Maintenance of Common Area of a Mall under Service Tax

CESTAT, CHENNAI BENCH

Chennai City Centre Holding (P.) Ltd.

v.

Commissioner of Service Tax, Chennai

Stay Order No. 439 of 2012

Application No. ST/S/112 of 2010

Appeal No. ST/185 of 2010

JUNE 8, 2012

ORDER

Chittaranjan Satapathy, Technical Member – Heard both sides. The learned advocate appearing for the appellants states that they are the owner of the impugned city centre mall where they have let out the individual shop premises for lease and rent. There are some common areas which are not maintained by the individual shop owners. As per an agreement entered into between the appellants and the individual shop owners, the common areas are maintained by the appellants. It is the contention of the learned advocate that since it is the obligation of the appellants to maintain these common areas, they are not rendering any service to anyone and, therefore, they are not liable to pay any service tax under the category of ‘maintenance services”.

2. This argument of the ld. advocate is prima facie untenable as the appellants are recovering charges incurred for maintenance of the common areas from the individual shop owners. Ld. advocate himself states that the maintenance is done through service contractors who are providing the maintenance service and are also paying service tax. Ld. advocate further states that they are recovering proportionate amount of service charges along with service tax from the individual shop keepers. In view of this position, it cannot be concluded that the appellants are doing maintenance as a part of their own obligation and they are not doing service to the shop keepers. If that was so, they would not have recovered service charges along with service tax proportionately from the shop keepers.

3. Ld. advocate also states that the recovery made not only includes maintenance charges and service tax paid thereof, but also charges for electricity and water used in the common areas. However, he is not in a position to state as to what percentage of recovery is attributable to the recovery of electricity and water charges.

4. He also states that the entire period of demand is from April 2006 to March 2008 and for the period from June 2007 to March 2008, they have paid Rs. 13 lakhs towards service tax demand minus CENVAT credit which they would be entitled if the tax is payable. He clarifies that, even for this period, the appellants are contesting the tax demand.

5. Heard ld. JCDR who states that the tax amount is payable for the entire period as they have rendered maintenance service to the shop owners and they have collected amounts from them. He fairly agrees that if the collected amount includes charges towards electricity and water, the same have to be excluded but neither the appellants have given details of this amount nor the adjudicating Commissioner has referred to any specific amounts in this regard in his order. He states that in the absence of concrete figures, the appellants may be directed to make predeposit of an appropriate amount.

6. As regards the argument of ld. advocate that they are entitled to credit of service tax paid by the service contractors engaged by them for undertaking maintenance work, he states that this requires to be examined with reference to the invoices etc., the details of which are not available in the case records. However, he states that for the period June’07 to March’08, the appellants have claimed credit of an amount of Rs.18 lakhs before the adjudicating Commissioner.

7. We have heard arguments from both sides. As stated above, prima facie, the argument of ld. advocate that no tax is payable on the ground that the maintenance was being done on behalf of the appellants themselves and that it was not a service rendered to the individual shop keepers is not tenable. If they were doing maintenance for themselves, there would not have been any reason for collecting the exact amount of service charges along with tax from the shop keepers. For the period from June’07 to March’08, the appellants have already paid an amount of Rs.13 lakhs claiming CENVAT credit of Rs.18 lakhs. As such, for the balance period, the tax demand is little over Rs.49 lakhs towards which no payment has been made. There are also no details available regarding the amount collected towards electricity and water charges along with service charges. Further, there are no details available to determine how much credit would be available to the appellants especially when they are challenging the taxability itself. Keeping all these factors in view, we direct the appellants to predeposit 50% of the balance amount of Rs.49 lakhs in cash within a period of 4 weeks from today and report compliance on 23.7.2012. This deposit will be in addition to Rs.13 lakhs stated to have been paid earlier. Subject to compliance with the above direction, pre-deposit of balance amount of tax, interest and penalty amounts shall remain waived during pendency of appeal.

Answer For CA Final November,2012 by CA Mahendra Soni

Dear Friends
Here are the guided Answer for CA Final November,2012 provided by CA Mahendra Soni

1. Information Systems Control and Audit
2. Advanced Management Accounting
3. Strategic Financial Management
4. Advanced Auditing 
5. Financial Reporting 

Answers of IPCC November,2012 by CA Mahendra Soni

Dear Friends
Here are the guided Answer for IPCC November,2012 provided by CA Mahendra Soni

1. Auditing and Assurance 
2. Cost Accounting and Financial Management 
3. Advanced Accounting
4. Law,Ethics and Communication 
5. Accounting - Gr 1 

Skills Required for Good Chartered Accountant

The minimum eligibility to be a Chartered Accountant (CA) is 10+2 in any stream.

The fundamental qualities required to become a chartered accountant are:

Inclination as well as ability to work with numbers:  Chartered accountancy is about managing accountancy with good mathematical and numerical skills.

Ability to communicate complex financial issue lucidly:  It involves explaining the tedious concepts of accountancy in a simpler way will help the client to take assertive decision about monetary funds.

Problem solving as well as analytical skills: Chartered accountants should be in a better position to analyze and figure it out the client’s problem and further suggest practical solutions.

Ability to build a professional relationship with the client:  A healthy rapport enables the client to build trust and confidence in chartered accountant’s work and decisions.

Ability to write financial reports at the same time to have an eye for detail: 
For a good CA, writing and validating a good financial report is a crucial part in order to draw certain conclusions. This is possible only when the CA has an eye for detail.

Have sound judgment and decision making skills: An ability to make sound judgment helps in taking decision in a better way.

Ability to convey recommendation both accurately and clearly: A client comes with a hope of minimizing his confusion and arriving at valid conclusion. It is the duty of the CA to guide the client in an effective manner.

Source : indiancollages.com

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Tribute to Jaspal Bhatti ! We Will Miss You ... RIP

XBRL Date Extended to 15th Dec,2012

Dear Professional Friends
Please Make a note that with the notification issued by MCA on 25/10/2012 the date of filling the returns in XBRL format has been extended to 15/12/2012.

Full Notification : Link

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Analysis of CA Placement Program Aug-Sep 2012

The Institute of Chartered Accountants of India had organised another set of Campus Placements for Newly Qualified Chartered Accountants in the month of August-September 2012 for those candidates who had attained the Chartered Accountancy Qualification in the CA Final Results which were announced in the month of July 2012.

The Placement Program was conducted at 18 Centres across India and the following are the highlights of the same

1. Highest Chartered Accountant Salary for International Posting was Rs. 16.70 Lakhs as compared to Rs. 25 Lakhs being offered in the previous Campus Placement held in the month of Feb
2. Highest Chartered Accountant Salary for Domestic Posting was Rs. 13.77 Lakhs as compared to Rs. 14 Lakhs being offered in the previous campus placement held in the month of Feb
3. Minimum Salary offered to a Chartered Accountant was Rs. 4 Lakhs
4. Average Cost to company was Rs. 7.1 Lakhs p.a.
5. 53 entities comprising of CA Firms & Company’s participated in the Campus Program with a total of 86 Interview Panels being formed
6. 518 Candidates were offered a Job out of total of 9382 registered candidates i.e. 5.52% of the Candidates were given Job Offer

Examiner's Comment on May,2012 Papers IPCC Group I

Dear Students
It is Most helpful to consider the Examiner's comment before you sit such a professional Exam on ICAI.
here is a link for the Examiner's comments for IPCE Group 1

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Top 10 Stock Exchanges in Asia Pacific Region

Stock exchanges BSE and NSE figure among top 10 bourses in the Asia-Pacific region in terms of market capitalisation of the companies listed on their platforms.
Among the 17 stock exchanges from the Asia-Pacific region listed by market regulator Sebi in its latest monthly bulletin, the BSE stood at fifth position followed by the NSE at sixth place.

