Update on Indirect Tax - Service Tax, Excise, GST and WBVAT

Update on Indirect Tax - Service Tax, Excise, GST and WBVAT for the month of December 2015 is as follows:

A. Service Tax

1.  Rate of Service Tax – The rate of service tax has been changed to 14% w.e.f. June 1, 2015 (the effective rate of Service Tax including Swach Bharat Cess (SBC) shall be 14.5% w.e.f. November 15, 2015).

2. Swach Bharat Cess (SBC) – SBC has been levied on all taxable services w.e.f. November 15, 2015 @ 0.5% on taxable value of service (not on Service Tax). The effective rate of Service Tax including SBC shall be 14.5%. Benefits of abatement will be available on calculating the taxable value. It may however be noted that input benefit for SBC is not available. SBC has to be charged seperately and paid under accounting code 00441493 (Interest – 00441494, Penalty - 00441496). All provisions as applicable to Service Tax (except CENVAT) shall also be applicable to SBC.

3. Service Tax payment for the month of November, 2015 is due for payment on 6th December, 2015 for assesses excluding Individual, Proprietary Firm, Partnership Firm or LLP. It is mandatory for all assesses w.e.f. October 1, 2014, to pay their dues through internet banking (e-payment) (In case the assessee wants to use any mode other than internet banking, a specific permission may be taken from the Assistant Commissioner/ Deputy Commissioner). In case of Challan payment, the due date shall be 5th December, 2015.

4. ST 3 Return – Half Yearly Service Tax Return (ST-3) for the period April – September 2015 was due on October 25^th, 2015. In case the return has not been filed for this period or for earlier periods, the same may be filed with applicable late fees. The Excel Utility can be downloaded from www.aces.gov.in/ downloads. Kindly use version v1.4 to file the returns.

5. Please note that in case you are liable to pay Service Tax (in case of services under reverse charge), you are not allowed to set it off against available balance of CENVAT credit. You need to pay the same. You can however avail CENVAT credit of this payment as in normal cases.

6. Amendment in the registration certificate is mandatory to reflect the complete set of services provided/ availed under reverse charge as per the new accounting codes.

7. CENVAT can be availed only for the last 1 year, changed from 6 months w.e.f. March 1, 2015 in the normal case, other than cases of re-credit, as clarified by the Government.

8. Rate of Interest – Interest rates have been revised w.e.f. 1-10-14 to 18% for delay till 6 months, 24% for delay from 6 months to 12 months and 30% for delay beyond 1 year. 3% small service provider’s benefit will be available.

B. Central Excise

1.  Basic Rate of Excise – The basic rate for excise duty has been changed to 12.5% (without cess) w.e.f. March 1, 2015. 

2. Excise payment for the month of November, 2015 is due for payment on 6^th December, 2015 for assesses excluding SSIs. It is mandatory for all assesses w.e.f. October 1, 2014, to pay their dues through internet banking (e-payment) (In case the assessee wants to use any mode other than internet banking, a specific permission may be taken from the Assistant Commissioner/ Deputy Commissioner). In case of Challan payment, the due date shall be 5^th December, 2015.

3. Excise Returns – Last date for filing of ER 1, ER 2 and ER 6 is 10th December, 2015.

4. CENVAT can now be availed only for the last 1 year changed from 6 months w.e.f. March 1, 2015 in the normal case, other than cases of re-credit, as clarified by the Government.

   

C. Goods & Services Tax (GST)

1.    Government releases three business processes for implementation of GST – The Government issues three business processes for GST implementation and had invited comments from the public. These processes are as follows: 

a. GST Payment Process

b. GST Registration

c. GST Refund Process

The release of these process documents shows that the Government is serious in implementing GST at the earliest and seeks to finalise these documents as soon as possible. The recent meeting of Hon’ble Prime Minister with Opposition party leaders shows the commitment of the Governmwnt towards implementing GST.

2.    Preparatory exercise - Assessees are advised to do their homework and start mapping their input taxes, processes and identify suppliers who are not registered and take other measures so that the ground work is kept ready by the time GST is implemented.

D. Major Amendments in November 2015

Common to Service Tax and Excise

1. Constitution of a Regional Bench at Chandigarh – A Regional Bench for CESTAT has been created at Chandigarh for appeals arising from territories within the territorial jurisdiction of Union Territory of Chandigarh, the States of Punjab & Haryana, Jammu & Kashmir and Himachal Pradesh w.e.f. 1-12-2015 (Notification No.2/2015[F.No.01(04)/Regional Bench/CESTAT/2015], Dated 4-11-2015).

