Direct Tax Code: Tax Liability And You

The direct tax code is a bit of a mixed bag for individuals, particularly the salaried class. Prima facie, the tax liability will reduce significantly as the draft code proposes to tax incomes up to Rs 10 lakh at 10%, that between Rs 10 lakh and Rs 25 lakh at 20% and sum in excess of that at 30%.

Thus, an individual with taxable gross income of Rs 10 lakh will pay tax of Rs 84,000 as opposed to about Rs 2.11 lakh he pays this fiscal year.

Also, deductions allowed for investments in specified instruments—mainly long-term savings and retirement savings—will go up to Rs 3 lakh from Rs 1 lakh. The bad news is that retirement savings will become taxable on withdrawal, as the draft code has proposed to usher in exempt-exempt-tax (EET) regime. M

ore significantly , the deduction of Rs 1.5 lakh allowed on interest paid on home loans appears set to be scrapped. There is no mention of such a deduction being allowed in the draft code.

It is also proposed that all perks are to be considered part of the gross salary for the purpose of taxation. The impact of that on tax liability of an individual will be known only when the rules are prescribed by the income-tax department at a later date, notes PricewaterhouseCoopers executive director Kaushik Mukherjee.

But one thing is certain. The tax treatment of the perks enjoyed by the government employee and the private sector employee will be the same. The objective according to the draft code: To improve both the horizontal and vertical equity of the tax system across employees in all sectors.

It has also proposed that benefits such as gratuity payment made to employees on change of jobs will be allowed tax exemption only if it is invested in a retirement fund.

If an employee fails to invest it in such a fund, such receipts will be taxed at the appropriate marginal rate of tax.

The most significant change is the proposal to bring in the EET regime for all approved provident funds, approved superannuation funds, life insurance and New Pension System trust from April 1, 2011.

The NPS is already subject to EET, where contributions and accruals in the scheme are not taxed but withdrawals are subject to tax.

The withdrawals will be taxed whenever they are made, that is, at maturity or prematurely at the personal marginal rate.

“Any withdrawal made, or amount received , under whatever circumstances, from this account will be included in the income of the assessee under the head ‘income from residuary sources’ in the year in which the withdrawal is made or the amount is received.”

The code provides for a grandfathering clause, meaning the withdrawal of any amount of accumulated balance as on March 31, 2011, in the account of an individual in the specified instruments such as provident funds will not be subject to tax.

It also provides that rollover of any amount received or withdrawn from one account of the permitted savings to any other account with the same or any other permitted savings scheme will not be treated as withdrawal. This means that such rollover will not be subject to tax.

The code has proposed to continue with other deductions such as medical insurance premium, medical treatment or maintenance of disabled dependent, treatment for specified diseases for self and dependents, for the handicapped, interest on loan taken for higher education, rent paid for residence, donations to certain non-profit organisations and specified institutions and tuition fees for children.

Other proposals include classifying income as those from ordinary source and from special source.

Income from ordinary source includes income from employment, house property, business and residuary sources, as well as capital gains.

Those from special sources include capital gains on equities and equity-oriented funds, income of any other nature.

Gross salary is to form part of the tax base on due or receipt basis, whichever is earlier and it will include value of perquisites and profits in lieu of salary.




Source ; http://economictimes.indiatimes.com/quickiearticleshow/4888231.cms

Human Rights Safeguards

It is too late to overemphasize or stress on the growing importance of the subject human rights and the different facets and dimensions thereof, both in the national and international spheres as well. The basic needs of the human beings are well recognized in almost every Constitution of the world and though the form or language may be different, the basic structure appears to be one and the same—the basic requirements and needs of the human beings.

The concept of human rights has assumed very great global importance, be that an advanced country, developed nation or underdeveloped country. The universal opinion is uniform relating to protection of human rights. Sir Hersch Lauterpacht was pleased to observe:

"The protection of human personality and of its fundamental rights is the ultimate purpose of all law, national and international."

The Universal Declaration of Human Rights, The UN Covenant on Economics, Social and Cultural Rights, the UN Covenant on Civil and Political Rights, the European Convention on Human Rights, the American Convention on Human Rights, Rules of Procedure of the Permanent Arab Commission on Human Rights, are a few which may be referred to in this context.

Shri A.H. Robertson in his Human Rights in the World had well dealt with the importance of human rights and the international protection to be given to such basic rights. The subject had been further dealt with elaborately in Human Rights in National and International Law, edited by Shri A.H. Robertson.

In Munn v. Illinois1 Field, J. observed that life means something more than mere animal existence and inhibition against the deprivation of life extends to all those limits and faculties by which life is enjoyed. In Baskey2 it was observed by Douglas, J. that the right to work is the most precious liberty because it sustains and enables a man to live and the right to life is a precious freedom.

