TIOL-DDT 758 · the untouched capture
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<p><font size="3"><b><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 758</font></b><font face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
10.12.2007<br>
Monday</b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st2:PersonName
w:st="on"><b><font color="#006600">CESTAT President Justice <st1:Sn w:st="on">Abichandani</st1:Sn></span></font></b></st2:PersonName><font color="#006600"><b> retires</b></font></font></p>
<p align=justify><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><b><img src="http://www.taxindiaonline.com/RC2/image/guest/abichandani.jpg" alt="Legal Corner Icon" width="60" height="75" hspace="5" border="0" align="left"></b></strong></b></font></b></font></b></font></b></font></b></font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CESTAT President Justice <st1:GivenName w:st="on">RK</st1:GivenName> <st1:Sn w:st="on">Abichandani</st1:Sn></st2:PersonName>has
laid down office as President of CESTAT. Justice <st1:Sn w:st="on">Abichandani</st1:Sn></st2:PersonName>
brought in several revolutionary changes in the CESTAT like a weekly Cause List
and a proper dress code for the Tribunal judges and the Departmental Representatives.
It was nice to see the Members of the Tribunal dressed like High Court judges
and the DRs with a black coat. One DR asked us, "what will I do with this coat
after I am transferred out?' A former SDR told me, "It would have been difficult
for me to organise for a coat if I were to wear one when I was the SDR". There
was a rumour that <st2:PersonName w:st="on">Justice <st1:Sn
w:st="on">Abichandani</st1:Sn></st2:PersonName> was trying for an extension and
I asked the <st1:Sn w:st="on">Hon'ble</st1:Sn> justice if he was interested
in an extension, when I met him recently. He called his wife and asked her if
he would seek an extension. Three months ago, he told me that he would not accept
an extension if it was offered to him. And <st2:PersonName w:st="on">Madam <st1:Sn
w:st="on">Lakshmi</st1:Sn></st2:PersonName> (his wife) told me, he had enough,
let him leave that job and practise in the Supreme Court. Lakshmi practises
in the Supreme Court and most probably <st2:PersonName w:st="on">Justice <st1:Sn
w:st="on">Abichandani</st1:Sn></st2:PersonName> will join her - we wish him all
the best.</font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>LTU
Chennai - Procedural arrangements </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to the Board, the Chennai LTU is
operational effective 1<sup>st </sup>December 2007 and the Board Instructions
in Board's circular No. 834/11/2006-CX, dated 05.10.2006 will apply <i><font color="#FF6633">mutatis mutandis</font></i> in respect of the LTU, Chennai except</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. As
a transitional measure, the returns for the month of November, 2007 ( to be
filed in December, 2007) will be filed with the erstwhile jurisdictional
officers and the returns for the month of December, 2007, onwards shall be
filed in the LTU.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. In
case of any time-bound matter like review of orders or filing of appeal or
hearing of the cases in the Court, etc., the present jurisdictional
Commissioner should handle the matter for the month of December, 2007, and
thereafter, the cases should be transferred. For other time-bound matters,
where the action is required to be taken during the next one month, i.e., the
month of January, 2008, the jurisdictional Commissionerate should send a D.O.
