TIOL-DDT 2289 · 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"><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><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></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2289</font><font face="Verdana, Arial, Helvetica, sans-serif"><br> </font></strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong>07.02.2014 <br> Friday </strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> Spirit of law is not to penalize assessee </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PURSUANT</strong> to the presentation of the Union Budget 2012, the JS (TRU-II) issued letter D. O. F. No 334/1/2012-TRU dated 16th March, 2012 which mentioned - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>C.3 Penalty waiver for renting of immovable property service:</strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. Recently, Delhi High Court while examining the issue of constitutionality of service tax on renting of immovable property service in the matter of Home Solutions Retail Vs UOI observed that 'on the question of penalty due to non-payment of tax, it is open to the Government to examine whether any waiver or exemption can be granted' [para 73] <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2011/2011-TIOL-610-HC-DEL-ST-LB.htm" target="_blank"><font size="1">[2011-TIOL-610-HC-DEL-ST]</font></a></strong></em>. Subsequently, in the matter of<em> Retailers Assn. of India Vs Union of India</em>, Honorable apex court, had ruled on October 14, 2011 <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/sc/2011/2011-TIOL-103-SC-ST.htm" target="_blank"><em><font size="1">[2011-TIOL-103-SC-ST]</font></em></a></strong> that litigants should pay 50% of the arrears within six months in three equated installments. For the balance, solvent surety should be furnished to the satisfaction of the jurisdictional commissioner.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18. Against the above backdrop, it is proposed that penalty may be waived for those taxpayers who pay the service tax due on the renting of immovable property service (as on the sixth day of March, 2012), in full along with interest within six months. Section </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">80A</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> is being introduced for this purpose. Those who fail to avail the benefit will be treated as if this section did not exist.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By the Finance Act, 2012, the following sub-section was inserted in section 80 of the Finance Act, 1994 -</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President.</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the question is whether an assessee who paid the Service Tax on Renting of Immovable property along with interest any time before this sub-section was inserted will be entitled for the benefit of waiver of penalty. We came across a case recently wherein the appellant had paid the ST along with interest and penalty in the year 2010, much before the Amnesty came on to the scene. The lower authorities took a view that section 80(2) of FA, 1994 inserted w.e.f 28.05.2012 is effective from that date and any payment made prior to that date is not eligible to get the benefit.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter was decided by the Ahmedabad Bench of the CESTAT recently.</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="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">amendment of Section 80 <strong><em>could </em></strong> be applicable to the payment made by assessee even prior to 28.05.2012, as the spirit of the law is to not to penalize the assessees who had defaulted the payment of service tax on renting immovable property, due to ratio of judgment which held field during the relevant period.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See</strong> <strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE5NTU=" target="_blank"><font size="1">2014-TIOL-196-CESTAT-AHM</font></a></font></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs - New Exchange Rates from Today</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified new exchange rates for Imported Goods and for Export Goods with effect from 7th February 2014. The US Dollar is 62.95 rupees for imports and 61.95 rupees for exports.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Exchange rates were last notified on 16 January 2014</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2014/cnt14_009.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 09/2014-Cus (N.T.), Dated: February 06, 2014</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MoS (R) JD Seelam to lay Foundation Stone for New Custom House at Hyderabad</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SHAMSHABAD</strong> in Hyderabad is considered to be one of the best airports in the world and perhaps the only thing it lacks is a Custom House nearby. Today morning, Minister of State for Finance (Revenue) JD Seelam is to lay the Foundation Stone for the 'Customs House' at Shamshabad in the presence of Joy Kumari Chander, the latest Member of the CBEC and BB Prasad Chief Commissioner, Hyderabad.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Recovery of wrongful/excess payments made to Government servants</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Supreme Court in a recent judgement observed,</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><em><font size="2">We are concerned with the excess payment of public money which is often described as "tax payers money" which belongs neither to the officers who have effected over-payment nor that of the recipients. We fail to see why the concept of fraud or misrepresentation is being brought in such situations. Question to be asked is whether excess money has been paid or not may be due to a bona fide mistake. Possibly, effecting excess payment of public money by Government officers may be due to various reasons like negligence, carelessness, collusion, favouritism etc. because money in such situation does not belong to the payer or the payee. Situations may also arise where both the payer and the payee are at fault, then the mistake is mutual. Payments are being effected in many situations without any authority of law and payments have been received by the recipients also without any authority of law. <font color="#FF0000">Any amount paid/received without authority of law can always be recovered barring few exceptions of extreme hardships but not as a matter of right</font></font></em><font color="#FF0000" size="2"><em>,</em></font><font size="2"><em> in such situations law implies an obligation on the payee to repay the money, otherwise it would amount to unjust enrichment.</em></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has yesterday issued guidelines on recovery of wrongful/excess payments to Government servants:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In all cases where the excess payments on account of wrongful pay fixation, grant of scale without due approvals, promotions without following the procedure, or in excess of entitlements etc. come to notice, immediate corrective action must be taken. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In a case like this where the authorities decide to rectify an incorrect order, a show-cause notice may be issued to the <strong><em>concerned</em></strong> employee informing him of the decision to rectify the order which has resulted in the overpayment, and intention to recover such excess payments. Reasons for the decision should be clearly conveyed to enable the employee to represent against the same. Speaking orders may thereafter be passed after consideration of the representations, if any, made by the employee.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Whenever any excess payment has been made on account of fraud, misrepresentation, collusion, favouritism, negligence or, carelessness, etc., roles of those responsible for overpayments in such cases, and the employees who benefitted from such actions should be identified, and departmental/criminal action should be considered in appropriate cases.