TIOL-DDT 1993
30.11.2012
Friday

BY Notification No 28/2012-CX., (N.T.), Dated: June 20, 2012, a new Rule 5B has been inserted in the CENVAT Credit Rules, 2004 as under:

5B. Refund of CENVAT credit to service providers providing services taxed on reverse charge basis. - A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette.

Even after five months of inserting the Rule 5B, the Notification prescribing the procedure, safeguards, conditions and limitations for granting refund are not notified. Service Tax assessees who are paying only 50% of the tax under the reverse charge mechanism may have accumulated CENVAT credit, which they are promised as refund but which they cannot claim as there is no procedure prescribed.

Has the Board forgotten about this Rule?

DDT had raised this issue in DDT 1970 - 26.10.2012. Will the Board do something?

Remand - Adjudicating Authority Directed to Supply Relied Upon Documents by SC

IN a recent case, where the CESTAT remanded the matter to the Adjudicating Authority to re-quantify the duty based on the prices quoted by a third party, the assessee went in appeal to the Supreme Court with a prayer that the Adjudicating Authority may be directed to supply copies of all the documents which are likely to be relied upon for the purpose of fresh adjudication in terms of the impugned order, to enable the appellants to meet revenue's case.

The Supreme Court found the prayer reasonable and directed the Adjudicating Authority to supply all the documents, on which it proposes to place reliance, to the appellants. It will be open to the appellants to furnish their explanation thereon. They would also be permitted to lead additional evidence, in support of their claim.

It is surprising that an assessee has to go the Apex Court of the Country to get the relied upon documents.

Why is the Department so shy of giving the documents to the assessees? In most cases, it is very difficult to get those documents from the officers. The assessees are asked to make several visits to the offices and beg for the records, often without success.

Please see the Supreme Court Order. 2012-TIOL-113-SC-CUS

Delhi High Court Dismisses Challenge to Section 8(1) (d) and (e) of RTI Act

THE Petitioner is Reliance Industries and they have filed a writ in the Delhi High Court seeking a declaration that Sections 8(1)(d) and 8(1)(e) of the Right to Information (RTI) Act, 2005 as ultra vires, unconstitutional and violative of Article 14 of the Constitution of India.

Section 8 of the RTI Act details the information, which is exempt from disclosure. Clauses (d) and (e) of Sub-section (1) thereof exempts from disclosure:

(i) Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party; and,

(ii) Information available to a person in his fiduciary relationship.

However, both the above exemptions are subject to:

“unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information”.

The grouse of the petitioner is more against the proviso than the main sub-sections.

It is contended, that the 'proviso' virtually takes away the exemption provided for in Sections 8(1)(d) and 8(1)(e) and is too widely worded leaving unguided discretion in the Competent Authority to override the exemption by citing public interest, without defining “larger public interest” and is thus arbitrary and violative of Article 14 of the Constitution of India. It is alternatively contended that the said 'proviso' may be required to be “read down”.

The High Court observed, “The 'proviso' to Sections 8(1)(d) and 8(1)(e) which carves out an exception to the information exempt from disclosure, is one of the facets of such harmonization of conflicting interest. While information including commercial confidence, trade secrets or intellectual property or made available to Public Authority in fiduciary relation, has in recognition of the principle of “preservation of confidentiality of sensitive information” been exempted from disclosure, but such exemption is not available when “larger public interest warrants the disclosure of such information”. It thus cannot be said that the proviso taketh away what has been given under Sections 8(1)(d) and 8(1)(e).”

And rejected the writ petition.

Please see the Delhi High Court Order. 2012-TIOL-955-HC-DEL-RTI

Enforcement Directorate (ED) Seizes Property of 103 Persons Worth Rs. 2406.28 Lacs under FEMA in Last Two Years

ENFORCEMENT Directorate of the Ministry of Finance has registered 1993 cases under the provisions of Foreign Exchange Management Act, 1999 (FEMA) in the last two years and property of 103 persons valued at Rs. 2406.28 lacs was seized, during investigation.

