Service Tax from 1.7.2012 - Government hastily issues Order to Rectify Himalayan Blunder
DDT Report on Friday (DDT 1880 15.06.2012) that Service Tax cannot be levied with effect from 01.07.2012 sent shock waves so intense that the Government came out with quick fire fighting and issued an Order by Friday evening to rectify the massive blunder.
A little recap: Up to 30.06.2012, the charging Section is Section 66 of the Finance Act, 1994 according to which service tax is levied at the rate of 12% on all taxable services. With effect from 01.07.0212, Section 66 will no longer be in force and a new charging section 66B will take its place.
Section 68 stipulates that service tax is payable by the service providers at the rate specified under Section 66 in such manner as may be prescribed. So, with effect from 01.07.2012, the assessees are required to pay service tax at the rate specified under Section 66, but there would be no Section 66 in the Statute. AND SO, THEY NEED NOT PAY ANY TAX.
Now, by order dated 15.06.2012, the Government has substituted in Section 68, the figures “66”, with the figures and letter “66B”.
But can they do it?
Section 95(1)(I) of the Finance Act, 1994 (Service Tax), reads as,
If any difficulty arises in giving effect to section 143 of the Finance Act, 2012, in so far as it relates to insertion of sections 65B, 66B, 66C, 66D, 66E and section 66F in Chapter V of the Finance Act, 1994, the Central Government may, by order published in the Official Gazette, which is not inconsistent with the provisions of this Chapter, make such provisions, as may be necessary or expedient for the purpose of removing the difficulty from such date, which shall include the power to give retrospective effect from a date not earlier than the date of coming into force of the Finance Act, 2012
Now, the Government order says, "difficulties have arisen in giving effect to the provisions of section 143 of the Finance Act, 2012 (23 of 2012), in so far as it relates to insertion of section 66B in Chapter V of the Finance Act, 1994"
What difficulties? It is an impossibility!.
If there is a difficulty, the Government can remove it, but can they amend an Act passed by Parliament? If the Parliament wanted the tax to be levied at a rate prescribed in one section of the Act, can a Babu in the North Block amend it to read as another Section in the name of removing a difficulty? If that could be so, they may as well make Parliament to pass a one line Act that there shall be levied a Service Tax at such rates and under such conditions at the whims and fancies of the Under Secretary working for the time being in the TRU Section of the CBEC in the Revenue Department of the Finance Ministry.
All Laws can be simplified and the Babus can legitimately usurp the powers and jurisdiction of the Parliament of India, for which they in any case have only scant respect. They may also add a proviso that the Supreme Court cannot poke its nose into the scholarly legislation brought out by the babus.
After all, if you want to administer taxes the way you want to, it is absolutely essential to keep the Parliament and the Supreme Court out of the way.
Dept. of Revenue Order No. 1/2012 in F. No. 334/1/2012 -TRU; Dated June 15 2012