News Update

FM says Chief Economic Adviser Arvind Subramanian’s tenure to be extended till Oct, 2018Income Tax conducts search at premises of S M Krishna's son-in-law who heads CCD GroupPak troops shoot at BSF posts in J&K; 5 injuredGST on 'out and out' transactions (See 'TOG Insight' in Taxongo.com)Whether due date for submission of GST TRANS-1 is really extended?Illegal income tax raids - Govt advises taxpayers to inspect warrants of searchesCII calls for 1% interest rate cut for job creationAffordable housing - Industry takes up GST issue with GovtIncome Tax - Provisions of Sec 115O do trench on powers of State Legislature to tax agri income but such incidential trenching does not warrant annulment of legislation: Supreme CourtGST - Govt notifies new rates for Duty Credit Scrips, saree falls, roasted grams and many other items + restriction on refund for corduroy fabrics + exemption to khadi fabric, musical instruments and many other items + clarity on issue of cereals etc sold in unit container with brand nameJuly GSTR-3B can now be edited and submitted: GSTNBlockage of Exporters' working capital - Govt exploring link between GSTR-1 & GSTR-3B Govt grants conditional IGST exemption to skimmed milk powder or concentrated milkCBI arrests Mumbai DCIT in alleged Rs 3 Crore corruption caseSC favours creation of portal to attend to home buyers’ grievancesNPPA notifies ceiling price exclusive of GST for 7 drugs including Rifabutin & Hepatitis B ImmunoglobulinCentral Govt notifies Porbandar Wildlife Sanctuary as Eco-sensitive zone; Industries not allowed in its surroundingsYogi Adityanath’s resignation from Lok Sabha notified to be valid from Sept 21, 2017New Drawback Rules, 2017 and AIR of Drawback explainedWealth Tax - Amendment made to Sec 40(3) vide FAs 1983 & 1988 is substantive in nature and that is why it cannot be retrospective: HCI-T- Simply because Writ Court has struck down previous transfer order u/s 127(2)(a), Department is not precluded from initiating fresh procedure: HCGST - Rs 65k Cr TRANS-1 Credit is much less than Rs 1.3 lakh crore as closing balance: GovtDoT finalises guidelines for settlement of claimsNITI, IRF Geneva sign pact in field of Intelligent Transport SystemsCBI nabs former HC Judge in medical admission scamGSTN informs that portal for uploading application seeking advance ruling to be ready only in Jan 2018 - HC questions authority for postponementCBEC makes many amendments in Drawback Rules; excludes many items from list of eligible goods + lists out goods where no drawback is to be determined; New rates to come in force from Oct 1, 2017I-T - Settlement Commission has no authority to review / reopen matters already concluded before it: HC
Untitled Document
GOVERNMENT's RESPONSE

TIOL TIOL's News
 

In DDT 2962, while highlighting the collateral damage caused while granting Service Tax largesse to the aforesaid endeavour of the government - UDAN -  "Ude Deshka Aam Nagrik", we had mentioned - While granting exemption to air passengers, CBEC by mistake withdraws Cenvat credit on input services for renting of hotels.

What had actually happened is best explained by extracting the following table.

Kindly Note - In between the entries 5 and 6 to the notification 26/2012-ST, an entry 5A was inserted by the amending notification 38/2016-ST dated 30.08.2016 resulting in the following -

Sl.No. Description of taxable service Percentage Conditions
(1) (2) (3) (4)
5

Transport of passengers by air, with or without accompanied belongings in

(i) economy class

(ii) other than economy class

40

60

CENVAT credit on  inputs and capital goods, used for providing the taxable service, has  not been taken  under the provisions of the CENVAT Credit Rules, 2004.

5A. Transport of passengers, with or without accompanied belongings, by air, embarking from or terminating in a Regional Connectivity Scheme Airport. 10 CENVAT credit on  inputs, capital goods   and input services, used for providing the taxable service, has not been taken by the service provider under the provisions of the CENVAT Credit Rules, 2004.
6 Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. 60 Same as above

Inasmuch as whereas the condition attached to serial no. 6 above prior to insertion of Serial no. 5A was non-availment of CENVAT credit on Inputs and Capital goods, consequent upon the insertion of Serial no. 5A the   condition has enlarged itself to mandate non-availment of CENVAT credit on Inputs, Capital Goods and Input Services.

DDT also said -

+ Even before the Aam Nagrik has taken to the skies, the hospitality sector is already in the pit!

+ Hopefully, the CBEC realises this gaffe and extinguishes the flames before they spread far and wide.

image GOVERNMENT's Response
 

Our sincere plea has been accepted by the responsive CBEC and that too within a week.

Yesterday, a corrigendum was issued to the notification 38/2016-ST and which does the following -

(i) in line 23, for "5" read "6";?

(ii) in the TABLE, in column 1, for "5A" read "6A";?

(iii) in line 31, for "5A of the TABLE" read "6A of the TABLE".

Read DDT 2969 dated: 11-11-2016 for details


TIOL TIOL's News
  In DDT 2819 published: April 04, 2016 Responsive Board - DDT Effect - Board amends
 

TIOL TUBE Discussed:

Budget 2016 introduced several assessee-friendly amendments in Rule 6 of the CCRs, 2004. However, there was one anomaly in the amended Rule. Not many observed this in fine print, but during Post-Budget Analysis, we raised this issue and pointed out that the Rule has not been properly drafted to reflect the intention of the Government.

   
image GOVERNMENT's Response
 

Now, the responsive Board has done the needful. An amendment has been made to sub-rule (3) of Rule 6. The amended Rule reads:

(i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services subject to a maximum of the sum total of opening balance of the credit of input and input services available at the beginning of the period to which the payment relates and the credit of input and input services taken during that period; or”;

As per this amended provision, assuming during a month, the value of exempted goods to be Rs one crore, the 6% amount would be Rs 6,00,000/-. However, if the opening balance of the credit of input and input Services plus the credit taken on all inputs and input Services during that month is Rs 1,20,000/- only, then the 6% amount would be restricted to Rs 1,20,000/- only.

