Sales tax Vs Service tax : Apex Court provides vital insights

Hon'ble Supreme Court has given an exhaustive view on the subject. Please refer to the statement that "the same transaction may involve two or more taxable events in its different aspects". But in case of leasing and hire purchase transactions both sales tax and service tax are being levied on the "same component" namely interest. This seems to be totally unjustified. We agree that the "processing charges" component of these transactions,which is not subject to the sales tax, is justifiably subject to the levy of service tax. This seems to be in tune to the Apex court's observation made above.

But it is the double taxation of the "same component - namely interest" in a lease and hire purchase transaction, which is unjustified and should be done away with.

Raman Aggarwal
Co-Chairman
FIDC, Delhi

RamanAggarwal RamanAggarwal 03/01/2007

 

It may seem harsh that the base of two taxes is the same amount. It appears to be a case of double taxation. But really it is not the same. These are two different taxes. The 'measure' of two taxes can be the same.

T R Rustagi

03/01/2007

 

Dear Mr. Rustaogi,
jk here.no doubt there can be sales tax and service tax on the same transaction but the moot question is whether they can be on a same value? We have tried to address in our Part III. in our opinion this is not double taxation but a trespass taxation.

jk

jaikumar seetharaman 03/01/2007