Latest update

1. Dear CMA Friends
I am pleased to present Gist of update-“In-Direct Tax related matters” for the month March 2016
as given below and trust this update is edifying and useful.
Updates of Excise, Service Tax, Customs, GST & VAT Month :- March 2016
Excise
 Interest on amount paid under provisional assessment would now be computed from due date under Rule
8(1)of the central excise rules till the date of actual payment,with the effect from 1-3-2016,by (notification
No.8/2016-C.E.)
 Cenvat credit rules,2004 Credit availability and utilisation –amendments:
- Option of maintain separate accounts under rule 6 for availment of credit on input and input services is
being omitted.
- Option of payment of 6% or 7% under rule 6 available, but is now subject to maximum of total credit
availment in the account at the end of the period to which payment relates.
- Rule 6(3A)providing formula is also amended.
- Capital goods exclusively used for manufacture of exempted goods or provision of exempted services-
credit will not available for 2 years from the date of commercial production.
- ISD will able to distribute Cenvat credit to outsoared manufacturing units
- Manufacture having one or more factories would be allowed to take credit on input received under an
invoice issued by warehouse of the manufacturing.
- NCCD payment-only nccd credit utilizable under effect from 1-3-2016.
- New infrastructure cess payment can not be made by utilizing credit.
 Exemption to goods for manufacture of excisable goods – New Rules amended to omit option of
provision of ‘security’ along with the general bond([Notification No. 22/2016-C.E
 Cenvat credit on furnace oil not required to be reversed on clearance of sludge – (Final order
no50014/2016,dated 5-1-16 - CESTAT Delhi)
 Demand on shortage of Cenvatted inputs when not maintainable (stove industries ltd vs commissioner-
order no a/10124/2016,dated 22-2-2016 CESTAT Ahemdabad)
 Captive consumption exemption is available to moulds manufacture no.67/95-C.E, (FINAL ORDER NO
50217-50218/2016,dated11-2-2016- CESTAT Delhi)
 Cenvat credit utilization for payment of duty on inputs procured duty free but utilized as per
conditions,correct(shree rajasthan syntex vs commissioner-final order no.50200-50202/2016dated 9-2-
2016
 Cenvat credit on containers when value thereof not included in value of final product. (order
no,A/10118/2016,dated 23-2-2016- CESTAT Ahemdabad)
 Provisional release of currency seized as proceeds ofclandestinely removed goods, permissible,final order
no.53204/2015,dated 7-10-2015
Service Tax
 Changes proposed in negative list
- Specified education services are proposed to be omitted from negative list.
- Transportation through stage carriage is proposed to be omitted from negative list from 1-6-2016 through
exemption will continue where such services are rendered by non-air-conditioned contract carriage.
- The domestic shipping lines registered in India will pay service tax under forward charge while the
services availed from foreign shipping line by a business entity located in India will get taxed

2. under reverse charge at the hands of the business entity. (9/2016 ST) and Cenvat credit will be
available to manufacturer or service provider. It is clarified that service tax levied on such services
shall not be part of value for custom duty purposes. (S.no. 2(b) and 5(h) of notification 13/2016 C.E.
N.T.)( already mentioned in previous news latter)
- Transportation of goods by an aircraft is removed from negative list but exeption will continue by the
way of amendment to notification 25/2012-ST TO include the same.
 Service tax applicability on funds sentto branch office abroad, under reverse charge.(Tech Mahindra Ltd. Vs.
