TIOL-DDT 2172 · the untouched capture
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<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 2172</font><br>
20 .08.2013<br>
Tuesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recovery
of Excise arrears from purchaser of property of defaulter - ‘No way', says
SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is how the story begins: - A unit is started with a loan from institutions like the State Finance Corporation. After some time the unit becomes sick. - Sick of everything - major reasons for the sickness would be excessive activism of a multitude of government agencies of this welfare state. In the meantime after a couple of Audit parties, preventive parties, Show Cause Notices and adjudication, arrears are born and by the time the Central Excise officer goes to serve the adjudication order, he is informed that the unit is closed, taken over by the SFC and sold. After a while the new owner comes for registration and then the department demands the dues of the old unit from him. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department believes that they represent the Crown (even seventy years after we got rid of the crown) and so they can recover anytime from anybody. But the Courts often tell them that unfortunately there are laws in this country, which the mighty Revenue is required to obey, even if they have only utter contempt for them.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last Friday, the Supreme Court delivered yet another landmark judgement holding emphatically that any person who buys a property of a defaulter, which was taken over by the SFC, was not liable to pay the dues of the defaulter. He is liable only when the buyer has purchased the entire business of the defaulter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this case there was another interesting angle. The sale deed by the SFC stated that all statutory dues are to be paid by the buyer. The Supreme Court held that the excise duty dues of the defaulter were not statutory dues to be paid by the buyer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this important judgement today. Please see<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18451" target="_blank"> <strong>Breaking News</strong></a></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see: </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>++ <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3138">Can arrears be realised from purchaser of the unit in auction? </a></strong></font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTIxNzI=">First Charge for Customs, Excise and Service Tax Dues </a></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16012">Recovery of arrears - Central Excise dues cannot have precedence over claims made by Banks: AP High Court </a></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2012/2012-TIOL-66-HC-AHM-CX.htm">2012-TIOL-66-HC-AHM-CX</a></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6786">'Precedence of Crown dues' falls flat once again - Central Excise has no priority over banks which are secured creditors : Bombay High Court </a></font></strong></p>
</blockquote>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central
Excise - Classification - Care or Cure - medicament or cosmetic - SC decides </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>‘CARE</strong> or cure', is the clue for the resolution of the lis arising in these cases. If the product by name ‘Moisturex' is held to be a medicament for cure, the decision goes in favour of the assessee and if the product is held to be one for care of the skin, the decision benefits the Central Excise. The Tribunal has held in favour of the assessee and, so, the aggrieved Central Excise Department is in appeals before the Supreme Court.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held that when a product contains pharmaceutical ingredients that have therapeutic or prophylactic or curative properties, the proportion of such ingredients is not invariably decisive. What is of importance is the curative attributes of such ingredients that render the product a medicament and not a cosmetic. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this judgement today. Please see<strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18452" target="_blank">Breaking News </a></strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No more LED TVs through free baggage </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY</strong>, it was widely reported in the Press that the government has banned duty- free import of flat screen television by air travellers in a bid to prop up rupee, which declined below the 63 level against USD (which as per Goldman Sachs would touch 65). This ban, it is said, is to come into force from August, 26, 2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In the Rajya Sabha yesterday, a copy of the Ministry of Finance (Department of Revenue) Notification No. 84/2013-Customs (N.T.), dated the 19th August, 2013, seeking to further amend Notification No. 30/98-Customs (N.T.), dated the 2nd June, 1998, so as to disallow import of “Flat Panel (LCD/LED/Plasma) Television” as part of free baggage allowance, along with Explanatory Memorandum, under Section 79 of the Customs Act, 1962 (52 of 1962), was laid on the Table of the House. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the days to come, we would get to read televisions being smuggled into the country.