TIOL-DDT 2855
27 05 2016
Friday

THE CBEC clarifies that Krishi Kalyan Cess is leviable on all taxable services, other than services which are fully exempt from Service Tax or services which are otherwise not liable to Service Tax under section 66B of the Finance Act, 1994, at the rate of 0.5%.

But, can the Board decide that the KKC is leviable on "all" taxable services excepting the exceptions OR should an exemption notification be issued?

Please see DDT 2853.

Accounting codes have been allotted by the Office of the Controller General of Accounts for the new Minor Head "507-Krishi Kalyan Cess" and new Sub-heads as:

This Circular issued by CBEC has 5 paras and Para No.3 is missing. Is it the usual casualness in drafting or is the para really missing?Will Board clarify?

CBEC Circular No. 194/04/2016-ST., Dated: May 26, 2016

Krishi Kalyan Cess-Kalyan Doubtful, Confusion Sure

WE received this mail from a Netizen:

The new levy "Krishi Kalyan Cess" is causing lot of confusions for the assessee. Some of the concerns need to be clarified by the CBEC in the interest of ease of doing business on the lines of FAQ released for SBC:

1. KKC was supposed to be a levy on all or any services. Now it seems that the same is applicable on all services including the reverse charge mechanism and partial reverse charge mechanism. Wherever deeming fictions are introduced in law, they have led to protracted litigation. Case in point is the deeming fiction in the Constitution of India for sale of goods. Now the deeming fiction introduced in the Finance Act, 1994 vide Section 67A amendment will certainly result in equal amount of litigation in future.

2. Notification No.10/16-ST is effective from 01st March, 2016, but Sec 67A amendment came into effect from14th May, 2016. Is there any statutory provision under law for re-determining the point of taxation once the service is rendered and invoice is issued by following Rule 3 of POTR, 2011? If it is considered as a new levy, it is nothing but increase in the service tax rate. Hence Rule 4 (Determination of rate of taxation in case of change in effective rate of tax) of the POTR, 2011 should apply. Many tax experts are interpreting Rule 5 (Payment of service tax in case of new services or new levy) of POTR, 2011 and advising that all invoices unpaid as on 01st June, 2016, the service provider needs to issue a supplementary invoice for collecting KKC. There is no non-obstante clause in Rule 5 and there is no hierarchy for interpretation of the rules under POTR, 2011. Hence if the point of taxation is decided under Rule 3, where is the need for Rule 5?

3. KKC is fungible in the hands of an output service provider against his obligation to pay KKC and it cannot be utilized against any other taxes. In case of manufacturer, who incidentally is provider some output services also, what would be treatment? Is that the manufacturer needs to maintain separate books of accounts to establish the one to one correlation in respect of the input services on which he can take credit of KKC to utilize against the payment of KKC on the output services to be provided by him?

Customs - Passenger Satisfaction - Mumbai Airport - CBEC Survey - Customs Response

Mr. D. Anil, Additional Commissioner, Bangalore Customs sent us this mail: (DDT Comments in red)

I write with reference to your article in Taxindiaonline "Customs - Passenger Satisfaction - Mumbai Airport - CBEC Survey " in DDT on 26/05/2016.

The mobile app - Indian Customs Travellers Guide has been developed by Bangalore Customs jointly and it has been updated as per the Budget announcements in March 2016. Please download the official version of the app from the CBEC website under Citizens Corner- Customs Travellers Guide and Mobile app. Here the link is available to the updated app as per the Budget of 2016. Also details which have been circulated to all field formations of Customs, Central Excise and Service Tax is attached for your reference as wide publicity has been given to the app. More than 16000 people have downloaded the app.

While your efforts in developing the app are laudable, what I pointed out was that the Baggage Rules given in the app are that of 1998. What is the use of giving the 1998 Rules when you have the 2016 Rules?

Even your Bangalore Customs link to Baggage Rules takes one to the 1998 Rules!

I also disagree the officers are ignorant about the Baggage Rules as the officers keep themselves abreast about the latest changes in the Law as they have to deal with passengers 24/7.

It is fine that you disagree, but after getting your mail I spoke to your helpline number 22001404 and I was told that I can bring two laptops duty free, one new and one old and the value of the new one should not be more than fifty thousand rupees. I was also told that I should bring only one item of each kind.

You think these are correct?

The Bangalore Customs Website has a link to the Travellers guide of CBEC.

That link also takes you to the 1998 Baggage Rules.

The Bangalore Airport Customs also has a facebook page, please visit the page and let us know.

Your suggestions have been noted for future guidance.

Thank You.

It is also requested that a clarification maybe given regarding the mobile app update.

Sure Sir, but please upload the latest "Baggage Rules".

Customs -Export Duty on Chromium - Exemption Withdrawn

IN Budget 2016, Export duty on chromium ores and concentrates, all sorts [2610] was reduced from 30% to Nil by Notification No. 15/2016-Customs, dated 01.03.2016 [new S. No.24BA of Notification No. 27/2011-Customs, dated 01.03.2011].

This was not a welcome move for the Indian Stainless Steel Industry. Jindal Stainless said that it would lose Rs. 300 Crore annual revenue. The industry's argument was that Removal of export duty would only encourage traders to mine the valuable resource and export it. This would lead to a demand-supply imbalance and increase the domestic chrome ore prices." This will result in increased prices of domestic ore and in return, production cost of ferrochrome will rise, which will impact the cost of production of stainless steel.

Government seems to have heard the Steel Industry's plea.Now this Sr. No. 24BA is omitted, means the 30% export duty comes back.

Notification No.35/2016-Customs, Dated: May 26, 2016

Central Excise Inspector on top of world

KOLKATA Central Excise Inspector Ramesh Roy has conquered Mt. Everest. Congrats Ramesh on this Himalayan feat.

Revenue Secretary Hasmukh Adhia tweeted, "Congratulations to Ramesh. The whole Revenue Department is proud of your achievement. God bless you."

Until Monday with more DDT

Have a nice weekend.

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