Budget 15-16 proposals: Amendments in sections 73, 76 and 78 (all related to penalty)
Budget 15-16 proposals: Insertion of transition provision by way of section 78B
Budget 15-16 proposals: Omitting section 80 (provided for waiver of penalty)
Extending the scope of advance rulings to resident firms, with immediate effect (from 1.3.2015)
Amendment in reverse charge mechanism, with immediate effect (from 1.4.2015)
To prescribe full reverse charge on manpower supply and security service provided by individual, HUF, partnership firm to a body corporate, with immediate effect (from 1.4.2015)
Prescribing reverse charge on service provided by a mutual fund agent, mutual fund distributor and agents of lottery distributor, with immediate effect (from 1.4.2015)
Amendments in section 86 (remedy against the order passed by commissioner (Appeals) in a matter involving rebate of service tax shall lie in terms of section 35 EE of the Central Excise Act)
Amendments in the provisions relating to Settlement Commission
Shifting the liability of payment of service tax on aggregator of a service where service is provided under the brand name of the aggregator, with immediate effect (from 1.3.2015)
Amendments in rules 4 (prescribing documentation, time limit and procedure for registration)
Registration for single premises shall be granted within two days of filing the application
Provisions for issuing digitally signed invoices and maintaining of records in electronic form added in rules 4A and 5 of the Service Tax Rules, 1994, with immediate effect (from 1.3.2015)
The period for taking Cenvat Credit is being extended from six months from the date of invoice to one year from the date of invoice.
Cenvat Credit allowed on input and capital goods received directly by job workers. ‘Export goods’ and ‘Exempt goods’ defined.
New exemptions for,- (a) Precondition, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables (b) Service by a Common Effluent Treatment Plant operator (c) Varistha Bima Yojana (d) Ambulance services (e) Admission to a museum, zoo, national park, wild life sanctuary, and a tiger reserve (f) Service provided by exhibitor of movie to a distributor or an AOP consisting of exhibitor as one of its member (g)Transport of export goods by road from the place of removal to a la
Change in abatement rates and conditions thereof for transport of passengers and goods by train; transport of goods by road by a GTA; transport of goods by vessels; executive/business class travel by air; and withdrawal of abatement on services provided in relation to chit, with immediate effect (from 1.4.2015)
Amendment in reverse charge mechanism, with immediate effect (from 1.4.2015)
To prescribe full reverse charge on manpower supply and security service provided by individual, HUF, partnership firm to a body corporate, with immediate effect (from 1.4.2015)
Prescribing reverse charge on service provided by a mutual fund agent, mutual fund distributor and agents of lottery distributor, with immediate effect (from 1.4.2015)
Amendment in rule 4(7) of the Cenvat Credit Rules to allow credit of service tax paid by recipient of service in partial reverse charge immediately on payment of tax ,with immediate effect (from 1.4.2015)
Service Tax to be levied on service by way of access to amusement facility (amusement parks, water parks , theme parks etc)
Service Tax rate is increased from 12.36% to 14%. New rate shall come into effect after the enactment of the Finance Bill, 2015.
Notification No. 42/2012-ST is being rescinded
Swachh Bharat Cess- Govt. to impose cess on all or any taxable service at the rate of 2% of the value of taxable service
We are committed to implementing a state of the art indirect tax system, the Goods and Services Tax, from April 1, 2016 - Finance Minister
Now issuing of Digital Invoices recognised in Service Tax.
The term “government” defined Section 65B(26A)
Section 80 providing waiver from penalty is proposed to be omitted.
