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    CircularsCentral Excise
    Authority to inspect the prosecution work and performance? FOR EVASION OF SERVICE TAX OR CENTRAL EXC...
    CircularsCentral Excise
    Whether prosecution once launched can be compound ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    CircularsCentral Excise
    What is the impact of prosecution under this Circular No. 1009/16/2015-CX - Dated: 23-10-2015 - Cent...
    CircularsCentral Excise
    Can withdrawal of sanction order of prosecution is possible. If yes, then what the procedure men...
    CircularsCentral Excise
    What is the term of publication of name of person convicted as per this Circular No. 1009/16/2015-CX...
    CircularsCentral Excise
    Who will be responsible to monitor cases of prosecution as per this reasons include and how? FOR EVA...
    CircularsCentral Excise
    what is the procedure of prosecution? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    CircularsCentral Excise
    Who has authority to sanction prosecution ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    CircularsCentral Excise
    What is the meaning of term “Habitual Evaders” in terms of prosecution? FOR EVASION OF SERVICE T...
    CircularsCentral Excise
    What is the prescribed limit for prosecution proceeding ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCI...
    CircularsCentral Excise
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    CircularsService Tax
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    CircularsService Tax
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    CircularsService Tax
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    CircularsService Tax
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    CircularsService Tax
    How would the service tax and Swachh Bharat Cess (SBC) be calculated on restaurant services covered ...
    CircularsService Tax
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    CircularsService Tax
    What would be the point of taxation for Swachh Bharat Cess?
    CircularsService Tax
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    CircularsCentral Excise
    Authority to inspect the prosecution work and performance? FOR EVASION OF SERVICE TAX OR CENTRAL EXC...
    Show AI Summary
    Inspection of prosecution work: ensure compliance with prosecution guidelines and address pendency and non-compliance in tax enforcement.
    Inspection of prosecution work requires the Director General, Directorate of Performance Management and Chief Commissioners to inspect Commissionerates to verify scrupulous compliance with the Circular's guidelines for launching prosecution. Inspections must examine reasons for pendency and non-compliance in prosecution cases and ensure recording of statistical data during field visits to support oversight of prosecution performance.
    CircularsCentral Excise
    Whether prosecution once launched can be compound ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    Show AI Summary
    Compounding of offences: administrative authorities may permit settlement by payment and written offer when prosecution is initiated.
    Compounding of offences for evasion under central excise and service tax allows the Principal Chief/Chief Commissioner to compound offences on payment of the compounding amount; Section 9A(2) of the Central Excise Act as applied to service tax via section 83 of the Finance Act authorises this, and circulars require that persons against whom prosecution is initiated or contemplated be informed in writing of the offer to compound.
    CircularsCentral Excise
    What is the impact of prosecution under this Circular No. 1009/16/2015-CX - Dated: 23-10-2015 - Cent...
    Show AI Summary
    Prosecution guidelines: sanctions granted after the circular govern cases regardless of offence date, with sanctioned cases reviewed.
    Prosecution guidelines apply to all cases where sanction for prosecution is accorded after the circular's issue date, and such cases must be prosecuted according to the circular regardless of the offence date. Sanctioning authorities must review cases in which prosecution has been sanctioned but no complaint filed, reassessing them against the circular's provisions before any complaint is presented.
    CircularsCentral Excise
    Can withdrawal of sanction order of prosecution is possible. If yes, then what the procedure men...
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    Withdrawal of prosecution permitted after final exoneration in parallel quasi judicial proceedings; formal application required to seek withdrawal.
    Withdrawal of prosecution is permitted where identical allegations led to the noticee's exoneration in quasi judicial proceedings and that order is final; the senior tax or investigative leadership shall direct the commissionerate to file an application through the public prosecutor requesting judicial permission to withdraw the complaint in accordance with law and prosecution guidelines.
    CircularsCentral Excise
    What is the term of publication of name of person convicted as per this Circular No. 1009/16/2015-CX...
    Show AI Summary
    Publication of convicted persons' names may be sought by the department through courts under central excise and service tax law.
