Respected Dipak Shah,
In this newsletter, we summarize the important amendments, Case laws and current issues in the field of indirect taxes of the past week. We hope this newsletter help you to abreast of all the latest happening in the indirect tax discipline and information needs. We look forward for your feedback at pradeep@capradeepjain.com. |  | | Publish Date:25/08/2012 | PJ/Weekly Newsletter/2012-13/021 | | | | Index | | Amendments | | • | DGFT | | • | Custom | | Case Laws |
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| • | PJ/Case Laws/ 2012-13/ 1186 | | • | PJ/Case Laws/ 2012-13/ 1187 | | • | PJ/Case Laws/ 2012-13/ 1188 | | • | PJ/Case Laws/ 2012-13/ 1189 | | • | PJ/Case Laws/ 2012-13/ 1190 | | • | PJ/Case Laws/ 2012-13/ 1191 | | • | PJ/Case Laws/ 2012-13/ 1192 | | • | PJ/Case Laws/ 2012-13/ 1193 | | • | PJ/Case Laws/ 2012-13/ 1194 | | • | PJ/Case Laws/ 2012-13/ 1195 | | Case Study |
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| • | PJ/CASE STUDY/ 2012-13/20 | | Queries |
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| • | Dear Sir, We are getting water supply from "SIDCUL" (this is a Government of Uttarakhand Enterprise, was incorporated as a Limited Company in the year 2002,) not charging any service tax, Could you please Confirm whether we have to Pay service tax based on reverse charge mechnasim, notification number 30 as government support services as stated under serial number 6. Raj Anand | | • | Dear sir, please advise whther installation charges on purchase of new split AC would be cover under the new definition of work contract service as it includes supply of material (i.e AC) and labour charges (i.e installation). | | • | Dear Sir, What is the present abatement rate for the Insectisides and pesticides,fungicide. which notification applicable, is still the 49/2008 is applicable as and when it is amended or is it supperseeded. Regards, HN Manjunatha | | • | We are service receivers for Transportation by Road and have been paying Service tax. A Govt.Undertaking order for goods with transportation charges to be paid by them (The Govt.Undertaking)includes Service tax and we have to furnish money receipt of the whole amount from the transporter; so we had to pay the Service Taxes on Freight also to the Transporter and liability to pay lies on them; are we doing it correctly although we are the Service Receiver liable to pay the Service Tax to the Govt.; please clear my doubt Sir | | • | Hi, We are a ltd concern and we have many transporter for sending a goods of various locations in India through Truck. He has been charged the amount of bill on monthly basis against GR Notes. So kindly guide me for deposit of service tax in some condition mentioned below :- 1. If GR is below Rs.750/- 2. If GR is above Rs.750/- and material send on Full Truck Load basis. So, Please given the solution. | | • | Respected Sir, Under the reverse charge, the due date of deposit to service tax is 5th/6th of the following month or the date when we make the payment? | | • | Prior to coming to force the negative list w.e.f. 1.7.12 the item "rice" comes under Agricultural produce, as was specifically mentioned in the definition. However in the negative list it has not been clearly specified. Therefore you may kindly clarify whether "Rice" comes under Agricultural produce or not. Ch Bhaskara Sarma - cbsarma53@gmail.com | | • | Under the revere charge, my company has made the payment to service provider in the month of August hence compay deposited service tax under reverse charge on 05.09.2012, now my question is whether company can avail the input service crdit (Reverse Charge) against the service tax libility of the month of August or against the ST liability of the month of September-12? | | • | We have agency of cement. V r supplying cement to builder from ultratech and annually v are getting annual incentive based on qty sale achieved by us. Is incentive received is taxable as service tax? And as discussed earlier there are some transaction where cement directly delivered to builder by company & we get commission on and we are paying service tax but some company giving cash discount to us & also incentive based on quantity sale achieved for this direct billing transactions. (in this case billing of sales is directly done by company to builder v keep deposit with company for the this transactions and as and when builder pay to company we get deposit refund from company). is cash discount & incentive received for this type of transactions taxable as service tax? | | • | is repairing of machinery consider as works contracts -ahadev - sahadevpatel@hotmail.com | | • | 1) Under the Reverse Mechanism of Service Tax whether Service Provider should compulsorily have ST number if not then should the service provider is liable to make the payment of its liability as a service receiver even though the service provider does not have ST number. 2) Under advertisement the rent paid for exhibition attracts ST under reverse mechanism or not. Kindly clarify. Thanks | | Event Calendar |