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Goods & Service Tax (GST)
Seeks to provide composition rate for Swachh Bharat Cess as applicable to ST under sub-rules 7,7A,7B,7C of rule 6 of STR, 1994
New Delhi, the 12th November, 2015 [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) Sub: Seeks to provide composition rate for Swachh Bharat Cess as applicable to ST under sub-rules 7,7A,7B,7C of rule 6 of STR, 1994 G.S.R. (E).-In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:- 1. (1) These rules may be called the Service Tax (Second Amendment) Rules, 2015. (2) They shall come into force on the 15th day of November, 2015. 2. In the Service Tax Rules, 1994, in rule 6, after sub-rule (7C), the following sub-rule shall be inserted, namely:- (7D) The person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6, shall have the option to pay such amount as determined by multiplying total service tax liability calculated under sub-rule (7), (7A), (7B) or (7C) of rule 6 by 0.5 and dividing the product by 14 (fourteen), during any calendar month or quarter, as the case may be, towards the discharge of his liability for Swachh Bharat Cess instead of paying Swachh Bharat Cess at the rate specified in sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015) read with Notification No.22/2015-Service Tax, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 843 (E), dated the 6th November, 2015, and the option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances.” This notification shall come into force from the 15th day of November, 2015. [F.No. 354/129/2015 - TRU] (K. Kalimuthu) Under Secretary to the Government of India Note.--The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) by Notification No. 2/94-Service Tax, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994 and last amended by Notification No. 05/2015 – Service Tax, dated the 1st March, 2015, published in the Gazette of India, Extraordinary, vide number G.S.R. 159(E), dated the 1st March, 2015
Seeks to provide that provisions of notification No. 30/2012 - Service Tax dated the 20th June,2012 shall be applicable for the purposes of Swachh Bharat Cess
New Delhi, the 12th November, 2015 [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) Sub: Seeks to provide that provisions of notification No. 30/2012 - Service Tax dated the 20th June,2012 shall be applicable for the purposes of Swachh Bharat Cess G.S.R.….(E).In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994) read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby provides that Notification No. 30/2012 - Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20th June, 2012 shall be applicable for the purposes of Swachh Bharat Cess mutatis mutandis. [F.No. 354/129/2015 - TRU] (K. Kalimuthu) Under Secretary to the Government of India
Seeks to amend notification No.22/2015-ST dated the 6th November, 2015 so as to specify that Swachh Bharat Cess will be calculated on abated value
New Delhi, the 12th November, 2015 [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) Sub: Seeks to amend notification No.22/2015-ST dated the 6th November, 2015 so as to specify that Swachh Bharat Cess will be calculated on abated value. 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) read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 22/2015-Service Tax, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 843 (E), dated the 6th November, 2015, namely:- In the said notification, after the proviso, the following shall be inserted, namely:- “Provided further that Swachh Bharat Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in the Notification No. 26/2012-Service Tax, dated 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June, 2012. Explanation.- It is hereby clarified that value of taxable services for the purposes of the Swachh Bharat Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.” [F.No. 354/129/2015 - TRU] (K. Kalimuthu) Under Secretary to the Government of India
Swach Bharat Cess Notification
New Delhi, the 6th November, 2015 [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) Sub: Swach Bharat Cess Notification 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) read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all taxable services from payment of such amount of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the said Act, which is in excess of Swachh Bharat Cess calculated at the rate of 0.5 percent. of the value of taxable services: Provided that Swachh Bharat Cess shall not be leviable on services which are exempt from service tax by a notification issued under sub-section (1) of section 93 of the Finance Act, 1994 or otherwise not leviable to service tax under section 66B of the Finance Act, 1994. This notification shall come into force from the 15th day of November, 2015. [F.No. 354/129/2015 - TRU] (K. Kalimuthu) Under Secretary to the Government of India
Swach Bharat Cess Notification
New Delhi, the 6th November, 2015 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) Sub: Swach Bharat Cess Notification G.S.R. ---(E).- In exercise of the powers conferred by sub-section (1) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government hereby appoints the 15th day of November, 2015 as the date with effect from which the provisions of Chapter VI of the said Act, shall come into force. [F.No. 354/129/2015 - TRU] (K Kalimuthu) Under Secretary to the Government of India
More Service Tax Notifications...
Regarding Accounting code for payment of Swachh Bharat Cess
