A2Z TAXCORP LLP Tax and Law Practitioners Page 1

This bulletin brings to you the highlights of recent updates and important judgments in the field of indirect taxation along with key inputs from other fields to keep you abreast of all the latest happenings.

A2Z TAXCORP LLP NEW DELHI, INDIA

Indirect Tax and Other Laws Communique 13th April, 2015

A2Z TAXCORP LLP Tax and Law Practitioners Page 2

CONTENTS Page No

Service Tax

Notifications and Circulars

New rate of Service tax shall come into effect only from a date to

be notified after enactment of the Finance Bill, 2015 – CBEC

Clarifies

06

Service tax exemption to the taxable services provided or agreed to

be provided against duty credit scrip issued under Service Exports

from India Scheme (SEIS)

06

Service tax exemption to the taxable services provided or agreed to

be provided against duty credit scrip issued under Merchandise

Export from India Scheme (MEIS)

07

Case laws

Period of limitation under Section 11B of the Excise Act, will not

apply in case of refund of Service tax paid inadvertently where no

such Service tax liability exist

07

No Service tax liability arise on loans and advances, if it is revealed

in the audited balance sheet

08

Cenvat credit allowed on civil construction services for construction

of factory shed, which is falling under setting up of factory

premises

09

Central Excise

Notifications and Circulars

Excise duty exemption to the goods cleared against duty credit

scrip issued under Service Export from India Scheme (SEIS) 11

Excise duty exemption to the goods cleared against duty credit

scrip issued under Merchandise Export from India Scheme (MEIS)

11

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Case laws

Limitation period prescribed under Section 11B of the Excise Act is

not applicable for the rebate claim filed under Rule 18 of the Excise

Rules

12

Doctrine of Unjust Enrichment will be applicable in case of refund

of duty paid on Capital goods which are captively consumed

13

Value of the clearances to Loan Licensees would not be includible

for determining the aggregate value of clearances for home

consumption while determining SSI status

14

Customs

Notifications and Circulars

Inland Container Depots (ICD) notified at Khujra District

Bulandshahr

15

Exemption to specified goods imported for ‘Airborne Early Warning

and Control (AEW&C) Programme of Ministry of Defence

15

Customs duty exemption to goods imported into India against duty

credit scrip issued under Service Export from India Scheme (SEIS)

16

Customs duty exemption to goods imported into India against duty

credit scrip issued under Merchandise Export from India Scheme

(MEIS)

16

Continuation of Anti-Dumping duty on import of ‘Recordable

Digital Versatile Disc (DVD)’ till April 11, 2016’

16

Levy Anti-Dumping duty on imports of Glass or Ceramics/Porcelain,

originating in, or exported from the People's Republic of China

16

Levy of Anti-Dumping duty on import of ‘Poly Vinyl Chloride Paste

Resin’ originating in and exported from Norway and Mexico for a

period of 5 years

17

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Levy of Anti-Dumping duty on import of ‘Flexible Slabstock Polyol

of Molecular Weight 3000- 4000’ originating in and exported from

Australia, European Union and Singapore for a period of 5 years

17

Continuation of Anti-Dumping duty on import of ‘Coumarin’ till

March 22, 2016

17

Condition for 4% SAD refund claim modified 17

Case Laws

Export obligation is ought to be completed by EOU even if the

goods were first sent to another unit and it is from that another

unit the export was effected

18

Value Added Tax

Case Laws

Publication of prospectus and making it available to students is

ancillary activity to the main and predominant object to impart

education and thus Institutions are not ‘dealer’ under VAT

19

Company Laws

Notifications and Circulars

Details to be incorporated in Auditor Report specified vide

Companies (Auditor's Report) Order, 2015

21

Remuneration to managerial person under Schedule XIII of the

Companies Act, 1956

21

Clarification under sub-section (7) of Section 186 of the Companies

Act, 2013

21

Foreign Trade Policy

Notifications and Circulars

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Pre-shipment Inspection Agency - Para 2.55 and 2.56 of Handbook

of Procedures, 2015-20 kept in abeyance

22

Foreign Exchange Management Act

Notifications and Circulars

Review of Sector Specific conditions on FDI policy relating to the

Insurance sector

22

News Flash 23

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SERVICE TAX

NOTIFICATIONS/CIRCULARS

New rate of Service tax shall come into

effect only from a date to be notified

after enactment of the Finance Bill, 2015

– CBEC Clarifies

The Union Budget, 2015 has proposed an

increase in the rate of Service tax from

12.36% to flat 14% with abolishment of

Education cess and Secondary & Higher

Secondary Education cess. Further

pursuing with Mr. Narendra Modi’s Dream

of Swachh Bharat, a new Chapter VI has

been inserted in the Finance Bill, 2015 that

contains a new levy of cess called the

‘Swachh Bharat Cess’ which may be levied

on all or any of the taxable services at the

rate of 2% on the value of such services.

With Swachh Bharat Cess, Service tax rate

may increase from present 12.36% to 16%.

The CBEC vide Circular No. 183/02/2015-

ST dated April 10, 2015, has clarified that

the new rate of Service tax i.e. 14% shall

come into effect from the date to be

notified by the Central Government after

the enactment of the Finance Bill, 2015.

It is further clarified that till the revised

rate comes into effect, the ‘Education

Cess’ and ‘Secondary and Higher Education

Cess’ will continue to be levied on Service

tax.

The Central Government has further

elucidated that valuation of services

provided in relation to serving of food or

beverages by a restaurant, eating joint or a

mess shall be determined as provided

in Rule 2C of the Service Tax Valuation

Rules. In the Union Budget, 2015, no

change has been made in these Rules;

therefore, any confusion is unwarranted.

Further, the rate of Service tax on the

specified portion of the amount charged

for such supply which is 40% continues to

be the same i.e. 4.944% till a date notified

in due course.

Our Comments: We have also intimated

the same to our esteemed readers on April

1, 2015 on similar footing as clarified by

CBEC, considering the debate taking place

in the Trade with the advent of New

Financial Year 2015-16, discussing a

common question as to whether the

increased Service tax rate is applicable

from April 1, 2015. Thereafter a similar

clarification was issued from the

Commissioner of Service Tax, Nagpur that

the new rate is applicable from a date to

be notified. Now, the CBEC has also

clarified the same.

Service tax exemption to the taxable

services provided or agreed to be

provided against duty credit scrip issued

under Service Exports from India Scheme

(SEIS)

In exercise of the powers conferred under

Section 93(1) of the Finance Act, the

Central Government vide Notification No.

11/2015 - Service Tax dated April 8, 2015

has exempted the taxable services

provided or agreed to be provided by a

person located in the taxable territory

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against SEIS duty credit scrip issued by the

Regional Authority in accordance with

Paragraph 3.10 read with Paragraph 3.08

of the Foreign Trade Policy 2015-2020,

from whole of the Service tax leviable

thereon under Section 66B of the Finance

Act, subject to the conditions as specified

in the Notification.

