TIOL-DDT 2464 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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 color="#663399" size="3">TIOL-DDT 2464</font><br>
28.10.2014<br>
Tuesday</strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Service Tax - Exit - Cancellation more difficult than Registration</font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjA3NTA=" target="_blank"><strong>DDT 2383</strong> </a>reported about a Superintendent and an Inspector of Service Tax arrested by CBI for accepting a bribe for cancellation of a registration. If you fail in business and want to close shop and surrender the Service Tax Registration Certificate - you will find - it's not all that easy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sometime back the Mumbai II Service Tax Commissioner issued a Trade Notice detailing the procedure to be followed for cancellation of registration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An application for surrender/cancellation of the service tax registration <strong>is to be made</strong> for following reasons:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Assessee's turnover is below the threshold limit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Change in the constitution of assessee; say from partnership to company or amalgamations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Death of proprietor. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Assessee closing down the taxable service business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Assessee has taken centralized registration and hence wants to surrender his other previous multiple registrations pertaining to various branches. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Assessee has shifted its office from the jurisdiction of one Division/Commissionerate to another and instead of requesting for change in the location code and premises code of the assessee, a fresh registration has been taken for the new address. Therefore, a need arises for surrender of the old registration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Due to technical error in the system, the assessee has been issued multiple registrations for the same address. In that case, the additional registrations are required to be surrendered. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessees who wish to surrender their registration certificates shall file their application on-line using the ACES module on <a href="http://www.aces.gov.in" target="_blank"><strong>www.ac-es.gov.in</strong></a>. On successful filing of the online application, the assessee shall submit the copies of documents mentioned at para 5 along with signed copy of the printout of the application generated by the ACES System to the jurisdictional Group Superintendent or Superintendent(s) of the Registration Cell in the <strong>concerned</strong> Divisional office. For, surrendering application, submitted by an assessee who had obtained registration prior to 01.04.2010 and not migrated to ACES, requirement of online filing of application has been done away with. </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee who wants to get his registration cancelled is required to submit the following documents: </font></em></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Application Form & Undertaking to surrender the Service Tax Registration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Copies of last six ST-3 returns filed with the department from the date of taking registration till the date of surrender but up to a maximum of last six returns </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where the assessee has not filed ST-3 returns for the period mentioned above, on account of the reasons that the turnover is within the threshold limit of small service providers' exemption then it is not necessary for him to file fresh return for surrender purpose only. He can apply for waiver of penalty under Rule 7C of STR for non-filing of returns. Instructions have been issued for waiver of penalty for non-filing of return where total turnover was less than threshold limit. The fact of non-filing of return should be clearly mentioned in the undertaking. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Copies of Profit & Loss account and Balance Sheet from the date of taking registration to the date of surrender, but for a maximum of last 3 financial years only. However, if Balance Sheet or Profit & Loss Statement has not been prepared, the applicant may submit copies of Income Tax Return for the said period. If said return has also not been filed then applicant should provide appropriate evidence like Bank Statement so as to enable the department to verify the reason stated for surrender. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Details of Show Cause Notice pending adjudication, details of confirmed demands, details of court cases, details of audit conducted, etc. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of cancellation due to death, the death certificate of the proprietor needs to be enclosed along with the application form. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of change of constitution the necessary documents like Partnership deed or Articles of Association etc. showing change of constitution may be enclosed along with application for surrender. In case of merger or acquisition necessary documents such as Order passed by the High Court or Article of Association to that effect, may be enclosed alongwith the application of surrender. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After submission of the required documents, the Superintendent concerned may require further information like reconciliation of the income shown in the Profit & Loss Account with the taxable income declared in ST-3 return. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee should submit the required documents with proper indexing of all enclosures. As far as possible all these documents will be verified by the Superintendent or Inspector at the time of its submission itself. In case of any deficiency, the same shall be informed to the assessee at the time of receipt of the documents. It may be noted that if the assessee fails to submit the complete set of hard copies within 15 days of submission of on-line application, it is <strong>liable to be rejected</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case the applicant has taken Service Tax registration prior to 01.04.2010 and has not migrated to ACES system, it is not necessary for such assesses to migrate to ACES for surrendering their registration. They can apply for surrender of registration by a manual application, alongwith other documents as required, without filing the online surrender application. Instructions have been issued to liberally cancel the registration for assessee who had taken registration in the past when there was no threshold limit. Further, in those cases the intimation regarding the cancellation shall be sent by post. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Superintendent shall process the application for surrender of registration and after successful cancellation of the registration, will inform the assessee through e-mail, and then the assessees can make surrendering application through ACES. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Surrender Application shall be accepted in person between 3.00 to 5.00 PM in the division. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The procedure in other Commissionerates must also be quite simple like this - no wonder nobody comes forward to get registration cancelled.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2014/st_tradenotice_40_2014.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner of Service Tax Mumbai-II Trade Notice 40 /2013-ST, Dated: February 17 2014 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Doing Business - India Ranks 134 in world </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> World Bank Group will release its latest report tomorrow on ‘doing business' across 189 countries of the world. In the last year's report, India stood at 134th Rank in ease of doing business. We are lower than Sri Lanka and Nepal.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Our present ranks are: (we may improve our position marginally this year) </font></p>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rank </font></strong></td>
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<td valign="top" bgcolor="#DFF3D6"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ease of Doing Business</font></strong></td>
