TIOL-DDT 1050 · 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 1050</font><br> 11.02.2009<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import Policy – Carbon Black, Seamless Tubes/Pipes and Bumpers and parts – FREE – DGFT Clarifies</strong></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=8461" target="_blank">DDT 1034 - 19.01.2009</a>, </strong>we had reported,<font color="#FF6600"> <strong>“</strong>Government has changed the Import Policy for Carbon Black, Seamless Tubes/Pipes and Bumpers and parts to be FREE instead of RESTRICTED. However for Carbon Black with CIF value of Rs.80,000 /- PMT and above, the Import Policy will be <em>Restricted</em>.”</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now DGFT has received representations seeking a clarification on clearance of import consignments of items where restrictions have been removed vide Notification No. 81 dated 16.1.2009. The consignments in question were said to be imported during the period i.e. 21st November, 2008 and 16th January, 2009, when these items were restricted for imports.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT clarifies that “import clearance without a licence may be allowed in all cases where goods have been imported during the period of restriction, but Bill of Entry for clearance has been filed with Customs on or after 16th January, 2009.”</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=46&filename=notification/dgft/2008/dgft08cir059.htm" target="_blank">DGFT Policy Circular No. 59 (RE-2008)/2004-2009 Dated: February 10, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on Ship-broking Activity – CBEC Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interocean Shipping (India) Pvt. Ltd., had sought clarification from the Board on leviability of service tax on ship broking activity.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC observes that,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The ship broker ensures that the conditions of the contracts are adhered to.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. They also follow up the movement of goods and freight payment till the cargo reaches its destination.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Hence, the activities undertaken by ship brokers are nothing but provision of services on behalf of client for a consideration akin to that of a commission agent.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The ship broker is acting on behalf of shipping lines/ship owner and causes provisions of services, for a consideration.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The activities of ship broker are akin to a commission agent.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Ship brokers not only provide services on behalf of shipping line/ship owner and charterer but also deal with the goods i.e. cargo.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. This is clearly evident from the fact that it monitors the cargo movement till it reaches the destination.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Ship broker also ensures that freight is paid after cargo reaches the destination.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Hence the activities undertaken by ship broker are of commission agent and leviable to service tax under Business Auxiliary Service (BAS) of section 65 (105) ( zzb ) of the Finance Act, 1994.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board clarifies that the service rendered by ship broker is leviable to service tax under business auxiliary service.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And as usual with all important clarifications from the Board, this is also contained in a private letter to the Company with copies to the CCs and Commissioners and the DGST, but not for the GENERAL PUBLIC.</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/ship_broking.htm" target="_blank">CBEC's F.No.332 /41/2008- TRU Dated: December 19, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cadre Review in CBDT – HRD Directorate Sends Questionnaire</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The HRD Directorate of the CBDT has sent a questionnaire to all the CCs and DGsIT to collect up-to-date data on organisational structure and manpower resources of the Department.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate wants the report by 16 th February 2009.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Can a person arrested and tried in USA and who had undergone sentence in USA be again tried in India? Double Jeopardy?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today we bring you an important Supreme Court judgement on an interesting legal conundrum involving the laws of the United States of America, and the domestic laws as existing in India. At the heart of the controversy is the concept of double jeopardy within the meaning of Article 20(2) of the Constitution of India and Section 300(1) of the Code of Criminal Procedure.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Article 20 (2) reads as</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) No person shall be prosecuted and punished for the same offence more than once;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly, Section 300(1) of the Code also prohibits a second trial if the person has either been convicted or acquitted and reads as, "300. Person once convicted or acquitted not to be tried for same offence. - (1) A person who has once been tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under sub-section (1) of Section 221, or for which he might have been convicted under sub-section (2) thereof."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question was whether a person arrested and convicted in USA for a Drug offence can again be tried in an Indian Court under the NDPS Act?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8587">Breaking News</a></strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8587">.</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FICCI wants Income Tax rate to be reduced to 25%</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">FICCI wants Personal and corporate tax rates to be reduced to 25 percent and surcharge withdrawn, to boost up the demand and to accelerate expansion and diversification. It also wanted the interim budget to extend tax holiday to housing sector and exempt it from the service tax considering sluggish demand.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">FICCI also expected Interest rate subvention or subsidy of 2 percent available to exporters up to 31st March, 2009 to be extended up to 31st March, 2010.