TIOL-DDT 2249 · 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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><img width="115" height="125" border="0" align="right" src="image/ddt/10yearsDDT.jpg" alt="" /></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img width="175" hspace="5" height="120" border="0" align="right" src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" /></a></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong><font color="#663399" size="3">TIOL-DDT 2249</font><br>
11.12.2013 <br>
Wednesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Car with the Red Beacon </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHY</strong> should anyone have a car with a red beacon? Well, It's a status symbol in India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2249car.jpg" alt="The Car with the Red Beacon " width="338" height="263" hspace="5" border="0" align="left">The Chairman of the Board was on a visit to the city - everyone knew he had some private work but to make it look official, he had a Revenue review meeting with his officers with everyone printing numerous copies of brochures.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A large number of officers including a Chief Commissioner and several Commissioners were in attendance at the airport to receive the Hon'ble Chairman. As the Ambassador car of the Chief Commissioner was not in good condition, they had arranged a private limo for the Chairman. The Chairman had one look at the car and said, "What - a car without a beacon - you want the Chairman to travel in this car?" Immediately the beacon on the Chief Commissioner's car was pulled out and it was fixed on the private car and then only the benign Chairman got into the car. In that city, hardly anyone knew what the Board was or who its Chairman was - yet the Chairman had to have a beaconed car - that is status for you. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Babus and Netas in India have a fascination for cars fitted with red beacons - even Arvind Kejriwal said recently, "<em>As Commissioner, I could have made crores and travel in a car fitted with beacon light. </em>"Who permitted a Commissioner to have a car with a beacon? The beacon light is thus a part of the perks.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Supreme Court yesterday in a landmark judgement put an end to all and sundry using the red beacon on their cars, directing that only constitutional authorities should be allowed to use the red beacon. But will the Supreme Court Judgement be enforced? Will the bureaucrats and politicians remove those illegal red lights from their cars?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see the following in earlier DDTs:</font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=ODM3Ng==">Car with Beacon and Government logo of Pune IT Commissioner Police not impressed </a></font></strong></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTEyOTk=">Private Taxis masquerading as Government Cars - Red Beacon and all </a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST VCES, 2013 on last leg </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> ST VCES, 2013 has entered the decisive phase. The scheme ends on 31/12/2013. It appears from inputs gathered by CBEC <em>(read arrests made over the past few days)</em> that the service tax evaders who were fence sitters till now are a worried lot and have started sweating profusely. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And they may come in droves to file the VCES applications as the deadline approaches. So, the Member (Service Tax) has requested all the Chief Commissioners to ensure that adequate arrangements are made for speedy processing of applications.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board also takes note of the following clarification it offered in its Circular <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2013/sercir170.htm" target="_blank">170/5/2013-ST</a></strong>, Dated: August 8, 2013 - </font></p>
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<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether declarant will be given an opportunity to be heard and explain his cases before the rejection of a declaration under section 106(2) by the designated authority?</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes. In terms of section 106 (2) of the Finance Act, 2013, the designated authority shall, by an order, and for reasons to be recorded in writing, reject a declaration if any inquiry/investigation or audit was pending against the declarant as on the cutoff date, i.e., 1.3.2013. An order under this section shall be passed following the principles of natural justice. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To allay any apprehension of undue delays and uncertainty, it is clarified that the designated authority, if he has reasons to believe that the declaration is covered by section 106 (2), shall <font color="#FF0000">give a notice</font> of intention to reject the declaration <font color="#FF0000">within <strong>30</strong></font> days of the date of filing of the declaration stating the reasons for the intention to reject the declaration. For declarations already filed, the said period of <font color="#FF0000"><strong>30</strong></font> days would apply from the date of this circular. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The declarant shall be given an opportunity to be heard before any order is passed by the designated authority. </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Noting that the time period of <font color="#FF0000"><strong>thirty days</strong></font> will obviously not be available in cases where applications are filed now, the Member (Service Tax) instructs that the cases in which declarations are in order, the declarant must be <strong>orally</strong> communicated so that 50% of the tax dues are paid by 31/12/2013. <font color="#FF0000">In any case, he has to pay it by then! What about those applications sought to be rejected - do you call him up and convey the bad news? </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DG, DGCEI is also requested to suitably instruct his officers so that any references made by Commissionerates are disposed of expeditiously.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And most importantly, the Chief Commissioners are directed to ensure that the offices are <strong>kept open Saturdays</strong>, to take care of the influx of applications and for timely processing of the same. [In our <strong>DDT <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTkyMDc=" target="_blank">2246, 6.12.2013</a></strong>, story '<strong>The VCES laddoo</strong>' we had commented - <font color="#FF0000"><em>There are only 26 days to go for the scheme to come to an end. And out of these, there are only 18 working days unless, of course, the CBEC instructs the Central Excise & Service Tax Commissionerates to keep their offices open on Saturdays & Sundays!</em></font>] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is also emphasized that in view of the three clarifications, dated 13.5.2013, 8.8.2013 and 25.11.2013 issued by TRU, the Commissioners should ensure that rejections by the Designated Authority are strictly covered by these three clarifications. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All in all a last ditch attempt to make the scheme a resounding success and gift to each declarant the VCES laddoo. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">This letter is dated December 2, 2013. So should we presume that the Central Excise offices were open last Saturday? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2013/order_13_05.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F.No. 137/50/2013-Service Tax Dated: December 2, 2013</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Approval of an Electoral Trust - add check-list with application </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> objective of the Electoral Trusts Scheme, 2013 is to lay down a procedure for grant of approval to an electoral trust which will receive voluntary contributions and distribute the same to the political parties. The scheme has been notified by the Central Government on 31 st January, 2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The term "electoral trust" is defined in section 2(22AAA) of the Income Tax Act, 1961. It means a trust so <em><strong>approved </strong></em>by the Board in accordance with the scheme made in this regard by the Central Government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under clause 22AAA of Section 2 of the Income Tax Act, 1961, the Central Board of Direct Taxes is empowered to approve an ‘Electoral Trust' for the benefit of provisions of section 13B of the Income Tax Act, 1961. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per clause 5(1)(a) of the Electoral Trusts Scheme, 2013, an application for approval under section 2(22AAA) of the Income Tax Act, 1961 is to be made in duplicate in Form A. In order to avoid procedural delay in processing these applications, the applicants are advised to file along with the application in Form A, on or before the prescribed date, the duly filled in and signed check-list accompanied with documents required therein before the CIT/DIT under whose jurisdiction their cases fall. The applicant shall also enclose a copy of the said check-list while sending the copy of their application to the Member (IT), CBDT in terms of clause 5(1)(b) of the Electoral Trusts Scheme, 2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So as to standardize the process of filing application for approval of an Electoral Trust, the CBDT has come out with a detailed check-list. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Needless to mention this check-list is a very detailed one and would certainly pre-empt a person from going ahead with his noble intentions. Pehle AAP, he would say!</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/CBDT Standardizing the process of filing application.pdf"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Letter F.No. 173/158/2013-ITA-I dated December 10, 2013</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST dues - In lieu of freezing of bank account, Bank guarantee allowed to be furnished </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> a letter dated 04/03/2013 the Dy. Commr. of Service Tax, Mumbai-II wrote to the Branch Manager of United Bank of India, Dahisar (W), Branch, Mumbai to freeze the account of the petitioner on the ground that he had defaulted in payment of Service Tax liability to the tune of Rs.88.10 lakhs although the same had been collected from his clients. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner has challenged this action under Article 226 of the Constitution of India by filing a WP before the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is submitted that the petitioner has already paid the Service Tax of Rs.1,32,50,497/-in two parts (Rs.1,23,68,420/+ Rs.8,82,077/-) and the aforesaid sum includes the amount of Rs.88.10 lakhs referred to in the departmental communication dated 4 March 2013 to the bank. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is further informed that the respondent <font color="#FF0000"><em>department has not commenced any adjudication proceedings and even a show cause notice has not been served upon the petitioner</em></font> and hence order for freezing of bank account is not justified. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Counsel for the Revenue informed that the total Service Tax liability of the petitioner is Rs.1,87,34,068/- and, since the petitioner still owes the revenue the balance amount of Rs.54,83,571/- the department is justified.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To this submission, the petitioner submitted that as their business has been completely paralyzed they are ready to give bank guarantee for the said balance amount. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court, therefore, disposed of the petition with a direction to the respondents to withdraw the letter dated 4 March 2013 freezing the petitioner's bank account or any subsequent communication regarding the petitioner's bank account upon the petitioner furnishing the bank guarantee in the sum of Rs.54,83,571/-. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court also added - </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ It will be open to the United Bank of India, Dahisar (W) Branch to utilise the amount lying in the petitioner's account for the purposes of giving the bank guarantee as required by the petitioner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ It will be open to the petitioner to give the bank guarantee of United Bank of India or any other Nationalized Bank. The bank guarantee will be subject to the satisfaction of the Commissioner of Service Tax, Mumbai. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Since the petitioner is going to furnish the bank guarantee, it will be just and proper for the respondents to issue a show cause notice to the petitioner by 28 February 2014 and to complete the adjudication proceedings as expeditiously as possible and preferably by 30 June 2014. </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petition was accordingly disposed of. </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=OTEwNjc=" target="_blank">2013-TIOL-1003-HC-MUM-ST</a></font></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Pune Bench of CESTAT? Times of India carries a revised story </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=MTkyMjY=" target="_blank">2247 - 09.12.2013</a></strong>, reported on a Times of India story about an order by the Pune Bench of the CESTAT, pointing out that there is no CESTAT Bench at Pune and CESTAT does not stand for <em>central excise service taxes appellate tribunal. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Times of India has carried yesterday a revised story correcting the mistakes in the previous story. Though Times of India has made no mention about its earlier story or the lapse pointed by us, we are happy that the correct position is being informed to the readers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can access the revised story of Times at <a href="http://timesofindia.indiatimes.com/city/mumbai/Flat-buyers-spared-service-tax-on-maintenance-fee/articleshow/27154579.cms"><strong>http://timesofindia.indiatimes.com/city/mumbai/Flat-buyers-spared-service-tax-on-maintenance-fee/articleshow/27154579.cms </strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the pervious story at <a href="http://timesofindia.indiatimes.com/city/indore/Service-tax-goes-buyers-smile/articleshow/27040680.cms"><strong>http://timesofindia.indiatimes.com/city/indore/Service-tax-goes-buyers-smile/articleshow/27040680.cms </strong></a></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"> – Thursday'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"><font color="#663399"><strong>Service Tax </strong></font></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service engaged in is receiving the goods, warehousing them, receiving dispatch orders from Ford India Ltd., arranging dispatch of goods, maintaining records of incoming shipments and deliveries - such activity is Clearing and Forwarding Agents Services: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are engaged in providing services to M/s. Ford India Ltd., in Chennai by entering into an agreement with the said Company. The appellants were issued various SCNs covering their activity under the ‘Clearing and Forwarding Agents" services in terms of the Finance Act, 1994. The said show-cause notices were confirmed by original authority as also first appellate authority. </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 scheduled bank is entitled to deduction under head provision for fraud in regular operations of bank, irregularities and embezzlements - YES, it is loss: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Bench are - Whether the assessee, a scheduled bank is entitled to deduction under the head provision for fraud in the regular operations of the bank, irregularities and embezzlements and Whether deduction u/s 36(1)(vii) is allowed to the assessee on provision for bad and doubtful debts not exceeding ten per cent of the aggregate average advances made by the rural branches as well as urban branches. 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">Construction Service used in construction of canteen building within factory premises is also an Input Service - Appeal allowed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant constructed a canteen building within their factory premises and availed credit of input service namely Construction service. Revenue objected to the same on the grounds that construction of canteen building is not construction of factory and, therefore, not covered under the definition of input services in terms of Rule 2(l) of the CCR, 2004.</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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