Friday, 28 September 2012

No Service Tax to be Levied on Railways Tickets Issued Prior to 1st October 2012

Levy of Service Tax on Railway Passengers Travelling in Ac Classes/First Class from 1st October 2012 :- No Service Tax to be Levied on Tickets Issued Prior to 1st October 2012

In Case of Cancellation of Tickets Issued on or after 1st October 2012, the Applicable Amount Including Service Tax to be Refunded by Railways

The Ministry of Railways has made partial modification in levy of Service Tax on the fare of passengers travelling in AC Classes/First Class from 1st October 2012.  As per the corrigendum issued by Ministry of 
Railways today i.e. 28.9.2012, there are following changes:

(i)      Service Tax amounting to 3.708% on the total fare of passenger services in
(a) AC First Class,
(b) Executive Class,
(c) AC-2 tier Class, (
d) AC-3 tier class,
(e) AC Chair Car class,
(f) AC Economy class and
(g) First Class is leviable from the 1st day of October 2012. It has been clarified that the Service Tax would be collected on the tickets issued/bookings made on or after 01.10.2012.  Service Tax is not leviable on tickets issued prior to 01.10.2012 and hence will not be collected on board the trains.

(ii)  In case of cancellation of tickets booked by the passengers on or after 01.10.2012, the applicable amount including refundable Service Tax amount will be refunded by Railways as per Railway refund rules and Finance Ministry guidelines.    


With Regards
Prakash Verma
E ID:-  


Shri Justice Altamas Kabir will assume the charge of the Chief Justice of India here tomorrow. The President of India, Shri Pranab Mukherjee, will administer the oath of office to the new Chief Justice of India at the Rashtrapati Bhawan.

Born on July 19, 1948 at Kolkata, Justice Kabir did his M.A. and LL.B.from University of Calcutta. He was enrolled at the Bar on August 1, 1973 and was made a permanent judge of Calcutta High Court on August 6, 1990. Justice Kabir assumed the office of acting Chief Justice of Calcutta High Court on January 11, 2005. He was elevated as Chief Justice of Jharkhand High Court on March 01, 2005 and was made a judge of the Supreme Court of India on September 09, 2005.

Shri Justice Altamas Kabir was responsible for the computerization of the Calcutta High Court and the City Civil Court and other Courts in Kolkatta. He was appointed as Executive Chairman of the National Legal Services Authority on January 14, 2010.

Shri Justice Kabir’s term will continue till 18th July 2013.

With Regards
Prakash Verma
E ID:-

Thursday, 27 September 2012



The MCA21 is considered as one of the most successful mission mode project (MMP) having implemented many innovations viz. internet payments, credit card payment, electronic issuance of stamp paper (e-stamp), use of adobe e-forms, end-to-end electronic work flow and digital signature (DSC) based electronic filing. This was stated by the Union Corporate Affairs Minister Dr. M.Veerappa Moily during a Press Conference organised on the recent Cabinet Committee on Economic Affairs approval of Continuation of MCA21 Project” - e-Governance, Computerization and Networking of Ministry of Corporate Affairs (MCA) and its field offices (MCA21 v2) here in New Delhi on 26th Sept, 2012.  

The Minister informed that the Cabinet Committee on Economic Affairs approved continuation of MCA21 Project for its second cycle from January, 2013 to July, 2021 as a Non-Plan Scheme at a total project outlay of Rs.357.81 crore including an outlay of Rs.54.42 crore for independent project management and certification over eight and a half year period.  It also includes an outlay of Rs.29.84 crore for continuous improvement and up-gradation to the electronic service delivery of Ministry of Corporate Affairs.

The project will benefit all the companies and LLPs registered in India.  In addition, the project benefits citizens through its IEPF sub-portal for investor awareness and disclosures.  Banks and financial institutions also benefit immensely from MCA21 as it acts as a repository of charge information on company/company’s assets. MCA21 project has also benefited various state governments through innovative use of electronic stamps (e-stamp).

