BUDGET-2016
INDIRECT TAXES
V. RAGHURAMAN, Advocate
CUSTOMS
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Section 2(43)
Definition of
Warehouse
[Clause 113]
Proposed
2(45)
[Clause 113]
amendment made so as to add a
new class of warehouses i.e., a special
warehouse licensed under Section 58A for
enabling storage of specific goods under physical
control of the department, as control over the
other types of warehouses would be only record
based
Definition of ‘Warehousing station’ to be
omitted
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Chapter
heading to
Chapter III
[Clause 114]
Section 9
[Clause 115]
Proposal
to omit words ‘warehousing station’
in the Chapter Heading
Proposal
to omit the power to declare places
as warehousing station
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
25
Notifications issued (granting exemption or
Deals with power withdrawal) shall come into effect on the date of
to grant
issue.
exemption
[Clause 116]
Requirement of publishing in official Gazzete is
done away with
To get over the decision of the Supreme Court in
UOI vs Param Industries Ltd 2015 (321) ELT 192 as
also the fact that such publications may now be
through electronic mode only.
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
28 Recovery of
Time limit to serve notice to demand presently
duties
stands at 1 year from relevant date
Proposal to increase such time limit to 2 years
[Clause 117]
Time limit for extended period remain
unchanged at 5 years
47- Clearance of To empower the Central Government to permit
goods for home certain class of importers specified by
consumption
notification to make deferred payment of duty
[Clause 118]
or other charges in the manner provided by the
rules.
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
To empower the Central Government to fix the rate of
47interest not below ten per cent. and not exceeding thirty-six
Clearance of
per cent. per annum where importer fails to pay import duty
goods for
either in full or in part within two days (excluding holidays)
home
consumption from the date specified below:
a) from the date on which the bill of entry is returned to him
[Clause 118] for payment of duty; or
b) in the case of deferred payment under the proviso to subsection (1), from such due date as may be specified by rules
made in this behalf.
AMENDMENTS TO CUSTOMS ACT,1962
Section Details of amendment
51
Clearanc
e of
goods
for
exportati
on
[Clause
119]
Proposal to amend Section 51 as follows:
To empower the Board to permit certain class of exporters specified
by notification to make deferred payment of duty or any charges in
the manner provided by rules.
It also proposes to insert a new section therein to empower the
Central Government to fix the rate of interest not below 5% and not
exceeding 36% per annum where the exporter fails to pay export
duty either in full or in part within the date specified by rules.
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
53: Transit of certain Proposal to amend so as to enable the proper officer
to allow transit of certain goods and conveyance
goods without
without payment of duty, subject to the conditions
payment of duty
specified by the Board by regulations.
[Clause 120]
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Wareh
ousing
provisio
ns
[Clause
121122]
 Proposal to vest with the Principal Commissioner of Customs or
Commissioner of Customs the power to license a public warehouse / private
warehouse (Sections 57&58)
Vest with Principal Commissioner of Customs or Commissioner of Customs
the power to license a special warehouse wherein dutiable goods may be
deposited and such warehouse shall be caused to be locked by the proper
officer and no person shall enter the warehouse or remove any goods
therefrom without the permission of proper officer. (Section 58A)
Power to cancel the licenses issued under Sections 57,58 or 58A where the
licensee contravened provisions or conditions
In case of cancellation of license of the warehouse, the warehoused goods
shall be removed from such warehouse to another warehouse or cleared for
home consumption or export within seven days from the date of the order.
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Warehous
ing
provisions
[Clause
123-124]
 New set of provisions proposed under Section 59 which deals
with execution bond and furnishing of security by importer for the
purpose of warehousing, in the manner specified therein.
Section 60:
The proposed sub-section (1) of section 60 seeks to provide for
permission for removal of goods from a customs station for the
purpose of deposit in a warehouse.
The proposed sub-section (2) of said section seeks to provide for
the deposit of goods in a warehouse pursuant to an order made
under sub-section (1).
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Warehousing This amendment proposes to substitute a new section for section 61 of
the Customs Act so as to specify the period for which goods may remain
provisions
[Clause 125] warehoused given as under:
(a) Capital goods intended for use in any EOU/EHTP/STP unit or any
warehouse wherein manufacture or other operations have been
permitted under section 65 - till their clearance from the warehouse;
(b) Goods other than capital goods intended for use in any
EOU/EHTP/STP unit or any warehouse wherein manufacture or other
operations have been permitted under section 65 - till their
consumption or clearance from the warehouse; and
(c) in the case of any other goods - till the expiry of one year from
the date on which the proper officer has made an order under subsection (1) of section 60:
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Warehousing
provisions
[Clause 126127]
Section 62 relating to physical control over warehoused goods is being
omitted since the conditions for licensing different categories of
warehouses and exercising control over the same are being provided
under sections 57, 58 and 58A.
Section 63 relating to payment of rent and warehouse charges is being
omitted in view of the privatization of services, and free market
determination of rates, including those by facilities in the public sector.
Proposal to substitute for section 64 of the Customs Act so as to make
provisions for owner’s right to deal with warehoused goods so as to
rationalize the facilities and rights extended under the section.
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Warehousing
provisions
[Clause 128133]
Amendment to Section 65 dealing with Manufacture and other
operations in relation to goods in a warehouse:
To provide that the Commissioner or Principal Commissioner of Customs
as authority sanctioning the said operations.
Section 68 & 69 is being amended so as to remove the requirement of
payment of rent and other charges on clearance from warehouse for
home consumption or for export
Section 73 is being amended to provide for cancellation bond in case of
transfer of ownership of the goods, and is thus aligned with sub-section
(5) of section 59.
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Warehousing Proposal to insert new section 73A to provide that person who
has been granted a license for warehousing shall be responsible
provisions
[Clause 134] custody of warehoused goods. The section also prescribes
responsibilities including the liabilities of warehouse keepers.
