Budget 2006
Idli, Dosa and Chutney are lapped up what happens to the elusive bowl of gruel?
The Budget speech did not reveal anything but behind it were hidden mountains of bad news. The worst affected are the Service Tax assessees. All the might of the department is going to be exhibited before the diminutive assessee. All the draconian measures they wanted to introduce in the Customs and excise side by the infamous Taxation Laws (amendment) Bill 2005 are brought in to Service Tax. Service Tax which was to be a voluntary compliance levy has now acquired demonic might and may as well lead to intolerable corruption, chaos and an ultimate upheaval. In its anxiety to acquire power by such draconian legislation, the government will not only ruin revenue but the very fundamental civilized democratic principles. Bad days are ahead. No tyrant has ever succeeded with tyrannical laws against the common small man.
Let us look at some of the provisions.
The controversial explanation to Section 65 (105) requiring Service Tax to be paid on services received abroad has been deleted. This had been stayed by the Madras High Court. If this explanation is withdrawn, it comes with all the might at the government's command in the form of Section 66A - and certainly more confusing. If one confusion is removed, it will create ten
Service Tax is enhanced to 12%. A day will come when the government will plan to tax 100% and then there will be nobody to be taxed. As such 10% is a high tax and the 12% burden will have to be shared by us all. If your telephone bill is Rs. 1000/- a month, the tax will be Rs. 120/-. Quite a high price indeed.
Valuation of Service Tax made more complicated and rules to be issued. All the difficulties in Central Excise are going to be imported.
Provisional attachment of property. Service Tax assessees Beware - the Commissioner is coming. Now an officer can attach property after issuing a Show Cause Notice. It is common knowledge that 80% of the Show Cause Notices are frivolous. Now every such silly Show Cause Notice can be followed by an attachment. This will only increase corruption and more work for CBI without really any increase in Revenue. When similar provisions were sought to be introduced in the excise and Customs laws, Taxindiaonline had appeared before the Hon'ble Parliamentary Committee on Finance and strongly argued against such draconian laws. The Government was wise enough to drop those proposals in excise and customs but surprisingly brought them in to Service Tax. Absolute power corrupts absolutely.
Draconian penalty: The penalty for non payment of Service Tax has been increased from Rs. 100/ per day to a minimum of Rs. Two Hundred per day or 2% per month. Shylock would appear a saint before this government.
Don't keep money in the bank- Service Tax officer may walk off with it - dangerous and unethical recovery proceedings. The Act has been amended as if the Service Tax law is the only law of the land. A post office, banker or insurer can be now issued a notice by the Service Tax officer to recover dues and the post office, bank insurer etc, are required to work for Central Excise and pay up the money. If they don't pay, they can be considered as defaulting assessees and their property seized. Very soon you will find Central Excise officers going round seizing banks and post offices. Remember this is a department where a Commissioner had imposed a penalty of Rs. 50 Crores on a PSU employee. Had this law been available then, the commissioner would have collected all the bank balances and insurance amounts of this employee! It is really unfortunate that such barbaric laws are made under the leadership of Dr. Man Mohan Singh and Mr. PC.