TIOL-DDT 114 · the untouched capture
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<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"><b><font color="#0000FF" size="3">TIOL-DDT 114</font><br> 13 05 2005<br> Friday</b></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Draconian Fiscal Laws</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>THE TAXATION LAWS (AMENDMENT) BILL, 2005 – CAG can wait – Here is the fiscal bomb of the year.</b> The second and third years in office of a new government are dangerous – to the citizens. The first year is euphoria and honeymoon with the voters. Fourth year should start the wooing back of the jilted lover. But the FM could not even wait for the first anniversary of the UPA government to inject his strong dose of fiscal medicine. It was only yesterday that<b> DDT</b> reported the FM as saying he was against search and seizure- but he is not against arrest – for alleged offences. He is not against attachment of property immediately after Show Cause Notice – as the two draconian measures introduced in the Bill would show. To be fair to the FM, he has also introduced several assessee friendly measures like a benevolent retrospective legislation in regard to wire drawing. Please see <b>DDT 111(10.5.2005)</b>. CAG can wait – the hot news is the Taxation Laws amendment Bill. And as usual we in Taxindiaonline are proud to be the first to bring you the Bill and a quick analysis of the provisions.<br> <br> Please see our stories in <b>Breaking News</b> for details on Central Excise and Income Tax and see Customs here.<br> <br> <font color="#006633"><b>Customs</b></font><br> <br> <b>Adjudication Order for assessment :</b>- Under Section 17 of the Customs Act, after filing of the Bill of Entry, the assessment is to be done. This assessment is an appealable adjudication order. But in practice, nobody passes an order. The signature of the officer is deemed adjudication. Even if the officer makes a mistake in this order and the importer pays excess duty due to the mistake of the assessing officer, he is not entitled to a refund unless he challenges this assessment order as held by several decisions - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2003/2003-TIOL-35-CESTAT-DEL.htm">2003-TIOL-35-CESTAT-DEL</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> to cite just one. But he really has no order and he has doubts about going to the Commissioner (Appeals) with an assessed Bill of Entry.<br> <br> Now the law is made a little clearer. The importer is to confirm his acceptance of the order in writing. If he does not, the Assessing officer is required to give a speaking order within 15 days from the date of assessment.<br> <br> <b>Interest on Provisional assessments – Rule 7 of Central Excise Rules imported to Customs Act:</b> The Revenue department is now concentrating more on interest than duty. In Central Excise there is a provision to collect interest on the differential duty on finalization of provisional assessments. To be fair to the Government, there is a provision to grant interest on refund too. There was no such provision in the Customs Act. This is made good now. Section 18 is amended to provide for interest on finalization of provisional assessments. Rule 7 of the Central Excise Rules is imported straight into the Customs Act. But now will the CAG find fault with the government for not doing this import three years ago and thereby losing Crores of Rupees by way of interest?<br> <br> <b>Arrest – Beware before you sign – you may land up in a lock up.:</b> - Under the Customs Act, arrests could be made only for offences under Section 135, mainly dealing with evasion and smuggling. Now Section 104 is amended to give powers to officers to arrest for offence under Section 132 and 133 dealing with false declarations and obstruction of officers respectively. And the punishment for these offences was a maximum imprisonment of six months. Now this is enhanced to two years. If the officer feels that your declaration of value is wrong, he can simply arrest you. Are we in for a fiscal emergency?<br> <br> <b>Summons – section 14 of the Central Excise Act imported:</b> Yet another import of a vital provision of law. It is a little known fact that the power to summon under Central Excise is far wider than in Customs. While in Central Excise any person can be summoned in connection with any inquiry, in Customs the summons could be only in connection with smuggling of goods, under section 108 of the Customs Act. This was the position even under Section 171A of the Sea Customs Act, 1878. This lapse is also made good now after more than a century! Now a Customs officer can summon any person for any inquiry under the Customs Act.<br> <br> <b>Provisional release of seized goods</b> - A new Section 110 A has been inserted to provide for release of seized goods under bond.<br> <br> <b>Other Provisions:</b> Changes identical to those made in Central Excise relating to attachment of property, immunity for payment of full duty, interest and 25% penalty are made in Customs too. Please see our Breaking News.<br> <br> <font color="#006633"><b>Income tax changes at a glance:</b></font><br> <br> ++ approval and monitoring process for certain charitable entities, scientific research associations, etc., streamlined<br> <br> ++ prescribes filling of return by certain charitable entities with aggregate annual receipts below one crore rupees,<br> <br> ++ requires payment exceeding twenty thousand rupees by way of an account payee cheque or account payee bank draft,<br> <br> ++ prescribes TDS on renting of plant and machinery, equipment, royalty and non-compete fee;<br> <br> ++ phased withdrawal of exemption to North-Eastern Finance Development Corporation Limited over the next five years.<br> <br> ++ Proposal to exclude (from the previous year 2004-2005) any sum received from a charitable entity or a local authority without consideration from the ambit of "income from other sources'.<br> <br> ++ rounding off of demands or refunds to the nearest multiple of ten rupees,<br> <br> ++ empowering the Tax Recovery Officer to exercise limited powers of the Assessing Officer,<br> <br> • allowing for revision of penalty orders on receipt of appellate orders regarding assessment, etc<br> <br> <font color="#006633"><b>Can’t ignore these-</b></font><br> <br> Rather a heavy weekend- other things were happening too.<br> <br> <b><font color="#006633">Jewellery- Excise or Service Tax - Gold produced on job work – not subject to Service Tax</font></b><br> <br> Since the Board had clarified about the excisability of branded Jewellery, the field officers have found a new method of bringing gold within their control via Service Tax. It has been brought to the notice of the Board that certain field formations have interpreted that service tax is leviable on certain processing activities undertaken by job-workers in relation to manufacture of Gem and Jewellery sector, for or on behalf of the client, even though such activities does amount to ‘manufacture’ under Central Excise Law. So the Board clarifies that, Processes outsourced in gem and jewellery sector which amount to ‘manufacture’ within the scope of section 2(f) of the Central Excise Act, 1944 would not be liable to service tax. Production of goods on behalf of the client is leviable to service tax under ‘business auxiliary service’ only if such production activity does not amount to manufacture. –<br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2002/stgems.htm">F.No. 341/13/2005-TRUdated 12.5.2005</a><br> <br> <b><font color="#006633">Authority for Centralised Registration</font></b><br> <br> As per Rule 4(3)(b) of the Service Tax Rules, the centralised registration for units falling within the jurisdiction of more than one Chief Commissioner is to be given by an Authority to be specified by the Board. Now Board has specified DG Service Tax as the authority for this purpose.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2002/dgst.htm">F.No. 341/20/2005-TRU dated 12th May, 2005</a><br> <br> <font color="#336633"><b>SEZ units – gold obtained on loan basis.</b></font><br> <br> The DGFT has stipulated that SEZ units obtaining gold/silver/platinum from the nominated agencies on loan basis shall export gold/silver/platinum jewellery within 90 days from the date of release. However this restriction will not apply in case of out right purchase of gold.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2005/dgft05pn007.htm">DGFT Public Notice No. 7 (RE-2005) /2004-2009, Dated: May 10, 2005 </a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Enough for the weekend!<br> <br> <font color="#FF6666"><b>Until Monday with more DDT<br> <br> Have a Nice weekend.<br> <br> Mail your comments to</b></font> <b>vijaywrite@taxindiaonline.com </b></font></p> </body> </html>