Law of Sales and Principles of VAT

This is a book on the law of sales and on principles of the imposition of sales tax or VAT.

All of us, young or old, rich or poor, enter into transactions related to sale or purchase of goods every day—we purchase when we buy a newspaper, a carton of milk or a motor car. A newspaper vendor sells goods as does the shopkeeper. The book discusses the law on the subject: the right of the seller to receive payment and the right of the buyer to receive goods of the kind and quality he wants. Though the transaction is usually quite straightforward and simple, there are endless variations that arise when goods are to be delivered later, or when the sale is on credit, each of which can create legal problems.

The various legal problems arising in such transactions are fully examined, including: the meaning of ‘goods’ and ‘documents of title’; the distinction between contracts of sale, sales proper, between sales and other relationships resembling sales such as agency and hire purchase; the obligations of the parties relating to the time of delivery and the quality and suitability of goods; the inter se rights of the sellers and the buyers as to when property in the goods and title to the goods passes; the rights and remedies of the unpaid seller and the buyer who has not received the goods in time, or at all, or who has received goods which are not of the kind or quality he had agreed to buy. Auction sales are a special kind of sale and the book discusses the rights of all the parties involved: the seller, the auctioneer, and the auction purchaser.

Virtually, all sales attract sales tax, generally known as VAT, a tax generally imposed in India by the state legislatures. The Constitution regulates and restricts the power of states to levy sales tax. These topics are exhaustively considered in the work as also the concept of ‘deemed sales’, ie, transactions which, in law, are not sales but on which sales tax or VAT can be imposed. The book will be very useful to determine when sales tax or VAT can be levied, though it does not consider the formalities which the seller of goods is required to comply with under the VAT laws.

Contents
Preface ................................................................................................. vii
Contents ............................................................................................... xi
Table of Cases ...................................................................................... xxi
CHAPTER 1
Introduction .................................................................................. 2
1.1 INTRODUCTION ........................................................................... 2
1.2 SCHEME OF BOOK ...................................................................... 3
1.3 CONSTITUTIONAL POSITION .......................................................... 4
1.4 HISTORY OF LEGISLATION: ENGLAND ............................................. 5
1.5 HISTORY OF LEGISLATION: INDIA .................................................. 6
1.6 INTERNATIONAL CONVENTIONS ..................................................... 7
CHAPTER 2
Sale and Contract of Sale .............................................................. 7
2.1 INTRODUCTION ........................................................................... 8
2.2 STATUTORY PROVISIONS ................................................................ 8
Sale of Goods Act 1930 ............................................................ 8
Indian Contract Act 1872, Section 29 ..................................10
2.3 APPROACH OF COURTS ................................................................11
2.4 MEANING OF ‘SALE’, AND SALE OF GOODS ..................................12
2.5 SALE AND AGREEMENT FOR SALE .................................................16
Self-Service Stores ...................................................................19
2.6 THERE MUST BE TWO PARTIES TO A SALE .................................19
Supply of Food and Drink by Clubs to Members .................21
2.7 PRICE: SALE MUST BE FOR MONEY CONSIDERATION .....................22
2.8 SALE PRICE ................................................................................25
General ...................................................................................25
Taxes: General .........................................................................27
2.9 DETERMINATION OF PRICE .........................................................35
Price to be Determined by Valuer .........................................37
2.10 EFFECT OF SECTION 64A, SALE OF GOODS ACT 1930. .............38
CHAPTER 3
Formalities of Contract: Validity and Legality .............................. 41
3.1 INTRODUCTION .........................................................................41
3.2 STATUTORY PROVISIONS ..............................................................42
3.3 APPLICABILITY OF THE INDIAN CONTRACT ACT 1872 .................44
3.4 PROVISIONS OF THE INDIAN CONTRACT ACT 1872 ....................44
Formation of Contract ............................................................44
Capacity to Contract ..............................................................45
Offer and Acceptance .............................................................46
Self-service Stores ....................................................................46
Consent ..................................................................................47
Free Consent ...........................................................................49
3.5 ‘STAUTORY’ SALES ......................................................................50
3.6 PROVISIONS OF THE INDIAN CONTRACT ACT 1872 ....................52
Legality and Validity of the Contract ....................................52
Illegal Contracts .....................................................................53
Lack of Consideration .............................................................54
Agreements in Restraint of Trade ...........................................54
Uncertainty .............................................................................54
Wagering Contracts ................................................................55
3.7 SECTIONS 7 AND 8, SALE OF GOODS ACT .................................55
CHAPTER 4
Other Basic Concepts: ‘Goods’; ‘Documents of Title’ ................. 57
4.1 INTRODUCTION .........................................................................58
4.2 STATUTORY PROVISIONS ..............................................................59
4.3 ‘GOODS’ ...................................................................................62
General ...................................................................................62
Actionable Claims ..................................................................63
Body (Human) .......................................................................64
Copyright ...............................................................................64
Debentures .............................................................................65
Decree .....................................................................................65
