TIOL-DDT 1225 · 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 1225 </font><br>
28.10.2009 <br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on Renting of Immovable Property – live and kicking</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently, a very reputed Company ABC Ltd (name changed) providing office space to various clients came to me for an advice. Their problem is, after the Delhi High Court judgement in case of <em>Home Solution Retail India Ltd </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2009/2009-TIOL-196-HC-DEL-ST.htm" target="_blank">2009 -TIOL-196-HC-Del-ST</a>)</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> some
of their clients have stopped paying service tax. Though the invoice is issued
with service tax, only rent is paid, but service tax is not reimbursed. Since
the clients are not paying service tax, ABC Ltd is not paying the service
tax to the Department. Department is insisting the assessee to pay service
tax. ABC Ltd is showing the unrealised service tax amount in the “Service Tax payable account” in
their books of accounts, which is likely to be objected by their statutory
auditors as they may qualify that service tax is not paid in time. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not the problem with only ABC Ltd, but same is the case with all the service providers. All the clients are aware of the Delhi HC judgement and stopped paying service tax, but little did they realise that in tax matters, only the decision of two authorities are final. One the Inspector of Central Excise and the other is Supreme Court. Of late, not even the Supreme Court decision is final as there is always retrospective amendment route to undo the judgements. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In any case, the departmental officers have been directed by the TRU to either pursue the tax payers to pay up the service tax due or take necessary action to safeguard revenue as the dispute has not reached finality and the department has filed an appeal against the order of the Delhi High Court. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2009/tru_renting.htm" target="_blank">F.No . 336/10/2009 TRU dated 17th July 2009</a>. </font></strong></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rules
under various Sections of IT (Amendment) Act, 2008
Notified </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rules for </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Regulating Service Conditions of Chairperson & Members of Cyber Appellate Tribunal; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Investigation of Misbehaviour or Incapacity of Chairperson and Members of Cyber Appellate Tribunal; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Directions for Interception, Monitoring and Decryption of Information; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Blocking for Public Access of Information in Computer Resource </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the <em>The Indian Computer Emergency Response Team known as CERT- In have </em> been notified. We have covered CERT-In in yesterday's Mixed Buzz. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>For investigation of misbehaviour or incapacity of Chairperson and Members of Cyber Appellate Tribunal </strong>, a three member committee headed by the Cabinet Secretary with Secretary, Department of Information Technology and Secretary, Department of Legal Affairs, Ministry of Law and Justice as members is proposed to be appointed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee shall devise its own procedure and method of investigation, which may include recording of evidence of the complainant and collection of material relevant to the inquiry and submit its report to the President of India. If there are reasonable grounds for further investigation, the President in turn will refer the matter to the Chief Justice of the Supreme Court of India requesting him to nominate a Judge to conduct inquiry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appointment of Judge for conduct of inquiry and the procedure to be followed are also notified in the Draft Rules. Keeping in view of the gravity of charges the President may also suspend the Chairperson or Member against whom a complaint is under investigation or inquiry. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government should also seriously consider replicating a similar procedure for other Appellate Tribunals like CESTAT, ITAT etc. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rules for Directions for Interception, Monitoring and Decryption of Information: </strong>The competent authority for issuing such directions is Union Home Secretary in case of Government of India; the Secretary in-charge of Home Department in a State Government or Union Territory as the case may be. In unavoidable circumstances, such order may be made by an officer, not below the rank of a Joint Secretary to the Government of India, who has been duly authorised by the Union Home Secretary or by an officer equivalent to rank of Joint Secretary to Government of India duly authorised by the Secretary in-charge of Home Department in the State Government or Union Territory, as the case may be. In certain instances, certain other authorities are also authorized for this purpose. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rules for Blocking for Public Access of Information in Computer Resource: </strong>The Secretary, Department of Information Technology, Ministry of Communications & Information Technology, Government of India shall designate and notify in official Gazette, an officer of the Central Government, not below the rank of a Joint Secretary, for issuing directions for blocking for access by the public any information generated, transmitted, received, stored or hosted in any computer resource. </font></p>
<p align="justify"> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rules for Monitoring and Collecting Traffic Data or Information: </strong>Directions for monitoring and collecting traffic data or information generated, transmitted, received or stored in any computer resource shall not be issued except by an order made by the competent authority i.e. Secretary to the Government of India in the Department of Information Technology, Ministry of Communications & Information Technology. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The competent authority may issue directions for monitoring and collection of traffic data or information generated, transmitted, received or stored in any computer resource. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Governor's Quarterly Review Report on Monetary Policy 2009 - 10 </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dr. D. Subba Rao , in his quarterly review report on the monetary policy for the FY 2009-10 states that the global economy has begun to recover from the deep recession set off by the financial crisis. This recovery is underpinned by output expansion in emerging market economies (EMEs), particularly those in Asia . The pace and shape of recovery, however, remain uncertain. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact, the global economic outlook presents a mixed picture. On the positive side, world output, as per the International Monetary Fund (IMF) estimates, has expanded by 3 per cent in the second quarter (quarter-on-quarter, annualised), manufacturing activity has picked up, trade is recovering, financial market conditions are improving, and risk appetite is returning. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the negative side, there are concerns that the recovery is fragile. The second quarter improvement is essentially the outcome of policy-induced stimulus. Going forward, the impact of the stimulus will fade away and inventory rebuilding may lose momentum. In advanced economies, private consumption remains constrained by continuing job losses, sluggish income growth and dented confidence. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even as output is recovering, unemployment is expected to increase to over 10 per cent in the US and the Euro area. Investment is also expected to remain weak due to ruptured balances sheets, excess capacity and financing constraints. Bank collapses are continuing. World trade remains below its year ago level, notwithstanding recent quarter-on-quarter improvement. </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="2">tiol</font><font color="#006600" size="2"> – Thursday'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, 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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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>India-Singapore DTAA – Reimbursement of costs by assessee to own Group Co for rendering technical services – Although payments made to non-resident are fees for technical services, also 'made available' to assessee but since services were provided offshore not liable to TDS: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the domain of international transactions, reimbursement of costs is a common practice particularly in the dealings among group companies. But reimbursement without profit mark-up is a tricky and unbelievable proposition for the Revenue! </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p>
<p><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Order passed in Stay application by CESTAT on previous occasion cannot be considered binding in nature as it does not lay down any law – CESTAT orders pre-deposit of entire duty </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
there is an arguable point sought to be canvassed in relation to the expression “in
connection with production” under the notification no. 52/2003-Cus dated
31.3.2003, while contending that the capital goods have been understood in
the market as ‘plant and machinery for packaging' since the day the Notification
no. 123/81 was issued, prima facie, the case has been made out for grant
of wavier in relation to the demand pertaining to the <strong>penalty</strong>. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Even though order states that failure to make pre-deposit within stipulated period shall result in dismissal of appeal without further notice to them, <em>it would not mean that without a formal order </em>, appeal is considered to be dismissed if pre-deposit as per order is not made – CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even though the order states that failure to make the pre-deposit within the stipulated period shall result in dismissal of appeal without further notice to them, it would not mean that without a formal order, appeal is considered to be dismissed if pre-deposit as per the order is not made. The matter is listed for noting compliance and if the compliance of the order is not made, a formal order of dismissal for non-compliance with the stay order is issued. </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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