Rule making Consequent to introduction of deferred payment in Section 47
power[Clause and 51, Central Government is being empowered to issue rules
in this regard
135]
AMENDMENTS TO CUSTOMS ACT,1962
Section
Details of amendment
Clause 136
Retrospective Amendment:
Various notifications pertaining to Advance License and Duty
Free Import Authorization Schemes are being amended
retrospectively, to correct the reference to “section 8” in such
notifications to “section 8B” so as to clearly provide that
exemption from safeguard duty under section 8B of the Customs
Tariff Act, 1975 was/is available under these notifications on
imports under Advance License and Duty Free Import
Authorization Schemes.
AMENDMENTS TO CUSTOMS TARIFF ACT, 1975
Section
Details of amendment
Clauses 137
-138
Proposed amendments in the Customs Tariff Act, 1975
Proposal to omit Section 8C which provides for “Power of
Central Government to impose transitional product specific
safeguard duty on imports from the People’s Republic of China”
Proposal to amend First Schedule w.e.f. 1.3.2016
Proposal to amend First Schedule w.e.f. 1.1.2017 to align same
with HSN
NOTIFICATIONS
NTFN.
Details of amendment
Ntfn. No.
No.30 & 31/
2016 - Customs
(N. T.) dt.
1.3.2016
W.e.f. 1.4.2016
New set of Baggage Rules have been prescribed
The Customs Baggage Declaration Regulations, 2013 is
being amended so as to prescribe filing of Customs
declaration only for those passengers who carry dutiable
or prohibited goods
NOTIFICATIONS
NTFN.
Details of amendment
Ntfn. No.
No.32/ 2016 Customs (N. T.) dt.
1.3.2016
W.e.f. 1.4.2016
New Customs (Import of Goods at Concessional Rate
of Duty for Manufacture of Excisable Goods) Rules,
2016 has been notified which would be effective from
1.4.2016.
Ntfn. No.
No.33/ 2016 Customs (N. T.) dt.
1.3.2016
W.e.f. 1.4.2016
Interest rates on delayed payment of Customs duty
under section 28AA is being rationalized at 15%.
CENTRAL EXCISE
IMPORTANT HIGHLIGHTS
RATE OF DUTY Standard rate remains @12.5%
CESS
New cess – Infrastructure Cess on Vehicles
JEWELLERY
Brought to tax - 1% without cenvat benefit or
12.5% with cenvat benefit
READY MADE
GARMENTS
Excise duty of 2% (without CENVAT credit) or
12.5% (with CENVAT credit)
SMART
WATCHES
Brought under MRP valuation and are covered
under III Schedule to Central Excise Act
AMENDMENTS TO CENTRAL EXCISE ACT,1944
Section
5A
Deals with
power to grant
exemption
[Clause 139]
Details of amendment
Notifications issued (granting exemption or
withdrawal) shall come into effect on the date of
issue.
Requirement of publishing in official Gezzete is
done away with
To get over the decision of the Supreme Court in
UOI vs Param Industries Ltd 2015 (321) ELT 192
as also the fact that such publications may now
be through electronic mode only.
AMENDMENTS TO CENTRAL EXCISE ACT,1944
Section
11A
Recovery of
duties
[Clause 140]
37B
Instructions to
Central Excise
Officers
[Clause 141]:
Details of amendment
Time limit to serve notice to demand presently
stands at 1 year from relevant date
Proposal to increase such time limit to 2 years
Time limit for extended period remain
unchanged at 5 years
Proposal to empower the CBEC to issue orders,
instructions
and
directions
for
the
implementation of any other provision of the
said Act.
AMENDMENTS TO CENTRAL EXCISE ACT,1944
Section
Details of amendment
III schedule to
Central Excise
Act, 1944
Goods brought under III schedule
Chapter heading Nature of goods
3401-All goods
3402-All goods
Toilet Soaps & similar products and other
washing preparations
7607-All goods
Aluminum foil etc.
[Clause 142]
Smart Watches
NotificationNo. 851762
12/2016-CE N.T These goods are brought under RSP valuation
dt. 1.3.2016
Proposal to amend III Schedule w.e.f. 1.1.2017 to
align the same with HSN
AMENDMENTS TO CENTRAL EXCISE TARIFF ACT,1985
Section
Details of amendment
I & II schedule to Proposal to amend the First Schedule and the Second
Central Excise
Schedule to the Central Excise Tariff Act as follows
Tariff Act, 1985
To insert and amend certain entries in the First
[Clause 143-144] Schedule, in the manner specified in the VII Schedule
(immediate effect)
To harmonise the First Schedule & Second Schedule
to the Central Excise Tariff Act with HSN, as specified
in VIII & IX Schedule (w.e.f. 1st Jan 2017)
INFRASTRUCTURE CESS
CLAUSE 159 READ WITH SCHEDULE XI
Details of amendment
Proposal to levy Infrastructure Cess on all goods specified in XI Schedule , W.e.f. 1.3.2016.
Rate of cess
Nature of Goods
Rate of cess
Motor cars under 8703 other the ones listed below
4%
ambulances, electric vehicles, hybrid vehicles, taxis.
Exempted
Smaller Petrol /LPG/CNG vehicles –upto 1200CC
1%
Smaller Diesel Vehicles- upto 1500CC
2.5%
Cess is in addition to Duty of excise and provisions and Rules under Central Excise
Act,1944 are made applicable to the levy and collection of ‘Infrastructure Cess’.
This Cess is for the purposes of the Union and proceeds shall not be distributed among
the States.
