TIOL-DDT 2266 · 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 align="justify"><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><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><font color="#663399" size="3">TIOL-DDT 2266</font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>06.01.2014<br> Monday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - VCES - A Grand Success - Excellent Performance by officers? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THOUGH</STRONG> the Final figure is not yet officially out, the Government is said to have collected nearly 8000 Crores under the Voluntary Compliance Encouragement Scheme 2013. But you know what their target was? A measly 1050 Crores!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per their "Results Framework Document" 2013-14 (RFD), if they collected 550 Crores in 2013-14, their performance is <strong>excellent.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is RFD? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Prime Minister approved the outline of a <em>"Performance Monitoring and Evaluation System (PMES) for Government Departments".</em> Under PMES, each department is required to prepare a Results-Framework Document (RFD). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An RFD provides a summary of the most important results that a department/ministry expects to achieve during the financial year. This document has two main purposes: (a) move the focus of the department from process-orientation to result-orientation, and (b) provide an objective and fair basis to evaluate department's overall performance at the end of the year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, our CBEC also sincerely prepared the RFD in which on page 9, they have shown VCES target for 2013-14 as Rs. 500 Crores and the projected value for 2014-15 as Rs. 550 Crores (maybe they hope to get some interest on delayed payments) - So, all they targeted was Rs. 1050 Crores. As with all Government statistics, which nobody perhaps reads, this report is also not without its contradictions. In page 9, their target for 2013-14 is Rs.500 Crores, while in page 4 it is 550 Crores - but what is after all 50 Crores when they have collected nearly 8000 Crores? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thankfully, many of the officers were not aware the target as mentioned in the RFD - otherwise they would have closed the VCES counters much before the December 31 deadline. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can access the RFD here -<strong> <a href="http://cbec.gov.in/deptt_offcr/RFD2013-14.pdf">http://cbec.gov.in/deptt_offcr/RFD2013-14.pdf </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest on Refunds of Income Tax/Customs/Excise/Service Tax - unauthorised and unconstitutional? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ARTICLE</STRONG> 114 of the Constitution of India states that a bill will be introduced 'to provide for the appropriation out of the Consolidated Fund of India of all moneys required to meet the grants so made by the House of People and the expenditure charged on the Consolidated Fund of India but not exceeding in any case the amount shown in the statement previously laid before Parliament'. The Bill so introduced will be based on the individual demand for grants. The Appropriation Act passed by Parliament provides for payment from the Consolidated Fund of India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Article 114(3) of the Constitution stipulates that no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Payment of interest on refunds of excess tax is a charge on the Consolidated Fund of India and is, therefore, payable only after having been authorised under the due appropriation made by law. Rule 8 of the Delegation of Financial Powers Rules, 1978, describes 'Interest' as primary unit of appropriation for classification of interest expenditure. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department of Revenue/Central Board of Direct Taxes (CBDT) has been classifying interest on refunds of excess tax as reduction in revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This incorrect practice has been commented upon successively in CAG's Audit Report on Union Accounts as well as in CAG's Report on Direct Taxes, but no corrective action has been taken by the department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This issue was examined by the Public Accounts Committee and the Committee in their Sixty-Sixth Report (2012-13) had observed that there was no valid ground as to why the Department could not make broad estimates of expenditure on interest liability on tax refunds based on the studied trends of the past. The Department itself had admitted that in terms of Article 266 of the Constitution, it had no legal authority to withdraw the 'interest' on excess tax collected/refunds without recourse of Appropriation law passed by Parliament. Further, the Committee reminded the Department that Article 114(3) of the Constitution clearly mandates that no money shall be withdrawn from the Consolidated Fund of India except under 'Appropriation' made by the Legislature. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG also found that a similar practice was also followed by the Central Board of Excise and Customs (CBEC) in respect of payment of interest on refunds of Customs, Excise and Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG has been raising this issue since the last three years and nobody seems to be really bothered. If money can be withdrawn from the Consolidated Fund of India by an Assistant Commissioner, without an authorisation by Parliament, there is something terribly wrong with the accounting system and if we don't rectify it at the earliest, the whole system will collapse. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meantime, if this issue is not settled soon, the Revenue Departments may soon stop paying interest on delayed refunds. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Amendment in procedure for issue of Registration Certificates (RCs) for export of various commodities</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government has amended the procedure for issue of Registration Certificates (RCs) for export of various commodities viz. Cotton, cotton yarn etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are certain commodities for which online registration procedure has been prescribed for export. This was made mandatory with effect from 1st July, 2013. After filing online applications, exporters are required to furnish printout of the application submitted online along with hard copies of Letter of Credit [L/C] or Foreign Inward Remittance Certificate [FIRC] or copy of proof of Advance Payment, as applicable and export contract.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With immediate effect, the requirement of submission of hard copies of the documents viz. printout of online application, Letter of Credit [L/C] or Foreign Inward Remittance Certificate [FIRC] or proof of Advance Payment, as applicable and export contract is dispensed with. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not063.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No.63 (RE-2013)/2009-14, Dated: January 03, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anxiety in India Inc. over stable govt: ASSOCHAM </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNCERTAINTY</STRONG> over the outcome of the coming Lok Sabha elections is likely to cast its shadow on the state of economy which is battling the twin challenge of slowdown and unabated inflation, an ASSOCHAM study has noted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The study that captured the contemporary political economic situation observed that there was an increasing concern among the investors, industry leaders and economists over the prospects of an unstable government which may be forced to follow more of the populist and Left of the centre policies. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"While the country has learnt to live with the coalition governments in the last 15 years, it would require a strong anchor party supported by smaller parties which are committed to a strong growth model… However, regional aspirations and urge to go in for populist measures could create major road-blocks",</em> says the ASSOCHAM study. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"The industry would need a big push from the new government in terms of reviving manufacturing and investment in the big ticket infrastructure projects requiring large scale financial debt…However, only a strong government will be able to come out with a credible blueprint,"</em> the ASSOCHAM paper pointed out. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The present taxation system is a burden on common man - Modi </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<em><strong>THE</strong> present taxation system is a burden on common man. There is a need to reform it and introduce a new system. It is the need of the time</em>," said Narendra Modi at the event organized by Baba Ramdev, who had demanded abolition of all kinds of taxes and pitched for a single tax in the form of 'Banking Transaction Tax' if the BJP leader becomes Prime Minister. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every politician in India is a tax expert before coming to power and by some quirk of fate, if power weds him, he conveniently forgets all the tax theories that he propagated while campaigning. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Date of reply cannot be taken to be date of declaration for denial of CENVAT credit </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are manufacturers of processed textile fabric. Vide Notification no. 25/03-CE(NT) the facility of MODVAT was extended to the manufacturer of processed fabric. Accordingly, appellant availed the CENVAT credit on the stocks lying in their factory as on 01.04.2003 and they filed declaration to this effect on 01.04.2003 as well as on 25.05.2003. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thereafter revenue raised some queries in the matter of the declaration filed by the appellant and same was replied by the appellant on 07.07.2003. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Later on, the Revenue took the view that the appellant had not filed the declaration within three months as required in terms of the notification. Inasmuch as the clarification was offered only on 07.07.2003 and which is beyond three months, therefore, the appellants are not entitled to take CENVAT credit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lower authorities confirmed the demand and hence the appellant is before the CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench held - </font></p> <blockquote> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"4. There is no dispute about the fact as the appellant has availed the credit on 01.04.2003 as per Notification no. 25/03 dated 01.04.2003 and declaration have been filed on 01.04.2003 and 25.05.2003. Therefore, if there is any query by the revenue and same has been replied later on does not amount that they filed declaration after the period prescribed. In these terms, I hold that appellant has filed declaration within time and they are entitled to CENVAT credit."</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fine, the appeal was allowed with consequential relief. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See </strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u><strong><u><font color="#006600" size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE0NDM=" target="_blank">2014-TIOL-29-CESTAT-MUM</a></strong></font></u></strong></u></strong></font></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_rts.jpg" alt="" width="460" height="465" hspace="5" border="0" align="center"><br> </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"> – Tuesday'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">Central Excise</font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SCN alleges that credit has been taken intentionally and wrongly - if credit is taken intentionally then it cannot be taken wrongly but if it is mentioned wrongly, then it cannot be intentional - SCN alleges two contrary terms and in this situation, benefit of doubt goes in favour of respondent - Penalty correctly set aside by Commr(A) - Revenue appeal dismissed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>respondent procured capital goods in the year 2001-02. In the said year, they availed 50% of CENVAT Credit of duty paid capital goods. Remaining 50% credit was taken in the year 2002-03. The respondent again took 50% in 2003-04. Audit took place in the factory of the respondent and on pointing out by the audit party they reversed the CENVAT credit availed on the capital goods on 14.07.2003 on 31.10.2003 and interest was also paid on 03.11.2003. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A SCN was issued for imposition of penalty under Section 11AC of the CEA, 1944 r/w Rule 13 of the CCR, 2004. </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 when assessee receives interest on additional compensation in lieu of his land acquired by State after Supreme Court decision, interest is to be charged retrospectively - NO: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee an individual is primarily an agriculturist. His land was acquired by the Government and he got compensation under Section 23 of the Land Acquisition Act, which comprised of three components - compensation, interest on additional compensation and solatium. The assessee had declared the amount of compensation and solatium under VDIS, 1997, but interest on additional compensation received under Section 23 (1A) was not declared by the assessee for the purpose of tax. The issue before the Bench is - Whether when the assessee receives interest on additional compensation in lieu of his land acquired by the State after the Supreme Court decision, interest is to be charged retrospectively. And the answer goes in favour of the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commercial Training or Coaching - applicant conducting Management Courses - the MBA course programme is not recognized by any University whereas applicant was misrepresenting otherwise - clear case of suppression - Pre-deposit ordered of 50% of confirmed demand: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> total Service Tax demand of Rs.5,34,65,199/- along with interest and penalty has been confirmed by the CCE, Pune-III against the applicant. The major demand is under the head ‘Commercial Training or Coaching'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While seeking a Stay, the applicant submitted before the CESTAT that they had started MBA Course in 2003 with the approval from AICTE vide letter dt. 11.5.2004; the approval was renewed on year to year basis and hence the demand is not sustainable. It is further submitted that in view of the decision of Supreme Court in the case of <em>Association of Management of Private Colleges Vs. All India Council for Technical Education & Others </em>dt. 25.4.2013, to start management courses, approval from the AICTE is not required and, therefore, the demand on the ground that the conditions imposed by the All India Council for Technical Education to start courses are not fulfilled cannot survive. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow for the judgements </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Until Tomorrow 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> </body> </html>