TIOL-DDT 341 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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>
<div align="justify">
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 341</font><br>
13 04 2006<br>
Thursday</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service
Tax on GTA - DGSTs missive still active</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The field refuses
to believe that the DG, Service Tax has withdrawn his controversial letter
on availability of credit on Service Tax on GTA service.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1458">TIOL-DDT
92 - 11 04 2005</a>, we wrote,</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax
- Goods Transport- DGST causes further confusion.</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What will the
poor assessees do if the officers who are meant to be there to solve their
problems themselves create confusion? Most of the Central Excise assessees
who are also required to pay Service Tax on goods transport have been paying
tax only on 25% of the value in terms of Notification No. 32/2004-Service
Tax, Dated : December 3, 2004 and <b>they are right</b>. Now the DG, Service
Tax has issued a clarification to all the Chief Commissioners that this exemption
is available only if the transport agency pays the tax and not if the consignor
or consignee pays it. The learned honourable and totally confused DG does
not mention, why he thinks so. The notification does not insist on any such
condition. Sadly the DGs understanding of the notification is different, but
the moot question is, what is the DGs authority for issuing such a clarification?
Of course thankfully his clarification is contained in a letter to the Chief
Commissioners who have been asked to share this wisdom with their commissioners.
Now the Commissioners or at least their Superintendents will have a lot of
explaining to do in the field to convince the assessees that they have to
pay tax on the full value and not 25%, because the Honourable DG, Service
Tax thinks so. The DG is not the Board and therefore his clarifications are
not binding even on the department let alone the assessees. But the field
is certainly not going to keep quiet. DDT asked a senior officer who felt
that the DGs clarification is patently wrong whether he was going to implement
it. Of Course, I am, he said. But Why Sir?, He is not the Board and you are
not bound by his clarifications , DDT asked. <b>HE is going to be in the Board
soon and that is good enough reason</b>, was the cryptic reply. Before the
field goes on the rampage, it is hoped that the CBEC will come with a proper
clarification. Some time back the CBEC had issued a direction to the Commissioners
not to issue Trade Notices. The Board should come with such a clarification
that DGs should not give clarifications -especially on important issues like
notifications. This should be the exclusive purview of the Board after all
they make these notifications and they know the intention. Further they can
obtain the views of the Law Ministry and also amend notifications even with
retrospective effect, if necessary. This one small clarification of the DG
will result in thousands of Show Cause Notices, if the Board does not come
up with an urgent clarification.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Two days later
in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1469">TIOL-DDT
94 - 13 04 2005</a>, we wrote,</font></p>
<p><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service
Tax on GTA - DG withdraws clarification</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>WE are happy
to report that the DG Service Tax has withdrawn the controversial clarification
we reported yesterday.</b> On behalf of thousands of assessees
spread across this large country, we express our deep feelings
of gratitude to the DG Service Tax for the courage in withdrawing the clarification
which we pointed out was patently illegal. Any one can make a mistake;
it takes real strength to correct a mistake. A responsible and responsive
tax administration ready to admit a mistake and that too promptly before
much damage could be done is the greatest happening. Now the consignors/consignees
can continue to pay Service Tax on 25% of the value. Yesterdays
storm was only one in the tea cup and it has blown over. Alls well
that end well. Your Taxindiaonline promises to humbly continue with its
mission to constantly watch and report such aberrations and this kind of
prompt corrections boost our morale. Thank you DG!</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But officers
in the field who knew their DG were not prepared to believe that the DG
would withdraw his circular. So in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=1748">TIOL-DDT
105 - 02 05 2005</a>, we confirmed
that the DG had indeed withdrawn his circular.</font></p>
<p><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service
tax GTA - DGSTs clarification Truly withdrawn</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since DDT
carried the information on 13-04-2005 that the DGST has withdrawn its
controversial clarification on service tax on GTA, we were flooded with
request for copies of the clarification. While the Chief Commissioners
were very prompt in sending to the field the DGFTs original, clarification it appears
that withdrawal of the letter has not been communicated to the field. One
hapless assessee wrote to us that his Range Officer is asking him to produce
a copy of the DGSTs letter or pay higher tax. We confirm that the
DGST has indeed withdrawn the clarification in a letter address to all
the Chief Commissioners. The letter states :</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The letter F
NO V/DGST/43-GTO/02/2005 dated 30.3.2005 issued by this Directorate in respect
of applicability of Notification No 32/2004 dated 03.12.2004 is hereby withdrawn.
And it is signed by the DG himself. It would be very nice if the DG gives
an official clarification that his original clarification is withdrawn to
avoid further damage.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The officers
are not impressed and <b>DDT</b> understands that Show Cause Notices are being
issued in several places. Recently the Commissioner, Service Tax in the
Board clarified in a seminar that the DGs letter was indeed
withdrawn. But even this is no leash for the Show
Cause Notice hungry officers. They continue to be issued merrily. DDT got this
frantic mail from a harassed assessee,</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though TIOL
has reported that the 75% abatement on GTA is available to everyone as
per clarification given by Mr. Gautam Bhattacharya - Commissioner of Service
Tax, our local Service tax office (Raigad commisionerate
in Maharashtra) is not ready to
listen to this and asking us for the payment.
