TIOL-DDT 2417
14.08.2014
Thursday

THE JS(TRU) in his letter D.O.F. No. 334/15/2014-TRU dated 10th July, 2014 while informing the changes in Service Tax by the Union Budget 2014-15 mentioned -

2.1.1 Service tax leviable currently on sale of space or time for advertisements in broadcast media, namely radio or television [section 66D (g) read with section 66B], is proposed to be extended to cover such sales on other segments like online and mobile advertising. The new levy would further extend to advertisements in internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc. Sale of space for advertisements in print media, however, would continue to be in the negative list and hence remain excluded from service tax. Print media is being defined in service tax law for the purpose. This change will come into effect from a date to be notified later, after the Finance (No.2) Bill, 2014 receives the assent of the President.

A Consultant informed DDT that some multiplexes have started collecting service tax from 6th August 2014 (i.e. the date of Presidential Assent to Finance Bill, 2014) on advertisement displayed on screens and wanted us to share the notification which imposed this levy from the said date.

We too were surprised with the speed with which the notification was issued, if it really was!

DDT made enquiries with the Ministry and has learnt that no such notification has been issued as of now.

So, why this haste - hopefully they will be paying it to the department the coming month.  There should not have been any interpretational issues as the TRU letter is crystal clear on this point. Perhaps the jurisdictional authorities should explain the fallacy to the multiplex owners - Less government more governance and some Trade facilitation!

Interest rate notified for delayed refund of pre deposit

BY the Finance Act, 2014, w.e.f 06.08.2014, section 35FF of the CEA, 1944 is substituted to read -

Interest on delayed refund of amount deposited under section 35F.

35FF. Where an amount deposited by the appellant under section 35F is required to be refunded consequent upon the order of the appellate authority, there shall be paid to the appellant interest at such rate, not below five per cent and not exceeding thirty-six per cent per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such amount from the date of payment of amount till, the date of refund of such amount:

Provided that the amount deposited under section 35F, prior to the commencement of the Finance (No. 2) Act, 2014, shall continue to be governed by the provisions of section 35FF as it stood before the commencement of the said Act.

Vide section 83 of FA, 1994 s.35FF is also applicable to Service Tax. Similar substitution has also been made in the Customs Act, 1962 - section 129EE refers.

The notification under this section has been issued the day before yesterday and the rate of interest is fixed at six percent per annum.

On the subject, this is what DDT 2404 /25.07.2014 said -

Interest on refund of Pre deposit from Day One - at rate to be notified: At present if pre deposit is to be refunded due to an appellate order, interest is paid from a date after three months from the receipt of the appellate order. It seems this is to be amended for payment of interest from the date of deposit, but this will apply to only deposits made after the enactment of the Finance Bill. Interest will be at a rate (between 5and 36 percent) to be notified by the Government. But what happens if the operation of the order of the appellate authority is stayed by a superior court or tribunal - no answers!

Considering that the new section 35FF/129EE is applicable only to deposits made u/s 35F/129E after the date of enactment and the notification prescribing interest rate was issued on the 12th August, 2014, what would be the interest rate for the period from 6th August 2014 to 11th August 2014 is another question that begs for an answer.

And, by the way, which year would the interest rate reach thirty-six percent?

Notification 24/2014-CE(NT), Dated: 12.08.2014

Notification 70/2014-Cus(NT), Dated: 12.08.2014

Don't Leave HQ without Permission - CBDT Chairman tells Commissioners

IN an Office Memorandum issued on 12th August 2014, the CBDT Chairman, K.V.Chowdary has observed,

It has been noticed that some of senior officers of the rank of Commissioner and above are leaving headquarters without prior permission of their immediate Controlling Officers. Some visit CBDT without such prior permission. Some of the officers do not apply for leave and/or permission to leave Headquarters. Such practices are undesirable and amount to misconduct. They need to be dealt with sternly.

Pr. CCIT/CCsIT may please exercise due control in this regard.

