News Update

ST - Amendment made to FA, 1994 on 14.05.2015 making service tax applicable retrospectively on chit-fund business is only prospective - Refund payable of tax paid between 01.07.2012 to 13.05.2015: HCST - SVLDRS, 2019 - Amnesty Scheme, being of the nature of an exemption from the requirement to pay the actual tax due to the government, have to be considered strictly in favour of the revenue: HCCX - Issue involved is valuation of goods u/r 10A of CE Valuation Rules, 2000 - Appeal lies before Supreme Court: HCCus - Smuggling - A person carrying any article on his belonging would be presumed to be aware of the contents of the articles being carried by him: HCCus - Penalty that could be imposed for smuggling 3.2 kg of gold was Rs.88.40 lakhs, being the value of gold, but what is imposed is Rs.10 lakhs - Penalty not at all disproportionate: HCCus - Keeping in mind the balance of convenience and irreparable injury which may be caused to Revenue, importer to continue indemnity bond of 115 crore and possession of confiscated diamonds to remain with department: HCCus - OIA was passed in October 2022 remanding the matter to adjudicating authority but matter not yet disposed of - Six weeks' time granted to dispose proceedings: HCI-T - High Court need not intervene in matter involving factual issues; petitioner may utilise option of appeal: HCChina asks Blinken to select between cooperation or confrontationI-T - Unexplained cash credit - additions u/s 68 unsustainable where based on conjecture & surmise alone: ITATHonda to set up USD 11 bn EV plant in CanadaI-T - Re-assessment is invalid where based only on a suspicion that income escaped assessment & where not based on concrete reasons to believe for commencing such proceedings : ITATImran Khan banned from flaying State InstitutionsI-T - Income from sale of flats cannot be computed in assessee's hands, where legal possession of flats had not been handed over to buyers in that particular AY: ITATPro-Palestine demonstration spreads across US universities; 100 arrestedI-T - Investment activities in venture capital which are not covered in negative list under Schedule III to SEBI Regulations, qualifies for deduction u/s 10(23FB): ITATNATO asks China to stop backing Russia if keen to forge close ties with WestCus - When Department has not complied with time limit, the order issued for revocation of licence or order issued for continuation of suspension licence cannot sustain: CESTATNY top court quashes conviction of Harvey Weinstein in rape caseWeather prediction normal for phase 2 poll dayIndiGo orders 30 Airbus A350s for long haulsST - Appellant is an 'authorised medical practitioner' providing 'healthcare services' - services exempted in terms of clause 2(i) of notification 25/2012-ST: Commr(A)RBI to issue fresh guidelines for banks to freeze suspected bank accounts being used for cyber crimesREC avails SACE-Covered Green Loan for 60.5 Billion Japanese YenStudy finds Coca-Cola accounts for 11% of branded plastic pollution worldwideCus - 'Small Form-factor Pluggable Optical Transceivers' are classifiable under CTH 8517 7090 and not under CTH 8517 62 90 - entitled for benefit of duty concession under 57/2017-Cus: CESTATDoNER discusses Development of Tourism in North EastCX - Appellant is eligible for exemption under Notfn 12/2012-CE upon fulfilling all conditions stipulated therein, thus sufficiently establishing that goods dealt with by Appellants qualify for exemption: CESTAT
 
Time Limit for claiming refund under Notification 41/2007 ST dated 6.10.2007 - Please clarify clarification

TIOL-DDT 1178
19.08.2009
Wednesday

WE are getting a large number of mails from worried exporters and more worried consultants on the subject.

Notification 41/2007 ST dated 6.10.2007 allowed refund of service tax paid on certain services used by the exporters of goods. As per the procedure given in the Notification, the refund claims are to be filed on quarterly basis within six months from the date of export.

The time limit for claiming the refund has been clarified by the Board vide Circular No 112/2009 as under:

It is clarified that consequent upon revision of limitation period, any refund claim that is filed within such revised limitation period would be admissible if it is otherwise in order. Therefore, refund claims of service tax on specified taxable services used for exports of goods made in the quarter Mar-Jun 08 could be filed till 31 st Dec 08.

