CHAPTER HEADS. Contents I-7 DIVISION ONE INTRODUCTION CHAPTER 1 : BASIC ASPECTS OF INDIRECT TAXES 3 DIVISION TWO VAT & SERVICE TAX

Transcription

1 CHAPTER HEADS PAGE Contents I-7 DIVISION ONE INTRODUCTION CHAPTER 1 : BASIC ASPECTS OF INDIRECT TAXES 3 DIVISION TWO VAT & SERVICE TAX CHAPTER 2 : STATE VAT 23 CHAPTER 3 : OTHER ASPECTS OF VAT 45 CHAPTER 4 : SALE, GOODS AND DEALER 61 DIVISION THREE SERVICE TAX CHAPTER 5 : BASICS OF SERVICE TAX 75 CHAPTER 6 : EXEMPTIONS AND ABATEMENTS IN SERVICE TAX 94 CHAPTER 7 : PROCEDURES IN SERVICE TAX 107 CHAPTER 8 : POINT OF TAXATION 135 CHAPTER 9 : OTHER ASPECTS OF SERVICE TAX 144 CHAPTER 10 : EXPORT AND IMPORT OF SERVICES 158 CHAPTER 11 : TAXABLE SERVICES A TO I 170 CHAPTER 12 : TAXABLE SERVICES J TO Z 211 DIVISION FOUR CENTRAL EXCISE CHAPTER 13 : BASICS OF CENTRAL EXCISE DUTY 253 CHAPTER 14 : MANUFACTURE, PRODUCTION AND MANUFACTURER 265 CHAPTER 15 : CLASSIFICATION OF GOODS 282 CHAPTER 16 : MRP BASED VALUATION FOR CENTRAL EXCISE 299 CHAPTER 17 : TRANSACTION VALUE IN EXCISE 311 CHAPTER 18 : CENTRAL EXCISE VALUATION RULES 338 CHAPTER 19 : OTHER MODES OF VALUATION OF A PRODUCT 358 CHAPTER 20 : ELIGIBILITY OF CENVAT CREDIT 362 CHAPTER 21 : UTILISATION OF CENVAT CREDIT 386 CHAPTER 22 : EXEMPTED GOODS/EXEMPTED OUTPUT SERVICES 406 CHAPTER 23 : OTHER PROVISIONS RELATING TO CENVAT 422 CHAPTER 24 : BASIC PROCEDURES IN CENTRAL EXCISE 441 CHAPTER 25 : OTHER PROCEDURES IN CENTRAL EXCISE 463

2 CHAPTER 26 : EXCISE CONCESSION TO SSI 480 CHAPTER 27 : EXEMPTION FROM DUTY 506 CHAPTER 28 : REFUND OF DUTY 514 CHAPTER 29 : DEMANDS OF DUTY 527 CHAPTER 30 : CAPTIVE CONSUMPTION AND JOB WORK 544 CHAPTER 31 : OTHER TOPICS IN CENTRAL EXCISE 561 CHAPTER 32 : ADJUDICATION AND ENFORCEMENT 578 CHAPTER 33 : PENALTIES AND CONFISCATION 593 CHAPTER 34 : CRIMINAL OFFENCES AND PROOFS 609 CHAPTER 35 : SETTLEMENT COMMISSION AND ADVANCE RULING 621 CHAPTER 36 : APPEALS IN INDIRECT TAXES 632 DIVISION FIVE CUSTOMS CHAPTER 37 : INTRODUCTION TO CUSTOMS DUTY 657 CHAPTER 38 : VALUATION FOR CUSTOMS DUTY 682 CHAPTER 39 : CUSTOMS PROCEDURES 713 CHAPTER 40 : BAGGAGE, COURIER AND POST 741 CHAPTER 41 : EXEMPTIONS, REMISSION, DEMANDS 756 CHAPTER 42 : OTHER PROVISIONS IN CUSTOMS 769 CHAPTER 43 : EXPORT INCENTIVES 791 CHAPTER 44 : EOU AND SEZ 808 DIVISION SIX BEFORE THE EXAMINATIONS CHAPTER 45 : BEFORE THE EXAMINATION 821 SUBJECT INDEX 827

