Taxation Laws (Second Amendment) Act,2016

Ministry of Finance16-December, 2016 18:17 IST

Taxation Laws (Second Amendment) Act, 2016 came into force yesterday i.e. 15th December, 2016 and rules notified today and placed in public domain; The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 introduced under the said Act to commence from tomorrow i.e.17th December, 2016 and to remain open for declarations up to 31st March, 2017.

 

The Taxation Laws (Second Amendment) Act, 2016 has come into force on 15th December, 2016.  The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (the Scheme) introduced vide the said Act shall commence on 17^th December, 2016 and shall remain open for declarations up to 31^st March, 2017. The rules in this regard have been notified vide Notification No.116 dated 16^th December, 2016 and have been placed in public domain. A separate notification has been issued for Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 by Department of Economic Affairs.  

           

The salient features of the Scheme are as under:

 

     (i)            Declaration under the Scheme can be made by any person in respect of undisclosed income in the form of cash or deposits in an account with bank or post office or specified entity.

   (ii)            Tax @30% of the undisclosed income, surcharge @33% of tax and penalty @10% of such income is payable besides mandatory deposit of 25% of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The deposits are interest free and have a lock-in period of four years.

 (iii)            The income declared under the Scheme shall not be included in the total income of the declarant under the Income-tax Act for any assessment year.

 (iv)            The declarations made under the Scheme shall not be admissible as evidence under any Act (eg. Central Excise Act, Wealth-tax Act, Companies Act etc.). However, no immunity will be available under Criminal Acts mentioned in section 199-O of the Scheme.

 

            Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totaling to 77.25% of such income, if declared in the return of income. In case the same is not shown in the return of income a further penalty @10% of tax shall also be levied followed by prosecution. It may be noted that the provisions for levy of penalty for misreporting of income @200% of tax payable under section 270A of the Income-tax Act have not been amended and shall continue to apply with respect to cases falling under the said section.

 

The Taxation Laws (Second Amendment) Act, 2016 has also amended the penalty provisions in respect of search and seizure cases. The existing slab for penalty of 10%, 20% & 60% of income levied under section 271AAB has been rationalised to 30% of income, if the income is admitted and taxes are paid. Otherwise a penalty @60% of income shall be levied.

           

The Scheme, Rules and Notifications are available on the official website of the Department www.incometaxindia.gov.in .  Any queries/clarifications relating to the Scheme may be emailed at ts.mapwal@nic.in .

 

 

*****

 

DSM/KA

 

(Release ID :155589)

ICAI issues mandatory KYC Norms

ICAI - ICAI issues mandatory KYC Norms applicable w.e.f 1.1.2017 - (10-12-2016) - http://resource.cdn.icai.org/44165icai-kyc-esb.pdf

The CBDT has issued Circular No. 40/2016

The CBDT has issued Circular No. 40/2016 dated 9th December 2016 directing Assessing Officers not to reopen assessments of earlier years u/s 147 of the Act merely because there is an increase in turnover of the present year because of the adoption by the assessee of digital means of payment. The CBDT has pointed out that such move would cause “undue harassment” to the taxpayers

Service tax Exemption Notification

No service tax on credit, debit card transactions up to 2,000

The Government will waive service tax on debit and credit card transactions of up to Rs. 2,000 to promote digital transactions amid cash crunch following the withdrawal of old Rs. 500 and 1,000 banknotes.

The Government has decided to "exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs. 2,000 in a single transaction through credit, debit card or other payment card service", sources said.

A notification to this effect will be tabled by Finance Minister Arun Jaitley in Parliament.

Following demonetisation of old high value notes, there has been a cash crunch in the country as people have been making a beeline for banks and ATMs to withdraw new currency.

The Government has been taking steps to promote cashless or digital transactions to take India towards a less-cash economy.

Recently, the Government asked banks to install additional 10 lakh PoS terminals by March 31 in different parts of the country.

The service tax notification of June 2012 will be amended to include exemption on credit and debit cards, the sources added.

As of now, services provided by organisations such as United Nations and other international bodies are exempt from tax.

A range of other services provided by arbitral tribunals, testing of newly developed drugs, educational institutions, trade unions, general insurance business and sports bodies, among others, too are exempt from the levy.

Circular on ;OIDAR

Ministry of Finance11-November, 2016 21:01 IST

To provide a level playing field to Indian service providers, the exemption given to service providers located in foreign territory but providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, is being withdrawn with effect from 1st December, 2016

 With a view to provide a level playing field to Indian service providers providing taxable online information and database access or retrieval [OIDAR] services including electronic services in India, the exemption to such services provided in India by service providers located in foreign territory is being withdrawn with effect from 1^st December, 2016. Thus cross border business to consumer [B2C] OIDAR services provided by a foreign service provider to a person in India will become taxable from 1^st December, 2016 onwards.

The salient features of this levy are as under:

·         A simplified online mechanism of taking registration has been prescribed and registration will be deemed to be granted online on submission of registration application.

·         A simplified mechanism of online payment of taxes and online filing of returns is being prescribed.

            A detailed Circular No. 202/12/2016-Service Tax dated 09.11.2016 has been issued by CBEC, explaining the likely issues arising from the withdrawl of this exemption.

Useful links:

1)      http://www.cbec.gov.in/ServiceTax-Notifications

2)      http://www.cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2016/st-circ-202-2016

**********

Service Tax on AC Restaurants is unconstitutional

November 24, 2016[2016] 75 taxmann.com 272 (Kerala)

Service Tax : Levy of service tax on Air Conditioned Restaurants is unconstitutional since when food is supplied as part of any service, such transfer would be deemed as sale. Thus, there is no component of service which could be charged to service tax when food is supplied by Air Conditioned Restaurant

• The Kerala High Court held that levy of service tax on air conditioned restaurants is unconstitutional. It relied on its own judgment in case of Kerala Classified Hotels & Resorts Association v. Union of India [2013] 35 taxmann.com 568 (Kerala) where it was held that the Article 366(29A)(f) of the Constitution empowers the State Governments to impose sales tax on supply of goods, whether it is by way of or as a part of any service and when food is supplied as part of any service, such transfer would be deemed to be a sale. Thus, there is no component of service which could be charged to service tax when food is supplied by Air Conditioned Restaurant.

Editor's Comment:

• The Government [vide LETTER C.NO.ST-20/STD/MISC./SEVOTTAM/62/12/4693, DATED 13-8-2015] has clarified that service-tax could not be levied either on takeaway orders or home deliveries by the Air Conditioned Restaurants.

• In case of takeaway orders or home deliveries, the dominant nature of the transaction is that of sale and not service, as the food is not served at the Restaurant. Further, no other element of service is offered at the Restaurants, be it ambience, live entertainment, Air Conditioning, or personalized hospitality. The Service tax can be levied if there is an element of 'Service' involved which would typically cover the case where food is served in Restaurant.

• However, the Kerala High Court held that the goods sold at Restaurants could only be considered as sale, irrespective of the fact whether any service is involved in it or not. The aforesaid ruling of the High Court is pending before the Apex Court. 

FAQ on PMGKY

FAQs on Pradhan Mantri Garib Kalyan Yojana   The Government has announced demonetization of existing currency of Rs. 500/1000 with effect from the 9th November, 2016. However, concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 ('Act') could possibly be used for concealing black money. So, the Government has introduced Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha to amend the provisions of Income-Tax Act. The Bill was also cleared in the Lok Sabha.   The Government has announced Pradhan Mantri Garib Kalyan Yojana 2016 (PMGKY) in the Taxation Laws (Second Amendment) Bill, 2016. As per this PMGKY black money deposited in banks or held in cash can be offered for taxation at 49.9% (i.e., 30% tax, 9.9% surcharge and 10% penalty).   

