Saturday, November 1, 2014

Cenvat Credit not availabe on Invoices Older than 6 Months


In the recent judgment Mumbai Tribunal in Ashok Leyland Ltd vs. Commissioner of Central Excise, Nagpur 2014 TIOL 2102 CESTAT MUM it was held that as per Rule 57G of CER, 1944 time limit of six months would be applicable even for the consignment which had arrived before the introduction of the procedural restriction.

Rule 57G of CER, 1944 specifically provided that “no credit under sub-rule (3) shall be taken by the manufacturer unless the inputs are received in the factory under the cover of specified documents.” Further, sub-rule (5) specifically provided that “credit shall not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3).”

The Bench adverted to the decision in Osram Surya (P) Ltd. vs. CCE, Indore - 2002-TIOL-64-SC-CX where the Apex Court observed that the substantive right had not been taken away by the introduction of the proviso to the Rule but a procedural restriction was introduced and which was permissible in law. Inasmuch as the time limit of six months would be applicable even for the consignment which had arrived before the introduction of the said proviso.

Presently Notification No 21/2014-CE(NT) dated 11.07.2014 has amended the Rule 4 of Cenvat Credit Rules, 2004

In the said rules, in rule 4,

(a) in sub-rule (1), after the second proviso, the following proviso shall be inserted with effect from first day of September 2014, namely :

"Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub- rule (1) of rule 9.";

(b) in sub-rule (7),

(ii) after the fifth proviso, the following proviso shall be inserted with effect from first day of September, 2014, namely :

"Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of rule 9."

Given the above, the revenue authorities may adopt the ratio of Ashok Leyland decision (supra) in respect of amendment made by Notification 21/2014-CE. Accordingly time limit of 6 months might be applied to invoices issued prior to 1 September, 2014.

Hope the information will assist you in your Professional endeavors.


“Journey of transformation should continue”


Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
Central Council Member of ICAI (2013-16)
Former Chairman NIRC of Institute of Chartered Accountants of India
Former Chairman NIRC of Institute of Cost Accountants of India
Author of “An Introduction to Service Tax” & “Comprehensive Guide to Service Tax”
M: 9810103611 E: atul@servicetax.net

CSR Mandatory for Central Public Sector Enterprises.


F. No.15 (13)2013-DPE (GM) Government of India Ministry of Heavy Industries & Public Enterprises (Department of Public Enterprises)

Public Enterprises Bhawan Block No. 14, C... Complex Lodhi Road, New Delhi- 110 003 Dated the 21 October, 2014

OFFICE MEMORANDUM

Subject: Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises.

The undersigned is directed to enclose the Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises. These guidelines will supersede the guidelines on Corporate Social Responsibility and Sustainability issued by DPE vide OM No. 15 (7)2012-DPE (GM)GL104 dated the 12" April, 2013. The guidelines would supplement CSR Rules (under Companies Act, 2013) notified by Ministry of Corporate Affairs and are issued in consultation with them.

2. These guidelines have the approval of Minister (Heavy Industries & Public Enterprises) and are effective from 142014.

3. All the administrative Ministries / Departments are requested to bring these guidelines to the notice of CPSEs under their respective jurisdiction for necessary action.

Encl: as above
(Umesh Dongre) Director Telefax. 24363066

Thursday, October 30, 2014

VAT is also applicable on petrol pump dealer commission :High Court


In the recent judgement by Hon’ble High Court of Punjab and Haryana in All Haryana Petroleum Dealers Association vs. State of Haryana (2014) 71 VST 185 (P&H) the vires of Explanation (v) to Section 2(1)(zg) of the Haryana Value Added Tax Act, 2003 was challenged on the ground that it is violative of Article 246 read with Entry 54 of List II of Seventh Schedule to Constitution of India.

The issue arose as a result of Notification No. Leg. 22/2011 dated September 29, 2011 which amended the definition of “sales price” under section 2(1) (zg) of Haryana Value added Tax, 2003 by inserting explanation (v). The effect of the amendment was that the sale price for the purpose of charging VAT, now included the commission payable to retail dealers for sale of petroleum products. Therefore, the VAT would now be charged on final price at which petrol is sold to the consumers which includes Commission of retail dealers/profits of seller. Thus, the Hon’ble Court was to decide the question whether State of Haryana is empowered to collect tax on the commission income of petrol dealers by way of modifying definition of “sales price” in Haryana Value Added Tax Act, 2003.

