TMI Tax Updates - e-Newsletter
March 1, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
By: CSSwati Rawat
Summary: The budget maintains a 12% rate for excise duty and service tax, and a 10% basic customs duty for non-agricultural products. Key changes include extended concessions for electric and hybrid vehicle parts, reduced duties on machinery for leather goods and pre-forms of precious stones, and withdrawn export duty on de-oiled rice bran oil cake. Increased duties apply to set-top boxes, raw silk, and luxury imports. Duty-free gold limits rise for passengers. Excise duty exemptions are granted to handmade carpets, shipbuilding, and certain textiles, while increased duties affect cigarettes, SUVs, marble, and high-priced mobile phones.
By: Dr. Sanjiv Agarwal
Summary: The article discusses proposed reforms by SEBI to enhance corporate governance, focusing on independent directors. It suggests SEBI create a code of conduct and a panel for independent directors, requiring companies to appoint at least 50% from this panel. It proposes a cap on directorships, restrictions on certain individuals, and a mandatory training program. It addresses the appointment process, suggesting a welcome kit instead of formal letters. It recommends age and tenure limits, with a cooling-off period post-tenure. It also highlights the need for clear resignation protocols and suggests a lead independent director role, advocating for a two-tier board system.
By: Dr. Sanjiv Agarwal
Summary: Service-specific accounting codes for registration and payment of Service Tax under the Negative List approach have been restored for statistical analysis, as per Circular No. 165/16/2012-ST and Notification No. 48/2012-ST. Registrations under the positive list remain valid. New taxpayers must select relevant services from a list of 120 descriptions. Amendments to registrations under 'All Taxable Services' should be made online in the ACES system. Old service codes remain valid, and new sub-codes for penalties and refunds are introduced. Registration changes must align with service descriptions, and payments should be made accordingly.
By: CSSwati Rawat
Summary: The proposed amendments to the Finance Act, 1994, in the 2013-14 budget, include changes to service tax regulations. The definition of 'approved vocational education course' is updated, and a new section, 66BA, clarifies the charging section under the negative list approach. Amendments also introduce penalties for non-compliance and empower authorities to arrest for specific offences. A retrospective exemption is granted to Indian Railways for certain services, and abatement rules for construction services are revised. Exemptions for charitable organizations and specific services are rationalized, and an amnesty scheme for non-filers is introduced. The scope of advance ruling is extended to resident public limited companies.
By: CSSwati Rawat
Summary: The 2013-14 budget proposed several measures to support the Hi-tech and MSME sectors. Key initiatives include a Rs. 55 lakh crore infrastructure allocation with private investment participation, development of industrial corridors, and non-tax benefits for MSMEs. Start-ups can list on SME exchanges without public offerings. Incentives for the semiconductor industry and a three-year tax exemption for growing MSMEs are included. The budget emphasizes skill development with a Rs. 1000 crore allocation and plans for a biotechnology institute in Ranchi. There are no changes to direct tax rates, but surcharges on high-income individuals and companies are introduced, alongside increased duties on certain goods.
News
Summary: The Finance Bill, 2013 introduces several amendments to direct taxes, including changes to the Income-tax Act, Wealth-tax Act, and Finance Act, 2004. Key provisions include maintaining existing income tax rates for the 2013-14 assessment year, introducing surcharges for high-income companies, and continuing education cess. The Bill proposes a new Commodities Transaction Tax on non-agricultural commodity derivatives and increases the tax rate on royalties and technical services for non-residents. It also offers incentives for manufacturing investments and extends tax benefits for the power sector. Relief measures include a tax rebate for low-income individuals and deductions for housing loans. Anti-tax avoidance measures and rationalization efforts, such as GAAR implementation and TDS on property transfers, are also included.
Summary: The Finance Bill 2013 was introduced in the Lok Sabha on February 28, 2013, as Bill No. 18 of 2013. It aims to implement the financial proposals of the Central Government for the fiscal year 2013-2014.
Summary: The 2013-14 budget presented by the Finance Minister focuses on navigating the Indian economy through global economic challenges, aiming for inclusive and sustainable growth. Key priorities include addressing fiscal and current account deficits, inflation, and encouraging foreign investment. The budget proposes increased allocations for sectors like health, education, rural development, and infrastructure. It emphasizes inclusive development with significant funds for marginalized communities, women, and children. Tax proposals include a surcharge on high-income individuals and companies, tax benefits for first-time home buyers, and measures to enhance investment in manufacturing. The budget also outlines plans for improving financial inclusion, skill development, and environmental sustainability.
Summary: The Index of Eight Core Industries, which constitutes 37.90% of the Index of Industrial Production, recorded a growth of 3.9% in January 2013, up from 2.2% in January 2012. However, the growth was hindered by negative outputs in crude oil, natural gas, fertilizers, and cement. Cumulatively, the core industries grew by 3.2% from April 2012 to January 2013, compared to 5.0% in the same period the previous year. Notably, coal and petroleum refinery products saw positive growth, while natural gas and fertilizers experienced significant declines. Electricity generation also showed an increase, albeit lower than the previous year's growth.
Summary: The budget for 2013-14, presented by the Finance Minister in Lok Sabha, increased the agricultural credit target to Rs. 7 lakh crores from Rs. 5.75 lakh crores. The short-term crop loan scheme, known as the Interest Subvention Scheme, has been expanded to include loans from private sector scheduled commercial banks, in addition to those from Public Sector Banks, Regional Rural Banks, and Co-operative Banks. Under this scheme, farmers can obtain loans at 4 percent interest per annum if they repay their short-term crop loans on time.
Summary: The 2013 budget introduced several notifications and amendments concerning Service Tax, Central Excise, and Customs effective from March 1, 2013. Key changes include the classification of resident public limited companies under specific Finance and Central Excise Act sections, amendments to previous service tax notifications, and revisions to customs duties and exemptions, such as duty-free limits on jewelry for returning residents and exemptions for sports trophies. Central Excise updates include zero duty for certain garments, revised duty rates on stainless steel products, and procedural changes for CENVAT credit recovery. Legislative changes were also highlighted in related circulars and instructions.
Summary: The Finance Minister announced a Rs. 800 crore allocation for generation-based incentives for wind energy projects in the 2013-14 budget, highlighting the need for incentives in the non-conventional wind energy sector. A scheme is proposed to encourage waste-to-energy projects in cities through public-private partnerships, supported by the government via funding mechanisms like viability gap funding and low-cost capital. To address the high cost of renewable energy for consumers, the government plans to offer low-interest funds from the National Clean Energy Fund to IREDA for lending to viable projects. The scheme will span five years.
Summary: The Finance Minister proposed a budget of Rs. 27,049 crore for the Ministry of Agriculture in the 2013-14 Union Budget, marking a 22% increase from the previous year. This includes Rs. 3,415 crore for agricultural research and Rs. 307 crore for the National Livestock Mission to boost investment and productivity. Agricultural exports from April to December 2012 exceeded Rs. 1,38,403 crore, and increased Minimum Support Prices have motivated farmers to enhance production. The foodgrain production for 2012-13 is expected to surpass 250 million tonnes, with an agricultural growth rate of 3.6% during the 11th Plan.
Summary: The government aims to skill 50 million people during the Twelfth Plan period, targeting 9 million in 2013-14. Funds will be allocated through the National Rural and Urban Livelihood Missions. The Finance Minister emphasized the role of the National Skill Development Corporation in setting training standards and curricula. Special funding will come from various development programs, with a focus on motivating youth to join skill development initiatives. Successful trainees will receive a certificate and a monetary reward of approximately Rs. 10,000. The scheme is supported by a budget allocation of Rs. 1,000 crore to enhance employability and productivity.
Summary: The Finance Minister announced an additional allocation of Rs. 10,000 crore for the National Food Security Act's incremental costs, beyond the usual food subsidy provision, in the 2013-14 budget presented to the Lok Sabha. The Minister emphasized the importance of passing the National Food Security Bill, equating food security with fundamental human rights such as education and healthcare.
Summary: The Finance Minister has proposed a budget for 2013-14 with a significant focus on enhancing agricultural production through a new green revolution. An allocation of Rs. 1000 crore is designated for increasing rice production in Eastern States like Assam and Bihar. Additionally, Rs. 500 crore is proposed for crop diversification in original green revolution States to address stagnating yields and water resource issues. Other initiatives include increased funding for the Integrated Watershed Programme, establishing agricultural research institutes, and a pilot scheme for rejuvenating coconut gardens. These measures aim to support small and marginal farmers, particularly in drought-prone regions.
Summary: The government plans to develop new criteria for assessing backwardness by incorporating human development indicators like per capita income into future planning and fund allocation. During the 2013-14 budget presentation, the Finance Minister proposed a Rs. 11,500 crore allocation for the Backward Regions Grant Fund, with an additional Rs. 1,000 crore for areas affected by Left Wing Extremism. The fund will also have a state component for regions including Bihar, Bundelkhand, West Bengal, and the KBK districts of Odisha, as well as 82 districts under the Integrated Action Plan.
Summary: The government has announced a fund to support science and technology innovations aimed at benefiting the public. The Ministry of Science and Technology, Ministry of Finance, and the Principal Scientific Advisor have identified key innovations for scaling up. In the 2013-14 budget presented in Lok Sabha, the Finance Minister proposed allocating Rs. 2,000 crore for this initiative, with the National Innovation Council tasked with managing the fund. Additionally, the Ministry of Science and Technology received Rs. 6,275 crore, the Department of Space Rs. 5,615 crore, and the Department of Atomic Energy Rs. 5,880 crore, despite budgetary constraints.
Summary: India's Current Account Deficit remains high due to reliance on oil and coal imports, gold demand, and sluggish exports. The Finance Minister highlighted the need to secure over USD 75 billion to manage the deficit for the current and possibly next year. The Minister emphasized that India must encourage foreign investments through Foreign Direct Investment (FDI), Foreign Institutional Investment (FII), or External Commercial Borrowings (ECB) to address the deficit, stating that India cannot afford to reject foreign investments at this time. The focus is on aligning these investments with India's economic objectives.
Summary: The fiscal deficit for 2013-14 is projected at 4.8%, down from 5.2% for the current year, with a target to reduce it to 3% by 2016-17. The revenue deficit is estimated at 3.3% for 2013-14, down from 3.9% this year. The Finance Minister announced plans to decrease the revenue deficit to 1.5% and the effective revenue deficit to zero by 2016-17. Plan expenditure is set at Rs. 5,55,323 crore, accounting for 33.3% of total expenditure, while non-plan expenditure is estimated at Rs. 11,09,975 crore.
