TIOL-DDT 2827
18 04 2016
Monday

IN DDT 2806, we reported on 14.3.2016, the CESTAT Order in the Do Best Infoway case 2016-TIOL-604-CESTAT-MAD wherein the CESTAT had pointed out the callous way in which a Commissioner (Appeals) dealt with a case. The Tribunal noted that the entire action of the Commissioner (Appeals) is contrary to law and there is no disposal of appeal as yet on his record.If this is the manner an appellate authority acts, and his undated order comes for judicial review, it is difficult to appreciate the very existence of the impugned order itself as to whether that has seen the light of the day.

The Tribunal told the CBEC:

1. appropriate guideline may be issued to the quasi Judicial Authorities in administrative justice system to discharge their duties publicly.

2. Also the manner how order sheet of public record shall be maintained by such authority while they discharge public duty may be advised.

The CBEC has reacted within a month. In a letter to the Chief Commissioners, CBEC informs:

1. The decision of the CESTAT as noted above points out severe lacunae in the functioning of quasi judicial and appellate authorities in the department. Poor maintenance of records inter alia in the discharge of the functions of these authorities has been a cause of concern. In this case CESTAT has found lacunae not only in the orders passed by the Commissioner (Appeal), but has also pointed to the deficiencies noted by them in performance of the assigned public duties. From the perusal of note sheet reproduced in the order of the CESTAT it is evident that the said Commissioner (Appeal) was performing his assigned public functions in a pre-functory and casual manner.

2. Justice has not only to be done but seem to have been done in the performance of quasi judicial functions.

3. if the quasi judicial authority has to grant the personal hearing on the date and time decided by him while deciding the case, then that authority alone can grant the said personal hearing on that date and time. The record of such hearing should be essential part of the record of the case under the signature of the said authority in person.

4. The quasi judicial orders subject to judicial review have to be necessarily a speaking orders recording every fact and reason leading to the final decision in the matter.

The Board wants the Chief Commissioners to cause sample verification of records of the adjudication and appellate proceedings from time to time to time to ensure compliance with these instructions.

But does the Board know what the meaning of pre-functory is? Perhaps what they mean is perfunctory. Now who has performed in a perfunctory manner? The Commissioner or the Board? That is why I have been suggesting that the Board should hire an English teacher.

CBEC Instruction in F No 390/CESTAT/24/2016-JC., Dated: April 13, 2016

Service Tax and CENVAT Credit Rules become more complicated as service by Government becomes taxable

THE Law is getting murkier and murkier as the Government shouts hoarse about ease of doing business. The services provided by Government have become taxable with effect from 1.4.2016 and several consequential amendments are required. Just before going on that long weekend of four days, the CBEC issued several notifications on 13th April 2016.

CBEC has clarified that any activity undertaken by Government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to Service Tax. It is immaterial whether such activities are undertaken as a statutory or mandatory requirement under the law and irrespective of whether the amount charged for such service is laid down in a statute or not. As long as the payment is made (or fee charged) for getting a service in return (i.e., as a quid pro quo for the service received), it has to be regarded as a consideration for that service and taxable irrespective of by what name such payment is called. It is also clarified that Service Tax is leviable on any payment, in lieu of any permission or license granted by the Government or a local authority .

MOT for export supervision - Service Tax Exempted: The Customs and Central Excise Department charges a fee from assessees called ‘Merchant Over Time' (MOT) for certain services rendered by it like supervision of export consignments. Ten years ago in DDT 393 27 06 2006, I asked a question - MOT for export supervision - Is the Central Excise department liable to pay Service Tax?

The Government has now issued a notification exempting Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges (MOT).

Now what is import export cargo?

Government has also exempted Services provided by Government or a local authority to another Government or a local authority; Services by way of grant of passport, visa, driving license, birth or death certificates ; Services by way of allocation of natural resources to an individual farmer for the purposes of agriculture; Fines and liquidated damages payable to Government or a local authority for non-performance of contract entered into with Government or local authority; Services provided by Government or a local authority where the gross amount charged for such services does not exceed Rs. 5000/-

Is the fee paid to the CESTAT and ITAT liable to Service Tax? An advocate asked us this question. As per Section 65B(44)(c) of the Finance Act, 1994, “service” does not include fees taken in any Court or tribunal established under any law for the time being in force.

