Financial Daily from THE HINDU group of publications
Monday, Feb 13, 2006
Financial Daily from THE HINDU group of publications Monday, Feb 13, 2006 |
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Industry & Economy
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Knitwear & Hosiery Spinning mills body gets interim stay on Finance Act explanatory provisions G. Gurumurthy
Coimbatore , Feb.12 THE Dindigul-based Tamil Nadu Spinning Mills Association (TASMA) has obtained an interim stay from the Madras High Court against the operations of the explanation to Section 65 (105) of the Finance Act as well as the provisions of the Service Tax rules as notified in June 2005 relating to the payment of tax on services rendered by foreign commission agents. The interim stay granted by Mr Justice K. Mohan Ram early this month (on February 3, 2006) on a writ petition from the TASMA on behalf of its member-mills will be valid for four weeks. According to TASMA, the relevant provisions of the explanations of the Finance Act as also the Service Tax Rules as notified on June 7, 2005 stipulated that in the event of any taxable service provided by a person who is not resident of India and does not have any office, the person receiving such service shall liable to pay the service tax. By virtue of the provisions of the FA explanation and the service tax rules, its member-mills were being called to pay service tax in respect of various services availed of by them outside Indian territory. Such demand was being made in respect of services received by them prior to the notification date on the ground the provision had been enacted by way of explanation for removal of doubts and hence will have retrospective effect. Contending the said provisions, the TASMA had said the provisions of the Finance Act which has the effecting of taxing the services rendered even outside Indian territory were contrary to the provisions of the Finance Act and the extra territorial application of these provisions were beyond the legislative competence of the government. Such levy of service tax is an unreasonable and illegal obligation cast upon the members of the association.
More Stories on : Knitwear & Hosiery | Courts/Legal Issues | Tamil Nadu
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