TIOL-DDT 2234 · 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 2234</font><br>
20.11.2013 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Uniform list of services to be followed in SEZs - DOC Instructions </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICES</strong> received by a unit located in a ‘Special Economic Zone' (SEZ) are exempted. The exemption operates under very complicated procedures. The first condition is that the SEZ unit shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations on which the SEZ unit wants to claim exemption from Service Tax. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Commerce had recently issued a list of 58 services, which may be permitted by all <strong>UAC</strong>s as default authorised services. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Representations have been received for inclusion of more services in the list of default authorised services. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has now been decided that following two more services may be included in the list of default authorised services:- </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Rent-a-cab Scheme Operator's Services</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) <strong>SEZ</strong> Online Services (<font color="#FF0000">what are <strong>SEZ</strong> online services?</font>) </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The approved list of services shall ordinarily be permitted by UAC unless anything to the contrary is noticed. Other services, which are not included in the uniform list, may be decided by UAC on merit. </font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">UAC = Unit Approval Committee </font></strong></p>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">After 1.7.2012, what is the sanctity of the list of services? </font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Default List of Services approved by Department of Commerce </font></strong></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Airport Authority Services<br>
2. Architect Services <br>
3. Asset Management Services <br>
4. Advertising agency services <br>
5. Airport services <br>
6. Banking and other financial services <br>
7. Business Exhibition services <br>
8. Cargo Handling services <br>
9. Chartered Accountant Services <br>
10. Cleaning Activity services <br>
11. Clearing & forwarding agents services <br>
12. Commercial or industrial construction services <br>
13. Company secretary services <br>
14. Computer network services <br>
15. Consulting Engineer's services <br>
16. Cost accountant services <br>
17. Courier services <br>
18. Credit rating agency services <br>
19. Custom house agent services <br>
20. Commercial training & coaching services <br>
21. Convention services <br>
22. Copyright services <br>
23. Design services <br>
24. Development & supply of content services <br>
25. Erection, commission and installation services <br>
26. General insurance business services <br>
27. Goods transport agency services <br>
28. Information Technology Software Services <br>
29. Interior decorator services <br>
30. Internet communication services <br>
31. Intellectual property services <br>
32. Legal consultancy services <br>
33. Management, maintenance or repair services <br>
34. Manpower Recruitment and supply agency services <br>
35. Market research agency services <br>
36. Other Port services <br>
37. Outdoor caterer services <br>
38. Packaging activity services <br>
39. Port services <br>
40. Processing & clearing house services <br>
41. Renting of Immovable property services <br>
42. Security agency services <br>
43. Site formation & clearance, excavation earth moving <br>
44. Storage & warehousing services <br>
45. Supply of tangible goods <br>
46. Survey & map making services <br>
47. Scientific or technical consultancy service <br>
48. Sound recording studio or agency services <br>
49. Technical inspection and certification <br>
50. Technical Testing and Analysis services <br>
51. Telecommunication services <br>
52. Transport of goods by Air services <br>
53. Transport of goods by Rail services <br>
54. Transport of goods by Road services <br>
55. Works contract services <br>
56. Transport of goods services <br>
57. Construction Services <br>
58. On-line Information and database access services </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/sez13ins079.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dept. of Commerce (SEZ Division) Instruction No. 79, Dated: November 19 2013. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarification with regard to applicability of provision of Section 372A of Companies Act, 1956 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONSEQUENT</strong> upon notifying Section 185 of the Companies Act, 2013 dealing with loans to directors which is corresponding to Section 295 of the Companies Act, 1956, the Ministry has received several representations.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ministry of Corporate Affairs has clarified that Section 372A of the Companies Act, 1956 dealing with inter-corporate loans continue to remain in force till section 186 of the Companies Act, 2013 is notified. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/mca_circular_18_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ministry of Corporate Affairs Circular No. 18/2013,Dated: November 19 2013. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner (A) cites Philippines Supreme Court Judgement to highlight judicial discipline </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DESPITE</strong> the existence of an order on identical issue passed by the Joint Commissioner and thereafter by the CCE (A), the Assistant Commissioner, had the temerity to deliberately commit judicial indiscipline, on the specious ground that the Department has filed an Appeal before CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (A) observed, “it is evident that the Assistant Commissioner has blatantly disregarded the decision of her immediate Superior Authority - Joint Commissioner and thereafter, the upholding of the said decision by the 1 st Appellate Authority i.e. the Commissioner Appeals. Decision rendered by two separate higher forums have been deliberately flouted. The propriety and wisdom of such conduct by a quasi-judicial officer has been adversely commented upon by the Hon'ble Apex Court in <em>"Union of India vs Kamlakshi Finance Corporation Ltd</em> - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-484-SC-CX-LB.htm"><strong><font size="1">2002-TIOL-484-SC-CX-LB</font></strong></a>." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (A) further observed, <em>"the Assistant Commissioner is consciously aware, that on the same subject matter, for the same Appellant, two forums have resolved the issue by holding identical views. The mere filing of an Appeal before the next higher forum will not tantamount to a Stay on those decisions. The Assistant Commissioner, vide Para 14 of the impugned order, has construed that, mere filing of an Appeal, empowers her to entertain a different view. Such an approach will cause utter chaos and (is) detriment to the administration of justice. The correct course for her was to transfer the case to Call-Book and await the decision of the Hon'ble CESTAT on the Appeal filed by the Department."