Corporate Updates – 21-12-2015


MCA has notified and appointed 14th day of December, 2015 as the date on which the provisions of Section 13 and 14 of the Companies (Amendment) Act, 2015 shall come into force. Section 13 of the Amendment Act deals with the reporting of fraud by the Statutory Auditors, Cost Auditors and Secretarial Auditors, where in the auditor is responsible to report the matter to the Central Government or to the Audit Committee in the manner prescribed. Further, Section 14 of the Amendment Act empowers the Audit Committee to make omnibus approval for related party transactions proposed to be entered into by the company subject to certain conditions.

CBEC – Service Tax

CBEC has issued clarification on Applicability of service tax on the services received by apparel exporters in relation to fabrication of garments. Issue was raised that service tax is payable on services received by the apparel exporters from third party for job work. The matter has been examined. The nature of manpower supply service is quite distinct from the service of job work. The essential characteristics of manpower supply service are that the supplier provides manpower which is at the disposal and temporarily under effective control of the service recipient during the period of contract. Service provider’s accountability is only to the extent and quality of manpower. Deployment of manpower normally rests with the service recipient. Therefore, the exact nature of service needs to be determined on the facts of each case which would vary from case to case. The terms of agreement and scope of activity undertaken by the service provider would determine the nature of service being provided. However, every job work is not covered under the negative list. If the job work involves a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944, it would be covered under negative list in terms of Section 66D(f) read with section 65B (40) of the Finance Act, 1994. The issue of applicability of service tax may accordingly be decided taking into account the nature of agreement/contract and the service being provided.

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