All is fine, but even this new amendment has a problem. While Table No 6 of the ER1 return (CENVAT statement) has separate columns for fresh credit of inputs, input services and Capital goods, the opening balance of credit at the beginning of the Month does not have item-wise break up. This means, the opening balance of Credit includes capital goods credit and it is not possible to identify the “opening balance of credit on inputs and input services available” for the purpose of Rule 6(3).

Perhaps it is not easy to solve the problems created by this Rule which was born as Rule 57CC with several congenital defects. Even the surgery performed in 2016 budget seems to have side effects.

   
TIOL TIOL's News
  In DDT 2766 published: January 15, 2016 TIOL Effect - CBEC Corrects Exchange Rate Notification - DDT Effect - Board amends
   
TIOL TIOL's News
 
   
TIOL TIOL's News
  In DDT 2646 published: July 22, 2015 Confusing, Complicated and Controversial Notifications - Storm in the Teacup blows over - DDT Effect - Board amends
TIOL TIOL's News
  Setting the Cat amongst the Pigeons Published: July 21, 2015
  Notification No. 34/2015-CE causes mighty problems for Notfn. 30/2004-CE Published: July 21, 2015
  Carelessness in drafting notifications Published: July 21, 2015
  Is it a mini budget or a step towards GST? Published: July 21, 2015
   
image GOVERNMENT's Response
 

The Central Government had issued notifications No 34, 35 & 36/2015-CE and goofed up the entire scheme of concessional duty offered for 'Make in India' Scheme. After TIOL and its Netizens quickly pointed out the mistakes in drafting and the intent, the Government was quick to amend them by issuing Notifications No 37, 38, 39-CE, all dated 21.07.2015 setting right its  Confusing, Complicated and Controversial Notifications.

   
TIOL TIOL's News
  In Cob(Web) - 323 published on DECEMBER 20, 2012, titled Dear FM, it is time now to get serious about Directorate of Taxpayers' Services
TIOL TIOL's News
  In DDT - 2499 published on DECEMBER 18, 2014 , DDT reported the CBEC faux pas in overvaluing the exchange rate of Japanese YEN by a hundred times.
image GOVERNMENT's Response
 

The Board was quick to act and in a day's time itself they rectified the mistake by issuing a corrigendum. DDT reported about the correction being done in DDT - 2500.


TIOL TIOL's News
 

In Cob(Web) - 419 published on OCTOBER 23, 2014 , titled 'Rising NPAs - Fault lies with our lax Regulator!' + Mixed Buzz published on OCTOBER 28, 2014, titled Govt disbands PSBs; sets up Panel to select CMDs for Public Sector Banks. In Cob(Web) - 151 published on September 3, 2009, titled 'New contours of modern Indian economy: Has Revenue Secretary's post indeed become redundant? - Part III' and in Cob(Web) - 152 titled "Dear FM, it's time to merge CBDT & CBEC, and create a Council for Revenue Management as policy catalyst!" published on September 10, 2009, TIOL talked about scrapping of the post of Revenue Secretary and setting up of a Tax Council to take care of the legislative activities.

image GOVERNMENT's Response
 

In its First Report, the Tax Administration Reform Commission (TARC), headed by Dr Parthasarthy Shome, has called for scrapping of not only the post of Revenue Secretary but also the liquidation of Revenue Hqs and their functions can be distributed among both the Boards. The Commission has also called for elevating the post of Chairman in the Revenue Boards to the level of Secretary to the Union Government and the Boards must be given financial autonomy. The TARC has also called up a Tax Council model to make the system more efficient.

The Shome Commission has to say: "... the post of Revenue Secretary does not merit presence in a modern tax administration. Instead, a Governing Council should be introduced with the chairs of the Boards alternating as its chairperson ... and the Council should include members from the non-government sector as well. The Governing Council will oversee the functioning of the two Boards and approve broad strategies ..."

TIOL is thankful to the Commission for finding substance in our views and giving it due place in its Report with some extra details relating to who should head this Council and developing TPL and TRU as a powerhouse of researched fiscal wisdom.


TIOL TIOL's News
 

NOTIFICATION 26/2012-ST dated 20.06.2012 provided abatement of 75% and 70% to two different groups of residential complexes / units. In DDT 2064 13.03.2013, while reporting a Netizen's dilemma, it was mentioned:

"English Vinglish:  Service Tax - Abatement - Construction of Residential Unit - Confusion between FM's Speech and CBEC Notification

DDT added: The notification clearly failed to give effect to the intention of the Government reflected in the Budget speech of FM. The Notification in the present form allows 75% abatement to a flat having a carpet area of 1000 sft and costing Rs 2 crores. Actually, in such cases, the abatement should have been only 70%, if we go by the Budget Speech. The Notification reads now:

12.
Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority,-
 

(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) The value of land is included in the amount charged from the service receiver

(i) for residential unit having carpet area upto 2000 square feet or where the amount charged is less than rupees one crore;
25
 
(ii) for other than the (i) above
30
 

Perhaps, it should have been worded like this:

12.

Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority,-

   

(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) The value of land is included in the amount charged from the service receiver.

 

(i) for residential unit having carpet area of 2000 square feet or more OR where the amount charged is more than rupees one crore;

30

  
 

(ii) for other than the (i) above.

25

  
 
GOVERNMENT's Response
 

After nearly two months, the Central government has corrected this fiasco.

By an amending Notification, the entry referred above has been substituted thus -

"12.

Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entire consideration is received after issuance of completion certificate by the competent authority,-

(a) for a residential unit satisfying both the following conditions, namely:-

(i) the carpet area of the unit is less than 2000 square feet; and

(ii) the amount charged for the unit is less than rupees one crore;

(b) for other than the (a) above.

