TIOL-DDT 2268 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 2268 </font><br>
08.01.2014 <br>
Wednesday </strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Education Cess and the Secondary and Higher Education Cess on other cesses - CBEC Clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD </STRONG>had in Circular No.345/2/2004-TRU (Pt.) dated 10th August, 2004 clarified that the Education Cess chargeable under Section 93(1) of the Finance (No.2) Act, 2004 is to be calculated by taking into account only such duties which are both <strong>levied and collected by the Department of Revenue </strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, it seems there is a doubt as to whether the Education Cess chargeable under Section 93(1) of the Finance (No.2) Act, 2004 and the Secondary and Higher Education Cess chargeable under Section 138(1) of the Finance Act, 2007 should be calculated taking into account the cesses which are <strong>collected </strong> by the Department of Revenue but <strong>levied </strong> under an Act which is administered by different departments such as Sugar Cess levied under Sugar Cess Act, 1982, Tea Cess levied under Tea Act, 1953 etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This simple issue had been agitated for the last eight years. And now the Board clarifies "<em>A cess levied under an Act which is not administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act cannot be treated as a duty which is both levied and collected by the Department of Revenue." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board reiterates that <em>the Education Cess and the Secondary and Higher Education Cess are not to be calculated on cesses which are levied under Acts administered by Department/Ministries other than Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts </em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In spite of the Board's clarification in 2004, in several parts of the country, demands were issued (and routinely confirmed) to include other cesses while calculating education cess. In one case before the Tribunal, the learned departmental representative argued that the Section would override the Board instructions. However the Tribunal set aside the order including paper cess for calculation of education cess. <strong><font size="1">[<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2008/2008-TIOL-2398-CESTAT-BANG.htm" target="_blank">2008-TIOL-2398-CESTAT-BANG</a>] </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And at least one Commissioner took the matter in appeal to the High Court against the Tribunal's order. The High Court emphatically held, " <em>it is apparent that a plain reading by itself would indicate that the sugar cess levied and collected cannot be equated with duty of central excise and therefore, cannot be treated to be part and parcel of the amount on which education cess has to be calculated </em>." <strong><font size="1">[<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2010/2010-TIOL-887-HC-AHM-CX.htm" target="_blank">2010-TIOL-887-HC-AHM-CX</a>] </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After all there is no punishment in the Department for officers flouting the Board instructions with impunity and contempt. Can there be anything more atrocious than a Commissioner telling the High Court that his Board is wrong and he would not follow the directions of the Board? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board is helpless against such blatant disobedience - the farthest it can go is "view" seriously and everybody knows that such a view is a big joke. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">'Cess on cess' is a small amount, but see how much damage it has caused to our clogged judicial machinery - even the precious time of a High Court was wasted by an overzealous Commissioner who had no respect for his Board. Who is going to pay for all this waste of national wealth? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even now the Board is only reiterating its earlier circular. Why can't it tell the field to withdraw/concede all the cases at all appellate stages? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2014/excircular978.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 978/02/2014-CX, Dated: January 07, 2014 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service recipient is required to reimburse the Service Tax to the service provider - High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> service provider is actually a collector of Service Tax - he collects the Service Tax and pays it to the Government, though the responsibility to pay tax is on him. It quite often happens that at the time of providing the service, there is no clarity on whether the tax is payable, or the recipient refuses to pay Service Tax as there was no provision for that in the contract. Come what may, after the service is received, some service recipients refuse to pay Service Tax and the list would include respectable (?) MNCs, PSUs and even Government departments! A retired senior officer of the Indian Army running a security service wrote a letter to the Board that a Navy unit is refusing to pay him Service Tax as it was not mentioned in the contract. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a case before the Allahabad High Court, the respondent BSNL refused to pay Service Tax to the petitioner service provider who provided security services, on the ground that the same was not contemplated in the service agreement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court noted: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Service tax is statutory liability. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. It is atax whichis required to be collected by the service provider from the person to whom service is provided, and thereafter to be deposited with government treasury within the prescribed time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Thus essentially the statute is being imposing the tax upon the person to whom service is being provided, and the serviceprovideris merely a collecting agency. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the High Court directed BSNL to make reimbursement of service tax to the petitioner without further delay. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE0NzU=" target="_blank">2014-TIOL-33-HC-ALL-ST</a></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2011/2011-TIOL-114-HC-DEL-ST.htm" target="_blank"><font size="1">2011-TIOL-114-HC-DEL-ST </font></a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appellant availing services of Renting of Immovable property - whether CENVAT credit can be availed in absence of mention of address of property in Registration Certificate - Stay granted </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicant is seeking waiver of pre-deposit of CENVAT credit availed by them of the ST paid on Renting of Immovable Property and which is denied by the lower authorities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The cause of denial is that the address of the property for which they have availed services is not entered in the registration certificate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed - </font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"3. Considering the submission made by the applicant, it can be seen at the final hearing whether this premise are required to be entered in the registration certificate or not. Prima facie I am of the view that stay can be granted to them. Accordingly, I waive the requirement of pre-deposit of disputed amount and stay recovery thereof during the pendency of the appeal." </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See
