MARCH 14, 2012
दिल है छोटा सा छोटी सी आशा
Compiled by TIOL Edit Team
TODAY we bring you another compilation of suggestions from our Netizens - Editor
Penalty / Late fees for late filing or non filing of Service Tax Return ST 3 amended in previous budget and hiked to Rs 20000/- from Rs 2000/- under Sec 70 of FA 1994.
Suggestion: Penalty should be Rs 20000/- or service tax whichever is lower or limited to Service Tax amount. As, when service tax return for nil services the penalty is Rs 20000/- that is mayhem.
Chirayu Kothi, Advocate
Digital signature should be allowed on invoices (Rule 11 of central excise rules 2002 / challans issued under 4(5) of CCR, 2004). Particularly in a large scale Organization where more than 1000 documents (invoices and challans) are being issued in a day. Every day person / officer has to spent at least 1 / 2 hour for signing the invoices / challans. This is procedural but will be great relief to the operational people.
Arun V Deshpande DESHPANDE.ARUN@mahindra.com
First Appeal to the Commissioner (Appeals) Central Excise should be abolished as it hardly serves any purpose. Alternatively, pre-deposit provisions should be dispensed withat the first Appeal stage. Only CESTAT should hear stay application in all cases and decide whether pre-deposit is required or not.
CA H H Kamdar
At present the duty structure under Chapter 30 on inputs used and on final product manufactured is quite vast i.e. on inputs for such goods are 10% and on its final product, it is 5%. Due to such vast difference in duty structure, accumulation in cenvat credit is there and manufacturer exporters are unable to utilise it.
It is suggested that duty on input and final product should be at par so that PLA utlisation can be increased.
2) In the state of Sikkim which is declared as Tax Free Zone , unlike other tax free zones the duty payment procedures to the extent of value addition and thereafter seeking higher value addition from the Excise authorities and refund procedures arevery cumbersome.
We request that like other tax free zones full duty on final product should be exempted and no CENVAT on inputs and capital goods should be there.
We are unable to understand why this type of discrimination is made for Sikkim tax free zone. Industries in Sikkim are facing lot of problems, which is subsequently generating many litigations.
L.P. Sanadhya Dy. General Manager – Excise lalit.sanadhya@ipca.com
Please see the below news. It shows the intention of the Government to Improve Cold Chain Products Development in the country.
AT present, the goods supplied or imported for Cold Storage is exempted as per Customs and Central Excise Notifications. But in Cenvat Credit Rules 6, the corresponding saving clause for such supplies are not figured. In this list, the supply of products under CT2 certificate also to be included. At present if we supply goods for exports, or to an EOU or SEZ the excise duty is exempted with cenvat facility. This needs to be extended to Cold Storage and and Cold Chain Production also. In absence of this specific provision, the manufacturer of cold chain products are not allowed to avail cenvat credit or otherwise, forced to pay 5% on the selling price.
BY TIOL News Service
NEW DELHI, FEB 09, 2012: THE Union Cabinet today gave its ex-post facto approval for registering National Centre for Cold Chain Development (NCCD) as a society. All stakeholders will be having membership in the society in a Public Private Partnership (PPP) mode.
The NCCD will be having a Governing Council under the Chairmanship of Secretary with 22 members, covering government officials, Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI), growers, cold chain equipment manufacturers/supplies etc. A sum of Rs.25 crore has been allocated as one time grant for setting up a corpus fund for NCCD.
S Swaminathan mailto: Swami@danfoss.com
(1) The eligibility to credit should be on the basis of a simple and clear negative list criteria.
(2)Input Service credit should be available, immediately on receipt of service & on the basis of service provider invoice raised, instead of, the present complicated method of reversal of credit if payment is not made within 3 months. This is essential, because, now service tax payment is on billing / accrual basis and hence there is no possibility of leakage of revenue.
(3) The return should be Annual and the format to be simple.
(4) Similarly, the definition and working of Gross value to be made simple and straight instead of complicated process now prescribed.
As regards Customs, the very levy of Special Addition Duty of Customs of 4% itself should be abolished, instead of reimbursing the SAD Duty through refund route.
