AMENDMENTS
A. CENTRAL EXCISE
1. Offences involving evasion of duty
exceeding ₹ 50 lakh to attract
imprisonment instead of earlier ₹ 30 lakh [Section
9(1)(i)]
2. Offences under Central
Excise-Cognizable and non-cognizable)
Some offences under
central excise are cognizable while others non-cognizable. Further, cognizable
offences would be non-bailable and non-cognizable offences would be bailable.
3. Recovery mechanism strengthened
[Section 11]
A.
Powers of recovery
Earlier, only an
officer empowered by CBEC was authorized to recover the excise duty. But now
the officer empowered by the CBEC may also require the following two categories
of officers to recover excise duty:
(i) A Central Excise Officer; or
(ii) A proper officer authorized to recover the
sums due from the Government
(i)
Issuance of the notice for recovery
to any person other than from whom money is due: The Central Excise Officer may
issue a written recovery notice to the following persons:
•
any person from whom money is due to such
person
•
any person from whom money may become due
to such person
•
any person who holds money for or on
account of such person
•
any person who may subsequently hold
money for or on account of such person.
(ii) Every person to whom a notice is issued
under this sub-section shall be bound to comply with such notice.
(iii) In case of failure to make the payment, then
the notice deemed to be the assessee in default. Therefore, all the
consequences prescribed for assessees in default would apply for such other
person as well.
4. Service of a statement containing
details of duty not levied/paid, short levied/paid or erroneously refunded to
be deemed to be service of show cause notice [Subsection (7A) inserted in section
11A]
If one show cause notice
has been issued, then service of a statement containing details of non/short
payment, short/non levy or erroneous refund of duty etc. would be deemed to be
a service of show cause notice provided the grounds relied upon for the
subsequent period are the same as are mentioned in the earlier notice(s).
Therefore, the
limitation period of one year or five years, as the case may be, would be computed
from the date of service of such statement.
5. Central Excise Officer empowered to
attach the property belonging to person on whom notice is served under ANY
sub-section of section 11A [Section 11DDA(1)]
Erstwhile position
Earlier, a Central
Excise Officer could provisionally attach the property belonging to only such
person on whom notice had been served under sub-section (1) of section 11A. Thus,
in respect of notices issued under other sub-sections of section 1 IA namely,
subsection (3), or (4) or (5), provisional attachment of property could not be
ordered.
New position
A Central Excise Officer
to attach the property belonging to any person on whom a notice is served under
any of the subsections of section 11A.
6. Scope
of advance ruling widened [Section 23A(a) and section 23C(2)(e)]
(i) Existing
producer or manufacturer may seek advance ruling at the time of starting a new
line of business
Erstwhile Position
New position
It
implies that any existing producer or manufacturer may also seek advance ruling
in relation to any new business of production or manufacture proposed to be undertaken
by him.
(ii) Advance ruling
can also be sought on the issue of admissibility of credit of service tax paid
or deemed to have been paid
Earlier, the application
for advance ruling was admissible, inter alia, on the question of admissibility
of credit of excise duty paid or deemed to have been paid on the goods used in
or in relation to manufacture of the excisable goods.
New position
Section 23C(2)(e) has
been amended to extend the advance ruling provisions to the admissibility of
the credit of service tax paid or deemed to have been paid on input services
used in the manufacture of excisable goods as well.
7. Tribunal
empowered to grant stay by another 185 days [Third proviso inserted to section 35C(2A)])
Where CESTAT grants a
stay in an appeal filed before it, it shall dispose of the appeal (where it is possible to do so) within
a period of 180 days from the date of stay order. In case the appeal is not
disposed of within 180 days from the date of stay order, the tay order stands
vacated [First and second provisos to section 35C(2A)].
The Finance Act, 2013
has inserted third proviso to section 35C(2A) to provide that CESTAT may
further extend the period of stay, by not more than 185 days:
8. Monetary limit of the Single Bench
of the Tribunal to hear and dispose of appeals enhanced from ₹ 10 lakh to ₹ 50 lakh [Section
35D(3)]
9. Speed post with proof of delivery or
courier approved by the CBEC will also be the authorized modes of delivery of
any decision or order or any summons or notices [Section 37C(1)(a)]
B.
SERVICE TAX
(a) Courses run
by ITI/ITC affiliated.to State Council of Vocational Training not liable to service
tax [Section 65B(11)]
The above amendments
will have the following implications:-
(i) Courses in designated trades offered by IT/ITC
affiliated to State Council of Vocational Training will also be exempt from
service tax as they have now been included under the negative list.(ii) A course run by an institute affiliated to
the National Skill Development Corporation set up by the Government of India would
no more be exempt from service tax.
|
S. No.
|
Vocational courses
|
Prior to 10.05.2013
|
With effect from 10.05.2013
|
|
1.
|
Courses offered by
ITI/ITC affiliated to State Council of Vocational Training
|
Taxable
|
Exempt
|
|
2.
|
Courses offered by
ITIIITC affiliated to National Council of Vocational Training
|
Exempt
|
Exempt
|
|
3.
|
Modular Employable
Skill Course
|
Exempt
|
Exempt
|
|
4.
|
Courses run by an institute
affiliated to the National Skill Development Corporation
|
Exempt
|
Taxable
|
Example
Comment on the
applicability of service tax in case of vocational educational courses (VEC)
run by the following institutes during the month of February, 2013 and June,
2013:
(a) ‘Udaan’ an industrial training institute
(ITI) affiliated to the National Council for Vocational Training (NCVT)
(b) ‘A-Star’ a vocational education provider
affiliated to Sector Skill Council formed under National Skill Development
Corporation (NSDC)
(c) ‘Best Skill Centre’ an industrial training
centre (ITC) affiliated to the State Council for Vocational Training, Delhi
(d) ‘Horizon an institute, registered with
Directorate General of Employment and Training (DGET), Union Ministry of Labour
and Employment, running a Modular Employable Skill Course (MESC) approved by
the National Council of Vocational Training.
The courses offered in
point (a), (b) and (c) are in designated trades notified under the Apprentices
Act, 1961.
Solution:
|
S. No.
|
Institute/Centre
|
February, 2013
|
June, 2013
|
|
1.
|
‘Udaan’ – ITIs
affiliated to NCVT are covered under the definition of approved VEC. Thus,
the same are included in the negative list.
|
Non-taxable
|
Non-taxable
|
|
2.
|
‘A-Star’ – With effect
from 10.05.2013, institutes affiliated to NSDC have been removed from the
definition of approved VEC vide the Finance Act, 2013. Thus, the same are
outside the purview of negative list.
|
Non-taxable
|
Taxable
|
|
3.
|
‘Best Skill Centre’ –
With effect from 10.05.2013, ITCs affiliated to SCVTs have been included in
the definition of approved VEC vide the Finance Act, 2013. Thus, the same are
included in the negative list.
|
Taxable
|
Non-taxable
|
|
4.
|
‘Horizon’ – Institutes
registered with DGET running MESC approved by NCVT are covered under the definition
of approved VEC. Thus, the same are included in the negative list.
|
Non-taxable
|
Non-taxable
|
(b) Manufacture
under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 not liable
to service tax [Section 65B(40)]
Example
State whether following
activities undertaken by M & M Manufacturers of Chandigarh would be liable
to service tax during April, 2013 and June, 2013:
(i) Manufacture of herbal cosmetics liable to
excise duty under the Central Excise Act, 1944
(ii) Manufacture of alcoholic drinks liable to
excise duty under the Punjab Excise Act, 1914
(iii) Processing of raw materials to make them fit
for further production. The process is not liable to any excise duty
(iv) Manufacture of medicines liable to excise
duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955
Solution:
|
S. No.
|
Activity
|
April, 2013
|
June, 2013
|
|
(i)
|
Manufacture of herbal cosmetics liable to
excise duty under the Central Excise Act, 1944 — covered in the definition of
process amounting to manufacture. Thus, included in the negative list.
|
Non-taxable
|
Non-taxable
|
|
(ii)
|
Manufacture of alcoholic
drinks liable to excise duty under the Punjab Excise Act, 1914 — covered in
the definition of process amounting to manufacture. Thus, included in the
negative list.
|
Non-taxable
|
Non-taxable
|
|
(iii)
|
Processing of raw materials to make them fit
for further production. The process is not liable to any excise duty.
This will be a service liable to service tax.
|
Taxable
|
Taxable
|
|
(iv)
|
Manufacture of medicines liable to excise duty
under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 — The
Finance Act, 2013 has included such manufacture in the definition of process
amounting to manufacture. Thus, with effect from 10.05.2013, such a
manufacture is included in the negative list.
|
Taxable
|
Non-taxable
|
(c) ALL
testing activities including seed testing directly related to production of any
agricultural produce not liable to service tax [Section 66Dd(i)]
Example
‘Big Agro Handlers’
furnishes the following details with respect to the activities undertaken by
them in the month of June, 2013:
|
S. No.
|
Particulars
|
Amount (₹)
|
|
(i)
|
Supply of farm labour
|
58,000
|
|
(ii)
|
Warehousing of biscuits
|
1,65,000
|
|
(iii)
|
Sale of rice on commission basis
|
68,000
|
|
(iv)
|
Training of farmers on use of new pesticides
and fertilizers developed through scientific research
|
10,000
|
|
(v)
|
Renting of vacant land to a stud farm
|
1,31,500
|
|
(vi)
|
Testing undertaken for soil of a farm land
|
1,21,500
|
|
(vii)
|
Leasing of vacant land to a poultry farm
|
83,500
|
Compute the service tax
liability of ‘Big Agro Handlers’ for the month of June, 2013. Assume that the
point of taxation in respect of all the activities mentioned above falls in the
month of June, 2013 itself.
