TIOL-DDT 1982 · 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 1982</font><br>
14.11.2012 <br>
Wednesday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue wins another <em>FIAT</em> in SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WORKS</strong> Contract in service tax has always been a jinxed service. Initially when service tax was imposed on Commercial or Industrial Construction, Residential Construction or Erection Commissioning or Installation service, an abatement of 67% was provided to identify the service portion. Many assessees were paying service tax after availing the abatement of 67%. But with effect from 01.06.2007, for reasons unexplained till today, Works Contract was introduced as new separately defined service, with Rules notified for composition. Initially, the composite rate was 2% on the gross amount charged. With general rate of Service Tax at 12%, paying 2% worked cheaper for the assessees instead of paying at 3.96%, that too with the condition of non-availment of CENVAT Credit. So many assessees started paying 2% on the ongoing works contracts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC vide Circular 98/1/2008-ST, dated 4.1.2008 had clarified that such migration to composition scheme is not permissible for ongoing works contracts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Circular was challenged before the High Court of Andhra Pradesh, but without any success. Supreme Court has dismissed the appeal filed by the assessee by holding that the Circular is valid and it cannot be termed as discriminatory. <a></a></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16287" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see the Breaking news story. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CVD on imported Fertiliser inputs - Include Notification in EDI Please! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> terms of Sl. No 127 of Central Excise Notification No 12/2012 dated 17.03.2012, goods which are used in the manufacture of other fertilisers are exempted unconditionally. The relevant entry though a little confusingly worded is reproduced below: </font></p>
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<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">S. No. </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chapter </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description of excisable goods </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rate </font></strong></p></td>
<td valign="top"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Condition </font></strong></p></td>
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<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">127 </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">31 </font></p></td>
<td valign="top"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All goods, other than those which are clearly not to be used in the manufacture of other fertilisers, whether directly or through the stage of an intermediate product. </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">NIL </font></p></td>
<td valign="top"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- </font></p></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is the grievance of many importers that if this exemption has to be claimed for CVD on imported goods used for manufacture of Fertilisers, manual Bills are insisted since the EDI is not accepting Nil rate under Notification No 12/2012 CE dated 17.03.2012. Filing manual Bills requires permission from the Commissioner and many importers are facing hardship in filing manual Bills. It would of much help to the trade and industry if necessary changes are made in EDI. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Amendment to Guidance Note in Appendix 25B of HBP </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended Guidance Notes 1,4 and 5 to Appendix 25B of the HBP. Appendix 25B is the Format of Legal Undertaking. Note 1 before amendment read: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bank Guarantee /Legal Agreement is to be executed and signed by the importer/exporter (party) and the surety Bank (Guarantor) on a non-judicial stamp paper of the minimum value of Rs. 15/-, or any amount as may be prescribed by the concerned State Government under the Indian Stamp Act, 1899 or State Act, as the case may be. </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is now amended to read as: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The Bank Guarantee / Legal Agreement is to be executed by the surety Bank (Guarantor)/ importer/exporter (party) on a non-judicial stamp paper an amount as may be prescribed by the concerned State Government under the Indian Stamp Act, 1899 or State act, as the case may be." </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Also in Notes 4 and 5, in the Phrase B.G/LUT , B.G is deleted and only LUT remains. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The effect of this amendment is explained by DGFT as "Bank Guarantee (B.G.) would require execution by the surety Bank (Guarantor) and LUT by Exporter/Importer" </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2012/dgft12pn029.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No 29 (RE-2012)/2009-14 Dated 12.11.2012. </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Vodafone Judgement Erroneous? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MY</strong> Experience with the office of Additional Solicitor General of India is already a news-making Book, authored by Mr. Bishwajit Bhattacharyya, who served as ASG to Government of India. It is reported that a separate Chapter has been devoted to Vodafone case alone. According to the former ASG, the Vodafone verdict was wrong! This view has also support from former CJI, J.S. Verma. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to Mr Bhattacharyya, for the judiciary to say that there is no jurisdiction,is erroneous. If the FIPB (Foreign Investment Promotion Board) has territorial jurisdiction over the remittance/transaction, why not the Central Board of Direct Taxes? And how is the transaction a Foreign Direct Investment when not a dollar came to India?" </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is said that the Supreme Court orders are final not necessarily because they are RIGHT, but because there is no appeal against them! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Meanwhile, it is reported that Vodafone has decided against making a USD 2.2 billion (about Rs 12,000 crore) provision for its Indian tax liability. Any cue from PM's recent statement that a final decision will be taken in a few weeks on retro amendments? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Taking Staff to London by Minister in connection with medical treatment - Not Crime - SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mr.</strong> C K Jaffer Sharief was Railway Minister of India between 1991 and 1995. In 1998, the CBI filed an FIR against him alleging commission of the offence under Section 13(2) read with 13(1)(d) of the Prevention of Corruption Acton the basis that he had dishonestly made the Managing Directors of RITES (Rail India Technical & Economics Services Ltd.) and IRCON (Indian Railway Construction Co. Ltd.) to approve the journeys of an Additional PS to Railway Minister, two Stenographers in the railway cell and domestic help of the Minister to London in connection with the medical treatment of the Minister.It was alleged in the FIR that the two Public Sector Undertakings did not have any pending business in London at the relevant point of time and the journeys undertaken by the four persons were solely at the behest of the Minister who had compelled the services of the employees to be placed in the two undertakings in question. Pecuniary loss to the Public Sector Undertakings was, therefore,caused by the wrongful acts of the Minister. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 2005, the CBI filed a closure report as no sanction for prosecution was granted by the Competent Authority. But the trial court refused to close the case and decided to proceed with the case. The accused minister filed an application seeking discharge, which was refused by the court on 27.01.2010. The accused former minister filed a writ petition in the Delhi High Court, which dismissed the petition on 11.04.2012. The former minister then approached the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed that the four persons had performed certain tasks to assist the Minister in the discharge of his public duties,however insignificant such tasks may have been and no question of obtaining any pecuniary advantage by any corrupt or illegal means or by abuse of the position of the appellant as a public servant can arise. As a Minister, it was for him to decide on the number and identity of the officials and supporting staff who should accompany him to London if it was anticipated that he would be required to perform his official duties while in London. If in the process, the Rules or Norms applicable were violated or the decision taken shows an extravagant display of redundance it is the conduct and action of the appellant which may have been improper or contrary to departmental norms. But to say that the same was actuated by a dishonest intention to obtain an undue pecuniary advantage will not be correct. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court did not find any reason to allow the prosecution to continue. Such continuance, the Supreme Court viewed, would be an abuse of the process of court and therefore it will be the plain duty of the court to interdict the same. So, the Supreme Court, in a recent judgement, quashed the proceedings initiated in the year 1998. </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">Service Tax</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Prior to 01.06.2007 specific service mainly Works Contract was not available in statute and, therefore, applying principles of classification as enumerated in Section 65A of Finance Act, 1994, claim of appellant that prior to 01.06.2007 service itself was not liable to tax cannot be upheld - Benefit of notfn. 1/2006-ST is not available as appellant was availing CENVAT credit on inputs/input services - Pre-deposit ordered of Rs.4.5 Crores: CESTA T </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEMAND</strong> for differential Service Tax amounting to Rs.31,44,92,629/- has been confirmed by the CCE, Vapi on the ground that the appellants did not include the value of site material used in providing erection, installation & commissioning services/commercial or industrial construction services and works contract services. Further, Service Tax of Rs.13,58,74,780/- has been demanded on the ground that the appellant is not entitled to avail the benefit of Notification No.1/2006-ST </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">Income tax - Whether refund can be granted even without processing return of income either under Ss 143(1) or 143(3) - NO: Delhi HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>KIWANICLUB</strong> of New Delhi was registered as a charitable organisation u/s 12A. It was established for the benefit of providing artificial limbs and therapy and for ensuring economic empowerment of women. During the year under consideration, the petitioner received rents from its properties. At the time of remitting the rent, the tenants had deducted and deposited the tax with the banks. In the ROI filed, the petitioner claimed the refund of tax deducted at source. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption under Notfn. 32/97-Cus - there is no definition of term job work' in notification - it would, therefore, be inappropriate to import definition of ‘job work' given in excise notification No.119/75 - ground taken by Revenue to deny benefit requires one to add words to notification and which is clearly not permissible - substantial quest ion of law as framed in favour of respondent-assessee and against appellant-revenue: HC</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> import of the raw material supplied free of charge by M/s. Agriguard Limited, Ireland for the purposes of jobbing, the Dy. Commissioner of Customs denied the benefit of exemption on the ground that where substantial inputs/raw materials are procured locally by the importer in execution of the export order, the activity would not amount to jobbing under Notification No.32/97-Cus. dated 1/4/1997 </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>
<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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