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| • | 31/08/2012 - Submission of Proof of Export for the month of July-2012
Form: Annexure-19
Provision: Rule 19 |
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| Amendments | | | | DGFT |
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| | CIRCULAR |
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| | • 03(RE-2012)/2009-14, Dated: 23/08/2012 |
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| | Relaxation of (-) 5% in weight against Registration Certificates issued for export of sugar shall be allowed. Hence the government has decided not to penalize sugar exporters whose shipments fall short by 5 per cent of the committed quantity. Read More |
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| | | | NOTIFICATION |
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| | • 11(RE-2012)/2009-14, Dated: 22/08/2012 |
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| | Following 5 Additional authorized laboratories are recognized by DGFT for certification/grading of diamonds of 0.25 carrots & above. (i) GIA Hong Kong Laboratory Ltd., Hong Kong; (ii) Gemological Research (Thailand) Co. Ltd., Bangkok; Read More |
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| | | | • 12(RE-2012)/2009-14, Dated: 22/08/2012 |
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| | Total import of Rough Marble and Travertine blocks under ITC HS Codes 25151100 and 25151210 will be subject to a ceiling of 6 lakh MT for the whole of the licensing year, 2012-13. Licenses for import of crude or roughly trimmed marble and travertine Read More |
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| | | Custom |
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| | TARIFF NOTIFICATION |
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| | • 47/2012-Cus, Dated: 21/08/2012 |
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| | Notification No. 12/2012-Cus dated 17.03.2012 grants concession/exemption from payment of customs duty on import of specified goods. Following goods has now been exempted from so much of the import duty:- 1. De-oiled soya extract (T/H – 23 Read More |
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| Case Laws | | | | • | PJ/Case Laws/ 2012-13/ 1186 |
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| | Case: - COMMISSIONER OF CENTRAL EXCISE, BANGLORE-I VERSUS MTR FOODS LIMITED
Citation: - 2012(282) E.L.T. 196 (Kar.)
Issue: - Whether the extended period can be invoked in second audit for earlier audit period also? Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1187 |
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| | CASE: BODAL CHEMICALS LTD. V/S COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD
CITATION: 2012 (27) S.T.R 276 (TRI. - AHMRDABAD)
ISSUE: - Refund of service tax for export of goods cannot be denied without verification of documents. Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1188 |
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| | Case:-PATIL TELESOLUTIONS V/S COMMISSIONER OF C. EX., NASHIK
Citation:- 2012 (27) S.T.R. 265 (Tri.-Mumbai)
Issue:- Whether the penalty under Sections 76 and 77 can be imposed on late payment of ST as well as of ST-3? Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1189 |
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| | Case:-M/S SAURASHTRA CEMENT LTD, SHRI K J V SHARMA, SHRI GULAM MOHAMMED UMAR BHAYA, SHRI V R SHIAL, SHRI B H WAGH V/S CC, JAMNAGAR
Citation:-2012-TIOL-924-CESTAT-AHM
Issue:- Whether the loading of goods onto ship without issuance of let export order are liable of confiscation? Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1190 |
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| | CASE: - RAMESHCHANDRA C. PATEL v. COMMR. OF SERVICE TAX, AHMEDABAD
CITATION: - 2012 (25) S.T.R. 471 (Tn. - Ahmd.)
