TIOL-DDT 1651 · 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 1651 </font><br>
14.07.2011 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Salaam Mumbai! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<em><strong>DURING</strong> my trip to Mumbai, I saw firsthand the strength and resilience of the Indian people, and I have no doubt that India will overcome these deplorable terrorist attacks</em>”, said President Obama reacting to the terrorist attack on Mumbai yesterday. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Secretary of State Hillary Rodham Clinton says it is more important now than ever to show solidarity with India in its fight against terrorism and she will not cancel her planned trip to India next week, following bomb attacks in Mumbai.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">UK's Guardian reported, “ In Mumbai, haphazard security precautions are still in place, but the fear inspired by the November 2008 killings has passed. Whoever is the culprit behind these new attacks,<strong> it will take much more to shake this vast metropolis</strong>.”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Technology has played its role in helping the needy. Within minutes websites were opened and people were googling and twittering with help. Offerings included: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Can help; blood A+VE, O+ve, place to stay, food.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Can give my flight pass to anyone wanting to travel to Mumbai.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If you have friend and relative in USA and cant get to them on phone, tweet me and I will call them up
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Can offer people a lift and a place to stay.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Anything
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Place to stay; willing to help in any other way. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Terrorism anywhere is a threat to peace everywhere. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> joins the rest of the world in condemning this Diabolic Deed of Terror. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taking inspiration from the Mumbaikars, DDT continues… </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Time limit for reply to Show-cause notice </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> received this mail from a Service Tax assessee - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I am in receipt of a show-cause notice demanding Service Tax and seeking imposition of penalty and interest. The SCN contains the following paragraph towards the end – </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<strong>XX</strong>. If no cause is shown against the action proposed to be taken within 30 days from the receipt of this notice or if they fail to appear before the adjudicating authority when the case is posted for hearing, the case will be decided ex-parte on the basis of the evidence available on record.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, I am aware that in terms of section 33A of the Central Excise Act, 1944 as applicable to Service Tax matters, the adjudicating authority can (and is required to) in the matter of personal hearing grant me an adjournment for three times during the proceedings. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, I fail to understand as to how the show-cause notice can threaten me with dire consequences of the matter being decided ex-parte if I do not appear for the hearing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly, the requirement of me showing “cause” within thirty days is apparently without any legal sanction. However, I find that the CBEC in its website <a href="http://cbec.gov.in/info-act/s-tax/service_tax.htm"><strong>http://cbec.gov.in/info-act/s-tax/service_tax.htm </strong></a>mentions the following - </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“5. Adjudication - Departmental action against an assessee starts with a Show Cause Notice by the department. Normally thirty days time is given to reply to the Show Cause Notice.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Admittedly, even I am eager to ease the burden of the show cause notice from my shoulders and ensure that the same is decided as soon as possible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, when I was unable to file a reply to the SCN within the “directed period”, I was asked by the department to seek an extension for filing the same. I find this a pressure tactic. Moreover, there is nothing in the law which requires me to seek such an “extension” and which to the best of my knowledge would be a discretionary power that would be exercised by the adjudicating authority. <font color="#FF6633"><strong>Assuming that the adjudicating authority does not allow me an extension to file a reply can I treat it as an appealable order?</strong></font> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I also find that the provisions of 73 of the Finance Act, 1994 do not lay down that the adjudicating authority is required to determine the amount of tax (where it is possible to do so) within a period of six months/one year as is the requirement in section 11A of the CEA, 1944. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last but not the least, the Citizens Charter brought out by the CBEC mentions the following – </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">“OUR COMMITMENT </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We shall strive to: </font></strong></font></p>
