TIOL-DDT 1091 · 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 1091</font><br> 17.04.2009<br> Friday</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Income Tax – Particulars under section 44AB – Form 3CD Amended</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EVERY</strong> business person having a total turnover of more than forty lakhs rupees or a professional having more than ten lakhs rupees receipts is required to get the accounts audited and submit a statement to the Department in Form 3CD.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Form 3CD is now amended to include a new item, "17A. Amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006."</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=35&filename=notification/cbdt/2009/it09not036.htm" target="_blank">CBDT Notification NO. 36/2009, Dated: April 13, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Export Obligation Period Extended</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For <font color="#FF6600">Import of Spices for Value Addition purpose like crushing/grinding/sterilisation or for manufacture of oils and oleoresins of pepper; cardamom and chillies and not for simple cleaning, grading, repacking etc.</font>, the Export Obligation period is 120 days. This is amended to add, “<font color="#FF6600">However, for imports completed up to 31.12.2008, Export Obligation Period (EOP) shall be 150 days from the date of clearance.</font>”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Identical amendment is made in Second sub- para of Para 6.7(c) of Handbook of Procedures Vol. I.</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/dgft08pn175.htm" target="_blank">DGFT Public Notice No. 175/(RE-2008)/2004-2009, Dated: April 15, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Former members cannot practice in CESTAT – There was a time when a son would appear in the court presided over by his father and no questions were asked - Delhi High Court</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Finance Act 2007, former members of the CESTAT were barred from appearing acting or pleading before the Tribunal. Some of the former Members who have been practising in CESTAT after retiring as Members were aggrieved and approached the Delhi High Court in writ petition.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court found nothing wrong with the bar and held that there was no discrimination; it was not unconstitutional; lawyers had no unregulated right to practice.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no such bar for ITAT Members; Why? It will come eventually; a good beginning has been made.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8901" target="_blank">Breaking News</a> </strong>for the High Court judgement and our story.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Input Service Distributor also a Service Provider – Benefit of 6/2005-ST, whether available?</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is an Audit objection communicated to us by a harried Input Service Distributor.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s XYZ Ltd. is registered as Input Service Distributor and distributes the credit of Input services viz. Telephone charges etc. to the registered manufacturer M/s XYZ Ltd.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s XYZ Ltd. have also rented a part of their registered office premises to their group company M/s ABC Ltd. and have claimed the benefit of small scale exemption in terms of notification 6/2005-ST dated 01.03.2005 in the matter of payment of Service Tax in respect of the Service category viz. ‘Renting of immovable property'.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Audit has come knocking and says that the exemption cannot be enjoyed because M/s XYZ Ltd. have <strong>availed </strong>the Cenvat Credit of service tax paid on input services.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clause 2(ii) of the Notification 6/2005-ST reads -</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) the provider of taxable service <strong>shall not avail </strong> the CENVAT credit of service tax paid on any input services, under rule 3 or rule 13 of the CENVAT Credit Rules, 2004 (herein after referred to as the said rules), <strong>used for providing the said taxable service</strong>, for which exemption from payment of service tax under this notification is availed of;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously in the instant case, the Input Service Distributor has not availed any Cenvat credit for providing the taxable service of ‘Renting of immovable property' but taken/received the credit for the purpose of distributing it to its manufacturing concern.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the Audit objection is getting an overwhelming response from the field formations, as always, and is sure to overtake the GTA fiasco in the days to come.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I request that <strong>DDT </strong> highlight this objection in its column and request Netizens to react to the same.</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=24&filename=notification/custom/2008/cnt08_113.htm" target="_blank">Notification NO. 113/2008 – Cus (N.T.) Dated: October 16, 2008</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Greek and Latin</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You will find the following maxims in the Supreme Court judgement we are carrying today.</font></p> <div align="justify"> <blockquote><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em>Nemo debet bis vexari pro una et eadem causa</em></font></blockquote> </div> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em>Interest republicae sit finis litium</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em>Res judicata pro veritate occipitur</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What do they mean?