Contact Us
 

Latest updates

 

Service Tax Budget-2015-Non-Sectoral Changes

 

1.   Other Legislative Changes

 

1.1.Interpretation

 

Sec 66F provides for principles of interpretation of specified descriptions of services or bundled services. An illustration is added (w.e.f. 14-05-2015-President Assent)in the section to provide that input services will not be exempted simply because of the main service enjoying exemption or being negative listed.

 

1.2.Valuation

 

  • Provision: An explanation is added to Sec 67 to include under the term “consideration the following:

    (i) any amount that is payable for the taxable services provided or to be provided(existing provision)

    (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed 14-05-2015(PA)

    (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket. 14-05-2015(PA)
     
  • Implication: The amendment overturns decision of Delhi High Court in International Consultants & Technocrats Ltd. vs. UOI w.r.t. non-taxability of reimbursements. Sec 94 is amended to provide for empowering CG to formulate rules for determining “consideration” u/s 67.
     
  • Date of Applicability: 14-05-2015 (President Assent)

 

2.   Penalty Provisions

 

Amendments in penalty provisions will be applicable w.e.f. enactment of FB 2015 14-05-2015

73 (1B) : Unpaid Service tax payable in ST-3 to be recovered u/s 87 without issuing any notice u/s 73(1)

 

  • Any amount payable by CEX dept.
     
  • From any person from whom any money is due
     
  • Distrain any movable or immovable property

 

2.1.Sec-76: Penalty for failure to pay service tax

 

  • Earlier Provision: 100/-day of delay or 1% of tax p.m. whichever is higher subject to maximum 50% of tax due.
     
  • Budget Provision: Cases not involving any intent to evade payment of tax penalty will be levied as under subject to maximum penalty capped to 10% of tax.

 

Penalty Leviable

Time limit for payment

Amount Payable

None {As per existing Sec 73(3)}

Before issuance of SCN

Tax + Interest

None

30 days of SCN

 

Proceedings shall be deemed to have been concluded.

25% of penalty demand in OIO

30 days of receipt of OIO

Tax+Int.+Reduced Penalty

25% of penalty demand in OIA

30 days of receipt of OIA

 

 

2.2.Sec 78: Penalty in case of suppression

 

  • Existing Provision:

 

True and complete details

Penalty

Reduction

Waiver u/s 80

Not captured in records

100% of Tax

Compulsory

No

Captured in records

50% of Tax - Proviso to Sec-78

A) Penalty 1% p.m. upto max 25% of Tax if Tax + Interest is paid before SCN-Sec 73(4A)] omitted w.e.f. 14-05-2015


B) 25% of tax if Tax+Int + Penalty is paid within 30 days of OIO -Second Proviso to Sec 78

Yes, on reasonable cause

 

  • Budget Provision: Amended Sec 78 provides for benefit of reduced penalty where amount stated is paid within time limits specified.

     

Penalty Payable

Time limit for payment

Amount payable

15% of tax in SCN

30 days of receipt of SCN and Proceedings shall be deemed to have been concluded.

Tax + Interest+ Reduced Penalty

25% of tax determined

30 days of date of OIO

25% of modified penalty

30 days of date of OIA modifying service tax

100% of tax

If none of the above

50% of tax

Details captured in specified records for the period 08-Apr-11 to 14-May-2015

 

Specified Records to mean "records including computerized 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 specified records."

 

2.3.Transitional Penal Provision (Sec 78B)

 

Amended Provisions of Sec 76 and 78 apply to

 

  • Cases where no SCN issued till 14-May-15

     
  • Cases where no OIO issued till 14-May-15 and 30 days period will be counted from 14-05-2015 for closure of proceedings.

 

2.4.Sec 80: Waiver of Penalty

 

Section 80, providing for waiver of penalty in cases where reasonable causes was shown is omitted.

 

3.   Cenvat Provisions

 

Cenvat provisions are amended w.e.f. 01-Mar-2015 except when stated otherwise.

 

  • Time limit of taking credit: Restrictions are placed on time limit of taking cenvat credit by a service provider and manufacturer u/r 4 of CCR as follows:

     

Nature

Earlier Provision-Pre-FB,2014

New  Provision

Inputs

May be taken immediately on receipt of inputs

Within w.e.f. 01-Mar-15 [6 months one year]of the date of invoice / bill/ challan

Input Service

On receipt of Invoice

Within 01-Mar-15 [6 months one year]of the date of invoice / bill /challan

 s.t. if payment of invoice not made in 3 months , pay  cenvat availed and re-avail on payment of invoice

Input Service-100% Reverse Charge

When payment of both, invoice and tax indicated are made

On payment of service tax

Input Service-Partial Reverse Charge

01-Apr-15 [When payment of both, invoice and tax indicated are made On payment of service tax]

 

3.1.Definition/Explanation

 

  • Export goods: The term export goods are defined u/r 5 to mean any goods which are to be taken out of India to a place outside India.
     
  • Exempted goods to include non-excisable goods:

    Exempted goods u/r 2(d) means:

a.     Non excisable goods

b.    Exempted from whole of duty of Excise

c.     NIL rate of duty goods

d.    "Exempted goods" u/n 1/2011-CE(1% of excise duty)

e.     "Exempted goods u/n 12/2012-CE-[entries 67 and 128]

 

An explanation is added u/r 6(1) of CCR to provide that ‘exempted goods’ would also include ‘non-excisable’ goods sold for a consideration. Thus manufacturer of excisable and non-excisable goods will now be required to reverse proportionate CENVAT Credit on inputs used for manufacture of such non-excisable goods.

