TIOL-DDT 2258 · the untouched capture
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<p><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><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><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></strong><font color="#663399" size="3">TIOL-DDT 2258</font><br>
24.12.2013<br>
Tuesday</strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">VCES - The Scheme does not envisage investigation by designated authority into veracity of declaration. As such, in implementation of VCES, effort must be to accept declaration as far as possible and recover arrears of tax - Commissioner (A) </font></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF0000"><strong>Rejection of Declaration Set aside </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> hardly a week for the Scheme to end, when will the Departmental officers understand this spirit? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTkyNzY="><strong>DDT 2251 - 13.12.2013</strong> </a> had reported a High Court order holding that the order of rejection of VCES declaration was appealable. The party did appeal and yesterday the Commissioner (A) passed an order setting aside the rejection <font color="#616161"><strong>order. </strong></font><strong></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Look at this case: </font></p>
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<td><p align="justify"><font color="#993300" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span">The assessee filed a declaration on 17.7.2013 declaring a total Service Tax liability of over Rs. 11.3 Crores. The Department sought to reject the declaration on the ground that the Range Superintendent had written two letters to the declarant in February 2013. The Show Cause Notice to reject the declaration was issued on 18/9/2013 (after two months). On 27.11.2013, the Order rejecting the declaration was passed. As per Board Circular No. 170/2013 dated 8.8.2013, <em>the Scheme <strong><font color="#FF0000">does not</font></strong> have a statutory provision for filing of appeal against the order for rejection of declaration.</em> This was challenged in the P&H High Court and the High Court, as mentioned above, held that the rejection order is appealable</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span">. </font></p>
<p align="justify"><font color="#993300" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span">As per Board Circulars, the Show Cause Notice to reject the declaration has to be issued within thirty days and the declaration cannot be rejected based on some letters written to the assessee (when no Audit or anti evasion objections are pending) </font></p>
<p align="justify"><font color="#993300" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#CCCCCC" span="span">The Commissioner (A) yesterday set aside the rejection order both on limitation as well as on merit with consequential relief. He also directed that the designated authority would allow the declarant to avail the benefit of VCES subject to fulfilment /compliance of other conditions including deposit of 50% tax dues by 31.12.2013. </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here the assessee filed a declaration on 17.7.2013 and since then, his peace of mind must have been shattered. Here is somebody who is prepared to give you 11 crores of rupees and you want litigation and only litigation. It is this attitude of the officers that damages the cause of VCES. Government should have educated the Service Tax officers that the FM wanted to collect that extra revenue through VCES and as loyal employees, you should not frustrate the efforts of the FM - after all he gave you a huge cadre review. At least in the next few days, be grateful and work for the success of the Scheme; keep your audit and preventive brilliance in cold storage and welcome the declarants wholeheartedly to your fold - YOU OWE IT. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can get the Commissioner (A)'s order <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=331&filename=notification/servicetax/2011/Baranala_Builders.htm" target="_blank"><strong>HERE</strong></a>.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VCES Catching Up </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Department should be fully geared to meet the last minute rush for the VCES. We understand that the State Government owned Chandigarh Housing Board has declared a Service Tax of nearly Rs. 10 Crores under VCES. We are told that a group of retired Central Excise officers in the small town of Sangli in Maharashtra have taken efforts to popularise the VCES and the response is said to be very good. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue collections are far below target and VCES would have been a great opportunity to salvage the situation - if only the Departmental officers were a little more considerate towards their Finance Minister. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Export of Charcoal - Prohibition not applicable to Bhutan </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Sl. No. 179 of Chapter 44 of Schedule 2 of the ITC(HS) Classifications of Export and Import Items, export of wood charcoal is prohibited - that is wood charcoal is not permitted to be exported. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Government has amended this policy to stipulate that the prohibition will not apply to Bhutan. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not060.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 60 (RE- 2013 )/2009-2014, Dated: December 23, 2013</strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs Tariff - Standard Unit of Quantity - be sure of your product - litres or metres - Board Invites Suggestions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Customs Department insists on the importer/exporter declaring the correct Standard Unit Quantity Code (UQC) in the Bills of Entry and Shipping Bills. Representations have been received in the CBEC from the trade and industry for change of Standard Unit Quantity Code (UQC) in the Customs Tariff Act, 1975 as per common trade parlance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You know the Standard Unit Quantity Code (UQC) for</font></p>
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<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Printed books is - </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kgs </font></td>
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<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Table, Kitchen or Other Household Articles -</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kgs </font></td>
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<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sanitary ware -</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kgs </font></td>
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<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Motherboard -</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kgs </font></td>