<font color="#FF0000"> Fortunately, they cannot be hidden in undergarments or body parts! So, they are right royally brought in without paying proper duty even by Customs officers. </font></font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">But, <strong>where is the notification ? </strong>- CBEC is yet to make it public. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Statement on Safe Harbour Rules </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> order to reduce the increasing number of transfer pricing audits and prolonged disputes, the Finance (No.2) Act, 2009 w.r.e.f 1.4.2009 inserted a new section 92CB to provide that determination of arm's length price under section 92C or Section 92CA shall be subject to safe harbour rules. Vide this amendment, the Government of India had empowered the CBDT to make Safe Harbour rules. “Safe harbour” was defined to mean circumstances in which the income-tax authorities shall accept the transfer price declared by the assessee. Thereafter, the issuance of the Safe Harbour Rules was examined and discussed at various points of time, but no finality could be reached. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The major recommendations of the Rangachary Committee have been accepted, with some modifications, and the following decisions have been taken by Government: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Safe harbour for the sectors recommended by the Rangachary Committee shall be applicable for two assessment years beginning from 2013-14. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Safe harbour for various sectors, subject to certain ceilings prescribed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Safe harbour rules shall not be applicable in respect of an international transaction entered into with an associated enterprise located in any country or territory notified under section 94A of the Income-tax Act, 1961, or in a no tax or low tax country or territory. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Safe harbour rules shall be applicable only where a taxpayer exercises his option to be governed by such rules in a specified form to be furnished before the due date of filing of return. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) Where the Transfer Pricing Officer is of the opinion that the option exercised by the assessee is valid, he shall intimate acceptance of transfer price declared by the assesse to the assessing officer and the assessee within a period of six months from the end of the month in which reference under section 92CA is received from the assessing officer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6) A taxpayer opting for safe harbour rules shall not be allowed to invoke Mutual Agreement Procedure (MAP) provided under the relevant DTAAs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(7) Where the safe harbour rules are not applicable in the case of an assessee, engagedin providing contract research and development services with insignificant risks, the Transactional Net Margin Method (TNMM) shall be considered as the most appropriate method for the determination of arm's length price unless it is shown by the assesse that it is not feasible to apply this method in the facts and circumstances of the case. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The draft rules along with the Second to the Sixth report of the Rangachary Committee have been posted on the website of the Income-tax Department. All stakeholders are requested to provide their comments, if any, by 26th August, 2013 to the Director (FT&TR) at her email id <a href="mailto:batsala.yadav@nic.in"><strong>batsala.yadav@nic.in</strong> </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please also see our <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18427">CobWeb</a></strong></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/FinalStatement.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Statement by CBDT on Safe Harbour Rules Under Section 92CB of the Act </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">A person who is going abroad can carry USD 25000 with him, therefore, redemption fine and penalties are to be considered separately for each of appellants </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> 17/12/2007, R. N. Mewawala, A.R.Sura & S.M. Katiyar were about to board flight for Bangkok but they were intercepted by the Customs officers and it was found that they were carrying three hand bags which were tagged with the boarding pass of S. M. Katiyar. All the bags were called for examination and it was found that the bags identified by the respective passengers were carrying Indian and foreign currencies. Therefore, all the passengers were detained for examination and investigation took place. On investigation, it was found that the bag claimed by R. N. Mewawala contained USD 1,05,800, Indian Currency of Rs.2,12,000/- and Thai Baht 1,39,070, the bag owned by A.RSura contained USD 40,000 and British Pounds 520. The bag owned by S.M. Katiyar contained USD 1100 and Indian Currency of Rs.18,000/-. Therefore, a case was made against all the appellants that they were engaged in the activity of smuggling of Indian currency as well as foreign currency, which were totally valued at Rs.60,87,157/-. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Adjudication proceedings culminated in confiscation of the currencies. A redemption fine was imposed of Rs.40 lakhs and following penalties were imposed on the three persons of Rs.15,00,000/-, Rs.4,00,000/- and Rs. 10,000/- respectively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, the appellants submitted that they are only contesting the quantum of redemption fine and penalties imposed and not the issue of illicit smuggling of the currencies. Reliance is placed on the decision in <em>Sh. Savier Poonolly vs. CC, Chennai </em><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2005/2005-TIOL-515-CESTAT-MAD.htm" target="_blank">(2005-TIOL-515-CESTAT-MUM)</a></font></font></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench held - </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<font color="#663399"><em>5. After considering the submissions of both sides, we find that it is not disputed by the adjudicating authority that a person who is going abroad can carry USD 25000 with him. Therefore, the contention of the ld. Counsel is acceptable that redemption fine and penalties are on higher side as held by the tribunal in the case of Savier Poonolly (supra). Therefore, we are of the opinion that redemption fine and penalties are to be considered separately for each of the appellants. As Shri Rajesh Narendra Mewawalla was carrying USD 105,800 and Thai Bhatt 139,070 therefore, considering the quantum, we impose redemption fine of Rs.6 lakhs (Rupees Six lakhs) and reduced penalty to Rs. 3 lakhs (Rupees Three lakhs) on Shri Rajesh N. Mewawalla under sec. 114(i) of the Customs Act, 1962. With regard to Shri Arun Ramlal Sura who was carrying Us $40,000/- and British Pounds 520 therefore, redemption fine of Rs.1,00,000/- (Rupees One lakh) is imposed and penalty is reduced to Rs.50,000/-. </em></font></font></p>
<p align="justify"><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. With regard to Shri Shashikant Munshilal Katiyar, we find that he was carrying USD 1100 which is within the permissible limit, therefore, no redemption fine is imposed on him and penalty is also dropped</font></em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">."</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appeals were disposed of in above terms.</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See </font><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk1MDU=" target="_blank"><font size="1" face="Verdana, Arial, Helvetica, sans-serif">2013-TIOL-1242-CESTAT-MUM </font></a></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 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">Price Escalation - Supplementary Invoices - Interest u/s 11AB - It cannot be said that short payment was due to fraud, collusion etc. which means intentional, deliberate or deceitful means - it is only reasonable that period of limitation that applies to claim for principal amount should also apply to claim for interest thereon - Appeals allowed: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the present case there is no allegation and it cannot be held that the longer period of limitation of five years is applicable. It cannot be said that the short payment was due to fraud, collusion etc. which means intentional, deliberate or deceitful means. In view of the aforesaid position, it has to be held that the period of limitation of one year would apply to the present cases and the show cause notices were belated and barred by limitation. </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 non-entertainment of a writ petition by High Court, when I-T Act offers an efficacious alternative remedy, is a rule of self-imposed limitation - YES: SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether non-entertainment of a writ petition by a High Court, when the I-T Act offers an efficacious alternative remedy is a rule of self-imposed limitation; Whether writ jurisdiction can be invoked even if there is alternative remedy on the ground of substantial reasons and Whether a High Court should exercise its writ powers only if it identifies some exceptions to the rule of alternative remedy. And the verdict goes in favour of 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">Appellant conducting training programs for officials of various banks and also post-graduate diploma programme for students in banking management and for which they are charging lumpsum amount from participants or their sponsors - in view of retrospective amendment made to definition of "commercial training or coaching centre" by FA, 2010, appellant liable to pay Service Tax: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NATIONAL</strong> Institute of Bank Management (NIBM) conducted a number of training programs for the officials of various banks and also a post-graduate diploma programme for students in banking management. The appellant charged lumpsum amount for conducting these programmes from the participants or their sponsors. The department was of the view that the service rendered by the appellant came under the category of ‘Commercial Training or Coaching' and accordingly a SCN dated 06/04/2009 was issued demanding service tax of Rs.3,58,38,984/- on a gross amount of consideration received of Rs.30,72,93,330/- during the period 01/10/2003 to 30/09/2008. </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 Wednesday 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>
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