In the context of formulating the proposals for the Union Budget of 2015-16, the Ministry of Finance vide MOF DOR TRU letter in F. No. 344/20/2014-TRU dated October 27, 2014 has invited suggestions and views of the Trade and Industry Associations for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same.
Suggestions and views may be supplemented and justified by relevant statistical information about production, prices, revenue implication of the changes suggested and any other information to support the proposal.
The request for correction of inverted duty structure, if any, for a commodity, should necessarily be supported by value addition at each stage of manufacturing of the commodity.
As regards direct taxes, the Government policy is to phase out profit linked deductions and minimizes exemptions; this may be taken into consideration while forwarding proposals.
Your suggestions and views may be emailed, as word document in the form of separate attachments, in respect of Indirect Taxes (Customs, Central Excise and Service Tax) and Direct Taxes before November 7, 2014 so as the same may be compiled and send to the CBEC and CBDT.
SERVICE TAX
RECENT CASE LAWS
No demand can be made against the Assessee applying the principle of estoppel only because the Assessee had admitted the Service tax liability
Commissioner, Customs and Central Excise, Meerut-I Vs. RS. Travels [2014 (10) TMI 817 - UTTARAKHAND HIGH COURT]
In the instant case, the Revenue has filed an appeal before the Hon’ble High Court of Uttarakhand raising the question of principle of estoppel in law relating to the taxability of RS. Travels (“the Assessee”) on the basis that services were being rendered under the rent-a-cab scheme (“impugned activity”) and the Assessee had admitted its Service tax liability.
Whereas the Hon’ble High Court of Uttarakhand on August 6, 2014 has decided that impugned activity is not taxable in the case of Commissioner, Customs & Central Excise Vs. Sachin Malhotra, Raj Kumar Taneja, M/s. Shiva Travels [2014 (10) TMI 816 - UTTARAKHAND HIGH COURT] (“Shiva Travels case”).
The Revenue de-linked Shiva Travels case from the present case on the basis of the fact that the Assessee had effected payments and also filed affidavits to the effect that he will be paying the balance of the amount.
However, the Assessee relied upon the judgment of the Hon'ble Apex Court in the case of Dunlop India Ltd. Vs. Union of India and others [(1976) 2 SCC 241] and Mafatlal Industries Ltd. and others Vs. Union of India and others [(1997) 5 SCC 536] and submitted that the amounts were paid under compulsion.
At the outset, the Hon’ble High Court observed that when there is only a contract of hire and there is no renting of the cab, there is no question of the Assessee being assessed in respect of services rendered in connection with rent–a-cab service as there is no renting at all.
It was further held by the Hon’ble High Court that Article 265 of the Constitution of India mandates that no tax can be levied or collected except as provided by law. Accordingly, mere fact that the Assessee had made some payments and also made promise to make further payments cannot be used against our refusing to interfere with the impugned order.
Penalty not imposable when the Service tax liability was discharged along with interest before issuance of Show Cause Notice
Bipco Industries (Tools) Pvt. Ltd. Vs. Commissioner of C. EX. & ST., Daman [2014 (10) TMI 768 - CESTAT AHMEDABAD]
Bipco Industries (Tools) Pvt. Ltd. (“the Appellant”) was informed about the short payment of Service tax by the Jurisdictional Range Officer on September 3, 2007. The Appellant duly complied with the same by discharging the said Service tax liability by cheque dated September 29, 2009. Further, the Appellant also informed the Jurisdictional Range Office about the payment of Service tax liability along with interest.
Thereafter, a Show Cause Notice (“SCN”) was issued to the Appellant on September 14, 2010 imposing penalty upon the Appellant under Section 76 of the Finance Act, 1994 (“the Finance Act”) which was further confirmed by the Commissioner (Appeals) by mentioning in its order that the SCN was issued to the Appellant on September 14, 2009 instead of September 14, 2010 (“impugned order”). Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Ahmedabad contesting the amount of penalty.
The Hon’ble CESTAT, Ahmedabad observed that the impugned order has factually recorded incorrect date of SCN as September 14, 2009 instead of September 14, 2010 and held that in terms of Section 73(3) of the Finance Act, when the Service tax liability was discharged along with interest before issuance of SCN, no penalty would be imposable on the Appellant.
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