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Arresting Guidelines in Service Tax

DDT in Limca Book of Records - Third Time in a rowTIOL-DDT 2942
03 10 2016
Monday

PERHAPS, after the tumult caused by the momentary setback [Please see DDT 2939 and DDT 2922] in the cases of Make My Trip.com2016-TIOL-1957-HC-DEL-ST and Ebiz Com - 2016-TIOL-1958-HC-DEL-ST, the Board felt it prudent to once again advise its officers about the arrest provisions and so have come out with a fresh Circular.

The CBEC refers to the amendments made to sections 89, 90 and 91 of the Finance Act, 1994 by the Finance Act, 2016 (w.e.f 14.05.2016) and informs that as a consequence of these amendments, the power of arrest in Service Tax is available only if a person collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond the period of six months from the date on which such payment becomes due and the amount exceeds rupees two crores.

The Board reiterates from its earlier Circular 171/6/2013-ST dated 17.09.2013 the conditions precedent, both legal and factual, while carrying out arrests and also informs that - If the alleged offender is assisting in the investigation and has deposited at least half of the evaded tax, then the need to arrest may not arise.

Central Excise Circulars  No. 974/08/2013-CX  dated 17.09.2013 and 1009/16/2015-CX  dated 23.10.2015 stand amended accordingly. The Circular  No. 1010/17/2015-CX  dated 23.10.2015 is rescinded.

The Board emphasises - It is again reiterated that arrest and prosecution should not be resorted to in cases of technical nature i.e. where the additional demand of duty/tax is based totally on a difference of opinion regarding interpretation of law.

With GST round the corner, it is time to set things right.

Circular 201/11/2016-Service Tax dated September 30, 2016

Section 11C notification saves the day for schools & children

THE Entry no. 9 of the Mega Exemption Notification 25/2012-ST  read -

9. Services  provided to  or by  an educational institution in respect of education exempted from service tax, by way of,-

(a) auxiliary educational services; or

(b) renting of immovable property;

The words "or by" went for a toss by the amending notification 3/2013-ST dated 01 March 2013 w.e.f 01.04.2013.

The JS TRU letter dated 28/02/2013 explained -

B. Exemptions

4. The following changes are being made  w.e.f April 1, 2013  in the exemption notification number 25/2012-ST dated June 20, 2012:

(i) Exemption by way of auxiliary educational services and renting of immovable property by (and not to) specified educational institutes under S. No 9 will not be available;

In the context of the Notification 25/2012-ST, the Board had come out with a Circular No.172/7/2013-ST, Dated: September 19, 2013 to assuage the apprehensions expressed by certain educational institutions and organisations in the matter of imposition of service tax on services provided to schools.

DDT had vividly covered this issue in its edition 2194 dated 20 September 2013 and also remarked -

Services provided to the schools are exempted, but the moot question is  are the services provided by the schools exempted? If the school provides bus transport or canteen or hostel, are they liable to pay? Does this mean that if a school hires a bus, there is no tax, but if the school owns the bus, there is tax liability?

This is exactly the point on which the Schools wanted clarification from the Board and the Board has conveniently ignored that question.

And then came the notification 6/2014-ST dated 11 July 2014 which substituted Entry no. 9 to read -

9. Services provided,-

(a)  by an  educational institution to its students, faculty and staff;

(b) to an educational institution, by way of,-

(i) transportation of students, faculty and staff;

(ii) catering, including any mid-day meals scheme sponsored by the Government;

(iii) security or cleaning or house-keeping services performed in such educational institution;

(iv) services relating to admission to, or conduct of examination by, such institution;"

So, in a way the position prevailing prior to 01.04.2013 was restored.

However, the interregnum period lay unattended and resulted in SCNs and recoveries by the dozen.

We had covered this issue exhaustively in DDT 2911 and awaited the section 11C notification which was in the pipeline.

The Board has now issued the notification exempting the services of transportation, by educational institutions to students, faculty and staff of such institutions from the leviablity of Service Tax for the period commencing on and from the first day of April, 2013 and ending with the tenth day of July, 2014.

Was all this not avoidable?

Notification 45/2016-ST dated September 30, 2016

Education is a costly affair, after all!

In the matter of the section 11C notification 45/2016-ST issued, P.G.James whose article Hanging Sword of Service Tax on Schools and Educational institutions we carried on August 17, 2016, dropped us this mail -

Kudos to TIOL for escalating the issue on the unfair demand of Service Tax on the fees collected by schools towards transportation of students which now got settled with the issuance of Notn No 45/2016-ST exempting the levy for the interim period.

Based on my RTI application, total ST demanded and paid pan India was obtained. Total ST paid was Rs 73.83 lacs and 78 SCN's were issued involving demand of Rs 649.92 lacs.

Post the publication of DDT-2911, another RTI query was raised to CBEC regarding the action plan to which it was replied that:

"The file dealing with the relevant data has been submitted to the higher authorities for seeking an exemption under Sec 11C of Excise act for the services of transportation for the relevant period. data will be shared with you as soon as file reaches this office and the future action taken will be intimated."

The purpose of education is to replace an empty mind with an open one - Malcolm Stevenson Forbes

Marginal dip in Tariff Value of Gold and Silver

GOVERNMENT has marginally decreased the tariff value of gold, silver & Palm oils. There is an increase in the Tariff values of Palmolein, crude soyabean oil & Brass Scrap. The Tariff values of poppy seeds and arecanuts remain put.

