TIOL-DDT 1203 · 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 1203 </font><br>
24.09.2009 <br>
Thursday </strong></font></p>
<p class=MsoNormal align=center style='text-align:center;mso-layout-grid-align:
none;text-autospace:none'><font size="2"><b><span style='color:#006600'><font face="Verdana, Arial, Helvetica, sans-serif">Service Tax Notifications consequent to Finance Act 2009
<o:p></o:p>
</font></span></b></font></p>
<p class=MsoNormal align=center style='text-align:center;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>
<o:p> </o:p>
</span></b></font></p>
<p class=MsoNormal align=center style='text-align:center;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>Export and import of Services.
<o:p></o:p>
</span></b></font></p>
<p class=MsoNormal align=center style='text-align:center;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>
<o:p> </o:p>
</span></b></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'><strong>THOUGH</strong> we all know<span class=GramE>,</span> a little
recap may not be out of place. As per the Export of Services Rules, 2005,
there are three categories of services which are treated as export of services.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpFirst style='text-align:justify;text-indent:
-18.0pt;mso-list:l1 level1 lfo1;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<span style='mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight: bold'><span style='mso-list:Ignore'>1.<span style='font:7.0pt "Times New Roman"'> </span></span></span>
<![endif]>
<span style='mso-bidi-font-weight:bold'>services provided in relation
to an immovable property situated outside India
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;text-indent:
-18.0pt;mso-list:l1 level1 lfo1;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<span style='mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight: bold'><span style='mso-list:Ignore'>2.<span style='font:7.0pt "Times New Roman"'> </span></span></span>
<![endif]>
<span style='mso-bidi-font-weight:bold'>services performed outside
India
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;text-indent:
-18.0pt;mso-list:l1 level1 lfo1;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<span style='mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight: bold'><span style='mso-list:Ignore'>3.<span style='font:7.0pt "Times New Roman"'> </span></span></span>
<![endif]>
<span style='mso-bidi-font-weight:bold'>Services to a recipient located
outside India.
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>The Rules specify which of the services are to be categorised in each
of the above three categories.
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>Now in the Finance Act, 2009 three more services, namely Cosmetic surgery,
Legal Consultancy and Coastal transport were added were added. But the Rules
were not so far amended to include these services in any of the three categories.
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>When we pointed this out, a Netizen had commented that those services
which are not specifically mentioned in (1) or (2) would automatically fall
under category (3).
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>Now the Rules have been amended to place <i style='mso-bidi-font-style:
normal'>‘Legal Consultancy’</i> in Category (1) and <i style='mso-bidi-font-style:
normal'>Cosmetic Surgery</i> and <i style='mso-bidi-font-style:normal'>Coastal
transport</i> are included under category (2).
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>Similar (converse) are the provisions for <b>The Taxation of Services
(Provided from Outside India and Received in India) Rules, 2006.
<o:p></o:p>
</b></span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
<o:p> </o:p>
</b></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>And similar amendments are made in these Rules also.
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span
style='mso-bidi-font-weight: bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='margin-left:0cm;mso-add-space:
auto;text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span
style='color:#0000CC'>Notification
No. 37/2009 – Service Tax: </span></b><span style='mso-bidi-font-weight:bold'>and<b><span
style='color:#0000CC'> Notification No. 38/2009 – Service Tax: <span
style='mso-spacerun:yes'> </span>Dated 23 rd September, 2009
<o:p></o:p>
</span></b></span></font></p>
<p class=MsoListParagraphCxSpLast style='text-align:justify;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoNormal align=center style='text-align:center;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>Service
Tax – Exemption to manufacture or processing of
alcoholic beverages
<o:p></o:p>
</span></b></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>
<o:p> </o:p>
</span></b></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>Government has granted an exemption to manufacture
or processing of alcoholic beverages by the service provider, for or on behalf
of the service receiver.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>The exemption is the <b>value</b> which is equivalent
to the value of inputs, excluding capital goods, used for providing the same
service.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>The exemption should normally be on the tax, not
value.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>Now look at this anomalous situation.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoListParagraphCxSpFirst style='text-align:justify;text-indent:
-18.0pt;mso-list:l0 level1 lfo2;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<span style='mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight: bold'><span style='mso-list:Ignore'>1.<span style='font:7.0pt "Times New Roman"'> </span></span></span>
<![endif]>
<span style='mso-bidi-font-weight:bold'>Suppose the value of inputs
is Rs. 10000.
