Goods and Services Tax

2011 (4) TMI 845 – CESTAT, NEW DELHI – 2012 (25) S.T.R. 30 (Tri. – Del.) – – Waiver of pre-deposit – exemption under notification 12/2003-ST – whether the value of materials supplied by service receiver can be brought within the meanings of “gross amount charged” or “consideration” used in section 67 of the Finance Act 1994 – Held that:- The type of contract undertaken by assessee would be covered under “Works Contract Service” from 01-06-2007 – In the notification it is specified that an assessee should indicate the value of materials sold in each invoice. All what is required is that they should have documentary proof specifically indicating the value of the said goods and materials sold. When the applicants are making a claim that they have paid VAT on more than 67% of the gross receipts received by them and they have documentary proof by way of VAT returns, this claim cannot be brushed aside – Hence, the Applicants have made out a strong prima facie case in their favor for comple

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wer. 3. The Revenue contests that they were engaged in providing only finishing services and hence they were not eligible for the benefit of the said notifications. It is also alleged that in some of the contracts, the Applicants had received free of cost (FOC) materials from the service receivers and the value of such FOC materials was not included in the gross amount charged before availing the rebate of 67% provided under the notifications. The demand confirmed in the impugned service is based on the above arguments. 4. The Applicants submit that the contracts undertaken by them were in the nature of composite works contract which were made chargeable to service tax only with effect from 01-06-2007 under works contract service and hence the applicants were not liable to pay service tax during the impugned period. 5. They further submit that even if they were liable to pay service tax under construction services, they were entitled to avail exemption under notification 12/2003-ST in

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shing service. He also argues that this exemption was available only if the value of all the materials supplied free of cost by the receiver of the service was included in the gross receipts before applying the 67% abatement from the gross value. 8. The Ld. DR further contests that for claiming exemption under notification 12/2003-ST they should have indicated the value of the material sold in the concerned invoices. Since this was not done they are not eligible for the exemption and the demand has been rightly confirmed. 9. We have considered arguments on both sides. 10. The condition specified in Notification 01/2006-ST against S. No. 7, which is the relevant entry, reads as under: This exemption shall not apply in such cases where the taxable services provided are only completion and finishing services in relation to building or civil structure, referred to in sub-clause (c) of clause (25b) of section 65 of the Finance Act. Explanation.- The gross amount charged shall include the va

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to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. 12. There can be a dispute whether activity undertaken by the Applicants is the one at clause (c) or that at clause (d) above. Further notification 1/2006-ST does not talk about inclusion of value of materials supplied free of cost by the receiver of the service. It only says that the value of materials sold by the provider of service should be included in the gross value before claiming abatement. The question whether the value of materials supplied by service receiver can be brought within the meanings of gross amount charged or consideration used in section 67 of the Finance Act 1994 is presently under dispute in many cases before the Tribunal and different Courts. 13. Notification 12/2003-ST reads as under:

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Hospital Services and Diagnostics Tests Exempted from New Levy in its Entirety; Abatement Enhanced From 40% to 55% of Retail Sale Price for SSI Garment Manufactures; Basic Custom Duty Reduced from 30 Per Cent to 5 Per Cent on Raw Silk AD Valorem; Constitution Amendment Bill to Facilitate GST Introduced – Dated:- 22-3-2011 – The Union Finance Minister Shri Pranab Mukherjee has proposed to enhance the abatement from 40% to 55% of the Retail Sale Price for the Small Scale Industries (SSI) Garment Manufacturers. With this relief, a unit would continue to be eligible for SSI exemption in 2011-12, even if it had a turnover based on Retail Sale Price of Rs 8.9 crore in the current year. The necessary notification in this regard will be issued in d

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impact on the domestic sericulture sector. The Union Finance Minister Shri Mukherjee said that it has been decided to exempt the new levy in its entirety both in respect of services provided by hospitals, as well as by way of diagnostic tests until GST comes into force. This has been done in view of considerable anxiety raised in this regard in the Parliament and outside, the Finance Minister added. He said that the purpose of the new levy was not mobilise revenues but to pave the way for the introduction of the GST. Beside above, outlining a significant legislative agenda for reforms in the financial sector, the Union Finance Minister Shri Mukherjee introduced the Constitution Amendment Bill to facilitate the GST in Lok Sabha today. Besid

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Dated:- 22-3-2011 – Empowered Group on IT Infrastructure on GST headed by Shri Nandan Nilekani Preface The broad IT plan for enabling GST was presented to the Government of India and the Empowered Committee of State Finance Ministers under the Chairmanship of Dr. Asim Dasgupta on July 21, 2010. This document is a follow-up to that presentation and feedback thereon and describes the IT strategy for GST implementation. This document is at the draft stage, and will evolve as various stakeholders a

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Allied Laws – Govt introduces Constitution Bill in LS for GST – TMI Updates – Highlights

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Govt introduces Constitution Bill in LS for GST – Dated:- 22-3-2011 – New Delhi, Mar 22 (PTI) The government today introduced a Constitution Amendment Bill in the Lok Sabha to facilitate implementation of the Goods and Service Tax (GST), an indirect tax regime that would subsume levies like excise, service tax and sales tax. The Bill, introduced by Finance Minister Pranab Mukherjee seeks to amend the constitution with a view to confer simultaneous powers on centre and states to levy taxes on goods and services. The GST would replace a number of indirect taxes presently being levied by the central government and the state governments and is intended to remove cascading of taxes and provide a common national market for goods and services , said the statement of objects and reasons of the Bill. The Bill provides for creation of a GST Council to be headed by Union Finance Minister. GST : The Constitution (One Hundered and Fifteenth Amendment) Bill, 2011* [BILL NO. 22 OF 2011] A Bill furthe

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: Provided that Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation.-For the purpose of this article, State includes a Union territory with Legislature. Amendment of article 248 3. In article 248 of the Constitution, in clause (1), for the word Parliament , the words, figures and letter Subject to article 246A, Parliament shall be substituted. Amendment of article 249 4. In article 249 of the Constitution, in clause (1), after the words with respect to , the words goods and services tax or shall be inserted. Amendment of article 250 5. In article 250 of the Constitution, in clause (1), after the words with respect to , the words goods and services tax or shall be inserted. Amendment of article 268 6. In article 268 of the Constitution, in clause (1), the words and such duties of excise on medicinal and toilet preparations shall be omi

