Tuesday, January 27, 2015

Compensation under Workmens Compensation Act, 1923

An employee covered under Employees’ State Insurance Act, 1948 will not be entitled to claim benefit under Workmens Compensation Act, 1923. 

Employer's liability to pay compensation to a workman Sec.3

On death or personal injury resulting into total or partial disablement or occupational disease caused to a workman arising out of and during the course of employment.

An employee shall be eligible for compensation under Employees’ Compensation Act, 1923 which results in the total or partial disablement of the workman for period exceeding THREE DAYS.

When an employee is not liable for compensation [Sec. 3(a) & (b)]

An employee shall not be eligible for the Compensation for any injury caused to by his willful negligence or failure to adhere to safety standards prescribed by the employer. 

  1. In respect of any injury which does result in the total or partial disablement of the workman for a period exceeding three days.
  2. In respect of any injury, not resulting in death or permanent total disablement caused by an accident which is directly attributable to-
  3. The workman having been at the time thereof under the influence of drink or drugs, or
  4. Wilful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen, or
  5. Wilful removal or disregard by the workman of any safety guard or other device which he knew to have been provided for the purpose of securing the safely of workman.

Amount of Compensation under Workmens Compensation Act, 1923 is as under., 

A. In case of death: An amount equal to 50% of monthly wages of the deceased workman multiplied by relevant factor or an amount of Rs.1,20,000/‐ WHICHEVER IS MORE. 

B. In case of Permanent total disablement: 60% of monthly wages multiplied by relevant factor or an amount of Rs.1,40,000/‐ WHICHEVER IS MORE 

Procedure for Calculation: Higher the age – Lower the compensation Relevant factor specified in second column of Schedule IV giving slabs depending upon the age of the concerned workman. 

Monday, January 26, 2015


Vat was introduced in all over country in 2006 and GST is the logical conclusion of the successful introduction and imposition of Value added Tax in India. In its standard format GST is a single tax replacing all the indirect taxes and collected by a single authority but in our country the system of Governance is Federal and both centre and states have the power to collect indirect taxes in one form or another. Hence a formula is developed to introduce a compromised GST with the consent of the States hence we can call it Indian format of GST. 

First it was referred in 2006 in the Budget speech of the FM that GST will be introduced in India from 1st. April 2010 but later for one or other reasons it was postponed from year to year and it is evident from this delay that it is not easy for the lawmakers to introduce GST in our country and now since 2016 is declared as GST introduction year, let us see what is Indian format of the GST and further what is the basic characteristics of India GST , the problems associated with it and further what is the possibility that the 2016 deadline will be met. 

Exchange traded fund: History, evolution benefits and operational process

In a recent development, Exchange traded funds has gained wide popularity, among investors as financial instruments, because of the unique advantages they provide over mutual funds. These instruments are highly advantageous for investors, who find it difficult to master the tricks of the trade resulting out of analyzing and picking stocks for their portfolio.(

Various Asset Management Companies, Managing Mutual funds have started providing ETF products that attempt to replicate the indices on NSE, so as to provide returns that closely correspond to the total returns of the securities represented in the index. ETF’s now currently available on NSE are extremely diverse which include Equity, Debt, Gold and International Indices ETF’s.

Read other types of Mutual Funds

ETF's launched on NSE

Exchange Traded Funds (ETF) are essentially Index Funds that are listed and traded on exchanges like stocks. An ETF is a basket of stocks that reflects the composition of an Index, like CNX Nifty. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. The funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the net asset values of their underlying portfolios. For the mechanism to work, potential arbitragers need to have full, timely knowledge of a fund's holdings.

ETF’s was first introduced in USA in 1993. It took several years for them to attract public interest. But once they did, the volumes took off with a vengeance. Over the last few years more than $120 billion (as on June 2002) is invested in about 230 ETFs. About 60% of trading volumes on the American Stock Exchange are from ETFs. The most popular ETFs are QQQs (Cubes) based on the Nasdaq‐100 Index, SPDRs (Spiders) based on the S&P 500 Index, iSHARES based on MSCI Indices and TRAHK (Tracks) based on the Hang Seng Index. The average daily trading volume in QQQ is around 89 million shares.

