TIOL-DDT 2086
16.04.2013
Tuesday
THE Larger Bench decision is out and the answer is an emphatic NO. Yes, NO third time cess.
A passage from the past -
DDT raised this issue in DDT-48 07.02.2005.
DDT 1318 - 15.03.2010 observed, ¶FOR setting up an EOU in India, you need two things. One is LOP from the Development Commissioner and the other is a Master's in Mathematics from a reputed University. The former is required for carrying the operations as EOU and the latter for computing the duties payable on DTA clearances and the CENVAT Credit against such clearances¶
In the Sarla Polyesters case 2008-TIOL-985-CESTAT-AHM, the CESTAT held that the third time cess is payable.
The High Court (2008-TIOL-516-HC-MUM-CX) set aside the CESTAT order and remanded the matter to the Tribunal.
On remand, as per the directions of the Bombay High Court, Tribunal served notice to the general public so that all the parties who are interested may also apply as interveners. After hearing the appellants, the interveners and the departmental representative, the CESTAT held, ¶What is required for the purpose of proviso to Section 3 of Central Excise Act, 1944 is to arrive at aggregate of customs duties and once we take a view that education cess is part of the customs duty and is an enhancement, the question of adding it again does not arise¶. (Sarla Performance Fibres Ltd v CCE, Vapi - 2010-TIOL-408-CESTAT-AHM)
Ten months after the tribunal order, Board issued a clarification that education cess had to be paid a third time. (Please see DDT 1584 - 06.04.2011).
While this confusion was in full swing, the Delhi Bench of the CESTAT did not agree with the decision in Sarla Performance and referred the issue to the Larger Bench - 2011-TIOL-1180-CESTAT-DEL
Revenue also appealed against the Sarla case in the High Court. The Gujarat High Court dismissed the Revenue appeal on the ground that the appeals were not maintainable before the High Court as it was a question of rate of duty and the appeal had to be made to the Supreme Court. 2012-TIOL-359-HC-AMH-CX
So, the Revenue took the matter to the Supreme Court but the appeal was dismissed on the ground of delay. [See DDT 2047]
All eyes were, therefore, trained on the Larger Bench for its decision. And the decision, as mentioned, is out. The answer is -
++ The intention of the legislature was never to charge education cess on education cess. In fact this is not permissible from very mode of this levy as prescribed in Section 91 of the Finance Act, 2004 and Section 136 of the Finance Act, 2007, as when a new tax is introduced as surcharge on the existing levies, the base on which the new levy as surcharge is to be calculated will include only the existing levies, not the new levy. If the Revenue's stand is accepted, and on the sum of Basic customs duty and Addl. Customs duty, first ¶cess on imported goods¶ under Section 94 of Finance Act, 2004 and Section 139 of Finance Act, 2007 is charged as duty of customs and on the aggregate of duties of customs, ¶cess on excisable goods,¶ under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 is charged, it would amount to charging education cess on education cess for which there is no sanction in law.
++ Since the DTA clearance of a 100% EOU attract central excise duty and in terms of proviso to Section 3(1) of Central Excise Act, 1944, the measure of the excise duty leviable is aggregate of duties of customs charged on import of like goods into India under Customs Act, 1962 read with Indian Customs Tariff Act, 1975 or any other law for the time being in force, this aggregate of duties of customs on which education cess under Section 93 of Finance Act, 2004 and S&H cess under Section 138 of Finance Act, 2007 is to be charged, would not include education cess and S&H cess under Section 94 of Finance Act, 2004 and Section 139 of Finance Act, 2007.
We will bring you the case tomorrow.
Also see -
Education cess payable by EoUs on DTA sale : Will this Budget clarify?
Setback for EOUs: CESTAT rules Education Cess is payable on DTA clearances in addition to duties computed under relevant Notifications
And
1. DDT 1318 15 03 2010
2. DDT 1354 07 05 2010
3. DDT 1584 06 04 2011
4. DDT 1690 12 09 2011
5. DDT 1855 11 05 2012
6. DDT 2047 18 02 2013
Erection of pandal or shamiana attracts ST
BOARD informs that it has received ¶several¶ representations seeking clarification as to whether the activity of preparation of place for organizing event or function by way of erection/ laying of pandal and shamiana is liable to Service Tax, the reason for ‘doubt' being that the transaction allegedly involves ¶transfer of right to use goods¶ and hence may be called as ‘deemed sale'.
