01 January 0001

Tax Amicus: March 2016


Union Budget, 2016 – An analysis of certain changes in Central Excise -

Examining some of the important changes brought about as part of Budget, 2016 by the Finance Bill, 2016, the article discusses at length some of the changes proposed in Rule 6 of the Cenvat Credit Rules; revision of Returns & reduction in number of these; amendments in the Rules to provide for facility of Input Distributor; and various other amendments, some of which have already come into existence. According to the author, the amendments eschew flamboyance and aim to rationalize and streamline the existing legal regime so as to prepare for the introduction of GST.

TN VAT Act – A look at the recent amendments -

Tamil Nadu Government has brought out certain amendments to the Tamil Nadu Value Added Tax Act 2006 and the Tamil Nadu Value Added Tax Rules, 2007, with effect from 29th January, 2016. Discussing change in eligibility to avail Input Tax Credit; restriction on benefits for sales to SEZs in the State; restriction relating to benefit of compounded rate notifications for works contract; restriction on 1% benefit for dealers involved in second and subsequent sales; increase of penalty in certain cases; registration, maintenance of records and filing returns and documentation required during movement of goods, the author is of the view that the extensive amendments point to the seriousness of the administration in addressing certain issues under TN VAT.


Central Excise

Budget 2016 and other changes

  • Interest payable on amount paid under provisional assessment even when such amount is paid before finalisation
  • Excise Returns – Quantum of returns reduced and provisions being made for revision
  • Cenvat Credit Rules, 2004 are being amended to carry out number of amendments in definitions, credit availability and utilization, etc.
  • Exemption to goods for manufacture of excisable goods – New Rules amended to omit option of provision of ‘security’ along with the general bond

Ratio decidendi

  • Cenvat credit utilization for payment of duty on inputs procured duty free but not utilized as per conditions, correct – CESTAT Delhi
  • Cenvat credit on furnace oil not required to be reversed on clearance of sludge – CESTAT Delhi
  • Demand on shortage of Cenvatted inputs when not sustainable – CESTAT Ahmedabad
  • Provisional release of currency seized as proceeds of clandestinely removed goods, permissible – CESTAT Delhi
  • Cenvat credit on containers when value thereof not included in value of final product – CESTAT Ahmedabad

Statutory Update

  • India notifies new Rules to counter increase in imports from the member States of the Association of Southeast Asian Nations (ASEAN) under Preferential Trade Agreement



Budget 2016 and other changes

  • Demand – Limitation period proposed to be enhanced to 2 years
  • Exemption effective from date of issue of notification
  • Interest for delayed payment of duty, reduced
  • SCOMET items - Online uploading of documents and export of spares
  • Iron and steel products – Minimum Import Price, effective for 6 months, notified

Ratio decidendi

  • IEIS - Clarification limiting benefit of IEIS quashed – Bombay High Court
  • Value not to be enhanced when evidence absent for under-invoicing or extra payment to supplier – CESTAT Delhi
  • No refund where amount not shown as recoverable in balance sheet of that financial year – CESTAT Mumbai
  • SAD refund admissible even when date of sale invoice is prior to date of bill of entry – CESTAT Delhi


Service Tax

Budget 2016 and other changes

  • Krishi Kalyan Cess, at a rate of 0.5% on the value of taxable service, proposed from 1-6-2016
  • Negative list’ proposed to be further pruned
  • Limitation for demand – Normal period proposed to be increased to 30 months
  • Interest on delayed payment – Rates of interest rationalised

Ratio decidendi

  • Service tax applicability on funds sent to branch office abroad, under ‘reverse charge’ – CESTAT Mumbai
  • Sale on commission basis is eligible input service – Amendment in Cenvat Rules made on 3-2-2016, is retrospective – CESTAT Ahmedabad
  • Refund claim by registered office in respect of tax paid by branch office, entertainable – CESTAT Mumbai
  • Refund of service tax on marine insurance premium policy, admissible – CESTAT Chennai
  • Commission received from borrower of loan not taxable under BAS – CESTAT Mumbai


Value Added Tax (VAT)


  • Delhi VAT – New Return specified for courier companies
  • Rajasthan VAT – Lump-sum payment of tax by developers

Ratio decidendi

  • Electronic Survey Instruments are classifiable under Entry 14 of Part F of Schedule I to the erstwhile Tamil Nadu General Sales Tax Act, 1959 – Supreme Court
  • Asafoetida is not a mixture of spices, classifiable under Entry 82 of the notification issued under the Rajasthan Sales Tax Act, 1994


March, 2016/Issue-57 March, 2016/Issue-57

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