Summary: The Finance Minister highlighted the challenge of returning to India's potential growth rate of 8%, as current growth estimates by CSO and RBI stand at 5% and 5.5%, respectively. He noted the impact of global economic slowdown on India, emphasizing that despite this, India remains one of the fastest-growing large economies after China and Indonesia. The minister underscored the government's commitment to inclusive development, rejecting growth models that neglect marginalized groups. The focus is on improving human development indicators to ensure sustainable and inclusive growth.
Summary: The government is expanding the Direct Benefit Transfer (DBT) Scheme nationwide to ensure financial aid reaches the intended beneficiaries directly, minimizing leakages in developmental programs for the poor. Since its initial implementation on January 1, 2013, approximately 1.1 million beneficiaries have received funds directly in their bank accounts. The Finance Minister highlighted the positive impact on dalit and tribal students and pregnant women, who have benefited from scholarships and maternity support. Efforts are underway to digitize beneficiary lists, open bank accounts, and link them with Aadhaar to streamline the process further.
Summary: The government has announced the creation of a Nirbhaya Fund with an allocation of Rs. 1,000 crores to enhance the safety and empowerment of women. This initiative, presented in the 2013-14 budget by the Finance Minister, aims to address the increasing violence against women, challenging the nation's progressive values. The Ministry of Women and Child Development, along with other relevant ministries, will develop the fund's structure and application. This effort supports various roles women play in society, from students to mothers, emphasizing their need for dignity and security.
Summary: The government announced a budget allocation of Rs. 400 crore to support institutions of excellence, with Rs. 100 crore each for specific universities and cultural heritage trusts. Additionally, the expansion of private FM radio services to 294 new cities is planned, with 839 new channels to be auctioned, aiming to cover cities with populations over 100,000. Furthermore, Rs. 532 crore is allocated to modernize the postal network, integrating post offices into the core banking solution to provide real-time banking services.
Summary: The Union Finance Minister emphasized India's potential to become one of the world's top five economies by making strategic decisions. Citing Tamil poet Tiruvalluvar and Swami Vivekananda, he highlighted self-reliance and proactive future-making. Currently the tenth largest economy, India aims to rise to the seventh or eighth position by 2017 and reach a $5 trillion economy by 2025. The 2013-14 General Budget is presented as a crucial step towards achieving these goals.
Summary: The government plans to allocate Rs. 5,87,082 crore to States and Union Territories through tax shares, non-plan grants, loans, and central assistance as part of the 2013-14 budget. The Finance Minister announced in the Lok Sabha that central funds will be distributed as Central plan assistance. Addressing concerns over the numerous Centrally Sponsored Schemes and Additional Central Assistance Schemes, the Finance Minister revealed plans to consolidate 173 schemes into 70, with each scheme undergoing a review every two years.
Summary: The Union Finance Minister announced measures to address the fiscal deficit by rationalizing government expenditure in the 2013-14 budget. The government implemented necessary but delayed policy decisions, including price corrections and tax policy reviews. The Finance Minister acknowledged that the previous year's budget overestimated Plan Expenditure and underestimated non-Plan Expenditure. By adjusting these estimates, the government aimed to create economic space to further its socio-economic goals.
Summary: The government has prioritized national security by ensuring financial constraints will not hinder meeting additional security needs. The Finance Minister announced in the Lok Sabha an increased defense budget allocation of Rs. 2,03,672 crore, with Rs. 86,741 crore designated for capital expenditure. This commitment underscores the government's stance on maintaining robust defense capabilities.
Summary: The Finance Minister announced that the government is committed to combating inflation, which poses a challenge to economic growth. Presenting the 2013-14 General Budget, he highlighted that some inflation is imported, while supply-demand mismatches, particularly in oilseeds and pulses, contribute to rising prices. He emphasized the need to address inflation on multiple fronts. Recent government efforts have reduced headline WPI inflation to around 7.0% and core inflation to 4.2%. However, food inflation remains a concern, prompting the government to enhance supply to meet increasing demand for food items.
Summary: The Finance Minister announced increased budget allocations to address maternal and child malnutrition and urban transport. The Integrated Child Development Scheme (ICDS) received a proposed allocation of Rs. 17,700 crore for 2013-14, marking an 11.7% increase to focus on early childhood care and education. A multi-sectoral program targeting malnutrition will be implemented in 100 districts with Rs. 300 crore, expanding to 200 districts the following year. For urban renewal, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) received Rs. 14,873 crore, more than doubling the previous year's budget, to support the purchase of up to 10,000 buses.
Summary: The Finance Bill 2013-14 introduces an additional tax benefit for first-time home buyers taking loans up to Rs.25 lakh. Announced by the Finance Minister, the proposal allows an extra deduction of Rs.1 lakh on interest for loans taken between April 1, 2013, and March 31, 2014. This deduction is in addition to the existing Rs.1.50 lakh allowed for self-occupied properties under Section 24 of the Income Tax Act. The initiative aims to boost home ownership and stimulate related industries, creating jobs in construction. Unused deductions can be claimed in the assessment year 2015-16.
Summary: The Finance Bill 2013-14 introduces a 10% surcharge on individuals, HUFs, firms, and similar entities with taxable incomes exceeding Rs. 1 crore annually. Domestic companies with taxable incomes over Rs. 10 crore will see their surcharge rise from 5% to 10%, while foreign companies will experience an increase from 2% to 5%. The surcharge on dividend distribution tax and similar taxes will also double to 10%. These changes are temporary, applicable only for the financial year 2013-14. The education cess remains at 3%, with the Finance Minister expecting wealthier individuals to contribute more for this period.
Summary: The government prioritized health and education in the 2013-14 budget, allocating Rs. 37,330 crore to health, including Rs. 21,239 crore for the National Health Mission and Rs. 4,727 crore for medical education. Six AIIMS-like institutions will be fully functional, with Rs. 1,650 crore allocated. Education received Rs. 65,867 crore, with significant funding for the Sarva Shiksha Abhiyan and Rashtriya Madhyamik Shiksha Abhiyan. Thousands of scholarships for SC/ST/OBC/Minorities and girl children were announced, with Rs. 5,284 crore allocated. The Mid-day Meal Scheme received Rs. 13,215 crore, and the Nalanda University reconstruction was emphasized.
Summary: The Finance Bill 2013-14 proposes a tax relief of Rs.2000 for individuals with a total income of up to Rs.5 lakh annually. This initiative is expected to benefit 1.80 crore taxpayers, amounting to a total relief of Rs.3600 crore. The Finance Minister announced this measure during the Union Budget presentation, emphasizing that while the current tax slabs and rates remain unchanged, this relief targets those in the Rs.2 lakh to Rs.5 lakh income bracket.
Summary: The budget for the Ministry of Rural Development in India increased by 46% for 2013-14, reaching Rs 80,194 crore from the previous year's Rs 55,000 crore. Key allocations include Rs 33,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme, Rs 21,700 crore for the Pradhan Mantri Gram Sadak Yojana, and Rs 15,184 crore for the Indira Awaas Yojana. A new phase, PMGSY-II, will be introduced to further support certain states. Additionally, Rs 1,400 crore is allocated for water purification plants to address arsenic and fluoride contamination in rural areas.
Summary: The Finance Minister announced a Rs 14,000 crore capital infusion for public sector banks to meet Basel III norms in the 2013-14 budget. By March 2013, Rs 12,517 crore will be infused into 13 public sector banks. To promote financial inclusion, all banks will adopt Core Banking Solutions by March 2013, and all public sector bank branches will have ATMs by March 2014. A public sector Women's Bank with Rs 1,000 crore initial capital will be established to support women and women-led enterprises. A Council of Experts will be formed to enhance the financial sector's competitiveness, with reforms forthcoming.
Summary: The Finance Bill 2013-14 proposes a 1% Tax Deducted at Source (TDS) on the transfer of immovable property valued over Rs. 50 lakh, with an exemption for agricultural land. This measure, announced by the Finance Minister during the Union Budget presentation, aims to address the common issues of undervaluation and under-reporting in property transactions, where many lack the Permanent Account Number (PAN) of involved parties. The initiative seeks to enhance transaction reporting and ensure proper taxation of capital gains.
Summary: The Finance Minister announced a 29.4% increase in plan expenditure for the 2013-14 fiscal year, setting it at Rs. 5,55,322 crore, with a total expenditure of Rs. 16,65,297 crore. This rise aims to address economic recovery and create job opportunities for the youth by enhancing education and skills development. Despite previous austerity measures, flagship programs have been fully funded, and the focus is on effective governance and implementation by ministries and departments. The budget's primary goal is to ensure youth can secure decent jobs or self-employment, leading to adequate incomes and a secure living environment.
Summary: The Finance Bill 2013-14 proposes changes to the Rajiv Gandhi Equity Savings Scheme (RGESS) to make it more accessible. First-time investors will be permitted to invest in mutual funds and listed shares over three consecutive years instead of just one. Additionally, the income eligibility limit for the scheme is proposed to be increased from Rs. 10 lakh to Rs. 12 lakh. These changes aim to encourage more participation in the scheme, which was initially launched in the fiscal year 2012-13.
Summary: The Finance Bill 2013-14 introduces a 15% investment allowance for manufacturing companies investing over Rs.100 crore in plant and machinery between April 1, 2013, and March 31, 2015. The Finance Minister emphasized the importance of a strong manufacturing sector for economic development. Additionally, the deadline for power sector projects to benefit under Section 80-IA of the Income Tax Act is extended to March 31, 2014. The 15% concessional tax rate on dividends received by Indian companies from foreign subsidiaries is extended for another year, encouraging fund repatriation, and exempting these companies from dividend distribution tax on such income.
Summary: The Finance Minister announced budget allocations focusing on the welfare of scheduled castes, tribes, women, children, minorities, and persons with disabilities. Rs. 41,561 crore and Rs. 24,598 crore were allocated to scheduled castes and tribal sub-plans, respectively. The gender budget received Rs. 97,134 crore, and the child budget Rs. 77,236 crore. Rs. 3,511 crore was allocated to the Ministry of Minority Affairs, with additional funds for the Maulana Azad Education Foundation to enhance educational and medical support. Rs. 110 crore was designated for the Department of Disability Affairs under the ADIP Scheme.
