TIOL-DDT 1787 · 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 1787</font><br> 02.02.2012<br> Thursday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Balaji's Lodge Liable to Service Tax - High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIRUMALA </strong>Tirupati Devasthanam (TTD) is the Trust that administers the famous Balaji temple of Tirumala (Tirupati), to which millions of pilgrims throng to get His blessings. TTD provides very decent facilities at affordable rates to pilgrims of all economic strata. Accommodation to pilgrims is one of the major activities of the TTD. You may remember, last year, in the Budget a new tax was introduced to tax service provided <em>by a hotel, inn, guesthouse, club or campsite, by whatever name called, for providing of accommodation for a continuous period of less than three months</em>. Hotels charging less than one thousand rupees per day were exempted. While the majority of rooms in Tirupati are charged rates like 50 to 200 rupees per day, there are some guesthouses charging more than 1000 rupees per day. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Service Tax department has sent a notice to TTD to get registered and pay Service Tax with effect from 1 st may 2011. TTD filed a writ in the AP High Court. The High Court dismissed the writ petition and held that TTD is liable to pay Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you want to get blessings of Balaji and stay in comfortable rooms in the abode of the Lord, you will have to pay a small tax to the Government. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A few years ago, I was in the High Court when a case was being argued in which the Municipal Corporation of Tirupati was the petitioner against TTD. The Counsel for the Municipal Corporation told the Judge, "your lordships tend to give orders in favour of Balaji." The Judge replied, "HE will not pardon me if I do so; HE wants me to give the correct judgement to the best of my ability". </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe Lord Balaji wants to pay Service Tax.</font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this High Court order today. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14194" target="_blank">Breaking News </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value increased for Gold, Silver, Brass Scrap and Poppy Seeds </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has increased the tariff values of Brass Scrap (all grades) from USD 4007 to USD 4078 and changed the tariff value of poppy seeds from USD 1970 to 2205. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tariff Value of Gold is increased from 526 to 556 USD per 10 grams and the tariff value of silver is increased from 953 to 1067 per kilogram. Tariff value was fixed for gold and silver only last month by Notification No. 2/2012-Cus(NT) dated 13th January 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no change in the tariff value of other items. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Customs officers in our airports have to keep track of this notification. Maybe this notification and its latest amendments should be prominently displayed in all international airports, for the information of the passengers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government should also publish the tariff values a couple of days before the effective date. The latest rates were said to be notified on 31 st January, but were made available only on 1 st February. God knows what happened to the gold brought in by passengers on 31 st January. Of course, in airports, when in doubt, they don't charge any duty - there are other means of getting through. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2012/cnt12_010.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 10/2012-CUS (N.T.), Dated : January 31, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Classification of Fused Silica under Customs Tariff - CBEC Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> matter of correct classification of fused silica under the First Schedule to the Customs Tariff Act, 1975 was taken up for discussion during the Conference of Chief Commissioners of Customs on Tariff and allied matters held in May 2011. After examining the various entries in the said schedule and the technical aspects of the product in question, it was decided that the Chief Commissioners under whose jurisdiction the import of fused silica are taking place, shall furnish the technical details of the product to the Board; it was also decided to seek an expert opinion before arriving at a final decision regarding classification of the product. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board now clarifies that ‘Fused Silica' is correctly classifiable under tariff item 32074000.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2012/cuscir12_003.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 03/2012-Cus.,Dated: February 01 , 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Quarterly payment of duty and return filing - is entitlement of full exemption under notification 8/2003-CE mandatory? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WE received this mail from a Netizen - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"The second proviso to rule 8 of CER, 2002 reads - </em></font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Provided further that <strong><u>where an assessee is eligible to avail of the exemption</u></strong> under a notification based on the value of clearances in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5th day of the month following that quarter, except in case of goods removed during the last quarter, starting from the 1st day of January and ending on the 31st day of March, for which the duty shall be paid by the 31st day of March. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation. 1. - For the purposes of this proviso, <strong>it is hereby clarified that an assessee shall be eligible, if his aggregate value of clearances</strong> of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees four hundred lakhs.</font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation. 