TIOL-DDT 1988 · 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 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 1988</font><br> 22.11.2012 <br> Thursday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Old Accounting codes for Service Tax - Return of Dragon? - A Netizen's Grievances </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY'S DDT</strong> carried the news of Service Tax Accounting Codes being revived. We received this message from an angry assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>I heaved a sigh of relief when a single accounting code was specified on 6th July 2012 for all services (Circular No. 161/2012-S.T dated 06.07.2012). I thought finally, the words of JS(TRU)'s letter dated 16th March 2012 “<font color="#FF0000"><u>No more will the most often-asked question “which taxable service is being provided?” be relevant; no more will an exporter be asked whether an input service has been used in export to claim a Cenvat refund; and no more will a host of questions confront a tax-payer filing his new one page return</u></font>” have become a reality, though partially. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">My happiness is SHORT LIVED! The old Accounting codes for service tax are back. Now I am back to square one and need to identify my service among the 119 service tax codes given for payment. Reason for such accounting codes is more surprising. It is said that the same is for STATISTICAL purpose and based on the suggestions from field formations! The report hungry IRS(Indian Reporting Service) was unable to do statistical analysis of revenue from different services, so they brought back those <strong>a</strong> to <strong>zzzzw</strong> services again. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, in the process, has anyone spared a thought to understand the inconvenience it causes to the tax payers who are just now getting used to the new system? Why should the assessee take the trouble of identifying his service again from the 119 codes just for some statistical purpose? Why should they take the trouble of amending their registrations again? What happened to this Grand objective of introduction of Negative list, which boasts “<u><font color="#FF0000">The new system is a marked shift by way of comprehensive taxation of the entire service sector without getting into complex issues of classification of services</font></u>” </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The JSTRU recognizes the classification of service is a <strong>complex issue</strong> and now the Director TRU in his letter dated 20th November 2012 asks his field formations to extend necessary guidance to the tax payers regarding the selection of appropriate description of taxable service and facilitate the payment of service tax/cess due under the appropriate accounting code. What a joke! </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Going back to the old accounting codes is a very bad step. Now, for paying Service Tax, one has to classify the service. The Director TRU's letter dated 20th November 2012 explains that “<font color="#FF0000">Descriptions of taxable services given in the annexure are solely for the purpose of statistical analysis</font>”. That means it is not a statutory requirement. What will happen if someone, to avoid this complex issue of classifying the service, pays Service Tax under item No 120? Issue SCNs? How to educate field that this is not a statutory requirement? How do you enforce an instruction, which is only for statistical purpose and has no statutory requirement? </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Partial reverse charge is already creating confusion due to classification issues. Even for the great statistical purpose, how they are going to apportion the service tax paid under code against Sl. No. 120 for the rest of the services, which will also contribute significant revenue? This is undoubtedly a bad and short-sighted bureaucratic decision. They are not going to achieve anything with this statistical data. Though they say that this is only for statistical purpose, in future Judicial for a will not hesitate to classify the service based on payment code adopted by assessee, by holding "the assessee has been paying Service Tax under this particular code and the department has never raised any objection" </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last, but not least, there are a few changes in the Negative list which have not been taken into account or conveniently forgotten for “statistical purpose”. Maintenance or repair service is now taxable under “ Works Contract service” with effect from 01.07.2012. Now, which code should the tax payer use? Old code for repair (zzg) or old code for works contract - zzzza or use code for Sl No 120 (Other Taxable services)? Which one will satisfy our Statistician? Now for construction services, the abatement of 67% is history. Should they pay tax under (zzq) or (zzzza) or Sl No 120? Under negative list, there is a concept called “Bundled Services”. Now, should a tax payer pay service tax under respective heads for bundled services also to help the Statistician to study the revenue trends of different services or should he pay under a single head? </font></em></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do the Babus ever think about the agony their thoughtless actions can cause? </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Refund of Terminal Excise Duty - Recipient Can also Claim </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PARA</strong> 8.3.1(i) of the Handbook of Procedures, Vol.I, 2009-14 reads as: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An application in ANF 8, along with prescribed documents, shall be made by registered office or Head office or a branch office or manufacturing unit of supplier to RA concerned. Where applicant is branch office or manufacturing unit of a supplier, it shall furnish self-certified copy of valid RCMC. Recipient may also claim drawback benefits on production of a suitable declaration from supplier, in the format given in Annexure III of ANF 8. In case of TED refund, a declaration, in the format given in Annexure II of ANF 8, regarding non-availment of CENVAT credit, shall be given, by the recipient of goods, in addition to other prescribed documents. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the following sentence is added at the end of the para. </font></p> <blockquote> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recipient may also claim TED refund on production of a suitable disclaimer from supplier, in the format given in Annexure-IV of ANF-8 </font></strong></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, now either the recipient of the goods or the supplier of the goods can claim TED refund with appropriate disclaimer. This is effective from 1.3.2011. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2012/dgft12pn031.