TIOL-DDT 1463 · 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 1463 </font><br>
11.10.2010 <br>
Monday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Composition Scheme for Lotteries - Service Tax Rules Amended </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> new sub rule 7C is inserted in Rule 6 of the Service Tax Rules to provide for an optional Composition Scheme for the Distributor or Selling Agents. They can pay Rs. 6000/- or Rs. 9000/- on every Rs. 10 Lakh value of tickets printed, depending on whether the guaranteed prize payout is more than or less than 80% - the rule does not specify 80% of what! And does the prize payout include the commission paid to the agent? (The Mizoram Lottery announces a payout which includes the agent's incentive)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And if there are more than one Distributor or Selling Agent, is each one required to pay this Rs. 6000 or Rs. 9000? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequently, the government has exempted persons other than distributors or selling agents, marketing lottery tickets, from the whole of service tax, if the optional composition scheme is availed of by the distributor or selling agent. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxing Lottery had been a taxing proposition for the government, not always leading to success. The lottery business in India is a big-time lottery for the organisers and ticket sellers with a turnover of over a lakh of Crores a year. Recently Congress Spokesman Abhishek Singhvi almost lost his job for trying to defend a lottery king in Kerala High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is said to be a Lottery Mafia in operation in several States and the whole scheme is full of frauds with absolutely no control. Interestingly the small North Eastern states are the origin for many lotteries and most of the tickets are sold deep down South in Kerala. Technology has only added a new dimension to the fraud. While many states have banned lotteries, internet knows no geographic boundaries and online lotteries are doing brisk business. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unfortunately governments have been interested only in getting their pound of flesh by taxes, instead of curbing the menace, which is simply an organised way of looting the poor people. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And now the service tax department adds to the confusion and ultimate litigation. Apparently this has been done on the request of the lottery agents as some newspapers have already reported about these notifications. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See : </strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2010/stnot10_049.htm" target="_blank"><strong>Notification No. 49/2010-ST, Dated : October 8, 2010 </strong></a>,</font><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2010/stnot10_050.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 50/2010-ST, Dated : October 8, 2010 </font></strong></a>,<strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/notification_lotteries_rules_2010.htm" target="_blank">Lotteries (Regulation) Rules, 2010. </a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rampant Corruption in Income Tax, Sales Tax and Excise - Supreme Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> admitting an appeal filed by the CBI challenging the acquittal of an Income Tax Inspector, the Supreme Court made certain strong remarks on Corruption. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It is very unfortunate that there is no control over corruption in the country. There is rampant corruption particularly in the Income Tax, Sales Tax and Excise Department. Nothing moves without money. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Why not government legalise corruption so that a specific amount is fixed for every case. Let us say if a man wants his case to be settled, he can be asked to pay Rs. 2,500. That way every individual will know how much bribe he has to pay. There is no need for any bargaining by the official and the people will also know beforehand how much they have to pay without any worry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Poor Government officials, we can't blame them also because of the growing inflation. </font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Who is not Corrupt? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CORRUPTION</strong> is as old as civilisation itself and its growth had been out of proportion. In India, most of the politicians are confirmed to be corrupt and the volumes of their corrupt enterprises are mind blowing. Chief Ministers of very small states are alleged to have walked away with two to three thousands Crores – in the larger states it is said to be a Lakh Crores. Some of our politicians have earned in three years more than what the Birlas could earn in three generations. Shanti Bhushan states before the Apex Court that judges have been corrupt. On and off the CBI books corrupt babus including some from the CBI itself and there are charges against even the CVC Chief! </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If corruption in Central Government is alarming, in the States, it is institutionalised and well organised. Today the only attraction for joining government service is ‘power' translated into ‘corruption'. A very senior IRS officer told me the other day, that from Day One, about twenty percent of the officers in his batch were very clear that they have joined the service only to make money – the rest acquired this wisdom over a period of thirty years! But today almost all the officers have clarity on why they are in the service and are busy from ‘day one' in making money as if there is no tomorrow. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can we stop corruption and is anybody serious about it? Technology and computerisation can curb corruption to a large extent. Now you don't bribe the postman, Railway clerk/conductor, electricity bill collector, etc, because all their operations now do not have human interference. But this is small time corruption – you can't really stop the big time corruption. The major underlying worry for the States regarding GST is whether they would lose the power – the power of corruption! </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And it seems even God is Corrupt – HE is very kind to the corrupt and many corrupt persons offer a share of their corrupt booty to the LORD! </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Corruption is cancer – but don't give up</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TN</strong> Seshan once said, “When my mother had cancer, I didn't give up; the Nation has cancer, don't give up”. How true – the fight against corruption is as hard as it is against cancer and chances of success are bleak – but fight we must. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nobody is born corrupt, but many achieve corruption and on some corruption is thrust. The sad part is the corrupt are also powerful and the most humiliating part is the corrupt lecture even to the honest – on honesty, while the honest are not only silent listeners to sermons on honesty, but also silent spectators to corrupt manipulation. Once upon a time honesty was a virtue; today it is an aberration. The honest are looked down as some mentally challenged persons and many believe that they are honest either because of lack of opportunity or fear of CBI. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no point in talking about corruption. Let's talk about honesty and the honest. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The honest are hounded; they are humiliated; they are ignored; they are manipulated; they are used; they are punished; they become laughing stock in society and in their families; even their very honesty is suspected. In spite of that there are many many honest officers in Government – even in Central Excise and Income Tax , who remain honest against all adversities. They are a special species; they have to be preserved and protected . </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a Netizen who keeps attacking me in our Message Board for my sermons in DDT – with due and undue apologies to him, I confess I couldn't help writing this. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>De-globalisation? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>A</em></strong><em> corollary
of a low growth scenario, weighed down by domestic concerns, is a less
welcoming attitude to globalization.</em> There may not be actually be ‘deglobalization'
but the earlier orthodoxy that globalization is an unmixed blessing is
being increasingly challenged. The rationale was, and hopefully is, that
even as advanced countries may see low end jobs being outsourced, they
will still benefit from globalization because for every low end job gone,
another high end job - that is more skill intensive, more productive -
will be created. If this does not happen rapidly enough or visibly enough,
protectionist pressures will arise, and rapidly become vociferous and politically
compelling. The wave of currency depreciations that we are seeing around
the world is a manifestation of protectionist pressures. - <em>RBI Governor
Dr. D. Subba Rao at the IMF, Washington DC on October 9, 2010</em>. </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"> – Tuesday'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">Central Excise/Customs/ Settlement Commission</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Settlement Commission is for Settlement not Adjudication; Settlement amount based on Investigation Commissioner's Report – Revenue cannot challenge; settlement Application can be made before Show Cause Notice – High Court </font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> feel that if we accept the submissions made on behalf of the petitioner, then it will discourage people from approaching the Settlement Commission. It must be emphasized that the expression used in the relevant provisions is “settlement” in contradiction to “adjudication” and therefore the very scheme of the relevant provisions is settlement and not adjudication. In these circumstances, a pragmatic and practical view should govern the proceedings before the Settlement Commission. </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">Sec 10A - Can Assessee claim deduction for miscellaneous income as derived from business of export - YES, says ITAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Tribunal is - whether income shown under the head ‘miscellaneous income' on account of service charges, exchange gain, overtime charges and services charges for procuring hardware, packing and clearing, can be said to be the income derived from industrial undertaking and, therefore, eligible for deduction u/s 10A of the Act. YES is the answer of the Tribunal. </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">MSRTC allowing some of their buses to be hired by various agencies for conducting tours in connection with picnic, marriage, student excursion etc - Prima facie not tour operator - stay granted: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PRIOR</strong> to the amendment, “Tour Operator” meant any person engaged in the business of operating tours in a vehicle covered by a permit granted under the Motor Vehicles Act, 1988 or the Rules made thereunder . The department has no case that the buses given to private agencies against hire charges during the period of dispute were covered by any such permit granted under the Motor Vehicles Act/Rules. None of such vehicles has been shown to have been covered by any tour permit issued by the Motor Vehicles authority. It has also not been shown that the Road Transport Corporation was engaged in the business of operating tours prior to or after 10.09.2004. Prima facie, therefore, the demand of service tax confirmed against the appellant is not sustainable in law. </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" target="_blank"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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