WORKSHOP ON SERVICE TAX

1
WORKSHOP ON SERVICE TAX

• Northern India Regional Council
• of
• The Institute of Chartered Accountants of India
• June 18, 2005

2
PRESENTATIONBYP. K. SAHU, AdvocateA-345
(FF), Defence ColonyNew Delhi-110024pksahu_at_vsnl
.comCell9810008892
3
Agenda

• Assessment
• Appeal
• Revision
• Advance Ruling
• Refund

4
Self Assessment

• Every assessee is liable to self assess service
  tax due on services provided by him and furnish
  to the Superintendent of Central Excise a return
  in a manner and frequency prescribed (section 70)
  
• Every assessee shall submit half yearly return in
  form ST-3 by 25th of the month following the half
  year (Rule 7)

5
No Regular Assessment

• No verification of return (section 71 omitted
  w.e.f 10.09.2004) .
• Provision for best judgment assessment deleted
  w.e.f 10.09.2004.

6
Provisional Assessment

• An assessee is unable to correctly estimate the
  actual amount payable by any particular month or
  quarter, he may apply to Asstt / Dy. Commissioner
  to pay service tax on provisional basis
  Rule6(4)
• The Asstt./ Dy. Commissioner may allow payment of
  service tax on provisional basis on such value
  of the taxable service as may be specified by him

7
Provisional Assessment

• Provision of Central Excise (No.2) Rules, 2001,
  to apply except that relating to exclusion of
  bond
• These rules have been superseded by Central
  Excise Rules , 2002

8
Provisional Assessment under Central Excise
Rules, 2002

• The Asstt/ Dy. Commissioner shall pass order of
  final assessment as soon as, may be, after the
  relevant information required for finalising the
  assessment is available, but within six months
  from the date of communication or for provisional
  payment of tax.

9
Provisional Assessment under Central Excise Rules

• The period for finalisation of assessment may be
  extended by the Commissioner by six months or by
  the Chief Commissioner to the extent he may deem
  fit
• The assessee to pay interest on any shortfall in
  tax upto the date of payment

10
Provisional Assessment under Central Excise Rules

• The assessee to get interest on refund from first
  day of the month succeeding the month in which
  the refund is determined till the date of refund
• The principle of unjust enrichment to apply on
  such refund

11
Re-opening of Assessment

• Where service tax has not been levied or paid or
  has been short levied or short paid or
  erroneously refunded, the Central Excise Officer
  may issue notice to the assessee to show cause
  why he should not pay the amount specified in the
  notice
• Notice can be issued within one year from the
  relevant date if non levy/non payment/short
  levy/short payment/ erroneous refund is for any
  reason

12
Extended Period

• Notice can be issued within extended a period of
  five years if non levy/ non payment /short levy
  /short payment / erroneous refund by reason of -
• Fraud or
• Collusion or
• Wilful mis-statement or
• Suppression of facts or
• Contravention of any of the provisions with
  intent to evade payment of service tax

13
Relevent Date

• When service tax has not been levied or paid or
  has been short levied or short paid.
• (a) Where periodical return is to be filed by an
  assessee, the date of filing the return,
• (b) Where no periodical return filed, the last
  date on which such return is to be filed.
• (c) Any other case, the date on which the service
  tax is required to be paid under the provisions.
• The date when provisional assessment is finalised
• In case of erroneous refund, the date of such
  refund

14
Built-in Amnesty

• Section 73(3)
• Where service tax has escaped assessment or was
  erroneously refunded
• Assessee pays tax voluntarily or on the basis of
  tax ascertained by a Central Excise Officer and
  informs the Central Excise Officer shall not
  issue notice u/s 73(1)
• Central Excise Officer can still proceed if there
  is short levy even after this

15
Appeal to Commissioner (Appeals)

• Any person aggrieved by any decision or order
  passed by any authority subordinate to the
  Commissioner may appeal to Commissioner (Appeals)
• Appeal in prescribed manner
• To be filed within three months from the date of
  receipt of the order
• Commissioner (Appeals) can allow further period
  of three months
• Commissioner (Appeals) to pass any order as he
  thinks fit, including an order enhancing
  assessment
• Commissioner (Appeals) to give opportunity to
  assessee against enhancement

16
Appeal to Tribunal

• Any person aggrieved by order of Commissioner
  u/s73, 83A or 84 or by order of Commissioner
  (Appeals) may appeal to Tribunal
• Board may direct Commissioner to file appeal to
  Tribunal if it objects to any order passed by
  Commissioner u/s73, 83A or 84
• Appeal to be filed within three months of receipt
  of the order
• Tribunal may condone delay in filing of appeal
• The other party can file cross-objection within
  45 days of notice