Service tax exemption to the taxable

services provided or agreed to be

provided against duty credit scrip issued

under Merchandise Export from India

Scheme (MEIS)

In exercise of the powers under sub-

section of Section 93(1) of the Finance

Act, the Central Government vide

Notification No. 10/2015 - Service Tax

dated April 8, 2015 has exempted the

taxable services provided or agreed to be

provided by a person located in the

taxable territory against MEIS duty credit

scrip issued to an exporter by the Regional

Authority in accordance with Paragraph

3.04 read with Paragraph 3.05 of

the Foreign Trade Policy 2015-2020 from

the whole of the Service tax leviable

thereon under Section 66B of the

Finance Act, subject to the conditions as

specified in the Notification.

RECENT CASE LAWS

Period of limitation under Section 11B of

the Excise Act will not apply in case of

refund of Service tax paid inadvertently

where no such Service tax liability exist

Shravan Banarasilal Jejani Vs.

Commissioner of Central Excise,

Nagpur [(2015) 55 taxmann.com 363

(Mumbai - CESTAT)]

Shravan Banarasilal Jejani (“the

Appellant”) is the owner of the residential

flats sold to them by the builder who paid

Service tax on the residential flats.

However, in terms of the Circular No.

108/2/2009-STdated January 29, 2009

(“the Circular”), there was no Service tax

liability on sale of the residential flats on

the Appellant. Accordingly, refund claim

was filed by the Appellant in respect of

Service tax so deposited.

The Adjudicating Authority sanctioned the

refund claim but on appeal by the

Revenue, the claim for refund was

rejected on the ground of being time

barred in terms of provisions of Section

11B of the Excise Act. Being aggrieved, the

Appellant preferred an appeal before the

Hon’ble CESTAT, Mumbai contending that

as they were not required to pay the

Service tax therefore, the provisions of

Section 11B of the Excise Act are not

applicable.

The Hon’ble CESTAT, Mumbai relying

upon the decision in case of CCE Vs. KVR

Construction [(2012) 36 STT 33/22

taxmann.com 408] held that period of

limitation under Section 11B of the Excise

Act will not apply in case of refund of

Service tax paid inadvertently, where no

such Service tax liability exist.

It was further held that in terms of the

Circular, the Department is not legally

allowed to ask for the Service tax and if

they do so, the same is unconstitutional.

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Accordingly, the Appellant is rightly

entitled for refund of the amount of

Service tax paid erroneously.

No Service tax liability arise on loans and

advances , if it is revealed in the audited

balance sheet

Reliance Infratel Ltd. Vs. Commissioner of

Service tax, Mumbai – II [2015 (4) TMI

129 - CESTAT MUMBAI]

Reliance Infratel Ltd. (“the Appellant” or

“the Company”) is a subsidiary of Reliance

Communications Limited (“RCM”)

(collectively referred to as “parties”)

providing taxable service falling under

Business Support Services. The Company

was formed when RCM demerged the

business of Telecom infrastructures and

Telecom operating services into different

entities and the business of Telecom

infrastructure was demerged into the

Appellant. Rs. 283/- crore were given by

RCM to the Appellant towards the

expenditure incurred by RCM even before

the Appellant came into existence by way

of expenses towards the initial setting up

and also by way of payments made to

vendors for supply of materials. Further,

since the Telecom towers require huge

investments the Appellant borrowed Rs.

1210/- crore from RCM during June, 2007

and September, 2007 as interest-free loan

which was repaid/ returned by December

31, 2007.

Investigation of the Appellant was

initiated on November 26, 2007 by the

officers of DGCEI and it was alleged that

the financial support given to Appellant by

RCM in terms of the Master Service

Agreement dated April 10, 2007 (“the

Agreement”) was in the nature of

advance for the taxable services rendered

or to be rendered by the Appellant to

RCM and is required to be set off against

the bills that would be raised later by the

Appellant on RCM.

Therefore, DGCEI issued a SCN demanding

Service tax liability along with interest and

penalty for the period from April 10, 2007

to March 31, 2008 which was confirmed

by the Adjudicating Authority.

Being aggrieved the Appellant preferred

an appeal before the Hon’ble Tribunal,

Mumbai contending that the sum of Rs. 1,

493/- crores (“impugned amount”)

received by the Appellant from RCM is a

loan by way of Inter Corporate Deposits

given to the Appellant.

The Hon’ble CESTAT, Mumbai held as

under:

The Agreement and the audited

balance sheets of the parties does not

lead to a conclusion that the impugned

amount received by the Appellant was

in nature of advances for the services

to be rendered;

Further, repayment of impugned

amount is not afterthought as even

prior to the investigations, on

September 20, 2007 the Appellant had

recorded and treated the amount as

Inter Corporate Deposits in the half

Yearly balance sheet;

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Audited Balance Sheet for the year

ending March 31, 2008 of both the

parties which are in the public domain

show Rs. 1,210/- crore as a loan and

not as consideration for any services

rendered. Further, there is no dispute

that the Appellant had repaid Rs.

1,210/- crore received from RCM

during the same financial year;

Amount of Rs. 283/- crore was given

before the Appellant came into

existence and the same was repaid

during the same financial year, hence

Rs. 283/- cannot be treated as a

consideration received for the services

to be rendered by the Appellant but it

is a financial support given by RCM to

the Appellant by way of loans. Further,

both the parties being Public Limited

Companies, have clearly indicated in

their balance sheets that the amounts

have been shown as received and loans

repaid.

Scrutiny of the balance sheets

produced revealed that accounts of the

parties do not indicate any co-relation

in the repayment of the loan and

receipt of the service charges by the

Appellant.

Invoices raised by the Appellant on

RCM do not reflect adjustment of

impugned amounts and the Appellant

has discharged Service tax liability for

the consideration received in respect

of the invoices raised;

In terms of Section 67 of the Finance

Act, 1994, only payment made

towards services provided can be

brought under the ambit of

consideration received and not any

other amount.

Thus, the Hon’ble Tribunal allowed the

appeal in favour of the Appellant and held

that no Service tax liability arises on loans

and advances if it is revealed in the

audited balance sheet.

Cenvat credit allowed on civil

construction services for construction of

factory shed, which is falling under

setting up of factory premises

Commissioner of Central Excise, Delhi III,

Gurgaon Vs. KML Molding [2015-VIL-171-

CESTAT-DEL-CE]

KML Molding (“the Respondent”) is a

manufacturer of motor vehicle parts. The

Respondent constructed factory shed in

their factory premises and availed Cenvat

credit of Service tax paid on civil

construction services (“impugned

service”). The Revenue alleged that the

Respondent is not entitled to avail the

Cenvat credit on impugned service as the

same has been taken for immovable

property and thus have no nexus with the

manufacturing activity of the Respondent.

Therefore, the Revenue issued a SCN

alleging denial of the Cenvat credit availed

on the impugned service, which was

further upheld by the Adjudication

Authority along with imposition of

interest and penalty. However, on appeal

being filed to the Ld. Commissioner

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(Appeals), Cenvat credit on impugned

service was allowed to the Respondent.

Being aggrieved, the Revenue preferred

an appeal before the Hon’ble CESTAT,

Delhi.