Service Tax on the interest charged by Government: Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 has been amended vide Notification No. 23/2016 -ST dated 13.4.2016 so as to provide that interest chargeable on deferred payment in case of any service provided by Government or a local authority to a business entity, where payment for such service is allowed to be deferred on payment of interest, shall be included in the value of the taxable service.

Point of Taxation: Point of Taxation Rules, 2011 has been amended vide Notification No. 24/2016 -ST dated 13.4.2016 to provide that in case of services provided by Government or a local authority to any business entity, the point of taxation shall be the earlier of the dates on which:

(a) any payment, part or full, in respect of such service becomes due, as indicated in the invoice, bill, challan, or any other document issued by Government or a local authority demanding such payment; or

(b) such payment is made.

Evasion by Government? It is heard that the Ministry of Finance is already investigating the Ministry of Railways for alleged evasion of Service Tax.

CENVAT Credit Rules Amended :

1. CENVAT Credit of the Service Tax on one time charges (whether paid upfront or in installments) paid in a year, may be allowed to be taken evenly over a period of 3 (three) years.

2. CENVAT credit allowed to be taken on the basis of the documents specified in sub-rule (1) of rule 9 of CENVAT Credit Rules, 2004 even after the period of 1 year from the date of issue of such a document in case of services provided by the Government or a local authority or any other person by way of assignment of right to use any natural resource .

3. CENVAT Credit may be availed on the basis of challan evidencing payment of Service Tax by the Service recipient   in respect of services provided by Government or a local authority.

The notifications have been issued on 13th April 2016, but the tax on government service was effective from 1.4.2016. What about the period from 1.4.2016 to 12.4.2016? Was MOT charges for Customs supervision liable to Service Tax for the first 12 days of the month?

Notification No. 22/2016-Service Tax, Dated: April 13, 2016

Notification No. 23/2016-Service Tax, Dated: April 13, 2016

Notification No. 24/2016-Service Tax, Dated: April 13, 2016

Notification No. 24/2016-Central Excise (NT), Dated: April 13, 2016

CBEC Circular No. 192/02/2016-Service Tax, Dated-April 13, 2016

Anti Dumping Duty on Normal Butanol

GOVERNMENT has imposed anti dumping duty on   ‘Normal Butanol or N-Butyl Alcohol' falling under tariff item 2905 13 00 originating in, or exported from the European Union, Malaysia, Singapore, South Africa and United States of America.

Notification No.13/2016-Customs (ADD)., Dated: April 13, 2016

CESTAT Senior Member seeks information from CESTAT under RTI

SENIOR-most CESTAT Member Ms. Archana Wadhwa has asked the Assistant Registrar&CPIO of the CESTAT for the following information.

The entire correspondence between the President and the Ministry of Finance / Department of Revenue during the month of February and up to 3.3.2016 i.e. the date of his retirement in relation to the transfer of the undersigned as also of handing over of work to the undersigned.

Copy of the letter dated 21.10.2014 from the Revenue Secretary addressed to the President on the basis of which the undersigned was transferred from Delhi.

Background: Ms Archana Wadhwa, Member (J) was transferred from the Principal Bench, Delhi to the Bangalore Bench on a request made by the Revenue Secretary in his letter dated 21.10.2014. She is now asking for a copy of that letter.

Justice Goda Raghuram retired as the President of the Tribunal on 3.3.2016. Before that he had transferred Ms. Archana Wadhwa back to Delhi. On 3.3.2016, the Revenue Secretary objected to the transfer and requested the president to cancel the transfer order of Ms. Archana Wadhwa from Bangalore to Delhi.

On 31.3.2016, the Government appointed Mr. MV Ravindran, the next senior-most Member as Head of Department of CESTAT till a regular President joins.

Now Ms. Archana Wadhwa is asking for the entire correspondence between the President of the Tribunal and the Ministry.

The absence of the President has created a sort of crisis in the Tribunal. Please see "CESTAT Needs a Regular President - Immediately" in DDT 2821 06 04 2016

Increase in Tariff Values of all items other than Brass Scrap and Poppy Seeds

GOVERNMENT has increased the tariff values of all the items except brass scrap and poppy seeds. Tariff values of brass scrap is decreased and that of poppy seeds remains unchanged.

Notification No. 54/2016-CUSTOMS (N.T.)., Dated: April 13, 2016

Until Tomorrow with more DDT

Have a nice day.

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