Summary: The Finance Minister announced a budget allocation of Rs. 800 crore to support wind energy projects through generation-based incentives. The initiative aims to boost the non-conventional wind energy sector. Additionally, a scheme is proposed to encourage waste-to-energy projects in cities and municipalities using a public-private partnership model. The government plans to support these projects through viability gap funding, grants, and low-cost capital. To address the high cost of renewable energy, low-interest funds from the National Clean Energy Fund will be provided to IREDA for lending to viable projects. This scheme is set to last five years.
Summary: The budget outlines tax proposals expected to generate Rs. 18,000 crore, with direct taxes contributing Rs. 13,300 crore and indirect taxes Rs. 4,700 crore. Key measures include a 10% surcharge on individuals with incomes over Rs. 1 crore and increased surcharges on domestic and foreign companies with high taxable incomes. A Tax Administration Reforms Commission will be established. Excise duty on SUVs and tobacco products is raised, while duties on luxury imports and mobile phones above Rs. 2,000 are increased. The budget also introduces a Voluntary Compliance Encouragement Scheme for service tax defaulters and emphasizes the need for a Constitutional amendment to pass the GST law.
Summary: The Finance Minister announced plans to develop a Public-Private Partnership (PPP) policy framework involving Coal India Limited to boost domestic coal production and reduce reliance on imports. Despite significant coal reserves, India imported over 100 million tonnes from April to December 2012, with projections reaching 185 million tonnes by 2016-17. The initiative aims to meet the coal needs of existing and upcoming power plants. Additionally, the government has approved a financial restructuring scheme for DISCOMS to improve the power sector's health, urging state governments to expedite their financial restructuring plans and sign the necessary agreements.
Summary: The Finance Minister announced significant progress on the Delhi Mumbai Industrial Corridor (DMIC), with plans for seven new cities and the commencement of smart industrial cities in Gujarat and Maharashtra during 2013-14. The Indian government, with Japan's support, will ensure necessary funding. Additionally, a comprehensive plan for the Chennai Bengaluru Industrial Corridor is underway, involving collaboration with Tamil Nadu, Andhra Pradesh, and Karnataka. Preparations for the Bengaluru Mumbai Industrial Corridor have also begun.
Summary: The Finance Minister announced measures to boost household savings in financial instruments rather than gold, aiming to enhance economic growth. The Rajiv Gandhi Equity Savings Scheme will be liberalized, allowing first-time investors to invest in mutual funds and listed shares over three years, with the income limit raised to Rs. 12,00,000. Additionally, first-time homebuyers can claim an extra Rs. 100,000 interest deduction on loans up to Rs. 25,00,000. To protect savings from inflation, new instruments like Inflation Indexed Bonds will be introduced in consultation with the RBI, targeting the poor and middle classes.
Summary: The Finance Minister announced measures to enhance India's capital markets, focusing on simplifying procedures for Foreign Portfolio Investors (FPIs). The Securities and Exchange Board of India (SEBI) will streamline registration and KYC norms for FPIs, aligning them with international practices. Investors with a stake of 10% or less will be classified as Foreign Institutional Investors (FIIs), while those with more than 10% will be considered Foreign Direct Investment (FDI). FIIs can now engage in currency derivatives and use corporate bonds and government securities as collateral. Additionally, SEBI will set guidelines for angel investor pools, and stock exchanges can introduce a debt segment to boost the debt market.
Summary: The Finance Bill 2013-14 proposes a 20% final withholding tax on profits distributed by unlisted companies to shareholders through share buy-backs, aiming to prevent tax avoidance. Additionally, the tax rate on payments for royalties and technical services to non-residents is proposed to increase from 10% to 25%, though the applicable rate will adhere to the Double Tax Avoidance Agreement. This adjustment addresses the discrepancy between the Income Tax Act's lower rates and those in various international agreements.
Summary: The government plans to enhance insurance penetration through a multi-pronged strategy, allowing insurance companies to open branches in smaller cities without prior IRDA approval and permitting banks to act as insurance brokers. Banking correspondents can sell micro-insurance products, and existing bank KYC will suffice for insurance purchases. By March 2014, LIC and another public sector insurer will establish offices in towns with populations over 10,000. The Rashtirya Swastha Bima Yojana will expand to include various worker categories. Additionally, the Rural Housing Fund will receive increased funding, and a new urban housing fund will be established. An integrated social security package for the unorganized sector is also proposed.
Summary: The Finance Minister presented the Union Budget, emphasizing key themes for tax proposals: clarity in tax laws, a stable tax regime, non-adversarial tax administration, a fair dispute resolution mechanism, and an independent judiciary. These principles aim to guide both direct and indirect tax proposals, ensuring a more transparent and efficient tax system.
Summary: The customs duty on imported luxury goods, including high-end motor vehicles, motorcycles, and yachts, has been increased significantly. The duty on motor vehicles rose from 75% to 100%, on motorcycles with engine capacities of 800 cc or more from 60% to 75%, and on yachts from 10% to 25%. Conversely, concessions for environment-friendly vehicles have been extended until March 31, 2015. The aircraft manufacture, repair, and overhaul industry also received certain concessions to boost employment. Additionally, the duty-free limit for eligible passengers bringing jewelry has been raised to Rs. 50,000 for males and Rs. 1 lakh for females, with standard conditions remaining applicable.
Summary: The Finance Bill 2013-14 includes a proposal to establish a Tax Administration Reforms Commission (TARC). Announced during the Union Budget presentation in the Lok Sabha, the Commission's role will be to review tax policies and laws, providing periodic reports aimed at enhancing the tax system's capacity. The Finance Minister emphasized the need for a tax system in line with global best practices, highlighting the Commission as a crucial initiative for an emerging economy.
Summary: The Finance Minister announced that work on the Direct Taxes Code (DTC) is ongoing, aiming to establish a new code aligned with international practices suitable for a rapidly developing economy, rather than merely amending the Income-Tax Act of 1961. The Standing Committee on Finance has submitted its report, and the Ministry of Finance is reviewing the recommendations. The Minister expressed his intention to reintroduce the Bill in the House before the Budget Session concludes.
Summary: The Finance Minister announced several changes in customs duties to boost exports and encourage domestic production. Duty on machinery for leather and leather goods manufacturing was reduced to 5%, and duty on pre-forms of precious stones was cut from 10% to 2%. Export duty on de-oiled rice bran oil cake was removed. To promote local production, customs duty on set-top boxes doubled to 10%, and raw silk duty increased to 15%. A new export duty on ilmenite was introduced, and duties on steam and bituminous coal were equalized at 2% customs duty and 2% CVD.
Summary: The Finance Bill 2013 proposes that the modified provisions of the General Anti-Avoidance Rules (GAAR) will take effect from April 1, 2016. Initially introduced by the Finance Act 2012, GAAR faced numerous objections, prompting the formation of an expert committee to consult stakeholders and finalize guidelines. After reviewing the committee's report, the government announced decisions on January 14, 2013, which were well-received and are now being incorporated into the Income-Tax Act. These modifications maintain the core intent and purpose of GAAR.
Summary: The Finance Bill 2013-14 proposes a reduction in tax on interest for investments made through a designated bank account in Rupee-denominated long-term infrastructure bonds, lowering the rate from 20% to 5%. This measure, presented in the Union Budget by the Finance Minister, aims to attract more investment in long-term infrastructure projects. The reduced tax rate aligns with last year's adjustment for non-resident investors, encouraging further participation in the infrastructure sector.
Summary: The Finance Bill 2013 proposes to extend the benefits under Section 80-D of the Income Tax Act to schemes similar to the Central Government Health Scheme (CGHS) operated by both the Central and State Governments. Contributions to CGHS are already eligible for tax deductions under this section. The Finance Minister announced that this benefit would now apply to similar health schemes. Additionally, contributions to the National Children's Fund will be eligible for a 100% tax deduction.
Summary: The Finance Minister has proposed the Voluntary Compliance Encouragement Scheme to motivate approximately 10 lakh service tax defaulters to file returns and pay dues. This one-time scheme allows defaulters to declare dues since October 1, 2007, with waived interest and penalties if paid by set dates. Two services added to the negative list are vocational courses by state-affiliated institutes and agricultural testing activities. Service tax exemptions for film copyrights are limited to cinema hall exhibitions. All air-conditioned restaurants will now be taxed uniformly. The abatement rate for high-value homes is reduced, while low-cost housing retains exemptions.
Summary: The Finance Bill 2013 proposes changes to life insurance policy eligibility for individuals with disabilities or certain ailments. The Finance Minister announced in the Union Budget that the permissible premium rate will increase from 10% to 15% of the sum assured for these cases. This adjustment applies to policies issued on or after April 1, 2013.
Summary: The Finance Minister announced the 2013-14 budget, providing relief to the readymade garment industry by restoring zero excise duty for the cotton and spun yarn sectors. Handmade carpets and textile floor coverings of coir or jute will also be excise duty-free. The shipbuilding industry will benefit from an excise duty exemption on ships and vessels. To increase revenue, the excise duty on cigarettes, cigars, and SUVs will rise, with SUVs registered as taxis exempt from the increase. Expensive mobile phones will face a 6% excise duty, while those under Rs. 2000 will remain at 1%. The excise duty on marble and silver has been adjusted, and MRP-based assessment will be used for branded traditional medicaments.
Summary: The Finance Minister emphasized the necessity of increasing the Tax GDP ratio during the Union Budget presentation. In the fiscal year 2011-12, the ratio was 5.5 percent for direct taxes and 4.4 percent for indirect taxes, among the lowest for large developing nations, which is insufficient for inclusive and sustainable development. The Minister highlighted that the Tax GDP ratio had reached a peak of 11.9 percent in 2007-08, and there is a need to achieve similar levels in the short term to ensure adequate resource mobilization.
Summary: A regulatory authority for the road sector will be established to address challenges such as financial stress, construction risks, and contract management issues, as announced by the Finance Minister in the Budget speech. This independent body aims to remove bottlenecks in road projects. The government plans to award 3,000 kilometers of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan, and Uttar Pradesh within the first half of the fiscal year 2013-14.
Summary: The Finance Bill 2013 aims to establish equal taxation for IDF-Mutual Funds distributing income and IDF-NBFCs paying interest to non-residents, setting a tax rate of 5 percent on such income or interest. Additionally, the Finance Minister announced that investor protection funds created by depositors to safeguard the interests of beneficial owners will be exempt from income tax.
