Budgetary changes reg. Service Tax and Cenvat Credit provisions summarized

S.Tax Net widened by New Levy of Krishi Kalyan Cess vide FBC-158 effective after enactment of FB,2016 w.e.f. 01.06.16

FBC-158 New Levy of Krishi Kalyan Cess

New levy of Krishi Kalyan Cess shall be levied as S.Tax @0.5% on value of taxable services and all the provision of Ch.V of the Finance Act,1994 and rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall be applicable.

As per para 3.1 of Budget DOL, credit of KKC available shall be allowed for payment of such KKC by Service Provider

Calculation of Value: However, it is not clarified anywhere which value to be considered in case service tax required to be paid on abated value or at optional rate given under as per sub-rule (7), (7A), (7B) or (7C) of STR 6. Though necessary clarification may issued by CBED before it�s implementation from 01.06.16.

In case of SBC which also to be levied at 0.5% of the value of service, vide N/N 23/2015-ST it was notified that S.Tax to be calculated on abated value on which S.Tax is calculated and paid. Also, vide N/N 25/2015-ST STR 7D inserted to effect that SBC to be paid as (S.Tax Calculated*(0.5/S.Tax Rate 14) in other word 1/28 of S.Tax Calculated. if basic S.Tax rate is changed calculation may be changed accordingly

S.Tax Net widened by New Entry of Declared Service List in S.66E of F.A.�94 on enactment of FB 2016

S.66D(j) inserted vide FBC-147

S.66D(j) inserted :" assignment by the Government of the right to use the radio-frequency spectrum and subsequent transfers thereof."

S.Tax Net widened by Excluding Entry from Negative List in S.66D of F.A�94 and partly included in Mega Notification 25/2012-ST on enactment of FB 2016 or 01.06.2016

S.66D(o)(i) omitted

E.23(bb) inserted in 25/2012-ST

Inserted (c) in Col(2) of E.9A of N/N 26/2012-ST

S.66D(o)(i) :Transportation of passengers by Stage Carriage omitted vide FBC-146(b)(i) after enactment of FB 2016 w.e.f. 01.06.16

However, stage carriage other than air-conditioned stage carriage made exempted by inserting Sr. 23(bb) in N/N 25/2012-ST vide N/N 9/2016-ST (w.e.f. 01.06.16)

As per newly inserted (c) in Col(2) of E.9A of N/N 26/2012-ST vide N/N 8/2016-ST (w.e.f. 01.06.16), for service of air-conditioned stage carriage, S.Tax to be paid on value of 40% where CENVAT credit not availed.

S.66D(l) omitted vide FBC-146(a)

E.9D inserted (Excluded from Negative List 66D(l)

Sr. 2(ba) inserted in N/N 25/2012-ST

S.66D(l) omitted vide FBC-146(a).: Service of Pre-school and upto HSC or equivalent, as part of curriculum to obtain qualification recognized by  law and approved vocational education course. (on Enactment of FB 2016)

Relevant service, except Vocational Education , is already covered in Sr. 9 of  N/N 25/2012-ST.

E.9D inserted in N/N 25/2012-ST ; Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana(DDUGKY) under the Ministry of Rural Development by way of offering skill or vocational training courses certified by National Council For Vocational Training covered in Mega Exemption by N/N 9/2016-ST w.e.f. 01.04.16(However, as per Annex-I to DOL, w.e.f. on Enactment of FB 2016)

Relevant Defin. of "approved vocational education course" given in S.65B(11) omitted vide FBC-145(a). The same defin.inserted the same at Sr. 2(ba), (w.e.f. on FB  Receive accent.)

S.66D(p)(ii) omitted vide FBC-146(b)(ii)

E.53 inserted in Mega Exmptn

S.66D(p)(ii) omitted: Transportation of by Vessel/Aircraft from foreign to Customs Station of clearance in India omitting S.66D(p)(ii) vide FBC-146(b)(ii) (after enactment  of finance Bill w.e.f. 01.06.16)

Out of the said service omitted from Negative list, service transportation of goods from foreign to first Indian Customs Station of clearance by Aircraft is included in Mega Exemption by inserting Sr. 53 of N/N 25/2012-ST vide  N/N 9/2016-ST(after enactment  of finance Bill w.e.f. 01.06.16)

So, now Transportation of goods by vessel from foreign to Customs Station of Clearance is made taxable, However, Cenvat credit can be availed for service of transportation of goods from Indian Customs Station to Foreign by vessel as transportation of goods by vessel from Indian Customs Station to Foreign excluded from Rule 2(e) and also from Rule 6(7) reg. Non applicability of Sub-rule 6(1),(2),(3) & (4).

Thus credit availed for service used in transportation of goods from Indian Customs Station to foreign can be utilized for service tax liability for transportation of goods from foreign to first Indian Customs Station of clearance.

S.Tax Net widened by Excluding Entry or part thereof in Mega Exemption N/N 25/2012-ST

E.14(a) substituted

w.e.f. 01.03.16

E.14(a) substituted vide N/N 9/2016-ST: Services by way of construction��. Original works pertains to- railways, excluding monorail and metro.

Expln- which contract for original works pertaining to monorail or metro, entered into and appropriate stamp duty paid before 1st March, 2016 are exempt by substituting E.14(a)

E.23(c ) omitted

w.e.f. 01.04.16

Transportation of Passengers by ropeway, cable car or aerial tramway excluded by omitting Sr. 23(c ) of N/N 25/2012-ST vide N/N 9/2016-ST. Now, such service are taxable

E.6 (b) & (c) amended by substitution

w.e.f. 01.04.16

E.6(b) substituted: Service of Senior Advocates excluded from service by individual/partnership firm of Advocate to- individual/partnership firm of Advocate providing legal service, a person other than business entity or business having T.O upto 10 lakh.

E(c) substituted: Also Sr. 6(c) for service by a person represented on Arbitral Tribunal to Arbitral Tribunal substituted by Service of Senior Advocate by legal service to person not carrying out activity relating to industry, commerce or any other business or profession.

