TIOL-DDT 345 · the untouched capture
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<font color="#663399" size="3">TIOL-DDT 345</font><br>
</b></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><b>20
04 2006</b></font> <font size="2"><b><br>
Thursday</b></font>
<p align="center"><font color="#006600" size="2"><strong>Finance Bill enacted
– Even Finance Ministry not aware! </strong></font></p>
</font>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Finance Act 2006 is a reality now. It was enacted on 18.4.2006 with the
President giving his assent to the Bill, but till late evening of 19.4.2006,
even the Finance Ministry was not fully aware of this. It seems
the Service Tax assessees of this country are expected to have an agent in
the Rashtrapati Bhavan, who will inform them, when the President signs the
Bill. All the assessees, who did not have the facility of appointing a secret
agent in the Rashtrapati Bhavan, are condemned to pay the excess Service
Tax applicable from 18.4.2006. Ignorance of law is not an excuse for the
assessee; it may be for the government. The CBEC has come to know about the
enactment on 19th and promptly they have issued some notifications.
Real good work TRU, but what about the <b>poor assessees who charged only
10% Service Tax on 18th and 19th of April 2006?</b> He has to now pay the
differential duty for the two days and what will happen if his customers
refuse to pay the difference? This raises a question, “was it necessary
to make the budget changes effective from the day of enactment?. Why could
these not be made effective from a notified date, which could have been May
1st? Are the Parliament and the Government so insensitive to people’s
woes? How fair is it to say that your duty has gone up with effect from day
before yesterday? How on earth somebody is to know what papers the President
signs? We talk so much about the Right To Information but laws are brought
into effect without making them known to the stake holders. Can a law have
effect if it is not made known to the public? Perhaps Parliament should make
a law that no Act is effective till fifteen days of its publication in the
official gazette and through the mass media. Heavens are not going to fall
if the Finance Act is not implemented immediately, but <b>a lot of silly
litigation can be avoided if proper announcements are made.</b> Except TIOL
nobody had carried the notifications issued on 19th April pertaining to the
Finance Act which became effective from 18th April. <b>And our sincere efforts
to bring the laws of the government to the governed as soon as possible do
not always get any support from the government.</b> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any
way the fact of the matter is the Finance Act has come into force from 18.4.2006
and the higher rate of 12% Service Tax is effective from that date. Whether
you have collected the higher rate or not you will be liable to pay this rate.
Several other provisions of the Act come into force – no have already
come into force. The following Sections have come into force.</font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 66A
– charge of service tax on services received from outside India. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 67
– valuation of taxable services for charging service tax. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 73(1A)
– payment of service tax after issue of show cause notice. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 73A
– service tax collected from any person to be deposited with Central
Government. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 73B
– interest on amount collected in excess. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 73C
– provisional attachment to protect revenue in certain cases. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 73D
– publication of information in respect of persons in certain cases.
</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 76
– penalty for failure to pay service tax. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 87
– recovery of any amount due to Central Government. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 93A
– power to grant rebate. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 94(2)
– power to make rules. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Section 96(C)(2)(f)
– application for Advance Ruling.</font></li>
</ul>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Output
service – Cenvat Credit Rules amended</strong> </font></p>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<p>As per Rule 2(p) of the Cenvat Credit Rules, </p>
</font>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(p)
"Output service" means any taxable service provided by the provider
of taxable service, to a customer, client, subscriber, policy holder or any
other person, as the case may be, and the expressions ‘provider’
and ‘provided’ shall be construed accordingly;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Explanation.- For
the removal of doubts it is hereby clarified that if a person liable for paying
service tax does not provide any taxable service or does not manufacture final
products, the service for which he is liable to pay service tax shall be deemed
to be the output service.</font></p>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<p>Now this explanation is removed. What are the implications? DGST will immediately
give a clarification and some Chief Commissioners will also come up with clarifications,
confusing the issue totally. The Board’s press statement affirms,</p>
</font>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule
5 of the Taxation of Services (Provided from Outside India and Received
in India) Rules, 2006 specifically state that the services received from
outside India are not treated as output services for the purpose of input
credit availment by the recipient of services. In view of this rule, the
said explanation is being omitted.</font></div>
</li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But
this explanation has implications elsewhere as in the case of Service Tax on
Goods Transport, where it is possible that the recipient who is required to
pay Service Tax may not be a manufacturer or Service Provider. What happens
then? We will explain in the days to come. Already we have received mails whether
GTA Service Tax cannot be paid from Credit account.</font></p>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/exnt06_08.htm"><strong>Notification
No. 8 /2006-Central Excise (N.T.)</strong></a> <strong>and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_011.htm">11
– Service Tax dated 19th April, 2006</a></strong></p>
</font>
<p align="center"> </p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest
under Section 73B to be 13%</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per section 73B, which came into effect from 18.4.2006, “Where an amount
has been collected in excess of the tax assessed or determined and paid for
any taxable service under this Chapter or the rules made thereunder from the
recipient of such service, the person who is liable to pay such amount as determined
under sub-section (4) of section 73A, shall, in addition to the amount, be liable
to pay interest at such rate not below ten per cent, and not exceeding twenty-four
per cent, per annum, as is for the time being fixed by the Central Government,
by notification in the Official Gazette, from the first day of the month succeeding
the month in which the amount ought to have been paid under this Chapter, but
for the provisions contained in sub-section (4) of section 73A, till the date
of payment of such amount”</font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
the Government has notified the rate of interest as 13%.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_008.htm"><strong>Notification
No. 8/2006-Service Tax dated 19th April, 2006</strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Services
received in India and not those received by an Indian are taxable – controversy
put to rest</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
As per the explanation to Section 65(105) inserted by Finance Act, 2005, any
service received by an Indian from a service provider abroad even if the service
is rendered abroad was made taxable. This controversial clause is under challenge
in the Madras High Court. Now the controversy is put to rest by several legislative
provisions including its deletion..<br>
<br>
As per Section 68, the government can notify any person other than the service
provider to be the person responsible for paying Service Tax in respect of certain
services like the recipient in the case of GTA. Notification No. 36/2004 dated
31.12.2004 had stipulated <font color="#FF6666"><strong>any taxable service
provided by a person who is a non-resident or is from outside India,</strong>
</font>does not have any office in India under this. Now this notification is
amended to <font color="#FF6666"><strong>any taxable service provided or to
be provided from a country other than India and</strong> </font><strong><font color="#006600">received
in India,</font></strong> <strong><font color="#FF6666">under section 66A of
the Finance Act, 1994.</font><br>
</strong><br>
Rule 2(1)(d)(iv) of the Service Tax Rules had stipulated the Indian recipient
to be the Person liable for paying service tax, in tune with the explanation
to Section 65(105). With the explanation going, the rule also needed an amendment.
Now this rule reads as </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> “(iv)
in relation to any taxable service provided or to be provided by any person
from a country other than India and received by any<strong><font color="#FF6666">
person in India</font></strong> under section 66A of the Act, the recipient
of such service;”.</font></p>
</blockquote>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> So
the receipt in India of the service is made clear.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_009.htm"><strong>Notification
No. 9,</strong></a> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_010.htm">10
/2006-Service Tax dated 19th April, 2006</a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<font color="#006600"><strong>Import of Services - rules notified </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
“Taxation of Services (Provided from Outside India and Received in India)
Rules, 2006” is notified with effect from 19.4.2006. The salient features
are:-</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Taxable services
received in India shall mean,</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(I) In relation
to the following services, the services in relation to immovable property situated
in India.</font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
general insurance</font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.
site formation and clearance,</font></td>
</tr>
<tr>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
architect</font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.
dredging</font></td>
</tr>
<tr>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
interior decorator</font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.
survey and map-making</font></td>
</tr>
<tr>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
real estate agent</font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.
construction of complex</font></td>
</tr>
<tr>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
commercial or industrial construction</font></td>
<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.
