TIOL-DDT 2609
01 06 2015
Monday

SERVICE TAX is at 14% from today. With GST round the corner, the line between State Taxes and Central Taxes, is getting slowly blurred and maybe as a preparation, the Service Tax levies are stepping into the State zone - with an increase in tax rate - after all under the GST regime there will be a State Service Tax and a Central Service Tax.

Liquor is a good source of revenue for the State Governments, next only to VAT and the Centre has been having an eye on it notwithstanding constitutionally prescribed bar on intaxication.

The CBEC issued a draft circular proposing to tax the job work of bottling liquor. In 2006-TIOL-268-HC-MP-ST   the High Court held that bottling of liquor is liable to Service Tax. However in Board's letter CBEC Letter F.No . 249/1/2006- CX 4 dated 27th October 2008, it was clarified that there would be no service tax.

When the negative list concept came in 2012, any process amounting to manufacture or production of goods was included in the negative list in Section 66D(f) of the Finance Act 1994.

Any process amounting to manufacture or production of goods was defined as a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.

So, it was clear that there would be no service tax on job work manufacture of alcohol.

In the 2015 Finance Act, alcoholic liquor for human consumption was taken out of the negative list and consequently this alcoholic liquors for human consumption was also removed from the definition of manufacture.

The crux of the story is that from today, Service Tax shall be levied on contract manufacturing/job work for production of potable liquor - which means almost the entire liquor industry will come under the Service Tax net and that booze is going to be slightly more expensive from today.

The Industry is obviously not happy and the Confederation of Indian Alcohol Beverages Companies took the matter to the Delhi High Court. The High Court was not impressed enough to grant stay of the levy. The case is posted for disposal on 10.09.2015. At least until then, happy intaxication.

The State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health  - Article 47 of the Constitution.

What about the balance of credit of Education Cess? CBEC should clarify immediately to avoid unnecessary litigation

WHILE there will be no education cess on Service Tax from today, somehow CBEC is shying away from giving a clarification on how the balance of CENVAT credit on education cess lying in the accounts as on 1.6.2015 can be used by the service providers and as on 1.3.2015 by the manufacturers.

CBEC should understand that they have put every manufacturer and every service provider in the country under deep distress, because there is no clarity on the issue. A leading manufacturer asked us, "What is the status of balance amount lying in both the cess in CENVAT account as on 01.03.2015 and Service tax Edu cess lying as on 31.05.2015. Shall we wait till the board clarifies or can we merge all the cess with basic excise duty?." With the hope that Board will soon clarify, we advised them to wait. But how long? Does the Board believe in the concept of ' ease of doing business' ? Or are our tax laws intentionally made complicated to torture the assessees?

Unfortunately there is a school of thought in the Department, which believes that this credit will lapse. Before such dangerous thoughts spread and the litigation system is further clogged with unwanted notices and appeals, CBEC/TRU should wake up to the reality and urgently issue the clarifications/amendments.

Will TRU listen?

Six New Technical Members for CESTAT?

IT is learnt from reliable sources that the Government has issued orders appointing six Commissioners/Principal Commissioners as Members (Technical) and posted them to Delhi, Mumbai, Chennai, Bangalore and Ahmedabad. There seems to be some confusion about one Member because of a mistaken identity. Maybe things will be clear today.

Anti Dumping Duty on Electronic Calculators

GOVERNMENT has imposed anti dumping duty on 'Electronic Calculators of all types [excluding calculators with attached printers, commonly referred to as printing calculators; calculators with ability to plot charts and graphs, commonly referred to as graphing calculators; programmable calculators]' falling under heading 8470 of the First Schedule to the Customs Tariff Act, originating in, or exported from the People's Republic of China. The duty is supposed to be valid for a period of five years.

Notification No. 24/2015-Customs (ADD), Dated: May 29, 2015

'Thru Proper Channel' - CBEC Officers have no respect for channel

AS per the existing instructions, representations on service matters should be forwarded through proper channel and the proper course for a Government servant is to address his immediate superior official, or the Head of his office, or such other authority at the lowest level as he is competent to deal with the matter.

