22.08.2014
Friday
THERE has been a long standing demand by Haj Committee and Private Tour operators that Haj pilgrims should be exempted from Service Tax at least for the transport part.
The Government has now exempted:
"Services by Kumaon Mandal Vikas Nigam Limited and the Haj Committee in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement. "
The Kumaon Mandal Vikas Nigam and Haj Committee facilitates religious pilgrimage to Mansarovar and Haj/Umrah respectively.
As per the exemption only the services provided by the above two organisations are exempted. What about the private tour operators who actually provide the service on behalf of the Haj Committee?
Board had in Circular No. 117/11/2009 - ST, dated 30.10.2009 clarified that the amount charged to the pilgrims in India undertaking Haj and Umrah pilgrimage, is for services provided by the Government of Saudi Arabia and the tour takes place outside India. As per Rule 3 (1) (ii) of the Export of Services Rules, 2005, (Circular No. 111/05/2009 - ST dated 24.02.2009), the service in respect of tour operator is export if such service is performed outside India. It is also provided therein that where such taxable service is partly performed outside India, it shall be treated as performed outside India. Therefore, it is clarified that service tax is not chargeable on the services provided in respect of tour undertaken for carrying out Haj and Umrah Pilgrimage in Saudi Arabia by Indian pilgrims considering these as export of service, provided they fulfill the other conditions of export as provided in Export of Service Rules.
This clarification is perhaps not valid after 1.7.2012.
Notification No. 17/2014 - Service Tax, Dated: August 20, 2014
Customs - New Exchange Rates from Today
CBEC has notified new exchange rates for Imported Goods and for Export Goods with effect from 22 August 2014. The US Dollar is 61.25 rupees for imports and 60.25 rupees for exports.
The Exchange rates were last notified on 7th August 2014.
Notification No. 72/2014-Cus., (N.T.), Dated: August 21, 2014
FTP - Onions - Minimum Export Price again enhanced
IN September 2013, the Minimum Export Price stipulated for onions was 1150 USD, which was reduced to 150 USD in December 2013. By Notification No. 73 dated 12.03.2014, the export policy for onions was made FREE.
It was only two months ago that the minimum export price (MEP) of USD 300 per MT was fixed on the export of onions by notification 82/(RE-2013)/2009-2014 dated 17.06.2014.
The Inter-Ministerial Committee in their meeting held on 30th June, 2014, observed that the wholesale and retail prices of onion are going up in producing and consuming mandis and despite MEP at USD 300 PMT there is no appreciable decline in the exports of onion.
Keeping in view of rising retail and wholesale prices and delayed monsoon, the Committee unanimously decided to fix the MEP at USD 500 per MT FOB which translates to Rs.30.00 per kg. with a view to arrest domestic price rise and augment domestic supply. And so by Notification No. 86(RE-2013)/2009-2014, dated: 02 July 2014, it was fixed at USD 500 per MT.
Now the domestic situation has improved and the Government has reduced the MEP to USD 300 PMT.
DGFT Notification No. 91(RE-2013)/2009-2014, Dated: August 21 2014
FTP - Quantity of input to be allowed under Advance Authorisation/DFIA shall be in proportion to the quantity of input actually used/consumed in production
GOVERNMENT has amended the Foreign Trade Policy to stipulate that:
in case in any SION, a single quantity has been indicated against number of inputs (more than one input), then quantities of such inputs to be permitted for import shall be in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in shipping bills.
DGFT Notification No. 90(RE-2013)/2009-2014, Dated: August 21 2014
Customs - Appeal - Limitation - whether limitation starts from the date of presentation of Bill of Entry or assessment
THIS was the question before the CESTAT recently.
An appeal was dismissed by the Commissioner (Appeals) on limitation. According to the Revenue, the date of presentation of bill of entry is the date from which limitation will be counted.
Assessee controverts the same saying that the date on which the assessment was completed shall be the date to count limitation.
Tribunal agreed with the Appellant that the demand raised on a particular date may aggrieve him and that date gives rise to the cause of action against the consequence of assessment.
The Tribunal remanded the matter to the Commissioner (Appeals) to call for the bill of entry and examine the date on which assessment was completed and the date on which assessment order was served on the assessee. Limitation shall be calculated from the date of service. If there was delay, delay may be condoned on the basis of facts and circumstances of the case.
