Direct Tax Basket
INSTRUCTION
F.No.328/08/ 2015-WT
CBDT clarifies due date for e-filing returns for Wealth Tax also stand extended upto Sept 7th , 2015
CASE LAWS
2015-TIOL-1399- ITAT-DEL
Envogue Wood Working Pvt Ltd Vs ACIT
Whether the penalty imposed under sec. 271D and 271E is justified when there was bonafide belief on the part of the assessee that the transaction with the Directors and the shareholders for meeting urgent cash requirements for running the business would not result in any violations? - Assessee' s Appeal Allowed : DELHI ITAT
2015-TIOL-1398- ITAT-HYD
Hanuman Trading Co Vs ITO
Whether when AO made enquiries on the various issues during the course of assessment proceedings on the basis of which jurisdication is assumed under section 263, merely because the returned income is lower, the assessment order cannot be termed as erroneous. - Assessee' s appeal allowed : HYDERABAD ITAT
2015-TIOL-1394- ITAT-DEL
ACIT Vs Elel Hotels and Investments Ltd
Whether penalty imposed is rightly deleted when quantum addition has been deleted - YES: ITAT
Whether penalty imposed is rightly deleted when quantum addition has been restored to the AO for fresh decision - YES: ITAT - Revenue' s appeal dismissed : DELHI ITAT
Indirect Tax Basket
TRANSFER ORDER
Order No 130 of 2015
CBEC finally issues AGT order of 180 ACs
CENTRAL EXCISE SECTION
2015-TIOL-1873- CESTAT-DEL
Jagannath Steel Pvt Ltd Vs CCE
CX - Clandestine removal - Assessee is a manufacturer of MS Ingots from sponge iron and iron scrap - A search was conducted in factory of assessee on 28.08.2001 and finished goods were verified - Weighment was done on three occasions - But only panchnama was drawn for weighment done on 30.08.2001 wherein sponge iron was found short of 291 MT - For weighment done on 28.08.2001 and 13.09.2001 to 15.09.2001 no panchnama was drawn - Therefore, in absence of panchnama or any other evidence on record it cannot be alleged that there was shortage of finished goods or iron scrap at the time of weighment of said goods - If there was shortage, Revenue could have produced panchnama as well as weighment slip as they have done for shortage deducted on 30.08.2001 - Allegation of manufacturing MS Ingots of sponge iron used for manufacturing the same is not sustainable in absence shortage of iron scrap - Allegation against assessee is only on the basis of presumptions and assumptions - Revenue failed to prove that sponge iron found short was used in manufacturing of final product - Therefore, demand is not sustainable: CESTAT - Appeal allowed : DELHI CESTAT
90 Appointment of Common Adjudicating Authority
89 Appointment of Common Adjudicating Authority
88 Appointment of Common Adjudicating Authority
87 Appointment of Common Adjudicating Authority
86 Appointment of Common Adjudicating Authority
85 Amendment in Principal Notification No. 12/97-Customs( N.T.) dated 02.04.1997
ANTI DUMPING NOTIFICATION
46 Definitive Anti Dumping duty imposed on Acrylo nitrile Butadiene Rubber for five years
PUBLIC NOTICE
33 New SION in Textile Product Group
32 Incorporating a new Appendix
NOTIFICATION
19 Amendment of General Notes No.10 regarding Import Policy
INSTRUCTION
F.No.328/08/ 2015-WT
CBDT clarifies due date for e-filing returns for Wealth Tax also stand extended upto Sept 7th , 2015
CASE LAWS
2015-TIOL-1399- ITAT-DEL
Envogue Wood Working Pvt Ltd Vs ACIT
Whether the penalty imposed under sec. 271D and 271E is justified when there was bonafide belief on the part of the assessee that the transaction with the Directors and the shareholders for meeting urgent cash requirements for running the business would not result in any violations? - Assessee' s Appeal Allowed : DELHI ITAT
2015-TIOL-1398- ITAT-HYD
Hanuman Trading Co Vs ITO
Whether when AO made enquiries on the various issues during the course of assessment proceedings on the basis of which jurisdication is assumed under section 263, merely because the returned income is lower, the assessment order cannot be termed as erroneous. - Assessee' s appeal allowed : HYDERABAD ITAT
2015-TIOL-1394- ITAT-DEL
ACIT Vs Elel Hotels and Investments Ltd
Whether penalty imposed is rightly deleted when quantum addition has been deleted - YES: ITAT
Whether penalty imposed is rightly deleted when quantum addition has been restored to the AO for fresh decision - YES: ITAT - Revenue' s appeal dismissed : DELHI ITAT
Indirect Tax Basket
TRANSFER ORDER
Order No 130 of 2015
CBEC finally issues AGT order of 180 ACs
CENTRAL EXCISE SECTION
2015-TIOL-1873- CESTAT-DEL
Jagannath Steel Pvt Ltd Vs CCE
CX - Clandestine removal - Assessee is a manufacturer of MS Ingots from sponge iron and iron scrap - A search was conducted in factory of assessee on 28.08.2001 and finished goods were verified - Weighment was done on three occasions - But only panchnama was drawn for weighment done on 30.08.2001 wherein sponge iron was found short of 291 MT - For weighment done on 28.08.2001 and 13.09.2001 to 15.09.2001 no panchnama was drawn - Therefore, in absence of panchnama or any other evidence on record it cannot be alleged that there was shortage of finished goods or iron scrap at the time of weighment of said goods - If there was shortage, Revenue could have produced panchnama as well as weighment slip as they have done for shortage deducted on 30.08.2001 - Allegation of manufacturing MS Ingots of sponge iron used for manufacturing the same is not sustainable in absence shortage of iron scrap - Allegation against assessee is only on the basis of presumptions and assumptions - Revenue failed to prove that sponge iron found short was used in manufacturing of final product - Therefore, demand is not sustainable: CESTAT - Appeal allowed : DELHI CESTAT
CUSTOMS SECTION
NON TARIFF NOTIFICATIONS 90 Appointment of Common Adjudicating Authority
89 Appointment of Common Adjudicating Authority
88 Appointment of Common Adjudicating Authority
87 Appointment of Common Adjudicating Authority
86 Appointment of Common Adjudicating Authority
85 Amendment in Principal Notification No. 12/97-Customs( N.T.) dated 02.04.1997
ANTI DUMPING NOTIFICATION
46 Definitive Anti Dumping duty imposed on Acrylo nitrile Butadiene Rubber for five years
PUBLIC NOTICE
33 New SION in Textile Product Group
32 Incorporating a new Appendix
NOTIFICATION
19 Amendment of General Notes No.10 regarding Import Policy
Direct Tax Basket
2015-TIOL-2031- HC-DEL-IT
CIT Vs Kajaria Ceramics Ltd
Whether payment made to a dealer for foreign travel cannot be characterized as commission, for the purposes of Section 194H, when the relationship of principal and agent is absent - YES: HC
Whether no TDS is to be deducted u/s 194C, when no element of income was embedded in the reimbursement - YES: HC - Revenue' s appeal dismissed : DELHI HIGH COURT
2015-TIOL-1397- ITAT-MUM
ACIT Vs M/s Alstom Projects India Ltd
Whether reopening of assessment will be invalid, when such assessment was reopened without bringing in any new tangible material evidence, to form the requisite belief of escapement of income - YES: ITAT - Revenue' s appeal dismissed : MUMBAI ITAT
2015-TIOL-1396- ITAT-LKW
M/s Baba Brick Industries Vs ITO
Whether once the AO has failed to make an addition on an issue on which assessment was reopened, he cannot assess or reassess other income which had escaped assessment - YES: ITAT - Assessee' s appeal allowed : LUCKNOW ITAT
2015-TIOL-1395- ITAT-HYD
Albert Einstien Society Of Human Gametes Vs DIT
Whether DIT(E) should not refuse grant of registration u/s 12AA, when it has not done the duty of satisfying himself in regard to the aims and objects of the trust/institution, and if they are of charitable nature and genuine - YES: ITAT - Case remanded : HYDERABAD ITAT
Indirect Tax Basket
SERVICE TAX SECTION
2015-TIOL-1874- CESTAT-MUM + Story
Pioneer Publicity Corporation Pvt Ltd Vs CST
ST - When the allegation in the SCN is of undervaluation and demand of differential tax liability and question of re-classification was never charged, both the lower authorities have misdirected their findings to classify services under Advertising agency - since there is no dispute that the appellant has collected amounts as "display charges" from LIC and New India Assurance and failed to discharge ST liability by not showing in their ST returns, order confirming demand is upheld and appeal is rejected: CESTAT [para 8, 9] - Appeal rejected : MUMBAI CESTAT
CENTRAL EXCISE SECTION
2015-TIOL-2034- HC-MAD-CX
Alstom T And D India Ltd Vs CESTAT
