TIOL-DDT 1727 · 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 1727 </font><br>
04.11.2011 <br>
Friday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Is
refund of Service Tax under Notification 17/2010-ST allowed if drawback
is claimed? </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> netizen sent us this: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide Notification No 68/2011 Cus (NT) dated 22.9.2011, new drawback rates have been notified. The Drawback schedule has two rates, one when <em>CENVAT</em> facility has not been availed and the other when CENVAT facility has been availed. While explaining the provisions of this Notification, vide Circular No 42/2011 –Cus Dated 22.9.2011, the Board has clarified that: </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. As in previous years, the drawback rates have been determined on the basis of certain broad parameters including, inter alia , the prevailing prices of inputs, Standard Input Output Norms (SION), share of imports in the total consumption of inputs, FOB value of export goods and the applied rates of duty. The incidence of duty on HSD/Furnace Oil has been factored in the drawback calculations. <strong><u>The incidence of service tax paid on taxable services which are used as input services in the manufacturing or processing of export goods has also been factored.</u></strong> The Commissioners may ensure that the exporters do not avail of the refund of this tax through any other mechanism while claiming the All Industry Rates of duty drawback. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As can be seen from the highlighted portion above, the incidence of service tax paid on taxable services used as input services has also been factored in the drawback rates. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a separate Notification (No 17/2009 ST dated 7th July 2009) which allows refund of service tax on certain services used in respect of goods exported. Now, the question is whether the exporter can avail drawback and also simultaneously avail the refund of service tax under Notification 17/2009 ST. Since Notification 68/2011 Cus(NT) does not prohibit the availment of refund under No 17/2009 ST, the same should be allowed. Also there is no restriction in Notification 17/2009 ST with regard to availment of drawback. Hence both drawback and refund should be admissible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It will be interesting to note that the previous version of Notification No 17/2009 ST , i.e., 41/2007 ST dated 6.10.2007 had this condition: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided the said goods have been exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995; </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, this condition was omitted vide Notification No 33/2008 ST Dated 7.12.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since there is a possibility of disallowing refund under Notification No 17/2009 ST, when drawback is also claimed by taking recourse to the Circular No 42/2011 Cus, a clarification by the Board on this issue will help the exporters. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Need to Increase Trade Facilitation in Customs: FM </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE</strong> Minister, Pranab Mukherjee has emphasized on the need to increase trade facilitation in customs. He was addressing the third meeting of the Consultative Committee attached to the Ministry of Finance during inter-session period of Parliament 2011. The subject matter of the meeting was “Trade facilitations in customs”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> A Power Point Presentation explaining the various initiatives taken by the Central Board of Excise & Customs (CBEC) in enhancing trade facilitation was made before the Members of the Consultative Committee, including a roadmap for future initiatives proposed to be undertaken. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> During the discussions which followed the presentation, the members of the Consultative Committee appreciated the initiatives taken by the Customs department in facilitating trade. The members also offered some suggestions for furthering the cause of facilitation. These suggestions included, strengthening of customs infrastructure and administration in border areas, facilitating clearance of perishable cargo, greater linkage with other agencies and improving road/rail infrastructure in remote areas. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Both the Ministers of State for Finance i.e. Shri S. S. Palanimanickam and Shri Shri Namo Narain Meena attended the meeting alongwith Members of Parliament and senior officials of the Ministry of Finance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fortunately or unfortunately, ‘Self Assessment and Post Clearance Audit in Customs' which was viewed as a trade facilitation measure by the ex-Chairman of CBEC was for various reasons not well received in the trade.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also refer to <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12371" target="_blank">TIOL-DDT 1587 11.04.2011</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12912" target="_blank">TIOL-DDT 1668 08.08.2011</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13045" target="_blank">TIOL-DDT 1680 26.08.2011</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13130" target="_blank">TIOL-DDT 1686 06.09.2011</a>, <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13525" target="_blank">TIOL-DDT 1723 31.10.2011</a></strong> for more on this.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">India China to Achieve Trade of USD 100 Billion by 2015 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>UNION</strong> Minister for Commerce, Industry and Textiles, Anand Sharma expressed confidence that India-China are on course to achieve the bilateral trade target of USD 100 billion by 2015. Trade between India and China has seen exponential growth in the last few years. As per the trade statistics of DGCI&S the total trade volume has gone up from USd 2.3 billion in 2000-01 to <strong>USD 59.62 billion</strong> in 2010-11 (April-March). The Minister met the Governor of Xinjiang province of China Mr Nur Baki yesterday. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> However, the Minister raised the issue of Indian concern for the trade deficit. Trade deficit for the Indian side has increased from USD 9.1 billion in 2006-07 to USD 20.8 billion in 2010-11. A balanced trade is needed for long term, sustainable and harmonious development of economic cooperation between the two countries. Shri Sharma said that the area of drugs and pharmaceuticals is an important segment of our efforts to diversify our bilateral trade basket. Both sides need to work aggressively towards removing administrative bottlenecks and overly restrictive regulatory measures, in order to boost development of all round cooperation in this area. The Indian Minister also highlighted renewable energy where Chinese Government has fixed a target of 100 GW by 2020, as another area with great potential for export from Indian side.</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> US Lawmakers' Turn to Propose Financial Transaction Tax </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>US</strong> Senator Tom Harkin and Member of House of Representatives Peter DeFazio, both Democrats, have introduced bills in both sides of the United States Congress to place a financial transaction tax (FTT) on trading activities undertaken by banking and financial firms, with effect from January 1, 2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The proposal would place an FTT of 0.03% on most non-consumer financial trading transactions, including stocks, bonds and other debts, except for their initial issuance. The tax would also cover all derivative contracts, options, puts, forward contracts, swaps and other complex instruments at their actual cost, but would exclude debt that has an original term of less than 100 days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This compares with the proposed European Union FTT, which, from January 1, 2014, would be levied on the exchange of shares and bonds at a rate of 0.1% and on derivative contracts at a rate of 0.01% (Refer to <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13310" target="_blank">TIOL-DDT 1703 29.09.2011</a> and <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13409" target="_blank">TIOL-DDT 1712 13.10.2011</a></strong> for similar proposals in EU). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Kenneth Bentsen, executive vice president, public policy and advocacy, confirmed that SIFMA remained opposed to the idea of imposing an FTT. "It's important to be clear about the economic and financial impact of such a tax not just on markets, but on investors. An FTT is essentially a sales tax on investors. At a time when we face a slow economic recovery, such a tax will impede the efficiency of markets and impair depth and liquidity as well as raise costs to the issuers, pensions and investors who help drive economic growth.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Major economies that have adopted such taxes have had overwhelmingly negative results, including reduced asset prices, trading moving to other venues, market dislocation and decreased liquidity," he added. “We encourage Congress and the Administration to continue to resist efforts to implement such a tax." </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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"> – Tuesday'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">Customs</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty - Tyre Curing Press - DA Findings and Customs Notification upheld: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants represent the tyre manufacturers in India who are importers of the impugned goods namely "Tyre Curing Press" (TCP). The domestic manufacturer of TCP M/s. L & T Ltd., representing the Domestic Industry (D.I.) filed an application before the Designated Authority (D.A.) for initiating Anti-dumping action against imports of TCPs from China PR. The D.A. issued the initiation Notification on 16.10.08. D.A. issued the preliminary findings on 05.03.09 recommending provisional anti-dumping duty of 15% adv. on imports of TCP from China PR. The Government of India, however, did not levy provisional anti-dumping duty pursuant to the recommendations of the D.A. Subsequently, the D.A. issued the impugned final findings on 15.10.09 recommending definitive antidumping duty @ 10% adv. on imports of TCPs of sizes upto 130". Pursuant to the said final findings, Customs Notification dated 08.01.10 has been issued by the Central Government, levying anti-dumping duty @ 10% adv. on imports of TCP of sizes of 130" from China PR. </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">Income tax - Whether when assessee teaches mathematics to students enrolled with Tutorial, fees received for services are to be treated as salary or professional income - ruled in favour of assessee: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Tribunal is - Whether when assessee teaches mathematics to students enrolled with a Tutorial, fees received for the services are to be treated as 'salary' or professional income. 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">Service Tax </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Activity of providing food, beverages and amenities to passengers in airport lounges on behalf of airlines not taxable under Airport service: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessees are engaged in providing food, beverages, amenities like TV, newspapers, magazines and internet facilities etc to passengers in lounges operated at IGI Airport, New Delhi. Revenue felt that these services would be covered under the category of Airport Services and issued show cause notices to both the assessees. While the adjudicating authority confirmed the demand against one assessee, by holding that the services rendered by them would fall under the category of Airport services, demand against another assessee was dropped. Two appeals were filed before CESTAT, one by Revenue and another by the assessee who was saddled with a demand.</font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tuesday for the judgements</font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tuesday with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend.</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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