TIOL-DDT 2217 · 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 2217</font><br>
25.10.2013 <br>
Friday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Arrest Vs VCES? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> recently conferred powers of arrest and treating offences as cognizable and non-bailable appear to be put into liberal use. It was only on 17th September 2013 by Circular No. 171 that the Board issued detailed guidelines on arrest and bail under Service Tax. The detailed Circular on VCES was issued on 13.5.3013. The arrest circular seems to have received the approbation of the field staff more than the VCES Circular. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The VCES is open till 31 December 2013 and a person who opts to pay the tax under the Scheme gets immunity from all proceedings under the Act including arrest and prosecution. Should such a person who has the option of filing a declaration be arrested under the Act and put in prison by denying bail? How will he arrange funds if he is in jail and will not his credibility levels suffer badly if he is in jail? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> asked a senior officer, who said that just because there was an on-going amnesty scheme, he cannot close down his preventive and audit wings and if the person wanting to come under VCES was genuine, he would have rushed to the Service Tax office on 11 May 2013 instead of waiting all these months. And he justified the arrests saying that only those who clearly evaded tax of more than Rs. 50 lakhs and who had collected the tax from the clients and not deposited it with the Government were arrested - such evaders deserve no better treatment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> spoke to a Commissioner of Service Tax who said that he would arrest only those who are not eligible under VCES. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The last few weeks saw quite a few arrests under Service Tax. Hyderabad II Commissionerate made two arrests within this week. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will these arrests prompt others to rush in and opt for VCES and/or pay Service Tax? Let's wait and see.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">I-T </font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">- Due Date for furnishing Audit Reports - CBDT Order </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> vide Order dated 26.09.2013 had ordered,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<em>CBDT in exercise of power under sec 119(2)(a) of the IT Act, 1961 read with Sec 139 and Rule 12 has decided to relax the requirement of furnishing the Report of Audit electronically as prescribed under the proviso to sub-rule(2) of Rule 12 of the IT Rules for Assessment Year 2013-14 as under - </em></font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) The assesses, who are presently finding it difficult to upload the prescribed Reports of Audit (as referred to above) in the system electronically may also furnish the same manually before the jurisdictional Assessing Officer within the prescribed due date. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) The said Report of Audit should however be furnished electronically on or before 31.10.2013.” </font></em></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, by an Order yesterday, the CBDT clarified,</font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In exercise of powers conferred under section 119 of the Income-tax 1961, the Central Board of Direct Taxes, in continuation to order u/s 119 dated 26.09.2013 in F.No. 225/117/2013/1TA.II, hereby directs that in cases where the 'due date' of furnishing reports of audit and corresponding income-tax returns was 30th September, 2013 and where the same are furnished electronically on or before 31st October, 2013, such reports of audit and returns of income shall be deemed to have been furnished within the 'due date' prescribed under section 139 of the Income-tax Act, 1961. </font></em></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2013/it13order_05.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Order in F.No. 225/117/2013-ITA.II., Dated: October 24, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Relaxation in export policy for export of Red Sanders wood </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has relaxed the export condition to allow export of 9784.1363 MT of Red Sanders wood, in the form of log obtained out of confiscated/seized stock from the Government of Andhra Pradesh & Directorate of Revenue Intelligence (DRI). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government of Andhra Pradesh is permitted to export 8584.1363 MTs of Red Sanders wood in log form, either by itself or through any entity/entities so authorized by them for the purpose and DRI is permitted to export 1200 MTs of Red Sanders wood in log form, either by itself or through any entity/entities so authorized by them for the purpose. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government of Andhra Pradesh/DRI should finalize the modalities including allocation of quantities to various entities, as applicable, for export of the respective quantities within 6 months of issue of this notification and such export must be completed within 6 months thereafter. The whole process of export shall be completed latest by 31st October, 2014. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently, the Assistant Commissioner of Central Excise, Bellary had seized Red Sanders valued at Rs. 6 Crores. Will this also be allowed to be exported? </font></p>
