News Update

Cus - Delay in NOC by FSSAI - Demurrage charges - Transportation of imported articles from the custodian warehouse to a public warehouse is not prohibited under the provisions of 1962 Act: HCCus - Refund of TED - Issue no longer res integra - Respondent is directed to grant credit of the amount of duty paid in the electronic credit register: HCGST - Not dropping google pin does not appear to be deliberate disobedience - Petitioner has given sufficient explanation - Order of lower court set aside: HCStrict Interpretation in Taxing Statutes - To what extent?I-T - Public functionary can be held liable for malicious acts in name of excercise of power : HCGovt issues Advisory against ads of betting on TV & Digital MediaI-T - If figures of sales and purchase were not doubted by AO, he cannot make additions on presumption of bogus purchases: HCScindia inaugurates direct flights between Bilaspur to IndoreI-T - In absence of enabling provisions, CPC Bangalore lacks jurisdiction to make any disallowance in order u/s 143(1): ITATWith tech developments, affordability of broadcasting services can be further improved: DoT SecretaryI-T - Additions framed on account of alleged cash receipts are invalid where no witnesses to such payments are available to testify & are based solely on statements: ITATRetail prices of edible oils expected to come down further: GovtI-T - Once income of trust is applied for its objects and stands maintained in seperate books of account, trust is eligible to claim exemption u/s 11: ITATImport duty on Platinum, Palladium & rhodium revised to 1.5% for specific useI-T - Rejection of valuation of shares as per DCF method is without any evidence on record and can not be upheld : ITATMoF notifies 7.1% interest rate for GPF w.e.f Oct 1, 2022VAT - Entry tax can be imposed on basis of stock transfer price instead of ELP: HCAnti-dumping duty on ‘Fishing Net’: DGTR initiates sunrise investigationCX - Restriction imposed under Rule 9(1)(b) has no application so far as to deny credit availed by appellant on basis of supplementary invoices issued by conversion agents in absence of sale of goods by them to appellant: CESTATMumbai Airport Customs nabs pax with 980 gm cocaine + Delhi Customs recovers drugs worth Rs 9 Cr from Liberian paxCX - If consolidated cenvat credit balance has been maintained more than the cenvat credit reversed, in such case appellant is not liable to interest post 17.3.2012: CESTATTruss Govt opts for volte-face on tax-cut for richST - Any issue which is not flowing from SCN being beyond SCN, need not be addressed by authority, Adjudicating Authority has correctly passed order addressing the only issue which was raised in SCN: CESTATJapan hoots siren as North Korea fires intermediate range ballistic missile over part of Hokkaido islandST - Composite works contract are a separate species of contracts known to trade and cannot be charged to service tax under any other head: CESTATTrump files USD 475 mn defamation suit against CNNTo slim down monarchy, Danish Queen revokes royal titles of four of her grandchildrenUS military kills Islamist group leader in Somali air strikeUS to further limit chip exports to ChinaDeath count rises to 90 in Ian-ravaged FloridaArchaeologists find 44 gold coins of Byzantine Empire during 7th CenturyDiageo chief expresses concern over Scottish dwindling water reservesPrize money for PM's Excellence Awards will be Rs 20 lakh in 2022: MoS
Service Tax from 1.7.2012 - Government hastily issues Order to Rectify Himalayan Blunder




DDT Report on Friday (DDT 1880 15.06.2012) that Service Tax cannot be levied with effect from 01.07.2012 sent shock waves so intense that the Government came out with quick fire fighting and issued an Order by Friday evening to rectify the massive blunder.

A little recap: Up to 30.06.2012, the charging Section is Section 66 of the Finance Act, 1994 according to which service tax is levied at the rate of 12% on all taxable services. With effect from 01.07.0212, Section 66 will no longer be in force and a new charging section 66B will take its place.

Section 68 stipulates that service tax is payable by the service providers at the rate specified under Section 66 in such manner as may be prescribed. So, with effect from 01.07.2012, the assessees are required to pay service tax at the rate specified under Section 66, but there would be no Section 66 in the Statute. AND SO, THEY NEED NOT PAY ANY TAX.

Now, by order dated 15.06.2012, the Government has substituted in Section 68, the figures “66”, with the figures and letter “66B”.

But can they do it?

