TIOL-DDT 852 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 852 </font><br>
25.04.2008 <br>
Friday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Delhi Service Tax Commissionerate – back into illegal publication of names – Disobedience
of law right under the nose of the Board ? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
was just four days ago that we applauded the Delhi Service Tax Commissionerate
for following the law in restraining from publication of names of the alleged
offenders. – See <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7176" target="_blank">DDT
846 21.04.2008</a> . But four days seems to be too much for the publicity
hungry Commissionerate to hold itself. The Commissionerate
apparently seems to have scant respect for the Board and the Laws churned
out by it is unfortunately superior to the Board. You can understand a Commissionerate
situated thousands of miles away from Delhi flouting the laws of the land,
maybe out of ignorance, but here is a Commissionerate located in Delhi ,
having territorial jurisdiction even over the Board office blatantly violating
the Board instructions and the laws of the land! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the Service Tax (Publication of Names) Rules, 2008, the following procedure has to be followed for publication of names of offenders:- </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Publication of names and other particulars - Subject to the provisions of
these rules, the Central Government may cause to be published in the Official
Gazette, print media, electronic media or by any other means, the names
and particulars of the following persons, namely:- </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Persons, who have been adjudged under the provisions of the Chapter, to have contravened any of the provisions of the Chapter or the rules made thereunder, with intent to evade payment of service tax; </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Persons who have been adjudged to pay but has not paid any amount, payable under the provisions of section 73A of the Chapter: </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Initiation of action and publication.-(1) If the Commissioner of Central Excise, having jurisdiction over such person, is satisfied that it is necessary or expedient in the public interest to publish the names and any other particulars as he deems fit, he shall after due verification of the facts, and the circumstances of the case, forward a proposal in the Annexure appended to these rules for such publication to the jurisdictional Chief Commissioner. </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The jurisdictional Chief Commissioner, on receipt of proposal referred to in sub-rule (1), shall within fifteen days from the receipt of such proposal, examine it and if he is satisfied that circumstance of the case justify such publication, may make a recommendation to the Board accordingly. </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) On receipt of the recommendation by the Board, or on its own, the Central Government may cause publication of the name and other particulars in a manner as specified in rule 3. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So
the power to publish the names is with the Central Government and not even
the Board. But the Delhi Service Tax Commissionerate seems to be above Board
and Government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Its website
yesterday carried news as follows: </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>In the News </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Title: Six Show Cause Notices Demanding Service Tax of 29 Crores issued to KPMG Group Entities </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Date : 24/04/2008 10:42:08 </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Massage:</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (sic! What he means is message) </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">KPMG group of Entities have been issued Show Cause Notices demanding Service Tax amounting to Rs.29 Crores. The details of Show Cause Notices issued are as under: - </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">KPMG (Partnership firm) 12.63 Crores </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">KPMG Advisory Services (P) Ltd. 2.59 Crores </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">KPMG (I) Pvt. Ltd. 3.77 Crores </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">KPMG Resource Centre (P) Ltd. 1.66 Crores </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">BSR and Co. 8.9 Crores </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">BSR and Associates 0.10 Crores </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">These Show Cause Notices have been issued to them on the following issues: - </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On Foreign remittances made to entities abroad in respect of professional services received by them. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On “Out of Pocket Expenses” billed
by them. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On services wrongly claimed as Export. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On Regulatory Services. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On Membership Fee during the course of investigation. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>KPMG
group of entities have already deposited Service Tax amounting to Rs 4.38
Crores and interest of Rs 42 Lacs. This amount has been paid primarily
for the period since 16.6.2005 to 31.03.2007 when an explanation was added
to Section 65(105) of Finance Act, 1994 making the rendering of such services
specifically taxable. </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the Department has alleged that services provided in India by Foreign service providers were always taxable and liability to pay Service Tax was on service receiver since 16.8.2002 when Rule 2 of Service Tax Rule was amended. </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
addition to taxability of services provided from abroad, the Department
has also alleged non payment of Service Tax on “Out of Pocket Expenses” billed,
non payment of Service Tax on Services wrongly claimed as export, non payment
of Service Tax on regulatory services, non payment of Service Tax on membership
fee.</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This you can access at <a href="http://servicetaxdelhi.gov.in/readnews.asp?nid=105">http://servicetaxdelhi.gov.in/readnews.asp?nid=105 </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And there was news at <a href="http://servicetaxdelhi.gov.in/readnews.asp?nid=106">http://servicetaxdelhi.gov.in/readnews.asp?nid=106 </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Title : 129 Crores Demand Issued Against Microsoft India </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Date
: 24/04/2008 11:44:37 </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Massage : (sic) </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Service Tax Commissionerate Delhi, issued a Show Cause cum Demand Notice of Rs 129.32 Cores against M/s Microsoft Corporation ( India ) Pvt. Ltd., Gurgaon . The notice has been issued to the company for nonpayment of service tax on various services provided by them, which were detected during the audit of the company. The demands pertains to following issues </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
The marketing and user support service Rs 126.75
Crores </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
Maintenance or repair service Rs 1.28
Crores </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
Convention Services Rs
1.25 Crores </font></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
