TIOL-DDT 1388 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1388</font> <br>
</strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25.06.2010 <br>
</font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Friday</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Target - ted Appellate Commissioners </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> seems the CBEC has fixed a target for the Commissioners (Appeals) – the number of orders they are required to pass. We are made to understand that a Commissioner(Appeals) has adopted an ingenious method to beat the target. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first part of an appeal before a Commissioners (Appeals), is the Stay Application. Most of the Commissioners, generally hear and decide both the Stay and Appeal together, but this ingenious Commissioner has devised a dubious way to meet the target. Immediately on an appeal being filed along with the stay application, he passes an order of pre-deposit, without even giving the party an opportunity of personal hearing. He relies on the decision of the Supreme Court in the Jesus Sales Corporation case – </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2002/2002-TIOL-259-SC-CUS.htm" target="_blank">2002-TIOL-259-SC-CUS</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">;
But the Delhi High Court in JT(India) Exports – </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2003/2003-TIOL-163-HC-DEL-EXIM-LB.htm" target="_blank">2003-TIOL-163-HC-DEL</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">,
it was held that Jesus Sales, cannot have universal application and it was
decided on the peculiar factual position of that case pertaining to the Imports
and Exports(Control) Act. The Delhi High Court added, “<font color="#FF6633"><strong>Justice should not only be done but should also be seen to be done</strong></font>”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Coming back to our target-top Commissioners (Appeals), he is a champion in passing orders and when his Chief Commissioner sends his report to the Board this Commissioners (Appeals), let us call him CA, is on the top of the league, all his other colleagues lagging way behind. The Board and CCs go by numbers and our CA is a clear leader and way ahead of all others and is shown as an example worthy of emulation. His colleague Commissioners are shown as inefficient and incompetent – at least painfully slow. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now if you analyse the work of our competent CA, this is what happens. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He passes a large number of orders asking the parties to make pre-deposit. Assessees don't manufacture currency notes and many of the assessees don't make the pre-deposit. In fact this pre-deposit order of the CA is FINAL; there is no appeal against it. For failure to comply with the order of pre-deposit, our CA dismisses the main appeal. Now the assessee goes to the Tribunal, which remands the case to the CA to decide the matter on merits. Now he passes his order and the assessee again goes to the Tribunal. Till now not a rupee has been realised, while other Commissioners who were not as fast as our CA must have realised some amounts in pre-deposit at least at the stage of the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government should realise that such record breaking and target hitting Commissioners are not exactly working for safeguarding the Government interests – they only add to work all around without adding in any way to the Revenue and in the process bringing a bad name to the government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government should seriously consider</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ doing away with the requirement of pre-deposit at the first appellate stage </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ doing away with the post of Commissioner (Appeals), as it is only an impediment and a necessary stopover in the legal journey. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ At least directing the Commissioners (Appeals) to give a hearing before deciding stay applications.</font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tax
Credit Statement - Form 26AS - Please Avail the Facility - CBDT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBDT has compiled the Tax Credit Statement (in Form 26AS) in respect of each PAN holder on real time basis. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can have details of your TDS deduction, Advance Tax payment and refunds for the current year as well as the previous years – all at a click. Incidentally TDS certificates given by your employer or other dedutors are now of no use – you will be given credit only for those amounts of TDS as reflected in your Form 26AS. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Department has sent Form 26AS statements by email to nearly 50 Lakh taxpayers by email. From the current year, you can view view your tax credits by undertaking a one-time registration. Detailed procedure for registration is available at <a href="http://www.incometaxindia.gov.in/"><strong>www.incometaxindia.gov</strong>.<strong>in</strong> </a>and <a href="http://www.tin-nsdl.com/"><strong>www.tin-nsdl.com</strong></a>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT wants Chief Commissioners to give wide publicity to this attempt of the Department. The Board wants the employees of the Department also to avail of the facility. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is a wonderful system that the CBDT has devised. No need of running around various deductos for those TDS certificates and you have one statement of all the tax deducted from your income.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AND IT WORKS! I HAVE TESTED IT.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2010/tds_letter.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT letter D.O. No. FTS-799468/2010-MEMBER (R) Dated: June 18 </font></strong></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of Milk and Milk Products from China - Prohibition Continues </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> prohibition on import of milk and milk products including chocolates and chocolate products and candies/ confectionary/ food preparations with milk or milk solids as an ingredient, from China, imposed vide <em>Notification No. 67(RE-2008)/2004-2009 dated 1st December, 2008</em> and extended vide <em>Notification No. 22/2009-2014 dated 23rd Dec, 2009,</em> is extended <font color="#FF6633"><em><strong>for a period of six months from 24th June,2010 and until further orders</strong></em></font>. </font></p>
<p align="justify"><font size="2"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2009/dgft09not049.htm" target="_blank"><strong><font face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 49/2009-2014, Dated: June 24, 2010 </font></strong></a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Cenvat Deadlock on inputs services - The genesis</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DO</strong> you remember the Tribunal's order on <em>CENVAT Credit</em> of input services </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-564-CESTAT-BANG.htm" target="_blank">2010-TIOL-564-CESTAT-BANG</a>)</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">?
