TIOL-DDT 1617 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 1617</font><br> </strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">27.05.2011<br> </font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Friday </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - BAS - Processing of Agricultural Produce - CBEC Clarification </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Notification No. 14/2004-ST dated 10.09.2004, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxable service provided to a client by any person in relation to the business auxiliary service , in so far as it relates to,- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ procurement of goods or services, which are inputs for the client; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ production or processing of goods for, or on behalf of, the client; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ provision of service on behalf of the client; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ a service incidental or auxiliary to any activity specified in (a) to (c) above, </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">and provided in relation to agriculture , printing, textile processing or education, from the whole of service tax leviable thereon under section 66 of the said Finance Act: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">is exempted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has received a representation that field formations are not considering<em> processing of tobacco involving threshing and drying of tobacco leaves and client processing of raw cashew involving roasting/drying, shelling and peeling of raw cashew, as <strong>in relation to agriculture</strong></em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board clarifies:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Client processing which falls under business auxiliary service undertaken on the primary agricultural produce namely tobacco or raw cashew, does not result in any change in their essential character of tobacco or cashew. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the light of the above principle </font></em></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) process of threshing and drying of tobacco leaves and thereafter packing the same and </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) processing of raw cashew and recovering kernel , </font></em></p> </blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">undertaken for, or on behalf of, the clients by processing units are covered by the expression “... processing of goods for, or on behalf of, the client.....and provided in relation to agriculture,...” appearing in the said notification. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board further clarifies that:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">where the commission agents stationed abroad provide business auxiliary service to promote the export of rice, said business auxiliary service is covered by notification 13/2003-ST(as amended) because, the word ‘rice' is mentioned under the explanation to the term ‘agricultural produce', in the inclusive portion along with other items like cereals, pulses, etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 13/2003-Service Tax exempts, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>the business auxiliary services provided by a commission agent in relation to sale or purchase of agricultural produce from the service tax leviable thereon under section 66 of the said Act. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation . </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) “agricultural produce” means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but makes it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice , coffee and tea but does not include manufactured products such as sugar, edible oils, processed food and processed tobacco.” </font></em></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/sercir143.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 143/12/2011 - ST., Dated: May 26, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of Apparel from Bangladesh - Customs Exemption - Quantity Increased </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Notification No. 51/2008, certain goods of the origin of Bangladesh are exempted from Customs Duty. This exemption, in respect of articles of apparel and clothing accessories, shall apply to a quantity of imports not exceeding <strong>8 Million</strong> pieces in a Calendar year. Now this quantity of <strong>8 Million</strong> pieces is increased to <strong>10 Million</strong> pieces </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_042.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 42/2011-Cus., Dated: May 25, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Cadre Restructure Cleared by Expenditure - More than 3000 New ACs </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MAYBE</strong> the first issue that the CBEC Chairman took up immediately after his return from a foreign trip, was the much awaited (by officers) cadre review. He successfully got it cleared by the Expenditure Department and now the file will go the FM, DOPT and Cabinet. As Expenditure had approved the scheme, the other approvals will be a mere formality, which hopefully should not take a long time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the proposal, the Chairman and Members of CBEC will no more be ex-cadre posts; they will be in-cadre! This should dispel any apprehension about any take-over of the Board by the IAS. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There will be 23 new posts of Principal Chief Commissioner in the HAG+ scale. There will be 72 Chief Commissioners compared to the existing 43. The strength of Commissioners is to be increased to 465 from the existing 295. There are 593 Additional Commissioner/Joint Commissioner posts which will swell to 1026. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present there are 1550 Assistant Commissioner/Deputy Commissioner posts and this strength will go up to 4896 bringing in 3346. There is going to be 100 percent increase in the strength of Sr. PS, LDC, Drivers and Sepoy. The strength of the Head Havildar is to be increased to 4117 from 2139. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It's raining posts in CBEC - maybe the cadres will now be happy or are they still going to be frustrated? </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Export of Gaur Gum to EU - Restriction withdrawn </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not047.htm" target="_blank">Notification No. 47 (RE-2010)/2009-2014 of 18.05.2011</a></strong>, DGFT had stipulated that export of Gaur gum to European Union, would be allowed only if it was certified that the product does not contain Penta Chlorophenol (PCP) in any proportion on sampling done by the authorized representative of the competent authority. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Notification No. 47 dated 18.05.2011, is rescinded with immediate effect. Thus, the earlier stipulation of Notification No. 50 of 06.07.2010 of allowing presence of upto 0.01 mg/Kg. of Penta Chlorophenol (PCP) in the consignments of Guar gum when exported to EU will continue to be valid. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why had the notification to be withdrawn within 8 days of its issue? </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not049.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 49 (RE - 2010)/2009-2014, Dated: May 26, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Water Pipes - Last Mile - Is it a proverb or a mathematical term used by Board to explain rationale of notification 6/2006-CE? </font></strong></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">WE received this mail from a netizen - </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I came across this sentence in the recent Board Circular 945/6/2011-CX , Dated: May 16, 2011 - “<strong>Thus, <font color="#663399">pipes which are used at the last mile</font> to provide the consumer connection whose cost is either paid by the consumer or recovered from him do not form part of the project and will not be eligible for the exemption.</strong>” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While reporting this Circular in the <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12526" target="_blank">DDT-1611</a></strong> issue, the author has questioned as to whether the best brains of the country needed to be wasted (vested) with such powers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I for one was bedazzled not with the denial of the ‘micro' benefits which is always the norm adopted by the bureaucratic fiefdom but about the usage of the term “at the last mile”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Wikipedia describes the term ‘the last mile' thus - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The "<strong>last mile</strong>" or "last <a href="http://en.wikipedia.org/wiki/Kilometer"><strong>kilometer</strong> </a>" is the final leg of delivering connectivity from a communications provider to a customer. The phrase is therefore often used by the <a href="http://en.wikipedia.org/wiki/Telecommunication"><strong>telecommunications</strong> </a>and <a href="http://en.wikipedia.org/wiki/Cable_television"><strong>cable television</strong> </a>industries. Because the last mile of a network to the user is also the first mile from the user to the world in regards to sending data (such as uploading), the term " first mile " is sometimes used. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Dictionary meaning of the term ‘last mile' is as under - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>LAST MILE</strong> (noun): the last walk of a condemned person to the execution place </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since I felt that none of these descriptions best described the term “the last mile” referred to in the Board Circular dated 16 th May, 2011, I thought it would be prudent to interpret this ‘expression' in mathematical terms. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Suppose the length of the pipe used to supply water from the distribution network to the consumer is 10 miles (16 kms). Adopting the literal meaning of the term “the last mile” which benefit is sought to be denied by the Board, the length of the pipe for which the benefit of the notification 6/2006-CE would be available would be 10 minus 1 and which equals nine miles. </font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">So, after all, it is "only one mile" for which the Board does not want any benefit of exemption to be extended.</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT should in fact be grateful to these best brains for drafting this beneficial Circular. </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"> - Monday's cases </font></strong></font></strong></font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#663399"><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 Excise</font> </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Valuation - Merely because some of partners in partnership firm and some of Directors of public limited company are relatives, it cannot be alleged that partnership firm and public limited company are related u/s 4(3)(b) of the CEA, 1944 - CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RELATIONSHIP</strong> as defined in the Companies Act read with Central Excise Act applies to natural persons and not to impersonal bodies like corporations: MORE often than not when a Revenue formation trumpets about they having unearthed a massive ‘related-person-undervaluation' case or for that matter a ‘clubbing case', after the initial euphoria dies down, the case too dies a slow death at the hands of the Appellate Tribunal or in the higher forum. Simply because the Revenue had half-read the provisions of the Central Excise Act and was more than eager to jump to a conclusion in its favour. You cannot blame them too for the primary reason is that the Valuation sections in the Central Excise Act have never been read and understood in the manner they were meant to be. </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">Whether when assessee offers 'discount' to distributors of SIM cards and Recharge coupons under pre-paid service against advance received from them, such discount is to be construed as commission, liable to tax deduction at source u/s 194H - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee company is engaged in the business of Cellular Mobile Phone Services in India. This Company with its Principal Office situated at Coimbatore, carried on the business of dealing with the branded products of the Company viz. mainly Starter Packs and Rechargeable coupons viz. SIM Cards and Prepaid coupons. The issue before the Tribunal is - Whether when assessee offers 'discount' to its distributors on SIM cards and Recharge coupons under pre-paid telecom service scheme against the advance received from them, it is to be construed as Commission, and thus, liable to TDS u/s 194H. And the verdict goes against the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">A benefit denied to appellant by Government cannot be granted by Tribunal in equity or otherwise: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONSIGNMENT</strong> of raw materials such as polyurethane, SBR rubber granules, adhesives etc. required for processing and producing an athletic track is classifiable under CTH 40.05 and not 9506.00 and is not entitled for exemption under notification 109/94-Cus or 146/94-Cus</font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend. </font></p> <div 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"><strong> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font> </div> </body> </html>