TIOL-DDT 237 · the untouched capture
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<p align='justify'><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><b>
<font color="#663399">TIOL-DDT 237</font></b></font><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>09
11 2005</b></font><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Wednesday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Board vs Supreme Court - whose decision prevails?</b></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Yesterday
we carried a report with a Supreme Court judgement about Service Tax on photography
service. A little recap is needed. Board had in F.No.B.11/1/2001-TRU) dated
9th July, 2001 clarified,</font></p>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The
value of taxable service is the gross amount charged from the customer for
the service rendered. However, the cost of unexposed photography films sold
to the customer is excluded. The service provider claiming benefit of the
cost of film should be advised to show them clearly on the invoices along
with description and particulars of the film. Otherwise, the claim will not
be considered as admissible. <b>No other cost (such as photographic paper,
chemicals, etc.) is excluded from the taxable value.</b></font></p>
</blockquote>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">This
clarification was challenged in the Kerala High Court and in the Supreme Court.
The Apex Court in <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=42&filename=legal/sc/2005/2005-TIOL-135-SC-ST.htm">2005-TIOL-135-SC-ST</a><strong>
</strong>which we carried yesterday, upheld the validity of the circular as
well as the Act. The Court had observed,</font></p>
<blockquote>
<p align="justify"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">When
a photographer undertakes to take photograph, develop the negative, or do
other photographic work and thereafter supply the prints to his client, he
cannot be said to enter into a contract for sale of goods. The contract on
the contrary is for use of skill and labour by the photographer to bring about
a desired result. The occupation of a photographer, except in so far as he
sells the goods purchased by him, in our opinion, is essentially one of skill
and labour</font></p>
</blockquote>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">So
the plea of the petitioner that taxing the gross value was dismissed by the
highest court of the land. It had already been dismissed earlier by the Kerala
High Court in 2002. </font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Now an interesting fact has come to our notice. </b></font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">The
Board, in a letter addressed to the Punjab Colour Lab Association in 2004, that
is two years after the Kerala High Court judgement, clarified that exemption
is available in respect of the input material consumed/sold. So as per this
letter, photographers need not pay tax on the value of paper, chemicals etc
consumed or sold if they make a mention of the inputs in the invoice. As per
the Board's clarification to the Association, many members are issuing invoices
like this.</font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">1.
Sale of photo paper 15.00</font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">2.
sale of chemistry ( what they mean is chemicals) 10.00</font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">3.
charges for picture 10.00</font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">4.
ST on 3. 1.20 </font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">Total
<b>36.20 </b> </font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">But
according to the Supreme Court Service Tax is payable on Rs. 35/- and not on
Rs. 10/-. </font></p>
<p align="left"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>Now
what prevails? Board clarification or Supreme Court judgement? </b>Board's letter
to the Association is extracted here for your perusal. <b>The least that is
expected of the Board is to give a clarification on the latest position - publicly
please!</b></font></p>
<table width="450" border="1" align="center" cellpadding="5" cellspacing="0" bordercolor="#000000">
<tr>
<td><p align="center"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">F.
No. 233/2/2003.CX.4</font></p>
<p align="center"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">GOVERNMENT
OF INDIA</font></p>
<p align="center"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">MINISTRY
OF FINANCE</font></p>
<p align="center"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">DEPARTMENT
OF REVENUE</font></p>
<p align="center"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">CENTRAL
BOARD OF EXCISE AND CUSTOMS</font></p>
<p align="right"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">New
Delhi the 7th April 2004.</font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
To</font></p>
<blockquote>
<p align="justify"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">
The Punjab Colour Lab Association</font></p>
<p align="justify"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">
c/o Indra Colour Lab, Milap Chowk,</font></p>
<p align="justify"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2">
Jalandhar.</font></p>
</blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
Sir,</font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
Sub:- Service Tax under the category of photography services.</font></p>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
I am directed to refer to your representation forwarded to Finance Minister
vide letter dated 11th March 2003 and state that in terms of the Notification
12/2003 - ST dated 20th June 2003, the exemption inn respect of input
material <b>consumed</b>/sold by the service provider to the Service
recipient while providing the taxable service is available. However
the exemption is available only if the service provider maintains the
records showing the material <b>consumed</b>/sold while providing the
taxable service. The value of such material should also be indicated
on the bill/invoice issued inn respect of the taxable service provided.</font></p>
</blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
Yours faithfully,</font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
Sanjiv Srivastava</font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
Deputy Secretary to Government of India</font></p>
</td>
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</table>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Effective
Audit - Excise to hire auditors</b></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Board
wants to enhance the effectiveness of audit. The solution? Hire expert Chartered
Accountants and Cost Accountants to scrutinize the accounts of high risk assessees.
