Leaf No: 57 Month : December Year : 2014

New Year Greetings !

 The 122nd Constitutional Amendment Bill on the Goods and Services Tax has been introduced in the Lok Sabha.

 Bharat Ratna conferred on former Prime Minister Atal Bihari Vajpayee and freedom fighter Madan Mohan Malaviya.

 Inflation likely to be around 6%: RBI Governor.

 Easy exit norms for foreign investors in construction sector.

 Govt proposes subsidy regime for MSMEs in draft policy.

 All ports implementing ERP for seamless connectivity.

 Introduction of Constitution Amendment Bill: The Constitution 122nd Amendment Bill, which is the first solid step in direction of GST, has been introduced in the Lok Sabha. The purpose of this amendment is to confer powers to the States to levy tax on Services to the Central Government to levy tax on Sales. The Bill also provides for setting up of a GST council with the Finance Minister as Chairman and the State Finance Ministers / Revenue Ministers as Members. The council will be responsible for bringing in GST and is having wide powers to decide the entire structure of GST. The Bill also provides for the Central Government to retain power to tax inter-state transactions and specifically excludes petroleum to be out of GST. Further the Bill provides for a levy of 1% tax by the States on inter-state transactions, compensation for States etc. The Bill is expected to pass during next session of the Parliament beginning from February-March 2015.


Response from States: Though the Bill has been introduced after a broad consensus on the contours of GST, after introduction of the Bill, most States have rolled back and are up in arms with some common and specific grievance and demands. The common grievance is that the GST Bill would confer powers to the Centre to levy tax from the manufacturing stage to the retail stage whereas the revenue from Services to the States would not be sufficient to compensate the revenue loss resulting from GST implementation. Further the 1% tax proposed which is contrary to consumption based nature of GST is a distortion intended to benefit only the manufacturing States. The specific demands ranges from compensation for ten years (North-Eastern States), compensation for 15 years and power to levy purchase tax (Punjab). Consensus on critical aspects like Revenue Neutral Rates (RNR) and bands, compensation methodology and thresholds (Tamilnadu), provision in the Budget for compensation of revenue loss suffered by states due to reduction in CST (Telengana) are not there.


Response from Industries: Abolition of taxes such as entry tax would result in free flow of goods across the States, logistics cost would come down substantially and there would be broadening of credit base which would be beneficial to the traders as well as service providers. Exclusion of Petroleum would result in breakage of set-off chain.


Challenges: Streamlining IT backbone, whether there is enough time for drafting a full fledged GST with inputs from experts, industry and public before the cut-off dated of 01st April, 2015, training to State VAT department on levy of tax on Services and Excise and Service tax on tax on sale of goods. Final integration with common GST portal would happen only after GST laws of Centre and States are ready.


What to watch out for: What would be the revenue neutral rate, treatment of exemptions as SEZ, EOU etc in GST, treatment of stock transfer as GST is a tax on supplies and not sales, whether GST law would take in to account nuances of areas as e-commerce, intangibles or services encompassing both international and domestic transactions, place of provision of supply rules…

 Monetary limit for filing appeal in the Tribunal/Courts.

 Amendment to CESTAT Appeal Forms.

 Inclusion of cases filed in the Settlement Commission in the “Call-Book”.

 Adjudication of appraising related cases.

 Norms for Execution of Bank Guarantee in respect of Advance License/Export Promotion Capital Goods (EPCG) Schemes.

 Re-warehousing of goods imported and/or procured indigenously by EOU/EHTP/STP/BTP units.

 Authentication of supply invoice/ ARE-3 by the Central Excise Authorities for Claiming Deemed export benefits.

Review of Accredited Clients Programme (ACP).

   Audit of the Service Tax assessees by the officers of Service Tax and Central Excise Commissionerates.

 Basic Excise Duty (BED) on petrol (both branded as well as unbranded) and diesel (both branded as well as unbranded) increased.

 Exemption from Basic Excise Duty to goods donated or purchased out of cash donations for the relief and rehabilitation of people affected by the floods in the State of Jammu and Kashmir.

 Exemption from the duties of Customs to goods imported for donation for the relief and rehabilitation of people affected by the floods in the State of Jammu and Kashmir.

 Import duty on crude and refined edible oils increased.

 Tariff concessions in respect of specified goods imported from Korea RP under the India-Korea Comprehensive Economic Partnership Agreement w.e.f. 01.01.2015.

 Tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) w.e.f. 01.01.2015.

 Tariff concessions in respect of specified goods when imported from ASEAN under the India-ASEAN Free Trade Agreement w.e.f. 01.01.2015.

 Tariff Value of Gold and Silver increased.

 New Exchange Rates for Customs.

