TIOL-DDT 2721
09 11 2015
Monday

THERE shall be collected as Service Tax a Swachh Bharat Cess @ 0.5% of the value of taxable services from next Sunday. Yes, from Sunday!

The Government preaches day in day out that it wants to improve the ‘ease of doing business' and the CBEC has declared 2015 as the "Year of the Tax-Payer Services", but what we find is a gross insult (to say the least) to the unfortunate taxpayer.

Maybe we misunderstood the message of the Government. When they speak of ‘ease of doing business', what they mean is not ease of doing business for the businessmen, it is ease of doing business for the government babus! When the CBEC goes to town with the "Year of the Tax-Payer Services", what it means is tax-payers' service to the Board. Whoever chooses to do business in India are doomed to make it easy for the government and serve the babudom without expecting any facilitation.

As per Section 119(2) of the Finance Act 2015,

2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent. on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

As per Section 119(1) of the Finance Act 2015, this is to come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. And now, the government has notified 15th November as the DATE.

Why 15th November? The Finance Act 2015 came into effect from 14th May 2015 and they waited for six months and suddenly thrust this tax on this nation. Why couldn't they wait for another 15 days and make it effective from 1st December? Will heavens fall in 15 days? Is the Board aware how much difficulty this is going to cause? In cases where Service Tax has already been collected for the month of November, now Swachh Bharat Cess (SBC) has to be collected separately for 15 days of November. Assessees using electronic systems will have to make changes in their programmes to collect SBC from 15th November and they have just a week to do that.

As such there are several doubts which the Board refuses to clarify.

1. There is absolute confusion on determining the date for payment of tax like - providing the service, issuing invoice, receiving payment… Which Rule of the Point of Taxation Rules covers the situation…

2. Board has not bothered to clarify whether SBC is cenvattable

3. Whether SBC can be paid from CENVAT account.

These questions need to be clarified by amending the rules, issuing instructions etc. Couldn't the Government wait for fifteen days, issue the necessary clarifications, educate the assessees and then impose the tax? But then the taxpayers' convenience has never been the concern of the bureaucracy; they sit in their comfortable rooms and cause misery with absolutely no stakes and responsibilities, but only periodical bounties like DA, increments, promotions and the mandatory decennial manna in the form of Pay Commissions - all for making life miserable for the citizens, who are actually their masters, but who are treated worse than servants.

With this kind of bureaucracy, the ruling party doesn't need an opposition party in Parliament to discredit it and eventually dislodge it.

It is scaring to even imagine that it is this very babudom which is going to unleash GST on this nation.

Anyway get prepared to pay 0.5% SBC from 15th November 2015 and a little advice to those who would like to challenge this levy in the High Courts - please don't; none of these challenges succeeded earlier.

The Government says, this will translate into a tax of 50 paisa only on every one hundred rupees worth of taxable services, but it is in addition to the 14 rupees already payable. If the Government goes on collecting 50 paisa more on its several activities, it may become another 14 rupees soon.

Please also see our articles on the issue:

1. Swachh Bharat Cess - An impatient & hurried imposition 

2. Swachh Bharat Cess - Not so clean

3. Swachh provisions for Swachh Bharat Cess needed

Notification No. 21/2015-Service Tax, Dated: November 6, 2015 & Notification No. 22/2015-Service Tax, Dated: November 6, 2015

Ease of Doing Business - FIR for alleged default in payment of Service Tax

THE charge against the assessee is that it owed an amount of Rs. 1,05,705 as Service Tax. And the Department filed an FIR in a Police Station. Ingenious indeed! Consequent to the FIR, charge was ordered to be framed against the assessee. And the FIR and the charge were not closed even after the assessee paid this disputed amount of Service Tax.

The matter reached the High Court.

In the High Court, the State argued that when the impugned FIR was registered against the petitioner, he was found to have committed an offence under Section 406 IPC, while not depositing the amount of Rs.1,05,705/- on account of service tax. So far as factum of deposit of said amount by the petitioner was concerned, the said fact alone would not absolve the petitioner from his criminal liability.

When a pointed question was put to the counsel for the State, as to how the impugned FIR was registered under the general provisions of IPC, when the Act of 1994 was a special Act, which would prevail upon the general provisions, he had no answer.

The High Court observed,

This Court feels no hesitation to conclude that once the Act of 1994 was a special and complete Code in itself, wherein even the procedure for penalty has been provided, governing the fact situation as obtaining in the present case, registration of the impugned FIR was nothing but abuse of process of Court and the same cannot be sustained.

It can be safely concluded that continuation of the criminal proceedings arising out of the impugned FIR, would certainly result in further abuse of process of Court, therefore, the same cannot be sustained, for this reason as well .

But look at the innumerable ways to harass an assessee in India.

Section 406 of the IPC reads as:

Punishment for criminal breach of trust: Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both .

Please see 2015-TIOL-2564-HC-P&H-ST

Excise Duty on Petrol hiked

GOVERNMENT has hiked the excise duty on petrol and diesel with effect from 7th November 2015.

Retail prices are not going to be affected - only government wants to take advantage of the low crude price, not the refinery, not the consumer.

Notification 43/2015-CE., Dated: November 06, 2015

Appoint Information Commissioners within six weeks - Delhi HC directs Government.

IN a writ petition filed by RTI activist RK Jain, the Delhi High Court on Friday directed the Government to appoint Information Commissioners in the Central Information Commission.

The Public Interest Litigation alleged inaction on the part of the Government in filling up the vacancies of Chief Information Commissioner and three Information Commissioners in the Central Information Commission and contending that the same has frustrated the very object of the Right to Information Act, 2005 (for short "RTI Act").

553 applications were received for the posts of Information Commissioners, The Search Committee met twice on 16.01.2015 and 06.02.2015 to shortlist the applicants for the Chief Information Commissioner and Information Commissioners respectively.

The tenure of one of the Information Commissioners out of seven would expire on 31.12.2016 and the others have a long tenure of more than two years. There is no likelihood of any vacancy of Information Commissioner in near future. However, the Chief Information Commissioner's tenure will be completed on 01.12.2015. In case one of the serving Information Commissioners is appointed as the Chief Information Commissioner in the vacancy that would arise w.e.f. 02.12.2015, one more vacancy of the Information Commissioner is likely to arise.

The High Court directed,

The selection process that has already been commenced vide Notifications dated 25.02.2014 and 16.07.2014 shall be finalized within six weeks from today and the three vacancies of Information Commissioners existing as of today shall be filled up amongst the 553 applications that were received in response to the said two notifications .

Hyderabad Bench of CESTAT Notified

THE President of CESTAT has notified the creation of the Hyderabad Bench of CESTAT. The Hyderabad Bench will have jurisdiction in the States of Andhra Pradesh, Telangana and Yanam Commune of the Union Territory of Pondicherry.

Hyderabad Bench will start functioning by accepting filing of appeals with effect from 14.12.2015.

CESTAT Notification No. 03/2015., Dated November 06 2015

Until Tomorrow with more DDT

Have a nice day.

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