ISSUE: Whether contract manufacturing will be considered as supply of manpower and security service? Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1191 |
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| | CASE: COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD V/S KISSAN INDUSTRIES LTD.
CITATION: 2012 (280) E.L.T 276 (TRI. - AHMEDABAD)
ISSUE:- The complete overheads cannot be charged to arrive at normal cost of production when factory is not running at its full capacity Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1192 |
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| | CASE: M/s ONE ADVERTISING & COMMUNICATION SERVICES LTD Vs COMMISSIONER OF SERVICE TAX, AHMEDABAD
CITATION: 2012-TIOL-969-CESTAT-AHM
ISSUE: Whether the Cenvat credit is admissible on the service tax paid on the employee welfare activity. Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1193 |
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| | Case: LIFE CARE MEDICAL SYSTEMS V/S COMMISSIONER OF SERVICE TAX, MUMBAI-II
Citation: 2012-TIOL-993-CESTAT-MUM
Issue:- Whether the service should be provided from India and used outside India to be termed as export of service? Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1194 |
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| | Case: SUZLON INFRASTRUCTURE V/S COMMISSIONER OF CENTRAL EXCISE, PUNE-III
Citation: 2012 (27) S.T.R. 242 (Tri.-Mumbai)
Issue:- (1) Whether the appellant is eligible for the benefit of Notification No. 19/2003-ST, dated 21.8.2003 as amended? Read More |
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| | | • | PJ/Case Laws/ 2012-13/ 1195 |
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| | Case:COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, RAIPUR V/S M/S MANISH KUMAR AGARWAL
Citation: 2012-TIOL-999-CESTAT-DEL
Issue:- Clandestine Removal – Whether the penalty is imposable on the Director when company paid duty along with interest and 25% penalty? Read More |
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| | | | Case Study | | | | • | PJ/CASE STUDY/ 2012-13/20 |
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| | Circular dated 17.08.2011 has clarified that there is no need to file appeals where the amount is less than Rs. 10 lacs before High Court. This circular was issued to reduce litigation. But the department has filed appeal where the amount was less than that. Hence the Gujarat High Court has rejected the appeal. Read More |
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| | | | Queries | | | | • | Dear Sir, We are getting water supply from "SIDCUL" (this is a Government of Uttarakhand Enterprise, was incorporated as a Limited Company in the year 2002,) not charging any service tax, Could you please Confirm whether we have to Pay service tax based on reverse charge mechnasim, notification number 30 as government support services as stated under serial number 6. Raj Anand |
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| | Sl. No. 6 of Notification No. 30/2012-ST provides reverse charge in respect of support services provided by Government or Local Authority as follows: "in respect of services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994 Further meaning of government is not defined in the Act or Rules related to service tax. Therefore meaning of 'Government' as given in General Clauses shall be adopted for this purpose (as also given in CBEC,s education guide on service tax). Going through the meaning as given in Section 3 (23) of General Clauses Act, 1897 we conclude that: • 'Government' includes both Central Government and any State Government. • The Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President • The State Government means the Governor or the officers subordinate to him who exercise the executive power of the State vested in the Governor and in the name of the Governor. The manpower of Company does not become officers subordinate to the President under article 53(1) of the Constitution and similarly to the Governor under article 154(1). Therefore a company is not covered under the definition of Government. Further a company is also not covered under the definition of Local Authority. So, reverse charge will not be leviable in the instant case. Read More |
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| | | • | Dear sir, please advise whther installation charges on purchase of new split AC would be cover under the new definition of work contract service as it includes supply of material (i.e AC) and labour charges (i.e installation). |
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| | Work contract is defined in the section 65B, which reads as follows: "(54) work contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such properly" So the purchase and installation of AC is covered under the above definition of work contract because there is transfer of property in goods involved in execution of such contract for the purpose of carrying out installation. And according to provision of Rule 2A of service tax (determination of Value) Rules 2006, "(i) value of service portion in execution of a work contract shall be equivalent to the gross amount charged for the work contract less the value of property in goods transferred in the execution of the said work contract" So effectively value of service portion in execution of work contract shall be equivalent to Installation charges i.e. Gross Amount Charged (excluding VAT/Sales tax) – Value of AC. But if it is not feasible to divide the material and labour charges then the service tax will be payable on 40% of complete value. Read More |
