TIOL-DDT 2184 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <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 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></strong></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2184</font><br> 06.09.2013<br> Friday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Delhi HC interim stay on recovery of service tax on Security services in respect of components of Salary, PF, Uniform Charges & Bonus</font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> are informed by the Advocate concerned:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In case of security agency supplying the security personnel or other manpower, Service Tax Department is demanding service tax on the entire amount, instead of limiting the service tax demand to the extent of service charges. Therefore, in this process, service tax is also being levied and demanded in respect of the amount charged by the security agency in respect of salary payable to such security personnel, as well as the contribution towards ESI, PF, and various other statutory and non- statutory levy such as, professional tax, or amount payable to them in respect of bonus, leave encashment, uniform and other incidental charges. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Skylark Securitas Private Limited has approached to the Honourable Delhi High Court by way of writ petition challenging the levy of service tax on Security agency other than the amount of service charges. The petitioner has urged that in case of manpower supply and security services, service tax is leviable only on the service charges and no service tax is leviable on the amount received from the client on account of salary payable to security guard/staff supplied and their contribution towards various statutory dues such as ESI, PF etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department has taken a stand that service provider like security agency are required to pay service tax on gross receipts inclusive of salary and statutory contribution like PF and ESI. However, while hearing the above-mentioned matter, the Delhi High Court has passed an interim order on 04th September 2013, directing the Department that while adjudicating the matter, service tax demanded in respect of components of Salary, ESI, PF, Uniform Charges, Bonus, etc. has to be computed separately but restrained the Department for recovery of said service tax from the petitioner providing security services. While passing the order, the High Court has further directed that recovery only can be made in respect of the service tax on service charges (other than above-components) of supply of security personnel/manpower supply and other demands shall be subject to the further orders of the High Court. The High Court has fixed 12th November 2013 for further hearing. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - Classification of 'Bluetooth Wireless Headset for mobile phones/cell phones' - CBEC Clarifies</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOUBTS</strong> have been raised on whether "Bluetooth Wireless Headset for mobile phones / cell phones" is classifiable in heading 8517 or 8518 of the Customs Tariff.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The relevant text of these headings is as under:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>85.17</strong>...; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network )</em></font>,...</p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>85.18...;</strong> headphones and earphones, whether or not combined with a microphone,… </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board examined this issue in consultation with the Department of Electronics and Information Technology, Ministry of Communication and Information Technology. The Compendium of Classification Opinions reflecting the decisions taken by the Harmonized System Committee (HSC) (47th Session - March 2011) was also referred. As seen, the classification of goods in the First Schedule of the Customs Tariff Act, 1975 is governed by the General Rules for the Interpretation (GRI) of Import Tariff. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is of the view that "Bluetooth Wireless headsets for mobile phones / cell phones is correctly classified in heading 85.17, subheading 8517.62, by application of GRI 1 (Note 3 to Section XVI), 3(b) and 6.</font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2013/cuscir13_036.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 36/2013-Cus Dated September 05 2013</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notifies Exchange Rates </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the new rate of exchange of conversion of foreign currency for imported goods and export goods, effective from today. The fluctuating rupee is to be 67 a dollar for imported goods and 65.55 for export goods. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_095.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. 95/2013 - Cus (NT), Dated: September 05, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Plea for abatement in ST on Security Agency service </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTA0NTk=">DDT 1308 - 26 02 2010</a></strong>, we had mentioned,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The plight of the Security agencies is really pathetic. Many of these agencies are run by upright retired military officers who do not know the vile of civil society and almost all of them have service tax cases against them, because they do not know how to treat the tax officials. These agencies are providing a great service to the Nation by providing employment to a large number of poor ex-servicemen. And they provide trained disciplined security personnel for the trade and industry. But at the end of the day, these Brigadiers and Captains who commanded battalions are now standing for hours together outside the offices of Central Excise officers who have summoned them to record their statements for having intentionally evaded service tax. These soldiers who were ready to die for the country, are now scared of Service tax officers. And at the end of the day they end up making losses in their business as all ex-servicemen do. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They are supposed to pay service tax on the gross amount charged. Suppose this is Rs. 5000/ per security man per month. Usually the contract is an all-inclusive one including service tax. From this, the security agency has to pay the salary of the person, provide for ESI, PF, provide him uniforms and has to incur a host of expenditure. His margin maybe just a couple of hundreds and he has to pay service tax on the whole amount. Why he doesn't get an abatement like the more powerful transporter or hotelier, is a mystery. They deserve a rich abatement. Pranab Babu was Defence Minister and he should be a little more kind to these unfortunate businessmen who really do not know how to do business. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Permission for export of Finished Leather, Wet Blue and EI Tanned Leather through Airports </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PUBLIC</strong> Notice No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn023.htm" target="_blank">23(RE-2013)/2009-14</a></strong> dated 13.08.2013 had prescribed that export of finished leather, Wet Blue and EI Tanned Leather would be permitted through Sea Ports of Chennai, Mumbai (JNPT) & Kolkata and ICDs Kanpur & Tughlakabad or any other port/ICDs to be notified by DGFT from time to time. This public notice also prescribed the procedure for drawl of samples and their testing as per the finished leather norms notified vide Public Notice No. <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2009/dgft09pn021.htm" target="_blank">21/2009-14</a></strong> dated 01.12.2009. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, in addition to the above sea ports/ICDs, export of finished leather, Wet Blue and EI Tanned Leather would also be permitted through Airports. Customs may draw samples, wherever so required, for certification by CLRI or such other labs as notified from time to time, as per finished leather norms. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn024.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 24/(RE-2013)/2009-14, Dated: September 5, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Hon'ble MPs on Hon'ble Judges - Rajya Sabhaclears Judicial Appointments Bill </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Rajya Sabha yesterday passed the judicial Appointments Commission Bill by a majority of 131 against 1. The lone Member who opposed the Bill was Ram Jethmalani who said, “The government was trying to demolish the collegium system and slowly creating a new system that is against the basic nature of the Constitution. I hope people avoid digging grave of the Constitution. The Bill is wholly unconstitutional … It is useless.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At present, very few people know how the judges of the High Courts and Supreme Court are appointed. It is totally a judicial and secret affair. Now the Executive wants to have a say. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Excerpts from the speeches of some Members: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the Supreme Court is so keen to protect the independence of the judiciary, it should have been equally keen to protect the independence of the High Courts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How a Judge is chosen? We have no access to that decision and there is no transparency. We can't seek any information in this regard. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are very worried with the manner in which relatives of Judges are practising in High Courts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">People have this impression that if known lawyer is hired, then only they can get justice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One judge of the High Court got the order of red beacon atop his car by getting a PIL filed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In India, the Judges can do no wrong. They have adopted that maxim for them. They think that they are law unto themselves and they do and undo anything they want because only impeachment is there, nothing else. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A statue of Manuneedhi Cholan adorns the premises of High Court of Madras, which is a Charter Court. This king is believed to have killed his own son to render justice to a cow. He had hung a giant bell in front of his palace. Whoever needed justice, could go and ring the bell. One day, to his surprise, there was a cow who lost its own calf. It was killed by the King's son, of course, without his knowledge, it is specifically mentioned, in the rear wheel of his chariot. But the King was so specific that he should give justice to the cow. So, killed his own son by his own chariot. That is why his statue is there adorning the High Court of Chennai. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Italy imposes world's First HFT Tax </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>HIGH</strong> Frequency Trading is the use of powerful automated systems and algorithms to enter, amend, and leave market positions several hundred times within the space of a minute, potentially earning a small profit on each transaction. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Italian Finance Ministry announced that a new tax of 0.02 percent has been instated on high-frequency trades of stock and derivatives transacted on the Italian national stock market. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With this imposition, Italy has become the first country in the world to enforce a tax specifically on High Frequency Trading activity. </font></strong></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">We tend to follow everything Italian - cuisines & fashion brands Gucci, Prada, Versace, Dolce & Gabbana, Christian Dior, Armani - to name a few! </font></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"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_cartoon_2184.jpg" alt="ddt cartoon" width="400" height="451" hspace="5" border="0" align="center"></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"> – Monday's cases</font></strong></font></strong></font></p> <p><font 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"><strong><font color="#663399">Central Excise </font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no provision under CEA, 1944 which prohibits issuing more than one SCN to an assessee-S. 11A also does not stipulate any such thing - any number of show cause notice can be issued under said Section to an assessee-: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Appellants are engaged in the manufacture of off-set printing machines. Based on an intelligence officers of DGCEI visited the official and residential premises of the appellants on 24.4.2002 and recovered various incriminating documents, computer etc. Investigations were further carried out in different parts of the country, covering about 70 customers as the off-set printing machines were being cleared on parallel set of invoices as also by not reflecting the correct value in the documents. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, the appellant submitted that they are not disputing the order on merits or quantification etc. but on the ground that the first SCN was issued on 14/01/2003 to the appellant and based upon the same intelligence and investigation the second SCN is issued on 04/01/2005 by invoking proviso to S. 11A and which is not permitted in law.</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 Section 80IB(1) benefits are available to builder only if he follows 'Project Completion Method' and not 'Percentage Completion Method' - NO: ITAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether the deduction u/s. 80IB(10) is to be granted only to a tax payer who follows "Project Completion Method"; Whether for giving benefit of deduction u/s. 80IB(10), it is necessary to obtain completion certificate for each year of assessee's claim or it is sufficient that certificate is obtained on the completion of the housing project as a whole and Whether when the Revenue decides to tax the profit on the ground that the assessee was following percentage completion method, the deduction is also to be allowed in the same year. And the verdict goes in favour of the assessee. </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">In return for forbearance on the part of AI in not operating on certain routes, sharing domain knowledge and allowing AICL to use brand name, royalty payments were received - ST demand on the entire amount without explaining how foregoing of rights or sharing of domain knowledge would come under IPR services is not sustainable -Matter remanded: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant entered into a Memorandum of Understanding (MOU) with its subsidiary M/s Air India Charters Ltd. (AICL) with effect from 1.4.2005 and operational from 1.3.2008. As per the said MOU, M/s AICL was permitted to operate low cost carrier flights to Gulf Sector by using Air India's International Traffic Rights to Gulf countries and AICL was also permitted to use Air India's brand name "AI" to carry out low cost carrier operations. Further, Air India was also to provide domain knowledge to AICL. In consideration thereof, AICL agreed to pay royalty of 25% of the revenue collected by low cost carriers to Air India. The department was of the view that the services rendered by Air India to AICL would come within the category of Intellectual Property Rights Services. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, a show-cause notice took wings on 1.6.2009 demanding the Service Tax of Rs.29,74,75,042/- along with interest thereon and proposing to impose penalties. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CCE, Thane-II confirmed the demand with aplomb. Already in the red , the appellant is before the CESTAT </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Monday for the judgements</font></strong></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">Have a nice weekend.</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> </body> </html>