Transcript SERVICE TAX www.swamyassociates.com

SERVICE TAX
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Basic Features
 Statutory provisions.
 Levy on service provider
- Exceptions.
 Levy on realisation.
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Classification of Service
 Specific description than general description.
 Essential character.
 Which occurs first in the definition.
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Valuation…
 Gross amount.
 Cum - tax.
 Abatements.
 Notification 12/2003.
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Valuation…
 Services rendered free.
 Consideration in kind.
 Reimbursement of expenses.
Upto 18.04.2006 – No liability.
Judgements and circulars.
From 19.04.2006 – Concept of pure agent.
Malabar Management Services VS CCE
2008(9) STR 483
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Proceedings in Service Tax
 Issue of show cause notice.
 Adjudication.
 Appellate remedies.
Commissioner (Appeals)
CESTAT
High Court / Supreme Court
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Procedures in Service Tax…
 Registration – Centralised Registration.
 Issue of invoice.
 Maintenance of records.
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Procedures in Service Tax.
 Payment of service tax.
-
Due date.
Advance payment.
e payment.
Self adjustment – if service not rendered.
Provisional payment.
Self adjustment of excess payments.
 Filing of return – ST 3.
- Due date / Half yearly.
- Revised return.
- Fine for delayed return.
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Penalties in Service Tax.
 Sec. 76 – Delayed payment of S.Tax.
 Sec. 77 – General Penalty.
 Sec. 78 – Suppression, etc.
 Sec. 80 – Power of waiver.
 Rule 7 C – Fine for delayed return.
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Certain important services.
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Business Auxiliary Service.
 Promotional activities.
 Customer care services.
 Procurement of goods or services.
 Production or processing.
 Provision of service on behalf of client.
 Manufacture – excluded.
 Notification 8/2005.
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Commercial / Industrial
construction Service.
 Exclusion for roads, airports, railways
transport terminals, bridges, tunnels,
dams and ports.
 67 % Abatement.
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Construction of Residential
Complex Service.
 More than 12 units..
 Personal use - exempted.
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Consulting Engineering
Service.
 Foreign Technological transfers.
Novinon Ltd. VS CCE 2006 (3) STR 397
 To cover software too.
Customs House Agents
Service.
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Erection, Commissioning and
Installation Service.
Franchise Service.
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Intellectual Property Service.
Management Consultant
Service.
Manpower recruitment /
Supply agencies.
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Goods Transport Agency
Service.
 Reverse Charge.
 Abatement.
 Exemption.
 Payment mode.
 No SSI exemption.
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Renting of immovable
property.
Support Services for business.
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Works Contract Service.
 Re-classification.
 Composition Scheme.
 Vice of Notification 1/2006.
 Diebold Systems (P) Ltd Vs CCE
2008 (9) STR 546.
Air Liquide Engg. India (P) Ltd. Vs CCE
2008 (9) STR 486.
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Sale Vs Service.
S.No
Citation
Decision
1
BSNL Vs UOI – 2006
(2) STR 161 SC
It has been held that the sale value of
goods shall not be subjected to the levy of
service tax.
2
Idea
Mobile
Communications
Limited VS CCE –
206 (4) STR 132 Tri
– Bang
Levy of sales tax and service tax are
constitutionally mutually exclusive.
3
BPL
Mobile
Communications
Limited VS CCE –
2007 (7) STR 440
Sale of SIM cards is sale and sales tax is
paid. Hence service tax is not payable.
4
Imagic Creative (P)
Limited Vs CCE –
2008 (9) STR 337
SC
Service tax and VAT are mutually exclusive.
5
Thermax Limited Vs
CCE – 2007 (8) STR
487
Service tax not leviable when sales tax is
paid.
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Small Scale exemption.
 Threshold limit.
 Conditions.
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Commercial Concern
Vs
Any person.
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Export of Service and Import
of Service.
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CENTRAL EXCISE
AND CENVAT
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MANUFACTURE
 Section 2 (f)
 Deemed manufacture.
 Third schedule.
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VALUATION
Section 4 – Transaction Value
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SECTION 4 & Valuation Rules
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Rule 4 - Comparable goods.
Rule 5 - Freight and Insurance.
Rule 6 - Additional consideration.
Rule 7 - Depot clearance.
Rule 8 - Captive consumption.
Rule 9 - Related person.
Rule 10 - Interconnected undertaking.
Rule 10A – Jobwork.
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Rule
11 - Best judgement
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SECTION 4 A
 Weights and Measures.
 OE Exemption.
