TIOL-DDT 902 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 902 </font><br>
07.07.2008 <br>
Monday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – Vivisection of composite contract – the <em>Daelim </em> Dilemma continues </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
the famous <em>Daelim Industrial Co case </em>- </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2003/2003-TIOL-110-CESTAT-DEL.htm" target="_blank">2003-TIOL-110-CESTAT-DEL</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">,
the Tribunal held that a composite contract cannot be vivisected to levy
Service Tax on a part of it and this decision was upheld by the Supreme Court.
But even after five years, the issue is still live. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently there was an interesting situation in the Delhi Bench of the Tribunal, where one Bench held that vivisection was possible and another held that it was not possible – of course both were stay orders. Incidentally there was a common Member in both the Benches! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meantime, the issue was before a Larger Bench. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
DR relied upon the decision in <em>BSBK Pvt Ltd. </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-1538-CESTAT-DEL.htm" target="_blank">2006-TIOL-1538-CESTAT-DEL</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> wherein
the Tribunal after distinguishing the <em>Daelim </em> decision held that
since separate bills were raised by the assessees in respect of designing
and engineering, the turnkey project contract was divisible and services
rendered by the assessee were covered under the category of consulting engineer
and liable to service tax. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On
the other hand, the assessee justified their claim by relying on the Tribunal's
order in <em>Larsen & Toubro Ltd.</em>, </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2006/2006-TIOL-490-CESTAT-MUM.htm" target="_blank">2006-TIOL-490-CESTAT-MUM. </a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When
the Tribunal heard the matter in August 2007, it observed that in view of
the two conflicting decisions, the matter needed to be referred to the Larger
Bench. <strong>[</strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2007/2007-TIOL-1600-CESTAT-MUM.htm" target="_blank">See
2007-TIOL-1600-CESTAT-Mum</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>] </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By the time the Larger Bench was constituted and the matter was heard, it was dawn of a new year 2008. Incidentally, the BSBK (P) Ltd. case had by then made its journey to the Apex Court and the Supreme Court vide its order dated 30.11.2007, in SLP 817/2007, set aside the Tribunal's order on the ground that it was an ex-parte order and remanded the matter to the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, when the Larger Bench heard the matter, there were no conflicting views existing, the only view that was confirmed by the Apex Court was the decision of the Tribunal in <em>Daelim Industrial Co. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Larger Bench, therefore, held that no orders were called for on the issue referred to it as, on date, no conflict existed by way of varying or divergent orders of the Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Accordingly, the case is sent back for fresh decision to Division Bench which had referred the matter in the first place. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a look at </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1. </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1056-CESTAT-MUM-LB.htm" target="_blank">2008-TIOL-1056-CESTAT-MUM-LB </a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>2. </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1057-CESTAT-DEL.htm" target="_blank">2008-TIOL-1057-CESTAT- DEL </a></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>3. </strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1057-CESTAT-DEL.htm" target="_blank">2008-TIOL-1058-CESTAT- DEL</a></strong></font> </p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import
of fuel under Advanced Authorisation - permitted against <em>adhoc </em> norms – DGFT
amends HOP </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The General Note for Fuel in Hand Book of Procedures, read as </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“For the purpose of import of fuel under Advance Authorisation, the applicant shall indicate the name of the specific fuel sought for import in their application.<font color="#FF6633"> Import of fuel, however, shall not be permitted under Paragraph 4.7 of Handbook of Procedures, v1 or against Adhoc Norms.</font> In case of DFIA and erstwhile DFRC , import entitlement for fuel as per SION may be transferred only to companies which have been granted licences to market fuel by the Ministry of Petroleum and Natural Gas. For the purpose of calculation of DEPB rates, fuel shall not be taken into account. However, exporter can apply for fixation of DEPB rate (Brand Rate) in ANF 4C for the component of customs duty on fuel under DEPB Scheme.” </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it is amended to read as, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“For the purpose of import of fuel under Advance Authorisation, the applicant shall indicate the name of the specific fuel sought for import in their application. <font color="#FF6633">Import of fuel shall also be permitted under Paragraph 4.7 of Handbook of Procedures, v1 or against Adhoc Norms as per the entitlement under “General Note for Fuel”.</font> In case of DFIA and erstwhile DFRC , import entitlement for fuel as per SION may be transferred only to companies which have been granted licences to market fuel by the Ministry of Petroleum and Natural Gas. For the purpose of calculation of DEPB rates, fuel shall not be taken into account. However, exporter can apply for fixation of DEPB rate (Brand Rate) in ANF 4C for the component of customs duty on fuel under DEPB Scheme.” </font></p>