Royalty paid to Microsoft Corporation USA Rs. 3,20,896/ </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The main demand related to the payments received by Microsoft India for providing the services of marketing and user support in India for which the payments were received from the Microsoft Operations Singapore. The department has alleged that these services are consumed in India as the market and the users are located in India and therefore, do not qualify as export. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Delhi Commissionerate
might have made good cases against Microsoft and KPMG, but did it get the
permission to
publish their names in the official website? As per the law, the names can
be published only after adjudication and appeal, but obviously the Delhi
Service Tax Commissionerate is not bothered about such niceties of law. Now
who will be responsible if Microsoft or KPMG sue the Department for vilification? </font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#000000">Commissionerates
who have no respect for LAW cannot expect their assessees to have that! </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Entitlement of DEPB prior to withdrawing the benefit under the Scheme </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Public Notice No. 130 dated 27.3.2008 (as amended from time to time), PN No. 137 dated 3.4.2008 DEPB Benefits were withdrawn against export of primary steel items, Cement and Rice with immediate effect. Clarification was sought by Trade and Industry and the Regional Authorities of DGFT as to whether exports prior to the date of withdrawal / suspension of DEPB benefits against the export products would also be denied the benefit of DEPB Scheme. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT clarifies that exports made prior to the date of withdrawal / suspension of DEPB Rates for specific products shall be entitled for DEPB benefit at the rate prevalent on the date of shipment / export. </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=46&filename=notification/dgft/2008/dgft08cir004.htm" target="_blank">POLICY CIRCULAR NO. 4 /( RE-08)/2004-2009 Dated: April 24, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEPB – Casein not eligible </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Public Notice No. 4/ 17.4.2008 reads as, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Skimmed Milk Product ( SMP ), Casein and any other Milk Product shall not be entitled for DEPB rate under Sl. No. 22C and 22D of the Miscellaneous Product. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is now amended as, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Skimmed Milk Product ( SMP ), Casein and any other Milk Product under Sl. No. 22C and 22D of the Miscellaneous Product (Product Code 90) and</strong> <strong>“Casein all types” appearing at Sl. No. 571 of the Product Group ‘Chemicals' (Product Code 62) shall not be entitled for DEPB Benefit. </strong></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=47&filename=notification/dgft/2008/corrigendum_pn04.htm" target="_blank">CORRIGENDUM TO Public Notice No. 4 Dated: April 17, 2008 dated April 23, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New ICD notified </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has notified, Patli , Gurgaon in Haryana as an ICD for Unloading of imported goods and loading of export goods </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_038.htm" target="_blank">Notification No. 38/2008- Cus ., ( N.T. ), Dated: April 24, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Apparel – Import from Sri Lanka – exemption </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification 26/2000-Customs, DATED : March 1, 2000 , allows exemption to imports from Sri Lanka . In respect of articles of apparel and clothing accessories, there was a restriction that the exemption shall apply to a quantity of imports, not exceeding 8 million pieces, computed from the 1st day of January, in a calendar year, <strong>all of which shall be manufactured from fabrics of Indian origin exported from India to Sri Lanka . </strong>Now this Indian origin condition is deleted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was also a restriction that the imports shall be made only through the ports of Mumbai, Nhava Sheva , Chennai, Kolkata or Cochin , or the inland container depots of Tuglakabad or Bangalore . This restriction is now removed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further now the full exemption will be allowed only for a total quantity of 3 million pieces. </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_022.htm" target="_blank">Notification No. 52/2008- Cus , Dated: April 22, 2008 </a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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 color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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></font></strong></font></strong></font></strong></font></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden <font color="#FF6633" size="5">tiol</font> – Monday's
cases </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>Sale of diamonds to non existing customers – reopening of assessments – High Court not to interfere: Allahabad HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The formation of belief by the assessing officer is within the realm of subjective satisfaction and at the stage of issuance of notice the only question is whether there was relevant material upon which a reasonable person could have formed requisite belief or not. Beyond this there is no scope of judicial review in such matters. Remedy under Article 226 of the Constitution of India is discretionary and even if there is some irregularity or illegality, the Court is not bound to exercise discretion at the instance of the petitioner if it is satisfied that it is not otherwise a fit case warranting exercise of discretionary jurisdiction under Article 226 of the Constitution. </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>Non-filing of Cross Objections proves costly as plea during hearing is not entertained by Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE
case is associated with the well-known Orissa Extrusions [ </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-240-SC-CX.htm">2002-TIOL-240-SC-CX </a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">]
decision wherein the Apex Court had held that in the absence of a bar in
the notification granting exemption, the credit of duty paid on inputs could
be availed. This alleged flaw pointed out by the Apex Court in the
matter of construction of an exemption notification vis-à-vis the
provisions of rule 57C of the CER , 1944 led the Central government, as one
school of thought says, to insertion of an Explanation in rule 3 of the Cenvat
Credit Rules. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revenue has a reason to smile - RPG Enterprises Ltd loses Rs 5 Cr Service Tax case – Tribunal upholds demand by holding that they are Management Consultants </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
two-year wait has brought cheer for Revenue. We had reported the Tribunal
decision [ </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-385-CESTAT-MUM.htm"><strong>2006-TIOL-385-CESTAT-MUM</strong></a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> ]
wherein the Bench had opined that the company had not made a prima facie
case for total waiver & hence directed them to make a pre-deposit of
Rs.2 crores . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The short facts of the “loaded” case need a mention. It was the contention of the Revenue that the company is rendering “management consultancy services” to its group companies & recovering fees hence the same was chargeable to Service Tax. Accordingly a demand of Service Tax of Rs.4.89 crores was made for the period 1998-1999 to 2001-2002. The demand was upheld & equivalent penalty, interest etc. was imposed by the Deputy Commissioner whose order was also upheld by the Commissioner (Appeals). </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend. </font></p>
<p align="justify"><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">vijaywrite@taxindiaonline.com </a></font></p>
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