TIOL-DDT 1846 · 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><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" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 1846</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 30.04.2012<br> Monday</font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Services provided by Agricultural Produce Marketing Committee (APMC) - CBEC Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REPRESENTATIONS</strong> have been received, seeking clarification regarding the levy of service tax on certain services provided by the Agricultural Produce Marketing Committee (APMC)/Board, using the ‘market fee', in the light of Notification No<strong>. <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2004/stnot04_014.htm">14/2004-ST</a></strong>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Board observes</strong>," APMCs are statutory bodies created with a view to regulate agricultural produce markets. APMCs charge market fee for issuing licenses to whole sale trader-cum-commission agent, wholesale traders, commission agent, mill / factory / cold storage owners or any other buyers of agricultural produce, for an agricultural year. The amount so collected by the APMC, from the licensees, is used for providing among other things facilities like roads, drinking water, weighing machines, storage places, street lights, etc. in the market area. These services are not provided on one-to-one basis i.e. in consideration or as an obligation to the persons who have tendered the license fee. Some of these services may be capable of being used more conspicuously by the licensees but they do not form part of any contractual obligation to any of the licensees. As statutory bodies, APMCs provide basic facilities in the market area out of the ‘market fee' collected from the licensees, mainly to facilitate the farmers, purchasers and others. APMCs provide a host of services to the licensees in relation to the procurement of agricultural produce, which are ‘inputs' in terms of the definition given in section 65(19) of the Finance Act, 1994 itself. To that extent the meaning of ‘input' is much wider in scope than the meaning assigned in rule 2(k) of Cenvat Credit Rules, 2004. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Clarifies:</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-ST. However, any other service provided by the APMCs for a separate charge (other than ‘market fee') to either the licensees or farmers or any other person, e.g. renting of shops in the market area, etc. would be liable to tax under the respective taxable heads. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, services provided by any Agricultural Produce Marketing Committee or Board, fall under the proposed negative list of services. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2012/sercir157.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 157/8 /2012-ST., Dated: April 27, 2012</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax - Cost of Collection about 0.6% </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• <strong>COST</strong> of collection showed a uniform trend of about 0.6 <em>per cen</em>t during 2006-07 to 2010-11 except 2008-09 and 2009-10, where it was 0.7 <em>per cent</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• The direct tax collection exceeded the budget estimates in all the years over the period 2006-07 to 2010-11 except 2008-09. The extent of actual collection exceeding the budget estimates ranged from 2.2 <em>per cent</em> in 2009-10 to 16.7 <em>per cent</em> in 2007-08. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Direct tax collection increased by 94.2 per cent from Rs. 2,30,181 crore in 2006-07 to Rs 4,46,934 crore in 2010-11 whereas total Gross Domestic Product (GDP) has increased by 90.0 <em>per cent</em> from Rs. 41,45,810 crore in 2006-07 to Rs. 78,75,627 crore in 2010-11 indicating a significantly higher growth rate of tax collection over five years period. During the period 2006-07 to 2010-11, the average rate of growth of direct tax collection was 23.6 per cent. The annual rate of growth ranged from 6.9 <em>per cent</em> in 2008-09 to 35.6<em> per cent </em>in 2007-08. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• In the case of the corporate assessees, net collection increased from Rs. 1,44,318 crore in 2006-07 to Rs. 2,98,687 crore in 2010-11 at an average annual rate of growth of 26.7 <em>per cent</em> and in the case of non-corporate assessees, net collection increased from Rs. 75,079 crore in 2006-07 to Rs. 1,40,042 crore in 2010-11 at an average annual rate of growth of 21.6 <em>per cent</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Voluntary compliance by assessees (pre-assessment stage) accounted for 81.4 <em>per cent</em> of the gross collections in 2010-11. The collection by way of voluntary compliance in 2010-11 was higher than 2006-07 but marginally lower as compared to 2007-08 to 2009-10. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• The assessee base grew over the last five years from 313 lakhs taxpayers in 2006-07 to 335.8 lakh taxpayers in 2010-11 at average annual rate of growth of 1.8<em> per cent</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• The pendency of scrutiny assessments increased from 2.8 lakh in 2006-07 to 3.9 lakh in 2010-11.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• At the end of 2010-11, as much as Rs. 2.9 lakh crore remained uncollected. This comprised demand of Rs. 2.0 lakh crore of earlier years and current demand (2010-11) of Rs. 0.9 lakh crore.