New Delhi, July 5 (IBNS) Apex industry body ASSOCHAM on Friday urged the government to define 'Export of Services,' by Parliamentary legislation as the industry is facing a whole lot of problems and unmanageable litigations in the absence of a clear principle on the same.
There is a slated policy of the government that tax should not be exported and export of services should be tax free, however the Parliament through legislation has not defined as to what constitutes 'export of services,' while it has defined what constitutes 'export of goods', said The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication addressed to Commerce Secretary S.R. Rao.
"The export of services should be only in respect of services, those are subject to service tax. If the service itself is not subject to service tax and if these services are treated as 'export of services' then whether these are export of services or not, it will remain tax free," said Rajkumar Dhoot, president of ASSOCHAM.
The concept of 'Export of Services' was introduced for the first time on March 15, 2005 by a delegated legislation through Export of Services Rules, 2005 but considering it was vague and complicated it was amended many times and were withdrawn on June 30, 2012.
Through delegated legislations, w.e.f July 1, 2012 as per the condition prescribed under Rule 6A of Services Tax Rules, 1994, only those services could be exported on which Parliament has levied no service tax, in according to above-mentioned Rule 6A, cannot be treated as 'export of services'. While, previously only those services were treated as export of services on which service tax was leviable.
"It is imperative that government defines 'export of services' through legislation as such an important concept cannot be entrusted to delegated legislation that not only failed to define it but also cannot be changed year after year as principle of export of goods remains same as defined under the Customs Act, 1962," said the ASSOCHAM chief.
"People like tour operators who are engaged in provision of services and earn huge foreign exchange for the country are not being given the status of 'export of services' and are deprived of the benefit as a provider of export of services," he said.