Submission of representations directly to higher authorities by-passing the prescribed channel of communication, is to be viewed seriously and appropriate disciplinary action should be taken against those who violate these instructions as it can rightly be treated as an unbecoming conduct attracting the provisions of Rule 3(1) (iii) of the CCS (Conduct) Rules, 1964.

However, of late, CBEC observes that some officers of Indian Customs and Central Excise tend to by-pass the prescribed channels of representation and write directly to the higher functionaries and functionaries outside, including State Government in violation of the prescribed channels.

This has been viewed seriously.

CBEC reiterates that the Government of India instructions on the issue may be brought to the notice of all the officers for strict compliance. All the officers may be suitably advised to refrain from sending application/ representation to other Ministry/ Department/ State Governments/ Organisations on service matter. The officers may be impressed upon to strictly follow the existing instructions in this regard, failing which appropriate disciplinary action may be taken against them.

The instructions were issued in 1968 and periodically reiterated. But still employees and their associations write to various Ministers, MPs, Prime Minister, President of India and many of these VIPs forward such representations dutifully to the Board. Has the Board in the last 47 years ever taken action against any officer for sending a representation through the improper channel?

But why do officers trained at NACEN for two years send their representations through all other kinds of channels, when the clear and proper channel is available? It is simply because the proper channel is so polluted and clogged that nothing flows through it and nothing comes out of it, unless you clear the blockages at each stage. And you are treated with contempt and disbelief by the top brass when the representations are sent through proper channels, whereas a representation sent through a political functionary gets immediate attention. Nobody will go out of the channel if the channel is effective. Board should first ensure that the channel is clear and representations are considered fairly. It is often found that senior officers talk insultingly and rudely to officers just one rank below them.

Anyway nobody will be bothered about this threat of 'viewing seriously' and disciplinary action as they all know that if the improper channel is big enough, no action will be taken.

CBEC had issued similar instructions in September 2014 (DDT 2447) and October 2014 (DDT 2455)

CBEC F. No.A.35017/32/2015-Ad.II.., Dated May 28 2015

Talcher STPP renamed as Talcher TPP in Customs and Excise Notifications

GOVERNMENT has amended exemption notification No. 12/2012-Central Excise, dated the 17th March, 2012 and Notification No. 12/2012-Customs, dated the 17th March, 2012 to change Talcher STPP to Talcher TPP.

Notification No. 31/2015-Cx., Dated: May 28, 2015 And Notification No. 35/2015-Cus., Dated: May 28, 2015

Government Notifies Black Money Act

GOVERNMENT has notified the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, on 27 th May 2015. The Act comes into force with effect from 1st April 2016.

Some of the major Penalties and Offences under the Act:

Penalties:

1. Three times the tax in respect of undisclosed foreign income and asset;

2. Ten lakhs of rupees for not filing the required return;

3. Ten lakhs if he fails to furnish any information or furnishes inaccurate particulars in such return relating to any asset or relating to any income from a source located outside India;

4. Equal to the amount of tax arrear for default of payment of tax;

5. Rs. 50,000 to 2 lakhs - for refusing to answer any question; fails to honour summons.

Offences:

1. Wilfully fails to furnish in due time the return of income which he is required to furnish - rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine :

2. Wilfully fails to furnish in such return any information relating to an asset located outside India, or disclose any income from a source outside India - rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.

3. If a person, being a resident other than not ordinarily resident in India, wilfully attempts in any manner whatsoever to evade any tax, penalty or interest - rigorous imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine.

4. If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act - rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and fine.

5. If a person, makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false - rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.

6. If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to tax payable under this Act which is false - rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine.

Tariff Value of Gold and Silver Decreased

THE Government has decreased the Tariff value of Gold from 398 USD to 385 USD per 10 gms. The tariff value of Silver is decreased from 567 USD to 544 USD per kilogram.

Tariff values of Poppy Seeds and Areca Nuts remain unchanged. Tariff Values of oils are increased.

The Tariff values as on 15.05.2015 and with effect from 29.05.2015 are as under:

Notification No. 49/2015-Cus.(N.T.), Dated: May 29, 2015

Until Tomorrow with more DDT

Have a nice day.

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