Central Excise - Differential duty paid on account of price escalation - Demand of interest - Appeal by assessee against the order of Tribunal upholding demand of interest following the ratio of Supreme Court decision in the case of SKF India Ltd - Contention that the issue is decided in favour of the assessee in case of M/s BHEL by Karnataka High Court - Held: The Supreme Court in SKF India Ltd. case, held that payment of differential duty by the assessee at the time of issuance of supplementary invoice to the customer demanding the balance of the revised prices clearly falls under the provisions of Section 11A(2B) of the Act.( para 7.3)
By interpreting Explanation (2) to sub-section 2B of Section 11A of the Act, the Supreme Court in SKF India Ltd. case, has clearly held that such payment of differential duty at the time of issuance of supplementary invoices would not be exempt from interest chargeable under Section 11AB of the Act. (para 7.4)
No reason to take a different view merely on the ground that the Special Leave to Appeal filed by the Revenue against the decision of the Division Bench of the Karnataka High Court in Bharat Heavy Electricals Ltd. case, was dismissed by the Supreme Court by order dated 3.12.2010. (para 7.7)
Substantial questions of law raised in these appeals are answered against the assessee and the appeals are dismissed. (para 11) - Appeals dismissed : MADRAS HIGH COURT
CUSTOMS SECTION
2015-TIOL-2033- HC-DEL-NDPS + Story
Thomas Karketta Vs State Thr Narcotics Control Bureau
Whether as per the provisions of section 42, the investigating officers have a duty to write down the information on the basis of which raid or search is going to take place, forward the same to the Superior Officer, preceding the search and seizure by the officer - YES: HC
Whether if there has been a considerable dela y in sending the seized sample to FSL, which is in violation of the standing instructions of NCB, moreover there was nothing on record to suggest that while the sealed samples were kept in the malkhana, they were tampered with, is it still possible to held the accused guilty - NO: HC
Whether if no sincere effort was made by the raiding party to associate public witnesses, this failure on the part of the police, by itself, may have been sufficient for discarding the prosecution case all together - NO: HC - Assessee' s appeal allowed : DELHI HIGH COURT
1% Additional Levy: Where is it heading us?
Introduction: -
Goods and Service Tax (GST) has been a topic of debate in the recent past. With the NDA government looking firm to bring in the GST, the members of Rajya Sabha still have a number of objections to raise, and for their very reasons. Finance Minister Arun Jaitley has been strongly contending that the implementation of GST would remove cascading effect of taxes thereby making way for a business-friendly economy. However, on close observation of Clause 18 of the Constitution (122nd Amendment) Bill, it appears that things are quite different than what is being projected. This clause seeks to impose the most talked 1% additional levy by the Centre on supply of goods in course of inter-state trade or commerce. In this article, an effort is being made to analyze this levy and criticism faced by it.
What is 1% additional levy?
The provisions relating to 1% additional levy have been proposed in clause 18 of the Constitution (122nd Amendment) Bill (popularly known as GST bill). This clause is being divided into four sub-clauses. These clauses are explained as follows:-
The sub-clause (1) to the clause 18 says:-
"An additional tax on supply of goods, not exceeding one per cent in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2)."
From analysis of above sub-clause 1, features of this levy can be listed as follows:-
It is an additional tax and will be levied over and above the normal GST rate as may be prescribed.
It shall be levied in course of inter-state trade of commerce.
Its rate will not exceed 1%.
It will be levied and collected by Centre for a period of two years.
The period of two year can be revised by GST Council.
The proceeds from this levy will be assigned to the State in which the supply of goods originates.
Further, provisions contained in sub-clause 2 to 4 to the clause 18 are explained as follows:-
Sub- clause no.
Provision contained
2 Collection from this levy shall not form part of consolidated fund of India and will be deemed to be assigned to the State from where the supply originates.
Only the proceeds attributable to Union territories shall be credited to Consolidated Fund.
3 Centre may prescribe list of goods on which this levy will not be applicable.
4 The law related to principles for determining the place of origin (from where the supply of goods takes place) shall be formulated by Parliament. Need of such levy:-
Since GST is a destination based tax, it is said that initially the manufacturing states or the states where the production of goods is done; will suffer loss. The purpose of this 1% additional tax is to compensate the manufacturing states, i.e., the states from where the supply of goods takes place. However, it is expected that GST will lead to increase in revenues of all the States, thus, the manufacturing states will also gain in long run. Due to this reason, this levy has been proposed for a period of two years only. However, end decision has been kept safe in the hands of GST council. This levy can be said to be a serious effort made by the Centre to convince the States to agree upon the introduction of GST. It is also in line with the recommendations made by the Empowered Committee in their various meetings for the protection of the revenues of the manufacturing States. It is worth noting here that Clause 18 in itself does not make any distinction of a "manufacturing state" and this tax shall be levied by all States who send their produce outside the State.
1% Levy: CST in new name?
It has been stated by our Finance Minister that the input tax credit of this levy will not be allowed. Thus, this is against the very basic objective of GST. Even the main feature of GST as popularized by the ruling party is that there will be no cascading effect. When the Credit of this levy will not be allowed where will it go? Definitely, it will be included in the cost of the goods that will further be subject to tax. Thus, cascading effect will be there. Also, it is mentioned that this 1% Additional tax shall be levied for a period of two years or such other period as the Goods and Services Tax Council may recommend. By these features, this levy seems to be replica of Central Sales Tax (CST) levied currently. Also, this levy has most of the inherent features of CST. At the time of introduction of VAT, CST was levied and it was said that it will be reduced year by year and ultimately it will be abolished. This promise was kept in the initial years and rate of CST was reduced from 4% to 3% and from 3% to 2% respectively. However, there was no reduction thereafter and still after around 9 years of implementation of VAT, CST could not be abolished as initially promised by the Government. Thus, the past indicates how far has the government withdrawn any tax after imposing it once? One can never be so sure as to if the duty shall last for two years or twenty!
Against the spirit of GST which says "no cascading effect here":-
GST is a destination based tax and this 1% additional duty is an origin based tax. How can both- the destination based as well as the origin based tax be levied on a single transaction? Also, ironically, it would favour international trade over inter-state trade. As stated earlier, clause 18 in itself does not make any distinction of a "manufacturing state" and this tax shall be levied by all States who send their produce outside the State. This provision in itself is the originator of cascading effect. Let us consider an example- Suppose a dealer in Maharashtra purchases cloth from Delhi and sends it to Punjab for tailoring. The finished goods are sent back to Delhi. Such finished goods are then consigned to Maharashtra for sale. In this way, by the time they reach Maharashtra, they would be laden with an additional tax burden of 3-4%, being 1% for each state. It would be more feasible for the dealer in Maharashtra to import such goods rather than getting them from Delhi.
On one hand, the government has been laying emphasis on "Make in India" campaign, wherein, special efforts are being made to ensure the free flow of goods and services in the economy. On the other, additional duty of such kind is being levied. It is beyond our understanding- how such additional duty shall contribute to the free flow of goods and services?
Rate of GST is already high, why 1% extra with no credit facility?
