The Central Excise and Service Tax are governed by the two separate acts, Central Excise Act, 1944 and the Finance Act, 1994. Due to separate acts, all essential processes like registration, return and assessment compliance for Excise or Service Tax are different. However, Cenvat Credit and some other provisions are common for Service Tax and Excise Duty. Goods and Service Tax Act (GST) is to be implemented to harmonize the separate laws into single law, thereby simplifying the essential processes to be followed. Steps may be taken to merge the two laws in Budget 2013.
Through Finance Act 2012, Negative List based Service Tax was introduced which has virtually brought all the services under the ambit of service tax except a few. Vide Notification No. 25/2012 dated 20/06/2012, 39 services are included in the negative list. At present Services provided to or by an educational institution in respect of education is exempted from service tax, by, way of auxiliary educational services or renting of immovable property. As per the officials it is expected that vide Budget 2013 further more services may be added to this list which are currently under a tax net.
Health care services by a clinical establishment, an authorised medical practitioner or para-medics are also exempt. Even in case of Health Care Services some amendments are expected.
Amending the Cenvat Credit Rules and making it simple will also be a step forward for implementation of GST and thereby making it is easy for manufacturer or service provider to avail and utilise the Cenvat Credit. Cenvat credit rules were amended to simplify the procedure for refund of unutilised credit on account of exports. Further the facility of taking CENVAT Credit on motor vehicles other than those falling under tariff headings 8702, 8703, 8704,8711 and their chasis has been extended to manufacturers. Payment of Service Tax by the service receiver on a reverse-charge basis is also allowed as Cenvat Credit. However, such minor changes done in the Cenvat Credit Rules has been not of much help. Some reforms are still expected to make Cenvat Credit Rules much simpler. Let us hope that Budget, 2013 brings certain changes which are expected.