TIOL-DDT 2391
08.07.2014
Tuesday

BUDGET is basically a balance sheet of the country in simple terms of receipts and expenditure, but as the finance of the country is not that simple, there is a slight confusion over the various words used in the Budget. Let us try to simplify the jargon.

The two major heads are Receipts and Expenditure.

Now Receipts are of two types - Revenue Receipts and Capital Receipts.

Again Revenue Receipts are two, tax revenue and non-tax revenue.

Capital Receipts are three types -

1) Recoveries of loans, 2) Other receipts, and 3) Borrowings and other liabilities

Total Receipts = Revenue Receipts + Capital Receipts.

Similarly expenditure has two heads, plan expenditure and non-plan expenditure which are again sub-divided. Plan expenditure has two heads, on Revenue account and on Capital account and Non-plan Expenditure also includes two heads Revenue Account and Capital account. Revenue expenditure includes interest payments.

The total expenditure is the sum of plan expenditure and non-plan expenditure. Revenue expenditure is the sum of plan expenditure and non-plan expenditure on revenue account. Similarly capital expenditure is the sum of the plan and non-plan expenditure on capital account.

Coming to deficits - There are three kinds of deficits, Revenue Deficit, Fiscal Deficit and Primary deficit. There used to be a Budgetary Deficit which is not mentioned these days.

Revenue Deficit is the difference between Revenue Receipts and Revenue Expenditure

Fiscal deficit is the difference between the sum of (Revenue Receipts, Recoveries of loans and other receipts) and Total Expenditure.

Primary deficit is the difference between fiscal deficit and interest payments.

Now let us look at the Interim Budget of 2014-15

It can be seen that of the total revenue receipts of 11,67,131 crores, 9,86,417crores come from taxes (and this is only the taxes net to the centre). The capital receipts of about six lakh Crores includes borrowings and liabilities of over five lakh crores. Of the Non-plan expenditure of 12,07,892 crores, 4,27,011 crores account for interest payment. That is our interest liability is almost equal to our borrowings or are we borrowing just to pay interest? Out of an expenditure of above 18 lakhs crores, only about 2 lakh crores i.e, about 11% is spent on capital account.

The Poor Rich Indian: What does all this mean to the Indian who earns less than 50 rupees a day who is not considered poor by the great economist Dr. Rangarajan? And three out of ten Indians earn less than 50 rupees a day.

Anti Dumping duty on steel and fibre glass tapes - resurrection again

IN DDT 850 - 23.04.2008, we commented,

Anti dumping duty on steel and fibre glass tapes - resurrection again

Anti dumping duty on steel and fibre glass tapes and their parts, originating in, or exported from People's Republic of China , was imposed by Notification No. 147/2003 with effect from 04.04.2003 and has expired on 4.4.2008. The Designated Authority has initiated a review and recommended the extension of anti-dumping duty for a period of six months from the date of its expiry. But they did not suggest that the extension can be after the expiry.

Now the Government has extended the notification till 3.10.2008, but this notification extending the validity is dated 21.4.2008 that is a good 17 days after the poor notification died.

Board should immediately review all its existing notifications and prepare a chart showing the dates of expiry of the notifications with an alarm going somewhere 15 days before the death day. This work should be outsourced.

Of course as long as the Government's irresponsible right to resurrect dead notifications is not questioned, there is hardly any need for monitoring - they can merrily continue!

Notification No. 50/2008-Cus,Dated: April 21, 2008

In DDT 950 - 12.09.2008, we reported,

Anti Dumping Duty on steel and fibre glass tapes - further extended

Anti Dumping Duty was imposed on steel and fibre glass tapes and their parts and components originating in, or exported from, the People's Republic of China and imported into India, vide Notification No. 147/2003-Customs, dated the 7th October, 2003.

Earlier the Central Government had imposed provisional anti-dumping duty on these products vide Notification No. 65/2003-Customs, dated the 4th April, 2003. The final duty imposed by Notification 147/2003 was to be effective from the date of provisional imposition that is 4th April 2003. And that would have expired on 3rd April 2008.

By Notification No. 50/2008- Cus., dated 21-4-2008, this was extended to 3 rd October, 2008.

Now the Government has extended it to 3rd April, 2009. This time around the government has extended it much before the expiry date - normally it is done after the notification has expired. And a colleague of mine believes that the government need not really extend it and the Tribunal feels that even if it is extended after expiry, during the period prior to resurrection, it would still be valid.

Strange are the ways of LAW.

The sane step would be to extend it before it dies and now the good government has done it. Kudos to them.

Notification No. 104/2008- Cus., Dated: September 10, 2008.

