TIOL-DDT 818 · the untouched capture
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<!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=utf-8"> </head> <body bgcolor="#FFFFFF"> <p><font face="Verdana, Arial, Helvetica, sans-serif" size="3"><strong><font color="#663399">TIOL-DDT 818 </font></strong><strong></strong></font></p> <p align="center"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"> Renting to Central Excise - no Service Tax?</font></strong></p> <p><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><strong><br/>05.03.2008 <br/>Wednesday </strong></font></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The CBEC has clarified to the field that </font></p> <blockquote><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">Renting of immovable property” has been brought under tax net w.e.f . 1/06/2007 . This service includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or in furtherance of business or commerce. If the rented immovable property is being used in furtherance of business, it is liable to services tax. It does not matter whether the Government or private parties rent it. Hiring Central Excise office does not fall under furtherance of business and commerce as it is an activity of performing statutory functions by a public authority and not an activity of business or commerce. Therefore, it is not liable to pay service tax under taxable service category of “renting of immovable property” </font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">But the Act stipulates </font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">( 90a ) "renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include - </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">( i ) renting of immovable property by a religious body or to a religious body; or </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">(ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Explanation. - For the purposes of this clause, " <strong>for use in the course or furtherance of business or commerce </strong>" includes use of immovable property as factories, <strong>office </strong>buildings, warehouses, theatres, exhibition halls and multiple-use buildings; </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">So, as per the explanation, office is included and there is nothing statutory about it. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Now who will collect Service Tax from the Service Tax Department? Can we allege that the Central Excise Commissioner is abetting evasion of Service Tax? </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/renting.htm" target="_blank">CBEC letter F. No. 137/280/2007- CX -4 dated 17 th December 2007 </a></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Tariff Value of Poppy seeds and brass scrap increased- No change in other items </strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The CBEC has increased the Tariff Value of poppy seeds from 5046 Dollars to 5069 Dollars and decreased the value of brass scrap from 4249 dollars to 4276 dollars. There is no change in the Tariff Value of other products. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2008/cnt08_012.htm" target="_blank">NOTIFICATION NO. 12/2008- Cus . ,( N.T. ), Dated: March 03, 2008 </a></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Anti dumping duty on phenol - confirmed </strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The provisional Anti dumping duty on phenol originating in, or exported from, the United States of America, Korea RP and Taiwan, imposed by Notification No. 105/2007-CUSTOMS, dated the 19 th September, 2007 is now final. Definitive anti dumping duty is imposed on the product with effect from the date of provisional anti dumping that is 19.09.2007. Consequently Notification No. 105/2007 is rescinded. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_030.htm" target="_blank">NOTIFICATION NO. 30</a><strong> and </strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_031.htm" target="_blank">31/2008- Cus ., Dated: March 3, 2008</a></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>DGFT amends SION </strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The DGFT has amended the Standard Input Output Norms ( SION ) for certain engineering products. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2007/dgft07pn119.htm" target="_blank">DGFT PN No. 119 (RE: 2008)/2004-2009, Dated: February 27, 2008 </a></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Bonafide default in Export Obligation – DGFT amends HOP </strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">As per para 4.28 of the Hand Book Of Procedure (HOP) of the Foreign Trade Policy, </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Cases of bonafide default in fulfillment of EO may be regularised by RA as under: </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">( i ) If EO is fulfilled in terms of value, but there is a shortfall in terms of quantity, the Authorisation holder shall, for regularisation, pay:- </font></p> <p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">a) to customs authority, customs duty on unutilised value of imported material along with interest as notified; and xxxx </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Now this is changed to </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">a) to customs authorities, customs duty on unutilized value of imported / <strong>indigenously </strong>procured material along with interest as notified; and </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2007/dgft07pn120.htm" target="_blank">DGFT PN No. 120 (RE: 2008)/2004-2009, Dated: February 29, 2008 </a></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Prohibition of export of rice - relaxation </strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The prohibition imposed on export of non-basmati rice shall not be applicable to export of 4 ,50,000 MT of non-basmati rice to Bangladesh (with 1,00,000 MT each through STC , MMTC , PEC , NAFED and 50,000 MT through the West Bengal Essential Commodities Supply Corporation Limited.”) </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2007/dgft07pn121.htm" target="_blank">DGFT PN No. 121 (RE: 2008)/2004-2009</a><strong> and</strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2007/dgft07not081.htm" target="_blank"> Notification No. 81, Dated: February 29, 2008 </a></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Advance Authorisation – Return of original TR6 Challan – DGFT clarifies </strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">As an evidence of payment of the Customs Duty and interest for the shortfall in export obligation, the authorization holder is required to submit the proof of having deposited the required amount before the Customs Authority at the Port of Import . One of the documentary evidence is TR 6 Chalan duly authenticated by the Customs Authority having endorsement of Customs Duty and interest paid against a specific advance authorization Number and date. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Representations have been received from trade and industry that the Regional Authorities are insisting for the original copy of the TR 6 Chalan for the purpose of regularization of the case and issuance of EODC . Since only one copy of TR 6 Challan is being issued to the exporter and the same in original, is also required to avail the CENVAT credit facility by the manufacturer, it would be difficult for the advance authorization holders to furnish the original copy to the Regional Authorities. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Now DGFT has decided to inform all concerned that for the purpose of regularization of shortfall in export obligation, the Regional Authority may accept an attested copy of the TR 6 Challan as an evidence of payment of the applicable duty and original copy of the TR 6 Challan may not be insisted for, unless the same is required for the reasons to be noted in record. Once EODC is issued, a copy of the Challan may be forwarded along with the EODC to the Customs Authority at the Port of Registration with specific endorsement for cross verification at their end before allowing redemption of Bank Guarantee (BG) / Legal Undertaking ( LUT ) by the Customs Authority. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2007/dgft07cir031.htm" target="_blank">DGFT Circular No. 31 (RE: 07)/2004-2009, Dated: February 29, 2008 </a></font></p> <p align="center"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#006600">Jurispruden</font> <font color="#ff6633" size="5">tiol </font> <font color="#006600">– Tomorrow ' s cases </font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b><strong><b><img align="left" alt="Legal Corner Icon" border="0" height="160" hspace="5" src="https://taxindiaonline.com/RC2/image/stories/ddt_31.gif" width="191"/></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></strong></font></p> <p align="justify"><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Income Tax </strong></font></p> <p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><font color="#ff6633">Computation of gross profits - for allowing deduction under section 80HHC , depreciation has to be allowed : ITAT </font></font></strong></p> <p align="justify"><strong><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">THE</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"></font></strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"> issue decided in this appeal before ITAT relates to allowance of depreciation which was not claimed by the assessee in assessment years under consideration. The facts of the case stated in brief are that the assessee company was incorporated on 30.03.1993 and commenced its business on 26 April 1993. For the assessment years 1994-95 to 1997-98, the assessee did not claim deduction on account of depreciation allowance. A search and seizure operation was carried on 18.6.2003. During the course of assessment proceedings u/s 153 A , the Assessing Officer found that in the computation of taxable income the assessee added back the depreciation as per Companies Act to the net profit for the purpose of computing gross total income. The assessee did not claim any depreciation allowable as per Income-tax Act. Thus the profits shown by the assessee were not the actual profits of the assessee company. The assessee company earned profits by using its assets but did not claim depreciation with the intention to claim higher deduction under Chapter VI-A of the Act. The Assessing Officer, therefore, worked out depreciation allowable to the assessee. He recomputed WDV and depreciation to be deducted for the purpose of determination of gross total income for assessment years 1998-99 to 2004-05. Accordingly, reassessment under section 153A was made for assessment years 1998-99 to 2003-04 and assessment under section 143(3) was made for assessment year 2004-05. </font></p> <p align="justify"><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Central Excise </strong></font></p> <p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><font color="#ff6633">Admitted that Compounded Levy Scheme did not legally warrant a manufacturer from showing duty element in sales bills issued but it does not absolve him from furnishing evidence that amount was not recovered – Refund disallowed on ground of unjust enrichment by Tribunal </font></font></strong></p> <p align="justify"><strong><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">THE</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"></font></strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"> appellants were working under the Compounded Levy Scheme during the period 1.4.1999 to 31.3.2000. As per provisions of the Compounded Levy Scheme their Annual Production Capacity was determined and duty liability fixed. This duty liability was challenged by the appellant & during the period when their appeal was pending, the appellant paid duty as per his own computation & later when the same was objected by the department, upon insistence he started paying a differential duty Rs 50,000/- per month. Ultimately their appeal was allowed by the CESTAT & the Commissioner was asked to re-fix their annual production capacity after taking into consideration the relevant factors and after hearing the appellants. After hearing the appellants, the Commissioner re-determined the annual production & the duty liability & which worked out to Rs.60 ,597 /- per month. In totality, since the assessee had paid in excess, they filed a refund claim in respect of Rs.2 ,73,108 /-. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The refund claim was sanctioned by the lower authority but on Revenue's appeal the order of sanctioning refund was set aside on grounds of unjust enrichment by the Commissioner (Appeals). </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Before the Tribunal, the appellant contended that during the compounded levy scheme the law did not require them to show excise duty separately in the invoice and, therefore, the provisions of Section 12B of the Central Excise Act, 1944 are not applicable to them; it was for the Revenue to come out with the evidence to show that the duty has been recovered from the customers and on their failure to do so the refund cannot be denied. They also submitted a certificate from the Chartered Accountant which stated that no excise duty had been collected in the sales bills raised by them nor there was any agreement between the seller and the buyer having any understanding for payment and charging excise duty separately in the sales bills. Moreover, since the differential duty was deposited subsequently the question of recovering the same from the customers does not arise. </font></p> <p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Until tomorrow with more DDT </font></p> <p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Have a nice day. </font></p> <p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Mail your comments to</font><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2"></font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>