TIOL-DDT 2733 · 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> <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> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2733</font><br> 27 11 2015 <br> Friday </strong></font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Service Tax - Seed Testing - CBEC Clarifies </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has come to the notice of the Board that certain field formations have taken a view that all activities incidental to seed testing are leviable to service tax and only the activity in so far it relates to actual testing has been exempted in the Negative List. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After elaborate interpretation of the words in the Statute, Board clarifies that: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All testing and ancillary activities to testing such as seed certification, technical inspection, technical testing,analysis, tagging of seeds, rendered during testing of seeds, are covered within the meaning of testing as mentioned in sub-clause (i) of clause (d) of section 66D of the Finance Act, 1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, such services are not liable to Service Tax under section 66B of the Finance Act, 1994. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTg3OTk=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No.189 /8/2015-Service Tax., Dated: November 26 2015 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Regional Advisory Committee (RAC) Decisions </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME</strong> more decisions from the RAC meeting of Pune Central Excise Zone </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#623094" span="span">Service Tax -Canteen Service - Company pays the whole amount and Service Tax to the canteen operator and later recovers 20% from employees - What is Service Tax liability?: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A factory provides the canteen facility to its employees. The factory pays to the canteen contractor the whole price including Service Tax. The factory later recovers 20% of the cost from its employees. Is Service Tax payable on this 20%? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To illustrate: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Amount paid to the contractor = 114 (100+14 Service Tax) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Amount recovered from employees = 22.80 (20% of 114) </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent meeting of the Regional Advisory Committee of Pune Zone, an assessee raised this <strong>ISSUE</strong>: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where the canteen services are availed by a factory registered under Factory Act, the service tax is charged by the service provider under his invoice, which is paid by the Company. The expenses towards this service are shared by company and employee 80% by company and rest 20% by employee. However, on receipt of service provider's bill on which service tax is paid, the company pays 100% amount to the service provider and later on recover 20% from employee. In other words, it a sharing of expenses on which ST is paid . If this 20% amount is levied to service tax again, it will amount to payment of service tax at two stages. This not the intension of the Legislature. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Reply</strong>: The Department replied, "<em>The business entity places order with the service provider to fulfill their own obligations of providing facilities to the employees, whether under any legal provisions or as courtesy or under some specific understanding with employees or their associations/ unions. Therefore, the business entities are required to bear the tax burden as charged by the service providers in the instant scenario. Further, if the business entity is recovering some amount from the employees towards provision of such services, then the business entity is actually providing such services to the employees. Therefore, service tax, if otherwise applicable, needs to be discharged by the business entity in terms of the provisions of Section 65B(44) of Finance Act, 1994</em>.” </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#623094" span="span">Service Tax - Can't a new cheque be issued in place of a lapsed cheque?: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Question:</strong> Company is an SEZ unit engaged in the business of providing Information Technology Software Services (ITSS). The Company claimed refund of unutilised CENVAT Credit on input services, for the period April 2012 to December 2012, under Notification no. 12/2013-ST. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Service Tax Authorities sanctioned the refund. However, the refund cheques could not be deposited in the bank account of the Company due to change in the directors. In the meantime, the cheques expired. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, for more than a year, we are in constant follow up with the Service Tax Authorities for re-issue of time barred cheques. However, the said request is still pending. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Reply:</strong> In such cases, normal business practices can be followed. The authority who had issued the cheque in the first place can be approached for re-validation / re-issue of the cheque. Specific instances may be brought to the notice of jurisdictional Commissioner. </font></p> <p align="justify"><font color="#FFFFFF" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#623094" span="span">Scope of RAC Meetings: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An assessee raised issues pointed out by Audit. The Department observed; </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the issues queried above are those which have been raised by the Audit officers during the course of audit of the records of the assessee. RAC is not the appropriate forum to discuss and deliberate on the observations raised by Audit. This is a forum for taking up procedural matters which are causing inconvenience to public at large and not any individual organization or entity. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The observations raised by Audit are discussed in the MCM, which itself is another forum, before finalizing the Audit objections. The objections, if vetted by MCM will culminate into a Show Cause Notice, which will further undergo quasi-judicial proceedings. The appropriate procedure, in the event of issue of SCN would be to discuss the merits and demerits of the case before adjudicating authority. </font></em></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Then, why can't they allow the assessees to be present in the MCM? </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Nothing Illegal in Small Favours to Babus/ gifted journalists </font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<strong><em>A</em></strong><em> senior official in Bastar wants an Innova to visit a temple in Gwalior from Delhi. If possible, please try to meet him in Delhi. According to sources, he may become Industry secretary.</em>” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is an internal email of a big corporate house. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Arranging a vehicle and a guest-house/hotel for a bureaucrat, accepting a recommendation for a job from a politician, making small presents to journalists, are all common activities for any major corporate house including PSUs. There are major PSUs arranging more than a hundred cars for various VIPs, every day in Delhi. We have thousands of gifted journalists, babus and Netas, who would not bat an eyelid for availing such services. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A major Corporate House told the Supreme Court yesterday that these are "<em>common courtesies extended by corporate houses</em>”. The Company says that there is no wrongdoing in giving gifts to people in public life or in the civil service since there has been no attempt to obtain undue favour. The PIL in the Supreme Court alleged an unholy nexus between the corporate with politicians, bureaucrats and journalists to promote its business interests. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not only Corporate Houses, even Commissionerates have "<em>protocol cells</em>” to look after the comforts of visiting dignitaries, often at huge costs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjEyMjc=" target="_blank"><strong>DDT 2414 - 11.08.2014</strong> </a>reported, "<em>Officers should be careful while availing this kind of hospitality, for the CBI might be after them. Even assessees must be careful while extending the hospitality, for the CBI might be after them too.</em>.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We reported an interesting case where the CBI had booked a case against a Chief Commissioner for availing the hospitality from an assessee by staying in the Sheraton Hotel, Delhi and getting a car booked by an assessee. The assessee was also booked. However, both the assessee and the officer were acquitted by the trial court as the prosecution failed to prove the case beyond reasonable doubt. But they had to go through the ordeal of a CBI investigation and a court case for about four years! </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">GST can be India's Brahmastra </font></em></strong></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<strong>GST</strong> can be a "Brahmastra” for the Indian economy against a very difficult global economic scenario, affected by demand slowdown, uncertain geo-political situation after the Paris terror attacks, and an unprecedented crash in vital commodities.”, says the new President of Assocham, Sunil Kanoria. He believes that GST will harmonise indirect taxes by doing away with multiplicity of taxes. It will also reduce cost of production, which will be then passed on to consumers, thus lowering inflation. More striking would be the display of a political unity and the will to rise up to national cause. That will be a great positive for revival of investment, both domestic and international, something most needed at this point of difficult international times. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Everybody seems to be eagerly waiting for the GST without realizing the demon lurking in the dark. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">CENVAT Credit and Swachh Bharat Cess - Writ filed </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is learnt that a writ has been filed in the Delhi High Court challenging the validity of the FAQ issued by the Board on Swachh Bharat Cess. The FAQ stating that CENVAT credit will not be given is challenged on the ground that the FAQ is contrary to the provisions of the Finance Act, 2015. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the High Court has given notice to the Government and stayed coercive action. </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><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> </body> </html>