ETF s Scheme launched on National Stock Exchange, NSE, represent Equity, Debt. Gold and World Indices. ETFs are just what their name implies: baskets of securities that are traded, like individual stocks, on an exchange.

Advantages of ETF’s over Mutual Fund:

There are certain specific advantages which ETF has over Mutual Fund which are listed below:

1. Unlike regular open‐end mutual funds, which are also basket of securities, ETFs can be bought and sold throughout the trading day like any stock.

2. Most ETFs charge lower annual expenses than index mutual funds. However, as with stocks, one must pay a brokerage to buy and sell ETF units, which can be a significant drawback for those who trade frequently or invest regular sums of money.

3. Even though ETFs and Futures allow investors exposure to an index, they are different in many regards. While Futures is a derivative product and trades in the F&O segment of NSE, ETFs are a cash market product and trade in the Capital Market segment of NSE.

4. The maximum tenure available for futures is 3 months while ETFs can be held for as long as the investor wants.

Saturday, January 24, 2015


New Delhi, the 23rd January, 2015 

No. 1-CA(7)/167/2014.- Whereas certain draft regulations further to amend the Chartered Accountants Regulations, 1988, were published as required by sub-section (3) of section 30 of the Chartered Accountants Act, 1949 (38 of 1949), in the Gazette of India, Extraordinary, Part III, Section 4, dated the 10th September, 2014, inviting objections and suggestions from persons likely to be affected thereby, before the expiry of forty -five days from the date on which the copies of the Gazette containing the said notification were made available to the public; 

And whereas the copies of the said Gazette were made available to the public on the 12th September, 2014; 

And whereas the objections and suggestions received from the public on the said draft regulations have been considered by the Council of the Institute; 



ANSWER:  There are Two Situations: First Analyze Section- 139(2) Applicable on your company or Not. Companies fall under Section- 139(2) as given below(exclude small company and one person company):

·         All Listed Companies
·         Every Public Company having a Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.
·         Every Private Limited Company having Paid-Up Share Capital of Rs. 20 Crore (Twenty crore rupees) or more.
·         All Companies having public borrowings from Financial Institutions, banks or public deposits of Rs. 50 Crore (Rupees Fifty Crore Only) or more.

Friday, January 23, 2015

Govt. notifies 9.1% interest rate for investment in 'Sukanya Samridhi Account' during 2014-15


OFFICE MEMORANDUM [F.NO. 2/3/2014.NS-II], DATED 20-1-2015

Subject: Launch of scheme for Girl Child named "Sukanya Samridhhi Account" by Hon'ble Prime Minister - rate of interest reg.

In compliance of announcement by Finance Minister in his Budget Speech 2014-15 the Government of India has introduced a new scheme named "Sukanya Samridhhi Account" vide Notification No.GSR No.863(E), dated 2nd December, 2014. It has been decided to allow 9.1% rate of interest on investments in the scheme during the financial year 2014-15.

This has the approval of Union Finance Minister.

Exporter can convert shipping bill under one export promotion scheme to another to avail the benefit of scheme

We are sharing with you an important judgment of Hon’ble CESTAT, Chennai in the case of Suzlon Energy Ltd. Vs. Commissioner of Customs, Chennai [(2014) 51 taxmann.com 176 (Chennai - CESTAT)] onthe following issue:
Whether Exporter can convert shilling bill under one export promotion scheme to another to avail the benefit of scheme?
Facts & background:
Suzlon Energy Ltd. (“the Appellant”) sought conversion of five shipping bills from EPCG Drawback Scheme to EPCG Drawback and Advance Licence/ DEEC Scheme. In terms of the Circular No. 4/2004-Customs, dated January 17, 2004 (“the Circular”) such conversion can only be allowed when the benefit of export promotion scheme claimed by an exporter has been denied by the DGFT/ Ministry of Commerce/ Customs due to any dispute. In absence of the aforesaid denial, the conversion claimed in the instant case was rejected by the Adjudicating Authority under Section 149 of the Customs Act, 1962 (“the Customs Act”) read with the Circular. Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Chennai.
The Hon’ble CESTAT, Chennai held that in terms of Section 149 of the Customs Act, the conversion is possible on the documents in existence at the time of export. The shipping bills in the instant case were supported by a certificate from the Chartered Engineer, which was endorsed with the export particulars. It was further observed that the export was made in the month of March and the request for the conversion was made in the following month. Hence, the Hon’ble Tribunal allowed the conversion of shipping bills from “EPCG Drawback Scheme” to “EPCG Drawback and Advance License” to the Appellant.

