TIOL-DDT 2601
20 05 2015
Wednesday

THE Finance Act 2015 was notified on 14th May 2015 and the consequential effects are here. The Joint Secretary, TRU has issued a D.O Letter clarifying the changes. TRU D.O.F.No.334/5/2015-TRU., Dated : May 19 2015

Enhanced Rate of ST: The following legislative amendments in Service Tax will come into force with effect from 01.06.2015.

1. Section 65B of the Finance Act, 1994 was amended to omit clause 9 - definition of "amusement facility"

2. Section 65B(24) omitted- definition of "entertainment event"

3. Section 65B(40) defines "process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or the Medicinal and Toilet preparation (Excise Duties) Act, 1955 (16 of 1955) any process amounting to manufacture of alcoholic liquors for human consumption , opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force; The words alcoholic liquors for human consumption are omitted.

4. Service Tax rate enhanced from 12 per cent to 14 per cent - Section 66B amended.

5. Amendment to Section 66D - Negative list; Clause (f) substituted to read as services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption;

6. Amendment to Section 66D - Negative list; Clause (i) amended to add explanation as: 'Explanation.- For the purposes of this clause, the expression "betting, gambling or lottery" shall not include the activity specified in Explanation 2 to clause (44) of section 65B;

7. Amendment to Section 66D - Negative list; Clause (j) - admission to entertainment events or access to amusement facilities; - omitted

8. Section 95 of the Finance Act 2004 - Education Cess on Service Tax omitted.

9. Section 140 of the Finance Act, 2007 - Secondary and Higher Education Cess on taxable services - omitted

Notification No. 14/2015 - Service Tax., Dated May 19 2015

Chit goes : In DDT 2550 03 03 2015, we reported:

Chit Remains

By Notification No 8/2015 ST dated 01.03.2015, the following entry in the Notification No 26/2012 ST dated 20.06.2012 is omitted:

But, they forgot to omit this part of the Notification:

2. For the purposes of this notification, unless the context otherwise requires,-

a. "chit" means a transaction whether called chit, chit fund, chitty, kuri, or by whatever name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to a prize amount..

Now this has been rectified; they have deleted the above clause (a).

Notification No. 13/2015 - Service Tax., Dated May 19 2015

Certain parts of Notification No. 5/2015-ST to come into force from 1.6.2015

NOTIFICATION No. 5/2015 -ST dated 1.3.2015 had amended the Service Tax Rules inter alia to hike the alternate rates of service tax for certain services like money changing service, service provided by air travel agent, insurance service and service provided by lottery distributor and selling agent. This is notified to come into effect from 1.6.2015.

Notification No. 15/2015 - Service Tax., Dated May 19 2015

Certain parts of Notification No. 6/2015-ST to come into force from 1.6.2015

NOTIFICATION No. 6/2015-ST dated 1.3.2015 had amended the Service Tax Notification No. 25/2012, dated 20.06.2012. This is notified to come into effect from 1.6.2015.

Notification No. 16/2015 - Service Tax., Dated May 19 2015

ST - Exemption to Power System Development Fund Scheme

GOVERNMENT has exempted taxable services provided under the Power System Development Fund Scheme of the Ministry of Power, from the whole of the service tax leviable thereon under section 66B. This exemption will be valid only till 1st day of April, 2017.

Notification No. 17/2015 - Service Tax., Dated May 19 2015

CENVAT Credit - Exempted services - amount payable hiked to 7%

AS per Rule 6(3) of the CENVAT Credit Rules, the amount payable for exempted goods or services is six per cent of the value of exempted goods or services. Now this is enhanced to 7 per cent in case of exempted services.

Notification No. 14/2015-CE.(NT), Dated May 19 2015

Refund of CENVAT Credit under Rule 5B - Manpower and security excluded

AS per Rule 5B of the CENVAT Credit Rules; Refund of CENVAT credit to service providers providing services taxed on reverse charge basis .- A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette .

Government had issued Notification No.12/2014-CE dated 3.3.2014 in this regard, which is now amended. Now supply of manpower for any purpose and security services are excluded from this notification.

Notification No. 15/2015-CE.(NT), Dated May 19 2015

Service Tax - Clarification on hiked rates applicability - Board shies away

NOW Service Tax is applicable at the rate of 14% from 1.6.2015, there are many doubts in the minds of officers and assessees on the applicability of 14% on ongoing transactions.