Summary: The Finance Bill 2013 proposes an exemption from income tax for Securitisation Trusts, as announced by the Finance Minister in the Union Budget. This measure aims to enable financial institutions to securitise assets via special purpose vehicles. Tax will be imposed only during the income distribution phase by the Securitisation Trust, with a 30% rate for companies and 25% for individuals or Hindu Undivided Families (HUF). Investors receiving income from the Securitisation Trust will not face additional tax.
Summary: The Finance Minister announced measures to boost investment in India's infrastructure sector, projecting an investment of Rs 55,00,000 crore in the 12th Plan. Efforts will focus on attracting both domestic and foreign investors by improving policy communication and reducing regulatory burdens. Infrastructure Debt Funds (IDFs) will be promoted to provide long-term low-cost debt, and tax-free bonds will be issued to raise funds. The India Infrastructure Finance Corporation Ltd, in collaboration with the Asian Development Bank, will enhance credit for infrastructure companies. Additionally, partnerships with multilateral banks will support regional connectivity projects, particularly in the North Eastern States. The Rural Infrastructure Development Fund will see an increased corpus, with funds allocated for agricultural storage facilities.
Summary: The Finance Minister proposed several administrative measures to enhance tax regime efficiency, announced during the Union Budget presentation. These measures include expanding the scope of annual information returns, increasing the e-payment facility through more banks, extending the refund banker system for refunds over Rs.50,000, and making e-filing mandatory for more taxpayer categories. The Income Tax Department is advancing towards technology-based processing, highlighted by the establishment of Central Processing Cells in Bengaluru and Vaishali, Ghaziabad. Additionally, a fifth large taxpayer unit is set to open in Kolkata.
Summary: The Finance Minister announced a budget allocation of Rs. 9,000 crore for the first installment of CST compensation to states, aiming to advance the implementation of the Goods and Services Tax (GST) regime. Recent discussions with state finance ministers suggest broad agreement on the necessity of a constitutional amendment and GST law. The Finance Minister urged state cooperation to facilitate a significant tax reform. The proposed tax measures in the 2013-14 budget are expected to generate Rs. 13,300 crore from direct taxes and Rs. 4,700 crore from indirect taxes.
Summary: The budget proposes tax measures to generate Rs. 18,000 crore, including Rs. 13,300 crore from direct taxes and Rs. 4,700 crore from indirect taxes. Key changes include a Rs. 2,000 relief for taxpayers in the Rs. 2-5 lakh bracket, a 10% surcharge on incomes over Rs. 1 crore, and increased surcharges on companies. Indirect tax adjustments raise duties on luxury goods, SUVs, and tobacco products. A Tax Administration Reforms Commission will be established, and the Goods and Services Tax (GST) law will be pursued through constitutional amendments. The Voluntary Compliance Encouragement Scheme is introduced for service tax defaulters.
Summary: The Finance Minister announced plans to develop a public-private partnership (PPP) policy framework with Coal India Limited to boost domestic coal production and reduce reliance on imports. Despite having substantial coal reserves, India imported over 100 million tonnes of coal from April to December 2012, with projections reaching 185 million tonnes by 2016-17. This initiative aims to ensure adequate coal supply for power producers and consumers. Additionally, the government has approved a financial restructuring scheme for DISCOMS to revitalize the power sector, urging state governments to quickly implement restructuring plans and benefit from the scheme.
Summary: The Delhi Mumbai Industrial Corridor (DMIC) project is advancing, with plans for seven new cities finalized. Construction of smart industrial cities in Dholera, Gujarat, and Shendra Bidkin, Maharashtra, will commence in 2013-14. The Indian government, supported by Japan, is committed to funding the project as needed. Concurrently, the Department of Industrial Policy and Promotion and the Japan International Cooperation Agency are developing the Chennai Bengaluru Industrial Corridor in collaboration with Tamil Nadu, Andhra Pradesh, and Karnataka governments. Preparatory work has also begun on the Bengaluru Mumbai Industrial Corridor.
Summary: The Finance Minister announced measures to boost household savings and economic growth. The Rajiv Gandhi Equity Savings Scheme will be liberalized, allowing first-time investors to invest in mutual funds and listed shares over three years, with an increased income limit of Rs. 12,00,000. Additionally, first-time homebuyers taking loans up to Rs. 25,00,000 between April 2013 and March 2014 can claim an extra interest deduction of Rs. 100,000. To protect savings from inflation, new instruments like Inflation Indexed Bonds are proposed, particularly benefiting the poor and middle classes. These initiatives aim to shift savings from gold to financial instruments.
Summary: The government plans to introduce a 15 percent investment allowance for companies making high-value investments of Rs. 100 crore or more in plant and machinery from April 1, 2013, to March 31, 2015. This initiative aims to attract new investments and expedite project implementation, supplementing existing depreciation rates. The policy is expected to benefit small and medium enterprises significantly. Additionally, to support the National Electronics Policy 2012, the government will offer incentives to semiconductor wafer fab manufacturing, including zero customs duty on plant and machinery, to boost electronics manufacturing in India.
Summary: The Cabinet Committee on Investment (CCI) has been established to expedite the implementation of high-end projects, particularly in the industrial and manufacturing sectors, which face regulatory hurdles. The Finance Minister highlighted this initiative during a budget speech, emphasizing the need to revive investment. The CCI is tasked with monitoring investment proposals and projects, including those stalled, to eliminate bottlenecks and accelerate progress. Two meetings have already been conducted, resulting in decisions on several oil, gas, power, and coal projects, with more projects to be addressed soon.
Summary: The Finance Minister announced that the work on the Direct Taxes Code (DTC) is ongoing, aiming to create a new code aligned with international standards rather than amending the existing Income-Tax Act of 1961. During the Union Budget presentation, it was noted that the Standing Committee on Finance has submitted its report, which is currently under review by the Ministry of Finance. The Minister intends to reintroduce the Bill to the House before the Budget Session concludes.
Summary: The Finance Minister announced several changes in customs duties to boost exports and encourage domestic production. The duty on machinery for leather and leather goods manufacturing was reduced to 5%, and the duty on pre-forms of precious stones was cut to 2%. Export duty on de-oiled rice bran oil cake was removed to enhance competitiveness. To promote local production, the duty on Set Top Boxes was doubled to 10%, and the duty on raw silk was tripled to 15%. A new export duty was introduced on ilmenite, and duties on steam and bituminous coal were equalized at 2% customs duty and 2% CVD.
Summary: The Finance Bill 2013 proposes that the modified provisions of the General Anti-Avoidance Rules (GAAR) will take effect from April 1, 2016. Initially introduced in the Finance Act 2012, GAAR faced numerous objections, prompting the formation of an expert committee to consult stakeholders and finalize guidelines. After reviewing the committee's report, the government announced decisions on January 14, 2013, which were well-received. These decisions are now being incorporated into the Income-Tax Act, maintaining the core intent and purpose of GAAR.
Summary: The Finance Bill 2013 proposes a limited introduction of the Commodities Transaction Tax (CTT), applying a 0.01% tax on non-agricultural commodities futures contracts, similar to equity futures. The tax will be deductible if the income is part of business income, and trading in commodity derivatives will not be treated as speculative. The Finance Minister emphasized the similarity between derivative trading in securities and commodities markets, with the primary difference being the underlying asset. Agricultural commodities will remain exempt from this tax.
Summary: The Union Budget presentation confirmed that the peak rate of basic customs duty for non-agricultural products remains at 10%. Additionally, there will be no changes to the normal excise duty rate of 12% and the service tax rate of 12%. These rates are maintained as part of the current fiscal policy, as announced by the Finance Minister in the Lok Sabha.
Summary: The Finance Bill 2013-14 proposes a reduction in Securities Transaction Tax (STT) rates for specific transactions. The Finance Minister announced the following changes: for equity futures, the rate is reduced from 0.017% to 0.01%; for mutual fund and exchange-traded fund (ETF) redemptions at fund counters, from 0.25% to 0.001%; and for mutual fund and ETF purchases/sales on exchanges, from 0.1% to 0.001%, applicable only to the seller. These reductions aim to stabilize market transactions by adapting to market changes and shifts.
Summary: The Union Budget for 2013-14 focuses on inclusive and sustainable development. Key initiatives include the Nirbhaya Fund for women's safety, the establishment of India's first Women's Bank, and Rs. 1,000 crore for youth skill development. The Direct Benefit Transfer Scheme will be expanded nationwide. Fiscal deficit is set at 4.8% of GDP, with significant increases in social sector allocations, including rural development, education, and health. Infrastructure funding will be supported through Infrastructure Debt Funds and tax-free bonds. New taxes are expected to yield Rs. 18,000 crore, with increased costs for tobacco, SUVs, and mobile phones. A 10% surcharge is imposed on high-income individuals.
Summary: The 2013-14 budget presented in the Lok Sabha increased the agricultural credit target to Rs. 7 lakh crores from Rs. 5.75 lakh crores. The Interest Subvention Scheme for short-term crop loans now includes loans from private sector scheduled commercial banks, in addition to public sector banks, regional rural banks, and cooperative banks. This scheme allows farmers to secure loans at 4 percent per annum if repaid on time.
Summary: The 2013-14 budget includes a proposal for matching equity grants of up to Rs. 10 lakh for registered Farmer Producer Organisations (FPOs) to help them secure working capital from financial institutions. An allocation of Rs. 50 crore is designated for this initiative. Additionally, a Credit Guarantee Fund with an initial corpus of Rs. 100 crore will be established in the Small Farmers Agri Business Corporation. State Governments are encouraged to amend the APMC Act to support these FPOs, which serve as aggregators of farm produce and link farmers directly to markets.
Summary: The government plans to revise criteria for determining regional backwardness by incorporating human development indicators such as per capita income into future planning and fund allocation. During the 2013-14 budget presentation, the Finance Minister proposed allocating Rs. 11,500 crores to the Backward Regions Grant Fund, a key source of gap funding, and an additional Rs. 1,000 crores for districts affected by Left Wing Extremism. The Fund will include a State Component for regions such as Bihar, Bundelkhand, West Bengal, the KBK districts of Odisha, and 82 districts under the Integrated Action Plan.
Summary: The Finance Minister's 2013-14 budget emphasizes a green revolution with a proposed allocation of Rs. 1000 crore to boost rice production in Eastern States like Assam and Bihar. A Rs. 500 crore outlay aims to diversify crops in original green revolution states facing yield stagnation and water issues. The budget allocates Rs. 9954 crore to the Rashtriya Krishi Vikas Yojana and Rs. 2250 crore to the National Food Security Mission. Additional initiatives include the Integrated Watershed Programme, Nutri-Farms, and new institutes for biotic stress management and agricultural biotechnology. A Rs. 75 crore pilot scheme will rejuvenate coconut gardens in Kerala and the Andaman Nicobar Islands.