Article 21 of the Constitution of India deals with protection of life and personal liberty. In Olga Tellis v. Bombay Municipal Corpn.3 it was observed: (SCC p. 572, para 32)

"The question which we have to consider is whether the right to life includes the right to livelihood. We see only one answer to that question, namely, that it does. The sweep of the right to life conferred by Article 21 is wide and far reaching. ...—An equally important facet of that right is the right to livelihood because, no person can live without the means of living, that is, the means of livelihood."

In Consumer Education and Research Centre v. Union of India4 (AIR at p. 999) dealing with the expression "life", it was held: (SCC p. 68, para 22)

"22. The expression 'life' assured in Article 21 of the Constitution does not connote mere animal existence or continued drudgery through life. It has a much wider meaning which includes right to livelihood, better standard of living, hygienic conditions in the workplace and leisure."

Quality of life covered by Article 21 is something more than the dynamic meaning attached to life and liberty5 Right to life includes right to human dignity6 Right to live with human dignity enshrined in Article 21 derives life breath from the directive principles of State policy7 Right to free legal aid to the poor is a fundamental right8 Right to education is a fundamental right9 Right to life does not include right to die10

Article 21 of the Constitution contemplates procedure established by law and hence it is not easy to contend that by amending CrPC the effect of the procedure established by law in Article 21 can be taken away11 Right to life is a natural right embodied in Article 21 but suicide is an unnatural termination or extinction of life and therefore incompatible and inconsistent with the concept of right to life10. Calling for bandh is violative of fundamental rights of the citizens12 To be a member of a cooperative society is only a right conferred by the statute and not a fundamental right13 Testimonial compulsion cannot be applied except in a case where a person is compelled to be a witness against himself14 Criminal prosecution for offence under Section 138, NI Act is no ground to stay proceedings for recovery of amount based on dishonoured cheque15 The mere possibility of abuse of a provision by those in charge of administering it, is not a ground on which it can be held that the provision is procedurally or substantively unreasonable16 Being a member of a cooperative society is a statutory right and not a fundamental right13. Blacklisting of a contractor can be set aside by a writ court17 Right to shelter forms part and parcel of fundamental right18 Right to live includes all those aspects of life which go to make a man's life meaningful, complete and worth living19 The management and control of traffic is a matter concerned with public safety and hence it will fall within the ambit of Article 2120 The beauty contest in any form in its true sense of the term can be neither obscene nor prohibited under any law as long as it is intended only as a form of art and entertainment and in a way a sport to select the winners on comparative merit21 Since right to life is more than mere animal existence, tribals have a right to social and economic empowerment22 Where fundamental rights of petitioners under Article 21 have been violated by the tortuous acts of the State or its servants, constitutional courts can grant relief of compensation23 Since the prison system is afflicted by nine major problems like overcrowding, delay in trial, torture, ill-treatment, neglect of health etc., observations were made and appropriate directions have been given24 It is now settled law that right to health is integral to the right to life. The Government has a constitutional obligation to provide health facilities25 Medical facilities to workers are constitutional, fundamental and human rights26 Where there was a mysterious tragic abduction and alleged murder of an advocate, his wife and child, it was held that the State is liable to pay compensation to the parents27 Right to shelter also falls within the ambit of Article 21 of the Constitution28 Prison officials are expected to ensure the life and safety of every person in jail including convicts29 Where timely medical treatment was not provided to a person in need of the same by a government hospital, it was held that it is violative of his right to life30 In Phoolawanti v. State of Punjab31 it was held that in case of terrorist violence and death of the victim, ex gratia grant cannot be denied on the ground that the deceased was employed.

