TIOL-DDT 1990 · 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 1990</font><br>
26.11.2012<br>
Monday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Should Housing Societies pay Service Tax for Distribution of Electricity?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TRANSMISSION </strong>or Distribution of Electricity by an "Electricity transmission or distribution utility (means the Central Electricity Authority; a State Electricity Board; the Central Transmission Utility or a State Transmission Utility notified under the Electricity Act, 2003; <strong>(36 of 2003.)</strong> or a distribution or transmission licensee under the said Act, or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government) is kept under negative list of the services under Section 66D. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <strong>Education Guide</strong> on Service Tax explains the scope of service tax on the said activity as under: </font></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.11: Transmission or distribution of electricity </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.11.1: What is the meaning of electricity transmission or distribution utility? An 'electricity transmission or distribution utility' has also been defined in section 65B of the Act. It includes the following -</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">• the Central Electricity Authority </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">• a State Electricity Board </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">• the Central Transmission Utility (CTU)</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">• a State Transmission Utility (STU) notified under the Electricity Act, 2003 (36 of 2003)</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> • a distribution or transmission licensee licensed under the said Act </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">• any other entity entrusted with such function by the Central or State Government </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.11.2: If charges are collected by a developer or a housing society for distribution of electricity within a residential complex then are such services covered under this entry? </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">No. The developer or the housing society would be covered under this entry only if it is entrusted with such function by the Central or a State government or if it is, for such distribution, a distribution licensee licensed under the Electricity Act, 2003.</font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.11.3: If the services provided by way installation of gensets or similar equipment by private contractors for distribution of electricity covered by this entry? </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">No. The entry does not cover services provided by private contractors. Moreover, the services provided are not by way of transmission or distribution of electricity. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is settled law that "Electricity" is "goods" and it is also subject to VAT though at zero rate. Electricity finds mentioned in exempted category under many VAT Acts. Further, Electrical Energy is classified under CETH2716 0000 of the First Schedule to the Central Excise Tariff Act, 1985 which indicates that electricity is treated as goods for the purpose of Central Excise Tariff Act, 1985. Trading of goods is covered under Negative List at entry No (e) under Section 66D. Hence, no service tax is attracted on sale / trading of goods. <strong>Thus, the paras 14.11.2 and 14.11.3 run contrary to the settled law that electricity is goods.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently, this issue reached the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The facts of the case: <em>the applicants are owner of premises, which have several units and were given on rent to various persons. The applicant is paying service tax on the rent received from their tenants. The applicants are also involved in the activity of maintaining and repairing of the building and the applicants are paying service tax on this activity also. These payments of service tax are not in dispute. Apart from these, the applicant is under an obligation to supply electricity to their tenants and (for that) a common electricity connection has been taken by the applicant from MSEB and separate meters has been installed in each premises and on the basis of reading in the meter the applicant is charging electricity charges from the tenants. When electricity is not being supplied by MSEB, the same is supplied through DG set to the tenants and on that also they are charging electricity charges from the tenants. The Revenue is of the view that electricity charges recovered from their tenants is to be part of the service of ‘Renting of Immovable Property Service' and, therefore, a notice was issued and demand for service tax was confirmed against the applicant along with interest, apart from penalty of equivalent amount under section 78 of the Finance Act, 1994. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal observed, <em>"The contention of the applicant that electricity is ‘goods' and the same shall not form part of taxable service is clarified by the Notification no. 12/2003. Therefore, we find that the applicant has made out a prima facie case for 100% waiver of the service tax confirmed and penalty imposed"</em>. Please see </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2012/2012-TIOL-1688-CESTAT-MUM.htm"><strong>2012-TIOL-1688-CESTAT-MUM</strong></a></font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board look into this and <strong>educate</strong> the assessees a little more? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Chief Commissioners Conference </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is learnt that the CBEC Chairman has called for a meeting of Chief Commissioners today, mainly to discuss Revenue. This is the third time in this year that a Chief Commissioners' conference is being organised by CBEC. Normally the Chief Commissioners conference is an annual affair. Obviously, the Revenue targets are ridiculously high and the hope of ever reaching anywhere near the target is bleak. Now the Chief Commissioners will be told, "You will have to meet the target (I don't know how)". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bad days are ahead for the assessees. Demands will be confirmed and recovery proceedings will be initiated, refunds will not be given and a total chaotic situation will be created. Assessees will be made to pay next year's taxes and duties this year and figures will be fabricated to announce on 31st March that Targets have been surpassed, sweets will be distributed and backs will be patted and the FM will be requested to provide more grants to the Department to buy furniture to replace the furniture they bought last year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The irony in today's meeting is that in a day or two, Board will be promoting 16 Commissioners as Chief Commissioners and maybe transferring many Chief Commissioners. So, after today's meeting, many of the Chief Commissioners will not be in the same place as they are today. Then, what purpose does today's meeting serve? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No Office Assistants for Income Tax AOs - Board Frowns </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSMENT</strong> officers of many charges have conveyed to the Board that they are not being provided any secretarial assistance or other office help and they are left with no option but to make private arrangement to finalise their assessment order and other time bound matters. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chairperson, CBDT has viewed this matter very seriously. While it is true that the Department is facing shortages of man power, however, the current situation where assessing officers are forced to make private arrangements for secretarial assistance and other help to run their office is highly undesirable and cannot be allowed to continue without seriously compromising the functioning of the Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Attention of the Chief Commissioners is invited to Rule 178 of GFR 2005, which allows outsourcing of certain services in the interest of economy and efficiency. It is also noted that every Commissionerate has already been sanctioned a budget of Rs. 30 lacs for meeting expenses of this nature. The Chief Commissioners are accordingly requested to ensure that these funds are properly utilised and every assessing officer in all the Commissionerates under their charge is provided with adequate secretarial assistance and other office help either through the regular employees of the department or through outsourcing. In case, further funds are needed in this regard, requisition should immediately be sent to the DIT (Expenditure Budget) under DG(Logistics). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants all action in this regard to be completed by the end of this month. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/itsec_123_2012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DIT HRD F. No.HRD/CMD/123/2/2011-12/23., Dated: November 23, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Motihari Customs Seizes Narcotics. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HAVE</strong> you heard of Motihari? Most probably, no. It is a small district headquarters in Bihar on the border of Nepal. This is the place where the famous author of <strong>Animal Farm </strong>and<strong> Nineteen Eighty Four</strong>, George Orwell was born in 1903. His father worked in the Opium Department there. Opium still seems to be the in thing in Motihari. There is a Customs Division in Motihari headed by a fresh IRS officer, Dr. Shashank Yadav, who with boring regularity books Narcotics cases. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On Saturday, he and his officers after a hot chase detained a mini truck with 700 kgs of cannabis valued at Rs. 14 lakhs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Patna Customs Preventive Commissionerate is headed by Kishori Lal who has a couple of ‘<em>just-out-of-NACEN-IRS officers</em>' who are keen on busting all smuggling of drugs in the Indo Nepal Border.</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"> - Tuesday'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">Garments stitched from fabric given by customers - No duty payable: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RESPONDENTS</strong> are engaged in the manufacture of readymade garments falling under the "Chapter Heading 6201" of the First Schedule of the Central Excise Tariff Act, 1985. The respondents are also engaged in stitching garments out of fabric bought by customers from their shop or brought by the customers from outside. In connection to the latter activity, it is a matter of record that in all such instances, the fabric is given by the individual customer. On the garments so stitched by the respondents, it affixes the label "Specially Tailored By Diwan Saheb Designs for Men". In cases where the fabric is bought from the respondents only, the stitching takes places after the "sale" of the fabric. Moreover, it is not compulsory for the customer to get the fabric stitched from the respondents. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, the dispute pertains to whether the tailoring activity of the respondents, in cases where the fabric is given by the customer, either after being bought from the respondents, or from outside, is liable to excise duty. </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 assesse is liable to TDS on salary, including perquisites, but fails to do do because of HC interim order, which was later vacated on basis of SC decision, assessee for period when interim order was in force, can be deemed to be assessee in default - NO: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether when the assesse is liable to deduct tax at source on salary, including the perquisites as per Rule 3, but fails to do do because of an interim order passed by the High Court, which is later vacated on the basis of the Apex Court decision, the assessee for the period when interim order was in force, can be deemed to be an assessee in default and Whether while vacating the interim order the HC allows three months period for compliance of the provisions of the I-T Act, the assessee is to be held to be in default and is also liable to pay interest from such a date as allowed while dismissing the writ. </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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import
- Seizure of Imported goods on account of mis-declaration and mis-classification
- Show cause notice for extension of seizure period - Show Cause Notice
under Section 110(2) of the Customs Act, 1962 is not mere formality, but
statutory right to oppose decision for extension of time - Hurriedly passed
ex parte order is set aside - HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 110(2) of the Customs Act, 1962, where any goods are seized under Section 110(1) and no notice is issued under Section 124(a) within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. However, as per the proviso to sub-section (2) of Section 110, on sufficient cause being shown, the period can be extended by the Commissioner of Customs for a period not exceeding six months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The goods imported by the Petitioner were seized under Section 110(1) on the allegations of mis-declaration and mis-classification of goods. The period of six months was to expire on 29.02.2012. Department issued a notice to the petitioner on 21.02.2012 calling upon the petitioner to show cause as to why the period be not extended by six months and to give an opportunity of hearing to petitioner it was directed to appear before the authorities on 24.02.2012. </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>
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