TIOL-DDT 1654 · 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 1654</font><br>
19.07.2011 <br>
Tuesday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - What is <em>Completion of Service</em>? CBEC Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICE</strong> Tax Rules, 1994 requires that invoice should be issued within a period of 14 days from the completion of the taxable service. The invoice needs to indicate inter alia the value of service so completed. Thus, it is important to identify the service so completed. This would include not only the physical part of providing the service but also the completion of all other auxiliary activities that enable the service provider to be in a position to issue the invoice. Such auxiliary activities could include activities like measurement, quality testing etc. which may be essential pre-requisites for identification of completion of service. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what is completion of service?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC clarifies: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The test for the determination whether a service has been completed would be the completion of all the related activities that place the service provider in a situation to be able to issue an invoice. However, such activities do not include flimsy or irrelevant grounds for delay in issuance of invoice . </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What a beautiful clarification! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, what is <em>completion of all the related activities?</em> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And what are <em>flimsy or irrelevant grounds</em> that the Department will not accept? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What does this Circular really clarify? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By the way, why should any sane person delay the issue of invoice and collect his money for the service? Maybe to avoid paying Service Tax even before getting payment? And how is the department going to prove that service has been completed? Are they going to check each invoice to ascertain whether the invoice had been issued within 14 days of completing the service? </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">For every problem, there is a solution, which is simple, elegant, and wrong. </font></strong></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/sercir144.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 144/13/2011-ST Dated: July 18, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Handling of Cargo in Customs Areas Regulations, 2009 - Residence and Transport Facilities to Customs Staff - Clarifications </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Notification No.96/2010-Customs (NT) dated 12.11.2010, ‘Customs Cargo Service Providers' (CCSP) are required to provide, <em>free of cost or rent fully furnished office accommodation for Customs, Customs Electronic Data Interchange (EDI) Service Centre, with required amenities and facilities and residential accommodation and transportation facilities for customs staff</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board clarifies that “<em>custodians already exempted from payment of cost recovery charges under Circular No.27/2004-Customs dated 6.4.2004 and Para 5.3 of Board's Circular No.13/2009-Customs dated 23.3.2009 would continue to avail the exemption even after issue of Board Circular No.4/2011-Customs dated 10.1.2011”</em>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board further clarifies:</font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Commissioner of Customs, subject to his satisfaction, should not insist for residential accommodation for staff from CCSP in cases where concerned facility of CCSP is located in the city area.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The underlying idea is to provide for residential facilities for staff deployment at Customs facilities located in far flung and remote areas where it is difficult to have appropriate residential facility and which can not be easily commuted by the officers.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Commissioner of Customs <em><strong>concerned</strong></em> (please note that it is now not the <em>concerned</em> Commissioner. Board deserves all praise for the correct usage of concern ) should exercise due diligence before enforcing provisions of 5(1)(i)(b) of Notification No.96/2010-Customs (NT) dated 12.11.2010.</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The type of residential accommodation to be provided to Customs staff would be determined as per entitlement of the officer of Central Government.