The Chartered Accountants will interpret information contained in the ER-4 Return
and help in scrutinizing the balance sheets and for deriving unitwise financial
information. Cost accountants will be used for ER-5 and ER-6 Returns and for
valuation issues. Two units in each Commissionerate to be picked up for the
expert audit in the next quarter. The hired auditor will be paid a fee of Rs.
5,000/- per day. There are a few CAs and ICWAs in the department. Will the Board
use them and pay them Rs.5000/- per day? or is it <b> Ghar ki murgi dal barabar?
As always? </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><b>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2005/excircular821.htm">Circular
No. 821/18/2005, Dated 7-11-2005</a></b></u></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Hindi is a desirable qualification but not an additional one- changes in CHA
Licensing regulations</b></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The
Custom House Agents licensing regulations have been amended. Somebody in the
Board had been reading these regulations recently and observed some infirmities.
The following are the changes:-</font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0" bordercolor="#CCCCCC" id="table1">
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<td width="64" align="center" valign="top" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Regulation</b></font></td>
<td width="429" align="center" valign="top" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Existing</b></font></td>
<td align="center" valign="top" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Amendment</b></font></td>
</tr>
<tr>
<td width="64" valign="top" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4</font></td>
<td width="429" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The
Commissioner may invite applications for the grant of such number of licences
as assessed by him, to act as Customs House Agents in the month of January
every year by means of a notice affixed on the notice board of each Customs
Station as well as through publication in at least <font color="#0000FF"><b>two
newspapers having circulation in the area of his jurisdiction</b></font>
specifying therein the last date of receipt of application. Such application
shall be for clearance work within the jurisdiction of the said Commissioner</font></td>
<td valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">“two
newspapers, one in English and the other in vernacular language having <b>wide</b>
circulation in the area of his jurisdiction</font></td>
</tr>
<tr>
<td width="64" height="137" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
5(1)</font></td>
<td width="429" height="137" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">An
application for a licence to act as a Custom House Agent in a Customs Station
shall be made <b><font color="#0000FF">in Form A</font> </b> </font></td>
<td height="137" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">in
the form of letter to the jurisdictional Commissioner of Customs, containing
details as specified in Form A</font> <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2">
T<font color="#0000FF">he regulations have not specified earlier as to
whom the application is to be given. The heading for the form was “Application
Form for Grant of Custom House Agents License --------------”. Now the
heading is “Particulars to be Furnished for Grant of Custom House Agents
License ------------“.</font></font></td>
</tr>
<tr>
<td width="64" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">8(7)
proviso</font></td>
<td width="429" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Provided
that in the case of persons deputed to work exclusively in the docks, knowledge
of English shall not be compulsory. Knowledge of Hindi shall be considered
as an <b><font color="#0000FF">additional or </font></b> desirable qualification.
</font></td>
<td valign="top" ><font color="#0000FF" face="Verdana, Arial, Helvetica, sans-serif" size="2"><b>
additional or </b></font><font face="Verdana, Arial, Helvetica, sans-serif" size="2">omitted</font>
<p> <font face="Verdana, Arial, Helvetica, sans-serif" size="2" color="#0000CC">Now
Hindi is not an additional qualification, but it is still a desirable
qualification.</font></td>
</tr>
<tr>
<td width="64" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">9(3)</font></td>
<td width="429" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The
Commissioner of Customs may reject an application for the grant of licence
to act as Customs House Agent if the applicant is <font color="#0000CC"><b>involved
in </b></font>fraud or forgery, or any criminal proceedings are pending
before any court of law against him or he has been convicted in any court
of law. <br>
</font></td>
<td valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">'convicted
of' instead of 'involved in'</font> <p><font face="Verdana, Arial, Helvetica, sans-serif" size="2" color="#0000CC">So
mere involvement is not enough</font></td>
</tr>
<tr>
<td width="64" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">9(6A)</font></td>
<td width="429" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">does
not exist.</font></td>
<td valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">“(6A.)