S.SIVAKUMAR, SR.MANAGER - INDIRECT TAXATION TVS INTERCONNECT SYSTEMS LIMITED
• There should be no bar of unjust enrichment in the case of refund;
• As the duty rate has been considerably reduced since the last 20 years, there should be no duty benefit for goods imported under Export Promotion Schemes such as DEEC, DEPB, EOU, EPCG etc;
• Rescind Notification No.21/2002-Cus dated 01.03.2002 as amended and replace it with Notification wherein only concessional duty with condition is to be provided. Duty without condition may be provided in the Customs Tariff. Similarly, Notifications under Central Excise may be issued and duty on merit may be provided in the Central Excise Tariff;
• Amendment in Section 87 of the Customs Act, 1962 in order to have exemption from payment of customs duty on imported stores/bunkers such as fuels, consumables and provisions(food items) to be consumed on coastal going vessel and rescind Circular No. 58/97-Cus dated 06.11.1997;
• If any notification provides exemption from Basic Customs Duty and CVD, it must also provide exemption from any other duty levied under the Finance Act or any other Act;
• Duty structure on Motor Spirit (Petrol) and High Speed Diesel must be simplified. Due to its most complex duty structure, duty is wrongly calculated by the computer system resulting in re-calculation of duty;
• Drawback must be sanctioned after submission of Bank Realization Certificate;
• Where there is provision of conditional refund of duty or tax after its payment (for example refund of SAD or Service Tax), such notifications may be amended in order to exempt the goods/services from duty or tax directly;
Samir Sinha samirksinha@gmail.com
There is a duty exemption to registered R&Ds under Notification No.24/2007-cus & 16/2007-CX.
But such R&Ds are receiving lot many services. So these services also should be exempted from tax by issuing a similar notification.
For Jammu there is an exemption of duty by way refund vide notification No.56/2002-CX. But dept is giving refund of only basic duty and not education cess.
When basic duty is exempted, the resultant education cess also needs to be exempted. So when basic is refunded, education cess also should be naturally refunded. Unnecessary litigations are going on this issue. So a clarification should be clarification on this matter.
Service tax credit is denied to the manufacturers literally on all services. Major part of the litigations upto Tribunals, are related to this issue. Govt is allowing this benefit, but field staff is denying it on simple and whimsical reasons. So a clarification should be issued in this matter as to ¶the credit should be allowed if the cost is born by the company¶.
Thomas. V.Y mailto:thomasvithayathil@lupinpharma.com
The definition of Capital Goods as per CENVAT Credit Rules,2004, in terms of Rule 2 (a)(A)(iii) ,covers components, spares and accessories of goods specified at Rule 2(a) (A) (i) - all goods falling under Chapter 82,84,85 & 90 (heading 6805 grinding wheels and parts falling under heading 6804) & Rule 2(a)(A)(ii).- Pollution control equipments and hence the spares, and component parts of Pollution control equipments are eligible for capital CENVAT.
However, Storage tanks are included in the list at S.No.(vii) and hence if the rule is strictly interpreted in letter, the spares, accessories and components of Storage Tanks are not eligible for the credit, as they are not included in the definition of capital goods.
This apparently is not the intention of the legislature when they included storage tanks in the list of capital goods. This may be an obvious slip up since the components, accessories and spare parts of Pollution control equipments are eligible for the credit, on the same analogy the spares, accessories and components of storage tanks also should be eligible for the credit
The Rule should be suitably amended with retrospective effect.
S. Varadarajan , DGM(Finance)(Retd.)/Consultant
Rule 6(3A)(b) provides for provisional payment of proportionate credit of inputs and input services.
While in sub rule (ii) of the said Rule 6(3A)(b), the word ¶ provisional “ has been very specifically mentioned, leaving no scope for ambiguity or interpretation whereas similar explicitly is not there in the sub rule (i) of the very same Rule 6(3A)(b) and the C.Excise authorities, especially the audit staff argue that since specific mention of the word “provisional¶ is missing in sub rule (i) when it is there in sub rule (ii), the assessees are expected to pay the actual input credit involved, even though the provisional is implicit.. This, however, is not the intention of the Statute making authorities, especially since the word ¶ provisional¶ is there in the main rule 6(3A)(b)
We request that the issue be brought to the concened authorities' notice and the word ¶provisional¶ be inserted at the relevant place so as to avoid any litigation on account of diffeentent interpretation.
