TIOL-DDT 1096 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1096 </font><br>
24.04.2009 <br>
Friday </strong></font></p>
<p align="center"><font color="#FF6600" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>OUR BIRTHDAY</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> are Nine – nine glorious years of intaxication as one of our famous writers would say.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was a celes<font color="#FF6600">tiol</font> happening almost circumstan<font color="#FF6600">tiol</font>, consequen<font color="#FF6600">tiol</font> to one man's creden<font color="#FF6600">tiol</font>s in confiden<font color="#FF6600">tiol</font> experimentation in starting a website for essen<font color="#FF6600">tiol</font>ly impar <font color="#FF6600">tiol</font> and influen<font color="#FF6600">tiol</font> tax journalism.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ini<font color="#FF6600">tiol</font> difficulties notwithstanding, over the last nine years we have created an omnipresen<font color="#FF6600">tiol</font> base and built up a pala<font color="#FF6600">tiol</font> edifice in the minds of netizens.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The poten<font color="#FF6600">tiol</font> for tax journalism had not seen anything more precedn<font color="#FF6600">tiol</font>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The netizens have shown preferen<font color="#FF6600">tiol</font> love for our mar<font color="#FF6600">tiol</font> arts as well as our nup tiol relations with the Taxa<font color="#FF6600">tiol</font>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are deferen<font color="#FF6600">tiol</font> in expressing our thanks to the indulgen<font color="#FF6600">tiol</font> netizens and promise you that we will never be iner<font color="#FF6600">tiol</font>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally it is also the birthday of our founder.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on Cold Rolled Flat Products of Stainless Steel</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Designated Authority has recommended imposition of provisional anti-dumping duty on all imports of the goods originating in, or exported from China PR, Japan, Korea, European Union, South Africa, Taiwan (Chinese Taipei), Thailand and USA.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly government has imposed provisional anti dumping duty on these goods effective upto and inclusive of the 21st day of October, 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=23&filename=notification/custom/2009/ctariff09_038.htm" target="_blank">Notification NO. 38/2009-Customs Dated: April 22, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rule 6 in a fix – Full CENVAT Credit on specified input services allowed in Rule 6(5) gets reduced in Rule 6(3A)</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have the famous Rule 6 in CENVAT Credit Rule 2004, dealing with cases where both exempted and taxable goods/services are manufactured/provided. One option is to maintain separate accounts and take credit only on the inputs/input services used in taxable goods/services.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Those who do not wish to exercise the above option have two more options. One is to pay 10% amount on exempted goods/8% on exempted services. The other option is to determine the credit attributable to the inputs/ input services and pay the amount.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, for determining the above “attributable” credit, a few formulae were inserted in Rule 6. A new sub-rule 6(3A) was inserted vide Notification No 10/2008 CE(NT) Dated 1.3.2008. As per Rule 3A (iii),</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided,
and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT credit taken on input services during the month;</em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To put it in less confusing terms, if your exempted turnover is 25%, you have to pay an amount of 25% of the total CENVAT Credit on input services.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, as per Rule 6(5) which was in vogue before the issue of Notification 10/2008 CE( NT), and also remained same after the issue of the Notn 10/2008, allows full credit on 17 specified services, though the same are used for both taxable and non-taxable goods/services.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the full credit allowed on these 17 services also gets reduced by 25% in the above formula. Though Rule 6(5) starts with a non-obstinate clause, this clause only refers to sub-rules 1,2 and 3 but not 3A.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, there seems to be a conflict and if the Govt wants to allow full credit on these 17 services even after the amendment in 2008, Sub-rule 3A (iii), it should have been written as:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided,
and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT credit taken on input services during the month LESS THE CREDIT ON 17 SERVICES SPECIFIED UNDER RULE 6(5).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Or alternatively, they can add sub-rule 3A also in non- obstante clause in Rule 6(5).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is someone listening?</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Idly king Sarathbabu for Parliament</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More than two years ago we carried the story of BITS Pilani and IIM graduate Saratbabu starting the Idly business. <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4331">'I want to provide employment to 50,000 people'</a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sarathbabu </strong>born and brought up in a slum in Madipakkam in Chennai is the CEO of Foodking Catering Services after obtaining an Engineering degree from BITS, Pilani and a Management one from IIM. Sarath was elected as PEPSI-MTV Youth Icon 2008 (earlier recipients were Anil Ambani, Rahul Dravid, Shah Rukh Khan, M. S. Dhoni)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sarath informed us that yesterday he filed nomination for contesting the Lok Sabah elections from South Chennai constituency.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He considers his mother a great entrepreneur – she sold idlys in the slum.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From the slums to BITS to IIM to FOODKING to Parliament –let's he hope he makes it.</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">–</font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> Monday's cases</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 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></strong></font></strong></font></strong></font></strong></font></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>If penalty is imposed under section 11AC of the CEA , 1944, further imposition of equivalent penalty under rule 173Q of CER , 1944/rule 25 of CER , 2002 is not warranted – Tribunal.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Tribunal observed that as against a total duty demand of Rs.2 ,52,553 /- the cumulative penalty imposed of Rs.5,25,606 /- was excessive. The Bench accordingly held that wherever penalties under section 11AC of the CEA, 1944 were imposed, further imposition of equivalent penalties under rule 173Q is not warranted. So saying, the simultaneous penalties imposed under rule 173Q were set aside. The Bench also justified this conclusion by pointing out to the contents of clause 2.2, Part III to the Chapter 13 of the CBEC's Excise Manual of Supplementary Manual which said so.</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>India-UK tax treaty - assessee receives technical services from non-resident lead managers for GDR issue - management and sale commissions are fees for technical services under I-T Act and DTAA but since they were not 'made available' to assessee they are not taxable; such income to be treated as business profit under Art 7 of DTAA but not taxable as non-residents have no PE in India: ITAT Special Bench</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TDS
- tax deduction at source - is a major instrument of tax collection for
the Revenue in any country. It is preferred to many other tools of revenue
collection as it carries greater element of certainty in collection like
the advance corporation tax. But, is it deductible on all sorts of payments?
Does it have any nexus with the tax liability of the payee? Should it be
deducted irrespective of the tax liability of the income recipient? There
are many similar questions which came up before the Special Bench of the
Tribunal in a case in which the Indian company had failed to deduct tax
at source u/s 195 before making payments to non-resident lead managers
from the UK who had provided various sorts of specialised services to the
assessee's GDR and FCCB's issues for mopping up funds. The Revenue had
held the assessee in default u/s 201(1) and also demanded interest u/s
201(1A).</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And in a landmark decision the Tribunal has held that what is pre-requisite for the Revenue to satisfy before treating an assessee in default is to find out whether the payee's income is liable to tax or not?</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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Self assessment - When no order capable of being appealed against, had ever been passed, it cannot be said that assessee could file appeal against assessment order - Refund sanctioned proper: Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> brief facts of the case are that the amount of Service Tax payable was self assessed and paid by the assessee. The return in form ST-3 for the period October 2006 to March, 2007 was also filed. Later, they filed a refund claim of Rs.2 ,29,010 /- and which was sanctioned by the lower authority and this order was upheld by the Commissioner(Appeals).</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></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 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>