News Update

FM reviews CAPEX of CPSEsGovt writes to over 2800 corporates to clear MSME duesGovt carrying out reforms in every sector of economy to prop up growth: PMIgnoring limitation proves costlyInverted duty structure - A Case study (See 'TOG Insight' in promotes four officers as Pr Commissioner of Customs & Central Excise + posts Sameer Pandey as DS in GST Council SecretariatSC cannot be a place for Govts to walk in when they choose, ignoring period of limitation prescribed - Petition dismissed as time barred; costs imposed on State for wasting judicial time - amount to be recovered from officers responsible: SCIs penalty compulsorily attracted on late payment of GST?No mutation of COVID-19 detected in India: Health MinisterCus - Goods re-imported for repair and re-exported - Merely because Assessee could claim duty drawback later on and it may give rise to a revenue neutral situation, it cannot be said that period of one year prescribed in 158/95-Cus is without any meaning: HCST - Payment of mobilization advance is a separate financial transaction within contract for providing of service & so is not to be included in gross taxable value as per Section 67 of Finance Act 1994 - duty demand cannot be raised thereon when there is no allegation of any part of contracted value having evaded taxation: CESTATBSVI introduction a revolutionary step: JavadekarCX - It is settled position in law that an assessee is entitled to interest on delayed disbursal of refund after three months from date of filing of refund claim till date of its realisation: CESTATCus - Drawback - After turning down request for taking test samples, Revenue cannot brush aside report given by an expert Committee simply for the reason that sample was not drawn and referred by Department: CESTATPayment made to a trust formed for the benefit of employees of the company, of which the assessee was a shareholder & whose shares the assessee had sold, does not qualify as expenditure incurred wholly in connection with transfer of asset: HCBogus purchases - only the profit element embedded therein is to be disallowed, rather than the entire quantum of purchases made: ITATSearch assessment is invalid where it is completed even before search operations are conducted or where any material incriminating the assessee has not yet been found: ITATWhere assessee did not claim exemption in respect of one residential property, the assessee can avail such benefit in respect of a second house or plot of land: ITATIndia successfully test-fires cruise missile from Indian Navy’s destroyer INS ChennaiCOVID-19: Global tally goes past FOUR Crore with 11.15 lakh deaths; America has close to 27 lakh active cases against 8 lakh in IndiaCOVID-19 - Almost 80% new cases coming from 10 StatesCountrywide S&T infrastructure facilities to be accessible to industry & startups: GovtPM calls for speedy access to vaccines once readyNew Zealand PM earns second term for managing COVID-19 wellDigital Media - Govt to extend all benefits available to othersGovt not considering any DA for Govt employees: GangwarCBDT issues transfer order of 395 Addl / JCITs on All India basisSBI given nod for sale of electoral bonds for 10 daysEducation CESS - the spoilt fruit
No Education Cess from 01-07-2012!

DDT in Limca Book of RecordsTIOL-DDT 1887



IN DDT 1880 - 15.06.2012, we pointed out that Service Tax could not be levied from 1.7.2012. That sent shock waves all over and a few TV channels contacted us, but could not understand the complexities of Section 68, 66 and 66A. We asked them to approach the Board for better clarification. The wise Board told them that it was only a numbering mistake, which was being corrected! Anyway, Board acted in unusual haste and issued an order called the Service Tax (Removal of Difficulty) Order, 2012, by which they corrected Section 66 as 66B in Section 68.

Now, they are in for another shock.

Education Cess on taxable services: This was imposed in 2004. As per Section 95 of the Finance Act 2004, this tax is collected at the rate of 2 percent of the tax levied and collected under Section 66 of the Finance Act, 1994.

Secondary and Higher Education Cess on taxable services: This was imposed in 2007. As per Section 140 of the Finance Act 2007, this tax is collected at the rate of 1 percent of the tax levied and collected under Section 66 of the Finance Act, 1994.

And as we know, Section 66 ceases to have effect from 1.7.2012. So there is no provision to collect Education Cess and SHE Cess on Service Tax from 1.7.2012.

And this time around, the Board has no escape route. They cannot amend Finance Act 2004 and Finance Act 2007 by an order!