Dated the 16th November, 2015 F. No. 354/129/2015-TRU (Pt.) Government of India Ministry of Finance Department of Revenue (Tax Research Unit) To Principal Chief Commissioners of Customs and Central Excise(All) Principal Chief Commissioners of Central Excise & Service Tax (All) Principal Director Generals of Goods and Service Tax/System/CEI Director General of Audit/Tax Payer Services, Principal Commissioners/ Commissioners of Customs and Central Excise (All) Principal Commissioners/Commissioners of Central Excise and Service Tax (All) Principal Commissioners/Commissioners of Service Tax (All) Principal Commissioners/Commissioners LTU/Central excise/Service Tax (Audit) Subject: Accounting code for payment of Swachh Bharat Cess - regarding. Chapter VI of the Finance Act, 2015 has been brought into effect from 15th November, 2015 [Notification Nos. 21/2015-ST, dated 6th November, 2015 refers]. Swachh Bharat Cess is leviable on all taxable services, other than services which are fully exempt from Service Tax or services which are otherwise not liable to Service Tax under section 66B of the Finance Act, 1994, at the rate of 0.5% [Notification No.22/2015-ST, dated 6th November, 2015 refers]. 2. Accordingly, accounting codes have also been allotted by the Office of the Controller General of Accounts for the new Minor Head 506-Swachh Bharat Cess and new Sub-heads as under: Swachh Bharat Cess (Minor Head) Tax Collection Other Receipts (Interest) Penalties Deduct Refunds 0044-00-506 00441493 00441494 00441496 00441495 3. All concerned are requested to acknowledge the receipt of this circular. 4. Trade Notice/ Public Notice to be issued. Wide publicity through local news media including vernacular press may be given. Hindi version shall follow. Yours faithfully, (Abhishek Chandra Gupta) Technical Officer (TRU)
Service tax levy on services provided by a Goods Transport Agency -reg
New Delhi, dated 5th October, 2015 F. No. 354 / 98 /20015-TRU Government of India Ministry of Finance Department of Revenue Central Board of Excise & Customs To, Principal Chief Commissioner / Chief Commissioner of Central Excise, Service Tax and Customs (All), Director General of Service Tax Director General of Audit Director General of Central Excise Intelligence Principal Principal Commissioners of Service Tax (All) Commissioners of Service Tax (All) Commissioner (DPPR) Subject: - Service tax levy on services provided by a Goods Transport Agency -reg. The All India Transport Welfare Association (AITWA) has represented regarding the difficulties being faced by the Goods Transport Agencies (GTAs) in respect of service tax levy on the services of goods transport. Doubts has been raised by the All India Motor Transport Congress (AIMTC) regarding treatment given to various services provided by GTAs in the course of transportation of goods by road. 2. The issue has been examined. Since July 1, 2012, service tax has shifted to a negative list regime, by which all the services except those covered in negative list as mentioned in section 66D of the Finance Act, 1994 or those exempted by notification are chargeable to service tax. 3. Goods Transport Agency (GTA) has been defined to mean any person who provides service to a person in relation to transport of goods by road and issues consignment note, by whatever name called. The service provided is a composite service which may include various ancillary services such as loading/ unloading, packing/unpacking, transshipment, temporary storage etc., which are provided in the course of transportation of goods by road. These ancillary services may be provided by GTA himself or may be sub-contracted by the GTA. In either case, for the service provided, GTA issues a consignment note and the invoice issued by the GTA for providing the said service includes the value of ancillary services provided in the course of transportation of goods by road. These services are not provided as independent activities but are the means for successful provision of the principal service, namely, the transportation of goods by road. 4. A single composite service need not be broken into its components and considered as constituting separate services, if it is provided as such in the ordinary course of business. Thus, a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The interpretation of specified descriptions of services in such cases shall be based on the principle of interpretation enumerated in section 66 F of the Finance Act, 1994. Thus, if ancillary services are provided in the course of transportation of goods by road and the charges for such services are included in the invoice issued by the GTA, and not by any other person, such services would form part of GTA service and, therefore, the abatement of 70%, presently applicable to GTA service, would be available on it. 5. It is also clarified that transportation of goods by road by a GTA, in cases where GTA undertakes to reach/deliver the goods at destination within a stipulated time, should be considered as ‘services of goods transport agency in relation to transportation of goods’ for the purpose of notification No. 26/2012-ST dated 20.06.2012, serial number 7, so long as (a) the entire transportation of goods is by road; and (b) the GTA issues a consignment note, by whatever name called. 6. Pending disputes on the above issues may accordingly be decided expeditiously. 7. Trade & field formations may be informed suitably. 8. Hindi version will follow. Yours faithfully, (Dr. Ravindra Kumar) Technical Officer, TRU-II
Instructions F.No.137/46/2015 - S.T
Clarification regarding the provisions of Section 73, 76 and 78 of the Finance Act, 1994 and Section 11AC of the Central Excise Act, 1944 after amendments made vide Finance Act. 2015
