TIOL-DDT 782 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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>
<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 782 </font><font size="3"></font><font size="2"><br>
15.01.2008 <br>
Tuesday </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Defiant and disobedient Chief Commissioner – Government cracks the whip </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Very often, the Board finds that its instructions are treated with scant respect by the chieftains in the field and Board is often faced with the piquant situation that its directions are flouted with impunity by the field, in spite of the Board telling them that such disobedience will be viewed seriously. But many of them know that there will be no view, let alone a serious view and in many cases by the time it is viewed, the original viewer is retired and the new one has no patience to seriously view the instructions issued by his predecessor. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But in a rare exercise of power in a swift, serious and stern view, the Government has transferred an errant Chief Commissioner of Income Tax and has called for his explanation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
a letter dated 28.12.2007, the CCIT, Kanpur had been directed that no transfer
of officers in any grade under his charge should be effected without the
prior approval of the Board. In spite of these directions, it seems the CCIT
went ahead and transferred some officers, which had been apparently brought
to the notice of the Board (obviously by those officers, who are not happy
with the transfers) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a swift action in less than ten days, the Government transferred the CCIT and has called for his explanation. When a big tree falls, some plants get crumbled. The ITO( Admn ) is also asked to explain. Can the poor ITO who signed the order as per the directions of hic CC be held responsible? Could he possibly disobey his boss, the CC? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps to show that the Board means business, copies of the order had been sent to all Chief Commissioners of Income Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the army, they have a theory, “to command is to obey” – you can't really command your subordinates without obeying your superiors. What kind of impression senior officers would be creating when they flout the instructions of even the Apex decision making body like the Board? What right have they to expect and demand obedience from their subordinates, when they don't obey their superiors? And what will happen to government business when everyone starts disobeying his superior officers? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Senior officers should set an example and be seen as a role model and should not be seen as irresponsible juvenile delinquents, being punished by the headmaster. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And incidentally all the transfer orders, issued by the defiant Chief Commissioner against Board instructions, had been cancelled. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are small games the taxmen play with the taxpayer's money! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/cbdtorder008_2008.pdf" target="_blank">MFDR order No. 8/2008 dated the 11 th January 2008. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs – Sri Lanka exemption not applicable to Notification No. 20/2006 </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 20/2006 – cus dated 1.3.2006, certain goods are exempted from the Special CVD in lieu of sales tax/VAT. But this does not apply in some cases when the goods are exempted by some specified notifications. Now Notification No. 2/2007 Customs, dated the 5 th January, 2007 is added to the list. Now this Notification pertains to goods which are of the origin of Democratic Socialist Republic of Sri Lanka in accordance with the Customs Tariff (Determination of Origin under the Free Trade Agreement between the Democratic Socialist Republic of Sri Lanka and the Republic of India ) Rules, 2000. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But what about the period from 5.1.2007 to 10.1.2008? Mystery? Litigation? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_007.htm" target="_blank">NOTIFICATION NO. 7/2008- Cus ., Dated: January 10, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Registered dealer & duty payment! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> has received the following interesting question. Although the Netizen has answered it, he is not sure & hence wishes that readers of <strong>TIOL </strong> comment on the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether a registered dealer can pay by a TR -6 challan the Cenvat Credit incorrectly passed to their consignees who availed Cenvat Credit? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Audit Wing of the Central Excise Department while auditing the records of a registered dealer found that the dealer had passed on as Cenvat credit the value of the Inputs sold by them. Upon pointing out this aberration, the Registered dealer requested that he be allowed to pay the said Cenvat credit quantum and that no action be initiated against the consignee manufacturers for he feared that he may lose his business. He also agreed to the fact that as a “registered dealer” he is liable to penalty in terms of rule 25 of the CER , 2002 for the above offence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequently, he handed over a cheque of the said “incorrectly passed on Cenvat Credit”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Should such a payment be accepted by the Audit group? The corollary to this question would be “Whether a registered dealer can make a payment in the first place of this Cenvat quantum? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A dealer of excisable goods gets registered under Rule 9 of the Central Excise Rules so as to issue Cenvatable invoices. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per rule 4(1) of the Central Excise Rules, every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse shall pay the duty leviable on such goods in the manner provided in rule 8 or under any other law ,… </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, Rule 2(h) of CER , 2002 defines a “warehouse” as any place or premises registered under rule 9. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So also, Rule 2(c) defines “assessee” as any person who is liable for payment of duty assessed or a producer or manufacturer of excisable goods or a registered person of a private warehouse in which excisable goods are stored and includes an authorized agent of such person; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A combined reading would lead one to conclude that even a registered dealer who is registered under rule 9 is an assessee who can pay the Cenvat incorrectly passed on by him. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To conclude, the payment made by the registered dealer can very well be accepted by the Audit officials. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any differing view??? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – abatement for transmission towers </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT had recently carried a Board instruction on the subject, which read as, </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">For availing abatement from the gross amount charged, one of the conditions stipulated is that the gross amount charged should include the value of plant, machinery equipment, structure or parts and any other material sold by the commissioning and installation agency. The other condition is that the service provider should not take the credit on input, input service and capital goods. The objective of allowing abatement for calculation of service tax is to offset the value of goods supplied in case of a composite supply of goods and services and availament of abatement is optional. Therefore, abatement would not be admissible in such cases where erection and commissioning service is provided under a contract/agreement that does not include the value of goods i.e., transmission tower and other accessories which are erected or commissioned under such contract/agreement. In other words, service tax would be applicable on the entire amount charged for erection and commissioning service if such amount does not include the value of all goods supplied. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An expert in the field wrote to us, </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">In this connection I feel that the conditions mentioned against the abatement notification issued (1/2006) for erection and commissioning mentions only "goods sold" and not goods supplied as clarified in the above circular. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The wording "goods supplied" appears in the conditions mentioned against "commercial or Industrial construction service.” </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<br>
<font color="#663399">I think there is vast difference between goods supplied and goods sold. For example, if the telecom service provider procures tower form one source and make some other person to lay foundation and erect the tower. How the circular is to be interpreted, as the commissioning and installation service provider has not sold any tower. In such case is he eligible to take abatement? </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Circulars often create more problems than solutions. <br>
</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5"> tiol</font> <font color="#006600">– Tomorrow's cases </font><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"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></strong></b></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax / VAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">In an indivisible contract no VAT if Service Tax is paid – Supreme Court </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Payments of service tax as also the VAT are mutually exclusive.</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong> Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rent and deposits received by intermediary tenant from ultimate user of premises not to be taken for computing net wealth of owner; CIT (A) gives no reasons for rejecting order – Revenue in appeal with new ground – should Govt suffer for officers' mistakes? : Bombay HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedure is not meant to trip justice but to aid the cause of justice. Wrong drafting by the draftsman cannot result in the Court being prevented from looking at the correct issue and having the issue answered. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Law would be much poorer if the Court precluded itself from doing so, merely because the draftsman for some reason has not applied his mind in framing the correct question or grounds. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The order of the Commissioner( appeals) does not disclose any reason as to why the appeal was allowed on the issue of proportionate debts. If the appellate authority seeks to reverse the finding of the authority below, it was bound to give reasons to its conclusion. We find the order does not disclose any reason for coming to the conclusion arrived at. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Use of power in operation of stirrer and electric motor for lifting water and caustic soda would amount to manufacture with aid of power – appellant not eligible for exemption : Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THESE two appeals involve identical questions. The appeals filed by the appellants were dismissed by CESTAT holding that they were not entitled to benefit of concerned notifications. In case of appellant M/s Vimal Textile Mills, the concerned Notifications were Notification No.28 /94-CE dated 1.3.1994 the Notification No.8 /96-CE dated 23.7.1996 and its successor Notifications. CESTAT denied the benefit relying on a larger Bench ' s decision in the case of M/s Mathania Fabrics v. Commissioner of Central Excise, Jaipur . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellants are engaged in the processing of cotton fabrics falling under Chapter 52. They claimed to be undertaking the processes of bleaching, mercerising, dyeing, printing, washing, drying and finishing before the fabrics were packed and cleared. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></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="#FF6666" 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></font></p>
</body>
</html>