TIOL-DDT 2934 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26988"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2016.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="252" height="220" hspace="5" border="0" align="right" ></a></font><font color="#663399" size="3">TIOL-DDT 2934</font><br>
21 09 2016<br>
Wednesday</strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>No need of photocopies of RRs to avail CENVAT credit but…</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICE</strong> Tax on 'Service provided in relation to transport of goods by rail' came into effect from 01.10.2012.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the purpose of availment of CENVAT credit by the customer, the CCR, 2004 did not prescribe any document at the material time.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thankfully, the Railways were prepared before the levy came into force.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Railways issue, what they call, Railway Receipts (RRs) for the goods booked with them. But, is this RR a valid document?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Railway Board in a Circular issued on 28.09.2012 directed that:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em>On any written request from customers, CCM Office will issue a monthly consolidated certificate to be signed by an Officer authorized by CCM and duly countersigned by Dy CAO/T or officer nominated thereto, for each customer giving details of Service Tax collected from them during the previous month, date-wise and rake-wise with breakup of (a) Service Tax, (b) Education Cess, (c) Higher Education Cess, and (d) Total Service Tax. <strong>This can be used by the customers for getting credit of Service Tax</strong>. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC thought about this almost two years later. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By notification <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2014/exnt14_26.htm" target="_blank">26/2014-CX(NT)</a></strong> dated August 27, 2014, a clause <em>"fa"</em> was inserted in Rule 9(1) of the CCR, 2004 and which read: </font></p>
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<p align="justify"><font color="#990000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or" </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For more, see <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjEzNjg=" target="_blank"><strong>DDT 2425</strong></a>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Board thinks that seeking <strong>photocopies</strong> of the railway receipts (RRs) mentioned in the STTG certificate is cumbersome and wastage of paper… <font color="#FF0000"><em>and it is better to do some more paperwork </em></font>…perhaps. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the clause (fa) is now substituted and the requirement of enclosing RRs along with the STTG certificate is done away with. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The substituted clause now reads - </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em>"(fa) a Service Tax Certificate for Transportation of goods by rail issued by the Indian Railways; or" </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But this does not mean that RRs are nowhere in the picture. <strong><em>They certainly are! </em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The meticulous Board has laid down an exhaustive procedure for availing CENVAT credit of service tax paid on transportation of goods by rail and this envisages two Annexures - Annexure <em>"A"</em> (STTG Certificate) & Annexure <em>"B"</em> to be issued by, hold your breath - the Railways. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annexure <em>"B"</em> contains the details of RR(s) in a tabular form - 12 columns (Board is fascinated with tables) which <em>inter alia</em> includes RR number, date, name of consignee, freight, service tax/cess paid etc. and which is to be certified by competent Railways authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Railways be happy to do this tabulation is what needs to be seen - as if they do not have their hands or bogies already full! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And if this Annexure<em> "B"</em> is not issued, will the credit be denied? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But should this Circular not be addressed to the Railway Board, courteously speaking. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe before GST comes, Board wants to make life so miserable that people will love GST and feel it to be <a></a>far better than all these complicated procedural rigmarole. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjA1MzI=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification 45/2016-CE (NT) dated September 20 2016 </strong></font></a></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjA1MzE=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular 1048/36/2016-CX dated September 20 2016</font></strong></a></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><a name="f1"></a>Salvaging SCNs </strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the matter of the letter <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjA0OTU=" target="_blank"><strong>F.No. 332/22/2015-TRU dated 05.09.2016</strong> </a>clarifying in the context of 'Representation received seeking clarification with respect to services provided - whether Works Contract Services or Construction of Complex service' our regular columnist G. Jayaprakash writes - </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the L&T case - <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA1ODM0" target="_blank"><strong>2015-TIOL-187-SC-ST</strong></a>, does the definition 65(105) (zzzh) survive? I feel, by this clarification, CBE&C is trying to salvage those SCNs issued under services other than works contract services till 1.7.2012. It appears that when there was specific definition for works contract services from 1.6.2007 all notices for Service Tax for indivisible contracts other than under works contract services under Section 65(105) (zzzza) of Finance Act, 1994 are null and void. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Quite possible that his views would have many takers. </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f2"></a>33.32% success </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> Directorate of Legal Affairs informs that 230 cases were heard by the Supreme Court during the month of August' 2016; that 33 cases were decided and 197 cases remained pending as on 31/08/2016. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, the Success rate of Departmental Appeals for the said month is 33.32%. Inasmuch as 11 appeals of the Department were allowed out of the total 33 cases. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjA1MzM=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F.NO.1080/06/DLA/MR/SC/2014 dated September 2016</font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f3"></a>One cannot kill both of one's parents and then claim to be an orphan </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Miscellaneous application was filed seeking recall of the order passed by the CESTAT on the ground that the order was passed without hearing the appellant as the hearing notice was not served upon the appellant because of which he could not attend the hearing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT while dismissing this application observed - </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The principles of natural justice require that a person should be given an opportunity of being heard; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It is evident that several notices sent to the appellant were returned with the remark that no such person was available at that address; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Bench has verified that the address on which the notices were sent was exactly as per the address given in the appeal papers; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ When the person is not found at the address given in the appeal papers, not once, not twice, but repeatedly, it cannot cry foul and claim violation of principles of natural justice; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The appellant cannot create a situation where it becomes impossible to contact him on the given address in spite of repeated attempts and then turn up to claim violation of principles of natural justice; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Appellant's contention that it was not given an opportunity of being heard is totally untenable. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the parting remark by the Bench - <font color="#FF0000"><em>One cannot kill both of one's parents and then claim to be an orphan! </em></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTE3Njcx" target="_blank"><strong>2016-TIOL-2243-CESTAT-DEL </strong></a></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f4"></a>Keeping doctors in good humour increases tax liability </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> purpose of incorporating an Explanation in section 37 of the Income Tax Act had been explained by the Central Board of Direct Taxes in Circular <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MzQ0" target="_blank"><strong>No. 772</strong></a>, dated December 23, 1998 thus - </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"20. Disallowance of illegal expenses. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20.1 Section 37 of the Income-tax Act is amended to provide that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purposes of business or profession and no deduction or allowance shall be made in respect of such expenditure. This amendment will result in disallowance of the claims made by certain assessees in respect of payments on account of protection money, extortion, hafta, bribes, etc., as business expenditure. It is well decided that unlawful expenditure is not an allowable deduction in computation of income. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20.2 This amendment will take effect retrospectively from 1st April, 1962, and will, accordingly, apply in relation to the assessment year 1962-63 and subsequent years."</font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this context, the case before the ITAT was whether the expenses incurred of Rs. 76,54,986/- for sponsoring the Doctors overseas Tour were allowable as deduction u/s 37 of the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT, Mumbai held - </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ these expenses are clearly hit by regulation 6.4.1 of the Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002 which existed during the previous year 2008-09 which created bar on the physicians on receiving gifts , gratuities, commissions or bonus in consideration of or return for the referring , recommending or procuring of any patients for medical, surgical or other treatment. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The expenditure has been admittedly incurred by the assessee with an objective to keep doctors in good humor to seek favours from them by way of recommending the pharmaceutical products dealt within by the assessee to the patients so that sales and profitability of the assessee company increases more and more which clearly reflect that these are illegal gratification against public policy being unethical prohibited by law. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Invoice which pertained to air tickets and hotel arrangements of Doctors for Istanbul Trip (indicated) that <u><strong>spouses of the Doctors also accompanied the Doctors to overseas trip to Istanbul and</strong></u> these expenses claimed by the assessee as revenue/business expenditure included the costs incurred for travel overseas to Istanbul of spouses of Doctors also, and also the arrangements included <u><strong>cruise travels to island, gala dinners, cocktails, gala entertainment etc</strong></u>. which clearly reflect that these overseas trips are merely to entertain doctors abroad and lure doctors to solicit business for the assessee by unethical , illegal and prohibited means which is an offence under the regulation 6.4.1 … and hence is clearly hit by explanation to Section 37 of the Act and is not allowable as revenue/business expenditure in the hands of the assessee. </font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As for free samples worth Rs.1,26,75,000/- distributed to the physicians, the ITAT viewed - </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ If the free samples of pharmaceutical products are distributed to physicians / doctors at the initial stage of introduction to test the efficacy of the products, the same are incurred wholly and exclusively for the purposes of the business of the assessee, while if the free samples of pharmaceutical products are distributed to doctors/physicians after the products are introduced in the market and its uses are established, giving of free samples will be a measure of sales promotion which will be hit by regulation 6.4.1…and the expenses cannot be allowed as deduction… </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTE4MzM1" target="_blank"><strong>2016-TIOL-1681-ITAT-MUM</strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also see -</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=NjU3NA==" target="_blank"><strong>Call girls hired by employees - Should company reimburse? Eligible as tax deduction?</strong> </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTAwNjY=" target="_blank"><strong>When you say it is the world's oldest profession and when you are not able to curb it by laws, why don't you legalise it?</strong> </a></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600"><a name="f5"></a>Anytime is Good Time for Transfers in CBEC - 69 Officers Transferred</font></em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEPTEMBER</STRONG> 20 - almost six months into the financial year and the CBEC is still transferring its officers. Yesterday they transferred 69 officers of ADC/JC/DC/AC grade. The following officers are posted as OSDs in the GST Council. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Himani Bhayana - JC in Air Cargo, Delhi. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Santosh Kumar Mishra - Under Secretary, CBEC </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Rohan - Under Secretary, CBEC </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Thari Sitkil - DC, Air Cargo, Delhi </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Kaushik TG - AC, Central Excise, Delhi. </font></p>
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<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjA1MzQ=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Office Order No. A-22013/05/2016-Ad.II., Dated: September 20 2016</font></strong></a></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A king, a prostitute, Lord Yamaraja, fire, a thief, a young boy, and a beggar cannot understand the suffering of others. The eighth of this category is the tax collector - Kautilya </font></p>
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<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice day.</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to <a href="mailto:vijaywrite@tiol.in" target="_blank"><strong>vijaywrite@tiol.in</strong></a></font></p>
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