Summary: The Finance Minister announced an additional allocation of Rs. 10,000 crore for the National Food Security Act's incremental costs, supplementing the existing food subsidy budget. This proposal was part of the 2013-14 budget presented in the Lok Sabha. The Finance Minister emphasized the importance of passing the National Food Security Bill, equating food security with fundamental human rights like education and healthcare.
Summary: The government aims to skill 50 million people during the Twelfth Plan period, with a focus on youth, by utilizing funds from the National Rural and Urban Livelihood Missions. In the 2013-14 budget, the Finance Minister highlighted the role of the National Skill Development Corporation in setting training standards. To motivate participation, certified trainees will receive a monetary reward averaging Rs. 10,000. The initiative, supported by Rs. 1,000 crore, will draw from various development funds, aiming to boost employability and productivity among the youth.
Summary: The Union Budget for 2013-14, presented by the Finance Minister, focuses on achieving higher economic growth through inclusive and sustainable development. Key measures include increasing allocations to crucial sectors, promoting investments and savings, and maintaining the fiscal deficit at 4.8% of GDP. The budget addresses concerns such as inflation, government expenditure, and the current account deficit. Initiatives include the Nirbhaya Fund for women's safety, youth training schemes, and nationwide rollout of Direct Benefit Transfer schemes. Significant allocations are made for rural development, agriculture, education, and health. Infrastructure investment is encouraged, with plans for industrial corridors and new ports. Tax reforms include relief for low-income taxpayers and increased surcharges on high-income individuals and companies.
Summary: The pre-budget 2013 recommendations by ICAI focus on various aspects of indirect taxation, particularly service tax, CENVAT credit rules, central excise duty, and customs duty. Key suggestions include refining definitions to reduce litigation, expanding exemptions for certain services, and aligning service tax laws with international practices. The recommendations also propose procedural simplifications, such as increasing the basic exemption limit for small service providers and streamlining the process for refunds and credits. Additionally, ICAI suggests enhancing the accountability of tax collectors, improving training for departmental personnel, and introducing measures to reduce litigation and enhance revenue collection.
Summary: Effective April 1, 2013, several changes are made to service tax exemptions. Exemptions for auxiliary educational services and renting property by educational institutes are removed. Copyright exemptions for films now apply only to cinema hall exhibitions. Non-air-conditioned restaurants no longer need an alcohol license for exemptions. Transportation exemptions are harmonized, excluding petroleum, postal, and household goods by rail or vessel, but allowing agricultural and defense items for goods transportation agencies. Exemptions for public vehicle parking and government aircraft maintenance are withdrawn. Charitable activity definitions change, reducing benefits for certain services. Construction abatement is reduced from 75% to 70% effective March 1, 2013.
Summary: Section 91 introduces the power for the Commissioner of Central Excise to authorize officers, at least at the rank of Superintendent, to arrest individuals for certain offenses, notably the non-payment of collected service tax. This provision is considered draconian by commentators, as it significantly expands the enforcement powers within the service tax framework.
Summary: Recent legislative changes in Central Excise and Customs laws include amendments to the Customs Act, 1962, and the Central Excise Act, 1944. The definition of "activity" for advance rulings is expanded to include new businesses. Provisions now allow resident public limited companies to seek advance rulings. Certain customs offences are now non-bailable, and similar changes apply to excise and service tax laws. Amendments also impose a 365-day limit on stay orders by tribunals and increase monetary limits for tribunal cases. Other updates involve electronic filing requirements, changes in duty evasion thresholds, and adjustments to refund and notice procedures.
Summary: The news outlines changes in excise duty rates across various chapters of the Central Excise Tariff Act, 1985. Key changes include the exemption of tapioca starch and sago from excise duty, deletion of peanut butter's sub-heading, and an increase in excise duty on cigarettes and marble slabs. Ayurvedic and other traditional medicaments are now assessed based on MRP with a 35% abatement. Excise duty on mobile phones priced above Rs. 2000 is increased to 6%, while duty on SUVs rises to 30%. Handmade carpets and certain vessels are fully exempted, and concessions for hybrid vehicle parts are extended.
Summary: The customs duty rates on various goods have been revised. The basic customs duty on hazel nuts and de-hulled oat grain is reduced, while peanut butter is reclassified under the Harmonised System. Export duty exemptions are applied to raw sugar and de-oiled rice bran oil cake. The duty on bituminous and steam coal is standardized, and the duty on raw silk is increased. Changes in duty rates also affect vehicles, with increased duties on luxury cars, motorcycles, and imported old cars. Baggage rules are updated, raising duty-free limits for jewelry and personal items for passengers and crew members.
Summary: Amendments to Chapter V of the Finance Act, 1994, propose changes to service tax regulations. Key updates include modifications to definitions related to vocational education and manufacturing processes, introduction of penalties for company officers, and new sections addressing arrest powers and cognizable offences. Retrospective exemptions are granted to Indian Railways for services prior to July 2012. The taxable portion for construction services is rationalized, and several exemptions are revised or withdrawn, including those for certain educational and transport services. An amnesty scheme is introduced for non-compliant service providers, and the scope of advance rulings is expanded.
Notifications
Central Excise
1.
12/2013 - dated
1-3-2013
-
CE
Seeks to amend notification No. 12/2012 – CE, dated the 17th March, 2012, so as to make necessary amendments in the specified entries thererin.
Summary: The Government of India has issued Notification No. 12/2013-Central Excise to amend Notification No. 12/2012-Central Excise, dated March 17, 2012. The amendments include extending the validity of certain provisions to March 31, 2015, and introducing new entries for various goods such as tapioca starch, peanut butter, and mobile handsets. Changes also involve adjustments in excise duty rates for specific items like motor vehicles and silver. Certain serial numbers and entries have been omitted, while new ones have been added to address various goods and manufacturing processes.
2.
11/2013 - dated
1-3-2013
-
CE
Seeks to amend notification No.30/2004-CE, dated the 9th July, 2004, so as to provide ‘zero excise duty route’ to branded ready- made garments and made-ups.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 11/2013-Central Excise, dated March 1, 2013, to amend Notification No. 30/2004-Central Excise from July 9, 2004. This amendment introduces a 'zero excise duty route' for branded ready-made garments and made-ups by substituting the entry against serial number 16 in the notification's table with "All goods." This change is enacted under the Central Excise Act, 1944, and the Additional Duties of Excise Act, 1957, to serve the public interest.
3.
10/2013 - dated
1-3-2013
-
CE
Seeks to amend notification No. 2/2011 - CE, dated the 1st March, 2011, so as to omit the entry relating to handmade carpets and other carpets and floor coverings of Jute and Coir.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 10/2013-Central Excise, dated March 1, 2013, to amend Notification No. 2/2011-Central Excise. This amendment involves the removal of serial number 37 and its related entries, which pertain to handmade carpets and other carpets and floor coverings made of jute and coir, from the exemption list. This decision is made under the authority granted by the Central Excise Act, 1944, and is deemed necessary in the public interest.
4.
09/2013 - dated
1-3-2013
-
CE
Seeks to amend notification No. 1/2011- CE, dated the 1st March, 2011, so as to omit the entry relating to specified goods.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 9/2013-Central Excise dated March 1, 2013, to amend Notification No. 1/2011-Central Excise. This amendment omits specific entries, namely serial numbers 72, 111, 112, 113, and 114, from the original notification. This change is made under the authority of section 5A of the Central Excise Act, 1944, in the interest of public welfare. The original notification was published on March 1, 2011, and had previously been amended on March 17, 2012.
5.
08/2013 - dated
1-3-2013
-
CE
Seeks to amend notification No. 7/2012- CE, dated the 17th March, 2012, so as to prescribe 6% rate of excise duty to branded readymade garments and made ups of cotton, not containing any other textile materials.
Summary: The Government of India has amended Notification No. 7/2012-Central Excise to set a 6% excise duty rate on branded readymade garments and made-ups of cotton that do not contain other textile materials. This amendment clarifies that goods made from cotton fabrics, even if they include non-cotton items like sewing threads, cords, labels, elastic tapes, and zip fasteners, are subject to this duty rate. The amendment is issued under the authority of the Central Excise Act, 1944, and is deemed necessary in the public interest.
6.
07/2013 - dated
1-3-2013
-
CE
Seeks to provide exemption to intermediate goods captively consumed in the manufacture of goods by units availing Area Based Exemption in the State of Himachal Pradesh and Uttarakhand
Summary: The Government of India issued Notification No. 7/2013-Central Excise, dated March 1, 2013, providing an exemption from excise duty for intermediate goods that are captively consumed in the manufacture of final products by units availing Area Based Exemption in Himachal Pradesh and Uttarakhand. The exemption applies to goods specified in the annexures of prior notifications No. 49/2003 and No. 50/2003, with the duty rate being nil. This notification was rescinded by Notification No. 9/2017-Central Excise, effective July 1, 2017.
7.
06/2013 - dated
1-3-2013
-
CE
Seeks to rescind notification No. 20/2011- CE, dated the 24th March, 2011 relating to 1% excise duty on Mobile handsets including Cellular phones.
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has issued Notification No. 6/2013-Central Excise, dated March 1, 2013, to rescind Notification No. 20/2011-Central Excise, which imposed a 1% excise duty on mobile handsets, including cellular phones. This action is taken under the authority of the Central Excise Act, 1944, and is deemed necessary in the public interest. The rescission applies to future actions, while past actions under the previous notification remain unaffected.
8.
05/2013 - dated
1-3-2013
-
CE
Seeks to amend notification No. 17/2007- CE, dated the 1st March, 2007 so as to increase the compound levy rate of duty for Stainless pattis/pattas from Rupees Thirty Thousand to Rupees Forty Thousand per cold rolling machine, per month.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 5/2013-Central Excise, amending Notification No. 17/2007-Central Excise. This amendment increases the compound levy rate of duty on stainless pattis/pattas from thirty thousand rupees to forty thousand rupees per cold rolling machine per month. The amendment is made under the authority of Rule 15 of the Central Excise Rules, 2002, and is intended to be published in the Gazette of India, Extraordinary.
9.
