Get photos x
Press ? for Keyboard Shortcuts.
Press the Enter key to select an item
To
GlobalIndianCAs@yahoogroups.com
Today at 3:32 AM
10 Messages
Digest #4142
Messages
Thu Jun 18, 2015 2:37 am (PDT) . Posted by:
ca.bhupendrashah
TERA CONSTRUCTION P. LTD. vs.INCOME TAX OFFICER-
DELTRIB
Penaltyâ€"Penalty u/s 271(1)(c)â€"Assessee was a builder and promoterâ€"No business activity was carried on during year relevant to assessment year under considerationâ€"However, some rental income was earned apart from some interest on FDRs, etcâ€"This rental income was declared under head ‘Income from house property’ on which deduction u/s 24 was claimed for ‘Other expenses’, namely, depreciation, building maintenance expenses, commission, etcâ€"AO held that such expenses were not separately allowable as deduction because same were covered under composite deduction allowable under head ‘Income from house property’â€"AO therefore, computed total income by assessing rental income under head ‘Income from house property’ as was declared by Assessee without allowing any separate deduction for expenses that were claimed by Assesseeâ€"Penalty was also imposed in respect disallowance of deductions claimed by Assessee against income under head ‘Income from house property’, which CIT(A) upheldâ€"Held, Assessee earned rental income on which it claimed deduction u/s 24(i)â€"Assessee further claimed deduction for various expenses and allowance in respect of let out property from which rental income was earnedâ€"Claim for deduction of various expenses etc. in computation of income under head ‘Income from house property’ was patently and ex facie untenableâ€"Provisions of Chapter IV-C were simple and plain in not admitting any deduction for expenses etc, of nature which had been claimed by Assessee, within its ambitâ€"As Assessee knowingly made wrong claim that was patently inadmissible, penalty u/s 271(1)(c) needed to be upheldâ€"Assessee’s appeal dismissed
DELTRIB
Penaltyâ€"Penalty u/s 271(1)(c)â€"Assessee was a builder and promoterâ€"No business activity was carried on during year relevant to assessment year under considerationâ€"However, some rental income was earned apart from some interest on FDRs, etcâ€"This rental income was declared under head ‘Income from house property’ on which deduction u/s 24 was claimed for ‘Other expenses’, namely, depreciation, building maintenance expenses, commission, etcâ€"AO held that such expenses were not separately allowable as deduction because same were covered under composite deduction allowable under head ‘Income from house property’â€"AO therefore, computed total income by assessing rental income under head ‘Income from house property’ as was declared by Assessee without allowing any separate deduction for expenses that were claimed by Assesseeâ€"Penalty was also imposed in respect disallowance of deductions claimed by Assessee against income under head ‘Income from house property’, which CIT(A) upheldâ€"Held, Assessee earned rental income on which it claimed deduction u/s 24(i)â€"Assessee further claimed deduction for various expenses and allowance in respect of let out property from which rental income was earnedâ€"Claim for deduction of various expenses etc. in computation of income under head ‘Income from house property’ was patently and ex facie untenableâ€"Provisions of Chapter IV-C were simple and plain in not admitting any deduction for expenses etc, of nature which had been claimed by Assessee, within its ambitâ€"As Assessee knowingly made wrong claim that was patently inadmissible, penalty u/s 271(1)(c) needed to be upheldâ€"Assessee’s appeal dismissed
Thu Jun 18, 2015 2:37 am (PDT) . Posted by:
ca.bhupendrashah
DEPUTY COMMISSIONER OF INCOME TAX vs. DEUTSCHA ASSISTANT MANAGEMENT (INDIA) PVT. LTD. vs.DEUTSCHA ASSISTANT MANAGEMENT (INDIA) PVT. LTD.
MUMTRIB
Transfer Pricingâ€"Computation of Arm’s length priceâ€"Validity of deletion of TP adjustmentâ€"Assessee company was engaged in business of providing investment advisory and marketing support servicesâ€"It provided advisory services to its Associated Enterprises (AEs)â€"In consideration for providing such advisory services, DAMAL (the fund Manager for Deutsche India Equity Fund) had given 50% shares of fees received by it to Assesseeâ€"TPO noticed that Assessee had received share of 70% of fees from another AE, Germany for providing liaisoning/marketin g support services to itâ€"Though Assessee had bench marked transactions under TNMM with net cost plus margin, TPO held that said method was not acceptableâ€"TPO further held that Assessee should have taken share of 70% of fees for advisory services provided to DAMAL alsoâ€"TPO proposed adjustment of Rs. 1.5 crores to income returned by Assesseeâ€"DRP deleted the adjustment madeâ€"Held, Identical adjustment made in Assessee’s own case in AY 2006-07 came to be considered by co-ordinate bench of this Tribunal in ITA No. 7717/Mum/2010â€"That tribunal vide its order dated 12-12-2012 thereof had given clear finding that fee received by Assessee for providing marketing and liasioning services could not be equated with advisory services given to investment managerâ€"Tribunal had accordingly set aside adjustment proposed by TPO, which had also been confirmed by DRP in that yearâ€"That TPO, in subsequent years, had accepted fact that services provided to AEs located in Singapore and Germany were different and accordingly did not propose any adjustment in assessment years 2010-11 and 2011-12â€"DRP followed decision rendered by it in AY 2008-09 in deciding issue in favour of Assesseeâ€"Since facts and circumstances of issue were identical in instant year also by following order passed by Tribunal in hands of assessee for AY 2006-07, order of DRP upheld on this issueâ€"Revenue' s Appeal dismissed
MUMTRIB
Transfer Pricingâ€"Computation of Arm’s length priceâ€"Validity of deletion of TP adjustmentâ€"Assessee company was engaged in business of providing investment advisory and marketing support servicesâ€"It provided advisory services to its Associated Enterprises (AEs)â€"In consideration for providing such advisory services, DAMAL (the fund Manager for Deutsche India Equity Fund) had given 50% shares of fees received by it to Assesseeâ€"TPO noticed that Assessee had received share of 70% of fees from another AE, Germany for providing liaisoning/marketin g support services to itâ€"Though Assessee had bench marked transactions under TNMM with net cost plus margin, TPO held that said method was not acceptableâ€"TPO further held that Assessee should have taken share of 70% of fees for advisory services provided to DAMAL alsoâ€"TPO proposed adjustment of Rs. 1.5 crores to income returned by Assesseeâ€"DRP deleted the adjustment madeâ€"Held, Identical adjustment made in Assessee’s own case in AY 2006-07 came to be considered by co-ordinate bench of this Tribunal in ITA No. 7717/Mum/2010â€"That tribunal vide its order dated 12-12-2012 thereof had given clear finding that fee received by Assessee for providing marketing and liasioning services could not be equated with advisory services given to investment managerâ€"Tribunal had accordingly set aside adjustment proposed by TPO, which had also been confirmed by DRP in that yearâ€"That TPO, in subsequent years, had accepted fact that services provided to AEs located in Singapore and Germany were different and accordingly did not propose any adjustment in assessment years 2010-11 and 2011-12â€"DRP followed decision rendered by it in AY 2008-09 in deciding issue in favour of Assesseeâ€"Since facts and circumstances of issue were identical in instant year also by following order passed by Tribunal in hands of assessee for AY 2006-07, order of DRP upheld on this issueâ€"Revenue' s Appeal dismissed
Thu Jun 18, 2015 2:37 am (PDT) . Posted by:
ca.bhupendrashah
ST - Revenue loses huge case on limitation - coaching provided for IIT along with 2 Course is taxable under coaching services; Only for failure on part of adjudicating authority to exercise jurisdiction vested in him, extended period is not invokable: CESTAT by Majority
By TIOL News Service
BANGALORE, JUNE 18, 2015: FACTS : The appellants are a not-for-profit society registered in the year 1987 under the provisions of the Registration of Societies Act, 1860 and operating solely for educational purposes. The appellants Society is also registered as a ‘Charitable Institution&# 39; under Section 12AA of the Income Tax Act, 1961 and is consequently claiming Income tax exemptions as a charitable institution.
