Revised format for Excise and Service Tax Return- regarding ( ER-1, ER-3 and ST-3 )

F No 201/05/2011-CX.6Government of India
Ministry of FinanceDepartment of Revenue(Central Board of Excise & Customs)

New Delhi, the 13th April, 2012

Subject: Revised format for Excise and Service Tax Return- regarding
The attached document is a draft circular containing details of proposed amendments to harmonize the ER-1, ER-3 and ST-3 returns so that a single common return can be prescribed instead of these three returns as measure of simplification of the Business Processes in respect of filing the Return by assesses. The draft is being placed in public domain for widest possible circulation and an extensive debate from all stakeholders in trade and industry as also from all the field formations of the department. All suggestions and feedback from Trade as well as Field formations, may please be emailed at dircx1@nic.in or at vp60singh@gmail.com latest by 15th May 2012. The feedback and suggestions received would be considered for revising the proposed amendments.
Encl: As above

  

DRAFT

Circular No /      /2012-CX

Circular No. /       /2012-ST

F No 201/05/2011-CX.6

New Delhi the 13^thApril, 2012

To,

All the Chief Commissioners of Central Excise and Service Tax

The Director General (Inspection, System, Audit & Central Excise Intelligence)

All the Commissioners of Central Excise

All the Commissioner of Service Tax

Madam/Sir,

        Central Excise assessees are required to file returns in the Format ER-1 to ER-3 and the Service Tax Assessee file the Return in ST-3 format as follow:

S No	Return	Frequency	To be filed by
1	ER.1	Monthly	All the assessess except those filing ER2 or ER.3
2	ER.3	Quarterly	Units availing exemption on the basis of value of Clearances
3	ST-3	Six Monthly	All the Service Tax Assessee’s

2.0      It has been proposed to harmonize the ER-1, ER-3 and ST-3 returns so that a single common return can be prescribed instead of these three returns as measure of simplification of the Business Processes in respect of filing the Return by assesses. The revised return EST- Return is Annexed.

3.0    One of the purpose of the return is to ensure the payment of the duty/ service tax in time. Accordingly it is propsed to also align the payment cycle and the return cycle. Under Central Excise Rules the returns and payment cycles are aligned already.

4.0    On Service Tax side at present every asssessee files the six monthly return (Rule 7 of Service Tax Rules 1994) whereas the payment cycle is as follows as per the Rule 6 of the said rules

    a.    Quarterly for the individual, proprietary firm and partnership firm

    b.    All others monthly.

5.0   Following amendments are proposed in the Service Tax Rules, 1994 to align the payment and return cycles:

   a.     Quarterly payment and quarterly return for assesses who had paid Service Tax of Rs 25 lakhs or less including the the payments made by utilizing the CENVAT credit, during the preceding financial year.

   b.    Monthly payment and monthly return for all other assesses who had paid Service Tax of more than Rs 25 lakhs including the the payments made by utilizing the CENVAT credit, during the previous financial year.

  c.    Quarterly payment and quarterly return for all the new assesses.

6.0    You are requested to circulate the contents of this circular along with the revised format of the return amongst the officers and trade formations in your jurisdiction and solicit their comments on the proposed amendments.

7.0   You may forward your comments on the formats and proposed amendments to the undersigned by e-mail at dircx1@nic.in or at vp60singh@gmail.com latest by 15^th May 2012.

8.0    Hindi version of the circular will follow.

Yours faithfully

V P Singh

Under Secretary (CX.6)

Sheet 1

1	Period of Return			2		Central Excise/ Service Tax
3	Name of the Assessee
4	Registration Number		Central Excise
			Service Tax

EST Return for Central Excise and Service Tax

Description of Goods/ Services

CETSH

Exemption Claimed

Effective rate of duty/ Service Tax

Quantity Cleared

Total Taxable/ Dutiable Value

CENVAT/

Service Tax payableRemarks

 5 Computation of CENVAT/ Service Tax Payable

6 Details of CENVAT Credit taken and utilized

Details of Credit

CENVAT/ Service Tax

AED

(TTA)NCCDADE*Additional Duty**Edu.
Cess***

1

Opening Balance

2

Credit on Inputs

3

Credit on Capital Goods

4

Credit on Input Services

5

Credit from inter unit transfers in LTU

6

Credit taken under Rule 12BB(2) of CER, 2002      Credit Utilisation for payment:

