TIOL-DDT 1696 · 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 1696</font> <br>
20.09.2011 <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 – Exemption of R&D Cess to Consulting Engineer </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2002/sernot02_18.htm" target="_blank"><em>NOTIFICATION</em></a><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2002/sernot02_18.htm"> No. 18/2002 - Service Tax, Dated December 16, 2002</a></em></strong>, reads as: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In exercise of the powers conferred by Sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts <font color="#663399"><strong>the taxable services provided by a consulting engineer</strong></font> to any person on transfer of technology from so much of the service tax leviable thereon under Section 66 of the said Act, as is equivalent to the<font color="#FF6633"> <strong>amount of cess paid on the said transfer of technology under the provisions of Section 3 of the Research and Development Cess Act, 1986 (32 of 1986)</strong>. </font></font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is amended by Notification No. 46/2011 dated 19 September 2011 to read as: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In exercise of the powers conferred by Sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services provided by a consulting engineer to any person on transfer of technology from so much of the service tax leviable thereon under Section 66 of the said Act, as is equivalent to the “<font color="#FF6633"><strong>amount of cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986 (32 of 1986), subject to the following conditions, namely:- </strong></font></em></font></p>
<p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(A) the said amount of Research and Development Cess is paid within six months from the date of invoice or in case of associated enterprises the date of credit in the books of account: </font></em></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the exemption shall be available only if the Research and Development Cess is paid at the time or before the payment for the service; </font></em></strong></font></p>
<p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(B) records of Research and Development Cess are maintained for establishing the linkage between the invoice or the credit entry, as the case may be, and the Research and Development Cess payment challan.</font></em></strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></em></font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now to claim the exemption, the assessee has to: </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ pay the cess within six months from the date of invoice;
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ the cess is paid with or before the payment for the service;
</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ records to show linkage has to be maintained. </font></p>
</blockquote>
</div>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2011/stnot11_046.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 46/2011-Service Tax, Dated: September 19, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Exemption of R&D Cess to IPR </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> similar amendment is made to <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2004/stnot04_017.htm" target="_blank">Notification No. 17/2004 - Service Tax, Dated September 10, 2004</a></em></strong>, in relation to exemption of R&D Cess paid by i<em>ntellectual property service providers. </em></font></p>
<p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why can't they merge these two notifications? </font></strong></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2011/stnot11_047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 47/2011-Service Tax, Dated: September 19, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Commissioner Promotion - UPSC says ‘NO' to Ad hoc Promotions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> present CBEC Chairman is very committed to Staff Welfare, but his best efforts always don't bring in the results he and his staff would like. There are nearly 50 vacancies of Commissioners in the Customs and Excise Department and the CBEC had moved in quickly and tried with all sincerity to fill up those posts. But in the last decade or so, promotions in the department were purely ad hoc due to several cases pending in various benches of the CAT. The seniority lists are in serious dispute at all levels from AC to CC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, it is understood that the UPSC has shot down this adhochism and refused to hold DPC for promotion to the cadre of Commissioner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Department is stuck. When will they be able to finalise all the seniority lists and give regular promotions? And if by some quirk of fate, the cadre review gets through, there will be a large number of promotions in all cadres, but with UPSC not agreeing for ad hoc promotions, the officers of the department eagerly waiting for that much sought after promotion, have to do a little more waiting. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Two Notifications; Two Rates; Which one to Foollow? (not a spelling mistake) </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> concerned Netizen asks us: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“As per Sl. Nos 62A,B,C,D and E of the table to Notification No. 4/2006-C.E dated 01.03.2006, goods falling under Sub headings, 3001,3003,3004,3005 and 3006 attract an effective rate of 5% excise duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Sl. No. 21 of Notification No. 2/2008-C.E dated 01.03.2008, 3001,3003, 3004,3005 and 3006 attract an effective rate of 10% excise duty. Both these exemptions are unconditional. Now which of the two should the assessee follow? Can the assessee pay duty at 5% for domestic clearance and pay duty at 10% for exports and claim rebate of the 10% duty paid? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not a hypothetical case. Some assessees are following this method and some Central Excise officers are giving full refund while others are not.” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board clarify? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Buffet Rule - Obama Explains </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> his message the US Congress yesterday President Obama said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This plan lives up to a simple idea: as a Nation, we can live within our means while still making the investments we need to prosper. It follows a balanced approach: asking everyone to do his or her part, so no one has to bear all the burden. And it says that everyone - including millionaires and billionaires—has to pay their fair share. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Buffett Rule: that people making more than 1 million dollars a year should not pay a smaller share of their income in taxes than middle-class families pay. No household making over 1 million dollars annually should pay a smaller share of its income in taxes than middle-class families pay. As Warren Buffett has pointed out, his effective tax rate is lower than his secretary's. No household making over 1 million dollars annually should pay a smaller share of its income in taxes than middle-class families pay. This rule will be achieved as part of an overall reform that increases the progressivity of the tax code. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">On Tax Reforms </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> President added, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tax code also places a substantial compliance burden on taxpayers. For instance, taxpayers filing Form 1040 spent an average of 21 hours preparing their returns and most taxpayers - about 60 percent - find themselves paying tax preparers to fill out their returns. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have not had a comprehensive reform of our tax code in a generation. The last time we had one, the Internet was a small tool used by researchers, the Euro did not exist, and global supply chains and commerce were far less developed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The time has come for tax reform to modernize our tax code, make it fairer, and to reduce its complexity. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Congress should enact comprehensive tax reform that will make our tax code simpler, fairer, and more efficient.</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">Compounding of offence - Compounding amount to include duty, penalty and interest - Compounding is an option and conditions are to be fulfilled - Proviso to Rule 4(3) of Central Excise (Compounding of Offences) Rules upheld: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> concept of compounding is different under the Code of Criminal Procedure and, therefore, the fixation of the amount is rigorous. Section 9A makes every offence non-cognizable notwithstanding anything contained in the Code of Criminal Procedure. That apart, in a non-cognizable offence, if a person tries to get the benefit to avoid a criminal prosecution, he has to satisfy the conditions precedent. It is optional. It is not statutorily mandatory that the person should apply for compounding. Whether or not to apply for compounding is the wish of the person concerned. </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 someone else deducts tax at source from payments made on behalf of assessee, it can be said that assessee has discharged its liability u/s 194C - NO, rules ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Tribunal are - Whether, for attracting the provisions of Sec 194C, the presence of an express agreement vis-à-vis transportation charges, is a condition precedent; Whether liability of section 194C can be said to have been discharged if someone else deducts tax at source from payments made on behalf of the assessee and whether when assessee has diverted interest bearing funds to its sister concerns without charging any interest, disallowance of interest after allocation of interest bearing funds to tax free unit and non tax free unit is tenable, particularly for the period when the commercial production has not commenced. And the verdict goes against the assessee. </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 Silk fabrics from China - Samples drawn by department and Testing done to ascertain the weight to determine if Anti Dumping Duty is leviable on this import - Anti Dumping Duty also paid by petitioner. Goods directed to be released within one week: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HIGH</strong> Court directed the department to release the goods within a period of one week. Further, High Court held that as far as payment made of Anti Dumping duty is concerned, it depends upon the final decision to be arrived at based on the adjudication of the show cause notice issued in this regard. </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">Law does not provide for any exclusion or prohibition to carry forward accumulated CENVAT credit when DTA unit is converted into a EOU or a EOU unit is converted into a DTA unit: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNDER</strong> the CENVAT Credit Rules, both 100% EOUs as well as DTA units are entitled to avail CENVAT credit of duty paid on inputs/input services and utilize the same for payment of excise duty on excisable goods manufactured and cleared from such units or for payment of service tax on the output service rendered by such units. The law does not provide for any exclusion or prohibition to carry forward accumulated CENVAT credit when a DTA unit is converted into a EOU or a EOU unit is converted into a DTA unit either in Rule 10 of the CENVAT Credit Rules or any other provisions of the said Rules. </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 align="justify"><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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