</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <strong><em>Nemo debet bis vexari pro una et eadem causa </em>: </strong>No one ought to be twice troubled or harassed [if it appear to the court that it is] for one and the same cause. No one can be sued a second time for the same cause of action, if once judgment has been rendered. No one can be held to bail a second time at the suit of the same plaintiff for the same cause of action. It is a significant basic rule of Criminal Law that no man shall be put in jeopardy twice for one and the same offence. The manifestation of this rule is to be found contained in Section 26 of the General Clauses Act, 1897, Section 300 of the Code of Criminal Procedure, 1973 and Section 71 of the Indian Penal Code. Section 26 of the General Clauses Act provides "Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <strong><em>Interest republicae sit finis litium </em> : </strong>the Republic's interest require that litigation must have an end; it is for the general welfare that a period be put to litigation.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <strong><em>Res judicata pro veritate occipitur : </em></strong>judicial decision must be accepted as correct.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Applying all the above principles, it had been observed, “The doctrine of <em>res judicata </em> is based on</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em>nemo debet bis vexari pro una et eadem causa</em>,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. interest republicae sit finis litium and</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. res judicata pro veritate occipitur.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These doctrines are based on public policy that no man should be vexed twice for the same cause (first maxim); that it is in the interest of the State that there should be an end to the litigation (second maxim); and the judicial decision must be accepted as correct (third maxim).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The doctrine applies to all judicial proceedings whether civil or criminal. In the field of public law, it is well settled that the doctrine applies to the proceedings under Article 32 or Article 226 of the Constitution.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font></strong></font></strong></font><font color="#663399">Central Excise</font></strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Taking MODVAT credit after six months from date of issue of Bill of Entry - debarring provisions were introduced to avoid misuse of same, where inputs are obtained after a period of 6 months from their clearance date - CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> provisions debarring taking of credit after the period of 6 months from the date of issuance of duty paying documents were introduced with intent to avoid misuse of the same, where inputs are obtained after a period of 6 months from the clearance from the factory of the manufacturer or from the premises of the dealer etc. Inasmuch as in the present case admittedly goods were received within a period of 6 months and entries were duly made in their RG 23A part-1, it was only a question of making suitable entries in part-II register of RG-23A format.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Export of software – remittance not received within six months from the end of the year; RBI competent to extend the time; letter from RBI treated as implied extension - ITAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee having applied for extension and having completed all the formalities; and in response the Reserve Bank of India having taken the remittances on record, the non-issue of a formal letter for approval, cannot be held against the assessee for none of its faults. The assessee having applied for extension and the same having been impliedly granted in substance, the benefit of section 10A has got to be allowed to the assessee on the ground that the extension is deemed to have been granted. Once the assessee has completed all the formalities and the request of the assessee for extension of time not having been rejected, if can be presumed after a reasonable time that the extension has been granted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Central Excise</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Valuation – related person - for mutuality of interest, there has to be holding of shares of each other between two companies: common accountant and common Excise manager will not make them related - CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FIRST </strong>question is as to whether the corporate veil should be lifted in this case. The Commissioner has held that since all the shares are held by the families and relatives in one company and the same group holds almost 70% of the shares in other company, they have to be treated as related persons. However what is to be seen is whether this aspect has influenced the price or not and whether there is mutuality of interest. It is not denied that the companies do not have shares in each other. It is also not denied that there are 965 share holders in MLL out of which the majority of them do not belong to family or their relatives. Tribunal in case of <em>M/s Utkal Alloy (P) Ltd </em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2005/2005-TIOL-932-CESTAT-KOL.htm"><font size="1">2005-TIOL-932-CESTAT-KOL</font> </a></strong>has held that for mutuality of interest, there has to be holding of shares of each other between two companies. This factor does not exist in this case.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Monday for the judgements</font></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> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments t</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">o <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>