TIOL-DDT 2091 · 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2091 </font><br> 25.04.2013 <br> Thursday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">70% Chance of GST Getting through before 2014; Not in the race for PM - FM </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADDRESSING</strong> the Economist 's India Summit yesterday, the Finance Minister Chidambaram said that there was 70 per cent chance for the important tax reform of GST to take place in the next 13 months. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“We have reached a stage when the empowered committee has authorised us to draft it. If these drafts are endorsed by the committee, then the percentage of possibility of GST will increase,'' he said. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FM said that the fiscal reforms will continue and there would be no early elections. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FM SPEAK:</strong> We are determined to go back to the path of fiscal consolidation. We have laid out a new path and I have said these are red lines. These will never, never be breached. Going forward, in 2013-14, the fiscal deficit will be contained below 4.8 per cent of the GDP. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAD (Current Account Deficit)is indeed high and is more worrying than the fiscal deficit. In 2012-13, CAD is expected to be USD90-94 billion. The satisfying aspect of this is that we have financed it completely without drawing down our reserves. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will continue to take small significant steps. We will also take forward some big ideas. India's economy will continue to reform. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">People talk about elections. They say have you not heard the bugle of election? I have not heard it. It is 13 months away. I believe the Government has to work every day until the last day of its term that is precisely what the Government will do. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No to PM:</strong> I have no such expectations. I have no such aspiration and I believe that in the few years that remain to me, I want to do few other things, like travel; I did not have enough opportunity to work at party level, except for a brief period when I was General Secretary of State Congress party. I want to prove that I can also do party work. I will love to do party work, but I would do whatever the party asks me to do. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tax Caravan Moves ahead… 14th Year of TIOL</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YOUR</strong> Taxindiaonline.com turned <strong>thirteen</strong> yesterday and has entered the <strong>fourteenth</strong> year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WE have come a long way from where we began but one thing has remained and will remain unchanged - our tag line - <em>the one stop destination for taxman and taxpayer</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ANNIVERSARY is a day, not only to count our achievements but also to generate more benchmarks to realize in the future. Today is the day when we learn from our past to brighten our future. While entering the fourteenth year of indefatigable journey on the roads of value added journalism, TIOL takes upon itself the onus of, not only fulfilling the expectations of our netizens but also enhancing them so as to add more milestones to our large portfolio of services. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, our site - the one stop destination for international taxation, <a href="http://www.taxindiainternational.com"><strong>www.taxindiainternational.com</strong> </a>is also three years old. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We thank you all for your valuable support and are confident that the same would continue to pour in in the years to come. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST-3 Return Date Extended </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17536" target="_blank">DDT 2088</a></strong> we had asked - <font color="#FF6633"><strong>ST-3 for October, 2012 to March, 2013 - Last date a week away? Will the Board extend?</strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Looking at the blinking ticker on the <strong>ACES</strong> website, we had guessed that the kind Board would be glad to alleviate the fears of the assessees by extending this date, which was today i.e 25th April, 2013 for the simple reason that they had yet to set their house in order to collect the returns for the earlier period July, 2012 to September, 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are happy to inform that the Board has extended the date for submission of Form ST-3 returns for the period from 1st October, 2012 to 31st March, 2013 from 25th April, 2013 to <strong>31st August, 2013</strong>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The reason offered is "<em>The Form ST-3, for the period from 1st October 2012 to 31st March 2013, is expected to be available on ACES <strong>around</strong> 31st of July, 2013</em>". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Extensions have become the order of the day when it comes to filing tax returns in the country. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An assessee called us and said - <em>if the Board after spending crores of public money for ACES is not able to get the forms ready on time, it would be prudent to allow the assessees to file ST-3 returns in the manual format and pay the taxes online and be done with it. After all, there is no justification in delaying these issues to such an extent. Surprising that in this age of technology it takes more than three months to devise a workable ST-3 form. </em></font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> shares the assessee's concern. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2013/order_13_03.