The Hon’ble CESTAT, New Delhi held that

in terms of the definition of Input service

under Rule 2(l) of the Credit Rules as was

prevalent during the period of dispute,

setting up, modernization, renovation or

repair of the factory falls under the

inclusive part of the definition and thus

Cenvat credit is allowed to the Appellant

on the impugned service availed for

construction of factory shed which is not

other than setting up of factory premises.

Our Comments:

Here, it would not be out of place to

mention that post facto April 1, 2011,

definition of the term ‘Input service’ given

under Rule 2(l) of the Credit Rules was

substituted vide Notification No. 3/2011-

CE(NT) dated March 1, 2011, inter alia,

deleting the phrase ‘setting up’. Thus,

limiting the wide scope of the term ‘Input

services’. In other words, effective from

April 1, 2011, one has to be very careful

while determining eligibility of any Input

service under Rule 2(l) of the Credit Rules.

Further, effective from April 1, 2011,

scope of wide interpretation of the term

‘Input service’ has been further curtailed/

limited by inserting exclusion-clause in the

stated definition. These services would

not be eligible even if they are eligible as

per the inclusive part of the definition of

‘Input services’:

Construction related services specifically

excluded under Clause (A):

Clause (A) under Rule 2(l) of the Credit

Rules specifically excludes service portion

in the execution of Works contract and

construction services including service

listed under Section 66E(b) of the Finance

Act in so far as they are used for the

following activities:

a) Construction or execution of Works

contract of a building or a civil

structure or a part thereof; or

b) Laying of foundation or making of

structures for support of Capital

Goods.

However, these services will be eligible as

‘Input services’ if used for the provision

of one or more of the specified services

i.e. Construction/ Works contract of a

building/ civil structure/ part thereof or

laying of foundation or making of

structures for support of Capital goods.

Thus, service portion in the execution of

Works contract and construction services

(specified services) will be eligible for

Cenvat credit only if used for service

portion in the execution of a Works

contract and construction services.

Hence, effective from April 1, 2011,

Cenvat credit would be allowed only if the

activity undertaken in the factory is in

relation to modernization, renovation, or

repairs only but not setting up.

CENTRAL EXCISE

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NOTIFICATIONS/CIRCULARS

Excise duty exemption to the goods

cleared against duty credit scrip issued

under Service Export from India Scheme

(SEIS)

In exercise of the powers conferred under

Section 5A(1) of the Excise Act, Section

3(3) of the Additional Duties of Excise

(Goods of Special Importance) Act, 1957

and sub-section of Section 3(3) of the

Additional Duties of Excise (Textiles and

Textile Articles) Act, 1978 , the Central

Government vide Notification No.

21/2015 – Central Excise dated April 8,

2015, has exempted the goods specified in

the First Schedule and the Second

Schedule to the Excise Tariff Act, when

cleared against SEIS duty credit scrip

issued by the Regional Authority

under Paragraph 3.10 read with Paragraph

3.08 of the Foreign Trade Policy 2015-

2020 from:

(i) Whole of the duty of Excise leviable

thereon under the First Schedule and

the Second Schedule to the Excise Tariff

Act;

(ii) Whole of the additional duty of Excise

leviable thereon under Section 3 of

the Additional Duties of Excise (Goods of

Special Importance) Act, 1957;

(iii) Whole of the additional duty of Excise

leviable thereon under Section 3 of

the Additional Duties of Excise (Textiles

and Textile Articles) Act, 1978.

The Exemption shall be allowable subject

to the conditions as specified in the

Notification.

Excise duty exemption to the goods

cleared against duty credit scrip issued

under Merchandise Export from India

Scheme (MEIS)

In exercise of the powers conferred under

Section 5A(1) of the Excise Act read

with Section 3(3) of the Additional Duties

of Excise (Goods of Special Importance)

Act, 1957 and Section 3(3) of the

Additional Duties of Excise (Textiles and

Textile Articles) Act, 1978, the Central

Government vide Notification No.

20/2015 - Central Excise dated April 8,

2015 has exempted the goods specified in

the First Schedule and the Second

Schedule to the Excise Tariff Act, when

cleared against a duty credit scrip issued

by the Regional Authority under the MEIS

in accordance with Paragraph 3.04 read

with Paragraph 3.05 of the Foreign Trade

Policy 2015-2020 from:

(i) Whole of the duty of Excise leviable

thereon under the First Schedule and

the Second Schedule to the Excise Tariff

Act;

(ii) Whole of the additional duty of Excise

leviable thereon under Section 3 of

the Additional Duties of Excise (Goods of

Special Importance) Act, 1957; and

(iii) Whole of the additional duty of Excise

leviable thereon under Section 3 of

the Additional Duties of Excise (Textiles

and Textile Articles) Act, 1978.

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The Exemption shall be allowable subject

to the conditions as specified in the

Notification.

RECENT CASE LAWS

Limitation period prescribed under

Section 11B of the Excise Act is not

applicable for the rebate claim filed

under Rule 18 of the Excise Rules

Deputy Commissioner of Central Excise,

Chennai Vs. Dorcas Market Makers Pvt.

Ltd and Commissioner of Central Excise

(Appeals), Chennai [2015-TIOL-820-HC-

MAD-CX]

Dorcas Market Makers Pvt. Ltd. (“the

Respondent”) is engaged in the export of

"Medimix" brand of Ayurvedic Toilet Soap,

falling under CSH 3401.11.10 of the

Central Excise Tariff Act. The Respondent

filed a rebate claim on June 17, 2008

under Rule 18 of Excise Rules for refund of

the duty paid for goods exported during

the period July 1, 2006 to January 31,

2007(“rebate claim”). The Deputy

Commissioner of Central Excise, Chennai

rejected the rebate claim as time barred

in terms of Section 11B of the Excise Act.

Later on, the denial of rebate claim was

upheld by the Commissioner of Central

Excise (Appeals), Chennai. Being aggrieved

the Respondent filed a Writ Petition

before the Hon’ble Madras High Court,

wherein the matter was decided in favour

of the Respondent and it was held that

rebate claim filed is not time barred as

Rule 18 of the Excise Rules is self-

contained and has to be construed

independently. Being aggrieved, the

Department preferred an appeal before

the Hon’ble Supreme Court.

The Hon’ble Supreme Court held as under:

No dispute exist that the Respondent

actually exported the goods in the

instant case as the same is evident

from ARE-1 forms;

Even, the facts that whether the

exports have taken place and duty had

been paid or not, can be ascertained

from facility of online filing of

applications;

Rule 18 of the Excise Rules itself does

not stipulate a period of limitation;

Rebate Claim under Rule 18 of the

Excise Rules should be as per

notification issued by the Central

Government and in this regard

Notification No. 19/2004-CE (NT) dated

September 6, 2004 (“Notification

19/2004”) was issued;

Further, Notification 19/2004 has

superseded the previous Notification

No. 41/94-CE (NT) dated September

12,1994 which prescribed the time

limit for filing claim. But, Notification

19/2004 does not contain the

stipulation regarding limitation. This

was a conscious decision taken by the

Central Government and hence, the

view taken by the learned Judge of the

Hon’ble High Court that Rule 18 of the

Excise Rules is to be construed

independently is fair and reasonable;

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Thus, the Hon’ble Supreme Court allowed

the appeal in favour of the Respondent

holding that period of limitation

prescribed under Section 11B of the Excise

Act is not applicable to rebate claim filed

as both Rule 18 of the Excise Rules and

Notification 19/2004 does not prescribe

the time limit for filing rebate claim.