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e deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. Explanation II.-For the purpose of this article, State includes a Union territory with Legislature. (2) Parliament may, by law, formulate the principles for determining when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Amendment of article 270 10. In article 270 of the Constitution,- (i) in clause (1), for the words, figures and letter articles 268,268A and 269 , the words, figures and letter articles 268, 269 and 269A shall be substituted; (ii) after clause (1), the following clause shall be inserted, namely :- (1A) Goods and services tax levied and collected by the Government of India shall also be distributed between the Unionand the States in the manner provided in clause (2). . Amendment of article 271 11. In article 271 of the Constitution, after the words in those articles , the words except the goods and services tax s

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Services Tax Council shall make recommendations to theUnionand the States on- (a) the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to or exempted from the goods and services tax; (c) the threshold limit of turnover below which goods and services tax may be exempted; (d) the rates of goods and services tax; and (e) any other matter relating to the goods and services tax, as the Council may decide. (5) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services. (6) One-third of the total number of members of the Goods and Services Tax Council shall constitute the quorum at its meetings. (7) The Goods and Services Tax Council shall determine the procedure in

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stituted under article 279A that results in a loss of revenue to a State Government or the Government of India or affects the harmonised structure of the goods and services tax. (2) The Goods and Services Tax Dispute Settlement Authority shall consist of a Chairperson and two other members. (3) The Chairperson of the Goods and Services Tax Dispute Settlement Authority shall be a person who has been a Judge of the Supreme Court or Chief Justice of a High Court to be appointed by the President on the recommendation of the Chief Justice of India. (4) The two other members of the Goods and Services Tax Dispute Settlement Authority shall be persons of proven capacity and expertise in the field of law, economics or public affairs to be appointed by the President on the recommendation of the Goods and Services Tax Council. (5) The Goods and Services Tax Dispute Settlement Authority shall pass suitable orders including interim orders. (6) A law made under clause (1) may specify the powers whic

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rvices or both shall be substituted; (iii) for clause (3), the following clauses shall be substituted, namely :- (3) Any law of a State shall, in so far as it imposes, or authorises the, imposition of a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of tax as Parliament may by law specify. (4) Nothing in clause (3) shall apply to a law of a State insofar as it imposes or authorises the imposition of goods and services tax. . Amendment of article 366 14. In article 366 of the Constitution,- (i) after clause (12), the following clause shall be inserted, namely :- (12A) goods and services tax means any tax on supply of goods or services or both except taxes on the supply of the following goods, namely :- (i) petroleum crude; (ii) high speed diesel; (iii) motor spirit (commonly known as petrol); (iv) natur

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produced inIndia, namely:- (a) petroleum crude; (b) high speed diesel; (c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel; and (f) tobacco and tobacco products. ; (ii) entries 92 and 92C shall be omitted; (b) in List II – State List,- (i) for entry 52, the following entry shall be substituted, namely:- 52. Taxes on the entry of goods into a local area for consumption, use or sale therein to the extent levied and collected by a Panchayat or a Municipality. ; (ii) for entry 54, the following entry shall be substituted, namely:- 54. Taxes on the sale, other than sale in the course of inter-State trade or commerce or sale in the course of international trade and commerce of, petroleum crude, high speed diesel, natural gas, motor spirit (commonly known as petrol), aviation turbine fuel and alcoholic liquor for human consumption. ; (iii) entry 55 shall be omitted; (iv) for entry 62, the following entry shall be substituted, namely:- 62. Taxes on entertai

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nded by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty: Provided that no such order shall be made after the expiry of three years from the date of such assent. (2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament. STATEMENT OF OBJECTS AND REASONS The scheme of the Constitution does not provide for any concurrent taxing powers to theUnionas well as the States. It is proposed to introduce the goods and services tax and for this purpose to amend the Constitution conferring simultaneous power on Parliament as well as the State Legislatures including every Union territory with Legislature to make laws for levying goods and services tax on every transaction of supply of goods or services or both. The goods and services tax

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goods outside the purview of the goods and services tax; (b) subsuming of State VAT/Sales Tax, entertainment tax (unless it is levied by the local bodies), Luxury Tax, Taxes on lottery, betting and gambling, tax on advertisements, State Cesses and Surcharges insofar as they relate to supply of goods and services and Entry Tax, not levied by local bodies; (c) levy of Integrated GST (IGST) on inter-State transactions of goods and services; (d) conferring simultaneous power upon Parliament and the State Legislatures to make laws governing goods and services tax; (e) coverage of goods other than crude petroleum, diesel, pertol, aviation turbine fuel, natural gas and alcohol for human consumption under the goods and services tax for the levy of goods and services tax; (f) creation of a Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to theUnion and the States on parameters like rates, exemption list and threshold limits; (g) enab

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olic Liquor for human consumption. 3. The Bill seeks to achieve the above objects. New Delhi; Pranab Mukherjee The 16th March, 2011. Presidents recommendation under article 117 of the Constitution of India [Copy of letter No. 31011/04/2009, dated 16-3-2011 from Shri Pranab Mukherjee, Minister of Finance to the Secretary-General, Lok Sabha] The President, having been informed of the subject matter of the proposed Bill, recommends, under clauses (1) and (3) of article 117, read with clause (4) of article 274, of the Constitution of India, the introduction of the Constitution (One Hundred and Fifteenth Amendment) Bill, 2011 in Lok Sabha and also the consideration of the Bill. FINANCIAL MEMORANDUM Clause 12 of the Bill seeks to insert new articles 279A relating to constitution of Goods and Services Tax Council and 279B relating to establishment of Goods and Services Tax Dispute Settlement Authority in the Constitution. The proposed new article 279A seeks to

