TIOL-DDT 2492
09.12.2014
Tuesday

THE Commissioner had confirmed a Service Tax demand of over Rs. 34 crores on certain alleged EPC projects for a State Government in an order dated 21.09.2011. The assessee filed a Stay application and sought waiver of pre-deposit. The CESTAT by an order dated 10.07.2013 2013-TIOL-1779-CESTAT-BANG, ordered deposit of over Rs. 30 crores and interest thereon.

The assessee filed a writ petition in the High Court. The interesting question before the High Court was whether the order of pre-deposit was an appealable order or whether writ was a remedy. The High Court held that it was an appealable order and rejected the writ petition. 2013-TIOL-997-HC-AP-ST.

And the assessee filed an appeal against the Tribunal's pre-deposit order. In a landmark order, the High Court observed that indiscriminate denial of the power of waiver would result in a situation where an aggrieved party would be indirectly told "pay or perish" . But strangely, the High Court ordered pre-deposit of about Rs. 18 crores. 2014-TIOL-137-HC-AP-ST. Please also see Service Tax - Appeal - Pre-deposit - Pay or Perish? in DDT 2285 03.02.2014

The perseverant assessee approached the Supreme Court. The Apex Court initially ordered that no coercive steps should be taken (DDT 2299) but later allowed the assessee to withdraw the SLP and go back to the High Court with a review petition.

The assessee approached the High Court with a review petition. In an order dated 12.06.2014, the High Court remanded the matter to the Tribunal for the exclusive purpose of paving the way for the assessee to urge the ground of their financial weakness, or inability, before the Tribunal. 2014-TIOL-1231-HC-AP-ST and (DDT 2405 28.07.2014)

So, the assessee was back to where it all started. This time around the Tribunal observed that it is necessary for the appellant to ensure that if not the full tax, at least a portion of the tax is paid for hearing the appeal. Appellants cannot expect the Government to stand in a queue along with other creditors for realization of tax when the assessee is a going concern and continues to be a taxpayer. The Tribunal ordered deposit of Rs. 10 crores.

Now, the assessee went straight to the Supreme Court. The Supreme Court on 05.12.2014, directed the assessee to deposit an amount of Rs. 2 crore before 14.12.2014 and on payment of this amount, the assessee will also be heard by the Larger Bench sitting at Bangalore.

The Larger Bench: In another case reported by us in 2014-TIOL-83-SC-ST the Supreme Court on 15.09.2014 directed that all similar cases should be heard by a Larger Bench of the Tribunal headed by the President, so that a uniform order is passed. [At last, some light at end of the... canal - DDT 2450 07.10.2014]

The Larger Bench of the Tribunal is all set to have its sitting in Bangalore from 15th December 2014.

In the last 17 months, this assessee was before the CESTAT twice, the High Court twice and the Supreme Court twice - perseverance pays.

Anti Dumping Duty - Sodium Nitrite - Reimposed at revised Rates

THE anti dumping duty on Sodium Nitrite originating in, or exported from, People's Republic of China, imposed by Notification No. 143/2009-Cus, dated 22nd December 2009, lapsed on 17th January 2011 and was resurrected again by Notification No. 11/2011-Cus dated 17.02.2011 giving a fresh lease of life to the anti-dumping duty till June 30, 2011 .

The Government reimposed the duty at a reduced rate with effect from 17th August 2011, valid for five years, by Notification No. 76/2011-Customs, dated the 17th August, 2011. Consequent to mid-term review, they have now rescinded the Notification No. 76/2011 and the anti dumping duty is reimposed at reduced rates with effect from 08.12.2014 valid upto and inclusive of the 16th August, 2016.

Notification No. 46/2014-Cus.,(ADD), Dated: December 8, 2014

FTP -Government Notifies Appellate Authorities

GOVERNMENT has notified Appellate authorities for orders passed by various adjudication authorities as follows:

DGFT Notification No. 101 (RE-2013)/2009-2014, Dated: December 05, 2014

FTP - No Registration for export of cotton

GOVERNMENT has amended Sl. No. 197 & 199 of Chapter 52 of Schedule 2 of ITC (HS) Classification of Export & Import Items to dispense with the registration requirement for export of cotton (Tariff Codes 5201 & 5203).

Similarly Sl. No. 200, 201 & 202 of Chapter 52 of Schedule 2 of ITC (HS) Classification of Export & Import Items have been amended to dispense with the registration requirement for export of cotton yarn (Tariff Codes 5205, 5206 & 5207), for which the export policy is now free without any restrictions.

