TIOL-DDT 1776 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 1776</font><br>
17.01.2012 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">AG's Audit Visit to Factories and Premises of Assessees? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Calcutta High Court had recently passed an order restraining the Comptroller and Auditor General (CAG) of India from auditing a private enterprise. We promised to bring this order as soon as possible. We bring it to you today. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner had submitted that under the Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971, audit regarding the accounts of the State and Central authorities or the State companies can be conducted and as it is evident that audit is sought to be conducted regarding a private company, that is, the writ petitioner, prayer is that an interim order may be passed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
State submitted that since the scope of Section 16 of the said Act is wide
and such enactment has been made to secure an effective check on the assessment,
collection and proper allocation of revenue and as it relates to assessment
of service tax, no interim order may be passed restraining the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held, "<em>let there be an interim order directing that no audit be conducted by the authorities till 16th March, 2012 or until further orders, whichever is earlier</em>"</font></p>
<p align="justify"><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2012/2012-TIOL-50-HC-KOL-ST.htm">2012-TIOL-50-HC-KOL-ST </a> </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service
Tax - Commercial Training or Coaching service –Pre-deposit
- Sri Chaitanya Case - SC grants Rs 60 Cr Relief </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Commissioner had demanded a Service Tax of more than Rs. 87 Crores and imposed a penalty of Rs. 150 Crores on Sri Chaitanya Educational Committee for the Service Tax payable for the period 2003-2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal granted full waiver of pre-deposit <strong><em><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-1306-CESTAT-BANG.htm">2010-TIOL-1306-CESTAT-BANG</a>)</font></em></strong> on the ground of limitation till the disposal of the appeal. The Department was not impressed and took the matter to the High Court. The High Court of Andhra Pradesh has set aside the order of the Tribunal and remanded the case by holding that the Tribunal ought not to have granted the order of stay or dispensation of pre-deposit without imposing conditions. <strong><em><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2011/2011-TIOL-147-HC-AP-ST.htm">2011-TIOL-147-HC-AP-ST</a>)</font></em></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In remand proceedings, the Tribunal again did not order any pre-deposit keeping in view the fact of attachment of property valued at Rs 27 crores can be considered as enough security to safeguard the interest of revenue. <em><strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-661-CESTAT-BANG.htm">2011-TIOL-661-CESTAT-BANG</a></font></strong></em><font size="1"><strong>) </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against this order, the department filed appeal again in High Court. The High Court held that the order of the Tribunal granting blanket waiver of pre-deposit <em>ex facie</em> constituted a clear erroneous exercise of discretion, warranting interference in appeal under Section 35-G of the 1944 Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On behalf of revenue, it was urged that the assessee may be directed to <strong>deposit 50% of the service tax liability </strong>under Section 35 F of the Central Excise Act, 1944. Having considered the competing interests of the Revenue and the hardship that is likely to be caused to the assessee in case the entire amount of service tax and penalty is directed to be deposited, which is around Rs 240 cores (Rs 87 crores tax liability with Rs 150 crores penalty) the High Court had ordered that the assessee shall deposit 1/3rd of the amount of service tax and penalty, about Rs. 80.00 crores as pre-deposit under Section 35-F of the 1944 Act. <em><strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2011/2011-TIOL-694-HC-AP-ST.htm">2011-TIOL-694-HC-AP-ST)</a></font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Revenue got more than what it pleaded for. It asked for only 50 percent of 87 Crores, but it got 80 Crores! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously, the party had to appeal to the Supreme Court, which it did. In the Supreme Court also, the Counsel for Revenue fairly pleaded for a pre-deposit of <strong>50 percent of the tax</strong> and the Supreme Court allowed a pre-deposit of a third of the Service Tax demand, which would come to about Rs. 30 Crores. We bring you the Supreme Court today -
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2012/2012-TIOL-02-SC-ST.htm"><strong><font size="1">2012-TIOL-02-SC-ST </font></strong></a> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>An aside:</strong> Meanwhile the Department attached the property of the assesse under non-existing rules. (Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13798"><strong>DDT 1747 07.12.2011<font size="1">)</font></strong></a>. The assesse challenged this attachment also in the High Court, which was dismissed - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2011/2011-TIOL-800-HC-AP-ST.htm"><strong><font size="1">2011-TIOL-800-HC-AP-ST</font></strong> </a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Utilizing Refunded SAD for Duty Payment (DEPB) - Extended Again </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_027.htm" target="_blank">Circular No 27/2010-Customs, dated 13.08.2010</a></strong>, provided the facility of manual filing of Bill of Entry for utilizing the amount of re-credited 4% CVD (SAD) refunds for payment of duty in case of re-credited DEPB/Reward Scheme scrips upto 30.12.2010. However several representations have been received from trade and industry to extend the time up to 30th June, 2011 for using re-credited 4% CVD(SAD) amount in DEPB as they have not been able to utilize the re-credited DEPB / Reward Scheme scrips within the stipulated time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_011.htm" target="_blank">Circular No.11/2011-Customs, dated 24.02.2011</a></strong>, Government had extended this time till 30.06.2011. Still there were representations that the trade could not use this facility within the stipulated time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, a benign Government had extended it till 15.09.2011 by <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_030.htm" target="_blank">Circular No. 30/2011-Cus dated 19.07.2011</a></strong>, with a rider that <strong>no further extension shall be given. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now they have further extended it till 31.03.2012, with a rider that <strong>"No further extension shall be given under any circumstances."</strong></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2012/cuscir12_002.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 02/2012-Cus., Dated: January 16, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No Retrospective VAT on Lease of Taxi Cabs/ Buses </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> 2008, the cabs in Hyderabad went off the roads protesting against the notices by the State VAT department levying VAT on lease of cabs, even though they were paying Service Tax. The State Government assured the cab owners that a committee would be formed to look into the applicability of VAT on the business transactions and come out with clear-cut guidelines. If VAT is found applicable by the committee, it will be effective with <strong>prospective</strong> date to be notified. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But by Ordinance No. 7 of 2011, the State Government imposed VAT with retrospective effect from 1.4.2005. The Government's decision was strengthened by a decision of the AP High Court in
</font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2012/2012-TIOL-49-HC-AP-CT.htm"><strong>2012-TIOL-49-HC-AP-CT </strong></a></font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The agitated Cab owners again approached the State Government. And a benign Government has decided to waive the tax till 7.11.2011. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government Memo states: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Government has noted that an element of doubt existed among the taxi cab/bus owners about the taxability of the transaction involving transfer of right to use the vehicles in view of differing Court decisions on the issue.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Hence keeping in view all the attendant circumstances and legal position on the issue, Government have decided, as a special case, to waive the VAT demand on transactions involving transfer of right to use taxi cabs/ buses up to 7th November, 2011 provided the vehicle owner has paid Service Tax to the Union Government and has not collected VAT from the customer (lessee/ hirer of the vehicle).
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ However, VAT should be levied and collected on all such transactions with prospective effect from 08-11-2011.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Cases in which VAT dues have been already paid shall not however be reopened nor the taxes refunded. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, from 8.11.2011, they have to pay both VAT and Service Tax? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/circular_ct42596.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AP Government Memo No. 42596/CT.II(1)/2011-1, Dated: November 11, 2011 </font></strong></a></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14082" target="_blank">ST Se GST Tak </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"> – Wednesday's cases</font></strong></font></strong></font></p>
<p><strong><font color="#663399" 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">Central Excise</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Addition and mixing of polymers and additives to base bitumen does not result in manufacture of a new marketable commodity: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is trite to state that "manufacture" can be said to have taken place only when there is transformation of raw materials into a new and different article having a different identity, characteristic and use. It is well settled that mere improvement in quality does not amount to manufacture. It is only when the change or a series of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity but is instead recognized as a new and distinct article that manufacture can be said to have taken place. </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 assessee purchases development rights for construction project and writes off certain payments as bad debt for extra land space detected after five years, and that too without making a claim, same is to be allowed u/s 36(1)(ii) - NO: ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, engaged in construction activities, purchased development rights for its projects known as Gangotri & Yamnotri. Payments were made in this respect. Against the outstanding credit balance of Rs 90,165/- as on 1.4.2004, the payment of Rs 9 lacs was made on the ground that the excess land space utilized for the aforesaid project was required to be adjusted. In view of utilization of the land space which was very negligible, the excess amount of Rs 8,09,835/- was written off being non-recoverable with the understanding that it was on account of the cost of extra land space utilization for the aforesaid project. The profitability in respect of the aforesaid project was already offered for taxation in the earlier years. Therefore, the assessee claimed the aforesaid payments as bad debts. </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">Review by Commissioner - date of passing the order would be date on which order or decision is made public or notified in some form or when it can be said to have left adjudicator's hand - Order passed after two years, not valid: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNLIKE</strong> the Tribunals or the courts, where the orders are pronounced in the open court, the orders passed by a Commissioner of Customs/Central Excise as adjudicating Authority or as reviewing authority under Section 84 of Finance Act, 1994 are not pronounced in the open court. Therefore, in such cases, the date of passing the order would be the date on which the order was dispatched to the assessee, not the date on which the decisions was recorded in the review file as on this date it can be said that the adjudicating authority has ceased to have authority to tear it off and draft a different order. </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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></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>
</body>
</html>