TIOL-DDT 2360 · the untouched capture
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<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><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></strong></font><font color="#663399" size="3">TIOL-DDT 2360</font><font size="2"><br>
</font></strong><font size="2"><strong>26.05.2014 </strong><br>
<strong>Monday</strong></font></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax deposited against wrong assessee code - No Remedy? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECENTLY</strong> the Mumbai Service Tax-I Commissionerate issued a Trade Notice regarding the unpardonable offence of paying Service Tax under a wrong head. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner elucidates…</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Commissionerate has been receiving a large number of requests for rectification of mistakes occurred on account of deposit of Service Tax in wrong accounts. Two types of mistakes are reported:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first mistake is where the Service Tax has been paid in the wrong accounting code which may occur due to wrong data entry of accounting codes. To illustrate, Service Tax payable for "Business Auxiliary Service" (accounting code No. 00440225) might have been paid under service, "Business Support Services (accounting code No. 00440366) or basic Service Tax might have been paid under accounting code for Education Cess [accounting code No. 00440298). For such mistakes, it is mentioned that as long as these mistakes have happened under the same Service Tax Code [also known as Registration Number or Assessee Code), the assessee should inform Deputy Commissioner (Technical], in writing along with copy of Service Tax payment Challan and by giving information in a prescribed format:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another type of mistake noticed is payment of Service Tax under the Service Tax Code of another assessee. The said mistake might happen because of the following reasons:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. The assessee holds multiple Service Tax Codes on same PAN for different branches within or across Commissionerates and pays the Service Tax liability against wrong service code, belonging to the same assessee. This also includes the cases where some of the registrations have become defunct because, either the assesse has stopped operating the business from the said premises or the assessee might have taken Centralized Registration, but by mistake Service Tax payment is made in the incorrect Service Tax Code. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. The Chartered Accountant/Consultant might commit a mistake of payment of Service Tax in the Service Tax Code of other client. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Requests are made by many assessees to transfer the amount of Service Tax from one Service Tax Code to another Service Tax Code. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue has been examined and it is clarified that, presently there is no system available whereby Service Tax paid into a wrong Service Tax Code can be transferred to correct Service Tax Code. It is reiterated that even in case of same legal entities having different Service Tax Code with same PAN, the transfer of amount from one Service Tax Code to another Service Tax Code is not possible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the following legal Remedies are available to the assessees to rectify their mistakes. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) As per Rule6(4A) of the Service Tax Rules, 1994, Service Tax amount paid wrongly, can be adjusted against liability for succeeding month or quarter, as the case may be...</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) In case facility at (a)cannot be availed, the assessee may file a refund application under Section 11B of the Central Excise Act, 1944 for the amount wrongly paid within the <strong>time limit </strong> prescribed under law. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is further clarified that, notwithstanding availing the above mentioned remedy, the assesse is also required to make Service Tax payment under correct Service Tax code. Any delay in making the Service Tax payment may attract interest as per provisions of the Service Tax Law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner reiterates that in case of payment under wrong Service Tax Code, there is <strong>no remedy </strong> available under the present system to transfer the money from one Service Tax Code to another Service Tax Code.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18157"><strong>DDT 2144 - 09.07.2013</strong></a> & <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgyMjY=" target="_blank">DDT - 2151 18.07.2013 </a></strong> </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the kind of highhanded GOVERNMENT which Narendra Modi wants to replace with good governance.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/st_trade_notice_21.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Commissionerate of Service Tax -I Trade Notice No. 21/13-14-ST-I, Dated: March 11, 2014 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Very Harsh - Will somebody listen? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> <strong><em>concerned </em></strong> assessee has written to us on the hardships due to this Trade Notice. He says…. </font></p>
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<td><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the trade notice, the only method is to apply for a refund within the time limit (one year) and pay the tax under the correct service tax code with interest. In our humble view this is a very harsh method proposed by the trade notice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any assessee paying service tax is purely an honorary agent of the Government of India (CBEC). Once he collects the tax and pays the same, he should not be subjected to pay tax again only because of a technical issue with his service tax code. There are the following issues that need consideration and hence we are writing to you. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) One assessee having two service tax codes – For example, one being a non-assessee and second being a regular assessee. Taxes are wrongly paid in the non-assessee code and returns are filed under the regular assessee code. The local commissionerate is of the view that the refund should be applied under the non-assessee code and tax should be paid again under the regular assessee code because there is no procedure to transfer the amount between the two codes. In our view the amount has reached the same bank account of the Service Tax Commissionerate. In this case, it is not prudent to ask the assessee to pay tax again. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Branches in the same jurisdiction, branches in different jurisdictions - – Here too in our view the amount has reached the same bank account of the Service Tax Commissionerate. In this case, it is not prudent ask the assessee to pay tax again. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Sister concerns/group – Here we may have to agree that it is not possible to follow the method because there are two separate entities and cannot be looked at as one group. </font></p>
</blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We hope some circular is issued quickly to help save the harsh treatment proposed by the above trade notice. </font></p></td>
