TIOL-DDT 2167 · the untouched capture
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<p align="justify"><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="3">TIOL-DDT 2167</font><br>
12.08.2013<br>
Monday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">VCES, 2013 - 19 questions answered by CBEC</font></strong></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/vces_ddt.jpg" alt="Legal Corner Icon" width="400" height="225" hspace="5" border="0" align="center"></font></p>
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<td><div align="center"><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">FM releasing the VCES Logo. Looking on seriously are the Revenue Secretary and Chairperson and Members of the CBEC </font></strong></div></td>
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<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/vces_logo.jpg" alt="Legal Corner Icon" width="295" height="149" hspace="5" border="0" align="center"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 8th August 2013, the Union Finance Minister released a booklet containing <strong>Frequently Asked Questions (FAQ) on Service Tax Voluntary Compliance Encouragement Scheme, 2013 </strong>in New Delhi in the presence of various dignitaries and the media. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Branding exercise attempted to the hilt, one may say after all those quarter page advertisements in the newspapers and the telly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Better late than never - almost three months after the VCES, 2013 came into being by the enactment of the Finance Bill, 2013 on the 10th May, 2013 but nonetheless a welcome step. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking at the event, Mr. Chidambaram said that the scheme offering "no penalty, no interest" provides one time opportunity to the defaulters to come clean. He further said that over 10 lakhs defaulters<font color="#FF0000"><em> <strong>have been identified</strong> (that's news - have they been identified after the VCES, 2013 was born?)</em></font>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Minister also said that <strong>1400 </strong>defaulters have already filed their declarations amounting to Rs.650crores [<font color="#FF0000"><em>which means only 9,98,600 defaulters left</em></font>] and he hoped that the scheme would result in substantial disclosure by non-filers. The Minister exhorted the service tax assessees to make use of this golden opportunity and pay their tax dues to avail immunity from interest, penalty and other proceedings. He further said that the FAQs are based on inputs received from various agencies and quarters and would be of immense use for the compliers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Much to the chagrin of a lot many officers from the CBEC and some erudite professionals, over the past three months,<strong> DDT</strong> has been consistently carrying the views of many netizens that have been mailed to us seeking clarifications on a host of issues afflicting the much touted VCES, 2013 scheme. [See <strong>DDT issues <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc2NjU=" target="_blank">2097</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc3MDI=" target="_blank">2100</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc3NTg=" target="_blank">2105</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc3NjU=" target="_blank">2106</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5MTQ=" target="_blank">2120</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5MjY=" target="_blank">2121</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17932" target="_blank">2122</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5NDg=" target="_blank">2123</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5ODA=" target="_blank">2127</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17995" target="_blank">2128</a>,<a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgyMjY=" target="_blank"> 2151</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgyMzU=" target="_blank">2152</a>, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgzMzI=" target="_blank">2162</a> & <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgzODA=" target="_blank">2166</a></strong>]</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some of the views which were carried in <strong>DDT</strong> and which apparently have been answered by the Central Board of Excise & Customs in its latest Circular dated August, 8, 2013 are tabulated below - </font></p>
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<td width="30%" valign="top"><p align="center"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarification sought in DDT </font></strong></font></p></td>
<td width="70%" valign="top"><p align="center"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Circular 170 dt. 08/08/2013 Issue & Clarification </font></strong></font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc2NjU=" target="_blank">DDT 2097-3.5.13</a> </font></strong></p>