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ervices Tax Dispute Settlement Authority will involve creation of some posts. Given that the introduction of goods and services tax will make the Indian trade and industry much more competitive, domestically as well as internationally and contribute significantly to the growth of the economy, such additional expenditure on these bodies would be miniscule. It is not practicable to make an estimate of the expenditure, both recurring and nonrecurring on account of the above. However, such expenditure would be considerably marginal. MEMORANDUM REGARDING DELEGATED LEGISLATION Clause 12 of the Bill seeks to insert a new article 279A relating to the constitution of a Council to be called the Goods and Services Tax Council and another article 279B establishing the Goods and Services Tax Disputes Settlement Authority. Clause (1) of the proposed new article 279A provides that the President shall, within sixty days from the date of the commencement of the Constitution (One Hundred and Fifteenth A

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Dated:- 8-3-2011 – Association of Private Airport Operators has requested the Government to bring aviation fuel under the Goods and Services Tax (GST) and to double the duty free allowances for passengers coming from abroad. In the model of the GST which has been proposed by the Empowered Committee of State Finance Ministers, it has not been possible to bring aviation turbine fuel under the purview of the GST. Also, it has not been found feasible to accede to the request to double the duty free

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Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 1-3-2011 Last Replied Date:- 30-12-1899 – Prepared By: CA Pradeep Jain And Sukhvinder Kaur, LLB[FYIC] The introduction of Goods and Service Tax (GST) at both Central as well as State level is the dream of the Government despite their being stiff opposition from various states who do not want to loose the sources which generate revenue for them. The Finance Minister Mr. Pranab Mukherjee has announced in the Budget Speech given on 28th February 2011 that the Constitutional Amendment Bill will be introduced in the Parliament in this Session. The other steps proposed to be taken for introduction of GST by the Finance Minister are establishment of a strong IT infrastructure. It was also

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Act levying GST is in place. These steps are far fetched ideas which cannot materialize till the Amendment is carried out in the Constitution and the path for introducing GST is cleared of all anomalies. The Finance Minister has also announced in its budget speech that to tax services based on a small negative list for tapping untapped sectors are brought under tax net, would be very conducive for a nationwide GST. It was proposed to initiate an informed public debate on the subject to help finalise the approach to GST. But the hurdle is still the same that when the proposed GST bill is not there, how the debate will go on and on what basis. Until and unless the first step of Centre having power to make the law and the said law is made, th

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Dated:- 28-2-2011 – Finance Minister Shri Pranab Mukherjee has stressed on the importance of computerization of Commercial Taxes. While presenting the Union Budget 2011-12 in Lok Sabha he said that Mission Mode Projects for computerization of Commercial Taxes in States will allow States to align with the roll out of GST. Funds have been released for 31 such projects received from the States and Union Territories (UTs). Most of the States and UTs have already enabled the facility of dealers maki

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New Service Tax Structure a Step Closure Towards Proposed GST – Service Tax Regime on Hotel Accommodation, Restaurant Services Restructured – Dated:- 28-2-2011 – Hotel accommodation, in excess of declared tariff of ₹ 1000 per day and service provided by air conditioned restaurants that have license to serve liquor are the new services which have been brought under the service tax net. While proposing to levy service tax on these services, the Union Finance Minister, Shri Pranab Mukherjee has said that the hotel accommodation with declared tariff of over ₹ 1000 per day will have to pay the service tax with an abatement of 50 per cent. This will mean an effective burden of only 5 per cent of the amount charged. Air conditioned res

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2011 (2) TMI 1270 – SUPREME COURT OF INDIA – [2011] 107 SCL 377 (SC), [2011] 163 COMP. CAS. 37 (SC), 2011 (11) SCC 524, 2011 (3) JT 66, 2011 (3) SCALE 33 – Maintainability of the suit – authorized signatory – authority letter – suit was filed by the respondent through Shri Ashok K. Shukla, who described himself as one of the directors of the company and claimed that he was authorised by Shri Raj K. Shukla, the chief executive officer of the company vide authority letter dated 2-1-2003, to sign, verify and file suit for recovery on behalf of the company. A copy of the authority letter allegedly signed by Shri Raj K. Shukla was also annexed with the plaint. In the written statement filed on behalf of the appellant, a preliminary objection was taken to the maintainability of the suit on the ground that Shri Ashok K. Shukla was not authorised by the company to file the suit and the authority letter given by Shri Raj K. Shukla was not sufficient to entitle him to do so. – CIVIL APPEAL NO.

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also annexed with the plaint. In the written statement filed on behalf of the appellant, a preliminary objection was taken to the maintainability of the suit on the ground that Shri Ashok K. Shukla was not authorised by the company to file the suit and the authority letter given by Shri Raj K. Shukla was not sufficient to entitle him to do so. The respondent filed replication but did not plead that Shri Ashok K. Shukla was authorised by the company to file the suit. 5. On the pleadings of the parties, the trial court framed the following issues: (1) Whether the suit has been signed, verified and filed by a duly authorised person ? (2) What is the effect of not joining Shri Debashish Saraswati in the present suit ? (3) Whether any loss has been caused by the defendant to the plaintiff ? (4) Whether payments have been made by the defendant in due course and in good faith as alleged in paragraph 3 of the preliminary objections of the written statement if so its effect ? (5) Whether the pl

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nd he had been authorised by the company to file the suit. Learned senior counsel extensively referred to the pleadings of the parties including the rejoinder filed on behalf of the company before the trial court, evidence of Shri Ashok K. Shukla and argued that the suit could not have been decreed because no evidence was produced on behalf of the company to prove that Shri Ashok K. Shukla was authorised to file the suit. Shri Gupta pointed out that resolutions dated 14-2-2001 and 19-4-2001, passed by the board of directors of the company had bearing only on the issue of operating the bank account and not on the issue of filing the suit and the Division Bench of the High Court gravely erred in relying upon those resolutions and the authority letter issued by Shri Raj K. Shukla in favour of Shri Ashok K. Shukla. 9. We have considered the submissions of learned counsel and scrutinised the record. 10. In paragraph 1 of the suit filed on behalf of the company, it was pleaded that Shri Asho

