Amendments effective from October 1, 2014

1.            Levy of service tax even on radio taxi (Radio Taxi defined as "a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service”)

Service Tax Authorities have issued Notification 19/2014 wrt the exchange rate to be adopted for computation of service tax liability on forex remittances under reverse charge mechanism (import of services) wef October 1, 2014.  In this regard, we request you to note the following: 

Wipro Limited - Form C can be issued even when the same is not declared in the VAT returns
Maya Appliances - Quantity Discount even if disclosed on the invoice cannot be allowed as deduction
ABB - Inter State movement of goods in pursuance of works contract liable to CST and not local VAT

Commercial Tax Department of Karnataka Government has introduced an all new System of VAT filing wherein a dealer is required to file the detailed list of Purchases, Sales, Interstate Purchases, Stock Transfer and Imported Purchases in the specified format.  These statements are required to be uploaded before filing monthly Return.  The statements are required to be filed by dealers with a total turnover exceeding Rs 50 Lakhs in the previous year or cumulatively at any point in time during the current year. 

Following is the summary of the clarifications issued by the CBEC on applicability of service tax on contributions received by Residential Welfare Associations (RWA) from its members. 

• Service tax exemption is available on monthly contributions received from members not exceeding an amount of Rs 5,000 per month per member; 

A Circular has been issued for Composition Dealers (including Works Contractor) to clarify that Composition Dealers are not allowed to effect inter state purchases / procurements and that e-sugam of the dealers would be verified to give effect to this circular and that the registration of dealers under composition scheme, who have effected such purchases, would be cancelled with immediate effect. 

However, for works contractor, to the extent they have paid full rate of tax in respect of such inter state purchases / procurements, this circular will not apply.  But, purchase of capital goods or goods which are not sold in the course of works contract would attract this circular.  We believe that to the extent it relates to Works Contractors, this Circular is bad in law because it goes beyond the statutory provisions which allow interstate purchases by works contract dealers under composition scheme

Following is the summary of the decisions taken on indirect tax issues by the Forum Chaired by Dr. Parthasarathi Shome, Adviser to the Finance Minister for Exchange of Views Between Industry Groups and Government on Tax Related Issues or Tax Related Disputes

The Commercial Taxes Department of Karnataka has issued a new notification, notifying revised list of commodities with regard to issuance of E-sugam for movement of goods in pursuance of sale, job work, entry into the state from outside territory (other states / import into India) or otherwise.  The additional commodities which have been notified under the new notification, apart from those appearing in the earlier notification are

The Hon'ble Supreme Court has in the case of L&T in the context of the VAT laws held that "activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government"

The Central Board of Excise and Customs (CBEC) has issued clarifications regarding levy of service tax on certain transactions relating to restaurant services.  In this context, it could be recalled that effective April 1, 2013 all the restaurants (other than non air-conditioned restaurants) were brought under the service tax net.  The transactions and clarifications issued in respect of the same have been summarized below for your reference: