SERVICE TAX IS NOW A HISTORY

[Dr. Sanjiv Agarwal]

Who would have ever thought of that we will have a levy called 'Service Tax' in India which will continue for as long as 23 long years without even a proper tax law of its own !! Yes. It happened. Circa 1994, yes, it was on July 1, 1994 when the then Union Finance Minister, Dr. Manmohan Singh introduced Service Tax in India with bare three services in Service Tax basket, viz, stock broking, telephone (not telecom) and general insurance as an experiment @ 5 percent. It fetched ₹ 425 crore in first year and we followed selective approach to reach a level of 120 old services by 2012. It was from July 1, 2012 that India moved to negative list approach wherein all services were taxed barring the negative list and exemptions. The levy of Service Tax, was administered by Finance Act, 1994 and it was amended every year in last 23 years. For fiscal 2017-18, the Budget estimates are for ₹ 2,75,000 crore making Service Tax an important central indirect tax.

Lot of ups and downs were seen by Service Tax in every sphere – growth of tax net, growth of revenue, assessee base, tax revenue, number of assessees and tax Commissionerates and obviously disputes and litigation. Today in indirect taxes, Service Tax is at top so far as litigation is concerned. The Cestat benches too grew from just four to over a dozen. There where disputes ranging from micro issues to Constitutional validity so much so that Government could never levy Service Tax on chit funds and had to come out with a concept of declared services (a deeming fiction) on the statute book.

In the first year of Service Tax itself, 1994, I wrote my book on Service Tax, that time for just ₹ 150 with just 150 odd pages. That was the first book of Service Tax in India, forwarded by none other than Dr. Raja J. Chelleah, author of GST are VAT. I never had the formal education of indirect taxation as in those days (1980-83), it was not a subject in CA syllabus. Nevertheless, I ventured in an unexplored territory to find myself amongst handful of professionals (mainly advocates) dealing in indirect taxes, mainly central excise. Time passed by and I continued my journey on the path of Service Tax which larger became my domain practice area (something different from corporate laws and corporate governance).

My writings on the subject allowed me to read and share knowledge. I would have written over 10,000 articles on Service Tax over these years besides several books on Service Tax. The flagship book, i.e. Commentary on Service Tax had seen over 50 editions and now runs into over 3000 pages in two volumes. (priced over ₹ 4000).

Service Tax law, which resulted in too much of litigation, also provoked me to undertake a project of Service Tax Case Digest wherein I digested over 8000 judicial pronouncements of various courts and Tribunals. This proved to be hardly for me as well as thousands of other professionals dealing in Service Tax litigation practice. Thus is the only book of its kind available in the country.

It is hard to believe that today, Service Tax is no longer there. Good for future, of course, economy and all stakeholders but it is difficult to detach yourself with one you have loved and lived with.

I am sure, GST in going to be a better, forward looking and objective tax which will change the way businesses are done and conducted, taxes are levied and collected and way services ought to be rendered by the professionals. My suggestion to fellow professional which are large in numbers today, would only be to read, understand and interpret the law keeping legislative intention in mind before implementing the same on any client including one self.

Bye Bye Service Tax : Welcome GST, we embrace you.