WORKSHOP ON SERVICE TAX

WORKSHOP ON SERVICE TAX Northern India Regional Council of The Institute of Chartered Accountants of India June 18, 2005 P. K. Sahu, Advocate

PRESENTATIONBYP. K. SAHU, AdvocateA-345 (FF), Defence ColonyNew Delhi-110024pksahu@vsnl.comCell:9810008892

Agenda • Assessment • Appeal • Revision • Advance Ruling • Refund P. K. Sahu, Advocate

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) P. K. Sahu, Advocate

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. P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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of Central Excise (No.2) Rules, 2001, to apply except that relating to exclusion of bond • These rules have been superseded by Central Excise Rules , 2002 P. K. Sahu, Advocate

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. P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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. P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

Refund • No specific service tax provision • Section 11B of Central Excise Act to apply, so far as may be P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

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 P. K. Sahu, Advocate

Excise Environment • Legacy of physical control • Anti-assessee attitude P. K. Sahu, Advocate

Thank You ! P. K. Sahu, Advocate

WORKSHOP ON SERVICE TAX