Scope of GST would be much wider than any other indirect tax structure. Thus, a no. of goods and services which are not taxable under present structure would also come under the ambit of tax. Also, the rate of GST is already proposed to be around 18-22% which is quite high. A service provider, who currently pays tax @14%, would be liable to pay the tax at a higher rate. The same goes with trader of goods as well. Adding to this, the rate of GST is going to be a single consolidated rate for both goods as well as services. In this manner, a trader of goods has to pay tax for service component also and service provider has to pay tax for goods also. Under such circumstances, when the tax imposition is already going to be higher than the existing situation due to increased rate and wider scope, where does the question arise regarding loss of revenue?
Compensation of losses already agreed, why provision for this levy:-
There is provision in clause 19 of the GST bill wherein the Central Government will compensate the loss occurring to the states due to implementation of GST for five years. When there is already a provision of compensation of loss occurring to the states, then where is the need for additional 1% duty which is totally against the basic principles of GST. Also, the provision of compensation of loss and this 1% additional levy is basically drafted for loss making states during transitional period of GST. When we talk of clause 19, it would result in no profit no loss situation since whatever the loss state is making will be compensated by Centre. However, when it comes to 1% additional levy, though the states making losses will have some income from this tax but the states already making profit or under no profit no loss situation will definitely gain extra. This seems to be against the basic principles of introducing this levy as the states gaining will gain more and that too with the cost of other states which shall have to bear the cost of this 1% additional levy.
By: Pradeep Jain
Introduction: -
Goods and Service Tax (GST) has been a topic of debate in the recent past. With the NDA government looking firm to bring in the GST, the members of Rajya Sabha still have a number of objections to raise, and for their very reasons. Finance Minister Arun Jaitley has been strongly contending that the implementation of GST would remove cascading effect of taxes thereby making way for a business-friendly economy. However, on close observation of Clause 18 of the Constitution (122nd Amendment) Bill, it appears that things are quite different than what is being projected. This clause seeks to impose the most talked 1% additional levy by the Centre on supply of goods in course of inter-state trade or commerce. In this article, an effort is being made to analyze this levy and criticism faced by it.
What is 1% additional levy?
The provisions relating to 1% additional levy have been proposed in clause 18 of the Constitution (122nd Amendment) Bill (popularly known as GST bill). This clause is being divided into four sub-clauses. These clauses are explained as follows:-
The sub-clause (1) to the clause 18 says:-
"An additional tax on supply of goods, not exceeding one per cent in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2)."
From analysis of above sub-clause 1, features of this levy can be listed as follows:-
It is an additional tax and will be levied over and above the normal GST rate as may be prescribed.
It shall be levied in course of inter-state trade of commerce.
Its rate will not exceed 1%.
It will be levied and collected by Centre for a period of two years.
The period of two year can be revised by GST Council.
The proceeds from this levy will be assigned to the State in which the supply of goods originates.
Further, provisions contained in sub-clause 2 to 4 to the clause 18 are explained as follows:-
Sub- clause no.
Provision contained
2 Collection from this levy shall not form part of consolidated fund of India and will be deemed to be assigned to the State from where the supply originates.
Only the proceeds attributable to Union territories shall be credited to Consolidated Fund.
3 Centre may prescribe list of goods on which this levy will not be applicable.
4 The law related to principles for determining the place of origin (from where the supply of goods takes place) shall be formulated by Parliament. Need of such levy:-
Since GST is a destination based tax, it is said that initially the manufacturing states or the states where the production of goods is done; will suffer loss. The purpose of this 1% additional tax is to compensate the manufacturing states, i.e., the states from where the supply of goods takes place. However, it is expected that GST will lead to increase in revenues of all the States, thus, the manufacturing states will also gain in long run. Due to this reason, this levy has been proposed for a period of two years only. However, end decision has been kept safe in the hands of GST council. This levy can be said to be a serious effort made by the Centre to convince the States to agree upon the introduction of GST. It is also in line with the recommendations made by the Empowered Committee in their various meetings for the protection of the revenues of the manufacturing States. It is worth noting here that Clause 18 in itself does not make any distinction of a "manufacturing state" and this tax shall be levied by all States who send their produce outside the State.
1% Levy: CST in new name?
It has been stated by our Finance Minister that the input tax credit of this levy will not be allowed. Thus, this is against the very basic objective of GST. Even the main feature of GST as popularized by the ruling party is that there will be no cascading effect. When the Credit of this levy will not be allowed where will it go? Definitely, it will be included in the cost of the goods that will further be subject to tax. Thus, cascading effect will be there. Also, it is mentioned that this 1% Additional tax shall be levied for a period of two years or such other period as the Goods and Services Tax Council may recommend. By these features, this levy seems to be replica of Central Sales Tax (CST) levied currently. Also, this levy has most of the inherent features of CST. At the time of introduction of VAT, CST was levied and it was said that it will be reduced year by year and ultimately it will be abolished. This promise was kept in the initial years and rate of CST was reduced from 4% to 3% and from 3% to 2% respectively. However, there was no reduction thereafter and still after around 9 years of implementation of VAT, CST could not be abolished as initially promised by the Government. Thus, the past indicates how far has the government withdrawn any tax after imposing it once? One can never be so sure as to if the duty shall last for two years or twenty!
Against the spirit of GST which says "no cascading effect here":-
GST is a destination based tax and this 1% additional duty is an origin based tax. How can both- the destination based as well as the origin based tax be levied on a single transaction? Also, ironically, it would favour international trade over inter-state trade. As stated earlier, clause 18 in itself does not make any distinction of a "manufacturing state" and this tax shall be levied by all States who send their produce outside the State. This provision in itself is the originator of cascading effect. Let us consider an example- Suppose a dealer in Maharashtra purchases cloth from Delhi and sends it to Punjab for tailoring. The finished goods are sent back to Delhi. Such finished goods are then consigned to Maharashtra for sale. In this way, by the time they reach Maharashtra, they would be laden with an additional tax burden of 3-4%, being 1% for each state. It would be more feasible for the dealer in Maharashtra to import such goods rather than getting them from Delhi.
On one hand, the government has been laying emphasis on "Make in India" campaign, wherein, special efforts are being made to ensure the free flow of goods and services in the economy. On the other, additional duty of such kind is being levied. It is beyond our understanding- how such additional duty shall contribute to the free flow of goods and services?
Rate of GST is already high, why 1% extra with no credit facility?
Scope of GST would be much wider than any other indirect tax structure. Thus, a no. of goods and services which are not taxable under present structure would also come under the ambit of tax. Also, the rate of GST is already proposed to be around 18-22% which is quite high. A service provider, who currently pays tax @14%, would be liable to pay the tax at a higher rate. The same goes with trader of goods as well. Adding to this, the rate of GST is going to be a single consolidated rate for both goods as well as services. In this manner, a trader of goods has to pay tax for service component also and service provider has to pay tax for goods also. Under such circumstances, when the tax imposition is already going to be higher than the existing situation due to increased rate and wider scope, where does the question arise regarding loss of revenue?
Compensation of losses already agreed, why provision for this levy:-
There is provision in clause 19 of the GST bill wherein the Central Government will compensate the loss occurring to the states due to implementation of GST for five years. When there is already a provision of compensation of loss occurring to the states, then where is the need for additional 1% duty which is totally against the basic principles of GST. Also, the provision of compensation of loss and this 1% additional levy is basically drafted for loss making states during transitional period of GST. When we talk of clause 19, it would result in no profit no loss situation since whatever the loss state is making will be compensated by Centre. However, when it comes to 1% additional levy, though the states making losses will have some income from this tax but the states already making profit or under no profit no loss situation will definitely gain extra. This seems to be against the basic principles of introducing this levy as the states gaining will gain more and that too with the cost of other states which shall have to bear the cost of this 1% additional levy.
By: Pradeep Jain
Goods and Service Tax (GST) upcoming in India is likely to result in widening the tax base substantially by covering large number of potential taxpayers who are hitherto not covered in the tax net either due to their activity not being in the nature of taxable or due to some exemption being claimed. It is talked that the present assessee base on Central side itself is expected to rise to approximately 60 lacs assessees from existing base of apprx. 15 lacs. One of major contributor in this rise would be job workers who may not be required to get registered under present taxation system. The paper writer has analysed impact on job workers in the proposed GST regime viz a viz current taxation system.
