TIOL-DDT 674 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"
"http://www.w3.org/TR/html4/loose.dtd">
<html>
<head>
<title>Untitled Document</title>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1">
</head>
<body>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL</font></b><font color="#663399" size="3"><b>-DDT 674</b></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
08.08.2007<br>
Wednesday</b></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Performance budget - How the Revenue spends its money. </b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Here are the details of how the Indirect taxes Department spent the money allotted to them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. During 2005-06, total expenditure of Rs.1368.74crore was 5.26% more than the expenditure of Rs.1300.33crore incurred in 2004-05.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In Revenue Section, the increase is 7.03% which is mainly due to enhancement of pay and allowances, more expenditure on reimbursement of medical expenses and publicity campaign about Service Tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Under Capital Section, there is decrease of 75.54% in 2005-06 visà- vis expenditure in 2004-05. This is because of non-finalisation of an office accommodation proposal and non-materialization of purchase of marine vessels and container scanners during the year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In 2006-07, total estimated expenditure of Rs.1632.70crore is 19.28% more than the expenditure of Rs.1368.74crore incurred in 2005-06. In Revenue Section, the anticipated increase is 15.80% which is mainly due to enhancement of pay and allowances, more cases of reward sanctioned for employees and informers, publicity campaign about Service Tax, more expenditure on hired accommodation and computerization of the Department.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In Capital Section, there is expected increase of 713.91% in 2006- 07 as compared to expenditure of 2005-06. This is because of finalization of proposal for purchase of office accommodation at Mumbai, expenditure on other ongoing schemes for acquisition of office/residential accommodation and likely expenditure as advance payment for construction of marine vessels and development of site for installation of container scanners.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Under 'Information Technology', expenditure during 2005-06 was Rs.32.63crore which is 6.45% less than the expenditure of Rs.34.88crore incurred in 2004-05 because of delay in finalization of process for implementation of consolidation project. However, for 2006-07 estimated expenditure of Rs.110.00crore is 237.13% more than the expenditure incurred in 2005-06 because implementation of some of the components of consolidation project are likely to start during 2006- 07.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. For procurement of marine vessels, no expenditure has been incurred upto January, 2007. Some advance payment is likely to be made by March, 2007 at the time of placing order for construction of 87 vessels of Category I, III A and III B.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. For procurement of container scanners, expenditure during 2005-06 was Rs.1.05crore which is 94.66% less than the expenditure of Rs.19.68crore incurred in 2004-05 because proposal for procurement of 3 mobile scanners and 4 fixed scanners in the second phase was approved by CNE on 14.02.2006 and by the CCEA on 27.10.2006 i.e. after the close of the financial year 2005-06. For 2006-07, estimated expenditure of Rs.6.00crore is 471.37% more than the expenditure incurred on 2005-06 because balance payment pertaining to installation of 2 scanners in first phase and some payments for Geo-Technical investigations and other preparatory work are also to be incurred.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. For acquisition of office accommodation, expenditure during 2005- 06 was negligible as no proposal could materialize. For 2006-07, estimated expenditure is Rs.17.34crore because of part payment made in respect of purchase of building from UTI at Mumbai.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.For acquisition of residential accommodation, expenditure during 2005-06 was Rs.5.77crore which is 19.46% more than the expenditure of Rs.4.83crore incurred in 2004-05 because of balance payment made in respect of ongoing projects. For 2006-07, estimated expenditure of Rs.12.00crore is 107.99% more than the expenditure</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Revenue earners are not really good spenders!</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You think the Customs and Excise officers are lavish? Honestly, they don't know how to spend money! Here's how various wings of the Department <b><font color="#663399">failed</font></b> to spend money allotted to them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Directorate of <b><font color="#663399">Inspection</font></b> was asked to spend 55.22 Crores of rupees - with much difficulty, it managed to spend 31.44 Crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Vigilance</font></b> was given a budget of Rs. 4.52 Crores and it managed to spend 3.72 Crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The premier Academy, <b><font color="#663399">NACEN</font></b> was able to spend 10.04 Crores out of the 10.40 Crores allotted to it - no wonder they were prompt in paying me the honorarium for lectures in NACEN. I wish they could get a little more so that there could be a little more lectures (paid) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <b><font color="#663399">Publicity</font></b> and publications wing could only spend 20.99 Crores from the grant of over thirty Crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ace investigator <b><font color="#663399">CEI</font></b> also could not spend all the money given to them. They managed to spend 15.41 Crores out of the 17.99 Crores given to them.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But one head where they could really spend the money was <b><font color="#663399">Secret
Service Fund</font>, </b>which is mostly used for tea parties and flight tickets, was well spent. Out of 3.35 Crores, they could spend 3.21 Crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Give more money for the Academy and Secret Fund -at least they know to spend and tea and training are the two most essential requirements of government service. </font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service tax - a promising source of revenue</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The gradual expansion of the service tax, introduced in 1994-95 to redress the asymmetric and distortionary treatment of goods and services in the tax regime, has been a buoyant source of revenue in recent years. The number of services liable for taxation was raised from 3 in 1994-95 to 6 in 1996-97, and then gradually to 100 in 2007-08. Simultaneously, the rate of tax was raised from 8 per cent to 10 per cent in 2004-05 and further to 12 per cent in 2006-07. Revenue from service tax, as the combined outcome of expanding tax net, creeping rate, and buoyant service sector growth, increased rapidly from a paltry Rs. 407 crore in 1994-95 to Rs. 38,169 crore in 2006-07 (RE)</font></p>
<div align=center>
<table width=450 border=0 align="center" cellpadding=5 cellspacing="0" bordercolor="#999966">
<tr bgcolor="#999966">
<td width=503 colspan=6>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Table 3. Service Tax : A Growing Revenue Source</b></font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Year</b></font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>No. of services</b></font></p></td>
<td width=87>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Number of assessees </b></font></p></td>
<td width=45>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Tax rate</b></font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Revenue </b></font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Growth</b></font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146 bgcolor="#999966">