Pursuant thereto, the Board has examined the issue and mentions that activity by way of erection of pandal or shamiana is a declared service, under section 66E 8(f) of the FA, 1994 and the same is a reasonably specialized job and is carried out by the supplier with the help of his own labour; that for a transaction to be regarded as ‘transfer of right to use goods' the transfer has to be coupled with possession which apparently is missing in this case inasmuch as effective possession and control over the pandal or shamiana remains with the service provider, even after the erection is complete and the specially made-up space for temporary use is handed over to the customer.
The decision of Andhra Pradesh High Court in the case of Rashtriya Ispat Nigam Ltd. vs. CTO [1990 77 STC 182] as upheld by the Supreme Court (2002-TIOL-560-SC-CT), the decision of the Punjab & Haryana HC in Harbans Lal vs. State of Haryana - [1993] 088 STC 0357 and the Supreme Court decision in BSNL Vs. UOI (2006-TIOL-15-SC-CT-LB) have been cited to explain what constitutesa transaction for the transfer of the right to use the goods.
And the Board finally concludes by saying -
¶5. Applying the ratio of above judgments and the test formulated by Hon'ble Supreme Court, the activity of providing pandal and shamiana along with erection thereof and other incidental activities do not amount to transfer of right to use goods. It is a service of preparation of a place to hold a function or event. Effective possession and control over the pandal or shamiana remains with the service provider, even after the erection is complete and the specially made-up space for temporary use handed over to the customer.
6. Accordingly services provided by way of erection of pandal or shamiana would attract the levy of service tax.¶
Hope this clarification was not necessitated by the DGCEI raids that took place pursuant to the ostentatious show of wealth at a wedding in Maharashtra which was in the news some months ago.
Circular 168/3/2013-ST dated 15th April, 2013
Definitive Anti-dumping duty imposed on Plain Gypsum Plaster Boards
PROVISIONAL anti-dumping duty was imposed on ‘Plain Gypsum Plaster Boards of all thickness and dimensions¶ vide notification 32/2012-Cus dated 7th June, 2012.
Now, the designated authority has vide final findings dated 15th January, 2013 come to the conclusion, inter alia, that the dumped imports of the subject goods from the subject countries have caused material injury to the domestic industry and has, therefore, recommended imposition of definitive anti-dumping duty on all imports of subject goods, originating in or exported from the subject countries in order to remove the injury to the domestic industry.
Accordingly, a notification has been issued imposing definitive anti-dumping duty on the subject goods. The anti-dumping duty imposed shall be effective for a period of five years (unless revoked, superseded or amended earlier) from the date of imposition of the provisional anti-dumping duty, that is, the 7th June, 2012.
Notification 6/2013-Cus(ADD) dated 12th April, 2013
Customs - Tariff Value of Gold, Silver dips
GOVERNMENT has changed the Tariff Values of various palm oils, palmolein, Crude soyabean oil and other items. Notable is the dip in the tariff values of Gold and Silver and also Brass scrap. Please also see our story 'Gold gets 'clean bowled'; Falling prices may bring succour to Finance Minister' carried a day before the notification.
Notification 38/2013-Cus (N.T) dated 15th April, 2013.
File RTI applications and pay fees online
THE RTI Act, 2005 is one of the best things that happened to the country more than seven years ago. Though the ten rupee note had the power to stir a hornet's nest, yet paying the application fee of rupees ten was a pain on occasions. A new beginning has been made. Gone are days when you had to trudge to the Post office for that elusive Rs.10 postal order or to the Bank and get that Demand draft/bankers cheque or go to the office of the CPIO and pay the application fees of Rs.10/- in cash. Not all the public authorities have the facility for receiving application fees through electronic means, so an applicant had to follow the other prescribed modes.
The Department of Personnel and Training which acts as nodal department for the implementation of transparency law in the country has created a portal www.rtionline.gov.in with an aim to help people exercise their right to seek information through online medium.
