NEWS SECTION

Draft of Negative List

The Finance Ministry has issued a list for those services, which may be kept outside the service tax net implying that all other services will be taxed.

The Finance ministry has invited comments on this new approach and the list of such services, by the end of next month. According to the government data, India's services sector is worth Rs. 50 lakh crore.

Now, finance minister Pranab Mukherjee has initiated a new debate on the way, India treats service tax. In an approach paper from the ministry, the government has listed 27 services, which it wants to keep outside the service tax net.

Health, public transport, agriculture and the real estate sector, and some financial sector services will be kept outside the ambit of service tax.

The Centre has also sought powers to intervene in a case, if there is overlapping, whether a service is to be taxed or not. The concept paper also seeks to define goods, money and immovable property, clarifying what can be included and what can be left out.

Finance ministry officials have clarified this is not a policy document by them instead it should be seen as more of an effort to help in the transition to the GST as and how it happens.

Ministry officials also added that services which are currently exempt, may not fall in the service tax list even if the negative list approach is accepted.

According to estimates of the Finance ministry, around 25 per cent of the service sector in India would go untaxed, if this negative list of services is accepted. That would mean revenues worth over Rs. 12 lakh crore, which if taxed at the current rate of 10 per cent, would result in a large amount of revenue loss for the government.
Read more at: http://profit.ndtv.com/news/show/service-tax-finmin-releases-draft-of-negative-list-175413?cp

Current Rate of Service Tax 10.3% no change this year

Punjab and Haryana High Cour Upheld constitutional validity of the levy of service tax on Renting of Immovable  Property. 
High Court of Punjab and Haryana Chandigarh, put rest to the controversial issue of levy of service tax on Renting of Immovable  Property.  On 22.11.2010, While deciding the civil writ petition No.11597 of 2010 (O&M) in the case of M/s Shubh Timb Steels Limited Vs. Union of India and another, the Divisional bench comprising of Hon’ble Mr. Justice Adarsh Kuamr Goel and Mr. Justice Ajay Kumar Mittal up held the constitutional validity of the levy. Court observed that Entry 49 of List II, relates to tax on land and building and not to any activity relating thereto. Income tax on income from property, wealth tax on capital value of assets including land and building and gift tax on gift of land and building have been upheld. It cannot be held that renting to property did not involve any service as service could only be in relation to property and not by renting of property. Renting of property for commercial purposes is certainly a service and has value for the service receiver. Moreover, the aspect of service element in renting transaction is certainly an independent aspect of service element in renting transaction is certainly an independent aspect covered under Entry 92C read with Entry 97 of List I. In any case, subject matter of impugned levy being outside the scope of entry 49 of List II, power of Union Legislature is undoubted. Question whether levy will be harsh being, in addition to income tax and property tax is not a matter for this Court once there is legislative competence for the levy. Even if it is held that transaction of transfer of right on immovable property did not involve value addition, the provision cannot be held to be void in absence of encroachment on List II.
On retrospective amendment of the section 65 court further observed that it is well settled that competent legislature can always clarify or validate a law retrospectively. It cannot be held to be harsh or arbitrary. Object of validating law is to rectify the defect in phraseology or lacuna and to effectuate and to carry out the object for which earlier law was enacted.