ARTICLE. Service Tax (Finance) Act, 1994 By. On Finance Bill (Budget) Proposals 2013 CA. SATISH AGARWAL

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1 ARTICLE On Finance Bill (Budget) Proposals 01 Service Tax (Finance) Act, 1994 By CA. SATISH AGARWAL Mobile : Phone : Office : 9/14, Ist Flo East Patel Nagar, (Near Jaypee Sidharthe Hotel) New Delhi satishagarwal07@yahoo.com

2 1 1 Service Tax (Finance) Act, 1994 (A) Amendments as Applicable From March 01, 01 Change in Rate of Abatements computer Peripherals Rate of Particulars Period Abatements (a) Residential units having carpet area upto 000 square feet (b) Where an amount charged is less than INR 1 Cre (c) In all other Cases Advance Rulings Section 96A 75% 70% *Public Limited Companies be permitted to obtain advance rulings against question of law fact regarding liability of service tax relating to proposed services Change in CENVAT Credit Rules, 004 Rule (5) *Amount equivalent to CENVAT Credit availed by assessee be paid to Govt. where inputs capital goods removed from facty of manufacturer premises of output service provider (II) Rule (5A) (a) Amount equivalent to CENVAT Credit availed by assessee after reduction of prescribed percentage be paid to Govt where used capital goods removed as capital goods scrap waste (b) Prescribed Percentage f computer (II) F Copyright of cinematograph films 1 F each quarter in First year F each quarter in Second year F each quarter in Third year F each quarter in Fourth year (c) Prescribed percentage f capital goods other than computers computer peripherals f each quarter, (d) However amount equivalent to excise duty to be levied on transaction value be paid to Govt. where CENVAT Credit availed after reduction of prescribed percentage is lower than excise duty to be levied (III) Rule (5B) *Amount equivalent to CENVAT Credit availed by assessee be paid to Govt. where inputs capital goods written off fully partially in books of accounts befe put to use (IV) Penal Interest 1% (a) Penal 18% 15% as case may be levied where assessee failed to pay an amount equivalent to CENVAT Credit availed to Govt. in accdance to rule (5) (5A) (5B) (b) Meover where assessee failed to pay to Govt against CENVAT Credit availed in accdance to rule (5) (5A) (5B) can not be termed as wrongly availed under Rule 14 (B) Amendments as Applicable from April 01, 01 * Changes in Mega Exemptions as duty Notified vide Notification No. 5 dated June 0, 01 Withdrawal of Benefits of Exemption (I) F Renting of Immovable Property (a) Exemption not available against renting of immovable property auxiliary educational services provided by educational institution (b) However exemption be available against renting of immovable property auxiliary educational services provided to educational institution relating to exempted education (a) Existing Provisions Exemption be available against tempary transfer permitting the use enjoyment of copyright of all cinematograph films (b) Proposed Provisions Exemption be available against exhibition of cinematograph films in cinema hall cinema theatre only (III) F Restaurants Eating Joints Mess (a) Now Service tax be levied against services provided by restaurants eating joints mess having centralized air conditioning

3 air heating in any part of establishment at any time during the year (b) Hencefth pre condition to have a license to serve the liqus has now been dispensed off (c) However no service tax be levied against services provided by restaurants eating joints mess not having centralized air conditioning air heating facility (IV) F Transptation by Rail Vessel *Now exemption not available against transptation by rail vessel of certain items i.e (a) Petroleum Petroleum products (b) Postal mail mail bags (c) Household effects (V) F Parking of Vehicle of General Public *Now exemption not available against parking of vehicle f general public (VI) F Repair Maintenance of Aircraft *Now exemption not available against repair maintenance of aircraft of Govt local authity governmental authity (VII) F Non Specified Charitable Activities (a) Now exemption not available against services provided to charitable ganization under head advancement of any other object Section 65B (40) of general public utility (b) Hencefth exemption be available f specified charitable activities only Extension of Benefit of Exemption *Benefit of exemption be permitted against certain services provided by goods transpt agency (GTA) by way of transptation (I) Agricultural produce (II) Goods where single carriage not exceeding 1500 (III) Goods where single consignee not exceeding 750 (IV) Foodstuff including (a) Flours (b) Tea (c) Coffee (d) Jaggery (e) Sugar (f) Milk Products (g) Salt (h) Edible oil Foodstuff excluding alcoholic beverages (V) Chemical fertilizer oilcakes (VI) RNA registered Newspapers magazines (VII) Relief materials f victims of natural man made disasters calamities accidents mishap (VIII) Defence military equipments (C) Amendments as Applicable From Date of Enactment of Finance Act, 01 1 Approved Vocational Courses Section 65B (11) * Existing Provisions * Courses provided by training institute industrial training centre as affiliated to National council f vocational Training are covered under negative list of services (II) Proposed Provisions * Now vocational courses provided by industrial training institute industrial training centre as affiliated to state council f vocational training will also be covered alongwith affiliated with National council under negative list of services Process Amounting to Manufacture Production 4 *Now process amounting to manufacture production under medicinal and Toilet Preparations (Excise Duties) Act, 1955 be also covered under negative list of services Seed Testing Service Section 66D * Now all kinds of testing including seed testing relating to agricultural agricultural produce be covered under negative list of services Recovery of Service Tax Not Levied paid Sht Levied Sht Paid Erroneously Refunded Section 7(A) (I) Central Excise Officer be permitted to determine Service Tax Liability f shter period 18 months where

