TIOL-DDT 1911 · 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 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 1911</font></strong><br />
<strong>30.07.2012<br />
Monday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs Circular on Changes in Foreign Trade Policy</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has issued a Circular explaining the changes made in Customs through Notifications and Circulars, consequent to the changes made in Foreign Trade Policy with effect from 05.06.2012.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification Nos. 29/2012-Central Excise to 33/2012-Central Excise all dated 9.7.2012 allow duty credit scrips issued under FPS, FMS, AIIS (under VKGUY), VKGUY and SHIS schemes to be used for domestic procurement, subject to the conditions laid down therein which have been provided keeping in view, <em>inter alia</em>, the transferability/limited transferability of these scrips. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A change made in the FTP issued on 5.6.12 related to declaration of intent on free shipping bills under para 3.11.8 of HBP, Vol. I. The position with respect to this para was earlier governed by DGFT Public Notice No. 53(RE-2010)/ 2009-14 dated 3.6.2011. In the FTP issued on 5.6.12, the requirement of declaration of intent was deleted. During post FTP discussions, the necessity of retention of this provision was informed to the Department of Commerce and it was agreed that the pre 5.6.12 position would be restored.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Certain notifications are yet to be issued, which include:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ the specification of Vishakapatnam Airport in the Customs exemption notifications for the purposes of import and export under the export promotion schemes (para 4.19 of HBP, Vol. I) for which modalities are being worked out by DG (Systems) and Chief Commissioner, Vishakapatnam.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ making operational the scheme of Post Export EPCG duty credit scrip (para 5.11 of FTP) for which modalities are being worked out in consultation with DGFT;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ changes made in para 5.2A of FTP notified on 5.6.12 w.r.t. catalyst for subsequent charge which are being reviewed by the DGFT.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2012/cuscir12_020.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Circular No. 20/2012 - Customs, Dated: July 27, 2012</strong></font></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Courier Imports and Exports (Electronic Declaration and Processing) Regulations - Procedure for revoking registration</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</STRONG> has notified the Procedure for revoking registration of authorized courier under the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010, by inserting a new Regulation 13A.</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2012/cnt12_065.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 65/2012 - Customs, (N T), Dated: July 26, 2012</font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Discharged CESTAT Member Gets Back His Job</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MEMBER</strong> (Judicial) of the CESTAT PK Das was discharged by an order dated 20.11.2009.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He was a practicing advocate in the Calcutta High Court as well as before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) for about 20 years mainly dealing with the customs, excise and service tax matters. On 22.04.2006, he appeared for an interview before the Selection Committee for the post of Member (Judicial) in CESTAT. He was selected. On 22.11.2006, he assumed charge as Member (Judicial) in CESTAT. On 21.11.2007, he completed the mandatory period of probation of one year under Rule 8(1) of the CESTAT Members (Recruitment and Conditions of Service) Rules 1987. No order extending the period of probation was issued. He served under three Presidents, namely, Justice Abichandani, Justice S.N. Jha and Justice Khandeparkar.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to him, he never received any adverse comment from any of them during his tenure of service as a Member (Judicial). He was expecting that his probation period would come to an end and he would be confirmed in the post of Member (Judicial). But, he received an order dated 19.11.2009 extending his probation period first upto 21.11.2008 and then further upto 21.11.2009. Because of this, the petitioner came under great stress and tension, as a result of which, he tendered his resignation from the post of Member (Judicial) on 20.11.2009. On that very day, the order dated 20.11.2009 was issued, whereby the Hon'ble Member was discharged from service.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before that, it seems there was an incident in his court and there was a complaint about alleged misbehaviour of the Departmental Representatives with the members of the Bar. The President in a note observed, "whenever any act of misbehaviour on the part of the parties or their representatives takes place in the Court, it is essentially for the Presiding officer to administer proper control and to try to defuse the tension, if any, caused on that count and not to retire immediately to the chamber. Abstaining from and abandoning the Court in such a situation and leaving it open and free for all could result in encouraging indiscipline in the Court".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Discharged Member approached the CAT against his discharge, but the CAT dismissed his application. Against the CAT Order, he filed a writ in the Delhi High Court.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court on Friday gave its judgement setting aside the order of discharge/termination.