Dated: August 18, 2015 F.No.137/46/2015-Service Tax GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE & CUSTOMS SERVICE TAX WING NEW DELHI To All Principal Chief Commissioners of Central Excise All Chief Commissioners of Central Excise/ Service Tax Principal Directors General of Goods & Services Tax/ Systems/Central Excise Intelligence Director General of Audit All Principal Commissioners of Central Excise/Service Tax All Commissioners of Central Excise/Service Tax All Principal Commissioners/Commissioners LTU Joint Secretary TRU-1/TRU-II/Review Commissioner Central Excise/ Service Tax/Legal/PAC Subject: Clarification regarding the provisions of Section 73, 76 and 78 of the Finance Act, 1994 and Section 11AC of the Central Excise Act, 1944 after amendments made vide Finance Act. 2015 Consequent to the amendments made to section 73, 76 and 78 of the Finance Act, 1994 and section 11AC of the Central Excise Act, 1944, vide Finance Act, 2015 with effect from 14.05.2015, field formations have sought certain clarifications with regard to detections made during audit, investigation or scrutiny. Keeping in mind the need to reduce litigation as well as paperwork and compliance formalities, I am directed to convey the following clarifications. 2.0 Issuance of a Show Cause Notice (SCN) Doubt: Does a SCN have to be issued in a case involving the extended period of limitation, where the assessee pays the tax/duty, interest and 15% penalty as prescribed? 2.1 In a case involving the extended period of limitation, if an assessee pays the service tax/central excise duty, interest and penalty equal to 15% of the tax/duty and makes a request in writing that a written SCN may not be issued to them, then in such cases the SCN can be oral and the representation (if he desires) against it also oral. In other words, an assessee can request for an informed waiver of a written SCN. The Supreme Court in the case of Commissioner of Customs, Mumbai versus Virgo Steels reported in 2002 (141) E.L.T 598 (S. C.) = CIO 2002 SC 8 has held that: "14. From the ratio laid down by the Privy Council and followed by this Court in the above cited judgments, it is clear that even though a provision of law is mandatory in its operation if such provision is one which deals with the individual rights of person concerned and is for his benefit, the said person can always waive such a right. 15. Bearing in mind the above decided principle in law, if we consider the mandatory requirement of issuance of notice under Section 28 of the Act, it will be seen that that requirement is provided by the Statute solely for the benefit of the individual concerned, therefore, he can waive that right. In other words, this Section casts a duty on the Officer to issue notice to the person concerned of the proposed action to be taken. This is not in the nature of a public notice nor any person other than the person against whom the proceedings are initiated has any right for such a notice. Thus, the right of notice being personal to the person concerned the same can be waived by that person. 16. If the above position in law is correct, which we think it is. M/s Virgo Steels, having specifically waived its right for a notice, cannot now be permitted to turn around and contend that the proceedings initiated against them are void for want of notice under Section 28 of the Act, so as to frustrate the statutory duty of the Revenue to demand and collect customs duty which M/s Virgo Steels had intentionally evaded." Although this decision is in relation to section 28 of the Customs Act, 1962. the principles laid down are equally applicable to SCNs issued under other statutes. Hence, an assessee can waive the requirement of a written SCN. 2.2 Further, section 124 of the Customs Act, 1962 provides, inter alia, that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing, an opportunity of making a representation in writing and a reasonable opportunity of being heard. The section also provides that the notice and the representation may, at the request of the person concerned, be oral. This provision has been made applicable to the Central Excise Act, 1944 vide notification number 68/63-Central Excise dated 04,05.1963 issued under section 12 of the Central Excise Act. 1944. The said section of the Central Excise Act is also applicable to service tax vide section 83 of the Finance Act, 1994. 2.3 If the grounds on which the department feels that there has been short/non-payment of tax/duty are intimated to the assessee orally with its quantification and the assessee indicates in writing that he has been informed about such grounds and he accepts the grounds and the quantification and is waiving the requirement of a written SCN, then a written SCN need not be issued. 2.4 Further, clause (i) of the second proviso to section 78 of the Finance Act, 1994 and clause (d) of sub-section (1) of section 11AC of the Central Excise Act. 1944 refer to a thirty day period, from the date of service of the notice, within which the assessee may make the payment of tax/duty, interest and reduced penalty of 15%. In case the assessee makes a written request for waiver of a written SCN, the thirty day period can be computed from the date of receipt of such a letter by the department. 2.5 There is no bar on an assessee making the payment of tax/duty, interest and reduced penalty of 15% even before the date of receipt of such a letter by the department. Such an assessee cannot be placed on a worse footing than one who pays tax/duty, interest and reduced penalty of 15% within 30 days of the receipt of the SCN/receipt of letter by the department. 3.0 Conclusion of proceedings Doubt: Who is competent to order conclusion of proceedings if the conditions meriting conclusion of proceedings are fulfilled? 