TIOL-DDT 878 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL- DDT 878</font><br>
03.06.2008<br>
Tuesday</b></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Is the Delhi Service Tax Commissioner blissfully ignorant or brashly arrogant? </b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is really amazing that a Commissionerate in the Capital right under the nose of the Board can blatantly violate the laws of the land, especially the ones framed by his bosses in the CBEC and at the same time book cases against unfortunate assessees for violating the laws framed by the same Board. There used to be a concept called equality before law and another one that all are equal in the eyes of the Law. But the Laws of the land don't seem to be applicable to the Commissionerate of Service Tax in <st1:City w:st="on"><st1:place w:st="on">Delhi.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">DDT</font></b> had pointed out several times that there is a procedure for Publication of Names of alleged offenders and it is only the Government – not the Board; not the Commissioner who can publish names. But right in the Capital – the seat of legislation, we have a Commissioner who is either blissfully ignorant that he does not know about the provisions of the Service Tax (Publication of Names) Rules, 2008 or he is so brazenly arrogant that he does not believe in obeying the laws of the land, but has no qualms about booking others for disobeying some laws which he assumes they have contravened. What will be the fate of this country, if we have Commissioners believing, “I am the State”. Is he trying for a transfer by blatantly disobeying the Board, the Government and the Parliament? </font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His latest <b><font color="#FF6633">MASSAGE</font></b> (that's what he calls his messages), yesterday proclaims,</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Anti Evasion Wing of the Commissionerate of Service Tax, <st1:City w:st="on"><st1:place w:st="on">Delhi issued <b><font color="#FF6633">large</font></b> 9 demands of more than Rs.50 lakhs amounting to Rs.77 crores and recovered Rs.12.86 crores in the month of May, 2008. Some of the major cases for which the demands had been issued includes the demand of Rs.35.54 crores against M/s <b><font color="#FF6633">Era Infra Engineering Ltd</font></b><font color="#FF6633">.</font> for wrong availment of benefit of abatement by non inclusion of value of free supplies material, the demand of Rs.8.55 crores against M/s <b><font color="#FF6633">Coca Cola India Inc</font></b><font color="#FF6633">.</font> for non payment of service tax on out of pocket expenses and the demand of Rs.6.16 crores against M/s <b><font color="#FF6633">Lufthansa Airlines</font></b> for non payment of Service Tax on full value of fare received in the category “Passenger embarking by air in India for international journey in a class other than economy class”.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Was the demand large or 9 large?</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Respected and exalted Commissioner Sir, these are only your allegations and at this stage not even your bosses, the Board and Government have the right to publish the names of the alleged offenders, which you assume you have. Who will pay the damages if these companies choose to sue you? </font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When will the bureaucrats realise that they are also bound by the laws of the land?</font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DRs in ITAT to get reimbursement for dress and residence expenditure – will DRs in CESTAT also get them? And what about the poor honourable Members?</b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has sanctioned Reimbursement of expenses towards the cost of dress, required to be worn before the 'Tribunal', for the <st1:stockticker w:st="on">CIT (DR) and SDRs appearing before the ITAT. A princely sum of Rs. 10,000/- towards reimbursement towards dress cost for his entire tenure. Assuming the tenure is three years and assuming he works for 250 days in a year, he works for 750 days in three years, he gets a grand sum of Rs. 13/- per day for his dress! Better something than nothing.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DRs are also eligible for a maximum amount of Rs. 5000/- reimbursable per month for Expenses on journals, net surfing; Stationery; Electricity bill upto 25% of the billed amount or Rs. 1,000/- whichever is lower; Typing charges; Any other expense incidental to performing the duty at residence.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They deserve a special allowance of at least One Lakh Rupees per month, but a small beginning has been made. Good job!</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This should be replicated for the DRs in CESTAT.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And how about giving some facilities for the Honourable Members? Or do you want them to be caught by <st1:stockticker
w:st="on">CBI?</font></p>
