TIOL-DDT 817 · the untouched capture
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<p><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">TIOL-DDT 817 </font></strong><strong></strong></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><strong><br>
04.03.2008 <br>
Tuesday </strong></font></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Publication of names </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax, Excise, Customs had it!! Now Service tax also has it !! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2008/stnot08_015.htm" target="_blank">Notification No 15/2008 – Service Tax</a>, here cometh a new set of rules called Service Tax (Publication of Names) Rules, 2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And
just in case, Netizens have over looked this one <em>( well, honestly nothing
has been missed out then ) </em> amongst other relevant changes consequent
to Budget 2008, here's the salient feature of the said Rules Comprising four
rules in all: - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1) As the name suggests, Central Government will be empowered to publish in the Official Gazette, print / electronic media etc, the names and particulars of persons of defaulters under service tax law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2) The defaulters would be those who have been adjudged to </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) <em>have contravened any of the provisions of the Finance Act, 1994 and rules made thereunder <strong>with intent to evade payment of service tax </strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) <em>pay but <strong>has not paid any amount, payable under the provisions of section 73A </strong> of the Finance Act, 1994 </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3) However, the name of such defaulters will not be published till the appeal period (for the said litigation) is in force. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4) This proposal will be mooted by the jurisdictional Commissioner and has to be recommended by the Chief Commissioner concerned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Just like its direct/ indirect tax colonial cousins (Income tax / Excise and Customs) where similar provisions for publishing the names of defaulters have been set out, Service Tax has also joined this bandwagon. But for its probable nuisance value and seeing a host of files on the Chief Commissioner's table, no substantive merit should come out from this legislation. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Publication of names – all these days - illegal? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the new Rules, it is only the government which has the power to publish the names and that too after the adjudication and the appeal period. Commissioners have a tendency of publishing the names of alleged evaders even before the Show cause Notice is issued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following are some extracts picked up from the website of Delhi Service Tax Commissionerate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The major demands issued by the Commissionerate includes an amount of service tax demanded are Ms Raj Furniture for Rs. 6.8 crores , Cherry Hills Interiors for Rs. 5.2 crores , AGV Alfabs for Rs . 2.11 crores , Vistar Constructions for Rs. 4.8 crores , Nirman Construction for Rs. 1.06 crores , Sharma Construction for Rs. 2 crores , Samiah International Builders for Rs. 3.10 crores and G. D. Builders for Rs. 6.50 crores . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Commissionerate of Service tax, Delhi issued a Show Cause Notice to Delhi Gymkhana Club for non payment of Service tax amounting to Rs. 2.92 Crores in respect of taxable services of Club and Associations. These services were brought into service tax net with effect from 16.06.2005. However Gymkhana club did not pay any service tax on the services provided by them to their members. The Gymkhana club has so far deposited only part of the demand i.e. Rs. 1.93 Crores towards service tax under protest and has not filed any service tax return so far. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The <strong>tax evasion </strong> of many other reputed clubs and associations are under investigation by the Service Tax Commissionerate Delhi. The demands against them are likely to be issued soon. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ After completion of investigations, the Service tax Commissionerate, Delhi has issued Shaw Cause Notice to M/s Oxigen Private Limited (earlier known as M/s Prepaid India Private Limited, New Delhi) for the recovery of service tax amounting to Rs. 1.75 crores . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++<strong>DTC booked for Service Tax </strong> evasion amounting to Rs 3 Crores and 73 Lakhs: The Commissionerate of Service tax, Delhi has issued Show Cause Notice to Delhi Transport Corporation ( DTC ) for non payment of service tax amounting to Rs. 3.73 crores in respect of taxable services of “Sale of Space for Advertisement” brought into tax net with effect from 1.5.2006. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Consequent to investigation, Lufthansa German Airlines deposited Rs. 5.42 on account of service tax liability on services of transport of passengers by air (in class other than economy). They are collecting fare from passengers under various head such as basic fare, YQ charges, YR charges etc. and were paying tax only on basic fare. Admitting there (sic – should be their) liability, now, they have deposited service tax due on YQ and YR Charges. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously, the Commissioner had no power to publish the names of the alleged offenders. It's only now that the power has been given and that too to the government and that too after the adjudication and appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3047" target="_blank">DDT 266 – 21.12.2005 </a><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3047">had written, </a></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. KP Singh DGST , is fond of dropping names of big corporates who owe him Service Tax. For an unduly long period the DG has been silent which he broke in Jaipur recently. His list of evaders include Airtel , Samsung, Sterlite , DCM Sriram , Reliance, Indian Airlines, ONGC and the Rajasthan Cricket Association. He further enlightened newsmen that leading corporates as well as <strong>state government and Central PSUs have evaded paying service </strong> tax and the department is communicating with them for recovery of the same. He adds that Sterlite Corporation owed about Rs 1.3 crore , Samcor Ltd, a Samsung Corporation subsidiary, has evaded service tax to the tune of Rs 35 lakh , Kota based Mangalam Cement Ltd has been booked for tax evasion of Rs 36.66 lakh and DCM Sriram is involved in a case for a claim of Rs 20.60 lakh . Indian Airlines owed him over Rs 100 crore against service tax and Hindustan Aeronautics Limited owes Rs 60 crore . He did not want to humiliate Reliance, Airtel and other corporates as they are sources of income for the government. Do you have laws to collect taxes or do you go to the press? What is the impression that the DG is trying to convey? When ONGC , RBI , Reliance, Indian Airlines and other such big names do not pay taxes why should small time barbers and photographers pay tax? Is that the message? Or is it that the big ones will any way get away but you small fry cannot? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/excircular849.htm" target="_blank">CIRCULAR NO. 849/07/2007- CX ., Dated: April 19, 2007</a> , Board had clarified that </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>“ these provisions are stringent in nature and may affect the reputation of a person. Therefore, these should be used sparingly, with due care and caution. At the same time, it has also to be ensured that in deserving cases, they are, in fact used, and that there is no arbitrary selection in their implementation.” </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking in the Lok Sabha on 20.8.2004, the Honourable Finance Minister said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>I think , one must be careful before branding somebody finally as a tax evader. There is a hierarchy of Tribunals and Courts and only when the last forum is exhausted, we come to a final conclusion; one can say that there is a final evasion of tax. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When <strong>TIOL </strong> was invited to Parliament to speak to the Standing Committee on Finance, I submitted to the Hon'ble MPs that a mere Show cause Notice does not make any one an offender and there should be some punishment for the officer who illegally and arbitrarily publishes the names of innocent persons as offenders – maybe the names of offending officers should also be published. There was an interesting discussion on this aspect in the Committee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also Have a look at our article <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=%205363" target="_blank">Lethal Libel</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ER-1 again amended </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government is burning up all our forests – the amount of paper they waste! The ER-1 is again amended. The form was last amended on 19 th April 2007 – a fairly long time indeed. Now get those new forms printed. This is effective from 1 st April 2008. So you can have the printing done by next month. This month's return can be filed in the old form. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1892" target="_blank">TIOL-DDT 116 - 17 05 2005 . </a></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" size="5"></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"><strong><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"><strong><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"><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"><strong><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"><strong><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"><strong><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"><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></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></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>Advance given to builder - no contract - interest taxable; Such interest is not capital receipt; expenditure incurred for earning interest deductible; Staff loans not for earning interest income, but to grant a benefit, interest not taxable : ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE appeal involved two issues. The first issue is whether the sum of Rs. 1.45 crore received by the assessee on settlement of its claim with Pure Drinks Ltd. ( PDL ) on account of breach of terms of the MOU dated 1.2.1995 was a capital receipt, to be set off against the expenses incurred by the assessee before the commencement of business? The alternative question was whether, even if the impugned amount was to be taxed under the residuary head, the assessee was entitled to deduct interest and other expenditure incurred for earning this income? The second issue was whether, interest on loan given to employees was chargeable to tax under the residuary head. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the assessment order, it is inter-alia mentioned that the assessee company was incorporated on 22.10.1991 and it acquired rights in residential as well as flatted factory under DCM Green Area Scheme and DCM Techno Plaza Scheme for a consideration of Rs.251,17,17,965 /-. These rights were shown as such in the opening and closing stocks. There has been no purchase or sale of any right other than the ones mentioned above till this year. Therefore, in the past it was held that the business of the assessee had not commenced and this position was accepted by the assessee. </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>Central Excise – valuation – captive consumption – When independent factory sale price is available, that should be the basis for determining value of captively consumed goods : SC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed that the assessable value of the captively consumed grey yarn would be on the basis of the price at which the grey yarn was sold by the assessee to unrelated buyers in wholesale at the factory gate. The assessee had produced a number of invoices showing the sale to such independent buyers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue has not been able to point out any material on the record to come to a conclusion other than the one arrived at by the Tribunal. <strong><font color="#FF6633">The finding recorded by the Tribunal is a finding of fact which cannot be interfered with. </font></strong></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>
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