Strict Action against Tax Evaders using other persons’ Bank Accounts to convert their Black Money

Press Information Bureau 
Government of India
Ministry of Finance
18-November-2016 16:23 IST

Strict Action against Tax Evaders using other persons’ Bank Accounts to convert their Black Money into New Denomination Notes; 
Person(s) who allows His Or Her Bank Account to be misused for this purpose can be Prosecuted for Abetment under Income Tax Act; Government appeals to people NOT to come in the Lure of Black Money Converters and be a Partner in this Crime of Converting Black Money into White through this method and help join the Government in eradicating it. 

It was announced by the Government earlier that small deposits made in the banks by artisans, workers, housewives, etc. would not be questioned by the Income Tax Department in view of the fact that present exemption limit for income tax is Rs. 2.5 lakh. There are some reports received that some people are using other persons’ bank accounts to convert their black money into new denomination notes for which reward is also being given to the account holders who agree to allow their accounts to be used. This activity is reported in case of Jandhan Accountsalso.

It is hereby clarified that such tax evasion activities can be made subject to income tax and penalty if it is established that the amount deposited in the account was not of the account holder but of somebody else. Also the person who allows his or her account to be misused for this purpose can be prosecuted for abetment under Income Tax Act.

However, the genuine persons having their own household savings in cash and depositing the same in the bank would not be questioned.

The people are requested NOT to come in the lure of black money converters and be a partner in this crime of converting black money into white through this method. Unless all citizens of the country help the Government in curbing black money, this mission of black money will not succeed. Also the people who are against the black money should give information of such illegal activities going on to the Income Tax department so that immediate action can be taken and such illegal transfer of cash can be stopped and seized.

Black money is a crime against humanity. We urge every conscientious citizen to help join the Government in eradicating it.

*****

DSM/KA

Banks to remain open for public on Saturday, November 12 and Sunday, November 13, 2016

@RBI
*Banks to remain open for public on Saturday, November 12 and Sunday, November 13, 2016* (So Banks working for next 4 days)
http://rbi.org.in/Scripts/NotificationUser.aspx?ID=10686 …

ICAI members PAN update Only required for Practicing Members

This refers to the earlier announcements of ICAI regarding the updation of PAN details by the members in the Institute’s records to avoid blocking of e-filing account by the Income Tax Department. Inspite of the earlier said announcements and reminder emails sent from time to time, it has been observed that many members have still not updated their PAN details in the Institute’s record.

It is pertinent to mention that in the recent past the Income Tax authorities have blocked the e- filing accounts of the members who either have not submitted their PAN details to the Institute or of those, in whose cases discrepancies have been found between records as available with the Institute and the database of the Income Tax Department on account of the mismatch in ‘Name’/ ‘PAN No.’ / ‘Date of Birth’. These blocked accounts have been reactivated after a lot of efforts by the Office as during this period members had to face lot of hardships.

To avoid such a situation in future, we urgently appeal to all practicing members who have not yet submitted their PAN details to submit the same to their respective Regional Offices at the earliest .Those members in whose cases mismatches (in Name, Date of Birth or PAN) have been found between ICAI records and those as per Income Tax Department are also advised to settle the discrepancies at the earliest. Individual communications for all such cases have already been sent through e-mail to all the members as per Institute’s records.

The members who have not yet provided their PAN details for ICAI records or members in whose records the discrepancy exists in the ICAI and Income Tax Authorities records, can also submit the same through the following link: http://appforms.icai.org/panupdate/index.html

Members who have already furnished details need not do again.

(V. Sagar)
Secretary, ICAI

For more details please visit

http://www.icai.org/new_post.html?post_id=13013&c_id=219

ASB ICAI issues FAQ on Dividend Distribution Tax

ASB ICAI issues FAQ on Dividend Distribution Tax. Link
http://resource.cdn.icai.org/43791asb33473a.pdf

GUIDANCE NOTE UNDER SECTION 92E

ICAI has issued GUIDANCE NOTE UNDER SECTION 92E OF THE INCOME-TAX ACT, 1961 (Transfer Pricing) on 2-Nov-16.

