TIOL-DDT 2837
03 05 2016
Tuesday

AS per Section 192(1) of the Income Tax Act, the employer is required to deduct tax (TDS) on the salaries paid to the employees. By Section 192(2D) inserted by last year's Finance Act, the deductor employer for the purposes of estimating income of the assessee or computing tax deductible under sub-section (1), obtain from the assessee the evidence or proof or particulars of prescribed claims under the provisions of the Act in such form and manner as may be prescribed.

Now, the CBDT has amended the Income Tax Rules to prescribe the form and manner.

A new Rule 26C is inserted which provides that the assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source.

The evidence to be produced:

CBDT Notification No. 30/2016., Dated: April 29, 2016

No Service Tax Paid on Tatkal Tickets by Indian Railways

IT looks as if the Indian Railways have not paid the Service Tax on Tatkal Tickets, cancellation charges and Bed Rolls charges. It is understood that the office of the Principal Commissioner of Service Tax, Delhi-1 has written a polite letter to the Adviser, Accounts of the Rail Board that it has come to the notice of the Service Tax office that Railways and its zones are not discharging Service Tax properly on the following issues and there is short collection and short payment of tax on the same.

1. Tatkal Charges/Premium Tatkal charges

2. Cancellation Charges

3. Bed Roll Charges

The Service Tax Commissionerate has requested the Railways to provide Zone-wise income received under the above heads during the financial year 2011-12 to 2015-16.

The Additional Commissioner who has issued the letter informs the Railways that the letter has been issued with the approval of the Principal Commissioner, Service Tax.

If the Railways have not really paid the Service Tax, the demand will run into hundreds of crores. Will there be a penalty on the Railways?

In DDT 2827 18 04 2016, I had briefly mentioned this issue - Evasion by Government?  It is heard that the Ministry of Finance is already investigating the Ministry of Railways for alleged evasion of Service Tax.

If the Railways have not collected this tax from the passengers, it is gone forever. They cannot go back to the passengers to recover this tax. Then, what is the use if the Finance Ministry of the Government of India collects the tax with a penalty from the Rail Ministry of the Government of India? If the case goes to the Court, will the Attorney General represent the Finance Ministry or the Rail Ministry? Is it Revenue Neutral when one department of the Government collects tax from another department which cannot be passed on to the consumer?

Who will win this IRS vs IRS battle?

Anti Dumping Duty on Measuring Tapes

GOVERNMENT has imposed anti dumping duty on 'Measuring Tapes' originating in or exported from the Chinese Taipei, Malaysia, Thailand and Vietnam.

The anti-dumping duty imposed under this notification shall be effective for a period of five years (unless revoked, superseded or amended earlier) from the date of publication of this notification - 2nd May 2016.

Notification No. 16/2016-Customs (ADD)., Dated: May 2, 2016

Income Tax - Consistency in taxability of income/loss arising from transfer of unlisted shares - CBDT clarification

BOARD feels that for determining the tax-treatment of income arising from transfer of unlisted shares for which no formal market exists for trading, a need has been felt to have a consistent view in assessments pertaining to such income.

It has, accordingly, been decided that the income arising from transfer of unlisted shares would be considered under the head 'Capital Gain', irrespective of period of holding, with a view to avoid disputes/litigation and to maintain uniform approach.

However this decision will not be applicable to the situations where:

i. the genuineness of transactions in unlisted shares itself is questionable; or

ii. the transfer of unlisted shares is related to an issue pertaining to lifting of corporate veil; or

iii. the transfer of unlisted shares is made along with the control and management of underlying business

CBDT Letter in F.No.225/12/2016/ITA.II., Dated: May 02, 2016

135 Crore Service Tax Demand on Blue Star

BLUE Star Ltd has informed the National Stock Exchange of India that it has received an order from the Principal Commissioner of Service Tax-1, Commissionerate, Kolkata holding that there has been alleged short payment of service tax amounting to around Rs. 67.86 crores during the period 2007-08 to 2011-12 in their Kolkata location on the basis of purported examination of the company's records etc. and comparing it with the Service Tax Returns filed by the said location during the said period. The Commissioner has also imposed penalty of Rs. 67.86 crores equal to the tax demand under Sec. 78 of the Finance Act, 1994 apart from interest (not quantified in the order) to be paid in terms of Sec. 75 of the Finance Act, 1994 on the tax demanded.

The Company informs NSE that the order is a complete departure from a ruling by the competent authority in an identical matter at another jurisdiction, in which after examination of the company's similar records, the demand notice raised by the Service Tax department was quashed. Based on the advice received from its tax advisors, the Company ­ strongly believes that the said order apart from being patently erroneous, been passed without appropriately considering the submissions made by the ­ company, is based on incorrect presumptions and hence is untenable.

The Company will challenge the said order before the appropriate forum in accordance with law and is confident about a positive outcome. This disclosure is issued in terms of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, without prejudice to the rights and contentions of the Company before any regulatory authority or Tribunal or a Court.