04/2013 - dated
1-3-2013
-
CE (NT)
Seeks to notify “the resident public limited company” as a class of persons under the sub-clause (iii) of clause (c) of section 23A of Central Excise Act, 1944.
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, issued Notification No. 4/2013-Central Excise (N.T.) on March 1, 2013. This notification designates "the resident public limited company" as a class of persons under sub-clause (iii) of clause (c) of section 23A of the Central Excise Act, 1944. A "public limited company" is defined as per the Companies Act, 1956, including private companies that become public under section 43A. "Resident" is defined according to the Income-tax Act, 1961, as it applies to companies.
10.
03/2013 - dated
1-3-2013
-
CE (NT)
Seeks to amend the notification No. 23/2004-CE (N.T.), dated 10th September, 2004, so as to provide a mode of recovery of CENVAT credit wrongly taken, under the CENVAT Credit Rules, 2004.
Summary: The Government of India has issued Notification No. 3/2013-Central Excise (N.T.) to amend the CENVAT Credit Rules, 2004. This amendment provides a mechanism for recovering CENVAT credit that has been wrongly availed. Specifically, it inserts an explanation in rule 3, stating that if a manufacturer or service provider fails to pay the required amount under sub-rules (5), (5A), and (5B), the recovery will be conducted as per the provisions of rule 14. This amendment comes into effect upon its publication in the Official Gazette.
11.
02/2013 - dated
1-3-2013
-
CE (NT)
Seeks to further amend the notification No. 4/2002-CE (N.T.), dated 1st March, 2002 so as to make provision for interest on refund, subject to sub-rule (6), arising out of an order of final assessment under sub-rule (3) of rule 7 of the Central Excise Rules, 2002.
Summary: The notification amends the Central Excise Rules, 2002, specifically sub-rule (5) of rule 7, to introduce provisions for interest on refunds. This applies when a refund is due following a final assessment order under sub-rule (3), subject to sub-rule (6). The interest on such refunds will be provided as per section 11BB of the Central Excise Act, 1944. These amendments, titled the Central Excise (Amendment) Rules, 2013, are effective from the date of their publication in the Official Gazette.
12.
01/2013 - dated
1-3-2013
-
CE (NT)
Seeks to amend notification No. 49/2008- CE (N.T.), dated the 24th December, 2008, so as to prescribe MRP based assessment with 35% abatement thereon, for branded medicaments used in Ayurvedic, Unani, Sidha, Homeopathic or Bio-Chemic systems and to align the tariff lines relating to Pressure Cooker with HS 2012 .
Summary: The notification amends the previous Central Excise Notification No. 49/2008 to implement MRP-based assessment with a 35% abatement for branded medicaments used in Ayurvedic, Unani, Siddha, Homeopathic, or Bio-Chemic systems. It also aligns tariff lines for pressure cookers with HS 2012. Amendments include changes to serial numbers in the notification's table, specifying goods under certain classifications and defining "brand name" for medicaments. The notification aims to regulate excise duties on specified goods, ensuring compliance with authoritative pharmacopoeia and trade connections.
Customs
13.
15/2013 - dated
1-3-2013
-
Cus
Seeks to amend notification No.27/2011-Customs, dated the 1st March, 2011, so as to specify effective rates of export duty on specified goods.
Summary: The Government of India has issued Notification No. 15/2013-Customs, amending Notification No. 27/2011-Customs to specify effective export duty rates on certain goods. The amendments include: inserting a new entry for raw, white, or refined sugar with a nil duty rate; changing the duty rate for an existing entry from 10% to nil; and adding new entries for various forms of bauxite and ilmenite with specified duty rates of 10% and 5%. These changes are made under the authority of the Customs Act, 1962, and are deemed necessary in the public interest.
14.
14/2013 - dated
1-3-2013
-
Cus
Seeks to amend notification No. 146/94-Customs, dated the 13th July, 1994, so as to exempt “Trophy” when imported into India by the National Sports Federation or any other registered sports body, for being awarded to the winning team in the international tournament to be held in India.
Summary: The Government of India has amended notification No. 146/94-Customs to exempt trophies imported by recognized National Sports Federations or registered sports bodies for international tournaments held in India from customs duties. This exemption applies if the trophies are awarded to winning teams. Conditions include providing necessary documents such as the manufacturer's invoice, a photograph of the trophy, and a declaration of the import's purpose. Additionally, the trophy must be retained until the event concludes, and if awarded to a non-Indian team, it must be exported. The amendment ensures trophies are not disposed of improperly.
15.
13/2013 - dated
1-3-2013
-
Cus
Seeks to rescind the notifications No. 19/2012-Customs, dated the 17th March, 2012, and No. 20/2012-Customs, dated the 17th March, 2012
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, issued Notification No. 13/2013-Customs on March 1, 2013, to rescind two previous notifications: No. 19/2012-Customs and No. 20/2012-Customs, both dated March 17, 2012. This action is taken under the authority of the Customs Act, 1962, and the Customs Tariff Act, 1975, in the public interest. The rescission applies except for actions completed or omitted prior to this notification.
16.
12/2013 - dated
1-3-2013
-
Cus
Seeks to amend notification No. 12/2012-Customs, dated the 17th March, 2012, so as to make necessary changes in the specified entries therein.
Summary: The Government of India issued Notification No. 12/2013-Customs, amending Notification No. 12/2012-Customs dated March 17, 2012. The amendments involve changes to the tariff rates and descriptions of various goods, including the insertion of new serial numbers and entries for items like de-hulled oat grain, peanut butter, bituminous coal, and pre-forms of precious stones. Adjustments also include modifications to conditions related to aircraft servicing and maintenance, and updates to List 29 with new machinery items. These changes are made in the public interest under the Customs Act, 1962.
17.
11/2013 - dated
1-3-2013
-
Cus
Seeks to amend notification No. 9/2012-Customs, dated the 9th March, 2012, so as to revise the variation limit in respect to height and circumference in case of re-import of cut and polished diamond
Summary: The Government of India has amended Notification No. 9/2012-Customs to adjust the permissible variation limits for the re-import of cut and polished diamonds. The amendment allows a variance of up to +/-0.01 mm in height and circumference and +/-1 cent in weight. Additionally, the definition of "Foreign Trade Policy" has been updated to refer to the policy published by the Ministry of Commerce and Industry, as amended. This amendment, issued under the Customs Act, 1962, aims to align with public interest considerations.
18.
10/2013 - dated
1-3-2013
-
Cus
Seeks to amend notification No. 75/2005-Customs, dated the 22nd July, 2005 so as to make editorial changes in column (2) of S. No. 118, to align it with HS 2012
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 10/2013-Customs to amend Notification No. 75/2005-Customs dated 22nd July 2005. This amendment involves editorial changes to align with the Harmonized System (HS) 2012 by substituting the entry in column (2) for serial number 118 with "2920 90 99." This change is made under the authority of section 25 of the Customs Act, 1962, and is deemed necessary in the public interest. The amendment was published in the Gazette of India on 1st March 2013.
19.
09/2013 - dated
1-3-2013
-
Cus
Seeks to amend notification No. 69/2004-Customs, dated the 9th July, 2004, so as to review the existing entries therein and make necessary changes.
Summary: The Government of India, through the Ministry of Finance, issued Notification No. 9/2013-Customs on March 1, 2013, to amend Notification No. 69/2004-Customs dated July 9, 2004. The amendments involve changes to specific entries in the notification's table. Certain serial numbers and their entries are omitted, while others are substituted with updated descriptions. These changes pertain to goods classified under specific sub-headings and are aligned with previous notifications, particularly Notification No. 12/2012-Customs. The amendments are made under the authority of the Customs Act, 1962, and the Finance Act, 2004, to serve the public interest.
20.
25/2013 - dated
1-3-2013
-
Cus (NT)
seeks to further amend notification No. 30/98-Customs (N.T.), dated 2nd June, 1998, so as to raise the value limit of Jewellery allowed duty free to an Indian passengers who has been residing abroad for more than one year.
Summary: The Indian government has amended the Baggage Rules, 1998, under notification No. 25/2013-Customs (N.T.), effective from March 1, 2013. The amendment increases the duty-free allowance for jewelry brought by Indian passengers residing abroad for over a year. The new limits are up to INR 50,000 for gentlemen and INR 100,000 for ladies, replacing the previous limits of INR 10,000 and INR 20,000, respectively. This change is intended to align with the evolving needs of travelers and facilitate smoother customs processes for returning Indian residents.
Service Tax
21.
04/2013 - dated
1-3-2013
-
ST
Seeks to notify “the resident public limited company” as a class of persons under sub-clause (iii) of clause (b) of section 96A of the Finance Act, 1994.
Summary: The Government of India, through the Ministry of Finance, issued Notification No. 4/2013 under the Service Tax provisions, effective from March 1, 2013. This notification designates "resident public limited companies" as a class of persons under sub-clause (iii) of clause (b) of section 96A of the Finance Act, 1994. The term "public limited company" aligns with the definition in the Companies Act, 1956, including private companies that have transitioned to public companies under section 43A. The term "resident" follows the definition in the Income-tax Act, 1961, as applicable to companies.
22.
03/2013 - dated
1-3-2013
-
ST
Seeks to amend notification No. 25/2012- Service Tax, dated the 20th June, 2012, so as to make necessary amendments in the specified entries therein.
Summary: The Government of India has issued Notification No. 3/2013 to amend Notification No. 25/2012-Service Tax, dated June 20, 2012. The amendments include changes to specific entries, such as modifying the wording in entry 9, revising entry 15 to address services related to copyright, and altering entry 19 concerning food and beverage services. Entry 20 items (a), (d), and (e) are omitted, and entry 21 is updated for goods transport agency services. Entry 24 is omitted, and entry 25 is revised. These changes will take effect on April 1, 2013.
23.
02/2013 - dated
1-3-2013
-
ST
Seeks to amend notification No. 26/2012- Service Tax, dated the 20th June, 2012, so as to make necessary amendments in the specified entries therein.
Summary: The Government of India, through the Ministry of Finance, has amended Notification No. 26/2012-Service Tax, dated June 20, 2012. The amendment, effective March 1, 2013, modifies entry 12 in the notification. It pertains to the service tax on construction services, specifically for complexes, buildings, or civil structures intended for sale, with exceptions when the entire payment is received post-completion certificate issuance. The amendment specifies conditions regarding CENVAT credit and land value inclusion. Different tax rates are applied based on residential unit size and price, with 25% for units under 2000 square feet or priced below one crore rupees, and 30% for others.