He said the New Features of MCA21 in Second Cycle includes: 

  • Replacement of existing desktops, printers, & scanners
  • Replacement of UPS with higher backup
  • Replacement of end-of-life & out-of-support servers and associated infrastructure
  • Upgrade Network Connectivity
    • ROC & RD Offices - 2 Mbps or 4 Mbps based on users
    • MCA-HQ: 8Mbps
  • Support ISO 27001 Audit of Data Center (DC) and Disaster Recovery Center (DRC) – For ensuring higher Security Standards
Enhanced User Experience:
  • Redesign of the portal to provide an enhanced look and feel to the end users
  • Improved dashboards for front office and back office users
  • Advanced search services
  • Collaboration tools like Bulletin Board, Discussion Forums etc.
  • SMS and mobile enabled interfaces
  • Business analytics solution to support user-defined customizable reports and enhanced technical scrutiny
 Additional Functionalities:
  • OL E-Governance with E-auction and integrated accounting
  • To Enable Value Added Service (VAS) Providers
  • Additional Offices like ROC Sikkim
  • Establishment Functions of CLB and SFIO
  • Business Process Re-engineering to simplify the forms and processes – continuous process
  • Flexible and configurable application to handle the changes to rules, processes with a quick turnaround
Selection Process:
  • Two stage bidding consisting of EOI for short-listing qualified bidder
  • Eight bidders were shortlisted in October 2011
  • Comprehensive consultation process before and after release of RFP was followed to create a level playing field.
  • Selection Committee comprised of experts from various organizations having vast experience on IT projects. Technical Committee was chaired by Prof. Deepak Phatak IIT, Mumbai, and Commercial Committee was chairted by Sh. Faud Mohammed Advisor & FA North Eastern Railways 
  • M/s Infosys declared as best value bidder. Infosys ranked first in both technical and commercial evaluation.
  • Infosys has proposed to implement MCA21 – v2 with Web 2.0 to Enhance User experience (on MCA Portal Front end) and Customer Relationship Management (CRM) to improve data structuring and reporting & end-to-end database management.

Dr. Moily  also informed that the project will be continued as Public Private Partnership, with Service Level based Equated Quarterly payments to M/s Infosys.

The Minister also detailed about the various initiatives of the M/o Corporate Affairs. Some of the initiatives are as under:

·     The Companies Bill, 2011 final draft after consideration of the Standing Committee recommendations and comments from the Ministry of Finance, Law and the Planning Commission is now before the Cabinet for consideration and it is expected to be taken up for consideration in the ensuring session of Parliament.

·     The Committee constituted under the chairmanship  of Shri Adi Godrej to draft policy document on Corporate Governance has submitted its report, which is being examined and the Ministry will finalise National Policy on Corporate Governance soon.

·     Cabinet Note for approval of the draft National Competition Policy has already been circulated.

·      After consideration of the GOM headed by the Finance Minister, Cabinet Note for approval of the draft Competition Amendment Bill has also been circulated.

·      A committee has been formed under the Chairmanship of Mr. M.Damodaran, former Chairman, to suggest a road map for improvement in ease of doing business in India. The aim is to have a measurable target in terms of improvement in the rankings within a period of next 3 to 5 years and place India at one of the top five positions with zero hassles. The Committte completed the exercise of collecting background materials. The Committee will hold its first meeting on 10th October, 2012 and is likely to submit its report by end of March, 2013.

·      The Ministry is working towards developing a business confidence index for the corporate sector in India based on robust economic parameters which would reflect true strengths and quicker analysis of the corporate sector in India. It is expected that such index  for the corporate sector in India based on robust economic parameters which would reflect true strengths and quicker analysis of the corporate sector in India. It is expected that such index will be in place in the near future.

·     With the enactment of the Companie Bill, CSR will get a statutory framework, wherein 2% of the average profit will have to be spent toward CSR activities. The MCA is already working on formulation of rules, procedures, etc. for implementation of this historical provision in the new Companies Bill.

·     The Ministry is also working on providing a sustainability report framework which will have to be mandatorily followed by the companies. A Committee constituted for this purpose has suggested a sustainable reporting framework, which has been adopted by the SEBI for listed companies.

Source: Press Release of MCA, dated 26-September-2012

With Regards
Prakash Verma
E ID:-

Tuesday, 25 September 2012

Financial Restructuring of State Distribution Companies (Discoms)

Cabinet Committee on Economic Affairs Approves Scheme for
Financial Restructuring of State Distribution Companies (Discoms).

In an attempt to restore power purchasing capacity of the debt ridden DISCOMS and also to enable Banks to recover their loans, the Cabinet Committee on Economic Affairs approved the scheme for Financial Restructuring of State Distribution Companies (Discoms). The scheme contains various measures required to be taken by State Discoms and State Governments for achieving the financial turnaround of the Discoms by restructuring their debt with support through a Transitional Finance Mechanism  by Central Government. The scheme is effective from the date of notification and will remain open upto 31st Dec 2012 unless extended by the GOI. The scheme would be applicable to all State owned Discoms having accumulated losses and facing difficulty in financing operational losses.

