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Income tax hands over Rs 1700 Cr tax demand to Congress PartyGST - Neither SCN nor the order spell out the reasons for retrospective cancellation of registration, hence cannot be sustained: HCStage-2 of Vikram-1 orbital rocket successfully test-firedGST - Non-application of mind - If reply was unsatisfactory, details could have been sought - Record does not reflect that such exercise was done - Matter remitted: HCHouthis claim UK has not capability to intercept their hypersonic missilesGST - Merely because a taxpayer has not filed returns for some period does not mean that registration is required to be cancelled with retrospective date also covering the period when returns were filed and taxpayer was compliant: HCIsraeli forces kill 200 Palestinians at Gaza medical complex & arrest over 1000GST - Petitioner's reply, although terse, is not taken into account while passing assessment orders - Petitioner put on terms, another opportunity provided: HCUnveil One Nation; One Debt Code; One Compliance Rule for Centre & StatesChina moves WTO against US tax subsidies for EVs & renewable energyMore on non-doms - The UK Spring Budget 2024 (See TII Edit)Notorious history-sheeter Mukhtar Ansari succumbs to cardiac arrest in UP jailTraining Program for Cambodian civil servants commences at MussoorieNY imposes USD 15 congestion taxCBIC revises tariff value of edible oils, gold & silver45 killed as bus races into ravine in South AfricaCBIC directs all Customs offices to remain open on Saturday & SundayBankman-Fried jailed for 25 yrs in FTX scamI-T- Once the citizen deposits the tax upon coming to know of his liability, it cannot be said that he has deliberately or willfully evaded the depositing of tax and interest in terms of Section 234A can be waived: HCHouthis attack continues in Red Sea; US military shoots down 4 dronesFederal Govt hands out USD 60 mn to rebuild collapsed bridge in BaltimoreI-T - Receipts of sale of scrap being part & parcel of activity and being proximate thereto would also be within ambit of gains derived from industrial undertaking for purpose of computing deduction u/s 80-IB: HCCanadian School Boards sue social media titans for 4 bn Canadian dollar in damagesFormer IPS officer Sanjiv Bhatt jailed for 20 yrs for planting drugs to frame lawyerCus - No Cess is payable when Basic Customs Duty is found to be Nil: CESTAT
 
Yesterday in Supreme Court - CX Valuation - Discount - Classification - Heel Guard - medicament or skin care product

DDT in Limca Book of Records - Third Time in a rowTIOL-DDT 2671
26 08 2015
Wednesday

WITH a Special Tax Bench in the Supreme Court, many old issues are getting settled and unsettled.

Central Excise - Valuation - Cash Discount has to be taken into account in arriving at "price" even under Section 4 as amended in 2000: In Central Excise, valuation is a problem as old as Central Excise itself. And the Government ensures that the same issues are agitated before the Supreme Court again and again. In the case decided yesterday, the Supreme Court considered the valuation provisions as it existed prior to 1973, after 1973 and before 2000 and after 2000.

The main issue was deduction on account of trade discounts. The Supreme Court observed, "It can be seen that the common thread running through Section 4, whether it is prior to 1973, after the amendment in 1973, or after the amendment of 2000, is that excisable goods have to have a determination of "price" only "at the time of removal". This basic feature of Section 4 has never changed even after two amendments. The "place of removal" has been amended from time to time so that it could be expanded from a factory or any other premises of manufacture or production, to warehouses or depots wherein the excisable goods have been permitted to be deposited either with payment of duty, or from which such excisable goods are to be sold after clearance from a factory."

When sold does not mean the time: The Supreme Court observed that the expression "actually paid or payable for the goods, when sold" only means that whatever is agreed to as the price for the goods forms the basis of value, whether such price has been paid, has been paid in part, or has not been paid at all. The basis of "transaction value" is therefore the agreed contractual price. Further, the expression "when sold" is not meant to indicate the time at which such goods are sold, but is meant to indicate that goods are the subject matter of an agreement of sale.

Vaseline Intensive Care Heel Guard is medicament: The issue involved in the appeal is as to whether Vaseline Intensive Care Heel Guard ('VHG') is to be treated as merely a skin care preparation or it is a medicament having curing properties.

The product in question, Vaseline Intensive Care Heel Guard, is marketed as a solution for cracked heels and it is claimed that this solution is specially developed by the scientists at Vaseline Research. The composition of this product includes salicylic acid I.P. 1.5% w/w. lactic acid 8.0% w/w. Triclosan 0.1% w/w. Cream base - q.s. Salicylic acid is described as keratolytic substance having bacteriostalic and fungicidal properties used in the treatment of fungus infection of the skin. The Tribunal, while deciding that the aforesaid product is a medicament, pointed out that the product was formulated and essentially used for treatment of 'cracked heels', protection from further cracks in the human heels due to extreme climatic conditions and low humidity, constant exposure of feet to water and due to absence of shoe or other protection while walking. It also found that this product was manufactured under a drug licence as drug authorities had treated the same as a medicament. The Tribunal also found that the usage of this product was related to the effect of therapeutic or mitigating substance of prophylactic substances added. Thus, the effect of mitigation of an external condition is primary effect and the effect of smoothing the skin was secondary in nature and, therefore, it was to be treated as a medicament and classified under Chapter 30.

