Going Beyond!!!

December 2014

Highlights

One More Opportunity for Professionals - Service Tax

Audit

Updates under Central Excise – November 2014

A note on the ER4, ER-5, ER-6, and ER-7 returns

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Artefacts

A thought!!!

Know how???

ABCs of HA!!!

Bulletin!!!

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Articles &Case Laws Summary

Artefacts

One More Opportunity for Professionals - Service Tax Audit

CST exemption for penultimate sale

Cenvat Credit related to VCES period

New Updates on Central Excise

Article on Drafting Legal Opinions

Comm. of C.Ex., Bangalore Vs. Tata Advanced Materials Ltd

[2011 (271) E.L.T. 62 (Kar.)]

Mohd.Ekram Khan & Sons Vs. CTT U.P on 21 July 2004

FlSmidth Pvt Ltd Vs CCE (2014-TIOL-2186-HC-MAD-CX)

Hindustan Coca Cola Beverages Pvt Ltd Vs C.C Ex,

Nashik(2014-TIOL-2460-CESTAT-MUM)

AIA Engineering Ltd Vs CST (2014-TIOL-2459-CESTAT-

AHM)

Articles

Case Law Summary

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4

One More Opportunity for Professionals -Service Tax Audit

Background

The conduct of an audit today maybe the ONLY check against the tax payer taking the payment of

tax lightly. The philosophy is that the Government trusts the tax payer but wishes to ensure

compliance and payment of just dues. Earlier all tax years were scrutinized. The reduction in the

number of assesses picked up for audit makes the need for audit imperative. In this backdrop we

examine legality of service tax audit and the recent notification 23/2014-ST chartered accountants

and Cost accountants' can conduct service tax audit.

Whether service tax audit is legal?

As per Rule 5A(2) of Service Tax Rules, 1994 every assessee was required to make available on

demand specified documents to the authorized officer or audit party deputed by the Commissioner

or C&AG within 15 days from date of demand or such extended period allowed.

A special audit could be undertaken if the circumstances outlined in Section 72A are fulfilled. The

fact that Section 72A prescribes the conditions meriting such special audit leads to the inference

that there was no intend to provide for a general audit that "every assessee" may be subjected to,

"on demand".

In ACL Education Centre Private Limited v. UOI - 2014-TIOL-120-HC-ALL-ST, the Allahabad High Court

held that Rule 5A(2) only empowers the officers, as duly authorized by the Commissioner to ask for

and collect records from the assessee. The audit can only be undertaken by an authorized Chartered

Accountant or Cost Accountant, as provided in Section 72A.

The Calcutta High Court in SKP Securities Limited v. Deputy Director - 2013-TIOL-38-HC-KOL-ST held

that no provision in Chapter V of the Finance Act, 1994 or the CAG Act, 1971 empowers the CAG to

undertake audit of accounts of a non-governmental assessee as these assessee are not in the

receipt of any aid or grant from the government.

In terms of Delhi HC decision in Travelite (India) Vs. UOI &Ors. 2014-TIOL-1304-HCD on the Service

Tax Audit issue it is held that: Rule 5A(2) of the Service tax Rules is ultra vires the provisions of the

Finance Act and the rule has been struck down.

As can be seen, the issue of maintainability of Rule 5A(2) had been dealt with by the High Courts of

Calcutta and Allahabad and finally struck down by Delhi. It is pertinent to note that the FA (No.2)Act,

2014 amended the provisions of rule-making power sunder Section 94(2)(k) to impose duty of

furnishing information, keeping records and the manner in which such records shall be verified.

“Never tell me the sky’s the limit when there are

footprints on the moon.” ~Anon

5

Though it fixes a responsibility on the tax payer in relation to his obligation for furnishing of

information, keeping records and the manner in which the records shall be verified. It does not

specify who the records shall be verified by, and circumstances in which such verification is to be

done. Already audit intimation letters are being issued to assessee by department officers citing

legality of service tax audit in view of the substituted sub-clause in Section 94.

Scope and impact of the recent notification

As per latest notification 23/2014-ST sets out as under:

…………………….In the Service Tax Rules, 1994, in rule 5A, for sub-rule (2), the following sub-rule

shall be substituted, namely:-

“(2) Every assessee, shall, on demand make available to the officer empowered under sub-rule

(1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of

India, or a cost accountant or chartered accountant nominated under section 72A of the Finance

Act, 1994,-

(i) the records maintained or prepared by him in terms of sub-rule (2) of rule 5;

(ii) the cost audit reports, if any, under section 148 of the Companies Act, 2013 (18 of 2013); and

(iii) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 (43 of

1961),

for the scrutiny of the officer or the audit party, or the cost accountant or chartered accountant,

within the time limit specified by the said officer or the audit party or the cost accountant or

chartered accountant, as the case may be.”

