The Finance Bill, 2014, after attaining the Presidential assent on 6 August 2014, has been enacted as the Finance Act (No.2), 2014 Thus, the following amendments have been made effective from the date of Presidential assent:

  • Penalty @ 1% per month on late payment of excise duty
  • W.e.f. 1 September 2014, CENVAT credit on inputs/ input services to be taken within 6 months from  the date of invoice/ challan
  • W.e.f. 1 October 2014, services provided by radio taxi/ radio cab, whether or not air-conditioned  would be taxable after 40% abatement [Notification no. 18/2014
  • ST dated 25 August 2014]
  • Rate of interest on delayed payment has been revised from 18% to:

Click here to view the table.

Case laws

Direct taxes

The sales tax concessions offered by state in lieu of setting up manufacturing plant in a notified  backward area are capital receipts

The Delhi ITAT held that sales tax subsidy offered by the state under Rule 28C of the Haryana  General Sales Tax Rules, 1975 for setting up manufacturing plant in a notified backward area is a  capital receipt.

[Johnson Matthey India (P) Ltd., Vs. Addl. CIT, Range – 4, New Delhi  (2014-TIOL-551-ITAT-DEL)]

Indirect taxes

Excise

Cenvat credit not to be denied on the quantity of goods involved in transit loss

The Mumbai Tribunal held that if goods, not being in solid state, transported through pipeline, are  lost then Cenvat credit cannot be denied on quantity lost in transit of goods. It was also held  that in such cases, transit loss varies between 0.01% and 0.72% and Cenvat credit cannot be denied  on such negligible quantity.

[Hindustan Petroleum Corporation Ltd. Vs. CCE, Mumbai (2014-TIOL-1616-CESTAT-MUM)]

Contaminated, under or over filled bottles or badly crowned bottles do not amount to manufactured finished goods

The Allahabad HC held that manufactured finished goods are only recorded in the R.G. 1 register if  such goods are fit for sale. Hence, contaminated, under or over filled or badly crowned bottles  cannot be entered in the R.G. 1 register as such goods are not marketable.

[M/s Amrit Bottlers Private Ltd. Vs. CCE, Allahabad (2014-TIOL- 1436-HC-ALL-CX)]

Cenvat credit allowed on MS plates, MS angles, channels, rounds, screws etc. used in manufacture of  finished goods

The Chennai CESTAT allowed Cenvat credit on MS plates, MS angles, channels, rounds, screws etc. on  the ground that such items are capital goods and are used in fabrication of chimney for diesel  generating set.

[CCE, Pondicherry Vs. ACE Glass Containers Ltd. (2014-TIOL- 1561-CESTAT-MAD)]

Value Added Tax

Exemption of entry tax can be claimed on the principle of ‘Promissory Estoppel’

The Chhattisgarh HC held that exemption from entry tax can be claimed on the principle of  promissory estoppel if an industrial unit was set up by the assessee under the promise given by the  state that exemption would be given vide a notification, to be issued in next 60 days. But, the  notification was issued after a period of 3 years. In such a case, the state cannot take advantage  of the negligence committed by it and thus, exemption is allowed to the assessee.

[State of Chhattisgarh Vs. M/s VM Extrusions Pvt. Ltd. (2014-VIL- 227-CHG)]

Transportation charges to be included in the sale price

The Ahmedabad HC held that amount charged for transportation of crude oil through pipeline is to be  included in the total sale price and hence, liable to tax. It was also held that interest, if any, on the differential amount, is to be paid from the date on  which the gas price was revised and not from the date of receipt of amount charged from the buyer.

[Oil & Natural Gas Commission Vs. CST (2014-VIL-211-GUJ)] 4