Economic empowerment is a basic human right and also a fundamental right (Air India Statutory Corpn. v. United Labour Union32 The right to vote is subject to limitations imposed by the statutes. It can be exercised only in the manner provided by the statute. The challenge to any provision in the statute prescribing the nature of right to elect cannot be made with reference to fundamental right in the Constitution (Anukul Chandra Pradhan v. Union of India33). Reservation for Scheduled Castes and Scheduled Tribes is a constitutional policy and hence it is the duty of the Government and the public servant to implement the same (Superintending Engineer, Public Health v. Kuldip Singh34 In Communist Party of India (M) v. Bharat Kumar12) it was observed that there cannot be any doubt that the fundamental rights of the people as a whole cannot be subservient to the claim of fundamental right of an individual or only a section of the people and therefore there cannot be any right to call or enforce a bandh which interferes with the exercise of the fundamental freedoms of other citizens in addition to causing national loss in many ways. In D.K. Basu v. State of W.B.28 the Apex Court held that the claim in public law for compensation for any constitutional deprivation of fundamental rights of life and liberty, the protection of which is guaranteed under the Constitution, is a claim based on strict liability and is in addition to the claim available in private law for damages for tortuous acts of the public servants. In People's Union for Civil Liberties v. Union of India35 it was held that the right of privacy by itself has not been identified under the Constitution. As a concept it may be too broad and moralistic to define it judicially and whether right to privacy can be claimed or has been infringed in a given case would depend upon the facts of the said case but the right to hold a telephone conversation in the privacy of one's home or office without interference can certainly be claimed as right of privacy. In Dalmia Cement (Bharat) Ltd. v. Union of India36 it was observed that Article 14 of the Constitution is a shining star among the fundamental rights which guarantees equity to every citizen and equal protection of laws to all persons and equality before law is a correlative to the concept of rule of law for all-round evaluation of healthy social order. In Gursharan Singh v. New Delhi Municipal Committee37 the Apex Court said that under Article 14 guarantee of equity before law is a positive concept and it cannot be enforced by a citizen or court in a negative manner. In K.R. Lakshmanan (Dr) v. State of T.N.38 it was observed that the presumption is in favour of the constitutionality of a legislative enactment and it has to be presumed that a legislature understands and appreciates the needs of its own people. In State of A.P. v. McDowell & Co.39 the Apex Court while dealing with the administrative action and judicial review, laid down that the scope of judicial review in case of administrative action is limited to three grounds: (1) unreasonableness which more appropriately be called irrationality; (2) illegality; (3) procedural impropriety. In Gian Kaur v. State of Punjab10 it was observed that right to live is a natural right embodied in Article 21 but suicide is an unnatural termination or extinction of life and therefore incompatible and inconsistent with the concept of right to life. In Surjit Singh v. State of Punjab40 it was held that self-preservation of one's life is the necessary concomitant of the right to life enshrined in Article 21 of the Constitution of India, fundamental in nature, sacred, precious and inviolable.

In Murli S. Deora v. Union of India41 it was held: (SCC pp. 766-67, para 2)

Fundamental right guaranteed under Article 21 of the Constitution of India, inter alia, provides that none shall be deprived of his life without due process of law. A non-smoker is afflicted by various diseases including lung cancer or of heart, only because he is required to go to public places. It is indirectly depriving of his life without any process of law. Undisputedly, smoking is injurious to health and may affect the health of smokers but there is no reason that health of passive smokers should also be injuriously affected. In any case, there is no reason to compel non-smokers to be helpless victims of air pollution.

Article 20 of the Constitution of India deals with protection in respect of conviction for offences. Likewise, Article 22 deals with protection against arrest and detention in certain cases. Article 23 deals with prohibition of traffic in human beings and forced labour. Articles 25 to 30 deal with right to freedom of religion. Article 20(2) incorporates within its scope the plea of "autrefois convict" as known to British jurisprudence or the plea of double jeopardy as known to the American Constitution but circumscribed it by providing that there should be not only a prosecution but also a punishment in the first instance in order to operate as a bar to a second prosecution and punishment for the same offence42 The ambit and contents of the guarantee are much narrower than those of the common law rule in England or the doctrine of "double jeopardy" in the American Constitution43 The principle upon which the right to plead autrefois acquit depends is that a man may not be put twice in jeopardy for the same offence. This principle is incorporated in Article 2044 The principle of issue of estoppel is different from the principle of double jeopardy or autrefois acquit as embodied in Section 403 (at present Section 300 CrPC).

Article 20(3) embodies the principle of protection against compulsion of self-incrimination which is one of the fundamental canons of the British system of criminal jurisprudence and which has been adopted by the American system and incorporated as an article of its Constitution. The guarantee in Article 20(3) in substance is against testimonial compulsion45 In order to claim benefit of the guarantee against testimonial compulsion embodied in Article 20(3) it must be shown (1) that the person who made the statement was "accused of any offence"; (2) that he made that statement under compulsion46 A person against whom an FIR is lodged alleging offences, is a person accused of an offence within the meaning of Article 20(3)47 Article 20(3) can be invoked in a case where the statement in question was made by a person at a time when he was accused of an offence48 In Balkishan A. Devidayal v. State of Maharashtra49 on the aspect of "person accused of an offence" in Article 20(3) it was observed by His Lordship Sarkaria, J., that determination of the issue whether a person is said to be an accused for any offence will depend on whether at the time when the person made the self-incriminatory statement, a formal accusation of the commission of an offence had been made against him. Section 161 CrPC no doubt enables the police to examine the accused during investigation but the prohibitive sweep of Article 20(3) goes back to the stage of police interrogation, not commencing in court only. (See Nandini Satpathy v. P.L. Dani50) Where a customs officer arrests a person and informs that person of the grounds of his arrest there is no formal accusation of an offence51 When a person is called upon under Article 240 of the Companies Act to give evidence and produce documents he cannot be said to be a person accused of any offence within the meaning of Article 20(3)52 To be a witness is not equivalent to furnishing evidence. In State of Bombay v. Kathi Kalu Oghad53 it was held: (AIR pp. 1816-17, para 16)