This notification seems to give effect to the direction in ACL Education where the Additional

Solicitor General of India has assured that the audit will be performed by a qualified Chartered

Accountant and as per accounting standard”.Here the important aspect maybe to ensure the

independence and integrity of the auditor who does the service tax audit.

One More Opportunity for Professionals -Service Tax Audit

“Whenever you find yourself on the side of the majority, it is

time to pause and reflect.”

- Mark Twain

6

Despite the recent notification empowering a CA to conduct service tax audit, the judiciary view is

that legality of service tax audit seems to be under doubt. It was also held in Sadbhav Engineering

Ltd vsUOI(2014-TIOL-2136-HC-AHM-ST)while granting stay that prima facie, if Rule 5A is not valid,

a serious question of the powers of the authority to issue the impugned communication would

arise. Subsidiary question would be, even if Rule 5A is valid, would the communication in question

be covered within the powers of the Commissioner as envisaged under sub rule (1) of Rule 5A,

which empowers the Commissioner to authorize any person to carry out the inquiry with respect

to the accounts of an assessee. Whether such authorized persons can be an outsider of the

organization of the Commissioner would also be an issue. Stay granted.

Conclusion

As of date there is no clarity as to the powers of conducting audit of private parties under service

tax law. Notwithstanding the legality of audit, sufficient checks and balances to be put in place to

ensure that the mandate to the CA/CMA to undertake audit is done by competent persons with

requisite knowledge of service tax provisions. This is also a landmark opportunity for

professionals to be able to contribute to the country and uphold the high ethical standards of the

profession.

- CA Madhukar. N. Hiregange

One More Opportunity for Professionals-Service Tax Audit

Discipline is the bridge between goals and accomplishment.

- Jim Rohn

7

Under CST law, the tax cannot be levied on sale of goods in course of import and export. Article

286 of the Constitution of India imposes restriction on levy of tax either on sale in course of export

or import by a state government. The exemption is mainly to counter double taxation of foreign

trade. Even the Government’s policy is to export goods and not to export taxes.

Tax exemption on exports and penultimate sales

As per Section 5(1) of CST Act 1956, sale is deemed to be in course of export only in case of

following:

The sale occasions export

The sale is effected by a transfer of documents of title to goods after goods have crossed the

customs frontiers of India

Further, Section 5(3) of CST Act 1956 provides that even last sale or penultimate sale to export

would be treated as sale in course of export. However, such penultimate sale must take place for

the purpose of complying with an agreement/order under which goods are to be exported. It is

important to note that if such sale is prior to agreement, then the same would not be treated as

penultimate sale and therefore, liable for tax.

Only the penultimate sale is exempt and the purchase earlier to penultimate sale is not exempt

and purchase tax if any imposed by the State Government on such purchase would be payable. This

view was affirmed in case of State of Tamilnadu v. Madras Pack Marine (2000) 120 STC 105.

Form ‘H’ required for claiming exemption

As per Section 5(4) of CST Act, the exemption on penultimate sale is available only if dealer selling

the goods furnishes a prescribed form to the prescribed authority in the prescribed manner which

is duly filled and signed by the exporter to whom the goods are sold. As per Rule 12 (10) (a) of CST

(Registration & Turnover) Rules 1957, the form prescribed for this purpose is form ‘H’. The further

requirement of having the link to the shipping document with due authentication by Customs

authority for confirming the export.

CST Exemption for Penultimate Sale

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Goods to be exported in same form

In addition to conditions discussed above, the dealer shall ensure that the goods are exported in

same form as sold in penultimate sale. If there is change in form of goods, then the benefit of CST

exemption would be disallowed.

However, activities like cleaning, freezing before export would not result in change the form of

goods. Similarly roasting of coffee seeds do not results in change in form. Therefore, when these

minor activities are undertaken the exemption cannot be denied.

Even the packing materials used for packing or use as containers would be eligible for the

exemption unless there is change in form. In case of State of AP Vs. Standard Packing’s *(1995) 96

STC 151(AP HC)], the court held that that if gunny bags purchased are used as containers for export

of certain goods to a foreign country, it is deemed as export sale as per section 5(3). The last

purchase preceding the sale occasioning export should be for complying with an export order. In

this case, the gunny bags purchased were for complying with export order and hence are eligible

for exemption u/s 5(3). The goods procured under penultimate sale should not lose the identity to

be eligible for exemption from CST.

