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1. Constitutional & Legal Provisions Behind levy of Service Tax in India.
Constitutional Validity
Article 265 of the Constitution lays down that no tax shall be levied or collected
except by the authority of law. Schedule VII divides this subject into three
categories-
a)
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Union list (only Central
Government has power of legislation)
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b)
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State
list (only State Government has power of legislation)
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c)
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Concurrent
list (both Central and State Government can pass legislation).
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To enable Parliament to formulate by law principles for determining the
modalities of levying the Service Tax by the Central Govt. and collection of
the proceeds thereof by the Central Govt. and the State, the amendment vide
Constitution (92nd amendment) Act, 2003 has been made.
Consequently, new article 268 A has been inserted for Service Tax levy by Union
Govt., collected and appropriated by the Union Govt., and amendment of seventh
schedule to the constitution, in list I-Union list after entry 92B, entry 92C
has been inserted for taxes on services as well as in article 270 of the
constitution the clause (1) article 268A has been included.
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