TIOL-DDT 1182 · 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> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1182 </font><br> 25.08.2009 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax exemption on GTA service utilized for Export of Goods – Exporters troubled by lack of foresight of Board</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9537" target="_blank">TIOL-DDT 1178</a> </strong>we highlighted the problems faced by the exporters seeking refund of service tax paid on services used by exporters under <em>Notification No. 41/2007-ST dated 06.10.2007</em> as amended and the lack of clarity on the time limit for claiming refund. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the Board may take its own sweet time in resolving the issues faced by the exporters, it appears the problems faced by the exporters at the ground level is compounding by the day. The flow of mails from exporters to TIOL explaining the troubles they encounter with the tax authorities in the field continues unabated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While <em>Notification No. 18/2009-ST dated July 7, 2009</em> provides that </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) services provided to an exporter in relation to transport of goods by road directly from their place of removal, to an inland container depot, a container freight station, a port or airport, as the case may be, from where the said goods are exported; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) services provided to an exporter for transport of goods by road from any container freight station or inland container depot to the port or airport, as the case may be, from where the said goods are exported; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">are wholly exempt from the levy of service tax leviable under Sections 66 and 66A of the Finance Act, 1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exporter will have to produce the consignment note in his name to support his claim for exemption. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is common knowledge that exporters receive empty containers from the ports/container freight terminals to their premises for stuffing of export goods under self sealing mechanism or excise supervision and subsequently cleared to the port for export. The exporters incur expenditure for both inward and outward transportation of containers i.e. from Port/Container Freight Terminals to the exporter's premises and back to Ports. However, it seems that the Board has always been under the impression that all inward transportation would invariably involve receipt of inputs into the factory which is an input service and there is no need to exempt this service for exporters. Since no inputs are received when “empty containers are received, this <strong><em>“INWARD TRANSPORTATION”</em></strong> should also have been included in the exemption Notification. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It appears that the authorities in the field are allowing exemption only for the charges paid for outward transportation of stuffed containers from exporter's premises to the Port of export is exempt from levy of service tax in terms of this notification and not the charges paid for inward transportation of empty containers from the Ports/Container Freight Terminals to exporter's premises. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is plain common sense that for clearing export goods in containers from exporter's premises to the ICD , CFS , Port etc, they have to invariably receive empty containers from the Ports/Container Freight Terminals and charges are levied on the exporters for both inward and outward movement of containers. Without receiving empty containers at their premises, how can the exporters who utilize containers for clearing bulk goods, export their consignments? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Time and again it was reiterated by the Finance Minister that exports are a priority for this country and here we have officers at top who have no vision of the ground realities and officers in the field whose only job is to either find loopholes in the notifications issued by the Finance Ministry </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These are testing times for the economy. While on the one hand it is plagued with several problems like recession, price rise of essential commodities, sluggish demands, job losses etc, on the other, the country's farming community is reeling under severe drought, one of the worst in recent memory, which has a cascading effect on the rest of the economy. In such gloomier times, if exporters who earn foreign exchange for the country are put to hardship then God save this country. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fundamental principle of taxation vis-à-vis exports is to export only goods and services out of the country and not incidental taxes on such goods or services. It is for this prime reason that such exemption notifications are issued by the Government to benefit exporters. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Hazardous Waste (Management, Handling and Transboundary) Rules, 2008 in respect of import of paper, paper board and paper product wastes – Customs Instructions </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board instructs all the Customs Commissionerates to designate nodal officers at appropriate level not below the rank of Assistant Commissioner / Deputy Commissioner for effective coordination and proper implementation of the Rules for timely interaction with the State / Central Pollution Control Board on matters relating to testing of samples, import or export matters relating to hazardous waste. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2009/instruction09_006.htm" target="_blank">CBEC F. No.401 /48/2009- Cus.III Dated 24th August, 2009.</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax – Penalty - The penalty under Section 271 (c) is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability - Supreme Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court of India judgement in the <em>Dhramendra </em> case was most misunderstood and the Apex Court clarified its judgement in the <em>Rajasthan Spinning & Weaving Mills </em>case. When penalty is intended to be a remedy for loss of revenue, there is no need for <em>mens rea </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court delivered yet another judgement on this issue yesterday and keeping in tune with TIOL traditions we bring you yesterday's judgement today. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <strong> Breaking News.</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Their Lordships' Assets - Supreme Court has no supervisory power or control over High Courts – Justice Shylendra</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Karnataka High Court Judge, Justice Shylendra in a Newspaper article said, </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a matter of utmost paradox that the chief justice of the most powerful Supreme Court in the world should be expressing apprehension for the safety and security of the judges of the superior courts in this country by saying that revealing the particulars of assets of the judges and throwing open the information to the public domain may result in harassment to judges and in turn prevent the judges from performing their duties without fear or favour. He has also expressed his fear that this may impair the independence of judges and affect their functioning. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is equally ironic that the apprehension should have been expressed by the chief justice of the Supreme Court of India, that too in an interview given to a news daily and as the chief justice of the apex court of the country and in the context of the applicability or otherwise of the provisions of the Right to Information Act (RTI Act), a piece of legislation which was commended for legislation by the very Supreme Court in terms of its judgment in <em>Peoples Union for Civil Liberties vs Union of India.