Negative list and related provisions will take effect on 1 July The central government has issued a set of notifications that will make the negative list of services and related service tax provisions effective from 1 July 2012. The old provisions will cease to have effect from that date, except as respects things done or omitted to be done before that date. (In other words, what happened before 1 July will be dealt with under the provisions of law as they existed before 1 July.)

1. Udyog Tax News Flash
14th June 2012
Negative list and related provisions will
take effect on 1 July
The central government has issued a set of notifications that will make the
negative list of services and related service tax provisions effective from 1 July
2012. The old provisions will cease to have effect from that date, except as
respects things done or omitted to be done before that date. (In other words, what

2. happened before 1 July will be dealt with under the provisions of law as they
existed before 1 July.)
The notifications are as follows. First the enabling notification to make the old
provisions cease to have effect from a notified date was issued. This was
notification 18/2012-ST.
Then the date from which the new sections 65B, 66B, 66C, 66D, 66E, 66F will come
into effect was notified as 1 July 2012, under notification 19/2012-ST.
Finally the date from which the old provisions would cease to have effect was
notified separately for each section, under notification 20/2012-ST for section 65,
21/2012-ST for section 65A, 22/2012-ST for section 66, and 23/2012-ST for section
66A.
These notifications, all dated 5 June 2012, can be seen at
http://www.servicetax.gov.in/notifications/notfns-2012/st18-2012.htm.
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A quick overview of the new provisions:
• Section 65B contains the new definitions. Earlier the definitions were contained
in section 65.Section 65 defined each taxable service, among other things. One of
the important definitions under section 65B is that of ‘service’, which was not
defined earlier).
• Section 66B is the new charging section, which says that a tax of 12 per cent will
be levied on all services except those specified in the negative list.
•Section 66C enables the central government to make rules to determine the place
where services are provided or deemed to be provided. (This has significance
because only services provided in the taxable territory are taxable.)
•Section 66D is the negative list of services, which will not be taxable.
•Section 66E lists the ‘declared services’, which are declared to be services so as to
put the matter beyond doubt. This covers the known contentious issues of
construction, renting of immovable property, hiring out of goods, hire purchase,
software design, transfer of intellectual property rights, and service portion of
works contracts and of catering of food and drinks. But it also includes a new item,
“agreeing to the obligation to refrain from an act, or to tolerate an act or situation,
or to do an act.”
•Section 66F provides for the manner of taxing ‘bundled services’.

3. Service tax valuation rules amended
Certain amendments have been notified to the Service Tax (Determination of
Value) Rules 2006. These are as follows:
Rule 2A, which was introduced in the Finance Bill 2012 to deal with valuation of
works contracts, has been amended. The amendment is in the nature of refining
and bringing clarity. The substantive changes are that now there is a blanket ban
on input credit in works contracts, and a new category of repair and management
of goods has been introduced, in which the service value is fixed as seventy per
cent of the gross contract value.
Joint development agreement : service tax
leviable
The Chennai bench of the CESTAT has held that service tax is payable by the
developer in joint development agreements where the land owner provides the
land and gets a flat or flats in return. The bench was of the view that there were no
joint risks, no common activity, no participation of the land owners in the activity;
the land owner, after transferring a part of his rights under the agreement, gets his
undivided share of the land like anybody else and is like any prospective buyer
except that his right to the agreed number of flats is guaranteed. The order is
discussed in
.http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&
newsid=15117
Foreign Trade Policy: annual supplement
announced
The annual supplement to the Foreign Trade Policy 2009-14 has been released.
Some of the highlights are -
•The 2% interest subvention scheme has been extended till 31 March 2013 and its
coverage has been increased. Now, in addition to handlooms, handicrafts, carpets
and SME’s, it will also cover the labour intensive sectors of toys, sports goods,
processed agricultural products, and readymade garments.
•Zero duty EPCG has been extended till 31 March 2013.

4. •Zero duty EPCG has been made available to units that avail TUFS (Technology
Upgradation Fund Scheme) for another line of business;
•Zero duty EPCG has been made available to those who availed SFIS, provided they
surrender the benefit with interest.
•Post export EPCG scheme has been introduced, with reduced export obligation.
•The waiver from maintaining average level of exports under the EPCG scheme
that was available to some sectors has been extended to carpets, coir and jute.
•A common service provider (CSP) under the EPCG scheme has been permitted to
give a single bank guarantee.
•Some benefits have been provided exports from for the north eastern region of
the country.
•Imports under advance authorisation will now be allowed through any EDI port,
without requirement of telegraphic release advice (TRA) from the port at which the
authorisation is registered.
•“E-BRC” has been launched, which will transmit data of bank realisations directly
to the DGFT, so that the exporter will not have to obtain bank realisation
certificates.
A report can be seen at
http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&
newsid=15153.
Tariff value of gold increased
The central government has notified change in the tariff values of gold. Now the
tariff value of gold in respect of which benefit of entries 321 and 323 of the
notification has been availed is USD 531 per 10 grams. There is no change in the
tariff value of silver in respect of which benefit under serial number 322 and 324 is
availed. See http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2012/cs-
nt2012/csnt48-2012.htm

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Anti dumping duty on digital offset printing
plates from China and Japan
The central government has levied anti dumping duty on digital offset printing
plates imported from or manufactured in Japan or the People’s Republic of China.
The duty is calculated in terms of square meters and also varies with the type of
plate. The notification number 31/2012-Customs (ADD) dated 4 June 2012 can be
seen at http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2012/cs-
add2012/csadd-31-2012.htm.
Anti dumping duty on gypsum board from
China, Indonesia, Thailand, UAE
Provisional anti dumping duty was levied earlier, and now definitive anti dumping
duty has been levied on plain gypsum plaster boards manufactured in or imported
from China, Indonesia, Thailand and UAE. The notification 32/2012-Customs (ADD)
dated 7.6.2012 can be seen at http://www.cbec.gov.in/customs/cs-
act/notifications/notfns-2012/cs-add2012/csadd-32-2012.htm
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6. Trade restrictions increasing, WTO alarmed
A joint study by the World Trade Organisation (WTO), the Organisation of
Economically Developed Countries (OECD) and the UN Council for Trade &
Development (UNCTAD) has revealed that protectionism still holds sway in
international trade.
http://www.wto.org/english/news_e/news12_e/igo_31may12_e.htm
The Director General of the WTO, Pascal Lamy, has gone on record with the
observation that the rise in trade restrictions is “alarming”. See the report at
http://www.wto.org/english/news_e/sppl_e/sppl234_e.htm
Updated and written by Radha Arun,
Consultant to Udyog Software (India) Ltd.
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