TIOL-DDT 1635 · 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 1635</font><br>
22.06.2011<br>
Wednesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Common Adjudicating Authority Appointed - Is Show Cause Notice Valid?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has appointed the Additional Commissioner of Customs or Joint Commissioner, CFS, Dhandari Kalan, Phase-V, Focal Point, Ludhiana to act as a common adjudicating authority for the purpose of adjudicating the matters relating to show cause notice pertaining to M/s Suresh Apparels (P) Ltd, Ludhiana and others, issued vide, F.No. 856(4)LDH/2009/Pt-I/982-991 dated the 04 May, 2010, by the Additional Director, Directorate of Revenue Intelligence, Ludhiana Regional Unit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But can the jurisdictional Additional Commissioner adjudicate a Show Cause Notice issued by the Additional Director, DRI?</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_039.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 39/2011-Cus.(N.T.), Dated: June 21, 2011</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SION amended - Lug Caps</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a><strong>DGFT</strong> has amended SION C-773 of the Product Group “Engineering Products”(Product Code: 61).</a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The existing entry of export item covers only “Printed Lug Cap with Internal Coating Lined with PVC compound”. The amended entry covers “ Lug Cap whether printed or plain; (a) with Internal Coating Lined with PVC compound and (b) External Coating”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inputs covered were: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Tin Plate Prime</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. PVC Compound</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Turpentine</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the inputs covered are:</font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Prime Quality Electrolytic Tin Plate (ETP)</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. PVC Lining Compound</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Primer Lacquer for internal base coat</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Adhesive Lacquer for internal coat</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. External base coat-white or</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Gold Varnish </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case the Lug Cap is printed, an additional input, “Printing inks” will be allowed</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This will facilitate import of raw materials for plain as well as printed Lug Caps. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn056.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 56/(RE-2010)/2009-2014, Dated: June 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Modification in SION - Engineering Products</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended SION C-390 - Engineering Products -<em> Powrah/Hoe/Pick axe/Kudali/Pick Mattock/ Cutter Mattock/ Trowel/Transplantor /Fork/Cultivator/Weeder/Bulb Planter/Combination Tool made of Non Alloy Steel/ Alloy Steel (including Stainless Steel)</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the phrase, “<strong>without handle or with handle made of PP and FRP or wood</strong>” is inserted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Import Products were: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Non-Alloy Steel/Alloy Steel (including Stainless Steel) Round/ Billets/ Plates/ Coils
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Epoxy Powder </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the following inputs are added: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Roving 4800 Tex Glass</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Resin GP/Isothermic</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Polypropelene</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Relevant Wood Blank</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SION C 1538 is also amended.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Earlier export item was “without handle”. Now, those with handles (either of fibre glass or wood) are also permitted. Hence, necessary changes are made under SION C-390 and SION C- 1538. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn057.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 57/(RE-2010)/2009-2014, Dated: June 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Compliance With Provisions of Companies Act and Rules - MOC clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Ministry has issued General Circular No. 33/2011 dated 01.06.2011 wherein it was informed that in order to ensure corporate governance and proper compliances of provisions of Companies Act, no request, whether oral, in writing or through e-forms, for recording any event based information / changes shall be accepted by the Registrar of Companies from such defaulting companies, unless they file their updated Balance Sheet and Profit & Loss Accounts and Annual Return with the Registrar of Companies.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is further clarified that the circular shall be applicable to those defaulting companies and their Directors which have not filed Balance Sheet or Annual Return for any of the financial years 2006-07, 2007-08, 2008-09 and 2009-10 with the Registrar of Companies as required under sections 220 and/or 159 of the Companies Act.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfmca/pdf2011/Circular_38-2011_021jun2011.pdf" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MOC Circular No. 38/2011 Dated: June 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Temporary Bar on Service Tax on Bar</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME</strong> hotels in Kerala had challenged in the High Court the imposition of Service Tax on hotels by sub clause zzzzv and zzzzw. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The clauses read as: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>(zzzzv)</em></strong><em> to any person, by a restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises; </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(zzzzw)</strong> to any person by a hotel, inn, guest house, club or camp-site, by whatever name called, for providing of accommodation for a continuous period of less than three months.</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Kerala High Court has granted interim stay against any coercive steps of recovery of service tax or against any proceedings for imposing penalty for a period of two months. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Kerala High Court Order dated June 16, 2011</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Challenging Imposition of Service Tax - Not a Wise Business Policy?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GETTING</strong> a stay against a new imposition does not seem to make good business sense. When the Government introduces a new levy, they study the legal implications and are usually ready to counter any legal attack. In the unlikely event of Government failing in the court, they always have the weapon of retrospective amendment, which they will use liberally. Not a single service, so far had been effectively set aside and the Government's success rate is almost hundred per cent. Ultimately the service provider will have to pay the tax - and with interest and sometimes with penalty too and at that time they will not be able to collect the tax from their customers. Apart from the huge expenses in the High Court and the Supreme Court, the petitioners will end up paying the tax with interest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even when the Delhi High Court struck down the levy of Service Tax on renting in the ‘Home Solutions' case, the Board in letter F. No 336/10/2009 – TRU dated 15.07.2009, informed the field formations, “ the Department has filed an appeal against the said order of the Delhi High Court, and the dispute has not reached finality. Given the situation, service tax formations throughout the country, are instructed to take necessary action to safeguard revenue by either pursuing the tax payer to pay up the service tax due or resort to means under law to protect the revenue.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Chennai Service Tax Commissioner in an RAC meeting stated, “<em>Board was aware of the decision of the Hon'ble High Court of Delhi and a SLP along with Stay Petition has been filed before the Hon'ble Supreme Court of India. It would be incorrect to stop payment of service tax, as otherwise demand notice would be issued by the jurisdictional officers invoking interest and penalty provisions. In the event of Revenue winning the appeal, the responsibility for the payment of applicable Service Tax with interest would squarely fall on the landlord. Hence, till the Hon'ble Supreme Court decides the case, it would be proper to mention service tax in the bills and remit the tax collected into the Govt. Account</em>.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The best method would be to beg, request, persuade or force the Government to put the levy on hold. The All India Motor Transport Congress had been consistently successful against Service Tax on goods transport. (Of course, Government asked somebody else to pay the tax). Recently the Health Industry was successful in mobilising public opinion against the ‘misery tax' as they called it and the Government had to relent and withdraw the proposed tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you are going to the North Block to make a representation, please ensure that you don't carry any chewing gum with you!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Government that taxes education and legal services cannot be expected to exempt bars and lodges, but somehow the BABAs who provide spiritual services and collect hundreds of Crores to service disturbed souls are not taxed.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You are doomed if you pay; you are doubly doomed if you don't pay. </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"> – Thursday's cases</font></strong></font></strong></font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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">Service Tax</strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on GTA service can be paid from CENVAT account upto 18.4.2006 - But from 19.4.2006, same cannot be paid from CENVAT account - CESTAT disposes of 50 appeals relating to GTA</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DISPOSING</strong> of 50 appeals in a bunch, involving the question of whether <em>CENVAT Credit</em> can be utilised for payment of service tax on Goods Transport Agency service, the South Zonal Bench of CESTAT held that before the amendment to Rule 2(p) of the <em>CENVAT Credit</em> Rules 2004, on 19.4.2006, the assessees can avail CENVAT Credit for payment of service tax on Goods Transport Agency service, but from 19.4.2006 onwards, the payment is not allowed from CENVAT account. While arriving at the above finding the CESTAT has relied on the decision in <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-147-CESTAT-BANG.htm" target="_blank"><font size="1">2011-TIOL-147-CESTAT-BANG</font></a></strong>. Incidentally, these 50 appeals were pending as the matter has been referred to the Larger Bench in case of <em>Panchmahal Steel Ltd. v. Commissioner of Central Excise & Customs, Vadodara-II</em> - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2008/2008-TIOL-1606-CESTAT-AHM.htm" target="_blank"><font size="1">(2008-TIOL-1606-CESTAT-AHM)</font></a></strong>.</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, a charitable body, has already claimed deduction for acquisition of capital assets by application of money, a further claim of depreciation on same assets would amount to double benefits - YES, rules ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is a charitable trust registered u/s 12A of the Act. In the return of income filed, it claimed depreciation on the assets, the cost of which were already claimed as application of money u/s 11(1). AO disallowed the depreciation claimed u/s 32 stating that the cost of asset/s having been allowed, its WDV was nil, so that there was no amount available on which depreciation could be claimed. The same would even otherwise amount to a double deduction, prohibited by law. </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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">EOU - When re-warehousing certificates are issued by jurisdictional central excise officials certifying receipt of duty free materials, benefit of doubt to be extended to recipient units viz., appellants: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ALLEGATION</strong> of complicity in diversion of duty free materials to local market resulting in imposition of penalties under sec. 112(b) of Customs Act, 1962 and Rule 26 of Central Excise Rules, 2002; Relying upon statements of alleged principal evader (supplier of goods under ARE3s) to arrive at a finding of non-receipt of goods by appellants, who are co-noticees, without any corroborative evidence, neither justified nor warranted – Levy of penalties set aside. </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 color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"></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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