Indirect tax updates of January 13 for easy digest

Notification: Central Excise:

Amendment in Notification No. 12/2012-Central Excise dated March 17, 2012 to prescribe effective rate of Excise duty of 12.5% on Vehicles falling under specified headings of First Schedule to the Central Excise Tariff Act

The Central Government vide Notification No. 02/2017 – Central Excise dated January 11, 2017 has amended the Notification No. 12/2012-Central Excise dated March 17, 2012 dealing with effective rate of duty on goods falling under chapter 1 to 96 of First Schedule of the Central Excise Tariff Act, 1985 by inserting serial number 277A and the entries relating thereto after serial number 277, namely: –

*SL. No.*	*Chapter or heading or sub-heading or tariff item of the First Schedule*	*Description of excisable goods*	*Rate*	*Condition No.*
(1)	(2)	(3)	(4)	(5)
“277A	8702 90 21, 8702 90 22, 8702 90 28 or 8702 90 29	All goods	12.5%	—

Thus, an effective rate of Excise duty of 12.5% is prescribed for vehicles falling under Miscellaneous heading of First Schedule of the Central Excise Tariff Act, 1985.

Circular: Maharashtra VAT:

Extension in last date of submission of Audit Report in Form e-704 for year 2015-16 upto February 9, 2017

The Maharashtra Government vide Trade Circular No. 3T of 2017 dated January 11, 2017 has extended the last date for submission of Audit Report in Form e-704 for the year 2015-16 from January 15, 2017 till February 9, 2017.

In view of the above, the physical copy of the acknowledgment and the statement of submission of Audit Report are required to be submitted to the concerned Nodal Officers upto February 20, 2017. Further, it is informed that penalty proceedings shall not be initiated against the dealers who upload the said Audit Report before February 9, 2017 along with submitting the physical copy of the acknowledgment on or before February 20, 2017.

Circular: Assam VAT:

Enrollment of existing dealers having multiple registrations under different Acts/ single Act to GST

The Assam Government vide Circular No. 1/2017 No. CTS-4/2017/1 dated January 12, 2017 has informed that the existing dealers who are migrating to GST are required to get themselves enrolled in the GST portal after obtaining provisional ID and password. However, there will be some dealers, who because of the nature of their business activities, will have multiple registrations under Value Added Tax, Central Sales Tax Act, Entry Tax, Luxury Tax and Entertainment Tax or may have even multiple registrations under the Assam Value Added Tax Act, e.g.-TlNs/GRNs and in this regard GSTN has decided to issue Provisional id and Password for each such registration.

However, since dealers having multiple registrations under existing laws will be provided with multiple Provisional id and Password, such dealers are required to ensure that they enroll themselves only once in GST portal against only one Provisional id and Password for the same business vertical. In other words, they should not enroll themselves with other Provisional id and Password. However, when a dealer is having different business verticals, in such case of course, he can do multiple enrolments for different business segments.

Further, as given above all entities registered under the existing laws and having valid PAN that will be subsumed under GST, will be given provisional registration and the onus will be on the taxpayers to get the same cancelled, if not liable to be registered under GST.

Notification: Service Tax:

Service tax to be paid under reverse charge for services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India

The Central Government (“the Government”) vide Notification No. 3/2017-Service Tax dated January 12, 2017 has made amendment in Notification No. 30/2012-Service Tax dated June 20, 2012 dealing with services subject to reverse charge by inserting the following, which shall come into force on January 22, 2017, as follows-

Insertion of sub- clause (vii) in paragraph I in clause (A):

“(vii) provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India;”;

Insertion of Entry No 12 in paragraph II in the table:

*Sl.No.*	Description of a service	Percentage of service tax payable by the person providing service	Percentage of service tax payable by any person liable for paying service tax other than the service provider
12	in respect of services provided or agreed to be provided by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India	Nil	100%”.

Further, the Government has also inserted a new explanation no. IV after Explanation III, namely-

“Explanation IV.- For the purposes of this notification, in respect of services provided or agreed to be provided by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, person liable for paying service tax other than the service provider shall be the person in India who complies with sections 29, 30 or 38 read with section 148 of the Customs Act, 1962 (52 of 1962) with respect to such goods.”