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inability of the suit on the ground that the plaint has not been signed, verified and filed by a competent and authorised representative on behalf of the company and that there is neither any valid board resolution nor any valid authorisation on behalf of the company nor a copy of the resolution has been filed along with the suit. It was also pleaded that the person who has instituted the suit on behalf of the company is not shown to be a power of attorney holder nor a copy of such power of attorney has been filed with the plaint and the authorisation letter purported to have been given by the so-called Chief Executive Officer is not a valid authorisation. 12. In the rejoinder filed on behalf of the company, it was reiterated that Shri Ashok K. Shukla, who has signed, verified and filed the plaint was authorised by Shri Raj K. Shukla vide authority letter dated 2-1-2003. 13. In his evidence, which was filed in the form of an affidavit, Shri Ashok K. Shukla claimed that he is one of the

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present suit. Apart from this authority letter, the plaintiff-company has not filed on record any board resolution authorising Shri A.K. Shukla to sign, verify and institute the present suit. The plaintiff has also not filed on record its memorandum/articles to show that Shri Raj Kumar Shukla had been vested with the powers or had been given a general power of attorney on behalf of the company to sign, verify and institute the suit on behalf of the company. The present suit, therefore, has been filed merely on the strength of the authority letter exhibit PW1/A … 15. The trial court then referred to the judgment of the Delhi High Court in Nibro Ltd. v. National Insurance Co. Ltd. [1991] 70 Comp. Cas. 388 and Shubh Shanti Services Ltd. v. Manjula S. Agarwalla [2005] 125 Comp. Cas. 477 (SC), the Delhi High Court (Original Side) Rules, 1967 and proceeded to observe: … As already stated, it has not been averred in the plaint nor sought to be proved that any resolution had been passed by

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ntment of Shri Ashok K. Shukla as a director, but reversed the finding of the trial court on issue No. 1 on the basis of the authority letter issued by Shri Raj K. Shukla and resolutions dated 14-2-2001 and 19-4-2001, by which the board of directors of the company had authorised some persons to operate the bank account. 17. In our view, the judgment under challenge is liable to be set aside because the respondent had not produced any evidence to prove that Shri Ashok K. Shukla was appointed as a director of the company and a resolution was passed by the board of directors of the company to file suit against the appellant and authorised Shri Ashok K. Shukla to do so. The letter of authority issued by Shri Raj K. Shukla, who described himself as the Chief Executive Officer of the company, was nothing but a scrap of paper because no resolution was passed by the board of directors delegating its powers to Shri Raj K. Shukla to authorise another person to file suit on behalf of the company.

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BUDGET 2011 SHOULD HAVE FINAL SAY ON GST – Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 9-2-2011 Last Replied Date:- 30-12-1899 – Once again we enter the budget month ,ie, February and we expect the Union Budget 2011 to be unveiled on 28 the February 2011 when country s Finance Minister shall be laying before the Parliament the Government s budgetary proposals and tax proposals- both direct and indirect. This year s budget assumes greater importance in the wake of ongoing high level of corruption and financial irregularities in almost every sphere of governance, thus putting tremendous pressure on the exchequer and fuelling bad money in the system. Also, the present governance and banking system has been unable to tame the evil of inflation causing hardship to one and all. Petrol prices and high rate home loans are only adding salt to the injury. However, economy has shown positive signs on various parameters. Thus, the top agenda for the Finance Minister would be t

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middot;Draw a final road map with timelines for both- DTC and GST atleast w.e.f. 1.4.2012. ·To revisit GST structure to be followed with fresh and open mind to restore confidence, remove various impediments faced and find solution to issues posed before the empowered committee. So far as GST is concerned, the seriousness of our Government , the democratic approach to introduce GDP and the deliberations at Empowered Committee – all have become a mockery. What is painful is that the people who do not understand much about GST and its implications are to decide on GST structure in the said empowered committee. The members therein, are primarily concerned about state s shares of revenue and nothing else, of course, least about the tax payer. It is high time that the Union Government should stop hoping for the consensus to emerge between the centre and different states on the GST roll out. Now what is legally permissible must be acted upon. It is once again advocated thatIndiamust f

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percent (being Union tax). We also have a strong case for tax rate reduction owing to higher inflation and slow sectoral growth. The government should also work on a formula where in all the products and services are covered under the GST regime. The benefit of GST should be available to all players including those in liquour or tobacco industry and fuel / petroleum sector. The budget should also seek to integrate or blend the excise and service tax before we get GST. Though we already have common cenvat credit rules in place, there are disputes in relation to direct or indirect inputs and input services. To point out few grey areas where integration is needed, issues persist such as payment of excise duty at the time of clearance of goods from the factory but service tax being paid on receipt of value of service, separate registration and procedural compliance requirements, different treatment of export of services and export of goods and consequential relief or rebate. Not only this,

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F.No.V/DGST/30-MISC-45/2009/756 Dated:- 8-2-2011 Circular – Circulars – Service Tax – F.No.V/DGST/30-MISC-45/2009/756 DIRECTORATE GENERAL OF SERVICE TAX 9 th Floor, Piramal Chambers, Jijibhoy Lane, Parel, Lalbaug, Mumbai 400 012 Ph. No.24178515, 24102587 Dated: February 8, 2011 Sub: Practice being adopted by leading Hotel Chains to utilize Cenvat Credit beyond permissible limits reg. Please refer to this office letter of even number dated 27.04.09 whereunder copy of letter Dy. No.62/Comm. (ST)/2009 dated 27.03.2009 from the Commissioner (Service Tax), CBEC, New Delhi along with its enclosures, was forwarded to you for taking appropriate action and calling for the action taken report. In the said letter dated 27.03.2009, the Commissioner Service Tax, had informed this office about irregular availment of Cenvat Credit by leading hotel chains, as reported to him by the Chief Commissioner, Customs Central Excise, Chandigarh vide letter C.No. 06-Zone 14

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ave found similar issue prevailing in their jurisdiction and that they are taking the necessary action to protect the revenue. On perusal of these reports, it has been observed that the service provider, in most of the cases, is M/s Indian Hotel Corporation Ltd. (M/s IHCL), an assessee registered with Service Tax-I Commissionerate, Mumbai. However, there are others as well viz. M/s Apeejay Sunder Corp. Services, Kolkata, M/s Sarovar Hotels Pvt. Ltd., Mumbai, M/s Nirulas Comer House P. Ltd. etc. who also provide similar services to hotel chains and enable the service recipient to take full Cenvat credit by treating the services as 'Business Consultancy Services'. The field formations are of a uniform view that the services provided by M/s IHCL and other such service providers to the owners of hotels can not be considered to be 'Management Consultant Services' but such services are actually in the nature of Business Support Service or Business Auxiliary Service or Franchise Service, as t

