TIOL-DDT 1700 · 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 1700 </font><br>
26.09.2011 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Renting - Retrospective amendment in 2010 is <em>ex</em> <em>abundanti cautela</em> - Larger Bench of Delhi HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> much awaited judegment of Larger Bench of Delhi High Court on levy of Service Tax on renting was pronounced on 23rd September 2011. The judgement was carried by TIOL the very next day. The Larger Bench has empathically ruled that the levy was intra vires the constitution and the retrospective amendment in 2010 to the definition of Renting of Immovable property was only by way of <strong><em>ex abundanti cautela</em></strong><em>, means - an abundance of caution </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The crux of the dispute was the competence of Union of India in levying service tax on land and buildings which is a State subject. The Larger Bench has examined this aspect in detail and some of the Principles culled out on levy of tax on Immovable property by States under Entry No 47 of List II and by the Union of India under Entry 97 of List I are: </font></p>
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<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Levy by States </font></strong></p></td>
<td><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Levy by Union of India </font></strong></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under Entry 49 of List II, the State Legislature is competent to impose tax either on lands or buildings or on both. It is basically a tax on property. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The measure of taxation does not affect the nature of taxation and, therefore, the manner of quantification of the levy of service tax has no bearing on the factum of legislative competence. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Entry 49 of List II of the Seventh Schedule contemplates levy of tax on lands and buildings or both as units. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxable services can include providing of premises on a temporary basis for organizing any official, social or business function but also other facilities supplied in relation thereto. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tax on land and building is a fundamental tax resting upon the general ownership of the lands and buildings but would not include a particular act like a transmission of title by gift. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Levy of service tax on a particular kind of service cannot be struck down on the ground that it does not conform to a common understanding of the word "service" as long as it does not transgress any specific restriction embodied in the Constitution. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a distinction between a direct tax on the assessee's building as such and a personal tax. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax is a levy on the event of service. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a distinction between the elements of tax, namely, the person, thing or activity on which the tax is imposed and the amount of tax. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The concept of service tax is an economic concept. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A tax may imperceptibly be the subject </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax is a value added tax which, in turn, is a general tax applicable to all commercial activities involving provision of service. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A tax may imperceptibly be the subject </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Value added tax is a general tax as well as destination based consumption tax leviable on services provided within the country. </font></p></td>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A tax levied on activity or service rendered having nexus with land or building would not come within the compartment of tax on land and building. </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Consumption of service" as in case of "consumption of goods" satisfies human needs. </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With regard to penalty the High Court has left open the same to the Government to examine whether any waiver can be granted. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">RAC Meetings for organized sector and small scale industries to be chaired by Chief Commissioners - Board issues instructions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>Board's letter F. No. 282/10/93-CX.9, dated 21.12.93, guidelines were issued for constitution of Regional Advisory Committee (RAC) for organized sector in each of the Central Excise Commissionerate. Board also issued instructions for constitution of a separate RAC for small scale industries vide F.No.282/34/73-CX-9, dated 22.12.75. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be recalled that in terms of existing guidelines, there can be 12 members in the RAC for organized sector and it is open for the Commissioner to co-opt not more than 3 members for a specified period or for any particular meeting. Similarly, in terms of the existing instructions, the RAC for small scale industries shall consist of not more than 8 members and not more than 2 members can be co-opted for a specific period or for any particular meeting. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The RAC meetings, which are held once in three months for organized sector and once in six months for small scale industries are presently being chaired by the Commissioner and the functions of the RAC are purely advisory in nature intended to resolve procedural difficulties of general nature. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committees, which were earlier constituted with the approval of the Board, are now being constituted by the Chief Commissioner of the Zone and the earlier requirement of seeking post-facto approval of the Board for the re-constituted RAC has also been dispensed with vide Board's letter F. No. 282/5/2008-CX.9, dated 24.9.