This kind of indiscipline and setting a bad example by senior officers of the level of Commissioners is unfortunately an unquestioned fact in the Revenue Boards. If such practices amount to misconduct as stated by the Chairman, why the officers indulging in such misconduct are not punished and why should the Board entertain such truants?

And why should a Commissioner level officer loiter on the verandas of North Block for a meeting with a Board Member or Chairman? Obviously he has a problem which he hopes the Board would solve. Why can't the Board be a little more compassionate to senior officers like Commissioners? Just because you have become a Board Member, you don't have the right to ill treat your senior officers who are powerful bosses in the field. Or is that the reason?

CBDT Chairman's O.M Dated: August 12, 2014

Company Law Settlement Scheme, 2014 - CLSS

THE Companies Act requires companies to file annual documents (Annual Return and Financial Statements) on the MCA2 electronic registry within prescribed time limits. These annual documents are considered very important in the context of an up-to-date Registry. It is observed that a large percentage of companies have not filed their statutory documents making them liable for penalties and prosecution for such non-compliance.

The Companies Act, 2013 lays down a stricter regime for the defaulting companies with higher additional fees. The quantum of punishment has been enhanced under the new Act vis-a-vis the earlier Act i.e. Companies Act, 1956. A specific provision for enhanced fine in case of repeated default has also been included in the form of section 451 of the Act. Additionally, the provisions of section 164(2) of the Act providing for disqualification of directors in case a company has not filed financial statements or annual returns for any continuous period of three financial years has been extended to companies.

The Ministry has received representations from various stakeholders requesting for grant of transitional period/one-time opportunity to enable them to file their pending annual documents to avoid attract ton of higher fees/fine and other penal action, especially disqualification of the Directors prescribed under the new provisions of the Act.

In order to give such an opportunity to the defaulting companies to enable them to make their default good by filing these belated documents, the Central Government has decided to introduce a Scheme namely “Company law Settlement Scheme 2014" [CLSS-2014] condoning the delay in filing the above mentioned documents with the Registrar, granting immunity for prosecution and charging a reduced additional fee of 25% of the actual additional fees payable as per section 403 read with Companies (Registration Offices and Fee) Rules, 2014 for filing those belated documents under the Companies Act, 1956/2013 and the Rules made thereunder.

In addition, the scheme gives an opportunity to Inactive companies to get their companies declared as 'dormant company' under section 455 of the Act (Chapter XX1X) by filing a simple application at reduced fees.

The scheme shall come into force on the 15th August 2014 and shall remain in force up to 15th October, 2014.

MoCA General Circular No. 34/2014, Dated: August 12, 2014

Review of SIONs A-1443, A-1170, A-3627 and K-134

DGFT had suspended the above mentioned SIONs vide PN No.30 dated 4th October, 2013 and reinstated the same with amendments in SIONs A-3627 and K-134 vide PN No.66 dated 11th July 2014, based on representations received from trade and industry.

It has been proposed to further review these SIONs in terms of para 4.10.1 of HBP vl.

So, the Manufacturers of export products covered under the aforementioned SIONs and the concerned Export Promotion Councils/Associations are requested to submit production and consumption data for further review of these SIONs by the 27th of August, 2014.

It is also emphasized that failure to provide the data, so required, by the specified date would result in stoppage of the benefit of Advance Authorization/DFIA for export products covered by these SIONs and the SIONs would be modified based on available data.

Interestingly, this Trade Notice tries to achieve the impossible - It refers to SION A-1443 and says that it was wrongly mentioned as A-1143 in the PN 30 dated 4.10.2013. In fact, this wrong continued in PN No.66 dated 11th July 2014 too.

Be informed that SION A-1443 refers to Oxalic Acid and SION A-1143 refers to Phosphorous Trichloride and supposedly they are not one and the same.

Some unseen retrospective legislation here?

DGFT Trade Notice 11/2014, Dated: August 7, 2014

CBI has almost thousand vacancies to be filled

THE overall vacancy position of CBI as on 01.08.2014 is as below:-

Note:-

Legal 270* [*14 Special Prosecutors, 05 Asstt. Prosecutor and 33 Public Prosecutors are engaged on contract basis in CBI.]

