TIOL-DDT 1345 · 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 1345</font> <br>
26.04.2010 <br>
Monday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise – CAG wants time limit for payment of interest and interest on interest thereafter </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> his latest report to Parliament the CAG laments - <strong>No time limit for payment of interest </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Audit report cites the case of BHEL Bhopal, engaged in the manufacture of various excisable goods had paid differential duty in the month of March 2007 on account of price revisions for the supplies made between the years 2002-03 to 2006-07. It was, therefore, liable to pay interest on differential duty payment, which worked out to Rs. 4.24 crore as per provisions of the sections 11A(2B) and 11AB of the Central Excise Act. The department, however, did not take any action for recovery of interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the matter being pointed out (February 2008), the department stated (May 2008) that the assessment was pending.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The reply is not tenable (to CAG) as the differential duty was paid in the month of March 2007 and non-payment of interest of Rs. 4.24 crore on the grounds that the assessment was provisional, has resulted in further financial accommodation to the assessee of Rs. 1.38 crore by way of interest from April 2007 to September 2009, as interest beyond the date of payment of duty (in this case March 2007) is not leviable under the existing Act. </font></p>
<p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG's Recommendation: There is no time limit in the Act for recovery of interest on duty from the assessees. Audit recommends that appropriate provision may be included prescribing a time limit for payment of interest and for charging of interest beyond this prescribed time limit, till the interest amount is finally paid.</font></strong></em></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">8 Crores PAN Card Holders – Only 3 Crores returns </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG has pointed out that Filing Rate and Non - Filing Rate, being assessed in modern tax administrations, has not yet been done in India. The Permanent Account Number (PAN) allotted to a taxpayer, is the unique identification number that helps track individual tax compliance. There were 807.9 lakh PAN cardholders as on 31 March 2009, of whom only 326.5 lakh assessees had filed their return of income relevant to the financial year 2008 - 09. This gap of 481.4 lakh assessees was considerably higher than the corresponding figure (by 10 lakh assessees) in 2007 - 08. The Board should identify the reasons for large - scale stop - filing or non - filing.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">7.5 Lakh corporate - Only 3.3 Lakh assessees </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> were 7.5 lakh working companies in the country registered with Registrar of Companies (ROC) as on 31 March 2009. However, the corporate assessees on the Income - tax department's records are only 3.3 lakh, leaving an un - reconciled list of 4.2 lakh companies. The Ministry intimated (January 2009) that this gap could be because the “non - filers” had not started their business or because they did not have any income during the said period. It added that the Board would be advised to reconcile the discrepancy for accurate assessment of the filing gap. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Prosecution – acquittal in 146 out of 173 cases </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> department had launched prosecutions in 11,894 cases of evasion upto 2008 - 09. Only 173 cases (1.5 per cent of the total cases) were disposed of, of which 146 cases resulted in acquittal. The high rate of acquittal needs to be analysed to ensure greater effectiveness of prosecution as a deterrent according to the CAG. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax – No adjustment of excess tax - CAG </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG cites the case of <strong>Bharti Airtel Ltd</strong>. engaged in providing telephone service, paid service tax of Rs. 195.73 lakh for the month of March 2005 against the liability of Rs. 189.19 lakh. The amount of Rs. 6.54 lakh paid in excess by oversight was adjusted against service tax liability for the subsequent month of April 2005. This suo-moto adjustment of service tax against future liability was not allowable under the rules and for this the assessee was required to file a refund claim under the provisions of section 11B of the said Act. The wrong adjustment of the service tax was liable to be recovered along with interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On this being pointed out, the department stated that the adjustment of excess service tax paid was permissible in view of various judicial pronouncements. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The reply of the department is not tenable (to Audit) as judicial pronouncements cited are not <strong>in the case of the assessee or by the jurisdictional court</strong>. Also, the reply is contradictory to the Ministry's clarification (13 October 1997) that there is no provision in the Finance Act, 1994 to adjust service tax already paid. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department further intimated (June 2008) that a show cause notice was being issued. The reply of the Ministry has not been received (January 2010). </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Interactive sessions to educate stake holders at Jawaharlal Nehru Customs House, Nhava Sheva </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INTERACTIVE</strong> sessions to educate the Importers/Exporters, Custom House Agents, CMC Service Centre Staff and all other stake holders were held in Jawaharlal Nehru Custom House on 20.04.2010 and 21.04.2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The sessions dealt with the importance of data being captured by the Customs administration while effecting clearances, how it helps the department in classification and valuation of goods not only for levying correct duty on imports or extending appropriate incentives on exports but also for the purposes of ensuring uniformity of assessment practices and enforcing restriction/prohibitions imposed under allied laws and also for statistical purposes. The sessions also laid emphasis on furnishing of the complete and accurate details of the goods, as the Export Commodity Data Base and the National Import Data Base are major tools in the hands of the policy makers for framing the policy decisions while taking decisions on imports and exports into and out of the country. It was reiterated that the basic information like brand, grade, model, specification, unit quantity code, weight, country of origin etc., are correctly declared and properly fed into the relevant fields while filing clearance documents before customs so that analysis of such data does not through up skewed results and some unscrupulous importers or exporters benefit from such analysis. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">TIOL's Grand entry into its Eleventh Year </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> any standards, it was the most tax intellectual gathering – the top officers of the two Revenue Boards with the Revenue Secretary himself present. Our Tenth anniversary was a grand affair with the most elite gathering that could be assembled for any tax related meeting. Apart from the top officers of the country, the function was graced with the presence of a large number of former leaders of the tax departments, captains of trade and industry, senior advocates and distinguished journalists. The Chief Guest, Mr. Salman Khurshid, Minister for Corporate Affairs was at his oratorical best and he said without hearing anyone in the audience, he knew he was addressing the best brains of the country in tax matters.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For a detailed report on the function, please see <strong>TIOL TOP</strong> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">TIOL's Anniversary - The speech that could not be delivered
</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IMMEDIATELY</strong> after the function, we got this mail from Mr. Rajesh Shukla of Skoda Auto India. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">It was a pleasure to attend the 10th anniversary function of <strong>TIOL</strong> and inauguration of <strong>TII</strong> </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I wanted to express my views on this occasion, which was not possible as the time was running out. I reproduce my thoughts here </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I am not a Law maker, Law executer or law analyst, but representative of law abiding population.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">As all three segments have been represented in this function, I think it is apt to conclude this wonderful session with feedback from representative of readers, finally for whose benefit this portal was mainly conceived by founder of <strong>TIOL</strong> Mr. Shailendra Kumar. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Many of us present in this hall start our day with <strong>DDT</strong> i.e. Daily Dose of Taxation, which has become integral part of our daily routine. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Without this dose, which is religiously delivered by Vijaykumar and his team with tireless efforts, our day will be incomplete. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">With launch of <strong>TII</strong>, it will add more flavour to our daily feast of <strong>DDT</strong>. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I am a great follower/fond of <strong>TIOL</strong> and that is the reason I came all the way from Aurangabad to Delhi to participate and cheer the function. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">From reader and industry fraternity, I wish All the VERY BEST to new initiative and expect them to add to value to all users including Department representative. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Thanks for inviting for this function.</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="2">tiol</font><font color="#006600" size="2"> – Tuesday's
cases</font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"><strong><font color="#663399">Central Excise</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sulphuric acid cleared to fertilizer manufacturers under notf. 4/2006-CE – No cause for payment of any amount under Rule 6 of CCR, 2004 as supply of goods under CT-3 certificate does amount to clearance under exemption: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Apex
Court has held in that case the reversal of CENVAT credit of 10% under Rule
6 is applicable only and the cases where a manufacturer is engaged in the
manufacture of any final product which is chargeable to duty as well as any
other final product which is exempted from payment of duty or chargeable
to nil rate of duty but in the instant case is not so as the final product
is the sulphuric acid only and the same is dutiable product it is not a exempted
product and the same was cleared to the manufacture of fertilizers under
CT-3 Certificate/bond hence the facts of the Ballarpur Industries case are
not applicable to this case.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">I-T
- Sec 194A - Assessee fails to deduct tax at source on interest payments
as payees had filed applications in Form No 13 for no TDS certificate -
mere filing of applications by payees does not cast away TDS burden from
assessee: Tribunal</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE
</strong>issue here is - whether it is obligatory for assessee to deduct
tax at source on interest payments even if payees have filed an application
in Form No 13 to their jurisdictional AOs for issuing a no TDS certificate
and whether information obtained under the RTI Act can be a subject matter
of adjudication under the I-T Act? And the Tribunal's answers to both these
queries are NO.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no provision to reverse credit of service tax availed in relation to such inputs or capital goods removed as such from the factory - Stay Application filed by Revenue rejected : CESTAT </font></strong></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>“… 3(5)</strong> of CENVAT Credit Rules, 2004 provides for recovery of equal amount of credit on inputs and capital goods only if they are removed from the factory, there is no such provisions to reverse credit of service tax availed in relation to such inputs or capital goods removed from the factory.” </font></em></p>
</blockquote>
<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><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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