Education is being provided by the appellants society through two types institutions, viz.: (i) Junior Colleges and (ii) Coaching Centers.
The appellant' s society, through their own junior colleges and the junior colleges of other societies under its management imparts education to the students for Intermediate (11 th and 12 th Standard). In order to impart education for their students, like any other schools providing education for 11 th and 12 th Standard students, the Appellants Society is recognized by the Andhra Pradesh Intermediate Board.
The appellant' s society introduced optional stream of courses in the year 1991 for students undergoing intermediate courses in their junior colleges. These courses are integrated into the syllabus of the First & Second year of the intermediate course. These optional courses are offered to students securing a high percentage of marks in their 10 th Standard & First Year Intermediate. The said optional courses are offered so as to enable the students to appear and score high in various entrance exams such as IIT-JEE, Engineering and Medical Common Entrance Test (EAMCET) etc. The appellant' s society follows the guidelines for the syllabus prescribed by the A.P. Intermediate Board, conducts regular internal assessments, follows a standard admission procedure and imparts education in various subjects under the Intermediate Board.
After investigations against the society which were conducted since the year 2003 the department issued a show-cause notice dated 8.9.2008 on the society proposing to demand service tax amounting to Rs.87,38,34, 876/- on the entire income received for the period 01.04.2003 to 31.03.2007 under the head of "Commercial training or coaching services" . The demand has been quantified on the basis of information gathered from the Balance Sheets of the Society for the period 01.04.2003 to 31.3.2007 which included all the receipts of the Society from all their institutions in India.
The Commissioner confirmed:
++ Amount of service tax: Rs. 85,38,34,876/ -;
++ Penalty of Rs.200 per day or 2% of the tax, whichever is higher u/s 76;
++ Penalty of Rs.150 crores u/s 78
++ Penalty of Rs.1000 u/s 77.
LAW : The texts of the relevant provisions of the Finance Act, 1994, which have a bearing on the case are as follows:
++ Section 65 (26) -"commercial training or coaching" means any training or coaching provided by a commercial training or coaching centre;
++ Section 65 (27) -"commercial training or coaching centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force.
++ Section 65 (105) (zzc) - ["taxable service" means any service provided or to be provided], to any person, by a commercial training or coaching centre in relation to commercial training or coaching;
Explanation - For the removal of doubts, it is hereby declared that the expression "commercial training or coaching centre" occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organisation under any law for the time being in force and carrying on its activity with or without profit motive and the expression "commercial training or coaching" shall be construed accordingly;
This Explanation was inserted in the Finance Act, 2010 and made effective from 1/7/2003, i.e. the date from which the levy of service tax was imposed on "commercial training or coaching" services.
In the Tribunal Division Bench, the Members had a difference of opinion.
Per Member (T):
++ Education qualification recognized by law: it cannot be said that the institutions under SCEC are excluded from the definition of ‘commercial training or coaching centres' because they issued certificate/ degree/diploma recognized by law.
++ Since the colleges are required to be run according to academic plan prescribed by the Board and each college is required to adhere to such plans, the observations that the coaching provided for competitive exam is optional and distinct and separate and is provided in campus which are considered as separate ones by the SCEC themselves, seems to be the correct position. Therefore the claim that it is integral part of curriculum of college education is not based on facts and ground reality.
++ The schools/institution s/Jr. colleges run by the appellants are neither excluded by the definition nor eligible for exemption Notification No.10/2003 issued by the Government in 2003.
++ Extended period: a simplistic approach to take a view that because the subsequent decisions of judicial fora took a view in favour of the appellant, appellant could have entertained a bona fide belief would not appropriate. While applying the precedent decisions to any particular case, the facts of the case have to be taken into account. After making efforts for more than two years the department proceeded to conduct search and investigations and thereafter show-cause notice was issued. Unless the very same facts are considered by a superior judicial forum or at least under the similar circumstances, a decision in favourable to the appellant has been taken, it would not be appropriate to simply follow the precedent decisions and apply the same to a case where the facts are totally dissimilar.
++ Therefore, if an assessee has to plead a bona fide belief, such a bona fide belief has to be pleaded during the relevant time and not on the basis of subsequent decisions. In this case, when the assessee intimated the department that assessee being a charitable trust was not liable to service tax, there were no decisions of any judicial forum taking such a view. Such decisions came only in 2008 and thereafter.
++ In view of the fact that suppression of facts and invocation of extended period are upheld, the penalty under Section 78 of the Finance Act would be mandatory.
++ Penalty under Sections 76 and 78 is required to be waived by invoking the provision of Section 80 of Finance Act, 1994.
++ Penalty under Section 77 of Finance Act 1994 of Rs.1000/- is upheld.
++ Normally when the service tax amount is required to be quantified, the matter is remanded to the original adjudicating authority for doing so. In this case in the absence of all the relevant details and the breakup under various heads, it may not be easily possible for the adjudicating authority to do the quantification without delay. In any case, the relevant details are required to be furnished by the appellants only to facilitate this. Therefore instead of remanding the matter for quantification, the appellant is directed to submit detailed worksheet year-wise to the Commissioner within two months from the date of receipt of this order quantifying the amount payable by them in terms of the decision taken by us above and also interest up to the date of preparation of such worksheet and thereafter interest per day payable.
Member (J) did not agree.
Per Member (J):
++ Formal education provided by school and college is not the subject matter of taxation under the Service Tax as defined in the Act. Such formal educational institution are not defined as Commercial Training or Coaching Centre under Section 65(27) of the Finance Act, 1994 and thus the coaching provided by such institution in addition to their prescribed syllabus by the Board is not the taxable activity under the Finance Act, 1994.
++ As regards invocation of extended period of limitation, the appellant had taken a stand as early as on 31.7.2003 (communicated in writing) that the activity is not taxable under the provisions of the Finance Act, 1994.
++ The stand taken by the appellant with respect to the activity in its coaching centre being not taxable, they being charitable institution registered under the Society Registration Act, 1860 and also recognized as a charitable institution under the provisions of the Income Tax Act, 1961, also has force.
++ The appellant' s activity in respect of coaching classes is taxable in view of the subsequent explanation added with retrospective effect under Section 65(105)(zzc) of the Finance Act, 2010.
++ Delay in furnishing information sought for by Revenue from the appellant, cannot be a ground for invocation of extended period. All the powers of a Court with regard to attendance of witness, discovery of information/ documents, etc. are vested in the adjudicating authority. Only for failure on the part of the adjudicating authority to exercise jurisdiction vested in him, extended period is not invokable.
Thus the Member (J) differed on the following points:
++ Service Tax is not leviable in respect of coaching provided by appellant through Junior Colleges under its management or under the management of others.
++ Extended period of limitation is not invokable.
++ Penalty under Section 77 is set aside.
He agreed with Member (T) on the following issues:
++ Service Tax is leviable on the activity of coaching at the Coaching Centres of the appellant.
++ Penalty imposed under Sections 76 and 78 of the Finance Act, 1994 are set aside.
++ Benefit of cum-tax calculation will be available.
++ Other receipts like Games fee, Hostel fee, Lab. Fee etc. will be deductible.
And so the matter went to the Third Member with the following questions:
++ Whether service tax is leviable in respect of coaching provided by the appellant through junior colleges under its management or under the management of others also as held by Member (Technical) or no tax would be leviable in such cases as held by learned Member (Judicial).
++ Whether extended period of limitation is invocable as held by Member (Technical) or is not invocable as held by learned Member (Judicial).
++ Whether penalty under Section 77 is to be set aside as held by learned Member (Judicial) or has to be imposed as held by Member (Technical).
Per Third Member :
++ I agree with the finding of the learned Member (Technical) that Service Tax is leviable on the Appellant Society on such coaching classes.
++ I agree with the order of learned Member (Judicial) and the demand of tax is barred by limitation.
++ Service Tax is leviable in respect of coaching provided by the Appellant as held by Learned Member (Technical) and therefore, the imposition of penalty under Section 77 as held by learned Member (Technical) is correct.
