TIOL-DDT 1677 · the untouched capture
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<p><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1677 </font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23.08.2011 <br>
</font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TUESDAY </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - All Containers to be Weighed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has decided that Customs Cargo Service providers (CCSP) should have weighbridges installed at their facilities preferably near the entry/exit gate. Board also desires that all containers must be weighed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Certain conditions are to be fulfilled by Customs Cargo Service providers (CCSP) for custody and handling of imported or export goods in a customs area to the satisfaction of the Commissioner of Customs like infrastructure, equipment and adequate manpower for handling of imported or export cargo in a Customs area, as per the ‘Handling of Cargo in Customs Areas Regulations, 2009'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Customs Commissioners to follow these directions strictly. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/instruction11_021.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Instruction in F. No.450/81/2011-Cus.IV., Dated: August 18, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Chandigarh Airport to Handle Baggage </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CHANDIGARH</strong> airport has been notified as a Customs airport for ‘<em>Unloading of baggage and the loading of baggage '. Earlier it was only for loading and unloading of baggage of defence personnel. Chandigarh continues to be a Customs Airport for ‘ Unloading of imported goods and the loading of export goods related to Ministry of Defence'. </em></font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_058.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 58/2011-CUS (N. T.) , Dated: August 19, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Consolidated Guidelines for import of precious metal, Issued </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has issued consolidated guidelines on import of precious metal by the nominated agencies and the system of monitoring. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the Premier Trading Houses and the Star Trading Houses (only for Gems & Jewellery exporters), the Certificate Holder shall be required to request to the <strong>concerned</strong> Regional Authority (RA) (who had issued the Status Certificate / the Registered office is located) enclosing therewith a self-attested copy of the valid Status Certificate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Monitoring Mechanism:</strong>- The following guidelines for monitoring the import of precious metal and its distribution and / or own use by the Nominated Agencies will be observed (other than the designated banks nominated by RBI): </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) All these Nominated agencies are required to maintain records of imports of precious metal (both quantity and value) and its distribution for the purpose of exports of value added product as well as for the purpose of domestic consumption. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) All the Nominated Agencies shall {other than the Premier Trading Houses and Star Trading Houses(only for Gems & Jewellery exporters)} file a half yearly return to the Gems & Jewellery EPC Registered Office at Mumbai, G&J EPC. The Premier Trading Houses and the Star Trading Houses (only for Gems & Jewellery exporters) shall file this return to the <strong>concerned</strong> RA which has issued the Certificate. These returns shall be filed within 15 days from the period of reporting. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) G&J EPC and the concerned RA shall compile the figures and forward it to DGFT (Hqrs.) by 15 th of the subsequent month. G&J EPC and concerned RA will also inform DGFT which agency has not filed the return, so that appropriate action for delisting of the agency can be taken.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) The performance of these agencies will be reviewed on annual basis by DGFT (HQs) in consultation with G&J EPC. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Policy and Procedure for import of precious metal shall be as per the guidelines stated in Foreign Trade Policy (FTP) and the relevant RBI Guidelines.; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Clearance of import consignment shall be allowed by the Customs Authority as per the Procedure laid down by them for the Nominated Agencies by way of Customs Notification and / or Circular issued by them from time to time. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir039.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 39/(RE-2010)/2009-14, Dated: August 19, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Levy of Service Tax on Fee for Country of Origin Certificate issued by Chambers of Commerce - Board Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has received representations seeking clarification as to whether service tax is leviable on the fee charged by the Chambers of Commerce for issuance of Country of Origin Certificate (COOC). </font></p>
<p align="justify"><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC explains:- </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service provided by a Chamber of Commerce by way of issuance of COOC appears to fall under two different headings, namely, ‘club or association service' [section 65(105)(zzze)], or ‘technical inspection or certification service' [section 65(105)(zzi)]. It is well known that in our country, Chambers of Commerce, Export Promotion Councils (EPC), some Trade Associations have been authorised by the Government to issue COOC to the exporters. General practice followed is that the exporter makes an application to the Chamber or any authorised agency for issuance of COOC, in the prescribed form, along with a copy of commercial invoice and other documents and pays the prescribed fees. On the basis and verification of the information provided in the application for COOC and the supporting documents with reference to the goods sought to be exported, the Chamber or the authorised agency issues a COOC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The above activity carried out by the Chambers, involving certification of the national character of the export goods, squarely falls under ‘technical inspection or certification', as defined in section 65(108) of Finance Act, 1994. In certain cases, when COOC is issued with reference to national character of the goods upon examination of the origin of their composition, requirements of the definition provided in section 65(108) of Finance Act, 1994 is clearly fulfilled. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">And concludes:- </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A chamber or EPC or Trade Association which issues COOC acts as a technical inspection and certification agency, and issuance of COOC attracts service tax under ‘technical inspection and certification agency' service, which is a specific description when compared to a general description like ‘club or association service', by the application of the principles of classification provided in section 65A of Finance Act, 1994. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board further clarifies that the Service Tax paid on ‘technical inspection and certification' of export goods is eligible for refund under Notification 17/2009-ST dated 7 th July 2009. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/sercir145.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 145/14/2011-ST Dated: August 19, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Issues Circular for ‘TDS on Salaries' for FY 2011-12 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT </strong>has issued a Circular, which contains the rates of deduction of income tax from the payment of income chargeable under the head "Salaries" during the financial year 2011-2012 and explains certain related provisions of the Income tax Act. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM "SALARIES" </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Method of Tax Calculation: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every person who is responsible for paying any income chargeable under the head "Salaries" shall deduct income tax on the estimated income of the assessee under the head "Salaries" for the financial year 2011-2012. The income tax is required to be calculated on the basis of the rates given above subject to provisions of sec 206AA of the Income Tax Act and shall be deducted at the time of each payment. No tax will, however, be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 1,80,000/- or Rs.1,90,000/- or Rs. 2,50,000/- or Rs. 5,00,000/-, as the case may be, depending upon the gender and age of the employee. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Payment of Tax on Non-monetary Perquisites by Employer: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at his option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. The employer will have to pay such tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head "salaries" to the employee. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Computation of Average Income Tax:</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For making the payment of tax mentioned above, tax is to be determined at the average of income tax computed based on rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted:</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201. Sub-section (1A) of section 201 lays down that such person shall be liable to pay simple interest (i) at one percent for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and (ii) at one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Such interest, if chargeable, has to be paid before furnishing of quarterly statement of TDS for each quarter. Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him. Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time the tax deducted at source by him, he shall be <strong>punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along fine</strong>. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be noted that under the new TDS procedure, the accuracy and availability of TAN, PAN and receipt number of TDS statement filed by the deductor will be unique identifier for granting online credit for TDS. Hence due care should be taken in filling these particulars. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">If employee (deductee) fails to furnish his/her PAN to the deductor:</font></strong> Then, the deductor shall make TDS at a higher of the following rates </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ at the rate specified in the relevant provision of this Act; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ at the rate or rates in force; or </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ at the rate of twenty per cent. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. This applies to any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVII-B of Income Tax Act. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income chargeable under the head "Salaries”. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following income shall be chargeable to income-tax under the head "Salaries”: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) Any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2011/it11cir05.htm"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT Circular No. 05/2011 in F.NO. 275/192/2011-IT(B)., Dated: August 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">GST - Oppose Clandestine and Sinister Attempt of Centre - Jayalalithaa </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TAMIL</strong> Nadu Chief Minister Jayalalithaa has raised a clarion call against GST in the proposed form. In a letter to all non-Congress Chief Ministers, Madame Jaya says, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As we all know, Sales Tax / VAT is the only major source of revenue for the States, while the Union Government has many sources of income. The Government of India is attempting to stealthily encroach upon even this single buoyant source of revenue for the State Governments in the name of indirect tax reforms. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At a point when many States continue to raise many pertinent and critical issues like tax structure, convergence of tax rates, compensation mechanism, etc. during the discussions in the Empowered Committee of State Finance / Taxation ministers, to our shock and dismay, the Government of India has chosen to introduce the Amendment Bill in Parliament without addressing any of them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bill includes provisions like the GST Council and GST Dispute Settlement Authority which, if brought into force, will erode the legislative and fiscal powers of the States. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the States have the power to withhold their consent to bring the Amendment into force as the Government of India will require ratification by the majority of the States, <strong>this clandestine and sinister attempt on its part needs to be opposed vehemently at the Bill stage itself</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Jaya has also written a letter to the Prime Minister on GST. </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">VAT/Service Tax</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Artificially Created Light Energy - ACLE, not goods - covered under Service Tax and not VAT - To levy tax on same aspect under both legislation is impermissible - Attempt to disobey SC Judgement viewed seriously - Karnataka Government directed to pay costs: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ACLE</strong> is not seen by the subscriber/consumer. It never comes to the market for it to be bought or sold. It is unknown in the market. It is not capable of abstraction, consumption and delivery by subscriber/customer. Therefore, it does not possess the characteristic of "goods" as understood in law and there is no sale of such goods involved in a telecommunication service. </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 compensates non-resident to settle dispute over alleged infringement of registered patents, such payment is akin to penalty and thus not allowable expenditure u/s 37(1) - NO, it's allowable: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE,</strong> incorporated in the year 1984, was engaged in the business of manufacturing of environmental control system such as Rotors, Heat Recovery Wheels, Desiccant Rotors, etc. During assessment proceedings AO noticed that assessee had debited an amount of Rs. 3.13 crores on account of compensation paid towards settlement of dispute. The issue before the Bench is - Whether when the assessee compensates a non-resident to settle a dispute over alleged infringement of registered patents, such payment is akin to penalty and thus not allowable expenditure u/s 37(1). And, the verdict goes in favour of the assessee. </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">Refund - Credit Note issued after two years of duty payment - No refund: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SECTION</strong> 12 of the Central Excise Act becomes relevant which indicates that the party who is liable to pay excise duty on any goods, has to file the sales invoice and other documents relating to assessment at the time of clearance of the goods itself. Therefore, when at the time of clearance no such document was filed and what is sought to be relied upon is a document issued after two years, the same raises a doubt and cannot be accepted as a reliable document. </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Procedure under Chapter X - Strict compliance necessary: SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DETAILED</strong> procedures have been laid down in Chapter X so as to curb the diversion and misutilisation of goods which are excisable. The matter is remitted to the Tribunal for fresh consideration de novo of the dispute in accordance with law. </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><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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