Value of “non-excisable goods” for the purpose of this rule shall be invoice value and where such invoice value is not available, such value shall be determined using reasonable means as envisaged in the CE Act and rules made thereunder.

 

3.2.Recovery of CENVAT Credit availed but not utilised:-Rule14

 

  • Earlier Provision: Where the CENVAT credit has been w.e.f. 01-04-12 [taken and utilized wrongly], till 31-03-12[taken or utilized wrongly] or has been erroneously refunded, the same along with interest shall be recovered.

 

  • Budget Provision: Recovery of CENVAT Credit:

a)    Wrongly availed but not utilized: Recovered u/s 11A of CEA or u/s 73 of FA.

b)    Wrongly availed and utilized: Recovered u/s 11A and 11 AA of CEA or 73 and 75 of FA.

It is also provided that all credits taken in a month shall be deemed to be taken on last day of the month and utilisation thereof shall be deemed to have occurred in the following manner-

  • Opening balance of the month has been utilised first
     
  • Credit admissible in terms of CCR taken during the month has been utilised next
     
  • Credit inadmissible in terms of CCR taken during the month has been utilised thereafter.

 

3.3.Provisions related to Job-worker

 

  • Rule 4(1) of CCR is amended to provide that where inputs are directly sent to the job worker, CENVAT Credit on such inputs can be availed at the time of receipt of such inputs at the job workers premises.
     
  • Inputs can also be sent after partially processing from one job worker to another.
     
  • 180 days for return of inputs: From date of receipt of input by job worker or date of sending from premises of manufacturer or service provider as the case may be.
     
  • Capital goods to be received within 2 years:
    • From date of date of removal by principal manufacturer/ provider to job worker

       
    • In case of capital goods directly sent to job worker, from date of receipt of capital goods by job worker.

 

3.4.Miscellaneous

 

Importer invoice indicating payment of duty is an eligible Cenvat credit document

Unutilized Cenvat Balance of EC and SHE – CE-12/2015-NT provides for utilization of EC/SHE balance as on 01-03-15 for payment of excise duty. Similar notification not issued in service tax.

 

 

4.   Administrative Amendments

 

4.1.Registration Procedure

 

Order No. 1/15-ST dated 28-02-2015 w.e.f. 01-Mar-2015

 

4.1.1.  Salient features

 

  • Online application in form ST-1 filed on ACES
     
  • Email and mobile no. compulsory in ST-1. Existing registrants to provide by 30-Apr-15.
     
  • Registration certificate ST-2 issued within 2 days of application.
     
  • Non-PAN registrants to obtain PAN based registration within 3 months else temporary registrations will be cancelled after giving opportunity
     

 

4.1.2.  Document Submission

 

Self-attested copies of following documents by registered post/ speed post within 7 days of filing online ST-1 for verification.

 

  • Copy of PAN card (PAN no. compulsory except government departments)
     
  • Photograph
     
  • Proof of Identity eg. PAN card, Passport, Voter-id card, Adhar card, Driving License, or any Photo-id card issued by Central / State Govt. or PSU.
     
  • Possession document of premises eg. Registry, Rent agreement, Allotment letter from Govt.
     
  • Details of Main Bank A/c {Though no documents specified  but a copy of cancelled cheque should suffice}
     
  • Constitution Document of Entity to be registered
     
  • List of Directors
     
  • Authorization in name of person filing application
     
  • Business transaction numbers from other government departments like Customs, VAT, Company Index Number
     

 

4.1.3.  Verification

 

Verification of premises only to be authorized by officer not below Addl./ Joint Commissioner.

 

4.1.4.  Revoking ST-2

 

Revoking of registration can be done by Asst./ Deputy Commr. after giving an opportunity to be heard in following situations:

 

  • Premises non-existent
     
  • Premises not in possession of assessee
     
  • Documents not received in 15 days of filing ST-1
     
  • Documents found incomplete/incorrect

 

4.1.5.  Change in Particulars

 

  • Change in information or details furnished in ST-1 to be intimated to AC/DC within 30 days (Rule 5A-STR)
     
  • Transfer of business- transferee to obtain new registration (Rule 6-STR)

 

4.2.Record keeping

 

Provision for issuing digitally signed invoices is added in Service Tax Rules along with option of maintaining of records in electronic form and their authentication by means of digital signatures. Conditions and procedure in this regard shall be specified by the CBEC in due course of time.  (Refer STR 4, 4A and 5).

 

4.3.Advance Ruling

 

Scope of obtaining advance ruling under provisions of indirect tax extended to a resident private limited company in Finance Bill, 2014 extended to resident firms in FB 2015 w.e.f. 01-Mar-2015. Firm means:

 

  • Partnership firm as per Partnership Act,1932
     
  • LLP as per Limited Liability Partnership Act, 2008
     
  • LLP which has no company as its partner
     
  • Sole proprietorship
     
  • One Person Company

 

4.4.Appeal in case of Rebate

 

Section 86 amended to prescribe that remedy against the order passed by Commissioner (Appeal), in a matter involving rebate of Service Tax, shall lie in terms of section 35EE of the Central Excise Act. It is also being provided that all appeals filed in Tribunal after the date the Finance Act, 2012 came into effect and pending on the date when the Finance Bill, 2015 receives assent of the President shall be transferred and dealt in accordance with section 35EE of the Central Excise Act.