TIOL-DDT 1287 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1287</font> <br>
28.01.2010 <br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on Renting of Immovable Property - Board promises Delhi HC to revise instructions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> little recap on the facts. The Delhi High Court in the <em>Home Solution Retail India </em> case - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-196-HC-DEL-ST.htm" target="_blank">2009-TIOL-196-HC-DEL-ST</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> had
held that renting of immovable property is not a taxable service. The Government
as usual filed an appeal in the Supreme Court and the whole Department is
under the impression that by mere filing an appeal in the Supreme Court,
the High Court order has become inoperative. So demands, threats, Show Cause
Notices are playing wild games in the field. Even the TRU, by a letter dated
17.07.2009 directed the Departmental officers to either pursue the tax payers
to pay up the service tax due or take necessary action to safeguard revenue
as the dispute has not reached finality and the department has filed an appeal
against the order of the Delhi High Court.[please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9859" target="_blank">DDT 1225 28.10.2009</a> </strong>] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><br>
</strong>It is true the SLP of the Department is pending before the Supreme Court, but the Apex Court has not stayed the order of the Delhi High Court and therefore as of now, the Delhi High Court order is valid, though the Department thinks otherwise. The present position is the matter is posted for 24.02.2010 in the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some assessees have assailed the TRU instructions as well as some letters issued by some field officers, in the Delhi High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Delhi High Court observed, </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“even when the judgement of this Court is challenged by filing SLP, till date there is no order passed by the Supreme Court staying the operation of that judgement. In these circumstances, the respondent could not instruct their officers to pursue the matter with tax payers calling upon them to pay service tax or to resort to other means under the law to protect the Revenue. The manner in which the letters are written clearly indicate that the payment of tax is demanded and the threat is also extended that if there is no compliance, Department would initiate further necessary action against them.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ASG appearing for the Government assured that corrective steps shall be taken by issuing further instructions, in supersession of earlier instructions, to the officers not to write such letters demanding the payment of service tax or threatening coercive steps. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court held, “on this assurance no further orders are required to be passed”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Registrar General of the High Court had forwarded a copy of the order on 13.01.2010, to the TRU, DGST, CBEC and Delhi Service Tax Commissioner for immediate compliance/necessary action. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the Government takes correctional steps immediately. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ITR V- date for filing extended </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after 1st April 2009, up to 31st March 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to 31st March 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In our Post-Budget Seminar in Hyderabad, a delegate asked the then Member CBDT, Mr. Khan, what he should do if the CPC at Bengaluru does not get the ITR sent by ordinary post. He said, “please send it again.” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/itr-v-form-extended.htm">Press release by CBDT </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revenue Comments on GST </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Revenue Department has sent its comments to the Empowered Committee on the First Discussion Paper on GST. Some of the comments are: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Dual GST model with appropriate binding mechanism to harmonise the various important aspects of the GST like rate structure, taxation base, exemption etc. between Centre and States is agreed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ IGST on inter-State transactions should be levied by the Centre. SGST on imports should also be levied and collected by the Centre. Centre should pass on SGST collection on imports to concerned States on the destination principle. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There should be a common base for taxation between Centre and States. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The threshold for goods and services should be common between Centre and State on one hand and between goods and services on the other. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There should be a uniform threshold for goods and services for both SGST and CGST. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There should be a uniform registration system through-out the country and this registration system should enable easy linkage with Income Tax database through use of PAN number. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Since the tax base is to be identical for the two components, viz., CGST and SGST, it is desirable that any dispute between a taxpayer and either of the tax administrations is settled in a uniform manner. The possibility of setting up a harmonised system for scrutiny, audit and dispute settlement may be developed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Alcoholic beverages should be brought under the purview of GST in order to remove the cascading effect on GST paid on inputs such as raw material and packaging material. Sales tax / VAT and State excise duty can be charged over and above GST. Similar dispensation should apply to opium, Indian hemp and other narcotic drugs and narcotics but medicines or toilet preparations containing these substances should attract only GST. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There should be a single rate of SGST both for goods and services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ SGST and CGST rates are required to be put in public domain much before initiation of legislative action. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Taxation of import of services may be on the basis of reverse charge model, as is being done at present. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Joint Working Group (JWG) has held several meetings by now. Department of Revenue is closely working with Ministry of Law, Government of India, for finalisation of draft Constitutional amendment. The issue of empowering States to levy GST on imports has been deliberated by the JWG and the view which has emerged out of discussion is that the Centre shall collect GST on imports and pass on the SGST component of it to concerned State on destination principle. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The provisions related to dispute resolution, advance rulings and other business processes need to be harmonised between Centre and States. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Empowered Committee may prepare a plan with clear timelines for orientation of stakeholders so that required steps may be taken by all the States in time. </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Comments of the Department of Revenue (DoR) on the First Discussion Paper on GST </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs day in Pakistan – Villagers run away with contraband </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Pakistan, Customs Day is celebrated by blazing narcotics for a media photo session instead of arranging any worthwhile activity to actually promote customs cooperation with other countries. This year customs trucks arrived at the vast scattered ground of Neelam Point, located just on the edges of Arabian Sea, carrying bottles of foreign liquor, huge bags filled with heroin and betel nuts and other contrabands. As the Customs officers unloaded the contraband and set it on fire and a bulldozer started crushing the liquor bottles, a large number of villagers rushed to the site and started lifting the partly damaged bags. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The stunned Customs officers fired in the air to disperse the looting mob. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Customs department in Pakistan celebrates the day every year by setting narcotics on fire. The Pakistan Customs this year has set ablaze 2,700 bottles of foreign liquor, 85-kg of heroin, 4,000 packets of betel nets and 2,000 cans of imported beer. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cheers! And a Happy Customs Day.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Friday's cases</font></strong></font></strong></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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">Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LUT is valid for export of all excisable goods i.e dutiable as well as exempt – CENVAT credit cannot be denied on exempted export goods - CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> method of adjustment, both from the point of Government and the assessee is to allow the assessee to take CENVAT credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, CENVAT credit is refunded in cash. This appears to be the Scheme of Rule 5 of the CENVAT Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6(6)(v) of the CENVAT Credit Rules, 2004 to the effect that the bar created by Rule 6(1) will not apply for goods exported. </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>Indo-UAE DTAA - Article 13 - assessee is individual resident of UAE - makes capital gains - Revenue denies it - taxability of capital gains in one of contracting states is not necessary to avail treaty benefits in other contracting state - assessee's appeal allowed: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, a resident of United Arab Emirates claimed benefit of Article 13(3) of the Indo-UAE tax treaty in terms of which capital gains on alienation of shares are 'taxable only in the Contracting State of which alienator is resident'. However, relying on the decision ofthe AAR in the case of Cyril Eugene Pereira's, which holds that "an individual who is not liable to pay tax under the UAE law cannot claim any relief from the only tax which is payable in India under the agreement" and that "the provisions of Double Taxation Avoidance Agreements do not apply to any cases where the same income is not liable to be taxed twice by the existing laws of both the contracting states", the Assessing Officer declined the tax treaty benefits to the assessee. </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>Re-Export of goods and Duty Drawback - Proof of inward remittance of proceeds for re-export is not essential for grant of Duty Drawback under Section 74 of Customs Act: – High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a Landmark decision, the Madras High Court had held that proof of Inward remittance of the proceeds for the re-export is not essential for grant of Duty Drawback under Section 74 of the Customs Act 1962, read with Re-Export of Imported Goods (Drawback of Customs Duties) Rules, 1995. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appellant renting their premises to bank and persisting with them to pay service tax but same was paid belatedly – upon receipt, tax immediately deposited in treasury – No cause for Penalty in view of s. 80 of Finance Act, 1994 – CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Bench after considering the submissions observed that the undisputed fact remained that Service Tax on ‘Renting of Immovable Property” was a new levy and moreover the facts were similar to that involved in <em>CCE, Nasik vs. A.B.International <strong>[<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-1561-CESTAT-MUM.htm" target="_blank">2007-TIOL-1561-CESTAT-Mum</a></font>] </strong></em>wherein the CESTAT had after observing that the tax collected from the service receivers was paid given the benefit of section 80 of the Finance Act, 1994 to the appellant and dropped the penalty demand. </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 <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>
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