Content at Glance :- News & UpdatesGo to Content at Glance 5 1.0 News & Updates 1. Rajya Sabha poll results raise GST hopes New Delhi: Results of elections to 27 Rajya Sabha seats

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Content at Glance :-

1.0 News & Updates

1. Rajya Sabha poll results raise GST hopes2. Is Your Business Software Ready For GST ?3. State FMs to meet this week to discuss model GST law4. Empowered Group of Ministers on GST to meet again in July5. All states, except Tamil Nadu, support GST, says Arun Jaitley6. Assam tea industry seeks relief under GST regime7. Jaitley shoots down Congress party's demand to cap GST8. Barring Tamil Nadu, 21 states 'virtually support' GST Bill: Arun Jaitley9. GST roll out from April 1 if law passed in next session: Jayant Sinha10. State to raise its GST concerns with Centre11. E-commerce transactions in GST net12. Time is opportune for the GST Bill: Mohandas Pai13. NOTIFICATION No. 24/2016-CE, dt. 14-06-201614. NOTIFICATION No. 25/2016-CE, dt. 14-06-201615. NOTIFICATION No. 32/2016-Service Tax dt. 06-06-201616. NOTIFICATION No. 33/2016-Service Tax dt. 06-06-201617. NOTIFICATION No. 34/2016-Service Tax, Date 06.06.201618. NOTIFICATION No. 35/2016-Service Tax, Date 23.06.201619. NOTIFICATION No. 36/2016-Service Tax, Date 23.06.201620. Circular No. 1031/19/2016-CX, dated 14-06-201621. Circular No. 195/05/2016-ST, 15-06-201622. Draft Model GST Laws

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2.0 Case Laws2.1 Case Laws related to Excise

Sr.No. Relevant Section Case Name Issue

1 Rule 6 read withRule 2(d) and Rule2 (e ) of CENVATCredit Rules 2004

Shree Rajasthan Syntexv.Commissioner of Central Excise, Jaipur-II

Cenvat Credit

2 Section 35B ofCentral Excise Act1944

Sai Wardha Power Ltd.v.Commissioner of Central Excise, Nagpur

Appeals

3 Rule 4 of CENVATCredit Rules 2004

Steel Authority of India Ltd.v.Commissioner of Central Excise, Raipur

Cenvat Credit

4 Section 5A ofCentral Excise Act1944

HIM Engineers India (P.) Ltd.v.Commissioner of Central Excise, Chandigarh

Levy and Collection ofDuty

5 Section 2(f) ofCentral Excise Act1944

Commissioner of Central Excise, Faridabad-IIv.Kapoor Lamp Shade Company (FactoryShop)

Manufacture

6 Section 2(f) ofCentral Excise Act1944

Jyoti Structures Ltd.v.Commissioner of Central Excise,Nashik"

Manufacture

7 Rule 5 of theCENVAT CreditRules 2004 readwith Section 11B ofCentral Excise Act1944

Envoy Mortgage India (P.) Ltdv.Commissioner of Central Excise, Mangalore

Refund

8 Section 37C readwith 35B of CentralExcise Act 1944

RP Casting (P.) Ltd.v.Customs, Excise & Service Tax AppellateTribunal, New Delhi

Service of decisions,orders, summons etc.

9 Section 5A ofCentral Excise Act1944

Commissioner, Central ExciseCommissionerate, Panchkulav.Cure Quick Remedies (P.) Ltd

SSI Exemptions

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2.2 Case Laws related to Service Tax

Sr.No. Relevant Statute Case Name Issue

1 Section 111 readwith Section 106 ofFinance Act 2013

Renuka Mangal Seva Kendrav.Commissioner of Central Excise & Customs,Aurangabad

VCES Scheme

2 Section 93 ofFinance Act 1994

Authority For Advance Rulings (Central Excise,Customs And Service Tax), New Delhiv.Hyundai Rotem Company, New Delhi

Exemptions

3 Section 65B(44) &Section 66E(e ) ofFinance Act 1994

Authority For Advance Rulings (Central Excise,Customs And Service Tax) New Delhiv.AKQA Media India (P.) Ltd.

Volume Discounts

4 Rule 5A read withRule 5 of ServiceTax Rules 1994

Mega Cabs (P.) Ltd.v.Union of India

Audit

5 Section5(105)(zzzh) ofFinance Act 1994

Suresh Kumar Bansalv.Union of India

Sale of UnderConstruction Flats

6 Section 66A, readwith Section65(65), 65B(44) andSection 66 ofFinance Act 1994

Rent Works India (P.) Ltd.v.Commissioner of Central Excise, Mumbai-V

Charge/Levy

7 Section 67 readwith Section66D(o) and Section65(105)(zzzo) ofFinance Act 1994

Lufthansa German Airlinesv.Commissioner of Service Tax, Delhi

Valuation


Sanjay Automobile Engineers (P.) Ltd.v.Commissioner of Central Excise, Pune-III

Recovery

9 Rule 6 of ServiceTax Rules 1994

Punjab National Bankv.Commissioner of Central Excise & ServiceTax, Chandigarh-II

Adjustment ofService Tax


Bizsolindia Services (P.) Ltd.v.Commissioner of Central Excise, Pune III

Valuation


Commissioner of Central Excise, Bhopalv.Western Coal Fields Ltd.

Interest

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12 Section 32F ofCentral Excise Act1944

HH Interior & Auto Components Ltd.v.Commissioner of Central Excise

Settlement of Cases


Blossom Industries Ltd.v.Commissioner of Central Excise, Customs& Service Tax, Daman

Valuation

14 Section 73B readwith Section 73Aand 77 of FinanceAct 1994

Chhattisgarh State Co-operativeMarketing Federation Ltd.v.Commissioner of Central Excise & ServiceTax, Raipur

Interest


Amcon Engineers (P.) Ltd.v.Commissioner of Service Tax, Delhi

Penalty

16 Section 65(102) ofFinance Act 1994

Commissioner of Central Excise, Customs& Service Tax, Raigadv.Balmer Lawrie & Co. Ltd.

Taxability

17 Section 65 (79) ofFinance Act 1994

Global Digital Color Labv.Commissioner of Central Excise, Jaipur-I

Taxability

Go to Content at Glance 5

1.0 News & Updates

1. Rajya Sabha poll results raise GST hopes

New Delhi: Results of elections to 27 Rajya Sabhaseats held on Saturday threw up more than a coupleof surprises. The BJP secured an unlikely victory inone of the seats in Jharkhand, while media magnateSubhash Chandra, whom the party had backed inHaryana, also won.

The biennial elections were held for 57 seats ofwhich 30 candidates have already been electedunopposed. After the results, the BJP has increasedits tally in the Rajya Sabha but the Congresscontinues to remain the single largest party.However, the shape of the new Rajya Sabha givesthe government effective numbers to get the Goodsand Services Tax (GST) constitution amendment Billpassed in the Monsoon session of Parliament likelyto begin on July 25.

After the results, the BJP has increased its tally in theRajya Sabha but the Congress continues to remainthe single largest party

The big surprise was Chandra's victory after theCongress had asked its legislators to vote for IndianNational Lok Dal candidate R K Anand. Chandra,chairman of the Zee group, had been claiming thathe has support of individual legislators in the twoparties.

In a related development, the governmentnominated social activist Sambhaji Raje Chhatrapatito the Rajya Sabha. He has been nominated to theonly vacant seat among the dozen nominatedmembers. The government had filled the other sixvacancies in the category in May.http://www.thehansindia.com/posts/index/National/2016-06-12/Rajya-Sabha-poll-results-raise-GST-hopes/234485

2. Is Your Business Software Ready For GST ?

Though the wrangling over the Goods and ServicesTax seems interminable, it is likely to become a lawby June, 2016, setting into motion irrevocable taxreforms that will mark a paradigmatic shift in theIndian taxation system. In such a scenario, one ofthe industries most affected by it would be softwarecompanies providing business applications as aservice to enterprises.

There will be far-reaching consequences foraccounting software such as Enterprise Resource

Planning (ERP) which is used by the corporateworld to generate invoices and payroll due to thefar-reaching nature of the change. The smallestchange in the taxation chain leads to a dominoeffect, affecting the entire structure of tax accountingfrom the top to the bottom. In such a context wherethe smallest change in the taxation system upsets theapple cart of accounting companies, one can verywell imagine the sheer number of changes thatwould have to be made in the software to makeclients tax compliant. It would basically entaildeveloping the tax accounting systems from scratch.