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Rule 9(2) of the CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL MEMBERS (RECRUITMENT AND CONDITIONS OF SERVICE) RULES, 1987, <font color="#FF0000">"(2) In case of a person appointed as a judicial member directly from the Bar, unless he is confirmed, the appointment may be terminated by the Central Government at any time without assigning any reason after giving him one month's notice of such termination and in case such judicial member wishes to resign, he shall be required to give one month's notice to the Central Government."</font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, a Notice is mandatory before a Member's service can be terminated and Mr. Das was discharged without a notice. How did the Government forget such elementary requirement before discharging him?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is exactly on this ground that the Delhi High Court set aside the discharge.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now can Mr. Das just report to duty in CESTAT or should the Government give another order?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you the Delhi High Court Order today. Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15543" target="_blank">Breaking News</a></strong>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9985" target="_blank">DDT 1243 - 24.11.2009 - CESTAT Member PK Das Discharged</a></strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10026" target="_blank">DDT 1249 - 02.12.2009 - Can a CESTAT Member who has not completed probation be sent home just like that?</a></font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">12% Service Tax for Payment received After 1.4.2012 – High Court Stays</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Circular No. 158/9/2012 – ST dated 08.05.2012, "in case of such 8 specified services provided by individuals or proprietary firms or partnership firms and in case of services wherein tax is required to be paid on reverse charge by the service receiver, if the payment is received or made, as the case maybe, on or after 1st April 2012, the service tax needs to be paid @12%.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The invoices issued before 1st April 2012 may reflect the previous rate of tax (10% and cess). In case of need, supplementary invoices may be issued to reflect the new rate of tax (12% and cess) and recover the differential amount".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This has been challenged in the Delhi High Court by the Delhi Chartered Accountants Society and we are informed by an advocate that the High Court has stayed (the coercive recovery of) the differential demand of service tax of 2% on services provided and invoices issued prior to 01.04.2012 by all the 8 categories of professionals including Chartered Accountants.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see</font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14948" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT 1853 – 09.05.2012</strong></font></a></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14947" target="_blank">POT Bomb for the Dwarfs!</a> </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Will CBEC do anything for Leslie Claudius?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>OUR</strong> story on Friday regarding Customs Olympian Leslie Claudius evoked huge response from concerned Netizens. But will the CBEC react? Can't they provide a decent house for Claudius. Four Olympic Medals, a Padmasri, a retired Assistant Collector of Customs – what more credentials you require to sanction about fifty lakhs of rupees to this hero of the Customs Department? In fact, his picture could have been there on the Postage Stamp they released last week.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the day of his retirement on 31 October 2011, the then Chairman of CBEC, Mr. Dutt Majumder wrote a touching letter to Leslie Claudius.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Majumder wrote,</font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"You joined Calcutta Customs in 1949 when I was not even born. I joined the Customs & Central Excise Department in 1974 and during my probation days in Calcutta Custom House when I met you as a young officer, I found you as a perfect officer and gentleman. As a school child, I used to preserve your photographs, particularly those in action, in my scrapbook. You will, therefore, appreciate how excited I was to meet you in flesh and blood in Calcutta Custom House.</font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a hockey player you have brought glory and fame to not only the Calcutta Customs but also to the country which you represented at four Olympics out of which you brought Gold Medal for India on three occasions and Silver Medal on the fourth occasion. I cannot remember any other living legend of Hockey as you have been. Above all, you have been an excellent human being and a continuous source of inspiration for young officers and sportsmen of the Department".</font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Chairman Mr. Goel is to retire tomorrow. It will be a great achievement for him if he can honour Claudius with a handsome gift from the Customs Welfare Fund or will the incoming Chairperson get that honour?</font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax – Directors to be Taxed?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has issued a draft circular clarifying several issues in the new Service Tax Regime.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Directors</strong>: Services of a director on the board of a company have now become taxable. A director may be appointed either in an individual capacity or to represent an entity (including government) who has either invested in the company or is otherwise authorized to nominate a director. When a director receives payment in his personal capacity, the same is liable to be taxed in the hands of the director. However, where the fee is charged by the entity appointing the director and is paid to such entity, the services shall be deemed to be supplied by such an entity and not by the individual director. Thus in the case of Govt. nominees, the services shall be deemed to be provided by the Govt. and liable to be taxed under the exclusion sub-clause (iv) of clause (a) of section 66D of the Finance Act, 1994 i.e. support services by Government to business. Such services are liable to be taxed on reverse charge basis.