TIOL-DDT 1634 · 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 1634</font><br>
21.06.2011 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Do
assessees need to file ER 5 & ER 6 returns even if Principal Inputs are
not CENVATTED?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Rule 9A of the <em>CENVAT Credit</em> Rules, 2004, a manufacturer of final products has to submit annual and monthly returns relating to the consumption of principal input in the manufacture of final products. As per the explanation given under the rule, "principal inputs", means any input which is used in the manufacture of final products where the cost of such input constitutes not less than 10% of the total cost of raw-materials for the manufacture of unit quantity of a given final products . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are certain products where the “principal inputs” are either non-dutiable (like wood used for manufacture of paper) or exempted. The other inputs on which credit is availed are not principal inputs, as they do not constitute more than 10% of the cost of inputs. Though the “principal inputs” constitute more than 10% of the cost of the raw materials, the fact remains that CENVAT credit is not availed on these inputs. In such cases, a doubt arises as to whether an assessee has to file ER 5 and ER 6 at all. When an assessee has not availed any credit on the principal inputs, the question of filing the ER 5 and ER 6 returns does not arise. However, it appears that the field formations are not willing to buy this logic and are insisting on filing ER 5 and ER 6 by treating the other inputs as principal inputs and in some cases the non-CENVATTED inputs as principal inputs. A suitable clarification is required on this especially in view of the CBEC instructions dated 14.01.2011 vide F.No.267/117/2010-CX8, directing the Commissioners to invoke the provisions of Rule 27 of the Central Excise Rules for non-filing of the returns. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI exempted from RTI</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNDER</strong> Section 24 of the RTI Act, certain intelligence and security organisations specified in the Second Schedule, being organisations established by the Central Government, are exempted from the provisions of the RTI Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Act in its original shape had the Second Schedule as given below: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Intelligence Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Research and Analysis Wing of the Cabinet Secretariat.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Directorate of Revenue Intelligence.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Central Economic Intelligence Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Directorate of Enforcement.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Narcotics Control Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Aviation Research Centre.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Special Frontier Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Border Security Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Central Reserve Police Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Indo-Tibetan Border Police.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Central Industrial Security Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. National Security Guards.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. Assam Rifles.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. Special Service Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. Special Branch (CID), Andaman and Nicobar.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. The Crime Branch-C.I.D.- CB, Dadra and Nagar Haveli.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18. Special Branch, Lakshadweep Police. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">First amendment to the Second Schedule of the RTI Act substituted Sashastra Seema Bal (serial number 15) for Special Services Bureau (Sashastra Seema Bal was earlier called Special Services Bureau when it was formed in 1963 after the Sino-Indian war) and added the following four organizations (with the following serial numbers in the Second Schedule prior to the second amendment): </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. Special Protection Group.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20 Defence Research and Development Organisation.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21. Border Road Development Board.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22. Financial Intelligence Unit, India. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Second amendment to the Second Schedule omitted the following three organizations (with serial numbers in the Second Schedule): </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. 16. Special Branch (CID), Andaman and Nicobar.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. 17. The Crime Branch-C.I.D.- CB, Dadra and Nagar Haveli.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. 18. Special Branch, Lakshadweep Police. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And included the following three organizations (with corresponding serial numbers in the Second Schedule): </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. 16. Directorate General of Income-tax (Investigation)
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. 17. National Technical Research Organisation
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. 18. Financial Intelligence Unit, India. </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Financial Intelligence Unit figuring at Sl. No. 22 was deleted (as it had moved up to Sl. No. 18.) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Second Schedule of the RTI Act was further amended vide No.G.S.R.726(E) dated 8 October 2008 which added the following organization (at sl. No. 22): </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22. National Security Council Secretariat </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now by Notification dated 9 th June 2011, Central Bureau of Investigation, National Investigation Agency and National Intelligence Grid are added to the list. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the latest list of exempted organisations is as given below: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Intelligence Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Research and Analysis Wing of the Cabinet Secretariat.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Directorate of Revenue Intelligence.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Central Economic Intelligence Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Directorate of Enforcement.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Narcotics Control Bureau.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Aviation Research Centre.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Special Frontier Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Border Security Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Central Reserve Police Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Indo-Tibetan Border Police.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Central Industrial Security Force.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. National Security Guards.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. Assam Rifles.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. Sashastra Seema Bal.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. Directorate General of Income-tax (Investigation).
