Under CST law, the tax cannot be levied on sale of goods in course of import and export. Article 286 of the Constitution of India imposes restriction on levy of tax either on sale in course of export or import by a state government. The exemption is mainly to counter double taxation of foreign trade. Even the Government’s policy is to export goods and not to export taxes.
Tax exemption on exports and penultimate sales
As per Section 5(1) of CST Act 1956, sale is deemed to...Read more
When a dealer is transferring goods to another state not as a result of sale but as stock transfer to any other place of his business ( branch, godown, warehouse etc.), then such transfer would not be liable for CST as per CST Act 1956. However, the burden of proving that the goods have not moved as a result of sale is on the dealer transferring such goods.
In this article, an effort has been made to understand the concept of Form ‘F’ and few related issues with regard...Read more
Following are the goods specified u/s 8(3) of CST Act 1956 in respect of which an interstate sale to a registered dealer is liable to tax at concessional rates i.e. 2% or state rate whichever is lower, provided that the transactions are covered by Form C: a. For resale or
For use in the manufacturing or processing of goods for sale or
For use in the mining or
For use in the generation or distribution of electricity or any other form of power...
Exceptions to Restriction Under Rule 6
The cenvat credit on capital goods, inputs and input services for a manufacturer could be as high as 9% of the basic value of goods sold/ removed. This is about 75% of the normal rate of 12%. Some goods fall under the 6% rate where the credit would probably be more than the applicable rate. In case of high investment, high level of stocking, direct or indirect export, there could also be an accumulation of credits. This accumulated situation...Read more
The concept of Input Service Distributor (hereinafter in this article referred as “ISD”) is not new in Goods and Service Tax law. It carries the legacy from the Service Tax law.
1. The Concept
The need for ISD arose for providing a chance to the businesses who have multiple units in different locations to receive common invoice for the services attributable to different units at centralised location, in doing so the input credit is accumulated at the centralised unit. The ISD then...Read more
With an intention to ensure that lower rate of taxes are maintained on few specified goods which are of essential use of people, few goods have been considered to be of special importance under CST Act. Article 286(3)(a) of Constitution of India authorises Parliament to declare some goods as of ‘special importance’ and to impose restrictions and conditions in regard to power of States in regard to levy, rates and other incidence of tax on such goods.
What are declared...Read more
Encouragement to Service Exporters Needed.
India is moving to makes it place among the developed nations by 2020. The government has also started policies to make what is spoken happen. The exporters of service have saved the country from destruction and place the Indian on the world map as a competent professional. Service exports contribute significantly 40+% of the total exports. In the past the falling rupee helped the local exporters. However this trend is expected to be...Read more
In this article we shall take a close look at the taxability of maintenance and repair services under service tax as well as specified exclusions from the same apart from recent developments. The aspects of Cenvat credit and remote service have been addressed. The relevant case laws along with comments and practical issues one comes across in the normal course are discussed with possible solutions.
The immovable and movable properties one acquires It is quite common to...
Revenue Augmentation – 6 Month Restriction – Can One Avail post 1st September?
Excise duty collections are expected to be about ? 2 Lakhs crores and Service Tax collections about 2.2 Lakhs crores for the year 2014-15.The cenvat credit accounts for about 50-60% of the total duty payment to be made by the manufacturing sector. For service providers credit may average about 20% of the duty payable. Therefore this year the credit to be availed would be in excess of ? 1.5 Lakhs...Read more
Concept of departmental audit
The departmental auditors look into the assessee’s own (private) records to verify whether the assessee is paying central excise duty correctly on excisable goods manufactured or deemed to be manufactured and service tax on taxable services provided and whether proper procedures are followed where required to be followed viz., in case of exports or while claiming the benefit of any exemption from duty or tax. The main...Read more