Idt RTP For Nov 17 For Print

FAROOQ HAQUE CLASSES IDT RTP FOR NOV 2017
Statutory Update INDIRECT TAX Laws

Significant Notifications and Circulars
SECTION A: CENTRAL EXCISE

CENVAT CREDIT
1. Following amendments have been made in the CCR:
(a) Definition of manufacturer or producer amended [Rule2(naa)]
The definition of manufacturer or producer under clause (naa) of rule 2 has
been amended vide Notification No. 36/2016 CE (NT) dated 26.07.2016. As
per the amended definition, manufacturer or producer
(i) inrelationtoarticlesofjewelleryorpartsofarticlesofjewelleryorboth,fallingunder
heading 7113 of the First Schedule to the Excise Tariff Act, includes a
person who is liable to pay duty of excise leviable on such goods under
sub-rule (1) of rule 9 of the Articles of Jewellery (Collection of Duty)
Rules,2016;
(ia) in relation to articles of precious metals falling under heading 7114 of the
First Schedule to the Excise Tariff Act, includes a person who is liable to
pay duty of excise leviable on such goods under sub-rule(1)of rule12AA of
the Central Excise Rules,2002;
(ii) in relation to goods falling under Chapters 61, 62 or 63 of the First
Schedule to the Excise Tariff Act, includes a person who is liable to pay
duty of excise leviable on such goods under sub-rule (1A) of rule 4 of the
Central Excise Rules,2002.
[Effective from 26.07.2016]
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Jewellery manufacturer with turnover upto 15 crore in preceding year
eligible to avail 100% CENVAT credit on capital goods in the year of
purchase [Rule 4(2)(a)]
As per explanation to rule 4(2)(a) read with third proviso to the said rule, an
SSI unit can take 100% CENVAT credit on capital goods in the financial year
when the same are received by him.
vide Notification No. 36/2016 CE (NT) dated 26.07.2016 a manufacturer of
articles of jewellery or parts of articles of jewellery or both, falling under
heading 7113 of the First Schedule of the Central Excise Tariff Act, will be
allowed to take 100% CENVAT credit on capital goods in the year of
purchase, if hisaggregate value of clearances of all excisable goods for home
consumption in the preceding financial year, did not exceed ` 15 crore.
(b) Requirement of enclosing photocopies of the railway receipts with STTG

for availing CENVAT credit dispensed with [Rule9(1)(fa)]
Notification No. 45/2016 CE (NT) dated 20.09.2016 has amended rule
9(1)(fa) to do away with the requirement of enclosing photocopies of the
railway receipts with Service Tax Certificate for Transportation of Goods by
Rail (STTG), as a document for availing CENVAT credit. As per the
amended rule 9(1)(fa), Service Tax Certificate for Transportation of Goods by
Rail issued by the Indian Railways will be an eligible document for availing
CENVATcredit.[Effective from 20.09.2016]
Circular 1048/36/2016 CX dated 20.09.2016 prescribes the following
procedure for availing CENVAT credit on goods transportation by rail:
STTG Certificate (as per prescribed format) will be issued by the railways
to rail customer (consignor/consignee, whosoever makes the payment of
service tax). The certificate will capture various details such as name of
customer, no. of RRs issued, total service tax/ cess paid, Service Tax
Code, registration no. details of RRs (as certified by railway authority)
issued etc.
Where service tax is paid by the consignor and he intends to avail the
CENVAT credit, CENVAT credit can be availed by him on the strength of
the STTG certificate issued in his name.
However, if the service tax is paid by the consignor but CENVAT credit is
to be availed by the consignee as per CCR, the consignor will have to
make a written request to railways for issue of consignee wise STTG
certificate. The consignor will transfer such consignee-wise STTG
certificate in original to consignee concerned. The consignee will avail
CENVAT credit on the basis of such certificate.
(c) Ethanol produced from molasses generated from cane crushed in the
sugar season 2015-16 deleted from the list of excisable goods removed
without payment of duty, which are excluded from the purview of
reversal provisions under rule 6 [Rule6(6)]
The Central Government had exempted excise duty payable on ethanol
produced from molasses generated from cane crushed in the sugar season
2015 -16 i.e. 1st October, 2015 onwards, for supply to the public sector oil
marketing companies, namely, Indian Oil Corporation Ltd., Hindustan
Petroleum Corporation Ltd. or Bharat Petroleum Corporation Ltd., for the
purposes of blending with petrol.
Further, such ethanol, removed without payment of duty, had also been
excluded from the purview of reversal provisions under rule 6.
Now since the exemption to ethanol has been withdrawn from 10.08.2016,
clause (ix) of sub-rule (6) of rule 6 has been omitted vide Notification No.
41/2016 CE (NT) dated10.08.2016. [Effective from 10.08.2016]
(d) Value for the purpose of rule 6 (3) & (3A) amended
The explanation I(e) to rule 6(3D) provides that Value for purpose of rules
6(3) and 6(3A) will not include the value of services by way of extending
deposits, loans, or advances where the consideration is represented by way of
interest or discount. A proviso has been added in the said clause vide
Notification No 04/2017 CE(NT)dated 02.02.2017 to provide that this clause
shall not apply to banking company and a financial institution including a non-
banking financial company, engaged in providing services by way of
extending deposits, loans or advances.
Thus, in case of banks and financial institutions including non -banking
financial institutions engaged in providing services by way of extending
deposits, loans or advances, value shall include the value of services by way
of extending deposits, loans or advances where consideration is represented
by way of interest or discount.
(e) Definition of input service amended

The definition of input service as provided in rule 2(l) has been amended vide
Notification No 10/2017 CE(NT) dated 13.04.2017 so as to include
transportation of goods services provided or agreed to be provided by foreign
shipping lines to a person located in non-taxable territory with respect to
goods destined for India, where service tax is paid by the manufacturer/output
service provider as importer of goods and the said imported goods are his
inputs or capital goods.
(f) Conditions for allowing CENVAT credit in respect of input service amended
Rule 4(7) has been amended vide Notification No 10/2017 CE(NT) dated
13.04.2017 to provide that in respect of services provided or agreed to be
provided by a person located in non-taxable territory to a person located in
non-taxable territory by way of transportation of goods by a vessel from a
place outside India up to the customs station of clearance in India where
service tax is paid by the manufacturer or the provider of output service being
importer of goods as the person liable for paying service tax for the said
taxable services, credit of service tax paid by the person liable for paying
service tax shall be allowed after such service tax is paid.
(g) Rule 9(1) prescribing documents for availing CENVAT credit amended
Rule 9(1) providing documents for purposes of taking credit has been
amended vide Notification No 10/2017 CE(NT) dated 13.04.2017 as new
clause (ea) has been added in the said rule which provides that theimporter of
the goods will be allowed to take CENVAT credit on the basis of the challan
of payment of service tax on the services provided by a foreign shipping line to
a foreign charterer with respect to goods destined forIndia.
(h) Time limit specified for transfer of CENVAT Credit under rule 10
Rule 10 has been amended vide Notification No 04/2017 CE(NT) dated
02.02.2017 to provide that the transfer of CENVAT Credit shall be allowed
within the time limit of 3 months from the date of receipt of application by the
Deputy Commissioner/Assistant Commissioner of Central Excise.
Further, this period is further extendable by 6 months by Principal
Commissioner/ Commissioner of Central Excise on sufficient cause being
shown and reasons to be recorded in writing.
2. Clearance of segregated foreign material from honey grade brass scrap
before feeding the same in the furnace cannot be treated as clearance of
inputs as such [Rule3(5)]
Rule 3(5) of CCR lays down that where when inputs or capital goods, on
which CENVAT credit has been taken, are removed as such from the factory,
or premises of the provider of output service, the manufacturer of the final
products or provider of output service, as the case may be, shall pay an
amount equal to the credit availed in respect of such inputs or capital goods.
In case of manufacture of brass products, foreign materials (impurities like
iron, steel, rubber, plastic, dust etc.) are segregated from imported honey
grade brass scrap before feeding brass scrap in the furnace. An issue arose
that if the brass manufacturers clear such segregated foreign material, can it
be treated as clearance of inputs as such and accordingly are the
manufacturers required to pay an amount equal to the credit availed in respect
of such inputs in terms of rule 3(5) ofCCR.
Circular No. 1029/17/2016 CX dated 10.05.2016 has clarified that
segregation from honey grade brass scrap in order to weed out other foreign
materials before the process of melting in the furnace is an essential process
relating to manufacture of brass articles. The foreign materials, emerging
during the process of segregation have to be treated as process waste and
cannot be treated like removal of inputs as such. The segregated foreign
material has an altogether different character and use vis-a-vis brass scrap.
Value per unit and classification of the segregated foreign material is also
different from that of imported brass scrap.
Accordingly, clearance of segregated foreign material such as iron, steel,
rubber, plastic, dust etc. from honey grade brass scrap before feeding the
same in the furnace cannot be treated as clearance of inputs as such as
envisaged under rule 3(5) of CCR. The segregated foreign material in such
situation, as has been explained above, shall be cleared on payment of
central excise duty on transaction value as per its appropriate classification
and rate of duty determined onmerits.
GENERAL PROCEDURES UNDER CENTRAL EXCISE
1. Assessee conducting business both as an importer and a first stage

