Finance Bill Passed in Lok Sabha - Service Tax Penal Provisions aligned with Central Excise
TIOL-DDT 2589
01 05 2015
Friday
Proposed in the Finance Bill 2015
As passed in the Lok Sabha on 30 04 2015
Penalty for failure to pay service tax.
76. (1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent. of the amount of such service tax:
Provided that where such service tax and interest is paid within a period of thirty days of-
(i) the date of service of notice under sub-section (1) of section 73, no penalty shall be payable;
(ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent. of the penalty imposed in that order, only if such reduced penalty is also paid within such period.
(2) Where the Commissioner (Appeals), the Appellate Tribunal or, the court, as the case may be, modifies the service tax determined under sub-section (2) of section 73, then, the amount of penalty payable thereon, shall also stand modified accordingly, and the benefit of reduced penalty under the proviso to sub-section (1) shall be available if such service tax, interest and reduced penalty so payable, is paid within a period of thirty days from the date of receipt of the order by which such modification is made.".
Penalty for failure to pay service tax.
76. (1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent. of the amount of such service tax:
Provided that where such (this word is removed now) service tax and interest is paid within a period of thirty days of-
(i) the date of service of notice under sub-section (1) of section 73, no penalty shall be payable; and proceedings in respect of such service tax and interest shall be deemed to have been concluded; (added)
(ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent. of the penalty imposed in that order, only if such reduced penalty is also paid within such period.
(2) Where the amount of penalty is increased by the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, over and above the amount as determined under sub-section (2) of section 73, the time within which the reduced penalty is payable under clause (ii) of the proviso to sub-section (1) in relation to such increased amount of penalty shall be counted from the date of the order of the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be .(substituted)
Did they make a mistake in substituting this clause instead of adding a new clause?
Penalty for failure to pay service tax for reasons of fraud, etc.
78. (1) Where any service tax has not been levied or paid, or has been short-levied or shortpaid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent. of the amount of such service tax:
Provided that where such service tax and interest is paid within a period of thirty days of -
(i) the date of service of notice under the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen per cent. of such service tax;
(ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent. of the service tax so determined:
Provided further that the benefit of reduced penalty under the first proviso shall be available only if the amount of such reduced penalty is also paid within such period.
(2) Where the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, modifies the service tax determined under sub-section (2) of section 73, then, the amount of penalty payable thereon, shall also stand modified accordingly, and the benefit of reduced penalty under the first proviso to sub-section (1) shall be available if such service tax, interest and reduced penalty so payable, is paid within a period of thirty days from the date of receipt of the order by which such modification is made.
Penalty for failure to pay service tax for reasons of fraud, etc.
78. (1) Where any service tax has not been levied or paid, or has been short-levied or shortpaid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent. of the amount of such service tax:
Provided that in respect of the cases where the details relating to such transactions are recorded in the specified record for the period beginning with the 8th April, 2011 upto the date on which the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent. of the service tax so determined.(now inserted) Provided that where such (word removed) service tax and interest is paid within a period of thirty days of -
(i) the date of service of notice under the proviso to sub-section (1) of section 73, the penalty payable shall be fifteen per cent. of such service tax; and proceedings in respect of such service tax, interest and penalty shall be deemed to be concluded (inserted now)
(ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent. of the service tax so determined:
Provided also that the benefit of reduced penalty under the second proviso shall be available(inserted now) only if the amount of such reduced penalty is also paid within such period.
Explanation.--For the purposes of this sub-section, "specified records” means records including computerised data as are required to be maintained by an assessee in accordance with any law for the time being in force or where there is no such requirement, the invoices recorded by the assessee in the books of accounts shall be considered as the specified records. (inserted now)
(2) Where the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, modifies the amount of service tax determined under sub-section (2) to section 73, then the amount of penalty payable under sub-section (1) and the interest payable thereon under section 75 shall stand modified accordingly, and after taking into account the amount of service tax so modified, the person who is liable to pay such amount of service tax, shall also be liable to pay the amount of penalty and interest so modified. (substituted now)
(3) Where the amount of service tax or penalty is increased by the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, over and above the amount as determined under sub-section (2) of section 73, the time within which the interest and the reduced penalty is payable under clause (ii) of the second proviso to sub-section (1) in relation to such increased amount of service tax shall be counted from the date of the order of the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be (inserted now)
Transitory Provisions: Section 78B
(2) Notwithstanding anything contained in sub-section (1), in respect of cases falling under the provisions of sub-section (4A) of section 73 as was in force prior to the date of coming into force of the Finance Act, 2015, where no notice under the proviso to sub-section (1) of section 73 has been served on any person or, where so served, no order has been passed under sub-section (2) of section 73, before such date, the penalty leviable shall not exceed fifty per cent. of the service tax
Transitory Provisions: Section 78B
(2) In cases where show cause notice has been issued under sub-section (1) of section 73 or under the proviso thereto, but no order has been passed under sub-section (2) of section 73 before the date on which the Finance Bill, 2015 receives the assent of the President, the period of thirty days for the purpose of closure of proceedings on the payment of service tax and interest under clause (i) of the proviso to sub-section (1) of section 76 or on the payment of service tax, interest and penalty under clause (i) of the second proviso to sub-section (1) of section 78, shall be counted from the date on which the Finance Bill, 2015 receives the assent of the President.(substituted now)
Consequent Notifications - Credit of Education Cess can be used for payment of Excise Duty
THE Finance Minister made certain announcements in Lok Sabha and promised the required notifications. CBEC was prompt to issue the notifications immediately. These are the notifications issued yesterday.
Since the budget day, there was a concern as to what would happen to the cenvat credit of education cess and the Board took all of two months to clarify the position.
Notification 12/2015 -CENT, dated 30.04.2015 amends the CENVAT Credit Rules, 2004 to stipulate that
"the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act:
Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act:
Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act.”
What about the balance of CENVAT credit of education cess lying in CENVAT account as on 28.02.2015? The amendment to CENVAT Credit Rules allows credit on inputs/input services received on or after 01.03.2015, but it does not provide solution to the balance of credit as on 28.02.2015.
What if someone had already received the inputs/input services before 28.02.2015, but did not take credit of education cess? Should he lose that?
In case of capital goods, it is not mandatory that the balance 50% should be taken only in the immediate next financial year. Then, why they allowed the credit only to the capital goods received in 2014-15, but not before that?
Why can't they make a simple amendment without creating any fresh problems?
Amends notification No. 39/96- Customs, dated the 23rd July, 1996 - Exemption from additional duty of customs levied under section 3 of the Customs Tariff Act (both CVD and SAD) in respect of certain entries of notification No.39/96-Customs, dated 23.07.1996 are withdrawn
Amends notification No. 62/95 - Central Excise, dated the 16th March, 1995 and notification No. 63/95- Central Excise, dated the 16th March, 1995 - exemption to Ordnance Factories & Defence PSUs is withdrawn. These changes will be effective from 01.06.2015. Level playing field & Make In India mantra at work?
Amends notification No. 12/2012- Central Excise, dated the 17th March, 2012 - Excise duty exemption on finishing agents, dye carriers to accelerate the dyeing or fixing of dye-stuffs, printing paste and other products and preparations of any kind used in the same factory for the manufacture of textiles and textile articles has been withdrawn. Back to old ways?
Amends CENVAT Credit Rules, 2004 - Cenvat credit of Education Cess and Secondary & Higher Education Cess for payment of basic excise duty. What happens to the balance credits of Education Cesses lying in the account as on 28.02.2015 is not forthcoming?
Amends notification No. 25/2012-ST dated the 20th June, 2012 so as to exempt certain specified services.Life Insurance business provided under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Jan Dhan Yojana (PMJDY), General Insurance business provided under Pradhan Mantri Suraksha Bima Yojana (PMSBY), collection of contribution under Atal Pension Yojana (APY).
Can two Exemption Notifications be simultaneously allowed - CBEC Clarifies.