The manufacturing industries now-a-days stick to their core competencies and get most jobs done on outsourced basis. The sending of raw materials/semi- finished materials for some process as per the directions of principal manufacturer is known as job work. This is widely used method in many industries.
Meaning of job work
Job work is understood as the processing or working on goods supplied by the principal so as to complete a part or whole of the process. The work may be the initial process, intermediate process, assembly, packing or any other completion process. The goods sent for job work maybe raw material, component parts, semi finished goods and even finished goods. The resultant goods could also be a variation of the same or the complete product.Examples of common job works are slitting, machining, welding, painting, electroplating, assembly, powder coating etc.
1. Provision under Central Excise and Service Tax
A. Meaning of Job work under Central Excise
Job work is defined in Notification No. 214/86 dated 25.03.1986 and under Rule 2(n) of the Cenvat Credit Rules, 2004
"Job work" means processing or working upon of raw materials or semi-finished goods supplied to the job worker/ so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process.
If one were to go by the definition of the term "job work", it is evident the raw materials have to be supplied by another person. In Prestige Engineering India Ltd v CCE Meerut, - 1994 (9) TMI 66, the Supreme Court held that when the job worker contributed his own material to the goods supplied by the customer and engaged in manufacturing, the activity was not one of job work. However, minor additions by the job worker would not take away the fact that the activity was one of job work.
B. Job Work and Manufacture (under Central Excise)
Since excise duty is on 'manufacture', duty liability arises only when the goods are manufactured during job work. The test as to whether the process amounts to manufacture or not would be determined as per section 2(f) of Central Excise Act, 1944 which defines manufacture as including any process incidental or ancillary to the completion of the manufactured product….. Various decision of the Supreme Court have arrived at a conclusion that where the product undergoes a change whereby a new article having a distinctive name, character or use emerges or not from the said process in manufacture (Honorable Supreme Court in Delhi Cloth and General Mills Co. Ltd Vs UOI 1962 (10) TMI 1 - SUPREME COURT OF INDIA)
C. Liability under Central Excise and Service Tax
Process amount to manufacture: If the process undertaken by the job worker amounts to manufacture/ deemed manufacture as per the definition or decided case laws, the job worker would be liable to pay duty of excise on the goods so manufactured. Alternatively, the principal manufacturer who has supplied the goods for job work may furnish a declaration under Notification No. 214/86 dated 25.03.1986 (which exempts goods manufactured by a job worker from duty of excise)based on which job worker would not be required to charge duty of excise. The goods must be used in manufacturing process by principal manufacturer which should result in a dutiable product being manufactured on which duty of excise is being charged. The activity undertaken by job worker would not be liable to service tax also as any process amounting to manufacture or production of goods is covered by Negative list.
Process does not amount to manufacture: Where the processing undertaken by the job worker does not amount to manufacture, the said job worker could be liable to service tax.But before determining the same, one need to examine the exemption provided in Notification No. 25/2012 ST 20.06.2012 (called as Mega Exemption Notification) . As per the said Notification, job work in relation of any goods on which appropriate duty is payable by the principal manufacturer, is exempted. Appropriate duty means "duty payable on manufacture or production under a Central Act or a State Act, but shall not include 'Nil' rate of duty or duty wholly exempt". It means that if the duty is charged on final product by principal manufacturer, there is no liability on job worker to charge service tax. On the contrary, if appropriate duty is not paid by principal manufacturer, the job worker would be liable to charge service tax.
D. Valuation
Prior to 2007 valuation of job work was as per the ratio of UJAGAR PRINTS ETC. Versus UNION OF INDIA & OTHERS 1989 (1) TMI 124 - SUPREME COURT OF INDIA It was held by Supreme Court that in respect of goods manufactured on job-work basis, assessable value would be the job charges (including the profit of the job-worker if not already included in the job-charges) plus the cost of the materials used in the manufacture of the item (including the cost of the materials supplied free of cost to the job-worker).
Rule 10A had been introduced in Central Excise Valuation (Determination of Price of Excisable goods) Rule 2000, in respect of the goods produced or manufactured by Job Worker which provides for valuation as follows:
Goods directly sold from job worker premise:Where the goods are sold by the raw material supplier/principal manufacturer from the factory of job worker - the value would have to be the transaction value of the goods so sold by the raw material supplier/principal. This will apply only when the raw material supplier and the buyer of the goods are not related and price is the sole consideration for the sale and the goods are sold for delivery at the time of removal from the job worker's factory.
Illustration: Let the value of raw materials supplied by principal be ₹ 1,00,000 and the job workers conversion cost be ₹ 15,000 and his profit margin be ₹ 5,000. If the principal sells the goods processed by the job worker at ₹ 1,50,000. Then assessable value would be ₹ 1,50,000 (that is the price charged by the principal for sale of the processed goods).
Goods not sold from job worker premise: In a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of job-worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of the job worker - the normal transaction value of such goods sold from such other place at or about the same time has to be adopted. This, in other words follows the principle of depot based valuation under Central Excise applicable where goods are cleared to depots of manufacturers and sold therefrom. Where such goods are not sold at or about the same time, then the normal transaction value of such goods at the time nearest to the time of removal of said goods from the factory of job worker is to be adopted. The cost of transport from the premises where from the goods are sold, to the place of delivery, would not be included in assessable value.
Valuation under service tax would be on gross amount charged towards labour charges. Where the nature of work undertaken is works contract, value would be arrived at as per options provided under Rule 2A of Service Tax (Determination of Value) Rules, 2006.
2. Provisions under CST/VATAct
A. Interstate job work:The goods may be sent outside state for job work.In the absence of any sale, there would be no liability on principal manufacturer to charge CST. The material may be sent along with a declaration that the goods have been sent on job work.
The work undertaken by job worker may or may not involve use of material. Where no material is used, there is no liability to charge CST as there is no transfer of property involved.When the job worker uses materials there would be a transfer of property in goods involved and the transaction would be taxable. The taxability would depend upon the following:
Material Billed separately: This would be a divisible contract in which job worker would charge the applicable CST on the materials transferred by him. He would also bill pure labour charges. In such cases the work order, purchase order or contract should be clear on the values ascribed towards the material and labour. It is advisable to keep the valuation of each of the components in such bifurcated contract near to the reality.
Composite Billing: In this case the value of material would be included in the total amount. This is called works contract. The material portion would be liable to CST. The various State governments have specified some deemed deduction for labour where the works contract or cannot arrive at the actual value of goods. The example could be annual maintenance contracts, galvanizing, electroplating, powder coating, painting of components, re-melting of scrap zinc/ brass etc. These transactions are liable for tax deduction at source when they provide services to the specified institutions.
Similarly, there could be contracts such as painting of portrait etc. in which some consumables are used. In these cases though there is a material transfer, the activity has been understood clearly to be service by the Court's by applying dominant motive test and consequently there is no liability to charge CST.
B. Job work within state: Where principal manufacturer and job worker are located within same state, there would be no liability on principal manufacturer to charge VAT in the absence of sales. The liability charge VAT would be same as discussed above in case of interstate job works.
3. Applicability of GST on job work
Having discussed the impact under Central Excise, Service Tax and CST/VAT, now we shall discuss the taxability under proposed GST regime.
