HIGHLIGHTS OF BUDGET 2013-14: INDIRECT TAXES
Service Tax
Amendments made vide Notifications No. 2-4/2013 ST dated 01.03.2013
Service tax to be paid on 30% of the value of a complex, building, civil structure having carpet area of more
than 2000 sq. ft or where the amount charged is ` 1 crore or more. However, in case of a residential unit
having carpet area of upto 2000 sq. ft. or where the amount charged is less than ` 1 crore, service tax
would continue to be liable on 25% of the value of the property.
Resident public limited companies to be eligible to seek advance ruling in case of specified matters relating
to service tax.
The above amendments have become effective from March 1, 2013.
All restaurants with air-conditioning or central air heating (including restaurants not serving liquor as well) in
any part of the establishment at any time during the year to be liable to service tax.
Transportation of the following items by a Goods Transport Agency would be exempted
foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding
alcoholic beverages,
relief materials for specialized purposes,
chemical fertilizers and oil cakes,
registered newspapers or magazines and defense equipments.
The exemptions available in respect of the following services would be withdrawn:
Transportation of petroleum and petroleum products, postal mails or mail bags and household effects
by railways and vessels.
Services provided by an educational institution by way of renting of immovable property or auxiliary
educational service. However, such services when provided to an educational institution would
continue to be exempt from service tax.
Temporary transfer or permitting the use or enjoyment of a copyright of cinematograph films for
exhibition elsewhere than 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. The exemption limit of ` 25 lakh available to charitable organizations providing service towards any other
object of general public utility would be withdrawn.
The above amendments would be effective from April 1, 2013.
Amendments vide the Finance Bill, 2013
Voluntary Compliance Encouragement Scheme, 2013 (VCES) is proposed to be introduced to encourage
voluntary compliance and broaden the tax base. In this scheme, 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". The scheme would be effective
from the date of the enactment of the Finance Bill, 2013.
Courses in 'designated trades' offered by Industrial Training Institute or Industrial Training Center affiliated
to State Council of Vocational Training to be covered under the negative list.
Definition of "process amounting to manufacture or production of goods" to include processes on which
duties of excise are leviable under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 thereby
bringing the same under the negative list.
Testing activities directly related to agriculture production of any agricultural produce like soil testing, animal
feed testing, testing of samples from plants or animals, for pests and disease causing microbes to be
covered under the negative list.
A show cause notice issued for fraud cases, if not found sustainable by an appellate authority or tribunal or
court, to be deemed to be a notice issued for a period of eighteen months.
Maximum penalty for failure to obtain registration to be restricted to ` 10,000 only as against earlier penalty
of ` 10,000 or ` 200 per day of default whichever is higher.
Director, manager, secretary or other officer of the company, who is in any manner knowingly concerned
with specified contraventions, to be liable to a penalty of ` 1 Lakh. The specified contraventions would
include evasion of service tax, issuance of invoices, bill, challan without the provision of taxable service,
availment and utilization of credit without actual receipt of taxable service or excisable goods or failure to
pay any amount collected as service tax to the credit of the Central Government beyond the period of 6
months from the date on which such payment becomes due.
Appellate tribunal to admit an appeal or permit the filing of memorandum of cross objections even after the
expiry of the period of 3 months in case of assessee appeal also.
Any person who collects any amount as but fails to deposit the same to the Central Government within 6
months would be punishable with imprisonment for a term which may extend to 7 years but not less than 6
months if such amount exceeds ` 50 lakh. Section 90 is proposed to be introduced to specify and differentiate the offences provided in section 89(1)
into cognizable offences from non-cognizable and bailable offences.
Commissioner of Central Excise to be empowered to authorize any officer of Central Excise not below the
rank of Superintendent of Central Excise to arrest a person for offences specified under clauses (i) & (ii) of
section 89(1) i.e., where the amount involved in the offence exceeds ` 50 Lakh.
The above amendments would be effective from the date of the enactment of the Finance Bill, 2013.
Central Excise Duty
Speed post with proof of delivery or courier approved by the Central Board of Excise & Customs would also
be the prescribed modes of delivery for any decision or order or any summons or notices.
Advance ruling may also be sought on the matters relating to credit of service tax paid or deemed to have
been paid on input services.
Offences relating to excisable goods, (with the duty liability exceeding ` 50 lakh) which are punishable for
evasion of payment of any duty or contravention of any of the provisions relating to credit of any duty to be
cognizable and non-bailable.
An offence involving evasion to be punishable with a term of imprisonment extending to seven years with
fine in case the duty leviable exceeds ` 50 lakh instead of earlier ` 30 lakh.