Electricity ...............................................................................65
Electromagnetic Waves and Radio Frequencies .....................66
Fixtures ...................................................................................66
Import Entitlements and Licenses .........................................68
Loom Hours ...........................................................................70
Lottery Tickets ........................................................................70
Money ....................................................................................70
Motor Vehicles .......................................................................71
Newspapers ............................................................................71
Partnership Property, Share In ...............................................71
Shares and Stock .....................................................................72
Ships 72
Software ..................................................................................72
Steam ......................................................................................73
TV Signals ..............................................................................73
Telephone Equipment and Connection .................................73
Trademarks .............................................................................74
Water ......................................................................................74
4.4 ‘DOCUMENTS OF TITLE’ ...........................................................74
General ...................................................................................74
Bill of Lading ..........................................................................75
Consignment Note (Way Bill) ...............................................77
Delivery Order .......................................................................77
Mate’s Receipt ........................................................................78
Multimodal Transport Document .........................................78
Post Office Intimation ............................................................78
Railway Receipt......................................................................78
Registration Book ...................................................................79
Warehouse Receipt .................................................................79
Way Bill ..................................................................................80
Wharfinger’s Certificate ..........................................................80
CHAPTER 5
Sale and other Legal Relationships .............................................. 81
5.1 INTRODUCTION .........................................................................82
5.2 SALE AND AGENCY ....................................................................83
5.3 SALE AND BAILMENT .................................................................86
Sale or Return Transactions ....................................................88
5.4 SALE AND HIRE PURCHASE .........................................................88
5.5 SALES AND LOAN ......................................................................92
5.6 SALE AND PLEDGE .....................................................................92
5.7 SALE AND WORKS CONTRACTS ..................................................93
General ...................................................................................93
Indian Decisions ....................................................................95
Works Contracts .....................................................................95
Sale Contracts ...................................................................... 103
Two Contracts or Two Parts of Contract ............................. 107
English Decisions ................................................................ 107
5.8 SALE AND SERVICE IN RESTAURANTS AND HOTELS ................... 109
CHAPTER 6
Levy of Sales Tax by States: Constitutional Provisions—I .........111
6.1 INTRODUCTION ...................................................................... 112
6.2 CONSTITUTIONAL PROVISIONS AND THE PROVISIONS OF THE CENTRAL
SALES TAX ACT 1956 ........................................................ 114
Article 245 .......................................................................... 114
Article 269 .......................................................................... 114
Article 286 .......................................................................... 114
Articles 287 and 288 .......................................................... 115
Articles 301, 303, 304 ........................................................ 116
Article 366(12) ................................................................... 116
Entries in the Seventh Schedule ......................................... 116
Central Sales Tax Act 1956 ................................................. 116
6.3 EFFECT OF ENTRY 54, LIST II, SEVENTH SCHEDULE TO THE
CONSTITUTION .................................................................. 117
6.4 SALES OUTSIDE THE STATE ..................................................... 118
6.5 INTER-STATE SALES ................................................................. 121
General; And History Of The Law ..................................... 121
Statutory Provisions ............................................................. 123
Article 286 Applies To Deemed Sales ................................. 124
Basic Principles Relating To Section 3 ................................ 125
Rate of Tax ........................................................................... 134
Burden of Proof ................................................................... 134
Appropriate State ................................................................ 135
Central Sales Tax Appellate Authority ................................ 136
6.6 SALES IN THE COURSE OF EXPORT OR IMPORT ........................ 136
General ................................................................................ 136
Occasioning Export or Import ............................................ 139
Export .................................................................................. 140
Crossing the Customs Frontiers of India ............................ 140
Sales Occasioning Export .................................................... 140
Sales by Transfer of Documents After Goods Cross the
Customs Frontiers of India ............................................ 143
Last Sale Before Export: General ......................................... 144
Last Sale Before Export: Same Goods .................................. 146
Supply of Goods to Foreign-going Ships or Aircraft ........... 148
Sales Occasioning Imports .................................................. 149
Sales by Transfer of Documents Before Goods Cross
the Customs Frontiers of India ...................................... 151
6.7 DECLARED GOODS ................................................................. 152
General ................................................................................ 152
