14% Service Tax not Now - CBEC Clarifies
13 04 2015
Monday
DDT 2550-03 03 2015 observed, "What is the Service Tax rate? It was announced that Service Tax rate has been enhanced to 14% and there would be no Education Cess. We are told that some people have already started collecting 14% Service Tax as they believe it would have immediate effect under the Provisional Collection of Taxes Act. They were surprised when we told them, that the enhanced rate of Service Tax will be applicable only from a date to be notified after enactment of the Finance Bill. If excise duty is applicable immediately, why not service tax? We explained that Provisional Collection of Taxes Act does not apply to Service Tax. Strange and difficult to comprehend? It must be noted that 14% Service Tax will be applicable from a date to be notified later."
DDT 2568 30 03 2015, carried a clarification from the Commissioner of Service Tax, Nagpur that the new rate is applicable from a date to be notified.
The Board was also activated and so the Board has now clarified that that the new Service Tax rate shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. The date will be notified in due course after the enactment.
People are so afraid of demands, interest, penalty and arrest that they are rushing in to pay the higher tax even before it is notified. The Board should ask Commissioners to put up big banners in their offices to the effect that the new rates are applicable from a future date. They should also advertise in visual media - already quite a damage has been done.
Service Tax on restaurants: Board clarifies that valuation of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess is determined as provided in rule 2C of the Service Tax (Determination of Value) Rules, 2006. In the Union Budget, 2015, no change has been made in these rules; therefore, any confusion is unwarranted. Further, the rate of service tax on the specified portion of the amount charged for such supply which is 40% continues to be 12.36% (including cesses) at present i.e. 4.944%. The rate of Service tax will continue unchanged till a date notified in due course.
Board wants Chief Commissioners and Commissioners to give wide publicity to the clarifications.
CBEC Circular No. 183/02/2015-ST., Dated: April 10 2015
FTP -Pre-shipment Inspection Agency - Para 2.55 and 2.56 of HoP kept in abeyance
IN order to facilitate transitional arrangements, the Director General of Foreign Trade has kept in abeyance the provisions of para 2.55 [Recognition as Pre-shipment Inspection Agency (PSIA) and issuance of Pre- shipment Certificate (PSIC)] and 2.56 [Responsibility and Liability of PSIA and Importer] of Handbook of Procedures, 2015-20 (which came into effect from 1.4.2015) till further orders.
Accordingly, the procedure for issue of Pre-Shipment Inspection Certificate (PSIC), as laid down in para2.32.2A and 2.32.2B of Handbook of Procedure Vol. I 2009-14, would remain in effect, till further orders.
DGFT Public Notice No. 05/2015-20, Dated: April 10, 2015
IT - Capital gains in respect of units of Mutual Funds under Fixed Maturity Plans on extension of their term - CBDT clarifies
AS per the provisions of the Income Tax Act, prior to the amendment made by the Finance (No.2) Act, 2014, assets in the nature of shares, listed securities, units of mutual funds and zero coupon bonds qualified as long term capital assets if held for a period of more than twelve months as against the holding period of more than thirty-six months in case of other assets. Accordingly, units of a mutual fund under the Fixed Maturity Plans (FMPs) held for a period of more than twelve months qualified as long term capital asset. The amendment in sub-section (42A) of section 2 of the Act by the Finance (No.2) Act, 2014 changed the period of holding in case of unlisted shares and units of a mutual fund (other than an equity oriented fund) for their qualification as long term capital asset to more than thirty-six months.
As a result, gains arising out of any investment in the units of FMPs made earlier and sold/redeemed after 10.07.2014 would be taxed as short-term capital gains if the unit was held for a period of thirty-six months or less.
FMPs are closed ended funds having a fixed maturity date wherein the duration of investment is decided upfront. The funds collected by FMPs are invested by the Asset Management Companies (AMCs) in securities having similar maturity period. To enable the FMPs to qualify as a long-term capital asset, some AMCs administering mutual funds have offered extension of the duration of the FMPs to a date beyond thirty-six months from the date of the original investment by providing to the investor an option of roll-over of FMPs in accordance with the provisions of Regulation 33(4) of the SEBI (Mutual Funds) Regulations, 1996.
In this regard representations have been received in the Board seeking clarification regarding applicability of tax on capital gains in the hands of the unit holder at the time of roll over of FMPs that are closed ended schemes.
CBDT clarifies that no capital gains will arise at the time of exercise of the option by the investor to continue in the same scheme. The capital gains will, however, arise at the time of redemption of the units or opting out of the scheme, as the case may be.
