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March 2015

Table Of Contents

Indirect Tax

Article on Taxability Of Chit Fund

Change of Classification of Service

Direct Tax

Amendments in TDS and TCS provisions as proposed in Finance Bill, 2015


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In keeping with the new government's resolve to minimize Tax litigation, Circular No. 990/14/2014-CX-8 was issued on 19th November 2014, clarifying that Cenvat Credit on Inputs/ Input Services can be re-claimed after six months provided within 6 months they once takes CENVAT Credit of input services on the basis of invoice.

Prior to the issuance of above Circular, Rule 4(1) and Rule 4(7) of the Cenvat Credit Rules, 2004 (“the Credit Rules”), as amendment by Notification by 21/2014-CE(NT) read as follows.

“The manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub- rule (1) of rule 9.]”

The purpose of the amendment made by above notification is to ensure that after the issuance of a document (Example: invoices) under Rule 9(1) of the Credit Rules, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation of ‘used within six months’ has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B)or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules.”


CBEC further clarified that re-credit taken in following three situations may be cancelled by the time limit of six months. These situations are as follows:


In the recent times, the levy of Service Tax on Restaurant, Outdoor Catering and Mandap keeper Services have become quite sensitive and Controversial Topics.

Lately two high courts, i.e., Kerala High Court and The Mumbai High court have given two divergent views on the services in relation to restaurant and outdoor Catering.

The Kerala High Court in the case of Kerala Classified Hotels and Resorts Association vs. UOI, 2013 (7) TMI 431 relied upon the view of the Supreme Court in the case of K.Damodarasamy Naidu which laid emphasis of Article 366(29A)(f) of the constitution which says –


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