TIOL-DDT 2802 · the untouched capture
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<p align="justify"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2802</font></strong><br>
<strong>08 03 2016<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><em><strong>GoDaddy activities in India are bundle of support services exported - No Service Tax: AAR</strong></em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GODADDY</STRONG> India Web Services Private Limited (GoDaddy India) proposes to enter into a 'Services Agreement' with GoDaddy.com, LLC('GoDaddy US') located in Arizona, USA and incorporated in Delaware, USA. GoDaddy US is a domain name registrar and provides other web services to customers across the world. GoDaddy India proposes to provide a gamut of services to its client GoDaddy US. It shall provide support services in an integrated manner to assist GoDaddy US develop its brand in India, carry on its operations efficiently and serve customers in India. GoDaddy US, through its website 'GoDaddy.com' is engaged in the business of providing name registration, web hosting, designing and other services.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>GoDaddy India</em> will provide the following services to GoDaddy US:</font></p>
<p align="justify"> </p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Direct Marketing:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Branding Activities:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Offline Marketing:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Supervision of quality of third party customer care center services:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Payment processing services:</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For these services, <em>GoDaddy India</em> will charge a fee equal to the operating costs incurred by it plus a mark-up of 13% on such costs, which will be received by the applicant from GoDaddy US in US Dollars. It is contemplated that GoDaddy US would be the only customer of <em>GoDaddy India</em>. It would not provide any services for or on behalf of GoDaddy US in India or outside India.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>GoDaddy India</em> has approached the Authority for Advance Rulings for ruling on the taxability of their activities.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AAR decided the case on 4th March 2016. The questions and the rulings are:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Question No.1:</strong> <em>Whether, in the facts and circumstances the various support services proposed to be provided by the Applicant to GoDaddy US are a "bundle of Services" being naturally bundled in the ordinary course of business and accordingly is a single service, being 'business support service', in terms of Section66F of the Finance Act?</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ruling:</strong> <em>the various support services proposed to be provided by the Applicant to GoDaddy US are a "bundle of Services" being naturally bundled in the ordinary course of business and accordingly is a single service, being business support service, in terms of Section 66F of the Finance Act.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Question No. 2:</strong> <em>If the answer to Question 1 is positive, whether, in the facts and circumstances of the case, the place of provision of business support service by the Applicant, is outside India in terms of Rule 3 of the Place of Provision of Service Rules, 2012 ("POPS"). If the services provided by the Applicant are not considered as naturally bundled then in the facts and circumstances enumerated, which of the individual service shall qualify for classification under Rule 3 of the POPS as service provided by a service provider located in India to a service recipient located outside India?</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ruling:</strong> <em>the place of provision of business support service provided by the applicant, is outside India in terms of Rule 3 of the Place of Provision of Service Rules, 2012.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Question No. 3:</strong> <em>Whether in the facts and circumstances and in the light of the answers to questions 1 and 2 above, the services to be provided by the Applicant to GoDaddy US that fall to be classified under Rule 3 of the POPS qualify as export of taxable services in terms of Rule 6A of the STR and therefore remain non-taxable for purpose of payment of service tax under the Finance Act?</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ruling:</strong> <em>the services to be provided by the applicant to </em>GoDaddy <em>US would fall to be classified under Rule 3 of the Place of Provision of Services Rules, 2012 qualify as export of taxable services in terms of Rule 6A of the Service Tax Rules, 1994 and therefore remain non-taxable for purpose of payment of service tax under the Finance Act.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Question No.4:</strong> <em>Whether in the facts and circumstances of the case, by providing the support services being business support to GoDaddy US, the Applicant is providing any service to the customers of GoDaddy US in India?</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ruling:</strong> <em>In facts and circumstances of the case, by providing the payment processing services to GoDaddy US, the applicant is not providing any service to the customers of GoDaddy US in India.</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this Ruling today. Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26392" target="_blank">Breaking News.</a></strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>Govt Notifies India-ASEAN Trade in Goods Agreement (Safeguard Measures) Rules</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOVERNMENT</STRONG> has notified the India-ASEAN Trade in Goods Agreement (Safeguard Measures) Rules, 2016.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Director General shall determine serious injury or threat of serious injury to the domestic industry taking into account, <em>inter alia</em>, the following principles, namely:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the Director General shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the good concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilisation, profits and losses and employment; and</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the determination referred in clause (a) shall not be made unless the investigation demonstrates, on the basis of objective evidence, the existence of the causal link between increased imports of the good concerned under the Trade Agreement and serious injury or threat thereof and when factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to increased imports.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Director General shall, after he has decided to initiate investigation to determine the serious injury or threat of serious injury to domestic industry, consequent upon the increased imports of a good into India on account of tariff concession under the Trade Agreement, issue a public notice notifying his decision.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"serious injury"</em> means a significant overall impairment of the domestic industry.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzNTQ=" target="_blank">Notification No.37/2016-Cus.,(N.T.), Dated: March 04, 2016</a></strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>EPC Contracts - Taxability of Consortium Members - CBDT Clarifies</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> consortium of contractors is often formed to implement large infrastructure projects, particularly in Engineering, Procurement and Construction ('EPC') contracts and Turnkey Projects.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tax authorities often take a position that such a consortium constitutes an Association of Persons ('AOP') i.e. a separate entity for charging tax. The claim of taxpayers, on the other hand, is contrary to this view. This has led to tax disputes particularly in those cases where each member of the consortium, although jointly and severally liable to the contractee, has a clear distinction and role in scope of work, responsibilities and liabilities of the consortium members.