<p><strong><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">What do you mean by initiation of an audit? </font></em></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Does it mean mere writing of letter to an assessee informing that Audit would be conducted on such and such date? The answer should be a resounding NO. This is because this clause of audit has been separately mentioned at (b). So, if the department has issued a letter prior to 1st March, 2013 informing a person of an impending audit in the month of March, 2013, he should not be hit by this exclusion clause. </em></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>However, a reading of the sub-section (2) indicates that inspite of these exclusions if a person makes an application/declaration, such a declaration can be rejected by the designated authority after giving reasons therefor. The usage of the word ‘<strong>order</strong>' means the principles of natural justice have to be followed. So if the declarant is unhappy with this order can HE GO IN APPEAL AND IF SO TO WHICH AUTHORITY? THE PROVISIONS OF THE SCHEME ARE SILENT IN THIS REGARD AND NEED CLARITY. Assuming that the declaration is rejected can the evidence be used against the person? Suppose the designated authority wrongly allows an applicant to file a declaration under section 96 of the VCES though he is hit by the debarring clauses. Can this order be reviewed by the Commissioner or any authority? </em></font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. In terms of section 106 (2)(b), if a declaration made by a person against whom an audit <u>has been initiated</u> and where such <u>audit is pending</u>, then the designated authority shall by an order and for reasons to be recorded in writing, reject such declaration. As the audit process may involve several stages, it may be indicated as to what event would constitute,- </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) initiation of audit; and </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) culmination of audit. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><u>Initiation of audit:</u> For the purposes of VCES, the date of the visit of auditors to the unit of the taxpayer would be taken as the date of initiation of audit. A register is maintained of all visits for audit purposes. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><u>Culmination of audit:</u> The audit process may culminate in any of the following manner.- </font></p>
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<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Closure of audit file if no discrepancy is found in audit; </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Closure of audit para by the Monitoring Committee Meeting (MCM); </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) </font><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Approval of audit para by MCM and payment of amount involved therein by the party in terms of the provisions of the Finance Act, 1994; </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) </font><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"> Approval of audit para by MCM, and issuance of SCN, if party does not agree to the parasoraised. </font></p>
</blockquote> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The audit culminates at a point when the audit paras ;raised are settled in any manner as stated above. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The pendency of audit as on 1.3.2013 means an audit that has been initiated before 1.3.2013 but has not culminated as on 1.3.2013. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>12</strong>. Whether declarant will be given an opportunity to be heard and explain his cases before the rejection of a declaration under section 106(2) by the designated authority? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes. In terms of section 106 (2) of the Finance Act, 2013, the designated authority shall, by an order, and for reasons to be recorded in writing, reject a declaration if any inquiry/investigation or audit was pending against the declarant as on the cut-off date, i.e., 1.3.2013. An order under this section shall be passed following the principles of natural justice. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">To allay any apprehension of undue delays and uncertainty, it is clarified that the designated authority, if he has reasons to believe that the declaration is covered by section 106 (2), shall give a notice of intention to reject the declaration within 30 days of the date of filing of the declaration stating the reasons for the intention to reject the declaration. For declarations already filed, the said period of 30 days would apply from the date of this circular. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The declarant shall be given an opportunity to be heard before any order is passed by the designated authority. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>13.</strong> What is the appeal mechanism against the order of the designated authority whereby he rejects the declaration under section 106 (2) of the Finance Act, 2013? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Scheme does not have a statutory provision for filing of appeal against the order for rejection of declaration under section 106 (2) by the designated authority . </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc3MDI=" target="_blank">DDT 2100 - 8.5.13</a>: </font></strong></p>
<p><em><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">What happens if the amount is paid but the declaration is rejected? </font></strong></em></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14 . A declarant pays a certain amount under the Scheme and subsequently his declaration is rejected. Would the amount so paid by him be adjusted against his liability that may be determined by the department? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The amount so paid can be adjusted against the liability that is determined by the department. </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3 and 4: <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc3NTg=" target="_blank">DDT 2105-15.5.13 </a>& <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc3NjU=" target="_blank">2106-16.5.13</a>: </font></strong></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 6(2) appears to be draconian. It says CENVAT credit shall not be utilised for payment of tax dues under the Scheme. It is settled law that even in cases of clandestine clearances, CENVAT Credit is allowed. It is not known what is the intention behind such condition, but it will surely take the ENCOURAGEMENT out of the scheme if there is really any. What about the receiver of the services? Can they take CENVAT Credit of service tax paid under VCES? </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>17.