AMENDMENTS TO CENTRAL EXCISE RULES,2002
Nfn. No. 08/2016-CE(NT) (N.T.) dt. 01.03.2016
Rule Details of amendment -Effective from 1.3.2016
7
Interest on finalization of provisions assessment to be computed from the date of original due date and not from the
date of finalization
Overcome the possibility of an adverse decision of the Larger Bench of the Supreme Court. In SAIL Vs. CCE 2015 (326)
ELT 450, the Supreme Court referred the above matter to a Larger Bench.
8
Consequent to introduction of excise duty on articles of jewellery they have been given the benefit of SSI notification
8/2003-CE upto a limit of Rs.6 crores in the present year provided their value of clearances in the previous years was
not over Rs.12 crores
Accordingly quarterly payment benefit is also allowed to such jewellery units having clearance of Rs. 12 crore or less
in previous FY
11
Requirement of self attestation of duplicate copy of invoice is done away with
AMENDMENTS TO CENTRAL EXCISE RULES,2002
Rule
Nfn. No. 08/2016-CE(NT) (N.T.) dt. 01.03.2016
Details of amendment
Annual returns to be filed
12
 Submission of Annual Return instead of Annual Financial Information
W.e.f
1.4. 2016 Statement or “Annual Installed Capacity Statement”
Revision of Return allowed- within end of the month in case of monthly/
quarterly returns and within one month from date of filing of annual return
– Effective date and forms to be notified
17(6)
Option to revise returns filed by EOU- within end of the month return –
Date to be notified

26(1)
where the proceedings has been concluded under clause (a) or (d) of Section
w.e.f.
11AC(1) of Central Excise Act, 1944 for the person liable to pay duty in
1.3. 2016 respect of duty, interest and penalty, all proceedings in respect of penalty
against other persons, if any, in the said proceedings shall also be deemed
to be concluded.
AMENDMENTS TO CENVAT CREDIT RULES,2004
Rule
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
Details of amendment – W.e.f 1.4.2016
Railway Wagons falling under tariff heading 860692 would qualify as
2(a)
Capital capital goods
Goods  Equipment or appliance used in an office would also qualify as capital
goods.
 Equipments used for pumping of water would also qualify as Capital
goods though located outside the factory;
 Restriction omitted – Non-inclusion of any equipment or appliance
used in an office – these goods would also qualify as capital goods
 Goods used for pumping of water for captive use shall qualify as inputs
2(k)
input even if located outside the factory;
 All capital goods which have a value upto Rs. 10,000/- per piece would
now qualify as inputs
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
Details of amendment –
Excludes Export of service and services by way of
2(e)
transportation of goods by a vessel from customs station of
clearance in India to a place outside India. Thus eligible for
cenvat credit.
1.3.2016
 Place of provision of service in both cases is out side India.
Though above services are not liable to tax, Cenvat facility
could be availed.
2(m)
Input Service Distributor could now distribute credit to an
INPUT SERVICE outsourced manufacturing unit.
EXEMPTED
SERVICE
WEF
DISTRIBUTORW.E.F.
1.4.2016
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
Rule Details of amendment
3
4(2)
4(5)
(b)
Restriction on utilization of credit for payment of infrastructure cess
levied in terms of Clause 159 of the Finance Bill, 2016;
This would mean that the infrastructure cess is a cost and is certainly
retrograde.
Jewellery units having clearance of 12 crores or less in preceding FY and
other units having clearance of 4 crore or less could avail credit of
capital goods to the extent of 100% in the year of receipt
Hitherto, option of directly sending Jigs, Fixtures and Mould to Jobworker was not specifically provided under the Rule[Rule 4(5)(b)] which
is now done. Further, tools have also been added to the list.
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
Rule Details of amendment
4(6)
4(7)
Permission issued under Rule 4(6) by Jurisdictional Deputy
Commissioner, to clear the final products from job worker’s premises
was hitherto valid for one year. The period of permission has been
extended from 1 year to 3 years
Credit of Service Tax paid on the assignment of the right to use, by
Government or by any other person:
 Avail proportionately over the period of right
 If such right is transferred to another person- avail balance credit
subject to maximum of the ST payable on such transfer
 ST on Monthly user charges- shall be allowed in the same financial
year in which they are paid.
Rule 6 – After amendment – W.E.F. 1.4.2016
Total Cenvat Credit on inputs
and input services
OPTION II
Reversal of
appropriate credit
OPTION I
Payment of 6% of
value of exempted
goods or 7% of value
of exempted services
Follow Rule 6(3A) and
reverse proportionate Credit
attributable to exempted
goods/services
PROCEDURE
DETAILED PROCEDURE
FOLLOWS
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
PROCEDURE UNDER RULE 6
 Segregate credit of input or input services used exclusively for
exempted activity- Reverse the same
From balance segregate credit of input or input services used
exclusively for taxable activity – avail the same
From the balance, arrive at the common credit attributable to
exempted activities based on the value of turnover of exempted and
taxable activities of previous year. –Reverse the same-This shall be
done monthly.
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
PROCEDURE UNDER RULE 6
Reversal shall be made within due date for payment of duty. If not
paid pay along with interest @ 15%PA
 Follow the same procedure for entire year after the end of
financial year. If excess credit has been reversed on monthly basis,
avail the excess. In case short credit has been reversed, pay within
30th June of next FY. If not paid within said date pay along with 15%
PA interest
 Option excised should be for all exempted goods or services and
such option shall not be withdrawn during the year
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
OTHER IMPORTANT AMENDMENTS UNDER RULE 6
Intimation about the option to Jurisdictional officer
After re-working at the end of the year, payment or the
adjustment of credit to be informed within 15days of such
adjustment/payment
Banking companies have additional option to pay 50% of the
monthly credit instead of the above two options
Valuation of exempted goods / exempt services as prescribed
under earlier rules remains unchanged
Assessees following 6(3A) for FY 2015-16 (earlier rules), to
follow the same procedure for that year
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
RULE 6
Rule 6(4) Other Credit on capital goods used exclusively for manufacture of
Capital
exempted goods or providing exempted services could be availed
goods
after a period of two years from the date of commencement of
commercial production / provision of service
For Units
other
Where capital goods are received after the date of commencement
than SSI of commercial production or provision of services, as the case may
be, the period of two years shall be computed from the date of
installation of such capital goods.