Commissioner –CESTAT Mumbai)
 Refund claim by registered office in respect of tax paid by branch office, entertain able (CCE vs Fujitsu
Consulting, 2016(41) S.T.R.728
 CENVAT CREDIT admissible on branch office rent being an input service for taxable output service.(Carrier
Air conditioner & Refrigeration Ltd vs CCE,2016(41)S.T.R.824
 Cenvat credit of service tax on photocopies of documents,when admissible.(CCE,C & ST VS Concast
Ferro,2016 (41)
 Refund of service tax on marine insurance premium policy,admissible.(Alstom t &d ltd vs comm.LTU,2016
 Rent a cab service provided by sub-contractors ,contractors can not be held liable.(CCE & ST vs Trinty
Travvels,2016(41)S.T.R.685
 Cenvat credit availed by assesee in different roles as manufacture and service provider, when admissible
(Megha Engg & Infrastructure ltd vs Commissionrr,2016(41) S.T.R. 842
 Commission received from borrower of loan not taxable under B.A.S(fulchand timamchand vs cce ,order
no.A/85755/16 stb
 Credit admissibility on service received at premises not registered at the time of receipt(Hindustan
Petroleum corporation ltd vs CCE,Appeal no E/1165/10)
 Option to pay reduced penalty ends on expiry of 30 days from adjudication order (2016(41)STR
Customs
 Exemption effective from date of issue of notification provision relating to exemption from customs duty are
proposed to be amended to omit the requirement of publishing and offering for sale any notification issued by
the CBEC. (Finance Bill 2016)
 Warehousing –various changes proposed new class of warehouse for enabling storage of specific goods
under physical control of the department ,provision for payment of fees to customs for manufacturing facility
under bond are being omitted. However now permission would be required from principal commissioner of
customs or commissioner of customs in this regard. (Clauses 121-134 of Finance Bill 2016)
 Minimum price notified for Iron and steel products import policy condition for 173 HS Code fallen under
chapter 72 to introduce Minimum import price (MIP)(notification no 38/2015)
 SCOMAT items shall required to upload online(notification no 20/2015-20)
 Receipt in INR allowed for SEZ supplies by advance licence holders ,under erst while FTP(notification no
16/2016)
 Value not to be enhanced when evidence absent for under invoicing or extra payment to supplier(JMD oils
pvt ltd vs commissioner-2016-TIOL-347-CESTAT-DEL)
 Buyer of the licence has to establish that he made enquiry and took requisite precautions to find geniuses ofthe
license ,falling which, he is liable to pay duty.( JSW STEEL LTD VS commissioner -2016-TIOL-381-CESTAT-
MAD)
 No refund where the amount is not shown as recoverable in balance sheet of the financial year(Vikas
globalone ltd vs commissioner-2016-TIOL-339-CESTAT-MUM)
 SAD refund when date of invoice is prior to date of bill of entry, the tribunal considered delivery challan which
was post the date of import of goods(radius infotech vs commissioner-2016-TIOL-383-CESTAT-DEL)
 Refund-seeking amendment of bills of entry and re-assessment amounts to challenging assessment(Grasim
industries ltd vs commissioner-2016-tiol-406-cestat-del)

3.  NO unjust enrichment where paymentof excess interestwas due to clerical error or due to mistake as to rate
of interest applicable (wind world india ltd vs commissioner-2016-IOL-268-CESTANT-MUM)
 SAD REFUND-mismatch between description of goods in bill of entry and sale invoice is no reason to deny
refund (orange Ind pvt ltd vs commissioner-2016-TIOL-302-CESTAT-DEL)
 No criminal prosecution if person exonerated in civil proceedings on merits(prem kumar vs customs-2016-
TIOL-151-HC-DEL-Cus)
 Penalty on goods already exported, the provisions for confiscation under section 114 of the customs will be
attracted (commissioner vs kamalabhai-2016-TIOL-151-HC-MAD-CUS)
 Earning of foreign exchange not ipso facto establish compliance of EXIM policy (commissioner vs sharada
industries-2016-TIOL-280-CESTAT-MAD)
 Paddle wheel aerators classifiable under customs tariff headings 8436 but not under 8479 and it is held that