"16. In view of these considerations, we have come to the following conclusions:

(1) An accused person cannot be said to have been compelled to be a witness against himself simply because he made a statement while in police custody, without anything more. In other words, the mere fact of being in police custody at the time when the statement in question was made would not, by itself, as a proposition of law, lend itself to the inference that the accused was compelled to make the statement, though that fact, in conjunction with other circumstances disclosed in evidence in a particular case, would be a relevant consideration in any enquiry whether or not the accused person had been compelled to make the impugned statement.

(2) The mere questioning of an accused person by a police officer, resulting in a voluntary statement, which may ultimately turn out to be incriminatory, is not 'compulsion'.

(3) 'To be a witness' is not equivalent to 'furnishing evidence' in its widest significance; that is to say, as including not merely making of oral or written statements but also production of documents or giving materials which may be relevant at a trial to determine the guilt or innocence of the accused.

(4) Giving thumb impressions or impressions of foot or palm or fingers or specimen writings or showing parts of the body by way of identification are not included in the expression 'to be a witness'.

(5) 'To be a witness' means imparting knowledge in respect of relevant facts by an oral statement or a statement in writing, made or given in court or otherwise.

(6) 'To be a witness' in its ordinary grammatical sense means giving oral testimony in court. Case-law has gone beyond this strict literal interpretation of the expression which may now bear a wider meaning, namely, bearing testimony in court or out of court by a person accused of an offence, orally or in writing.

(7) To bring the statement in question within the prohibition of Article 20(3), the person accused must have stood in the character of an accused person at the time he made the statement. It is not enough that he should become an accused, any time after the statement has been made."

The right guaranteed under Article 20(3) does not extend to a total exemption from appearing before any authority who summons for recording evidence but is restricted to compelled testimony54

The right guaranteed by Article 25 is an individual right as distinguished from the right of an organized body like a religious denomination of any section thereof dealt with by Article 2655 The protection of these articles cannot be limited to matters of doctrine or belief, they extend also to acts done in pursuance of religion and therefore contain a guarantee for rituals and observances, ceremonies and modes of worship which are an integral part of religion. What constitutes an essential part of a religion or a religious practice has to be decided by the courts with reference to the doctrine of a particular religion and includes practices which are regarded by the community as part of its religion56. Articles 25 and 26 are based for the most part upon Article 44(2) of the Constitution of Eire. Our Constitution-makers have embodied the limitations which have been evolved by judicial pronouncements in America or Australia in the Constitution itself and the language of Articles 25 and 26 is sufficiently clear to enable us to determine without the aid of foreign authorities as to what matters come within the purview of religion and what do not56 The principle that there must be separation of the Church from the State is not consistent with the constitutional provisions of India57 In fact these articles emphasize the aspect of religious tolerance56.

Article 25 is an article of faith in the Constitution incorporated in recognition of the principle that the real test of a true democracy is the ability of even an insignificant minority to find its identity under the country's Constitution58 While Article 25 confers the particular rights on all persons, Article 26 is confined to religious denominations of any section thereof59 (See S.P. Mittal v. Union of India60)

Religion is a matter of faith with individuals or communities and it is not necessarily theistic57. The expression "matters of religion" in Article 26(b) embraces not merely matters of doctrine and belief pertaining to the religion but also the practice of it61

Articles 26(c) and (d) merely safeguard and guarantee the continuance of rights which a denomination of its section had. If the right to administer properties never vested in the denomination or had been validly surrendered by it or has otherwise been effectively and irretrievably lost to it Article 26 cannot be successfully invoked62 The distinction between clauses (b) and (d) strikes one at once. So far as administration of its property is concerned, the right of a religious denomination is to be exercised in accordance with law but there is no such qualification in clause (b). The administration of its property by a religious denomination has thus been placed on a different footing from the right to manage its own affairs in matters of religion. The latter is a fundamental right which no legislature can take away whereas the former can be regulated by laws which the legislature can validly impose63 Matters of religion in Article 26(b) include even practices which are regarded by the community as part of its religion63. The distinction between matters of religion and those of secular administration of religious properties may, at times, appear to be a thin one. But in cases of doubt, the court should take a common-sense view and be actuated by considerations of practical necessity64

