Udyog Tax News Flash

December 2013

Service tax: Threshold for compulsory epayment lowered

Till now, service tax assessees who had paid ten lakh rupees or more in service tax, whether out of Cenvat credit or in cash, in the previous financial year, were required to make electronic payment of service tax, through internet banking. This threshold has been lowered to one lakh of rupees. Now a service tax assessee who had paid one lakh of rupees or more in service tax in the previous financial year is required to electronically deposit the service tax payable by him. The change has been made by amendment of proviso to Rule 6(2) of the Service Tax Rules 1994, by notification 16/2013-ST dated 22 November 2013, which can be seen at http://www.servicetax.gov.in/notifications/notfns-2013/st16-2013.htm

Service tax: more clarifications on VCES issued

In response to the confusion and apprehensions expressed in various forums, the Central Board of Excise & Customs has issued one more set of clarifications on the Voluntary Compliance Encouragement Scheme for payment of service tax dues. The main points are There will be no return of applications under VCES: all applications will be received and acknowledged, and defects, if any, will be explained to the declarant so that he can rectify them. Declarations will not be rejected if the tax dues pertain to different issues (even if same period) or different periods (even if same issue) from investigations that were pending as on 1 March 2013. If the department has called for documents like balance sheets etc as part of a roving enquiry, this will not disqualify the person from VCES. (Whether or not a particular instance is a roving enquiry has to be decided on case to case basis.) If a person paid arrears of service tax in cash (without using Cenvat credit) after the VCES came into effect, and filed a VCES declaration for that amount later, the VCES declaration will be accepted for the amount paid. If a person had paid arrears of service tax in cash before the VCES came into effect, he is not eligible for the benefit of VCES for that amount, as the amount was not pending as tax dues when the VCES came into effect. The circular 174/9/2013-ST dated 25 November 2013 can be seen at http://www.servicetax.gov.in/circular/st-circular13/st-circ-174-2013.htm

Service tax: not on lottery tickets: Sikkim HC

The Sikkim High Court has, in a detailed order, held that service tax is not leviable on sale of lottery tickets. The order was passed on 24 September 2013 in WP 32 of 2012 filed by Future Gaming Solutions (India) Private Limited, and can be seen at http://www.highcourtofsikkim.nic.in/downloads/judgment/September%20 2013/24.09.2013%20WP(C)%20No.%2032%20of%202012%20Future%20Ga ming%20Solutions%20Vs.%20Union%20of%20India%20DB.pdf

Central excise: Changes in valuation rules 8, 9 and 10, and clarification thereon
Rules 8, 9 and 10 of the Central Excise Valuation (Determination of the Price of Excisable Goods) Rules 2000 have been amended: Rule 8 earlier provided that if the excisable goods are not sold by the assessee but used by him or on his behalf in the production or manufacture of other articles, the value shall be 110% of the cost of production or manufacture of such goods. This has been substituted with a clearer version, which says that Where whole or part of the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. Rule 9 has been substantively changed. Earlier it provided that if an assessee sold all his excisable goods only to or through a related person, the assessable value of those goods would be the normal transaction value at which they are sold by the related person. This had left open all cases where there was even a small number of sales to a non-related person. Now the rule has been changed to provide that if an assessee sells whole or part of the excisable goods to or through a related person, the assessable value of the goods will be the normal transaction value at which these are sold by the related person. (The new wording leaves some ambiguity over whether the transaction value of the related person will become the assessable value of only the goods sold to or through him, or whether it will apply to all the excisable goods. However, the CBEC has explained in a circular that each rule will apply to the specific transactions treated by it.) Rule 10, which applies to sales to or through inter-connected undertakings, has been amended in similar fashion as Rule 9.

The amending notification 14/2013-CE(NT) dated 22 November 2013 can be downloaded from http://www.cbec.gov.in/excise/cx-act/notfns-2013/cx-nt2013/cent14-152013.pdf The CBEC has issued a circular explaining the changes made. It draws attention to section 4(1) of the Central Excise Act 1944 by which each removal of goods is separately assessed to duty based on its value. Accordingly, the circular clarifies, Each clearance is required to be assessed according to section 4(1)(a) or the relevant rule dealing with the circumstances of clearance of the goods, as the case may be. The circular, no. 975/09/2013-CX dated 25 November 2013, can be seen at http://www.cbec.gov.in/excise/cx-circulars/cx-circ13/975-2013cx.htm

Central excise: Re-labelling etc of scheduled drugs: validity of exemption period extended
Notification 22/2013-CE exempts repacking, re-labelling etc of pharmaceutical drugs from excise duty (which would be payable thereon as deemed manufacture), provided the activity has been necessitated by lowering of price of a scheduled drug by a notification of the National Pharmaceuticals Pricing Authority under the Drug Price Control Order. The exemption was valid for forty five days or for such extended period not exceeding thirty days as the Department of Pharmaceuticals may permit. This extended period has been changed to ninety days by an amendment made to sub-para (iii) of the original notification, vide notification 29/2013CE dated 26 November 2013. The amending notification can be seen at http://www.cbec.gov.in/excise/cx-act/notfns-2013/cx-tarr2013/ce292013.htm

Customs: duty waiver for jute imported from Bangladesh from July 2004 to Feb 2011
The Customs Act has a provision to waive customs duty if the same was not levied or collected due to some prevalent practice during a specified period. Using this provision in section 28A of the Customs Act 1962, the central government has directed that additional duty of customs payable on jute products of headings 5310 and 6305 imported from Bangladesh during the period 9 July 2004 to 13 February 2013 shall not be required to be paid. The notification to this effect, no. 113/2013-Customs (NT) dated 27 November 2013, can be seen at http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2013/csnt2013/csnt113-115-2013.pdf

Customs: Tariff values notified

The CBEC has notified fresh tariff values under section 14(2) of the Customs Act 1962 for specified products under notification 116/2013-Customs (NT) dated 29 November 2013. The notification can be seen at http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2013/csnt2013/csnt116-2013.htm

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Updated and written by Radha Arun [radha.arjuni@gmail.com], Consultant to Udyog Software (India) Ltd.
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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.