Goods or service – VAT a question!
Recently more than 25,000 cabs in Hyderabad went off the roads in protest against the demand of VAT/ Sales Tax from cab owners from 2003. The Cab owners were worried that though they were already paying Service Tax, now they are stuck with VAT demands. The general opinion is, if Service Tax is payable, there would be no VAT/Sales Tax. DDT contacted several VAT officials including an officer who is on deputation from the CBEC, but they were all evasive as either they did not want to commit themselves or they were blissfully ignorant.
By sheer luck, we got through to T. Vivek , Additional Director in the Vigilance & Enforcement Department of the Government of Andhra Pradesh, who has an explanation, who says, “It calls for greater prudence and ingenuity in the days to come to see where service ends and goods begin or vice versa.” In the “Umbrella Morals”, Gardiner says, “your freedom ends where my nose begins”. In the confusion between Service Tax and VAT, it is very difficult to find where the freedom ends and the nose begins. As Vivek says, “ In the context of modern technology innovations, the line that divided goods and services hitherto seems no longer valid as both goods and services are increasingly converging to coalesce into one as happened in the case of SIM Cards and Software”