TIOL-DDT 1540 · the untouched capture
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<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1540
</font><br>
01.02.2011<br>
Tuesday</strong></font></div>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Renting – Board Wants Field to Apply P&H High Court Judgement</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong>, in a recent letter to the Chief Commissioners and Commissioners brought to their notice the landmark judgement of the Punjab and Haryana High Court in in the case of <em>M/s. Shubh Timb Steels Limited Vs UOI</em> <strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-765-HC-P-H-ST.htm" target="_blank"><font size="1">2010-TIOL-765-HC-P&H-ST</font></a>)</strong>, wherein the validity of levy of service tax on renting of immovable property was upheld.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board notes that the High Court deliberated in detail the issues, namely,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) whether renting on immovable property constitutes rendering of services;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) whether Parliament has legislative competence to levy service tax on renting of immovable property;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) whether it impinges upon the jurisdiction of State Legislature to levy tax on property (Entries 18, 45 and 49 of List-II); and</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) the validity of retrospective amendment,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and has decided the issues in favour of revenue.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the field formations to apply the ratio of this judgement in defending the pending litigation. But the Board is totally silent on the “Home Solutions” case.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2010/circular_renting.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Letter in F. No.276/282/2010-CX.8A(Pt.); Dated December 02, 2010</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Renting - The Ping Pong</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AN</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Advocate sent us this on the Renting Story.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Litigants are tearing their hair and lawyers are smiling. (or as they say, laughing their way to the Bank) In the last one month, there have been hearings in Delhi High Court on 14th December and 25th January. In Supreme Court on 10th, 20th, 24th January. Both the Courts have given further adjournments.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the judgement was pronounced by Delhi High Court in 2009 <strong>(<font size="1"><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></font>)</strong> holding that it is not a service, appeal was filed by UOI. That round went in favour of trade. Supreme Court declined to pass any interim orders on Dept’s plea to stay the judgement. Trade was jubilant.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 2:</strong> In favour of Department when the Govt. tried by legislation to nullify the effect of Delhi High Court judgement by bringing back the same provision with improved definition and retrospectively.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 3:</strong> In favour of Trade when Delhi High Court again stayed the operation of above modified provisions. <strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-341-HC-DEL-ST.htm" target="_blank"><font size="1">2010-TIOL-341-HC-DEL-ST</font></a>)</strong> Everyone who applied got the stay. Other High Courts followed suit.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 4: </strong>In favour of Department when P&H High Court upheld the main issue and the validation provisions. <strong>(<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-765-HC-P-H-ST.htm" target="_blank">2010-TIOL-765-HC-P&H-ST</a></font>)</strong> Trade seemed worried.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 5: </strong>Delhi High Court holds hearing on 14.12.2010 but is hesitant in passing any final order. There are real handicaps. Can it overrule its own Division Bench order ? Isn’t that order of 2009 having a binding precedent ? Can it hold a hearing on main issue again when the matter is pending before Supreme Court on appeal filed by UOI in 2009 ? Should it hold a hearing when the appeal against the P&H High Court’s order has been admitted and notice issued to UOI ? <strong>(<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-818-HC-DEL-ST.htm" target="_blank">2010-TIOL-818-HC-DEL-ST</a></font>)</strong> A sensible escape route was found by consensus during hearing when both – the Trade and the UOI suggested that they will approach the Supreme Court for “expeditious disposal” of main appeal. This hearing somehow lifted the spirit of the trade. Optimism prevailed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 6 : </strong>Jan 10, In favour of Department. Supreme Court stays the STAY of the High Court. No one has a clue what is happening and who did what and who did not appear when he had been specifically hired ? Fingers are being raised in all directions ? Blame game begins.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 7:</strong> In favour of Trade : On 20th Jan, Supreme Court directs filing of affidavit and rejoinder when the second petition comes up. In fact, Home Solutions had moved an application for an early hearing and decision. They are hoping for a reconsideration of vacation of stay. Nothing of such sort happens. Trade is disillusioned.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 8 :</strong> On 24th Jan 2011, Supreme Court grants leave to the UOI on the main petition of 2009, agrees to the suggestion of an expeditious decision and states that the date shall be announced.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Round 9 :</strong> On 25th Jan, the drama shifts to Delhi High Court. Amidst heated arguments and allegations and counter allegations, the High Court adjourns the case to 15th February.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And why shouldn’t the passions rise ? Thousands of crores are riding on this case. Most of us lawyers are fleecing the clients by charging them fats fees for numerous appearances for the last couple of months. The gravy train’s wheels have still not made a move. Lots of activity but no movement.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ping Pong continues. Litigant-Lawyer-Govt.-High Court-Supreme Court and then the Supreme Court-High Court-Govt.-Lawyer-Litigant.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyone to wager: Who will decide first ? The Supreme Court or the Delhi High Court?</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Poppy Seeds decreased</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has decreased the Tariff Value of poppy seeds from 3382 to 3317 US Dollars. There is no change in the tariff value of other items.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_007.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO.07/2011-CUSTOMS (N.T.) Dated: January 31, 2011</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Inputs Under Advance Authorisation (AA) and Duty Free Import Authorisation (DFIA) - DGFT Clarifies</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> clarifies that import of Tapioca Starch and Wheat Gluten as alternative inputs against import item No. 1 of SION E-5 and, import of Lactose / Fructose / Maltose / Mannitol / Sodium Saccharin / Artificial Sweetening Agents, as alternative inputs against import items No. 2 of SION E-5 and import item No. 1(a) of SION E-1, is not to be allowed, under Advance Authorisations and Duty Free Import Authorisations issued against SIONs E-1 & E-5.</font></p>
