tag:blogger.com,1999:blog-3202774368551476669.post55291172646386121..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: Taxing times for the software industryUmakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-3202774368551476669.post-27099959070844602662009-03-04T19:44:00.000+05:302009-03-04T19:44:00.000+05:30The point about Kesavananda is a very interesting ...The point about Kesavananda is a very interesting one. It is the only decision which reads the residuary entry narrowly, and although it was delivered by a 13-judge Bench, subsequent decisions seem to have read it differently. For example, in Ujagar Prints and in Sat Pal, the Supreme Court expressly held that a "rag-bag" legislation is valid i.e. a law which refers to both the residuary entry and to other entries. More to the point, the Court held in Hoechst Pharma and other decisions that the residuary entry automatically applies wherever List II does not.<BR/><BR/>The point on taxable service is also very interesting. It does seem to imply that there must be actual service. However, sub-clause zzzze specifically lists certain items which the legislature has said constitutes service, and the Court in Kalyana Mandapam held that the definition of service in the Act does not have to conform to the common understanding of service. <BR/><BR/>It will be interesting to see how this dispute is finally resolved.V. Niranjanhttps://www.blogger.com/profile/08357572960266796641noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-41235599731161535292009-03-03T16:56:00.000+05:302009-03-03T16:56:00.000+05:30Niranjan - "So the Central Government may simply a...Niranjan - "So the Central Government may simply argue that even if it is not a service, it is entitled to levy service tax under the residuary entry"<BR/><BR/>Note that this argument will not work under the present legislation on service tax, i.e. the Finance Act 1994. The charging section says that tax is levied on "taxable service".<BR/><BR/>S. 65 defines a "taxable service" as ANY SERVICE PROVIDED TO (detailed description in the sub-clauses)<BR/><BR/>Note that this does NOT expand the definition of service - taxable service presumes the prior existence of "service" - no "deemed service" is created...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-85916343167973947532009-03-03T16:32:00.000+05:302009-03-03T16:32:00.000+05:30@ V Niranjan:"the Central Government may simply ar...@ V Niranjan:<BR/>"the Central Government may simply argue that even if it is not a "service", it is entitled to levy "service" tax under the residuary entry - Entry 97 of List I"<BR/><BR/>It is arguable that such an exercise will be ultra vires; on scope of residuary see the observations in 13J Bench Kesavananda - majority opens the door for an argument which would not allow the residuary entry to be used in such cases... The observations may well be wrong, but they are by a 13J bench...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-86779644065918637302009-03-03T12:07:00.000+05:302009-03-03T12:07:00.000+05:30@ Kodur_Sathya,That does seem to be an attractive ...@ Kodur_Sathya,<BR/><BR/>That does seem to be an attractive option. But with elections round the corner, it looks like there is going to be no relief for the foreseeable future.<BR/><BR/>@Anonymous,<BR/><BR/>I am not aware of any decision which has applied something similar to the real income principle. It is significant to note that even the real income principle is subject to a statutory provision to the contrary. Moreover, in AIR 1979 SC 1550 and in (2002) 5 SCC 203, the Supreme Court held that a legislation may be justified with reference to more than one legislative entry, and particularly with reference to the residuary entry. So the Central Government may simply argue that even if it is not a "service", it is entitled to levy "service" tax under the residuary entry - Entry 97 of List I. Legislative intervention is perhaps the best solution.V. Niranjanhttps://www.blogger.com/profile/08357572960266796641noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-41357849708930048702009-03-02T23:36:00.000+05:302009-03-02T23:36:00.000+05:30The Revenue is making merry of the confusion... Th...The Revenue is making merry of the confusion... They levy all kinds of taxes on everything, irrespective of whether the transaction is a sale or a service. In income tax we have the real income principle at least; anything similar in sales and services?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-71856822119363444392009-03-02T07:17:00.000+05:302009-03-02T07:17:00.000+05:30yes confusion like this is happening and bound to ...yes confusion like this is happening and bound to occur forever. <BR/>Radical steps such as bringing in integrated taxing through "Goods and service tax " could be the best option.<BR/>let india inc. work on these radical steps. <BR/>regards<BR/>sathyaKodur_Sathyahttps://www.blogger.com/profile/15288210942230914348noreply@blogger.com