6(7)
Services by way of transportation of goods by a vessel from
customs station of clearance in India to a place outside India, shall
not be treated as exempted services for the purpose of this rule
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
RULE 7: INPUT SERVICE DISTRIBUTOR – Manner of distribution
The credit distributed shall not exceed the amount of service tax credit
availed by ISD
The credit shall be distributed in following manner:
Credit is attributable to
Manner of distribution
Only one unit
Distribute entirely to such unit
More than one unit but not to all
units
Distribute to such units to which the credit is attributable.
Distribution shall be based on the value of turnover of such units during the
relevant period
Credit is attributable to all units
Distribute to all units on pro rata basis based on the
value of turnover of said period.
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
RULE 7: INPUT SERVICE DISTRIBUTOR – Manner of distribution
ISD could also distribute the credit to outsourced manufacturing unit.
Such unit shall maintain separate account for input service credit received
from each of the input service distributors and shall use it only for payment of
duty on goods manufactured for the input service distributor concerned
Credit of service tax paid on input services, available with the input service
distributor, as on the 31st of March, 2016, shall not be transferred to any
outsourced manufacturing unit and such credit shall be distributed amongst
the units excluding the outsourced manufacturing units
Provisions of rule 6 shall apply to the units to whom credit is distributed and
not to ISD
Total turnover for distribution of credit shall be determined in the same
manner as determined under rule 5
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
RULE 7: INPUT SERVICE DISTRIBUTOR – Manner of distribution
Turnover of an outsourced manufacturing unit shall be the turnover of goods
manufactured by such outsourced manufacturing unit for the input service
distributor
Relevant period‘ shall be, (a) if the assessee has turnover in the preceding financial year‘ then such
turnover; or
(b) if the assessee does not have turn over for some or all the units in the
preceding financial year, the last quarter for which details of turnover of all
the units are available, previous to the month or quarter for which credit is to
be distributed.
Outsourced manufacturing unit means a job-worker who is liable to pay duty
AMENDMENTS TO CENVAT CREDIT RULES,2004
Nfn. No. 13/2016-CE(NT) (N.T.) dt. 01.03.2016
RULE Details of amendment
7B
9
9A
14
Similar to First Stage Dealer or Second Stage Dealer, manufacturer
having one or more factories could avail credit of inputs on an invoice
issued by a warehouse.
The provisions relating to Dealer would equally be applicable to
warehouse
Amended to provide for allowing invoice issued by a service provider
towards reversal of credit on goods cleared as such as a valid document
for the purpose of availment of credit.
Annual Cenvat return to be filed – 30th NOV of next FY
Interest would be payable only if the credit is actually utilised
Deemed utilisation as provided under (2) is omitted
AMENDMENTS TO OTHER NOTIFICATIONS
Nfn. No. 14/2016-CE(NT) (N.T.) dt. 01.03.2016
Time limit for filing REFUND - Rule 5 of CCR, 2004 Notification No.27/2012-CE
(NT)
Manu- Within period as specified in Section 11B of CE Act- One year from
facturer > Date of ship or aircraft carrying goods leaves India
Date on which the goods cross frontier if exported by land route
 Date of despatch of goods by Post office if exported through
post
Service before the expiry of one year from:
provide Date of Receipt of payment in convertible foreign exchange,
r
where provision of service had been completed prior to receipt of
such payment ; or
Date of issue of invoice, where payment for the service had been
received in advance prior to the date of issue of the invoice.”.
AMENDMENTS TO OTHER NOTIFICATIONS
Nfn. No. 5,6 &19/2016-CE(NT) (N.T.) dt. 01.03.2016
Nature of Amendment
Registratio
n
procedure
‘single registration’-where two or more premises of the
same factory are located within a close area in the
jurisdiction of a Range Superintendent, the manufacturing
process undertaken therein are interlinked, and the units
are not operating under any of the area based exemption
notifications, subject to certain conditions as may be
imposed by Commissioner
Jewellery Units could opt for Centralised registration w.e.f. 1.3.2016
Jewellery units- Exemption from physical verification of
premises for registration
AMENDMENTS TO OTHER NOTIFICATIONS
Nfn. No. 18,20/2016-CE(NT) (N.T.) dt. 01.03.2016
Nature of Amendment
Removal of
Goods
at
Concessional
Rate of Duty
Rebate on
Export
New set of Rules issued , so as to simplify the rules, including
allowing duty exemptions to importer/manufacturer based
on self-declaration instead of obtaining permissions from the
Central Excise authorities.
Notification No. 19/2004-C.E. (N.T.), dated 6.9.2004 is
amended to provide that the Indian market price of goods
exported shall not be less than the rebate claimed
Also limitation under 11B is brought into rebate claim.
To get over the decision in DCCE vs Dorcas Market Makers
2015 (321) ELT 45(Mad)
AMENDMENTS TO OTHER NOTIFICATIONS
Notification
Details of amendment
Notification
No.21/2004CE(NT) dated
6.9.2004
By
Rebate on duty on raw materials used in manufacture of exported
goods - Declaration to be accompanied by Chartered Engineer
certificate and approval for declaration
Notification No.
21/2016-Central
Excise (N.T.) dt.
01.03.2016
AMENDMENTS TO OTHER NOTIFICATIONS
Section
Details of amendment
Interest under Section 11AA
Notification No.