The Supreme Court agreed with the Tribunal.

Please see Breaking News

Litigation Loving Revenue to pay interest on interest payable - Revenue High-handedness condemned by High Court

IT is easier for a camel to pass through the eye of a needle than an assessee to get refund from the Indirect Taxes Department. It is easier for two camels to pass through the eye of that needle than for an assessee to get interest on that refund.

But here is an assessee who got not only the refund and interest, but interest on interest - due to the perseverance of the department, yes the department. Their love for litigation finally landed them in this comically sad situation. Of course it took 17 long years.

It is a long story, which I had briefly narrated in DDT 2561.

An importer realised that he paid the Customs duty, even though he was eligible for an exemption. He promptly filed a refund claim of Rs.1,06,74,049/- on 24.12.1998 and it was promptly rejected.

The Commissioner (Appeals) allowed the appeal but ordered crediting the refund amount to the Consumer Welfare Fund on the ground of unjust enrichment.

Appeal against the said order was allowed by the Tribunal vide order dated 27.07.2005 in favour of the appellant by holding that the refund claim is not hit by the principles of unjust enrichment.

The Revenue appeal against the Tribunal order was dismissed by the High Court on 01.04.2010. Revenue took the matter to the Supreme Court, where also it lost the case on 21.02.2011.

The importer approached the Customs for refund with interest - twelve years after filing the first refund claim.

The Department was kind enough to grant refund but not interest.

The Commissioner (Appeals) upheld the rejection of interest on the ground that the refund amount has been sanctioned within three months from the date of judgment of Hon'ble Supreme Court in dismissing the Special Leave Petition (SLP) filed by the department; and that for a substantial period, the amount was lying with the Consumer Welfare Fund and not with the department.

The importer approached the Tribunal again. The Tribunal allowed the appeal with consequential benefits observing that the object behind insertion of interest provisions in Section 27A of the Act is that interest is compensatory in character. (2015-TIOL-442-CESTAT-BANG).

The never say die, Revenue is in appeal before the High Court again.

The High Court in a very refrained order condemned the Revenue to a further interest at 9%.

Some observations of the High Court.

Even when on 27.07.2005, the Tribunal allowed the appeal of the respondent-company with consequential benefits, yet the amount was not refunded and therefore, the matter was taken up by the Revenue before the High Court and further also before the Supreme Court, where the appellant-Revenue had been unsuccessful. It was then, after more than 12 years of filing of the application for refund, on 13.04.2011 an order was passed by the Assistant Commissioner for refunding the amount, but without interest.

Here, we may mention that initially itself it took nearly three years for the Department to process the application of the respondent for refund of customs duty and pass an order on the same, which, in our opinion, does not appear to be justified, but we however refrain from passing any further comments on this issue.

Even after the amount was found to be payable to the respondent-company, the appellant-Revenue did not pay the interest on the amount to be refunded. Admittedly, the respondent was deprived of the amount of over Rs.1 Crore which had been deposited by it, and was found refundable to the respondent-company. Earlier also, the appellant dragged on the matter up to the Supreme Court, and paid the amount only after more than 12 years when the matter was finalized by the Supreme Court.

The appellant (Revenue) has been misinterpreting the law, and thereby depriving the respondent from its rightful claim of interest, even after the order for refund of the amount had been made upto the Supreme Court. Not only that, the interest has been denied to the respondent even though the order directing payment of interest was made by the Tribunal on 21.05.2014, which was based on a decision of the Supreme Court. Merely because of the pendency of this appeal, though there was no stay order granted, the appellant has thus, without any valid reason, further delayed the payment of interest for a period of over 15 months from the date of the order of the Tribunal dated 21.05.2014.

At least now, will they pay the interest or take the matter to the Supreme Court?

We bring you this exemplary order today, which should be an example for all those pseudo revenue lovers, who pretend to protect the interest of revenue by unimaginable demands, illegal rejection of refunds etc. The department should realize that such officers are actually an impediment in Revenue realization.

Please see Breaking News

Ease of Doing Business - CBEC

ADVOCATE S. Viswanathan mails in:

The much touted new magnum opus CBEC site gives pride of the place to so called "Ease of doing business", wherein while referring to Notification NO.6/2015-CE (NT) dt 01.03.2015 the following is mentioned:

If the export proceeds are not received within the prescribed time period, the exporter has to reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has been allowed, if such export proceeds are received within one year from the specified period.

