TIOL-DDT 693 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<html> <head> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <title>TIOL-DDT 670</title> <link rel=themeData href="06.09.07_files/themedata.thmx"> <link rel=colorSchemeMapping href="06.09.07_files/colorschememapping.xml"> <style> <!-- --> </style> </head> <body bgcolor="#FFFFFF" link=blue vlink=purple> <div><p align="justify"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 693</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br> 06.09.2007<br> Thursday</b></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Mandatory penalty – Happy Board commends CESTAT LB decision to the field.</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 26<sup>th</sup> July 2007, we carried the landmark decision of the Larger Bench of the Tribunal holding that mandatory penalty is not the maximum penalty and if suppression, collusion etc, are proved, there is no option and penalty equal to the duty demanded has to be imposed. <u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-1017-CESTAT-DEL-LB.htm" target="_blank"><font size="1">2007-TIOL-1017-CESTAT-DELHI-LB</font></a></u><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-1017-CESTAT-DEL-LB.htm">.</a></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously the Board is very happy and has communicated our citation to the field, with extracts from the Larger Bench decision. The Board letter says,</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The above cited Tribunal's decision is an important authority on the subject and has considered the legal provisions in a very comprehensive, holistic and detailed manner, setting to rest the controversies as created by a host of decisions on the subject matter creating all round confusion in the field</font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">.</font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the field officers to keep in mind this decision, <font color="#663399">while deciding the question of imposition of penalty under Section 11AC of the Central Excise Act or Section 114A of the Customs Act as it lays to rest the disparity of practices in the field formations arising out of two diametrically opposite viewpoints as held by various judicial bodies and for the guidance and action of the field officers in similar circumstances.</font></font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board actually has no reason to worry as perhaps not a single officer in the country had imposed a penalty less than the amount of duty, under Section 11AC.</font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember we had carried an article last week by <st1:PersonName w:st="on"><st2:GivenName w:st="on">Jai</st2:GivenName> <st2:Sn w:st="on">Kumar</st2:Sn> and Natarajan, where the authors felt that the Tribunals and courts can still impose lesser penalty. Maybe the issue is not finally settled and the issue can still be agitated in the Supreme Court.</font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>In his budget speech of 1996, the Finance Minister said,</strong></font></p><p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">I am proposing suitable changes in the Customs and Excise Acts to provide for mandatory penalty, together with interest, for evasion of duties on account of fraud, collusion, mis-statement or suppression of facts. Henceforth, the mandatory penalty for evasion of duty on these counts shall be equal to the amount of duty evaded. Tax evaders would also be required to pay interest starting from the first day of the succeeding month in which the duty evaded ought to have been paid and also face criminal prosecution.</font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Board letter explaining the Budget said,</strong></font></p><p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Bill also contains a proposal regarding mandatory penalty in cases of non-levy, short levy or non-payment or short payment of duty or erroneous refund arising from fraud, collusion or any wilful statement or suppression of facts or contravention of provisions of Act or rules with intent to evade payment of duty. A new Section 11AB has been inserted in the Central Excises and Salt Act. It may be seen that in such cases the adjudicating officer shall have no discretion to determine the amount of penalty and the penalty shall be equal to the amount of duty or refund which is determined as payable under Section 11A(2).</font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Any idea who the FM was? Our very own Chidambaram!</strong></font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the original idea appears to have been to impose a mandatory penalty equal to the duty demanded, but somewhere down the line with <i>Machino montell</i> and <i>RINL</i>, it somehow became the law that if duty is paid before issue of notice, there should be no mandatory penalty. This was too good to last, though a perfectly good logic. Even when the assessees came up voluntarily to pay any excise duty which escaped inadvertently, they were stuck with penalty and interest notices. </font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway it is celebrations time for Revenue and the Board has gladly circulated the case reported by us. Penalty or interest, revenue or assessee, it is good economics to log on to <a href="http://www.taxindiaonline.com">www.taxindiaonline.com</a> for the latest.</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=31&filename=notification/excise/2007/instruct03.htm" target="_blank">CBEC letter in F.No. 275/67/2007-CX.8A Dated <st1:date ls="trans" Month="8" Day="24" Year="2007" w:st="on">August 24, 2007 </a></u></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Electronic filing of <st1:stockticker w:st="on">TDS returns – CBDT clarifies</b></font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the amendment to the Income Tax Rules by Notification No. 238/2007 dated 30<sup>th</sup> August 2007-<strong>[See</strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6010" target="_blank"><font size="1">TIOL-DDT 691 03.09.2007</font></a><b>], </b>whereby electronic filing of <st1:stockticker w:st="on">TDS returns was made mandatory for the following additional cases,</font></p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Where the deductor/collector is a person required to get his accounts audited under section 44AB of the Income-tax Act in the immediately preceding financial year. </font><p align="justify"></p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) The number of deductees'/collectees' records in a quarterly statement for any quarter of the immediately preceding financial year is equal to more than fifty. </font><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT clarifies that</strong></font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Failure to furnish quarterly statements of <st1:stockticker w:st="on">TDS and quarterly statements of TCS shall, under the provisions of section 272A of the Income-tax Act, 1961, render the defaulter liable for a penalty of Rs.100/- for every day during which the default/failure continues.