TIOL-DDT 2724 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2724</font><br> 13 11 2015<br> Friday </strong></font></p> <p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#006600" size="2"><strong>Swachh Bharat Cess - Government Issues Notifications </strong></font></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> is happy to report that the Government has reacted to public outcry and issued clarifications on the huge confusion created by Swachh Bharat Cess. TIOL has repeatedly highlighted the issues of concern to the assessees. </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#993333" span="span"> <strong>Tax on whole value or abated?</strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An effective rate of 0.5 percent of the value of taxable services was fixed by Notification No.22/2015, dated 06.11.2015. Now this notification is amended to clarify that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Swachh Bharat Cess shall be leviable only on that percentage of taxable value specified in the notification No. 26/2012-Service Tax, dated 20th June, 2012. (Abatement Notification) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Value of taxable services for the purposes of the Swachh Bharat Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg3NTQ=" target="_blank">Notification No. 23/2015-Service Tax., Dated:November 12, 2015 </a></strong></font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#993333" span="span"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reverse Charge Mechanism to apply to SBC </font></strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 30/2012-Service Tax dated 20.06.2012 prescribes the extent of Service Tax payable by the service provider and any other person liable to pay the Service Tax. (Reverse Charge Mechanism). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now a notification is issued to stipulate that this Notification No. 30/2012-Service Tax dated 20.06.2012 shall be applicable for the purposes of Swachh Bharat Cess <em>mutatis mutandis </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg3NTU=" target="_blank">Notification No. 24/2015-Service Tax., Dated:November 12, 2015</a> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#993333" span="span"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax Rules Amended to provide for alternative rates:</font></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> As per sub-rules 7, 7A, 7B and 7C of rule 6 of the Service Tax Rules, there is an alternative rate of Service Tax for air travel agents, life insurance, foreign exchange and lottery. Now the alternative rate is fixed for Swachh Bharat Cess also for these services, which is Service Tax liability multiplied by 0.5 divided by 14. This is done by inserting a sub-rule 7D in rule 6 of the STR, 1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This notification comes into force from 15th November 2015. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg3NTY=" target="_blank">Notification No. 25/2015-Service Tax., Dated:November 12, 2015 </a></strong></font></p> <p align="center"><font size="3"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Government also issues clarifications</em></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> one section of the Board was busy in issuing these notifications, yet another section was busy issuing clarifications through the PIB. Maybe that Circular will be issued today. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board's Press Release states: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some doubts are being raised with respect to the levy of Swachh Bharat Cess, such as,- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) what would be Swachh Bharat Cess on services where service tax is being paid under the alternative rates of service tax? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) what would be the value of taxable services for computation of Swachh Bharat Cess? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) whether reverse charge mechanism would apply for the levy of Swachh Bharat Cess? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) what would be the point of taxation for Swachh Bharat Cess ? </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that answers to the above queries are in the provisions of sub-section (5) of Section 119 of the Finance Act, 2015 by which all the provisions of service tax as contained in Chapter V of the Finance Act, 1994 have been made applicable to Swachh Bharat Cess. It is, thus, very clear that all the provisions including those related to computation of taxable value, assessment, exemption, payment, penalty applicable to service tax would also apply in respect of Swachh Bharat Cess. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If that was the case, what was the need for these notifications? Strangely, the Board Press Release does not make any mention about the notifications. </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#993333" span="span"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Point of Taxation:</font></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Press Release clarifies that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) in case where payment has been received and invoice is raised before the service becomes taxable, i.e., prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In case payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board concludes that all issues relating to Swachh Bharat Cess are addressed in the Service Tax provisions itself by virtue of the applicability of Chapter V of the Finance Act, 1994 and the rules made thereunder. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>Swachh Bharat Cess and CENVAT Credit - Board Does Not Clarify </strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NEITHER</strong> the Press Release, nor the Notifications issued yesterday clarifies as to whether Swachh Bharat Cess is cenvattable and whether Swachh Bharat Cess can be paid from CENVAT account. This is a major cause of concern and the Board should address it immediately. This requires amendment of the CENVAT Credit Rules - maybe yet another section in the Board is working on that. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>Clarify immediately to avoid confusion and spread of different opinions</strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> have come across the following opinions circulated by some leading lawyers: </font><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFCCCC" span="span"></font></p> <blockquote><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFCCCC" span="span"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) it seems benefit of Abatement Notification No. 26/2012-ST is not available and Swachh Bharat Cess will be leviable on total value and not abated value. It is advisable to file a representation to get the notification amended. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Cenvat Credit of Swachh Bharat Cess is not available. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Cenvat credit cannot be utilized for payment of Swachh Bharat Cess. </font></p> </font></blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessees are worried and depend on consultants to advise them and if the Board is stoically silent, all kinds of advices will float around. An assessee who called me up was rather irritated that I couldn't clarify his doubts. “I have to plan my business strategy and revise my contracts”, he told me. Business plans don't happen at the speed with which Board issues notifications. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board should have thought of all these problems and perhaps should have sought public opinion before hastily thrusting a new tax on the nation in the year of the taxpayer. They had eight months time to do it. </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#993333" span="span"><strong>No CENVAT Credit?</strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is heard that the view in the Government is that there would be no CENVAT Credit of Swachh Bharat Cess, because the tax is a low 0.5% and the Government wants the whole of it, cascading effect and GST notwithstanding. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And will the Board ever bother to clarify on the balance of Education Cess? </strong></font></strong> </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>CESTAT Asst. Registrar seeks Information under RTI from CESTAT </strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> assistant Registrar in CESTAT, New Delhi has sought information under the RTI Act from CESTAT as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Please provide the copies of the filled up format submitted by all the Assistant Registrars, CESTAT, for preference of choice of station in case of transfers to the benches of CESTAT asked by the administration, CESTAT, New Delhi, during last three years</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He also submits: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The information can be furnished, the information sought for concerns my life and liberty, therefore the information may be furnished to me within 48 hours. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Without prejudice to my rights under the RTI Act 2005, to facilitate faster retrieval of information, I would like to state that the information could be available with registrar, CESTAT, New Delhi</em>. </font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong></strong><strong>DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice weekend.</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in</strong> </a></font></p> </body> </html>