TIOL-DDT 2552 · 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 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 2552</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 05 03 2015 <br> Thursday</font></strong></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Budget Blues </font></em></strong></font></p> <p align="justify"><strong><em><font color="#993366" size="2" face="Verdana, Arial, Helvetica, sans-serif">RECOVERY of CENVAT credit wrongly taken but not utilised: No interest? But penalty leviable? </font></em></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RULE 14 of the CENVAT Credit Rules, before its amendment by Notification <strong> <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3NTQ=" target="_blank">6/2015</a></strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3NTQ="> </a>- CE (NT) dated 01.03.2015, read as:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>Recovery of CENVAT credit wrongly taken or erroneously refunded</em></strong>:-<em> Where the CENVAT credit has been taken<font color="#FF0000"><strong> and</strong></font> utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11A and 11AA of the Excise Act or Sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As you would remember, the<em><font color="#FF0000"><strong> and</strong></font></em> was <font color="#FF0000"><em><strong>or</strong></em></font> earlier. After the famous judgement of the Supreme Court in the case of<em> Ind Swift Labs</em> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2011/2011-TIOL-21-SC-CX.htm"><strong>2011-TIOL-21-SC-CX</strong></a>, wherein the Apex Court held that "<em>interest is payable from the date of taking credit, not utilizing it"</em>, the benign Government amended <font color="#FF0000"><strong>or</strong></font> to <font color="#FF0000"><strong>and </strong></font>by Notification No. <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/exnt12_18.htm" target="_blank"><strong>18/2012</strong> </a>- CE (NT) dated 17.03.2012.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So from 17.03.2012, interest was applicable only on utilizing the wrong credit, not merely on taking it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However there was a strange situation that interest was not payable, but the assessee was liable to penalty under Rule 15. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 15 provides for penalty <em>if any person,</em> <font color="#FF0000"><em>takes <strong>or</strong> utilises</em></font> <em>CENVAT credit</em>…</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Budget 2015 brings in some changes in Rule 14. The new Rule 14 stipulates: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(1) (i) Where the CENVAT credit has been taken wrongly but not utilised, the same shall be recovered from the manufacturer or the provider of output service, as the case may be, and the provisions of <strong>section 11A</strong> of the Excise Act or section 73 of the Finance Act, 1994 (32 of 1994), as the case may be, shall apply mutatis mutandis for effecting such recoveries; </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Where the CENVAT credit has been taken and utilised wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer or the provider of output service, as the case may be, and the provisions of sections 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, 1994, as the case may be, shall apply mutatis mutandis for effecting such recoveries. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now the provisions relating to wrong CENVAT credit ‘taken' and ‘taken and utilised' are separated. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. Where CENVAT credit is taken, but not utilised, recovery shall be made and the provisions of Section 11A shall apply. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Where CENVAT credit is taken and utilised, recovery shall be made and the provisions of Sections11A and 11AA shall apply.</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That is if the credit is taken and utilised, apart from the credit, interest under 11AA is payable. If the credit is taken but not utilised, provisions of Section 11AA are not specifically made applicable. But does this mean that there is no interest liability? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 11AA(1) states, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Notwithstanding anything contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub-section (2), whether such payment is made voluntarily or after determination of the amount of duty under section 11A . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So whatever you write wherever you want, if duty is payable, interest is mandatory. Are we back to square one? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PS: Even now, the penalty under Rule 15 is not deleted. So, if credit is taken and not utilised, and if it is recovered by the department under Rule 14, both interest and penalty are payable. Is this the law? </font></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600" size="3">The ‘Person Concerned' or 'worried person'? </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> has written several times about the <strong><em>concern</em></strong> of the lawmakers. Is the <em>person</em> mentioned in Law a <em>'concerned person' or a 'person concerned'</em>? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 28(8) of the Customs Act; </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The proper officer shall, after allowing the <strong>concerned person</strong> an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This person is certainly concerned as he is at the mercy of the Customs Officer. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is an identical provision in Section 11A(10) of the Central Excise Act: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Excise Officer shall, after allowing the </font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>concerned person</strong><em> an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty of excise due from such person not being in excess of the amount specified in the notice . </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the person is concerned in Customs, he can't be unconcerned in Central Excise. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Proviso to Section 124 of the Customs Act reads as, "<em>Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the <strong>person concerned</strong> be oral</em>". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is difference between the <em><strong>concerned person</strong></em> under Section 28 and the <em><strong>person concerned</strong></em> under Section 124? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, is the <em><strong>concerned person = person concerned</strong></em>? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">English Grammar teachers used to teach that when '<em><strong>concerned</strong></em>' precedes the noun it qualifies it means 'worried, anxious, or troubled', but when '<em><strong>concerned</strong></em>' follows the noun it qualifies, it means 'involved or implicated' </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the latest Circular No. <strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3NTc=" target="_blank">998/2015</a></strong>, dated 28.02.2015, the CBEC quoted a Supreme Court judgement - "<em>the yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the <strong>person concerned</strong> in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the<strong> person concerned</strong> shall be in abuse of the process of the court</em>." </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the CBEC added, "<em>Chief Commissioner shall give direction to the Central Excise Officer in the <strong>concerned</strong> Commissionerate</em>.." </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <em>officer responsible</em> for bad drafting of law is not really a<em> responsible officer</em> and DDT is <em><strong>concerned</strong></em> about this.