Periodicity of filing Form ‘H’

Under CST law, C forms are required to be issued for transactions covering 3 months (quarter) in a

year and F forms are to be issued monthly. But it is nowhere mentioned in the CST (R&T) Rules

clearly about the periodicity of H forms. But Rule 12(10)(b) of CST (R&T) Rules prescribes that state

provisions applicable to Form ‘C’ shall apply mutatis mutandis to Form H as well. Therefore, dealers

could file the form H according to state rules prevailing.

Conclusion:

The dealer engaged in clearing goods as penultimate sale to export and dealer procuring such

goods for export shall take due care and ensure that all important conditions are satisfied in order

to claim CST exemption. Clearing goods without having an export contract, undertaking any major

processing on the goods procured for export, non submission of form H would lead disallowance of

CST exemption. For any more clarifications please reach me at mahadev@hiregange.com.

-CA Mahadev. R

CST Exemption for Penultimate Sale

9

Background

As per Rule 3(1) of CCR, the provider of taxable services can avail credits attributable to taxable

services provided by them.

Under ‘Voluntary Compliance Encouragement Scheme (VCES)’ a defaulter could pay ‘tax dues’

which had failed to pay without any interest or penalty for the period October 1 2007 to December

31 2012. There seems to be a misunderstanding among section of the VCES declarant that the

eligible credits related to VCES period cannot be availed by them.

Credits related to VCES period

As per circular no. 176/2/2014-ST dated January 20, 2014 in reply to whether the first installment

of tax dues paid under VCES would be available as Cenvat Credit immediately after payment or

credit can be availed only after payment of tax dues in full and receipt of acknowledgement of

discharge in specified form. A view seems to be that the Cenvat credit shall only be available to

service receiver after payment of entire service tax dues and obtaining discharge certificate in form

VCES 3.

As per this service provider can avail Cenvat credits of the service tax collected and paid by his

vendor who is declarant under VCES scheme, only after payment of entire tax dues by such vendor.

Also the clarification also may not be in line with Cenvat Credit Rules, which permit availment of

credits, once the value of services +service tax is paid by taxable service provider-assessee on his

vendor bills. It was also held in Ratan Melting & Wire Industries 2008 (231) E.L.T. 22 (S.C.) decision

that circulars which are not in line with law are non est.(invalid)

Further as per Rule 6(2) of VCES Rules, prescribes the CENVAT credit cannot be utilized for payment

of tax dues under the Scheme. Except this condition, all issues relating to admissibility of CENVAT

credit are to be determined in terms of the provisions of the Cenvat Credit Rules. There is no

restriction as per VCES scheme for the availment of eligible cenvat credit covered in VCES period of

Oct 07 to Dec 12 by a VCES declarant on the vendors input service bills.

Cenvat Credit related to VCES period

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The past eligible credits related to VCES period can be availed as long as it was attributed to the

taxable services provided by VCES declarant assessee.

Time limit for availment of credit

Till 1.9.14 there was no time bar for availment of credit under Cenvat Credit Rules. In absence of

time limit credit could be availed for upto 6-7 years for past.

Now, due to amendments in rules,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.

Even if the ST-3 was filed by the service provider VCES declarant till September 2014 and had

missed out to disclose details of past credits in said return. He can now file revised return within

90 days of filing of the original ST-3 return. The details of past credits can be shown in the revised

ST-3 to be filed now in any of the months before September 2014. If such credits sought to be

availed post 1.10.14 the department could seek to deny eligible credits related to period earlier to

1.4.14 citing time bar of 6 months.

Conclusion

In the normal course, as per Rule 3(1) of CCR, the provider of taxable services can avail eligible

credits on inputs, input services and capital goods used for providing taxable services. The old

credit is not lost and can be carried forward and set off for the future liabilities.

- CA Roopa Nayak

Cenvat Credit related to VCES period

Talent is God given, Be humble. Fame is man-given,

Be grateful. Conceit is self-given, Be careful.

- John Wooden

11

New Updates

Updates under Central Excise – November 2014

1. Many agarbathi manufacturers were not treating ‘Odoriferous Compound’, which is normally

used in manufacture of agarbathis, in a continuous manner, as “excisable product” treating the

same as not capable of being bought and sold in the market in normal course of trade and

hence, excise duty was not discharged.

Now the board has come up with a clarification that, where on the basis of evidence, it is

established that such intermediate compounds are capable of being marketed, the same will be

excisable, irrespective of whether the compound is actually marketed or not.