The taxable events under present laws are manufacture (Central Excise), provision of service (Service Tax) and sale (CST/VAT) respectively for applicability of different kind of taxes. Under proposed GST regime, all these concepts would lose relevance and the taxable event would only be "supply of goods" and "supply of services". The goods supplied by principal supplier to job worker would be supply of goods chargeable to CGST/SGST in case of intra state job work and IGST, in case of inter- state job work. The job worker would be entitled to take the credit of tax charged by principal supplier. When the goods would be supplied back by job worker, he is also required to charge the tax in the same manner as charged by principal supplier. Following could be certain aspects which would be relevant under GST:
Valuation: Supply of goods by principal supplier to job worker would be on account of other than sales. Now the question arises as to on what value the principal supplier is required to charge GST as the principal supplier is not going to receive any consideration from job worker towards such supply. One possible option could be the price to be arrived at based on intrinsic value of goods. This can be arrived at by taking the price of comparable goods. Another option could be wherein tax to be charged on the cost of product being supplied which could be determined based on cost accounting record. Similarly, job worker may charge duty based on intrinsic value of goods in the form in which it is supplied by him after processing. This can be done based on the price at which supplied by principal supplier + his job work charges (including material and labour).
Nature of taxes and credit: In case of job work within state, both principal supplier and job worker would be required to charge CGST and SGST. In case of inter-state movement, IGST would be charged. The tax charged by one party would be eligible as credit to another which may be adjusted against discharging their output liability.
Treatment of additional 1 % tax: In case of interstate supply of goods, additional 1% tax would also be levied for initial 2 years. However, it is proposed not to levy this tax where supply of goods is other than on account of sales. Hence, principal supplier would not be required to charge this additional tax on supply of goods to job worker. Similarly, the job worker needs not to charge this tax to the extent material supplied by principal supplier. However, he has added certain material from his sources, there would be transfer of property in goods to that extent and this supply may be liable to additional tax of 1%. The tax so charged will not be admissible as credit to the principal supplier.
Tax on supply of capital goods: There would be no distinction between capital goods and other goods in the GST regime. Hence, the supply of capital goods by principal supplier will also entail levy of GST on the value of goods supplied. The value could be arrived at the book value/intrinsic value/value of similar goods etc. Where the value of capital goods supplied is very large, this is likely to result in substantial cash outflow by principal supplier. The tax so charged though would be available as credit to job worker but it may be possible that the liability of job worker on output is very less due to which the same may remain unutilised for very long period.
Requirement of submission of forms: Under present law, the principal supplier and job worker is required to transfer the material on the basis of Annexure –II challan, delivery challan, forms under CST/VAT Act etc. All these requirements are expected to be done away under proposed GST regime. Though there could be some documentary evidence/format which may be prescribed to capture the transactions other than of supply.
Booking of revenue in books of account: The distinction between supply and sale will continue in the post GST regime also. All supply may not be considered sales. As the transaction would not be on account of sale, it shall not be recorded as revenue in the books of principal supplier as well as job worker as revenue can be booked only when there is transfer of property in goods which is guided by Accounting Standards issued by ICAI. If all supplies are treated as revenue in the books of account, the revenue would be inflated in the books of both principal supplier as well as job worker which would be incorrect. It could be possible that separate series of invoice/documentary evidence may be permitted to record such transaction so that these can be distinguished from sale.
ST - When allegation in SCN is of undervaluation and demand of diffe
MUMBAI : THE issue is regarding the service tax liability on the appellant in providing the activity of painting, pasting, displaying and/or maintaining the same on side-panel of buses on behalf of the client namely M/s. LIC and M/s. New India Insurance Co. Ltd.
The appellant had charged an amount as "display charges" from their clients but did not discharge the service tax liability under the category of "Advertising Agency" service.
The demands were confirmed along with imposition of penalties besides demanding interest.
Before the Tribunal, the appellant submitted that the services rendered by them would not fall under the category of "Advertising agency" but under "Sale of Space or Time for Advertisement" and is taxable from 01.05.2006 whereas the demand in the case in hand is from April 2003 to March 2008. Reliance is placed on the decision in Dhanshree Publicity - 2007-TIOL-1983- CESTAT-DEL to emphasise that the painting activity undertaken by a sole proprietor will not amount to advertising agency services. Furthermore, it is informed that appellant on his own from 01.05.2006 has discharged the service tax liability under the category of "Sale of Space or Time for Advertisement" .
The AR submitted that the appellant had got registered under the category of "advertising agency" services and discharged their tax liability but now were claiming reclassification of the services and that the SCN only sought to recover differential tax on the charge of under-valuation.
The Bench observed -
"8. We find that the appellant has mis-directed himself in defending the allegations made in the show-cause notice and has put up a defence that the service rendered by them are not classifiable under advertisement agency service post 01.05.2006 and classifiable under the category of "Sale of Space or Time for Advertisement" . On perusal of the show-cause notice we find in Para 7 and 8, the allegations in the show cause notice is that appellant has not discharged the differential service tax liability on an amount received from M/s LIC and M/s New India Insurance Co. Ltd. towards painting charges and display charges. Appellant had never disputed the fact that they have received the amount towards painting charges and display charges from their clients. On perusal of the agreement/work order issued to the appellant we find that M/s. LIC has categorically stated that service tax liability arises on both the amounts. When the allegation in the show cause notice is for undervaluation and question of re-classification was never charged, we find that both the lower authorities have misdirected their findings and tried to classify the services under advertisement agency services. We find that these service are not at all disputed by appellant nor there is any allegation in the show cause notice to that extent."
Upholding the order confirming the demand of differential service tax liability along with interest and the penalties imposed, the appeals were rejected as being devoid of merits.
(See 2015-TIOL-1874- CESTAT-MUM)
NDPS - Whether as per Sec 42, IOs have a duty to write down informat
NEW DELHI : THE issue before the bench - Whether as per Sec 42, IOs have a duty to write down information on basis of which raid or search is planned and forward the same to Superior Officer, preceding search and seizure. YES is the answer.
Facts of the case
The assessee was arrested near ISBT, Sarai Kale Khan, and was found to be in possession of four bags containing a total of 61.49 kg ganja. The prosecution case was that, while HC Som Pal Singh (PW.1), Ct. Gurvinder Singh (PW.3), SI Shivraj Bisht (PW.4) and Ct. Prakash (PW.6) were on patrolling duty on 6/8/2009, were informed at about 5:30 PM by a Secret Informer that one person was sitting near ISBT, Sarai Kale Khan, with contraband and if raid was conducted immediately, he could be apprehended. The aforesaid information was communicated by SI Shivraj Bisht (PW.4) to the ACP, Operation Cell, where after direction was given to undertake the raid. His request to four public persons to become witnesses in the search and seizure proceedings was refused. Assessee was found sitting on two red coloured bags. He was holding the strings of other two bags in his hands. He was apprehended and was told about the information which the Police party had about him. He was made aware of his legal rights to be search in the presence of a Gazetted Officers or a Magistrate by way of a written notice u/s 50, but the assessee refused to exercise such option. The refusal was taken down in the hand writing of assessee, he was also offered to search the members of the raiding team before he was searched, but that to be was refused. The four bags contained, in all, 61.49 kg ganja. SI Shivraj Bisht (PW.4) drew out samples of ganja from each of the four bags and gave serial numbers to the same. They were packed in separate cloth pullandas and were also sealed affixing the seal of SSB. FSL form was also prepared on the spot, on which also the same seal was affixed. The seal, after its use was given to HC Som Pal Singh (PW.1). SI Shivraj Bisht (PW.4), prepared a rukka and sent the same to PS Hazarat Nizammudin through Ct. Gurvinder Singh (PW.3). He was also entrusted with the sealed pullandas, FSL form and seizure memo for being given to the SHO. Charge-sheet was filed against the assessee on 29/10/2009, where upon cognizance was taken u/s 20(b) (ii) (c). Prosecution had relied upon 10 witnesses who were examined on its behalf to bring home the charges against assessee.
