TIOL-DDT 1515 · 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 1515 </font><br>
27.12.2010 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - BAS – Promoting Real Estate in the Air – Jetlite wins huge case in Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> case,
as they say, had a chequered history – in a short span of time. It all started
with a Show Cause Notice dated 28.10.2008. The issue was displaying logo
of Sahara Corporation in the Boarding Pass of the then Sahra Airlines, which
later became JETLITE. The Department was of the view that this was Business
Auxiliary Service and tax was payable. The learned Commissioner confirmed
the demand of about Rs . 129 Crores with an equal amount of penalty with
attendant interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On appeal to the tribunal, the Tribunal ordered pre-deposit of Rs . 100 Crores - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-854-CESTAT-DEL.htm" target="_blank">2010-TIOL-854-CESTAT-DEL.</a></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Naturally the assessee rushed to the High Court. The High Court by an order dated 20.08.2010 directed payment of cash of Rs . 60 Crores and a bank guarantee of Rs . 10 Crores and directed the Tribunal to decide the appeal by the end of November. The assessee appealed to the Supreme Court, but did not get any relief. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal finally decided the appeal on 20.12.2010, holding that no Service Tax was payable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, the Tribunal made some very valid and relevant observations that ‘the adjudicating authority cannot travel beyond the Show Cause Notice'; that the department has to prove the charge made in the Show Cause Notice and that<font color="#FF6633"> <strong>Failure of the department to prove the charge can neither shift the burden, nor can give any advantage to the department:</strong></font><strong> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal emphatically held that it is now settled law that <font color="#FF6633"><strong>with the introduction of new entry without any bifurcation of the old entry and without disturbance of any old entry would disclose non inclusion of the subject of the new entry in the old existing entries. </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based on this order by the Bench headed by the President, the Government, especially at the lower levels should now stop their idle pursuit of dead issues and concentrate more on collecting Revenue. At least now they should not try to tax works contract under a different service prior to 1.6.2007 and many such other new services. And the Department should be sure about the service under which they want tax their victim, before issuing a Show Cause Notice. In most cases the department is not sure of the classification and their Show Cause Notices allege suppression and intent to evade payment of duty! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a Departmental test, an Assistant Commissioner was asked, "When can you invoke the five year period to issue a Show Cause Notice?". "When the one year period has lapsed", was the smart reply of the young Assistant Commissioner! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this order today. Please see <strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11852" target="_blank">Breaking News</a></strong>. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Pre-deposit – A Nightmare? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EVERY</strong> assessee and his Advocate/Consultant shiver at the very thought of pre-deposit. The Department is famous for inflating demands on unsustainable issues and adjudicating authorities blindly confirm the demands made in the Show Cause Notices. And when you go to the Tribunal, there is the Damocles' sword of pre-deposit hanging on your head. Finally the appeal may be allowed but initially, you have to make a pre-deposit. When the impugned order demands Crores of rupees, the Tribunal would be naturally inclined to ask for at least 25 percent of the demand as pre-deposit – and this will also run into Crores. Most of the times, no assessee will be in a position to make this pre-deposit. And normally the High Court or the Supreme Court would not like to interfere with the interlocutory orders of the Tribunal. Where does the poor assessee go? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once I approached a High Court against a pre-deposit order of the Tribunal against a client whose factory was closed and who had absolutely no means of paying the pre-deposit. I submitted to the Court that my client had no money and there was no way by which he could pay the pre-deposit. The Court asked me if I could submit a bank guarantee. I said, "no bank would give my client a bank guarantee". Then the Court asked me what would happen, if I lost the case finally in the Tribunal. I told the Court, "now or then, my client has no money to pay, but please give us an opportunity to prove our innocence." </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court was kind enough to consider my prayer and held, "<em>the petitioner – Industry is not working at present"as the same is closed since June, 2003". This one fact undoubtedly may disclose the severe financial constraints and the financial hardship being faced by the petitioner on account of which it could not make necessary pre-deposit in terms of the Stay Order dated 19-04-2005 passed by the Tribunal. Normally, this Court in exercise of the jurisdiction under Article 226 of the Constitution of India does not interfere with such interlocutory order which creates any irreversible situation but having regard to the facts and circumstances and more particularly, the fact that the industry is closed ever since June, 2003 due to which the petitioner is not in a position even to make the pre-deposit, we consider it appropriate to modify the impugned order passed by the Tribunal and accordingly direct the Tribunal to hear the appeal preferred by the petitioner on merits . xxx The Tribunal shall not insist for the pre-deposit </em>" <em><font size="1"><strong>[ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2005/2005-TIOL-181-HC-AP-CX.htm" target="_blank">2005-TIOL-181-HC- HYD-CX</a> ] </strong></font></em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was of course a rare case! Remember the case where a Commissioner imposed a personal penalty of Rs. 50 Crores on a BHEL employee? – <font size="1"><strong><em>[ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2002/2002-TIOL-281-CESTAT-DEL.htm" target="_blank">2002-TIOL-281-CESTAT-DEL</a> ]</em></strong></font>. What would have happened if the Tribunal had asked him to pre-deposit some ten Crores? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the Departmental adjudication has become a total farce, this pre-deposit menace has to be removed. The government should stop treating all assessees as thugs, evaders and smugglers. They are in fact better partners in the enterprise of tax collection. The law should be amended to stipulate that there shall be no pre-deposit for appeals till the stage of Tribunal. This would also reduce opportunities for corruption at several stages.. If the government considers assessees as partners in progress instead of as adversaries, this can be done. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP – VKGUY - Additional 2% Duty Credit Scrip for Export of Grapes </strong></font></p>