3.1 Conclusion of proceedings may be approved by an officer equal in rank to the officer who is competent to adjudicate such cases. The cases can be closed by officers of DGCEI/Executive Commissionerate/Audit Commissionerate, as the case may be. If multiple issues involving different monetary values arise from the same proceedings, then the sum total involved in all the issues arising from the same proceedings should be considered for conclusion of proceedings. The conclusion of proceedings should invariably be intimated to the assessee in writing. There is no need to issue an adjudication order. Further, there is no need to undertake review of such conclusion of proceedings. 3.2 It is further clarified that as per section 73(3) of the Finance Act, 1994, in cases not involving fraud, suppression of facts, etc, if the assessee pays the tax and interest thereon, on the basis of his own ascertainment or that ascertained by the department, no penalty is payable and no show cause notice shall be served under sub-section (1) of section 73 in respect of the amount so paid. Further, as per provisions of clause (i) of proviso to section 76, in such cases not involving fraud, suppression of facts, etc, if the tax and interest thereon is paid within 30 days of the issuance of SCN, no penalty shall be payable and the proceedings shall be deemed to be concluded. These two provisions have to be read harmoniously to conclude that in cases not involving fraud, suppression of facts, etc, if the assessee pays the tax along with interest, either within 30 days of issuance of SCN or before the issuance of SCN, then in such cases proceedings shall be deemed to be concluded. Legal provisions for similar closure in central excise are present in clause (a) of sub-section (1) of section 11 AC of the Central Excise Act, 1944. (Himani Bhayana) Under Secretary (Service Tax)
F. No. 224/44/2014-CX.6
Instructions regarding maintenance of Records in Electronic Form and authentication of records by Digital Signature–manner of verification
New Delhi, dated the 6th July, 2015 F. No. 224/44/2014-CX.6 Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs To Principal Chief Commissioners / Chief Commissioners of Central Excise (All), Principal Chief Commissioners/Chief Commissioners of Central Excise & Service Tax (All). Sub: Instructions regarding maintenance of Records in Electronic Form and authentication of records by Digital Signature–manner of verification-reg. Madam/ Sir, Kind attention is invited to sub-rule (5) of rule 10 of Central Excise Rules, 2002, inserted vide Notification No. 8/2015-CE (N.T.) dated 01.03.2015 and sub-rule (5) of rule 5 of the Service Tax Rules, 1994 inserted vide notification no. 5/2015-Service Tax dated 01.03.2015. As per the provisions of these sub-rules, the assessees may opt to maintain records in electronic form and authenticate the same by digital signatures subject to conditions, safeguards and procedures prescribed by the Board. Attention is also invited to sub-rule (9) of rule 11 of CER, 2002, and sub-rule (2) of rule 4(C) of the Service Tax Rules, 1994 inserted by the same notifications. As per the provisions of these rules, the assessees may exercise the option to issue invoices authenticated by digital signatures. Subsequently, Board vide Notification No. 18/2015-C.E.(N.T.) dated 6th July, 2015 has prescribed conditions, safeguards and procedures for preserving records in electronic form and authentication of records by digital signatures. 2.0 The salient features of the Notification No. 18/2015-C.E. (N.T.) dated 6th July, 2015 are:- a. Every assessee proposing to use digital signature shall use Class 2 or Class 3 Digital Signature Certificate duly issued by the Certifying Authority in India. b. Every assessee proposing to use digital signatures shall intimate the details such as name, e-mail id, office address and designation of the person authorized to use the digital signature certificate, name of the Certifying Authority, date of issue of Digital Certificate and validity of the digital signature etc., to the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise at least 15 days in advance. In case of any change in the details submitted to the jurisdictional Deputy Commissioner or Assistant Commissioner, complete details shall be submitted afresh within 15 days of such change. Assessees already using digital signature shall intimate the above details within 15 days of issue of the notification. c. Every assessee opting to maintain records in electronic form, who has more than one factory or service tax registration, shall maintain separate electronic records for each factory or each service tax registration. d. A Central Excise Officer, during an enquiry, investigation or audit, in accordance with the provisions of section 14 of the Central Excise Act, 1944 and as made applicable to Service Tax as per the provisions contained in section 83 of the Finance Act, 1994, may direct an assessee to furnish printouts of the records in electronic form and invoices and may resume printouts of such records and invoices after verifying the correctness of the same in electronic format; and after the print outs of such records in electronic form have been signed by the assessee or any other person authorised by the assessee in this regard, if so requested by such Central Excise Officer. 3.0 Following procedures are hereby prescribed for verification of digitally signed invoices and documents: 3.1 The process for verifying digitally signed documents or invoices requires a computer system with internet connection. Digitally signed invoices or documents either in PDF format or the hard copy of invoices and documents may contain a web link where the documents or invoices are stored by the assessee, which can be accessed using this web link for verification. Assessee shall either provide access to the weblink of the company for verification or forward the digitally signed invoice or document by e-mail on requisition by the Central Excise Officer for verification. 