letter explaining the relevance details of these cases.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You know what <i><font color="#FF6633">mutatis mutandis</font></i> means. Write to us your views.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/excircular834.htm" target="_blank">The Board Circular 834/11/2006-CX, dated 05.10.2006 stipulated
that</a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>1. Receipt of Consent Form and its Acceptance: </b>On receipt of the
consent form from the large taxpayer, the Chief Commissioner, LTU will get the
said consent form verified, and if the eligibility conditions prescribed under
the rule and the notification have been satisfied, the taxpayer will be
informed by way of issue of an acceptance letter. The process of acceptance
would not normally take more than 7 days. Once a taxpayer acquires the status
of LTU, the entire jurisdiction of central excise, service tax and income tax
matters shall stand transferred to the said LTU in respect of all his manufacturing
units, service providing premises, and other registered premises located
throughout the country. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>2. Client Executive:</b> The Chief Commissioner, LTU will
assign a Client Executive for each large taxpayer from among the
Additional/Joint/Deputy/Asstt. Commissioner posted in the LTU either from the
Income Tax or Central Excise Department. The said Client Executive will be the
single point interface with the large taxpayer for any assistance,
clarification, and grievance redressal.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>3. Transfer of intermediate goods/inputs/capital goods:</b> The goods can be
removed by the sender premises under an invoice or a transfer challan, which
should contain all details as in case of an invoice except the value. However,
the facility of such removal without payment of duty or reversal of credit is
not permitted when the recipient unit is availing the benefit under specified
area based exemption notification or where the sender premises is an EOU or a
unit located in EHTP or STP. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>4. Transfer of credit:</b> Rule 12A(4) of the Cenvat Credit
Rules, 2004 provides an option to a large taxpayer to transfer Cenvat credit
(of central excise duty or service tax) accumulated in one manufacturing unit
or service providing unit to any of its other manufacturing or service
providing units. Such transfer can be made by way of issue of a transfer
challan containing the details as provided in the said sub-rule. The said
transfer challan can be sent by fax or electronically by way of e-mail
attaching the scanned copy of the challan to other unit for taking credit which
should be followed by the original copy of the challan.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>5. Excess payment: </b>Rule 12 BB of the Central Excise Rules,
2002 provides a facility that if a large taxpayer manufacturing excisable goods
has paid at any time excess excise duty on account of arithmetical error, he
would be permitted to adjust the said excess duty paid by him in the subsequent
period.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>6. E payment:</b> In case of difficulties in e-payment, a
large taxpayer is permitted to pay the duty (except in such cases of Service
Tax where e-payment is mandatory) in the respective jurisdiction where the
factories or service providing premises are situated or even in the
jurisdiction of LTU, Bangalore.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>7. Pending rebate/refund cases:</b> All the
refund/rebate claims filed with the jurisdictional Central Excise and Service
tax Commissionerate till the date of receiving the acceptance letter issued by
the Chief Commissioner, LTU shall be processed by the jurisdictional
Commissionerate only, and these will not be transferred to the LTU. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>8. Export Procedures: </b>facility of self-sealing of export
consignment is available to all the large taxpayers. Therefore, all the
taxpayers are expected to avail this facility. However, in exceptional cases,
where the taxpayer intends to avail the facility of sealing by the Central
Excise officers or the Customs officers, they should apply for the same to the
LTU who in turn will request the jurisdictional Commissionerate to depute the
staff for supervising the sealing of export cargo. However, the processing of
accepting the proof of export shall be carried out only in the office of the
LTU.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>9. Audit:</b> As far as possible, the audit of the head
office and all the units will be conducted simultaneously. Dates for audit will
be fixed in consultation with the large taxpayer.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>10..Adjudication: </b>All show cause
notices pending adjudication, as on the date of issue of acceptance letter will
be transferred to the LTU along with all connected case papers. Cases that are
in the process of being adjudicated (i.e. where personal hearings have been
conducted) will be decided by the jurisdictional adjudicating authority only.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>11.Investigations:</b> All pending
investigation cases as on the date of issue of acceptance letter will be
completed by the jurisdictional Commissioner</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>12.Arrears of revenue
:-</b>
The complete details of the arrears of revenue will be forwarded to the LTU by
