TIOL-DDT 861 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 861 </font><br>
08.05.2008 <br>
Thursday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Writ petitions challenging the constitutional validity of levy of Service Tax on renting of immovable property – CBEC files transfer petition in Supreme Court. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ever since service tax has been imposed on renting of immovable property, the same has been surrounded by several controversies and many feel that the levy is unconstitutional. The levy has been challenged in many High Courts. Before the High courts give a ruling and may be to avoid conflicting decisions, the CBEC has stepped in to seek an authoritative pronouncement on the question of law. In a communication to the field, the Board informed that: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Large number of Writ Petitions have been filed by number of petitioners in various High Courts of the country challenging the Constitutional validity of subsection (90a) of section 65 read with section 65 (105) (zzzz) of the Finance Act, 1994 seeking to levy Service Tax on renting/leasing of immovable property. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has already filed a transfer petition in the Hon'ble Supreme Court of India, inter-alia praying, for transfer of 15 writ petitions filed in the Hon'ble High Courts of Mumbai, Chennai, Punjab & Haryana, Kerala & Kolkata for determination and authoritative pronouncement on the question of law involved, by the Hon'ble Supreme Court. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board also wanted that the Government Counsels representing the department in respective High Courts in the writ petitions, now being filed on the subject issue be instructed to make a prayer to the Hon'ble High Court not to proceed with the same till the outcome of the transfer petition filed by the department in the Hon'ble Supreme Court and till such time all these matters may be kept in abeyance by the respective High Courts. It is also requested that the copy of the writ petitions filed by the parties and received by the department, may immediately be forwarded along with a neatly typed spare copy, as the Board is again contemplating to move another transfer petition in respect of the writ petitions filed subsequent to filing of the above stated transfer petition by the department before the Hon'ble Supreme Court. </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=41&filename=notification/servicetax/2008/rentwrits.htm" target="_blank">F.No.280/46/2007-CX 8A Dated : April 24, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New products added to the Focus Product Scheme DGFT amends HBP </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Appendix 37D of the HBP containing the list of notified products under Focus Product Scheme has been amended to include the following products. This is effective for the exports made with effect from 1.4.2008. Similarly Cuttle Fish and Squids covered under ITC HS codes 030741' ,030749' and 16059020 are also added to the list of goods items under VKGUY. </font></p>
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<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top" width="47"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sl No </font></strong></p></td>
<td valign="top" width="72"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">FPS product code </font></strong></p></td>
<td valign="top" width="48"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ITC (HS) </font></strong></p></td>
<td valign="top" width="336"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Description </font></strong></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.1 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5001 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SILK-WORM COCOONS SUITABLE FOR REELING </font></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.2 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5002 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RAW SILK (NOT THROWN) </font></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.3 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5003 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SILK WASTE (INCLD COCOONS NT SUITBLE FOR REELING, YARN WASTE & GARNTE STOCK) </font></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.4 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5004 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SILK YARNS (OTHER THAN YARN SPUN FROM SILK WASTE) NT PUT UP FOR RETAIL SALE </font></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.5 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5005 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">YARN SPUN FROM SILK WASTE NT PUT UP FR RETAL SLE </font></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.6 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5006 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SILK YARN & YARN SPUN FROM SILK WASTE PUT UP FOR RETAIL SALE , SILK-WORM GUT </font></p></td>
</tr>
<tr>
<td valign="top" width="47"><p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. </font></p></td>
<td valign="top" width="72"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11.7 </font></p></td>
<td valign="top" width="48"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5007 </font></p></td>
<td valign="top" width="336"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">WOVEN FABRICS OF SILK OR SILK WASTE </font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn011.htm" target="_blank">DGFT PUBLIC NOTICE NO 11 (RE-2008)/2004-2009</a><strong>, and </strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn012.htm" target="_blank">12 (RE-2008)/2004-2009 Dated: May 5, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>You are under arrest! - DGCEI revises instructions on arrest </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the guidelines in Chapter X of the Central Excise Intelligence and Investigation manual, arrest at the investigation stage may be considered if : </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) the person concerned is not cooperating with investigation, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) there is possibility of his tampering with evidence, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii) there is possibility of his influencing the co-accused or witnesses, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv) there is possibility of his fleeing from justice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent Board meeting, Board has observed that field formations are under the incorrect assumption that if the duty liability has been discharged by the assessee during the course of investigation, arrest should not be resorted to. In this context, it is clarified that deposit of amount towards duty evaded by the assessee, by itself, is not to be treated as sufficient reason for not taking resort to arrest in a case if the gravity of offence committed is of a serious nature. What would constitute a serious offence would depend upon the facts and circumstances of each case. The relevant factors would be violation of law with advance planning and knowledge, use of forged documents, falsification of records or creating parallel documents, the offence being committed on a sustained basis over a long period of time, party being habitual offender, etc. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now one of the inducements offered by the investigators to get spot recovery is, “if you don't pay up, we will arrest you – rather if you pay, we will not arrest you ..” Now should the sleuths say, “even if you pay up, we will arrest you! '. So the logic is, “either you pay or don't; arrest is inevitable”. So the inevitable conclusion is “DON'T PAY”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can expect an arresting spree in the coming days! </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/2008/dgceicircular.htm" target="_blank">F.No 587/CE/82/2007 dated 02.04.2008 of DGCEI </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs officers not abreast with Policy Provisions leading to loss in time, money and effort for the exporters. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Welcoming the participants at the Open House Meet with the Chief Commissioner Customs, Delhi region organized, yesterday, by the Federation of Indian Export Organisations ( FIEO ) Dr. R K Dhawan , Chairman FIEO ( Northern Region) highlighted the various problems being faced by the exporters which increased the transaction costs and made Indian exports un-competitive in the global market. He said that the exporters should be given a fair and just treatment by Customs in the difficult scenario which has arisen due to appreciating Rupee vis-à-vis US Dollars coupled with global slowdown. Dr. Dhawan said that most of the exporters' problems could be sorted out through regular training interventions for the customs officials as many of them dealing with export cargo were not abreast of the policy provisions and raised unjust and unfair objections leading to loss in time, money and effort for the exporters. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. A C Buck , Chief Commissioner Customs said that annually there has been an increase of 29% in the number of shipping bills being received by the Delhi Air cargo and they were coping with the increased workload with the limited infrastructure which was existing in the past. He said that the Consolidation Project was on and the physical infrastructure for setting up centralized servers, software etc. was being built up and expected the pilot run to begin from June 2008 and the full system to begin function from the year end. Meanwhile he invited the exporters to take up their pending issues through FIEO once every quarter with the respective commissioners. He also advised the commissioners to review the pending cases automatically every month and to reduce pendency. He assured the exporters that all pending supplementary drawback claims would be cleared by the end of May. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Ajay Sahai , Director General FIEO drew the attention of the customs officials on the large number of pending drawback claims as also certain in-built policy provisions which were being flouted by the customs officials due to their ignorance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is really a sad state of affairs that the trade is accusing the officialdom of ignorance, when that used to be the privilege of the assessee. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Nothing private about a laptop at the border – customs can search </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Beware of what you carry in your laptop during your next visit to Bushland , for the US Customs can search your laptop. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Michael Timothy Arnold, a 44-year-old teacher arrived July 17, 2005 , at the LAX customs counter after a three-week trip in the Philippines and the US Customs and Border Patrol officers turned on his laptop, clicked on a file and found a photo of two nude women. Arnold was detained and his computer and other equipment were searched. Numerous images of alleged child pornography were found. Arnold was later charged with possessing and transporting child pornography, and faces up to 30 years in federal prison if convicted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But a lower Court had ruled that the evidence found on the laptop was inadmissible. The Customs appealed and the Appellate Court upheld the authority of customs officials to control what enters the United States . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now people entering USA with laptops must realise that their laptops are no more private and confidential and your data is subject to scrutiny by US Customs! Obviously what the US Customs is interested in is not paedophilia, but a dreaded terrorist lurking somewhere to blow up some US buildings with boring regularity! <strong>A terrified Democracy at it its electronic </strong>best <strong>! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you, like me, have the bad habit of lending your laptop to friends, don't carry that laptop to US – they may not be able to get Laden but this stupid laptop can land you in prison. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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></font></strong></font></strong></font></strong></font></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden <font color="#FF6633" size="5">tiol</font> – tomorrow's cases </strong></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>ITAT
and CIT (A) can invoke provisions of section 14A for deciding the issue
in proceedings pending before such authorities - Restriction on AO
cannot be stretched to appellate authorities: ITAT Special
Bench </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to the principle of harmonious construction and after considering the plain meaning of the provision and the proviso, it is quite clear that both have to be applied in their respective fields. The proviso only restrains the Assessing Officer from invoking the provisions of sections 147 and 154. This restriction cannot be stretched too far and has to be confined to the area which it covers. That appears to be the intention of the Legislature. If the restriction was to be applied to other areas and was to cover other authorities for curtailing their powers, the same could have been specifically provided. The proviso does not talk of restricting the power of CIT ( A) or ITAT. Hence, powers of these authorities are to be exercised as per the provisions of the Income-tax Act and no restriction can be inferred from the proviso. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Kerala General Sales Tax Act – </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Satilon coated cookware & Teflon coated cookware are not ‘aluminium household articles' but ‘non-stick cookware' – Amendment made is clarificatory in nature: Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE issue before the Supreme Court was whether the “ Satilon brand cookware” sold by the appellants is an "aluminium household utensil made of aluminum " and "aluminium alloys" classifiable under Entry 5 of the First Schedule under the Kerala General Sales Tax Act, 1963 or whether the said product would fall under Entry 104 which pertains to "pressure cooker, cook and serve ware to keep food warm, casseroles, water filters and <strong>similar home appliances </strong> not coming under any other entry </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Booking orders in India for foreign principal is export of services: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Service Tax- booking orders in India – export of services :</font> </strong> On a very careful consideration of the matter, the appellants have produced documentary evidence to show that they had rendered the services to their foreign principals by booking orders in India for their goods. Refund Claims relate to the goods supplied by the foreign principals based on the orders booked by the appellant. Moreover, in the Agreement relied on by the Revenue, para 9 relates to the services rendered by the appellants. This para has not been referred to by the Commissioner (Appeals) in his order at all. On the basis of the records, I am convinced that the services rendered have been exported in terms of Rule 3(2) of the Export of Service Rules, 2005. Hence, the appellants are entitled for the refund of the Service Tax already paid. </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 <strong>DDT</strong> </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>
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