TIOL-DDT 1950 · 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 1950</font><br>
26.09.2012<br>
Wednesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Establishment of Liaison Offices (LO) /Branch Offices (BO) / Project Offices (PO) in India by Foreign Entities - Reporting requirement </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> addition to the existing prescribed reports, all the new entities setting up LO/BO/PO shall also:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) submit a report containing information as per Annex within five working days of the LO/BO/PO becoming functional to the DGP of the state concerned in which LO/BO/PO has established its office; if there are more than one office of such a foreign entity, in such cases to each of the DGP concerned of the state where it has established office in India; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) a copy of the report as per Annex shall also be filed with the DGP concerned on annual basis along with a copy of the Annual Activity Certificate/Annual report required to be submitted by LO/BO/PO concerned, as the case may be. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii) A copy of report thus filed as above shall also be filed with AD by LO/BO/PO concerned. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The existing LO/BO/PO shall henceforth report the information as per Annex along with the copy of Annual Activity Certificate/Annual report to DGP of state concerned and also file a copy of the same with AD bank. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2012/rbi12cir035.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI A.P. (DIR Series) Circular No. 35 ; Dated September 25 2012 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Honest officers and conducive atmosphere </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> received this mail - </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The other day, TIOL in a news item <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15929"><strong>Revenue Secretary for enabling environment for honest officers to work without fear</strong> </a>mentioned the following - <em> "Revenue Secretary Sumit Bose while concurring with the need for use of technology for improved systems, reduced human interface and transparency also highlighted the need for creating an enabling environment where honest administrators can work without fear and are duly rewarded. He stressed that the bonafide mistakes should be distinguished from the malafide mistakes and genuine decision makers must be encouraged and protected, while guilty should be quickly punished." </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I may point out almost all the officers in the Central Excise department are honest to the core - they are honest in the service of the department and would never ever let go of any opportunity to prevent an assessee from ‘<strong>withdrawing any money</strong>' from the coffers of the exchequer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ours is a registered STPI unit having an annual turnover of approximately Rs. 150 Crores and we export 100% of our services. In view of the Government mantra that "<strong>taxes should not be exported</strong>", we are entitled for refund of the Input Service Tax borne by us and which tax credit is in the range of a few crores in a year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The "<strong>honest</strong>" officer in our jurisdiction while processing our refund claim issued a SCN alleging that there was no nexus between the services which were claimed as Input Service and the activity performed by us. We were also asked to ‘submit the following documents'/clarify so that the claim could be processed (read rejected) - </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Service Tax Registration Certificate (incidentally, we are registered as service provider with the same division) to ascertain the status of our unit whether we are registered or not? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Copy of STPI registration to ascertain whether we are an STPI or not; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Certificate to prove that we are a 100% EOU; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Establish tax paid nature of services; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Softex Forms; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Whether having Centralised Registration or not? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Copy of License for "private Bonded warehouse" issued by Customs; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Detailed write-up of the exported services needs to be provided to ascertain the nature of services exported; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Correlation of each input service with the exported services with detailed write up of the input and output services; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Copies of Tax payment challans and ST-3 of the service providers to prove that the tax has been paid to Government; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. FIRC cannot be accepted as a proof that the services have been exported; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Nexus of Renting of premises, manpower services, recruitment services, telephone, internet, IT services, renting of tangible goods (computers etc), testing, security, advertising, courier, AMC of office equipment's etc. with activity undertaken. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I agree that such "honest officers" do work fearlessly and the atmosphere is already conducive for them." </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Lowest Tax costs in India - KPMG Study </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>KPMG Study - <strong>Competitive Alternatives 2012 Special Report: Focus on Tax</strong> - reveals that the emerging markets offer more than just growth potential; they also offer some of the lowest tax costs. This study estimates that companies located in India pay about 50 percent less in tax costs than their peers in the United States. Indeed, of the five countries with the lowest total tax costs, four are emerging markets: India, China, Mexico and Russia. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The survey, which assesses the impact of all business taxes including corporate income taxes, capital taxes, sales taxes, property taxes and statutory labour costs, finds that a country's tax competitiveness is strongly related to how taxes are weighted and applied in different jurisdictions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Among 14 major countries surveyed, outside of the emerging markets only Canada (ranked second), the United Kingdom (ranked sixth) and the Netherlands (ranked seventh) offer lower total tax costs than the United States. Higher tax costs seem to prevail in parts of Europe (Germany, Italy and France) and Asia Pacific (Australia and Japan). But Brazil stands out as an enigma: the country is widely recognized as a top emerging market, yet its total tax costs are around 43 percent higher than those of the United States. </font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
