TIOL-DDT 393
27 06 2006
Tuesday

A netizen asked us, “Kindly enlighten us as to whether Merchant Overtime Fee collected by Range Superintendent  for supervising stuffing of export consignment is liable to service tax or not”.

Customs and excise officers realize a fee for physical supervision and sealing of export cargo. The exporter has an option of not getting them supervised by the officers and for the service provided by the department, a fee is collected and this is normally known as Merchant Over Time (MOT). Now is Service Tax payable by the department on this service?

As per Section 65 (105) (zzzq)  "taxable service" means any service provided or to be provided -

to any person, by any other person, in relation to ' support services of business or commerce, in any manner;

As per Clause 104(c),

 "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.

So services provided in relation to business or commerce by any person to any other person is taxable. Therefore the service of supervision of export cargo is in relation to business and commerce, is liable for tax. Are we going to have one wing of the department issuing Show Cause Notices to the other wing to pay Service Tax?

Another netizen could not wait for a clarification through these columns; he made a frantic call and asked, “ As an employee of the company I work for, I am providing a service to my employer in relation to business and commerce; Am I liable to pay Service Tax?”

Will the Board clarify?

Income Tax – TDS – Truck operators

As per section 203 of the Income-tax Act, every person deducting tax is required to furnish to the person from whom tax is deducted, a TDS certificate to the effect that tax has been deducted, specifying the amount so deducted, the rate at which the tax has been deducted and such other particulars as have been prescribed.

This has created some problems for the truck operators whose jurisdiction is as wide as that of the CBDT. Where tax is deducted under section 194C from the payment being made to the truck-operator on delivery of the goods by the consignee, the certificate is either not being issued by the consignee within the prescribed time or the certificate is being issued in favour of the consignor of the goods at the place of the truck-operator. Because of such irregularities, the truck-operator is not able to claim credit for the tax deducted from the payments received by him.

The trade practice is that the trucks are normally booked by the consignor, but payment is made by the consignee and in this scenario, the Board has reiterated the provisions of section 203 and advises the consignee to issue TDS certificate in the cases of the truck/goods-carriage operators within the prescribed time and in favour of such truck/goods-carriage operators.

Board has also cautioned that that in case of any failure in timely issue of certificate or in case of issue of certificate in favour of any person other than the person from whose payment tax has been deducted at source, the provisions of section 272A(2)(g) shall be attracted, under which, penalty of one hundred rupees for every day during which the failure continues is leviable.

But there is another side to the story. Many of the truck operators do not want the TDS certificates or refuse to take them. There are many truck owners who refuse to ply if TDS is deducted. Even if it is deducted, they will not claim it for the simple reason that they will not be paying any income tax. All this will go when the centralized computer generated TDS certificates will be issued by the Assessing officer.

CBDT CIRCULAR NO. 6/2006, Dated: June 23, 2006

There is no Customs Commissioner, Vizag-I, Board clarifies.

On 14 06 2006, DDT asked (TIOL-DDT 384)

Committee of Commissioners - Jurisdiction Renotified – Who is Customs Commissioner Vizag I?

And as usual, every rectification by the Board invariably leads to another mistake which has to be corrected later. Now the committee to review the customs orders passed by the four Appellate commissioners of Vizag includes the Commissioner of Customs Visakhapatnam I. No problem on this except for the fact that there is only one Commissioner of Customs in Vizag and there is no post designated as Commissioner of Customs Visakhapatnam I. This would mean we are back to square one. No review of orders of these commissioners.

Now the Board has issued a corrigendum that it is Commissioner of Customs, Vizag and not Vizag-I.  This is one of the fastest corrections. Well done Board!.

Corrigendum in F.No. 390/09/2005-JC (BMB) Customs dated June 21, 2006

Coimbatore added to list of airports for courier imports and exports

As per the Courier Imports and Exports (Clearance) Regulations, 1998, the provisions apply only to the goods imported or export goods from the Customs airports at Mumbai, Delhi, Chennai, Calcutta, Bangalore, Hyderabad, Ahmedabad, Jaipur, Trivandrum and Cochin. Now Coimbatore is added to the list.

NOTIFICATION NO . 68/2006-Cus.,(N.T.), Dated: June 23, 2006

Commissioners appointed for specific adjudication

Certain Commissioners have been nominated to adjudicate certain specified DRI cases.

NOTIFICATION NO . 69, 70, 71/2006-Cus.,(N.T.), Dated: June 23, 2006

Import of white sugar exempted till September

The government has exempted white sugar from customs duty till 30^th September 2006.

NOTIFICATION NO . 63/2006-Cus. Dated: June 23, 2006

Jurisdiction of JD,  DGFTs changed

The jurisdiction of the Joint Director, DGFT, Ludhiana and Chandigarh has been changed. The JD Ludhiana will have jurisdiction over Punjab excluding the districts of Amritsar , Roop Nagar ( Ropar ) and Sahibzada Ajit Singh Nagar while the Chandigarh JD will have jurisdiction  in Himachal Pradesh and Union Territory of Chandigarh as well as district of Roop Nagar ( Ropar ), Sahibzada Ajit Singh Nagar and Panchkula .

DGFT PN 26 (RE-2006) / 2004-09, Dated: June 23, 2006

High level Committee on financial inclusion

The government has constituted a high level committee headed by Dr. Ranagarajan

i) To study the pattern of exclusion from access to financial services disaggregated by region, gender and occupational structure.

ii) To identify the barriers confronted by vulnerable groups in accessing credit and financial services, including supply demand and institutional constraints.

iii) To review the international experience in implementing policies for financial inclusion and examine their relevance/applicability to India.

The Committee will suggest

i) strategy to extend financial services to small and marginal farmers and other vulnerable groups, including measures to streamline and simplify procedures, reduce transaction costs and make the operations transparent.

ii) measures including institutional changes to be undertaken by the financial sector to implement the proposed strategy of financial inclusion.

Until Tomorrow with more DDT

Have a nice Day.

Mail your comments to vijaywrite@taxindiaonline.com