TIOL-DDT 2297 · the untouched capture
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<p><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 2297</font><br>
19.02.2014<br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Modi's Rallies - Why Notice and why Withdrawal? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> February 12, the Directorate General of Central Excise Intelligence (DGCEI) has issued a letter to the BJP and its Chandigarh office. The notice reads:</font></p>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Recently, it was in news that Bhartiya Janta Party has collected amount by way of tickets for entry to the rally at different places in India where Mr.Narendra Modi had addressed the public at large. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">After coming into operation of the negative list regime under service tax laws w.e.f. 01.07.2012, every service is now taxable except services in negative list and in Mega Exemption list. </font></p>
<p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">"As the entry tickets to the event were not for any admission to any entertainment event or access to amusement facilities (which are in the negative list) the same is taxable in the hands of the person collecting the amount of tickets. It appears that the BJP/Shri Narendra Modi has neither got registered under the Service Tax nor paid tax on collection from tickets". </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">You are requested to intimate with ten days of the receipt of this letter the details of amounts collected and service tax paid, if any, in regard to entry tickets to various Rallies organized after 01.07,2012 by the Bhartiya Janta Party/ Sh. Narendra Modi in the region falling under your office. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Please note that the above information has been called under the provisions of Section 14 of the Central Excise Act, 1944 as made applicable to Service Tax vide Section 83 of the Chapter V of the Finance Act, 1994. </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The BJP reacted sharply and loudly. Leader of Opposition in the Rajya Sabha, Arun Jaitely commented, <em><font color="#FF0000">"Obviously, there are no tickets for Narendra Modi's rallies. Either at the rallies or elsewhere in the country, the BJP has launched a massive fund collection campaign. Our effort is to reach 10 crores households for fund collection. The Directorate General of Central Excise and Intelligence appears to be believing that the BJP/Narendra Modi renders service to those who come to attend Narendra Modi's rallies. They believe that Mr.Modi's rally is neither ‘entertainment event nor access to amusement facilities' hence they are liable to levy of service tax. A legitimate question arises if such notice for collecting funds is only being issued to the BJP or to other political parties, particularly the Congress Party. There is no doubt that the UPA government has taken leave of all its senses. I hope the people realize the extent of desperation to the extent the Congress has stooped to. If this is how the principal opposition party or its Prime Ministerial candidate can be harassed, the extent of plight of common taxpayers in the country can be easily understood." </font></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under attack from the BJP's top advocate and fuelled by a passionate press, DGCEI developed cold feet. It was projected as if Finance minister Chidambaram was out to hound Modi and the BJP through Service Tax. A very learned advocate of the BJP claiming to be an expert practitioner of indirect taxes appeared before National TV and forcefully argued that Service Tax is payable only for commercial activities and that in this case there was no service provider and receiver. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGCEI yesterday informed the BJP "<em>no action is required to be taken at your end"</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why did the DGCEI issue the Section 14 notice to the BJP in haste and why did they withdraw it more hastily? Does the Sr. Intelligence Officer of the DGCEI believe that Modi rallies are subject to Service Tax? If so, who decided that there was no tax liability? Who has adjudicated the case even before a Show Cause Notice was issued? It is laudable that a case is dropped at the pre-investigation stage but that happened only because the noticee is BJP. Why aren't ordinary people given the same facility as Modi and BJP in respect of summons and notice? Well, there is no danger of ordinary people ever becoming Prime Ministers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further it is amusing that the Sr. Intelligence Officer has concluded that <font color="#FF0000"><em>Modi's rally is neither ‘entertainment event nor access to amusement facilities'</em></font>. Have they withdrawn the notice after finding Modi's rally as entertainment and amusement? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI Letter to BJP. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/modi-dgcei.jpg" alt="Legal Corner Icon" width="500" height="716" hspace="5" border="0" align="center"><br>
