TIOL-DDT 1181 · the untouched capture
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<p><font size="3"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1181 </font></strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong></strong></font></font><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><br>
24.08.2009 <br>
Monday </strong></font></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 66A not a Charging Section – Tax paid by reverse charge eligible as input credit if service is an input service </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>COMMISSIONER </strong>(LTU), Mumbai raised an issue with the Ministry that the list of duties/taxes mentioned under Rule 3 of the CENVAT Credit Rules, 2004 covers only section 66 of the Finance Act, 1994 and does not mention section 66A of the Finance Act, 1994. Since Section 66A refers to payment by recipient of service imported from abroad, under reverse charge mechanism, in the absence of a specific mention of this Section in Rule 3, any credit of such tax paid would be illegal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was further mentioned that CERA has objected to the clarification issued by the Board vide letter F.No.BI/4/2006-TRU dated 19th April, 2006 wherein it was clarified that if such imported service is used as input for providing any taxable output service, the service tax paid thereon can be taken as input credit, in the absence of a specific mention of section 66A in Rule 3. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry examined this matter and it is clarified that the provisions under section 66A state that in case service is provided from abroad and received in India such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of Chapter V of the Finance Act, 1994 would apply. Therefore, it is clear that section 66A is not a charging section by itself. It only creates a legal fiction to deem import of service as provision of service within India so that the provisions of Chapter V of the Finance Act, 1994 can be applied. Section 66 remains the charging section even for import of services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of this, it is clear that there is no mistake or omission in the relevant provisions of the CENVAT Credit Rules, 2004 and credit of service tax paid on imported services should be allowed if they are in the nature of input services. It is further advised that the CERA objection on the subject should be replied accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such an important clarification explaining the clear position of law by the Ministry/Board is indeed commendable. But why is it that the Ministry/Board does not give up the habit of hiding such important clarifications from the stakeholders. Is it not incumbent on the Ministry/Board to make this clarification public? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, does the Ministry/Board think that this issue is only confined to Mumbai and has no relevance for the service recipients in the rest of the country? While a copy of this clarification is marked to the Director General, Service Tax for informing the field formations, what about the service recipients who are at the receiving end across the country? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2009/st_credit.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TRU Letter F.No.354/148/2009-TRU dated July 16, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 11C Notification for Dough </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Government has issued a Section 11C notification for ‘Dough' falling under Chapter 1901 20 00 used for preparation of Baker's wares of Chapter 1905. The Notification exempts Dough for preparation of Baker's wares of Heading no. 1905 during the period 28 th February, 2005 to 27 th May, 2008. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2009/exnt09_20.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION NO 20/2009 CX (N.T.) Dated: August 18, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – What is Export of Services? - Microsoft ordered to pre-deposit Rs 70 Crores - CNTRL + ALT + DELETE </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2009/sercir111.htm" target="_blank"><strong>CBEC in CIRCULAR NO. 111/05/2009-ST., Dated: February 24, 2009</strong></a> had clarified, </font></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">For the services that fall under Category III [Rule 3(1 )( iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase ‘used outside India' is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III services [Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Concept of imports and exports in Service Tax is quite complicated. If you appoint an agent to sell your goods in London and if the agent works from London and canvasses your goods in London, the service is treated as import and you are required to pay the tax. Conversely if you do in Delhi the same work for a London manufacturer, it should be treated as export of services and you should be eligible for all the benefits. For certain services, the place of performance of service is not important, but the location of the Service provider and recipient determines whether the service is imported or exported. This is the essence of the Board Circular. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But there are officers in the field who have scant or no respect for the Board and its wisdom. They even have the audacity to argue that the Board is wrong. A Commissioner is supposed to be the agent of the Board and he has no right to sit in judgement over the Board's wisdom. And a Commissioner who has the audacity to think that he is above Board has no right to exist as a Commissioner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Field is full of intelligent people who are all far wiser than the Board and who know that nothing is going to happen to them for blatant disobedience of Board's instructions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These issues take totally different and unexpected turns when they reach the courts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent Stay order, the Hon'ble Tribunal held, “The well tested and experienced Customs Act, 1962 has defined such term by section 2(18) thereof to mean "taking out of India to a place outside India ". Therefore, in no uncertain terms "export of service" shall mean that outcome of service should have been consumed outside India.” </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>So the Customs Act is exported into Service Tax. And the Tribunal directed Microsoft to pre-deposit Rs. 70 Crores. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All these days Microsoft and several other companies have been treated as exporters of service and they have also been given refund of Credit. Suddenly they have become providers of service in India and are liable to pay huge amounts of service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though this is a stay order, if it is put to effect – all of a sudden exporters will become importers and importers will become exporters. The whole face of taxation is going to change. Interesting days ahead. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It used to be said that while other leaders created history, Madam Indira Gandhi created Geography – she created Bangladesh. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are our lawmakers and courts creating the lexicon or rewriting the dictionary? Thank God the original lexicographer Dr. Johnson and his illustrious student Boswell are not alive today! </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>You