Restrictions under Section 15 ............................................. 155
6.8 SALES TAXES IN CONTRAVENTION OF ARTICLES 301-304 OF THE ..
CONSTITUTION .................................................................. 157
General ................................................................................ 157
Exemption of Local Goods from Tax ................................... 160
Lower Rate of Tax on Local Goods ...................................... 161
Legislation in the Public Interest ........................................ 161
CHAPTER 7
Levy of Sales Tax by States: Constitutional Provisions—II ........163
7.1 INTRODUCTION ...................................................................... 163
7.2 CONSTITUTIONAL PROVISIONS RELATING TO DEEMED SALES ..... 164
7.3 GENERAL EFFECT OF 46TH AMENDMENT ................................ 168
7.4 ENLARGED MEANING OF SALE ................................................. 169
Valuable Consideration ....................................................... 170
7.5 TRANSFER OF PROPERTY IN WORKS CONTRACTS ...................... 172
General ................................................................................ 172
CHAPTER 36
CREDIT RATING AGENCY’S SERVICES (TAXABLE W.E.F. 16-10-1998)
1.Introduction509
2.Legislative amendments509
3.Definition applicable to Credit Rating Agency’s Services509
4.Scope of Taxable Service509
5.Value of Taxable Service510
6.Rate of Service Tax510
7.Exemption notification(s) u/s. 93 of Act 32 of 1994510
8.Export of Service Rules, 2005, applicability of510
9.Import of Services510
10.For Credit Rating Agency’s Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant510
CHAPTER 37
CUSTOM HOUSE AGENT’S SERVICES (TAXABLE W.E.F. 15-6-1997)
1.Introduction511
2.Legislative amendments511
3.Definition applicable to Custom House Agent’s Services511
4.Scope of Taxable Service511
5.Value of Taxable Service512
6.Rate of Service Tax512
7. Exemption notification(s) u/s. 93 of Act 32 of 1994512
8. Export of Service Rules, 2005, applicability of512
9. Import of Services512

10.For Custom House Agent’s Services, the following exemption Notifica-tions/ Circulars/Trade Notices, etc., are relevant512
11. Custom House Agent’s Services-Discussion of case laws513
CHAPTER 38
DREDGING SERVICES (TAXABLE W.E.F. 16-6-2005)
1.Introduction514
2.Definition applicable to Dredging Services514
3.Scope of Taxable Service514
4.Value of Taxable Service514
5.Rate of Service Tax514
6. Exemption notification(s) u/s. 93 of Act 32 of 1994514
7. Export of Service Rules, 2005, applicability of515
8. Import of Services515
9. For Dredging Services, the following exemption Notifications/Circ NON-ACCEPTANCE OF GOODS . 358
16.7 SUIT FOR DAMAGES BY BUYER: NON-DELIVERY;
DELAYED DELIVERY ............................................................ 359
Non-delivery ....................................................................... 359
Delay in Delivery ................................................................ 360
16.8 SUIT FOR SPECIFIC PERFORMANCE BY BUYER ............................. 361
16.9 SUIT BY BUYER FOR DAMAGES; BREACH OF WARRANTY ............ 364
16.10 CLAIM FOR INTEREST .............................................................. 368

 

........ 146
Supply of Goods to Foreign-going Ships or Aircraft ........... 148
Sales Occasioning Imports .................................................. 149
Sales by Transfer of Documents Before Goods Cross
the Customs Frontiers of India ...................................... 151
6.7 DECLARED GOODS ................................................................. 152
General ................................................................................ 152
Restrictions under Section 15 ............................................. 155
6.8 SALES TAXES IN CONTRAVENTION OF ARTICLES 301-304 OF THE ..
CONSTITUTION .................................................................. 157
General ................................................................................ 157
Exemption of Local Goods from Tax ................................... 160
Lower Rate of Tax on Local Goods ...................................... 161
Legislation in the Public Interest ........................................ 161
CHAPTER 7
Levy of Sales Tax by States: Constitutional Provisions—II ........163
7.1 INTRODUCTION ...................................................................... 163
7.2 CONSTITUTIONAL PROVISIONS RELATING TO DEEMED SALES ..... 164
7.3 GENERAL EFFECT OF 46TH AMENDMENT ................................ 168
7.4 ENLARGED MEANING OF SALE ................................................. 169
Valuable Consideration ....................................................... 170
7.5 TRANSFER OF PROPERTY IN WORKS CONTRACTS ...................... 172
General ................................................................................ 172
Supreme Court Decisions ................................................... 173
Contract With Photographer .............................................. 175
Effect Of Service Tax ............................................................ 177
Supply Of Lifts .................................................................... 177
Maintenance-cum-Service Contracts .................................. 177
Land Development Contracts ............................................. 178
Deductions From Total Consideration ................................ 178
High Court Decisions ......................................................... 179
7.6 HIRE PURCHASE TRANSACTIONS ............................................... 182
7.7 TRANSFER OF RIGHT TO USE GOODS ..................................... 184
Supreme Court Decisions ................................................... 185
High Court Decisions ......................................................... 186
7.8 SUPPLY OF FOOD AND DRINK BY CLUBS AND BODY OF PERSONS .....
ASSOCIATIONS TO MEMBERS ............................................... 189
7.9 SUPPLY OF FOOD AND DRINK IN HOTELS AND RESTAURANTS .. 189
CHAPTER 8
Freedom of Parties to Exclude Implied Terms ............................191
8.1 INTRODUCTION AND SECTION 62 ........................................... 191
8.2 EFFECT OF THE PROVISION AND DECISIONS ............................ 191
CHAPTER 9
Stipulations as to Time Constitutional Provisions—II ..............195
9.1 INTRODUCTION ...................................................................... 195
9.2 STATUTORY PROVISIONS ........................................................... 195
Section 11; Section 55, INDIAN CONTRACT ACT 1872 ......... 195
Section 32 ............................................................................ 196
Section 35 ............................................................................ 197
Section 36 (2) ...................................................................... 197
