FEBRUARY 15, 2015

By Navin Khandelwal, CA

1) MINIMUM Turnover limit of registration to be kept at Rs. 15 Lacs.

2) For exemption of SSI, Rs. 18 lacs, same should be available for service recipient also in case of reverse charge.

3) For Turnover of Rs. 18 lacs to 48 lacs,only Annual Return should be required to be filed if no Cenvat is taken.

4) One time registration fee should be prescribed Rs. 1000/-

For Centralized ,it can be Rs. 5000/-.

5) Delay fee for return filing should be Rs. 100/- per day after the due date of return filing which should be -

a. In case of annual filing - 30/06 every next year

b. In case of Companies - 30/10 & 30/06

c. In case of others - 25/10 & 31/05

(Maximum delay fee can be Rs. 30000/-). Return should be allowed to be revised multiple times upto 120 days.

6) Penalty should be as under :

a. For Non/Late registration - Rs. 20000/- minimum

b. For short/ Non tax payment

i. If transaction recorded- 30% of tax

ii. If transaction not recorded- 60% of tax

c. In case of Sec. 78 attraction

i. If transaction recorded - 40% of tax

ii. If transaction recorded - 75% of tax

d. If Tax, Interest + Penalty paid upto 20% within 60 days of OIO then case to be finished /concluded there itself.

7) Every amount of expenditure/ cost debited to expenses carrying service tax element should be treated as input service and thecenvat credit of such element to be allowed invariably . No exclusion clause at all .Removedefinition of input service. But rate can be fixed at 18%/20% in this case.

8) The rate of service tax (where no Cenvat at all is availed) shall be 5% or 6% only.

9) Increase the scope of Capital goods eligible for CCR 2004. Also allow 100% credit in the first year itself.

10) Associate Concerns/ Enterprises :

a. If transactions are entered into on actual values (As certified by CA) for reimbursements on account of sharing of expenses of every kind, then, no need to pay service tax.

b. No reverse charge applicability also.

11) The %age of tax to be paid by Providers & Receivers should be democratic ones in case of Partial reverse charge.

12) Point of taxation has to be 60 days from the date of bill or receipt of payment/ advance whichever is earlier.

13) Rate of Interest has to be :

a. 10% for first three months.

b. 15% for next three months.

c. 18 % next six months

d. 24% thereafter

14) There should be a system of compulsory scrutiny of returns by Inspector, Superintendent, AC and DC, where tax payment in previous year is 10 lacs , 10 to 20 lacs , 20 to 40 lacs and 40 to 50 lacs respectively.

For returns where tax payment is above Rs. 50 lakhs but below Rs. 1 Cr . , the scrutiny can be done by ADC/ COMM if the same is not carrying a tax compliance certificate issued by Chartered Accountant duly empaneled by the Commissioner for this purpose.

15) Audits : Bring the provisions of audits through sections only.

No Audit to be done if the records are already scrutinized as above by the dept. As such to be conducted

a. By Dept. only if – assessee paid the service tax more than Rs. 1 Cr. But less than Rs. 3 Cr. last year.

b. By empaneled CA firm/ Cost Accountant if – assessee paid the service tax more than Rs. 3 Cr.

16) Adjudication:

a. Show cause notice cannot be issued for the period of which audit has been done and a one year period after that has passed.

b. SCN to be decided within 4 months from the date of issue.

c. If assessee pays the tax and interest with 10% penalty before the adjudication then the SCN to be treated dropped automatically.

17) Any amount reimbursed to service provider by the service receiver in the nature of reimbursement,recovery of expenses. Pure agent expenses shall not form part of taxable value if the same is lesser than or equal to 15% of the taxable service provided. For example,in case of C&F services the value of reimbursement on pure agent basis shall not be more than RS. 15000/- if the value of the commission or the remuneration of the C&F is Rs. 100000/- .

18) The service tax if found to be payable, by the dept. and which is not paid at the time of finding for the reason that it is not charged from the client then since the service is taxable the opportunity of 60 days time to be given to the service recipient to pay to the service provider and then only he should be asked to pay it.

We mean to say if somebody not collected the tax and found to be taxable by the service provider then the servicer receiver should be asked by the dept to pay the tax to the provider since it is a destination and consumption based indirect tax.

19) In case of Bad debts, which are written off in the books as per the prevailing accounting practices and is duly certified by the auditors then, either service tax would not be payable or if paid, can be automatically adjusted by the assessee against the future liability.

20) Service tax to be payable by 10 th of next month and can be paid through bank challan if the total tax liability for the year is less than Rs. 1 Lac.

21) The service tax for and upto 25 th March needs to be paid by 31 st March and for 26 th to 31 st March, by 10 th April.

22) There should be a facility to put some remarks in the e-return.

23) Pre-deposit should not be mandatory. It should be maximum 5% that to only at tribunal stage and when the tax demanded is more than Rs. 1 Cr.

24) If the audit is done by dept. or CA , then again audit by C&AG should not be conducted at all. Further, C&AG team should sit in the Dept. only and do the audit of departmental records and not to enter the premises of assessee.

25) Pl decide the 11 accounting codes only. 9 for declared services ,one for other than negative list services one for GTA.