DGFT Notification No. 102 (RE-2013)/2009-2014, Dated: December 08, 2014

DGFT Notification No. 103 (RE-2013)/2009-2014, Dated: December 08, 2014

Thou Shalt - 21 Commandments for the babu - Conduct Rules Amended

THE president has amended the Central Civil Services Conduct Rules to add 18 clauses to Rule 3(1), which are:

Every Government servant shall at all times--

iv. commit himself to and uphold the supremacy of the Constitution and democratic values;

v. defend and uphold the sovereignty and integrity of India, the security of the State, public order, decency and morality;

vi. maintain high ethical standards and honesty;

vii. maintain political neutrality;

viii. promote the principles of merit, fairness and impartiality in the discharge of duties;

ix. maintain accountability and transparency;

x. maintain responsiveness to the public, particularly to the weaker section;

xi. maintain courtesy and good behaviour with the public;

xii. take decisions solely in public interest and use or cause to use public resources efficiently, effectively and economically;

xiii. declare any private interests relating to his public duties and take steps to resolve any conflicts in a way that protects the public interest;

xiv. not place himself under any financial or other obligations to any individual or organisation which may influence him in the performance of his official duties;

xv. not misuse his position as civil 'servant and not take decisions in order to derive financial or material benefits for himself, his family or his friends;

xvi. make choices, take decisions and make recommendations on merit alone;

xvii. act with fairness and impartiality and not discriminate against anyone, particularly the poor and the under-privileged sections of society;

xviii. refrain from doing anything which is or may be contrary to any law, rules, regulations and established practices;

xix. maintain discipline in the discharge of his duties and be liable to implement the lawful orders duly communicated to him;

xx. maintain confidentiality in the performance of' his official duties as required by any laws for the time being in force, particularly with regard to information, disclosure of which may prejudicially affect the sovereignty and integrity of India, the security of the State, strategic, scientific or economic interests of the State, friendly relation with foreign countries or lead to incitement of an offence or illegal or unlawful gain to any person;

xxi. perform and discharge his duties with the highest degree of professionalism and dedication to the best of his abilities.

Earlier there were only three clause which were:

(i) maintain absolute integrity;

(ii) maintain devotion to duty; and

(iii) do nothing which is unbecoming of a Government servant.

DoPT Notification in F. No. 11013/6/2014-Estt A, Dated: November 27 2014

CBEC Releases Draft IRS Rules

THE CBEC has released the Draft Indian Revenue Service (Customs and Central Excise) Group 'A' Rules, 2014. CBEC has requested the Chief Commissioners to circulate the Draft Rules among all the concerned members of the Service.

Group A in the Service consists of:

The last grade of temporary Assistant Commissioners (recently promoted) will exist only up to 17.12.2018 and these officers will not have any right to continue in these posts after that.

Chief Commissioners with one year of service are eligible to be promoted as Principal Chief Commissioners and PCs with one year service are eligible for promotion as Chief Commissioner.

As of now there are no Principal Chief Commissioners and there are only three Principal Commissioners. After the Rules are notified, the promotion exercise will start.

CBEC Letter in F.No.A 12018/3/2014-Ad II, Dated: December 08 2014

Jurisprudentiol-Wednesday's cases

Central Excise

No error in order of Tribunal disallowing CENVAT Credit on services relating to trading activity prior to 01.04.2011: HC

INPUT service means service used by the appellant - manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. In the present case, the pre-heater valued at Rs.5.41crores is the final product, which was manufactured and cleared from the place of removal, i.e., from the appellant's factory. The remaining goods valued at Rs.36.04 crores were not manufactured as final product and cleared from the place of the appellant. In such a case, it would not qualify for the benefit of cenvat credit under Rule 2(l) of the Cenvat Credit Rules, as rightly upheld by the Commissioner (Appeals) and the Tribunal. The service tax paid on sales commission in respect of procuring orders by M/s. Adhunik Corporation cannot be utilised by the appellant for taking credit for the goods not manufactured as a final product and cleared from the appellant's manufacturing unit.

Income Tax

Whether when assessee revises return after being confronted by AO but before issue of notice for filing accurate particulars, penalty is warranted in such case - YES: HC

THE assessee company had gone into liquidation and the Official Liquidator had been appointed. Assessee had filed e-return declaring loss of Rs.1,89,44,380/-. It had also claimed business loss amounting to Rs.2,33,07,349/- on account of sale of fixed assets. During assessment, assessee filed a revised return declaring total income of Rs.33,62,974/. In the revised return, the loss of Rs. 2,33,07,349 on account of sale of fixed assets was not treated as "business loss", rather shown as capital loss. The AO made some additions and assessed the total income of assessee at Rs.40,19,974/- and taxable income at "NIL" after giving benefit of brought forward losses. Pursuant to the satisfaction recorded in the assessment order, penalty proceedings for concealment u/s 271(1)(c) were initiated and penalty equal to 100% of the tax payable of Rs. 80,66,400/- on the concealed income was imposed.

The issue before the Bench is - Whether when assessee revises return after being confronted by AO but before issue of notice for filing accurate particulars, penalty is warranted in such a case. YES is the answer of the High Court.

Service Tax

Whether introduction of new, comprehensive definition of "credit card, debit card, charge card or other payment card service" by FA, 2006 by excluding from ‘Banking & Other financial services' is substantive and prospective or is in continuation of levy under Section 65 (10)/(12) of FA, 1994 & retrospective - Matter referred to LB: CESTAT

THE issue before the Bench is - Whether the commission/discount earned by the acquiring bank from the Merchant Establishment is liable to service tax under the category of banking and financial services for the period prior to 01.05.2006?

Matter is referred to Larger Bench

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in