TIOL-DDT 2408 · the untouched capture
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<p><font size="2" 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><strong><font color="#663399" size="3">TIOL-DDT 2408</font><br>
01.08.2014 <br>
Friday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Foreclosure charges - No charges for foreclosing Litigation </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the erstwhile Section 65(12) of the Finance Act, 1994 (as amended), "banking and other financial services"<em> inter alia </em>included lending. Ministry of Finance vide letter <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/foreclosure.htm"><strong>F. No. 345/6/2008-TRU dated 11-06-2008</strong> </a>clarified that pre-closure/foreclosure charges collected for early payment of loans, are leviable to Service Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAG's Audit pointed out that a unit in Pune I Commissionerate collected Rs. 12.38 crore on account of foreclosure charges of loans during April 2007 to March 2011, on which Service Tax amounting to Rs. 1.41 crore was not paid which was recoverable along with interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner promptly issued a Show Cause Notice for recovery of nearly Rs. 1.5 Crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Board took a different view and informed the CAG that <em>the foreclosure charges are treated as loss of interest. As interest is excluded from the levy of Service Tax, this does not amount to service as per the provisions of the Finance Act 1994. The Ministry further added that CESTAT New Delhi had taken the same view in the case of SIDBI vs CCE Chandigarh - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-581-CESTAT-DEL.htm" target="_blank"><strong><font size="1">2011-TIOL-581-CESTAT-DEL</font></strong></a></em> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit is in no mood to accept Board's explanation. “What about your clarification?”, asks the CAG. Audit has also observed that in the case of <em>HUDCO vs Commissioner of Service Tax Ahmedabad, CESTAT</em>, Ahmedabad - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-1606-CESTAT-AHM.htm"><strong><font size="1"><em>2011-TIOL-1606-CESTAT-AHM</em></font></strong></a> had held that Service Tax is leviable on the reset charges and pre-payment charges paid by the customers. <em>(Against this favourable order, Revenue went in appeal to the High Court as the Tribunal had dropped penalties) </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now we have two contradictory orders from two Benches of the CESTAT: </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. SIDBI vs CCE Chandigarh - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-581-CESTAT-DEL.htm" target="_blank"><strong><font size="1">2011-TIOL-581-CESTAT-DEL </font></strong></a></font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em> HUDCO vs Commissioner of Service Tax Ahmedabad, CESTAT, Ahmedabad <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-1606-CESTAT-AHM.htm"><strong><font size="1">2011-TIOL-1606-CESTAT-AHM</font></strong></a></em><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-1606-CESTAT-AHM.htm"></a></font> </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQwNzM=" target="_blank"><strong><font size="1">2014-TIOL-935-CESTAT-DEL</font></strong></a>, the Tribunal observed, “Two decisions of this Tribunal in <em>Small Industries & Development Bank of India vs. CCE, Chandigarh </em>-<em><strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-581-CESTAT-DEL.htm" target="_blank"><font size="1">2011-TIOL-581-CESTAT-DEL</font></a></strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-581-CESTAT-DEL.htm" target="_blank"><font size="1"></font></a></em> and in <em>Housing & Dev. Corporation Ltd. vs. CST, Ahmedabad -<font size="1"><strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-1606-CESTAT-AHM.htm" target="_blank">2011-TIOL-1606-CESTAT-AHM</a></strong></font></em> have recorded conflicting views and conclusions on the issue whether foreclosure charges fall within the ambit of "banking and financial" services. The earlier judgment ruled that these do not fall within the ambit of the taxable service while the later distinguished the earlier judgment in <strong>SIDBI</strong> and concluded that foreclosure charges come within the ambit of "banking and other financial" service.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When there are two conflicting decisions, why is the matter not referred to a Larger Bench? Maybe because this was only a Stay stage, they granted waiver of pre-deposit and matter will be referred to the Larger Bench after ten years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal, Chennai Bench in <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE2NjM=" target="_blank"><strong><font size="1">2014-TIOL-103-CESTAT-MAD</font></strong></a>, followed the HUDCO decision and order pre-deposit of two crores of rupees. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the CAG wants the Board to give a clarification regarding the applicability of TRU letter F. No. 345/6/2008-TRU dated 11 June 2008 keeping in view the various CESTAT decisions on the subject. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, what can the poor Board do? Reiterate its own circular or follow one of the two decisions of the Tribunal.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Litigation assured for the next twenty years - on an issue, which can be settled with one sensible sentence. Who will deliver that? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Gold and Silver reduced </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government has decreased the Tariff value of Gold from 425 USD to 421 USD per 10 gms. The tariff value of Silver has also decreased from 690 to 671 USD per kilogram. Tariff Values of various oils have been reduced. Tariff value of Brass scrap has been increased. However, the Tariff values of Poppy Seeds and Areca Nuts remain same. The Tariff values as on 15.07.2014 and with effect from <strong>31.07.2014 </strong> are as under: </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr bgcolor="#E1FFE1">
