TIOL-DDT 2317 · 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 2317</font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>20.03.2014<br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Thursday</strong></font></p> <p align="justify"><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>Service Tax of over Rs 30 Crores collected, not paid to Department - MD arrested </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Pune-III Central Excise and Service Tax Commissionerate recently detected a case of huge evasion of Service Tax by a Company belonging to a high-flying liquor Group now almost grounded. This Firm is alleged to have evaded Service Tax to the tune of Rs. 35.31 Crores. Out of this, the Firm is said to have collected Rs. 30.76 Crores from their clients, which they used in their business instead of depositing with the Government. The 58 year old Managing Director of the Company has been arrested by the Central Excise sleuths. This is the second case of arrest under Service Tax by the Pune III CE&ST Commissionerate. Assistant Commissioner V. Mangaraju says that this case <em><font color="#FF0000">reinforces the Department's intention to take stringent action against willful tax offenders while extending full co-operation to honest taxpayers</font></em><font color="#FF0000">. </font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the Department calls it evasion, the Company Counsel says that it is a case of default there was a delay in payment of Service Tax due to economic slowdown. It is alleged that the MD was called to the Service Tax Office to record his Statement and he was arrested. It seems the Department is now approaching the clients of the Company to make payments directly to the Department, which they say, is damaging the reputation of the Company. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was a report of another arrest in Delhi that of the MD of Telecom Co. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>It's Raining Gold in all Airports - Smuggling unabated - Gold Powder in Tea Packets </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> ingenuity of the smuggler knows no bounds. In spite of tons of gold being seized by the Customs, smugglers are not disheartened and fresh means of smuggling are improvised every day. Not a day passes without a major seizure in some airport or other. And a conservative estimate (not backed by any authentic analysis) is that less than ten percent of the smuggled gold is seized by Customs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a Modus Operandi Circular issued on 15.03.2014, the Chennai Airport Customs Commissioner Sanjay Kumar Agarwal has highlighted the unique method adopted by a passenger that he powdered gold and mixed it with tea powder.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The quantity of gold so concealed in the form of powder in six tea packets was limited to 200 gms in each packet (approx)., with a view to avoid detection at the airports, even by scanning. Further, detection of such concealment is not possible without a keen eye as the concealment was done deftly and cleverly. However, on keen scanning, the tea powder mixed with gold powder appeared little bit black grainy(denser) than the normal tea powder which was used to be orange or green in colour. The tea packets were also found to be unusually heavier than the usual tea packets of same size. The total quantity of the gold seized in the form of powder was about 1.2 kgs from the possession of the said passenger. The Commissioner has requested all the Customs Commissioners to sensitise the Air Customs Officers about the new and novel modus operandi so that such concealment can be detected and department can thwart the attempts of such acts of smuggling of gold. </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/Tea_Packets.jpg" alt="" width="484" height="340" hspace="5" border="0" align="center"></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Gold in Soap </strong>: It is not tea powder alone in which gold can be concealed as the Mangalore Airport Customs found yesterday. They found gold pieces and granules, totally weighing 800.600 grams and valued at Rs.24,09,806/- concealed in four ‘LUX' brand bathing soaps and one ‘American Garden' brand Chocolate Syrup bottle from the possession of a passenger who arrived at Mangalore International Airport on 19.03.2014 at about 07.30 hrs by Air India Express flight IX814 from Dubai. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner D. Purushotham expressed his deep concern regarding the increasing trends in smuggling and directed the officers to intensify the vigilance and surveillance and crack the attempts made by the unscrupulous elements who are indulging in these activities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tea packets, soap, chocolate, innerwear, flowerpots almost anything is good for smuggling gold. Recently a welder returning home to Kerala was arrested with a Kg of gold in the lining of his brass flowerpot. The welder was said to have been offered Rs. 30,000 to carry that 1 kg of gold which ultimately landed him in jail. If there is a place to conceal gold will be concealed there but our Customs officers cannot be really checking all the cavities carried by a passenger! And so gold smuggling continues unabated though P. Chidambaram does not like import of gold and unsettling of his CAD. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export Sealing - Is it mandatory to provide vehicle to CE Officer? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> senior officer in a MNC asked us whether he was mandatorily required to provide a vehicle to the Central Excise Officer visiting his factory for supervision/sealing of export consignment. He works in a MNC which wants to follow strict ethical standards and so does not want to provide vehicles to export inspecting Central Excise Officers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Strictly speaking, there is no law, which requires the exporter to arrange a vehicle for the Central Excise Inspector/Superintendent. But a vehicle is considered to be one of the unofficial perks of office for a Central excise Officer. Actually whenever there is an export, the exporter is expected to provide a vehicle for the whole day, during which the actual export supervision may hardly take 10 minutes. But if a vehicle is not provided, the Excise Officer may come by public transport reaching the factory after a few hours upsetting the whole export schedule. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You don't need to provide a vehicle, but if you don't, your export itself is in jeopardy. So, you have to choose, whether you want your ethics or your exports. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT spoke to a few exporters and strangely none of them was against providing vehicles to Central Excise Officers for export supervision. They said, it was a matter of simple costing. Each seal by the Central Excise officers involves costs like providing a vehicle for the whole day and other incidental expenditure, which may come to about Rs. 5000/- per consignment. You know the sealing by the Excise Officers is purely optional the exporter can clear the goods on his own sealing. The exporters who have tried self-sealing in protest against the arrogant Central Excise officers have found that they are holy nuns compared to the Customs officers in the ports who are worse than the worst pirates. The self-sealed containers are subject to checks in the Customs Ports, where they are practically ravaged, delayed and costs are multiples of what it would cost to get them sealed by excise officers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, ultimately it is cheaper to provide a vehicle to the Central Excise Officer for the whole day for that 10 minute sealing of export consignment. If you seek legal advice, you may save on that car, but your export consignment will not leave your factory. Nobody has asked you to opt for sealing by the Central Excise Officer, and once you opt for it, you have to bear the consequential inconveniences including that irritant vehicle. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 13 (1) of the Central Civil Services (Conduct) Rules, 1964, <em>no Government servant shall accept, or permit any member of his family or any other person acting on his behalf to accept, any gift.</em> As per the explanation to this Rule, "<em>The expression "gift" shall include <strong>free transport</strong>, boarding, lodging or other service or any other pecuniary advantage when provided by any person other than a near relative or personal friend having no official dealings with the Government servant"</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But there is a note which says that <em>a casual meal, <strong>lift </strong> or other social hospitality shall not be deemed to be a gift.</em> He is also allowed to accept a gift worth not more than Rs. 1500/-. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And in practice, no Central Excise Officer will demand a car for the export supervision you have to request him to accept your hospitality! </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"> - Friday'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">Central Excise </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A miscellaneous application is not substitute for an appeal as provided for in law - Application dismissed: CESTAT by Majority </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Member (Judicial) has taken the view that the miscellaneous application has to be treated as an appeal and the delay in filing the miscellaneous application has to be condoned in the facts and circumstances of the case and the application allowed with consequential relief. This Tribunal is creation of statute and is not a High Court/ Supreme Court whose powers are very wide. There is no provision or procedure under the Central Excise Act to consider a miscellaneous application as an appeal and condone the delay suomotu even without knowing the reasons for delay. In the earlier order of the Tribunal, there are no findings in relation to rebate even though in the facts position, certain arguments of the appellant are mentioned. </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 provisions of Sec 56(2)(vii) apply to all capital assets, including bonus and rights shares offered on proportionate basis even if offer price is less than fair market value - NO: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is an HUF, holding 15,000 shares in a company by the name Dorf Ketal Chemicals Pvt. Ltd. (DKCPL). The entire share capital was held by the family members of the assessee's karta's family, representing 4.98% of the share capital (3,01,316 shares), was offered 3,13,624 additional shares at the face value rate of Rs.100/- each, on a proportionate basis. It subscribed to and was accordingly allotted 1,94,000 of those shares, on 28.01.2010, i.e., along with the other shareholders, who were allotted - on the same terms, not only the shares similarly offered to them but also that not subscribed to by the other shareholders, as 1,19,624 (313624 194000) shares by the assessee. The shares were received by the assessee on 10.02.2010. As the book value of the shares of DKCPL as on 31.03.2009 was Rs.1,538/- per share, which was to be adopted as a measure of their FMV under the applicable rules, AO treating the difference of Rs.1,438/- per share as the extent of the inadequate consideration, in terms of section 56(2)(vii)(c) added toward the acquisition of additional shares. On appeal, CIT(A) confirmed AO's order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether the provisions of section 56(2)(vii) apply to all capital assets, including bonus and rights shares offered on proportionate basis even if the offer price is less than the fair market value; Whether in case the value of the property in the additional shares is derived from that of the existing shareholding, it can be presumed that additional property have been received by the shareholder; Whether in case there is no disproportionate allotment, shares are allotted pro-rata to the shareholders, based on their existing holdings, there is any scope for any property being received by them on the said allotment of shares; Whether in case the value of additional shares is derived from that of the existing shares, the decline in the value thereof can be excluded from valuation; Whether purchase or transfer implies existence of a property, while the shares, where out of un-appropriated capital, come into existence only on their allotment and Whether the consequences can alter the meaning of a statutory provision, even where such meaning is plain and unambiguous. And the verdict partly goes in favour of the assessee. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Commercial or Industrial Construction Services - Lowering, laying, jointing and testing GRP pipes for Gujarat Industrial Development Corporation is taxable service as GIDC is corporation primarily undertaking development of infrastructure for industries Appeal dismissed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are engaged in the activity of lowering, laying, jointing and testing GRP pipes (manufactured by the appellant) at the customers' site. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They undertook such activity for the benefit of customers namely <em>M/s Videocon Narmada, Birla Copper, IVRCL Infrastructure, Gujarat Industrial Development Corporation (GIDC), Surat Municipal Corporation and Vizag Municipal Corporation. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In respect of the service rendered to the first three parties, the appellants paid service tax but not in the matter of services rendered to GIDC & the Surat & Vizag Municipal Corporations. </em></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow for the judgements</strong></font></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 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>