However, the clarification given in the same table at Sl No IV reads:

It is clearly prescribed in the notification that limitation period of six month is to be computed from the date of exports.

So, some officers are interpreting that the refund claims filed beyond six months of the date of export are barred by limitation. Thus the claim for the goods exported in March 2008, if filed in the month of October 2008 would be time barred. However, this view is contrary to the clarification given at Sl No I which clearly stated that the claim could be filed till 31 st Dec 2008.

Apparently, the clarification at Sl No IV of the table that the limitation period of six months to be computed from the date of export is only meant to clarify that the date of receipt of remittances is not relevant for computing the limitation, as can be seen from the column “issue raised”.

In any case, it would be appropriate for the Board to resolve the confusion in the minds of the concerned officers.

Fortunately, the refund is now governed by Notification No. 17/2009 ST (after rescinding of Notification 41/2007 ST) which clearly stipulated the time limit as one year from the date of export.

Requirement of lease agreement when Developer/Co-Developer and unit are same – DOC Clarifies

Department of Commerce has clarified that in cases where Developer or Co-Developer setup a unit, there is no need for a separate lease agreement between the developer/Co- Developer and unit. An allotment letter from the Developer or Co-Developer to the unit would be sufficient.

DOC INSTRUCTION NO 31: Dated August 17, 2009

Clearance of used capital goods into Domestic Tariff Area - DOC Clarifies

Department of Commerce has clarified that he capital goods which have been procured by the developer or co-developer for undertaking authorise operations in SEZ can be cleared back into DTA following the procedure as per the provisions of rule 49(3).

Rule 49(3) reads as

Goods on which any export entitlements were availed at the time of procurement of goods may be supplied back to the Domestic Tariff Area on payment of duty equivalent to the export entitlements availed subject to the condition that the identity of goods being supplied back to the Domestic Tariff Area is established to the satisfaction of the Specified Officer

DOC INSTRUCTION NO 32: Dated August 17, 2009

CESTAT needs Technical Members

Government has called for applications from candidates for appointment of Technical Members in CESTAT in the pay scale of Rs 75500-80,000/- as there are some anticipated and unanticipated vacancies. Now what are unanticipated vacancies? Are they planning to remove some Members or are some Members planning to quit?

The Qualification: a member of the Indian Customs & Central Excise Service Group ‘A' and has held the post of Commissioner of Customs and/or Central Excise or any equivalent or higher post for at least three years, and has attained the age of 45 years. Applicants who have already appeared twice for interview for the post of Member (Technical) in CESTAT need not apply again as they will not be called for interview.

Department of Revenue F.No.A.12026 /2/2009- Ad1C : Dated August 17, 2009

Jurisprudentiol – Thursday's cases

Legal Corner IconCentral Excise

CENVAT Credit – Inputs used for generation of electricity cleared outside the factory – not entitled for credit – Supreme Court

The definition of "input" brings within its fold, inputs used for generation of electricity or steam, provided such electricity or steam is used within the factory of production for manufacture of final products or for any other purpose. The important point to be noted is that, in the present case, excess electricity has been cleared by the assessee at the agreed rate from time to time in favour of its joint ventures, vendors etc. for a price and has also cleared such electricity in favour of the grid for distribution. To that extent, assessee was not entitled to CENVAT credit. In short, assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price.

Income Tax

TDS on payments to non-resident - if payee has paid tax then AO is not justified to raise demand for short deduction; Assessee's default comes to end when payee pays tax for payments received from deductor - It is not expected from deductor to decide tax status of payee: ITAT

The issue as to under which head the income is to be taxed is between the payee and the Assessing Officer having jurisdiction over the payee. Tax is to be paid by the payee and the deductor is only facilitating in the collection of such tax. The deductor can raise a ground in respect of his bona fide belief for short deduction of tax at source but he cannot step into the shoes of the Assessing Officer having jurisdiction over the payee to decide the head under which such income is to be taxed.

