TIOL-DDT 1873 · 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 1873 </font><br>
06.06.2012 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Finance Act 2012 - Effective Date Notified </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HERE</strong> is a very complicated amendment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 143 of the Finance Act 2012, amended Chapter V of the Finance Act, 1994, relating to service tax, with a view to replace the existing system of taxation of services based on specified description of services with a new system of taxation of all services other than the services specified in the negative list. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By
Clauses (A), (B), (D) and (E) of Section 143 of the Finance Act, certain
amendments were made to the following Sections of the Finance Act 1994 (Service
Tax): </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A.</strong> Section 65: Definitions</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>B.</strong> Section 65A: Classification of Services</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>D.</strong> Section 66: Charge of Service Tax.</font>
</p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>E.</strong> Section 66A: Charge of Service Tax on services received from outside.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What was the amendment? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The amendment was to delete the above sections from the Statute - the amendments read as <em>"the provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint."</em> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The amendments were to take effect from a date to be notified. So, the Government has notified 1st June 2012 as the date from which the amendment was to take effect. That is from 1st June 2012, these Sections have a clause that they shall not apply from a date to be notified by the Government. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_018.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 18/2012-ST, Dated: June 01, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Adieu to Sections 65, 65A, 66 and 66A </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Sections 65, 65A, 66 and 66A, sought to be deleted from the Statute by Section 143 of the Finance Act, are now to be history with effect from 1st July 2012. These are to be replaced by a new set of provisions with different Section Numbers. </font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_020.htm" target="_blank">Notification Nos. 20,</a> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_021.htm" target="_blank">21,</a> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_022.htm" target="_blank">22</a> and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_023.htm" target="_blank">23/2012-ST, Dated: June 05, 2012 </a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New Provisions in Service Tax effective from 1.7.2012 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CLAUSES</strong> (C), (F), (G) and (I) of Section 143 of the Finance Act 2012 inserted certain new provisions in the Service Tax Statute as follows: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>C. A new section 65B: Definitions which are now called Interpretations:</strong> actionable claim, advertisement, agriculture, agricultural extension, agricultural produce, Agricultural Produce Marketing Committee or Board, aircraft, airport, amusement facility, Appellate Tribunal, approved vocational education course, assessee, associated enterprise, authorised dealer of foreign exchange, betting or gambling, Board, business entity, Central Electricity Authority, Central Transmission Utility, courier agency, customs station, declared service, electricity transmission or distribution utility, entertainment event, goods, goods transport agency, India, information technology software, inland waterway, interest, local authority, metered cab, money, negative list, non-taxable territory, notification, person, port, prescribed, process amounting to manufacture or production of goods, renting, Reserve Bank of India, securities, service, Special Economic Zone, stage carriage, State Electricity Board, State Transmission Utility, support services, tax, taxable service, taxable territory, vessel, works contract are defined/interpreted. </font></p>
<p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F. New Sections inserted:
</font>
</strong></p>
</blockquote>
<ol>
<blockquote>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>a. 66B: Charge of Service Tax:</strong> at the rate of twelve per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.
</font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>b. 66C.: Determination of place of provision of service.
</strong></font>
</p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. 66D: Negative list of services.
</font>
</strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. 66E: Declared Services
</font>
</strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e. 66F: Principles of interpretation of specified descriptions of services or bundled services.</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (a.k.a Classification) </font></p>
</blockquote>
</blockquote>
</ol>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>G. Explanation (b) to section 67 omitted:</strong> This clause defined “money”. Now that "money" finds a definition in Section 65 B, maybe this is redundant here. </font>
</p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">H. New Section 68 Amended to provide for payment of a part of the Service Tax by the provider and a part by another person, like recipient. </font></strong></p>
</blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The above changes were to come into force from a date to be notified by the Government. Now the notified date is 01.07.2012. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_019.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 19/2012 -ST, Dated: June 05, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Certain Service Tax Notifications to be effective from 01.07.2012 </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> following Service Tax Notifications which are to come into force from the date on which Section 66B comes into effect, that is 1st July 2012. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_011.htm" target="_blank">Notification No. 11/2012 -S.T Dated 17.03.2012</a>:</strong> Valuation of Taxable Service: </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_012.htm" target="_blank">Notification No. 12/2012 -S.T Dated 17.03.2012</a>:</strong> Exemption to certain services like individual lawyers </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_013.htm" target="_blank">Notification No. 13/2012 -S.T Dated 17.03.2012</a>:</strong> Abatement </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_014.htm" target="_blank">Notification No. 14/2012-S.T Dated 17.03.2012</a>:</strong> Import of technology - exemption on R&D Cess paid. </font>
</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_015.htm" target="_blank">Notification No. 15/2012 -S.T Dated 17.03.2012</a>:</strong> Service Tax payable by provider or receiver or both; In the case of service provided by advocate, 100% of the tax is to be paid by recipient. For works contract, both the provider and receiver have to pay 50% each. </font></p>
