TIOL-DDT 2095 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><font color="#663399"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></strong></strong></strong></strong><font color="#663399" size="3">TIOL-DDT 2095 </font><br>
01.05.2013 <br>
Wednesday</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Finance Bill - Amendments - How FM explained it - His Speech writers need to be more careful</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOVING</STRONG> the official amendments in the Lok Sabha, Finance Minister Chidambaram said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Wealth Tax on Agricultural Land</font><font color="#663399">:</font></strong> Following certain judgments of the Punjab and Haryana High Court and the Supreme Court, which were rejected at the admission stage, a misapprehension may have arisen in some quarters that Wealth Tax is leviable on agricultural land falling within a municipal area or within the notified peripheral area. I worked hard late last night. I spoke to the Prime Minister upon his return, got it signed by the President and we have moved the amendment. Therefore, in order to make matters so clear and place it beyond doubt, I have introduced an official amendment which makes it abundantly clear that urban land does not include agricultural land which is recorded as such in the Government records and which is used for agriculture. The matter should come to an end rather than trade charges. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">TDS on Transfer of Property</font></strong><font color="#663399">:</font> There is a proposal to have a tax deducted at source at one per cent on transfer of immovable property other than agricultural land; that remains. However, in order to be helpful to the person who is required to deduct the tax, we are dispensing with the requirement of obtaining a TAN. He need not have a TAN but he must deduct the tax.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">President of ITAT:</font></strong> We are also providing that the Chairman of the Central Excise and Customs Appellate Tribunal, CESTAT, can be either a High Court Judge or a Senior Vice President or one of the Vice Presidents. [<font color="#FF0000">The amendment was in relation to ITAT and not CESTAT. Somebody wrote CESTAT in the FM's speech and he read it out, with a little doubt though! The CESTAT already has a High Court Judge President</font>] </font></p>
<p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of cashew kernels:</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> we are taking us as for ourselves a tariff cushion to raise the import duty from 30 per cent to 70 per cent so that if necessary we can impose a higher duty on import of cashew kernels in order to protect domestic industry. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Service Tax-retrospective exemption to Railways:</font></strong> At the request of Railways, although the service tax became applicable to Railways a little earlier, they did not collect the service tax for the period prior to 1st of October 2012, therefore, for the period from 1st of July 2012 to 1st of October 2012 in order to avoid an unusual burden on the Railway and the persons to whom they provide or got services, I am exempting the period 1-7-2012 to 1-10-2012 from the service tax for the Railways. [<font color="#FF0000">The amendment does not mention 1-7.2012 at all and do they need to exempt something that was not taxable at all? <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15352"><strong>DDT 1892-03.0 7.2012</strong> </a> had mentioned that there was no exemption for a day ie 1-7-2012 and we had asked whether the Government would issue a corrigendum, amendment or a Section 11C Notification? And they got Parliament to include it in the Finance Act</font>] </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Finance Bill, 2013 - The Amendments cometh </strong></font></p>
<P ALIGN="JUSTIFY"><FONT COLOR="#FF0000" SIZE="2" FACE="VERDANA, ARIAL, HELVETICA, SANS-SERIF"><STRONG>Direct Taxes</STRONG></FONT></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> section 252 of the Income Tax Act, for sub-section (3), the following sub-section shall be substituted with effect from the 1st day of June, 2013, namely:- </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"(3) The Central Government shall appoint-</em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) a <em>person who is a sitting or retired Judge of a High Court and who has completed not less than seven years of service as a Judge in a High Court; or </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the Senior Vice-President or one of the Vice-Presidents of the Appellate Tribunal, to be the President thereof."</font></em></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The existing sub-section (3) is the one as substituted by the Finance Act, 2002 w.e.f 01.04.2002 and reads-</font></em></p>
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<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"(3) The Central Government shall appoint the Senior Vice-President or one of the Vice-Presidents of the Appellate Tribunal to be the President thereof."</font></em></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the sub-section (3) as it existed prior to the one in vogue read-</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"(3) The Central Government shall ordinarily appoint a judicial member of the Appellate Tribunal to be the President thereof." </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems there was a lot of experimentation undertaken earlier. And now the Central Government has decided to take a leaf from the Customs Act, 1962 in this matter. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 129 (3) of the Customs Act, 1962 reads-</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"(3)The Central Government shall appoint - </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(a) a person who is or has been a Judge of a High Court; or </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(b) one of the members of the Appellate Tribunal, </em><em>to be the President thereof."</em></font></p>