Please see 2014-TIOL-1571-CESTAT-DEL
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Jurisprudentiol - Monday's cases
 Service Tax
In the SCN there is not even a single line describing as to what is the actual service rendered by the appellants which is sought to be covered under the Consulting Engineer, which fact itself, is arguably fatal - services rendered of engaging contractors and supervising their work cannot be stretched to come within the scope of the definition of Consulting Engineer: CESTAT
IT is alleged that during the period 2002-2003 to 2005-2006 the appellants had collected supervision charges amounting to Rs.7,79,91,577/- relating to construction of Navodaya Vidyalaya building and that the said amount was liable to service tax under the category of Consulting Engineer Service which the appellants did not pay by indulging in suppression of facts.
Before the CESTAT, the appellant contended that the amount on which service tax has been demanded was received from Navodaya Vidyalaya Samiti for execution of works based on the architectural drawing, specification etc. given by Navodaya Vidyalaya Samiti or their appointed consultants; that this activity does not fall within the scope of Consulting Engineer Service; that during the relevant period, companies were not included in the definition of Consulting Engineer and that there has been no willful mis-statement or suppression of facts on their part as alleged in the SCN.
Income Tax
Whether Sec 80IB benefits are not to be denied merely because ownership of the Undertaking changes from proprietorship to partnership firm - YES: High Court
THE assessee's factory is situated in SIDCO Industrial Estate in Jammu & Kashmir and derives income from manufacture and sale of consumer electronic durable goods. For AY 2005-06, assessee had filed a return showing a loss. The case was taken up for scrutiny and notice u/s 143(2) and 142(1) was issued. During the year, assessee claimed deduction u/s 80-IB amounting to Rs.18,51,055/-. The AO issued a notice u/s 142(1) requiring the assessee to justify his claim of deduction u/s 80-IB. In response to which, assessee had submitted that his factory was situated in Jammu & Kashmir. On going through the claim of the assessee, AO found that the assessee was running business from the same premises as a proprietorship concern and that on 1st April, 2004 a partnership firm was constituted in which two other persons were inducted as partners. According to AO, a new legal entity was formed on 1st April, 2004. The AO accordingly held that the industrial undertaking under proprietorship was converted into a partnership firm on 1st April, 2004 and that the transfer of machinery or plant previously used by the proprietorship concern was being used by the partnership firm and, accordingly, the assessee was not entitled for exemption u/s 80-I. The AO, accordingly, disallowed the deduction claimed by the assessee.
The issues before the Bench are - Whether Sec 80IB benefits are not to be denied merely because the ownership of the Undertaking changes from proprietorship to partnership firm; whether on conversion of a proprietorship firm into a partnership firm, there is any transfer of plant and machinery to the new firm and whether in that case there is only a transfer of industrial undertaking as a whole along with assets and liabilities. And the verdict goes in favour of the assessee.
Central Excise
CENVAT Credit - Dutiable and exempted goods - When credit is not taken on the inputs used in exempted goods, there is no need for separate records - Duty demand on sugar syrup with a shelf life of 24 hours set aside: CESTAT
APPELLANT engaged in manufacturing of dutiable and exempted goods with common input for both kinds of products - Availed Cenvat credit of duty paid on inputs like sugar, various flavors, packing materials, furnace oil etc - Separate records are maintained and CENVAT credit is not availed in respect of inputs used for exempted goods as per Rule 6 of CENVAT Credit Rules 2004 - Benefit of Notification No.67/95 is clearly extendable - No evidence on record to demonstrate that separate records are not maintained or credit availed against exempted goods - Merely that no separate record is maintained with regard to sugar syrup used in the process which presumably has 24 hours of shelf life, without verifying its marketability and saleability, demand of duty held unjustified - Extraction of selective portion of statement convenient to the department in the show-cause notice to initiate proceedings and confirming demand without substantial evidence, deprecated - In view of the fact that the most important part of any investigation i.e. to ascertain facts, apply law to the facts and propose action in accordance with law has not been followed in this case, appeal allowed.
See our Columns on Monday for the judgements.
Until Monday with more DDT
Have a nice weekend.
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