TIOL-DDT 1290 · 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 1290 </font><br> 02.02.2010 <br> Tuesday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export and import of currency - Now you can carry Rs. 7500 </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the <font color="#FF6633"><strong>Foreign Exchange Management (Export and Import of Currency) Regulations, 2000,</strong></font> a resident Indian can take outside India or having gone out of India on a temporary visit, can bring into India Indian Currency Notes up to an amount not exceeding Rs. 5,000 per person. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For providing greater flexibility to the resident individuals travelling abroad, the existing limits, mentioned above, have been enhanced to Rs. 7,500 per person. [God knows what greater flexibility an additional Rs. 2500 can bring in! You may wonder why somebody going abroad needs rupees and how somebody coming from a foreign country can bring in rupees]</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway RBI clarifies that: any person resident in India, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) may take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.7,500 (Rupees seven thousand five hundred only) per person; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.7,500 (Rupees seven thousand five hundred only) per person.</font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbicir.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CIRCULAR NO. 30/RBI., Dated: February 1, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recovery when Stay Application is Pending </font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">OVERZEALOUS</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Revenue officers, having no respect for the Law which they are paid to implement or the Judicial Authorities whom they are bound to follow, or the Boards to whom they are subordinates, go crazy and resort to all sorts of illegal activities to collect what they assume to be government dues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Just yesterday, we came to know about an Additional Commissioner who addressed a large gathering of his staff and told them not to follow the Delhi High Court judgement in the<em> Home Solution Retail India</em> - <em><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"><font size="1">2009-TIOL-196-HC-DEL-ST</font></a></strong></em>, even after we carried the Delhi High Court decision in the <em>SSIPL RETAIL LTD & ORS</em><strong> -</strong> <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-84-HC-DEL-ST.htm" target="_blank"><font size="1">2010-TIOL-84-HC-DEL-ST</font></a></strong></em> wherein the High Court found fault with the Department for assuming that the Delhi High Court judgement was not valid as the Department had gone in appeal. This Additional Commissioner who is supposed to instil a sense of respect for the judiciary in the minds of his subordinates was openly telling them to disobey the High Court order and persuade the assessee to pay up or resort to coercive action. The subordinates are not all that stupid, if they are asked by the Additional Commissioner to disobey the High Court, why should they obey the Additional Commissioner? This very Additional Commissioner told his staff that the decision of the Bombay High Court in the Indian National Shipowners - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-633-HC-MUM-ST.htm" target="_blank"><em><font size="1">2008-TIOL-633-HC-MUM-ST</font></em></a></strong> case about the effective date for Service Tax on import of services. He told them that the CESTAT Larger Bench decision in Hindustan Zinc is still valid. He conveniently forgot that the Government lost in the Supreme Court in the Indian National Shipowners and twice in the Hindustan Zinc case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In several cases, when stay applications are pending with appellate Authorities, the Revenue officers do not have the patience to wait for the appellate orders and they resort to all means – legal and illegal to collect their pound of flesh. Is it the assessee's fault that Commissioner (Appeals) posts are lying vacant? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently the Bangalore bench of the CESTAT had observed, </font></p> <blockquote> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">We would like to mention that we have been coming across these kinds of letters issued by the lower authorities for the recovery, despite the stay petition filed, is pending before Tribunal. In our considered view, this action of the lower authorities is not in consonance with the law, as has been settled by the higher judicial forum. It is a settled law that if a stay petition for waiver of pre-deposit of dues is pending before the Tribunal, the lower authorities should not proceed to recover the dues. Suffice to say, that this action is not in accordance with law and should desist from such action </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal directed the registry to mark copy of this order to all the Chief Commissioners and Commissioners under jurisdiction of Bangalore Bench. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what will happen? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Most probably, this order will not be read by any Chief Commissioner or Commissioner – they have better things to do. Most probably it will not reach them; it will be submerged in the flood of correspondence they get every day. But even if they do get it, what will happen – they will routinely forward it their subordinates until it reaches an Inspector who has no subordinate. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In any case when they have no respect for the Supreme Court and their own Board, will a copy of a CESTAT order make any difference? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Judicial and executive indiscipline has become a hallmark of the Revenue Departments as every revenue Officer knows that his immediate superior is far more important than the Supreme Court or the Board! </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see the CESTAT order in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-179-CESTAT-BANG.htm" target="_blank"><font size="1">2010-TIOL-179-CESTAT-BANG</font></a></strong> </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax – No Business Profit in India in absence of permanent establishment </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TODAY</strong> we bring you an important AAR decision where the Authority ruled that the payment received by the applicant from VARs (“third party re-sellers”) on account of supplies of software products to the end-customers (from whom the licence fee is collected and appropriated by VAR) does not result in income in the nature of royalty to the applicant and moreover payments received by the applicant cannot be taxed as business profits in India in the absence of permanent establishment as envisaged by Article 7 of the India-Japan Tax Treaty </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10327" target="_blank">Breaking News </a></strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sunil Mitra is new Revenue Secretary </font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/sunilmitra.bmp" alt="Legal Corner Icon" width="170" height="216" hspace="5" border="0" align="center"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SUNIL</strong> Mitra a 1975 West Bengal cadre IAS officer has taken over as the new Revenue Secretary. While Sunil is not new to the North Block, he has a little less than a month to help his Minister Pranab Da to present the BUDGET 2010. Sunil Mitra inherits a not so happy legacy from his predecessor who was certainly not known for his manners and humility. Even the Bhides of this world have to retire! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the Finance Ministry's website, Mr. Bhide is still the Revenue Secretary and a colleague tells me that he will remain there unless you tell the new Revenue Secretary. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the first task for the new Revenue Secretary would be to officially get himself declared as the new Revenue Secretary, at least in the FINMIN website! We hope he WILL be successful. In any case we wish him all the success in Revenue Department. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Working Taxes </font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt07feb.jpg" alt="Legal Corner Icon" width="240" height="320" hspace="5" border="0" align="center"></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> signboard by the Greater Hyderabad Municipal Corporation. </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"><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"><strong><font color="#663399">Central Excise </font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Deterrent Action against tax evaders – Copies of relied upon documents must be provided to the assessee - Opportunity of hearing means an effective opportunity – CBEC Member's order set aside - High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> notification itself stipulates that the noticee has to be given an opportunity of being heard and that his representation must be considered before the recommendation is made to the Director General. Opportunity of hearing means an effective opportunity of hearing and in this case it means that the petitioner ought to have been supplied with the documents so that he could have made an effective representation against the contemplated action. </font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit – capital goods used for setting up of co-generation plant received prior to operationalization of sugar mill – credit cannot be denied - CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> cannot be denied credit holding that non-dutiable electricity was final product at the time of receipt of capital goods – Sugar mill not being operational on date of receipt of capital goods does not disentitle credit – On erection of entire facility, dutiable excisable goods were final products manufactured using electricity produced by co-generation plant – Impugned order not consistent with law, liable to be set aside </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessee is tax resident of USA - sets up R&D Centre to develop agri-genetic research - claims exemption u/s 10(1) - Creation and sale of hybrid parent seeds not agricultural activity - expression 'agriculture', has got to be understood as connoting integrated activity of basic operations upon land: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CREATION</strong> and sale of hybrid parent seeds not agricultural activity. The expression "agriculture", has got to be understood as connoting the integrated activity of basic operations upon the land. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From the nature of activity carried out by the assessee, it is clear that the breeder seeds developed or produced by the assessee are sown to obtain large quantities of parent seeds, which are being supplied to joint venture Company for a price. The assessee undertakes the production of parent seed through multiplication of breeder seed, which are developed by the assessee after a long drawn process of combining two or more traits of different seeds into one seed. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of services – No tax prior to 18.04.2006 – High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>YET</strong> another High Court has put a stop to Revenue's cavalcade to tax a service without the authority of LAW. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The revenue is before the High Court with the following substantive questions of: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Whether the service tax was leviable on the recipient of service irrespective of Section 66-A of the Finance Act? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Whether non-supply of information to the department regarding overseas commission with the intention to evade service tax does not amount to suppression of facts and invite invocation of extended period of limitation? </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Till the time Section 66A was enacted only the person who rendered the service was liable to pay tax and not the recipient of the service. Accordingly, the revenue did not have any authority to levy service tax on the assessee. </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 t</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">o <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>