Doctrine of Unjust Enrichment will be

applicable in case of refund of duty paid

on Capital goods which are captively

consumed

Commissioner of Central Excise, Chennai-

III Vs. Grasim Industries [2015 (4) TMI 389

- SUPREME COURT]

Grasim Industries (“the Respondent”)

purchased Electro Static Precipitators

(“ESPs”) from BHEL, Ranipet on which,

concessional 5% ad valorem duty was

payable in terms of the Notification

No.78/1990-CE dated March 20, 1990

provided an officer not below the rank of

Deputy Secretary in the Ministry of

Environment and Forests (MoEF) certifies

that the goods manufactured are meant

for pollution control purpose.

Since, the dispute arose as to whether the

Respondent was entitled for concessional

rate of duty or not, the Respondent paid

normal rate of 15% ad valorem duty and

sought for refund of the extra duty paid

amounting to Rs. 27,66,970/-. However,

the Ld. Commissioner of Central Excise

refused to release this refund claimed on

the ground that the Respondent had

passed on the burden and therefore

refunding the extra duty paid would result

in unjust enrichment. On appeal being

filed to the Ld. Commissioner of Central

Excise (Appeal) Chennai, wherein also

refund was rejected.

Thereafter, the Respondent preferred an

appeal before the Hon’ble CESTAT, where

the appeal was allowed in favour of the

Respondent by holding that the Capital

goods viz. ESPs have been only used

captively for pollution control purpose

and the same is not used for processing or

manufacturing of any other final product

and therefore there is no question of

passing on the burden of duty to anyone.

Being aggrieved, the Revenue preferred

an appeal before the Hon’ble Supreme

Court.

The Hon’ble Supreme Court relying upon

the decision in the case of Indian Farmers

Fertiliser Coop. Ltd. Vs. C.C.E.

Ahmedabad [1996 (86) ELT 177 (S.C.)]

and Union of India Vs. Solar Pesticides

Pvt. Ltd.[(2000 (2) SCC 705] (“Solar

Pesticides Case”), held as under:

If a particular material is used for

manufacture of a final product that has

to be treated as the cost of the

product. Insofar as cost of production is

concerned, it may include Capital

goods which are a part of fixed cost as

well as raw material which are a part of

variable cost;

Therefore, the principle laid down in

Solar Pesticides Case that unjust

enrichment applicable in case of

captive consumption, would extend to

Capital goods which are used in the

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manufacture of a product and have

gone into the costing of the goods;

In order to come out of the

applicability of the doctrine of unjust

enrichment, it therefore becomes

necessary for the assessee to

demonstrate that in the costing of the

particular product, the cost of Capital

goods was not taken into

consideration;

The observation of the Hon’ble

Tribunal that Capital goods viz. ESPs

have been only used captively for

pollution control purpose and the same

is not used for processing or

manufacturing of any other final

product and therefore there is no

question of passing on the burden of

duty to any one is erroneous in law.

Thus, the Hon’ble Supreme Court allowed

the appeal in favour of the Revenue by

setting aside the decision the Hon’ble

Tribunal and held that Doctrine of Unjust

Enrichment will be applicable in case of

refund of duty paid on Capital goods,

which are used captively.

Value of the clearances to Loan Licensees

would not be includible for determining

the aggregate value of clearances for

home consumption while determining SSI

status

Redicura Pharmaceuticals Pvt Ltd Vs.

Commissioner of Central Excise, Delhi-II

[2015 (4) TMI 314 - CESTAT NEW DELHI]

Redicura Pharmaceuticals Pvt. Ltd. (“the

Appellant”) is a manufacturer of P&P

medicines chargeable to Central Excise

duty. For the period April 1, 2003 to

October 31, 2003 (“impugned period”),

the Appellant was availing SSI Exemption

under Notification No. 9/03-CE dated

March 1, 2003 (“SSI Notification”).

Further, during the impugned period, the

Appellant in addition to manufacturing

the goods on their own account, which

were being cleared by affixing their own

brand name (“Activity 1”), were also

manufacturing the goods of other persons

called ‘loan licensees’ under job work

agreement, which were cleared on

payment of normal rate of duty by affixing

the loan licensee's brand name (“Activity

2”). Further, the Appellant also as loan

licensee, were getting their goods

manufactured through other

manufacturers under job work

agreements and those manufacturers

were clearing the goods on payment of

normal rate of duty by affixing the

Appellant's brand name (“Activity 3”).

The Department contended that eligibility

for SSI exemption during impugned period

must be determined by clubbing the

clearances of the goods from Activity 1,

Activity 2 and Activity 3, accordingly

sought to deny the benefit of SSI

Notification to the Appellant for the

impugned period. The same was

confirmed by the Order of the Joint

Commissioner who confirmed the duty

demand of Rs. 6,39,190/- along with

interest under Section 11AB of Excise Act

and imposed penalty of Rs. 10,000/-

under Rule 25(1) of Excise Rules.

Thereafter on appeal being filed to the Ld.

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Commissioner (Appeals), the same was

dismissed. Being aggrieved, the Appellant

preferred an appeal before the Hon’ble

CESTAT, Delhi.

The Hon’ble CESTAT, Delhi relying upon

the decision in the case of Indica

Laboratories Pvt. Ltd vs UOI [1990 (50)

ELT 210 ( Guj .)] and after observing that

loan licensee had not hired any shift or

any part of the factory premises of the

Appellant and similarly the Appellant as a

loan licensee, had not hired any shift or

any part of the factory of the other

manufacturers, held that the Appellant

had manufactured the goods for loan

licensees as a job worker only and, since,

the goods manufactured for loan licensees

had been affixed with the Brand Name

belonging to the loan licensees, and for

this reason the same had been cleared on

payment of normal duty, the value of the

clearances to loan licensees would not be

includible for determining the aggregate

value of clearances for home

consumption.

Further, in respect of the goods got

manufactured by the Appellant as a loan

licensee through other manufacturers, the

Hon’ble Tribunal held that it is the other

manufactures, who have to be treated as

manufacture and not the Appellant more

so, when there is no dispute that the duty

liability in respect of those goods had

been discharged by those manufacturers.

Therefore, the value of these clearances

also cannot be included for determining

the aggregate value of clearances of the

Appellant for home consumption for

determining their SSI exemption.

CUSTOMS

NOTIFICATIONS/CIRCULARS

Inland Container Depots (ICD) notified at

Khujra District Bulandshahr

The CBEC vide Notification No. 36/2015-

Customs (N.T.) dated April 7, 2015,

thereby making further amendments in

the Notification No. 12/97-Customs (N.T.)

dated April 2, 1997 has notified ICD at

“Khurja, District Bulandshahr” in Uttar

Pradesh for unloading of imported goods

and loading of export goods.

