TIOL-DDT 1233 · the untouched capture
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<p><font size="3"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1233 </font></strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong></strong></font></font><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><br>
10.11.2009 <br>
Tuesday </strong></font></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RS inaugurates e-Pay and Accounts Office</strong></font></p>
<p align="center"><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_11nov.jpg" alt="Legal Corner Icon" width="400" height="283" hspace="5" border="0" align="center"></b></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PV</strong> Bhide, the Revenue Secretary has inaugurated e-Pay and Accounts Offices for Central Excise and Service Tax, COMPACT (Revact) & P-CBEC softwares and website of Pr. CCA, CBEC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Principal Chief Controller of Accounts already has a website - <a href="http://pccacbec.nic.in/" target="_blank">http://pccacbec.nic.in/ </a> . Then what has the Revenue secretary newly inaugurated? You go to the website, it is totally silent on the Revenue secretary or his inauguration! Apparently all the officers were busy with the inaugural function that they did not bother to update their website. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Principal Chief Controller is the Authority to give us the Accounting Codes for the various taxes and duties we are required to pay. So far they have not announced the Accounting Codes for the new services introduced in this year's Finance Act. If they can do this small job which they should have done a couple of months ago, we will all be grateful to the honourable Principal Chief Controller of Accounts! Pray, what prevents you from announcing those numbers? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GST – The First Step Today </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A journey of a thousand miles begins with a single step - Today India's long and arduous journey into GST is all set to begin Union. Finance Minister Pranab Mukherjee will have discussion/interaction with the Finance Ministers of the States/UTs today and thereafter he will have interaction with media persons. The Chairman, Empowered Committee will release first discussion paper and FAQs on GST at the time of media interaction today at 3.30 pm at Hall No. 4, Vigyan Bhawan, New Delhi. Minister of State, S. Palanimanickam will also be present. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps today, we will know the proposed threshold limit which is most likely to be Rs. 10 Lakhs. As you know, the present exemption limit for Central Excise Rs. 1.5 Crores. Is CBEC ready to handle the huge number of assessees likely to join the excise net? Or will CBEC leave this job to the State VAT Departments? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Pollution Tax? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thailand is all set to introduce a new Pollution Tax soon. The law, which puts controls only on wastewater and air pollution, lists tax rates that vary with the size of a plant and the quantity of its toxic emissions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Of the total taxes collected, 3 per cent will go to the Excise Tax Department, 25 per cent to the Industry Ministry as the budget for its plant audits, and the rest to a research and development (R&D) fund. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The R&D fund would be used to improve environmental quality by building up the central waste-treatment facility and monitoring pollution. The fund will also provide low-interest loans for factories to meet environmental standards. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Way back in 2000, the IIT Kharagpur in a study had recommended imposition of <em>taxes for pollution. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Several countries have experimented with this pollution tax. Now we should decide, whether this will also be part of our GST. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>U.S.
Homeland Security Secretary Janet Napolitano and WCO Secretary General
Kunio Mikuriya announce preliminary results of largest global cash smuggling
operation – ATLAS </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Homeland Security (DHS) Secretary Janet Napolitano and World Customs Organization (WCO) Secretary General Kunio Mikuriya today announced the preliminary results of Operation ATLAS—the largest multilateral operation in history targeting cash smugglers which took place from 26 to 30 October. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More than 80 countries participated in Operation ATLAS (an acronym for Assess, Target, Link, Analyse and Share), leading to more than $3.5 million in cash seized and the identification of $24 million in undeclared currency that may have otherwise gone undetected at ports of entry around the world during the five-day period. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“In our increasingly networked world, multinational cooperation is critical to combating transnational criminal activity,” said Secretary Napolitano. “Today's announcement reflects an unprecedented model of international collaboration that we will continue to build upon in the future.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Operation ATLAS provided the perfect platform to promote the implementation of international anti-money laundering standards and recommendations, to improve national control techniques, and to enhance cooperation among all parties involved in fighting money laundering and terrorist financing,” said Secretary General Mikuriya. “The operation's successful outcomes also demonstrate the benefits that accrue from coordinated and focused inter-agency cooperation at the national level”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">U.S. Immigration and Customs Enforcement (ICE) led Operation ATLAS in close collaboration with U.S. Customs and Border Protection (CBP) with the assistance of the WCO using CENcomm, a secure communication tool developed by the WCO. The operation was supported by Interpol and Europol. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Participating countries used real-time information sharing and coordination of cash declaration data to disrupt and dismantle criminal organizations that smuggle illicit cash around the world—employing several different methods to detect cash carried in baggage, on travellers and in shipments aboard commercial flights at designated airports. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Operation ATLAS reflects the commitment shared by Secretary Napolitano, Secretary General Mikuriya and WCO members to continue the expansion of cooperative efforts to deter transnational smuggling organizations around the world—bolstering global security and enhancing mutual efforts to deter terrorists and other criminals. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The announcement came during a press conference at WCO Headquarters in Brussels—part of Secretary Napolitano's week-long trip to Europe and the Middle East to meet with her international counterparts to discuss information sharing and privacy protection; collaborative efforts to secure cyber networks worldwide; the international response to the H1N1 global pandemic; and coordination to combat transnational criminal activity and the global threat of terrorism. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Global
