TIOL-DDT 973 · 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> <p align="justify"><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">TIOL-DDT 973 </font></strong></font><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2"><strong><br> 17.10.2008 <br> Friday </strong></font></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Excise Revenue falls by 3.2% in September – Excise and Customs Revenue crosses One Lakh Crores in the half year</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you are an excise assessee, beware – the Ides of March are here – in October. The Excise Revenue for September 2008 is 3.8% less than the Revenue for September 2007 and that sure will send the Department on a crazy drive. Your CENVAT Credit will be suspect; your production figures will not be believed; and most probably your CENVAT Credit accounts will be frozen and if you don't co-operate, you will have to bear with frequent friendly visits from the Anti Evasion wing! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Hell hath no fury like the Department scorned! And if the trend continues in October, you've had it! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But Service Tax is the saving grace – there is a 26% increase. The fact is, whatever the Department does, they cannot increase the Customs or Excise Revenue, but they can certainly tap the vast area of service providers who simply do not pay Service Tax. Just by going through the <em>real estate </em> and <em>classified </em> pages of newspapers, they can rope in new Service Tax assessees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And maybe there should be a permanent amnesty scheme for Service Tax – many prospective assessees are not approaching the Department for fear that their past would be investigated – the Department is the triple loser for the past, present and future! The Department can collect at least 50,000 Crores more if they just deploy all their staff for Service Tax work in the next six months. They should have a team in each Commissionerate just to read newspapers and watch TV. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They can also fix targets – for all officers from Inspector to Chief Commissioner. Each officer should be required to bring in at least one new assessee under ST net every week and may be they can be rewarded 10% of the tax paid by each new assessee. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tariff Value of Brass Scrap and Poppy seeds reduced </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government has reduced the Tariff Value of Brass Scrap from 4146 US Dollars to 3904 and the Tariff Value of Poppy Seeds from 6724 Dollars to 6292 Dollars. There is no change in the Tariff Values of other items. </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/cnt.htm" target="_blank">Notification NO. 113/2008 – Cus ( N.T) Dated: October 16, 2008</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAG - Out of 9000 Audit Paras not even a first response for 3000 paras </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAG lamented that “out of more than nine thousand audit paragraphs included in Audit Reports for the years 1994 to 2008 presented to Parliament, about three thousand audit paragraphs have not received even the first response from the Ministries. This is despite a time frame of four months agreed to by the Government for submission of Action taken Notes to the Public Accounts Committee. Such huge pendency in submission of Action Taken Notes by the Ministries highlights the ineffectiveness of the existing system” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So for the last 14 years, the CAG had been producing reports but some departments of the Government are just not bothered about even submitting a first reply. If this is the case of the Central Government, the status pertaining to the State Governments must be more appalling. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AGs of the Country had just concluded their conference and they had the benefit of benediction from the President Of India, Prime Minister, Chief Justice and of course the CAG himself. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They will all go back and be busy in their work of producing Audit Paras, which are simply going to be ignored. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAG should introspect as to whether it is worthwhile in producing so many paras at such a huge cost only to be ignored and put in cold storage by the Mninistries– instead of presenting a thousand irrelevant paras to Parliament, if it just presents two, then will get all the attention and also perhaps a solution. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is time the CAG concentrated on quality than on quantity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You are rated so high that the President, the PM and the CJI are prepared to address your meetings but at the end of the year, some clerk in some Ministry decides that you are not worth a reply – and he has the last word! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We need to change and the first step is for AUDIT to ensure that they don't raise silly objections and become a laughing stock instead of being the Nation's prime financial watchdog. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Role of Audit - You have an important constitutional function in our democracy- PM </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Addressing the AGs, the Prime Minister said, “I have no doubt that public auditors in India have the competence and the will to fully meet the new challenges that they face. Let me conclude by wishing each one of you all success. I sincerely hope that as public auditors you will contribute even more actively in the processes of nation building in the future. You have an important constitutional function in our democracy.