It was held by the High Court that State of Haryana is not violating the Article 246 read with entry 54 of seventh schedule of Constitution of India as the amended definition of “sales price” is in conformity of business practice of Oil companies and dealers.

Another issue which arose due to the aforesaid amendment was in respect of adjustment of the excess input tax credit which accumulated in the hands of petroleum dealers because of evaporation loss of petrol products. This was due to the fact that output tax liability of the dealers is lower on account of evaporation loss leading to tax being carried forward on a regular basis.

As regards the adjustment of Input tax credit the Hon’ble High Court held that the Input tax credit shall not be allowed for evaporated goods as state of Haryana in its circular dated 21.03.2013 issued by Excise and Taxation Department has clarified that no credit shall be allowed for goods on which no output tax liability is arising.




Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM
Central Council Member of ICAI (2013-16)
Former Chairman NIRC of Institute of Chartered Accountants of India
Former Chairman NIRC of Institute of Cost Accountants of India
Author of “An Introduction to Service Tax” & “Comprehensive Guide to Service Tax”
M: 9810103611 E: atul@servicetax.net

Advocates alone are entitled to Practice, Plead and Act before the revenue authorities.


Indian legislature provided special class of persons called Advocates in Advocates Act, 1961 to practice all Indian laws. Therefore, authorised representative clause not required in any Indian taxation statute. Bar Council of India Vs A.K.Balaji [SLP(Civil)No(s)17150-17154/2012] Dt.4.7.2012 (SC) & A.K.Balaji Vs Govt. of India (2012) 35 KLR 290 21.02.2012 (Madras HC) it was clearly held by Hon’ble Supreme Court & Madras High Court that Advocates alone are entitled to practice the Profession of Law both in litigious & non-litigious matters, nullifying the effect of Section 33 of Advocates Act. This also confirms to Section 29 of Advocates Act. The constitution bench of Supreme Court of India in National Tax Tribunal case of Madras Bar Association Vs Union of India bearing No.150 of 2006 Dt.25.09.2014, it was ultimately held that Chartered Accountant to represent a party to an appeal before NTT, unconstitutional and unsustainable in law. The verdict of Supreme Court is the declared law of land, binding on all throughout the territory of India under Article 141 of Indian Constitution & contravention liable for action under Article 129 read with Article 142(2) of Indian Constitution. Hence, Advocates alone are entitled to Practice, Plead and Act before the revenue authorities. On date, authorized representative clause under all Indian taxation statute has been subject to review of apex court and hence require deletion. Other than Advocates should appear before tax authorities under CPC/Evidence Act, against summons issued. If such appearance clause still retained in statute book of Indian taxation laws, situation may arise that order of assessing authority passed against the representation of other than Advocates become in-fructuous, bad in law, null & void. Further, such orders cannot be enforced/appealed. Power of attorney (Vakalatnama) to practice law can only be given to Advocates.


REQUIRED ACTION OF MINISTRY OF FINANCE IN CONSULTATION WITH MINISTRY OF LAW & JUSTICE, GOVT. OF INDIA, IN VIEW OF ABOVE COURT VERDICTS. 


Learned officials in Ministry of Finance well aware that all procedure laid down in CPC/Evidence Act followed in assessment procedure in all Indian taxation laws. In view of above court verdicts, following amendment to taxation statute & procedural changes should be brought, in consultation with Ministry of Law & Justice. Govt. of India. Authorised representative clause require deletion. In response to notice issued in Indian taxation statute, assessee should appear in person or only through Tax Advocate duly authorising him by way of vakalatnama. In order to seek production of records in support of return filed, summons should be issued to enable other than Advocates to appear on behalf of the assesses
Author :-

B.S.K.RAO, B.Com, LL.B, MICA,
Auditor & Tax Advocate,
BDKRAO, Beside SBI,
Tilak Nagar, Shimoga-577201
Karnataka State

MO     : 0-9035089036

Court Verdicts enclosed as attachment

Friday, October 24, 2014

Service Tax Return 4-2014 to 9-2014 Due date Extended


CBEC vide Order No. 02/2014-ST dated 24th October, 2014 has extended the due date of filing Service Tax Return, for the period April 2014 to September 2014, from 25th October 2014 to 14th November 2014.