Fundamental Changes Effected By GST:The GST would be a comprehensive indirect tax onmanufacture, sale, and consumption of goods andservices throughout India. It will replace taxes thatthe Central and Stategovernments levy. Tax wouldbe collected at each stage on the basis of the inputtax credit method, allowing registered businesses toclaim tax credit to the value of GST they paid onpurchase of goods or services as part of their normalcommercial activity. Goods and services are notdistinguished from one another and are taxed at aflat single rate in a supply chain till the goods orservices reach the consumer. In the dual-rated GSTsystem, while exports are zero-rated, imports wouldbe taxed two way: Central GST and State GST. Thus,all state-administered taxes such as Excise, VAT,Octroi, and Service Tax, will be replaced by a singleunified tax across the country and would be dividedbetween the Center and the states.

The government expects the GST will unshackleIndia from red tape and improve the ease of doingbusiness but how the industry will take to the newchange will get apparent only after theimplementation of the law. The changes in theproposed indirect tax system could reducetransportation cycle times, enhance supply chaindecisions, lead to consolidation of warehouses, etc.which could help the logistics industry reach itspotential in terms of service and growth.

Leading Market Players Building Tax CompliantSoftware Ecosystems:With GST’s imminent implementation, the logisticsindustry should start exploring different supplychain models with their clients and at the same timedevelop a completely synchronised ERP accountingsystem to support inventory supply management asrequired under the GST regime. Multiple moduleswill have to be created such as those for input credit,destination system, twin rates, exclusion, and otherfactors in the GST.


“The GST is basically a complete overhaul of theexisting tax system. We have to start preparing forthe transition. We are developing our software andwe will help Indian enterprises make the transitionto GST painlessly. Our software will support thenew compliance requirements,” said ShashankDixit, CEO, Deskera—the leading business softwareprovider in the Asia-Pacific region.

But coping with tax requirements may mean extrafinancial burden for small and medium enterprisesas far as tax compliance is concerned.

“The transition may be difficult for companies usingold systems, particularly, if companies thatprovided them with the software in the first placehave shut down and they do not have the codes fordevelopment any more. In such a case, it be difficultto adapt the software to the changing times formoving beyond Excise, VAT to GST. Suchenterprises will have to go for new vendors, whohave the technology to deal with GST,” added Dixit.

Industry pundits are keeping their fingers crossed asseveral contentious issues remain, such as the cleardefinition of supply, supply chain managementthrough warehouse engineering, credit allowanceduring the transition phase, classification of goodsand services under GST, etc. The industry eagerlyawaits clarification on those issues. And there is notime like the present.

Is GST the change that will define market leaders inthe business software sector? Or will it be thenemesis of several of them? Only time will tell theanswers to such questions.http://techstory.in/business-software-gst/

3. State FMs to meet this week to discussmodel GST law

Amid hopes of long pending GST bill getting passedin Rajya Sabha in the next Parliament session, statefinance ministers will deliberate on the model GSTlaw at a two-day meeting in Kolkata beginningTuesday.

Finance Minister Arun Jaitley will participate in themeeting of Empowered Committee of State FinanceMinisters and try to iron out differences over thenew regime that will subsume all indirect taxes andcreate one national market under the Goods andServices Tax (GST).

“The meeting on June 14 and 15 will discuss themodel GST law, which will be adopted by the

Centre and all states. Union Finance Minister willattend the meeting on June 14,” an official said.The Centre is planning to roll out the indirect taxfrom the next financial year beginning April 1, 2017,but the GST bill has been pending in Rajya Sabhabecause of stiff opposition from the Congress party.Once the Constitution Amendment Bill to roll outGST is passed by the Parliament, the Centre andstates will have to adopt their own laws to giveeffect to the new indirect tax regime.

The Central GST (CGST) will be framed based onthe model GST law. The states will draft their ownState GST (SGST) based on the draft model law withminor variations incorporating state-basedexemptions.

Will go for voting on GST bill if Congress doesn’tcome onboard, says Arun JaitleyBesides these two laws, the Centre and states willhave to approve the integrated-GST law or iGST,which will deal with inter-state movement of goods.The Empowered Committee of State FinanceMinisters is headed by West Bengal FinanceMinister Amit Mitra, who took over thechairmanship in February.

The government has proposed to take up the GSTConstitution Amendment Bill in the Rajya Sabha inthe forthcoming monsoon session of the Parliament.The reform of the indirect taxation was initiated bythe Kelkar Committee in 2003, following which theUPA government in 2006 proposed the GST Bill.

The GST Constitution Amendment Bill was passedby Lok Sabha in May last year and has been pendingin the Rajya Sabha, where the ruling NDA does nothave the majority.http://indianexpress.com/article/business/economy/state-fms-to-meet-this-week-to-discuss-model-gst-law/

4. Empowered Group of Ministers on GST tomeet again in July

A meeting on Goods and Services Tax (GST),attended by Finance Ministers of all States andUnion Finance Minister Arun Jaitley was held inKolkata on Tuesday where the States aired theirviews on the major initiative.

The next meeting, scheduled in July, will deliberateon two procedural issues. “At the next meeting,presentations will be made on these two issues,” Mr.Jaitley said after the over three-hour long meeting.

http://techstory.in/business-software-gst/

http://indianexpress.com/article/business/economy/state-fms-to-meet-this-week-to-discuss-model-gst-law/

http://indianexpress.com/article/business/economy/state-fms-to-meet-this-week-to-discuss-model-gst-law/


West Bengal Finance Minister Amit Mitra, chairmanof the Empowered Group on Ministers, said the twoissues were fixing the revenue neutral rate and dualcontrol.

It may be noted that the Trinamool Congress hasovercome its opposition to the GST and ChiefMinister Mamata Banerjee has thrown her party’sweight behind the major move.

“GST is the joint effort of the States and the Centrein federal structure,” Mr. Mitra said.

The Centre expects some forward movement in thepassage of the long-pending bill with theimprovement in the BJP’s strength in the UpperHouse and with support from parties that hadopposed it.

Ten things to know about the GST Bill:-

1. Officially, the Constitution (One Hundred andTwenty-Second Amendment) Bill 2014.

2. It was introduced in the Lok Sabha on December19, 2014 by Finance Minister Arun Jaitley.

3. The Bill seeks to amend the Constitution tointroduce a goods and services tax (GST) which willsubsumes various Central indirect taxes, includingthe Central Excise Duty, Countervailing Duty,Service Tax, etc. It also subsumes State value addedtax (VAT), octroi and entry tax, luxury tax, etc.

4. The Bill inserts a new Article in the Constitutionmake legislation on the taxation of goods andservices a concurrent power of the Centre and theStates.

5. The Bill seeks to shift the restriction on States fortaxing the sale or purchase of goods to the supply ofgoods or services.

6. The Bill seeks to establish a GST Council taskedwith optimising tax collection for goods and servicesby the State and Centre. The Council will consist ofthe Union Finance Minister (as Chairman), theUnion Minister of State in charge of revenue orFinance, and the Minister in charge of Finance orTaxation or any other, nominated by each Stategovernment.

7. The GST Council will be the body that decideswhich taxes levied by the Centre, States and localbodies will go into the GST; which goods and

services will be subjected to GST; and the basis andthe rates at which GST will be applied.

8. Under the Bill, alcoholic liquor for humanconsumption is exempted from GST. Also, it will beup to the GST Council to decide when GST wouldbe levied on various categories of fuel, includingcrude oil and petrol.

9. The Centre will levy an additional one per centtax on the supply of goods in the course of inter-State trade, which will go to the States for two yearsor till when the GST Council decides.

10. Parliament can decide on compensating Statesfor up to a five-year period if States incur losses byimplementation of GST.http://www.thehindu.com/business/Economy/gst-bill-empowered-group-of-ministers-to-meet-again-in-july/article8728268.ece

5. All states, except Tamil Nadu, supportGST, says Arun Jaitley

KOLKATA: Virtually all states have supported theidea of GST except Tamil Nadu which has "somereservations", finance minister Arun Jaitley said onTuesday after a meeting of empowered committeeof state FMs on the long awaited indirect tax reform.

