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FICCI for comprehensive service tax act

Our Bureau

NEW DELHI, Aug. 28

FICCI, in a note submitted to the expert group on service tax, has said that a comprehensive Service Tax Act may be enacted to avoid ambiguity on various provisions of service tax with its corresponding set of rules. The definitions of taxable services s hould be simple and explicit so as to include the intended services and exclude the rest. The existing provisions are cumbersome and time-consuming and need better administration.

In India where the Central Government, State Governments and local bodies levy taxes, the imposition of service tax has resulted in considerable cascading of taxes at the production and distribution stages. It is imperative to devise measures to provide relief from service tax levied at various stages.

Time is now ripe to move towards VAT system within a given time frame. What is important is that tax on services should be imposed under a VAT system where goods and services are given the same treatment for input tax credit.

The office of the authority administrating the service tax should be fully computerised for speedy disposal of cases. That apart, concept of Advance Ruling should be introduced to reduce litigation in case of service tax law.

Currently, service tax evaders are penalised and interest realised for delayed payment. This is an economic offence and there is a need to distinguish economic offences with criminal offences. What is particularly important is that the Government should not think in terms of introducing the provisions of prosecuting the assessees in case of not complying with the provisions pertaining to Service Tax Law.

It also said that a provision be inserted in the service tax law itself for giving suo-moto refund instead of assessee applying for the same under Section 11B of the Excise Law. The same would be in consonance with provisions in other economic and fiscal statutes such as Income-Tax Act and Sales-Tax Act.

Further, the scope of the existing definition of Mandap Keeper is very wide, leading to lot of avoidable and unintended hardships. Even chambers of commerce, trade associations and charitable trusts which are carrying out their activities on mutual inter est basis and/or for charitable purposes and whose income/surplus are tax exempt under Income-Tax Act, are technically construed to be falling within the ambit of the definition.

The same would have neither been intended by legislator more warranted. They also said that chambers of commerce and charitable trusts should be specifically excluded from the definition of Mandap Keeper.

FICCI is of the view that the existing rate of five per cent service tax is reasonable. However, in case of services where fixed percentage cannot be imposed, specific amount may be prescribed as in the case of mechanised slaughter house's services.