Introduction
The basic premise of any Welfare State is to fulfil the
increasing developmental needs of the country and its citizens by
way of public expenditure. Despite being a developing country,
India still is striving to fulfil the prime responsibility and
obligations of a welfare State within its limited resources. It is
an irrefutable fact that in India, services constitute a larger
proportion of the consumption of the rich rather than of the poor
as the demand for services is income elastic. Depending upon the
socio-economic conditions and compulsions, each country needs to
devise a taxation mechanism that taxes its service sector, as it
occupies the centre stage in almost all economies. Although there
are countries that chose to tax all the services with very few and
limited exemptions, India followed the approach of selective
taxation.