9.3 WHEN TIME OF PERFORMANCE IS OF THE ESSENCE OF THE...........
CONTRACT ........................................................................ 197
9.4 TIME OF DELIVERY ................................................................ 200
9.5 TIME FOR PAYMENT................................................................ 201
CHAPTER 10
Stipulations as to Quality, Fitness, etc ........................................205
10.1 INTRODUCTION ...................................................................... 205
10.2 STATUTORY PROVISIONS ........................................................... 206
Sections 12 to 17 ................................................................ 206
10.3 CONDITIONS AND WARRANTIES ............................................... 209
10.4 STIPULATIONS AS TO TITLE AND QUIET ENJOYMENT ................ 212
Condition as to Title ........................................................... 213
Warranty that the Goods are Free of Undisclosed
Encumbrances................................................................ 214
Warranty of Quiet Enjoyment ............................................ 215
10.5 SALE BY DESCRIPTION ............................................................. 215
10.6 STIPULATIONS AS TO QUALTIY AND FITNESS ............................. 219
General ................................................................................ 219
Particular Purpose for which the Goods are Required ........ 220
Reasonably fit for the Purpose for which Goods
are Bought ...................................................................... 221
If Goods are Bought by Description, They Must of
Merchantable Quality ................................................... 223
Warranty or Condition Annexed by Usage of Trade ........... 225
10.7 SALE BY SAMPLE ..................................................................... 226
CHAPTER 11
Effect of Contract of Sale—I: Transfer of Property Between Seller
and Buyer ....................................................................229
11.1 INTRODUCTION ...................................................................... 230
11.2 STATUTORY PROVISIONS ........................................................... 230
Section 18 ............................................................................ 230
Section 19 ............................................................................ 231
Section 20 ............................................................................ 231
Section 21 ............................................................................ 231
Section 22 ............................................................................ 231
Section 23 ............................................................................ 231
Section 24 ............................................................................ 232
Section 25 ............................................................................ 232
Section 26 ............................................................................ 233
Section 2(3) ......................................................................... 233
Section 2(6) ......................................................................... 233
Section 2(14) ....................................................................... 234
Sections 4(2), (3), (4) ......................................................... 234
11.3 GOODS MUST BE ASCERTAINED .............................................. 234
11.4 PROPERTY PASSES WHEN INTENDED TO PASS ........................... 235
11.5 SALE OF SPECIFIC GOODS IN A DELIVERABLE STATE ................. 237
11.6 SALE OF SPECIFIC GOODS TO BE PUT IN DELIVERABLE STATE ... 239
11.7 SPECIFIC GOODS IN DELIVERABLE STATE WHERE SELLER HAS TO
DO SOMETHING TO ASCERTAIN PRICE ................................ 240
11.8 SALE OF UNAPPROPRIATED GOODS AND APPROPRIATION............. 240
Appropriation By Act Of Seller ......................................................... 241
Appropriation By Delivery To Buyer Or Carrier Or
Other Bailee For Transmission To Buyer ...................................... 244
11.9 GOODS SENT ON APPROVAL OR ‘SALE OR RETURN’ ................ 247
11.10 RESERVATION OF RIGHT OF DISPOSAL ..................................... 250
11.11 RISK PASSES WITH PROPERTY .................................................. 253
11.12 SALE OF PART OF BULK (ENGLISH LAW) ................................. 258
CHAPTER 12
Effect of Contract of Sale-II: Transfer of Title ...........................261
12.1 INTRODUCTION ...................................................................... 261
Sales By Agent Of Necessity ............................................... 263
12.2 STATUTORY PROVISIONS ........................................................... 263
Section 27 ............................................................................ 263
Section 28 ............................................................................ 264
Section 29 ............................................................................ 264
Section 30 ............................................................................ 264
12.3 OWNER ESTOPPED FROM DENYING SELLER’S AUTHORITY
TO SELL ............................................................................ 265
