TIOL-DDT 2910 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=26988"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2016.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="252" height="220" hspace="5" border="0" align="right" ></a></font><font color="#663399" size="3">TIOL-DDT 2910</font><br>
16 08 2016</strong></font><br>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tuesday</strong></font></p>
<p align="center"><em><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600">Service Tax on Freight Forwarders on Transportation of Goods from India - CBEC Clarifies </font></strong></font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Board first recapitulates the provisions of Law as:</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In terms of rule 10 of the Place of Provision of Services Rules 2012, ('POPS Rules 2012') the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory and hence not liable to service tax.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Rule 9 of the POPS Rules 2012, stipulates that the place of provision of intermediary services is the location of the service provider.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. An intermediary has been defined, <em>inter alia</em>, in rule 2(f) of the POPS Rules 2012, as one who arranges or facilitates the provision of a service or a supply of goods between two or more persons, but does not include a person who provides the main service or supplies the goods on his own account. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Board clarifies: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The freight forwarders may deal with the exporters as an agent of an airline/carrier/ocean liner, as one who merely acts as a sort of booking agent with no responsibility for the actual transportation. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In such cases the freight forwarder may be considered to be an intermediary under rule 2(f) read with rule 9 of POPS since he is merely facilitating the provision of the service of transportation but not providing it on his own account. When the freight forwarder acts as an agent of an airline/carrier/ocean liner, the service of transportation is provided by the airline/carrier/ocean-liner and the freight forwarder is merely an agent and the service of the freight forwarder will be subjected to tax while the service of actual transportation will not be liable for service tax under Rule 10 of POPS. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The freight forwarders may also act as a principal who is providing the service of transportation of goods, where the destination is outside India. In such cases the freight forwarders are negotiating the terms of freight with the airline/carrier/ocean liner as well as the actual rate with the exporter. The invoice is raised by the freight forwarder on the exporter. In such cases where the freight forwarder is undertaking all the legal responsibility for the transportation of the goods and undertakes all the attendant risks, he is providing the service of transportation of goods, from a place in India to a place outside India. He is bearing all the risks and liability for transportation. In such cases they are not covered under the category of intermediary, which by definition excludes a person who provides a service on his account. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It follows therefore that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is <font color="#FF0000">from a place in India to a place outside India. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Board advises the field: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You may deal with cases purely on the basis of the facts of the case, the terms of contract between the entities concerned, the provisions of the Finance Act, 1994, the POPS Rules 2012 and <font color="#990000">other rules.</font></font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As to what the <em>"other rules"</em> are, it is for the field formations to hunt for! </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzNDQ=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 197/7/2016-ST., Dated August 12 2016 </font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f1"></a>Special Advance Authorization for Apparel - DGFT and CBEC Sync </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Notification No. <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzMzk=" target="_blank"><strong>21/2015-2020</strong> </a> dated 11th August 2016, DGFT introduced a new scheme called <font color="#FF0000">Special Advance Authorisation Scheme</font> for export of Articles of Apparel and Clothing Accessories of Chapter 61 & 62 of ITC(HS) Classification with effect from 1st September 2016 wherein exporters are entitled for an authorisation for fabrics including inter lining on pre-import basis, and All Industry Rate of Duty Drawback for non-fabric inputs on the exports. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this Scheme, the exporters are also eligible for All Industry Rates of Duty Drawback as specifically determined by Central Government in which case, for the purpose of value addition norm of para 4.08 of FTP, the value of any other input used on which benefit of Drawback is claimed or intended to claimed has been specified in the DGFT notification as equal to 22% of the FOB value of export realized. However, option to claim drawback determined and fixed by Central Excise Authority (brand rate) under Rule 7 of the Drawback Rules 1995 remains in which case the value of inputs (other than the fabric imported duty free under the Special Advance Authorization) continues to be based on actuals. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To give effect to the Special Advance Authorisation Scheme, the <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzNDg=" target="_blank"><strong>Notification No. 45/2016-Customs</strong> </a>dated 13th August, 2016 has been issued providing exemption to fabrics (including interlining) from import duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And Notification No. <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzNDk=" target="_blank"><strong>110/2016-Customs (NT)</strong> </a>dated 13th August, 2016 has been issued providing, subject to the specified conditions, the alternative All Industry Rates (AIRs) of drawback in the Drawback Schedule for the exports made against the Special Advance Authorisation in discharge of export obligations in terms of Notification No. 45/2016-Customs dated 13th August, 2016. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As mentioned above, the scheme comes into force from 1 st September 2016. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC's Systems Directorate is making all the necessary EDI related arrangements for implementation including specifying the appropriate new scheme code that would need to be declared by exporters making exports under the Special Advance Authorization Scheme cum AIR Drawback. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzNDc=" target="_blank">CBEC Circular No. 37/2016-Customs, Dated: August 13, 2016 </a></font></strong></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f2"></a>EOUs - Out of Bond-age - DGFT syncs with CBEC </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Notification No. 44/2016-Cus., dated 29.07.2016, the Government has decided to to do away with the need to comply with warehousing provisions by </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Export Oriented Units (EOUs), </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Electronics Hardware Technology Park Units (EHTPs), </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Software Technology Park Units (STPIs) and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Bio-Technology Park (BTP) Units </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(Please see <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=Mjc2OTc=" target="_blank"><strong>DDT 2900 01 08 2016</strong></a>). This has come into force from 13.08.2016 </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the DGFT has also made the required changes in the Foreign Trade Policy and Hand Book of Procedures(HBP) to give effect to the CBEC Notification - also with effect from 13.08.2016. DGFT worked on a Saturday to issue this notification. </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=MjAzNDY=" target="_blank">DGFT Notification 22/2015-2020., Dated: August 13, 2016</a></strong></font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzNTE=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 25/2015-2020., Dated: August 13, 2016</font></strong></a></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f3"></a>Import of Electronic Goods by Post - CIF Value Enhanced. </font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is rather complicated. If you want to export or import, you should understand at least the following Statutes. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Foreign Trade (Development and Regulation) Act, 1992 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">- Foreign Trade (Regulation) Rules, 1993 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Foreign Trade (Exemption from application of Rules in certain cases) order, 1993 </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Foreign Trade Policy </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Foreign Trade Procedure </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Customs Act, 1962 with its Rules, Regulations, Notifications and Circulars </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> - Customs Tariff Act, 1975, with its schedules.