3.2 The contents of a digitally signed document or invoice can be verified as follows: a. Automatic pop-up of message once a digitally signed invoice is opened for the first time i. Whenever a document/ invoice containing a valid digital signature is opened in a pdf format, a pop up will automatically appear on the computer screen indicating the manner in which the digital signature of the person, who has signed the document, can be validated. ii. This pop-up would generally contain the messages “At least one signature has problems” and “Signature Panel”. iii. Digital signature can be validated by clicking on the signature box, which has message “validity unknown” with a “?” stamp, generally appearing on the bottom right corner of the invoice. iv. This pop up will not appear where the sender creates only an image of the digital signature instead of digitally signing the invoice or document. Such an invoice or document will not be a valid digitally signed invoice or document. b. Document modification history i. Once the signature box on digitally signed invoice or document is clicked, a window bearing title ‘signature validation status’ will appear to provide document modification history. This window will provide the information as to whether the document has been modified or not post signing of the document. ii. A tab bearing the title “Signature Properties” shall also appear on the same window and this tab once clicked, a window bearing the title “Signature Properties” will appear. c. Access to key information from the signature panel and acceptance of signer post verification of necessary particulars i. The next step is to click “show signers’ certificate” option which appears on the “Signature Properties” window. By doing so, various tabs will provide key information about the signer, validity and authenticity of the digital signature certificate, details about the agency that has issued the digital certificate, details about the certificate granted to such issuing agency etc. ii. After verifying various particulars (the name of the holder of the digital signature, the validity of the signature and details of issuance of the document) and being satisfied with the authenticity of the document, the Central Excise Officer may add the certificate in question to its list of trusted certificates by clicking the “trust” tab on the menu. By clicking ‘Add to trusted identities’ the signer gets added as a trusted source and the process of verification is thus complete. 4.0 Difficulty, if any, in implementation of the procedure may please be brought to the notice of the Board. Hindi version would follow. (ROHAN) Under Secretary to the Government of India
Detailed Manual Scrutiny of Service Tax Returns
Dated: June 30, 2015 F.No.137/314/2012-Service Tax GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE AND CUSTOMS SERVICE TAX WING NEW DELHI To All Principal Chief Commissioners of Central Excise All Chief Commissioners of Central Excise/ Service Tax Principal Directors General of Service Tax/Central Excise Intelligence/Systems Director General of Audit All Principal Commissioners of Central Excise/Service Tax All Commissioners of Central Excise/Service Tax All Principal Commissioners/Commissioners LTU Subject: Detailed Manual Scrutiny of Service Tax Returns 1.1 In the era of self-assessment, the need for a strong compliance verification mechanism cannot be over emphasized. Such a mechanism has three important prongs - audit, anti-evasion and return scrutiny. In order to put in place a strong 'return scrutiny' system, a two-part system of return scrutiny was envisaged- a preliminary scrutiny which would be online covering all the returns; and a detailed manual scrutiny of select returns, identified on the basis of risk parameters, to be done by the Division/ Range offices. 1.2 The Board vide Circular No. 113/07/2009-ST dated 23-4-2009 had laid down the procedure for carrying out detailed scrutiny of returns and had circulated a Return Scrutiny Manual for Service Tax. However, with the introduction of the Point of Taxation Rules, 2011, which shifted the liability of payment of service tax from receipt basis to accrual basis, and the advent of negative list-based comprehensive taxation of services in 2012, it was felt that the guidelines for detailed scrutiny of returns needed a revision. In this background, it has been decided that detailed scrutiny of ST-3 returns, with effect from 01.08.2015, should be carried out in the manner outlined below:- 2.0 PRELIMINARY ONLINE SCRUTINY 2.1 The purpose of preliminary scrutiny of returns includes ensuring the completeness of the information furnished in the return, arithmetic correctness of the amount computed as tax and its timely payment, timely submission of the return and identification of non-filers and stop-filers. On the basis of the validation checks incorporated in ACES by the Directorate General of Systems & Data Management (DGS&DM), preliminary scrutiny of all returns is done online in ACES and the returns having certain errors are marked for Review and Correction (RnC). These have to be processed accordingly by the Range Officers. 