TIOL-DDT 1069 · 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 1069</font><br> 12.03.2009<br> Thursday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bringing back all the Money stashed away in foreign banks – a twist in the tale</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>OUR</strong> Editor Shailendra has written a two part article (the concluding part appears today in our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8731" target="_blank">CobWeb</a></strong>) on the tax havens and the money stashed away in unimaginable places. He mentions that Indians had about USD 1456 billion in Swiss banks in 2006. That is a whopping 72 lakh Crores – ten times India's Budget. And the figure must have doubled in the last few years. Is there any hope? He states, “No concerted efforts are indeed expected from our politicians as it is a Catch-22 situation for them - they are being urged to bring back their own money?”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More than twenty years ago Jeffrey Archer published a collection of his short stories, called, “A Twist in the Tale”, in which one of the stories was about a strict honest Finance Minister of Nigeria who was out to end corruption in his county. He goes on a mission to Switzerland to unearth bank accounts of his countrymen in Swiss banks. He goes to a Bank and meets the Chairman and asks for the details.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He cajoles, threatens, induces and uses all the tricks in the trade to persuade the Chairman to part with the details, but the Chairman is very firm.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He threatens that his Embassy in Geneva will be closed and he will throw out the Swiss ambassador from his country; he would hold a press conference and announce that the Bank is under investigation – but the Chairman did not respond.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally the Minister got up from his seat, took out a pistol and said, “I need those names and by now you must have realised that I will stop at nothing. If you don't give them immediately, I am going to blow your brains out. Do you understand?”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman was sweating but he gave no names. He was prepared to die rather than part with the names.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Excellent,” said the Minister as removed the pistol from the Chairman's head and picked up his briefcase and opened it to the banker to show neatly packed rows of hundred dollar bills which the Chairman quickly estimated to be about 5 million dollars.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Sir,” said the Minister, “How do I go about opening an account with your bank?”</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Ant – a fable or?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> got the following fable from a retired senior officer of the Department who was also a Member of the CESTAT.</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>Every day, a small ant arrives at work very early and starts work immediately.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>She produces a lot and she was happy.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The Chief, a lion, was surprised to see that the ant was working without supervision.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>He thought if the ant can produce so much without supervision, wouldn't she produce even more if she had a supervisor</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>So he recruited a cockroach who had extensive experience as supervisor and who was famous for writing excellent reports</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The lion was delighted with the cockroach's reports and asked him to produce graphs to describe production rates and to analyse trends, so that he could use them for presentations at Board‘s meetings. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>So the cockroach had to buy a new computer and a laser printer and ...</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>recruited a fly to manage the IT department.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The ant, who had once been so productive and relaxed, hated this new plethora of paperwork and meetings which used up most of her time…</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The lion came to the conclusion that it was high time to nominate a person in charge of the department where the ant worked.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The position was given to the cicada, whose first decision was to buy a carpet and an ergonomic chair for his office.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The new person in charge, the cicada, also needed a computer and a personal assistant to help him prepare a Work and Budget Control Strategic Optimisation Plan …</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>It was at that time that the cicada convinced the boss, the lion, of the absolute necessity to start a climatic study of the environment.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>Having reviewed the charges for running the ant's department, the lion found out that the production was much less than before.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>So he recruited the owl, a prestigious and renowned MNC consultant to carry out an audit and suggest solutions.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The owl spent three months in the department and came up with an enormous report, in several volumes, that concluded : “The department is overstaffed ...”</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>Guess who the lion fires first?</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <em>The ant, of course, because she “showed lack of motivation and had a negative attitude".</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <strong><em>The characters in this fable are fictitious; any resemblance to real people or facts within the Organisation is pure coincidence…</em></strong></font></p> </blockquote> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ACES – CBEC Member Sridhar To inaugurate Pilot Project in Chennai toady</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ACES stands for the 'Automation of Central Excise and Service Tax' and it is a Web based application of Central Board of Excise and Customs designed to provide an electronic interface to the Taxpayers & the department and aims to reduce paper work, visits to departmental offices and improving transparency, accountability and efficiency in Indirect tax administration in India. The implementation of this project is envisaged as a major step in utilising the total potential of the IT revolution.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the best.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSOCHAM wants Service Tax on “Security” to be scrapped</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has sought scrapping of service tax on security providers as also demanded conferment of industry status on them under Section 801A , 801AB , 801IB and 80IC of Income-Tax Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ASSOCHAM has argued that security agencies be exempted from paying service tax as these are also subjected to various other taxes which include higher import tariffs on security gadgets, still higher excise on security equipment manufactured domestically and number of local levies on movements of such equipment within the State and inter-state.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This amounts to double and triple taxation and it is because of this reason the cost of security to end users is proving to be too expensive to afford, feels the ASSOCHAM.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a representation forwarded to Ministry of Finance after conclusion of ASSOCHAM's recent National Security Conference, the Chamber has demanded that security agencies should no longer be enlisted under category of service provider and be brought under category of Auxiliary Service Provider to avail tax benefits.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since, the security agency ensures safety of material as well as of personnel in unsafe times while risking their own life in the process, the industry need to be given infrastructure status on lines provided to industries relating to infrastructure, civil aviation, ports etc.</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>Income Tax</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TDS on the charges you pay to a Barber? – No TDS on payments made to a hotel by a customer – CBDT Circular quashed- High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> are so many laws and complying with all of them is really a hard task. For instance did you know that you were required to deduct TDS on payments you make for lodging/boarding in a Hotel? Every time you checked into a hotel, you were violating this law! Well, there was a Board Circular to that effect. Surprised? Perhaps even the High Court was, when it observed, “If the contention of the revenue is accepted, then it would mean that even the hair cutting work done by a barber would be a 'work' and the person making payment to the barber would be covered under section 194C.”</font></p> <p align="justify"><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>CENVAT credit is available on plastic crates used as material handling equipment in factory premises as capital goods as also as input: CESTAT Larger Bench</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong> long disputed issue has been settled by the Tribunal Larger Bench.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Larger Bench was required to decide as to whether the plastic crates used by the appellant as a material handling device within their factory premises would earn modvat credit either as capital goods or as input.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such plastic crates are used for internal transportation of the raw material/semi-finished and finished goods from stores to processing machine and from one machine to other machine and to finished goods storage. As such, they are mainly used for storage and supply of different components of radiators, in the production of which the appellant is engaged, in the production line. These plastic crates, due to wear and tear on account of usage are also periodically replaced by the assessee.</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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Does reprography constitute infringement under Copyright Act and does Customs have power to adjudicate copyright issue or jurisdiction to declare prohibition and confiscate photocopied books, original of which was supplied by Government of Ethiopia – Tribunal sets aside order and remands the case</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants through their CHA presented Shipping Bill dated 27.8.2007 for exportation of a consignment along with the invoice showing value of Rs.44,94,478.58 (FOB) and claiming DEPB benefit of Rs.3,14,613.50 under S.No . 457 of Group no. 62, declaring that the consignment consists of 626 cartons of Printed books for educational reference. The consignment showed <em>Ministry of Education, P.O.Box No. 1367, Addis Ababa, Ethiopia</em>, as the consignee.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A routine examination of the consignment was carried out by the Department on sample checking basis. On examination of one book, it was found that the book was <em>not original printed book </em> but same was a photocopy of book titled “Computer Organization and Architecture” showing the name of the author as William Stallings.</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="#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>