B U S I N E S S

Online facility to locate PAN
CHANDIGARH, June 10 — To cope with the rush of taxpayers, the Income Tax Department is opening special counters to function as helpline for those who have not been allotted PAN.

Furnace oil gets costlier in Punjab
CHANDIGARH, June 10 — Small units in Punjab using furnace oil and LDO are facing a crisis. The units had been getting these oils from the depots of the oil companies in Haryana, U.P. and elsewhere by paying 4 per cent central Sales Tax.

Qazi Hussain Ahmed, chief of the Jamat-i-Islami, addressing traders in Rawalpindi on Friday. Confrontation between traders and Pakistan's military-led government continues as merchants staged a rally protesting the government's plans to document business transactions and impose a 15 per cent sales tax. — AP/PTI photo

Competition in car parts hots up
CHANDIGARH, June 10 — Competition among small car manufacturers has reached the spare parts segment. Eight spare parts of the Matiz are the cheapest in the segment as compared to those for Zen (MPFi version), Santro, Wagon R, Fiat Uno and Tata Indica.

Exports of shawls up
AMRITSAR, June 10 — The exports of woollen shawls from Punjab recorded 50 per cent growth last year and are likely to show better growth this season.

CHECK OUT

Consumers denied interest on deposits
I wish Communications Minister Ram Vilas Paswan would consider this long-pending subscriber demand as sympathetically as he does the demands of employees. Well, I am not referring to the general plea for better service, because as I see it, it is only competition and a strong regulator that would force the service provider to improve its services.

AN ANALYST'S DIARY

Keep eye on Mascot 
A lot of primary market buffs who gave the IPO of Mascot Systems Limited the miss are now awaiting its listing to lap up the shares of this company. From being a much awaited issue, the book-built portion of Mascot Systems Limited ran into rough weather as its tenure coincided with that of the Nasdaq meltdown and resultantly the response was less exuberant than it would otherwise have been.

 

AVIATION NOTES

Stop travel agents’ entry into airports
STAR Alliance, a combination of 11 airlines, has taken affective measures to make travelling easier than has been the case for many years. As many as 500 airport lounges around the world will be available for passengers, known as frequent flyers.

SALES TAX ISSUES

LABOUR LAWS

IN THE WONDERLAND OF INVESTMENT

Online facility to locate PAN
By Vishal Gulati
Tribune News Service

CHANDIGARH, June 10 — To cope with the rush of taxpayers, the Income Tax Department is opening special counters to function as helpline for those who have not been allotted PAN.

Talking to TNS, the Chief Commissioner, Income Tax, North-Western region, Mrs Surinder Paul Kaur, said for the last 10 days of June the department would hire a building with sufficient parking and other facilities for taxpayers. An online facility will help taxpayers to locate their PAN.

The taxpayers quoting PAN get priority in the processing of their returns and also get a quicker refund. Those who have not received PAN or have applied for it, they should obtain a 49A Form beforehand and file their returns with two passport size photographs size, she said.

“Nearly 12.47 lakh of the 13.32 lakh applicants of Punjab, Himachal Pradesh, Jammu and Kashmir and Chandigarh have been allotted PAN”, she said.

She attributed the non-issuance of PAN and delay in certain cases due to deficiencies in filling of forms by applicants.

For instance, she said: “There were forms where only the initial of the name of the tax-payer or his father had been given when full name was required for proper identification”.

“Another problem is that a large number of women assesses have mentioned their husband’s name. Married women have to give their father’s name to make the unique identification possible”, she said.

Nearly 1.13 lakh assesses had been allotted numbers but not PAN cards. The cards would be issued only after the assesses furnished the information demanded by the department.

Regarding confusion among the people that they cannot open a bank account without PAN, she said the requirement of quoting of PAN would not come in the way of opening of the account.

“If a person has not got PAN, he can quote GIR (general index number) which was issued by the department in the past”, she said.

“If a person has not been allotted even a GIR number and the transaction is in cash, then he can file Form No 60,” she said

However, it is mandatory for all assesses to have PAN, a penalty up to Rs 10,000 would be levied against those who do not apply.

Furnace oil gets costlier in Punjab
Tribune News Service

CHANDIGARH, June 10 — Small units in Punjab using furnace oil and L.D.O. are facing a crisis. The units had been getting these oils from the depots of the oil companies in Haryana, U.P. and elsewhere by paying 4 per cent central Sales Tax.

Oil PSUs have now decided to stop all inter-state movement of furnace oil, L.D.O. and diesel by road.

Now Punjab units will get furnace oil from the depots of the oil companies within the state by paying sales tax. This tax is 20 per cent with a surcharge of 2 per cent. As a result there is a straight way hike of 18 per cent.

Already the basic prices of furnace oil and L.D.O. have more than doubled during the past one year.

Punjab’s industry uses more than 10,000 kl of furnace oil and 3000 KL of L.D.O. a month. 