Thus Service of Senior Advocate by legal service to person who carrying out activity relating to industry, commerce or any other business or profession are now taxable in forward charge.

Defin. of Senior Advocate inserted at Sr. 2(zdd) of the Notification,  accordingly senior advocate as defined in section 16 of the Advocates Act, 1961, means an advocate may, with his consent, be designated as senior advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability 1[standing at the Bar or special knowledge or experience in law] he is deserving of such distinction.

Relevant change made in STR 2(1)(d)(i)((D)(II) by excluding "Senior Advocate" vide N/N 19/2016-ST and also in N/N 30/2012-ST at para I(A) (iv)(B ) and in Table at Sr.5 Col.(2) excluding "senior advocate" therefrom, vide N/N 18/2016-ST

S.Tax Exemption widened by inclusion in Mega Exemption N/N 25/2012-ST

E.9B inserted from 01.03.16

E.9B inserted vide N/N 9/2016-ST: Service by IIM, As per guideline by Govt,  to students for (i) 2 yr fulltime residential Post Graduate Programs in Management(PGPM) for the Post Graduate Diploma in Management (PGDM) where admission by CAT. (b) fellowship program in management (c) 5 yr integrated program in management, except for Executive Development Program .

As per DOL-2 Para-7.2, w.r.t. MHRD letter D. O. No.2-14/2009-TS.V dated 8th July, 2014 and 5th February, 2014, such program are equivalent to educational degrees and this exemption is clarificatory in nature and  liability to pay service tax in respect of the said programs for the past period will also become infructuous)

E.12A inserted from 01.03.16 Till 31.03.20

E.12A inserted vide N/N 9/2016-ST: E.12(a),(c ) & (f) were deleted w.e.f. 01.04.15 i.e. Services provided to Govt., Local Authority or a Governmental Authority - (i) civil construction or any original work � or profession(ii) a structure meant for use as educational, clinical or an art or cultural establishment & (iii) residential complex for self/employee or other person.

But for the contract entered and on which appropriate stamp duty, where applicable, was paid prior to 01.03.15, re-inserted Entry 12A reinserted upto 31.03.20. Relevant S.101 in F.A.94 inserted by FBC-156 which may be referred.

E.13(ba) & (bb) inserted,

after 13(b)

w.e.f.01.03.16

E."13(ba) a civil structure or any other original works pertaining to the "In-situ rehabilitation of existing slum dwellers using land as a resource through private participation" under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers. , and

E.13(bb) a civil structure or any other original works pertaining to the Beneficiary-led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

By inserting in Entry 13(b), in N/N 25/2012-ST vide vide N/N 9/2016-ST.

E.14(ca) inserted

w.e.f. 01.03.16

14(ca) inserted vide N/N 9/52016-ST: low cost houses up to a carpet area of 60 square meters approved by the competent authority under (i) "Affordable Housing in Partnership" component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana or (ii) any housing scheme of a State Government.

E.14A inserted

w.e.f. 01.03.16.

Till 31.03.20

E.14A vide N/N 9/2016-ST: Services by way of construction��. Original works pertains to- Port & Airport was omitted from E.14(a) w.e.f. 01.04.15.

But for the contracts entered and on which appropriate stamp duty paid, where applicable, thereon prior to 01.03.15 subject to production of certificate by Min. of Civil Aviation or Ministry of Shipping.

E.9C inserted

w.e.f. 01.04.16

E.9C inserted vide N/N 9/2016-ST:Services of assessing bodies empanelled centrally by DG, Training, Min. of Skill Development and Entrepreneurship by way of assessments under Skill Development Initiative (SDI) Scheme.

E.9D inserted (Excluded from Negative List 66D(l)

w.e.f. 01.04.16

E.9D inserted vide N/N 9/2016-ST: Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational training courses certified by National Council For Vocational Training covered in Mega Exemption.

E.16 value enhanced

w.e.f. 01.04.16

E.16 value enhanced vide N/N 9/2016-ST: For the performing Artists in falk/classic by artist in music, dance or theatre, exemption limit per performance enhanced from 1 lakh to 1.5 lakh.

E.26(q)inserted

w.e.f. 01.04.16

E.26(q) inserted vide N/N 9/2016-ST: Niramaya‟ Health Insurance Scheme implemented by Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

E.26C inserted

w.e.f. 01.04.16

E.26C inserted vide N/N 9/2016-ST: Services of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority of India (PFRDA) under the PFRDA Act, 2013.

E.49 inserted

w.e.f. 01.04.16

E.49 inserted vide N/N 9/2016-ST: Services provided by Employees� Provident Fund Organization (EPFO) to persons governed under the EPFMP Act, 1952.

E.50 inserted

w.e.f. 01.04.16

E.50 inserted vide N/N 9/2016-ST: Services provided by Insurance Regulatory and Development Authority of India (IRDA) to insurers under the IRDA Act, 1999.

E.51 inserted

w.e.f. 01.04.16

E.51 inserted vide N/N 9/2016-ST: Services provided by Securities and Exchange Board of India (SEBI) set up under the SEBI Act, 1992 by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market.

E.52 inserted

w.e.f. 01.04.16

E.50 inserted vide N/N 9/2016-ST: Services provided by National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation and Farmer‟s Welfare by way of cold chain knowledge dissemination.

E.23(bb) inserted

w.e.f. 01.04.16

E.23(bb) inserted vide N/N 9/2016-ST : Stage carriage other than air-conditioned stage carriage made exempted. Whole Stage carriage service excluded from Negative list S.66D(o)(i).

E.53 inserted.

w.e.f. 01.04.16

E.53 inserted: For the  vide N/N 9/2016-ST: Transportation of by Vessel/Aircraft from foreign to Customs Station of clearance in India omitting S.66D(p)(ii) vide FBC-146(b)(ii).

However, the said service by Aircraft is included in Mega Exemption.

New Exemption Notification

11/2016-ST dt. 01.03.16

Exempts Information Technology Software(ITS) when recorded on a media under Ch.85 of CETA with RSP declared under Legal Metrology Act,2009 or any other law/rule, for the purpose of levy of C.Ex or CVD, determined under Section 4A of CEA and such C.Ex duty paid by such MFRR/Duplicator /Copyright Holder or Customs duty alongwith CVD paid by importer, and service provider(Should be seller) has declared in invoice that no amount in excess of RSP is recovered from Customer.

For the Customized ITS recorded on Media, either domestic or imported,  where such RSP not required, to avoid double taxation i.e. of C.Ex/CVD & S.Tax both, C.Ex or CVD exempted- equivalent to C.Ex duty determined under S.4 of CEA or  CVD leviable under S.3(1) of CTA determined under S.14 of CA respectively on portion of value of ITS recorded on the said Media which is leviable to S.Tax under S.66B read with S.66E vide N/N 11/2016-CE & 11/2016-Cus. Respectively.

Other Existing Exemption Extended or Clarified

12/2016-ST dt. 01.03.16

NN 32/2012-ST: Exemption benefit given to Technology Business Incubator (TBI) and Science and Technology Entrepreneurship Park (STEP) recognized by National Science and Technology Entrepreneurship Development Board (NSTEDB) of Dept. of S&T, now extended to approved bio-incubators recognized by the Biotechnology Industry Research Assistance Council(BIRAC)

N/N 41/2012-ST amended retrospectively Vide FBC-157

w.e.f FB 2016 Recv Assent

N/N 41/2012-ST amended retrospectively: Effect of NN 1/2016-ST dt. 03.02.16 amending NN 41/2012-ST given from 01.07.12 to 02.02.16 wherein Expln of (a): A(i) , "place of removal" amended as place beyond factory or any place of production/ manufacture. Also omitted (B) reg. place of removal as now defin. of Place of Removal inserted in Rule 2(qa) of CCR. Refund of S.Tax which has been denied will be granted. An application for the claim of rebate of service tax under sub-section (2) shall be made within the period of one month from the date of commencement of the Finance Act, 2016

By Changes in Abatement Exemption N/N. 26/2012-ST by N/N. 8/2016-Service Tax dt. 01.03.2016. Effective from 01.04.16 (except Sl. No. 9A which is effective from 01.06.16)

Relevant Entry No.

Relevant Service

%

age

Condition

Sl.2 substituted

Transport of goods by rail ( other than service specified at Sl. No.2A below) (DOL para 15.3- including service by railway to Container Train Operator)

30

Cenvat credit of Input service can be availed, but not on Input and CG  (Changed)

Sl.2A substituted

Transport of goods in containers by rail by any person other than Indian Railways

40

Cenvat credit of Input service can be availed, but not on Input and CG  (Changed)

Sl.3 changed

Transport of passengers by rail

30

Cenvat credit of Input service can be availed but, not on Input and CG  (Changed)

Sl.7

changed

Service by GTA (except  for used household goods)

30

No cenvat credit be availed.

Sl.7A inserted

Service by GTA (for Used household goods)

40

No cenvat credit be availed.

Sl.8 inserted

Service by foreman to Chit Fund  (Was deleted from 01.04.15)

70

No cenvat credit be availed.

Sl.9

Valuation enhanced in Expln.

Renting of Motorcab

40

Cenvat credit on Input/CG Not allowed but credit of Input service can be availed as charged by the input service provider, from whom service received, pays service tax-

(i)Full, If SP paying S.Tax on 40% value,

(ii) 40% If SP paying S.Tax on full value. In other words, in both case credit at 6% value of service.

No credit eligible for Input service except above.

Value of service will be amount charged for service and includes the fair market value of all goods (including fuel) and services supplied by the recipient(s) in or in relation to the service, under the same contract or any other contract as per inserted para BA of Expln.

9A(c ) inserted w.e.f. 01.06.16

Transport of Passenger by (a) Contract carrier other than motorcab (b) Radio Taxi (c ) w.e.f. 01.06.16  Stage Carraige  (meant for A.C.)

40

No cenvat credit be availed.

Sl.10

Transport of goods in a vessel

30

Cenvat credit of Input service only can be availed but, not on Input and CG (Changed)

11 substituted (Defin. of �Package Tour� given at para-2 is omitted)

Service by Tour Operator i/r

(i) tour, only for arranging or booking accommodation

10

Cenvat credit allowed only of input service of tour operator service used in providing taxable service, and if invoice show that it covers charge for accommodation and not allowed if charges only for service charge.

(ii) other than (i) above.

30

Cenvat credit allowed only of input service of tour operator service used in providing taxable service, and if invoice show amount is inclusive of tour charges and gross amount charged for tour.

12  substituted

Construction of a complex,�. By the competent authority.

(a & b merged)

30

Abetment Subject to Value of land included in amount charged from service receiver.

Cenvat Credit for Input goods only not allowed. 

(CG/IS credit  Eligible)

For Sr. 9- Renting of Motorcab, in Explanation after para B, inserted para BA stating that

"the amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods (including fuel) and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract"

As per DOL para 9.2, Defin. of �Package Tour� given at para-2(b) is omitted. But not found in Notification 8/2016-ST or elsewhere.

Changes in  N/N. 30/2012-ST(RCM) by N/N. 18/2016-ST dt. 01.03.2016 & 16/2016-ST dt. 01.03.16 w.e.f. 01.04.16

Relevant Entry/Sr. No.

Relevant Service

Para I(A) (ib) omitted

Service by Mutual Fund agent or distributor to Mutual Fund or Asset Management Co. (omitted) [Relevant STR 2(1)(d)(i)(EEA) omitted vide NN 19/2016-ST]

(Sr.1B of Table), so such service is now taxable as forward charge.

Para I(A) (ic) substituted

Service by selling/marketing agent of lottery to lottery distributor/selling agent of the state Govt. under the Lottery (Regulations) Act, 1998 (Col.2 of Sr.1C in Table). It is clarificatory and hence no significant change.