dealer permitted to take one common registration [Rule9(2)of CER]
CBEC, vide Notification No. 30/2016 CE (NT) dated 28.06.2016, has
specified that
(a) a person who is registered as a first stage dealer shall not be required
to take registration as an importer;or
(b) a person who is registered as an importer shall not be required to take
registration as a first stage dealer.
CBEC has issued Circular No. 1032/20/2016 CX dated 28.06.2016 to clarify
that an assessee conducting business both as a first stage dealer and an
importer can take single registration as he is exempted from the requirement
of taking a second registration. However, this facility is optional and any
assessee needing separate registration for his own business purposes, may
soregister.
Further, such an assessee will also have an option to file a single quarterly
return giving details of transactions as a first stage dealer and an importer,
one after the other in the same table ofreturn.
2. Manufacturers of readymade garments and made up articles of textiles

sold under a brand name with RSP of 1000 or more exempt from
physical verification of premises during registration-Notification
No.35/2001CE(NT)dated26.06.2001
Notification No. 35/2001 CE (NT) dated 26.06.2001, which lays down the
conditions and procedures for registration, provides that on receipt of an online
application for registration, the authorized officer will verify the premises
physically within 7 days of such receipt.
Notification No. 32/2016 CE (NT) dated 11.07.2016 has amended
Notification No. 35/2001 CE (NT) dated 26.06.2001 to exempt every
manufacturing factory or premises engaged in the manufacture or production
of goods falling under Chapters 61, 62 or 63 (except laminated jute bags
falling under headings or tariff item 6305, 6309 or 6310) of the First Schedule
to the Central ExciseTariffAct,1985 bearing a brand name or sold under a
brand name and having a retail sale price (RSP) of 1,000 and above.
Accordingly, there will be no post registration physical verification of the
premises in case of manufacturers of readymade garments and made up
articles of textiles sold under a brand name with RSP of 1000 or more.
Jewellery manufacturers (excluding manufacturer of articles of silver jewellery
not studded with diamond/ ruby/ emerald/ sapphire) are also exempted from
post registration physical verification of the premises
3. General bond for receiving goods at concessional rate of duty may be

executed with security also [Rule 4(5) of Central Excise (Removal of
Goods at Concessional Rate of Duty for Manufacture of Excisable and
Other Goods) Rules,2016]
As per rule 4(5) of the Central Excise (Removal of Goods at Concessional
Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016, the
applicant manufacturer is required to execute a general bond with surety for
receiving excisable goods at concessional rate ofduty.
Notification No. 46/2016 CE(NT) dated 26.09.2016 has added words or
security after the word surety in sub-rule (5) of rule 4. Therefore, in terms
of amended rule 4(5), now an applicant manufacturer can execute the general
bond with surety or security.
Digitally signed invoices with manual signatures are valid invoices under
central excise and service tax
CBEC has clarified vide Circular No. 1038/26/2016 CX dated 19.07.2016 that
a manufacturer or a service provider who opts to issue invoices authenticated
by digital signature may print a copy of such invoice and sign them manually
and forward the same to such customers who are unable to accept or receive
the digitally signed invoices. Such invoices in effect would be authenticated by
two signatures, digital signature as well as manual signature and would be
considered to be in conformity with rule 11 of Central Excise Rules, 2002 or
rule 4A, 4B and 4C of the Service Tax Rules, 1994. Such invoices would also
be a valid document to avail CENVAT credit.
EXPORT PROCEDURES
1. Infrastructure cess to be considered as duty for the purposes of

notifications issued under rule18 and rule19 of the CER
With effect from 01.03.2016, an infrastructure cess is being levied and
collected as a duty of excise on motor vehicles falling under heading 8703.
The rate ranges from 1% to 4% depending on specific characteristics
ofvehicles.
Notification Nos. 19/2004 CE (NT) and 21/2004 CE (NT) both dated
06.09.2004 issued under rule 18 of the CER provide for the procedure and
conditions for grant of rebate of duty paid on export of excisable goods and
rebate of duty paid on excisable goods used in manufacture of export
goods,respectively.
Similarly, Notification Nos. 42/2001 CE (NT) and 43/2001 CE (NT) both dated
26.06.2001 issued under rule 19 of the CER provide for the procedure and
conditions for exporting excisable goods under bond (without payment of duty)
and procurement of excisable goods without payment of duty for use in
manufacture of export goods, respectively.
Notification No. 26/2016 CE (NT) dated 05.05.2016 has amended all the
above notificationsto the effect that now the term duty in all the above
notifications would include infrastructure cess also thereby allowing
rebate/non-payment of infrastructure cess in case ofexports.
DEMAND, ADJUDICATION AND OFFENCES
1. Circular No. 967/01/2013 CX dated 01.01.2013 on recovery of confirmed

demands of indirect taxes during the pendency of stay application
rescinded
CBEC in an attempt to provide relief to taxpayers from recovery of confirmed
demands during pendency of stay, has rescinded Circular No.967/1/2013 CX
dated 01.01.2013 vide Circular No. 1035/23/2016 CX dated04.07.2016.
The new Circular provides that in cases where stay application is pending
before Commissioner (Appeals)/CESTAT, no recovery shall be made during
the pendency of the stay application for period prior to 06.08.2014 and for
period on/after 06.08.2014, Circular No. 984/08/2014 CX dated 16.09.2014
shall continue to befollowed.
Further, in cases where demand is confirmed by CESTAT/High Court,
recovery proceeding may be initiated after a period of 60 days from date of
order of CESTAT/High Court, as the case may be, where no stay has been
granted by High Court/Supreme Court against the order of CESTAT/High
Court, respectively.
Monetary limits for adjudication of show cause notice under central excise and
service tax revised
Circular No. 1049/37/2016 CX dated 29.09.2016 has issued new
instructions with regard to monetary limits for adjudication of show cause
notice under central excise and service tax. It has been directed that
henceforth powers of adjudication in both central excise and service tax shall
be exercised, based on the monetary limit of the duty/ tax/ credit involved in
a case, asunder:-
Sl. Central Excise Officer Monetary limits of duty/ tax/credit

No. demand for central excise and service
tax
1. Superintendent Not exceeding 10 lakh
2. Deputy/ Assistant Commissioner Above 10lakh but not exceeding50 lakh
3. Additional/ Joint Commissioner Above 50 lakhs but not exceeding 2 Crores
4. Commissioner cases exceeding 2 Crores
However, cases involving taxability, classification, valuation and extended period

of limitation will be kept out of the purview of adjudication by Superintendents.
Such cases, upto 10 lakh, will also be adjudicated by the Deputy Commissioner/
Assistant Commissioner in addition to the cases exceeding 10 lakhs but not
exceeding 50 lakhs.
For special category cases, following monetary limits have been prescribed:
(i) Cases of refund (including rebate) will be adjudicated by the Deputy
Commissioner/ Assistant Commissioner without any monetarylimit.
(ii) Cases relating to issues as specified in clause (a) [loss of goods in trans it or
in processing] and (d) [Utilisation of credit of excise duty under the provisions
of the Act or rules not made effective as yet] under the first proviso to
section 35B(1) of the Central Excise Act,1994 will be adjudicated in the
following manner:-
SI. Central Excise Officer Monetary limits for central excise

No.
1. Additional/Joint Commissioner Exceeding 50 lakh.
2. Deputy/Assistant Commissioner Above 10 lakh but not exceeding 50 lakh
3. Superintendent Not exceeding 10 lakh
(iii) In case different show cause notices have been issued on the same issue
answerable to different adjudicating authorities, show cause notices involving
the same issue shall be adjudicated by the adjudicating authority competent to
decide the case involving the highest amount ofduty.
REMISSION OF DUTY AND DESTRUCTION OF GOODS
1. Time limit specified for remission of duty under rule 21

