TIOL-DDT 2463 · 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 2463 </font><br> 27.10.2014 <br> Monday </strong></font></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600" size="3">Service Tax - Rate of Exchange for value - Board should clarify </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> effect from 01.10.2014 vide Notification 19/2014 ST dt 25.08.2014, the <em>rate of exchange</em> for determination of value of taxable service shall be the applicable rate of exchange as per the <font color="#FF0000"><em>generally accepted accounting principles</em></font> on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What are the<font color="#FF0000"><em> generally accepted accounting principles</em></font>? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For example, in respect of payment to non-resident for import of service, point of taxation is date of payment (if payment is made within 3 months form the invoice) the payment consists of two parts: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) payment of income tax deducted at source and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) payment to the party for the balance amount (Invoice value less Income tax amount) </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First Income tax is paid at IT Buying Rate available as on date of payment as per Income Tax Rules and then payment is made to party as per the exchange rate charged by bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent RAC meeting of Chennai Central Excise zone, an assessee wanted to know whether it is a satisfactory compliance if Service Tax is paid on sum total of Income Tax paid and balance amount paid to the party as per the exchange rate charged by Bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the Commissioners present in the meeting said that as per the Point of Taxation Rules, 2011, the date of payment should be taken as the relevant date. The exchange rate on the relevant date has to be reckoned for payment of tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner, Service Tax observed that since the issue is a policy decision, needs Board's clarification. And the Chief Commissioner agreed and informed the assessee that the matter would be taken up with the Board for clarifications. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"> When will the Board clarify? And until then what is to be done? </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/doubt.jpg" alt="Legal Corner Icon" width="516" height="388" hspace="5" border="0" align="center"></font></p> <p align="center"><em><font size="3"><strong><font color="#006600" face="Georgia, Times New Roman, Times, serif">Service Tax - Last Date for Filing S.T-3 Return Extended </font></strong></font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> Saturday (25.10.2014) evening, a frantic assessee telephoned me and said that while he was trying to file the S.T.3 Return, the document ‘hung' and he was not able to proceed further. He was worried as to what could be done. I asked him to relax and go home as the due date for filing the return has been extended. On behalf of the CBEC and ACES, I also advised him not to wait till the last day to file his return.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the recent Natural Calamities in certain parts of the country, in exercise of the powers conferred by sub-rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs vide Order No 02/2014-Service Tax dated 24th October, 2014 has extended the date of submission of the Form ST-3 for the period from 1st April 2014 to 30th September 2014, from 25th October, 2014 to 14th November, 2014.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2014/st_order_14_002.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Order No 02/2014-Service Tax, Dated: October 24, 2014</font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Company Law - Corporate Social Responsibility - Swach Bharat Kosh and Clean Ganga Fund included</font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 135 of the Companies Act 2013, every Company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall spend, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Schedule VII of the Act, <em>Activities which may be included by companies in their Corporate Social Responsibility Policies are those relating to:-</em></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation (<font color="#FF6633"><em>including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation</em></font>) and making available safe drinking water:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water (<font color="#FF6633"><em>including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga</em></font>);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) measures for the benefit of armed forces veterans, war widows and their dependents; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(viii) contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(x) slum area development. </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation.- For the purposes of this item, the term ‘slum area' shall mean any area declared as such by the Central Government or any other competent authority under any law for the time being in force. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga are added to the list. The VII schedule is amended to add the words marked in red. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/mca_not_14_24.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoCA Notification in F.No.1/18/2013-CL-V , Dated: October 24, 2014 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Customs Brokers Licence written examination under CBLR, 2013 to be held on 28.01.2015 - No Cadre Review Confusion </font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DG inspection, Customs & Central Excise had invited applications for written examination of Customs Brokers to be held on 28.01.2015 under the Customs Brokers Licensing Regulations (CBLR), 2013. The last date for receipt of application is 14.11.2014. The applications are to be submitted through the jurisdictional Commissioners of Customs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now from 15th October 2014, several new Commissionerates were created. Not even the departmental officers, let alone the assessees are sure as to which Commissionerate is where. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this situation, the DG, Inspection informs that it will be open to the applicants to apply either to the old jurisdictional Commissioner or to the new jurisdictional Commissioner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where the applicant has filed application with the old jurisdictional Commissioner, the Commissioner is requested to forward the said application to the new jurisdictional Commissioner under intimation to the applicant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hopefully, the relevant date would be the date of submitting the application in the old jurisdiction or will it be settled by litigation?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">Attestation by Gazetted Officer</font></strong>: As per the Advertisement issued by the DG, Inspection, the applicant for the examination has to submit <em>two passport size photos attested by a <strong>Gazetted Officer</strong> and <strong>attested</strong> documents on citizenship, educational qualification and financial requirements.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue Department in a letter to the Chief Commissioners and DGs in CBEC had informed them that <em>Government of India is keen to promote self-attestation/certification instead of attestation by a Gazetted Officer/furnishing of affidavit so as to avoid unnecessary harassment to the Public</em> and directed them that<font color="#FF0000"></font><em><font color="#FF0000"> in respect of all copies of documents hitherto requiring certificate/attestation by a Magistrate or Gazetted Officer, Self Certification by the applicant should be treated as sufficient, subject to production of the original certificates as and when required</font>. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is the attestation by the Gazetted Officer still required? Not that it is difficult, now that after cadre review, every Commissionerate is overflowing with Gazetted Officers? </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/files/pitara/sernews/order/cadre_review_21092014.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DG Inspection, CBEC F.No.1191/01/2014-Confl, Dated: October 21, 2014 </font></strong></a></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><em><font size="3"><strong><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="4">tiol</font><font color="#006600"> - Tuesday's cases</font></strong></strong></font></em></font></p> <p><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">Central Excise</font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 57G of CER, 1944 - time limit of six months would be applicable even for consignment which had arrived before introduction of procedural restriction: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> SCN was issued demanding the credit taken and proposing to impose penalty for violation of rule 57G(5) of the CER, 1944 which at the material time mentioned "<em>Credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3)…</em> ". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT observed that the time limit of six months would be applicable from the date of issue of the bill of entry and even in respect of the goods imported prior to the amendment of Rule 57G(5) introducing the time limit.</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 benefit conferred on assessee by way of conversion of loan into grant by Govt for maintaining SLR as per RBI Policy so as to enable assessee-bank to carry out banking would constitute capital receipt and hence not liable to tax - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is a Non-scheduled Cooperative Bank engaged in the business of banking. For the assessment year under consideration, assessee bank filed a return of income on 16.10.2010 declaring total income at ‘Nil'. The return was selected for scrutiny assessment whereby after making certain disallowances the total income has been determined at Rs.181,85,34,355/-. Various additions/disallowances made by the AO were carried in appeal before the CIT(A), who has allowed partial reliefs. The assessee is in appeal challenging the additions sustained by the CIT(A) whereas the Revenue is in appeal challenging the reliefs allowed by the CIT(A). In this background, now we may proceed to adjudicate the captioned cross-appeals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether the benefit conferred on the assessee by way of conversion of loan into grant by the Government for maintaining Statutory Liquidity Ratio (SLR) in compliance with the requirements of RBI so as to enable the assessee bank to carry out its banking activities would constitute capital receipt and hence not liable to tax. And the verdict favours the assessee. </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">Packaging Services - As per Fertiliser (Control) Order, 1985, packaging of fertilizers before marketing is statutory requirement - activity of packaging would, therefore, form integral part of manufacturing in terms of s.2(f)(i) of CEA, 1944 and cannot be viewed as service - Demand of Rs.3.20crores set aside: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is engaged in providing packaging activity services in relation to fertilizers manufactured by M/s Zuari Industries Ltd., Goa for which they are receiving certain consideration. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue is of the view that the said services are liable for Service Tax under the category of "packaging services" defined in section 65(76b) of the FA, 1994 </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Packaging of fertilizer is a statutory requirement for sale of the fertilizer. Sale of fertilizer in bulk requires a license to sell in bulk. As the appellant is not having any such license, therefore, packaging is a statutory requirement for sale of fertilizer by M/s Zuari Industries Ltd. If marketing of fertilizer cannot take place without packaging, the appellant is a manufacturer as per section 2(f)(i) of the Central Excise Act, 1944, wherein manufacture includes any process incidental or ancillary to the completion of a manufactured final product. In other terms, the completion of fertilizer manufacture product occurs when packaging is done and without packaging, the fertilizer cannot be marketed. Therefore, the activity of packaging in respect of fertilizer would form an integral part of manufacturing activity and cannot be said to be a service activity, especially, in the context of packaging activity. </font></em></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> <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><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@tiol.in" target="_blank">vijaywrite@tiol.in</a></font></strong></p> </body> </html>