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milar service providers would follow suit. Till then, action is required to be taken by the field formations to prevent / recover the inadmissible excess Cenvat Credit availed by the recipient of such services. It may not be out of place to mention here that the Commissioner, Chandigarh-I, who had originally taken up the issue, had, in the meantime, dropped the demand notice issued in this respect to M/s Taj GVK Hotels and Resorts (service recipient) by passing an Order-in-Original dt.20.09.2010 by holding, inter-alia, that 'the cause which has initiated the present proceedings was beyond the control of the noticee; the noticee can not be held responsible for the misclassification of taxable service at the bands of provider of such service; so the demand is not sustainable and it is even hit by time bar also apart from being not sustainable on merits' etc. However, it has now been reported by the Chief Commissioner's office, Chandigarh, vide their letter dated 16.12.2010 that the sub

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r of output service taking such credit; thus it was the noticee who was required to ensure the description of service and as to what is the classification of input service to discharge this burden even if there was some misclassification at the service provider's end; the entire onus of correct availment was on the noticee'. Considering the issue in the backdrop of what is stated herein above, all the field formations are hereby requested to take appropriate action in the matter to protect the revenue. Commissioner, Service Tax-I, Mumbai would be expected to complete the ongoing investigation/ verification immediately and communicate the result thereof to this office at the earliest. Reports about the final outcome of the action taken may please be forwarded to this, office by all concerned. Yours faithfully, (Additional Director General) – Circular – Trade Notice – Public Notice – Instructions – Office orders Tax Management India – taxmanagementindia – taxmanagement

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F No.V/DGST/88-GTA/01/2010/464 Dated:- 20-1-2011 Order-Instruction – Circulars – Service Tax – F No.V/DGST/88-GTA/01/2010/464 Directorate General of Service Tax 9th Floor, Piramal Chambers Jijibhai Lane, Lalbaug, Parel Mumbai-400012 Dated: January 20, 2011 Sub:- Inclusion of handling charges to Goods transport Agent in case of M/s. Food Corporation of India Reg. An instance of avoidance of payment of appropriate Service Tax amount has been reported by the Central Excise Commissionerate, Rohtak. Brief details in this regard are as follows. In respect of the transportation services provided by the contractors with regard to the transportation of the foodgrains stocks, M/s. Food Corporation of India (M/s. FCI)

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ing charges in the transport charges, wherever provided by the same contractor/agency, for determining the taxable value and accordingly discharged Service tax liability. As such, if loading/unloading charges are added into the transport charges, many bills may cross the exemption limit of Rs.750/-, on which no Service Tax has been paid by M/s. FCI. To summarise the above, M/s. FCI should have Included the handling charges to the transport charges, wherever provided by the same contractor/agency. They have evaded Service Tax by not including the value of handling charges to the transport charges and wrongly availed the slab exemption of Rs.750/- per consignment under Notification No. 34/2004-ST dated 03.12.2004. In this connection, at

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Goods and Service Tax – GST – By: – Nagesh Bajaj – Dated:- 14-1-2011 Last Replied Date:- 30-12-1899 – Now it has almost become clear that the Goods and Services may not meet its deadline of April 1,2011 due to lack of consensus among the States and the Centre. So, we have to wait more for the new tax regime which is expected to replace excise duty , service tax on the Centre's end and VAT on the States front, besides local levies ,cesses and surcharges. The Government failed to tabled the Constitution Amendment Bill in the monsoon session of the Parliament as the BJP-ruled states raised their voice against the revised draft of the Centre on the Constitution Amendment Bill. However, a recent statement by the Finance Ministry indicated t

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of the State Finance Ministers because it proposed to give Veto Power to the Union Finance Minister on the State taxation issues. However, the revised draft from the Finance Ministry drops the main issue of giving Veto Power to the Union finance Minister and said that the Council could take a decision only when there is a Consensus. But the BJP-ruled States along with some of the allies of the UPA, have been opposing the revised draft of the Constitutional Amendment Bill on GST and asked for more time to study that and give their views on the various provisions in the GST Bill . Also, they wanted to know the clear meaning of the consensus and suggested changing the word with consent . In order to remove their concerns , the Finance Ministr

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Dated:- 14-12-2010 – Finance Minister Shri Pranab Mukherjee today inaugurated a two-day National Seminar on 'Goods and Services Tax : Transition Issues', organised by the Comptroller & Auditor General of India (CAG) to discuss the findings of the CAG on the preparedness for transition from sales tax to value added tax, the rationale for the tax reforms, IT related issues to GST as well as legal and operational issues relating to tax reforms. Text of speech of the CAG, Shri Vinod Rai at the Inaugural function of the National Seminar on 'Goods and Services Tax: Transition issues', is as follows: This seminar is being hosted as part of the celebrations associated with completion of 150 years of the institution of the Comptroller and Auditor General of India. The Hon'ble Finance Minister would recall that recently in his speech delivered on the occasion of the inaugural ceremony of the 150th anniversary celebrations he had mentioned that the C&AG's study re

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ion to Goods and Services Tax. That Report synthesized the findings of the performance audits conducted by 23 of our field offices where we reviewed the transitional process from the sales tax regime to the VAT system by evaluating whether the States had planned well for the transition, the administrative machinery had been appropriately geared to suit the requirements of the new tax regime, the legislative provisions were adequate and properly enforced, adequate and effective internal controls were in place and the new systems had stabilized and were functioning effectively after four-five years of introduction of VAT. The Report underlined the fact that certain fundamental issues which were required to be tackled prior to implementation of VAT were not addressed and their consequent fallout in the post-VAT scenario was discussed. We are of the opinion that the findings of that Report could serve as indicators towards some of the important areas which need to be examined and tackled b

