TIOL-DDT 2196 · 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 2196</font><br>
24.09.2013<br>
Tuesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on 'TOLL' - Department restrained from Recovery by Delhi HC</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC </strong>had clarified in Circular No. 152/3 /2012-ST, dated: February 22, 2012: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. Service tax is not leviable on toll paid by the users of roads, including those roads constructed by a Special Purpose Vehicle (SPV) created under an agreement between National Highway Authority of India (NHAI) or a State Authority and the concessionaire (Public Private Partnership Model, Build-Own/Operate-Transfer arrangement). ‘Tolls' is a matter enumerated (serial number 59) in List-II (State List), in the Seventh Schedule of the Constitution of India and the same is not covered by any of the taxable services at present. Tolls collected under the PPP model by the SPV are collection on own account and not on behalf of the person who has made the land available for construction of the road. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. However,<strong> if the SPV engages an independent entity to collect toll from users on its behalf and a part of toll collection is retained by that independent entity as commission or is compensated in any other manner, service tax liability arises on such commission or charges, under the Business Auxiliary Service </strong></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. An SPV formed as a result of agreement between NHAI or State Authority and the concessionaire under the BOT arrangement, cannot be considered as an agent of the NHAI. Renting, leasing or licensing of vacant land by the NHAI or State Authority to an SPV for construction of road and such construction do not attract service tax. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Levy of service tax on collection of toll demanded by the service tax department has been challenged in the Delhi High Court. The Petitioner also challenged the above mentioned Circular No. 152/3/2012-ST for justifying levy of service tax on toll despite admitting that the ‘Tolls' is a matter enumerated (serial number 59) in List-II (State List), in the Seventh Schedule of the Constitution of India. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner submitted that ‘Toll' is a matter enumerated at Sr. No.59 of list II (State List) and service tax cannot be imposed on ‘Toll'; that they are collecting ‘Toll' from the public/users of the roads under the agreement with National Highway Authority of India. Under the agreement, they cannot collect, levy or charge any amount other than the sum specified in the agreement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner drew the attention of the Court to paragraph 2 of the circular dated 22nd February, 2012 wherein it is mentioned and accepted that ‘Toll' falls in the State List and the same is not covered by taxable services under the Finance Act. However, as per the circular, the respondents claim that the excess amount retained by the toll collector is commission and, therefore, service tax liability arises on the said amount. The contention of the petitioner is that toll is an indirect tax and has to be collected from the customer or consumer, in present case, the toll users. The amount collected retains its character as toll paid by the user. The profit earned, if any, cannot be treated as commission or compensation, but it is income earned after meeting expenses. The toll collector is not rendering service to oneself. There is no service element in the excess amount, which is retained. He further submits that profits may not accrue and in some cases there may be loss also. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court last week ordered ‘issue of notice returnable on 12th November, 2013'. The Court ordered that, "<em>Assessment proceedings can continue but the respondents will separately quantify the amount which they claim is due and payable as service tax on toll charges which were retained by the petitioner after payment to the National Highway Authority of India. The said amount in terms of the assessment will not be collected by the respondents by taking coercive steps."</em></font></p>
<p><strong><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk5NTU=" target="_blank"><font size="1">2013-TIOL-722-HC-DEL-ST </font></a></font></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT lays down SOP for cases under Non-filers Monitoring System ('NMS') </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> feels that at present, cases of Non-Filers are not being uniformly monitored by the Assessing Officers due to lack of consistency in approach in dealing with such cases, Therefore, in order to streamline processing Of such cases and to ensure consistency in monitoring NMS cases by the Assessing Officers, the Board, lays down the following Standard Operating Procedure: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The Assessing Officer should issue letter to the assessee within 15 days of the case being assigned in NMS, seeking information about the return of income flagged in: NMS. Facility to generate letter has been provided in the NMS module of i-taxnet. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. If the letter is delivered, the Assessing Officer should capture the delivery date in the NMS module. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. If the letter is not delivered, the Assessing Officer should issue letter to the alternate addresses of the assesse available in the Online Monitoring System or any other address available with the Assessing Officer through field enquiries or otherwise. All addresses used in IT Return/ AIR, CIB databases have been made available to the Assessing Officer in the Online Monitoring System to assist the field formations in identification of current address of the taxpayer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. If the return is received, the assessing officer should capture the details in AST within 15 days of filing of the return. If the assessee informs that paper return has already been filed which was not captured in AST, the details of return should be entered in the AST within 15 days of receiving such information. E-filed returns will be automatically pushed to NMS. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. If no return is required to be filed in the case (non resident etc.), the Assessing Officer should mark "No return is required" and mention reason for the same in NMS which needs to be confirmed by Range head. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. If the Assessing Officer is not able to serve the letter and identify the taxpayer, assessing officer should mark the assessee "Assessee not traceable" in NMS which needs to be confirmed by Range head. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. In cases where the assesse has been identified and no return has been filed within 30 days of the time given in the letter, the Assessing Officer should consider initiation of proceedings u/s 142(1)14B in AST.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. The cases will he processed every week by the Directorate of Systems and will be marked as closed in NMS if one of the following actions are taken for A.Yr.'s 2010-11, 2011-12 and 2012-13: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) Details of return are available in AST </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Notice u/s 142(1) or 148 has been issued in MT </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) "No return is required" is marked by the Assessing Officer and confirmed by Range head. </font></p>