Rule 21 of Central Excise Rules, 2002 has been amended vide Notification
No. 28/2016 CE dated 26.07.2016 to provide the time limit of 3 months for
deciding the remission of duty by the authority. This time limit shall start from
the date of receipt of application by theauthority.
Further, this period is further extendable by 6 months by an authority next
higher than the authority before whom the application for remission of duty is
pending on sufficient cause being shown and reasons to be recorded in
writing.
EXEMPTION BASED ON VALUE OF CLEARANCES
1. Threshold exemption (SSI exemption) raised from 6 crore to 10 crore for

jewellery manufacturers with simultaneous increase in eligibility limit from
12 crore to 15 crore
With effect from 26.07.2016, SSI exemption for articles of jewellery or parts of
articles of jewellery or both [excluding silver jewellery not studded with
diamonds/ ruby/ emerald/sapphire] has been fixed at 10 crore in a year with an
eligibility limit of 15 crore in the preceding year.
The SSI exemption for the month of March, 2016 for such jewellery
manufacturers has been fixed at 85 lakh, subject to the condition that value of
clearances for home consumption by a manufacturer from one or more
factory/premises of production or manufacture, or from a factory/premises of
production or manufacture by one or more manufacturers during the financial
year 2014-15 should not be more than 15 crore.
Notification No. 8/2003 CE dated 01.03.2003 has been amended vide
Notification No. 28/2016 CE dated 26.07.2016 to carry out the above
amendment.
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SECTION B: SERVICE TAX

BASIC CONCEPTS OF SERVICE TAX
1. Determination of service tax liability in a case involving hiring, leasing or
licensing of goods
In terms of Article 366(29A)(d) of the Constitution of India, transfer of the right
to use any goods for any purpose (whether or not for a specified period) for
cash, deferred payment or other valuable consideration is deemed to be a
sale of those goods by the person making the transfer, delivery or supply and
is liable to Sales Tax/Value Added Tax.
Further, in terms of section 66E(f) of the Finance Act, 1994, transfer of goods
by way of hiring, leasing, licensing or in any such manner without transfer of
right to use such goods isa"declaredservice"andhenceliabletoservicetax.
CBEC has clarified that to determine the service tax liability in any given case
involving hiring, leasing or licensing of goods, it is essential to determine
whether, in terms of the contract,thereisatransferoftherighttousethegoods.
For ascertaining whether there is transfer of the right to use the goods, the
following criteria has been laid down by the Supreme Court in the case of
Bharat Sanchar Nigam Limited v Union of India 2006 (2) STR 161 (SC):
(a) There must be goods available fordelivery;
(b) Theremustbeaconsensusadidemastotheidentityofthegoods;
(c) The transferee should have a legal right to use the goods - consequently
all legal consequences of such use, including any permissions or licenses
required therefor should be available to thetransferee;
(d) For the period during which the transferee has such legal right, it has to be
to the exclusion to the transferor this is the necessary concomitant of the
plain language of the statute - viz. a "transfer of the right" to use and not
merely a licence to use the goods;
(e) Having transferred the right to use the goods during the period for which it
is to be transferred, the owner cannot again transfer the same right to
others.
The Circular further clarified that to determine the service tax liability in each
case, the terms of the contract must be studied carefully vis-a-vis the above
criteria laid down by the SupremeCourt.
In other words, no a priori generalisations or assumptions about service tax
liability should be made and the terms of the contract should be examined
carefully, against the backdrop of the criteria laid down by the Supreme Court
in the Bharat Sanchar Nigam Limited case as well as other
judicialpronouncements
[Circular No. 198/08/2016 ST dated 17.08.2016]
PLACE OF PROVISION OF SERVICE
1. Clarification on levy of service tax on the services by way of

transportation of goods by a vessel from a place outside India to the
customs station in India with respect to goods intended for transhipment
to any country outside India.
In terms of rule 10 of the Place of Provision of Services Rules, 2012, the place
of provision of services of transportation of goods by air/sea, other than by
mail or courier, is the destination ofthe goods.
Thus, with respect to goods imported into a customs station in India intended
for transshipment to any country outside India, the destination of goods is not
a place in taxable territory in India but a country other than India if the same is
mentioned in the import manifest or the import report as the case may be and
the goods are transshipped in accordance with the provisions of the Customs
Act, 1962 and rules made thereunder.
Hence, with respect to such goods, services by way of transportation of goods
by a vessel from a place outside India to the customs station in India are not
taxable in India as the destination of such goods is a country other than India.
Point of Taxation
1. New rule 8B inserted in Point of Taxation Rules, 2011
New rule 8B inserted vide Notification No. 14/2017 ST dated 13.04.2017
hasspecified the date of bill of lading of goods in the vessel at the port of
export as the point of taxation of services provided by a foreign shipping
line to foreign charterer with respect to goods destined for India. However,
no service tax is leviable if the bill of lading is of date prior to 22.01.2017.
EXEMPTIONS AND ABATEMENTS
1. Clarification in respect of transportation of goods by sea

Notification No. 26/2012 ST dated 20.06.2012 provides an exemption on 70%
of value of services of transportation of goods in a vessel subject to the
fulfillment of the condition that CENVAT credit on inputs and capital goods
used for providing the taxable service, has not been taken under the
provisions of the CENVAT Credit Rules, 2004.
However, in case of foreign shipping lines, their services being exports from
their home country, are zero-rated in their home country and thus have
suffered no taxes. Further the foreign shipping lines do not get registered in
India and do not follow the provisions of CENVAT Credit Rules.
Thus, the condition for availing exemption under Notification No. 26/2012-ST
dated 20.06.2012 is not fulfilled by the foreign shipping lines. Hence, benefit of
conditional exemption will not be available to them and service tax will be paid
on full value of services.
SERVICE TAX PROCEDURES
1. Amendments in relation to service of transportation of goods by a vessel

by a foreign shipping line
(i) Person liable for paying service tax has been prescribed in relation to
service of transportation of goods by a vessel
Notification No. 2/2017 ST dated 12.01.2017 has amended rule 2(1)(d) of
Service Tax Rules, 1994 by inserting a new Item (EEC) in clause (i) of rule
2(1)(d) to prescribe that the person in India complying with sections 29, 30 or
38 read with section 148 of the Customs Act, 1962 would be the person liable
for paying service tax in relation to services provided or agreed to be provided
by a person located in non-taxable territory to a person located in non-taxable
territory by way of transportation of goods by a vessel from a place outside
India up to the customs station of clearance in India.
The person complying with sections 29,30 or 38 read with section 148 of the
Customs Act, 1962 is referred as Person-in-charge who in relation to vessel
means the master of the vessel as per section 2(31) of the Customs Act, 1962.
[Effective from 22.01.2017 to 22.04.2017]
Further, Notification No. 16/2017 ST dated 13.04.2017 has substituted the

above mentioned item (EEC) of rule 2(1)(d)(i) with effect from 23.04.2017, to
provide that the importer as defined under section 2(26) of the Customs Act,
1962 will be the person liable to pay service tax for the above mentioned
services.
Importer in relation to any goods at any time between their importation and
the time when they are cleared for home consumption, includes any owner,
beneficial owner or any person holding himself out to be the importer. [Section
2(26) of the Customs Act, 1962]
(ii) Reverse charge Notification amended to prescribe full reverse charge

With effect from 22.01.2017, Notification No. 3/2017 ST dated 12.01.2017
has amended Reverse Charge Notification No. 30/2012 ST dated 20.06.2012
so as to notify the service provided or agreed to be provided by a person
located in non-taxable territory to a person located in non-taxable territory by
way of transportation of goods by a vessel from a place outside India up to the
customs station of clearance in India under reverse charge mechanism.
Further, 100% service tax is payable by the person liable for paying service
tax other than service provider.
It has been clarified by inserting an explanation in the notification that the
person complying with the sections 29, 30 or 38 read with section 148 of the
Customs Act, 1962 shall be the person liable for paying service tax other than
service provider for the purpose of reverse charge notification for the period
22.01.2017 to 22.04.2017.
Further, with effect from 23.04.2017, for the purpose of reverse charge
notification in respect of the above mentioned service, the importer as defined
under section 2(26) of the Customs Act, 1962 has been notified as the person
liable for paying service tax other than service provider vide Notification
No.15/2017ST dated 13.04.2017.
(iii) Alternate mechanism for calculation of service tax, SBC & KKC
New sub-rule (7CA) has been inserted in rule 6 vide Notification No.
16/2017 ST dated 13.04.2017 which provides asunder:
In case of services of transportation of goods by sea provided by a foreign
shipping line to a foreign charterer with respect to goods destined for India, an
option has been provided to the person liable for paying service tax to pay an
amount calculated at the rate of 1.4% of the sum of cost, insurance and freight
(CIF) value of such imported goods.
Swachh Bharat Cess and Krishi kalyan Cess will be paid accordingly. Sub -
rule 7(D) and sub-rule (7E) has been amended suitably so as to include the
reference of sub- rule (7CA). Swachh Bharat Cess and Krishi Kalyan Cess
each will be paid @ 0.05% of Customs value of goods.
Clarifications on issues pertaining to OIDAR services