<td valign="top" bgcolor="#DFF3D6"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">134 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Starting a Business </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">179 </font></td>
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<tr bgcolor="#DFF3D6">
<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dealing with Construction Permits </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">182 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Getting Electricity </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">111 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Registering Property</font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">92 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Getting Credit </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">28 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Protecting Investors </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">34 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Paying Taxes </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">158 </font></td>
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<td valign="top"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Resolving Insolvency </font></strong></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">121 </font></td>
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<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Income Tax - scrutiny assessments in cases of fish farmers - CBDT Instructions </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REPRESENTATIONS</strong> have been received by the Board regarding difficulties being faced on account of surveys and income-tax scrutiny assessments by fish farmers, being involved in business and profession of running inland fresh water fish tanks specifically in cases where the books-of-accounts are not being maintained by the assessees concerned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While conducting scrutiny in such cases, issue arises about quantification of income from activity of fish farming during the relevant financial year. As the books-of-accounts are unavailable, an Assessing Officer is required to assess the income from activity of fish farming on estimated basis. While making such estimates on basis of 'per Acre water spread area', it has been reported that there are wide disparities in the figure of income being so estimated as non-uniform yardsticks/benchmarks are being adopted by the different Assessing Officers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board notes that conflicting views of the Assessing Officers lead to framing of subjective and high pitched assessments, which besides leading to infructuous work for the Department, causes harassment and grievance to the taxpayer concerned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, considering the genuine difficulties (business located in far off and interior areas lacking banking facilities, vagaries of nature including availability of water, lack of education and knowledge of accounting, etc.) to cases of fish farmers, Board is of the view that uniform and appropriate norms may be applied while computing income form fish culture on basis of 'per Acre of water spread area'. To ensure consistency in approach a Committee comprising of two Commissioners and two representatives of the fish farmers or fish farmers' association may be constituted by the Pr. Chief-Commissioner to determine reasonably the income that may be estimated for the financial year. In making such a determination, due consideration of various local factors and inputs from the concerned agency of the State Government may also be obtained. A suitable standard benchmark may also be adopted for estimating water spread of fish farmers area as a percentage of total land area. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board reiterates that the guideline applies only to cases of fish farmers running inland fresh water fish tanks, who are not maintaining books-of-accounts in the regular course of business as per the requirement of section 44AA(2) of the Act. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTcyMTg=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Instruction No. 8/2014, Dated: October 27, 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"> - Wednesday's cases</font></strong></strong></font></em></font></p>
<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">Service Tax </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service provided by appellant is essentially supply of drilling rig along with its personnel to operate same on charter hire basis and payment for services rendered is made on per-day basis - activity comes within scope of ‘Supply of Tangible goods for use': CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant had entered into two contracts with<em> M/s. Oil and Natural Gas Corporation Ltd. (ONGC)</em> for supply of Cantilever type jack-up rigs named Greatdrill Chetna and Greatdrill Chitra. These were required to provide offshore drilling services to ONGC in terms of the contracts dated 27/02/2009 and 08/05/2009. These drilling rigs were hired by the appellant from <em>M/s. Greatship Global Energy Services Pte. Ltd.</em>, Singapore, on bareboat charter basis.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The adjudicating authority confirmed a service tax demand of <strong>Rs.27,24,52,804/-</strong> against the appellant M/s. <em>Greatship (India) Ltd</em>., Mumbai. While passing the impugned order, the Commissioner has classified the services rendered by the appellant as falling under ‘Supply of Tangible Goods for Use service' (SOTG in short) and the period of demand is from 07/07/2009 to 31/03/2010.</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 if contract for sale or purchase is ultimately settled and no actual delivery of goods is affected under settlement, it is to be treated as speculative transaction - YES: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>assessee company, engaged in the business of trading of cut and polished diamonds, filed its return of income declaring loss at Rs.2,19,91,359/-. AO finalised the assessment u/s 143(3) determining the total income of Rs.78,57,190/. Effective ground of appeal was about disallowance of loss of Rs.2,98,48,551/- on account of cancellation of foreign currency forward contract. During assessment, AO found that the assessee had debited loss on account of exchange rate fluctuation amounting to Rs. 2.98 Crores and directed the assessee to furnish details on account of exchange rate difference and of forward contracts. After considering the explanation filed by assessee, AO observed that any loss incurred by an assessee on entering into currency derivatives, due to forward contract of foreign exchange (FE) rate, had to be taken as forex derivative loss, that such loss had to be on account of dealing in forex derivatives which had actually been incurred by way of settling the difference at the end of the expiry of period of derivative contract or its termination, that assessee had to prove that currency derivative losses incurred was on account of hedging (reducing) risk and had not been undertaken as a speculative transaction to earn more profit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether if a contract for sale or purchase is ultimately settled and no actual delivery of goods is affected under the settlement, it is to be treated as a speculative transaction. YES is the answer. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Conversion of Shipping Bill for duty free goods into Shipping Bill for drawback - Single Member Bench cannot hear such case - Matter to be placed before Division Bench: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue involved is conversion of Shipping Bills for Duty Free Goods into Shipping Bill for drawback. Against the order passed by the Commissioner of Customs, Pune, the appellant is before the CESTAT with an appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case was heard by a Single Member Bench and the order was reserved. An order has been passed in the matter recently holding that the matter cannot be decided by the Single Member Bench and must be heard by the Division Bench.</font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements</font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></strong></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@tiol.in" target="_blank"><strong>vijaywrite@tiol.in</strong></a></font></p>
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