25

30

(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) The value of land is included in the amount charged from the service receiver.".

Notification 9/2013-ST dated 8 th May, 2013


TIOL TIOL's News
  Article on amendment to the CESTAT Members (Recruitment and conditions of service) Rules 1987
GOVERNMENT's Response
 

Amendment in the Customs, Excise and Service Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1987 - reg.


TIOL TIOL's News
 

Notification fiasco - Who is responsible for confusion? Madam Chairman, will you stop this 'smuggling' in Notifications?

On August 27, 2012 TIOL published the above article in its DDT column.

Notification Fiasco - Who is responsible - CBEC Clarifies. No Legal Force for Notifications in CBEC website

On September 14, 2012 TIOL published the above article in its DDT column.

GOVERNMENT's Response
 

CBEC TRU Dy. No.FTS - 147255/12 dated: September 13, 2012


TIOL TIOL's News
 

No Education Cess from 01-07-2012!

On June 26, 2012 TIOL published the above article in its DDT column.

  No More Cess from July 1, 2012? On June 26, 2012 TIOL published the above article in its SERVICE TAX - NEW LAW +VE or -VE column.
GOVERNMENT's Response
  Circular No 160/2012, Dated : June 29, 2012 Levy of Education Cess on Service tax from july 1, 2012: CBEC takes help of General Clauses Act, 1897 to retrieve lost ground
 

Order No 2/2012, Dated: June 29, 2012 CBEC Order on levy of education cess from July 1, 2012


TIOL TIOL's News
 

No Service Tax from 1.7.2012?

On June 15, 2012 TIOL published the above article in its DDT column.

GOVERNMENT's Response
 

In response Govt came out with an Order on the same day i.e. June 15, 2012, rectifying the error in the law to make it effective from July 1, 2012 Order No 1/2012, Dated: June 15, 2012


TIOL TIOL's News
 

Levy of Service Tax: Is CAG really a Chartered Accountant?

On June 7, 2012 TIOL published the above article in its 'The Cob(Web)' column.

GOVERNMENT's Response
 

In response Govt came out with Service Tax circular on June 19, 2012, conceding our line of interpretations and clarifying that the CAG is not a CA. Circular No. 159/10/2012-ST., Dated: June 19, 2012


TIOL TIOL's News
 

Boiler Credit - CBEC Responds

BY Circular No. 964/07/2012-CX dated 02.04.2012, Board made some very important clarifications.

"structural components which are to be used essentially as a part of Boiler System would be classifiable as parts of Boiler only under Heading 8402 of the Tariff. It is further clarified that since these structural components are nothing but the parts and accessories of the Boiler, they would be covered by the definition of inputs under Rule 2(k)(iii) of the CENVAT Credit rules, 2004 (i.e. all goods for generation of electricity & steam)."

DDT did not make any adverse comments on this circular, when it was carried in DDT 1830 – 04.04.2012; in fact, we mentioned, "This is a beneficial clarification and let us hope the pending disputes would be settled".

In DDT 1831 - 09.04.2012, we asked a question whether this clarification would apply to goods 'other than' boilers?

Board issued another Circular - 966/09/ 2012-CX, Dated: May 18, 2012, in which it was clarified that while CENVAT Credit is available in respect of parts of Boiler, the same is not admissible in respect of the structural components used for laying of foundation or making of structures for support of capital goods/ Boiler.

While reporting this in DDT 1861 - 21.05.2012, DDT observed, "It is beyond reason, why the Board should create so much confusion by issuing circulars. Can't they just be satisfied with their confusing rules and notifications? Should they complicate matters further by issuing clarifications on which further clarifications have to be issued within less than two months ?"

The CBEC responded pretty fast. Member (CX) in CBEC, Sreela Ghosh, spoke to DDT expressing her anguish at the harsh criticism, but patiently explained the need for the second circular.

The Director (CX) in the Board clarified the position as:

The relevant facts leading to the issuance of the circular no 964/07/2012-CX dated 2nd April 2012 are as follows:

++ The manufacturer of Boiler, clears the Boiler and it components/ parts/accessories after classifying them under tariff heading 8402 and pays the duty accordingly.

++ Amongst the parts cleared there are certain components which are used for construction of support to the Boiler. These too are classified by the Boiler manufacturer under the same heading.

++ The jurisdictional officers from where the Boiler and its parts/ components are being cleared are in agreement with the classification made.

++ However the officers in the jurisdiction where the CENVAT credit is being taken by the recipient of the Boiler and its parts, have been raising the issue with regard to the admissibility of CENVAT credit in respect of the certain components. The argument advanced by these officers is that since these structural components are not contributing to the functioning of the Boiler but are used for manufacture of supporting structure in respect of the Boiler, therefore they will be hit by the exclusion clause in the definition of input, read along with the decision of the tribunal in case of the Vandana Global [2010 –TIOL-624-CESTAT-DEL-LB]

After examination of the issue in consultation with the jurisdictional officers, the Board clarified that only those structural components which are essential for manufacture of the Boiler and are necessary for its operation shall merit classification under heading 8402. It was also clarified that since these structural components are essential to the functioning of the Boiler they shall be eligible for CENVAT Credit. The natural corollary to the assertion made is that those structural components which only provide support to the boiler (e.g. those used for laying foundation) will not be classifiable under heading 8402. Further as these structural components are used for construction of support to the Boiler the CENVAT credit shall not be admissible in respect of these items.

After issue of the Board circular dated 2 nd April 2012, certain doubts were expressed with regard to the scope of the clarification issued in the said circular. Accordingly a second circular vide 966/09/2012-CX dated 18th May 2012 was issued reiterating the position and indicating that admissibility of CENVAT credit on structural components used for construction of support to the Boiler are in accordance with the judicial pronouncements on the subject.

With regard to the issue of jurisdiction mentioned in the Article, it may be mentioned that it is a well settled law that goods are to be classified in the jurisdiction where they are manufactured and cleared and the jurisdiction in which they are received cannot alter the classification of the goods. The circulars in question do not attempt to clarify issue of the jurisdiction.