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<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Raps Income Tax Department for bad administration of Prosecution </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> its report tabled in Parliament yesterday, the CAG has found that the prosecution mechanism in the Income Tax Department (ITD) is awfully bad. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG found mismatches at every stage of selection, initiation, pursuance and disposal of cases as also at every level of monitoring and coordination. To handle prosecution cases, CBDT has not ensured posting of appropriate officers as Nodal Officers in its field formations; Nodal Officers have not maintained the prosecution registers despite various instructions issued by CBDT; ITD has not given adequate priority in launching of prosecution as indicated by delay in initiation of cases and by not launching the prosecution even in approved cases; Prosecution cases are being pursued on companies which have already been liquidated or have been declared sick by BIFR; CBDT is wasting resources in pursuing cases under repealed sections of the Act, dead assessees etc.; CBDT did not utilize the prosecution mechanism for ensuring tax compliance under section 276CC of the Act.; ITD's nominees are not attending regular hearing in the Courts impacting disposal of cases; ITD has poor records maintenance and inadequate monitoring of prosecution cases pending in the Courts; Poor record maintenance and delay in timely production of evidences has led to acquittal of assessees in prosecution related offences; The enforcement of CBDT's policy and procedures on Prosecution Counsels has not been effective and has impacted the pursuance of cases; ITD did not use the compounding of offences as alternate dispute resolution mechanism effectively to reduce the litigation and realize the due revenue; ITD has acted not in consonance with the spirit of National Litigation Policy by wasting prosecution machinery on technical offences; Prosecution machinery of ITD was used to handle individual assessees and low money value cases, not against systematically organized entities; Central Economic Intelligence Bureau established for gathering, collation and dissemination of information among tax gathering agencies like CBDT, CBEC etc. has not worked in coordinated manner to arrest tax evasion by prosecution. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG concluded that ITD has not given adequate priority to prosecution in tackling tax evasion and prosecution mechanism is not working effectively and efficiently. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Recommended : </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The entire process of initiation, levy and order of penal proceedings to be duly recorded so that proceedings do not suffer from procedural infirmities. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The Ministry may ensure that concealment of income is penalized as per the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Ministry may put in appropriate mechanisms to ensure that tax demands are collected on time and defaults penalized. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The Ministry may ensure coordination between various wings within ITO so that revenue efforts are synergized. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The Ministry may put in a mechanism for ensuring appropriate penalties for cash transactions relating to loans and deposits beyond prescribed limits. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The Ministry needs to ensure instituting a more robust mechanism for identifying cases for prosecution which takes into account timeliness; quantum of tax evasion; and contemporary impact. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. CBDT should ensure posting of a designated and experienced Nodal officer to handle prosecution at the field level with independent charge. CBOT is to ensure periodical interaction amongst authorities (like quarterly) so that status of a case is ascertainable at any point of time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. CBDT should take up work of cleaning of records and data bases to ascertain actual pendency and status of prosecution cases at various levels. CBOT should ensure maintenance of updated prosecution records at all levels. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. CBDT should ensure periodical physical verification of prosecution related files. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Ministry needs to streamline the mechanism for appointment and evaluation of departmental counsels representing the ITO before judicial authorities. The remuneration rates also need a relook in accordance with the tasks associated so as to avail and retain the services of experienced counsels. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. The Ministry may ensure regular coordination with the judicial machinery. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. CBDT should perform one time exercise to identify the stage of pendency of all cases in the various Courts and follow it actively for resolution. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. CBDT should consider compounding offences before launching the prosecution proceedings so that revenues are collected. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. CBDT should deploy prosecution machinery for high impact cases and avoid focussing on low impact cases. </font></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From CAG's Report No. 28 of 2013 laid on the table of Parliament yesterday. </font></em></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No '<font color="#FF0000"><em>National</em></font>' Companies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MINISTRY of Corporate Affairs has clarified that no company should be allowed to be registered with the word <strong>'National'</strong> as part of its title unless it is a government company and the Central/State government(s) has a stake in it.MoCA directs that this stipulation should be stringently enforced by all Registrar of Companies (ROCs) while registering companies.