By Monish Bhalla

ONE may wonder how with passing moments in time the blue-eyed boy of the FM, the Information Technology sector, has come on the receiving end. With more and more greed to cover wider areas under the Service Tax net , the FM has quietly withdrawn a number of notifications which a common man fails to understand and more rightly so as the same were not a part of his Budget Speech.

Notification 2/ 2006 Service Tax dated 1.03.2006 simply says that in the public interest the following notifications are rescinded. But is it so if the truth be told in the Public Interest?

The Information Technology Service means any service in relation to designing, developing or maintaining of computer software or computerized data processing or system networking or any other service primarily in relation to Operation of Computer systems. Undoubtedly the definition of words “data” ,”Information” Electronic Form” and Computer network” were borrowed from The Information Technology Act 2000.

On rescinding Exemption notification 8/2003 Service Tax dated 20.6.2003 the service provided by the Call centre as well as the Medical transcription centers is covered under the Service tax net.

To understand the implication of the same, the definitions of the Call centers and Medical transcription centers play an imperative role.

Call centre means a commercial concern which provides assistance, help or information or contacts current or prospective customers for sales, telemarketing, payments through telephone, lease lines, satellite links, mail fax, web chat and using information systems for monitoring and recording information on behalf of another person.

Medical transcription centre means a commercial concern which transcribes medical history, treatment, medical observations and the like.

Moreover, the Internet Telephony services presently classifiable under Online information and Data bases access and /or retrieval Service is proposed to be in a separate service head christened “Internet Telephone Service” ( sub clause zzzu of section 65(105) ).

“Computerized Data Processing” earlier enjoying the expemtions are now covered under the Business Auxiliary Service. Now, in the present era do we have non-computerized data processing ?

With the onslaught of the Apex court verdict in the Tata Consultancy Service v/s Andhra Pardesh ( civil appeal no 2582 of 1998) the Software became goods and as per CBEC circular NO. 81/02/2005- ST, DT. 07/10/2005 any service in relation to maintenance or repair or servicing of software is leviable to service tax under section 65(105)(zzg) read with section 65 (64) of the Finance Act, 1994.

Eventually With Computers coming under the Central Excise regime and 12 % excise duty being imposed with reference to Notification 6/2006 CE dated 1.3.2006 it seems that there is an end of an Era of the blue-eyed sector.