TIOL-DDT 2848
18 05 2016
Wednesday

AS per Entry 5A of para 1 of Notification No. 25/2012-ST, dated 20.6.2012, Services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement, are exempted.

As per clause (zfa) of para 2 specified organisation is defined as:

(a) Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or

(b) 'Committee' or 'State Committee' as defined in section 2 of the Haj Committee Act, 2002 (35 of 2002).

The  Kumaon Mandal Vikas Nigam  and  Haj Committee  facilitate religious pilgrimage to Mansarovar  and  Haj  respectively.

Thus, the services by Kumaon Mandal Vikas Nigam  and  Haj Committee are exempted. But this exemption was given only with effect from 20.08.2014 by Notification No. 17/2014-ST, dated 20.08.2014. Notification No. 25/2012-ST was effective from 01.07.2012 and Haj was exempted only from 20.08.2014. What about the period from 01.07.2012 to 19.08.2014? Were the services taxable? At least the Government thought so. The Haj Committee was of the opinion that it had an exemption all through, even without the exemption in 2014 as per Serial No.5(b) of the Notification No.25/2012-ST dated 20.06.2012. (conduct of any religious ceremony).

So, the position was that services by the Haj Committee are exempted from 20.08.2014, but were taxable during the period from 01.07.2012 to 19.08.2014.

Government has now retrospectively exempted the services during the above period by a Section 11C notification.

The CEO of the Haj Committee of India is Ataur Rahman, an IRS officer and author of one of the earliest books on Service Tax.

Please also see

1. Service Tax - Haj and Mansarovar get exemption in DDT 2421   22.08.2014  

2. Service Tax - the  Haj  Exemption in DDT 242225.08.2014  

3. Service Tax on Tour operator service in connection with Haj & Umrah pilgrimage

4. Tax payers money spent for Haj - Not unconstitutional

Notification No. 25/2016-Service Tax., Dated May 17, 2016

Helicopter used by Director - Cenvat Credit?

CAN a Company take Cenvat Credit on the Service Tax paid on the repair and maintenance of a helicopter used for transport of the Chairman and directors? This was the question before a CESTAT Bench recently. This is actually not res integra as they say. Way back in 2008, the Tribunal had in 2008-TIOL-1199-CESTAT-MUM, observed that in this modern age, use of aircraft is to be considered as a bare requisite for business purposes and held that any service tax paid on the services for the maintenance of aircraft is admissible as credit.

In the present case, Commissioner (Appeals) has not disputed the eligibility of credit, but has sought to deny it on the ground that the helicopter was not exclusively used for the assessee's unit. The Department argued before the Tribunal that the appellant failed to produce evidence that the helicopter was used for business purposes only, since it appears that the helicopter was used for the purpose of other companies also, as the Managing Director of this Company was also the Managing Director of other group companies at Mettur, Cuddalore and trips to such places have been proved.

The tribunal held, "The denial of credit is therefore incorrect and unsustainable."

For more details of this case, please see Breaking News.

Refrain from Notifying Taxpayer when asking for information from Foreign Tax Authorities -Instructions

CBDT notes that it is frequently seen that requests for Exchange of Information in Form A (of the Manual of Exchange of Information issued by C.B.D.T. in May, 2015) addressed to Foreign Tax Authorities have been received from field formations without proper explanation as to why it is necessary to refrain from notifying the taxpayer. This leads to avoidable delays on account of further correspondences between Foreign Tax Authorities, FT &TR Division and field formations for subsequent clarification in this regard.

As per international standard for Exchange of Information, a requesting State may request exception from 'prior notification' if it is able to demonstrate through some specific evidence that the request for information is either (a) very urgent or (b) prior notification to the taxpayer/person of such request for information is likely to hamper/undermine the success of investigation.

CBDT notes that very often such evidences and explanations are not attached with the request. Further, whenever a request for refrainment from notification is made, it automatically implies that information which is in possession of the taxpayer cannot be obtained and provided by the Foreign Tax Authorities. Thus, in many cases, Foreign Tax Authorities are expressing their inability to provide the information when it has to be obtained from the taxpayer due to the 'refrainment from notification' condition.

Board wants the field to ensure that Sl. No.8 of Form A (Part II) clearly mentions whether a request to refrain from notifying taxpayer(s) involved is to be made to the Foreign Tax Authorities. In case of refrainment is required, sufficient explanation/justification should be furnished to demonstrate the necessity of refrainment from prior notification, failing which, the request from refrainment from prior notification may not be forwarded by the FT &TR Division.

MoF, Foreign Tax & Tax Research Division F.No.500/20|2013/FT., Dated: May 17, 2016

SCN to Dummy Unit - A Catch-22 Situation!

SHOW Cause Notice to a dummy unit was always a tricky issue for the Central Excise officials. It happens mostly in cases of clubbing of clearances of SSI units. Suppose there are two Companies, A1 and A2, both manufacturers, both registered, both having a factory each and both managed independently. But the Department knows that the creation of two units is only to avoid excise duty. There is actually only one Company and the second one is a dummy. Suppose the Department decides that A1 is the Company and A2 is the dummy, who should they issue the notice to?

If they issue the notices to both A1 and A2, it proves the existence of two independent Companies capable of replying to the department.

If they issue the notice only to A1, thenA2 can claim that it is an independent Company and was not a party to the litigation and the order passed against A1 is not applicable to it.

Damned if you do and damned if you don't!

We bring you one such case today. Please see Breaking News.

Until Tomorrow with more DDT

Have a nice day.