He said however that there was "no deadline assuch" for the implementation of the Goods andServices Tax which aims to subsume a string of stateand central level levies.The government had earlier targeted to roll out thenationwide single tax regime from April 1, 2016 butthe Constitutional Amendment Bill on GST has beenstuck in the Rajya Sabha due to opposition by theCongress party.

"Virtually all the states have supported the idea ofGST today barring Tamil Nadu which has expressedsome reservations. TN has offered a few asuggestions which have been noted by thecommittee," Jaitley told reporters on the first day ofthe two-day meet.

The meeting was attended by finance ministers of 22states including West Bengal's Amit Mitra as well aschief ministers of Arunachal Pradesh andMeghalaya, deputy CM of Delhi and senior officialsof seven others.

Stating that this was a record attendance of FMs,Jaitley said that every state has given detailed viewson GST.

http://www.thehindu.com/business/Economy/gst-bill-empowered-group-of-ministers-to-meet-again-in-july/article8728268.ece




Chairman of GSTN and revenue secretary HasmukhAdhia were also present.Jaitley said the Lok Sabha had approved the GSTBill while it was pending before the Rajya Sabha.

"The first thing which will have to be done is to passthe Constitutional amendment which has to be thenratified by the states. Then Parliament will have topass the CGST Bill and states the SGST Bills" he said.

Tamil Nadu chief minister Jayalalithaa and PrimeMinister Narendra Modi are scheduled to meet inDelhi later on Tuesday wherein she is expected totake up with him a host of state-related issuesincluding the Formation of Cauvery ManagementBoard and Cauvery Water Regulation Committee.http://timesofindia.indiatimes.com/business/india-business/Virtually-all-states-are-in-favour-of-GST-Arun-Jaitley/articleshow/52745702.cms

6. Assam tea industry seeks relief under GSTregime

GUWAHATI: With the empowered group of statefinance ministers meeting in Kolkata from Tuesdayto Wednesday on the Goods and Services Tax (GST)regime, Assam's tea industry representatives haveappealed the Centre to keep tea under theconcessional rate of 5% GST slab.

The joint forum of Assam Tea Planters' Association(ATPA), North Eastern Tea Association (NETA) andBharatiya Cha Parishad (BCP) and Tea Board ofIndia (TBI) vice chairman Bidyananda Barkakoty onTuesday said any higher rate of taxation on tea willhave very adverse impact on the industry.

In a memorandum submitted to the state financeminister Himanta Biswa Sarma, who is also part ofthe empowered committee, the joint forum arguedthat tea should be clubbed for taxation at a similarrate as for other items of mass consumption such asflour, pulses and salt. They said that tea being anagricultural produce the income tax Act considers60% of the income derived from growing andmanufacturing tea as an agricultural income.

"Tea is a high labour intensive crop absorbing 60%to 70% of its total cost. Tea market is regulated bythe packeteer and blenders and it was difficult onthe part of Assam Tea Industry to pass the burden ofhigher cost to the buyers and ultimately the netrealization of tea sales price is reduced," Barkakotysaid.

ATPA chairman Raj Barooah said due toagricultural nature of tea sector, about 70% ofindustry cost consists of worker wages which do notoffer any possibility of input credits.

BCP chairman Mayank K Agarwal said that adverseweather conditions, severe pest attack, increase incost of wages and other input costs with nocomparative increase in tea sales price have affectedthe sector immensely in last few years.

NETA chairman Manoj Jallan said during the lastfew years the cost of production of tea has increasedbecause of hike in cost of labour wages and othersocial costs related to wages.http://timesofindia.indiatimes.com/business/india-business/Assam-tea-industry-seeks-relief-under-GST-regime/articleshow/52745434.cms

7. Jaitley shoots down Congress party'sdemand to cap GST

Finance Minister Arun Jaitley on Tuesday shotdown the opposition Congress party's demand towrite a cap for the proposed goods and services tax(GST) into the Constitution.

After meeting state finance ministers in Kolkata,Jaitley said there was a consensus among Indianstates against the Congress party's stand.

The proposed tax reform, India's biggest revenueshake-up since independence in 1947, seeks toreplace a slew of federal and state levies,transforming a nation of 1.3 billion people into acommon market.

The Congress party, the original author of the taxreform, has said it would back the GST bill if thegovernment agreed to cap the tax rate at 18 percentand create an independent mechanism to resolvedisputes on revenue sharing between states.

http://www.business-standard.com/article/reuters/jaitley-shoots-down-congress-party-s-demand-to-cap-gst-116061400495_1.html

8. Barring Tamil Nadu, 21 states 'virtuallysupport' GST Bill: Arun Jaitley

Finance Minister Arun Jaitley attended a crucialmeeting to decide the roadmap for the Goods &Services Bill. In attendance were 22 state finance

http://www.business-standard.com/article/pti-stories/cait-sharpens-pitch-on-gst-bill-wants-congress-to-play-ball-116051500471_1.html



http://timesofindia.indiatimes.com/business/india-business/Virtually-all-states-are-in-favour-of-GST-Arun-Jaitley/articleshow/52745702.cms



http://www.dnaindia.com/money/report-gst-bill-will-be-approved-in-monsoon-session-of-parliament-arun-jaitley-2213117




ministers who were there to also share ideas on theGST bill.

Speaking to the media after the meeting, Jaitley saidthat all the 22 state finance minister shared theirviews on the GST bill on Tuesday in Kolkata. Hesaid nearly all the states, barring Tamil Nadu, werein support of the GST Bill that the centre has beentrying to get implemented.

Jaitley said that all the stakeholders who attendedthe meeting, also gave their views on the roadmapand design of the GST bill.

Going ahead, it is likely that the government willhold more such meetings before the crucial bill iseventually passed.

Recently, Minister of State for Finance Jayant Sinhasaid that the government was looking at April 2017as the new deadline for the rollout of the GST Bill.This will only be possible though, if it gets thesupport from smaller regional parties to pass thenational sales tax legislation in the Parliamentsession next month. Then it would need theapproval for supporting laws by year-end.

"If we can pass it in the monsoon session (ofParliament beginning next month), then we canimplement it in April 1, 2017," Sinha had told PTI.http://www.dnaindia.com/money/report-arun-jaitley-22-state-finance-ministers-discuss-roadmap-for-gst-bill-2223675

9. GST roll out from April 1 if law passed innext session: Jayant Sinha

NEW DELHI: Targeting April 2017 for the rollout ofGoods and Services Tax, the government is bettingon support from smaller regional parties to pass thenational sales tax legislation in the Parliamentsession from next month, and expects approval forsupporting laws by year-end.

GST was earlier planned to be introduced fromApril 1 this year, converting 29 states into a singlemarket through the new indirect tax regime, but thedeadline was missed as the bill to roll it out remainsstalled in the opposition- dominated Rajya Sabha.

"If we can pass it in the monsoon session (ofParliament beginning next month), then we canimplement it in April 1, 2017," Minister of State forFinance Jayant Sinha told PTI.

The government has enough backing from smallerregional parties to pass the Bill in Rajya Sabhawithout support from the main opposition Congressparty, he said.

Congress, which first proposed the constitutionalamendment in 2006, is demanding capping theoverall rate at 18 per cent and scrapping anadditional 1 per cent tax designed to compensatemanufacturing-heavy states that fear losing revenueonce the measure is implemented.

After Parliament approves the constitutionalamendment to allow GST, it needs to be ratified bymore than half of states. Then Parliament must passanother bill to implement the GST, Sinha said.

"First the Constitution Amendment will have to beratified by 50 per cent of the state assemblies, thenthe GST Bill will be passed by all the stateassemblies," he said.

After the Constitution Amendment Bill is passed inParliament, there are three more legislations -Central GST (CGST), State GST (SGST) andIntegrated GST (IGST) - which are required to bepassed.

"Of course, there is a complicated legislativecalendar that we have to work through. Then thereare implementation issues which are working, butwe feel that we can get all of that done in time," hesaid.

Meanwhile, the Empowered Committee of StateFinance Ministers will deliberate on the model GSTlaw at a two-day meeting in Kolkata beginningtomorrow. Finance Minister Arun Jaitley willparticipate in the meeting and try to iron outdifferences with the states over the new regime.