    Power exists under the Central Excise statutory framework, as applied to service tax by the Finance Act, to publish the name and place of business of persons convicted under the relevant enactments; courts have exercised this power sparingly, and the department is directed to request courts to invoke this publication power in deserving cases for all convicted persons.
    CircularsCentral Excise
    Who will be responsible to monitor cases of prosecution as per this reasons include and how? FOR EVA...
    Show AI Summary
    Prosecution monitoring: Principal Commissioners must track and review cases monthly to ensure satisfactory progress.
    The Principal Commissioner/Commissioner must monitor prosecution files monthly, take corrective action where necessary, and inspect the prosecution register in the Prosecution Cell at least once every quarter. Designated supervisors in zonal investigative units must oversee prosecution work. Prosecution registers in prescribed formats are to be maintained, regularly updated and kept in the Commissionerate Prosecution Cell and in zonal units to enable systematic tracking of prosecution cases.
    CircularsCentral Excise
    what is the procedure of prosecution? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    Show AI Summary
    Prosecution Sanction: mens rea and evidentiary sufficiency determine whether tax evasion prosecution proceeds.
    Prosecution proposals for service tax or excise evasion must be examined and forwarded by the adjudicating authority to the sanctioning Principal Chief/Chief Commissioner or Principal/Director General; prosecution requires evidence of mens rea and should not be launched in purely technical or interpretation disputes. Criminal standards (beyond reasonable doubt) must be weighed separately from adjudication findings; prosecution may be initiated before adjudication in serious cases. Investigation reports must be prepared within one month and sanction obtained prior to filing; authorised officers must secure exhibits and coordinate with public prosecutors, with reporting obligations for delays and monthly updates to the sanctioning authority.
    CircularsCentral Excise
    Who has authority to sanction prosecution ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE :
    Show AI Summary
    Sanction for prosecution: designated senior authorities must authorize and formalize prosecution before filing criminal complaints.
    Sanction for prosecution is required before initiating criminal complaints in service tax and central excise matters. The Principal Chief/Chief Commissioner must sanction routine cases, while the Principal Director General/Director General, CEI must sanction cases investigated by the Directorate General of Central Excise Intelligence. The sanctioning authority issues a written order and forwards it to the Commissionerate for expeditious filing of the complaint.
    CircularsCentral Excise
    What is the meaning of term “Habitual Evaders” in terms of prosecution? FOR EVASION OF SERVICE T...
    Show AI Summary
    Habitual evasion: prosecution permitted where repeated confirmed demands and substantial cumulative tax evasion or credit misuse.
    Prosecution may be initiated against a company or assessee classified as a habitual evader where multiple confirmed demands (at first appellate level or above) for Central Excise duty or Service Tax, or findings of Cenvat credit misuse arising from fraud or suppression, occur within a prior period and the cumulative duty or tax evaded or credit misused meets a substantial monetary threshold; the Offence Register (335J) may be used to identify such assessees.
    CircularsCentral Excise
    What is the prescribed limit for prosecution proceeding ? FOR EVASION OF SERVICE TAX OR CENTRAL EXCI...
    Show AI Summary
    Prosecution threshold: prosecution requires evasion exceeding the prescribed monetary limit before proceeding for excise or service tax offences.
    Prosecution for evasion of Central Excise duty or Service Tax, or misuse of Cenvat credit in relation to offences specified under sub section (1) of Section 9 of the Central Excise Act, 1944 or sub section (1) of Section 89 of the Finance Act, 1994 should normally not be launched unless the evasion meets or exceeds the prescribed monetary threshold set out in the departmental guideline.
    CircularsCentral Excise
    The person who are liable to prosecuted ?-FOR EVASION OF SERVICE TAX OR CENTRAL EXCISE
    Show AI Summary
    Corporate criminal liability: officers and partners can be prosecuted for company service tax or excise evasion.
    Persons in charge of and responsible for a company's business are prosecutable alongside the company for service tax or central excise evasion; where an offence by a company is shown to involve the consent, connivance or neglect of a director, manager, secretary or other officer, that individual is deemed guilty. The statutory definition of company includes firms and associations and treats a partner as a director, extending corporate liability principles to service tax prosecutions.
    CircularsService Tax
    Whether SBC is levied on all or selected services?
    Show AI Summary
    Swachh Bharat Cess applicability: applies to all taxable services except services fully exempt or not leviable to service tax.