Para I(A)(iv)(B) Substituted

a firm of advocates or an individual advocate other than senior advocate, by way of legal services, or [Relevant change in STR 2(1)(d)(i)((D)(II) has been done vide NN 19/2016-ST). Senior Advocate has to pay S.Tax as Forward Charge

I(A)(iv)(C), phrase " by way of support service" omitted

I(A)(iv)(C): phrase " by way of support service" meant for service by Govt./Local authority excluding Renting of immovable property and services of 66D(a)(i)(ii)(iii) omitted vide N/N 7/2015-ST but date was to be notified, which is now notified vide N/N 16/2016-ST as 01.04.16

Relevant Changes in Table given

Relevant Entry/

Sr. No. Col(1)

Col(2)

1B omitted

Para 1B - Service by Mutual Fund agent or distributor to Mutual Fund or Asset Management Co. Therefore such Mutual Fund agent or Distributor has to pay S.Tax in forward Charge.

1C (Col.2 substituted)

Para 1C, Col.(2), Service by selling/marketing agent of lottery to lottery distributor/selling agent of the state Govt. under the Lottery (Regulations) Act, 1998 . It is clarificatory and hence no significant change.

5 (Col.2 substituted)

Service by a firm of advocates or an individual advocate other than a senior advocate by way of legal services. Now, Senior Advocate has to pay S.Tax in Forward Charge.

Sr.6(Col.2)phrase "by way of support services" omitted

phrase " by way of support service" from Sr.6(Col.2) of Table meant for service by Govt./Local authority excluding Renting of immovable property and services of 66D(a)(i)(ii)(iii)

Changes in  Service Tax Rules�2004 N/N. 19/2016-Service Tax dt. 01.03.2016 , w.e.f. 01.04.16

Relvnt. Authority

Relevant Service & Changes

Exclusion from RCM , now liability to pay S.Tax as Forward Charge

STR 2(1)(d)(i) (EEA) omitted

Service by Mutual Fund or distributor to Mutual Fund or Asset Management Co. (omitted)

STR 2(1)(d)(i) (D)(II) amended by Substitution

"a firm of advocates or an individual advocate other than senior advocate, by way of legal services, or". Now Senior Advocate excluded from RCM and has to pay S.Tax as forward charge.

Eligibility for quarterly payment and Payment of S.Tax on Receipt bases Expanded

First proviso to STR 6(1) substituted

One Person Company (defined in Section 2(62) of the Companies Act, 2013) having turnover upto 50 lakh in previous year and HUF added in the category of person and made eligible for quarterly payment.

Third proviso to STR 6(1) substituted

One Person Company (defined in Section 2(62) of the Companies Act, 2013) added to existing category of individual & partnership firm having turnover upto 50 lakh lakh in previous year and made eligible for receipt base service tax payment

Alternate composite S.Tax Rate for Insurer carrying Life Insurance Business

STR 6(7A)(ia) inserted.

In case of single premium annuity policies other than 6(7A)(i), 1.4 per cent. of the single premium charged from the policy holder, by inserting STR 6(7A)(ia) vide N/N 19/2016-ST.

STR-7 New Returns to be filed  by the Assessee

STR 7(3A) inserted

STR7(4) amended

Notwithstanding anything contained in sub-rule (1), every assessee shall submit an annual return for the financial year to which the return relates, in such form and manner as may be specified in the notification in the Official Gazette by the CBEC, by the 30th November of the succeeding financial year.

Relevant Change made in Rule 7(4)  reg. extension of period for filing Return, by substituting word sub-rule(2) as sub-rule (2) and (3A).

[STR 7(3A) inserted w.e.f. 01.04.16 & STR7(4) amended vide N/N 19/2016-ST]

STR 7(3B) inserted

The Central Government may, subject to such conditions or limitations, specify by notification an assesse or class of assesses who may not be required to submit the annual return referred to in sub-rule(3A)

STR 7B renumbered as (i) and added sr. (ii)

An assessee who has filed the annual return referred to in sub-rule (3A) of rule 7 by the due date may submit a revised return within a period of one month from the date of submission of the said annual return

STR 7C renumbered as (i) and added sr. (ii)

For late filing of Annual Return under STR 7(3A), Assessee shall pay Rs.100/- per day, subject to a maximum of Rs. 20,000/-

Changes proposed in the Finance Act�1994, by the Finance Bill, 2016, w.e.f. Enactment of Finance Bill ,2016

FBC

Relevant Section and action

Action

FBC-146(a)

S.66D(l) omitted

S.66D(l) omitted : Service of Pre-school and upto HSC or equivalent, as part of curriculum to obtain qualification recognized by  law and approved vocational education course is omitted

FBC-145(a)

S.65B(11) omitted

Defin. of "approved vocational education course" omitted

FBC-145(b)

Expln-2(ii)(a) of 65B(44) substituted

Expln-2(ii)(a) of 65B(44) is exclusion clause of the expression " transaction in money and actionable claim" which itself is excluded from defin. of "Service" is substituted as under.

"(a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998;" This made clear that lottery distributor or selling agent as agent of the State Government is service prided to State Govt. and has to pay service tax in RCM N/N 30/2102-ST

FBC-146(b)(i)

S.66D(o)(i) omitted w.e.f. 01.06.16

S.66D(o)(i) omitted: Transportation of passengers by Stage Carriage omitted w.e.f. 01.06.16

FBC-146(b)(ii)

S.66D(p)(ii) omitted w.e.f. EFB 01.06.16

S.66D(p)(ii) omitted :Transportation of by Vessel/Aircraft from foreign to Customs Station of clearance in India omitted w.e.f. FBE 01.06.16

FBC-147

S.66E(j) inserted

"66E(j) assignment by the Government of the right to use the radio-frequency spectrum and subsequent transfers thereof." OFB

FBC-148

S.67A renumbered as (1) and inserted (2)

"S.67A(2): The time or the point in time with respect to the rate of service tax shall be such as may be prescribed." inserted w.e.f. from enactment of Finance Bill 2016, Reference in POTR. (OFB)

