TIOL-DDT 1902 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font><font color="#663399" size="3">TIOL-DDT 1902 </font><br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>17.07.2012 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exemption
under Notification No 42/2012 ST - An unwanted condition? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> No <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_042.htm" target="_blank">42/2012 ST</a></strong> dated 29th June 2012 exempts service tax payable on the service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him.Unlike other exemption Notifications like <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2011/stnot11_052.htm" target="_blank">52/2011 ST</a></strong> dated 30.12.2011 (earlier version<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2009/stnot09_017.htm" target="_blank"> <strong>17/2009 ST</strong></a> dated 07.07.2009), this exemption does not operate through refund procedure, i.e., the person availing the exemption shall first pay the service tax and then claim refund of the same. Notification <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_042.htm" target="_blank">42/2012 ST</a></strong> ST dated 29th June 2012 has a peculiar condition. The assessee has to give a declaration in Form EXP 4 to the jurisdictional Assistant / Deputy Commissioner and Sl No 9(iii) of the Declaration reads as under: </font></p>
<blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) no CENVAT credit of service tax paid on the specified service used for export of said goods taken under the CENVAT Credit Rules, 2004; </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The service tax on the commission paid to the agents located outside India is payable by the receiver of the service (Exporter) under Section 68(2) of the Finance Act, 1994. When the service tax is exempted, the Exporter will not pay any service tax under reverse charge and the question of taking CENVAT Credit does not arise. Hence this condition appears to be totally irrelevant.This condition is understandable for notifications operating through refund route as there is a possibility of claiming refund as well as taking CENVAT Credit. For Notifications like <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_042.htm" target="_blank">42/2012 ST</a></strong>, this condition makes no sense. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, the exemption is only upto the extent of 10% of the FOB value of goods exported. If the commission paid is in excess of 10% of the FOB, the exporter has to pay service tax on the amount paid in excess of 10%. In such cases, there is no reason why the exporter should be denied the CENVAT Credit of service tax paid on the commission in excess of 10%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Interestingly, this condition appears to be a copy paste error continued for a long time. In Notification <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2012/stnot12_042.htm" target="_blank">42/2012 ST</a></strong> dated 29th June 2012, the declaration appears as<font color="#FF0000"> Sl No 9</font> after<font color="#FF0000"> Sl.No 9</font> ( Details of Bank account), The earlier Notification No <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2009/stnot09_018.htm" target="_blank">18/2009-S.T</a></strong>., Dated: July 7, 2009 also had a similar condition at Sl No 9(iii). Even in Notification <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2009/stnot09_018.htm" target="_blank">18/2009 ST</a></strong> also, <font color="#FF0000">Sl No 9</font> ( Declaration) appears after <font color="#FF0000">Sl No 9</font> ( Details of bank account). </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Imported Sugar attracts 10% duty Notification No 12/2012 Cus amended </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NOTIFICATION</strong> No <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_012.htm" target="_blank">12/2012</a></strong> Cus dated 17.03.2012 has three entries Sl No 76 (Raw Sugar), 77(Refined or White Sugar) and 78 (Raw Sugar imported by bulk importer) with effective rate of duty as Nil. These entries had a sunset clause and were valid only upto 30 th June 2012 and the exemption is not applicable on or after 1st July 2012 (Ref: Proviso (b) under the Table). So from 1st July 2012, the applicable rate of duty is 100% as per the Tariff. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It took a cool 12 days for the Board to realise this as now the Notification has been amended to make effective rate of duty as 10%. What about the sugar imported from 1st July 2012 to 12th July 2012? The conditions 3A, 3B, 3C remain unchanged and the proviso (b) has now been omitted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, Sl No 334 has been amended to include certain flat rolled products of other alloy steels falling under Customs Tariff headings 7225 40 19, 7225 50 or 7225 99 00 which will now attract duty at the rate of 7.5%. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2012/ctariff12_045.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No 45/2012-Cus., Dated: July 13, 2012 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Increased use of Regulatory Measures Creates New Challenges for WTO </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NON-TARIFF</strong> measures, such as regulatory standards for manufactured and agricultural goods, can have a significant impact on trade - possibly even more than tariffs - according to the latest edition of the WTO's flagship publication published on 16 July 2012. Director-General Pascal Lamy said “a clear trend has emerged in which NTMs are less about shielding producers from import competition and more about the attainment of a broad range of public policy objectives.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The World Trade Report 2012 examines why and how governments use non-tariff measures, including domestic regulation in services. Such measures can serve legitimate public policy goals, such as protecting the health of consumers, but they may also be used for protectionist purposes. The Report reveals how the expansion of global production chains and the growing importance of consumer concerns in richer countries affect the use of non-tariff measures. It also reports that such measures represent the main source of concerns for exporters. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The focus of the Report is on technical barriers to trade (TBT) regarding standards for manufactured goods, sanitary and phytosanitary (SPS) measures concerning food safety and animal/plant health, and domestic regulation in services. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Report identifies several challenges for international cooperation, and the WTO more specifically. First, the transparency of non-tariff measures needs to be improved. The newly created WTO database I-TIP (Integrated Trade Intelligence Portal) will help in improving transparency. Secondly, more effective criteria are needed to identify why a measure is used. Thirdly, the increase in global production chains calls for deeper integration and regulatory convergence. Lastly, capacity-building is a vital element in improving international cooperation. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT Cartoon </strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt18july.png" alt="DDT Cartoon " width="424" height="479" hspace="5" border="0" align="center"></font></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"> Wednesday's cases</font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><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">Race Course Licence </font> </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Race Course Licence Fee is a fee and not a tax: An institution of size of Race Course should not cloak their objection to an increase in rate of licence fee and present them as a challenge to constitutionality of charging section: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is manifest that the true test to determine the character of a levy, delineating ‘tax' from ‘fee' is the primary object of the levy and the essential purpose intended to be achieved. In the instant case, it is plain from the scheme of the Act that its sole aim is regulation, control and management of horse-racing. Such a regulation is necessary in public interest to control the act of betting and wagering as well as to promote the sport in the Indian context. To achieve this purpose, licences are issued subject to compliance with the conditions laid down therein, which inter alia include maintenance of accounts and furnishing of periodical returns; amount of stakes which may be allotted for different kinds of horses; the measures to be taken for the training of the persons to become jockeys, to encourage Indian bred horses and Indian jockeys; the inclusion and association of such persons as the government may nominate as stewards or members in the conduct and management of the horse-racing. <strong>Therefore, it is clear that the said levy is a ‘fee' and not ‘tax'. </strong></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 reassessment can be initiated based on materials obtained during assessment proceedings for a different assessment year and not materials already on record - NO: Bombay HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a public financial institution and carries on the business of providing finance in the form of long or medium term loans, equity participation, sponsoring and underwriting new issue of shares and securities, providing hire purchase, lending etc. Its income from business of providing long term finance i.e. loans in excess of five years is referred to as fund based income while income arising from its business other than providing of long term loans is referred to as non-fund based income. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manufacture s. 4A Valuation - Imported switchgear marketed by appellant after putting their labels - prima facie view is that putting of labels on the product would amount to manufacture, as labels not only have the name of appellant but also ir logo and Section 2(f)(iii) does not say that labels affixed in process of labelling or re-labelling must also have MRP mentioned on them Pre-deposit ordered of Rs.3 Crores: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are engaged in the manufacture of switchgear products and part and accessories thereof. Besides this, they also import switchgears, which were cleared by them on payment of duties of customs and thereafter were being sold by them after putting their labels indicating their name and logo. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Wednesday for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </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"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
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