<p align="left"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No.47 (RE 2013)/2009-2014, Dated: October 24, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP -SION Entry Corrected </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has corrected the SION entry at Sl. No. A-3504 of the Product Group “Chemical and Allied Products”, the description of import item no. 1. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The existing entry <em>"7-Chloro-1-cyclopropyl-6-fluoro-1,4-dihydro-4-oxo-3-Quinoline-<font color="#FF0000"><strong>3</strong></font>-carboxylic acid" is corrected as, "7-Chloro-1-cyclopropyl-6-fluoro-1,4-dihydro-4-oxo-3-Quinoline carboxylic acid"</em></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn033.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No.33/(RE - 2013)/2009-2014, Dated: October 24, 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Seizure of Red Sanders and huge Recovery of excise duty by Assistant Commissioner, Bellary</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECENTLY</strong>, the team under the Bellary Assistant Commissioner of Central Excise, Arvind Ghuge seized Red sanders valued at about Rs. 6 Crores. This Division also recovered excise dues of nearly 17 Crores. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why is CBEC not able to issue promotion orders of Chief Commissioners? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME</strong> 15 Commissioners are waiting with bated breath for that magical announcement of their promotion to the ultimate field job in CBEC - THE Chief Commissioner. Everything is cleared - the DPC is over; the ACC has cleared their names - now all that is to be done is for a Deputy Secretary to issue the promotion and posting orders - and that the CBEC is not able to do for the last ten days. What is the problem? There are vacancies and there are officers ready to occupy the vacant slots. But administration is not about simply filling in the vacant slots. There are manoeuvring games, fixers and shakers, obliging the powers that be and puzzling problems that have to be overcome before postings can be done. This time there is a tremendous pressure for posts in and around Delhi. All the Delhites who are now posted out of Delhi are out to seize their bastion back and unfortunately, not everybody can be accommodated. In the process, the promotion is getting delayed. Until the promoters come to a consensus, these promotions cannot take place. Even NACEN, Faridabad is in great demand - it is also a Delhi posting! <strong>(<a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTg4OTI=" target="_blank">see DDT 2215</a>)</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many officers wonder how the CBEC is going to promote hundreds of officers under cadre restructuring if they cannot promote 15 Commissioners to the rank of Chief Commissioner. What right has the Board to deny the promotion to these officers who have all put in more than thirty years of service in the department? The whole work can be completed in two hours - if they want to! There has to be something terribly wrong if officers cleared by the Prime Minister of the country cannot be issued promotion orders for ten days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe it is time for the FM to call for the file and order on the spot promotion and posting. <font color="#FF0000">And if the CBEC is not able to sort out the settlement problems, the least it can do to the Chief Commissioners-in-waiting is to give them ‘in situ' promotions as they had done several times in the past. Already one of the Commissioners in the list has retired last month. How miserable he must have felt. Don't make their Diwali dark – please spread a little glitter of happiness and call them Chief Commissioners as a Diwali gift – you can do the posting later. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently in a service case - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong>(<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTA0NDY=">2013-TIOL-56-SC-SERVICE </a> )</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">, where an officer was not promoted to the IAS, the Supreme Court awarded damages and observed, "<strong>The award of damages is necessary also because, a message must go down that those who are responsible for administration of the State cannot trample upon the rights of others on the grounds which are unsustainable in law</strong>." The Supreme Court also held that it will be open to the State Government to recover these amounts from the then Commissioner of Commercial Tax, and/or whoever were the officers responsible for the non-consideration of the claim of both the appellants . </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recidivist and futile endeavours by Revenue for utopian perfection tends to undermine stability of law and impose wholly avoidable litigation costs on exchequer besides burdening docket of this Tribunal - Costs of Rs.1000/- payable to assessee for inflicting on it wholly unjustified litigative trauma</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent was a Service Tax registrant for Stock Broking services. During audit for the period March 2005 to March 2007, Revenue <font color="#FF0000"><em>assumed</em></font> that the assessee had under declared its service tax liability to the extent of Rs.6,06,684/- on the alleged differential income received of Rs. 59,47,750/-. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee responded pleading that the sub-brokers, operating under the assessee had remitted the applicable service tax in respect of transactions undertaken by them; that in terms of the guidelines/Regulations of SEBI, sub-brokers working under the principal Broker are required to route all transactions through the principal; that the entirety of disputed quantum of service tax due, on amounts received on transactions attributable to the assessee, is directly relatable to transactions of the sub-brokers and has been remitted either by the assessee or the sub-brokers; and there is no short remittance of tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The adjudicating authority critically examined the defence of the assessee and after making a detailed assessment of the material on record came to the conclusion that the lapse of the assessee is not intimating payments made by his sub-brokers in ST-3 returns was a mere technical flaw and no demand could be raised on the assessee on this count, since the resultant service tax was already remitted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nonetheless, he held that there is short remittance of a small amount of Rs.1,978/- on account of some arithmetical calculation and that in the absence of any bad faith or willful intent to make short payment of this amount, no case for imposition of any penalties leviable under sections 76 to 78 was made out. He confirmed this amount and directed the assessee to pay interest on the same u/s 75 of the FA, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue went in appeal before the Commissioner(A) but he rejected the same and so they are before the CESTAT. While doing so, the lower appellate authority placed reliance on the LB decision in <em>Vijay Sharma and Company vs. CCE</em> -<strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-1215-CESTAT-DEL-LB.htm" target="_blank"><font size="1">2010-TIOL-1215-CESTAT-DEL-LB</font></a></strong> [which inter alia ruled that provisions of the Act do not accommodate double taxation; the scheme of service tax suggests only a single point taxation]. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A quick glance at the appeal and the Bench commented that the same was a <font color="#FF0000"><em>'misconceived one'</em></font>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As for the merits of the appeal, the CESTAT observed - </font></p>
