TIOL-DDT 2823
08 04 2016
Friday

IN United Shippers Ltd. vs. Commissioner of Central Excise, Thane-II - 2014-TIOL-2500-CESTAT-MUM, it was observed that when the goods are being transported by the barges from the mother vessel to the jetty onshore, that activity is part of the import transaction of bringing the goods into India from a place outside India; that question of rendering any service in respect of such goods by way of cargo handling or otherwise can take place only after the customs transaction is completed; therefore for the levy of Service Tax, the transportation by barges from the mother vessel to the jetty on-shore, would not arise at all since the activity is part of the import transaction leviable to import duty.

Tribunal in  Shri Atul Kaushik & others vs. Commissioner of Customs (Export), New Delhi -  2015-TIOL-1766-CESTAT-DEL held that there is no provision warranting exclusion from the assessable value for customs purposes, on the ground that service tax has become chargeable on such license fee under a different statute.

There is a general opinion among many that there cannot be double taxation. They believe that Service Tax and Excise duty or Service Tax and Customs duty cannot be collected for the same transaction. There is actually no legal backing for this opinion.

In the case of Imagic Creative Private Ltd - 2008-TIOL-04-SC-VAT., the Supreme Court laid down the ratio that payment of service tax and VAT are mutually exclusive. The Tribunal in Atul Kaushik observed that the said ratio laid down by the Supreme Court cannot be extrapolated to mean that customs duty and service tax are also mutually exclusive. The Tribunal further observed, "No constitutional provision is brought to our notice inhibiting levy of taxes under different statutes on the same transactions. It is axiomatic that the same transaction may inhere distinct taxable events, exigible to different taxes. The only question is whether demand of tax is sustainable under the particular statute.

In a recent case before the Authority for Advance Rulings, the question raised by the applicant was:

While discharging the foreign C & F Agent raised composite bill/invoice liability, which portion of amount will attract Service Tax obligation under reverse charge mechanism?

The applicant submitted that a foreign C&F Agent would be incurring the expenses on behalf of the applicant with respect to freight, insurance, loading, unloading and handling charges of goods, etc. proposed to be imported. Further, all these expenses incurred are included in the valuation of goods as per Section 14 of the Customs Act, 1962 for the purpose of charging Customs duty. Therefore, charging Service Tax on said component would tantamount to double taxation.

But the advocate of the applicant (candidly) admitted that there is no statute to indicate that if customs duty is chargeable, Service Tax is not leviable on the same component.

So, the plea of double taxation failed.

The AAR ruled:

As per Notification No. 30/2012-ST dated 20.06.2012, the taxable services provided or agreed to be provided by any person which is located in a non-taxable territory and received by any person located in the taxable territory, is liable to Service Tax and payable 100% by the person receiving the service. In this case, foreign C&F Agent would be located outside India and the applicant, who is recipient of service, located in India. The service to be provided is in respect of freight, insurance, loading, unloading and handling charges of goods etc. Therefore, as per Notification No. 30/2012-ST dated 20.06.2012, Service Tax would be payable by the applicant i.e., recipient of service.

As per Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, where any expenditure or costs are incurred by the Service provider in the course of providing service, all such expenditure or costs shall be included in the value for the purpose of charging Service Tax on said service. Further, Rule 5(2) ibid inter alia envisages that the expenditure or costs incurred by the service provider as a pure agent of recipient of service shall be excluded from the value of taxable service.

For more details, please see Breaking News.

FTP - Eligibility of Liquid Glucose under Focus Market Scheme - DGFT clarifies

PARA 3.14.3 of FTP 2009-14,  inter-alia  states that Sugar, of all types and in all forms shall be ineligible for Duty Credit Scrip under  Focus Market Scheme  (FMS) of FTP 2009-14.

DGFT has received representations stating that the 'Liquid Glucose' under ITC (HS) Code 1702 is maize product, which is not sugar. Therefore, its export may be eligible for FMS benefit.

The issue has been examined in consultation with Policy Interpretation Committee (PIC). It is noted that Liquid Glucose falls under HS code 17023010. HS code 1702 is described under chapter 17 heading "Sugar and Sugar confectionery":

DGFT therefore clarifies that all items under HS code 1702 are Sugar as HS code 1702 lists "Other Sugar". Accordingly, the export item Liquid Glucose is "Sugar" and therefore not eligible for FMS benefits.

DGFT Trade Notice No. 01/2016, Dated: April 07, 2016

6% D.A to Government Servants

ALL Central Government employees and pensioners are to get a hike of 6% as dearness allowance from 1.1.2016. With this, the D.A of the babus is 125% of the pay. The babus are actually to get the benefits of the 7th Pay Commission with effect from 1.1.2016, where this 125% D.A is to be absorbed in the new pay scales. But as the Government is yet to finalise the implementation of the Pay Commission Report, this fresh instalment of D.A is announced. In July, the babus will get their annual increment. The Pay Commission report is to be implemented after that.

Department of Expenditure Office Memorandum No. 1/1/2016-E-II(B)., Dated April 07 2016

Customs - New Exchange Rates from Today

CBEC  has notified new exchange rates for Imported Goods and for Export Goods with effect from today. The USD is 67.50 Rupees for imports and 65.80 Rupees for exports.

Notification No. 48/2016-Cus (NT)., Dated: April 07, 2016

Cars line up at the CBP (the US Customs and Border Protection) inspection station at San Ysidro Port of Entry, considered to be the busiest land port in the world.

Today is Chaitra Sukladi, Ugadi, Gudi Padava, Cheti Chand, Navreh and Sajibu Cheiraoba. Celebrate and enjoy.

Until Monday with more DDT

Have a nice weekend.

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