Circular No. 202/12/2016 ST dated 09.11.2016 has provided a list of 46 issues
and clarifications thereto in respect of various aspects pertaining to the withdrawal
of exemption from service tax on cross border B2C OIDAR services provided
online/electronically from a non-taxable territory to consumers in taxable territory in
India.
Prior to 01.12.2016, services received in taxable territory in India from outside the
taxable territory by Government, a local authority, a governmental authority or an
individual in relation to any purpose other than commerce, industry or any other
business or profession were exempted [cross border B2C (business to consumer)
services provided in taxable territory].
On the other hand, services received by other persons in taxable territory from
non - taxable territory [cross border B2B (business to business) services] were
taxable under reverse charge i.e.service recipient in taxable territory used to pay
tax.
Further, in view of rule 9(b) of Place of Provision of Service Rules, 2012,with
respect to online information and database access or retrieval services [OIDAR],
the place of supply was location of service provider and thus such cross border
B2B/B2C services provided by a person in non-taxable territory and received by a
person in taxable territory were outside the levy of servicetax.
Further, with effect from 01.12.2016, Notification No.46/2016-ST,47/2016-
ST,48/2016-STand 49/2016-STall dated 09.11.2016 provides that service tax
would be chargeable on online information and database access or retrieval [
OIDAR] services provided by any person located in non-taxable territory and
received by Government, local authority, governmental authority, or an individual
in relation to any purpose other than commerce, industry or any other business
or profession [cross border B2C (business to consumer)OIDAR services provided
in taxable territory].
Online information and database access or retrieval [OIDAR] services have been
re-defined in Service Tax Rules, 1994 to include electronic services. In this regard,
the following clarifications are issued in respect of various aspects pertaining to
the taxation of such services:-
Sr Issue Clarification
No
1 What is taxable Taxable territory has been defined in section 65B of

territory? the Finance Act, 1994 as the territory to which the
Finance Act, 1994 applies i.e. the whole of territory
of India other than the State of Jammu
andKashmir.
India includes not only the land mass but its
territorial waters, continental shelf, exclusive
economic zone or any other maritime zone as
defined in the Territorial Waters, Continental Shelf,
Exclusive Economic Zone and Other Maritime
Zones Act, 1976; the sea-bed and the subsoil
underlying the territorial waters; the air space
above its territory and territorial waters; and the
installations structures and vessels located in the
continental shelf of India and the exclusive
economic zone of India, for the purposes of
prospecting or extraction or production of mineral
oil and natural gas and supply thereof.
2 What do we mean It means those services where the service provider is

by cross border in non-taxable territory and the service recipient is
B2C services Government, a local authority, a governmental
provided in the authority or an individual in relation to any purpose
taxable territory? other than commerce, industry or any other business
or profession (located in the taxable territory in India)
and the place of provision of such services as
determined by the application of Place of Provision of
Service Rules, 2012, is in the taxable territory in India.
3 Are all cross No. Only cross border B2C OIDAR services provided
border B2C in the taxable territory have been made taxable w.e.f
services provided 1st December, 2016. Other cross border B2C services
in the taxable continue to be exempted. Further, cross-border B2B
territory made services have been taxable since prior to
taxable with effect 1st December, 2016, under reverse charge
from 1stDecember, mechanism.
2016?
4 Do OIDAR service No. The existing definition of OIDAR services given

s have the same in PoPSR, 2012 [clause (l) of rule 2] has been
meaning as redefined to assign the OIDAR services the same
defined in the meaning as assigned to it in the clause (ccd) of sub-
Place of Provision rule 1 of rule 2 of the Service Tax Rules, 1994
of Service Rules, [inserted vide notification No. 48/2016-ST].
2012? If no, what
do we mean
by OIDARservices
?
5 What do we mean Cross border B2C OIDAR services means

by Cross Border online information and database access or
B2C OIDAR servic retrieval services provided by a person located
es provided in in non-taxable territory to a non assesse online
taxable territory in recipient in taxable territory in India.
India? Non assessee online recipient has been
defined in Service Tax Rules, 1994 [rule
2(1)(ccba)] to mean Government, a local
authority, a governmental authority or an
individual receiving OIDARservices in relation to
any purpose other than commerce, industry or
any other business or profession, located in
taxable territory [notification No. 48/2016-ST
refers].
6 Is there any No. The current dispensation of taxing cross

change border B2B services under reverse charge
regarding cross mechanism i.e. the recipient business entity
borderB2B pays service tax, continues.
[business to Cross border OIDAR services provided in
business] taxable territory in India to a business entity will
services be taxed under reverse charge i.e. the business
provided in entity receiving the services will pay tax under
India? reverse charge.
Will the cross
border B2B
OIDAR services
provided in
taxable territory
in India to a
business entity
be taxed under
forward charge
or reverse
charge?
7
Service recipient in taxable Service Taxable/ Taxing Person
territory receiving cross Exempted Mechanism liable to
border B2C services tax
Government, a local authority, a OIDAR Taxable Forward Service

governmental authority or an [w.e.f. charge provider
individual in relation to any 01.12.2016] non-taxa
purpose other than commerce, territory
industry or any other business
or profession
Government, a local authority, a Other Exempted Exempted Exempte

governmental authority or an than
individual in relation to any OIDAR
purpose other than commerce,
industry or any other business
or profession
Other than Government, a local All Taxable Reverse Service

authority, a governmental including Charge recipient
authority or an individual in OIDAR taxable
relation to any purpose other territory
than commerce, industry or any
other business or profession
8 What are the 1. Notification Nos. 46/2016-ST, 47/2016-ST,

changes made in 48/2016-ST and 49/2016-ST have been issued
statutory/legal on 9th November, 2016 to effect these changes.
provisions and 2. These changes will however, come into force
when are these with effect from 1st December, 2016.
coming into effect?
9 What are the 1. Vide notification No. 46/2016-ST, the Place of

changes made in Provision of Services Rules, 2012 [PoPSR] are
the Place of being amended with effect from 1st December,
Provision of 2016,-
Services Rules, i. to assign the OIDAR services the same
2012 [PoPSR] and meaning as assigned to it in the clause (ccd)
what are its of sub-rule 1 of rule 2 of the Service Tax
implications? Rules, 1994 [inserted vide notification No.
48/2016-ST].
ii. to amend proviso of rule 3 of PoPSR so as to
make the proviso inapplicable to OIDAR
services.
iii. to omit the clause (b) of rule 9 of PoPSR.
2. As a result, default rule 3 of PoPSR will be
applicable in such cases from 1st December,
2016, whereby the place of provision of a service
is the location of recipient of services i.e. cross
border B2B/B2C OIDAR services received by a
person located in taxable territory will be leviable to
service tax in the taxable territory. In order to avoid
any confusion, the existing proviso to rule 3
of PoPSR has been made inapplicable
for OIDAR services
10 Even though the Vide notification No. 47/2016-ST, the existing

cross exemption [Sl. No. 34(a) of notification No. 25/2012-
border OIDARserv ST] to services provided by a person located in a non-
ices are being taxable territory and received by Government, a local
made leviable to authority, a governmental authority or an individual in
service tax with relation to any purpose other than commerce, industry
effect from 1st or any other business or profession, will not be
December, 2016, available for OIDAR services received by such
will these services persons w.e.f 1st December, 2016. OIDAR services
not get exempted have been assigned the same meaning as assigned to
by means of any it in the clause (ccd) of sub-rule 1 of rule 2 of the
existing Service Tax Rules, 1994 [inserted vide Notification no.
exemption? 48/2016-ST].
11 What is the Online information and database access or retrieval

definition [OIDAR] services have been defined in Service Tax
of OIDAR services Rules, 1994, rule 2(1)(ccd) to mean services whose
? delivery is mediated by information technology over the
internet or an electronic network and the nature of
which renders their supply essentially automated and
involving minimal human intervention, and impossible
to ensure in the absence of information technology and
includes electronic services such as,-
i. advertising on the internet;
ii. providing cloud services;
iii. provision of e-books, movie, music, software
and other intangibles via telecommunication
networks or internet;
iv. providing data or information, retrievable or
otherwise, to any person, in electronic form
through a computer network;
v. online supplies of digital content (movies,
television shows, music, etc.);
vi. digital data storage; and
vii. online gaming.
12 Do OIDAR service Using the internet, or some electronic means of