17
Fees to Tribunal

• Appeal
• Rs.1,000/- where demand is upto Rs.5 lakhs
• Rs.5,000/- where demand is more than Rs.5 lakhs
  and upto Rs.50 lakhs
• Rs.10,000/- where demand is more than Rs.50 lakhs
• Application
• Rs.500/- for filing an application for
  stay/rectification/restoration of appeal or
  application

18
Pre-deposit

• Appellant to deposit demand in the impugned order
  before appeal is taken up for hearing
• Appellant can apply for waiver of pre-deposit to
  the Commissioner (Appeals) / Tribunal

19
Appeal to High Court / Supreme Court

• On questions relating to classification or
  valuation, appeal lies to the Supreme Court from
  the order of the Tribunal
• On all other issues, appeal lies to the High
  Court from the order of the Tribunal, if the case
  involves substantial question of law
• Appeal to the High Court within 180 days from the
  date of receipt of the order of the Tribunal
• An appeal lies to the Supreme Court from the
  order of the High Court

20
Revision

• Commissioner can call for record of any
  proceeding in which subordinate has passed any
  decision or order and after enquiry, pass such
  order thereon as he thinks fit
• No order is to be passed by the Commissioner on
  issue pending before Commissioner (Appeals)
• No revision can be made after two years from the
  date of original order.

21
Advance Ruling

• Determination, by the Authority, of a question of
  law or fact specified in the application
  regarding the liability to pay service tax in
  relation to a service proposed to be provided by
  the applicant

22
Applicant

• Non-resident setting up a joint venture in India
  in collaboration with non-resident or resident
• Resident setting up a joint venture in India in
  collaboration with non-resident
• Wholly owned subsidiary Indian company, of which
  the holding company is a foreign company.
• A joint venture in India
• A resident falling within such class or category
  of persons as may be notified

23
Ruling on following questions

• Classification of service
• Valuation of taxable service
• Principles to be adopted for valuation of taxable
  service
• Applicability of notification
• Admissibility of credit of service tax

24
Procedure by Authority

• Copy of application to be forwarded to
  Commissioner
• If necessary, authority can ask Commissioner to
  furnish relevant records
• Authority to allow or reject application after
  examining it
• Authority not to allow application where the
  question is pending before Central Excise
  Officer, Tribunal or any Court or where such
  question has already been decided by Tribunal or
  Court
• Applicant to be heard, if requested
• Authority to pronounce advance ruling within 90
  days of the receipt of application

25
Applicability of Advance Ruling

• Advance Ruling binding on the applicant and the
  Commissioner (including authorities subordinate
  to him) in respect of the applicant and in
  respect of the referred question

26
Refund

• No specific service tax provision
• Section 11B of Central Excise Act to apply, so
  far as may be

27
Section 11B of C.E. Act

• Applicant to establish that the amount of duty,
  for which refund is claimed, was collected from,
  or paid by, him and the incidence of such duty
  has not been passed on by him to any other person
• Application to be made within one year of
  relevant date
• Limitation would not apply where duty has been
  paid under protest

28
Principles of Unjust Enrichment

• A refund of duty can be made to the manufacturer,
  if he has not passed on the incidence of such
  duty to any other person
• A refund can be made to the buyer, if he has not
  passed on the incidence of such duty to another
  person

29
Relevant Date

• In the case of a person other than the
  manufacturer, the date of purchase of the goods
  by such person
• In case of provisional assessment, the date on
  which adjustment of duty is made after final
  assessment
• In any other case, the date of payment of duty
• Interest payable if refund not made within three
  months from the date of receipt of application

30
Recovery of Sums Due to Govt. (S.11 of C. E.
Act)

• In respect of duty payable to Central Govt. under
  the Act may be recovered by the authorised
  officer
• By deducting the amount so payable from any money
  owing to the person from whom such sums may be
  recoverable or due to which may be in his hands
  or under his disposal or control or
• By attachment and sale of excisable goods
  belonging to such person
• And if the amount payable is not so recovered,
  such officer may prepare a certificate signed by
  him specifying the amount due from the person
  liable to pay the same and send it to the
  collector of the district in which such person
  resides or conducts his business
• On receipt of such certificate, Collector may
  recover such amount as an arrear of land revenue

31
Excise Environment

• Legacy of physical control
• Anti-assessee attitude

32
Thank You !