TIOL-DDT 2221 · 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 2221</font><br> 31.10.2013 <br> Thursday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - requirement of CENVAT declaration as per PN 35 dated 01.03.2011 - DGFT Clarifies</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PARA</strong> 8.5 of the FTP provides:</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Similarly, supplies will be eligible for deemed export drawback in terms of para 8.3(b) of FTP of Central Excise duty paid on inputs/components, <strong>provided CENVAT credit/rebate has not been availed</strong> of such duty paid by supplier of goods. <strong>A declaration to this effect, in Annexure III of ANF 8, from supplier of goods, shall be submitted by applicant. Such supplies shall, however, be eligible for deemed export drawback on custom duty paid on inputs/components". </strong></font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As required under Para 8.5 of FTP, applicant has to give declarations regarding non-availment of CENVAT credit/rebate, as given in Public Notice No.35, dated 01.03.2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT clarifies</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, deemed export drawback, in terms of Para 8.3(b) of FTP, including as per Column B of All Industry Rate of Duty Drawback under Duty Drawback Schedule of Department of Revenue, is not admissible if facility of CENVAT credit/rebate has been availed. This is because if the CENVAT facility/rebate facility has been claimed, then central excise duty component on the inputs is already compensated. However, if basic custom duty has been paid, then the same is refundable as Para 8.5 of FTP clearly prescribes “such supplies shall however be eligible for deemed export drawback on custom duty paid on inputs/components”. Such basic custom duty paid can be taken back, as brand rate of duty drawback, based on actual duty paid documents, as per procedure prescribed in Chapter 8 of FTP and Chapter 8 of HBP Volume-I. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All Industry Rate of Duty Drawback, as notified by Department of Revenue, wherever admissible, also includes service tax component on input services. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT further clarifies: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While giving a declaration for non-availment of CENVAT credit, applicant has to ensure that it has also not claimed CENVAT credit on service tax on input services. While making an application, applicant must ensure that it does not claim double benefit of CENVAT credit and duty drawback.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2013/dgft13cir009.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 9/(RE-2013)/2009-14, Dated: October 30, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Voluntary disclosure does not release assessee from the mischief of penal proceedings - SC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> an income tax case, during the course of investigation, an assesse made an offer to surrender a sum of Rs.40.74 lakhs with a view to avoid litigation and buy peace and to make an amicable settlement of the dispute, subject to the condition that there would be no initiation of penalty proceedings and prosecution. The AO completed the assessment by adding this amount as “income from other sources”. Then the Department initiated penalty proceedings under which the AO imposed a penalty of Rs. 14.61 lakhs, which the CIT(A) confirmed. On further appeal, the Tribunal held that the amount of Rs.40,74,000/- was surrendered to settle the dispute with the department and since the assessee, for one reason or the other, agreed or surrendered certain amounts for assessment, the imposition of penalty solely on the basis of assessee's surrender could not be sustained. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This time, the Revenue took the matter in appeal to the High Court, which set aside the Tribunal's order and allowed the Revenue appeal. Now, the assesse is before the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a judgement delivered yesterday, the Supreme Court held, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AO shall not be carried away by the plea of the assessee like “voluntary disclosure”, “buy peace”, “avoid litigation”, “amicable settlement”, etc. to explain away its conduct. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessee has only stated that he had surrendered the additional sum of Rs.40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Statute does not recognize those types of defences under the explanation 1 to Section 271(1)(c) of the Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Supreme Court dismissed the appeal. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this case today. Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18944" target="_blank">Breaking News </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Inputs actually used in export product should only be imported and those actually imported must be used in export product - Applies to SEZs also </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Government had inserted a new para 4.1.15 in the FTP 2009-2014 by Notification No.31 dated 1.8.2013, which read as, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"4.1.15 Wherever SION permits use of either (a) a generic input or (b) alternative inputs, unless the name of the specific input(s) [which has (have) been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, match the description in the relevant bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly the name/description endorsed in the shipping bill. At the time of discharge of export obligation (EODC) or at the time of redemption, RA shall allow only those inputs which have been specifically indicated in the shipping bill."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now two sentences are added at the end: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These provisions will also be applicable for supplies to SEZs and supplies made under Deemed exports. Details as given above will have to be indicated in the relevant export documents/import documents/ documents for domestic procurement." </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not048.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No.48/(RE-2013)/2009-2014, Dated: October 30, 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Applicability of provisions of para 4.1.15 of FTP </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> view of the above notification, DGFT has specified the applicability of para 4.1.15 of the Foreign Trade Policy 2009-2014, as follows: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. Where both export and import have been completed prior to 1.8.2013, such cases will not be covered under Notification No. 31 dated 1.8.2013 (as amended), irrespective of whether the <strong>concerned</strong> authorization (AA/DFIA) has been redeemed or not. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. If only export has been fully completed / partly completed before 1.8.2013, then the corresponding import would be allowed subject to an undertaking from the authorization holder, that the inputs which have been actually used in the product already exported shall only be imported. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. If the DFIA has been endorsed as ‘transferable' by the concerned RA, before 1.8.2013, the provisions of Notification No. 31 dated 1.8.2013 (as amended) will not be applicable to such DFIA. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. For every export made on or after 1.8.2013 provisions of para 4.1.15 of FTP shall apply. It is immaterial whether for such export, corresponding import has already been made (fully or partly) or import has not been made.</font></em></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn035.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 35/(RE-2013)/ 2009-2014, Dated: October 30, 2013 . </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">As ST demands were computed in respect of each skin treatment/procedure, therefore, Commissioner ought to have examined each one of them and decided matter </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent is providing certain treatments/procedure relating to skin. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SCNs were issued to the respondent in respect of different outlets of theirs on the ground that these treatments/procedures are nothing but beauty treatment services and would, therefore, fall under section 65(17) of the Chapter V of the FA, 1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based on the submission made by the '<em>clinic</em>' that the services provided by them are medical services and, therefore, not chargeable to service tax the Commissioner of Service Tax, Mumbai dropped the demands one after the other on 19th, 20th & 21st August, 2008. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Deeply aggrieved with this '<em>treatment</em>' meted out to its SCNs, the Revenue is before the CESTAT and inter alia submits that certain treatments/procedures provided by the respondents have not been discussed at all by the Commissioner in his orders but whole of the demands have been dropped. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inasmuch as - </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ In appeal no. ST/234/08, demands were in respect of <strong>13</strong> treatments/procedures, Commissioner has discussed only <strong>9</strong> treatments/procedures and dropped the entire demand. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Similarly, in appeal no. ST/235/08, <strong>20</strong> treatments/procedures were involved but Commissioner has discussed only <strong>10</strong> treatments/procedures and dropped the demand in respect of all the 20 treatments/procedures. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ So also, in appeal no. ST/236/08, <strong>13</strong> treatments/procedures were involved but Commissioner has discussed <strong>9</strong> treatments/procedures and dropped the demand in respect of all the treatments/procedures. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench found merit in the contention of the Revenue since demands were computed in respect of each treatment/procedure. Accordingly, all the three appeals filed by the Revenue were allowed by setting aside the orders of the adjudicating authority. The Bench directed the Commissioner to examine the remaining treatments/procedures and thereafter decide the matter. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>Some skin show this </em></strong>- <font color="#FF0000"><em>That effortless radiance... that smooth skin... the heads that turn to stare in admiration... she is that elusive woman millions around the world want to be. The woman for whom crowds part so she can pass by, for whom doors are opened, that woman who is always the most beautiful woman in the room. She could be you… </em></font></font></p> <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=OTA1MTk=" target="_blank">2013-TIOL-1621-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"> – Friday'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">Appellant has been functioning as an ‘Authorized Service Station' of M/s Tata Motors and, therefore, services rendered by appellant is <em>prima facie</em> classifiable under the category of 'Authorized Service Station' - Pre-deposit ordered of Rs.1.10 Crores for obtaining stay: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HE</strong> appellants are engaged in servicing of vehicles manufactured by M/s Tata Motors Ltd. and M/s Fiat India Ltd. During the course of audit of the records of M/s Pandit Automotive Private Ltd., Pune (M/s Pandit in short), it was noticed that though M/s Pandit are Authorized Service Station for M/s Tata Motors, however, they were only paying Service Tax on the pay-off received from the Tata Motors<font color="#FF0000"><em> on servicing done during the warranty period</em></font>. After the warranty period is over, their purported sister concern, who is the appellant herein, does the servicing of vehicles and no Service Tax is paid on the services done by the appellant for servicing of such vehicles. </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 business loss in form of business expenses against NIL business receipt is eligible for set off against income from other sources when interest income earned by assessee was considered as income from other sources - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> was engaged in the business of real estate development. A search & seizure operations were carried out u/s 132. Therefore, notices u/s 153A were issued .The AO observed that the assessee had started a real estate project and had booked expenses incurred on the project under the head work in progress, during the year nothing was sold. The assessee had earned an interest income of Rs.24,19,085/- partly from the loan given to sister concern and partly from bank deposits and after claiming various expenses the net profit was declared at Rs.2,85,123/-. The AO treated the income of interest as income from other sources and disallowed the amount expenses debited in the P&L Account treating them as not related to earning of interest income. THE issues before the Bench are - Whether the business loss in the form of business expenses against NIL business receipt is eligible for set off against income from other sources when interest income earned by the assessee was considered as income from other sources and Whether the AO can force the assessee to change the method of accounting. And the verdict goes against the Revenue. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs</font></strong></p> <p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ADD notification 86/2011-Cus -tolerance is given to product not to limits - tolerance is to be added to width actually found in consignments - in case on hand, width was found to be more than 1250mm and which already is beyond tolerance limit of notification for attracting Anti-dumping duty - demand set aside- Appeals allowed: CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant filed a Bill of Entry for clearance of the goods declared as Stainless Steel Cold Rolled Coils Ex Stock Slit (Trim Edge Grade 430 BA Width 1258 MM Thk Below 4mm). The Revenue was of the view that the goods are mis-declared with regard to the characteristic of the goods and in terms of Notification No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_014.htm" target="_blank">14/2010- Cus</a></strong> dated 20.02.2010 read with the Notification No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_086.htm" target="_blank">86/2011-Cus</a></strong> dated 06.09.2011, Sl. No. 22, the appellants are required to pay anti-dumping duty. Therefore, proceedings were initiated against the appellants. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements</font></strong></p> <p><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>