auction of property</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(II)
In relation to the following services, if they are performed in India:-</font></p>
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. stock-broker</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">21. port</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">41. opinion
poll agency</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. courier
agency</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22. authorised
service station</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">42. outdoor
caterer</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. custom
house agent</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23. beauty
parlour</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">43. survey
and exploration of mineral</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. steamer
agent</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24. cargo
handling agency</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">44. panadal
or shamiana contractor</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. clearing
and forwarding agent</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25. dry cleaning</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">45. travel
agent</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. air travel
agent</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26. event
manager</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">46. forward
contract</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Mandap
keeper</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">27. fashion
designer</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">47. cleaning
activity</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. tour operator</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">28. health
club</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">48. club or
association</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. rent-a-cab
scheme</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">29. storage
or warehouse keeper</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">49. packaging
activity</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. practicing
chartered accountant</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">30. commercial
training or coaching centre</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">50. transport
of goods in containers by rail</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
</font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. practicing
cost accountant</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">31. erection,
commissioning and installation</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. practicing
company secretary</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">32. internet
cafe</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. security
agency</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">33. maintenance
or repair</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. credit
rating agency</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">34. technical
testing and analysis agency</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15. market
research agency</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">35. inspection
and certification agency</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16. underwriter</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">36. other
port</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17. photography
studio</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">37. airports
authority</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18. holding
of convention</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">38. air craft
operator</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19. video
production agency</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">39. business
exhibition</font></td>
<td> </td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20. sound
recording studio</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">40. goods
transport agency</font></td>
<td> </td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>If a service
is partly performed in India and partly abroad, it will be deemed as performed
in India and tax has to be paid accordingly. </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(III) Other Services
with certain exceptions which are received by a recipient located in India for
use in relation to business or commerce.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Registration:</strong>
Recipients of taxable service in India are required to be registered. Were they
not earlier?</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Not to
be treated as output services: </strong>The imported services will not be treated
as output services and no credit can be availed/used in respect of those services.
Please see<font color="#006600"> <strong>Output service – Cenvat Credit
Rules amended above.</strong> </font></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_011.htm"><strong>Notification
No. 11/2006-Service Tax dated 19th April, 2006</strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Valuation
of Service – Rules notified – is it a Pandora’s Box of litigation?
Rail fare collected by air travel agent exempted!!!!!!!</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
It is finally here. Anything to do with Central Excise must have a valuation
angle and consequent eternal litigation. For 12 years Service Tax managed
without any litigation about valuation and perhaps the peace is going to
end. It is doubtful whether hope is still locked up in the Pandora’s
Box or released.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Highlights
of the valuation Rules:-</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.
<strong>Similar service – dangerous concept- </strong>Where the consideration
for service is not wholly or partly in cash, the consideration for similar service
will be the basis. This is not as simple as it sounds, if we look at the disputes
in Customs and Central Excise on this issue.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. If similar service
assessment is not possible, the value in money terms has to be determined but
this shall not be less than the cost of service. Should we bring in the Chartered
Accountant?</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Central
Excise officer can after due notice determine the value.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Value includes
all costs and expenditure, with certain costs excluded.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.<strong> Value
includes</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. the commission
or brokerage charged by a broker on the sale or purchase of securities including
the commission or brokerage paid by the stock-broker to any sub-broker;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b.
the adjustments made by the telegraph authority from any deposits made by the
subscriber at the time of application for telephone connection or pager or facsimile
or telegraph or telex or for leased circuit;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. the amount of
premium charged by the insurer from the policy holder;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. the commission
received by the air travel agent from the airline;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e. the commission,
fee or any other sum received by an actuary, or intermediary or insurance intermediary
or insurance agent from the insurer;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f.