3 CONTENTS PAGE Chapter-heads I-5 DIVISION ONE INTRODUCTION 1 BASIC ASPECTS OF INDIRECT TAXES 1.1 Features of Indirect Taxes Constitution of India Basic Concept of VAT Tax credit system to remove cascading effect Duel VAT in India Illustration of VAT calculations 16 SELF STUDY QUESTIONS 19 DIVISION TWO VAT & SERVICE TAX 2 STATE VAT 2.1 Categories of Sale Highlights of State Sales tax VAT Concession for small dealers Non-availability of input credit in certain cases Procedural provisions in VAT Record of input Tax Credit Provisions of assessment and audit Disadvantages and pitfalls in VAT 39 SELF STUDY QUESTIONS 42 3 OTHER ASPECTS OF VAT 3.1 Overview of Central Sales Tax Other Variants of VAT Deficiencies in present VAT system 59

4 SELF STUDY QUESTIONS 59 4 SALE, GOODS AND DEALER 4.1 Sale and deemed sale Goods Dealer Declared goods (Goods of special importance) Sale Price for purpose of Vat/CST 67 SELF STUDY QUESTIONS 70 DIVISION THREE SERVICE TAX 5 BASICS OF SERVICE TAX 5.1 Nature of levy of Service Tax Taxable Event in Service Tax Valuation for service tax Costs and expenditure relating to service includible Rejection of value and determination of value by Central Excise Officer Classification of Service 89 SELF STUDY QUESTIONS 92 6 EXEMPTIONS AND ABATEMENTS IN SERVICE TAX 6.1 General Exemptions General Exemption to small service providers Abatement and composition in case of some services 100 SELF STUDY QUESTIONS PROCEDURES IN SERVICE TAX 7.1 Main procedures and records Person who is liable to pay service tax Registration Invoice Payment of service tax Advance payment and self credit of service tax Returns Assessment 124

5 7.9 Cenvat Credit 125 SELF STUDY QUESTIONS POINT OF TAXATION 8.1 Rules to determine rate and due date Point of Taxation at a glance 141 SELF STUDY QUESTIONS OTHER ASPECTS OF SERVICE TAX 9.1 Demands Provisional attachment pending adjudication Amount collected representing as service tax must be paid to Government Refund of service tax and interest Penalties Appeals Advance Ruling Prosecution for offences 156 SELF STUDY QUESTIONS EXPORT AND IMPORT OF SERVICES 10.1 Export of Service Meaning of export of taxable service Services provided to installations, structures and vessels in the Continental Shelf of India and the EEZ taxable in some cases Rebate of service tax paid on exported services or tax paid on inputs/input services Import of service Rules to determine whether a service is import of service Service receiver is liable to pay service tax under reverse charge 166 SELF STUDY QUESTIONS TAXABLE SERVICES A TO I 11.1 Advertising Agency s Services Air transport of passengers for domestic or international journey Architect s services Banking and other Financial Services Business Auxiliary Service 176

6 11.6 Business Exhibition Services Business Support Services Cargo Handling Agency Services Clearing & Forwarding Agent s Services Commercial Training or Coaching Services Construction Services Consulting Engineer s Services Courier Services Credit Rating Agency s Services Custom House Agent s Services Erection, Commissioning and Installation Franchise Services Information Technology Software Service Intellectual Property Services Interior Decorator s Services 208 SELF STUDY QUESTIONS TAXABLE SERVICES J TO Z 12.1 Legal Consultancy Service Mailing list Compilation and Mailing Service Management, Maintenance or Repair Services Management or Business Consultant s Services Mandap Keeper s Services Manpower Recruitment or Supply Agency s Services Market Research Agency s Services Practising CA/CWA/CS Services Preferential Location or Development of Complex Public Relation Service Real Estate Agent s Services Renting of Immovable Property Scientific or Technical Consultancy Services Site formation and clearance, excavation and earthmoving and demolition Stock Broker s Services Storage and Warehousing of Goods Services Technical Testing and Analysis Services Telecommunication Services Transport of Goods by Aircraft Service Transport of Goods by Rail 236

