Circular No. 157/8 /2012-ST dt 27 April 2012, regarding Agricultural Produce Marketing Committee / Board

Issue:

Some Officers are inclined to take a view that services charged as Market fee provided by the APMCs are in the nature of Business Support Service (BSS), and hence the exemption made available for BAS in relation to agriculture vide Notification No.14/2004-ST will not be applicable.

Market Fee Collected by APMC

 1.APMCs are statutory bodies created with a view to regulate agricultural produce markets.

2. APMCs charge market fee for issuing licenses to whole sale trader-cum-commission agent, wholesale traders, commission agent, mill / factory / cold storage owners or any other buyers of agricultural produce, for an agricultural year.

3. The amount so collected by the APMC, from the licensees, is used for providing among other things facilities like roads, drinking water, weighing machines, storage places, street lights, etc. in the market area.

4. These services are not provided on one-to-one basis i.e. in consideration or as an obligation to the persons who have tendered the license fee.

5. Some of these services may be capable of being used more conspicuously by the licensees but they do not form part of any contractual obligation to any of the licensees.

6. However it has been clarified that, reference to its constitution and functions, the services provided by APMC out of the ‘market fee’ collected from the licensees, do not appropriately fall under the category of BSS and hence market fee is not in the nature of ‘outsourced service’. 

7. It is not possible to hold that the licensees have outsourced the development and maintenance of agricultural market to the APMC, which could have been otherwise undertaken by them, solely in their business interest.

8.Development and maintenance of agricultural market infrastructure undertaken by APMC in accordance with the statute, is for the benefit of all users, rather than an activity solely in the interest of licensees.

9. Hence, APMC cannot be said to be rendering ‘business support service’ to the licensees. ‘Market fee’ is not in the nature of consideration for such BSS. Therefore, it is clarified that the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-ST.

10. Other services provided by APMS is taxable.

However, any other service provided by the APMCs for a separate charge(other than ‘market fee’) to either the licensees or farmers or any other person, Such as. renting of shops in the market area, etc. would be liable to tax under the respective taxable heads.

Circular No 201/05/2011-CX.6 on ST / ER forms

Draft Central Excise and Service Tax Returns, Proposals and Proposed amendments.

Purpose of the Proposal: 

1.To harmonize the ER-1, ER-3 and ST-3 returns so that a single common return can be prescribed instead of these three returns as measure of simplification of the Business Processes in respect of filing the Return by assesses.

2.The revised return EST- Return is Annexed.

One of the purpose of the return is to ensure the payment of the duty/ service tax in time. Accordingly it is propsed to also align the payment cycle and the return cycle. Under Central Excise Rules the returns and payment cycles are aligned already

3. Suggestions and Feedback if any,on the draft may please be emailed at dircx1@nic.in or at vp60singh@gmail.com latest by 15^th May 2012.

Current Practise

 Central Excise

Central Excise assessees are required to file returns in the Format ER-1 to ER-3 and the Service Tax Assessee file the Return in ST-3 format as follow:

S No	Return	Frequency	To be filed by
1	ER.1	Monthly	All the assessess except those filing ER2 or ER.3
2	ER.3	Quarterly	Units availing exemption on the basis of value of Clearances
3	ST-3	Six Monthly	All the Service Tax Assessee's

Service Tax

On Service Tax side at present every asssessee files the six monthly return (Rule 7 of Service Tax Rules 1994) whereas the payment cycle is as follows as per the Rule 6 of the said rules

    a.  Quarterly for the individual, proprietary firm and partnership firm

    b.  All others monthly.

 Proposal:  Following amendments are proposed in the Service Tax Rules, 1994 to align the payment and return cycles:

            a.     Quarterly payment and quarterly return for assesses who had paid Service Tax of Rs. 25 lakhs or less including the the payments made by utilizing the CENVAT credit, during the preceding financial year.

          b.    Monthly payment and monthly return for all other assesses who had paid     Service Tax of more than Rs. 25 lakhs including the the payments made by utilizing the CENVAT credit, during the previous financial year.

          c.    Quarterly payment and quarterly return for all the new assesses.

