Budget Blues
05 03 2015
Thursday
RECOVERY of CENVAT credit wrongly taken but not utilised: No interest? But penalty leviable?
RULE 14 of the CENVAT Credit Rules, before its amendment by Notification 6/2015 - CE (NT) dated 01.03.2015, read as:
Recovery of CENVAT credit wrongly taken or erroneously refunded:- Where the CENVAT credit has been taken and utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AA of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries.
As you would remember, the and was or earlier. After the famous judgement of the Supreme Court in the case of Ind Swift Labs 2011-TIOL-21-SC-CX, wherein the Apex Court held that "interest is payable from the date of taking credit, not utilizing it", the benign Government amended or to and by Notification No. 18/2012 - CE (NT) dated 17.03.2012.
So from 17.03.2012, interest was applicable only on utilizing the wrong credit, not merely on taking it.
However there was a strange situation that interest was not payable, but the assessee was liable to penalty under Rule 15.
Rule 15 provides for penalty if any person, takes or utilises CENVAT credit…
Budget 2015 brings in some changes in Rule 14. The new Rule 14 stipulates:
(1) (i) Where the CENVAT credit has been taken wrongly but not utilised, the same shall be recovered from the manufacturer or the provider of output service, as the case may be, and the provisions of section 11A of the Excise Act or section 73 of the Finance Act, 1994 (32 of 1994), as the case may be, shall apply mutatis mutandis for effecting such recoveries;
(ii) Where the CENVAT credit has been taken and utilised wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer or the provider of output service, as the case may be, and the provisions of sections 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, 1994, as the case may be, shall apply mutatis mutandis for effecting such recoveries.
So, now the provisions relating to wrong CENVAT credit ‘taken' and ‘taken and utilised' are separated.
1. Where CENVAT credit is taken, but not utilised, recovery shall be made and the provisions of Section 11A shall apply.
2. Where CENVAT credit is taken and utilised, recovery shall be made and the provisions of Sections11A and 11AA shall apply.
That is if the credit is taken and utilised, apart from the credit, interest under 11AA is payable. If the credit is taken but not utilised, provisions of Section 11AA are not specifically made applicable. But does this mean that there is no interest liability?
Section 11AA(1) states,
(1) Notwithstanding anything contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub-section (2), whether such payment is made voluntarily or after determination of the amount of duty under section 11A .
So whatever you write wherever you want, if duty is payable, interest is mandatory. Are we back to square one?
PS: Even now, the penalty under Rule 15 is not deleted. So, if credit is taken and not utilised, and if it is recovered by the department under Rule 14, both interest and penalty are payable. Is this the law?
The ‘Person Concerned' or 'worried person'?
DDT has written several times about the concern of the lawmakers. Is the person mentioned in Law a 'concerned person' or a 'person concerned'?
As per Section 28(8) of the Customs Act;
The proper officer shall, after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice .
This person is certainly concerned as he is at the mercy of the Customs Officer.
There is an identical provision in Section 11A(10) of the Central Excise Act:
The Central Excise Officer shall, after allowing the concerned person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty of excise due from such person not being in excess of the amount specified in the notice .
If the person is concerned in Customs, he can't be unconcerned in Central Excise.
The Proviso to Section 124 of the Customs Act reads as, "Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of theperson concerned be oral".
What is difference between the concerned person under Section 28 and the person concerned under Section 124?
So, is the concerned person = person concerned?
English Grammar teachers used to teach that when 'concerned' precedes the noun it qualifies it means 'worried, anxious, or troubled', but when 'concerned' follows the noun it qualifies, it means 'involved or implicated'
In the latest Circular No. 998/2015, dated 28.02.2015, the CBEC quoted a Supreme Court judgement - "the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court."
And the CBEC added, "Chief Commissioner shall give direction to the Central Excise Officer in the concerned Commissionerate.."
The officer responsible for bad drafting of law is not really a responsible officer and DDT is concerned about this.
Why no tax concessions?
THE Woes:
- Rs. 16.8 lakh crore actual expenditure in FY 15; actual revenue collection of Rs. 11.7 lakh crore;
- Printing of notes to run the government - Rs. 5.1 lakh crores or 44% of revenue collection;
- Interest payments Rs. 4.1 lakh crore, representing 37% of revenue collection;
- India's Tax-GDP ratio, fiscal deficit and debt levels among the worst in developing world;
- Inflation running at 8-12% and only came down because of lower oil prices and MSP management;
- 14th Finance Commission reduced Plan Expenditure by further Rs. 1.1 lakh crore; and
- Fiscal deficit had to be brought down to 3.9% of GDP and more money had to be devolved to the States.
