Wednesday, October 8, 2014

SERVICE TAX - A Critique

B/F s



 Mumbai housing societies spared service tax
The CESTAT decision is the first of its kind for the western zone. The tribunal, based on decisions of other jurisdictions, accepted the principle of mutuality — the society provided services to itself which could not be subject to service tax. However, finality will be reached only once the Supreme Court adjudges on a similar matter pending before it," said Bakul Mody, chartered accountant, who represented Mittal Towers.

<> The reported development, a welcome ruling of tribunal, - ignoring for the nonce the fact (openly revealed and come to be known by many only now) that a similar matter is pending adjudication by the apex court,- is sure to have proved soothing music to the ears of the aggrieved, under sufferance; all the more so, to those who have never ever even cared to know or become aware that  that there has been such a levy as per the rules book. There is no gainsaying, - continuing ignorance at times may be turned into a Bliss.

  click here.

ASIDE :Simply for the pleasure that sharing has in store:

A Midsummer Night's Dream Summary

In the final scene, the play has come full circle, and all of the cast returns to the palace where Theseus and Hippolyta discuss the strange tale the lovers have told them about the events of the previous evening. The joyous lovers enter, and Theseus decides it is time to plan the festivities for the evening. Of all the possible performances, the play "Pyramus and Thisbe" turns out to be the most promising. Theseus is intrigued by the paradoxical summary of the play, which suggests it is both merry and tragical, tedious and brief. The players finally present their play. Hippolyta is disgusted by their pathetic acting, but Theseus argues that even the best actors create only a brief illusion; the worst must be assisted by an imaginative audience. The play ends with Puck's final speech, in which he apologizes for the weakness of the performance and promises that the next production will be better.

Read More

GST may subsume all entry taxes

Proposal likely to face stiff opposition from states

Oct 30

Service Tax on Transfer of Development Rights of Land – A Detailed Legal Analysis


AMD Research & Development Center vs. DCIT (ITAT Hyderabad)

As narrated:

In view of the finding of the service-tax authorities that services were rendered, argument that amount paid is a reimbursement of actual cost without profit element is not acceptable and it is chargeable as “fee for included services”

A glaring instance of, -bitten twice (or more) but not even remotely shy for once, so to say.

The tribunal order is, as understood, noted to throw up the fact of the Canadian company having been charged on fee income, not only to income-tax but also to service tax.
To a common man, not so-well informed, the instance sounds too bizarre; to be, besides not appealing or not acceptable to common sense, justifiable by any logic one can readily think of. May be, law experts at large, with reasonable exposure and expertise think differently, and find legitimacy , if not strict legality in such a duplication in taxation.

Even so, one is left bewildered , and wondering, - do not the governing tax enactments have any provision for saving from duplicate incidence of 'direct' and 'indirect' tax ?

As is expected to be known, India has a tax treaty with Canada. Of which, of course, no notice appears to have been taken, and no mention at all made.  Hence, no knowing whether or not, and in any case, why the tax treaty can be taken to have no implication or application, whatsoever, in deciding the point of issue.

To hint at :Consider, in a given case, as per agreed terms, apart from income-tax, service tax, if leviable /  levied, is required to be to the Canadian company's account , and borne by it. In such a case, if both are liveable /  levied, availing of double tax relief on both would requires to be examined, having particular regard to the treaty provisions defining 'taxes' covered for  such relief.

Over to law experts, if any willing and mind to, to enlighten the not –so- well-informed readers having an inborn passion or quest for ‘knowledge’ – avidly scouted for “Jnana Vistara’ !

 REALTY related>

Comp. Cert. FOR Service Tax

A Pragmatic Relaxation:

MF(DR) ORDER NO. 1/2010, dt. 22-06-2010 - Service Tax

 If so, why not like relaxation for other less significant purposes; why insist for CC by municipal authority, which in any caser has been reduced to a sheer empty formality but continued  to be insisted for conveyance regn', property tax, khata, and other regn purposes.

READ here>

Also,  look up the specimen CC issued by BBMP on record.

Jottings (fleeting thoughts)

What is it ?- If a levy on fee income of service provider why it is not tax on income ? 