</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And all these are frequently amended. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The amazing fact is that the stakeholders DO keep trek of all this mountain of LAW. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per a combined understanding of all the above statutes, consumer electronic items of a CIF value not exceeding two thousand rupees can be imported by post. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Writing in our columns in March 2011, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTIyMTI=" target="_blank"><strong>Postal Imports - Can Amendments Cut Gordian Knot?</strong>,</a> JM Kishore explained: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Foreign Trade (Regulation) Rules, 1993 provide for various aspects relating to licencing. However, The Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993 stipulates several conditions/circumstances for Exemption from the application of these Foreign Trade (Regulation) Rules, 1993. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, in terms of the Rule 3(1)(i) of The Foreign Trade (Exemption from application of Rules in certain cases) Order, 1993, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Nothing contained in the Foreign Trade (Regulation) Rules, 1993 shall apply to the import of any goods, </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">by any person through the post or otherwise for his personal use, or by any institution or hospital for its use except- </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF0000">xxx </font></em></font></p>
<p align="justify"><font color="#FF0000"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">xxx </font></em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that the c.i.f value of goods imported as aforesaid at any one time shall not exceed<strong> rupees two thousand</strong>. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He had suggested that the value limit needs to be revised/enhanced to about Rs.10,000. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has now reacted. The limit is enhanced to Rs.50,000/-. The Foreign Trade (Exemption from application of Rules in certain cases) order, 1993, issued in exercise of the powers conferred by the Foreign Trade (Development and Regulation) Act, 1992 [read with the Foreign Trade (Regulation) Rules, 1993, if you please], is amended to enhance the limit to Rs. 50,000/-.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What does it all mean?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can import by post or air (what is the difference?) articles for your personal use up to a value of Rs. 50,000. It should be noted that this is not duty free as baggage is. The Customs Tariff has a heading 9804 which reads as: <strong>9804 - All dutiable articles, intended for personal use, imported by post or air </strong>and the Tariff duty rate is 35%. Nonetheless, Notification 12/2012-Cus provides a concessional rate of duty @10% in terms of sr. no. 517 in respect of all goods imported for personal use.</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjAzNDY=" target="_blank">DGFT Notification 22/2015-2020., Dated: August 12, 2016</a></font></strong></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600"><a name="f4"></a>Delhi High Court Strikes Down Service Tax on Hotel Accommodation</font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> we are trying to enter the arena of GST, the Delhi High Court on Friday struck down the levy of Service Tax on short term accommodation in hotels as it was outside the legislative competence of Parliament and an instance of encroachment by the Union into a field that is completely covered by a State legislation.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court made some interesting observations:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exemption from service tax on the provision of accommodation for a room having a declared tariff of less than Rs. 1,000 per day or equivalent is by Notification No. 12/2012 dated 17th March 2012. This is not provided in the Act or the Rules. In <em>Commissioner of Central Excise and Customs, Kerala v. Larsen and Toubro Ltd.</em> - <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA1ODM0" target="_blank"><strong>2015-TIOL-187-SC-ST</strong></a>, the Supreme Court affirmed the decision of the Orissa High Court to the effect that the machinery provisions for levy of the tax could not be provided by instructions and circulars.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTE3MDkw" target="_blank"><strong>2016-TIOL-1730-HC-DEL-ST</strong></a></font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFFFF" span="span">Approval of GST law by parliament has further strengthened our economy and all political parties are worthy of praise for making it possible. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFFFF" span="span">Taxation through GST is also bound to bring equality and a common system that will also unite the country. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFFFF" span="span">There is a class in the country, especially the middle class, the upper middle class, who is more troubled with income- tax officials than the police. I have to change this situation, I am trying and I will change it. But there was a time when an honest Taxpayer would pay his income-tax, even pay extra two rupees so that he does not face any problem. But, once the tax was deposited, he would face difficulties in getting refund. He even had to go to the extent of canvassing and wait endlessly for the refund. Now, we have introduced a system of online refund. Now refund is done within a time frame of 1 to 3 weeks. Those who are watching this telecast on television will also agree that their refund reached them directly, without any application for it. This became possible only due to efforts in making government accountable. </font></p>
<p align="right"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>From Prime Minister Narendra Modi's Independence Day Speech</em></strong></font></p>
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<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></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" target="_blank"><strong>vijaywrite@tiol.in</strong></a></font></p>
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