So the final order is:
++ Service tax is leviable in respect of coaching provided by the appellant through junior colleges under its management or under the management of others also;
++ Extended period of limitation is not invocable and the demand is limited to the normal period of limitation; and
++ Only penalty under Section 77 of the Finance Act, 1994 is upheld.
Effect on the party:
++ Most or whole of the demand of Rs. 85 crore will go as time barred.
++ Penalty of Rs. 150 crore is quashed.
++ Penalty of Rs. 10,000 survives.
Interestingly, the matter is not remanded for quantifying the demand - if any - that survives.
By TIOL News Service
BANGALORE, JUNE 18, 2015: FACTS : The appellants are a not-for-profit society registered in the year 1987 under the provisions of the Registration of Societies Act, 1860 and operating solely for educational purposes. The appellants Society is also registered as a ‘Charitable Institution&# 39; under Section 12AA of the Income Tax Act, 1961 and is consequently claiming Income tax exemptions as a charitable institution.
Education is being provided by the appellants society through two types institutions, viz.: (i) Junior Colleges and (ii) Coaching Centers.
The appellant' s society, through their own junior colleges and the junior colleges of other societies under its management imparts education to the students for Intermediate (11 th and 12 th Standard). In order to impart education for their students, like any other schools providing education for 11 th and 12 th Standard students, the Appellants Society is recognized by the Andhra Pradesh Intermediate Board.
The appellant' s society introduced optional stream of courses in the year 1991 for students undergoing intermediate courses in their junior colleges. These courses are integrated into the syllabus of the First & Second year of the intermediate course. These optional courses are offered to students securing a high percentage of marks in their 10 th Standard & First Year Intermediate. The said optional courses are offered so as to enable the students to appear and score high in various entrance exams such as IIT-JEE, Engineering and Medical Common Entrance Test (EAMCET) etc. The appellant' s society follows the guidelines for the syllabus prescribed by the A.P. Intermediate Board, conducts regular internal assessments, follows a standard admission procedure and imparts education in various subjects under the Intermediate Board.
After investigations against the society which were conducted since the year 2003 the department issued a show-cause notice dated 8.9.2008 on the society proposing to demand service tax amounting to Rs.87,38,34, 876/- on the entire income received for the period 01.04.2003 to 31.03.2007 under the head of "Commercial training or coaching services" . The demand has been quantified on the basis of information gathered from the Balance Sheets of the Society for the period 01.04.2003 to 31.3.2007 which included all the receipts of the Society from all their institutions in India.
The Commissioner confirmed:
++ Amount of service tax: Rs. 85,38,34,876/ -;
++ Penalty of Rs.200 per day or 2% of the tax, whichever is higher u/s 76;
++ Penalty of Rs.150 crores u/s 78
++ Penalty of Rs.1000 u/s 77.
LAW : The texts of the relevant provisions of the Finance Act, 1994, which have a bearing on the case are as follows:
++ Section 65 (26) -"commercial training or coaching" means any training or coaching provided by a commercial training or coaching centre;
++ Section 65 (27) -"commercial training or coaching centre" means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by law for the time being in force.
++ Section 65 (105) (zzc) - ["taxable service" means any service provided or to be provided], to any person, by a commercial training or coaching centre in relation to commercial training or coaching;
Explanation - For the removal of doubts, it is hereby declared that the expression "commercial training or coaching centre" occurring in this sub-clause and in clauses (26), (27) and (90a) shall include any centre or institute, by whatever name called, where training or coaching is imparted for consideration, whether or not such centre or institute is registered as a trust or a society or similar other organisation under any law for the time being in force and carrying on its activity with or without profit motive and the expression "commercial training or coaching" shall be construed accordingly;
This Explanation was inserted in the Finance Act, 2010 and made effective from 1/7/2003, i.e. the date from which the levy of service tax was imposed on "commercial training or coaching" services.
In the Tribunal Division Bench, the Members had a difference of opinion.
Per Member (T):
++ Education qualification recognized by law: it cannot be said that the institutions under SCEC are excluded from the definition of ‘commercial training or coaching centres' because they issued certificate/ degree/diploma recognized by law.
++ Since the colleges are required to be run according to academic plan prescribed by the Board and each college is required to adhere to such plans, the observations that the coaching provided for competitive exam is optional and distinct and separate and is provided in campus which are considered as separate ones by the SCEC themselves, seems to be the correct position. Therefore the claim that it is integral part of curriculum of college education is not based on facts and ground reality.
++ The schools/institution s/Jr. colleges run by the appellants are neither excluded by the definition nor eligible for exemption Notification No.10/2003 issued by the Government in 2003.
++ Extended period: a simplistic approach to take a view that because the subsequent decisions of judicial fora took a view in favour of the appellant, appellant could have entertained a bona fide belief would not appropriate. While applying the precedent decisions to any particular case, the facts of the case have to be taken into account. After making efforts for more than two years the department proceeded to conduct search and investigations and thereafter show-cause notice was issued. Unless the very same facts are considered by a superior judicial forum or at least under the similar circumstances, a decision in favourable to the appellant has been taken, it would not be appropriate to simply follow the precedent decisions and apply the same to a case where the facts are totally dissimilar.
++ Therefore, if an assessee has to plead a bona fide belief, such a bona fide belief has to be pleaded during the relevant time and not on the basis of subsequent decisions. In this case, when the assessee intimated the department that assessee being a charitable trust was not liable to service tax, there were no decisions of any judicial forum taking such a view. Such decisions came only in 2008 and thereafter.
++ In view of the fact that suppression of facts and invocation of extended period are upheld, the penalty under Section 78 of the Finance Act would be mandatory.
++ Penalty under Sections 76 and 78 is required to be waived by invoking the provision of Section 80 of Finance Act, 1994.
++ Penalty under Section 77 of Finance Act 1994 of Rs.1000/- is upheld.
++ Normally when the service tax amount is required to be quantified, the matter is remanded to the original adjudicating authority for doing so. In this case in the absence of all the relevant details and the breakup under various heads, it may not be easily possible for the adjudicating authority to do the quantification without delay. In any case, the relevant details are required to be furnished by the appellants only to facilitate this. Therefore instead of remanding the matter for quantification, the appellant is directed to submit detailed worksheet year-wise to the Commissioner within two months from the date of receipt of this order quantifying the amount payable by them in terms of the decision taken by us above and also interest up to the date of preparation of such worksheet and thereafter interest per day payable.
Member (J) did not agree.
Per Member (J):
++ Formal education provided by school and college is not the subject matter of taxation under the Service Tax as defined in the Act. Such formal educational institution are not defined as Commercial Training or Coaching Centre under Section 65(27) of the Finance Act, 1994 and thus the coaching provided by such institution in addition to their prescribed syllabus by the Board is not the taxable activity under the Finance Act, 1994.
++ As regards invocation of extended period of limitation, the appellant had taken a stand as early as on 31.7.2003 (communicated in writing) that the activity is not taxable under the provisions of the Finance Act, 1994.
++ The stand taken by the appellant with respect to the activity in its coaching centre being not taxable, they being charitable institution registered under the Society Registration Act, 1860 and also recognized as a charitable institution under the provisions of the Income Tax Act, 1961, also has force.
++ The appellant' s activity in respect of coaching classes is taxable in view of the subsequent explanation added with retrospective effect under Section 65(105)(zzc) of the Finance Act, 2010.
++ Delay in furnishing information sought for by Revenue from the appellant, cannot be a ground for invocation of extended period. All the powers of a Court with regard to attendance of witness, discovery of information/ documents, etc. are vested in the adjudicating authority. Only for failure on the part of the adjudicating authority to exercise jurisdiction vested in him, extended period is not invokable.
Thus the Member (J) differed on the following points:
++ Service Tax is not leviable in respect of coaching provided by appellant through Junior Colleges under its management or under the management of others.
++ Extended period of limitation is not invokable.
++ Penalty under Section 77 is set aside.
He agreed with Member (T) on the following issues:
++ Service Tax is leviable on the activity of coaching at the Coaching Centres of the appellant.
