TIOL-DDT 2641 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><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=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></s>TIOL-DDT 2641</font><br>
15 07 2015<br>
Wednesday</strong></font></p>
<p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif"><em><font size="3"><strong>How can Assistant Commissioner impose more than 250 rupees penalty?</strong></font></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>AS</strong> per Section 33 of the Central Excise Act, </em></font></p>
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<td valign="top" bgcolor="#FF9966"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION 33. Power of adjudication </strong>. - Where under this Act or by the rules made thereunder anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged - </font></td>
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<td valign="top" bgcolor="#FF9966"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) without limit, by a Commissioner of Central Excise; </font></td>
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<td valign="top" bgcolor="#FF9966"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) up to confiscation of goods not exceeding five hundred rupees in value <strong>and imposition of penalty not exceeding two hundred and fifty rupees </strong>, by an Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise: </font></td>
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<td valign="top" bgcolor="#FF9966"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Provided that the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, in the case of any officer performing the duties of an Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, reduce the limits indicated in Clause (b) of this section and may confer on any officer the powers indicated in Clause (a) or (b) of this section. </em></font></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the above provisions, the Assistant Commissioner/Deputy Commissioner can impose a maximum penalty of Rs. 250/-. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How are the Assistant Commissioners imposing huge penalties then?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24071"><strong>DDT 2638</strong></a><strong> – 10.07.2015 </strong>, asked this question to the Netizens.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is the summary of the answers we got. Most of the answers were correct and majority of the answers were from Departmental officers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC had clarified this position way back in 1997. In <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/1997/excircular299.htm">Circular No. 299/15/97-CX, Dated: Feb 27,1997</a>, the Board observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>By virtue of Clause (a) of Section 33 of Central Excise Act 1944, Commissioners can adjudicate the cases of confiscation and penalty without limit. This power has been delegated to Deputy Commissioners by C.B.R. Notification No. 12 - Cexdt. 17th May 1947, to Assistant Commissioners of Central Excise by C.B.R Notification No. 8-C.Exdt. 2nd September 1944 and to Superintendent of Central Excise by C.B.R. Notification No. 93/59 dt. 28th November 1959</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This archaic Section in the Central Excise Act needs revision. Can you think of confiscating something worth five hundred rupees and imposing a penalty of two hundred and fifty rupees? </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The identical provision in the Customs Act reads as:</font></p>
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<td valign="top" bgcolor="#FF9966"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SECTION 122. Adjudication of confiscations and penalties. – In every case under this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged, - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) without limit, by a Commissioner of Customs or a Joint Commissioner of Customs; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) where the value of the goods liable to confiscation does not exceed five lakh rupees, by an Assistant Commissioner of Customs or Deputy Commissioner of Customs; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) where the value of the goods liable to confiscation does not exceed, fifty thousand rupees, by a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs or Deputy Commissioner of Customs. </font></p></td>
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<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Any idea what happened to the Additional Commissioner? </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Service Tax, it is: </font></p>
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<td valign="top" bgcolor="#FF9966"><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">83A Power of adjudication. Where under this Chapter or the rules made thereunder any person is liable to a penalty, such penalty may be adjudged by the Central Excise Officer conferred with such power as the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, by notification in the Official Gazette, specify.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why different statutory positions for the three Statutes under the same Revenue Administration? Board knows! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(Now there is also a <em>Principal Commissioner</em>, which is deleted in the extracts to avoid confusion.) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT thanks all the Netizens who have responded. We got the first response a few minutes after DDT was uploaded. </font></p>
<p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif"><em><strong><font size="3">Service Charge Vs Service Tax </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> much circulated message in our social media reads as: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>This is the bill which we got from Hotel xxxxx(it's the same story every hotel) for a small family dinner.. We ate for 6770 and paid tax 2053 which is 30% of the cost and this amount which I paid comes from my monthly salary for which I am already paying 30% tax every year. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>This is the same story for each of us in India… As we are paying tax in every </em></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img width="367" height="592" src="http://www.taxindiaonline.com/RC2/image/stories/insideddt_2641.jpg" alt="MacintoshHD:Users:admin:Desktop:DDT 2641 15 07 2015:hotelbill.jp2"> </font></p>
<p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>product we buy right from groceries, to utility bills or medicals or whatever you choose… </em> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In short if each of us is earning Rs.100 as monthly salary then our actual earning or you can say net income is Rs. 35-40 as the rest we are directly or indirectly paying towards tax, which may be or may not be reaching the government. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>So my question to the current and all previous government is….what are we getting against all this??? If we are paying 60% of each person's annual salary in India as tax, then I believe we should not be considered as poor nation and not a single stomach in our country should remain empty….the big business of begging should be put a stop with immediate effect. We should get better infrastructure; Better support system and training mechanism for all sports; Free and high quality education and medical support and many more facilities which are offered in other countries where the tax is just 30% or whatever of the salary each member earns. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>I believe these questions will be lurking in each of our minds. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Let's start pushing and sharing this as much as possible and hopefully it will reach the right ear someday …and someday as we the youth of India is thinking… will definitely get a better government….who may be little corrupt (we don't mind) but will take care of its people and country… </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><font color="#006600">Service Charge is not Service Tax – CBEC </font></em></strong><font color="#006600"><em>:</em></font><em> </em>The CBEC in a Press Note yesterday stated: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Some restaurants / hotels / eateries besides charging for the food and beverages are also charging ‘service charges' in their bills. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The proceeds of the ‘service charges' are retained by the restaurants / hotels / eateries. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Some of the consumers have a misapprehension that these ‘service charges' are being collected by the restaurant on behalf of the Government as tax. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It is clarified that these ‘service charges' collected by the restaurants / hotels / eateries are retained by the restaurants / hotels / eateries and are not ‘service tax' imposed by the Government. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It is further clarified that effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air–conditioning or central air-heating in any part of the establishment is 5.6% (14% of 40%) of the total amount charged. </em></font></p>
<p align="center"><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>Can water be sold at above the MRP and what is the Service Tax implication? </strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the above hotel bill, you can see that three bottles of mineral water are sold for Rs. 285. On this also a 4.944% Service Tax has been charged, which works out to about Rs. 14. So each bottle of water is sold for Rs. 100. The MRP will certainly be less. Now, this raises two questions. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Can the water bottle be sold at a price higher than the MRP? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. What is the Service Tax implication? </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first question was answered by the Delhi High Court in <em>The Federation of Hotel Restaurants Association of India </em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2007/2007-TIOL-345-HC-DEL-SWMA.htm">2007-TIOL-345-HC-DEL-SWMA </a></strong>. The High Court held, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Charging prices for mineral water in excess of MRP printed on the packaging, during the service of customers in hotels and restaurants does not violate any of the provisions of the SWM Act as this does not constitute a sale or transfer of these commodities by the hotelier or Restaurateur to its customers. The customer does not enter a hotel or a restaurant to make a simple purchase of these commodities. It may well be that a client would order nothing beyond a bottle of water or a beverage, but his direct purpose in doing so would clearly travel to enjoying the ambience available therein and incidentally to the ordering of any article for consumption. Can there by any justifiable reason for the Court or Commission to interdict the sale of bottled mineral water other than at a certain price, and ignore the relatively exorbitant charge for a cup of tea or coffee. The response to this rhetorical query cannot but be in the negative. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. SB Parikh writing in our <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24091">ST se GSTTak </a> observes, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Restaurants are generally engaged in purchase and sale of some items like bottled water, soft drinks, liquor, pouches of snacks like wafers, etc. If such items are sold at MRP across the counter, service tax is not leviable as per CBEC's Circular <a href="http://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTY0MTk=">No. 173/8/2013-ST </a> dated 07.10.2013. This activity amounts to trading. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>If the bought out items have been sold as such by restaurants at a price higher than MRP or if such items have not been sold across the counter but served in the restaurant, whether such activity is to be considered as trading or not? I am unable to offer views on this issue, but interested readers may like to refer <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18786">DDT-2205 </a> dated 08.10.2013 where the issue has been deliberated in detail. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Eating out is intaxicating and keep your fingers crossed till GST comes. </font></p>
<p align="center"><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif"><a><em><strong>Income Tax - Extension of time limit for submitting ITR-V </strong></em></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has extended the time limit for submitting ITR-V forms relating to Income Tax Returns filed electronically (without digital signature certificate) for AY 2013-14 (filed on or after 1st April 2014 till 31st March 2015) and for AY 2014-15 (filed on or after 1st April 2014 till 30th June 2015). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These ITR-V forms can now be submitted upto 31st October 2015 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This notification is issued to mitigate the hardship and grievance of the taxpayers who have been prevented by reasonable causes to file the ITR-V in time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxpayers can also verify their status of receipt of ITR-V at e-filing website https//incometaxindiaefiling.gov.in . They can also download the ITR-V from the same website from sub-menu ‘e-filed Returns/forms' under main-menu of My account after login to above mentioned website and clicking on the relevant AckNo. hyperlink. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITR-V forms should be sent by ordinary post or speed post addressed to CPC, Post Bag No 1 Electronic City Post Office, Bengaluru- 560 100. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgzMDI=" target="_blank">CBDT F No 2/3/CIT(OSD)(S)/20l 4-15/CPC-ITRV, Directorate of income Tax (Systems) Notification No. 1/2015., Dated July 10 2015. </a></strong></font></p>
<p align="center"><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>Reports appearing on Black Money Act - CBDT Clarifies </strong></em></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> in a Press Release states, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Over last few days a number of reports have appeared in the media expressing views and concerns regarding the applicability of various provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Some of the views expressed in these reports are based on surmises and may not be factually accurate or correctly reflecting the legal position. The CBDT has already issued an Explanatory Circular No. 12 dated 02-07-2015 and another Circular No 13 dated 06.07.2015 containing a set of ‘Frequently Asked Questions' (FAQs) clarifying various aspects of the Act. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Any further Issues and concerns that need clarification may be brought to the notice of the CBDT at the following e-mail address so that these are also addressed in an appropriate manner. </em></font></p>
<p align="justify"><font color="#0000FF" size="2" face="Verdana, Arial, Helvetica, sans-serif">sandip.mishra@nic.in</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgzMDM=" target="_blank">CBDT Press Release., Dated July 14 2015</a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more<strong> DDT </strong></font></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"><strong>vijaywrite@tiol.in</strong></a></font></p>
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