If you find your friendly neighbourhood chartered accountant (CA) unhappy, the reason may be a recent development in service tax. According to an `exemption notification' issued by the Government, CAs (and other practising professionals such as cost accountants and company secretaries) have been told in so many words that they would be on par with the legal professionals, but the truth is not something to cheer the bean-counters and their ilk.

"Exemption notification has been issued by the Government exempting the services of CAs to a client in any proceeding initiated under any law being in force before any statutory authority," informs a cheerful e-mail dated July 14, from Mr T.N. Manoharan, President of the Institute of Chartered Accountants of India (ICAI).

He notes that such services by CAs had come under the tax net with effect from March 1, 2006, and that the ICAI had represented to the Finance Minister (FM) that the levy resulted in discrimination. Reason, similar services provided by legal and tax practitioners were not liable to service tax.

"Besides, it was also pointed out that the cost of services to the various business enterprises including small and medium entities increased by 12.24 per cent on engaging the services of CAs," narrates Mr Manoharan.

The Institute appears to be disproportionately smug. The prez's mail mentions that the FM `appreciated the submissions made' and `directed the issuance of notification granting exemption in respect of representation services before any statutory authority rendered by CAs w.e.f. July 13.'

The sub-text, though, is that CAs will be liable to pay service tax in respect of services rendered on all other services such as auditing, certification work, consultancy services, return preparation work and so on.

"ICAI President, T.N. Manoharan, thanked the Government for giving this relief," reads the Institute's mail, but rift is rife among the ranks of CAs. For instance, Mahesh Kapasi, a CA from New Delhi, calls the move an `eyewash'. He writes that still the services provided by lawyers for tax-return preparation and filing of the same are exempt.

"Service tax is discriminatory. Between lawyers and CAs, cost accountants and company secretaries, for a single and similar service, one class is exempted from service tax and not the others. This is unconstitutional and I am sure courts of law shall strike it down as illegal and discriminatory," he adds.

Another mail, from Dr Sanjiv Agarwal, a Jaipur-based CA, wonders if the so-called relief to CAs' services is a myth or reality. "Considering that the total number of CAs is over 1.2 lakh, the relief does not seem to be beneficial, as hardly 5 per cent of CAs appear at the representation stage in various tribunals," he points out. "Therefore, the Department may not lose much as tax through this exemption." However, Dr Agarwal is happy that the Government has recognised that there was discrimination between the legal professionals and CAs.

In the ultimate analysis, the paltry relief that the ICAI has achieved for its members after many rounds of parleys with the bureaucracy may be no different from going for the elephant and ending up with the tail. A case of big bang that only wraps with much whining and whimper.

D. Murali