TIOL-DDT 2102 · 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 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=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></font></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2102 </font><br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>10.05.2013 <br>
Friday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Economic offences constitute a class apart and need to be visited with different approach in matter of bail: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHILE</STRONG> rejecting the bail plea of YS Jaganmohan Reddy, MP and son of former AP Chief Minister YS Rajasekhara Reddy, the Supreme Court yesterday observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused,circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehensionof the witnesses being tampered with, the larger interests of thepublic/State and other similar considerations </em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court also rejected the bail application of industrialist and co-accusedNimmagadda Prasad (aka Matrix Prasad) and observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fiber of the country's economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole </em>. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court quoted from an earlier judgement, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. <strong><font color="#990000">A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community.</font> </strong> A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest </em>… </font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Classification of Filters referred to as 'Disposable Sterilized Dialyzer' and 'Microbarrier' for 'filtering blood'</strong></font> </p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Board informs that doubts have been raised regarding classification of the filters referred to as "Disposable Sterilized Dialyzer" and "Microbarrier" for filtering blood, whether under heading 9018, in tariff item 90189031 which provides for "renal dialysis equipment (artificial kidneys, kidney machines and dialysers)" or under 8421 in tariff item 84212900 as –"Other", filter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After giving a brief product description, the Board says that the same is illustrative in nature for the purpose of classification of <strong>similar </strong> / <strong>identical </strong> goods in the First Schedule of Customs Tariff Act, 1975. [ <font color="#FF0000">What does this mean? </font>] </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Meaning of ‘dialysis' in medicine is explained by the Board and then it is informed that the complete machine which performs this process is classifiable in subheading 9018.90 which reads as, " <em>other instruments and appliances </em>" and the system includes the aforementioned "Disposable Sterilized Dialyzer" and / or "Microbarrier" where they find use as filters and qualify as parts of blood purifying system of subheading 9018.90. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board then mentions that as required by Chapter Note 2 (a) to Chapter 90, the question to be decided is whether these parts or accessories of blood purifying system are included in any of the headings of Chapter 90 or of Chapter 84, 85 or 91. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And concludes - </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"5. In this regard, the classification of goods in First Schedule of the Customs Tariff Act, 1975 is governed by the principles contained in the General Rules for the Interpretation (GRI) of Import Tariff. The GRI 1 provides that "the titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes.." In accordance with Rule 1 and Note 2 (a) to Chapter 90, subject to Note 1 to Chapter 90, "parts and accessories for machines, apparatus, instruments or articles of this Chapter,.. which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than heading No. 84.85, 85.48 or 90.33) are in all cases to be classified in their respective headings; … ". Further,the second paragraph of Part III of the HS General Explanatory Note to Chapter 90, gives guidance for the application of Chapter Note 2(a) to this Chapter. According to this Note, "parts which in themselves constitute articles falling in any particular heading of Chapter 90, 84, 85 or 91 are in all cases to be classified in their respective headings". </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>6. The heading 84.21 covers, inter alia, filtering or purifying machinery and apparatus for liquids. Therefore, in accordance with the stipulation mentioned in paragraph 5 above, the aforementioned articles, viz. "Disposable Sterilized Dialyzer" and "Microbarrier", are classifiable in heading 84.21, subheading 8421.29, and tariff item 84212900. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>7. To sum up, it is clarified that both the articles, viz. "Disposable Sterilized Dialyzer" and "Microbarrier", as filters would be classified in heading 84.21, subheading 8421.29, tariff item 84212900 - - Other, by application of GRI 1, Note 2 (a) to Chapter 90." </em></font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_019.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Circular 19/2013-Customs dated 9 th May, 2013 </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Post Budget notifications explained </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> changes made in the duty rates by notifications 16/2013-CE, 25/2013-Cus &26/2013-Cus, all dated 8 th May, 2013 have been explained by TRU. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/TRU%20Letter_334_2013.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>D.O.F.No. 334/3/2013-TRU dated 8 th May, 2013. </strong></font></a></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>High
Court dismisses petition against ITAT Members – Gross abuse of process of
Law </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner is a Chartered Accountant and has been appearing before the Income Tax Authorities as well as before various Benches of the Income Tax Appellate Tribunal. The grievance of the petitioner is that the petitioner is facing lot of harassment at the hands of respondents No.2 and 3, who are Judicial and Accountant Member of the Tribunal at Amritsar as the petitioner has not been able to meet their expectations and illegal demands. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"It appears that the present writ petition is to settle the scores which the petitioner might have raised during the course of his conduct as representative of the assessees. The petitioner has asserted that he is not able to meet the expectations and illegal demands raised by the Members but there is no details as to when and how the demands were raised. Not only the writ petition is bereft of any material particulars but also the petitioner has no right to claim mandamus for restraining an authority constituted under the Act from discharging the functions entrusted to it by the Statute. The present writ petition is gross abuse of process of law and, therefore, it is dismissed". </em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see
</strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODgwOTU=">2013-TIOL-374-HC-P&H-SERVICE</a></strong></font> </p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax Chief Commissioner's Bungalow required by State Govt to construct World