Governance: fall of Berlin wall was indeed a turning point in globalization:
WTO DG </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Director-General of WTO Pascal Lamy, in a speech at the Bocconi University in Milan on 9 November 2009, said: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fall of the Berlin wall was indeed a turning point in globalization. The end of the cold war led to an unprecedented era of economic openness. We saw a reduction in poverty like never before. Freedom expanded and with it ideas, culture and technology. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For me global governance describes the system we set up to assist human society to achieve its common purpose in a sustainable manner, that is, with equity and justice. Growing interdependence requires that our laws, our social norms and values, our mechanisms for framing human behaviour be examined, debated, understood and operated together as coherently as possible. This is what would provide the basis for effective sustainable development in its economic, social and environmental dimensions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether public or private, governance needs to provide leadership, the incarnation of vision, of political energy, of drive. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are a number of lessons that we can draw from the more than 60 years of European integration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first one is that institutions alone cannot do the trick. Neither can political will without a clearly defined common project. Nor can a well-thought-through common project deliver results if there is no institutional machinery. The reality is that we need the three elements together to create an integration dynamic. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But even if these three elements are there, there is a risk that a real or perceived legitimacy problem remains, creating a glass ceiling for further integration. The reality is that supranational institutions, and the European Union is one, require a long term investment. And this is often incompatible with the short term attention span of many of its leaders who are often elected on thin majorities or with fragile coalitions. Global legitimacy requires long term care and attention. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Globalization today is posing a serious challenge for our democracies, and our governance systems must respond to the challenge. If our citizens feel that the global problems are insoluble, if they feel they are out of reach, this will risk emasculating our democracies. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The same will be true if our citizens see that global problems can be addressed but they have no influence on the result. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today, more than ever, our governance systems, whether in Europe or at the global level, must provide citizens with avenues for shaping tomorrow's world, the one they want their children to inherit. Among the many regional integration attempts, the European Union remains the laboratory of international governance — the place where the new technological frontier of international governance is being tested. </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>
<p align="justify"><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 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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>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT Credit taken wrongly but not utilized in its entirety – Interest payable only in respect of the portion of credit wrongly utilized – CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE facts are that the respondent is a registered manufacturer of excisable goods and is also providing Management Consultant Service and IPR Services for which also they are registered. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, what happened is that the assessee took Cenvat Credit of the Service Tax paid by them on the aforesaid services. This amount is Rs.12,36,670/- for the period October 2004 to September 2005</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When this irregularity was detected by the Departmental officers in November 2005, they reversed the entire amount. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, by that time, out of total credit of Rs.12,36,670/- they had utilized credit of Rs.91,000/- and the remaining credit was lying unutilized along with other credit. </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>Assessee is exporter - pays discounting charges to non-resident on bill of exchange - Revenue treats same as interest u/s 2(28A) - Discount is not in nature of interest - moreover, non-resident has no PE in India - not liable to TDS - Sec 40(a)(i) cannot be invoked: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ARE discount charges paid on discounting of bill of exchange by an exporter to a non-resident interest payments? If yes, is TDS deductible on such payments under Sec 195? In an interesting case where the Revenue has held that the sum paid to the Singapore-based non-resident is in the nature of interest under section 2(28A) of the Act. And since the assessee fails to deduct tax at source u/s 195, the sum is disallowable u/s 40(a)(i). However, the Tribunal has held that the discounting charges are not in the nature of interest paid by the assessee. Rather after deducting discount the assessee receives net amount of the bill of exchange accepted by the purchaser. Since the non-resident has no permanent establishment in India in terms of Article 5 of the India-Singapore DTAA, its income is not liable to tax in respect of such discount earned by it and hence the assessee is not under obligation to deduct tax at source under section 195 of the Act. Accordingly, the same amount cannot be disallowed by invoking section 40(a)(i) of the Act. </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 watch straps made of ostrich, calf and alligator leather. The Mississippian species of crocodile does not exist in India. Same is the position in regard to Ostrich. Since these species do not exist in India, there is no question of their protection in this country – Import is free – High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If it was the intention of the respondent to evade customs duty, the respondent would not have even placed an order for that item. The respondent's bona fide conduct in this regard is evident from the correspondence exchanged between the respondent and the foreign exporter. The respondent vide fax dated 18.4.2003 requested the foreign exporter to inform the status of Delivery Note No. 5375747 dated 28.11.2002 and Delivery Note No. 5192159 dated 31.7.2002. </font></p>
<p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </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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