- An attempt seems to have been made to render the bail provisions less onerous by providing that all offences would be bailable. However, despite the declaration by the FM in his speech that "In response to concerns expressed by Members that the proposal regarding grant of bail only after hearing the public prosecutor is too harsh, I propose to omit this provision entirely", Section 121 of Finance Bill 2012 (which prescribes the opposition by the public prosecutor) does not seem to have been changed. This appears to be an oversight and further clarifications may be expected in this regard from the Ministry of Finance Customs

 Excise

• In the face of severe opposition from the relevant industry bodies,
the proposed levy of excise duty of 1 percent on unbranded precious metal jewellery has been rolled back with effect from March 17, 2012

• Excise duty rates for various tobacco products have been rationalized
 

Service tax

Various changes have been introduced vis a vis the comprehensive service tax regime. The key changes are highlighted below:

• The definition of `service' has been amended to exclude activities which qualify as `deemed sale' under the Constitution. This would have a significant impact vis a vis service tax positions in case of `lease transactions' and `works contracts'.

• The definition of `Interest' has been amended to exclude "any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized". This was earlier included in the definition.

Given that the Negative List of services includes "services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount", it might have been possible (based on the earlier definition) to adopt a view that several financial services would be outside the service tax net since not only `interest' in the classical sense, but also various processing charges etc could also have been said to be excluded vide the original definition. This potential planning option has effectively been done away with.

• The definition of `works contract' has been expanded to include works carried out on moveable properties also. Under the original provisions of the Finance Bill, contracts solely for "any building or structure on land" were covered under the ambit of `works contract'. Thus, an attempt has been made to align the definition of `works contract' under service tax to State VAT laws presumably in order to achieve consistency of tax treatment.

This is a significant change as the option of composition scheme under service tax may now be available even for certain hitherto uncovered services like maintenance contracts for goods. On the flip side, this may also lead to new credit restrictions given the Explanation 2 to the new Rule 2A in the Service Tax Valuation Rules which states "For the removal of doubts, it is clarified that duty of excise paid on any goods, property which is transferred (whether as goods or in some other form) in the execution of works contract, shall not be availed as CENVAT credit"

• The language used in the negative list entry pertaining to services of transportation of goods provided by an aircraft or vessel from outside India to within India has been amended to avoid interpretative disputes as to the scope and extent of that entry.

The earlier entry used the phrase "to the first customs station of landing in India" which has now been replaced with "upto the customs station of clearance" – a much improved drafting effort which would hopefully result in avoiding interpretative disputes.