TIOL-DDT 349 · the untouched capture
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<p ><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT
349</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>26
04 2006<br>
</b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Wednesday</b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Budget 2006 – Service Tax provisions
to come into force from May 1<sup>st</sup>. </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the 12% Tax is already in force, the
rest of the provisions come into effect from 1<sup>st</sup> May 2006. While
one section of the Board was busy with the Service Tax notifications, another
section was buzz with transfer of Commissioners. And we in TIOL were busy with
frantic calls from officers wanting to know who goes where and from assessees
wanting to know the latest on Service Tax. <b>DDT</b> lists below the notifications
issued yesterday with brief comments on what they are all about. </font></p>
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<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Notification
( all dated 25.4.2006)</b></font></p></td>
<td width=905 valign=top > <p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Effect</b></font></p></td>
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<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10/2006
CE(NT) </font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the CENVAT Credit Rules, 2004, in rule 9 relating to the documents for
taking credit, sub clause (vii) of Rule 2(d) of the Service Tax Rules,
dealing with the sponsorship service has been added, which means that
a challan issued by the recipient of the service in case of sponsorship
service is an eligible document for credit. What is this challan? Are
they referring to TR6 Challan or an invoice? </font></p></td>
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<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15/2006-Service
Tax</font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
new services and expanded services come into effect from 1<sup>st</sup>
May 2006 . The changes made in Section 65 like replacing the “Commercial
Concern with “any person” comes into effect from 1st May 2006</font></p></td>
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<tr>
<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">16/2006
Service Tax</font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">36/2004-Service
Tax, dated the 31st December, 2004 has been amended to include sponsorship
service provided to any body corporate or firm at sl no (vi) to facilitate
specifying the person liable to pay service tax.</font></p></td>
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<tr>
<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">17/2006
Service Tax</font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Amends
service tax rules </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
to increase the rate of service tax to be paid by Air Travel Agents from
0.5% to 0.6% of the basic fare for domestic bookings and from 1.0% to
1.2% for International bookings. This is because the Service Tax now is
12% instead of 10%. </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
To specify that In relation to Sponsorship service, the person who receives
the service is liable to pay service tax.</font></p></td>
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<tr>
<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">18/2006
Service Tax</font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
provisions of sub rule 8 of Rule 4 of the Service Tax Rules relating to
cancellation of the Registration are also made applicable for Input service
distributors and the like categories. </font></p></td>
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<tr>
<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">19/2006-Service
Tax</font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Commercial
Concern” appearing in several Notifications has been replaced with
“ any other person” or “ any person” as the case
may be with effect from 1<sup>st</sup> May 2006. The Finance Act did this
for the Act. </font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
Notification No.13/04 is amended to replace “commercial concern”
“with any person”. This particular notification seeks to exempt
service provided by Banks or NBFC in providing service in relation collection
of duties or taxes levied by Government of India or any State Govt. Now
any person, providing such services also qualifies for exemption. Why
was this amendment done blindly? Will there be any individuals involved
in such tax collection? Or is the Government planning to allow individuals
to collect taxes on behalf of the government?</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
Similarly the words “Commercial concern “was replaced in 29/04
with “any person “. This notification seeks to exempt certain
services like- overdraft facility, cash credit facility, discounting of
bills – which are normally the domain of Banks or NBFC or other
commercial concerns. Will an individual do these services (legally) in
<st1:country-region w:st="on"><st1:place w:st="on">India</st1:country-region>?</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
Truck owners to come under service tax net from 1<sup>st</sup> May 2006.
What happens to assurance given to parliament in this regard?</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
Speed Post Service provided by Postal Department will come under Service
tax as courier service provided. Really the Finance Ministry created a
level playing field even before the proposed amendment to Indian Postal
Act which is at draft stage.</font></p>
<p align="justify" > <font size="2" face="Verdana, Arial, Helvetica, sans-serif">·
</font></p></td>
</tr>
<tr>
<td width=235 valign=top > <p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">20/2006
Service Tax</font></p></td>
<td width=905 valign=top > <p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1/2006
ST dated 1.3.2006 has been amended with effect from 1<sup>st</sup> May
2006 to provide 70% abatement for Transport of goods in containers by
rail. Consequently, service tax will be chargeable only on 30% of the
gross amount charged for transport of goods in containers by rail. This
is as per the assurance given in TRU letter dt.28/02/2006. </font></p></td>
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<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>And that leaves a few issues un-answered</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From 1st May if a cola company sponsors any
event by supplying free cool drinks, he will not only pay central excise duty
but also service tax on the money consideration of this non-money transaction
(in terms of new service tax valuation ) . Certainly it will add to the fizz.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can
the Body corporate or firm take credit on such payment made as person receiver?
