Presented By J.K. MITTAL (Advocate) Chairman, Indirect Taxes Committee, PHDCCI Co-Chairman, National Council (Indirect Taxes), ASSOCHAM LL.B.,F.C.A., F.C.S. NEW DELHI Ph: , ,72,76 Fax: J.K.Mittal FCA, FCS,LLB J.K.Mittal FCA, FCS,LLB 1 BUDGET CHANGES Amendment in Indirect Taxes by the Finance Act, 2014 – analysis and comments

In the words of Bhagwad Gita Says- J.K.Mittal FCA, FCS,LLB 2 “what a great man does, is followed by others. People Go by the example he sets”

In the words of Mahatma Gandhi J.K.Mittal FCA, FCS,LLB 3 “You must not worry whether the desired result follows from your action or not, so long as your motive is pure, your means correct”

Budget Speech of Sh. Arun Jaitley, Minister of Finance, July10,2014 (Extract/Excerpt): J.K.Mittal FCA, FCS,LLB 4 GST 9.. I do hope we are able to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST. This will streamline the tax administration, avoid harassment of the business and result in higher revenue collection both for the Centre and the States.

Budget Speech of Sh. Arun Jaitley, Minister of Finance, July10,2014 (Extract/Excerpt): J.K.Mittal FCA, FCS,LLB 5 Advance Ruling and Other Tax Related Measures 11. Tax demand of more than `4 lakh crore is under dispute and litigation before various Courts and Appellate authorities. This is one of the serious concerns of all taxpayers in this country. In order to reduce litigation in direct taxes, I propose to make certain legislative and administrative changes.

Budget Speech of Sh. Arun Jaitley, Minister of Finance, July10,2014 (Extract/Excerpt): J.K.Mittal FCA, FCS,LLB As an administrative measure, I propose to set up a High Level Committee to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required. Based on the recommendations of the Committee, the Central Board of Direct Taxes and the Central Board of Excise and Customs shall issue appropriate clarifications, wherever considered necessary, on the tax issues within a period of two months.

Budget Speech of Sh. Arun Jaitley, Minister of Finance, July10,2014 (Extract/Excerpt): J.K.Mittal FCA, FCS,LLB While preparing the tax proposals, I had to encounter the challenge of an extremely limited fiscal space. Nonetheless, I propose to introduce measures to revive the economy, promote investment in manufacturing sector and rationalize tax provisions so as to reduce litigation as well as to address the problem of inverted duty structure in certain areas. I also propose to give relief to individual taxpayers and to certain sectors of the economy.

Budget Speech of Sh. Arun Jaitley, Minister of Finance, July10,2014 (Extract/Excerpt): J.K.Mittal FCA, FCS,LLB To expedite the process of disposal of appeals, amendments have been proposed in the Customs and Central Excise Acts with a view to freeing appellate authorities from hearing stay applications and to take up regular appeals for final disposal.

J.K.Mittal FCA, FCS,LLB 9 TIMIT LIMIT FOR MAKING ADJUDICATION Finance Act, 2014 w.e.f , amended in service tax law in line with the amendment already made sometime back in the Central Excise Act.Under section 73, a new sub-section 4B has been inserted by Finance Act, 2014 w.e.f , to prescribed the time limit for passing an order (4B) The Central Excise Officer shall determine the amount of service tax due under sub-section (2)— (a) within six months from the date of notice where it is possible to do so, in respect of cases whose limitation is specified as eighteen months in sub-section (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A).

J.K.Mittal FCA, FCS,LLB 10 FIXIED TIMIT LIMIT HAS BEEN FOR TAKING CENVAT CREDIT OF INPUTS AND INPUT SERVICES The Central Government by the Notification no. 21/2014-CE(NT) dated made amendment in the CENVAT Credit Rules, 2014 and fixed the time limit for taking CENAVT Credit on Input and Input Services. 4. Conditions for allowing CENVAT credit.—(1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service.[Rule 4(1) of CENVAT Credit Rules, 2004] following proviso inserted Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of rule 9 [Third proviso Rule 4(1) of CENVAT Credit Rules, 2004 which shall be effective from ]

J.K.Mittal FCA, FCS,LLB 11 The CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 is received. [Rule 4(7) of CENVAT Credit Rules, 2004] Following proviso inserteded Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of rule 9 [sixth proviso Rule 4(7) of CENVAT Credit Rules, 2004 which shall be effective from ]

J.K.Mittal FCA, FCS,LLB 12 MANADATORY PRE-DEPOSIT Section 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.—The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal,— (i) under sub-section (1) of section 35, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Commissioner of Central Excise; (ii) against the decision or order referred to in clause (a) of sub-section (1) of section 35B, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against;

J.K.Mittal FCA, FCS,LLB 13 (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014.

J.K.Mittal FCA, FCS,LLB 14 Explanation.—For the purposes of this section “duty demanded” shall include,— (i) amount determined under section 11D; (ii) amount of erroneous CENVAT credit taken; (iii) amount payable under rule 6 of the CENVAT Credit Rules, 2001 or the CENVAT Credit Rules, 2002 or the CENVAT Credit Rules, The Hon’ble Finance Minister In Budget Speech said that: 252. To expedite the process of disposal of appeals, amendments have been proposed in the Customs and Central Excise Acts with a view to freeing appellate authorities from hearing stay applications and to take up regular appeals for final disposal.

J.K.Mittal FCA, FCS,LLB 15 INTEREST ON REFUND OF PRE-DEPOSIT Section 35FF. Interest on delayed refund of amount deposited under section 35F.—Where an amount deposited by the appellant under section 35F is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, not below five per cent. and not exceeding thirty- six per cent. per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such amount from the date of payment of amount till, the date of refund of such amount: Provided that the amount deposited under section 35F, prior to the commencement of the Finance (No. 2) Act, 2014, shall continue to be governed by the provisions of section 35FF as it stood before the commencement of the said Act.

J.K.Mittal FCA, FCS,LLB 16 Section 15A. Obligation to furnish information return.— (1) Any person, being— (a) an assessee; or …. Section 15B. Penalty for failure to furnish information return.—If a person who is required to furnish an information return under section 15A fails to do so within the period specified in the notice issued under sub-section (3) thereof, the prescribed authority may direct that such person shall pay, by way of penalty, a sum of one hundred rupees for each day of the period during which the failure to furnish such return continues.

J.K.Mittal FCA, FCS,LLB 17 APPEAL TO SUPREME COURT Section 35L. Appeal to the Supreme Court.— (1) An appeal shall lie to the Supreme Court from— …. (2) For the purposes of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment.

J.K.Mittal FCA, FCS,LLB 18 The Central Government w.e.f by issuing Notification No. 12/2014-ST, dated , which shall be applicable from , by superseding the earlier Notification No. 26/2004-ST, the rate of interest payable under Section 75 on delayed payment of service tax has been significantly enhanced from 18% p.a. to interest payments on variable rates ranging from 18% to 30% per annum depending upon the period of delay in payments of service tax, as given below at a glance:

J.K.Mittal FCA, FCS,LLB 19 S. No. Period of delay Rate of simple interest (1)(2)(3) 1. Upto six months 18% p.a. 2. More than six months and upto one year 18% p.a. for the first six months of delay and 24% p.a. for the delay beyond six months 3.More than one year 18% p.a. for the first six months of delay; 24% p.a. for the period beyond six months up to one year and 30% p.a. for any delay beyond one year