Class Museum – Chief Commissioner asked to vacate </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>residential bungalow at 6, Bailey Road occupied by the Chief Commissioner of Income Tax, Patna is required by the State Government for construction of a world class Museum. After several rounds of negotiations the applicant agreed to hand over vacant possession of the bungalow in his occupation and to shift to a new residential bungalow at 5-M Strand Road, Patna, now allocated to him. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As the said bungalow at 5-M Strand Road required some repairs and renovations, the High Court had, in its order dated 4th December 2012, directed the State Government to hand over the vacant possession of the bungalow at 5-M Strand Road and to release the fund of Rs. 25 lakhs for repairs of the said bungalow. It is admitted that pursuant to the said direction, the sum of Rs. 25 lakhs was released on 7th December 2012. The vacant possession of the bungalow at 5-M Strand Road was handed over to the Chief Commissioner on 12th December 2012. The High Court had also directed the Chief Commissioner to hand over the vacant possession of the bungalow at 6, Bailey Road, Patna to the State Government as early as possible, latest by 31st March 2013. Now, the Chief Commissioner is before the High Court asking for time up to 15th May 2013. The State Government submitted that the project envisaged by the State Government is worth Five Hundred crores. Having regard to the escalation of construction cost, every month of delay would cause a further loss of Five crores to the State exchequer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed that keeping in view the fund available to the applicant and the machinery available to him, the applicant ought to have adhered to the time-frame decided by the Court with consensus. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court further observed, <em>"we earnestly believe that the applicant will make sincere efforts to complete the necessary repairs and renovations and will hand over the vacant possession of the residential bungalow at 6, Bailey Road in his occupation latest by 30th April 2013."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And we understand that the Chief Commissioner has since vacated the bungalow. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see
</strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODgwOTY=">2013-TIOL-375-HC-PATNA-MISC</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">To the Hills with GST </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Empowered Committee of State Finance Ministers under the Chairmanship of Bihar's Finance Minister (and Dy. CM)Sushil Kumar Modi is to meet in the cool hill station of Mussoorie in Uttarakhand today to discuss the road map for introduction of GST.Modi believes that 80% of the work is over. This meeting will discuss reports of sub-committees on revenue neutral rates, place of service rules, prevention of dual control for small traders and list of exempted items. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Vacancy of Supdt. Of Police in CBI – depute eligible and willing officers </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> yesterday's <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17715" target="_blank">DDT 2101</a> </strong>we had mentioned that the CBI has about 581 vacancies. 26 vacancies are in the grade of Superintendent of Police. Incidentally, the CBI has invited nominations of IRS (C&CE) officers with 12 years of regular service for appointment to the post of Superintendent of Police on deputation basis. This requisition is forwarded by the Board to the field and the applications of willing officers are sought latest by 20 th May, 2013. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">How many such posts are to be filled is not mentioned though. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/deputation/Vacancy_cbi_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F.No.-A.35017/60/2011-Ad.II dated 7 th May, 2013. </font></strong></a></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 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 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"><img src="http://www.taxindiaonline.com/RC2/image/stories/White_Collar_Truth.jpg" alt="" width="424" height="479" hspace="5" border="0" align="center"></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong><br>
</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Monday's cases</font></strong></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></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Agreement by appellant with ONGC is for charter hiring of drilling units - compensation is paid to the appellant based on the number of days during which the vessel was on charter hire and even when the vessel was not used for drilling - such an activity merits classification under ‘supply of tangible goods for use' service and not under ‘mining service' - prima facie appellant liable to pay Service Tax - Pre-deposit ordered of Rs. 5 Crores: CESTAT </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> appellant provided their rigs "Kedarnath" & "Badrinath" on charter hire basis to Oil and Natural Gas Corporation Ltd. (ONGC) and M/s. Deep Water Service India Ltd., subsidiary of M/s. ONGC for drilling operation/drilling wells in the offshore waters of India during the period July 2009 to March 2010. The department was of the view that the services undertaken by the appellant is classifiable under the category of "Supply of Tangible goods for use Services" and is taxable under Section 65(105)(zzzzj) of the Finance Act, 1994 with effect from 16/05/2008. </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>Whether when Revenue has taken a view that surrendered income belongs to individual members and not to AOP, can a different view be taken in case of AOP by taking same amount again on ground that assessee himself had originally filed return in hands of AOP - NO: ITAT </strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>issues before the Bench are - Whether when Department has taken a view that surrendered income belongs to the members individually and not to AOP, can a different view be taken in the case of AOP by taking the same amount again on the ground that the assessee himself had originally filed the return in the hands of AOP and Whether penalty u/s 271(1)(C) is warranted, when the assessee has disclosed on affidavit the undisclosed income and the manner it was earned during a search operation u/s 132. And the verdict goes in favour of the assessee. </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"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">It cannot be said that in all cases of duty demands, department should specify interest amount also, especially when date of payment of duty on subsequent period is not known - appeal dismissed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NO</strong> doubt, quantum of interest has not been specified in the said order. The interest liability accrues from the due date of payment of duty till such time the payment is made. Inasmuch as the appellant had made only part payment and have not made the full amount of duty confirmed, the question of quantifying the interest amount does not arise since the date of payment of duty is not known. Interest is a consequential liability and has to be discharged by the appellant on his own whenever there is a default in payment of duty by the due date and, therefore, it cannot be said that in all cases of duty demand, the department should specify the interest amount also, especially when the date of payment of duty on a subsequent period is not known. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our Columns Monday for the judgements </font></strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice weekend. </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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