TIOL-DDT 1411 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1411 </font><br> 28.07.2010 <br> Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GST Implementation Group's Report - Certain Issues </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> GST implementation is taking shape in the CBEC, we carried a summary of the report in our TIOL TOP, we bring you analyses on some important aspects of the report. We will bring you the comments on various issues in the next few days. Today we cover <font color="#663399"><strong>Re-engineering of Business Processes</strong></font>. The recommendations are in black font and our comments in<font color="#FF6633"><strong> red</strong></font>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The registration process for all the three taxes viz. CGST, SGST & IGST should be common and online, with physical verification of a small percentage of taxpayers based on assessment of risk. </font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">This looks good for reading in a report, but “How do you assess the risk at the time of giving registration?” How do you decide the character of a person at the time of birth? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The frequency of filing of returns for small taxpayers may be made half yearly or on annual basis. For medium and large taxpayers, the frequency can be quarterly and monthly respectively. Option to be given to all taxpayers to file monthly returns, if they wish to. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The GST regime will have assessee base of around 50 lakhs which the group also recognises as a big number to handle. In such a scenario, why do they need quarterly or monthly returns even for large or medium taxpayers? Even if we average on quarterly basis, the number of returns would be somewhere in the range of 2 crores per annum. When focus of tax compliance is based on audit and anti-evasion, why to bother the larger / medium taxpayers with monthly/quarterly returns? What is wrong in making the frequency of return annual for all the taxpayers? Once the returns are filed on yearly basis, it will be convenient for the auditors also to check the compliance on Year on Year basis. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For procedural and minor technical irregularities a <font color="#663399"><strong>fixed percentage</strong></font> as penalty may be prescribed in the law, which can be paid by taxpayers on their own assessment, without the requirement of issue of show cause notice and follow up adjudication. </font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">It is not clear whether they want a fixed percentage or a fixed amount as penalty. The Presentation says, “ <strong>For procedural/technical lapses - fixed penalty can be paid without SCN and adjudication</strong>”, while the executive summary says, “<strong>For procedural and minor technical irregularities a fixed percentage as penalty may be prescribed in the law”</strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present practice of mandatory annual audit of the large taxpayers to be dispensed with. Based on stringent risk parameters, such units to be selected for audit. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Even the EA 2000 audit was conceptualised on risk parameters. But, in practice, it has rarely been followed and auditors knock the doors of assessees paying more than one crore at the stroke of one year from the previous audit as if they are habitual offenders. Some assessees grumble whether more payment of duty means more evasion and vice versa. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The EA 2000 Audit Manual reads “Given that audit is an activity requiring substantial, high-quality human resources and the large assessee base, it is impossible to subject every assessee to audit each year. The units for such selective audit should be identified on the basis of assessment of the risk potential to revenue. This process is known as Risk Assessment” </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">But this lofty ideal is rarely implemented. It remains to be seen whether the “risk based audit” would be a reality in GST regime and a real re-engineering of business process will take place or only the same old engineering is continued.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you more comments tomorrow. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of ‘Worn Clothing' - CBEC Instructions </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has re-issued the withdrawn Circular. Board reiterates that being a restricted item under ITC (HS), the import of ‘worn clothing' should be adjudicated and fine in lieu of confiscation and penalty imposed keeping in view the ‘margin of profit' on such unauthorized import and also the fact that such consignments should not get cleared by paying only nominal fine and penalty in future. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has also considered the possible health hazard associated with such imports and hence, decided that consignment of ‘used / worn clothing' will be given clearance by the Customs authorities only after proper fumigation of the consignment. The cost of fumigation will have to be borne by the <em><strong>concerned</strong></em> importers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board warns -<font color="#FF6633"><strong>Any laxity on the part of Customs officials in this regard will be viewed seriously</strong></font>. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_022.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 22/2010-Cus., Dated: July 26, 2010 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty Imposed on Viscose Staple Fibre </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GOVERNMENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font> has imposed anti dumping duty on Viscose Staple Fibre excluding Bamboo fibre falling under sub heading 5504 10 00 originating in, or exported from, People's Republic of China and Indonesia. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_076.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 76/2010-Cus., Dated: July 26, 2010 </strong></font></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provisional Anti Dumping Duty Imposed on Poly Vinyl Chloride Paste Resin </font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">GOVERNMENT</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> has imposed provisional anti dumping duty on Poly Vinyl Chloride Paste Resin falling under sub heading 3904 22 10, originating in, or exported from, People's Republic of China, Japan, Republic of Korea, Malaysia, Russia, Taiwan and Thailand. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This will be effective up to and inclusive of the 25th January, 2011 </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_077.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 77/2010-Cus., Dated: July 26, 2010 </strong></font></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Motor Cycles Imported in CKD condition – Exemption entitled - But what is CKD </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> an interesting decision the Authority For Advance Rulings held that the expression CKD in the context of motorcycles also includes parts in the form of identifiable basic sub assemblies, such as the engine assembly, the transmission assembly, the clutch assembly, the axle assembly, the body assembly, the exhaust pipe assembly, the fork assembly, the mirror assembly, the front wheel assembly, the head light assembly, the rear wheel assembly, the oil tank assembly, shock absorber assembly etc..” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AAR passed this order yesterday and <strong>TIOL</strong> brings it to you today. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WCO Chief In India</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WORLD</strong> Customs Organization, Secretary General Dr. Kunio Mikuriya was in New Delhi on 22nd and 23rd July 2010. He met senior Customs officers, the Revenue Secretary, Business Associations and the probationers at NACEN. As reported by us earlier, the Indian Customs could not arrange a meeting for him with our Finance minister. </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"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> <br> <br> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Picture shows the Secretary General with CBEC Chairman V Sridhar and CBEC Member SK Goel. </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 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"><font color="#663399"><strong>Central Excise </strong></font></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court decisions in Dharamendra Textile as well as in Rajasthan Spinning & Weaving Mills do not lay down that for every short payment of duty, penalty is automatic: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LAW</strong> laid down in Dharmendra Textile as well as in Rajasthan Spinning & Weaving Mills is that mandatory penalty under Section 11AC of the Act was not applicable to every case of non-payment or short-payment of duty. Thus, even though the authorities may have no discretion once conditions stipulated under Section 11AC of the Act exist, in absence of fulfilment of such conditions, penalty could not be levied. In this view of the matter and the finding of the Tribunal that there was no allegation of suppression of facts with intent to evade the payment of duty, the penalty under Section 11AC of the Act was not warranted. No substantial question of law arises. </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">Cultivation of potatoes - assessee provides seeds to farmers for better crops and buys back entire produce - Can such activity be treated as works contract and farmers as jobworkers? - No, provisions of Sec 194C do not apply - Sec 40(a)(ia) cannot be invoked: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is settled law that the jobwork is akin to manufacturing. Jobworkers also pay Central Excise duty like any other manufacturers. But can this term be stretched to an extent that a potato cultivator can be treated as a joworker, and such an activity can be brought under the provisions of Sec 194C by treating it as works contract? Are provisions of Sec 40(a)(ia) applicable to payments made by the assessee to farmers to grow better potatoes crops? Is cultivation of potatoes a natural phenomena and cannot be managed by any science and hence, mere guidelines for growing better potato crop cannot be termed as direction for obtaining desired products? And the final verdict has gone in favour of the assessee. </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">Refund of Service Tax – Notfn. 41/2007-ST – bill raised by service provider indicated that service tax was paid by another service provider – when fact remains that assessee had borne service tax, refund cannot be denied: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents filed a refund claim of service tax claiming the benefit of exemption <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_041.htm" target="_blank">Notification no. 41/2007-ST dated 6.10.2007</a></strong></em>. The respondents claimed the refund on the strength of bill raised by the service provider indicating service tax amount claimed by the service provider from the respondent whereas the service tax was actually paid by some other party. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Averring that this document indicated that the service provider who had issued the bill had not paid the service tax, the department was of the opinion that the document submitted was not a valid one to claim refund of service tax . </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> </body> </html>