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The notification has come into effect from 1<sup>st</sup> day of September, 2007. Accordingly, quarterly statement for the quarter ending 30<sup>th</sup> September, 2007 shall have to be mandatorily filed electronically by Government and corporate deductors/collectors and by the deductors/collectors falling in the aforementioned two categories.</font></p><p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Antidumping duty on Paracetamol from China</b></font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was in 2002 that by Notification No. 89/2001-Customs, dated the 6th September, 2001, that anti dumping duty was imposed on paracetamol originating in, or exported from, the People's Republic of <st1:place w:st="on"><st1:country-region w:st="on">China</st1:country-region>. This was to expire on 5<sup>th</sup> September 2006 and was further extended and would have expired on 5<sup>th</sup> September 2007. The Government has this time around acted before the lapsing and imposed a fresh lease of anti dumping for another five years and consequently Notification No. 67/2005-Customs, dated the 19 th July 2005, is rescinded.</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=23&filename=notification/custom/2007/ctariff07_099.htm" target="_blank">Notification No. 99 </a></u><b><u>and </u></b><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_100.htm" target="_blank">100/2007-Cus., <st1:date ls="trans" Month="9" Day="3" Year="2007" w:st="on">September 3, 2007</a></u></font></p> <p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Intel outside – When the chips are down - <st1:country-region w:st="on"><st1:place w:st="on">India</st1:country-region> loses - to china for bureaucratic delays</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/intel.jpg" alt="Legal Corner Icon" width="80" height="61" hspace="5" border="0" align="left"></b></b></b>Intel Corporation has decided to set up its manufacturing plants in <st1:country-region w:st="on">China</st1:country-region> and <st1:country-region w:st="on">Vietnam</st1:country-region> following delays in <st1:place w:st="on"><st1:country-region w:st="on">India</st1:country-region> announcing its semiconductor policy, according to <st2:GivenName w:st="on">Craig</st2:GivenName> <st2:middlename w:st="on">R.</st2:middlename> Barrett, Chairman of the Board, Intel Corporation. The company is a $35-billion world's largest chip maker. “The Indian Government policy was not timely for us. The Government did not have a well documented plan when we began discussions with them,” he told. </font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“There are no complaints on issues like infrastructure against <st1:place w:st="on"><st1:country-region w:st="on">India</st1:country-region>. Between the time we initiated discussions with <st1:country-region w:st="on">India</st1:country-region> and the announcement of the semiconductor policy, Intel already firmed up its plans in <st1:country-region w:st="on">Vietnam</st1:country-region> and <st1:place w:st="on"><st1:country-region w:st="on">China</st1:country-region>,” he said. </font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“<st1:place w:st="on"><st1:country-region w:st="on">India</st1:country-region> is still high on our list and will definitely consider in our next round of investment. However, right now we don't have any plan to set up a plant here. There is enough capacity at this point,” he said after announcing various healthcare projects. </font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">'The Indian government was a bit slow in coming out with the semi-conductor manufacturing proposal and missed the period of our commitment in which we had to set up our manufacturing unit,' he added.</font></p><p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Intel plans to build a $2.5-billion facility in <st1:place w:st="on"><st1:country-region w:st="on">China</st1:country-region> to make chip wafers using 300-millimetre technology. Work will start later this year and the plant will begin initial production runs in the first half of 2010. <st2:GivenName w:st="on">Barrett</st2:GivenName> said in <st1:country-region w:st="on">India</st1:country-region>, Intel would like to strengthen its activities in engineering and software at <st1:place w:st="on"><st1:City w:st="on">Bangalore. </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"><b>Income Tax</b></font></p><p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>ITAT has power to extend stay, even after 2007 amendment - Identical cases in Central Excise followed : Bombay High Court</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">THE </font></strong>question: "Does the third proviso to Section 254 (2A) of Income Tax Act, have the effect of denuding the Tribunal of its incidental power to grant interim reliefs?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This question is settled on the Central Excise side, but the matter is in the High Court from the Income Tax side.</font></p><p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Indian company's PE in Japan makes losses - Deduction for such losses is available in India even though positive income is taxed in Japan : ITAT</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399">WITH</font> </b>more and more Indian companies setting up shops on foreign lands and generating both incomes as well as losses, the issue of taxation is becoming more and more interesting and taxing! In this case, involving Patni Computer Systems Ltd, the dispute is about allowing deduction for losses incurred by the assessee's trading branch in <st1:place w:st="on"><st1:country-region w:st="on">Japan</st1:country-region> when the income from the same branch has been taxed locally in the source country.</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 color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>J & K exemption - education cess also to be refunded : Tribunal</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is evident that when the exempted amount of duty was required to be refunded for operationalising the exemption, Education Cess, which was in the nature of piggy back duty on the excise duties under the said three Acts, was also required to be refunded, because it was not at all leviable, in view of the entitlement to exemption</font></p><p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>No penalty if suppression and mis-statement are not even alleged : High Court</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once there was no allegation, there was no question of any finding in that regard.</font></p><p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u>See our columns tomorrow for the judgements</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> </div> </body> </html>