TIOL-DDT 1874 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font><font color="#663399" size="3">TIOL-DDT 1874</font><br>
07.06.2012 <br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fire in North Block </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>minor fire broke out in the Finance Ministry in North Block early this morning. Furniture, files and computers are reported to have been burnt. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Valuation Rules - Amended Rules superseded before coming into force</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Notification No. 11/2012 –S.T dated 17.03.2012, the Service Tax (Determination of Value) Rules, 2006 were amended and the amendments were to come into force from the date on which the new Section 66B (the new charging Section) comes into effect. The Section 66B is to come into effect from 1st July 2012 and so these amended rules should also come into force on 1.7.2012. But, now the Government has superseded Notification No. 11/2012-S.T and issued revised amendments to the valuation rules. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The changed rules with the major changes marked in<font color="#FF0000"> red</font>: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2A. <strong>Determination of value of</strong> <font color="#FF0000"><strong>service portion</strong></font> <strong>in the execution of a works contract.</strong>- Subject to the provisions of section 67, the value of service <font color="#FF0000">portion</font> in the execution of a works contract , referred to in clause (h) of section 66E of the Act, shall be determined in the following manner, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Value of <font color="#FF0000">service portion in the execution of a</font> works contract shall be equivalent to the gross amount charged for the works contract less the value of property in goods <font color="#FF0000">transferred</font> in the execution of the said works contract. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Explanation.</em>- For the purposes of this clause,- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid <font color="#FF0000">or payable</font>, if any, on transfer of property in goods involved in the execution of the said works contract; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) value of works contract service shall include, - </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) labour charges for execution of the works; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) amount paid to a sub-contractor for labour and services; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) charges for planning, designing and architect's fees; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) cost of consumables such as water, electricity, fuel used in the execution of the works contract; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) cost of establishment of the contractor relatable to supply of labour and services; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) other similar expenses relatable to supply of labour and services; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) profit earned by the service provider relatable to supply of labour and services; </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Where value added tax <font color="#FF0000">or sales tax</font> has been paid <font color="#FF0000">or payable</font> on the actual value of property in goods <font color="#FF0000">transferred</font> in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax <font color="#FF0000">or sales tax</font>, shall be taken as the value of property in goods <font color="#FF0000">transferred</font> in the execution of the said works contract for <font color="#FF0000">determination of</font> the value of <font color="#FF0000">service portion in the execution of</font> works contract under this clause. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service <font color="#FF0000">portion</font> involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(B) in case of <font color="#FF0000">works contract entered into for maintenance or repair or reconditioning or restoration or servicing </font>of <font color="#FF0000">any goods</font>, service tax shall be payable on <font color="#FF0000">seventy percent</font>. of the total amount <font color="#FF0000">charged for the works contract</font>; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(C) in case of other works contracts, <font color="#FF0000">not covered under sub-clauses (A) and (B), including maintenance, repair</font>, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings <font color="#FF0000">of an immovable property</font>, service tax shall be payable on sixty per cent. of the total amount charged for the works contract; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Explanation 1.</em>- For the purposes of this rule,- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) "original works" means- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) all new constructions; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; </font></p>
</blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“total amount” means the sum total of <font color="#FF0000">the </font>gross amount <font color="#FF0000">charged for the works contract </font>and the <font color="#FF0000">fair market</font> value of all goods and services supplied in or in relation to the execution of <font color="#FF0000">the</font> works contract, <font color="#FF0000">whether or not supplied</font> under the same contract or any other contract, <font color="#FF0000">after deducting</font>- </font></p>
<blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the amount charged for such goods or services, if any; and </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) the value added tax or sales tax, if any, levied thereon: </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the <font color="#FF0000">fair market</font> value of goods <font color="#FF0000">and</font> services <font color="#FF0000">so</font> supplied <font color="#FF0000">may</font> be determined<font color="#FF0000"> in accordance with the generally accepted accounting principles. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Explanation 2. -- </em>For the removal of doubts, it is clarified that the provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in <font color="#FF0000">or in relation</font> to the <font color="#FF0000">said</font> works contract, <font color="#FF0000">under the provisions</font> of CENVAT <font color="#FF0000">Credit Rules, 2004</font>.". </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">3.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In <font color="#FF0000">the said rules, in </font>rule 2B, <font color="#FF0000">the words, brackets, letters and figures “referred to in sub-clause (zm) and (zzk) of clause (105) of section 65</font> of the <font color="#FF0000">Act,” shall be omitted.</font></font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In the</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> said rules, after rule 2B, the following rule shall be inserted, namely:- </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"2C.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Determination of value of service</strong> <font color="#FF0000"><strong>portion</strong></font><strong> involved in supply of food <font color="#FF0000">or any other article of human consumption or any drink</font> in a restaurant or as outdoor catering</strong>. - Subject to the provisions of section 67, the value of service <font color="#FF0000">portion</font>, in <font color="#FF0000">an activity wherein goods being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity at a restaurant or as outdoor catering, </font>shall be the <font color="#FF0000">specified</font> percentage of <font color="#FF0000">the</font> total amount <font color="#FF0000">charged for such supply, in terms of</font> the following Table, <font color="#FF0000">namely</font>: - </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Table </strong></font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No. </font></p> </td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Percentage of the total amount </font></p></td>