The GST bill -- which will help create a singlenational sales tax to replace several state and centrallevies -- has already been approved by the LokSabha or Lower House of Parliament and is pendingin the Upper House where the government doesn'thave a majority.

Sinha hoped to get support of most of the parties onGST Bill so that it is passed with national consensus.

"Our expectation is that we will get support frommany parties. We would like it to be passed with anational consensus, so we would like all parties toapprove it. In the Lok Sabha when the Constitution

http://timesofindia.indiatimes.com/business/india-business/Congress-not-opposing-GST-says-Ghulam-Nabi-Azad/articleshow/52292231.cms




Amendment was passed, it was passedunanimously. So we would like it to be passed inRajya Sabha unanimously as well," he said.http://economictimes.indiatimes.com/news/economy/policy/gst-roll-out-from-april-1-if-law-passed-in-next-session-jayant-sinha/articleshow/52729039.cms

10. State to raise its GST concerns with Centre

Gandhinagar: The Gujarat government has decidedto raise concerns about likely impact on the state'srevenues, in case the Government of India decidesto implement the Goods and Services Tax (GST)regime across the country in the next few months.The Gujarat government will raise its concerns at theEmpowered Committee's meeting of state financeministers in Kolkata on May 14. State financeminister Saurabh Patel will make a representation atthe meeting.

According to a report from the state commercial taxdepartment that was submitted recently to theUnion ministry of finance, Gujarat will face a directloss Rs 10,800 crore per annum in revenues from2016-17 if the GST regime is implemented. Lowercompensation for central sales tax (CST) foregonewill be an added loss to state. The Gujaratgovernment will raise this and other issues.

Patel said: "We will raise the issues of compensationto states, dual control of central and stategovernment over GST collection, sharing ofrevenues between states, collection of GST on e-commerce, GST on exports, ITC (input tax credit),GST on petroleum products, real estate etc,. There isno clarity on the mechanism to collect GST in theservice sector, as the state government doesn't havethe expertise or a mechanism to collect tax fromservice sector units. Special assistance will berequired for registration and collection of GST fromservice sector units. All these issues will be raised atthe empowered committee meeting."

At present, the state's average income from VATand other state taxes is around Rs 62,000 crore perannum (VAT alone is Rs 45,000 crore and the state'sshare in central taxes is around Rs 14,000 crore). Thestate government's concern is how to offset aroundRs 76,000 crore of revenues with at least 20% annualgrowth. According to the estimates of theEmpowered Committee, apparently only about 30%of all tax revenues of the Centre will be subsumedinto GST and the majority of direct taxes of theCentre will remain untouched by GST reform. Onthe other hand, the mainstay of states in terms ofrevenues is indirect taxes, of which VAT is the

largest component in most states. Therefore, almost65% of total tax revenues of the states are gettingsubsumed into GST. In Gujarat, which does nothave any significant revenues from excise, the shareof state tax revenues to be subsumed will reach 81%of the state's tax revenues.

Further, the loss due to abolition of CST will be anadditional loss for states. This additional loss will belarger for states that have a larger manufacturingsector and are net exporting states in terms of inter-state trade.http://timesofindia.indiatimes.com/city/ahmedabad/State-to-raise-its-GST-concerns-with-Centre/articleshow/52739040.cms

11. E-commerce transactions in GST net

The model Goods and Services Tax (GST) law, madepublic by the Centre, has clarified that all e-commerce transactions will attract GST and that thetax will be collected by the service operator as soonas the supplier receives payment.

“…Every electronic commerce operator shall, at thetime of credit of any amount to the account of thesupplier of goods and/or services or at the time ofpayment of any amount in cash or by any othermode, whichever is earlier, collect an amount…representing consideration towards the supply ofgoods and /or services made through it,” accordingto the model law, approved by most state financeministers.

While this has cleared the confusion surroundingthe levy of the tax on e-commerce transactionsspanning different states, it will also makeoperations more complicated for the e-commerceplatform, according to experts.

Significant burden:“This will mean significant compliance burden on e-commerce companies as many of them deal withthousands of vendors,” Pratik Jain, Leader - IndirectTax, PwC India said. “Further, this may lead torefund situations for many suppliers who operateon thin margins. In addition, the e-commercecompanies will need to file a statement providingdetails of all supplies made through e-commerceplatforms.”

The model GST law — with 162 clauses and fourschedules — will be applicable for all those with anannual turnover of Rs.10 lakh or more. This limit isRs. five lakh in the north-eastern states.

http://timesofindia.indiatimes.com/city/ahmedabad/State-to-raise-its-GST-concerns-with-Centre/articleshow/52739040.cms




“The provisions of the model GST law thatprescribes a GST threshold limit which is so low asRs.10 lakh (Rs.5 lakh for north east), may be a zerosum game as the administrative cost of complianceon both ends would equal the tax collected,” SachinMenon, Partner and Head, Indirect Tax at KPMG inIndia said, adding that the Empowered Committeeshould consider a higher threshold.

Comments elicited:Revenue Secretary Hasmukh Adhia tweeted: “Werequest all stakeholders to give theirsuggestions/comments to secretariat of EmpoweredCommittee of FMs and or to finance ministry.”.

The model law also provides for an Authority forAdvance Ruling to be located in every state,comprising one Central GST member and one StateGST member to be appointed respectively by theCentral Government and the State government.

In addition, the law provides for the creation of anAppellate Authority in each state.The GST modellaw also includes a ‘composition levy’, wherein aperson with an annual turnover of less than Rs.50lakh on the sale of goods and services in a singlestate will have to pay a tax of “not less than one percent.http://www.thehindu.com/business/Economy/ecommerce-transactions-in-gst-net/article8728976.ece

12. Time is opportune for the GST Bill:Mohandas Pai

ET Now: What is your take on the GST issue?

Mohandas Pai: I think the time is opportune. For thelast two years, the Congress and some part of theopposition has been obstructionist. They are hurtingthe future of our children. They are hurting thefuture of young people in this country becausecreation of jobs and economic growth is a prioritynumber one.

UPA government which pushed the GST is nowbecoming the main barrier on very frivolousgrounds. Of course, BJP played obstructionist in thelast parliament and this should be condemned andmany of us condemned it but now being in theopposition, they should have supported it. For veryfrivolous reasons, shut down parliament is notacceptable, because we should not allow politicalparties to play with the future of young people inthis country.

Today, the biggest challenge for India is a lack ofjobs. You have 10 crores young people who attainthe age of majority over last 10 years without jobs.There is a Jat agitation, the Gujar agitation, the Patelagitation. In the whole of middle India, there is ahuge amount of anger and fervour against lack ofjobs.

The Kashmiri issue is basically a lack of jobs. Thenorth-east issue is lack of jobs. So we have to protectour country to make sure that we remain as a singlecountry. We must promote growth and GST is themeans to do that because GST will reduce cost, GSTwill make sure that transaction cost come down andGST will create one single national market.

We are not one single national market and so manypeople are struggling. I am very happy now thatMamata Didi has come to power. She has said thatshe will do it. She has asked Amit Mitra to makesure it happens and down south our amma is also Ithink politically inclined to make it happen, becauseshe understands the thing. Jaitley Ji is now changingit. Prime minister changing it. I hope MrChidambaram and others support this because theyworked on it.

I am sure Dr Manmohan Singh will support itbecause he has struggled long for it. It is his dream.So I am very confident it will happen now.

ET Now: What do you make of the wholecontroversy over the GDP numbers? People aresaying that there is lot of discrepancies in thenumbers at this point of time.

Mohandas Pai: This is a leftist and left or centreeconomies and others who are not happy aboutIndia's progress who comment on this and try torubbish it. Look the CSO is an independentorganisation. They get data independently. Theymake mistakes, is independent. The governmentdoes not control it. The CSO is never controlled bythe government.

The UPA was there, they are not controlled and thenew methodology was brought in by the UPA. Bythe time, they released the numbers, the UPA wasthrown out of power but it is done by the UPA. Andafter new government has come, I do not thinkanybody has interfered. Now you can come and saymethodology some discrepancy because the newsystem, they do not have back data but you questionit and say government is manipulating, governmentis there, this is total rubbish.

http://www.thehindu.com/business/Economy/ecommerce-transactions-in-gst-net/article8728976.ece

http://www.thehindu.com/business/Economy/ecommerce-transactions-in-gst-net/article8728976.ece


Earlier also the data price was not fine. It was very-very narrow. We need to invest in statistical system.We need to invest in more data, more datagathering.

