What is the Service Tax rate?

By Vijay Kumar

It was announced that Service Tax rate has been enhanced to 14% and there would be no Education Cess. We are told that some people have already started collecting 14% Service Tax as they believe it would have immediate effect under the Provisional Collection of Taxes Act. They were surprised when we told them, that the enhanced rate of Service Tax will be applicable only from a date to be notified after enactment of the Finance Bill. If excise duty is applicable immediately, why not service tax? We explained that Provisional Collection of Taxes Act does not apply to Service Tax. Strange and difficult to comprehend? It must be noted that 14% Service Tax will be applicable from a date to be notified later.

SAD - Not for all:

There was a general misunderstanding that the Finance Minister has exempted all goods from SAD; they all looked for the notification exempting all goods from SAD; sadly they couldn't find it. Many of them called us to tell us that there is a terrible mistake. This is what the Finance minister said in Para 112 of his Budget Speech.

Some other changes address the problem of CENVAT credit accumulation due to the levy of SAD. I propose to fully exempt all goods, except populated printed circuit boards for use in manufacture of ITA bound items from SAD and reduce the SAD on imports of certain other inputs and raw materials subject to actual user condition .

This was understood as exemption from SAD for all goods. Even a leading advocate told me that he too understood it that way only. The Annexure to Finance Minister's speech stated,

Reduction in SAD to address the problem of CENVAT credit accumulation: All goods except populated PCBs, falling under any Chapter of the Customs Tariff, for use in manufacture of ITA bound goods from 4% to Nil .

So, it is clear that all goods are not exempt from SAD. "it's a comma mistake", says another leading lawyer.

Two Rates of Duty - which one is applicable?:

There was a frantic call from an importer. What is the rate of duty for iron and steel falling under Chapter 72?

Notification No. 12/2012-Cus as amended on 1.3.2015 has the following different rates and there is one rate of 10% for all goods under Chapter 72. Will they insist on payment of 10% for all goods?

The JSTRU in his D.O Letter answered this question. The JS stated,

"it is quite likely that a commodity may be covered under more than one notification attracting different rates of duties. In such cases, as per various judicial pronouncements on the subject, the benefit of lower rate of duty cannot be denied to the assessee provided he fulfils the conditions prescribed, if any, for such lower rate."