TIOL-DDT 1238 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1238</font> <br> 17.11.2009 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Foreign Service Provider and Indian Tax payer – since when? – Litigation Continues in spite of Government's Review Petition in <em>Hindustan Zinc </em> being dismissed </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>STRANGE</strong> are the ways of the Government in multiplying litigation. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For a complete analysis of the issue, please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5736" target="_blank">TIOL-DDT 652 09.07.2007</a>. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the <em>Hindustan Zinc </em>case - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2008/2008-TIOL-1149-CESTAT-DEL-LB.htm" target="_blank">2008-TIOL-1149-CESTAT-DEL-LB</a></strong>, a Larger Bench of the Tribunal headed by the President held that, <em>“the taxable service provided by a non-resident or from outside India, who does not have any office in India, having been specified as 'taxable service' with effect from 1.1.2005, under notification No.36 /2004, recipient of such service could not be held liable for paying service tax prior to 1.1.2005 notwithstanding the amendment in rule 2(1)(d) of the Service Tax Rules under notification no. 12/2004.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department had challenged this in the Supreme Court and the Supreme Court had dismissed the Government's appeal - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2009/2009-TIOL-87-SC-ST.htm" target="_blank">2009-TIOL-87-SC-ST</a>. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This, many in the Government, take as a reason to state that the Supreme Court had confirmed that Service Tax on import of services is payable from 1.1.2005 and not 18.4.2006 as held by the Bombay High Court in <em>Indian National Shipowners Association </em> – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-150-HC-MUM-ST.htm" target="_blank">2009-TIOL-150-HC-MUM-ST</a> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court had not held that the tax is payable from 1.1.2005, but only dismissed the Revenue appeal against the CESTAT order holding that it was not payable before 1.1.2005. And there is a lot of difference in the two concepts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway not satisfied with the dismissal of its appeal by the Supreme Court, the Government filed a review petition in the Supreme Court in the <em>Hindustan Zinc </em> case. The Supreme Court found no merit in the prayer for Review and dismissed the Review Petition. - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2009/2009-TIOL-117-SC-ST.htm" target="_blank">2009-TIOL-117-SC-ST</a> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bombay High Court judgement in <em>Indian National Shipowners Association </em> – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-150-HC-MUM-ST.htm" target="_blank">2009-TIOL-150-HC-MUM-ST</a></strong>, has been extensively followed by various benches of the Tribunal in the following cases. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-347-CESTAT-DEL.htm" target="_blank">2009-TIOL-347-CESTAT-DEL</a> </strong></font></p> <p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-869-CESTAT-DEL.htm" target="_blank">2009-TIOL-869-CESTAT-DEL</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-927-CESTAT-MAD.htm" target="_blank">2009-TIOL-927-CESTAT-MAD</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 4. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1076-CESTAT-MAD.htm" target="_blank">2009-TIOL-1076-CESTAT-MAD</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 5. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1089-CESTAT-BANG.htm" target="_blank">2009-TIOL-1089-CESTAT-BANG</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 6. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1242-CESTAT-DEL.htm" target="_blank">2009-TIOL-1242-CESTAT-DEL</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 7. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1273-CESTAT-DEL.htm" target="_blank">2009-TIOL-1273-CESTAT-DEL </a></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 8. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1356-CESTAT-MUM.htm" target="_blank">2009-TIOL-1356-CESTAT-MUM </a></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 9. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1429-CESTAT-MUM.htm" target="_blank">2009-TIOL-1429-CESTAT-MUM </a></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 10. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1438-CESTAT-DEL.htm" target="_blank">2009-TIOL-1438-CESTAT-DEL</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 11. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1670-CESTAT-BANG.htm" target="_blank">2009-TIOL-1670-CESTAT-BANG</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 12. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1769-CESTAT-MAD.htm" target="_blank">2009-TIOL-1769-CESTAT-MAD</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 13. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1803-CESTAT-MAD.htm" target="_blank">2009-TIOL-1803-CESTAT-MAD</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 14. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1815-CESTAT-MAD.htm" target="_blank">2009-TIOL-1815-CESTAT-MAD</a> </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 15. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1827-CESTAT-DEL.htm" target="_blank">2009-TIOL-1827-CESTAT-DEL</a></strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And when a Tribunal Bench did not follow this, the Bombay High Court in <em>A C NEALSEN ORG-MARG PVT LTD & ANR </em><strong>- <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-578-HC-MUM-ST.htm" target="_blank">2009-TIOL-578-HC-MUM-ST</a> </strong>observed, “Once this Court lays down the law that the recipient of the service is not liable for paying service tax, that law is binding on all Tribunals and Authorities functioning within the jurisdiction of this Court.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even the Delhi High Court followed the Bombay High Court decision while dealing with the case of <em>Unitech Ltd </em> reported in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-293-HC-DEL-ST.htm" target="_blank">2009-TIOL-293-HC-DEL-ST</a>. </strong>In this case the Departmental Counsel informed the court that the Department is in the in the process of filing a review petition in the <em>Hindustan Zinc </em> case. (which has since been dismissed) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He also informed that the Department is in the process of filing an appeal against the judgment of Bombay High Court in <em>Indian National Shipowners Association </em>case. And sure enough they have filed an SLP in the Supreme Court which is at the admission stage. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why is the government fond of so much litigation? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hundreds of cases are pending at various stages from Assistant Commissioner to now the Supreme Court. And the entire litigation is now concentrated on the period from 1.1.2005 to 17.4.2006 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some two and a half years ago, Board created history by issuing a Section 37 B order - F.No. 166/13/2006- CX.4 dated the 12th March, 2007<strong>, </strong>clarifying that abatement in respect of GTA cannot be denied to recipients of service who pay the tax and thereby it closed more than 30,000 Show Cause Notices. It had ordered that demands need not be issued even if there are CAG objections. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is another opportunity for the dynamic Chairman of CBEC and Member, Service Tax to come up with another such order in respect of this <em>foreign service </em>so that a lot of unwanted litigation can be avoided. Of course the consultants will lose some money – but that is a small price to pay for the larger welfare of society. Withdraw all those cases and let there be some peace. Let us all use that time and money in more productive work. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Supply of pipes to Water Supply Project - exemption not restricted to the first storage point; available to subsequent points – Another favourite litigation point </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Water has been a source for litigation and even wars. The Government in its wisdom chose to exempt pipes used in water supply projects. Revenue insists that this exemption is for pipes available to first stage of storage only. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every Municipality undertaking some drinking water project is stuck with this dispute. The Tribunal in the case of <em>IVRCL Infrastructures & Projects Ltd </em> – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-167-CESTAT-BANG.htm" target="_blank">2009-TIOL-167-CESTAT-BANG</a> </strong>had held that the exemption cannot be restricted to the first storage point. The Kolkata bench of the Tribunal had taken a similar decision in the case of <em>Electro steel </em> in <strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-1880-CESTAT-KOL.htm" target="_blank">2009-TIOL-1880-CESTAT-KOL</a>. </strong>In both the cases, Revenue had taken the matter in appeal to the Supreme Court and in both the cases the Supreme Court had dismissed the Revenue Appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is yet another case, where Revenue should put a full stop. As they have lost in the Supreme Court, they should honourably concede and withdraw all those Show Cause Notices and pending cases. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Meditation and Central Excise - Begin Meditation For Happiness, calm and serenity </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr BB Prasad is a Commissioner of Central Excise dealing with complicated subjects like exemption for pipes for water projects and import of services, but he keeps his cool – by meditation. He also teaches mediation to his staff. His former boss, Ms Jasdeep, once told DDT that since he started teaching meditation to the staff, the quality of work in the office has improved considerably. Mr. Prasad feels that a lot of problems can be solved by meditation; especially the lady employees who have a lot of things to worry about can find solutions in meditation. Another Central Excise employee informs DDT that by meditation, you can transcend distance and time and you create a lot of energy around you. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Prasad believes that anyone who cannot spend a few minutes a day for meditation is missing a lot in life; he wants everyone to begin mediation for happiness and serenity. He has written a small booklet on meditation and wanted us to carry it as a public service. He also wanted us to remind our Netizens periodically about this. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/meditation.htm" target="_blank"> <strong>meditation</strong></a> booklet in What's New – Do tell us if meditation has helped you. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tariff Value of Brass Scrap increased </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has increased the Tariff Value of Brass Scrap from US Dollars 3318 to 3348 per MT and decreased the value of Poppy Seeds from 3066 to 3041 dollars. </font></p> <p><font size="2"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2009/cnt09_173.htm" target="_blank"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION NO. 173/2009-CUSTOMS (N.T.) Dated: November 13, 2009 </strong></font></a></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><font color="#006600">Jurispruden</font><font color="#FF6633">tiol</font><font color="#006600"> – Wednesday's cases</font></strong></strong></font></p> <p><font color="#660099" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#FF6633"><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" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font><font 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>Intermediate goods manufactured on job work basis under Notification 214/86-CE for further consumption in a unit availing area based exemption Notification 50/2003-CE should pass test of marketability for levy of excise duty – Demand of duty and levy of penalty fails on merits as well as limitation – CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a settled law that the burden to prove marketability is always on the revenue and not on the assessee and in the instant case there is no proof adduced by revenue to prove that the extrusions/profiles manufactured by Appellant I were marketable in the condition in which they were removed from their factory. In the absence of any proof of marketability of the goods cleared on job work basis, CESTAT held that the duty liability cannot be fixed on Appellant I. </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>Executive power of Union extends to matters to exercise of rights by virtue of any treaty or agreement with by virtue of Article 73 (1) (b) of Constitution of India but that is “subject of course to constitutional limitations”. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr S.K. Jha, who famously challenged the circular issued by the CBDT to accept certificates of residence issued by the Mauritius authorities as final proof of residence of a taxpayer without any question and won the first round in the Delhi High Court, has done it again! It is common knowledge that the decision of the High Court was overturned by the Supreme Court in the famous <em>Azadi Bachao Andolan </em> case. Thereafter, Mr Jha tried to get the decision reviewed on certain points so that he could file a curative petition. Having failed, he filed a PIL in the Delhi High Court by way of a writ alleging that the powers and authority of the Central Government in entering into treaties are being abused in violation of the Constitution. </font></p> <p align="justify"><font 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>Penalty under rule 15 of CER, 2002 is not imposable as there is no such provision – penalty under rule 25 can be imposed where goods are liable for confiscation – being a revenue neutral situation no intention to evade duty – Penalty set aside – CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The penalty under rule 25 of the Central Excise Rules, 2002 cannot be imposed as the goods were held liable for confiscation. The penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act is also not imposable as there was no intention to evade payment of duty in the fact and circumstance of the case. </font></p> <p align="justify"><font size="2"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong> </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>