'Comprehensive' circular not at all comprehensive

EXPERT EYE

The department of revenue has proposed two comprehensive circulars, one for technical issues and the second for procedural issues. This is not a good idea at all.

The whole point is, what will happen to the amendments thereafter?

As soon as some amendments or clarifications are to be issued, they will once again clutter the system and the users, that is, tax-payers, lawyers and officers, will once again be in a quandary, not knowing what is the final position. So the proper course should have been to issue one circular for each service.

The number should have been like Stock Broker/1-2007 or CHA/1/2007 and so on. Each circular should be self-contained. It should contain coding system, all the clarifications which have been proposed to be given in the technical circular and the procedures involved. Any later amendments can be included in these circulars and the circulars reissued.

Now we come to the question whether the proposed two circulars are in fact comprehensive or not. The technical circular is not at all comprehensive although it has been intended to be one. The reasons are the following:

a) The proposed technical circular only carries certain clarifications. Each clarification should be taken out and made a part of the individual circulars that have been proposed above.

b) Para No.7 of the proposed circular says the Budget clarifications will continue to be there. This makes the whole circular incomplete. If you have to read so many other Budget circulars from 1994 to 2007, along with the present proposed circular (which it is claimed is "comprehensive"), it is not comprehensive at all. It is exactly the opposite of comprehensive.

c) On moneychangers, the clarification is wrong. It has been said that the moneychangers' activity does not fall within the scope of foreign exchange broking and therefore is not liable to service tax under Section 65(105)(zm). The correct position is that moneychangers' actability is not a service at all. It is simply buying and selling of foreign exchange, which is just a trading activity.

d) There are several other issues that are not clarified. Readily, I remember that there are certain issues about custom house clearing agent service, there being at least three practices going on at the field level.

Only a few important issues have been clarified but not all. Para No.8 of the circular says that the views stated in the circular are only an interpretation of the law and are not to be treated as law. It says the relevant statutory provisions are to be referred. This statement is superfluous.

Everybody knows that a circular is only an interpretation of the law and does not overrule the statutory provisions. By such a superfluous expression, an unnecessary doubt has been created about its authenticity, giving the impression that circular may not be quite in consonance with the statutory provisions.

The procedural circular by itself is quite good, but as suggested above, the technical and procedural issues should be combined together in one comprehensive circular for each service.

In conclusion, I may say that there can only be a comprehensive circular for each service and not a comprehensive circular for all services put together. That will be like a master circular which is just not possible. To try to have a master circular is to chase a chimera.

smukher2000@yahoo.com