TIOL-DDT 1682 · 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 1682 </font><br>
30.08.2011 <br>
Tuesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxation Based on Negative List of Services</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Finance Minister had said in Parliament, while presenting the Union Budget 2011 that he would initiate <em>an informed public debate on the subject</em>. Now the Government has released a concept paper to seek public opinion, mainly on: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Negative vs positive list: should the country adopt a negative list? What will be the proper timing: at the time of GST or even earlier?
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ How to define ‘service', for the purpose of taxation? </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ What are the services, which should be placed in the negative list?
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ How comprehensive the coverage should be while drawing the negative list? What should be the policy on taxation of important sectors e.g. education, health, public services, charitable and NGOs, infrastructure etc.?
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ What are the likely revenue implications? </font></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Definition of Service</strong>: The Concept Paper suggests definition of service as: - </font></p>
<p><em><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">A “service” means anything, which does not constitute supply of goods, money or immovable property- and includes - </font></strong></em></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ right to use an immovable property;
</em></font>
</p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;
</font>
</em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ temporary transfer or permitting the use or enjoyment of any intellectual property right;
</font>
</em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
</font>
</em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ service in relation to lease or hire of goods; and
</font>
</em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ right to enter any premises- </font></em></p>
</blockquote>
<p><strong><em><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">but excludes a supply - </font></em></strong></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ by an employee to an employer in the course of or in relation to the employment of the person;</em></font>
</p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ by a constitutional authority under the Indian Constitution or a member of an Indian legislature or a local self-government in that capacity;</font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ that amounts to manufacture of excisable goods or is chargeable as part of the value of goods to a duty in terms of the provisions of Central Excise Act, 1944;</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Comments, suggestions or feedback may be given by September 30, 2011 to Shobhit Jain, OSD (TRU) at <a href="mailto:shobhit.jain@nic.in"><strong>shobhit.jain@nic.in</strong> </a></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/stnegative_list.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxation of Services Based on a Negative List of Services - Concept Paper For Public Debate </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT - CDR is now Chief Commissioner (AR) - But who has appointed them? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has changed the designation of the officers representing the Customs and Central Excise Department before CESTAT. The New designations are:- </font></p>
<table width="100%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td width="182" valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rank of the officer</font></strong></p></td>
<td width="135" valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Present Designation </font></strong></p></td>
<td width="107" valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">New Designation </font></strong></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Chief Commissioner </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chief Commissioner (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Commissioner </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Jt. CDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commissioner (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Additional commissioner </font></p> </td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Addl. Commissioner (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Joint Commissioner </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Joint Commissioner (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv)
</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Deputy Commissioner </font></p> </td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">JDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Deputy Commissioner (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Assistant Commissioner </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">JDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assistant Commissioner (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Superintendent </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">JDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Superintendent (A.R.) </font></p></td>
</tr>
<tr valign="top">
<td><p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Appraiser </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">JDR </font></p></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appraiser (A.R.) </font></p></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AR stands for <em>Authorised Representative</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 2 (c)(ii) of the CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL (PROCEDURE) RULES, 1982, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Authorised representative in relation to any proceedings before the Tribunal means, - “<em>a person <strong>duly appointed</strong> by the Central Government or by an officer duly authorised in this behalf as authorised representative to appear, plead and act for the Commissioner or Administrator, in such proceedings</em>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But has the Government or an authorised officer ever appointed an ‘authorised representative”? They are routinely posted by the Board in routine transfer orders. Are they really <strong>authorised</strong> representatives? </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2011/excircular951.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 951/12/2011-CX., Dated: August 26, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange Rates for September Notified </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods for September 2011. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_062.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 62/2011-Cus.,(N.T.), Dated: August 26, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption for Import of Coal - Corrigendum issued </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> virtue of Notification No. 77/2011-Cus dated August 17, 2011, Notification No. 21/2002-Cus was amended whereby, in the table appended thereto, S. No. 66A and the entries relating thereto were omitted. Further, the explanation in S. No. 68 was amended to redefine ‘coking coal' as ‘<em>Coal having mean reflectance of more than <strong>0.60 and Swelling Index or Crucible Swelling Number of more than 1'.