SEZ
24.
S.O. 342(E) - dated
6-2-2013
-
SEZ
Proposed Under Section 3 of the Special Economic Zones Act 2005(28 to 2005), (hereinafter referred to as the said act), to set up a multi product Special Economic Zone
Summary: M/s. Kakinada SEZ Private Limited proposed to establish a multi-product Special Economic Zone (SEZ) in Ponnada, Mulapeta, and Ramannakkapeta villages in Andhra Pradesh under the Special Economic Zones Act, 2005. The Central Government approved this proposal, confirming compliance with legal requirements, and designated the area as an SEZ. An Approval Committee was constituted, comprising officials from various government departments and representatives from the developer, to oversee the SEZ's operations. The SEZ was also designated as an Inland Container Depot effective February 6, 2013, under the Customs Act, 1962.
Circulars / Instructions / Orders
Service Tax
1.
D.O.F. No. 334/3/2013-TRU - dated
28-2-2013
Union Budget 2013: Changes in Service Tax-reg.
Summary: The Union Budget 2013 introduced several changes to the service tax regime aimed at providing stability and enhancing compliance. Key legislative changes include revisions to the Finance Act, 1994, such as updates to the negative list and penalties under sections 73 and 77(a). Exemptions have been adjusted, affecting educational services, copyrights, and transportation, among others. The abatement for construction services is reduced, and a Voluntary Compliance Encouragement Scheme is proposed for tax defaulters. Additionally, the Advance Ruling Authority's benefits are extended to resident public limited companies. These changes will take effect upon the enactment of the Finance Bill, 2013.
Income Tax
2.
Memorandum-1 - dated
28-2-2013
FINANCE BILL, 2013 - PROVISIONS RELATING TO DIRECT TAXES
Summary: The Finance Bill, 2013 proposes amendments to direct tax laws, including the Income-tax Act, Wealth-tax Act, and Finance (No.2) Act, 2004. Key changes include maintaining existing income tax rates for the 2013-14 assessment year, introducing a surcharge for companies with income exceeding one crore rupees, and continuing education cess. The Bill proposes a new Commodities Transaction Tax, increases tax on royalties and technical fees for non-residents to 25%, and offers incentives for new manufacturing investments. It also extends tax benefits for the power sector, introduces a rebate for individuals with income up to five lakh rupees, and provides deductions for interest on home loans. Various anti-tax avoidance measures, including GAAR, are outlined, with implementation deferred to 2016. The Bill aims to widen the tax base, rationalize tax policies, and promote socio-economic growth.
FEMA
3.
321 /03.10.42 /2012-13 - dated
27-2-2013
Know Your Customer (KYC) norms /Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002
Summary: The circular outlines the obligations of banking and financial institutions under the Prevention of Money Laundering Act (PMLA), 2002, specifically regarding the identification and verification of beneficial owners. Institutions must identify beneficial owners by verifying individuals who control a client through ownership or other means. For non-individual clients, beneficial owners are those with significant ownership interests or control. For trusts, institutions must identify key figures like settlors, trustees, and beneficiaries with significant interest. Companies listed on stock exchanges or their majority-owned subsidiaries are exempt from these requirements. Non-Banking Financial Companies (NBFCs) are advised to update their KYC policies accordingly.
Customs
4.
D.O.F.No.334/ 3/2013-TRU - dated
28-2-2013
Important changes in respect of Customs and Central Excise duty and legislative changes
Summary: The circular outlines significant changes in Customs and Central Excise duties as proposed in the Finance Bill, 2013, effective from March 1, 2013. It includes tariff and non-tariff notifications for both Customs and Central Excise, detailing reductions and increases in duty rates on various goods such as hazelnuts, oat grains, bituminous coal, and raw silk. The document also highlights legislative changes, including amendments to advance ruling provisions, arrests, prosecutions, and procedural adjustments in the Customs Act, 1962, and Central Excise Act, 1944. The circular emphasizes smooth implementation, error avoidance, and stakeholder guidance through interactive sessions.
Central Excise
5.
D.O.F.No.334/ 3/2013-TRU - dated
28-2-2013
Important changes in respect of Customs and Central Excise duty and legislative changes
Summary: The Finance Bill, 2013 introduces significant changes to Customs and Central Excise duties, effective from midnight of February 28/March 1, 2013. Key amendments include revised duty rates on various goods, such as reduced customs duty on hazelnuts and de-hulled oat grain, and increased duty on raw silk and certain vehicles. The bill also proposes legislative changes, including expanded definitions for advance rulings and amendments to arrest and prosecution provisions. Additionally, the duty-free limits under Baggage Rules are raised, and excise duty on certain items like cigarettes and mobile handsets is increased. Detailed changes are outlined in annexes accompanying the circular.
Highlights / Catch Notes
Indian Laws
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2013 Budget Brings Changes to Service Tax, Central Excise, Customs; New Compliance Rules and Tax Rate Adjustments Announced.
News : Budget 2013 – Notifications and Circulars – Service Tax, Central Excise and Customs
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Proposed changes in Finance Act 1994, Chapter V aim to streamline service tax processes and enhance compliance in India.
News : SERVICE TAX - AMENDMENTS PROPOSED IN CHAPTER V OF THE FINANCE ACT, 1994
Case Laws:
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Income Tax
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2013 (2) TMI 630
Deduction u/s 80IB(10) - Housing project - HC uphold the order of ITAT in which ITAT directed the A.O. to look into the agreement entered into by the assessee with land owner and decide whether the assessee has in fact purchased the land for a fixed consideration from the land owner and assessee had developed the housing project at its own cost and risk involved in the project, in respect of the issue regarding deductions u/s. 80IB(10) r.w.s. 80IB(1) as claimed by the assessee.
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2013 (2) TMI 629
Revenue or capital expenditure - amount spent for acquisition of membership of the clubs - held that:- the concurrent finding arrived at by the appellate authority and the Income-tax Appellate Tribunal that the expenditure incurred for acquisition of membership of the club is revenue expenditure, is justified and cannot at all said to be perverse or arbitrary so as to call for interference in this appeal. - Decision of Apex Court in Empire Jute Co. Ltd.'s case [1980 (5) TMI 1 - SUPREME COURT] and decision of HC in CIT v. Wipro Systems [2009 (11) TMI 402 - KARNATAKA HIGH COURT] followed. - Decided in favor of assessee. Expenditure on ISO-9001 certificate - held that:- the certificate would only certify that the procedure followed by the assessee in the manufacture and the quality maintained during manufacture is in accordance with the standard prescribed. - held as revenue in nature - Decision in CIT v. Perot Systems TSI (India) Ltd. [2010 (9) TMI 108 - DELHI HIGH COURT] followed - Decided in favor of assessee.
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2013 (2) TMI 628
Reassessment - reopening after 4 years - notice u/s 148 - held that:- If the Legislature amends the provisions of the Act with retrospective effect, it cannot be said that there was failure on the part of the assessee to disclose fully and truly all material facts relevant for the purpose of assessment. - Decided in favor of assessee.
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2013 (2) TMI 627
Deduction u/s 37(1) - welfare expenses towards providing education to its employees' children & Payments to other educational institutions where the children of its employees were studying - held that:- matter remanded back in view of earlier decision in Sandur Manganese & Iron Ores Ltd. Versus Commissioner of Income-tax [2012 (9) TMI 765 - SUPREME COURT]. There is a difference between reim-bursement and contribution. If the Tribunal comes to the conclusion that the amount has been reimbursed, the quantified amount shall be certified by the chartered accountant of the assessee to enable the assessee to make a claim.
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2013 (2) TMI 626
Interest on monies borrowed for setting up sugar plant – assessee set up Ferro Alloys Plant in 1991 & sugar plant in 1995 - HC has [2008 (11) TMI 43 - HIGH COURT DELHI] uphold the decision of Tribunal that there is a unity of control and management, in respect of both plants and there is also intermingling of funds and dove-tailing of businesses - hence it cannot be said that the assessee had not commenced its business and hence, interest would have to be capitalized - financial charges i.e., interest is allowable as deduction u/s 36(1)(iii) - Appeal against the Decision of HC dismissed by the apex court in view of the concurrent findings recorded by the courts below. - In favor of assessee.
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2013 (2) TMI 625
Addition u/s 68 - cash credit - capacity and credit worthiness - held that:- in view of authoritative pronouncement of the Apex Court in ommissioner of Income Tax v. Lovely Exports (P) Ltd., [2008 (1) TMI 575 - SUPREME COURT OF INDIA], as also by the Division Bench in Jaya Securities Ltd. v. Commissioner of Income Tax, [2007 (5) TMI 552 - HIGH COURT OF ALLAHABAD] decided in favor of assessee.
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2013 (2) TMI 623
Deduction u/s 80-IB(11) - cold chain facilities - Integrated business of cold storage and cold transportation - held that:- it is not necessary that there should be facility of transportation along with the facility of cold storage to constitute a cold chain facility. The business of cold storage alone, without any transportation facility with refrigeration back to back upto consumption and, linking farmer and market also qualifies for deduction in terms of provisions of Section 80-1B (11) of the Act. The word "or" in the context here means and should be interpreted as disjunctive particle. The statute should be read in its ordinary, natural, and grammatical sense. - Decided in favor of assessee.
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2013 (2) TMI 622
Deduction u/s 80-IB(11) - cold chain facility - AO denied the benefit by stating that merely providing refrigerated storage facilities for potatoes cannot be regarded as an undertaking having 'cold chain facilities' within the meaning of Section 80-IB of the Act - held that:- Bare perusal of the aforesaid definition it is clear that "cold chain facility" means a chain of facilities for storage of agricultural produce under scientifically controlled conditions including refrigeration and other facilities necessary for the preservation of such produce. The words storage and transportation have been separated by using word 'or' as such both the facilities of storage and transportation at the same time was not necessary for falling within the definition of "cold chain facility" Business of the assessee is covered within the definition of "cold chain facility" under Section 80-IB (14) (aa) of the Act and the assessee was entitled for exemption under Section 80-IB of the Act.