<td colspan="5" valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Table 1</font></strong></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S. No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter/ heading/ sub-heading/tariff item </font></strong></p></td>
<td valign="top" bgcolor="#E1FFE1"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value USD (Per Metric Tonne) <br>
from 15.07.2014 </font></strong></p></td>
<td valign="top"><p align="center"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value USD (Per Metric Tonne) <br>
from 31.07.2014 </font></strong></font></p></td>
</tr>
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) </font></strong></p></td>
<td valign="top"><p align="center"><strong><font color="#FF0000"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6) </font></font></strong></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1511 10 00 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Crude Palm Oil </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">862 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">836 </font></strong></font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1511 90 10 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBD Palm Oil </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">903 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">874 </font></strong></font></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1511 90 90 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Others - Palm Oil</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">883 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">855 </font></strong></font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1511 10 00 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Crude Palmolein </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">911 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">884 </font></strong></font></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1511 90 20</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBDPalmolein</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">914 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">881 </font></strong></font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1511 90 90 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Others -Palmolein </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">913 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">883 </font></strong></font></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1507 10 00</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Crude Soyabean Oil </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">963</font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">927 </font></strong></font></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7404 00 22 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Brass Scrap (all grades) </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4016 </font></p></td>
<td valign="top"><p align="right"><font color="#FF0000"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4075 </font></strong></font></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1207 91 00 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Poppy seeds</font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3255 </font></p></td>
<td valign="top"><p align="right"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3255<br>
</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> No change</font> </p> </td>
</tr>
<tr>
<td colspan="5" valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><strong>Table 2 </strong></font></p></td>
</tr>
<tr bgcolor="#E1FFE1">
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S. No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter/ heading/ sub-heading/tariff item </font></strong></p></td>
<td valign="top" bgcolor="#E1FFE1"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value USD <br>
from 15.07.2014 </font></strong></p></td>
<td valign="top"><p align="center"><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value USD <br>
from 31.07.2014 </font></strong></p></td>
</tr>
<tr>
<td valign="top"> </td>
<td valign="top"> </td>
<td valign="top"> </td>
<td valign="top"> </td>
<td valign="top"> </td>
</tr>
<tr bgcolor="#E1FFE1"><td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">71 or 98 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Gold, in any form in respect of which the benefit of entries at serial number 321 and 323 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">425 per 10 grams</font></p></td>
<td valign="top"><p align="center"><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">421 per 10 grams</font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">71 or 98 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Silver, in any form in respect of which the benefit of entries at serial number 322 and 324 of the Notification No. 12/2012-Customs dated 17.03.2012 is availed. </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">690 per kilogram </font></p></td>
<td valign="top"><p align="center"><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">671 per kilogram </font></strong></p></td>
</tr>
<tr>
<td colspan="5" valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><strong>Table 3</strong></font></p></td>
</tr>
<tr>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S. No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter/ heading/ sub-heading/tariff item </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of goods </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value USD (Per Metric Tons) <br>
from 15.07.2014 </font></strong></p></td>
<td valign="top"><p align="center"><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff value USD (Per Metric Tons) <br>
from 31.07.2014 </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">080280 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Areca nuts </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1912 </font></p></td>
<td valign="top"><p align="center"><font color="#009900" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1912</strong> <br>
