TIOL-DDT 975 · 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 975</font><br>
21.10.2008<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax - Do Not Call the Assessee - CBEC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the time to file service tax half-yearly returns and many assessees after filing the self assessed returns by the due date assure themselves of having complied with the statutory requirement. The assesses, who file the return in the rush hour, may not find time to have ‘personalized touch' with the service tax officer or sometimes the assessees are so complacent that they send the return by the office boy and do not bother to meet the officers at the time of filing the return. However, this complacency on the part of the assessee gets a jolt by a phone call from the service tax officer informing the assessee that though the return is filed, it will be accepted subject to detailed scrutiny and also directing him to meet the officer to get the return scrutinized and accepted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not a story concocted to malign the Department, but found to be a practice being resorted to by the ingenious officers in some Commissionerates to have “<strong><font color="#FF6633">personalized touch</font></strong>” of the assesses who failed to meet them at the time of filing the return.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC is seized of the matter and has issued instructions directing the Commissioners to issue strict instructions to service tax field officers not to resort to such practices.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board letter states,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the recent conference of the Chief Commissioners and Directors General, it was noted that there are reports that in many cases the service tax officers/formations are contacting taxpayers, soon after filing of the return (and without detecting any short/non-payment of tax or error) and conveying the message that though the return has been received, it would be accepted subject to detailed scrutiny. Such an action on the part of the officers is likely to give an impression to the taxpayer, that he is required to visit the service tax officer for getting his return scrutiny completed, even though there is no error in the return or short-payment of tax on part of the taxpayer.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Board wants:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Commissioners to issue strict instructions to the field officers not to resort to such practices.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Only in the event of detection of a short-levy, non-levy of service tax or arithmetical errors or errors in filing up the return form, the taxpayer should be contacted.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The assessee, if needed be contacted only by an officer not below the rank of a superintendent of Central Excise.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Record of such communication may be maintained by the officer.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Such record should be periodically reviewed by the senior officers.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has informed the Commissioners that any deviation from this practice would be viewed <strong>seriously</strong>.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Next time you get that friendly call from your Service Tax Officer to <strong>meet </strong> him in connection with your return, please ensure that he is at least a Superintendent and ask him if he is aware of the Board instructions.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong> conducted a little survey on this. An assessee said that he invariably got the call if he did not meet the officer while filing his return. And he was not impressed with the ‘power to phone' being vested with the Superintendent – he said the calls always are from the Superintendent- Has the Board now officially authorized him?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was a different view from the Department – an officer told DDT,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“But often the reason to contact the assessee is not merely the Superintendent or an Inspector, but the top order of the tax administrators. Very often they ask reports in such a manner as if the Superintendent has everything. They ask how many persons are registered under "Sale of Lottery Tickets". The service is classified under Business Auxiliary Service and nobody takes registration for "Sale of Lottery Tickets". BAS service consists of host of services and invariably all the assessees need to be contacted to get the sub-classification of the service. Similarly they ask what is the revenue from "providing safe vaults"? Safe vaults are taxable under Banking and other financial services and nobody pays service tax on safe vaults under a separate head.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Therefore to avoid contact with the assessee, it is the Board which needs to stop asking for the details which are not available in the ST 3 returns to achieve the desired objective of not contacting the assessees.”</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/st_letter_02.htm" target="_blank">CBEC Dy. No. 170/Com(ST)/08 Dated: 12th June, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Foreign Trade Policy - Submission of applications for claiming deemed export benefits</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT Policy Circular clarifies that,</font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. To reduce the paper work and ensure proper monitoring, there is necessity to limit the number of applications which an applicant may file within a year. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Therefore, in respect of all the claims arising for a particular month /quarter (as per the option of applicant), one consolidated application should be filed within the stipulated time period. </font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. For all the deemed export benefit claims, in respect of a particular project or a particular recipient (of goods) unit, arising in a calendar month/quarter(as per the option of applicant), a consolidated application can also be filed within the stipulated time period of twelve months from end of the monthly/quarterly period. </font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Such applications, even if more than one in a month/quarter, will not be treated as supplementary claims under para 9.4 of HBP V.1.</font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft08cir036.htm" target="_blank">DGFT Policy Circular No. 36 (RE-08)/2004-2009 Dated: October 16, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Weight of Cement bags - 1% variation allowed - CBEC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Show Cause Notices have been issued by field formations to Cement manufacturers based on sample weighment of cement bags.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Standard of Weights and Measures (Packaged Commodity) Rules, 1977, cement is required to be packed in bags containing 50 Kgs. Generally, bagging in cement factories is done by automatic filling machines, adjusted to pack 50 Kg. in a bag. However, some times, the actual quantity filled in a bag may be little more or less than 50 Kg. due to the inherent nature of the product and the quality of machines. Due to these reasons, the Standard of Weights and Measures (Packaged Commodity) Rules, 1977 provides for 1% variation (excess or short) for cement bags of 50 Kgs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has decided that the same practice of variation (1%) should be allowed for cement filled in bags for the purpose of levy of central excise duty. <strong>Pending disputes may also be decided accordingly.</strong></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=31&filename=notification/excise/2008/excircular876.htm" target="_blank">CBEC Circular No. 876/14/2008- CX Dated: October 20, 2008</a></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="#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>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sections 80HH and 80I benefits - Ship-breaking activity does produce a distinct and different article - benefits cannot be disallowed; Usance interest paid outside India is exempt; TDS is applicable only if it is assessable in India: Supreme Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOES ship-breaking activity result in 'production' of a new 'article', eligible for Ss 80HH and 80I benefits? The connotation of the word 'production' in the Income tax Act, as per several judicial decisions, has much wider connotation than the word 'manufacture'. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. </strong> Further, the Legislature has used the words 'manufacture' or 'production'. Therefore, it is settled judicial view that the word 'production' cannot derive its colour from the word 'manufacture'. Further, even according to the dictionary meaning of word 'production', the word 'produce' is defined as something which is brought forth or yielded either naturally or as a result of effort and work.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>VAT</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Punjab VAT - discriminatory tax on import of sugar from other states unconstitutional: High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ARTICLE 304</strong> of the Constitution of India authorises the State Legislature to levy tax on goods imported from other States or Union Territories, but levy of such tax should not discriminate between the goods so imported and similar goods manufactured or produced within the State. Clause (a) of Article 304 of the Constitution of India though worded in a positive language has a negative aspect. It is, in truth, a provision prohibiting discrimination against the imported goods vis-a-vis the goods manufactured or produced within the State. The basic object of the provision is to check the States from creating what may be called “tax barriers” or “fiscal barriers” with the object to ensure enjoyment of right guaranteed under Article 301 of the Constitution of India to the freedom of trade, commerce and intercourse throughout the territory of India. The object is to emphasise upon oneness of the territory of India.</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>Payment made by Citibank to VISA - Prima facie no tax prior to April 2006 - Stay granted: CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> ld. consultant has also argued that VISA had their offices in India during the material period and, therefore, service tax, if any, ought to have been recovered from them in terms of the relevant provisions of the Finance Act, 1994 as they stood prior to 18.4.2006. In this connection, it is pointed out that it was on 18.4.06 that Section 66A was inserted in the Finance Act, 1994 for making service-recipient liable to pay service tax where the service is received from a foreign party having no office in India. In this connection, reliance has been placed on the Tribunal's decision in <em>Foster
Wheeler Energy Ltd. Vs. Commissioner </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-785-CESTAT-AHM.htm" target="_blank">2007-TIOL-785-CESTAT-AHM</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">, wherein services provided from outside India prior to 18.4.06 were held not exigible to service tax in the hands of the service-recipient who was resident in India.</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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