<p align="justify"><font color="#999966"></font></p></td>
<td width=70 bgcolor="#999966"><font color="#999966"> </font></td>
<td width=87 bgcolor="#999966"><font color="#999966"> </font></td>
<td width=45>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>per cent</b></font></p></td>
<td width=72>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>(Rs. in crore)</b></font></p></td>
<td width=73>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>per cent</b></font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1994-95</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3,943</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">407</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">...</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1995-96</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4,866</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">862</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">111.8</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1996-97</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13,982</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,059</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22.9</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1997-98</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">15</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">45,991</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,586</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">49.8</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1998-99</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">107,479</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72 bgcolor="#999966">
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,957</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23.4</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1999-00</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">115,495</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2,128</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.7</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2000-01</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">122,326</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2,613</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">22.8</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2001-02</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">41</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">187,577</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3,302</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">26.4</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2002-03</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">52</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">232,048</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4,122</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">24.8</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2003-04(with effect from May 14,2003)</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">60</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">403,856</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7,891</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">91.4</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2004-05 (with effect from September 10, 2004)</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">75</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">740,267</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14,200</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">80.0</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2005-06</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">84</font></p></td>
<td width=87>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">805,591</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23,055</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">62.4</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2006-07 (RE) (with effect from April 18, 2006)</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">99</font></p></td>
<td width=87 bgcolor="#999966">
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">...</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">38,169</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">65.6</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=146>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2007-08 (BE)</font></p></td>
<td width=70>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">100</font></p></td>
<td width=87>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif">...</font></p></td>
<td width=45>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12.00</font></p></td>
<td width=72>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">50,200</font></p></td>
<td width=73>
<p align=right><font size="2" face="Verdana, Arial, Helvetica, sans-serif">31.5</font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax indeed is a promising source of revenue, but five caveats are in order. First, the scope for expanding the service tax net to more and more services gets narrower as the net is widened. The contribution of the expanding net will reduce with time. Second, the preponderance of small service providers below the taxable limit on turnover constrains the scope of revenue mobilization beyond a certain level. Third, with resurgence of industry and revitalization of agriculture, the rapid growth in the share of services in GDP may not continue in the medium to long run. This would have implications for service tax revenue as a proportion of GDP. Fourth, service tax was introduced under the residuary entry No. 97, List I in the Seventh Schedule of the Constitution. There are already moves afoot for a sharing of the tax base between the Centre and the States, particularly in the context of phasing out of the Central Sales Tax. Any sharing of the tax base with the States will diminish the Centre's available resources to finance the plan. Fifth, with the declared goal of introducing a unified goods and services tax (GST) by April 1, 2010, there is considerable uncertainty about the rates, base, and setting off (that is input tax credit) mechanism with implications for revenue collection.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Revenues from service tax</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For projecting service tax, the most buoyant source of revenue, in view of the major changes since its introduction in 1994-95, historical buoyancy was not considered to be a reliable method to follow. The 2007-08 (BE) figures were taken as the base and though the scope for further expansion of base and rate is limited, given the room for improvement in the level of compliance and probable loss because of SEZ development, it was assumed that service tax collection will grow by 25 per cent in the four years of the Eleventh Five Year Plan, beginning from 2008-09.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax Revenue (In rupees crore)</font></p>
<table width=450 border=0 align="center" cellpadding=5 cellspacing=0>
<tr bgcolor="#999966">
<td width=85 valign=top bgcolor="#9999CC">
<p align="justify"></p></td>
<td width=55 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2005-06</font></p></td>
<td width=59 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2006-07 (RE)</font></p></td>
<td width=57 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2007-08 (BE)</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2008-09</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2009-10</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2010-11</font></p></td>
<td width=76 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2011-12</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=85 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Growth of GDP at factor cost at current prices in per cent</font></p></td>
<td width=55 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.8</font></p></td>
<td width=59 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14.4</font></p></td>
<td width=57 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.0</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.0</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.0</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.0</font></p></td>