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;text-indent:
-18.0pt;mso-list:l0 level1 lfo2;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<span style='mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight: bold'><span style='mso-list:Ignore'>2.<span style='font:7.0pt "Times New Roman"'> </span></span></span>
<![endif]>
<span style='mso-bidi-font-weight:bold'>The service provider gets
Rs. 1000 for the job work.
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;text-indent:
-18.0pt;mso-list:l0 level1 lfo2;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<span style='mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight: bold'><span style='mso-list:Ignore'>3.<span style='font:7.0pt "Times New Roman"'> </span></span></span>
<![endif]>
<span style='mso-bidi-font-weight:bold'>Now the total value of the
service is taken to be Rs. 11000 on which he has to pay tax which is say Rs.
1100. (<span class=GramE>for</span> ease of calculation).
<o:p></o:p>
</span></font></p>
<p class=MsoListParagraphCxSpMiddle style='text-align:justify;text-indent:
-18.0pt;mso-list:l0 level1 lfo2;mso-layout-grid-align:none;text-autospace:
none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
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<i style='mso-bidi-font-style:normal'><span
style='mso-fareast-font-family: Verdana;mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span
style='mso-list:Ignore'>4.<span style='font:7.0pt "Times New Roman"'> </span></span></span></i>
<![endif]>
<span style='mso-bidi-font-weight:bold'>Now the exemption <i
style='mso-bidi-font-style:normal'>is so much of value which is equivalent
to the value of inputs. </i><span style='mso-spacerun:yes'> </span>The
value of inputs is Rs. 10,000/- and so he has to deduct Rs. 10,000 from <span
class=SpellE>Rs.1100</span> to arrive at his tax liability.<i
style='mso-bidi-font-style:normal'>
<o:p></o:p>
</i></span></font></p>
<p class=MsoListParagraphCxSpLast style='text-align:justify;text-indent:-18.0pt;
mso-list:l0 level1 lfo2;mso-layout-grid-align:none;text-autospace:none'>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<![if !supportLists]>
<i
style='mso-bidi-font-style:normal'><span style='mso-fareast-font-family:Verdana;mso-bidi-font-family: Verdana;mso-bidi-font-weight:bold'><span style='mso-list:Ignore'>5.<span
style='font:7.0pt "Times New Roman"'> </span></span></span></i>
<![endif]>
<span
style='mso-bidi-font-weight: bold'>SO HIS TAX LIABILITY IS NEGATIVE.<i style='mso-bidi-font-style:normal'>
<o:p></o:p>
</i></span></font></p>
<p class=MsoNormal style='margin-left:18.0pt;text-align:justify;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>As per Section 93, the Government can exempt taxable
from the whole or any part of the service tax, not the value.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='margin-left:18.0pt;text-align:justify;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>
<o:p> </o:p>
</span></font></p>
<p class=MsoNormal style='margin-left:18.0pt;text-align:justify;mso-layout-grid-align:
none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='mso-bidi-font-weight:bold'>Anyway what the government intents is to allow deduction
of the value of inputs while computing the value of taxable service.