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry has also clarified that the word, 'Bank' may be allowed in the name of an entity only when such entity produces a ‘No Objection Certificate' from the RBI in this regard. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly, the word, "Stock Exchange" or "Exchange" should be allowed in name of a company only where ‘No Objection Certificate' from SEBI in this regard is produced by the promoters. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/mca_circular_02_2014.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoCA Circular No. 2/2014 in F. No. 2/2/2014, Dated: February 11, 2014 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax Revenue to overtake Customs and Excise Next Year </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICE </strong>TAX appeared on the Indian Taxation scene in 1994 - a good fifty years after the Central Excise Act in 1944. What started as a modest appendage to the Customs and Excise duties has now become almost equal to them in the amount of revenue collected. The Government hopes to collect more Service Tax than each of the Customs and Excise duties in the next fiscal. As per the Finance Bill presented by PC on Monday the Budget estimates for 2014-15 are as follows: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">1. Customs Rs. 2,01,314 Crores </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">2. Central Excise Rs. 1,99,831 Crores </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">3. Service Tax Rs. 2,15,478 Crores </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government hopes to collect Rs. 1,64,927 Crores as Service Tax in this fiscal. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, is there any justification for calling the Board as Central Board of Excise and Customs? </font></p>
<p align="center"><strong><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></strong></p>
<p><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">Customs</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Petition for de-freezing of Bank account frozen by the DRI during investigation of evasion of customs duty - Bank Account is neither goods nor currency for purpose of Section 110 of the Customs Act, 1962 - Petitioner is not entitled for unconditional de-freezing of Bank account: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 110(3) of the Act deals with seizure of the documents or things which in the opinion of the proper officer would be relevant to any proceedings under the Act. Freezing of the bank account, will not be seizure of any document or thing useful or relevant to any proceedings under the Act. Rather freezing of the account was only with a view to stop the Petitioner from withdrawing the proceeds of the alleged violations under the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this view of the matter, since the freezing of the bank account, was not seizure of the ‘goods' as envisaged under Section 110 of the Act, the Petitioner is not entitled to de-freezing of the bank account unconditionally. It is therefore, directed that the amount deposited in Bank Account, after the date of freezing the account shall be released, subject to furnishing of a Bank guarantee. </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 Revenue does not find any corroborative evidence during Search, any addition strictly made on basis of un-retracted statement recorded u/s 132(4) is legally sustainable - YES: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether depreciation in case of a rented building can be claimed as business expenditure u/s 32; Whether voluntary disclosure of an assessee made u/s 132(4) can be rejected in case, revenue has not filed any corroborative evidence against it; Whether the income assessed under Chapter 14B can be included in the regular assessment of any previous year included in the block period; Whether penalty can be imposed under Section 271 (c) where undisclosed income is determined under Chapter 14B and Whether the possibility of penalty can be a reason to require that it can be treated as undisclosed income only when the claim is found to be made deliberately. And the verdict goes against the assessee. </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">AED(T&TA) & AED(GSI) are being collected with certain objectives and are required to be accounted for under that head and also used for that purpose - In case credit of such duty is allowed to be used for duty liability of other type, quantum and purpose of collecting said duties will get defeated/distorted - accumulated credit of AED (T&TA) cannot be cross utilized for payment of duty relating to AED (GSI) and for payment of basic excise duty - Appeals disposed of: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE appellant had accumulated credit of AED (T&TA) as on 1.4.2000. In addition, certain credit of the said duty was availed during 1.4.2000 to 30.6.2001. This credit could not be utilized during the period of availment as the goods chargeable to AED (T&TA) were not cleared and hence duty liability was far less than the accumulated credit. The credit was, however, utilized during January 2003 to May 2003 for payment of Additional duties of Excise (Goods of Special Importance) [AED(GSI)] and also basic excise duty leviable under CEA, 1944.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue involved in the appeals before the Tribunal is whether accumulated credit of AED (T&TA) can be cross utilized for payment of duty relating to AED(GSI) and for payment of basic excise duty during January 2003 to May 2003. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
<p><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"> <strong> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p>
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