Read More : Link

Source : The Economics Times

National Committee on Direct Cash Transfers By Prime Minister

The Prime Minister has constituted a coordination committee called the National Committee on Direct Cash Transfers. as a mechanism to coordinate action for the introduction of direct cash transfers to individuals under the various government schemes and programmes.

The National Committee chaired by the Prime Minister will have as its members eleven Cabinet Ministers, two Ministers of State with independent charge, the Deputy Chairman Planning Commission, the Chairman UIDAI, the Cabinet Secretary with the Principal Secretary  to the PM as the convenor. The Prime Minister may invite any other Minister/Officer/Expert to any meeting of the Committee.

For Full Info. : Link

SC : Director Can Be Held liable for Company's Tax Dues

IT : The expression "tax due" used in section 179 means tax as defined in section 2(43); "tax due" will not comprehend within its ambit penalty and interest

FACTS

• In the instant case, the petitioner was an individual and the only surviving director of a company after the expiry of other director who was his father.

• The petitioner was entitled to two refunds of Rs. 38,92,957 and another Rs. 15,00,276 but the revenue under section 179, proposed to set off the company's tax liability of Rs. 28,71,84,883 with the refund payable to the petitioner.

• In the context of recovery, the petitioner filed a writ petition and the Delhi High Court ordered that the petitioner will be given a hearing and fresh order under section 179 required to be passed.

• Acting on the order of the High Court, the revenue held the petitioner as the assessee in default liable for the company's outstanding dues of Rs. 27,93,05,184.

• The Petitioner filed for rectification/amendment against which the revenue enhanced the outstanding dues of the company, and consequently, of the petitioner to Rs. 35,13,35,804. The increase was due to charging of interest and penalty.

• The petitioner contended that the company's outstanding dues were in the form of interest and penalties whereas "tax due" under section 179 does not include within its ambit interest and penalty. It was submitted that the language of the provision is clear and has to be construed in its terms.

• The revenue, however, urged that section 179 intends to shift the tax liability, in cases of such dues which are of a private company and have not been recovered, upon the directors of such private company; and that whatever is recoverable from the private company, inclusive of interest and penalties due, becomes recoverable at the hands of the directors.

HELD

• In the instant case, the principal question requiring resolution is to understand the true ambit and scope of the provisions of section 179.

• Generally, the intention of the Legislature should primarily be gathered from the language used in the statute, which in turn means that attention should be paid to what has been said as also to what has not been said.

• Again, when in relation to the same subject matter, different expressions are used in the same statute, there exists a presumption that the legislature intended such different uses, and that the words are not to be used in the same sense.

• In H. Ebrahim v. The DCIT and The Tax Recovery Officer [2011] 332 ITR 122, the Karnataka High Court held that 'what is contemplated under section 179 is the tax component and not the penalty and interest'.

• In Dinesh T. Tailor v. Tax Recovery Officer [2010] 326 ITR 85, the Bombay High Court held that in section 179(1), the expression "tax due" and, for that matter the expression "such tax" must mean tax as defined for the purposes of the Act by section 2(43); "tax due" will not comprehend within its ambit a penalty.

• In view of the above, it was opined that the structure and construct of the Act has consciously used different words to create constructive liability on third parties. The treatment of the same subject matter by using different terms – in some instances expansive and in others, restrictive - means that the Court has to adopt a circumspect approach and limit itself to the words used in the given case (in the present case, "tax due" under section 179) and not "travel outside them on a voyage of discovery".

• Thus, it was to be held that the petitioner cannot be made liable for anything more than the tax as defined in section 2 (43). The revenue was consequently directed to determine the liability of the petitioner, in the light of the finding.

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[2012] 26 taxmann.com 203 (Delhi)

HIGH COURT OF DELHI

Sanjay Ghai

v.

Assistant Commissioner of Income-tax

S. RAVINDRA BHAT AND R.V. EASWAR, JJ.

W.P.(C) NOS.  2303 & 5175 OF 2012

AND C.M. APPL. NOS. 4936 & 10572 OF 2012

OCTOBER 11, 2012

ORDER

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S. Ravindra Bhat, J. - These writ petitions challenge the orders dated 3.11.2011 and 2.7.2012 passed by the first respondent under Sections 179/154/ of the Income Tax Act (the "Act") respectively.

2. The facts, to the extent necessary for the deciding the petitions, are that the petitioner is an individual and was a director of M/s Sarvodaya Realtors Pvt. Ltd (the "Company"), which has its registered office at New Delhi. The only other director of the company was late Shri D.K. Ghai, the petitioner's father. While the petitioner was assessed by DCIT Circle-1, Dehradun, the company was assessed with the first Respondent. By letter dated 15.3.2010, the petitioner was informed by DCIT Circle-1, Dehradun that he was entitled to tax refund of Rs. 38,92,957/- and Rs. 15,00,276/- in respect of A.Y. 1999-2000 and 2003-2004. However, at the same time, he was intimated that the first Respondent had computed the outstanding tax liability of the company at Rs. 28,71,84,883/-, and proposed that the refund payable to the petitioner, be set off with the tax liability of the company. The writ Petitioner wrote a letter to the ACIT, Dehradun, on 23rd March, 2010, and inspected the record in Delhi; he claims that at this stage, he became aware of the Income tax liabilities of the company, and the order made against him on 14th November, 2007, under Section 179 of the Act. The petitioner felt aggrieved by the order and the move to recover the arrears of the company's taxes and related liabilities, from him. He preferred a writ petition before this Court. That petition was disposed of in the following terms:

"5. We have examined the said contentions. We have also looked at the quantum of demand and the legal issues raised by the petitioner. Keeping in view the aspects and questions raised, we feel that it will be appropriate and proper if the petitioner is given a hearing, and a fresh order under Section 179 of the Act is passed. There is a dispute regarding service of notice dated 27th September, 2007. The respondent in the counter affidavit has stated that Abhay Singh had informed that the petitioner was out of station and intimation may be sent to him by writing to him another letter. However, the respondent did not communicate or correspond with the petitioner thereafter. It may be noted that the notice was received by Abhay Singh on 11th October, 2007 at 12.30 pm and hearing was fixed on 15th October, 2007, i.e. just four days later. Therefore, no communication was made by the respondent to the petitioner fixing the hearing or calling for reply. On 14th November, 2007 order under Section 179 was passed. It is not clear and there is no material/evidence whether the order under Section 179 of the Act dated 14th November, 2007 was ever served on the petitioner. No steps for recovery were undertaken even after passing of the order. Keeping in view the aspects and questions raised, we feel that it will be appropriate and proper if the petitioner is given a hearing and a fresh order under Section 179 of the Act is passed.

