TIOL-DDT 2093 · the untouched capture
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<p><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" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2093 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
29.04.2013 <br>
Monday </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No ST on Chit Fund business</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Delhi High Court has quashed Entry against Sr. no. 8 of Notification 26/2012-ST which sought to levy service tax on chit-fund business, saying the act of a foreman, who conducts auction of chit amount among contributors, does not fall under the definition of "service" provided in the Finance Act, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Read the order for the drafting tips & placing of the Explanation described in the following words </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It is the function of an Explanation to explain the meaning and effect of the main provision to which it is an Explanation and to clear up any doubt or ambiguity in it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Explanation, therefore, seems to offer a clue to the problem which appears to us to be a creation of the very confounding manner in which the definition is found to have been drafted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If these rules of interpretation are applied, it appears that even if it is assumed that there is an ambiguity or doubt in the interpretation of the exclusionary part of the definition of the word "service" and as to what types of activities in relation to a transaction or money or actionable claim are exempted from the levy of service tax, that doubt or ambiguity gets cleared up on a careful examination of the implications of the Explanation 2. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this order today. <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17619" target="_blank">See Breaking News</a></strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17619">. </a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cheat Funds? No ST? Going the Renting way? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICE</strong> Tax on Chit Funds was introduced by a backdoor method with a Circular No. 96/7/2007-ST, dated, 23.08. 2007, wherein the Board thought that Chits are covered under “banking and other financial services”.This Circular was quashed by the AP High Court in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-502-HC-AP-ST.htm" target="_blank"><font size="1">2008-TIOL-502-HC-AP-ST</font></a></strong>. Revenue has taken this to the Supreme Court where it is pending. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7364" target="_blank"><font size="1">DDT- 875 29.05.2008</font></a></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Come 2012 and the Babu has failed again in drafting law. The Education Guide on Service Tax does not really educate, but only tells what the Babu wanted the law to be. Para 2.8.2 of the Education Guide reads: </font></p>
<blockquote>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.8.2 Would a business chit fund come under 'transaction only in money'? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In business chit fund since certain commission received from members is retained by the promoters as consideration for providing services in relation to the chit fund it is not a transaction only in money. The consideration received for such services is therefore chargeable to service tax. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, the Delhi High Court thought otherwise. While disposing of the Writ Petitions filed by Delhi Chit Fund Association, the High Court held that - <em>In a chit business, the subscription is tendered in any one of the forms of 'money' as defined in section 65B(33). It would, therefore, be a transaction in money. So considered, the transaction would fall within the exclusionary part of the definition of the word 'service' as being merely a transaction in money. This would be the result if the argument that the exclusionary part of the definition in clause (a) is considered to have been enacted ex abundant cautela; if the argument based on Explanation 2 read with the exclusionary part of the definition is accepted as correct, <strong>even then the services rendered by the foreman of the chit business for which a separate consideration is charged, not being an activity of the nature explained in the said Explanation, would be out of the clutches of the definition</strong>. Either way, there can be no levy of service tax on the footing that the services of a foreman of a chit business constitute a taxable service. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As usual, the department will take the matter to Supreme Court and notwithstanding that,<font color="#FF0000"> the next Budget may see a retrospective amendment to clause (a)(iii) to Section 65B(44) as under : </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) an activity which constitutes merely, - </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) a transaction in money or actionable claim; </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#00FF00"><strong><u>Other than the transactions in a Chit Fund</u>.</strong></font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board can consider this even in this year's Finance Act they have about ten days' time. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - Now Sushil Modi Wants amendment to Section 40 Scrapped </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>existing provisions of section 40 specifies the amounts which shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”. The non-deductible expense under the said section also includes statutory dues like fringe benefit tax, income-tax, wealth-tax, etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Disputes have arisen in respect of income-tax assessment of some State Government undertakings as to whether any sum paid by way of privilege fee, license fee, royalty, etc. levied or charged by the State Government exclusively on its undertakings are deductible or not for the purposes of computation of income of such undertakings. In some cases, orders have been issued to the effect that surplus arising to such undertakings shall vest with the State Government. As a result it has been claimed that such income by way of surplus is not subject to tax. It is a settled law that State Government undertakings are separate legal entities than the State and are liable to income-tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>In order to protect the tax base of State Government undertakings</strong> <em>vis-à-vis</em> exclusive levy of fee, charge, etc. or appropriation of amount by the State Governments from its undertakings, the Finance Bill 2013 proposes to amend section 40 of the Income-tax Act to provide that any amount paid by way of fee, charge, etc., which is levied exclusively on, or any amount appropriated, directly or indirectly, from a State Government undertaking, by the State Government, shall not be allowed as deduction for the purposes of computation of income of such undertakings under the head “Profits and gains of business or profession”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Bill 2013 defines the expression “State Government Undertaking” for this purpose. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This amendment, after enactment, will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some State Governments are obviously not happy with this situation. As usual it was Amma Jayalalithaa who raised the first voice of dissent. In a letter to the Prime Minister (she hardly recognises the Finance Minister), she wrote, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"I am dismayed to find that the Finance Bill 2013, introduced in the Lok Sabha along with the Union Budget for 2013-14, contains an extremely retrograde, anti-federal provision in Clause 7 of the Bill. This clause seeks to amend section 40 of the Income Tax Act and make any levy by a State Government by way of privilege fee, license fee, royalty etc., on State Public Sector Undertakings not deductible for the purpose of computation of income. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">States have the powers to levy such fees, royalties etc. under Article 265 of the Constitution read with the relevant entries in List 2 of the Seventh Schedule. All such levies are legitimate statutory levies and as such were deductible from the income of the State Public Sector Undertakings under Section 37 of the Income Tax Act. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clause 7 of the Finance Bill 2013, now seeks to make such statutory levies non-deductible from the income of State Public Sector Undertakings and thereby intends to boost the income of the Central Government at the cost of legitimate tax and non-tax revenue of the State Governments. This amounts to an indirect taxation of the income of State Governments and hence is violative of the spirit of Article 289 of the Constitution which exempts the property and income of a State from Union taxation. This provision is also discriminatory because this only subjects State PSUs to such non-deduction of State Government levies but not Central Public Sector Undertakings. Further, the clause as presently worded also gives very wide discretion to Income Tax Authorities to determine which levies will not be permitted for deduction and these powers can be exercised in an arbitrary manner which will lead to needless litigation. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I am disappointed to note that the Ministry of Finance, <strong>instead of focusing on curbing tax evasion by a large number of private persons and increasing the tax base by such means, is attempting to act against the Constitutional scheme of distribution of taxation powers between the Centre and the States and to distort the federal polity of the country</strong>. The legitimate expenditure on statutory levies of State Public Sector Undertakings which declare their incomes openly and are subject to audit by the Comptroller and Auditor General of India and whose annual reports are subject to scrutiny by State Legislatures is sought to be disallowed. Clearly this provision is ill-conceived and misguided and has no place in a federal polity like ours. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would, therefore, earnestly urge you to kindly ensure that an official amendment is moved to delete Clause 7 of the Finance Bill 2013 before the Finance Bill is enacted into Law in Parliament." </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Bihar finance Minister Sushil Modi who is also Chairman of Empowered Committee of State Finance Ministers on GST has in a letter to the Finance Minister wants the provisions scrapped. Modi says in his letter, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The proposed amendment amounts to imposition of tax on State Government's income and therefore violates Article 289 of the Constitution of India. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You are aware that States are already agitated by some of the actions or inactions of the central government on the issue of compensation of introduction of Value Added Tax (VAT). The proposed move will further erode the confidence of the state governments and delays the introduction of GST . </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A great opportunity for the FM to yield to Amma and Modi! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST-3 for July to September, 2012 Last date is 30th April, 2013 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR </strong>the past two days newspapers are splashed with advertisements by the CBEC inviting the attention of the Service Tax assessees with the caption "<strong>Hurry! Or you will worry!"</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The advertisement mentions '<em>For your<strong> convenience,</strong> last date to e-file Service Tax Return for the period 1st July, 2012 to 30th September, 2012 has been extended to 30th April, 2013' and also warns that 'Late filing of return would attract penalty'</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessees very well know whose '<font color="#FF0000"><strong>convenience'</strong></font> the department is referring to. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After those two orders dated 06/03/2013 & 12/04/2013, it seems that there are ‘<strong><em>no circumstances of special nature</em></strong>' existing this time around and, therefore, it would be in the interest of all <em><strong>concerned</strong></em> to file their returns by the deadline. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many assessees are still complaining that they are not able to get a positive “accepted” response from ACES. What will happen if the returns filed till 30 April are rejected? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - Tariff Value of Gold climbs </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> hitting a low, <strong>Gold</strong> prices moved ahead on sustained buying by stockists and retailers for the ongoing marriage season. Silver lacks demand and the prices infact seem to dip further. So, the Central government while retaining the Tariff values of various Palm oils, Palmolein, Brass Scrap & Poppy seeds & even Silver allowed that of Gold to climb. AIU staff at Airports would once again become busy. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It now stands at </font></p>
<table border="1" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S. No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter/ heading/ sub-heading/tariff item </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value (USD) <br>
Earlier </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value (USD) <br>
Now </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) </font></strong></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">71 or 98 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Gold, in any form, in respect of which the benefit of entries at serial number 321 and 323 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">449 per 10 grams </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">472</font></strong> per 10 grams </font></p></td>
</tr>
</table>