This is a portal to file RTI applications/first appeals online along with payment gateway. Payment of application fee of Rs.10/- can be made through internet banking of SBI & its associate banks and debit/credit cards of Master/Visa. Through this portal, RTI applications/first appeals can be filed by Indian Citizens only for the main ministries/departments of Central Govt., located at New Delhi.
It is clarified that RTI applications/first appeals should not be filed for other Public authorities under Central/State Govt. through this portal.
DDT hopes that other Public authorities would soon join the bandwagon.
The Name & Shame tactic - are you a game?
IT is reported by the Press Trust of India that the Income Tax department has decided to name and shame ¶chronic¶ tax defaulters by publicizing their names and addresses on its website.
The department, it is presumed, would upload the names and possible addresses of such tax evaders on the lines of the 'Wanted' list uploaded by enforcement agencies like police and investigative agencies like the CBI and the NIA on their portals.
The Income Tax department may also consider measures to publish the names of such defaulters in other forms of mass communication media like newspapers but that would be done on a later stage, an official said.
Incidentally, the provisions for all this hoopla exists in the form of section 287 of the Income Tax Act, 1961 titled as ‘Publication of information respecting assessees in certain cases'.
And the CBEC has a similar arsenal thanks to the Taxation Laws (Amendment) Act, 2006 which inserted section 37E in the CEA, 1944 and section 154B in the Customs Act, 1962.
Elaborate procedure has also been made known by the Board vide Circular 849/07/2007 dated 19/04/2007 but unfortunately, none has the patience to follow it for they like to jump the gun as reported by us in DDT- 2081 involving the DG, CEI.
The Circular dated 19/04/2007 says -
“3. It is, however, clarified that these provisions are stringent in nature and may affect the reputation of a person. Therefore, these should be used sparingly, with due care and caution. At the same time, it has also to be ensured that in deserving cases, they are, infact used, and that there is no arbitrary selection in their implementation.”
Draft guidelines to regulate functioning of worn & used clothing units
THE Department of Commerce, SEZ Division has circulated draft guidelines and invites suggestions/comments on the same in order to finalize the Policy to regulate functioning of worn and used clothing units in the SEZ. The comments on the guidelines are sought within fifteen days. Interestingly, the draft guidelines mention that the matter relating to setting up of new ‘used clothing units' may be considered only after the mechanism being proposed for the existing units is implemented and reviewed at a future date for its efficacy. This appears to be a bit unfair.
Draft guidelines
Jurisprudentiol - Wednesday's cases
CENTRAL EXCISE
DTA Clearances from EOUs – No third time Cess, rules Larger Bench
WHY do the framers of legislation become so insensitive to the commotion around although they know very well that a simple clarification from their end revealing their intention in drafting the legislation would solve the disputes in a flash.
Income Tax
I-T - Whether an assessee can claim depreciation on machinaries installed at dealer's site for purpose of providing after sales service - YES: ITAT
THE questions before the Bench are - Whether an assessee can claim depreciation on the machinaries installed at the dealer's site for the purpose of providing after sales service; Whether security amount collected from customers can be excluded from the cost of assets for the purpose of calculating depreciation; Whether advances given for the purposes of acquisition of capital assets can be claimed as ‘bad debt', when these are written off; Whether losses in the running of business can be said to be of capital nature and Whether when any income is exempt u/s. 10, the same has to be mandatorily excluded from the purview of computation of total income under different sections. And the verdict partly goes in favour of the assessee.
Service Tax
Services rendered by mandap keepers as caterer would also be liable to ST under category of 'Mandap Keeper services' - food charges collected from customers includible in value for discharging ST - Pre-deposit ordered: CESTAT
THE appellant is registered with the department under the category of ‘Mandap Keeper Service'. While rendering ‘Mandap Keeper Services' they were also providing catering services. However, they split the charges for the services rendered into two parts. One was for ‘hall charges' which was towards temporary usage of the banquet hall for conducting the function and the other is for supply of food. Incidentally, they discharged the service tax liability on the ‘hall charges' collected from the customers.
See our Columns Wednesday for the judgements
Until tomorrow with more DDT
Have a nice day.
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