TIOL-DDT 2424 · 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><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 2424 </font><br> 27.08.2014<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">Service Tax - Board and CCs authorized to issue instructions - Is Principal CC covered?</font></strong><font size="2"><strong> </strong></font></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the Finance Act 2014, a new clause (m) was added to Section 94 (the power to make rules) for </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>authorisation of the Central Board of Excise and Customs or Principal Chief Commissioner of Central Excise or Chief Commissioners of Central Excise to issue instructions, for any incidental or supplemental matters for the implementation of the provisions of this Act </em>; </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In exercise of this power the Government has amended the Service Tax Rules to provide for a new Rule 12 which reads as: </font></p> <blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>12. Power to issue supplementary instructions </strong>.- The Board or the Chief Commissioners of Central Excise may issue instructions for any incidental or supplemental matters for the implementation of the provisions of the Act. </font></p> </blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the above rule, the Board or Chief Commissioner can issue instructions. <font color="#FF0000">What about the Principal Chief Commissioner - Has the Government forgotten him? </font></font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Or is section 95 of the Finance (No.2) Act, 2014 supposedly taking care of this omission? </font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Who are these instructions meant for - the officers or the assessees? </font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">And can a Chief Commissioner or even the Board issue instructions for implementation of the Act? What kind of instructions are being planned - be assured any kind will only multiply litigation. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has also introduced a new Rule 11 which reads as: </font></p> <blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>11. Determination of rate of exchange </strong>. - The rate of exchange for determination of value of taxable service shall be the applicable rate of exchange as per the generally accepted accounting principles on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011. </font></p> </blockquote> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">This is another litigation bomb. What is the generally accepted accounting principle? Enough fodder for audit objections and subsequent Show Cause notices. </font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">These provisions will come into force on 1 st October 2014. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2014/stnot14_019.htm" target="_blank"><strong>Notification No. 19 /2014-Service Tax, Dated: August 25, 2014 </strong></a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Legislative changes to be effective from 1st October </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has appointed the 1st day of October 2014 as the date on which the provisions of clauses (A), (B) and (C) of Section 114 of the Finance Act 2014 will come into force. These clauses amend the Finance Act 1994 in the following manner: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(A)</em> in section 65B, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint,- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) in clause (32), after the words "the rules made thereunder", the words "but does not include radio taxi" shall be inserted; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) after clause (39), the following clause shall be inserted, namely:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">‘(39a) "print media" means,- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) "book" as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867, but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes; <strong>(25 of 1867.) </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) "newspaper" as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867;'; <strong>(25 of 1867.) </strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(B)</em> in section 66D, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint,- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) for clause (g), the following clause shall be substituted, namely:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"(g) selling of space for advertisements in print media;"; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) in clause (o), for sub-clause (vi), the following sub-clause shall be substituted, namely:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"(vi) metered cabs or auto rickshaws;"; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(C)</em> in section 67A, for the Explanation , the following Explanation shall be substituted with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, namely:- </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Explanation .-For the purposes of this section, "rate of exchange" means the rate of exchange determined in accordance with such rules as may be prescribed."; </font></em></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2014/stnot14_018.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 18 /2014-Service Tax, Dated: August 25, 2014</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit Rules Amended to bring in service provider under Deterrent Action - Comma Missing Mishap </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has amended Rule 12 AAA of the CENVAT Credit Rules as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the CENVAT Credit Rules, 2004, in rule 12AAA, after the words "first stage and second stage dealer", the words "provider of taxable service" shall be inserted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Rule 12 AAA before the amendment reads as: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>12AAA: Power to impose restrictions in certain types of cases</strong>.- Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, <strong>first stage and second stage dealer</strong> or an exporter, may by notification in the Official Gazette, specify the nature of restrictions including restrictions on utilization of CENVAT credit and suspension of registration in case of a dealer and type of facilities to be withdrawn and procedure for issue of such order by the Chief Commissioner of Central Excise. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now after the amendment, this rule will read as: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, <strong>first stage and second stage dealer provider of taxable service</strong> or an exporter, may by notification in the Official Gazette, specify the nature of restrictions including restrictions on utilization of CENVAT credit and suspension of registration in case of a dealer and type of facilities to be withdrawn and procedure for issue of such order by the Chief Commissioner of Central Excise. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There should have been a comma between the phrases <em><strong>first stage and second stage dealer </strong></em>and<em><strong> provider of taxable service,</strong></em> in the absence of which the phrase becomes meaningless as <strong>first stage and second stage dealer provider of taxable service.</strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now neither the <em><strong>first stage and second stage dealer</strong></em> nor the <strong>provider of taxable service</strong> can be brought under the ambit of this rule. In trying to add something, you lost something. Comma is very important Sir Jee. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2014/exnt14_25.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 25/2014-CX., (N.T.), Dated: August 25, 2014</font></strong></a></p> <font size="2"></font> <p align="center"><font size="2"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif">Customs - Undervaluation - Proof of imports of identical goods at higher value not given to appellant - Assessment Order set aside; however SCN survives - SC </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> story started twenty years ago. The imported goods were provisionally assessed and allowed clearance on 17.9.1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Show Cause Notice alleging undervaluation was given on 25.09.2000. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The First Authority adjudicated the case on 31.03.2001. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (A) allowed the appeal of the party on 08.08.2001 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal, on appeal by Revenue, remanded the case to the Commissioner (A) on 15.02.2002. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the second round, the Commissioner (A) upheld the original adjudication order enhancing the value. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the second round the Tribunal also upheld the O-in-O on 23.8.2005. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On appeal by the party, the Supreme Court decided the case last week. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not the end of the story.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the Supreme Court set aside the Tribunal's order and the original assessment order, it gave liberty to the Revenue to proceed against the appellants pursuant to the show cause notice dated 25.9.2000.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This time around it may take more than twenty years before some finality on the issue is reached in the Supreme Court.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this case today. Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=21361" target="_blank">Breaking News</a></strong>. </font></p> <font size="2"> <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> </font> <p><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">Central Excise</strong></font></p> <p align="justify"><strong><font color="#FF6633"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT - If any goods are transported through pipeline or by other means, if they are not solid, there is every chance of loss of quantity by way of evaporation - CENVAT credit cannot, therefore, be denied on quantity involved in transit loss: CESTAT </font></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant is a manufacturer of petroleum products. They were receiving Lube Base Oil through pipeline. During the course of transportation of the goods, they have received less quantity varying from 0.01% to 0.72% as per the invoices. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue is of the view that as the appellant has received less quantity as shown in the invoices, therefore, they are not entitled to take CENVAT Credit on the differential quantity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The authorities below were not impressed by the arguments advanced by the assessee and, therefore, made him fall in line - inasmuch as the demands were confirmed along with interest and penalty. </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 registration to Trust u/s 12AA can be refused merely because it earned some income from housing projects but applied same towards charitable objectives - NO: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee applied for the registration u/s 12A. The assessee stated that they are in the process of obtaining permission from various government organisations to have a Heritage Park constructed. To raise funds for the said project, they have also initiated a residential apartment project for which permission from the concerned authorities has been obtained. After considering all the documentation provided by the assessee, the Director of Income Tax (Exemptions) observed that Clause 10 of the Trust Deed which is neither part of the objects nor incidental to the objects, vests power in the trustees authorizing them to carry on activities for profit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - issue before the Bench is - Whether a trust can be denied registration u/s 12AA when it has earned income from housing projects, but applied them towards charitable objectives. And the verdict goes against the Revenue. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">So long as activity is service and even if it is not taxable, it has to be considered as an exempted service. It is not necessary that service should be taxable and an exemption notification exempting from levy of service should have been issued: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHEN</strong> the statute is clear and there is no ambiguity, no citizen has the liberty or luxury of assuming and acting on his assumptions without looking into the law and without any verification whatsoever. More so, in matters like service tax where the responsibility of assessment is on the assessee and not on the department. Such being the position, no one has the liberty to make assumptions about the liability. The law requires a person to read it, understand it and implement it. Failing to do so and assuming the provisions which are non-existing would lead to consequences which the assessee has no option but to take. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></p> <font size="2"></font> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>