TIOL-DDT 2350 · 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 color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><s><strong><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 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></strong></font></strong></font></strong></s></font></strong></font><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2350 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br> </font></strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong>09.05.2014 </strong><br> <strong>Friday </strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - GTA - Toll Charges - whether includible in value of taxable services - IOCL gets Rs. 5 Crores Notice from DGCEI </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> is well known, the Service Tax in respect of GTA service in most cases is to be paid by the consignor or consignee. Apart from the charges collected by the transporter for transporting goods, most often, the other road charges are to be reimbursed to the transporter. These days there are not many potholes on our National Highways, but they are full of toll gates, which collect hefty toll charges for using the high-speed roads. Now, the transporter would expect the consignor/consignee to reimburse the toll charges and most often, they do. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the question is whether these charges are includible in the value of taxable services of GTA. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us take a sample case:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently the DGCEI noticed that IOCL has not been discharging their Service Tax liability properly as Goods Transport Agency by not including toll charges paid to the transporters as actual expenses in the taxable value for the purpose of payment of Service Tax during the period from October '2008 to September '2013. The amount of Service Tax payable worked out to Rs. 4,64,97,752/- </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI noted that all amounts paid to transporters by customers shall be the part of gross value of service received and in order to compensate the components of in transit costs, viz. toll charges, etc. an abatement of 75% is provided. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI noted that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Indian Oil Corporation Ltd is receiving the service of Goods Transport Agency defined under the terms of erstwhile Section 65 (54b) of the Finance Act, 1994, as amended, (now covered under Section 65 (26) of the Finance Act, 1994, as amended w.e.f. 1.7.2012) read with erstwhile Section 66 now Section 66B of the Act, ibid. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>These services were taxable in terms of erstwhile Section 65(105) (zzp) Chapter V of the Finance Act,1994 (now Section 66 D(p) of the Act, ibid.). Being a recipient of these taxable services, Indian Oil Corporation Ltd is liable to pay Service Tax themselves, being covered by the provisions of Rule 2(1)(d)(v) of the Service Tax Rules, 1994. The service provider, that is the transporters involved in the instant case, are plying their trucks/goods carriage on various routes for transporting the goods of M/s Indian Oil Corporation Ltd. There are certain roads/bridges where toll charges/fees are levied and collected from the trucks/ commercial vehicles plying over those roads/bridges. Without payment of the impugned toll charges/fees, the goods carriage cannot cross/use the said road/bridge and hence, the transporter cannot provide the impugned services of Goods Transport Agency, without paying toll charges/fees. Hence, the expenditure incurred by the transporter becomes intrinsic part of the cost of transportation, as without incurring the expenditure on toll charges/fees, the provision of service of Goods Transport Agency is impossible on the route. Hence, the toll charges/fees, cannot be disintegrated from the value of taxable services of Goods Transport Agency as they are inextricably connected with the service provided. This expenditure on account of toll charges/fees is indispensable and inevitably incurred to provide taxable service and hence, essentially forms part of value of taxable service. As per information, these toll charges/fees have been later on charged/ recovered by the transporters from Indian Oil Corporation Ltd. Such expenditure incurred by the transporters and charged from Indian Oil Corporation Ltd form an intrinsic part of value of taxable service, in terms of Section 67 of the Finance Act, 1994 </em>. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI alleges that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>From October '2008 to September '2013 IOCL have short paid Service Tax on goods transport agency by not including the toll charges in the taxable value for the purpose of payment of Service Tax amounting to Rs. 4,64,97,752/-. They have not disclosed these facts in the ST-3 Returns filed with the department and never informed to the department that they are reimbursing certain amount to transporters without including the same in the gross value of services received by them and therefore, they have suppressed the said fact from the knowledge of the department with intent to evade payment of Service Tax. Therefore, the extended period under the provisions of Section 73 of the Finance Act, 1994 is invokable in this case </em>. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, IOCL is with a Show Cause Notice demanding about Rs. 5 Crores with penalties and interest. [TIOL is in possession of a copy of the Show Cause Notice] </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is applicable to every transport of goods by road. There is hardly any road without a tollgate and there is hardly any assessee who includes toll charges in his value for payment of Service Tax on GTA. So every assessee is an offender. Maybe the Government should exempt the toll charges from the taxable value for GTA. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Data by Export Promotion Councils/Trade and Industry Associations for All Industry Rates (AIR) of Duty Drawback for year 2014 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has requested the Export Promotion Councils/Trade and Industry Associations to provide cost and consumption data for the period January-March, 2014 w.r.t. the inputs/input services which are used in the manufacture of the export products in the specified Proforma, in 4 parts - I(A) & I(B), II, III, IV. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While providing the above data, due care should be taken on the aspects that- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Data provided is representative and complete for the period January-March, 2014. While submitting data in respect of a particular manufactured export item of a manufacturer, the details of any/all input(s)/service(s) used in the manufacture of all types/styles of that particular export item should also be indicated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Data submitted should pertain to at least five units for each export product. The units should be selected from amongst the small, medium as well as large manufacturer exporters. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Data should be of and should pertain to manufacturers/ manufacturer exporters, and it should be certified by the manufacturer and its Chartered Accountant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) The data is to be supported by relevant documents such as Bills of Entry, Shipping Bills, invoices etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) The data should pertain to only those manufacturers/units which are ready to have their records and production processes subjected to inspection by the Customs and Central Excise Department for the purposes of verifying correctness. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Data is also sought for the above purpose from all the Commissioners of Central Excise & Commissioners of Customs. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2014/DBK-2014-A.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F.No.609/54/2014-DBK (A), Dated: May 07, 2014 </strong></font></a></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2014/DBK-2014-B.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F.No.609/54/2014-DBK (B), Dated: May 07, 2014 </strong></font></a></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2014/DBK-2014-C.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F.No.609/54/2014-DBK (C), Dated: May 07, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Chidambaram as FM in UPA III? I am not an MP!</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> asked whether he could again be the Finance Minister in the eventuality of UPA-III coming to power, Finance Minister Chidambaram said yesterday - I am not an MP. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dr. Manmohan Singh was not an MP when he became the FM in 1991. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram said that he would vacate the Ministerial Bungalow soon after the results of the Lok Sabha polls are out. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram said that the economy had stabilised and hoped this would help in reviving investments. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He said that the domestic capital expenditure of about 23 public sector undertakings - including Navaratnas and Mini Ratnas - for the current fiscal would be - 1.33 lakh crore. The provisional figure of capital expenditure for these PSUs in the last financial year was - 1.25 lakh crore. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram said the Centre had decided to withdraw the offer of non-binding conciliation to <strong>Vodafone</strong>. The Government will now defend its case when it comes up for arbitration. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Three new Technical Members appointed in CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has appointed three IRS officers PS Pruthi, RK Singh and R Periasami as Technical Member at Mumbai, Delhi and Chennai respectively.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This order is in respect of existing vacancies and not connected with the proposed new benches, for which the selections are yet to be finalised.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/office_order_12026_14.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Department of Revenue No.A.12026/2/2012-Ad.IC (CESTAT)(II), Dated: May 02, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Joined as CBI Additional Director - Suspended immediately </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1980</strong> batch Tamil Nadu cadre IPS officer Archana Ramasundaram, yesterday assumed charge as the Additional Director of CBI and was promptly suspended by her State Government - the State of Tamil Nadu, where she is a Director General of Police and Chairperson of the Tamil Nadu Uniformed Service Recruitment Board. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The State Government has suspended her on charge of "deserting office" - barely minutes after she took over charge as the No.2 officer in the premier investigating agency in the country! </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong><font color="#006600">DDT Cartoon </font></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Keeping_Safe_Distance.jpg" alt="Legal Corner Icon" width="424" height="479" hspace="5" border="0" align="center"></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="#663399"><strong><font 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></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Liability accrued to proprietorship concern cannot be said to have evaporated when entire assets belonging to it came to be vested to partnership firm: HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONE </strong>M.L. Narayana was carrying out business as proprietor in the trade name and style of "Shree Ganesh Forging Company" and committed default in payment of excise duty. Proceedings were initiated against the proprietor who subsequently died in the midst of the proceedings. According to the department, the factum of death of the said proprietor was not communicated and the authority proceeded to decide the matter imposing the duty and the penalty upon the said proprietor. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the sons of the said deceased preferred an appeal before the CESTAT and subsequently made an application for dismissal of the said proceeding on the ground that the appeal has abated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal dismissed the appeal. </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 income arising to stockiest by winning prize on unsold lottery tickets is necessarily 'income from other sources' - YES: HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Assessee is appointed as a stockist by the State of U.P. on payment of such commission on the sale of lottery tickets under the terms and conditions provided in the agreement. Assessee gained income by winning the prize on unsold lottery tickets as a business income. AO treated the same as income by way of winning prize money on lottery tickets and assessed u/s 115BB at the rate of 40%. Assessee also claimed loss towards unsold tickets. Under the agreement, assessee was to collect the prize of winning tickets, out of the tickets sold by him and shall make the payment of prizes of winning prize uptoRs.1,000/- on the basis of the left hand counter foils kept with him. A sum of Rs. 1.30 lacs had been determined as value of the prize winning tickets payable by the assessee to the prize winners. However, a sum of Rs. 1.23 crores had been paid to the winners and the balance amount remained unclaimed and unpaid to the winners were shown as a liability. AO sought the details of such tickets against which the amount had been paid and details of those winning tickets against which the amount could not be paid to the winners. On non-furnishing of such details, AO invoked provisions of section 145(2) and made addition u/s 68. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether income arising to a stockiest by winning the prize on unsold lottery tickets is business income or income from other sources u/s 56(2)(ib). And the answer is 'income from other sources'. </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>Activities of Maharashtra State Seed Certification Agency cannot be considered as mandatory and statutory functions provided by sovereign/public authority and, therefore, benefit of Circular 89/7/2006-ST is not applicable - demand upheld for normal period - interest payable but penalties set aside: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>APPELLANTS</strong> are engaged in the activities of technical inspection and certification of seeds produced by seed producers in Maharashtra State as per the Seeds Act, 1966 (Act No. 54 of 1966) and the Seeds Rules, 1968. They are an Autonomous Body registered as a society under the Societies Registration Act, 1860. The appellants charge fee for the said certification as prescribed under the said Rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Service titled as "Technical Inspection and Certification Service" became leviable to Service Tax with effect from 1.7.2003. As per Section 65(108) of the Finance Act, "Technical Inspection and Certification" means inspection or examination of goods or process or material or any immovable property to certify that such goods or process or material or immovable property qualifies or maintains the specified standard, including functionality or utility or quantity or safety or any other characteristic or parameters, but does not include any service in relation to inspection and certification of pollution levels. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Monday for the judgements </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">Have a nice 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>