Exemption to specified goods imported

for ‘Airborne Early Warning and Control

(AEW&C) Programme of Ministry of

Defence

In the exercise of the power conferred

under Section 25(1) of the Customs

Act, the Central Government vide

Notification No. 26/2015-Customs dated

April 9, 2015 has exempted the goods

such as aircrafts, aircrafts parts, radars,

machinery, equipments and such other

goods when imported into India for the

purpose of the Airborne Early Warning

and Control (AEW&C) Programme,

Ministry of Defence, subject to the

conditions specified therein. The

exemption is being provided with due

amendment in Notification No. 39/96-

Customs dated July 23, 1996.

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Customs duty exemption to goods

imported into India against duty credit

scrip issued under Service Export from

India Scheme (SEIS)

In exercise of the powers conferred under

Section 25(1) of the Customs Act, the

Central Government vide Notification No.

25/2015 – Custom dated April 8, 2015

has exempted goods when imported into

India against a SEIS Scheme duty credit

scrip issued by the Regional Authority

under Paragraph 3.10 read with Paragraph

3.08 of the Foreign Trade Policy, 2015-

2020 from the whole of the duty of

Customs leviable thereon under the First

Schedule to the Customs Tariff Act and

the whole of the additional duty leviable

thereon under Section 3 of the Customs

Tariff Act, subject to the conditions as

specified in the Notification.

Customs duty exemption to goods

imported into India against duty credit

scrip issued under Merchandise Export

from India Scheme (MEIS)

In exercise of the powers conferred under

Section 25(1) of the Customs Act, the

Central Government, vide Notification No.

24/2015 dated April 8, 2015, has

exempted goods when imported into

India against a duty credit scrip issued by

the Regional Authority under the MEIS

Scheme in accordance with

Paragraph 3.04 read with Paragraph

3.05 of the Foreign Trade Policy, 2015-

2020 from the whole of the duty of

Customs leviable thereon under the First

Schedule to the Customs Tariff Act and

the whole of the additional duty leviable

thereon under Section 3 of the Customs

Tariff Act, subject to the conditions as

specified in the Notification.

Continuation of Anti-Dumping duty on

import of ‘Recordable Digital Versatile

Disc (DVD)’ till April 11, 2016’

The Central Government vide Notification

No. 12/2015-Customs (ADD) dated April

11, 2015 has amended Notification No.

98/2010-Customs (ADD) dated September

28, 2010, wherein provisional Anti-

Dumping duty (“ADD”) was levied on

import of Recordable Digital Versatile Disc

(DVD) of all kinds (“said Goods”)

originating in, or exported from Malaysia,

Thailand and Vietnam, falling under the

heading 8523 of the First Schedule to

the Customs Tariff Act for the period of

five years from the date of imposition of

the provisional anti-dumping duty, i.e.,

April 12, 2010.

Now, the Government vide the stated

Notification has extended the period of

imposing ADD on the said Goods till April

11, 2016 unless revoked earlier.

Levy Anti-Dumping duty on imports of

Glass or Ceramics/Porcelain, originating

in, or exported from the People's

Republic of China

The Central Government vide Notification

No. 11/2015-Customs (ADD) dated April

11, 2015 has imposed Anti-Dumping Duty

(“ADD”) on import of “Glass or

Ceramics/Porcelain” falling under sub-

heading 854610 or 854620 of the First

Schedule to the Customs Tariff Act,

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originating in or exported from the

People’s Republic of China.

The ADD levied under the Notification

shall be effective for a period of five years

(unless revoked, superseded or amended

earlier) from the date of imposition of

provisional ADD, i.e. September 16, 2014

and shall be paid in Indian currency.

Levy of Anti-Dumping duty on import of

‘Poly Vinyl Chloride Paste Resin’

originating in and exported from Norway

and Mexico for a period of 5 years

The Central Government vide Notification

No. 10/2015-Customs (ADD) dated April

7, 2015, has imposed Anti-Dumping Duty

(“ADD”) on import of “Poly Vinyl Chloride

Paste Resin” also known as “Emulsion

Poly Vinyl Chloride Resin” falling under

heading 3904 of the First Schedule to

the Customs Tariff Act, originating in or

exported from the Norway and Mexico.

The ADD levied under the Notification

shall be effective for a period of five years

(unless revoked, superseded or amended

earlier) from the date of publication of the

Notification in the Gazette of India and

said duty shall be paid in Indian currency.

Levy of Anti-Dumping duty on import of

‘Flexible Slabstock Polyol of Molecular

Weight 3000- 4000’ originating in and

exported from Australia, European Union

and Singapore for a period of 5 years

The Central Government vide Notification

No. 09/2015-Customs (ADD) dated April

7, 2015, has imposed Anti-Dumping Duty

(“ADD”) on import of “Flexible Slabstock

Polyol of Molecular Weight 3000- 4000”

falling under subheading 3907 20 of

the First Schedule to the Customs Tariff

Act, originating in or exported from the

Australia, European Union and Singapore.

The ADD levied under the Notification

shall be effective for a period of five years

(unless revoked, superseded or amended

earlier) from the date of date of

publication of the Notification in the

Gazette of India and said duty shall be paid

in Indian currency.

Continuation of Anti-Dumping duty on

import of ‘Coumarin’ till March 22, 2016

The Central Government vide Notification

No. 08/2015-Customs (ADD) dated April

7, 2015, has amended Notification No.

12/2012-Customs (ADD) dated the

February 8, 2012, wherein Anti-Dumping

duty (“ADD”) was imposed on import of

Coumarin falling under the Tariff

Item 2932 21 00 of the First Schedule to

the Customs Tariff Act for the period of

five years from the date of imposition of

the provisional anti-dumping duty, i.e.,

March 23, 2010 when imported into India

from People’s Republic of China.

Now, the Government vide the stated

Notification has extended the period of

imposing ADD on the said Goods till

March 22, 2016 unless revoked earlier.

Condition for 4% SAD refund claim

modified

The CBEC in Circular No 6/2008-Customs

dated April 28, 2008 (“Board Circular”)

prescribed the manner of claim and

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sanction of 4% Special Additional Duty

(“SAD”) refund in terms of Notification

No. 102/2007-Customs dated September

14, 2007. In terms of the Board Circular,

an importer can file only one refund claim

in a month in a Commissionerate.

However, the CBEC received

representation that adherence to this

stipulation is not feasible in the

Commissionerate having Customs

locations widely spread and in situations

where imports are made by an importer

from more than one Customs location in a

Commissionerate. Therefore, after

receiving representations from trade, the

CBEC vide Circular No. 12/2015-Customs

dated April 9, 2015 has decided that

importers may file refund claim of 4% SAD

in terms of Notification No. 102/2007-

Customs dated September 14, 2007 at the

Customs stations where imports are

made. However, the number of such

claims at a Customs station shall be

limited to one in a particular month.