FBC-149(i)

S.73(1)(2)(2A)(3A)

Period for service SCN extended from 18 months to 30 month (OFB)

FBC-149(ii)

S.73(4B)(a) phrase substituted

S.73(4B)(a): For time limit to adjudicate the case for S.73(1), Phrase "whose limitation is specified as eighteen month in" substituted with phrase "falling under" (OFB)

FBC-150

S.75, Proviso renumbered and new inserted

S.75: Existing proviso reg. less 3% interest for person having Tutnover less than 60 lakh in prev.year, made as second proviso and inserting new first proviso stating that on failure to deposit amount collected as service tax in due date, Govt. may specify other rate of interest, as it deem necessary (OFB)

FBC-151

S.78A, Expln inserted (penalty to Co./director)

S.78A(penalty to Co./director): Inserted Explanation. To effect that where any service tax has not been levied/paid or short-levied/paid or erroneously refunded, and the proceedings to a notice issued under section 73(1) or under proviso to section 73(1) is concluded as per clause (i) of the first proviso to section 76 or clause (i) of the second proviso to section 78, the proceedings pending against any person under this section shall also be deemed to have been concluded.". (OFB)

So no separate penalty to Co/Director in such case.

FBC-152

S.89(1), figure substituted

S.89(1): For offence and penalty in (i) and (ii), word 50 lakh substituted with 2 Crore. (OFB)

FBC-153

S.90(2) omitted

S.90(2) omitted : (2) Offence except under 89(1)(ii) are non-cognizable and bailable- omitted, (OFB)

So now all the offence under 89(1) are cognizable and non-bailable

FBC-154(a)

S.91(1) phrase omitted

S.91(1) Phrase omitted: Phrase "clause (i) or" omitted. Now arrest can be done only for offence specified in S.89(1)(ii) (OFB)

FBC-154(b)

S.91(3) omitted

S.91(3) omitted : For Non-cognizable and bailable offence, AC having power to release an arrested person subject to S.436 of CRPC-omitted (OFB)

FBC-155

93A, word substituted

93A meant for power to make rule for Rebate of service used for Export of Goods/Service: Words "prescribed' substituted by phrase "prescribed or specified by notification in the Official Gazette" (OFB)

FBC-156

S.101 inserted

No S.Tax from 01.07.12 to 29.01.14 for service provided to an authority, board or any body set up by Act by Parliament or State legislature or established by Govt. with 90% or more participation by way of equity or control, to carry out function entrusted to Municipality under Article 243W of the Constitution by construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of canal, dam or other irrigation works. For such S.Tax collected Refund will be granted subject to unjust enrichment. An application shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President. (OFB)

On 31.01.14, defin. of "Governmental Authority" was amended (including -established by the Government.)

FBC-156

S.102 inserted till 31.03.20 (Reg. Noti. 25/2012-ST Sr. 12(a)(c)(f) omitted from 01.04.15]

No S.Tax from 01.04.15 to 29.02.16 for service provided [covered in Noti. 25/2012-ST Sr. 12(a)(c)(f) omitted from 01.04.15] to the Government, a local authority or a Governmental authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of  (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession (b) a structure meant predominantly for use as��(i) an educational establishment (ii) a clinical establishment; or (iii) an art or cultural establishment (c) a residential complex predominantly meant for self-use or for the use of their employees or other persons specified in Explanation 1 to clause (44) of section 65B of the said Act under a contract entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date. For such S.Tax collected Refund will be granted and for that an application shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President till 31.03.20 (OFB)

FBC-156

S.103 inserted

No S.Tax from 01.04.15 to 29.02.16 for service provided by way of construction, erection, commissioning or installation of original works pertaining to an airport or port, under a contract which had been entered into before 31.03.15 and on which appropriate stamp duty, where applicable, had been paid before 31.03.15, subject to the condition that Ministry of Civil Aviation or, as the case may be, the Ministry of Shipping in the Government of India certifies that the contract had been entered into before 31.03.15. For such S.Tax collected Refund will be granted and for that an application shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President (OFB)

FBC-157

N/N 41/2012-ST amended retrospectively vide NN 1/2016 effect thereof

N/N 41/2012-ST amended retrospectively: Effect of NN 1/2016-ST dt. 03.02.16 amending NN 41/2012-ST given from 01.07.12 to 02.02.16 wherein Expln of (a): A(i) , "place of removal" amended as place beyond factory or any place of production/manufacture. Also omitted (B) reg. place of removal as now defin. of Place of Removal inserted in Rule 2(qa) of CCR. Refund of S.Tax which has been denied will be granted. An application for the claim of rebate of service tax under sub-section (2) shall be made within the period of one month from the date of commencement of the Finance Act, 2016 (OFB)

FBC-158 w.e.f. 01.06.16

Krishi Kalyan Cess (New Levy w.e.f.01.06.16)

Krishi Kalyan Cess shall be levied as S.Tax @0.5% on value of taxable services and all the provision of Ch.V of the Finance Act,1994 and rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall be applicable. w.e.f.01.06.16

NN No.

Details of Misc. nature not directly relevant with Exemption, abatement, RCM etc.

10/2016-ST dt. 01.03.16

w.e.f. 01.03.16

Reg. POTR

In P.O.T.Rules'2011,(1) in opening paragraph, Phrase "sub-section (2) of section 67A and" shall be inserted after the words "powers conferred under" (w.e.f. commencement of Finance Act'2016).

(2) at the end of Rule 5, inserted : Expln 1- This rule shall apply mutatis mutandis in case of new levy on services & Expln-2 that New levy or tax shall be payable on all the cases other than specified above.

11/2016-ST dt. 01.03.16 w.e.f. 01.03.16

Exempts Information Technology Software(ITS) when recorded on a media under Ch..85 of CETA with RSP declared under Legal Metrology Act,2009 or any other law/rule, for the purpose of levy of C.Ex or CVD, determined under Section 4A of CEA and such C.Ex duty paid by such MFRR/Duplicator /Copyright Holder or Customs duty alongwith CVD paid by importer, and service provider(Should be seller) has declared in invoice that no amount in excess of RSP is recovered from Customer.