</blockquote>
<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/dgft08pn042.htm" target="_blank">DGFT Public Notice No.42 (RE-2008)/2004-2009, Dated: July 4, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FOB
value for export – VA – not to include Agency Commission - DGFT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended the guidelines in the </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Application for clubbing of Advance Authorisations </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Application for Redemption / No Bond Certificate against Advance Authorisation </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Application for DFIA </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">to stipulate that <font color="#FF6633">“ FOB value of export for the purpose of V.A shall be arrived at after excluding the Agency Commission, if any. This provision shall be applicable for authorizations issued on or after 1.4.2008”. </font></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=47&filename=notification/dgft/2008/dgft08pn043.htm" target="_blank">DGFT Public Notice No.43 (RE-2008)/2004-2009, Dated: July 4, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DFIAs issued during 1.5.2006 till 31.3.2007 entitled for revalidation for a further period of six months - DGFT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per paragraph 2.12 read with paragraph 2.13.1 of the Handbook of Procedures, Vol.1, the original validity of import of DFIA shall be 24 months from the date of issuance of the authorization and in case transferability is endorsed, no further revalidation shall be allowed against the freely transferable authorization. Representations have been received from the Trade and Industry that due to varying interpretation of the provisions of DFIA Scheme, as per FTP and the corresponding Customs Notification for the period 1.5.2006 to 31.3.2007, DFIAs , in particular, the DFIAs endorsed with transferability, could not be utilized in time for import clearances. Accordingly, it has been represented that DFIAs issued during the aforesaid period may be revalidated for a further period of six months from the date of endorsement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of above, Duty Free Import Authorisations ( DFIAs ) issued during 1.5.2006 till 31.3.2007 and which have already been endorsed with transferability, shall be entitled for revalidation for a further period of six months, even if the original import validity of 24 months has already expired, subject to the conditions : </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Application for revalidation may be submitted to the concerned Regional Authority within a period of 30 days from the date of the issuance of this Public Notice. DFIA shall be revalidated for a period of six months from the date of expiry of 24 months from the date of issuance of the DFIAs . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. This facility shall not be available where misrepresentation / fraud has come to the notice of any authority. </font></p>
</blockquote>
<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/dgft08pn044.htm" target="_blank">DGFT Public Notice No.44 (RE-2008)/2004-2009, Dated: July 4, 2008 </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Day on July 24 th - compilation of best orders/practices of the Income Tax Department </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have the Customs Day on 26th January and the Central Excise Day on 24th February and now we have the Income Tax Day on July 24th . In the recent conference of Chief Commissioners of Income Tax held in June 2008, a decision was taken to celebrate the Income Tax Day on 24th July. To mark this occasion, it was also decided to come out with a compilation of best orders and practices in the form of a booklet. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A concept paper was prepared by DIT ( O&MS ) on “Creation of Knowledge Bank of best orders and practices – A Road Map for Knowledge Management” and a presentation was made on this topic. A proposal for putting in place an institutional mechanism for capturing knowledge at the time of its creation was made. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The proposal for compilation of best orders/Practices was approved and for this purpose, a Committee was set up. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Committee will function under the overall guidance of Member(R), Mrs Saroj
Bala. The functional and regional members in turn, would constitute sub-committees
for collection, evaluation and final selection of the best orders/Practices.
