TIOL-DDT 433 · 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
433</font><br>
23 08 2006<br>
Wednesday</b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEZ
Rules amended</strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Processing
area – 35% may be relaxed up to 25%:</b> As per the Rules, at least twenty five
per cent of the area shall be earmarked for developing processing area. Now
this is changed to thirty-five per cent which may be relaxed up to twenty-five
per cent by the Central Government on recommendations of the Board for the reasons
to be recorded in writing – <i>Rule 5(2) (a), third Proviso</i></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>SEZ
for specific sector- Built up area:- </b>A Special Economic Zone for a specific
sector or in a port or airport, shall have a contiguous area of one hundred
hectares or more - Provided that in case a Special Economic Zone is proposed
to be set up exclusively for bio-technology, non-conventional energy, including
solar energy equipments/cell, or gem and jewellery sectors, the area shall be
<b>ten hectares</b> or more. Now a new condition is added that they should have
a minimum built up area of</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(i) forty thousand square meters in case of a Special Economic Zone proposed
to be set up exclusively for bio-technology and non-conventional energy sectors,
including solar energy equipment/cells but excluding a Special Economic Zone
set up for non-conventional energy production and manufacturing;</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(ii) fifty thousand square meters in case of a Special Economic Zone proposed
to be set up exclusively for the gems and jewellery sector.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided
that in case a Special Economic Zone is proposed to be set up exclusively for
electronics hardware and software, including information technology enabled
services, the area shall be ten hectares or more with a minimum built up processing
area of one lakh square meters: - <i>Rule 5(2) (b), second Proviso</i></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>SEZ
for Free Trade and warehousing:</b> A new proviso added that in a ‘stand alone’
Free and Warehousing Zone at least fifty per cent of the area shall be earmarked
for developing processing area </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>IT
Infrastructure requirements:</b> A new Rule 5A inserted which requires the following
facilities to be ensured in an IT related SEZ.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(a) twenty-four hours uninterrupted power supply at stable frequency in the
Zone;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(b) reliable connectivity for uninterrupted and secure data transmission;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(c) provision for central air-conditioning system; and</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
(d) a ready to use, furnished plug and pay facility for end users.</font></p>
</blockquote>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Non
Processing area – no leasing for business and social purposes. </b>As per the
existing rules, “The Developer may allot the land in the non-processing area
for business and social purposes such as educational institutions, hospitals,
hotels, recreation and entertainment facilities, residential and business complexes,
provided that infrastructure for business or social purposes in the Special
Economic Zone, as may be approved by the Board, shall be eligible for exemptions,
concessions and drawback.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
this is changed to </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No
vacant land in the non-processing area shall be leased for business and social
purposes such as educational institutions, hospitals, hotels, recreation and
entertainment facilities, residential and business complexes, to any person
except a co-developer approved by the Board : </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided
that the developer or co-developer may lease the completed infrastructure along
with the vacant land appurtenant thereto for such purposes: </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided
further that infrastructure for business or social purposes in the Special Economic
Zone, as may be approved by the Board, shall be eligible for exemptions, concessions
and drawback.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>‘Trading’
redefined.</b> Trading is now defined as to mean import for the purposes of
re-export.</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service
Tax – Broadcasting service – Board clarifies</strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board
was clarifying a question from a Chief Commissioner. Board states that </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ prior to 2005 Budget, in respect of the foreign broadcasting channels
the
‘activity of selling of time slots…. Or collecting broadcasting charges’ were
within the tax net. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ In 2005 Budget the scope was expended to include permitting the right to
<u>receive</u> any form of communication…..</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ In other words, whereas prior to 2005 Budget the charges were limited to
those collected by Broadcasters from clients who purchase time slots to show
a telecast (say a TV serial, a cricket watch or an advertisement), after 2005
Budget, the tax of also extended to such customers (of the broadcaster) who
subscribe/pay the channels for receiving the Broadcasted signals.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ Further, on going through the definition of the term ‘Broadcasting’ in
the Prasar Bharti (Broadcasting Corporation of India) Act, 1990, it is seen
that under the said Act the term “Broadcasting” has been defined to mean the
dissemination of any form of communication like sign, signal writing, pictures,
images and sound of all kind by transmission of electromagnetic waves through
space or through cables <u>intended</u> to be received by the general public
either directly or indirectly through the medium of relay station and all
its grammatical variation and cognate expressions shall be construed accordingly.</font></p>
</blockquote>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Therefore
the Board has clarified that:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ it is clear that while broadcasting ‘intends’ to be received by general
public, such receipt of signal is not an essential criteria. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ For example if all the receivers of a place stop receiving the signal due
electrical fault in that place, it can not be said that there has been no
‘broadcasting’ during that period.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ Thus, while receipt of the broadcasted signal may be intended but is never
an essential condition. </font></p>
<p align="justify"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
This leads to conclusion that only after the insertion of provision regarding
charging for right for receiving signal was added in Budget 2005 (i.e. w.e.f.
16.6.05) that the charges collected by Broadcasters from M.S.O. etc. fell
within the purview of tax net. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
++ This issue has also been clearly brought in circular No.B1/6/2005 – TRU
dated 27.7.05 (para No.17.1).</font></p>
</blockquote>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the Circular referred to above, Board had clarified that </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the case of radio or TV broadcasting services, the services are subject to tax
where the services are effectively used and enjoyed. Multi System Operators
(MSOs) are permitted to receive signals from the broadcasting agencies on payment
of prescribed amount. Cable operators transmit programmes to customers through
cable network after receiving signals from the multisystem operators (MSOs).
Prior to 16/6/2005, service tax was leviable on services provided by cable operators
to their customers and multisystem operators to cable operators. In this year’s
budget, the charges recovered by the broadcasting agencies from the multisystem
operator for providing the signals have been specifically made liable to service
tax. This completes the service tax chain from the customer to the broadcaster.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
really is beyond logic as to why the Board does not publicly circulate such
important decisions. </font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2006/Clarification.htm">CCBEC’s
F.No.149/5/2006-CX.4 dated 9th June, 2006.</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Australian
Customs seizes male hormone in post</strong></font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
joint operation between Customs and NSW Police led to a man being arrested as
he walked out of a Sydney post office this week.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Events
leading to his arrest began in May, when Customs officers located the male hormone,
testosterone, inside an air express mail package.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs
officers subsequently intercepted further packages allegedly containing anabolic/androgenic
substances which were destined for delivery to addresses in south west Sydney</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These
substances are prohibited imports without the appropriate permit.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further
evidence was located when search warrants were executed by Customs investigators
and NSW police on a number of residential premises in south west Sydney.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As
a result of the joint operation, a man was arrested and charged on 14 August
under the <i>Customs Act, 1901</i> with importing a prohibited import and, under
the <i>NSW Poisons and Therapeutic Goods Act, 1966</i>, with being in possession
of an anabolic/androgenic substance.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
prohibited import charge carries a maximum penalty of a $ 110 000 fine or
imprisonment for five years, or both.</font></p>
<p align="justify" ><font size="2" face="Verdana, Arial, Helvetica, sans-serif">-
<i>from the Australian Customs media release.</i></font></p>
<p align="justify" ><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
tomorrow with more DDT </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">vijaywrite@taxindiaonline.com</a></font></p>
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