s include all communication, just to communicate or facilitate
services mediated outcome of service does not always mean that a
by information business is providing OIDAR services.
technology over
internet or
electronic
network?
13 What services Indicative list of non-OIDAR services

would NOT be i. Supplies of goods, where the order and
considered as processing is done electronically
OIDAR services?
ii. Supplies of physical books, newsletters,
newspapers or journals
iii. Services of lawyers and financial consultants
who advise clients through email
iv. Booking services or tickets to entertainment
events, hotel accommodation or car hire
v. Educational or professional courses, where the
content is delivered by a teacher over the
internet or an electronic network (in other words,
using a remote link)
vi. Offline physical repair services of computer
equipment
vii. Advertising services in newspapers, on posters
and on television
14 What type of OIDAR services covers services which are

services will be automatically delivered over the internet, or an
covered electronic network, where there is minimal or no
under OIDAR servi
ces? human intervention. In practice, this can be either:
i. where the provision of the digital content is entirely
automatic eg, a consumer clicks the Buy Now button
on a website and either:
the content downloads onto the consumers
device, or
the consumer receives an automated e-mail
containing the content
ii. where the provision of the digital content is
essentially automatic, and the small amount of
manual process involved doesnt change the nature
of the supply from an OIDAR service
All electronic services that are provided in the ways
outlined above are OIDAR services.
15 Examples of services whether or not OIDAR services
Service Whether Provision Whether it is OIDA

of service mediated Automated and R
by information impossible to servi
technology over the ensure in the ce
internet or an absence of
electronic network information
technology
Pdf document Yes No No

manually emailed
by provider
Pdf document Yes Yes Yes

automatically
emailed by
providers system
Pdf document Yes Yes Yes

automatically
downloaded from
site
Stock photographs Yes Yes Yes

available for
automatic
download
Online course Yes Yes Yes

consisting of pre-
recorded videos
and downloadable
pdfs
Online course Yes No No

consisting of pre-
recorded videos
and downloadable
pdfs plus support
from a live tutor
Individually Yes No No
commissioned
content sent in
digital form eg,
photographs,
reports, medical
results
16 Indicative List of OIDAR services

1. Website supply, web-hosting, distance maintenance of
programmes and equipment;
(a) Website hosting and webpage hosting;
(b) automated, online and distance maintenance of programmes;
(c) remote systems administration;
(d) online data warehousing where specific data is stored and retrieved
electronically;
(e) online supply of on-demand disc space.
2. Supply of software and updating thereof;
(a) Accessing or downloading software (including
procurement/accountancy programmes and anti-virus software) plus
updates;
(b) software to block banner adverts showing, otherwise known as
Banner blockers;
(c) download drivers, such as software that interfaces computers with
peripheral equipment (such as printers);
(d) online automated installation of filters on websites;
(e) online automated installation of firewalls.
3. supply of images, text and information and making available of
databases;
(a) Accessing or downloading desktop themes;
(b) accessing or downloading photographic or pictorial images or
screensavers;
(c) the digitised content of books and other electronic publications;
(d) subscription to online newspapers and journals;
(e) weblogs and website statistics;
(f) online news, traffic information and weather reports;
(g) online information generated automatically by software from specific
data input by the customer, such as legal and financial data, (in
particular such data as continually updated stock market data, in real
time);
(h) the provision of advertising space including banner ads on a
website/web page;
(i) use of search engines and Internet directories.
4. supply of music, films and games, including games of chance and
gambling games, and of political, cultural, artistic, sporting,
scientific and entertainment broadcasts and events;
(a) Accessing or downloading of music on to computers and mobile
phones;
(b) accessing or downloading of jingles, excerpts, ringtones, or other
sounds;
(c) accessing or downloading of films;
(d) downloading of games on to computers and mobile phones;
(e) accessing automated online games which are dependent on the
Internet, or other similar electronic networks, where players are
geographically remote from one another.
(5) supply of distance teaching.
(a) Automated distance teaching dependent on the Internet or similar
electronic network to function and the supply of which requires limited
or no human intervention, including virtual classrooms, except where
the Internet or similar electronic network is used as a tool simply for
communication between the teacher and student;
(b) workbooks completed by pupils online and marked automatically,
without human intervention.
17 Who shall be liable Service providers providing OIDAR services to a non-
to collect and assesse online recipient in taxable territory would be
discharge the responsible for collection of service tax and remitting
service tax liability the same to the Government of India. However, the
in cases of service provider in the non-taxable territory may
provision of cross appoint an agent in the taxable territory who will be
border person liable for paying service tax.
B2C OIDAR servic
es?
18 When will the When an intermediary located in the non-

liability to collect taxable territory including an electronic platform,
and discharge arranges or facilitates provision of cross border
service tax for B2C OIDAR service but does not provide the
providing cross main service on his account, the intermediary
border B2C shall be deemed to be receiving such services
services in taxable from the service provider in non-taxable territory
territory, be on an and providing such services to the non-assesse
intermediary/electr online recipient except when such intermediary
onic platform and satisfies all the following conditions, namely :-
not on service 1. the invoice or customers bill or receipt issued or
provider in the made available by such intermediary taking part
non-taxable in the provision clearly identifies the service in
territory? question, its provider in non-taxable territory and
the service tax registration number of the
provider in taxable territory;
2. the intermediary involved in the provision does
not authorise the charge to the customer or take
part in its charge i.e. intermediary neither
collects or processes payment in any manner
nor is responsible for the payment between the
non-assesse online recipient and the provider of
such services;
3. the intermediary involved in the provision does
not authorise delivery;
4. the general terms and conditions of the
provision are not set by the intermediary
involved in the provision but by the service
provider:
Thus, in the context of cross border B2C OIDAR
services provided to individual consumers, either the
underlying supplier of services or the
intermediary/digital platform operator, depending on
who is seen to be providing the electronic services,
would be required to collect service tax from
consumers and remit the tax to the Government.
When the service provider in non-taxable
territory is represented for any purpose in
taxable territory by a person, then such person
is deemed to be the person liable for paying
service tax [notification No. 48/2016-ST refers].
19 What is the If the electronic market place owner enables a

aggregator model potential customer to connect with persons providing
in the context of service of a particular kind under the brand name or
the cross-border trade name of the market place owner, he is covered
provision of under the aggregator model. The aggregator is either
electronic services required to have a physical presence in India or is
in the B2C required to appoint a person in India to discharge the
context? compliance liability on his behalf.
20 If the owner of If the intermediary successfully establishes that he is

market place is merely an intermediary by satisfying the conditions as
acting merely as discussed at Sl. No. 18 above, the actual provider of
an intermediary, is OIDAR services in non-taxable territory shall be
he liable to required to register and discharge service tax liability.
register and pay If intermediary does not satisfy the said conditions, the
service tax? If not, intermediary will be deemed to be receiving and
then on whom providing cross border OIDAR services in taxable
does this liability territory and thus liable for collecting service tax from
rest? consumers in taxable territory and depositing with the
Government of India. However, the intermediary
services provided by such intermediary (as defined
under Provision of Place of Service Rules) for which it
charges fee from the service provider will continue to
be non-taxable, provided the intermediary falls in non-
taxable territory.
21 Is there There is a presumption that for each transaction in the

any deeming supply chain between an OIDAR services/electronic
provision for the services provider and the end consumer, each
provider of online intermediary (such as a content aggregator) is deemed
information and to have received and provided the said service
database access provided the conditions discussed at Sl. No. 18 above
or retrieval are not satisfied. To give effect to the above, a proviso
services/electronic has been inserted in the Service Tax Rules in Rule 2
services? (1) (d) (ii) [notification No 48/2016-ST refers].
22 Please give an For example, a business, which provides the

example where applications through its website would be deemed to
the intermediary is be providing these applications to the final customer if
the person liable any of the conditions mentioned at Sl. No. 18 are not
to pay service tax. fulfilled. Therefore business providing the applications
through its website would be responsible for taking
registration with CBEC and paying service tax and not
the business that owns/makes the applications
(content owner).
23 Please give an In some instances, the service may be supplied

