TIOL-DDT 2168 · 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 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 2168</font><br> 13.08.2013<br> Tuesday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ Rules Amended </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> order to revive investors' interest in Special Economic Zones, the Commerce & Industry Minister had announced certain measures on 18th April, 2013. Based on the announcements necessary amendment to SEZ Rules, 2006 have been carried out vide Notification dated12th August 2013. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Definition of "SECTOR' amended: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present Rule 2(1)(x) reads as:</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(x) "Sector” means one or more products or one or more services falling under a category such as engineering, textiles and garments, pharmaceuticals and chemicals, handicrafts, gem and jewellery, electronics hardware and software, including information technology enabled services and bio-technology; </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is amended to add a proviso: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Provided that various categories comprising their respective products or services, similar or compatible with each other, including related ancillary services and Research and Development services of the sector and additional combination of products and services of a similar or compatible nature as approved by the Board of Approval shall constitute a single sector;" </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 5(2) (a): </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) A Special Economic Zone for multi product shall have a contiguous area of <strong>one thousand hectares</strong> or more but not exceeding 5000 hectares: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that in case a Special Economic Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and Kashmir, Goa or in a Union Territory, the area shall be<strong> two hundred hectares</strong> or more : </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, this 1000 is changed to 500 and 200 to 100. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 5(2) (b): <strong>Important changes</strong>:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Special Economic Zone for a specific sector or for one or more services or in a port or airport shall have a contiguous area of fifty (earlier 100) hectares or more. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For each contiguous fifty hectare land, an additional sector may be allowed: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Additional land requirement for an additional sector in a Special Economic Zone for a specific sector or for one or more services as per first proviso will be twenty five hectares when the Special Economic Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttarakhand, Sikkim, Jammu and Kashmir, Goa or in a Union territory. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• No minimum area requirement for setting up a Special Economic Zone for Information Technology or Information Technology Enabled Services, but a minimum built up processing area requirement shall be applicable, based on the category of cities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• In case a Special Economic Zone is proposed to be set up exclusively for handicrafts, the area shall be ten hectares or more: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• In case a Special Economic Zone is proposed to be set up exclusively for biotechnology, non-conventional energy, including solar energy equipments or cell, or gems and jewellery sectors, agro-based food processing, the area shall be ten hectares or more. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 11(11) reads as:</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Special Economic Zone shall be deemed to be a port, airport, inland container deport, land customs station under section 7 of the Customs Act in accordance with the provisions of section 53 from the date notified in this behalf : </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new proviso is added: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Provided also that addition or inclusion of any land to an existing Special Economic Zone, where such land contains a port, manufacturing unit, or structures in which no commercial, industrial or economic activity is in progress, then such Special Economic Zone shall not be eligible for any duty benefits in respect of the pre-existing structures but any additions or up-gradations to such existing ports, manufacturing units, or structures after their addition or inclusion in a Special Economic Zone shall be eligible for the fiscal incentives as applicable for a new infrastructure in a Special Economic Zone and also the authorised operations being carried on in such infrastructure shall be eligible for benefits as provided for under the Special Economic Zone Act and rules." </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Rule 74A inserted: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The New Rule reads as: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<strong>74A. Transfer of Assets by Special Economic Zone Units upon their exit</strong> .- The Unit may opt out of Special Economic Zone by transferring its assets and liabilities to another person by way of transfer of ownership including sale of Special Economic Zone units subject to the following conditions:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the Unit has held a valid Letter of Approval as well as lease of land for not less than a period of five years on the date of transfer; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) the unit has been operational for a minimum period of two years after the commencement of production as on the date of transfer ; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) such sale or transfer transactions shall be subject to the approval of the Approval Committee; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) the transferee fulfils all eligibility criteria applicable to a Unit; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) the applicable duties and liabilities, if any, as calculated under rule 74, as well as export obligations of the transferor Unit, if any, shall stand transferred to the transferee Unit which shall be under obligation to discharge the same on the same terms and conditions as the transferor Unit.". </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Classification of Cities is included as per Annexure IVA.