<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE0NzY=" target="_blank"><font size="1">2014-TIOL-40-CESTAT-MUM
</font></a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No need of "my lord" - "sir" is good enough </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<strong>YOU</strong> don't need to call us 'my lord' or 'lordship' always; calling us 'sir' is good enough for us.", said a Supreme Court Bench yesterday dismissing a petition filed by a 75 year old lawyer who wanted a directive restraining all lawyers from addressing judges as "your lordship", "my lord" etc,. The court said that it never took exception when lawyers or litigants addressed judges as 'sir' and it told the petitioner that if the lawyers felt so strongly about addressing the judges, they should ask bar associations to issue directions, restraining them from calling judges 'my lord' or 'lordship'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Most of the lawyers are interested in winning cases and are not bothered about how they address the judges. There are some lawyers who address even Commissioners as "my lords". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A judge fell into a ditch and a lawyer pulled him out. "Is your honour hurt", asked the lawyer. "Stupid fellow, can't you see it's my head that is hurt, not my honour?", replied the judge. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The property in the name of an income tax assessee itself cannot be a ground to hold that it actually belongs to such an assessee - Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a judgement delivered on 6th January 2014, the Supreme Court observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"While passing the order of discharge, the fact that the accused other than the two Ministers have been assessed to income tax and paid income tax cannot be relied upon to discharge the accused persons particularly in view of the allegation made by theprosecution that there was no separate income to amass such huge properties. The property in the name of an incometax assessee itself cannot be a ground to hold that it actually belongs to such an assessee. In case this proposition is accepted, in our opinion, it will lead to disastrous consequences. It will give opportunity to the corrupt public servants to amass property in the name of known persons, pay income tax on their behalf and then be out from the mischief of law." </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court made these observations while upholding the decision of the Special Court rejecting the discharge petitions of two former DMK ministers of Tamil Nadu. </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"><strong><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></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">UP Trade Tax </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Government Circular extending the exemption even if the Commissioner had cancelled the certificate - Government Circular binding on the Authorities: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> an industrial unit has obtained an eligibility certificate for exemption from trade tax under the exemption scheme which was in forceupto31.03.1990 and no act of forgery or cheating has been committed in obtaining the certificate or if no conditions of the certificate is violated, then even if the Commissioner has cancelled the certificate in exercise of his powers under Section4A(3) of the Act, then also the outstanding amount prior to the date of cancellation or modification would be remitted unless the unit has not realized the tax from its customers. The aforesaid circular is binding on the authorities under the Act as noticed by a Constitution Bench of Supreme Court in the case of <em> Collector of Central Excise, Vadodara vs. Dhiren Chemical Industries , </em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-83-SC-CX-CB.htm"><strong><em><font size="1">(2002-TIOL-83-SC-CX-CB) </font></em></strong></a><font size="1"><em>.</em></font><em> </em></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 while granting administrative approval u/s 158BG CIT is obliged to give a hearing opportunity to assessee - NO: High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOTH</strong> the assessees are doctors, carrying on medical profession. A search u/s 132 was carried out at the residence and the business premises of the assessee. During search, certain incriminating documents were found. AO made the additions which were upheld by the CIT(A). On further appeal, Tribunal had observed that in the instant cases, no opportunity was given by the CIT while giving approval u/s 158 BG, so, no enhancement can be made out. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether while granting administrative approval u/s 158BG CIT is obliged to give a hearing opportunity to assessee and Whether in case an assessee follows cash basis of accounting, interest income must be taken on receipt basis only. And the verdict partly goes in favour of Revenue. </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">CENVAT - Rule 2(l) of CCR, 2004 - By no stretch of imagination can events conducted by Event Management Company and buying & supplying movie tickets to woo customers be considered as promotion of business activities of a bank - prima facie not an Input Service: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> regards the Insurance Auxiliary Service, this service is for providing group insurance policy, which is a part and parcel of the salary and perks given to the employees and, therefore, it would qualify as an eligible input service for CENVAT credit. As regards the Real Estate Agent Service, even though the appellant claims that it is towards part of the employees perks, there can be a dispute whether it is a service activity or a welfare activity. In the case of Event Management Service, the claim of the appellant is that the events are conducted to attract customers and to promote business of the bank. Buying movie tickets and supplying the same, by no stretch of imagination, can be considered to be promotion of business activities. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrowfor the judgements </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Until Tomorrowwith 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>