TIOL-DDT 915 · 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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''><font color="#663399" size="3">TIOL-DDT 915</font></span><span style=''><br> 24.07.2008<br> Thursday </span></b><span style=''><o:p></o:p></span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b style='mso-bidi-font-weight:normal'><span lang=EN-US style='color:#006600;mso-ansi-language:EN-US; mso-fareast-language:EN-US'>Ignited ideas yet to be extinguished – <span class=SpellE>Intaxication</span> at its worst - Service Tax on Liquor manufacturers – Draft Circular kept in cold storage?<o:p></o:p></span></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='color:green; mso-ansi-language:EN-US;mso-fareast-language:EN-US'><o:p> </o:p></span></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US'>A number of distillers are engaged in manufacture of Indian Made Foreign Liquor of various brands, on job work basis, on behalf of the brand owners. The activity involves blending, manufacturing, bottling, labelling, etc. These job workers do not have any proprietary rights over the goods produced. They are paid job charges by the brand owners who have the proprietary rights over the goods and who market and sell the <span class=SpellE>IMFL</span> produced by job workers. A doubt has arisen as to whether this activity of job worker falls under the category of taxable service, namely, 'Business Auxiliary Services' for the purposes of charging service tax under the Finance Act, 1994.</span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US'><o:p> </o:p></span></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US'>The Board <span class=GramE>vide</span> <span class=SpellE><span style='mso-bidi-font-weight:bold'>F.No</span></span><span style='mso-bidi-font-weight:bold'>. 249/1/2006-<span class=SpellE>CX.4</span> had issued a Draft Circular saying that the above activity falls under Business Auxiliary Service and the <span class=SpellE>IMFL</span> job workers are liable to pay service tax. The circular was issued to elicit response from the public and the responses to the above Draft Circular were to be sent by 20.10.2006.<o:p></o:p></span></span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'><o:p> </o:p></span></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'>Nearly 20 months have passed since the draft circular was issued and the second birthday is fast approaching and the draft circular remained as draft so long. What happened to the responses? Has the Board forgotten the Circular? Or is the response from the Liquor lobby so strong that the file has been kept in the cold storage? <o:p></o:p></span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'><o:p> </o:p></span></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'>In a case reported yesterday in <b><font color="#FF6633">TIOL</font></b>, the West Zonal Bench of Tribunal prima facie held that “</span><span lang=EN-US style='mso-ansi-language:EN-US;mso-fareast-language:EN-US'>it is only manufacture of goods liable to Central Excise duty which would stand excluded from the purview of Business Auxiliary Services” and <span style='mso-bidi-font-weight:bold'>ordered pre-deposit of Rs 25 Lakhs </span></span></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><u><strong><span lang=EN-US style='mso-bidi-font-size:12.0pt;color:blue;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-font-weight:bold'><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1161-CESTAT-MUM.htm" target="_blank">2008-TIOL-1161-CESTAT-MUM</a></span></strong></u><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2008/2008-TIOL-1161-CESTAT-MUM.htm"><span lang=EN-US style='mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'> <o:p></o:p> </span></a><span lang=EN-US style='mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'> <o:p></o:p> <o:p></o:p> </span></strong><span lang=EN-US style='mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-font-weight:bold'> <o:p></o:p> </span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-font-weight:bold'>After taking its own sweet time of almost two years and finally if the Board says Service tax has to be collected, how do they expect the field to raise demands when the matter was within the knowledge of the Board and no suppression can be invoked? Board has ignited confusion in the minds of trade and field formations and just forgot to extinguish it.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span lang=EN-US style='mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-font-weight:bold'>Please also see </span><b><u><span lang=EN-US style='mso-bidi-font-size:12.0pt;color:blue;mso-ansi-language:EN-US;mso-fareast-language: EN-US'><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4344" target="_blank">TIOL-DDT 463 <st1:date ls="trans" Month="5" Day="10" Year="2006" w:st="on">05 10 2006</st1:date><o:p></o:p></a><o:p></o:p></span></u></b></font></p> <p align=center style='text-align:center'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>Mobile payment – <span class=SpellE>RBI</span> wants banks to go slow</span></b><span style=''><o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>We are bombarded with how happy our lives will be if we have a mobile connection. We can talk to our near and dear, who are near and far. Talk time unlimited, talk day and night at no extra costs, no roaming charges blah <span class=SpellE>blah</span> <span class=SpellE>blah</span>. Recently, some service providers have also started more <span class=SpellE>suvidha</span> services where you can send money to your near and dear, pay your bills etc and after all these chores if you exhaust your talk time, you can recharge too on your mobile. When service providers are churning out innovative ideas to stay ahead in the mobile race, <span class=SpellE>RBI</span> is waving the red flag. <o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>Reserve Bank of <st1:place w:st="on"><st1:country-region w:st="on">India</st1:country-region></st1:place> is in the process of finalizing the Operative Guidelines for banks on mobile payments. The Draft Guidelines were placed on <span class=SpellE>RBI</span> website and a number of comments have since been received. The comments are being compiled and after evaluation of the comments, the final Guidelines would be issued.