TIOL-DDT 1878 · 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 align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><font color="#663399"><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 color="#663399" size="3">TIOL-DDT 1878 </font><br> 13.06.2012 <br> Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs - Rail Cum Road Vehicle - Classification - Board Clarification </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> seems the field formations of Customs are classifying rail cum road vehicles both in chapter 86 which covers, "<em>Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds"</em>, and in chapter 87 which covers, "<em>Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has examined the issue <em>. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The General Rules of Interpretation (GRI), Rule 1 inter alia states that,<em> "…for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes…".</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Note 4(a) to Section XVII states that, "<em>For the purposes of this Section, vehicles specially constructed to travel on both road and rail are classified under the appropriate heading of Chapter 87…".</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is of the considered view that the correct classification in the harmonised Customs Tariff in case of Rail cum Road Vehicles should be in the appropriate heading in Chapter 87 by application of GRI 1 (Note 4 (a) to Section XVII).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, Board wants all pending provisional assessment cases of Rail Cum Road Vehicle imports to be finalised based on the above instructions. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2012/cuscir12_014.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 14/2012 - Cus., Dated: June 11, 2012</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Evasion of Service Tax by CAG - No Notice - Yet… </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15145" target="_blank">DDT 1871-04.06.2012</a></strong>, we had reported about the Nagpur Central Excise Chief Commissioner's letter to all Chief Commissioners about the proposed Show Cause Notice to the CAG for evading Service Tax. DDT had suggestively asked whether the Chief Commissioners' conference would discuss this issue. Obviously it did. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT has authentic information that at least one Chief Commissioner had already written to his Commissioners that the matter is being examined by the Board and requested them not to take any action in the matter till Board issues further clarifications. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, for the present, the CAG is safe - he need not have disturbed sleep worrying about summons from the Service Tax department. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe the CAG should himself <em>suo moto </em>examine this issue to determine whether he is liable to pay Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many a time, the CAG writes in his reports - <em>"the department's reply is not acceptable/tenable". </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the Service Tax Department can say, the CAG's reply is not tenable! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ten Minutes of Fame </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>senior IRS (C&CE) officer wrote to us,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"My friends in the IAAS tell me that the recent love of incumbent CAG for the media, which has contributed to the larger than life image of present CAG (and will ensure him a post retirement job OR a place in Team Anna OR in the Team of Justice Verma OR in the Team of Lyngdoh) has nothing to do with building up the institution of CAG vis-a-vis its potential. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Constitution provides a unique opportunity to CAG to see how Govt. policies are working in the ground by giving its Officers access to various departments of Govt. To illustrate in our context, CAG can do a study on the safeguards provided (monitoring mechanisms and means to recover revenue lost - by B.G., LUT, etc. taken) in schemes like EPCG to recover revenue, by doing a sample study by collecting data from DGFT and Custom Houses for a particular period or a particular industry and see how effectively the objective of this Export Promotion Scheme is being achieved. THERE IS NO EFFORT IN THIS DIRECTION EVEN IN THESE DAYS OF A CAPABLE CAG. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>So, when a Central Excise CC/Commissioner gets publicity for seeking Service Tax from CAG, it is the same syndrome of "seeking 10 minutes of fame"." </em></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Excise Duty Exemption Certificate - Formats Changed </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Ministry of New & Renewable Energy has made additions/amendments in the existing formats of Application, Annexures, check-lists and drafts of the Excise Duty Exemption Certificate (EDEC) and Concessional Customs Duty Certificate (CCDC). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This has been done in view of the issuance of new Customs Notifications No.<strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_021.htm" target="_blank">21/2012</a></strong>-Customs, dated 17.03.2012 which was amended vide subsequent Notification No.<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_032.htm" target="_blank"><strong>32/2012</strong></a>-Customs, dated 8th May 2012 and also Excise Notification No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2012/etariff12_26.htm" target="_blank">26/2012</a></strong>-Central Excise, dated 8' "May 2012 by the Ministry of Finance, Department of Revenue, (CBEC).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These certificates shall continue to be issued by Dr. A. Raza, Scientist 'F' for Solar PV power projects and by Dr. AK Singhal, Scientist ‘F' for solar thermal power projects, who have been authorized to do so as per the guidelines of the Ministry they are above the rank and pay of Deputy Secretary in the Central Govt. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/exemption_certificate.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ministry of New & Renewable Energy OM No. 22/9/2009-NSM (ST) Dated, June 08 2012 </strong></font></a></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 align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font 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"></font>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>There is no provision for imposing personal penalty on the Director under the Finance Act, 1994 - Appeal allowed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> penalty under section 77(c) of the Finance Act was imposed by the Commissioner of Central Excise, Customs & Service Tax, Goa on the appellant, who is a Director of <em>Top Security Ltd. , for delaying the payment of service tax by Top Security Ltd. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant, Shri Diwan Rahul Nanda is before the CESTAT with an appeal and a Stay application. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal ordered: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"As there is no provision for imposing personal penalty on the Director, under the Finance Act, 1994, therefore, the impugned order is not sustainable. Accordingly, after waiving the requirement of pre-deposit, we allow the appeal by setting aside the impugned order." </em></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income tax - Whether when assessee earns exempt share income, disallowance u/s 14A is warranted only with reference to expenditure incurred and not any other allowance like depreciation, admissible under other provisions - YES: ITAT Special Bench</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> THE </strong>issues before the Special Bench are - Whether when a partnership firm is a transparent vehicle under the Partnership Act, it is not so under the Income Tax Act - Whether, for the purpose of Income Tax Act, a firm can be equated with a limited company - Whether the relationship between a firm and its partners can be said to be that of an employer and employees - Whether when the firm pays salary and interest income to partners, the same is allowed as expenditure in the hand of the firm but taxed as business income in the hands of partners so as to avoid double taxation - Whether since share income is excluded from the total income of the partners, any expenditure incurred has to be diallowed as per Sec 14A - Whether provisions of Sec 14A only refer to disallowance of expenditure - Whether such provisions also apply to statutory allowance admissible u/s 32. And the verdict goes in favour of the assessee.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No employer, worth his name, will put such terms and conditions in respect of his employees holding the employee responsible for all the wrong doings - it is evident that the appellant CHA was receiving commission and not the other way around - CHA has violated the provisions of CHALR, 2004 by sub-letting his licence and also undertaking various transactions in violation of the CHALR provisions stands clearly established - revocation of licence cannot be faulted - Appeal dismissed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>Directorate of Revenue Intelligence, Mumbai investigated a case relating to undervaluation and mis-declaration of a consignment of shoes illegally imported. It was found that the CHA had aided and abetted the act of smuggling of the goods. Accordingly, an Inquiry was conducted against the CHA under the provisions of CHALR,2004 and certain charges were made:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under Regulation 12 of the CHALR, 2004 - CHA licence cannot be sold or otherwise transferred. In the case under consideration, they allowed another person to use the licence for a monetary consideration which is in violation of Regulation 12 of the CHALR, 2004. It was further imputed the CHA failed to obtain authorization from the importer and without obtaining valid authorization they violated the Regulation 13(a) of the CHALR, 2004. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Tomorrow for the judgements </font></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">Have a Nice Day </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"><strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p> </body> </html>