TIOL-DDT 1719 · 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 1719</font><br>
24.10.2011 <br>
Monday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Services provided by sub-contractors Not Taxable - CBEC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> Circular No. 138/07/2011 – Service Tax dated 06.05.2011, CBEC had clarified that the services provided by the subcontractors / consultants and other service providers to the Works Contract Service (WCS) provider in respect of construction of Dams, Tunnels, Road, Bridges etc. are classifiable as per Section 65 A of the Finance Act, 1994 under respective sub clauses (105) of Section 65 of the Finance Act and are chargeable to service tax accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12486" target="_blank">DDT 1604-09 05 2011</a></strong>, we had asked , “<font color="#FF6633"><strong>But why? If the whole service provided by one person is not taxable, why a part outsourced to a sub-contractor be taxable</strong></font> ?” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Board seems to have realised this logic and clarifies, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>“it is apparent that in case the services provided by the sub-contractors to the main contractor are independently classifiable under WCS, then they too will get the benefit of exemption so long as they are in relation to the infrastructure projects</em></strong>. <em>Thus, it may happen that the main infrastructure projects of execution of works contract in respect of roads, airports, railways, transport terminals, bridges tunnels and dams, is sub-divided into several sub-projects and each such sub-project is assigned by the main contractor to the various sub-contractors. In such cases, if the sub-contractors are providing works contract service to the main contractor for completion of the main contract, then service tax is obviously not leviable on the works contract service provided by such sub-contractor.” </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board hopes that the statutory position is clarified and wants the Circular to be widely disseminated to the trade and field formations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board should have also clarified that this being a clarification is retrospectively applicable. Let us hope the field would accept this with retrospective effect and avoid unnecessary litigation. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/sercir147.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC circular No. 147/16/2011-ST Dated: October 21, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Implementation of 'On Site Post Clearance Audit' - It's a Facility not retribution </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has introduced the scheme of ‘On Site Post Clearance Audit' or OSPCA at premises of importers and exporters' vide Notification No. 72/2011-Cus. (NT) dated 4.10.2011. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To begin with, Board has operationalized OSPCA w.e.f. 1.10.2011 only for importers registered under the Accredited Client Programme (ACP) . It has also been decided that ACP importers shall be subjected to OSPCA on annual basis i.e. once during each financial year. However, during the transitional phase of the current financial year, the records for previous months beginning from 1.4.2011 may be taken up for audit. Coverage of OSPCA shall be increased in subsequent phases and the periodicity of audit in respect of other entities prescribed at that stage.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For a coordinated and effective OSPCA, the ACP importers have been segregated as under: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Those that are registered with LTU Commissionerates – to be audited by the audit wing of LTU concerned; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Multi Location Units – to be audited by the Central Excise Commissionerates with the nodal Commissionerate being the one having jurisdiction over the registered / head office of the ACP importer; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Others ACP importers – to be audited by the Central Excise Commissionerate having jurisdiction over the head office / registered office of the ACP importer. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board states that <strong>OSPCA is viewed as a trade facilitation</strong> measure and one way to do away with avoidable interface with the Department. ACP importers with manufacturing facilities and / or those registered as service providers / recipients with the department would already be undergoing Central Excise and / or Service Tax audit. Therefore, in order to avoid duplication of exercise and reduce interface, OSPCA shall be done simultaneously with Central Excise and Service Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, in respect of ACP importers to be audited under the scheme within a period of one year, Board has decided that carrying out PCCV [Post-Clearance Compliance Verification] or PCA at the respective Customs House shall be a duplication of effort for both Department and ACP importers. Therefore, Board desires that in respect of ACP importers PCCV or PCA at the Customs Houses shall be dispensed with henceforth. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants these instructions to be given wide publicity. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unwelcome officers all over your place, ransacking your records and not allowing you to do your work, is Board's concept of facilitation! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2011/cuscir11_047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC circular No. 47/2011-Customs, Dated : October 21, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Rubber Chemicals - Resurrection Prospective? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Anti Dumping Duty on certain Rubber Chemicals, namely (MBTS) Dibenzothiazole disulphide, falling under Chapters 29 and 38, originating in, or exported from, People's Republic of China, was imposed by Notification No. 87 /2005-Customs, dated 27th September, 2005, which would have expired on 26th September 2010. After its death, it was extended till 25th July 2011 by Notification No. 28/2011-Cus dated 4th March 2011. So, it died a second time on 4th March 2011.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has imposed the Anti Dumping Duty again for a period of five years from 20th October 2011.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does it mean that there was no dumping and injury between 4th March and 19th October of 2011? Who will bear the responsibility for the injury to the domestic industry and loss of revenue to the Government during this period? Babus are entitled to sleep and allowed to wake up any time and prove their presence! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2011/ctariff11_098.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 98/2011-Cus., Dated: October 20, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Eligibility of export product 'Technical Textiles' - DGFT Clarifies </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sr</strong>. No. 33, Table-4, Appendix 37D of HBPv1 allows FPS benefit to products covered under ITC HS Code 5407 with description “Technical Textiles – Woven Fabrics of Synthetic Filament Yarn”. References have been received from the Regional Authorities seeking clarification on coverage of products classified under ITC HS Code 5407 for FPS benefit. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Clarifies: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is decided that a technical textile is a textile product manufactured for non-aesthetic purposes, where function is the primary criterion. Technical textiles include textiles for automotive applications, medical textiles, geotextiles, agrotextiles and protective clothing like heat and radiation protection for fire fighter clothing, molten metal protection for welders, stab protection and bulletproof vests and spacesuits etc. Accordingly, only 33 items as listed in the Annexure are covered under technical textiles. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has, therefore, been decided to allow FPS benefits to export products listed in the Annexure to the Policy Circular under category of “Technical Textiles.” This list is applicable for exports made w.e.f. 1.4.2011 and any FPS benefit granted to products other than those listed in Annexure to this Circular for exports made w.e.f. 1.4.2011 would need to be recovered from the exporters. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2010/dgft10cir042.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Policy Circular No. 42 (RE-2010)/2009-14, Dated : October 21, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - import licenses of Rough Marble Blocks for the balance quantity for Financial year 2011-12</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> number 64 of 4th August 2011 stipulated the conditions and modalities for allocation of quota of 5 lakh MTs of Rough Marble blocks. Allocation was made vide Trade notice no 16 of 17th August 2011. Some balance quantity has become available due to rejection of some applications. This quantity to be allocated now will follow the same procedure and same eligibility criteria. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The only change from the earlier Notification No 64 of 4th August 2011 is that documents are to be submitted at HQ office of DGFT. Therefore hard copy of the application along with documents as prescribed in Notification number 64 of 4th August 2011 will need to be submitted to DGFT office at Udyog Bhavan, New Delhi by 1700 hours on 28th October 2011, before the allocation is made to eligible applicants. Hard copies of complete application not received by 1700 hours in DGFT office on 28th October 2011 will not be considered for allocation. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2010/dgft10not081.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Notification No. 81(RE-2010)/2009-2014, Dated : October 21, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DRI to Investigate <em>Hundi </em></font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DRI </strong>is not our famous Directorate of Revenue Intelligence but Nepal's Department of Revenue Investigation. According to Nepal's DRI DG, Shanta Bahadur Shrestha, misappropriation of foreign currency and capital flight are major problems the country is facing through Hundi. Hundi has been emerging as a serious threat to national economy. Hundi is an underground banking system that allows money transfer without leaving any paper trails because there is no contract, bank statements or transaction record. It is also known as a Hawala in neighbouring India. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hundis refer to financial instruments evolved on the Indian sub-continent used in trade and credit transactions. They were used </font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ as remittance instruments (to transfer funds from one place to another), </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ as credit instruments (to borrow money [IOUs]), </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ for trade transactions (as bills of exchange). </font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Technically, a Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order. Hundis, being a part of the informal system have no legal status and are not covered under the Negotiable Instruments Act, 1881. Though normally regarded as bills of exchange, they were more often used as equivalents of cheques issued by indigenous bankers. </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"> – Friday'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">Refund - liability of revenue to pay interest under Section 11BB commences from date of expiry of three months from date of receipt of application for refund not on expiry of said period from date on which order of refund is made - SC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> question is whether the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Held</strong>: the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. </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 is given option not to pay for allotment of shares under ESOP Scheme but same is to be deducted at time of sale, no transfer can be said to have taken place - Whether such valuable right is capital asset, liable to LTCG tax - YES, 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 when the assessee is given the option not to pay for the purchase of shares at the time of allotment under the ESOP Scheme but the same is to be deducted at the time of sale of shares, no transfer can be said to have taken place and whether when shares, not transferred physically, are held for three years before redemption, such a valuable right is to be treated as capital asset, liable to capital gains tax. And the verdict goes in favour the assessee. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Distributor not C&F Agent - CESTAT By Majority </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> factual matrix of this case clearly indicates that the appellant never acted as C&F agent or a consignment agent as rightly held by Member (Judicial). It is correctly argued by the Counsel and held by Member (Judicial) that it is not open to a C&F agent to sell the goods to independent parties and at a cost, which can be decided by himself. In the case in hand, it is very clear that the appellant is allowed to sell the goods even at a price lower than the prices, which were indicated by IPCL. All these indicate that the appellant had acted as a distributor and not as C&F agent of IPCL </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 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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