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Manpower Supply</strong>: There could be certain contracts in which such manpower is made available to execute another independent contract by the service provider. For example, a person may agree to carry out construction or a manufacture for another in which certain manpower may be engaged. As long as such manpower is not placed operationally under the superintendence or control of the recipient, it shall not be a case of manpower supply, though it will continue to be judged independently whether it comprises any other taxable service.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Supplies made by the employer to employees</strong>: Where the employee pays for such services or where the amount is deducted from the salary, there does not seem to be any doubt. However, in certain situations, such services may be provided against a portion of the salary foregone by the employee. Such activities will also be considered as having been made for a consideration and thus liable to tax. CENVAT credit for inputs and input services used to provide such services will be eligible under extant rules. The said goods or services would now not be construed to be for personal use or consumption of an employee per se and rather shall be a constituent to the taxable service provided to an employee. The status of the employee would be as a service recipient rather than as a mere employee when consuming such output service. The valuation of the service so provided by the employer to the employee shall be determined as per the extant rules in this regard.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has invited suggestions, comments and views on the draft circular which may be sent to <a href="mailto:shobhit.jain@nic.in" target="_blank">shobhit.jain@nic.in</a> on or before 24th August 2012.</font></p>
<p align="justify"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/draft_circular01_2012.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Draft Circular in F.No 354/127/2012-TRU, Dated: July 27, 2012</font></a></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Jurispruden</font></strong><font color="#FF6600" size="4" face="Verdana, Arial, Helvetica, sans-serif"><strong>tiol</strong></font><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> – Tuesday's cases</font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" width="100" height="84" hspace="5" align="left" />Customs</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption from Customs duty - SFIS scrip was valid only upto 30th April, 2011 – as the goods had landed at ICD, Faridabad only on 26th May, 2011 action of the department directing payment of full duty and refusal to give the benefit cannot be characterized as unreasonable: High Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> petitioner availed of the facility of the customs duty exemption in terms of the SFIS (Serve From India Scheme) and had entered into contract for purchase of certain equipment from Italy on 18.4.2011. The scrip had been issued to the petitioner on 15.04.2009 and was valid in terms of the scheme till 30.04.2011. The goods were shipped on 18.04.2011 from Antwerp and landed at the Inland Container Depot, Faridabad on 26.05.2011. By this time, the validity of the scrip had expired. The petitioner was, therefore, required to pay duty. The petitioner's request for revalidation of the scrip under the SFIS was turned down by the Policy Relaxation Committee (PRC) on 29.08.2011.</font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2">Income Tax</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income tax - Whether when unabsorbed depreciation of amalgmating company cannot be carried forward u/s 32(2), Explanation 3 to section 43(6) can also not be applied in such a case - YES: Madras HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> THE</strong> issues before the Bench are - Whether when unabsorbed depreciation of an amalgmating company cannot be carried forward u/s 32(2), can explaination 3 to section 43(6) be applied in such a case; Whether in such a case, the appropriate section is section 43(6) r/w explaination 2(b) which allows unabsorbed depreciation to be carried forward into the books of the amalgamated company; Whether "depreciation actually allowed" in terms of explaination 2(b) of section 43(6) includes "unabsorbed depreciation" of the amalgamating company; Whether the option of carrying forward of "unabsorbed depreciation" of the amalgmating company is also available within the scope of section 72A; Whether amalgamated company can be allowed the benefit of investment allowance, when no such allowance was created by the amalgamating company and Whether expenses incurred in raising funds for expansion projects can be amortised as preliminary expenses, when such proceeds are invested on an interim basis, pending government approval for the projects. </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">CESTAT granting unconditional waiver of pre-deposit of Interest and Penalty on the submission made by the appellant that they had paid the entire amount of Service Tax demand of Rs.18 Crores – on verification, it was found that only Rs.6 Crores had been paid – Order recalled and appellant directed to pay balance amount of ST along with 25% penalty – Contempt proceedings initiated for misleading the Bench: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CESTAT</strong> had granted an unconditional waiver of pre-deposit of Interest and Penalty subject to the verification of the submission made by the applicant that the entire amount of Service Tax of Rs.18,08,18,228/- had been paid. In the verification report submitted by the Revenue representative it was mentioned that out of the total demand of Rs.18,08,18,228/- the appellant had deposited only Rs.6,24,21,219/-.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"> See our columns Tuesday 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 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>
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