Monetary Limit for Filing Appeal in the Tribunal/Court - CBEC Clarifies

CBEC draws the attention of the Chief Commissioners to:

1. Board's Instruction dated 17.12.2015 DDT 2748 18.12.2015  by which the Board had fixed monetary limits below which appeal shall not be filed in the Tribunal/Courts by the Department,

2. Board's Instruction dated 26.12.2014 DDT 2505 29.12.2014 clarifying that the instruction shall apply to case of recurring nature and no appeal shall be filed in cases of recurring nature if the amount involved is less than the prescribed threshold.

After the amendments made in the instruction dated 17.08.2011 by the instruction dated 17.12.2015, paragraph 3 of the instruction dated 26.12.2014 is amended as follows:

It is hereby clarified that the existing Instruction regarding applicability of monetary limits to cases of recurring nature need to be examined in light of subclause 'c' added vide instruction dated 17.12.2015. Therefore, in all cases, of "classification and refund issues which are of legal and/or recurring nature", appeals wherever merited will be filed irrespective of the amount involved.

Board wants the Chief Commissioners to take note of the above clarification while processing appeals before the Tribunal and Courts.

CBEC Instruction in F.No.390/Misc./163/2010-JC/Pt-III., Dated April 27 2016

Notice for voluntary retirement/resignation - CBEC Instructions

BOARD observes that despite clear directions, even now, proposals are referred to the Board in a routine manner at the fag end of the expiry of the period of notice for VRS and that too without verifying the veracity/genuineness of the grounds for VRS and without giving adequate/sufficient convincing reasons and recommendation of the Zonal head thereon. Further, clarifications sought are provided in piecemeal and at a very late stage thereby not leaving sufficient time for the Board for proper examination and also resulting in putting avoidable strain on the already overburdened system. Delay in deciding VRS cases have been viewed very seriously by the higher authorities.

Board now wants the proposals to be sent two months before the intended date of retirement duly signed by the concerned Chief Commissioner/Director General.

Board has prescribed the following guidelines:

(i) On receipt of the application/notice for VRS under Rule 48 or 48A of the CCS (Pension) Rules, 1972, a letter may be issued immediately requesting the officer to continue on duty till the decision of the competent authority is communicated to him.

(ii) Any request for VRS under Rule 48 will first be examined by the concerned Principal Chief Commissioner/Chief Commissioner/Director General. Request for VRS by officers stating personal reasons, family grounds/reasons/circumstances without specifying detailed grounds may not be considered and the officer may be asked to amplify reasons or grounds for seeking VRS with copies of all the supporting documents, if any. Thereafter, such cases will be recommended to the Board

(iii) Any request for VRS under Rule 48A will first be examined on merit by the concerned Principal Chief Commissioner/Chief Commissioner/Director General and only if they are convinced that there are sufficient and reasonable grounds for seeking VRS, such cases will be recommended to the Board. Request for VRS by officers stating personal reasons, family grounds/reasons/circumstances without specifying detailed grounds may not be considered and the officer may be asked to amplify reasons or grounds for seeking VRS with copies of all the supporting documents, if any.

(iv) In case of an officer of the rank of Assistant Commissioner, his/her vigilance status prior to his/her promotion to the grade of Assistant Commissioner may be provided, alongwith no dues certificate and certificate of qualifying service of the Administration Unit and recommendation of the concerned Principal Chief Commissioner/Chief Commissioner/Director General.

(v) The proposal may be sent to the Board in the proforma two months before the intended date of retirement, without fail.

The above instructions may be noted by all concerned for strict compliance.

The Chief Commissioners should be really concerned when their officers want to leave the organisation.

CBEC F.No.26014/13/2015-Ad.IIA., Dated May 02 2016

Right to Information - CIC Issues Notice to 108 Delhi VAT Officers

AN Appellant before the Central Information Commission had sought for details of cash refunds in the D-VAT returns filed online from the financial year 2013 till date. He also wanted to know the number of dealers to whom refund was sanctioned and credited within the period of two months u/s 38 of DVAT Act and also the number of dealers who were sanctioned refunds beyond the statutory period along with the interest permissible. Generally, the online Tax Returns filed by the registered dealers will contain details of refund claimed mandatorily. If refund is sanctioned, such amount gets credited automatically to account of dealer and delay if any has to be paid u/s 42 of DVAT Act.

The CPIO has simply forwarded the RTI request to all 108 Ward PIOs to furnish the information. All of them replied stating "NIL", or "No such record is available", "no complete detail is available" etc, but did not provide relevant information which they were expected to have automatically on line.

Appellant stated that when everything is submitted in online mechanism how they could claim that such information was not available.

The Commission was surprised to know that the office of Commissioner DV at is having no concern for the revenue related record keeping and allowed their 108 PIOs to give a false or incomplete reply. It is beyond comprehension that DVAT office does not have 'refund' details, which is a very significant issue of governance and also enforcement of rule of law.

The Commission found it as a fit case to initiate penal proceedings against all 108 PIOs representing 108 wards in New Delhi and also its past and present CPIOs, who simply forwarded the RTI question and the replies back to the appellant without any application of mind.

Commission directed the then Central PIO, along with each of 108 ward PIOs to show cause why maximum penalty should not be imposed against each of them for not providing correct information or suppressing the information or giving wrongful/incomplete information besides non-compliance of order of FAA (First Appellate Authority).

Until Tomorrow with more DDT

Have a nice day.

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