TIOL-DDT 2111 · 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 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><font color="#663399" size="3">TIOL-DDT 2111 </font><br> 23.05.2013 <br> Thursday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST </font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">& Cart before the bullock story </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YOU</strong> may have heard about the idiom ‘putting the cart before the horse'. That's old now. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the entry of the new category of service viz. "supply of tangible goods for use", the "horse" in the idiom may probably be required to be replaced by the "bullock". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Confused?................read further.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the case of <em>Sahakar Maharshi Shankarrao Mohite Patil SSK Ltd. vs. CCE, Pune-III</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2012/2012-TIOL-1381-CESTAT-MUM.htm" target="_blank"><font size="1">(2012-TIOL-1381-CESTAT-MUM)</font></a></strong>, the Bench had observed thus - </font></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"6. The issue is whether giving bullock-carts on consideration amounts to supply of tangible goods service. As per the definition of tangible goods service it includes machinery, equipment and appliances. Bullock-carts prima facie cannot be considered as machinery, equipment or appliances. In view of this, the applicants have made out a case for total waiver for hearing of the appeal." </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the CESTAT had allowed the Stay petitions but not before noting that since the Commissioner(A) had not decided the case on merits, the matter was required to be remanded and it was ordered accordingly. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">We do not know what the factual position was - i.e whether the "bullock-carts" were without the bullocks or otherwise. In fact, if it had been without "bullocks", Revenue would not have used the word "bullock-carts" but only "carts".But did the Revenue officials see the bullocks or the carts or both? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Be that as it may, in the present case, it is alleged that the appellant rented out "bullock carts" to the farmers for transportation of the sugar cane to the appellant's factory. The department, therefore, took the view that the said activity is liable to Service Tax under the category of ‘Supply of Tangible Goods for Use' and accordingly confirmed a Service Tax demand of Rs.1,32,117/- during the period 16.05.2008 to 31.12.2009 along with interest thereon and also imposed penalties. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant preferred an appeal before the lower appellate authority who dismissed the appeal thereby giving credence to the Revenue allegation that the <em><strong>bullocks led from the front.</strong></em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, the appellant submitted that they have supplied <strong><u>only carts</u>. It is further submitted that neither did they supply bullocks to the farmers nor did they provide any person to ride the cart and,</strong> therefore, the effective control and possession does not lie with the appellant and, therefore, renting of bullock carts [probably the right term may be carts for bullocks] will not come under the purview of said services. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal decision cited above was also relied upon. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative obviously had not seen either the bullock or the cart so he chose to reiterate the findings of the lower authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed - </font></p> <blockquote> <p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"5.1 As per section 65(105)(zzzzj) of the Finance Act, 1994, "Taxable Services" means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipments and appliances for use, without transferring the right of possession and effective control of such machinery, equipments and appliances'. In other words, <strong>the right of possession and effective control over the goods should remain with the service provider</strong>. When the bullock carts are supplied without the bullocks, the possession and control over the cart does not lie with the service provider. Therefore, mere activity of renting of bullock cart does not come within the purview of ‘Supply of Tangible Goods for use Service'." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fine, the appeals were allowed. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODgzMTY=" target="_blank"><font size="1" face="Verdana, Arial, Helvetica, sans-serif">2013-TIOL-775-CESTAT-MUM </font></a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">De-oiled soya extracts & oil cake/oil cake meals exempted </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VIDE </strong>an entry 104A in Notification 12/2012-Cus dated 17th March, 2012, de-oiled soya extract & oil cake/oil cake meal of Groundnut, sunflower, canola, mustard were subjected to Nil rate of customs duty. As per proviso clause (ba) to the notification, this exemption was not available on or after the first day of April, 2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, on the 21st May, 2013, the Central Government has "for the very same goods" carved a new entry 104B granting Nil rate of duty and also mentioned by addition of a new proviso clause (bb) that the exemption shall not apply on or after the first day of October, 2013. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">So, this would mean that the said items were not exempted for the period from 1 st April, 2013 to 20th May, 2013. Intentional or otherwise, we will know! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2013/ctariff13_030.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 30/2013-Cus, Dated: May 21, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ACES - SOS</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> yesterday's <strong>DDT</strong>, we reported, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">A worried assessee mailed us this: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em>Still I am unable to view the status of ST-3 return for the period from July, 2012 to Sept., 2012 uploaded on 5.4.2013. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">When I click 'view status' it does not work. No status is indicated. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Can you guide me? </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Will the <strong>ACES </strong>guide him? </font></p> <p align="justify"><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">They did. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Immediately after <strong>DDT</strong> was uploaded, we got a call from ACES - from the office of the ADG, Systems. The ADG's office also contacted the assessee and sorted out his problem. The grateful assessee has expressed his gratitude to the ADG Systems Office. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a thrilling experience - a Government office reacting and resolving an issue promptly - We in TIOL are also grateful to the office of ADG Systems. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Initiative - Booklet on Appellate Procedures </font></strong></p> <p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Appeals-Procedures-for-filing-Appeals-(TPI-42).jpg" alt="" width="200" height="315" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TAXPAYERS</strong>, particularly small taxpayers, are still not very well aware of the course of action available to them in case they do not agree with the decisions of the Income Tax Authorities. The book is the first endeavour of the Income Tax Department to educate the taxpayers about the appellate proceedings under the Income Tax Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Right to appeal under the Income Tax Law is a creation of statute and is not an inherent right. Appeal can be filed only against orders listed in the Income Tax Act. Income Tax liability is determined at the level of Assessing Officer. When a taxpayer is adversely affected by orders as passed by the Assessing Officer, he can file an appeal before the Commissioner of Income Tax (Appeals) having jurisdiction over the tax payer. Income Tax Appellate Tribunal is the second appellate channel available for the taxpayers. On substantial questions of law, further appeal can be filed before the High Court and Special Leave Petition can be filed before the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This booklet has been brought out for the first time under the Tax Payers Information Series. It is an attempt to educate the taxpayers about the provision and procedures relating to Filing the Appeals. The booklet lists out the Forms in which Appeals can be filed, how to fill the same, who will sign the Form, authority with whom appeals should be filed, language to be used in the Forms and fees to be paid etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The book is authored by Rajat Bansal, CIT-III, Baroda. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/cbdt_initiative.pdf">The book </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Holy grail of Tax avoidance - Ireland, a Tax Haven? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> apple a day keeps the doctor away, says an old proverb. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can keep everyone away but not a Taxman and that is precisely what the American multinational corporation learnt recently. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to a report issued on Monday by the US Senate Permanent Subcommittee on Investigations, Apple is holding almost USD102bn of its USD145bn in cash overseas. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The report estimates that the California-based company avoided at least USD3.5bn in US federal taxes in 2011 and USD9bn in 2012 by using the strategy. It paid USD2.5bn in federal taxes in 2011 and USD6bn in 2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apple uses five companies located in Ireland to carry out its tax strategy, according to the report. While all five companies were incorporated in Ireland, only two also have tax residency in that country, allowing three companies to not be required legally to pay taxes in Ireland. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The report says Apple capitalises on a difference between US and Irish rules regarding tax residency. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Ireland, a company must be managed and controlled in the country to be a tax resident. Under US law, a company is a tax resident of the country in which it was established. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apple has so far denied claims of tax evasion in its testimony saying that the current legislation <em>"has not kept pace with the advent of the digital age and the rapidly changing global economy."</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tech giant argued that as 61 percent of the company's revenue last year came from international sales, foreign funds are needed for expansion, promotion and competition. It also added that the US system claims too much from the business - 35 percent of the income, hence the company has to keep much of its funds abroad. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ireland's deputy Prime Minister said that the country is not to blame for the low rate of tax paid by Apple. He added - "They are issues that arise from the taxation systems in other jurisdictions and that is an issue that has to be addressed first of all in those jurisdictions." </font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sound bites for our Politicians to chew upon! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cricket - Fixing! </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME</strong> eight years ago I had gone to a hotel to interview a cricket umpire. There were a few college boys talking to the umpire. After sometime, the boys asked the umpire if he could take them to Sachin Tendulkar and Dhoni who were staying in the same hotel. The umpire said it was not proper on his part to meet the players and the vigilance wing of the Board would not like it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the umpire was a Central Excise Superintendent! </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see <a href="http://www.taxindiaonline.com/RC2/print_story.php?newsid=2889"><strong>India's top cricket umpire is a Central Excise officer </strong></a></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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">How review by Committee of Chief Commissioners/Commissioners should not be done - CESTAT holds mere appending the signatures in note sheet is not review - Rejects revenue appeal on this preliminary ground.</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH </strong>the lofty objective of improving the quality of review by the department, the concept of review of the orders by the Committee of Commissioners or Committee of Chief Commissioners as the case may be was introduced. But in practice, the review is done by the Inspector / Superintendent of review Section and the next process is only appending the signatures by the next level officers. The Committees do not sit nor deliberate the issues.In this appeal by department, the respondent raised a preliminary objection about the review order and the Tribunal called for the file. </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 specialises in transforming raw food materials into therapeutic food by adopting customised processes, it cannot be denied Sec 80IB benefits - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>assessee is a partnership firm which is registered as a Small Scale Industry. The assessee was exclusive suppliers of food packets for the "mid day meal scheme" of the Government. For this purpose, it was converting raw food material into therapeutic food in packets. The assessee claimed deduction u/s 80IB. The AO disallowed the entire claim of deduction u/s 80IB after detailed discussion. The CIT(A) too rejected the assessee's claim on the reasoning that the list of ingredients submitted by the appellant as raw materials & final product did not indicate that any new product had come into existence. Different food items (raw materials) had been merely ground & mixed together, the chemical composition had not changed intrinsically. The constituents of the final product were separate. The issues before the Bench are - Whether when the assessee specialises in transforming raw food materials into therapeutic food by adopting customised processes, it cannot be denied Sec 80IB benefits and Whether the computation of deduction u/s 80IB as made by the assessee is erroneous when the assessee has removed the interest paid on partners capital which has resulted into enhancement of profit. 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">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellant undertook activity of registration of car on behalf of the buyers with RTO authorities - for this purpose they collected amounts from buyers for payment of various statutory dues - on ‘excess' amounts collected demand is made of ST under category of ‘BSS' - when a customer purchases a car from dealer and services are rendered in relation thereto, it cannot be said that services have been rendered in relation to business or commerce - <em>prima facie</em> demand under ‘BSS' is not sustainable in law - Stay granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MY</strong> Car Pune Pvt. Ltd. is an authorized Maruti Suzuki car dealer in Pune. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the motorcar is to be registered prior to delivery of the same, they undertook the activity of registration of the car on behalf of the buyers with the RTO authorities. They collected amounts from buyers for this purpose, which are used for payment of the various statutory dues and sometimes they have collected excess amount. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department is of the view that the amount collected in excess is liable to Service Tax under the category of ‘Business Support Services'. Accordingly, a notice was issued and after due process of law, a demand of Service Tax of Rs.3,27,406/- was confirmed for the period January, 2010 to February, 2011 along with interest thereon and also imposing penalties. </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><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>