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<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Government is taking over - will it make the babus more assessee friendly? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Unethical transfers in Revenue Boards - on Hold </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> Friday <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20488" target="_blank">DDT 2359 - 23.05.2014</a> </strong> commented that it was atrocious for a Government that was rejected by the people to make some last minute transfers and favours, referring to the recent transfer orders of 104 Assistant Commissioners and 5 Additional Commissioners made by CBEC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the same day by an Office Order signed by CBEC Member (P&V) Mala Srivastava, the transfer orders of 104 Assistant Commissioners and 5 Additional Commissioners were put on hold. She directed that no officer mentioned in the above two transfer orders should be allowed to join their new postings till further orders. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Transfer Orders are not cancelled - they are only put on hold and probably the same orders will be issued after approval by the new minister - and that is propriety - that is how it should have been done. Anyway they saw reason at the last moment - good for them and established conventions!. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/cbecorder108_2014.htm" target="_blank"><strong>CBEC Office Order no. 108/2014, Dated: May 23, 2014 </strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mortified Government gives way to Modi-fied Governance </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> way India is going to be governed is going to witness a paradigm shift and maybe our babus, especially the Revenue ones should start realising that they are servants and not masters. At least Narendra Modi promises more governance and less government. Let us hope and allow him to keep up his promises.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is some sensible modispeak on what the future is likely to be: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Pro People Proactive Good Governance</strong>: Mere good governance is not enough; it has to be pro-people and pro-active. Good governance is putting people at the centre of development process. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Minimum Government, Maximum Governance: </strong>government has no business to do business. The focus should be on Minimum Government but Maximum Governance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>We need Action not Acts</strong>: The need of the hour is a bureaucratic shift! Governments boast of giving people the new rights but the Constitution of India has already provided us with many rights. What we need are not more new Acts - we need action. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sabka Saath, Sabka Vikas</strong>: Collective Efforts Inclusive Growth: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has only one religion - India first! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has one holy book - the Constitution. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government must be immersed in only one Bhakti-Bharat Bhakti! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government's only strength is Jan Shakti! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government's only ritual is the well being of the 125 crore Indians! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The only code of conduct of the Government should be ‘Sabka Saath, Sabka Vikas! </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Red Carpet, Not Red Tape - </strong>The country can progress only if we end red-tapism. No red tape, only red carpet, is my policy towards investors. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Modi's latest twitter promises a commitment to bring a change in the work culture and style of governance; convergence in the activities of various Ministries where one cabinet Minister will be heading a cluster of Ministries; Smart Governance where the top layers of Government will be downsized and there would be expansion at the grass root level. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, will we have one minister for Finance, Corporate Affairs, Commerce and Industry? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While on it, there are several dumping yards in Delhi for unemployed politicians, bureaucrats and economists - all of which cost us a fortune. They may be closed down, the Planning Commission is a good place to start with. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/inevitable.jpg" alt="Legal Corner Icon" width="479" height="246" 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"> – Tuesday's cases</font></strong></font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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">Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Basmati Rice - DGFT notification only requires that grain of rice to be exported should conform to specification of average length and ratio of length to breadth - holding that sample has failed ad-mixture content as per Agmark norms is not condition warranted by notification - appeals allowed: CESTAT </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">appellants had filed shipping bills for export of basmati rice/pusa basmati rice. The said consignments were examined by the officers of dock examination and representative samples were drawn and forwarded to Chief Chemist, Regional Agmark Laboratory, Mumbai to ascertain whether the samples meet specifications of the basmati rice as the appellant had sought the benefit of DGFT Notification No.55(RE-2008)/2004-2009, dt.05.11.2008 as amended by the Notification No.57/2009/14, dt.17.08.2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The report of the Chief Chemist, Regional Agmark Laboratory, Mumbai indicated that the average length of the grain and the ratio of the length to breadth of the grains of sample sent was within limit as indicated in DGFT notification, but it failed in the admixture i.e. mixture of basmati rice and non-basmati rice. </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 reassessment of escaped income without any express finding or direction can be made under explanation (2) to Section 153(3) - YES: HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> AO held that the closing stock could not be valued without taking into account the work in progress, the cost of labour and office expenses and added the said amount to the income of the assessee. Assessee contended that in case the closing stock is revalued, the opening stock is also required to be revalued. AO rejected the claim of assessee stating that the assessee has been following wrong method of accounting in respect of closing stock and if it is allowed to adjust the difference in opening stock, the profit & loss account would not reflect the true picture of the profit during the year because all along these years the assessee has been unilaterally suppressing its value of work-in-progress and thereby the profit of the year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether reassessment of the escaped income without any express finding or direction can be made under explanation (2) to Section 153(3) and Whether when the opening stock value is increased, the closing stock will necessarily be enhanced in the preceding year. And the verdict goes in favour of the Revenue. </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>Pre-deposit - against total outstanding dues of 5.90 Crores, pre-deposit of Rs. 8,53,502/- would meet ends of justice - said amount ordered as pre-deposit is around 1.44% of total dues and 3.32% of total duty confirmed and would not result in any undue hardship to Applicant: CESTAT </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THIS </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is a Revenue appeal filed in the year 2006. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department found tobacco products stored in various godowns outside the factory and alleged that the goods have been clandestinely manufactured and cleared by the respondents. Actually, the godowns were originally sealed by the sales tax officers and were found to be stored with the goods bearing the brand name of the respondents. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Statements of the company were recorded and they informed that the said godowns do not belong to them as they do not have any other storing place except the factory premises. When asked about the goods lying in the godowns, they submitted that the <em>goods might have been stolen from their manufacturing units in small quantities clandestinely and might have been stored there. </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>
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