GOVERNMENT
OF INDIA
MINISTRY
OF FINANCE
DEPARTMENT
OF REVENUE
CENTRAL
BOARD OF EXCISE & CUSTOMS
(TAX
RESEARCH UNIT)
*****
V.K. Garg
Joint
Secretary (TRU-II)
Tel:
23093027; Fax: 23093037
Email: garg.vk@nic.in
New
Delhi dated the 29th June, 2012.
Dear
Madam/Sir,
You will be already
aware that the Negative List, together with many other accompanying changes,
comes into operation from July 1, 2012.
2. The
necessary notifications from 25/2012-ST to 40/2012-ST and Notification No.
28/2012-CX (NT) were issued on June 20, 2012 and have comprehensive changes
relating to exemptions, Place of Provision Rules, 2012, changes to Service Tax
Rules, 1994, Cenvat Credit Rules, 2004 and details of all the notifications
that are being rescinded.
3. Notification
No 52/2011-ST dated 30.12.2011 relating to refunds on specified services has
also been revised in accordance with the new regime and the new notification
No.41/2012-ST dated 29.06.2012 has been issued under the revised section
93A. Services of commission agents to
exporters on the existing lines have also been validated by the issue of
Notification No.42/2012-ST dated 29.06.2012.
4. There
has been some doubt regarding the applicability of provisions of the Finance
Act, 2004 relating to education cess and the Finance Act, 2007 relating to
secondary and higher education cess as the concerned acts make reference to
section 66 of the Finance Act, 1994, which shall cease to have effect from July
1, 2012. In this connection, as also in
general, you may kindly refer to the sub-section (1) of section 8 of the
General Clauses Act, 1897 which reads as under:
“Where this Act, or any Central Act or
Regulation made after reference to the commencement of this Act, repeals and
re-enacts, with or without modification, any provision of a former enactment,
then references in any other enactment or in any instrument to the provision so
repealed shall, unless a different intention appears, be construed as
references to the provisions so re-enacted.”
Thus any reference to section 66 of the
Finance Act, 1994 shall be construed as reference to the newly re-enacted
provision i.e. section 66B of the same Act.
Despite the stated position of law, the matter has been settled by the
issue of Removal of Difficulties Order No. 2/2012 dated 29.06.2012.
5. It
may be noted that Notification No. 11/2005-ST dated 19.04.2005 has not been
rescinded to enable sanction of pending rebates. It shall, however, automatically cease to
have effect for exports on or after July 1, 2012 as the Export of Services
Rules, 2005 will stand superseded from the said date.
6. You
may kindly go through all the changes and let me know at the earliest if
anything is required in any manner for the smooth implementation of the new
provisions.
7. The
successful implementation of this reform requires an involved approach at all
levels, in particular in the initial months. It is necessary that these changes
are well understood by the tax payers as well as our staff. To this end CBEC
has released an elaborate Educational Guide (with further improvisation over
the draft Guidance Papers that were released at the time of budget) and
adequate copies of the same should be available to you already or shortly. You
may also like to download the same from CBEC website (from the dropdown menu
under the title service tax).
8. It
is clarified that any Board circular that is contrary to the revised law will
stand automatically superseded. In case
you have any doubt about any specific circular the same may be referred to the
Board.
9. CBEC
has already held five seminars during this month at Delhi, Chennai, Kolkata, Ahmedabad
and Hyderabad for both the trade and some of the officers in and around these
places. Seminar at Mumbai is scheduled
on July 13, 2012.
10. It
will be desirable if similar events are held locally, supplemented also by
training of our officers who have to implement the new provisions. If you need,
some of the TRU officers could also assist subject a little bit to the
exigencies of work here. Those who
desire may source a copy of the power point presentation from TRU (by sending a
request at garg.vk@nic.in).
11. Despite
a very elaborate consultative process starting from August, 2011, when the
first concept paper was released, it is likely that the actual implementation
of negative list will throw some issues that appear a little complex. You may like to discuss them appropriately
within your own set up and in appropriate cases refer
them to the Board for suitable examination. Any precipitated action will be
ill-advised at the early stages of implementation unless the revenue is at
immediate stakes.
12. A
list of services that are likely to come into the tax net in your charge may be
drawn and communicated to me. This would help us to share the same with other
formations as also provide information from other formations to you so that a
coordinated approach is followed until the system gets streamlined.
13. In
general any case resulting in taxation of an activity that is not liable to tax
under the present regime should at least receive the attention of the
Commissioner in charge before it is taken up for any further action.
14. Of
equal importance is to devote attention to activities that are presently liable
to tax and may cease to be taxed in future.
Some of these have been clearly exempted. There could be others where, either due to a
particular interpretation or due to applicability of Place of Provision Rules,
2012 or in some other manner, an interpretation may be taken that the same are
no more liable to tax. Such cases may be
immediately identified and in case of doubt referred to the Board.
15. The
allotment of accounting heads is being communicated by a separate
communication.
16. A spirit of Helpfulness, Understanding
and Guidance (HUG for short) should guide us in balancing our task keeping in
perspective the enormity of changes that are being implemented shortly.
With
regards,
Yours
sincerely,
(V.K.
Garg)
To
All Chief Commissioners/Directors
General
All Commissioners of Central Excise
All Commissioners of Customs and
Central Excise
All Commissioners of Service Tax
----X----