TIOL-DDT 924 · 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 bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 924 </font><br> 06.08.2008 <br> Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CUTE entitled for Export Obligation. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CUTE</strong> stands for Common User Terminal Equipment Counters in airports and the good DGFT has clarified that charges received from foreigners for such CUTE charges are eligible for discharge of Export Obligation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following payments received in Free Foreign Exchange (FEE) by Airport Service Provider for the services rendered to foreign Airlines/foreign nationals are eligible for EO discharge under EPCG Scheme. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Aircraft landing and parking charges, from foreign airlines. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Land and space rentals, warehousing charges, demurrage charges, de-stuffing, X-ray, carting, and packing charges from foreign airlines. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Common user terminal equipment (CUTE) counter charges from foreign airlines. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Passenger Service Fee, only for the part collected through domestic or foreign airlines from foreign nationals alone. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Payment received from ground handlers by airport service provider, provided ground handler does not count the same towards their own EO fulfilment and gives a disclaimer to that effect under EPCG. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now will the Service Tax Department consider these as export of services? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has also clarified that the following payments are not eligible:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Licence fee or rentals paid by Trade Concessionaires (TCs) to airport service providers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Payment received from duty free shop operators by airport service provider. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Security portion of passenger service fee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Cargo handling service charges etc., so far as they pertain to Indian consumer (who pays for it). </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=46&filename=notification/dgft/2008/dgft08cir024.htm" target="_blank">DGFT Policy Circular No. 24 (RE-2008) 2004-09, Dated: August 04, 2008 </a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Exemption to Injection Progesterone</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Sl. No 80 of the table to the Notification No. 21/2002 – Cus, Drugs, medicines, diagnostic kits or equipment specified in List 3 attract a concessional rate of duty. This List 3 has 149 items, of which item No. 58 is “Micronised progesterone”. Now this is changed to “Micronised Progesterone or Injection Progesterone” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You understand how difficult it is to keep track of so many notifications and our poor boys in TRU do really have a tough time. With the kind of infrastructure they have (rather the lack of it), it is a miracle that they are able to churn out so many notifications, and most of them correctly. </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=23&filename=notification/custom/2008/ctariff08_095.htm" target="_blank">Notification No. 95/2008-Cus., Dated: August 4, 2008</a> </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Maharashtra VAT - Submission of Audit Report in Form 704 – date extended </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the Maharashtra VAT Act, dealers are required to file Audit Reports certified by Chartered Accountants, in Form 704. This was challenged by Advocates and Sales Tax practitioners in the Bombay High Court which dismissed the petition - <font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2008/2008-TIOL-193-HC-MUM-VAT.htm" target="_blank">[ </a></font><font size="1"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2008/2008-TIOL-193-HC-MUM-VAT.htm" target="_blank">2008-TIOL-193-HC-MUM-VAT</a></font>] </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However the High Court extended the date for filing the Form 704 to 30th June 2008. On representations from various trade associations, the government has now extended the last date for filing this return to <strong>31st August 2008. </strong>The last date for filing revised returns by those who have already filed the return and any discrepancies are shown, is now <strong>extended to 30 th September 2008. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the present, audit reports in Form 704 will be accepted in hard copy even if the soft copy is not furnished. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/maha_vat1.pdf" target="_blank">Maharashtra Sales Tax Trade Circular No. 27T of 2008, Dated: July 31, 2008 </a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Saffron Brigade in Calicut </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/saffron.jpg" alt="Legal Corner Icon" width="144" height="108" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Air Customs Unit of Calicut Air Port Customs yesterday seized 14 kgs of saffron from a passenger arriving from Sharjah. Saffron is said to cost a lakh of Rupees a kg. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong></strong></strong></strong></strong></strong></strong></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By smuggling 14 kgs of saffron worth Rs. 14 Lakhs, this alleged smuggler would have earned a maximum of Rs.1 lakh and now his whole life is ruined. Had he smuggled 14 kgs of gold in his shoes (an accepted trade practice), he could have made at least 14 lakhs. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>US Customs may retain your laptop– India's DRI is no better </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you are planning to go to US of A, better keep back your laptop and maybe even that fancy mobile phone which has windows, internet and email, for the US Customs can check your data and copy them or even retain the device and for this to happen, you don't need to resemble Osama Bin Laden. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the US Customs Policy regarding Border Search of Information, <strong>officers may examine documents, books, pamphlets, and other printed material, as well as computers, disks, hard drives, and other electronic or digital storage devices.</strong> These examinations are part of CBP's long-standing practice and are essential to uncovering vital law enforcement information. For example, examinations of documents and electronic devices are a crucial tool for detecting information concerning </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. terrorism, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. narcotics smuggling, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. and other national security matters; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. alien admissibility; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. contraband including child pornography, monetary instruments, and information in violation of copyright or trademark laws; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. and evidence of embargo violations or other import or export control laws. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Officers may detain documents and electronic devices, </strong> or copies thereof, for a reasonable period of time to perform a thorough border search. The search may take place on-site or at an off-site location. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DRI no better: </strong> The US Customs will return your laptop, if they don't find any useful data like Osama's email id, but the Indian DRI's fascination for laptops in unfathomable. Even after the investigation is over, even if the laptop is not proposed to be confiscated, they will not return your laptop. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This seems to be an unwritten, illegal policy of India's super sleuths. God knows why! And what do they do with all the unreturned un-confiscated laptops? </font></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></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 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>Technical collaboration fee for transfer of technical know how– Classifiable under Intellectual property service– Not leviable to service tax under Consulting Engineer's service at the relevant time: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ORIGINAL</strong> authorities dropping proceedings at their level has become a thing of past. But in the instant case, the original authority without being cowed down by the shadow of superior officers dropped proceedings against the assessee. Unfortunately, there is a strange provision in the form of Section 84 of the Finance Act, 1994 which empowers the Commissioner to pass revisionary orders after calling for record of the proceedings before his subordinates, within two years of the date of passing the original order. In spite of a safety provision in clause 4 of Section 84 which bars a Commissioner from taking up a revision of an issue if an appeal is pending before the Commissioner (Appeals), Commissioners frequently resort to this because the safety valve is only for appeal in an issue pending before Commissioner (Appeals). What would happen if the appeal process has passed the stage of Commissioner (Appeals) and the matter is pending before the Tribunal? There are instances where Commissioners have waited for this stage of the appeal process, to take up revision and pass adverse orders against the hapless assessees. We can deal with this subject another time. </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>Customs Commissioner (P) Mumbai has no jurisdiction over EEZ- Neither practice nor would consent confer jurisdiction– District of Raigad does not include EEZ.- High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Considering Article 297 and Article 1 of the Constitution, it will be clear that the territorial waters, Contiguous Zone, Continental Shelf and EEZ are not part of the territory of India but India exercises sovereign rights in respect of the territorial waters, on the continental shelf and also certain sovereign rights within the EEZ. The contention, therefore, urged on behalf of the Revenue that the Collector (Preventive) having been notified as the proper officer for the District of Raigad would have jurisdiction over the notified areas in the EEZ is rejected. Once the power has been exercised under Section 4, then it is only the proper officer who can only exercise the powers in respect of the areas in respect of which the jurisdiction has been conferred on them. Neither practice would confer jurisdiction nor would consent confer jurisdiction. </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="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JV partners have ‘associated' themselves with a ‘common design' to provide consultancy services- to be considered as "Association of Persons– taxable in India- AAR </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A non-resident company forming a J.V. with two Indian companies to provide technical services to an Indian client engaged in developing infrastructure has a P.E. in India and is taxable in India in terms of IT Act and Indo-Austrian DTAA- J.V. partners have ‘associated' themselves with a ‘common design' to provide consultancy services to the client <strong> - </strong>Common purpose and common action pursued towards the ultimate end of earning income/profits is evident in the agreements- J.V. partners are to be considered as "Association of Persons" in terms of s.2 (31)(v) of I.T. Act and hence taxable in India. </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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day. </font></p> <p align="justify"><font color="#FF6633" 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>