the respective Commissionerates. The case files are not to be merely forwarded,
but individual details of each case along with the full history should be
prepared and sent. Similarly, all cases pending before the Commissioner
(Appeals), CESTAT, High Court, and Supreme Court should be transferred to the
LTU with a self-contained note in each file.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Does anybody know
where this LTU is?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2007/excircular861.htm" target="_blank">CIRCULAR
NO.861/18/2007-Cx.,
Dated: December 7, 2007 </span></a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><ns0:PersonName><font color="#006600">S<ns0:GivenName></ns0:GivenName><ns0:Sn></ns0:Sn></font></ns0:PersonName><font color="#006600">upplies to SEZ - Drawback - Who sanctions? </font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A doubt has been raised as to whether the
jurisdictional Commissioners of Customs or Central Excise can sanction drawback
claims against supplies made by DTA units to units in SEZ.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board now clarifies that, wherever admissible, drawback claims in respect of supplies
made by DTA units to units or Developers in SEZ are not to be processed or
sanctioned by the Customs and Central Excise formations. The Specified Officer
posted in an SEZ is the appropriate authority for granting drawback in respect
of goods supplied from DTA units to Developers and units in SEZ except where
the unit or Developer issues a disclaimer to the DTA supplier in which case the
Commissionerate of Central Excise /Customs & Central Excise having
jurisdiction over the DTA unit would sanction the drawback. The jurisdictional
Commissioner of Customs in consultation with the Pay & Accounts Officer
shall make arrangements for issue of authorization and drawback cheque books
(wherever EDI facilities are not available for directly crediting the said
amount to the Bank Accounts of the exporters) as clarified by the Board vide
Circular No.6/2005-Cus, dated 3.2.2005.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards applications for fixation of
brand rate of drawback the same may continue to be filed with the Commissioner
of Central Excise or the Commissioner of Customs and Central Excise having
jurisdiction over the manufacturing unit of the manufacturer or the supporting
manufacturer, as the case may be. Copies of the brand rate fixation letters may
be endorsed to the Development Commissioner and the Specified Officer of the
SEZ. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since drawback in respect of goods supplied
by DTA units to Developers or units in SEZ can be claimed by either the SEZ
unit or the Developer, as the case may be, or by the DTA supplier on the basis
of the disclaimer issued by the SEZ unit or the Developer, necessary safeguard
may be taken to ensure that drawback is not availed of twice on the same goods.
It may be ensured that the disclaimer certificate issued by the SEZ unit or the
Developer to the DTA supplier is supported by a certificate from the Specified
Officer in the SEZ to the effect that drawback has not been claimed/availed of
on the goods by the SEZ unit or the Developer, as the case may be.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the field to issue a suitable
Public Notice for information of the trade and Standing Order for guidance of
the staff to be issued and difficulties faced, if any to be brought to the
notice of the Board.</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=25&filename=notification/custom/2007/cuscir07_43.htm" target="_blank">CIRCULAR
NO 43/2007-Cus., Dated: <st2:date ls="trans" Month="12" Day="5" Year="2007"
w:st="on">December 5, 2007</st2:date></span></a></u></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Standing
counsels for Indirect taxes cases in High Courts</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Central Excise and Customs is
represented in the High Courts by the Additional Solicitors General of India
and in the Tribunals by the Departmental Representatives from JDR to CDR. Now
the CBEC has been has been assigned the
powers to appoint Standing Counsels to handle the litigation of Indirect Taxation
before the various High Courts / Tribunal / BIFR / AAIFR / DRT and other
statutory bodies / authorities and also to regulate their terms and conditions
of engagement etc.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There would be
three categories of counsels,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. Junior Standing Counsels</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. Senior Standing Counsels</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. Standing Counsels</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Apart from the usual advocates, the Junior Standing Counsel could be
former officers of the Department of the rank of Addl. Commissioner and below
and senior Standing Counsels can be retired/resigned officers of the rank of
Commissioner and above and also or retired/resigned as Member/Vice
President/President of CESTAT/Settlement Commission and is enrolled/registered
as an advocate in the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">DDT</font></b> recently reported the agony of a former Member of the CESTAT who was
called up by a PS to the Chief Commissioner to find out if he is interested in
such a job. Even for this job the retired officers will have to apply to the
