TIOL-DDT 346 · the untouched capture
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<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
346</font><br>
</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>21
04 2006</b></font><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><b><br>
Friday</b></font></font></font> </p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central
Excise valuation – Return fare – Includible? </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
manufacturer sends his goods to a dealer in his own transport and collects transport
charges. Now the transport can be used only for a particular type of goods,
say autos or cars. In the return journey, the vehicle has to come back empty
as it cannot be used for transporting anything else. Now the manufacturer collects
charges for the return journey also. Is this return fare includible in the assessable
value?</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
says, yes. In the latest clarification on valuation, Board informs, </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“As
per Rule 5 of the Valuation Rules the actual cost of transportation from the
place of removal up to the place of delivery is only to be excluded. If the
assessee is recovering an amount from the buyer towards the cost of return fare
of the empty vehicle from the place of delivery, this amount will not be available
as a deduction. Therefore, unless it is specifically mentioned in the invoice
that the transportation charges indicated therein do not include cost of transportation
for the return journey of the empty truck/vehicle, the deduction of the said
transportation charges will not be admissible.” </font></p>
<font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"></font>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/excircular827.htm">CIRCULAR
NO. 827/4/2006-CX., Dated: April 12, 2006</a></u></strong></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Plant
site verification for finalization of project imports – PSU MD can certify</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
has decided that the requirement for plant site verification for actual installation
of goods under project import can be fulfilled by means of a certification from
the head of the PSU/ Government undertaking in the rank of Chairman/Executive
Director specifying the individual items were actually installed in the project
site.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2006/cuscir06_14.htm">CIRCULAR
NO. 14 /2006-Cus, Dated : April 17, 2006</a></u></strong></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Finance
Act 2006 – consequences – TRU clarifies</b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Tax Research Unit – TRU in the CBEC has issued a detailed explanation
to the changes consequent to enactment of the Budget 2006. </font></p>
<p ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service
Tax valuation:-</b></font></p>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Where the consideration received for provision of services is wholly in
money, the value shall be the gross amount charged by the service provider
for provision of service.</font></div>
</li>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Where the consideration received for provision of service is not wholly
consisting of money, the value in such cases shall be the gross amount charged
by the service provider for provision of similar service to any other person
in the ordinary course of trade.</font></div>
</li>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
If the value of similar service provided by the same service provider is
not available, then the value has to be determined.</font></div>
</li>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
Money value of non-money consideration received should be determined by
the service provider.</font></div>
</li>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
If the consideration received is not wholly consisting of money, equivalent
money value of the consideration determined by the service provider shall
be the taxable value for charging service tax.</font></div>
</li>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
If the consideration received is partly in money and partly in non-money
terms, the sum of consideration received in money and the equivalent money
value of the non-money consideration determined by the service provider
shall be the taxable value for charging service tax.</font></div>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The taxable
value shall be determined by the service provider but the value so determined
for the purpose of paying service tax should not be less than the cost of
provision of such service.</font></li>
</ul>
<p ><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Will
these lead to frequent Show Cause Notices? TRU advises extreme care and caution</b>.
</font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Verification
only after written instructions from the Divisional AC/DC.</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Before issuing
any show cause notice on matters relating to valuation, concurrence of Commissioner
should be obtained</font></li>
</ul>
<font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Reimbursable
expenditure</b></font>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
All expenditures or costs incurred by the service provider in the course
of providing a taxable service forms integral part of the taxable value
and are includable in the value. </font></div>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Amounts paid
to the third party by the service provider as a pure agent of his client can
be treated as reimbursable expenditure and not includible in the taxable value.</font></li>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
However, if the service provider acts as an undisclosed agent i.e. acting
in his own name without disclosing that he is actually acting as an agent
of his client, he cannot claim the expenditure incurred by him as reimbursable
expenditure. Whether the expenditure or cost incurred by the service provider
in his capacity as a pure agent of the client or incurred on his own account
is a question of fact and law and is to be determined carefully. </font></div>
</li>
</ul>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Foreign
Service – Indian Tax</b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Service Tax on services received abroad/received from abroad has been a cause
of confusion and litigation. The TRU gives a few valuable clarifications.</font></p>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
In the Budget for 2006-07, Explanation to clause (105) of section 65 providing
for charging of service tax on taxable services received from outside India
has been omitted and for this purpose a new section 66A has been incorporated
in the Finance Act, 1994. </font></div>
</li>
</ul>
<p > <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>It may be
noted that only services received in India are taxable under these provisions.