</tr>
<tr>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service portion in an activity wherein goods, being food or any other article of human consumption or any drink(whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">40</font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink(whether or not intoxicating) is supplied in any manner as a part of such outdoor catering </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60</font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Explanation 1.</em>- For the purposes of this rule, "total amount" means the sum total of the gross amount <font color="#FF0000">charged </font>and the <font color="#FF0000">fair market</font> value of all goods <font color="#FF0000">and </font>services supplied in or in relation to the supply of food or any other article of human consumption or any drink <font color="#FF0000">(whether or not intoxicating), whether or not supplied </font>under the same contract or any <font color="#FF0000">other contract</font>, after deducting- </font></p>
<blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the amount charged for such goods or services, if any; and </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) the value added tax or sales tax, if any, levied thereon: </font></p>
</blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the fair market value of goods <font color="#FF0000">and </font>services <font color="#FF0000">so supplied may be determined in accordance with the generally accepted accounting principles.</font> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Explanation 2</em>.- For the removal of doubts, it is clarified that <font color="#FF0000">the provider of taxable service shall not take CENVAT credit of duties or cess paid on</font> any goods classifiable under <font color="#FF0000">Chapters</font> 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986).".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In the said rules, in rule 3, for the words “where the consideration received is not wholly or partly consisting of money”, the words “where such value is not ascertainable” shall be substituted. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">6. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the said rules, in rule 5, in sub-rule(1), in the Explanation , for the words, brackets, letters and figures “services specified in sub-clause (zzzx) of clause (105) of section 65 of the Finance Act, 1994, <font color="#FF0000">the value of taxable service shall be the gross amount paid by the person to whom telecom service is provided by the telegraph authority”, the words “the value of the telecommunication service shall be the gross amount paid by the person to whom telecommunication service is actually provided.</font>" shall be substituted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. In the said rules, in rule 6,- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) in sub-rule (1),- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) in clause (viii), for the words “in any manner; and” the words “in any manner;” shall be substituted; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) in clause (ix), for the words “insurance agent”, the words “insurance agent; and” shall be substituted; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) after clause (ix), the following clause shall be inserted, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“(x) the amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service.”; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) in sub-rule (2),- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) for clause (iv), the following clause shall be substituted, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“(iv) interest on delayed payment of any consideration for the provision of services or sale of <font color="#FF0000">property, whether moveable or immoveable;"</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) after clause (v), the following clause shall be inserted, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“(vi) accidental damages due to unforeseen actions not relatable to the provision of service; <font color="#FF0000">and </font></font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) subsidies and grants disbursed by the Government, not directly affecting the value of service.”. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_024.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 24/2012-ST, Dated: June 06, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mystery
of Notification No 27/2012-CE dated 30th May 2012 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> No. 18/2012-CE dated 17.03.2012, fixed the effective rate of duty mostly at 12% for several goods. Notification No. 27/2012 CE dated 30th May 2012 rescinded this notification. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ever since Notification No 27/2012 CE dated 30th May 2012 has been issued, we are getting several mails and calls not only from the not-so-well-informed-remotely-located assessees, but also from reputed consultants and lawyers. Their single doubt was why Notification No 18/2012 dated 17.3.2012 has been rescinded vide Notification No 27/2012 CE? What will happen to the goods covered under Notification No 18/2012 CE dated 17.3.2012 which attracted duty at the rate of 12%/6% under the said Notification? At what rate these goods will be charged from 30 th May 2012? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually, Notification No 18/2012 dated 17.3.2012 is only a stop-gap arrangement between the date of presentation of the Finance Bill 2012, and the date of its enactment. In Finance Bill 2012, vide Schedule seven, it was proposed to reduce the <strong>tariff rate</strong> on many commodities to 12%/6%. But, these rates will become part of the <strong>Statutory Tariff</strong> only after enactment of the Finance Bill – because the Provisional Collection of Taxes Act applies only to increase or imposition of excise duty and not decrease. In this case, duty was reduced from 16% to 12% and so would not have had immediate effect from 17.3.2012. So, till such time, the rate of duty is maintained at the desired rate by way of an exemption Notification. Once the Finance Bill is enacted, the Statutory rate itself will be 12%/6% and after the enactment of the Finance Bill, the new rates will be part of the Central Excise Tariff and the stop-gap exemption notification becomes useless / redundant. Hence, the same is rescinded. Let us see some entries in Notification No 18/2012 CE and parallel entries in Seventh Schedule to the Finance Act, 2012 </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter Heading </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rate under Notification No 18/2012 CE </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rate under Seventh Schedule ( i.e., New CE Tariff) </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1107, 1108 (except 1108 20 00) </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12% </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12% </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment in Chapter 11,— </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) for the entry in column (4) occurring against all the tariff items of heading 1107, the entry "12%" shall be substituted; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) for the entry in column (4) occurring against all the tariff items of heading 1108 (except tariff item 1108 20 00), the entry </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"12%" shall be substituted; </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1905 31 00, </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1905 90 10, </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1905 90 20 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6% </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6% </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment in Chapter 19 – </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) in tariff item 1905 31 00, for the entry in column (4), the entry "6%" shall be substituted; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) xxxxx; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) in tariff items 1905 90 10 and 1905 90 20, for the entry in column (4), the entry "6%" shall be substituted </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">And Jewellery too:</font></strong> Similarly, Notification No 23/2012 CE dated 08.05.2012 (Jewellery exemption) has also been rescinded vide Notification No 27/2012 CE dated 30 th May 2012. One of my consultant friends asked me “Does this mean jewellery will now attract duty? What about the FM's statement that the duty on jewellery has been withdrawn? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is another story. While keeping the FM's word, CBEC had issued Notification No 23/2012 CE dated 08.05.2012, which came into effect obviously from 08.05.2012, but jewellery remained taxable for the period from 17.3.2012 to 07.05.2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, vide the amendments proposed to the Finance Bill 2012, in Fifth Schedule, an entry was inserted to make the duty rate in Notification No 12/2012 CE at Sl No 199 (i.e., Jewellery ) as <strong>Nil with effect from 17.3.2012</strong> without any conditions attached. So the new Notification No 23/2012 CE is no longer required and accordingly the same has been rescinded vide Notification No 27/2012 CE dated 30 th May 2012. (Notification No 23/2012 CE had another entry for goods falling under Ch 8607, which has also been taken care of vide amendments made to the Finance Bill, 2012) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously, the Babus have been very careful in drafting these notifications and they deserve our kudos for taking care of such minute issues, which can boomerang into major litigation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, the subject for Notification No. 18/2012, in <strong>TIOL </strong>reads as, "<em>Effective Rate of 12% and 6% fixed for many items for which the Tariff Rates have also been reduced. But as the reduction in tariff does not have immediate effect, the reduction is brought into immediate effect by this notification, which will be rescinded when the Finance bill is enacted"</em>. On the Budget Day itself, we told you that this notification will be rescinded when the Finance Bill is enacted. </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">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recovery of Dues - Dues from a deceased assessee cannot be collected from his legal heir: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the <em>assessee who was registered under the Act as a manufacturer and who was availing the benefit of cenvat credit dies and registration certificate is surrendered, whether the legal heirs are liable to answer the claims of the department under the Act?</em> There is no provision, which empowers the authorities to recover due from a deceased assessee by proceeding against his legal heirs. </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 main business of assessee is to earn interest income from loans and advances, loss arising from sale and purchase of shares is covered under exclusionary clause of Explanation to Sec 73 - YES: Allahabad HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>assessment proceedings, AO issued notice to explain as to why the business of sale and purchase of shares may not be treated as speculation business as per Explanation to Section 73. Assessee submitted that it was also doing business of sale and purchase of shares and earning mainly interest by granting loans and advances and income from interest. As per memorandum of association, its principal business was to deal and develop real estate. AO considered the loss on sales and purchase of shares as speculation loss, which was not set off against the net profit observing that it would be set off against the speculation profit in subsequent years. CIT (A) confirmed the order of the AO. ITAT allowed the appeal of the assessee observing that principal business of the company being granting of loans and advances, and its activities were covered under the exclusionary clause of Explanation to Section 73, hence deeming provision for carrying of speculation business in respect of purchase and sale of shares was not applicable. The company was liable to set off losses against its other income by way of interest. </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">Airport Service - Details submitted by applicants does not cover amount of tickets sold prior to 01.05.2006 for journey carried out on or after 01.05.2006 - <em>prima facie </em>extended period has been rightly invoked as there is suppression of fact - Pre-deposit ordered of entire amount of Service Tax demanded: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicants are engaged in the services of transporting of passengers embarking in India for International journey by 'Airport Service'. The levy of service tax on the tickets issued by them for international journey came into effect from 01.05.2006. Therefore, the department was of the view that the applicants are required to pay service tax on charges collected by them for services rendered under the category of Transport of Passengers embarking in India for International Journey by Air Service from 01.05.2006 onwards. </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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day </font></p>
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