TIOL-DDT 1512
22.12.2010
Wednesday
ONIONS bring tears to the eyes of not only housewives, but politicians too. A government can be unseated on the issue of price of onions. As onion price has already hit the century mark while it is less than Rs. 15 in neighbouring Pakistan, the Government is in serious trouble. It is understood that in an emergency damage control exercise, Government has exempted onions and shallots from import duty and also banned export of onions.
Service Tax - Several Notifications
YESTERDAY, the Government came up with several Service Tax Notifications, to clarify certain issues and to further confuse certain already confused issues.
Information Technology Software - Total Confusion!
NOTIFICATION No. 2/2010 – ST, dated 27.02.2010, exempted the service of providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products , subject to certain conditions. Now this notification is rescinded.
Notification No. 51/2010 - Service Tax; Dated December 21, 2010
Notification No. 17/2010 – ST, dated 27.02.2010, exempted the service providing packaged or canned software, intended for single use and packed accordingly from the whole of service tax, subject to certain conditions. – This notification is also rescinded.
Notification No. 52/2010 - Service Tax; Dated December 21, 2010
Now this does not mean that these services are no more exempted. The Government has brought back these exemptions after many clarifications and avoidable confusion.
The new exemption notification stipulates that
++ the value of the goods shall be determined under section 4A of the Central Excise Act – Retail sale Price.
++ Appropriate excise duty has been paid on software manufactured in India and the appropriate duties of customs including the additional duty of customs on such value, have been paid by the importer in respect of software which has been imported into India.
The moot point is why the value of canned/packaged software should be determined in terms of section 4A of the Central Excise Act, 1944 when it is not one of the notified goods in terms of that section (please refer Notification No.49/2008-CE(NT) dated December 24, 2008). Can a notification under service tax law override the provisions of section 4A of Central Excise Act, 1944 and stipulate that the duty shall be payable on such items in terms of section 4A by virtue of a service tax notification? Where are we heading to?
Notification No. 53/2010 - Service Tax; Dated December 21, 2010
Exemption for Repair of Roads to include bridges and tunnels
NOTIFICATION No. 24/2009 – Service Tax-, dated 27.07.2009, exempted the service of management, maintenance or repair of roads from the whole of the Service Tax leviable. Now the scope of the exemption is extended to bridges, tunnels, dams, airports, railways and transport terminals.
Now repair of roads is exempted from 27.7.2009 and bridges, tunnels etc, from 21.12.2010. If they deserve to be exempted, why shouldn't the exemption be retrospective? In the Karvembu case - 2010-TIOL-676-HC-MAD-ST, the Madras High Court has already held that the exemption cannot be given retrospective effect.
Exemption notifications are issued in Public Interest. Can it be said that exempting repair of bridges was not in public interest till 20.12.2010, but it suddenly became in public interest on 21.12.2010? Does public interest depend on the mood, timing and inadequacies of the Board?
Notification No. 54/2010 - Service Tax; Dated December 21, 2010
IRS v IRS- Indian Railway Service v Indian Revenue Service - Transport of Goods by Rail - Didi gets another extension
IN TIOL DDT 1495 26.11.2010, we had mentioned,
Since 2009, the Finance Ministry had been trying to levy Service Tax on transport of goods by Rail, but Madam Mamata Banerjee had been scuttling their efforts. We were told that a CBEC Member called on a Railway Board Member to work out the details of collecting the tax. The Railway Board Member told him, “we don't recognise this tax”. And he was right! His Minister got the tax put on hold. The exemption for this tax is to expire on 31 December 2010, which means that from 1 January 2011, the Railways will have to pay this tax.
But the Railways is in no mood to pay. It seems yesterday DidiMamata met Dada Pranab and asked for extension of the exemption till 31 March 2011. The FM is known to be a very obliging person and he cannot certainly turn down the request of his illustrious colleague with whom his party has to face an election in his home state soon.
The exemption is bound to be extended, but let us hope our babus do it before it lapses on 31st December.
And the exemption is extended. Now the Government has extended the exemption till 31 st March 2011
Please also see
1. DDT 1180 – 21.08.2009
2.. DDT 1187 – 01.09.2009
3. DDT 1188 – 02.09.2009
4. DDT 1387 – 14.06.2010
Notification No. 55, 56, 57/2010 - Service Tax; Dated December 21, 2010
Exemption for General Insurance Business
GOVERNMENT has exempted the taxable services in relation to general insurance business provided under the Weather Based Crop Insurance Scheme or the Modified national Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture, from the whole of service tax leviable.