12.4 SALE BY MERCANTILE AGENT .................................................. 267
12.5 SALE BY CO-OWNER IN EXCLUSIVE POSSESSION ......................... 270
12.6 SALE BY PERSON IN POSSESSION UNDER
VOIDABLE CONTRACT ......................................................... 270
12.7 SALE BY SELLER IN POSSESSION ............................................... 271
12.8 SALE BY BUYER IN POSSESSION ................................................ 273
CHAPTER 13
Performance of the Contract ......................................................275
13.1 INTRODUCTION ...................................................................... 276
13.2 STATUTORY PROVISIONS ........................................................... 276
Sections 31, 2(2) ................................................................. 276
Section 32 ............................................................................ 277
Section 33 ............................................................................ 277
Section 34 ............................................................................ 277
Section 35 ............................................................................ 278
Section 36 ............................................................................ 278
Section 37 ............................................................................ 279
Section 38 ............................................................................ 279
Section 39 ............................................................................ 279
Section 40 ............................................................................ 280
Section 41 ............................................................................ 280
Section 42 ............................................................................ 281
Section 43 ............................................................................ 281
Section 44 ............................................................................ 281
13.3 BASIC DUTIES OF SELLER AND BUYER ..................................... 282
13.4 DELIVERY AND PAYMENT ARE CONCURRENT CONDITIONS ......... 282
13.5 DELIVERY ............................................................................... 283
13.6 PART DELIVERY ...................................................................... 284
13.7 BUYER TO APPLY FOR DELIVERY .............................................. 285
13.8 RULES AS TO DELIVERY .......................................................... 285
13.9 DELIVERY OF WRONG QUANTITY ............................................ 287
13.10 INSTALMENT DELIVERY ........................................................... 290
13.11 DUTIES OF SELLER ................................................................. 291
General: Delivery To Carrier Or Wharfinger ...................... 291
CIF And Other Standard Contracts ................................... 293
13.12 BUYER’S RIGHT TO EXAMINE GOODS ....................................... 301
13.13 ACCEPTANCE .......................................................................... 302
13.14 BUYER NOT BOUND TO RETURN REJECTED GOODS ................. 303
13.15 LIABILITY OF BUYER FOR NEGLECTING OR
REFUSING DELIVERY ........................................................... 304
CHAPTER 14
Auction Sales ..............................................................................305
14.1 INTRODUCTION ...................................................................... 305
14.2 STATUTORY PROVISIONS ........................................................... 306
Section 64 ............................................................................ 306
14.3 WHEN AUCTIONS ARE COMPULSORY: TRUST AND
STATE PROPERTY ................................................................ 308
14.4 LAW RELATING TO AUCTIONS .................................................. 309
Nature of an Auction .......................................................... 309
Conditions of Auction Prevail ............................................. 310
When Bids Can be Withdrawn........................................... 310
Highest Bid Need Not be Accepted ................................... 311
Bids Below Reserve Price ..................................................... 311
When Auction Sale Complete and Property Passes ............ 312
Bidding by Seller and other Irregularities in BIDDING ........ 313
Agreement Between Bidders ............................................... 314
Resale of Goods ................................................................... 314
14.5 POSITION OF AUCTIONEER ...................................................... 315
Seller Having No Title to Goods Sold ................................ 315
Secret Profit by Auctioneer ................................................. 315
Warranty of Quality of Goods Sold .................................... 316
Payment of Price .................................................................. 316
Withdrawal of Advertised Goods from Auction ................. 317
CHAPTER 15
Right of Seller Against Goods .....................................................319
15.1 INTRODUCTION ...................................................................... 319
