TIOL-DDT 548 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
548</font><br>
08.02.2007<br>
Thursday </b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Suicide
averted - Service Tax on ginning and pressing of cotton under BAS ?</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does ginning and
pressing of cotton involve a service liable to Service Tax? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cotton is a sensitive
subject in Andhra Pradesh with frustrated cotton farmers committing suicide
with politically incorrect regularity. Recently in a cotton troubled district
of Andhra Pradesh, the Service Tax sleuths got activated and asked ginning and
pressing units to pay Service Tax under Business Auxiliary Service. With threats
of suicides looming large, a worried District Collector made a trip to the office
of the Assistant Commissioner. Overawed by the presence of the District Collector
in his office, the Assistant Commissioner promised to take up the matter with
the CBEC and also advised the mighty District Collector to represent to the
Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following report
from the Hindu on Nov 25, 2006 would make interesting reading.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The cotton conundrum
in Adilabad district looks like getting resolved, what with new light being
thrown on the issue of levy of service tax on processing units. Marketing Commissioner
D. Sreenivasulu conferred with higher officials of the Central Excise over payment
of service tax by the 30 odd private cotton ginning and pressing units where
the Cotton Corporation of India (CCI) processed its purchases under the minimum
support price (MSP). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The owners of these
cotton processing units had refused according their facilities on lease to the
CCI unless the issue of service tax was resolved. Farmers were facing problems
in selling their produce at a remunerative price. Mr. Sreenivasulu directed
the district administration to delink the CCI's commercial operations . He said
in the case of MSP operations, the concerned Ministry will reimburse taxes like
service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The association
of private cotton purchasers and ginning and pressing unit owners is ready to
lease units if there is no `threat' of service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But right through,
everyone forgot about an exemption tucked away in our huge mountain of notifications,
which the vigilant Commissioner, Service Tax in the Board hunted out. The Board
had received several representations on the issue and the Service Tax Commissioner
clarified in a letter addressed to a Commissioner with copies marked to several
others including Hyderabad Chief Commissioner ,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The process of
ginning and pressing of cotton does not amount to manufacture. Therefore, if
these processes are undertaken ‘for or on behalf of the principal/client’, the
same would fall within the purview of “business auxiliary service”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, notification
No.14/2004-ST, dated 10.09.2004, exempts, interalia, production or processing
of goods for or on behalf of the client if it is provided in relation to textile
processing. Since, cotton fibre is a textile material, and ginning/processing
are types of processing thereof, the said processes are covered within the ambit
of exemption. <b>Therefore, cotton ginning/pressing is presently exempted from
service tax.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thank You, Sir!
You have perhaps saved a few lives and a government! But why can’t such important
communication be issued in a circular and given wide publicity? Why are you
shy of making public even the good work done by you? It was a frustrated and
worried ginning unit which brought this to our notice! But who would have been
responsible if a couple of farmers committed suicide because the Service Tax
department is not aware of its own laws? And even the clarification given from
the Board is secretly stored somewhere beyond the reach of the people for whom
it is meant. There is <b>life</b> and death beyond your bureaucracy. Please
understand this!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2006/stletter.htm">F.No. 137/151/2006-CX.4
dated 13<sup>th</sup> December 2006</a></b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Palaniappan
Chidambaram <i>kyo khush hain</i>? GDP Growth at 9.2%</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FM said he
is happy</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ the estimate
of GDP growth at constant prices is 9.2 per cent. This is particularly gratifying
because it is upon a base year growth of 9.0 per cent that has been recorded
in 2005-06.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++Manufacturing
is the main driver of growth. In the current year it is expected to grow at
11.3 per cent. In the three years of the UPA Government, growth rate in manufacturing
has accelerated from 8.7 per cent to 9.1 per cent and further to 11.3 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Services
sector also continues to maintain an impressive growth rate. The estimate for
the current year is 11.2 per cent. In the three years of the UPA Government,
the Services sector has recorded growth rates of 9.6 per cent, 9.8 per cent
and 11.2 per cent, respectively. Here too there has been an acceleration from
year to year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Within the Services
sector, double-digit growth rates have been recorded by ‘trade, hotels, transport
and communication’ and ‘financing, insurance, real estate and business services’.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++The Agriculture
sector is estimated to grow in the current year at 2.7 per cent. Although this
is lower than the desired growth rate of 4.0 per cent, it may be noted that
in the base year (2005-06) the growth rate was at a high of 6.0 per cent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ the per capita
income in real terms in 2006-07 is estimated to grow at 7.9 per cent compared
to 7.4 per cent in the previous year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <b>it is reforms
that are driving growth.</b> Reforms have brought in investment, fostered competition
and enhanced productivity and efficiency.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Government will
continue to accord the highest priority to investment – domestic and foreign,
public and private – across all sectors.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Growth is a
function of investment; and investment is facilitated by flexible, timely and
progressive policy responses in a dynamic and competitive global economy.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <b>High growth
has also brought in more revenues. These revenues are being allocated to crucial
social sectors like education, health, child care and employment guarantee programmes.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From a statement
of the Finance Minister Shri P. Chidambaram on the advance estimates of national
income for the financial year 2006-07, released by NSO yesterday</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Use
the Foreign Exchange reserves – World Bank VP</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We are sitting
on a neat pile of over 178 Billion Dollar foreign exchange reserves. But is
it wise to sit over such a huge pile? The World Bank Vice President Praful Patel
does not think so. He wants part of these funds to be utilized in the high-return
infrastructure sector. "India can utilise a part of its forex reserves
for setting up a fund for the infrastructure sector on the pattern of Singapore,",
he said. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
Finance Minister P Chidambaram is reported to have set up a group headed by
Finance Secretary Ashok Kumar Jha to look in to the partial use of forex reserves
for infrastructure. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, if
you think Patel is an Indian, you are mistaken; he belongs to Uganda.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Tax
trivia</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Strange Taxes
– all in US</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In Tennessee,
if you acquire an illegal drug, you are required to pay a tax. You don’t need
to identify yourself.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There is a flush
tax in Maryland tacked onto septic and sewer bills.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In Mississippi,
there is a tax on all amusements, unless you are going to hear gospel music.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ You are required
to pay a tax in <st1:place><st1:State>Arkansas</st1:State></st1:place> if you
get a tattoo or nose ring.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++In Utah, owners
of “sexually explicit businesses,” where someone appears nude or partially nude,
must pay a 10% tax.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>USA</b>the dreamy
BushLand was formed on a tax protest and the Nation’s first tax law was enacted
during the Civil War. In 1913, the 16th Amendment to the Constitution made the
income tax a permanent fixture. The withholding tax on wages was introduced
in 1943 and was instrumental in increasing tax collections to $43 billion by
1943. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>To avoid tax</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In the 11th
century, Englishwoman Lady Godiva successfully reduced a tax assessment on her
husband, the Earl of Mercia, by riding naked on a white horse through the streets
of Coventry.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
In England, William Pitt the Younger introduced a tax on every property with
more than six windows. <b>Many windows were bricked up.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ During 1795
William Pitt introduced a tax on wig powder when the French fashion for wearing
wigs was all the rage. The tax was short lived as between tax and wig, what
would any one prefer?</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">How
do you influence PC?</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></span></font></p>
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