the reimbursement received by the authorised service station, from manufacturer
for carrying out any service of any motor car, light motor vehicle or two wheeled
motor vehicle manufactured by such manufacturer;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">g. the commission
or any amount received by the rail travel agent from the Railways or the customer;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">h. the remuneration
or commission, by whatever name called, paid to such agent by the client engaging
such agent for the services provided by a clearing and forwarding agent to a
client rendering services of clearing and forwarding operations in any manner;
and</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. the commission,
fee or any other sum, by whatever name called, paid to such agent by the insurer
appointing such agent in relation to insurance auxiliary services provided by
an insurance agent.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. <strong>Value
does not include</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. initial deposit
made by the subscriber at the time of application for telephone connection or
pager or facsimile (FAX) or telegraph or telex or for leased circuit;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. the airfare
collected by air travel agent in respect of service provided by him;</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. The<strong>
rail fare</strong> collected by air travel agent in respect of service provided
by him; and (Does the air travel agent collect rail fare? Board should know
or they should have asked the Railway Board.)</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. Interest on
loans.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_012.htm"><strong>Notification
No. 12/2006-Service Tax dated 19th April, 2006</strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export
of Services – foreign exchange mandatory</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Export of
Services Rules, 2005 is amended to re organise certain services within the definitions
and to stipulate that services will be treated as export only if</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a)
the service is delivered outside India and used outside India; and</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Payment for
the service provided outside India is received by the service provider in convertible
foreign exchange. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_013.htm"><strong>Notification
No. 13/2006-Service Tax dated 19th April, 2006</strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service
received abroad not taxable – exemptions rescinded</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
government not only thought it had the power to tax services received abroad
, but also in a benevolent mood allowed certain exemptions to services abroad
like those pertaining to services availed by Indian ships abroad and services
availed by individuals like a hair cut in London. Now that the situation is
clarified that only services received in India are taxable, these exemptions
are no more valid and so are rescinded. They never had any validity as the Indian
Government which has no power to collect Service Tax in Kashmir cannot have
the power to do so in Canada. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_014.htm"><strong>Notification
No. 14/2006-Service Tax dated 19th April, 2006</strong></a></font> </p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Greek
and Latin</strong></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> Wednesbury
resonableness</I></B></TD>
</TR>
</TBODY>
</TABLE>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Wednesbury reasonableness derives its origin in Associated Provincial Picture
Homes Limited vs. Wednesbury Corporation (1947) 2 All E.R. 680 and has been
explained to require that the person entrusted with discretion must, so to speak,
direct himself properly in law. He must cal his attention to matters which he
is bound to consider. He must exclude from his consideration matters which are
irrelevant to what he has to consider. If he does not obey those rules he may
truly be said to be acting unreasonably. Similarly, there may be something so
absurd that no sensible person could ever dream that it lay within the powers
of the authority. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
rationale is that the rule of law prohibits arbitrary exercise of power. There
is no legal meaning assigned to the term “arbitrary”. It is clear
that this word is taken in its ordinary sense. In Oxford Dictionary, it means,
“not seeming to be based on reasons, system or plan”. Hence, where
a decision is unreasonable, it must be arbitrary. It may be argued that where
a decision maker does not arbitrarily make a decision, a decision can still
be not reasonable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
decision must be “so unreasonable that no reasonable authority could reach”.
The reason is simple: such ground is to protect citizens against arbitrary decisions.
To determine whether a decision is arbitrary, a benchmark should be adopted.
The benchmark should be reasonableness. This is because, by definition, where
a reasonable person thinks that a decision is unreasonable, the decision is
arbitrary in his eyes. From the perspective of a reasonable person, the decision
need not be “so unreasonable” to be arbitrary. Unreasonableness
will suffice. If we require something more than reasonableness, the aim of the
ground of review will be much weakened.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
is not for the court to determine whether a particular policy or particular
decision taken in the fulfillment of the policy is fair. It is only concerned
with the manner in which those decisions have been taken. The extent of the
duty to act fairly will vary from case to case. Shortly put, the grounds upon
which an administrative action is subject to control by judicial review can
be classified as under: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i)
<strong>Illegality :</strong> This means the decision-maker must understand
correctly the law that regulates his decision making power and must given effect
to it.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii)
Irrationality, namely Wednesbury unreasonableness.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
Procedural impropriety.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
Furthermore, in considering whether Wednesbury reasonableness exists one must
also investigate the purpose behind the change in Regulations. The effort was
to simplify the grant of licences as per the Kelkar Committee.<strong> (The
Delhi High Court in</strong> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=27&filename=legal/hc/2005/2005-TIOL-210-HC-DEL-CUS.htm">2005-TIOL-210-HC-DEL-CUS</a></strong>)</font></p>
<p align="center"> </p>
<p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Convenience
is the basis of mercantile law</strong>.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until
tomorrow with more DDT</font></font></p>
<p><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </font></font></p>
<p><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to<strong> </strong></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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