In DDT 1112 - 18.05.2009, we reported,

Anti Dumping Duty on steel and fibre glass tapes - yet another resurrection

THE Anti Dumping Duty on steel and fibre glass tapes and their parts and components originating in or exported from, the People's Republic of China was first imposed by Notification No. 65/2003-Customs, dated the 4th April, 2003. This expired on 3rd April 2008. The Government forgot to extend it for 17 days, but woke up and extended the duty till 3rd October 2008, by Notification No. 50/2008-Customs, dated the 21st April, 2008.

For the next extension, the Government woke up on time and extended it till 3rd April 2009 by Notification No. 104/2008- Cus, dated 10-9-2008. This expired on 3.4.2009 and the good Government again forgot to extend it.

The Designated Authority has recommended continued imposition of definitive anti-dumping duty on the subject goods.

So the Government has now imposed a new anti dumping duty on these goods from 15th May 2009.

But what about the dumping during the period 4th April 2009 to 14th May 2009? Was duty payable during this period?

Shouldn't we have a system of reminder bells for sunset notifications?

Notification NO. 49/2009-Customs Dated: May 15, 2009

Even this notification expired on May 15 2014. Now they have extended it till 14th May 2015. How many times will they resurrect a dead notification?

Notification NO. 29/2014-Customs Dated: July 04, 2014

FEMA - Import of Rough, Cut and Polished Diamonds

AS of now, Banks were permitted to approve Suppliers' and Buyers' Credit (Trade Credit), including the usance period of Letters of Credit for import of Rough, Cut and Polished Diamonds for a period not exceeding 90 days from the date of shipment.

Taking into consideration the representations received from the diamond importers and the GJEPC, it has been decided, in consultation with the Government of India, that the Clean Credit i.e. credit given by a foreign supplier to its Indian customer/buyer, without any Letter of Credit (Suppliers' Credit)/Letter of Undertaking (Buyers' Credit)/Fixed Deposits from any Indian financial institution for import of Rough, Cut and Polished Diamonds, may be permitted for a period not exceeding 180 days from the date of shipment. The revised directions will come into force with immediate effect.

The Circular further says that the directions have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

Incidentally, only a week ago, the RBI had in Circular 151/RBI., Dated: June 30, 2014 [See DDT 2386 /01.07.2014] mentioned -

3. Reserve Bank of India has reviewed the policy relating to issue of instructions under Foreign Exchange Management Act, 1999 (FEMA), clarifying tax issues. It has now been decided that Reserve Bank of India will not issue any instructions under the FEMA, in this regard. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.

A P (DIR Series) CIRCULAR NO 02/RBI Dated: July 7, 2014

Jurisprudentiol - Wednesday's cases

Service Tax

Legal consultancy service for obtaining patent rights abroad - better classified and more specifically covered by Legal Consultancy Service -No Extended period when CENVAT Credit is entitled to: CESTAT

ON going through the activities undertaken which is basically in the nature of applying for patent and through the relevant documentation work etc. and the details as provided by the Commissioner, Tribunal considered that the activities can be better classified and more specifically covered by Legal Consultancy Service.

The appellant would be entitled to CENVAT credit of the entire tax paid and therefore extended period may not be invokable in this case at all. As regards the amount within the normal period, the situation would be revenue-neutral since the appellant would be entitled to CENVAT credit of the tax paid.

Income Tax

Whether when assessee files estimate of income showing NIL advance tax liability on basis of loss returns of previous years it attracts penal provisions of Sec 273(2)(c) - NO: HC

THE appellant is a Public Limited Company, engaged in the manufacture and sale of synthetics yarn & cement. It was following calendar year, as the accounting period. For the AY 1982-83, assessee had closed its accounts on 31.12.1981. The assessee was supposed to submit the estimate u/s 209A for the purposes of payment of advance tax on 15.6.1981, 15.9.1981 and 15.12.1981. The assessee had filed an estimate on 9.6.1981 showing the advance tax liability at nil.

The issue before the Bench is - Whether when assessee files estimate of income showing NIL advance tax liability on basis of loss returns of previous years it attracts penal provisions of Sec 273(2)(c). NO, says the High Court.

Central Excise

Credit availed without receiving capital goods - Assets register seems to be manipulated/cooked up one and cannot be accepted as reliable piece of evidence to substantiate appellant claim that they had received capital goods but had removed the same later - Pre-deposit ordered: CESTAT

THE appellant was denied CENVAT credit of Rs.20,94,889/- on the ground that capital goods on which the credit had been taken were neither found to be received in the factory nor reflected in the IT returns in Form 3CD and the balance sheet. The absence of capital goods was noticed during the audit of the records of the appellant in August/September 2008 and also during the search of the premises conducted by the department on 06/03/2012 under a panchnama.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@taxindiaonline.com