While presenting his budget proposals for 2011-12 on 28th February 2011 the Finance Minister Shri Pranab Mukherjee proposed certain changes in the Central Excise rate structure to prepare the ground for the transition to GST, beginning with a reduction in the number of exemptions. He accordingly withdrew the exemption on 130 of these items and levied a nominal Central Excise duty of 1 per cent on these 130 items that entered the tax net. The manufacturers of these items were granted the benefit of the SSI exemption. The scheme of SSI exemption is governed by notification 8/2003 the salient features of which are discussed hereunder.
What were the conditions for levy of duty on articles of jewellery? In order to attract this levy the following conditions were required to be fulfilled: a. The articles of jewellery must be of the type covered under heading 7113 of Central Excise Tariff Act and such articles must have brand name or trade name indelibly affixed or embossed on the articles of jewellery itself. b. “Brand name” or “Trade name” meant a brand name or trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person.
While the intentions of the State Government are clear as to non levy of VAT on Fabric, but due to some misdrafting of the rules and notifications, the general public is put under severe confusion as to whether a specific levy is applicable to it or not. In the case of Fabric, the same is the situation. After all amendments, the position of law that remains on the statute book. This situation has first arrived when Entry-45 of Schedule A which contains Fabric was amended in such a way that declared goods were removed from Schedule A and shifted to Schedule “C” by bifurcating the existing entry 101 into two parts
Ever Since the rate of excise duty on fabric under Additional Duties of Excise (Goods of Special Importance)(AED-GSI) Act, 1957 was lowered to NIL % w.e.f._01-03-2006 it was widely perceived by the Textile Industry (Fabric) that the levy of state VAT on fabric is now just a matter of time, particularly when this AED levy on fabric was in lieu of state sales tax (VAT). However, the State Government just could not levy VAT on Fabric because though the rate of AED-GSI was lowered to NIL%, the items of fabric continue to remain listed in the Schedule to the AED-GSI ACT. What is the importance of this listing in Schedule to the AED-GSI Act 1957 ?.
Service tax on Restaurant Service and Short term accommodation Service. Restaurant Service has been made taxable to service tax w.e.f. 1st May 2011. This levy is covered by section 65(105)(zzzzv) read with notification No. 1/2006-Service Tax, dated the 1st March, 2006, as amended by Notification No.34/2011 – Service Tax 25th April, 2011. The scope of the service is defined as services provided to any person, by a restaurant, by whatever name called, having facility of air-conditioning in any part of the establishment, at any time during the financial year, which have license to serve alcoholic beverages, in relation to serving of food or beverages, including alcoholic beverages or both, in its premises.
1) The amendments to the provisions of Finance Act, 2011 pertaining to Service Tax shall come into force from 1st day of May 2011. Notification No. 29/2011 – Service Tax the 25th April, 2011. 2) Service tax on Medical Services : EXEMPT FULLY from service tax w.e.f. 1st day of May, 2011.Section 105(65)(zzzzo) was inserted by Finance Bill-2011 which provided for levy of service tax on taxable services provided to any person (i) by a clinical establishment; or (ii) by a doctor, not being an employee of a clinical establishment, who provides services from such premises for diagnosis, treatment or care for illness, disease, injury, deformity, abnormality or pregnancy in any system of medicine. Notification No. 30/2011 – Service Tax the 25th April, 2011
Shri P. Chidambaram recommended an excise duty of 2 per cent on such branded jewellery and clarified that there was no levy on unbranded jewellery, including unbranded gold jewellery. Accordingly an exemption notification 05/2006 CE dated 1-03-2006 was issued which exempted full duty in excess of 2% on article of jewellery on which brand name or trade name was indelibly affixed or embossed on the articles of jewellery itself.
The issue of excise duty on readymade garments, the applicability of SSI exemption notifications and many such other issues were discussed in my last article VALUE BASED EXEMPTION SCHEME FOR SSI – GARMENTS . Since the time of publication of this article many clarifications were issued and many procedural aspects were simplified. In this article I propose to discuss these clarifications. In this article readymade garments and made up articles will be referred to as “Garments”
What do the words ROTI & MAKAN mean to a common man is very well known. These two basic needs of a common man are today very uncommon, thanks to the very high rate of food inflation and extra super inflation in the prices of need based House. What was left to the common man was perhaps, KAPDA i.e. Fabric. But the eagle eye of the central government has eventually fallen on this last lame duck pray so as to smoothen the beginning of the end of the common man. The reason: An expected VAT on FABRIC @ 5% .
The finance Bill 2011 has enacted Point of Taxation Rules, 2011 which cover the provisions of payment of service tax on accrual basis insted of the hitherto adopted cash basis system. The implication of this changeover has been examplified in the attached Excel File which contains practical examples of all the rules from 3 to 8 of the Point of Taxation Rules, 2011.
