TIOL-DDT 2542 · the untouched capture
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<p align="justify"><strong><font color="#663399" size="3" 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>TIOL-DDT 2542</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
19 02 2015 <br>
Thursday </font></strong></p>
<p align="center"><font color="#006600" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3">Mandatory Penalty for payment of Service Tax Manually?</font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Rule 6(2) of the Service Tax Rules, the assessee is required to pay Service Tax electronically, through Internet banking.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What does this mean? Is there any other mode of paying the tax? If electronic payment is mandatory, why should they accept any other form of payment? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nonetheless, the proviso clause mentions that the Assistant/Deputy Commissioner may for reasons to be recorded in writing, allow the assessee to deposit the service tax by any other mode other than internet banking. So, is <em>"any other mode"</em> referring to <em>"any other mode of electronic payment"</em> or is it referring to the time tested ‘payment in cash/cheque'? A simple one-liner rule but which throws up many possibilities! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 77(1)(d) of the Finance Act 1994, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any person who is required to pay tax electronically, through internet banking, fails to pay the tax electronically, shall be liable to a penalty which may<strong> extend</strong> to ten thousand rupees. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An assessee recently received the following letter from a Service Tax Superintendent:</font></p>
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<td bgcolor="#FFFFA4"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Gentlemen, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sub: Service Tax -SOF on theme based audit by AG Audit - demand for payment of penalty for physical payment of Service Tax - Reg. </font></p>
</blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AG Audit has conducted a theme based audit on "Tax Accounting and Reconciliation" covering the payments made by the assessees falling under this Commissionerate. In terms of proviso to Rule 6(2) of the Service Tax Rules, 1994, all assessees who paid duty/service tax of ten lakh rupees or more, in the preceding financial year are required to deposit the tax electronically, through internet banking </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During, the course of audit, the AG has pointed out that you have paid certain amount of Service Tax physically instead of paying electronically during the year 2013-14 and you are liable to pay a penalty of Rs. 10,000/-(Ten thousand Only) under Section 77(1)(d) of the Finance Act, 1994 for contravention of Rule 6 (2 ) of the Service Tax Rules, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the above, it is requested <strong>to pay the penalty of Rs.10,000</strong>/- immediately, in compliance of the objection raised by the AG Audit and intimate the details of the payment to this office. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yours faithfully, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Superintendent of Service Tax Range </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is the Department on a fast track? Have they forgotten concepts like Show Cause Notice, hearing, adjudication etc? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The learned Superintendent is not even sure as to whether the assessee has really failed to pay the tax electronically - he doesn't mention as to when the assessee failed. He only depends on the AG Audit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Law states that the penalty <em>may <strong>extend</strong> to ten thousand rupees. Superintendent Sir, the <strong>maximum</strong> penalty is ten thousand rupees.</em> </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Can a service recipient who is required to pay ST on reverse charge basis collect ST paid from provider? </font></strong></em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> received this mail from a Netizen - </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ "X" is a recipient of service from "Y". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ As per the ST law, "X" is required to pay 100% Service Tax under reverse charge basis although service is provided by "Y". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Assume "Y" has rendered a service costing Rs.1000 to "X". </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ "X" has to pay @12.36% of Rs.1000/- as Service Tax and which comes to Rs.123.60 = Rs.124 (rounded off). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ "X" and "Y" have a mutual understanding that Y will bear the service tax component. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ So, "X" collects Rs.124/- from "Y" separately. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department is of the view that "X" could not have collected this amount of Rs.124/- from "Y" and, therefore, the same is recoverable from "X" in terms of section 73A of the FA, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Is this action proper & legal in law? </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The section 73A of FA, 1994 applicability - analysis. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us revisit the issue in pure mathematical and logical terms - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Rs.124/- is paid by "X" as Service Tax.