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| | | • | Dear Sir, What is the present abatement rate for the Insectisides and pesticides,fungicide. which notification applicable, is still the 49/2008 is applicable as and when it is amended or is it supperseeded. Regards, HN Manjunatha |
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| | There is no change in rate of abatement in respect of products i.e. Insecticides, fungicides, herbicides, weedicides and pesticides of chapter Head 3808 and the current rate of Abatement is 30% of Retail Sale Price. Read More |
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| | | • | We are service receivers for Transportation by Road and have been paying Service tax. A Govt.Undertaking order for goods with transportation charges to be paid by them (The Govt.Undertaking)includes Service tax and we have to furnish money receipt of the whole amount from the transporter; so we had to pay the Service Taxes on Freight also to the Transporter and liability to pay lies on them; are we doing it correctly although we are the Service Receiver liable to pay the Service Tax to the Govt.; please clear my doubt Sir |
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| | Firstly your question is not clear that what you want to say. Secondly, since your question is related to reverse charge under GTA service, so we are stating here the related provisions. Notification No. 30/2012-ST (Reverse charge mechanism) provides that "in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, 100% service tax is payable by service receiver". Further the explanation given in the said notification in respect of GTA service is as follows: "Explanation-I. - The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification". So effectively liability to pay service tax under services provided by Goods Transportation Agency will be on the person who pays or is liable to pay freight. Read More |
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| | | • | Hi, We are a ltd concern and we have many transporter for sending a goods of various locations in India through Truck. He has been charged the amount of bill on monthly basis against GR Notes. So kindly guide me for deposit of service tax in some condition mentioned below :- 1. If GR is below Rs.750/- 2. If GR is above Rs.750/- and material send on Full Truck Load basis. So, Please given the solution. |
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| | Notification No. 30/2012-ST exempts following: "21. Services provided by a goods transport agency by way of transportation of - (a) Fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage; (b) Goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or (c) Goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;" So 1. If GR is below Rs. 750/- it will be exempt. 2. If material is send on Full Truck Load basis (i.e. only one consignment), it will be exempt if transportation cost shall not exceed Rs. 1500. Read More |
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| | | • | Respected Sir, Under the reverse charge, the due date of deposit to service tax is 5th/6th of the following month or the date when we make the payment? |
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| | Rule 7 of Point of Taxation Rules, provides that: "The point of taxation for the service receiver liable under reverse charge is the date on which payment is made to the service providers". Further the proviso to Rule 7 provides that in cases "where such payment is not made within a period of six months of the date of invoice, the point of taxation shall be determined as if rule 7 'does not exist'." So under the reverse charge mechanism, for receiver due date of deposition of service tax is 5th/6th day immediately following the month in which payment is made. But if the payment is not made within six months then date shifts to date of invoice. Consequently, service tax has to be paid along with interest. Read More |
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| | | • | Prior to coming to force the negative list w.e.f. 1.7.12 the item "rice" comes under Agricultural produce, as was specifically mentioned in the definition. However in the negative list it has not been clearly specified. Therefore you may kindly clarify whether "Rice" comes under Agricultural produce or not. Ch Bhaskara Sarma - cbsarma53@gmail.com |
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| | Section 65B(5) defines Agricultural Produce as follows: "Any produce of agriculture on which either no further processing is done or such processing is done as is usually done by cultivator or producer which does not alter its essential characteristics but make it marketable for primary market" So rice will also covered under the definition of 'agricultural produce' but only upto when there is no any further processing is done or processing is done for making it marketable in Primary Market by cultivator. Read More |
