I. AMENDMENTS PROPOSED
IN CHAPTER V OF THE FINANCE ACT, 1994: Chapter V of the Finance Act, 1994, is
being amended:
(i) Definition of
‘approved vocational education course’ provided in section 65B (11) is being
amended: firstly, the words, ‘or State Council of Vocational Training’ (SCVT)
is being inserted in (i), and secondly, entry at item serial number (iii) is
being omitted, for NSDC is not an affiliating body. After the proposed
amendment takes effect, courses in ‘designated trades’ offered by Industrial
Training Institute or Industrial Training Center affiliated to State Council of
Vocational Training will also be covered by the negative list;
(ii) Definition of
“process amounting to manufacture or production of goods”, in section 65B(40)
being amended to include processes on which duties of excise are leviable under
the Medicinal and Toilet Preparations (Excise Duties) Act, 1955(16 of 1955);
(iii) Explanation
contained in Removal of Difficulty Order 2/2012 is being introduced as a
separate section, namely 66BA. By the authority of this section, references to
section 66 (charging section under the positive list approach) in Chapter V of
the Finance Act, 1994 or any other act, will be construed as reference to
section 66B (charging section under the negative list approach), with effect
from the 1st day of July, 2012. Reference to section 66 appearing in the Finance
(No.2) Act, 2004 and the Finance Act, 2007, in the context of education cesses
will be read as 66B, in accordance with this new section;
(iv) The word, ‘seed’ is
being omitted from the expression ‘seed testing’ found in section 66D (d)(i).
As a result, testing activities directly related to production of any
agricultural produce like soil testing, animal feed testing, testing of samples
from plants or animals, for pests and disease causing microbes will be covered
by the negative list;
(v) In section 73, a new
sub-section (2A), similar to sub-section (9) of section 11A of Central Excise
Act, 1944, is being inserted to harmonize the Central Excise and Service Tax
law. As a result, if a show cause notice issued under proviso to sub-section
(1) of section 73, is not found sustainable by an appellate authority or
tribunal or court, the same will be deemed to be a notice issued for a period
of eighteen months;
(vi) Section 77,
sub-section (1), clause (a), is being amended, in such manner that, maximum
penalty imposable for failure to obtain registration will be ten thousand
rupees only;
(vii) Section 78A is
being introduced, to make provision for imposition of penalty on director,
manager, secretary or other officer of the company, who is in any manner
knowingly concerned with specified contraventions;
(viii) In section 86,
sub-section (5), it is proposed to insert the expression “sub-section (1) or”
appropriately. Therefore, in case of assessee appeal also, appellate tribunal
can admit an appeal or permit the filing of memorandum of cross objections
after the expiry of the relevant period;
(ix) Section 89 is being
amended: (i) in the case of an offence specified in clauses (a), (b) and (c )
of sub-section (1) where the amount exceeds fifty lakh rupees, punishment shall
be for a term which may extend to three years, but shall not, in any case, be
less than six months; (ii) in the case of failure to pay service tax collected,
to the credit of the Central Government within six months, an offence specified
in section 89(1 )
(d), if such non-payment
exceeds fifty lakh rupees, punishment shall be imprisonment for a term which
may extend upto seven years but not less than six months; (iii) in the case of
any other offence, the punishment shall be imprisonment for a term which may
extend to one year;
(x) Section 90 is being
introduced to specify and differentiate cognizable offences from non-cognizable
and bailable offences;
(xi) Section 91 is being
introduced to provide for power to arrest; Commissioner of Central Excise is
empowered to authorize any officer of Central Excise not below the rank of
Superintendent of Central Excise, to arrest a person for specified offences
particularly nonpayment of collected service tax;
(xii) Section 95 is
being amended to empower the Central Government for removal of difficulty in
respect of amendments carried out through the Finance Act, 2013.
II. RETROSPECTIVE
EXEMPTION:
Retrospective exemption
is being extended to the Indian Railways on the service tax leviable on various
taxable services provided by them during the period prior to the 1st day of
July 2012, to the extent show cause notices have been issued upto the 28th day
of February 2013. Section 99 is being added for this purpose, in Chapter V of
the Finance Act, 1994.
III. RATIONALIZATION OF
ABATEMENT:
At present taxable
portion for service tax purpose is prescribed as 25% uniformly for
constructions where value of land is included in the amount charged from the
service recipient. This is being rationalized. Accordingly, where the carpet
area of residential unit is upto 2000 square feet. or the amount charged
is less than One Crore Rupees, in the case of ‘construction of complex,
building or civil structure, or a part thereof, intended for sale to a buyer,
wholly or partly except where the entire consideration is received after
issuance of completion certificate by the competent authority’, taxable portion
for service tax purpose will remain as 25%; in all other cases taxable portion
for service tax purpose will be 30%. This change will come into effect from the
1st day of March, 2013.
IV. REVIEW OF EXEMPTIONS
(to take effect from 1st day of April, 2013):
(A) The following
exemptions are being rationalized:
* Rationalization of
exemption limit prescribed for charitable organizations, providing service
towards any other object of general public utility. So far, the limit was 25
Lakh Rupees per annum. Now, they will be covered by the threshold exemption.
* Exemption provided to
restaurants other than those having (i) air-conditioning and (ii) license to
serve liquor, is being rationalized; condition regarding ‘license to serve
liquor’ is being omitted. Therefore, with effect from 1st April, 2013, service
tax will be leviable on taxable service provided in restaurants with
air-conditioning or central air heating in any part of the establishment at any
time during the year.
* Rationalization of
exemption to transport of goods by road and rail/vessel.
(B) The following
exemptions are being withdrawn:
* Services provided by
an educational institution by way of renting of immovable property.
* Temporary transfer or
permitting the use or enjoyment of a copyright relating to cinematographic
films was fully exempt so far; now, this exemption will be restricted to
exhibition of cinematograph films in a cinema hall or a cinema theatre.
* Services by way of
vehicle parking to general public.
* Services provided to
Government, a local authority or a governmental authority, by way of repair or
maintenance of aircraft.
V. AMNESTY SCHEME FOR
NON FILERS AND STOP FILERS :
To encourage voluntary
compliance and broaden the tax base, it is proposed to provide one time amnesty
by way of (i) waiver of interest and penalty; and (ii) immunity from
prosecution, to the stop filers, non-filers or non-registrants or service
providers (who have not disclosed true liability in the returns filed by them
during the period from October 2007 to December 2012) who pay the “tax dues”.
Details of the scheme are available in Chapter VI of the Finance Bill, 2013.
The scheme will be operational from the date on which the Finance Bill, 2013
receives the assent of the President.
VI. ADVANCE RULING:
Scope of advance ruling
is being extended to cover resident public limited companies; a notification is
being issued for this purpose, under section 96A (b) (iii) of the Finance Act,
1994.
