TIOL-DDT 1026 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1026</font><br> 06.01.2009<br> Tuesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Transport Strike – Service Tax exemption for inputs announced</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday at 7.18 pm, the Ministry of Shipping, Road Transport & Highways in a press release stated,</font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">A final decision relating to exempting all subcontract services under GTA from payment of service tax is also under consideration at the highest level of the Government and a decision in this regard is expected at any time.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At 7.46 pm, the Finance Ministry issued a press release stating that Notification No. 1/2009 – ST had been issued.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The government has reacted to the transporters' strike. The first sop is exemption from service tax to input services used by the Goods Transport Agency. “Supply of goods carriage” is already exempted by Notification No. 29/2008- Service Tax, dated the 29th June, 2008. Now the following services used by a GTA will be exempted from Service Tax.</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. (j) clearing and forwarding agent,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. (k) manpower recruitment or supply agency,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. (zr) cargo handling agency,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. (zza) storage or warehouse keeper,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. (zzb) business auxiliary service,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. (zzzf) packaging activity,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. (zzzq) support services of business or commerce and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. (zzzzj) supply of tangible goods</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has realised that as the GTA operators are not allowed CENVAT Credit, they don't get set off of the Service Tax paid on these input services, which amounts to double taxation. But as usual there is a rider – the service provider has to mention the name and address of the ‘goods transport agency' and also the name and date of the consignment note. Is it possible? Suppose a truck is hired to a GTA, how will the owner know the consignment note No. of the GTA?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This GTA service tax has brought in more litigation and strikes than any real revenue. For more than a decade we have been struggling with this tax and every time the government has to bow its mighty head before the transporters. The Finance Ministry which bluntly refuses to consider the plea of the CISF is ready to bend for the transporters. When the Chief Minister of Madhya Pradesh asked for an exemption from Service Tax for repair of roads belonging to the State Government, he was told that such end use based exemptions are difficult to monitor and cannot be given.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now how is the Department going to monitor whether these exempted services are indeed provided to GTA?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why don't we abolish this Service Tax on GTA and be done with it?</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2009/stnot09_001.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No 1/2009 – Service Tax Dated: January 05, 2009</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Reduced DEPB Rates Reversed</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendments made in DEPB Rates vide Public Notice No. 102 dated 05.11.2008 in respect of products where DEPB rates were reduced, are withdrawn w.e.f . 5.11.2008 itself, thereby restoring the DEPB Rates notified prior to 5.11.2008, for those items.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn124.htm" target="_blank">DGFT Public Notice No. 124 (RE-2008)/2004-2009, Dated: January 3, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEPB extended till Year end</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 1.1 of the Handbook of Procedures (Vol. I), is amended to read as</font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In pursuance of the provisions of paragraph 2.4 of FTP, the Director General of Foreign Trade (DGFT) hereby notifies the compilation known as HBP v1, HBP v2 and Schedule of DEPB rates. These compilations, as amended from time to time, shall remain in force until further amendments except DEPB Scheme which shall continue to be operative till <strong>31st December, 2009.”</strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that DEPB which was to expire in May 2009, is extended till December 2009.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8280" target="_blank">DDT 1009, dated 11.12.2008</a></strong>, while reporting the extension of FTP and HOP, we asked “But here is a problem – in May 2009, there may not be a proper government and what will happen from 1st June 2009 – No DEPB ?” Now with the second stimulus package, the DEPB scheme was extended up to 31st December, 2009, hence this amendment to HOP.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn125.htm" target="_blank">DGFT Public Notice No. 125 (RE-2008)/2004-2009, Dated: January 3, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Terminal Excise Duty Refund - Rs. 600 Crores released</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you have any refund claims pending with the DGFT, this is the time to rush and get your claims settled.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has released a further sum of Rs. 600 crore to regional authorities of DGFT for payment of pending claims of Terminal Excise Duty and Duty Drawback under deemed export scheme. The Government has also released Rs. 200 crore to the Development Commissioners of Special Economic Zones for payment towards pending claims of Central Sales Tax (CST) in respect of supplies made to 100% Export Oriented Units (EOUs).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a general opinion that it is very difficult to get a refund from the Customs and Central Excise Department but those having a little refund experience with DGFT will find that getting a refund of Central Excise Duty is as easy as withdrawing from your bank account.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway, they have money now – claim it NOW.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">– Tomorrow's cases</font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cost of special packing viz. catch cover not to be included in valuing Physician Samples as the value is arrived at on pro-rata price of regular pack – CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> cost of special packing in which the physician's samples are packed gets recovered from the customer in the cost of regular pack which would include all the expenses incurred by the manufacturer for selling the product in the market.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>STPI unit - export of software - if exports proceeds are realised after a time lag, assessee can file rectification application u/s 155(11A) to avail Sec 10A benefits: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EXPORT</strong> is a business fraught with unpredictability and huge risks. Export proceeds getting stuck for long even after exports accomplished is one of the most common perils of this business. Now the issue is that can Revenue allow exports benefits against such unrealised exports proceeds within the time limit? What if the exports proceeds of previous years are realised after a time lag? While deciding the case of a software exporting STPI unit the ITAT has held that if the exports proceeds are realised, the assessee can file rectification application u/s 155 (11A) within a period of four years from the end of the previous year and the AO is bound to consider the exports proceeds realised as a part of exports turnover for allowing Sec 10A benefits.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>100% EOU - Permission for advance DTA sales against fulfilment of future export obligation - When Development Commissioner determines that export obligation as not fulfilled, exemption benefit for DTA sales not available – Demand of duty and imposition of fine and penalty confirmed – CESTAT by majority</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant, a 100% EOU in Kandla Free Trade Zone, had obtained the Development Commissioner's permission for clearance of 25% of their production to the Domestic Tariff Area (DTA) as advance DTA sales against an undertaking to fulfil export obligation prescribed for the first year of production and also achieve the prescribed value addition. Subsequently, the appellants cleared goods valued at Rs.1 ,15,86,475 /- to DTA availing the benefit of Notification No.2/95-CE dtd. 4/1/1995. Subsequently, the Development Commissioner held that the appellant had failed to fulfil the export obligation and imposed a penalty of Rs. 5 lakhs.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>