TIOL-DDT 1545 · 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 1545 </font><br> 08.02.2011 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suspension of Pre-shipment Inspection (PSI) Agencies</font></strong> </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DGFT observed that</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Intertek International Ltd. P.O. Box No.802 10 Wallace Johnson Street, 2nd Floor Freetown, Sierra Leone Tel: 232 (0) 22 27198 Fax: 232 (0) 22 228620 and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Worldwide Logistic, Survey and Inspection(WLSI)Group and Affiliates, 18 Keyport Crescent Glendenning, NSW 2761, Sydney (Australia), Tel: 61-412262272, 61-412209123, 61-2-97645884, Fax: 61-2-97645885 Email: <a href="mailto:info@wlsi.us"><strong>info@wlsi.us </strong></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">had issued wrong Pre-shipment - Inspection certificates. It has, therefore, been decided not to accept the PSI Certificates issued by these agencies. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Trade and Industry is informed that certificates issued by these agencies will not be accepted by Customs till a final decision is taken in the matter. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir016.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 16 ( RE-2010)/2009-2014, Dated : February 4, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Delisting of Pre-shipment Inspection (PSI) Agencies</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT has delisted 19 agencies from Appendix 5 of H.B.P. (Vol -I). The agencies which are not interested and /or not performing the job of pre-inspection are delisted from Appendix 5 and made ineligible to issue Pre-Shipment Inspection Certificate. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn027.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 27/2009-2014 (RE- 2010), Dated : February 4, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Use of plastic materials in sachets for gutkha, tobacco and pan masala banned</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Ministry of Environment and Forests has notified the Plastic Waste (Management and Handling) Rules 2011 to be effective from 4th February 2011. Among other things, according to the condition in Rule 5(d), </font></p> <p align="justify"><em><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sachets using plastic material shall not be used for storing, packing or selling gutkha, tobacco and pan masala. </font></strong></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise duty is collected on Gutkha and Pan Masala based on the number of packing machines installed and working in the factory. With the MOEF banning packing Gutkha and Pan Masala in plastic pouches, all these machines either have to be shut down or adapted to continue the production by using other packing materials. MOF should immediately study the ways and means to collect the Central Excise duty in the changed scenario. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Salient features of these rules are: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Use of plastic materials in sachets for storing, packing or selling gutkha, tobacco and pan masala has been banned. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the new Rules, foodstuffs will not be allowed to be packed in recycled plastics or compostable plastics. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recycled carry bags shall conform to specific BIS standards. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Plastic carry bags shall either be white or only with those pigments and colourants which are in conformity with the bar prescribed by the Bureau of Indian Standards (BIS). This shall apply expressly for pigments and colourants to be used in plastic products which come in contact with foodstuffs, pharmaceuticals and drinking water. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Plastic carry bags shall not be less than 40 microns in thickness. Under the earlier Rules, the minimum thickness was 20 microns. Several State Governments in the meanwhile, had stipulated varying minimum thickness. It is now expected that 40 microns norms will become the uniform standard to be followed across the country. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The minimum size (of 8x12 inches) for the plastic carry bags prescribed under the earlier Rules has been dispensed with. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Carry bags can be made from compostable plastics provided they conform to BIS standards.</font></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Disputes in Income Tax - CAG Recommendations - Implementation of Appellate Orders Low in AO's Priorities </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG embarked upon a study of Issues leading to Disputes in Income Tax and noted that, “The dimensions of disputes in income tax are staggering. Rs 2.2 lakh crore is the amount locked up in appeals at various levels, which can almost wipe off the revenue deficit of the Union Government in 2008-09. On an average, 48 per cent of tax demands remain uncollected and disputes account for 45 per cent of uncollected demands.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Audit worked with several constraints. The absence of a centralised database on appeals at the State level, hampered the selection of the audit samples. Audit therefore, had to examine individual assessment records for the selection, which considerably strained the audit plan. Poor maintenance of records across the assessment and judicial wings of the Department, is an area of concern. Non-production of records was a major constraint as well as concern. The Department produced only 49 per cent of the records requisitioned for audit; it was as low as 5 per cent in the case of Delhi Office. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG felt that implementation of appellate orders is placed low in the AOs ' priorities. Inadequate attention on correctness in implementation of appellate orders, led to mistakes amounting to Rs. 1,456 crore in 385 cases. 97 per cent of these mistakes in implementation led to under-assessment of tax benefitting the tax payer, which raises doubts on the integrity of the process. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG has recommended that: </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Small tax payers' disputes may be hived off and dealt separately through an alternate dispute resolution mechanism. This would bring relief to a large number of disputants (66 per cent) and clear the pendency. Segregation of complex corporate disputes from such low end disputes, would promote greater focus on the “big ticket” appeals and also facilitate rationalisation of the workload of CsIT (A); </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The reasons for low satisfaction in assessment of small taxpayers leading to disputes need to be identified; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Act may be amended to stipulate a definite time limit in finalising appeals at the CIT(A) level, which may be in line with international best practices; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. There is a need to remove ambiguities in the provisions of the Act to reduce the use of discretion by the AOs . The penal provisions of the Act, for instance, require a re-look, since the deterrent edge to these provisions is being blunted due to inability to sustain the penalty orders in appeals; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. A databank of cases in which permission is not granted by Committee on Disputes (COD) containing details on the disputed provisions of the Act may be created so that similar cases are not pursued or referred to COD; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Responsibility must be fixed on AOs for technical or procedural lapses that drag the Department to needless litigation; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Automation of receipt and disposal of appellate orders, with inbuilt supervisory controls be implemented. Pending automation, maintenance and updation of control registers should be monitored regularly; a system for periodic reconciliation of data maintained by different sources, may be instituted; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. An effective system, involving departmental representative/legal counsel may be laid down to ensure timely collection of appellate orders to stem the delays in implementation; as a confidence building measure, the data on AO-wise receipt and implementation of appellate orders should be placed on the website. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. There should be supervisory review of orders giving effect to appeal, to detect mistakes; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. A stricter accountability structure should be formulated to fix responsibility on AOs for incorrect implementation of appellate orders. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Source:</strong> <strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/MOEF_Plastic_Rules.pdf" target="_blank">CAG's Report No 20 of 2010-11</a>.</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Border Management Modernization - World Bank Book </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARDER</strong> clearance processes by customs and other agencies are among the most important and problematic links in the global supply chain. It takes three times as many days, nearly twice as many documents, and six times as many signatures to import goods in poor countries than it does in rich ones. Delays and costs at the border undermine a country's competitiveness, either by taxing imported inputs with deadweight inefficiencies or by adding costs and reducing the competitiveness of exports. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As countries have come to realize the importance of trade in achieving sustainable economic growth they have progressively lowered tariffs, established regimes to encourage foreign investment and pursued opportunities for greater regional integration. This progress has, however, been undermined by the high costs and administrative difficulties associated with outdated and excessively bureaucratic border clearance processes which are now often cited as more important barriers to trade than tariffs. Inefficient border processing systems, procedures, and infrastructure result in high transaction costs, long delays in the clearance of imports, exports, and transit goods, and present significant opportunities for administrative corruption. They essentially undermine a country's competitiveness in the international marketplace. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Governments around the world are therefore placing increased emphasis on border management reform designed to remove unnecessary barriers to the flow of legitimate trade across their borders. However, in spite of the widespread recognition of the need to improve the efficiency of border management regimes, Customs and other border management agencies in many countries have frequently paid lip service to the trade facilitation agenda. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This book is designed to shed new light on these problems and to identify a range of strategies that will help officials meet their traditional control responsibilities while at the same time facilitating legitimate trade. It also provides advice to development professional and key policy makers about what works, what doesn't and why. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WCO Secretary General Kunio Mikuriya says, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This world bank publication is a compelling account of the diverse and complex issues associated with border management in the 21st century. To achieve national objectives related to growth in international trade and economic development, there is no alternative but to embrace a “whole of government? approach to border management modernization, which increasingly requires active coordination between border agencies, both domestically and internationally. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This publication is to be released at WCO Headquarters on 15 February 2011. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Chairman's Directions for Redressal of Employees' Grievances</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> grievance petition was received by the chairman, CBDT on 02.02.2011 from the widow of an Inspector (who expired in May, 2010) of CCA, Mumbai charge pointing out that she had yet not received gratuity and leave encashment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chairman was shocked over the insensitivity of our people towards the anguish of the widow and directed immediate action within 24 hours. CCIT(CCA), Mumbai, who was conveyed the anguish & directions of the Chairman, took personal interest & the widow could get the money within 24 hours, as promised by the Chairman. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In another case, a medical bill pending for more than two and a half years in Delhi, was settled within two days but only after the intervention of the Chairman. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The same plight is seen in the settlement of medical & TA bills. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT laments, “These instances of our gross apathy and indifference towards our own people are brought to the notice of all with an appeal to have concern and compassion towards their own colleagues. Please take cognizance of all such cases in your jurisdiction and settle them within 15 days. Henceforth, any lapse in such matters will be viewed adversely and serious action initiated.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You think the officers treat you badly – this proves that they are equally bad to their colleagues – even the dead ones. </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"> – Wednesday'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"><font color="#663399"><strong>Service Tax</strong></font></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Damned if you pay tax and damned if you don't - CESTAT sets aside order denying <em>CENVAT credit</em> of service tax paid before 18.4.2006.</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOR</strong> many years, the revenue was of the view that service tax on services received from outside India was to be paid even before the insertion of Section 66A in the Finance Act, 1994 with effect from 18.4.2006. Notices were issued demanding service tax in terms of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. Many assessees even paid the service tax before 18.4.2006 as they can take the <em>CENVAT credit</em> of the service tax paid under reverse charge. The dispute was finally settled in Indian National Shipowners Association case <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2009/2009-TIOL-129-SC-ST.htm" target="_blank"><font size="1">2009-TIOL-129-SC-ST</font></a></strong> wherein it was held that no tax can be levied under reverse charge prior to 18.4.2006. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the revenue is on the revenge. They say that prior to 18.4.2006, whatever amount paid under reverse charge, no credit can be availed as the tax is applicable only from 18.4.2006 and the tax paid prior to 18.4.2006 is not tax and hence no credit is admissible. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when Electricity Regulator fixes tariff, assessee is right in computing profit based on price paid to seller of power for purpose of computing Sec 80IA benefits - YES, says ITAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE issue</strong> before the Tribunal is - Whether when the Electricity Regulator fixes the tariff, the assessee is right in computing profit based on the price paid to the seller of power for the purpose of computing Sec 80IA benefits. And the decision goes in favour of the assessee. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the Judgements</font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Time. </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> </body> </html>