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=259&filename=sez/sez_notifications/sez_rules_01_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ministry of Commerce and Industry (Department of Commerce) Notification, Dated: August 12 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Definitive Anti-dumping duty imposed on Resin and laminated fibre boards</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the matter of resin or other organic substances bonded wood or ligneous fibre boards of thickness below 6mm, except insulation boards, laminated fibre boards and boards which are not bonded either by resin or other organic substances [Ch 44] originating in, or exported from, China PR, Indonesia, Malaysia and Sri Lanka and imported into India, the Central Government had imposed provisional anti-dumping duty, vide notification No. 43/2012-Cus(ADD), dated the 21st September, 2012. This notification was valid for a period of <strong>six</strong> months. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Designated Authority vide its final findings No. 14/29/2010-DGAD, dated 10th May, 2013, had come to a conclusion that the domestic industry had suffered material injury due to the dumping of the subject goods by the subject countries and recommended imposition of definitive anti-dumping duty. The Central Government has, therefore, imposed definitive anti-dumping duty on all imports of the subject goods, originating in or exported from the subject countries. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This notification is valid for a period of <strong>18</strong> months. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">By the way, the provisional anti-dumping duty notification which was valid only for six months found its way to the bin on March 20, 2013 and now we have a notification imposing definitive anti-dumping goods on the subject goods, originating in or exported from the subject countries. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">What happens to the period from 21/03/2013 till 07/08/2013 is anyone's guess. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">How can the authorities concerned be so callous or are the importers not bothered. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2013/ctariffadd13_018.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 18/2013-Cus (ADD), Dated:August, 08, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Option to close cases of default in Export Obligation</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DGFT has provided an option for redemption/ regularisation of old cases of default in Export Obligation under (a) Duty Exemption Scheme (b) EPCG Scheme. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>All pending cases of the default in meeting Export Obligation (EO) can be regularised by the authorisation holder on payment of applicable customs duty, corresponding to the shortfall in export obligation, along with interest on such customs duty; but the interest component to be so paid shall not exceed the amount of customs duty payable for this default. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The customs duty could be paid either in cash or by way of debiting of any valid duty credit scrips issued under Chapter 3 of the Foreign Trade Policy. The interest component however, has to be paid in cash only. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any authorisation holder choosing to avail this benefit must complete the process of payment on or before 31st March 2014. </font></em></p> </blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Customs Department agree? Will they issue a notification/circular?</font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn022.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 22/( RE-2013)/ 2009-2014, Dated: August 12, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">"V” for Victory in VCES, 2013 Logo</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_logo.jpg" alt="Legal Corner Icon" width="293" height="149" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY</strong>, after we carried the capsule on VCES, 2013 in this column, we received a mail from a netizen who seems to be closely following our <em><strong>voluntary</strong></em> journey on the scheme. This is what he has to say – </font></p> <blockquote> <p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"Since the announcement of the VCES scheme, DDT has been continuously carrying mails from netizens airing their views on the scheme and their apprehensions in spite of some erudite professionals branding these views as merely hypothetical and being those of votaries who are against the scheme per se. Thankfully, the Board </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2013/sercir170.htm" target="_blank">Circular 170</a></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"> has provided answers to these ‘netizen views' reaffirming that the Board is a listener but nonetheless a slow starter and wishes to go all out to bring many of these stop-filers/non-filers/incorrect return filers into the taxation fold by luring them with waiver of penalty, interest and prosecution. </font></em></p> <p><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Nayidisha, nayi shuruvaat</strong> …God knows!” </font></em></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Pune Zone organizes MCTP Workshop </font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Workshop.jpg" alt="Legal Corner Icon" width="606" height="342" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> had in our Guest Column carried a four-part series titled "<strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgwMTQ=" target="_blank">Mid-Career Training Programme – the Value of Training</a></strong>” by Dr. G. Sreekumar Menon, Commissioner (Appeals), Goa who had attended the programme four months ago at the Indian School of Business (ISB), Hyderabad and thereafter at the Maxwell School of Syracuse University, U.S.A . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chief Commissioner, Pune Zone, felt it apt to organize a similar workshop at his workplace and, therefore, invited Dr.Menon to disseminate among the officers, the valuable insights gained by him.The audience was told the importance of positive thinking, motivation, strategy and achievement, effective change, leadership, leadership styles, difference between personal traits and managerial traits, women in leadership positions and their style of functioning. The program was attended by officers of all ranks drawn from Pune I & III, Central Excise and Pune Customs Commissionerate. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The participants were also treated to a pep talk by Mr.Gopinath, Additional Commissioner, Pune Customs, who too emphasized the importance of self-motivation and benefits of positive thinking and actions for organizational and personal growth. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Positive thinking and self-motivation are badly needed these days what with the Cadre Review in CBEC yet to become a reality.