6. Accordingly, the impugned order dated 14th November, 2007 is set aside with a direction that the petitioner or his authorized representative will appear before the Deputy Commissioner of Income Tax, Circle 7(1), New Delhi on 29th August, 2011 at 2 p.m. He shall also file his reply to the notice under Section 179 of the Act on the said date. If required and necessary, the Assessing Officer can grant further opportunity of hearing to the petitioner. However, the proceedings under Section 179 of the Act will be disposed of within three months from the first date of hearing."

3. After the conclusion of the proceedings before the first Respondent, he made the impugned order dated 3.11.2011 holding the petitioner liable for the outstanding dues of Rs. 27,93,05,184/- of the company. It was held that the petitioner had not proved how he, the lone surviving director of the company, should not be treated as the assessee in default, and the whole amount should not be recovered from him in accordance with the provisions of Section 179(1) of the Act; furthermore, it was held that he was unable to show that the non-recovery of taxes cannot be attributed to gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

4. The Petitioner filed an application for rectification/amendment under section 154/155 of the Act. In these proceedings, the first Respondent, by the second impugned order dated 2.7.2012, enhanced the outstanding dues of the company, and consequently, of the petitioner to Rs. 35,13,35,804/-. The increase was on account of interest due under section 234A and section 234B, and penalty leviable under section 271(1)(b)/(c) of the Act.

5. The petitioner contends that the outstanding dues of the company were in the form of interest and penalties. He contended that "tax due" under Section 179 does not include within its ambit interest and penalty. It is submitted that the language of the provision is clear, and has to be construed in its terms; the Act makes a clear distinction between taxes, penalties and interest, which are distinct liabilities. Learned counsel relied on the definition of "tax" under Section 2(43) of the Act. Further, reliance was placed on the decision of the Bombay High Court in Dinesh T. Tailor v. Tax Recovery Officer [2010] 326 ITR 85 (Bom.), H. Ebrahim & Ors. v. Dy. CIT & Anr. [2011] 332 ITR 122 (Karn.), Harshad Shantilal Mehta v. Custodian [1998] 231 ITR 871 (SC) and Pratibha Processors v. Union of India, [1996] 11 SC 101.

6. Ms. Rashmi Chopra, counsel for the revenue, on the other hand, urged that a purposive interpretation of Section 179 has to be adopted. It was urged that Section 179 is intended to shift the tax liability, in cases of such dues which are of a private company and have not been recovered, upon the directors of such private company, and that whatever is recoverable from the private company, inclusive of interest and penalties due, becomes recoverable at the hands of the directors. Every director, she pointed out, is jointly and severally liable, to pay all the dues, including penalties, and interest, unless it is proved that the non-recovery was not due to gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. It was emphasized that in the present case, the company had only two directors, the petitioner, and his late father, and thus, there is no scope for the petitioner to escape the liability under Section 179 of the Act.

7. Counsel for the revenue relied on Union of India and others v. Manik Dattatreya Lotlikar1988 172 ITR 1 (Bom.) and the Kerala High Court in Ratanlall Murarka and Ors. v.Income-tax Officer, "A" Ward and Ors., [1981] 130 ITR 797 (Ker.) in support of the proposition that all tax arrears would be payable by a director, under Section 179(1). It was also argued that a question of fact cannot be agitated in a writ petition and that whether the director, against whom proceedings for recovery of arrears of tax are initiated, has discharged the burden of proving that the non-recovery of the arrears of tax cannot be attributed to neglect, misfeasance or breach of duty on his part is a question of fact which should not be gone into in writ proceedings. The revenue relied on Union of India v.Praveen D. Desai [1988] 173 ITR 303 (Bom.), Sunderaraman (M.R.) v. CIT [1995] 215 ITR 9 (Mad.), and Roop Chandra Sharma v. DCIT (Assessment) [1998] 229 ITR 570 (All.). It was, lastly, contended that Section 179 enacts a statutory presumption and places the burden on the director to prove that the non-recovery was not due to his gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. For this, reliance is placed on Sunderaraman (M.R.) v. CIT [1995] 215 ITR 9 (Mad.) and the Gujarat High Court view in Indubhat T. Vasa (HUF) v. ITO [2006] 282 ITR 120 (Guj.).

8. The principal question which has to be resolved by the Court in this case is the true ambit and scope of the provisions of Section 179. Section 179(1), as it exists at present, reads as:

"(1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company."

This provision, prior to its amendment, read as under:

"179. Notwithstanding anything contained in the companies Act, 1956 (1 of 1956), when any private company is wound up after the commencement of this Act, and any tax assessed on the company, whether before or in the course of or after its liquidation, in respect of any income of any previous year cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company."

9. Section 2 (43) defines "tax":

"2. In this Act, unless the context otherwise requires, -

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(43) "tax" in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date and in relation to the assessment year commencing on the 1st day of April, 2006, and any subsequent assessment year includes the fringe benefit tax payable under section 115WA;"

10. There are, apart from Section 179 (1), several other provisions of the Act which cast liability upon specified individuals or entities, in the event the assessee, (either an individual, partnership firm or other entity or concern, etc) defaults in payment of its dues. Section 170 provides for succession to a business "otherwise than on death" and enacts that where an assessee, carrying on any business or profession is succeeded to by another, who continues the business or profession, the predecessor shall be assessed in respect of the income of the previous year in which the succession took place up to the date of succession. The successor is to be assessed for the income of the previous year after the date of succession. Section 170 (3) says that when "any sum payable" under that Section in respect of the income of such business or profession for the previous year (in which the succession took place) up to the date of succession or for a previous year preceding that year, assessed on the predecessor, cannot be recovered from him, the Assessing Officer shall record a finding to that effect and"the sum payable" by the predecessor shall be payable by and recoverable from the successor. Thus, "any sum payable" necessarily carries a wider connotation than "tax payable". Section 177 provides that where a business or profession is carried on has been discontinued or where an association is dissolved, the Assessing Officer has to make an assessment of the total income, as if no such discontinuance or dissolution had taken place, and all the provisions of this Act, including the provisions with respect to levy of a penalty or "any other sum" chargeable under the Act are to apply. Section 177 (3) mandates that every person who was, at the time of such discontinuance or dissolution, a member of an association of persons and a legal representative of any such person who is deceased "shall be jointly and severally liable for the amount of tax, penalty or other sum payable". This again is wider than what is provided for under Section 179 (1). Section 188A, prescribes that every person who was, during the previous year, a partner of a firm, and the legal representative of any such person who is deceased, shall be jointly and severally liable along with the firm for the amount of tax, penalty or other sum payable by the firm for the assessment year. Section 189 too uses the same terms, i.e. "amount" of tax, penalty or other sum payable in respect of a firm (while creating liability of every partner at the time of discontinuance or dissolution of a firm). Section 221(1) deals with an assessee who, in addition to the amount of arrears and the amount of interest payable under Section 220 (2) is made liable by way of penalty, to pay such amount as the Assessing Officer may direct. Hence, in the case of an assessee in default, Parliament has made a specific provision making such a person liable to pay tax and in addition thereto the amount of interest payable under sub-section (2) of Section 220 and penalty.

