TIOL-DDT 601 · the untouched capture
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<p><font size="3"><b><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 601</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></font><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
26.04.2007<br>
Thursday</b></font></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Credit of Service Tax on outward freight – landmark order from Tribunal – There is still hope</font></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5374" target="_blank">DDT 599 on 24.4.2007</a></u> brought to you details of a Delhi CESTAT order disallowing credit of Service Tax paid on outward freight. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A netizen wrote in </font></p>
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<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The outward transportation is part of the selling overheads which the manufacturer adds to cost of production . This will give cost of sale and cost of sale + profit = sale price.<br>
<br>
Excise duty is on the transaction value and if the manufacturer has paid duty on the transaction value (which includes outward freight also ) how the credit is not justified ?</font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">My friend Santosh Hatwar, hopefully said </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Certainly not the end of road </font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact there was no need to split hairs on whether the definition and the clauses therein have to be read disjunctively or not when whatever is stated in the rule is obvious. When this rule is examined harmoniously with the definition of "place of removal" it clearly makes a case for allowing cenvat credit of service tax paid on transportation of goods not only up to the place of removal but also from the place of removal.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">An imaginative barrier cannot be imposed on availability or otherwise of credits of service tax paid on transportation for clearances from different places of removal when there is no such intention in the CEA or the CCR.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">This judgment is certainly not the end of road on this issue. Lets hope this issue is agitated at the next level for a fair view. Until then swallow the notices from the Revenue on this issue.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes, Sir; It’s certainly not the end of the road. The Bangalore Bench has in a recent case, rejected the stay application of the Revenue on this very issue and <i>prima facie</i>, the Tribunal agreed with the submission that such services come within the definition of “Input Services”. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The case is posted for 14<sup>th</sup> May. Now what can this Bench do, since there is already a decision by another Bench? It has only two choices – agree with the Delhi Bench or refer the matter to a Larger Bench. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">An angry netizen told us, “why are you in a hurry to publish such orders?; You are doing free service to Revenue.” Revenue of course will never think so. Anyway we are in the business of bringing you the news as fast as possible – good, bad and indifferent. </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-547-CESTAT-BANG.htm">2007-TIOL-547-CESTAT-BANG</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Can Service Tax on GTA be paid from your excise cenvat credit? </font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You are a manufacturer. You engage the services of Goods Transport Agency for your inward and outward transport and as a recipient of service, you are by law required to pay Service Tax. Now can you pay this Service Tax from your cenvat credit account? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please send me your answer by tonight and tomorrow we will tell you what the Tribunal thinks. </font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">How a simple question of fact gets side tracked </font></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Supreme Court judgement, we are carrying today, the Supreme Court observed,</font></p>
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<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">A simple question of fact has been sidetracked by copious citations.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>That is what has happened in this case. The Commercial Tax Officer invoked a fiction; the Assistant Commissioner of Commercial Taxes relied upon the doctrine of "finished product", the Appellate Tribunal relied upon surmises; and the High Court on the principle of “implied agreement."</b></font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When you want to convert a question of fact into a question of law, all that you have to do is frame the question, “"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that xxxx” </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT</font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></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@taxindiaonline.com"><u> vijaywrite@taxindiaonline.com</u></a> </font></p>
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