“Resident public limited companies” to be eligible for seeking advance ruling on central excise and service
tax matters as is available under Customs.
Money due to the Government may now be recovered from any person other than from whom money is due
after giving a proper notice, if that other person holds money for or on account of the first person.
Recovery provisions provided under rule 14 of the CENVAT Credit Rules, 2004 to apply in case of failure to
pay the amount on removal of inputs/capital goods as such, after use and writing off the value of the inputs/
capital goods.
Service of a statement containing details of duty not paid, short levied or erroneously refunded to be
deemed to be a show cause notice.
The officer-in-charge of police station to admit the arrested person to bail to appear before the Magistrate or
in default of bail forward him in custody of Magistrate only where the offence is non-cognizable.
Interest on refund arising out of finalization of provisional assessment to be paid as per the provisions of
Section 11BB.
MRP based valuation prescribed with 35% abatement for non-allopathic medicaments.
Excise duty on following goods enhanced:- Mobile phones of retail sale price exceeding ` 2,000/-.
Cigarettes
Marble tiles and slabs
Full exemption from excise duty on ships and other vessels. Hence, there will be no CVD on import of the
same.
'Zero excise duty route' restored in respect of branded readymade garments and made ups.
Customs Duty
Duty free allowance in respect of jewellery for an Indian passenger who has been residing abroad for over
one year or a person who is transferring his residence to India raised from Rs.10,000 to Rs.50,000 in case
of a gentleman passenger and from ` 20,000 to ` 1,00,000 in case of a lady passenger.
Duty free allowance for crew member of vessel/ aircraft raised from ` 600 to ` 1500.
Customs house agents to be known as customs brokers.
It is proposed that the minimum amount of refund of customs duty will be ` 100.
For issuance of the show cause notice, it is proposed that the minimum amount demanded should be
` 100.
Interest free period for payment of import duty to be reduced from five days to two days.
Import/export general manifest to be filed electronically. However, Commissioner of Customs may, in cases
where it is not feasible to electronically present the same, allow the same to be delivered in any other
manner.
CBEC to be empowered to permit the landing of vessels and aircrafts at any place other than customs port
or customs airport.
Following specified offences would be non-bailable:-
(a) evasion of duty exceeding ` 50 lakh;
(b) import or export of prohibited goods notified under section 11 which are also notified under section
135;
(c) import or export of any goods not declared in prescribed manner and the market price of which
exceeds ` 1 crore;
(d) Fraudulent availment of drawback or exemption, if the amount of drawback or exemption from duty
exceeds ` 50 lakh. The period of storage of imported goods, pending clearance, in a public or private warehouse to be reduced
to thirty days. However, Commissioner of Customs may extend the period of storage for further period not
exceeding thirty days at a time.
The threshold limit for punishment in an offence relating to evasion of duty or fraudulent availment of
drawback or exemption from duty in connection with export of goods, to be increased from ` 30 lakh to ` 50
lakh.
It is proposed that any warehoused goods may be exported to a place outside India without payment of
import duty if a shipping bill or a bill of export in prescribed form or label or declaration accompanying the
goods as referred to in section 82 has been presented in respect of such goods.
Importation or exportation of goods to be prohibited for protection of "designs and geographical indications"
also.
Provisional attachment of property may be ordered in case of non-payment of duty on account of fraud,
suppression of facts etc as well.
Provisions relating to duty deferment to be omitted.
No duty liability on any sample of goods which is consumed or destroyed during the course of testing or
examination.
Basic customs duty enhanced on the following goods:-
Yachts and motor vehicles
Raw silk
Set top boxes
Luxury cars (duty enhanced from 75% to 100%)
Common Points
Rate of service tax, customs duty and excise duty not tinkered with.
In cases where the delay in disposing of the appeal is not attributable to the appellant, the Tribunal may
extend the period of stay by a period not exceeding 185 days subject to the condition that if the appeal is not
disposed of within the total period of 365 days from the date of order, the stay order shall stand vacated.
The producer or manufacturer allowed to seek advance ruling while starting a new line of business of
production or manufacture. Similarly, the importer or exporter also would be allowed to seek advance ruling
while starting a new line of business. Monetary limit of the Single Bench of the Tribunal to hear and dispose of appeals enhanced from Rs.10 lakh
to ` 50 lakh.
Goods and Services Tax
Roadmap for GST announced. First decisive step taken by allocating a sum of ` 9,000 crore towards the first
instalment of the balance of CST compensation. Draft Constitutional Amendment Bill for GST and Draft GST Bill
to be placed in the Parliament within the next few months.