The CESTAT has held that the provisions of the <em>CENVAT credit</em> rules
in allowing credit on input services “used” for providing output service are ultra vires the Finance Act, 1994 because the words used in Section 94 are “consumed” but not “used”.
The above judgement has sent shock waves across the trade and the officers
and there is total confusion now as to what constitutes an input service. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually, if we look at the history of <em>CENVAT Credit</em> on inputs services, it would reveal some interesting facts as to how this word consumed has crept in Section 94 of the Finance Act, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the year 2002, for the first time credit was allowed on input services. But the condition was that both the input service and the output service should fall under the same category. Thus, Section 94 was amended vide Finance Act, 2002 to insert sub-section (ee) which reads as “the credit of service tax paid on the services consumed for providing a taxable service in case where the services <strong>consumed</strong> and the service provided fall in the same category of taxable service”. The new sub-section is effective from 16.8.2002. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Simultaneously, with effect from 16.8.2002, Service Tax Credit Rules 2002 were also notified. The definition of the input service in these rules read as </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>“input service"</em> means any taxable service received and <strong>consumed</strong> by a service provider in relation to rendering of output service. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the rule was in perfect harmony with the Section. The usage of consumed can be understood to some extent since the input service and output service should fall under the same category. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But later, when the cross sectoral credit across goods and services was allowed, new set of <em>CENVAT Credit</em> Rule 2004 have been notified and poor babu just did not know that the word used in Section 94 still reads “consumed”. But all was going on well till the above referred order of the Tribunal and it will be interesting to see how this issue will be resolved. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>International Day against Drug Abuse and Illicit Trafficking</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TOMORROW</strong> is International Day against Drug Abuse and Illicit Trafficking. By resolution 42/112 of 7 December 1987, the General Assembly decided to observe 26 June as the International Day against Drug Abuse and Illicit Trafficking as an expression of its determination to strengthen action and cooperation to achieve the goal of an international society free of drug abuse. This resolution recommended further action with regard to the report and conclusions of the 1987 International Conference on Drug Abuse and Illicit Trafficking. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On this occasion, tomorrow, we bring you an article <strong>NARCO TERRORISM AND TERROR FUNDING</strong>, by Dr. Sreekumar Menon, who has done extensive research on the subject and holds a doctorate. </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"> – Monday's cases </font></strong></font></strong></font></p>
<p align="left"><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>Supplementary Invoices - Interest - On date of clearance, no escalation – no interest payable - SC decision in SKF - </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2009/2009-TIOL-82-SC-CX.htm" target="_blank">2009 TIOL-82-SC-CX</a></strong></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> distinguished: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> supplementary invoices were issued to facilitate the recovery of the expenditure of cost escalation and the enhanced duty thereon was paid. Therefore, as on the date the goods were cleared initially, if such a price escalation had not taken place, then the assessee could not foresee, the subsequent escalation in price. However, In the instant case the assessee paid duty on the differential price also. Therefore, we cannot apply the said decision to the present case. </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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income
tax - Sec 80IA - Merely on basis of licence agreement with State Govt to
establish the undertaking it cannot be said that assessee's cellular mobile
service business commenced in relevant fiscal: ITAT</font></strong></p>
<p align="justify"><font size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif">SECTION </font></strong><font face="Verdana, Arial, Helvetica, sans-serif">80IA
is one of the most controversial Sections of the I-T Act. The greater
are the efforts of the policy makers to sort it out, more complicated
it tends to get. The issue before the Tribunal is<strong> - </strong></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether
on the basis of licence agreement, approved by the state of Gujarat for
establishing undertaking, alone, can it be said that the assessee has
commenced its telecom services in AY 1996-97 in terms of section 80-IA
(4) (<em>ii</em>), ignoring the other evidences such as list of cellular
mobile services license holders, published by Telecom Department and
assessment order of the AO 1996-97, mentioning that the assessee’s
business has actually commenced on 21.01.1997. And the answer is NO.</strong></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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Laying pipe in wall/roof/floor for crossing of wires, fixing junction box, MS box, etc. would not amount to commissioning, installation of plant, machinery and equipment.: High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> activities like laying the pipe in wall/roof/floor for crossing of wires, fixing the junction box, MS box, Wooden Box, fixing the cables trays to lay the cables, digging the earth to lay the cables and digging the earth pits for earthing of equipments would not amount to commissioning, installation of plant, machinery and equipment. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">weekend</font></font></font><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">.</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"><strong>vijayWrite@taxindiaonline.com</strong> </a></font></p>
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