TIOL-DDT 1450 · 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 1450 </font><br> 22.09.2010 <br> Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Classification of New Taxable Services for Export/Import Rules </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Export of Services Rules, 2005 and Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 classifies all the taxable services notified in sub-section 105 of section 65 of the Finance Act, 1994 into three categories in terms of sub-rule (1) of Rule 3 in the said rules for the purpose of determining whether the said services were exported or imported as the case may be, by the service provider/service recipient. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Through Finance Act, 2010, eight new taxable services were brought into the tax net with effect from July 1, 2010. However, there was no indication about their classification for the purpose of export/import of these services. With the result, the service tax payers raised doubts about determining the export/import of the new services as they have not been notified under the respective categories of services enlisted in the relevant provisions of the said rules. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this regard, Board has clarified that all the new services notified through the Finance Act, 2010 falls in category (iii) of Rule 3(1) of the said rules i.e. residual category, no separate notifications were issued regarding individual classification of the new services. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2010/sercir129.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CIRCULAR NO. 129/11/2010-ST, Dated: September 21, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Committees of Commissioners and Chief Commissioners have lost their relevance - Government should accept recommendation of GST Implementation Group of CBEC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10445" target="_blank">TIOL-DDT 1307 25.02.2010</a></strong> while explaining that these Committees have outlived their utility we said,</font></p> <p align="justify"><strong><em><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“THE institution of committees of Commissioners and Chief Commissioners to review the orders of Commissioner (Appeals) and jurisdictional Commissioners to decide on appeals to the CESTAT has miserably failed and is best abolished. This system has complicated matters and is a huge waste of money and time with absolutely no improvement in the quality of decisions.………The Committees of Commissioners and Chief Commissioners were brought into the statute with the hope that two heads are better than one and a Committee consisting of two Commissioners or two Chief Commissioners would not routinely decide to appeal but would have the courage to hold that no appeal is necessary. But sadly they ensured that the good intentions of the Board are defeated.” </font></em></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11086" target="_blank">TIOL-DDT 1395 06.07.2010</a></strong>, we highlighted a case where High Court of Bombay expressed its frustration over frivolous filing of appeals and gave the Government the tag of being the largest litigant and exhorted the CBEC Chairman to issue necessary instructions to the field formations to avoid filing of frivolous appeals, based on similar instructions issued by CBDT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In that edition of <strong>DDT </strong>we further highlighted the CBEC's appeal policy over a period of two decades and how the field officers blatantly ignored the policy guidelines, with some senior officers being of the view that the matter will rest finally only when the issue is decided by the Supreme Court and no less (as if they have any respect for the Supreme Court judgments). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Then again in <strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11414" target="_blank">TIOL-COBWEB 205 16.09.2010</a></strong> while deliberating on the need to reduce litigation in tax matters we highlighted a dubious case of a Committee of Commissioners deciding to file an appeal against an order passed by the Commissioner (Appeals) who set aside a demand of a princely sum of Rs. 14/- towards interest on a royal sum of Rs. 437/- which the assessee promptly paid up, along with mandatory penalty <strong><em>[<font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2010/2010-TIOL-1198-CESTAT-DEL.htm" target="_blank">2010-TIOL-1198-CESTAT-DEL</a></font>]</em></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact realizing this farce being perpetrated in a ritualistic manner in the field, the ‘CBEC's Group on Implementation of GST' which was authorized to study and make recommendations on the nature of administrative set up required in the new GST regime, while dealing with the review and appeal mechanisms, suggested a common review mechanism for the two dispute resolution models suggested by this group wherein, officers of the rank of Commissioners, under the Central and State Governments will review the orders passed by the adjudicating authorities lower in rank. On their recommendations, appeals can be filed with the Commissioner (Appeals). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further officers of the rank of Chief Commissioners under the Central and State Governments will review the orders passed by officers in the rank of Commissioners or Orders-in-Appeal passed by the Commissioner (Appeals). On their recommendations, appeals can be filed with the State level GST Tribunals. Further these officers of the Chief Commissioner rank will review the orders passed by the State level GST Tribunals and if required recommend filing of appeals before NGSTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the recommendations by the Implementation Group of CBEC, there is not a whisper of continuing with the existing system of Committees of Commissioners or Chief Commissioners. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope that this recommendation is accepted by the Central Government as well as the Empowered Committee on GST, which will restore some semblance of sanity in the way orders are reviewed and appeals are filed in the field formations. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DRI arrests Customs Supdt for Drug Smuggling </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> Superintendent of Customs in the Container Corporation of India, Tiruvottiyur in Tamil Nadu was arrested by the Directorate of Revenue Intelligence ( DRI ) authorities on Sunday on the charge of allowing export of a consignment, in which more than 50 kg of ketamine hydrochloride had been concealed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to DRI sources, the consignment left India even before the DRI could lay hands on it, but a perseverant DRI got the drug seized in Malaysia and arrested the accused in India, including the Customs Superintendent. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And it is learnt that a Lady Superintendent of Belapur II Division was also arrested by CBI along with a couple of her colleagues and an adhoc employee. It seems CBI searched her office and recovered cash of Rs . 80,000/- from a drawer. This is said to be one day's collection in the Range. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With such high stakes, who is interested in VI Pay Commission Scales? </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Trade likely to grow by 13.5% in 2010, WTO </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DIRECTOR</strong>-General Pascal Lamy says, “This surge in trade flows provides the means to climb out of this painful economic recession and can help put people back to work. It underscores, as well, the wisdom governments have shown in rejecting protectionism. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Following faster than expected recovery in global trade flows so far in 2010, WTO economists have revised their projection for world trade growth in 2010 upwards to 13.5%. The WTO's March forecast was a 10% expansion in trade volumes. <br> <br> Merchandise exports of developed economies are predicted to expand by 11.5% in volume terms while the rest of the world (including developing economies and the Commonwealth of Independent States) is expected to see an increase of 16.5% for the year. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FM happy with SENSEX 20000 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE</strong> Minister Pranab Mukherjee was happy that the SENSEX has crossed the 20,000 mark, but he cautioned, “we all know that the Sensex is always a little bit unpredictable”. When the last bull run happened, P. Chidambaram said, “the fundamentals of the country do not change on a daily basis”. Finance Secretary Chawla said that Sensex at 20,000 reflects the confidence of investors in the India growth story and that it was a vote of confidence of foreign institutional investors. </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><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">Service Tax</font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In definition of Input Service in rule 2(l) of CCR, 2004, nowhere it is mentioned that input service credit is not available for service utilized outside factory premises – Repair and maintenance service used for running a Water pump situated at bank of Wardha river is an Input Service – When there is a final decision on issue, same is to be respected rather than a prima facie view taken while deciding Stay application: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent is engaged in the manufacture of cement. They have a Water Pump situated at the bank of the Wardha River to draw water for use in the captive power plant. Needless to mention this Pump is required to be kept functional almost 24x7x365 and hence the manufacturer i s required to regularly carry out its repairs and maintenance through a service provider. This service provider pays service tax on the service rendered to the client and the manufacturer avails the CENVAT credit of the same. Revenue cannot digest this fact of availment of CENVAT credit and hence issues a demand notice, confirms the duty without batting an eyelid and imposes penalty and interest. </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">Income tax - Sec 32 - AO is justified to disallow claim of depreciation on finding that assessee claimed to be acquired never existed: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> Company, engaged in the business of financial leasing, filed income tax return. The same was processed under section 143(1 )( a) and subsequently evaluated under section 143(3) of the Act. Thereafter the case of the assessee was reopened on the basis of report of investigation wing. In the reassessment proceedings the AO disallowed the claim of 100% depreciation of the assessee on the ground that the assets namely rollers never existed. CIT (A) affirmed the order of the AO. Appeal was filed before the ITAT where it was argued that since the assessee has offered lease rental income for taxation the order of the authorities below is not sustainable. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs/Excise/Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Since last date of filing appeal fell on a Sunday, as per s.10 of General Clauses Act, 1897, Monday, next working day should be treated as last date and consequently condonable period of 30 days is to be computed thereafter Appeal fil ed within condonable period - Matter remanded to Commissioner (Appeals): CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AN </strong>intelligent manner of computing the time period in the matter of delayed filing of an appeal to the Commissioner (Appeals) has been pronounced in a recent decision by the CESTAT. In the present case, the Bill of Entry was assessed on 11.6.2008 and the importer was aggrieved with the assessment. He filed an appeal with the Commissioner (Appeals) on 10.09.2008. The Commissioner (Appeals) refused to entertain the appeal by taking the stand that the appeal had been filed beyond 90 days of the impugned order. </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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>