When the service is rendered, invoice is issued and payment received before 1st June 2015, there is no problem. But what is the rate when:

1. Service is rendered before 1.6.2015, invoice is issued before 1.6.2015 but payment is received after 1.6.2015?

2. Service is rendered before 1.6.2015, but invoice is issued after 1.6.2015 and payment is received after 1.6.2015,?

3. Service is rendered before 1.6.2015, invoice is issued after 1.6.2015 and payment is received before 1.6.2015?

4. Service is rendered after 1.6.2015, invoice is issued after 1.6.2015 and payment is received before 1.6.2015?

5. Service is rendered after 1.6.2015, invoice is issued before 1.6.2015, but payment is received after 1.6.2015?

6. Service is rendered after 1.6.2015, invoice is issued before 1.6.2015 and payment is received before 1.6.2015?

Maybe the rates would be as per the table below.

DDT 2598 15 05 2015, had explained this position and also the contradiction between Rule 4 and Section 67A. We requested the Board to clarify the position before notifying 14% rate in the light of Section 67A. We also reminded them that in the earlier round when the tax was enhanced from 10% to 12&%, Board had issued two circulars No.158 /9/2012-ST dated 08.05.2012 and No.154/5/2012-ST dated 28.03.2012, both of which were quashed by the Delhi High Court in 2013-TIOL-81-HC-DEL-ST.

Board almost gave a clarification in the TRUJS letter, but for some reason withdrew it at the last moment. Let us hope they come out with the clarification before 1 st June 2015. And not replicating the circulars, which were quashed.

Customs - Ease of Doing Business

AN exporter is required to submit the SDF form along with Shipping Bills for export of goods. RBI has recently dispensed with the SDF in case of exports taking place through the EDI ports vide Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2015' and A.P. (DIR Series) Circular No 101, dated 14.05.2015. Consequently, RBI has desired that the declaration of foreign exchange remittance under the Foreign Exchange Management Act, 1999 may be made a part of the Shipping Bill.

"I/We undertake to abide by provisions of Foreign Exchange Management Act, 1999, as amended from time to time, including realization / repatriation of foreign exchange to / from India."

DGFT has endorsed this proposal.

Accordingly, CBEC has issued Notification No 46/2015 -Customs (N.T.), dated 18.05.2015 to incorporate the declaration in lieu of SDF form in the Shipping Bill.

CBEC Circular No. 15/2015-Cus., Dated: May 18, 2015

Indirect Taxes - SLPs in Supreme Court by Department - Monetary Limit

CBEC Instruction F.No.390/Misc./163/2010-JC dated 17.08.2011, has laid down monetary limits for filing of appeals before CESTAT, High Court and the Supreme Court as:

The Board has been receiving proposals for filing of SLPs against High Court orders in Supreme Court from various field formations wherein the amount involved happens to be below the threshold limit as prescribed in the above Instruction dated 17.08.2011.

CBEC has decided that no SLP against the High Court's order can be filed before the Supreme Court in case the amount involved is below the threshold limit as prescribed in the said Instruction dated 17.08.2011 except in two categories of cases. Therefore, provisions relating to monetary limit for filing SLPs should be complied with, before sending the proposals. However, SLP proposals are to be sent in case adverse judgments relate to the following, irrespective of the amount involved:

(a) Where the constitutional validity of the provisions of an Act or Rule is under challenge; and

(b) Where Notification/Instruction/Order or Circular has been held to be illegal or ultra vires.

CBEC Instruction in F.No.276/132/2015-CX.8A., Dated: May 15, 2015

Income Tax - Grievances relating to verification and correction of demand outstanding against taxpayers

THE Income Tax Department has taken note of grievances of taxpayers arising on account of outstanding tax demand which may be inaccurate due to non-reporting or delayed reporting of TDS by deductors leading to mismatch between the claim and data available with the Department, non-posting of challans, non-disposal of rectification applications, incorrect details of income or pre-paid taxes reported by taxpayer etc.

In order to swiftly and accurately resolve such grievances, the CBDT has issued a comprehensive Circular No. 8 of 2015 dated 14.05.2015. The Circular explains the various steps to be taken by the taxpayers to view and submit their response with regard to their outstanding tax demand. The Circular elucidates the range of facilities available and the responsibilities of the Assessing officers to verify and take corrective actions. Demand upto Rs. 1,00,000/- for an Assessment year in case of an Individual or HUF which has already been paid but is shown as outstanding due to mis-match etc. can be rectified on the basis of evidence of tax paid as submitted by the taxpayer.