<blockquote>
<p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"</font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The grounds of appeal herein do not assert that the decision of the Larger Bench of this Tribunal in Vijay Sharma and Company vs. CCE was assailed in an appeal by Revenue. The axiomatic that doctrinal and normative coherence is as critical to fiscal legislation as it is in any other branch of law. Once this Tribunal has pronounced on an aspect having a clear and direct application in a subsequent case, such judgment, absent any overarching norm by any superior court must constitute the non-derogable norm in conformity with which subsequent assessment or adjudication should proceed. Recidivist and futile endeavours by Revenue for utopian perfection tends to undermine the stability of law and impose wholly avoidable litigation costs on the exchequer besides burdening the docket of this Tribunal."</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Holding that the appeal filed by the Revenue was without any justification whatsoever, the CESTAT dismissed the same but, in the circumstances, with costs of Rs. 1,000/- (Rupees one thousand only) payable by Revenue to the assessee, for inflicting on it a wholly unjustified litigative trauma. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Quite a mouthful this - Get the Oxford and Webster's out of the closet! </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=OTA0Mzc="><font size="1">2013-TIOL-1586-CESTAT-AHM</font></a>)</font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT Cartoon </font></strong></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/DDT_Cartoon_2217.jpg" alt="" width="400" height="452" hspace="5" border="0" align="center"><br>
<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"> - Monday's cases</font></strong></font></strong></font></p>
<p><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"><strong><font color="#663399">Service Tax </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Registration fee collected from clients-sameis adjusted to first purchase made and in case no purchase is made registration fee is not refunded -in view of fact that registration fee is not to be refunded as such, same is required to be added to gross value of taxable service - Revenue appeal allowed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents are registered as provider of "On-line information and data base access or retrieval or both".During the course of verification of records, it was observed that the registration fee collected by the respondent was not declared in the ST-3 returns filed by them. Taking a view that the registration fee formed part of the value of the taxable service, a SCN for the period July 2001 to July 2003 was issued demanding service tax of Rs.32,00,857/- and imposition of interest and penalties.The adjudicating authority confirmed the demand but the same was set aside by the Commissioner(A) on merits as well as on time barand hence Revenue is in appeal before the CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The registration fee is not to be refunded as such, hence is required to be added to the gross value of taxable service on which the respondents are liable to pay service tax. </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 makes huge investment for acquiring controlling stake in loss-making company, its expenditure warrants disallowance u/s 14A for lack of earning dividend income - NO: ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is a holding investment company. It had made huge investment in M/s Ambuja Cement Ltd., to acquire the controlling interest in it by purchasing their shares. Assessee under section 14A claimed expenditure for the A.Y. 2008-09 and A.Y. 2007-08. The AO noticed that the business of the assessee was not yet set up and started, therefore, disallowed various expenses claimed in its P&L A/c. The issue before the Bench is - Whether when the assessee makes huge investment for acquiring controlling stake in a loss-making company, its expenditure warrants disallowance u/s 14A for the lack of earning dividend income. And the verdict favours 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">Goods supplied against International Competitive Bidding - clause (e) or clause (g) of clause 8.2 of FTP is relevant for granting deemed export benefit and has no relevance whatsoever for granting exemption under Notification 6/2006-CE: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>show-cause notice was issued to the appellant in July 2010 demanding duty for the period 2006 to 2007 by denying the benefit of the Notification on the ground that the applicant suppressed the material facts with intent to evade payment of duty inasmuch as the Project Authority Certificate has been issued under clause 8.2 (g) of Chapter 8 of the Foreign Trade Policy and not under clause 8.2 (f) of the said Chapter/Policy.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Holding that the benefit of the exemption notification 6/2006-CE has been correctly availed by the appellant, the orders confirming the duty liability and imposing penalties and interest were set aside and the appeals were allowed. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Monday for the judgements</font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend. </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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