While several issues connected with the introduction of the goods and services tax legislation have been widely commented on, the likely effects of bringing the service sector within the jurisdiction of states has not got the desired attention.
Since its modest inception in 1994, the ambit of service tax has widened, thus contributing substantial revenue. In mid-2012, there was a departure: All services, except those on the negative list came under the tax net; at the same time those with an annual turnover of up to Rs 10 lakh were exempted. The term "service" was also well defined.
Over time, aided by several judicial pronouncements, central excise authorities have acquired the knowledge and experience required to administering this complex tax. Procedures for service providers spread over several states have also been streamlined in the form of centralised registration and filing of returns.
Entrusting this sector overnight to states, which have no previous experience in this regard, is fraught with not only risk to revenue but is also bound to be a constant source of irritation and harassment to service providers. The clamour of states to have full jurisdiction over units with an annual turnover of up to Rs 1.5 crore, over and above concurrent jurisdiction, is absurd and should be rejected outright in the interest of a smooth transition to GST.
S K Choudhury Bengaluru
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