Hence, the Circular has simplified the

extant provision in Board Circular which

stands modified to that extent.

RECENT CASE LAWS

Export obligation is ought to be

completed by EOU even if the goods

were first sent to another unit and it is

from that another unit the export was

effected

Commissioner of Customs,

Visakhapatnam (AP) Vs. Alsa Marine And

Harvests Ltd., Commissioner of Central

Excise, Visakhapatnam Vs. Alsa Marine

And Harvests Ltd. [2015 (4) TMI 237 -

SUPREME COURT]

In the instant case, Bhimli Unit of Alsa

Marine And Harvests Ltd. (“the

Respondent”) is a 100 % Export Oriented

Undertaking (“EOU”) engaged in the

process of freezing and export of marine

products as per the permission accorded

by the Department of Industrial

Development. The Respondent imported

goods without payment of Customs duty

and procured indigenous goods without

payment of Central Excise duty seeking

exemption under Notification No. 13/81

dated February 9, 1981 and Notification

No. 123/81 dated June 2, 1981

respectively. Departmental investigation

revealed that during 1994-1996 the

Respondent cleared goods with total

value of Rs. 43,47,97,371/- to their

Chennai Unit for further exporting.

Accordingly, it was alleged that the

Respondent have cleared the goods to the

Domestic Tariff Area (“DTA”) on which

duty of Rs. 4,34,79,737/- was payable.

Accordingly SCN dated December 12,

1997 was issued which was further

confirmed by the Ld. Commissioner.

Being aggrieved, the Respondent

preferred an appeal before the Hon’ble

Tribunal, where the appeal was allowed in

favour of the Respondent and interalia it

was held that since Chapter V-A of the

erstwhile Central Excise Rules, 1944

applies to removal from an EOU unit,

hence confiscation and penalty under

erstwhile Rule 173Q thereof is set aside.

A2Z TAXCORP LLP Tax and Law Practitioners Page 19

Further, the goods manufactured and

removed from the EOU have been

admittedly exported out of India and

therefore, there cannot be any duty

leviable under the Customs Act and /or

the Excise Act. Being aggrieved the

Department preferred an appeal before

the Hon’ble Supreme Court.

The Hon’ble Supreme Court held as under:

The Notification (General Exemption

No. 127) (“the Notification”) stipulate

only 3 conditions namely the importer

has been granted necessary licence for

the import of the goods for the said

purpose; importer carries out the

manufacturing operation in the

Customs Bond apart from the other

conditions if any specified by the

Assistant Collector of Customs and the

importer exports out of India 100% or

such other percentage, as may be fixed

by the Board, of Articles manufactured

wholly or partly from the goods for the

period stipulated by the Board or

extended period if any;

The Respondent had fulfilled its legal

obligation of exporting the

manufactured goods in terms of the

Notification;

Exemption under the Notification

cannot be denied on the premise that

the unit at Bhimli (Visakhapatnam)

which was given the status of EOU has

not fulfilled export obligation, rather

goods were sent to Chennai unit and it

is from Chennai unit that the export

was effected;

Export done from Bhimli

(Visakhapatnam) or Chennai unit,

would be totally irrelevant and

immaterial.

Thus, the Hon’ble Supreme Court allowed

the appeal in favour of the Respondent

and held that the Respondent, which is an

EOU, had fulfilled its legal obligation of

exporting the manufactured goods.

VALUE ADDED TAX

RECENT CASE LAWS

Publication of prospectus and making it

available to students is ancillary activity

to the main and predominant object to

impart education and thus Institutions

are not ‘dealer’ under VAT

Commercial Taxes Officer Vs. Banasthali

Vidyapith [2015 (4) TMI 393 - RAJASTHAN

HIGH COURT]

Banasthali Vidyapith (“the Petitioner”) is

a institution imparting education primarily

to female students and has claimed that

they are not carrying on any trade,

commerce or business but only carrying

on the activity of imparting education. The

Petitioner is registered under Section

12AA of the Income Tax Act, 1961 and it is

a public society formed and registered on

March 16, 1951 under the provisions of

Indian Societies Act, 1860 and also under

Rajasthan Societies Act, 1958.

The Departmental survey of the Petitioner

premises on December 12, 2012 revealed

that for the Assessment Years 2007-08 to

A2Z TAXCORP LLP Tax and Law Practitioners Page 20

2012-13, the Petitioner provided material

namely cement, iron and steel to the

contractors for constructing its premises

or/and maintenance of the properties

being owned by it (“Supply of Material”).

The Petitioner also sold prospectus to the

prospective students who wanted to seek

admission in the institution (“Sale of

Prospectus”). The Revenue contended

that Supply of Material to the Contractors

and reducing the value of the same from

the Contract amount and Sale of

prospectus is ‘Sale’ liable to the Rajasthan

Value Added Tax (“RVAT”) under Entry

104 and the Petitioner being a dealer is

liable to get registered under the

Rajasthan Value Added Tax Act, 2003

(“RVAT Act”).

Thereafter, the Assessing officer held that

the Petitioner is liable to be registered

under the category of 'Obligatory

Registration’ under Section 11 of the RVAT

and also imposed penalty on account of

non-registration, which was further

upheld by the first Appellate Authority.

Being aggrieved, the Petitioner preferred

an appeal before Rajasthan Tax Board,

who held that the Petitioner does not fall

in the purview of ‘dealer’ under Section

2(11) of the RVAT as it does not carry on

any business. Further, the Petitioner is not

carrying on any business as the primary

and dominant activity is of imparting

education which cannot be said to be

business.

Being aggrieved, the Revenue preferred a

revision Petition before the Hon’ble High

Court of Rajasthan.

The Hon’ble High Court of Rajasthan

relying upon the judgments in case of

N.M. Goel & Co. Vs. STO, Rajnandgaon

and Anr. [1989 (1) SSC 335] allowed the

appeal in favour of the Petitioner and held

that imparting of education which is the

main activity of the Petitioner cannot be

said to be in the nature of business

activity, a trade, commerce or

manufacture, therefore the Petitioner is

not a ‘dealer’ liable to ‘Obligatory

Registration’ under Section 11 of the

RVAT.

The Hon’ble High Court further held that it

is well settled that if the main activity is

not business, then the connected,

incidental or ancillary activities would not

normally amount to business unless an

independent intention to conduct

business in these connected, incidental or

ancillary activities is established by the

Revenue. Moreover, in the instant case,

the Petitioner is a deemed University and

publication of 'prospectus' and making it

available to students is ancillary,

incidental and essential to its main and

predominant object to impart education.

Hence, it is not a dealer liable to be

registered under the Rajasthan VAT Act.

Further, while dealing with aspect of

Supply of material, the Hon’ble High Court

held that the Petitioner has purchased the

material after payment of VAT. Tax having

been suffered at the time of purchase by

the Petitioner the same material cannot

be subjected to another levy on such

A2Z TAXCORP LLP Tax and Law Practitioners Page 21

transfer to the contractor for

consumption as levy under RVAT Act is a

single point tax.

