TIOL-DDT 1039 · 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 1039</font><br> 27.01.2009<br> Tuesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Definitive Anti Dumping Duty Imposed on DVDs</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Provisional Anti Dumping Duty imposed on imported DVDs originating in, or exported from the People's Republic of China, Hong Kong and Chinese Taipei, is now confirmed. The anti dumping duty varies from 65.63 to 68.111 Dollars per 1000 pieces. The Provisional anti dumping duty was around Rs. 3 per piece. The new rates are slightly higher, maybe due to exchange fluctuations.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While reporting the Provisional Anti Dumping Duty in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7623" target="_blank">TIOL-DDT 916 25.07.2008</a> , </strong>it was mentioned,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today you can get a good 4.7 GB DVD for as less as Rs. 15/- and this can perhaps carry a whole library. Instead of wasting paper and depleting our forests, a lot of data can be comfortably transferred in a DVD, but the Government is prepared to waste paper rather than allow inexpensive DVDs. They are told that DVDs are dumped into the country and have imposed an anti dumping duty of around Rs. 3/- on each DVD imported and this would certainly ensure that DVDs become more expensive.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If somebody wants to dump DVDs in India at prices lower than their value, why can't we take advantage of the situation and enjoy it? Instead of supplying tons of paper to Government offices, it will be far cheaper to supply DVDs. In Central Excise, every Superintendent, Assistant Commissioner and Commissioner can carry his entire office in one DVD. Perhaps such dumping should be encouraged, even if the domestic industry suffers. Actually the Domestic Industry can also buy these dumped DVDs and sell them in India.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway Government has decided to impose anti dumping duty on digital versatile discs-recordable generally known as DVD-R and DVD- RW originating in, or exported from China PR, Hong Kong, and Chinese Taipei at rates ranging from Rs. 2.96 to Rs. 3.06 per piece. The Government has clarified that the product under consideration is digital versatile disc recordable of all kinds. Such product includes DVD -R, DVD +R, DVD- RW and DVD+ RW.</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=23&filename=notification/custom/2009/ctariff09_008.htm" target="_blank">Notification NO. 8/2009 – Cus Dated: 22nd January, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bad SCNs and Adjudication Orders - CBEC Chairman wants Field to take note of SC Order</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman of the CBEC in a letter to all Chief Commissioners and DGs , has invited their attention to the Supreme Court Judgement in <em>Commissioner of Central Excise, Bangalore-III Vs. M/s. Shanmugananda Soapnut Works </em> - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2008/2008-TIOL-181-SC-CX.htm" target="_blank">2008-TIOL-181-SC-CX</a>.</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Chairman extracted certain observations of the Supreme Court in his letter:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>(i) “Repeatedly this Court has observed that in cases in which excisability is in issue, the Department should insist on the examination of the product. Despite our saying so, repeatedly, the Department is not insisting on examining the process. This is one more such case.” </em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>(ii) “………the show cause notice has not even alleged that the assessee is engaged in the manufacture of Shikakai powder by crushing shigekai pods and ‘ Reeta ' being mixed and, consequently, the entire adjudication stands derailed.” </em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>(iii) “Lastly, in the present case, the adjudication authority has not insisted on examining the process undertaken by the assessee in conversion of the pods into powder.” </em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>(iv) “Therefore, for want of allegations in the show cause notice and for want of specific findings with regard to use of Reeta in the powder, we do not wish to interfere on the facts of the present case.”</em></strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman further observed that the Apex Court has noted in the above judgement that “even in other cases despite its repeated directions the adjudication authority did not examine the process of manufacture. In the instant case, it has also pointed out that the Show Cause Notice does not mention the process of manufacture and therefore the entire adjudication stands derailed.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman wanted the judgement of the Supreme Court to be brought to the notice of all Commissioners including Commissioners (Appeals), ADGs, and other concerned officers with a direction that observations made by the Apex Court are duly taken note of and complied with.</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=31&filename=notification/excise/2009/chairman.htm" target="_blank">CBEC Chairman's letter Dated: 25th November, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT Credit Admissibility on Invoices Raised for Removal of Inputs ‘as such' – Board to Decide</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been brought to the notice of the Board that some manufacturers, especially of iron & steel products, purchase inputs, take CENVAT credit and then sell the inputs after reversing the credit. The sale of such inputs is made to ‘dealers', who once again sells it and passes on the credit.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some field formations have taken the view that a ‘dealer' cannot receive goods from manufacturer who clears the ‘inputs as such' by reversing the credit. In this process, inputs are rotated number of times by passing the restriction up to two stages for the dealer.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To illustrate, TISCO sells goods to a dealer, who sells it to a second stage dealer, who sells it to a manufacturer, who in turn clears the ‘inputs as such' and sells it to another dealer and so on. This practice, in view of few field formations is against the provisions of law.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 2(ij) of CCR, 2004, a first stage dealer should purchase goods directly from manufacturer and it means the goods manufactured by a manufacturer. The inputs cleared as such under Rule 3(5) of CCR, 2004 are not eligible for purchase by a dealer. Therefore, in their view, a dealer cannot purchase ‘inputs cleared as such' under Rule 3(5) of CCR, 2004.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board realises that this issue has wide ramifications and so wants the Chief Commissioners to give their considered views.