++ Penalty imposed under Sections 76 and 78 of the Finance Act, 1994 are set aside.
++ Benefit of cum-tax calculation will be available.
++ Other receipts like Games fee, Hostel fee, Lab. Fee etc. will be deductible.
And so the matter went to the Third Member with the following questions:
++ Whether service tax is leviable in respect of coaching provided by the appellant through junior colleges under its management or under the management of others also as held by Member (Technical) or no tax would be leviable in such cases as held by learned Member (Judicial).
++ Whether extended period of limitation is invocable as held by Member (Technical) or is not invocable as held by learned Member (Judicial).
++ Whether penalty under Section 77 is to be set aside as held by learned Member (Judicial) or has to be imposed as held by Member (Technical).
Per Third Member :
++ I agree with the finding of the learned Member (Technical) that Service Tax is leviable on the Appellant Society on such coaching classes.
++ I agree with the order of learned Member (Judicial) and the demand of tax is barred by limitation.
++ Service Tax is leviable in respect of coaching provided by the Appellant as held by Learned Member (Technical) and therefore, the imposition of penalty under Section 77 as held by learned Member (Technical) is correct.
So the final order is:
++ Service tax is leviable in respect of coaching provided by the appellant through junior colleges under its management or under the management of others also;
++ Extended period of limitation is not invocable and the demand is limited to the normal period of limitation; and
++ Only penalty under Section 77 of the Finance Act, 1994 is upheld.
Effect on the party:
++ Most or whole of the demand of Rs. 85 crore will go as time barred.
++ Penalty of Rs. 150 crore is quashed.
++ Penalty of Rs. 10,000 survives.
Interestingly, the matter is not remanded for quantifying the demand - if any - that survives.
Thu Jun 18, 2015 2:37 am (PDT) . Posted by:
ca.bhupendrashah
Customs - Valuation - imported goods - Related Person - No interference with order of Tribunal' s findings of fact: Supreme Court
NEW DELHI: THE appellant had imported jumbo rolls from M/s Habasit Holding A.G. Switzerland for the manufacture of "endless belts". Bill of Entry was filed declaring the value as per the invoices raised by the seller company. It was discarded by the customs authorities on the ground that the M/s Habasit Holding A.G. Switzerland and the appellant are "related persons" . This finding was arrived at by giving reasons that the Swiss company holds 51 per cent shares of the appellant and it also appoints three directors in the Board in the Indian company with additional right to nominate a Director of its choice to be the Chairman of the Board with a casting vote. These facts are not disputed and therefore, the aforesaid conclusion of the customs authorities, which is accepted by the Customs, Excise and Service Tax Appellate Tribunal, is also not challenged in the present appeal.
On the aforesaid facts, the only dispute is about the valuation which was arrived at by the customs authorities.
The contention of the appellant was that even if the appellant company and Swiss company were related persons, the transaction in question was on principal to principal basis and was at arms length and the price at which the goods in question were bought by the appellant was the market price of such goods at which these goods were sold and therefore, the appellant had not sought any advantage because of the relationship between the parties.
This contention has been rejected by the CESTAT by giving following reasons:
1. The exporting Swiss Company charged the independent importers 20% extra on the basic list price of S-251, A-2 grade materials towards cutting and joining. This extra 20% has been into account and adjusted by the original authorities to compare the prices charged to the respondents and other independent importers. This method adopted by the original authority is perfectly in order to arrive at a valid comparison between goods of the same grade and identification code in the absence of any sale of belts in running length to other independent importers.
2. The Swiss Company is allowing a 20% discount to independent buyers, whereas the respondents have been charged a lower price after allowing 33.3% discount. In other words, the respondents are not being charged 20% towards the cutting and joining charges and in addition, they are being given a discount of 33.3% as against 20% to others. Under the circumstances, the original authority cannot be faulted for having come to the conclusion that the price charged to the respondents is influenced by their relationship with the supplier Swiss Company.
3. Once it is held that the supplier and the importer are related and the relationship has influenced the price, valuation cannot obviously be done under the Transaction value method accepting the declared value. The original authority has therefore, rightly, in our view, rejected the declared value.
The Supreme Court held that these are the findings of fact arrived at on the basis of material on record and there is no reason to interfere with the same.
The appeal is, accordingly, dismissed.
NEW DELHI: THE appellant had imported jumbo rolls from M/s Habasit Holding A.G. Switzerland for the manufacture of "endless belts". Bill of Entry was filed declaring the value as per the invoices raised by the seller company. It was discarded by the customs authorities on the ground that the M/s Habasit Holding A.G. Switzerland and the appellant are "related persons" . This finding was arrived at by giving reasons that the Swiss company holds 51 per cent shares of the appellant and it also appoints three directors in the Board in the Indian company with additional right to nominate a Director of its choice to be the Chairman of the Board with a casting vote. These facts are not disputed and therefore, the aforesaid conclusion of the customs authorities, which is accepted by the Customs, Excise and Service Tax Appellate Tribunal, is also not challenged in the present appeal.
On the aforesaid facts, the only dispute is about the valuation which was arrived at by the customs authorities.
The contention of the appellant was that even if the appellant company and Swiss company were related persons, the transaction in question was on principal to principal basis and was at arms length and the price at which the goods in question were bought by the appellant was the market price of such goods at which these goods were sold and therefore, the appellant had not sought any advantage because of the relationship between the parties.
This contention has been rejected by the CESTAT by giving following reasons:
1. The exporting Swiss Company charged the independent importers 20% extra on the basic list price of S-251, A-2 grade materials towards cutting and joining. This extra 20% has been into account and adjusted by the original authorities to compare the prices charged to the respondents and other independent importers. This method adopted by the original authority is perfectly in order to arrive at a valid comparison between goods of the same grade and identification code in the absence of any sale of belts in running length to other independent importers.
2. The Swiss Company is allowing a 20% discount to independent buyers, whereas the respondents have been charged a lower price after allowing 33.3% discount. In other words, the respondents are not being charged 20% towards the cutting and joining charges and in addition, they are being given a discount of 33.3% as against 20% to others. Under the circumstances, the original authority cannot be faulted for having come to the conclusion that the price charged to the respondents is influenced by their relationship with the supplier Swiss Company.
3. Once it is held that the supplier and the importer are related and the relationship has influenced the price, valuation cannot obviously be done under the Transaction value method accepting the declared value. The original authority has therefore, rightly, in our view, rejected the declared value.
The Supreme Court held that these are the findings of fact arrived at on the basis of material on record and there is no reason to interfere with the same.
The appeal is, accordingly, dismissed.
Thu Jun 18, 2015 2:37 am (PDT) . Posted by:
ca.bhupendrashah
ADDITIONAL DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) vs.SPECTRUM POWER GENERATON LTD.
