The Finance Bill - 2007-2008 has been enacted in May 2007, after it received the assent of the President of India. The important points arising out of this enactment include the following:

• The Secondary and Higher Education Cess for Service Tax would be effective from 12.05.2007 (1 per cent of the Service Tax, this is in addition to the 2 per cent Education Cess already in vogue – Now the total Service Tax implication is 12.36 per cent and not 12.24 per cent).
• The penalty for late filing of Service Tax returns quantified and in this connection Section 70 has been amended to include a late fee not exceeding Rs 2,000 for delayed filing of returns.
• The Central Board of Excise and Customs has issued 8 notifications to make consequential changes.
• The government has issued a notification introducing a new Rule 7C in the Service Tax Rules.
• The late fee is:

Rs 500 for the first 15 days 
Rs 1,000 for delay of more than 15 days but less than 30 days
Beyond 30 days - Rs 1,000+ Rs 100 per day, but not more than Rs 2000
Once this amount is paid, there will be no further penal proceedings and this applies to pending cases also. 
(Service Tax Notification 20/2007 dated 12.5.2007) Rebate of Service Tax – Secondary and Higher Education Cess included

• Notification No. 11 and 12/2005 Service Tax is amended to include Secondary and Higher Education Cess for granting of rebate for export of services. (Service Tax Notification 21 and 22/2007 dated 12.5.2007)
• Consequent to the enactment of the Finance Bill, the Secondary and Higher Education Cess related exemptions are withdrawn. (18/2007 CE dated 1.3.2007 - rescinded by No. 25/2007-Central Excise dated 12.5.2007, 27/2007 - cus dated 1.3.2007 - rescinded by No. 70/2007 - Cus dated 12.5.2007]
• Secondary and Higher Education Cess added in Cenvat Credit Rules, 2004.
• The Secondary and Higher Education Cess has been incorporated in the relevant portions of the Cenvat Credit Rules - (Notification 27/2007 CENT dated 12.5.2007)
  Customs effective rate proposed in Finance Bill - temporary notification withdrawn. Notification No. 21/2007 dated 1.3.2007, prescribed the effective rates as proposed in the Finance Bill. Now that this bill is enacted, the notification has no life and so is rescinded. (Notification 68/2007 Cus dated 12.5.2007)
• Secondary and Higher Education Cess exemption to certain imported goods

Notification No. 28/2007 cus dated 1.3.2007 exempted certain goods from Secondary and Higher Education Cess, which were already exempted from education cess. Consequent to the enactment this notification is amended to include the Finance Act. (Notification 69/2007 Cus dated 12.5.2007)

The new services introduced in Budget 2007-08 would be notified as taxable services shortly and it would be effective from the date of such notification.

Vinod Kuriakose

(The writer Vinod Kuriakose can be contacted at feedback2vinod@yahoo.co.uk)