15/2016-Central
Excise (N.T.) dt.
01.03.2016
Earlier Notification No.5/2011-CE(NT) dated
1.3.2011 has been superseded and new rate of
interest at 15% for non payment of duty has been
notified. Reduction in interest rates from 18% to
15%- is welcome move.
Indirect Tax Dispute Resolution Scheme, 2016
Applicability:
(indirect tax
dispute)
To cases pending before Commissioner(Appeals) as on
1.3.2016
Who can apply / Cases other than following
which cases
(a) the impugned order is in respect of search and
could be
seizure proceeding; or
resolved
(b) prosecution for any offence punishable under the Act
has been instituted before the 1st day of June, 2016; or
(c) the impugned order is in respect of narcotic drugs or
other prohibited goods; or
Indirect Tax Dispute Resolution Scheme, 2016
Who can apply
/ which cases
could be
resolved
(d) impugned order is in respect of any offence punishable
under the Indian Penal Code, the Narcotic Drugs and
Psychotropic Substances Act, 1985 or the Prevention of
Corruption Act, 1988; or
(e) any detention order has been passed under the
Conservation of Foreign Exchange and Prevention of
Smuggling Act, 1974.
Procedure and This scheme would come into force from 1.6.2016
Time Lines
Declaration to the designated authority shall be made on or
before the 31st day of December, 2016
Designated authority shall acknowledge the declaration
Indirect Tax Dispute Resolution Scheme, 2016
Procedure and Declarant shall tax due alongwith the interest thereon at he
Time Lines
rate as provided in the Act and penalty equivalent to twentyfive per cent. of the penalty imposed in the impugned order,
within 15 days of the receipt of acknowledgement.
Intimate such payment to the designated authority within 7
days of the payment.
On receipt the proof of payment of dues, the designated
authority shall pass an order of discharge of dues referred to
in sub-section (3) in such form as may be prescribed.
Indirect Tax Dispute Resolution Scheme, 2016
Immunity
The appeal pending before the Commissioner (Appeals) shall
stand disposed of and the declarant shall get immunity from all
proceedings under the Act, in respect of the indirect tax dispute
for which the declaration has been made under this Scheme
Declaration shall be conclusive upon issue of order. No matter
relating to the impugned order shall be reopened thereafter in
any proceedings under the Act before any authority or court
Other
aspects
The Order issued under this scheme shall not be deemed to be
an order on merits and has no binding effect.
It is clarified that nothing contained in this Scheme shall be
construed as conferring any benefit, concession or immunity on
the declarant other than the benefit, concession or immunity
granted under the Act.
SERVICE TAX
IMPORTANT HIGHLIGHTS
RATE OF TAX Remains @14%+ Swachch Bharat Cess @0.5%
CESS
New cess – Krishi Kalyan Cess
Effective from 1st June 2016
@ 0.5% of value of service proposed
On all or select notified services

To be utilised for such purposes of financing
and promoting initiatives to improve agriculture
or for any other purpose relating thereto
Provisions relating to service tax would apply to
this cess also

[Clause 158]
AMENDMENTS TO STATUTORY PROVISIONS
Nature of
services
Details of amendment
Services by
educational
institutions
[Clauses 145(a)
and 146(a)]
Proposal to omit Educational Services from Negative list resulting in
taxability of the said services
Lottery
Services 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
Already two cases decided by Sikkim High Court in Future Gaming
Solutions which has gone against the department. They are still
insisting on this venture.
Clause 145(b)
Notification No. 25/2012-ST dt. 20.06.2012 has been suitably amended
to exempt these services.
AMENDMENTS TO STATUTORY PROVISIONS
Nature of
services
Details of amendment
Services of transport Proposal to tax “Transportation of passengers by a Stage
of passengers
carriage,”- Deletion of entry in Negative list
[Clause 146(b)(i)]
Effective from
1.6.2016
Exemption Notification amended to exempt Non AC Stage
Carriage passenger transport services [Sl. No. 23 of
Notification No. 25/2012]. Therefore, air conditioned stage
carriage would be taxed from 1.6.2016.
AMENDMENTS TO STATUTORY PROVISIONS
Nature of
services
Details of amendment
Transportation of
goods
[Clause 146(b)(ii)]
Proposal to tax ‘Services by way of transportation of goods by an
aircraft or a vessel from a place outside India up to the customs
station of clearance’- Deletion of entry in Negative list
Effective from
1.6.2016
Services provided by way of transportation of goods by an
aircraft from a place outside India upto the customs station of
clearance in India is being exempted [Sl. No. 23 of Notification
No. 25/2012]
Assignment of radio
frequency rights
[Clause 147]
Proposal to bring assignment by the Government of the right to
use the radio-frequency spectrum and subsequent transfers
thereof, under declared services by inserting clause (j) under
Section 66E.
AMENDMENTS TO STATUTORY PROVISIONS
Section
Details of amendment
Section
67A
[Clause
148]
Section 67A is proposed to be amended to provide for specific rule
making powers in respect of Point of Taxation Rules, 2011.
Consequent amendments are also carried out in Point of Taxation
Rules, 2011 which would be effective from the date of enactment
of the Finance Bill, 2016
Till this amendment there is no statutory back up to determine
rate of tax in accordance with POT Rules. Past notices on this
aspect could go.
Section 73
[Clause
149]
Time limit to serve notice to demand presently stands at 18
months from relevant date
Proposal to increase such time limit to 30 months
Time limit for extended period remain unchanged at 5 years
AMENDMENTS TO STATUTORY PROVISIONS
Section
Details of amendment
Section 75
[Clause
150]
Proposal to provide different rate of interest for the service tax collected but
not paid.