 Different MRP.
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EXPORTS
 Exports without payment of duty.
 Exports under claim for rebate.
 Protection of Cenvat Credit.
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APPELLATE / OTHER REMEDIES
 Commissioner (Appeals).
 CESTAT.
 Settlement Commission.
 Pre deposit.
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PENAL MEASURES
 Various penalties.
 Provisional attachment of property.
 Prosecution.
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Basic Features
 Concept of Cenvat credit.
 Landmarks – 1986, 1994 & 2004.
 Cenvat Credit Rules, 2004.
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Applicability
 Manufacturers.
 Service providers.
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Certain terms.
 Input.
 Capital goods.
 Input Services.
 Input Service Distributor.
 First / Second stage dealer.
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Cenvatable duties / taxes
 Basic Excise Duty.
 CVD.
 NCCD.
 Education CESS.
 Addl. Duty of Customs – Sec. 3(5).
 Service Tax and CESS thereon.
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Utilisation and Restrictions on
utilisation
 Payment of Excise duty.
 Payment of Service tax.
 Other payments.
 Cross utilisation.
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Other conditions.
 Capital goods – 50 % restriction.
 No to “having the cake and eating it too”
- Depreciation / Cenvat Credit.
 Removal of inputs / capital goods
- the story “as such”.
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Other conditions.
 Removal for job work.
 Write off.
 Service Tax Credit - Pay and use.
 Documents for availing credit.
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Rule 6 Algebra.
 Position upto 31.03.2008.
 Position from 01.04.2008.
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Rule 6.
 Protection to certain clearances.
 Protected Services.
 Chandrapur Magnet Wires (P) Ltd Vs CCE.
1996 (81) ELT 3 SC
- Recent developments.
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Certain common disputes…
 Credit for mobile phone.
India Rayon Industries Ltd. Vs CCE
2006 (4) STR 79.
 Credit for outdoor catering.
Victor Gaskets India Ltd Vs CCE
2008 – TIOL – 409.
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Certain common disputes…
 Credit for outward transportation.
- Gujarat Ambuja Cements Ltd. Vs CCE.
2007 (6) STR 249.
- India Cements Limited Vs CCE
2007 (8) STR 43.
- Master Circular and recent amendments.
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CUSTOMS
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Role of customs
• Collection of import & export duties
• enforcement of customs act
• enforcing prohibitions/restrictions
• prevention of smuggling
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• Imports
• IGM (by shipping lines)
• cargo declaration
• Bill of Entry
• assessment
• duty Payment
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• Exports
• Shipping bill, Invoice, ARE#
• assessment
• duty Payment (if any)
• EGM (by shipping lines)
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Customs Valuation Rules, 2007
•The Customs Valuation (Determination of
Value of Imported Goods) Rules, 2007
- Notfn. No. 94/2007-Cus(NT) dated 13-9-07
• The Customs Valuation (Determination of
Value of Exported Goods) Rules, 2007
- Notfn. No. 95/2007-Cus(NT) dated 13-9-07
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Value of imported goods
• transaction value – Section 14 (1) of
CA, 1962
• deductive value – Rule 7
• computed value – Rule 8
• residual method – Rule 9
• similar goods / identical goods
• related person
• provisionally assessed value is not
transaction value.
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Value of exported goods
•transaction value – Section 14 (1) of CA,
1962
• computed value – Rule 5
• residual method – Rule 6
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refunds
• claim to be filed within six months.
• one year for some persons.
• no time limit for duty / interest paid
under protest
• unjust enrichment
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RE-IMPORT OF EXPORTED GOODS
• indigenously manufactured
1. cancellation of export order
2. return from overseas exhibition
3. completion of overseas contract
• imported
1. sent abroad for repairs
2. for special processes
• UNLESS a specific exemption is issued,
import duties are leviable – Section 12 of CA,
1962.
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RE-EXPORT OF IMPORTED GOODS
• 98% of Customs duties drawback
• within 2 years from the date of import
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Export promotion schemes
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duty drawback
• all india industry rate
• brand rate
• simplified scheme
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Advance licence
• actual user condition
• physical exports
• intermediate supplies
• deemed exports
• invalidation
• export obligation
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Other export promotion schemes
• DFRC
• DEPB
• EPCG
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export oriented units
• customs bonded ware house
• duty free imports
• B-17 bond
• procurement of indigenous goods
– CT-3 procedure
• DTA sale - valuation – section 3 of
CA, 1962.
