TIOL-DDT 1562 · 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 1562</font><br> 07.03.2011<br> Monday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can Advocates be taxed for representation before Courts? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Finance Bill proposes to tax representational services provided by any person to any business entity before any court, tribunal or authority. An advocate is an officer of the court and his job is to assist the court in the justice delivery mechanism and in fact if an advocate is prevented from performing his duty, a prima facie case for contempt of Court is made out, as held by the Delhi High Court sometime back. Even the Supreme Court had held that an advocate is an officer of the Court. Is it legal or fair to tax such an officer of the court? And now, under the accrual system, he has performed/provided the service by his appearance in the court and if impressed by his performance in the court, the client vanishes without paying him, he has to still pay the tax even if he does not get paid! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally as of now there is an exemption for CAs, Cost Accountants and Company Secretaries for representation work as per Notification No. 25/2006 - S.T DATED 13.07.2006. Most probably the government will withdraw this notification once the Finance Bill is enacted and lawyers' representation will become a taxable service. If they forget there will be a funny situation where the lawyers whose main job is to argue in courts will be taxed for their arguments while CAs will be exempted. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Budget to make life more expensive </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> the Budget impact sinks in, more and more people are unhappy. In one of his budget speeches, the present Prime Minister, Dr. Manmohan Singh said that voting the Congress is not only good politics, but also good economics. Pranab Da can make no such claim. Income Tax paying women will not certainly vote for his party as they have not been given even the small increase in exemption that has been given to the men. And this at a time when the President of India, the Speaker of the Lok sabha , the Chairperson of UPA and the Leader of Opposition in Lok Sabha are all gracious women. Maybe there will be a demand from the leader of the opposition for a hike in exemption, during the budget debate (if at all there is one) and the FM will gracefully yield. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But what is the justification for taxing health? In India there is no ‘social security' and the government has miserably failed in providing proper heath care. When a middle class person suffers a serious ailment like cancer, or suffers from heart or kidney problems, the hospital bill could be anything from 2 lakhs to 5 lakhs and his Service Tax liability would be between 20,000 to 50,000. Can he really afford it?. For such a person, dying is a better option than getting treated and living the rest of his life in debt. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxing education is the most regressive step any government anywhere in the world can take and this year they want to enlarge the scope of the levy. In the Malappuram District Parallel Colleges association case – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2006/2006-TIOL-35-HC-KERALA-ST.htm" target="_blank"><font size="1">2006-TIOL-35-HC-KERALA-ST</font></a></strong>, the Kerala High Court observed, “tax on education, particularly when the incidence of tax is passed on to the beneficiaries, that is, the students, is a regressive legislation and has to be condemned, more so, when large number of poor people seek salvation through education and employment.” However the court expressed its helplessness when it said, “<em>So long as there is no constitutional bar against levy of service-tax on education, and statute stands the test of article 14 of the Constitution, then the levy has to be fully upheld, no matter whether the Court considers the levy</em> <font color="#FF6633"><strong><em>unwise, improper or even a regressive measure which is a policy matter to be left to the wisdom of the Legislature ”.</em></strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In that case, the Government Counsel had argued that “ so many educational institutions are mushrooming and education is carried on as business. Therefore, according to him, there is no illegality or even impropriety in levying tax on such educational institutions”. This is a general argument we hear from people who complain about the loot that private educational institutions are indulging in. But the Court was not impressed and observed, “ this malady has to be corrected only by levying income-tax on the institutions and not by licensing the institutions to collect service-tax from students. ----- the levy of service-tax on students will not serve the purpose of disciplining those who make business out of education”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Air travel is going to be more expensive – Do you want keep the middle class grounded? Is air travel meant only for the rich? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 1% and 5% excise duty is creating havoc in the field with prospective assesses running from consultant to officer. They have so many questions – all simple but genuine like are they liable to pay duty on pre-budget stocks?; about <em>CENVAT Credit</em>; about registration; about invoice; about SSI exemption; about payment and there is nobody to guide them. Is the department ready to issue registration certificates to all the new assesses? And can they clear goods pending registration; Is there any assurance that they will not be penalized for this? Industry in many sectors has come to a grinding halt and goods are not being cleared for want of clarity. When they bring in such major changes, can't they explain the provisions clearly and provide the assistance of knowledgeable officers? </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Budget Bloomers</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PARA</strong> 21.2 of the Central Excise Explanatory Notes to the Budget reads as, “21.2: <em>A Tariff rate of 5% has been prescribed for the tariff items falling under tariff heading 2105 00 00 , 2106 90 92 while keeping the effective rate at 1% <strong>with</strong> Cenvat credit</em>”. Maybe what they mean is <strong>without</strong> CENVAT Credit facility. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Para 58.1 reads as, “58.1 A tariff rate of 5% excise duty is being prescribed on all goods falling under heading 5805 and 5807 However these goods would attract a concessional rate of 1% without Cenvat credit facility.(S. Nos.73 and 74 of notification No./2011 -Central Excise refers) ” They forgot to put the Notification Number here. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Certainly small mistakes – but certainly avoidable! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">IT Refunds - Would you not feel proud if your Chairman is able to keep his word? - CBDT Chairman </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> his message dated 24.02.2011, the CBDT Chairman had asked all his Chief Commissioners to personally monitor all the time barring refund cases to ensure that these are necessarily processed by March 15, 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In his latest message, he says, “It is a matter of great regret that, despite a personal appeal made to each one of you, most of the CCIT regions have by 28/2/11 not provided details of time barring paper refund cases still not entered in the system. <strong>Once again I beseech you all to immediately mail the said information</strong> ….. As regards paper Returns entered in the system, all CCITs are once again advised to ensure processing of all time barring refund cases by 15/3/11. “ </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He concludes his letter with, “Would not you feel proud if the Chairman of your organization is able to keep his word given to the Union Finance Minister that all refunds would definitely be issued before March 2011? CBDT trusts each of you & seeks your personal indulgence”. It's not easy to be Chairman! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cbdt_desk.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From the Desk of the Chairman, CBDT . S. No. 11 Dated: March 05, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">IRS Officers as Superintendents in CBI </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI</strong> is predominantly a deputationist organisation. Six posts of Superintendents of police are exclusively reserved for IAAS , IRS (IT), IRS (C&CE) and Central Police Organisations. CBDT has invited applications from its officers for the post. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/deputation/cbi_deputation.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT F . No. A - 35012/8/2011- Ad.V Dated: March 04, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI Charge sheets High Court Judge </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Bureau of Investigation has filed charge sheet against a High Court Judge and four others in the Court of Special Judge, Chandigarh in the case related to delivery of Rs . 15 lakhs cash at the door step of another High Court Judge of Punjab and Haryana High Court in August, 2008. The charge sheet has been filed after receipt of Prosecution Sanction U/s 19 of Prevention of Corruption Act, 1988 from Ministry of Law and Justice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI investigation established that the then High Court Judge, being a public servant, in the capacity of a judge of the Punjab and Haryana High Court obtained an amount of Rs . 15 lakhs and other valuable things without consideration from a private person (First), she knew to be interested in another private person (Second) from whom also she had obtained an air ticket. It is further established that another private person (Second) was not only an advocate who appeared before the High Court Judge in the matter of RSA 550 of 2007 but was also interested in the plot in Panchkula , which was subject matter of the said RSA along with his friend (Third private person). The High Court Judge had also obtained Rs . 2.5 Lakhs from the private person (First) on earlier occasion and was found using a mobile phone in his name. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The chargesheet has been filed for commission of offences punishable Under Section 11 of the Prevention of Corruption Act, 1988 by the High Court Judge, U/s 120-B of IPC read with Section 12 of the Prevention of Corruption Act, 1988 by a private person(First), another private person (Second), his friend / private person (Third) as well as 120-B IPC r/w sections 193 r/w 192, 196, 199 & 200 IPC and substantive offences thereof by private person (Second), private person (Third) and one other private person(Fourth). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI release is quick to add, “The public is reminded that the above findings are based on the investigation done by CBI and evidence collected by it. Under the Indian Law, the accused are presumed to be innocent till their guilt is finally established after a fair trial”. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI normally does not add this reminder! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DIN Process Simplified - MCA </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Ministry of Corporate Affairs has re-examined the process of allotment of Directors Identification Number (DIN) to be obtained u/s 266B of the Companies Act, 1956. The present process is cumbersome and time consuming. The following procedure will be in place soon. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Application for DIN will be made on <strong><em>eForm; No physical submission of documents</em> shall be accepted</strong> and for this purpose Scanned documents along with verification by the applicant will be attached with the eForm. Only online fee <em><strong>payment</strong></em> will be allowed i.e. No challan payment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <em><strong>The application can also be submitted online by the applicant himself using his DSC.</strong></em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. DIN 1 eForm can be <em><strong>digitally signed by the professional who shall also confirm that he has verified the particulars of the Applicant given in the application. </strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Where the DIN 1 is verified by the professional, the DIN will be approved by the system immediately online. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In other cases the DIN cell will examine the application and same shall be disposed of within one or two days. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Companies (Directors Identification Number) Rules, 2006 are being amended on the above lines. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Penal action against the applicant and professional certifying the DIN application in case of false information / certification as per provisions of section 628 of the Act will be taken in addition to action for professional misconduct and revocation of DIN, allotted on false information </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The above procedures is expected to enable allotment of DIN on the <em><strong>same day</strong></em>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The above procedures applies to filing of DIN 4 intimating changes in particulars of Directors. </font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/circular_04_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MOC Circular No.5 /2011 Dated: March 04, 2011 </font></strong></a></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><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 Sales Tax</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Goods transported to outside State Depots for sale on agreement - No interference on question of fact found by Tribunal - transactions in question were inter-State sales taxable under Central Act. - Supreme Court</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MERELY</strong> because the branch office could also effect supplies directly to some of the bulk consumers, it cannot be said that all supplies that are made to branch offices are not pursuant to the Sales Agreement and letter of allocation. A close reading of the clauses would clearly indicate that the parties have agreed to discharge certain obligations cast on them under the agreement. xxxxx It is because of these covenants, the assessee is obliged to move the goods from its factory to the godown situated in other States to fulfill its part of the contract. Bearing in mind the provisions of Section 3(a) of the Central Sales Tax Act, 1956 and on the facts of the case, the transactions in question were inter-State sales taxable under the Central Act. </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 80IB - Activity of converting raw fish into tinned fish is only processing and not manufacturing as essential characteristic does not change; Paying Central Excise duty makes no difference and assessee may claim refund if it is entitled to: Delhi High Court</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether the activity undertaken to convert raw fish into tinned fish is only a ‘processing' or ‘manufacturing' and Whether assessee can claim Sec 80IB benefits on such activity. The other question is - Whether assessee can claim refund if it has been paying Central Excise duty on such activity. The answers to the first two questions were given against the assessee, and the third one went in its favour.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tribunal cannot pass futile orders - application filed for stay of operation of Commissioner(A) is of academic interest only as provisional assessments have since been finalised on the basis of view taken by the original authority and affirmed by the appellate authority: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADMITTEDLY</strong>, the question of applicability of Rule 9(1)(c) read with section 14 of the Customs Act remains academic for the appellant inasmuch as they have not claimed to have made any subsequent imports. The imports in question are already covered by the final assessments based on the impugned orders. In this scenario, any order of stay will be of no use to either side. The Tribunal cannot pass futile orders. </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 Time.</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>