TIOL-DDT 1328 · 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 align="justify"><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1328</font></strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><br> 30.03.2010 <br> Tuesday</strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Heath Service is input service for General Insurance Service? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> Finance Bill 2010, certain new services were proposed to be included to the taxable services. One among such new services is the service rendered by any hospital, nursing home or multi speciality clinic to a person covered by health insurance scheme for any health check-up or treatment, where the payment for such health check-up or treatment is made by the insurance company directly to such hospital, nursing home or multi-specialty clinic (Ref Section 65(105)(zzzzo)) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually, insurance companies are already covered under General Insurance Service and they pay service tax on the insurance charges collected from the clients. To give an illustration, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If an Insurance company charges @ Rs 10,000 from 100 persons, total amount collected would be Rs 10,00,000/- (the insurance company pays service tax on this amount of Rs 10,00,000/- under general insurance service) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now they settle one claim from the above 100 persons and pay the hospital, say Rs 1 ,00,000 /- for treatment. The hospital has to pay service tax on this Rs 1,00,000/- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once the entire amount of Rs 10,00,000/- collected is subjected to tax under General Insurance Service, collecting service tax again on Rs 1,00,000/- under Health Service amounts to double taxation. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The benign Board has realised this already and vide para 2.2 (Annexure A) of the JS TRU letter dated 26.2.2010, it has been clarified that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Under general insurance service, an insurance company is a service provider to its clients. Under the proposed new service, tax is also being imposed on the medical charges paid by the insurance companies to the hospitals on behalf of a business entity for its employees. As such, the insurance company would be the service receiver and the tax paid by the hospital would be available to the insurance companies as credit </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, the point is how the Health Service provided by a hospital can be treated as input service for the output service, i.e, General Insurance Service? Will the definition of CENVAT Credit Rules support this clarification? Are the health services provided by the hospitals used for providing output service, i.e, General Insurance Service? Will the field formations allow the credit? Obviously they will not, as the JS TRU letter itself has a word of caution in para 9: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>9. It may be noted that this D.O. letter does not set out the changes in an exhaustive fashion. It gives a broad view of the changes made in the service tax law and procedure in Budget 2010. It should not be used for interpreting any provisions in the case of any ambiguity. The wordings used in the statutory provisions and the notifications alone have legal standing. Therefore, they must be read carefully for interpretation, tax compliance and tax administration purposes. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the whole exercise is revenue neutral, why does the department create extra work for itself as well as for the Hospitals? Now they have to register the hospitals, scrutiny their returns/ records, audit the accounts etc which consumes number of man-hours on both sides. Why can't this tax be just done away with so that the hospitals can focus on treatment of patients than participating in a mere paper work which by no means bring extra penny to the Government? </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Notifies procedure for application for site visits, on-site verification </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended the Handbook of Procedures to prescribe procedure/guidelines for filing/evaluation of applications for entering into an arrangement or understanding for site visits, on-site verification and access to records/documentation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An application for entering into an arrangement or understanding involving site visit, on-site verification or access to records/documentation by a foreign government or a foreign third party either acting directly or through an Indian party as mentioned in Appendix 3 of Schedule 2 of ITC(HS) shall be made in ANF 2EE to DGFT(Hqrs.), New Delhi. These applications shall be considered by an Inter-Ministerial Working Group (IMWG) in DGFT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Permission for arrangement or understanding involving site visit, on-site verification or access to records/documentation will be subject to the following conditions:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Site visit, on-site verification or access to records/documentation will be confined to the purpose, sites and activity for which permission given/which have been mentioned in the authorization. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Site visit, on-site verification or access to records/documentation will be allowed only to individuals mentioned in the authorization. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Site visit, on-site verification or access to records/documentation shall be concluded during the period mentioned in the authorization. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Exporter/Importer will keep a record of site visit, on-site verification or access to records/documentation alongwith detail of individuals who visited the premises during this visit and produce the same as and when required to do so by the GOI. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) No exchange of goods, services and technologies and any documentation including drawings, specification sheets etc. will take place during the visit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) Exporter/importer may be required to give any additional assurance that the Government of India may require. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) Any other condition that may be stipulated in the permission. </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2009/dgft09pn050.