<td width=76 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13.5</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=85 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Growth of service tax revenue</font></p></td>
<td width=55 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">62.36</font></p></td>
<td width=59 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">65.56</font></p></td>
<td width=57 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">40.00</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25.00</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25.00</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25.00</font></p></td>
<td width=76 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25.00</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=85 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Projected Service Tax Revenues</font></p></td>
<td width=55 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">23,055</font></p></td>
<td width=59 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">38,169</font></p></td>
<td width=57 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">50,200</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">62,750</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">78,438</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">98,047</font></p></td>
<td width=76 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">122,559</font></p></td>
</tr>
<tr bgcolor="#999966">
<td width=85 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax revenue-GDP at factor cost ratio in per cent</font></p></td>
<td width=55 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">0.71</font></p></td>
<td width=59 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.03</font></p></td>
<td width=57 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.20</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.32</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.46</font></p></td>
<td width=66 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.62</font></p></td>
<td width=76 valign=top bgcolor="#9999CC">
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.78</font></p></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax revenues, according to the projections, increase more than three-fold from Rs. 38,169 crore in 2006-07 (RE) to Rs. 122,559 crore in 2011-12. As a proportion of GDP, the increase is from a little over 1 per cent of GDP in 2006-07 (RE) to 1.78 per cent in 2011-12.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Loss due to SEZs: </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The total area covered by the notified SEZs is 67 square kilometres, while area covered by the formally approved SEZs would be 350 square kilometres, which is small in comparison to the area covered under domestic tariff area (DTA) units. Exports from SEZs is expected to cross Rs 100,000 crore in 2008-09. The units in SEZs will be exempt from customs duties, income and corporate tax, and service tax. The movement of goods to DTA areas will be on payment of applicable rates of duty. The loss of revenue for 2005-2010 from indirect taxes, viz, customs duties, excise duties and service tax assessed, based on investment lined up for 70 SEZs, was estimated at Rs 29,700 crore, Rs 10,368 crore and Rs 8,813 crore, respectively. Loss of revenue from SEZs for the four years of the Eleventh Five Year Plan have been assumed at 5 per cent for customs revenue and 2 per cent each for excise duties and service taxes, based on the investment of 70 SEZs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Source: </strong>The report of the Working Group on Centre's Financial resources for the Eleventh Plan.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>From our Legal Corner - tomorrow's cases</b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></b></b></font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Customs appraiser's prosecution quashed - When departmental adjudication fails, on same facts, no prosecution - It would be an abuse of process of court to allow any action which would result in injustice and prevent promotion of justice : Bombay HC </font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE prosecution charge against the Customs appraiser is that</strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#000000">1. The appraiser connived with certain smugglers to evade Customs duty.</font></font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">2. He used to accept misdeclarations made in Bills of Entry without reference to actual goods imported and covered.</font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. For this work he used to receive monetary consideration.</font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Since he denied his signature and rubber stamp on the Bills of Entry, they were referred to the Government Examiner of Questioned Documents who certified that the signatures on the 11 pre-marked Bs/Entry tallied with the signature of A.O.</font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The perseverant appraiser got through the legal maze and finally the High Court quashed his prosecution. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Recovery of audit fees u/s 11 of Excise Act can be made by adjustment of refund payable to particular person and not from another unit of same company : Tribunal </font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#000000">CONTRARY
to the general perception, the provisions of Section 14AA of the CEA'44
are still on the scene & are being used by some Commissioners of
Central Excise. </font></font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">This section permits the Commissioner to direct the manufacturer to get the accounts of his factory, office, depot, distributor or any other place, audited by a Cost Accountant, if he has a reason to believe that the credit of duty availed of or utilized is not within normal limits etc. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Supreme Court- sales tax</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Toughened safety glass including wind screen, constitutes 'glass' or 'glassware' - While interpreting a provision court only interprets law and cannot legislate it : SC </font></b></font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">APPELLANT
assessee being aggrieved by the denial of total exemption of sales tax on
the purchase of raw materials and packing materials, filed an appeal which
was allowed by the Assistant Commissioner (Judicial) by order dated 11.1.1989.
This order was confirmed in Second appeal by the Tribunal, as Revenue's appeal
before the Tribunal was dismissed. An application for revision was filed
before the High Court which, confirmed the view of the Assessing Officer.
It was held that the expression "glass" or "glass ware" does
not include the articles manufactured by the assessee. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">Entire work done in Singapore - no part of service rendered in India and thus, it cannot be held to be an assessee in default for non-deduction of TDS : ITAT</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE assessee is engaged in the Real Estate Development. It entered into an agreement with M/s. Site Concepts Int. Ltd. for development. The agreement stipulates that the entire designs and drawings will be transferred at Singapore either to the assessee or its agent by M/s.Site Concepts International Ltd., British Virgin Islands. It also stipulates that the entire work will be carried out by M/s Site Concepts International Ltd. in Singapore and no part of the work will be carried out in India. The assessee made payments to "M/s Site Concepts International Limited, without deducting any tax at source after obtaining a certificate from Chartered Accountant in accordance with the procedure laid down under section 195. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u><font color="#663399">See our columns tomorrow for the judgements</font></u></b></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>
</body>
</html>