<o:p></o:p>
</span></font></p>
<p class=MsoNormal style='text-align:justify;mso-layout-grid-align:none;
text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i style='mso-bidi-font-style:normal'><span
style='mso-bidi-font-weight: bold'>
<o:p> </o:p>
</span></i></font></p>
<p class=MsoListParagraph style='margin-left:18.0pt;mso-add-space:auto;
text-align:justify;mso-layout-grid-align:none;text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span
style='color:#0000CC'>Notification
No. 39/2009 – Service Tax Dated 23 rd September, 2009</span></b></font><font size="2"><b><span
style='color:#0000CC'></span></b></font><span
style='font-size:10.0pt;font-family:"Verdana","sans-serif";mso-bidi-font-weight:
bold'>
<o:p></o:p>
</span></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Transparent Commissioner (Appeals)? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUST</strong> two days ago, in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9699" target="_blank">DDT 1201 – 22.09.2009</a></strong>, we remarked,</font></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Commissioner (Appeals) should function like a Court and more transparently. Proceedings should be open to public and orders – at least the operative part, should be dictated in the open court. </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A very senior Advocate and a pioneer in the field called me up and shared his experience on this subject. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems he appeared before a lady Commissioner (Appeals) in a case and as he was about to begin his arguments, a relative of the lady walked into her office. She asked him to sit in the sofa for two minutes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lawyer protested that he would not be able to finish his arguments in two minutes and in any case there was no point in arguing when the Commissioner (Appeals) was more attentive towards her relative than the lawyer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The lawyer took up the matter with the Board and urged for open hearings by the Commissioner (Appeals). The Chairman of the CBEC agreed and it was decided that the Commissioner (Appeals) would sit in an open Court and the proceedings would be open to the public. The Chairman even inaugurated an open Court of the Commissioner (Appeals). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But there was a hitch – the sepoy would not allow anyone into the Court Hall unless he gets a pass from the Superintendent in the office of the Commissioner (Appeals). And the pass was really elusive. So the Commissioner (Appeals) slowly crept back to the solitary confines of an office room from the open Court Room. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Departmental Adjudication and Appellate Mechanism – Needs a total re-haul. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Adjudication in the Revenue Department has become a total farce. The honest officers are afraid of giving any order in favour of the assessee, for fear of being accused of dishonesty. The corrupt are selective, depending on the grease. The norm at the first stage of adjudication is to confirm the demand however ridiculous it is. Many adjudicators would openly agree that the assessee has a strong case, but would advise them to win the case in appeal. In fact some officers demand money for writing their orders in such a way that they will not stand scrutiny at a higher judicial appellate forum. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not that the higher appellate forums are all honest, but the fact is that there is some hope of justice. Do we need all this farce? Can't we separate Administration from Adjudication? Let the first stage of adjudication be by a Court of two Additional Commissioners and the appellate stage by a Court of two Commissioners (Appeals). And these adjudicators and Appellate Authorities should be independent and free from Departmental constraints. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present practice of the policeman being also the judge should be discontinued. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New Customs Chief in USA </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">President Obama has nominated Alan Bersin , a veteran of federal border enforcement and a former San Diego schools superintendent to be the new commissioner of U.S. Customs and Border Protection, the nation's largest law enforcement agency. Bersin was a senior partner in the Los Angeles law firm of Munger , Tolles & Olson and a law professor. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The US Customs Chief is appointed by the President and approved by the Senate. The Indian Customs Chief is just another Special Secretary overshadowed by the Revenue Secretary. </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"> – Friday'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" 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="#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" 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" 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></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Admissibility of deemed credit to small scale units – HC reverses Larger Bench decision – Rules credit is admissible </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS </strong>issue pertains to admissibility of deemed credit to the assessees availing small scale exemption under Notification 1/93 CE. In the year 1994, deemed credit was allowed in respect of Ingots and rerollable material purchased from outside or lying in stock with the units availing exemption under Notification 1/93 CE as on 1st of April 1994. </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>Excise Duty deposited in PLA, though not due – allowable deduction under Sec 43B ; Prior period expenses allowed irrespective of year in which it pertains as liability got crystallized during relevant previous year; Issuance of shares in lieu of interest liability cannot be considered payment towards expenditure – disallowed: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Deduction for tax, excise duty etc. is allowable under section 43B on payment basis even before incurring liability to pay such amount. Since in the present case the amount is already paid by way of excise duty, though lying in PLA balance, yet the same is payment towards excise duty and hence allowable in terms of section 43B of the Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The word "expenditure" is not defined under the Act. When the assessee issues shares the assessee does not incur any expenditure as the assessee is not to make any payment legally towards shares issued. Thus by issuance of shares the assessee cannot be said to have incurred any expenditure and hence issuance of shares in lieu of interest liability cannot be considered to have been payment towards expenditure. Accordingly the interest liability discharged is not an allowable expenditure. </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>Import of hazardous waste - developed nations are trying to dump their municipal waste in developing countries - Third Round in High Court – Review petition dismissed </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court had pointed out as to how the developed nations are trying to dump their municipal waste in the developing countries. In the counter affidavit filed by the 7th respondent herein in the Writ Appeal, they themselves have agreed that even if the containers are directed to be re-exported, they cannot be sent to any country. Had this business tactic and cunning intention to segregate and dispose the municipal waste at the Tuticorin Port and disposing off the plastic waste alone to their identified firm, was permitted by this Court, it would have posed a dangerous threat of pollution to our land and water. </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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