If so, why DTAA  does not come into play - read the tax treaty Title, and the definition / explanation of taxes covered.

Why  classified as 'indirect tax'  (as distinct from 'direct tax') for all purposes, including in the Annual Finance Act ?
SC verdict - holding the constitutional amendment is valid, hence it is a proper levy 
IN contrast - the others under that classification  are on  'expenditure' x not on 'income' within its widest meaning of the I T Act

GST- No Answer (solution)  !

·  ·  How will the Goods and Services Tax (GST) work in India? - Quora

·  What is GST - PwC

    < Service Tax on Joint Development Agreements

  1. GST India

    The Hon'ble Supreme Court while deciding the case, observed as follows: -
    "The service tax levied by reason of services which are offered. The imposition is on the person rendering the service. Of course, it may be indirect tax, it may be possible that the same is passed on to the customer but as far as the levy and assessment is concerned, it is the person rendering the service who alone can be regarded as an assessee and not the customer. This is the only way in which the provision can be read harmoniously.
    The Hon'ble Apex Court further opined that ''The charge of tax is on the value of services and it is only the person who is providing service can be regarded as an assessee. The rules, therefore, cannot be so framed which do not carry out the purpose of the Chapter (Statute) and cannot be in conflict with the same.''

    The above  needs to be closely studied  and understood, as that might help and bring to surface some materially valid points having a nexus to the subject topic; besides, on the lurking doubt whether the service provider is at all right in passing on, as a matter of routine, but left unquestioned, the burden of service tax to the 'serviced'.

    KEY NOTE: As one may be aware, - income-tax is a tax on 'income', it is levied on the person who is in receipt or 'beneficiary' of it, it is he who is the 'assessee', accountable and liable to pay, and if instead, by virtue of a contract or arrangement, the tax otherwise payable/to be borne by the assessee comes to be passed on to / 'borne' by another, the assessee is liable to pay tax by applying the commonly known concept of - 'grossing up of income for tax'.

    The point is prima facie a moot one. Nonetheless, it seems worthwhile to seriously consider: - Why not, by the same token of logic, 'service tax' (so also 'GST', if and after it has come into force) passed on by the service provider (or 'seller'),to his 'serviced'('customer'), be regarded a 'benefit' and accordingly be treated as his 'income' and taxed as such in his hands? OR
    - In the alternative, for achieving the same result,is there not scope for invoking the provision already on the statute- section 40 (ii) of the IT Act- or in any case, justification for suitably amending it.
    May be, preferably,- this is, in one's perception,an aspect worth considering, to the end of introducing a suitable provision in the DTC Bill.

    Caution:For a proper examination of action called for on the foregoing lines,it is imperative for one,- to make a close study of the plethora of court decisions on the scope / interpretation of the extant provision I.E. section 40(ii)- for useful clues, one may look up the expert commentary and case law in - Palkhivala's BOOK on INCOME TAX, u/s 40 (ii) and (iia);


    Country Tax Profile: India - KPMG
    Income Tax Treaties for the Avoidance of Double Taxation .... by India often include anti treaty shopping provisions such as the Limitation on Benefits .... by Central Government on all services except the services covered under negative list and.

    Hefty e-commerce is here for good

    Textbook anachronism

    Great leap online: Government mustn’t get ensnared in overbearing regulation of e-commerce

    <....If anything, there are bound to be many more challenges for both governments and e-commerce companies. Globally, e-commerce transactions are a flashpoint for tax authorities as technology and consequent business models have raced ahead of the law.
    It is also the reason why governments should not subject e-commerce to heavy-handed regulation. Technological evolution marches on because people benefit. For instance, arguably the most successful e-commerce company in India is the government’s own IRCTC, which has made railway reservations simpler for millions. Like any savvy e-commerce company, IRCTC is expanding the scope of its services. And now that India is the fastest growing market for smartphones, e-commerce transactions are bound to increase. Therefore, government should be wary of calls to regulate e-commerce. Tread lightly, should be the motto.>


    What is Flipkart's Big Billion Day Sales? Are they cheating people in the name of Big Billion Day sales?
    Nikhil Venkat Sonti

    Nikhil Venkat Sonti, Programmer

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