COMPANY LAWS

NOTIFICATIONS/ CIRCULARS

Details to be incorporated in Auditor

Report specified vide Companies

(Auditor's Report) Order, 2015

The MCA vide Public Order dated April 8,

2015 (“Order for CARO 2015”), has

introduced the Companies (Auditor’s

Report) Order, 2015 (“CARO 2015”) which

shall apply to every company including a

foreign company as defined in clause (42)

of Section 2 of the Companies Act, 2013,

except -

a banking company as defined in clause

(c) of Section 5 of the Banking

Regulation Act, 1949 (10 of 1949);

an insurance company as defined

under the Insurance Act, 1938 (4 of

1938);

a company licensed to operate under

Section 8 of the Companies Act;

a One Person Company as defined

under clause (62) of Section 2 of the

Companies Act and a small company as

defined under clause (85) of Section 2

of the Companies Act; and

a private limited company with a paid

up capital and reserves not more than

rupees fifty Iakh and which does not

have loan outstanding exceeding

rupees twenty five lakh from any bank

or financial institution and does not

have a turnover exceeding rupees five

crore at any point of time during the

financial year.

Every report made by the auditor under

Section 143 of the Companies Act, 2013,

on the accounts of every company

examined by him to which the Order for

CARO 2015 applies for the Financial Year

commencing on or after April 1, 2014,

shall contain the matters specified in

Paragraphs 3 and 4 of the stated Order.

Remuneration to managerial person

under Schedule XIII of the Companies

Act, 1956

The MCA vide General Circular No.7/2015

dated April 10, 2014 has provided

clarification on the payment of

remuneration to the managerial person

under Schedule XIII of the Companies Act,

1956 (“earlier Act”).

As per provisions of Schedule XIII (sixth

proviso to Para (C) of Section II of Part II)

of the earlier Act and as clarified vide

Circular number 14/11/2012-CL-VII dated

August 16, 2012, listed companies and

their subsidiaries were allowed to pay

remuneration, without approval of

Central Government, in excess of limits

specified in Para II Para (C) of such

Schedule, if the managerial person met

the conditions specified therein.

Since similar provisions are not available

in the Schedule V of the Companies Act,

2013, the MCA has clarified that that a

managerial person appointed in

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accordance with such provision of

Schedule XIII of the earlier Act may

receive relevant remuneration for his

remaining period as approved by the

Company in accordance with provisions of

earlier Act even if the part of his tenure

falls after April 1, 2014.

Clarification under sub-section (7) of

Section 186 of the Companies Act, 2013

In terms of sub-section (7) of Section 186

(i.e. Loans and Investment by Company)

of the Companies Act, 2013, no loan shall

be given by a Company under Section 186

at a rate of interest lower than the

prevailing yield of one year, three year,

five year or ten year Government Security

closest to the tenor of the loan.

The MCA vide General Circular No.

06/2015 dated April 8, 2015, has clarified

that in cases where the effective yield

(effective rate of return) on tax free bonds

is greater than the prevailing yield of one

year, three year, five year or ten year

Government Security closest to the tenor

of the loan, there is no violation of sub-

section (7) of Section 186 (i.e. Loans and

Investment by Company) of the

Companies Act, 2013.

FOREIGN TRADE POLICY

NOTIFICATIONS/ CIRCULARS

Pre-shipment Inspection Agency - Para

2.55 and 2.56 of Handbook of

Procedures, 2015-20 kept in abeyance

In order to facilitate transitional

arrangements, the DGFT vide Public

Notice No. 05/2015-20 dated April 10,

2015, has kept in abeyance the provisions

of Para 2.55 [Recognition as Pre-shipment

Inspection Agency (PSIA) and issuance of

Pre- shipment Certificate (PSIC)] and Para

2.56 [Responsibility and Liability of PSIA

and Importer] of Handbook of Procedures,

2015-20 (which came into effect from

April 1, 2015), till further orders.

Accordingly, the procedure for issue of

Pre-Shipment Inspection Certificate (PSIC)

as laid down in Paras 2.32.2A and 2.32.2B

of Handbook of Procedure Vol. I 2009-14,

would remain in effect, till further orders.

FOREIGN EXCHANGE

MANAGEMENT ACT

NOTIFICATIONS/ CIRCULARS

Review of Sector Specific conditions on

FDI policy relating to the Insurance sector

The RBI vide A. P. (DIR Series) Circular No.

94 dated April 8, 2015 has reviewed the

Sector Specific conditions of FDI policy

relating to the Insurance sector to further

liberalize the guidelines. Accordingly, with

immediate effect, FDI in Insurance sector

shall be permitted up to 49% of the paid

up equity capital [26% by Automatic

Government Route beyond 26% and up to

49% the permission of the Government]

subject to the revised conditions specified

in the Press Note 3 (2015 Series) dated

March 2, 2015.

A2Z TAXCORP LLP Tax and Law Practitioners Page 23

Further, a new activity viz. “Other

Insurance Intermediaries appointed under

the provisions of Insurance Regulatory

and Development Authority Act, 1999”

has been included within the definition of

‘Insurance’. An Indian insurance company

shall ensure that its ownership and

control remains at all times in the hands

of resident Indian entities.

NEWS FLASH

Government to move GST Constitutional

Amendment Bill in Lok Sabha in next

few weeks: FM Arun Jaitley

Finance Minister Arun Jaitley said that

the Government will move GST

Constitutional Amendment Bill in Lok

Sabha in next few weeks.

The Goods and Services Tax, proposed to

be rolled out from April 2016, was last

introduced in the Lok Sabha in 2011 by

the then UPA Government but lapsed,

requiring the new NDA Government to

come with a new Bill.

GST : State Finance Ministers to meet on

May 7 in Kerala

A consensus would be built among States

for implementation of the GST by April

2016 as there is no "obstinate

opposition" from any State, Said K M

Mani, the newly selected Chairman of

the Empowered Committee of State

Finance Ministers. Mani, who is the

Kerala Finance Minister, said the next

meeting of the panel would be held in

Kerala on May 7 and 8.

Certain States have argued that

implementation of GST would be

beneficial for consuming States, while for

their manufacturing counterparts like

Maharashtra and Gujarat it could be

challenging. "Gujarat has certain

apprehensions and certain States have

certain apprehensions. We will remove

that and we have a consensus

decision……. We will safeguard the

interest of all the States, producing States

and consumer States," he said.

Queried on the Centre's plans to

implement GST by April 2016, Mani said:

"I cannot exactly say. But that is the

present schedule. We will try to

materialize the object by that time".

Foreign banks may be forced to pay Rs

600 crore in 'retro' Service tax

The Service tax Department is all set to

recover around Rs 600 crore in tax –

pending since 2009 – from 30 foreign

banks operating in India. The

Department is likely to issue tax notices

to these Banks in a week.

The move follows the strongly-worded

message from Finance Minister Arun

Jaitley. "What is due must be paid; India

is no tax haven," he had said. "The

Service tax payment is on the

expenditure incurred by the head offices

of these foreign banks with domestic

branches in India. The Service tax liability

on an average stood at Rs 20-30 crore

per bank," said a senior official with

Service tax Department.