Pls click below link to access or download the document:

http://resource.cdn.icai.org/43783citax33453.pdf

CBDT Directive On Scope Of Disallowance U/s 40(a)(i) For Failure To Deduct TDS U/s 195 On Payment To Non-Residents

CBDT Directive On Scope Of Disallowance U/s 40(a)(i) For Failure To Deduct TDS U/s 195 On Payment To Non-Residents

The CBDT has issued a letter dated 26.10.2016 in which it has drawn attention to its Circular No 3/2015 dated 12.2.2015. In the said Circular it was clarified that for the purpose of making disallowance of “other sums chargeable” under Section 40(a)(i) of the Income-tax Act, 1961, in the case of non-residents, the appropriate portion of the sum chargeable to tax under the Act, i.e. income component therein shall form the basis of such disallowance. The CBDT has noted that this Circular is not being kept in view by administrative Commissioners & Commissioners (Appeal) while filing further appeals and while deciding cases. Further, the Circular is not kept in view by departmental representatives in ongoing litigation cases, who still take a position that the disallowance should be based on the gross amount of offshore payments such as purchases. The CBDT has directed the departmental officers including representatives of the department in litigation before ITAT/Courts etc. to be sensitized to the content of this circular

Extension of last date for filing AOC-4, AOC-4 (XBRL), AOC-4 (CFS) and MGT-7

Extension of last date for filing AOC-4, AOC-4 (XBRL), AOC-4 (CFS) and MGT-7 eforms under the Companies Act, 2013 till 29th November, 2016.

http://mca.gov.in/Ministry/pdf/Generalcircular12_28102016.pdf

CBEC ON EPCG

CBEC Instructions for Rationalization of procedures reg. handling exporters obligations under EPCG authorizations

The CBEC has instructed to further rationalize the procedures reg. handling exporters obligations under EPCG authorizations to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Also CBEC has reiterated to ensure credibility and transparency in the Bond cancellation process by making the process speedier and that the exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.

CBEC Instructions dt. 14 Oct. 2016 F.No.605/71/2015-DBK 

1. The undersigned is directed to say that as a part of further rationalizing procedures and avoiding duplication of work based on feedback on outcomes of applying extant procedures, taking into account the conditions prescribed in the Foreign Trade Policy and Customs notifications, the Board reviewed certain aspects of the directions given to field formations in Circular No. 5/2010-Cus, Instruction No. 609/119/2010-DBK dated 18.01.2011 and Circular No. 14/2015-Cus insofar as they relate to EPCG scheme. The details are given in succeeding paragraphs.

2. At present the correctness of the installation certificates issued by Chartered Engineers are to be verified on random basis in at least 5% cases through the Central Excise Division. The Board has decided that this verification be restricted to 5% cases.

3A. In the Circular of 2010 it was prescribed that first block EO (export obligation) should be verified in detail and if it has been found satisfactory then EODC issued at end of second block should be accepted without further verification. The Instruction of 2011 confirmed that this is to be implemented; however, for past cases where exporter had not come forward for first block verification but had submitted the EODC, the EODC may be accepted subject to random verification of at least 5% of EODCs issued in such past cases. It further directed that the Customs check, in detail, at least 5% EODCs. In this connection, it was noted that not meeting the block-wise EO attracts composition fees or payment of duty with interest and this find mention in HBP and is also referred in Customs notifications.

3B. On consultation, the DGFT has informed that the provisions of para 5.14 of HBP 2015-20 that provides

"5.14(c)HBP: Where EO of the first block is not fulfilled in terms of the above proportions, except in cases where the EO prescribed for first block is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block",

and the similar provisions in previous FTP/HBP 2009-14 and 2004-09 are strictly followed by Regional Authorities before issuing EODC/redemption/closure letters; and also that cases of condoning / delay in fulfillment of block-wise EO are considered by Regional Authorities only when exporter has obtained relaxation in terms of DGFT's powers under the FTP. The DGFT has also advised its Regional Authorities to ensure that these provisions are strictly followed in respect of all unredeemed EPCG authorization issued during the FTP 2004-09, 2009-14 and 2015-20.