4 5 6 7 Appellate Authity Tribunal concludes that notice not sustainable due to extended period can not be invoked (II) Hencefth 100% proceedings not to be become void-ab-intio Penalty f Failure to Take Registration Section 77(a) Maximum penalty f failure to take registration be restricted to INR 10 thousands Penalty f Offences by Directs of Company Section 78A (I) Maximum penalty f certain contraventions as committed by direct manager secretary any other officer of company be 1 Lakh (II) Certain Contraventions Includes (a) Evasion of Service Tax (b) Issuance of invoice bill challan without provisions of service tax (c) Availment Utilization of credit of taxes duty without actual receipt of taxable service excisable goods either fully partially (d) Failure to pay amount collected as service tax beyond 6 months (III) Imposition of penalty on Direct Manager secretary any other officer of company (a) When he was in charge of duty (b) Also he was responsible f conduct of business (c) Also he was knowingly concerned with contravention Appeals to Appellate Tribunal Section 86(5) CESTAT be permitted to admit an appeal to permit the filing of memandum of cross objections after expiry of period where CESTAT is satisfied with reason of delay 8 9 filing appeal Offences Penalties Section 89 (I) Term of imprisonment extended from to 7 years where assessee collects Service tax exceeding 50 Lakhs (II) Also fail to deposit with Govt. of India (III) Also 6 months period expired (IV) Term of imprisonment extended to 7 years f second subsequent offences where person convicted again f offence specified under section 89 Cognizance of Offences Section 90 * This section specify differentiate cognizable offences from non cognizable bailable offences (I) Cognizable Offences (a) Where assessee collects Service tax exceeding 50 Lakhs (b) Also fail to deposit with Govt. of India (c) Also 6 months period expired (II) Non Cognizable offences All other offences as specified under section 89 of Act be treated non cognizable 10 Power to Arrest Section 91 (I) Commissioner of Central Excise be empowered to authize any officer of Central Excise not below the rank of superintendent of central excise to arrest a person f offences as specified in section 89(1) (i) (ii) i.e offences where imprisonment f term may be extended from to 7 years (II) Ground of arrest be infmed to person arrested f any cognizable offence (III) Concerned officer be required to produce the person in court with in 4 hours (IV) All arrests under this section be carried out in accdance with provisions of code of Criminal Procedure, 197

5 11 Proof of Delivery 4 Section 8 (I) Speed post with proof of delivery courier entity as approved by Central Board of Excise and Customs be permitted as mode of delivery (D) Service Tax Voluntary Compliance Encouragement Scheme (VCES) 01 Where Service Tax collected but not deposited with Government 4 in addition to registered post (II) Date of delivery by courier entity be deemed a date of serving of decision der summon notice where served through courier 1 *Introduction of Scheme (d) This Scheme not available f section 7 7 7A f subsequent period also (I) This scheme to encourage the defaulters of Service tax to discharge their service tax liability (II) This scheme is permitting the payments of service tax without interest penalty proceedings under this Act (III) Assesses be permitted to declare true liability befe authity discharge their liability in installments Date of Application of Scheme This scheme be applicable from date of Enactment of Finance Act, 01 Period Covered Under Scheme (I) Commencing from Oct 01, 007 ending to dec 1, 01 (II) Hencefth not covered period commencing from Jan 01, 01 Eligible Persons to Avail this Scheme (I) Any person can avail this scheme by filing a declaration befe authity not below the rank of Assistant Commissioner (II) This Scheme not Available Where notice der determination already been issued under certain sections befe March 01, 01 (a) Section 7 Where Best Judgement Assessment der already passed (b) Section 7 Where Service Tax not levied paid sht levied sht paid erroneously refunded (c) Section 7A(III) Certain Cases Includes 5 6 (III)(a) This Scheme not available where Service tax return already filed (b) Also disclosed true liability (c) Also not discharged his service tax liability either in full in part Power to Reject the Declaration (I) Designated Authity be permitted to reject the declaration where enquiry investigation already initiated in certain cases (II) Also be pending as on March 01, 01 (III) Certain Cases Includes (a) Where search already conducted at premise of person (b) Where summon already issued under section 14 of Central Excise Act, 1944 (c) Where notice requiring production of accounts documents other evidence already issued (d) Where audit already initiated (IV) Designated Authity be required to pass an der in writing alongwith reasons thereof f rejection the declaration Procedure f Submitting of Declaration (I) Any person be permitted to submit a declaration upto December 1, 01 (II) Designated Authity be required to issue an acknowledgement of submission (III)(a) Defaulter be required to make truthful declaration f his all pending tax dues commencing from Oct. 01, 007 and ending to Dec. 1, 01

6 7 (b) Also to pay minimum 50% as tax befe Dec. 1, 01 (c) Also balance be paid upto June 0, 014 without interest (d) Upto December 1, 014 with interest as applicable from July 01, 014 (IV) Designated Authity be required to issue an acknowledgement f discharge of due against submission of proof of payment of service tax interest, if any Immunity (I) Declarant be permitted f immunity from interest penalty any other proceeding under Finance Act, 1994 after payment of Service tax interest, if any (II) After issue of acknowledgement f discharge of due the proceedings be deemed as conclusive can not be reopened Refund of Service Tax Paid Under this Scheme Amount once paid under this scheme will not be refunded under any Circumstance Tax Declared But Not Paid Service tax deptt. be permitted to recover tax liability + interest under section 87 where declaration already submitted but service tax not paid Reopening of Proceedings (I) Where commissioner of Central Excise has reason to believe that declarant made substantially false declaration by way of recding the reasons in writing (II) Show case notice already issued be deemed to have been issued under Section 7(1) 7A as case may be (III) Show case notice can not be served after expiry 1 year from date of declaration

Finance Bill-2013-Analysis of Service Tax by CA Atul Kumar Gupta

Finance Bill-2013-Analysis of Service Tax by CA Atul Kumar Gupta A. Changes applicable from the date of enactment of Finance Bill, 2013 I. Expansion in the Scope of Negative List:- 1. The agriculture sector has been supported by keeping the bulk of services relating