Dr. Sanjiv Agarwal

India has migrated to new regime of Service Tax w.e.f. July 1, 2012 where in all services, except negative list of services and exempted services are liable to suffer Service Tax @ 12.36 percent. While the government expects over 125 lakh crore rupees from Service Tax in current fiscal, it appears that the task may be achieved easily but at the cost of rising disputes and confusion.

In the garb of simplification and trimming of the statutory provisions, the Act has become more complicated and too much dependent upon rules and subordinate notifications. While interpretation of law itself will pose lot of challenges to all stake holders including the law implementing officers, it will give rise to disputes, litigation and consequential delayed or no recoveries.

It is indeed laudable that CBEC has this time issued an education guide for assessees as well as officers to understand the changes in Service Tax law and procedures. This is a welcome move but it comes with a rider. On are hand, government says that ‘it is necessary that these changes are well understood by the tax payers as well as our staff’. To this end, CBEC has issued an elaborate educational guide. It has also specified, that any Board Circular that is contrary to the revised law will stand automatically superseded. This will create problems for assessee to ascertain which ones prevail and which one stand superseded. CBEC ought to bring out a comprehensive list of live Circulars.

It is shocking to see that while with this educational guide, CBEC claims to have elaborately and comprehensively explained the taxation issues, it at the same time disowns any responsibility for the same. It states that it is merely based on broad understanding of a team of officers. It is neither a Circular nor a manual of instructions. It does not command any legal backing to be binding. In such a situation, expecting compliance with the law in letter and spirit is itself on a shaky foundation. Even the tax liability can be disputed by the officers. It also leaves room for all types of disputes. If government can not take a stand on issues, where should the assesses look at!!

There are many loose ends in the present taxation and it is expected that CBEC should come out with a legally binding Circular with all sorts of clarifications duly owning the same. It also needs to instruct its officers not to indulge in invoking harsh penal provisions in the first year of the new law.

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  1. jay says:

    even the deptt is not clear, but they expect the assessees to be absolutely clear about all povisions, conditions & concesions and not make even the smallest default.
    obviously, the guide is prepared by the cream of people in the deptt, by very efficient, proficient, very senior level, well experienced, knowledgable team. but still they are shaky and do not want to assume responsibilty for their own deptt document.
    this shows the attitude of the department and poor sorry state of the common man in the hands of the ever / all powerful deptt kings.

  2. jay says:

    while the deptt themselves are not
    clear what they expect from the assessees, they expect the assessee, to be absolutely clear with all provisions, conditions, and concessions and not make even the smallest of default.
    obviuosly the guuide is compiled by a cream of people in the deppt., by competent, efficient, proficient, senior level, well expereinced group.
    if such cream cannot assume responsibluty for a their own deptt.. document, how can an assessee be penalised for non understanding a law which is comliacted even to the cream in the deppt.
    this speaks of the attitude of the deptt. and the sorry state of the common man in hands of the ever powerful deptt kings.

  3. S.MANOHARAN says:

    Why should we pay 12.36%. why you are allowing exemption and negative .You fix uniform tax rate for all. Do not make the public fool. Try to reduce the departmen expenses.

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October 2020