Notification
No. 13/2016Service Tax
dt. 1.3.2016
Notification
No. 14/2016-ST
dt. 1.3.2016
Interest rates- effective from date of presidential assent to Finance Bill 2016
Situation
Rate
interest
Collection of any amount as service tax but failing to pay the
amount so collected to the credit of the Central Government
on or before the date on which such payment becomes due
24%
Other than in situations covered under above.
15%
Interest under Section 73B- reduced from 18% to 15%- effective from the
date of presidential assent to Finance Bill 2015
AMENDMENTS TO STATUTORY PROVISIONS
Section Details of amendment
Section
78A
[persona
l
penalty]
Where assessee remits tax along with interest and penalty (as
indicated below) within 30 days from the date of service of notice,
the proceedings are deemed to be concluded :
No penalty if the demand is normal period [clause (i) of the first
proviso to section 76 ]
Penalty of 15% of demand where notice is for extended period
[clause (i) of the second proviso to section 78]
The proposal is to amend personal penalty provisions(78A) to provide
that in above situations, the personal penalty proceedings shall also
be deemed to be concluded
AMENDMENTS TO STATUTORY PROVISIONS
Section Details of amendment
Section
89-91
Offences
and Arrest
[Clauses
152-154]
Section
93A
[Clause
155]
i.
The monetary limit for filing complaints for punishable offences is proposed
to be enhanced to an amount in excess of Rs. 2 crores, which presently
stands at amount in excess of Rs. 50 Lakhs.
ii. Cognizance of offence and arrest is limited to case which involves the tax
payer has collected the tax but not deposited it with the exchequer, and
amount of such tax collected but not paid is above the threshold of Rs 2
crores.
iii. There will be no arrest in other cases though prosecution will continue in
appropriate cases.
Proposal to amend Section 93A so as to enable issue notification or prescribe
rules for the purpose of grant of rebate on exports
AMENDMENTS TO STATUTORY PROVISIONS
Section
Details of amendment
Governmenta
l Authority
Retrospective
exemption
[Clause 156]
Definition of Governmental authority was amended with effect from
30.01.2014 so as provided that entities set up by Government but not
necessarily by an Act of Parliament or a State Legislature would be
covered under the definition and there by are eligible for exemption
relating to certain works contracts.
However, services provided prior to 30.01.2014 to such bodies remained
taxable.
The benefit of exemption is proposed to be extended to the said services
of construction, erection, maintenance, or alteration etc. of canal, dam
or other irrigation works provided to such Governmental authority
during the period from the 1st July, 2012 to 29.01.2014
AMENDMENTS TO STATUTORY PROVISIONS
Section
Details of amendment
construction
services
provided to
Government
or Local
Authority or
Governmental
Authority
[Clause 156]
Notification
No No.9/2016ST dated
1.3.2016
Exemption provided to construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance, renovation or alteration of
certain specified type of constructions were withdrawn w.e.f. 1.4.2015.
Proposal to provide exemption to such constructions for the period from
1.4.2015 to 29.2.2016, where the contract for service has been entered
prior to 1.3.2015 on which appropriate stamp duty is paid(wherever
applicable )
On similar lines entry 12A has been inserted in Notification No. 25/2012-ST
dt. 20.06.2012, to provide exemption prospectively for the agreement
entered into prior to 1.3.2015
The exemption would be applicable till 1.4.2020.
AMENDMENTS TO STATUTORY PROVISIONS
Section
Retrospective
exemption to
construction /
repair etc., of
Airport/ port
Details of amendment
Exemption from Service Tax on services by way of construction, erection,
etc. of original works pertaining to an airport, port was withdrawn with
effect from 1.4.2015.
The same is being restored for the services provided under
 a contract which had been entered into prior to 01.03.2015 and
 on which appropriate stamp duty, where applicable, had been paid prior
to that date,
 subject to production of certificate from the Ministry of Civil Aviation or
Ministry of Shipping, as the case may be, that the contract had been
entered into prior to 01.03.2015
Notification
On similar lines entry 14A has been inserted in Notification No. 25/2012-ST
No No.9/2016- dt. 20.06.2012, to provide exemption prospectively for the original work
ST dated
pertaining to an airport, port, if the agreement entered into prior to
1.3.2016
1.3.2015 with same conditions as set out above
The exemption would be applicable till 1.4.2020.
AMENDMENTS TO STATUTORY PROVISIONS
Section
Details of amendment
Retrospective
exemption.
In all the above cases of retrospective amendments, assessees could claim
refund of Service Tax which has been collected but which would not
have been so collected had these provisions were in force.
Application for refund may be allowed to be filed within a period of six
months from the date on which the Finance Bill, 2016 receives the assent
of the President
AMENDMENTS TO STATUTORY PROVISIONS
Section
Details of amendment
Retrospective
amendment to
Notification No.
41/2012Service
Tax, dated the
29th June, 2012
 The said notification was amended vide 01/2016- S.T, Dated
02.2.2016 to provide rebate on taxable services that have been used
beyond factory or any other place or premises of production or
manufacture of the said goods, for their export.
 Clause 157 of Finance Bill, 2016 read with Tenth Schedule to said
Finance Bill proposes to give said benefit for the period from 1.7.2012
to 1.2.2016
AMENDMENTS TO EXEMPTIONS
Legal Services- Entry 6 of Notification No. 25/2012-ST
Service
provider
Recipient
Taxability
Senior
Advocate
person other than a person ordinarily carrying out any
activity relating to industry, commerce or any other
business or profession
Other than above (effective 1.4.2016)
Exempt
Advocate /
Firm of
Advocate
(i) an advocate or partnership firm of advocates providing
legal services;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to rupees ten lakh
in the preceding financial year;
Person represented on an arbitral tribunal (effective 1.4.2016)
“senior advocate” has the meaning assigned to it in section 16 of the
Advocates Act, 1961 (25 of 1961).