CBDT Circular No. 6 of 2015 F. No. 133/39/2014-TPL, Dated: April 9, 2015
Anti Dumping Duty - Resurrection
PROVISIONAL anti dumping duty was imposed on ‘Electrical Insulators of Glass or Ceramics/Porcelain, whether assembled or unassembled' originating in, or exported from the People's Republic of China by Notification No. 40/2014-Customs (ADD) dated 16.09.2014. This expired on 16.03.2015 and the designated authority had on 4th March 2015 recommended imposition of definitive anti-dumping duty - it took the Board more than a month to get the notification ready. Now the Government says the newly imposed anti dumping duty is effective from the date of imposition of provisional anti-dumping duty, that is, the 16th September, 2014.
How long will they continue with this resurrection and retro taxation? And they worked on a Saturday to bring back to life a dead notification.
Notification No.11/2015-Customs (ADD)., Dated: April 11, 2015
Anti Dumping Duty on DVD - Saved Just in Time
YOU know why they worked on a Saturday?
The notification No. 98/2010, dated 28.09.2010 which imposed anti dumping duty on "Recordable Digital Versatile Disc [DVD]" expired on 12th April 2015 (yesterday - Sunday). So to save it just before expiry, they came to office on Saturday, the 11th of April and issued the notification extending the duty till 11th April 2016.
Interestingly, whereas the parent notification 98/2010 carried the following Explanation clause (a) which read -
Digital Versatile Disc Recordable means such discs of all kinds and includes DVD-R, DVD+R, DVD-RW and DVD+RW;
the notification issued for extending the ADD substitutes this explanation clause (a) to read -
Digital Versatile Disc Recordable means such discs of all kinds and includes DVD-R, DVD+R, but does not include DVD-RW and DVD+RW.
Nonetheless, the notification categorically states that it comes into effect from 12.04.2015 so as to avoid any confusion.
But good work indeed - this shows respect for LAW - the more the babus have it, the more safe we are.
Notification No.12/2015-Customs (ADD)., Dated: April 11, 2015
Company Law - Details in Companies' Auditor Reports
THE Ministry of Corporate Affairs has issued the Companies (Auditor's Report) Order, 2015.
The Order has specified some 12 questions, which the Auditor should answer and certify. A few samples.
1. Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
2. Whether physical verification of inventory has been conducted at reasonable intervals by the management;
3. Is the company regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.
4. Whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.
Companies (Auditor's Report) Order, 2015., Dated: April 10, 2015
CBEC promotes 63 Commissioners - nearly 30 left out
IN an unusual bureaucratic massacre, the CBEC has denied promotion to nearly 30 senior Commissioners while granting promotion to the grade of Principal Commissioner. In a Saturday Order, the CBEC promoted 63 Commissioners as Principal Commissioners, but in the process nearly thirty officers in the seniority list have been superseded. This means the CBEC (or Government) did not find a third of the Commissioners eligible and qualified for promotion. What is wrong with them? And if they are not fit to be promoted as Principal Commissioners, how are they fit to work as Commissioners - after all the Commissioner and the Principal Commissioner does the same work and are equal in all respects except a slightly higher pay for the Principal Commissioner. And some of the overlooked officers are the stars of the Department holding key positions and some of them were tipped to be future Members and Chairmen of the Board - what went suddenly wrong with them that they are not considered fit enough to get a little more salary?
Perhaps many of them will rush to the nearest Bench of the CAT.
NACEN Hindupur Bhoomi Puja - Huge Political Show
IT was a giant political show for AP Chief Minister Chandra Babu Naidu. "We brought the National Customs Academy to the severe drought-prone district", he told a large number of his illiterate supporters gathered after the grand function.
He didn't tell them how the Customs Academy was going to help the drought stricken district.
Any way it was the foundation stone laying ceremony of NACEN at Hindupur in Andhra Pradesh on Saturday. Amidst chanting of vedic hymns, many politicians and officials joined the Union Finance Minister Arun Jaitley in laying the foundation stone for the future citadel of learning that the CBEC plans to construct on a huge 500 acre land.
Picture shows Ms. P. Sunitha, AP Minister, Dr.Sreekumar Menon, DG, NACEN, Ms. Joy Kumari Chander, CBEC Member, Mr.Venkaiah Naidu, Mr. Chandra Babu Naidu, Mr. Arun Jaitley, Mr.YS Choudhary and CBEC Chairman Mr. Kaushal Srivastava.
It is indeed a great achievement for CBEC that they could get the land and get the foundation stone laid within one year of announcement.
D.A Order for Babus
IT is now real, no fake. The Department of Expenditure has issued an Office Memorandum enhancing the Dearness Allowance of the Government employees from the present 107% to 113% with effect from 1.1.2015.