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on the macro picture, contributing to the process of governance through timely interventions. The aim of audit is not to criticize but to place the Executive in a comfort zone by acting as an aid to the decision making process. As revenue auditors, we look at systems and processes and point out lacunae in laws and rules which lead to leakage of revenue and suggest ways to plug this. The findings in our Reports have led to several amendments in various legislative enactments, both at the Centre and in the States. To cite an example, on the Direct Taxes side, the Government introduced six legislative amendments in the last five years to correct the anomalies pointed out by us, the latest being the amendment made in the Finance Act 2009 based on our Report on 'Assessments relating to infrastructure development (Deductions under section 80‐IA of the Income Tax Act)'. Deductions under section 80‐IA of the Act are based on profits, and the lack of clear directions for de

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s as professional auditors to be a part of the evolving process in order to be effective. Through this seminar, we intend to provide a platform where individuals who are actively associated with the process of determining the final shape of GST, engage in dialogue on critical parameters, share their views, experiences as well as concerns, reflect on the problems and throw light on what could be the possible way forward. We have amongst us distinguished representatives of the Union and State governments, scholars, academicians, chartered accountants and persons from trade and industry associations. We look forward to hearing their views on a gamut of issues ranging from the need for a constitutional amendment for introduction of GST, development of IT infrastructure, the possible architecture of rates, exemptions and thresholds and the administrative preparedness that would be required to effectively implement the new tax regime. Their rich experience would help those of us in the audit

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Dated:- 14-12-2010 – FM Expects Inflation to come down to 6 per cent by March, 2011 Govt willing To Consider a Phased Approach for Introduction of GST: FM GST would Improve Tax Collections and Boost India's Economic Development: FM GST to Encourage Consumer Friendly Product Pricing to Benefit Aam-Admi: FM FM Inaugurates National Seminar on GST The Central Government, with a view to evolve a consensus, is willing to consider a phased approach for the introduction of GST, a step towards further consolidation of taxes on goods and services to achieve a genuine value added tax system at all levels in the country, stated the Union Finance Minister Shri Pranab Mukherjee, here today. In a departure from our earlier stand, as a transitory measure, we are also willing to accept a dual rate structure that could eventually lead to a model GST regime , he added. The Finance Minister was addressing the inaugural session of a two-day National Seminar on 'Goods and Services Tax : Transition

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state of the art IT platform to make tax administration in the country more efficient. Speaking to the mediapersons on the sidelines of the Seminar Shri Mukherjee said that the inflation is expected to come down to 6 per cent by March, 2011. The text of Finance Minister's inaugural address at the Seminar is as follows: I am happy to be here at the inauguration of the Seminar on the Goods and Service Tax (GST). Let me start by congratulating the Comptroller and Auditor General of India for taking this timely initiative for bringing together the various stakeholders to deliberate on this issue when India's tax structure and its legal framework is being reviewed and is in the process of being finalized. I understand that the seminar seeks to focus on transition issues that would have to be addressed by tax administrators, both at the Centre and at the State levels, as they set out to implement the GST in due course. I am glad that this discussion is going to benefit from the part

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extent- the compulsions for tax rate war among States and also moderated the cascading effect of taxes on commodities. More importantly, VAT was an effort at improving tax payer friendliness with greater faith being reposed in the tax payer. The implementation of VAT brought a steady increase in the revenues of the States. We are now hoping to take the next step by moving towards an economy-wide generalized system of goods and service taxes. From the current mixed system of taxation, both at the Centre and States, we are moving towards value added tax principle with input tax credit mechanism for taxation of goods and services. The proposed GST is a natural step towards further consolidation of taxes on goods and services to achieve a genuine value added tax system at all levels in the country. GST is likely to improve tax collections and boost India's economic development by integrating the Indian market through a uniform tax rate. As I have said earlier, it is a win-win situatio

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dness on the administrative and legislative front before embarking on the implementation of tax proposals presently under consideration. One important issue brought out in the said study report is lack of required automation in commercial tax administration of State Governments. This is an issue that has been flagged for discussion in this seminar. The Central Government has recently launched a mission mode project for computerization of commercial tax administration of States and UTs. I am told that project proposals for 31 States have already been sanctioned with an overall cost of ₹ 975 crore. Around 70 per cent of the project cost is being borne by the Government of India. Some States like Maharashtra, Kerala, West Bengal and Rajasthan have been able to use these funds and successfully put in place modern IT systems as a part of their tax administration. These systems will support e-services like e-registration, e-payment, e-return filing, e-issue of 'C' forms and con

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T has been prepared and sent to the Empowered Committee of State Finance Ministers for seeking the views of the States. The Empowered Committee is discussing the draft to arrive at a consensus on the issue. It is my earnest hope that there will be a convergence of views on this draft so that the required bill for making these amendments could be introduced in the Parliament at the earliest. Efforts are being made in parallel to prepare Central GST legislation and model State GST legislation. A model State GST Legislation, in sync with Central GST Legislation and common processes to be followed by the Central as well as the State Governments will help in strengthening an integrated national market. That in turn should provide a further impetus to the growth momentum of our economy. On our part, with a view to evolve a consensus we have revised our position to accommodate the concerns of the State Governments. The Central Government is willing to consider a phased approach for the introd

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Goods and Services Tax – Started By: – Santosh Kumar – Dated:- 9-12-2010 Last Replied Date:- 10-12-2010 – Whether Goods and Service Tax is on supply or on consumption? – Reply By Brijesh Verma – The Reply = According to the road-map and other drafts on the matter, it seems that GST would be a destination based consumption tax. – Reply By rishi mohan – The Reply = The goods and service tax (GST) is proposed to be a comprehensive study on indirect taxes which is levied on manufacture, sale and co

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Goods and Services Tax – Started By: – Nitin Jain – Dated:- 8-12-2010 Last Replied Date:- 9-12-2010 – PLS SOMEONE PROVIDE BRIEF ABOUT GST……. THANKS – Reply By Yash Matta – The Reply = Kindly Follow the link : http://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=1039 – Reply By rishi mohan – The Reply = The Goods and Services Tax (GST) is a value added tax (VAT) on the supply of goods or services. The introduction of goods and services tax shall replace taxes such as Centra