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No.31 (RE 2012)/ 2009-14., Dated: November 21, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FM's Praise for Income Tax CPC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER </strong>a visit to the Income Tax Department's Central Processing Centre (CPC) at Bengaluru on 19.11.2012, the Finance Minister Chidambaram remarked in the Visitors' Book.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF0000">I am greatly impressed by what has been created and put in place at the CPC. The CPC represents a technological leap for the I.T. Department. Undoubtedly, the CPC has resulted in better, quicker and more efficient service to the taxpayer community. </font></em></font></p> <p><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I warmly congratulate the I.T. Department on the splendid achievement. </font></em></font></p> <p align="justify"><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I urge the I.T. Department to continuously upgrade the technology and provide full satisfaction to the taxpayers. </font></em></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cricket -Customs Captures Women's World Cup Trophy </font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Trophy.jpg" alt="Cricket -Customs Captures Women's World Cup Trophy <empty>" width="417" height="462" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>2013 Women's World Cup Cricket Trophy brought to Mumbai from Dubai for a promotional launch, is still under Customs custody. It seems the trophy is only a replica of the original. But the Customs is determined to collect duty on the trophy and neither ICC nor BCCI seems to be ready to pay the duty. It is reported that Customs wants the ICC to pay duty or take the trophy back to Dubai. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If duty has to be paid on the trophy, what is the value? How do you arrive at the correct value of a trophy, which has unimaginable value for the winner and the cost of making that would hardly be a few thousands? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More than three years ago AR Rahman the Music Maestro flew in to the Chennai airport with an Oscar golden statuette to a tumultuous welcome. I called up the Commissioner of Customs and asked him whether there was any exemption for the Oscar statuette and whether Customs would allow free clearance. The Commissioner told me that the value of the statuette was only one dollar and there was no requirement of any exemption. Rahman was allowed to walk through with the statuette. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No such luck for the Cricket trophy! </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">Services utilised in residential colony set up by appellant so that personnel are available 24 hours near factory - CENVAT Credit not available on such welfare activity in view of precedent decisions of High Courts in <em>Manikgarh Cement and Gujarat Heavy Chemicals Ltd .</em>: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is quite common in cement factories to provide residential colony to employees since cement factories are invariably located in remote areas. Similarly in the case of big chemical factories also residential colony virtually becomes a necessity since such big factories are established not always in the middle of the city where all facilities are available. Under these circumstances, the submission that residential colony is not welfare activity and when it is not welfare activity, credit is admissible does not seem to flow from the precedent decisions. As regards the penalty, in view of the fact that issue involved is a pure question of interpretation of law, question of imposition of penalty does not arise. </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 has claimed deduction of interest payments made against house loan u/s 24(b), same can be claimed again at time of computation of capital gains u/s 48 - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong>, an individual had filed his ROI declaring income of Rs.6,40,440/-. During assessment, AO noticed that the assessee had purchased a house property for Rs.32.64 lakhs and in addition to the said consideration, he had also paid Rs.4.00 lakhs towards registration cost and Rs. 39,926/- as cost of improvement. Thus, the assessee had paid net cost of Rs.37,03,926/-. In the enclosures with the return, the assessee had added an amount of Rs.4,82,042/- as interest on housing loan taken in 2003 for purchasing the property. Finally, the assessee sold the said property for Rs.26.00 lakhs. AO held that since the interest on housing loan, had already been claimed as deduction u/s 24(b) in AYs 2004- 05 to 2006-07, the same could not be taken into consideration for computation u/s 48. Therefore, AO added back the interest amount to the income of the assessee from short term capital gains. The issue before the Bench is - Whether when the assessee has claimed deduction of interest payments made against house loan u/s 24(b), the same can be claimed again at the time of computation of capital gains u/s 48. And the verdict goes against the assessee. </font></p> <p align="justify"><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">ISD invoices issued by HO pertaining to Input Services not used at appellant's plant - since in appellant's own case for earlier period on an identical issue the CESTAT has held that appellant is entitled for Input Service credit, Bench is not required to go into details of arguments advanced by Revenue - Order set aside and appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> lower authorities denied CENVAT credit on the ground that the appellant had received Input Service Distributor invoices from Head Office pertaining to input services not used in or in relation to manufacture of goods at Borivali plant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, in the appellant's own case for the earlier period on the same issue, the Division Bench had decided in their favour - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-1851-CESTAT-MUM.htm"><strong><font size="1"><em>(2010-TIOL-1851-CESTAT-MUM)</em> </font></strong></a>;by placing reliance on the decision in<em> ECOF Industries Pvt. Ltd. - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-2109-CESTAT-BANG.htm"><strong><font size="1">(2009-TIOL-2109-CESTAT-BANG)</font></strong></a></em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, the appellant relied on the aforesaid decisions and also submitted that in the case of <em>Mercedes Benz India Pvt. Ltd. vs. UOI </em>-<font size="1"><em><strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2010/2010-TIOL-195-HC-MUM-CX.htm">(2010-TIOL-195-HC-MUM)</a></strong></em></font> it has been held that the Bench has to follow the order passed by another co-ordinate bench in identical set of facts for the earlier period and hence their appeal should be allowed, submitted the appellant. </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> <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>