For full view of circular follow the link http://www.cbec.gov.in/excise/cx-circulars/cx-

circ14/989-2014cx.htm

2. Board has clarified that Aluminium dross and Skimming are “excisable goods” with effect from

10.05.2008 in view of the explanation added to section 2(d) of the Central Excise Act, 1944.

For full view of circular follow the link http://www.cbec.gov.in/excise/cx-circulars/cx-ins-14/cx-

ins-juddgemt-alumn-dross-skimming.htm

3. It is instructed by board that, CENVAT credit is not eligible on Tower Parts & Pre-fabricated

buildings. This circular is issued by referring M/s Bharti Airtel Ltd. Vs. The Commissioner of

Central Excise, Pune III in Central Excise Appeal No. 73 of 2012 and 119 of 2012 (reported as

2014-TIOL-1452-HC-MUM-ST)

Ground on which above decision was rendered:-

The towers are structures fastened to the earth on which the antennas are installed and hence

cannot be considered to be an accessory or part of the antenna.

From the definition of the term ‘input’ as defined in 2 (k) of the CENVAT Credit rules it is clear

that the Appellant is a service provider and not a manufacturer of capital goods. A close

scrutiny of the definition of the term capital goods and input indicates that only those goods

as used by a manufacturer would qualify for credit of the duty paid. As observed hereinabove,

a service provider like the appellant can avail the credit of the duty paid only if the goods fall

within the ambit of the definition of capital goods as defined under Rule 2(a)(A) of the CENVAT

Credit Rules.

The contention of the appellant that they are entitled for the credit of the duty paid towers and

PFB and printers is defeated by the very wording of the definition of input.

In any case, towers and PFB are in the nature of immovable goods and are non-marketable and

non-excisable.

If this be the position then towers and parts thereof cannot be classified as inputs so as to fall

within the definition of Rule 2(k) of the credit rules.

The subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the

CENVAT Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the

appellants.

Restriction for availing credit within 6 months as per notification number 21/2014 N.T dated

11.07.2014 is applicable on document issued as per sub-rule (1) of Rule 9, credit is taken for the

first time within six months of the issue of the document. Once this condition is met, the limitation

has no further application. Hence, it clarified that the limitation of six months would apply when

the credit is taken for the first time on an eligible document. It would not apply for taking re-credit

of amount reversed.

For full view of the circular, follow the following link http://www.cbec.gov.in/excise/cx-circulars/cx-

circ14/990-2014cx.htm

- Venkatanarayana G M

12

New Updates

“Take up one idea. Make that one idea your life –

think of it, dream of it, live on that idea. Let the brain,

muscles, nerves, every part of your body, be full of

that idea, and just leave every other idea alone. This

is the way to success.”

- Swami Vivekananda

13

Article on Drafting Legal Opinions

"It is a fact that people usually agree to disagree. The same also applies to opinions expressed on a

matter of law, statute, or any of its provisions, circulars, notifications etc. This is more so in the case

of tax laws which keep changing from time to time. Thus it is subject to varied interpretations.

However a good opinion has to be able to withstand the litmus test which is that it should be upheld

by any Court of Law of the land in course of time and ultimately the law must get amended in line

with the same.

Consulting can be understood as providing advice in a particular area of expertise. In order to

develop skills relating to assisting the clients, the following could be practiced:

Patience: A client may come with a problem and may not be able to express himself with clarity. He

should be heard out without any interference patiently.

Empathetic: The consultant must be empathetic towards his client and must give a patient hearing

to his client. He must get deeply involved in the subject and literally step into his shoes; only then

will he be able to provide an unbiased and effective opinion.

Non-judgmental: The consultant should be impartial, and be willing to see all sides of an argument

without jumping to conclusions.

Take notes: A note pad, writing pad should come in handy. The consultant should make notes in a

systematic manner. He should put in date of his client’s visit, name of client/his organization,

designation, note down the important points in discussion, list out solutions as well as contact

details. Alternatively there can be a soft copy of discussions had with client.

Proper filing system: The client may come with agreements, copies of invoices, on which he wishes

to get advice. There should be a proper filing and reference system of such documents so that

nothing is misplaced.

Today, Consultancy is a wide and challenging area of practice. It is ever evolving and fresh talent with

out of box thinking would only make it better.

- Vidhya R and Nandini H

vetted by CA Roopa Nayak

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Central ExciseComm. of C.Ex. Bangalore Vs. Tata Advanced Materials Ltd [2011 (271) E.L.T. 62 (Kar.)]

Facts and Backgrounds:

The assessee purchased the capital goods in the year 1998 and paid the excise duty. The said

capital goods were used in manufacturing of excisable goods. Therefore, the assessee availed

the Cenvat credit and utilized the same at the time of clearing the excisable goods

manufactured in his factory.

