By Monish Bhall, Consultant
PANDORA the first mortal woman as per the Greek Mythology, was created by Zeus and sent to earth with a jar or box of evils in revenge for Prometheus' having brought the gift of fire back to the world. Pandora let out all the evils from the jar to infect the earth; hope alone remained to assuage the lot of humankind.
Budget 2006-2007 has not only opened the Pandora Box for unending never-resolving interpretations , extrapolations ,for widening the scope and new avenues for the Service Taxes but more so for the aficionado of English language . One wonders how is that a “professional photographer” is not a “person” . But the law framers sitting in the FMO with a battery of stalwarts in the TRU do not find any thing wrong with this . After the substitution of term “Commercial Concern” in relation to taxable services with “ person” so as to expand the scope of the taxable services ,section 65 (79) reads as follows
(79) "photography studio or agency" means any professional photographer or a person (substituted for commercial concern) engaged in the business of rendering service relating to photography.
Things could have been much simple and straight had the said section be amended stating
(79) "photography studio or agency" means any person engaged in the business of rendering service relating to photography.
With as many as 17 service providers being touched by the said insertion its imperative to examine the magnitude of the after shock which few may feel at the moment , but with time the pain and the suffering of the common man will augment rather than the contrary.
The Persons engaged in the following activities are directly affected by this insertion and substitution
1. Advertising agency
2. banking and other financial services
3. courier agency
4. Credit rating agency
5. Dry cleaner
6. Goods transport agency
7. Market research agency
8. Photography studio or agency
9. Programme producer
10. Security agency
11. Sound recording studio or agency
Understanding the meaning of ‘commercial concern’ is now a primary concern as the term ‘commercial concern’ denotes either firm or a business house or a business entity or an organization, primarily engaged in commercial activities . The activities like for a consideration and having profit motive. i.e either it be sale or purchase or providing services for a consideration.
Now this means that a non commercial concern like a charitable institution cannot fall under the category of a ‘commercial concern’, mainly because it does not have profit motive.
For instant section 65 (94) now read as
“security agency' means any person engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation detection or verification, of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel”
In the case of Kerala State Ex-Service League v. CCE the appellant challenged the levy of service tax on the ground that they were only a service organization and not making any profit as business concern. As per the observations of CESTAT that the authorities were required to see as to whether the appellants were making profits as a business concern. In case if the appellants were able to establish that they were not a commercial concern making any profits in terms of the definition of the term ‘security agency’, then they could not be brought within the ambit of the definition of ‘security agency’.
The Section 65 after due amendments will reads as follows
(3) "advertising agency" means any PERSON engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant;
12) 'banking and other financial services' means-
(a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or Person namely:-
(33) "courier agency" means a Person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles;
(34) "credit rating agency" means any PERSON engaged in the business of credit rating of any debt obligation or of any project or programme requiring finance, whether in the form of debt or otherwise, and includes credit rating of any financial obligation, instrument or security, which has the purpose of providing a potential investor or any other person any information pertaining to the relative safety of timely payment of interest or principal;
(38) "dry cleaner" means any PERSON providing service in relation to dry cleaning;
(50b) "goods transport agency" means any PERSON which provides service in relation to transport of goods by road and issues consignment note, by whatever name called
(68) "manpower recruitment or supply agency" means any PERSON engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client;
(69) 'market research agency" means any PERSON engaged in conducting market research in any manner, in relation to any product, service or utility, including all types of customised and syndicated research services;
(79) "photography studio or agency" means any professional photographer or a PERSON engaged in the business of rendering service relating to photography;
(86b) "programme producer" means a PERSON which produces a programme on behalf of another person;
(94) 'security agency' means any PERSON engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation detection or verification, of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel;
(99) "sound recording studio or agency" means any PERSON engaged in the business of rendering any service relating to sound recording;
(105) "taxable service" means any *[service provided or to be provided],-
(zc) to a client, by any PERSON in relation to holding of a convention, in any manner;
(zh) to a customer, by a PERSON , in relation to on-line information and database access or retrieval or both in electronic form through computer network, in any manner;
zm) to a customer, by a banking company or a financial institution including a non- banking financial company, or any other body corporate or PERSON , in relation to banking and other financial services;
(zzq) to any person by a PERSON in relation to commercial or industrial construction service
With the Super Sub rule catching up in the cricketing lobby ,not be surprised if in the Budgets we find more such Super Sub : substitution in relation of the definitions under section 65 where we have to find more Dashing Allrounder players as Super subs to older lot “to the client'', ”to the Customer” to the Subscriber''.
With the definition of “person” still missing in the Service Tax text of the Finance Act , hope alone remained to assuage the lot of humankind.