    Swachh Bharat Cess applies to all taxable services except those that are fully exempt under a statutory notification or are otherwise not leviable to service tax; the cess was imposed by government authority to cover the taxable service base while preserving existing exemptions and non leviability rules.
    CircularsService Tax
    Does a person providing both exempted and taxable service and reversing credit @ 7% of value of exem...
    Show AI Summary
    Cenvat credit reversal does not require separate reversal of Swachh Bharat Cess under the applicable rule per FAQ.
    The circular states that Swachh Bharat Cess is not integrated into the Cenvat credit chain; the reversal under Rule 6 requires payment based on the value of exempted services, and therefore a separate reversal of Swachh Bharat Cess is not required when reversing credit under Rule 6 of the Cenvat Credit Rules.
    CircularsService Tax
    How would liability be determined in case of reverse charge services where services have been receiv...
    Show AI Summary
    Point of taxation determines Swachh Bharat Cess liability; payment date triggers reverse charge cess on taxable service.
    Point of taxation governs SBC liability for reverse-charge services: the date of payment is the point of taxation and SBC is payable on the value of the taxable service at the prescribed rate when consideration is paid to the service provider.
    CircularsService Tax
    Whether SBC would be applicable on services covered by Rule 6 of Service Tax Rules (i.e. air travel ...
    Show AI Summary
    Swachh Bharat Cess option for services under specified service-tax rule; SBC computed by prescribed formula and fixed for financial year.
    Persons liable to pay service tax under the sub rules of rule 6 may elect to discharge Swachh Bharat Cess by applying a prescribed computation to their Service Tax liability; once exercised the election must be applied uniformly to such services and cannot be changed during the financial year.
    CircularsService Tax
    How would the service tax and Swachh Bharat Cess (SBC) be calculated on restaurant services covered ...
    Show AI Summary
    Swachh Bharat Cess on restaurant services is calculated on the value determined under Service Tax valuation rules, creating a combined levy.
    Swachh Bharat Cess on restaurant services is payable on the taxable value determined under the Service Tax (Determination of Value) Rules, 2006; for restaurants, eating joints or messes with any air-conditioning or central heating, the cess and service tax are each applied to the portion of the total charge treated as taxable under those rules, and the combined levy is the sum of the service tax rate and the cess rate applied to that taxable portion.
    CircularsService Tax
    How would the tax (Service Tax and SBC) be calculated on services covered under Rule 2A, 2B or 2C of...
    Show AI Summary
    Service tax calculation for services under Rule 2A/2B/2C: apply combined service tax and SBC to the rule determined value.
    Service tax and Swachh Bharat Cess on services governed by Rule 2A, 2B or 2C are computed by multiplying the combined service tax plus SBC rate by the value determined under the relevant rule. For works contract services, applying the combined rate to the rule specified taxable fraction of the contract value produces the operative tax liability; the same approach applies to restaurant and outdoor catering services.
    CircularsService Tax
    What would be the point of taxation for Swachh Bharat Cess?
    Show AI Summary
    Point of taxation for Swachh Bharat Cess: levy applies where service, invoice and payment occur on or after commencement date.
    Because SBC is a new levy on taxable services not in the Negative List or wholly exempt, the Point of Taxation Rules determine liability. SBC does not arise where payment and invoice are issued before the levy's commencement or where payment precedes commencement but invoice is issued within the short prescribed period. SBC is chargeable where service provision, invoice issuance and payment occur on or after the commencement date; it also applies if service is provided on or after commencement but payment was received earlier and invoice is not issued within the short post-commencement period.
    CircularsService Tax
    Whether Cenvat Credit of the SBC is available?
    Show AI Summary
    Cenvat credit of Swachh Bharat Cess disallowed; SBC not in Cenvat credit chain and not payable using credits.
    Cenvat credit for the Swachh Bharat Cess (SBC) is not available because SBC is not integrated into the Cenvat credit chain; consequently SBC cannot be claimed as input credit nor paid using credits of any other duty or tax.
    CircularsService Tax
    How will SBC be calculated for services where abatement is allowed?
    Show AI Summary
    Swachh Bharat Cess calculation: SBC applies same abatement percentage as service tax, on combined taxable rate.
    Swachh Bharat Cess is to be levied on the same abatement percentage that applies to service tax; the notification prescribing abatement for service tax applies equally to SBC, so the combined rate (service tax plus SBC) is applied to the abated value to determine the effective levy.

