TIOL-DDT 2381 · 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 color="#663399" size="3"><s><strong><font size="2"><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=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></s>TIOL-DDT 2381</font><br> 24.06.2014<br> Tuesday</strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Prohibition on import of milk and milk products from China</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> prohibition on import of milk and milk products (including chocolates and chocolate products and candies/ confectionary/ food preparations with milk or milk solids as an ingredient) from China was imposed vide<i> Notification No. 46(RE-2008)/2004-2009</i> dated 24th September, 2008, <i>Notification No. 67(RE-2008)/2004-2009 </i>dated 1st December, 2008 and <i>Notification No. 16/2004-2009 dated 3.1.2011</i> and extended from time to time. The latest extension was notified on 18.06.2013 by <i>Notification No. 23 (RE-2013)/2009-2014</i>, by which the prohibition was extended till 23.6.2014.</font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT acted just in time (unlike CBEC extending ADD Notifications) and extended its validity for one more year.</font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This prohibition is now extended till 23.6.2015 or until further orders whichever is earlier. </font> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2013/dgft13not084.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 84/(RE - 2013)/2009-2014, Dated: June 23, 2014</strong></font> </a> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Evasion of Service Tax by Banks - DGCEI MO Circular </font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING</strong> the course of investigation against one of the Co-Operative Banks, DGCEI noticed that the Bank was, <em>inter alia</em>, providing banking and other financial services to their clients which include </font> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Issue of cheque books </font> </p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Issue of Bankers Cheques/Pay Orders/Demand Drafts </font> </p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Advancing loans to clients such as personal loans, vehicle loans, housing loans, working capital loans, term loans etc </font> </p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Arranging for local and international Letters of Credit </font> </p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) Bill discounting </font> </p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) Providing Bank guarantees etc. and charging their customers who avail of the above facilities. </font> </p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI found that the Bank was charging processing fee @ 0.25% of the loan amount subject to a maximum of Rs.10,00,000/- from the customers for processing of the loan applications. Investigations conducted revealed that the Bank was bifurcating the said processing fee into two parts, one as processing fee and the other as agreement fee @ 25% and 75% of the total fee respectively. Processing fee is collected on pre-sanction basis for appraisal & sanction of the loan and the agreement fee is collected on post-sanction basis for executing the loan documents for release of the sanctioned facilities. It was revealed that the Bank, was not paying service tax on 75% of the processing fee which they termed as ‘agreement fee' till July, 2012. </font> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI brings this <em>Modus Operandi </em> to the filed formations for taking <strong><em>necessary action </em></strong> in similar cases. </font> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC MCTP inaugurated at ISB by CBEC Member and Canada's High Commissioner</strong></font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC's</strong> flagship Mid Career Training Programme (MCTP) 2014, was inaugurated at Indian School of Business, Hyderabad yesterday by Member CBEC Joy Kumari Chander and Canadian High Commissioner Stewart Beck. A total of 27 officers comprising of Chief Commissioners and Commissioners are attending the programme, which also includes a module at Syracuse University, New York State and thereafter with the Canadian Border Service Agency, at Toronto, Montreal and Ottawa. The officers will get briefings on Canadian GST, Canadian Customs clearance procedures and best practices being followed. </font> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img width="480" height="642" src="http://www.taxindiaonline.com/RC2/image/stories/ddt_image24062014.jpg"></font> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Canadian High Commissioner Stewart Beck addressing the senior officers of CBEC in the MCTP at ISB in Hyderabad yesterday. The front benchers in the <strong>class </strong> include Joy Kumari Chander, Member, CBEC; Dr. Sreekumar Menon, DG, NACEN; PN Rao, ADG NACEN and Dr. SL Meena, Commissioner. </em></font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The curriculum includes sessions by eminent management experts from India and abroad on subjects like Strategic HR Management and Cadre Planning, organisational vision, performance, strategy & Governance, Managing complex change, Building quantum relationships with stake holders, conflict resolution and crucial conversations. Leadership lessons and stress and time management will also be part of the curriculum. </font> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is MCTP all about? </font> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Dr. Sreekumar Menon who was a participant in last year's MCTP had written a series of articles for us on this programme: </font> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18014"><strong>Mid Career Training Program (MCTP) 2013 - The value of Training </strong></a> </font> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18035">The value of Training - Mid Career Training Program 2013 - Part II </a></font> </strong> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18075">Mid Career Training Program (MCTP) 2013 - Part III</a></font> </strong> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTgwOTI=">Mid Career Training Program (MCTP) 2013 - The value of Training - Part IV </a></font></strong> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government of India spends huge amounts of money on this training programme. We hope it is useful. </font> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Gopal Subramaniam will be a tribute to Supreme Court - Justice Krishna Iyer</strong> </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUSTICE </strong>VR Krishna Iyer, in a statement issued yesterday on the appointment rather disappointment of Gopal Subramaniam as a Judge of the Supreme Court, said, </font> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>But to my despair and disappointment, I read in the Indian Express that the Government has changed its mind and eliminated Gopal Subramaniam who was unanimously selected by the collegium. To some extent I know Shri. Gopal Subramaniam. He is a sound lawyer with great integrity and will be a tribute to the Supreme Court Bench if he is installed as the judge of the Supreme Court of India. However to eliminate him from that post will be an indefensible disaster, a disappointment which the country need not suffer from at all. As a retired judge of the Supreme Court myself I regret this measure of the Prime Minister. I hope he will reconsider this wrong step. The country cannot afford to lose a sound and splendid lawyer who will adorn the Supreme Court Bench. </em> </font> </p> </blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Justice Iyer is about 99 years old.</font> <p align="center"><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"> - Wednesday's cases</font></strong></font></strong></font></strong> <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">Service Tax </font></strong></font> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BAS - profit margin cannot be construed as commission - appellant cannot be said to provide any service of BAS to client for marketing of goods - contention of AR that private parties are paying ST is not acceptable as in case of private parties invoices on customers were raised by MGL directly and private parties are receiving commission and there is no transaction on principal to principal basis - Orders set aside and appeals allowed: CESTAT </strong> </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are Public Sector undertakings and engaged in marketing of petroleum products. </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They purchase Compressed Natural Gas (CNG) from Mahanagar Gas Limited (MGL) and, thereafter, sell the same to their dealers. When the gas is supplied to the vehicles, the product has to be maintained at a particular pressure. Since the gas reaches these sale outlets through pipeline, it is not in the compressed form and, therefore, the gas has to be compressed before it is actually sold. In the various retail outlets of the appellants, space is provided by appellants to MGL to install their machinery, equipment etc. for compression and MGL sells the gas to the appellants on payment of excise duty. </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The revenue is of the view that the services rendered by the appellants to <i>M/s MGL </i>are in relation to the marketing of the goods by <i>M/s MGL</i> and, therefore, it constitutes Business Auxiliary Services. </font> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether premium paid on insurance policy designed under Unit Linked Investment Plan can be claimed as business expenditure u/s 37 - NO: ITAT </strong> </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> Company had debited an amount of Rs. 3 lacs under the head ‘Insurance‘ pertaining to premium paid towards ‘Keyman Insurance Policy' of Joint MD. Assessee had contended that the amount paid was claimed as expense allowable u/s 37. The amount due on maturity of this policy had been received back in AY 2010-11 and had been offered for taxation in year of receipt. Payment of premium for keyman insurance cover was allowable as a business expense. The law permits deferment of payment of tax on this amount. This amount cannot be taxed twice. The claim of payment of premium was genuine. The nature of insurance plan cannot adversely effect that admissibility of claim. </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">During assessment, AO held that a unit linked plan can't be equated with Keyman Insurance Policy as per meaning of the term given in clause (c) of Section 10(10D) and elaborately differentiated between the quoting guidelines and circulars of IRDA, as detailed in the assessment order and held that the expense of Rs. 3 lacs was not to be treated as incurred for the purpose of business of assessee. </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the bench are: Whether expenditure incurred on Term Insurance Plan under Keyman Insurance Cover is eligible for deduction u/s 37, even if the assessee firm proves that the said amount has been spent wholly and exclusively for the purposes of the business as per provisions of section 37; Whether in case the insurance companies otherwise invest the funds available with them in debt/stock etc, deduction of the amount invested can be claimed as revenue expenditure; Whether the nature of investment can be a deciding factor in determining the allowability of the premium paid; Whether when the policies are taken from Unit Linked Investment Plan it becomes investment plan, premium of which has been put into growth fund and it is not a Pure Life Insurance Policy on the life of another person and Whether in case only a fraction of the total premium is meant for risk premium, the balance is for the deployment of purchase of units, can be claimed as business expenditure. And the verdict goes against the assessee. </font> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong> </font> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>There is no merit in contention that merely because person liable to pay duty has discharged duty liability, proceedings against others on whom penalty has been imposed u/r 26 of CER, 2002 will get concluded - Pre deposit ordered of penalty: CESTAT </strong> </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> proceedings against the main appellant, <i>M/s Giriraj Re-Rolls Pvt. Ltd</i>., Jalna was concluded in as much as the said main-appellant had paid the duty demanded along with interest and also 25% of the penalty within the period stipulated. </font> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, a penalty of Rs.25,000/- was imposed on Shri Satish Nandlal Rathi, Proprietor of <i>M/s Santosh Steel Traders</i> for aiding and abetting the main appellant in evading duty and since the Commissioner(A) upheld the same, the appellant is before the CESTAT. </font> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow for the judgements </strong> </font> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong> </font> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font> <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> </body> </html>