The result:
There was little ability to provide tax concessions - said the Minister of State for Finance Jayant Sinha, at a meeting of FICCI yesterday.
ST hike needed to move towards GST - Revenue secretary
SPEAKING at the FICCI meeting, the Revenue Secretary said that the proposal of raising service tax to 14% from 12.36% in the Union Budget was a necessary measure in the eventual movement towards Goods and Services Tax (GST). States will get powers to tax services under the Goods and Services Tax, pushing up the rate, so the government has raised the rates, signalling transition towards a new regime.
Referring to the view that GST rate was a cause for concern, the Chief Economic Advisor, Mr. Subramanian said the GST rate should be internationally competitive and suggested the more the industry harps on this and sends out a clear message to that effect, the better it would be.
ST Exemption for folk artists - Same benefit for Film Actor - Madras HC rejects actor's petition
ACTOR Siddharth has challenged the ST notification No.25/2012 providing for an exemption in respect of services provided by performing artist in folk or classical art forms of music, dance or theatre from the liability towards service tax. The actor assails this notification on the ground that it is discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution of India inasmuch as the same benefit is not extended to other performing artistes namely film actors. The petitioner claims to be an actor in movies and submits that his job involves skills to display different kinds of emotions, dialogue delivery skills and acting characters specified by film Director. These skills are stated to be not different from an actor who performs with similar skills in theatre or drama. In a nutshell, the plea is that the impugned notification is arbitrary and discriminatory as it extends only to performing artistes in theatre and drama and not artistes in films.
The High Court observed, the mere fact that there is an element of drama or acting both in case of theatre and in case of films does not mean that the two activities are identical, taking into consideration the circumstances in which films are made and theatre is performed.
The Court asked the petitioner whether he would perform at the rates at which theatre artistes perform. The High Court was of the view that the petition is completely misconceived and without any merit and so dismissed it.
And in this year's Budget, they have pruned this exemption for artists.
Company Law - Difficulty in filing information about new directors - MoCA clarifies
THIS Ministry has received several representations about the difficulties faced by stakeholders due to deactivation of Digital signature certificate (DSC) following en masse resignation of all the directors of a company before appointment of new directors in their places. The difficulty arises because of automatic deactivation of DSC on filing of DIR-11
(Notice of resignation of a director to the Registrar) by the resigned/resigning Director (s), and none of the new Director's details having been filed. As a result, Form DIR-12
(Particulars of appointment of directors and the key managerial personnel and the changes among them) cannot be filed by a company due to lack of an authorized signatory Director.
It is clarified that the Registrar of Companies within the irrespective jurisdictions are authorized, on request from the stakeholders, and after due examination, to allow any one of the resigned directors who was an authorized signatory Director for the purpose of filing DIR-12.
MoCA General Circular No. 03/2015, Dated: March 03, 2015
CE/ST - Timely Disposal of Registration applications - CBEC Advisor advises
CBEC's former Member and present Advisor SB Singh has started his work. In a letter to all the Chief Commissioners, he told them,
I am sure, necessary steps to ensure disposal of registration applications in the line of new procedures must have already been initiated by your Officers. You have to personally monitor the implementation of the new system of granting registration and to ensure that all the new applications filed after the presentation of the Budget are disposed off expeditiously and within the prescribed time limit of two days.
As regards the past registration applications pending in the ACES, as on the date of presentation of Budget, you have to ensure that these are immediately disposed off as per the guidelines provided on the circular dated 28.2.2015. All these past registration applications have to be disposed off latest by 15.3.2015.
He wants a report by 16th March.
Let us hope the field follows his advice.
CBEC Advisor D.O. Letter F. No. 201/24/2013-CX.6, Dated: March 03, 2015.
CBEC Website to be revamped
CBEC Directorate General of Systems has undertaken the task of revamping and redesigning the CBEC website [www.cbec.gov.in] and also making it more user-friendly. However, the DG has observed that the contents hosted at the website like Acts, Rules, Regulations and other public related information do not get updated from time to time because of lack of regular inputs from the Content Administrators of different field formations and Board. The DG's office has been constantly pursuing with the offices of Chief Commissioners, Director Generals, and different formations of the Board for providing relevant website contents promptly and to monitor update and relevance/authenticity of the contents hosted at website at regular basis in view of the web-policy of CBEC.
In a letter to us, the TRU in 2012 clarified, "The copy published on the website is for trade facilitation and does not have any legal force." (Please see DDT 1942)
DIRECTORATE GENERAL OF SYSTEMS F. No. IV (25)3/2013-Systems Dated: March 03, 2015.
Tomorrow is HOLI
Until Monday with more DDT
Have a nice weekend.
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