                                             

                                              Proposed form

1	Period of Return			2		Central Excise/ Service Tax
3	Name of the Assessee
4	Registration Number		Central Excise
			Service Tax

 EST Return for Central Excise and Service Tax

Description of Goods/ Services	CETSH	Exemption Claimed	Effective rate of duty/ Service Tax	Quantity Cleared	Total Taxable/Dutiable Value	CENVAT/Service Tax payable	Remarks

5 Computation of CENVAT/ Service Tax Payable

6 Details of CENVAT Credit taken and utilized

	Details of Credit	CENVAT/ Service Tax	AED (TTA)	NCCD	ADE*	Additional Duty**	Edu. Cess***
1	Opening Balance
2	Credit on Inputs
3	Credit on Capital Goods
4	Credit on Input Services
5	Credit from inter unit transfers in LTU
6	Credit taken under Rule 12BB(2) of CER, 2002
Credit Utilisation for payment:
7	Of CENVAT on goods/ Service Tax on Output Services
8	When inputs/ Capital goods cleared as such
9	Of amount under Rule 6 of CCR, 2004
10	Adjustments under STR
11	Other payments
12	Inter unit transfer of Credit by LTU
13	Closing Balance

7 Details of Payment made

Description	Duty Code	Account		Challan		BSR Code	Total Paid
		Credit	Cash	Date	Number
CENVAT
Service Tax
Education Cess
Secondary Education Cess
Cess
NCCD
Other Duties & Cess
Adjustment under STR
Arrears Rule 8
Other Arrears
Interest Rule 8
Other Interest
Other payments

*ADE levied under clause 85 of Finance Act 2005

**Additional duty of Customs levied under Section 3(5) 0f Customs Tariff Act, 1985.

***Education Cess & Secondary education Cess

INSTRUCTIONS

1. Indicate the period of return at Serial Number (1).

2. At Sl No (2) indicate whether the return is filed for Service Tax or Central Excise. For assessee's who have to file return both as service tax assessee and as Central Excise Assessee separate returns shall be filed for service tax and central excise.

3. At Sl No (5) following instructions need to be followed:

          a. In case more than one item is manufactured, the details of all the items manufactured or service provided should be indicated in separate row.

          b. If a specific product / service attracts more than one rate of duty, then all the rates should be mentioned in separate rows.

          c. The goods cleared for export under bond should be indicated separately by mentioning the same in column (5)

          d. In case the intermediate goods are cleared by a large taxpayer under sub rule (1) of rule 12BB, the details of such clearances may be mentioned separately. Under columns (5) of the table the  words ‘inter unit transfer by large taxpayer under rule 12BB (1)’ may be mentioned.

          e. If a specified product attracts different rates of duty, within the same month, then such details should be separately mentioned.

          f. 8-digit CETSH Number may be indicated without any decimal point.

          g. In case the goods are assessed provisionally, the details may be given separately in Table at serial number 5. In column (9) of Table at serial number 5, specify the Unique Identification number mentioned in the order for Provisional Assessment.

          h. Goods cleared under compounded levy scheme, indicate the aggregate duty payable in column  (8) as per the compounded levy scheme. The columns not applicable may be kept blank.

4. In column (7) of Table at serial number 3, the Total Taxable/ Dutiable value means:

          (a) where goods attract advalorem rate of duty, the value under section 4 of Central Excise Act, 1944 (1 of 1944);

          (b) where goods are covered under section 4A of the Act, the assessable value as worked out under MRP after allowing deductions as provided under section 4A of the Act;

          (c) in case of goods for which the tariff value is fixed, such tariff value;

          (d) in case of specific rated goods, the aggregated invoice value of the goods excluding all taxes;

          (e) in case of combination of advalorem and specific duties, the transaction value under section 4 of the Act;

          (f) in case of exports under Bond, the ARE-1/ARE-2/invoice value.

5. In Tables at serial numbers 7 the ‘Other duties’ paid/payable, as applicable, may be mentioned in order of: SED, AED(TTA), SAED, ADE, ADE on specified products levied under clause 85 of Finance Act, 2005, Cess on Excisable goods

6. In column (4) in Table at serial number 5, indicate the effective rates of duty. Columns which are not applicable, may be left blank.

7. The details of the challans for duty payment should be mentioned in Table at Sr.No. 7. In Table at S.No.7, separate challans should be used for pre-deposit of duty for the purpose of appellate remedy, for paying dues for approaching Settlement Commission and for other payments.

8. Other payment includes penalty, redemption fine, and pre-deposit.

9. In the Tables at serial numbers 7, the BSR codes of the Bank branch should be indicated when the instructions to this effect are issued.