</font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Why no tax concessions? </font></em></strong></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE Woes: </font></strong></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Rs. 16.8 lakh crore actual expenditure in FY 15; actual revenue collection of Rs. 11.7 lakh crore; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Printing of notes to run the government - Rs. 5.1 lakh crores or 44% of revenue collection; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Interest payments Rs. 4.1 lakh crore, representing 37% of revenue collection; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- India's Tax-GDP ratio, fiscal deficit and debt levels among the worst in developing world; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Inflation running at 8-12% and only came down because of lower oil prices and MSP management; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- 14th Finance Commission reduced Plan Expenditure by further Rs. 1.1 lakh crore; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Fiscal deficit had to be brought down to 3.9% of GDP and more money had to be devolved to the States. </font></p> </blockquote> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The result:</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was little ability to provide tax concessions - said the Minister of State for Finance Jayant Sinha, at a meeting of FICCI yesterday. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">ST hike needed to move towards GST - Revenue secretary </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SPEAKING</strong> at the FICCI meeting, the Revenue Secretary said that the proposal of raising service tax to 14% from 12.36% in the Union Budget was a necessary measure in the eventual movement towards Goods and Services Tax (GST). States will get powers to tax services under the Goods and Services Tax, pushing up the rate, so the government has raised the rates, signalling transition towards a new regime. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Referring to the view that GST rate was a cause for concern, the Chief Economic Advisor, Mr. Subramanian said the GST rate should be internationally competitive and suggested the more the industry harps on this and sends out a clear message to that effect, the better it would be. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">ST Exemption for folk artists - Same benefit for Film Actor - Madras HC rejects actor's petition </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ACTOR </strong>Siddharth has challenged the ST notification No.25/2012 providing for an exemption in respect of services provided by performing artist in folk or classical art forms of music, dance or theatre from the liability towards service tax. The actor assails this notification on the ground that it is discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution of India inasmuch as the same benefit is not extended to other performing artistes namely film actors. The petitioner claims to be an actor in movies and submits that his job involves skills to display different kinds of emotions, dialogue delivery skills and acting characters specified by film Director. These skills are stated to be not different from an actor who performs with similar skills in theatre or drama. In a nutshell, the plea is that the impugned notification is arbitrary and discriminatory as it extends only to performing artistes in theatre and drama and not artistes in films. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed,<em> the mere fact that there is an element of drama or acting both in case of theatre and in case of films does not mean that the two activities are identical, taking into consideration the circumstances in which films are made and theatre is performed. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court asked the petitioner whether he would perform at the rates at which theatre artistes perform. The High Court was of the view that the petition is completely misconceived and without any merit and so dismissed it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And in this year's Budget, they have pruned this exemption for artists. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Company Law - Difficulty in filing information about new directors - MoCA clarifies</font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> Ministry has received several representations about the difficulties faced by stakeholders due to deactivation of Digital signature certificate (DSC) following <em>en masse</em> resignation of all the directors of a company before appointment of new directors in their places. The difficulty arises because of automatic deactivation of DSC on filing of DIR-11 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(Notice of resignation of a director to the Registrar) by the resigned/resigning Director (s), and none of the new Director's details having been filed. As a result, Form DIR-12 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(Particulars of appointment of directors and the key managerial personnel and the changes among them) cannot be filed by a company due to lack of an authorized signatory Director. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that the Registrar of Companies within the irrespective jurisdictions are authorized, on request from the stakeholders, and after due examination, to allow any one of the resigned directors who was an authorized signatory Director for the purpose of filing DIR-12. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3NzM=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoCA General Circular No. 03/2015, Dated: March 03, 2015 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">CE/ST - Timely Disposal of Registration applications - CBEC Advisor advises </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC's</strong> former Member and present Advisor SB Singh has started his work. In a letter to all the Chief Commissioners, he told them, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>I am sure, necessary steps to ensure disposal of registration applications in the line of new procedures must have already been initiated by your Officers. You have to personally monitor the implementation of the new system of granting registration and to ensure that all the new applications filed after the presentation of the Budget are disposed off expeditiously and within the prescribed time limit of two days. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards the past registration applications pending in the ACES, as on the date of presentation of Budget, you have to ensure that these are immediately disposed off as per the guidelines provided on the circular dated 28.2.2015. All these past registration applications have to be disposed off latest by 15.3.2015. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He wants a report by 16th March. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the field follows his advice. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3NzU=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Advisor D.O. Letter F. No. 201/24/2013-CX.6, Dated: March 03, 2015. </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">CBEC Website to be revamped </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> Directorate General of Systems has undertaken the task of revamping and redesigning the CBEC website [www.cbec.gov.in] and also making it more user-friendly. However, the DG has observed that the contents hosted at the website like Acts, Rules, Regulations and other public related information do not get updated from time to time because of lack of regular inputs from the Content Administrators of different field formations and Board. The DG's office has been constantly pursuing with the offices of Chief Commissioners, Director Generals, and different formations of the Board for providing relevant website contents promptly and to monitor update and relevance/authenticity of the contents hosted at website at regular basis in view of the web-policy of CBEC. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a letter to us, the TRU in 2012 clarified, "<strong><em>The copy published on the website is for trade facilitation and does not have any legal force.</em></strong>" (Please see <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTU4NzM=" target="_blank">DDT 1942</a></strong>) </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/revamping-cbecwebsite.pdf" target="_blank">DIRECTORATE GENERAL OF SYSTEMS F. No. IV (25)3/2013-Systems Dated: March 03, 2015. </a></font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow is <font color="#FF0000" size="4">H</font><font size="4"><font color="#009900">O</font><font color="#666666">L</font><font color="#993300">I</font></font></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday 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 weekend. </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> </body> </html>