TIOL-DDT 926 · 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 bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 926 </font><br> 08.08.2008 <br> Friday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - Truce with Truckers – Board keeps the word and clears the air.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Remember the three day strike by the transport operators in the first week of July 2008? The strike was called off after getting assurance that the Service Tax agreement of 2004 would be honoured. The Board has now issued a clarification in respect of certain issues relating to this service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Composite service is classifiable as GTA service: </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The composite service of goods transport may include various intermediate and ancillary services provided in relation to the principal service of the road transport of goods. Such intermediate and ancillary services may include services like loading/unloading, packing/unpacking, transhipment, temporary warehousing etc., which are provided in the course of transportation by road. A composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified Thus, if any ancillary/intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA , and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GTA + Cargo Handling = GTA: </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cargo handling service means loading, unloading, packing or unpacking of cargo and includes the service of packing together with transportation of cargo with or without loading, unloading and unpacking. Transportation is not the essential character of cargo handling service but only incidental to the cargo handling service. Where service is provided by a person who is registered as GTA service provider and issues consignment note for transportation of goods by road in a goods carriage and the amount charged for the service provided is inclusive of packing, then the service shall be treated as GTA service and not cargo handling service </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GTA Vs Courier Service: </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether time sensitive transportation of goods by road in a goods carriage by a GTA shall be classified under courier service and not GTA service? On this issue, it is clarified that so long as, (a) the entire transportation of goods is by road; and (b) the person transporting the goods issues a consignment note, it would be classified as ‘ GTA Service' </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>These clarifications have retrospective effect </strong> as the C ircular clearly states, “ Pending disputes on the above issues may accordingly be decided expeditiously.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hundreds of cases are pending at various levels and all of them will be disposed of soon hopefully. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7501" target="_blank">DDT 896 - 27.06.2008</a> , </strong>had noted,<font color="#FF0000"> “ Normally the Government is quick to react to representations from the Transport sector, for they can literally take to the roads”</font>, to which, a Netizen had reacted as, </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">I agree with your comments that the CBEC responds faster on representations from the GTA. It is my personal experience that any representation made through forums like the CII , FIEO , FICCI or even directly with the Board goes to the waste paper box. The only way to wake them up is to drag them to the court. Now there is a better alternative, thanks to <strong>TIOL's </strong> tip. Go through either the All India Motor Transport Congress or Confederation of Goods Vehicles Owners Association. Better still through both. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/sercir104.htm" target="_blank">CBEC Circular No. 104/ 07 /2008-Service Tax Dated 6th August, 2008 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Service tax paid as recipient of service is eligible for CENVAT Credit – Board clarifies again. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Services provided from outside India and received in India are subjected to levy of service tax under Section 66 A of the Finance Act and the liability to pay service tax is on the recipient of the service. The question is whether CENVAT Credit is available for service tax paid on such services by the recipient of the services. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even after clarifying vide para 4.2.13. of C ircular F.No B1 /4/2006- TRU dated 19 th April, 2006 that C ENVAT C redit is allowed on such services, it appears the field formations have no respect for the said instructions as the industry associations have brought it to the notice of the Board that a view contrary to the above is taken by the field formations. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How dare the field take a view contrary to the Board's? But that is the Revenue Department for you! Why has the Board not called for a report on the officers who have taken such a contrary view and why are they not punished for blatant disobedience of the Board? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Board has now reiterated the contents of the TRU letter dated 19 th April 2006, that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The recipient of the service is required to pay service tax under Section 66A though the service is actually provided not by the recipient but by a person located in a country other than India . Such taxable services, not being actually provided by the person liable to pay service tax, are not treated as “output services” for the purpose of C ENVAT C redit Rules, 2004. However, service tax paid under Section 66A is available as “input credit” under CENVAT redit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> has learnt that the CENVAT Credit is denied on the services received from outside India not on any of the grounds feared by the Board, but based on some strange ground. Rule 3(ix) of the CENVAT Credit Rules 2004 reads as: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">xxx </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">xxx </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ix) the service tax <strong><font color="#FF0000">leviable under section 66 of the Finance Act;</font> </strong> and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, a manufacturer or service provider is allowed to take credit of service tax leviable under Section 66 of the Finance Act, but not service tax payable under <strong><font color="#FF0000">Section 66A of the Finance Act, 1994</font> </strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, even on this latest Circular, a view contrary to the above will be taken by the field and the credit will be denied. The field formations and the trade and industry associations will again have to represent to the Board. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Disobedience of the Board has almost received legal status having gone unchecked for years! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And this re clarification is not by a Circular, but by a private letter addressed by an Under Secretary to the DGST. Like the GTA Circular, why can't the Board issue a Public Circular? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please find a more detailed article on the issue in our <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7676" target="_blank">ST se GST Tak</a>. </strong></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=41&filename=notification/servicetax/2008/cir_345.htm" target="_blank">CBEC Letter in F.No. 345/1/2008- TRU Dated 27 th June 2008</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Board of Extreme Callousness – Tribunal's anguish</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT Benches periodically express their anger/anguish at the lackadaisical way that the Revenue handles its high value cases before the Tribunal. It is not uncommon to see the Revenue seeking early hearing in cases involving high Revenue, but when the cases come up for hearing, there is no Departmental Representative to argue the case for Revenue, defeating the whole purpose of seeking early hearing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday, the Kolkatta Bench of the C ESTAT in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/misc206.htm" target="_blank">MISCELLANEOUS ORDER NO. M/206/ KOL /08 Dated : 07.08.2008</a>, observed, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally for cases Involving Rs.1.00 C rore and more of duty, penalty etc., the Department has been applying for early hearing and as a general practice, we have been allowing early hearing in such cases. Since beginning of this week from Monday (4.8.2008) onwards, we have been hearing requests from the DRs to adjourn cases involving high amounts of duty and penalty on the ground that the Id. Jt. C DR is required to argue these cases and he has gone on leave on medical ground. In respect of cases involving high revenue stakes, normally the Department should be interested in early disposal of the stay petitions which may result in pre-deposits of duty and penalty. Since now we are having Roster of daily lists which are being prepared almost 1 to 1 & ½ months in advance, any adjournment of such cases means postponing of hearing by more than a month. To obviate such delay, we have directed the ld. SDR , Shri J. A. Khan to take up the matter with the ld. C DR and the Board for deputing the Jt. C DRs from Delhi/Mumbai as was done earlier pursuant to our earlier order dated 10.1.2008 (copy enclosed). As we have not seen any progress In this regard despite the ld. SDR taking up the matter with his superiors, the Assistant Registrar is directed to send a copy of this order to the ld. C DR/Board as well as to the C hief C ommissioners and the C ommissioners in the Zone, so that appropriate arrangement is made for departmental representation in the high stake cases and the inconveniences caused to the litigant public are avoided. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The order dated 10.1.2008, referee to by the Bench reads as, </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/misc05.htm" target="_blank">Miscellaneous Order No. 5/ KOL /2008 - Dated : January 10, 2008</a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We find that adequate number of <strong>competent </strong>DRs have not been posted to argue the Revenue cases before East Zonal Bench resulting in ineffective representation of the departmental cases, which is detrimental to public interest. As such, the A.R. is directed to inform all the Appellant/Respondent C ommissioners in the Zone to depute competent officials to ensure effective representation of their cases before the Tribunal. The AR may also send a copy of this Order to all the C hief C ommissioners in the Zone and the Member ( L&J ), CBE&C , New Delhi for their information. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On many occasions, the Tribunal has expressed its deep displeasure and sent copies of its orders to the Revenue Secretary, CBEC Chairman and Members of the Board– but has anyone of the above worthy mighty officers ever reacted? For the Revenue Department, the CESTAT is just another subordinate office! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is there no way out of this mess? The Cabinet Secretary has written to all Secretaries to curtail expenditure on tours and other activities to save a little money for the Government and here you have the Government not bothered about defending/fighting high value Revenue cases– no wonder the Apex C ourt says that not even God can save this country! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How about paying the Departmental Representatives a little more? Why can't we pay each DR at least Rs. 1000/- for each case that he argues? It's not really big money for the Government. In 1997, KP Joseph, a former AG wrote that the pigs and cattle on the government farms in Bihar live in greater style and comfort than the poor Governor. The government spent only about Rs 1 C rore a year on the Governor, while each of the six government farms in the Ranchi district spent Rs 20 C rore on feeding and looking after the lucky pigs and cattle. </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">– Monday's cases</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>Notice issued under Section 11A cannot be presumed to invoke extended period – SCN has to spell out nature of suppression or mis -representation on part of the appellant– Tribunal allows appeal on ground of limitation </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Without going into the merits </strong> of the case, the Bench observed that the S C decision in Kaur & Singh cited by the appellant clearly applied to the facts of the case and hence the notice was time barred. As for the specificity of not invoking the proviso to section 11A and the presumption factor taken by the DR, the Bench noted that the show cause notice has to spell out the nature of suppression or mis -representation on the part of the appellant so as to give an opportunity to the noticee to meet the same and since there was no such allegation either in the notice or the order of C ommissioner (A), the demand was clearly hit by limitation. </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>COFEPOSA - Indolence on the part of the authorities has vitiated the Detention order on the ground of unexplained delay even if it is presumed that the detenue was absconding: Bombay High Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High C ourt did not agree with the submissions made by the APP that the detenue is taking benefits of his own wrongs in challenging the detention order on the ground of delay caused in its execution. On the contrary, the record shows that the detaining authority as well as the sponsoring authority failed to take timely steps for execution of the order, including the order to be passed under Section 7(1 )( b) of the Act. The casual and non serious attitude of the detaining as well as the sponsoring authority in executing the detention order is writ large. </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>Revenue earned by non-resident from services related to processing of data for oil exploration– Business profits from such services in terms of section 44BB (1) not taxable in India; not taxable even under Indo-Australia DTAA in absence of PE in India –Tribunal </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Payment received by non-resident company for technical guidance and training of client's personnel for usage of the assessee's proprietary software tools– Provisions of section 115A read with section 44D not applicable - Consideration for such services will not be treated as fees for technical services for the purpose of Explanation 2 to section 9(1 )( vii) of the Act but income chargeable to tax under section 44BB– Board Circular No. 1862 dated 22.10.1990 relied– Revenue's appeal dismissed. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Citius , Altius , Fortius </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Faster, Higher, Stronger </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 2008 Summer Olympics, stats today in Beijing , China . The sporting events lasts for three weeks in which around 10,500 athletes from various countries are expected to participate in various sporting events. The official logo of the games, titled “Dancing Beijing”, is a character “Jing”, referring to the host city, Beijing . The mascots of Beijing 2008 are the five Fuwa (literally meaning “good luck dolls”), each representing both a colour of the Olympic rings and a symbol of C hinese culture. The slogan for the 2008 Olympics, “One World, One Dream”, calls upon the world to unite in the Olympic spirit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Spend your weekend happily with the Olympics </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend. </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>