They are in fact in the process of issuing show
cause notices to us.<br>
<br>
We are surprised at the attitude of this office. Is it possible that the DGST
has not issued any circular to its offices? What
should we do?<br>
<br>
We confirm that the DGST has withdrawn his letter and this was confirmed by
the Commissioner, Service Tax in CBEC. It is
exactly a year since the DG has withdrawn his clarification but it strange
that field officers are more loyal than the king. The Chief Commissioners who
were prompt ion communicating the DGs
letter were not equally prompt in communicating his withdrawal. Unnecessary
litigation is being produced and multiplied. Board and the DGST should once
again clarify that the instructions are withdrawn and any body who acts on
the withdrawn instructions should be punished.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With
a hope to put the issue to rest we are giving here a copy of the letter from
DGST withdrawing his instructions. It may please be noted that the letter
is signed by the DG himself.<br>
<br>
<img src="http://www.taxindiaonline.com/RC2/image/stories/ddt13letter.gif" alt="Letter" width="450" height="515">
</font> </p>
</div>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<br>
<strong><font color="#006600">Are IIMs manpower recruiting agents?</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Service Tax department thinks so. And so they would want the IIMs to pay Service
Tax. The IIMs are not impressed. Recently the IIM graduates got employed from
the campus with fancy salaries. The Service Tax department thinks, it is entitled
to a share in the booty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IIM,
Ahmadabad Director Bakul Dholakia feels that the IIMs are not liable to pay
Service Tax. According to him, the IIM-A is not a manpower recruiting agency
and therefore does not come under the purview.<br>
<br>
He admitted that the IIMs are charging US $5,000 to Rs 1,50,000 per candidate.
The director said the institute incurred Rs 3.5 lakh as expenses on each
student of the post-graduate programme of which Rs 1.5 lakh were recovered
as fees from the students while the rest were recovered from the companies
who came for campus recruitments.<br>
<br>
"IIM-A can by no stretch of imagination be compared with a manpower placement
agency. We are opposing this on principle," according to the IIM-A Director,
Prof. Bakul Dholakia.<br>
<br>
The IIMs collect the placement fees from recruiters only to keep the cost
of education low for the students and this principle has been agreed upon
by the Government, Prof Dholakia said.<br>
<br>
Asked what would happen if the IIM lost its case with the Service Tax Department,
Prof Dholakia said the companies visiting the campus had been informed about
the possible liability. However he added that, we oppose it as we are an
educational institute and not a placement agency”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service
Tax officers are fond of summoning officers and the summons look very threatening.
Recently a professor was summoned to furnish particulars for a subsequent
period to a period for which he had already been given Show Cause Notice.
His plea that for furnishing records, he not need not be physically present
was not appreciated. They insisted that he should appear in person. Now the
IIM director is in serious danger of being summoned by a Superintendent.
The policy of the government is to encourage education not to tax it???</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">New
and simplified income tax law</font></strong></font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new and simplified income
tax law is in the offing and the government is working on a comprehensive
legislation to replace the cumbersome and voluminous Income Tax Act. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Four working groups have been set up to provide inputs for drafting a new
income tax legislation and they would submit their reports by this month-end. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Minister had announced in last year's budget that a new comprehensive
Income Tax Bill would be drafted by 2005-end to replace the archaic law as
part of tax reforms. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<font color="#006600"><strong>Mohammedan Sporting appoints controversial Central
Excise Superintendent as coach</strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was only about four months
ago that East Bengal coach Subhas Bhowmick was caught by CBI for receiving
an alleged bribe. Apparently Bhowmick is a good coach and now Mohammedan Sporting
has appointed him coach.<br>
</font></p>
<P align=center><B><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt.jpg" width=375></B></P>
<TABLE cellSpacing=0 cellPadding=0 width=350 align=center border=1>
<TBODY>
<TR>
<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>In
pari passu </I></B></TD>
</TR>
</TBODY>
</TABLE>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><br>
<br>
<font color="#663399">On equal footing - side by side</font><font color="#0000FF"><br>
</font><br>
Creditors who are entitled to receive out of the same fund without any precedence
over each other</strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
Thus whatever course is open to the appellate authority while disposing of an
appeal would apply pari passu to an application made under Section 35E and thus
would include the power to condone the delay also.</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
increase of modvat credit would be pari passu with the increase in the payment
of duty on the inputs</font></strong></p>
<p align="justify"><strong><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 pari passu.</font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
the income-tax payable also being a debt has to rank pari passu with other debts
due from the company<br>
<br>
<font color="#663399">Litigation - A machine which you go into as a pig and come out as a sausage.</font></font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Monday with more DDT</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice extended weekend.</font></p>
<p align="justify"><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">vijaywrite@taxindiaonline.com</a></font></p>
</body>
</html>