Chief Commissioner who will recommend the candidate's suitability to the Board. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the Senior Standing Counsel will get a princely fee of Rs. 4500/- for
appearing before the High Court. Remember Monkeys
and peanuts?</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/guidelines.htm" target="_blank">CBEC's F.No.278A/43/2007-Legal dated the 05<sup>th</sup>
December, 2007</a></u></font></p>
<p align=center><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Sections 6 & 12 of the <st2:stockticker w:st="on">CEA</st2:stockticker>'44
- no longer relevant while making rules?</span></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The poser carried by us in our <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6473" target="_blank">DDT-756 of 7<sup>th</sup> December
2007</a> attracted a couple of replies over the weekend.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before we tell you the answer, just take a look at some interesting
replies, though all may apparently<font color="#FF6633"> <b><i>seem to be right in their own right!</i></b></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
It is just a
drafting error, no problem, let the Board issue another notification
prescribing the new Central Excise Rules, 2007 by referring to all the three
sections & as for the earlier period section 38A will take care.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Central Excise
Rules were framed before <st2:City w:st="on"><st2:place w:st="on">Independence</st2:place></st2:City> and when the Government got the opportunity to frame a new set of Rules in the
year 2001, they wanted it to be different & free of British legacy. </span></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yet another Netizen responded, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The preamble to the erstwhile Central Excise Rules, 1944 was - <i>In exercise of the powers conferred by sections 6,12 and 37
of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government
is pleased to apply in the adapted form set out below certain provisions of the
Sea Customs Act, 1878 (VIII of 1878), and to make the following rules for the
purpose of providing for the assessment and collection of the duties imposed by
the first mentioned Act.</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 37(1) of the Central Excise Act, 1944 lays that the Central
Government can make rules to carry into effect the purposes of the Central
Excise Act. So also, in terms of
sub-section (2) such rules can be may be made for covering particular
situations as mentioned there under.
This sub-section (2) has seen amendments by the dozen to lay down the
framework for the rules & no rule can obviously trespass the limits
mentioned in the various clauses to this sub-section.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This would mean that Section 37 is an encompassing section. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">Omission of reference to Section 6 of the Act</font></b> - The earlier Section 6 was substituted by section
113 of the Finance Act, 1992 (w.e.f 14.5.1992) & it entails registration by
a prescribed person, the word "prescribed" being defined in Section 2(g) of the <st2:stockticker w:st="on">CEA</st2:stockticker>'44 to mean<font color="#FF6633"> <b><i>'prescribed
by rules made under this Act'</i></b>.</font> Since the contents of Section 6 have
been carried into effect by the Central Excise Rules, 2002/2002 issued in
exercise of the powers conferred by Section 37, there no longer exists a need
to refer to Section <st2:metricconverter ProductID="6 in" w:st="on">6 in</st2:metricconverter> the Preamble to the new Rules. </span></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Section 12 - Omission of Reference in the CER 2001/2002: </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 12, as it existed earlier, laid down that the provisions of the
Sea Customs Act, 1878 are to be made applicable to Central Excise duties with
such modifications and alterations.
Since the Sea Customs Act, 1878 was repealed & replaced by the
Customs Act, 1962 (Act no. 52 of 1962), obviously <b><i><font color="#FF6633">the reference made in
the preamble to the Central Excise Rules, 1944 lost its relevance after the
Customs Act was enacted.</font></i></b> Importantly,
the CER 1944 were made when the Section 12 existed in its earlier avatar &
when it referred to the Sea Customs Act, 1878.
Similarly, notification 69/59 dated 18.07.1959 (G.S.R No. 822 of 1959)
extended the provisions of the Sea Customs Act, 1878 to the Central Excise
duties & with the coming into force of the Customs Act, 1962, Notification
68/63 dated 04.05.1963 was issued to a like effect.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, Section 12 of the <st2:stockticker w:st="on">CEA</st2:stockticker>'44
omitted the reference to the Sea Customs Act, 1878 only after the amendment by
Section 78 of the Finance (No.2) Act, 1996 [w.e.f 28.09.1996]. No doubt, such late amendment did not cause
any damage for the earlier period in view of the Supreme Court decision in <i>New
Central Mills Co. Ltd. vs. ACCE</i>, <st2:stockticker w:st="on"><i>AIR</i></st2:stockticker><i>
1971 SC 454, 456</i> wherein it is held that Section 8(1) of the General
Clauses Act, 1897 takes care of the situation inasmuch as in Section 12 of the <st2:stockticker
w:st="on">CEA</st2:stockticker>'44, the Customs Act, 1962 can be read in place
of Sea Customs Act, 1878.</span></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the first available opportunity the Central Government shed the heavy