Service Tax

Security Services provided to Director at his residential bungalow, Repair & maintenance of guest house and garden – Prima facie there is nothing to show that there was any connection, directly or indirectly in or in relation to manufacture or clearance of finished products – Pre – Deposit ordered - CESTAT

The lower authorities denied CENVAT Credit amounting to Rs.3,61,193 /- in respect of the following three Services –

+ Repair and Maintenance of guest house and garden;

+ Security service provided to a Director of the company at his residential bungalow;

+ Outdoor Catering Service, and also imposed equal amount of penalty on the party under section 11AC of the Act.

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@taxindiaonline.com


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Limitation period

Dear Sir,

As per the said Notn. No.41/2007 payment of service tax is also the criteria. In the below situation what wld be the action.

if the export of goods was in Feb'08 then the qtr ending wld be March'08 the six month period wld end in Aug'08, but the payment of Service Tax for services rendered against the export of goods in Feb'08 was only made in Sept'08, hence will it be treated as time barred or the time limit of 6 mths frm the qtr ending Sept'08 be applicable.

In my opinion irrespective of the above the claim has to be allowed by way of refund or by taking cenvat credit, since duties and taxes cannot be exported. but "Government ke saath kaun panga lega" since the dept wld not refund neither allow cenvat credit just to satisfy their revenue targets and be in the good books of the Ministry.

Posted by Vijay Vora
 
Sub: No rationality

Dear Sir,

The Notn. No.41/2007 has really become a helm of affairs for the exporters since the procedures are practically not workable in any manner and the notifications and circular are poorly drafted which leads to confusion and confusion but no relief, why don’t the department simply provide a blanket exemption for Service Tax used for export of goods and services.

If a careful reading is made to the original Notn. No.41/2007 the clause (f) i.e.“exemption or refund of service tax paid on the specified services used for exports of the said goods shall not be claimed except under this notification”. It directly provides for exemption from service tax as the word used in the notn is “OR”. So the option is open to the exporter either to avail the exemption or refund as required. But the question is will the Department allow the exemption? the answer to it is NO for the simple reason that the Revenue Dept wants to make good their targets by collecting the revenue and when the exporters applies for refund simply reject it so their kitty would not be affected as it appears that the department wants to simply enjoy on these hard earned exporters sales.

Now after the recent changes in the BUDGET the department had issued 2 new notifications no.17/2009 and 18/2009 for refund and exemption respectively, but a careful analysis shows that these 2 notifications vis-à-vis the old notification would still not save the exporter. Eg

As we are all well aware that under RBI regulations the max permissible limit for DA bills under LC is 180 days, now the question here arises that if the exporter had exported the goods under LC with DA 180 days from BL and on such exports if the exporter is suppose to pay commission to the overseas agents, what would happen – say if the exporter had exported the goods in Mar’08 then –

The claim for service Tax refund should be submitted by the end of Sept’08, whereas the realization of the export proceeds against these exports would be due in Sept’08, hence only after receipt of the export proceeds the overseas agent wld be liable to claim his commission and accordingly the Indian exporter would pay the service tax after realization of the proceeds on reverse charge method.

Now the BIG question is can the refund for the service tax paid in Oct’08 for commission agents after receipt of the export proceeds in Sept’08 be allowed? The department would simply reject it saying time barred at the same time CENVAT credit would not be allowed. So the only option left over with the exporter is claim under the new Notn. 17/2009, but here also the exporter would not be able to do much for the simple reason that the Department has not included the said specified service in the refund notn. No.17/2009 in regard to commission paid to overseas agents.
Hence the exporter has to simply forget the tax paid to the department and charge it to the revenue account as an expense, and the department would enjoy the tax paid by these exporters who are fighting and begging to export goods in the current situation. But end of the day exporters have no choice since the mechanism is so poorly administered in the north block that no relief for these issue would come.


Posted by Vijay Vora
 

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