TIOL-DDT 2206 · 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 2206</font><br> 09.10.2013<br> Wednesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - BCCI given time to pre-deposit Rs. 10 Crores - HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THESE</strong> appeals are directed against the common order dated 6 August 2013 <strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk4MzE=" target="_blank">2013-TIOL-1361-CESTAT-MUM</a>)</font></strong> passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Branch at Mumbai (Tribunal) on the stay applications filed by the appellant in appeals pending before the Tribunal challenging the levy of service tax for the total sum of Rs.20,70,22,328/- plus interest and penalty. The demand of service tax was confirmed by the adjudicating authority on the ground that the appellant received taxable service of programme producer service from the foreign service providers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal has directed the appellant to deposit 50% of the service tax confirmed in each case within 8 weeks. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court was not inclined to admit the appeals, but on the request of the Counsel, the High Court extended the time limit for the appellant to pay the amount of pre-deposit upto 31 October 2013. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTAxOTc=" target="_blank"><font size="1">2013-TIOL-775-HC-MUM-ST </font></a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - Warehoused Goods - Commencement of interest free period of 90 days under Section 61 of Act - Board Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Sub-section 2 (ii) of Section 61 of the Customs Act, 1962, <em>where any warehoused goods specified in sub-clause (b) of sub-section (1) of Section 61 remain in a warehouse beyond a period of ninety days, interest shall be payable at such rate, as may be fixed by the Board, on the amount of duty payable at the time of clearance of the goods in accordance with the provisions of section 15 on the warehoused goods, for the period from the expiry of the said ninety days till the date of payment of duty on the warehoused goods. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When does the period of ninety days commence?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board explains: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The term '<em>warehoused goods</em>' is defined under Section 2 (44) of the Customs Act, 1962 as 'goods deposited in a warehouse'. Section 61 further indicates that the warehoused goods have to remain in the warehouse beyond a period of ninety days, for the interest to be chargeable.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, a harmonious reading of the wording of Sub-section 2 (ii) of Section 61 and the definition of the term ‘warehoused goods' indicates that when the goods deposited in a warehouse remain warehoused beyond a period of ninety days, then the interest starts accruing. In other words, the relevant date when the period of 90 days would commence would be the date of depositing the goods in the warehouse. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Board clarifies, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The period of 90 days, under Section 61 (2) (ii) of the Customs Act, 1962, would commence from the date of deposit of goods in the warehouse. </font></em></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_039.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 39/2013-Cus., Dated: October 01, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Is officer investigating case under NDPS, Police Officer and is Statement recorded by him confessional statement? - Matter Goes to Larger Bench of SC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong><em>Kanhaiyalal vs. Union of India</em> - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2008/2008-TIOL-06-SC-NDPS.htm"><strong><font size="1">2008-TIOL-06-SC-NDPS</font></strong></a>, the Supreme Court had held that confessions made under provisions of Section 67 of the NDPS Act and other criminal enactments, such as the Customs Act, 1962, may be treated as confessions for the purpose of Section 27 of the Evidence Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now another Bench of the Supreme Court has doubted Kanhaiyalal and referred the issue for consideration by a Larger Bench. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court delivered the judgement yesterday and as usual, we bring it to you today. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18795" target="_blank">Breaking News</a></strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Statement before Customs Officer - Also needs Review </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> some strange reason, the Courts in this country believe that officers of Customs, Central Excise and the like are not as bad as the police officers. A statement given before a police officer is not a valid piece of evidence while the one given before a Customs or Excise officer is. The logic would be that the Police obtain statements by force and the Customs is full of clones of <em>ahimsavadi</em> officers and the hard core Criminal who does not succumb to third degree torture of the police will sing voluntarily before the Customs! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why would anyone voluntarily confess to a crime? It is a known fact that every <strong>voluntary</strong> statement is obtained by threat and torture and if any volunteer has the audacity to retract immediately, he is further tortured to retract his retraction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the law is that a statement before these authorities is EVIDENCE. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Ramesh Chandra Mehta v State of West Bengal</em>, way back in 1968, a Constitution Bench of five judges of the Supreme Court held, "<em>a Customs Officer is under the Act of 1962 not a police officer within the meaning of Section 25 of the Evidence Act and the statements made before him by a person who is arrested or against whom an inquiry is made are not covered by Section 25 of the Indian Evidence Act</em>."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the same year another Constitutional Bench in <em>Ilyas v Collector of Customs</em>, held,<em> "even though the customs officers have been invested with many of the powers which an officer in charge of a police station exercises when investigating a cognizable offence he does not thereby become a police officer within the meaning of s. 25 of the Evidence Act and so the confessional statements made by accused persons to customs officials would be admissible in evidence against them</em>."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since then, many judgements have consistently taken the same view and Statements recorded by Customs officers (by any means) are accepted as consecrated confessions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I brought this issue to the notice of the Parliamentary Standing Committee on Finance, when TIOL was invited to speak before the Committee eight years ago. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Hon'ble Chairman of the Standing Committee was surprised and said, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I did not know about this aspect. I am surprised that a person who is recording the evidence is also, in a way, the prosecutor. In case of Police, they are not allowed to record the evidence because it is not acceptable in a court of law. The Police have to approach the Magistrate to record the evidence. Why is it that there is no third agency involved in this case? You have talked about the disadvantages of the present system. I am quite surprised as a common citizen that the Custom people have been allowed this authority whereas the Police have not been allowed to do so. Both are trying to prosecute the people whom they consider to be guilty. Let me know the background and whether there is any legal solution for this. Apart from prohibiting a Custom officer from recording the evidence, we should say that such and such person should be present at the time of recording the evidence or something like that. If you have got any suggestion to ensure that this third degree method is not employed or if it is employed, their evidence is not accepted, please submit. You can send this information after due consideration, in writing. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps it is time the Supreme Court reconsidered not only Kanhaiyalal but also Ramesh Chandra Mehta in relation to Statements under the Customs Act and Central Excise Act. Recently a senior officer of a Company told me that he was forced to give a statement that he took CENVAT credit knowing that he was not eligible for it! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reverse Mortgage Scheme </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IS</strong> mortgage of property for obtaining a loan under the reverse mortgage scheme a transfer within the meaning of the Income-tax Act thereby giving rise to capital gains? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per clause (XVI) of section 47 of the Income-tax Act (with effect from 1.4.2008), any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government shall not be regarded as a transfer and therefore shall not attract capital gains tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, in pursuance of above, Reverse Mortgage Scheme has been notified vide notification No. 93/2008 dated 30th September 2008. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has amended the <strong>Reverse Mortgage Scheme </strong>to provide for disbursing the loan to the annuity sourcing institution for the purposes of periodic payments by way of annuity to the reverse mortgagor. And some consequential changes are made. “Annuity Sourcing Institution” means Life Insurance Corporation of India or any other insurer registered with the Insurance Regulatory and Development Authority. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2013/it13not079.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Notification No. 79/2013-., Dated: October 07, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Paper Trail - Viable Voter Verifiable Paper Audit Trail (VVPAT) system for Elections in India - SC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Dr.</strong> Subramanian Swamy was before the Supreme Court with a prayer to direct the Election Commission of India to incorporate a system of "paper trail/paper receipt" in the Electronic Voting Machines (EVMs) as a convincing proof that the EVM has rightly registered the vote cast by a voter in favour of a particular candidate. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court in a judgement delivered yesterday was satisfied that the “paper trail” is an indispensable requirement of free and fair elections. The confidence of the voters in the EVMs can be achieved only with the introduction of the "paper trail". EVMs with VVPAT system ensure the accuracy of the voting system. With an intent to have fullest transparency in the system and to restore the confidence of the voters, it is necessary to set up EVMs with viable VVPAT (Voter Verifiable Paper Audit Trail) system because vote is nothing but an act of expression which has immense importance in democratic system. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taking notice of the pragmatic and reasonable approach of the ECI and considering the fact that in general elections all over India, the ECI has to handle one million (ten lakhs) polling booths, the Supreme Court permitted the ECI to introduce the same in gradual stages or geographical-wise in the ensuing general elections. The area, State or actual booth(s) are to be decided by the ECI and the ECI is free to implement the same in a phased manner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For implementation of such a system (VVPAT) in a phased manner, the Government of India is directed to provide required financial assistance for procurement of units of VVPAT. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is likely to cost the taxpayer about Rs. 2000 Crores. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Applications Invited for Post of Settlement Commission Members </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Revenue Department has invited applications from Chief Commissioners of Customs and Central Excise for the post of Member, Customs and Central Excise Settlement Commission, which are likely to arise during the period from 1st October, 2013 to 31st March, 2014. The posting would be in New Delhi, Mumbai, Kolkata or Chennai.</font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/deputation/vacancies_settmt_comm_member.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoF Dept of Revenue F.No.A.12026/10/2013-Ad.I., Dated: October 03, 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"> – Thursday's cases</font></strong></font></strong></font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Service Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Electroplating of connector components on job-work amounts to manufacture - No Service Tax payable: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is engaged in the manufacture of various electric and electronic goods. Besides undertaking manufacture on their account, they have also undertaken electroplating of connector components for M/s. Tyco Electronic Corporation India Pvt. Ltd. Job work consists of electroplating of goods supplied by M/s. Tyco Electronic with silver or gold. The appellant was availing the benefit of Notification No.8/2005 on the ground that they are engaged in the manufacture of these goods and they were supplying the same to M/s. Tyco Electronic. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The process undertaken by the appellant amounts to manufacture and therefore they are not liable to pay service tax in view of the specific exclusion in the definition of ‘business auxiliary service' which provides that if the process amounts to manufacture, no service tax would be liable to be paid.</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 expenditure incurred towards channel placement charges for broadcasting of channel on desired bands can be construed as expenditure for sales promotion or publicity - NO: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee company is broadcasting news through its four news channels, viz., Aaj Tak, Headlines Today, Dilli Aaj Tak and Tez. The assessee has incurred expenses in respect of channel placement charges which is in the nature of distribution expenses. However, the AO was of the opinion that the same was for sales promotion and attracted the rigours of fringe benefit tax (FBT). The issues before the Bench are - Whether expenditure incurred towards channel placement charges for broadcasting of channels on the desired bands is in the nature of sales promotion or publicity; Whether such payments attracts the levy of FBT and Whether channel placement charges made to third parties meets the requirement of employer-employee relationship between the assessee and such recipient. And the verdict partly goes in favour of the assessee. </font></p> <p align="justify"><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">Uttarakhand Exemption - commencement of commercial production means starting of manufacture of finished products on commercial scale, which is preceded by trial production - Pre-deposit ordered - CESTAT by majority</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>COMMENCEMENT</strong> of commercial production means starting of the manufacture of the finished products on commercial scale, which is preceded by trial production and installation of complete plant & machinery and on that day the plant must be ready in all respects for manufacture of finished product in commercial quantity and all raw materials, consumables, etc. required for manufacture are available. It is settled law that while considering waiver from the requirement of pre-deposit under Section 35F of the Central Excise Act, 1944, the main factor which is to be considered is as to whether the appellant have prima facie case in their favour or not and if there is slightest risk to the Revenue, the conditions must be imposed for safeguarding the interests of the Revenue. </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><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p> </body> </html>