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Dated:- 7-12-2010 – Lucknow, Dec 7 (PTI) Fixing pre-conditions for enforcing Goods and Service Tax (GST) regime from 2011 in the state, the U.P government today sought an early settlement of its claim for ₹ 2,527.93 crore from the Centre for its roll out. Centre should abide by its promise and take decision about early settlement of the state's claim for ₹ 2,527.93 crore, if it was sincere and honest about its intention , state institutional finance minister Nakul Dubey said. Th

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Goods and Service Tax – GST – By: – RUPESH NAGPAL – Dated:- 2-12-2010 Last Replied Date:- 30-12-1899 – The reformed indirect tax system GST-Goods and Service Tax is proposed to implement in INDIA on and from 1st April 2011 (Still not clear how the Government be doing this). Do you know, several countries implemented this tax mechanism followed by France which was the first country introduced GST. To simplify the understanding about the Goods and Service Tax (Papularly known as GST and hereinafter called as GST ) it may be called a new version of VAT which gives a comprehensive setoff for input tax credit and subsuming many indirect taxes from state and national level. The GST Implementation deadline is not yet cleared by government (i.e. 01/04/2011) and the clarification (within the Committee of State Finance Ministers) of draft of GST law is still under process and a clear picture will be available only after fresh announcement of Implementation is made by our Union Finance Minister

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es like luxury tax, entertainment tax, (which are charged as extras to VAT) are yet to be included in the VAT. These taxes are still existing and payable. iii. Shortfall of Existing CENVAT Several taxes like additional customs duty, surcharges not included under CENVAT. Input tax and service tax set off (to a certain extent) is out of reach to the manufacturer and dealers. Benefits of GST 1. GST provide comprehensive and wider coverage of input credit setoff, you will be able to use service tax credit for the payment of tax on sale of goods etc. 2. CST will be removed and need not to collect and pay. As we all know that at present there is no input tax credit available for CST. 3. Many indirect taxes in state and central level subsumed by GST, You will have to pay a single GST instead of all. 4. There is likely to be Uniformity of tax rates across the states (as proposed) 5. It may ensure better compliance due to aggregate tax rate reduces. 6. By reducing the tax burden the competitive

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own as countervailing Duty ( CVD) 6. Special Additional duty of custums-4% ( SAD) 7. Surcharges 8. Cessess The above taxes dissolve under GST; instead only CGST & SGST exists. The GST model in India Many countries are following single GST. But it is proposed that dual GST is suitable for federal country like India. The end user, i.e. consumer cannot recover taxes but a business can recover by claiming input tax setoff. Dual GST Dual GST means, the proposed model will have two component called 1. CGST – Central goods and service tax levied by Central Govt. 2. SGST – State goods and service tax levied by State Govt. There would have multiple statute one CGST statute and SGST statute for every state. Taxable event Supply of goods and supply of services will be considered as taxable event under GST. In simple way any economic activity which is not supply of goods will be treated as supply of service. Tax payer identification number Each tax payer will be allotted a PAN based identifica

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interstate transaction. As I understand for interstate transaction IGST is proposed and would be implemented along with CGST and SGST. Constitution amendment for levying service tax by the states The power of levying service tax is rest with central Government and a constitutional amendment is necessary for empowering states for levying service tax hence there is very much chance that the deadline for the implementation of GST can only be fixed once there is a constitutional amendment to make this effective. Applicability of CGST and SGST The applicability of taxes is as usual there would be a prescribed limit of annual turnover, also some goods and services are exempted under GST. The dealer whose turnover is below prescribed limit need not pay tax. In my opinion and to the best of my knowledge and belief threshold for annual turnover for goods and services would be 10 lakh for SGST and threshold of CGST for goods may be 1.5 crore and service would have a separate threshold that too

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Goods and Services Tax – Started By: – Sanjeev jha – Dated:- 1-12-2010 Last Replied Date:- 2-12-2010 – Please tell me how can I find the slab of taxes commodity wise. For Delhi only. 2.What is GST tell me some thing about it. – Reply By RUPESH NAGPAL – The Reply = The reformed indirect tax system GST-Goods and Service Tax is proposed to implement in INDIA on and from 1st April 2011 (Still not clear how the Government be doing this). Do you know, several countries implemented this tax mechanism followed by France which was the first country introduced GST. To simplify the understanding about the Goods and Service Tax (Papularly known as GST and hereinafter called as GST ) it may be called a new version of VAT which gives a comprehensive setoff for input tax credit and subsuming many indirect taxes from state and national level. The GST Implementation deadline is not yet cleared by government (i.e. 01/04/2011) and the clarification (within the Committee of State Finance Ministers) of dr

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State VAT on CST, Entry tax on VAT etc. So the Govt must have decided to abolish tax on tax effect by implementing GST. ii. Shortfall of Existing VAT Indirect taxes like luxury tax, entertainment tax, (which are charged as extras to VAT) are yet to be included in the VAT. These taxes are still existing and payable. iii. Shortfall of Existing CENVAT Several taxes like additional customs duty, surcharges not included under CENVAT. Input tax and service tax set off (to a certain extent) is out of reach to the manufacturer and dealers. Benefits of GST <!-[if !supportLists]->1. <!-[endif]->GST provide comprehensive and wider coverage of input credit setoff, you will be able to use service tax credit for the payment of tax on sale of goods etc. <!-[if !supportLists]->2. <!-[endif]->CST will be removed and need not to collect and pay. As we all know that at present there is no input tax credit available for CST. <!-[if !supportLists]->3. <!-[endif]->Many in

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ed with GST State taxes <!-[if !supportLists]->1. <!-[endif]->VAT/Sales tax <!-[if !supportLists]->2. <!-[endif]->Entertainment Tax (unless it is levied by local bodies) <!-[if !supportLists]->3. <!-[endif]->Luxury tax <!-[if !supportLists]->4. <!-[endif]->Taxes on lottery, betting and gambling. <!-[if !supportLists]->5. <!-[endif]->State cesses and surcharges in so far as they relate to supply of goods and services. <!-[if !supportLists]->6. <!-[endif]->Entry tax not on in lieu of octroi. <!-[if !supportLists]->7. <!-[endif]->Purchase tax (This is not sure still under discussion) Central Taxes <!-[if !supportLists]->1. <!-[endif]->Central Excise Duty. <!-[if !supportLists]->2. <!-[endif]->Additional Excise Duty. <!-[if !supportLists]->3. <!-[endif]->The Excise Duty levied under the medical and Toiletries Preparation Act <!-[if !supportLists]->4. <!-[endif]-&