 Service Tax Third Amendment Rules 2014.

 ADD on Sodium Nitrite originating in or exported from China PR.

 ADD on imports of cable ties, originating in or exported from People's Republic of China and Chinese Taipei, for a period of five years.

 ADD on imports of Clear Float Glass originating in or exported from Pakistan, Saudi Arabia and United Arab Emirates (UAE).

 Import of items under the Exim Codes 6802 10 00, 6802 21 10, 6802 21 20, 6802 21 90, 6802 91 00 and 6802 92 00 of Chapter 68 is permitted freely if cif value is US$ 60 and above per square meter with the condition that maximum thickness of slab be 20 mm.

 Officers authorized to function as Appellate Authority against the orders passed by the Adjudicating Authorities authorized by the Central Government under Section 13 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992).

 The registration requirement for export of cotton (Tariff Codes 5201 & 5203) has been dispensed with.

 The registration requirement for export of cotton yarn (Tariff Codes 5205, 5206 & 5207) has been dispensed with.

 Procedure for export of Certified Organic Products notified vide Public Notice No. 73 (RE-2013)/2009-2014 dated 18.11.2014 would come into effect from 18/12/2014.

 Procedure for export of Certified Organic Products has been deferred till further orders.

 Service tax on advocates - levy upheld by High Court - PC Joshi vs Union of India - 2014 TIOL 2279 HC MUM ST.

 Rule 8 (3A) CE Rules, 2002 - Condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional - Indsur Global Ltd vs UOI - 2014 TIOL 2115 HC AHM CX.

 Nature of the orders, instructions, directions issued under Section 37B is only for limited purpose and while doing so, it cannot override or nullify or get over the decision of the Tribunal by exercising any appeal power or indulged in legislating - VVD and Sons (Pvt.) Ltd Vs CBEC - 2014 (310) ELT 718 (Mad.)

 High Court not to interfere with order of Revisionary Authority to re-credit duty paid in excess by manufacturer exporter to Cenvat account - CCE vs Cipla Ltd - 2014 TIOL 2080 HC MUM CX.

 SEZ is not liable to pay CVD on its clearance to DTA when identical goods in DTA are exempted from excise duty - Roxul Rockwool Insulation India Pvt Ltd vs UOI -  2014 TIOL 2123 HC AHM CUS.

 Neither the Central Government nor the DGFT would have the power to amend the FTP or withdraw any export benefit with retrospective effect through circular - Malik Tanning Industries vs UOI -  2014 TIOL 2197 HC DEL CUS.

 Supply of mixies and Table top wet grinders to TNCSC for free distribution as per Tamilnadu Government scheme is assessable under Section 4A - Butterfly Gandhimati Appliances vs CCE -2014 TIOL 2466 CESTAT MAD.

 Requirement to deposit 7.5% for entertaining appeal before Tribunal is satisfied by taking in to account amount paid by the appellant and appropriated by the adjudicating authority - Zam Laboratories Ltd vs CCE - 2014 TIOL 2436 CESTAT MUM.

 After omission of provisos to Section 35C (2A), there is no provision for making any applications for extension of stay nor Tribunal has powers for hearing and disposing the applications for extension of stay from 7.8.2014 - Venkateswara Filaments Pvt Ltd vs CCE - 2014 TIOL 2388 CESTAT AHM.

 Revenue neutrality on ground that assesee is eligible for input service credit is not a ground for waiver of interest on delayed payment of tax under reverse charge - Forbes Marshall Pvt Ltd vs CCE - 2014 TIOL 2615 CESTAT MUM.

 Credit of service tax availed on outdoor catering service by manufacturer cannot be denied on ground that same is used primarily for personal use or consumption of any employee - Hindustan Cocacola Beverages Private Limited vs CCE - 2014 TIOL 2460 CESTAT MUM.

 Activity undertaken as mandatory and statutory functions does not come under the taxable service and therefore no service tax is leviable on such activity - Maharashtra Industrial Development Corporation Vs CCE Nasik - 2014 (36) STR 1291 (Tri.-Mumbai).

 Interest on refund is payable when there has been delay in submitting additional documents called for by the department subsequent to refund application - Commr. of Customs vs Reliance Industries Ltd - 2014 TIOL 2454 CESTAT AHM.

 Issue to ascertain the relevant date for claiming rebate on export of services under Notification 05/06-CE referred to larger bench - Commr.of Customs vs Ratio Pharma India Pvt Ltd - 2014 TIOL 2397 CESTAT MUM.

 Classification of coal as steam coal or bituminous coal referred to larger bench in view of contrary decisions of Chennai and Bangalore Benches - TAGEDCO vs CC - 2014 TIOL 2503 CESTAT MAD.

 

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