Taxable
Exempt
Taxable
AMENDMENTS TO EXEMPTIONS
Services provided by IIMs- Entry 9B of Notification 25/2012
Nature of Exemption
Following services provided by IIMs to its student are exempt from service tax
 Two year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in
Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian
Institute of Management;
 fellow Programmes in Management;
five year integrated Programmes in Management.
Executive Development Programmes are not covered under exemption and are made taxable. Amendment effective
1.3.2016.
AMENDMENTS TO EXEMPTIONS
Entry No.
Nature of Exemption
9C effective
1.4.2016
Exemption is granted to the services provided by the assessing bodies that are empanelled by
Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of
assessments under Skill Development Initiative (SDI) Scheme.
9D
Effective
1.4.2016
Exemption is granted to the services provided by the ‘Training providers’ (Project Implementation
agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural
Development, who are rendering services by way of offering skill or vocational training courses
certified by National Council For Vocational Training
AMENDMENTS TO EXEMPTIONS
Works contract services to Government - Entry 12A of Notification 25/2012
Nature of Exemption
Service recipient: Government, a local authority or a governmental authority
Nature of services: construction, erection, commissioning, installation, completion, fitting
out, repair, maintenance, renovation, or alteration of :
a. civil structure or any other original works meant which are predominantly used for
other than for commerce, industry, or any other business or profession;
b. a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art
or cultural establishment; or
c. a residential complex predominantly meant for self-use or the use of their employees
or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said
Act;
Condition: Contract which had been entered into prior to the 1st March, 2015 and on
which appropriate stamp duty, where applicable, had been paid prior to such date.
Exemption ends by 1.4.2020. This amendment is effective 1.3.2016
AMENDMENTS TO EXEMPTIONS
Works contract services– Entry 13 of Notification 25/2012
Nature of Exemption
Construction, erection, commissioning, installation, completion, fitting out, repair,
maintenance, renovation, or alteration of a civil structure or any other original works of
specified works :
“(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.
(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
Effective 1.3.2016
AMENDMENTS TO EXEMPTIONS
Works contract services– Metro & Monorail- Entry 14(a) of Notification
25/2012 – Effective 1.3.2016
Nature of Exemption
Services of construction, erection, commissioning or installation of original
works pertaining to ‘monorail or metro’ hitherto were exempted from service
tax
The Exemption to above is restricted to the contracts entered into prior to
1.3.2016 and on which appropriate stamp duty, was paid.
However, the exemption to the construction and other services pertaining to
railways remain unchanged.
AMENDMENTS TO EXEMPTIONS
Works contract services– Entry 14(ca) of Notification 25/2012 effective
1.3.2016
Nature of Exemption
Exemption to services which are provided by way of construction, erection,
commissioning or installation of original works has been extended to:
“low cost houses up to a carpet area of 60 square metres per house in a
housing project approved by the competent authority under:
(i) the “Affordable Housing in Partnership” component of the Housing for
All (Urban) Mission/Pradhan Mantri Awas Yojana;
(ii) any housing scheme of a State Government
AMENDMENTS TO EXEMPTIONS
Works contract services to Government - Entry 14A of Notification 25/2012
Nature of Exemption
Service recipient: Government, a local authority or a governmental authority
Nature of services: construction, erection, commissioning, installation, or any other
original works pertaining to Port or Airport
Condition: contract which had been entered into prior to the 1st March, 2015 and on
which appropriate stamp duty, where applicable, had been paid prior to such date.
This is subject to the condition that Ministry of Civil Aviation or the Ministry of Shipping
in the Government of India, as the case may be, certifies that the contract had been
entered into before the 1st March, 2015
Exemption ends by 1.4.2020.
Amendment effective 1.3.2016.
AMENDMENTS TO EXEMPTIONS
Notification 25/2012-ST
Entry No.
Nature of Exemption
16
The threshold limit for granting exemption to the services provided by an artist by way of a performance
in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, has been increased from Rs. One lakh
to Rs. One lakh and fifty thousand effective 1.4.2016.
23(a)
The exemption is granted to the transportation of passengers with or without accompanied belongings, by
stage carriage other than air-conditioned stage carriage effective 1.6.2016.
23(c)
Exemption granted to the services of transportation of passengers by ropeway, cable car or aerial
tramway has been omitted effective 1.4.2016.
AMENDMENTS TO EXEMPTIONS
Notification 25/2012-ST all effective 1.4.2016
Entry No.
Nature of Exemption
26
Exemption is granted to the services of general insurance business provided under “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 (44
of 1999).
26C
Exemption to 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
Pension Fund Regulatory And Development Authority Act, 2013 (23 of 2013)
49
Services provided by Employees‟ Provident Fund Organisation (EPFO) to persons governed under the
Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)
AMENDMENTS TO EXEMPTIONS
Notification 25/2012-ST
Entry Nature of Exemption
No.
50.
Services provided by Insurance Regulatory and Development Authority of India
(IRDA) to insurers under the Insurance Regulatory and Development Authority
of India Act, 1999 (41 of 1999);
51.
Services provided by Securities and Exchange Board of India (SEBI) set up under
the Securities and Exchange Board of India Act, 1992 (15 of 1992) by way of
protecting the interests of investors in securities and to promote the
development of, and to regulate, the securities market
52.
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
53
Services provided by way of transportation of goods by an aircraft from a place
outside India upto the customs station of clearance in India is being exempted
-W.E.F. 1.6.2016
AMENDMENTS TO EXEMPTIONS
Notification 25/2012-ST
Entry No. Definitions inserted to be effective from Presidential assent.
