TIOL-DDT 2150 · 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 2150</font><br> 17.07.2013<br> Wednesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">IT - Sections 10A, 10AA, 10B & 10BA - CBDT clarifications </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been brought to the notice of the Board that the provisions of 10A/10AA/10B/10BA of the Income-tax Act, with regard to applicability of Chapter IV of the Act and set off and carry forward of losses, are being interpreted differently by the Officers of the Department as well as by different High Courts.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the above sections fall under Chapter III of the Income Tax Act, which deals with INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 10A:</strong> Special provision in respect of newly established undertakings in free trade zone, etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section10AA:</strong> Special provisions in respect of newly established Units in Special Economic Zones. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 10B:</strong> Special provisions in respect of newly established hundred per cent export-oriented undertakings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Section 10BA: </strong>Special provisions in respect of export of certain articles or things. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter IV deals with Computation of income. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Board clarifies that section <em>10A and 10B provide for deduction of the profits and gains derived from the export of articles or things or computer software for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such article or thing or computer software. The deduction is to be allowed from the total income of the assessee. The term 'total income' has been defined in section 2 (45) of the IT Act</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All income for the purposes of computation of total income is to be classified under the following heads of income and computed in accordance with the provisions of Chapter IV of the Act- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> • Salaries </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> • Income from house property </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> • Profits and gains of business and profession </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> • Capital gains </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> • Income from other sources </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The income computed under various heads of income in accordance with the provisions of Chapter IV of the IT Act shall be aggregated in accordance with the provisions of Chapter VI of the IT Act, 1961. This means that first the income/loss from various sources i.e. eligible and ineligible units, under the same head are aggregated in accordance with the provisions of section 70 of the Act. Thereafter, the income from one head is aggregated with the income or loss of the other head in accordance with the provisions of section 71 of the Act. If after giving effect to the provisions of section 70 and 71 of the Act there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or section 10A, 10B etc. of the Act, the same shall be allowed in computing the total income of the assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If after aggregation of income in accordance with the provisions of section 70 and 71 of the Act, the resultant amount is a loss (pertaining to AY 2001-02 and any subsequent year) from eligible unit it shall be eligible for carry forward and set off in accordance with the provisions of section 72 of the Act. Similarly, if there is a loss from an ineligible unit, it shall be carried forward and may be set off against the profits of eligible unit or ineligible unit as the case may be, in accordance with the provisions of section 72 of the Act. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2013/it13cir07.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT letter in F. No. 279/Misc./M-116/2012-ITJ, Dated: July 16, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SOP for appeals/SLP in the SC - CBDT Instructions </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INSTRUCTIONS</strong> already exist laying down the Standard Operating procedure on filing appeals/SLPs by the Income Tax Department and those filed by the taxpayers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently, a <strong>video</strong> conference was held by the Member (A&J) with all CCsIT(CCA) and feedback was taken about current practices adopted in the field for attending to SLPs/appeals filed by the assessee. Based on the feedback gathered and with a view to providing effective and uniform approach <strong>for handling of SLPs/appeals filed by the assessee,</strong> a revised set of instructions have been issued. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are endless dissertations and hopefully the Departmental officers follow these scrupulously when they contemplate filing of Caveat/Counter Affidavit in SLPs filed against the Department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The seven point institutional mechanism commences immediately and ends with the usual stuff - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ The CCIT and CIT shall ensure timely processing of caveat application & counter affidavit and their submission to the DIT (L&R) as per the timelines given in Annexure A (<font color="#FF0000">a 25 point how-to-do kit</font>). Any deviation from the timelines will have to be duly explained and delay occurring without any reasonable cause or due to negligence would be <strong>viewed adversely</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We hope that the same gusto prevails when it comes to filing of a Departmental Appeal/SLP. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1308.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Instruction No 08/2013, Dated: July 16, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Payment of interest u/s 244A of IT Act, 1961 when assessee is not at fault </font></strong></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHETHER</strong> computerisation and Central Processing of Income Tax Returns is a boon or bane is rather sample to answer, as benefits of computerisation easily outweigh and outscore any argument to the contrary. Computerization does away with human or manual element and the frailties attached and ensures transparency besides being quick and fool proof. Alas, it is a human element and frailties which have resulted in the present Public Interest Litigation (PIL) which was initiated pursuant to the letter dated 30th April, 2012 written by Anand Prakash, F.C.A. Chartered Accountant -</font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> these are the opening lines of the landmark decision of the Delhi High Court reported by us almost four months ago. See <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2013/2013-TIOL-207-HC-DEL-IT.htm" target="_blank"><font size="1">2013-TIOL-207-HC-DEL-IT</font></a></strong><em>. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This 12 point letter saw the Delhi High Court issuing a seven point mandamus for necessary action by the Income Tax Department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1306.htm" target="_blank"><strong>Instruction 6/2013 dated July 10, 2013 </strong></a>has been issued and it pertains to the subject<em> "Past adjustment of refunds against the arrears where procedure u/s 245 of Income Tax Act was not followed- regarding".</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present instruction has been issued covering "Payment of interest u/s 244A of Income Tax Act 1961 when the assessee is not at fault."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Adverting to the observations of the Court made in paragraphs 31& 32, the CBDT seeks strict compliance of the following - </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"3. In view of the direction of the Hon'ble Court, I am directed to convey that in no case should interest u/s 244A of the Act be denied to the assessee where the assessee is not at fault. The observation of the Hon'ble High Court in Para 32 above be strictly kept in mind while dealing with such matters."</font></em></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1307.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instruction No. 07/2013, Dated: July 15, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Relieve transferred Commissioners immediately - CBEC tells Chief Commissioners </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Order No. 138/2013 dated 18.06.2013, CBEC had transferred 28 Commissioners. These Commissioners were to be relieved immediately and were required to join at their new place of posting on or before 28.6.2013. The Chief Commissioners were directed to send compliance reports regarding relieving and joining of these officers to the Board (with a copy endorsed to DG, HRD) by 5.7.2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After ten days of the due date for compliance, Board says it has not received compliance reports from all the <strong>concerned </strong>cadre authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, Board requests all Chief Commissioners to relieve the transferred Commissioners positively by 19.7.2013 and report compliance to the Board on the same day. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What will the Board do if the officers are still not relieved? They will write another strong letter! If they cannot implement an order transferring 28 officers, how will they implement transfer orders involving hundreds of officers? And what can you do if Chief Commissioners and Commissioners don't obey the Board? </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/office_order_22013_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Letter in F.No. A.22013/7/2013-Ad.II, dated: July 15 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">An Income Tax Office in every District in India </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a meeting of all cadre control authorities and core committee on cadre restructuring, the Member (P&V) in CBDT said that there should be an effort to create an Income Tax office in every district of India, while drawing up the plan for restructuring. She wanted the entire cadre restructuring work to be completed in the calendar year 2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">She also cautioned her officers that the CBDT is committed to deliver an additional revenue collection of Rs. 25,756 crores and the officers even if busy restructuring the cadre, should not lose sight of the hefty revenue target. Quid pro quo? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do we really need an income tax office in every district? For the assessees, there is hardly any need to go to an IT office unless they are summoned; will there be more summonses now? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A senior officer remarked, "Now I can go TO any part of the country and be assured of a car and accommodation!”Truly an All India Service!</font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ba-GAS-se issue - Curtains down? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SUGAR</strong> manufacturers seem to be a harassed lot. No, it is not the black ants that trouble the manufacturers but Rule 6 of the CCR, 2004. All over the country these manufacturers have been making a beeline to the High Courts and the CESTAT seeking sugary relief and they are getting it….but the Central Board of Excise & Customs probably seems to enjoy the sweetness in its demands! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The sweet facts - During the course of manufacture of sugar and molasses [dutiable] from sugarcane, bagasse is generated as a waste product. Bagasse is the fibrous matter that remains after sugarcane stalks are crushed to extract their juice. It is currently used as a biofuel and in the manufacture of pulp and paper products and building materials.This bagasse is classified under sub-heading 23032000 of CETA, 1985as 'Beet-Pulp', 'bagasse' and other waste of sugar manufacture' and cleared from the factory at NIL Tariff rate of duty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department is of the view that since the appellant is availing CENVAT credit on various inputs/services and have not maintained separate records showing the consumption and utilization of inputs/input services in the manufacture of dutiable products viz. Sugar/molasses and the Nil rate product, namely, bagasse, the appellant is liable to pay an amount equal to 5%/8% of the price of bagasse in terms of rule 6(3) of the CCR, 2004. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board had vide Circular <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=NDE5NQ==" target="_blank">904/24/2009-CX</a></strong> dated 28.10.2009 emphasized thus - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"2. The matter has been examined. Excisability of bagasse and similar waste products arising during the course of manufacture has been under dispute for a long period of time. There are number of Tribunal's judgments that being waste, these are not excisable products. Departmental appeal in respect of excisability of bagasse in one such case i.e Balrampur Chinni Mills Ltd. is reportedly <strong>still pending</strong> in the Supreme Court. Generally, the courts have been taking a view that the waste or refuse or residue arising during the course of manufacture can-not be treated as excisable goods even if such waste fetches some price in the market. However, all these matters pertain to the period prior to 2008. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In the budget of 2008, the definition of "excisable goods" in clause (d) of Section 2 of the Central Excise Act, 1944 was amended by adding an explanation that for the purposes of this clause, "goods" include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. It is clarified that with this amendment in Section 2 (d), the bagasse, aluminium/zinc dross and other such products termed as waste, residue or refuse which arise during the course of manufacture and are capable of being sold for consideration would be excisable goods and chargeable to payment of excise duty. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Field formations are advised to take suitable action for ensuring recovery of duty from the assessees in respect of these goods for the period after the budget of 2008.<font color="#FF0000"> It is further clarified that in case the rate of duty in respect of such products is Nil in the tariff or they are exempt from duty in terms of any exemption notification, and if Cenvat Credit has been taken on the inputs which are used for manufacture of dutiable and exempted goods, then in terms of rule 6 of Cenvat Credit Rules, 2004, the assessee is required to reverse the proportionate credit or pay 5% amount."</font></font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, this issue was also raised by the participants in a seminar conducted by us at Visakhapatnam last year <strong>(<a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTQ4Mjk=" target="_blank">DDT-1842 dt 24.04.2012</a>)</strong>. We brought to their notice the letter <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/letter_01_2010.htm" target="_blank">F. No.17/2/2009-CX 1</a></strong> dated 08/04/2010 addressed by the CBEC to the Dy. Director General, Indian Sugar Mills Association, New Delhi and where it is mentioned thus - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"<font color="#FF0000">2. In this regard, it is to inform that Circular No.904/24/2009 dated 28.10.2009 clarifies the legal position subsequent to the amendment of the definition of excisable goods in the budget of 2008. It is to further inform that from 1.4.2008, Rule 6 of the Cenvat Credit Rules has been amended to also provide for the reversal of proportionate credit on the inputs used in the manufacture of exempted goods. </font></em></font></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. It is therefore, clarified that the sugar mills have an option to reverse the proportionate credit on the inputs used in the generation of bagasse subject to following the provisions contained in the said Rule 6 and in that case it is not necessary for them to pay an amount equal to 5% on the value of bagasse</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Be that as it may, the matter was settled conclusively in favour of the manufacturer by the CESTAT in the case of<em> Indian Potash Ltd.</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2012/2012-TIOL-1402-CESTAT-DEL.htm" target="_blank"><font size="1">(2012-TIOL-1402-CESTAT-DEL)</font></a></strong>. Paragraph 6 of the order dated 20/04/2012 is extracted below - </font></p> <blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"6. We have considered the rival submissions. We find that bagasse emerges in course of crushing of the sugarcane. It may be noted that crushing of sugarcane is necessary to extract cane sugar juice, which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be said that the assessee possibly could have maintained separate accounts for the inputs for production of sugar and molasses (excisable item) and bagasse. Thus, in our considered view, <strong>the amendment in Finance Act</strong>, cited by Shri Nagesh Pathak, AR and the Board Circular <strong>would not make any difference in the facts and circumstances of the case</strong>. Moreover neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final product) and bagasse (exempted final product). Since Bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. Accordingly, we find merit in the contention of the appellant. The impugned order is set aside. The appeal and stay applications are allowed."