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| | | • | Under the revere charge, my company has made the payment to service provider in the month of August hence compay deposited service tax under reverse charge on 05.09.2012, now my question is whether company can avail the input service crdit (Reverse Charge) against the service tax libility of the month of August or against the ST liability of the month of September-12? |
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| | The relevant proviso of Rule 4 (7) of Cenva t Credit Rules is reproduced below: "Provided that in case of an input service where the service tax is paid on reverse charge by the recipient of the service, the CENVAT credit in respect of such input service shall be allowed on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in the invoice, bill or, as the case may be, challan referred ion Rule 9" So you can take Cenvat credit when payment of value of service and as service tax thereon will be paid. However, it is to be noted that the service tax liability under reverse charge is to be paid in cash only. If you have any service tax liability as service provider or central excise duty payment as a manufacturer then you can take and utilize this credit. Read More |
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| | | • | We have agency of cement. V r supplying cement to builder from ultratech and annually v are getting annual incentive based on qty sale achieved by us. Is incentive received is taxable as service tax? And as discussed earlier there are some transaction where cement directly delivered to builder by company & we get commission on and we are paying service tax but some company giving cash discount to us & also incentive based on quantity sale achieved for this direct billing transactions. (in this case billing of sales is directly done by company to builder v keep deposit with company for the this transactions and as and when builder pay to company we get deposit refund from company). is cash discount & incentive received for this type of transactions taxable as service tax? |
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| | The nomenclature of amount paid does not decide the service tax liability. The nature of transaction decides the service tax liability. If you are purchasing material from Ultratech and then selling to builder then it is a trading activity. Any incentive received in such type of transaction is discount only and not service tax is payable on the same. "Service" has been defined in clause (44) of the new section 65B and means – "any activity carried out by a person for another for consideration, and includes a declared service" Further 'service' does not include – "Any activity that constitutes only a transfer in title of (i) goods or (ii) immovable Property by way of sale, gift or in any other manner" In the first case the incentive is not a consideration for service (as service does not include "activity constitutes only a transfer in title of goods") and in nature of discount on sale. Therefore service tax is not leviable. If Ultratech is supplying the material directly to builder and commission is paid to you then you are a service provider. For this transaction either you receive commission or cash discount or incentive, service tax should be leviable as you are not selling the goods and only works as commission agent. Read More |
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| | | • | is repairing of machinery consider as works contracts -ahadev - sahadevpatel@hotmail.com |
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| | Work contract is defined in the section 65B, which reads as follows: "(54) work contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such properly" So repairing of machinery is considered will be considered as work contract service, if there is transfer of property in goods involved (i.e. material should be used in such repairing) in execution of such repairing. Read More |
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| | | • | 1) Under the Reverse Mechanism of Service Tax whether Service Provider should compulsorily have ST number if not then should the service provider is liable to make the payment of its liability as a service receiver even though the service provider does not have ST number. 2) Under advertisement the rent paid for exhibition attracts ST under reverse mechanism or not. Kindly clarify. Thanks |
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| | 1. According to Rule 4 of service tax rules 1994, "(1) Every person liable for paying the service tax shall make an application to the concerned Superintendent of Central Excise in Form ST-1 for registration within a period of thirty days from the date on which the service tax under section 66B of the Finance Act, 1994 is levied." So if service provider is liable to pay service tax then he should make a registration within the thirty days. Further if earlier service provider has not taken the service tax registration as he is not liable to pay service tax but now he is liable to pay service tax under reverse charge as a receiver then he should now required to grant service tax registration as he is now "a person liable to pay service tax" as a service receiver. 2. Clause (g) of section 66D specifies selling of space or time slot for advertisement other than advertisement broadcast by radio or television as a non-taxable service. Therefore service tax will not be leviable on rent paid for advertisement space or time slot. Read More |
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