</strong></em> <strong>Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12991" target="_blank">TIOL-DDT 1676 19.08.2011</a></strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, a corrigendum is issued to replace the words and figures ‘<strong>more than 1</strong>' by ‘<strong>1 and above'</strong>. With this corrigendum, the Explanation under S. No. 68 will now read as follows: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation: for the purpose of this exemption, "coking coal" means Coal having mean reflectance of more than <font color="#FF6633"><strong>0.60 and Swelling Index or Crucible Swelling Number of 1 and above.</strong></font> </font></em></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/corrigendum_11_77.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Corrigendum to Customs Notification No. 77/2001-Cus., Dated: August 25, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Finds Fault with Deficiencies in Service Tax Administration</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG conducted a performance audit to evaluate the adequacy of provisions of the Finance Act, 1994, Service Tax Rules and related instructions in ensuring proper levy, assessment and collection of service tax on Banking and other Financial Services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG found procedural deficiencies in registration of assessees, receipt of returns, scrutiny of returns, ambiguities/inadequacy in rule provisions and non-compliance. While the total financial implication of this audit intervention was 1923.30 crore, the direct additional revenue which could come to the Government was 264.50 crore. Observations with money value of 90.55 crore had been accepted by the department and 21.52 crore recovered. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Findings and recommendations: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ 1142 service providers who had provided Banking and other financial services and were liable to pay service tax but were not on the departmental registration lists. 65 of these potential assessees were liable to pay service tax of Rs. 92.12 crore.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Department may liaise with statutory authorities such as the RBI to obtain information regarding non-banking financial companies to bring them under the service tax net.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The information furnished by the department showed that 6 per cent of service tax returns were received late and 14 per cent of the returns were not received at all. CAG found, through cross verification of service tax returns with income tax returns and other records, instances of evasion of service tax totalling Rs. 28.93 crore. It is recommended that the monitoring mechanism for receipt and scrutiny of returns may be streamlined.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ CAG found instances of non-compliance to rules and provisions on incorrect valuation, incorrect/excess availing and utilisation of CENVAT credit, non-remittance of service tax, etc. resulting in revenue impact of Rs. 251.38 crore. </font></p>
</blockquote>
<p><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From CAG's Audit Report No. 15/2011-12 </font></em></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Dubai Customs Distributes Iftar meals in Ramadan </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> part of its social initiatives, Dubai Customs distributed 18000 iftar meals during Ramadan. In Airport halls of Dubai Internationall Airport, Dubai Customs inspectors distributed the Iftar bags and Sahour supper to the arriving passengers. The Customs inspectors distribute the Iftar bags to passengers at sunset time (fast breaking time), and at late night (sohour time). This doesn't prevent them from working hard to finalise passengers' other travel procedures. A Customs official said, "It is also a step towards reviving the holy prophetic way (sunna) which motivates Muslim community to contribute food iftar for gaining great rewards from Allah". </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><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">Apprehension of department that expenses incurred for sale of pressure cookers (valued u/s 4A) have been included for deduction is not supported by any evidence – Revenue appeal dismissed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING</strong> the period from April 2000 to March 2001, the assessee claimed a deduction on account of dealer discount, taxes and octroi, equalised freight and interest on receivable @ 36.28% of the sale price. Assessment was done on provisional basis. The assessment was subsequently finalised and the Assistant Commissioner allowed deduction on account of dealers discount and taxes and octroi. The discounts were allowed on the basis of Chartered Accountant's certificate submitted by the assessee.</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">Ransom paid to kidnappers of one of directors - allowable deduction: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> is a private limited company, engaged in the business of manufacturing and sale of bidis. Its director ‘S' was kidnapped and immediately an FIR was lodged but the police remained unsuccessful to get the director released from the dacoit and a sum of Rs.5,50,000 was paid by way of ransom. The said amount was claimed as General Expenses by the company. AO disallowed the claim stating that the ransom paid to the kidnappers was not an expenditure incidental to business. CIT (A) allowed the claim of the assessee. ITAT also confirmed the order of the CIT(A). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether when the Director of the company is on business tour and is kidnapped by dacoits; ransom money paid to get him releases is to be treated as incidental to business as per Sec 37(1) and whether the payment made towards ransom for saving the life of the Director of the assessee-company is prohibited by law and thus, not allowable expenditure. And the verdict is that it is allowable expenditure. </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">MRP based CVD assessment applicable to importers who affix their own brand name on notified goods and supply to institutional consumers: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is settled law that substantive statutory provisions should be strictly construed. Upon such strict construction, if the goods in question should be held to have been manufactured by the assessee, it should bear clear markings indicating that it was made, produced or manufactured by them. It is not in dispute that the packaged commodity imported by the appellant did not bear any such marking. There is nothing in the definition of “manufacturer” to show that mere affixture of trade mark would suffice the requirement of the inclusive definition."</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Thursday for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Thursday 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>
<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>
</body>
</html>