The Department of Revenue amended the Service Tax Rules 1994 on 3 November 2006 to simplify the procedure for service tax. A system of centralized registration for service taxpayers who provide services from multi-location is now in place. Centralized registrations is granted by the Commissioner or the Chief Commissioner of Central Excise or DG Service Tax, depending on the location of premises where centralized billing or accounting system is maintained or the place from where the taxable service is provided. Thus a large consultancy organization can choose to register its billing section in the main office or the place from where the main service is provided as convenient. The Government is keen to facilitate service tax payment and the service tax registration now is a matter of choice of the assessee and not the department.

The Service Tax Rules were also amended to extend the facility of centralized registration to any person liable to pay service tax. Those who pay service tax for the supplier for example, an importer of services who pays for the service provider abroad can also avail of new central registration facility.

There is no change in the rules for maintaining records by the service providers. The centralization is only for payment. The system of audit also continues as before.

Distilleries to pay service tax: The nuisance of service tax is extending its reach to new areas. The latest is a convoluted interpretation of the excise act to say that liquor distilleries are liable to service tax for the activity of distillation. The product of distillation, that is, the liquor is liable to state excise hence the Centre can charge separately for the distillation service, says North Block. The unique interpretation of services in manufacturing is, as of now, only in the form of a draft circular for public comment but the North Block bureaucracy has full intentions of converting the draft into an official circular.

The same activity is being taxed several times from different view points only to extract money. Simultaneously, the Department is spending crores on advertisements to educate the assessee to pay service tax as a national duty to providing public goods services. The rule of law should prevail for both assesses as well as the Government of the day and hair splitting to earn revenue should not be allowed.

IIMs too must pay up: Another circular on service tax was issued on 1 November to take the IIMs and IITs off the hook for service tax on placement services before 1 May 2006. However, the issue of charging service tax for the current season after May 2006 has been left to the jurisdiction Commissioner of Excise.

The learned officers of CBEC are not clear whether the IIMs are a manpower supply agency or institutions to provide quality management education in which placement services are provided to interested students as a measure of goodwill by the student bodies themselves. The provision to placement is not a part of the contract with the student nor is providing a job to the graduating students an obligation.

There is no limit on the insults to institutes of national importance by the service tax facilities. At this rate, the transfer and posting department of the North Block to be liable to tax for notional value of the services rendered! The IIMs must now maintain detailed records of their phone and internet bills to set off the expenses charged to companies for “supply of students” to guest companies. (The individual consumer who buys a mobile card has no set off on the service tax paid on the land line bills. He is the worst sufferer in the oppressive service tax regime).