TIOL-DDT 954 · 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 954</font><br>
19.09.2008<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT restricts import of tiles/slabs</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of articles of cement, of concrete or of artificial stone, whether or not reinforced <strong> </strong>Tiles, flagstones, bricks and similar articles under Heading 6801, is free as per the Foreign Trade Policy. Now the DGFT has made it restricted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Import of processed tiles/slabs of agglomerated/artificial stones shall be permitted freely, provided CIF value is US Dollars 50 and above per square meter.</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=45&filename=notification/dgft/2008/dgft08not041.htm" target="_blank">DGFT Notification No. 41 (RE-2008)/2004-2009 Dated: September 18, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROCEDURE FOR REIMBURSEMENT OF CENTRAL SALES TAX (CST) ON SUPPLIES MADE TO EOUs, EHTP AND STP</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per para 2 of the Appendix-14-I-I, the following conditions are to be fulfilled.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) The supplies from DTA to EOU/ EHTP/TP units must be utilised by them for production of goods meant for export and/or utilised for export production and may include raw material, components, consumables, packing materials, capital goods, spares, material handling equipment etc. on which CST has been actually paid by the EOU/EHTP/STP.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> (b) While dealing with the application for reimbursement of CST, the Development Commissioner or the designated officer of EHTP/STP shall see, inter alia, that the purchases are essential for the production <strong>of goods meant for export and/or to be utilised for export production by the units.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now these paras are amended to read as,</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“2(a) The supplies from DTA to EOU/EHTP/STP units must be utilized by them for production of goods/<strong>services </strong> and may include raw material, components, consumables, packing materials, capital goods, spares, material handling equipment etc. on which CST has been actually paid by the EOU/EHTP/STP.”</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“2(b) While dealing with the application for reimbursement of CST, the Development Commissioner or the designated officer of the EHTP/STP shall see, inter alia , that the purchases are essential for the production of goods/<strong>services </strong>by the units.”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Basically, <strong><font color="#FF6633">services</font> </strong> are now included. The same is included also in the undertaking to be given.</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=47&filename=notification/dgft/2008/dgft08pn081.htm" target="_blank">DGFT Public Notice No. 81 (RE-2008)/2004-2009 Dated: September 16, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Last date for filing IT returns extended – for Bihar, J&K</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT has extended the last date of filing of income tax returns and obtaining tax audit report under section 44AB of the Income Tax Act, 1961, due by 30 th September 2008, to 30th November 2008 in the state of Bihar in view of the disruption caused by floods in the state.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has also extended the last date of filing of income tax returns due by 31st July 2008 to 30 th September 2008 in the state of Jammu & Kashmir in view of the dislocation caused due to law and order problem in the state.</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/cbdt_press_release.htm" target="_blank">CBDT No.402/92/2006-MC (41 of 2008) Dated: September 17, 2008 </a><strong>and</strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cbdt_press_release.htm" target="_blank">CBDT No.402/92/2006-MC (42 of 2008) Dated: September 17, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Are co-loaders who provide services to courier agency liable to pay service tax?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A concerned Netizen sent us this:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per s. 65(33) of Finance Act, 1994 "courier agency" means any person engaged in the door-to-door transportation of time–sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles. Hitherto when courier agency was brought into the tax net in October 1996 and up to May 1, 2006, instead of ‘person' it was ‘commercial concern'.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, vide clause (f) of s. 65(105), taxable service of a courier agency was defined as a service provided or to be provided “to any person, by courier agency in relation to door-to-door transportation of time-sensitive documents, goods or articles”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When this new levy was introduced TRU issued a clarification vide F. No. 341/43/96- TRU dated 31.10.2006. At paras 15 and 16 thereof explained briefly the services of co-loaders and clarified that the activity of co-loaders is excluded from the purview of service tax under the “Courier Agency service”.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further, the service profiles on the CBEC website enumerates that a <strong>‘Co-loader' is a company whose services are engaged by a Courier Agency for handling part of the job for delivery of articles, goods, documents, etc. They are not providing any direct service to the customer. The client is concerned only with the Courier Agency, for the services and the co-loader is only a sub­contractor. Therefore the service provided by the “co-loader” is not leviable to Service Tax.