The said capital goods were destroyed in a fire accident on 20-5-2003. Thereafter, the assessee

purchased new capital goods. On that basis, he put forth a claim before the Insurance Company

for reimbursement in terms of the insurance policy taken. The Insurance Company reimbursed

the amount to the assessee, which included the excise duty, which the assessee had paid on the

capital goods

Excise Department called upon the assessee to reverse the Cenvat credit. When the same was

not done, they raised a demand for payment of the said amount.

The assessee preferred an appeal challenging the said demand, which came to be dismissed by

the Commissioner of Appeals. Against the said order, assessee preferred an appeal to the

Tribunal. The Tribunal held that the assessee had legally availed the Cenvat credit and further

used the same for payment of duty on the final products.

Arguments by the assessee and his representative:

There is no provision in the rules which provides for a reversal of the credit by the Excise

Authorities except where it has been irregularly taken in which event it stands cancelled or if

utilised has to be paid for.

Merely because the Insurance Company paid the assessee the value of goods including the

excise duty paid, that would not render the availment of the Cenvat credit wrong or irregular. At

the same time, it does not confer any sight, on the Excise Department to demand reversal of

credit or default to pay the said amount

Arguments by department

Department contention is that the appellants claimed insurance, which included the Excise Duty

on the machinery. By claiming insurance and also availing the Cenvat credit, it was argued that

the appellants were getting double benefit.

15

Central ExciseComm. of C.Ex. Bangalore Vs. Tata Advanced Materials Ltd [2011 (271) E.L.T. 62 (Kar.)]

Analysis & Decision of High Court

The assessee has paid the premium and covered the risk of the capital goods and when the

goods were destroyed in terms of the insurance policy, the Insurance Company has

compensated the assessee. It is not a case of double payment as contended by the department.

At any rate, the Excise Department has no say as held by the Apex Court in the case of Collector

of Central Excise, Pune v. Dai IchiKarkaria Ltd. reported in 1999 (112) E.L.T. 353 (S.C.). In that

view of the matter, the substantial questions of law framed in this appeal are answered in

favour of the assessee and against the revenue. Accordingly, the appeal is dismissed.

Note:

It is to be noted that period of dispute in this case is of 1998-2003. However in the year 2007, a

Notification No. 39/2007-C.E (N.T.), dated 13-11-2007 had been issued providing for reversal of

credit in case of removal of old and used Capital Goods by allowing specified depreciations

(Refer Rule 3(5A) of Cenvat Credit Rules, 2004 for explanation).

- CA Rajesh Maddi

A man must be big enough to admit his mistakes, smart

enough to profit from them, and strong enough to correct

them.

- John C. Maxwell

16

CSTMohd.Ekram Khan & Sons Vs. CTT U.P

Issue:

Whether sales tax is payable on parts replaced under warranty period by agents when consideration received by the agents from the manufacturers towards such replacement?

Facts and Background:

The assessee was an agent of M/s. Mahindra & Mahindra (Manufacturer). Manufacturer had warranty agreement with the customers of vehicles to replace defective parts.

The assessee was paid amounts by the manufacturer towards the parts which were replaced on behalf of manufacturer.

The tax authorities and the High court confirmed the demand of sales tax on the amounts received by assessee

Contentions of the Appellant:

The assessee relied on various decisions of courts wherein it has been held that replacement of defective parts during the warranty period would not involve any sale.

Assessee further argued held that there was no sale involved to discharge the sales tax.

The assessee further took the argument that even if it is conceded for the sake of arguments that the transactions attracted sales tax, no categorical finding has been recorded about the nature of the sale i.e. whether inter-state sale or intra-state sale in character.

Contentions of the department:

The assessee has supplied the goods for which it received the consideration by way of credit notes / other modes and the High court was justified in its view about the taxability of the transactions.

Supreme Court’s Decision:

The court held that there is no substance in the plea taken by the assessee. The decisions relied by the assessee are not relevant for the present case.

Accordingly the tax would be payable.

Decisions relied on by Supreme Court:

Prem Motors Vs. CST, MP [1986(61)STC 244]

Geo Motors Vs. State of Kerala [2001 (122) STC 285]-

- C A Mahadev R

17

FlSmidth Pvt Ltd Vs CCE (2014-TIOL-2186-HC-MAD-CX)

Facts:

The appellant is engaged in the manufacturing of parts of pre-heater and clearing the same on

payment of excise duty and the contract was for Rs.41.45 crores.