Bimal Jain 
FCA, FCS, LLB, B.Com (Hons) 

Thursday, January 22, 2015

Summons not to be issued to top management of companies

On 20-Jan-15, CBEC has issued instructions directing the Central Excise officers to be very cautious before issuing summons under excise & service tax laws.

The Board instructed the Superintendents to obtain prior permission of Assistant Commissioner with reasons for issuance of summons in writing.

Post issuance of summons, a report incorporating the briefing of proceedings in the case file should also be submitted by the person issuing the summons.

Further, it also stated that summons should not be issued to senior mgt. officials such as CEO,CFO,General Manager of a large company or a PSU, unless there is an indicator of their involvement in decision making process which led to loss of revenue.


The aforesaid instructions have acted as a breather to the industry. Let's hope to get some relief from undue harassment done by the departmental officials without application of mind. 

Sumit Grover

Chartered Accountant

F. No. 207/07/2014-CX-6
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
  New Delhi, the 20th January, 2015  


Principal Chief / Chief Commissioners of Central Excise (All),
Principal Chief / Chief Commissioners of Central Excise of Central Excise & Service Tax (All),
                        Web-master, CBEC.  

Sub: Instructions regarding issue of summons in Central Excise and Service Tax matters – reg.


           It has been brought to the notice of the Board that in some instances, the summons under Section 14 of the Central Excise Act, 1944 have been issued by the field formations to the top senior officials of the companies in a routine manner to call for material evidence/ documents. Besides, summons have been issued to enforce recovery of dues, which are under dispute. As per Section 14 of Central Excise Act, 1944, summons can be used in an inquiry for recording statements or for collecting evidence/ documents. While the evidentiary value of securing documentary and oral evidence under the said legal provision can hardly be over emphasized, nevertheless, it is desirable that summons need not always be issued when a simple letter, politely worded, can also serve the purpose of securing documents relevant to investigation. It is emphasized that the use of summons be made only as a last resort when it is absolutely required.

2.         On this issue, Board has already issued a circular vide F. No 208/122/89-CX.6 dated 13.10.1989 in respect of Central Excise. Instruction has also been issued vide F. No. 137/39/2007-CX.4 dated 26.2.2007 in Service Tax matters.

3.   The following guidelines are being issued to be followed in both Central Excise and Service Tax matters:–

(i) Power to issue summons are generally exercised by Superintendents, though higher officers also issue summons. Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with the reasons for issuance of summons to be recorded in writing;
(ii) where for operational reasons it is not possible to obtain such prior written permission, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity;
(iii) In all cases, where summons are issued, the officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the  officer who hadauthorised the issue of summons.
4. Further, senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue.

5. These instructions may be brought to the notice of all the field officers for strict compliance. Non observance of the instructions will be viewed seriously. Hindi version would follow.

Yours faithfully,

Under Secretary, (CX-6)

Wednesday, January 21, 2015

Assessee is eligible to avail remaining 50% of Cenvat credit on Capital Goods cleared during the same Financial Year of its receipt