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The term AOP has not been specifically defined in the income-tax Act, 1961. In the specific context of the EPC contracts/Turnkey projects, there are several contrary ruling of various Courts on what constitutes an AOP.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to avoid tax-disputes and to have consistency in approach while handling these cases, the Board has decided that a consortium arrangement for executing EPC/Turnkey contracts which has the following attributes may not be treated as an AOP.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. each member is independently responsible for executing its part of work through its own resources and also bears the risk of its scope of work i.e. there is a clear demarcation in the work and costs between the consortium member and each member incurs expenditure only in its specified area of work;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. each member earns profit or incurs losses, based on performance of the contract falling strictly within its scope of work. However, consortium members may share contract price at gross level only to facilitate convenience in billing.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. the men and materials used for any area of work are under the risk and control of respective consortium members;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. the control and management of the consortium is not unified and common management is only for the inter-se coordination between the consortium members for administrative convenience;</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzNTk=" target="_blank">CBDT Circular No. 07/2016., Dated: March 07, 2016</a></strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>FTP - Tobacco Board, Guntur is empowered to issue GSP Certificate</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended Appendix 2C of Appendices and Aayat Niryat Forms of FTP 2015-20 i.e., list of agencies authorized to issue Generalized System of Preferences (GSP) Certification to include Tobacco Board, Guntur in the list.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTkzNjU=" target="_blank">DGFT Public Notice No. 63/2015-20., Dated: March 07, 2016</a></strong></font></p>
<p align="center"><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><strong><em>Excise Duty on Gold Jewellery - Kal, Aaj aur Kal?</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was in the Budget speech of 2005 that the then Finance Minister Chidambaram said, <em>"Expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery I propose to levy an excise duty of 2%"</em> and the gold rush started for the Department. Within hours of the FM's budget speech, excise sleuths descended on gold shops to do stock taking. The agitated traders pulled down shutters and closed business. Within three days on 4.3.2005, Board came up with a clarification that every sign or mark is not a brand name.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even though the duty was only on branded jewellery, there was serious resentment.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finance Minister Pranab Mukherjee in his 2009 Budget Speech said,<em> "I fear that my proposals relating to gold and silver on the customs side would somewhat dent my popularity with women. I propose to salvage this by fully exempting branded Jewellery from excise duty."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the 2011 Budget, the same Finance Minister brought back the 1% excise duty on gold jewellery. Gold merchants again protested vociferously. But in the very next Budget 2012, Finance Minister Pranab Mukherjee said, <em>"The House would recall that I had re-introduced a levy of excise duty of 1 per cent on branded precious metal jewellery in the last Budget. As a measure of rationalisation, I propose to include jewellery, not bearing a brand name, under its ambit."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All hell broke loose and the reaction was so strong that at the beginning of the budget discussion in the Lok Sabha on 7th May 2012, Finance Minister Pranab Mukherjee retracted saying, <em>"A related proposal that has attracted public attention is the imposition of Central Excise duty on unbranded precious metal jewellery at the rate of 1%. Madam Speaker, I would like to reiterate that the levy was well-intentioned and introduced not so much for raising revenue as for rationalization and movement towards GST. However, the outpouring of sentiment both within and outside the House indicates that we are not ready for it. As such, the Government has decided to withdraw the levy on all precious metal jewellery, branded or unbranded, with effect from 17th March, 2012."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Four years later, Finance Minister Arun Jaitley has brought back the same enterprise and the gold trade has reacted with the same vigour. The FM said in his 2016 Budget Speech, <em>"I also propose to impose an excise duty of '1% without input tax credit or 12.5% with input tax credit' on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other precious stones], with a higher exemption and eligibility limits of Rs. 6 crores and Rs. 12 crores respectively. Necessary steps will also be taken to enable the new taxpayers to comply with this levy without any difficulty."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the gold trade is on strike since then.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why is the Government repeatedly imposing this golden duty and withdrawing it? Is there a Section in the Board meant to embarrass Finance Ministers periodically with this gold levy? Is the present Finance Minister informed about the earlier fiascos?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Or are they condemning him to repeat the mistakes of history?</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Another Mackenna's gold in the making!</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Legend has it that a gold fortune is hidden in the Canyon, Del Oro guarded by the Apache gods. Marshal Mackenna kills an Indian chief and gets a map that supposedly shows the way to the treasure. Though skeptical, he memorizes the directions before burning the map.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mexican outlaw Colorado and his gang had been tracking the old man to get the map and they were chased by the U.S. army. He takes shelter in the house of a judge whom he kills and kidnaps his daughter, Inga as a hostage in case the cavalry catches him. Colorado forces Mackenna to lead him to the canyon.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On their trek, they are joined by others infected by gold fever, among them a newspaper editor, a storekeeper, a priest etc,. They are trailed by the cavalry, under Sergeant Tibbs, who periodically sends messengers back to his commanding officer, supposedly to keep him informed. Eventually, the patrol is reduced to just a couple of men whom Tibbs himself kills so that he can join the outlaws.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally, they reach the place shown in the map. They enter the canyon and find pure gold on the sides. While the rest are celebrating their great fortune, MacKenna escapes with Inga. Colorado kills the rest of the gold hunters. The Apaches attack and the rocks start shaking and the whole canyon begins crashing down. Colorado leaves in disgust, believing the gold has been buried beyond his reach. MacKenna and Inga also escape. In the end, a saddlebag on the horse Mackenna took in the mad scramble is found to be full of gold.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Yes there was gold after all.</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice day.</strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p>
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