</blockquote>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provisional Anti Dumping Duty on Digital Offset Printing Plates </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</strong> has imposed provisional anti dumping duty on Digital Offset Printing Plates originating in or exported from Peoples' Republic of China (China PR) and Japan. This is valid for a period of six months from 04.06.2012. The Board should mark somewhere on the wall that this notification expires on 03.12.2012 and if they want to extend it, they should do it before 03.12.2012. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=337&filename=notification/custom/2012/ctariffadd12_031.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 31/2012 -Cus (ADD), Dated: June 04, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Government releases Annual Supplement to Foreign Trade Policy </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> revised edition of the (Foreign Trade Policy) FTP incorporating the changes made up to 5th June, 2012 will become operational. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2012/dgft12not001.htm" target="_blank">Notification No 1/(RE-2012)/ 2009-2014, Dated: June 05, 2012</a></strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has notified the new Handbook of Procedures (Volume I) and the Appendices to the Handbook of Procedures (Volume I). This comes into force from 5th June, 2012. - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2012/dgft12pn001.htm" target="_blank">PUBLIC NOTICE NO. 1/(RE-2012)/ 2009-2014, Dated: June 05, 2012</a></strong> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Introduction of electronic Bank Realization Certificate (e-BRC) system</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AT</strong> Present, for claiming benefits under various schemes of Foreign Trade Policy, exporters have to obtain Bank Realisation Certificate (BRC) from banks in the existing prescribed formats and submit the same to the Directorate General of Foreign Trade (DGFT) manually.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With the introduction of electronic BRC system, banks will issue and transmit BRC's electronically to DGFT's server replacing the manual mode of obtaining and submitting BRC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The existing system of physical BRC along with the new system of ‘e-BRC' will however, run concurrently for a period of one month for ensuring smooth transition. Thereafter, issuance and transmission of ‘e-BRC' to DGFT in electronic form would be mandatory. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2012/dgft12pn002.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PUBLIC NOTICE NO. 2/(RE-2012)/ 2009-2014, Dated: June 05, 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Positive and Negative </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Service Tax Law is undergoing a major change from 1st July. In the next few weeks, the assessees, the consultants and the Board itself will have to do a lot of unlearning and get used to concepts like you pay 50% of the tax and your client will pay 50%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WE are starting today a new Column, Service Tax - NEW LAW +/- . Our Netizens will analyse and explain the new law and its consequences. This is our humble attempt to assist the asssessees and the Board in understanding and implementing the new concepts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You are welcome to send in your articles on any aspect of the new provisions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We start today with an article by our prolific writer Siva Kumar. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15158" target="_blank">Service Tax - NEW LAW +/-</a> </strong></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"> - Thursday'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">Customs</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty - Release of seized goods, which are prohibited, on payment of redemption fine is discretion in terms of Section 125 of Customs Act, 1962 - Allowed goods on RF and enhanced RF amount: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ABSOLUTE</strong> confiscation and redemption of seized goods - Prohibited Goods - The expression 'prohibited goods' is much broader and wider and is not confined merely to goods import and export of which is prohibited absolutely or subject to conditions by a notification issued under Section 11(1). In fact, the said aspect is no longer res integra , in view of the decisions of the Supreme Court in <em>Om Prakash Bhatia vs. Commissioner of Customs, Delhi =</em> <em><strong><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2003/2003-TIOL-06-SC-CUS.htm" target="_blank">(2003-TIOL-06-SC-CUS)</a></font></strong></em> </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 holding company creates a wholly-owned subsidiary and transfers hotel development rights for NIL consideration but when same is transferred back to holding company on rejection of name substitution application for a consideration, capital gains arising out of such transaction is exempt u/s 47(v) - NO: Delhi HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>‘S'</strong> was granted the rights to develop a hotel by the NDMC. ‘S' incorporated another company i.e. the assessee company and asked the NDMC to substitute its name with that of the assessee's name. During the pendency of such application, ‘S' transferred its right to the assessee for nil consideration. NDMC rejected the application of ‘S' and the assessee transferred the hotel development rights back to ‘S' for a consideration of Rs 21 crores. The assessee claimed capital gain on transfer of hotel development rights to ‘S' as exempt u/s 47(v) which applied when a wholly owned subsidiary transferred its capital assets for consideration to the holding company. AO rejected the plea of the assessee stating that as per the material unearthed during the search operation and post search investigation, the assessee was not a wholly owned subsidiary of ‘S' as claimed and observed that the share certificates were allotted in the name of the individual shareholders and did not show that the shareholders were nominees of ‘S'. </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">Onus on department to prove that amount received and shown in Balance Sheet is as "Consulting Engineering Firm" - since department has failed to prove same, Service Tax demand set aside: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is the manufacturer of PVC lamination film, rigid and flexible films during the year 1999-2001. The appellant has shown an amount of Rs.14,02,300/- and Rs.18,91,500/- in their balance sheet as received by them against the financial year 1999-2000 and 2000-2001 respectively on account of "Technical Consultancy". This entry was enough for the departmental officers to issue a show-cause notice to the appellant demanding service tax on the amount received under the category of ‘Consulting Engineer'. The appellant contested the demand notice by submitting that they are a manufacturing firm and not a Consulting Engineer but both the lower authorities turned down this plea and confirmed the demand along with penalties. </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></p>
<p><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">Have a Nice Day</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>
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