TIOL-DDT 2071
22.03.2013
Friday

THE dispute relates to the question whether reimbursable charges are includable in the taxable value. During the hearing of Stay Petition, the petitioner relied on the judgement of Delhi High Court 2012-TIOL-966-HC-DEL-ST, wherein the High Court held that Rule 5(1) of the Service Tax Valuation is ultra vires the Finance Act, 1994.However, the Tribunal was not impressed and ordered pre-deposit by holding that:

The expenses incurred were directly allocable to generate the service provided and no way can be held to be avoidable to call the same reimbursable for incremental value addition to the service. It appears that revenue lifted corporate veil to go inside the transactions for ascertaining the truth behind the operation. The facts and circumstances of the case suggest that the appellant has adopted a novel way of splitting the consideration with nomenclature of reimbursement of expenses. We do appreciate that rule should not be a tyrant but should be a servant of law. But, deliberate splitting is not possible to be ruled out when splitting is not intended by law. Once splitting is attributable to a motive, the appellant cannot get any shelter under the purview of law.

Pls see 2013-TIOL-494-CESTAT-DEL

... And the HC allows the Writ Petition filed by the Assessee

AGAINST the above order, the assessee filed a Writ Petition before the High Court of Delhi. The High Court allowed the Writ Petition after noting that in view of the judgement in case of 2012-TIOL-966-HC-DEL-ST, prima facie, there can be no service tax on reimbursable expenditure. Further, the High Court also observed that the amount computed by the department includes the direct expenditure which is not reimbursed and accordingly, held that the amount of Rs 40 lakhs already deposited by the Petitioner is sufficient to hear the appeal and waived the balance amount of Rs 60 lakhs.

Pls see 2013-TIOL-223-HC-DEL-ST

Exchange Rates Notified for export and imported goods

GOVERNMENT has notified the exchange rates for export and imported goods effective from 22-03-2013.

CBEC Notification No. 31/2013-Cus., (N.T.), Dated: March 21, 2013

17 Imported luxury cars seized - CBI/DRI timing most unfortunate - PM

THE Central Bureau of Investigation registered a case under various sections of the Prevention of Corruption Act, 1988 in connection with a complaint that about 33 vehicles had been imported in Tamil Nadu and of these, certain vehicles are believed to have been imported and subsequently sold in violation of import provisions causing loss of up to Rs.48crores approx. to the exchequer.

The case has been registered against an importer and a Senior Intelligence officer of DRI who allegedly did not take any action even after identification of vehicles at the premises of certain users and unknown others. It appears that although the DRI launched a probe a couple of years ago, no action was taken to recover the tax evaded or confiscate the vehicles.

During the searches conducted 17 imported cars have been located and seized under Section 102 (3) Cr.PC.

Among the premises searched were the houses of Dravida Munnetra Kazhagam president M. Karunanidhi's sons, M.K. Stalin and M.K. Alagiri, who was a Union Minister in the UPA government until a day earlier.

So as not to attribute these searches to any vendetta, the CBI in a press note mentions - “CBI wishes to clarify that the above operation was strictly in accordance with procedures and there was no intention whatsoever to target any particular individual.”

But the PM says the timing was most unfortunate. Is the DRI/CBI supposed to plan their raids according to the political climate? It is most unfortunate that the Prime Minister of the Country thinks that the raid by the premier investigation agency of the country is badly timed.

IT - Adjustment of refunds only after assessment - CBDT Clarifies

THE Directorate of Income Tax Systems clarifies that as per a recent judgement of the Delhi High Court, the department is required to follow the procedure prescribed under Sec 245 of the Income Tax Act before making any adjustment of the refund payable by CPC, Bangalore. Therefore the assessee must be given an opportunity to file response or reply which should be considered by the AO before directing any adjustment. The AO should communicate his findings to CPC Bangalore which will adjust the demand if any.

The Directorate wants the Chief Commissioners to issue necessary instructions to the Assessing Officers.

Directorate Of Income Tax (Systems) F. No.DIT(S)-III/CPC/2012-13/Demand Management, Dated March 21, 2013

DPCO and NPPP

UNDER the provisions of the Drugs (Prices & Control) Order, 1995 (DPCO, 1995), the prices of 74 bulk drugs listed in its First Schedule and the formulations containing any of these scheduled drugs are controlled. National Pharmaceutical Pricing Authority (NPPA) fixes or revises prices of scheduled drugs / formulations as per the provisions of the DPCO, 1995. In respect of drugs - not covered under the DPCO, 1995 i.e. non-scheduled drugs, manufacturers fix the prices by themselves without seeking the approval of Government / NPPA. However, the trend in prices of non-scheduled drugs is monitored and suitable action is taken by NPPA where price increase is more than 10% in a period of one year on moving basis.

The National Pharmaceutical Pricing Policy-2012 (NPPP-2012) has been notified on 07.12.2012. As per the provisions of NPPP-2012, all the manufacturers/importers manufacturing/importing the medicines as specified under National List of Essential Medicines, 2011 (NLEM-2011) shall be under the purview of price control. The objective of NPPP-2012 is to put in place a regulatory framework for pricing of drugs so as to ensure availability of required medicines - “essential medicines” - at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of industry, thereby meeting the goals of employment and shared economic well-being for all.

This information was given by the Minister of State (Independent Charge) for Chemicals and Fertilisers, Srikant Kumar Jena in a written reply in the Lok Sabha yesterday.

DDT Cartoon

Jurisprudentiol – Monday's cases

Service Tax

Erection of sluice gates in agricultural dams constructed by various corporations - Chief Engineer, Water Resources Department, Govt. of Maharashtra is not commissioning and installation agency as they do not undertake these activities for anybody else except themselves - Prima facie strong case in favour - Pre-deposit of Rs.4.65 Crores ST demand waived and stay granted: CESTAT

THE department viz. Commissioner of Central Excise, Customs & Service Tax, Nashik/Nagpur was of the view that the appellant was liable to pay service tax on these activities under the category of Erection, Commissioning and Installation Service' and accordingly confirmed demands of Rs.1.37Crores for the period 01/04/2007 to 31/03/2011; Rs.2.42Crores for the period 01/04/2006 to 31/03/2011 and Rs.86.66 lakhs for the period 01/04/2006 to 31/03/2011, along with interest thereon and also imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994.

Income Tax

Wealth Tax - Whether when particular asset is not included in definition of 'assets', but rental income from letting out of said asset has been offered as income from house property, same can be treated as income from business - NO: ITAT

THE issues before the Bench are - Whether when the AO has reopened the assessment on the basis of cogent evidences on record, no fault can be found with such reopening; Whether the assessment can be reopened merely on the basis of audit objections and Whether when a particular asset is not included in the definition of 'assets', and the rental income from letting out of the said properties has been offered by the assessee as income from house property, the same can be considered as income from business. And the verdict goes against the assessee.

Central Excise

CENVAT - duty paying documents lost in transit - Powers of adjudication are given to quasi judicial authorities to sub-serve justice and not to deny them -rejection of request is case of pure and simple harassment to assessee - over and above this, Commissioner(A) without understanding basic facts directed pre-deposit -appeal allowed: CESTAT

THE appellant received a consignment of duty-paid inputs from M/s. Rashtriya Ispat Nigam Ltd., Pune vide invoice No. 2007005407 dated 05/12/2007 which was transported vide Truck No. MH-06-K-1000. During the course of transportation, all the documents including the duty paying documents were lost in transit by the driver of the truck and the driver lodged a complaint with the Sonai Police Station, Ahmednagar.

See our Columns Monday for the judgements

Until Monday with more DDT

Have a Nice Weekend