TIOL-DDT 1845 · 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="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 1845 </font><br> 27.04.2012 <br> Friday </strong></font></p> <p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">Problems In Filling ER-7 returns by New Registrant – Will Board do something before 30th April?</font></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PIYUSH </strong>Sha from Ahmedabad sent us this mail: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Form ER - 7 is an annual return of Annual Installed Capacity Statement. As per Rule 12(2A) (a) of the Central Excise Rules, 2002, every assessee has to file Annual Installed Capacity Statement by 30th of April of the succeeding financial year. In the said statement, the assessee is required to declare annual production capacity of the factory vis – a –vis details of main plants and machinery. It is also to declare details of the supplier of electricity, contract demand of electricity, Meter No., details of generator etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This return has to be filed electronically except by the units located in Uttaranchal and Himachal Pradesh and availing exemption Notification No. 49/2003 - CE & 50/2003 - CE both dated 10/06/2003 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue had issued Notification No. 26/2009 - CE(NT) dated 18/11/2009, under sub rule (b) of Rule 12(2A) of Central Excise Rules, 2002, giving exemption to the manufacturer of Biris and Matches (manufactured without the aid of machines) and falling under tariff item No. 24031031 & 3605 respectively. By virtue of this notification, the manufacturers of reinforced cement concrete pipes falling under heading 6810 are also exempted from filling ER - 7 Return. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus all assesses have to file ER - 7 return except manufacturers of Biris & Matches (Without the aid of machines) and Reinforced Cement Concrete Pipes. Further, all assesses except for those whose units located in Uttaranchal and Himachal Pradesh would file ER - 7 Return electronically. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no exemption for any newly registered assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore, new units registered in the last financial year i.e. in 2011 - 2012 would file their first ER - 7 return. If they are not located in Uttaranchal and Himachal Pradesh, they would file ER - 7 return electronically before 30/04/2012. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the server does not allow filing ER - 7 return to the new units! On the contrary it shows error message that “Cannot File Return for the Assessees who Registered in Assessment Year” What does this mean? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are new units compulsorily exempted from filing their first return? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are new units compulsorily exempted from filing their return electronically? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the range officers are not accepting ER - 7 returns in paper format, what should these units do? </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the “Board” clarify the issue before 30th April? </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Outsourcing Orders - Scam involving ITAT Member </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PERMISSION</strong> of the Central Government for the prosecution of a Member of Income Tax Appellate Tribunal (ITAT) was conveyed to the Central Bureau of Investigation (CBI) on 29.12.2011 and the approval of the Central Government under section 6A of Delhi Special Police Establishment Act, 1946 for registering a Preliminary Enquiry in respect of some Members of ITAT, has been conveyed to CBI on 29.3.2012. During investigations, CBI had seized computer hard disk of a lawyers firm. Investigations led to the retrieval of certain documents showing similarities with certain orders passed by the Income Tax Appellate Tribunal (ITAT). The President, ITAT, has been advised to be vigilant and review the rule and practices relating to preparation and delivery of the orders of the Tribunal to strengthen the systems. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was informed by Salman Khurshid, Minister of Law & Justice, in a written reply to a question in the Lok Sabha yesterday. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">No Branches for Supreme Court of India </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REPRESENTATIONS </strong>have been received from time to time from various sources, for establishment of Benches of the Supreme Court in various parts of the country. The Law Commission in its 229th Report, in addition to its 95th Report, has recommended: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) A Constitution Bench be set up at Delhi to deal with constitutional and other allied issues; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Four Cassation (Zonal) Benches be set up in the Northern region/ zone at Delhi; the Southern region/ zone at Chennai/ Hyderabad; the Eastern region/ zone at Kolkata and the Western region/ zone at Mumbai to deal with all appellate work arising out of the orders/ judgments of the High Courts of the particular region. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chief Justice had informed that after consideration of the matter, the Full Court, in its meeting held on 18th February, 2010, unanimously resolved that the recommendations of the Law Commission cannot be accepted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was informed in a written reply to a question in the Lok Sabha yesterday by Salman Khurshid, Minister of Law & Justice. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exchange Rates for May Notified </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods for May 2012. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2012/cnt12_038.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 38/2012-Cus.,(N.T.), Dated: April 26, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Retrospective Taxation - Fair? No; Legal? Yes! </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> is so much debate going on about the fairness of retrospective legislation – all because of a 11000 Crore dispute the Income Tax Department has with a mobile phone company, but the Supreme Court has consistently upheld the right of Parliament to legislate with backdate! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1971, everyone thought that Mrs Indira Gandhi was elected to the Lok Sabha from Rae Bareily, but the Allahabad High Court unseated her and she got the election laws amended retrospectively to undo the High Court verdict. The Supreme Court upheld the retrospective legislation and consequently her election observing that the <em><strong>power of the Legislature to pass a law includes a power to pass it retrospectively</strong></em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following observations of the Supreme Court may be worth a look. </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All taxation, as shown by its very nature and object, is in the interest of the general public because it is a contribution for governmental expenditure from all persons who in some measure are entitled to its benefit. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The needs of the revenue cannot be known to the courts and cannot be determined by them, and the sources of revenue are entirely within the knowledge of the legislature and it is for that department of the State to determine how the burden will be distributed and why, because that department is the policy making body and is familiar with the economics and the resources of the country and its needs. It is for that department in its discretion to select anything for taxation or to exclude it. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>If the Legislature decides to levy a tax, it may levy such tax either prospectively or even retrospectively. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is necessary that the legislature should be able to cure defects in statues. No individual can acquire a vested right from a defect in a statute and seek a windfall from the legislature's mistakes. Validity of legislations retroactively curing defects in taxing statues is well recognised and courts, except under extraordinary circumstances, would be reluctant to override the legislative judgment as to the need for and the wisdom of the retrospective legislation. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government amongst those who benefit from it. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is open to the legislature to remove the defect pointed out by the court or to amend the definition or any other provision of the Act in question retrospectively. In this process, it cannot be said that there has been an encroachment by the legislature over the power of the judiciary. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tailspark:</strong> The Supreme Court had in the very famous <em>Ranadey Micronutrients</em> case - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-184-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-184-SC-CX</font></a></strong> observed, Consistency and discipline are of far greater importance than the winning or losing of court proceedings . </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why Litigation; Why Courts? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> retrospective legislation is so right and legal, why do we need the courts and why should anyone enter into litigation? Is it fair for the Government to change the rules after they lost the game? And what is the legislature on which the Supreme Court has conferred so much unfettered right to legislate? Most of the retrospective laws are not even read in Parliament and often it takes about 120 seconds to pass a retrospective legislation. The Law is actually made by the babus, often by an Under Secretary, almost always to cover up the mistakes of the bureaucrats and this cover-up is given respect in the name of "legislative will". The arrogance of the babu can be clearly seen behind every word in the legislation - "so what if I made a mistake, Parliament will retrospectively amend my mistakes; if I make a mistake, Supreme Court finds fault with me, but if I correct it and say Parliament has done it, Supreme Court will ratify it!"</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Retrospective legislation is in fact a vulgar manifestation of the contempt the Babu has for Parliament and Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And if they want to change the law retrospectively, why can't they do it before the Supreme Court gives its judgement? They fight the battle in the Supreme Court in all seriousness, sure of winning either way – heads I win; tails you lose. If they win in the Supreme Court, that's fine; if they lose, they can always amend the law retrospectively! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe we should have a law that a tax appeal can be made in the Supreme Court only if an Under Secretary in the Revenue Department certifies that the Government will not amend the law retrospectively. If the Government does not like the appeal, it can immediately pass a law amending the provisions retrospectively. And the power to amend the law retrospectively should be delegated to the Under Secretary – that will save a lot of time, money and paper and reduce litigation! </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"> – Monday'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">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether when franchisees conduct learning classes as per agreement with assessee, payment made in this regard is covered by provisions of Sec 194C - NO, rules Delhi HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee provides its services across the country through education centres run by the assessee itself or by its franchisees. While completing the assessment, the AO noted that the assessee had debited a sum of Rs.6,38,64,018/- to the profit and loss account as payment made to franchisees. On a perusal of the agreement between the assessee and one of its franchisees, which was apparently taken as a specimen agreement, the AO took the view that the payment made by the assessee came within the provisions of Section 194(C) of the Act as a payment made for carrying out a work in pursuance of a contract and accordingly the assessee ought to have deducted tax from the payment at the applicable rates. He further took the view that since the assessee failed to deduct the tax as contemplated by Section 194C, the amount cannot be allowed as a deduction in view of the embargo placed by Section 40(a)(ia). </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">Services utilized for construction/erection and installation of Ammonia Storage tank outside factory premises (at the port) to store imported inputs – since taxable services are covered under definition of ‘input service' prima facie strong case in favour – Pre-deposit waived: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicant is engaged in manufacture of excisable goods and the inputs were imported which are being stored at the port and subsequently transported to the factory for use with the manufacture of the final product. In view of the definition of ‘input service' during the relevant period, prima facie, the applicant has a strong case in their favour. Stay petition is allowed. The pre-deposit of duty, interest and penalty is waived and recovery of the same is stayed during pendency of the appeal. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit - shortage of Raw Material - Penalty Confirmed - Appellate authority and Tribunal should be very precise: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the process of giving brief statement of submission of the appellant, if all the grounds running in several pages are quoted in any order or judgment and that too in a different font, then it may be possible that instruction may have been given to the Steno or any other person to type verbatim the grounds raised in the appeal starting from one point to the last point. Such practices are required to be deprecated and the Appellate authority and the Tribunal should be very precise in narrating the facts of the case and the grounds raised by the parties. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements</font></strong></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend</font></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> </body> </html>