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export oriented units
• sale of surplus / un-utilised goods
• clearance under ARO/inland letter/DFRC
• sub-contracting
• inter-unit transfer
• de-bonding
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SPECIAL
ECONOMIC
ZONES
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Basic Features
 duty free imports
 indigenous procurement
 sub-contracting
 DTA clearances
 Exports
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duty free imports of
goods and services
 exempt from customs duties – customs act.
 exempt from service tax – finance act, 04
 securities transaction tax – finance act, 04
 exempt from most cesses.
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Indigenous procurement
 exempt from excise duty (from 11-5-2004),
service tax and most Cesses.
 DTA supplier’s benefit – export entitlements
 Cenvat credit on materials used in goods
supplied to SEZ units. (Rule 6(6) of CCR)
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Sub-contracting –
Rules 41 to 44 of SEZ rules
 can under take job-work of DTA units (for
exports only)
 trading units not allowed
 SEZ developer/Co-developer/contractor–
may subcontract a process into DTA
 permission of DC/AC Customs required.
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DTA Clearance–
Section 30 of SEZ Act.
 to be cleared on payment of
customs duties as if imported.
 valuation as per CV(DoPoI)R,88
 quantity or value - no limit on sale
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exports
 direct exports
 through third parties
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39/2001-CE dated
31-7-2001
Exemption to excisable goods
manufactured in Kutchh (Gujarat)
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 applicable to new industrial units
 commercial production before 3112-2005
 not applicable to SSI units
 exceptions
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 pay excise duty through cenvat
credit account
 after exhausting cenvat account,
pay through PLA (cash)
 take re-credit of PLA amount on
15th of next month.
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1st amendment –
42/2001-CE dated 21-9-2001
Original value of plant & machinery to be
as certified by CA (under head fixed assets)
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2nd amendment - 5/2003-CE
dated 13-2-2003
‘refund shall not exceed the amount of
duty paid LESS the amount of cenvat
credit availed of, used in relation to the
manufacture of goods’.
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3rd amendment - 16/2003-CE
dated 1-3-2003
‘refund shall not exceed the amount of
duty paid LESS the amount of cenvat
credit availed of, used in relation to the
manufacture of goods’.
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4th amendment - 65/2003-CE
dated 6-8-2003
‘para 1A (i) to (iii),
para 2A (a) to g, inserted’
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5th amendment - 16/2008-CE
dated 27-3-2008
new words replaces old words –
“to the duty payable on the value addition
undertaken in the manufacture of the said
goods by the said unit.”
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rebate of excise duty on exports
682/73/2002-CX dated 19-12-2002 –
refund of duty paid in cash.
842/19/2006-CX dated 8-12-2006 –
contents of circular dated 19-12-2002
applies to kutchh also.
209/11/2005-CX-6 dated 8-12-2006 –
rebate on goods manufactured in kutchh.
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rebate of excise duty on export
209/11/2005-CX-6 dated 3-4-2007 –
clarification to board’s instruction dated
8-12-2006
37/2007-CE(NT) dated 17-9-2007 –
bans rebate on export for units availing
benefits of 39/2001.
209/11/2005-CX-6 dated 13-10-2007 –
board’clarifies – export after 17-9-2007
may be done only under bond.
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rebate of excise duty on export
Rule 18 of CER, 2001 amended - Rebate
allowed from 1-7-2001 to 28-2-2002 –
Fifth schedule of Finance Bill enacted on
10-5-2008
Rule 18 of CER, 2002 amended - Rebate
allowed from 1-3-2002 upto 7-12-2006 –
Sixth schedule of Finance Bill enacted on
10-5-2008
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ASK SA:
Chennai - #21, rams flats, ashoka avenue, directors colony,
Kodambakkam, chennai – 600024 : tel: 044-24811147
Ahmedabad - #B-8, satya triveni tower, opp. karnavati club, s.g.
highway, ahmedabad – 380052 : tel/fax: 079-26920291
Bengaluru - # G-8, Fortuna Icon Apartments, Jodidar Ashwathappa
Farm, Saharkaranagar, bengaluru – 560092 : tel/fax: 080-41303434
Coimbatore - #402, presidium woods vale, no. 1, bharathi Park 1st
cross, sai baba colony, coimbatore-641043 : tel/fax: 0422-4378622
Hyderabad - #307, block B, sri sai land mark, street no. 8,
habshiguda, hyderabad – 500007 : tel/fax: 040-65526879
Rajkot - #401, shukan flats, limbudiwadi, b/h neptune towers,
kalawad road, rajkot – 360007 : tel/fax: 0281-2451547
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