The sub-committees would prepare the gist in the prescribed format after
selecting the best orders/practices. The orders/practices, which are local
or regional in nature, would be retained at the regional level and only those
orders/practices with wider ramifications would be passed on for inclusion
in the national database. In order to have proper representation, the sub-Committees
constituted by regional members should include CIT (A), CIT (DR), DIT (Exemption)
or Addl DIT as members. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The committee has been reconstituted after taking the approval of the full Board on 26 th June 2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/committee.htm" target="_blank">CBDT F.No.396 /4/2008- ITCC (Part) </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SAD refunds – Ministry's ‘unfinished business' – Reminder to Board </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Circular No. 6/08- Cus dated 28.04.08, specified a time limit of one year for refund of SAD by importers- resellers. It was further stated that the Notification No. 102/2007 dated 14.09.2007 would be suitably amended to capture this time limitation. The relevant extract of the circular which speaks of the impending amendment to the Notification is given below:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"Taking into account various factors, it has been decided to permit importers
to file claims under the above exemption upto a period of one year from the
date of payment of duty. Necessary change in the notification is being made
so as to incorporate a specific provision prescribing maximum time limit
of one year from the date of payment of duty, within which the refund could
be filed by any person." </em><br>
<br>
However, the Board has not issued any amendment to this Notification till date
to specify the time limit in the notification itself. In the introductory paragraph
of this Circular it is clearly stated that the provisions of this notification
would prevail. As on date in the absence of any amendment, the time limitation
prescribed by the Circular would be redundant unless the Board comes out with
an amendment to the Notification. </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><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> – Tomorrow's cases</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></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>Merely because appellants company had equity shares in another company and also that Chairman of two companies was common, mutuality of interest, direct or indirect in business of each other is not proved unless and until any extra commercial financial flow back is established with documentary evidence: Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent company had cleared goods to M/s Maharashtra Scooters Ltd. wherein the Chairman, is also the Chairman of the respondent company and a share holder of the said M/s Maharashtra Scooters Ltd. It is the department's contention that both the companies are related persons and hence the price charged by the respondent to M/s Maharashtra Scooters Ltd. is not correct price. The adjudicating authority upheld the charges and confirmed the differential duty by adopting the normal price charged in the wholesale trade. </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>Anti-dumping - Notification ordering provisional assessment legally correct - Tribunal's view overlooks language and purport of Rule: Delhi HC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Needless to say, provisional assessments cannot be made with retrospective effect. Therefore, to avoid or at least lessen the chances of manipulation, there are three options available: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.to permit exports without the levy of anti- dumping duty; this may wipe out the domestic industry; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.to permit exports after levy of anti-dumping duty; this may financially wipe out first time exporters; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. to permit exports on the basis of provisional assessments. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Designated Authority has recommended the third option of exports through provisional assessments in respect of all exports of vitrified/porcelain tiles by Respondent Nos. 3 and 4 and this recommendation has been accepted by the Central Government as mentioned in the Notification dated 9th March, 2007. To this extent, there is a check on Respondents No. 3 and 4 and the interest of the domestic industry is protected and the decision is in conformity with Rule 22 (2) of the Anti- Dumping Rules and the proviso thereto. </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>Fee paid for use of transponder and up-linking facility in satellite is royalty and liable to TDS : ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
assessee is getting a comprehensive service as part of digital broadcast
of their programmes on MCPC platform at the thaicom teleport and DTH center
. These service provisions cannot be equated with simple hire of transponder
as “equipment” to be governed by the amended provision as canvassed by the
AR. Whether any process is used or any services in connection with process
are provided and whether the same fell within the meaning of term ‘Royalty'
was already been considered by the ITAT Delhi “C” Bench in the case of <em>Asia
Satellite Telecommunication Co. Ltd. vs DCIT </em> - </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=53&filename=legal/itat/2003/2003-TIOL-37-ITAT-DEL.htm" target="_blank">2003-TIOL-37-ITAT-DEL</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">.
In the case the issue was whether rental chares for hiring transponder capacity
was covered by the definition of royalty. The above said decision was given
in the context of foreign Satellite Company. But the service provisions are
applicable equally in the assessee's case as the assessee is getting services
as part of agreement and not simple hire of “Equipment”. In fact the payments
made to Foreign Satellite Company are clearly termed as Service Fee vide
clause 4 of the Agreement. The original invoices given by the said Shim satellite
public company is for Transponder service fee only. </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 day. </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>