<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">APPENDIX </font></strong><font size="2">37A of HBPv1 lists the export items that are eligible to claim benefits under the Vishesh Krishi and Gram Udyog Yojana (VKGUY).Table 2 of this Appendix lists the Special VKGUY products, which entitles them an additional 2% benefit. The exporters of Grapes covered by ITC HS Code 0806 are entitled for additional 2% Duty Credit Scrip, over and above the normal rate under the VKGUY Scheme. This shall apply in respect ofexports made on or after 23.12.2010. </font></font></p>
<p align="justify"><font size="2"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn019.htm" target="_blank"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice No. 19/2009-2014 (RE 2010), Dated: December 23, 2010 </strong></font></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Money Mules – Who are they? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a <em>money mule </em> transaction, an individual with a bank account is recruited to receive cheque deposits or wire transfers and then transfer these funds to accounts held on behalf of another person or to other individuals, minus a certain commission payment. Money mules may be recruited by a variety of methods, including spam e - mails, advertisements on genuine recruitment web sites, social networking sites, instant messaging and advertisements in newspapers. When caught, these money mules often have their bank accounts suspended, causing inconvenience and potential financial loss, apart from facing likely legal action for being part of a fraud. Many a time, the address and contact details of such mules are found to be fake or not up to date, making it difficult for enforcement agencies to locate the account holder </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has come to know that "Money mules" can be used to launder the proceeds of fraud schemes (e.g., phishing and identity theft) by criminals who gain illegal access to deposit accounts by recruiting third parties to act as "money mules." In some cases these third parties may be innocent while in others they may be having complicity with the criminals. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2010/rbi10cir030.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Circular No. RBI/2010 -11/33, Dated: December 24, 2010 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>DDT's Cartoon with Dr. Gopalakrishnan , IAS (Rtd) </strong></font></p>
<p align="center"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_1515.jpg" alt="Legal Corner Icon" width="250" height="267" hspace="5" border="0" align="centre"></p>
<p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">It's a woman manager. She takes bribes only in the form ofperfumes and cosmetics! </font></strong></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"> – Tuesday's cases</font></strong></font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" 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"></font>Foreign Trade Policy </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Served From India Scheme(SFIS) – Sale of a Residential Building is not covered </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SALE</strong> of immovable property is as such not included within the expression 'real estate services' involving owned or lease property. The purport of the inclusion of sale of immoveable property within the expression ‘real estate services' in Division 821 of the UNCPC is only to emphasise that only the amounts corresponding to the earnings by way of brokerage or commission on such sales, and not the entire sale consideration, will qualify for the issuance of the DFCE certificate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DFCE is a licence: </strong>a licence for the purpose of the FTDR Act is not restricted to a licence to import or export. The second part of the definition is an inclusive one. It includes a customs clearance permit and any other permission issued or granted under the FTDR Act. It is not possible to place a narrow interpretation on the word 'licence' while interpreting Section 2(g) of the FTDR Act. The DFCE certificates issued under the SFIS would indeed qualify aslicencessince they permit the holders of such certificates to avail of duty credit while making subsequent imports of freely importable goods </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec 10B - Whether when a part of exports proceeds is retained outside India for carrying out exports activities, the same is to be excluded from 'exports turnover' - NO, says ITAT Special Bench </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Special Bench are -Whether when a part of exports proceeds is utilised for carrying out exports activities outside India, the same is to be excluded from exports turnover; Whether the expenses incurred in foreign currency for onsite development of computer software at overseas client's place are to be excluded from the exports turnover and whether a part of exports proceeds which is allowed by the RBI to be retained abroad for specific exports activities is also to be excluded from the export turnover. And the verdict goes against the Revenue. </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>Jurisdiction
of Review Committee is to be discerned from the notification 40/2005-Cus(N.T)
issued by the Board – Order passed by Commissioner of Customs (Appeals),
Mumbai-II first reviewed by Commissioner of Customs (Imports) and then
by a Committee of Commissioners comprising Commissioner of Customs (General),
Mumbai and the Commissioner of Customs (Imports), Mumbai – Neither
of them have jurisdiction in the matter – Revenue appeal not maintainable:
CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is an interesting case where the Revenue
in its hurriedness to file an appeal against an order of the lower appellate
authority first got the order reviewed by the jurisdictional Commissioner
forgetting that such orders are to be reviewed by a Committee of Commissioners.
So it did just that. Unfortunately the Committee that signed the review
order was not the one that was supposed to be legally constituted in terms
of the Notification issued by the Central Government u/s 129A of the Customs
Act, 1962. The end result of this fiasco was that the appeal was dismissed
by the CESTAT. Read further for details. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF3333">Until Tomorrow with more DDT </font></font></p>
<p align="justify"><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day. </font></p>
<p align="justify"><font color="#FF3333" 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>