INDIRECT TAXES
Changes Effective from 14th May 2015
(date on which Finance Bill received Presidential Assent)
Amendments in the Central Excise Act, 1944
1. Section 11A stands amended as follows:
(i)
category of cases where extended period of time applies but the
transactions are recorded in the specified record, will be removed from
the statute,
(ii)
provision relating to relevant date also amended to provide definition
of relevant date in
respect of cases where a return is not filed on the
due date and where only interest is required to be recovered,
(iii)
provisions of section 11A will not apply to cases where the non-payment
or short payment of duty is reflected in the periodic returns filed and
that in such cases recovery of duty will be made in such manner as may
be prescribed in the rules.
2. Section 11AC is substituted so as to rationalize the penalty in the following manner:
(i) in
cases not involving fraud or collusion or wilful mis-statement or
suppression of facts or contravention of any provision of the Central
Excise Act or rules with the intent to evade payment of excise duty-
a)
in addition to the duty as determined under section 11A(10), a penalty
not exceeding 10% of the duty so determined or `5000, whichever is
higher, will be payable;
b)
if duty and interest payable thereon under section 11AA is paid either
before issue of show cause notice or within 30 days of issue of show
cause notice, no penalty will be payable and all proceedings in respect
of said duty and interest will be deemed to be concluded;
c)
if duty as determined under section 11A(10) and interest payable
thereon under section 11AA is paid within 30 days of the date of
communication of order of the Central Excise Officer who has determined
such duty, the amount of penalty will be equal to 25% of the penalty so
imposed, provided that such reduced penalty is also paid within 30 days
of the date of communication of such order.
(ii) in
cases involving fraud or collusion or wilful mis-statement or
suppression of facts or contravention of any provision of the Central
Excise Act or rules with the intent to evade payment of excise duty-
a) in addition to the duty as determined under section 11A(10), a penalty equal to the duty so determined will be payable.
b)
if duty and interest payable thereon under section 11AA is paid within
30 days of communication of show cause notice, the amount of penalty
payable will be 15% of the duty demanded, provided that such reduced
penalty is also paid within 30 days of communication of show cause
notice and all proceedings in respect of said duty, interest and penalty
will be deemed to be concluded;
c)
if duty as determined under section 11A(10) and interest payable
thereon under section 11AA is paid within 30 days of the date of
communication of order of the Central Excise Officer who has determined
such duty, the amount of penalty will be equal to 25% of the duty so
determined, provided that such reduced penalty is also paid within 30
days of the date of communication of such order; and
(iii)
If the duty amount gets modified in any appellate proceeding, then the
penalty amount mentioned in (ii) (a) above and interest will also stand
modified accordingly. Where the duty amount is increased in the
appellate proceedings, the benefit of reduced penalty as specified will
be admissible if duty, interest and reduced penalty in relation to such
increased amount is paid within 30 days of such appellate order.
3. Section
32B has been amended so as to enable Vice-Chairman or Member of the
Settlement Commission to officiate as Chairman, in the absence of
Chairman of the Settlement Commission.
4. Penalty provided under sub-sections (4) and (5) of section 37 has been enhanced from `2000 to `5000.
Amendments in the Customs Act, 1962
1. Section 28 which deals with recovery of duties, penalty etc. is amended to provide as follows:
a. in
cases not involving fraud or collusion or wilful mis-statement or
suppression of facts or contravention of any provision of the Act or
rules with the intent to evade payment of duty, no penalty will be
imposed if the amount of duty along with interest, is paid in full
within 30 days from the date of receipt of the notice and the
proceedings in respect of such person or other persons to whom the
notice is served will be deemed to be concluded;
b. in
cases involving fraud or collusion or wilful mis-statement or
suppression of facts or contravention of any provision of the Act or
rules with the intent to evade payment of duty, the amount of penalty
payable to be reduced to 15% (instead of the present 25%) if the amount
of duty in full or in part, as may be accepted, along with interest and
such reduced penalty, is paid within 30 days from the date of receipt of
the notice.
