TIOL-DDT 2314 · 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 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><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 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 face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2314</font><font size="2"><br> </font></strong><font size="2"><strong>14.03.2014<br> Friday</strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Drawback Shipping Bill - EDI - Higher Rate - CENVAT Credit and Broad Confusion </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN </strong>you export goods, you are entitled to a Drawback to offset the Customs and Excise duties and Service Tax suffered all the way till export. There are two rates of drawback - one when you have taken CENVAT credit and another when you have not taken credit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While filing the duty drawback shipping bill at the time of export you are required to declare whether you have taken CENVAT credit or not. If you declare that you have not availed CENVAT credit, you will be asked to produce a <em>Non-Availment of Cenvat Certificate </em> and if you are not able to produce this certificate, your shipping bill is stuck. So what the clever Custom House Broker does is - to claim that he has availed CENVAT credit and thereby claiming less drawback. His Shipping Bill is through. Of course this does not prevent the exporter from subsequently claiming higher drawback. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has noticed that in some cases the amendment of the shipping bill was avoided even though the necessary certificate for claiming the higher AIR was not available at the time of export. The practice in such cases was to show, in the EDI System document menu, that the certificate is available, and simultaneously record contrary remarks in the ‘departmental comments' that certificate should be verified subsequently. Intent behind such remarks was that the certificate be seen at the time of drawback processing. However, instances were noticed where drawback was processed at the higher rate based on the details recorded in the EDI system rather than in the departmental comments. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board declares, “Such a practice is not in harmony with the EDI's system-based checks and balances and places revenue at risk. The Board directs that such a practice should be strictly avoided and field formations should ensure that the prescribed procedure is scrupulously followed at the time of export.” </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why should the Board make drawback claims so complicated? As such every effort is made by every officer to deny every benefit to the assessee. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2014/instruction14_003.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Instruction in F.No.609/156/2013-DBK, Dated: March 13, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti-dumping duty on Plain Medium Density Fibre Board - re re resurrection</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Duty was imposed provisionally by Notification No. 21/2009-Customs, dated 27 th February, 2009 and was valid till 26th day of August, 2009. So from 27 th August, 2009, there was no anti dumping duty on this product. But that is not how our lawmakers function. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While covering this in <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=ODY4NA==" target="_blank">TIOL-DDT 1063</a> - </strong>02.03.2009, we had reported, <font color="#FF0000">"this is valid till 26th day of August, 2009 and will of course be valid even if the government forgets to extend it then and chooses to do it on a later day."</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is what exactly happened. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The government imposed definitive anti dumping duty effective from the date of imposition of the provisional anti-dumping duty by Notification No. 116/2009-Cus dated 8.10.2009. So the government forgot to extend the antidumping duty on 26 th August, 2009 and who gets punished for such memory loss? The importer of course! The Anti Dumping section badly needs an alarm clock.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This definitive anti dumping duty would have expired on 26.2.2014 and as usual they were sleeping. They woke up a fortnight later and extended the validity of the notification till 26.2.2015, notwithstanding intermittent black holes. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2014/ctariffadd14_012.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 12/2014-Cus.(ADD), Dated: March 12, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Grant of relaxation for import of steel and steel products from applicability of Steel and Steel Products (Quality Control) Order</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT </strong>has amended Notification No. <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not033.htm" target="_blank"><strong>33 (RE-2013)/2009-2014 dated August 07, 2013</strong></a> to stipulate that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Quality certification should be either from a product certification body as per applicable international standard (ISO Guide 65/ISO 17065) by an accreditation body which is a signatory to the Mutual Recognition Arrangement of the International Accreditation Forum (IAF); or certification for each consignment from an inspection body which is duly accredited as per ISO:17020 by any accreditation body which is signatory to the Mutual Recognition Arrangement of the International Laboratory Accreditation Cooperation (ILAC); or Quality certification from the quality certification body recognized in the country of origin by international organizations, such as the International Association of Classification Societies (IACS) or European Union or Central Boiler Board of India </em>. </font></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Appropriate body to certify quality of steel has been modified. Earlier it was recognized Quality Certifying Body of the country of origin. Now it shall be international standard certifying body</em>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not074.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No 74(RE-2013)/2009-2014, Dated: March 13, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - Construction of residential complex - No tax payable by builder/promoter prior to 1.7.2010 - Entitled for refund of Service Tax paid - Unjust enrichment hurdle overcome - CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CESTAT has recently delivered an order which has created a lot of hype in the real estate sector. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2006/ser_tru.htm"><strong>Board's F. No. 332/35/2006 - TRU Dated: August 01, 2006.