We are grateful to the Board for its prompt response and clarification. So, the position now is that structural components essential to the functioning of the Boiler are eligible for CENVAT Credit and classification of the product is not to be done at the receiving end. There can be absolutely no dispute with this view of the Board. A responsive tax administration commands respect and confidence.

TIOL TIOL's News
 

1% Duty Goods - Now Entitled to Filing Quarterly Returns - Board Corrects error pointed out by DDT

In DDT 1830 – 04-04-2012, we pointed out;

According to (the fourth) proviso in Rule 12 of the Central Excise Rules, 2002,

Provided also that, where an assessee is availing the exemption notification of the Government of India, Ministry of Finance (Department of Revenue) No. 1/2011- Central Excise, dated the 1st March, 2011, published in the Gazette of India, Extraordinary, Part-II, section 3, sub-section (i) vide number G.S.R. 116(E) dated the 1st March, 2011 and does not manufacture any other excisable goods other than those specified in the said notification, he shall file a quarterly return in the form specified by notification by the Board, of production and removal of goods and other relevant particulars, within ten days after the close of the quarter to which the return relates.

Now that certain items like coal and fertilizers are covered under Notification No 12/2012 CE, the above proviso requires amendment. Last week they corrected the CENVAT Credit Rules, 2004, but they failed to notice that Central Excise Rules also require a correction.

GOVERNMENT's Response
 

It took the Board just a fortnight to correct this mistake. The Proviso has been amended to provide for quarterly return for the 1% duty items covered under Notification No. 12/2012. We thank the Board for the quick response, thereby avoiding unwanted litigation and trouble. It does not give us any pleasure in pointing out the mistakes of the babus, though some of them get very angry; but it does give us tremendous happiness when Board realizes its mistakes and carry out corrections. Notification No. 23/2012 - CX., (N.T.), Dated: April 18, 2012


TIOL TIOL's News
 

PLEASE refer to DDT 1476–28.10.2010 , wherein we pointed out that Notification No. 26/2010 – Service Tax dated 22.06.2010, was issued under the wrong Section. We had pointed out that the Notification was issued under clause (aa) of sub-section (2) of section 94 while it should have been issued under Section 93(1) of the Finance Act.

Notification No. 26/2010 – Service Tax Dated June 22, 2010 reads as:

In exercise of the powers conferred by clause (aa) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the services referred to in clause (zzzo) of sub-section (105) of section 65 of Finance Act, 1994 from so much of service tax as is in excess of,-

(a) ten percent of the gross value of the ticket or rupees one hundred per journey, whichever is less, for passengers travelling in any class, within India;

(b) ten percent of the gross value of the ticket or rupees five hundred per journey, whichever is less, for passengers embarking in India for an international journey in economy class:

Provided that this exemption shall not apply xxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For a recap, Section 94 empowers the Government to make Rules, while Section 93 empowers the Government to issue exemption Notifications.

DDT asked, “Will CBEC make a correction before some Tribunal Bench holds the notification as invalid as issued under a wrong Section of the ACT?”

GOVERNMENT's Response
 

We are happy to report that the Government has realised the mistake and issued a corrigendum. The Corrigendum reads as,

for “clause (aa) of sub-section (2) of section 94”,  read “sub-section (1) of section 93 read with clause (aa) of sub-section (2) of section 94.

Now why to read clause (aa) of sub-section (2) of section 94 ? This clause empowers the Government to make rules for determination of amount and value of taxable service. This was an exemption notification and there was no Rules Notified.

Will the Board issue another corrigendum? It is really unfortunate that notifications are issued so callously.

CBEC Corrigendum, Dated 23.11.2010


TIOL TIOL's News
 

Custodial Death in Malda Customs – NATIONAL HUMAN RIGHTS COMMISSION awards interim relief of One Lakh Rupees based on TIOL Reports

Please refer to our stories:

Malda custodial death : FM finds gaping holes in internal report & orders independent probe

Kolkata Customs Custodial Death - FM deprecates TIOL-DDT 255

WE had reported about the sad story of a young man who died in the custody of the Customs. This man was selected by the Staff Selection Commission for appointment as Inspector in the very Department. Unknown to us, the National Human Rights Commission had taken up the matter based on our reports and issued a Notice to the Revenue Department.

The Revenue replied that,

No FIR has been lodged against Custom officers nor there is any evidence regarding torture or harassment by Custom officers during custody of the deceased, and therefore, Custom officers cannot be held responsible for the un-natural death of the deceased.

The Govt. after getting proper inquiry conducted in the matter has issued Warning' to the concerned officials as they were found having acted in a negligent manner and failing to provide safe custody to the deceased, and not on account of any harassment or torture in custody to the deceased. Nothing has been established on record to prove any malafide on their part. As such, there is no ground to indicate that the concerned officials violated the human rights of the deceased in any manner.

GOVERNMENT's Response
 

The Commission did not agree and observed,

It is a clear case of violation of human rights of the deceased who was a young man of 30 years and died in the state custody. Secretary, Deptt. of Revenue, Ministry of Finance, Govt. of India is recommended to pay compensation of Rs. 1,00,000/- (Rupees One Lakh only) to the next of kin of the deceased as damages /interim, relief u/s 18(a)(i) of the Protection of Human Rights Act, 1993. The proof of payment be sent to the Commission within six weeks.

The Commission's Registry very kindly sent us a copy of the Order recommending compensation in Case No. : 400/25/2005-2006 .

It is a great reward for all of us in TIOL that due to our efforts, some small compensation is awarded to the poor father who lost his precious son. We hope the Revenue Department will pay up this small compensation without further prolonging the litigation.


