The Finance Bill 2010 has received presidential assent on 8th May 2010 and has become the Finance Act 2010 with effect from that date. While the effective date for the levy of service tax on certain newly introduced taxable services and amendments in the scope of existing taxable services are yet to be notified, although expected in the very near future, the procedural changes in service tax legislation have come into force. It would therefore be worthwhile to briefly review the aforesaid developments in the service tax law.

Newly introduced Services
The activity of the temporary transfer or permitting the use or enjoyment of copyright in cinematographic films and sound recordings, which is specifically excluded from intellectual property services, will now attract service tax under the new category of ' copyright service. However, the transfer of rights in original literary, dramatic, musical and artistic works, as typically relevant for authors etc. will still be outside the ambit of the levy. This service will cover a majority of the typical transactions in the film and entertainment industry.

A related activity on which the tax will now be levied is the that of promotion or marketing of any brand (of goods or services or event) or endorsement of a name, including a trade name, logo or house mark of a business entity, under the category promotion or marketing of brand services. There were disputes earlier as to whether such services would attract tax as business auxiliary services and the introduction of this category is expected to provide clarity for the past as well .

The service of granting rights or permitting the commercial use or exploitation of specified types of events is now taxable as permitting the commercial use or exploitation of any event services. This category would cover the grant of commercial exploitation rights of events like cricket matches, beauty contests and awards. Two new taxable services of relevance in the medical space are those of storage and maintenance of medical records of employees of business entities as storage of medical records services and the other one of hospitals, nursing homes and multi-specialty clinics services which includes services in relation to health check-ups and or preventive care of employees of business entities and or any treatment of persons holding health insurance, where the insurance company directly pays the hospitals etc. Again , the activity of promotion, marketing, organizing or assisting in organizing games of chance , including lotteries , which was earlier taxed as business auxiliary services is now sought to be taxed under the new category of promotion, marketing and organizing of games of chance including lottery services.

Service tax was earlier levied on services provided by stock exchanges and commodity exchanges. The levy is now extended to services provided by electricity exchanges as well. Further, builders collecting extra charges from buyers of property for provision of specific additional features would need to discharge service tax under the category of preferential location services.

Amendments in scope of existing services
An explanation has been inserted in auctioneers service to clarify that auctions by the Government, which have been excluded from the levy, would mean those where the property being auctioned belongs to the Government. .

The scope of transport of passengers by air service is sought to be enlarged to cover domestic air travel in all classes and international travel in economy class. As a result of this amendment, airline travel could become costlier, although more input tax credit should now be available as an offset to the airlines. Information technology software service has been amended to remove the condition of use of the services in business or commerce and consequently such services procured for personal use will also now be taxed. Coming to the most significant amendments , pertaining to the real estate sector , the scope of commercial or industrial construction service and construction of complex services has been extended to cover all transactions of purchase of property where any amount is paid by the buyer to the developer before the developer obtains the completion certificate for the property. A retrospective amendment has been made in the definition of the renting of immovable property services with effect from June 1, 2007 so as to render the activity of renting specifically liable for service tax. This retrospective amendment has been made to overcome the Delhi High Court judgement in the case of Home Solutions Retail India Pvt. Ltd. wherein the court had held that the activity of renting per se did not attract service tax and only the services in relation thereto were so liable. Further, the definition of immovable property is also being amended to include vacant land given on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce.

In management of investment under ULIP Services, the value of taxable service is now considered as the higher of the maximum amount fixed by the IRDA as fund management charges for the ULIP or the actual amount charged for fund management by the insurer. The coverage of sponsorship services has been enlarged by removing the specific exclusion of sponsorship of sports events therefrom. An explanation has been inserted with retrospective effect from July 1, 2003 in commercial training or coaching service, clarifying that the definition of commercial coaching or training will extend to all situations where any training or coaching is imparted for consideration.

Until now, only the services provided by the port / airport authorities or the persons authorized by port / airport authorities in port / airport premises were subjected to service tax. Now, any services provided in the port / airport premises by any person will be taxed. Additionally, all such services provided within the port / airport will be classified as port services / airport services respectively, even though they may have been specifically taxed under any other category of service.

These are very material and significant changes and will mark a major expansion of the service tax, prior to the advent of the GST.