Budget 2010 is likely to get a variety of reaction from different sectors.
For the "aam admi", it is not a khaas budget and for the khaas admi, it is nothing more than an aam budget. Experts view it in a different prospective. Budget 2010 will be remembered as a 'retrospective effect' special.
The modus operandi used in Budget 2010 is to undo all which had led to a fall in revenue for the government. The finance minister this time seems to have used this weapon very effectively. Right from tribunals, high courts, advance ruling authorities to quasi judicial authorities, whoever passed a ruling wherein the department ended up losing a revenue battle, has been overruled and bypassed by a simple stroke of amendment with retrospective effect.
Last year, a group of retail chain had challenged the service tax on renting of immovable property. The Delhi high court passed a landmark judgement in the case of Home Solutions Retail India Ltd. & Others vs.UOI and struck down this levy by observing that the renting of immovable property for use in the course of furtherance of business does not involve any value addition and therefore, cannot be regarded as service.
The Budget 2010 proposes to amend the definition and as such, the activity of renting of immovable property per se would also constitute a taxable service under the relevant case.
This amendment is being given retrospective effect from 01.06.2007. Another masterstroke played by the veteran finance minister is in the case of commercial training or coaching services. The revenue department had lost many cases and at various levels wherein the services rendered by non-profit organization were ruled out of the ambit of service tax.
As a result, educational institute and organizations engaged in imparting such services without any profit motive were out of the ambit of service tax. Budget 2010 proposes to clarify that the term 'commercial' appearing in the relevant definitions, only means that such training or coaching is being provided for a consideration, whether or not such training or coaching is conducted with a profit motive and the irony is that even this change is being given retrospective effect from 01.07.2003.
In other words, "heads I win, tails you lose"