Citizenship is an essential condition to claim protection under Article 29 unlike under Article 3065 Article 29 in fact saves the cultural and educational rights of any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own66 Article 29(2) specifies that no citizen shall be denied admission in any educational institution maintained by the State or receiving aid out of State funds on grounds of (1) religion, (2) race, (3) caste, (4) language, or (5) any of them67 Religious or linguistic minorities should be determined only in relation to the particular legislation which is sought to be impugned, namely, that if it is the State Legislature, then the minorities have to be determined in relation to the population of the State68 The right to get admission in any educational institution of the kind specified in Article 29(2) is a right which an individual citizen has as a citizen and not as a member of any community or class of citizens69 In C.N. Prasad v. G.M. Sanghi College of Commerce70 on the aspect of minority institution, His Lordship P.A. Choudary, J., held that in the absence of autonomous and separate intent of minority community it cannot be said to be a minority institution.

Article 30(2) mandates that the State shall not discriminate against any educational institution on the ground that it is under management of a minority and the State is under an obligation to maintain equality of treatment in granting aid to educational institutions71 Minority institutions cannot be asked to maintain themselves without State aid72

In Manager, St. Thomas U.P. School v. Commr. and Secy. to General Education Deptt.73 it was held that a school established by a single philanthropic individual with his own means can also be treated as a minority institution.

The Protection of Human Rights Act, 1993 (Act 10 of 1994) is an Act to provide for the constitution of a National Human Rights Commission, State Human Rights Commissions in States and Human Rights Courts for better protection of human rights and for matters connected therewith or incidental thereto. Chapter II deals with the National Human Rights Commission, Chapter III deals with functions and powers of the Commissioner, Chapter IV deals with procedure, Chapter V deals with State Human Rights Commissions, Chapter VI deals with Human Rights Courts, Chapter VII deals with miscellaneous. The different provisions of the said Act are self-explanatory and they need not be dealt with in detail for the present context.

Certain other legislations which may be referred to in the context of human rights can be specified as hereunder:

1. Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

2. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

3. Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 and Rules, 1995.

4. Protection of Civil Rights Act, 1955 and Rules, 1977.

5. National Commission for Minorities Act, 1992.

6. National Commission for Women Act, 1990.

7. National Human Rights Commission (Procedure) Regulation, 1994.

8. National Commission for Backward Classes Act, 1993.

9. National Commission for Safai Karmacharis Act, 1993.



As already stated supra, the concept of human rights became a concern of universal importance. Ours is a multi-linguistic, multi-religious complex society. We have several particular problems of our own including the problems of women, children, minorities peculiar to our Indian society. I have been always speaking about legislations in theory and legislations in practice. As far as certain social problems are concerned, mere legislations cannot bring the change though they may operate as a threat and there must be change in the society itself, a social reformation as I can put it. Untouchability and dowry prohibition can be cited as examples. Confrontation between communal or religious fanaticism v. secularism in this country is yet another problem which ultimately may have serious impact on basic human rights. Terrorism is yet another serious problem posing a threat to invasion of human rights. The examples referred to supra are only illustrative and not exhaustive. The statutory provisions as such cannot be said to be insufficient, but however, several of the legislations are not legislations in practice and the failure to implement them is on account of major sections of the society's disinterestedness in having them implemented in strict letter and spirit. Let us hope that the Indian society will well receive such changes and will give a nod of approval, which I call as "social approval" in the larger interest of the Indian society and the nation as well.



FROM THE PRACTICAL LAWYER

Arbitration in India

Arbitration , in law, is a form of Alternative Dispute Resolution - specifically, a legal alternative to litigation, whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a NEUTRAL third party called the Arbitrator (s) or Arbiter (s) for resolution. The "Disputes-Settlement-Trust" plays the role of a NEUTRAL in the Arbitration conducted by the Trust.

The comprehensive nature of this Act is the result of the United Nations Commission on International Commercial Arbitration, 1985 because Geneva Assembly of the United nations had emphasised and also recommended uniform model law on arbitral among the countries

As defined under Section 2(1)(a) it covers any arbitration whether it is administered by any permanent arbitral institution or not. It also covers arbitration relied on voluntary agreement by the private parties or by operation of law. The Arbitration and Conciliation Act does not provide definition of the word "Arbitration" but its literally recognised meaning is that "settlement" of differences or disputes by mutual understanding or agreement by the parties where the rights and liabilities of the parties are determined in judicial point of view which are binding to them, such settlement may be before the arbitral tribunal but not by the court of law.

The new Act has limited the powers of Court rather restricted the exercise of judicial powers, in other words confined the extent of judicial intervention as provided under Section 5 of the Act - "Notwithstanding anything contained in any other law for the time being in force, in matters governed by this part, no judicial authority shall intervene except where so provided in this part." Finality of Arbitral Award under Section 35 is subject to this part according to which an arbitral award shall be final and binding on the parties and persons claiming under them respectively. Thus, the Act itself provided finality of arbitral awards and its enforcement (Section 36) without intervention of the Court. The Arbitral Tribunals are empowered to settle any objections raised in respect of jurisdiction or scope of authority of the arbitrators.