</strong></a>, it was clarified that </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>in a case where the builder, promoter or developer builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of such residential complex, the contractor shall be liable to pay service tax on the gross amount charged for the construction services provided, to the builder / promoter / developer under ‘construction of complex' service falling under section 65(105)(zzzh) of the Finance Act, 1994 </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em>If no other person is engaged for construction work and the builder / promoter / developer undertakes construction work on his own without engaging the services of any other person, then in such cases in the absence of service provider and service recipient relationship, the question of providing taxable service to any person by any other person does not arise </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This created more confusion than clarity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Board Circular No. 108/02/2009, Dated: January 29, 2009, it was clarified: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of ‘agreement to sell'. Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any service provided by such seller in connection with the construction of residential complex till the execution of such sale deed would be in the nature of ‘self-service' and consequently would not attract service tax </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And with effect from 01/7/10 an explanation was added to Section (105) (zzzh) as under :- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<em>Explanation - For the purposes of this sub-clause, the construction of a new building which is intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorized by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer.]" </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Law is clear that till 1.7.2010, the builder was not required to pay Service Tax, but somehow the Department sought to extend the scope of the explanation to periods prior to 1.7.2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Magus Construction</em>, <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-321-HC-GUW-ST.htm"><strong><font size="1">2008-TIOL-321-HC-GUW-ST</font></strong></a>, the Guwahati High Court had held that <em>it becomes clear that the circular, dated August 1, 2006, is binding on the department and this circular makes it more than abundantly clear that when a builder, promoter or developer undertakes construction activity for its own self, then, in such cases, in the absence of relationship of ‘service provider' and ‘service recipient', the question of providing ‘taxable service' to any person by any other person does not arise at all </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal had in many orders held that Explanation to Section 65(105)(zzzh] does not have a retrospective reach. Please see RF Properties - <strong><em> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODg4NDg="><font size="1">2013-TIOL-971-CESTAT-DEL</font></a></em></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now the latest order of the Tribunal not only confirms that the explanation has no retrospective effect, but also grants refund in cases where Service Tax has been paid overcoming the hurdle of ‘unjust enrichment'. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this case today.</font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=19995" target="_blank">Breaking News</a><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=19995">.</a></font></strong></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 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_compulsions.jpg" alt="" width="500" height="564" 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"> - 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">Service Tax </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Infosys wins 160 Crores case:CENVAT Credit on insurance premium for family members of employees - not allowed; CENVAT Credit on services utilised for construction, maintenance or repair or renovation of Global Training Centre up to 01/04/2011, allowed; credit of service tax paid on services used in respect of hostel, food court, gym etc - credit would not be admissible in respect of service tax paid relating to construction, maintenance, repair or renovation to these facilities: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>service is correctly classifiable under “Tele Communication Service's and such services are taxable only when the same is provided by person who has been granted a licence under Indian Telegraph Act, 1985. It is not the case of the department that Foreign Service suppliers have been licensed under the Indian Telegraph Act.; No service tax in respect of information technology software services received from overseas sub-contractors to overseas branches. </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 assessee fails to prove that its income was below taxable threshold, AO can make estimation on basis of average of income declared in preceding and in succeeding AYs - YES: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is the wife of ShriMayur M Thakkar, son of ShriManojM.Thakkar, who is one of the pioneers of chemical trade and dealing in chemicals. There was a search and seizure operation u/s 132 in Thakkar Group of cases on 21.1.1999. The search operation covered both, the business premises as well as residential premises of the members of Thakkar family. The Thakkar family is engaged in the business of manufacturing as well as trading in various chemicals. During the relevant years the assessee was associated with certain business concerns of Thakkar Group. Sunil Chemical Industry carried out trading business in petrochemicals under the proprietorship of assessee only for four months i.e. till 31.3.1998 and from 1.4.1998 this concern was converted into a partnership firm with assessee and her husband as partners. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when assessee fails to prove that its income was below taxable threshold, the AO can make estimation on the basis of average of income declared in the preceding and in the succeeding AYs. And the answer is YES. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Project authority certificate issued by NTPC clearly indicates that supply of goods is under procedure of International Competitive Bidding and contract has been awarded to M/s. WPIL - as condition of Notif. 12/2012-Cus is satisfied, appellant is entitled for exemption under notif. 12/2012-CE: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant had supplied Electrically Operated Travelling (EOT) cranes to NTPC, BARH Super Thermal Power Project as a sub-contractor of M/s. WPIL Ltd., Kolkata, who was awarded the contract for supply of equipment under International Competitive Bidding (ICB) procedure and claimed the benefit of exemption notification 6/2006-CE, 12/2012-CE. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lower authorities denied the exemption on the ground that under the Customs Notification the benefit is available to the goods falling under Chapter 9801 and moreover the appellant has not participated in the International Competitive Bidding procedure themselves being sub-contractor. Inasmuch as a demand of Rs.9,55,304/- along with interest thereon and penalty was confirmed by the adjudicating authority and the said order was upheld by the Commissioner(A). </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Monday is a Holiday - Happy Holi</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our Columns Tuesday for the judgements </font></strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tuesday with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice extended 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>