Sl.No.9, the term ‘educational institution’ has been defined as follows:
(oa) “educational institution” means an institution providing services by way of:
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law
for the time being in force;
(iii) education as a part of an approved vocational education course;”;
(ba) “approved vocational education course” means, (i) a course run by an industrial training institute or an industrial training centre affiliated to
the National Council for Vocational Training or State Council for Vocational Training
offering courses in designated trades notified under the Apprentices Act, 1961 (52 of
1961); or
(ii) a Modular Employable Skill Course, approved by the National Council of Vocational
Training, run by a person registered with the Directorate General of Training, Ministry of
Skill Development and Entrepreneurship
AMENDMENTS TO EXEMPTIONS
Exemption to Incubators: [Amendment to Notification No. 32/2012-ST vide
Notification No. 12/2016-Service Tax dt. 1.3.2016- Effective from 1.4.2016]
Notification No. 32/2012 ST provides exemption to services provided by a
Technology Business Incubator (TBI) or a Science and Technology
Entrepreneurship Park (STEP) recognized by the National Science and
Technology Entrepreneurship Development Board (NSTEDB) of the
Department of Science and Technology, Government of India.
The said Notification has been amended to extend exemption to Services
provided by Biotechnology Industry Research Assistance Council (BIRAC)
approved biotechnology incubators.
AMENDMENTS TO ABATEMENT
Notification No. 26/2012-ST
Nature of services
Details of amendment
Entry
No.
Transport of goods
by rail
Restriction on availment of credit on input services is removed
2
Transport of goods
in container by rail
by other than
Railways
New Entry
Grants 60% abatement – tax to be paid on 40%
Condition of non availment of credit on inputs and capital goods
2A
Transport of
passengers by rail
Restriction on availment of credit on input services is removed
3
AMENDMENTS TO ABATEMENT
Notification No. 26/2012-ST
Nature of
services
Details of amendment
Entry
No.
GTA services
for other
than house
hold articles
Tax on 30% (abatement of 70%) with condition of non availment
of credit on inputs, input services and Capital goods
7
GTA services
for house
hold articles
New Entry
Tax on 40% with condition of non availment of credit on inputs,
and Capital goods. Credit on input services could be availed.
7A
Chit Fund
Abatement restored
Tax to be paid on 70% with condition of non availment of credit
on inputs, input services and Capital goods
8
Stage
carriage
W.e.f. 1.6.2016- would be eligible for 60% abatement (tax on
40%) with condition of non availment of credit on inputs, input
services and Capital goods
9A
AMENDMENTS TO ABATEMENT
Nature of
services
Notification No. 26/2012-ST
Details of amendment
Entry
No.
Transport of Restriction on availment of credit on input services is
goods in a
removed
vessel
10
Tour
Operator
- Entry
revised
11
Only for arranging/ booking accommodation.
Bill shall include the cost of the
accommodation. No cenvat credit
Tax on 10%
Other than above- No Cenvat Credit
Tax on 30%
Construction 30% for all types of constructions (on value including land)
12
Renting of
motor cabs
9
the amount charged shall include the fair market value of all
goods (including fuel) and services supplied by the
recipient(s) in or in relation to the service
AMENDMENTS TO REVERSE CHARGE
Notification No. 30/2012-ST
Nature of services Nature of amendment
Services of mutual Excluded from reverse charge. Service provider is liable to pay
fund agents
effective 1.4.2016
Services of Senior
Advocate
Legal services by senior advocates would be out of the ambit of
reverse charge. Senior advocates now have to collect and remit
service tax on their services effective 1.4.2016.
Service by
Government to
Business Entity
Consequent to notification of the amendment deleting ‘support
services’ thereby bringing in all services provided by Government
to Business entities under tax net w.e.f. 1.4.2016, the reverse
charge entry has also been amended effective from said date to
cover ‘all services provided by Government other than (1) renting
of immovable property, and (2) services specified in sub-clauses
(i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994
[Notifications 15-17/2016 -ST dated 1.3.2016
AMENDMENTS TO SERVICE TAX RULES
Rule
Nature of amendment – Effective from 1.4.2016
No.
2(1)(d) Suitable amendments to exclude Mutual fund agent, Senior advocate from
reverse charge applicability
6
One person company whose aggregate value of taxable services provided from
one or more premises is fifty lakh rupees or less in the previous financial year,
would be eligible for payment of service tax on quarterly basis and on receipt
basis
HUF could pay service tax on quarterly basis
7
 Annual return to be filed by 30th day of November of next financial year
Revision of Returns- Time Limit:
Half yearly return- 90days from date of filing
Annual return- 1 month from the date of filing
7C
Penalty for delay in filing Annual return- Rs.100 per day of delay –Max 20,000
AMENDMENTS TO POINT OF TAXATION RULES
Rule
No.
Nature of amendment
Consequent to proposal to amend Section 67A to provide rule making
power, in respect of Point of Taxation Rules, 2011, amendments are
carried out in opening paragraph of Point of Taxation Rules, 2011. This
amendment would be effective from the date of enforcement of
amendment to Section 67A.
Rule 5 Rule 5 of Point of Taxation Rules, 2011 deals with the point of taxation
of service for payment of tax in case of new services.
Amendments have been brought into clarify that the said rule would be
applicable for new levy on services.
EXEMPTION TO IT SOFTWARE RECORDED ON MEDIA
Requirement to affix RSP on
package in terms of Legal
Metrology Act, 2009
YES
NO
Notification No. 11/2016-
Notification No. 11/2016- CE &
11/2016 Cus both dt. 1.3.2016
Service Tax dt. 1.3.2016
A. Service Tax- exempt
B. To pay CVD on the basis
of RSP if imported
C. To pay duty of excise on
RSP where media
manufacture in India
 To pay service tax on such
information technology software
 Exemption from CVD and Excise
Duty vide following notifications
 Assessee shall have to give a
declaration stating that they would
remit service tax on the value of
software which is being claimed as
exemption