TIOL-DDT 2352 · the untouched capture
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<p><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>TIOL-DDT 2352</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
13.05.2014<br>
Tuesday</font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Payment through CENVAT credit account - Not a valid payment? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAN</strong> you pay service tax on your output service from CENVAT credit account? If your client is a Government of India undertaking or a Government Company, perhaps the answer is ‘NO'. Pay it at your own risk. There is every possibility that your client may not reimburse your tax for want of evidence, i.e., a bank challan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is very common among many Government organizations to reimburse service tax to the service provider only on submission of documentary proof in the form of a Bank challan. If you pay from CENVAT Credit account, there will not be any challan and there will not be any reimbursement of service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When we came across an assessee paying service tax under multiple challans, we asked him, instead of paying tax under different challans, why can't he pay total service tax under a single challan, he replied, “Sir, we need to submit challans to our clients who are mostly Government companies. Unless we match the service tax amount on the invoice with a challan, they don't pay us the service tax.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coming back to CENVAT issue, there is a big Coal mining company called Bharat Coking Coal Limited. It is learnt that the Company is refusing to reimburse service tax paid from the CENVAT credit account. The Board Secretariat of the Company has also issued strict instructions not to reimburse payment of service tax from CENVAT Credit account made by the contractors. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tender document as amended by the Functional Directors has the following conditions.</font></p>
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<td bgcolor="#FFFFD7"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The quoted offer should be exclusive of Service Tax. Service Tax if it is legally payable by the Contractor under this Contract, will be reimbursed by BCCL on production of <strong>original challan</strong> of having made cash remittance of such Service Tax to the Service Tax authority. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Original Challan will be defaced by management by putting a stamp across the challan </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Defacement to be done with the following stamp: </font></p>
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<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reimbursed the Service Tax </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For Rs.................................</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For W.O. No.......................... </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dated..................of BCCL. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GM(F)I/c AFM Area......... </font></p></td>
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</table> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Copies of original challan duly attested by General Manager (F) I/c will be retained for subsequent use as per requirement. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Service Tax reimbursement will be made to the contractor for <strong>net Service Tax payment (Calculated service tax on the value of work less paid through CENVAT)</strong>. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Copy of Returns of the firms showing all details of Service Tax should be furnished. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. A self—certification declaring that the Service Tax amount claimed through the submitted voucher will not be further claimed for any other work. </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(<font color="#FF0000">The above information is extracted from a judgement of the Jharkhand High Court</font>.) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WHEN a Government company does not recognize payment from CENVAT Credit as a valid payment, who else will? How can they unilaterally decide not to reimburse tax paid through CENVAT credit to the contractors? In case of any doubt or need for clarification, they could have contacted the jurisdictional Central Excise officers or the Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is time the Board/Ministry gives a clarification and maybe a direction at least to the PSUs that they are required to reimburse the Service Tax paid either in cash or by CENVAT Credit. It should be made clear that payment by CENVAT Credit is as good as payment by cash. And that there is no requirement of cash payment of Service Tax separately for each service recipient. In fact in certain situations, even the Service Tax Department refunds the unutilised balance in the CENVAT Credit Accounts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government should inculcate respect for law at least in its own companies. A Government company refusing to recognise payment by CENVAT credit as good payment is blatantly violating a law framed by the Government. The Government should speak with one voice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe we should wait for a Mody-fied VAT system to take over in a few days. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cadre Review Implementation in CBEC - Chairperson greets </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Shanti_Sundharam.jpg" alt="Legal Corner Icon" width="241" height="419" hspace="5" border="0" align="left"><strong>THE</strong> CBEC Chairperson Shanti Sundharam is happy to inform that the implementation of the cadre restructuring of the department has been approved by the FM. The cadre review had been approved by the cabinet long ago and it is not known as to what the FM again approved. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any way the Department is going to get more than 18,000 posts. It will be a miracle if the Department can really fill those 18000 vacancies by promotion, recruitment or whatever means. It takes them a couple of years to fill up a few hundreds vacancies. When will they fill up 18000?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe they will start with making the top unbearably heavy. They are going to have 14 new Principal Chief Commissioners, 38 new Chief Commissioners and 53 new Principal Commissioners that is they have a vacancy for 105 posts of Principal Commissioners and above. All the present Chief Commissioners will immediately move to the top slots and about 100 Commissioners can move into their chairs and some of them can get a further promotion in a day or two - if they can clear Delhi's red tape. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the biggest challenge is to promote about 2200 Superintendents as Assistant Commissioners. As such nobody has a proper updated list of all these officers. Maybe for the next one or two years, the only activity in the Board and the field offices would be promotions, postings, transfers, infrastructure, reorganisation and utter confusion - not necessarily in that order. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The only reason for the cadre restructuring seems to be to address the problem of stagnation due to lack of promotion especially among the junior staff. But this actually will not solve the problem as only the senior officers will get promotion and the rest have to live with stagnation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairperson says that it is in the interest of the department to have a committed and largely satisfied work force. Stagnation is one of the de-motivating factors in this regard. While CR resolves some of the issues leading to stagnation, it does not address some of the root causes of stagnation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If some of these posts could be diverted to the Tribunal, maybe we could have had more Benches, which could have reduced the mounting arrears of cases in the Tribunal. And all these new officers are sure to add work for the Tribunal. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Member(T) Joins in Chennai CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Chennai Bench of the CESTAT was without a Technical Member for sometime since the retirement of Mathew John. Yesterday R. Periasami has assumed charge as Member (Technical). He will have a two year term. He was earlier Service Tax Commissioner in Chennai. And that creates a problem - appeals against his orders, as Service Tax Commissioner will have to be heard by a different Bench. Of course Chennai is to get one more Bench soon. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Post of Competent Authority vacant in Chennai </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is proposed to fill a vacancy of the post of Competent Authority and Administrator,<em> Smugglers and Foreign Manipulators (Forfeiture of Property) Act and Narcotic Drugs and Psychotropic Substances Act, at Chennai.</em></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner level officers of Income Tax, Customs and Central Excise are eligible. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC officers can send their applications to the Board latest by 16.05.2014. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/deputation/vcacancy42_2014.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F. No.A.35017/29/2014-Ad.II, Dated: May 12, 2014 </font></strong></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/your_obediently.jpg" alt="Legal Corner Icon" width="479" height="403" 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"> – Thursday's cases</font></strong></font></strong></font></p>
<p align="justify"><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"><strong><font color="#663399">Service Tax</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner (Appeals) has fallen into error in taking certain figures (year wise or consolidated for total period) given by respondents instead of examining invoice wise/transaction wise details - Matter remanded: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON </strong>the basis of information that the two respondents are not depositing the appropriate amount of service tax in relation to security services provided by them, respondents were visited by the Central Excise officials on 22.10.2002 and certain incriminating documents were recovered under panchanama. Statements were recorded and thereafter demand notices were issued for the period 16.10.1998 to 30.9.2002. Investigation showed that the respondents were issuing invoices covering security services and some invoices covering labour services. In respect of invoices relating to security services, most of such invoices showed that service tax amount was charged and collected. However, in respect of some of the invoices, though the services were mentioned as security services but no service tax was charged. </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 AO allows an expenditure as revenue in nature during original assessment, any attempt to treat same as capital expenditure in reassessment would amount to change of opinion - YES: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Assessee is a company. Present writ petition has been filed by the assessee to seek quashing of the Notice dated 28th March, 2012 issued by the ACIT u/s 148 in relation to the AY 2005-06 as well as the Order dated 25th February, 2013 rejecting the Petitioner's objections thereto. It was contended by the assessee's counsel that, as more than four years had elapsed from the end of the relevant AY 2005-06, ACIT could not have issued the notice without coming to the conclusion that he had reason to believe that income had escaped assessment by virtue of the fact that the assessee had failed to disclose fully and truly all material facts necessary for its assessment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when AO allows an expenditure as revenue in nature during original assessment, any attempt to treat the same as capital expenditure in reassessment would amount to change of opinion. And the verdict goes in favour of the assessee. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Refund - Unjust enrichment - Deposit made before adjudication and appropriated in order in original - If there is contest to demand, amount remains as deposit and doctrine of unjust enrichment is not applicable - CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issue involved is rejection of refund of deposit of duty made during the provisional assessment. The Appellant had imported ICs, Transistors etc. at Air Cargo Complex Ahmedabad and the said goods were cleared vide Bill of Entry No.6757/98 dated 27.10.1998. The said consignment was detained by the Customs officers on the ground that the prices shown in the said bill of entry and invoice were very low. The detained goods were released provisionally on execution of the requisite bonds and on payment of differential duty of Rs.10,00,000/- and Rs.7,50,000/- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal finally decided the matter in favour of the appellant. The claim of refund for the duty of Rs 17,50,000/- paid by the appellant was credited to consumer welfare fund by the Adjudicating Authority on the ground of unjust enrichment. The same has been upheld by the Appellate Authority. Aggrieved by the same, the appellants are before the CESTAT. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tomorrow is a Holiday - Budha Purnima</strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Thursday for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Thursday 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>
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