2. Section
112 providing penalty for improper importation of goods, etc./ section
114 providing penalty for attempt to export goods improperly, etc. has
been amended to provide that any person who, in relation to any dutiable
goods, other than prohibited goods, does or omits to do any act which
would render such goods liable to confiscation under section 111/
section 113 respectively, or abets the doing or omission of such an act,
will, subject to the provisions of section 114A, be liable to a penalty
not exceeding 10% of the duty sought to be evaded OR `5000, whichever
is greater.
However,
in cases of short levy or non-levy or short payment or non-payment and
erroneous refund of duty for reasons of collusion or any willful
mis-statement or suppression of facts, if the duty as determined under
section 28(8) and the interest payable thereon under section 28AA is
paid within 30 days from the date of communication of the order of the
proper officer determining such duty, the amount of penalty liable to be
paid under this section will be 25% of the penalty so determined.
Common Amendments under Central Excise and Customs
1. Proviso
to section 31(c) of the Central Excise Act, 1944/ proviso to section
127A(b) of the Customs Act, 1962 have been amended to provide that when
any proceeding is referred back, whether in appeal or revision or
otherwise, by any court, Appellate Tribunal Authority or any other
authority to the adjudicating authority for a fresh adjudication or
decision, then such case will not be entitled for Settlement.
2. Certain provisions relating to Settlement Commission, which are now redundant, are now omitted.
SERVICE TAX AMENDMENTS
1. Amendment in Service Tax Rules
a. Rule
6 (6A) which provide for recovery of service tax self-assessed and
declared in the return under section 87 has been omitted.<
b. In respect of services related to Air Travel Agent, Life Insurance, Money Changer & Lottery distributor and selling agent,
the service provider would be allowed to pay service tax at an
alternative rate subject to the conditions as prescribed under rule 6
(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994.
2. Consideration
for a taxable service will include all reimbursable expenditure or cost
incurred and charged by the service provider and amount retained by the
distributor or selling agent of lottery from gross sale amount of
lottery ticket or the discount received.
3. Government defined in Service Tax Law:
"Government
means the Departments of the Central Government, a State Government and
its Departments and a Union territory and its Departments, but shall
not include any entity, whether created by a statute or otherwise, the
accounts of which are not required to be kept in accordance with article
150 of the Constitution or the rules made thereunder"
4. Amendment in definition of 'service' i.e. Section 65B(44):
Following
activities has been specifically excluded from the term 'transaction in
money' or we can say following activities has been specifically
included in definition of 'service':-
a. Services by chit fund foreman by way of conducting a chit; and
b. Services in relation to promotion, marketing, organizing, selling of lottery or facilitating in organizing a lottery of any kind
5. Clarification on classification of input services used for providing output services
Section
66F(1) provides that an input service shall be classified independent
to the nature of main services, for the provision of which it is
utilized. Finance Bill 2015 has clarified this through following
illustration.
"As
illustrated, reference to service provided by the Reserve Bank of India
(RBI), in section 66D (b) does not include any agency service provided
by other banks to RBI, as such agency services are input services used
by RBI for provision of its main service. Accordingly, banks providing
agency service to or in relation to services of RBI, are liable to pay
Service tax on the agency services so provided by virtue of the existing
section 66F (1)."
6. Section 73 has been amended in the following manner:
a. A
new sub-section (1B) is being inserted to provide that recovery of the
Service Tax amount self-assessed and declared in the return but not paid
will be made under section 87, without service of any notice under
sub-section (1) of section 73; and
b. sub-section
(4A) that provides for reduced penalty if true and complete details of
transaction were available on specified records, has been omitted.
