TIOL-DDT 373 · 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
373</font><br>
30 05 2006<br>
Tuesday</b></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">C
and AG raps DGST for poor internal control at Apex Level.</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
C and AG and the DGST may agree on the non availability of 75% exemption to
the manufacturers who pay service tax on GTA as receiver of the service, but
when it comes to internal control at the apex level, the C & AG certainly
is not happy with the DGST. In its report No 6 Customs, Central Excise &
Service Tax - Performance Audit for the year 2004-05, the C&AG observed
that:</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“The
post of DGST was created in December 1997 mainly to strengthen monitoring of
collection and assessment of service tax; study staff requirement; suggest measures
to increase revenue collection and to inspect service tax cells in commissionerates.
Review of functioning of DGST revealed that their recommendations for immediate
creation of six independent service tax commissionerates in the budget proposals
for the year 1999- 2000 were implemented only in September 2004. One of the
functions of DGST was to study and create database and update the same from
time to time. DG had instructed commissionerates on 26 May 2003 for creation
of complete and upto date database in respect of potential service tax assessees.
No database was, however, found created either by cells incommissionerates or
at DGST. There was also requirement of fortnightly report on creation of database
from division to commissioner and then to chief commissioner which was not being
followed by commissionerates. Though DGST had been regularly issuing circulars
to all commissioners regarding ‘modus operandi’ for taking remedial action since
January 2003, no feedback was received from zones/commissionerates in the absence
of any prescribed return”.</font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Audit cannot
fault with the DGST at least in revenue mobilization. After all it was the DGST
who issued the circular denying the 75% exemption for GTA and issued another
circular to levy service tax on estate builders who subsequently sell or let
out the flats. </font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Since
Board is not consistent, pay service tax of Rs 46.80 crores - C&AG tells
Prasar Bharti Corporation</font></b></font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The Audit report
says - </b>test check of records of service tax division-X, in Delhi I Commissionerate
of service tax, revealed that Prasar Bharti Corporation, registered with service
tax department in August 2003 collected broadcasting service charges of Rs.936.05
crore in respect of Doordarshan commercial service and All India Radio commercial
broadcasting service from 16 July 2001 to 31 March 2003 from clients. Service
tax of Rs.46.80 crore due on these service charges was, however, not paid. Department
too did not initiate any proceedings to recover the same. On this being pointed
out the Ministry stated that as per Board’s letter dated 27 March 2003, Prasar
Bharti (Doordarshan and All India Radio) was not liable to pay service tax prior
to 1 April 2003. Reply of the Ministry is not tenable as Board in its earlier
circular dated 9 July 2001 had clarified that, under provisions of section 22
of Prasar Bharti Act, 1990, the Corporation, was exempted from only direct taxes
since they were not borne by it from its own income, but not indirect taxes.
Board in its subsequent circular dated 27 March 2003 rendered Corporation not
liable to pay service tax and yet again modified its decisions through subsequent
circular of 14 July 2003 making Prasar Bharti liable to pay service tax from
1 April 2003. Since specific notification under section 93 (1) or (2) of Finance
Act, 1994 as amended, was not issued granting exemption to the Corporation from
payment of service tax, it was recoverable for the period 16 July 2001 to 31
March 2003.</font></p>
<p style='text-autospace:none'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>What
does Section 22 of Prasar Bharti Act,1990 say?</b></font></p>
<p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>22. </b> <b>Corporation
not Liable to be Taxed. </b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notwithstanding
anything contained in the Income-tax Act, 1961, or any other enactment for the
time being in force relating to income-tax or any other tax on income, profits
or gains, the Corporation shall not be liable to pay any income-tax or <b><font color="#FF0000">any
other tax in respect of</font></b><font color="#FF0000"> --------</font></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a)
any income, profit or gains, accruing or arising out of the Fund of the Corporation
or <b><font color="#FF0000">any amount received in that Fund</font></b>; and</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b)
any income, profits or gains, derived or any amount received, by the Corporation.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously
the Board’s Circular dated 9<sup>th</sup> July 2001 was issued by incorrect
interpretation of the above Section which was made good in 27<sup>th</sup> March
2003 circular. Since this section was omitted from the Act from 1<sup>st</sup>
April 2003, another Circular dated 14<sup>th</sup> July 2003 was issued to collect
service tax from 1<sup>st</sup> April 2003. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But
it is not so easy to convince the AG Audit and now they say, having given a
wrong circular in 2001, Board is bound to follow it. Once AG audit raises an
objection SCNs will follow, by alleging suppression of facts etc. </font></p>
<p ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>What would
have happened if the department had collected Service Tax from Prasar Bharti?</b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
AG auditors auditing the Prasar Bharti Accounts would have raised another objection
that they were not liable to pay Service tax in view of Section 22 of the Prasar
Bharti Act and the corporation lost 48.60 crores by paying a tax which they
were not required to pay. </font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Automobile
parts, plant growth regulator, and tooth brush brought under MRP levy from 1<sup>st</sup>
June 2006.</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With
the Finance Bill 2006 containing the amendment to the third schedule, it was
an indication that these goods will be notified for assessment under the MRP
levy. Now it was made official with the issue of Notification which amends the
Notification No. 2/2006-Central Excise (N.T.), dated the 1<sup>st</sup> March,
2006 to include the parts, components and assemblies of automobiles, plant growth
regulators and toothbrushes under the goods specified for assessment under Section
4A and also specified the abatement . </font></p>
<table width="450" border=1 align="center" cellpadding=3 cellspacing=0>
<tr>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1)
</font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2)
</font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3)
</font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4)
</font></p></td>
</tr>
<tr>
<td width=52 valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"97.
