Surender Kumar Jain
This article makes a comprehensive analysis of the decision of the High Court in Kerala Non-banking Finance Companies Welfare Association v. Union of India [2009] 20 STT 1, wherein a recent issue as to : whether charging of service tax on banking and other financial services which include equipment leasing and hire-purchase, is unconstitutional, has been considered.
1- Vide section 137 of the Finance Act, 2001 service tax is introduced on ‘Banking and other financial services’ which include ‘equipment leasing and hire-purchase’. The impugned provisions providing for service tax on ‘Equipment leasing and hire-purchase transactions’ are introduced by amending the Finance Act, 1994. The relevant definition of ‘Banking and other financial services’ is contained in clause (12) of section 65 of the Finance Act, 1994. Along with the introduction of the definition of ‘Banking and other financial services’, the charging section, namely, section 66 of the Finance Act, 1994 is also amended to cover tax on value of taxable services referred to in sub-clause (zm) of section 65(105). The question as to whether charging of service tax on ‘Banking and other financial services’, which include equipment leasing and hire-purchase, is unconstitutional, arose for consideration of the Kerala High Court in the case of Kerala Non-Banking Finance Companies Welfare Association v. Union of India [2009] 20 STT 1.
2 – The petitioner No. 1, an association of non-banking financial companies, which was covered under the definition of ‘Banking and other financial services’, and its two members, viz., petitioner Nos. 2 and 3 had filed a writ petition challenging the constitutional validity of the impugned provisions of section 137.
3 – These are discussed as under :
(a)- The Parliament has no authority to legislate on hire-purchase and leasing transactions which are subjects left for levy of sales tax by the States under entry 54 of List II of the Seventh Schedule to the Constitution of India.
(b)- After the 46th Amendment to the Constitution introducing clauses (29A)(c) and (d) to article 366, States are authorised to provide for sales tax among other things on hire-purchase and leasing transactions.
(c)- As a follow-up measure, all the States including the State of Kerala introduced provisions in the respective Sales Tax Acts authorising levy of sales tax on hire-purchase and leasing transactions.
(d)- Impugned provisions for levy of service tax on hire-purchase and leasing transactions are discriminatory and violative of articles 14 and 19(1)(g) of the Constitution.
4 – These are as follows :
(a)- Even though service tax is payable on the value of taxable service pertaining to leasing and hire-purchase transactions, the Government of India had vide Notification No. 4/2006-ST, dated March 1, 2006 granted exemption on 90 per cent representing interest income earned by the service provider.
(b)- The Supreme Court had upheld the legislative competence of the Parliament to levy service tax under the residuary entry 97 to List I of the Seventh Schedule in the decisions in Tamil Nadu Kalyana Mandapam Association v. Union of India [2006] 4 STT 308, C.K. Jidheesh v. Union of India [2005] 2 STT 242 and Gujarat Ambuja Cements Ltd. v. Union of India [2005] 1 STT 41 and thereafter, through constitutional amendments entry 92C to List I of the Seventh Schedule and article 268A are introduced expressly giving authority to the Parliament to legislate on service tax.
(c)- The validity of legislation and the grievances of the petitioners should be considered with reference to the aforesaid Notification No. 4/2006-ST, dated March 1, 2006, by which rigour of the levy was neutralized by granting exemption on 90 per cent of the charges received in the hire-purchase and leasing transactions, thereby completely excluding interest on loans from service tax.
5 - It is well-settled that the Constitution by virtue of the provisions contained in article 366(29A) authorises, levy of sales tax on hire-purchase transactions and on leasing of goods and based on the same there is State legislation authorising it.
6 - The legislation applies to all engaged in banking and other financial services and is not confined to members of the first petitioner. In fact, banking companies in the public Sector are also liable to pay service tax on financial leasing service including equipment leasing and hire-purchase . Since the petitioners had not established the parties engaged in the same business who were left out and how they were discriminated, the contention was to be rejected. Similarly provisions of service tax do not take away or create any unreasonable restriction on the fundamental rights of the members of the first petitioner including petitioner Nos. 2 and 3 to carry on business. Therefore, the allegation of violation of article 19(1)(g) also, did not merit consideration.