15.2 STATUTORY PROVISIONS ........................................................... 320
15.3 EXPLANATIONS OF TERMS....................................................... 324
Meaning of Unpaid Seller ................................................... 324
Meaning of ‘Seller’ .............................................................. 325
Rights of Unpaid Seller: General ........................................ 326
Effect of Sub-sale of Pledge by Buyer ................................. 326
15.4 LIEN OVER GOODS ................................................................ 327
15.5 RIGHT TO STOP GOODS IN TRANSIT ....................................... 329
15.6 EFFECT OF EXERCISE OF RIGHT OF LIEN OR STOPPAGE
IN TRANSIT ........................................................................ 332
15.7 RIGHT OF RE-SALE ................................................................ 333
CHAPTER 16< r /> Suits for Breach of Contract .......................................................337
16.1 INTRODUCTION ...................................................................... 338
16.2 STATUTORY PROVISIONS ........................................................... 339
Sale of Goods Act 1930 ....................................................... 339
Provisions of the Indian Contract Act 1872 ....................... 342
Provisions of the Specific Relief Act 1963 .......................... 345
16.3 SUIT BY SELLER FOR PRICE ..................................................... 346
16.4 SUITS FOR DAMAGES BY SELLER AND BUYER:
GENERAL PRINCIPLES .......................................................... 347
Basic Rule ............................................................................ 347
Plaintiff must Suffer Loss as a Result of the Breach ............ 349
Damages must be Computed on Basis Most
Advantageous to Defendant ............................................ 350
Loss must be Caused by the Breach ................................... 350
Meaning of ‘Market’ ........................................................... 351
Claim for Expenditure Incurred by the Plaintiff ................ 353
Remoteness .......................................................................... 353
Mitigation ........................................................................... 354
Liquidated Damages and Penalty ........................................ 355
Clauses Excluding or Limiting Liability ............................. 355
16.5 ANTICIPATORY BREACH OF CONTRACT ..................................... 355
16.6 SUIT BY SELLER FOR DAMAGES: NON-ACCEPTANCE OF GOODS . 358
16.7 SUIT FOR DAMAGES BY BUYER: NON-DELIVERY;
DELAYED DELIVERY ............................................................ 359
Non-delivery ....................................................................... 359
Delay in Delivery ................................................................ 360
16.8 SUIT FOR SPECIFIC PERFORMANCE BY BUYER ............................. 361
16.9 SUIT BY BUYER FOR DAMAGES; BREACH OF WARRANTY ............ 364
16.10 CLAIM FOR INTEREST .............................................................. 368

 

lars/ Trade Notices, etc., are relevant515
CHAPTER 39
DRY CLEANING SERVICES (TAXABLE W.E.F. 16-8-2002)
1.Introduction516
2.Legislative amendment516
3.Definitions applicable to Dry Cleaning Services516
4.Scope of Taxable Service516
5.Value of Taxable Service516
6.Rate of Service Tax516
7. Exemption notification(s) u/s. 93 of Act 32 of 1994517
8. Export of Service Rules, 2005, applicability of517
9. Import of Services517

10.For Dry Cleaning Services, the following exemption Notifications/Cir-culars/Trade Notices, etc., are relevant517
CHAPTER 40
ERECTION, COMMISSIONING OR INSTALLATION SERVICES518
CHAPTER 41
EVENT MANAGEMENT SERVICES (TAXABLE W.E.F. 16-8-2002)
1.Introduction519
2.Legislative amendment519
3.Definitions applicable to Event Management Services519
4.Scope of Taxable Service519
5.Value of Taxable Service519
6.Rate of Service Tax519
7. Exemption notification(s) u/s. 93 of Act 32 of 1994520
8. Export of Service Rules, 2005, applicability of520
9. Import of Services520

10.For Event Management Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant520
11. Circular, etc., in relation to Event Management Services520
12. Event Management Services-Discussion of case laws521
CHAPTER 42
FACSIMILE (FAX) SERVICES (TAXABLE W.E.F. 16-7-2001)
1.Introduction522
2.Legislative amendments522
3.Definitions applicable to Facsimile (FAX) Services522
4.Scope of Taxable Service522
5.Value of Taxable Service522
6.Rate of Service Tax523
7. Exemption notification(s) u/s. 93 of Act 32 of 1994523
8. Export of Service Rules, 2005, applicability of523
9. Import of Services523
10.For FAX Services, the following exemption Notifications/Circulars/ Trade Notices, etc., are relevant523
CHAPTER 43
FASHION DESIGNING SERVICES (TAXABLE W.E.F. 16-8-2002)
1.Introduction524
2.Legislative amendment524
3.Definitions applicable to Fashion Designing Services524
4.Scope of Taxable Service524
5.Value of Taxable Service524
6.Rate of Service Tax524
7. Exemption notification(s) u/s. 93 of Act 32 of 1994525
8. Export of Service Rules, 2005, applicability of525
9. Import of Services525