</font></p></td>
<td width=136 valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any
heading </font></p></td>
<td valign=top > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Parts,
components and assemblies of automobiles </font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">33.5%
</font></p></td>
</tr>
<tr>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">98.
</font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3808
30 40 </font></p></td>
<td valign=top > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Plant-growth
regulator </font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">30%
</font></p></td>
</tr>
<tr>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">99.
</font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9603
21 00 </font></p></td>
<td valign=top > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Toothbrush
</font></p></td>
<td valign=top > <p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">28.5%
</font></p></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/exnt06_11.htm">Notification
11/2006-CE (N.T.) Dated: May 29, 2006</a></u></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Third
Schedule to the Central Excise Act amended. </font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide
Section 66 of the Finance Act 2006, the third schedule of the Central Excise
Act has been amended to include the following three entries at Sl 100,101 and
102. This amendment has to be effective from a date to be notified as per Section
66 (b) of the Finance Act 2006. Now the notification has been issued to specify
the date as 1<sup>st</sup> June 2006, which means from this date, in respect
of these goods, the process of packing or repacking of such goods in a unit
container or labelling or re-labelling of containers including the declaration
or alteration of retail sale price on it or adoption of any other treatment
on the goods to render the product marketable to the consumer will amount to
manufacture. If an automobile dealer gets 100 pistons in a bulk pack and sells
them in retail pack, the process amounts to manufacture and may be the dealer
has to obtain even Central Excise Registration. </font></p>
<table width=450 border=1 align="center" cellpadding=3 cellspacing=0>
<tr>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100.</font></p></td>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Any heading</font></p></td>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Parts,
components and assemblies of automobiles</font></p></td>
</tr>
<tr>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">101.</font></p></td>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3808
30 40</font></p></td>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Plant-growth
regulator</font></p></td>
</tr>
<tr>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">102.</font></p></td>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9603
21 00</font></p></td>
<td > <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Toothbrush</font></p></td>
</tr>
</table>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2006/exnt06_12.htm">Notification
No 12/2006 CE(N.T) Dated May 29, 2006 </a></u></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Import
duty reduced on certain woven fabrics </font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import
duty on Woven fabrics of carded wool or of carded fine animal hair and woven
fabrics of combed wool or of combed fine animal hair has been reduced by way
of an exemption Notification. The tariff rate of these products is 12.5% Advalorem
or certain specific rate (ranging from Rs 155 per Sq Mtr to Rs 75 per Sq Mtr)
which ever is higher. While there is no change in the Advalorem rate, the exemption
has been given for the specific rate. Thus, the effective rate of duty now is
the reduced specific rate or the 12.5% Advalorem whichever is higher. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2006/ctariff06_048.htm">Notification
48/2006-Cus., Dated: May 26, 2006</a></u></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">CBEC
appoints Commissioner for adjudication of several DRI And DGCEI cases</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC
has issued seven notifications appointing Commissioners of Customs and Commissioners
of Central Excise for the purpose of Adjudication of several show cause notices
issued by the Zonal Units of DRI/DGCEI.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_053.htm">Notification
Nos 53</a>-<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_059.htm">59
Cus ( NT) Dated May 26, 2006</a></u></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Exchange
rates notified for import and export</font></b></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For
the purpose of Section 14 of the Customs Act, Board has specified the exchange
rates for conversion of foreign currency with effect from 1st June 2006. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_060.htm">Notification
No 60</a><strong> and</strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2006/cnt06_061.htm">
61 Cus ( N.T) Dated May 26, 2006</a></u></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 width="67"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><IMG height=67 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle></font></TD>
<TD><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i><font color="#0000FF">Res
ipsa loquitur</font> - </i></b><strong>"the thing speaks for
itself"</strong></font></TD>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
word is a legal term from Latin meaning literally, "The thing speaks for
itself". Used in the context of claims which, do not have to be explained
beyond the obvious facts. In International Airport Authority of India Vs Ashok
Dhawan, Hon’ble Supreme Court applied the principle of <i>Res ipsa loquitur.
</i>The case relates to compensation for the loss of goods while in custody
of the Airport Authority. The court observed: There is no dispute that the lost
container was landed and placed in the custody of the Authority and that it
was untraceable while in its custody. It was therefore a case, to which the
principle of <i>res ipsa</i> <i>loquitur,</i> applied. It was for the Authority
to give some explanation about how the container became untraceable, whereon
the first respondent could have been relegated to a suit. Since there was no
explanation whatever, the plea of the Authority that the first respondent should
be relegated to a suit was taken only to buy time and the High Court was justified
in requiring the Authority to compensate the first respondent for the value
of the lost container.</font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Maxim</font></b></font></p>
<p align=center ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><i><font color="#660066">omnia</font></i></b><font color="#660066"><b><i>
praesumuntur legitime facta donec probetur in contrarium </i></b></font></font></p>
<p align=center ><font color="#660066" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>"All
things are presumed to be lawfully done, until it is shown to be in the reverse"
or innocent until proven guilty".</b></font></p>
<p ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Tomorrow with more DDT </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </font></p>
<p><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>
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