</em></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The object of this article is to dispel the most damaging and uncalled for impression created in the minds of the public at large and litigants in particular, that the judges of the superior courts in this country, who enjoy high constitutional protection and immunity, are wary of disclosing their assets or are not prepared to throw open the information relating to the acquisition and holding of their assets to the public domain; that they would rather prefer to keep the information well-guarded and also cover up a possible misdeed or a possible improper acquisition of assets and would like to avoid either scrutiny or an explanation, if one was needed in respect of their asset holdings. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is fair to say that the views expressed by the Chief Justice of India are not necessarily representative of the views of all the judges of the superior courts of this country. In fact, the Supreme Court of our country has no supervisory power or control over the high courts in the scheme of our Constitution. High courts are independent and function in accordance with the constitutional provisions and in terms of the applicable statutory provisions. The Supreme Court only exercises appellate jurisdiction over the high courts in specified areas as provided for under the Constitution and the laws. The law declared by the Supreme Court is binding on all the courts - it is a constitutional mandate in terms of Article 141 of the Constitution. The Supreme Court has also the most exclusive power in passing such decrees and making such orders as are necessary for doing complete justice between litigants in any cause or matter before it and it is to be enforced throughout the territory of India in the manner prescribed by law. Other than such a constitutional provision and subject to these very constitutional provisions, the high courts function independently. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Hitherto, it is only the opinion of the Chief Justice of India that is expressed in public and the Chief Justice of India is the person, who has been reacting to the doubts and queries of the people as articulated in different sections of the media. No one else from the judiciary has expressed any opinion to the contrary and silence in such a situation obviously amounts to consent or agreement! And yet, the fact of the matter is that judges of the superior courts of this country are not reluctant and hesitant to declare their assets. On the other hand, a majority of them must be ready and willing to do so. There should be no question of any judge either hiding or taking shelter under any non-disclosure provision or under a provision to ensure confidentiality or secrecy of the information. The protection provided to the judges of the superior courts under the Constitution itself is good enough and sufficient to ensure the independence of the judiciary and fearless functioning of the judges. There is absolutely no question of any other person or any other organ creating a sense of apprehension, fear or possible harassment in the minds of the judges by use or misuse of any information that one may come across or might fall into the hands of the litigant public of this country. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">An article of this nature, which is otherwise not common or usual for a judge to pen, has become necessary only to convey to the people of this country that the impression created as of now is not necessarily the correct impression; that the judges of the superior courts of this country do not necessarily subscribe to the views and apprehensions expressed hitherto; that they have views and opinions otherwise than what has been conveyed to the public at large so far. The judges have nothing to fear; they have nothing to hide and they have no hesitation to disclose particulars of their assets and even for throwing open the information to the public domain. In fact, it is for the judges of this country to act and provide information even voluntarily. Indeed, I humbly appeal to all my brother and sister judges of the superior courts to do so. No inhibition need deter us from this path. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Hon'ble CJI says, “He wants publicity and such a thing is not good for a judge. Judges should not be publicity-crazy." </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And Senior Advocate Harish Salve said that he agreed with Justice Kumar's view that judges should publicly declare their assets, but his criticism of the Chief Justice was not in order. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Heights of Democracy? </font></p> <p align="center"> <font face="Verdana, Arial, Helvetica, sans-serif"><strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">Jurispruden</font><font color="#FF6633" size="4">tiol</font><font color="#006600" size="2"> – Wednesday 's cases</font></strong></font></strong></font></p> <p><font color="#660099" 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" 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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Plastic <em>bhusa </em> used as fuel in Marine Boiler – whether permission from Maharashtra Pollution Control Board was taken or not is immaterial to issue of availing Cenvat Credit under the CCR , 2004 – Revenue appeal Dismissed – CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue is of the view that this <em>‘plastic bhusa ' is not covered under the definition of input/fuel or capital goods </em> inasmuch as it does not find a mention in the definition of ‘input' given under rule 2 of the Cenvat Credit Rules, 2004. </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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Search - Assessee offers to pay tax on excess jewellery to buy peace - additions - CIT(A) and Tribunal find explanation satisfactory but sustain disallowance - Once explanation accepted it is not permissible for Revenue to impose tax liability - it would mean illegal extraction of tax: High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEARCH </strong>& Seizure is a routine activity in Income Tax Department. Recovery of jewellery, semi-precious and precious stones and cash are most common items. In may cases, although the assessees do painstakingly explain the source of purchases and cash withdrawals from banks but also make an offer to pay tax on anything declared as ''excess'' by the AO. This is done by the assessee to buy peace and avoid protracted litigation. But there are cases within such instances where the AO prefers not giving quietus to issue and proceed with huge additions. However, the appellate authority and the Tribunal accept the explanation given by the assessee but even then they also sustain the partial disallowance made by the AO on which the assessee has offered to pay tax. Now the question is: Is it permissible for the Revenue to still fasten the assessee with the liability to tax when it has accepted the explanation of the assessee relating to the source of purchase? </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sales Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sales Tax – Two questions referred to High Court – Only one is answered – HC requested to answer the unanswered question: Supreme Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We set aside the order of the High Court insofar as it relates to the first question of law and remit same to it with a request to answer same referred to by Sales Tax Tribunal, after affording opportunity to both parties, and pass fresh order in accordance with law as expeditiously as possible. To this extent, the impugned order of the High Court is modified. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p> <p align="justify"><font color="#FF6666" 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>