F.No.137/99/2011-Service Tax
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
***
New Delhi, the 24th October, 2014

ORDER NO. 02/2014-SERVICE TAX
In exercise of the powers conferred by sub-rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st April 2014 to 30th September 2014, from 25th October, 2014 to 14th November, 2014.

The circumstances of a special nature, which have given rise to this extension of time,
are as follows:
“Natural calamities in certain parts of the country.”

Himani Bhayana
Under Secretary (Service Tax)
Central Board of Excise and Customs


Wednesday, October 22, 2014

HAPPY DIWALI TO ALL SIMPLE TAX INDIA READERS


Wish you and your family a very happy,bright ,joyful and prosperous Deepawali



Three people were asking for your mobile no. We didn't give ur no.
But we gave them ur home address. They are coming this Diwali.
They are : SUKH,SHANTI and SAMRIDDHI.
Please welcome them as we have requested them to stay with you forever.
HAPPY DIWALI !

FROM SIMPLE TAX INDIA TEAM

Tuesday, October 21, 2014

Arbitration as a dispute resolution mechanism


Arbitration as a dispute resolution mechanism has always been the preferred option despite the challenges it has faced time and again as to how effective it really is. In some instances, the challenge has been due to the power vested with Indian courts to set aside arbitral awards citing wider issues of ‘public policy’. In certain other instances, it has been a debated interpretation of the provisions of the Arbitration and Conciliation Act, 1996 (Indian Arbitration Act) as to whether Indian courts can intervene in matters governed by foreign seated arbitrations.

A couple of recent decisions that are summarized below have set an encouraging path that courts should adopt while dealing with such issues. For a clearer understanding, it is relevant to examine the current legal framework and the law laid down by courts. 

The Indian Arbitration Act is divided into two parts – Part I applies to arbitrations that take place within India and Part II applies to international commercial arbitrations that are held outside India. The question that is often raised by contracting parties is whether Indian courts will have jurisdiction over arbitrations governed by Part II of the Indian Arbitration Act i.e. international commercial arbitrations. The decision in Bhatia International laid down that Part I of the Indian Arbitration Act would equally extend to arbitrations that are held outside India, unless it was expressly or impliedly excluded by the parties. This decision was widely debated in as much that the very essence of arbitration as an effective dispute resolution mechanism would stand to reason.

In the landmark Balco decision in 2012, the Hon’ble Supreme Court, in its wisdom and realizing the interpretational fallacy of the decision in the Bhatia International case, finally reversed the decision and confirmed the legal position that Part I of the Indian Arbitration Act would apply only to arbitrations seated in India. The Hon’ble Supreme Court upheld the principle of territoriality and settled the position that Part I of the Indian Arbitration Act would have no application to international commercial arbitrations held outside India. It was however specifically stated that the said position of law would be applicable only as regards arbitration agreements executed after the date of the Balco judgment i.e. 6 September 2012. The question therefore remained as to the position of the arbitration agreements executed prior to 6 September 2012.

Early this year in the matter between World Sport Group (WSG) and MSM Satellite, the question that arose was whether arbitration as a dispute resolution mechanism would be available should there be any determination required of matters alleging fraud, misrepresentation or the like. In this matter, although a division bench of the Hon’ble Bombay High Court initially granted relief to MSM, the Hon’ble Supreme Court overturned the decision in favour of WSG by applying the doctrine of severability since the contract containing the arbitration provision was itself being challenged. It was held by the Hon’ble Supreme Court that the agreement of the parties to resort to arbitration was not rendered inoperative merely for the reason that allegations of fraud have to be inquired into. This decision marked a shift from the approach traditionally followed by Indian courts that allegations like fraud or misrepresentation can only be inquired by courts and not arbitrators.

In a more recent decision involving Reliance Industries Limited and Union of India, the matter in question was whether an express choice of law to govern an arbitration agreement would ensure that Part I of the Indian Arbitration Act will not be applicable even where parties have not expressly excluded Part I. The Hon’ble Supreme Court made a distinction as between the substantive law governing the main contract and the law governing the arbitration agreement. With this decision of the Hon’ble Supreme Court, it now appears clear that even pre‐Balco arbitration agreements would have enough protection provided they have contractually and expressly agreed that foreign law would govern the arbitration agreement, which would then imply exclusion of Part I of the Indian Arbitration Act, and consequentially, exclusion of the jurisdiction of Indian courts.