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CGST statute and SGST statute for every state. Taxable event Supply of goods and supply of services will be considered as taxable event under GST. In simple way any economic activity which is not supply of goods will be treated as supply of service. Tax payer identification number Each tax payer will be allotted a PAN based identification number containing 13 or 15 digit number ( as of now this feature is used for the grant of the service tax code or central excise No). Payment of tax This is proposed that the central GST would be paid to central and state GST paid to state government in the prescribed account head. Collection of GST It is same as VAT; Tax is collected on the basis of value addition on each stage of sale. Both CGST and SGST would have to be charged in an every service bill and sale bill and paid after adjusting input credit available on both. Input tax credit setoff In m y opinion as proposed the input tax credit of SGST can be utilized for the payment of SGST only an

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ices are exempted under GST. The dealer whose turnover is below prescribed limit need not pay tax. In my opinion and to the best of my knowledge and belief threshold for annual turnover for goods and services would be 10 lakh for SGST and threshold of CGST for goods may be 1.5 crore and service would have a separate threshold that too will be appropriately high. GST rates As we all must know by now that the rate structure would be as follow, but not final <!-[if !supportLists]->1. <!-[endif]->A lower rates for essential commodities <!-[if !supportLists]->2. <!-[endif]->Standard rates for general goods <!-[if !supportLists]->3. <!-[endif]->Special rates for precious metals <!-[if !supportLists]->4. <!-[endif]->For services may be single rates for CGST and SGST. During the first and second year GST on goods will charged in two rates. i.e. Goods at lower rate for necessary items and goods of basic importance ,Goods at standard rate for goods

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Dated:- 24-11-2010 – New Delhi, Nov 24 (PTI) State finance ministers are scheduled to meet on December 6 to break their deadlock with the Centre on the proposed Goods and Services Tax (GST) to reduce multiplicity of taxes. They will hold discussions on the requirement of a constitution amendment bill for rolling out the proposed GST, which is all set to miss even the revised deadline of April one, 2011. The empowered committee of state finance ministers would meet on December 6 to arrive at a c

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GST applicable or not for transport charges – VAT and Sales Tax – Started By: – Prakash Prakash – Dated:- 12-11-2010 Last Replied Date:- 17-11-2010 – In transport charges service tax applicable or not

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FM unlikely to agree to changes in GST structure – Dated:- 31-10-2010 – Panjim, Oct 31 (PTI) The Finance Ministry is unlikely to bow to the Empowered Committee of State Finance Ministers' demand for altering the basic structure of the proposed Goods and Services Tax to make the new indirect tax regime more acceptable to states. Any changes in the basic structure in GST would not be acceptable to the Centre. The functioning of Dispute Settlement Body and GST Council is at the core of the GST

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Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 19-10-2010 Last Replied Date:- 30-12-1899 – CA Preeti Parihar and CA Rajani Thanvi Introduction:- Continuity gives us roots; change gives us branches, letting us stretch and grow and reach new heights. How truly it has been said. The change is the need of time, change is innovation, but it becomes arduous when it is not accepted by that people for whom it was made. Whenever any change is about to come in our country it hangs in the way cause of lack of cooperation. To change the system of Indirect taxation Government brought a new system for implementation called GST-The goods and services tax. It was heard that GST will bring a drastic revolution in Indian Indirect Taxation system but the real picture shows something else as it itself become a reason of struggle between Central and states. Need:- Indian entrepreneurs are loaded with a number of taxes. Almost every business transaction suffers a different tax. For services, it

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s are there for payment of taxes and filing of returns, etc. which require a significant amount of man power and money. However, the GST, when implemented, will replace many of the taxes and will obviously reduce the paper work, man power and money. Further, there are no. of ambiguities in certain cases which makes it difficult to ascertain as to which law is applicable. For eg. software and SIM cards are service or goods? The service tax department says it is a service while the sales tax department says it is sale of goods. The GST will resolve the issue. The Government too will be benefitted. It is anticipated that the GDP of the economy will be increased by $500 billion and exports will also increase by 15%. Beginning of GST:- The Thirteenth Finance Commission, as constituted by the President on November 13, 2007 to give recommendations regarding the Central-State Fiscal relations during the year 2010-15. The Commission recommended a model GST structure and also recommended a grant

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rce on GST that it will be postponed till 01.10.2010 due to oppositions raised by states which is again delayed by 01.04.2011. In the middle:- On oppositions made by states, Government presented a revised draft bill of GST in order to arriving at consensus with the states. In the revised bill Government has provided veto power to the Union Finance Minister relating to state subjects matters on taxation issues. Then after Finance minister had offered some concessions on major demands of states relating to simplification of tax administration and replacement of multiple levies of taxes like CST, VAT, Excise, Service tax into a single tax. Government also proposed dual rate system to be included in GST system but because of this new system states may have revenue loss in initial year of implementation of GST. For this it was cleared by the government for compensation to states for switchover to the new tax regime including special incentives to those states such as Punjab and Haryana for

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f this amendment. On coming of oppositions from many states, Centre has given up on the matter of veto powers given to the Union Finance Minister. The veto power has been withdrawn from the constitutional amendment bill on GST with giving a statement that central FM had no any intention of becoming the Super Finance Minister to interfere with the State GST. In the latest meeting of state finance ministers and centre for GST, held on 20.09.2010 many states has accepted the approach of new draft of GST bill except few mainly Gujarat and Madhya Pradesh who still have different viewpoint. In that meeting the Madhya Pradesh government given an idea of an alternative model of the GST and BJP rules states has supported to it. Also some other states have allotted one month time for consideration to make their opinion on revised bill. In the meeting the states has stressed on retention of their rights and wished some more changes in the proposed Act. Next what? Recently, while addressing an int

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