TIOL-DDT 581 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<html> <head> <meta name=Generator content="Microsoft Office HTML Filter 2.0"> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Originator content="Microsoft Word 11"> </head> <body > <p align="justify"><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">TIOL-DDT 581</font></b><b></b></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><b><br> 28.03.2007<br> Wednesday</b></font></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Have you not deposited that TDS with the Government – beware you can go to jail!</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government is perceived as symbolized by three lions. As you prepare to defend yourself against the state might of three lions, remember there is actually a fourth unseen lion and it may pounce on you most unexpectedly. Many companies go easy on depositing the TDS amounts with the government and routinely they credit it late and mostly with interest. If you have been following this path, you are in for trouble. Your company, its directors, and other responsible persons are liable for prosecution. It was more than 15 years ago that prosecution was launched against a company and its directors for delayed crediting of TDS. They took the case from the Trial Court all the way up to the Supreme Court and lost all the way and ultimately – on every count. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They pleaded that prosecution was illegal, that company cannot be prosecuted, that directors cannot be prosecuted, that sanction for prosecution was wrong, that prosecution was not right as the TDS has been deposited with interest, that a lady is not generally associated with the day to day affairs of the company, that they had shown a reasonable cause for delay, that when penalty is imposed, prosecution is not fair, that prosecution should be dropped as more than 15 years have elapsed and that finally they should be exempted from personal appearance in the trial court.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As stated before, they lost on every count. The Supreme Court was only interpreting the law – they had not made this law!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Continuing our tradition of bringing the latest in law to you, today we carry this milestone judgement. See our <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5230" target="_blank">Breaking News</a></u> for more details,</font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Customs – import and export valuation rules – Board corrects mistakes.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5198" target="_blank">TIOL-DDT 577 - 21.03.2007 </a>pointed out certain mistakes in the draft valuation rules published by the Board. With a rare and laudable alacrity, Board has corrected all the mistakes pointed out by TIOL and published the corrected draft rules. We had also pointed out that the interpretative notes specified in the Schedule, have not been made public. That schedule is also now published. While congratulating the Board for such fast work, may we point out the following errors in the schedule?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Note to Rule 8</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 12. It is recognized that the method of valuation provided for in rule 8(3) would normally not be applicable when, as a result of the further processing, the imported goods lose their identity. However there can be instances where, although the identity of the imported goods is lost, the value added by the processing can be determined accurately without unreasonable difficulty. On the other hand, there can also be instances where the imported goods maintain their identity but form such a minor element in the goods sold in the country of importation that the use of this valuation method would be unjustified. <b>In view of the above, each situation of this valuation method would be unjustified.</b> <b>In view of the above, each situation of this type must be considered on a case-by-case basis.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is some mix up of sentences here.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Note to Rule 9 </b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Whether certain goods are "of the same class or kind" as other goods must be determined on a case-by-case basis with reference to the circumstances involved. In determining the usual profits and general expenses under the provisions of rule 9, sales for export to <st1:country-region><st1:place>India</st1:place></st1:country-region> of the narrowest group or range of goods, which includes the goods being valued, for which the necessary information can be provided, should be examined<b>. For the purposes of rule 11</b> "goods of the same class or kind" must be from the same country as the goods being valued.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is perhaps Rule 9</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Note to Rule 11</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In rule <b>9(l)(a)(i),</b> the term "buying commissions" means fees paid by an importer to his agent for the service of representing him abroad in the purchase of the goods being valued.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is perhaps Rule 11.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Rule 11(l)(c)</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b> </b>1. The royalties and licence fees referred to in rule <b>9(l)(c)</b> may include ……</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is also must be Rule 11(1)(c)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Minor mistakes, no doubt but can create complications in future.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revised Draft Rules –<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/export.htm" target="_blank"> <u>Import</u> <u>export</u> <u>schedule</u></a></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Draft Valuation Rules - Board is waiting for your feedback</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is eagerly waiting for your comments on the draft valuation rules. <b>DDT</b> understands that a conference of Chief Commissioners is scheduled in Mumbai on 9<sup>th</sup> April to discuss the issue and they want your comments latest by 4<sup>th</sup> April. So please rush your comments immediately. This is the time for us to tell the Board and they appear to be ready to listen. There is no point in criticizing them later. You can send your comments to us also. We will compile and send a consolidated list of suggestions to the Board.