By TIOL News Service

HYDERABAD, Mar 27, 2006 : SATURDAY, 25th March 26, 2006. Hotel Fortune Katriya, Hyderabad. 9.30 a.m. The valet-parking chauffeurs and the uniformed gatekeepers were busy in their respective activities. The reception table is frozen with a smile and ushering the pouring guests to the “The Vijayanagara II”. Enter “The Vijayanagara II”, an aesthetically decorated hall with teak wood wall panels. The dais is elegant with a cozy seating arrangement. There is a huge screen for the LCD projector smiling at the audience. The public address system and the lighting is fit to host a perfect gathering. Around 10.30 a.m, the hall was full with near to hundred audiences and the air was filled with an intellectual aura. Yes. The stage was set for a heart throbbing and a mind absorbing program ¶Seminar on Service Tax and Central Excise¶ by Tax Law Research Group in association with TIOL.

Mr.G V Suresh of the Tax Law Research Group, the co-host of this mega event, invited Shri. K. Vijay Kumar, Editor–in-chief of the Taxindiaonline.com (TIOL), to conduct the programme and he took the podium to be the Tax Jockey (TJ) for the great event. He welcomed the gathering and invited the “STAR OF THE SHOW – Mr. Gautam Battacharya, Commissioner, Service Tax and the man behind the most important and levy of the future – Service Tax, on to the stage. Amidst thundering applause, the tall and handsome Mr. Gautam assumed the stage with warm smile on his face. After him, the dais was dressed with Shri. Prabhakar Shastri, Convenor of TLRG, Shri. Jaikumar, Advocate, Shri. Shailendra Kumar, Managing Editor, TIOL and Shri. Sunil Kumar Achuthan. Shri Vijay gave a brief and a cute introduction to the audience about the dignitaries on the dais. First he invited Shri. Shastry to give a lecture on the Excise changes in the Budget 06. Shri. Shastry gave a comprehensive account of the changes in the Budget on Excise front, including the change in rate of duty and the SSI scheme. He made an appeal to the Government to consider the withdrawal of exemption without aid of power for Sugars. After his brief but comprehensive lecture, Shri. Vijay invited the STAR of the day Shri. Gautam Battacharya. Shri. Vijay described Shri. Gautam as Sir Donald Bradman of Service Tax and invited him to play an Ashes’ innings.

The warm and gentle Commissioner from the North Block took over the microphone and thereafter it was a spell of intellectual rain wherein the entire gathering was flooded with a session of extraordinary intellectual feast. Starting his innings with the history of Service Tax, its birth, its growth and intentions, Shri. Gautam enlightened the gathering with his most eloquent and electric speech. Shri. Gautam also spoke about the present bottlenecks, deficiencies and the issues concerning the Service Tax. Excerpts from his revered speech:

Services means a “non material equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods.

The decision to tax the Services is the most brilliant and progressive decision on the indirect taxation and as on date, the Revenue from ST is around Rs. 25000 crores.

++ There are pure Services like “teaching” and pure goods like “cars”. There are also mixtures like “Shirts stitched to one’s size”, which is a combination of both goods (fabric) and service (tailoring). In such cases, having a dual levy on goods and services is cumbersome. Thus we shall move towards a single point levy on both goods and services (GST), which is the most successful global phenomenon.

++ Initially Service tax was only levied on three Services and till 2000-01, it was like a neglected sister. Now the Government is seriously thinking of a full fledged and self contained Act and also a comprehensive Tariff for Service Tax.

++ The major issues of concern on the ST front are, progress towards a mean rate, proper valuation mechanism, regulation of cross border movement of services (Export and Import of services), increasing the tax base and improving tax compliance.

After a spectacular cruise along the evolution of the most complicated levy on this planet, Shri. Gautam also impressed on the importance of the role of the tax payers, in law making. He lauded generously the committed and impartial contributions of TIOL and hailed the role of TIOL as the ambassadors of the assessee community. Then he invited the audience to ask their questions for clarification.

On the invitation, we all witnessed an instant release of water from the Nagarjuana Sagar dam. The delegates were requested to come on to the stage and introduce them and ask their questions. Learned people from the cross section of the industry, Consultants, professionals and advocates, queued up in line with a variety of very valid questions. Sir Bradman, calmly and authoritatively played all the googlies, bouncers and Yorkers with sheer elegance and gave exhaustive and effective replies to all the queries with detailed explanations. The excerpts from the interactive sessions are;

++ The DGST letter of restricting the 75% abatement on GTA has been withdrawn. All are entitled to the abatements.

++ Cenvat credit on cellular phones shall be allowed if it otherwise satisfies the “input service” definition. The earlier Circular disallowing such credit is given under different situation and after 10/9/2004, the situation is different.

++ Cenvat credit scheme is a set off scheme and not a subsidy scheme. As the value of the outward freight does not form part of the assessable value for payment of excise duty, it appears the service tax on GTA on outward transportation shall not be admissible.

++ Rules exonerating innocent and genuine service recipients and protection of their ST credit shall be drafted, even if the service provider is found guilty.

++ No credit can be allowed if the final products are exempted even if the manufacturer pays a lot of tax as service provider under GTA.

++ Doubts, if any shall be addressed to him directly or through TIOL and he shall clarify them at the earliest.

After hours of tireless innings, the gathering broke for a lunch break. Thereafter, the audience assembled again with fresh steam. Shri. Vijay took a brief spell, whereby, he navigated the audience through the features and benefits of the TIOL’s XCuSe and Service tax CD’s. He explained about the most user friendly software which has all the Indirect laws, such as, the Acts and Tariffs of Excise & Customs, Foreign Trade Policy, Finance Act 1994, (Service Tax), Drawback & DEPB schedules, etc. all under your thumb nails. He also detailed about the various modes of Search facilities, which make the software one among its kind at a down to earth price of Rs. 2200/-. The participants were given a grand discount on their purchases on that day. After this commercial break, Shri. Vijay invited Shri. Jaikumar, Advocate on to the podium. Sri Jai Kumar in a strong anguished voice expressed concern at the draconian recovery measures proposed to be brought in the Service Tax law. He said the department can attach your property immediately after issuing a Show Cause Notice, they can attach your bank and post office deposits, and if the banks don’t pay they will be considered as defaulters. They can attach your dues from others; they can even attach property under your control. “Next time you lend your car to somebody, be sure that he does not have Service Tax dues”, he cautioned the audience. He expressed apprehension that Service Tax valuation is going to cause prolonged litigation. He summed up his speech saying that he came as a speaker but was going out like a student.

Next came the whirlwind speaker Shri. Sunil Kumar Achchutan. In his quote filled speech, he explained the benefits of the Settlement Commission and also the salient features of it. He summed up with the quote of Justice Marshall requesting all of us to pay the taxes and be a part of the civilization.

Then the second innings with the crowd favourite Shri. Gautam started. He along with Shri. Jaikumar, answered a spate of high voltage questions from the audience, in respect of the self adjustment of the excess service tax paid, applicability of service tax on the sub contractors, classification of erection and commissioning of electricity towers, service tax on Governmental organizations, difference between cargo handling and GTA, etc. The questions kept on flowing like the perennial Nile and Shri. Gautam was also replying them with great energy and clarity. Sensing that the time is running out, Shri. Vijay announced curtains to the show. Shri. Shailendra Kumar profoundly appreciated and thanked the gathering for being a wonderful audience and promised to have many more similar workshops in the future.

The gathering disbursed with great satisfaction and enormous faith on the system. It is relevant to mention a dialogue between two participants,” When we will get a Commissioner like him?” which would tell tales about the workshop!