<p align="justify" style='text-align:justify'> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/reimbursement.htm" target="_blank">F.No. 279/Misc-25/2008-ITJ, Dated : May 7, 2008 </a></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Foreign Trade Policy – One year time to file representations against the decision of Norms Committee</b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><st1:place w:st="on">Para 4.7.5 of the Handbook of Procedures, Vol. 1(RE-2008), stipulates,</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Applicant shall give an undertaking that he shall abide by norms fixed by NC and accordingly pay duty, together with interest, on unutilised inputs as per norms fixed by NC. However Authorisation holder has option to undertake additional EO in proportion to excess unutilized inputs. In case application is rejected by NC Authorization holder shall pay customs duty saved along with interest on imported inputs, as notified. However in such cases where the NC decides adhoc norms based on information available to it and the exporter represents against the decision of the NC, time limit for filing representation, if any, before the Norms Committee shall be four months from the date of communication of decision of the fixation of adhoc norms by NC “.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, to this para is added,</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“For project supplies, the time limit for filing representations, if any, against the decision of Norms Committee shall be one year from the date of communication of decision of the Norms Committee”.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn021.htm" target="_blank">DGFT Public Notice No. 21 (RE-2008) /2004-09, Dated: <st1:date ls="trans" Month="6" Day="2"
Year="2008" w:st="on">June 2, 2008 </a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Export obligation automatically extended when ban is imposed on exports</b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT has amended the HOP of the FTP to stipulate that</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Whenever a ban / restriction is imposed on export of any product, export obligation period in respect of advance authorisation already issued prior to imposition of ban, would stand automatically extended for a period equivalent to the duration of ban, without any composition fee”.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn022.htm" target="_blank">DGFT Public Notice No. 22 (RE-2008) /2004-09, Dated: <st1:date ls="trans" Month="6" Day="2"
Year="2008" w:st="on">June 2, 2008</a></u><i></i></font></p>
<p align=justify ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Export of cement; eligible for DEPB </b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT has amended the HOP of the FTP to stipulate that, “Export of Cement shall be entitled for DEPB benefit under <st1:PersonName w:st="on"><st2:GivenName w:st="on">Sl.</st2:GivenName> <st2:middlename w:st="on">No.</st2:middlename> <st2:nameSuffix w:st="on">22D</st2:nameSuffix> of the Misc. Product Groups with immediate effect.”</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn023.htm" target="_blank">DGFT Public Notice No. 23 (RE-2008) /2004-09, Dated: <st1:date ls="trans" Month="6" Day="2"
Year="2008" w:st="on">June 2, 2008</a></u><i></i></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>External Commercial Borrowings (ECB) by Services Sector - RBI announces liberalisation</b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the ECB guidelines, borrowers in the services sector are not eligible to avail ECB under the <st2:street u1:st="on"><st2:address u1:st="on"><st1:Street
w:st="on"><st1:address w:st="on">Automatic Route</st2:address></st2:street>. It has been decided, in consultation with the Government of India, to allow entities in the service sector viz. hotels, hospitals and software companies to avail ECB up to USD 100 million, per financial year, for the purpose of import of capital goods under the <st2:street u1:st="on"><st2:address u1:st="on"><st1:Street
w:st="on"><st1:address w:st="on">Approval Route</st2:address></st2:street>. All other aspects of ECB policy shall remain unchanged..</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated <st2:date ls="trans" month="5" day="3" year="2000" u1:st="on"><st1:date
ls="trans" Month="5" Day="3" Year="2000" w:st="on">May 3, 2000</st2:date> are being issued separately.</font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2007/rbi07cir046.htm" target="_blank">RBI Circular No.46/RBI., Dated: <st1:date ls="trans" Month="6" Day="02"
Year="2008" w:st="on">June 02, 2008</a></u></font></p>
<p align=center ><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden <font color="#FF6633" size="5">tiol</font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>– Tomorrow's cases</b></font><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></p>
<p align="justify" style='text-align:justify'><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Income Tax </b></font></p>
<p align="justify" style='text-align:justify'><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Profit from the eligible business for deduction u/s 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation – ITAT Special Bench</b></font></p>
<p align="justify" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6633">Deduction under Section 80IA :</font></b> Section 80-IA(5) of the Act seeks to regard the eligible unit as a separate source of income so as to separately determine the carry forward and set off of losses in the hands of that unit. the only harmonious construction of section 80-IA(5), consistent with the object in allowing deduction only to profits and gains of the eligible business would be that-</font></p>