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>In the meantime, some banks have already started offering mobile payment services to their customers without waiting for the release of <span class=SpellE>RBI's</span> Guidelines.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>While <span class=SpellE>RBI</span> has no objection for use of mobile channel to provide basic services such as mobile alerts for credit or debit entry, balance enquiry etc. which are in the nature of providing information, it cautions that due care needs to be taken for permitting the channel for customers to initiate payment instructions. <o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>There are a number of attendant issues and therefore, banks are advised to keep on hold their mobile payment services till issuance of the final Guidelines. Banks may also dissociate themselves from any mobile based money transfer service which has not received explicit approval of <span class=SpellE>RBI</span> or not covered by any of the Guidelines issued by <span class=SpellE>RBI</span>.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>The draft Guidelines contain some interesting information – a sample:<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''>International Experience<o:p></o:p></span></b></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='color:red'>There is very little material available on the regulatory frame work for mobile payments by central banks. Although there are a number of research articles available, they refer to the practices available rather than regulatory guidelines. Efforts to collect specific regulatory guidelines, from a few countries where person to person remittance through mobile channel has been implemented, have not been a success. Mobile payment framework in most countries is covered under the General Electronic Banking Guidelines. However, on the website of Consultative Group for Assisting the Poor (<span class=SpellE>CGAP</span>), there are several discussion papers on mobile payments. Examples of <st1:country-region w:st="on">Kenya</st1:country-region>, <st1:country-region w:st="on">Philippines</st1:country-region>, <st1:country-region w:st="on">South Africa</st1:country-region> and <st1:country-region w:st="on"><st1:place w:st="on">Tanzania</st1:place></st1:country-region> have been described in great detail. In these countries, cash-in and cash-out for the purpose of remittance is permitted to be done by the distributors of mobile companies. State Bank of <st1:country-region w:st="on">Pakistan</st1:country-region> has also placed a 'Draft policy paper on Regulatory Framework for Mobile Payments in <st1:place w:st="on"><st1:country-region w:st="on">Pakistan</st1:country-region></st1:place>' on their website for public comments.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>So all those mobile addicts have to wait to get more <span class=SpellE>suvidha</span> services till <span class=SpellE>RBI</span> guides the banks on how to receive and transmit your payments.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b style='mso-bidi-font-weight:normal'><span style=''><font color="#FF6633">Maybe in the next confidence vote in Parliament, they can dump a bunch of mobile phones on the Secretary General's table to show how much money had been transferred!</font><span style='color:red'><o:p></o:p></span></span></b></font></p> <p class=MsoNormal style='mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span class=SpellE><u><span style='color:blue'><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbimobile.htm" target="_blank">DPSS.CO.No.144</a></span></u></span><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbimobile.htm"><u><span style='color:blue'>/02.23.01/2008-2009, Dated: <st1:date ls="trans" Month="7" Day="22" Year="2008" w:st="on">July 22, 2008</st1:date></span></u></a><b><u><span style='color:blue'><st1:date ls="trans" Month="7" Day="22" Year="2008" w:st="on"></st1:date></span></u></b></font></p> <p class=MsoNormal align=center style='text-align:center'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:#006600'>Banking facilities to visually challenged</span></b><b style='mso-bidi-font-weight: normal'><span style='color:#339966'><o:p></o:p></span></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b style='mso-bidi-font-weight:normal'><span style='color:#339966'><o:p> </o:p></span></b></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>It has been brought to the notice of the <span class=SpellE>RBI</span> that visually challenged persons are facing problems in availing banking facilities. <span class=SpellE>RBI</span> informs that banking facilities including cheque book facility / operation of ATM / locker, etc. cannot be denied to the visually challenged as they are legally competent to contract.<o:p></o:p></span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''><o:p> </o:p></span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''><o:p></o:p></span></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>So <span class=SpellE>RBI</span> has advised that <b><font color="#FF6633">all the banking facilities such as cheque book facility including third party cheques, ATM facility, Net banking facility, locker facility, retail loans, credit cards, etc. are invariably offered to the visually challenged without any discrimination.<o:p></o:p></font></b></span></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''><o:p> </o:p></span></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''><o:p></o:p></span></b></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span class=SpellE><span style='mso-bidi-font-weight: bold'>RBI</span></span><span style='mso-bidi-font-weight:bold'> wants the banks</span><span style=''> to advise their branches to render all possible assistance to the visually challenged for availing the various banking facilities.