TIOL-DDT 952 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 952 </font><br>
16.09.2008<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Butt it's an offence</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Assessees beware.– The Central Excise inspector maybe after your butt! Come October 2 and your friendly Inspector may not be snooping around your factory for tell-tale evidence of evasion, but he may be looking for the butt – of cigarettes.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the <strong>Prohibition of Smoking in Public Places Rules, 2008</strong>, coming into force from 2nd October 2008, “public place” shall also include work places, shopping malls, and cinema halls. And you are not supposed to smoke in a public place. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happens if you do? You are liable for a fine up to Rs. 200/-. The Health Minister promises to hike it to Rs. 1000/-.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who will collect this fine? There is an Authorised person and all our Revenue Officers like Central Excise, Customs and officers of and above the rank of Inspector are authorized officers! Next time an Inspector visits your factory, don't offer him a cigarette – in any case show some respect and don't smoke before him.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what happens, if the Central Excise Inspector is a kind soul and chooses to turn a blind eye to such illegal activities such as smoking? He is liable for punishment.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the officer fails to act on report of a violation, he shall be liable to pay fine equivalent to the number of individual offences..</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus if the Inspector finds five workers smoking in a factory and he does not take action, the Inspector will be liable to a penalty of Rs. 1000/-. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Who will enforce all this? How will the Inspector collect the fine? What receipt would he give? And how would he credit it to the government?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Instead of all these impractical measures why can't they just ban manufacture of cigarettes?</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of marble – port of registration</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday's <strong>DDT </strong> had reported that as per DGFT PUBLIC NOTICE NO.78/ (RE-2008)/2004-09, Dated: September 10, 2008, the Handbook of Procedures (Vol.I), was amended to stipulate that;</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import authorizations for a restricted item if so directed by the competent authority, shall be issued for import through one of the sea ports or air ports or ICDs or LCS , as per the option indicated, in writing, by the applicant. Authorization holder shall register the same at the port specified in the authorization and thereafter all imports against said authorization shall be made only through that port, unless the authorization holder obtains permission from customs authority concerned to import through any other specified port.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the DGFT clarifies that:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The <strong>concerned </strong> licensing authorities of DGFT shall call back all authorizations for import of rough marble blocks/slabs issued under Policy Circular No.12 dated 27.6.2008 and under Policy Circular No.13 dated 30.6.2008 and indicate the port of registration on these licences, as per the option exercised by the license holder.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have you ever met a <strong>concerned </strong> officer? – That is one who is <strong>concerned </strong> about your problem.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Destination Sri Lanka for Indian IT Companies? Service Tax – a good reason</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Sri Lankan IT/ BPO -sector delegation led by the Board of Investment (BOI) of Sri Lanka concluded a successful mission to Chennai, Bangalore and Hyderabad last week. The Mission: To attract Indian IT Companies, especially the smaller ones to Sri Lanka.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why should Indian IT Companies try to relocate to Sri Lanka?</font></p>
<div align="justify">
<ol>
<ol>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Difficulties in hiring the best talent, in India</font><br>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">High attrition rates</font><br>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appreciation of the Indian rupee, and</font><br>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A high Service Tax of 12.36%</font></li>
</ol>
</ol>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And what does Sri Lanka offer?</font></p>
<div align="justify">
<ol>
<ol>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Low operational costs<br>
</font>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In India, the best IT-related talent often migrates towards large companies. However, in Sri Lanka, it is possible for a small IT company to make a name for itself quickly and hire top talent because of its entrepreneurial culture.</font><br>
</li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An IT company based in India is liable to a 12.36% service tax on services to a customer in India. However, the same company would be exempt from this tax if operating and making the service to the customer from Sri Lanka.</font></li>
</ol>
</ol>
</div>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rectification Of Mistake - What is a 'mistake apparent from the record'?</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">Once you lose a case in the Tribunal, it is very difficult to succeed in the higher courts – so normally another attempt is made to find a mistake apparent on records and file a ROM with the Tribunal. Normally Tribunals don't allow a review in the guise of ROM but what is a ‘mistake apparent from the record'?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today we bring you a landmark judgement of the Supreme Court delivered just yesterday, on this issue.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here are some worthy quotes from the Apex Court.</font></p>