Thus, with effect of this insertion services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India shall be subject to reverse charge and the person in India who complies with Sections 29 (Arrival of vessels and aircrafts in India), 30 (Delivery of import manifest or import report) or 38 (Power to require production of documents and ask questions) read with Section 148 (Liability of agent appointed by the person in charge of a conveyance) of the Customs Act, 1962 i.e the person in charge of vessel or authorised agent, with respect to such transported goods shall be liable to pay Service tax.

Amendment in Notification No. 25/2012- Service tax dated June 20, 2012

The Central Government vide Notification No. 1/2017-Service Tax dated January 12, 2017 has amended Notification No. 25/2012-Service Tax dated June 20, 2012 (“the Mega Exemption Notification”) by substituting Entry No 29 dealing with exemption from the Service tax leviable on Services by “business facilitator or a business correspondent to a banking company with respect to a Basic Savings Bank Deposit Account covered by Pradhan Mantri Jan Dhan Yojana in the banking company’s rural area branch, by way of account opening, cash deposits, cash withdrawals, obtaining e-life certificate, Aadhar seeding;” with the following words namely;

“(g) business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch.”

Thus, now any services provided by business facilitator or a business correspondent to banking company with respect to accounts in rural area branch is exempt from Service tax.

Further, the Central Government has substituted proviso to Entry no. 34 dealing with exemption from Service tax on the service received from a provider of service located in non- taxable territory by specified persons, as follows-

“Provided that the exemption shall not apply to –

(i) online information and database access or retrieval services received by persons specified in clause (a); or

(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India;”.

Thus, with effect of this substitution, exemption from Service tax on services received from a provider of service located in non- taxable territory by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is withdrawn. Further, the said amendment in Entry no. 34 is effective from January 22, 2017.

Amendment in definition of aggregator and the persons liable for paying Service tax under Service Tax Rules

The Central Government vide Notification 2/2017-Service Tax dated January 12, 2017 has made the Service Tax (Amendment) Rules, 2017 to amend the Service Tax Rules, 1994 (“the Service Tax Rules”) which shall come into force on January 22, 2017 as follows-

Clause (aa) of Rule 2(1) of the Service Tax Rules

Insertion of proviso in clause (aa) of Rule 2(1) of the Service Tax Rules dealing with the definition of aggregator as follows-

“Provided that aggregator shall not include such person who enables a potential customer to connect with persons providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes subject to following conditions, namely:-

(a) the person providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes has a service tax registration under provision of these rules; and

(b) whole of the consideration for services provided by such service provider is received directly by such service provider and no amount, which forms part of the consideration of services of such service provider, is received by the aggregator directly from either recipient of the service or his representative.

Thus, the said proviso has excluded such person from the definition of aggregator who enables a potential customer to connect with persons providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes subject to the conditions that-

Person providing services by way of renting of hotels etc. has a Service tax Registration.
The whole consideration for services provided is received directly by service provider and no part of consideration is received by the aggregator directly from either recipient or his representative.

Insertion of item (EEC) in Rule 2(1)(d)(i) of the Service Tax Rules

In Rule 2(1)(d)(i) (stipulating the persons liable for paying Service tax), a new item has been inserted after item (EEB) namely;

“(EEC) in relation to services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, the person in India who complies with sections 29, 30 or 38 read with section 148 of the Customs Act, 1962 (52 of 1962) with respect to such goods;”.

Thus, the person complying with the Sections 29, 30 or 38 read with Section 148 of the Customs Act, 1962 is required to pay Service tax in relation of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India.

40 % abatement of Service tax on services by a tour operator subject to certain conditions

The Central Government vide Notification No. 4/2017-Service Tax dated January 12, 2017 has amended the Notification No. 26/2012- Service Tax dated June 20, 2012 (“the Abatement Notification”) by substituting the Serial no. 11 dealing with abatement of 90% on the services by a tour operator in relation to a tour, only or the purpose of arranging or booking accommodation for any person and 70% on other tours. with the following words and figures namely;

Sl. No.

Description of taxable service

Percentage

Conditions

(1)

(2)

(3)

(4)

“11

Services by a tour operator

(i) CENVAT credit on inputs and capital goods used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The bill issued for this purpose indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour.”

Thus, with effect of this notification flat 40% abatement is provided to the tour operator services subject to the conditions prescribed. Further, the said notification shall be effective from January 22, 2017.

Indirect tax updates of January 13 for easy digest

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Indirect tax updates of January 13 for easy digest

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