Issue:

Out of the contract valued at Rs.41.45 crores, the manufactured and supplied goods were of the

value of Rs.5.41 crores and balance traded goods. The appellant took credit of the service tax paid

on sales commission out of which disallowed credit of Rs 17 Lakhs pertaining to traded turnover.

Held:

The service tax paid on sales commission in respect of procuring orders cannot be utilised for the

traded goods. High Court held there was no error in the order of Tribunal disallowing CENVAT

Credit on services relating to trading activity prior to 01.04.2011

Hindustan Coca Cola Beverages Pvt Ltd Vs C.C.Ex, Nashik(2014-TIOL-2460-CESTAT-

MUM)

Facts:

Appellant, have indeed used the services during their normal business operations and not for

personal use or consumption or any of their employees, and that they have claimed credit only to

the extent of cost borne by the company.

Issue:

Cenvat credit on outdoor catering services was denied to the Appellant by the lower authorities.

The period involved is December 2011 to December 2012.

Decision:

Post 01.04.2011 what is excluded under clause (C) of Rule 2(l) of CCR, 2004 is only the services

‘primarily for personal use or consumption of any employee' - Service Tax to the extent of cost of

Catering Services borne by the company & not recovered from employees is admissible as credit.

18

AIA Engineering Ltd Vs CST (2014-TIOL-2459-CESTAT-AHM)

Facts:

The transactions recorded as a purchase transaction and transaction between appellant and ACC as

sales transaction for the goods delivered by WSL to ACC directly from Karnataka to Jharkhand.

Issue:

The appellant charged with non-discharge of Service Tax liability on an amount received by them as

commission.

Held:

The transaction indicates that it is nothing but purchase and sale of the goods. The goods moved

from Karnataka to Jharkhand & the transfer of documents took place during such movement is not

in dispute. The activity cannot be considered as a Business Auxiliary Services so as to be made

liable for Service tax under the Finance Act, 1994.

- CA Roopa Nayak

We wish you and your family

an enjoyable new year

celebration and a prosperous,

fulfilling and wonderful 2015

to follow.

19

A Thought???

Topic Click the link

Circulars

Clarification regarding availment of

CENVAT credit after six months-reg.

http://www.cbec.gov.in/excise/cx-circulars/cx-

circ14/990-2014cx.htm -

Regarding procedure of service tax

refund/exemption to SEZ

http://www.cbec.gov.in/excise/cx-circulars/cx-

ins-14/cx-ins-refund-exemption-sez.pdf -

Audit of the Service Tax assessees by

the officers of Service Tax and Central

Excise Commissionerates

http://www.servicetax.gov.in/st-circulars-home.htm

Articles over the Internet!!!

Topic Written by Click the link

Impact of budget Changes for rent a cab (impact of amendments on ‘Rent a cab service’ (A REVERSE GEAR))

CA Rajesh Maddi http://www.caclubindia.com/articles/impact-of-budget-changes-for-rent-a-cab-22398.asp#.VI_eciuUf7w

Applicability of CST/K-VATon E-Commerce Transactions

CA Roopa Nayak http://www.caclubindia.com/articles/applicability-of-cst-k-vat-on-e-commerce-transactions-22189.asp?utm_source=article_mailer&utm_medium=email&utm_campaign=article_followup#.VI_ek9KUen0

Effect of VAT and Service Tax on Restaurant Bills

Ramya C http://www.caclubindia.com/articles/effect-of-vat-and-service-tax-on-restaurant-bills-22346.asp#.VI_oEtKUen0

Knowledge Portal

20

Student Corner

Topic Click the link

Award of Financial Assistance to Students

from Chartered Accountants Students

Benevolent Fund for the year 2014-2015

http://www.icai.org/new_post.html?post_id=1112

4&c_id=240

International Conference For CA Students

At Bangalore

http://220.227.161.86/35115bos24818a.pdf

Supplementary Study Paper - 2014 on

Paper 4: Taxation - Relevant for May, 2015

& November, 2015 Examinations

http://www.icai.org/new_post.html?post_id=11091&c_id=342

http://hiregangeacademy.com/events.php

21

In News

Know how???

In newsGems from Audit

A note on the ER4, ER-5, ER-6,

and ER-7 returns

Excise duty hike on petrol, diesel to cost

Rs. 10,000 crore to OMCs

Centre to release Rs. 11,000 cr in FY15

to states, Says Jaitley – GST

Gems of Audit

22

Excise duty hike on petrol, diesel to cost Rs. 10,000 crore to OMCs, prices fall

• Oil- marketing companies (OMCs) are likely to pay the price of the government’s desire to correct

fiscal health by levying higher excise on petrol and diesel. Within a span of three weeks, the excise

duty on petrol has been raised by Rs. 3.75 a litre and that on diesel has risen by Rs. 2.5 a litre. An

increase in duty on the two automobile fuels means OMCs will have to take a hit of over Rs. 10,000

crore in the rest of the financial year, since they offset the duty hike against margins on retail prices.