3.0 SCOPE OF DETAILED MANUAL SCRUTINY 3.1 The purpose of detailed manual scrutiny of returns is to ensure the correctness of the assessment made by the assessee. This includes checking the taxability of the service, the correctness of the value of taxable services in terms of Section 67 of the Finance Act, 1994, read with the Service Tax (Determination of Value) Rules, 2006 and the effective rate of tax after taking into account the admissibility of an exemption notification, abatement, or exports, if any; ensuring the correct availment/utilization of CENVAT Credit on inputs, capital goods, and input services in terms of the CENVAT Credit Rules, 2004, etc. In doing this, the proper officer must rely mainly on assessment-related documents like agreements/contracts and invoices. Detailed financial records should not be called for in a routine manner. 3.2 A detailed scrutiny programme typically supplements the audit programme. The scope of audit, on the other hand, is to inspect the financial records of a company for a complete financial year in order to identify non-compliance issues and to evaluate the assessee's internal control system. The two processes of audit and scrutiny are, in fact, complementary to each other. 4.0 SELECTION OF RETURNS FOR DETAILED SCRUTINY 4.1 The detailed manual scrutiny programme must replicate some of the best practices in audit. A Return Scrutiny Cell should be created in the Commissionerate's Headquarters. The Return Scrutiny Cell shall maintain the records of the assessees and the returns which are selected for detailed scrutiny and also the results thereof. 4.2 The focus of detailed manual scrutiny of the returns would be on the returns of those assessees which are not being audited. The detailed return scrutiny would be conducted in respect of such assessees whose total tax paid (Cash + CENVAT) for the FY 2014-15 is below Rs 50 lakhs. Each Commissionerate has to select equal number of assessees for carrying out returns' scrutiny from each of the these three total tax paid bands (Cash+CENVAT) viz., Rs 0 to Rs 10 lakhs, Rs 10-25 lakhs and Rs 25-50 lakhs for the financial year 2014-15. 4.3 The risk parameters and the risk tools which would govern the selection of the returns for detailed manual scrutiny have been developed. The risk scores for the Service Tax returns for the financial year 2014-15 have been calculated. The data has been segregated on the basis of Zone/Commissionerate/Division/Range. The data resides with DGS&DM which will be shared with the Service Tax & Central Excise field formations through secure data exchange in the following manner:- 43.1 The risk score files will be placed on a server. Chief Commissioners of Service Tax & Central Excise Zones are required to nominate a 'Zonal Nodal Officer' who shall access these data and distribute the same to the Zonal Commissionerates dealing with Service Tax. The said officer should preferably be of the rank of Additional/Joint Commissioner and should necessarily have an official email id (ICEGATE or NIC email). 4.3.2 The nomination of Zonal Nodal Officers should be informed to the Service Tax Wing, CBEC by email addressed to firstname.lastname@example.org alongwith attaching a scanned copy of the nomination letter. The said communication should contain the nomination by the Chief Commissioner along with the designation, email id, telephone numbers (mobile & land line numbers) of the nominated Nodal Officer. 4.3.3 An email will be sent by DGS&DM to the Zonal Nodal Officer. These Zonal Nodal Officers would need to copy and paste on the internet browser the 'weblink' of the page hosting the folders. They would need to login using the username and password which would be shared with them through a separate email sent on their official email id. They would then need to click on the folder bearing the respective Zone name (available on the left panel) to access the files placed there. 4.3.4 The Return Scrutiny Cell, through an officer authorized by the Commissioner, shall collect the Risk Score data for the Commissionerate from the Zonal Nodal Officer. 4.3.5 The list of returns to be taken up for detailed scrutiny would be finalized by the Additional/Joint Commissioner in-charge of Division (or in his absence by the Commissioner) as per the risk score in conjunction with the total tax paid by the assessee, local risk parameters (including sensitive and evasion prone sectors), past compliance record of the assessee and manpower availability. The list of the assessees selected will be sent to the respective Divisions. 4.3.6 The assessees who have been selected for audit or have been audited recently (in the past three years) should not be taken up for detailed scrutiny. However, the Chief Commissioner, may direct detailed manual scrutiny of an assessee's return who has paid service tax (Cash + CENVAT) more than Rs 50 lakhs in certain specific cases. In no event should an assessee be subjected to both audit and detailed manual scrutiny. 4.3.7 All the officers should maintain strict confidentiality regarding the Risk Score data including the original score, further selection by the Commissionerate, etc. Under no circumstances it is to be shared with the assessee or any other authority since this is information available in a fiduciary relationship, pertaining to a third party, and which may entail further investigation. 5.0 METHODOLOGY 5.1 Detailed scrutiny of returns must be conducted by the Service Tax Range headed by the Superintendent and assisted by a complement of Inspectors. However, the Divisional DC/AC shall be responsible for the overall supervision of this business process in respect of his/her division. Before return scrutiny is initiated, the assessee must be given prior intimation of at least fifteen days and the purpose of the exercise must be spelt out in an Intimation Letter in a format given as Annexure I. Once an assessee's returns are taken up for detailed scrutiny, the Range should compile the Assessee Master Information to facilitate trend analysis in a format given as Annexure II. Since this information is based on the returns, it can be obtained from the returns filed in ACES without making any reference to the assessee. Returns scrutiny must be done for a complete financial year by looking at two half-yearly returns in conjunction. Before scrutinizing the return for evaluating the correctness of assessment, the information available in the assessee master should be carefully studied by the Divisional DC/AC and discussed with his officers, much like Desk Review in Audit. To begin with, the returns for the financial year 2013-2014 should be taken up for detailed scrutiny. 