10.For Fashion Designing Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant525
11.Fashion Designing Services-Discussion of case laws525
12.A fashion designer and a tailor, distinction525
CHAPTER 44
FINANCIAL INSTITUTION INCLUDING A NON-BANKING FINANCIAL COMPANY’S SERVICES526
CHAPTER 45
FOREIGN EXCHANGE BROKER’S SERVICES (TAXABLE W.E.F. 1-7-2003)
1.Introduction527
2.Legislative amendment527
3.Definitions applicable to Foreign Exchange Broker’s Services527
4.Scope of Taxable Service527
5.Value of Taxable Service527
6.Rate of Service Tax527
7. Exemption notification(s) u/s. 93 of Act 32 of 1994528
8.Export of Service Rules, 2005, applicability of528
9.Import of Services528
10.For Foreign Exchange Broker’s Services, the following exemption Noti-fications/Circulars/Trade Notices, etc., are relevant528
CHAPTER 46
FORWARD CONTRACT SERVICES (TAXABLE W.E.F. 10-9-2004)
1.Introduction529
2.Definitions applicable to Forward Contract Services529
3.Scope of Taxable Service529
4.Value of Taxable Service529
5.Rate of Service Tax529
6. Exemption notification(s) u/s. 93 of Act 32 of 1994530
7. Export of Service Rules, 2005, applicability of530
8. Import of Services530
9. For Forward Contract Services, the following exemption Notifications/ Circulars/Trade Notices, etc., are relevant530
CHAPTER 47
FRANCHISE SERVICES (TAXABLE W.E.F. 1-7-2003)
1.Introduction531
2.Definitions applicable to Franchise Services531
3.Scope of Taxable Service531
4.Value of Taxable Service531
5.Rate of Service Tax531
6. Exemption notification(s) u/s. 93 of Act 32 of 1994531
7. Export of Service Rules, 2005, applicability of532
8. Import of Services532
9. For Franchise Services, the following exemption Notifications/Circu-lars/ Trade Notices, etc., are relevant532

10.Franchise Services-Discussion of case laws532
CHAPTER 48
GENERAL INSURANCE BUSINESS SERVICES (TAXABLE W.E.F. 1-7-1994)
1.Introduction533
2.Legislative amendments533
3.Definitions applicable to General Insurance Business Services533
4.Scope of Taxable Service533
5.Value of Taxable Service534
6.Rate of Service Tax534
7. Exemption notification(s) u/s. 93 of Act 32 of 1994535
8.Export of Service Rules, 2005, applicability of535
9.Import of Services535
10.For General Insurance Business Services, the following exemption Noti-fications/Circulars/Trade Notices, etc., are relevant535
11.General Insurance Business Services-Discussion of case laws536
CHAPTER 49
GOODS TRANSPORT AGENCY’S SERVICES (CURRENTLY TAXABLE W.E.F. 1-1-2005) (EARLIER TAXABLE BETWEEN 16-11-1997 AND 1-6-1998)
1.Introduction537
2.Definitions applicable to Goods Transport Agency’s Services537
3.Scope of Taxable Service537
4.Value of Taxable Service538
5.Rate of Service Tax538
6. Exemption notification(s) u/s. 93 of Act 32 of 1994538
7. Export of Service Rules, 2005, applicability of538
8. Import of Services538
9. For Goods Transport Agency’s Services, the following exemption Noti-fications/Circulars/Trade Notices, etc., are relevant538

10.Circulars, etc., in relation to Goods Transport Agency’s Services539
11. Goods Transport Agency’s Services-Discussion of case laws543
12. Demands raised by the Department are far beyond the period of limita-tion548
13.Whether the taxes on goods and passengers carried by road or inland waterways is within the exclusive domain of State Legislature or Parlia-ment549
14.During the period 16-11-1997 to 1-6-1998 no service tax can be col-lected from receiver of goods transport services549
15. No tax liability, no liability to pay interest on tax either550
16. Goods transport operator’s services exempted from penal liability in terms of validation provisions550
17.Interim stay550
18.When no penalty or interest could be imposed550
19.Demand of service tax set aside550
20.Judicial Analysis to Notification No. 42/97, dated 5-11-1997550
21.Notification, dated 2-6-1998 exempted the levy of tax on the services rendered by the goods transport operators551
CHAPTER 50
HEALTH CLUB’S AND FITNESS CENTRE’S SERVICES (TAXABLE W.E.F. 16-8-2002)
1.Introduction552
2.Legislative amendment552
3.Definitions applicable to Health Club’s and Fitness Centre’s Services552
4.Scope of Taxable Service552
5.Value of Taxable Service552
6.Rate of Service Tax553
7. Exemption notification(s) u/s. 93 of Act 32 of 1994553
8.Export of Service Rules, 2005, applicability of553
9.Import of Services553
10.For Health Club’s and Fitness Centre’s Services, the following exemp-tion Notifications/Circulars/Trade Notices, etc., are relevant553
11.Circulars, etc., in relation to Health Club’s and Fitness Centre’s Services553
CHAPTER 51
INSURANCE AGENT’S SERVICES555
CHAPTER 52
INSURANCE AUXILIARY SERVICES (TAXABLE W.E.F. 16-7-2001)
1.Introduction556
2.Legislative amendments556
3.Definitions applicable to Insurance Auxiliary Services557
4.Scope of Taxable Service557
5.Value of Taxable Service558
6.Rate of Service Tax558
7. Exemption notification(s) u/s. 93 of Act 32 of 1994558
8.Export of Service Rules, 2005, applicability of558
9.Import of Services558
10.For Insurance Auxiliary Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant558
CHAPTER 53
INTELLECTUAL PROPERTY SERVICES (TAXABLE W.E.F. 10-9-2004)
1.Introduction560
2.Definitions applicable to Intellectual Property Services560
3.Scope of Taxable Service560
4.Value of Taxable Service560