• On an annual basis, the first duty hike in November would give the government an additional Rs.

13,000 crore. The burden of the excise duty hike would not be passed on to consumers as it was

meant to meet the revenue deficit, Petroleum Minister Dharmendra Pradhan said at an event on

Wednesday. He added that the fall in international oil prices had resulted in six consecutive

reductions in petrol and diesel prices.”

• The Centre’s excise duty collection from the petroleum sector rose from Rs. 68,000 crore in 2011-

12 to Rs. 77,000 crore in 2013- 14.

Centre to release Rs. 11,000 cr in FY15 to states, says Jaitley - GST

• Finance Minister Arun Jaitley said on Wednesday, 10th of December 2014, a day before a crucial

meeting with state finance ministers on the proposed Goods and Services Tax (GST), that the

ministry would release Rs. 11,000 crore to states towards Central Sales Tax (CST) in FY15.

• This will take care of the amounts from 2010- 11 onwards. For the balance of the amount,

payment will begin from the next financial year, Jaitley said. The government is working towards

rolling out GST from April 1, 2016, and is in discussion with states to insulate their revenues from the

impact of GST.

• GST will subsume indirect taxes such as excise duty and service tax at the central level and value

added tax (VAT) and local levies on the states’ front. Although the Centre seems firm on its decision

to subsume petroleum and entry taxes in GST, with a provision for first tranche of CST

compensation, Jaitley is likely to assure the states on Thursday’s meeting that the government will

compensate them for three years’ losses under GST as well, even though there is no provision for

that in the Constitution

www.business-standard.com

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Introduction

ER-4, ER-5, ER-6 and ER-7 returns are to be filed by the assessee in addition to the ER-1/ER-3 which

is regularly filed by the assessee registered under the Central Excise. However ER-4, ER-5 and ER-6

are to be filed by the certain specified assessee only.

Provision for filing of the ER-4, ER-5, ER-6 and ER-7 returns

ER-4 – As per the rule 12(2)(a) of the Central Excise Rules, ER-4 should be filed by the assessee

paying excise duty of Rs.1 crore or more per annum either through PLA or Cenvat or both together

and the return is annual return. This return is Annual Financial Information Statement. Due date for

it is November 30 of the subsequent year. For instance, for the FY 2013-14 the due date would be

30th November 2014.

ER-5 – As per 9A(1) and 9A(2) of Cenvat Credit Rules, the return should be filed by the assessee

paying duty of Rs.1 crore or more per annum either through PLA or Cenvat or both together and

the products of the assessee fall under excise chapter 22, 28, 29, 30, 32, 33, 34, 38, 39, 40, 48, 72,

73, 74, 76, 84, 85, 87, 90 and 94. In this return, the details of the principle inputs used by the

manufacturer for manufacture of finished products shall be provided. Due date for filing ER-5 is

April 30 for the current finance year. For instance, ER-5 for FY 2014-15 is to be filed by 30-4-2014.

For the purpose of this return, ‘principal inputs’, means any input which is used in the manufacture

of final products where the cost of such input constitutes not less than 10% of the total cost of

raw-materials for manufacture of unit quantity of a given final products.

ER-6 – As per the 9A (3) of the Cenvat Credit Rules, this return should be filed by the assessee

who is required to file ER-5 return. This return is a monthly return in which details of information

regarding the receipt and consumption of each principal inputs with reference to quantity of final

products manufactured by him.

A note on the ER4, ER-5, ER-6, and ER-7 returns

Gems From Audit

24

ER-7 – As per the Rule 12(2A) of Central Excise Rules, this return should be filed by all assessee

except manufacturers of matches without aid of power and reinforced cement concrete pipes. This

is an annual installed capacity statement declaring the annual production capacity of the factory

for the financial year to which the statement relates. The due date of filing the return is 30th April

for the previous financial year. For instance, for FY 2013-14, the return should be filed within the

April 30th of the 2014.

Filing of the Returns

These returns can be filed either by directly filling it online or through downloading of the MS Excel

utility file which can be subsequently uploaded.

