TIOL-DDT 1594 · the untouched capture
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<p align="justify"><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL-DDT 1594 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>25.04.2011 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Huge response to TIOL Seminar in Vizag</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> large number of assessees participated in the one day work shop on Budget Changes organized in Visakhapatnam by the Tax Law Research Group in association with Taxindiaonline.com. The Chief Commissioner of Vizag Zone, Mr. Chandrahas Mathur was the Chief Guest on the occasion. The participants raised various issues which were answered by the Chief Commissioner and the Commissioners of the Zone. Some of the issues raised during the seminar are: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. We issued invoice for value of taxable service at Rs 90,000/- and service tax @10.3% on this amount. The recipient paid only the basic value of Rs 90,000/- and the service tax amount has not yet been paid by him. Do we need to pay service tax? </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Yes. You are required to pay service tax on Rs 90,000/- by treating it as cum-tax value. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Show Cause notice was issued to deny the CENVAT Credit on services like security, outdoor catering service and chartered accountant service. Whether these services are eligible for credit. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the Show Cause notice was issued, the issue will be taken up in adjudication after due process of law. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. We are manufacturers of excisable goods and are claiming refund of service tax paid on certain services like CHA etc, used for export of excisable goods under Notification No 17/2009 ST 7.7.2009. The departmental officers are insisting on proof of payment of service tax by the providers of service. Is it required under law? </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Prima facie, you are not required to produce the challans of payment of service tax by the service provider. You can meet the jurisdictional Commissioner for any problem in getting the refund. </strong></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During post lunch session, a panel of experts from the consulting fraternity answered some other issues raised by the participants. Some issues are: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. We have lot of CENVAT credit under basic excise duty. Can this be used for payment of education cess and SHE Cess? </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>There is no bar under the CENVAT credit rules on utilising the credit on basic excise duty for payment of Education Cess and SHE Cess. Only restriction is that the credit of Education cess and SHE Cess cannot be used for payment of basic excise duty. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. After clearance of goods from the factory, there is an amendment to the price. We paid the differential excise duty by raising supplementary invoices. Do we need to pay interest also on such differential duty? </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes. The dispute is settled in favour of revenue in case of <em>SKF India Ltd </em>. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Can we file a revised ER 1 return if there is any error in the earlier return filed with the department? </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the rules expressly do not provide for filing revised return in case of central excise, unlike in service tax, a revised return can be filed as following the maxim, whatever is not prohibited under law is allowed. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Some of the service providers from whom we are receiving services are not charging service tax on the ground of small scale exemption, etc. Is the recipient of the service is also responsible if there are any violations by the service providers? </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The service receiver is not responsible for any violations by service provider, except in exceptional cases like abetting the evasion. However, as an abundant caution, you can obtain an undertaking from the service provider that they are under any exemption, small scale or any other. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. We are paying advance to the service provider who is required to pay service tax on such advances received. Can we avail CENVAT Credit of service tax paid on such advances paid? </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the service has not yet been received, you are not entitled for CENVAT Credit of service tax paid on such advances. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. We are an SEZ unit and are claiming refund of service tax paid on services not wholly consumed within the SEZ. Do we need to file ST 3 returns? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No. In terms of the Notification No 17/2011 ST, the developer or the SEZ unit is required to only obtain service tax code by applying in Form A 3 to the jurisdictional Assistant / Deputy Commissioner. </font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Come to me at any time convenient to you – Commissioner invites assessee </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING</strong> our Vizag Seminar on Saturday, an assessee raised a rather complicated issue which needed detailed discussion. His jurisdictional Commissioner Ponnu Swamy, who was on the dais said, “You can come to me at any time <strong>convenient </strong> to <strong>you</strong>; we will sort out the issue.” His Chief Commissioner who was also present added that the Commissioner will also provide a cup of tea. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Very often, we find that it is very difficult to meet a Commissioner – in fact you can't even send in your card unless you answer correctly at least half a dozen questions posed by the all important PS and most often he would tell you that the Commissioner is very busy and advise you to meet the Additional Commissioner or the Superintendent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But here is a Commissioner who has invited his assessee to meet him at the assessee's convenience and a Chief Commissioner who directs his Commissioner to offer a cup of tea to the assessee. Well, this is what democracy is all about. Larry Lipsher, addressing our Mumbai Seminar last month said that nowhere in the world he has seen Revenue officers answering questions from the Public in a seminar like this. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Inclusion of handling charges to Goods transport Agent in case of M/s Food Corporation of India – DGST's clarification </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> instance of avoidance of payment of appropriate Service Tax amount has been reported by the Central Excise Commissionerate, Rohtak to DGST. Brief details in this regard are as follows: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In respect of the transportation services provided by the contractors with regard to the transportation of the food grains stocks, M/s. Food Corporation of India (M/s. FCI) is paying Service Tax on 25% value of the said transportation charges (upon availing abatement of 75%) after availing the benefit of Notification No. 34/2004-ST dated 03.12.2004. However, M/s. FCI is paying Service Tax only on transportation charges and neither they nor other agencies make payment of Service Tax on Handling charges consisting of labour/loading and unloading charges even if the services of transportation as well as handling are provided by the same contractor. In view of the clarification given by the Board/Ministry vide Circular No. 104/07/2008/ST dated 06.08.2008. F. No. 334/4/2006-TRU dated 28.02.2006 (para 3.2 and 3.3) and F.No. 334.1/2006-TRU dated 29.02.2008 (para 3.2 and 3.3). M/s. FCI should have added the loading charges in the transport charges, wherever provided by the same contractor/agency, for determining the taxable value and accordingly discharged Service tax liability. As such, if loading/unloading charges are added into the transport charges, many bills may cross the exemption limit of Rs.750/-, on which no Service Tax has been paid by M/s. FCI. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To summarize the above, M/s. FCI should have included handling charges to the transport charges, wherever provided by the same contractor/agency. They have evaded Service Tax by not including the value of handling charges to the transport charges and wrongly availed the slab exemption of Rs.750/- per consignment under Notification No. 34/2004-ST dated 03.12.2004. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this connection, DGST draws attention to its clarification issued vide letter F.No.V/DGST/88/GTA/01/08 dated 04.11.2008 pertaining to the availment of exemption under Notification No.34/2004-ST dated 03.12.2004, which may also be appropriately taken into consideration <strong>(<font color="#FF6633">see below for details of DGST's letter dated 04.11.2008</font>).</strong> </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/circular_dgst464.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGST's Letter F.No.V/DGST/88-GTA/01/2010/464, Dated: 20th January, 2011 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Availment of exemption under Notification No.34/2004 ST – DGST's clarification </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGST</strong> received a reference from the Commissioner, Central Excise & Customs Indore, seeking clarification on the availment of Notification No.34/2004 ST dated 03.12.2004 in respect of individual consignments transported by road by the Goods Transport Agency. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The officers of Central Excise, Indore Commissionerate noticed during the course of audit that service providers were availing of exemption from service tax in respect of individual consignments when freight amount did not exceed Rs.750/- even if the total freight of all consignments in a goods carriage was higher than Rs.1500/-. They were of the view that the exemption under clause (ii) of the Notification No.34/2004 ST dated 03.12.2004 was applicable only when a goods carriage transport consignment consisting of one or more consignments (packages) meant only for a single consignee and if the total freight for all their consignment meant for the only consignee was more than Rs.750/-, the exemption was not available under the said notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGST examined the issue and is of the view that as per clause (i) of the said notification, if by a truck /carriage consignments were transported whose total freight did not exceed Rs.1500/-, then it will qualify for availment of the benefit of the notification supra irrespective of the freight charges of the individual consignments; and as per clause (ii) of the said notification, the freight amount in respect of a individual consignment being transported by a truck/carriage should not exceed Rs.750/- for the availment of the benefit of the notification supra, irrespective of the number of such individual consignments transported by a carriage and irrespective of the total combined freight amount charged in respect of all such consignments being in excess of Rs.1500/-. DGST is of the view that the two clauses of the notification provided two independent exemptions on account of the fact that these clauses have been separated by the word 'or' and not by 'and'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGST's above views were also communicated to Board vide letter of even number dated 31.07.2008 for clarification and it informs the field formations that the Board has confirmed /accepted these views vide endorsement dated 11.8.2008 made on the copy of said letter. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/circular_dgst01.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGST's Letter F. No.V/DGST/88/GTA/01/08, Dated: 4th Nov, 2008 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Corrections in Explanatory Notes issued along with Budget papers – TRU's Clarification </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REFERENCE</strong> is invited to the Explanatory Notes to changes in Central Excise duties circulated along with budget papers. In para 61.2 of these notes, wherein changes in the excise duty rate on readymade garments and made up articles of textile were discussed, it has inadvertently been mentioned that the excise duty of 10% is being imposed on such goods without CENVAT credit facility. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TRU clarifies that CENVAT credit of the duty paid on inputs and capital goods as well as service tax paid on input services is available to the manufacturers of readymade garments and textile made ups. In case the liability to pay duty on these items rests with the person who gets them manufactured on job-work basis (merchant manufacturer), the facility of CENVAT credit would also be available to him. For this purpose, a suitable amendment has been made in the definition of 'manufacturer' or 'producer' appearing in clause (naa) of rule 2 of the CENVAT Credit Rules, 2004. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also minor errors in some notifications <em>[namely, 5/2011-CE, 6/2011-CE, 14/2011-CE, 7/2011-CE (NT), 21/2011-Cus., 25/2011-Cus. and 27/2011-Cus.] </em> dated 01.03.2011 were observed. These have since been corrected and corrected versions of the notifications have been hosted on the CBEC website: www.cbec.gov.in. The Gazette copies of the notifications published on 01.03.2011 also reflect the correct versions of these notifications <font color="#FF6633"><strong>[Refer to <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12293" target="_blank">TIOL-DDT 1575 March 24, 2011</a> for the Errata published by Directorate of Publicity and Public Relations, CBEC] </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central excise duty of 1% was imposed on vaccines (other than those specified under the National Immunization Program) by virtue of S. No.39 of notification No. 1/2011-CE dated 01.03.2011. The policy intent was to retain full exemption from excise duty on vaccines specified under National Immunization Program. In order to reflect this clearly, an entry prescribing full exemption for such vaccines has been inserted at S. No. 62AA of notification No. 4/2006-CE dated 01.03.2006. This amendment has been carried out by notification No.19/2011-CE dated 03.03.2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/circular_tru.htm" target="_blank">D.O.F.No.334/3/2011-TRU, Dated: 4th March, 2011 </a></strong></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"> - 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"></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Income
tax - expenses incurred on promotion of Pace Foundation for Fast Bowlers
of Cricket - Can it be treated as equivalent to sponsorship of sport or
akin to charity - It's charity, claim not allowable: ITAT</font></strong></font></p>
<div align="justify"></div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> THE
</strong>issues before the Tribunal are - Whether when
assessee incures certain expenditure on promotion of Pace Foundation for
fast bowlers of cricket, the same can be claimed as advertisement expenses
for purpose of tyre-manufacturing business and whether such expenditure
is akin to sponsorship of sports or charity. And the verdict goes against
the assessee.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise - Valuation - Sale of paint booth - value of the hot air generator and filter blower supplied separately not required to be included in the assessable : CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are engaged in manufacture of paint booth, on which appropriate duty of Excise stand paid by them. The said Booth is a complete commodity by itself and is actually being marketed by them without generator and filter. As their customers insist on for supply of generator and filter, they procure the same from the market and supply to their customers. The value of such bought out items cannot be included in the assessable value of paint booth and drying cabinet. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Requirement of section 37C of Central Excise Act, 1944 is to be taken as complied with by sending order-in-appeal by speed post at address given by assessee to department: CESTAT </font></strong></font></p>
<p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the Stay application filed by the appellant came up before the CESTAT, the Revenue representative raised a preliminary objection about the maintainability of the appeal inasmuch as it is his contention that the appeal had been filed beyond the time-limit prescribed under the statute. </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 color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </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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