TIOL-DDT 1497 · 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 align="justify"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1497 </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 30.11.2010 <br> Tuesday </font></strong></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Notification Issued under the Wrong Section – Board Corrects .... but keeps the old mistake </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please refer to<strong> <em><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11598" target="_blank">DDT 1476–28.10.2010</a></em></strong> , wherein we pointed out that Notification No. 26/2010 – Service Tax dated 22.06.2010, was issued under the wrong Section. We had pointed out that the Notification was issued under <strong><font color="#FF6633">clause (aa) of sub-section (2) of section 94</font></strong> while it should have been issued under Section 93(1) of the Finance Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Notification No. 26/2010 – Service Tax Dated June 22, 2010 reads as: </em></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In exercise of the powers conferred by </em><strong><em><font color="#FF6633">clause (aa) of sub-section (2) of section 94 </font></em></strong><em>of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the services referred to in clause (zzzo) of sub-section (105) of section 65 of Finance Act, 1994 from so much of service tax as is in excess of,- </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(a) ten percent of the gross value of the ticket or rupees one hundred per journey, whichever is less, for passengers travelling in any class, within India; </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(b) ten percent of the gross value of the ticket or rupees five hundred per journey, whichever is less, for passengers embarking in India for an international journey in economy class: </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Provided that this exemption shall not apply xxxxxxxxxxxxxxxxxxxxxxxxxxxxx </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For a recap, Section 94 empowers the Government to make Rules, while Section 93 empowers the Government to issue exemption Notifications. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT asked, “Will CBEC make a correction before some Tribunal Bench holds the notification as invalid as issued under a wrong Section of the ACT?” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are happy to report that the Government has realised the mistake and issued a corrigendum. The Corrigendum reads as, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><STRONG><FONT COLOR="#000000">“<SPAN STYLE="font-style: normal"><SPAN STYLE="font-weight: normal"><SPAN STYLE="background: #ffff00">for “clause (aa) of sub-section (2) of section 94”, read “sub-section (1) of section 93 </SPAN></SPAN></SPAN></FONT><FONT COLOR="#0000ff"><SPAN STYLE="font-style: normal"><SPAN STYLE="font-weight: normal"><SPAN STYLE="background: #ffff00">read with clause (aa) of sub-section (2) of section 94</SPAN></SPAN></SPAN></FONT><FONT COLOR="#000000">”<SPAN STYLE="font-style: normal"><SPAN STYLE="font-weight: normal">.</SPAN></SPAN></FONT></STRONG></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now why to read clause (aa) of sub-section (2) of section 94 ? This clause empowers the Government to make rules for determination of amount and value of taxable service. This was an exemption notification and there was no Rules Notified. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board issue another corrigendum? It is really unfortunate that notifications are issued so callously. </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=40&filename=notification/servicetax/2010/corrigendum_26.htm" target="_blank">CBEC Corrigendum, Dated 23.11.2010 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of Cotton Yarn not entitled to DEPB benefit under the DEPB Rate Schedule - DGFT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT observes that, “Benefit of DEPB under Sl. No. 22D of the Misc. products is available only when, Standard Input Output Norms (SION) exist for a product, but no DEPB rate has been notified. In the case of Cotton Yarn, it is not that DEPB Rate has not been notified but actually, the notified specific DEPB benefit has been suspended as per Public Notice of 21.4.10. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And so clarifies that “exports of “Cotton Yarn” is not entitled for any DEPB benefit either under entry 78 of Product Group Textiles (as was notified already on 21.4.10), or even under the residual entry at Sl. No. 22D of the Product Group “Misc. products” of the DEPB rate schedule.” </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir004.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No.04 (RE-2010)/2009-14 , Dated: November 29, 2010 </font></strong></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exchange Rates for DECEMBER Notified </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has notified the Exchange Rates for imported goods and export goods for December 2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_098.htm" target="_blank"><strong>CBEC Notification No. 98/2010-Cus.,(N.T.), Dated: November 26, 2010 </strong></a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on Renting of Immovable Property – High Court upholds levy as well as Retrospective amendment </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Punjab and Haryana High Court recently upheld the levy of Service Tax on “renting of immovable Property” and the retrospective amendment. In a detailed order covering several court decisions, the Constitution and treatises on the aspect theory, the High Court held that it cannot be held that renting of property did not involve any service as service could only be in relation to property and not by renting of property. Renting of property for commercial purposes is certainly a service and has value for the service receiver. Moreover, the <strong>aspect </strong> of service element in renting transaction is certainly an independent aspect covered under Entry 92C read with Entry 97 of List I. In any case, subject matter of impugned levy being outside the scope of entry 49 of List II, power of Union Legislature is undoubted. Question whether levy will be harsh being in addition to income tax and property tax is not a matter for this Court once there is legislative competence for the levy. Even if it is held that transaction of transfer of right in immovable property did not involve value addition, the provision cannot be held to be void in absence of encroachment on List II. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On retrospective amendment, the High Court held that it is well settled that competent legislature can always clarify or validate a law retrospectively. It cannot be held to be harsh or arbitrary. Object of validating law is to rectify the defect in phraseology or lacuna and to effectuate and to carry out the object for which earlier law was enacted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this case today. Please see <strong>Breaking News</strong>. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><font color="#006600">Jurispruden</font><font color="#FF6633">tiol</font><font color="#006600">- Wednesday's cases</font></strong></strong></font></p> <p align="justify"><font 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"><font color="#663399">Central Excise </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Manufacture – Intermediate Products even if not sold, excisable - marketability of a product is essentially a question of fact : Supreme Court </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> term "manufacture" is of wide import and may include various activities and processes which may not be termed as `manufacture' in the common parlance. But manufacture of goods alone is not enough. In order to attract the levy of excise duty, the goods should not only be manufactured, i.e., come into existence, but also should be articles or products that are known to the market and must be capable of being brought and sold. Some emphasis has to be laid on the use of the word capable as actual sale of the product or article is not essential and required. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Wealth Tax </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Whether ownership of property for wealth tax purpose can be decided solely on basis of facts that assessee offered capital gains on sale of such property under Income Tax? - NO, says ITAT </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Tribunal is - Whether the ownership of the property for the wealth tax purpose can be decided solely on the facts that the assessee has offered capital gains on sale of such property under Income Tax. NO, says the Tribunal. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT CREDIT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Cevvat Credit on goods received from 100% EOUs – CVD referred in the formula restricting the credit under Rule 3(7) of the CENVAT Credit Rules 2004 includes 4% Additional duty : CESTAT </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT </strong>Credit on the goods received from a 100% EOU is restricted in terms of Rule 3(7) of the CENVAT Credit Rules 2004. For a long time, the amount of credit admissible was to be determined based on the formula given under the rule. This formula has always been in the news for not being updated in tune with the other changes made to the provisions of the EOUs. It is only with effect from 7.9.2009 all the anomalies were removed and suitable amendments were made to this sub-rule. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </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>