SERVICE TAX

Basic Features  Statutory provisions.  Levy on service provider - Exceptions.  Levy on realisation.

Classification of Service  Specific description than general description.  Essential character.  Which occurs first in the definition.

Valuation…  Gross amount.  Cum - tax.  Abatements.  Notification 12/

Valuation…  Services rendered free.  Consideration in kind.  Reimbursement of expenses. Upto – No liability. Judgements and circulars. From – Concept of pure agent. Malabar Management Services VS CCE 2008(9) STR 483

Proceedings in Service Tax  Issue of show cause notice.  Adjudication.  Appellate remedies. Commissioner (Appeals) CESTAT High Court / Supreme Court

Procedures in Service Tax…  Registration – Centralised Registration.  Issue of invoice.  Maintenance of records.

 Payment of service tax. - Due date. - Advance payment. - e payment. - Self adjustment – if service not rendered. - Provisional payment. - Self adjustment of excess payments. Procedures in Service Tax.  Filing of return – ST 3. - Due date / Half yearly. - Revised return. - Fine for delayed return.

Penalties in Service Tax.  Sec. 76 – Delayed payment of S.Tax.  Sec. 77 – General Penalty.  Sec. 78 – Suppression, etc.  Rule 7 C – Fine for delayed return.  Sec. 80 – Power of waiver.

Certain important services.

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/

Commercial / Industrial construction Service.  Exclusion for roads, airports, railways transport terminals, bridges, tunnels, dams and ports.  67 % Abatement.

Construction of Residential Complex Service.  More than 12 units..  Personal use - exempted.

Consulting Engineering Service.  Foreign Technological transfers. Novinon Ltd. VS CCE 2006 (3) STR 397  To cover software too. Customs House Agents Service.

Erection, Commissioning and Installation Service. Franchise Service.

Intellectual Property Service. Management Consultant Service. Manpower recruitment / Supply agencies.

Goods Transport Agency Service.  Reverse Charge.  Abatement.  Exemption.  Payment mode.  No SSI exemption.

Renting of immovable property. Support Services for business.

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

Sale Vs Service. S.NoCitationDecision 1BSNL 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. 2Idea Mobile Communications Limited VS CCE – 206 (4) STR 132 Tri – Bang Levy of sales tax and service tax are constitutionally mutually exclusive. 3BPL 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. 4Imagic Creative (P) Limited Vs CCE – 2008 (9) STR 337 SC Service tax and VAT are mutually exclusive. 5Thermax Limited Vs CCE – 2007 (8) STR 487 Service tax not leviable when sales tax is paid.

Small Scale exemption.  Threshold limit.  Conditions.

Commercial Concern Vs Any person.

Export of Service and Import of Service.

CENTRAL EXCISE by g. natarajan advocate & cost accountant CENTRAL EXCISE AND CENVAT

MANUFACTURE  Section 2 (f)  Deemed manufacture.  Third schedule.

VALUATION Section 4 – Transaction Value

SECTION 4 & Valuation Rules  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.  Rule 11 - Best judgement

SECTION 4 A  Weights and Measures.  OE Exemption.  Different MRP.

EXPORTS  Exports without payment of duty.  Exports under claim for rebate.  Protection of Cenvat Credit.

APPELLATE / OTHER REMEDIES  Commissioner (Appeals).  CESTAT.  Settlement Commission.  Pre deposit.

PENAL MEASURES  Various penalties.  Provisional attachment of property.  Prosecution.

Basic Features  Concept of Cenvat credit.  Landmarks – 1986, 1994 &  Cenvat Credit Rules,

Applicability  Manufacturers.  Service providers.

Certain terms.  Input.  Capital goods.  Input Services.  Input Service Distributor.  First / Second stage dealer.

Cenvatable duties / taxes  Basic Excise Duty.  CVD.  NCCD.  Education CESS.  Addl. Duty of Customs – Sec. 3(5).  Service Tax and CESS thereon.

