TIOL-DDT 1042 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1042</font><br>
30.01.2009<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="4">A</font><font color="#663399"> CERTIFICATE</font> - Central Board of Film Certification issued Notice for Service Tax – Board puts off Fire</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ingenuity knows no bounds especially with the wild imagination in the fertile minds of the Taxmen.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Secretary, Ministry of Information and Broadcasting has brought to the notice of the CBEC that a Show Cause Notice has been issued demanding Service Tax from Central Board of Film Certification under the category of ‘Technical Testing and Analysis Service' and/or ‘Technical Inspection and Certification Service' on account of services provided by Central Board of Film Certification by way of certification of films.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fortunately, the CBEC is, of late, in an anti-litigation mode. Several clarifications given recently are perfectly logical, legal and which would avoid unnecessary litigation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coming back to the CBFC , the CBEC has noted:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. This certification by Central Board of Film is done to ensure that film is suitable for exhibition and not against interest of sovereignty and integrity of India, the security of the State, friendly relation with foreign States, public order, decency or morality or involves defamation or contempt of court etc.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. It is a mandatory requirement under the provisions of Cinematographic Act, 1952.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Act provides that any person, who exhibits a film other than a film which has been certified by the Board as suitable for unrestricted public exhibition or for public exhibition restricted to adults, he shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to one lakh rupees, or with both, and in the case of a continuing offence with a further fine which may extend to twenty thousand rupees for each day during which the offence continues.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore Board clarifies that certification by Central Board of Film Certification is a statutory requirement. CBEC vide Circular No.96 /7/2007-ST dated 23.08.2007 has clarified that any activity assigned to and performed by a sovereign/public authority under the provisions of any law, do not constitute taxable services. Any amount/fee collected in such cases is not to be treated as consideration for the purpose of levy of service tax.</font></p>
<p align="justify"><strong><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">In the instant case, CBFC issues certificates as required under the provisions of law i.e. Cinematographic Act, 1952, and thus does not constitute taxable service.</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, should such important issues be left to the whims and fancies of the field formations? Here, since it is CBFC , they could get the clarification immediately. What about the common assessee? Obviously he has to go through all the hurdles of reply, appeal and pay the litigation costs. Has the Board issued any directions, especially to the so called intelligence agencies to consult and take concurrence of the Board before taking such steps? Recently a regional office of an intelligence agency felt that screening of movies in theatres is rendering renting of immovable property service and started issuing notices. When such important issues which have all India ramifications are involved, shouldn't there be uniformity in approach across the length and breadth of the Country?</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_demand.htm" target="_blank">DGST F.No.V / D GS T /30- Misc.185 /2008/409 - Dated: 16th January, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>On line transmission of Shipping Bills and Licences/Authorizations – Board's Renewed Instructions – wait some more</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board had issued a Circular No. 11/2007-Customs dated 13.02.2007 whereby a procedure for online transmission of DEPB shipping bills from Customs to DGFT and DEPB scrips from DGFT to Customs was put in place.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually nothing was put in place. It was only instructed that the jurisdictional Commissioners of Customs should implement the instructions from a <strong>specified date </strong> in consultation with the Directorate General of Systems.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apparently even after two years, either the Commissioners did not bother to consult the DG, Systems or the System was not in place.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board informs that,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate General of Systems has since designed necessary software for online transmission of shipping bills and Advance Licences/Authorizations under the Duty Exemption Scheme (DES) and the EPCG scheme. These Authorizations and shipping bills shall now be transmitted from DGFT to Customs and vice versa online. Detailed instructions on the subject shall be issued by the Directorate General of Systems separately.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board again directs,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Jurisdictional Commissioner of Customs (in charge of EDI enabled ports) may implement the procedures relating to online transmission of shipping bills/Authorizations under the DES and EPCG scheme from a specified date in consultation with the Directorate General of Systems. As regards manual shipping bills at non-EDI station, the existing procedure shall continue.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A concerned mother woke up her sleeping child to inform him that there would be no dinner and that he would have to sleep without dinner.</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=25&filename=notification/custom/2009/cuscir09_003.htm" target="_blank">CBEC Circular No. 3/2009 - Cus - Dated: 20th January, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EOUs,
EHTPs, STPs, BTPs – Extension of Approval after completion of Period</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 6.3.9 of the Handbook Of Procedure of the Foreign Trade policy relating to EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE, TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS, (STPs) SCHEME AND BIO-TECHNOLOGY PARKS (BTPs),</font></p>
<p align="justify"><strong><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">On completion of approval period as provided for in paragraph 6.6 of FTP, it shall be open to unit to continue under scheme or opt out of scheme. If no intimation in this regard is received from unit within a period of six months of expiry of approval period, DC will take action, suo moto, to cancel approval under EOU scheme and take further action in this regard. Where unit opts to continue, DC concerned will extend approval period.</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is amended to read as,</font></p>