Section 95(1)(I) of the Finance Act, 1994 (Service Tax), reads as,

If any difficulty arises in giving effect to section 143 of the Finance Act, 2012, in so far as it relates to insertion of sections 65B, 66B, 66C, 66D, 66E and section 66F in Chapter V of the Finance Act, 1994, the Central Government may, by order published in the Official Gazette, which is not inconsistent with the provisions of this Chapter, make such provisions, as may be necessary or expedient for the purpose of removing the difficulty from such date, which shall include the power to give retrospective effect from a date not earlier than the date of coming into force of the Finance Act, 2012

Now, the Government order says, ¶difficulties have arisen in giving effect to the provisions of section 143 of the Finance Act, 2012 (23 of 2012), in so far as it relates to insertion of section 66B in Chapter V of the Finance Act, 1994¶

What difficulties? It is an impossibility!.

If there is a difficulty, the Government can remove it, but can they amend an Act passed by Parliament? If the Parliament wanted the tax to be levied at a rate prescribed in one section of the Act, can a Babu in the North Block amend it to read as another Section in the name of removing a difficulty? If that could be so, they may as well make Parliament to pass a one line Act that there shall be levied a Service Tax at such rates and under such conditions at the whims and fancies of the Under Secretary working for the time being in the TRU Section of the CBEC in the Revenue Department of the Finance Ministry.

All Laws can be simplified and the Babus can legitimately usurp the powers and jurisdiction of the Parliament of India, for which they in any case have only scant respect. They may also add a proviso that the Supreme Court cannot poke its nose into the scholarly legislation brought out by the babus.

After all, if you want to administer taxes the way you want to, it is absolutely essential to keep the Parliament and the Supreme Court out of the way.

Dept. of Revenue Order No. 1/2012 in F. No. 334/1/2012 -TRU; Dated June 15 2012

Exemption to Export Promotion Schemes - Tondiarpet added

UNDER several exemption notifications pertaining to imports under the various promotional schemes, the imports are allowed only through certain ports and ICDs. Now Tondiarpet (TNPM), Chennai is added to the list. 31 Notifications are amended and the Board needs to be congratulated for amending all the notifications, which were required to be amended. This time they have a right list with them.

It was only recently by Notification No. 8/2012 - Cus NT dated 30.01.2012 that Tondiarpet was declared as an ICD. (Please see DDT 1785 - 31.01.2012). Then why did it take them five months to issue this notification?

Notification No. 40/2012 - Cus., Dated: June 14, 2012

Imports from China - Exemption

AS per Notification No. 38/96-Cus dated 23-7-1996, Goat skin, sheep skin horses, goats, sheep, wool, butter, common salt, raw silk, yak tail, yak hair, china clay, borax, szaibelyite and goat cashmere, when imported into India from China through Gunji in Pithoragarh district of Uttar Pradesh along the Gunji Pulan (Tibet) land route or through village Namgaya Shipkila in Kinnaur district of Himachal Pradesh along the Namgaya-Shipkila-Shipki Jui Jiub a land route, are exempted.

Now, Readymade Garments, Shoes, Quilt/Blankets, Carpets and Local Herbal Medicines are added to the list.

Notification No. 41/2012 - Cus., Dated: June 14, 2012

Tariff Value - Brass, Poppy Seeds, Gold and Silver

GOVERNMENT has decreased the tariff values of Brass Scrap (all grades) from USD 4270 to USD 4113 and has increased sharply the tariff value of poppy seeds from USD 3896 to 5611.

The Tariff Value of Gold is decreased from 531 to 524 USD per 10 grams and the tariff value of silver is increased from 899 to 938 per kilogram. Tariff value was fixed for gold and silver only recently by Notification No. 2/2012-Cus (NT) dated 13th January 2012.

There is no change in the tariff value of other items.

Notification No. 50/2012 - Cus.,(N.T.), Dated: June 15, 2012

Kaun Banega Rashtrapati? Pranab is too intelligent to be wasted there!

THERE shall be a council of ministers with the Prime minister at the head to aid and advice the president who shall, in the exercise of his functions, act in accordance with such advice.”

Article 74 of the constitution stipulates this role for the President of India. Why then all this cacophony about who should be the next occupant of Rashtrapati Bhavan?

Pranab Da is too intelligent to be wasted in the Rashtrapati Bhavan! Says who? None other than another Presidential aspirant PA Sangma!