Arbitration is the reference of dispute or difference between two or more parties to a person chosen by the parties or appointed under statutory authority, for determination of the same. In a broad sense, it is substitution of ordinary judicial machinery by a mutually chosen tribunal i.e., an Arbitrator.


The first stage in arbitration is the formulation of the arbitration agreement whereby the parties agree to submit their present or future differences to arbitration. In case of any dispute, one of the parties to the contract must file a request for Arbitration and pay the required fee to an Arbitration Institution referred to in the agreement that provides Arbitration services. Often the Arbitration Institution will suggest an arbitrator or arbitrators to which the parties must agree. The arbitrator may be an attorney, judge, or business person.


After the parties have defined their dispute, there will be a hearing, often at the arbitrator's office, where the parties present evidence and witnesses in a fairly informal manner without the formal rules of evidence used in court litigation. After the evidence has been presented, the arbitrator reaches a decision and usually later sends the parties a written reasoned opinion (an award).

In our country, an award passed by an arbitration tribunal has the force of a decree. Thus, it can be executed in the same manner in which a court decree can be executed.

Service Tax Registration

Registration

Section 68
According to section 68 every person liable to pay the service tax under this Chapter or the rules made thereunder shall, within such lime and in such manner and in such form, as maybe prescribed, make an application for registration to the superintendent of Central Excise

Form for Registration:

The assessee is required to apply for registration in a simple ST-I form.

In addition to ST-1 at certain places a declaration form is also demanded from the person seeking registration.

Documents required to be attached

(a) Proof of address
(b) Copy of PAN No.
(c) AOA & MOA in case of Companies or Partnership Deed in case of Partnership Firm.
(d) List of Directors (in case of Company) and List of Partners (In case of Partnership firms)

Additional Document: - though not required as per statutory provisions, the department is generally asking a declaration about certain particulars of the business and date of commencement of business. Some time department provides the format of declaration or otherwise the person seeking registration may submit his own declaration. The contents of the declaration would be as Name, Address, Nature of Business, PAN, Type of Services, Number of Services Provided, Date of commencement of business, Authorized Signatory etc.

(d) Declaration about date of commencement of business

Further as per Trade Notice No. 76/2003 dated 6/11/203 issued by Commissioner of customs and central excise Hyderabad IV prescribes the details of information required to be submitted alongwith the ST-1 application.

Whether declaration made in ST-1 be questioned

As per Circular No. 72/2/2004 ST dated 2/1/2004 department is not allowed to question the declaration made by the person in the ST-1 form.

Where to apply for Service Tax Registration

Registration application should be submitted to the Superintended of the Central Excise.

The Jurisdiction of Central Excise Department for the purpose of Service Tax Matters is same as under the Central Excise Act, 1944.

Besides, the Central Government has appointed separate Service Commissionerate (Service Tax Cell) at select cities for efficient and effective management of Service Tax Department.

Therefore, where separate Service tax cells has been appointed then instead of visited the Central Excise office the service provider or receiver is advised to visit the service tax cell for the purpose of Registration and other related matters.

Time Limit - Rule 4

Every person liable for paying the service tax shall make an application for registration within a period of thirty days from the date on which the service tax under section 66 is levied :

However, where a person commences the business of providing a taxable service after such service has been levied, he shall make an application for registration within a period of thirty days from the date of such commencement

Registration Requirement for Small service provider (availing exemption upto Rs. 4 lakhs) - Registration requirements

Notification no. 6/2005 ST dated 1-3-2005 has been issued to grant exemption to small service provider subject to certain conditions.

Small Service Provide (hereinafter called as SSP)

An SSP can avail the exemption upto Rs. 4 lakhs in the current financial year.

As per section 69(1), a person who is liable to pay service tax is required to pay service tax is liable to obtain registration certificate. However, 69(2) has been inserted with effect from 13-03-2005 to provide that. "The Central Government may, by notification in the Official Gazette, specify such other person or class of persons, who shall make an application for registration within such time and in such manner and in such form as may be prescribed."

In exercise to the power granted as above, CG has issued two notification as:

1 Prescribing Service Tax (Registration of special categories of persons) rules, 2005 - Notification No. 27/2005 ST dated 07-06-2005

2 Persons, other than the persons who are liable to pay serviced tax, to obtain registration number - Notification No. 26/2005 ST dated 07-06-2005

Therefore, a person who is eligible for availing exemption under notification no. 6/2005 is required to apply for service tax registration number within 30 days from the date when his turnover of services exceeds rupees 3 lakhs.

