Old Accounting codes for Service Tax - Return of Dragon? - A Netizen's Grievances
YESTERDAY'S DDT carried the news of Service Tax Accounting Codes being revived. We received this message from an angry assessee.
I heaved a sigh of relief when a single accounting code was specified on 6th July 2012 for all services (Circular No. 161/2012-S.T dated 06.07.2012). I thought finally, the words of JS(TRU)'s letter dated 16th March 2012 “No more will the most often-asked question “which taxable service is being provided?” be relevant; no more will an exporter be asked whether an input service has been used in export to claim a Cenvat refund; and no more will a host of questions confront a tax-payer filing his new one page return” have become a reality, though partially.
My happiness is SHORT LIVED! The old Accounting codes for service tax are back. Now I am back to square one and need to identify my service among the 119 service tax codes given for payment. Reason for such accounting codes is more surprising. It is said that the same is for STATISTICAL purpose and based on the suggestions from field formations! The report hungry IRS(Indian Reporting Service) was unable to do statistical analysis of revenue from different services, so they brought back those a to zzzzw services again.
But, in the process, has anyone spared a thought to understand the inconvenience it causes to the tax payers who are just now getting used to the new system? Why should the assessee take the trouble of identifying his service again from the 119 codes just for some statistical purpose? Why should they take the trouble of amending their registrations again? What happened to this Grand objective of introduction of Negative list, which boasts “The new system is a marked shift by way of comprehensive taxation of the entire service sector without getting into complex issues of classification of services”
The JSTRU recognizes the classification of service is a complex issue and now the Director TRU in his letter dated 20th November 2012 asks his field formations to extend necessary guidance to the tax payers regarding the selection of appropriate description of taxable service and facilitate the payment of service tax/cess due under the appropriate accounting code. What a joke!
Going back to the old accounting codes is a very bad step. Now, for paying Service Tax, one has to classify the service. The Director TRU's letter dated 20th November 2012 explains that “Descriptions of taxable services given in the annexure are solely for the purpose of statistical analysis”. That means it is not a statutory requirement. What will happen if someone, to avoid this complex issue of classifying the service, pays Service Tax under item No 120? Issue SCNs? How to educate field that this is not a statutory requirement? How do you enforce an instruction, which is only for statistical purpose and has no statutory requirement?
Partial reverse charge is already creating confusion due to classification issues. Even for the great statistical purpose, how they are going to apportion the service tax paid under code against Sl. No. 120 for the rest of the services, which will also contribute significant revenue? This is undoubtedly a bad and short-sighted bureaucratic decision. They are not going to achieve anything with this statistical data. Though they say that this is only for statistical purpose, in future Judicial for a will not hesitate to classify the service based on payment code adopted by assessee, by holding "the assessee has been paying Service Tax under this particular code and the department has never raised any objection"
Last, but not least, there are a few changes in the Negative list which have not been taken into account or conveniently forgotten for “statistical purpose”. Maintenance or repair service is now taxable under “ Works Contract service” with effect from 01.07.2012. Now, which code should the tax payer use? Old code for repair (zzg) or old code for works contract - zzzza or use code for Sl No 120 (Other Taxable services)? Which one will satisfy our Statistician? Now for construction services, the abatement of 67% is history. Should they pay tax under (zzq) or (zzzza) or Sl No 120? Under negative list, there is a concept called “Bundled Services”. Now, should a tax payer pay service tax under respective heads for bundled services also to help the Statistician to study the revenue trends of different services or should he pay under a single head?
Do the Babus ever think about the agony their thoughtless actions can cause?