TIOL-DDT 1771 · 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 align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1771 </font><font size="3"></font><font size="2"><br> </font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>10.01.2012 <br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tuesday </strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Anti Dumping Duty on Caustic Soda - The First Resurrection of 2012 </font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has started the New Year with a resurrection. The very first Customs (tariff) notification issued in the year 2012 is to revive a dead notification. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 98/2006-Cus dated 13.09.2006, anti dumping duty was imposed on Sodium Hydroxide commonly known as caustic soda originating in, or exported from, Saudi Arabia, Iran, Japan, USA and France. The notification very clearly mentioned, <font color="#FF6633"><em><strong>"This notification shall be effective for a period of five years, unless revoked, suspended or amended earlier". </strong></em></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the notification was effective till 12.09.2011 and after that not valid. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Government has amended this notification to add at the end,<em><strong><font color="#FF6633"> "This notification shall remain in force up to and inclusive of the 1st September, 2012, unless the notification is revoked earlier ."</font></strong></em> - nearly three months after its demise! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, with the latest amendment, this notification is valid up to 12.09.2011 and also up to 01.09.2012. Impossible? Board at its best? When the notification provides two options, the importer can choose the one that is better suited to him. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Quality of Notification manufacture in the Board has reached its lowest ebb! They had done a similar farce in Notification No. 111/2011 - Cus dated 20.12.2011. Most probably, they will follow the same pattern throughout the year. God save the stakeholders! </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_001.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 1/2012-Cus.,(ADD), Dated: January 06, 2012 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Adjudicators appointed for DRI cases </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has appointed the Joint Commissioner or Additional Commissioner of Customs (Imports), Air Cargo Complex, Sahar, Mumbai, to act as a common adjudicating authority to adjudicate certain DRI cases. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2012/cnt12_001.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 1/2012- Cus., (NT), Dated: January 06, 2012 </strong></font></a></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - Reimbursement of Expenses - <em>Bhagavathy Traders </em> Goes to Supreme Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> SHRI BHAGAVATHY TRADERS Vs COMMISSIONER OF CENTRAL EXCISE, COCHIN -<em><strong> <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2011/2011-TIOL-1155-CESTAT-BANG-LB.htm" target="_blank">2011-TIOL-1155-CESTAT-BANG-LB</a></font></strong></em>, the Larger Bench of the Tribunal had held, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"<em>The claim for reimbursement towards rent for premises, telephone charges, stationary charges, etc. amounts to a claim by the service provider that they can render such services in vacuum. What are costs for input services and inputs used in rendering services cannot be treated as reimbursable costs. There is no justification on legal authority to artificially split the cost towards providing services partly as cost of services and the rest as reimbursable expenses."</em> </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Party has appealed to the Supreme Court and the Apex Court on 02/01/2012 has admitted the appeal. Incidentally, the Tribunal's Larger Bench had not decided any issue; it found no conflict between the decisions of the Benches and so returned the matter to the referral Bench. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise and Service Tax Registration - No Systems </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG has conducted a study of the Registration Process in Central Excise and Service Tax and observed, "<em>For both central excise and service tax, the registration certification has to be granted by the department within seven days of filing of an application. These processes are carried out through a centralised, web based software application known as Automation of Central Excise and Service Tax (ACES). This application is connected through MPLS14 network which automates various processes of central excise and service tax and gives complete end to end solution under various modules. Any assessee can register with the Department online, can file online returns, claims, permissions & intimations. The system tracks its status and the assessee gets online messages. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Online applications for registration are processed by the divisions/ ranges and registration certificates are issued through the system. In the case of central excise registrations, the divisional officers (AC/DC) mark the cases on-line for post facto physical verification of premises and other details given in application, by the concerned Range Officers."</em> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit found instances of delays in issuing registration certificates and conducting post-verification, non-conversion of temporary registration numbers and delays/ shortcomings in the processing of applications for surrender of registrations such as non-availability of verification reports and lack of monitoring. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The department stated that delays occurred due to improper functioning of ACES system, non-submission/ delayed submission of complete records by the assessees, delay in verification of assessees' premises, heavy workload, connectivity failures and other administrative reasons. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit observed that ACES was not generating a report showing the date of forwarding the duplicate copy of the application from the division to the range for post facto verification and date of receipt of verification report, which would enable the divisions to monitor delays. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What happened to the Road? </strong>: In one case, the Audit found that "the range Superintendent had stated in his verification report that the assessee was operating from two separate premises which were part of the same factory but separated by a public road. This required the approval of the Commissioner." When Audit pointed out this, the department replied that ‘assesse resubmitted the ground plan which showed the factory premises as continuous and not separated by any road or canal. Thus, approval of Commissioner was not required', leaving the Audit confused as to what happened to the road. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit also noted that several temporary registrations were not converted into PAN based registrations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Audit has recommended that: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Suitable control mechanisms may be put in place so as to prevent delays in granting registration certificates and accepting surrender of registration certificates. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The department may monitor the time taken for post facto verification of registration applications. Appropriate MIS report may be generated in ACES. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>From CAG's Report No. 25 of 2011 (Indirect Taxes) </em></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600"> </font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GST - State FMs agree to Negative List </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Empowered Committee of State's Finance Ministers on GST, meeting in Bhopal on Monday agreed in principle to the concept of services tax based on the 'negative list' and suggested that the Centre could prepare such a list, which would help, widen the tax base. But there is a catch - the committee suggested that all items mentioned in the negative list should be liable to be taxed by the States. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems the States have estimated a loss of Rs 19,000 crore in revenues after the Central Sales Tax was reduced (as part of the move towards GST regime). But so far, the Centre has released only Rs 6,393 crore to 13 states by way of compensation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The State Finance Ministers are scheduled to have a meeting with the Union Finance Minister on January 18. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Shrinking Money and High Inflation </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SHRINKING</strong> value of money because of persistent high inflation explains the importance of anti-inflationary monetary policy. For a country with large percentage of population still living below the poverty line, inflation works as a regressive tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Economic welfare of the population at large could be enhanced primarily through higher growth, that too in a low and stable inflation environment. That suggests why balancing growth and inflation becomes so important to monetary policy. It is a much more complex task than what may appear in any public discussions. To ensure that the grease effect of modest inflation allows economic growth and investment activities to materialise, inflation would have to be positive. A positive inflation within the threshold level would not mean erosion in purchasing power since higher growth would also raise the income levels, and as a result, net purchasing power would increase. Unless the benefits of growth get equitably distributed, this net increase in purchasing power may not happen to all. At the aggregate level, some positive inflation that coexists with high growth could be welfare maximising. At high inflation, particularly above threshold level, growth may however, moderate, and both high inflation and low growth could erode welfare. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From a speech of HR Khan, Deputy Governor, RBI. </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 align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"></font><font color="#663399">Central Excise </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>As the pre-budgetary stock of finished fabrics/WIP stock/input stock as on 9.7.04 was exempted from duty under Notification No.30/04-CE, the benefit of captive consumption notification 67/95-CE claimed in respect of tops, yarn and grey fabrics manufactured and used/contained in the finished fabrics stock/WIP is not available - Demand of Rs.2.15 crores upheld and appeal rejected: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SINCE </strong>the appellants have opted for Notification No.30/04, the benefit of the Notification No.67/95 is not applicable to them on the inputs used in the manufacture of exempted final products. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether when sale and purchase of shares are done in normal course of business and not with object to earn dividend, profits arising on sale of shares is to be treated as capital gains - NO, business income: AP High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE </strong>filed their returns declaring income from investment in shares, interest on income, salary and capital gains. AO held that the trading in shares were classified by the assessee into three categories (i) business income (ii) short term capital gains before 1.10.2004 and (iii) after 1.10.2004, in respect of some of the transactions, effected during the period 1.4.2004 to 31.3.2005, the assessee had admitted that it was business income, however, in view of the insertion of Section 111A with effect from 1.10.2004, the assessee had segregated certain transactions, pertaining to "trading in shares," into two categories i.e., trading carried on during the period 1.4.2004 to 30.9.2004, and during the period 1.10.2004 to 31.3.2005. Segregation of business income and short term capital gain before 1.10.2004 was accepted as the tax rate was same. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Penalty - Section 76, 78 - No penalty proposal in the Show Cause Notice - Receipt of Corrigendum disputed - Section 80 not considered - Matter remanded - High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> is an error and mistake in the impugned order and the reasons given for deleting penalty under Section 78 of the Act cannot be sustained. It is apparent that the respondent-assessee has invoked Section 80 of the Act and submitted that there was a reasonable cause and, therefore, penalty should not have been imposed. The factual aspects, explanation offered etc. have not been dealt with and adverted to. The Tribunal while deleting the penalty has not discussed and stated the stand of the respondent-assessee and recorded any finding on the said respect. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day. </font></p> <div 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> </div> </body> </html>