HYDTRIB
Penalty u/s 271Câ€"Interest of delayed payment shown as liability in accountsâ€"Non-deduction of tax at sourceâ€"Assessee-Company was engaged in business of generating power and selling itâ€"For verifying Assessee’s compliance to TDS provisions, survey u/s 133A was conducted in business premises of Assesseeâ€"During survey, it was found that assessee entered into agreement with RRIPL for operation and maintenanceâ€"Assessee entered into another contract with GAIL for supply of gasâ€"It was found during survey that, though Assessee paid interest on account of delayed payment both to RRIPL as well as GAIL, but, it failed deduct tax as per sections 194A and 195â€"It was noticed that on account of Assessee’s failure to deduct tax proceedings were initiated u/s 201 and ultimately orders were passed treating Assessee as Assessee default u/s 201â€"Demands were raised u/s 201(1) along with interest u/s 201(1A)â€"Consequent upon order passed u/s 201(1) and 201(1A), AO initiated proceeding for imposition of penalty u/s 271C by issuing show cause notice to Assesseeâ€"CIT(A) found that there was no deliberate attempt on part of Assessee for not deducting tax at source, deleted penaltyâ€"Held, AO proceeded to impose penalty mainly on reasoning that interest on delayed payment was shown as liability in accounts of Assessee in AY 2005-06, but, Assessee failed to deduct tax on such liability on account of interest on delayed payment to RRIPL and GAIL and remit same to government account in accordance with Ss. 194A and 195â€"Liability created was not actual liability towards deductees and in reality said amounts were not paid to themâ€"Payment made ultimately by Assessee did not match with liability created in accounts for FY 2004-05â€"Liability created at instance of auditor has also been reversed after settlement of dispute between partiesâ€"It could not be said that there was any deliberate attempt or contumacious conduct on part of Assessee for not deducting tax at sourceâ€"As per provisions contained u/s 271C read with section 273B penalty imposable was not automaticâ€"Discretion had been given to authority concerned, not to impose penalty if Assessee proved that there was reasonable cause for not deducting taxâ€"Assessee proved beyond doubt that there was reasonable cause for not deducting tax at sourceâ€"Revenue’s Appeal dismissed
HYDTRIB
Penalty u/s 271Câ€"Interest of delayed payment shown as liability in accountsâ€"Non-deduction of tax at sourceâ€"Assessee-Company was engaged in business of generating power and selling itâ€"For verifying Assessee’s compliance to TDS provisions, survey u/s 133A was conducted in business premises of Assesseeâ€"During survey, it was found that assessee entered into agreement with RRIPL for operation and maintenanceâ€"Assessee entered into another contract with GAIL for supply of gasâ€"It was found during survey that, though Assessee paid interest on account of delayed payment both to RRIPL as well as GAIL, but, it failed deduct tax as per sections 194A and 195â€"It was noticed that on account of Assessee’s failure to deduct tax proceedings were initiated u/s 201 and ultimately orders were passed treating Assessee as Assessee default u/s 201â€"Demands were raised u/s 201(1) along with interest u/s 201(1A)â€"Consequent upon order passed u/s 201(1) and 201(1A), AO initiated proceeding for imposition of penalty u/s 271C by issuing show cause notice to Assesseeâ€"CIT(A) found that there was no deliberate attempt on part of Assessee for not deducting tax at source, deleted penaltyâ€"Held, AO proceeded to impose penalty mainly on reasoning that interest on delayed payment was shown as liability in accounts of Assessee in AY 2005-06, but, Assessee failed to deduct tax on such liability on account of interest on delayed payment to RRIPL and GAIL and remit same to government account in accordance with Ss. 194A and 195â€"Liability created was not actual liability towards deductees and in reality said amounts were not paid to themâ€"Payment made ultimately by Assessee did not match with liability created in accounts for FY 2004-05â€"Liability created at instance of auditor has also been reversed after settlement of dispute between partiesâ€"It could not be said that there was any deliberate attempt or contumacious conduct on part of Assessee for not deducting tax at sourceâ€"As per provisions contained u/s 271C read with section 273B penalty imposable was not automaticâ€"Discretion had been given to authority concerned, not to impose penalty if Assessee proved that there was reasonable cause for not deducting taxâ€"Assessee proved beyond doubt that there was reasonable cause for not deducting tax at sourceâ€"Revenue’s Appeal dismissed
Thu Jun 18, 2015 3:04 am (PDT) . Posted by:
ca.bhupendrashah
RECOVERY OF SERVICE TAX UNDER SECTION 87 OF FINANCE ACT,1994
Section 87 was inserted by the Finance Act, 2006 with effect from 18.04.2006. Section 87 prescribes the procedure for the recovery of amount due to the Central Government. The words ‘amount due’ may be, in the context of Finance Act, 1994, as service tax due. Section 87 provides that where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made there under is not paid, the Central Excise Officer shall proceed to recover the amount by one or more of the modes mentioned in Section 87. The ‘tax due’ shall be ascertained liability. The tax due may ascertained by the assessee by self assessment. The tax may be ascertained by the Revenue by means of powers given under Section 73. Section 73 gives powers to the Central Excise Officer to issue show cause notice if the assessee fails to levy or pay the service tax or short levy or short payment of service tax or erroneously refunded within eighteen months from the relevant date. The eighteen months period may be extended, if the non levy or nonpayment of service tax is with the intention to evade payment of service tax , to five years. The assessee is required to give reply to the show cause notice. The Central Excise Officer may, after considering the submissions made by the assessee, determine the service tax from such person. Thus before taking action under Section 87 the service tax liability is to be ascertained. Section 87 provides the procedure for the recovery of the tax due.
In ‘R.V. Manpower Solution V. Commissioner of Customs & Central Excise’ â€" 2013 (4) TMI 294 - UTTARAKHAND HIGH COURT the High Court held that going by the language of Section 87 of the Act that any amount payable means that amount adjudged after hearing the show cause notice and this provision of Section 87 is one of the method of recovery of the amount due and payable after adjudication is done.
In ‘ICICI bank Limited V. Union of India’ â€" 2015 (5) TMI 300 - BOMBAY HIGH COURT the Revenue coerced the assessee to pay service on threat of taking action under Section 87 of the Act which can have drastic consequences such as sealing, attaching accounts of bank etc., and when an assessee succumbs to the said pressure and deposits the same under protect the argument of the Revenue that since the payment is made the provision of Section 73 cannot be invoked. The High Court held that if it is the view of the Revenue that the petitioners though liable to pay service tax are evading payment of service tax, they can very well take recourse to Section 73 and determine the amount of service tax payable on them.
Section 73C allows the department to make provisional attachment of the properties during the pendency of the proceedings. In ‘Technomaint Contractors Limited V. Union of India’ â€" 2014 (4) TMI 882 - GUJARAT HIGH COURT the High Court held that when show cause notice was issued by the department in which the petitioners have raised their objections, recoveries in that adjudication of such disputed taxes were simply not permissible in law. Section 73C allows the department to make provisional attachment of the properties of the assessee during the pendency of the proceedings under Section 73 of the Act for the purpose of protecting the interest of the Revenue. Such provisions cannot be activated for seeking recovery even before adjudication. Recovery of unpaid tax is to be made as per Section 87 of the Act which provides for the power and procedure for such recoveries.
Section 87 prescribes the procedure for the recovery of the service tax due to the Central Government.
Section 87 (a) provides that the Central Excise Officer may deduct or may require any other Central Excise Officer or any officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the said Central Excise Officer or any officer of customs;
Section 87 (b) (i) provides that the Central Excise Officer may, by notice in writing, require any other person from whom money is due or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount.
Section 87 (b) (ii) provides that every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.
Section 87 (b) (iii) provides that in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow.
By virtue of Section 87 the Department freezed the bank accounts of the assessees. This section is considered to be the harassment caused to the assesees. In ‘R.V. Manpower Solution V. Commissioner of Customs & Central Excise’ â€" 2013 (4) TMI 294 - UTTARAKHAND HIGH COURT the High Court held that from the language of Section 87 (b) there is no power to freeze the bank account. The High Court held that the impugned order freezing the bank account is not sustainable in the eye of law as this has been passed without having any jurisdiction. The same is set aside.
Section 87 (C) provides that the Central Excise Officer may, on an authorization by the Principal Commissioner of Central Excise or Commissioner of Central Excise, in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person;
The proviso to Section 87 (C) provides that where the person (hereinafter referred to as predecessor) from whom the service tax or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining the written approval of the 3[Principal Commissioner of Central Excise or Commissioner of Central Excise, for the purposes of recovering such service tax or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change;
Section 87 (d) provides that the Central Excise Officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified there under as if it were an arrear of land revenue. This is the common method used by various authorities to recover the dues.
The recovery under Section 87 of the Act cannot be done unless the service tax due is an ascertained liability. The due shall be adjudged by the Adjudicating Authority. After becoming due and the same has not been paid by the assessee then the Revenue can take recourse of Section 87. The assessee may comply with the provisions of Finance Act, 1994 in respect of making payment of service tax regularly and correctly to avoid such action under Section 87 of the Act.
