No ST on foreign service prior to 18.4.2006 Says Supreme Court

Now It is Final - No Service Tax on foreign service prior to 18.4.2006: Supreme Court dismisses Revenue SLP

TIOL-DDT 1258
15.12.2009
Tuesday
IS it 1.1.2005 or 18.4.2006?

In the Hindustan Zinc case - 2008-TIOL-1149-CESTAT-DEL-LB, a Larger Bench of the Tribunal headed by the President held that, “the taxable service provided by a non-resident or from outside India, who does not have any office in India, having been specified as 'taxable service' with effect from 1.1.2005, under notification No.36 /2004, recipient of such service could not be held liable for paying service tax prior to 1.1.2005 notwithstanding the amendment in rule 2(1)(d) of the Service Tax Rules under notification no. 12/2004.”

The Department had challenged this in the Supreme Court and the Supreme Court had dismissed the Government's appeal - 2009-TIOL-87-SC-ST.

This, many in the Government, take as a reason to state that the Supreme Court had confirmed that Service Tax on import of services is payable from 1.1.2005 and not 18.4.2006 as held by the Bombay High Court in Indian National Shipowners Association – 2008-TIOL-633-HC-MUM-ST

 

The Supreme Court had not held that the tax is payable from 1.1.2005, but only dismissed the Revenue appeal against the CESTAT order holding that it was not payable before 1.1.2005. And there is a lot of difference in the two concepts.

Anyway not satisfied with the dismissal of its appeal by the Supreme Court, the Government filed a review petition in the Supreme Court in the Hindustan Zinc case. The Supreme Court found no merit in the prayer for Review and dismissed the Review Petition. - 2009-TIOL-117-SC-ST

 

You will remember that in Indian National Shipowners Association – 2008-TIOL-633-HC-MUM-ST the Bombay High Court held that the tax is payable only from 18.04.2006 and this decision had been widely followed.

But the litigation loving government does not keep quiet. It has filed a Special Leave Petition in the Supreme Court against the Bombay High Court judgement.

Yesterday the Supreme Court dismissed the SLP and in tune with TIOL tradition – we are the first to bring you this news.  

 Kind regards,

 Rebecca Andrews

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

Reversal of cenvat credit on WIP/ finished goods written off in the books of accounts -reg

Circular No. 907/27/2009-CX



F.No.267/141/2009-CX8

Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)



New Delhi, dated the 7th December, 2009.



To,

All Chief Commissioners of Central Excise (including LTU),

All Commissioners of Central Excise (including LTU),

All Director Generals.



Sir/ Madam,



Subject: Clarification on issues related to reversal of cenvat credit on WIP/ finished goods written off in the books of accounts -reg.



References have been received from field formations stating that as per Rule 3(5B) of CENVAT Credit Rules, 2004, if the value of inputs is fully written off, then the manufacture is required to pay an amount equal to cenvat credit taken. However, there is no provision to demand reversal of credit taken on inputs which have gone into manufacture of work in progress (WIP), semi finished goods and finished goods which have also been written off fully in the books of accounts.

2. The matter has been examined. Rule 3(5B) of the CENVAT Credit Rules, 2004, provides that if the value of any input on which cenvat credit has been taken is written off fully in the books of accounts, then the manufacturer is required to reverse the credit taken on the said input. As far as finished goods in concerned, it is stated that excise duty is chargeable on the activity of manufacture or production. Even though liability for payment of tax has been postponed to the time of removal of goods for the factory, but still the legal liability to pay the excise duty has been fastened on the goods, when it has been manufactured or produced. Therefore, normally all goods manufactured suffer excise duty at the time of removal, but if the manufactured goods are destroyed due to natural causes etc., Rule 21 of Central Excise Rules, 2002, provides for remission of duty. Further, Rule 3(5C) of CENVAT Credit Rules, 2004, also requires reversal of credit on the inputs when the duty is ordered to be remitted under the said Rule 21. Therefore, if the goods have been manufactured, in that case, a manufacturer is liable to pay excise duty unless duty is remitted under Rule 21. Therefore, if the value of finished goods is written off, the manufacturer would be liable to pay excise duty or he would be required to reverse the credit on the inputs used, if duty has been remitted on finished goods.



