Udyog Tax News Flash

February 2014

Service tax: Only CAs can conduct service tax audit?

Eight assessees received notices of service tax audit from the central excise department under rule 5A(2) of the Service Tax Rules 1994 and moved the High Court against it, questioning the vires of the said rule by which a service tax assessee is required to furnish records to an audit party deputed by the Commissioner or by the Comptroller & Auditor General (CAG). The petitioners contended that there was no provision in the statute from which this rule could be derived. The Additional Solicitor General representing the government defended the rule saying that it was not ultra vires section 72-A of the Finance Act 1994; that the departmental officers would only collect documents on behalf of the Commissioner and hand them over to a chartered accountant for audit. Accepting this assurance the High Court dismissed the writ petitions. Thus, the petitioners who seemingly lost their cases gained a huge benefit for all service tax assessees in the form of immunity from the dreaded EA-2000 audit! One wonders what the next move of the government will be. Having won the case on the basis of their own averments, they cannot appeal against the order nor backtrack on the averments. This interesting order dated 19 December 2013 in the case of Tiranga Construction Company and others v Union of India can be accessed at http://elegalix.allahabadhighcourt.in/elegalix/StartWebSearch.do by entering the petitioners name, the case no. 11948 and selecting Lucknow for seat of court and Miscellaneous bench for type of case.

Service tax: exemption governmental authority amended

for

Specified services provided to a governmental authority are exempted under notification 25/2012-ST. The definition of governmental authority for this purpose has been amended in a manner that gives it clarity. Earlier it was, a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution. This has been changed to, an authority or a board or any other body; (i) set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;.

The change makes it clear that the body may be either set up by an enactment or established by government. The amending notification 2/2014-ST dated 30 January 2014 can be perused at http://www.servicetax.gov.in/notifications/notfns-2014/st02-2014.htm

Central excise: clarification on compounded levy for smokeless tobacco products

Pan masala, gutkha and chewing tobacco are assessed to excise duty under the compounded levy scheme under section 3A of the Central Excise Act 1944 read with the rules made for the purpose for each of the said products. Under the scheme, the duty is payable on deemed production based on the number of packing machines. The central excise field formations raised a doubt as to whether excise duty can be re-determined based on the speed of the packing machine and the actual production thereof, which may be higher than the deemed production. The CBEC has clarified vide circular dated 24 January 2014 that the number of packing machines is the only factor relevant for determining production under the law; and that duty is payable on deemed production determined in this manner. The CBEC Circular 980/04/2014-CX dated 24 January 2014 can be downloaded from http://cbec.gov.in/excise/cx-circulars/cx-circ14/980-2014cx.htm

Central excise: pan masala deemed production per machine and rates of duty increased
The central government has issued notification no. 3/2014-CE(NT) dated 24 January 2014 to amend the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 so as to increase the deemed production per machine. The notification can be seen at http://cbec.gov.in/excise/cx-act/notfns-2014/cx-nt2014/cent03-2014.htm The central government has also issued notification 1/2014-CE dated 24 January 2014 to effect an upward revision in the rates of duty on pan masala as notified under notification 42/2008-CE dated 1 July 2008 and amended earlier by notification 13/2012-CE dated 17 March 2012. The notification 1/2014-CE can be accessed at http://cbec.gov.in/excise/cx-act/notfns-2014/cx-tarr2014/ce01-2013.htm

Central excise: deemed production of chewing tobacco & unmanufactured tobacco, and rates of duty, increased
The central government has issued notification 4/2014-CE dated 24 January 2014 to amend the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. The amendment effects an upward revision in the deemed production of the product per machine. The notification can be seen at
http://cbec.gov.in/excise/cx-act/notfns-2014/cx-nt2014/cent04-2014.htm The central government has also issued notification 2/2014-CE dated 24 January 2014 to effect an upward revision in the rates of duty on chewing tobacco and unmanufactured tobacco. The notification, which amends the original notification 16/2010-CE under which the duty rates were notified, can be accessed at http://cbec.gov.in/excise/cx-act/notfns-2014/cx-tarr2014/ce02-2013.htm

Customs: export duty on iron ore pellets

The central government has imposed a 5% duty on export of iron ore pellets. This has been effected by amendment of notification 27/2011Customs. The amending notification 3/2014-Customs can be seen at http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cstarr2014/cs03-2014.htm

Customs: anti-dumping duty on float glass extended

The DG Anti-Dumping has undertaken a sunset review on the anti-dumping duty that had been imposed on float glass from China PR and Indonesia vide notification 4/2009-Customs. Pending the review the central government has extended the validity of the duty imposed under the said notification uptil 5 January 2015. The notification 7/2014-Customs (ADD) dated 23 January 2014 under which this has been done can be seen at http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/csadd2014/csadd07-2014.htm

Customs: CBEC drawback rates

clarifies

on

new

The CBEC has issued Circular no. 3/2014-Customs dated 30 January 2014, to explain the changes made in the drawback schedule by notification 5/2014-Customs (NT) dated 21 January 2014. See http://cbec.gov.in/customs/cs-circulars/cs-circ14/circ03-2014-cs.htm

Customs: tariff values notified

The CBEC has notified tariff values for specified commodities under section 14(2) of the Customs Act 1962. Gold and silver values have been lowered. Thus, the tariff value of gold in respect of which the benefit of exemption under serial numbers 321 and 323 of notification 12/2012-Customs is availed has been notified as USD 404 per 10 grams (from USD 407), while the benefit of silver in respect of which the benefit of serial numbers 322 and 324 is availed has been notified as USD 635 per kilogram (from USD 663). The values of all the palm oils and oleins, crude soyabean oil and brass scrap have been lowered. The value of poppy seeds and areca nuts remains unchanged. The notification 8/2014-Customs (NT) dated 31 January 2014 can be seen at
http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cs-nt2014/csnt082014.htm

Customs: certain restrictions on import from Bhutan eased

The central government has issued notification 7/2014-Customs (NT) dated 28 January 2014, to amend notification 152/84-Customs (NT) by allowing machinery that entered Bhutan through an Indian place of entry for use in execution of projects there, to be imported into India based on the original documents and verification of the identity of the goods. The notification can be seen at
http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cs-nt2014/csnt072014.htm

Customs: additional land route to Bangladesh notified

The CBEC has notified Golakganj under section 7(b) of the Customs Act 1962 as a land customs station for goods being exported to or imported from Bangladesh. The land routes to be used have also been notified, as required under section 7 (c) of the said Act. See the notification 6/2014Customs (NT) dated 23 January 2014 at
http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cs-nt2014/csnt062014.htm

New Chairperson for CBEC

Ms Praveen Mahajan retired as Chairman of the CBEC on 31 January. The next incumbent is Ms JM Shanti Sundaram, known to be an upright, strict and knowledgeable officer. We wish her a successful tenure.

Udyog has been successful in integrating iTAX with following the ERPs

SAP E.C.C. 6.0 MFG-QAD eB 2.1 BPCS BAAN FP 7

SAGE Accpac ERP 100 v 5.6 ABAS Adage Oracle

Updated and written by Radha Arun [radha.arjuni@gmail.com], Consultant to Udyog Software (India) Ltd.
Udyog Software (India) Ltd. www.udyogsoftware.com Phone: 022-67993535 Email: ca-service@udyogsoftware.com | sales@udyogsoftware.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.