<p align="justify"><strong><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">“On completion of approval period as provided for in paragraph 6.6 of FTP, it shall be open to unit to continue under scheme or opt out of scheme. Where unit opts to continue, DC concerned will extend approval period. If no intimation in this regard is received from unit within a period of six months of expiry of approval period, DC will take action, suo motto, to cancel approval under EOU scheme and take further action in this regard. Where units give their option to continue after expiry of six months as stipulated above, DC will grant extension after obtaining approval of BOA.”</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The change is that now, if the option to continue is given after the period is over, the extension can be given only after the approval of the BOA.</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/dgft08pn138.htm" target="_blank">DGFT Public Notice No. 138/(RE-2008) 2004-09, Dated: January 23, 2009</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest Rates for Delayed Payment/Refund of duty</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Netizen asked us for the Interest Rates for delayed payment of duties.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest Rates for Customs and Excise duties </strong></font></p>
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<tr>
<td rowspan="2" valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Period from</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></td>
<td colspan="2"><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest rates</strong></font></div></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Delayed Refunds </strong></font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Delayed payment of duty </strong></font></td>
</tr>
<tr>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">29.05.1995 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15% </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20% </font></div></td>
</tr>
<tr>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">01.03.2000 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15% </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24%</font></div></td>
</tr>
<tr>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.05.2001 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9%</font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24% </font></div></td>
</tr>
<tr>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.05.2002 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8% </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15% </font></div></td>
</tr>
<tr>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12.09.2003 </font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6%</font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13%</font></div></td>
</tr>
</table>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Today's case </strong></font></p>
<p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax – Reimbursement of part salary is not Revenue Receipt – No TDS – ARA</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In an important decision, the ARA yesterday ruled - <em>Indo-Korea DTAA - agreement to promote </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>insurance business of each other - non-resident provides technical staffer for the purpose - applicant partly pays for salary - though provision of services of technical personnel is covered u/s 9(1)( vii) and also DTAA but no tax is deductible in India as reimburement of part salary cannot be treated as revenue receipt. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Applicant, an Indian company, soght advance ruling broadly on the question whether it is obliged to deduct tax at source for the payments made to Hyundai Marine & Fire Insurance Co. Ltd. Korea (HMFICL) from time to time in connection with the ‘Secondment Agreement' entered into between them. Under that agreement, the services of Mr Shin Bong In, who was an employee of HMFICL at Korea were kept at the disposal of the applicant for a period of two years in order to assist the applicant in matters relating to Korean insurance business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this [yesterday's] Ruling today. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8518" target="_blank">Breaking News</a></strong></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">– Monday'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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Amendment to Section 11A of Central Excise Act in 2001 causes havoc - Tribunal rules no interest is payable for period prior to 11.05.2001 for duty paid under Section 11 A(2B) </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION </strong> 11 AA and Section 11 AB of the Central Excise Act, 1944 deal with payment of interest on duties short paid/not paid or not levied/short levied or erroneously refunded. Prior to 11.5.2001, Section 11 AA dealt with payment of interest in non-suppression cases and it stipulated that the interest liability under this Section starts after the expiry of three months from the adjudication order. Section 11 AB stipulated that the in cases of suppression of facts etc the interest liability starts from the first date of the month succeeding the month in which the duty ought to have been paid. </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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Non-resident Co deals in shares through four cells - Four returns filed within time-limit - revised return filed after consolidating figures - Revenue goes by revised return - declares earlier returns invalid and disallows carry forward of losses - Filing four returns is technical mistake curable u/s 292B - substance should prevail over procedure: ITAT by majority</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MAKING </strong>mistakes is an integral part of life. There are no human activities which are devoid of their own share of mistakes. There is a French saying which states - ''Only he who does nothing makes a mistake''. The famous quote of Robert Fripp on this subject is that ''there are no mistakes, save one: the failure to learn from a mistake''. And 'mistake' is the central theme of the latest decision of the Tribunal decided by the Third Member. <strong> The issue is that can a mistake either procedural or technical in nature result in denial of a substantive benefit a taxpayer is otherwise entitled to? When does Sec 292B of the I-T Act come into play in such cases? If a mistake is made in filing one's income tax return while complying with Sec 139(1), is there any machinery provision that may come to the taxpayer's rescue?</strong></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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>State transport undertaking engaged in conduct of tours for sightseeing and religious purpose – Prima facie, engaged in activity of tour operator service – Pre-deposit of Rs 50 lakhs ordered: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> Appellant, Andhra Pradesh State Transport Corporation is a State Transport Undertaking carrying on the activity of transport operations. The Revenue proceeded against the appellant to bring their activity under the category of “Tour Operator”. They were issued a demand notice for more than Rs. 10 Crores but finally an amount of Rs.3,97,24,300 /- was confirmed by the Commissioner besides imposition of penalties of Rs.100 /- per day under Section 76, Rs.2000 /- under Section 77 and Rs.4,01,10,786 /- under Section 78 of the Finance Act, 1994.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See
our columns on Monday for the judgements</strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend.</font></p>
<font color="#FF6600" 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>
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