TIOL TIOL's News
 

WHEN the USA's Forbes magazine ranked India 23rd on a scale of 'Tax Misery Index' it had indeed confounded and hurt many of us but not the policy-making netizens in North Block! What evidences such a perception of common taxpayers is the introduction of New TDS Regime which has been rolled out not only without proper homework but also sans full Board approval! Worse, the Controller of Govt Accounts is also not aware of ...

New TDS Regime - A grand fiasco for CBDT; Is outgoing FM 'aware' of policy change, richly contributing to 'Tax Misery Index'!

GOVERNMENT's Response
  Govt announced postponement of the new TDS Regime for two months. See Press Release

TIOL TIOL's News
 

ANYBODY who deals in export and import of goods, is bound to be familiar with one IT term - EDI (the Electronic Data Interchange) which CBEC is very proud of. EDI is the epicentre around which all Customs-related activities revolve today. Filing of bill of entry or shipping bill or drawback claims or refund - you name the activity, and the EDI comes into the picture. There are different cells which handle different sets of these customs works. This entails allotment of password to officials working there. And, going by the IT Security Protocol, the onus to maintain the secrecy of the password lies with individual officers. However, how careless and perfunctory these officials can afford to be, is a common site in virtually all Customs ports and Custom Houses across the country. A visitor from the private sector who visits the clearance zone and understands the deleterious fall-out of sharing of password gets horrified when he sees how office boys of CHAs use the Customs officials' passwords to the EDI at their own will. None cares as long as a fraud is not reported, and the lucre keeps swelling in concealed pockets of these officials, collecting a 'cut' for such quick facilitation of cargo!

Yet another EDI-based drawback fraud detected; CBEC suspends 31 officers but none from Group 'A' so far!

GOVERNMENT's Response
 

Frauds resulting from failure to maintain password security - reg Instruction


TIOL TIOL's News
  In our post-budget analysis, we carried an article highlighting the errors in Rule 6, titled ABC of Rule 6 - What is "P"? and suggested an amendment.
GOVERNMENT's Response
  We are happy to report that the necessary amendment has been made to this Rule vide Corrigendum issued.

TIOL TIOL's News
 
TIOL Recommendations
1. Dear FM, please tax 'law' and 'lottery'!
2. 'Renting of immovable property' is already taxed; Will Budget 2008 levy tax on 'renting of movable property'?
3. Budget should address issues relating to Rule 6 of CCR, 2004
4. Withdraw exemption given to software services
5. Multiplicity of excise duty rates hurting cement industry?
6. Time for equitable tax rates in place of slab rates that tax higher income disproportionately lesser and lower income more!
7. A few legislative amendments required in Central Excise
8. Budget 2008 : A peep into the realm of not-so-speculative proposals!
GOVERNMENT's Response
 
Now part of Finance Bill
1. Explanation in Finance Bill confirms the levy on lottery/games
2. Service Tax is proposed to be levied on renting and leasing of capital assets like crane and machineries
3. Major amendment in Rule 6 of CCRs, 2004 proposed
4. Many taxes levied on IT-related services and goods under ST & Excise
5. Parity in duty rates has been achieved
6. More than expected changes in the tax exemption slabs
7. Most of the amendments like Sec 11D + Rebate etc proposed
8. Hike in threshold limit to Rs 10 lakh for small service providers; dispute settlement scheme in Service Tax, Amendment to deny exemption to certain so-called charitable institutions and many more

TIOL TIOL's News
 

Nearly two years ago TIOL edit team had highlighted the practical difficulties faced by the consignors/consignees who are liable to pay service tax on Goods transport agency service. In order to avail the benefit of the 75% abatement, they had to ensure that the goods transport agency did not avail cenvat credit on the inputs or capital goods. It was suggested that the tax rate on this service should be reduced unconditionally by extending the 75% abatement without any strings attached. Read Story

GOVERNMENT's Response
 

TIOL is happy to report that in this year’s budget, Notification 13/2008 dated 1.3.2008, has been issued to extend the benefit of 75% abatement without imposing any conditions.


TIOL TIOL's News
 

TIOL-DDT 621 25.05.2007, mentioned about an inadvertent omission which made jute twine dutiable all of a sudden. Extracts from the DDT.

This is a classic example of how unintended actions can be disastrous to the trade and industry. Jute goods have been enjoying exemption for quite some time and twine is no exception. To eliminate the hassles of even exemptions, the Tariff rate itself is made NIL in the Central Excise Tariff. But in the maze of amendments to the Central Excise Tariff from 6 digit to 8 digit and consequential amendments to the related exemption Notifications, a small error is now snowballing into huge demands and going to be another gold mine for the consultants.

GOVERNMENT's Response
 

We are very happy to report that the Government has very graciously understood the problem and has stopped the big forest fire. Now they have issued a notification whereby Twine of jute or other textile bastfibres of heading 5303, is exempted from the whole of the duty.

This brings a lot of cheer to the harassed jute manufacturers of Kolkotta and other places. Reports have reached us that after seeing our flash yesterday, dancing assessees have gone to Central Excise offices and distributed sweets.

The CBEC deserves all praise for correcting this inadvertent lapse, but there is another problem.

NOTIFICATION NO. 28/2007-Cex., Dated: June 15, 2007

See detailed report in TIOL-DDT 638 19.06.2007


TIOL TIOL's News
 

In our Budget articles, we had carried a story Amendment to Rule 21 of CE Rules - Half done !

wherein it was pointed out that

In the second and third provisos, in fact two words need to be substituted in each proviso, for upper and lower limits, but only one word of the revised upper limit has been substituted. So now there is overlap of powers between the Superintendent , Assistant/Deputy Commissioner and the Joint Commissioner. Therefore there is a need to substitute " one thousand" in second proviso to "ten thousand" and in the third proviso, "two thousand five hundred" needs to be replaced with "one lakh rupees".