7

Of CENVAT on goods/ Service Tax on Output Services

8

When inputs/ Capital goods cleared as such

9

Of amount under Rule 6 of CCR, 2004

10

Adjustments under STR

11

Other payments

12

Inter unit transfer of Credit by LTU

13

Closing Balance 

 7 Details of Payment made

Description	Duty Code	Account		Challan		BSR Code	Total Paid
		Credit	Cash	Date	Number
CENVAT
Service Tax
Education Cess
Secondary Education Cess
Cess
NCCD
Other Duties & Cess
Adjustment under STR
Arrears Rule 8
Other Arrears
Interest Rule 8
Other Interest
Other payments

 *ADE levied under clause 85 of Finance Act 2005

**Additional duty of Customs levied under Section 3(5) 0f Customs Tariff Act, 1985.

***Education Cess & Secondary education Cess

——————————————————————————–

INSTRUCTIONS

1. Indicate the period of return at Serial Number (1).

2. At Sl No (2) indicate whether the return is filed for Service Tax or Central Excise. For assessee’s who have to file return both as service tax assessee and as Central Excise Assessee separate returns shall be filed for service tax and central excise.

3. At Sl No (5) following instructions need to be followed:

a. In case more than one item is manufactured, the details of all the items manufactured or service provided should be indicated in separate row.

b. If a specific product / service attracts more than one rate of duty, then all the rates should be mentioned in separate rows.

c. The goods cleared for export under bond should be indicated separately by mentioning the same in column (5)

d. In case the intermediate goods are cleared by a large taxpayer under sub rule (1) of rule 12BB, the details of such clearances may be mentioned separately. Under columns (5) of the table the words ‘inter unit transfer by large taxpayer under rule 12BB (1)’ may be mentioned.

e. If a specified product attracts different rates of duty, within the same month, then such details should be separately mentioned.

f. 8-digit CETSH Number may be indicated without any decimal point.

g. In case the goods are assessed provisionally, the details may be given separately in Table at serial number 5. In column (9) of Table at serial number 5, specify the Unique Identification number mentioned in the order for Provisional Assessment.

h. Goods cleared under compounded levy scheme, indicate the aggregate duty payable in column (8) as per the compounded levy scheme. The columns not applicable may be kept blank.

4. In column (7) of Table at serial number 3, the Total Taxable/ Dutiable value means:

(a) where goods attract advalorem rate of duty, the value under section 4 of Central Excise Act, 1944 (1 of 1944);

(b) where goods are covered under section 4A of the Act, the assessable value as worked out under MRP after allowing deductions as provided under section 4A of the Act;

(c) in case of goods for which the tariff value is fixed, such tariff value;

(d) in case of specific rated goods, the aggregated invoice value of the goods excluding all taxes;

(e) in case of combination of advalorem and specific duties, the transaction value under section 4 of the Act;

(f) in case of exports under Bond, the ARE-1/ARE-2/invoice value.

5. In Tables at serial numbers 7 the ‘Other duties’ paid/payable, as applicable, may be mentioned in order of: SED, AED(TTA), SAED, ADE, ADE on specified products levied under clause 85 of Finance Act, 2005, Cess on Excisable goods

6. In column (4) in Table at serial number 5, indicate the effective rates of duty. Columns which are not applicable, may be left blank.

7. The details of the challans for duty payment should be mentioned in Table at Sr.No. 7. In Table at S.No.7, separate challans should be used for pre-deposit of duty for the purpose of appellate remedy, for paying dues for approaching Settlement Commission and for other payments.

8. Other payment includes penalty, redemption fine, and pre-deposit.

9. In the Tables at serial numbers 7, the BSR codes of the Bank branch should be indicated when the instructions to this effect are issued.