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the Master Circular No. 96/2007 dated August 23, 2007 is silent on this. But by virtue of its overriding effect, the TRU clarification dated 31.10.1996 may not be valid anymore. It appears that certain field formations are issuing show cause notices to co-loaders proposing to classify their services under the category of “Business Auxiliary Services” on the ground that these co-loaders are providing services to the clients on behalf of the courier agency.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If we look at the definition of BAS in s. 65(19) of the Act, at clause (vi) therein, “provision of service on behalf of a client” is a taxable service and the department's proposal is by virtue of this provision. But is it really so in the case of co-loaders? If we examine the practice prevailing in the trade, co-loaders are merely engaged by the courier agencies to collect the parcels/documents etc from their clients. They get their remuneration from the courier agency for this service. They do not provide any service directly to the client<strong> on behalf of the courier agency</strong> but provide the service only to the courier agency.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
For the client, the identity of co-loader is nonexistent. Co-loader does not act as a representative of the courier agency before the client but is regarded as the courier agency itself. In other words, a co-loader has no independent identity before the client of the courier agency. So when the service is provided by a co-loader to the courier agency it would have to be construed only as "provision of service to the client" but not "provision of service on behalf of the client" as is being made out in certain field formations. Though technically the original clarification dated 31.10.1996 is overruled/redundant by virtue of Master Circular dated August 23, 2007, the principle enunciated in the original clarification still holds good in the absence of anything contrary to this in the Master Circular.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before it escalates into further controversy, CBEC is requested to issue a suitable clarification by amending the Master Circular No. 96/2007. Of late, CBEC has started issuing clarifications independent of the Master Circular notable among them is the latest Circular No. 105 issued on September 16, 2008 clarifying the jurisdiction and liability of services provided by SEZ units. The very idea of codification of services in the Master Circular for the purpose of issuing clarifications systematically service-wise would be defeated if CBEC goes about issuing clarifications / circulars independent of Master Circulars 96 and 97 both dated 23.08.2007.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Real India</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While delivering the Field Marshal KM Cariappa Memorial Lecture, yesterday, the dynamic Finance Minister P. Chidambaram revealed certain interesting facts</font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><strong>67,000 villages do not have electricity;<br>
<br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><strong>35 per cent of habitations do not have an all-weather road connecting the habitation to the nearest highway or market;<br>
<br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><strong>363,664 habitations do not have an assured source of safe drinking water</strong></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe after that, the Defence staff did not have the heart to ask for a pay hike.</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><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>Remanded case – Tribunal cannot go beyond directions of High Court - When a direction is issued to an Authority or Tribunal to do a certain thing in a certain manner, the thing must be done in that manner and in no other manner: High Court.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden. In the instant case, the matter was remitted to the Income Tax Appellate Tribunal by this Court with certain directions and it was not open for the Tribunal to take fresh evidence in the matter as no such direction was issued by this Court. The impugned order by which a fresh direction has been issued by the Tribunal to the Assessing Officer is legally not sustainable.</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>Outdoor catering – In premises of the client – liable to tax: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant is a caterer and has served food and beverages to the employees of M/s EID Parry (India) Ltd, Alwar as per agreement with the said company. The appellant was not having any business premises of their own to run their business independently. They were given space by M/s EID Parry in their own factory/place for the purpose of preparing and supplying the food to employees of the said company. The space was given without any rent. The food items were supplied at concessional rates to the employees. The subsidy involved was reimbursed to the appellant by M/s EID Parry.</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>When DRI did not consider evidence to be strong enough to call for immediate suspension of licence, no emergency can be said to exist after a time lag of 7-8 months so as to warrant suspending licence without issuing a show cause notice as contemplated under Regulation 20(2) of CHALR, 2004: Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issue is interpretation of the term “immediate action” contained in Rule 20(2) [Suspension or revocation of licence] of the Customs House Agents Licensing Regulations, 2004 which reads <strong> –</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“(2) Notwithstanding anything contained in sub-regulation (1), the Commissioner of Customs may, in appropriate cases where <strong>immediate action </strong> is necessary, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated.”</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="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 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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