R. Subramanian , General Manager - Finance. Mangalore Refinery & Petrochemicals Ltd.
As per the relevant provisions, Service Tax is exempt upto 10 lakhs and this exemption will be applicable only in the first year of registration. From the second year onwards, the Tax is payable right from the beginning irrespective of whether you will be crossing the exempted limit or not. This results in an anomaly if the income in the second year does not even reach the exemption limits. Hence a scenario arises where those who are earning more than 10 lakhs in that year enjoy an exemption upto 10 lakhs whereas those who earn not even five lakhs may be subjected to tax in view of the fact that they had crossed the 10 lakhs limits in the previous year.
The anomaly should be rectified by bringing in necessary amendments so that the marginal cases of service providers can be benefited in the second year.
S.Varadarajan
1) Currently most of the EOUs are in exit mode . Revamping of the scheme with more benefits would contribute better to GDP growth.
2) Software Patch for Customs EDI system should be kept ready in advance and released during the midnight after the Budget presentation. The EDI system should be made available for customs clearances on the effective date of notifications, instead of shutting down the systems in ports & halting the clearances.
3) Considering India's growing business needs and to accelerate the supply chain activities, Customs shall introduce 24/7 customs cargo clearance facilities (at least in airports) . To introduce such facilities, additional expenditures may be collected from the users by way of fees; some of the activities may be outsourced to private enterprises wherever possible.
4) Gov't shall introduce new austerity measures to control its spending & strict mechanisms to control each rupee spent on every small public projects, instead of increasing tax load on common man/salaried employees, who buy inflated essential goods & services with their residual income, left out after huge income tax payouts.
Vijay Shettigar . Emplyoee of a Pvt Ltd., Co., in Bangalore. shettigar@tkap.co.in
SAD : Industries import the RM and pay SAD @4% at the time of imports but due to sales tax exemption in some region the said amount get accumulated. In our company, we have had accumulation of CENVAT credit to the tune of 9 Crores since last six years. There is not a single rupee reduced after enjoying all export benefits like excise refund etc.
The provision should be made for refund of such CENVAT credit which are not going to be utilized by the industries even after enjoying export refund. Or some provision to be made for transfer of such unutilized CENVAT credit to its principal company or sister concern.
There are CERA AUDIT conducted once in three to five years and CERA auditor take some technical points which is unsettled and going on with dept and we are getting periodical SCN without given proper reason. The only reason is ¶It is CERA Audit point and it is going on without any time limit¶. Is there any time limit for CERA to settle its para????? Or it's going on for years and years; we are now in seventh year to receive such SCN. Is it justifiable????? After first audit again second third CERA audit conducted at factory but the first point of CERA is still not settled and we get SCN every year. How to control such CERA point v/s Dept. SCN???
Vinod Parekh mailto:vinod_parekh@ushamartin.co.in
1) Levy of penalty for late filing of returns in excess of liability: Certain assesses, who have small liabilities to service tax like service receiver in case of Goods transport agency, are required to register and pay service tax and file returns. In case the liability is even a couple of rupees, the threshold limit does not apply to them. In case they delay in filing of returns, the late fees goes upto Rs. 20,000/- which is much much higher than that of the actual liability. It is suggested that the section 71 be amended to include after “not exceeding twenty thousand rupees” these words “or the amount of tax liability, whichever is lower”. Or any other suitable amendment which will ensure that those having small amount of liability are not subject to harassment by field officers on account of this huge late fees.
2) Further, section 80 also needs to be amended to include section 71, to provide relief from late fees, if the assessee proves there was a reasonable cause for failure to furnish returns.
3) Barge services: Goods transport agency services have a 75% abatement towards diesel costs, while transport of goods by waterways only has a 25% abatement. It is suggested that Transport of goods by waterway should also be given a similar abatement of 75%.
4) Refund of Service tax: In most cases where barge service are used for exports, the exporters ends up claiming the same for refund. In most cases, port services are also eligible for refund of service tax. It is suggested that in such cases, it is advisable to grant exemption of service tax to such transaction in total as in case of GTA services.
Parimal, CA
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