Held that,
++ the FSL report clearly states, after giving the description of the parcels that the seals on the four parcels marked as S1 to S4 were intact and tallied with the specimen seals as per the forwarding letter (FSL form). Thus one of the arguments on behalf of the assessee viz. the FSL form was not sent along with the sealed samples to the FSL is incorrect. It can safely be presumed that PW.9 inadvertently missed in stating about the FSL forms also being sent to the FSL along with sealed samples. In Abdul Rashid Ibrahim Mansuri vs. State of Gujarat: (2000) 2 SCC 513, a three judge bench of SC held that compliance with the Section 42 is mandatory and failure to take down the information in writing and forthwith send the report to the immediate Official Superior would cause prejudice to the accused. However in Sajan Abraham vs. State of Kerala: (2001) 6 SCC 692, which was also decided by a three Judge bench, it was held that Section 42 was not mandatory and substantial compliance was sufficient. Admittedly, the present case hinges on the secret information having been provided by a spy to PW.4. There is no averment in the testimony of PW.4 regarding such secret information having been reduced in writing and sent to the Superior Officer. There is no DD entry regarding such secret information having been received by PW.4. As has been decided in Karnail Singh vs. State of Haryana, the mandatory requirement is of writing down the information received and sending a copy thereof to the Superior Officer, preceding the search and seizure by the officer, which could only be relaxed in special circumstances involving emergent situations, when compliance of such requirement could be postponed by a reasonable period, i.e. after the search and seizure. Total non compliance with requirement of Section 42 has been held to be impermissible. It has been reiterated a number of times by SC that the consequences of non compliance of Section 42 of NDPS Act are grave. The stringent provisions of the NDPS Act cast a duty upon the prosecution to strictly follow the procedure and comply with all its safe guards;
++ the SC in Sukhdev Singh vs. State of Haryana, 2007-TIOL-104- SC-NDPS; has observed that the provisions of Section 42 are intended to provide protection as well as lay down a procedure which is mandatory and should be followed positively by the Investigating Officer. He is obliged to furnish the information to his superior officer forthwith. That obviously means without any delay. But there could be cases where the investigating officer instantaneously, for special reasons to be explained in writing, is not able to reduce the information in the writing and send the said information to his superior officers, but could do it later and preferably prior to the recovery. Compliance of Section 42 of NDPS Act is mandatory and there cannot be an escape from it strict compliance" . Though there has been delay of one and half months in sending the sample to FSL, which is in violation of the standing instructions of the NCB, nonetheless there is nothing on record to suggest or to come to the opinion that while the sealed samples were kept in the malkhana, they were tampered with. From the deposition of the witnesses, it becomes very clear that the samples were sent to the FSL, Rohini in proper and in untampered condition. It is normally expected, that there should not be any delay in dispatching the sample to the laboratory to avoid any suspicion, but in every instance of delay in such dispatch, the prosecution case cannot be thrown overboard. The last limb of the argument on behalf of the appellant is that there are only police witnesses and no serious effort was made for joining public witnesses. It has been submitted that ISBT is a crowded area and there could have been many willing persons to become a witness to the search, seizure and later arrest of the appellant. In this context, reference is made to testimony given by PW.3, wherein it has been admitted that no public witness was asked to join such proceedings. Similarly PW.4 has also admitted that no public person was requested to witness the search. However such statement was qualified by saying that no one was available at the time of search. In Ajmer Singh vs. State of Haryana:(2010) 3 SCC 746, the Supreme Court has held that joining of public persons is not an inviolable rule and there could not be any acquittal merely because no independent person was produced; nonetheless the requirement of independent persons joining the investigation and deposing before the Trial Court was not undermined wholly;
++ this Court finds that in most of the NDPS cases investigated by the police, there is a routine statement that persons who are asked to join the investigations declined to become witnesses. In the case in hand, this Court is not convinced that any sincere effort was made by the raiding party to associate public witnesses. The names and addresses of such persons have also not been noted. From the deposition of the witnesses also, it is hardly established that anybody was asked to join the proceedings. This failure on the part of the police, by itself, may not have been sufficient for discarding the prosecution case all together but from the conspectus of the totality of circumstances namely: (i) Complete non compliance of Section 42 of the NDPS Act; (ii) Arrest having been affected at a busy public place; (iii) The appellant being in possession of four bags containing 61.49 kg of ganja, which is a huge quantity and which cannot be easily transported; (iv) No statement with regard to the origin and source of such contraband and from which place was such contraband being carried by the appellant and to which destination, and (v) Delay of one and half months in dispatching the seized sample to the FSL, the non-joining of public persons has assumed great significance. Thus, to tie the strings together, there has not been even a delayed compliance of the provisions of Section 42 of NDPS Act, which is a mandatory safeguard engrafted in this statute and despite the recovery of contraband being of huge quantity and that also from a public place, no serious effort has been made by the police for joining the investigation. Based on the above findings, it is difficult to uphold the conviction. For the reasons afore-recorded, the appeal is allowed and the appellant is directed to be released forthwith from custody, if not wanted in any other case. Trial Court record to be returned. Two copies of the judgment be sent to the Superintendent of the concerned jail for record as well as compliance. In view of the appeal having been allowed, this bail application has become infructuous.
(See 2015-TIOL-2033- HC-DEL-NDPS)
MUMBAI : THE issue before the Bench is - Whether attachment of assessee' s property u/s 35 is an absolute power which could be exercised without recording opinion. NO is the answer.
Facts of the case
The assessee is a registered dealer under the Maharashtra VAT Act, 2002. It's product which was styled as "rigid frame steel structures" , involves a particular configuration of various steel components, commonly and collectively referred to as "PreEngineered Buildings" . The components were supplied to the customers in a completely knocked down condition. The customers have an option to get these materials installed and erected by either the assessee or any third party. The assessee had been collecting the VAT from its customers until the year 2011 at the rate of 12.5.% on account of rigid frame columns and rafters and remitting the same to the Revenue. On the rest of the products, assessee had been collecting VAT from its customers at the rate of 4 or 5%, as applicable, and remitting the same to the Revenue. There was no dispute with the Revenue until the financial year 2010-2011. Assessee thereafter relying upon a judgment of the Rajasthan HC, started charging VAT at the rate of 5% and not 12.5% on rafters and rigid frame columns. Assessee also invoked the procedure for determination of disputed question (DDQ) under the MVAT Act, 2002 for one of the products supplied by it. An order was passed by the Commissioner holding that the rigid framed columns do not fall under the entry claimed by assessee, and therefore, liable to be taxed at the residual rate of 12.5%. Against this order, an Appeal was filed by assessee in 2013. A search and seizure notice was issued and records and information as requested by the Sales Tax Department was produced. Some of the documents were seized. The seized documents were stored in the assessee' s premises but with a seal. The statements of the various employees of the assessee were recorded, and thereafter, the assessee was called upon to produce all books of accounts since 1st April, 2011. Thereafter, assessee was required to appear before the Joint Commissioner, but before that it was informed by the bankers that there was a communication from the department attaching their bank accounts.
The Joint Commissioner of Sales Tax, VAT Administration, Pune Division had provisionally attached the bank accounts of the assessee dealer for the tax liability. The order directed that the amounts would remain provisionally attached until further orders. Any amount shall not be paid, unless that order was withdrawn or communication to that effect was made by the Joint Commissioner of Sales Tax,(VAT Administration) Pune. The order further directed that if any such payment was made, such a person shall be personally held liable to the Commissioner of Sales Tax, Maharashtra State, Mumbai and the said amount shall be recovered as an arrears of land revenue as per the provisions of Maharashtra Land Revenue Code, 1966 and appropriate legal action will be initiated as per the provisions of law. The dealer would be at liberty to produce any documents, papers or books of accounts and appear before the Joint-Commissioner of Sales Tax (VAT Administration) Pune in person within 15 days from the service of that order to justify the withdrawal of this order, failing which that order would be absolute. That order was to remain in operation for 12 months from the date of service on the dealer and may be extended further from time to time for a period of two years.
