TIOL-DDT 2518 · the untouched capture
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<p align="justify"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><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 2518</font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>15 01 2015 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Thursday </strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Service Tax - Supply of Ready Mix Concrete - Not a Taxable service - SC Dismisses Revenue Appeal- </em></font></strong></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">THE</font></strong><font size="2"> respondent was engaged in preparation of ready mix concrete (RMC). While carrying out such dominant objects other ancillary and incidental activities were also carried out. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT in the case of GMK Concrete reported by us in <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2012/2012-TIOL-137-CESTAT-DEL.htm"><strong>2012-TIOL-137-CESTAT-DEL</strong></a> held, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Record does not reveal involvement of any taxable service aspect in the entire supply of RMC. Rather the contract appears to be a sales contract instead of a service contract. In absence of cogent evidence to the effect of providing taxable service, primary and dominant object of the contract throws light that contract between the parties was to supply ready mix concrete (RMC) but not to provide any taxable service. Finance Act 1994 not being a law relating to commodity taxation but services are declared to be taxable under this law, the adjudication made under mistake of fact and law fails </em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue took the matter in appeal to the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Apex Court in an order dated 6th January 2015 dismissed the appeal by observing, “ <em>Having gone through the records of the case, we are of considered opinion that the appeal, being devoid of any merit, is liable to be dismissed and, is dismissed accordingly. </em>” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTg5NTY=" target="_blank"><font size="2"><strong>2015-TIOL-05-SC-ST-LB</strong></font></a></font> </p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Srinagar in Tripura declared as Customs Station </em></font></strong></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">GOVERNMENT</font></strong><font size="2"> has amended Notification No. 63/1994-CUSTOMS (NT) dated the 21st November, 1994, to notify Srinagar in the Srinagar (Tripura)- midpoint between Purbamadhugram and Choygharia, Border Pillar No. 2195/5S and 6S as a Customs Station for import of small items from Bangladesh through the Border Haat. On 6th January, the Government had notified the Customs exemption for these goods. (Please see <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjI0ODQ="><strong>DDT 2513 </strong></a><strong>.</strong>) </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Haat was inaugurated two days ago by Ms Nirmala Sitharaman, India's Minister of State for Commerce and Mr. Tofail Ahmed, Bangladesh Commerce Minister Ms Sitharaman said that Tripura, located in an advantageous position in respect of strategic, diplomatic and economic relations with Bangladesh, is likely to become the gateway in tandem with implementation of the ‘Act East' policy adopted by the Government of India. She further said that the Centre intended to move for development of Bangladesh through Tripura. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img width="450" height="300" src="http://www.taxindiaonline.com/RC2/image/stories/ddt-inner15-2015.jpg" alt="Macintosh HD:Users:vijay1:Desktop:DDT 2518 15 01 2015:Border haat.jpg"></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tripura Chief Minister Mr. Manik Sarkar made a plea to the governments of both countries to provide transit facility using Ashuganj and Chittagong sea ports in Bangladesh. He said if allowing transit facility is not possible, trans-shipment facility could be taken into consideration. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the third India-Bangladesh Border Haat. The other two are at Kalaichar (India) - Baliamari (Bangladesh) and at Balat (India) - Dolora (Bangladesh) on the Meghalaya - Bangladesh border. Construction of the fourth Border Haat at Kamlasagar (Tripura) - TarapurKashba (Brahmanbaria District) is in progress. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc1NTc=" target="_blank">Notification No. 08/2015 -Cus(NT)., Dated: January 09, 2015 </a></strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Right to Information - Postal Stamps as RTI Fee/Cost - Comments invited </em></font></strong></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">RTI </font></strong><font size="2">Rules, 2012 prescribe payment of RTI application fee/Cost through four Modes i.e. </font></font></p>
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<blockquote><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. IPO, </font></blockquote>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Demand Draft, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Bankers Cheque and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Cash against receipt. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apart from regular modes of payments, Information seekers can use the facility of e-IPO and also use Debit/Credit Card for filing online RTI application. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CIC in its full bench decision dated 27.08.2013 had inter-alia urged DoPT to consider acceptance of RTI stamps as a mode of payment of RTI Fee and Costs. The issue was examined in consultation with Department of Posts and the latter expressed its inability to print exclusive RTI stamps. Subsequently, Department of Posts recommended use of definitive series of postal stamps which are ubiquitously available in the Post Offices across the country in different denominations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CIC in its recent decision dated 12.12.2014 has again recommended to DoPT to adopt the proposal of the Deptt. of Posts of use of ordinary Postal Stamps for payment of RTI fee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following issues need to be sorted out before taking any decision. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Use of ordinary postal stamps for the purpose of RTI may lead to accounting problem, as it would not be possible to account amount collected for RTI through ordinary stamps. Section 25(3)(e) of the RTI Act lays down that each public authority is required to communicate to CIC/SIC, as the case may be, the amount of charges collected under this Act for incorporation in their Annual Report. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. There is apprehension of misuse of ordinary stamps for the purpose of RTI, in the absence of specific procedure for crossing such stamps. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Whether postal stamps may be considered for initial RTI fees only or for payment of additional fee also. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has formed a Committee to look into these and other related issues. It has been decided to invite views/suggestions from the citizens in the subject matter, for the consideration of the Committee. The views/suggestions, preferably not exceeding more than one page, may be sent latest by 7.2.2015 through email only to Shri R.K. Girdhar, Under Secretary (RTI), North Block at <a href="mailto:usrti-dopt@nic.in">usrti-dopt@nic.in</a>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/circular_132014-IR.htm" target="_blank">DoPT Circular No. 1/3/2014-IR ., Dated: January 14 2015</a></strong></font> </p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em><br>
CBEC wants CCs to assign additional charge to officers </em></font></strong></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">THE</font></strong><font size="2"> cadre review confusion is continuing. As per a Board Office Order of 2012, all Chief Commissioners are required to notify a link officer at all levels. Now, the Board wants the CCs to notify the link officer for posts up to the level of Principal Commissioner. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Just last week Board promoted and posted nearly 100 Commissioners. If all the posts are still not filled up, Board wants the CCs to assign additional charges. Commissioners are busy finding rooms and cars. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/order/board_letter_22011122012.htm" target="_blank">CBEC Letter No.22011/12/2012-Ad.II., Dated January 14 2015</a></strong></font> </p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Royalty Payments on Software - Goods or Services? </em></font></strong></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">FINANCE</font></strong><font size="2"> Minister Mr. Arun Jaitley addressed a meeting of the IT industry yesterday in connection with the coming Budget. The meeting was attended by the captains of the IT business and the top revenue officers. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The IT industry's wish list to the FM included: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Incentives for setting-up of data centers within the country. There is a need to give tax incentives for building infrastructure for large data centers and cloud services within the country to ensure data security as well as to have a big network of large software products companies within the country. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. More budgetary allocation for digital literacy programme in order to make Digital India a success, to promote innovations by allowing angel funding, stable tax regime, direct tax benefits for the sector, tax benefits for cashless transactions, resolving issues relating to double taxation on software products, transfer pricing and duty drawback. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. There is need for clarity on royalty payment on software products (whether goods or services) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Initiatives to improve overall business environment including ease of doing business and setting-up of a High Level Committee for industry interactions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In order to make ‘Make in India' success, extend investment allowance for efficiency enhancing tools like IT products, remove exclusion for expenses towards software tools for R&D deduction, incentives for digitization of SMEs, tailor incentives for skill development and employment generation for SMEs and large companies, revision/clarifications on export related issues like foreign tax credit policy, drawback scheme for services, carry backward of business losses etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Clarity in service tax between domestic and overseas vendors for e-commerce and export proceed realization (SEZ). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. There is need for MAT rate to be rationalized, applicability on transfer pricing on companies eligible under section 10A and 10 AA and introduce duty drawback scheme for software services like goods among others. </font></p>
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<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>iPhones as a Suit - Customs not amused </em></font></strong></font></p>
