TIOL-DDT 455 · the untouched capture
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<p> <b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT
455</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
22 09 2006<br>
Friday</font></b></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">E payment of Service
Tax mandatory</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please
see<b> </b><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4139">TIOL-DDT
431 21 08 2006</a><b> </b>– “Service Tax – mandatory payment of Service Tax
for major assessees – Board keeps it a top secret” where we questioned, <b>If
the Board wants to make e-payment mandatory, why can’t it issue a notification
publicly instead of making the DGST write DO letters? Or is the DGST an independent
authority that it decides for the Board?</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Board has now issued the notification.
The Notification stipulates that </strong><b>the assessee, who has paid service
tax of rupees fifty lakh or above in the preceding financial year or has already
paid service tax of rupees fifty lakh in the current financial year, shall deposit
the service tax liable to be paid by him electronically, through internet</b>
<b>banking.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
notification is out, but where is the procedure? How to go about it? Immediately
after TIOL published the notification, I was bombarded with phone calls
from worried assessees anxious about the procedure. I didn’t know whether
to be proud or sad when an assessee told me that when he called up his Service
Tax Superintendent to find out how to make e payment, the officer told him
to contact Taxindiaonline. Yet another assessee told me
that a Joint Commissioner whom he called up wanted him to visit his office
to get the details. “How can I give it on phone, man?”, the Joint Commissioner
is said to have told the assessee. “If I can pay the tax online, why can’t
I get the information online?”, wondered the assessee. A representative
of a very popular TV channel (which is a sort of a super cop catching corrupt
government officers) told me that he also called up a senior officer who
asked him to come to the office to get the information. Yet another assessee
told me that an officer told him, “we held a seminar, why didn’t you attend
it?”. This poor assessee
was not aware of the seminar!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">E-payment is really comfortable and convenient,
but should it be done with such undue haste? Why can’t the government give a
little time for the system to be understood? Now the next payment is to be made
latest by 5<sup>th</sup> of October. Now to make the electronic payment, the
assessee has to open an account with the designated bank, get money deposited
there and get a username and password. All this will take at least 15 days.
How then are they going to fulfill the requirement of e-payment by October 5<sup>th</sup>?
Should the Board go out of the way to complicate matters? And what should be
done when the computer of the assessee or the bank does not work or the net
is down or the site is not available for maintenance? Is there an alternate
mechanism? Nobody seems to have thought over these problems. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anything to do with computers, the department
had always managed to put the cart before the horse. In the early nineties when
the department wanted to go for a massive computerization, first the air conditioners
arrived and not knowing where to put them, the senior officers grudgingly allowed
them to be installed in their rooms. Then the computer tables and chairs arrived.
Nobody knew where to put them. Then again the senior officers grudgingly agreed
to use them as lunch tables in their rooms. Then the computers arrived and there
were neither rooms nor tables to put them in or on. Then a stage came when a
computer was considered a good piece of decoration in the room. But using a
computer? Ask your steno to do it!</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2006/stnot06_027.htm">Notification
No. 27/2006-Service Tax dated the 21<sup>st</sup> September 2006</a></u></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/epayment.htm">Click</a>
<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/epayment.htm"><u>here</u>
for the procedure and the list of banks.</a></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Agricultural tractors
– no duty</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some field formations are trying to charge excise
duty on agricultural tractors on the ground that besides agricultural work,
these tractors are used for haulage of farm products, fertilizers, etc. thereby
qualifying as “road tractors for semi-trailers”. “Road tractors for semi-trailers”
attract Central Excise duty at the rate of 16%, if the engine capacity is more
than 1800 cc.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has noticed that Tractors falling under
Chapter heading 8701 were exempted from excise duty in Budget 2004-05 with the
intention to give exemption to agricultural tractors, in order to encourage
farm sector. Further a tractor meant primarily for agriculture purposes can
also be incidentally used to take goods to nearby markets. But that is an incidental
use, and such tractors are not primarily designed to haul trailers. Therefore,
incidental use of hauling trailers will not put such tractors in dutiable category.
Therefore primary use of tractor should be the deciding factor.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board proposes to issue a circular on the above
lines. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/Draft_circular.htm">Draft
Circular</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Parts of Tractors – exemption
for captive consumption</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The question is whether parts falling under
Chapters other than 87, when used within the factory of production for manufacture
of goods of heading 8701 are eligible for the exemption under Notification No.
6/2002-CE dated 1.3.2002 (Sr. No. 296) and Notification No. 6/2006-CE dated
1.3.2006(Sr. No. 92).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where is the doubt? The Board wants to say,
but not before going through the Section Note 2(e) of Section XVII which excludes
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) machines or apparatus of headings 8401 to
8479, or parts thereof; articles of heading 8481 or 8482 or, provided they constitute
integral parts of engines or motors, articles of heading 8483;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How does it matter when parts falling under
any chapter arte exempted?</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/Draft_circular.htm">Draft
Circular</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Any manufacture outside
purview of Service Tax </font></strong></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on bottling
of liquor – but what is manufacture? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A process amounting to manufacture within the
definition under Section 2(f) of the Central Excise Act, is outside the purview
of Service Tax. Recently we carried a judgement where the High Court held that
liquor bottling is liable to Service Tax because it did not amount to manufacture
as per Section 2(f). But what is manufacture?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">V. Unnikrishnan from <st1:State><st1:place>Cochin</st1:place></st1:State>
has raised an interesting issue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per section 2 (f) of the CEA, 1944 'any activity
incidental or ancillary to the completion of a manufactured goods amounts to
manufacture'. <b>There is no condition that the process should be carried out
for the completion of excisable goods</b>. So any activity incidental or ancillary
for the completion of non-excisable goods also comes under the purview of section
2 (f). Accordingly, it is only to find out whether the bottling is essential
for the completion of liquor. As such the liquor cannot be marketed without
bottling; the activity of bottling has to be considered as manufacture for the
completion of liquor. So, it is pertinently seen that activity of liquor bottling
is outside the purview of 'packaging service' under Section 65 of Finance Act,
1994. It appears that the aforesaid law point was not argued in the HC . Hope
the said point will be presented in the apex court.</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT
</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice week end. </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></span></font></p>
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