Held that,
++ for any action in terms of section 35 to be taken, firstly there ought to be an inquiry in any proceedings including the proceedings relating to recovery of any amount due. Secondly, that ought to be in respect of any person or dealer. Thirdly, during any inspection or search in relation to any business of any person or dealer under the MVAT Act, 2002, the Commissioner ought to form an opinion that for the purpose of protecting interest of the Revenue, it is necessary to pass an attachment order provisionally. Foundation for the action thus, is the recovery of the amount due and the opinion of the Commissioner that for the purpose of protecting interest of the Revenue, this drastic action is needed. It is not an absolute power and which could be exercised without recording the requisite opinion and on the above material counts. We are not impressed by the argument of Mr Sonpal that the assessee can be relegated to the remedy provided by section 35(5) and that is of making an application to the Commissioner for modifying or cancelling the order. We are also not satisfied that in the given facts and circumstances, this Court should not exercise its discretion in favour of the Petitioner and relegate it to the alternate remedy, as it is well settled that the existence of an alternate remedy is not an absolute bar against entertaining a Writ Petition under Article 226 of the Constitution of India. It is more a rule of caution and prudence rather than a legal bar. Therefore, whether the Petitioner should be relegated to the alternate remedy, is a matter left to the discretion of the Court exercising powers under Article 226 of the Constitution of India. Considering the impact of the impugned order and the drastic consequence thereof, we do not think that the assessee should be relegated to the remedies suggested by Mr Sonpal. They are hardly efficacious in the present case;
++ we find that the Petitioner is proceeded against because in the opinion of the Joint Commissioner, it was reported to him that the proceedings u/s 64 are in progress. Those proceedings, on the own showing of the Joint Commissioner, pertain to production and inspection of accounts and documents and search of premises. On the date of the impugned order these proceedings were in progress. Thereafter, the Joint Commissioner proceeds to verify the records and holds that the dealer has misclassified its product and sold it at an incorrect tax rate. This was the discrepancy noticed during the course of the investigating visit. According to him, the dealer has failed to act as per the provisions of law. We find absolutely no reference made by the Joint Commissioner to the admitted and undisputed factual position, namely, since 2011 the Petitioner entertained the doubt about the rate at which tax is to be levied and collected, and therefore, requested the Commissioner to determine a disputed question and issue. That determination ended in an order dated 9th July, 2013 adverse to the Petitioner. However, this order is challenged in Appeal before the Tribunal and that Appeal is pending. In such circumstances, and that the dispute being as old as 2011, coupled with the fact that the Commissioner&# 39;s order is of 9th July, 2013 and against which an Appeal has been preferred by the Petitioner in the Tribunal which is pending since September 2013, then, we do not see what was the occasion to exercise the powers u/s 35;
++ it may be that a search of the premises was conducted and that production and inspection of accounts and documents was directed, and thereafter, the same came to be referred to, but by that itself, and without making any reference to the debatable issues, we do not think that the Commissioner was justified in exercising his powers. There is no basis for holding that the dealers' credentials are doubtful and if coercive action is not initiated immediately, then, the dealer may not discharge the said liability to the exchequer. How or why such an apprehension was not raised from 2011 till date, has not been clarified at all. What was the occasion to act in terms of Section 35 on 21st August 2015, has not been also explained beyond referring to the action under Section 64. We do not think that the Commissioner needed to exercise this power in order to protect the interest of the Revenue. If the Joint Commissioner was of the opinion that revenue involved is to the tune of more than Rs.45 Crores, and that is required to be secured, then, he could have ensured security of the same by appropriate proceedings including by an Application in the pending Appeal. That Authority could have obtained an undertaking and thereby ensuring that the assets and properties are not frittered away or disposed of. The Petitioner appears to be readily willing to make a statement that the factory building, plant and machinery are unencumbered, and therefore, there appears to be no apprehension that their present value would not be adequate to secure the Revenue. Assessee' s counsel had stated that the assessee is ready and willing to make a statement that unless and until the proceedings under the Act including an Appeal preferred by the Petitioner is disposed of, it would not create any third party right, part with possession of the assets and properties including the above plant and machinery and building. However, that should not prevent the Petitioner from utilizing the same in the ordinary and normal course of business;
++ we are of the opinion that the statements made by the Senior Counsel, are enough to protect the interest of the revenue at this stage. There is no need of continuing the provisional attachment ordered by the Joint Commissioner vide Exhibit-A to the Petition. By accepting the statement made by the Senior Counsel as an undertaking given to the Court and directing that movable and immovable Assets and properties of the Petitioner shall not be disposed of, transferred and no third party interest of any nature created therein nor their possession shall be parted with during the pendency of the proceedings under MVAT Act, 2002, as noted above, we set aside the impugned order. Ordered accordingly. We clarify that our order and direction shall not prevent the Petitioner from utilizing all movable and immovable properties and assets in the ordinary and normal course of business. The bank accounts and which are the subject matter of the provisional attachment order are forthwith released and defreezed. The Petitioner is free to operate these bank accounts as well in the ordinary and normal course of business. However, our order and direction shall not prevent or preclude the Revenue from passing the assessment order in accordance with law and equally our order and direction shall not preclude the parties from raising all contentions in the pending appellate proceedings. All such contentions of both sides are kept open. Needless to clarify that having expressed no opinion on the merits of the controversy, this order and direction shall not influence the Tribunal while deciding the Appeal of the Petitioner. The Writ Petition is accordingly allowed in the above terms. This order is passed in the presence of Mr Alakesh Roy, Managing Director of the Petitioner who is before us in this Court. We also record the statement of Mr Sonpal that the Revenue/ Department will pass the requisite assessment order in accordance with law and after giving all prior opportunities of hearing to the Petitioner within a period of three months from today. Needless to clarify that the Petitioner will cooperate with the Department in early conclusion of assessment proceedings by not seeking unnecessary adjournments.
(See 2015-TIOL-2032- HC-MUM-VAT)
IT: For purpose of exemption under section 10(23C)(iiiad), 'aggregat
IT: For purpose of exemption under section 10(23C)(iiiad) , 'aggregate annual receipts' refers to receipts by educational institution and not that of society
[2015] 60 taxmann.com 428 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'G'
Assistant Commissioner of Income-tax
v.
[2015] 60 taxmann.com 428 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'G'
Assistant Commissioner of Income-tax
v.
Shiksha Samiti
Introduction
A 'whistle blower' is a person who exposes any kind of information or activity that is deemed illegal, dishonest, or not correct within an organization that is either private or public. The information of alleged wrongdoing can be classified in many ways: violation of company policy/rules, law, regulation, or threat to public interest/national security, as well as fraud, and corruption. Those who become whistleblowers can choose to bring information or allegations to surface either internally or externally. Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization. Externally, a whistleblower can bring allegations to light by contacting a third party outside of an accused organization. He/She can reach out to the media, government, law enforcement, or those who are concerned. Whistleblowers also face stiff reprisal/retaliatio n from those who are accused or alleged of wrongdoing. Whistleblowers face legal action, criminal charges, social stigma, and termination from any position, office, or job.
The demand to enact a law to protect whistle blower has gained momentum after a National Highways Authority of India engineer Satyandra Dubey was killed in 2003 after complaining of corruption. To protect the whistle blowers the Government enacted an Act viz., 'The Whistle Blowers Protection Act, 2011'. The whistleblowers Act seeks to protect whistleblowers who report corruption, abuse of power or a crime to the designated authority. The whistleblowers have to send their disclosures to the competent authority. The Act prescribes various competent authorities to whom the complaint is to be made. The Act prescribes the procedure for conducting the inquiry and the powers of the competent authority. It also provides for punishment for contravention of the provisions of the Act.
Objective
The objective of the Act is- to establish a mechanism to receive complaints relating to
disclosure on any allegation of corruption; or willful misuse of power; or willful misuse of discretion
against any public service; to inquire or cause an inquiry into such disclosure;
to provide adequate safeguards against victimization of the person making such complain; and
for matters connected therewith and incidental thereto.
Applicability
This Act extends to the whole of India except Jammu and Kashmir. The provisions of this Act shall not apply to the armed forces of the Union, being the Special Protection Group constituted under the Special Protection Group Act, 1988.
Competent Authority
Section 2(b) gives the list of competent authority which is given in the following table:
Sl. No Category Competent Authority
1 In relation to a Member of the Union Council of Ministers The Prime Minister
2 In relation to a Member of Parliament, other than the a Minister-
-if such a member is a Member of the Council of States;
-if such Member is a Member of House of People.