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2013 (2) TMI 621
Income escaping assessment - notice u/s 147/148 - non mentioning of AY in the notice - assessee participated in the reassessment proceeding. - appeal was allowed in part by the CIT(A) against the order u/s 147 - validity of assessment u/s 292B and 292BB - held that:- No party can claim to have vested right in injustice being done because of some slip of pen, or omission causing no prejudice to anyone. The section is intended to ensure that an inconsequential technicality does not defeat justice. Nature of mistake will determine whether a return, order or proceeding is vitiated or not. The only defect which could be pointed out is that the assessment year was not mentioned in the reasons recorded by the Assessing Officer. Unless it is shown that assessee was misled by not mentioning the assessment year in the reasons recorded, we are of the view that if the reasons recorded relate to a particular year, the reassessment proceeding initiated relate to that particular year and the assessee participated in the reassessment proceeding without raising any objection, such an objection cannot be raised by the assessee at a subsequent stage of the proceeding. Order of the Tribunal cannot be sustained - Decided in favor of Revenue.
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Customs
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2013 (2) TMI 638
Import of used tyres - hazardous waste - confiscation - held that:- as per the United Nations Environmental Programme vis-à-vis Basel Convention regarding Pneumatic tyres, the lifetime of an original tyre casing must not exceed seven years. All the imported used tyres in these cases are 6+ years old and as per the reports available on record, these tyres cannot be made use of until and unless they are re-treaded and even after re-treading, they cannot be made use of for quite a long time. Therefore, naturally, these old tyres will shortly be a hazardous waste in our country. Writ appeals filed by the Customs are allowed. The respondents/importers are directed to send back the imports to the countries of origin at their own cost and expenditure immediately. The appellants are directed to take all steps necessary in this regard. Appellants to consider the requests of the respondents/importers for refund of any such fee or other charges they have paid for claiming the goods, as per rules, if any such request is made on behalf of the respondents/importers within two weeks of receipt of a copy of this order.
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Service Tax
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2013 (2) TMI 635
Whether the advances giving raise to tax demand has really suffered tax in subsequent period and disclosed in service tax returns filed - Held that:- From various documents enclosed to paper book it exhibits that the appellant has made effort to satisfy the authority below making reconciliation of the advance received with adjustment thereof towards taxable service received in future. But that does not pin point in which year and under which head that was adjusted filing returns under Finance Act, 1994. What that is required is that both sides should make effort to reconcile with reference to receipt and disclosure in the returns of relevant year to reach to a rational conclusion in respect of the amounts of the show cause notice. If any of the part of the advance attributable to taxable service and that did not form part of returns filed subsequently that amount shall be brought to tax without escapement. Law does not permit postponement of liability because of specific provision under section 67(3) of the Finance Act - remand the matter for proper reconciliation to serve interest of justice
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2013 (2) TMI 634
Job Work - Notification No. 8/2005-S.T., dated 1-3-2005 - It is pointed out that the benefit was denied on the ground that the ducts and other items fabricated by the appellant were not excisable goods covered by the first schedule to the Central Excise Tariff Act. - held that:- demand of service tax and education cess is not under any determinate head of taxable service. No breakup of the gross value for different categories mentioned in the impugned order is forthcoming. Apparently, the appropriate taxable service was not identified either in the show-cause notice or in the impugned order. A demand of service tax without correct classification of the taxable service is alien to the scheme of service tax levy. This apart, the learned Commissioner appears to have denied the benefit of the aforesaid notification on a ground which is not sustainable in law, given the parameters of the said notification. Activities otherwise includible within the ambit of ‘Business Auxiliary Service’ were excluded from the levy from 2004 onwards where such activities involved manufacture of excisable goods. For claiming the benefit of the notification, the assessee should be held to have provided the taxable service. - Stay granted.
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2013 (2) TMI 633
Rectification of Mistake - Error apparent on face of record - Issue involved wrongly considered - held that:- the Cenvat credit of services availed during construction would be available and the decision is applicable squarely to the facts in this case - Accordingly, the paragraphs 8 & 9 of the order dt. 17-1-2012 [2012 (11) TMI 574 - CESTAT, AHMEDABAD] substituted - ROM application accepted.
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2013 (2) TMI 632
Whether the CESTAT was justified in upholding the service tax demand confirmed by the adjudicating authority with interest and penalty solely on the basis of the statement of the employee of the assessee without considering the specific plea of the assessee that service tax is not leviable based on certain documents produced before the CESTAT. Held that:- It is well established in law that it is open to the assessee to demonstrate on the basis of the documentary evidence that the statement recorded is erroneous. - if on remand the CESTAT comes to the conclusion that the service tax is not leviable for the disputed period and consequently interest and penalty is not leviable, then and in that event the assessee shall not claim refund of service tax already collected and paid to the Revenue. - matter remanded back to tribunal.
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Central Excise
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2013 (2) TMI 620
Refund claim on service tax paid denied - service tax paid under Section 66A(1) of the Finance Act, 1994 was not listed under Rule 3(1) of the CENVAT Credit Rules and hence, no CENVAT Credit could be allowed on the said amount of service tax paid and accordingly, no refund was admissible - Held that:- Payment of service tax under Section 66A(1) had been subsequently inserted as clause (ixa) in Rule 3(1) of the CENVAT Credit Rules, 2004 by amending the said Rule and giving retrospective effect to the said amendment from 18.04.2006. Hence, the refund of CENVAT Credit on the said input service is admissible under Rule 5 of the CENVAT Credit Rules. Thus the claim for refund under CENVAT Credit Rules is admissible to the Appellant. For the refund amounts of Rs.430/- and Rs.2691/-, it is necessary that the xerox copies of the documents produced have to be examined by the adjudicating authority afresh, to ascertain its admissibility. Accordingly, the case is remanded to the adjudicating authority for the limited purpose of verification of documents on the eligibility of refund claims of Rs.430/- and Rs.2691/-.
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2013 (2) TMI 619
Cenvat credit on the input packing materials that had gone into the manufacture of exempted products - Non maintenance of separate inventory/records - appellants manufactured both dutiable as well as exempted product - demand for recovery of Modvat credit wrongly availed and equivalent amount of penalty - Held that:- Modvat credit against all these Invoices were not availed by the appellants during the material period 1998-1999 to 2001 - 2002. The 23 Nos. of Invoices involving the credit of Rs.88,000.33, were considered by the Commissioner (Appeals), but the benefit was not extended fully on the ground that the benefits were already extended to them in the impugned show-cause notices. But as find that in the show-cause notice, the demand was calculated on pro rata basis and not on actual basis. Accordingly, in view of the scrutiny/examination of Department, it can safely be concluded that the appellants did not avail modvat credit against 26 Nos. of Invoices involving credit of Rs.88,000.33 and also 17 Nos. of Invoices involving credit of Rs.99,825/-. The entire amount of cenvat credit not availed by them during the said period, works out at Rs.1,87,825/-, which clearly covers the amount of cenvat credit alleged to have been wrongly availed on the common inputs/packing materials used in or in relation to the manufacture of dutiable as well as exempted products. In these circumstances the appellants had not availed cenvat credit of Rs.1,48,630/- on the input packing materials that had gone into the manufacture of exempted products - in favour of assessee.
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2013 (2) TMI 618
Cenvat credit on royalty charges - Held that:- The appellants were engaged in the manufacture of Sharon brand plywood along with their own brand, that is, in the manufacture of plywood, they had affixed the brand name of Sharon and cleared it from their factory. Therefore, it can be inferred that the service tax paid on the royalty, (IPR Services) were used in or in relation to the manufacture of their Sharon branded plywood . Thus, it is squarely covered under the definition of input services laid down under Rule 2 (l) (ii) of Cenvat Credit Rules, 2004 - in favour of assessee.
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2013 (2) TMI 617
Utilization of credit of additional excise duty of Textiles 9,00,000/- within eight weeks. Compliance on 1.3.2013.
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2013 (2) TMI 616
Refund claim of Service Tax paid for services received and utilised for export of goods - rejection of claim as filled before an inappropriate authority - Held that:- Jurisdictional Deputy Commissioner of Central Excise, Division-V (City), Ahmedabad-II rejecting the claim rather should have forwarded this application filed for the refund by the appellant to the jurisdictional Assistant/Deputy Commissioner of Service Tax, Ahmedabad City,an exclusive Service Tax Commissionerate. Remit the matter back to adjudicating authority, with a direction to him to forward the same to jurisdictional Assistant/Deputy Commissioner of Service Tax for processing the same in accordance with the law & to treat this as a refund claim filed within limitation and decide the issue at the earliest.
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CST, VAT & Sales Tax
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2013 (2) TMI 637
Penalty u/s 67 of the KVAT Act - Held that:- Notice dated 3.10.2012 was served on the petitioner on 6.10.2012 with seven days' time to file objections and also affording an opportunity of hearing but petitioner did not respond to the notice in any manner and therefore, penalty order dated 28.11.2012 was passed. It is thereafter that the petitioner filed Ext.P1 objection. Thus, while on the one hand petitioner says that the order is a pre-dated one, according to the learned Government Pleader, order was passed on 28.11.2012 on account of the petitioner's failure to respond to show cause notice. No violation of principles of natural justice justifying interference with penalty orders.
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2013 (2) TMI 636
Detention of a consignment of scientific equipments - KVAT Act - case of the petitioner that they are not a dealer but are only engaged in diagnostic services and in a similar situation that another consignment was detained, this Court ordered the goods release - Held that:- The respondent is directed to release the vehicle and goods on satisfying the requirement besides executing a 'personal bond' for the requisite amount as shown in Ext.P2. Petitioner will be free to file a statement of objection in response to Ext.P2 and it will be without prejudice to the right and liberties of the departmental authorities to pursue the adjudication proceedings, which however shall be finalised as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of this judgment.
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Indian Laws
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2013 (2) TMI 631
Intellectual Property - registration of trade mark “MAJA” label in the name of one “Shantikumar Ratilal” trading as “Shashi Industries” - held that:- the Board has rightly observed that the Registrar dealt with the application which was not before this Court and the directions of this Court have not been complied with. The Board has also rightly observed that the Registrar has gone beyond the directions of this Court. The directions issued to decide the application on Form TM-16 for amending the name of the petitioner, as a mistake had crept in due to lapse on the part of the counsel, but the Registrar failed to deal with the said application and instead proceeded to decide another application and passed orders allowing the said application. The petitioner has miserably failed to substantiate its claim that application was erroneously or inadvertently filed in wrong name. The original file of the application is already lost and cannot be reconstructed as admittedly even the petitioner does not have true copies of papers and his counsel has destroyed his file. The petitioner has failed to justify as to why the application for amendment was moved after orders were reserved in 1995 while the petitioner filed affidavit of evidence in correct name in January, 1994 itself.
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