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Internal Audit completed 66 <em>per cent</em> of the targeted audits. Only 14.9 <em>per cent</em> of major findings raised by Internal Audit were acted upon by the assessing officers in 2010-11. Departmental response to Internal Audit was clearly inadequate. </font></p> <p><em><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Source: CAG's Report No. 27 of 2011-12 (Direct Taxes) </font></strong></em></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Intra-bank Deposit Accounts Portability – RBI Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SOME </strong>banks insist on opening of fresh accounts by customers when customers approach them for transferring their account from one branch of the bank to another branch of the same bank. Such insistence on opening of fresh account or making the customer undergo full KYC process again causes inconvenience to them resulting in poor customer service. It is not reasonable in view of the fact that most bank branches are now on CBS and KYC records of a particular customer can be accessed by any branch of the bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI advises the banks that KYC once done by one branch of the bank should be valid for transfer of the account within the bank as long as full KYC has been done for the <em><strong>concerned</strong></em> account. The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof may be obtained from him/her upon such transfer by the transferee branch. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_notification.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI/2011-12/528: Dated: April 27, 2012 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Problems In Filling ER-7 returns by New Registrant - DG, Systems Responds </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> Friday 27th April, <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14854" target="_blank">DDT 1845</a></strong> had carried the grievance of a Netizen with the above caption. Within minutes of DDT being uploaded, the office of the DG, Systems mailed us, <em>"It is requested that, the assessee may be advised to raise the complaint with ACES Service Desk through email - <a href="mailto:aces.servicedesk@icegate.gov.in"><strong>aces.servicedesk@icegate.gov.in</strong> </a>or call up the TOLL FREE NUMBER 1800 425 4251, for investigation and proper resolution at the earliest."</em></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">We are floored - this is exactly how Government should work. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Piyush Shah, who raised the issue, also wrote to us, <em>"Believe me, the Service Desk of ACES server has awaken in the 2nd half of the day. They have started issuing call ticket number and they had also asked for contact details and exact registration date.</em>”</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">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal - Appeal dismissed on ground of limitation - does not merge: SC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SUPREME</strong> Court had in a plethora of decisions had categorically, observed that if for any reason an appeal is dismissed on the ground of limitation and not on merits, that order would not merge with the orders passed by the first appellate authority.</font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax/Arbitration </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Principal can deduct Service Tax from the Bills of the contractor: SC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondent as the contractor had to bear the service tax under clause 9.3 as the liability in connection with the discharge of his obligations under the contract. The appellant could not be faulted for deducting the service tax from the bills of the respondent under clause 9.3, and there was no reason for the High Court to interfere in the view taken by the arbitrator, which was based, in any case on a possible interpretation of clause 9.3. The single Judge as well as the Division Bench clearly erred in interfering with the award rendered by the arbitrator. </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 when assessee pays regularisation fee to State Govt for violation of building bylaws but State Ordinance later declared ultra vires by HC, assessee cannot claim depreciation on enhanced construction costs as fee paid becomes penal - NO: ITAT By Majority </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>assessee had constructed a hospital building. It was later found out that the assessee had violated certain regulations of Chennai Metropolitan Development Authority (CMDA) in constructing the said hospital building. Meanwhile, the Government of Tamil Nadu issued an Ordinance to add a new section 113A into the Tamil Nadu Town and Country Planning Act, 1971, whereby the State Government may regularize deviations made in constructing buildings. In the light of that Ordinance and the newly brought in section, the assessee opted for regularization of the violation. The violation alleged in the hands of the assessee in constructing the hospital building was thus regularized on payment of Rs. 18,41,787/- to CMDA as regularization fee. This amount was paid by the assessee in the previous year 2003-04, relevant to the AY 2004-05. </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 align="justify"><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"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p> </body> </html>