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We had carried a report on a similar programme organised by Hyderabad Chief Commissioner in <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgxNDk="><strong>DDT 2143-08.07.2013 - MCTP - Follow up Workshop - Hyderabad CC's Initiative</strong> </a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a complete disregard and defiance on part of refund sanctioning authority of orders passed by this Tribunal - If order is not complied with, authority shall be liable to contempt proceedings</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CESTAT had vide order dated 27/09/2012 directed that the authority <em><strong>concerned</strong></em> should consider the bar of unjust enrichment in respect of the refund claim filed by the appellant and pass order in accordance with law within a period of 30 days from the communication of the order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In spite of such specific directions, the refund sanctioning authority did not put pen to paper. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant is before the CESTAT and submits that they were heard on the matter by the sanctioning authority only on 23/07/2013 much after the time-limit had expired. They, therefore, submit that directions be given to the refund sanctioning authority to decide the matter forthwith. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the AR was asked about this by the Bench, he submitted that although a status report was sought from the refund sanctioning authority, no reply had been received so far. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed – </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399">"4. On going through the records and after hearing the arguments, I find that there is a complete disregard and defiance on the part of the refund sanctioning authority of the orders passed by this Tribunal. Be that as it may, I direct the concerned authority to pass order on the refund claims filed by the appellant forthwith and report compliance on 1 st August, 2013. </font></em></font></p> <p align="justify"><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The learned Dy. Commissioner (AR) is present in the Court and has noted the order given hereinabove and that constituted sufficient notice to the concerned authority to comply with the directions of this Court. If the order is not complied with and the decision on the refund claim is not passed and communicated to the appellant, the authority shall be liable to contempt proceedings.” </font></em></font></p> </blockquote> <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=ODk0MzY=" target="_blank">2013-TIOL-1213-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"> – Wednesday's cases</font></strong></font></strong></font></p> <p><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><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">CENVAT Credit on inputs contained in scrap generated during manufacture of exempted goods – Assessee is entitled to credit: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> view of the fact that the waste and scrap is final product and exciseable item, taking into consideration the scheme of CENVAT Credit, it is but obvious that the appellant is entitled to claim CENVAT Credit on the inputs of plastic granules proportionate to the waste and scrap. The Tribunal lost the sight of this aspect of the matter. It is held that the appellant was entitled for CENVAT Credit under Rule 57AA of the Central Excise Rules on proportionate plastic granules which generated the scrap in the manufacturing process of intravenous fluids. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when assessee receives arrears of his professional fees after getting elevated as HC Judge, such receipt cannot be taxed for lack of legislative provision - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a lawyer by profession, before his elevation as a Judge of the Delhi High Court. During the year under consideration, he derived income from salary, profession and income from other sources, maintaining his books of account on cash basis. He claimed an amount of Rs 67,10,362/- representing receipt of arrears of his professional fees for professional services rendered in earlier years before his elevation as Judge of the High Court, as exempt from tax. The AO was of the view that by claiming the exemption, the assessee had neither offered the amount of Rs 67,10,362/- for taxation in the year in which the professional activity was carried out by him, nor in the year of receipt, nor in any other year, and so, allowing the claim of exemption would result in the receipt never being taxed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tribunal held, "due to the absence of any legislative provision these receipts cannot be treated as business income falling under the head "Profits and Gains of Business, Profession or Vocation” carried on by the assessee during the relevant year. They cannot be included in the total income of the assessee, even though the amount was received by the assessee before the discontinuance of his profession due to his elevation as High Court Judge.” </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">Taking of credit and its utilization is a substantive right of taxpayer under value added taxation scheme - therefore, in the absence of clear legal prohibition, this right cannot be denied - <em>Prima facie</em> case in favour - Stay granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VIDE</strong> Finance Act, 2007, the scope of telephone service was expanded and the services of any description by means of telecommunication provided to any person was made exigible to service tax. Prior to 01/06/2007 the appellant was rendering services to other telecommunication operators which were commonly known as "Inter Connectivity usage service" for which they were receiving consideration. However, since the other telephone operators were not the subscribers of the appellant, there was no service tax liability. As per<em> CENVAT Credit</em> Rules as they stood at the relevant time, under Rule 6(3)(c), in a situation where the output service provider rendered taxable as well as exempted service and did not maintain separate account of the input services utilised, there was a restriction on availment of CENVAT Credit to the extent of 20% of the amount of service tax payable on taxable output service. Therefore, the appellant was not able to utilize 80% of the input service tax credit prior to 01/06/2007. Consequently, there was accumulation of CENVAT Credit in the books of accounts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was, however, no provision in the CENVAT Credit Rules, for lapse of accumulated credit. On 01/06/2007, when the scope of telecommunication service was extended to cover inter-connectivity usage services provided to other telephone operators, the appellant utilised the accumulated credit towards the discharge of service tax liability. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p 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"> <strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p> </body> </html>