TIOL-DDT 1604 · the untouched capture
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<!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 1604 </font><br> 09.05.2011 <br> Monday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Services provided by sub-contractors Taxable: CBEC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Works Contract service (WCS) in respect of construction of Dams, Tunnels, Road, Bridges etc. is exempt from service tax. WCS providers engage sub-contractors who provide services such as Architect's Service, Consulting Engineer's Service, Construction of Complex Service, Design Services, Erection Commissioning or Installation Service, Management, Maintenance or Repair Service etc. The representation by Jaiprakash Associates Limited seeks to extend the benefit of such exemption to the sub contractors providing various services to the WCS provider by arguing that the service provided by the sub contractors are ‘in relation to' the exempted works contract service and hence they deserve classification under WCS itself. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The subject of the Board clarification mentions as, “ Representation by Jaiprakash Associates Limited, Noida, in terms of Judgement dated 14.02.2011 in W.P. No. 7705 of 2008 – regarding ”. It does not mention as to which Court's judgment, this representation is all about. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any way Board has examined the matter and recalls the clarification given in CIRCULAR NO 96/7/2007-ST, dated 23 rd August, 2007 – 999.03; </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Q:</strong><em> A taxable service provider outsources a part of the work by engaging another service provider, generally known as sub-contractor. Service tax is paid by the service provider for the total work. In such cases, whether service tax is liable to be paid by the service provider known as sub-contractor who undertakes only part of the whole work. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A:</strong><em> A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub-contractor. Services provided by sub-contractors are in the nature of input services. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his capacity as a sub-contractor and whether or not such services are used as input services. The fact that a given taxable service is intended for use as an input service by another service provider does not alter the taxability of the service provided. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board clarifies that the services provided by the subcontractors / consultants and other service providers are classifiable as per Section 65 A of the Finance Act, 1994 under respective sub clauses (105) of Section 65 of the Finance Act, 1944 and chargeable to service tax accordingly. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But why? If the whole service provided by one person is not taxable, why a part outsourced to a sub-contractor be taxable? </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/sercir138.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 138/07/2011–ST, Dated : May 6, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Board appoints Adjudicators for DRI Cases </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has appointed the Commissioner of Customs (Adjudication), Chennai to adjudicate two Show Cause Notices issued by DRI. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">But can a jurisdictional Commissioner adjudicate a Show Cause Notice issued by DRI? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also in Board's Instruction dated April 15, 2011 (refer <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12440" target="_blank">TIOL-DDT 1597</a></strong>) it was clarified as follows: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF6633"><strong>“In view of the Supreme Court order <font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2011/2011-TIOL-20-SC-CUS.htm">2011-TIOL-20-SC-CUS</a>)</font>, while other alternative measures are being considered to address the matter, it has been decided by the Board that henceforth all Show Cause Notices under Section 28 of the Customs Act, 1962 in respect of cases investigated DRI/Customs Preventive formations are required to be issued by jurisdictional Commissioners from where imports have taken place. </strong></font></em></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board also desires the field formations to examine the pending show cause notices and wherever the cases are not hit by limitation, show cause notices may be got issued afresh by jurisdictional Commissionerates in supersession of the earlier show cause notices and in the light of the Hon'ble Supreme Court judgement in the matter. </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As for the cases which would be hit by limitation if notices are issued afresh now, necessary legal options are being explored.” </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With the Board being in such a dilemma about the legal options available, is it necessary at this juncture to allocate adjudicating officers for SCNs issued by DRI/DGCEI without finalizing the legal options?.</font></em></strong></font></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Refund Drive - A Success Story </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBDT Chairman says,<em> “Our initiative to issue all the refunds has received wide public acclaim both in the print and electronic media. In a TV programme ‘We the people' aired by NDTV on Sunday April 24 , 2011, tax payers acknowledged that now they are receiving their refunds without making any effort.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In that programme, a lady had said that she was to get a refund of Rs. 40,000/- from the Income Tax Department; her chartered accountant called her up and said that she had to pay 10 per cent bribe. She called up three CAs and all of them said that it is how things are done and she has to pay. Another participant in the programme said, “your CA is misleading you and now corruption in Income Tax refunds, is almost zero”. Another participant noted that the CA was not a public servant and he was corrupt; how do you deal with such private corruption? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT Chairman can certainly feel proud of this success story.</font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT President's Travel Bill under scanner? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIMES</strong> of India reported that President of CESTAT, RMS Khandeparkar, travelled eight times to his hometown in Goa from Mumbai and Delhi at government expense for non-existent official meetings. The report says that travel allowance for the trips from Delhi and Mumbai during May 8, 2009 to January 3, 2011 works out to Rs. 2.34 lakh.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Times of India says that the information was obtained through the RTI route and according to TOI, the RTI reply states, "<em>The Hon'ble president, for constituting the circuit bench (a temporary bench) at Goa, convened meetings with the commissioner of Goa for ascertaining proper place during the period March 16, 2009 to October 31, 2010. He stayed at his own residence.</em>”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If this is true, it is strange that a President of the Tribunal has to discuss with a Commissioner for 18 months, the venue for a Circuit Bench! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the report says that in his reply, the Commissioner stated that “as per records available with this office, there is no record of any meeting held with the president, CESTAT. ” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is really unfortunate that the premier Tribunal which deals with weighty tax matters is getting embroiled in undesirable controversies.</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><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">Income Tax</font></strong> </font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether if no satisfaction is recorded by AO of person searched, notice u/s 158BD is to be held as bad in law - YES, rules HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the High Court is - Whether, if no satisfaction is recorded by the AO of the person searched, notice issued u/s 158BD, is to be held as bad in law. And the verdict goes against the Revenue. </font></p> <p><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">Recipient of GTA service who is not engaged in providing any taxable output service or manufacture of dutiable final product not entitled to utilize CENVAT Credit A/c for discharging service tax on GTA services - CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECIPIENT</strong> of GTA service who is not engaged in providing any taxable output service or manufacture of dutiable final product not entitled to utilize CENVAT Credit A/c for discharging service tax on GTA services. Legal fiction created under explanation to Rule 2(p) is applicable only to persons who do not provide any output service or manufacture any dutiable final products and not to persons who provide some taxable service / services and /or manufacture some dutiable final products . Such persons are liable to pay service tax only through cash and not entitled to utilize CENVAT Credit A/c for which another legal fiction is required to be provided which is not available in CENVAT Credit Rules, 2004 </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Confiscation of Gold - Initial burden of proving defence has not been discharged - Tribunal order upheld: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> mere production of one receipt without anything more when the appellant himself did not purchase, the initial burden of proving the defence has not been discharged. The Tribunal below, in such circumstances, did not commit any illegality in disbelieving the version of the appellant regarding lawful entry of the biscuits in India and thus, no question of law is involved in this appeal. </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"><strong>vijaywrite@taxindiaonline.com</strong> </a></font></p> </body> </html>