Technical 68+37 = 105* [11 Banking & Foreign Trade, 06 Engineering, 06 Insurance & Taxation and 14 Computer Professionals totalling to 37 are working on Contract basis for an initial period of 03 years.]

Nearly seven years ago, DDT 684 reported that the premier investigation agency is grossly understaffed with over 22% of the posts lying vacant; that against the sanctioned strength of 5959, the number of vacant posts is 1341. It appears that the situation has slightly improved with the vacancy now being below 1000.

But for some strange reason, there seems to be no shortage of Revenue officers in the country - after the Cadre Review they are swarming all over the place.

70 million years old fossil teeth, Poisonous spiders in Mail

The Chinese Customs authorities seem to be receiving interesting things from Hungary & the US in MAIL these days.

Sample these - 30 cm long Elephant tusk, 22 live poisonous spiders, 200 fossil teeth of mosasaurs (large extinct marine reptiles) that lived 70 million years ago, 263 butterfly specimens of precious specimens that are listed in the protection conventions.

Smuggling is never passé.

DDT Cartoon

Jurisprudentiol – Tuesday's cases

Service Tax

Commissioner (Appeals) has no power to review order of pre deposit, but if order of pre deposit passed by Commissioner (Appeals) is erroneous, Tribunal is required to set aside order of Appellate Authority and remand matter to Appellate Commissioner after passing an appropriate order as to pre deposit as laid down by Tribunal itself in Girnar Transformers Pvt. Ltd case Matter remanded: HC

THE appellant filed an appeal with Commissioner (Appeals) who ordered a pre deposit of 50% of the duty demanded. The appellant, made a request to the Appellate Commissioner to reconsider the order. The Appellate Commissioner took up the said request letter as a review application and proceeded to dispose of the appeal in the following manner:

(i) The assessee had no case on merits;

(ii) There is no power to review/reconsider the order directing pre deposit; and

(iii) The assessee had not complied with the direction of the Appellate Commissioner in his order dated 24.2.12 and, therefore, the appeal is liable to be rejected summarily for non-compliance

Income Tax

Whether Section 80IA benefits are available to captive electricity unit supplying power to assessee's manufacturing plant - YES: HC

THE assessee company was engaged in the business of manufacturing of fused Aluminium Oxide Grains, Calcined products, Monolithics, Refractories, Bonded Abrasives, Ceramic Paper and trading of Monolithic and Refractories. The assessee had an Abrasives Grains Division that manufactured fused Aluminium Oxide grains etc. The assessee had setup a power plant for captive supply to the Aluminium Oxide gains unit. Profit earned from the power plant unit was claimed as eligible for deduction under Section 80 IA as an undertaking engaged in generation of electricity. The assessee along with return of income filed Form No.10CCB, computing deduction under Section 80 IA. In the course of the assessment proceedings, assessee filed a technical note explaining the features of the power plant established by them to generate electricity. The Assessing Officer denied benefit of Section 80 IA in respect of power plant unit.

The issue before the Bench is - Whether Section 80IA benefits are available to captive electricity unit supplying power to assessee's manufacturing plant. And the answer is YES.

Central Excise

Right to sell in DTA accrues on first day of a FY - accrued/vested right cannot be taken away merely because there was delay in issuing letter of permission by DC - such an interpretation would make mockery of provisions of EXIM policy: CESTAT

THE appellants are 100% EOUs engaged in the manufacture of cotton yarn and during the process of manufacture, cotton waste arises.

As per the EXIM policy and the guidelines issued in this regard the appellants are entitled to sell 50% of the value of their exports during a financial year into DTA in the subsequent financial year.

In the present case, impugned duty demands have been confirmed by the CCE, Kolhapur on the sole basis that the permission for DTA clearance is valid from the date of issue of letter of the Development Commissioner and prior to issue of such letter, there is no entitlement to the appellants for sale into DTA.

See our Columns on Tuesday for the judgements

Until Tuesday with more DDT

Have a nice extended weekend.

Happy 68th Independence Day (15th August Friday) and Janmashtami (18th August Monday)

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