Arun Kumar Singh

Hon’ble Minister of Finance presented union finance budget for the Financial Year 2014-15. Key changes are enumerated below;

CENTRAL EXCISE:

– An additional duty of excise is being levied at the rate of 5% ad valorem on waters, including aerated waters, containing added sugar falling under chapter heading 2202 10 i.e. aerated waters [2202 10 10], lemonade [2202 10 20] and other [2202 10 90].

– Basic excise duty on cigarettes and other products of tariff heading 2402 is being increased.

– Basic Excise Duty is being increased from 12% to 16% on pan masala, from 50% to 55% on unmanufactured tobacco and from 60% to 70% on jarda scented tobacco, gutkha and chewing tobacco.

– The Clean Energy cess is being increased from Rs.50 per tonne to Rs.100 per tonne.

– Excise duty on Branded Petrol is being reduced from Rs.7.50 per litre to Rs. 2.35 per litre.

– Full exemption from Central Excise duty is being provided to Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and Liquefied Petroleum Gases (LPG) for supply to Non-Domestic Exempted Category (NDEC) customers by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum Corporation Limited retrospectively w.e.f. 08.02.2013.

– Concessional excise duty of 2% without CENVAT credit and 6% with CENVAT credit is being extended to gloves specially designed for use in sports.

– Optional excise duty of 2% (without CENVAT) / 6% (with CENVAT) on writing and printing paper for printing of educational textbooks is being withdrawn and instead a uniform excise duty of 6% with CENVAT is being levied.

– Excise duty on Polyester Staple Fiber (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles (which is already exempt w.e.f. 08.05.2012) is being exempted retrospectively w.e.f. 29.06.2010 to 07.05.2012.

– Excise duty at the rate of 2% (without CENVAT) or 6% (with CENVAT) is being imposed on Polyester Staple Fiber and Polyester Filament Yarn manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles w.e.f. 11th July, 2014.

– Excise duty is being reduced from 12% to 6% on footwear of retail price exceeding Rs.500 per pair but not exceeding Rs.1,000 per pair.

– Full exemption from excise duty is being provided on solar tempered glass used in the manufacture of solar photovoltaic cells

– Un-branded articles of precious metals are being exempted from excise duty retrospectively for the period 01.03.2011 to 16.03.2012.

– Excise duty is being reduced from 12% to Nil on forged steel rings used in the manufacture of bearings of wind operated electricity generators.

– Full exemption from excise duty is being provided to reverse osmosis (RO) membrane element for water filtration or purification equipment (other than household type filter). Excise duty on RO membrane element used in household type filters is being reduced from 12% / 10% to 6%.

– Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is being amended with retrospective effect from 13.04.2010 to provide that where a manufacturer manufactures pouches of different RSPs on a single machine in a month, the duty liability for that month would be the duty applicable to the highest of the RSP so manufactured.

– All goods falling under any Chapter supplied against International Competitive Bidding (ICB) are fully exempt from excise duty.

– Law is proposing amendments referring to Principal Commissioners and Principal Chief Commissioners. It appears that new posts with such designation is planned to be created.

– Settlement Commissions is being strengthened and their jurisdiction has been enlarged.

– Section 35B(1) is being amended so as to increase the discretionary powers of the Tribunal to refuse admission of appeal from the existing Rs.50,000 to Rs.2 lakh.

– Section 35F is being substituted with a new section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage and another 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs.10 crore.

– Section 35L is being amended so as to clarify that determination of disputes relating to taxability or excisability of goods is covered under the term „determination of any question having a relation to rate of duty‟ and hence, appeal against Tribunal orders in such matters would lie before the Supreme Court.

– Rule 12A of Cenvat Credit Rules is being amended so as to disallow transfer of credit by a large taxpayer from one unit to another.

– Rule 4(1) (for input credit) and Rule 4(7) (for input service credit) of Cenvat Credit Rules are being amended in order to fix a time limit of six months for availment of the CENVAT Credit.

– E-payment is being made mandatory for all assessees subject to certain exceptions.

– Sub-rule (3A) of Rule 8 of Central Excise Rules is being substituted to provide that in case of default in payment of duty, the assessee shall on his own pay a penalty of 1% per month on the amount of duty not paid for each month or part thereof.

– The Scheme of Advance Ruling is being extended to Resident Private Limited Companies.

– The Schedules to the Customs and Central Excise Tariffs are being amended in respect of selected goods to match the Unit Quantity Codes prescribed therein with the ones that are actually used in trade and commerce.

SERVICE TAX:

– Service tax leviable currently on sale of space or time for advertisements in broadcast media, namely radio or television [section 66D (g) read with section 66B], is proposed to be extended to cover such sales on other segments like online and mobile advertising. The new levy would further extend to advertisements in internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc. Sale of space for advertisements in print media, however, would continue to be in the negative list and hence remain excluded from service tax. Print media is being defined in service tax law for the purpose.

– Service tax is proposed to be levied on services provided by radio taxis or radio cabs, whether or not air-conditioned.

– Any service provided for transport of passenger by air-conditioned contract carriage including which are used for point to point travel, will attract service tax, with immediate effect. Service tax will be charged at an abated value of 40% of the amount charged from service receiver; therefore, effective tax will be 4.944%. Services by non-air conditioned contract carriages for purposes other than tourism, conducted tour, charter or hire continue to be exempted.

– Exemption to services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies on human participants by a clinical research organization approved to conduct clinical trials by the Drug Controller General of India is being withdrawn. This would be taxable with immediate effect.

– The concept of “auxiliary educational services” are being dispensed with. Accordingly, only the following services received by eligible educational institutions are exempted from service tax: (i) transportation of students, faculty and staff of the eligible educational institution; (ii) catering service including any mid-day meals scheme sponsored by the Government; (iii) security or cleaning or house-keeping services in such educational institution; (iv) services relating to admission to such institution or conduct of examination. Further, for the purposes of this exemption, “educational institution” is being defined in the exemption notification 25/2012-ST as institutions providing educational services specified in the negative list.

– The exemption hitherto available to services provided by way of renting of immovable property to educational institutions stands withdrawn, with immediate effect.

– In Rule 2A of the Service Tax (Determination of Value) Rules, 2006, in relation to works contracts are proposed to be merged into one single category, with percentage of service portion as 70%; this change will come into effect from 1st October, 2014.

– Stiff interest rates are being proposed for delay in payment of Service Tax.

– E-payment of service tax is being made mandatory with effect from the 1st Oct 2014.

– Services provided by Recovery Agents to Banks, Financial Institutions and NBFC is being brought under the reverse charge mechanism; service receiver will be the person liable to pay service tax.

– The definition of intermediary is being amended to include the intermediary of goods in its scope. Accordingly, with effect from 1.10.2014, an intermediary of goods, such as a commission agent or consignment agent shall be covered under rule 9(c) of the Place of Provision of Services Rules.

– The first Proviso to rule 7 of the Point of Taxation Rules (POTR) is being amended to provide that point of taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier. This amendment will apply only to invoices issued after 1st October, 2014.

– A manufacturer or a service provider shall take credit on inputs and input services within a period of six months from the date of issue of invoice, bill or challan w.e.f. 1st September,2014.

– The condition for availing abatement in case of GTA service is being amended with immediate effect to clarify that the condition for non- availment of credit is required to be satisfied by the service providers only. Service recipient will not be required to establish satisfaction of this condition by the service provider.

– Services provided by the Indian tour operators to foreign tourists in relation to tours wholly conducted outside India are being exempted.

– Section 73 is being amended to prescribe time limits for completion of adjudication as already exists in Central Excise. This time limit would need to be followed, as far as possible.

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