luggage of the Central Excise Rules, 1944 and in supersession of the same came
out with a fresh set of sleek rules catering to various situations viz. the
Central Excise Rules, 2001, Cenvat Credit Rules, 2001 etc. w.e.f 01.07.2001.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of the justification given above, these new rules are required
to carry reference to section 37 of the <st2:stockticker w:st="on">CEA</st2:stockticker>'44 and nothing more.</span></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>We are thankful to the Netizen who sent us this reply. </b></font></p>
<p align="center"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2">DDT cartoon </font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By now, Gopal – Dr. Gopalakrishnan former IAS officer and present painter, writer thinker …. Is well known to DDT readers. Here is yet another cartoon from his ken. </font></p>
<p> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6490" target="_blank">Today we also carry an interesting article by Dr. Gopal in TIOL TOP. </a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_cartoon_758.jpg" alt="Legal Corner Icon" width="292" height="446" hspace="5" border="0" align="center"></b></strong></b></font></b></font></b></font></b></font></b></font></b></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Jurispruden</font><font color="#663399" size="5">tiol</font><font size="5"></font><font color="#006600">-
Tomorrow's cases</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><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></strong></b></font></b></font></b></font></b></font></b></font></b></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Works Contract </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">Works contract tax - <st2:stockticker
w:st="on">TDS</st2:stockticker> - interstate sales - Section 35 of Chattisgarh
Act allowing tax deduction at source is constitutionally invalid - Supreme
Court</span></font></b></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b></b></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>assessee
is a proprietary concern of one <ST1:PERSONNAME u1:st="on"><ST2:GIVENNAME u1:st="on"><st2:PersonName
w:st="on"><st1:GivenName w:st="on">Shri</ST2:GIVENNAME>
<ST2:MIDDLENAME u1:st="on"><st1:middlename w:st="on">Krishana</ST2:MIDDLENAME>
<ST2:SN u1:st="on"><st1:Sn w:st="on">Mudliar</ST2:SN></ST1:PERSONNAME> and
it has been executing works contracts for various Departments of the Chhattisgarh
State Government and others and was holding sales-tax registration. During
the assessment year 2001- 2002, it had executed works contracts awarded by
Executive Engineer, P.W.D. (B&R), Division Khairagarh,
for which it received payment of Rs.1,27,115/- on which sales tax of
Rs.2,545/-, being 2% of sum of Rs 1,27,115/- was deducted at source towards
the sales tax payable as provided under Section 35 of the State Act.</span></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Service Tax </b></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Port providing storage is not
warehouse keeper - Storage being integral part of port service cannot be taxed
separately - if a particular service is liable to tax w.e.f particular date, it
cannot be held that newly-entered service was covered under any pre-existing
service : CESTAT</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE appellant is
registered as minor port and is rendering the port services. Some <i>intelligence</i> officers of Central Excise and Service Tax visited the premises of the
appellant and after investigation came to the conclusion that during the period
16 th August 2002 to 30 th June 2003, appellant had rendered services falling
under the category "Storage and Warehousing Services" and are liable
to pay service tax on the said services. A show cause notice was issued to the
appellant demanding the service tax and also proposing for imposition of
penalty on them. Appellant contested the said show cause notice on the ground
that they are registered as a minor port with the authorities and as such are
providers of the port services and are not rendering any services of storage
and warehouse. The said contentions were not accepted by the adjudicating
authority and the demand of service tax was confirmed and penalties were
imposed. On an appeal the Commissioner (Appeals) concurred with the findings of
the adjudicating authority and the matter is before the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench had a
difference of opinion. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax </b></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Broad understanding for
transfer of business to a JV company - Non-resident company cancels decision - compensation
paid - Since source of business was not adversely affected, it is compensation
for loss of business - a revenue receipt : ITAT</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">IN</font> </strong>an interesting
ruling the ITAT has held that if a compensation is paid even before a contract
is signed between the two parties which required transfer of assets and the
existing business, <b><font color="#FF6633">such a lump sum payment is to be treated as a
compensation for loss of business rather than the loss of source of business,
and is at best a revenue receipt, exigible to income tax.</font></b></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 <a
href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></span></font></p>
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