This is a mandatory requirement, even if his likely turnover does not exceed Rs. 4.00 lakhs in the relevant financial year, he has to apply for registration after crossing the limit of Rs. 3.00 lakhs.

Registration of More than one Service

Where an assessee is provided more than one taxable services, he seek a single registration for all such services provided by him. Rule 4(4)

For this purpose he can submit a single ST-1 application form. While submitting the application he should indicate all the taxable services provided by him. - Circular No. 72/2/2004 - ST dated 2/1/2004

Where services are provided from more than one premise

Rule 4(2) has been changed with effect from 01-04-2005, and consequently the new provisions are being discussed hereinafter:

Before amending the rule 4(2) there were separate procedure for obtaining registration on the basis of Centralized Billing system or Centralized Accounting System. But, from 1-4-2005 an assessee is providing services from more than one premises the following procedure is to be followed:

However the registration granted under the provisions of erstwhile rule 4 (as existing immediate before 01-04-2005) shall remain valid for all purposes.

1 Option First - Rule 4(1) - Separate Registration

Separate registration for each premises from where services are being provided than there is no need to follow special procedure and obtain service tax registration simply filing a ST-1 form alongwith relevant documents before the Superintended of Central Excise.

Note: - Where the assessee is having more than one office and does not have either central accounting system or central billing system, he is required to obtain separate registration for each premises.

However, the assessee can opt for single registration for all the premises if he is following either centralized accounting system or centralized billing system. In such a situation authority for granting registration is different which is discussed herein below.

2 Option Second - Rule 4(2) and Rule 4(3) - Single Registration

- Registration may be obtained at the premises from where Central Billing is made or Central Accounting is done.

Situation one - Where all the premises are falling under the jurisdiction of one commissionerate

- Registration shall be granted by the Commissioner or Chief Commissioner of Central Excise instead of Superintended of Central Excise - Rule 4(3)(a)

Situation two - Where all the premises are not falling under the jurisdiction of one commissionerate

- Registration shall be granted by the Director General of Service Tax - Rule 4(3)(b) read with circular / letter no. F. No. 340-20-2005 dated 12-05-2005

- Procedure and action to be taken by the person seeking centralized registration - Guidelines

In this case application shall be filed before the AC / DC of central excise under whose jurisdiction the office for which registration is sought is situated. AC / DC shall verify the application form and send to Commissioner for further action. The commissioner of central excise shall certify the application and send the same to the DGST under intimation to the Chief Commissioner. DGST after being satisfied, will grant the permission to the Commissioner to grant the registration. Commissioner in turn will grant the registration to the applicant.

3 Option third - TRU instructions F. No. B 1/6/2005 Dated 27-07-2005

Assessee has an option to get the registration at ZO (Zonal Leval) or RO (Regional Level). This is the hybrid system of service tax registration. TRU has understood the difficulties faced by the assesses and allowed multiple centralized registrations to a business entities. TRU has quoted an example of banks. However, the basic condition remains same that is, 'ZO level or RO level office must have either centralized accounting or centralized billing.'


Transferability of Registration Certificate - Rule 4(6)

For the all reasons concerned, registration certificate is not transferable.

In all the situations including the followings where business is transferred or ownership has been changed etc. a new certificate is must.

- Where Proprietorship concern is changed to Partnership concern or vice-versa
- Where Proprietorship concern is changed to company
- Where business is inherited
- Division of HUF
- Merger or Demerger
- Sale or lease of a business etc.

Surrender of Registration Certificate -Rule 4(7)

Where is a registered person ceases to provide taxable services for which he is registered, he should surrender the registration certificate. Rule 4(7)

There is no time limit for surrender of registration certificate. Ideally it should be surrendered when all the taxes have been paid, all the returns have been filed etc.

There is no prescribed format of application for surrender of registration certificate. A simple application is sufficient for surrender of RC.

Surrender of Certificate in case of a person availing value based exemption (SSP)

SSP denotes small service provider.

An SSP who is, already, holder of the registration certificate and intends to avail the exemption under notification no. 6/2005 upto the value of Rs. 4 Lakhs, may surrender the RC if his likely turnover in the current financial year would not exceed Rs. 3 lakhs.

There is no specific procedure addressing this situation, but after combined reading of Section 69, Rule 4 and Notification No. 26-2005, it may be concluded that SSP can surrender the RC within the exemption limit.

Input Service Distributor - Registration requirements

The concept of input service distributor came from the Cenvat Credit Rules, 2004.

Before 16-06-2005 there was no specific provision in respect of input service distributor to have service tax registration number.

