TIOL-DDT 338 · the untouched capture
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<div align="justify"><font color="#3333FF" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT
338</font><font color="#663399"><br>
</font></strong></font><font color="#663399"><strong><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">07
04 2006<br>
Friday</font></strong> </font><font color="#000000" face="Verdana, Arial, Helvetica, sans-serif">
</font><font face="Verdana, Arial, Helvetica, sans-serif"> </font><font face="Verdana, Arial, Helvetica, sans-serif">
</font><font face="Verdana, Arial, Helvetica, sans-serif"> </font><font face="Verdana, Arial, Helvetica, sans-serif">
</font><font face="Verdana, Arial, Helvetica, sans-serif"> </font></div>
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<p align="center"><font color="#006600" size="2"><strong>Service Tax on Photography
Services - yet another salvo from DGST</strong></font></p>
<p><font size="2">A little recap - Board had in F.No.B.11/1/2001-TRU) dated 9th
July, 2001 clarified,</font></p>
</font>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font 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. <strong>No other cost (such as photographic paper,
chemicals, etc.) is excluded from the taxable value.</strong></font></font></p>
</blockquote>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="justify"><font size="2">This circular was unsuccessfully challenged in the Kerala High
Court and the Supreme Court. In the meantime Board had, in a letter addressed
to the Punjab Colour Lab association, clarified that the input material consumed/sold
is not includable in the value of taxable services. However recently Board had
decided that the clarification is wrong and so it is withdrawn. Now DGST enters
the picture and clarifies that the provisions of the notification will prevail
over the clarification given by the Board and so he wants his boys to attack
the photo studios immediately and recover the arrears - Perhaps with interest
and penalty. The photographers can be charged with suppression and collusion
in not understanding that the Board clarification was patently illegal and not
bringing it to the notice of the authorities that the clarification was wrong.
With so many clarifications and disputes, may be a time will come when we will
have to handover the Service Tax administration to the Indian Army. On this
issue <font color="#0066FF"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2859">DDT 237</a></u></font> on 9.11.2005
had asked </font></p>
</font>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><strong>"Now
what prevails? Board clarification or Supreme Court judgement?</strong> Board's
letter to the Association is extracted here for your perusal. <strong>The
least that is expected of the Board is to give a clarification on the latest
position - publicly please!"</strong></font></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has given the clarification now. Strangely after the Right
to Information Act has come into force, the Board and its officers are secretive
about such highly public matters. These clarifications are contained in letters
to Chief Commissioners. Why can't they be properly publicized as circulars?.</font></p>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="center"><font color="#006600" size="2"><strong>Board Clarifies</strong></font></p>
</font>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL</strong> understands that Board has clarified/decided/likely
to clarify the following</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Legislative amendments in respect of Settlement Commission – Service Tax to come under settlement?</strong>: The review committee
constituted by the Chairman of the Settlement Commission had suggested the following</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1)
Amend Section 32E of the Central Excise Act and Section 127B of the Customs
Act to provide for settlement of cases in pursuance to the show cause notices
issued to declarants who have not filed returns and similarly cases relating
to import or export through baggage, courier or by post.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2)
Extend the scope of settlement Commission in matters relating to service tax.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3)
Amend Customs Act to align with para 2.46 of the Foreign Trade Policy 2004-2009,
to provide for settlement of cases in sow cause notices issued by DGFT.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4)
Remove the restrictions imposed under section 127B of the Customs Act in relation
to goods notified under Section 123.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5)
Provision for settlement of cases of the co-noticees, namely, Directors, transporter,
associates etc. under the Central Excise Act.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6)
Provision for settlement of cases that are already pending before the Tribunal.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(7)
Prescribe uniform rate of interest under Section 127C of the Customs Act and
Section 32F of the Central Excise Act to align with statutory rate of interest
prescribed under section 23AB and Section 11AB respectively.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(8)
Provision for prosecution of offences in relation to service tax matters.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has not found any of these suggestions feasible for acceptance
except the one relating to service tax.</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mechanism for review of the order-in-original and order-in-review
passed by the Commissioners in Service Tax cases. - No Committee to review Service
Tax orders</strong> - Board was of the view that Service Tax is at a nascent
stage and evolving; hence it should be allowed to settle down. Accordingly the
proposal to amend section 86(2) of the Finance Act, 1994, so as to align the
review provisions, in respect of orders passed by Commissioners in service tax
cases, with the provisions of the Customs and Central Excise Law through a mechanism
of review by a Committee of Chief Commissioners may not be appropriate for the
present. Thus the Board would continue to review the orders passed by the Commissioners
in respect of Service Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Transfer of cases requiring review by the Committee
of Chief Commissioners, where one of the members of the committee had passed
order in such case.</strong> - The Board considered that the Committee of Chief
Commissioners and Commissioners have been constituted under Customs and Central
Excise Acts for the purpose of independent review of the orders passed by the
Commissioners and Commissioner (Appeals). In view of this and on the principle
that 'no person can be a judge in his own cause', Board decided that in a case
where one of the Chief Commissioners had decided the case, as Commissioner,
he would not be part of the Committee and the Chief Commissioner of adjoining
Zone or Commissioner of adjoining commissionerate in the Committee would be
co-opted for deciding such cases.</font></p>
<p> </p>
<p align="center"><B><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt.jpg" width=375></B></p>
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<TD><IMG height=67 hspace=5 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle vspace=5><B><I> Pari Passu </I></B></TD>
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<p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">By
an equal progress; equably; without preference.</font></strong></em></p>
<p align="justify"><font color="#663399"><em><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">creditors
who, in marshalling assets, are entitled to receive out of the same fund without
any precedence over each other.</font></strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A broad analogy,
though in itself may not be conclusive, is furnished by the idea of "mutual
dealings" and the principle of set-off statutorily recognized in bankruptcy
proceedings under section 46 of the Provincial Insolvency Act and attracted
also to proceedings for winding up of companies by virtue of section 529 of
the Companies Act, 1956, where the 'mutual credit' clause steps in to avoid
the injustice, which would otherwise arise, of compelling a creditor to pay
the official assignee the full amount of the debt due from him to the insolvent,
while the creditor would, perhaps, only receive a small dividend on the debt
due from the insolvent to him under a<font color="#3333FF"> pari passu</font>
payment - <font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-129-SC-IT.htm"><b>2002-TIOL-129-SC-IT</b></a></font><font color="#006600"><u></u></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 11A is
a recovery provision and the two Sections 11A and 11B, although in a sense complementary,
are not really <font color="#3333FF">pari passu</font>. Section 11A provides
for two different time-limits for recovery which is absent in Section 11B. –
CESTAT </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Income tax payable
being a debt has to rank <font color="#3333FF">pari passu</font> with other
debts due from the company</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whatever
course is open to the appellate authority while disposing of an appeal would
apply <font color="#3333FF">pari passu</font> to an application made under Section
35E and this would include the power to condone the delay also</font></p>
<blockquote>
<p align="justify"><font color="#663300" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>“What
was originally a forgery would remain null and void forever and it would not
acquire legal validity at any time by whatever process of sanctification subsequently
done on it. Forgery is antithesis to legality and law cannot afford to validate
a forgery.”</em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Supreme
Court of India in New India Assurance Co. Vs. Kamla </b></font></p>
</blockquote>
<p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until
Monday with more DDT</font></font></p>
<p><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice Weekend. </font></font></p>
<p><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<font color="#3333FF"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font>
</font> </p>
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