11. It is a sound canon of construction that when Parliament or the legislature creates duties or liabilities, the task of the Court is to carefully interpret the provisions as they are. As held in Jumma Masjid v. Kodimaniandra AIR 1962 SC 847 (quoting Vickers Sons and Maxim Ltd v Evans 1910 AC 444):

"We are not entitled to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself"

Thus, it has been sometimes held that the intention of the Legislature is to, primarily, be gathered from the language used in the statute, which in turn means that attention should be paid to what has been said as also to what has not been said. (See Mohammed Alikhan v. Commissioner of Wealth Tax 1997 (3) SCC 511; Institute of Chartered Accountants v.Price Waterhouse AIR 1998 SC 74). Another rule of interpretation which the Court has to keep in mind, in cases like the present is that when, in relation to the same subject matter, different expressions are used, in the same statute, there exists a presumption that the legislature intended such different use, and that the words are not to be used in the same sense. This was stated in Commissioner of Income Tax v. East West Import & Export (P.) Ltd. AIR 1989 SC 836, in the following observations:

"..there has been no dispute before us that the requirement "if any such shares have been in the course of such previous year" would also apply to the last requirement "are in fact freely transferable by the holders to other members of the public". The only contentious aspect is as to whether "in the course of such previous year" would mean throughout the year or any part of it. There is no direct authority indicating the true meaning of this requirement in the Explanation one way or the other. The purpose of enacting s. 23A, as pointed out in Afro's case, was to control evasion of tax.

The Explanation has reference to the point of time at two places: the first one has been stated as "at the end of the previous year" and the second, which is in issue, is "in the course of such previous year". Counsel for the Revenue has emphasised upon the feature that in the same Explanation reference to time has been expressed differently and if the legislative intention was not to distinguish and while stating "in the course of such previous year" it was intended to convey the idea of the last day of the previous year, there would have been no necessity of expressing the position differently. There is abundant authority to support the stand of the counsel for the Revenue that when the situation has been differently expressed the legislature must be taken to have intended to express a different intention. 'Course' ordinarily conveys the meaning of a continuous progress from one point to the next in time or space and conveys the idea of a period of time; duration and not a fixed point of time. "In the course of such previous year" would, therefore, refer to the period commencing with the beginning of the previous year and terminating with the end of the previous year. If that be the meaning of the phrase "in the course of such previous year", it would necessarily mean that free transferability of the shares by the holders to other members of the public should be present throughout the previous year. Admittedly that was not the position in this case as transferability was acquired only on 26th of March, 1951." (Emphasis added)

12. In H. Ebrahim v. The DCIT and The Tax Recovery Officer, [2011] 332 ITR 122 (KAR.) relied on by the Petitioner, the Karnataka High Court, which dealt with the same issue that has arisen in the present petitions, held that:

"12. Whether the Nomenclature 'tax' would include the other two components namely the penalty as well as interest, fell for consideration before this Court in the case ofSoma Sundarams (Private) Ltd. v. Commissioner of Income Tax Karnataka reported in [1979] 116 ITR 620. Indeed in the said case Section 2(43) of the Income Tax Act fell for consideration before a Division Bench of this Court. It had an occasion to examine whether interest, penalty and fine, which are payable under the provisions of the Act can be termed as income tax, this Court decidedly stated that the component 'income tax' does not include payment of penalty as well as interest. Indeed Section 179 of the Act indicates that the Directors would be liable to pay the tax due in the case, where the company is unable to satisfy the demands and gross negligence, misfeasance and breach of duty are attracted. Thus, what is contemplated under Section 179 of the Act is the Tax component and not the penalty and interest Indeed Section 126 of the Act would relate to notice of demand, which clearly indicates that the entire sum due to the Revenue is classified into three different components i.e., tax, interest, penalty or any other sum, which would not necessarily come under Section 179 of the Act. Indeed this reference would be only to the Directors of the Company. With reference to Section 222 of the Act the assessee undoubtedly is liable to pay the tax, interest and penalty. But however, the same cannot be said about the Directors of the Company. Indeed whether tax would include penalty and interest fell for consideration before the Apex Court in the case of Prathibha Processors and Ors. v. Union of India and Ors.reported in [1996] 11 SCC 101. Indeed the said decision was rendered under the Customs Act but however, the words and phrases "interest", "tax" and "penalty" fell for consideration and the Apex Court has observed thus:

"In fiscal statutes, the import of the words 'tax', Interest', penalty', etc. are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially, it is compensatory and different from penalty - which is penal in character."

Having regard to the decisions referred to above in relation to the import of words 'tax' interest and 'penalty' which would operate in different concepts, I am of the view that the said contention of Mr. Shankar is required to be accepted, inasmuch as, the phrase tax' as contemplated under Section 179 of the Act does not include penalty and interest insofar as the Directors of the Company are concerned. It is made clear that this interpretation of phrase 'tax' would not be' is under Section 179 of the Act and does not encompass the assessee. Indeed the Assessee as contemplated under Section 222 of the Act is liable to pay all the three components i.e., 'tax' 'interest' and 'penalty' and any other sum due or recoverable from him."

13. Earlier, the Bombay High Court, in Dinesh T. Tailor (supra) made a detailed analysis of the provisions of the Act, the effect of which has been discussed in the earlier part of this judgment, and after noticing the differing nature of the expressions, used by the Act, creating constructive liability, held that:

"7. … Section 179(1) refers to "any tax due from a private company" and every director of the company is jointly and severally liable for the payment of "such tax", which cannot be recovered from the company. The expression "tax due" and, for that matter the expression "such tax" must mean tax as defined for the purposes of the Act by Section 2(43). "Tax due" will not comprehend within its ambit a penalty.

8. The provisions of the Act make a clear distinction between the imposition of a tax on the one hand and a penalty on the other. Section 2(43) defines the expression "tax" in relation to an assessment year commencing on 1 April 1965 and any subsequent assessment year to mean inter alia Income Tax chargeable under the provisions of the Act.

10. [W]here Parliament has intended to make a specific provision imposing a liability to pay penalty apart from the tax which is due and payable, a specific provision to that effect has been made. Section 179, which falls for interpretation in the present case imposes a joint and several liability upon a director of a private company where tax due from the company cannot be recovered. The expression "tax due" cannot comprehend within the meaning of that expression a liability to pay a penalty that may have been imposed on the company."