</strong> Whether the <em>CENVAT credit</em> is admissible on the inputs/input services used for provision of output service in respect of which declaration has been made under VCES for payment of any tax liability outside the VCES? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The VCES Rules 2013 prescribe that CENVAT credit cannot be utilized for payment of "tax dues" under the Scheme. Accordingly the "tax dues" under the Scheme shall be paid in cash. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The admissibility of CENVAT credit on any inputs and input services used for provision of output service in respect of which declaration has been made shall continue to be governed by the provisions of the Cenvat Credit Rules, 2004. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>18. </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Whether the tax dues amount paid under VCES would be eligible as CENVAT credit to the recipient of service under a supplementary invoice? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Whether cenvat credit would be admissible to the person who pays tax dues under VCES as service recipient under reverse charge mechanism? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 6(2) of the Service Tax Voluntary Compliance Encouragement Rules, 2013, prescribes that CENVAT credit cannot be utilized for payment of "tax dues" under the Scheme. Except this condition, all issues relating to admissibility of CENVAT credit are to be determined in terms of the provisions of the Cenvat Credit Rules. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards admissibility of CENVAT credit in situations covered under part (a) and (b), attention is invited to rule 9(1)(bb) and 9(1)(e) respectively of the Cenvat Credit Rules. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT Comment</strong>: Why can't they make it clear that the provisions of Rule 9(1)(bb) of the CENVAT Credit Rules, 2004 are not applicable to the amount paid under VCES? Don't they know that the field will apply this Rule to deny the credit? What is the use of evasive clarification? </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 9(1)(bb) stipulates denial of credit when additional amount is recoverable by reason of fraud, collusion, etc,. </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17932" target="_blank">DDT 2122- 7.6.13</a> </font></strong></p>
<p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Section 111 of the FA, 2013 says that where the CCE has reasons to believe that the declaration made by the declarant under the Scheme was "substantially" false, he may in writing serve notice on the declarant in respect of such declaration requiring him to show-cause why he should not pay the tax dues not paid or short-paid. What is meant by "substantially false" would be an issue that would need the Courts (or for that matter Settlement Commission) to answer in the days to come. </font></em></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>15.</strong> Section 111 prescribes that where the Commissioner of Central Excise has reasons to believe that the declaration made by the declarant was ‘substantially false', he may serve a notice on the declarant in respect of such declaration. However, what constitutes a ‘substantially false' declaration has not been specified. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner would, in the overall facts of the case, taking into account the reasons he has to believe, take a judicious view as to whether a declaration is ‘substantially false'. It is not feasible to define the term "substantially false" in precise terms. The proceeding under section 111 would be initiated in accordance with the principles of natural justice. </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">To illustrate, a declarant has declared his "tax dues" as Rs 25 lakh. However, Commissioner has specific information that declaration has been made only for part liability, and the actual "tax dues" are Rs 50 lakh. This declaration would fall in the category of "substantially false". </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">This example is only illustrative. </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5NDg=" target="_blank">DDT 2123-10.6.13 </a></font></strong></p>
<p><em><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">VCES, 2013 and a recent Preventive case </font></strong></em></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I found that the definition of "tax dues" given in the Finance Act, 2013, as reproduced below does not debar me from making any declaration and payment even if it is a Preventive case. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>4.</strong> Whether a party, against whom an inquiry, investigation or audit has been initiated after 1.3.2013 (the cut-off date) can make a declaration under the Scheme? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Yes. There is no bar from filing of declaration in such cases. </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5ODA=" target="_blank">DDT 2127-14.6.13</a>: </font></strong></p>
<p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">How many times can I apply under the VCES, 2013? </font></strong></p>
