TIOL-DDT 1192 · the untouched capture
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<p><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1192 </font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><br>
08.09.2009 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Rice – MEP reduced </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DGFT has reduced the Minimum Export Price ( MEP ) of Rice from 1100 US Dollars to 900 US Dollars that is from Rs. 49500 to Rs. 41400. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of Basmati rice, shall be subject to the additional condition that foreign commission upto 12.5% is to be allowed for computation of MEP and any discount /commission in excess of 12.5% will not be allowed for calculation of MEP (and FOB price will have to be higher to that extent). </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2009/dgft09not005.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notification No. 5/2009-2014, Dated: September 7, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Investigation Agencies – Keep off SEZs </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An issue has cropped up whether different agencies of Government of India and State Government can carry out search, inspections, seizure and investigation in a SEZ . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commerce Ministry has clarified that no such agencies can carry out inspection, search, seizure or investigation without approval of the DC of the Zone concerned. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does this apply to DRI ? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins034.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC INSTRUCTION NO 34: Dated: 31st August, 2009. </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEZs – New Consolidated List of Authorized Operations </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The MOC has drafted a new consolidated list of authorized operations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DCs / UACs may allow Developer/approved co-developers duty free material for these default authorized operations from the date of notification of the SEZ . These authorized operations will, however, continue to be subject to the various guidelines issued by Government from time to time. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins035.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC INSTRUCTION NO 35: Dated: 4th September, 2009. </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>SEZ – Proposal to be sent to <em>Concerned </em> DC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been decided that, henceforth, a developer shall invariably endorse a copy of the proposal sent by him, for consideration of the Board of Approval ( BoA ), to the <strong><font color="#FF6633">concerned</font> </strong> Development Commissioner who will quickly analyse the same and send the comments to the Ministry for the next meeting of the BoA . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the <strong><font color="#FF6633">concerned</font> </strong> Development Commissioner be really <strong><font color="#FF6633">concerned</font> </strong>? </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins036.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC INSTRUCTION NO 36: Dated: 3rd September, 2009. </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NCB Zonal Director arrested by CBI </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI arrested an In-charge Zonal Director, Narcotics Control Bureau, Chandigarh for demanding and accepting a bribe of Rs. two lakhs from the complainant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A CBI release states, “The complainant lodged a complaint in CBI Chandigarh stating that he is running a Pharmaceutical Factory at Baddi (Himachal Pradesh). A team led by In-charge Zonal Director, Narcotics Control Bureau, Chandigarh raided his factory premises and seized certain documents. The accused asked the complainant to meet him at his office at Chandigarh. When the complainant met him at his office, the officer demanded a bribe of Rs. 5 lakhs from the complainant stating that otherwise he will be booked under The Narcotics Drugs and Psychotropic Substances Act ( NDPS ) Act and further told that he will talk to the complainant at Delhi. He called the complainant to a public place at Delhi and demanded at least Rs.two Lakhs to settle his case. The complainant came to Chandigarh with the records. The accused told him to meet him at Delhi with the bribe amount of Rs. two lakhs . CBI laid a trap and the accused was caught red handed while demanding and accepting a bribe of Rs. two lakhs from the complainant yesterday.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These NCB guys can put people in prison for ten years and more and if they book cases and drop them for money, what can the poor victims do? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Last time a CBN officer was arrested by CBI and we reported it as NCB. A senior officer of the NCB clarified to us that, “NCB is the nodal agency dealing with narcotics in India and is under Ministry of Home Affairs, Deptt of internal security, whereas CBN is under Ministry of Finance, Dept of Revenue.” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hope we got it right this time. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Murder of Central Excise Officer – Gutka Manufacturers arrested </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assistant Commissioner of Central Excise, Narvedeshwar Singh was killed by unidentified persons in Varanasi on August 23. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Police have arrested 8 persons solving the murder mystery. It seems the murder was by contract killers hired by gutka company owners, who were unhappy after Singh seized goods from them in May. Rs 5 lakh was given to the contract killers to execute the plan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the four contract killers trapped Narvedeshwar by making a hoax call about some goods being illegally brought to a warehouse. Knowing that he usually swooped down on offenders alone, they gave him an address where they could attack him. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Microsoft doesn't get relief in Delhi High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is Export of service in Bangalore is Import of Service in Delhi. Recently the Delhi CESTAT had ordered a pre-deposit of Rs 70 Crores in a 260 Crore case of Microsoft. </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2009/2009-TIOL-1325-CESTAT-DEL.htm" target="_blank">2009-TIOL-1325-CESTAT-DEL</a></strong></font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Microsoft approached the Delhi High Court for a stay which was refused. The High Court has posted the hearing for September 22. The Tribunal had ordered pre-deposit of Rs. 70 Crores and compliance is to be made on 30.09.2009. Microsoft must have found creating <strong><font color="#FF6633">Windows</font> </strong> and <strong><font color="#FF6633">Office</font> </strong> much easier than understanding Indian Tax Laws. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Meanwhile the very levy of Service Tax on import of services is under challenge before the Supreme Court. The Supreme Court of India has issued notice by order dated 04.09.2009 in the matter of <em>Ankit Exim Pvt. Ltd. V. Union of India & Anr </em> in SLP (C) NO. 21190/2009 challenging the legality and validity of Section 66A of the Finance Act 1994 and Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Litigation is what law is all about. </font></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"> – Wednesday's cases</font></strong></font></strong></font></p>
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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 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 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 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" 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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>Construction of residential complex by cooperative housing societies for its members not liable to service tax – Tax paid initially available as refund – Matter remanded to original authority to determine unjust enrichment and correctness of claims: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> two appellants, being cooperative housing societies, are engaged in construction of residential complex for their own / prospective members. The third appellant was a developer engaged by the societies to construct a super structure on the land owned by the societies which were to be transferred to the members of the society. The appellants paid service tax initially and later on filed refund claims on the ground that they are not liable to pay any service tax under the taxable service category of ‘construction of complex' service. The refund claims were rejected by the lower authorities resulting in this appeal before the CESTAT. </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>Hypo tax - AO does not find it allowable deduction u/s 16 - it is to be reduced from tax perquisite and not basic salary; Social security charges paid by employer in home country of assessee is also allowable deduction: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT </strong>is hypo tax? Hypothetical tax has nowadays become a part and parcel of a salary package offered to an expat employee for working in a foreign country. It is done under tax equalisation policy in order to cap the tax liability of an employee in the hiring country to the tax liability which the employee would have borne in his home country. For example, if an expat employee is hired by a corporate in India, and in case the tax rate in his home country is 25% and the tax he suffers in India is 30%, the balance 5% is borne by the employer. </font></p>
<p align="justify"><font 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>CENVAT Credit cannot be allowed on inputs used by job worker for processing of goods received under Rule 4(5)(a) of CENVAT Credit Rules, 2004 - CESTAT orders pre-deposit of full amount of duty demanded </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> basic issue involved is whether the CENVAT credit can be allowed on the inputs used by the job worker (the Applicants M/s TATA Motors Ltd.) in the processing of goods received under Rule 4(5)(a) of Cenvat Credit Rules, 2004. The goods cleared by M/s FIAPL (M/s Fiat India Automobiles Pvt. Ltd.) under rule 4(5)( a) were the car body shells and after job work by M/s Tata Motors, the job worked goods i.e painted car body shells were returned to the principal manufacturer i.e M/s FIAPL under the job work challans without payment of duty as per the provisions of Rule 4(5)(a) ibid. The paints used by M/s Tata Motors are from their on-stock, which have been received in their factory for the manufacture and clearance of their own finished goods. These paints have also been utilized for painting the goods received on job work basis. </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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