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SHRI JASWANT SINGH: May I just remind the hon. Member that we are discussing the Constitutional amendment for service tax and not the Value Added Tax? We can have a discussion on VAT later. … (Interruptions)

SHRI A.C. JOS (TRICHUR): He is adding more value to it. … (Interruptions)

SHRI RUPCHAND PAL : It is mentioned here. I am reading it from the Statement of Objects and Reasons. It says:

"The States have taken a unanimous decision to replace their existing sales tax system with the system of Value Added Tax (VAT) from 1st of April, 2003. In this context, with a view to widening their tax base, the States have suggested that they should be enabled to collect an appropriate tax on services. "

SHRI K. YERRANNAIDU (SRIKAKULAM): Sir, I am adding one thing which my colleague left out. If tomorrow the Parliament may enact another law regarding what proportion of the tax should go to the States, I would say that 50 per cent should go to the States from service tax collection. Why? It is because the States are giving services.… (Interruptions)

MR. DEPUTY-SPEAKER: Are you substituting his speech?

Dr. M.V.V.S. MURTHI : I asked for sharing states 5 points and centre 3 points. (5:3) SHRI A.C. JOS (TRICHUR): Mr. Deputy-Speaker, Sir, I will not take much time. I generally support this Constitution (Amendment) Bill. I am happy to support it especially because I come from the State of Kerala where more services are rendered than other things. Our State level GDP is much more in the case of services. I am only supporting the contention raised by my colleague, Shri Murthi. There is no definition of services now.

Just as Shri M.V.V.S Murthy has said, now even what a barber does is also a service. So, would that be taxed? In Kerala, there are more organised services. A number of tutorial institutes are coming in and there are a number of nursing schools and pharmaceutical colleges. All of them would become taxable under the service tax. There are certain genuine areas where the States should come in and impose taxes on services. … (Interruptions)

MR. DEPUTY-SPEAKER: Shri A.C. Jos, please conclude now.

SHRI A.C. JOS : Sir, I am not taking much time. I know, the hon. Deputy-Speaker is unusually strict today. He generally gives us enough time.

MR. DEPUTY-SPEAKER: All right, please continue.

SHRI A.C. JOS : I have only two submissions. I do not know whether the definition is to be made in the rules or in the main law but that has to be carefully worded. The second is that space should be given, leverage should be given for the States also to impose taxes. Now, if it is included in the Union List, the States would not have any space or angle to move about. That is also for the hon. Minister of Finance to consider. Otherwise, it is high time we started taxing services and this endeavour is laudable. So, I support this Bill.