An appeal filed by an applicant under sub-regulation (4) shall be decided
by the Chief Commissioner of Customs or the Chief Commissioner of Customs
and Central Excise, as the case may be, with in a period of one year from
the date on which such appeal is filed</font> <p> <font face="Verdana, Arial, Helvetica, sans-serif" size="2" color="#0000CC">For
the first time, a time limit is fixed for the Chief Commissioner to decide
an appeal. But why should the Chief Commissioner need one year to decide
the appeal. </font></td>
</tr>
<tr>
<td width="64" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">10(1)
</font> </td>
<td width="429" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Before
granting a licence under regulation 9, the Commissioner of Customs shall
require the applicant to enter into a bond in Form D and, if necessary,
a surety bond in Form E for due observance of these regulations and shall
also require him to furnish a bank guarantee, postal security or National
Savings Certificate in the name of the Commissioner of Customs for an amount
of Rs. <font color="#0000CC"><b>50,000/</b>-</font> for carrying out of
business as a Customs House Agent. <br>
</font></td>
<td valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2" color="#0000CC">The
amount is now Rs. 75,000/-</font></td>
</tr>
<tr>
<td width="64" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">14</font></td>
<td width="429" valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Change
in directors of company, etc. — In case a company holding a licence under
regulation 9 undergoes any change in the directors, or managing director,
s<font color="#0000CC"><b>uch change shall forthwith be communicated by
such licensee to the Commissioner of Customs. </b> </font></font></td>
<td valign="top" ><font face="Verdana, Arial, Helvetica, sans-serif" size="2">such
change shall be communicated by such licensee to the Commissioner of Customs
within a period of sixty days of such change</font></td>
</tr>
</table>
<p align="justify"> <font face="Verdana, Arial, Helvetica, sans-serif" size="2"><u><b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2005/cnt05_099.htm">Notification
No. 99/2005-Cus. (N.T.), dated 7-11-2005</a></b></u></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006633">
CBI Chief moots federal body</font></b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI director Uma
Shankar Misra would like the investigating agency turn into a federal body which
can take up cases on its own without waiting for permission of the state governments
as told to reporters in Bhubaneswar. He also said,</font></p>
<font size="2" face="Verdana">
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI can
do nothing if a state withdraws its consent for investigation. The US and
Pakistan have amended their laws to allow the FBI and FIA, their respective
investigating agencies, to take up cases suo motu</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBI had
moved the government to increase the quota of direct recruits and make the
ratio 60:40 in their favour from the present system under which 50 per cent
of investigating officers belonged to the state cadre. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are facing
shortage of staff at the lower level in the post of inspectors and DSPs who
form the backbone of the organisation</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The government
was thinking of providing 25 per cent extra salary to officers coming to CBI
on deputation. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The gamut of
activity of CBI is no longer confined to anti-corruption and major financial
crimes are now given to the organisation.</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">corrupt people
in the country like dacoits and murderers should be rejected by the society.</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the society
ostracised and looked down at murderers and thieves for their crimes, while
the corrupt never received such treatment from the society.</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">bribe giver
is more liable than the 'bribe taker' and both of them should be equally treated
to put a check on the growing corruption. </font></li>
</ul>
<div class="main">
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>LAW<br>
<br>
Once Law was sitting on the bench,<br>
And Mercy knelt a-weeping.<br>
"Clear out!" he cried, "disordered wench!<br>
Nor come before me creeping.<br>
Upon your knees if you appear,<br>
'Tis plain you have no standing here."<br>
<br>
Then Justice came. His Honor cried:<br>
"Your status? — devil seize you!"<br>
"Amica curiae," she replied —<br>
"Friend of the court, so please you."<br>
"Begone!" he shouted — "there's the door —<br>
I never saw your face before!"<br>
</b></font></div>
</font>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> <font color="#FF6666">Until
tomorrow with more DDT</font></b></font></p>
<p align='justify'><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Have a nice day. </b></font></p>
<p align='justify'><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>
Mail your comments to </b><a
href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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