Taxable Territory?
THE Service Tax Law has introduced a new concept - "Taxable Territory"
Section 65B(35) of the Finance Act, 1994 defines "non-taxable territory" as the territory which is outside the taxable territory;
Section 65B(52) of the Finance Act, 1994 defines "taxable territory" as the territory to which the provisions of this Chapter apply.
Section 64(1) of the Act stipulates that the Chapter extends to the whole of India except Jammu and Kashmir.
Therefore, the "Taxable Territory" is India except
Jammu and Kashmir. The Guidance Note 5.2.2 issued by the Board states,
What is "taxable territory"? What is its significance?
Taxable territory has been defined in sub-section 52 of section 65B. It means the territory to which the provisions of Chapter V of the Finance Act, 1994 apply i.e. whole of India excluding the state of Jammu and Kashmir. "Non-taxable territory" is defined in sub-section 35 ibid accordingly as the territory other than the taxable territory.
"India" is defined in sub-section 27 of section 65 B, as follows:
"India" means-
(a) the territory of the Union of India as referred to in clauses (2) and (3) of article 1 of the Constitution;
(b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976;
(c) the sea-bed and the subsoil underlying the territorial waters;
(d) the air space above its territory and territorial waters; and
(e) the installations structures and vessels located in the continental shelf of India and the exclusive economic zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof;
The new charging section, section 66B, enables taxation of only such services as are provided in taxable territory. Thus, services that are provided in a non-taxable territory are not chargeable to service tax.