1. Pay up, folks after 1% cst reduction!

Loosen your purse strings. As a sequel to 1% CST reduction effective 1st April, 2007 you, as a consumer, may have to pay more for a host of new services like hotel, motel and lodging, electricity transmission and distribution, legal advisory services, amusement and recreational services etc; during this fiscal itself. States are planning to bring some of the 44 new services, given to them as a part of the Centre’s Central Sales Tax phase-out compensation package. The States have also decided to impose 12.5% VAT on tobacco items. In the meantime, industry body ‘Assocham’ seeks removal of VAT on cigarettes. According to Assocham, the imposition of VAT on products such as cigarettes, where taxes are almost 130% of the ex-factory price, will have severe cascading effect on the tobacco industry. Further, according to Assocham, the high incidence of tax on cigarettes, coupled with a lack of uniformity in VAT rates across States will result in illegal movement across State boundaries. Hence, Assocham submitted that, if the levy of a State VAT is inevitable, the Centre must ensure an appropriate legal provision, requiring the States to abide by a fixed VAT rate on the value, net of Excise duty and other taxes.

2. Reverting to the main issue, the Chairman of the Empowered Committee of State Finance Ministers, Mr. Asim Dasgupta recently said in Delhi:– "We will take a final decision on May 5 as to which services out of the 44 new services should be brought under the tax net." He further clarified that, in the first year, the Centre would collect service tax on the services given to the States. Within this transition period, States would set-up their service tax machinery and then collect tax on their own on all 77 services reserved for them. Moreover, on the proposed unified goods and service tax regime, Mr. Asim Dasgupta said the Centre had asked the Empowered Committee to prepare a roadmap for consultation with it. The Committee also decided to set-up a joint working group which would work on it and report back to EC. Thereafter, Mr. Dasgupta gave a pleasant news that VAT revenues of States had grown by over 25% in 2006-07, but did not give out the figures. So, the above is a latest development in the field of VAT.

2. pm advises judiciary not to overstep

While sharing a common platform at the Vigyan Bhavan at Delhi on 8th April, 2007, on the eve of a conference of Chief Ministers and Chief Justices of High Courts on fast-track justice, the PM and the Chief Justice of India gave their respective takes on how to maintain harmony in the delicate relations between the legislature, the executive and the judiciary in the context of the raging debate over judicial activism.

2. In this context, the PM said: "The dividing line between judicial activism and judicial overreach is a thin one. However, substituting mandamus (a type of judicial writ) with a takeover of the functions of another organ may, at times, become a case of overreach. These are all delicate issues which need to be addressed cautiously. All organs, including the judiciary, must ensure that the dividing lines between them are not breached. This makes for a harmonious functioning."
    

3. In the reply to the above observations of the PM, the Chief Justice of India (CJI) Hon’ble K.G. Balakrishnan said : "The application of judicial review to determine constitutionality of the legislation and to review the executive decision some times creates tensions between the judge and the legislative and the executive branch. Such tension is natural and to some extent desirable." Noting that the judiciary’s independence was essential to the rule of law, the CJI further said: "Judicial review was an extraordinary legal invention that seems deceptively simple, but it is one of the most baffling of legal devices. Sometimes it is described, mistakenly as a veto power over legislation." The CJI further said that the principles of separation of powers are kept in the forefront and the Judge should make sure that each of the other branches operates within the boundaries of law and judicial review.
    

4. In the above context, the writer is tempted to quote Thomas Jefferson, a legal luminary as under: -
   
   "I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors."

3. RBI’s directive on safe deposit lockers

The recent RBI directive by way of Notification for the purpose of compliance by the banks on safe deposit lockers has left customers happy on some counts and insecure on others. Customers were pleased to learn that banks cannot demand beyond fixed deposits beyond permissible limits when allotting lockers and, in case of non-availability of lockers, there should be a wait-list. At the same time, the permissions given to the banks to break open lockers have left customers fearful. The RBI has said that banks can put customers on notice for not operating a locker for a year, even if rent for the service has been paid.

2. In the above context, Shri Shirish Deshpande, an advocate and an official of Mumbai Grahak Panchayat reacted thus:- "One can understand the RBI’s apprehensions over lockers being misused. But I do not know what data the RBI has. How many such instances (of lockers with explosives) have occurred?"
    

3. I also take a view like Shri Shirish Deshpande in the matter. So, as customers of the banks hiring safe deposit lockers, we should be concerned about the recent directive of the RBI
   and study its implications well in time, not only for us but also for the society.

4. Life is indeed a bubble!

Wise men always said, ‘life is a bubble’, but to here this saying is one thing and to experience it another thing – a devastating experience at least to me personally and till the time of writing this piece am not very well composed. In the afternoon of 19th April, 2007, I received a shocking news that my dearest friend for a long time, Shri N.K. Bhat, Chartered Accountant, has passed away due to heart attack, in the morning at about 9.45 A.M. He suddenly collapsed and in a few seconds everything was over, there was no need to call a doctor. Till his death, he had excellent health and even no history of any type of heart ailment. Fortunately, at the time of his passing away, all the members of the family were present. Fondly I used to call him simply "N.K.". He had great clarity in his thinking and as soon as he cleared his CA in first attempt, he decided to go in for income tax practice, and not to accept lucrative jobs which were waiting for him, then. He rose in the profession on merit and hard work very fast, and specialized in International Taxation and co-authored a book on "Tax & Treaty Guide", published by BCA, Mumbai.

2. I pray the Almighty to bestow eternal peace on the departed soul. But in the meantime, am feeling lonely how long I do not know !