5.Rate of Service Tax560
6. Exemption notification(s) u/s. 93 of Act 32 of 1994561
7.Export of Service Rules, 2005, applicability of561
8.Import of Services561
9.For Intellectual Property Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant561
10.Intellectual Property Services-Discussion of case laws561
CHAPTER 54
INTERIOR DECORATOR’S SERVICES (TAXABLE W.E.F. 16-10-1998)
1.Introduction562
2.Legislative amendments562
3.Definition applicable to Interior Decorator’s Services562
4.Scope of Taxable Service562
5.Value of Taxable Service563
6.Rate of Service Tax563
7.Exemption notification(s) u/s. 93 of Act 32 of 1994563
8.Export of Service Rules, 2005, applicability of563
9.Import of Services563
10.For Interior Decorator’s Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant563
11.Interior Decorator’s Services-Discussion of case laws564
CHAPTER 55
INTERMEDIARY OR INSURANCE INTERMEDIARY’S SERVICES565
CHAPTER 56
INTERNATIONAL JOURNEY OF PASSENGERS BY AIR SERVICES566
CHAPTER 57 INTERNET ACCESSING SERVICES (TAXABLE W.E.F. 1-7-2003)
1.Introduction567
2.Definition applicable to Internet Accessing Services567
3.Scope of Taxable Service567
4.Value of Taxable Service567
5.Rate of Service Tax567
6. Exemption notification(s) u/s. 93 of Act 32 of 1994567
7.Export of Service Rules, 2005, applicability of568
8.Import of Services568
9.For Internet Accessing Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant568
10.Internet Accessing Services-Discussion of case laws568
CHAPTER 58
INTERNET CAFE SERVICES569
CHAPTER 59
INTERNET TELEPHONY SERVICES (TAXABLE W.E.F. 1-5-2006)
1.Introduction570
2.Definitions applicable to Internet Telephony Services570
3.Scope of Taxable Service570
4.Value of Taxable Service570
5.Rate of Service Tax570
6. Exemption notification(s) u/s. 93 of Act 32 of 1994570
7. Export of Service Rules, 2005, applicability of570
8. Import of Services571
9. For Internet Telephony Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant571
CHAPTER 60
LEASED CIRCUIT SERVICES (TAXABLE W.E.F. 16-7-2001)
1.Introduction572
2.Legislative amendments572
3.Definitions applicable to Leased Circuit Services572
4.Scope of Taxable Service572
5.Value of Taxable Service572
6.Rate of Service Tax573
7. Exemption notification(s) u/s. 93 of Act 32 of 1994573
8.Export of Service Rules, 2005, applicability of573
9.Import of Services573
10.For Leased Circuit Services, the following exemption Notifications/ Circulars/Trade Notices, etc., are relevant573 Leased Circuit Services-Discussion of case laws
11.Judicial Analysis to Notification No. 4/2001, dated 9-7-2001574
CHAPTER 61
LIFE INSURANCE BUSINESS SERVICES (TAXABLE W.E.F. 16-8-2002)
1.Introduction575
2.Legislative amendments575
3.Definitions applicable to Life Insurance Business Services575
4.Scope of Taxable Service575
5.Value of Taxable Service576
6.Rate of Service Tax576
7. Exemption notification(s) u/s. 93 of Act 32 of 1994576
8.Export of Service Rules, 2005, applicability of576
9.Import of Services576
10.For Life Insurance Business Services, the following exemption Notifica-tions/Circulars/Trade Notices, etc., are relevant576
CHAPTER 62
MAILING LIST COMPILATION AND MAILING SERVICES (TAXABLE W.E.F. 16-6-2005)
1.Introduction578
2.Definition applicable to Mailing List Compilation and Mailing Services578
3.Scope of Taxable Service578
4.Value of Taxable Service578
5.Rate of Service Tax578
6. Exemption notification(s) u/s. 93 of Act 32 of 1994578
7.Export of Service Rules, 2005, applicability of579
8.Import of Services579
9.For Mailing List Compilation and Mailing Services, the following ex-emption Notifications/Circulars/ Trade Notices, etc., are relevant579
CHAPTER 63
MAINTENANCE OR REPAIR SERVICES (TAXABLE W.E.F. 1-7-2003)
1.Introduction580
2.Legislative amendment580
3.Definitions applicable to Maintenance or Repair Services580
4.Scope of Taxable Service580
5.Value of Taxable Service580
6.Rate of Service Tax581
7. Exemption notification(s) u/s. 93 of Act 32 of 1994581
8. Export of Service Rules, 2005, applicability of581
9.Import of Services581
10.For Maintenance or Repair Services, the following exemption Notifica-tions/ Circulars/Trade Notices, etc., are relevant581
11.Circular, etc., in relation to Maintenance or Repair Services581
12.Maintenance or Repair Services-Discussion of case laws583
CHAPTER 64
MANAGEMENT CONSULTANT’S SERVICES (TAXABLE W.E.F. 16-10-1998)
1.Introduction584
2.Legislative amendments584
3.Definition applicable to Management Consultant’s Services584
4.Scope of Taxable Service584
5.Value of Taxable Service585
6.Rate of Service Tax585
7. Exemption notification(s) u/s. 93 of Act 32 of 1994585
8. Export of Service Rules, 2005, applicability of585
9. Import of Services585
10.For Management Consultant’s Services, the following exemption Noti-fications/ Circulars/Trade Notices, etc., are relevant585
11.Management Consultant’s Services-Discussion of case laws586
12. Management, what it is588
CHAPTER 65
MANAGEMENT, MAINTENANCE OR REPAIR SERVICES589
CHAPTER 66
MANDAP KEEPER’S SERVICES (TAXABLE W.E.F. 1-7-1997)
1.Introduction590
2.Legislative amendments590
3.Definitions applicable to Mandap Keeper’s Services590
4.Scope of Taxable Service590
5.Value of Taxable Service591
6.Rate of Service Tax591
7.Exemption notification(s) u/s. 93 of Act 32 o