TIOL-DDT 956 · 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 956</font><br>
22.09.2008<br>
Monday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC – need for a Sixth Member exclusively for Service Tax</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax Revenue in this fiscal would be around 70,000 Crores – there are many States in India which do not have that kind of budgets. Isn't it strange that the CBEC does not have a Member exclusively for Service Tax? Perhaps they should change the name of the Board also as Central Board of Excise, Customs and Service Tax and maybe think of having an Act called the Service Tax Act.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They already have exclusive Service Tax Commissionerates and a DG for Service Tax. It's time that they have a Member in the Board exclusively for Service Tax. The CBDT already has six members and at least to maintain parity the CBEC should also have six members.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems long ago, a post of Member, Service Tax was created in the CBDT but CBEC bagged Service Tax with a promise to collect service tax with no additional post and no additional expenditure – that is how Service Tax came to CBEC. But that was more than 14 years ago and for fourteen years they collected the tax with no additional expenditure – now they should be rewarded. They richly deserve a post of Member for Service Tax in the Board and perhaps percolating down the line, they can have Service Tax divisions and some posts of Assistant Commissioners, which will to some extend ease the humungous frustration of the much stagnated lower cadres.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is understood that CBEC is seriously trying to get that sixth Member Post – We hope the FM will help them getting it.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Born free,</strong></font></p>
<p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Born free, as free as the wind blows,<br>
As free as the grass grows,<br>
Born free to follow your heart.<br>
Born free and beauty surrounds you,<br>
The world still astounds you,<br>
Each time you look at a star.<br>
Stay free, with no walls to hide you,<br>
You're as free as the roving tide,<br>
So there's no need to hide.<br>
Born free and life is worth living,<br>
It's only worth living, if you're born free.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is a verse from the famous movie, “Born Free”, but what is its relevance in <strong>DDT </strong> and <strong>TIOL</strong>?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was included in a recent judgement of the Supreme Court in the case of the famous Sanjay Bhandari who had imported those fancy cars and got into trouble with the Customs. Please refer to <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=2537" target="_blank">TIOL-DDT 195</a> </strong>wherein we had reported the case more than three years ago.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed, <strong>since the personal liberty and individual freedom of a citizen is curtailed by an order of preventive detention, the Detaining Authorities must apply their minds carefully and exercise great caution in passing such an order upon being fully satisfied from materials which are both for and against the detenu that such an order is required to be passed in the interest of the State and for the public good.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See </strong></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/2008/2008-TIOL-178-SC-CUS.htm" target="_blank">2008-TIOL-178-SC-CUS</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti Dumping Duty on Maleic Anhydride</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has imposed Anti dumping Duty on Maleic Anhydride, originating in, or exported from, the People's Republic of China, Chinese Taipei and Indonesia.</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_105.htm" target="_blank">Notification NO. 105/2008-Cus., Dated: September 18, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEPB benefit for payment in Indian Rupees by SEZ</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per paragraph 4.3.1 of the Foreign Trade Policy,</font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">An exporter may apply for credit, at specified percentage of FOB value of exports, made in freely convertible currency or payment made from foreign currency account of SEZ unit/SEZ Developer in case of supply by DTA.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, “In addition, the exporter shall also be entitled for DEPB benefit in case payment is made in Indian Rupees by SEZ Developer/Co-Developer for supplies received w.e.f 10.2.2006.”</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/dgft08not042.htm" target="_blank">DGFT Notification NO.42 (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>The I<font color="#FF6633">r</font> R<font color="#FF6633">everent</font> S<font color="#FF6633">ervice</font> – AAR's displeasure – attempt to belittle AAR cannot be countenanced - pejorative comments of the Commissioner unwarranted</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Authority for Advance Rulings is headed by a retired Judge of the Supreme Court of India, but that doesn't seem to make the arrogant civil servant show any respect to such an exalted judicial forum.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent order, the AAR, keeping in tune with its high stature, very politely deprecated the attitude of a respondent Commissioner of Income Tax. The AAR observed,</font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In effect, the Commissioner submits that the filing of this application would amount to abuse of the provisions for seeking advance ruling and by entertaining and deciding this application, the Authority will be “subverting the ordinary process of judicial determination prescribed under the Act” and will be created ‘judicial disarray'.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. We do not find any merit in the <strong>strongly worded </strong> objection raised by the Commissioner for admitting this application under section 245R (2) of the Act. On the one hand, the Commissioner concedes that in “technical sense”, the applicant is entitled to maintain this application, for the obvious reason that the applicant is eligible to apply for ruling and none of the embargos laid down in sub-section(2) of section 245R are attracted.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. From the comments of the Commissioner, it is clear that the assessing authority <strong>felt itself bound by the ITAT's decision in preference to the ruling of this Authority and, therefore, passed an order, that too an unreasoned order</strong>, under section 197 of the IT Act rejecting the applicant's submission.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.<strong> The pejorative comments against the applicant for availing of a remedy conferred by law are unwarranted.