‘Big Agro Handlers’ has
paid service tax of 6,18,000 during the Financial Year 2012-13.
Solution:
Computation of service tax payable by Big Agro Handlers for
June, 2013
|
S. No.
|
Particulars
|
Amount (₹)
|
|
(i)
|
Supply of farm labour [Note 1]
|
-
|
|
(ii)
|
Warehousing of biscuits [Note 3]
|
1,65,000
|
|
(iii)
|
Sale of rice on commission basis [Note 1]
|
-
|
|
(iv)
|
Training of farmers on use of new pesticides
and fertilizers developed through scientific research [Note 1]
|
-
|
|
(v)
|
Renting of vacant land to a stud farm [Note 2]
|
1,31,500
|
|
(vi)
|
Testing undertaken for soil of a farm land
[Note 1]
|
-
|
|
(vii)
|
Leasing of vacant land to a poultry farm [Note
2]
|
-
|
|
|
Total
|
2,96,500
|
|
|
Service
tax @ 12.36% (rounded off)
|
36,586
|
4. Maximum
penalty for failure to obtain registration restricted to ₹ 10,000
[Section 77(1)(a)]
Example
A Ltd. starts an
advertising agency on April 1, 2013. The details of the bills raised by it
during April to June, 2013 are given as under:
|
Bill No.
|
Date
|
Value of taxable services (₹)
|
|
1.
|
05.04.2013
|
82,500
|
|
2.
|
11.04.2013
|
95,000
|
|
3.
|
18.04.2013
|
1,65,000
|
|
4.
|
28.04.2013
|
95,000
|
|
5.
|
13.05.2013
|
2,75,000
|
|
6.
|
15.05.2013
|
1,68,000
|
|
7.
|
30.05.2013
|
1,07,000
|
|
8.
|
01.06.2013
|
82,500
|
|
9.
|
17.06.2013
|
89,500
|
|
10.
|
25.06.2013
|
47,600
|
A Ltd. applies for
registration on 22.08.2013. Is A Ltd. at any default? If yes, what are the
penal consequences?
Solution: Since A Ltd. has
started its business in the year 2013-14, it would be entitled for small
service providers exemption available under Notification No. 33/2012 ST dated 20.06.2012.
Thus, A Ltd. will be exempt from paying service tax on the taxable services of
aggregate value up to ₹ 10 lakh.
However, section 69 of
the Finance Act, 1994 read with the Service Tax (Registration of Special
Category of Persons) Rules, 2005 provides that a provider of taxable service
whose aggregate value of taxable services in a financial year exceeds ₹ 9,00,000 has to make an
application for registration within a period of 30 days of exceeding the
aggregate value of taxable service of
₹ 9,00,000.
The aggregate value of
taxable services of A Ltd. exceeds ₹ 9,00,000 on 30.05.2013
when it issues Bill No. 7 of ₹ 1,07,000. Thus, A Ltd. should apply for
registration on or before 29.06.2013. However, the application for registration
is made on 22.08.2013. Thus, there is delay of total 54 days.
A Ltd. will, therefore,
be liable to a penalty which may extend to ₹ 10,000. Under the old
provisions of section 77(1)(a), A Ltd. would have been liable to a penalty of ₹ 10,800 [₹ 10,000 or ₹ 200 x 54 days, whichever
is greater].
5. Imposition of personal
penalty on director, manager, secretary, or other officer found to be knowingly
concerned with specified contraventions [New section 78A]
6. Tribunal empowered to condone the
delay in filing of an appeal by the assesse [Section 86(5)] after the expiry of
the statutory period for filing the same i.e. 4 months.