3C. In the light of this, Board has decided that Customs authorities need not replicate the verification of export obligation of the first block that is being conducted by Regional Authorities and that the EODCs received under EPCG Scheme in terms of FTP/HBP 2004-09, 2009-14 and 2015-20 be normally accepted without further verification, except in 5% cases where they be verified in detail before acceptance.

4. The foregoing aspects remain subject to detailed verification of EODC when there is such a need suggested by specific intelligence. Further, if Regional Authorities endorse verification of shipping bills/other documents on an EODC, such verification shall be carried out. Moreover, it remains mandatory to verify genuineness of non-EDI shipping bills/bills of export on which an EODC may be based.

5. The guidelines issued in the past on the subject shall be modified to the above extent. It should be noted that monitoring of progress of block-wise EO fulfillment is to continue and as clarified in Circular No. 14/2015-Cus the field formations can view the EPCG authorization-wise all India export details in EDI.

6. The Commissioners are also directed to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Credibility and transparency may be brought into the Bond cancellation process which may be made speedier. The exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.

To view or download pdf copy of CBEC Instructions in this regard, please refer the link below:

CBEC Instructions dt. 14 Oct. 2016 Procedures reg. Exporters obligations under EPCG au

          

Form 68

Form No. 68 notified to get immunity from penalty for underreporting and misreporting of income

October 7, 2016

INCOME-TAX (TWENTY FIFTH AMENDMENT) RULES, 2016 - INSERTION OF RULE 129 AND FORM NO.68

NOTIFICATION NO. SO 3150(E) [NO.90/2016 (F.NO.370142/26/2016-TPL)], DATED 5-10-2016

In exercise of the powers conferred by section 295 read with sub-section (2) of section 270AA of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (25th Amendment) Rules, 2016.

(2) They shall come into force on the 1st day of April, 2017.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), after rule 128, following rule shall be inserted, namely:—

"129. Form of application under section 270AA.— An application to the Assessing Officer to grant immunity from imposition of penalty under section 270A and from initiation of proceedings under section 276C or section 276CC shall be made in Form No.68.".

3. In the said rules, in Appendix-II, after Form No.67, the following form shall be inserted, namely:—

"FORM No. 68 Form of application under section 270AA(2) of the Income-tax Act, 1961

Withdrawal of two ICAI Guidance Notes on Accounting (07-10-2016)

Withdrawal of two ICAI Guidance Notes on Accounting (07-10-2016)

The same are no longer relevant in the present day context:

GN(A) 9 (Issued 1994) – Guidance Note on Availability of Revaluation Reserve for Issue of Bonus Shares

GN(A) 20 (Issued 2005) - Guidance Notes on Accounting for Fringe Benefits Tax

ST Arrest Guidelines

Revised Guidelines of CBEC for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944

The CBEC has issued revised guidelines for arrest in relation to Service Tax offences punishable under the Finance Act, 1994 and Central Excise Act, 1944, while emphasizing careful examination of the legal and factual aspects  before proceeding with arrest, as under:

CBEC Circular No. 201/11/2016-Service Tax dt. 30 Sept. 2016 F.No. 137/47/2013-Service Tax

1. I am directed to draw your attention to the fact that the arrest provisions in Service Tax were introduced with effect from 10.05.2013 vide sub-sections (J) and (K) of section 103 of the Finance Act, 2013 which introduced sections 90 and 91 in the Finance Act, 1994 and also amended section 89 of the Finance Act 1994. Vide sections 155, 156 and 157 of the Finance Act 2016, with effect from 14.05.2016, sections 89, 90 and 91 of the Finance Act, 1994 have been amended. As a consequence of these amendments, the power of arrest in Service Tax is available only if a person collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond the period of six months from the date on which such payment becomes due and the amount exceeds rupees two crore.

