TIOL-DDT 1732 · 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 1732 </font><br> 15.11.2011<br> Tuesday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Retrospective Exemption For Mid-Day Meal Scheme </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> Non-Government Organization registered under any Central Act or State Act, under the Centrally assisted Mid-Day Meal Scheme, has been granted exemption from service tax vide Notification No. 47/2010 - Service Tax dated 03.09.2010 for providing the taxable service of outdoor catering. This exemption is applicable with effect from 03.09.2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that the NGOs were liable to pay the Service Tax for the period before 03.09.2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has retrospectively exempted the taxable service of outdoor catering referred to in sub-clause (zzt) of clause (105) of section 65 of the Finance Act, if the same has been provided by a Non Government Organization registered under any Central Act or State Act, under the Centrally assisted Mid-Day Meal Scheme, from the whole of service tax leviable thereon under section 66 of the Finance Act, during the period 10.09.2004 to 02.09.2010. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/st_order02_2011.htm" target="_blank">AD HOC EXEMPTION ORDER No 2/2/2011 - Service Tax , dated: August 8, 2011 </a>and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/issuance_ad_hoc_exemption.htm" target="_blank">CBEC F.No.137/94/2010-CX.4, Dated: August 9, 2011 </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on CISF - Retrospective Exemption </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> security agency's service provided by CISF is liable to service tax under Section 65 (105) (w) read with Section 65 (94) of the Finance Act, 1994. But initially for a considerable period there was lack of clarity about the leviability of service tax on the security services provided by CISF for the reason that CISF is a government agency, and also because the recipient of the said services are Public Sector Undertakings in which Government has a stake; Later it was decided that the services provided by CISF to Public Sector Undertakings and State Governments are liable for payment of service tax under the "Security Agency's Service" and CISF thereafter started paying service tax with effect from 01.04.2009. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Government has exempted the taxable service provided, to any person by Central Industrial Security Force in relation to 'Security Agency's service' during the period 16.10.1998 to 31.03.2009 from the whole of the service tax leviable thereon under section 66 of the Finance Act, 1994. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/st_order01_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AD HOC EXEMPTION ORDER No 1/1/2011 - Service Tax, dated: July 01, 2011 </font></strong></a></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PLEASE also see </font></strong></p> <blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7963"><strong>1. DDT 965 – 06.10.2008 </strong></a></font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7975">2. CISF, WHETHER LIABLE TO PAY SERVICE TAX? </a></font></strong></p> </blockquote> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax Notice to Mumbai Police </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> CISF can be taxed, why not Mumbai Police, which also provides security service to several individuals and organisations? The Mumbai Service Tax-I Commissionerate has issued a notice to the mighty Mumbai Police demanding Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to the Service Tax Commissioner Sushil Solanki, Police department was requested to provide data for value of such services number of times including by DO letters to Commissioner of Police and to State Government officials but they did not respond. Therefore, value has been taken on estimated basis under Section 72. In fact, they were issued a Show Cause Notice in the past about 5-6 years ago, which was dropped because erstwhile definition used the words service to be provided by 'a commercial concern'. But, by an amendment in 2006, said word was substituted with 'any person', hence Police Department is also required to pay service tax. In fact, this legal position was also mentioned in earlier order passed by then Commissioner. This fact along with clarification issued by department that police organization are required to pay service tax was also clarified to them in writing but still they did not provide information. Hence, value available for past period was enhanced and accordingly Show Cause Notice has been issued for 2006 to 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will they impose a hefty penalty on Mumbai Police? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many other State Police organisations might be providing security services on payment and the Service Tax Commissioners in those states can also take a leaf from Mumbai Service Tax and issue notices to their respective Police forces. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">And Air India too </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANOTHER</strong> major defaulter of Service Tax is India's ailing erstwhile Maharajah - AIR INDIA. Mumbai Service Tax Commissioner Solanki says that Air India has defaulted in Service Tax payment of about 125 crores in the current year. Their bank accounts were restrained twice and they paid 42 crores but still there is shortfall of more than 125 crores (exact amount to be quantified). Air India simply has no money and maybe the Civil Aviation Minister has to request the Finance Minister to bail him out to pay the Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13256" target="_blank">DDT 1697 – 21.09.2011</a></strong>, we had reported, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Every month end, I go to Pranab Mukherjee's house at midnight and ask for money”. He asks, “how much”. “I say I want 200 Crores”. He asks, “200 Crores in the night?” </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the plight of Civil Aviation Minister Vayalar Ravi as every month he has to ask the Finance Minister money for paying salaries of Air India staff. His first priority is to make enough money to pay the salaries. </font></em></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now he has to ask for a little more to pay Service Tax!. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">High Court orders CBI, ED probe against Chandra Babu Naidu </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> former Hi-tech Chief Minister of Andhra Pradesh N. Chandra Babu Naidu, along with his wife, son and some associates like media baron Ramoji Rao are to be investigated by CBI, ED and the State Government on several charges levelled by the wife of another former Chief Minister YS Rajasekhara Reddy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AP High Court in an interim order delivered yesterday observed, “<em>We are of the opinion that the petitioner has made out a case of misuse and or abuse of power and also acts of indulgence shown by the 8 th respondent (Naidu), warranting admission of this writ petition. However, we are of the opinion that respondents 3,4,5 and 6 should be directed to independently carry out necessary inquiries/investigation into the various acts alleged to have been committed and attributed to respondents 8 to 20 in the affidavit filed in support of this writ petition based upon the documents enclosed as material papers of this writ petition, before an opinion can be firmed up about the criminal culpability. Let the investigation be carried out and a report be submitted by each of the respondents 3 to 6 in sealed covers for further consideration of this Court, to enable it to take appropriate and necessary further action in the matter. For this purpose, we grant respondents 3 to 6, three months time .” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner had levelled several charges like: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Naidu has cleverly used the name of his mother for purposes of securing most valuable assets in and around Hyderabad city in favour of his minor son without the necessity to explain the sources for such acquisition. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dr. Reddy's Laboratories, a giant pharmaceutical company based in Andhra Pradesh was granted sales tax deferment of Rs.25 Crores for a period of 14 years by the State Government when Naidu was its Chief Minister. Promoters of Dr. Reddy Laboratories purchased land from Naidu's family for a little more than Rs.3 Crores, whereas the market value of such lands in the vicinity was not up above Rs.12 Lakhs per acre and thus the purchase of land by the family members of Dr. K. Anji Reddy is a <em>quid pro quo</em> for the favour of sales tax deferment of Rs.25 Crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Naidu has misused and abused his official position and has amassed massive wealth in his own name and in the name of his immediate family members. Several assets held by Naidu and his other family members have not been brought out into the open and if their values are also taken into consideration, his wealth will further zoom past. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Naidu's son who was an average student did his Bachelors Degree Course from the prestigious Carnegie Mellon University in United States of America between 1997-2000 and thereafter prosecuted to study his Masters Degree between 2000-2002 from yet another prestigious University, Stanford University. He could have easily spent educational and living expenses amounting to USD 2,40,000 but no where the respondents have reflected in their statements of accounts filed with the Income Tax Department as to where from these funds have been generated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Between Naidu and Rajasekhara Reddy, they ruled the State for nearly 15 years - while Reddy's son Jagan is already under investigation, now the High Court has ordered investigation against Babu, his family and friends. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is not the best of times for politicians – economics sometimes dominates politics. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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><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">Appeal pending with Commissioner (Appeals) for 33 years - BG Encashed by Department - Refund ordered with Interest: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>lengthy argument nor elaborate reasoning is required to condemn the attitude of any quasi judicial appellate authority sitting over in a statutory appeal for thirty years and take a plea that the appellant could have pursued the matter in right earnest. The power conferred to decide appeals casts a duty on the designated authority to dispose of appeals expeditiously. </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 an employer maintaining account on basis of mercantile system is entitled to deduction on actuarial basis for discharging any liability arising from unapproved pension scheme - NO, rules Calcutta HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee claimed deduction of Rs.1,43,35,000/- on account of unfunded actuarial liability for pension in respect of certain categories of employees. The assessee maintained its account on mercantile basis. Out of the aforesaid amount claimed as actuarial liability of pension under the aforesaid Head, the amount actually paid was to the extent of Rs.23,04,228/- only and the same was included under the Head as Staff Welfare Expenses. The AO disallowed the aforesaid claim of deduction by holding that the amount of death pension is not admissible. On appeal, the CIT(Appeal) also denied the relief.</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">In respect of services rendered by C&F Agents, only commission or remuneration paid to C&F Agent is taxable before introduction of Service Tax (Determination of Value) Rules, 2006: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is registered as a service tax assessee under the category of 'Clearing & Forwarding Agent' and discharged their liability for the consideration received for the said services. However, the appellant was also getting reimbursement from service recipient of handling charges, establishment charges, computer stationery charges and go-down rent but the appellant was not paying any Service Tax on the said charges. The period involved is October, 2002 to March, 2006.</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> </body> </html>