example of service directly by the owner of the electronic content to the
procured from final consumer. For instance, an individual purchases a
individual or song directly from an independent artist via his or her
market place? website. Such owner shall be responsible for taking
registration and payment of service tax. Other
situations may involve transactions between multiple
intermediaries. For instance, in the case of a ring tone,
the content owner may enter into a licensing
agreement with an aggregator of ring tones who in turn
enters into agreements with mobile telecom providers
that provides these ringtones to their mobile
customers. Here, telecom operator shall be
responsible for taking registration and collection of
service tax from customers and payment of the same
to the Government of India. Similar arrangements exist
when creators of applications contract with applications
stores or platforms from where customers purchase
these applications by paying to the store or the
platform via which the applications was bought. Here,
application store or platform shall be responsible for
taking registration and collection of service tax from
customers and payment of the same to the
Government of India.
24 Who is considered In the following situations, taxable persons involved in

as not taking part the provision of service of online information and
in providing the database access or retrieval services cannot be
service deemed as taking part in the said provision:-
of OIDAR services i. provider of payment services (e.g. a credit card
? company) is not deemed as taking part in the
provision of the said service to the final
customer if that provider only processes the
payment.
ii. The internet provider is not taking part in the
provision of the said service when he is only
making the internet network available for
carrying of the content and/or collection of
payment (via wi-fi, cable, satellite, other).
iii. In cases where a mobile operator only performs
the functions of carrying the content and/or
processing the payment (in the same way that
an internet provider makes the internet network
available), that mobile operator should be
treated in the same way and not as providing
the said service of online information and
database access or retrieval services. If,
however, a mobile operator is involved in any
way other than that described above (carrying of
the content or processing of payment) his
participation cannot be disregarded. In other
words, his involvement in the provision of the
service would then become sufficiently
predominant and therefore he should be seen
as taking part in the supply. One of the tests
which should help to identify whether a mobile
operator takes part in the cross-border provision
of service is to verify whether the network is
essential for the provision of the said service.
Another possible point is to verify whether the
payment collection covers only a simple charge
to a bill.
iv. There is no doubt that where an application
store or a portal puts up such electronic service
for supply, it must be seen as predominantly
involved in the provision of that service and it
should therefore be regarded as taking part in
the supply. The fact that there is an additional
intermediary taking part in that supply who is
placed between the app store or portal and the
final customer (e.g. a mobile operator), does not
automatically change the situation of the app
store or portal.
25 What would be the In order for a taxpayer or a tax authority to determine

basis to determine whether a person is taking part in the provision of
whether a person online information and database access or retrieval
is taking part in the services provided through a telecommunications
provision of cross- network, an electronic interface or a web portal, the
border online facts and the nature of the contractual relations need
database service? to be examined. If there is a contradiction between
contractual arrangement and economic reality, then
the latter will prevail. This means that even though
there is contract to the contrary but the intermediary
involved in the supply authorises the charge to the
customer or takes part in its charge i.e. intermediary
collects or processes payment in any manner and is
responsible for the payment between the non-assesse
online recipient and the supplier of such services.
Further, the intermediary involved in the supply does
authorise delivery of online information and database
access or retrieval services;
26 Whether Registration of suppliers of cross border

registration of the B2C OIDAR services in India is mandatory in India. If
service provider the service provider does not have a physical presence
would be in India, then he can appoint an authorized
mandatory? person/agent to comply with the service tax laws and
remit tax to the Government. In case the service
provider is represented by authorized person or agent,
such person may be allowed to take registration on
behalf of service provider and comply with all service
tax provisions on behalf of such service provider.
27 How can the Person receiving such services shall be deemed to be

service provider located in the taxable territory if any two of the
located in non- following non-contradictory conditions are satisfied,
taxable territory namely :-
providing cross 1. the location of address presented by the service
border OIDAR recipient via internet is in taxable territory;
services, identify
2. the credit card or debit card or store value card
that the service
or charge card or smart card or any other card
recipient is in
by which the service recipient settles payment
taxable territory
has been issued in the taxable territory;
and whether the
service recipient in 3. the service recipients billing address is in the
taxable territory is taxable territory;
non-assesse 4. the internet protocol address of the device used
online recipient or by the service recipient is in the taxable territory;
not?
5. the service recipients bank in which the account
used for payment is maintained is in the taxable
territory;
6. the country code of the subscriber identity
module (SIM) card used by the service recipient
is of taxable territory;
7. the location of the service recipients fixed land
line through which the service is received by the
person, is in taxable territory.
Further, the person in the taxable territory receiving
such services shall be deemed to be non-assesse
online recipient if such person does not have a service
tax registration in the taxable territory.
[notification No.48/2016-ST refers]
28 Which authority Large Taxpayer Unit, Bengaluru (LTU-Bengaluru)

will be the under the Central Board of Excise and Customs
administrative (CBEC) would be the administrative authority for the
authority under purpose of administration of service provider in non-
CBEC for the taxable territory providing cross
purposes of border OIDAR services provided to non-assesse
administration of online recipient in taxable territory.
cross
border OIDAR
services provided
to non-assesse
online recipient in
taxable territory?
29 What is procedure First down load firefox software.

of registration? Go to site https://www.aces.gov.in/ It will open home
page for ACES. Click Service Tax. It will open login
window. Click on new user to click here. Fill in the
details such as user ID (which you want), name,
mobile number, email etc. It will generate user ID and
password, which shall be delivered on e-mail provided.
Login again with login ID and password. Complete
registration formalities in Form ST 1A and submit. It
will generate non-PAN based registration number and
acknowledgment. Registration in FORM ST 2A shall
be deemed to be issued from the date of application.
Download and keep it. Physical registration shall be
delivered in PDF format by email/post.
30 How registration Special registration procedure is being provided, which

would be granted will be based on country code/registration/business
in absence of number obtained by such service provider in the
PAN? What is country of incorporation. This details of this procedure
PAN? would soon be available on cbec.gov.in.
31 Whether the Documents, such as copy of certificate of

application for registration/incorporation would be accepted in PDF
registration and format, which may be forwarded to the authority
other documents granting registration via Email. Further, a simple
would be required declaration by the service provider stating and
to be submitted in affirming that they would charge service tax from the
physical form? individual customers in India and deposit the same
with Government of India through internet is required.
32 How to deposit Payment of service tax would be made online as in

service tax and file case of other resident service providers in the taxable
service tax territory electronically through internet banking on web
returns? site https://www.aces.gov.in/ . Such service providers
would file ST-3C returns online as done by other
service providers located in India electronically through
internet banking on website https://www.aces.gov.in/ ..
33 Whether threshold Service providers in non-taxable territory may seek

exemption of Rs registration under rule 4 of the Service Tax Rules,
10 lakhs should 1994 in form ST 1A, within 30 days from 1st December,
apply to such 2016, if they crossed threshold of Rs.10 lakh in the
transactions? previous financial year, i.e, in 2015-16 for provision of
any taxable service in India and service tax liability
would arise after crossing the threshold.
34 Whether such One of the conditions for availing small scale

services would be exemption [notification No. 33/2012-ST refers] is that
considered as the aggregate value of taxable services rendered by a
non-taxable provider of taxable service from one or more premises,
services for the does not exceed ten lakh rupees in the preceding
previous years financial year. Cross border B2C services were
and benefit of taxable. However, such services when provided by a
Rs.10 lakh would person in non-taxable territory to non-assesse online
be available in recipient were exempted. If total turnover of such
current financial services crossed Rs.10 lakh in previous year, the small
year? exemption benefit would not be admissible.
35 Most of the online Small scale exemption is not applicable to

services are taxable services provided by a person under a brand
branded services. name or trade name, whether registered or not, of
Whether small another person. [notification No. 33/2012-ST refers]
scale exemption [Brand name or trade name has been defined in the
would be available said notification to mean a brand name or a trade
to the said service name, whether registered or not, that is to say, a name
providers? or a mark, such as an invented word or writing, or a
symbol, monogram, logo, label, signature, which is
used for the purpose of indicating, or so as to indicate
a connection, in the course of trade, between a service
and some person using the name or mark with or
without any indication of the identity of that person.]
36 How would the The value of taxable service would be calculated on

service provider in the basis of the rate of exchange, which shall be the
non-taxable applicable rate of exchange as per the generally
territory compute accepted accounting principles on the date when point
the value of of taxation arises in terms of the Point of Taxation
his/her turnover in Rules, 2011 [Rule 11 of Service Tax Rules]. The point
Indian rupees? of taxation (or tax point, as it is called in certain
jurisdictions) in the instant case would generally be
earliest of the following three events of issuance of
invoice or receipt of payment or completion of
provision of service.
37 Whether the No
foreign supplier
would be eligible
for input tax
credits?
38 Whether the No. It is not necessary for the service recipient to be an

