TIOL-DDT 2725
16 11 2015
Monday

THE Government wanted to collect a 0.5% cess as Service Tax to fund its clean up programmes and had the approval of Parliament to collect up to 2% on all or some services. It entrusted the job to the CBEC and that started a series of Greek drama resulting in utter confusion.

The Government could have simply enhanced the Service Tax rate to 14.5% and be done away with(with credit of course). That would have been more of 'ease of doing business' and less of hassles to the hapless assessee. But that is not the Board's understanding of ease.

See what they unleashed on an unsuspecting nation.

1. First they announced the launch of Swachh Bharat Cess (the darned SBC ) from the middle of the month - 15th November. This singular act causes maximum misery.

2. Then they issued three confusing notifications, mostly to clarify that the existing provisions are adequate.

3. They issued a Press Release through PIB without even recognising the existence of the notifications.

4. And now they have issued a FAQ.

FAQ - All the questions you wanted to ask a day before SBC came into force :

As per the Board's FAQ released on Saturday

1. Show SBC separately in the Invoice: SBC will have to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code 00441493. SBC may be charged separately after service tax as a different line item in invoice. If you have invoices, get them changed to include SBC. If you use electronic invoices, make changes in your software.

2. No CENVAT Credit of SBC: On Friday, DDT reported, "It is heard that the view in the Government is that there would be no CENVAT Credit of Swachh Bharat Cess, because the tax is a low 0.5% and the Government wants the whole of it, cascading effect and GST notwithstanding". Board has now confirmed this. The FAQ clarifies, "SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax". Is it not against the basic structure of GST and even CENVAT that the chain of credit flow should not be broken? Have they forgotten the concept of 'cascading effect of taxation"?

Is it really worth the trouble to trouble your assessees so much just to collect an additional tax of 0.5%? Now, the cost of compliance will be more than the tax collected and the amount of inconvenience caused is humungous. In any case, the entire collection of SBC is going into the Consolidated Fund of India and there is no separate accounting there. They are not going to create a fund into which the SBC is going to be transferred. Then why do they need separate accounts, payment, invoice etc by the assessee? At the end of the year, why can't they simply calculate the amount collected as SBC and use that money, instead of making life miserable for the assessees? How much time and money are you going to waste on this SBC?

And why rush in with the Cess in the middle of the month? The Return has columns for the month, which have to be split now for November. Is it all not additional unproductive work?

Is this what you call ‘ease of doing business' and is this what the taxpayer should expect in the ‘year of taxpayer services'?

The FAQ released by the Board.

We also bring you today a couple of articles on the issue. Please see Swachh Bharat Cess - FAQ adds to confusion And SBC clarification - A goof up

Short paid duty demanded with interest; excess paid amount not refunded - Tribunal by majority quashes order

THE assessments were provisional. On finalisation of the provisional assessment, it was found that the assessee had during the year short paid duty to the extent of about 8.76 crore rupees and excess paid about 3.54 crore. The benign Commissioner was pleased to demand the 8.76 crore with interest, but rejected adjustment of excess paid duty.

In the CESTAT, the Member, Technical emphatically held that inter se adjustment of duty short paid and duty excess paid during the period of provisional assessment, cannot be allowed.

The Member, Judicial did not agree. She observed that if the shortfall during a particular period is required to be paid by the assessee and the excess payment made during another period falling in the same financial year is to be rejected, the entire purpose of keeping the assessment provisional, becomes a futile exercise . And so she held that the appellant is entitled to the adjustment of duty excess paid by them with duty short paid and their duty liability has to be arrived at accordingly .  

The matter went to a Third Member who held, "The appellant is entitled for adjustment of excess paid duty with the short paid duty during the financial year 2006-07 as held by Member (Judicial)."

Recently the Division Bench based on the majority view allowed the appeal.

We bring you this case today. Please see Breaking News.

Foreign Going Vessels - Indian Currency

AS per CBEC Circular No.51/99-Cus dated 12.08.1999, Merchant Ships are allowed to carry Indian currency notes of denomination up to Rs 100/- for disbursement of wages to the crew of the ships etc. on board of foreign going vessels, subject to the usual conditions prescribed by RBI. This was actually increased from Rs.50 to Rs. 100 in 1999.

In a recent meeting of the Trade Facilitation Committee of Vizag Customs, there was a request to further enhance this. The Principal Commissioner informed the meeting that the matter was taken up with CBEC. He informed that the Ministry of Shipping has also taken up the matter with the CBEC. The Commissioner advised the Trade also to pursue the matter with CBEC.

Payment of Duty when Department's System is Down

AS per Section 47 of the Customs Act, if duty is not paid within two days from the date when the Bill of Entry is returned, the importer has to pay interest. What happens when the Department's system is down and the importer is not able to pay the duty or the duty paid is not reflected, for no fault of his?

This issue was raised in the Trade Meet at Vizag

The Commissioner replied that it is a system based problem and the issue would be taken up with DG(System) if frequent disruptions are noticed.

Tariff Value of all Oils Reduced

GOVERNMENT has decreased the Tariff value of all oils and brass scrap. There is no change in tariff value of gold but that of silver is reduced.

Notification No. 108/2015-Customs (NT), Dated: November 13, 2015

Until Tomorrow with more DDT

Have a nice day.

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