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Recovery should be made in all cases of overpayment barring few exceptions of extreme hardships. No waiver of recovery may be allowed without the approval of Department of Expenditure.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. While ordering recovery, all the circumstances of the case should be taken into account. In appropriate cases, the <strong><em>concerned </em></strong> employee may be allowed to refund the money in suitable installments with the approval of Secretary in the Ministry, in consultation with the FA.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Wherever the relevant rules provide for payment of interest on amounts retained by the employee beyond the stipulated period etc. as in the case of TA, interest would continue to be recovered from the employee as heretofore.</font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/Recovery_wrongful.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOPT F. No.18/26/2011-Estt (Pay-I),. Dated: February 06, 2014</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT - Invoice not in name of applicant - although it is four years since issuance of SCN, applicant could not bring corrected invoices - pre-deposit ordered</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>applicant, a service provider, availed CENVAT credit of an amount of Rs. 68,026/- on the basis of invoices issued by <em>M/s Zee Turner Ltd</em>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the invoices were in the name of <em>M/s Hemraj Cable Network </em> and not in the applicant's name and, therefore, the Revenue denied the credit and imposed penalties etc.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As the lower appellate authority upheld the order, the applicant is before the CESTAT and submits that non-mentioning their name in the invoice is a mistake on the part of the service provider and that they had paid the service provider. That, when they had approached the service provider they were advised to go to the distributor <em>Pratik Satellite Services </em> but to no avail. It is submitted that they have with them a certificate from the Tehsildar mentioning that there is no company with the name <em>M/s Hemraj Cable Network </em> in their area. And since they have already paid 50% of the service tax amount as pre-deposit for hearing the case before the Commissioner (Appeals), stay may be granted.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative submitted that the invoices are not in the name of the applicant and hence there is no way that the credit can be allowed. Further, even though it is four years since the SCN was issued, the applicant has not been able to get the invoices corrected and so the demand is to be upheld.</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>"5. The fact that CENVAT credit of Rs. 68,026/- taken based upon the invoices which are not in the name of the applicant is not disputed. The Show Cause Notice was issued in April 2009 and through medium of the Show Cause Notice the applicant was made aware of the discrepancy. In the last four years they could not bring the corrected invoices. In view of this the applicant has not made out a case for waiver of pre-deposit of the disputed amount. The applicant is directed to deposit remaining 50% of the amount within four weeks from today. On deposit of the amount, there shall be waiver of pre-deposit of penalties till disposal of the appeal…."</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE5NTQ=" target="_blank">2014-TIOL-195-CESTAT-MUM</a></font></strong></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="#FF6633"><strong><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/Sickness.jpg" alt="Legal Corner Icon" width="424" height="479" hspace="5" border="0" align="center"></font></strong></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="#FF6633"><strong><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></strong></font></strong></font><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Composite services of shifting/transportation of materials where loading and unloading is ancillary to main activity of transportation are classifiable under GTA Services - pre-deposit waived & stay granted: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Applicant had received various works contracts from <em>M/s. Usha Martin Ltd.(UM</em>L) for unloading of ores at the Railway siding from the Railway rakes and shifting/transportation of the said materials from Tata Goods Shed(TGS)/Goods Dispatch Yard(GDY) at Tatanagar to the stacking yard in <em>M/s. UML's </em>works. The rate quoted is for the composite activity on per M.T. basis. In all these cases, necessary tools, tackles, labour, material handling equipment and vehicles were to be arranged by the Applicant and they are also liable to pay demurrage/wharfage charges on failing to unload/load goods within free time allowed by the Railway. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The SCN demanding Service Tax of Rs. 2,16,17,110/- from the Applicant under the category of 'Cargo Handling Service' was confirmed by the <em>CCE, Jamshedpur </em> along with imposition of penalties on the Applicant, the Partner of the applicant and <em>M/s Usha Martin Ltd. </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether when agreement which assessee entered into gets terminated, all expenses relating to such agreement is allowable as revenue expenditure - YES: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is engaged in the business of Realtor and Contractor. It used to enter into agreements with parties in need of huge parcel of land for construction and development work, for aggregating small pieces and finally handing over to them. Assessee entered into an agreement with 'M' for sourcing and aggregating land to the extent of 52 acres. On the basis of this agreement, the assessee estimated his profit and included the same amount of profit in the original return at Rs. 3.46 crores. Subsequently a revised return was filed at Rs. 34.24 lacs. The return was revised on the basis that the sale agreement entered into between the assessee and has been frustrated and the agreement was not materialized in accordance with the terms of the agreement. Later on, the agreement itself was cancelled.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AO did not accept the revised return observing that as against the overall extent of 52 acres of land, the assessee has already procured 13.12 acres and therefore, the agreement was in full force and in such circumstances, a loss cannot be anticipated as argued by the assessee. Revised return can be filed only if the assessee discovers any omission or any wrong statement in the original return. There is no such omission or a wrong statement and therefore, there is no valid ground to file a revised return.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when agreement which assessee entered into gets terminated, all expenses relating to such agreement is allowable as revenue expenditure. And the answer is YES.</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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Excess amount of CENVAT credit reversed by assessee is not a duty, therefore, provisions of section 11B of CEA, 1944 are not applicable - Assessee is entitled to take <em>suomotu </em> credit - no requirement of filing refund claim - Appeal allowed with consequential relief: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant noticed that they have reversed excess CENVAT credit of Rs. 9,96,585/- during the period 05.09.1994 to 20.10.1994. Therefore, they <em>suomotu </em> took credit of the excess amount reversed by them.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue found this out and issued a demand notice alleging that the appellant could not have <em>suomotu </em> taken the credit and ought to have followed the proper procedure of refund.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both the lower authorities confirmed the demand and, therefore, the appellant is before the CESTAT.</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 color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice weekend.</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>