Finance Bill enacted- Notifications galore

By Vijay Kumar

Friday evening was very hectic for a few officers in the CBEC and for us in TIOL. Immediately after the notifications were issued, we carried them with our analysis.

If you have missed them or , find them here

SERVICE TAX
Notification No. 18/2008 – Service Tax - Effective date for new services Changes in the Act to be effective from 16 th May 2008
Notification No. 19/2008 – Service Tax - Amends Service Tax Rules 1. Customer in Rule 4A becomes any person and in 4B becomes recipient of service 2. An explanation is added to Rule 6, “ Explanation .- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called ‘Suspense account' or by any other name, in the books of account of a person liable to pay service tax.”; 3. Foreign Exchange Broker – Service Tax @ 0.25% of the gross receipt, if service charges are not shown separately. Sub Rule 7B added to Rule 6
Notification No. 20/2008 – Service Tax – Export of services – services to be performed outside India . The following new services are added to the list of services which are to be performed outside India to qualify for export: 1. Services provided by a recognised stock exchange in relation to securities [section 65(105)( zzzzg ]; 2. Services provided by a recognised association or a registered association (commodity exchange) in relation to sale or purchase of any goods or forward contracts [section 65(105)( zzzzh )]; 3. Services provided by a processing and clearinghouse in relation to processing, clearing and settlement of transactions in securities, goods or forward contracts Supply of tangible goods – export only if the goods are located abroad. Services provided in relation to supply of tangible goods, without transferring right of possession and effective control of said tangible goods [section 65(105)( zzzzj )], will be treated as export subject to the condition that the tangible goods supplied for use are located outside India during the period of use of such tangible goods by such recipient. Similar amendments for Taxation of Services (Provided from Outside India and Received in India ) Rules - Notification No. 21/2008 – Service Tax
Notification No. 22/2008 – Service Tax Exemption Notification 1/2006 – client becomes “any person”, “recipient of service” and customer becomes “recipient of service” Similar amendments made in other notifications too. - Notification No. Slowly the client concept is being erased from Service Tax.
Notification No. 24/2008 – Service Tax Exemption to taxable services used for export of goods – refund procedure – three more services added to list At present 16 services are covered under this complicated refund procedure. Three more services are added AS Sl.No 17, 18 and 19, · Purchase or sale of foreign currency under banking and other financial service, · Purchase or sale of foreign currency under foreign exchange broking service, · Supply of tangible goods for use service without transferring right of possession.
Central Excise
Notification No. 27/2008 – Central Excise – Cement of MRP exceeding Rs.190 /- per bag to attract 12% of MRP as excise duty. Notification No. 4/2006 is amended. This was so even before, but was applicable only if the per tonne retail price was less than Rs. 5000/-. Now this cap is removed. The Finance Minister in his reply to the discussion on the Finance Bill had told the Lok Sabha , “ package cement for the price of about Rs.250 per bag is currently chargeable to a specific rate of duty of Rs.600 per MT. This results in a regressive duty structure and does not sufficiently discourage increase in price beyond the threshold of Rs.250 per bag. Since all other duties are ad valorem, I propose to correct this by changing the mode of levy in package cement in this price bracket also to an ad valorem rate of 12 per cent of retail sale price.” Is this what the FM really want ?
Notification No. 28/2008 – Central Excise NCCD – Notification No. 14/2008 rescinded. Notification No. 14/2008 dated 1.3.2008 exempting certain textile articles from N C CD has been withdrawn. Don't worry; they have been removed from N C CD by the Finance Act and so there is no need for notification. Similarly Customs Notification 22/2008 is rescinded by Notification No. .
Customs
Notification No. 66/2008 – cus – Export duty on pig iron and other ferrous products. This notification has an interesting history, though brief. In the amendments to the Finance Bill, the FM proposed to amend the Export Tariff by imposing the following duties as Sl. Nos 27 to 42 in the Export Tariff. Many Customs officers argued that this imposition will have immediate effect from 30.4.2008, but there was another school of thought which held that an amendment to the Finance Bill is not a Bill to be introduced and so the “Provisional Collection of Taxes” is not applicable to it. This view prevailed. The FM had proposed a uniform rate of 20% for export of various ferrous products and Rs. 12,000 per tonne for Basmati Rice , which have come into force from 10.5.2008, but by this notification, the effective duties are prescribed as 1. 15 per cent on specified primary forms and semi-finished products and hot rolled coils and sheets. 2. 10 per cent on specified roll products including cold-rolled coils and sheets and pipes and tubes. 3. Five per cent on galvanised steel in coil and sheet form. 4. Rs. 8000/- per tonne for Basmati rice. These are effective from 10.5.2008 – We got the Notification at 6 pm and we are the first to break it to the world, but what would happen to exports made today? How would the exporters or for that matter the Customs officers know that the Board had issued the notification?

