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Banks selling gold coins, sharing ATM facilities - CCRs need Amendment

JANUARY 27, 2015

By K R Ramankutty, CA

(A) RULE 4 of the Point of Taxation Rules

Rule 4 of the POT Rules deals with point of taxation in case of change in effective rate of duty. Section 67A has been inserted by the Finance Act, 2012 with effect from 28.05.2012. By the insertion of section 67A, rule 4 of the POTR has become redundant. Rule 4 may, therefore, be deleted.

(B) Electronic documents to be considered valid in the cases of ATM transactions

Presently, there are about 203 participant banks sharing 129,671 ATMs under agreement with National Payments Corporation of India (NPCI).

Banking companies providing interbank ATM facilities through membership/connectivity to a common switch/network are incapable of taking CENVATcredit of service tax paid on payments made to other member banking companies for providing such facilities through the common switch/network for want of physical invoice.

In this view of the matter, electronic statements issued by the operator of common switch/network viz. NPCI should be considered as valid document for availing CENVAT credit.

(C) Trading activity carried out by Banks/NBFCs

Banking and Non Banking Financial Institutions are also involved in trading of Gold coins. The jurisdictional authorities are taking a view that apart from the payment required under Rule 6(3B) of CCR, 2004, further reversal under rule 6(3) is also required to be made. For this, the department relies on Sl. no. 11 of Circular No. 943/04/2011 -CX dated 29.04.2011 which reads -

11

Sub-rules 3B and 3C of rule 6 apply to whole entity or independently in respect of each registration?

The sub-rules 6(3B) and 6(3C) impose obligation on the entities providing banking and financial services (in case of a bank and a financial institution including a non-banking financial company) or life insurance services or management of investment under ULIP service. The obligation is applicable independently in respect of each registration. When such a concern is exclusively rendering any other service from a registered premises, the said rules do not apply. In addition to BoFS and life insurance services if any other service is rendered from the same registered premises, the said rules will apply and due reversals need to be done.

The view of the Department is apparently wrong as sub-rule (3B) starts with a non-obstante clause.

Board should clarify immediately and if need be make necessary amendments in the sub-rule.

(DISCLAIMER: The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the sites)

 


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