In one of the circulars issued on May 10, 2007 an important purpose has been achieved. Fortyeight circulars/clarifications/instructions have been deleted by this circular. This is in pursuance of a task force appointed for this purpose. It is too little because there is an innumerable number of circulars/clarifications/instructions, which are now in circulation and many of them deserve partial deletion. It is also too little, because only those circulars which have to be fully deleted have been identified but not those circulars needing partial deletion.
The enormity of the problem can be understood only if we take into account the following five factors:
(a) Enormity of the number of circulars: I have in front of me a book of circulars/clarifications/instructions and notifications published by a standard publishing house which runs into more than 800 pages. The following examples, which do not constitute an exhaustive list, will be revealing. There are 21 circulars for accounting codes, 14 for advertising agencies, 11 for banking & financial services, 9 for business auxiliary services, 6 for cable operators, 18 for caterers and catering, 11 for clearing and forwarding agents, 10 for consulting engineers, 10 for courier agencies, 10 for custom house agents and steamer agents, 120 for exemptions, 9 for foreign exchange and so on. So many circulars make it sure that at no point of time a taxpayer cannot be sure that he is doing the right thing.
(b) There are so many types of circulars namely, instructions, clarifications and circulars. There are no differences between the three types. One really does not understand why there should be three varieties when only one would suffice.
(c) Some general circulars too! It is not enough to see the circulars which are service specific. There are so many general circulars also applicable to the services.
(d) There is a large number of notifications; and,
(e) There is also a large number of exemptions.
All the above situations have made it extremely difficult to form a definite opinion about any service in relation to its applicability and scope. It has become virtually a circular-driven service tax.
Some economists have suggested that there should be a comprehensive service tax with a negative list. It is worthwhile devoting some thoughts to that end. But so long as any such comprehensive service tax is not introduced, the following should be done to make the existing service tax come out of the jungle of confusions and contradictions.
(i) A new Task Force should be appointed to work out, in a time-bound manner, a concrete scheme of limited circulars.
(ii) It should consist some existing officers dealing with the subject, some retired officers and an economist.
(iii) They should review all circulars and redraft them on the following basis:
(i) Distinction between circulars, clarifications and instructions should be abolished and only one set of circulars should be issued.
(ii) There should be one, comprehensive circular for each service. This means it will deal with its scope, valuation, abetment, accounting code, and everything else.
(iii) So there will be as many circulars as there are services.
(iv) These circulars should bear numbers such as Courier Services/1/File No./Date.
(v) Any subsequent amendments should be part of the original circular and the whole circular should be reissued.
These ideas may be circulated by the Board in the website and opinion of the taxpayers and all others taken before launching the new task force.