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      Rationalisation of provision of transfer of capital asset to partner on dissolution or reconstitution

      1 February, 2021

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      Budget 2021-22 + FINANCE Bill, 2021

      Rationalisation of provision of transfer of capital asset to partner on dissolution or reconstitution

      The existing provisions of section 45 of the Act inter alia, provides that any profits or gains arising from the transfer of a capital asset shall be chargeable to income-tax under the head Capital gains and shall be deemed to be the income of the previous year in which such transfer takes place. Further sub-section (4) of the said section, provides that the profits or gains arising from the transfer of a capital asset by way of distribution of capital assets on the dissolution of a firm or other association of persons or body of individuals (not being a company or a co-operative society)or otherwise, shall be chargeable to tax as the income of such firm or other association of persons or body of individuals of the previous year in which the said transfer takes place. Further, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration for the purposes of section 48.

      In this regard, it has been noticed that there is uncertainty regarding applicability of provisions of aforesaid sub-section to a situation where assets are revalued or self- generated assets are recorded in the books of accounts and payment is made to partner or member which is in excess of his capital contribution.

      Hence, it is proposed to substitute the existing sub-section (4) of section 45 of the Act with a new sub-section (4) and also insert a new sub-section (4A) to this section.

      New proposed sub-section (4) of section 45 of the Act applies in a case where a specified person who receives during the previous year any capital asset at the time of dissolution or reconstitution of the specified entity. The capital asset represents the balance in the capital account of such specified person in the books of the specified entity at the time of its dissolution or reconstitution. In this situation, the profit and gains arising from the receipt of such capital asset by the specified person shall be chargeable to income-tax as income of the specified entity under the head “capital gains” and shall be deemed to be the income of such specified entity of the previous year in which the capital asset was received by the specified person. For the purposes of section 48 of the Act, the fair market value of the capital asset on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. The balance in the capital account of the specified person in the books of account of the specified entity is to be calculated without taking into account increase in the capital account of the specified person due to revaluation of any asset or due to self-generated goodwill or any other self-generated asset.

      New proposed section sub-section (4A) of section 45 of the Act applies in a case where a specified person receives during the previous year any money or other asset at the time of dissolution or reconstitution of the specified entity. The money or other asset is required to be in excess of the balance in the capital account of such specified person in the books of accounts of the specified entity at the time of its dissolution or reconstitution. In this situation, the profits or gains arising from the receipt of such money or other asset by the specified person shall be chargeable to income-tax as income of the specified entity under the head "Capital gains" and shall be deemed to be the income of such specified entity of the previous year in which the money or other asset was received by the specified person. For the purposes of section 48 of the Act,

      • value of the money or the fair market value of other asset on the date of such receipt shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset; and

      • the balance in the capital account of the specified person in the books of accounts of the specified entity at the time of its dissolution or reconstitution shall be deemed to be the cost of acquisition.

      The balance in the capital account of the specified person in the books of account of the specified entity is to be calculated without taking into account increase in the capital account of the specified person due to revaluation of any asset or due to self- generated goodwill or any other self-generated asset.

      For the purposes of these two sub-sections,-

      • specified person” is proposed to be defined as a person who is partner of a firm or member of other association of persons or body of individuals (not being a company or a cooperative society), in any previous year;

      • “specified entity” is proposed to be defined as a firm or other association of persons or body of individuals (not being a company or a cooperative society);and

      • “self-generated goodwill” and “self –generated assets” are proposed to be defined as goodwill or asset, as the case may be, which has been acquired without incurring any cost for purchase or which has been generated during the course of the business or profession.

      Consequential amendment is also proposed in section 48 of the Act to provide that in case of specified entity, the amount included in the total income of such specified entity under sub-section (4A) of section 45 which is attributable to the capital asset being transferred, shall be reduced from the full value of the consideration to compute income charged under the head “capital gains”. This is to be calculated in the manner to be prescribed later. This is to mitigate the double taxation which may have happened but for this provision in a situation where an asset which was revalued and for which income under the proposed sub-section (4A) of section 45 of the Act was brought to tax is transferred subsequently by the specified entity.

      These amendments will be effective from the 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years.

      [Clauses 14 and 16]

       

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      Budget 2021-22 + FINANCE Bill, 2021

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      ActsIncome Tax
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