SC decides on taxability of sales from bonded warehouses

SC decides on taxability of sales from bonded warehouses

S Madhavan / Feb 20, 2012, 00:32 IST

The sales taxability of transactions relating in the course of import and export has been the subject matter of intense judicial scrutiny, particularly due to exemption from the tax granted to transactions under the Central Sales Tax Act, 1956 (“CST Act”). Section 5 of the CST Act provides that any transaction of sale or purchase that either occasions the import/export of goods into/outside India or is effected by a transfer of documents of title to goods before/after the goods cross the customs frontiers of India qualifies as a sale or purchase in the course of import/export is hence exempt from tax. The expression ‘crossing the customs frontiers of India’ has been defined in Section 2 thereof as crossing the limits of the area of a customs station in which imported goods or exported goods are ordinarily kept before clearance by customs authorities. The explanation to this Section states that ‘customs station’ will be as defined in the Customs Act, 1962, as any customs port, customs airport or land customs station. The above Act further defines ‘customs port’ as any port appointed as such thereunder as well as an inland container depot, appointed as such. The courts in India have repeatedly ruled on the above provisions of law.
In a very recent judgment, the Supreme Court dealt with the issue of exemption from tax under the above Section for sale of goods effected from duty free shops to passengers. In M/s Hotel Ashoka Vs. Assistant Commissioner of Commercial Taxes [(2012) 03 VIL (SC)], the Court held that since duty free shops were located in the customs airports of the country, sales therefrom to both inbound & outbound passengers were made before/after the goods had crossed the customs frontiers and hence such sales were exempt from tax under the CST Act. While the aforesaid decision is wholly unexceptionable, the Supreme Court has also made certain observations relating to taxability of goods from bonded warehouses and these give rise to serious legal consequences since the observations, in the context in which they have been made, will clearly have the force of law and cannot be treated as mere obiter dicta.

SUPREME COURT SAYS

* when the goods are stored in the bonded warehouses, they cannot be said to have crossed the customs frontiers of India

* since duty free shops were located in the customs airports of the country, sales therefrom to both inbound & outbound passengers were made before/after the goods had crossed the customs frontiers and hence such sales were exempt from tax under the CST Act

The facts of the above case were that during the relevant period, M/s Ashoka Hotels had imported goods from foreign countries and stored these in customs bonded warehouses. These goods were subsequently transferred to duty free shops situated within Bengaluru airport, as and when stocks of such goods lying at these shops were exhausted, and were subsequently sold therefrom. On the above facts, the Supreme Court has observed that when the goods are stored in the bonded warehouses, they cannot be said to have crossed the customs frontiers of India. Accordingly, the Court has concluded that sales from the duty free shops are exempt from tax, without appearing to distinguish between bonded warehouses and duty free shops. This has led to a piquant situation since the various judgements of the Courts and the Tax Tribunals relating to the taxability of goods sold from bonded warehouses have evidently not been discussed in this judgement, given that there was no need to do so since the matter in the present case was limited to sale of goods from the duty free shops.
If the relevant provisions of the CST Act and Customs Act referred to in the initial paragraph were to be perused, it would be seen the once goods are cleared by the customs authorities, upon the filing of the relevant documentation by the importer of a Bill of Entry of whatever nature, and the goods physically leave the area of the port/airport, they would be deemed to have crossed the customs frontiers of India. Typically, customs bonded warehouses are situated in areas which are evidently beyond any customs port/airport and goods are stored in such warehouses consequent to the filing of the appropriate Bill of Entry, based on which they are allowed to be cleared from the customs station and transported to such warehouses. Of course, if such a bonded warehouse were to be located within a customs port/airport, goods stored in such a warehouse could be argued to have not crossed the customs frontiers of India.
There is a significant amount of case law relating to the taxability of goods sold from customs bonded warehouses.
It must be understood here that bonded warehouses extend to those treated as such under the Customs Act such as in 100% Export Oriented Units (EOUs)/Software Technology Parks (STPs) etc, as well as units in the Special Economic Zones (SEZs), besides those operated as such for the sole purpose of storage of goods.
Consequently, the case law referred to above has dealt with all of the aforesaid categories of bonded warehouses. More importantly, the decisions have been in conflict with one another. A detailed examination of the case law will not be possible in this article but suffice it to say that there is an adequate basis in law to argue that sales from such bonded warehouse will be exigible to the sales tax since they would not be covered within the ambit of the aforesaid exemption under Section 5 of the CST Act.
Based on the aforesaid decision of the Supreme Court however, it could now be argued that sales of goods from bonded warehouses of any kind cannot be charged to the sales tax.
This is sure to add to the uncertainty surrounding the taxability of transactions of sales in the course of import or export under Section 5 of the CST Act.
A variety of transactions, including those commonly known as High Seas Sales, effected through such bonded warehouses could now arguably be outside the tax net.
It remains to be seen as to how the tax authorities respond to the above decision and whether they would possibly seek to file a review petition. At the same time, it would be interesting to note how the Courts and the Tax Tribunals deal with this vexatious matter, in the light of this decision of the Supreme Court.

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The author is Executive Director, PricewaterhouseCoopers Pvt. Ltd. pwctls.nd@in.pwc.com 

http://www.business-standard.com/india/news/sc-decidestaxabilitysalesbonded-warehouses/465140/