<p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> And, by the way, is there anything in the VCES, 2013 which requires me to declare all my Service Tax dues for the reference period in one go OR in other words can I file more than one declaration under the VCES, 2013 and come clean?" </font></em></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Whether upon filing a declaration a declarant realizes that the declaration filed by him was incorrect by mistake? Can he file an amended declaration? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The declarant is expected to declare his tax dues correctly. In case the mistake is discovered suo-moto by the declarant himself, he may approach the designated authority, who, after taking into account the overall facts of the case may allow amendments to be made in the declaration, provided that the amended declaration is furnished by declarant before the cut-off date for filing of declaration, i.e., 31.12.2013. </font></p></td>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17995" target="_blank">DDT-2128-17.6.13 </a></font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1) Whether the Scheme is applicable only where no ST has been paid? Will it be applicable to the cases wherein tax has been paid partially? </em></font></p>
<p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2) Another issue that arises is whether the Scheme will be applicable to the cases wherein ST has been paid in the past at relevant point of time. However, for certain reasons, ST-3 has not been filed till date. As you know, substantial amount of additional fees are required to be paid for late filing of ST-3. A question arises whether VCES can cover such cases? To put it differently, whether the Assessee can have the benefit of waiver of payment of fees for late filing of ST-3. </font></em></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>7</strong>. Whether a person, who has paid service tax for a particular period but failed to file return, can take the benefit of VCES Scheme so as to avoid payment of penalty for non-filing of return? </font></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Under VCES a declaration can be made only in respect of "tax dues". A case where no tax is pending, but return has not been filed, does not come under the ambit of the Scheme. However, rule 7C of the Service Tax Rules provides for waiver of penalty in deserving cases where return has not been filed and, in such cases, the assessee may seek relief under rule 7C. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT Comment:</strong> Under Rule 7(c), the only case where there is possibility of reducing penalty is a Nil return - So, this is a useless clarification - When they are ready to forego interest and penalty, why can't they extend the benefit of waiver of late fee also? </font></p></td>
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<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">On behalf of the netizens DDT is thankful to the <em><strong>concerned</strong></em> Board and wishes that this proactive attitude continues to subsist in the days to come for we still have more than four months for the first phase of VCES, 2013 to end and there can be more doubts that can emanate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, there are a few more issues that <strong>DDT </strong>had pointed out and it is hoped that the Board would like to clarify on those doubts too. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They are - </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTc5MTQ=" target="_blank">DDT 2120 05.06.2013 </a>-</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ <em>And assuming that the department recovers the tax dues by usage of section 87 of the FA, 1994, will the declarant get any immunity from penalty, interest or any other proceeding under the Chapter V of the Finance Act, 1994. The answer probably lies in the <strong>NEGATIVE </strong>for the reason that section 108(1) of the FA, 2013 grants such immunities if the "<font color="#FF0000">declarant</font></em><font color="#FF0000"><em>, <strong><u>on his own</u></strong>, pays the tax dues declared by him under sub-section (1) of section 107 and the interest payable under the proviso to sub-section (4) thereof </em></font>". </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, in spite of the department getting the entire amount of "tax dues" declared under the VCES, 2013, after having recourse to section 87 of the FA, 1994, the declarant is the loser inasmuch he will not get any immunity. </font></em></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgzODA=" target="_blank">DDT 2166/08.08.2013</a> - <font color="#006600">VCES, 2013 and a frozen bank account </font></font></strong></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> also hastens to add that apart from the <strong>ten</strong> issues that the Board has clarified in the subject Circular and which are extracted above, there are <strong>nine</strong> more clarifications issued by the sympathetic Board and which too cover myriad issues. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is hoped that the VCES, 2013 now enters the determinative phase of its existence what with a total of <strong>23</strong> issues having been clarified by the Board for the smooth run of the encouragement scheme. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">[Earlier Circular <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2013/sercir169.htm" target="_blank">169/4/2013-ST</a></strong> dated 13/5/2013]</font> </p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2013/sercir170.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 170/5 /2013 - Service Tax, Dated: August08, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Where is the FAQ Booklet? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> FM has released the FAQ booklet containing clarifications on doubts and queries about the scheme, the statutory provisions and the VCES Rules containing the VCES forms. But where is the booklet available? Where I can I get a copy from? As of now, nobody knows. The CBEC website is blissfully ignorant about the booklet. The booklet was released on 8th August which date was followed by three days of holidays - when Government of India came to a halt. Today they may start working again. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provisional release of export-goods detained for investigation - Board STRONGLY reiterates earlier instructions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FIELD</strong> formations never take Board instructions seriously, as this column has reported on several occasions. The CBEC invites the attention of all Chief Commissioners and Commissioners to its earlier Circular No. 01/2011-Customs dated 04.01.2011 regarding provisional release of export goods that are detained or seized and which Circular was issued with the objective of expediting the clearance of export goods and to ensure that where permissible by law, exports should not get unduly delayed, thereby causing congestion in ports as well as delays in fulfilment of export orders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been brought to the notice of the Board that the above instructions are not being implemented by certain field formations and exporting community is aggrieved by the long detention of exports goods. The matter has been raised in many forums and the issue of congestion in ports has also been highlighted by Inter-Ministerial Committee for boosting exports from Micro, Small & Medium Enterprises (MSMEs) sector, which pointed out that, besides the Boards aforementioned instructions, paragraph 2.42 of the Foreign Trade Policy also provides that export consignments shall not be withheld / delayed for any reason. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Board has re-examined the matter and observes - </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"3... The view is that there can be no justification to hold up export consignments for long periods unless the export goods are prohibited under Customs Act, 1962 or ITC (HS) Policy. Essentially genuine exports must be facilitated and there should be no delays or hold ups of export goods. Therefore, the Board strongly reiterates the instruction dated 04.01.2011 referred above. It shall be the responsibility of Commissioner of Customs concerned to ensure strict compliance of these instructions. Needless to state any deviation or lapse shall be proceeded against by the Board." </font></em></p>
</blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">While reporting the Circular No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_001.htm" target="_blank">01/2011-Customs</a></strong> dated 04.01.2011, <strong>DDT said in <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTE5MDA=" target="_blank">DDT 1523-06.01.2011</a></strong>, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF0000">"When the Board knows that its instructions are not followed, why should the Board helplessly issue another circular? If the previous circular was disobeyed, is there any good reason as to why this Circular should be obeyed? What will the Board do when these instructions are also flouted? Issue another Circular <strong>after five years</strong>! </font></em></font></p>
<p align="justify"><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is high time that Board takes a serious decision. Either enforce its instructions scrupulously or stop giving instructions. </font></em></font></p>
<p align="justify"><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Detaining export cargo illegally should be treated as a serious crime against the Nation and the offenders should be punished." </font></em></font></p>
</blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">We were wrong; it didn't take them five years to issue the next circular; it took only two and a half years. Can we expect the next circular in one year? </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Strong - stronger - strongest. Probably the next level of reiteration would be at the strongest level - i.e. charge sheet the officer concerned for not showing any concern. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_030.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 30/2013 - Customs, Dated: August 05, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SION rate notified for Sodium Lauryl Ether Sulphate </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DGFT has notified a SION bearing number A-3644 in respect of the export product "Sodium Lauryl Ether Sulphate (Active Matter 69% min.)" in the Chemicals and Allied Products Group. This is a new entry. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn021.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 21/(RE: 2013)/2009-2014, Dated: August 08, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedure - application to obtain Status Recognition Certificate / Nominated Agency Certificate</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DGFT has noticed that RAs/Development Commissioners are following different practices while issuing Status Recognition Certificate / Nominated Agency Certificate in case of IEC holders having both DTA units as well as SEZ Units. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To bring greater clarity into the matter and also to have uniform and harmonious practice by RAs and Development Commissioners, a tabular chart has been provided below: </font></p>
<div align="justify">
