TIOL-DDT 913 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong><font color="#663399" size="3">TIOL-DDT 913</font><br> 22.07.2008<br> Tuesday </strong></font></div> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of taxes – the SEZ confusion continues</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now that SEZ units and developers are reconciled to payment of export duty in steel products cleared to SEZs, some new issues crop up. What is the valuation for calculating the export duty? Does the value include excise duty and VAT? Excise duty is either not payable or rebated and so should it be excluded?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the Revenue Department, especially the Super Intelligent DRI, is sure that export duty is payable, nobody seems to be sure, on what value the duty is to be calculated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is high time the Revenue Department clarifies such hot issues – but who is bothered – about the plight of the poor investor who invests his money and time in business in India?</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Annexure-less Income Tax Returns – Officers don’t read Board instructions</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday, <strong>DDT</strong> reported, “Let us hope the officers receiving the returns read these instructions – we had reported last year the confusion at various centres, which the Board now acknowledges.”</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And today we get a mail from a taxpayer under Salary Ward 14(3), Bangalore, who says, “I have already faced this at Salary ward 14(3) in Bangalore....... they asked for the Fom16 and also copy of PAN card...I had to enclose and resubmit my IT Returns“</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT wanted Chief Commissioners to ensure strict compliance of the Board instructions. Obviously Board’s writ does not run in the field – not because of arrogance, but only due to ignorance; Nobody reads the Board Instructions – maybe Chief Commissioners should call meetings of all the officers and read out the Board instructions.</font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Non – compliance with Supreme Court order - Customs Commissioner asked to pay costs from his salary</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is yet another lesson for all those arrogant bureaucrats who do not believe in obeying even the Apex Court of the land. The Supreme Court has ordered recovery of costs of Rs. 10,000/- from the salary of a Commissioner to be paid to the assessee. What a great honour for an assessee to get costs recovered from the mighty Commissioner’s salary!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In spite of the orders from the Supreme Court, the Customs Commissioner of Kolkata did not release goods of an importer. The Supreme Court was annoyed with the Commissioner for flouting its orders and ordered payment of personal cost of Rs. 10,000/- to be recovered from the salary of the Commissioner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let’s hope the Commissioner has at least now complied with the Supreme Court order and maybe the Board should satisfy itself that the Apex Court’s directions are complied with.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <u>Breaking News</u> for details of the case.</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI Governor YV Reddy conferred Honorary Fellowship of LSE</strong></font></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/reddy_governor.jpg" alt="Legal Corner Icon" width="125" height="104" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RBI Governor, Dr. Y.V. Reddy, has been conferred the Honorary Fellowship of the London School of Economics and Political Science, London (LSE) at an official ceremony in London on July 17, 2008.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The oration given by Lord Nicholas Stern of Brentford on this occasion reads:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Chairman, Dr. Yaga Venugopal Reddy (YV) joined the Indian Administrative Service in 1964 when it was the most elite of organisations not only in terms of analytical and leadership abilities but also in the embodiment of integrity and effectiveness in administration. It was designed to bring the highest quality and standards to the service. These were the inspiring years of the building of post-independent India. Governor Reddy has been committed to service, to integrity and to fair play all his life. We are reliably informed that an extract from his reference on graduating from college was that "he is a brilliant, young man with a zeal for hard work. He impressed me by his industry and sincere work. He organised a night school during his under-graduation at Vivekananda College in Madras. He is always genial and respectful towards all": ‘under-graduation’ means ‘whilst studying as an undergraduate’ and is an example of the great efficiency of Indian English. He went on to do his M.A. in Economics at Madras University and his Ph.D. at Osmania University.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">YV Reddy became the twenty first Governor of the Reserve Bank of India on September 6, 2003. Prior to this he had been with the Finance Ministry, later becoming Secretary to the Government of India. He has also served as Executive Director for India, Sri Lanka, Bangladesh and Bhutan on the Board of the International Monetary Fund. Earlier he had served a six year tenure with the Reserve Bank of India as its Deputy Governor. Governor Reddy is the Chairman of the BIS Asian Consultative Council (ACC). He is also the Chairperson of SAARCFINANCE, a Group of Governors of the central banks of SAARC member countries.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His boss in his first Indian Civil Service job and a friend who has known him for over 40 years, BPR Vithal (former Registrar of Osmania University) says that Governor Reddy’s approach to economic issues is to place them in a broad social perspective and test all economic analyses within that perspective. KV Kamath, the chief executive of ICICI (one of the largest commercial Banks in India) says of Governor Reddy "He has brilliantly managed to balance growth imperatives with stability. This he has done using his enormous technical expertise in the area of monetary policy and applying it judiciously to a growth environment as seen in India." According to Narayana Murthy, the chairman and chief mentor of Infosys Technologies, a company at the heart of the Bangalore IT industry, who sat on the board of RBI "Dr Reddy is called the Guru by all of us on the board of the RBI because of his extraordinary ability to explain complex macroeconomic concepts in simple words. He is a gentleman and a scholar," he says.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Governor Reddy has always been committed to the cause of the under privileged, a commitment which has never been lost in the complex world of international finance. As he has said "You can be an economic powerhouse but your task is to make sure that people inhabiting the country have a reasonable standard of living". He directly links financial stability to social protection: as Governor Reddy says "You don’t have social insurance mechanisms, you don’t have risk mitigation mechanisms for a large number of people." And he goes beyond protection to the role of policy in directly promoting standards of living; thus he is committed to the Reserve Bank’s financial inclusion programme, which encourages banks to reach out to India’s poor people and translates documents into several of the country’s regional languages.