A2Z TAXCORP LLP Tax and Law Practitioners Page 24

"For the past one month, we are probing

several leading foreign banks. We have

sought all the documents related to their

headquarter expenditure and tax returns

filed by the respective banks," the official

added.

According to the sources, most foreign

banks have opposed to the levy saying no

entries have been made in their records

on head office expenditure, and

therefore are not liable to pay Service

tax.

But according to taxman, if Indian

subsidiary claims an income-tax

exemption on the expenditure incurred

by head offices, then foreign banks

should also be paying service tax under

the reverse charge mechanism.

Under the reverse charge mechanism,

Service tax is payable – in full or part – by

service provider, depending on the

nature of services received. "In this case,

the Indian subsidiary has to pay full

service tax, since 2009," said the source.

Excise Department move on Service tax

may make rail-based traffic costlier

At a time when the Centre is trying to

increase the share of rail-based traffic, an

Excise department move may end up

shifting container traffic away from rail

to roads.

The excise department wants to impose

full Service tax on containerised traffic

without providing the 70 per cent

abatement available to cargo moving on

rail. This means, in effect, the Service tax

will be levied on 30 per cent of the tariff.

Incidentally, road transporters also get

about 70 per cent abatement on Service

tax.

The proposed move has irked the

Railway Ministry and the container train

operators, and could jeopardise the rail-

based container segment, which includes

operators such as the Container

Corporation of India etc,.

The Directorate-General of Central Excise

Intelligence (DG-CEI) has used a

technicality in the Finance Act 1994 --

Section 65 B (49) -- to say that container

train operators offer a "support service"

to the Railways, which attracts full

Service tax.

It has issued a show-cause notice to the

operators asking them to pay full Service

tax with effect from 2012. Meanwhile,

the Railways and container train

operators are citing two clauses of the

Finance Act 1994 – 65 (B) 25 and 66F – to

prove that they move goods on the rail

mode and support their view for

attracting Service tax with abatement.

‘Best’ Officers to head VAT, Excise

Departments: CM

In an experiment of sorts, Chief Minister

Arvind Kejriwal has decided to appoint

the best bureaucrat as the head of each

department who can achieve targets set

by the Government. A beginning is being

made with the two revenue generating

A2Z TAXCORP LLP Tax and Law Practitioners Page 25

wings of Value Added Tax (VAT) and

Excise.

"We are going to issue a circular

regarding the posts of VAT and excise

commissioners. Whoever wants to

become the VAT/excise commissioner,

they will have to tell me how much

money they can collect in one year. They

will be asked to provide us with a

quarterly plan, along with a blueprint of

how they will collect that money,"

Kejriwal said.

"This will inspire people to come up with

ideas and we can compile those ideas.

Whoever will get the job, I assure that

...in one year, there will be no political

interference, no transfers and we will

give them a hefty sum as their

performance allowance," the CM said.

Earlier, Kejriwal had asked HODs to think

out of the box to achieve targets. The

Government is projecting the move as a

bid to encourage healthy competition

among bureaucrats. "We have seen what

happens in transfers and postings.

Recommendations come (to be in any

department). This time we have decided

that for some of the head of the

departments, there should be a new

experiment," Kejriwal had said.

New foreign trade policy identifies 108

MSME clusters

To help India meet its export target of

$900 billion by 2019-20, 108 micro, small

and medium enterprise (MSME) cluster

shave been identified, according to

Knowledge and News Network, a media

platform for MSMEs. This has been done

under the new five-year Foreign Trade

Policy unveiled by Union Commerce

Minister Nirmala Sitharaman.

Full rupee convertibility in a few years:

RBI Governor Raghuram Rajan

Reserve Bank of India Governor

Raghuram Rajan signalled that the

Country may be on course to have full

convertibility of the currency without

mentioning a time frame, a debate which

commenced nearly two decades ago. The

controversial base rate concept could be

scrapped if a benchmark for pricing

credit such as loans and bonds is

established, he said.

He said that, "We hope to get full capital

account convertibility in a short number

of years,". Capital account convertibility

refers to the freedom to convert local

financial assets into foreign financial

assets, and vice versa. It is associated

with changes of ownership in foreign and

domestic financial assets and liabilities.

The current regime is liberal when it

comes to portfolio investments by

foreigners, but there are limits when it

comes to their ownership of debt.

Indians have to seek regulatory approval

beyond a limit for purchase of assets

overseas, or investments. Foreign direct

investments are capped in various

sectors such as insurance and defence,

and need to be approved by various

agencies.

A2Z TAXCORP LLP Tax and Law Practitioners Page 26

Union Cabinet approved amendments

to Real Estate (Regulation and

Development) Bill, 2013

The Union Cabinet on 7 April 2015

approved amendments to the Real Estate

(Regulation and Development) Bill, 2013.

The bill protects the interests of millions

of consumers and curbs malpractices in

the real estate sector by ensuring

accountability and transparency in to

access capital and financial markets

essential for its long term growth and

with an aim create uniform regulatory

mechanism across the Country.

Through the amendments, the

applicability of the Bill has been

extended to commercial real estate too.

Ongoing projects that have not received

Completion Certificates have also been

brought under the purview of the Bill and

such projects will need to be registered

with the Regulator within three months.

MUDRA Bill to be in Parliament within

6-12 months: Adhia

Legislation on MUDRA Bank is expected

to be introduced in Parliament within a

year and it will incorporate provisions of

the Micro Finance Institutions Bill that

was prepared by the previous

Government, said the Finance Ministry.

The MUDRA Bill will seek to create a

financial institution for providing funding

to 58 million micro and small business

entities engaged in manufacturing,

trading and services. The roles envisaged

for MUDRA Bank include laying down

policy guidelines for micro enterprise

financing business as well as registration

of MFIs, their accreditation and rating.

Speaking on the launch of Pradhan

Mantri MUDRA Yojana, Financial Services

Secretary Hasmukh Adhia said there will

not be a separate bill on MFIs as many

components of that would be

incorporated in the proposed MUDRA

Bill. Asked if there is a plan to merge old

MFI Bill into MUDRA Bill, he said, "Some

components of MFI Bill will definitely

come to MUDRA Bill". So, there will not

be a separate MFI Bill, Adhia said, adding

that "it will be a part of MUDRA Bill. It

will be tabled in Parliament in the next 6

months to one year".

A2Z TAXCORP LLP Tax and Law Practitioners Page 27

Glossary Finance Act, 1994 Finance Act

Service Tax (Determination of Value) Rules, 2006 Service Tax Valuation

Rules

Service Tax Rules, 1994 Service Tax Rules

Show Cause Notice SCN

Central Excise Act, 1944 Excise Act

Central Excise Tariff Act, 1985 Excise Tariff Act

Central Excise Rules, 2002 Excise Rules

Customs Act, 1962 Customs Act

Customs Tariff Act, 1975 Customs Tariff Act

Central Board of Excise and Customs CBEC

Goods and Services Tax GST

Ministry of Corporate Affairs MCA

A2Z TAXCORP LLP Tax and Law Practitioners Page 28

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