TIOL-DDT 2248 · the untouched capture
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<p align="left"><font color="#663399" size="3"><strong><font face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2248</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>10.12.2013 <br>
Tuesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Stay order of CESTAT - Appeal or Writ? - AP High Court follows Madras </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTg5ODk=" target="_blank">2225 - 06.11.2013</a></strong> carried a detailed analysis on the subject. The Madras High Court had in <em>Metal Weld Electrodes, Chennai Vs. CCE</em> - <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTA1OTY="><strong><font size="1">2013-TIOL-865-HC-MAD-CESTAT </font></strong></a>held that orders of the CESTAT in terms of Section 35F of the Central Excise Act, 1944 or Section 129-E of the Customs Act, 1962 are appealable in terms of Section 35G of the Excise Act, 1944 or Section 130 of the Customs Act, 1962. So, the writ petitions were dismissed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently the Andhra Pradesh High Court followed the Madras High Court decision and dismissed a writ petition, as the remedy was ‘appeal'.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this interesting case, the CESTAT had ordered pre-deposit of around Rs.30 Crores. - <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTA5MDk="><strong><font size="1">2013-TIOL-1779-CESTAT-BANG</font></strong></a> on 10.07.2013. Against this order, the assesse filed a writ in the AP High Court. The AP High Court on 13.11.2013 - <strong><font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTEwNDM=">2013-TIOL-997-HC-AP-ST</a></font></strong> dismissed the writ petition holding that the remedy was ‘appeal' against the CESTAT order and not writ. The High Court however gave ten days time to appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assesse filed an appeal on 21.11.2013 and prayed for interim order of waiver of pre-deposit. On 22.11.2013, the High Court refused to pass such order as it would amount to disposal of the main appeal itself. However, the High Court passed an interim order that the appeal before the Tribunal should be kept on record and should not be dismissed till the hearing of this appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, see the strange situation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the CESTAT Stay Order, the party is required to deposit about Rs. 30 Crores. If this is not deposited, CESTAT can dismiss the appeal, but as per the High Court order, CESTAT should not dismiss the appeal. But and this is the real BUT, the Department is not barred from recovering the whole demand. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal or writ, misery is writ large on the face of the assessee! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cellular Roaming Services availed in J&K - whether taxable? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOON</strong> after we published in yesterday's<strong> <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTkyMjY=" target="_blank">DDT 2247</a></strong> the following - <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=19226"><strong>Winter package tour to Srinagar - ST liability</strong> </a>and sought a response, we received a mail from another netizen enquiring as to whether he would be charged Service Tax on the roaming charges by the cell phone service provider if he goes on the winter package tour to Srinagar. His understanding is that since wherever he goes the network follows, both he and the service provider are located in the non-taxable territory and, therefore, no service tax is leviable or for that matter payable. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> would like to have a response from netizens. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Consolidated Advance received for execution of contract - demand of ST on part of advance pertaining to supply of goods is <em>prima facie</em> not sustainable </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON </strong>the ground that the applicant had received advance of Rs.11.8 Crores for execution of service contracts, a service tax demand of Rs.1,45,88,969/-, interest and penalties was confirmed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT with a Stay application, the applicant submitted that they had entered into three contracts with M/s RINL; two contracts were for providing services regarding which the applicant is paying service tax and one contract is for supply of goods. It is further stated that they had received a consolidated advance of 10% of the total consideration amount of the three contracts. As regards the advance received of Rs.3.08 Crores against the contract for providing service they had already paid an amount of Rs.33.89 lakhs. Since the balance of the 10% advance is in respect of the contract under which the goods were supplied, the demand of service tax on that part of the advance is not sustainable, the applicant submitted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative submitted that the applicant had received a consolidated advance and the contract is a composite contract artificially bifurcated to evade tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed - </font></p>
<blockquote>
<p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"5. We have gone through the contracts and find that the two contracts are for service and the applicant had paid service tax and they had received 10% advance in respect of the contracts of service and the applicant had already paid an amount of Rs.33.89 lakhs. In these circumstances, prima facie the applicant has a strong case in their favour. Therefore, the pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeal. Stay petition allowed."</font></em></p>
</blockquote>
<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=OTEwNTM=" target="_blank">2013-TIOL-1839-CESTAT-MUM </a></font></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Nokia group owes Rs.21K crore to IT department </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per PTI, the Income Tax department has informed the Delhi High Court that Nokia India and Nokia Corporation owe it Rs.21,153 crore as total tax liability (existing and anticipated), including penalty during a seven-year period from 2006-2013. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Job of tax collection is complicated and not easy </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the group of 87 probationers of 64th Batch of the IRS (C&CE) from the NACEN, Faridabad called on the President of India, Shri Pranab Mukherjee yesterday at Rashtrapati Bhavan, he had the following pearls of wisdom for the young officers - job of tax collection is complicated and not easy. He also advised the probationary officers to discharge their responsibilities with sincerity and by creating a conducive atmosphere. </font></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><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">Mobilisation Advance received is adjusted against running bills on which service tax is paid - delay in payment of service tax - pre-deposit ordered of Rs.30 lakhs towards interest: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> demand of Rs.4,14,14,117/- is confirmed on the ground that the applicant had received mobilization advance in relation to various construction contracts and had not paid the service tax on this amount. The contention of the applicants is that the applicant had received the advance which has to be paid as per the contracts along with interest and the advance amount is to be adjusted against the running bills. The contention is that as the applicant had paid service tax on the gross amount of the construction activity which also includes the mobilization advance, therefore the demand is not sustainable. </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 failure on part of assessee to submit valuation certificate is a good enough reason for Revenue to levy capital gain tax - NO: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, an individual, had purchased land and building consisting of two shops and two houses. For the purpose of computation of capital gain, the assessee took the value of the property as on 1.4.1981 at Rs.2,75,000/-. The AO required the assessee to file the valuation report of the property as on 1.4.1981. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench is - Whether the failure to submit valuation certificate can be a basis to levy capital gain tax and Whether in such a case, for determining the fair market value, reliance on either the guideline value for the purpose of stamp duty and registration charges, or the value adopted under the Wealth Tax Act is justified. And the verdict goes against the Revenue. </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">As per Note 10 of Chapter 28, two requirements were needed to be satisfied to term activity as manufacture - One, there should labelling or re-labelling of container and second is repacking from bulk packs to retail packs - Activity does not amount to manufacture - Revenue appeal dismissed: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Note 10 of Chapter 28 as it stood at the relevant time, two requirements were needed to be satisfied. One, there should labelling or re-labelling of the container and second repacking from bulk packs to retail packs. When both these conditions are satisfied, the activity would amount to ‘manufacture'. In the present case, on perusal of the show-cause notice and the order passed by the lower appellate authority, nowhere it is coming out that the appellant has done labelling and re-labelling on the gas cylinder. It is also seen that in many cases, the gas has been supplied by the appellant in the buyer's cylinders. If that be so, the question for re-packing from bulk pack to retail pack would not arise. </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><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"> <strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></strong></font></p>
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