TIOL-DDT 2129 · 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 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></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong></font><font color="#663399" size="3">TIOL-DDT 2129</font><br> 18.06.2013<br> Tuesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>'Finance Minister' includes any Minister - </strong></font><font color="#006600"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">'Government of India (Allocation of Business) Rules' not to apply to Parliament</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a recent Writ Petition before the Karnataka High Court, the amendments made to the Special Economic Zones (SEZ) Act, by the Finance Act 2011 was challenged on the ground that as per the Government of India <em>(Allocation of Business) Rules</em>, all matters relating to development, operation and maintenance of special economic zones and units exclusively falls within the domain of Ministry of Commerce, Government of India and the amendments in the Schedule-II to the SEZ Act was beyond its legislative competency. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court was of course not impressed and observed, “<em>Firstly, the Government of India (Allocation of Business) Rules relied on by the petitioners are not applicable to the proceedings and the business of parliament. These Rules are only applicable to the Government of India and not to the Parliament. The proceedings and the business of the parliament is governed by “Rules of Procedure and Conduct of Business in the Lok Sabha ”(for short “Rules of Lok Sabha”). Chapter-I, Rule 2(1) of Rules of Lok Sabha defines “Finance Minister” includes any Minister. Further “Member incharge of the Bill” means the Member who has introduced the Bill and every Minister in the case of Government Bill. “Minister” means a member of the Council of Ministers and includes a member of the Cabinet, a Minister of State, a Deputy Minister or a Parliamentary Secretary. Further the Rules of Lok Sabha provides for Government bill and private members bill. A perusal of the Rules of Lok Sabha do not bar the Finance Minister from moving a bill for amendment to SEZ Act. On the other hand, a reading of the Rules specifies that Finance Minister includes any minister and as such he is competent to move a bill seeking amendment of SEZ Act which comes under the domain of Ministry of Commerce.</em>” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held, “<em>Therefore, the impugned amendment to the SEZ Act passed by the parliament on the Finance Bill introduced by the Finance Minister is well within the legislative competency since the same relates to a charge in the Income Tax Act.</em>” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you the judgement tomorrow. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST - FTP-related amendments with respect to computation of incremental growth </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> the purpose of calculation of export performance or for computation of entitlement under paragraph 3.14.4 or paragraph 3.14.5 of the Foreign Trade Policy, the incremental growth shall be in respect of each exporter [Importer Exporter Code (IEC) holder] without any scope of combining the export for group company or for transferring export performance from any other IEC holder and the incremental growth shall be in terms of freely convertible currency to the designated markets. Further, the categories of exports which are not to be counted for calculation of export performance or for computation of entitlements are also listed out in the amending notifications. The above changes are made in the Notification No. 06/2013 dated 18.04.2013. Yesterday's <strong>DDT</strong> brought to you the amendments made in the Customs and Central Excise Notifications. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2013/stnot13_011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 11/2013-Service Tax, Dated: June 13, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">GST Suffers a Setback at the Centre too </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> Sushil Modi out of the Empowered Committee of State Finance Ministers causing irreparable damage to the GST movement, there is yet another shock at the Centre. The JSTRU-II in CBEC is in charge of co-ordination and we understand that the JS has resigned and the FM has accepted his resignation. It seems the Board is now raising some technical objections about his resignation. Don't they raise objections before the resignation is accepted? They are on the lookout for a new JSTRU for Service Tax any takers? </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Former IAS Officer JD Seelam is new MoS in Finance Ministry </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/seelam.jpg" alt="" width="103" height="136" hspace="5" border="0" align="left"><strong>FORMER</strong> IAS officer of the Karnataka cadre JD Seelam is the new Minister of State in the Finance Ministry. Seelam joined the IPS in 1983 and the IAS in 1984. He resigned from the service in 1999 to join the Congress Party. He lost the 1999 elections to Lok Sabha and was later elected to the Rajya Sabha. At 60, Seelam was the youngest minister inducted yesterday and is a generation (25 years) younger than the 86 year old Sis Ram Ola who was inducted as the Labour Minister. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other MoS in the Finance Ministry Namo Narain Meena is a 1969 batch IPS officer who had a distinguished career in the Police Service and is a recipient of the Police Medal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Seelam is once reported to have remarked, <strong><font color="#FF0000">"the CAG is a watchdog. It is supposed to bark, not bite!" </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is babudom all the way in the Finance Ministry! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Believe me, I believe you…Sudha Sharma, CBDT Chief </font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/CBDT_CP.jpg" alt="" width="159" height="185" hspace="5" border="0" align="left"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Dr</strong>.Sudha Sharma has taken over as the new Chairperson of the Central Board of Direct Taxes and has addressed the members of the Aayakar family through a 521 worded letter titled ‘<em>A Word from Chairperson, CBDT</em>'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While profusely thanking the Finance Minister and calling him the epitome of support for the Cadre restructuring proposal approved by him and which has resulted in creation of 1349 posts in IRS Cadre and 19402 posts in non IRS Cadres, totalling 20751 additional posts in the department, the Chairperson has reminded the members of the family the guiding principles of non-intrusive and non-adversarial tax administration, to be followed in the day-to-day working and to create environment for voluntary compliance, as given by the Finance Minister when he took over charge. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairperson has also asked her ‘family members' to focus on non-filers and stop-filers in order to enhance the tax base and augment tax collection and culled out some statistics - <em>that the tax base is of only about 3.5 crore assesses, which is a mere 2.9% of national population, wherein only 42,800 show annual income over Rs. One Crore, and that is too small for a country like ours! </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Believe me, I believe you and your potential…I want all of you to be ‘thinking' persons, with ingenuity to think ways and means for the development of the Department and the well-being of the nation, are the words of the Chairperson while concluding her address to the family members. </font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT wishes the Chairperson all the best!</font></p> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cbdt_letter_01_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Chairperson's Letter</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Board's Draconian Circular 967 - Madras HC clarifies that Circular is directory and not mandatory </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> bunch of Writ Petitions were filed in the Madras High Court challenging the Board Circular No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular967.htm" target="_blank">967/01/2013-CX</a></strong>, dated 1.1.2013 and the consequential recovery notices although the stay applications were pending before the Commissioner of Customs (Appeals). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court found it relevant to refer to the earlier circulars/instructions that were issued on the subject and rescinded by the present Circular and observed that the Board was of the view that, as a general principle, recovery should be resorted to in cases where no appeal is filed or where there is a failure on the part of the assessee to obtain interim orders and that if appeal and stay/waiver applications are filed, a reasonable time should be given. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court thereafter took note of the provisions of Section 37-B of the CEA, 1944 and s. 151A of the Customs Act, 1962 and noted that the same do not strictosensu apply to the circulars/instructions under challenge but may be covered under rule 31 of the CER, 2002 and the <strong>Circular <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/excircular967.htm" target="_blank">967</a> could, therefore, be at best termed as instructions by the Board. At best it is persuasive in character and consequently, it is directory in nature and not mandatory</strong>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court then adverted to the provisions of s. 35, s. 35C, 35F of the CEA, 1944 and observed that if the circular attempts to defeat the object of Section 35-F of the Central Excise Act and Section 129-E of the Customs Act in whatever manner, it cannot be justified, as it would amount to overreaching the provisions of the respective Acts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Noting that the instruction in Serial Nos.3, 6, 9 and 10 employs the words "if no stay is granted" and "whichever is earlier" and gives the department a right to proceed and take coercive steps after the time limit of 30 days, the High Court held that the same is arbitrary. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taking cognizance of the letter dated 1.11.2012 <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTYyMTY=" target="_blank">(DDT 1975 02 11 2012)</a></strong> addressed to the Hon'ble Finance Minister by the Indirect Taxes Bar Association in the matter of <em>filling up the vacancies in the posts of Member (Judicial) and Member (Technical), in the Chennai Bench (CESTAT), the High Court observed that</em> it is evident that the non consideration of the stay/waiver applications is because of lack of members to constitute the coram for a bench. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court further held - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ it is clear that the present circular/instruction, which though not relatable to Section 37-B of the Central Excise Act, 1944 or Section 151-A of the Customs Act, 1962 can at best be taken as an instruction to the field formations to initiate proceedings for recovery of revenue dues which the assessee or the importer has failed to pay having suffered an order passed by the adjudicating authority and is pending in appeal before the Commissioner (Appeals) or the CESTAT, as the case may be. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ It is not mandatory to effect recovery immediately after 30 days as mentioned, as such an intention is not there in the statute. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ There is no doubt that for recovery of dues payable to the revenue, proceedings can be initiated thirty days after filing of the appeal or any time thereafter and the same cannot be found fault with. But the action of the department in resorting to coercive recovery proceedings at an early date without taking into consideration the pendency of the stay/waiver application before the Commissioner (Appeals) or the Tribunal would necessarily work hardship to the petitioners/assessees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ in the absence of proper functioning of the Tribunal due to non availability of members and when the Commissioner (Appeals) does not provide dates for hearing of the stay/waiver application within the time specified, it is not clear as to how the petitioners/ assessees can be found fault with. The Department cannot, under this circular, take away the substantial right granted under the statue to the petitioners/assessees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ In cases where appeals are filed along with applications for stay/waiver and intimation of the same has been given to the department, the Officers of the respondent/department should not proceed for recovery as a matter of course, unless and until it is found that the petitioners/assessees in the case are deliberately prolonging the issue under one pretext or the other. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ If no order is passed in the stay/waiver application by the Commissioner (Appeals) or the Tribunal for some reason not attributable to the assessee, the authorities shall refrain from initiating coercive action. The circular/instruction stands clarified as above. The assessee is also required to show to the authorities that he is diligent in prosecuting the appeal along with the stay/waiver application. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ The circular/instruction is accordingly clarified to state that while there is a power to initiate recovery proceedings on an erring assessee, the department should refrain from taking coercive steps if due diligence is shown by the assessee in prosecuting the appeal and the stay/waiver application. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODg3MDM=" target="_blank">2013-TIOL-480-HC-MAD-CX </a></font></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">One more Amnesty Scheme </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is reported that the government has announced yet another tax amnesty scheme to waive off additional tax penalties and fines of those who will pay their pending taxes fully by June, 30, 2013 in order to generate additional revenue to reach the revised revenue collection target of the outgoing fiscal year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, this benefit is not available to fraudulent refunds, drawback cases or any other duty/tax fraud where prosecution proceedings have been initiated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It needs mention that the Government had already announced two tax amnesty schemes, one for regularising the non-customs duty paid vehicles and second for textile sector to clear their past sales tax liabilities, to generate additional revenue within ongoing fiscal year to reach the annual tax collection target. See <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc2NTU=" target="_blank">DDT 2096</a></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the <em><strong>third</strong></em> amnesty scheme to waive off additional tax penalties and fines of those who will pay their pending taxes fully by June 30. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, this scheme was announced just two days before the Federal Budget 2013 2014. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Just for the record, this scheme is operational in our friendly neighbourhood <font color="#006600"><strong>Pakistan</strong></font>. </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"> - Wednesday'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">Inputs used in a process not considered as manufacture by Department Duty paid Credit cannot be denied and duty cannot be again demanded under Section 11D: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee took CENVAT credit on inputs which were used in a process which was considered as manufacture. The product that emerged from that process was cleared on payment of duty. This duty payment was partly by debit in PLA and partly by debit in CENVAT account. According to the department, the above process did not amount to ‘manufacture' and hence the respondent ought not to have paid duty on the product. On this basis, CENVAT credit taken on the inputs was sought to be denied. Department also wanted to collect the amount under Section 11D. </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">Sec 10AA - Whether a roadmap to guillotine tax exemption is not a condition precedent for Parliament to introduce sunset clause - NO: Karnataka HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether the action of Finance Minister to move a bill seeking amendment of the SEZ Act, which comes under the domain of Ministry of Commerce, lacks legislative competence; Whether it is a settled principle that there can be no permanent tax exemption or incentive in fiscal legislation; Whether a roadmap to end the tax exemption is not a condition precedent for the Parliament to introduce sunset clause; Whether Doctrine of Promissory estoppel and Legitimate expectation are the offspring of equity and flexible in nature; Whether there is a difference between the doctrine of promissory estoppel and Doctrine of Legitimate Expectancy and Whether the former is based on a legal relationship and constitutes a superior relief. And the verdict goes against the assessees. </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">Market fee collected from licencees by APMC is classifiable under BAS and same is exempted under notification 14/2004-ST - however, Service Tax payable on renting of shops in market area since appellant has paid ST along with interest within six months of enactment of Finance Act, 2012, benefit of s.80 available & no penalty is imposable Appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant constructed infrastructural facilities for marketing of agricultural produce and the same was given to the farmers for marketing their produce. The appellant collected a market fee @ 1.05% under Section 73 of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. They have also rented out shops to various traders in the market. During the period 2006-07 to 2010-11 the appellant received market fee amounting to Rs. 58,39,90,519/- and during the period 2006-07 to 2010-11 they received a sum of Rs. 70,50,487/- by way of rent from the traders who hired the shops on rent. The department was of the view that the market fee collected by APMC is liable to service tax under the category of ‘Business Support Service' and the rent received is liable to service tax under the category of 'Renting of Immovable Property'. </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"> <strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p> </body> </html>