TIOL-DDT 967 · 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=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 967</font><br> 08.10.2008<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise - Registration – manufacturers of LNG can register different premises under one Commissioner</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 35/2001 – CENT dated 26.06.2001, “If the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But textile manufacturers having more than one premises within the same Commissionerate, can obtain a single registration.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now LNG manufacturers get this benefit – a rather enlarged one; LNG manufacturers having more than one premises within the jurisdiction of a Chief Commissioner can obtain a single registration with any of the Commissioners.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And this Commissioner will have jurisdiction over the entire jurisdiction of the Chief Commissioner. It has not been mentioned in the notification whether the jurisdiction is limited to LNG only.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Commissioner's jurisdiction is enlarged by an assessee applying for a registration with him. In any case the Tribunal has struck down all jurisdiction as can be seen in the CESTAT case we are reporting today.</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=30&filename=notification/excise/2008/exnt08_43.htm" target="_blank">Notification No. No.43/2008-Central Excise (N.T.)</a> <strong>and</strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/exnt08_44.htm" target="_blank">Notification No. No.44/2008-Central Excise Dated: October 06, 2008</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>External Commercial Borrowings ( ECB ) Policy – mining, exploration and refining added</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present, Infrastructure sector is defined in the ECB policy as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) sea port and airport (vi) industrial parks and (vii) urban infrastructure(water supply, sanitation and sewage projects);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now mining, exploration and refining are added</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/pressnotest_01.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Economic Affairs, Ministry of Finance Press Release dated October 07, 2008</font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on GTA – the CAG refuses to give up</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>“WHAT </strong> will the poor assessees do if the officers who are meant to be there to solve their problems themselves create confusion?” <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1458" target="_blank">DDT-92 -11.04. 2005</a></strong> <strong>, </strong>asked when the DGST issued the controversial circular on Service Tax on GTA and since then it had been litigation galore and for us in TIOL it was a crusade. The good Board put all litigation and confusion to rest when it issued a Section 37B order on 12.3.2007. In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5158" target="_blank">TIOL-DDT- 571-13.03.2007</a>, </strong>we offered <strong>A Bouquet with the choicest flowers to the Board. </strong>And remarked, “We are extremely happy to report that finally reason, law and good sense have prevailed over ridiculous <em>clarifications </em>. For nearly two years we have been running a virtual crusade on the issue of abatement for GTA. And finally the good Board has put the issue to rest, even clarifying that notices need not be issued pursuant to CAG's objections. The Board is meant to issue this kind of clarifications and we join thousands of harassed assessees all over the country in thanking the Board for the wise decision.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGST had withdrawn his circular, the Board had given a section 37B order but the AG Audit is adamant – they don't want to drop their point.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now in this year's report to Parliament, the CAG has come up with a new objection. Read his report:-</font></p> <blockquote> <p align="left"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Incorrect grant of exemption of service tax</font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">By a notification dated 3 December 2004, seventy five per cent value of the taxable service provided by a goods transport agency (GTA) to a customer is exempt from the levy of service tax, subject to the conditions that cenvat credit on inputs or capital goods used for providing such taxable service is not taken and exemption under notification dated 20 June 2003 is not availed of by the GTA.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board clarified on 27 July 2005 that the person availing of exemption under the notification dated 3 December 2004, will have to obtain a declaration from the GTA on the consignment note to the effect that the conditions of the aforesaid notification have been satisfied. The Board again examined the issue in consultation with the Ministry of Law and issued order on 12 March 2007 under section 37B reiterating that earlier instructions of 27 July 2005 must be followed.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Twelve assessees, in Vadodara II, Surat I, Vapi, Daman, Rajkot and Ahmedabad III commissionerates, engaged in the manufacture of various excisable goods, availed of the services of GTA. These assessees paid service tax after availing of exemption of seventy five per cent on the gross freight charges paid to the GTA during the period between January 2005 and March 2006. The declarations as required under the Board's instructions cited above for satisfying the conditions of the notifications, were not obtained in any of the consignment notes issued by the GTA. Exemption of service tax amounting to Rs. 2.42 crore availed of by the assessees was, therefore, incorrect.