TIOL-DDT 1249 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1249 </font><br> 02.12.2009 <br> Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Can a CESTAT Member who has not completed probation be sent home just like that? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RECENTLY</strong> the President of India was pleased to discharge Hon'ble member of the CESTAT Mr. PK Das, just a day before he was to complete his three year probation period. Can a Member of the Tribunal be sent home just like that? The answer, unfortunately is, ‘YES'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Das is not the first Member of the Tribunal to be discharged. In fact one of the founder Members of the Tribunal was discharged even before completing one year in the newly formed Tribunal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Sunder Grover, then a member of the ITAT (for more than ten years) was appointed as Vice – President of the CEGAT (as CESTAT was known in those days) in late 1982. On 16 th July 1983, the President Of India was <em>pleased hereby to give one month's notice to Shri Grover and to order that on the expiry of the period of one month from the date on which this notice is served on him, he shall stand reverted to the post of Judicial Member, Income Tax Appellate Tribunal </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Grover challenged his reversion in the Delhi High Court.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court held that a temporary Government Servant can be removed without assigning any reason; that even though the Tribunal Member's post was a high one, the Members are also bound by the terms and conditions of appointment. Regarding the assessment of the capability of a Member, it is better for the courts not to interfere. However it suggested that as the Government is a litigant before the Tribunal, it would be better if the decision to terminate a member is taken by a body nominated by the Chief Justice of India, instead of the Government doing it. But this was only a suggestion and the suggestion made in 1983 by the Delhi High Court seems to have fallen on deaf ears in the government. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Delhi High Court way back in 1983 had emphatically held that a Member of the CESTAT can be sent home without assigning any reason, if the terms of appointment specify so. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fine! But then who will join the CESTAT with so much insecurity of job? A CESTAT Member gets a salary of about Rs. 1.2 lakh per month – that is less than what a third grade lawyer would earn. Now why should a Commissioner of Customs and Central Excise or a good lawyer join the Tribunal as Member of CESTAT for that kind of money when he can easily earn more than that without joining the Tribunal? For the Perks? – They hardly have any perks, not even a proper vehicle and bungalow. And added to that there is tremendous insecurity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Justice Shah, the then Chief Justice of Madras High Court addressing the Silver Jubilee function of the CESTAT in Chennai said, “In High Court, we deal with petty matters, but you in CESTAT decide issues involving Crores of rupees” </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is it a Catch-22 situation? Do we have a solution? </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can see the Delhi High Court Judgement in </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2003/2003-TIOL-321-HC-DEL-MISC.htm" target="_blank">2003-TIOL-321-HC-DEL-MISC</a></strong></font> </p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Finished Leather- Revised Leather Norms </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has specified for the purpose of the entry “Finished Leather all kinds” appearing at <em>Serial No:142, Chapter 41, Schedule 2 – Export Policy, of the Foreign Trade Policy 2009-14 </em>the items which shall constitute “Finished Leather” and which may be exported without a license but subject to the terms and conditions specified against each item. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2009/dgft09pn021.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice No. 21/2009-14, Dated: December 1, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Credit of duty under Rule 16 of Central Excise Rules, 2002 on goods brought into factory – CBEC Clarification</strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBEC has clarified that:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Rule 8(2) of the Central Excise Rules, 2002, provides that “the duty of excise shall be deemed to have been paid for the purposes of these rules on the excisable goods removed in the manner provided under sub rule(1) and the credit of such duty is allowed, as provided by or under any rule. This provision explains that the invoice of the returned goods would be a valid document for availing credit and duty is deemed to have been discharged. Regarding availing credit on its own invoice, Rule 16(1) of the Central Excise Rules, 2002, allows the assessee to do so. In any case, the whole procedure is revenue neutral, in the sense as the duty has to be discharged by the 5th of next month. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clarified that credit on rejected/ returned goods, received in the factory before prescribed date for duty payment, can be allowed to be taken under Rule 16(1) of the Central Excise Rules, 2002. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/instruction09_267144_267.htm" target="_blank">CBEC Letter F.No.267144/2009-CX 8 Dated: November 25, 2009 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Financial Inclusion by Extension of Banking Services – Use of Business Correspondents (BCs) </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Reserve Bank of India wants banking facilities to reach the maximum number of people. And banks need not open branches in all inaccessible places to make banking services available to more people. They can use the services of </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Individual kirana/medical /fair price shop owners </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Individual Public Call Office (PCO) operators </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Agents of Small Savings schemes of Government of India/Insurance Companies </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Individuals who own Petrol Pumps (v) Retired teachers and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Authorised functionaries of well run Self Help Groups (SHGs) linked to banks. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI has suggested: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ The BC model can succeed only if the banks own up the BCs as their agents. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ The range of services to be delivered through the BC should be ramped up to include suitable small savings, micro-credit, micro-insurance, small value remittances etc. (Paragraph 3.29) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Banks may be permitted to collect reasonable service charges from the customer, in a transparent manner, for delivering services through the BC model. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Banks may bear the initial set up cost of the BCs and extend a handholding support to the BCs, at least during the initial stages. Banks may also need to bear the costs relating to transit insurance of the cash handled by BCs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ In order to improve the viability of the BC model, banks may consider providing reasonable temporary overdrafts to the BCs free of interest charges. </font></p> </blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI/2009-10/238 DBOD.No.BL.BC. 63 /22.01.009/2009-10 Dated: November 30, 2009 </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOUSE Kills CAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAT</strong> is the premier Common Admission Test for that coveted seat in one of the IIMs and this year the CAT was made online and the mouse simply ate it up. The Mouse refused to work with the CAT and in every test centre, there was confusion and cancellation. India is supposed to be a software super power, but our premier Management Schools are not able to conduct an online test. This is the problem perhaps with outdated hardware and pirated software. </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"> – Thursday'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">Central Excise</font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise – CENVAT Credit – Exempted and dutiable goods – reversal of credit is no substitute for payment of 8% (10% or 5%) - It is not open to an assessee to contend that some other method is also available and assessee has choice of claiming credit or reversing same. Big win for Revenue – CESTAT LB order in </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2008/2008-TIOL-1877-CESTAT-MUM-LB.htm" target="_blank"><font size="1">2008-TIOL-1877-CESTAT -MUM-LB</font></a></strong></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> over-ruled: High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MERELY</strong> because an assessee contends and it may be factually true that in some instances the rule cannot be followed in the matter of maintaining accounts that cannot be said to be a tool of oppression to extract that amount which is beyond the remedial measure A power to give benefit, encompasses within itself, the power to put conditions and restrictions under which credit is available. Power to give benefit also carries with it power to take it back or withdraw it. </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>Indo-USA DTAA - Applicant enters into agreement with DRDO for commercialisation of defence-related technology - also enters into agreement with US-based University for providing technical and managerial services - Revenue treats consideration as 'fees for included services' - Since no technical knowhow 'made available' as per DTAA, payments are not liable to tax in India: Advance Ruling </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> the Indian economy expanding and getting increasingly integrated to the global economy, hiring technical and managerial services from business entities abroad has become a common practice. But do all managerial and consultancy services qualify as technical services as per Sec 9(1)(vii) of the I-T Act or Article 12(4)(b) of the Indo-USA Double Taxation Avoidance Treaty (DTAA)? <strong>NO </strong> is the answer. What brings the payments made for availing such services provided by non-residents is the qualifying expression 'make available' as mentioned in the DTAA. Unless technical knowhow or skill or experience is made available to equip the service recipient to perform the same in future independent of the support of the non-resident, such considerations cannot be treated as 'fees for included services' as per the treaty and cannot be subjected to TDS u/s 195, nor as business profits as the non-resident has no PE in India. </font></p> <p><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>Technical Testing – though test done in India, result sent abroad – export of service - CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONSIDERATION</strong> of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. This is not the disputed fact. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p> <p><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> </body> </html>