individual Indian resident for the service tax liability to arise. The
consumer of cross person in taxable territory receiving such services
border service should satisfy any two of the non-contradictory
necessarily has to conditions specified in Sl. No. 27 above.
be an Indian
resident for the
service tax liability
to arise?
39 What are the The data to be recorded would be limited to what is

requirements of required to satisfy that the tax for each provision of
record keeping? service has been charged and accounted for
appropriately. The information that is available to
service provider in the course of their normal business
activity would be relied upon. This would be limited to
the type of service, the date of the service, the service
tax payable and the information used to determine the
place where the customer has her usual residence.
40 What are the In case of online information and database access or

provisions relating retrieval services provided or agreed to be provided in
to invoice? taxable territory by a person located in the non-taxable
territory, an invoice, a bill or, as the case may be,
challan shall include any document, by whatever name
called, whether or not serially numbered, but
containing name and address of the person receiving
taxable service to the extent available and other
information in such documents as required under sub-
rule (1) of rule 4A of the Service Tax Rules, 1994.
[notification No.48/2016-ST refers]
41 When does the The liability to pay service tax is determined under
liability of service Point of Taxation Rules, 2011. On or after
provider located in 1stDecember, 2016 service provider would charge total
non-taxable tax of 15% [Service tax 14%+ Swachh Bharat Cess
territory arise? 0.5% + Krishi Kalyan Cess 0.5%] along with
How would he/she consideration for online information and database
pay the tax? access or retrieval services. This tax shall be
deposited with the Central Government by the 6th day
of the following month in which service was provided.
Duty may be deposited electronically through internet
banking on web site https://www.aces.gov.in/ .
42 What evidence The service provider is required to visit the
would the service website https://www.aces.gov.in/ for paying his/her tax.
provider have that She would be required to opt for e-payment. As on
he/she has paid date e-payment facility is available with respect to
his/her tax? Indian banks only. On electronic payment of service
tax, a challan will be generated which will be the proof
of having made the service tax payment.
43 Whether the It has been provided that in case of OIDAR services

service provider is provided or agreed to be provided by any person
allowed to appoint located in a non-taxable territory and received by non-
a representative to assesse online recipient, any person located in taxable
discharge his/her territory representing such service provider for any
liabilities and purpose in the taxable territory shall be the person
responsibilities? liable for paying service tax [notification No.48/2016-
ST refers].
44 How many returns The taxable person shall submit a half-yearly return in
are required to be Form ST-3C electronically for the months covered in
filed and what is the half-yearly return by the 25th of the month following
the frequency of the particular half-year.
returns?
SECTION C:
CUSTOMS AND FOREIGN TRADE POLICY
LEVY OF AND EXEMPTIONS FROM CUSTOMS DUTY
1. Amendment in the Customs (Import of Goods at Concessional Rate of

Duty for Manufacture of Excisable Goods) Rules,2016
Customs (Import of Goods at Concessional Rate of Duty for Manufacture of
Excisable Goods) Rules, 2016 have been amended vide Notification No.
100/2016 Cus (NT) dated 14.07.2016 as under:
(i) Service providers also allowed to import goods at concessional rate of duty
Rule 2 has been amended so as to apply these rules mutatis mutandis to a
service provider also. Further, any reference to the expressions manufacture,
manufacturer, excise duty and factory in these rules shall be construed as
service, service provider, service tax and registered premises respectively of a
service provider referred to in Chapter V of the Finance Act, 1994 and the
rules made there under
(ii) Furnishing of security also permitted

Rule 5, inter alia, requires a manufacturer who intends to avail the benefit of
an exemption notification, to submit a continuity bond with such surety
undertaking to pay the amount equal to the difference between the duty
leviable on such inputs but for the exemption and that already paid, if any, at
the time of importation, along with applicableinterest.
Said rule has been amended to allow the manufacturer to either submit a
security or a surety for the amount specified herein.
(iii) Time period for re-export of unutilized or defective imported goods extended
from 3 months to 6 months
Rule 7 allows the manufacturer who has availed the benefit of exemption
notification to re-export the unutilized or defective imported goods, with the
permission of the jurisdictional Deputy/Assistant Commissioner of Central
Excise within 3 months from the date of import, subject to specified conditions.
The said time period allowed for re-export has been extended from 3 months
to 6 months.
CLASSIFICATION OF GOODS
Clarification in relation to Project Imports
It has been clarified by CBEC vide Circular No. 15/2017 Cus dated 19.04.2017
that individual exemption notification will apply even for items grouped under the
heading9801 of the customs tariff (project imports) liable to duty at the project rate
as per recent Supreme Courtjudgement.
IMPORTATION, EXPORTATION AND

TRANSPORTATION OF GOODS
1. Customs (Provisional Duty Assessment) Regulations, 2011 rescinded

CBEC reviewed the said regulations and rescinded Customs (Provisional
Duty Assessment) Regulations, 2011 vide Notification No. 113/2016 Cus
(NT) dated 22.08.2016 since section 18 itself lays down the procedure to be
followed in the case of provisionalassessment.
Further, for the sake of uniformity of practice, transparency and predictability
for the taxpayer, the CBEC has issued following revised and simplified
guidelines for provisional assessment vide Circular No. 38/2016Cus dated
22.08.2016:
Wherever, duty is to be assessed provisionally, the importer shall:
(a) execute a bond in the prescribed form, for the purposes of undertaking to
pay on demand the deficiency, if any, between the duty as may be finally
assessed and the duty provisionally assessed;and
(b) furnish prescribed amount of security for the payment of the duty
deficiency. No sureties shall be obtained. The security to be obtained shall
be in the form of a bank guarantee or a cash deposit, as convenient to the
importer.
Further, the requirement of depositing 20% deposit of the provisional duty has
been dispensed with
2. Deferred Payment of Import Duty Rules, 2016 notified
The Deferred Payment of Import Duty Rules,2016 have come into force vide
Notification No. 134/2016 Cus (NT) dated 02.11.2016 . These rules will apply to
eligible importers i.e. class or classes of importers specified by the Central
Government who shall pay such duty electronically The new rules have become
effective from 16.11.2016. The salient features of the new rules are discussed
hereunder:
Information about intent to avail benefit of notification: An eligible importer
intending to avail the benefit of deferred payment shall intimate to the Principal
Commissioner/Commissioner of Customs, having jurisdiction over the port of
clearance, his intention to avail the said benefit who on being satisfied with the
eligibility of the importer allow him to pay the duty by duedates.
Electronic payment of duty: The eligible importer shall pay the duty
electronically: However, the Assistant/Deputy Commissioner of Customs may for
reasons to be recorded in writing, allow payment of duty by any mode other than
electronicpayment.
Deferred payment not to apply in certain cases: If there in default in payment of

duty by due date more than once in three consecutive months, this facility of
deferred payment will not be allowed unless the duty with interest has been paid
infull.
The benefit of deferred payment of duty will not be available in respect of the
goods which have not been assessed or not declared by the importer in theentry.
Due dates for deferred payment of import duty : The eligible importer has to
pay the duty by the dates mentioned below inclusive of the period (excluding
holidays) as mentioned in section47(1):-
For goods corresponding to bill of entry Duty to be paid by
returned for payment from
st th th
1 to 15 day of any month 17 day of that month
th nd
16 day till the last day of any month other than 2 day of the following month
March
th th st
16 day till the 29 day of March 31 March
th st 2nd April
30 March to 31 March
(For the period 16.11.2016 till 30.03.2017)
Further, with effect from 31.03.2017,the due date of deferred payment of import
duty has been substituted vide Notification No. 28/2017 Cus (NT) dated
31.03.2017 which provides as under:-
S. Goods corresponding to Bill of Due date of payment of duty,

No. Entry returned for payment from inclusive of the period (excluding
holidays) as mentioned in section
47(2)
1. st th th
1 day to 15 day of any month 16 day of that month
2. th st
16 day till the last day of any 1 day of the following month
month other than March
3. th st st
16 day till the 31 day of March, 31 March
3. Notified Importers to make deferred payment of import duty
Central Government vide Notification No. 135/2016 Cus (NT) dated

