The Madhya Pradesh Chief Minister, Shivraj Singh Chauhan sought exemption from Service Tax on maintenance or repair of roads.

Promptly the DGST has written a letter to the field formations,

“You are requested to kindly ensure that service tax is collected from the service providers undertaking management, maintenance or repair of roads and rendering service to Public Works Department of the State or the Central Government or to any other Department of the State or the Central Government.”

Perhaps the poor Chief Minister has prompted the Department to collect the tax. Now Service Tax officers will be on the roads to check up which roads are being maintained or repaired. Now you find our cities being cleaned by hired workers during midnight and early morning. Is the sweeping of the roads, maintenance or repair? As such, our civic bodies are so helplessly handicapped with lack of funds that the roads are in bad shape. Can they afford to pay an additional 12.36% for the repairs and maintenance?

And since when is this road tax leviable?

Clause 64 of Section 65 of the Finance Act, 1944 (when will we have a Service Tax Act – with GST looming large, perhaps no such possibility) defines the service as

(64) " management , maintenance or repair" means any service provided by—

( i ) any person under a contract or an agreement; or

(ii) a manufacturer or any person authorised by him, in relation to,-

(a) management of properties, whether immovable or not;

(b) maintenance or repair of properties, whether immovable or not; or

(c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicle;

Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, "goods" includes computer software;

Is the road an immovable property? It is, at least as per the CBEC. In F.No.B1 / 6 /2005- TRU , dated : July 27, 2005 , the TRU calrfied ,

16. Maintenance or repair service

16.2 Prior to 16/6/2005, such services covered maintenance or repair or servicing of any goods or equipment, excluding motor vehicles. However, since 16/6/2005, services relating to maintenance or management of immovable property (such as roads, airports, railways, buildings, parks, electrical installations and the like) have also been covered under the purview of service tax. Such services would be taxable when provided under a contract or an agreement by any person or by a manufacturer or any person authorized by a manufacturer.

So this tax is leviable from 16.6.2005, but was it being collected? Can the DGST tell the country how much tax was collected on road repairs? Now perhaps SCNs will fly alleging suppression and evasion. Will Municipal Commissioners be summoned to give information about repair contracts given by them in the last three years? The possibilities are exciting and varied. The Service Tax officers can go to remote villages and forests to survey road repair activity and detect evasion. The Border Roads Organisation can also be a good target.

If somebody repairs the Jammu - Pathankot national highway, how will he be taxed, for there is no Service Tax in J&k but it is payable across the border!

Is it worth taxing the road repair? 99% of the roads belong to the Government – state or central, Municipal bodies, panchayats . As mentioned earlier, should the cost of maintaining the horrible roads be enhanced for these fund starved bodies?

Perhaps the FM can graciously accede to the request of the Madhya Pradesh CM and exempt road repair from Service Tax and for this he need not wait for the budget.

And perhaps, the BJP has a political agenda in this request. They can now take to the road and say the FM has made even a basic requirement like road repair prohibitive! The BJP demagogues will remind their audiences that it was Emperor Asoka , Sher Shah Suri and then Atalji , who built roads in India and now this government wants to tax even repair of these roads!

DGST's F No V/ DGST /30-Misc-16/2008448 Dated : January 31, 2008

Tariff Value of Brass Scarp – Increased; No change in other items

The CBEC has increased the Tariff Value of imported Brass Scrap from US Dollars 4114 to US Dollars 4249. Tariff value for poppy seeds remains at 5398 Dollars. There is no change in the Tariff Value of other products too.

NOTIFICATION NO. 6/2008- Cus . ,( N.T. ), Dated: February 05, 2008

Summons through video conference – CIC's e-hearing

Please refer to TIOL-DDT 760 12.12.2007 - we reported about the Central Information Commission summoning former senior officers of the CBI for a video conference. The appellant, Customs officer, Ajay Ubale had asked for some gate registers from CBI and they asked him to get them from different officers. He had also asked for information about a case in which investigation had been completed.

The hearing took place with the applicant Ajay Ubale at NIC studio Mumbai, V.V. Lakshmi Narayana , DIG, CBI at NIC studio Hyderabad and S. N. Saxena , SP, CBI at NIC studio Mumbai.  Now the video hearing is over and the CIC was told that the gate registers have been destroyed and though investigation is over, a revision petition is pending.

The CIC ordered that gate registers cannot be inspected now as there remains nothing to inspect. Regarding the case details, the Commission held that that mere continuation of prosecution or process of investigation is not enough to deny information to an information seeker under the RTI Act, unless the disclosure of such information would impede the process of investigation or apprehension or prosecution of offenders.

And so directed the CPIO to furnish the information.

Jurispruden tiol  – Tomorrow's cases

Income Tax

Condonation of delay – 1530 days - assessee pursuing ROM with Commissioner (Appeals) – Delay not condoned – penalty confirmed : ITAT

The delay of 1530 days was due to the Assessee being unaware of the correct procedure to contest the original CIT (A)'s order and was advised wrongly by the earlier Authorized Representative and hence not deliberate and neither willful nor wanton but on account of the bonafide belief on the part of the assessee that it was proceeding on the right track, which to its-utmost dismay it found was a mistaken belief.

The Tribunal was not impressed. Accordingly, the appeal was dismissed as time barred.

Prosecution vs adjudication

No prosecution on same set of facts if departmental adjudication drops proceedings on strong reasons -  After exonerating the party on merits, the same authority cannot be a prosecutor for the same offence : Delhi High Court

The Respondent has itself exonerated the petitioner in the adjudication proceedings on merits and its order has attained finality. The continuation of criminal proceedings on identical facts and requiring a higher degree of proof cannot be justified.

Central Excise

Aircraft on foreign run although making some halts within Indian territory entitled to concessional rate of duty : Tribunal

INGENUITY knows no bounds when it comes to Departmental officers interpreting an exemption notification.

The case goes thus - the appellant supplied Aviation Turbine Fuel (ATF) at concessional rate of duty to an Air India Aircraft operating through Sahar Airport . It is the allegation in show cause notice that the said ATF was supplied to flights of Air India for plying between Mumbai and Ahmedabad /Hyderabad/Goa/Calicut in India without a trip to foreign Airport on their voyage. After granting hearing, the adjudicating authority confirmed the demand and also imposed penalty and directed to pay the interest on the said amount .

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice Day.

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