India has changed tremendously in the last 10 years.Now this come to 2011-12 which is very good butother areas are based on 2004-2005. The inflationfigures are based on 2004-2005. So I think it is goodto have a debate but let us not rubbish. Let us saythat look on technical grounds, we want this, wewant that that is perfectly fine. I believe the GDP isstrong.

How can you explain 12% increase, 17% increase intaxes, 12% increase in secular taxes last year and thisyear? Even the first two months, if you look at theIPI numbers, 30% decline is because of insulatedcable and some ill electronic matter. Insulated cablescannot shake IPI in this country, this is ridiculous.

They cannot shake. It is not such a large production.It has got very small so no impact. So I think weneed better sense in this country.http://economictimes.indiatimes.com/markets/expert-view/time-is-opportune-for-the-gst-bill-mohandas-pai/articleshow/52746246.cms

13. NOTIFICATION No. 24/2016-CE, dt. 14-06-2016

Seeks to further amend notification No.214/86-Central Excises dated 25.03.1986.

To See the detailed notification please click thebelow link:-

http://www.cbec.gov.in/htdocs-cbec/excise/cx-act/notifications/notfns-2016/cx-tarr2016/ce24-2016.pdf

14. NOTIFICATION No. 25/2016-CE, dt. 14-06-2016

Seeks to further amend notification No.67/95-Central Excises dated 16.03.1995.


http://www.cbec.gov.in/htdocs-cbec/excise/cx-act/notifications/notfns-2016/cx-tarr2016/ce25-2016.pdf

15. NOTIFICATION No. 32/2016-Service Taxdt. 06-06-2016

Seeks to amend notification No. 25/2012 - ServiceTax, dated the 20th June, 2012, so as to exempt thelegal services provided by senior advocates to abusiness entity with a turnover up to rupees tenlakh in the preceding financial year.


http://www.cbec.gov.in/htdocs-servicetax/st-notifications/st-notifications-2016/st32-2016.pdf

16. NOTIFICATION No. 33/2016-Service Taxdt. 06-06-2016

Seeks to amend Service Tax Rules, 1994 so as tospecify the business entity as the person liable toservice tax in respect of services provided by senioradvocates.



17. NOTIFICATION No. 34/2016-Service Tax,Date 06.06.2016

Seeks to amend notification No. 30/2012-Service Taxdated 20th June, 2012, so as to prescribe extent ofpayment of service tax by a business entity as arecipient of services provided by senior advocates.




Seeks to exempt taxable services from the whole ofKrishi Kalyan Cess leviable thereon with respect towhich the invoice for the service has been issued onor before 31st May, 2016 subject to the condition thatthe provision of the service has been completed onor before 31st May, 2016.



http://knnindia.co.in/news/newsdetails/state/roadblocks-in-transport-of-goods-within-india





http://www.cbec.gov.in/resources//htdocs-servicetax/st-notifications/st-notifications-2016/st26-2016.pdf












Seeks to exempt service tax on taxable services byway of transportation of goods by a vessel fromoutside India upto customs station in India withrespect to which the invoice for the service has beenissued on or before 31st May, 2016 subject to thecondition of production of customs certified copy ofthe import manifest or import report required to bedelivered under section 30 of the Customs Act, 1962.



20. Circular No. 1031/19/2016-CX, dated14-06-2016

Regarding the scope of the levy of excise duty onreadymade garments and made articles of textilesbearing a brand name or sold under a brand nameand having a retail sale price of Rs. 1000 or more inthis years Budget.

To See the detailed circular please click the belowlink:-

http://www.cbec.gov.in/htdocs-cbec/excise/cx-circulars/cx-circulars-2016/circ1031-2016cx.pdf

21. Circular No. 195/05/2016-ST, 15-06-2016

Refund claims under rule 5 of the CENVAT CreditRules, 2004.

To See the detailed circular please click the belowlink:-

http://www.cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2016/st-circ-195-2016.pdf

22. Draft Model GST Laws

Draft Model GST Laws dated 14.06.2016

http://www.finmin.nic.in/reports/ModelGSTLaw_draft.pdf












2.0 Case Laws2.1 Case Laws related to Excise

Sr. No. 1RelevantSection

Rule 6 read with Rule 2(d) and Rule 2(e )

RelevantStatute

CENVAT Credit Rules 2004

Issue Cenvat CreditSub Issue Exempted and dutiable goods or

exempted and taxable services,obligation of assessee

Favour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment Assessee was manufacturing cottonyarn - Assessee took credit of capitalgoods, which were exclusively usedfor manufacture of 'exempted cottonyarn' under Notification 30/2004-CE -On department's insistence, assesseereversed credit even prior to issuanceof notice dated 25-10-2005 - Assesseeargued that same capital goods wereput to use on 2-2-2006 for manufactureof 'dutiable cotton yarn' underNotification 29/2004-CE; hence, creditcannot be denied - HELD : At time oftaking credit, capital goods were usedexclusively for exempted goods;hence, credit was inadmissible on thatdate - However, on 2-2-2006, sincesame capital goods were used fordutiable goods, credit cannot be heldto be inadmissible - Hence, matter wasremanded back for allowing creditfrom 2-2-2006, if it is found thatcapital goods were used formanufacture of dutiable goods

Citation [2016] 69 taxmann.com 331 (NewDelhi - CESTAT)Shree Rajasthan Syntexv.Commissioner of Central Excise,Jaipur-II


Section 35B

RelevantStatute

Central Excise Act 1944

Issue AppealsSub Issue Appellate Tribunal

Favour of RevenueIssuingAuthority

CESTAT Mumbai

Judgment Against an order relating to rebate ongoods supplied from DTA to SEZwithin India, assessee filed appealbefore Tribunal under section 35B -Whether in terms of clause (b) ofproviso to section 35B(1), appealagainst order relating to rebate ongoods supplied from DTA to SEZwithin India would not lie to Tribunal

Citation [2016] 69 taxmann.com 333 (Mumbai -CESTAT)Sai Wardha Power Ltd.v.Commissioner of Central Excise,Nagpur


Rule 4

RelevantStatute

CENVAT Credit Rules 2004

Issue Cenvat CreditSub Issue Conditions for AllowingFavour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment Assessee was engaged in manufactureof various iron and steel items liableto central excise duty - It had severalcaptive power plants and used powerproduced therein in its manufacturingactivity - It had transferred one suchcaptive power plant to another entity -It claimed cenvat credit on certaininputs purchased and certain itemsmanufactured by it, which weretransferred to above captive powerplant for use in generation ofelectricity, which in turn was fullyutilised by it - Lower authoritiesdisallowed claim of cenvat credit -Whether since no separate centralexcise licence was given to captivepower plant transferred to anotherentity and all inputs transferred topower plant were fully utilised in orin relation to manufacture ofelectricity which in turn was fullyused captively by assessee, assesseewas eligible for cenvat credit - Held,yes


Citation [2016] 69 taxmann.com 424 (NewDelhi - CESTAT)Steel Authority of India Ltd.v.Commissioner of Central Excise,Raipur


Section 5A

RelevantStatute


Issue Levy and Collection of DutySub IssueFavour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment Assessee was engaged in manufactureof tractor parts liable to central exciseduty - It claimed exemption frompayment of duty under NotificationNo. 50/2003-CE, dated 10-6-2003 stating that there had been asubstantial expansion of installedcapacity by more than 25 per cent -Adjudicating Authority deniedexemption on grounds that (i)replacement of hydraulic press byassessee with another machinerycould not be considered as expansionof installed capacity, and (ii) assesseecould not establish fact of substantialexpansion of more than 25 per cent -Whether expansion of installedcapacity could happen either byaddition or by part or full replacementof existing machinery - Held, yes -Whether since considering variousevidences submitted by assessee andcategorical report received fromDistrict Industries Authorities of StateGovernment it was apparent thatassessee had executed substantialexpansion of installed capacity ofmore than 25 per cent, it was eligiblefor exemption claimed underNotification No. 50/2003-C.E. - Held,yes

Citation [2016] 69 taxmann.com 397 (NewDelhi - CESTAT)HIM Engineers India (P.) Ltd.v.Commissioner of Central Excise,Chandigarh


Section 2(f)