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<p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">This provision made its appearance by the Finance Act, 1996. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A comparison between the proposed amendment in the Income Tax Act indicates that there remains a subtle difference in the appointment to the post of the President of the CESTAT and the ITAT.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After all, one cannot overlook the fact that the appointment of the Members too are on different parameters for the CESTAT & the ITAT. For more on this read <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17596" target="_blank">DDT 2092</a></strong>. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other proposed amendments on the Direct Taxes side are - </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"># No PAN needed for payment of interest on infra bonds made to non-residents </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"># TDS on royalty & fees for technical services to attract 25% rate </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"># Sec 2 of Wealth Tax Act amended relating to definition of 'urban land' </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"># TDS on transfer of property above Rs 50 lakh or more: TAN requirement dropped </font></p>
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<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Indirect Taxes</strong></font><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We had in<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15994" target="_blank"> <strong>DDT 1953</strong></a> mentioned the following - </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>'Swift' response from Indian Railways - Revenue service to take a cue from Railway Service </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON </strong> 27th September 2012, Ministry of Railways issued a press note that Service Tax will be applicable on AC Classes, Executive Class and First Class passenger fares from 1st October 2012. The Ministry Press note also said that for the <u>tickets already issued prior to 01.10.2012 [<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#00FFFF" span="span"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u>for journeys to be performed on or after 01.10.2012</u></font></font></font></font></font>], the service tax will be collected by the TTEs/Booking offices</u>. Apparently, one cannot find fault with the Railways for not understanding the Point of Taxation Rules of Service Tax, as they might be under the impression that the fare revision will be applicable even for the tickets issued prior to 1st October 2012, since that is how normally railways will implement the fare revisions. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, they were wrong. The service tax on transportation of passengers/goods by Railways is made applicable from 1st October 2012 by way of not extending the exemption under Notification No 43/2012-ST which expired on 30th September 2012. In such situations, Rule 4(b)(ii) of the Point of Taxation Rules will be applicable and it reads: </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>4. Determination of point of taxation in case of change of rate of tax. </strong>- Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a change in effective rate of tax of tax in respect of a service, shall be determined in the following manner, namely: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(a) in case a taxable service has been provided before the change in effective rate of tax,- </em></font><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) xxxx </font></em><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) xxxx </font></em><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) xxxx </font></em><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) in case a taxable service has been provided after the change in effective rate of tax,- </font></em><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) xxxx </font></em><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) where the invoice has been issued and the payment for the invoice received before the change in effective rate of tax, <font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#00FFFF" span="span"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier; or </font></em> </em></font></font></font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) xxxxx </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, in case of tickets issued prior to 1st October 2012 [<font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">for journeys to be performed on or after 01.10.2012</font></font></font>], since the service is provided after the change in effective rate and the payment is received and invoice (ticket) is issued before the change in effective rate, the point of taxation will be date of receipt of payment or date of issuance of invoice whichever is earlier. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Hence, no service tax will be applicable to the tickets issued before 1 st October 2012. </strong></font></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On cancellation of tickets, the Press Note said that the passengers have to file the refund claims with the Service Tax department. But, as per sub-rule (3) of Rule 6 of the Service Tax Rules, when the service is not provided and the amount is refunded to the person from whom it was received, the service provider can take the credit of such excess service tax paid. So, there was no need for Railways to direct the passengers to claim refund from the Service Tax department as they can very well refund the entire fare to the passenger and take credit of the service tax already paid on such cancellations. Further, considering the fact that the service tax on each ticket will be too small, it will be difficult for each passenger to file a refund claim and follow it up. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15976"><strong>DDT 1952 </strong></a> had also highlighted this problem. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Ministry of Railways has responded to the above issues. With a speed matching that of a Shatabdi Express! Within 24 hours of the first Press Note, another Press Note was issued on 28th September 2012 modifying the first Press Note as under: </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The Ministry of Railways has made partial modification in levy of Service Tax on the fare of passengers travelling in AC Classes/First Class from 1st October 2012. As per the corrigendum issued by Ministry of Railways today i.e. 28.9.2012, there are following changes: </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(i) Service Tax amounting to 3.708% on the total fare of passenger services in (a) AC First Class, (b) Executive Class, (c) AC-2 tier Class, (d) AC-3 tier class, (e) AC Chair Car class, (f) AC Economy class and (g) First Class is leviable from the 1st day of October 2012. It has been clarified that the Service Tax would be collected on the tickets issued/bookings made on or after 01.10.2012. </em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>Service Tax is not leviable on tickets issued prior to 01.10.2012 and hence will not be collected on board the trains. </strong></em></font></strong> </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(ii) In case of cancellation of tickets booked by the passengers on or after 01.10.2012, the applicable amount including refundable <strong>Service Tax amount will be refunded by Railways </strong> as per Railway refund rules and Finance Ministry guidelines."</em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Government does not want the Railways to refund the Service Tax amount in case it has been collected in the first place in respect of tickets already issued prior to 01.10.2012 <font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#00FFFF" span="span">for journeys to be performed on or after 01.10.2012. </font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Finance Bill, 2013 sees the following amendments-</font></p>