For the Customized ITS recorded on Media, either domestic or imported,  where such RSP not required, to avoid double taxation i.e. of C.Ex/CVD & S.Tax both, C.Ex or CVD exempted- equivalent to C.Ex duty determined under S.4 of CEA or  CVD leviable under S.3(1) of CTA determined under S.14 of CA respectively on portion of value of ITS recorded on the said Media which is leviable to S.Tax under S.66B read with S.66E vide N/N 11/2016-CE & 11/2016-Cus. Respectively.

12/2016-ST dt. 01.03.16

w.e.f. 01.04.16

NN 32/2012-ST: Exemption benefit given to TBI/STEP recognized by NSTEDB of Dept of S&T, now extended to approved bio-incubators recognized by the Biotechnology Industry Research Assistance Council(BIRAC)

13/2016-ST dt. 01.03.16

w.e.f. FB Recv Assent

Rate of interest U/S 75 and notified vide N.N 14/2012-ST dt. 11.07.14 amended.

(1) S.Tax collected but not paid within due date- 24%

(2) in case other than Sr.(1)- 15% , whose previous turnover is less than 60 lakh- 12%(w.e.f. Bill receives accent)

14/2016-ST dt. 01.03.16 w.e.f. FB Recv Assent

Rate of interest U/S 73B, on amount collected in excess of S.Tax as notified by NN 8/2006-ST dt.19.04.06(as amended) reduced from 18% to 15% (OFB)

15/2016-ST dt. 01.03.16

Defin. of 'support service' given at S.65B(49) omitted in terms of S.107(h) of Finance Bill,2015, but pending notifying date now notified as 01.04.2016

16/2016-ST dt. 01.03.16

Vide NN 7/2015-ST had proposed omission of phrase ' by way of support service' in N/N 30/2012-ST at I(iv)( C) but date was not notified and now notified as 01.04.16

17/2016-ST dt. 01.03.16

Vide para 2(a)(iii)(II) of  N/N 5/2015-ST had proposed omission of word 'support' in in STR 2(1)(d)(i)(E) but date was not notified and now notified as 01.04.16

Changes made to the Cenvat Credit Rules�2004 vide N/N 13/2016-CE(NT)

w.e.f. 01.03.2016

2(e) defin. of "exempted service"

Exclusion clause, at last, substituted as "but shall not include a service �(a) which is exported in terms of rule 6A of the Service Tax Rules, 1994; or (b) by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India;"

This would allow shipping lines to take credit on inputs and input services used in providing the said service.

3(4) Fifth proviso substituted - only NCCD Credit to be used for payment of NCCD

Phrase "NCCD leviable under section 136 of the F.A, 2001 " shall be substituted for existing phrase "said NCCD on goods falling under tariff items 8517 12 10 and 8517 12 90 respectively of the First Schedule of the Central Excise Tariff"

3(4) ninth proviso inserted- Cenvat credit not to be utilized for payment of Infrastructural Cess

"Provided also that CENVAT credit shall not be utilised for payment of Infrastructure Cess leviable under sub-clause (1) of clause 159 of the Finance Bill, 2016:"

Thus, Infrastructural Cess to be paid by Cash only.

4(2)(a) Expln Substituted. Reg. full credit on CG  be availed in year of receipt.

Home Consumption value limit for Jwelery-12 Cr & for Others 4 Cr in previous year, to avail full credit of CG  in the year of receipt.

( Non-applicability of Rule4(2)(a) of CCR restricting credit on CG  in year of receipt )

6(7) words inserted. Reg. Non applicability of Sub-rule 6(1),(2),(3) & (4)  for Service without S.Tax

at last, "or when a service is provided or agreed to be provided by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India".

Thus, for transportation of goods from Indian Customs Station to Foreign by vessel, though service tax not payable, credit can be taken and used for payment of service tax by Domestic Shipping line.

W.e.f. 01.04.2016

2(a)(A)(i)- words substituted. Defin. of CG  

Words "heading 6804" substituted by "heading 6804 and wagons of sub-heading 860692". Now cenvat credit on wagons is allowed as CG .

2(a)(A)Cond-1.

Exclusion from defin. of CG .

Words omitted.

Words "but does not include any equipment or appliance used in an office" omitted. Now cenvat credit on equipment or appliance used in an office is allowed as CG

2(a)(A)Cond.1A & 2(k)(iii) defin. of Input and CG

the words "or for pumping of water" shall be inserted after the words "or steam"  & "generation of electricity�� respectively. Now, Cenvat credit on inputs & CG  used for pumping of water, for captive use, is allowed even where such CG  installed outside factory.

2(k)(v) inserted in defin. of Input

2(k)Exclusion clause(C) substituted

All CG  of value upto ten thousand rupees per piece will be considered as input and full credit can be availed on receipt of goods in factory.

To effect the same, said goods covered of defin. of input by excluding from CG  in exclusion clause.

2(m) defin. of ISD

the words "or an outsourced manufacturing unit" shall be inserted after the words "producer or provider". Thus OSM is made eligible for receiving credit distributed by ISD.

4(5)(b) Substituted

By substitution added- tools falling under Chapter 82 and also added proviso that credit shall be available even when sent directly to Job-worker or any other MFRR.

Now Cenvat credit also allowed on tools falling under Chapter 82, in addition to existing  jigs, fixtures, moulds and dies, and as per proviso- even when sent directly to Job-worker or any other MFRR.

4(6) Words substituted. Permission to send goods for job-work and clear finished product by job-worker.

Words "valid for three financial years" substituted for the words "valid for a financial year".

Now, validity of permission for clearance of finished products from premises of job-worker etc. extended from 1 F.Y. to 3 F.Y.

4(7) Credit allowed for input service on receipt of doc. U/R 9.