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Order No. 03/2013-Service Tax, Dated: April 23, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New ST-3 Returns - Along with existing deficiencies further complications added </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> received a mail from <strong><em>Ankit Somaiya</em></strong> who has been closely following the new ST-3 return format. This is what he has to say - </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">New ST-3 return format has been introduced for the period July, 2012 onwards, vide notification number 01/2013-Service Tax dated February 22, 2013. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This new format was introduced to incorporate the various details required as per the changed service tax provision w.e.f. July 1, 2012 viz. partial reverse charge, negative list, effects of Place of Provision of Services Rules, 2012, etc. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the deficiencies of the old format remain unanswered and in addition few more are added to make return filing an arduous task. Some of them are highlighted below - </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>A. Existing deficiencies which are still unaddressed in the new format: </em></font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In the CENVAT section, the table requires mentioning whether the assessee is providing any exempted or non-taxable services. Further to which the assessee is required to answer, as to which option has availed under the Rule 6 of the CENVAT Credit Rules, 2004 to comply with their obligation under the said rule. However, to disclose the option selected, the table only provides the option of “separate books” and the options as specified under “Rule 6 (3)”. <strong>The option of Rule 6 (3B) is still not included in the new ST3 format.</strong> </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In the new format, three separate tables are provided to show the details of CENVAT credit availed, reversed and utilised in respect of Service Tax, Education Cess and SHE Cess. However, the space to disclose the reversal or payments under Rule 6 (3) has been provided only in the table of CENVAT of Service Tax and the same has not been provided in the table of Education Cess and Sec. & Higher Education Cess. Thus, the reversal or payments under Rule 6 (3) against the CENVAT credit availed of Education Cess and Sec. & Higher Education Cess can be shown only in the space of <strong>'for any other payments/adjustments/reversals (please specify)'</strong>. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Also, there is no space in either of the tables relating to CENVAT on Service Tax, Education Cess and Sec. & Higher Education Cess, providing for the disclosure of CENVAT reversed under Rule 6 (3B) of CENVAT Credit Rules, 2004. Thus, in such case the reversal under Rule 6 (3B) may be disclosed in the space of '<strong>for any other payments/adjustments/reversals (please specify)'</strong> containing the narration as <strong><u>'Reversal under Rule 6 (3B) of CENVAT Credit Rules, 2004'</u></strong>. </font></em></p> </blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">B. Further complications in the new format and utility checks: </font></em></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The notification specifying the services and their percentage of service tax payable by the service provider and service receiver respectively has been issued under section 68 (2) and not under section 93 of the statutory provisions, thus the same is not an exemption notification. However, the same has been provided under the list of exemption notifications. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. As discussed earlier that there is no option provided to disclose that the assessee is required to reverse the CENVAT under Rule 6(3B). In such case, the assessee can check ‘YES' only in the option ‘Whether providing any exempted service or non-taxable service' and the rest of the options have to be left indicating as ‘NO' as the assessee is not falling under any of those options. But the checks stipulated in the new utility does not allow validating and submission of the return if any one of the option viz. separate books or the options available Rule 6 (3) is filled ‘NO'. Thus, selecting any of the options in the said table would be a wrong disclosure but the assessee has no option and have to check ‘YES' in any one of the options so as to be able to file the return. </font></em></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong>is certain that the ACES Service Desk is reading this and would make amends soon. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Strange case - any charge of violating Customs Act would arise only when somebody files a B/E for import of goods - CC to issue instructions to field formations </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> case relates to an alleged fraudulent import of Sodium Sulphate. Since the documents accompanying the consignment showed the appellant as the consignee, action was initiated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate of Revenue Intelligence questioned the ‘appellant'. In his statement, the appellant said that they had not imported the consignment; they had not filed any bill of entry; that although they had initially consented to import the goods, they changed their mind and informed the foreign supplier in writing that they did not want it; they also did not have any IEC code at that point of time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nevertheless, a show-cause notice was issued to the appellant proposing to impose penalties for lending their IEC code to somebody else. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Someone had to be crucified, it appears, and so the appellant was imposed with a penalty of Rs.6 lakhs. Neither the adjudicating authority nor the lower appellate authority was ready to listen to the appellant's plea that they had not filed any documents (B/E) in respect of the alleged consignment or had claimed themselves to be the importer of the goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant narrated the facts and the Bench observed - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399">"6.1 We find that the issue involved in the present case is very strange one. Any charge of violating the provisions of Customs Act would arise only when somebody files a bill of entry for import of the goods and claims himself to be the importer. In the present case as is evidenced from the records no bill of entry has been filed and, therefore, violating the provisions of Section 111(m) of Customs Act would not arise at all. Secondly, the appellant did not have the IEC code at the time of importation; therefore, lending of IEC code to anyone else also would not arise. Consequently, there cannot be any violation of Rules 7 & 11 of the Foreign Trade (Regulations) Rules attracting the provisions of section 111(d) of the Customs Act. </font></em></font></p> <p align="justify"><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.2 We do not understand how in such a scenario can the customs authorities proceed against the appellant and impose penalty when no cause of action has arisen. The said action is clearly unsustainable in law. Accordingly, we set aside the impugned order imposing penalty on the appellant."</font></em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After allowing the appeal, the Bench wanted something more to be done in the matter. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT, therefore, marked a copy to the Chief Commissioner of Customs, Mumbai for issue of necessary directions to the field formations so that such instances are not repeated in <em><strong>future.</strong></em></font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> will try to carry a copy of those 'directions' if and when issued.</font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc4Nzc=" target="_blank"><font size="1">2013-TIOL-648-CESTAT-MUM </font></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"> – 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">Free Phones to Employees - Bharti Airtel directed to deposit Rs. 80 Crores out of a demand of Rs. 119 Crores - Stay granted up to 3.12.2013 or disposal whichever is earlier: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant as a provider of "telecom service" had made available of such service (mobile phone, fixed line and broad band service as well as fixed wireless phone (FWP) connection) free of cost to its employees as well as their family members and employees of Bharti Group Companies during the period October, 2004 to September 2009 under "Bharti Airtel Limited Employees Phone Policy" The Commissioner confirmed a service tax demand of Rs.1,18,70,19,472/- under section 73 of the Act, penalty of Rs. 125,00,00,000/- under Section 78 of the said Act followed by interest under section 75 as well as penalty under section 76 & 77. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bharti Airtel is in appeal before the Tribunal in appeal and also Stay Application. Keeping in view that Revenue was deprived of realising its legitimate dues and the questionable modus operandi followed by the appellant as well as irreparable injury caused to Revenue, as an interim measure the appellant is directed to deposit Rs. 80.00 (eighty) crores only within a period of four weeks. Subject to above compliance, realisation of balance tax demand of Rs.38.70 crores (Rupees thirty eight crores seventy lakhs approximately), penalty of Rs. 125.00 (Rupees one hundred twenty five crores) and interest on the service tax demand shall be stayed during pendency of the appeal or till 3.12.2013 whichever date is earlier. </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 Education Cess paid by assessee can be treated as revenue expenditure - NO, it is a part of tax liability: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> questions before the Bench are - Whether for invoking the provisions of section 14A read with rule 8D a proximate connection between the expenditure incurred and income earned is sine-qua-non; Whether burden of proving the proximate nexus between the exempt income and expenditure incurred is on Revenue; Whether any disallowance under section 14A can be made without proving the proximate nexus; Whether expenses which are not directly related to the exempt income can be disallowed merely because rule 8D permits to do so; Whether for invoking the provisions of rule 8D the “satisfaction” of the AO about the inaccuracy of accounts and also to correctness of expenses <em>suo-motto</em> disallowed is a condition precedent; Whether Revenue can sit in the arm chair of a businessmen and decide what expense is necessary; Whether once it is proved that an expense is <em>bonafide</em> and has been incurred wholly and exclusively for the purpose of business any disallowance can be made by checking the necessity of the expense; Whether necessity behind an expense is an alien if the expense is incurred in the interest of business; Whether any disallowance under section 40(a)(ia) can be made on account of payment of commission to foreign residents and Whether education cess is revenue expense. And the verdict partly goes in favour of the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">VAT </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Dispensing of medicines by doctors not sale; no tax: Tribunal </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> transactions effected by the appellant so far as dispensation of medicine is not a transaction of sale: As held in BSNL case, the dominant nature being rendering of medical services, the transaction cannot be split into service and goods components. The transactions in question does not fit under any of the sub-clauses of Article 366 (29-A). By applying the dominant nature test as well as the transaction nature it is decided that the dispensing of medicine by the doctors during the course of integrated package treatment cannot be considered as sale for the purpose of the Act. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Friday for the judgements </font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Friday 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>