the meaning of agriculture covers not only cultivation of land and growing crops but it includes animal
husbandry, rising of livestock also and hence would cover fisheries or aquaculture also(suyog agro poultry
products pvt ltd vs commissioner-2016TIOL-385-CESTANT-MAD)
 Wireless Microphone Sets / systems consisting ofone or more wireless microphones and a wireless receiver
are classifiable under Tariff Item 8518 10 00. CBEC has issued a clarification providing that consequent to
deletion of tariff line 8525 50 50, all microphones including. (Circular no. 09/2016)
 Service tax on reverse charge basis - Point of taxation shifted from ‘date of payment’ to ‘date of invoice’
in case there is change in liability to pay service tax (Notification 21/2016- 30 Mar-2016)
 Service tax on senior advocates stayedby Gujarat High Court vide order dated30/03/2016
GST
 Congress govt is keen on early introduction of GST- According to the Karnataka fiscal plan for 2016-2020,
released after chief minister Siddaramaiah presented the budget on Friday, introduction of GST will create a
healthy and competitive environment besides propelling growth and development (Source : GST.Com)
 Union finance minister Arun Jaitley said the principal Opposition party’s demand to fix the cap in the
Constitution amendment bill itself is difficult - he agrees to the Congress demand thatthe proposed Goods
and Services Tax (GST) rate should not go beyond 18 %, brightening prospects of the passage of the
legislation in the second half of the budget session. (Source : GST.Com)
 Keen on getting the much delayed GST bill approved by Parliament in second half of the Budget Session
beginning next month, Finance Minister Arun Jaitley has said he will reach out to the Congress again to
persuade it to support the legislation (Source : GST.Com)
VAT
 Delhi VAT – New Return specified for courier companies by notification no
.F.3(628)/POLICY/VAT/2016/1424-36,DATED 11-2-2016
 LUMP SUM payment of tax by developers-Rajasthan vat rules amended ,by notification
NO.F.12(11)FD/TAX/2016-182 S.O.251,dated 8-3-2016
 Electronic Survey Instruments are classifiable under Entry 14 of Part F of Schedule I to the erstwhile Tamil
Nadu General Sales Tax Act, 1959 – Supreme Court ,(electo optics(p) ltd vs state of tamil nadu-2016-VIL-
09-SC)
 Asafoetida is not a mixture of spices, classifiable under Entry 82 of the notification issued under the
Rajasthan Sales Tax Act, 1994( commercial tax officer vs ramdev food products pvt ltd-(2016) 88 VST
161(raj)
 Section 10(3) of the Karnataka Value Added Tax Act, 2003 – No time limit for availment of input tax credit
(High court decision In the case of M/S. Hindustan Coca Cola Beverages Pvt. Ltd (W.P. No. 38509/2015)
 Highlights of Budget Proposal presented on 18th March 2016 by Hon’ble Minister of Finance for
Maharashtra State Government.

4. - Conceptof“fair market price” being introduced to give power to assess the dealer atfair marketprice if the
goods are sold below market price with intention to evade payment of tax.
- Returns can be revised multiple times up to the due date for filing the audit report.
- The returns of a dealer who has filed returns within the prescribed date shall be deemed to have been
accepted after the expiry of a period of four years if assessment notice has not been issued till then.
- The confiscated used vehicles of loan defaulters are sold off by the banks and such sale attracts 12.5%
tax. Proposal is made to reduce the rate oftax to 5.5% on sale of used vehicle by the banks and financial
institutions. However, this concession will be available to such vehicles on which sales. tax or entry tax
has been paid at the earlier stage.
- Motor Vehicle Tax enhanced on two wheelers and three wheelers owned by individual. Tax to be based on
engine capacity - upto 99cc - 8%, 100cc to 299cc – 9%, 300cc and above – 10%. Institutional and
Imported Vehicles to be subjected to double the rate of tax.
With Warm Regards & Jai Hind
(CMA Rakesh Bhalla)
Mobile no. 09779010685
Information source- M/s LKS, M/s Nitya tax Associates, Economic Times, Financial express, GST.com and other sources-
many thanks to all.