7 -There is no conflict between the levy of sales tax on the sale or deemed sale of vehicle under the hire-purchase agreement and the service tax payable on services rendered by the financier under the hire-purchase agreement. The provisions contained in article 366(29A) of the Constitution authorising levy of sales tax on the supply of goods under the hire-purchase agreement does not stand in the way of the Parliament levying service tax on taxable service charges received in respect of hire-purchase transactions by the financiers.
It is obvious that levy of sales tax is possible on sale of goods involved in the transactions while service tax can be levied on the service charges received in the transactions. Further, the provisions pertaining to levy of service tax on hire-purchase or lease transactions are not in any way different from the service tax authorised for the large number of transactions under the Finance Act, 1994, the constitutional validity of which is upheld by the Supreme Court. Since incidence of service tax is not on sale of goods or deemed sale of goods pertaining to leasing and hire-purchase transactions covered by clauses (c) and (d) of article 366(29A), the Parliament has authority to authorise levy of service tax on banking and other financial services including equipment leasing and hire-purchase.
Impugned provisions of levy of service tax on hire-purchase and leasing transactions are not discriminatory and violative of articles 14 and 19(1)(g).
By: taxmann
Posts Tagged ‘India’
Service Tax On Equipment Leasing And Hire-Purchase – Whether Un-Constitutional ?
December 11th, 2009Design Patent Law India
December 2nd, 2009Design patent design patent law firm India An article is distinguished not only by its utility but also by its visual appeal which too usually play an important role in shaping the buyers preference for the article. Therefore, the design of an article and even design of its packaging is important from the commercial view point.
Since the enactment of the Design Act, 1911 considerable progress has been made in the field of science and technology. The legal system of the protection of industrial design requires to be made more efficient in order to ensure effective protection to registered design. It is also essential to promote design activity in order to promote the design element in an article of production. The Design Act, 2000, after repealing the Act of 1911 aims at the protecting the design in India and bringing the Indian law at par with International law.
A design can be registered only when it is new or original and not previously published in India. A design would be registrable if the pattern though already known is applied to new article. For example, the shape of teddy bear if applied to school bag would be registrable. It is necessary that the design must be new with respect to the class of the article to which it has been applied. A combination of previously known designs can be registered if the combination produces a new visual appeal.
The novelty or originality is to be judged on the evidence of expert in the trade. An expert who is aware of what is common trade knowledge and usage in the class of goods to which the design is applied would be the once entitled to pass the verdict on the novelty and originality. The design must appeal to and judged solely by the eye. The visual appeal of the article must be to the eye of the customer.
The design must not be previously published in India. To constitute publication, a design must be available to the public or it has been shown or disclosed to some person who is not bound to keep it secret. The private or the secret use or an experimental use of a design will not constitute publication by prior use. In the case of Wimco Limited versus Meena Match Industries, the High Court held that the disclosure even to one person is sufficient to constitute publication.
As per Section 5 of Design Act, 2000, any person who claims to be the proprietor of any new or original design can apply for the registration of the design. The foreigner can apply for the registration of the design. However, the convention followed is that if a country does not offer the identical registration right to Indian citizen for their designs in their country, its citizen would not be eligible to apply for registration of design in India. design patent design patent law firms delhi
The application under Section 5 shall be accompanied by four copies of representation of the design and the application shall state the class in which the design is to be registered. The applicant is also to file a brief statement of novelty with the application. There are 31 classes plus miscellaneous class 99 of goods. The procedure for registration of a design is comparatively simple when compared to procedure for registration of a patent and trademark.
a) Submission of application
b) Acceptance / objections / refusal
c) Removal of objections / appeal to central Government
d) Decision of Central Government
e) Registration of the design
The exclusive right conferred on a design is termed as copyright in design. It should not be confused with exclusive right granted for literary and artistic work also termed a copyright in the literary and artistic work. There are certain designs which can qualify for registration both under the Design Act and Copyright Act. The industrial design and product design are covered by Design Act, 2000, if the design has been registered under this Act, it can not be protected by the Copyright Act even though it may be an original artistic work. If the design qualifies for registration under Design Act but has not been registered under Design Act, the exclusive right will subsist under the Copyright Act. If such design is of an article which is commercially produced, the copyright over the design under Copyright Act will cease to exist when the article to which design has been applied is reproduced more than fifty times by an industrial process by the owner of the copyright.
There is an overlapping area of the applicability of the Design Act and Copyright Act but they can not be applied at the same time for protection of the same subject matter. Section 11 of Design Act lays down the term of the copyright in design is ten years which can be extended to further second period of five years making it total fifteen years.
