TIOL-DDT 1477 · 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 1477 </font><br>
29.10.2010 <br>
Friday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court upholds Service Tax on Financial Leasing Services </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was a constitutional victory for the Service Tax Department in the Supreme Court. And for a record fourth time! The validity of Service Tax with reference to Entry 97 of List I and the competence of Parliament to levy tax on certain <font color="#FF6633"><em><strong>services</strong></em></font>, was before the Supreme Court earlier in </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>- T.N. Kalayana Mandapam Association v. Union of India - </em><strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2004/2004-TIOL-36-SC-ST.htm">2004-TIOL-36-SC-ST</a>) </font></strong></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Gujarat Ambuja Cements Ltd. v. Union of India - </font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2005/2005-TIOL-53-SC-ST.htm">2005-TIOL-53-SC-ST</a>) </font></strong></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- All-India Federation of Tax Practitioners v. Union of India - </font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2007/2007-TIOL-149-SC-ST.htm">2007-TIOL-149-SC-ST</a>)</font></strong>. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court once again upheld the validity of a Service Tax levy, this time on financial leasing services including equipment leasing and hire-purchase . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
petitioners made a strong plea that when sales tax is already paid for the
transfer of the right to use the goods particularly when such transfer is
a deemed sale under Article 366(29A), it is not open to Parliament to impose
service tax on the same transaction once again . But the Supreme Court was
not impressed and held, “The impugned tax is not on material or sale. It
is on activity/service rendered by the service provider to its customer.
Equipment Leasing/ Hire- Purchase finance are long term financing activities
undertaken as their business by NBFCs ” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Until GST comes, we will have to live with this kind of issues. In every sale , there would be a service and now the Board may look for these services in sales to bring them within the tax net. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this Supreme Court judgement today. Please see <strong>Breaking News</strong>.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on 1-Phenyl-3-Methyl-5-Pyrazolone - extended – Before Expiry</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Anti Dumping Duty on 1-Phenyl-3-Methyl-5-Pyrazolone originating in, or exported from, Peoples Republic of China was imposed, <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2006/ctariff06_001.htm" target="_blank">Notification No. 1/2006-Customs, dated the 10th January, 2006</a></strong></em>. This would expire on 09.01.2011. Now the Government has extended it till 30.06.2011. This is done a good two and a half months before the expiry. DDT Congratulates the Board for not resurrecting yet another corpse and extending the validity much before expiry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clarity and consistency are more important than ... </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_111.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 111 /2010-Cus., Dated: October 27, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise Valuation - Inclusion of After Sale Service and Pre-delivery Inspection Charges – Board Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> in its <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2002/excircular643.htm" target="_blank">circular No. 643/34/2002-CX dated 1-7-2002</a></strong></em> had clarified that After-sale Service and Pre-delivery Inspection charges were liable to be included in the assessable value under Section 4 of the Central Excise Act 1944. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excircular909.htm" target="_blank">Circular No. 909/29/09-CX dated 11.12.2009</a></strong></em>, Board directed to transfer all the show cause notices issued on the above subject to call book pending the decision of the larger bench of CESTAT in the case of Maruti Udyog Ltd. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Larger Bench of CESTAT vide its order dated 13.8.2010 - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2010/2010-TIOL-1127-CESTAT-DEL-LB.htm"><strong>2010-TIOL-1127-CESTAT-DEL-LB</strong></a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> has
now held that Pre-delivery Inspection charges and After-sale Service charges
collected by the dealers are to be included in the assessable value under
Section 4 of the Central Excise Act, 1944. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board wants the cases pending in the call book to be decided keeping in view the law laid down by the larger bench of CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT Larger Bench delivered its order on 13.08.2010 and we carried it on 31 st August. In less than two months, Board has taken note of the decision and issued directions to the field. Some real fast working this! </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2010/excircular936.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 936/26/2010 –CX, Dated: October 27, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange Rates for November Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC </strong>has notified the Exchange Rates for imported goods and export goods for November 2010. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_091.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 91/2010-Cus.,(N.T.), Dated: October 27, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax – Period of Validity of approvals for Certain Organisations </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNDER</strong> Section 10(23C) of the Income Tax Act, income of certain organisations approved by the Chief Commissioner /Director General are exempted. There are doubts among asssessees as well as officers as the period of validity of these approvals under Section 10(23C) </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv): fund or institution established for charitable purposes </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) : any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) : any university or other educational institution existing solely for educational purposes and not for purposes of profit </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(via) : any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that the approvals are now a one-time approval valid till its withdrawal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a similar doubt about the exemption to donations made to a trust approved by the Commissioner under 80G (5) (vi) . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here also Board clarifies that any approval under Section 80G(5) on or after 1.10.2009 would be a one time approval which would be valid till it is withdrawn. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2010/it10cir07.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 7/2010 Dated October 27, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Former Police Chief gets Life Imprisonment for killing a Naxalite 40 years ago</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> Naxalite, Varghese, was killed in a Police Encounter in Kerala on 18.02.1970. The local police closed the case as one of police encounter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">28 years later, a police constable declared that he had shot dead the naxalite on the orders of his superior officers. There was a public outcry and the Kerala High Court directed the CBI to investigate the issue – after 29 years of the incident. After extensive investigations, the CBI filed a charge sheet against the constable, the IGP and the DGP- all of whom had retired by then. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday when the CBI Court delivered its verdict, the constable was no more on this Earth having joined the naxalite he shot dead, in whatever world dead people go to, if at all they do. The court let off the DGP (rtd) and awarded life imprisonment to IGP (rtd), K. Lakshmana who is now 74 years old. The 74 year old retired IGP Lakshmana told the court that he had an excellent service record with the police force and requested leniency saying that he is suffering from health issued related to old age . He pleaded for maximum leniency and humanitarian consideration . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the CBI court was not impressed and held, "... no more evidence is needed, it is proved beyond any shadow of reasonable doubt that Varghese who was caught alive was brutally killed by the first accused (late CRPF constable Ramachandran Nair) who was a stooge of Lakshamana who on his order brought about his plan." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The judgement has evoked mixed response – while some feel that high quality biriyani has to be provided to terrorists, naxalites and smugglers when they spend a few days in jail, others feel that policemen and government servants also deserve some humanitarian consideration and sympathy. </font></p>
<p align="left"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Borders divide but Customs Connects </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">WCO Chief requests Customs Agents to help Customs in Modernisation </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WORLD</strong> Customs Organisation Secretary General Mikuriya attended the 41st annual meeting of ASAPRA (Association of Professional Customs Agents in America) which was held in Lima, Peru on 26 and 27 October 2010 to enhance the Customs-Business partnership with the Customs broker industry in Latin America. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In his keynote address, the Secretary General highlighted the building blocks necessary for Customs administrations to be successful which were contained in the WCO Customs in the 21st Century vision. During his presentation, he promoted the importance of Customs brokers joining forces with Customs administrations in advancing Customs modernization and in remaining visionary, relevant and indispensable to global trade. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs Agents are powerful everywhere! </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><strong><font color="#663399" 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">Central Excise</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeals – Commissioner(A) passes final order without passing order on pre-deposit - Tribunal remands case to decide on pre-deposit - Tribunal committed error in remanding matter; it should have decided issue on merits - High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee cannot be faulted for not deciding the application filed for waiver of pre-deposit. The assessee duly filed the application setting out the reasons for waiver of pre-deposit. Admittedly, the said application was not contested by the department and that is the reason why the Commissioner of Central Excise (Appeals) decided the matter on merits. Even while deciding the appeal on merits, the department has not chosen to appear and raise any objection. Further, while filing an appeal before the Tribunal on merits, no ground has been taken that the department was not heard and the non-compliance of pre-deposit, which resulted due to the failure of the Commissioner of Central Excise (Appeals) in deciding the said application filed for wavier, would require the appeal deciding on merits as finality. </font></p>
<p><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">Whether Commission paid to MD as part of remuneration, authorised by AGM and approved by Company Law Board, falls within ambit of Sec 36(1)(ii)? - NO, 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 Commission paid to Managing Director as part of remuneration, authorised by the AGM and also approved by Department of Company Affairs, falls within the ambit of Sec 36(1)(ii) and warrants disallowance. NO is the Tribunal's answer. </font></p>
<p><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">While providing service, goods sold to customers on payment of VAT – prima facie value of such material is not to be taken into consideration for calculating Service Tax demand</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PRIMA</strong> facie, goods which are sold to their customers on payment of VAT and this fact is admitted in the present case, the value of such material is not to be taken into consideration while calculating the amount of service tax in respect of completion and finishing services provided by the applicant.</font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice weekend.</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>
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