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<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rank </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Country </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total Tax <br>
Index 2012 </font></strong></p></td>
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<td valign="top"><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">1 </font></strong></p></td>
<td valign="top"><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">India </font></strong></p></td>
<td valign="top"><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">49.7 </font></strong></p></td>
</tr>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Canada </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">59.1 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">China </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">59.7 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mexico </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">63.6 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Russia </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">71.7 </font></p></td>
</tr>
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<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">United Kingdom </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">73.3 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Netherlands </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">77.2 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font color="#FF6633"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8 </font></font></strong></p></td>
<td valign="top"><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">United States </font></strong></p></td>
<td valign="top"><p><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">100.0 </font></strong></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Germany </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">122.0 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Australia </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">125.1 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Brazil </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">142.6 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Japan </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">152.3 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Italy </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">152.9 </font></p></td>
</tr>
<tr>
<td valign="top"><p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14 </font></strong></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">France </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">179.7 </font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Total Tax Burden varies from city to city in the same country. Chennai with a Total Tax Index of 46.4 tops 55 major cities of the world, while Mumbai with 53 ranks 4th. Paris with 187 is the most taxed city. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is 1950 - Going 2000</font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> is 1950 today, inching its way to the magical 2000th edition.</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">Non-payment of refund - Interest and Cost imposed on Commissioner and other officers - Refund not given because communication to party returned with 'addressee left'. - Interest and Cost set aside: HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> grievance of the Department seems to be genuine, as later, if someone brings the original challan and claims this money, the Department would be in difficulty as there is no time limit fixed for refund. Accordingly, respondent/writ petitioner directed to produce the documents pertaining to the identity of the person with correct proof of address and also bank account number along with indemnity bond with an undertaking to the Department so that genuine apprehension expressed by the Department could be satisfied to a large extent. In that view of the matter, there cannot be award of 6% interest on the amount to be refunded so also the exemplary cost awarded in the Review Petition deserves to be set aside. </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, an industrial development arm of State Govt, advances loans to a JV, which is declared sick by BIFR, applying commercial and business exigency tests, it can be said that assessee satisfies twin conditions for claiming deduction of bad debt - YES: SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is State Industrial Development Corporation Limited, Trivandrum. It had advanced loans/credit facilities to M/s. Vanchinad Leathers Limited, a joint sector Company promoted by the appellant for processing hides and skins. M/s. Vanchinad Leathers Limited was set up sometime in the year 1974. Though M/s. Vanchinad Leathers Limited started commercial production in the year 1977, it closed in the year 1980 due to poor performance. It was re-opened in September, 1982, and again closed down in January, 1983. The Company had huge liabilities by end of December, 1986, running into Rs.362.80 lakhs as against its assets worth Rs.106.80 lakhs. In February, 1988, M/s. Vanchinad Leathers Limited moved a Reference Application for declaration that it was a sick Company under BIFR. On inquiry, a declaration was made by BIFR vide Order dated February 22, 1988, that M/s. Vanchinad Leathers Limited, was a sick Company. The High Court disallowed the deduction for bad debt. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Breakage of cenvated glass bottles during manufacture of aerated beverages - No cause for reversal of Cenvat Credit - since benefit given to assessee by Board's instruction dated 17.09.1975 has been withdrawn by Board Circular dated 09.07.2010 it cannot be held to be retrospective - Appeal allowed: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REVENUE</strong> while confirming the demand relied on the Boards circular dated 9.7.2010. In the present case, the period of demand is November 2009 to June 2010 i.e. prior to the issue of the circular. During the period in dispute, there was a Board circular dated 17.9.1975 which clarifies that the breakage of bottles in the manufacture of aerated beverages upto 0.5% is condonable and manufacturer is not liable to reverse the credit. This circular is withdrawn vide Circular dated 9.7.2010. The Circular dated 9.7.2010 is to be treated as prospective in nature and it cannot be held to be retrospective as the benefit given to the assessee has been withdrawn which cannot be held to be retrospective.... </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><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>
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