</font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Annual Closing of Government Accounts - Special Measures for the Current Financial Year (2006-07) – RBI instructions</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With a view to facilitating accounting for all the Government transactions of the current financial year (2006-07) by March 31, 2007 as desired by the Government of India and in order to meet the probable rush of tax-payers towards the end of the year, RBI has decided that:-</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) All Regional Offices of Reserve Bank of India (RBI) and branches of Agency banks conducting Government business will suitably extend the banking hours to conduct Government business by keeping their counters open for the purpose from March 26, 2007 to March 31, 2007 to facilitate receipt of taxes etc. from members of public even at late hours. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) The Regional Offices of RBI and branches of Agency banks conducting Government business will keep their counters open even in the States where March 31, 2007 is declared a holiday under the Negotiable Instruments Act and conduct Government transactions.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii) Special clearing (with return clearing) will be conducted in the evening/night of March 30 and 31, 2007, with the approval of the President of local Clearing Houses run by Reserve Bank of India/Agency bank keeping in view the operational convenience at the local centres so that the clearing instruments received from members of public are realized and credited to Government account by March 31, 2007.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbt_tax.htm" target="_blank">RBI/2006-07/293 DGBA.GAD.No.H-14214/42.01.029/2006-07 dated March 23, 2007</a></u></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>ADB on SEZ</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Asian Development Bank comments on <st1:country-region><st1:place>India</st1:place></st1:country-region>’s SEZ.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Investments of about Rs 1 trillion with an employment potential of over 500,000 are expected from the new SEZs over the next 3 years.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The pros and cons of SEZs are very difficult to weigh. Nothing of this scale and with this particular set of administrative arrangements and subsidies has been attempted before in <st1:country-region><st1:place>India</st1:place></st1:country-region>. Clearly, SEZs present an opportunity to provide potential investors with better infrastructure and greater bureaucratic efficiency. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Nevertheless, valid criticisms of subsidies to SEZs deserve consideration.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. with firms already eager to invest (but for the infrastructure and bureaucratic problems), providing enclaves that meet these needs might be enough to stimulate investment. Tax breaks may therefore be unnecessary. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. SEZ tax inducements are expensive, and come at a time when government is struggling to provide adequate infrastructure in the wider economy.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. special tax exemptions always risk opening up loopholes for tax evasion. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. And subsidies can undermine both investment and existing firms located outside the SEZs. These firms suffer two disadvantages— worse infrastructure and higher taxes.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Serious concerns have also been expressed with regard to the people displaced by land acquisition. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Important issues include: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. the kind of land to acquire for SEZs;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. the extent of state involvement in selecting and taking land; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. how to provide land losers with financial stakes in SEZs; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. and how to retrain economically displaced people, especially landless agricultural workers for jobs in SEZs.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Indeed, some of the loudest political opposition to SEZ projects comes from the landless, who may not receive lasting compensation for land conversion and who lack the capital to become self-employed.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Governments have begun promoting the redevelopment of farmland with the aim of creating SEZs which are intended to assist industrial developers seeking to bypass infrastructure and administrative bottlenecks. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">o the creation of SEZs involves a series of measures that are fiscally costly, potentially diverting industry away from other areas, and bring states’ land-acquisition powers to bear in markets where land ownership is either poorly defined, or carries significant external effects. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Given that large numbers of agricultural laborers who have no title to these lands nevertheless depend upon them for sustenance, the issue is exceptionally emotive.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Government is in a position to play a crucial role in alleviating these tensions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It can do so by assuring appropriate compensation packages for displaced workers; retraining schemes to permit displaced workers to qualify for jobs on SEZs; and most important, infrastructure support for creating and locating manufacturing jobs more organically. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ More directly, it can help tackle the tensions through well-targeted investments to improve agricultural productivity.</font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Arrest under Customs Act – bailable?</b></font></p> <div> <div> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>High Courts are divided on the issue. While Bombay High Court feels that the offences under the Customs Act are bailable, the Delhi High Court does not think so. And the Supreme Court is yet to decide the issue. Today we are carrying two judgements of the Bombay High Court holding that such offences are bailable. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>So the position is if somebody is arrested under the Customs Act in <st1:City>Delhi</st1:City>, he may not get a bail, but if he is arrested in <st1:place>Maharashtra</st1:place>, he is sure to get bail. And in the rest of the states – we have to wait and watch! </strong></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><font face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"></font></p> </div> </div> </body> </html>