LEVIABILITY of service tax on construction of canals for Government projects.

Board notes that as per section 65 (25b ) of the Finance Act, 1994 “commercial or industrial construction service” means —

(a) construction of a new building or a civil structure or a part thereof; or

(b) construction of pipeline or conduit; or

(c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or

(d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit,

which is —

(i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or

(iii) engaged, or to be engaged, primarily in,

commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.

Thus the essence of the definition is that the “commercial or industrial construction service” is chargeable to service tax if it is used, occupied or engaged either wholly or primarily for the furtherance of commerce or industry.

As the canal system built by the Government or under Government projects, is not falling under commercial activity, the canal system built by the Government will not be chargeable to service tax.

However, if the canal system is built by private agencies and is developed as a revenue generating measure, then such construction should be charged to service tax.

Government taking up construction activity of dams, irrigation projects buildings or infrastructure construction etc. through turnkey or EPC (Engineering Procurement & Construction) mode: The service is covered under section 65 (105) ( zzzza ) of Finance Act, 1994. The section itself excludes works contract in respect of dams, tunnels, canals of irrigation projects, road, airports, railways, transport terminals & bridges executed through such turn-key or EPC mode. Hence works contract in respect of above works even if done through turn-key or EPC mode are exempt from payment of service tax.

CBEC Circular No. 116/10/2009 – ST: dated 15th September 2009

A nuclear war cannot be won and must never be fought – President Obama

Addressing the UN Security Council, yesterday US President Obama said,

This very institution was founded at the dawn of the atomic age, in part because man's capacity to kill had to be contained. 

Just one nuclear weapon exploded in a city - be it New York or Moscow; Tokyo or Beijing; London or Paris -- could kill hundreds of thousands of people.  And it would badly destabilize our security, our economies, and our very way of life.

Once more, the United Nations has a pivotal role to play in preventing this crisis. 

Nations with nuclear weapons have the responsibility to move toward disarmament; and those without them have the responsibility to forsake them.

Now, we harbour no illusions about the difficulty of bringing about a world without nuclear weapons.  We know there are plenty of cynics, and that there will be setbacks to prove their point. 

But there will also be days like today that push us forward -- days that tell a different story.  It is the story of a world that understands that no difference or division is worth destroying all that we have built and all that we love. 

It is a recognition that can bring people of different nationalities and ethnicities and ideologies together. 

He quoted Ronald Reagan

"A nuclear war cannot be won and must never be fought.  And no matter how great the obstacles may seem, we must never stop our efforts to reduce the weapons of war.  We must never stop until all -- we must never stop at all until we see the day when nuclear arms have been banished from the face of the Earth."

Better global governance - WTO's Public Forum

The role of the multilateral trading system in the context of the current economic crisis will be the central focus of this year's WTO Public Forum and representatives of civil society, academia, governments and the media will be encouraged to engage and debate on how the system can best provide global answers to the crisis.

“At a time of economic crisis, the civil society contribution is needed more than ever as we come together to seek global solutions to global problems” said WTO Director General Pascal Lamy .

Trade, as one of the pillars of the global economy, has an important role to play in stimulating growth. The forum will also offer the possibility to debate and reflect upon how the WTO and its rules-based multilateral trading system can contribute to the post-crisis agenda.

The forum begins with a high level inaugural debate featuring WTO Director General Pascal Lamy , former South African President Thabo Mbeki, Special Envoy on Climate Change for the UN and former Prime Minister of Norway Gro Harlem Brundtland and Uruguayan Senator and former Foreign Minister Sergio Abreu . The opening session will be moderated by Rui Chenggang , a prominent presenter for the Chinese television network, CCTV .

The annual WTO Public Forum, first launched in 2001, provides a platform for public debate and discussion across a wide range of WTO issues and activities, including the current Doha Round of multilateral trade negotiations. Since then the WTO Public Forum has become one of the most important platforms for dialogue between the civil society and governments. It is now a significant feature of the international calendar. Over the years, 8,500 representatives from civil society, academia, business, the media, governments and inter-governmental organizations including regional economic and development organizations, attended the Public Forum.

DRI seizes Rs 60 lakh from Customs Superintendent

DRI , Mumbai un-earthed a major multi- crore export scam and seized Rs. 66 lakh cash from the residence of a customs superintendent in follow-up raids on Thursday.

It was found that containers containing torn and waste cloth pieces were declared to be carrying finished fabric products. The same were being cleared by customs officials for export to Dubai. The scam came to light when one such container, sent back from Dubai, was found to be stuffed with torn and waste cloth pieces. Further investigations revealed that the container was cleared for export by a customs superintendent.

DRI officials conducted search operations at his residence and found Rs. 66 lakh cash. The superintendent has been detained for further questioning.

The DRI is now in the process of questioning all those involved in the process of clearing export consignments.

The scam may run into several Crores.

Jurisprudentiol – Tuesday's cases

Central Excise

Undervaluation of dutiable IT peripherals by overvaluing the non duty paid driver software – 30% of duty amount deposited before Commissioner( A) sufficient – Stay granted - CESTAT.

After noting that in terms of that order the assessee had deposited 30% of the total amount of duty, the CESTAT observed that the same would suffice the pre-deposit requirement of the present appeal and accordingly granted a waiver of pre-deposit and stayed recovery in respect of the balance amounts. It was also directed that the deposit of Rs. 14 lakhs should be maintained till final disposal of the present appeals.

Settlement of case before Settlement Commission and being granted immunity from penalty and prosecution – whether supplementary invoices issued are cenvattable –Stay granted by waiving pre-deposit of Rs.14.7 Crores - CESTAT

The Commissioner categorically held that, where immunity was granted by the Settlement Commission to the input-supplier against penal liability under Section 11AC of the Central Excise Act, it was not correct to deny the Cenvat credit in respect of such goods to the manufacturer of final products where the latter claimed the benefits on the basis of supplementary invoices issued by the input supplier. This decision of the Commissioner at Chennai squarely covers the issue involved in the present case, in favour of the appellant.

Income Tax

Defects in returns filed by FII - AO declares them invalid as defects found in returns not listed out in relevant Section - Types of defects enumerated in Sec 139(9) are only inclusive, and not exhaustive - defect memo to be issued - AO's decision to invalidate defective returns not sustainable: ITAT

DEFECTS in income tax returns are a common phenomenon. And these defects can be attributed to various reasons, including an oversight. To cure such defects, the two relevant provisions which apply are Sec 292B and Sec 139(9). These provisions are there in the I-T Act to assist the assessee to rectify the defects so that the return is not declared invalid. Sec 139(9) lists out in details various types of defects which can be cured. But what happens when a particular type of defect is not found in the list? Does it render the return invalid and non est ? NO is the Tribunal's answer. In an interesting defect-focussed decision the Tribunal has held that the list provided under Sec 139(9) is not exhaustive. The Legislature has provided an inclusive list which brings under its sweep many other types of defects which are not mentioned there.

Monday is a Holiday

See our columns Tuesday for the judgements

Until Tuesday with more DDT

Have a nice (extended) weekend.

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