TIOL-DDT 1755 · 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 1755</font><br>
19.12.2011<br>
Monday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax Refund to exporters through Customs EDI System </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the promise made by the Finance Minister in his Budget speech, the Government proposes to introduce a simplified scheme for electronic refund of service tax to exporters, on the lines of duty drawback. This Scheme is optional. The exporter can either claim the electronic refund through ICES or claim it with documents from Central Excise/Service Tax offices. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the electronic refund scheme, which is based on a schedule of rates to be notified soon, an exporter </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) should have a bank account and also a central excise registration or service tax code number and the same should be registered with Customs ICES 1.5 using ‘Annexure –A' Form; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) should declare his option to avail STR (Service Tax Refund) on the electronic shipping bill while presenting the same to the proper officer of Customs. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">STR amount processed under the ICES will be disbursed through the branch of the authorized bank at each Customs location. The STR amount in respect of individual exporters will be credited directly to the bank account of the exporter, in the authorized bank branch at a Custom location or to any core banking enabled banking account of the exporter, in any branch/bank anywhere in the country (through the NEFT/RTGS). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board wants its various officers to urgently take the following steps: - </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Chief Commissioners/ Commissioners to cause wide publicity to the new electronic STR scheme among exporters. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Custom Houses should make special arrangements to verify the Annexure–A forms from the exporters. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Systems Managers should make necessary arrangements to verify the Annexure –A forms and upload the details in the ICES. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the system would work and the exporters would actually get the refund. Why can't it be made mandatory for the Customs officer to ask the exporter at the time of filing the export documents, “do you want to claim refund of service tax?” The Central Excise officers who make it their avowed goal in life to reject all refunds, if possible, should learn a lesson from this. Technology will take over and will not tolerate your incompetence and delays. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2011/sercir149.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 149/18/2011-ST Dated: December 16, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tariff Value decreased for Brass Scrap and Poppy seeds </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has decreased the tariff values of Brass Scrap (all grades) from USD 4125 to USD 4030 and decreased the tariff value of poppy seeds from USD 2117 to 2044. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no change in the tariff value of other items.</font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_087.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 87/2011-CUS (N.T.), Dated : December 15, 2011 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax Arrears - 12 Individuals account for 90 percent of arrears - Most of them not recoverable: CAG </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Comptroller and Auditor General of India has come out with interesting findings on the Income Tax arrears.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Direct tax collections, amounting to 4.35 lakh crores accounted for three-fourth of revenue receipts of the Government of India in 2009-10. At the same time, the uncollected portion of tax demand was 2.29 lakh crores in March 2010 equivalent to 54 per cent of total direct tax collections. The arrears of demand also registered a steep hike in last five years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The demand against individuals is highly skewed with just 12 individuals accounting for 90 per cent of the outstanding demand. Further, 84.3 per cent of the arrear demand amounting to 1,65,337.42 crores is <strong>categorized as unrealizable demand by the Department</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One individual Hassan All Khan accounts for 43 per cent of the total arrear demand and owes Rs. 50,000 Crores while Chandrika Tapuriah Rs. 21,000 Crores and Harshad Mehta Rs. 16,000 Crores! </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAG Recommends : </font></strong></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ The Department may ensure preparation of a robust and reliable database of arrear demand by reconciling the data maintained by different wings of the Department, towards effective monitoring and follow up of arrears. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A reasonable time may be made mandatory for the drawal of Recovery Certificates by the TROs. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The target for drawing up of Recovery Certificates by the TROs may be revisited and a appropriate norm may be fixed on the basis of the actual work load in different charge instead of the existing norm of 1200 certificates to be disposed annually. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ministry may consider working out appropriate modalities for liaison between AOs and TROs under supervision of the higher authorities to ensure better co-ordination and speedy disposal of cases. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ministry may consider strengthening Internal Audit of the post assessment collection process to effectively monitor the recovery of tax arrears by prescribing minimum number of TROs to be covered by Internal Audit every year. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Department may ensure correct and timely credit of TDS/TCS to the assessee by introducing reconciliation with <strong>concerned</strong> agencies to avoid mismatches resulting in creation of wrong demand. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Reasons for low disposal of appeals by CIT(A) need to be analysed. Wherever pendency is due to lower efficiency, strict administrative measures may need to be taken. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Department needs to effectively pursue the cases locked up in litigation at the ITAT and higher formations. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The provisions of adjustments of arrear demand while granting refunds should strictly be followed. The system may provide for fixing responsibility in such cases. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The information collected through Annual Information Returns by the Central Information Branch (CIB) particularly about the properties owned by the assessee should be accessible to the TROs also. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <strong>The write off proposals in justifiable cases may be pursued and such irrecoverable demand may be considered for write off after following due administrative procedure</strong>. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The mechanism of Regional Economic Intelligence Committee (REIC) needs to be strengthened to facilitate sharing of information among different revenue collecting agencies. </font></em></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe the first thing they can do is to write off those unrealiasable arrears </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Governor's Plainspeak to CAs </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ADDRESSING</strong> a meeting of the Western India Regional Council of the Institute of Chartered Accountants of India (ICAI), the RBI Governor Dr. Subba Rao said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The profession has shied away from the responsibility for prevention and early detection of fraud. The need for such a service exists and if the profession does not fulfill that need, other agencies, which can provide this service, will displace auditors and deprive them of a potentially expanding opportunity. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case of Enron, which took down along with it the audit firm Arthur Andersen, comes to mind. The sudden collapse of Enron, an energy trading and distributing company, ranked seventh in the Fortune 500, raised a number of questions about the accounting and auditing practices followed by the company. The company used creative accounting to shift losses and debts off the company's balance sheet into special purpose entities (SPEs) thereby concealing the extent of its indebtedness. The company was also reported to have withheld information about SPEs which could have led auditors to insist on their consolidation in the balance sheet. Enron's accounting transgressions misled investors to believe that the company was more profitable and less leveraged than it really was. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Andersen audited Enron for all sixteen years since the company's formation. On top of pure audit, it also sold internal-audit and consulting services. Despite this privileged insight, Andersen did not discover that Enron was publishing incorrect financial statements leading to the term “Enronisation of financial statements”. This raises an important question of conflict of interest. Is it the case that the extensive consultancy work done by Arthur Andersen for Enron compromised its independence leading to its failure to detect erosion of accounting standards? It also subsequently came to light that some members of the Audit Committee faced financial conflicts of interest, generated in part by the company's donations to charities to which they were connected. Could this conflict have been prevented? Let me turn to the sensitive and important issue of a value system. Recent months have witnessed an agitation across the country about erosion of values in the public domain. The norms of a society are determined by the dominant sections of that society, and the accounting profession is certainly a dominant section of society. The value system you practice in your professional conduct influences the value system of the society. Sadly, we see several transgressions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case of Satyam Computer Services here in India - The company's chairman confessed to more than a billion dollar fraud on its balance sheet which was hidden from the company's Board, its senior managers and of course the auditors for several years. The truth followed a now familiar pattern - overstating profits, understating liabilities, and overstating cash causing a big hole in the balance sheet. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With so much accounting misconduct in big corporations, stakeholders wonder why books are not being reviewed on the default assumption that there could be fraud afoot. Accounting experts explain that the kind of forensic auditing that reconstructs fraud is so time-consuming and expensive that it could bring an honest business to its knees. However, I strongly believe that a robust system of audits, a corporate culture in which ethical conduct is encouraged and exemplified and an active and independent Board of Directors can make such frauds harder to perpetrate, easier to detect and help restore public confidence in published results. </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"> – 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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Horses imported by horse riding Champion under Customs Custody for 15 months - Ordered to be released: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> should always be present to the mind of the respondents that procedures are evolved only in aid of, and to implement the substantive rights and obligations of parties. The procedural requirements cannot become an excuse to deny the substantive rights of a party, particularly when the prescribed procedure itself provides for the same. The petitioner under the substantive law of import is entitled to import horses even from Germany/Austria. The mere lack of a prior import license, to import horses from Austria/Germany cannot come in the way of the petitioner in now procuring an amended or a fresh import license under the relevant rules. </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 Satisfaction Note plays crucial role in proving that search and seizure was in harmony with provisions of Act - YES, rules Bombay HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE </strong>company, filing its return of income and complying with the other statutory obligations such as maintenance of books of accounts and payment of advance tax, was searched by the department - Aggrieved with the action of search the assessee filed petition before the High Court and contended it may be permitted to peruse the search folder - also contended that there was no material with the authorities below on the basis of which a satisfaction, that the assessee was covered by the rigors of Sec 132 can be covered, recorded and hence the action of the revenue was bad in law and contrary to the provisions of section 132. </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">Whether activities in nature of loading, unloading, packing, unpacking etc provided as intermediary to GTA service provider taxable as GTA service - Matter remanded to original authority: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> intermediary service is subservient to the original transaction, mere breaking of original transaction in transit does not bring out a different transaction. It may be stated that nature, character and terms of a contract decides the incidence of tax on intermediate transaction. If the character of the service provided by the intermediary in transit is GTA service without the original transaction coming to an end, the service provided by the intermediary may not be construed to be a different transaction.</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><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"> <strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></strong></font></p>
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