It is also relevant to note that in the Reliance Industries matter, the Hon’ble Supreme Court while holding that Part I of the Indian Arbitration Act would not be applicable also held that in the event a final award is made against the Union of India pursuant to the arbitration held outside India, the enforceability of the same in India can be resisted on the ground of public policy. It was also specifically accepted that such principle of public policy will necessarily be applied by courts in England (which was the forum contractually agreed between the parties) should arbitrability be challenged, given that the substantive law governing the contract is Indian law.

On the one hand, this decision settles the law as to the inapplicability of Part I to arbitrations held outside India, where parties have expressly or impliedly excluded its applicability. It also clarified the position that even where issues of public policy are involved, foreign courts can be approached to seek appropriate remedy and the issue of public policy alone will not dilute the contractual understanding and agreement of the parties to subject all their disputes to arbitration outside India and seek all their remedies before courts outside India.

While the law on this has been emerging positively, it is necessary that while drafting contracts with an arbitration mechanism for dispute resolution, clear and precise provisions are incorporated to reflect the intention of the parties taking into account the law laid down in various decisions from time to time. These decisions clearly reflect a proarbitration stand of Indian courts and should provide the necessary confidence to the contracting parties involved in international commercial transactions.

Monday, October 20, 2014

New features/ Options of e-form ADT-1 introduced by Ministry today itself


New e-Form ADT-1

New features/ Options of e-form ADT-1 introduced by Ministry today itself

  1. Provide whether company is falling under any class of Companies as per Section 139(2).
  2. Whether Joint Auditors have been appointed - Provide Whether joint auditors have been appointed. If yes is selected then provide the value for Number of auditor(s) appointed shall be greater than 1. 
  3. Period of account for which appointed - Please mention the “From” and “To” date for the period for which auditor is appointed. 
  4. Number of financial year(s) to which appointment relates - Please provide the Number of financial year(s) to which appointment relates. 
  5. Whether the appointment of auditor is within the limits of twenty companies as specified in sub section 3(g) of section 141 - Please provide Whether the appointment of auditor is within the limits of twenty companies. 
  6. Specify the tenure of previous appointment(s) of the auditor or auditor’s firm or its member in the same company in which audit was conducted or is functioning (excluding previous years having break of five or more years as specified in Rule 6) - Please provide the tenure of previous appointment(s) of the auditor or auditor’s firm or its member in the same company in which audit was conducted or is functioning in number of financial year(s). Please provide details as Person appointed as auditor, financial start date and financial end date of his tenure 
  7. Mandatory Attachments: 
    1. Ø Copy of the intimation sent by company 
    2. Ø Copy of written consent given by auditor; 
    3. Ø Copy of resolution passed by the company; 
NOTE:

  • v The e-Form will be auto approved (STP).
  • v Now it’s mandatory for the companies to attach the above mentioned documents with e-form ADT-1
  • v Its mandatory to mention Number of financial year(s) to which appointment relate.

Saturday, October 18, 2014

Deregulation of Diesel Prices :Diesel Prices go down by 3.37 per litre wef 18.10.2014 midnight


The Union Cabinet Committee of Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, today approved the issues relating to the under-recovery on sale of diesel and its present status. Instructions have been issued today i.e. on 18th October 2014 to make the price of Diesel market determined with effect from midnight of 18th-19th October 2014. The prices of Diesel will be market determined at both Retail and Refinery Gate level for all consumers thereafter. 

Based on an earlier decision of the Cabinet Committee on Political Affairs (CCPA) dated 17th January 2013, instructions were issued to the Public Sector Oil Marketing Companies (OMCs) allowing them to increase the retail selling price of Diesel in the range of 40 paisa to 50 paisa per litre per month (excluding VAT as applicable in different States/Union Territories) till further orders. 

Diesel prices will henceforth be market determined. This will facilitate greater competition in the Auto Fuels Retail segment and enhanced efficiency in service delivery of the oil companies. This is expected to benefit consumers due to greater competition among oil companies and more choices. The competition is also expected to foster greater efficiency in oil companies benefitting the consumers.