RelevantStatute


Issue ManufactureSub IssueFavour of AssesseeIssuingAuthority

High Court of Punjab & Haryana

Judgment Assessee procured variouscomponents of lamp shades andchandeliers from different sources andthereafter, packed same in cartons,put thereon its logo, besides codenumber of product - Departmentargued that said assembly of variouscomponents of lamp shades andchandeliers amounted to 'manufactureof lamps and light fittings' - HELD :Procuring manufactured items andpacking them with its own brandname by assessee, does not amount tocreation of a new product which mayinvite duty

Citation [2016] 70 taxmann.com 20 (Punjab &Haryana)Commissioner of Central Excise,Faridabad-IIv.Kapoor Lamp Shade Company(Factory Shop)


Section 2(f)

RelevantStatute


Issue ManufactureSub IssueFavour of AssesseeIssuingAuthority

CESTAT Mumbai

Judgment Assessee was engaged in activity oferection of transmission line towers -Parts of transmission towers wereassembled piece by piece andcomprised of structural steel angles,channels, etc. - Transmission towerwas erected using nuts, bolts, washer,springs, etc. - Assessee claimed thatactivities like punching, drilling ofholes, welding, trimming and


galvanizing carried out on duty paidangles, beams and channels, etc. didnot amount to manufacture -Adjudicating Authority held thatprocess undertaken by assesseeamounted to manufacture andattracted duty - Whether processundertaken by assessee viz. punching,welding, trimming, drilling of holes,level cutting of edges and galvanizingdid not amount to manufacture, asthis process did not transform subjectgoods into a new and differentproduct with a distinct name,character and use - Held, yes

Citation [2016] 70 taxmann.com 192 (Mumbai -CESTAT)Jyoti Structures Ltd.v.Commissioner of Central Excise,Nashik


Rule 5 of the CENVAT Credit Rules2004 read with Section 11B

RelevantStatute


Issue RefundSub IssueFavour of AssesseeIssuingAuthority

CESTAT Bangalore

Judgment Assessee was exporting 'IT enabledservices' - Assessee filed claim forrefund of Cenvat credit under rule 5on 29-3-2010/18-5-2010 within 1 yeartime-limit - Department requestedassessee to furnish refund claim inprescribed form - Assessee re-submitted refund claim on 22-3-2011 -Department denied refund on groundthat : (a) date of filing of refund claimwas 22-3-2011; (b) since said date wasbeyond 1 year from date of export,hence, refund claim was time-barred;and (c) refund claim was filed half-yearly (instead of quarterly) - HELD :In view of earlier order in case of sameassessee, date of filing of refund claimwould be 29-3-2010/18-5-2010 and not22-3-2011 - Hence, matter wasremanded back for payment of refundadmissible in accordance with lawafter due verification

Citation [2016] 70 taxmann.com 218 (Bangalore- CESTAT)Envoy Mortgage India (P.) Ltd.v.Commissioner of Central Excise,Mangalore


Section 37C read with 35B

RelevantStatute


Issue Service of decisions, orders, summonsetc.

Sub IssueFavour of AssesseeIssuingAuthority

High Court of Rajasthan

Judgment Department served adjudication orderdated 4-10-1999 vide registered post,but, could not produce'acknowledgement due' - Assesseeargued that order was not receivedand he came to know of it later in year2008 and therefore, delay in filingappeal must be condoned - HELD : Asper section 37C(1), at relevant time,adjudication order could have beenserved through registered post butwith acknowledgement due - There isnothing on record to show that aftersending copy of order throughregistered post, acknowledgementdue was produced - In absence ofservice of copy of order in mannerprescribed under section 37C(1), delaycannot be attributed to assessee -Hence, appeal was remitted back forhearing on merits

Citation [2016] 70 taxmann.com 242(Rajasthan)RP Casting (P.) Ltd.v.Customs, Excise & Service TaxAppellate Tribunal, New Delhi


Section 5A

RelevantStatute


Issue SSI ExemptionsSub IssueFavour of Assessee


IssuingAuthority

High Court of Punjab & Haryana

Judgment Assessee was availing SSI-exemptionwithout cenvat credit for clearancesmade under Notification dated 1-3-2003; but, in respect of branded goods,assessee cleared same on payment ofduty with claim of credit -Department argued that simultaneousavailment of SSI-exemption alongwith Cenvat credit is impermissible;hence, denied SSI-exemption asCenvat credit benefit was claimed -HELD : Goods bearing brand name ofothers are ineligible for SSI-exemptionand are liable to duty and further,same are not taking into account incomputing turnover-limits under SSI-exemption - Since they are outsidescope of SSI-exemption, if duty is paidthereon, inputs, etc. used therein areeligible for Cenvat credit - Hence, inthat sense, simultaneous availment ofSSI-exemption and Cenvat credit innot barred

Citation [2016] 70 taxmann.com 244 (Punjab &Haryana)Commissioner, Central ExciseCommissionerate, Panchkulav.Cure Quick Remedies (P.) Ltd


2.2 Case Laws related to Service TaxSr. No. 1RelevantSection

Section 111 read with Section 106

RelevantStatute

Finance Act 2013

Issue VCES SchemeSub IssueFavour of AssesseeIssuingAuthority

CESTAT Mumbai

Judgment Assessee declared tax dues underVCES and paid 50 per cent thereof on31-12-2013 and balance upto 30-6-2014- On finalization of balance sheet,assessee's auditors pointed out thatthere was under-reporting of 'grossreceipts' leading to under-reporting of'tax dues' by Rs. 35,288 - Assessee paidsaid amount with interest on 20-12-2014 - Department treated VCESdeclaration as substantially falseunder section 111 and raised demand- Assessee argued that there was merearithmetical error - HELD : Mistakeoccurred due to arithmetic error inquantifying dues and same waspointed by assessee himself and madegood by making payment withinterest for delay - There was nointention of assessee to make a falsedeclaration - Hence, VCES declarationcannot be regarded as substantiallyfalse and same was valid

Citation [2016] 69 taxmann.com 329 (Mumbai -CESTAT)Renuka Mangal Seva Kendrav.Commissioner of Central Excise &Customs, Aurangabad


Section 93

RelevantStatute

Finance Act 1994

Issue ExemptionsSub Issue Works Contract ServiceFavour of AssesseeIssuingAuthority

AAR - New Delhi

Judgment Under contract with Delhi Metro,applicant was to carry out 'integratedtesting', 'commissioning' and 'trailruns' of 'rolling stock' - Applicantsought advance ruling that its activity

is exempt under Entry 14(a) ofNotification 25/2012-ST relating to'commissioning… of original workspertaining to … metro' - HELD : Asper dictionary-meaning,'commissioning' implies 'to bring amachine, plant, equipment etc., intooperation' - Rolling Stocks areplant/machinery - Applicant's role isto verify and confirm compatibilityand compliant performance of hisequipment/sub-system/system withequipment/sub-system/systemprovided by others (including trialruns) - Such activity amounts to'commissioning of rolling stocks', viz.,bringing Rolling stocks into operation- 'Commissioning of Rolling stock'would amount to 'commissioning ofplant and machinery' and would fallunder original works - Therefore,commissioning of original works forDelhi Metro is exempt

Citation [2016] 69 taxmann.com 391 (AAR -New Delhi)Authority For Advance Rulings(Central Excise, Customs And ServiceTax), New Delhiv.Hyundai Rotem Company, NewDelhi,


Section 65B(44) & Section 66E(e )

RelevantStatute

Finance Act 1994

Issue Volume DiscountsSub IssueFavour of AssesseeIssuingAuthority

AAR - New Delhi

Judgment Activity carried out for aconsideration - To be 'service', theremust be nexus between 'activity' and'consideration' and also a contractualrelationship (express or implied) -Burden of proof is always ondepartment Refraining from, orTolerating or Doing, an Act -Applicant, advertising agency,proposed to : (a) provide services toadvertisers by placing advertisementsin media selected by advertisers; and(b) buy and sell media space/time


inventory on own account - Applicantwould also earn incentives/volumediscounts from Media Owners -Applicant sought ruling whenincentives/discounts would amountto 'service' to Media Owners - HELD :Department could not show what'activity' is undertaken by applicantresulting into Media Owner givingvolume discount - Here : (a) choice ofselecting Media Owner is withAdvertiser, hence, applicant cannot besaid to be promoting/marketing anyparticular 'media owner'; (b) there isno contractual obligation betweenapplicant and Media Owner to givevolume discount; (c) volume discountis not fixed and isdiscretionary/gratuitous and cannotbe claimed as a matter of right -Hence, in absence of any defineactivity and consideration, there is noservice by applicant to Media Ownerand therefore, incentive/volumediscounts cannot be charged to servicetax