The most active cabinet minister, the trouble-shooter for the UPA and a seasoned politician - are we going to lock him up in the Rashtrapati Bhavan? Why should a man who virtually runs the Government of India be kicked upstairs to sign a few papers and attend ceremonial functions? Cartoonist Abu had caricatured President FA Ahmad signing an ordinance in his bathtub! The only decision that the President takes is inviting the leader of the majority group to become Prime Minister. Do we need a top political master for that job?

Pranab Da will be leaving the North Block with many unfinished jobs like DTC, GST, cadre review for his officers. The successor will be inheriting an economy in shambles and a babudom that has only contempt for legislature and judiciary and perhaps the Minister.

For Dada, it is certainly an elevation - at least technically, he will be higher in rank to Dr. Manmohan Singh, whose boss he was thirty years ago! But for the UPA, it's a great loss - loss of their most capable minister!

Promotion of Additional Commissioners: The jinxed file of the promotion of Additional Commissioners to Commissioners in CBEC has been at last cleared by the PM. Now, it is doubtful if the present FM, who is all set to resign any moment, will be able to clear the posting orders. And if the new FM has to clear it, there may be further delay.

Service Tax Amendment of Section 68 on a hurry: There is perhaps logic in why the CBEC was frantic in issuing the order amending Section 68 of the Finance Act, 1994. It would have been difficult to convince a new Finance Minister that there was a difficulty, because they forgot to ask the Parliament to amend Section 68 and so they were issuing the order to remove the difficulty.

DDT Cartoon


Jurisprudentiol - Tuesday's cases

¶LegalService Tax

Appellant providing Compliance Services - Compliance with laws is part of responsibilities of management and such responsibility per se cannot bring it into ambit of words ¶in connection with management of any organisation¶ to tax such services: CESTAT

REVENUE was of the view that ¶Compliance Services¶ would fall within the definition of Management Consultancy Service and the appellants are liable to pay Service Tax. Accordingly, a Show Cause Notice was issued on 20.10.2006 demanding service tax of Rs. 3,53,05,405/-. This widely reported case was adjudicated by the Commissioner of Service Tax, Delhi, but naturally by confirming the demand and imposing penalties galore.

“...The adjudicating authority has chosen to ignore the Circular of CBEC. But we would not like to ignore the decisions of Tribunal quoted before us....”- CESTAT

Income Tax

Whether when assessee settles inter-corporate loan through journal entries and pays us balance sum by account payee cheque, such netting of accounts violates provisions of Sec 269T and thus attracts penalty u/s 271E - NO: High Court

ASSESSEE is a member of the National Stock Exchange and a Merchant Banker, registered with SEBI. Prior to 1st April 2002, the assessee had accepted a sum of Rs. 4,29,04,722/- as and by way of loan/inter-corporate deposit from ‘ITI' which was repayable during AY 2003-2004. Assessee transferred 1,99,300 shares of ‘R' held by it to ‘ITI' for an aggregate consideration of Rs. 4,28,99,325/. Instead of repaying the loan / inter-corporate deposit to ‘ITI' and receiving the sale price of the shares from ‘ITI', both the parties agreed that the amount payable / receivable be setoff in the respective books of account by making journal entries and pay the balance by account payee cheque. Accordingly, after setting off of the mutual claim through journal entries, the balance amount was paid by the assessee.

In view of the objections raised in the Audit Report regarding repayment of loan / inter-corporate deposit otherwise than by an account payee cheque or draft, AO issued show cause notice as to why action should not be taken for violating provisions of section 269T. AO imposed penalty under section 271E on the ground that the assessee had repaid the loan / inter-corporate deposit to the extent of Rs. 4,28,99,325/-in contravention of the provisions of Section 269T.

Service Tax

The express mention of one thing excludes all others - explicit mention in notification is ¶services provided for consumption within such Special Economic Zone¶ - as such, services consumed outside such zone will not be entitled for benefit of exemption notification No.4/2004-ST - Pre-deposit ordered of Rs. One Crore: CESTAT

THE appellant is engaged in rendering of services of Custom House Agent, Clearing and Forwarding Agent, Storage and Warehousing, Business Auxillary Service, Transport of goods by road and Business Support Service, etc. During the course of audit, it was noticed that the assessee was wrongly availing exemption of service tax under Notfn. No. 4/2004-ST dated 31/03/2004 for the CHA services rendered outside the unit situated at Special Economic Zone, Chennai. The demand notice was confirmed by the CCE, Thane-I along with penalty and interest and hence the appellant is before the CESTAT.

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

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