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He quoted Dr Ambedkar, “ <em>I am of the opinion that this dignitary or officer is probably the most important officer of the Constitution of India. He is the one man who is going to see that the expenses voted by parliament are not exceeded, or varied from what has been laid down by Parliament in what is called the Appropriation Act.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Prime Minister added, “The effectiveness of audit depends to a considerable extent on cooperation between the audit and the auditee. The relationship between audit and executive agencies should not be the familiar adversarial relationship. It should be one of partnerships with a common goal of improvement of systems to enable the Government to deliver better to serve our people better. The basic purpose underlying external statutory audit is the need to ensure accountability, transparency and good governance. While working towards these objectives, we need to take care so that audit does not become an exercise which obstructs speedy implementation of agreed programmes and in the process discourages worthwhile initiative. The role of auditors in the ultimate analysis should be a positive one, as a group that contributes to improve the quality of governance in our country.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Prime Minister himself has shown the direction which the Audit needs to take. These should not be taken as mere empty conference remarks. It is time that the AUDIT changes its concept and style! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI powers for CAG? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the issues discussed in the AGs' conference was regarding the power to be given to AG Auditors to seize records. It was also suggested that CAG should have similar powers like the CBI. One of the questions for discussion was, <strong>Should there be a high level committee under CAG, consisting of Chairman CVC, Director CBI, Secretary DoPT and Chairman CBDT, on the lines of Audit Advisory Board to monitor follow up on cases of fraud/corruption reported in Audit Reports? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a small town, there was a huge PSU refinery and every Department in the town from Commercial Taxes to Income Tax to Central Excise and Customs always used to threaten to seize the car of the GM of the Refinery. The poor GM who was a petro engineer never could understand why so many government departments were interested in seizing his car – and he was not using any fancy car, but an old Ambassador – the babus just wanted to prove that they have the power to seize! </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="#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>Central Excise </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Advertisement expenditure incurred by a customer can be added to the sale price only if the manufacturer has an enforceable legal right against the customer to insist on such advertisement expenses - CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It appears that these advertisements cannot be held to have been carried out by the buyers on behalf of the manufacturer; that the assessee has no enforceable legal right to insist on incurring such advertisement expenditure. The contention of the Department that there is no option available to the dealers does not stand proved. The stand of the department that the failure on the part of the dealer may lead to the cancellation of dealership and therefore there is an enforceable legal right is acceptable. Such cancellation cannot enable recovery of dealer's share of cost of advertisements. </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>All receipts of assessee are to be taken into account for working out presumptive income u/s 44BB - if place of business is available to assessee for period in which its independent work can be completed, it shall constitute a PE: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is clear from the perusal of section 44BB that all amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive, and includible in the receipts mentioned in sub-section (2) of section if 44BB. Thus, there is a clear authority of the jurisdictional High Court that all amounts mentioned in sub-section (2) are to be included for the purpose of calculating deemed income on the basis of receipts. There is no doubt that the assessee has received the amount and, thus, the same is includible in the receipts for working out the presumptive income. </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>Claim of benefit of exemption Notification without challenging assessment order – Refund claims for excess duty paid not maintainable if original assessment is not challenged – SC decision in Priya Blue Industries and Larger Bench decision in Eurotex Industries followed : CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what if the importer is eligible for exemption from any or all of the Customs duties or concessional rate of duty under any Notification and it is not mentioned in the bill of entry, and later attempts to seek a refund of the excess duty paid by him. Will the Customs authorities allow refund of such excess duty? What do you think; you can get such excess duty back without any resistance from the Department? Dear Importer, as far as payments goes it is only one way traffic into the Government coffers and not two way as we are commonly made to believe by pretentious senior officers and the Finance Minister. The claims are blocked with technicalities and your money will never come back to you. </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="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend. </font></p> <p align="justify"><font color="#FF6666" 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>