GOVERNMENT's Response
 

We are happy to report that the Government has corrected the mistake by issuing the corrigendum below:

CORRIGENDUM to Notification No. 8/2007 dated the 15th March, 2007


TIOL TIOL's News
 

We carried a detailed well-researched commentary on how unsafe are the public deposits with Margadarsi Financiers run by media baron Ramoji Rao, HUF? No doubt, Mr Ramoji Rao enjoys unmatched creditworthiness but the issue was more of public interests and related to infraction of laid down norms. How safe are public deposits with press baron Ramoji Rao, HUF? Will MoF or RBI answer this question, please?

GOVERNMENT's Response
 

Kudos to the MoF for taking note of our suggestions and asking RBI to act. And RBI has acted but modestly. It needs to be more aggressive, given the quantum of public deposits involved.

RBI finally asks Margadarsi Financiers to stop accepting public deposits; funds to be transferred to escrow account to refund depositors


TIOL TIOL's News
 

We carried a series of reports about the e-payment facility started by the CBEC. In our reports we commented if the Board wants to make e-payment mandatory, why can't it issue a notification publicly instead of making the DGST write DO letters? Or is the DGST an independent authority that it decides for the Board? Later, we also raised several questions on the mandatory e-payment and even conducted quick survey in the major cities, to give the Board the quickest feedback possible. We had also raised a question whether the limit of Rs. 50 Lakhs was for cash payment only or whether it includes payment from Cenvat credit too.

Our reports are as follows: EASIEST Electronic Accounting System in Central Excise & Service Tax Service Tax - mandatory e-payment of Service Tax for major assessees - Board keeps it a top secret E payment of Service Tax mandatory E-payment of Service Tax - we are as ignorant as you are. Our Netizen reporters - assessees report for TIOL


GOVERNMENT's Response
 

In response the Board came out with proper clarifications and even advised the field formations not to initiate penal action against the assessees for not making e payments. E payment of Service Tax - no penalty please Rs.50Lkahs limit includes payment from cenvat credit


TIOL TIOL's News
 

Two central excise Inspectors were killed and many other were injured in the Mumbai serial blasts on July 11, 2006. TIOL extensively reported and commented on the diabolic act of terror. We also recommended for a fair relief package for the victims. Our reports are as follows:

Headcount of killed & injured continues in Mumbai I-T, Customs & Excise offices but Revenue Boards yet to react to the tragedy

 

TIOL TIOL's News
 

Two central excise Inspectors were killed and many other were injured in the Mumbai serial blasts on July 11, 2006. TIOL extensively reported and commented on the diabolic act of terror. We also recommended for a fair relief package for the victims. Our reports are as follows:

Headcount of killed & injured continues in Mumbai I-T, Customs & Excise offices but Revenue Boards yet to react to the tragedy
Bid to blast holes in buoyant economy Another calamity strikes Mumbaikars The blasted officers – will the Board help? The paper chase (special Column Article),
The paper chase
(TIOL-DDT 407)
Too little Mr PC

 
GOVERNMENT's Response
 

In response to our campaign the large hearted Finance Minister has done the needful. See reactions: Compassionate PC - Blast victims' wives to get job FM grants Rs 5 lakh ex gratia to families of Central Excise Inspectors killed in Mumbai blasts but more needs to be done All India Federation of Central Excise Executive Offiers letter of thanks to FM (pdf file)


TIOL TIOL's News
  While withdrawing many exemption notifications, the Govt also withdrew exemption given to food preparations and waters, not cleared in sealed containers. Water provided by municipal bodies became excisable from March 1, 2006 (See DDT 357 - 08- 05- 2006) We also pointed out even if the exemption is restored, what about the interim period? Fortunately, the Govt has issued an 11C notification for this.
 
GOVERNMENT's Response
 

In response to our remarks, the Govt has not only restored the exemption but also issued 11C Notification, exempting it for the interim period.
SEE DDT370


TIOL TIOL's News
  Vizag and Mumbai notified as proper Customs ports. We had reported on several occasions that Vizag is not an authorised port for imports and all goods imported through Vizag are liable for confiscation and all the officers who abetted this are liable to penal action.
 
GOVERNMENT's Response
 

Now Government has amended the Notification to rectify the lapse pointed out by TIOL
SEE the DDT370


TIOL TIOL's News
  AFTER the budget we reported on the confusion arising among taxpayers because of the newly introduced ATM services.
SEE the NEWS
 
GOVERNMENT's Response
 

We are happy to report that the Government has indeed come out with a clarification that Service Tax is not proposed to be levied on use of cards in ATMs.
SEE the DDT


TIOL TIOL's News
  THERE were no Rules for recruitment of CBDT & CBEC Chairmen and Members. This was, on umpteen occasions, highlighted and debated by TIOL which also suggested formation of a Selection Committee to pick up Members on merit basis.
 
GOVERNMENT's Response
 

President of India has finally done it. The Govt has notified the Recruitment Rules for Chairmen and Members of both the Revenue Boards broadly along the lines suggested by TIOL experts.SEE the NEWS


TIOL TIOL's News
  ON January 01, we reported about CBEC’s fiasco on extension of two CCs'.
SEE the INSIDER
 
GOVERNMENT's Response
 

After our news FM himself took action SEE the RAISINA


TIOL TIOL's News
  ON December 07, we spoke on the issue of service tax draft circular on advertising.
SEE the DDT
 
GOVERNMENT's Response
 

After out report (DDT TIOL-DDT 256) the Board issued the said Draft circular (F.NO.341/43/2005-TRU) on advertising.


TIOL TIOL's News
  ON September 26, 2005 we carried a special reports, editorial and views on Custodial Death in Kolkata Customs along with various vagaries related to the incident.
 
GOVERNMENT's Response
 

Pursuant to the special report: "Has Kolkata Customs turned a 'killer'?", the editorial "Malda custodial death : FM finds gaping holes in internal report & orders independent probe" along with the views of Dr G Sreekumar Menon and Justice R K Abichandani, President, CESTAT, the Finance Ministry issued a letter dated November 22nd 2005 (F.No. 394/100/2005-CUS(AS)),reminding all the officers and field formation the ground rules for taking a person in custody. SEE THE LETTER.

Also read DDT No. 255 in this regard dated December 06, 2005


TIOL TIOL's News
  IN an Editorial 'Cases worth Crores being dismissed but CBDT prefers to be comatose to revenue cause!' We suggested that the FM needs to look into this practice where appeals not being filed even in cases involving substantial quetions of law as the Board Instruction did not make a distinction."
READ the Editorial
 
GOVERNMENT's Response
 

The CBDT issued a fresh instruction, albeit hiking the monetary limit for filing appeal before Tribunal, HCs & SC but making it clear that if a law point is involved and the tax effect is less than Rs one lakh, appeal must be filed.
SEE THE INSTRUCTION


TIOL TIOL's News
  AS earlier expressed and being the first to publish 'THE TAXATION LAWS (AMENDMENT) BILL, 2005', the TIOL team extensively commented on the various proposed provisions of the Tax Laws
SEE the BILL
 
PARLIAMENT's Response
 

The STANDING COMMITTEE OF FINANCE BRANCH has asked our Panel of Experts for valuation views and suggestions on the provisions of the Bill in the form of a memorandum - LOK SABHA LETTER dated September 8, 2005


TIOL TIOL's News
  ON July 01, 2005 we carried our DDT 'Help Please!' we commented on "cumersome procedure adopted by DGST for centralised registration of assessees located in the jurisdiction of more than one Chief Commissioner. " Also it was questioned, "And, is there any time frame for the registration process to be completed?"
READ the ARTICLE
 
GOVERNMENT's Response
 

The CBEC conceded our points and has issued instructions overruling DGST and simplifying the procedure. - CBEC letter in F.No.354/106/2005-TRU dated 8.8.2005
READ the DDT


TIOL TIOL's News
  ON August 11, 2005 we carried our DDT 'Finally, adjudication powers notified for service tax' we talked about "in the entire 38 paragraphs, nowhere any clarification was found on the issue of who has to issue and adjudicate show cause notices." Also in earlier DDT dated July 29, 2005 'Service tax on new services : TRU issues clarification but only for field' we pointed out that "mega exercise of budget Notifications, the Board forgot to specify the powers of adjudication by a Notification under Section 83 A".
 
GOVERNMENT's Response
  A notification was issued on August 10, 2005 under Section 83 A of the Finance Act 1994 prescribing the monetary limits for adjudication of Service Tax Cases. The powers of AC/JC/ADC/Commissioner are identical to those under the Central Excise. - Notification No 30/2005 Service Tax

TIOL TIOL's News
  ON July 28, 2005 we carried our Editorial 'Ostrich hiding its head in the sand' and DDT ''Service Tax on new services : TRU issues clarification but only for field'' and advocated that the CBEC should make the service tax D.O. letter addressed to all CCs and Commissioners public for the larger benefits of assessees.
 
GOVERNMENT's Response
  ON August 2, 2005, the CBEC made it public by putting it online on its official website - TRU D.O. Letter (F No B1/6/2005-TRU)

TIOL TIOL's News
  ON 10th-April-2005, S Jaikumar, G Natarajan & M Karthikeyan our special Guest reported "DGST floats a new speed breaker for 75 per cent service tax abatement on GTA!", under which DGST clarified that the benefit of Notification 32/2004 ST Dated 03.12.2004 (Grant of abatement of 75 % for the purpose of levy of service tax on GTA services), is applicable only when the transport agencies pay the service tax and not when the consignor or the consignee pays the service tax
READ the ARTICLE
 
GOVERNMENT's Response
  DG Service Tax has withdrawn the controversial clarification we reported on 10th April 2005, Now the consignors/consignees can continue to pay Service Tax on 25% of the value.
READ the DDT

TIOL TIOL's News
  ON 06.09.2004, in Oil and Power News under 'News Channel' under the story "NO MORE WAREHOUSING OF PETRO GOODS! CBEC NOT IN HARMONY WITH RULES!", we had pointed out Since the facility of warehousing has been withdrawn from 6.9.2004, the excise duty has to be paid by the refineries at the time of removal from the refineries. But the duty has to be paid only as per the provisions of Rule 8 of the central excise Rules according to which the duty for the clearances for the month of September can be paid by 5th of October 2004.
READ the ARTICLE
 
GOVERNMENT's Response
  Board clarified vide Circular No.804/1/2005-CX 4th January, 2005. The attention is invited to para 1(ii) in Circular No. 796/29/2004 CX dated 4.9.2004 which stated that as on or after 6.9.2004, no stocks could remain bonded/ warehoused, the excise duty on the stocks of petroleum products lying in the warehouses on the mid night of 5th/6th September 2004 should be paid immediately. The matter has been re-examined in the light of the representations received in this behalf. Accordingly, para 1(ii) in the Board's Circular dated 4.9.2004 is clarified to the effect that duty on bonded/warehoused goods (treated as cleared immediately after 5th/6th September, 2004) could be discharged in terms of provisions of Rule 8 of Central Excise Rules 2002 i.e. by 5th October, 2004.

TIOL TIOL's News
  ON 19.1.2005, we carried a report about a guitar gifted by an Englishman to a poor boy in Assam, getting stuck in Kolkotta Customs as none of the parties concerned, donor, donee or the church through which the gift was arranged could not afford to pay the 40,000 rupees customs duty. We had carried the letter from the British donor and requested the Finance Minister to help.
READ the ARTICLE
 
GOVERNMENT's Response
  (F.No.401/6/2005-Cus.III) See the full text of the Board’s letter to us.

TIOL TIOL's News
  TIOL sensitises Govt about circular trading in precious metals; DGFT prescribes higher value addition norms and calls for a match for forex outgo
READ the ARTICLE
 
GOVERNMENT's Response
  Government has finally worked out an effective way out. Instead of using the RBI instrument the Govt asked the DGFT to prescribe a higher value addition formula for exports of studded jewellery (DGFT Cir No.18/2004-09)
See related STORY.