By: Mr. M. GOVINDARAJAN
Section 87 was inserted by the Finance Act, 2006 with effect from 18.04.2006. Section 87 prescribes the procedure for the recovery of amount due to the Central Government. The words ‘amount due’ may be, in the context of Finance Act, 1994, as service tax due. Section 87 provides that where any amount payable by a person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made there under is not paid, the Central Excise Officer shall proceed to recover the amount by one or more of the modes mentioned in Section 87. The ‘tax due’ shall be ascertained liability. The tax due may ascertained by the assessee by self assessment. The tax may be ascertained by the Revenue by means of powers given under Section 73. Section 73 gives powers to the Central Excise Officer to issue show cause notice if the assessee fails to levy or pay the service tax or short levy or short payment of service tax or erroneously refunded within eighteen months from the relevant date. The eighteen months period may be extended, if the non levy or nonpayment of service tax is with the intention to evade payment of service tax , to five years. The assessee is required to give reply to the show cause notice. The Central Excise Officer may, after considering the submissions made by the assessee, determine the service tax from such person. Thus before taking action under Section 87 the service tax liability is to be ascertained. Section 87 provides the procedure for the recovery of the tax due.
In ‘R.V. Manpower Solution V. Commissioner of Customs & Central Excise’ â€" 2013 (4) TMI 294 - UTTARAKHAND HIGH COURT the High Court held that going by the language of Section 87 of the Act that any amount payable means that amount adjudged after hearing the show cause notice and this provision of Section 87 is one of the method of recovery of the amount due and payable after adjudication is done.
In ‘ICICI bank Limited V. Union of India’ â€" 2015 (5) TMI 300 - BOMBAY HIGH COURT the Revenue coerced the assessee to pay service on threat of taking action under Section 87 of the Act which can have drastic consequences such as sealing, attaching accounts of bank etc., and when an assessee succumbs to the said pressure and deposits the same under protect the argument of the Revenue that since the payment is made the provision of Section 73 cannot be invoked. The High Court held that if it is the view of the Revenue that the petitioners though liable to pay service tax are evading payment of service tax, they can very well take recourse to Section 73 and determine the amount of service tax payable on them.
Section 73C allows the department to make provisional attachment of the properties during the pendency of the proceedings. In ‘Technomaint Contractors Limited V. Union of India’ â€" 2014 (4) TMI 882 - GUJARAT HIGH COURT the High Court held that when show cause notice was issued by the department in which the petitioners have raised their objections, recoveries in that adjudication of such disputed taxes were simply not permissible in law. Section 73C allows the department to make provisional attachment of the properties of the assessee during the pendency of the proceedings under Section 73 of the Act for the purpose of protecting the interest of the Revenue. Such provisions cannot be activated for seeking recovery even before adjudication. Recovery of unpaid tax is to be made as per Section 87 of the Act which provides for the power and procedure for such recoveries.
Section 87 prescribes the procedure for the recovery of the service tax due to the Central Government.
Section 87 (a) provides that the Central Excise Officer may deduct or may require any other Central Excise Officer or any officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the said Central Excise Officer or any officer of customs;
Section 87 (b) (i) provides that the Central Excise Officer may, by notice in writing, require any other person from whom money is due or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount.
Section 87 (b) (ii) provides that every person to whom a notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.
Section 87 (b) (iii) provides that in a case where the person to whom a notice under this section is sent, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and all the consequences of this Chapter shall follow.
By virtue of Section 87 the Department freezed the bank accounts of the assessees. This section is considered to be the harassment caused to the assesees. In ‘R.V. Manpower Solution V. Commissioner of Customs & Central Excise’ â€" 2013 (4) TMI 294 - UTTARAKHAND HIGH COURT the High Court held that from the language of Section 87 (b) there is no power to freeze the bank account. The High Court held that the impugned order freezing the bank account is not sustainable in the eye of law as this has been passed without having any jurisdiction. The same is set aside.
Section 87 (C) provides that the Central Excise Officer may, on an authorization by the Principal Commissioner of Central Excise or Commissioner of Central Excise, in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person;
The proviso to Section 87 (C) provides that where the person (hereinafter referred to as predecessor) from whom the service tax or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining the written approval of the 3[Principal Commissioner of Central Excise or Commissioner of Central Excise, for the purposes of recovering such service tax or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change;
Section 87 (d) provides that the Central Excise Officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified there under as if it were an arrear of land revenue. This is the common method used by various authorities to recover the dues.
The recovery under Section 87 of the Act cannot be done unless the service tax due is an ascertained liability. The due shall be adjudged by the Adjudicating Authority. After becoming due and the same has not been paid by the assessee then the Revenue can take recourse of Section 87. The assessee may comply with the provisions of Finance Act, 1994 in respect of making payment of service tax regularly and correctly to avoid such action under Section 87 of the Act.
By: Mr. M. GOVINDARAJAN
Thu Jun 18, 2015 3:21 am (PDT) . Posted by:
ca.bhupendrashah
CALL BOOK CASES â€" SERVICE TAX
A call book acts as a set of records of those central excise and service tax cases where the demand could not be realized due to reasons such as the department having gone in appeal and injunction from courts, etc.
The Board’s Circular No. 162/73/95-CX, dated 14.12.1995 provides that the following four types of cases that are pending adjudication are to be transferred to the Call Book:
Cases in which the Department has gone in appeal in a quasi judicial or a judicial authority - This category refers to cases wherein on identical issue, the Department has filed appeal before higher appellate authority against the order passed by the lower authority, which was against the Government.
Cases where injunction has been issued by Supreme Court/High Courts â€" Vide Circular No. 992/16/2014- CX, dated 26.12.2014 the Board clarified that Cases admitted by the Settlement Commission may be transferred to the Call book, as it is already covered under this Category. It has been further clarified that where there are multiple noticees, the case can be transferred only in respect of those noticees who have made application in the Settlement Commission, and whose case has been admitted by Settlement Commission. Such cases should be taken out of the Call-Book after Settlement Order has been issued or where the case has been reverted back for adjudication.
Cases where audit objections were contested;
Cases where the Board has specifically ordered the same to be kept pending and to be entered in the call book. For example under this category, the issue of inclusion of “after sales service and pre-delivery charges in the assessable value†can be mentioned. First, vide Circular No. 909/29/09-CX, CBEC directed all its field formations to transfer SCN issued on the subject matter to call book. Later, vide Circular No. 936/36/2010- CX, dated 27/10/2010, it directed field formations to decide the cases pending in the call book on the issue of inclusion of after sales service and pre-delivery inspection charges in the Assessable value in the light of CESTAT Order dated 13.8.2010.
Once transferred to the Call Book, the cases are not to be included in the list of cases pending adjudication. The cases in the call book are to be reviewed every month to identify any cases that are to be taken out of the call book and adjudicated.
The C&AG pointed out in its audit report that in spite of clear instructions of the Board on transfer of cases to call book, there are several other types of cases, which are transferred to call book in violation of the instructions of the CBEC. These are-
Cases ordered for de-nov adjudication by the Courts;
Cases pending for want of Chemical Examiner’s report;
Provisional assessment cases.
The Director General of Inspection (Customs and Central Excise) has reiterated the need for monthly review and stated that the review of call book cases may result in substantial reduction in the number of unconfirmed demands in call book.
C&AG in its audit report tabulated the date relating to performance of the department in respect of clearance of call book cases in service tax during the recent years and observed that the pendency of call book cases continues to be very high.
Call book cases pending on 31st March
Year
Cases
Revenue involved
(in Cr. Rs.)
Age wise pendency
< 1 year
1 â€" 2 years
2 â€" 5 years
> 5 years
FY 11
6430
15667.47
3003
2065
1135
227
FY 12
8390
20273.45
2736
3157
2162
295
FY 13
8637
21339.85
3203
2451
2673
310
Source: C&AG Report 6/2014
The C&AG also advised that since the amount involved in these cases are also in the increase the monitoring of these cases should be done effectively.
By: Mr. M. GOVINDARAJAN
A call book acts as a set of records of those central excise and service tax cases where the demand could not be realized due to reasons such as the department having gone in appeal and injunction from courts, etc.