7 12.21 Transport of Goods by Road Service Transport of goods other than water, through Pipeline or other conduit Works Contract Service 242 SELF STUDY QUESTIONS 248 DIVISION FOUR CENTRAL EXCISE 13 BASICS OF CENTRAL EXCISE DUTY 13.1 Laws relating to Central Excise Types of excise duties Excisable Goods 258 SELF STUDY QUESTIONS MANUFACTURE, PRODUCTION AND MANUFACTURER 14.1 Taxable event is Manufacture Manufacture Manufacture must be in India Deemed manufacture Deemed manufacture in case of goods covered under MRP provisions Manufacturer 277 SELF STUDY QUESTIONS CLASSIFICATION OF GOODS 15.1 Central Excise Tariff Act (CETA) and Customs Tariff Act (CTA) Overview of Tariff Rules for Interpretation of Tariff Application of GIR in Tariff Other provisions relating to classification Trade Parlance Theory 293 SELF STUDY QUESTIONS MRP BASED VALUATION FOR CENTRAL EXCISE 16.1 Methods of calculation of duty payable Applicability of MRP Valuation provision 302

8 16.3 Applicability of Legal Metrology Act Deemed Manufacture of products covered under MRP Wrong indication or tampering of MRP is offence 307 SELF STUDY QUESTIONS TRANSACTION VALUE IN EXCISE 17.1 Excise Duty based on Value Transaction Value as Assessable Value Deduction of Taxes from AV Inclusions in Transaction Value Deduction of Trade Discounts Outward handling, freight and insurance Bought out goods, accessories supplied with main product 328 SELF STUDY QUESTIONS CENTRAL EXCISE VALUATION RULES 18.1 Valuation Rules to determine Assessable Value Valuation when price is not the sole consideration Sale at depot/consignment agent Valuation in case of captive consumption Best judgment assessment Sale to a Related Person 348 SELF STUDY QUESTIONS OTHER MODES OF VALUATION OF A PRODUCT 19.1 Duty based on production capacity Specific Duty Tariff value Compounded Levy Scheme 360 SELF STUDY QUESTIONS ELIGIBILITY OF CENVAT CREDIT 20.1 Background of Vat Input goods eligible as credit Cenvat Credit of Input Service Input Service Distributor 372

9 20.5 Cenvat credit of duty paid on Capital goods 373 SELF STUDY QUESTIONS UTILISATION OF CENVAT CREDIT 21.1 Introduction Taking and utilisation of credit Reversal of Cenvat Duty paying documents for Cenvat Deemed credit on declared inputs Responsibility of person taking Cenvat credit 400 SELF STUDY QUESTIONS EXEMPTED GOODS/EXEMPTED OUTPUT SERVICES 22.1 No Cenvat credit if final product/service exempt Provisions in respect of various options Exempted goods Meaning of exempted services Exceptions from provisions of payment of amount or proportionate reversal Value for purpose of rule 6(3) and 6(3A) Payment of amount on exempted final product/exempted services Proportionate reversal of Cenvat Credit 415 SELF STUDY QUESTIONS OTHER PROVISIONS RELATING TO CENVAT 23.1 Removal of inputs/capital goods Removal of capital goods after use Removal for job work/repairs/testing Removal of inputs other than covered under Cenvat Procedures and Records for Cenvat Special Cenvat Provisions in respect of SSI Cenvat in case of export of final products and taxable services Transfer/Merger/Shifting of undertaking Penalty for wrongful availment of Credit or violation of rules Accounting, Inventory Valuation and Cenvat 435 SELF STUDY QUESTIONS 439

10 24 BASIC PROCEDURES IN CENTRAL EXCISE 24.1 Overview of procedural provisions Administrative set up of Central Excise and Customs Registration of factory/warehouse Storage and accounting of final products Invoice for removal of final products Payment of excise duty Periodic returns under Central Excise 458 SELF STUDY QUESTIONS OTHER PROCEDURES IN CENTRAL EXCISE 25.1 Duty free exports General procedures for exports Removal under bond without payment of duty Export under claim of rebate Rebate of duty on inputs used in manufacture of export goods Inputs free of Central Excise duty Duty drawback of excise portion Intermediate products against advance intermediate authorisation upto two stages Export to Nepal/Bhutan Warehousing after clearance for export Supplies to SEZ/EOU from DTA Bringing goods for repairs, re-making etc Bonds under Central Excise Receipt of goods at concessional rate of duty Warehousing in Excise Supervision/Overtime charges 477 SELF STUDY QUESTIONS EXCISE CONCESSION TO SSI 26.1 Provisions of General SSI exemption Clubbing of turnover of various factories Slabs in SSI excise exemption Calculation of limit of ` 150/` 400 lakhs Goods not eligible for SSI concession Other provisions in respect of concession to SSI 489

