TIOL-DDT 532 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
532</font><br>
15.01.2007<br>
Monday</b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>What
is the rate of Service Tax? Pay only10.2%?</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
on today, it is 10.2%, if you go by what a Chief Commissioner informs the world.
Where can you get correct information on Service Tax? Certainly not the Service
Tax offices. A netizen who is incidentally a Central Excise officer sent us
this picture. This is a huge hoarding outside a Chief Commissioner’s office
which loudly proclaims that the rate of Service Tax is 10.2%.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Netizen who
sent us this picture asks, “Can an assessee pay 10.2% and claim that he paid
the tax at the rate advertised by the Commissioner and Chief Commissioner? Sadly,
the answer has to be a “no” as there is no estoppel against the statute in these
matters. But what will happen if somebody pays 10.2% and claims that he paid
the amount as per the advertised rate of the government? And that too right
in front of the Service Tax office? It is nearly nine months since the rate
of Service Tax has been made 12.24% and the hoarding outside the Chief Commissioner’s
office continues merrily proclaiming the Service Tax rate as 10.2%. And if anybody
pays at the rate of 10.2%, this very department will charge suppression, evasion,
and mis-statement and will demand interest and penalty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DDT</b> hopes
and wishes that the Chief Commissioner would spend a little paint to correct
the position. We will wait for a week and let you know who the Chief Commissioner
is who wants to collect only 10% instead of 12%, if it is not corrected by then.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And please don’t
get angry with us; we are only trying to help you!</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>North
East exemption – no refund and rebate – once duty is refunded it is no more
“duty paid”</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It’s
almost a year since we carried an interesting article by one of our regular
columnists <strong>“</strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3570">Region
specific exemption and rebate of duty - Having the cake and eating it too!!</a><b>”.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
article delved into the issue of rebate of goods manufactured and cleared by
units availing region-specific exemption notification and subsequently exported
under Rule 18 of the Central Excise Rules. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>The issue
in brief :-</u></b> Rule 18 of the Central Excise Rules provides for grant of
rebate of duty paid on exported goods. In terms of the relevant exemption notifications,
exemption from excise duty is available only to the extent it is in excess of
the amount paid out of CENVAT credit. However, the said exemption notifications
come into effect only when payment of duty on finished goods at the appropriate
rate is made and that too by way of refund of duty paid in cash. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the question
raised by the author was <i>“Whether the goods cease to be duty paid goods for
the purpose of granting rebate given the fact that cash refund of the same has
been availed by the manufacturer” . </i>Given Board’s clarification that <b><i>“
As there appears to be no legal bar, the Board desires the claim ( read rebate
claim ) should be processed as per the existing provisions of law”</i>,</b>
it appeared the issue was well and truly settled and rebate could not be denied
of the quantum of cash refund availed by the manufacturer. In spite of the same,
the author signed off pondering aloud <b><i>“Hope there is no scope for interpretation
now ? Or is it too early to hazard such a statement !!!”</i></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No
way this <b><i>“la Nostradamus”</i></b> prediction could have come a cropper.
This matter was referred to the Law Ministry by the Board who has since opined
that the term 'duty paid' used in rule 18 does not include that portion of duty,
which is subsequently refunded to the manufacturer. They have further opined
that the amount so refunded to the manufacturer is to be treated as an exemption
and rebate of the said amount cannot be paid. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The clarification
ends with a parting directive - <i>“In view of the above statutory position,
it is hereby directed that all pending show cause notices may be decided accordingly.
Even pending rebate claims should be decided as per said interpretation. Show
Cause Notices may be issued in respect of sanctioned claims, which are within
the statutory time limit of one year.” </i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As far as the field
formations are concerned, the issue is quite clear now. Deny rebate for pending
rebate claims and issue demand notices in respect of sanctioned claims which
are within the statutory time limit – mercifully!!!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However a few questions
beg answers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) What happened
to the earlier clarificatory letter stating that there is no legal bar in grating
rebate? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Why again no
circular and only a clarificatory letter?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Does the Law
Ministry’s opinion imply ‘the statutory position” on the subject matter? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) Can the Board
direct the adjudicating authority to decide all pending show cause notices according
to Law Ministry’s opinion? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e) Who is responsible
for the loss of revenue in rebates already sanctioned? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe, yet another
clarification to clarify the above clarification!!!!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/cxinstruction1.htm">F.No.209/11/2005-
CX-6</a></b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Budget
2007 – FM should plan for the next generation, not next FY - open letter to
FM</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today
we start our run-up to the Budget 2007 with an open letter to the FM by
a former Member of the CBEC, Mr BV Kumar. Mr Kumar, now a practising advocate
has been an illustrious member of the Board, the only revenue officer to
appear in the cover page of the <i>Illustrated Weekly</i> of India. There is no
post which he held, in which he had not left his stamp of excellence, be
it the Collector, Gujarat, DG, DRI, DG, NACEN, or Member CBEC. He wants
the FM to be above being a mere revenue minister. </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">
</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a
href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></span></font></p>
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