2.0 Vide paragraph 2 of Board Circular F.No. 137/47/2013-Service Tax dated 17.09.2013 certain conditions precedent to carrying out arrests were indicated. These were:

2.1 Careful exercise of this power since arrest impinges on the personal liberty of an individual.

2.2 The reason to believe that a person has committed the specified offence which is rendering the person liable for arrest must be based on credible material which will stand judicial scrutiny.

2.3 The relevant factors before deciding to arrest a person must be, apart from fulfillment of the legal requirements, the need to ensure proper investigation and prevention of the possibility of tampering with evidence or intimidating or influencing witnesses.

3.0 In the context of the legislative amendments vide the Finance Act 2016 and the single offence for which the power of arrest exists, it is necessary to again emphasize and indicate the factors which must invariably be kept in mind before arresting a person:

4.0 Conditions precedent- Legal 

4.1. At the outset there must be clear and unambiguous notings in the file, bringing out how all the ingredients of the offence have been established. The notings must specifically refer to evidence relating to-

4.1.1 Amount collected as service tax: Collection of an amount as service tax should be clear and self-evident from the invoices, bills, contracts, etc. An amount should be clearly indicated as service tax. The copies of sample invoices /bills, contracts, etc. which cover the period being investigated should be in the file.

4.1.2 Amount should exceed Rs 2 crore.

4.1.3 Failure to pay the amount so collected to the credit of the Central Government:

The 8T3 return filed by the assessee for the relevant period, showing the self-assessed value of taxable services and service tax paid should be available in file. Where no such return has been filed, an observation to this effect should be made since this will make the departmental case stronger.

4.1.4 Such a failure should be beyond the period of six months from the date on which such payment becomes due: Fulfillment of the condition relating to the time period must be verified carefully, and a month wise abstract of the invoice numbers, due date of payment of service tax and date when the six month period was completed must be kept ready.

4.2 The suggestions in the preceding paragraph are intended at bringing uniformity in the approach to such matters and ensuring that evidence relating to the alleged offence is readily available for perusal by a judicial body, when necessitated.

5.0 Conditions precedent- factual 

5.1 Even if all the legal conditions precedent mentioned in paragraph 4.1 to 4.2 are fulfilled, that will not, ipso facto, mean that an arrest must be made. Once the legal ingredients of the offence are made out, the Commissioner must then determine if the answer to the following questions is in the affirmative

5.1.1 Is the alleged offender likely to hamper the course of further investigation by his unrestricted movement?

5.1.2 Is the alleged offender likely to tamper with evidence or intimidate or influence witnesses?

5.2 If the answer to both the questions is yes, then the decision to arrest can be made.

5.3 If the alleged offender is assisting in the investigation and has deposited at least half of the evaded tax, then the need to arrest may not arise.

6.0 The Guidelines issued vide Board Circular F.No. 137/47/2013-Service Tax dated 17.09.2013 may be referred to for the procedure for arrest, post-arrest formalities and the reporting system.

7.1. It has been decided to revise the monetary limits for arrests and prosecution in Central Excise to maintain uniformity of practice in Central Excise and Service Tax. It is directed that henceforth arrest and prosecution of a person in relation to offences specified under clause (a) to (d) of sub-section (1) of section 9 of the Central Excise Act, 1944 may be considered only in cases where evasion of Central Excise duty or misuse of CENVAT Credit is equal to or more than rupees two crore. Central Excise Circular No. 974/08/2013-CX dated 17.09.2013 and 1009/ 16/2015-CX dated 23.10.2015 stand amended accordingly. Circular No. 1010/ 17/2015-CX dated 23.10.2015 is rescinded in View of the revision of monetary limits prescribed by this circular. It is again reiterated that arrest and prosecution should not be resorted to in cases of technical nature i.e. where the additional demand of duty/tax is based totally on a difference of opinion regarding interpretation of law.

7.2 Transitional provisions as prescribed in para 11 of the Circular No. 1009/ 16/2015-CX dated 23.10.2015 shall apply mutatis-mutandis i.e. all cases where sanction for prosecution is examined and accorded after the issue of this circular, shall be dealt in accordance with the provisions of this circular, irrespective of the date of the offence. Cases where prosecution was sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the enhanced monetary limit and sanction withdrawn for cases where evasion of Central Excise duty or misuse of CENVAT Credit is below the revised monetary limit of rupees two crore.