SERVICE TAX

Notification No. 18/2008 – Service Tax - Effective date for new services

Changes in the Act to be effective from 16 th May 2008

Notification No. 19/2008 – Service Tax - Amends Service Tax Rules

1. Customer in Rule 4A becomes any person and in 4B becomes recipient of service

2. An explanation is added to Rule 6,

“ Explanation .- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called ‘Suspense account' or by any other name, in the books of account of a person liable to pay service tax.”;

3. Foreign Exchange Broker – Service Tax @ 0.25% of the gross receipt, if service charges are not shown separately. Sub Rule 7B added to Rule 6

Notification No. 20/2008 – Service Tax – Export of services – services to be performed outside India .

The following new services are added to the list of services which are to be performed outside India to qualify for export:

1. Services provided by a recognised stock exchange in relation to securities [section 65(105)( zzzzg ];

2. Services provided by a recognised association or a registered association (commodity exchange) in relation to sale or purchase of any goods or forward contracts [section 65(105)( zzzzh )];

3. Services provided by a processing and clearinghouse in relation to processing, clearing and settlement of transactions in securities, goods or forward contracts

Supply of tangible goods – export only if the goods are located abroad.

Services provided in relation to supply of tangible goods, without transferring right of possession and effective control of said tangible goods [section 65(105)( zzzzj )], will be treated as export subject to the condition that the tangible goods supplied for use are located outside India during the period of use of such tangible goods by such recipient.

Similar amendments for Taxation of Services (Provided from Outside India and Received in India ) Rules - Notification No. 21/2008 – Service Tax

Notification No. 22/2008 – Service Tax

Exemption Notification 1/2006 – client becomes “any person”, “recipient of service” and customer becomes “recipient of service”

Similar amendments made in other notifications too. - Notification No.

Slowly the client concept is being erased from Service Tax.

Notification No. 24/2008 – Service Tax

Exemption to taxable services used for export of goods – refund procedure – three more services added to list

At present 16 services are covered under this complicated refund procedure. Three more services are added AS Sl.No 17, 18 and 19,

· Purchase or sale of foreign currency under banking and other financial service,

· Purchase or sale of foreign currency under foreign exchange broking service,

· Supply of tangible goods for use service without transferring right of possession.

Central Excise

Notification No. 27/2008 – Central Excise – Cement of MRP exceeding Rs.190 /- per bag to attract 12% of MRP as excise duty. Notification No. 4/2006 is amended. This was so even before, but was applicable only if the per tonne retail price was less than Rs. 5000/-. Now this cap is removed.

The Finance Minister in his reply to the discussion on the Finance Bill had told the Lok Sabha , “ package cement for the price of about Rs.250 per bag is currently chargeable to a specific rate of duty of Rs.600 per MT. This results in a regressive duty structure and does not sufficiently discourage increase in price beyond the threshold of Rs.250 per bag. Since all other duties are ad valorem, I propose to correct this by changing the mode of levy in package cement in this price bracket also to an ad valorem rate of 12 per cent of retail sale price.”

Is this what the FM really want ?

Notification No. 28/2008 – Central Excise NCCD – Notification No. 14/2008 rescinded.

Notification No. 14/2008 dated 1.3.2008 exempting certain textile articles from N C CD has been withdrawn. Don't worry; they have been removed from N C CD by the Finance Act and so there is no need for notification.

Similarly Customs Notification 22/2008 is rescinded by Notification No. .

Customs

Notification No. 66/2008 – cus – Export duty on pig iron and other ferrous products.

This notification has an interesting history, though brief.

In the amendments to the Finance Bill, the FM proposed to amend the Export Tariff by imposing the following duties as Sl. Nos 27 to 42 in the Export Tariff. Many Customs officers argued that this imposition will have immediate effect from 30.4.2008, but there was another school of thought which held that an amendment to the Finance Bill is not a Bill to be introduced and so the “Provisional Collection of Taxes” is not applicable to it.

This view prevailed.

The FM had proposed a uniform rate of 20% for export of various ferrous products and Rs. 12,000 per tonne for Basmati Rice , which have come into force from 10.5.2008, but by this notification, the effective duties are prescribed as

1. 15 per cent on specified primary forms and semi-finished products and hot rolled coils and sheets.

2. 10 per cent on specified roll products including cold-rolled coils and sheets and pipes and tubes.

3. Five per cent on galvanised steel in coil and sheet form.

4. Rs. 8000/- per tonne for Basmati rice.

These are effective from 10.5.2008 – We got the Notification at 6 pm and we are the first to break it to the world, but what would happen to exports made today? How would the exporters or for that matter the Customs officers know that the Board had issued the notification?