14. In Harshad Shantilal Mehta (supra) The Supreme Court considered the provisions of Section 11(2)(a) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, under which inter alia all revenues taxes, cesses and rates due from persons notified by the Custodian under Sub-section (2) of Section 3 to the Central Government or to any State Government or Local Authority have to be paid or discharged in full. The Supreme Court considered as to whether the expression "tax" under Section 11(2)(a) would include interest or penalty under the Income Tax Act, 1961. This question was answered in the negative:

"38. One other connected question remains: whether "taxes" Under Section 11(2)(a) would include interest or penalty as well? We are concerned in the present case with penalty and interest under the Income Tax Act. Tax, penalty and interest are different concepts under the Income Tax Act. The definition of "tax" Under Section 2(43) does not include penalty or interest. Similarly, Under Section 157, it is provided that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand as prescribed. Provisions for imposition of penalty and interest are distinct from the provisions for imposition of tax. Learned Special Court judge, after examining various authorities in paragraphs 51 to 70 of his judgment, has come to the conclusion mat neither penalty nor interest can be considered as tax Under Section 11(2)(a). We agree with the reasoning and conclusion drawn by the Special Court in this connection."

15. As far as the decisions cited by the revenue are concerned, the Court notices that none of them discussed, or analyzed the different expressions used, and varying liability cast on different classes of assesses, in event of the principal or main assessee/defaulter, if one can use that expression. Manik Dattatreya Lotlikar held that the liability created is joint and several with that of the company; the High Court looked at the expression "assessee" under Section 2 (7) which includes an assessee in default. Therefore, held the High Court, a director would be an assessee deemed under Section 179; he has to satisfy all demands.Ratanlal Murarka too went by Section 2 (7) and was concerned with interest liability under Section 220 (2); the Court held that such non tax liability would have to be borne by the director of the company "despite the distinction between tax and interest emphasised by counsel for the petitioner." This court is of the opinion that the absence of any discussion about the different treatment given by Parliament to the same nature of liability, i.e. tax default of an assessee, in one instance only providing for recovery of tax, and in other cases all "amounts" or "sums" points to different nature and content of the same class of liability, which cannot be ignored. The said two decisions do not, therefore help the revenue.

16. As regards the second contention, there is no doubt about the principle that the High Court would not decide questions of fact, in proceedings under Article 226, and that whether the presumption of liability can be rebutted under Section 179 has to be gone into before the tax authorities. Nonetheless, the Court here has to deal with the assessee's fundamental argument that he is not liable to pay anything more than the tax (i.e. not liable to pay penalty or interest). A decision on that question falls within the legitimate scope of this Court's jurisdiction, as it implicates the authority of the revenue to collect such amounts from the petitioner. The objection of the revenue, is therefore, rejected as meritless.

17. In view of the above discussion, the Court is of the opinion that the structure and construct of the Act has consciously used different words to create constructive liability on third parties, in the case of default in payment of taxes by an assessee. The treatment of the same subject matter by using different terms - in some instances expansive and in others, restrictive, mean that the Court has to adopt a circumspect approach and limit itself to the words used in the given case (in the present case, "tax due" under Section 179) and not"travel outside them on a voyage of discovery" (Magor & St. Mellons RDC v. Newport Corporation 1951 (2) All ER 839). Therefore, it is held that the petitioner cannot be made liable for anything more than the tax (defined under Section 2 (43)). The first respondent is consequently directed to determine the liability of the Petitioner, in the light of the finding; the impugned orders are therefore quashed. The writ petitions are allowed in the above terms, without any order on costs.

Source : Taxmann.com

CPT December,2012 Notification

Common Proficiency Test application forms duly filled in may be sent so as to reach the Additional
Secretary (Examinations) at New Delhi not later than 26th October, 2012. Applications received after 26thOctober, 2012 shall not be entertained under any circumstances. Applications duly filled in will be received
by hand delivery at the offices of Institute at New Delhi and at the Decentralised Offices of the Institute at
Mumbai, Chennai, Kolkata, Kanpur, Ahmedabad, Bangalore, Hyderabad, Jaipur and Pune upto 26thOctober, 2012. Candidates residing in these cities are advised to take advantage of this facility. It may be
noted that there is no provision for acceptance of application forms after 26th October, 2012 with
late fee.
The candidates who fill up the examination application form online at http://icaiexam.icai.org from
8th October, 2012 (10.00 hrs) to 26th October, 2012 (17.30 hrs) and remit the fee online by using either
VISA or MASTER Credit/ Debit Card shall not be charged Rs. 500/- (i.e. cost of application form fee) in
order to popularize filling-in of application form online.

FOR FULL NOTIFICATION : Link

LIC Policy Earning Funda

How KBC is a Great Business Explained by Sunny Rahul

You All Know KBC Is Good Business. But Have You Ever Wondered How Well?
Let's See..
Airtel Is Charging Rs.6/- Per SMS Sent For This Contest.
Assuming There Are Only 100 Entries From
Say 10 Cities Of Some 20 Districts And 20 States,

6(Rs. per SMS) x 100(entries) x 10(cities) x 20(districts) x 20(states) i.e. = 6 x 100 x 10 x 20x 20 =
Rs.24, 00,000/-
Rs.24 Lakhs In Just 20 Minutes
(From People Trying For The Rs.2Lakhs Cash Prize). :O
Imagine The Scenario If 1000 Entries Try Out From 100 Cities?
The Figure Simply Grows By 2 More Zeroes And Yields A Whopping
Rs.24 crores!
And It Does Not Stop There. In Practice, It Could Be Another Multiple Of 100 Or A Multiple Of 1000 On An Average.
In That Case, It Is 24 x 100 Crores Earnings In Just 20 Minutes On Every Episode!
And The Prize Money: A Mere Rs.2 Crores (And From Whose Pocket?) X_X
Smart Business By Siddharth Basu! And The Best Part Of The Above Calculation Is Just The SMS Earning!
What About The Ad Money? :>
A Rough Annual Profit Calculation Goes Like This:
(2400 x 5 x 4) (episode/ month) x 12 = Rs.5, 76,000 crores.
Let Even 50% Get Dissolved In Taxes And Other Payments; Still,You Will Be Left with
(Which Includes Even The MeagreRs.480 Crores Of Prize Money, i.e., If Êvery Episode Bags Rs.2 Crores Prize) – Rs.2,
88,000/- Crores Profit! (Only From SMS). 8-|
Therefore, A Very Simple Question:
"KAUN BANEGA CROREPATI?"
And Your Options Are –
A) SONY TV
B) AIRTEL
C) AMITABH BACHAN
D) SIDDHARTH BASU
Computerji, Iska Jawab Bataiye....
Answer: All FOUR!

By Sunny Rahul

DO SHARE

In CA Every Thing is Important

Reference for Income Tax & Wealth tax issued by ICAI

Institute of Chartered accountants of India had issued the Quick Referencer of Income Tax & Wealth Tax, download the file.