I have not come across the relevant provisions warranting such reversals anywhere, nor the amendments. Is this ease of business.?

Anti Dumping Duty - Phosphoric Acid - Re-imposed

ANTI Dumping Duty on "Phosphoric Acid of all grades and all concentration (excluding Agriculture or Fertilizer grade)", falling under Chapter 28 of the First Schedule to the Customs Tariff Act, originating in, or exported from, Korea (RP), was imposed vide notification No.140/2009-Customs, dated 15th December, 2009, with effect from 22nd June 2009 and expired on 21st June 2014. After a month of its expiry, it was extended till 21st June 2015 by Notification No.32/2014-Customs (ADD), dated the 23rd July, 2014

It again expired on 21st June 2015.

Now, they have imposed the duty afresh for another five years. Thanks to them for not going for that tempting retrospective amendment.

Notification No. 45/2015-Customs (ADD), Dated: August 24, 2015

Liquid Cocaine as massage oil

HONG KONG Customs recently seized about 760 grams of liquid cocaine with a market value of about USD 800,000 at Hong Kong International Airport.

The drug was found in a parcel from Brazil to Hong Kong, which was declared to contain massage oil. A Customs officer at the airport suspected that the two massage oil plastic bottles contained liquid cocaine.

A man who was expecting a parcel actually got handcuffs from the Customs. The 32-year-old arrested man will be charged with trafficking in dangerous drug.

Under the Dangerous Drugs Ordinance, drug trafficking is a serious offence for which the maximum penalty is life imprisonment and a fine of USD 5 million.

A Gentle Reminder to file income Tax Return

TODAY the Income Tax Department sent a nice mail to many assessees.

Dear Taxpayer,

By this time last year, you may have had already electronically filed your Income Tax Return. This is a gentle reminder for you to file your Income Tax Return for Assessment Year 2015-16. E-filing is simple, easy and convenient as you would have experienced in the last year.

This year we are excited to bring you the electronic verification facility using which you can avoid the signing and sending of the ITR-Verification form to CPC Bangalore. E-verification is possible through

i. Aadhaar One-time password (OTP) for which you would have to authenticate your Aadhaar and link it with your PAN, or

ii. Net-banking where you can login to your netbanking account and get redirected to the efiling account directly or

iii. E-filing OTP (available only if the Returned Income is below Rs 5 Lakh and no refund is claimed).

You are, therefore, kindly requested to login to https://incometaxindiaefiling.gov.in and download the free return preparation software with a host of new features to help you in preparing the Income Tax return and submit your return. You can also prepare and submit ITR1 and ITR4S online. Please take some time to browse through all the value-added services offered on the E-filing website that will help you prepare your return accurately and guide you in case of any prior pending items.

Needless to mention that the quicker you submit your return and send the signed ITR-V (ITR-Verification) form to CPC, Bangalore, the faster your refund, if any, would be processed and credited to your bank account. As on 19th August 2015, over 6.4 lakh refunds have already been issued for AY 2015-16, many of them where return was e-verified! File early to get your return processed soon.

They are actually selling refund. CBEC, please note.

CBEC Top Brass with Revenue Secretary and MoS

CBEC Members Neerja Shah, AK Kaushal, Revenue Secretary Shakti kanta Das, MoS Jayant Sinha, CBEC Chairman Najib Shah and CBEC Member VS Krishnan at the Conference of Chief Commissioners at New Delhi yesterday.

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Ease of doing business

This is with reference to DDT dated 26.08.2015 communicating email of Advocate S. Viswanathan.

It appears that reference to Notification No. 6/2015-CE(NT) dated 01.03.2015 has been given by mistake in the following paragraph of the measures taken for ‘Ease of doing business’ (Service Tax):

“If the export proceeds are not received within the prescribed time period, the exporter has to reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has been allowed, if such export proceeds are received within one year from the specified period.”

Actually, the above measure was taken by inserting a Proviso to Rule 6(8) of CCR,2004 vide Notification No. 21/2014-CE(NT) dated 11.07.2014.

As per Rule 6A of Service Tax Rules, 1994, to treat any service as export of service, one of the conditions is that the payment for such service has to be received in convertible foreign exchange. If the exporter of service does not receive payment within the period specified RBI, the service cannot be treated as exported and it has to be treated as exempted service being no service tax is payable as the PoP of service is outside India. So, the provisions of Rule 6 of CCR, 2004 applies in such situation and the service provider has to reverse Cenvat credit, if taken. In several cases, it is possible that the exporter may receive payment in convertible foreign exchange after expiry of the period specified by RBI and he may claim re-credit of the amount reversed under Rule 6 of CCR, 2004. Prior to 11.07.2014, there was no explicit provision allowing such re-credit. So, the measure taken can be considered towards ‘Ease of doing business’.

These are personal views.

Posted by Shvetal Parikh
 

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