Service Tax - Delayed Payment Charges Collected by Stock Brokers - No Tax
TIOL-DDT 1669
09.08.2011
Tuesday
BOARD was asked a clarification whether Service Tax is payable on the additional amount that is collected towards the delay in making payment to the stock brokers by their customers (delayed payment charges) in respect of Stock Broker's services.
Board explains :
1. Circular No. 96/7/2007 at para 002.01 clarifies that an amount collected for delayed payment of a telephone bill is not to be treated as consideration charged for provision of telecom service and therefore, does not form a part of the value of taxable service.
2. Circular No. 121/02/2010 - ST dated 26.4.2010 clarifies that detention charges in respect of detained containers are not in respect of service provided on behalf of client (under BAS) nor is it on account of infrastructure support services (under BSS). Such charges can at best be called as 'penal rent' for retaining the containers beyond the predetermined period. Therefore, the amount collected as 'detention charges' is not chargeable to service tax.
Board Clarifies :
Similarly, delayed payment charges received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. Such amounts are not includible in the taxable value for charging service tax.
This principle will also apply to other service providers .
But there is a rider : However, section 67 of the Finance Act 1994 provides that service tax is chargeable on taxable value which shall be the 'gross amount charged' by the service provider. Therefore, if in the account statement / invoice / bill etc issued by the service provider, only the gross amount is shown without indicating the delayed payment charges separately, the service tax would be payable on the entire amount. Delayed payment charges would not be includible in 'gross value charged' only if these charges are shown separately in the account statement/invoice/bill etc.
Board wants pending cases to be decided in line with this clarification.
CBEC Letter F. No. 137/25/2011 - Service Tax: Dated August 03, 2011
Anti Dumping Duty on Sodium Formaldehyde Sulphoxylate - Resurrection but not Retrospective
ANTI Dumping Duty on Sodium Formaldehyde Sulphoxylate, originating in, or exported from, People's Republic of China, was imposed by Notification No. 23/2006-Cus dated 06.03.2006. This notification clearly stipulated that the anti dumping duty imposed under this notification would be valid till 21.06.2011. So from 22.06.2011, there was no anti dumping duty on this product.
Now the Government has re-imposed the anti dumping duty on this product for a period of five years from 05.08.2011. The amounts of duty are identical to the amounts mentioned in the dead Notification No. 23/2006.
Were there no dumping and no injury to domestic industry during the period from 22.06.2011 to 04.08.2011? How much Revenue the Government has lost and how much injury the domestic industry must have suffered, just because some babu was sleeping? Maybe the CAG can do an audit on this.
Notification No. 70/2011-Cus , Dated : August 05, 2011
FTP - Import of Rough Marble Blocks for the year 2011-12 - Only for Manufacturing, not trading - DGFT Clarification
DGFT clarifies that only manufacturing turnover of the units in respect of processed marble slabs/tiles will be considered for grant of import quota of marble and no trading turnover will be considered. In case a unit is having manufacturing as well as trading turnover, then they will have to separate the two and apply for grant of quota on the basis of manufacturing turnover of processed marble slabs/tiles only.
If any unit having only trading turnover has mistakenly applied for import quota by e mail, they should immediately send an e mail to marbleimport2011-dgft@nic.in with the subject header: “Withdrawal of application for import of marble”.
Failure to send such corrective e-mail is liable to be treated as mis-declaration and invite penal action under FTD&R Act 1992.
DGFT Policy Circular No. 37 (RE-2010)/2009-2014, Dated: August 08, 2011
India has Enough Forex Liquidity reserves to meet the demand
A Statement from RBI says, “ in anticipation of financial market turbulence related to the US debt ceiling impasse, the Reserve Bank made an assessment of the ability of the forex reserve portfolio to meet potential forex requirements in the event of significant capital outflows. This exercise indicated that there were sufficient liquid reserves to meet the demand for forex even in stress scenarios. The Reserve Bank is closely monitoring all key indicators and will continuously assess the impact of global developments on Rupee and forex liquidity and macroeconomic stability. We will respond quickly and appropriately to the evolving situation ”.