11 26.7 Sending material for job work by exempt SSI unit Procedural concessions to SSI Branded Goods and SSI Exemption to manufacturers of branded goods 502 SELF STUDY QUESTIONS EXEMPTION FROM DUTY 27.1 Tariff rate and Effective rate of duty Exemption from duty by a notification Exemption optional but absolute exemption compulsory Other provisions in respect of exemption 510 SELF STUDY QUESTIONS REFUND OF DUTY 28.1 Claim of refund Time limit for filing refund application Duty collected from buyer must be paid Proof of not passing of burden Interest on late disbursement of refund Consumer Welfare Fund Applicability and validity of doctrine of unjust enrichment Non-application of provisions of unjust enrichment 523 SELF STUDY QUESTIONS DEMANDS OF DUTY 29.1 Short payment of duty Demands for suppression, misstatement or fraud Show Cause Notice Who can issue show cause notice Interest for delayed payment of duty Provisional attachment pending adjudication Recovery of dues 539 SELF STUDY QUESTIONS CAPTIVE CONSUMPTION AND JOB WORK 30.1 Intermediate product 544

12 30.2 Duty leviable in certain cases on intermediate products Valuation in case of captive consumption Job work under Central Excise Exemption for job work under Cenvat Exemption to job work under Notification No. 214/86-CE Exemption for job work for inputs received from SSI unit Valuation in case of job work 557 SELF STUDY QUESTIONS OTHER TOPICS IN CENTRAL EXCISE 31.1 Assessee and assessment Provisional assessment Budget and Central Excise Remission of duty on lost/destroyed goods Brand Name under Central Excise Excise Audit/Checks Special Audit - Valuation Audit and Cenvat credit audit Payment of Duty under Protest Withdrawal of facilities to manufacturer/dealer misusing facilities Tax Planning in Central Excise Emergency Powers to increase duty 575 SELF STUDY QUESTIONS ADJUDICATION AND ENFORCEMENT 32.1 Adjudication in indirect taxes Enforcement Powers of Revenue Officers Power to Summons Power to arrest Powers of Search Powers of Seizure 590 SELF STUDY QUESTIONS PENALTIES AND CONFISCATION 33.1 Civil and criminal liabilities for offences General provisions in case of penalties Penalty for non-payment of duty Mandatory penalty in case of fraud, suppression of facts etc. in excise and customs 596

13 33.5 Principles in imposition of penalty Personal penalty on director, partners and employees Confiscation in Excise and Customs Provisions in respect of confiscation Redemption fine Effect of wrong seizure/confiscation 607 SELF STUDY QUESTIONS CRIMINAL OFFENCES AND PROOFS 34.1 Prosecution for Offences Offences under Customs Act Who can be punished Other provisions in respect of prosecution Compounding of offences Proofs in adjudication and prosecution Burden of proof Proof in Customs Law Special provisions for Goods covered under section 123 of Customs Act Relevancy of Statement before Excise/Customs Officer Evidence by documents Testing of samples Expert opinion/testing report 620 SELF STUDY QUESTIONS SETTLEMENT COMMISSION AND ADVANCE RULING 35.1 Purpose of Settlement Commission Who can approach Settlement Commission Disclosure to be made by applicant Which issues can be taken before Settlement Commission Procedure before Settlement Commission Powers to grant immunity from prosecution Powers of Settlement Commission Advance Ruling 627 SELF STUDY QUESTIONS APPEALS IN INDIRECT TAXES