The accumulated losses of the state power distribution companies (Discoms) are estimated to be about Rs 1.9 Lakh crore as on 31st March, 2011.Any turn around strategy has to be based on the principle that gap between Average Revenue Realization (ARR) and Average Cost of Supply (ACS) is eliminated as early as possible, liability to be taken over by State Government/ equity infusion by State Government, subsidy to be provided in full by State Government as per the Electricity Act and Average Debt Service Coverage Ratio (DSCR) to be atleast 1. The scheme has been prepared keeping in view the fragile health of utilities and State Government, coupled with serious systemic deficiencies in the working of State Discoms and underlying principles of turnaround as aforesaid. The scheme contains immediate/ continuing and short term measures required to be taken in a time bound manner by the Discoms and State Governments. These measures include Financial Restructuring, Tariff Setting & Revenue Realization, Subsidy, Metering, Audit & Accounts and Monitoring.

Salient features

50% of the outstanding short term liabilities upto March 31, 2012 to be taken over by State Governments. This shall be first converted into bonds to be issued by Discoms to participating lenders, duly backed by State Govt guarantee.

a.      Takeover of liability by State Govt from Discoms in the next 2-5 years by way of special securities and repayment and Interest payment to be done by State Govt till the date of takeover.
b.      Restructuring the balance 50% Short Term Loan by rescheduling loans and providing moratorium on principal and the best possible terms for this restructuring to ensure viability of this effort.
c.      The restructuring/reschedulement of loan is to be accompanied by concrete and measurable action by the Discoms/States to improve the operational performance of the distribution utilities.
d.    For monitoring the progress of the turnaround plan, two committees at State and Central levels respectively are proposed to be formed.
e.      Central Government will provide incentive by way of grant equal to the value of the additional energy saved by way of accelerated AT&C loss reduction beyond the loss trajectory specified under RAPDRP and capital reimbursement support of 25% of principal repayment by the State Govt on the liability taken over by the State Govt under the scheme.
f.   Ministry of Power to bring out draft model legislation on State Electricity Distribution etc. Responsibility bill, after due inter-ministerial consultation within a period of twelve months from the approval of the Scheme.
g.      States will enact the legislation within twelve months from the date of circulation of model legislation by Ministry of Power to mandate the compliance of the provisions of FRP.


The scheme proposes to enable the State Governments and the DISCOMs to carve out a strategy for the financial turnaround of the distribution companies in the State power sector which will be enabled by the lenders agreeing to restructure/reschedule the existing short-term debt. As the restructuring/reschedulement by lenders is subject to certain prior steps to be taken by the State Government/DISCOMs and their commitment to fulfil mandatory conditions which are aimed at bridging the gap between the average cost of supply and the average revenue realized, this would help in restoring the viability of the distribution sector in the State. By restructuring and rescheduling the outstanding short term debt and securing the commitment of the State Govt in the discharge of debt service obligation, the Discoms would be nursed back to health. Government of India support through the transitional finance mechanism would serve the purpose of incentivizing the fulfilment of mandatory conditions. 

Expected Outcomes 

(a)        Providing comfort to the lenders by securing State takeover of and guarantee for debt,
(b)        Bringing about financial discipline in the distribution sector in the State,
(c)        Providing a commercial orientation to the functioning of the distribution companies,
(d)     Casting responsibility on the State Government to ensure a steady flow of revenue to the distribution companies by improving the efficiency of their operations,
(e)       Accelerate the AT&C loss reduction effort of DISCOMs, through additional incentive from Central Govt
(.f)       Ensure regular rationalisation of tariff to cover cost of service,
(g)        Gradual elimination of the gap between ACS and ARR.
(h)        Ensure timely audit of DISCOM accounts
(i)        Improve the financial health of the Distribution Utilities to enable them to procure more electricity for meeting their growing demands.

1.    State Governments shall convert all their loans to equity
2.    All outstanding energy bills of State Departments/Agencies as on 31.3.2012 to be paid  by        30.11.2012
3.    Eliminate the gap between ACS and ARR within the period of moratorium of the bonds
4.    Involvement of private sector in state distribution sector through franchisee arrangements or any other mode of private participation to be prepared within a year by the Discoms
5.    Tariff order to be notified by 30th April of each Financial year
6.    Fuel cost adjustment to be allowed as directed by APTEL
7.    FRP to include targets for progressive reduction in Short Term Power (STP) purchase by the State Discoms
8.    Subsidy should be paid upfront by State Govt.
9.    Prepaid meters to be installed by 31.3.2013 for all Government consumers
10.  Audited accounts for and up to FY 2010-11 by 30.9.2012 and of FY 2011-12 to be finalized by 31.12.2012.

Source: Press Release, Ministry of Power

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With Regards
Prakash Verma
E Id: