TIOL-DDT 1734 · the untouched capture
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<!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="3"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1734 <br> </font></strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17.11.2011 <br> Thursday </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Escort Charges Collected by Police - Taxable - CBEC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was just a day before that we reported about the Mumbai Service Tax notice to Mumbai Police. Now, we have a Board instruction that escort charges collected by State Police from banks for escorting cash are taxable under 'Security Agency service'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has clarified that the service provided by the State Police in providing escort service as mentioned above for a consideration is leviable to service tax under 'Security Agency service [Section 65(105)(w) of the Finance Act, 1944]. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants all formations to safeguard revenue accordingly. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But why is the Board shy of making such important instructions public? These instructions were issued in May and we could get it only now. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/st_order03_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F. No. 137/131/2010 - CX. 4, Dated: May 20, 2011</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Winter Session of Parliament - Many Laws in the Making – What about DTC? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> winter session of Parliament is to be held from 22 November through 21 December 2011. If the usual issues like 3G, CAG and other assorted respected jees would leave any time for legislative business, the Government has lined up more than 50 Bills for introduction, consideration and passing. Topping the legislative business would be the Lok Pal Bill 2011. There are other very important Bills like:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Judicial Standards and Accountability Bill, 2010. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Constitution (One Hundred and Fourteenth Amendment) Bill, 2010 - <em>To increase the age of retirement of the High Court Judges, by three years from 62 to 65. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Chartered Accountants (Amendment) Bill, 2010. <em>To enable members of three institutes to form Limited Liability Partnership (LLP) firms in accordance with LLP 2008. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Constitution (One Hundred and Eighth Amendment) Bill, 2010, (already passed by Rajya Sabha). To provide reservation for women in Lok Sabha and State Legislative Assemblies. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Commercial Division of High Courts Bill, 2009, (already passed by Lok Sabha) - <em>To provide for the constitution of a Commercial Division in the High Courts for adjudication commercial disputes and for matters connected therewith or incidental thereto. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Prevention of Money Laundering (Amendment) Bill, 2011 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Electronic Delivery of Services Bill, 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Consumer Protection (Amendment) Bill, 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Companies Bill, 2011. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Direct Taxes Code (DTC) does not find a place in the list released by the Government? When are they going to pass it and implement it? </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retirement Age of High Court Judges to be 65 - What about others? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONE</strong> of the Bills mentioned above proposes to enhance the retirement age of High Court Judges from the present 62 to 65. Will there be a consequential increase in the retirement age of other judges and Government Officers. In the CESTAT, the retirement age of the president (a sitting or former judge of a High Court) is 65. Now where will they get sitting or former High Court judges to preside over CESTAT? Which sitting Judge or Chief Justice of a High Court would join the CESTAT when the retirement age is same? Will they make the retirement age 68 for CESTAT President and for heads of similar Tribunals? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And what about bureaucrats – will they get a retirement age of 62? When the top political masters of the Country, both the ruling and opposition variety are all above seventy years old, perhaps there is nothing wrong in having 62 year old babus and 65 year old judges. When a Supreme Court judge can continue until 65, perhaps there is no logic in retiring a High Court judge at 62. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe they should make a uniform retirement age of 70 years for all judges and Government servants, subject to passing a medical exam every year! </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retirement Age – Through the Ages </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>UNTIL </strong>31-3-1938, the normal age of retirement of Central Government Employees was 55 years. Employees could, however, be retained in service up to 60 years depending on their being physically fit and mentally alert. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The First Central Pay Commission set up by the Central Government in 1946 recommended 58 years for superannuation of Central Government employees. But this recommendation was not accepted by the Government on the grounds, that the majority of persons retiring at the age of 55 were not capable of rendering efficient service; that their replacement at the age of 55 by younger men would serve the interest of efficiency better and that a retirement age should be fixed which would release men at the age when they would still be fit to render service to the country in other spheres of their choice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1953, the question was reconsidered, but the earlier decision to retain the age of retirement at 55 was reaffirmed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1958, the question of retirement age was again considered in view of the continuing shortage of trained manpower. The Government did not extend the age of superannuation, but laid down the criteria for grant of extension and re-employment of technical and scientific personnel. It was decided that re-employment or extension might be granted up to two years at a time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government decided to raise age of retirement from 55 to 58 years with effect from 1st December 1962. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Third and Fourth Central Pay Commissions received many representations for upward revision of age of retirement to 60 years. But it did not favour the revision on the ground, that it would reduce the employment opportunities for fresh graduates and technical persons in Government service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Pursuant to the recommendations made by the 5 th CPC, the Central Government by order dated 13th May 1998, raised the age of retirement of Central Government employees from 58 to 60. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government of West Bengal, Pondicherry, Meghalaya, Mizoram and National Capital Territory of Delhi, have raised the retirement age of their civil servants to 60 years. The remaining States, however, have not raised the age of retirement of their employees and it remains at 58. Kerala Government consistently stood the ground by retaining the retirement age at 55 years for their employees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Regarding the age of retirement of High Court and Supreme Court Judges, Dr. Ambedkar explained in the Constituent Assembly, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“It is essential that a difference of 3 to 5 years should be maintained between the retirement age of High Court Judges and that of Supreme Court Judges; The honour and prestige associated with a seat on the Supreme Court Bench have their limits as an attraction and it is the prospect of continuing in service for a period of five more years that chiefly attracts him to the new office. As this attraction would disappear if the age of superannuation for High Court judges also is raised to 65, judges for the Supreme Court will have to be selected from among junior and comparatively inexperienced judges of the High Court, and a Court thus manned would hardly command the respect and confidence which the Supreme Court in the land ought to inspire. On a careful balancing of these considerations, we have come to the unanimous conclusion that - (i) it is essential that a difference of 3 to 5 years should be maintained between the retiring age of High Court Judges and that of Supreme Court Judges; (ii) age limit for retirement should be raised to 65 for High Court Judges and to 68 years for Supreme Court Judges;" </font></em></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FDI - Transfer of 'participating interest/right' in oil fields to a non resident as a Foreign Direct Investment transaction </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the existing regulations, transfer of equity shares / fully and mandatorily convertible debentures/ fully and mandatorily convertible preference shares of an Indian company, from a person resident outside India (non-resident) to a person resident in India (resident) or vice versa, has to be reported to an Authorized Dealer bank within 60 days of transactions. Further, the receipt of consideration for issue of shares as well as the issue of shares of an Indian company, to a non-resident has to be reported to the Reserve Bank of India through an Authorized Dealer bank within 30 days of the transaction (receipt of consideration for issue of shares to a non resident or issue of shares to the non-resident). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, RBI has decided to treat the issue / transfer of 'participating interest/ rights' in oil fields to a non- resident as Foreign Direct Investment (FDI) transaction under the extant FDI policy and the FEMA regulations. Accordingly, these transactions have to be reported as FDI transactions in terms of the provisions of Regulations 9 and 10 of the Foreign Exchange Management (Transfer of Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time read with A.P. (DIR Series) Circular No.63 dated April 22, 2009 as well as paragraph 9 of Schedule I to the Foreign Exchange Management (Transfer of Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2011/rbi11cir045.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 45/RBI., Dated: November 16, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Master Circular on Cost Accounting Records and Cost Audit </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Ministry of Corporate Affairs has issued a Master Circular concerning Cost Accounting. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Cost Auditor cannot also be the internal auditor of a Company for the period for which he is conducting cost audit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A cost auditor shall be deemed to have concluded his appointment for the relevant financial year as soon as he renders a report to the Central Government in accordance with the Cost Audit Report Rules, as applicable. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The cost auditor, wherever appointed, shall attend and participate at the meetings of the Audit Committee or the Board, as the case may be, but shall neither be a member nor have the right to vote. </font></p> </blockquote> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/mca_master_circular_11_02.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MCA Master Circular No. 2/2011., Dated: November 11, 2011 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Seven Judicial Sins? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">'<strong><em>THE</em></strong><em> process by which a judge is appointed to a superior court is one of the best kept secrets in this country', said Justice Ruma Pal last week in her Tarkunde Memorial Lecture from the safe haven of retirement</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">She explained 'independence of the judiciary' used as a shield to cover seven sins some venial and others not so venial. Any lawyer practicing before a court will have a rather long list of these. She has chosen seven. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Brushing under the carpet</strong> or turning a Nelsonian eye. Many judges are aware of injudicious conduct of a colleague but have either ignored it or refused to confront the judge concerned and suppressed any public discussion on the issue often through the great silencer-The Law of Contempt. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Hypocrisy: </strong>A favourite rather pompous phrase in judgments is “Be you ever so high, the law is above you” or words to similar effect. And yet, judges who enforce the law for others often break that law with impunity. This includes traffic regulations and any other regulation to which the “ordinary” citizens are subject. Some in fact get offended if their cars are held up by the police at all while controlling the flow of traffic-the feeling of offence sometimes being translated into action by issuance of a rule of contempt against the hapless police constable all in the name of judicial independence. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Secrecy</strong>. The normal response of Courts to any enquiry as to its functioning is to temporize, stone-wall and prevaricate. The process by which a judge is appointed to the High Court or elevated to the Supreme Court is one of the best-kept secrets in the country. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Plagiarism and prolixity</strong>: Many judgments are in fact mere compendia or digests of decisions on a particular issue with very little original reasoning in support of the conclusion. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Judicial and administrative indiscipline</strong>. Both of these in fact stem from judicial arrogance as to one's intellectual ability and status. A judge's status like other holders of public posts is derived from the office or the chair. One has to merely occupy that chair during one's tenure with dignity and remember that each time a lawyer bows and says “Deeply obliged” --the bow is addressed to the office and not to the person. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Intellectual arrogance or what some may call intellectual dishonesty</strong> is manifest when judges decide without being bound by principles of stare <em>decisis</em> or precedent. Independence no doubt connotes freedom to decide but the freedom is not absolute. It is bound to be in accordance with law. Otherwise, we have lawyers and the sub-ordinate judiciary baffled while “mastering the lawless science of our law” faced with "that codeless myriad of precedent, that wilderness of single instances”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>Nepotism</strong> or what the oath of office calls 'favour' and 'affection'. What is required of a judge is a degree of aloofness and reclusiveness not only <em>vis a vis</em> litigants but also vis a vis lawyers. Litigants include the Executive. Injudicious conduct includes known examples such as judges using a guesthouse of a Private Company or a Public Sector Undertaking for a holiday or accepting benefits like the allocation of land from the discretionary quota of a Chief Minister. </font></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Deeply Obliged, My Lord! </font></strong></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"> – 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">Customs</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Hazardous Waste - Import of Waste Pneumatic tyres require permission from Ministry of Environment and Forests – WP seeking directions to department not to insist on such permission is devoid of merit: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> High Court dismissed the Writ Petition by holding that the Rules have been made in the public interest and with a view to ensure that the import, management and handling of hazardous wastes do not result in a deleterious effect on public health and the environment. The provisions contained in the Rules must be scrupulously enforced.</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">When purchase of raw materials were not adequately accounted and evidenced by assessee and suppression in sales was also admitted, non-acceptance of book results qua trading profit upheld: ITAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is an individual running a non-vegetarian restaurant in Trivandrum. On examination of their books of accounts and other details in the course of assessment proceedings, the AO observed several discrepancies. The books of accounts disclosed a gross profit of 24%, which is lower than that of assessees similarly placed in that trade, based on a comparison of gross profit declared by another restaurant in that locality. The AO inferred suppression in gross profit in the range of 15% to 20% and accordingly, the differential amount of Rs. 12.50 lakhs on a total declared sale of Rs. 85 lakhs was held as undisclosed income by way of suppressed trading profit. </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">If an official of CBEC was not aware of correct legal position in matter, then members of public cannot be faulted for having acted in good faith by relying on clarification by said official – Extended period cannot be invoked: CESTAT.</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> an official of CBEC was not aware of the correct legal position in the matter then the members of the public cannot be faulted for having acted in good faith relying on the said clarification dated 07-04-2004 issued by an official of CBEC. Further, the Tribunal also took cognizance of the letter and interpreted law in a manner different from the previous legal position and one such decision was upheld by the Supreme Court and another by the Karnataka High Court. In such a situation, can an assessee be accused of suppressing information with intention to evade payment of duty?</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> </body> </html>