The Assessee is eligible to avail remaining 50% of Cenvat credit on Capital Goods which were cleared during the same Financial Year of its receipt
We are sharing with you an important judgment of Hon’ble High Court, Madras, in the case of Nilkamal Ltd. Vs. CCE, Bolpur [2015 (1) TMI 588 - CESTAT KOLKATA] on following issue:
WhetherAssessee is eligible to avail remaining Cenvat credit on Capital Goods which were cleared during the same financial Year of its receipt?
Facts & background:
Nilkamal Ltd. (“the Appellant”) was engaged in the manufacture of excisable goods and for the manufacture of these goods, they had purchased some moulds as Capital Goods.  Upon receipt of the said moulds in the factory, the Appellant availed 50% of the eligible Cenvat credit on the moulds as Capital Goods and the moulds were put to use for some time in the factory for further manufacturing of excisable goods. Thereafter, these modules were cleared to other units of the Appellant during the same Financial Year. Accordingly, the Appellant availed the remaining 50% of the Cenvat credit on the said moulds and cleared the said moulds, as such, by debiting the entire amount of Cenvat credit availed on such moulds.
The Department denied the availment of the remaining 50% of the Cenvat credit in the same Financial Year on the ground that once moulds were put to use, the same looses the character as such and their clearance from the factory after some time cannot be called ‘as such’, under Rule 4(2)(a) of the Cenvat Credit Rules, 2004 (“the Credit Rules”). Hence the Appellant was not eligible to avail remaining 50% of Cenvat credit at the time of its clearance in the same Financial Year.
Resultantly, a Show Cause Notice dated February 14, 2008 was issued to the Appellant alleging irregular availment of 50% Cenvat credit on moulds amounting to Rs. 3,01,95,614/-, which was further upheld by the Adjudication Authority confirming the demand of recovery of Cenvat credit along with interest and penalty. Being aggrieved the Appellant preferred an appeal before the Hon’ble CESTAT, Kolkata.
The Hon’ble CESTAT, Kolkata relying upon the following case laws:
·      Modernova Plastyles Pvt. Ltd. [2008 (232) ELT 29 (Tri-LB)] duly upheld by the Hon’ble Bombay High Court also vide its order dated November 4, 2009;
·      CCE, Hyderabad-III Vs. Navodhaya Plastic Industries Ltd. [2013 (298) E.L.T. 541 (Tri.-LB)];
·      CCE, Salem Vs. Rogini Mills Ltd. [2011 (264) E.L.T. 367 (Madras)].
and held that the Capital Goods which were put to use and when cleared from the factory, would be eligible to the balance 50% of Cenvat credit available on such Capital Goods on its clearance from the factory in the same financial year.
Our Comments:
It will not be out of place to draw recent comment made by the Hon’ble Justice Raghuram at FAPCCI, Hyderabad on January 17, 2015 that “Something is pathologically, terminally and seriously wrong with our departmental adjudication”.

Bimal Jain 
FCA, FCS, LLB, B.Com (Hons)

Tuesday, January 20, 2015

No Service Tax on advances received on works contract, if that works contract gets terminated & amount refunded


Crux of the Decision: 

No service tax can be leviable on the amount of advances received by the assessee under the works contract if that works contract gets terminated and the assessee have to pay that amount back to its clients. It means no service tax is payable if no service is rendered, hence, the amount of service tax already deposited by the assessee have to be considered as deposit to which time barred provision of section 11B, of CEA, 1944 are not applicable and refund of it can be claimed even after time span of 2 years.

Issue Involved:

“Whether the service tax is chargeable on the amount of advances received by the assessee under a work contract, if that work contract gets terminated and the assessee has to pay back the amount of the advance received to its clients? And if, the assessee cannot claim the refund of the amount paid as service tax on the advance received within the period of 2 years , then whether the provision of time barred under section 11B, of CEA,1944 will be applicable on it.”?

Decision of the Bench :

Heard both sides and perused the case records. The issue involved in the present proceedings is as to whether amount of Rs.19, 11,331 /- paid by the Respondent should be considered as payment of 'duty' or an amount paid as 'deposit'. From the facts available on records service tax was paid on the amount of advances received by the Respondent but ultimately no service could be provided as the said works contract got terminated. In the case of Addition Advertising vs. UOI (supra) jurisdictional Gujarat High Court has, inter-alia, held that if no service is provided then there is no service tax. It means that once service is not rendered then no service tax is payable. Similarly Karnataka High Court in the case of CCE, Bangalore vs. Motorola Private Limited (supra) held that any duty paid by mistake cannot be termed as 'duty'. Similar view has been taken in the other case laws relied upon by the Respondent. In view of the above, it has to be held that the amounts paid by the Respondent cannot be termed as payment of duty but has to be considered as a 'deposit' to which provisions of Section 11B of the Central Excise Act, 1944 will not be applicable. Accordingly, there is no reason to interfere with the order dated 23.7.2013 passed by the first appellate authority.


