BCC suggests clarity in Service Tax

Kolkata, June 30 (UNI) Bharat Chamber of Commerce (BCC) has resented ''ambiguity'' in ''taxable services'' and stressed on clarity to help the tax payers understand the details.

''It should be clear whether service tax is payable on any item or not and if it is payable then we must know who is required to pay the same. The Act should be very specific as there is confusion at present,'' BCC President Santosh Rungta said.

Service tax since its inception in 1994, which covered three items- General Insurance, Stock Broking and Telephone services- now covers nearly 100 items, bringing more services into the tax net.

Citing an example, he said, service tax is charged by contractors hired by developers. The developers/estate builders pay the service tax to such contractors. Confusion has now been created because the department is asking the developers to pay service taxes again in respect of sale of spaces to the prospective purchasers.

Clarifying it, he said, the developers construct complexes either for letting it out or for selling the constructed spaces by executing a deed of conveyance in favour of the prospective purchaser.

The transfer of immovable property takes place under the ''Transfer of Property Act'' and the purchaser has to pay stamp duty and registration charges on such a transfer. The developer has not provided any service to the purchaser of the unit. Nor has the unit been constructed by the developer as a contractor of the purchaser.

In fact the developer may not even know the identity of the purchaser. As such there should not be any question of payment of service taxes by the developer, Mr Rungta pointed out in an interactive session on Service Tax yesterday.

He said many court cases were filed which made it difficult for the developers to work.

He, however, welcomed the government's move to set up a committee to review circulars on Service Tax and suggested that the commitee should hold discussions with the chambers of commerce as well as specilised industry associations on regional basis.

BCC's Trade Reforms&Indirect Taxes Standing Commitee Chairman S N Kasera said the present system of using the Finance Act, 1994 was quite inconvenient and demanded recommendations of two committees- Dr Govind Rao Comittee and the Task Force headed by Dr Kelkar while implementing issues relating to Service Tax.

UNI PC BA CS DS1135