FINMIN TAKEN TO COURT

The Delhi High Court has issued notice to the finance ministry on a petition filed that said the government should not impose 12% service tax on exporters availing the services of foreign-based commission agents to win supply contracts. Meanwhile, Tamil Nadu Spinning Mills Association has won a stay order against the government from the Madras High Court in a similar case. It alleged the government had extended the jurisdiction of the Finance Act beyond Indian territory without substantive provisions. The finance ministry said these instances of service tax came under the “business auxiliary service” category and, therefore, from September 2004, the government could slap charges on exporters for services taken from agents with offices outside India.