Citation [2016] 69 taxmann.com 390 (AAR -New Delhi)Authority For Advance Rulings(Central Excise, Customs And ServiceTax) New Delhiv.AKQA Media India (P.) Ltd.,


Rule 5A read with Rule 5

RelevantStatute

Service Tax Rules 1994

Issue AuditSub Issue Audit of records by Department

whether legalFavour of AssesseeIssuingAuthority

High Court of Delhi

Judgment Assessee filed writ challengingvalidity of rule 5A(2), as amendedwith effect from 5-12-2014 andCirculars dated 10-12-2014 and 27-2-2015, on ground that there is no powerof audit with service tax authoritiesand only audit under section 72A canbe conducted by Chartered/CostAccountants and, therefore, audit byservice tax officers is ultra vires -

HELD: Section 72 providing for bestjudgment assessment, section 72Aproviding for special audit and section82 providing for power to search,contain reasonable restrictions andprocedure for exercise of said powers- There is no power with service taxauthorities to conduct audit - Word'verify' in section 94(2)(k) empowersverification of records and does notempower 'audit' of records, as audit isan specialized function and cannot beentrusted to any and every officer ofdepartment - Moreover, 'records'would mean 'records' required to bekept under rule 5(2); therefore, rule5A(2) requiring even furnishing of'audit reports' exceeds mandate of'records' - Rule 5A(2) requiringsubmission of records to C&AG isirrational - Hence : (i) Rule 5A(2)authorising officers of Service TaxDepartment or audit party deputed bya Commissioner/CAG to seekproduction of documents on demandis ultra vires Finance Act and is,therefore, struck down; (ii) since'verification' cannot be construed as'audit', hence, Rule 5A(2) cannot besustained with reference to Section94(2)(k); (iii) Circular No. 181/7/2014-ST and Circular No. 995/2/2015-CXfixing power of audit and audit normsare ultra vires and quashed; and (iv)therefore, consequent direction ofaudit of accounts of assessee was alsoquashed

Citation [2016] 70 taxmann.com 51 (Delhi)Mega Cabs (P.) Ltd.v.Union of India


Section 65(105)(zzzh)

RelevantStatute

Finance Act 1994

Issue Sale of Under-Construction FlatsSub Issue Construction of Complex ServicesFavour of AssesseeIssuingAuthority

High Court of Delhi

Judgment Facts : Assessee purchased flat in aresidential complex for chargesinclusive of value of land. Assessee


challenged levy of service tax onground that composite contract(inclusive of value of land) cannot becharged to service tax in absence ofany machinery provision fordetermination of value of serviceportion. Further, preferential locationcharges do not amount to service andcannot be charged to service taxHeld:Rule 2A of Valuation Rules, does notapply when price is inclusive of valueof land : Whilst Rule 2A of Service Tax(Determination of Value) Rules, 2006provides for mechanism to ascertainthe value of services in a compositeworks contract involving services andgoods, the said Rule does not cater todetermination of value of services incase of a composite contract whichalso involves sale of land. The grossconsideration charged by abuilder/promoter of a project from abuyer would not only include anelement of goods and services but alsothe value of undivided share of landwhich would be acquired by thebuyer.No machinery provision to segregatevalue of land - Mere abatement orcircular not sufficient : Neither the Actnor the Rules framed therein providefor a machinery provision forexcluding all components other thanservice components for ascertainingthe measure of service tax. Theabatement to the extent of 75% by anotification or a circular cannotsubstitute the lack of statutorymachinery provisions to ascertain thevalue of services involved in acomposite contract.Preferential charges amount to service: Insofar as service tax on taxableservices as defined under Section65(105)(zzzzu) [Preferential Locationor Development of Complex Services]is concerned, there is element ofservice involved in the preferentiallocation charges levied by a builder.Such charges do not relate solely tothe location of land. Thus, preferentiallocation charges are charged by thebuilder based on the preferences of itscustomers. They are in one sense ameasure of additional value that a

customer derives from acquiring aparticular unit. Such charges may beattributable to the preferences of acustomer in relation to the directionsin which a flat is constructed; the flooron which it is located; the views fromthe unit; accessibility to other facilitiesprovide in the complex etc. Service taxis a tax on value addition and chargesfor preferential location in one senseembody the value of the satisfactionderived by a customer from certainadditional attributes of the propertydeveloped. Such charges cannot betraced directly to the value of anygoods or value of land but are as aresult of the development of thecomplex as a whole and the positionof a particular unit in the context ofthe complex.No service tax on composite contracts,where price is inclusive of land :Hence, no service tax under section 66read with Section 65(105)(zzzh) of theAct [Construction of ComplexServices] and Explanation to section65(105)(zzzh) could be charged inrespect of composite contracts. Theimpugned explanation to the extentthat it seeks to include compositecontracts for purchase of units in acomplex within the scope of taxableservice is set aside.

Citation [2016] 70 taxmann.com 55 (Delhi)Suresh Kumar Bansalv.Union of India


Section 66A, read with Section 65(65),65B(44) and Section 66

RelevantStatuteIssue Charge/LevySub Issue Service Tax on services received

outside IndiaFavour of AssesseeIssuingAuthority

CESTAT Mumbai

Judgment Under contract with foreign-baseddirector AVN, assessee-company paidmonthly remuneration pluspercentage-based discretionaryamount for management of market,etc. - Department demanded service


tax thereon under reverse chargetreating it as ManagementConsultancy Services - Assesseeargued that sums paid were 'salary'and taxed as 'salary' under income-taxand, thus, not liable to service tax -HELD : Income-tax Departmentconsidered payments to AVN as'salary' in adjudication proceedings -If amount paid to AVN is consideredas a salary by Income-tax Department,a branch of Ministry of Finance,Department of Revenue, then, anotherbranch of same Ministry viz. ServiceTax Department cannot consider it as'consultancy charges' liable to servicetax - Same department of Governmentof India cannot take different standson amounts paid to very same personand treat it differently - In ourconsidered view, amount paid toAVN has to be treated as salary andnot liable to service tax

Citation [2016] 70 taxmann.com 38 (Mumbai -CESTAT)Rent Works India (P.) Ltd.v.Commissioner of Central Excise,Mumbai-V


Section 67 read with Section 66D(o)and Section 65(105)(zzzo)

RelevantStatute

Finance Act 1994

Issue ValuationSub IssueFavour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment Assessee-airlines was providingpassenger-transport services by air -However, assessee was not including'passenger service fee' and 'airport tax'in 'value' of services - Assessee wascollecting same from customers andpaying back said amounts toairports/Government Authorities -Department sought inclusion thereofin value and demanded service tax -HELD : Airport taxes and passengerservice fees collected by airlines onbehalf of airports and paid to them arenot includible in value of 'passenger-transport services by air

Citation [2016] 70 taxmann.com 60 (New Delhi- CESTAT)Lufthansa German Airlinesv.Commissioner of Service Tax, Delhi


Section 73

RelevantStatute

Finance Act 1994

Issue RecoverySub IssueFavour of AssesseeIssuingAuthority

CESTAT Mumbai

Judgment Department demanded service tax oncommission received forrecommending auto-loans andinvoked extended period - Assesseechallenged extended period ongrounds that : (a) assessee had bonafide view as to non-taxability andfinally matter was resolved by largerbench upholding taxability; (b) EA-2000 audit for period July 2001 toMarch 2006 was concluded on 9-8-2006 without any objection/para onthis point - Department argued thataudit party does not look into entirerecords and mandate is very limited;therefore, non-declaration of receiptsby assessee amounted to suppressionfor invoking extended period - HELD: On merits, issue is decided againstassessee - However, this issue was notraised in audit despite receipts beingdisclosed in balance sheet - EA-2000audit is an extensive audit - Impliedly,therefore, authorities were aware ofsums received and recorded inbalance sheet - Once audit takes placeand no objection is taken on an issue,demand raised by invoking extendedperiod is unsustainable - Hence,demand was set aside as time-barred

Citation [2016] 70 taxmann.com 59 (Mumbai -CESTAT)Sanjay Automobile Engineers (P.)