14 36.1 Provisions of Appeal and Revision Pre-deposit for filing appeal Time limit for filing appeal Departmental Appeal First Appeal Revision by Central Government Appeal before Tribunal Powers of Tribunal Rectification of own mistakes by Tribunal Appeal to High Court on substantial question of law Appeal to Supreme Court Constitutional remedies in indirect taxes 651 SELF STUDY QUESTIONS 651 DIVISION FIVE CUSTOMS 37 INTRODUCTION TO CUSTOMS DUTY 37.1 Brief Background of Customs Law Nature of Customs Duty Territorial Waters and Customs waters Goods under Customs Act Classification for Customs and rate of customs duty Basic Customs Duty Additional Customs Duty u/s 3(1) (CVD) Education cess on Customs duty Secondary and Higher Education Cess Additional Duty under section 3(3) Additional Duty under section 3(5) (Special CVD - SAD) Protective Duties Countervailing duty on subsidised goods Anti Dumping Duty on dumped articles Safeguard duty NCCD of Customs Export duty Cess 679 SELF STUDY QUESTIONS VALUATION FOR CUSTOMS DUTY

15 38.1 Value for purpose of Customs Act Transaction value at the time and place of importation Rate of Exchange for Customs Valuation WTO Valuation Agreement Customs Value - Inclusions Exclusions from Assessable Value Valuation of second hand Machinery and old Motor cars Declaration of value by Importer Methods of Valuation for Customs Transaction value of same goods for customs valuation Transaction value of identical goods for customs valuation Transaction value of similar goods for customs valuation Deductive Value for customs valuation Computed Value for Customs valuation Residual Method for customs valuation Valuation of Export Goods 708 SELF STUDY QUESTIONS CUSTOMS PROCEDURES 39.1 Introduction Self Assessment of Customs Duty Containers and Inland Container Depots Miscellaneous Customs Procedures Import Procedures Overview of procedures for import Submission of Bill of Entry Assessment of Customs Duty Provisional Assessment Relevant Date for Rate and Valuation of Import Duty Relevant date for foreign exchange rate Execution of Bond Customs Clearance from view of Import policy Procedure after assessment Demurrage if goods not cleared from customs Export Procedures Procedures to be followed by Exporter 735 SELF STUDY QUESTIONS BAGGAGE, COURIER AND POST

16 40.1 Baggage Rate of Customs Duty on Baggage Exemptions/Restrictions on Baggage Baggage of Indian resident or foreigner residing in India Concession to persons transferring his residence (TR) Concessions to Tourists Practical Examples on baggage Other provisions of Baggage Import and export through Courier Export and Import by Post 752 SELF STUDY QUESTIONS EXEMPTIONS, REMISSION, DEMANDS 41.1 Exemption from customs duty Project Imports General Exemptions under customs notifications Control over end use exemptions Remission on lost/pilfered goods Remission on relinquished goods Abatement of duty on damaged goods Re-import of goods Refund of customs duty if imported goods are rejected Re-exports Demand of Customs duty Recovery of sums due to Government Refund of customs duty 764 SELF STUDY QUESTIONS OTHER PROVISIONS IN CUSTOMS 42.1 Warehousing in customs Public/Private Bonded warehouses Warehousing period under customs Manufacture in customs bonded warehouse Clearance from bonded warehouse Other provisions of customs warehousing Storage without warehousing Prohibitions on Imports and Exports Customs - Other provisions 779

17 42.10 Penalties under Customs Act Improper imports Improper exports Penalties that can be imposed in customs Monetary Penalty in Customs Penalty for short landing Confiscation of Goods in customs Re-export of offending goods 788 SELF STUDY QUESTIONS EXPORT INCENTIVES 43.1 Foreign Trade Policy Export Promotional Measures Promotional measures through Duty Credit Schemes Status Holders Advance Authorisation Duty Free Import Authorisation (DFIA) Duty Entitlement Pass Book (DEPB) Scheme EPCG Authorisation Duty Drawback Type of Drawback Rates Drawback claim procedure Duty drawback on Re-export Deemed Exports 805 SELF STUDY QUESTIONS EOU AND SEZ 44.1 An overview of EOU scheme Obtaining approval for setting up EOU/STP/EHTP/BTP Inputs and capital goods without payment of duty Rebate of excise duty and service tax paid on inputs and input services EOU is a bonded warehouse Procedures by EOU Central Excise and EOU Excise Procedures by EOU units Other schemes similar to EOU Special Economic Zone (SEZ) 817

18 SELF STUDY QUESTIONS 818 DIVISION SIX BEFORE THE EXAMINATIONS 45 BEFORE THE EXAMINATION 45.1 Some suggestions to students Syllabus of Indirect Taxes of the three prime Institutions Past Questions set at CA/CWA/CS examinations 826 SUBJECT INDEX 827