TIOL TIOL's News
  Taxindiaonline had carried an article "CESTAT, Chennai joins FM in his revenue drive!". The article had pointed out that the Chennai bench of the CESTAT has recently insisted that a fee of Rs. 500/- should be paid even for adjournments in the Tribunal. The article had pointed out that sometimes adjournments are sought mid way through the arguments and at that point of time it would be difficult to get a draft for Rs. 500/
READ the ARTICLE
 
GOVERNMENT's Response
  Tribunal has clarified that there is no fee for adjournments in the Tribunal. In CESTAT Public Notice No. 1/2005, the Vice President Ms Jyoti Balasundaram has clarified that requests for adjournments are not considered to be formal applications and so no fee is required to be paid. (CESTAT PN No. 1/2005)
See the STORY.

TIOL TIOL's News
  ON August 11, 2005 we carried our DDT 'Finally, adjudication powers notified for service tax' we talked about "in the entire 38 paragraphs, nowhere any clarification was found on the issue of who has to issue and adjudicate show cause notices." Also in earlier DDT dated July 29, 2005 'Service tax on new services : TRU issues clarification but only for field' we pointed out that "mega exercise of budget Notifications, the Board forgot to specify the powers of adjudication by a Notification under Section 83 A".
 
GOVERNMENT's Response
  A notification was issued on August 10, 2005 under Section 83 A of the Finance Act 1994 prescribing the monetary limits for adjudication of Service Tax Cases. The powers of AC/JC/ADC/Commissioner are identical to those under the Central Excise. - Notification No 30/2005 Service Tax

TIOL TIOL's News
  ON July 28, 2005 we carried our Editorial 'Ostrich hiding its head in the sand' and DDT ''Service Tax on new services : TRU issues clarification but only for field'' and advocated that the CBEC should make the service tax D.O. letter addressed to all CCs and Commissioners public for the larger benefits of assessees.
 
GOVERNMENT's Response
  ON August 2, 2005, the CBEC made it public by putting it online on its official website - TRU D.O. Letter (F No B1/6/2005-TRU)

TIOL TIOL's News
  ON 10th-April-2005, S Jaikumar, G Natarajan & M Karthikeyan our special Guest reported "DGST floats a new speed breaker for 75 per cent service tax abatement on GTA!", under which DGST clarified that the benefit of Notification 32/2004 ST Dated 03.12.2004 (Grant of abatement of 75 % for the purpose of levy of service tax on GTA services), is applicable only when the transport agencies pay the service tax and not when the consignor or the consignee pays the service tax
READ the ARTICLE
 
GOVERNMENT's Response
  DG Service Tax has withdrawn the controversial clarification we reported on 10th April 2005, Now the consignors/consignees can continue to pay Service Tax on 25% of the value.

READ the DDT

TIOL TIOL's News
  ON 06.09.2004, in Oil and Power News under 'News Channel' under the story "NO MORE WAREHOUSING OF PETRO GOODS! CBEC NOT IN HARMONY WITH RULES!", we had pointed out Since the facility of warehousing has been withdrawn from 6.9.2004, the excise duty has to be paid by the refineries at the time of removal from the refineries. But the duty has to be paid only as per the provisions of Rule 8 of the central excise Rules according to which the duty for the clearances for the month of September can be paid by 5th of October 2004.
READ the ARTICLE
 
GOVERNMENT's Response
  Board clarified vide Circular No.804/1/2005-CX 4th January, 2005. The attention is invited to para 1(ii) in Circular No. 796/29/2004 CX dated 4.9.2004 which stated that as on or after 6.9.2004, no stocks could remain bonded/ warehoused, the excise duty on the stocks of petroleum products lying in the warehouses on the mid night of 5th/6th September 2004 should be paid immediately. The matter has been re-examined in the light of the representations received in this behalf. Accordingly, para 1(ii) in the Board’s Circular dated 4.9.2004 is clarified to the effect that duty on bonded/warehoused goods (treated as cleared immediately after 5th/6th September, 2004) could be discharged in terms of provisions of Rule 8 of Central Excise Rules 2002 i.e. by 5th October, 2004 .

TIOL TIOL's News
  ON 19.1.2005, we carried a report about a guitar gifted by an Englishman to a poor boy in Assam, getting stuck in Kolkotta Customs as none of the parties concerned, donor, donee or the church through which the gift was arranged could not afford to pay the 40,000 rupees customs duty. We had carried the letter from the British donor and requested the Finance Minister to help.
READ the ARTICLE
 
GOVERNMENT's Response
  (F.No.401/6/2005-Cus.III) See the full text of the Board’s letter to us.

TIOL TIOL's News
  TIOL sensitises Govt about circular trading in precious metals; DGFT prescribes higher value addition norms and calls for a match for forex outgo
READ the ARTICLE
 
GOVERNMENT's Response
  Government has finally worked out an effective way out. Instead of using the RBI instrument the Govt asked the DGFT to prescribe a higher value addition formula for exports of studded jewellery (DGFT Cir No.18/2004-09)
See related STORY.

TIOL TIOL's News
  Taxindiaonline had carried an article "CESTAT, Chennai joins FM in his revenue drive!". The article had pointed out that the Chennai bench of the CESTAT has recently insisted that a fee of Rs. 500/- should be paid even for adjournments in the Tribunal. The article had pointed out that sometimes adjournments are sought mid way through the arguments and at that point of time it would be difficult to get a draft for Rs. 500/
READ the ARTICLE
 
GOVERNMENT's Response
  Tribunal has clarified that there is no fee for adjournments in the Tribunal. In CESTAT Public Notice No. 1/2005, the Vice President Ms Jyoti Balasundaram has clarified that requests for adjournments are not considered to be formal applications and so no fee is required to be paid. (CESTAT PN No. 1/2005)
See the STORY.

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