RBI adds, “ As Friday's market behaviour demonstrated, India is not insulated from such developments. It may, however, be noted that in the worst phase of the recent global financial crisis, the economy grew by 6.8 per cent, suggesting high resilience emerging from domestic factors. While downside risks to growth may have increased in the wake of global developments, they are likely to have limited impact. However, the policy and regulatory framework must anticipate and be prepared to respond to turbulent financial market conditions arising out of external developments ”.
CBEC Promotion to the Cadre of Assistant Commissioners - Ball Back in Board's Court - Supreme Court wants new exercise to be undertaken
IN the much-stagnated lower executive cadres of Inspectors and Superintendents of Central Excise, there are lots of anomalies and imbalances. Every day we get mails from frustrated officers who have not got a second promotion in 35 years of service. A 1992 Inspector is still an Inspector - a 1992 Superintendent is still a Superintendent. Central Excise officers complain that appraisers junior to them by 25 years have become their bosses. There are cases pending at all possible levels of litigation from Tribunal to Supreme Court. The bone of contention is the ratio among the three feeder cadres - Superintendents of Central Excise, Superintendents of Customs and appraisers of Customs. The ratio was 6:2:1 and this was not appreciated by all the feeder cadres. Twelve years ago, the Supreme Court in All India Federation of Central Excise vs. Union of India had held that the Supreme Court was not the forum to change the formula and any one aggrieved with the quota should convince the Government about the need to change the rules.
Nothing much has happened since except litigation and more litigation and promotions are being made on purely ad-hoc basis, for a period of six months or until further orders, whichever is earlier. This is continuing for decades! And there seems to be no solution within the foreseeable future, as officers are running from Court to Board.
Now the Supreme Court has directed that the Government should try to complete the process of amending the Recruitment Rules including altering the existing ratio to secure just and fair representation of all the 3 feeder categories, based on representations from the feeder cadres.
Certainly, what they could not do for the last two decades or more cannot be done in the next five months. The only certainty is uncertainty. Even adhoc promotions are not being given regularly. The last time promotions were given was in October 2010 - even now, they have more than a hundred vacancies, but no promotion - ad hoc or otherwise.
(See 2011-TIOL-74-SC-MISC )
The Customs (Amendment and Validation) Bill, 2011 Introduced in Lok Sabha
AS Parliament was rocked by uproarious scenes, Finance Minister Pranab Mukherjee introduced the Customs (Amendment and Validation) Bill, 2011. Hardly any one was aware of this Bill.
The Bill seeks to confer jurisdiction on DRI officers to issue Show Cause Notice with retrospective effect. “ Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law...all persons appointed as officers of customs...before July 6, 2011 shall be deemed to have and always had the power of assessment... and have been proper officers for the purpose ”. This is to undo the effect of the Supreme Court decision!
The Bill will most probably be passed without a debate in one of the quick passages when most of the members are busy disturbing the proceedings. This is how laws are passed in India!
Jurisprudentiol - Wednesday's cases
Central Excise
Goods sent to SEZ without payment of duty for export purposes - Appeal against order of Commissioner (Appeals) lies with Joint Secretary and not CESTAT: CESTAT
AS per proviso (c) to section 35B of the Central Excise Act, 1944, this Tribunal has no jurisdiction to deal with such cases. In view of the above, the appeal is not maintainable before this Tribunal.
Income Tax
Whether when assessee carries out job work as a sub-contract to make article marketable, it is entitled to claim Sec 80HH benefits - YES, rules High Court
ASSESSEE is a company engaged in the manufacture and sale of High Tensile Fasteners, Cold Extruded parts, Powder Metal Parts, Precision Forged Gears, Hot and Warm Precision Forged Products, Radiator Caps etc - had a unit located in a notified backward area. The assessee claimed deduction u/s 80HH in respect of the receipt which it called as sub contract receipts. AO rejected the claim in respect of the Krishnapuram Unit.
Service Tax
Input Services used for job work - CENVAT Credit cannot be denied: CESTAT
IT is not disputed that the goods manufactured by the appellants on job work basis have been cleared without payment of duty to their principal manufacturer, who further used these goods in manufacturing of final product which were cleared on payment of duty.
See our columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a Nice Day.
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