Table 1

S. No.

Chapter/ heading/ sub-heading/tariff item

Description of goods

Tariff value USD (Per Metric Tonne) as on 15.09.2016

Tariff value USD (Per Metric Tonne) from 30.09.2016

(1)

(2)

(3)

(5)

(6)

1

1511 10 00

Crude Palm Oil

766

767

2

1511 90 10

RBD Palm Oil

780

776

3

1511 90 90

Others - Palm Oil

773

772

4

1511 10 00

Crude Palmolein

793

811

5

1511 90 20

RBD Palmolein

796

814

6

1511 90 90

Others - Palmolein

795

813

7

1507 10 00

Crude Soyabean Oil

817

827

8

7404 00 22

Brass Scrap (all grades)

3004

3055

9

1207 91 00

Poppy seeds

2533

2533

Table 2

S. No.

Chapter/ heading/ sub-heading/tariff item

Description of goods

Tariff value USD from 15.09.2016

Tariff value USD from 30.09.2016

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.

430 per 10 grams

428 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.

620 per kilogram

619 per kilogram

Table 3

S. No.

Chapter/ heading/ sub-heading/tariff item

Description of goods

Tariff value USD (Per Metric Tons) from 15.09.2016

Tariff value USD (Per Metric Tons) from 30.09.2016

1

080280

Arecanuts

2623

2623

Notification No. 123/2016-CUSTOMS (N.T.)., Dated: September 30, 2016

Implementation of Hazardous and Other Wastes Rules, 2016

MINISTRY of Environment, Forests and Climate Change (MoEF & CC) has decided that licenses of import of plastic and PET scrap issued under previous Hazardous Waste (Management, Handling and Trans boundary Movement) Rules, 2008 will be treated as legal documents.

However, the import will be limited to the following four categories as on date of issue of their office memorandum:

(i) Those consignments which have arrived under the valid licenses on Indian ports.

(ii) Those consignments under valid licenses which are in transit from the country of origin.

(iii) The quantity of import for which Letter of Credit (LC) has already been opened by valid license.

(iv) The quantity of import for which advance has already been paid with documentary evidences. However, in this category the quantity permissible for import will not be the entire quantity for contract against which the advance is paid but the quantity would be limited to the value of advance paid.

Instruction F.No.401/26/2014-Cus.-III(Pt.) dated September 30, 2016

Get your latitude and longitude right!

WE received this mail -

The draft GST Registration Rules contains the following rule 17 which reads -

17. Physical verification of business premises in certain cases: Where the proper officer is satisfied that the physical verification of the place of business of a taxable person is required after grant of registration, he may get such verification done and upload the verification report along with other documents, including photographs, in Form GST REG-26 on the day following the date of such verification.

"Satisfying" the proper officer has always been the bane in Central Excise & Service Tax matters. And, therefore, it is not a surprise to have it in GST too. But, being satisfied that physical verification of the place of business doesn't seem to be proper English. Perhaps, it should have been 'of the opinion'. But, our drafters were never too particular about English and do not wish to carry the Imperial baggage.

That apart, the proper officer is required to get the 'verification done' by another officer under his command and this gentleman/gentle lady is required to submit and upload the verification report along with "photograph" on the day following the visit date.

The following particulars that are required to be filled in Form GST REG-26 [Form for Field Visit Report] make interesting reading.

Take a look -

3. Location details

Latitude

Longitude

North - Bounded By
South - Bounded By
West - Bounded By
East - Bounded By

7. Details of the premises

Open Space Area (in sq m.) - (approx.)
Covered Space Area (in sq m.) - (approx.)

Floor on which business premises located

9. Upload photograph of the place with the person who is present at the place where site verification is conducted.

10. Comments (not more than < 1000 characters>

The officer concerned who is entrusted with this job has a difficult task on hand.

Wherefrom is he going to get the "Latitude & Longitude" and the other details from? Is he equipped with any equipment or for that matter any "App" on his smartphone (he certainly owns one!) that will enable him to find these co-ordinates?

As for "open/covered space area (in sq. m.), this is a job best left to the Municipal authorities.

And, pray, what does the Government need these for?

By the way, Serial number 9 is the proudest of all. Photograph of the place with (not of) the person who is present at the place - Mind you, it is a single photograph and should be taken with the person who is present at the place, not the owner/proprietor/partner/Director etc., any person is enough! Will a selfie do? Or should the officer verifying the premises be also in the frame?

Should the officer entrusted to verify the premises get a photographer along with him? Or will his prized smartphone suffice? What should be the pixel count?

If this is the way a solitary rule can be mauled and become the butt of jokes, God alone knows the fate of the other rules and sections.

As for comments, sr. no. 10 (not more than 1000 characters) a twitter user would find this heavenly!

One thing is clear - all this GST mumbo jumbo is taking us all a few light years back.

This too shall pass…

IDS, 2016 - congratulations via Twitter

THE Finance Minister, while addressing the media said that as many as 64275 declarations worth Rs 65250 Crore were made and the Exchequer is going to reap 45% of the same as tax. And that is a cool Rs.30,000 crores which would come into the central government kitty by September next year.

Congratulatory messages rained on twitter. Take a look -

Where did the (Black) Money Come From?

SEVERAL newspapers have reported that out of the 65,000 crore black money declared, 13,000 crore came from Hyderabad, 8000 crore each from Mumbai and Delhi.

CBDT clarified again on twitter that no official list of region wise declarations has been issued. Deptt is committed to maintain strict confidentiality and requested general public NOT to pay any heed to such fraudulent messages circulating on social media.

Anyway 65000 crores of black money have become white and apart from a tax of 30,000 crore, about 35,000 crores will enter the productive sector and should perennially generate an annual tax of about 350 crores.

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in


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