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A closer look at the aforesaid would reveal that the insertion of Explanation in the definition of ‘excisable goods' in section 2(d) of the CEA, 1944 by the Finance Act, 2008 was also adverted to by the Bench in the aforesaid case but nothing went in favour of the Revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This assessee favourable decision was followed by the WZB of the CESTAT in the case of Shree <em>Chh. Shahu SSK Ltd. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2012/2012-TIOL-1760-CESTAT-MUM.htm" target="_blank"><font size="1">(2012-TIOL-1760-CESTAT-MUM)</font></a></strong></em> and many other cases by other Benches too. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today, we report the Allahabad High Court decision passed in a batch of Writ Petitions on the issue, quashing the Circular <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=NDE5NQ==" target="_blank">904/24/2009-CX</a></strong> dated 28.10.2009. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18218" target="_blank">Breaking News</a>.</font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> - 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">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Goods supplied under Notification No 108/95 CE - Benefit of exemption is admissible to goods cleared to contractors executing projects financed by UN or international organizations: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents were engaged in the manufacture of Loaders falling under Chapter Heading 84.29 of the 1st Schedule to the CETA 1985. They cleared these goods by availing exemption in terms of Notification No.108/95-CE dated 28.8.95 which inter alia exempts excisable goods supplied to projects financed by UN and International Organizations approved by the Government of India, subject to certain conditions relating to production of certificate from specified authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The benefit of the Notification was denied to the respondents by holding that it only exempted goods supplied to Projects financed by United Nations or International Organizations approved by the Government of India while the appellants had cleared the loaders to contractors of the respective Projects and not to the Project Implementing Authorities and on the ground that the contractors continue to be the owners of the goods and continue to possess them even after the completion of the Project. </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 once Commissioner while exercising his revisional powers has stated that non-initiation of penalty proceedings by AO does not warrant any interference, hands of AO are tied on invoking penalty on remand - 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 the Commissioner while exercising his revisional powers has stated that non-initiation of penalty proceedings by the AO does not warrant any interference, the hands of the AO is tied on invoking the penalty provisions on remand; Whether such penalty proceedings cannot be initiated, although the assessee was later found to have made bogus claims and concealed income during such fresh assessment; Whether in such a situation, if the provisions of the Act on penalty are attracted, the AO has to go by the dictates of the law or rather by the order of the Commissioner; Whether mere submitting a claim which is incorrect and untenable in law would not give rise to imposition of penalty; Whether if such claim made by the assessee is not bona fide and with mala-fide intention, Explanation 1 to Section 271(1)(c) would come into play and penalty shall be levied and Whether penalty can be imposed in a civil liability, once it is established that the assessee has wilfully provided a wrong explanation to conceal its income. 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">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Nobody can provide a service to himself - Just because the storage of free sale sugar had to be extended at behest of GOI, neither sugar mill becomes a ‘storage and warehouse keeper' nor GOI becomes a client - no cause for payment of ST as no service provided - Revenue appeal dismissed: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are manufacturers of sugar. The Directorate of Sugar, Government of India, directed the appellants to keep a buffer stock of sugar in their factory for which they paid buffer stock subsidy.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As is their wont, the revenue took a view that the appellants had rendered a service to Government of India for which they received a consideration and therefore, the subject transaction is liable to the service tax under the category of "storage and warehousing services".</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lower authorities did the needful viz. issuing SCN and confirming them with sweetness. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner(A) did not allow this sweetness to last. He allowed the appeals on the ground that the activity cannot be considered as a service as the goods belonged to appellant themselves and the storage was undertaken in respect of appellant's own goods; therefore, no service has been rendered. The lower appellate authority also held that the demands were time barred.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue was aggrieved with this order which left a bitter taste. So, the CCE, Pune is before the CESTAT. </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><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>