TIOL-DDT 2140 · 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 2140</font><br> 03.07.2013<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IRS Vs IAS</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> senior IRS (Income Tax) officer of the rank of Chief Commissioner, requested for a State Government Bungalow for his residence. The Home Secretary was not too willing, but the IRS officer got it anyway from the Chief Minister's quota. He was apparently angry with the Home Secretary for nor processing his file promptly and so got the Home Secretary's house raided by Income Tax sleuths. Following the raid, the Home Secretary was suspended and charge-sheeted, but later, all charges were dropped and he was reinstated. The IAS officer challenged the raid in the High Court. The High Court recently quashed the search and consequential actions. The IAS officer has now filed a complaint in a Police Station to register an FIR against the IRS officer. The IRS officer has since retired as a Member of the Board and the IAS officer is still in service. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The war between the services will go on for some more time! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Services provided to SEZ unit/Developer - New refund procedure</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Central Government has superseded Notification <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_040.htm" target="_blank">40/2012-ST</a></strong> and issued a new notification granting exemption to taxable services received by a unit located in a Special Economic Zone or Developer of SEZ and used for the authorised operation from the whole of the service tax and the Cesses leviable thereon. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exemption is provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the <strong>authorised</strong> operations. In case the specified services received by the SEZ Unit or the Developer </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">are used exclusively for the authorised operations, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the person liable to pay service tax has the option not to pay the service tax <em>ab initio</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The list of the services as are required for the authorised operations <font color="#FF0000">(also called as specified services)</font> should be got approved by the SEZ unit/Developer from the Approval Committee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The<em> ab-initio</em> exemption on the specified services received and <strong>used exclusively for the authorised operation</strong> shall be allowed subject to certain procedure and conditions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the previous Notification (40/2012), the <em>ab-initio</em> exemption was admissible only to the specified services which are ‘wholly consumed within the SEZ'. To decide whether a particular service was wholly consumed within the SEZ or not, the provisions of Place of Provision of services Rules, 2012 needed to be applied. Now to simplify the procedure, the abinitio exemption if allowed is specified services are ‘ used exclusively for the authorised operations', whether wholly consumed within the SEZ or not.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case the specified services on which exemption has been claimed <font color="#CC6633"><u>are not exclusively used for authorised operation or were found not to have been used exclusively</u></font> for authorised operation, the SEZ unit/Developer shall pay to the government <font color="#FF0000"><em><strong>an amount</strong></em></font> that is claimed by way of exemption from service tax and cesses along with interest as applicable on delayed payment of service tax under the provisions of the said Act read with the rules made thereunder. <font color="#FF0000">And what is the mechanism for recovery of this ‘amount'? </font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case the SEZ unit/Developer does not use the specified services exclusively for authorized operation but for other operations, they are entitled to a refund of the service tax paid in the manner spelt out in the notification. Also the SEZ unit/Developer who chooses not to opt for the ab initio exemption though entitled for the same can also claim refund of the service tax paid in a similar manner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The notification also mentions that in case the <strong>specified services</strong> are common to the authorised operation in an SEZ and the operation in domestic tariff area [DTA unit(s)] the service tax paid shall be distributed amongst the SEZ Unit or the Developer and the DTA unit (s) in the manner as prescribed in rule 7 of the CENVAT Credit Rules, 2004. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is further laid down that the SEZ unit/developer who is registered as an assessee under the CEA/CER shall file the claim for refund to the jurisdictional Dy/Asstt. Commissioner of CE and in case they are not registered they need to get registered under rule 4 of the Service Tax Rules, 1994 <strong>before filing</strong> a claim for refund. The periodicity of refund and the time within which a claim for refund has to be filed is also stipulated - periodicity is one claim for every quarter & the time limit is one year from the end of the month in which actual payment of service tax was made by the SEZ unit/Developer to the registered service provider or such extended period (<font color="#FF0000">how much is this?</font>). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The notification further clarifies that the SEZ Unit/Developer also has a choice to take CENVAT credit on the specified services by foregoing the exemption/refund prescribed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nonetheless, there are various forms A-1 to A-4 prescribed that the claimant of this notification has to fill in to reap the benefit of exemption. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To the extent that the new notification has let go of the cumbersome calculations, the disputed words “wholly consumed” and the leaning on the <em>Place of Provision of Services Rules, 2012</em>, it appears to be lighter and would, hopefully, be welcomed by the beneficiaries. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But……</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a new complication. For availing <em>ab initio</em> exemption, the SEZ unit has to get an Authorisation from the Deputy Commissioner of Central Excise and the SEZ unit/developer should provide a copy of the Authorisation to the Service Provider and then only the service provider can provide the service without tax. It is not known whether the service provider is required to hire a few investigating agencies to ascertain the genuineness of the Authorisation by the Deputy Commissioner. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2013/stnot13_012.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 12/2013-Service Tax dated, 1st July, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Goods imported under Notfn. 13/97-Cus - SCN issued by Commissioner of Customs is beyond jurisdiction </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant imported certain inputs and claimed concessional rate of duty in terms of Notf. 13/97-Cus and by following the procedure set out in Customs (Import of Goods at Concessional Rate of duty for Manufacture of Excisable Goods) Rules, 1996 notified by Notif. 36/96-Cus(NT) dated 23/07/1996. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since only a part quantity of these inputs was utilized in manufacture of the final product, a SCN was issued by the <em>Commissioner of Customs</em>, <em>Pune</em> to the appellant for demand of differential duty from the appellant and which demand was upheld. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, it is submitted that the Commissioner of Customs has no jurisdiction to issue SCN inasmuch as as per Condition no. 8 of the Rules, the Assistant Commissioner, Central Excise is required to affect the recovery of the differential duty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench emphasized that it was not going into the merits of the case and after extracting the contents of rule 8 of the Rules, 1996 concluded that the SCN issued by the Commissioner of Customs was beyond his jurisdiction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the order was set aside and the appeal was allowed. </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=ODg5MzQ=" target="_blank">2013-TIOL-1004-CESTAT-MUM</a></font> </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"> - Thursday'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"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By placing shares in private domain, no advice or technical assistance relating to conceptualizing, devising, development, modification, rectification or up-gradation of any working system of any organization could be said to have been rendered by appellant - classification done by department under ‘Management Consultancy Service' has no basis - Order set aside and appeal allowed: CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant were registered with the department under the "stock broking service" during the year 1998-99 & 1999-2000. The appellant collected placement fee of Rs. 10 lakhs and Rs. 4,27,90,000/- for private placement of unlisted shares. Since the placement of listed shares was only taxable, the appellant did not discharge any service tax on the unlisted shares. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A show-cause notice dt. 04/01/2002 was issued to the appellant demanding service tax on the above transaction amounting to Rs.21,89,500/- along with interest for the delayed payment amounting to Rs. 12,02,278/- up to January 2002. Interestingly, the show-cause notice did not mention under what category the service tax demand was made.</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">Exemption - Whether word 'aggregate annual receipts' of other educational institution is to be understood as clubbing of annual receipts of all educational institutions run by an assessee society - NO: 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 once an educational society has been incorporated under the Societies Registration Act, it assumes the character of a juridical person; Whether when the status of such society is described as an association of juridical person in the return of income, the question of treating the assessee as an association of persons does not arise; Whether the real test for application of exemption benefits u/s 10 is the assessee, who claiming these exemptions is running educational institutions solely for education purposes and not for purpose of profit; Whether the word “aggregate annual receipts” of other educational institution is to be understood as clubbing of annual receipts of all educational institutions run by an assessee society and Whether such interpretation shall render the intention of the Legislature to separately treat the educational institutions wholly or substantially financed by the Government for the purpose of granting exemption as otiose. And the verdict goes in favour of the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Fixed Wireless Terminals cannot be treated as cellular phones - Divergent views within Department - Extended period not invokable - Stay Granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON </strong>the question whether the parts/components of FWTs were covered by the description "parts, components and accessories of mobile handsets including cellular phones" given under Notification No.21/2002-Cus. and Notification No.21/2005-Cus, the appellant has not been able to establish a prima facie case so as to claim the benefit of the two Notifications. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Thursday for the judgements</font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Thursday with more <strong>DDT</strong></font></p> <p align="justify"><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>