MARCH 12, 2015

By Suresh Nair, Partner (Indirect Taxes), E&Y LLP

ONE of the key contours of the Budget 2015 has been the emphasis on "Ease of doing Business in India". In line with the same, intent to simplify the registration related procedures under Central Excise and Service Tax find mention in the Budget documents.

Central Excise Registration:

We now have specific reference of a time line of two working days (from the receipt of duly completed online application form on ACES) for grant of central excise registration certificate. While the standards on time lines in the Citizen Charter of the Central Excise and Customs('CBEC') always referred to two working days for completing central excise formalities, let's acknowledge that expecting this efficiency at the grass root level and more importantly, respect to the Citizen Charter was far and few. Netizens will recollect the reference to the time line of 'seven days' for granting central excise registration certificate in Notification No. 35/2001-C.E(N.T). Well, need I say anything more!!!!

The difference however is that the age old concept of having a signed copy from the jurisdictional central excise AC/DC on the Registration Certificate as "proof of registration" has now been done away with. This should hopefully trigger the real change from an assessees' perspective.

Mr. Warren Buffet can be the amongst the world's wealthiest persons without a mobile phone, but to get a central excise registration in India, e-mail address and mobile number of the applicant is now made mandatory. If you have not submitted this information please do so on or before end of May2015 by way of an amendment application through ACES. Further, business transaction numbers such as BIN, IEC, VAT, CST, CIN, Service Tax registration no. are required to be submitted.

Verification of premises would be conducted by the authorities after the registration has been granted-Self attested copies of relevant documents [as identified vide amending notification no. 07/2015-CE (N.T) ]required for registration can be submitted at the time of verification of the premises.

Service Tax Registration:

Order No. 1/2015-Service Tax dated 28 February 2015 which specifies the time lines, documentation etc for service tax registration restricts itself to single premises registration. If trust based registration is the mantra and way forward, then the same could have been extrapolated to cover within its ambit centralized service tax registration also. The challenges of obtaining a centralized registration certificate/ amendment thereof in the present regime could be best explained by the assessees who have struggled in this process.

Single premises registration under service tax would now be granted online within two working days of filing the complete ST-1 form in ACES.

If an existing registered assessee has not submitted email address and mobile phone number then an amended application has to be filed by 30 April 2015 through ACES.

The applicant is required to submit a self attested copy of the identified documents by registered post/ Speed Post to the concerned Division, within 7 days of filing the Form ST-1 online, for the purposes of verification.

Visit to the premises for verification thereof would need to be authorized by an officer not below the rank of Additional /Joint Commissioner.

De-registration

Para 8 of the Board Circular No. 997/4/2015 dated 28 February 2015 mentions that the process of De-registration and cancellation of the registration has also been streamlined by prescribing clear procedure for the same so that winding up of business and starting new business of manufacture is made easy.

However, apart from a time line of 30 days for approving application of de-registration, there is nothing substantively new in Para 9 and Para 11 of Notification No. 07/2015-CE(N.T).

This time line also is limited to an assessee where no dues are pending recovery from the assessee.

The format for surrender of registration certification on the ACES requires the applicant to sign off on the following:

I/We further declare that duty has been paid in respect of all excisable good manufactured and remaining in the factory, which are liable to duty.

I/We also declare that there is no government due pending against us and that there is no demand pending us under Central Excise Act, 1944 (1 of 1944) and rule made thereunder pending as on the date of surrendering the Registration Certificate.

Going by the above, which apparently remains unchanged, there is no clarity even now on the procedures to be followed by a registered assessee who has been issued demand notice(s) pending adjudication or have matters pending resolution before Commissioner Appeals, Tribunal and the Courts. If one goes by the said format, then it could be construed that if any demand is pending then the applicant may not be allowed to de-register or there apparently should be another format to address this scenario. If that be the case, would the transferee of business / company acquiring the business be allowed to register itself in the same premises? The key is whether the assessee has stopped production/ ceases to carry on business for which he was registered - If so, then surrender of registration has to be accepted and the same has no linkage whatsoever with pending duty demands which is a different issue.

There are instances (even recent) where Department has insisted on Bank Guarantee of the duty amount, interest and penalty even in cases where demand notices are pending adjudication. There are cases where the assessee is required to submit a 'Bond' to the Department undertaking to pay the dues which arise out of the pending matters. Also, typically it is a norm to keep "De-registration" pending on the grounds that audit of the records has to be completed and only then the related process can be taken up. Practically one is left to the interpretation and understanding of the jurisdictional central excise authority to navigate through the process of de-registration. If the format as per ACES relies upon declaration / undertaking and there is no reference to Bond/ Bank Guarantee/ Audit etc, then insistence of such additional requirements (as above) are avoidable and contrary to the theme of 'trust based registration' and 'ease of doing business in India'.

It is in this backdrop that the CBEC appears to have lost out on a good opportunity to streamline this process to ensure that there is clarity and uniformity on the process for surrender of central excise registration especially in cases of transfer of business or acquisition of factory. Given the proactive approach of the present Government, we hope that CBEC addresses the practical challenges around deregistration of central excise / service tax in line with its mission of facilitating "Ease of doing Business in India" with a more detailed Circular/Order.