JANUARY 31, 2017

By Arun Deshpande & Milind

Advance Intimation: IN case of exports under physical verification, advance intimation shall be done away even in case of ARE 2 exports also, since rebate is sanctioned only on the basis of actuals and not on intimation submitted to them. Although majority of the manufacturer are following self-sealing procedure then is there any necessity to file intimation 24 hrs in advance before removal of goods? Particularly when export is under notification no. 21/2004 C.E N.T. 06.09.2004 subsequently amended by notification no. 21/2016 C.E. N.T. dated 01.03.2016.

Single tax instead of multiple tax or cess. (step towards GST)

Presently vehicles falling under sub-heading no. 8703 except few attracts: Basic excise duty + Infrastructure Cess + Auto Cess + NCCD.

The manufacturer has to maintain separate accounts for each type of duty/cess/tax paid by him or liable to pay and to reconcile it with ER-1 returns and all other IT returns. Over and above, it is difficult to accommodate all the taxes (including TDS/WCT) in one invoice and sometimes creates problems at the time of Refund.

Also considering the adoption of advance technology by automobiles manufacturers, technological up gradation, complying with environmental norms including Euro etc. ban on diesel vehicles having CC capacity more than 2000 CC in NCR, there should not be any CESS on account of infra cess or any other cess.

The same is the case with Service Tax wherein service provider has to charge SBC and KKC in each bill and to show it separately.

The worst part is, if while depositing cess/NCCD if account head gets interchanged then manufacturer/assesse has no option except to deposit money once again or to file refund claim. At least there should be provision to rectify it, and in the era of digitization it is quite possible.

Rebate Claim/Refund Claim : Time limit should be brought down to 60 days, instead of 90 days considering the digitization and of no of claims received at jurisdictional division. The documents such as copies of bill of lading/shipping bills, L/R, customs invoice should not be insisted upon. (One copy is sufficient) Since shipping bill/Bill of export can easily be traced out or verified from ICEGATE. This will reduce national waste.

Further, in case of input stage rebate claims instead of 100% verification of input invoices it should be reduced to 20% and shall be sanctioned on the basis of C.W.A. (I.C.W.A)/C.A. certificate. Anyhow the responsibility of excess claim or wrong claim is with the assesse only.

Extension of validity of LUT: It is advisable to automatically extend validity of all Letter of undertaking expiring on or before 15.09.17 till 31.03.2020 to avoid unnecessary documentation since it is non-value added job for both the assesse and the department. This would be at par with public notice no. 159/2016 dated 28.11.2016, wherein all self-sealing permissions have been extended up to 2020.

Special Permissions: Say permission granted under rule 4(4) of CCR for storage of goods outside factory premises w/o payment of duty, permission under rule 16 (c) for removal of goods for testing shall also be automatically renewed for another three years or upto 30.09.2017.

Common order: If Supreme Court rejects/dismissed SLP filed by the department, then Commissioner/Chief Commissioner's should be given powers to drop SCN's issued on identical ground/ subject. For E.g. The decision of the Bombay High Court in  CEAT Ltd., (2015-TIOL-397-HC-MUM-CX) has been affirmed by the Apex Court by way of dismissal of SLP No. 20219/2015. Issue is of payment of interest on finalization of provisional assessment. Decided in favor of CEAT Ltd., (decided on 14.12.2015) however industry is receiving orders from department to pay interest.

The reasons

No guidelines from the CBEC/MOF regarding acceptance of the said judgment, no officer would take responsibility unless the CBEC accepts the same and issues circular to that effect

This is resulting in non-value added work both for the department as well as assesse. Departmental officers are issuing order for recovery of interest and assesse are filing an appeal. Request to issue a guideline that in all such cases department should follow honorable Supreme Court's judgment and dispose of all such cases by a common order in each Commissionerate.

Cenvat/Modvat – In line with Accounting standard or international accounting standard, cenvat reversal should not be asked for shortages noticed/reported by statutory auditors during physical verification of inventory, unless statutory auditor finds it abnormal/beyond limit/not at par with industry norms.

Service tax on Construction services : A clarification should be given on what is repairs and maintenance in terms of rule 2(l) of CCR, 2004, since in some of the Commissionerates service tax credit is outright denied on the ground that repairing of shop floor, plastering of wall, painting of wall compound, repairing of material docks, security gate, falls under construction services, and hence credit is not allowed.

Considering GST era, some of the assessees registered their premises (stock yard/deport/ marketing offices) as first stage or second stage dealer, to pass on excise duty/sales tax benefits to buyer/dealer/industrial consumer on the Pre GST stock, in such cases there should not be any penalty or interest in case of non-filing of NIL returns prior to enactment of GST.