2. Strengthening the institution of Indirect Tax Ombudsmen (ITOM) - The Indirect Tax Ombudsmen (ITOM) will be holding meetings with the trade and industry associations in their jurisdiction and encourage the taxpayers to bring forth their problems/ issues. The taxpayers can approach the Indirect Tax Ombudsmen (ITOM) if they have complaints of deficiency in the working of Customs, Central Excise and Service Tax Departments on account of non-adherence to the prescribed working hours and procedural delays in refunds, rebate, drawback and other such matters. The Ombudsmen are created for protecting the rights of the taxpayers and also to suggest remedial action for redress of their grievances. These Indirect Tax Ombudsmen (ITOM) have been set-up under the ITOM Guidelines 2011. The name, address and contact details of the Ombudsmen are available on CBEC website www.cbec.gov.in under the link 'taxpayer assistance' (Press Release dt. 20-11-2015).

Service Tax

1. Swach Bharat Cess (SBC) – SBC has been levied on all taxable services w.e.f. November 15, 2015 @ 0.5% on taxable value of service (not on Service Tax). The effective rate of Service Tax including SBC shall be 14.5%. Benefits of abatement will be available on calculating the taxable value. It may however be noted that input benefit for SBC is not available. SBC has to be charged seperately and paid under accounting code 00441493 (Interest – 00441494, Penalty - 00441496). All provisions as applicable to Service Tax (except CENVAT) shall also be applicable to SBC. (Notifications 21/2015-Service Tax dt. Nov 6, 2015, 22/2015-Service Tax dt. Nov 6, 2015, Press Release dt. 12-11-2015, 23/2015-Service Tax dt. Nov 12, 2015, 24/2015-Service Tax dt. Nov 12, 2015, 25/2015-Service Tax dt. Nov 12, 2015 and FAQs on SBC (Press Release dt. 16-11-2015), Circular No. 188/7/2015-ST, DATED 16-11-2015)

2. Speedy disbursal of pending refund claims of exporters of services – A scheme has been drawn up to fast track sanction of refund of accumulated CENVAT credit to exporters of services. This scheme is not a substitute for the various notifications but is meant to complement them and is aimed at enabling ease of doing business. (Circular No.187/6/2015-ST, Dated 10-11-2015).

3. Clarification on leviability of service tax on seed testing with retrospective effect from 1-7-2012 – It has been clarified that all testing and ancillary activities to testing such as seed certification, technical inspection, technical testing, analysis, tagging of seeds, rendered during testing of seeds, are covered within the meaning of 'testing' as mentioned in sub-clause (i) of clause (d) of section 66D of the Finance Act, 1994. Therefore, such services are not liable to Service Tax under section 66B of the Finance Act, 1994 (Circular No.189/8/2015-ST, Dated 26-11-2015)

E. Important Case Laws in Service Tax and Excise in November 2015 (New section added recently) (Ref: www.taxmann.com)

1. Where, as per exemption notification, DTA clearances by EOU are liable to 'excise duty leviable on clearances by non-EOUs', said DTA clearances are to be valued as per Central Excise Valuation rules - Assessee cleared tea manufactured wholly out of indigenous raw materials, to its sister concerns in EOU. As per Notifications 8/97 and 23/2003, said clearance of tea was liable to duty equal to 'excise duty' leviable on clearance by non-EOUs and any excess was exempted. The Assessee valued said tea as per rule 8 of excise valuation rules. The Department argued that since DTA clearances by EOU are liable to excise duty equal to 'customs duty leviable', tea was to be valued as per customs law. It was held that though DTA clearances are valued as per customs law, however, in this case, as per exemption notifications, tea was liable to 'excise duty' on clearance by non-EOUs. Hence, valuation of tea was to be done as per excise law. Since tea was not sold but was captively consumed by sister concerns/units in DTA, said tea was to be valued as rule 8 of excise valuation rules. Therefore, demand was set aside [Paras 14 to 16]. [2015] 63 taxmann.com 312 (SC) SUPREME COURT OF INDIA, Commissioner of Central Excise v. Nestle India Ltd.

Thanks & Regards,

Meetesh Shiroya