7. Non-payment of amount collected as
service tax beyond six months, when the amount exceeds ₹ 50 lakh, to be a
cognizable offence punishable with an imprisonment extendible to seven years
[Section 89 and 90]The amended provisions
of section 89 and new section 90 have been depicted by way of diagrams as
follows:
|
Offence Category
|
If any person is convicted for an offence for [Section 89]
|
|
A
|
First time
|
Where
the amount is
|
Term of imprisonment
|
|
Prior to amendment
|
After the amendment
|
|
(i) upto ₹ 50 lakh
|
Upto 1 year
|
Upto 1 year
|
|
(ii) more than ₹ 50 lakh
|
6 months* - 3 years
|
6 months* - 3 years
|
|
Second & every subsequent offence
|
The term of imprisonment would be 6 months* -
3 years.
|
The term of imprisonment may extend to 3
years.
|
|
B
|
First time
|
Where
the amount is
|
Term of imprisonment
|
|
Prior to amendment
|
After the amendment
|
|
(i) upto ₹ 50 lakh
|
Upto 1 year
|
Upto 1 year
|
|
(ii) more than ₹ 50 lakh
|
6 months* - 3 years
|
6 months* - 7 years
|
|
Second & every subsequent time
|
(i) upto ₹ 50 lakh
|
6 months* - 3 years
|
Upto 3 years
|
|
(ii) more than ₹ 50 lakh
|
6 months* - 3 years
|
Upto 7 years
|
*Such imprisonment shall
be for a term of less than six months if there are special and adequate reasons to be recorded in the judgment of the
Court.
Non-cognizable and bailable offence [Section 90]
Cognizable offence [Section 90]
8. Powers of arrest introduced in
service tax [New section 91]
Under Central Excise
Law, an Inspector or any other Central Excise Officer above his rank is
empowered to arrest any person whom he has reason to believe to be liable to
punishment.
Similar powers have been
introduced in the service tax law this year by the Finance Act, 2013.
(i) Who can
arrest?
- New section 91 provides that the Commissioner of Central Excise by general or
special order authorize any officer of Central Excise, not below the rank of
Superintendent of Central Excise to arrest a person.
(ii) Who can be
arrested?
- A person who has committed any of the offences specified under section 89(1)
and the amount involved in the offence exceeds ₹ 50 lakh.
(iii) When can arrest
be ordered?
- The Commissioner of Central Excise can order arrest if he has reason to
believe that a person has committed the offence mentioned above.
(iv) Manner of
arrest
- All arrests have to be carried out in accordance with the provisions of the
Code of Criminal Procedure, 1973 relating to arrests.
(v) Procedure in
case of cognizable offence - In case of cognizable offence, every officer authorised to
arrest a person has to inform the arrested person of the grounds of arrest and
produce him before a magistrate within 24 hours.
(vi) Procedure in case of non-cognizable and bailable
offence
— The Assistant Commissioner Deputy Commissioner is empowered to release an
arrested person on bait or otherwise. For this purpose, the Assistant
Commissioner/Deputy Commissioner will have same powers and be subject to the
same provisions as an officer in charge of a police station is under Code of
Criminal Procedure, 1973.
Example
Discuss the prosecution,
arrest and ball implications, if any, in respect of the following cases
pertaining to the period June, 2013:
(i) ‘A’ avails CENVA T credit of ₹ 52 lakh without actual
receipt of excisable goods. However, he is yet to utilize the same.
(ii) ‘B’ willfully evades payment of service tax
of ₹ 55 lakh.
(ill) ‘C’ knowingly supplies false information
sought by the Central Excise Officer. The amount of service tax involved is ₹ 10 lakh.
(iv) ‘D’ collects ₹ 65 lakh as service tax
from its clients but deposits only ₹ 5 lakh with the Central
Government.
(v) ‘E’ collects ₹ 55 lakh as service tax
from its clients and deposits ₹ 51 lakh with the Central Government.
Solution:
|
Person
|
Offence
|
Prosecution
|
Arrest
|
Bail
|
|
‘A’
|
No offence as both availment and
utilisation of credit without actual receipt of excisable goods constitutes
an offence [Section 89(1)(b)]
|
NA
|
NA
|
NA
|
|
‘B’
|
Non-cognizable offence [Section 90(2)]
|
6 months to 3 years
[Section 89(1)(i)]
|
Arrest can be ordered
by Commissioner of Central Excise [Section 91(1)]
|
Bailable Offence
[Section 90(2)]
|
|
‘C’
|
Non-cognizable offence [Section 90(2)]
|
Upto 1 year [Section
89(1)(iii)]
|
No arrest [Section
91(1)]
|
Bailable Offence
[Section 90(2)]
|
|
‘D’
|
Cognizable offence [Section 90(1)]
|
6 months to 7 years
[Section 89(1)(ii)]
|
Arrest
can be ordered by Commissioner of Central Excise without arrest warrant
[Section 91(2)]
|
Non-Bailable/Bailable
Offence [Section 90(2)]
|
|
‘E’
|
Non-cognizable offence [Section 90(2)]
|
Upto 1 year [Section
89(1)(iii)]
|
No arrest [Section
91(1)]
|
Bailable Offence
[Section 90(2)]
|
Example
In the above Example,
what will be the prosecution implication, if B, D and E are convicted for
subsequent offences?
