TIOL-DDT 2862
07 06 2016
Tuesday

THIS is good news for the real estate. When you buy a flat, if you pay any money before the completion certificate is issued, the transaction is treated as a service and taxed. Many believe that this is a sale and not service and so the Central Government is not empowered to tax this. The Delhi High Court last week upheld the levy but quashed the tax as there was no statutory measure to ascertain the value of services involved in this composite contract which involved sale of undivided share of land.

The question before the High Court was whether the consideration paid by flat buyers to a builder/promoter/developer for acquiring a flat in a complex, which under construction/development, could be subjected to levy of service tax.

The High Court found no objection to the tax per se, but noted that, "In the present case, there is no machinery provision for ascertaining the service element involved in the composite contract. In order to sustain the levy of service tax on services, it is essential that the machinery provisions provide for a mechanism for ascertaining the measure of tax, that is, the value of services which are charged to service tax. Neither the Act nor the Rules framed therein provide for a machinery provision for excluding all components other than service components for ascertaining the measure of service tax. The abatement to the extent of 75% by a notification or a circular cannot substitute the lack of statutory machinery provisions to ascertain the value of services involved in a composite contract."

This case is sure to have wide ramifications and the Government is sure to take it to the Supreme Court.

We bring you this judgement today. Please see Breaking News.

Shock Treatment - State Electricity Agencies to File Returns to Central Excise - Board Needs an English Teacher

AS per Rule 3 of the 'Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016', a State Electricity Board or an electricity distribution or transmission licensee is required to furnish a Return electronically under sub-section (I) of Section 15Aof the Central Excise Act, with regard to certain class of assessees.

The Principal Chief Commissioner or the Chief Commissioner is required to identify and intimate the State Electricity Agency, information of such manufacturers, who are using an induction furnace or rolling mill to manufacture goods falling under Section XV of the First Schedule to the Central Excise Tariff Act, 19.85 (5 of 1986), whose aggregate value of clearances exceeds one hundred and fifty lakh rupees in the financial year to which the return pertains.

The CBEC prescribes the following procedure to maintain uniformity.

1. The Principal Chief Commissioner or the Chief Commissioner of Central Excise and Service Tax in-charge of the Central Excise or Service Tax Zone shall nominate an officer to liaison with the officials of the Stale Electricity Agencies to apprise them of the compliance required under the Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016.

2. It may be conveyed to the State Electricity Agencies that as required under the said rules, an officer is required to be duly authorized by such State Electricity Agency to furnish information return in the format prescribed in the said rules. The procedure for furnishing such return may also be conveyed for ease of compliance.

3. The Principal Chief Commissioner or the Chief Commissioner of Central Excise and Service Tax shall identify and intimate to such authorised officer, information pertaining to such manufacturers who are using an induction furnace or rolling mill to manufacture goods falling under Section XV of the First Schedule to the Central Excise Tariff Act whose aggregate value of clearances exceeds one hundred and fifty lakh rupees in the financial year to which the return pertains, by the 30th June of the subsequent financial year.

4. Till such time the formats for electronic filing of return is not finalised, such returns may be received in a computer readable media (Compact Disc Read Only Memory (CD-ROM) or 8 Digital Video Disc (DVO).

Please note the above sentence - Till such time the formats for electronic filing of return is not finalised, such returns may be received in a computer readable media.... What the Board means is - Till such time the formats for electronic filing of return is finalised,...

The not should not have been there. That is why I have been pleading for appointment of an English teacher in the Board.

Please also see RBI and Electricity Authorities to file returns to Central Excise - DDT 2787

CBEC Instruction in F.No.221/01/2016-CX.6., Dated June 6, 2016

Anti-dumping Duty on Polytetrafluoroethylene Extended

THE anti-dumping duty on 'Polytetrafluoroethylene(PTFE)', falling under Chapter 3904 61 00 of the First Schedule to the Customs Tariff Act, 1975 originating in, or exported from, Russia, imposed vide notification No. 57/2010-CUSTOMS, dated the 3rd May, 2010 was extended till 2nd May 2016 by Notification No. 17/2015-Cus(ADD) dated 1.5.2015. Now this expired on 2nd May 2016 and this expiry went unnoticed.

Now they have re-imposed the duty with effect from 6th June 2016. Was there no dumping and injury to domestic industry during the period 3rd May 2016 to 5th June 2016.Obviously, there was, as evidenced by the final findings dated 12th April 2016 of the Designated authority.

Thank fully, the Government has not gone for the retrospective weapon.

Notification No. 23/2016-Customs(ADD)., Dated June 6, 2016

Method for determining amount of expenditure in relation to income not includible in total income

GOVERNMENT has amended the Income Tax Rules to substitute Rule 8D(2) to stipulate that the expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:-

(i) the amount of expenditure directly relating to income which does not form part of total income; and

(ii) an amount equal to one per cent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income:

Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee.

CBDT Notification No. 43/2016., Dated June 2, 2016

Until Tomorrow with more DDT

Have a nice day.

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