However, w.e.f. 16-06-2005, two notification has been issued in this regard:

3 - Prescribing Service Tax (Registration of special categories of persons) rules, 2005 - Notification No. 27/2005 ST dated 07-06-2005

4 - Persons, other than the persons who are liable to pay serviced tax, to obtain registration number - Notification No. 26/2005 ST dated 07-06-2005


Time Limit

An input service distributor shall apply for registration within 30 days from:

- The date of commencement of business or
- 16-06-2005

Centralized Registration

Whether an input service distributor can apply for centralized registration?

In the opinion of author, the answer is negative. Centralized registration facility is available for a person who is providing taxable services and liable to pay service tax. If more than one office of a business entity wants to distribute the input services and cenvat credit thereon to the other location which is liable for payment of service tax, a separate registration will be required for each such office.

Consequence for delay or non registration under service tax

Before 10-09-2004 there was a mandatory penalty of Rs. 500/- for delay or non registration in seeking registration under section 75A. Salt to the injury was that the department was asking the same to deposit in advance before applying for registration.

From 10-09-2004 the section 75A has been omitted and consequently there is no mandatory penalty is there for failure to apply for registration.

But, even after deletion of section 75A there may be a maximum penalty of Rs. 1000/- for failure to pay registration under section 77.

However, penalty under section 77 is general penalty and not mandatory and before imposing this penalty the proper office has to issue a show cause notice and give an opportunity of being heared.

Importer Exporter Code Number : Exempted Categories

The following categories of importers or exporters are exempted from obtaining Importer - Exporter Code (IEC) number:
1. Importers covered by clause 3 (1) [except sub-clauses (e) and (l)] and exporters covered by clause 3(2) [except sub-clauses (i) and (k)] of the Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993.
2. Ministries/Departments of the Central or State Government.
3. Persons importing or exporting goods for personal use not connected with trade or manufacture or agriculture.
4. Persons importing/exporting goods from/to Nepal provided the CIF value of a single consignment does not exceed Indian Rs.25,000.
5. Persons importing/exporting goods from/to Myanmar through Indo-Myanmar border areas provided the CIF value of a single consignment does not exceed Indian Rs.25,000.

However, the exemption from obtaining Importer-Exporter Code (IEC) number shall not be applicable for the export of Special Chemicals, Organisms, Materials, Equipments and Technologies (SCOMET) as listed in Appendix- 3, Schedule 2 of the ITC(HS) except in the case of exports by category(ii) above.
6. The following permanent IEC numbers shall be used by the categories of importers/ exporters mentioned against them for import/ export purposes..
S.No Code Number Categories of Importers/ Exporters
1 0100000011 All Ministries/Departments of the Central Government and agencies wholly or partially owned by them.
2 0100000029 All Ministries/Departments of the State Government and agencies wholly or partially owned by them.
3 0100000037 Diplomatic personnel, Counselor officers in India and the officials of the UNO and its specialised agencies.
4 0100000045 Indians returning from/going abroad and claiming benefit under the Baggage Rules.
5 0100000053 Persons/ Institutions/ Hospitals importing or exporting goods for personnel use, not connected with trade or manufacture or agriculture.
6 0100000061 Persons importing/ exporting goods from/to Nepal provided the CIF value of a single consignment does not exceed Indian Rupees 25000/-.
7 0100000070 Persons importing/ exporting goods from/to Myanmar through Indo- Myanmar border areas provided the CIF value of a single consignment does not exceed Indian Rupees 25000/-.
8 0100000088 Ford Foundation
9 0100000096 Importers importing goods for display or use in fairs/exhibitions or similar events under the provisions of ATA carnet.
10 0100000100 Director, National Blood Group Reference Laboratory, Bombay or their authorized offices.
11 0100000126 Individuals/Charitable Institutions/ Registered NGOs importing goods, which have been exempted from Customs duty under the Notification issued by Ministry of Finance for bonafide use by the victims affected by natural calamity.
12 0100000134 Persons importing / exporting permissible goods as notified from time to time, from/to China through Gunji and Namgaya Shipkila ports, provided the CIF value of a single consignment does not exceed Indian Rs.25,000. In case of Nathula port, the applicable value ceiling will be Rs.100,000.
13 0100000142 Ordinance factories under the Ordinance Factories Organisation.
14 0100000151 Deleted (Deleted (Ref. DGFT Public Notice No.36(RE-2008)/2004-2009, dated 01-07-2008.) [Old- The Directorate of Purchase and Stores, Department of Atomic Energy,Government of India.]
15 0100000169 Non-commercial imports and exports by entities who have been authorized by Reserve Bank of India.
Note: Commercial Public Sector Undertaking (PSU) who have obtained PAN will however be required to obtain Importer Exporter Code number. The permanent IEC number as mentioned above, shall be used by non-commercial PSUs.