TIOL-DDT 1434 · 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 1434 </font><br> 30.08.2010 <br> Monday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax – Construction service – Constitutional Validity of FA 2010 Amendment Challenged – Interim relief </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> you will recall, the Finance Act 2010 added this explanation to Section 65(105)(zzzh) </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Explanation. - For the purposes of this sub-clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer;" </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and the TRU clarified this to mean as , that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This had been challenged and the Bombay High Court had already granted an interim relief – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-526-HC-MUM-ST.htm" target="_blank"><font size="1">2010-TIOL-526-HC-MUM-ST</font></a></strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Madras High Court has also given an interim relief to the party – please see <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2010/2010-TIOL-604-HC-MAD-ST.htm" target="_blank"><font size="1">2010-TIOL-604-HC-MAD-ST</font></a></strong> </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Woes of a MBA Student </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> got this mail from a MBA Student. </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I have done MBA as a part time student from TASMAC in PUNE validated by University Of Wales U. K., On 16 August 2005 TASMAC had put a notice on PUNE campus regarding service tax, mentioning that all the students of TASMAC have to pay service tax on the entire fees which they have paid and will be paid, whereas nothing been told to us regarding this matter at the time of joining the institute nor even it is mentioned anywhere in the documents given by the TASMAC earlier and I've been paying the fees in six installments out of which four installment I've paid, on consulting the matter to CA and lawyer I came to know that TASMAC can only ask the service tax on the amount which is remaining to pay and they can't ask us to pay the service tax on the amount which we have already paid, so I want your help in this matter and request you to kindly help me and all the students of TASMAC in this matter. They have held up my Certificate until I pay the service tax on the entire fees. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One such Management Institute is my client with regard to Service Tax on Commercial Coaching and Training. One of my colleagues is an MBA from that institute. When she came to know that her alma mater was my client, she requested me to charge a hefty fee as the institute had charged her a fortune for that MBA Degree, for which the Government wants to collect Service Tax as the degree is not recognised by law. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is really unfortunate that in this country, we want to tax education, when the Government has failed miserably in its Constitutional responsibility of providing universal primary education. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Where knowledge is free</strong> ..... poor Gurudev </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Consolidated guidelines /instructions issued on staff management of Government and Private Special Economic Zone </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> SEZs are headed by Development Commissioners (Joint Secretary /Director /Deputy Secretary Level at the Centre) with supportive Customs and Ministerial Staff. Central Government appoints Development Commissioner in one or more Special Economic Zone. [Section 11(1) of the SEZ Act]. Central government also appoints such officers and other employees as it considers necessary to assist the Development Commissioner in the performance of his functions in the Special Economic Zones [Section 11(2) of the SEZ Act]. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present there are Seven Special Economic Zone at Kandla, Santacruz (Mumbai), Noida, Chennai, Cochin, Falta (Kolkata) and Visakhapatnam administered by the Central Government. Accordingly Recruitment Rules (RRs) for the officers and employees in these Government SEZs has been framed and a list of RR is given below. These RRs cover all aspects of staffing in the concerned zone such as number of posts, their classification, scale of pay, mode of appointment viz, promotion or deputation educational qualification, disqualification and relaxation provisions etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Staffing in the 12 State/Private Sector Special Economic Zones is managed as per the RRs of respective Central Government SEZ under which the State SEZ has been placed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Commerce has issued consolidated instructions on the staffing pattern in various SEZs. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=259&filename=sez/sez_notifications/consolidated_guidelines_SEZ.htm" target="_blank">Department of Commerce F.No.A-16/12/2010-SEZ Dated: August 16, 2010 </a></strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise Valuation – Landmark Judgement by CESTAT LB </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MARUTI</strong> sells its cars through dealers. The dealers collect pre-delivery inspection and after-sale-service charges from the buyers. Are these to be included in the assessable value? Yes, says the Larger Bench of the Tribunal headed by the President. Don't the dealers make a profit on these services and are the profits also excisable? Dealers offer several discounts to the customer and sometimes these charges are waived and then how is the transaction value determined? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The whole concept of transaction value will have a new look. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Larger Bench observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Any amount collected by the dealer towards pre-delivery inspection or after sale services from the buyer of the goods under the understanding between the manufacturer and the dealer or forming part of the activity of sale promotion of the goods would be a payment on behalf of the assessee to the dealer by the buyer, and hence, it would form part of the assessable value of such goods. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The term "sale" used in the definition clause should not be misunderstood as having used, otherwise than to identify the stage at which the product is cleared to the customer i.e. the buyer thereof and the price element which is to be considered for the purpose of deciding the issue relating to the assessable value of the manufactured goods. It essentially denotes the total consideration payable by the buyer for the product which is to be considered while calculating the assessable value of the goods for the purpose of determining the duty liability under the said Act. It is totally different from the liability relating to sale tax. This is apparent from the scheme of the Act as well as the intent and spirit of the Section 4 itself. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In the scheme of the said Act, therefore, the concept of transaction value relates to the manufacturing cost inclusive of any other amount received or receivable directly or indirectly to make the product marketable. The manufacturing of a product and the marketability thereof are inbuilt elements of the scheme of assessable value under Section 4 of the said Act. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you this landmark judgement tomorrow. </font></p> <p align="center"><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"> – Tuesday's cases</font></strong></font></strong></font></strong></p> <p><font color="#663399" 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">Central Excise</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Higher duty paid on export goods calculated on the CIF value – Revenue was not right in reducing rebate claim to extent of duty payable on FOB value - re-credit taken of rejected rebate amount - prima facie applicability of LB decision in BDH Industries is in doubt - Stay granted: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants had paid higher duty on the export goods calculated on the CIF value and their claim for rebate was reduced to the extent of duty payable on FOB value. Consequently, the appellants have taken credit of the balance amount suo motu . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department was of the view that there is no provision for taking suo motu credit. Reliance is placed on the decision of the Larger Bench in the case of BDH Industries vs. Commissioner of Central Excise (Appeals), Mumbai <strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2008/2008-TIOL-1211-CESTAT-MUM-LB.htm" target="_blank">2008-TIOL-1211-CESTAT-LB)</a></font></strong>. </font></p> <p><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">Exporter receives trade advances - Can balance trade advances after adjustment of value of exports goods be treated as taxable income? - NO, says ITAT Third Member </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is normal practice that business entities receive trade advances against exports orders. Now the issue before the Third Member of the Tribunal is - Whether trade advances which were received from foreign buyers and remained in the books after adjusting the value of goods supplied, can be treated as income of the assessee ignoring that the same has been remitted back in subsequent year after taking approval from RBI. And the Third Member verdict goes against the Revenue. </font></p> <p align="left"><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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>