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He is described as the Governor who has the courage to implement policies which are fair and for the benefit of all people, motivated by strong principles of economic management and constantly recognising the needs of poor people. He has been recognised as a leader who is firm, flexible and fair and is well respected by all his staff. Notwithstanding the intense demands of his job he is a voracious reader and in all my meetings with him he has raised something interesting that he has recently read, from the most esoteric economics to the most profound novels.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Governor Reddy maintains a strong commitment to academic pursuits and has many publications to his credit mainly in areas relating to finance, planning and public enterprises. He holds Visiting Professorships at a number of universities in India. He has been a Visiting Fellow at the LSE. He was ‘the life force’ in setting up the IG Patel Chair and the India Observatory at the LSE in honour of our former Director whose name the Chair carries and which I have the privilege to hold. He is indeed in the great tradition of inspired, distinguished and humble leadership embodied in his predecessor, IG Patel as Governor of the Reserve Bank of India.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Governor YV Reddy is an outstanding individual who has distinguished himself through his knowledge, service and commitment not only to India but to the wider global community. We are honoured that he is accepting an Honorary Fellowship at the School.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chairman, I ask that Dr Yaga Reddy be admitted as an Honorary Fellow of the London School of Economics and Political Science."</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> <strong>Tomorrow's cases </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><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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Aluminium structural glazing system emerges as a distinct product from Aluminium frames and glass sheets – Assembly of glazing system at site amounts to manufacture – emergent product is also marketable, hence leviable to duty: Tribunal</font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong>assessee is engaged in the manufacture of aluminium frames and also undertakes contracts for erection of aluminium curtain wall structural glazing system. The lower authority issued a show cause notice stating that the activity of erection of aluminium curtain walls at the customer's site amounts to manufacture of excisable goods and hence they are liable to pay excise duty. The demand notice was confirmed by this lower authority ritualistically. The assessee approached the Commissioner (Appeals) who set aside the order of lower authority and provided relief.</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>Production of goods containing alcohol and discharging State Excise duty – Prima facie attracts Service Tax under head 'Business Auxiliary Services' – Tribunal orders pre-deposit of Rs 25 lakh</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CAN you travel in an airplane by buying a Shatabdi ticket or vice versa & when caught argue that since both almost cost the same there is no offence? – this was the question we were confronted with while reporting the Tribunal decision in Savera Pharmaceuticals <strong><font size="1">[</font></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-1768-CESTAT-MUM.htm" target="_blank">2007-TIOL-1768-CESTAT-MUM</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="1">]</font></strong>. Call it a prudent decision or otherwise, but we did not answer the poser <em><strong><font color="#FF6633">and good we didn’t!</font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the private limited company is manufacturing, <em>nay</em> producing, products containing alcohol and on which the State Excise duty was being discharged.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One fine day, but not a <em><strong><font color="#FF6633">“dry day”</font></strong></em>, the Central Excise authorities visited this unit and contended that the activity undertaken by them is liable to Service Tax under the category “Business Auxiliary Service” inasmuch as they are engaged in the production or processing of goods which activity is “not manufacture” within the meaning of Section 2(f) of the Central Excise Act, 1944.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Interest on exports proceeds deposited in bank – no exemption u/s 10A: Madras High Court</font></strong></font></p> <p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> appellant is a Company operating an Undertaking for development and export of software in the Madras Export Processing Zone. In respect of assessment year 2003-2004, the appellant filed a return of income, claiming exemption under Section 10A of the Income-Tax Act to an extent of Rs.3,09,65,597/-. The return was processed under Section 143(1) of the Income-Tax Act, wherein and whereby the Assessing Authority disallowed the claim of relief in respect of interest income received by the appellant to an extent of Rs.45,83,024/-. It is contended that the interest income represented the interest received by the appellant in respect of the deposit of the export sale proceeds in the foreign currency account. The amounts were kept in deposit to meet exigencies of export by the undertaking. The deposit was made as part of the business activities of the appellant and not with a view to earn interest from other sources. The claim of the appellant as above has been rejected by the Assessing Officer, which finding has been confirmed by the Commissioner of Income-tax (Appeals). When the matter was taken on appeal, the Income-tax Appellate Tribunal confirmed the order of the Assessing Authority. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The correctness of the same is now put in issue in this case.</font></p> <p align="justify"><font color="#6633CC" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>General:</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Zafrani Zarda being a 'manufactured tobacco' would not answer description of processed tobacco: Supreme Court </font></strong></p> <p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">LEVY</font></strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">of market fee on Zafrani Zarda in terms of the provisions of the U.P. Krishi Utpadan Mandi Adhiniyam , 1964 is in question in these appeals which arise out of a common judgment and order dated 21st July, 2003. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Act was enacted to provide for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence and control of markets therefor in Uttar Pradesh.</font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#663399">See our columns Tomorrow for the judgements</font></font></strong></p> <p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT</font></font></p> <p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></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" target="_blank">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>