3. As regard writing off work in progress (WIP), it is stated that if the WIP has reached the stage, when it can be considered as manufactured goods, in that case, the same treatment as applicable to finished goods, discussed in para2 above would apply. However, if the activity carried out on the WIP goods cannot be considered as amounting to manufacture, in that case, the said goods should be considered as input and the treatment for reversal of credit applicable to input would be applicable.

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia
2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

Notification No. 31/2009-Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

New Delhi, the 1
st September, 2009.


Notification No. 31/2009-Service Tax

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the

Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central

Government, on being satisfied that it is necessary in the public interest so to do, hereby

exempts the taxable service referred to in sub-clause (zzb) of clause (105) of section 65 of the

Finance Act,1994, provided by a sub-broker, to a stock-broker as defined in clause (101) of

Section 65 of the Finance Act,1994, in relation to sale or purchase of securities listed on a

registered stock exchange from the whole of the service tax leviable thereon under section 66

of the said Finance Act.

[F.No.354/175/2009-TRU]

(Prashant Kumar)

Under Secretary to the Government of India

posted at www.taxmannindia.blogspot.com

Notification No. 32/2009-Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

New Delhi, the 1
st September, 2009.


Notification No. 32/2009-Service Tax

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the

Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central

Government, on being satisfied that it is necessary in the public interest so to do, hereby

exempts the taxable service referred to in sub-clause (zzb) of clause (105) of section 65 of the

Finance Act,1994, provided by any person, to a client as defined in clause (19) of Section 65

of the Finance Act,1994, in relation to the manufacture of pharmaceutical products,

medicines, perfumery, cosmetics or toilet preparations containing alcohol, which are charged

to excise duty under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 from the

whole of the service tax leviable thereon under section 66 of the said Finance Act.

[F.No.354/182/2009-TRU]

(Prashant Kumar)

Under Secretary to the Government of India

posted at www.taxmannindia.blogspot.com

Notification No. 33/2009 - Service Tax

[TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

New Delhi, the 1
st September, 2009


Notification No. 33/2009 - Service Tax

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the

Finance Act, 1994 (32 of 1994), (hereinafter referred to as the Finance Act), the Central

Government, on being satisfied that it is necessary in the public interest so to do, hereby

exempts the taxable service provided to any person in relation to transport of goods by rail, as

referred to in sub-clause (zzzp) of clause (105) of section 65 of the Finance Act, from the

whole of the service tax leviable thereon under section 66 of the Finance Act,

provided, nothing contained in this notification shall apply to any service provided or

to be provided, by any person other than government railway, in relation to transport of goods

in containers by rail.

F. No. 356/24/2009-TRU

Prashant Kumar

Under Secretary to the Government of India

posted at www.taxmannindia.blogspot.com

Service tax exemption for specified goods

The Finance Ministry has now given service tax exemption on transportation of certain specified goods by rail or through inland water and coastal shipping. The exemption has been given keeping in mind the common man, a Finance Ministry official said. The Budget 2009-10 had imposed service tax on transport of goods by rail. Separately, it had also brought services provided in relation to transport of coastal goods and goods through inland water, including national waterways under the service tax net. All the Budget announcements on service tax came into effect from Tuesday. In case of rail services, the Finance Ministry has now said that transport of defence/military equipment, railway equipment/materials, postal mail bags, luggage of train passengers, parcels (including newspapers/magazines), foodgrains, sugar, fertilisers, milk and milk products, fruits and vegetables and motor vehicles will not attract service tax. Also, kerosene oil meant for supply through public distribution system, petroleum products including LPG cylinders booked by public sector oil marketing companies and transported by Indian Railways will now be service tax exempt. For transport of goods through inland water and coastal shipping, the exempted items include edible oils, foodgrains, fruits, vegetables and flowers, tea and coffee, sugar, sugarcane, grocery, fertiliser, sarees, petroleum and petroleum products, raw jute and jute textile, hank yarn made from cotton, medicine and pharmaceutical products and newspapers and magazines. “All essential items and those used by Government have been service tax exempt in the case of transportation of goods by rail or through inland water and coastal shipping,” Mr Pratik Jain, Executive Director, KPMG, told Business Line. Meanwhile, for transport of goods by rail, the Finance Ministry has now specified an abatement rate of 70 per cent. – www.thehindubusinessline.com

posted at www.taxmannindia.blogspot.com