TIOL-DDT 767 · the untouched capture
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<p><font size="2"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 767 <br>
<font color="#000000">24.12.2007 <br>
Monday </font></font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - Total Confusion </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While
releasing the FAQ on Service Tax in Mumbai on Friday, the FM said that <font color="#FF6633">e</font><font color="#FF6666">very
effort was being made by his department to impart clarity on issues of taxation
so that taxpayers did not face unnecessary problems and make mistakes because
of non clarity or lack of information . Glorious ideals, but unfortunately
the FM seems to be unaware of the chaotic confusion the Revenue bosses are
creating not only for the hapless assessees, but also for the worried officer.
Look at a few clarifications given by the Board recently for the exclusive
use of the Delhi Commissionerate.</font> And these are very important clarifications. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Given below is a clarification given by Delhi Service Tax Commissionerate; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">The services provided by the lawyers in their professional capacity are not subjected to Service Tax </font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The doubt was raised whether the outsourcing of legal work to an associate by a law firm can be categorized under Business Support Service. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has clarified that the services provided by lawyer in their professional capacity relating to law it are not taxable under the service tax. The clarification of the Board is as follows </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"The matter has been examined. The scope of taxable service namely "business support service" has been explained in TRU 's letter F.NO.334/4/2006-tru Dated 28.02.06. As regards services provided by lawyers in their professional capacity relating to law, the Finance Minister has already made the position clear on the floor of Parliament. It is also pertinent to note that the Empowered Committee of State Finance Ministers has included Legal Service in the list of services which are not presently taxed. This has been accepted in principle". </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">And here is a clarification given by the Board! <strong><font color="#FF6633">J&K
service </font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Subject : <strong>Clarification regarding applicability of service tax on law firms under the category of "business support service" - regarding. </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Please refers to your letter F. No. IV(16)Hqrs/Tech/720/S.T./06 dated 12.03.2007 on the above subject. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The mater has been examined in consultation with the Ministry of Law. The opinion of the Law Ministry is as follows,- </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"Chapter V of the Finance Act, 1994 extends to the whole of India except the State of J&K. Therefore, services provided within the territorial limits of the State of J&K only are excluded from the purview of the levy of service tax. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">3.1 Sub-section (1) of section 68 of the said Act provides that every person providing taxable service to any person shall pay service tax at the rates specified u/s. 66 in such manner and within such period as may be prescribed. It will thus be seen that the incidence of service tax is attracted with reference to the place where the service is provided. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">3.2 <strong>In the case under consideration, the object of service may be in the State of J &K but the service provider as well person receiving the service are outside the State of J &K. Therefore, provisions of Chapter V are attracted. </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Appropriate action may accordingly be taken in the matter. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And on J&K service, the Delhi Service Tax Commissioner has another clarification - also allegedly from the Board! - which we had carried earlier! </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax chargeable, if the Service provider and service receiver are both located outside Jammu and Kashmir </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">The doubt was raised if the services provided by a Delhi based company for conduction of topographical survey work of project area in Jammu and Kashmir is chargeable to Service Tax, if the contract for the construction of the project in the state of J & K was awarded to Mumbai based company. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">It was clarified by the Board in consultation of the Ministry of Law that even if the object of service is in the state of J & K but as the service provider and the service receiver are outside the State of J & K, the Service Tax shall be chargeable from the service provider. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board is perhaps trying to apply the concept of import of service into service in or from J&K - thereby treating Jammu and Kashmir as a foreign country. In the above case, how can the Department demand Service Tax from the Mumbai Company for service done in J&K? Who has jurisdiction to demand that? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And why such important sensitive and sensational clarifications are not available in the public domain or does the Board think that these clarifications are applicable only to Delhi Commissionerate. How will the tax payers know about the Board's great wisdom if it is not made public? And the FM says that every effort is made to impart clarity on issues of taxation. In fact <strong><font color="#FF6633">every effort seems to be made to ensure that there is no clarity on any issue. </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the preface to the CBEC's FAQ on Service Tax quotes,<font color="#FF6633"> <strong>"Knowledge will forever govern ignorance; and people who mean to be their own governors, must arm themselves with the power which knowledge gives." </strong></font></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And perhaps ensure that knowledge is not percolated down to the stakeholders. </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FAQ on Service Tax and FBT on ESOP - Instead of FAQ they should issue RAQ </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FM had released the two booklets on Friday, which we had reported on Saturday along with copies of the FAQ. The Service Tax FAQ released with so much fanfare hardly has any clarifications for real hot issues and has some good jokes which you can see in our story. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A senior officer who was preparing an FAQ on Cenvat Credit showed me the draft. The TO DO list contained an item, "file a declaration with your Range Superintendent". When I pointed out that there was no such requirement, the officer told me, "I know, but there is nothing wrong in filing a declaration, no?" If you don't believe me, there was a witness, another officer! Fortunately the FAQ did not come out! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government need not issue these "Frequently Asked Questions" - they should either make the law clear so that there are no questions or issue RAQ - "Rarely Answered Questions" </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When I told a friend that the DGST is coming out with an FAQ, he remarked, "I hope they don't create any major damage as they did in the case of abatement for Service Tax on GTA " </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tax payers are really afraid of your laws and scared of your clarifications. For you, it is only a piece of paper - for the tax payer it is money - hard money! </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=6547" target="_blank">Click
