TIOL-DDT 1248 · the untouched capture
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<td><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#663399" size="3">TIOL-DDT 1248 </font><br />
01.12.2009 <br />
Tuesday </strong></font> </p>
<p align="center"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt5yrs/ddt5yrgifts.jpg" width="277" height="131" border="0" /></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT is <font size="4">5</font> years Old </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was on 1st December 2004 that we started <strong>DDT </strong> and five years and 1247 <strong>DDTs </strong> have gone by. This is perhaps the longest running column, at least in the field of taxation. In the last five years, there was not a single day we missed in bringing you the <strong>DDT</strong>. <strong>DDT </strong> is now a daily habit, an addiction with many a netizen. Even the best of well wishers did not think that we would be able to continue beyond 50 editions. In fact after completing 100 DDTs, I wanted to take a break, but the Managing Editor did not agree and said that, “we have no choice – and for many Netizens, the day starts with <strong>DDT </strong>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many consultants have told us that <strong>DDT </strong> has made life difficult for them – the law was what they told their clients it was, but now the clients were reading <strong>DDT </strong> and asking them about the latest notifications, circulars and case law – so they were forced to read <strong>DDT </strong> before the clients did. In fact a consultant asked me, “why should you analyse all those notifications and cases – leave that to us.” But of course there are many consultants and Departmental officers who feel that we have made their job easier. In fact some Departmental officers have told me that <strong>DDT </strong> has made them lazy – now they don't need to update their law – <strong>DDT </strong> does it for them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Senior Departmental officer sent us a mail, “truth prevails finally, even in its raw form and to tell you frankly that it motivates individuals not to shy away from adversities. Any system can't improve till its shortcomings are recognised and remedies are prescribed.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> is grateful to the Government of India for keeping it alive and to all the Netizens for the solid support all through. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manufacture of Alcoholic Beverages on Job Work Basis - Service Tax - Board Clarifies </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">UNDER</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> section 67 of the Finance Act, 1994, service tax is chargeable on the ‘gross amount charged' by the service provider for providing taxable services. As per CIABC [Confederation of Indian Alcoholic Beverages Companies] the gross value of sales, as per invoices, includes the following elements: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1) Bottling/job charges - paid to CBU </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2) Distribution costs including freight, transit insurance etc. – paid to CBU </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3) Other reimbursables – paid to CBU </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4) Cost of raw materials – paid to CBU </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5) Cost of packaging materials – paid to CBU </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6) State excise duty and VAT – paid to State Government </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7) Surplus/profit – retained by BO </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CIABC has now sought clarifications on the tax base on which the service tax would be chargeable after allowing the deduction provided in the notification. In short, they want to know as to how many of the above 7 elements (para 2 above) would be includible in the value for the purpose of charging service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For removal of doubts and with a view to avoid disputes on valuation, CBEC has clarified that :- </font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">a. Service tax would be payable on the bottling/job charges, distribution costs and other reimbursables. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">b. So far as inputs i.e. raw materials and packing materials are concerned, one of the conditions of exemption notification No.39/2009-ST is that there should be documentary proof specifically indicating the value of these inputs. Therefore, service tax on the value of raw materials and packaging materials would be exempt only when such charges are specifically mentioned in the invoice raised/documents maintained by the CBU. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">c. As regards the statutory levies, namely, excise duty /VAT, they do not present any ‘consideration' for rendering the service. Whether such amount is paid by BO or by CBU, they have no nexus with the provision of service. As such, these levies will not be included for charging service tax. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">d. Similarly, the surplus/profit earned by the BO being in the nature of business profit (which falls within the purview of direct taxes), will not be chargeable to service tax </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the DG, Service Tax to clarify the position suitably to the field formations </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2009/alcohol.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F.No.332/17/2009-TRU Dated: October 30, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New entries in the Drawback Schedule </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government has issued <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2009/cnt09_175.htm" target="_blank">notification No.</a></strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2009/cnt09_175.htm"><strong>175/2009 Customs (NT) dated 27th November, 2009</strong></a><strong> </strong> introducing the following new entries in the present Drawback Schedule:- </font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">a) Gold and silver jewellery (711301 & 711302); </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Rounder's bat, wooden (sports goods) (95069963); </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Bells, gongs, statuettes, ornaments, picture frames etc of Aluminium and Iron & steel (830603 & 830604);</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"> d) Leather Safety Footwear with protective metal toe (640311); </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">e) Jars, perfume bottles, candle plate/ coasters, votive, lotion bottle/soap dish, ornamental spheres/ stars/ bells made of glass (70139991); </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">f) Lanterns/ lamps predominantly of glass (940506). </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The drawback rates and caps on other items remain unchanged. Thus, the drawback schedule which was announced vide notification NO. 103/2008-Cus (NT) dated 29th August, 2008 as amended shall continue to be in operation until a revised schedule is notified. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2009/cuscir09_033.