02.11.2016 has made Importers certified under Authorized Economic Operator
Programme as AEO (Tier-Two) and AEO (Tier-three) as eligible importers for
the deferred payment of duty scheme. AEO means Authorized Economic
Operator certified by the Directorate General of Performance Management
under CBEC.
DUTY DRAWBACK
1. Clarification on availing rebate of duties paid on inputs /procuring inputs
without payment of duty for use in manufacture or processing of export
goods and admissibility of duty drawback in such cases
Circular No. 1047/35/2016 CX dated 16.09.2016 has clarified that:-
(i) Where in respect of exports, CENVAT credit is not availed on inputs but input
stage rebate on excisable goods except diesel is availed under rule 18 of the
Central Excise Rules,2002,drawback of customs portion, as per rates and
caps specified in column(6) and (7) [drawback when CENVAT facility has
been availed] of the drawback schedule shall be admissible;
(ii) Where in respect of exports, CENVAT credit is not availed on inputs but the
inputs except diesel, are procured without payment of Central Excise duty
undersub -rule(2) of rule 19 of Central Excise Rules, 2002, drawback of
Customs port ion, as per rates and caps specified in column (6) and (7)
[drawback when CENVAT facility has been availed] of the drawback schedule
shall be admissible;
(iii) Where in respect of exports, input stage rebate on diesel under rule 18 of
Central Excise Rules, 2002 is availed or diesel is procured without payment of
Central Excise duty under sub-rule (2) of rule 19 of Central Excise Rules,
2002, no drawback either under column (6) and (7) [drawback when CENVAT
facility has been availed] or column (4) and (5) [drawback when CENVAT
facility has not been availed] of the drawback schedule shall be admissible.
PROVISIONS RELATING TO ILLEGAL IMPORT, ILLEGAL

EXPORT,CONFISCATION, PENALTY &
ALLIED PROVISIONS
1. Immediate prosecution in case of gold

Circular No. 27/2015 Cus dated 23.10.2015 contains the guidelines for
launching of prosecution in relation to offences punishable under Customs
Act, 1962. It, inter alia, provided that where the offence relates to certain
specified items; prosecution may preferably be launched immediately after
issuance of show cause notice (and not on completion of
adjudicationproceedings).
Henceforth, gold has also been included in the list of such specified goods. In
other words, where the offence relates to gold, prosecution may preferably be
launched immediately after issuance of show causenotice.
[Circular No. 46/2016 Cus dated 04.10.2016]
2. Silver bullion and cigarettes notified under section 123 of the Customs
Act,1962
Section 123 of the Customs Act, 1962 stipulates that where gold, and
manufactures thereof, watches, and any other class of goods notified by the
Central Government, are seized under the Customs Act, 1962 in the
reasonable belief that they are smuggled goods, the burden of proving that
they are not smuggled goods shall be on the accused and not on
theDepartment.
Earlier, a list of items like synthetic yarn and metallised yarn, fabrics made
wholly or mainly of synthetic yarn, electronic calculators, watches, dials and
cases for watches, silver bullions, etc. were notified vide Notification No.
204/84 Cus dated 20.07.1984 for the said purpose.
Now, Notification 103/2016 Cus (NT) dated 25.07.2016 has rescinded
aforesaid notification and specified only silver bullion and cigarettes for the
purpose of said section. [Effective from 25.07.2016]
3. Passing of order made mandatory in case of seizure of goods under

section 110 of the Customs Act,1962
CBEC has instructed vide Instruction No. 01/2017 Cus dated 08.02.2017
that whenever goods are being seized, the proper officer must also pass an
appropriate order (seizure memo/order/etc.) in addition to panchnama, clearly
mentioning the reasons to believe that the goods are liable for confiscation.
Further, the person from whom the goods are seized to be issued a show
cause notice, usually within six months, irrespective of the fact whether goods
remain seized or are provisionally released. However, the Principal
Commissioner/ Commissioner of Customs, on sufficient cause being shown,
can extend the time period for issue of Show cause notice, by a further 6
months.
FOREIGN TRADE POLICY

1. Amendments in EOU, EHTP, STP and BTP schemes
Following amendments have been made in EOU, EHTP, STP and BTP schemes
vide FTP Notification No. 23/2015-2020 dated 13.08.2016
(i) Earlier, transfer of manufactured goods from one EOU / EHTP / STP / BTP
unit to another EOU / EHTP / STP / BTP unit was allowed with prior intimation
to concerned Development Commissioners of the transferor and transferee
units as well as concerned Customs authorities, following procedure of in-
bond movement of goods.
Under the amended provisions, transfer of manufactured goods from one EOU /
EHTP/ STP / BTP unit to another EOU / EHTP / STP / BTP unit is allowed with
prior intimation to concerned Development Commissioners of the transferor and
transferee units as well as concerned Customs authorities, as per following
procedure for movement of goods:
(a) Any procurement by one unit from another should be supported by a
Procurement Certificate or pre-authenticated procurement certificates,
as applicable;
(b) The supply of the goods from one unit to another shall be based upon
the usual commercial documents, such as, invoice and delivery challan;
(c) Upon receipt of goods, copies of documents shall be provided to the
jurisdictional office of the sending and receiving unit by way of intimation.
(ii) Earlier, when existing EHTP / STP units applied for conversion / merger to
EOU unit and vice-versa, they had to remain in bond and avail exemptions in
duties and taxes asapplicable.
Under the amended provisions, EHTP / STP units, who have applied for
conversion / merger to EOU unit and vice-versa, can avail exemptions in
duties and taxes as applicable without having to remain in bond.

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FAROOQ HAQUE CLASSES IDT RTP FOR NOV 2017

Statutory Update INDIRECT TAX Laws

SECTION A: CENTRAL EXCISE

(b) Requirement of enclosing photocopies of the railway receipts with STTG

(e) Definition of input service amended

GENERAL PROCEDURES UNDER CENTRAL EXCISE

1. Assessee conducting business both as an importer and a first stage

2. Manufacturers of readymade garments and made up articles of textiles

3. General bond for receiving goods at concessional rate of duty may be

1. Infrastructure cess to be considered as duty for the purposes of

DEMAND, ADJUDICATION AND OFFENCES

1. Circular No. 967/01/2013 CX dated 01.01.2013 on recovery of confirmed

Sl. Central Excise Officer Monetary limits of duty/ tax/credit

4. Commissioner cases exceeding 2 Crores

However, cases involving taxability, classification, valuation and extended period

SI. Central Excise Officer Monetary limits for central excise

3. Superintendent Not exceeding 10 lakh

1. Time limit specified for remission of duty under rule 21

[Effective from 02.02.2017]

EXEMPTION BASED ON VALUE OF CLEARANCES

1. Threshold exemption (SSI exemption) raised from 6 crore to 10 crore for

SECTION B: SERVICE TAX

PLACE OF PROVISION OF SERVICE

1. Clarification on levy of service tax on the services by way of

1. Clarification in respect of transportation of goods by sea

SERVICE TAX PROCEDURES

1. Amendments in relation to service of transportation of goods by a vessel

Further, Notification No. 16/2017 ST dated 13.04.2017 has substituted the

(ii) Reverse charge Notification amended to prescribe full reverse charge

Clarifications on issues pertaining to OIDAR services

1 What is taxable Taxable territory has been defined in section 65B of

2 What do we mean It means those services where the service provider is

4 Do OIDAR service No. The existing definition of OIDAR services given

5 What do we mean Cross border B2C OIDAR services means

6 Is there any No. The current dispensation of taxing cross

Government, a local authority, a OIDAR Taxable Forward Service

Government, a local authority, a Other Exempted Exempted Exempte

Other than Government, a local All Taxable Reverse Service

8 What are the 1. Notification Nos. 46/2016-ST, 47/2016-ST,

9 What are the 1. Vide notification No. 46/2016-ST, the Place of

10 Even though the Vide notification No. 47/2016-ST, the existing

11 What is the Online information and database access or retrieval

12 Do OIDAR service Using the internet, or some electronic means of

13 What services Indicative list of non-OIDAR services

14 What type of OIDAR services covers services which are

15 Examples of services whether or not OIDAR services

Service Whether Provision Whether it is OIDA

Pdf document Yes No No

Pdf document Yes Yes Yes

Pdf document Yes Yes Yes

Stock photographs Yes Yes Yes

Online course Yes Yes Yes

Online course Yes No No

16 Indicative List of OIDAR services

18 When will the When an intermediary located in the non-

19 What is the If the electronic market place owner enables a

20 If the owner of If the intermediary successfully establishes that he is

21 Is there There is a presumption that for each transaction in the

22 Please give an For example, a business, which provides the

23 Please give an In some instances, the service may be supplied

24 Who is considered In the following situations, taxable persons involved in

25 What would be the In order for a taxpayer or a tax authority to determine

26 Whether Registration of suppliers of cross border