DO SHARE

Placement Paper TCS

Dear Friends
Here are some of the Questions asked in Placement Papers in TCS Provided by Mahindra Kumar Soni

Link

DO SHARE

CA Version of Jab Tak Hai Ja

JAB TAK HAI JAAN…. (CA VERSION)

TERA PHELA KADAM MERE OFFICE MEIN AANA…
TERA CHUP CHAAP SE BAHAAR INTEZAAR KARNA..
TERE TEEN SAAL KI THOKRE KAANE KI CHAA DEKNA…

NA BOOLUNGA MEIN..
JAB TAK HAI JAAN …
AB TAK HAI JAAN…

TERA DER DER TAK OFFICE MEIN RUKNA..
LEAVE NA DENE PAR YUN ROOTNA…
NA BOOLUNGA MEIN..
JAB TAK HAI JAAN …
AB TAK HAI JAAN…

AAPKO STIPEND KE LIYE TARSTE DEKNA…
BAAT BAAT PAR TOKNE PAR TERA CHUP CHAAP MOOH FERNA..
NA BOOLUNGA MEIN..
JAB TAK HAI JAAN …
AB TAK HAI JAAN…

DER SE AANE PAR CHILLANA…
CLASS HAI AISA KEHKAR BHI.. DER SE JAANE DENE PAR REACTION DEKNA…
NA BOOLUNGA MEIN..
JAB TAK HAI JAAN …
AB TAK HAI JAAN…

TERA DAAR DAAR KE LEAVE MAANGNE AANA…
EXTENSION DENE PAR TERA YUN GUSSE SE CHALE JAANA..
NA BOOLUNGA MEIN..
JAB TAK HAI JAAN …
AB TAK HAI JAAN…

Admit Card for November.2012 CA Exams

NOVEMBER 2012 EXAMSICAI will not send a HARD COPY of your HALL TICKET i.e. ADMIT CARD from nowyou have to download it from ICAI WEBSITEwww.icai.nic.in
so DOWNLOAD your ADMIT CARD N take a PRINT of it.......

don't need to worry if you didn't get your photo n signature on your ADMIT CARD just ATTACH your recent passport size photo N complete it with your SIGNATURE (don't forget to take your ID proof in EXAM HALL)

DO SHARE WITH YOUR FRIENDS

Tip for IPCC November,2012 by Surbhi Bansal

MPORTANT TOPICS 4 IPCC NOV'12 STUDENTS
MUST READ n SHARE
(Don't leave these Chapters n topics @ any Cost)
Good luck 2 All
Might b of some help 2 u...

@Other pages...copy with due Credits is allowed...

*Grp1 Accounts
-Avg. due date(4)
-Partnership(16)
-Pre-incorporation(8)
-Amalgamation/Internal Reconstruction(16)
-Hire Purchase(8)
-NPO(16)
-Cash flow(16)
-Single entry(16)
-Imp. AS(revenue recog.,contract,dep.,fixed asset)

*Law,ethics n comm.
-Bonus(8)
-Gratuity(8)
-last 3 chptrs of Indian Contract Act,combined (10)
-Share Capital,General Meeting
-t/f transmission of shares,Membership
-Share allotment,prospectus n MOA
-ethics(full,dnt leave anythn)
-comm.(deeds r vry imp.) n comm. theory,rest of d chptrs

*CAFM
-Contract Costing,Material
-Reconciliation
-Standard,Marginal
-Labour,Overhead,Process Costing

-Capital budgeting,leaverage
-Working Capital,Receivable Mgt.
Cost of Capital,Ratios

*Direct tax
-Salary(RFA,HRA,gratuity,pension,leave salary...motor car facility n few more perquisites,all allowances r imp. shudnt b ignored)

-Business proff.(thz sec r d most imp. 1s viz sec 32,40A2,40A3,43B n topics lyk deduction in case of scientific research,writing off of preliminary exp.,ques related with book profits n cash payments in excess of 20,000 n payments tht can b made n claimed till ROI filing date ie d above sections mentioned)...dnt leave ths chptr FCAs plz,it's coming of 16 marks since May'10 in evry attempt.

-Capital gains(exemption related sections,forfeiture sec 51,conversion of capital in2 stock n sec 47)
-ROI,TDS,deductions(80C,80D,80DD,80U,80G)
-Clubbing,other sources

*Service tax n VAT(fully) dnt leave anythn,r SCORING

*Grp2 Accounts
-Partnership(16)
-Amalgamation/Internal Reconstruction(16)
-Branch A/c,liquidation,banking,insurance...all may come of 8 marks each
-Underwriting,departmental(5 each)
-imp. AS(borrowing cost,govt. grant,eps,lease)
-debenture chptr(16)

*Auditing
-Vouching,verification
-Co. audit 1 n 2
-Spcl. Audit
-EDP,govt. audit,Caro
-200 300 500 series SAs r imp.

*IT
-internet
-networking
-Dbms
-flowcharts
(almost carry 40 marks weightage)

*SM (full)
BEST OF LUCK FRENDSS

By Surbhi Bansal

Service tax of Service provided by Director

Company liable to pay service tax on services received from its directors

Company liable to pay service tax on services received from its directors & Recipients of security services to discharge 75% of service tax liability

Company receiving services from the directors are being brought into tax net as new Notification No. 45/2012-ST, dated 7-8-2012 has clarified that in respect of services provided by the directors to company, liability to pay service tax would be on the company under reverse charge. Companies would be required to pay service tax on gross amount paid to directors. However, question arises whether all payments made by the company to directors would be covered by above reverse charge provisions.

In our view, services provided by directors as employee in the course of employer- employee relationship would not be covered by the said provision as employer-employee relationship activities are already excluded from the definition of service itself under section 65B (44) of the Finance Act.

—————-

Payment of service tax – service tax payable on specified services – amendment in notification no. 30/2012-st, dated 20-6-2012

Notification No. 45/2012-ST, dated 7-8-2012

In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 30/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 472 (E), dated the 20th June, 2012, namely:-
In the said notification,-

(a) in para I, in clause (A),-

(i) after the sub-clause (iv), the following sub-clause shall be inserted, namely :-

“(iva) provided or agreed to be provided by a director of a company to the said company;”;

(ii) in sub-clause (v), after the words “manpower for any purpose”, the words ” or security services” shall be inserted.

(b) in para II, in the Table,-

(i) after Sl. No. 5, the following S. No. and entries shall be inserted, namely:-

“5A in respect of services provided or agreed to be provided by a director of a company to the said company Nil 100%”
(ii) in Sl. No. 8, in the entries under the heading ‘Description of a service’, after the words “manpower for any purpose”, the words “or security services” shall be inserted.

CA Entry for Gradute / PG Students

This is to inform all concerned that with the issuance of the Notification
No. 1-CA(7)/145/2012 on August 1, 2012, the provisions relating to Direct
Entry Scheme for Graduates/Post Graduates, etc., with prescribed percentage
of marks, to the Chartered Accountancy Course have come into force from
August 1, 2012. The said Notification is reproduced hereinbelow for
information of all concerned.
Interested persons/students, i.e., freshers and existing students are
advised to watch for the details of registration formalities and of transitional
scheme including fee payable, registration form which will be
announced/published by around August 16, 2012.

Link to Notification

DO SHARE

Result of IPCC May,2012

The results of the Chartered Accountants Professional Competence and Integrated
Professional Competence Examinations held in May, 2012 are likely to be declared tentatively on

Tuesday, the 7th August, 2012 around 5.00 P.M. and the same as well as the merit list


(candidates securing a minimum of 55% and above marks and upto the maximum of 50th Rank
and in accordance with the decision of the Examination Committee) on all India basis will be
available on the following website:

http://www.caresults.nic.in

Arrangements have also been made for the students desirous of having results on their email
addresses to pre-register their requests at the above website, i.e.,
http://www.caresults.nic.in from 3rd August, 2012. All those registering their requests will be
provided their results through e-mail on the e-mail addresses registered as above immediately
after the declaration of the result.
Further facilities have been made for students of Professional Competence and Integrated
Professional Competence Examinations held in May, 2012 desirous of knowing their results with
marks on SMS. The service will be available through India Times.
For getting results through message students should type:
(i) for Professional Competence Examination result the following
CAPCE(Space)XXXXXX (where XXXXXX is the six digit PCE examination roll number of the
candidate)
e.g. CAPCE 000197
(ii) for Integrated Professional Competence Examination result the following
CAIPCE(Space)XXXXXX (where XXXXXX is the six digit IPCE examination roll number of the
candidate)
e.g. CAIPCE 002971
and send the message to
58888 - for all mobile services - India Times

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

Extension Of Due Date For Filing ROI From 31.07.2012 To 31.08.2012

F.No.225/163/2012/ITA.I1
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, the 31st July 2012.

Order under Section 119 of the Income Tax Act. 1961

On consideration of the reports of disturbance of general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and HUF has been made mandatory, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the ‘due date’ of filing of returns of income for the Assessment Year 2012-13 to 31st August 2012 in respect of assessees who are liable to file such returns by 31st July 2012 as per provisions of section 139 of Income Tax Act, 1961.

(Ajay Goyal)
Director (ITA.II)

Copy to:-
1. PSto F.M./ OSDto FM/ PS to MOS(R)/ OSDto MOS(R).
2. PS to Secretary (Revenue).
3. Chairman (DT), All Members, Central Board of Direct Taxes.
4. All CCITs(CCA)
5. All Joint Secretaries / Directors / Deputy Secretaries / Under Secretaries of
Central Board of Direct Taxes.
6. DIT(Systems), New Delhi, for appropriate publicity by putting it on
departmental website.
7. The C& AGof India (30 copies).
8. The IS & Legal Advisor, Min. of Law & Justice, New Delhi.
9. The DG,NADT,Nagpur.
10. The Institute of Chartered Accountants of India, IP Estate, New Delhi-
110003.
11. All Chambers of Commerce
12. CIT(OSD),Official Spokesperson of CBDT.
13. All Cs.lT,CBDT ~\-i\~,\n..
(Ajay Goyal)
Director (ITA.II)

SEZ Exemption from Service Tax only if consumed in SEZ

Notification No. 4/2004-ST being a conditional exemption notification issued under Section 93 of the Finance Act, 1994, cannot be interpreted on the basis of the provisions of SEZ Act, 2005 or the Rules made thereunder and the conditions specified therein have to be fully satisfied for availing the benefit under the said notification. Further, as observed earlier, the notification came into force much before the Special Economics Zone Act or the Rules made there under came into force. If the intention of the legislature was to align the exemption with section 26 of the SEZ Act or Rule 31 of the SEZ Rules, then notification No. 4/2004-ST would have been amended to reflect the same. No such amendment has been carried out in the said notification. In these circumstances, we are of the view that if the services are not consumed within the Special Economic zone, then the benefit of notification No. 4/2004-ST will not be available.

CESTAT, MUMBAI BENCH

DHL Lemuir Logistics (P.) Ltd.

v.

Commissioner of Central Excise, Mumbai

ORDER NO. S/644/2012/CSTAB/C-I

APPLICATION NO. ST/S/52 of 2012

APPEAL NO. ST/11 of 2012

MAY 16, 2012

ORDER

P. R. Chandrasekharan, Technical Member – This appeal and stay application are directed against order-in-original No. 56/BR-56/ST/Th-I/2011 dated 30/09/2011 passed by the Commissioner of Central Excise, Thane-I. The stay application is being taken up for consideration.

2. The appellant, M/s. DHL Lemuir Logistics Pvt. Ltd., Chennai, is engaged in rendering of services of Custom House Agent, Clearing and Forwarding Agent, Storage and Warehousing, Business Auxillary Service, Transport of goods by road and Business Support Service, etc. During the course of audit of the records of the company from 06/08/2007 to 08/08/2007 it was noticed that the assessee was availing wrongly exemption of service tax under Notification No. 4/2004-ST dated 31/03/2004 for the CHA services rendered outside the unit situated at Special Economic Zone, Chennai. It is further noticed that the assessee had made late payment of service tax for the month of October & November 2006 and January & March 2007 but did not pay the interest thereon. It was further found that the assessee has been rendering CHA service Air and Sea freight Agency service (business auxillary service) pertaining to the import of cargo to M/s. Nokia India Pvt Ltd., a unit situated at in the Special Economic Zone in Sriperumpudur, Chennai and the assessee had not paid service tax on the above charges claiming the benefit under Notification No. 4/2004-ST dated 31/03/2004. It was further noticed that the assessee had rendered such services during the period from 01/12/2005 to 31/07/2007 for a consideration of Rs. 17.43 crores approximately and the service tax payable on the same works out to Rs. 2,07,42,984/-. Accordingly, a show-cause notice dated 23/04/2008 was issued to the assessee demanding service tax of Rs. 2,07,44,984/- ad Rs. 2,56,896/- in respect of the services rendered to the airlines for which they received a consideration along with interest thereon at appropriate rates. The notice also proposed penalties under Section 76 & 78 of the Finance Act, 1994. The case was adjudicated and the above demands were confirmed along with interest thereon. A penalty was also imposed on the assessee for an equivalent amount under Section 78 of the Finance Act for suppression and wilfull mis-statements of facts with an intent to evade tax apart from penalty under Section 76 for non-payment of service tax. Hence, the appellant is before us.

3. Sri. Harsh Shah, Senior Manager of the appellant firm submits that during the impugned period, the services provided to a SEZ developer or to a unit in the SEZ by any service provider was exempt under Notification No. 4/2004-ST dated 31/03/2004 and, therefore, they are eligible for the said exemption. He further referred to Section 26 of the Special Economic Zone Act, 2005 and rule 31 of the SEZ Ruled, 2006, wherein it is stated that every developer and the entrepreneur shall be entitled to exemption from service tax under Chapter V of the Finance Act, 1994 on taxable services provided to a developer or a unit to carry on the authorized operations in a Special Economic Zone. Accordingly, he argued that Notification No. 4/2004-ST has to be read along with Section 26 of the SEZ Act, 2005 and the rules made thereunder and therefore, the appellant is rightly entitled for the service tax exemption. He also relied on the judgments of the Tribunal in the case of Norasia Container Lines v. CCE [2012] 21 taxmann.com 370 (New Delhi – CESTAT) and Maersk India Ltd. v. CST [2012] 21 taxmann.com 279 (Chennai – CESTAT) and the judgement of the High Court of Delhi in the case of CIT v. Jindal Stainless Ltd., [2011] 337 ITR 495/[2012] 20 taxmann.com 531. In the light of these submissions, it is contended that the appellant is not liable to pay any service tax and the demand of service tax is not sustainable in law. Consequently the penal provisions also do not apply. Accordingly he prays for complete waiver of pre-deposit of the dues adjudged.

