TIOL-DDT 1513 · 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 1513</font><br> 23.12.2010<br> Thursday</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 upheld by P&H High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> you will remember, 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 was 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">Later the Madras High Court has also given an interim relief in<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="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the P&H High Court has upheld the validity and observed, "contention that there is no element of service of construction involved in a builder selling a flat cannot be accepted. Whether or not service is involved has to be seen not only from the point of view of the builder but also from the point of view of the service recipient. What is sought to be taxed is service in relation to construction which is certainly involved even when construction is carried out or got carried out before construction and before flat is sold. " </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court also observed that, "<em>The legal backup was further provided by the introduction of Article 268-A in the Constitution vide the Constitution (Eighty-eighth Amendment) Act, 2003." </em></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">However,the fact is that Article 268 A is yet to come into force. Somehow, strangely this fact is not being effectively argued before the courts. </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><a href="http://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=11835" target="_blank">Breaking News</a></strong> for more details of this case. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Information Technology Software - Excise Notifications Issued </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> yesterday's<strong> DDT</strong>, it was pointed out,</font></p> <blockquote> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The moot point is why the value of canned/packaged software should be determined in terms of section 4A of the Central Excise Act, 1944 when it is not one of the notified goods in terms of that section (please refer Notification No.49/2008-CE(NT) dated December 24, 2008). Can a notification under service tax law override the provisions of section 4A of Central Excise Act, 1944 and stipulate that the duty shall be payable on such items in terms of section 4A by virtue of a service tax notification? Where are we heading to? </font></strong></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Lo and Behold! We suddenly find that Notification No. 49/2008 - CENT has been amended and Packaged software or canned software has been brought under MRP valuation with a 15 percent abatement. For some good reason, the wise TRU kept this notification under wraps and released it a little later. Maybe TRU does not like to part with its notifications and keep them in Public Domain. A law is a law only when you make it available to the public and while we in <strong>TIOL</strong> try to help them in making their laws available to the stakeholders, they consider as adversaries! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/exnt10_30.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 30/2010 – CX, (N.T.); Dated December 21, 2010</font></strong></a></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There used to be an excise exemption for packaged software under <em>Notification No. 17/2010; dated February 27, 2010</em>. Now that this product has been brought under MRP, that exemption notification is rescinded.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2010/etariff10_35.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Notification No. 35/2010 – CE; Dated December 21, 2010 </font></strong></a></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A similar notification exists in Customs for exemption from CVD - <em>Notification No. 31/2010-Customs dated 27th February, 2010</em>,which is also rescinded. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_126.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 126/2010 –Cus; Dated December 21, 2010</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Onions - Import Duty Exempted </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"> were the first to break this news yesterday and the news was there in all the channels with in-depth analysis and eye-catching images of photogenic onions and teary housewives. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Notification No. 21/2002 – Cus Dated 1st March 2002</em> has been amended to provide for nil duty for imported onions and shallots. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Shallot - a small bulb that resembles an onion and used for pickling or as a substitute for onion. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2010/ctariff10_127.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 127/2010 - Cus; Dated December 21, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Onions - Export Prohibited </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government has prohibited the export of Onion (all varieties) including Bangalore Roseonions and Krishnapuramonions fresh or chilled, frozen, provisionally prepared or dried but excluding onions cut, sliced or broken in powder form. This has immediate effect and transitional arrangements will not be applicable. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 13(RE–2010)/2009-2014 ; Dated December 22,2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export of Cotton Yarn - Restricted </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has made export of cotton yarn restricted w.e.f 1.12.2010. The export of cotton yarn (Tariff Codes 5205, 5206 & 5207) was earlier subject to registration of export contracts with Textile Commissioner, Mumbai. Now,the export of cotton yarn has been restricted and export will now be permitted under licence. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not014.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 14(RE–2010)/2009-2014 ; Dated December 22,2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Conditions and modalities for applications for grant of export licence for export of Cotton Yarn </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been decided in the meeting of Group of Ministers (GoM) on 21.12.2010 that for the present, 720 million Kgs. of Cotton Yarn is to be allowed for export during the year 2010-11(i.e. upto 31.03.2011).Accordingly,NotificationNo.14(RE 2010)/2009-14 dt. 22.12.2010 has been issued, stipulating that henceforth export of cotton yarn will be restricted and will be allowed to be exported under licence. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, Exporters who have obtained Registration Certificate from Textile Commissioner, Mumbai before 1st December, 2010 would be permitted to export Cotton Yarn within the quantity limit for which such registration certificate has been issued and within the validity of such registered contract. The data for the quantity that has already been exported in 2010-11 is being collected. The representations received to review the extent of exportable surplus are also being examined. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir007.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 07(RE-2010)/2009-14 ; Dated December 22,2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Releases Draft Manual for Disposal of Seized/Confiscated Goods </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBEC has released a draft manual prescribing the procedure to be followed for disposal of seized goods/ confiscated goods / uncleared / unclaimed cargo/ / mishandled Baggage / cargo involved in Time Expired Bonds / Goods detained under section 142 of the Customs Act, 1962 in all the formations under Central Board of Excise & Customs (CBEC). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The procedures prescribed in the Manual are subject to the provisions of Customs Act/Central Excise Act, rules and regulations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of inconsistency between the procedures prescribed in this Manual and the provisions of Customs Act/Central Excise Act and various rules and regulations, the latter shall prevail. </font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why should a manual prepared and prescribed by the Apex Board contain anything not consistent with the Act and the Rules? Is it an admission that they do not read the Act and Rules while preparing the manual? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has invited comments from the field within two weeks and maybe the manual will be finalised soon.</font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/disposal-siezed-goods.pdf" target="_blank">CBEC's Draft Manual </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT's Cartoon with Dr. Gopalakrishnan, IAS (Rtd) </font></strong></p> <p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_1513.jpg" alt="Cartoon" width="250" height="327" hspace="5" border="0" align="centre"></font></strong></p> <p align="center"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"Sir! To reduce corruption, I suggest that we declare one day in a year as "Corruption-less Day"! </font></strong></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"> - Friday'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">Customs</font></strong></p> <p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CHA Licence can be suspended without hearing: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHERE</strong> immediate action is required, power under Article 20(2) can certainly be invoked. In the present case, reason given for immediate action is that investigation was pending which could be hampered and further irregularities could take place unless licence was suspended.The High Court cannot re-appreciate correctness of such assessment. Such power has to be exercised on assessment of a fact situation by the concerned authority.</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 30 - Whether expenses incurred for modernisation of plant and to replace particular machinery used for a particular process out of various processes are current repairs - NO, says AP High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> two issues before the HC are - Whether the expenses incurred for modernization of the plant and to replace particular machinery used for a particular process out of various processes are current repairs and whether where assessee neither claimed investment allowance in the return nor created any investment allowance reserve, the ITAT is correct in giving an opportunity to the assessee to create the reserve as per Explanation to Section 32A(4).And the verdict has gone against the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">EOU- Assessee not mentioning applicable serial number in the notification - Assessing officer should have raised objection at the time of assessment - No suppression: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> case the assessee had not indicated the serial number of the relevant notification, it was for the concerned Assessing Officer to point out the same to the assessee and call upon it to state the proper facts. Without calling upon the assessee to state the serial number under which the goods would fall, and without pointing out any defect in the bill of entry filed by the assessee, the concerned officer had assessed the bill of entry and had not raised any demand of countervailing duty or special additional duty. The assessee had rightly or wrongly claimed liability to pay duty at a particular rate. </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more <strong>DDT</strong></font></font></p> <p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day</font></font></p> <p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font></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>