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">FICCI starts its Annual General Meeting tomorrow to be inaugurated by <em>de facto </em> PM Pranab Mukherjee. The top business tycoons of India are to listen to L K Advani, Sheila Dikshit, Omar Abdullah, Shivraj Singh Chouhan, Prem Chand Gupta, Minister for Corporate Affairs; M Damodaran, former Chairman, SEBI; T V Mohandas Pai, Director-Human Resources, Infosys; US Ambassador to India <strong>Mr David C Mulford </strong> and Dr Abhishek Singhvi, among others.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr Kamal Nath, Union Commerce Minister will address the Luncheon Session on 13th.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Harsh Pati Singhania , Managing Director, J K Paper will take over as the President of FICCI at the conclusion of the AGM. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Satyam Ramalinga Raju disowned by both Naidu and Reddy but Income Tax wants him for three days.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Andhra Pradesh Assembly witnessed acrimonious scenes yesterday with both the Chief Minister YSR and Leader of Opposition Chandra Babu trading charges against each other on Ramalinga Raju. While it was alleged that Ramalinga Raju financed Naidu's son's education in USA and that Naidu made Raju sit next to President Clinton, Naidu retaliated by saying that while he made Raju sit next to the US President, Reddy got him involved in so many shady deals that he is in jail now. Naidu was sure that Reddy was eminently suited to keep company with Raju where he is now and so was Reddy about Naidu. If there is one vacant slot in the Central jail near to Ramalinga Raju, both Reddy and Naidu are sure as to who should be there.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meanwhile it seems the Income Tax Department has joined the bandwagon of Central Agencies wanting to interrogate Raju.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Department is understood to have filed an application with the Additional Chief Metropolitan Magistrate in Hyderabad seeking custody of Ramalinga Raju for three days. The hearing on this case is posted for 13th February.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Preamble to O-in-A cites wrong appellate authority – Drawback claims rejected by Commissioner(A) - Appeal lies before Joint Secretary (Revision Application) and not before Tribunal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PREAMBLE </strong>to an Order in original or an Order in appeal is the <em>‘welcoming' </em> cover page of an O-in-O or O-in-A that is the most neglected portion of the order and always carries with it the risk of being responsible for appeals being filed with authorities who are not empowered to decide such cases under the relevant Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other day we happened to come across an O-in-O issued by a Customs Commissioner which was mentioning some thing about appeal that could be preferred before the <em>Special Bench </em> of the Tribunal or that preamble which referred to the Central Excise Act <em>although it was an o-in-o deciding a Service Tax case</em>. Just goes to prove that the old preamble is still in circulation.</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>Indo-Italy DTAA - non-resident claims deduction of direct expenses under DTAA - pays 10% tax u/s 44BB on net receipts after deducting 90% receipt as general expenses - assessee cannot take part benefit under DTAA and part under I-T Act - if DTAA is applied, it is to be applied in full - Invocation of Sec 263 upheld: Tribunal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NON-APPLICATION</strong> of mind is a terminology which is often used for the AO by CITs before invoking powers under Sec 263. But it is indeed rare occasion when the CIT's Sec 263 order is upheld by higher judicial fora . And the simple reason in most cases is that the CITs generally fail to fulfill the twin conditions of proving the AO's order as erroneous and prejudicial to the interest of revenue. However, in the instant case, involving a non-resident which took the benefits of DTAA as well as Sec 44BB , the case of the Revenue has been upheld. The Tribunal has held that in the name of rule of consistency if an improper method is followed in the past for claiming deduction of direct expenses under the Indo-Italy DTAA and then paying tax @ 10% of net contractual receipts after deducting 90% of receipt as general and administrative expenses, it cannot be termed as one of the valid possible views taken by the AO. If the benefits are allowed to the assessee under DTAA, then the DTAA provisions are to be applied in full. And if domestic law is to be applied, then the 10% rate is to be applied to gross receipts under Sec 44BB.</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>Commercial Coaching and Training Service - Since partners of assessee fail to substantiate private tuitions provided, fees collected for same to be included in gross amount chargeable to tax; Since assessee also fails to prove sale of prospectus and forms, this income is also includible in gross sum liable to service tax: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> an interesting case involving the Commercial Coaching and Training Service, the Tribunal has held that since the assessees, partners in a leading coaching institute, failed to provide evidence related to the private tuition provided by them to students, the value of service needs to be added to the gross amount chargeable to service tax, collected by the professional coaching institutes. Similarly, the sum attributed to the sale of forms and prospectus is also includible to the taxable value of services provided by the Institute as the assessee failed to corroborate it to actual sale of prospectus.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards the discount offered on services, since the assessee was found maintaining parallel records, the same was disallowed. However, in certain cases where the Income Tax authorities had verified the same from certain students, the Revenue directed to verify and extend the same benefit to the assessee. But, for the cases in which no such verification was done, similar benefit cannot be extended as this appears to be unrealistic and improper.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns tomorrow for the judgements</font></strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p> <p align="justify"><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></p> </body> </html>