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>CCSPs shall continue to provide transport facilities irrespective of location of facilities</strong>.</font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_029.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 29/2011-Cus., Dated: July 18, 2011 </font></strong></a></p>
</div>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Tetrafluoroethane - No Resurrection</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROVISIONAL</strong> Anti Dumping Duty was imposed on 1, 1, 1, 2-Tetrafluoroethane or R-134a of all types, originating in, or exported from, People's Republic of China and Japan, by notification No. 52/2010-Customs, dated the 19 th April 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Notification expired on 18.10.2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has imposed definitive anti dumping duty on the products for a period of five years from 15.07.2011. For a change, a welcome one at that, the Government has not imposed the duty retrospectively from the date of provisional imposition and that too after its lapse. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how Government should work. If they had forgotten to extend the provisional anti dumping duty, let it be; but the importer should not be made a scapegoat as was being done all these days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT had been harping on this issue for more than five years and we extend our heartiest congratulations to the Board. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_061.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 61/2011-Cus, Dated: July 15, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">GST - Sushil Modi - New Chairman of Empowered Committee </font></strong></p>
<p align="justify"><img src="http://www.taxindiaonline.com/RC2/image/stories/sushil_mody.jpeg" alt="Legal Corner Icon" width="183" height="128" hspace="5" border="0" align="left"></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Ace politician that he is, Finance Minister Pranab Mukherjee got BJP's Bihar Finance Minister and Deputy CM, Sushil Modi, elected as Chairman of the Empowered Committee of State Finance Ministers on GST. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though April 2012 is an impossible dream for launch of GST, Modi's election as Chairman in place of Asim Dasgupta, is a sign of hope. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Already the new Chairman has announced that GST is not a political issue and has nothing to do with Congress or BJP. He wanted the Centre and the States to be flexible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the concluding day of the 14th Lok Sabha, Leader of opposition, LK Advani said, "<em>Sometimes I think had Pranab not been there, what would happen to this government. Whenever there is a crisis, he is there</em>”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Pranab Da deserves a place in history as the founder of GST regime in India. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Just have one Tax </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Dr</strong>. Laurie Roth, an American Columnist wrote yesterday, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We
must have a total paradigm shift in taxation, not another tax decrease
or increase that only touches the surface and kicks the can down the road.
We must introduce a 2% consumption tax and stop all other tax, including
Income tax, excise tax, capital gains tax, payroll tax, gas tax, property
tax and whatever tax is sneaking around. It is high time for just a 2%
consumption tax. This would bring in 10-20 trillion dollars a year, liberate
the people from the IRS and Government controls, while giving us enough
money to take care of our real priorities and debt. </font></em></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can't we think of something like that?</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><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 Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Manufacture - Rosin and Turpentine - process of lifting water is incidental to manufacture; Supreme Court decision prevails over Board Circular: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> operation of lifting of the water from the well to the higher levels, is so integrally connected with the manufacture of "Turpentine Oil" and "Rosin", that without this activity it is impossible to manufacture the said goods and therefore, the processing of the said raw material in or in relation to manufacture of the said final goods is carried on with the aid of power. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is well settled proposition of law that Circulars and instructions issued by the Central Board of Excise and Customs are no doubt binding in law on the authorities under the respective Statutes but when this Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Courts or the Tribunal, as the case may be, to direct that the Board's Circular should be given effect to and not the view expressed in a decision of this Court or a High Court. </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 32 - Whether when Revenue fails to bring any fact on record to doubt authenticity of transaction, assessee is entitled to claim depreciation on asset leased back to vendor - YES, rules High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AO</strong> disallowed the claim of the assessee of 100% depreciation on the equipment purchased by it from the Haryana State Electricity Board, which was already installed at the said Board's Thermal Power Station at Faridabad and immediately thereupon leasing the said equipment back to the HSEB on certain terms and conditions relying on the decision of Apex Court in the case of <em>McDowell and Company Limited v. Commercial Tax Officer </em><strong><em><font size="1">(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-40-SC-CT.htm">2002-TIOL-40-SC-CT</a>)</font></em></strong> stating that the transaction was not a case of purchase and lease back of equipment, but was a pure financial and loan transaction. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign Trade Policy </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Telecom Sector SFIS – DGFT Circular 38 dated 15.7.2010 is ultra vires FTP – Para 3 Quashed – The foreign exchange earned cannot be defined as remittance of foreign exchange less an outflow: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> policy document has defined both the eligibility and the entitlement with reference to foreign exchange earned. Where the policy intended that the concept of the net foreign exchange should be applied it has stipulated so expressly. In the absence thereof, it was wholly impermissible for the DGFT, by means of a policy circular, to direct the implementation of what constitutes clearly an amendment of the policy.</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><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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