The taxpayers may view their outstanding tax demand on their e-filing account at www.incometaxindiaefiling.gov.in and follow the steps elucidated in the Circular to submit their response either agreeing with or disputing the demand.

The Income Tax Department is committed to early and satisfactory resolution of taxpayers' grievances.

CBDT Press release., Dated: May 19, 2015

Anti Dumping Duty on Morpholine

AFTER a mid-term review, the Designated Authority has recommended continued imposition of the anti-dumping duty on Morpholine falling under tariff item 2933 39 17 of the First Schedule to the Customs Tariff Act originating in or exported from the People's Republic of China, European Union. This duty which was originally imposed by Notification No. 10/2012-Cus(ADD), dated 24.01.2012, will be valid till 19th day of September, 2016

Notification No. 18/2015-Cus (ADD)., Dated May 18 2015

Allahabad Bench of CESTAT should function from 1st July - Hyderabad Bench already functioning?

THE Allahabad High Court in a judgement last week observed,

Notification for constitution of a Bench of the Customs Excise and Service Tax Appellate Tribunal at Allahabad was made by the Central Government as early as on 01.11.2013 along with Benches to be established at Hyderabad and Chandigarh. At Hyderabad the Bench has been established. At Chandigarh a circuit Bench has been made operational. It is only at Allahabad that the Bench of the Tribunal is not being established despite the notification made nearly two years ago.

Only explanation furnished before this Court is that a letter was written by the Registrar of the Tribunal at New Delhi to Chief Secretary, U.P. Government, Lucknow to provide suitable accommodation at Allahabad for establishment of the Bench, which has not been responded. Letter dated 14.11.2013 was followed by a letter from the State Government to the Collector, Allahabad dated 17.12.2013 for the same purpose. What has happened thereafter is not known. We fail to understand as to why the Central Government itself could not provide suitable accommodation for Tribunal specifically when it has large space available at 38 M.G. Marg, Civil Line, Allahabad. We have been informed that earlier an Income Tax Appellate Tribunal operational in the same premises has been shifted to Lucknow. Therefore the space which was earlier occupied by the Income Tax Tribunal at Allahabad is now available for use for the Customs Excise and Service Tax Appellate Tribunal. We are of the considered opinion that the notification issued for constitution of a Bench as early in the year 2013 cannot be permitted to be frustrate and made a waste paper for years only because of inaction on the part of the State or its departments.

The High Court issued following directions:-

(a) Let State of U.P. through Chief Secretary be impleaded as respondent no. 6 during the course of the day. Notice on behalf of respondent no. 6 has been accepted by learned Standing Counsel.

(b) The respondents no. 1 and 2 shall ensure that a Bench of Custom Excise and Service Tax Tribunal becomes operational at Allahabad atleast new cases to be filed w.e.f. 01.07.2015.

(c) The respondent no. 1 shall file his personal affidavit indicating as to why the State has not responded to the request letter dated 11.12.2013 till date and what reply was received from the District Magistrate, Allahabad in respect of accommodation for establishment of full fledged Tribunal.

(d) The respondent no. 1 may file an affidavit of an officer not below the rank of a Secretary as to why the property owned by the Union of India in the city of Allahabad including 38 M.G. Marg, Civil Line, Allahabad cannot be suitably provided for establishment of a Bench of the Tribunal at Allahabad.

(e) The Commissioner of Central Excise shall file his personal affidavit indicating space available with the Tribunal at Allahabad and as to why it cannot accommodate a regular Bench at Allahabad, till suitable alternate arrangements are made.

The High Court further observed, "We hope and trust that there shall be no request for further time be granted in the matter. The Court has been informed that complete infrastructure for establishment for one Bench of Tribunal is at present available at 38 M.G. Marg, Civil Line, Allahabad i.e. the portion, which is lying unused after shifting of one of the Income Tax Tribunals to Lucknow."

The case is posted for 31.7.2015, by which time the Allahabad Bench should be functioning.

But the Hyderabad Bench is not functioning as mentioned in the High Court order. Only a Circuit Bench for four days is to function next week.

Until Tomorrow with more DDT

Have a nice day.

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