<div align="justify">
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is very difficult to define an "error apparent on the face of the record" precisely, scientifically and with certainty.</font><br>
<br>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may therefore be taken as settled that a writ of certiorari could be issued to correct an error of law. But it is essential that it should be something more than a mere error; it must be one which must be manifest on the face of the record.</font><br>
<br>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The real difficulty with reference to this matter, however, is not so much in the statement of the principle as in its application to the facts of a particular case. When does an error cease to be mere error, and become an error apparent on the face of the record?<br>
<br>
</font>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record.</font> <br>
<br>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction.</font><br>
<br>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not.</font> <br>
<br>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An error apparent on the face of the record means an error which strikes on mere looking and does not need long- drawn-out process of reasoning on points where there may conceivably be two opinions.<br>
<br>
</font>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record.</font><br>
<br>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the view
accepted by the Court in the original judgment is one of the possible
views, the case cannot be said to be covered by an error apparent on
the face of the record.</font></li>
</ul>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Not following High Court or Supreme Court – Error apparent? The Blackstonian theory - Judges do not make law, they only discover or find the correct law.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can non-consideration of a decision of Jurisdictional Court or of the Supreme Court be said to be a "mistake apparent from the record"?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is well settled that a judicial decision acts retrospectively.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>According to Blackstonian theory, it is not the function of the Court to pronounce a `new rule' but to maintain and expound the `old one'. In other words, Judges do not make law; they only discover or find the correct law. The law has always been the same.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are <em>res judicata </em> or accounts that have been settled in the meantime".</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This
Blackstonian theory was aplied by the CESTAT in a case before it. In Commissioner
of Customs, Mumbai Vs. Bharat Forge Limited [</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/2002/2002-TIOL-419-CESTAT-MUM.htm" target="_blank">2002-TIOL-XXX-CESTAT-MUM</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">]
the Tribunal held that</font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> if
the Supreme Court has opined on a meaning of a provision, then any contrary
decision given by any other authority lower to this must be held to be erroneous
and such error must be treated as error apparent on the record. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In
this case the Tribunal following a decision of the Supreme Court in Tamilnadu
Newsprint & Papers Ltd Vs Appraiser [</font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2002/2002-TIOL-641-SC-CUS-LB.htm" target="_blank">2002-TIOL-641-SC-
CUS-LB</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">]
held that benefit of project import cannot be availed if the importer has
already claimed the benefit of another Notification.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rectification of an order stems from the fundamental principle that justice is above all.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our <strong>Breaking News</strong></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="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fee received from Indian pharmaceutical companies for undertaking clinical and bio-analytical studies is not subject to tax in India in accordance with Double Taxation Avoidance Agreement between India and Canada - AAR</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>KNOW HOW</strong> represents what a manufacturer cannot know from mere examination of the product and mere progress of the technique. The Commentary further states that a know-how contract differs from contracts for the provision of services, in which one party undertakes to use the customary skills of his calling to execute the work himself for the other party. Payment made under the latter contract generally come in the category of business income.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As such, the fees received by the applicant are to be treated as business income and not royalty income.</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>Molasses used in manufacture of exempted Cattle feed and other dutiable goods – since separate accounts not maintained of common inputs viz. phosphoric acid, caustic soda, water treatment chemicals, 8% amount to be paid under rule 6 of CCR , 2002 – Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IS </strong> there anything left in Central Excise other than Rule 6 of CCR , 2004 is the omnipresent question. <strong>Sadly, the answer is a hesitant no.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants are engaged in manufacture of sugar, molasses and ethyl alcohol etc. which are dutiable goods and <strong>cattle feed </strong> falling under Chapter No. 23 which is exempted.</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>CENVAT credit of Service Tax paid on Outdoor Catering Services – Stay granted as matter referred to Larger Bench: Credit of Service Tax on Garden Maintenance Services – No prima facie case – Pre-deposit ordered: Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS </strong>regards credit availed on garden maintenance no prima facie, case has been made out and, therefore, direct pre-deposit of Rs. 14,712/- within a period of four weeks.</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>
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