8.0 It is emphasized once again that since an arrest impinges on the personal liberty of an individual, this power should be exercised with great responsibility and caution and only after a careful examination of the legal and factual aspects indicated in the preceding paragraphs.

CBEC Circular No. 201/11/2016-Service Tax dt. 30 Sept. 2016 | View

CBDT notifies ICDS

CBDT notifies ICDS to be applicable w.e.f. AY 2017-18 for all assesses other than individual & HUF (who are not under audit u/s 44AB) following mercantile system of accounting.

It also amends Form 3CD w.e.f. 1st April 2017 to incorporate compliance of ICDS.

SC on Service Tax Audit

Apex Court stays Delhi HC's judgment of 'Mega Cabs' on service tax audit

September 30, 2016[2016] 73 taxmann.com 402 (SC)

Service Tax : Judgment of Delhi High Court quashing rule 5A(2) of Service Tax Rules, 1994 and holding service tax audits as invalid, has been stayed by Supreme Court; hence, for time being, service tax audits may continue

■■■

[2016] 73 taxmann.com 402 (SC)

SUPREME COURT OF INDIA

Union of India

v.

Mega Cabs (P.) Ltd.

Madan B. Lokur AND DR. D. Y. CHANDRACHUD, JJ.

Petition(s) for Special Leave to
Appeal (C) no(S). 26675 of 2016

SEPTEMBER  26, 2016 

Rule 5A , read with rule 5 of the Service Tax Rules, 1994 and sections 72, 72A, 73, 82 and 94(2)(k) of the Finance Act, 1994 - Audit - Service Tax - Submission of Records - Rule 5A(2) was amended w.e.f. 5-12-2014 authorising officers of Service Tax Department or audit party to seek production of documents on demand and Circulars 181/7/2014-ST and Circular 995/2/2015-CX were issued power of audit and audit norms - Assessee challenged said rule and Circulars on ground that there is no power of audit with service tax authorities and only audit under Section 72A can be conducted by Chartered/Cost Accountants - High Court held that : (A) there is no general power with service tax authorities to conduct audit; (B) word 'verify' in section 94(2)(k) empowers verification of records and does not empower 'audit' of records, as audit is an specialized function and cannot be entrusted to any and every officer of department; (C) moreover, 'records' would mean 'records' required to be kept under rule 5(2), therefore, rule 5A(2) requiring even furnishing of 'audit reports' exceeds mandate of 'records'; and (D) hence, Rule 5A(2) and two Circulars were ultra vires and quashed - On Revenue's Special Leave Petition before Supreme Court - HELD : Notice be issued in petition - In meanwhile, there shall be a stay of operation of judgment of High Court. [Para 3] [Partly in favour of Revenue]

Circulars and Notifications : Notification No. 23/2014-ST, dated 5-12-2014, Circular No. 181/7/2014-ST dated 10-12-2014, Circular No. 995/2/2015-CX dated 27th February 2015

CASE REVIEW

 

Mega Cabs (P.) Ltd. v. Union of India [2016] 70 taxmann.com 51 (Delhi) - stayed.

Mukul Rohatgi, AG, Rupesh Kumar, Subash C. Acharya, Ms. Diksha Rai, Nikhil Rohatgi, Mohit Khubchandani, Advs. and B. Krishna Prasad, AOR for the Petitioner. J.K. Mittal, Rajveer Singh, Advs. and Praveen Swarup, AOR for the Respondent.

ORDER

 

Issue notice.

Mr. J.K. Mittal, learned counsel accepts notice on behalf of the sole respondent.

In the meanwhile, there shall be a stay of the operation of the impugned judgment and order dated 3.6.2016 passed by the High Court in Writ Petition(C) No.5192 of 2015.

Tag with Special Leave Petition (Civil) No.34872 of 2014