By: Kaviraj Singh
Weshould Review our Constitution
September 29th, 2009We should have a review of our Constitution.
Dalip Singh Wasan, Advocate,
Formerly employment Officer P.E.S. II.
E.Mail. dalipsinghwassan @ Yahoo Co.In.
We must accept that our Constitution had accepted all good items available in Constitutions of other countries and therefore, it is a comperhensive document and shall be guiding us for all the times to come. We have been conducting review and there had been some amendments in this Constitution. Still we need more amendments because uptil now we could not provide that only competent people should come forward in the houses. We could not provide maximum age uptil which they shall be in the houses. It would have been better if people who are more than 70 years age should not be present in the house and we should have abolished all the state level legislative assemblies because one Parliament is enough to represnt us. We are one country and we have got one types of our problems and the situations and conditions are also the same. We have got one nation and when we have a deep look, all the provinces have created so many problems for us. These units have given birth to religious and regional political parties and now these parties are taking more than due place in the centre too. Had there been one Parliament in this country, there were chances that there could have been two to three political parties there were chances that these parties would have taken competent people in them. All and sundary would not have been allowed to enter these two to three parties and there were chances that these parties would have adopted the path of giving us shadow cabinets and we, the people of India would have been given a chance to elect ministers direct. The present system of appointing ministers by the Prime Minister is not healthy because here we are obliged to appoint ministers as their share in the government and merit is no consideration. That is the reason there is no unity in the cabinet and they just work. Since ministers are not appointed on the basis of merits, they are not in a position to hold charge of people working under them. Rather they work under the bureaucracy and in most of the cases orders are passed by the bureaucracy and signed by the ministers. Such government cannot be called a
democracy.
We should think of establishing one Public Service Commission for the whole country and similarly there should be Subordinate Services Selection Board for whole of the country. We should see that the Employment Exchanges are also allowed to function and if candidates appointed through these agencies are found fit their services should be regularised without rooting them thrrough the Subordinate Service Selection Boards. Recruitment to all offices should be made through these agencies and even establishments in private sectors be invited to utilise the services of these organisations. We should not disturb and put into difficulties our unemployed people and they should be tested once and given job as per their performance in the competitive test.
We should abolish all schools and colleges which are estrablished on religious basis and there should be educational institutions as national institutions and none should be allowed to preach his own religion through these institutions. We should limit the religious institutions in the country their numbers be fixed by the state and the state must have an eye on these institution so that they may not be giving birth to fundamentalists who can cause danger to our unity and integrity.
We should have one law for the whole of India so that the people must be in a position to understand law and they also start believing that people of one part are not better placed. Whole of India must be open to all of us and none of the state be allowed to see that people of its own area are getting jobs under the state and people from other states are not allowed to participate in competitions.
We should ensure that each one of us has got proper education, proper training and proper adjustment at work from where each one is carrying adequate income with which he is able to run his family administration. We are more than 100 crore in number and therefore, we need a working force of about 40,00,00,000 and if such an assessment is carried out, we shall be short of workers. There had been some defect in our plannings that we could not develop such a structure in which each one of us should have been at work and none should have been dependant upon others.
We may allow to the people religious libirty, but time has come when we shall have to see that people who are living on charity should not be allowed to increase in number. even to day this number is on higher side and we must try to see that no one is allowed to live on charity alone and everyone should be at work because when a nation has got a large number of people living on charity, more and more people shall be joining this line and thus burdon on working people is increased and this is not a healthy sign. We should have an introspection and must see that this number is decreased.
We should see that people of one religion should not be allowed to concentrate on one place. They must be asked to disperse and locate themselves amongst people of other religions because people of one religion are located at one place, they start demanding something which our Constitution dies notallow. We should have one common civil code in which system of marriage and divorce should be one and similarly we should be having one succession law with us. We should see that the family should be bound to look after the infirm and old people and every child must get proper education and proper training. The nation must look after the child through his or her parents, but none of them should be allowed to go astray.
Till we have one spirit, we shall never become a nation and till we attain the status of a nation all these terrorism and riots shall be hampering our progress and we shall remain a backward country. Therefore, we should see that each one of us must get all these fundamental rightws automatically and is not is compelled to fight for these rights in Courts.
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By: Dalip Singh Wasan