</em> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (A) referred to a decision of the Supreme Court of Philippines wherein it was observed, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Respondent Judge ought to know his place in the judicial ladder. Occupying as he does a court that is lower in rank than the RTC, he owes respect to the latter and is bound by the disposition or decision of said appellate court upon a petition for review of an order/orders issued by him. His act of "reversing" the final judgment of the RTC, instead of complying with his mandatory and ministerial duty of executing the same, is the height of audacity, arrogance and presumption on his part (Habaña vs. Vamenta, 33 SCRA 569; Republic vs. Angeles, 20 SCRA 608; Baclayon vs. Court of Appeals, 182 SCRA 761) for if the decision of the RTC was unacceptable to the defendants, their remedy was to appeal it to a higher court. Having failed to do that, they, as well as the lower court, were bound by the judgment. There was no avoiding compliance with it for the execution of a final judgment is a ministerial duty of the trial court. A municipal trial judge, figuratively speaking, is "the low man in the totem pole" of the judiciary. He should, of necessity, defer to orders of the higher courts regardless of his personal opinion in the case. "A becoming modesty of inferior courts demands realization of the position that they occupy in the interrelation and operation of the integrated judicial system of the nation (People vs. Vera, 65 Phil. 56)." (Ysasi vs. Fernandez, 26 SCRA 393, 395.) The appellate jurisdiction of a higher court would be meaningless if a lower court may disregard and disobey with impunity its final judgment or order. As we held in another case: "If each and every Court of First Instance could enjoy the privilege of overruling decisions of the Supreme Court, there would be no end to litigation, and judicial chaos would result. Appellate jurisdiction would be a farce if the Supreme Court did not have the power of preventing inferior courts from meddling with decisions when sent to them for compliance. </font></em></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Judicial indiscipline is a matter of routine in the Department and you can't really blame the Assistant Commissioner - she must have picked up the trait from her Commissioner. Even senior officers in the Department have scant respect for the Tribunal, High Courts, Supreme Court or even their own Board. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">For that matter even Commissioners (Appeals) with blatant impunity disobey the orders of superior authorities like Tribunal and High Court. After all in this department you never get punished for an order in favour of Revenue, however ridiculous it is! What is beyond comprehension is the reason why we waste so much of money, time and paper on this farce called departmental adjudication and appeals. I have seen lawyers spending Rs.20,000 on flight tickets (obviously charged to the client) to travel half way across the country to appear before an Additional Commissioner - just to get the Show Cause Notice confirmed - and later repeating the performance to get the OIO confirmed by the Commissioner (A)! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=331&filename=notification/excise/2013/shraddhaispat_private_limited.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see the Order of the Commissioner (A)</font></strong></a></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"> Reference to Dispute Resolution Panel - CBDT clarifies on Circular No.5/2010 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 144C, providing for reference to Dispute Resolution Panel (DRP), was inserted in the Income-tax Act, 1961 by Finance (No.2) Act, 2009. Sub-section (1) of section 144C reads as under: </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereinafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee."</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanatory Circular for Finance (No.2) Act, 2009 i.e. Circular No. 5 of 2010 dated 03.06.2010, in para 45 has explained the said new section 144C and the consequential amendments made in other sections of Income-tax Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 45.5 of the Circular No.5/2010 dated 03.06.2010 reads as under:</font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<strong>45.5 Applicability:</strong> These amendments have been made applicable with effect from 1st October, 2009 and will accordingly <strong>apply in relation to assessment year 2010-11</strong> and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) dated 20th November, 2009."</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the above Para 45.5 there has been an inadvertent error in stating the applicability of the provisions of section 144C inserted vide Finance (No.2) Act, 2009 that amendments will apply in relation to the assessment<strong> year 2010-11 and subsequent assessment years.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the CBDT has replaced the para to stipulate that <em>Section 144C is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 </em><strong><em>irrespective of the assessment year to which it pertains</em></strong>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It took the Board three years to realize the mistake in the Circular - better late than never. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2013/it13cir09.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 9/2013, Dated: November 19, 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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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</strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since supply of material is under separate agreement and on which VAT/Sales Tax has been paid, applicant has <em>prima facie </em>strong case in their favour - Stay granted: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> are two separate agreements. One is for supply of material and other is for erection, commissioning and installation service. Applicant had paid the appropriate service tax on erection commissioning service. Revenue wants to add the value of material supplied for the purpose of service tax. The supply of material is under a separate agreement and applicant paid Vat/Sales tax. Therefore prima facie the applicant has a strong case in their favour on this issue. </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"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when Revenue finds incriminating materials during Survey Operation and also Search & Seizure, Survey materials have to be dealt with independently - YES: HC </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a partnership firm. The Revenue conducted a search & seizure in the premises of one of the partners Mr.P. Mohammed Sherief. So far as the assessment pertaining to Mr. Mohammed Sherief, the matter was remanded back to the file of the Assessing Officer as substantive additions were made. When the assessment of the present assessee came up on protective basis, according to the counsel for the appellant, similar exercise was adopted which was uncalled for in the light of Section 133A having no presumptive value. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when the Revenue finds incriminating materials during Survey Operation and also a Search & Seizure, the Survey materials have to be dealt with independently. And the answer goes against 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">Duty liability outstanding as on 31/03/2007 was paid by appellant on 01/04/2007 but by utilizing CENVAT credit earned on capital goods on 01/04/2007 - mistake rectified by appellant on own on 30/04/2008 by making payment through PLA along with interest - Duty demand not sustainable - CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the impugned case, the appellant has reversed the credit and made good the wrongly availed credit along with interest thereon. Therefore, the provisions of Rule 8 of the CER, 2002 are not at all attracted. Therefore, the confirmation of duty demand under Rule 8 is not sustainable in law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inasmuch as the assessee has made good the wrongly availed CENVAT Credit along with interest, imposition of penalty of Rs.50 lakhs is totally unwarranted.</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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