<blockquote>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ carry out our tasks with: </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- courtesy and understanding ” </font></strong></font></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hope the CBEC responds positively. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FBT - DGFT Amends SION</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended SION A-2913 and A-263.</font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SION </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">EXISTING PRODUCT DESCRIPTION </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MODIFIED EXPORT PRODUCT DESCRIPTION </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A-2913 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2,4 Xylidene thru 4 - Nitro Meta Xylene </font></p></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2,4 Xylidine OR 2,6 Xylidine </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A-263 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hyoscinen Butyl Bromide or Hyoscine Hydro Bromide </font></p></td>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hyoscinen Butyl Bromide OR Hyoscinen-N-Butyl Bromide OR Hyoscine Hydro Bromide </font></strong></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Descriptions of the export product under these two SIONs have been modified. There is no other change. The number of inputs, their description & quantity permitted remains the same. The only change is in the name of export product in respect of both SIONs.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn064.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 64/(RE-2010)2009-2014; Dated; July 13 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retail Electronic Payment Systems – NEFT / NECS / RECS / ECS – Levy of Processing Charges by Clearing Houses – Service Tax to be paid by Banks</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI</strong> instructs that for the charges payable for electronic transfer of funds between banks, the charges payable by the originating banks to destination banks (including the service tax applicable thereon) will be calculated and settled by the Clearing Houses using the multilateral netting method. However, the service tax will be calculated on gross obligations of the banks. <strong>Necessary MIS reports will be provided to the banks to enable them to remit the service tax to the Government</strong>. Will the Service Tax Department agree or will the Clearing Houses be asked to pay the Service Tax? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_notification.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI/2010-11/111 DPSS (CO) EPPD No. / 94 / 04.03.01 / 2011-12 Dated; July 13 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can Service Tax on GTA be paid from CENVAT Account? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is not a major issue but has been agitated in all the Benches of the CESTAT and some High Courts. The Punjab & Haryana High Court had disposed of more than twenty cases on the subject. Recently we carried an order of the Chennai Bench of the Tribunal <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-767-CESTAT-MAD.htm" target="_blank"><font size="1">(2011-TIOL-767-CESTAT-MAD</font></a><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-767-CESTAT-MAD.htm">)</a></font></em></strong>, in which the Tribunal disposed of 50 appeals in a bunch holding that before the amendment to Rule 2(p) of the CENVAT Credit Rules 2004, on 19.4.2006, the assessees can avail CENVAT Credit for payment of service tax on Goods Transport Agency service, but from 19.4.2006 onwards, the payment is not allowed from CENVAT account. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal had in <em>CCE, Belgaum v. M/s. Shri Tubes & Steels Pvt. Ltd. </em>reported in <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-147-CESTAT-BANG.htm"><strong><font size="1">2011-TIOL-147-CESTAT-BANG</font></strong> </a> had observed, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similar view was taken earlier in CCE, Chandigarh v. Nahar Industrial Enterprises Ltd. reported in - <strong> <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-555-CESTAT-DEL.htm">2007-TIOL-555-CESTAT-DEL</a></font></strong> which was followed in RRD Tex Pvt. Ltd. v. CCE, Salem reported in - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-891-CESTAT-MAD.htm"><strong><font size="1">2007-TIOL-891-CESTAT-MAD</font></strong></a>, Pallipalayam Spinners Pvt. Ltd. v. CCE, Salem reported in - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-2136-CESTAT-MAD.htm"><strong><font size="1">2007-TIOL-2136-CESTAT-MAD</font></strong> </a>and Bhushan Power and Steel Ltd. CCE, C&ST reported in - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-1828-CESTAT-KOL.htm"><strong><font size="1">2007-TIOL-1828-CESTAT-KOL</font></strong></a>. The last decision was also followed in Mahindra Ugine Steel Co. Ltd. v. CCE, Raigad reported in - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2008/2008-TIOL-657-CESTAT-MUM.htm"><strong><font size="1">2008-TIOL-657-CESTAT-MUM</font></strong> </a>. Undisputedly, all these cases related to the period prior to 19-4-2006. In other words, as far as the issue in question is concerned to the extent it related to the period prior to 19-4-2006, the consistent view taken by the Tribunal is that in view of the explanation clause, the assessee would be entitled to avail the benefit of such service tax in order to claim the Cenvat Credit thereof. In view of the detailed reasoning given in Nahar Exports Ltd. case - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-1907-CESTAT-DEL.htm"><strong><font size="1">2007-TIOL-1907-CESTAT-DEL</font></strong> </a>in relation to the explanation clause, in the absence of any other material which could justify a different view in the matter, we do not find any justifiable reason to take a different view. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently the P&H High Court in Commissioner of <em>Central Excise v Nahar Spinning Mills Ltd -</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2011/2011-TIOL-413-HC-P-H-ST.htm" target="_blank"><em><font size="1">2011-TIOL-413-HC-MUM-ST</font></em></a></strong> followed its own order in CCE v. <em>M/s Nahar Industrial Enterprises Ltd </em>- <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-868-HC-P-H-ST.htm" target="_blank"><font size="1">2010-TIOL-868-HC-P-H-ST</font></a></strong></em> <font color="#FF6633"><strong>(this decision was not widely reported and will now be.)</strong></font> on the question "Whether a person who is not actual service provider, but discharges the Service tax liability on the Taxable Services, under Section 68(2) of the Finance Act, 1994, as a deemed service provider, is entitled to avail the Cenvat Credit on inputs/inputs services/Capital Goods for payment of GTA Services tax, even if he is not using such inputs/input services/capital goods for providing taxable services?", which was decided in favour of the assesse.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However the Tribunal in <em>CCE, GHAZIABAD vs BPL DISPLAY DEVICES LTD - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-841-CESTAT-DEL.htm" target="_blank"><font size="1">2011-TIOL-841-CESTAT-DEL</font></a></strong></em> had held that <em>the GTA services received by the respondent cannot be treated as their "output service" and since in terms of the provisions of Rule 3(4) of Cenvat Credit Rules, the Cenvat Credit could be utilised only for payment of service tax on output services or payment of excise duty on final products, the respondents have wrongly paid the service tax on the GTA services received by them through Cenvat credit.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The GTA demon refuses to leave Service Tax assessees. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">10 things to learn from Japan - in a Crisis</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> the recent tragedy in Japan; </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE CALM: Not a single visual of chest-beating or wild grief. Sorrow itself has been elevated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE DIGNITY: Disciplined queues for water and groceries. Not a rough word or a crude gesture. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE ABILITY: The incredible architects, for instance. Buildings swayed but didn't fall. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE GRACE: People bought only what they needed for the present, so everybody could get something. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE ORDER: No looting in shops. No honking and no overtaking on the roads. Just understanding. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE SACRIFICE: Fifty workers stayed back to pump seawater in the N-reactors. How will they ever be repaid? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE TENDERNESS: Restaurants cut prices. An unguarded ATM is left alone. The strong cared for the weak. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE TRAINING: The old and the children, everyone knew exactly what to do. And they did just that. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE MEDIA : They showed magnificent restraint in the bulletins. No silly reporters. Only calm reportage. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ THE CONSCIENCE: When the power went off in a store, people put things back on the shelves and left quietly!</font></p>
</blockquote>
<p align="center"><strong><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"> – Friday's cases</font></strong></font></strong></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#663399"><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">Customs</font></font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal - Pre-deposit - Bank realisation certificates found to be forged - No reason to interfere with Tribunal's order of pre-deposit of Rs. One Crore: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO</strong> case has been made out for the grant of a complete waiver of the requirement of predeposit. Prima facie, at this stage, it does emerge that the Bank realization certificates on the basis of which the DEPB benefit has been claimed were found to be forged in large measure. The Tribunal has furnished adequate reasons in support of the order of predeposit. No case was made out to completely waive the requirement of predeposit.</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">Whether when project also has commercial shops, it is entitled to Sec 80IB(10) benefits if it was commenced prior to amendment in Sec 80IB from April 1, 2005 - Yes, rules ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AO</strong> denied deduction claimed u/s. 80 IB(10) on the basis that section 80IB was not applicable to a project which contained shop/commercial establishment and it did not remain a ‘Housing Project' - the assessee had constructed 66 shops being commercial premises included in the project admeasuring 9404 sq. ft. which was as per the assessee was about 11.88% but as per AO about 12.41%.</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">Security Service - No provision in Law to exclude statutory liabilities like PF and ESI - Penalty reduced: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SO</strong> far as the valuation aspect is concerned, whether the statutory dues which form part of gross value of the service shall be included or excluded is not a prescription of law. But the consideration that shall contribute to render the services shall essentially form part of the gross value of the taxable service.</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>
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