5.2 One of the important objectives of return scrutiny is to ensure validation of the information furnished in the self-assessed ST-3 return. The validation exercise would require reconciling information furnished in the ST-3 return with ITR Form Nos. 4, 5, 6 and 26AS and any third party information made available. In addition to this, the scrutiny exercise must also look at the correctness of self-assessment with respect to taxability, admissibility of abatement and eligibility for exemption, valuation and CENVAT credit availed/utilized. 5.3 A Checklist has been prepared for carrying out detailed manual scrutiny of selected ST-3 returns (Annexure III). For achieving the stated objectives, the checks have been categorized as follows: • Reconciliation for validation of the information furnished in the ST-3 return; • Taxability in respect of services which may have escaped assessment; • Classification (for the purposes of due availment of abatement/exemption benefit); • Valuation; and • CENVAT credit availment/utilization. 5.4 In case any additional details are required, the same may be obtained from the assessee through requisition rather than through a visit. Calling of such additional documents must be done with the approval of the jurisdictional DC/AC so as to obviate the complaint of administrative intrusion. 5.5 Based on the experience of some Zones/Commissionerates, it is seen that in a month an Inspector will be able to perform detailed manual scrutiny of a minimum of three assessees. While some cases may take time, the scrutiny process of an assessee should be completed in a period not exceeding three months. 6.0 DOCUMENTATION OF FINDINGS 6.1 In order to ensure transparency of the scrutiny process, it is important to document the findings flowing from the scrutiny effort. For this purpose, an Observation Sheet should be prepared. The format of the observation sheet, enclosed as Annexure IV, bears a one-to-one co-relation with the checklist. The scrutiny officer must record his findings under each of the subject of the checklist namely, reconciliation, taxability, classification, valuation and CENVAT credit. Under each of these heads, the officer should record any action that needs to be taken by the Range. The findings should clearly outline the process of scrutiny that led to the outcome. It is also possible that the officer may come across some issues which may have to be referred to audit or anti-evasion. These should also be noted in the relevant column given in the observation sheet. In cases where detailed scrutiny of returns results in detection of defaults in service tax payment and it appears that the proviso to section 73(1) of the Finance Act, 1994 is invokable, the ST-3 returns of the past periods should also be verified and the results of such verification should be recorded. 6.2 All scrutiny findings in a month must be discussed in a Monthly Scrutiny Monitoring Committee Meeting headed by the Additional/Joint Commissioner in-charge of the Division (or in his absence by the Commissioner) where each Range should present their scrutiny findings in the form of a 'Scrutiny Report' given as Annexure V. The meeting should be attended by all the Range Inspectors, Superintendents and DC/ACs of the Divisions whose supervisory control is with the said ADC/JC. This would provide an opportunity to the officers from other Ranges to respond to the findings and also share best practices. The views of the committee on the return scrutiny findings must be documented and follow up action taken. Important issues may be put up to the Commissioner for information. The minutes of the meeting and the decisions including detection and recovery of service tax dues should be properly recorded and maintained by the Scrutiny Cell of the Commissionerate. 6.3 Zonal Chief Commissioners are requested to submit monthly reports in the format given in Annexure VI to the Directorate General of Service Tax till facilities are developed to enable the Commissionerates to upload the data in the MIS of CBEC. 6.4 Based on the past experiences in performing detailed manual scrutiny, a few Templates/Case studies have been prepared and are enclosed as Annexures VII and VIII. These Case Studies will help and guide the officers who are not conversant with the process of Detailed Scrutiny. 6.5 The timelines to be followed for starting detailed manual scrutiny as per the above detailed process are as below: 6.5.1 Forwarding of official mail ids of the Zonal Nodal Officers by 06.07.2015 6.5.2 Forwarding of data by DGS&DM by 08.07.2015 6.5.3 Finalization of the list of the returns of the assessees selected for detailed manual scrutiny and dispatch of the Intimation Letter by 15.07.2015 6.5.4 Commencement of detailed manual scrutiny of selected returns by 01.08.2015. 6.6 Even after the introduction of GST, it may be appreciated that the basic principles of scrutiny of returns and reconciliation of records would remain the same. (Himani Bhayana) Under Secretary (Service Tax) Annexure - I Annexure - II Annexure - III Annexure - IV Annexure - V Annexure - VI Annexure - VII Annexure - VIII
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