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice No. 50/2009-2014, Dated: March 29, 2010 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of Cosmetics under Drugs and Cosmetics Act, 1940 – CBEC Instructions</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> clarifies that import of cosmetics at points of entry / places other than those specified under Rule 43A may not be permitted as per the provisions of the Drugs and Cosmetics Rules, 1945. The points of entry have been specifically mentioned in Rule 43A such as Chennai, Kolkata, Mumbai, Nhava Sheva, Cochin, Kandla , Delhi, Ahmedabad, Hyderabad and Ferozepur Cantonment, Amritsar, Ranaghat , Bongaon and Mohiassan Railways Stations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the imports are noticed through Customs stations, other than the one notified as mentioned above, then necessary action may be taken for non-compliance of the Drugs and Cosmetics Rules in respect of such imports. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants these instructions to be brought to the notice of all concerned by way of issuance of suitable Public Notice / Standing Order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this day and age of globalization, where major cities in India are connected with international destinations by air and there is movement of people and cargo, how justified is it to restrict import of items like cosmetics to just a few cities in India . Why does the Government not realize that such restrictions are archaic? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact recently in <em>Max Overseas vs. CC, Marmagoa <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=28&filename=legal/cestat/2010/2010-TIOL-244-CESTAT-MUM.htm" target="_blank"><font size="1">2010-TIOL-244-CESTAT-MUM</font></a></strong>, </em> this very issue came up before the CESTAT. After considering the relevant provisions of the Drugs and Cosmetics Act, 1940 and Drugs and Cosmetic Rules, 1945, CESTAT held that Shower Gel, Roll on, Shampoo/Conditioner shampoo, Shaving Gel, Hair Cream, Body Cream and Scented Spray are “cosmetics” covered by the term “Substances” mentioned at Entry no. 1 in Schedule ‘D' of Rule 132 of the Drugs & Cosmetics Rules, 1945 and can be imported from any port. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_008.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 8/2010-Cus., Dated: March 26, 2010 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PPF - Date of Realisation is date of deposit </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> most of the government transactions, in case of deposit by local cheque or demand draft, the date of tender of cheque or draft is treated as date of deposit, provided the related cheque is honoured on presentation for encashment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the case of <strong>Public Provident Fund Scheme, 1968, </strong>Government of India has clarified that " <em>when a deposit is made in the PPF account by means of a local cheque or demand draft by the subscriber, the date of realization of the amount will be the date of deposit </em>." </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI wants the banks operating PPF to note this and incorporate this in the computerized system. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI also clarifies that an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Either father or mother can open a PPF account on behalf of his/her minor child but not both. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_notification.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI/2009-10/365 DGBA.CDD. H - 7530/15.02.001/2009-10 Dated: March 29, 2010 </strong></font></a></p> <p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font 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="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – </font><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">Wednesday's</font></strong></font></strong></font></strong></font></strong></font><font color="#006600" size="2"> cases</font></strong></font></strong></font></p> <p align="justify"><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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Option of payment of reduced penalty under Section 11AC to be mentioned in adjudication orders in terms of Board Circular dated 22.05.2008: High Court</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADJUDICATING</strong> authority directed to provide options to the assessee to pay interest and penalty @25% within 30 days in terms of provisos to Section 11AC – Assessee to comply with the said directions failing which they would be liable to pay 100% penalty. </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>India-UAE DTAA - payments to non-resident for technical services - TDS exemption sought - AO denies - For availing tax treaty benefits, non-resident need not be a tax-paying company - DTAA benefits cannot be denied: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> number of cases have now been decided by the ITAT to the effect that a resident of UAE would be entitled to the treaty benefits even if no tax was paid in UAE. While doing so, it took a stand different from the initial stand taken by the Advance Ruling. In subsequent cases, however, the Advance Ruling held that while actual payment of tax was not necessary, in order to claim the benefits of the treaty, a person had to be liable to tax in UAE. </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>Amendment of consignee's name in IGM – Deputy Commissioner order refusing to change names set aside; directed to consider afresh in a reasoned order: High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SUB</strong> section (3) of Section 30 lays down that if the proper officer is satisfied that the import manifest or import report is in any way incorrect or incomplete, and that there is no fraudulent intention, he may permit it to be amended or supplemented. It is now well settled that the power of judicial review of the Court under Article 226 of the Constitution of India includes all cases where the orders are passed by the authorities or even where the authorities have failed to exercise jurisdiction vested in them. It may be stated that the statutory discretion cannot be fettered by self created rules or policy. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements</strong></font></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> </body> </html>