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ He has collected Rs. 124/- from "Y", the service provider. If the department wants to effect recovery of Rs.124/- too, then for a Service provided of gross value of Rs.1000/- it can be said that the department wants to pocket Rs.124 + Rs.124 = 248/- [and this is absurd and beyond what the FA comprehends] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Going by the rationale contained in section 73A(1) what is collected from any person in excess of the ST assessed and paid is to be deposited with the Central Government. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The assessee "X" not having collected amount "in excess of service tax assessed and paid" , he does not fall within the ambit of section 73A(1) of the FA, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+++ Now coming to section 73A(2), the same reads -</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Where any person who has collected any amount, <font color="#FF0000">which is not required to be collected</font>, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+++ The words that require emphasis are "which is not required to be collected". <strong>The provisions of reverse charge do not envisage that the payer (service recipient) of service tax cannot collect the service tax from the service provider</strong>. This sub-section operates only when no service tax is payable but the person collects any amount, in any manner as representing service tax. The amount collected in the present case is not clothed as representing service tax - it is in fact service tax itself. Since "X" in the example is required to pay service tax and has paid the same, collection of a part or whole of the same cannot attract section 73A(2) of FA, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the whole bogey of section 73A being attracted in the present case is mischievous, to say the least.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This can be compared with the 8% amount payable under Rule 57CC/ Rule 6. Department was always of the view that the 8% amount shall not be collected from the buyer of exempted goods. The issue is well settled now with Larger Bench of Tribunal holding that the provisions of Section 11D are not attracted (<em>Unison Metals Vs CCE</em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2006/2006-TIOL-1337-CESTAT-DEL-LB.htm" target="_blank">2006-TIOL-1337-CESTAT-DEL-LB</a></strong>) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore there is no case to invoke the provisions of Section 73A if service tax payable under reverse charge is collected from the service provider. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also CENVAT Credit cannot be denied to X on the ground that he has collected service tax from the service provider as the same stands paid to the Government. </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Anti Dumping Duty on Acetone - Re-imposed - No Resurrection </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ANTI</strong> Dumping Duty on Acetone falling under tariff item 2914 11 00 originating in or exported from Korea ROK was imposed by Notification No. 75/2008-Customs, dated 10th June, 2008. This expired on 10th June 2013. And the Government was sleeping. They woke up on 25th June and extended it till 9th June 2014. Again it expired on 10th June 2014. Again the Government was sleeping. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now they have again imposed the duty with effect from 18th February 2015 for a period of another five years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was no anti dumping duty on this product during the period 10th June 2014 to 17th February. Was there no dumping during this period? </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The original notification 75/2008-Cus referred to imposition of anti dumping duty on imports from Korea ROK, which is Republic of Korea i.e South Korea. The present notification refers to Korea RP. Are they are referring to the same country?</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc2OTc=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No.05/2015-Customs (ADD),. Dated: February 18, 2015</font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">CBI Arrests Central Excise Superintendent - Bribe of 1 Lakh </font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Central Bureau of Investigation has arrested a Superintendent of Central Excise, Khamgaon (Maharashtra) for demanding & accepting a bribe of Rs.one lakh from the complainant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The complainant alleged that the Superintendent of Central Excise demanded a bribe of Rs.5 lakhs from him for not imposing penalty/excise duty on his plant. CBI laid a trap and the accused was caught red handed while demanding & accepting a bribe of Rs. One Lakh as first instalment from the complainant. Searches were conducted at the office & residential premises of the accused and incriminating documents recovered. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The arrested accused was produced before the Court and remanded to Judicial Custody. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can you believe it - A superintendent demanding a bribe of Rs. 5 Lakhs and if this was to waive penalty as stated by CBI, obviously some higher officers are involved, for no superintendent can impose or waive a penalty that could attract a bribe of Rs. 5 lakhs. It is heard that bribe amounts have galloped very high and audit parties routinely demand bribes ranging from 10 lakhs to 30 lakhs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The mindless confirmation of Show Cause Notices by adjudicating authorities has ensured that corruption thrives in the field. The revenue that can be collected by all the notices in the department is not even ten per cent of the total revenue. The Government should consider delinking adjudication from the department.</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more<strong> DDT</strong></font></p>
<p align="justify"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p>
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