Proviso 6 inserted

Proviso 7 inserted

Proviso  8 inserted

Where input service credit taken for service by way of assign of right to use any natural resource such as radio-frequency spectrum, mines etc. by Govt or any person, spread over such period of time, Proportionate credit for the year shall be taken in the financial year

Where person re-assign of right to use any natural resource by Govt or any person, to any other person for consideration, such balance cenvat credit not exceeding service tax liability on such consideration, shall be allowed in same financial year

CENVAT credit of annual or monthly user charges payable in respect of any service by way of assignment of right to use natural resources shall be allowed in the same financial year in which they are paid."

6(1) substituted.

Reg. Non-allowance of credit for exempted goods/service

Credit not allowed on input/input service used in exempted goods/service which is to be calculated in terms of (2) or (3).

But credit shall not be denied to Job-worker in Rule 12AA of CER, clearing goods without duty as per said rule.

Expln 1 to 4- Non-excisable goods cleared for a consideration from the factory covered in exempted goods and it�s value will be invoice value, if invoice value not available, it shall be ascertained by valuation provision in Excise. Also, value of activity which is not defined as service will be termed as exempted service and it�s value will be invoice value, if invoice value not available, it shall be ascertained valuation provision in Finance Act.

6(2) substituted.

Whole Credit not allowed if input/input service used exclusively for exempted goods/service.

MFRR who exclusively manufacture exempted goods or Provider of exclusively exempted service shall not allowed for Cenvat Credit on Input and Input service.

6(3) substituted.

When common records for input/input service used for dutiable/taxable and also exempted- goods/service

MFRR/Service provider of dutiable/taxable and also exempted- goods/service to follow any one option

(i) 6/7% of value of exempted goods/service respectively

(ii) pay an amount as per sub-rule(3A).

Proviso 1- if any excise duty paid on exempted goods, the same shall be reduced from amount payable under clause(i),

Proviso 2- If part value of taxable service exempted with condition of non-availment of cenvat credit on oinput and input service, amount for clause (1) to be paid at 7% of such partly exempted, (Doubt- this need some clarification- does it mean non-availment of both input and input service?  Further, Part value exempted i.e. abatement but now no such service for which abatement given subject to non availment of credit on input and input service both. In case, if there is such service, what if input credit not availed in full but already on abated value? )

Proviso 3- For transportation of passenger/goods by rail, amount for clause (1) to be paid at 2% of exempted value to be paid.

Expln 1- if any option is availed, it will be for all exempted goods/service and shall not be withdrawn for remaining part of financial year.

Expln 2 - Credit available only for input & input service as defined and not for other goods/service.

Expln 3- for sub-rule(3) & (3A) given definitions of exempted/non-exempted goods & exempted service

6(3A) substituted

Common credit

Calculation of payment of amount when common records for input/input service used for dutiable/taxable and also exempted- goods/service.

For monthly Provisional payment of amount: Tm-Total Credit taken for current month, Am-used exclusively for exempted goods/service during month, Bm- used exclusively for dutiable/taxable goods/service during month, Cm- Tm(Am+Bm) is common credit taken during month. Dm- Provisional payment for month = (E/F)*Cm where E-Exempted turnover of last year, F-Whole turnover of last year. In case last year turnover is NIL then Dm=Cm/2. Reminder of common credit is eligible common credit Gm=Cm-Dm. Thus person has to pay amount A plus Dm per month. (in case paid after due date, with interest 15%)

At the end of year, Ty= Total Credit taken during year, Ay-used exclusively for exempted goods/service during year, By- used exclusively for dutiable/taxable goods/service during year, Cy- Ty(Ay+By) is common credit taken during year, Dy- Annual Payment for year = (H/I)*Cy where H-Exempted turnover of during year, I-Whole turnover of during year.

At the end of year, amount calculated as [(Ay+Dy)-{total (A+B) paid for 12 months }] be adjusted-  if amount positive by paying it before 30th June (for late payment, with interest 15%)  or if minus by taking credit thereof, under intimation to JRS within 15 days of such adjustment along with relevant details as prescribed.

Doubt: This new as well as old formula do not ascertain exact portion credit of common credit attributed in exempted product. Details are given in the last of the Table.

6(3AA) inserted,

Common credit- If not opted 6(3)&(3A)

Where person fails to opt Rule 6(3) and (3A), Central Excise Officer competent to adjudicate a case may allow to pay amount for each month calculated as per sub-rule 3A( c) i.e. with interest 15% for delay period.

Doubt- What the term "Central Excise Officer competent to adjudicate a case"? Is it Adjudicating authority deciding SCN? So, is it must to issue SCN, even during Audit, Assessee ready to pay amount as per applicable rule?

6(3AB) inserted

Common credit Transitional provision for Rule 6(3A)

It is transitional provision to provide that the existing rule 6 of CCR would continue to be in operation upto 30.06.2016, for the units who are required to discharge the obligation in respect of financial year 2015-16.

6(3B) substituted Common credit for Bank/Financial institution

Earlier, Banking Co., Financial Institution or NBFC engaged in extending deposits, loans or advances had to pay 50% credit availed. But now, the same is considered as option in addition to sub-rule 6(1),(2),(3).

6(4) substituted

When CG is used exclusively for manufacturing exempted goods or providing exempted service for two years from commencement of commercial production or providing service,  except in case of value/quantity based exemption, cenvat credit on the said CG not allowed and lapsed.

If CG is received and installed after  commencement of commercial production or providing service, period of two years will be computed from such installment.

7 substituted.

Input Credit Distributor (ISD)

ISD shall distribute Input service credit to its MFRR/SP units or OSM units with condition that,

(a) credit distributed not exceed credit taken on documents referred to in Rule 9,

(b) credit attributable to particular unit shall be distributed to that unit only,

(c ) if ST credit is attributed to more unit, but not to all unit, credit shall be distributed on pro rata based on (unit turnover/gross turnover of all such units) amongst such units in operation during relevant period,

(d) similarly for ST credit attributed to all unit, credit shall be distributed on pro rata based on (unit turnover/gross turnover of all units operational during relevant period),

(e) Outsourced unit shall maintain register reg. receipt of credit from each ISD and use such credit only for concerned ISD,

(f) credit balance on 31.03.16 shall not be transferred to any OSM, Expln-  this provision apply mutatis-mutandis to OSM commencing production since 01.04.16,

(g) Provision of Rule 6 shall not apply to ISD.

