CBEC has issued a circular no. 96/7/2007 dated 23/7/2007 Service Tax.

Paragraph 6 of the Circular states that,

"This circular supersedes all circulars, clarifications and communications, other than Orders issued under section 37B of the Central Excise Act, 1944 (as made applicable to service tax by section 83 of the Finance Act, 1994), issued from time to time by the CBEC, DG (Service Tax) and various field formations on all technical issues including the scope and classification of taxable services, valuation of taxable services, export of services, services received from outside India, scope of exemptions and all other matters on levy of service tax.  With the issue of this circular, all earlier clarifications issued on technical issues relating to service tax stand withdrawn."

Now, therefore, all the service providers need to re-assessee the services provided by them and the implication of withdrawal of all the previous circulars must be ascertained.

For an instance, for certain specific services, service providers were not paying service tax on Sub-contract services. But, with the withdrawal of all the circulars, every person is liable to pay service tax on each stage irrespective of the fact that he is main contractor or sub-contractor.

Withdrawal of prior service tax circulars alters taxability: service providers must re-assess liability at each stage of provision. The circular withdraws all prior technical clarifications on service tax-covering scope, classification, valuation, export/import of services and exemptions-and supersedes earlier circulars and communications except specified Orders. As a result, service providers must re-assess taxability of their services because previous positions, including non-levy by subcontractors in certain services, may no longer apply and liability may arise at each stage of service provision.