can see this very important CESTAT order in our ST se GST Tak Column tomorrow. </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEZ - Time bound disposal of various categories of applications </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department of Commerce has prescribed a time schedule for disposal of different applications in the Special Economic Zones. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Renewal of Identity Card, Permission for re-import, Permission for re-export, Permission for replacement / repair of goods etc, will be done on the same day. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins033.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOC F. No. C.8 /3/2009- SEZ Dated: August 20, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Time bound disposal – Are they serious? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Central Excise also they had stipulated a time schedule – the Citizen's Charter proudly proclaims:- </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE SHALL </strong></font></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Acknowledge declarations, intimations, applications, returns and all communications on the spot and in any case within 7 days of their receipt. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Respond to all communication within 15 working days of its receipt. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++Settle any disputes relating to declarations or assessments within 10 working days of receipt of your written or oral explanation. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++Refund amounts due to you within 48 hours of the export of the goods in case of electronic declarations and 15 days in case of paper declarations. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Release, where your declaration relating to any consignment is complete and consignment is complete and correct, </font></strong></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++in case of exports, within 8 hours of filling an electronic declaration or within 24 hours of filing a paper declaration. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> ++in case of imports, within 24 hours of filling an electronic declaration or within 72 hours of filing a paper declaration </font></strong></p>
</blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Complete excise registration formalities within 48 hours of receiving your application. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Return to you the input duty documents on which MODVAT credit has been availed of within 7 days of your submission. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Complete examination and clearance of your export consignment at your factory premises, whenever you seek such a facility, within 8 hours of receiving intimation. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Give you 15 days advance intimation before we undertake audit of your records. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of likely or inevitable delay in decision making or when an issue is disputed, we shall promptly communicate the reasons on our own initiative. </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have you ever had any of these happenings? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise Assistant Commissioner Shot Dead </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">59-year-old Assistant Commissioner Nripateshwar Singh, posted at Varanasi, was shot dead from a point-blank range. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He was riding a motorcycle and when he reached a secluded place behind Banaras Hindu University in the area, the assailants suddenly stopped his vehicle and fired at him, killing him on the spot. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The circumstances indicate that he was killed because of some old rivalry but the exact cause of the murder is still being probed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nripateshwar Singh was rushed to the nearby Sir Sunderlal Hospital immediately after the incident but doctors declared him brought dead. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His body has been sent for post-mortem and efforts are on to nab the culprits, the police official said. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Originally a resident of Ballia in Eastern UP, Nripateshwar Singh had settled at Shivpur area of Varanasi and was to retire next year. Before coming to Varanasi he was posted at Delhi for a few years. </font></p>
<p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">Jurispruden</font><font color="#FF6633" size="3">tiol</font><font color="#006600" size="2"> – Tuesday's cases</font></strong></font></strong></font></p>
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sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" 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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appellant to be given one more chance by the appellate authority to present sufficient cause for condonation of delay in filing appeal – CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I set aside the impugned order so as to give the appellant a reasonable opportunity to plead, prove and succeed before the lower appellate authority in the delay condonation application, and thereby, an opportunity to prosecute their appeal before the lower appellate authority. Accordingly, the appellant shall have an opportunity to convince the Ld. Commissioner( Appeals) by proving the facts contained in the explanation for delay through proper affidavit and medical records. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Spl Bench decision against VSNL's claim of deduction u/s 80IA - ROM - Joint conference and discussion are integral parts of decision-making process in multiple member benches - It is essentially a decision of Members constituting Special Bench as to whether or not joint conference is necessary before draft can be finalised: ITAT Spl Bench </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A three-Member Special Bench of the Tribunal had dismissed the appeal filed by VSNL in 2007, regarding its claim of deduction under section 80IA <font size="1"><strong><font size="2">(See</font> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2007/2007-TIOL-261-ITAT-MUM-SB.htm">2007-TIOL-261-ITAT-MUM-SB </a><font size="2">)</font></strong></font>. The assessee thereafter filed a miscellaneous petition on the ground that certain apparent mistakes had crept in the original order of the Tribunal. The matter came up before a Special Bench which has dismissed the misc petition. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Intellectual property case - Inventor of Plurality of Subscriber Identity Module ( SIM ) files writ against Customs Order – Writ not maintainable when facts are disputed and efficacious appellate mechanism is available: Madras HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is well settled in law that the disputed facts cannot be decided in a writ petition under Article 226 of the Constitution of India Whether the High Court is entitled to go into the disputed questions of fact in a writ petition filed under Article 226 of the Constitution of India, is already decided by the Honourable Supreme Court. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
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