Expln1- Unit includes premises of MFRR/SP/OSM  registered or not,

Expln 2- Turnover as per Rule 5, for OSM turnover for concerned ISD,

Expln3- Relevant period for year during which ISD to be distributed, a preceding financial year if there was turnover in that year. If no turnover in preceding year for some or all units, last quarter previous to month/quarter for which credit to be distributed.,

Expln4- OSM means Job-worker who manufacture goods for ISD clear on payment of duty under Rule 10A of CEV(DPEG) Rules�2000, or manufacture goods for ISD under contract, bearing a brand name of such ISD and liable to pay duty under Section 4A of CEA

7B inserted

Distribution of credit on inputs by warehouse of MFRR like dealer

For MFRR�s having one or more factories and also a common ware house, the said ware house is allowed to take credit and pass on to the units of same MFRR like wise as first/second stage dealer and all the provisions first/second stage dealer will be applied.

9(1)(a)(i) word inserted

Documents eligible for Credit

Words "a manufacturer or a service provider for clearance of", shall be substituted for the words "a manufacturer for clearance of". Invoice of Service Provider removing input/CG  which was missing in eligible documents to receive credit, now covered.

9A inserted

Annual Return

MFRR/SP shall file an annual return for each financial year, by the 30th November next year, to which CER-12 will apply.

14(2) omitted.

Reg. FIFO method for Utilization of credit

FIFO method abolished and old situation re-established i.e. in case of wrong availment of credit, it can be termed as used only when balance credit is less than wrong credit and be termed as used upto extent of difference of wrong credit and minimum balance during the period. Interest liability on such used i.e. difference only.

Doubts for Old Formula in Rule 6(3A): Doubt raised in earlier point but not in later on and if the same is applicable to later also, may be considered for later also( to avoid repetition).

(a) Purpose of Rule is to ascertain cenvat credit attributable to input/input service used in exempted goods/service. The term Attribute is not simply proportion but relates with input/input service used, and not related with value of goods MFRD or service provided. As value of resultant goods/service may be affected by various factors viz. other inputs/input service used, process, technique, importance & demand in market etc. Hence only quantum of in input/input service only is crucial and not the value of resultant goods/service. However formula mainly based on value of resultant product/service.

(b) Sub-rule (3A)(b)(i)  & 3A(c )(i) - How A  & H for input used in manuf. of exempted goods , during month or year respectively, to be calculated? As being common registered, it can�t be ascertained. Should it be based on Qty or value of input? On the basis of input issued for manufacture or based on goods MFRD from subject input and cleared the same or based on goods MFRD and cleared the same? What is goods MFRD before period without using input issued and cleared during period or if MFRD using input issued but not cleared and lying in stock?

(c ) Sub-rule (3A)(b)(ii)  & 3A(c )(ii) - A & H are already doubtful as above. Also for C & K , the term "value of goods MFRD and removed" is doubtful. Does term "MFRD and removed" to be read as a whole i.e.  goods removed which is MFRD   from input used during period? What if goods MFRD but not removed, lying in stock and goods MFRD earlier by not using subject input?

What is meaning of removal, it is indicate clearance for sell or otherwise?

Also the term" total value of output service provided plus total value of exempted service provided" is doubtful. What if such service provided by not using subject input? What if input used in prior period and initiated providing service but Point of taxation falls in later year in which valuation is accounted for and S.Tax to be paid?

(iii) Sub-rule (3A)(b)(iii)  & 3A(c )(iii) For goods, word "clearance" used in purpose of formula but word "removed" used in calculation, whether both are same and used properly or otherwise?

Words "removed", does it mean removal of goods MFRD during period only or also covers goods MFRD in earlier period? "Removed" indicate sell or otherwise?

Also for E & M what if goods MFRD but not removed and lying in stock?

Overall doubt:

It is possible that (CI) used only very little in resultant dutiable/ taxable goods/service of cheap value and most used in exempted goods service of higher value, thus merely based on value of goods/service can mislead from actual eligibility/non-eligibility.  For example Common input (CI) being used for dutiable product (DP) and exempted product (EP), 100 unit of (CI) purchased where per unit value of (CI) is Rs. 100  & Input credit per unit is Rs. 12 (so total credit 1200). If 50 unit each of (CI) used for (DP) & (EP), it is understood that credit of Rs. 600 is eligible and Rs. 600 is ineligible. But what if (DP) value of Rs. 6000 &  (EP)value of Rs. 10,00,000/-  or vice versa?  As the base is value of (DP)  & (EP), calculation will be far away from the exact figures. Same may be for any service

Doubts for New Formula in Rule 6(3A):

(a) As per (a) for Old Rule (3A).

(b) As per formula, value of exempted services provided, exempted goods removed during the period is crucial. However, what if goods MFRD or service provided during the period not from CI used during period, but of from CI of earlier period, or other CI on which credit not taken? What if goods MFRD but not cleared or service provided but Point of Taxation not falls during the period?

(c) Common Input(CI), 100 unit@Rs.100/- per unit purchased for Rs. 10000/-. Cenvat credit involved Rs.12 per unit(Rs.1200 for 100 Unit). If equal quantity of CI used in Exempted as well as dutiable finished goods (FG), credit eligible and ineligible must be equal but on calculation by given formula, if the value FG is different, eligibility is changed. Plz see below Table.

(d) As referred in  (a) for Old Rule (3A), value of FG may be affected by various factors viz. other inputs/input service used, process, technique, importance & demand in market etc. and not merely on subject CI.  So, many times, though little quantity if CI used, FG may having high value or may be vice versa.  Plz check below table.