Utilisation and Restrictions on utilisation  Payment of Excise duty.  Payment of Service tax.  Other payments.  Cross utilisation.

Other conditions.  Removal of inputs / capital goods - the story “as such”.  Capital goods – 50 % restriction.  No to “having the cake and eating it too” - Depreciation / Cenvat Credit.

Other conditions.  Removal for job work.  Write off.  Service Tax Credit - Pay and use.  Documents for availing credit.

Rule 6 Algebra.  Position upto  Position from

Rule 6.  Protection to certain clearances.  Protected Services.  Chandrapur Magnet Wires (P) Ltd Vs CCE (81) ELT 3 SC - Recent developments.

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 –

Certain common disputes…  Credit for outward transportation. - Gujarat Ambuja Cements Ltd. Vs CCE (6) STR India Cements Limited Vs CCE 2007 (8) STR Master Circular and recent amendments.

CUSTOMS

Role of customs Collection of import & export duties enforcement of customs act enforcing prohibitions/restrictions prevention of smuggling

Imports IGM (by shipping lines) cargo declaration Bill of Entry assessment duty Payment

Exports Shipping bill, Invoice, ARE# assessment duty Payment (if any) EGM (by shipping lines)

Customs Valuation Rules, 2007 The Customs Valuation (Determination of Value of Imported Goods) Rules, Notfn. No. 94/2007-Cus(NT) dated The Customs Valuation (Determination of Value of Exported Goods) Rules, Notfn. No. 95/2007-Cus(NT) dated

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.

Value of exported goods transaction value – Section 14 (1) of CA, 1962 computed value – Rule 5 residual method – Rule 6

refunds claim to be filed within six months. one year for some persons. no time limit for duty / interest paid under protest unjust enrichment

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.

RE-EXPORT OF IMPORTED GOODS 98% of Customs duties drawback within 2 years from the date of import

Export promotion schemes

duty drawback all india industry rate brand rate simplified scheme

Advance licence actual user condition physical exports intermediate supplies deemed exports invalidation export obligation

Other export promotion schemes DFRC DEPB EPCG

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.

export oriented units sale of surplus / un-utilised goods clearance under ARO/inland letter/DFRC sub-contracting inter-unit transfer de-bonding

SPECIAL ECONOMIC ZONES

Basic Features  duty free imports  indigenous procurement  sub-contracting  DTA clearances  Exports

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.

Indigenous procurement  exempt from excise duty (from ), 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)

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.

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

exports  direct exports  through third parties

39/2001-CE dated Exemption to excisable goods manufactured in Kutchh (Gujarat)

 applicable to new industrial units  commercial production before  not applicable to SSI units  exceptions

 pay excise duty through cenvat credit account  after exhausting cenvat account, pay through PLA (cash)  take re-credit of PLA amount on 15 th of next month.

1 st amendment – 42/2001-CE dated Original value of plant & machinery to be as certified by CA (under head fixed assets)

2nd amendment - 5/2003-CE dated ‘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’.

3 rd amendment - 16/2003-CE dated ‘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’.

4th amendment - 65/2003-CE dated ‘para 1A (i) to (iii), para 2A (a) to g, inserted’

5 th amendment - 16/2008-CE dated 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.”

rebate of excise duty on exports  682/73/2002-CX dated – refund of duty paid in cash.  842/19/2006-CX dated – contents of circular dated applies to kutchh also.  209/11/2005-CX-6 dated – rebate on goods manufactured in kutchh.

 209/11/2005-CX-6 dated – clarification to board’s instruction dated  37/2007-CE(NT) dated – bans rebate on export for units availing benefits of 39/2001.  209/11/2005-CX-6 dated – board’clarifies – export after may be done only under bond. rebate of excise duty on export

 Rule 18 of CER, 2001 amended - Rebate allowed from to – Fifth schedule of Finance Bill enacted on  Rule 18 of CER, 2002 amended - Rebate allowed from upto – Sixth schedule of Finance Bill enacted on rebate of excise duty on export

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