TIOL-DDT 2324 · 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 color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2324</font><br> 31.03.2014<br> Monday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - VCES - The Rejection Starts </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> payment of the second instalment of 50% under the VCES has to be made by 30th June 2014, but before that department is busy trying to reject the VCES declarations and go for the Show Cause Notice route.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a case in Delhi High Court last week, the Assistant Commissioner/designated authority rejected the VCES application of the applicant on the ground that a dispute was pending before the CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The facts are: the assessee claimed exemption under vocational training for the period 10.9.2004 to 27.2.2010 - which matter is in dispute before the Tribunal. After 1.3.2010, the assessee was paying Service Tax and there is no dispute about the taxability during this period. But due to some reasons, the assessee could not pay the tax from 1.4.2012 to 31.12.2012, which they now volunteered to pay under VCES. But the Assistant Commissioner was not prepared to allow this because there was a pending dispute! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court could easily understand the situation and held that there was no dispute pending on the taxability during this period and the applicant was eligible for the benefits of VCES. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In December 2013, the Finance Minister clearing the apprehensions about rejection of declaration stated that the effort is to accept the declaration, but not to reject it. He said instructions were given to field formations to accept the declarations and collect taxes and not to reject the declarations by giving any wider interpretation to the Section 106 of FA. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In any case, each Central Excise Authority is an independent Authority by himself and he has no respect for the law, court, Board, Finance Minister or any other Authority. But for some strange reason, he has a lot of respect for lawyers in filling whose pockets he keeps himself incessantly busy. After all who else benefits from all these silly illegal activities, which stop the revenue flow to the Government. Can you call these officers revenue officers? They are a threat to Revenue! </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTI4MTc=" target="_blank">2014-TIOL-396-HC-DEL-ST</a></font></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Who can be respondent in an appeal before Tribunal? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a recent case before the CESTAT, the issue was whether when the Service Tax is paid on the total consideration by the Principal contractor, the sub contractor need not pay the tax. The appeal was filed by the sub-contractor and the respondent was the Commissioner of Customs, Central Excise & Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal wanted the Principal contractor also to be impleaded as a respondent. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The short order of the CESTAT can be reproduced here: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. The crux of the case of the appellant-assessee is that the principal contractor M/s. B. Girijapathy Reddy & Co (M/s. BGR) had remitted the service tax on total consideration received from the employer to Revenue and deducted that amount from the amounts due to the petitioner herein, while retaining a small amount as commission (for having procured the contract from the employer). The remittances were by M/s. BGR on its own account whether could be treated as remittances by the petitioner which had provided the taxable service of “Site Formation and Clearance, Excavation and Earthmoving and Demolishing” defined under Section 65(97a) of the Finance Act, 1994, is the matter to be considered eventually. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In the circumstances of the case it is considered appropriate that M/s. BGR and Co which is a party to this tax triangle, is impleaded as a Respondent in this appeal. The petitioner may file an appropriate application for such impleadment, within three weeks. List the appeal after three weeks. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here the question was whether the sub contractor is required to pay Service Tax even if the Principal Contractor has paid the tax on the total consideration. Obviously the Commissioner wanted Service Tax from the sub contractor too and he has appealed to the Tribunal making the Commissioner the respondent. Now, how can the Principal contractor be made a respondent and what is the guarantee that he would respond to the Tribunal? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suppose the principal contractor is a Mega PSU. The only fact to be verified is whether the principal contractor has paid the Service Tax on the total consideration. This can be verified by the Commissioner or even proof can be produced before the Tribunal. What is the need to make the Principal Contractor a respondent before the Tribunal? And what order can the Tribunal pass against the Principal contractor? Can it give any directions to the Principal Contractor? Can the Tribunal dismiss the appeal of the sub contractor because the principal contractor has chosen not to respond? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are we not complicating things by bringing in an unrelated third respondent in a dispute between the assessee and the Commissioner?. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact the<strong> Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982</strong> has an answer to this tricky question. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 12 of the Rules reads as: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>RULE 12. Who may be joined as respondents.-</em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) In an appeal or an application by a person other than the Commissioner or the Administrator, the Commissioner concerned or the Administrator shall be made the respondent to the appeal or, as the case may be, the application. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) In an appeal or an application by the Commissioner or the Administrator, the other party shall be made the respondent to the appeal or, as the case may be, application. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no choice - in an appeal by an assessee, the Commissioner and only the Commissioner shall be made the respondent. There is no provision for making a third party as a respondent. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even in the Form for Appeal S.T-5, there is no provision for more than one respondent. The Appeal Form mentions only ‘respondent' and not ‘respondents'. SO, THERE IS NO PROVISION TO FILE AN APPEAL AGAINST ANY PERSON OTHER THAN THE COMMISSIONER. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Then how can the Tribunal direct a third party to be impleaded as a respondent? The President of the Tribunal has been a distinguished judge of a High Court and is an authority on the Constitution of India. He is perhaps trying to bring the High Court procedures into the Tribunal. But this Tribunal is only a creature of the Customs Act and not a High Court and so has to function within the Customs Act and the Rules framed by the Tribunal itself. The President had in an earlier order held that the proceedings by the Department against a Railway Divisional Manager without arraying the Union of India as a respondent were not valid <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTEyMDU=" target="_blank"><font size="1">(2013-TIOL-1891-CESTAT-DEL)</font></a></strong>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are we complicating matters and reinventing the Tribunal thirty years after its formation? </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTI4MTk=" target="_blank">2014-TIOL-479-CESTAT-BANG</a></font></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI arrests IRS Officer for Bribery - Power packed sensational story </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> story has all the ingredients that would put Bollywood story spinners to shame - Politics, crime, economics, taxes, rivalry, high society, the rich and powerful and a lady as the central character. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lady is a Deputy Commissioner in Income Tax - let's call her PR. Her husband GM is a top BJP functionary and a former personal secretary to a former union minister. Our Deputy Commissioner PR was a paying guest with the minister at that time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is RB, a builder and also a BJP leader. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now our builder BJP leader RB got into trouble with the Income Tax Department and the graceful Deputy Commissioner agreed to help for a consideration of Rs. 25 lakhs. The deal was said to have been settled in the BJP office. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the builder was not ready to pay up. So he alerted the CBI against his BJP colleague and the Agency stepped in and arrested the Income Tax Deputy Commissioner, her husband and a third person. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, this is not an ordinary corruption case. Both the complainant and beneficiary are senior BJP party functionaries and it seems the accused is close to BJP PM aspirant while the complainant is close to the State Chief Minister who is not exactly a blind follower of the PM in waiting. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is Grateful </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> is immensely grateful to the large number of Netizens who sent in congratulatory messages on DDT's third time entry in Limca Book of Records. We received several calls, SMS, mails - the refrain of all of which were - it is alright you have achieved something, but there are better heights - and you better try to reach there. We got the message. Thank You. </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><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">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification 10/97-CE - Clearance of Optical fibres and cables - certificate of Dy.Secy.not produced at time of clearance but applied thereafter and produced after issuance of SCN - condition is not merely procedural but has to be strictly complied with: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is a Revenue appeal filed ten years ago against the order of the Commissioner(A) allowing the appellant the benefit of Notification No.10/97-CE dated 1.3.97 in respect of optical fibres and optical cables.The lower appellate authority held that the requisite certificate as per the condition of the notification was produced by the respondents, albeit subsequent to the clearance of the goods and this would not disentitle the assessee from claiming the exemption. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is the contention of the Revenue that as per the condition to the notification necessary certificate issued by the officer not below the rank of Dy. Secretary to the Government of India should be produced at the time of clearance of the goods. </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 in case of Survey u/s 133A, if statement is recorded on oath it loses its evidentiary value - NO: Bombay HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a practicing Dentist. The Revenue conducted a survey u/s 133A at the assessee's clinic, during which some diaries and loose documents were found. One such diary was marked as “A1 Fantasy”. In this diary, professional receipts from 6 August 2007 to 30 August 2007 were recorded but the pages before 6 August 2007 were torn there from. The receptionist of the assessee made a statement during the Survey that the receipts from each patient was recorded in diary and note book which were handed over to the assessee along with fees received. From the perusal of the fees recorded in the diary and note book with that recorded in the regular Books of Account, it was found that the regular books of account recorded receipts which were much lower than the amounts received as evidenced in the diary and note book. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether in case of a Survey u/s 133A, if a statement is recorded on oath it loses its evidentiary value; Whether if a statement is to be retracted it is necessary for the assessee to prove that the statement made was not correct; Whether if the allegation of the statement being recorded in the middle of the night is to stick against the Revenue, the assessee is required to substantiate the same by producing evidence; Whether the affidavit filed by the assessee indicating its intention to only estimate its income in loose papers so that some medical equipments could be taken on loan, can be construed as afterthought unless some evidence is furnished and Whether in case of a professional, receipts can be treated as income. And the verdict goes against the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">ST liability on 'Insurance Auxiliary Service' payable by the appellant, provider of ‘General & Life Insurance Service' as service recipient on reverse charge basis can be discharged by utilizing CENVAT credit: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants provide General and Life Insurance service. They also appoint Insurance Agents for canvassing business and such services fall under the taxable service category of ‘Insurance Auxiliary Service'. Service Tax liability on the ‘Insurance Auxiliary Service' is on the service recipient on reverse charge basis and the appellants are required to discharge Service Tax liability. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question for consideration is whether for discharging Service Tax liability on Insurance Auxiliary service (on reverse charge basis) the appellant can utilize CENVAT Credit available with them. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Today is Chaitra Sukladi, Ugadi, Gudi Padava, Cheti Chand, Navreh and Sajibu Cheiraoba. Celebrate and enjoy. </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><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> </body> </html>