The Chairman of the Council of States;
The Speaker of the House
3 In relation to a Member of the Council of Ministers in a State or Union Territory The Chief Minister of
the State of Union Territory
4 In relation to a Member of Legislative Council or Legislative Assembly of a State or Union Territory, other than a Minister-
-if such Member is a Member of the Council;
-if such Member is a Member of the Assembly
-the Chairman of the Legislative Council;
-the Speaker of the Legislative Assembly
5 In relation to-
any Judge (except a Judge of the Supreme Court or of a High Court) including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions; or
any person authorized by a court of justice to perform any duty, in connection with the administration of justice, including a liquidator, receiver or commissioner appointed by such court; or
any arbitrator or other person to whom any cause or matter has been referred for decision or report by a Court of Justice or by a competent public authority
The High Court
6 In relation to-
any person in the service or pay of the Central government or remunerated by the Central Government by way of fees or commission for the performance of any public duty except Ministers, Members of Parliament and members or persons referred to in clause (a) or clause (b) or clause (c) or clause (d) of article 33 of the Constitution, or in the services or pay of a society or local authority or any corporation established by or under any Central Act, or an authority or a body owned or controlled or aided by the Central Government or a Government company as defined in Section 617 of the Companies Act, 1956 owned or controlled by the Central Government; or
any person who holds an office by virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll or to conduct an election or part of an election in relation to elections to Parliament or a State Legislature; or
any person who holds an office by virtue of which he is authorized or required to perform any public duty (except Ministers and Members of Parliament); or
any person who is the president, secretary or other officer bearer of a registered co-operative society engaged in agriculture, industry, trade or banking, receiving or having received any financial aid from the Central Government or from any corporation established by or under a Central Act, or any authority or body or a Government company as defined in Section 617 of the Companies Act, 1956 onwards or controlled or aided by the Central Government; or
any person who is a chairman, member or employee of any Central Service Commission or Board, by whatever name called, or a member of any selection committee appointed by such Commission or Board for the conduct of any examination or making any selection on behalf of such Commission or Board; or
any person who is a Vice-Chancellor or member of any governing body, professor, associate professor, assistant professor, reader, lecturer or any other teacher or employee, by whatever designation called, of any University established by a Central Act or established or controlled or funded by the Central Government or any person whose services have been availed of by such University or any such other public authority in connection with holding or conducting examination; or
any person who is an office-bearer or an employee of an educational, scientific, social, cultural or other institution, in whatever manner established, receiving or having received any financial assistance from the Central Government or any local or other public authority
The Central Vigilance Commission or any other authority, as the Central Government may, by notification in the Official Gazette, specify in this behalf.
7 In relation to-
any person in the service of the State Government or remuneration by the State Government by way of fees or Commission, for the performance of any public duty except Ministers, Members of Legislative Council or Local authority or any corporation established by or under a Provincial or State Act, or an authority or a body owned or controlled or aided by the State Government or a Government company as defined in Section 617 of the Companies Act, 1956, owned or controlled by the State Government; or
any person who holds an office by virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll or to conduct an election or part of an election in relation to municipality or Panchayats or other Local body in the State; or
any person who holds an office by virtue of which he is authorized or required to perform any public duty in relation to the affairs of the State Government (except Ministers and Members of Legislative Council or Legislative Assembly of the State); or
any person who is the president, secretary or other office-bearer of a registered co-operative society engaged in agriculture, industry, trade or banking, receiving or having received any financial aid from the State Government or from any corporation established by or under a Provincial or State act, or any authority or body or a Government company as defined in Section 617 of the Companies Act, 1956 owned or controlled or aided by the State Government; or
any person who is a Chairman, member or employee of any State Service Commission or Board, by whatever name called, or a member of any selection committee appointed by such Commission or Board for the conduct of any examination or making any selection on behalf of such Commission or Board; or
any person who is a Vice-Chancellor or member of any governing body, professor, associate professor, reader, lecturer or any other teacher or employee, by whatever designation called, of any University established by a Provincial or State Act or established or controlled or funded by the State Government or any person whose services have been availed of by such University or any such other public authority in connection with holding or conducting examination ; or
any person who is an office-bearer or an employee of an educational, scientific, social, cultural or other institution, in whatever manner established, receiving or having received any financial assistance from the State Government or any local or other public authority.
The State Vigilance Commission, if any, or any officer of the State Government or any other authority, as the State Government may, by notification in the Official Gazette, specify in this behalf under this Act.
8 In relation to members or persons referred to in clause (a) or clause (b) or clause (c) or clause (d) of article 33 of the Constitution.
Any authority or authorities as the Central Government or the State Government, as the case may be, having jurisdiction in respect thereof, may, by notification in the Official Gazette, specify in this behalf under this Act.
Disclosure
Section 2(d) of the Act defines the term 'disclosure' as a complaint relating to-
an attempt to commit or commission of an offence under the Prevention of Corruption act, 1988;
willful misuse of power or willful misuse of discretion by virtue of which demonstrable loss is caused to the Government or demonstrable wrongful gain accrues to the public servant or to any third party;
attempt to commit or commission or a criminal offence by a public servant
made in writing by electronic mail or electronic mail message, against the public servant and includes public interest disclosure.
Public Interest Disclosure
Section 4 of the Act provides for the requirement of public interest disclosure. This section provides that notwithstanding anything contained in the provisions of the Official Secrets Act, 1923, any public servant or any other person including any non-governmental organization, may make a public interest disclosure before the competent authority. Any disclosure made under this Act shall be treated as public interest disclosure for the purposes of this Act and shall be made before the Competent Authority and the complaint making the disclosure shall, on behalf of the Competent Authority, be received by such authority as may be specified by regulations made by the Competent Authority.
Every disclosure shall be made in good faith and the person making disclosure shall make a personal declaration stating that he reasonably believes that the information disclosed by him and allegation contained therein is substantially true. Every disclosure shall be made in writing or by electronic mail or electronic mail message in accordance with the procedure as may be prescribed and contain full particulars and be accompanied by supporting documents, or other materials, if any. The Competent Authority may, if it deems fit, call for further information or particulars from the person making the disclosure.
No action shall be taken on public interest disclosure by the Competent Authority if the disclosure does not indicate the identity of the complainant or public servant making public interest disclosure or the identity of the complainant or public servant is found incorrect or false.
Exemption from disclosure
Section 8 provides that certain matters are exempt from disclosure. According to this section no person shall be required or be authorized by virtue of provisions contained in the Act to furnish any such information or answer any such question or produce any documents or information or render any other assistance in the inquiry under this Act, if such question or document or information is likely to prejudicially affect the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign State, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence-
as might involve the disclosure of proceedings of the Cabinet of the Union Government or any Committee of the Cabinet;
as might involve the disclosure of the proceedings of the Cabinet of the State Government or any Committee of that Cabinet;
and for the purpose of this Section, a certificate issued by the Secretary to the government of India or the Secretary to the State Government, as the case may be, or any authority so authorized by the Central or State Government certifying that any information, answer or portion of a document is of the nature specified above, shall be binding and conclusive.
No personal shall be compelled for the purposes of inquiry under this Act to give any evidence or produce any document which he could not be compelled to give or produce in proceedings before a Court.
By: Mr. M. GOVINDARAJAN
[2015] 60 taxmann.com 463 (Andhra Pradesh and Telangana)
HIGH COURT OF ANDHRA PRADESH AND TELANGANA
T. Rajendra
v.
Aryabhatta Solutions Ltd.
Service Tax : Where writ petition is filed against adjudication orde
[2015] 60 taxmann.com 451 (Jharkhand)
HIGH COURT OF JHARKHAND
Ramchandra Singh
v.
Union of India
IT/ILT : Where company failed in related party transaction filter an
IT/ILT : Foreign exchange gain/losses related to assessee' s business activities are to be treated as operating income/expense for computing operating margins of both assessee and comparable companies
[2015] 60 taxmann.com 311 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'A'
Pole to Win India (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle 11 (3), Bangalore
__._,_.___
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