Ltd.v.Commissioner of Central Excise,Pune-III



Rule 6

RelevantStatute

Service Tax Rules 1994

Issue Adjustment of Service TaxSub IssueFavour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment Assessee-bank was paying service taxon sums charged towards services -Subsequently, on case to case basis,head office of assessee-bank refundeda part of amounts to credible/valuedcustomers - Accordingly, in payingservice tax for a particular month,value of service provided during thatmonth was reduced by amountsrefunded to valued customers -Department argued that full servicetax was payable on services providedwithout reducing amounts refunded -Assessee sought to apply rule 6(3)providing credit/adjustment of taxpaid on services not provided - HELD: In view of rule 6(3), assessee'spractice was in order - Hence, demandwas set aside with consequential relief

Citation [2016] 70 taxmann.com 58 (New Delhi- CESTAT)Punjab National Bankv.Commissioner of Central Excise &Service Tax, Chandigarh-II


Section 67

RelevantStatute

Finance Act 1994

Issue ValuationSub IssueFavour of AssesseeIssuingAuthority

CESTAT Mumbai

Judgment Assessee collected amounts towardsvarious fees paid to DGFT authorities(application fees, licence fees, etc.) -Assessee submitted that demanddrafts were raised in name of DGFTauthorities and receipts were issuedby DGFT authorities in respect ofassessee's clients and assessee wasundertaking liaisoning work with

authorities - HELD : Demand wasincorrect as said amounts werereimbursement of expenses incurredby assessee for licence fees, etc.

Citation [2016] 70 taxmann.com 61 (Mumbai -CESTAT)Bizsolindia Services (P.) Ltd.

v.Commissioner of Central Excise, PuneIII


Section 75

RelevantStatute

Finance Act 1994

Issue InterestSub IssueFavour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment Assessee paid time-barred demandwithout interest - Departmentdemanded interest - Commissioner(Appeals) held that : (a) limitation,being a law of procedure, does nottake away any right, it only barsremedy; hence, payment made fortime-barred demand is valid payment;(b) however, no interest can bedemand as demand of tax itself wasinvalid - HELD : Since demand itselfwas time-barred, no interest can bedemanded therefor

Citation [2016] 70 taxmann.com 133 (NewDelhi - CESTAT)Commissioner of Central Excise,Bhopalv.Western Coal Fields Ltd.


Section 32F

RelevantStatute


Issue Settlement of CasesSub IssueFavour of AssesseeIssuingAuthority

High Court of Delhi

Judgment Settlement Commission can rejectapplication only in two cases : (a)assessee has not made full and true


disclosure [section 32F], or (b) assesseehas not co-operated in proceedingsbefore it [section 32L]; there is noprovision to send matter back merelybecause of differences betweenassessee and department

Citation [2016] 70 taxmann.com 168 (Delhi)HH Interior & Auto Components Ltd.v.Commissioner of Central Excise



RelevantStatute

Finance Act 1994

Issue ValuationSub Issue Business Auxilliary ServicesFavour of AssesseeIssuingAuthority

CESTAT Ahmedabad

Judgment Assessee was engaged in manufactureof Alcoholic Beverages (Beer) - It wasmanufacturing Beer on its account andalso for one 'U' on job work basis interms of license agreement formanufacture and sale of Beer -Adjudicating Authority levied servicetax on activities of assessee ofmanufacture of Beer on job work basis- He while determining taxable valuehad included amount ofsurplus/profit returned to 'U' andother reimbursable expense paid toassessee - Whether in view of decisionof Delhi High Court rendered in caseof Intercontinental Consultants andTechnocrats (P.) Ltd. v. UOI [W.P. (C)No. 6370/2008, dated 30-11-2012]amount of surplus/profit returned 'U'and other reimbursable expenses paidto assessee, covered under rule 5(1) ofService Tax (Determination of Value)Rules, could not be included intaxable value - Held, yes

Citation [2016] 70 taxmann.com 193(Ahmedabad - CESTAT)Blossom Industries Ltd.v.Commissioner of Central Excise,Customs & Service Tax, Daman


Section 73B read with Section 73A and77

RelevantStatute

Finance Act 1994

Issue InterestSub IssueFavour of AssesseeIssuingAuthority

CESTAT New Delhi

Judgment On amount collected in excess ofduty/tax - Despite exemption fromservice tax, assessee-transporters werecollecting service tax but not payingsame - On investigation, assessee paidservice tax without interest - After 16months, a notice was issueddemanding interest and penalty -Assessee argued that since amountwas already paid and nothing waspayable as per adjudication orderunder section 73A, no interest can bedemanded under section 73B - HELD :As per section 73A(3), any amountrequired to be paid under section73A(1) or 73A(2) but not paid, willonly result in issuance of notice - Inthis case, as amount was already paid,case would fall under section 73A(2)and, therefore, section 73A(3)requiring notice and section 73A(4)requiring adjudication order wouldnot apply - Since section 73A(4) wouldnot apply, section 73B requiringpayment of interest on 'sumdetermined under section 73A(4)'would also not apply - Hence, interestdemand was set aside - However,penalty of Rs. 5,000 under section 77was upheld

Citation [2016] 70 taxmann.com 215 (NewDelhi - CESTAT)Chhattisgarh State Co-operativeMarketing Federation Ltd.v.Commissioner of Central Excise &Service Tax, Raipur



RelevantStatute

Finance Act 1994

Issue PenaltySub Issue


Favour of RevenueIssuingAuthority

CESTAT New Delhi

Judgment Assessee-builder was collectingservice tax from customers but hadneither taken registration nor paidsame to government - Oninvestigation, assessee paid service taxwith interest prior to issuance ofnotice, but, challenged evasionpenalty on ground that service taxwas not paid due to financialdifficulty - HELD : Financial difficultycan be appreciated to some extent ifservice tax had to be deposited fromassessee's own pocket - It is non-understandable as to how collectedamount, which was required to bedeposited, can lead to any financialhardship; in fact, assessee retained itfor own financial gains - In any case,assessee was obliged to reflect theirliability to revenue, by takingregistration and filing ST-3 returns -Collecting service tax but not payingsame reflects upon mala fide intentionof assessee and there is no 'reasonablecause' for waiver of penalty undersection 80 - Hence, penalty wasupheld

Citation [2016] 70 taxmann.com 217 (NewDelhi - CESTAT)Amcon Engineers (P.) Ltd.v.Commissioner of Service Tax, Delhi


Section 65(102)

RelevantStatute

Finance Act 1994

Issue TaxabilitySub Issue Storage and Warehousing of Goods

ServiceFavour of AssesseeIssuingAuthority

CESTAT Mumbai

Judgment Whether sale proceeds of auction ofwarehoused imported goods, in caseof importer abandoned goods, couldnot be considered as service chargestowards storage or warehouse andwas not liable for service tax - Held,yes[2016] 70 taxmann.com 159 (Mumbai -

Citation CESTAT)Commissioner of Central Excise,Customs & Service Tax, Raigadv.Balmer Lawrie & Co. Ltd.


Section 65 (79)

RelevantStatute

Finance Act 1994

Issue TaxabilitySub Issue Photography ServiceFavour of RevenueIssuingAuthority

CESTAT New Delhi

Judgment Assessee 'G' was engaged in activityof image editing but did not give anyprinted photograph to customers andonly loaded images on a CD whichwas given to customers for gettingphotos printed elsewhere - Anotherassessee 'S' was undertaking work ofmending/reconstructingold/mutilated/torn photographs andfor this purpose it scanned them oncomputer and such scanned imageswere further decorated on computeritself and such images of saidphotographs were not printed onpaper or film and said images wereloaded on a CD and handed over toclient - They argued that such anactivity would not fall within scope ofphotography service - Whether sinceassessees were professionalphotographers and commercialconcerns and were engaged inbusiness of rendering services relatingto photography, they were coveredwithin scope of definition of'photography studio or agency' andimpugned service was covered underphotography service - Held, yes

Citation [2016] 70 taxmann.com 226 (NewDelhi - CESTAT)Global Digital Color Labv.Commissioner of Central Excise,Jaipur-I

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