TIOL-DDT 1186 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1186 </font><br>
31.08.2009 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New Services from Tomorrow – But where are Board Instructions? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>following new services are to come into effect from tomorrow. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Transport of goods by rail </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Cosmetic surgery or plastic surgery </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Transport of coastal goods; goods through national waterway; goods through inland water. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Advice, consultancy or assistance in any branch of law </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But strangely, the Board is deafeningly silent – there is no circular, there is no notification, there is no instruction. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What will be the value of taxable services? Will there be any abatement? What will be the Small scale exemption limit for this financial year? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For Legal Consultants, appearance before Courts and Authorities is not treated as taxable service. How are they going to find out what the fee is for consultancy and what it is for appearance? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suppose I collect a fee for appearance but I don't appear as the Court does not sit – I still collect a fee, but I have not provided any service, nor appeared. Is the fee taxable? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The whole idea of making the provisions applicable from a date after the enactment of the Finance Bill is to help the prospective assessees to understand the tax and for the Board to put its system in place. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bill was enacted on 19 th August – today are we in any way better than we were on 19th August 2009? Government could have as well made the law effective from 19.8.2009 – they could have got a little more Revenue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is understood that the Railways are not ready to collect the tax and nobody knows at what point the tax is to be collected and there certainly has to be an abatement. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Let us hope at least today the Board will come up with the necessary notifications and instructions. </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In his reply to the Finance Bill, the Finance Minister said, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Addition of new services to the list of taxable services or alterations in the scope of existing taxable services made through Finance Acts come into force from a notified date after the enactment of the Finance Bills; Trade and industry has requested that sufficient time be provided between notifying such changes and making them effective, thereby enabling adjustments in business accounting systems and software. I find merit in this suggestion. Accordingly, I have directed the Central Board of Excise and Customs to make the notifications prescribing levy of service tax on new services and alterations in the scope of existing services announced in the current Budget effective from the 1st day of September 2009.” </font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Validity
of 'Highlights' of FTP </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Along with the Foreign Trade Policy, DGFT also released Highlights of the Foreign Trade Policy. As per Serial No 40 of the said highlights, EOUs will now be allowed CENVAT Credit facility for the component of SAD and Education Cess on DTA sale. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Relevant questions that require clear answers: </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Will the Ministry of Finance issue notification based on “Highlights” when in the past it has been shy of issuing notifications even after express provisions have been made in the FTP itself? </font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Notwithstanding the above, what does the Highlight intend to communicate – There has never been a case of EOU not being allowed to avail credit of SAD and eligible education Cess? In such a case, is the measure warranted, given that there was never any issue in this regard? </font>
</p>
</blockquote>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The EPCES Circular No 86 dated 27 August 2009 explains that the said issue would resolve a major issue relating to EOUs, as in the open houses, EOUs have repeatedly requested for change of CENVAT credit formula. Can we then safely presume that serial no. 40 of the Highlights of FTP should have actually read thus, <em>“DTA units procuring goods from EOUs will now be granted CENVAT Credit facility for the component of SAD and Education Cess levied on DTA Sale by the EOU” </em> (This should be relevant if a corresponding amendment is made to the formula for CENVAT Credit availment by the DTA unit on procurement from EOU, as provided in Rule 3(7)(a) of the CENVAT Credit Rules, 2004 to incorporate therein, SAD and eligible component of Cess) </font></p>
</blockquote>
</div>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Also see</strong> </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2009/2009-TIOL-1058-CESTAT-DEL-LB.htm" target="_blank">2009-TIOL-1058-CESTAT-DEL-LB</a></strong></font>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New Direct Taxes Code – Board Constitutes Committee to examine suggestions </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Has the Board finally taken control of the new Direct Taxes Code? <strong><font color="#FF6633">TIOL</font> </strong> had reported that the Code had actually gone ahead bypassing the Board. Now the Board, in its meeting on 27 th August, decided that:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Suggestions will be invited from all the officers and the public regarding the Direct Taxes Code. Suggestions will be invited through the Cadre controlling CCITs and also directly from the officers through irsofficersonline. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The suggestions has to be received by the core Committee by <strong><font color="#FF6633">10th September</font> </strong> and a draft based on suggestions and their studies will be prepared by the core Committee by <strong><font color="#FF6633">15th September</font> </strong> which will be put before the full Board for consideration </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) The final suggestions as approved by the full Board shall be placed before the Finance Minister. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So you have all of <strong><font color="#FF6633">TEN DAYS</font> </strong> time to submit your suggestions to the Core Committee and they have full <strong><font color="#FF6633">FIVE DAYS</font> </strong> to submit their report to the Board! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are they really serious about getting suggestions from their officers and the Public? Most probably the Communication from the Board will reach the field formations by 7 th of September and then they will have exactly three days to send in their suggestions. It would have been more practical to direct that the suggestions may be sent directly to the Waste Paper Basket of the Board! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board Communication says that the suggestions may be sent by email to <a href="mailto:diritcc-rev@nic.in">diritcc-rev@nic.in </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Discussion Paper on the Code states that you can send your suggestions to <a href="mailto:directtaxescode-rev@nic.in">directtaxescode-rev@nic.in </a></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now which of these mail ids are valid? We hope both of them are! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In his Foreword to the Code, Finance Minister Pranab Mukherjee stated, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“I invite all members of the Public to go through this draft and share their valuable suggestions with us. I am sure through our collective effort, we will be able to build a consensus and finalise this Draft Code so that we can present it to Parliament in the Winter Session, 2009 for enacting a Direct Taxes Code for the 21st Century which will be compatible with the needs of a fast developing economy.” </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We hope and pray that the code is not rushed through in Parliament and there is a genuine debate. Most probably it will be referred to the Standing Committee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TIOL will be happy to get your comments on the Code, which will be compiled and submitted to the Ministry/Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today we are carrying yet another analysis on the Code in our <strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9592" target="_blank">TIOL TOP </a></strong></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/panel_DTC.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT F.No. 402/78/2009-ITCC Dated : August 28, 2009 </strong></font></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"> – Tuesday's cases</font></strong></font></strong></font></p>
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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>Goods cleared under claim of rebate – truck meets with an accident and goods brought back to factory – refund of duty paid allowed but Commissioner(A) sets aside order insisting that rule 16 procedure ought to be followed – there cannot be any recovery without a demand u/s 11A of the CEA, 1944 – CESTAT orders stay. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant had cleared a consignment of their final product for export under claim of rebate but the goods could not be exported as the truck which carried the goods was involved in an accident in transit. The goods were brought back to the factory and subsequently an application for refund of the above amount of CENVAT credit was filed. The original authority allowed this claim and the <strong><em><font color="#663399">party was permitted to raise credit of equivalent amount in their RG 23A Part II account</font>. </em></strong> This decision was reviewed under section 35E of the Central Excise Act, 1944 and an appeal was filed with the Commissioner(Appeals). The appeal of the department was allowed by the appellate authority on the ground that the <strong><em><font color="#663399">party ought to have taken credit of the above amount under Rule 16 of the Central Excise Rules, 2002 rather than filing a refund claim.</font> </em></strong></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>The term <em>'derivatives' </em>in which underlying asset is shares, will fall within meaning of <em>'commodity' </em> used in Sec. 43(5) of Act - Exempting certain derivatives by Finance Act only prospective: ITAT Spl Bench </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In this case, the Legislature made the amendment because of the technological advancement introduced by the stock markets resulting in more transparency in the dealings. Therefore, the circumstances under which amendment was brought into existence do not lead to the inference that it was retrospective. </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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Settlement Commission is empowered to order interest even if there was no notice for interest: Bombay HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Settlement Commission has all the powers of an officer under the Act. The Applicant approaches the Settlement Commission for the purpose of settlement of the matter which can exercise the power of the Custom Officer. Once there is power under Section 127F, it was open to the Settlement Commission to have directed payment of interest. Ultimately Settlement is of the “case”. The case involves a demand for duty. Once duty is held to be payable, interest becomes payable by operation of law. Only the question has to be ascertained in terms of the Board's Orders. It is, therefore, a part of the ‘case'. </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>
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