Declared Services Under Service Tax Law: Section 66E Explained
Section 66E of the Finance Act, 1994 specified nine categories of activities treated as declared services under India's former service tax framework. This guide explains each category, its legal meaning and the position following the introduction of Goods and Services Tax (GST).
Updated: 10 October 2026 | Indian indirect tax law
What were declared services?
Under Section 65B(22) of the Finance Act, 1994, a "declared service" meant an activity carried out by a person for another person for consideration and declared as such under Section 66E. Section 66E identified activities treated as services for the former service tax law. Classification as a declared service did not automatically establish tax liability: the charging provision, exclusions, exemptions, valuation and place-of-provision rules also had to be considered.
Section 66B was the principal charging provision for service tax on taxable services, subject to the law and exemptions applicable during the relevant period. The historical negative list was set out in Section 66D.
The nine declared services under Section 66E
- Renting of immovable property [Section 66E(a)]. Granting use or occupation of immovable property for consideration, including specified renting or licensing arrangements, was treated as a declared service. Applicable exclusions and exemptions depended on the period and facts.
- Construction intended for sale [Section 66E(b)]. Construction of a complex, building, civil structure or part thereof intended for sale to a buyer, wholly or partly, was covered unless the entire consideration was received after issuance of the completion certificate by the competent authority. Statutory explanations addressed "competent authority" and "construction". The timing of payment and completion was central to classification.
- Temporary transfer or permitted use of intellectual property [Section 66E(c)]. Temporary transfer of, or permission to use or enjoy, an intellectual property right was included. The contractual rights granted and their duration mattered.
- Information technology software activities [Section 66E(d)]. Development, design, programming, customization, adaptation, upgradation, enhancement and implementation of information technology software were specified as declared services.
- Agreeing to refrain, tolerate or do an act [Section 66E(e)]. An agreement to refrain from an act, tolerate an act or situation, or do an act was included. A separate contractual obligation and consideration must be assessed; a payment described as damages or a penalty is not necessarily consideration for a service.
- Hiring, leasing or licensing goods without transfer of right to use [Section 66E(f)]. Transfer of goods by hiring, leasing, licensing or a similar arrangement, without transfer of the right to use the goods, was covered. Arrangements involving transfer of the right to use goods required separate legal analysis.
- Hire-purchase and instalment arrangements [Section 66E(g)]. Activities relating to delivery of goods on hire purchase or any system of payment by instalments were included, subject to the applicable statutory treatment and valuation rules.
- Service portion of works contracts [Section 66E(h)]. The service component of a works contract was a declared service. The former law defined works contracts with reference to specified contracts involving transfer of property in goods and related activities; valuation rules governed the taxable service portion.
- Service portion of supply of food or drinks [Section 66E(i)]. The service component of an activity in which food, another article of human consumption or a drink, whether intoxicating or not, was supplied as part of the activity was included, such as relevant restaurant and catering arrangements.
How are these activities treated under GST?
The former list should not be used as a current GST classification schedule. Section 7 of the Central Goods and Services Tax Act, 2017 defines the scope of supply, read with Schedule II, which classifies specified supplies as goods or services. Schedule II classification operates subject to Section 7; it does not independently make every activity taxable. Schedule III identifies activities treated as neither a supply of goods nor a supply of services.
| Former service tax category | Relevant GST starting point |
|---|---|
| Renting of immovable property | Schedule II, paragraph 2; examine exemptions, reverse charge and property type. |
| Construction intended for sale | Schedule II, paragraph 5(b), including the completion certificate or first occupation test, whichever is earlier. |
| Intellectual property permissions | Section 7 and Schedule II, as applicable to the rights transferred and contract terms. |
| Software development and related activities | Section 7 and applicable supply classification; software arrangements require fact-specific analysis. |
| Refraining, tolerating or doing an act | Schedule II, paragraph 5(e), subject to an identifiable supply and consideration. |
| Hiring or leasing goods | Schedule II, including paragraphs 1 and 5(f), depending on the nature of the rights transferred. |
| Hire-purchase and instalment transactions | Schedule II, paragraph 1(c), and applicable rules on consideration and financing components. |
| Works contracts | Section 2(119) and Schedule II, paragraph 6(a), for qualifying immovable-property works contracts. |
| Restaurant and catering supplies | Schedule II, paragraph 6(b), subject to applicable rates and notifications. |
Legacy service tax demands and disputes
For a pre-GST service tax dispute, identify the precise taxable period, the version of the Finance Act and rules then in force, the relevant contract and invoices, and any applicable exemption or abatement. The Finance Act, 1994, service tax rules and notifications must be read as they stood during that period. The CGST Act, Section 174 contains repeal and saving provisions relevant to specified earlier tax obligations, investigations and proceedings.
Time limits for demands and proceedings depend on the governing provisions and period, including the historically applicable version of Section 73 of the Finance Act, 1994. Do not apply current GST limitation periods automatically to former service tax demands.
Official legislation and guidance
- India Code: official repository of Central Acts - consult the Finance Act, 1994 and CGST Act, 2017.
- Central Board of Indirect Taxes and Customs (CBIC): GST laws, rules and notifications.
- GST Portal: registration, returns and taxpayer services.
- CBIC official website: indirect tax notifications, circulars and legacy resources.
Frequently asked questions
Is Section 66E still used to tax services today?
No. Section 66E belongs to the pre-GST service tax framework. For present-day transactions, assess GST under current legislation. It may remain relevant to disputes concerning earlier periods.
Were all nine declared services automatically taxable?
No. Taxability also depended on the charging provision, exclusions, exemptions and other rules applicable during the relevant service tax period.
Are liquidated damages always taxable under GST?
No. Whether a payment represents consideration for a distinct obligation to tolerate or refrain from an act depends on the contractual and factual circumstances. A mere compensatory payment is not automatically taxable.
This article provides general legal information. Check the legislation, amendments, notifications and judicial decisions applicable to the particular transaction and tax period.