Greetings from Team SA!

A concept paper on negative list of services has recently been hosted on the website of Central Board of Excise and Customs for views and public debate. Although it is a fact that not so many has read and debated on the same so far, the concept paper is worth having a discussion for the paradigm shift it is going to bring to mode of taxing services. During client meetings on service tax issues, the comment we more often hear from those vexed with classification of services is ‘ let them (the government) give a list of what is not taxable and not confuse us with lot of services as in Finance Act, 1994’. Now what the negative list is actually going to do?? As far as we understand, it is not as simple as that. On the face of it there is a dilemma right from the appropriate time for launching the negative list (which means sweeping away the present positive list). If this is going to be done before GST, we are to face a new legislation for taxing services which revolves around a negative list. The situation is as good or as bad as how we were made to face MODVAT, then CENVAT, then integration of service and goods CENVAT and finally VAT. Before the creases of negative list is ironed out, we again will have to prepare to welcome the long conceived ‘GST’ which merges both commodity tax and service tax. Our tax administration is not equipped with so much of potential to effective implement a legislation for a year and then shift to a new one.

Going further deep in to the Concept paper, the negative list is important primarily on the point that it proposes to do away with the positive list of services that is presently being followed. There is a new definition for service (or a deceiving definition) which says “ service means anything which does not constitute supply of goods, money or immovable property”....

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