TIOL-DDT 1818 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font><font color="#663399" size="3">TIOL-DDT 1818</font> <br>
19.03.2012 <br>
Monday </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We had <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14550"><strong>Special Budget DDT</strong> </a>on Saturday. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Budget 2012 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> promised we analysed the Budget like nobody did. We will continue with analyses from top experts in the field and our in-house talent. We had a record 11 Lakh hits on Budget Day. Our Budget updated CD is also ready. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retrospective Legislation </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME</strong> time back, the Secretary of a Department of the Union of India wanted our help in getting a provision in an Act amended retrospectively. We told him that it is very simple – go to Parliament with a proposal to amend the law retrospectively and it will be done. We also asked him to get the help of the Revenue Secretary who gets a few retrospective amendments passed by Parliament every year. The Secretary told us “it is easy for the Revenue Secretary, because he goes to Parliament every year with the Finance Bill, but my department went to Parliament with a Bill more than thirty years ago; any Bill I take to Parliament will be thoroughly scrutinised and debated – I can't get it passed, but the Revenue Secretary can get his amendments through the Finance bill.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday,
the Finance Minister said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Retrospective fiscal legislation normally should not be brought in. But if a judgment comes that Rs. 5 lakh crore in revenue has to be returned, would it be possible? Everybody knows that it will lead to a financial crisis. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are making three points quite clear — that India is a not a ‘no tax' or ‘low tax' or even a ‘tax haven.' India is a country where all taxpayers, whether resident or non-resident, will be treated on a par. Secondly, India is a country where tax laws are that if you pay tax in one country, you need not pay tax in the other country of your business operation which is covered by the DTAA. But it cannot be a case that you pay no tax at all. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why we have to go back to day one is that this is one piece of legislation which is relevant to the date of enactment. Because I am amending the Income Tax Act 1961, Section 90, its relevant date is the date of enactment of the Act and that is why it goes back to 1962. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The apprehension that the retrospective amendments would create negative sentiment for FDI is not correct. FDI comes when there is profitability. FDI does not come only on account of zero tax… To make the intent of the legislature clear, clarificatory amendments have been proposed. This will bring tax certainty and would also make it clear that India has a right to tax similar transactions.” </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reasonableness of legislative measures is unknown to our Constitution </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> you think that it is unfair for Parliament to unsettle a Supreme Court Judgement by retrospective legislation, the Supreme Court as early as in 1959 held that that the legislature has power in appropriate cases to pass even retrospective legislation. In the Indira Gandhi election case, the Supreme Court held that <strong>Reasonableness of legislative measures is unknown to our Constitution.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The power of the Legislature to pass a law includes a power to pass it retrospectively. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> had extensively covered this retrospective legislation in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=981"><strong>DDT 43 <br>
31 1 2005</strong> </a>and <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1075"><strong>DDT 49 8 2 2005 </strong></a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Why the New Section 73 (1A)? </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> new Section 73 (1A) is proposed to be inserted in the Finance Act, 1994 as: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"(1A) Notwithstanding anything contained in sub-section (1), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service of such statement shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices. " </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why was this provision inserted? The JS TRU answers: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<em>A new sub-section (1A) is being inserted to save the <strong>botheration of retyping</strong> the same charges <strong>(and save paper)</strong> when a follow-up demand is given for a period subsequent to the previous notice(s) on same grounds.</em>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He may save a few sheets of paper but a few forests are going to be wiped off in printing the clarifications to this provision and the huge litigation that this is sure to generate. More details of this in our budget analysis. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Baggage Rules - Effective When? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BAGGAGE</strong> Rules have been amended to increase the duty free allowance to Rs. 35,000 by Notification No. 21/2012 – Cus NT dated 17.03.2012. Now, when is this effective from? The Notification states that it shall come into force on the date of publication in the official Gazette. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some bright Customs officers at our airports have<em><strong> interpreted </strong></em>this to mean that the enhanced allowance would be applicable only after the Finance Act comes into force and they have not allowed the Rs. 35,000 benefit to passengers who landed in India yesterday. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">P-AND-OR-A box closed</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PANDORA</strong> was a mythical Greek woman had possession of a box that she was not supposed to open. Her curiosity got the better of her and one day she opened it and out came all the miseries like hate, anger, sickness, poverty, and every bad thing in the world. She slammed the lid down but by that time, all the evils had flown off. There was one item left in the box and it requested Pandora to let it also out. Pandora obliged and this last one was HOPE and it is because of hope that we are all able to live in spite of all the evils floating around. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 14 of the CENVAT Credit Rules, “<em>Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries</em>”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This had created quite a controversy and in this budget, <font color="#FF6633"><strong><em>taken or utilized wrongly</em></strong></font> has been amended as <font color="#FF6633"><em><strong>taken and utilized wrongly</strong></em></font>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">My friend, Jai Kumar calls it <strong>P-AND-OR-Abox closed. </strong></font></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">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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