The Board’s Circular No. 162/73/95-CX, dated 14.12.1995 provides that the following four types of cases that are pending adjudication are to be transferred to the Call Book:
Cases in which the Department has gone in appeal in a quasi judicial or a judicial authority - This category refers to cases wherein on identical issue, the Department has filed appeal before higher appellate authority against the order passed by the lower authority, which was against the Government.
Cases where injunction has been issued by Supreme Court/High Courts â€" Vide Circular No. 992/16/2014- CX, dated 26.12.2014 the Board clarified that Cases admitted by the Settlement Commission may be transferred to the Call book, as it is already covered under this Category. It has been further clarified that where there are multiple noticees, the case can be transferred only in respect of those noticees who have made application in the Settlement Commission, and whose case has been admitted by Settlement Commission. Such cases should be taken out of the Call-Book after Settlement Order has been issued or where the case has been reverted back for adjudication.
Cases where audit objections were contested;
Cases where the Board has specifically ordered the same to be kept pending and to be entered in the call book. For example under this category, the issue of inclusion of “after sales service and pre-delivery charges in the assessable value†can be mentioned. First, vide Circular No. 909/29/09-CX, CBEC directed all its field formations to transfer SCN issued on the subject matter to call book. Later, vide Circular No. 936/36/2010- CX, dated 27/10/2010, it directed field formations to decide the cases pending in the call book on the issue of inclusion of after sales service and pre-delivery inspection charges in the Assessable value in the light of CESTAT Order dated 13.8.2010.
Once transferred to the Call Book, the cases are not to be included in the list of cases pending adjudication. The cases in the call book are to be reviewed every month to identify any cases that are to be taken out of the call book and adjudicated.
The C&AG pointed out in its audit report that in spite of clear instructions of the Board on transfer of cases to call book, there are several other types of cases, which are transferred to call book in violation of the instructions of the CBEC. These are-
Cases ordered for de-nov adjudication by the Courts;
Cases pending for want of Chemical Examiner’s report;
Provisional assessment cases.
The Director General of Inspection (Customs and Central Excise) has reiterated the need for monthly review and stated that the review of call book cases may result in substantial reduction in the number of unconfirmed demands in call book.
C&AG in its audit report tabulated the date relating to performance of the department in respect of clearance of call book cases in service tax during the recent years and observed that the pendency of call book cases continues to be very high.
Call book cases pending on 31st March
Year
Cases
Revenue involved
(in Cr. Rs.)
Age wise pendency
< 1 year
1 â€" 2 years
2 â€" 5 years
> 5 years
FY 11
6430
15667.47
3003
2065
1135
227
FY 12
8390
20273.45
2736
3157
2162
295
FY 13
8637
21339.85
3203
2451
2673
310
Source: C&AG Report 6/2014
The C&AG also advised that since the amount involved in these cases are also in the increase the monitoring of these cases should be done effectively.
By: Mr. M. GOVINDARAJAN
Thu Jun 18, 2015 5:52 am (PDT) . Posted by:
ca.bhupendrashah
IT/ILT: Profit arising to a German Co. from high sea sale of equipment to Indian customer couldn't be taxed in India even if equipment was subjected to inspection in India.
Facts
(a) Assessee, a German company, sold equipment to an Indian Customer on high seas. The consideration for sale of equipment was received outside India in the foreign currency; (b) Significant amount was payable upon delivery of equipment on FOB basis at foreign port of shipment. The balance amount was payable on inspection of the equipment (i.e., acceptance test) by the customer; (c) It was noted by the Assessing officer (AO) that assessee had a supervisory Permanent Establishment (PE) in India and it had sold equipments for various projects in the year under consideration; (d) AO attributed the profits from sale of equipment to assessee' s supervisory PE in India contending that sale was concluded in India as equipment was subjected to inspection in India; (e) On appeal, DRP confirmed the order of the AO. Aggrieved by the order, assessee filed the instant appeal before the Tribunal. The Tribunal held in favour of assessee as under:
(1) The clause of the agreement which requires payment of balance sum after acceptance test generally happens in common trade parlance and partakes the character of trade warranties. Any breach of the warranty could result in payment of damages but it would not mean that the title in the goods would pass on to buyer in India only after conducting the acceptance test. Hence, undue importance could not be given to such clause to construe that sale was concluded in India; (2) As far as attribution of profit to supervisory PE was concerned, the Article 5(2)(i) of the DTAA between India and Germany reads as under: 'The term "permanent establishment" includes especially, - (i) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities continue for a period exceeding six months' The words 'such site, project or activities&# 39; as mentioned under Article 5(2)(i) of India-Germany DTAA clearly indicate that the supervisory PE has to be examined separately for each of the projects; (3) In the instant case, majority of the projects of the assessee did not have a supervisory PE in India. In that case the question of any attribution of profit from supply of equipment to the supervisory PE would not arise at all; (4) Hence, no portion of receipts from sale of equipment could be taxed in India since equipment was sold by assessee outside India and it didn't have any PE in India in respect of the project for which equipment was sold.
[2015] 58 taxmann.com 232 (Kolkata - Trib.)
IN THE ITAT KOLKATA BENCH 'C'
Qutotec GmbH
Facts
(a) Assessee, a German company, sold equipment to an Indian Customer on high seas. The consideration for sale of equipment was received outside India in the foreign currency; (b) Significant amount was payable upon delivery of equipment on FOB basis at foreign port of shipment. The balance amount was payable on inspection of the equipment (i.e., acceptance test) by the customer; (c) It was noted by the Assessing officer (AO) that assessee had a supervisory Permanent Establishment (PE) in India and it had sold equipments for various projects in the year under consideration; (d) AO attributed the profits from sale of equipment to assessee' s supervisory PE in India contending that sale was concluded in India as equipment was subjected to inspection in India; (e) On appeal, DRP confirmed the order of the AO. Aggrieved by the order, assessee filed the instant appeal before the Tribunal. The Tribunal held in favour of assessee as under:
(1) The clause of the agreement which requires payment of balance sum after acceptance test generally happens in common trade parlance and partakes the character of trade warranties. Any breach of the warranty could result in payment of damages but it would not mean that the title in the goods would pass on to buyer in India only after conducting the acceptance test. Hence, undue importance could not be given to such clause to construe that sale was concluded in India; (2) As far as attribution of profit to supervisory PE was concerned, the Article 5(2)(i) of the DTAA between India and Germany reads as under: 'The term "permanent establishment" includes especially, - (i) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities continue for a period exceeding six months' The words 'such site, project or activities&# 39; as mentioned under Article 5(2)(i) of India-Germany DTAA clearly indicate that the supervisory PE has to be examined separately for each of the projects; (3) In the instant case, majority of the projects of the assessee did not have a supervisory PE in India. In that case the question of any attribution of profit from supply of equipment to the supervisory PE would not arise at all; (4) Hence, no portion of receipts from sale of equipment could be taxed in India since equipment was sold by assessee outside India and it didn't have any PE in India in respect of the project for which equipment was sold.
[2015] 58 taxmann.com 232 (Kolkata - Trib.)
IN THE ITAT KOLKATA BENCH 'C'
Qutotec GmbH
Thu Jun 18, 2015 5:53 am (PDT) . Posted by:
ca.bhupendrashah
IT: Rental income received from unsold portion of property constructed by assessee a real estate developer, is assessable as income from house property
IT: Interest paid on partners' capital which was utilized for construction of property from which rental income was earned, was allowable
[2015] 58 taxmann.com 111 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax-12, Mumbai
v.
Sane & Doshi Enterprises
IT: Interest paid on partners' capital which was utilized for construction of property from which rental income was earned, was allowable
[2015] 58 taxmann.com 111 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax-12, Mumbai
v.
Sane & Doshi Enterprises
This message has been truncated.