<blockquote>
<p align="justify" style="text-align:justify;
"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> a. the deduction under that section would be computed with reference to profits of the eligible unit, unaffected by losses suffered in other units;</font></p>
<p align="justify" style="text-align:justify;
"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> b. in case of loss suffered by the eligible unit, such loss would not be set off against profits of other units / other business / other incomes in the initial year of assessment or subsequent years of eligible years of assessments ;</font></p>
<p align="justify" style="text-align:justify;
"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> c. where losses of the eligible unit remained to be adjusted against that very source they are to be carried forward to subsequent year(s), and set of in the succeeding year(s), and on the balance profit alone the deduction admissible would be computed;</font></p>
<p align="justify" style="text-align:justify;
"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> d. where there are no losses of the eligible unit carried forward (in view of set off against profits of that very source), it is the mandate of law that the losses of earlier years, though already absorbed against other sources they are once again be notionally brought forward and set off against profits of the eligible unit to compute eligible deduction.</font></p>
<p align="justify" style="text-align:justify;
"> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"> e. the deduction would be limited to gross total income;</font></p>
</blockquote>
<p align="justify" style='text-align:justify'><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise </b></font></p>
<p align="justify" style='text-align:justify'><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Conversion of copper rods into Copper wire - there cannot be two definitions for manufacture, one for EOU and another for DTA unit – Liability to be restricted to duty and interest under notification 22/2003-CE: Tribunal</b></font></p>
<p align="justify" class=MsoNormal><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>DUTY</b> has been demanded with interest and penalty on Copper Wire “manufactured” by the appellant and cleared to domestic tariff area on refusal by their customers to whom they were sent for export. </font></p>
<p align="justify" class=MsoNormal><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Adjudicating Authority has held –</font></p>
<div align="justify">
<ul type=disc>
<li class=MsoNormal><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Conversion of Copper rods into wires has to be treated as manufacture in view of the fact that unit themselves have obtained LOP for manufacture from the Development Commissioner and the licence is granted to them for manufacture; </font></li>
</ul>
<ul type=disc>
<li class=MsoNormal><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Development Commissioner while giving post-facto approval for sale in DTA had specifically mentioned that sale will be on payment of full duty in terms of para 6.8(f) of the Exim Policy, 2002-2007.</font></li>
</ul>
</div>
<p align="justify" style='text-align:justify'><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Central Excise </b></font></p>
<p align="justify" class=MsoNormal style='text-align:justify'><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Clearances made to DTA purchasers, after obtaining requisite permission from DC, against payment in forex, duty need not be discharged by 100% EOU and duty is to be discharged on such clearances by DTA purchasers: Tribunal by Majority<i></i></b></font></p>
<p align="justify" class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The clearances made to DTA purchasers after obtaining requisite permission from Development Commissioner against payment in foreign exchange, duty need not be discharged by the 100% EOU and duty is to be discharged on such clearances by the DTA purchasers. </font></p>
<p align="justify" class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As the duty payable is held to be not payable by 100% EOU, and as the said duty has been paid ‘Under Protest', the EOU is eligible for the refund of the duty, along with interest, subject to filing of refund claim, if any, subject to the satisfaction of Doctrine of unjust enrichment.</font></p>
<p align="justify" class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The clearances of EOU in this case are not provisional since the assessees have not been able to establish the same.</font></p>
<p align="justify" class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the assessments are held not to be provisional, the aspect of unjust enrichment is required to be looked into and <i>suo</i><i> moto</i> refund cannot be sanctioned. </font></p>
<p align="justify" style='text-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" style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more <strong>DDT</strong></font></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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