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S.No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Category </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Issuing/renewing Authority for Status Recognition Certificate </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Issuing/Renewing Authority for Nominated Agency Certificate </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IEC holder having DTA unit as well as SEZ/EOU unit </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">R A concerned <br>
As per Appendix 1 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RA concerned <br>
As per Appendix 1 <strong>A</strong> </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IEC holder having SEZ/EOU unit only </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DC concerned <br>
As per Appendix 1 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No such Certificate for such applicants. </font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IEC holder having DTA unit only </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RA concerned <br>
As per Appendix 1 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RA concerned <br>
As per Appendix 1 <strong>A</strong> </font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is also clarified that the existing Status Recognition Certificates and Nominated Agency Certificates that have been issued already shall not be withdrawn, irrespective of whether it has been issued by concerned RA or DC. Further, after the expiry of validity period of existing certificates, these certificates can be renewed only as per the authority indicated in tabulation given above. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2013/dgft13cir004.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 4/2009-2014 (RE 2012), Dated: August 08, 2013 </font></strong></a></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"> - </font></strong></font><font color="#006600">Tuesday's Cases </font></strong></font></p>
<p align="justify"><font color="#006600"><strong><font 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"></font></strong></font><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Advance Ruling: processing of various grades of stainless steel scrap ('metal scrap') to produce ‘blended metal scrap' amounts to manufacture: AAR </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>APPLICANT</strong> proposes to process various grades of stainless steel scrap (‘metal scrap') to produce ‘blended metal scrap'. Blended metal scrap is required by the stainless steel manufacturers as a raw material for its manufacturing activity i.e. for manufacture of stainless steel products. Applicant will source different grades of metal scrap from its vendors located within India as well as outside India. The metal scrap so procured by Applicant is classified under Chapter 720421 of the Central Excise Tariff Act, 1985 (in short Tariff Act). The different grades of metal scrap will then be processed in order to produce blended metal scrap of the grade required by its customers. The blended scrap so produced by Applicant is also classified under Chapter 720421 of the Tariff Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The core issue is whether the activity proposed to be undertaken is <em>manufacture or production</em>. </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 penalty is imposable if assessee makes false claim of Sec 80IA benefits on sub-contracted work and also furnishes a CA Certificate in this regard - YES: Delhi HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a joint venture company by the name of M/s. HCILARSSPLTRIVENI and M/s. HCILKALINDEEARSSPAL. The assessees had claimed deduction under section 80IA for executing certain work for M/s. Rail Vikas Nigam Ltd and M/s. Rites Ltd. The AO disallowed the deduction as the assessee had not done any actual work but had only subcontracted the work. The AO levied penalty under section 271(1) (c) for concealment of facts. The CIT(A), upheld the penalty levied by the AO. On appeal, the ITAT deleted the penalty. THE issues before the Bench are - Whether no penalty u/s 271(1)(c) is warranted even if assessee makes false claim of Sec 80IA benefits on sub-contracted work and also furnishes a CA Certificate in this regard; Whether the onus of establishing that the explanation was <em>bonafide</em> and the facts and material relating to computation of his income disclosed, is on the assessee, so that penalty is not attracted and Whether penalty for concealment can be imposed and is justified when interpretation or claim of the assessee is rejected. And the verdict favours the Revenue. </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">In view of <em>ad-hoc </em>exemption order exempting Security Agency Service rendered by CISF, there is no tax liability on appellant - therefore, delay of 826 days in filing appeal condoned and appeal allowed: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VIDE </strong>an Order-in-Original dated 25/09/2009, the CCE, Nashik confirmed a Service Tax demand of Rs.3,33,47,243/- against the Central Industrial Security Force, (CISF), India Security Press, Nasik for the ‘Security Agency Service' provided during the period May 2006 to November 2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant is before the CESTAT with an appeal & stay application. The appellant has also filed an application for Condonation of Delay in filing the appeal - the delay being 826 days and the reason stated is that the appellant being a Government department had to seek prior approval from the higher authorities and the matter was also under consideration by the Ministry of Home Affairs. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tuesday for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tuesday 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 align="justify"><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>
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