MoF, Dept. of Expenditure Office Memorandum No.1/2/2015-E-II(B)., Dated April 10 2015
Aviation Minister wants ST Exemption for MROs
CIVIL Aviation Minister Mr. Ashok Gajapathi Raju said in Bangalore yesterday that his Ministry has requested the finance ministry to remove MRO (maintenance, repair and overhaul) activity from the service tax regime for at least ten years. Will the FM yield?
Jurisprudentiol- Recent Supreme Court Judgements
Central Excise - Classification - Lean Gas: natural gas after extraction of LPG, remains natural gas and, therefore, lean gas is also to be classifiable under sub-heading 2711.21 and entitled to the exemption under Notification No.179/85. The CESTAT decision in 2002-TIOL-123-CESTAT-DEL approved. The issue in question was as to whether Lean Gas is exigible to excise duty. According to the appellant ONGC, lean gas is nothing but natural gas and therefore attracts 'nil' duty. This contention was not accepted by the Tribunal and so ONGC is in appeal before the Supreme Court. In fact CESTAT had in another case 2002-TIOL-123-CESTAT-DEL held that lean gas is nothing but natural gas and the Supreme Court had dismissed the Revenue appeal. So, the Supreme Court once again confirmed that the appellant is right in contending that Lean Gas is in fact natural gas and therefore would attract nil duty.
Please see Commissioner of Central Excise, Indore vs Gas Authority of India Ltd - 2015-TIOL-61-SC-CX
Central Excise - Classification - security holograms - The appellant manufactures security holograms. At the very beginning of the manufacturing process, they use coated metallised film which is classified under Tariff entry 39.20.36 after which the said film is embossed. Post embossing, there is adhesive coating and release coating which results in a hologram which ultimately is cut to size and utilised by customers of the appellant for security purposes. In the show cause notice dated 04.02.2000, the Department sought to classify the security hologram under Tariff entry 39.19 of the Central Excise Tariff. The appellant disputed this and stated that, in fact, the holograms ought to be classified under Tariff entry 49.01. The Commissioner, Central Excise, by an order dated 01.01.2002 agreed with the Department's classification and classified the said goods under Tariff entry 39.19. An appeal to the CESTAT by the appellant was dismissed. The Tribunal by the impugned judgment dated 19.12.2003, agreed with the Commissioner.
The Supreme Court did not; it allowed the appeal and observed, "The security hologram part of the product in question is primary and the self adhesive part only incidental insofar as the user of the said goods is concerned."
Please see Holostick India Ltd Vs Commissioner of Central Excise, Noida - 2015-TIOL-60-SC-CX
Central Excise - Classification - blended marble vinyl flooring - The respondent is a manufacturer of blended marble vinyl flooring which comes under the chapter 68 of the Schedule of Central Excise Tariff, 1985 Act under sub-heading No. 6807. The order of the Assistant commissioner shows that in the test conducted by the Department the percentage of plastic (PVC) which was found was as low as 13.3% while the content of limestone was as high as 84.9%. It has also come on record that the plastic was primarily used as a binder. Even after noticing these facts, the only consideration which weighed with the Assistant Commissioner was that the main characteristics of the material was plastic. It is here where the Assistant Commissioner fell in error, which error is rightly corrected by the Commissioner (Appeals).
The Supreme Court reiterated that the onus lies on the Department to show that the goods were to be classified under sub-heading 3918.10, which onus the Department has failed to discharge.
Please see Commissioner of Central Excise, Vadodara Vs Inarco Ltd - 2015-TIOL-59-SC-CX
Central Excise - EOU - Clearance to DTA: - the duty of excise has to be the amount equal to the aggregate of the duties of customs which would be leviable under Section 12 of the Customs Act, on like goods produced or manufactured outside India - Valuation has to be as per the Customs Act - the sale price charged to customer in India of the goods under assessment cannot be considered as a price in the course of International trade.
The Supreme Court has remanded the case to the Commissioner who shall decide as to which Rule of the Valuation Rules, 1988 shall be applicable.
Please see Commissioner of Central Excise, Nagpur Vs Morarjee Brembana Ltd - 2015-TIOL- 62 -SC-CX
A new Tax Regime
PRIME Minister Modi said yesterday,
There were institutions in India that seemed beyond scrutiny. Well, they no longer are. We are reforming institutions in ways that has not happened in decades. We are building a tax regime that is predictable, stable and competitive. We will now address the remaining uncertainties. The Goods and Services Tax is a long needed revolution that is becoming a reality .
Tomorrow is a Holiday - Dr. Ambedkar's Birthday.
Until Wednesday with more DDT
Have a nice day.
Mail your comments to vijaywrite@tiol.in