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<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Printed Circuits -</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">kgs </font></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Board proposes to change the UQC for several items as per the trade request. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chambers, trade, industry and field formations are requested to go through the draft list of UQC and offer their comments, views and suggestions.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/draft_uqs.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Letter in F.No.528/69/2012-STO (TU), Dated: December 23, 2013</strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Address mentioned on envelope is Dasha, Ghageabad instead of Ghaziabad - as there is no postal mark 'refused', it cannot be said that applicant refused said communication - COD application allowed</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN</strong> Order-in-Original was passed by the Commissioner of Customs (Export Promotion), Mumbai on 24.11.2009.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against this order, the applicant has filed a Stay application and an appeal before the CESTAT. The applicant also seeks a condonation of delay of 1119 days on the ground that they had neither received the notice for personal hearing nor the adjudication order. It is submitted that it is only when the applicant received recovery notice that they came to know that the adjudication order is passed and thereafter they immediately filed appeal after obtaining the order. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench had directed the Revenue to produce evidence regarding service of adjudication order on the applicant. The Revenue produced the original envelope under which the order had been sent to the applicant and which has been received back. In the covering letter dt. 23.8.2013, the Assistant Commissioner of Customs stated that notice was received back with the postal remark “Refused”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench took a closer examination of the "envelope" produced by the Revenue and found that there is no postal remark “refused”. Moreover, notice was sent at the address of the factory as well as of the Head Office and thereafter address of the Head Office was scored and the address mentioned on the envelope is <em>Dasha, <font color="#FF0000">Ghageabad</font> </em> instead of <em><font color="#FF0000">Ghaziabad</font></em>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT observed that since there was no refusal by the applicant, therefore, there is merit in the contention of the applicant. Accordingly, the delay in fling the appeal was condoned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As for the appeal, the duty demand is confirmed on the ground that applicant made import of certain goods under the advance licence without payment of duty and during investigation it was found that the advance licence was procured by submitting fake documents by mis-declaring the quantity of the exported goods. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The applicant submitted that they had procured the advance licence from the market on consideration and there was no mis-declaration on their part and hence the demand is not sustainable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative drew the notice of the Bench to an order dated 13/10/2011 passed in the case of <em>Bajaj Exports </em> covering a similar issue and wherein the Bench had ordered pre-deposit of the amount of duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Holding that the advance licence under which the goods were imported was obtained by submitting forged documents and pre-deposit could not be waived, the Bench directed the applicant to deposit the duty and interest for obtaining stay. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTEyNjg=" target="_blank">2013-TIOL-1904-CESTAT-MUM</a></font></strong></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 align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"></font><font color="#663399">Service Tax </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Service Tax - Tour operator - No tax on outbound tours - service tax is not tax on pursuit of profession of providing taxable service but is tax on provision of taxable service; Adjudication Authority seeking administrative advice disturbing: CESTAT </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DO provisions of the Act have an extra territorial reach and operation</strong>? Qua the text and context of provisions of the Act, it is clear that service tax is a destination based consumption levy. The taxable event, in all events, qua the provisions of the Act, in particular provisions of Section 65, is on provisions of a taxable service. Thus, where a service is provided and consumed outside the territorial locus of the Act, the consideration received therefor would not be subject to levy of service tax, under the substantive and processual provisions of the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Whether any payment made for transfer of copyright for perpetual period of 99 years is not royalty but transaction for sale - YES: Madras HC </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a person carrying on business in the purchase and sale of Telugu films. The assessee filed return of income admitting a total income of Rs 33,10,829/-. The case was selected for scrutiny and a notice under Section 143(2) of the Income Tax Act, 1961 was issued on 24.08.2010. The assessment proceedings were completed under Section 143(3) of the Act and the order of assessment dated 29.12.2011 was passed. The Assessing Officer made various additions; The issue before the Bench is - Whether any payment made for transfer of copyright for a perpetual period of 99 years is not royalty but a transaction for sale. And the verdict favours the assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">If appellant has not included the amortized cost of dies or cost of drawings and designs developed for manufacture of excisable goods, consideration received would be includable in AV of goods manufactured- submission that dies are exempted from excise duty since captively consumed and hence cost not includible is wrong - Demand upheld: CESTAT </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is a manufacturer of motor vehicle parts, IC Engine etc. Investigation conducted revealed that the appellant received drawing and design/development charges from the various customers, by raising either debit notes or invoices, but did not include the value of the same on the goods manufactured with these drawings and designs for the purposes of payment of duty. The appellant also issued debit notes for charges towards technical study and assistance to develop an indigenous 10PO8 pressure die cast item at the request of the customer. The appellant did not include the cost of amortization in the value of castings manufactured using these dies. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our Columns Thursday for the judgements</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Until Thursday with more DDT</font></strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Have a nice day. </strong></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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