Notification No. 58/2010 - Service Tax; Dated December 21 2010
New York Attorney General Sues Ernst & Young, alleging Lehman accounting fraud
THE big accounting firm Ernst & Young helped Wall Street investment bank Lehman Brothers fraudulently conceal its deteriorating financial condition before its collapse in September 2008, New York Attorney General Andrew Cuomo charged on Tuesday. The NY AG in his Statement said, “This practice was a house-of-cards business model designed to hide billions in liabilities in the years before Lehman collapsed. Just as troubling, a global accounting firm, tasked with auditing Lehman's financial statements, helped hide this crucial information from the investing public.”
The Suit seeks more than USD150 million in damages.
CBI Arrests Bar Council of India Member in Bribery case
THE Central Bureau of Investigation has arrested a member of Bar Council of India, New Delhi and a member of Advisory Board of Ghaziabad(UP)-based Law College in a bribery case.
A CBI release states,
CBI laid a trap on 20.12.2010 and caught the Member, Bar Council of India red handed while accepting the bribe of Rs. One lakh from Member of Advisory Board of Ghaziabad-based College in front of the Office of Bar Council of India. Both the accused have been arrested. Subsequent to the trap, the CBI team accompanied with independent witnesses conducted the house search of Member, BCI at Vaishali, Pitampura, New Delhi and several other places at Delhi, Ghaziabad and Chennai.
Simultaneous searches were also conducted at Chennai and Rs.75 lakh was seized from the house of the Vice Chairman of Bar Council of India.
During the search proceedings at the residence of Member, BCI at Pitampura, huge cash, suspected to be a part of illegal gratifications received by him from Member of Ghaziabad-based Law College on earlier occasions, was recovered.
However, while the search proceedings were going on, at around 7 PM, a mob of around 10-15 persons unlawfully assembled in front of his residence. These persons started raising slogans against the CBI team. On the apprehension that search proceedings may be disrupted by the mob, a telephonic request was communicated to officials of Delhi Police for providing assistance. Consequently, personnel from the local police station, including the SHO reached the spot. However, at around 10 PM, the mob which had grown up to 30-40 persons and was being led by President of the Saket Court Bar Association, New Delhi and two advocates, entered the residence of Member of BCIunauthorizedly. They manhandled / prevented the CBI team from discharging its duties and also snatched away the seized case properties which included the cash and other incriminating documents found from the place during the on-going search proceedings.
CBI has lodged a complaint in this regard with Delhi Police against the President of Saket Court Bar Association, New Delhi, two advocates and others.
DDT's Cartoon with Dr. Gopalakrishnan,IAS (Rtd)
'He is a coin-collector by hobby! That is how he accepts bribes!'
Jurisprudentiol – Thursday's cases
Customs
Import of ‘Aircraft engine' under notification 21/2002-Cus - crucial condition violated -Pre-deposit ordered: CESTAT
THEdispute is in relation to an Aircraft engine which was imported in May, 2005 by Air India ltd. by claiming exemption under notification no. 21/2002-Cus dated 1.3.02 (sl. No. 347). As per the relevant entry, parts of aero plane, helicopter etc. could be imported for duty-free clearance subject to a condition (condition no. 67) which stipulated that the parts should be used for manufacture or servicing of aero plane, helicopter etc. Explanation to the said condition defined “parts” as including engines and engine parts. The Aircraft engine imported by the appellant was kept as such in their premises over a period of 2 years.
Income Tax
Tax deducted at source and deposited in Govt account on alleged interest accrued to IDBI - Can refund be claimed by deductor particularly when deductee has treated it as income liable to tax? - YES, rules Delhi HC
THE issue before the High Court is -Whether when no interest actually accrued to the deductee-bank which also did not treat it as income liable to tax, TDS paid on alleged interest can be claimed as refund by the deductor. High Court rules in favour of the assessee.
Central Excise
Condonation of Delay in filing applications for fixation of brand rate of duty drawback - Tribunal condones delay - No question of Law - Revenue Appeal Dismissed:
THE Tribunal having taken into consideration the facts as well as the spirit of the circular dated 9th March 2003, has passed the impugned order and it is not possible to say that the Tribunal has committed any legal error in condoning the delay that had occasioned in filing the application. In any case, the Tribunal has exercised its discretion and it being neither arbitrary nor unreasonable, the view adopted by the Tribunal does not warrant any interference. The impugned order of the Tribunal does not give rise to any question of law as proposed or otherwise, much less, a substantial question of law.
See our columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice Day
Mail your comments to vijaywrite@taxindiaonline.com
