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Illegality in Levy of Service Tax and Cesses Under Removal of Difficulty Orders

其他書名	A Retrospect
出版	SSRN, 2013
URL	http://books.google.com.hk/books?id=58LfzwEACAAJ&hl=&source=gbs_api

註釋Service Tax is levied in India in terms of Chapter - V of the Finance Act, 1994. Prior to the enactment of Finance Act, 2012, service tax was levied on the service providers upon rendering of taxable services where the taxable services were specifically defined in Section 65 of the Act and most services had specific nomenclatures such as 'business auxiliary service,' 'technical inspection and certification service,' etc. The entire basis for levy of service tax was, however, revamped by the Finance Act, 2012 whereby service tax is levied on all services other than those enumerated in the negative list or those specifically exempted by the Government. Moving the Finance Bill, 2012 the Finance Minister stated before the Parliament that the 'movement towards the negative list will result in reducing nearly 290 definitions and descriptions in the Act to 54, and the exemptions from the existing 88 to 10, of course merging some of the existing exemptions into a revised notification. In terms of number of pages, the law will be shorter by nearly 40 per cent.' Thus a number of changes were introduced in the Finance Act, 1994 to levy service tax under the new regime with effect from 1st July, 2012. In order to ensure that the transition to the new regime was smooth, the Finance Act, 1994 was inter alia amended vesting the power to the Central Government to make arrangements 'for the purpose of removing the difficulty' in giving effect to the changes made by the Finance Act, 2012. In exercise of these powers the Central Government has issued two orders in June 2012 purporting to remove the difficulties in implementation of the changes. These orders are of critical importance as they relate to the charging provision in terms of which service tax as also 'Education Cess' and 'Secondary & Higher Education Cess' is levied from 1st July, 2012 onwards. This paper examines the scope of powers of the Government in terms of the 'removal of difficulty clauses', as delineated in various judicial pronouncements to test the legality and validity of these orders passed by the Central Government. The issue may have turned academic in the wake of the retrospective amendment introduced by the Finance Act, 2013. Nonetheless it provides the author with the requisite background for testing the hypothesis that these orders were issued in excess of the powers conferred upon the Government and may not have stood scrutiny if challenged before appropriate courts. This paper is divided into eight parts. The first part appraises the existing jurisprudence on the rationale for vesting power on the executive government to issue 'removal of difficulty orders'. The second part enumerates the various types of clauses which are rechristened as 'removal of difficulty orders' and their respective scope while the third part revisits the decisions of the constitutional courts of the country to enlist the limitations on this power of the executive government. The fourth part brings to perspective the relevant provisions of the service tax law in India i.e. the Finance Act, 1994 while the fifth part appraises the purported difficulties and removal of difficulty orders which form the subject-matter of the present analysis as delineated in the introduction earlier. The sixth part evaluates the interplay of various factors to examine the sustainability of the removal of difficulty orders, the seventh part takes note of the recent amendments by the Finance Act, 2013 which undo the anomalies and limitations pointed out in this paper and the eight part is the conclusion of the lessons learnt from the jurisprudential analysis of this specific and unique power of the executive government.