here for our story,</a> the <a href="http://www.taxindiaonline.com/RC2/pdfdocs/st_faq.pdf" target="_blank">FAQ
on Service Tax</a> and <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=36&filename=notification/cbdt/2007/it07cir09.htm" target="_blank">FAQ
on FBT on ESOP</a> ) </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on CFL from China and Hong Kong </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Anti Dumping Duty on Compact Fluorescent Lamps (CFL) originating in, or exported from, the People's Republic of China and Hong Kong was imposed by notification No.138/2002-Customs, dated the 10th December. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s Osram China Lighting Limited, People's Republic of China had requested for review in terms of rule 22 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 in respect of exports made by them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 7/2006 - Cus dated the 13 th February, 2006, the Government had ordered that pending the outcome of the review by the designated authority, export of the subject goods, by M/s Osram China Lighting Limited, the People's Republic of China when imported into India , shall be subjected to provisional assessment till the review is completed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the review is completed and the Government has imposed an anti dumping duty of 0.16 US Dollars on each piece of CFL exported to India by M/s Osram China Lighting Ltd., China PR, effective from 13 th February, 2006, the date of ordering Provisional assessment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And consequently, the <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2006/ctariff06_007.htm" target="_blank">Notification No. 7/2006 - Cus dated the 13 th February, 2006</a> is rescinded. </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=23&filename=notification/custom/2007/ctariff07_119.htm" target="_blank">NOTIFICATION NO. 119 </a><strong>and </strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_120.htm" target="_blank">120/2007, Dated: December 18, 2007</a> </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></b></font></p>
<p><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_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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax - Settlement Commission </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No settlement of income already discovered by AO - Jayalalitha's settlement unsettled by Madras High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
has to be noted that the Commission exercises power in respect of income
which was not disclosed before the authorities in any proceeding, but is
disclosed in the petition under Section 245-C. It is not that any amount
of undisclosed income can be brought to the notice of the Commission in the
said petition. The Commission exercises jurisdiction if the additional amount
of tax on such undisclosed income is more than a particular figure (which
at different points of time exceeded rupees fifty thousand or rupees one
hundred thousand,as the case may be). The assessee must have in addition
furnished the return of income which he is or was required to furnish under
any of the provisions of the Act. In essence the requirement is that there
must be an income disclosed in a return furnished and undisclosed income
disclosed to the Commission by a petition under Section 245C. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification 6/2002-CE - Pipes for water supply - Tribunal gives CBEC clarification a thumbs down </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IN the month of January 2006 we had carried a story titled <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=3160">CBEC clarification may 'choke' water supply! </a> This piece was prompted by the Board's missive <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2005/pipe.htm">F.No. 354/129/2005-TRU dated 28.10.2005 </a>. At the end of the story, we had made an earnest plea to the Board to have a fresh look at this TRU letter that was apparently choking various notifications that sought to quench the thirst of a million households. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Needless to say, Board never bothered to check up the consequences of this letter except collecting data as to the quantum of Central Excise demands that had been issued and adjudicated & the recoveries made by the department. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Advance licence - After allowing imports and exports, it cannot be pleaded that licence was wrong - if licence was wrong it should have been rectified : Madras High Court </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CAN</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the Government go in appeal on the ground that the licence issued by it was wrong? This is what exactly happened in this case. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent Company was manufacturing and exporting drugs by importing certain drugs meant for manufacturing the finished formulation for export purpose. During the year 1992, the Government of India announced its export and import policy. Under Chapter XVII of the Export and Import Policy, for the period from 1992 to 1997, duty exemption schemes were framed and explained. Under clause 49, a scheme called "Value Based Advance Licence Scheme" has been introduced. The object of the said scheme was to provide raw materials and components to exporters duty free. Under the said licence, any inputs specified in the licence could be imported duty free for the CIF value stated in the licence. The licensee is obliged to export the manufactured drugs to the value and quantity mentioned in the licence. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our column on Wednesday for the judgements </strong></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_767.jpg" alt="Legal Corner Icon" width="296" height="430" 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 color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Dr. Gopalakrishnan 's cartoon </strong></font></p>
<p align="justify"><font color="#FF6633" size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong>Merry Christmas - there will be no DDT tomorrow </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Wednesday with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice time. </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>
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