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CIRCULAR NO.33/2009-CUSTOMS Dated: November 27, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Remittances to non-residents under section 195 of the Income-tax Act - remittances of Consular receipts - CBDT Clarification </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Article 28 of schedule to section 2 of the Diplomatic Relations (Vienna Convention) Act, 1972, the fees and charges levied by a diplomatic mission in the course of its official duties shall be exempt from all dues and taxes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the above, while remitting consular receipts abroad, diplomatic missions in India will be required to submit only a self certified undertaking in Form No 15CA to the remitter bank. They are not required to obtain a certificate from an accountant/ certificate of Assessing officer (Form 15CB). The procedure for furnishing information regarding remittances of consular receipts by diplomatic missions in India will be as follows:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(i) The diplomatic mission will access the website to electronically upload the remittance details to the Income-tax Department in Form 15CA (undertaking). </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The diplomatic mission will then take a print out of this filled up Form 15CA (which will bear an acknowledgement number generated by the system) and sign it. Form 15CA (undertaking) can be signed by the Head of the mission or by an officer of the mission so authorized by the Head of the mission. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) The duly certified Form 15CA (undertaking) will be submitted in duplicate to the Reserve Bank of India / authorized dealer. The Reserve Bank of India / authorized dealer will in turn forward a copy of the undertaking to the Assessing Officer concerned. </font></em></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2009/it09cir09.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT CIRCULAR NO. 9/2009 Dated: November 30, 2009 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of Duty free refined or White Sugar - extended </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REFINED</strong> or white sugar, up to an aggregate quantity of ten lakh metric tonnes of total imports during the period up to and inclusive of 30th November 2009, was exempted from Customs Duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a rare case of waking up before the sun set, the CBEC has extended this exemption before its expiry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Refined or white sugar, imported upto and inclusive of 31st March, 2010, is exempted. Notification No. 21/2002-Customs, dated the 1st March, 2002, is amended suitably. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_126.htm" target="_blank">NOTIFICATION NO. 126/2009 - Cus., Dated: November 27, 2009</a> </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tariff Value of Brass Scrap increased </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has increased the Tariff Value of Brass Scrap from US Dollars 3348 to 3402 per MT and the value of Poppy Seeds from 3041 to 3144 dollars. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION NO. 176/2009-CUSTOMS (N.T.) Dated: November 30, 2009 </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>More skeletons out of the CLB Lockers - CBI recovers nearly a Crore </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> recent searches at the residence at Chennai of Member, Company Law Board, following cash, jewellery & FDRs have been recovered :- </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. In the three lockers cash of Rs. 40 lakhs, 30.42 lakhs & 14.16 lakhs have been recovered. In addition, cash of Rs. 75, 000/- was also recovered from his residence. The fourth locker is yet to be opened. </font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. 450 gram gold jewellery and 10-12 Kgs silver jewellery have been recovered so far. The estimated cost of jewellery comes to Rs. 6-7 lakhs. </font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. The FDRs worth Rs. 6.9 lakhs have been recovered. In addition, 12 passbooks either in his name or in the name of his family members have been recovered. The balances in these bank accounts are yet to be ascertained. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Member, Company Law Board was arrested for demanding & accepting bribe on 23.11.2009. A cash of Rs. 55 lakhs including seven lakhs bribe amount was recovered during searches after trap from his residence at Delhi. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Satyam case - PWC is not a firm of Chartered Accountants </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PRICE</strong> Waterhouse Coopers is not a firm of Chartered Accountants registered with the Institute of Chartered Accountants of India (ICAI). The ICAI has, however, initiated disciplinary action against M/s. Price Waterhouse, Bangalore, M/s. Price Waterhouse with head office at Kolkata and M/s. Price Waterhouse with head office at New Delhi, which are firms of chartered accountants registered with the ICAI. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the Chartered Accountants Act, 1949 and the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 framed there under, it is the ICAI, which is empowered to take disciplinary action in relation to misconduct of any of its members. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As ICAI is regulatory authority for taking action against chartered accountants of these firms, the Government does not come into picture. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This information was given by Mr. Salman Khurshid, Minister of Corporate Affairs in the Rajya Sabha in a written reply. </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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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" /><font color="#663399">FEMA </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Summons issued by the Department in exercise of power vested in them cannot be quashed – High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> writ of prohibition will issue to prevent a tribunal or authority from proceeding further when the authority proceeds to act without or in excess of jurisdiction; proceeds to act in violation of the rules of natural justice; or proceeds to act under a law which is itself ultra vires or unconstitutional. The petitioner in essence seeks for a writ of prohibition against the department for having issued the summons by the exercise of the powers vested on them under section 37 read with section 131 of the Income Tax Act. The attack made against the summons issued by the Department cannot be countenanced by this Court. </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>Interest tax - Assessee is investment company - earns interest income on bonds and debentures - Revenue for levy of tax u/s 2(7) - A residuary non-banking company did not fall within Sec 2(5B)(vi) and its interest income is not chargeable to tax: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> case relates to Assessment Year 1992-93. The assessee is a registered company, set up as non-banking company with the objective to buy, sell, invest or deal in securities, bonds or fixed deposits. It earns interest income on bonds and debentures. Revenue treats the assessee as a 'credit institution' as defined in Sec 2(5A) of the Interest Tax Act and levies tax on interest income under Sec 2(7). The question before the Apex Court is - Whether "interest" which the assessee earned on bonds and debentures was chargeable to tax in view of the definition of the term "interest" in Section 2(7) of the Interest Tax Act, 1974. And the SC's decision has gone against the Revenue on the ground that the residuary non-banking company did not fall within sub-clause (vi) of Sec 2(5B) of the Interest Tax Act. </font></p>
<p align="justify"><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>Security Service – BSNL directed to pay Service Tax amount with interest, to the service provider who has to pay it to the government – High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> tragedy of a hapless service provider stuck with a Show Cause Notice from the Department and the service recipient refusing to reimburse the tax, is an everyday story in the life of any consultant. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the High Court directed BSNL, to pay the service tax amount. Of course BSNL had never disowned its liability. </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> </td>
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