<o:p></o:p></span></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='color:red'><o:p> </o:p></span></font></p> <p class=MsoNormal style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span class=SpellE><u><span style='color:blue'><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_letter.htm" target="_blank">RPCD.CO.RRB</a></span></u></span><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/rbi_letter.htm"><u><span style='color:blue'>. No. BC 13 /03.05.33/2008-09 Dated<span style='mso-spacerun:yes'> </span>23 July, 2008</span></u><span style=''><o:p></o:p></span></a><span style=''><o:p></o:p></span></font></p> <p align=center style='text-align:center'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b></b><span style=''><o:p></o:p></span></font><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 style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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 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_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></font></strong></font><font color="#663399">Service Tax<span style='mso-spacerun:yes'> </span></font></span><span style='color:red'><font color="#663399"></font><span style='mso-spacerun:yes'> </span></span></b><span style=''><o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><span style=''><font color="#FF6633">Cenvat Credit on Canteen, Catering Services – Revenue's ROM applications dismissed</font></span></strong><font color="#FF6633"><span style=''><o:p></o:p></span></font><span style=''><o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''><o:p></o:p></span></font></p> <blockquote> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>• Failure on the part of the Revenue to make enquiries is not an error apparent on record and needs no rectification; <o:p></o:p></span></font></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>• It cannot be said that the Tribunal has not considered the material evidence on record available before it; <o:p></o:p></span></font></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>• Non-citing of an existing judgement and failure to rely on the same before passing of the Final order would not give rise to any mistake in order warranting any rectification; <o:p></o:p></span></font></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>• Findings have been given in great detail and after due consideration of all the issues raised before the Tribunal; <o:p></o:p></span></font></p> <p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>• There is no error apparent on record in the Tribunal's order. <o:p></o:p></span></font></p> </blockquote> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:red'></span><span style=''><font color="#663399">Customs</font><span style='mso-spacerun:yes'></span></span><span style='color:red'><span style='mso-spacerun:yes'> </span></span></b><span style=''><o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''><font color="#FF6633">Any issue arising out of drawback related matters, which entails penal provisions has to be seen and linked in context of issue on which penal action stands and penalty alone cannot be separated from core issue – Tribunal cites lack of jurisdiction while dismissing appeal</font></span></b><font color="#FF6633"><span style=''><o:p></o:p></span></font><span style=''><o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style=''>The Bench observed that the issue of non-imposition of redemption fine is interlinked with the claim of drawback and hence the appeal is not maintainable in asmuch as <em><span style=''>the proper recourse for the exporter is to file an appeal with the Revisionary authority viz. the Government of <st1:place w:st="on"><st1:country-region w:st="on">India</st1:country-region></st1:place>.</span></em></span><em><o:p></o:p></em></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style='color:red'></span><span style=''><font color="#663399">Income Tax<span style='mso-spacerun:yes'> </span></font><span style='mso-spacerun:yes'></span></span><span style='color:red'><span style='mso-spacerun:yes'> </span></span></b></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''><font color="#FF6633">Interest on excess refund – Not applicable for assessment year 2003-04 and earlier years: ITAT Special Bench</font></span></b><font color="#FF6633"><span style=''><o:p></o:p></span></font><span style=''><o:p></o:p></span></font></p> <p class=MsoNormal style='mso-margin-top-alt:auto;mso-margin-bottom-alt:auto; text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><span style=''>No retrospective application for Section <span class=SpellE>234D</span>: </span></b><span style='mso-bidi-font-weight: bold'>“There is no dispute to the proposition that court cannot read anything into a statutory provision which is plain and unambiguous A statute is the edict of the legislature. The language employed in a statute is a determinative of the legislative intent and according to the first and primary rule of construction the intention of the legislation must be found in the words used by the legislature itself and the function of the court is only to interpret the law and court cannot legislate, if a provision of law is misused and subjected to the abuse of the process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. Legislative <span class=SpellE>causus</span> <span class=SpellE>omissus</span> cannot be supplied by judicial interpretative course.” Thus, on the basis of argument that legislature has brought this provision just to fill the lacuna in the law and, therefore, these provisions should be construed retrospective cannot be accepted more particularly when these provisions have been inserted on the statute <span class=SpellE>w.e.f</span>. 1st June, 2003 and not with retrospective effect. The legislature has specifically mentioned the date of applicability i.e., 1st June, 2003 and the legislature was not incompetent to make retrospective provision, if it was so intended. Therefore, merely on the basis of interpretation, retrospective effect cannot be given to the provisions of Section 234-D.<o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><u><span style=''><font color="#663399">See our columns Tomorrow for the judgements</font></span></u></b><font color="#663399"><span style=''><o:p></o:p></span></font><span style=''><o:p></o:p></span></font></p> <p style='text-align:justify'><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='color:#FF6666'>Until Tomorrow with more <strong>DDT</strong></span><span style=''><o:p></o:p></span></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='color:#FF6666'>Have a nice Day.</span><span style=''><o:p></o:p></span></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><span style='color:#FF6666'>Mail your comments to</span><span style=''> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a><o:p></o:p></span></font></p> </body> </html>