TIOL-DDT 2279 · 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></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 2279 </font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>24.01.2014 <br> Friday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Applicant cannot become illiterate to pay ST after collecting it from customers </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AGAINST</strong> the imposition of penalties u/s 76, 77 and 78 of the FA, 1994 the applicant is before the CESTAT. The applicant has already paid the ST demanded and the interest. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is submitted that the applicant is illiterate; that the person who was appointed for assessment had not assessed the ST timely and, therefore, there was a delay. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative informed the Bench that the applicant had collected the service tax but did not pay to the government and it was only after issuance of SCN that the service tax collected was paid along with interest and, therefore, imposition of penalty is in order. </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>"4. …I am not impressed with the argument that the applicant is illiterate. Applicant cannot become illiterate to pay service tax after collecting it from the customers. In any case this cannot be criterion for payment of tax. Applicant has collected the amount from his customers and raised the bills. After collecting the amount there is no reason why the collected amount is not deposited with the Government. Prima facie the applicant has not made out a case for total waiver of pre-deposit of penalties…."</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Saying so, the Bench directed the applicant to make a pre-deposit and report compliance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE3MTg=" target="_blank"><font size="1" face="Verdana, Arial, Helvetica, sans-serif">2014-TIOL-123-CESTAT-MUM</font></a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Withdrawal of Pre-2005 currency notes - No demonetisation; not related to elections - RBI Governor </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YESTERDAY</strong> RBI Governor Raghuram Rajan addressed the 8th RN Kao Memorial lecture in the Capital. After his lecture, during the interaction, CBI Director Ranjit Sinha asked him about the significance of RBI's move to withdraw pre-2005 currency notes (Please see yesterday's DDT for details), just before the elections. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The RBI Governor clarified: </font></p> <blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not an attempt to demonetise. It is an attempt to replace less effective notes with more effective notes. I understand people are making different interpretations. Unfortunately, that should not be the interpretation. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">It has nothing to do with elections. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The notes after 2005 have greater security features and the Finance Ministry sought withdrawal of the pre-2005 notes. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The RBI Governor does not understand why people are worried when RBI had asked them not to panic. The problem is that RBI has a Printing Press and the people are not blessed with such divine facility and naturally they will be worried. But it's not ordinary people who are really worried - it's the people sitting on piles of black money who are really worried. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Export of Cotton Yarn </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has amended the Foreign Trade Policy (FTP) 2009-14 to make Export of Cotton Yarn eligible for benefits under Incremental Export Incentivisation Scheme for the entire financial year 2013-14. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not066.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 66/(RE-2013)/2009-2014., Dated: January 23 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Assessment based on Tariff Values - Madras HC allows Writ Appeal filed by department</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> dispute is on valuation of Betel Nuts. Revenue adopted tariff value as fixed by Notification No 85/2013 Cus (NT) dated 21.08.2013. The importer challenged this in Writ Petition and pleaded that the transaction value should be adopted for the purpose of assessment. The single judge disposed of the Petition by directing the importer to pay the admitted customs duty and deposit 75% of the differential duty and execute bond for the remaining 25%. The revenue filed appeal against the said order. The Division Bench held: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based on the tariff notification No.85/2013, dated 21.08.2013, the Customs Department is demanding duty on the tariff value fixed which is objected to by the respondent/importer. Admittedly, the said notification is not under challenge. The only plea raised by the respondent/importer is that it is not in consonance with the transaction value. The respondent/importer has to agitate the said issue before the appropriate forum under the provisions of the Customs Act, if he so desires. For the purpose of release of the goods, the respondent/importer is not entitled to state that Section 14(2) of the Customs Act does not apply to the present Import and that Section 14(1) has an overriding effect and that duty is payable only on the transaction value declared by him. This plea cannot be countenanced in view of the non-obstante clause in Section 14(2). </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the Single Judge order is modified with the direction to the importer to pay 75% of the duty demanded on assessment provide Bank Guarantee for the balance 25%. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see </strong></font><strong><font face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE3MjA=" target="_blank"><font size="1">2014-TIOL-92-HC-MAD-CUS</font></a></font></strong></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No Roll Back on Gold Imports Curbs - Chidambaram </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE</strong> Minister Chidambaram said in Davos yesterday that India is not planning any roll back on the curbs on gold imports. He said, “"Until we have a firm grip on the current account deficit I do not contemplate any roll back in any measure. We will have a full idea of the current account deficit only when the budget is presented and when the year comes to an end.” </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT Cartoon </strong></font></p> <p align="center"><font color="#663399" 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/Cartoon_2281.jpg" alt="" width="400" height="451" hspace="5" border="0" align="center"></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"> - Monday's cases</font></strong></font></strong></font></p> <p align="justify"><font color="#663399" 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>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Construction of water supply pipelines and pumping stations for Government - Clause 'e' confusion - total waiver of pre-deposit granted: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HERE</strong> is some good news for contractors executing water supply projects for Government, especially after the weird interpretation by a section of the department that the non-commercial constructions which are excluded under sub-clause (b) of the explanation under the definition of Works Contract service are taxable under sub-clause (e) as EPC / Turnkey contracts. At least there should be some relief at pre-deposit stage in view of this recent order by the Circuit Bench of the Tribunal at Hyderabad. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Petitioner is engaged in providing services to several departments of the Government of Andhra Pradesh i.e. in the Command Area Development; Irrigation; and Public Health Departments on turn-key or non turn-key basis involving works relating to laying of pipelines including associated earth work, excavation, supply, laying, joining, testing and commissioning of water pipelines of various diameters; civil works involving construction of pumping stations; treatment plants and canals; and electro-mechanical works involving erection, commissioning and installation of various pumps, motors and equipments for treatment required to set up water treatment or water supply plants and the like. </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 for purpose of deemed transfer u/s 2(47)(v), all Development Agreements, in all situations, can be said to have satisfied conditions u/s 53A of Transfer of Property Act - NO: ITAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING</strong> the previous year 2006-07 relevant to A.Y. 2007-08, the assessee company had entered into a Development Agreement cum-GPA with M/s. MAK Projects Pvt. Ltd for development of its agricultural property, into a Housing Project as company under incorporation. After examination of all the documents and details filed, the AO, completed the assessment by rejecting claim of the assessee company that the land is not a capital asset, being agricultural land, and therefore no capital gain is assessable. Having held that there is a charge within the meaning of section 45, the land being a capital asset, the AO proceeded to determine the full value of consideration ignoring the plea of the assessee company that the same is not ascertainable in the year under consideration. In other words, it was the prayer of the assessee company that the full value of consideration is only ascertainable in the year of receipt of constructed area for the purpose of computation of capital gain as the same can be worked out with certainty with reference to the cost of construction in the hands of the builder. The AO referred to the penal clause of the development agreement and adopted the same as yardstick to estimate the full value of consideration for the purpose of computation of capital gain. On appeal, the CIT(A) confirmed the additions made in the assessment order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE issue before the Bench is - Whether for the purpose of deemed transfer u/s 2(47)(v), all Development Agreements, in all situations, can be said to have satisfied the conditions of Section 53A of the Transfer of Property Act. And its answer is NO. </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">CENVAT Credit of Sugar Cess - Appellant entitled to credit of CVD paid on imported sugar equivalent to Cess levied and paid under Sugar Cess Act: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SUGAR CESS</strong> - Tax or Fee: the provisions of the Central Excise Act and the Rules made thereunder including those relating to refunds and exemptions from duty shall, so far as may be, apply in relation to the levy and collection of the said duty of excise as they apply in relation to the levy and collection of the duty of excise on sugar under that Act. In other words, the provisions of the Central Excise Act and the Rules made there under are read into the Act. Levy and collection of cess under the Act is treated as levy and collection of a duty of excise on sugar under the Central Excise Act. The cess imposed under the Act is a duty of excise or a tax. The contention that it is a fee and the assessee is not entitled to CENVAT credit has no substance. Therefore, the sugar cess paid under the Act is tax, and to be precise it is DUTY OF EXCISE and not FEE. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is entitled to claim CENVAT credit in respect of the cess paid as additional duty (CVD) on raw sugar imported under the Sugar Cess Act of 1982 read with Section 3 of the Customs Tariff Act, 1975.</font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Happy Republic Day and International Customs Day [</strong>please see our Guest Column on Sunday for an article on <em>Communications and Celebrations - International Customs Day</em><strong>] </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our Columns Monday for the judgements</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Monday with more <strong>DDT</strong></font></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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>