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">On this being pointed out (between March 2006 and January 2007), the department admitted the audit observations in two cases and intimated (September 2006) recovery of tax of Rs. 4.62 lakh in a case. In the other two cases, it stated (April and May 2007) that show cause notices for Rs. 25.43 lakh were being issued. In two cases relating to Vapi commissionerate , it contended that the exemption availed of was correct as the assessees had declared that credit had not been availed.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The reply is not tenable as declaration was required to be given on each consignment note by the GTA in terms of notification dated 3 December 2004 read with Board's clarification dated 27 July 2005 and hence exemption availed of was not correct. </strong> Reply of the Ministry has not been received (November 2007).</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this case of GTA , the Board had been outright bold and fair – even this had been clarified in a recent letter in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/service_tax_gta.htm" target="_blank">F.NO.137/154/2008- CX.4 Dated: August 21, 2008</a> </strong>in which it was clarified, “that the benefit of availment of abatement may also be extended in past cases if the taxpayers produce a general declaration from the GTA to the effect that neither credit on input or capital goods used for the provision of service has been taken nor the benefit of notification No. 12/2003-ST has been taken by them. We reported this in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7774">TIOL-DDT–937-26.08.2008</a> </strong>with the caption, <strong>Service tax on GTA – Ghost of abatement availability rears its head again only to be exorcised by the Board.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board, especially the present Chairman deserves all praise for this revolutionary decision, even against Audit Objection. By this single action, the Board had killed over 25000 useless Show Cause Notices, but the CAG seems to be determined to revive some of them.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I asked a colleague to do a story on the CAG report – He says, ” A perfect recipe for insanity”</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">– Friday's cases</font></strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font>Customs</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Spot recovery in DRI case – amount of Rs 70 Lakhs realised ordered to be released – bank guarantee also released - DRI has no legal or moral right to ask petitioner to furnish any BG in absence of any demand raised: High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS </strong> is a classic lesson for overzealous Revenue officers who intimidate their victims into making those huge ‘voluntary' payments at the initial stage of investigation and then take their own sweet time to finalise investigation and issue notice. The High Court first ordered release of the cash paid on a bank guarantee and later released even this bank guarantee.</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>Office premises on lease - assessee spends on repairs - such expenses are allowable revenue expenditure u/s 30(a)(i) - question of relegating assessee to claim depreciation u/s 32 does not arise: Delhi High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>assessee takes office premises on lease and spends considerable sum on repairs and furnishing it. The sum spent on repairs is claimed as deduction u/s 30(a)(i). However, the AO disallows it on the ground that only depreciation u/s 32 can be allowed as it cannot be treated as revenue expenditure. However, the CIT(A) does not agree with the AO as he finds no assets of enduring benefits were created. And the Tribunal agrees with this viewpoint.</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>Job work, procurement of raw material, packing of finished goods, documentation etc - not management consultant service: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellants are engaged in the manufacture of oil field equipment. M/s Varco Sara (India) Pvt. Limited is a sister concern of the appellant with some common Directors and under common management. The appellant has rendered services to the sister concern in various areas like procurement of raw materials, undertaking certain job work, permitting use of certain facilities of the appellant company like telephone, reception etc.</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>Duty paid 'Coconut Punch Chocolates' bought in bulk and repacked with manufactured 'Coffee Bite chocolates' and cleared on payment of duty under s.4A is entitled for Cenvat Credit: Tribunal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent procures “Coconut Punch Chocolates” on payment of duty in a large pack and <strong>repacks them with </strong> the “Coffee bite chocolates” which are manufactured by them and cleared the same on payment of duty under Section 4A of the Central Excise Act, 1944. Since the duty is paid on “Coconut Punch Chocolates” the respondent availed Cenvat Credit on the said “Coconut Punch Chocolates” treating them as inputs and utilized the said credit for payment of duty on final products.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Dussehra celebrates the triumph of good over evil – Happy Dussehra</strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Friday for the judgements</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Friday with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p> <p align="justify"><font color="#FF6633" 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> </body> </html>