TIOL-DDT 884 · 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 align="justify"><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">TIOL-DDT 884 </font></strong><strong></strong></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><strong><br> 11.06.2008 <br> Wednesday </strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Petro smuggling – the new business opportunity </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With <strong><em><font color="#FF6633">Democratic Socialistic</font> </em></strong> States highly subsidising petro prices, the temptation to smuggle petrol across the border, where there is no subsidy, is really tempting. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sultanate of Brunei is now worried about smuggling of its precious petrol to neighbouring countries. Even smaller cars are now being used to smuggle gasoline across the border, where prices have recently been hiked. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Preventive and Intelligence Unit of the Royal Brunei Customs and Excise Department has claimed that it foiled an attempt to smuggle 258 litres of petrol out of the country. <strong><font color="#FF6633">YES! 258 litres of petrol being smuggled and the Customs foiling the attempt. </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The subsidised fuel is far cheaper in Brunei compared to neighbouring Malaysia and Customs officers in Brunei continue to be on the lookout for smuggling of diesel and gasoline. Even fuel tanks of cars are being modified to carry more petrol. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As pointed out by a Netizen in our Message Board, we also face the real threat of smuggling of petrol to Nepal . Nepal has increased its prices to Rs. 100/per litre for petrol, Rs. 70/- for diesel, Rs 65/- for kerosene and Rs. 1200/per cylinder of LPG. Landlocked Nepal has no petro production and depends on India for its petro needs – imports or smuggled. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">PSU OIL Companies to lose 1.8 Lakh Crores of rupees: </font></strong> State-run oil firms are likely to lose Rs 1 ,80,000 Crores during the current fiscal after surge in international crude oil prices and weakening rupee made imports costlier. India imports 73 per cent of its crude oil import needs and the cost of imports would be mind boggling. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no political or economic logic in subsidising petro prices. If you need the petrol, pay the price for it and why should we subsidise petrol price in Maoist Nepal when our local communists do not understand economics? Why the Maoists in India have not launched an agitation against the huge hike in petro prices in Nepal , which the much condemned King had kept under control? Left, Right or Centre – the fact is the petro prices are rising and government can't really afford to pay your petro bills. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Goods or service – VAT a question! </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently more than 25,000 cabs in Hyderabad went off the roads in protest against the demand of VAT/ Sales Tax from cab owners from 2003. The Cab owners were worried that though they were already paying Service Tax, now they are stuck with VAT demands. The general opinion is, if Service Tax is payable, there would be no VAT/Sales Tax. <strong><font color="#FF6633">DDT </font></strong> contacted several VAT officials including an officer who is on deputation from the CBEC, but they were all evasive as either they did not want to commit themselves or they were blissfully ignorant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By sheer luck, we got through to T. Vivek , Additional Director in the Vigilance & Enforcement Department of the Government of Andhra Pradesh, who has an explanation, who says, “It calls for greater prudence and ingenuity in the days to come to see where service ends and goods begin or vice versa.” In the “Umbrella Morals”, Gardiner says, “your freedom ends where my nose begins”. In the confusion between Service Tax and VAT, it is very difficult to find where the freedom ends and the nose begins. As Vivek says, “ In the context of modern technology innovations, the line that divided goods and services hitherto seems no longer valid as both goods and services are increasingly converging to coalesce into one as happened in the case of SIM Cards and Software” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7423" target="_blank">Special Column</a> </strong> <strong>today for a very interesting article by this State Government bureaucrat. </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>India wines </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No, that was not a spelling mistake. True, India wins, but that was relating to wines! The US of A had made a complaint with the WTO on excessive customs duties for Imported liquor in India . </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Complaint </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 6 March 2007, the United States requested consultations with India with respect to “additional duties” or “extra additional duties” that India applies to imports from the United States, which include (but are not limited to) wines and distilled products ( HS2204 , 2205, 2206 and 2208. The measures include: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Sections 2 and 3, and First Schedule, of the Customs Tariff Act, 1975 (“basic customs duty”, “additional duty” and “extra additional duty”; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Section 12 of the Customs Act, 1962 (“basic customs duty”); </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Customs Notification No. 5/2004 (8 January 2004) (“basic customs duty” <em>inter alia </em>on spirits); </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Customs Notification No. 20/1997 (1 March 1997) (“basic customs duty” <em>inter alia </em>on wine); </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Customs Notification No. 32/2003 (1 March 2003) (“additional duty” <em>inter alia </em>on wine and spirits); </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Customs Notification No. 19/2006 (1 March 2006) (“extra additional duty” <em>inter alia </em>on wine and spirits) </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The United States claims that the measures are inconsistent with Articles II :1 (a) and (b), and III:2 and III:4 of the GATT 1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 16 March 2007, the European Communities requested to join the consultations. On 21 March 2007, Australia requested to join the consultations. Subsequently, India informed the DSB that it had accepted the request of the European Communities to join the consultations. On 24 May 2007, the United States requested the establishment of a panel. At its meeting on 4 June 2007, the DSB deferred the establishment of a panel. At its meeting on 20 June 2007, the DSB established a panel. Australia , Chile , the European Communities, Japan and Viet Nam reserved their third-party rights. On 3 July 2007, the panel was composed. On 17 December 2007, the Chairman of the Panel informed the DSB that due to the complexity of the dispute, and the administrative and procedural matters involved, the Panel is not able to complete its work in six months. The Panel has given its report now. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Panel concluded: </strong></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the United States has failed to establish that the Additional Duty on alcoholic liquor is inconsistent with Article II:1 (a) or (b) of the GATT 1994; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the United States has failed to establish that the SAD is inconsistent with Article II:1 (a) or (b) of the GATT 1994. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the light of these conclusions, the Panel makes no recommendations under Article 19.1 of the DSU . However, in the particular circumstances of this case, the Panel found it appropriate to offer some concluding remarks. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) To recall, after the establishment of this Panel, India issued new customs notifications making certain changes to the AD on alcoholic liquor and the SUAD , "to address concerns raised by [ India 's] trading partners". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) It is therefore appropriate to note that the Panel's disposition of the US claims under Article II :1 (a) and (b) does not necessarily imply that it would be consistent with India's WTO obligations for India to withdraw the relevant new customs notifications or otherwise re-establish the <em>status quo ante </em>, i.e., the situation as it existed on the date of establishment of the Panel. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) By the same token, in making this point, we do not wish to suggest that the entry into force of the new customs notifications necessarily implies that the AD on alcoholic liquor, to the extent it still exists, and the SUAD are WTO-consistent. </font></p> </blockquote> <p align="justify"> </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><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></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>Role of Third Member in dealing with difference of opinion – Third Member has to agree with either one or the other Member: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Role of the third Member in dealing with the case is limited, he has to agree either with one or the other Member. He cannot formulate a new point and pass decision thereon". In view of the above majority decision, the proposition forwarded by the Jt. CDR to remand the matter back to the adjudicating authority would not arise, as the Bench, which heard the matter had not put forward such proposition. Hence, the proposition of remanding the matter back to the adjudicating authority does not arise. </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>CESTAT exonerating appellant on merits No prosecution: Delhi HC </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As far as the present case is concerned, the finding of the CEGAT that the petitioner deserves to be exonerated has been arrived at after discussing the evidence brought on record by the Department. The order of the CEGAT exonerating the petitioner on merits having attained finality, there is no justification for continuation of the criminal proceedings against him on the same facts and evidence. </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>Payments made by Co-operative sugar factories to member farmers - TDS not applicable: ITAT Spl Bench </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 194C applies when the payments are made for carrying out any work including supply of labour for carrying out any such work in pursuance of a contract between the contractor and the persons stated therein. By sub-section (1) of section 194C a liability to deduct tax at source is cast upon the person responsible for paying any such sum. Here, the responsibility of paying the sum for harvesting, cutting and transporting is of the cane growers. The payments are, no doubt, made to the labour hired for this purpose but these payments were made by the Samiti or by the assessee as alleged by the revenue, not on its own account; they were for and on behalf of the cane growers. </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more DDT </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> </body> </html>