For a more detailed write up, please see an article by Advocate Vaitheeswaran in SERVICE TAX - NEW LAW +VE or -VE

Customs - Exemption Under EPCG and SHIS

GOVERNMENT has amended Notification Nos 100/2009 to 104/2009 - Cus to align these with the Foreign Trade policy announced on 5.6.2012. These notifications deal with exemption for Export Promotion Capital Goods (EPCG) Scheme and Status Holders Incentive Scrip (SHIS)

Notification No. 42 /2012-Cus.,Dated: June 22, 2012

Service Tax Seminar in Hyderabad

YESTERDAY CBEC Member (Service Tax) Shiela Sangwan addressed a Seminar in Hyderabad on Impact of Budgetary changes - Taxation of Services. JM Kennedy, Director (Service Tax) in TRU gave a rather lengthy presentation on the new Service Tax regime with effect from 1st July 2012. The packed auditorium with a capacity of over 500 was filled and overflowing with assesses, consultants and departmental officers. At the end of his speech, we got an sms message - “no value addition so far”, but the FAPCCI chief who hosted the function said that Kennedy was a professor and “we are all students”. A question was asked whether remuneration paid to a partner was liable to Service Tax and whether the partner was an employee. The CBEC bosses had no clue on this issue and so they cleverly skirted it.

Another delegate wanted to know a few examples of “transfer of goods without transfer of right to use such goods”. They had no clue though they had included it in the Statute. The Board should ensure that their brand ambassadors are well trained before they embark on their road shows.

The highlight of the programme was the very sensible ‘vote of thanks' by Chief Commissioner SB Singh who said that any change is received with a lot of apprehension about an uncertain future and nobody understands it better than a Government Servant who is under the threat of a transfer every year. He said that the two words, “thank you” are not enough to convey the deep feelings of gratitude and for want of better words, he was constrained to limit his expression to “thank you” - maybe the law makers can get a few tips from him.

And if you want to know how the Pink Press understood Kennedy, The Business Standard today covering the event reports that, “The government has hiked the service tax rate to 14 per cent, from the earlier 12 per cent in this year's Budget!”

Income Tax - Setting up of Tax Kiosks and use of mobile vans

AS a taxpayer friendly initiative, the Income Tax Department has decided to set up Tax Kiosks at various places within CCIT regions. The Tax Kiosk would be a temporary structure set up for 1-2 days in a residential area such as apartment blocks in association with RWAs, large offices and other central locations of the cities. These Tax Kiosks would be manned by TRPs who would handle queries of taxpayers relating to return filing, PAN applications, refund status as well as assist the taxpayers in preparing their returns of income.

CBDT F. No. RC/TRP-1(1)/2011-12 Dated: June 19, 2012

External Commercial Borrowings (ECB) - Repayment of Rupee loans

RBI has decided to allow Indian companies to avail of ECBs for repayment of Rupee loan(s) availed of from the domestic banking system and / or for fresh Rupee capital expenditure, under the approval route , subject to them satisfying the following conditions:-

i. Only companies in the manufacturing and infrastructure sector will be eligible to avail of such ECBs;

ii. Such companies shall be a consistent foreign exchange earner during the past three financial years;

iii. Such companies are not in the default list/caution list of the Reserve Bank of India; and

iv. Such ECBs shall only be utilized for repayment of the Rupee loan(s) availed of for 'capital expenditure' incurred earlier and are still outstanding in the books of the domestic banking system and / or for fresh Rupee capital expenditure.

This facility will come into with immediate effect and is subject to review at an appropriate time depending upon evolving macroeconomic conditions and other relevant factors.

A P (DIR Series) CIRCULAR No. 134/RBI ; Dated: June 25, 2012

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Jurisprudentiol - Wednesday's cases

Legal Corner IconCentral Excise

Though storage tanks have been specified under capital goods, only such storage tanks which are ‘goods' can fall within definition of capital goods - steel items which have gone into manufacture cannot be treated as ‘input' for manufacture of capital goods - Pre-deposit ordered of Rs.35 lakhs: CESTAT

THE appellant are manufacturers of Cement and Clinker. Scrutiny of the records revealed that they availed CENVAT credit amounting to Rs.61,44,464/- in respect of steel items such as MS Plates, angles, channels, beams etc. used in the construction of storage tanks/silo and chimney which are in the nature of immovable property.

A show-cause notice was issued for denying the aforesaid CENVAT credit. The demand was confirmed.

Service Tax

Since appellants have paid service tax liability under category of BAS and Renting of Immovable Property services, they are liable to pay interest also: CESTAT

THE appellants were operating as Multi Service Operator (MSO) in TV cable operation business as a commission agent and distributor of M/s Win Cable & Datacom Pvt. Ltd. by retransmitting TV signals to various cable subscribers. For these services, they were earning commission from the signal supplier on which they were not paying the service tax.

Since the activity falls under the category of ‘Cable Operators Service', a show-cause notice was issued for recovery of service tax and also for commission received from their signal supplier under the category of ‘Business Auxiliary Service'. There was also a proposal to demand of service tax on ‘Renting of Immovable Property Service' against the appellants. The show-cause notice was adjudicated and all the demands were confirmed by the Commissioner of Service Tax, Mumbai-II.

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

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