THE issue as to whether an importer can simultaneously avail the exemption benefits under two notifications, one for Basic Customs Duty and the other for CVD was clarified by the Board in Circular No.41/2013-Customs dated 21.10.2013 that an importer while availing of BCD exemption on steam coal under notification No.46/2011-Customs, dated 01.06.2011 can simultaneously avail of concessional CVD at 2% under S.No.123 of notification No.12/2012-Customs, dated 17.03.2012.
Drawing the same analogy, in the case of muriate of potash and urea for use in the manufacture of other fertilizers, Board clarifies that importers can simultaneously avail benefit of S.No.198 or 203 of notification No.12/2012-Customs, dated 17.03.2012 for concessional rate of BCD and S.No.127 of notification No.12/2012-Central Excise for CVD exemption.
This clarification is contained in the letter from JS, TRU explaining the notifications issued yesterday.
THE Government has increased the Tariff value of Gold from 388 USD to 393 USD per 10 gms. The tariff value of Silver is increased from 524 USD to 537 USD per kilogram.
Tariff values of all the oils, Brass Scrap have been changed.
The Tariff values as on 15.04.2015 and with effect from 30.04.2015 are as under:
Table 1
S. No.
Chapter/ heading/ sub-heading/tariff item
Description of goods
Tariff value USD (Per Metric Tonne)
from 15.04.2015
Tariff value USD (Per Metric Tonne)
from 30.04.2015
(1)
(2)
(3)
(5)
(6)
1
1511 10 00
Crude Palm Oil
658
650
2
1511 90 10
RBD Palm Oil
682
659
3
1511 90 90
Others - Palm Oil
670
655
4
1511 10 00
Crude Palmolein
684
662
5
1511 90 20
RBDPalmolein
687
665
6
1511 90 90
Others -Palmolein
686
664
7
1507 10 00
Crude Soyabean Oil
726
752
8
7404 00 22
Brass Scrap (all grades)
3469
3460
9
1207 91 00
Poppy seeds
2602
2602
Table 2
S. No.
Chapter/ heading/ sub-heading/tariff item
Description of goods
Tariff value USD
from 15.04.2015
Tariff value USD
from 30.04.2015
1
71 or 98
Gold, in any form in respect of which the benefit of entries at serial number 321 and 323 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed.
388 per 10 grams
393 per 10 grams
2
71 or 98
Silver, in any form in respect of which the benefit of entries at serial number 322 and 324 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed.
524 per kilogram
537 per kilogram
Table 3
S. No.
Chapter/ heading/ sub-heading/tariff item
Description of goods
Tariff value USD (Per Metric Tons)
from 15.04.2015
Tariff value USD (Per Metric Tons)
from 30.04.2015
REPLYING to the debate on the Finance Bill, the FM said,
Recently a controversy did come up. There is an old income tax form of 12 pages which was made 13.5 pages. I was out of the country when it was done. I had it stopped. I am having the entire matter reviewed and very soon you will hear of an extremely simplified procedure coming from us.
An easy taxation form in which an assessee is able to do things himself and does not have to run to various advisors.
Exchange Rates changed
THE Central government has notified new exchange rates for imported goods and for export goods in respect of the following foreign currencies viz. Danish Kroner, Euro, Norwegian Kroner, Pound Sterling and Swedish Kroner from today.
Expeditious clearance of export goods to Nepal - CBEC Instructions
THE Ministry of External Affairs has announced "Operation Maitree" under which India has embarked upon massive rescue, relief and evacuation operations in Nepal. A number of organizations/individuals as a part of their contribution to the relief operations may be required to procure relief items for export to Nepal.
In this regard, CBEC has directed the Chief Commissioners that field formations may be instructed to ensure all possible facilitation for expeditious procurement of goods meant for cross border supplies to Nepal from India. All procedural formalities, relating to export of relief items under bond or duty free procurement of relief items for export, may be expeditiously completed in order to facilitate export of relief items to Nepal on an urgent basis and where necessary, temporary orders may be issued by the Chief Commissioner to remove difficulty in complying with the procedures prescribed.
Sub: Consequent Notifications - Credit of Education Cess can be used for payment of Excise Duty
The wordings should read like this - "The credit..... on or after... can be utilized" & "inputs, C.G. received in the factory of manufacture of final product".