<p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_050.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification 50/2013-Cus (N.T) dated 26th April, 2013</strong></font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Common Adjudicating Authority appointed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Central Board of Excise & Customs has appointed the Additional/Joint Commissioner of Customs (Preventive), Mumbai and the Additional/Joint Commissioner of Customs (R&I), Mumbai to act as a common adjudicating authority in respect of 60 show-cause notices issued by the Additional Director, DRI/MZU, Mumbai. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, some of these show-cause notices are more than three years old and were languishing in the dusty files. And by the time these notifications reach the officers <em><strong>concerned</strong></em> and the adjudication process commences, it will be another couple of months. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Only shows how<em><strong> concerned</strong></em> the Revenue department is! </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_048.htm" target="_blank">Notification 48/2013-Cus (NT)</a> & <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_049.htm" target="_blank">49/2013-Cus (NT), both dated 25th April, 2013</a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Draconian Circular 967 Department refrained from initiating recovery proceedings </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IT seems the lull is over. In the first week of April, 2013, the Karnataka High Court, in three cases,refrained the department from initiating recovery proceedings until such time the appellate authority passed an order on the interlocutory applications filed by the petitioners in the matter of the pending appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bombay High Court decision in <em>Larsen and Toubro Vs. Union of India and Others<font size="1"><strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2013/2013-TIOL-99-HC-MUM-CX.htm">(2013-TIOL-99-HC-MUM-CX)</a></strong></font></em> was referred by the Karnataka High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, in one of the cases, the department had attached and recovered nearly thirty lakh rupees from the petitioner's Bank account while the stay application was pending. The petitioner was willing to part with half of that amount as a pre-condition for their appeal being heard by the CESTAT before whom their Stay application and appeal was pending. The High Court agreed and directed the CESTAT to consider the petitioner's Stay application <em><strong>forthwith</strong></em> and the department was directed to refund the balance 50% within a week. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc5MDA=" target="_blank">2013-TIOL-320 -HC-KAR-CX</a></font></strong></font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc5MDE=" target="_blank">2013-TIOL-321 -HC-KAR-CX </a></font></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc5MDI=" target="_blank">2013-TIOL-322 -HC-KAR-CX</a></font> </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">3657 corruption cases in the first quarter of 2013 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROSECUTORS</strong> handled 3,657 corruption cases and 1,481 cases involving dereliction of duty and rights violations during the first quarter of 2013, the Supreme People's Procuratorate (SPP) announced on Saturday. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All these violations had directly infringed upon peoples' interests, according to an SPP statement, which added that 5,102 people as well as a total volume of 540 million yuan (87.5 million U.S. dollars) were involved in the corruption and bribery cases. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first three months saw 2,054 people found culpable of dereliction of duty or rights violations, including five municipal-level cadres. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The SPP statement said it will continue focussing on such cases that have a direct bearing on people's interests, namely cases in such sectors as food and drug safety, agriculture, education, employment, social security, medicine, housing, the environment, safe production, public security and law enforcement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A public<em><strong> procurator</strong></em> is an officer of a state charged with both the investigation and prosecution of crime.The Supreme People's Procuratorate is the highest agency at the national level responsible for both prosecution and investigation. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are referring to the People's Republic of China. </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">Application before Settlement Commission Meaning of "before adjudication" in Section 32 E Application filed by assessee before date of dispatch of order of adjudication is maintainable before Settlement Commission HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> adjudication cannot be regarded as being complete merely upon the signing of an order by the adjudicating authority - If the adjudicating authority were to keep the order in his own drawer without dispatching it to the assessee the latter would have no means of knowing of the making of the order. An order of adjudication must be placed by the adjudicating authority out of his control by dispatching it to the assessee. The Commissioner, without waiting for receipt of the documents of which disclosure was sought and without paying heed to the request of the assessee proceeded to pass an order of adjudication in haste on 13 January 2011. The order was actually dispatched to the assessee on 19 January 2011 when the assessee had already moved a settlement application on 14 January 2011. </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 borrows funds from holding company on interest and participates in tender for land allotment it can be said that it has set up business even if it fails to get land allotted - YES: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is engaged in the business of real estate development, including purchase and sale of land. It was a 100% subsidiary of DLF Ltd. In the return filed, the assessee declared a loss of Rs. 1,17,12,473/- under the head “business” which represented the difference between the interest of Rs. 62,28,333/- received from NGEF Ltd. of Bangalore on the earnest money of Rs. 186 crores deposited with it and the interest of Rs. 1,79,37,534/- paid to DLF Ltd. from whom the assessee had obtained a loan of Rs. 186 crores. Since this was the first year of the existence of the assessee, the AO examined as to when the assessee could be said to have set-up its business within the meaning of section 3. The AO was of the view that since the assessee was not successful in acquiring the land from NGEF Ltd., it cannot be said that the business was set-up in the relevant accounting year. </font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2">Service Tax </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">ST - s. 85 of FA, 1994 - Appellant's son participated in the adjudication proceedings as the Managing Partner of the firm - son receiving o-in-o passed by Jt. Commissioner on 07/02/2009 - son committing suicide on 23/06/2009 - appeal filed by appellant who is the father of the deceased son & a partner in the firm on 05/10/2009 which was dismissed as time barred by Commissioner(A) and order was upheld by CESTAT - knowledge of passing of O-in-O can be attributed to the appellant also who is a partner - therefore, it cannot be said the appellant was not aware of the order - explanation offered is unacceptable - appeal rightly held as time barred - Appeal dismissed: High Court </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> SCN dated 02.01.2008 demanding service tax was issued to the partnership firm M/s Sangameshwar Trading Company . </font></p>
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<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tuesday for the judgements </font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tuesday 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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