</blockquote>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1314.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Instruction No. 14/2013, Dated: September 23, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">I-T - Central Action Plan for Refunds </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> wants the Chief Commissioners to direct the Assessing Officers to issue the refunds for AY 2011-12 without further delay. Board wants the Chief Commissioners to monitor the progress and send a report on the matter by 15.10.2013 with reasons for non-issue of refunds, if any. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/Central_Action_Plan.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT F No.380/1/12013, Dated: September 20, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">US Rules in Favour of India in Countervailing Duty Investigation on Frozen Shrimp exports from India </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> United States International Trade Commission (USITC) determined that the US industry is neither materially injured nor threatened with material injury by reason of imports of frozen warm water shrimp from India, China, Ecuador, Malaysia, and Vietnam. USITC voted 4-2 against imposition of countervailing duty (CVD) against India and other six countries. As a result of the USITC`s negative determinations, US Commerce will not issue countervailing duty orders on imports of these products from India, China, Ecuador, Malaysia, and Vietnam. The final decision of USITC brings great relief to Indian shrimp industry and its exports. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Material collected by Adjudicating authority after completion of personal hearing and the same used for confirmation of demand - Principles of natural justice violated - matter remanded</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEMAND</strong> notices of Service Tax in excess of Rs.15 lakhs each was issued to the applicants on the ground that the applicants provided ‘Manpower Recruitment or Supply Agency Service'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the applicants attended personal hearing on 24/07/2012, the adjudicating authority made certain enquiries and after receipt of a report from the Assistant Commissioner of Labour, Aurangabad, an o-in-o dated 23/08/2012 was passed confirming the demands of Service Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lower appellate authority directed the applicants to deposit the amount of service tax along with interest as confirmed by the adjudicating authority for hearing of the appeals. However, since the applicants failed to make the pre-deposit, their appeals were dismissed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, the appellant reiterated their submission that since the evidence collected by the adjudicating authority after the date of personal hearing is used against the applicant and that too without supplying copy to them the order is passed in violation to the principles of natural justice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequent upon the directions of the Bench, the said enquiry report was produced by the Revenue representative during the hearing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative submitted that the only information sought by the adjudicating authority from the Assistant Commissioner of Labour, Aurangabad is regarding the registration certificate under the Contract Labour (Regulation & Abolition) Act, 1970 obtained by the applicants and that the same had no bearing on the merits of the case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed that in paragraph 16, 17, the adjudicating authority had taken into consideration the information received from the Assistant Commissioner of Labour, Aurangabad and relied upon the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Holding that there is merit in the contention of the applicant that the adjudication order is passed in violation to the principles of natural justice and that the relevant papers have been received by the applicants during the hearing of the appeals before the Tribunal, the Bench set aside the orders and remanded the matter back to the adjudicating authority to decide afresh and after affording an opportunity of hearing to the appellants. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">And now, the entire process starts all over again…all because of a puerile slip! </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See
<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk5NTY=" target="_blank"><font size="1">2013-TIOL-1413-CESTAT-MUM </font></a> </font></strong></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – 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">Instructions on Adjudication: Tribunal expects a reasoned speaking and fair order to be passed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> primary argument of the learned C.A. is that even after remand by the Tribunal in first round of litigation, learned authority has not done justice to the appellant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal has again remanded the matter with the observations that the Tribunal expects a reasoned speaking and fair order to be passed following due process of justice according to the guidelines of the Supreme Court laid down in para 7 of judgment in case of <em>Joint Commissioner of Income Tax, Surat Vs. Saheli Leasing & Industries Ltd. </em>- <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2010/2010-TIOL-37-SC-IT-LB.htm"><strong><font size="1">2010-TIOL-37-SC-IT-LB</font></strong></a>. </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 central agency is engaged in combating money laundering, Income tax search based on inputs from such an agency would be against national interests - YES: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether in a case of search & seizure, the Revenue can claim privilege for not disclosing the satisfaction note prepared on the basis of inputs received from the FIU; Whether disclosure of sources of such information would jeopardise public interest and Whether when a central agency is engaged in combating money laundering, income tax search based on inputs from such an agency would be against national interests. And the assessee's writ dismissed. </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">Laying of optical fibre cables for BSNL and other telecom service providers - Not taxable - <em>Prima facie</em> case made out - Pre-deposit waived: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant has claimed that this activity does not amount to rendering of any service. CBEC Circular dated 24/5/2010 clarifies the issue which is in favour of the assessee. On considering the circular, this Tribunal in the case of <em>Nicco Corporation Ltd . and in the case of Sanjeev Kumar Jain</em> have taken a view which is in favour of the assessee. The appellant has made out a strong prima facie case for waiver of the predeposit of the amount involved. Application for waiver of predeposit of the amount involved is allowed and recovery thereof stayed till the disposal of the appeal. </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 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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