</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. It is trite that this Authority, the applicant and the Revenue are bound by the provisions of statute and nothing shall be done or suggested which has the effect of nullifying the clear provisions creating a speedy remedy under the aegis of an independent adjudicating body.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The apparent attempt to denude this Authority of its undoubted jurisdiction and raising a bogey of creating “judicial disarray” even when this Authority is seeking to exercise its legitimate jurisdiction without in any way outstepping the contours assigned by law is not in keeping with healthy traditions.</font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>7. We can only express our dismay at the language chosen by the Commissioner.</strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. The stand taken by the Commissioner would come to this: Whenever there is a decision of the Tribunal favourable to Revenue, the AAR must stay its hands off and decline to entertain the application unless, for sure, the Authority toes the same line as that set by the Tribunal; otherwise, the Authority will be created a ‘judicial disarray' or chaos. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>9. Such an attempt to belittle the role of this Authority in the statutory scheme of adjudication cannot be countenanced.</strong></font></p>
</blockquote>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=183&filename=legal/ara/2008it/2008-TIOL-13-ARA-IT.htm" target="_blank">2008-TIOL-13-ARA-IT</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Typewriters – still in vogue?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You remember this machine? It is called a typewriter. Recently <strong>DDT </strong> captured this picture of a PS to a Commissioner using this antique machine to record the proceedings of a “Personal Hearing”. There was a power cut in the office and not wanting to make the consultant wait till power came back (a very uncertain happening), this ingenious PS put to use his old trusted typewriter and typed out the record of the proceedings.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This babu could have asked the consultant to wait as there was no power and nobody could have found fault with him, as it was not his fault.</font></p>
<p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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/typewriters.jpg" alt="Legal Corner Icon" width="120" height="160" hspace="5" border="0" align="center"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font></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="#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></strong></font><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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ITAT had no choice but to pay obeisance at altar of judicial discipline and abide by decision of larger bench; there is no option to assessee, but to provide for depreciation while calculating eligible profits and gains on which deduction is permissible under 80 IB, 80HHC: Delhi HC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the issue raised by the assessee that if it has an option to claim depreciation under Section 32 of the Act with respect to computation of normal income then the claim of depreciation allowance cannot be thrust upon the Assessee for determining profits and gains eligible for the purposes of ascertaining amount deductible under Section 80 IB and 80 HHC is untenable.</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>Refund claim for getting back amount of CENVAT credit reversed twice –CA certificate clearly mentions that expenses not passed on to customers and which finding is not challenged by Revenue – No question of unjust enrichment: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants had taken CENVAT credit in respect of inputs meant for use in their factory. Subsequently, it was found by them that a part of inputs were not received by them but instead went to another unit of theirs. They, therefore, on their own debited CENVAT credit amounting to Rs.6,44,352/- relatable to such non-receipted inputs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Internal Audit of the Department got wind of this “non-receipt” issue and the assessee was asked to reverse the ineligible portion. They too reversed the same Under Protest <strong>little remembering that the needful had been done by them earlier and on their own accord.</strong> To reclaim this amount, they agitated and ultimately credit was allowed to them by the Commissioner (Appeals).</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax/AAR</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Advance Ruling - construction services used for construction of workers' quarters, not input service; No full drawback along with CENVAT credit on construction services - Why inclusive definitions?; "Interpretation must depend on the text and the context; if the text is the texture, context is what gives the colour. Neither can be ignored - AAR</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Advance ruling has been sought on the following issues :-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Whether the construction services used for construction of workers' quarters within the factory premises, fall within the ambit of input services as defined in rule 2(1) of CENVAT Credit Rules, 2004 and consequently whether Applicant can avail of the credit of such construction services in terms of rule 3 of the mentioned rules?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Whether the applicant can claim full rate of drawback on export of yarn manufactured by the applicant along with CENVAT credit on construction services used for construction of manufacturing/storage/workers residential quarters within the factory premises?</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CST</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central sales Tax Act – On imported steel – High Court had erred in holding that no question of law arose – matter remanded – Supreme Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court felt that the High Court had failed to consider various documents which were placed on record before it, namely, the invoices, the bill of lading, the modality of payment, the name of the consignee etc. The Supreme Court did not wish to express any opinion on these documents at this stage. Suffice it to state that the above question needs to be examined by the High Court de novo in accordance with law. The High Court had erred in proceeding on the basis that no question of law arose on the interpretation of the documents placed on record before it.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></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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