Solution:
|
Person
|
Prosecution for subsequent offences
|
|
‘B’
|
Imprisonment upto 3
years [Section 89(2)(a)]
|
|
‘D’
|
Imprisonment upto 7
years [Section 89(2)(b)]
|
|
‘E’
|
Imprisonment upto 3
years [Section 89(2)(a)]
|
C. CUSTOMES
1. No refund and recovery if the amount
of customs duty involved is less than ₹ 100 [Section 27(1) and
28(1) amended]
2. Proper officer empowered to
provisionally attach the property in case of non-payment of customs duty or
interest thereon on account of fraud, collusion, suppression of facts etc. as
well [Section 28BA(1)]
Section 28BA(1) has been
amended so as to enable a proper officer to attach the properly belonging to
any person on whom notice is served under
sub-section (1) or sub-section (4) of section 28. It implies that proper officer has now been empowered to provisionally
attach the properly belonging to a person on whom a SCN has been served for
short-levy! non-levy erroneous refund of customs duty or non-payment!
part-payment! erroneous refund of any interest payable, by reasons of collusion or any wilful mis-statement or suppression of
facts.
3. CBEC empowered to permit landing of
vessels and aircrafts at any place other than customs port or customs airport
[Section 29(1)]
4. Electronic filing of import/export
manifest mandatory except in cases allowed by Commissioner of Customs [Section
30(1) & Section 41(1)]
Section 30(j) and
section 41(1) have been amended vide the Finance Act, 2013 to provide for the mandatory electronic filing of
the import manifest and export manifest respectively. However, in cases where
it is not feasible to deliver import/export manifest by presenting them
electronically, the Commissioner of Customs may, allow the same to be delivered
in any other manner.
5. Interest free period for payment of
import duty reduced from five days to two days
[Section 47(2))
6. Period of storage without
warehousing restricted to 30 days [Section 49] )
Erstwhile Position
Earlier, no time-period had been
specified under section 49 for which imported goods could be stored in a
warehouse.
New position
Section 49 has been
amended to introduce a time limit of 30
days for storage of goods in a warehouse in the interest of accountability
and early finalization of assessments.
However, the
Commissioner of Customs may extend the period of storage for a further period not
exceeding 30 days at a time)
7. Export of warehoused goods without
payment of import duty allowed on presenting postal export documents also
[Section 69(1)(a)]
As per section 69(1)(a)
of the Customs Act, 1962, any warehoused goods might be exported to a place outside
India without payment of import duty provided a shipping bill or a bill of
export had been presented in respect of such goods in the prescribed form.
This section had been
amended to allow export of warehoused goods under postal export documents [as
referred to in section 82] also.
Note: In the case of
goods exported by post, any label or declaration accompanying the goods, which
contains the description, quantity and value thereof, is deemed to be an entry
for export.
8. Certain specified offences to be
non-bailable [Section 104(6)]
Erstwhile position
Earlier, ALL offences
under Customs Law were bailable [Section 104(6)].
New position
Finance Act, 2013 has
substituted sub-section (6) to section 104 with sub-sections (6) and (7). Now,
certain offences have been specified as non-bailable offences. Rest of the
offences would be bailable as before.
9.
Removal of duty liability on
any sample of goods consumed/destroyed during the course of testing/examination
[Section 144(3)]
Erstwhile position
Earlier, section 144(3)
stipulated that no duty shall be chargeable on any sample of goods taken under
this section which is consumed or destroyed during the course of any test or
examination thereof, if such duty
amounts to ₹ 5 or more.
New position
The words “if such duty
amounts to ₹ 5 or more” have been
omitted from the aforesaid section. Consequently, there shall be no duty
liability on a sample of goods consumed/destroyed during the course of testing/examination.
10. Change of nomenclature of “customs
house agents” to “customs brokers” [Section 146 and section 146A(2)(b)])
11. Person who has committed offence under
the Finance Act, 1994 also disqualified to act as authorized representative
[Section 146A(4)(b)] )
Any person who was
convicted of an offence connected with any proceeding under the Customs Act,
1962, the Central Excise Act, 1944, or the Gold (Control) Act, 1968 or the
Finance Act, 1994 is disqualified from acting as an authorized representative
in customs matters. Hence, a person
convicted under the Finance Act, 1994 has also been disqualified from
acting as an authorized representative in customs matters.
*****