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. National Technical Research Organisation.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18. Financial Intelligence Unit, India.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. Special Protection Group.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20. Defence Research and Development Organisation.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21. Border Road Development Board.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22. National Security Council Secretariat
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23. Central Bureau of Investigation
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24. National Investigation Agency
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25. National Intelligence Grid </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is worth noting that information pertaining to the <strong>allegations of corruption and human rights violations</strong> are excluded from the exclusion, as per Proviso to Section 24(1) of the RTI Act. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/rti_notification_9june.pdf"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DOPT Notification: Dated: June 09 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Excluding CBI from RTI - Certainly Bad Timing </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</strong> this Government deserves all praise for bringing in the RTI Act and slightly empowering the citizen against brute might of the State. Now the Government accosted with swindles and scandals has started showing weak links in its administration and does not want the citizens to know about its top intelligence agencies. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Minister of State in the PMO, V. Narayana Swamy defends the move citing National Security as the reason and claims that it is done based on the opinion of the Attorney General. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The first Chief Information Commissioner Wajahat Habibullah has told the Prime Minister that the move is counterproductive. Habibullah is reported to have written in a letter to the Prime Minister, “CBI does not collect intelligence or perform security related duties and does not "fit" the criteria laid down for organisations, listed under second schedule of Section 24 of the transparency law, which are exempted from disclosing information under the Act. Given the public mood around the country against corruption, exempting the CBI could be counter-productive. The same might be said for exempting others such as National Investigation Agency (NIA) which also perform investigative functions." </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Already CBI has acted on the exemption. It recently refused to part with information about disproportionate asset cases against government servants, including bureaucrats and ministers, even though the application was made much before CBI could get the exemption. Now that raises a question – Is the exemption retrospective? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meanwhile, the Delhi High Court has stayed an order of the CIC declaring the Mumbai International Airport Pvt Ltd (MIAL) as a "public authority" under the Right to Information (RTI) Act. In this case, the applicant wanted to know the cost of Bisleri bottles sold at MIAL. (They were being sold at prices higher than the MRP – Does that make a case for Central Excise?) </font></p>
<p align="center"><font color="#006600"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Wal - Mart wins Largest Sex Bias case in US Supreme Court </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> what is described as "without a doubt the most important class action case in more than a decade”, the US Supreme Court delivered a huge victory to businesses trying to fend off costly class action lawsuits filed by employees. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The opening words of the landmark judgement delivered yesterday by the Supreme Court make interesting reading, especially about Wal-Mart. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court said, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>We are presented with one of the most expansive class actions ever. The District Court and the Court of Appeals approved the certification of a class comprising about one and a half million plaintiffs, current and former female employees of petitioner Wal-Mart who allege that the discretion exercised by their local supervisors over pay and promotion matters violates Title VII by discriminating against women. In addition to injunctive and declaratory relief, the plaintiffs seek an award of back pay. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Petitioner Wal-Mart is the Nation's largest private employer. It operates four types of retail stores throughout the country: Discount Stores, Supercenters, Neighborhood Markets, and Sam's Clubs. Those stores are divided into seven nationwide divisions, which in turn comprise 41 regions of 80 to 85 stores apiece. Each store has between 40 and 53 separate departments and 80 to 500 staff positions. In all, Wal-Mart operates approximately 3,400 stores and employs more than one million people. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The named plaintiffs in this lawsuit, representing the 1.5 million members of the certified class, are three current or former Wal-Mart employees who allege that the company discriminated against them on the basis of their sex by denying them equal pay or promotions. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held that the plaintiffs' claims were worlds away from showing a companywide discriminatory pay and promotion policy. The Court did not find a commonality among the plaintiffs' complaints. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Did Wal - Mart buy Supreme Court decision? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITHIN</strong> hours
of the decision of the Supreme Court, which had about 1.5 million women as
plaintiffs, an employee of the super Corp anonymously announced that money
had been used, according to “Weekly World News”. He explained, “I don't want
to call it protection money because Wal-Mart is not in the business of killing
people or hurting people, unless, of course, you count all the processed
food we sell. Five Justices received cautionary letters, and followed by
a delivery of cash. It was clear. It was understood. As long as the Justices
throw out the suit, they don't have to worry.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems a woman activist said outside the Supreme Court, “ We knew Wal-Mart was this sleazy, but we didn't realize the Supreme Court was just as shady ”. </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"><a></a><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">CENVAT Credit - Security Services provided at residential quarters of workers - not input service: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the present case, the act of providing residential quarters by the manufacturer to its employees was voluntary. Providing further security service in such residential quarters was also an act voluntary in nature. No connection between the security service provided by the manufacturer in the residential quarters maintained for the workers as having any direct or indirect relation in the activity of manufacture of the final product. </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 115WA - Whether when only 40% income of a tea company is chargeable to tax, even FBT liability arises only on 40% of expenses - NO, rules ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> Company is engaged in the business of growing, manufacturing and sale of tea. It filed its return of income declaring 40% of FBT value on the ground that only 40% income is chargeable to tax under the Income Tax Act and hence FBT is leviable only to that extent. A.O. negated the claim of the assessee and charged FBT on 100 % of the expenses. The CIT(A) reduced the FBT to 40 %. Appeal was filed before the ITAT where the DR pointed out that FBT had nothing to do with the chargeable Income under Income Tax Act. </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">Import of Gold as baggage - Re-export allowed, but Customs does not release gold as penalty imposed on a third person not realized - Gold ordered to be released for re-export: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RESPONDENTS</strong> directed to release the goods in question for the purpose of re-exporting the same, without imposing any conditions, as per the provisions of the Customs Act, 1962. The respondents have not been in a position to show as to how the petitioners would be liable to pay the enhanced penalty imposed on Rahamathullah. Further, there is no finding that the goods in question belongs to Rahamathullah. It is also noted that the order of the Commissioner of Customs (Appeals), Chennai, dated 5.2.2010, had become final. In such circumstances, the petitioner need not be compelled to avail the appellate remedy, available under the provisions of the Customs Act, 1962. </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><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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