TIOL-DDT 1520 · 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 1520</font><br>
03.01.2011<br>
Monday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax from Services Surge but not Service Tax!</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Finance Minister started the New Year with a meeting with senior Revenue officers of Eastern Zone at Kolkata. The meeting was attended by Revenue Secretary Sunil Mitra, CBEC Chairman, SD Mazumder, CBDT Member MukeshDoshi and Commissioners and Chief Commissioners of Income Tax, Customs, Central Excise and Service Tax.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the issues noted was the income tax department reporting that there was a spurt in income tax collections from the services sector, but strangely the CBEC counterparts did not notice any commensurate growth in Service Tax. The Central Excise Department is likely to transfer many of its officers to the Service Tax wing to accelerate the Service Tax revenue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Minister explained to his senior officers the state of Indian Economy and his road-map and he requested the co-operation of his officers in generating enough money for all the plans he has. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Infrastructure - facilities: Income Tax Better Than Customs</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Finance Minister stressed the need for providing all facilities and good infrastructure for the Revenue Departments. He observed that they are better in the Income Tax Department and while several proposals from the Income Tax Department are cleared, several demands are pending. He observed that there are no proposals from the Customs and Excise Department. Obviously the Central Excise Department does not believe in spending government money. They have less than 90 days left in this fiscal year - let them spend all the money allocated to them and try to get some more to spend. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What the FM had observed, is open for any one to see. Just visit any Income Tax Office and Central Excise and Customs office - you will know the difference. It will be surprising to note that they are both under the same Department of the Government. The CBEC's field offices can go for better offices, with enough rooms and toilets for everyone including visitors; they should enhance their technical knowledge and subscribe to <strong>TIOL</strong>, ELTetc,. And they should take a few tips from their cousins in the Income Tax Department on how to spend money. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While on spending, the Department can also seriously think of cutting down on certain wasteful expenditure. In all the main buildings of the Customs and Excise Department, you find a control room with a uniformed Inspector and a dozing sepoy to assist him. Inspectors are posted round the clock for these control room duties. And what they do is anybody's guess. Are they receptionists? Are they security guards? This is not the work that you recruit inspectors and this work can be outsourced at half the cost and for a more efficient work. You also find Superintendents and Inspectors posted for ‘house keeping'. What is their expertise in house keeping? Is it because you have so many officers that you don't know what to do with them? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">IEC Applications Online - DGFT's New Initiative </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AT</strong> present, Importer Exporter Code (IEC) applications are to be filed manually with the Regional Authority of DGFT. The applications are filed in hard copy in the prescribed proforma with stipulated documents. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Effective 01.01.2011, DGFT has provided for the additional facility of filing IEC applications online. The existing system of filing the IEC application manually would simultaneously continue till further orders i.e. the applicant will have an option to prefer his application either manually or “on-line” as per his/her convenience. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Filing of online applications for obtaining IEC will reduce the transaction cost and time for the applicant, would ensure easy, flexible filing of application and reduce human interface and paper work in the process. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange Rates for DECEMBER Notified </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods for January 2011. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_102.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 102/2010-Cus.,(N.T.), Dated: December 29, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value of Brass Scrap and poppy Seeds increased </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has increased the Tariff Value of Brass Scrap from US Dollars 4189 to 4320 per MT. The tariff value of poppy seeds is increased from 3215 to 3445 US Dollars. There is no change in the tariff value of other items.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_103.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO.103 /2010-CUSTOMS (N.T.) Dated:December 31, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Madurai Airport becomes Customs Airport </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MADURAI</strong> Airport has been appointed as a Customs Airport for ‘Unloading of baggage and the loading of baggage' </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2010/cnt10_104.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NOTIFICATION NO.104 /2010-CUSTOMS (N.T.) Dated:December 31, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Airport Security - Guns Allowed, not Nail Clippers! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> story is doing the rounds that an American soldier returning from Afghanistan was intercepted by Airport Security at Indianapolis airport and his nail clippers confiscated. He and 329 other soldiers in the plane were carrying weapons – machine guns – not loaded of course. This particular soldier was carrying a pistol in addition to the machine gun. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The security person objected to the nail clippers, because they could be used as a weapon. The soldier pointed out that he was allowed to carry a gun and a pistol, but the security guy was not impressed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While officials are denying the story, some newspapers have reported it to be true as it is too absurd to be made up. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even if it is true, there is a point here. The rules permitted carrying of the gun by the soldier, but not nail clippers and if the security man had allowed nail clippers, he would have been accused of negligence! </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">Service Tax</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Export - Refund - fact that service provider was registered under different category cannot be made a basis for denial of refund to appellant - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> No. 41/2007-ST provides exemption by way of refund from specified taxable services used for export of goods. Granting refund to exports, on taxable services that he receives and uses for export do not require verification of registration certificate of supplier of service. Therefore refund should be granted in such cases, if otherwise in order. The procedural violations by the service provider need to be dealt separately, independent of the process of refund. </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 55 - Whether sum paid for transfer of on-going business can be treated as payment for technical knowhow or consideration for goodwill, taxable as LTCG - It is a case of transfer of goodwill: Madras High Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issue
before the High Court is -Whether the sum paid for transfer of an on-going
concern can be treated as payment of technical knowhow or consideration for
goodwill, taxable as long term capital gains. Whether when the claim of the
assessee is held to be the payment for goodwill by the Tribunal, it is a
case of tax evasion. And the verdict goes 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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise - Removal of Capital Goods as such - Payment of duty on depreciated
value, correct - no reversal of credit taken - question of law correctly decided
by Tribunal; No question of Law: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Commissioner of Central Excise is the appellant. The questions of law, read
as under:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Whether the
expression "as such" appearing
in Rule 3(4)(C) of the Cenvat Credit Rules, 2002 would cover used as well as
unused capital goods or not? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Whether the assessee is required to reverse credit equivalent
to credit taken when used capital goods are removed from the factory or not?</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>
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