7. Amendments to Section 76: Penalties for cases not involving fraud, collusion etc.
Provisions
of Section 76 stand amended to rationalize the provisions relating to
penalties, in cases not involving fraud or collusion or wilful
misstatement or suppression of facts or contravention of any provision
of the Act or rules with the intent to evade payment of Service Tax, in
the following manner,
a. penalty not to exceed 10% of Service Tax amount involved in such cases;
b. no
penalty is to be paid if Service Tax and interest is paid within 30
days of service of notice under section 73 (1) and proceedings in
respect of such service tax and interest will be deemed to have been
concluded.
c. a reduced penalty equal to 25% of the penalty
imposed by the Central Excise officer by way of an order is to be paid
if the Service Tax, interest and reduced penalty is paid within 30 days
of such order; and
d. if
the amount of penalty is increased by Commissioner (Appeals), the
Appellate Tribunal or Court, as the case may be, over and above the
amount determined under section 73 (2), the time period of 30 days for
paying a reduced penalty i.e. 25% of the penalty imposed will be counted
from the date of order of the Commissioner (Appeals), the Appellate
Tribunal or Court.
8. Amendments to Section 78: Penalties for cases involving fraud, collusion etc.
Provisions
of Section 78 stand amended to rationalize penalty, in cases involving
fraud or collusion or wilful misstatement of suppression of facts or
contravention of any provision of the Act or rules with the intent to
evade payment of Service Tax, in the following manner,-
a. Penalty
will be 100% of Service Tax amount involved in such cases. However, in
respect of the cases where the details relating to such transactions are
recorded in specified record for the period 8th April 2011 to 14th May 2015, the penalty will be 50% of the service tax so determined.<
Specified Records here mean "records
including computerised data as are required to be maintained by an
assessee in accordance with any law for the time being in force or where
there is no such requirement; the invoices recorded by the assessee in
the books of accounts will be considered as specified records."
b. a
reduced penalty equal to 15% of the Service Tax amount is to be paid if
Service Tax, and interest is paid within 30 days of service of notice
in this regard and proceedings in respect of such service tax, interest
and penalty will be deemed to have been concluded.
c. a
reduced penalty equal to 25% of the Service Tax amount, determined by
the Central Excise officer by an order, is to be paid if the Service
Tax, interest and reduced penalty is paid within 30 days of such order;
and
d. if the amount of service tax is modified
by Commissioner (Appeals), the Appellate Tribunal or Court, as the case
may be, then the interest and penalty amount will also stand modified
accordingly, and benefit of reduced penalty (25% of service tax amount)
will be admissible if Service Tax, interest and reduced penalty is paid
within 30 days of such appellate order. The time period of 30 days for
paying the interest and the reduced penalty i.e. 25% of the service tax
amount will be counted from the date of order of the Commissioner
(Appeals), the Appellate Tribunal or Court.
9. Section 78B: Transition Provision
Section 78B (transition provision) provides that:
a. amended
provisions of sections 76 and 78 will apply to cases where either no
notice is served, or notice is served under sub-section (1) of section
73 or proviso thereto but no order has been issued under sub-section (2)
of section 73, before the date on which the Finance Bill, 2015 receives
the assent of the President; and
b. in
respect of cases where notice is served under sub-section (1) of
section 73 or proviso thereto but no order has been issued under
sub-section (2) of section 73 before 14th May 2015 , the period of 30 days will be counted from 14th
May 2015 for the purpose of closure of proceedings on payment of
service tax and interest under section 76 (1) and for payment of service
tax, interest and penalty under section 78(1).
10. Section 80 stands omitted w.e.f. 14th May 2015
11. Section 86
stands amended to prescribe that remedy against the order passed by
Commissioner (Appeal), in a matter involving rebate of Service Tax, will
lie in terms of section 35EE of the Central Excise Act. It is also
provided that all appeals filed in Tribunal after 28th May 2012 and pending on 14th May 2015 will be transferred and dealt in accordance with section 35EE of the Central Excise Act
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