<blockquote>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Special provision for taxable services provided by Indian Railways. </em></font><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>99. (1) Notwithstanding anything contained in section 66, as it stood prior to the 1 st day of July, 2012, or in section 66B, no service tax shall be levied or collected in respect of taxable services provided by the Indian Railways during the period prior to the 1 st day of October, 2012. </em></font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(2) No refund shall be made of service tax paid in respect of taxable services provided by the Indian Railways during the said period prior to the 1 st day of October, 2012. </em></font></p>
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<p align="justify"><FONT COLOR="#FF0000" SIZE="2" FACE="VERDANA, ARIAL, HELVETICA, SANS-SERIF"><STRONG>Customs</STRONG></FONT><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the Customs side, vide an amendment to the Finance Bill, 2013 viz. the Third Schedule, the Tariff Rate of Basic Customs duty in respect of Cashew Kernel, broken/whole [Tariff Items 0801 3210, 0801 3220 & 0801 3290] has been raised to 70%.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Incidentally, the provisions of the much touted VCES, 2013 scheme remain untouched. </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - Tariff Values changed </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central government has changed the Tariff values. Whereas the tariff values of various Palmolein, Palm Oils and Brass scrap have been reduced, those of Crude Soyabean Oil, Gold and Silver have been raised. Tariff Value of Poppy seeds stay put. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> has learnt that if the US economy continues its good run, you can expect a further decline in gold prices in 2013.</font><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_051.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification 51/2013-Cus (NT) dated 30th April, 2013</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 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"></font>Service Tax </strong></font><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Refund-Entire exercise of Revenue is a non-starter inasmuch as it is settled law that classification of product or services cannot be done by authorities at recipient's end-Appeal allowed: CESTAT </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the case in hand, the classification of Technical Testing & Analysis and Customs House Agent's services are being sought to be classified under various other services and refund is sought to be rejected. This is not in consonance with the law which has been laid down by various judicial pronouncements.</font><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax</font></strong><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether assessee can be denied exemption merely because he himself did not cultivate agricultural land - NO: HC</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE </strong>an individual had filed ROI for the AY 2008-09. During assessment, AO noticed that the assessee was owner of 1/4th of a property acquired by the State, for which under the order of the Court, an additional compensation of Rs.4,47,98,432/- was paid and therefore, was entitled to 1/4th additional compensation of Rs.1,11,99,608/. The assessee contended that in view of provisions of section 10(37) read with section 45(5), no capital gain tax was payable. The AO, however, rejected such contention on the ground that the land in question was situated within the municipal limits of Gandhinagar, which had population of more than 10000. Section 10(37) therefore, does not apply to the assessee. Issues before the Bench are - Whether assessee can be denied exemption merely because he himself did not cultivate the agricultural land; Whether the concept of personal cultivation also recognizes, cultivation of a land through hired labourer or through member of one's family and Whether the exemption u/s 10(37) can be denied merely on the basis that the assessee was not residing close to the land or was also pursuing some other business and thus the land was not used for agricultural purposes by the assessee. And the verdict goes in favour of the assessee. </font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>COFEPOSA </strong></font><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Preventive detention is an extreme step which is required and may be justified, but when detention order does not meet prescribed parameters and fails to comply with procedural requirements, order stands vitiated and has to be struck down: HC </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> a detenu is in police or judicial custody and there is no imminent possibility of his release, the rule is that the power of preventive detention should not be exercised. However, when there is imminent possibility that the person in custody may be released, power of preventive detention can be exercised. Preventive Detention is permissible under Article 22(3)(b) of the Constitution of India but the same has to ordered/directed keeping in view that right to life and liberty are enshrined in Article 21 of the Constitution of India. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our Columns Thursday for the judgements </font></strong></font><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more</font><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong><strong>Have a nice day. </strong></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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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