TIOL-DDT 772 · the untouched capture
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<!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><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 772 </font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br> 01.01.2008 <br> Tuesday </font></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT wishes you a HAPPY NEW YEAR </strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A NEW YEAR in which </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. There will be less confusion due to wrong clarifications </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Unnecessary litigation will be avoided </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Tax payer will not be treated as a thief </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Tax collectors will be more responsible and responsive </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. DDT will have no material to comment about. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If wishes were horses, beggars would fly! </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you were part of a NEW YEAR bash last night, we hope that you have reached home safely, for we are told that the taxmen and the policemen were keeping a close watch on the New Year. If you had attended a New Year celebration in a 5 Star hotel, please don't forget to show the expenses in your account, for the taxmen have been watching you closely! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Rules amended </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax Rules have been amended. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the existing Rule 5(2) , <font color="#FF6633">Every assessee shall furnish to the Superintendent of Central Excise at the time of filing his return for the first time a list of all accounts maintained by the assessee in relation to service tax including memoranda received from his branch offices. </font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now this is amended to read as </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every assessee shall furnish to the Superintendent of Central Excise at the time of filing of return for the first time or the 31st day of January, 2008, whichever is later, a list in duplicate, of- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">( i ) all the records prepared or maintained by the assessee for accounting of transactions in regard to,- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) providing of any service, whether taxable or exempted; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) receipt or procurement of input services and payment for such input services; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) receipt, purchase, manufacture, storage, sale, or delivery, as the case may be, in regard of inputs and capital goods; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) other activities, such as manufacture and sale of goods, if any. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) all other financial records maintained by him in the normal course of business. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 4, which read as “ Every assessee shall make available, at the registered premises, at all reasonable time, such records as mentioned in sub-rule (3), for inspection and examination by the Central Excise Officer authorised in writing by the jurisdictional Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, or, by the audit party deputed by the Comptroller and Auditor General of India.”, is now deleted. But don't be happy; it comes back with renewed vigour. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A new Rule 5 A is inserted which reads as, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 5A . Access to a registered premises . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) An officer authorised by the Commissioner in this behalf shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) <font color="#FF6633">Every assessee shall, on demand, make available to the officer authorised under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be,- </font></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the records as mentioned in sub-rule (2) of rule 5; </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) trial balance or its equivalent; and </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 ( 43 of 1961), for the scrutiny of the officer or audit party, as the case may be. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Paying the taxes may not be as difficult as maintaining all these records and producing them for the probing officers and answering all their questions. <br> <br> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Barbers, caterers, washer men and beauticians should now appoint Chartered Accountants and consultants to comply with Service Tax provisions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And what should be the registered premises for an outdoor caterer and a service provider located in Mumbai rendering a service in J&K for a recipient in Delhi ? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thank God that they did not stipulate that the cook should provide an AC room and reclining chairs to the officers and CAG Auditors! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For some strange reason, the Babus, before they go on their year-end vacation, have a tendency to spoil the New Year party of their assessees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_045.htm">Notification No. 45/2007 – Service Tax Dated 28th December, 2007 </a></strong></font></p> <p align="center"></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exchange rates notified </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has notified the new exchange rates for Imported Goods and Export Goods with effect from 1.1.2008. </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=24&filename=notification/custom/2007/cnt07_123.htm" target="_blank">Notification No. 123/2007(NT)- Cus ., Dated: December 26, 2007 </a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax on Movie Theatres </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department is as usual thoroughly confused and issuing contradictory directions: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An Assistant Commissioner of Service Tax in Mysore responded officially to a query as, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sub : Service Tax on theatres -reg. </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In response to your letter dated 23.7.2007 on the subject mentioned above, it is clarified that the activity of screening the film on fixed share basis and on percentage basis would attract service tax on the consideration of amount received under heading "Renting of immovable property service". Explanation to clause 90(a) of Section 65 of the 'Finance Act' 1994 specifically includes, interalia , theatres and exhibition halls and the service tax levy his come into force on 01.06.2007. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the activity of buying the films for screening does not come under service tax net. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">To this, the Commissioner, Service Tax in the Board reacted with a letter to the Chief Commissioners as follows:- </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Please find enclosed herewith a letter issued by the Assistant Commissioner, Mysore , informing a movie theatre owner that the activity of screening of films supplied by a film distributor would fall under taxable service namely, "renting for immovable property " from 01.06.07. Therefore, the picture houses are required to pay service tax on the amount received from the film distributors. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">02. In this regard, preliminary enquiry conducted by this office reveals that generally a film distributor supplies a print of a film to the owners of movie theatres, who run the same using their own manpower and infrastructure. The distributor has no control over the screening of film. He gets either the share of the total collections or a fixed sum (depending on the success or failure of a movie). From the above facts, it does not appear that the movie theatre which is rented out to the distributor is thus providing the aforesaid taxable service. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">03. In this connection, it also requires examination, whether delivery of the content of the cinematograph film by the distributors to the movie theater owners for a charge, would fall under any other taxable service such a IPR Service, Business Auxiliary Service, Business Support Service etc. This issue becomes relevant as transfer of such films in encrypted form has been specifically exempted under notification No. 12/2007-ST dated 01.03.07. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">04. It is requested that the facts, your views on the issues and the reasons for concluding that the said activity falls/ does not fall under taxable services, may please be informed to the undersigned, so as to reach this office by 31.8.207.</font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As of now, we are not sure, what the latest opinion of the Board is, but we only hope that after reading this, the Service Tax Department does not go on a raiding spree of all movie theatres. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Life would be less miserable if officers stop giving clarifications. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2007/theatre.htm">CBEC F.No . 137/186/2007- CX.4 Dated : August 23, 2007 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Theft of Canon from the fort of Narvar – DRI alert </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Archaeological Survey of India ( ASI ) has informed about theft of two Canons from the fort of Narvar , Shivpuri , a State protected monument, in the intervening night of 20-21 August, 2007. The DRI has asked the field formations to be vigilant and thwart any attempt to export the antique illegally. Results achieved, if any, are to be intimated to the Directorate in due course. In case the stolen canons are located, necessary details of the case description of stolen items and suspects apprehended etc. may be informed immediately. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Interest on loans – taxable service? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT's story on the subject yesterday on the above subject sparked a response from a practicing Consultant, K. Mani , who wrote in, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I have gone through the articles and problems faced by one Netizen in respect of service tax on Interest on loans charged by ICICI Bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I also faced the same problem and I took up the matter with ICICI Bank through correspondence, mail and phone. They had been repeating that according to Finance Act, 1994, service tax is liable to be charged on all. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Immediately I brought to their notice about the availability of exemption under Valuation Rules of Service Tax and endorsed a copy of the same and I also sent Advocate notice to them that if they continue to charge interest on loans then I will not pay the interest which is recovered without authority of law. Queries were raised by their Hyderabad Office and Gurgaon Office and I replied. I finally informed that I will not pay interest. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I fully concur with the netizen and Interest on loans (whatever type) is not payable. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5"> tiol </font>–<font color="#006600"> Tomorrow's cases </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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></strong></font><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>Review ­- Commissioner need not use words, ‘not legal and proper' in his review order - It is not words but substance that matters: Bombay High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">THE</font> </strong>question before the High Court in this Revenue appeal was:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Commissioner has not recorded satisfaction regarding the legality and propriety of the order appealed against as required under section 35E ( 2) of the Central Excise Act, 1944 and, therefore, the Commissioner (A) was justified in dismissing the appeal filed by the revenue ? </em></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RTI Act: </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Department determined to deny information - fails in second appeal before HC - no prejudice would be caused in any manner to Revenue if information is disclosed: Delhi HC </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">JUST a week ago, we carried a story and case where a Single Bench of the Delhi High Court had taken serious note of the lackadaisical approach of the Department in releasing the information. The High Court had directed the department to furnish the information within two weeks. Please <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6549">see our story </a> and case <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2007/2007-TIOL-739-HC-DEL-RTI.htm">2007-TIOL-739-HC-DEL- RTI </a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Do you think the information was furnished? Respect for judiciary or reducing litigation are not exactly priority areas for Revenue. They took the matter in appeal before a Division Bench. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Deferred tax liability is a provision for tax effect of difference between taxable income and accounting income - Not a provision for income tax paid or payable - it is also not a reserve as same cannot be transferred to P & L a/c, unlike a regular reserve : ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE main issue in this Revenue appeal was whether in respect of computation of MAT , the deferred tax is not to be reckoned for arriving at the book profit under the explanation to section 115JB . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue has pleaded that deferred tax is actually </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++A Provision for tax effect and is meant for formatting future tax liability. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++That it is not determined during the year and therefore, the same could not be said to be an ASCERTAINED PROVISION. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Deferred tax charge is nothing but the charge of income-tax, which is liable to be added in Explanation (a) to sub-section (2) of section 115JB . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The same should be treated as an amount credit to reserve within the meaning of Explanation (b) to sub-section (2) of section 115JB . </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice time. </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>