I hope the connotation is right in the said notification.
Posted by satish kumar
Sub: Utilization of Education Cess for Duty payment regarding
Sir
Even there is no amendment made as per the balance of Education Cess of both the categories in PLA account. Almost all assessees have some balances in this categories as of 28th February 2015.
The amendment has come and wording is made in best of the capacity of CBEC(probably this is why they were awarded in last month). The Hon. PM few days back in legal fraternity meet emphasized on having an institute which can impart the skill of drafting the laws. I would urge Min of HRD and Law both to join hand and setup this kind of institute immediately, also deploy top rankers of first batch in CBEC and CBDT this will help to reduce the litigation at least by 50%. Coming back to the amendment vide notf.12-2015 Cx, all the assess will have to do following exercise if they at all wish to use Cr of E Cess and SHE and avoid litigation:-
1. Segregate and keep separate (as per ER-1-ER-2) the closing balance as on Feb-15.
2. Credit availed after 28th Feb for which Goods received prior.
3. Credit availed after 28th Feb for which service received prior.
4. Credit availed after 28th Feb for which Goods also received after.
5. Credit availed after 28th Feb for which Service also received after.
This need to be done because as per the amendment the credit at sr. no 4 & 5 is eligible for utilization but assess will have to prove the same with supporting during the famous EA2000audit & also audits done by different wings of revenue dept.
Further, this raises some questions:-
1. What happens to E Cess and SHE which is paid under reverse charge but service received before 28th Feb?
2. What happens to reversals of E & SHE credit on account on non payment to service provider and subsequently availed after payment?
3. What happens if some adjustments are made incase of excess service tax payments made during earlier month and it is adjusted or in case of advance payment?
4. What will be imagination(interpretation) as against POT rules against this notf.?
5. If the credit can be availed with in 1 year, why there is barrier for utilization?( can any Babu give the rational?)
The best solution for these problems is perhaps to rescinding this notf immediately and issue fresh notf. but I am sure as per the habit and reputation of CBEC if at all they wake (may be after 6 mths) they will issue amendment. They expect ordinary people to remember all the notf. they have issued, (what a joke?), I would rather say there should be ban on amending the notf. if at all Babus want to make chages in law/notf they should rescind previous notf. and issue fresh because some of the notfs are amended so many times (eg. 214/86, 23/2003 ) that it is practically impossible to even trace the amendments forget about remembering them.
Before parting…
Dear Hon PM, As all the BABUS enjoy “ACCHE DIN”, request you to please extend the “ACCHE DIN to the ordinary people of this country who are working in private industries in taxation fields & also small time Business man who himself is looking into tax matters, such type of amendments are making their life traumatic, and on the other hand Babus enjoy, this is clearly inequality between haves and have not’s. This has become a standard practice by “Babucrates” that to make guffups and then down level Babus will issue you SCN after SCN during Audits.
View expressed here are strictly personal
All you have said is spot on, though I would like to differ on one point where in you are suggesting to segregate the credit, however in my opinion this will not service the purpose because as per Rule of CCR the formula to determine the usage of credit is defined. Assesse can do whatever it takes to do but the famus Babus are waiting for issue of SCN (may be Drafted & kept read) on this, because as per new rule 14 whatever credit is used, the first utilization will be considered from opening balance.
Therefore as per this Notf. 12/2015 no body can use the credit of E cess & SHE ir-respective of when it is availed.
So I agree with you that this notf. has to be rescinded, there is no other alternative, though I also agree with you that this will not happen, but Babus will amend this Notf. by creating few more doubts, because when they will amend, it will be prospectively hence during interim period there will be litigations hence my advice to Assesee would be keep the Credit in Cenvat a/c and do not use because you will hit by Rule 14 of CCR.
Probably this was the “ACCHE DIN” & ease of doing business so to create new jobs promised by our Hon’ PM to us the working class and the irony is that all the opposition shout on roof top that this is Pro Business Govt. God only knows what it means?
Posted by Purushottam Sandye
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