Opinion - Letters to the Editor

Tax on services

Sir, — This has reference to C. Aaranganayagam's letter (March 19). The constitutionality of the levy of service tax has been tested in the courts many times and on each occasion the judiciary has upheld the competence of Parliament to legislate and impose tax on services. Parliament has exclusive jurisdiction to legislate and impose tax on any subject not enumerated specifically under any of the lists.

The legislative power to impose tax on services in traceable to entry 97 of the List I of the VII Schedule to the Constitution.

On April 30, 2001, the Division Bench of the Madras High Court, dismissing a batch of cases filed by various associations of service providers lucidly distinguished the scope of Entry 60 in the State List vis-a-vis Entry 97 of the Union List and held that tax on services is perfectly legal and valid and does not suffer from any legal infirmity.

In the light of the settled legal position, there appears to be no reason to entertain any doubt about the competency of the Union Government to impose tax on services.

K. Parasuraman,

Commissioner of Central Excise,

Chennai

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