No change </font></p>
</td>
</tr>
</table>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2014/cnt14_055.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No.55/2014-Customs (NT), Dated: July 31, 2014 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarification Regarding Acquisition and Transfer of Immovable Property In India by Foreign Nationals </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has come to notice of the Central Government that foreign nationals are buying immovable property illegally in some parts of the country. Many organizations and social groups have also made representations to the Central Government expressing their serious concerns in this regard. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has also been observed that foreign nationals coming to India and staying beyond 182 day on a tourist or other visa meant for a certain period are illegally acquiring immovable property in India in violation of the extant rules and regulations under FEMA. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finance Ministry has clarified that: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. An Indian citizen resident outside India and a Person of Indian Origin resident outside India may acquire immovable property in India other than agricultural land, plantation or a farmhouse. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. A foreign company which has established a Branch Office or other place of business in India under the provisions of Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) Regulations, 2000 can acquire immovable property in India which is necessary for or incidental to carrying on such activity, subject to the conditions stipulated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. A foreign national who is residing in India for more than 182 days during the course of the preceding financial year for taking up employment or carrying on business/vocation or for any other purpose indicating his intention to stay for an uncertain period can acquire immovable property in India as he would be a ‘person resident in India' as per Section 2(v) of FEMA 1999. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ministry has advised all concerned to be extra vigilant. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/clarification_Acquist_Transfer_Property_foreignnationals.pdf"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finance Ministry Clarification, Dated: July 31, 2014 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Audit of ‘deemed government companies' - MoCA clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOUBTS</strong> have been raised about applicability of sections 139(5) and 139(7) of the Companies Act, 2013 (New Act), which deal with appointment of auditors by Comptroller and Auditor General of India (C&AG), to 'deemed Government Companies' referred to in section 619E of the Companies Act 1956 (Old Act) i.e. companies where ownership or control lies with two or more Government companies or corporations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ministry clarifies that the new Act does not alter the position with regard to audit of such deemed Government Companies through C&AG and thus such companies are covered under sub-section (5) and (7) of section 139 of the new Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarification has also been sought about the manner in which the information about incorporation of a company subject to audit by an auditor to be appointed by the C&AG is to be communicated to the C&AG for the purpose of appointment of first auditors under section 139(7) of the New Act. It is clarified that such responsibility rests with both, the Government concerned and the relevant company. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>To avoid any confusion</strong> it is further clarified that it will primarily be the responsibility of the company concerned to intimate to the C&AG about its incorporation along with name, location of registered office, capital structure of such a company immediately on its incorporation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is also incumbent on such a company to share such intimation to the relevant Government so that such Government may also send a suitable request to the C&AG. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Where is the Governance in all this Government? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/mca_circular_33_2014.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoCA General Circular No. 33/2014, Dated: July 31, 2014 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cycle to Supreme Court - Acute Parking Problem </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ALL that I learnt in my practice in a High Court is to park my car in reverse gear between two cars which are too close for decency. Our Courts were not built when there were so many cars around and unfortunately, even the new courts do not provide ample parking space and all the chaos in the Indian judicial system can be actually seen in the parking space with too many cars chasing too few parking slots. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday there was a hearing in a writ petition pertaining to parking problem in the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Cycle_Parking.jpg" alt="Legal Corner Icon" width="264" height="175" hspace="5" border="0" align="left">Chief Justice of India RM Lodha asked, “Why can't you reduce the use of cars in Supreme Court? Why can't you use cycles? It will be environmental friendly too. Lawyers are leaders of change. You should usher in changes.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Surely the Chief Justice was only joking. It will be a sight to see lawyers cycling to the Supreme Court in their black coats and robes - It will be like batman on a bicycle! The Solicitor General told the court that it will not be possible for lawyers to cycle from Noida, Gurgaon and other far off places. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even if you insist on cycles, the position may be like this after some time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case is adjourned for six weeks and the Solicitor General agreed to look into the issue and come up with a solution.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the new CESTAT Benches are opened, we should keep this in mind and plan ahead for at least fifty years. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No Voluntary Disclosure Scheme - Nirmala Sitharaman </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REPLYING</strong> to the Budget Debate in Rajya Sabha on 30th, the MoS, Finance, Nirmala Sitharaman said, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would like to put on record here, the experience shows that when you bring in voluntary disclosure schemes, it discriminates against genuine tax payers. Those who do pay tax are disincentivised or it goes against honest tax payers and it may even be discriminatory. So, maybe, that may not be a very conducive path for recovering more taxes. </font></em></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT Cartoon </font></strong></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Cartoon_2408.jpg" alt="Legal Corner Icon" width="469" height="542" hspace="5" border="0" align="center"><br>
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<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><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">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT - Rule 6(3A) of CCR, 2004 - deficiency in reversal of credit is due to rounding off of percentages of credit to nearest decimal - no evidence that taking of credit was on account of any intention to evade service tax - Stay granted: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> demand of Rs.1.01crore was confirmed by the CCE, Mumbai-I along with penalties and interest against the service tax assessee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant is before the CESTAT and submits that - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ During the year 2008-09 the appellant availed CENVAT credit on input services used in the rendering of dutiable as well as exempted services. However, they reversed the CENVAT credit attributable to the exempted services as per the procedure. Inasmuch as the turnover of the exempted services amounted 90.60% of the total turnover, the same was rounded off to 90% and the credit was reversed accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ In the subsequent year i.e., 2009-10, the appellant reversed CENVAT credit at 87% of the total credit taken whereas the credit attributable to the exempted services amounted only to 86.57%. This was also done due to rounding off. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ The excess credit availed in 2008-09 amounted to Rs.1.01crore while the short credit availed during the year 2009-10 amounted to Rs.1.11crore. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ It is submitted that it was only due to rounding off, the excess taking of credit or the short-taking of credit arose, and there was no intention on the part of the appellant to evade any service tax and, therefore, if the excess credit taken during the year 2008-09 is adjusted against the short-credit taken during 2009-10, there would be no loss of revenue to the exchequer. </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 assessee does not cooperate in assessment and DVO also adopts arm-chair approach of making no independent inquiry, merely following return on capital method AO can make huge additions as unexplained investment - NO: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee, an individual, had filed the return for AY 2007-08. Revenue conducted a search and seizure u/s 132 in respect of the Gopal Zarda Group including the assessee, and proceedings u/s 153A were initiated. The case of the assessee was centralized by an order and notice was issued u/s 153A requiring the assessee to file return. The assessee filed a return declaring income of Rs. 12,76,890/-. The original return in this case was filed on 05.11.2008 declaring income of Rs. 12,62,699/- . The difference was on account of interest income from bank which was declared at Rs. 14,846/-; subsequently it was disclosed as Rs. 29,035/-. AO held that property bearing No. 201 to 210, 15, Community Centre, Karkardooma, Delhi-92 shown to have been purchased for a consideration of Rs. 51 lakhs was not correctly valued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when the assessee does not cooperate in the assessment proceedings and the DVO also adopts arm-chair approach of making no independent inquiry, merely following the return on capital investment method the AO can make huge additions as unexplained investment. And the verdict favours the assessee. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit on capital goods - Credit on Captive Power Plant set up on premises leased out to adjacent unit - Credit allowed - Tribunal by majority. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT</strong> Credit on Capital goods/input/input service used on power plant situated at a different premises is admissible subject to exclusive supply of power by the impugned plant to the assessee manufacturing unit - In the present case, the capital goods were used to set up power plant for generation of electricity primarily for use in the manufacture of the final product within the factory of the appellant - So, if the power plant is situated outside the factory premises, CENVAT credit on capital goods used for setting up power plant cannot be denied as the electricity is captively consumed within the factory of the appellant - title of the property is not relevant for availing CENVAT credit on capital goods. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Monday for the judgements </font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more<strong> DDT </strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend. </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"><a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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