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The subject of upgrading the level of RAC has been under consideration of the Board for some time. The Board is of the view that to facilitate greater participation of the representatives of the trade and industry and also to raise the quality of deliberations in the forum, the RAC should be constituted at the zonal level and the Chief Commissioner should preside over the RAC meetings. Constitution of the RAC at the Zonal level will also ensure uniformity of action within the Zone and expeditious implementation of the decisions taken in such meetings. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has decided that: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) A single RAC may be constituted/for both the organized sector as well as small scale industry by the Zonal Chief Commissioner for the entire zone and not for individual Commissionerates under his jurisdiction. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) The number of members in the RAC is raised from 12 to 16 so that all the registered Trade Associations, Chambers within the zone are adequately represented. Representatives of the State Government, Manufacturers, SSI, Exporters' Association, PSU etc may also be included in the RAC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) The Chief Commissioner is also empowered to co-opt three members from the industry or assessee group important from the zonal point of view for a specific period or for a particular meeting. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) The RAC meetings are to be convened on a quarterly basis under the Chairmanship of the Zonal Chief Commissioner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) In respect of the Zones covering Commissionerates in different cities, the Chief Commissioner may, in his discretion, hold the RAC meetings at different Commissionerate Headquarters, if so felt necessary. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The existing guidelines stand superseded to the extent above. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board ‘requests' that necessary action to re-constitute the RACs for the zones may kindly be taken immediately. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2024" target="_blank">TIOL-DDT 120 24 05 2005</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2806" target="_blank">TIOL-DDT 229 26 10 2005</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3592" target="_blank">TIOL-DDT 343 18 04 2006</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3753" target="_blank">TIOL-DDT 369 24 05 2006</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5158" target="_blank">TIOL-DDT 571 13.03.2007</a> and <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10001" target="_blank">TIOL-DDT 1246 27.11.2009</a></strong> for a sample of the functioning of various RACs. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/excircular953.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 953/14/2011, Dated: September 12, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Conditions for Grant of License and areas for cultivation of Opium Poppy Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENTRAL</strong> Government has notified conditions for grant of license for cultivation of opium poppy and also notified specific tracts of lands in the States of Madhya Pradesh, Rajasthan and Uttar Pradesh within which poppy may be cultivated for the opium crop year commencing from October 1, 2011 and ending with September 30, 2012. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/not11_opium_poppy.htm" target="_blank">Notification Nos. 01/2011-Narcotics Control-I </a>and <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/not11_02narcotics.htm" target="_blank">02/2011-Narcotics Control-I, both dated: September 20, 2011 </a></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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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">Central Excise</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Alternative remedy is to be availed even where issue raised by petitioner in Writ Petition is a reasonable one as well as a debatable one: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HIGH </strong>Court held that the petitioner has got an alternative of effective appeal remedy under Section 35B of the Central Excise Act, 1944, though the High Court for a moment accepts the issue raised in the Writ Petition as a reasonable one, but in view of the existence of efficient alternate remedy provided under Section 35 B of the Act, directed the petitioner to approach the Tribunal within a period of two weeks. </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">Income tax - Whether in absence of demand notice u/s 156, assessee cannot be treated as assessee-in-default u/s 201(1) for non-deposit of TDS deducted - NO, it can be: ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHETHER</strong> penalty u/s 221(1) can be imposed only after the completion of appellate proceedings, if any – Whether the amount of tax deducted at source can be treated to have become payable in consequence of any order passed under the Act for which notice u/s 156 of the Act was required to be issued – Whether in the absence of demand notice u/s 156, the assessee cannot be treated as assessee in default. And the final verdict goes against the assessee. </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">Commission received for disbursement of salary of Government employees is in relation to statutory function of the govt. – following the principle of <em>ejusdem generis</em> same cannot be considered as consideration for activities covered under definition of ‘commission agent' - <em>Prima facie</em> case in favour - Pre-deposit waived: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>applicant filed this application for waiver of pre-deposit of Service Tax of Rs. 87,686/- along with interest and penalty imposed under various provisions of Finance Act, 1994. The contention of the applicant is that what they receive from the Government is managerial charges for maintenance of salary account book keeping of the Govt. employees. The charges received by them cannot be treated as commission as envisaged in the definition of commission agent. </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><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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