Similarly, Enforcement Directorate has registered 396 cases under the Prevention of Money Laundering Act, 2002 (PMLA) and during investigation, property of 58 persons valued at Rs. 56965.32 lacs was attached in the same period.

This was stated by the Minister of State for Finance, S.S. Palanimanickam in a written reply to a question in the Rajya Sabha yesterday. The Minister also said that the names/details of individuals cannot be disclosed by the Enforcement Directorate.

Guidelines for monitoring and expeditious disposal of disciplinary proceeding cases - DOPT Guidelines

DEPARTMENT of Personnel & Training has issued fresh guidelines for monitoring and expeditious disposal of disciplinary proceedings of Government servants.

There are a number of instances where the Courts have set aside the order of penalty due to inordinate delay in initiating action. Therefore, it has to be ensured that disciplinary proceedings are initiated without undue delay.

If vigilance angle is involved in a complaint, the case should be referred to CVC for their first stage advice within one month from the date of receipt of investigation report. If vigilance angle is not involved, case should be put up to the disciplinary authority for taking decision to initiate disciplinary action for major or minor penalty against delinquent officer.

For effective monitoring of the disciplinary proceedings cases, the Vigilance set up must be strengthened in every Ministry/Department.

DOPT wants all the Ministries/Departments to follow the guidelines in letter and spirit so that disciplinary proceedings are concluded expeditiously.

DOPT No. 425/04/2012-AVD-IV(A); Dated November 29 2012

DDT Cartoon

Jurisprudentiol - Monday's cases

Central Excise

Classification of ‘softserve' served at restaurants/outlets commonly and popularly known as McDonalds - to be classified under tariff sub-heading 2105.00 as 'ice-cream'.:SC

THE short question of law for consideration in these appeals, filed by the revenue, under Section 35L of the Central Excise Act, 1944 is whether ‘soft serve' served at the restaurants/outlets commonly and popularly known as McDonalds, is classifiable under heading 21.05 (as claimed by the revenue) or under heading 04.04 or 2108.91 (as claimed by the assessee) of the Central Excise and Tariff Act.

In the absence of a technical or scientific meaning or definition of the term “ice-cream” or ‘soft serve', the Tribunal should have examined the issue at hand on the touchstone of the common parlance test.

Held: ‘softserve' is to be classified as “ice-cream” under heading 21.05 of the Act.

Income Tax

Whether when subsidiary receives share application money from non-resident parent in form of cash and capital goods and also imports certain consumables, waiver of payment obligations amounts to income receipt u/s 41(1) even if assessee transfers entire sum to capital reserve account - NO: HC

THE issues before the Bench are - Whether when the subsidiary receives share application money from the non-resident parent in the form of cash and capital goods and also imports certain consumables, waiver of payment obligations amounts to income receipt u/s 41(1) even if the assessee transfers the entire amount to the capital reserve account and Whether if the assessee claims depreciation on the capital goods, it is to be added back if the sum is treated as capital receipt. And the verdict partly favours the assessee.

Service Tax & Central Excise

Appropriation of amounts towards alleged Service tax dues said to be payable by petitioner from amount due to petitioner as export duty rebate in respect of manufactured goods cannot be sustained in eye of law when fact is that their appeals against Service Tax dues were pending before CESTAT: HC

THE appropriation of the amounts, to the extent of Rs.18,32,782/-, towards the alleged service tax dues said to be payable by the petitioner, from the amount of Rs.47,00,094/- said to be due to the petitioner as export duty rebate, cannot be sustained in the eye of law. The petitioner ought to have been given a reasonable opportunity of hearing before the second respondent had appropriated the said amount towards the alleged excise duty liability of the petitioner. Even though an appeal had been preferred by the petitioner before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, in Appeal No.ST/217/2010, along with the stay petition, the second respondent had appropriated the amount of Rs.18,32,782/- from the export duty rebate, which was refundable to the petitioner, arbitrarily.

See our columns Monday for the judgements

Until Monday with more DDT

Have a Nice weekend

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