Show Full Message| |
| |
To
ICAI_CIRC_MEERUT_CA@yahoogroups.com ludhiana-ca@googlegroups.com V Narayanan
Today at 1:58 AM
Sent from my iPad
Begin forwarded message:
From: Jagadish <pjagadishrao@gmail.com>
Date: June 18, 2015 17:25:59 GMT+05:30
To: undisclosed-recipients:;
Subject: [CA RUNGTA PD] 10 TYPE OF ADVANCE WITHDRAWALS FROM EMPLOYEE PROVIDENT FUND ELIGIBILITY AMOUNT
Reply-To: forum4ca@googlegroups.com
Dear Friends,--An employee can at least 10 type of advances from their funds deposited in EPF department. However to avail these advances you have to fulfill few conditions and have to furnish few document in support of your eligibility to claim a particular advance . These advance have general condition of No of years of service and amount of withdrawal is also linked with monthly wages in most of the case.--Main type of Advances from EPF are
- Marriage / Education
- Treatment
- Purchase or construction of Dwelling house
- Repayment of Housing Loan
- Purchase of Plot
- Addition/Alteration of House
- Repair of House
- Lockout
- Withdrawal Prior to Retirement
- Other Advances
Eligibility condition of each advance and amount of advance from epf is covered as underFor Marriage / Education
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-k of the Scheme For the marriage of: For education of :
- self
- son, daughter
- brother, sister
- self
- son, daughter
Should complete atleast 7 years of service. 3 times in the entire service 50% of Employee share at the time of tendering the application Apply in Form-31 through the Employer
Bonafide Certificate duly indicating the fees payable from the educational institution
Marriage invitation card along with the
application should be submitted through the employerFor Treatment :The condition of Treatment advance is very strict as hospitalisation for 1 month or more is/was necessary .
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-j of the Scheme
Whenever required for treatment
For the treatment of :
- self
- Hospitalisation for 1 month or more
- major surgical operation in a hospital
- suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailment
and having been granted leave by his employer for the treatment of said illness
- family( spouse, son, daughter, dependent father, mother)
- major surgical operation in a hospital and 1 month or more hospitalisation for the operation
- suffering from TB, leprosy, paralysis, cancer, mental derangement or heart ailment
- No minimum service required
- Certificate from ESI or from Employer that the ESI facility are not available to the member
- a doctor [ or registered medical practitioner] of the hospital certifies that a surgical operation or hospitalisation for 1 month or more is/was necessary
- In case of TB, leprosy ...etc., a specialist doctor should certify
6 times of Wages
OR
Full of Employee share
(whichever is less)Certificates of proof as mentioned in the eligibility column
Apply in Form-31 through the EmployerFor he construction/ purchase of dwelling unit (house/ flat)
Type of Advance
PurposeEligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-B of the Scheme
Only Once (either 'construction or purchase of house' or 'repayment of housing loan)
Apply in Form-31For the construction/ purchase of dwelling unit (house/ flat)
- Should complete 5 Years of service
- Only once in service
- property should be in the name of self or spouse or jointly
- should not be a joint property owned by other than the spouse
36 times of Wages Declaration in the Proforma obtained along with application signed by Member
Apply in Form-31 through EmployerRepayment of housing loan
Type of Advance
PurposeEligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-BB of the Scheme
Only Once (either 'construction or purchase of house' or 'repayment of housing loan) Apply in Form-31Repayment of housing loan
- Should complete 10 Years of service
- Only once in service
- property should be in the name of self or spouse or jointly
- should not be a joint property owned by other than spouse
36 times of Wages Declaration in the Proforma obtained with approval and signed by the Member
Apply in Form-31 through the EmployerFor the purchase of site/ plot
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-B of the Scheme
Only Once
For the purchase of site/ plot
- Should complete 5 Years of service
- Only once in service
- property should be registered in the name of self or jointly with spouse
- should not be a joint property owned by other than spouse
24 times of Wages Filled-up Declaration(from the Employee in the prescribed form and enclosed with the application.
Copy of the Purchase Agreement
Apply in Form-31 through the EmployerAddition/alteration of house
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-B(7) of the Scheme
Only Once
Apply in Form-31Addition/alteration of house
(same type of advance can be availed for repair of house)
- Should complete 5 Years after construction
- Annexure III (construction / completion certificate/ utilisation certificate) should be submitted
- Only once in service
- property should be in the name of self or spouse or jointly
- should not be a joint property owned by other than spouse
12 times of Wages Certificates of proof
Apply in Form-31 through the EmployerRepair of house
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-B(7) of the Scheme
Only onceRepair of house
(same type of advance can be availed for alteration of house)
- Should complete 10 Years after construction
- Annexure XIII (construction completion certificate) should be submitted
- Only once in service
- property should be in the name of self or spouse or jointly
- should not be a joint property owned by other than spouse
12 times of Wages Certificates of proof
Apply in Form-31 through the EmployerLockout or closure of the establishment
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-H of the Scheme
Whenever need arisesLockout or closure of the establishment
- No minimum service
- should be closed for more than 15 days
- Wages for atleast 2 months is not paid
- Balance should be there in Employee's share. If closed for more than 6 months, advance can be allowed from Employer's share also
equivalent to the total of wages multiplied by no. of months closed Declaration
Apply in Form-31Withdrawal prior to retirement
Type of Advance Purpose Eligibility Maximum Admissible Amount** Proof/ documents required Under Para 68-NN of the Scheme
Only onceWithdrawal prior to retirement
- No minimum service
- atleast 54 years of age
- 1 year before retirement
90% of total of both shares Certificate from the employer showing the date of retirement
Apply in Form-31Other Advances68L : ADVANCE IN ABNORMAL CONDITIONS
Types of Benefit Eligibility Eligible Amount Form Documentary Support
Types of Benefit Eligibility Eligible Amount Form Documentary Support
OR
Rs.300/-
Types of Benefit Eligibility Eligible Amount Form Documentary Support
or own share of contribution with interest or cost of equipment which ever is least.
Jagadish" Think GREEN, Save Earth "
P Print only if essential.
SAVE TREES
forum4ca is a Google Group of eServe online for the benefit of CA and other professionals. It is especially meant for written discussion & circulate information within group members. The mail may contain such research/advice/opinion/information/fact provided by any member and are subject to the accuracy and of the description of facts.The forum4ca, do not claim that contains in mail/information obtained after reading as a complete and accurate disclosure of relevant facts. Further this Group’s Owner/Moderator/Member are not liable for any damages or costs suffered due to action/transaction based on information on this Group.
To join and/or to post to this group send email: forum4ca@googlegroups.com
To unsubscribe from this group, send email to:forum4ca+unsubscribe@googlegroups.com
For more options, visit this group at:http://groups.google.co.in/group/forum4ca or www.eserveonline.net
---
You received this message because you are subscribed to the Google Groups "forum4ca" group.
To unsubscribe from this group and stop receiving emails from it, send an email to forum4ca+unsubscribe@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.
| |
| |
To
Dipak
Jun 17 at 7:00 AM
| For a perfect display of this email, you can follow this link | |||
| In order to be sure of receiving all my e-mails, please add alisha@a.ali-in.com to your address book. | |||
| | |||
 | |||
| |||
 |
| |
| |
To
djshah1944@yahoo.com
Today at 1:09 PM
| World Refugee Day is June 20. This day is always special to employees of USCIS as we play a critical role in resettling refugees from around the globe. This year marks the 10th anniversary of our refugee corps, which has grown to include 88 officers and 22 supervisors, who are based in Washington, D.C., but also travel around the world to interview refugee applicants. The men and women of the USCIS Refugee Corps provide resettlement opportunities to qualified refugees from around the globe while ensuring the integrity of the refugee program and our national security. Working in cooperation with the Department of State, the U.S. Refugee Admissions Program resettled 69,987 in the United States during fiscal year 2014. Our director, Leá½¹n RodrÃguez, made a video in honor of the importance of World Refugee Day and the hard work of all people working to help refugees from around the globe. You can learn more about World Refugee Day at the UNHCR website. To learn more about USCIS’ mission to help refugees, visit our Humanitarian page. For more, see the link to this story on our blog, The Beacon. Please do not reply to this message. See our Contact Us page for phone numbers and e-mail addresses.
SUBSCRIBER SERVICES:
| ||||||||||||
| |
| |
No comments:
Post a Comment