4. The Ld, AR appearing for the revenue on the other hand submits that exemption under Notification no. 4/2004-ST is a conditional exemption and is available only in respect of the services provided by a service provider for consumption of services within such Special Economic Zone. In the instant case the services of CHA, C&F agent, Business auxillary services, etc. have not been consumed within the Special Economic Zone and, therefore, the benefit of the said exemption will not apply. The Ld. AR also relies on the judgement of the Tribunal in the case of Sobha Developers Ltd. v. CCE [2011] 33 STT 13/13 taxmann.com 84 (Bang. – CESTAT) (Mag.) wherein while deciding the eligibility of cenvat credit under the CENVAT Credit Rules, it was held that the provisions of SEZ Act has no relevance. On the same analogy in the instant case also the appellant will not be eligible for the benefit under Notification No. 4/2004-ST and prayus for putting the appellant to terms.

5. We have carefully considered the rival submissions.

5.1 Notification No. 4/2004-ST, effective from 31-3-2004, issued under section 93 of the Finance Act, 1994, exempts taxable services provided to developer of a Special Economic Zone or a unit in the Special Economic Zone by any service provider for consumption of service within such Special Economic Zone. The argument of the appellant that the notification has to b e read along with Special Economic Zone Act, 2005 and the Special Economic Zones Rules, 2006 is devoid of merits for the reason that the latter enactments came much later, more than one year after the issue of notification No. 4/2004-ST dated 31/03/2004.

5.2 Any exemption notification has to be interpreted based on the language used therein. The Supreme Court in the case of Hemraj Gordhandas v. H.H. Dave, Asst. Collector of Central Excise & Customs [1978 (2) ELT J 350 (SC)] = (2002-TIOL-351-SC-CX) laid down the principle as follows:-

“It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority”.

The principle relating to interpretation of notification was again considered and enunciated by the hon’ble apex Court in the case of Mangalore Chemicals & Fertilizers Ltd., v. Dy. Commissioner of Commercial Taxes [1991] (55) ELT 437 (SC) wherein the apex Court held as follows:-

“It appears to us the true rule of construction of a provision as to exemption is the one sated by this Court in Union of India v. Wood Papers Ltd., (1991 JT (1) 151 at 155)”…..Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction…”

Again in the case of Bombay Chemical (P.) Ltd. v. Collector of Central Excise [1995] (77) ELT 3 (SC), the hon’ble apex Court inter-alia held as follows:

“One of settled principled of construction of an exemption notification is that it should be construed strictly, but once a goods is found to satisfy the test by which it falls in the exemption notification then it cannot be excluded from it by construing such notification narrowly”.

In the Sarabhai M. Chemicals v. CCE 2005 (179) ELT 3 (SC) a three judge bench of the hon’ble apex Court held as follows:-

“It is well settled that an exemption notification has to be strictly interpreted. The conditions for taking the benefit of the exemption have to be strictly interpreted.”

The same was re-iterated by the hon’ble apex Court in the case of Gujarat State Fertilizers CO. v. Collector of Central Excise 1997 (91) ELT 3 wherein it was held that-

“an exemption notification has to be interpreted by taking into consideration , the language of the notification which has to be given its due effect. Supposed object and purpose of the exemption has to be culled out from the said language.”

5.3 If one applies the ratio of these judgments to the facts of the present case, then the exemption is available only in respect of services provided for consumption within the Special Economic Zone. In other words, the exemption will not be available if the services are consumed elsewhere than in the Special Economic Zone.

5.4 The canon of interpretation ” Expressio unius est exclusio alterius” applies in this case. This canon implies that “the express mention of one thing excludes all others”. The explicit mention in the notification is “services provided for consumption within such Special Economic Zone”. This means services consumed outside such zone will not be entitled for the benefit of exemption.

5.5 Reliance placed by the appellant in the Norasia Container Liners case, Maersk India Ltd. case or Jindal Stainless Ltd, Case does not help when one applies the principles of statutory interpretation laid down by the hon’ble apex court. The law laid down by the hon’ble apex court is binding on all. Further, this Tribunal in the case of Shobha Developers Ltd., in a similar situation held that the provisions of Special Economic Zone Act, 2005 or the Rules made thereunder cannot be said to have any application while considering the eligibility to Cenvat Credit under the Cenvat Credit Rules, 2004.

5.6 The hon’ble High Court of Gujarat in the case of Essar Steel Ltd. v. Union of India 2008 (232) ELT 617 considered a question as to whether export duty under the Customs Act could be levied on supplies made from the DTA to a unit in the SEZ, taking into account the provisions of Section 2 (m) (ii) of the Special Economic Zone Act, 2005, read with section 51 ibid which defines the words export, import and domestic tariff area. The hon’ble High Court held that the provisions of Special Economic Zone Act, 2005 cannot be automatically be extended to other Acts such as Customs Act and prima facie in the absence of specific provision under Special economic Zone Act to levy Customs duty, no liability to pay Customs duty on goods supplies from DTA to Special Economic Zone would rise. The said decision of the hon’ble Gujarat High Court was upheld by the hon’ble apex Court reported in 2010 (255) ELT A115.

5.7 Applying the ratio of these judgments to the facts of the present case, it can be inferred that notification No. 4/2004-ST being a conditional exemption notification issued under Section 93 of the Finance Act, 1994, cannot be interpreted on the basis of the provisions of SEZ Act, 2005 or the Rules made thereunder and the conditions specified therein have to be fully satisfied for availing the benefit under the said notification.

5.8 Further, as observed earlier, the notification came into force much before the Special Economics Zone Act or the Rules made there under came into force. If the intention of the legislature was to align the exemption with section 26 of the SEZ Act or Rule 31 of the SEZ Rules, then notification No. 4/2004-ST would have been amended to reflect the same. No such amendment has been carried out in the said notification. In these circumstances, we are of the view that if the services are not consumed within the Special Economic zone, then the benefit of notification No. 4/2004-ST will not be available.

5.9 The appellant has not pleaded any financial hardship in their stay application. The hon’ble High Court of Andhra Pradesh in SQL Star International Ltd. v. Commissioner of Customs 2012 (276) ELT 465 (A.P.) held that stay cannot be granted merely on prima facie case being shown. Balance of convenience and prejudice to interest of public revenue needs to be taken into consideration while granting stay. In the instant case not only that the appellant has not made out a prima facie case but also the balance of convenience and interest of revenue demand that the appellant be put to terms.

6. In the light of the foregoing, we are of the view that the appellant has not made out any case for full waiver of the pre-deposit of dues adjudged. Accordingly, we direct the appellant to make a pre-deposit of Rs. 1.00 Crore within a period of eight weeks and report compliance on 20.8.2012. Subject to such compliance, pre-deposit of balance of dues adjudged shall stand waived and recovery thereof stayed during the pendency of the appeal.