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<td><p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THIS</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> man tried to walk through Chinese Customs with 94 iPhones stuck to his body, but the Chinese Customs found something strange in the way he walked and the iPhones got seized on 11th January 2015. iPhones are manufactured in China, but a hefty VAT makes it beyond the reach of many citizens - smuggling is the next option. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems iPhone6 has a huge market in China - both black and white - the markets, not phones. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These phones are much cheaper in Hong Kong. </font></p></td>
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<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>RBI cuts Repo Rate</em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a surprise move today morning, Reserve Bank of India decided to: </font></p>
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<blockquote><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8.0 per cent to 7.75 per cent with immediate effect; </font></blockquote>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liabilities (NDTL); </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• continue with daily variable rate repos and reverse repos to smooth liquidity. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Stock Market is celebrating in style - it has saluted RBI with a 500 point increase in the SENSEX. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/PR.htm" target="_blank">RBI Press Release 2014-2015/1486 ., Dated: January 15 2015 </a></strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font color="#006600">Jurispruden</font></strong></strong></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><font color="#FF6633" size="4">tiol</font></em></strong></font></strong></font><em><strong><strong><font color="#006600">-Friday's cases</font></strong></strong></em></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2">Sales Tax </font></strong></font></p>
<p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Official Liquidator is a dealer liable to pay tax - Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>OFFICIAL</strong> Liquidator is an officer of the Court and that for the purpose of discharging statutory obligations imposed under the Act, 1956, the Official Liquidator merely steps into the shoes of the company in liquidation. By virtue of the notice issued by the Official Liquidator for inviting tenders, dated 26.11.2001, it is amply evident that the liquidator intended to conduct a transfer of the said goods in liquidation. Since the conduct of an auctioned sale involved transfer of goods, it falls within the wide ambit of section 2(viii)(f) of the Act, 1963. Therefore, it can be concluded that the liability to pay sales tax, in the present case, would be on the Official Liquidator in the same manner as the dealer, that is, the Company in liquidation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Official Liquidator would be required to pay the tax payable on the sale of the assets of the company in liquidation. </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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether when assessee is engaged in business of race horses and has betting income it cannot set off losses incurred in earning such income - YES: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a breeder and owner of race horses. The assessee had shown betting income and while computing the total income, the assessee had adjusted the losses suffered under the head 'business' against the income earned under other heads, including betting income, and after setting off such losses, and the betting income was brought to tax by the assessee at the flat rate of 40% as prescribed u/s 115BB of the Act. This computation was refused by the AO and held that the total winnings are to be taxed u/s 115BB and losses cannot be set off against such income. Accordingly, the total winnings from betting were brought to tax at the rate of 40% as envisaged u/s 115BB of the Act. The CIT(A) allowed the appeal of the assessee that tax is to be computed on the net betting income receipts. This was further confirmed by the Tribunal and hence this appeal by the Revenue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue is - Whether when the assessee is engaged in the business of race horses, and has betting income it cannot set off losses incurred in earning such income. And the answer is YES. </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"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rule 16 of CER, 2002 does not require maintenance of any records - Returned goods have to be treated as inputs and the assessee having shown the issuance of the said inputs from their RG-1 are deemed to have manufactured final product - CENVAT reversal cannot be sought: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> respondents are engaged in the manufacture of Aluminum Foils. The said final product cleared by them on payment of duty to their customers is sometimes received by them either under the cover of the invoices issued by their customers or under the cover of the invoices issued by the respondent themselves. In terms of the provisions of Rule 16 of the CER, 2002 the respondent was entering goods in their input receipt register and was availing the CENVAT Credit. There is no dispute about the availment of credit by the Respondents. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, it is the Revenue observation that after entering the goods in their CENVAT Account, the assessee has simpliciter shown the issuance of the said inputs for further manufacture, without maintaining any records about the same. </font></p>
<p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns tomorrow for the judgements </strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice day.</strong></font></p>
<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"><strong><a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in </a></strong></font></p>
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