- Santhosh Kumar

Vetted by C A Mahadev R

DATE COMPLIANCE FORM/CHALLAN

15 December

Payment of VAT and Monthly Returns byComposition Dealers

VAT 120

20 December

Payment of VAT & CST and Monthly Return

VAT 100

31 December

Audited Statement of accountunder see 31(4)

VAT 240

6 January Payment of Service tax GAR 7

10 January Monthly returns of excise ER 1/2/6

10 January Quarterly returns of excise ER 3

Compliance Calendar for the next 30 Days

A note on the ER4, ER-5, ER-6, and ER-7 returns

25

Training CornerUpcoming EventHappenings @ HA

Upcoming Events

“Getting Ready for GST”

on 3rd January, 2015

Happenings @ HA

A course on Capacity Building Initiative on K-

VAT/CST from 21st November to 23rd November,

2014.

Training corner

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Training Corner

Hiregange Academy as its initial step takes pride in introducing unique different Certificate training

programs in Indirect taxes, with an objective of training fresher's, interested employees,

professionals, Government officers to enhance their knowledge, skill, problem solving abilities in

Indirect Taxes paving the way for further enhancing the quality of services they provide to their

stake holders.

*Provided, minimum batch size of 20 delegates register for each course

Basic courses would cover introduction to subject, manner of Records keeping under the

respective subject, Invoicing, Credit Availment, Payment of Tax as well as filing of returns.

Advance courses would enable one to learn the subject in depth, take reasoned decisions and

resolve compliance issues effectively. They would also be able to optimize their taxes and

maximize the available advantages including credits. In all becoming value added resource

rather than a cost to an organization. For further information please contact

TV Gopinath : Mob No: +91 9620116163

Ph No. 080-26536404

Web: www.hiregangeacademy. com

E-mail id: gopi@hiregangeacademy.com

Sl No Topic Course Duration

(Days)

1 Basic Service Tax 3

2 Advanced Service Tax 7

3 Basic Central Excise 2

4 Advanced Central Excise 5

5 Basic Customs & FTP 2

6 Advanced Customs & FTP 5

7 Basic CST & K-VAT 3

8 Advanced CST & K-VAT 5

9 Basic Indirect Taxes 7

10 Advanced Indirect Taxes 15

11 Dispute Avoidance & Resolution before notice under- VAT/

CST, CE, ST

3

27

For further details,

Contact: Hiregange Academy

Mr. TV Gopinath

Mob No: +91 9620116163 Ph No. 080-26536404

Web: www.hiregangeacademy.com

E-mail id: gopi@hiregangeacademy.com

For details, visit: http://hiregangeacademy.com/events.php

One of the biggest taxation reforms in India -- the Goods and Service Tax

(GST) -- is all set to integrate State economies and boost overall growth.

If you are wondering, how to go about understanding this new law..... then

come along and attend the workshop conducted by Hiregange Academy in

association with SSMRV College on 3rd January, 2015 from 10.00 A.M. to 6.00

P.M.

As the saying goes , “Change is inevitable… Progress is Optional”

Well, here is an opportunity to get ready to accept the 'Change' so that we can

make the right 'Progress.’

So let’s learn the present concepts / future possibilities and get GST-savvy..!

28

Internal Training Session on GST

An internal training session on GST, was conducted on 2nd December 2014, at the Hiregange

Academy premises, by CA Madhukar N Hiregange.

The session was aimed at surfacing the salient features of the most awaited Goods and Service

Tax (GST).

Important learning from the session is detailed below:

1. Goods and Service tax in mainly on the supply of goods and services.

2. It replaces the following present indirect taxes:

• Service Tax

• VAT & CST

• Central Excise

• Entry tax, luxury tax & Entertainment tax

• Customs duty (to the extent of SAD & CVD)

3. Origin-based tax changed to destination-based tax.

4. Minimum cascading effect.

5. Consists of 3 levels - Central, State and Integrated tax (CGST, SGST, IGST)

6. Pattern of credit - SGST only against SGST, CGST only against CGST, IGST against both SGST &

CGST.

7. Single registration number, applicable for all States.

8. States can levy Service tax on services.

9. Mandatory audit.

10. Expected rate – 27%. States to have a bandwidth (12.5%-14.5%)

11. Refunds to be fast-tracked. Clearing house mechanism is expected.

12. Returns – monthly and annual, except SSI & Works contract where it is quarterly returns.

13. Revision of returns – 1 month time.

14. GST requires constitutional amendments

15. Simpler procedures.

16. Reduction in disputes and corruption.

“Capacity Building Initiative on K-VAT/CST”,conducted from 21st November to 23rd November2014, was a knowledge treat for the delegates!

We thank all the delegates and the speakers for making the workshop and seminar a marvelous learning experience!

We acknowledge our knowledge sharing partners Hiregange & Associates

For feedback and suggestions, write to us at admin@hiregangeacademy.com