– <font color="#663399">This is a wonderful clarification. Let us hope
the field follows it.</font></b></font></p>
<ul>
<li>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The service provider should be outside India and the recipient of service
should be in India. However, taxable services received by individuals from
outside the country for non-business purposes are not leviable to service
tax.</font></div>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Provision of
service by a permanent establishment outside India to another permanent establishment
of the same person in India is treated, for the purpose of charging service
tax, as provision of service by one person to another person.</font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Three categories
of foreign service</font></li>
</ul>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
1. Ten specified taxable services, which are provided from outside India in
relation to an immovable property situated in India</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
2. Specified taxable services, which involve physical performance if such services
are partly or wholly performed in India.</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
3. Taxable services, not covered under the two categories specified above. Taxable
services are received by a recipient located in India
for use in relation to commerce or industry.</font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> This service
will not be deemed as output service – means pay Service Tax by cash,
credit not allowed. <b><font color="#0000FF">But the same will now apply to
GTA?</font></b></font></li>
</ul>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
TRU clarification also has a disclaimer – “The above explanation
of the changes of law is only for the purpose of guidance to facilitate understanding
and implementation. It is not a part of law and does not override it. Adequate
care may be taken to carefully read the relevant provisions of law.”</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2006/truletter2.htm">F.No.
B1 / 4 / 2006-TRU dated the 19th April, 2006</a></u></strong></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Greek
and Latin</b></font></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> Certiorari-latin</I></B></TD>
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<p><B><I><font color="#663399"> - To be informed of</font></I></B></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Broadly
speaking, the writ certiorari have for their object to keep the inferior courts
or Tribunals within their jurisdiction by restraining them exercising jurisdiction
which does not vest in them and/or to correct errors apparent from the face
of its record.</b><b> Such writs could be issued not only to courts but to all
authorities exercising judicial or quasi judicial functions. – </b>Rajasthan
High Court in an Anti Dumping case</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>In
an appropriate case by exercise of a writ of certiorari under Article 226 of
the Constitution, it exercises superintendence over all courts and tribunals
throughout the territory. </b>- Supreme Court in COMMISSIONER OF SALES TAX v
SUPER COTTON BOWL REFILLING WORKS</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The
Writ of Certiorari cannot be issued when there is no order, either judicial
or quasi-judicial</b>. – Supreme Court </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>A
writ of certiorari would be available not only where the impugned order infringes
immediately enforceable rights but also where it is a step as a result of which
legally enforceable right may be affected. – </b>Supreme Court</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The
rule that before a writ of certiorari is claimed, an aggrieved party should
exhaust the statutory remedies is one of convenience and not a rule of law.
If the inferior tribunal has acted without, or patently in excess of, jurisdiction,
or has conducted the proceeding before it in a manner contrary to the rules
of natural justice, or offending the sense of justice and fairplay, the High
Court would be competent to exercise its power to issue the prerogative writ
of certiorari to correct the order of the court or tribunal, even if an appeal
to a departmental authority or tribunal was open and the aggrieved party did
not avail himself of that remedy.- </b>Supreme Court</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i><u3:p><font color="#663399">Excellence
is not a singular act but a habit. You are what you repeatedly do. <font color="#000000">Aristotle</font></font></i></b></font></p>
<p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Monday with more DDT</font></p>
<font size="2">
<p ><font color="#FF6666" face="Verdana, Arial, Helvetica, sans-serif">Have a
nice Weekend. </font></p>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p ><font color="#FF6666">Mail your comments to</font> <a
href="mailto:vijaywrite@taxindiaonline.com"><b>vijaywrite@taxindiaonline.com</b></a></p>
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