<p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 13/(RE-2010) 2009-14, Dated: January 31, 2011</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Obeying Board - Income Tax As Good as Customs</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> it comes to following Board instructions, the Income Tax Department seems to be as good as the Customs and Central Excise Department – and this is no compliment!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently the Chairman, CBDT had requested the Chief Commissioners of Income Tax to bestow their personal attention for collection of unpaid self assessment tax in TOP-300 cases of their regions. CCITs were also advised to send a report in the matter by 24/01/2011.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the DIT, Systems informs that the reports called for have not been received from most of the CCITs.</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chairman, CBDT has expressed his displeasure.</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the DIT has again requested the Chief Commissioners to send the reports by 31/01/2011.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/self_assessment_tax.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DIT’s Letter F.No. DIT(S)-III/Report/2010-11/, Dated: January 28, 2011</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Action on Anonymous/Pseudonymous Petitions/Complaints Against IT Officers – CBDT Clarifies</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has noticed that on the basis of anonymous/pseudonymous complaints, investigation has been initiated on the ground that the content of the complaint is verifiable. Board says, it is quite possible that this could be used as a convenient tool for blackmailing and detrimentally affecting the career of public servants whose promotions/career benefits are delayed/denied owing to such investigation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board apparently does not want innocent and honest employees to become victims of such complaints. So Board has decided that:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reference to Central Vigilance Commission for looking into verifiable facts in anonymous/pseudonymous complaints may be made in the case of all Group A officers up to the level of Commissioner with the approval of the Chairman of CBDT. In case of the lower cadre, the reference will continue to be made by the CVO.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/improving_vigilance_administration.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT FTS-7853/2011/Ch(DT) Dated: January 20, 2011</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Revenue Sports in Chennai Today</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> Chairman, Dutt Mazumder is to inaugurate the Central Revenue Sports Meet in Chennai today. Over a thousand supposedly sportspersons from the offices under the CBEC and CBDT will participate in the meet. Over the years, the Central Revenue Sports Meets have become a farce, with not many real sportspersons participating and in many events there are only three participants who get the gold, silver and bronze medals and on some occasions, they enter into agreements and walk away with the medals, even without taking part in the events. Of course the Department has some real sports stars like Anju Bobby George</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"> – Wednesday'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">Service
Tax</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Maintenance
of application software already licensed and installed in the computer
systems of the banks – Department holding that service tax payable
under ‘Management, maintenance or repair services' - Activity correctly
classifiable as ‘information technology service' and same is exigible
to service tax with effect from 16.05.2008 - Appeal allowed: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> question
for consideration before the CESTAT is whether the service rendered by the
appellant to their clients (banks) during the period of dispute (09/07/2004
to 30/04/2006) is taxable under the head ‘management, maintenance or
repair service' in terms of Section 65 (105) (zzg) of the Finance Act, 1994.</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">Sec 37 - Whether sum paid towards withholding tax liability can be allowed as expenditure - NO, says ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> are two issues involved in this case. The first one is - Whether the amount paid towards tax withholding liability can be allowed as expenditure. And the Tribunal's answer is NO. The second issue is - Whether the payment made in violation of garnishee notices issued by the DRT for payment of overdue sum of a bank is allowable. NO is again the Tribunal's answer.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit - LPG which is used to run Canteen maintained for workers under Factory Act, 1948 is an input under the CCR, 2004: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent is the manufacturer of Scooters who have availed CENVAT credit on Liquefied Petroleum Gas (LPG). The LPG was also used by them in their canteen for providing meal to the workers and staff members. An inspection was done at the premises of the respondent and an objection was raised that the quantity of LPG which is used in Canteen is not eligible for Credit as it is not used in or in relation to the manufacture of final products. The respondent was asked to reverse inadmissible credit of LPG used in the canteen. Same was confirmed by the adjudicating authority.</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 Time.</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"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p>
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