Undeniably, though Service tax on repair and maintenance has been enforced more than a month, its implementation is still the subject of criticism and comprehensiveness among affected groups. The haste move by the government to impose Service Tax on almost all types of maintenance and repair clearly demonstrated its lack of empathy and the required process to complete the necessary procedures on its finalization on procurement of contracts on repair and maintenance by all the affected. The announcement was a surprise as quoted by the press as the authority presumed all affected were ready and easily adhered to its rulings but in reality it was not only a surprise but shock as it was a haste. As it happened, numerous queries including the questions posed by the attendees in the Q&A session but viewed as provocative by the officer-in attendance during the talk on new implementation of SST on repairs and maintenance organized by Customs Office, Prai last March 24 proved the confusion and disillusionment existed among most of the attendees.
Repair and maintenance including calibration, testing, corrective measures, fault finding and rectification are totally different from procurement of materials in manufacturing sectors where the date for completion of production is predictable. In practice, ample notification for the work on commencement of service and repair is needed and crucial as preparatory ground work such as arrangement on the date for site-visit by supervising consultants, and renting and installing of testing equipment etc are time consuming. To prevent any misunderstanding between the service providers and the clients, Purchase Order or (PO) will only be issued upon completion of fault finding of which its duration for the testing and fault finding is unpredictable. To avoid pricing problems and any controversy, PO will normally be issued when all faults and work are defined and finalized. What a coincidence and also a bemusement with the sudden announcement of implementation of SST! When the findings completed and PO just issued to the service providers in February 24, immediately a revised pricing was needed for the inclusion of SST for the work to commence in latest month! How to resonate the SST in the price negotiation with the clients? Yes, it may be easy to quote the enforcement of SST by the authority but will the unexpectedness help to erode the confidence on the service providers?
Additionally, there were some repair works which had started prior to the imposition of SST but stretched beyond March 24 when its price had been mutually finalized and agreed. Surely the affected clients would not agree for the extra payment on the revised price to include SST. Of course, the Customs Office can instruct the service providers to include SST in the billings. The instruction looks simple and it only works for local companies but not for all foreign companies. For an example, for signed and endorsed contracts for provision of long term services maintenance and rent of equipment, invoices and supporting documents will have to submitted online with the agreed pricings . Any discrepancies will be automatically rejected and for further negotiations on alterations and amendments on price difference are seldom entertained.
The economic and financial market are full of challenges and volatile, however, the authority may help to tranquilize the trend with less “ surprise “ move. Other than pragmatics in the implementation of rules and orders, empathy should be taken into consideration too.