</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=31&filename=notification/excise/2009/file_267.htm" target="_blank">CBEC F.No.267/61/2008- CX.8 Dated: 5.12.2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Commission Paid to Directors of Companies – No Service Tax – Board Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some over-enterprising Service Tax officers have sought Service Tax from Company Directors who get a Commission from their Companies. In fact an Assistant Commissioner in Pune had in adjudication, held that the Directors have deliberately not discharged service tax liability which clearly indicates their intention to evade service tax. And he imposed all kinds of penalties that could be thought of.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thankfully the Board has now come out with a clarification.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board is of the view that some companies make payment to their officials, such as Managing Directors/Directors, terming the same as ‘Commissions'. This payment may be over and above the salary and other remunerations. Such commissions may be either performance linked or linked to the financial results of the company, but the fact is that it is nothing but remuneration paid to an employee by the employer. The relationship between an employee and the employer is distinct from the relationship between a service receiver and service provider. Thus action taken by an employee for the benefit of the employer cannot be in the nature of service. Therefore, so long as the activities performed are duties within the framework of the terms of employment, the amount paid by an employer to an employee, even if it is termed as commission, would not be treated as ‘commission' mentioned under the definition of business auxiliary service and <strong>service tax would not be leviable on such amount.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants pending issues to be resolved in line with the above.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Wonderful! Board deserves all praise for this apt and clear clarification, but BUT this is again contained in a private letter to a Commissioner. And Board has marked a copy to the DGST to circulate this clarification to the field formations.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Pray, why can't this be made public? Why can't the Board issue a Public Circular, so that such vital clarifications are known to the Public for whose benefit they are actually given?</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=41&filename=notification/servicetax/2009/st_commission.htm" target="_blank">CBEC Dy.No.324/Comm (Service Tax)/2008: Dated 1st December, 2008</a>.</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax Notice From Income Tax Department?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Times of India reported yesterday, <em><font color="#FF6633">Infosys Technologies has received a show cause notice from the <strong>income tax </strong> department for alleged evasion of <strong>service tax </strong></font></em><font color="#FF6633">amounting to Rs 33 crore.</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how tax matters are reported by most respectable newspapers.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FED may get more powers – to protect the stability of the System</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The US Federal Reserve is to get authority to examine the workings of a wide range of companies in an attempt to address one of the key failures that led to the financial crisis, according to a report in the Washington Post yesterday. An abundance of federal agencies regulate the financial industry. But no agency is responsible for understanding or containing risks affecting the financial system as a whole. In fact, none even has a complete picture of the financial markets.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Don't we need some such thing in India – SEBI is yet to get to Ramalinga Raju.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally Satyam's Balance Sheet for 2007-08 shows an Income of Rs. 61.04 Crores from Tax Deducted at Source. (Schedules annexed to and forming part of the Profit & Loss Account -12. Other Income). Did the Income Tax Department get this?</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>Supply of pipes to Water Supply Project - exemption not restricted to the first storage point; available to subsequent points: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>respondents were awarded with contract for the manufacture and supply of pipes for Krishna Drinking Water Supply Project-II by M/s. Hyderabad Metro Water Supply and Sewerage Board. They claimed exemption from payment of appropriate Central Excise Duty under Notification 6/2002-CE dated 01.03.2002 as amended by Notification No.47/2002-CE dated 06.09.2002. The assessments were done on provisional basis. The point at issue is the entitlement of the said pipes to the benefit of the exemption notification. Based on Board's instruction dated 28.10.2005, the Revenue restricted the exemption Notification only up to the first storage point. In other words, from the water treatment plant the exemption was available only up to the first storage point and not to the subsequent storage point. Consequently, while finalizing the assessment, the Original Authority confirmed the duty demand.</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>Income earned by filing bogus TDS certificates and collecting refunds from Revenue - IT Act treats legally earned and tainted income alike - illegality of income earned by resorting to fraudulent means has no bearing on taxability - it is taxable: Madras HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> Satyam saga unfolding new dimensions of the billion-dollar fraud every day and making people curiouser and curiouser about the end-result, here is a simple question for TIOL netizens - what is the colour of the money 'earned' by fraud? And the most common answer is likely to be - it is a tainted or illegal money. The second limb of the question is that can such illegal money if recovered be assessed in the hands of Ramalinga Raju under the Income Tax Act? If yes, can it be said that the State is becoming a party to the illegal act of Mr Raju by sharing his booty?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the court verdict is likely to be, if one goes by the ratio of the decision given in a similar case of fraud albeit tiny in size, that such a tainted income is taxable.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manpower supplied to software units - whether taxable under Manpower recruitment and Supply service or exempted as consulting engineer service? - CESTAT grants stay</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS </strong>appeal raises an interesting issue. When manpower is supplied to a client, whether they are providing the Man power supply service or ‘the service provided by such manpower supplied?' To put it in less confusing terms, the appellant has been supplying manpower to the reputed software firms like Infosys and TCS. The charges were collected on the basis of mandays/manmonths. The question is whether they are rendering manpower supply service or rendering technical assistance in the discipline of software engineering.</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>