TIOL-DDT 1832 · 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 1832</font><br>
10.04.2012 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Air Tickets bought before 1st April 2012 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> has been brought to the attention of the Board that some Airlines are collecting differential service tax on tickets issued before 1st April 2012 for journey after 1st April 2012, causing inconvenience to passengers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems Air India had issued a circular that differential Service Tax has to be collected at the time of issuing the Boarding Pass for tickets purchased from agents, before 1st April 2012. Air India being the leading Indian Carrier, Foreign Airlines also immediately followed the AI directive and hapless passengers were made to pay Service Tax at the airports. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, Board clarifies, </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 4 of the Point of Taxation Rules 2011 deals with the situations of change in effective rate of tax. In case of airline industry, the ticket so issued in any form is recognised as an invoice by virtue of proviso to Rule 4A of Service Tax Rules 1994. Usually in case of online ticketing and counter sales by the airlines, the payment for the ticket is received before the issuance of the ticket. Rule 4(b )( ii) of the Point of Taxation Rules 2011 addresses such situations and accordingly the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier. Thus, the service tax shall be charged @10% subject to applicable exemptions plus cesses in case of tickets issued before 1st April 2012 when the payment is received before 1st April 2012. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In case of sales through agents, (IATA or otherwise including online sales and sales through GSA) the payment is received by the agent and remitted to airlines after some time. When the relationship between the airlines and such agents is that of principal and agent in terms of the Indian Contract Act 1872, the payment to the agent is considered as payment to the principal. Accordingly as per Rule 4(b )( ii), the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier. Thus, the service tax shall be charged @10% subject to applicable exemptions plus cesses in case of tickets issued before 1st April 2012 when the payment is received before 1st April 2012 by the agent . </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, to the extent airlines have already collected extra amount as service tax and do not refund the same to the customers, such amount will be required to be paid to the credit of the Central Government under Section 73A of the Finance Act 1994 (as amended). </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All those who paid differential Service Tax to the airlines, can now demand a refund and perhaps a compensation for collecting an illegal tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> called up Air India. While one officer told us that differential tax has to be paid, another officer said that they have got an amendment from the Government and you need not pay – Pretty well informed and fast too! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2012/sercir155.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 155/6/ 2012–ST., Dated: April 9, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Study Team for Common Code for Excise and Service Tax </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has appointed a Study Team under the leadership of former Chief Commissioner MK Gupta “to examine the possibility of a common tax code for service tax and central excise, which could be adopted to harmonize the two legislations”. Government has not announced the other Members of the Team. The Team will also suggest a draft Common Tax Code for service tax and central excise that can be implemented under the present Constitutional scheme, keeping in view the challenges in the context of impending Goods and Service Tax (GST). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What we really need is not another code or Act, but clarity and consistency. Every Tax Law is drafted by the taxmen on the assumption that all taxpayers are evaders and they should somehow be fixed – in the process, life is made miserable and tremendous scope for litigation is provided. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the new code does not become another fiasco like the CENVAT Credit Rules. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Actually, why do we need a common code for excise and Service Tax? What is wrong with two separate enactments for the two taxes? A Common Code will be good, but can we really make a simple code with little scope for litigation? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How much time, money and paper have we wasted on GST! Now this common code will be the new mantra for all experts, seminarists and news media. Ultimately the taxpayer pays!. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Phosphoric Acid </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has imposed definitive anti dumping duty on Phosphoric <br>
Acid of all grades and all concentrations (excluding Agriculture/Fertilizer Grade), falling under tariff item 28092010, originating in, or exported from, Israel and Taiwan. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provisional anti dumping duty on this product was imposed by Notification No. 4/2012–Customs (ADD), dated the 13th January 2012. Now this definitive anti dumping duty is imposed from the date of imposing provisional duty that is 13 January 2012 and will be valid for five years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since definitive anti dumping duty is imposed, the notification imposing provisional duty (4/2012) is rescinded. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2012/ctariffadd12_019.htm" target="_blank"><strong>Notification No. 19/2012-Cus.,(ADD), Dated: April 4, 2012 </strong></a> + <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2012/ctariffadd12_018.htm" target="_blank"><strong>Notification No. 18/2012-Cus.,(ADD), Dated: April 4, 2012 </strong></a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption for Import of Sugar - Extended for three more months </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IMPORT </strong>of Raw Sugar and Refined or White Sugar are exempted from Customs duty vide Sl. Nos 76,77 and 78 of the table to Notification No. 12/2012 – Cus. As per Clause (b) of the proviso to the Notification, this exemption ceases to have effect on or after 1st April 2012. Now it is extended and will cease to have effect on or after 1st July 2012. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_025.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 25/2012 - Cus., Dated: March 30, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty on Peroxosulphates- Yet another Resurrection </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROVISIONAL </strong>anti dumping duty on ‘Peroxosulphates' also known as ‘Persulphates', originating in, or exported from, China PR and Japan, was imposed by Notification No. 40/2007-Cus dated 19.03.2007. Definitive anti dumping duty was imposed on this product with effect from the date of provisional imposition, by Notification No. 96/2007-Customs, dated 29th August, 2007. This notification was to be valid till 18th March 2012 and had expired on 19th March 2012. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Government strongly believes in resurrection to take care of their slumber. They obviously forgot about this notification on 18th March and allowed it to lapse. Now, it is extended till 18th March 2013. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is understandable when the Revenue officers have no respect for the Courts or Parliament, but what do you do when the Board has no respect for the Board? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Circular No. 28/2011-Cus dated 08.07.2011, Board had emphatically clarified that <font color="#FF0000">Thus, a definitive/final anti-dumping duty can be collected beyond the stipulated period only when a notification extending the levy has been issued,</font> <font color="#FF0000"><strong>before the expiry of the parent notification. </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ignoring its own circular, Board has now extended the validity after the expiry of the notification! </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2012/ctariffadd12_020.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 20/2012-Cus.,(ADD), Dated: April 4, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The demand BANK - a Revolutionary Way of Issuing SCNs </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME</strong> time back, we had in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=13459"><strong>DDT-1717 - 20.10.2011</strong> </a>carried a snippet titled “Preparation of Order-in-Original – a comic <em>kissa</em>”. Continuing in the same vein, the Netizen has something more for us. He writes in: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Issuance of show-cause notices at the drop of a hat is becoming the norm nowadays. More often than not, these SCNs are given birth by Audit objections, which too are the result of in vitro or test-tube experimentation and carry a lot of prestige for the Auditors. Like the other day, I received an Audit Report in respect of an assessee and there were a dozen paragraphs which when added up projected a duty liability in excess of Rupees Fifty lakhs. As for the merits, no one discusses merits these days! The very thought of getting the SCN (obviously invoking extended period) approved by the Commissioner as warranted by the Board Circular 752/68/2003-CX dated 01.10.2003 gave me creeps – he would start from the basics and finally I would be asked as to how long I could survive in the department without knowing anything – give me a dressing down – all the while I will be standing like a moron listening to his intellectual prowess! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, I thought that the most convenient way would be to give separate show-cause notices so that the amount gets split right in the middle and the sober Additional Commissioner would have no qualms in signing on the dotted line. I did just that and no one objected – who is bothered! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While implementing this ploy of mine, I had a great idea which I would like to share with my brethren. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Needless to mention this idea if implemented would save all of us (departmental officers) from the rigours of getting the SCN approved from the higher bosses. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It works like this - Let there be a total duty demand amount allotted to a particular Range based on its monthly Revenue figures for the preceding financial year with the permissible additions and subtractions in percentage terms viz. addition of new units/closure of old ones. Obviously, the Chief Commissioner should have a final say in the matter! Based on the monetary limits of adjudication prescribed by the Board Circular dated 01.10.2003 as amended, allot the first five lakhs to the AC/DC, the next forty five lakhs to the Joint Commissioner/Additional Commissioner and the balance in excess of fifty lakhs and one rupee to the Commissioner. If the apportioned “demand amount” crosses this total figure then repeat the exercise once again! If this is done, the Range authorities would not be required to trudge the steps leading to the Joint/Additional Commissioner's or the Commissioner's cabin during their tenure and issue the SCNs by showing that they have been signed ‘in anticipation'. A monthly report should be submitted to the Chief Commissioner indicating the SCNs issued and the allotted amount that has been consumed during the month. If there is any allotted amount in balance, the same is required to be carried forward and if the amount falls short, permission should be taken from the Chief Commissioner for raising the allotted amount on a post facto basis. I intend to sell this “idea” to the Board and if you agree please sign on the dotted line…” </font></p>
<p><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT can do only thing - praise this genius! </font></strong></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><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">Central Excise</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Time limit for demand of interest - Principle adopted by Supreme Court was that period of limitation, which applies to a claim for principal amount, should also apply to claim for interest thereon - Demand of interest beyond normal period of one year is barred by limitation: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue involved in the Writ Petition filed by the assessee is whether the demand letters for payment of interest issued in 2005/2006 pertaining to the demand of duty confirmed by the Order-in-Original passed in the year 2000. It is important to note that neither the Order-in-Original nor the Order-in-Appeal contained any directions for payment of interest. </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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether
when dividend income is incidental to business of sale of shares, which
remained unsold, it cannot be said that expenditure incurred in acquiring
shares is to be apportioned to extent of dividend income and should be
disallowed - NO: HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues
before the Bench are - Whether when dividend income is incidental to the
business of sale of shares, which remained unsold with the assessee, it cannot
be said that expenditure incurred in acquiring shares is to be apportioned
to the extent of dividend income and should be disallowed and Whether when
the assessee takes loan and purchases shares and earns dividend income on
unsold shares, any notional interest expenditure is to be disallowed ...</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">Rent a cab service provided to ONGC by land losers - Penalty Quashed: High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BELIEVING</strong> it for a moment that the appellants were unable to pay the amount on the ground of dispute with the ONGC though they were aware of the levy of service tax in absence of any fraud, misrepresentation, collusion or wilful mis-statement or suppression, there is no justification in levying the penalty. Moreover, when the entire issue for levying of the tax was debatable, that also would surely provide legitimate ground not to impose the penalty. Adjudicating authorities could also have considered the fact that this was a society of persons, which was created in the interest of land losers, who had lost their lands with the ONGC setting up its plant in the area and operating without any profit model. In such circumstances also submissions of the appellant ought to have been appreciated in light of overall circumstances. </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">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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