From the plain reading of the above decision it can be easily concluded that since the assessee paid the service tax on the amount of the advances received , but no service could be provided as the said work contract got terminated, they are eligible to get the refund of the same amount paid as service tax. It means no service tax is payable if no service is rendered. In view of the above decision it can also be concluded that payment of service tax by the assessee, on the services which was ultimately not provided, is not a payment of duty therefore, the assessee can apply for their refund even after a time span of two years.

Arun Sharma
(B.Com (H)/FCA/L.L.B)
Hari Global Advisory Services Pvt. Ltd.
(Attorneys & Advisors for Service Tax, Central Excise & Custom , IPR).
L: 01141051727 Ph. No.- 9953757893/9999036150.

The Assessee is free to choose the most beneficial Exemption Notification where two Exemption Notifications are available

We are sharing with you an important judgment of Hon’ble CESTAT, Ahmedabad, in the case of Bharat Vijay Mills Vs. Commissioner of Central Excise, Ahmedabad-III [(2014) 51 taxmann.com 266 (Ahmedabad - CESTAT)]on following issue:
Whether the Assessee is free to choose the most beneficial Exemption Notification where two Exemption Notifications are available?
Facts & background:
Bharat Vijay Mills (“the Appellant”) was engaged in manufacturing of cotton fabric which was cleared to the domestic market as well as for export after the payment of Central Excise Duty. Such export of cotton fabric was made under claim of rebate of duty at the rate of 4% in terms of the Notification No. 59/2008-CE dated December 07, 2008 (“the Notification 59/08”). The Appellant had also availed Cenvat credit in respect of the Inputs, Capital goods and Input services used in the manufacture of the finished goods during the period from December 07, 2008 to July 06, 2009.
There was simultaneously full exemption i.e. nil rate of duty available under another Notification No. 58/08-CE dated December 07, 2008 (“the Notification 58/08”) for the same period. Both the Notifications i.e. the Notification No. 58/08and the Notification No. 59/08were issued under Section 5A (1) of the Central Excise Act, 1944 (“the Excise Act”).
The Department contended that the Appellant was required to reverse the Cenvat credit involved on the Inputs lying in their stock or in process of the finished goods or contained in finished goods lying in stock as on December 7, 2008, as the Appellant was not eligible for such Cenvat credit in accordance with the provisions of the Notifications No. 58/08.
The Department relied upon Section 5A(1A) of the Excise Act, which provides that where an absolute exemption is available under sub-section (1) of Section 5A of the Excise Act in respect of any excisable goods from the whole of the duty of Excise leviable thereon, the manufacturer of such excisable goods shall not pay the duty of Excise on such goods.
Further, as per Rule 6(1) and Rule 6(4) of the Cenvat Credit Rules, 2004 (“the Credit Rules”), the Cenvat credit shall not be allowed on such quantity of Inputs, Input services and Capital goods, which were used in the manufacture of exempted goods.
Accordingly Show Cause Notice was issued to the Appellant which was duly confirmed by the Adjudicating Authority. Being aggrieved, the Appellant filed an appeal before the Hon’ble CESTAT, Ahmedabad.
The Hon’ble CESTAT, Ahmedabad relied upon its own decision in the case of Arvind Ltd. Vs. CCE [(2014) 47 taxmann.com 91/46 GST 566 (Ahd. - CESTAT)] and held that where two Exemption Notifications, one granting absolute unconditional exemption and other granting unconditional partial exemption, is available to the Assessee, the Assessee has an option to opt the Exemption Notification which is more beneficial to him. Accordingly, Section 5A(1A) of the Excise Act is inapplicable in such a case and the Cenvat credit availed by the Appellant  is valid.
Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.
Thanks & Best Regards,
Bimal Jain

FCA, FCS, LLB, B.Com (Hons)