Yes. They can take credit. Though it is not an output service, but certainly
it is an input service used for sales promotion (covered under inclusive
clause of definition of input service). And also because the challan evidencing
such payment (under Rule 2(d)(vii) ) is mentioned as one of the document
for taking credit under Rule 9 of Cenvat Credit Rules. But then tax is paid
by the recipient. Then who takes the credit? </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can this service tax be paid through credit
? Don’t ask such foolish questions. Recently DGST has clarified that GTA
Service Tax cannot be paid through credit, but why???????????????</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The taxable service as per Sec.105(zzn) is
: Taxable service means any service provided (or to be provided ) to any body
corporate or firm by any person receiving sponsorship in relation to such sponsorship,
in any manner , but does not include services in relation to sponsoring of sports
events</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The new inserted rule under Rule 2(d)(ii)
reads as follows:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“(vii) in relation to sponsorship service
provided to any body corporate or firm, the body corporate or firm, as the case
may be, who receives such sponsorship service;”.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now a doubt arises as to who received sponsorship
service, whether the person conducting the event or persons sponsoring the event.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>NCCD on pan masala – Government withdraws
exemption.</b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Notification No. 26/2001 Central Excise pan masala containing
not more than 15% of betel nut and no tobacco is exempted from National Calamity
Contingent Duty. Now this exemption is withdrawn. </font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/etariff06_028.htm">NOTIFICATION
NO. 28/2006-Central Excise, Dated: April 25, 2006</a></u></b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Exchange rates announced for imported goods
and export goods</b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification Nos.
<b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_046.htm">46/2006
</a>and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_047.htm">47/2006-Cus.,
(N.T.), Dated: March 28, 2006</a> </u></b>fix the exchange rates for imports
and exports respectively with effect from 1<sup>st</sup> April 2006. Notifications
38 and 39/2006-Cus. (N.T.), dated 28-03-2006 are superseded<i>.</i></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u3:p></u3:p></b></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt2.jpg" width=375></b></font></p>
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<TD><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><IMG height=67 hspace=5 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle vspace=5><B><I> </I></B><I><b>Non
est factum - </b></I><b>it is not my deed</b></font></TD>
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<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i>Non est factum - </i></b>"it is
not my deed". A plea that a person who has signed up to a deed or a contract
lacked the necessary understanding or intent, and is therefore not bound by
the document. A successful plea would void the contract. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A claim of <i>non est factum</i> means that
the signature on the contract was signed by mistake, without knowledge of its
meaning, but was not done so negligently. A successful plea would void the contract.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A person who signs away the deed to a house,
thinking that the document signed was only a guarantee for another person's
debt, might be able to plead <i>non est factum</i> in a court and on that basis
get the court to void the contract. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A refund claim filed before authority not having
territorial jurisdiction is not <i>ab initio</i> void or <i>non est factum –
CEGAT</i></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Mistake as a ground for relief. </b>At common
law mistake was admitted as a foundation of relief in three cases only, namely
(1) in actions for money had and received to recover money paid under a mistake
of fact; (2) in actions of deceit to recover damages in respect of a mistake
induced by fraudulent misrepresentation; and (3) as a defence in actions of
contract where the mistake of fact was of such a nature as to preclude the formation
of any contract in law, for example, where there was a mutual mistake as to
the subject matter of the contract, and, therefore, no consensus <i>ad idem
</i>by the parties, or where the mistake was made as to the identity of one
of the parties and such identity was an inducement to the other to enter into
the contract, or where the mistake related to the nature of the contract under
such circumstances as would, if the contract were embodied in a deed, justify
a plea of <b><i>non est factum</i></b><i>.- Halsubry’s Laws of England,</i></font></p>
<p align="center" ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Legal Maxims</b></font></p>
<p align="center" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Derativa</font></b><font color="#663399"><b>
potestas non potest esse major primitiva. - The power which is derived cannot
be greater than that from which it is derived.</b></font></font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT<U6:P></font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day. </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"><b>vijaywrite@taxindiaonline.com</b></a></font></p>
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