2. - <strong>The manner of payment as specified in this proviso shall be available to the assessee for the whole of the financial year." </strong></font></em></p> </blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I commenced manufacturing of excisable goods last July and although entitled to avail SSI exemption of Rs. 1.5 Crores opted for payment of normal rate of duty by availing CENVAT credit. This option was exercised by me in terms of clause 2(i) of notification 8/2003-CE dated 01.03.2003. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the quarter ending September, I paid the duty due on the 5 th of October and filed a quarterly return thereafter in terms of rule 12 of CER, 2002. For the subsequent quarter, also I adopted the same manner of duty payment and return filing. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The jurisdictional authorities have now objected to such payment of duty and return filing and are contemplating taking action under section 11 of the CEA, 1944 and issuance of a show-cause notice. It is their contention that since I was not availing the benefit of SSI exemption but paying normal rate of duty by availing Cenvat, I am not entitled to benefit of paying duty on quarterly basis and so also in filing the return. They are alleging that I have committed a default in payment of duty and are referring to sub-rules 3, 3A and 4 of rule 8 of CER, 2002 to initiate action against me. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I tried to impress upon them that the proviso in rule 8 and a similar one appearing in rule 12 only refers to "an assessee <u><strong>being eligible </strong></u>to avail of the SSI exemption" and does not warrant an assessee to compulsorily avail the exemption viz. Nil rate for Rs.1.5 Crores. Even otherwise, the payment of normal rate of duty by foregoing the full exemption was made possible by clause 2(i) of notification 8/2003-CE and this would tantamount to my availing the exemption notification 8/2003-CE, I pleaded.</font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nothing seems to convince the officers but I am firm in my belief."</font></em></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I request DDT to bring this instance to the notice of the CBEC so that suitable clarification is issued in the matter. </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Celebration of 50 Years of Customs Act - Today </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE </strong>Mukherjee is the Chief Guest at the celebration of 50 years of Customs Act, today at the FICCI Auditorium in New Delhi. Minister of State Palanimanickam is the Guest of Honour. The celebrations will continue throughout the year. </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"> - Friday'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">Service Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Laying pipeline for transport of gas - Whether liable to Service Tax under category 'Commercial Construction Service' or does it stand excluded in view of definition of 'Erection, Commissioning and Installation Service' - Issue arguable - Prima facie case in favour on limitation- Pre-deposit waived and Stay granted: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> adjudicating authority concluded that the operation carried by assessee will not fall under the category of Commercial Construction service but would fall under the category of Erection, Commissioning and Installation service, which talks about charging of Service Tax liability for laying of pipes. However, since the entry refers to laying of pipes for transportation of fluids but not gases, the activity of the appellant is excluded from the said services, the original authority concluded while dropping the demand. </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 takes accommodation on rent after paying huge security deposits for its CMD, FBT is leviable on notional interest payable on security deposits - No, rules ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> Company provided residential accommodation to its chairman and accounted for the monthly rent in the return of FBT. During the course of assessment proceedings the AO observed that for this accommodation the assessee gave huge amount of security, observing this security the AO asked to explain why interest attributable to security should not be considered for FBT. In response, it was mainly stated that the security deposit was paid for taking the above said flat on lease basis which was provided to Chairman & Managing Director of the company. Therefore, no benefit was passed on to him. The AO, after considering the submissions, did not agree and observed that according to section 115WB(1), ‘fringe benefit' means any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to the employees, and accordingly taxed the notional interest attributable to this security and taxed in the hands of assessee. The CIT(A) affirmed the order of the AO. </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">There is no provision of law where the future CENVAT credit admissible can be taken into account while calculating customs duty payable under Notification no. 94/96-Cus - Deduction of CENVAT credit amount while sanctioning refund is not correct - Prima facie case - Stay granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant imported a machine on 11/11/1997 and paid duty approximately of Rs.3.33 Crores. Since the machine was found damaged it was re-exported and the appellant availed drawback of approximately Rs.2.26 crores. Thereafter, the machine was rectified and was re-imported and since there was a dispute regarding eligibility of the appellant for the exemption under Notification No. 94/96-Cus which provides for exemption of the goods to the extent of drawback received, the appellant paid full amount of duty and cleared the goods. The matter regarding eligibility of the appellant to benefit of the notification attained finality at the level of this Tribunal. Thereafter, the appellant filed a refund claim claiming benefit of Notification no. 94/96-Cus. </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>