Competition in car parts hots up
Tribune News Service

CHANDIGARH, June 10 — Competition among small car manufacturers has reached the spare parts segment.

Eight spare parts of the Matiz are the cheapest in the segment as compared to those for Zen (MPFi version), Santro, Wagon R, Fiat Uno and Tata Indica.

These parts are — oil filter, filter-air cleaner, fuel pump assembly, shoe and lining kit (R.R. brake), fenders, front bumper, rear bumper and radiator assembly.

As compared to the Matiz, Santro has six parts that are the cheapest in the segment. The fuel pump assembly, pad kit for disc brake, glass windshield, headlamp unit, taillamp unit and rear view mirror assembly of the Santro are the cheapest in the segment. In fact, the fuel pump assembly of the Matiz and the Santro costs the same.

Zen comes a close third as five of its spare parts are the cheapest in the B-segment. These parts are clutch disc assembly, clutch cover assembly, shoe and lining kit (RR brake), glass, tailgate and the radiator assembly. The shoe and lining kit (RR brake) and radiator assembly of the Matiz and Zen cost the same.

Maruti Wagon R and Fiat Uno score only one point each. Wagon R’s shock absorbers are the cheapest in the segment while Fiat Uno scores on the fuel filter assembly.

Giving these figures here, a senior Daewoo official claimed that the Matiz is the cheapest car to maintain.

Exports of shawls up
From Our Correspondent

AMRITSAR, June 10 — The exports of woollen shawls from Punjab recorded 50 per cent growth last year and are likely to show better growth this season.

The President of the Shawl Club of India, Mr J.S. Madan, said here today that as per the statistics made available by the International Woollen Secretariat the exports of wool and woollen have also shown an annual increase of more than 12 per cent to markets in developed nations.

The Director of Wool Mark, Dr S.K. Chaudhary, said that this growth was the result of their sustained efforts for producing international quality shawls.

IN THE WONDERLAND OF INVESTMENT

Then again, it appears that the loan is directly taken by you from a housing finance company. Your employer subsidises a part of the interest. This subsidy would be treated as taxable perquisite in your hands. On the other hand, if the employer had given you a loan directly at concessional interest rate, It would not be treated as perquisite, even if the concession is heavy.

LABOUR LAWS

by Praful R. Desai

Ad-hoc salary

Q: Pending disposal of the appeal, in lieu of reinstatement, can there be a direction to pay ad hoc payment on monthly basis?

Ans: The SC in Regional Engineering College, Warangal v Cheralu (2000-I-LJ-1086) expressed the view thus:

Keeping the question of law open, the SC deemed it fit to dispose of this Special Leave Petition by directing the petitioner to pay on ad hoc basis Rs 500 per month to the respondent in lieu of his reinstatement ordered by the Labour Court pending disposal of the Writ petition No. 3234/1995 by the HC.

The said amount shall be paid to the respondent from 1.3.99 as order U/s 17.B of the I.D. Act was passed by the HC in the pending writ petition, effective from that date. All arrears will be paid within three months from today and the future amount of Rs 500 per month will be paid from month to month till disposal of the writ petition by the H.C.

The respondent, for compliance of the order of S.17.B of the IDAct, will have to file appropriate affidavit as required by the said provision.

On filing of such affidavit, the aforesaid amount will be released to the respondent. Writ Petition No. 3234/1995 deserves to be expedited, according to the SC. The SC, therefore, requested the H C to dispose of the same as early as possible, preferably within six months from today.

The second Leave Petition was disposed of accordingly. Thus the SC directed an ad hoc monthly payment to be made to the respondent, after fulfilling the formalities U/s. 17.B, till the disposal of the writ Petition in the HC, over an order passed by the Labour Court, ordering reinstatement of the employee. Ad hoc payment per month was in lieu of such reinstatement order.

AN ANALYST'S DIARY

from Ashok Kumar in Mumbai

Keep eye on Mascot 

A lot of primary market buffs who gave the IPO of Mascot Systems Limited (MSL) the miss are now awaiting its listing to lap up the shares of this company. From being a much awaited issue, the book-built portion of Mascot Systems Limited (MSL) ran into rough weather as its tenure coincided with that of the Nasdaq meltdown and resultantly the response was less exuberant than it would otherwise have been. However, the pedigree of this issue saw it through although its discovered price was pegged down at Rs. 480 on a face value of Rs. 4.

MSL is a subsidiary of Mastech Systems Corporation, which, in turn, is a 100% subsidiary of the US-based, Nasdaq-listed iGate Capital. MSL has hitherto primarily been engaged in the business of providing offshore software delivery services to clients of iGate Capital using its offshore development centres (ODCs) in Bangalore, Chennai and Pune. The objects of this issue included listing MSL’s equity shares to make its ESCOP meaningful.

The issue proceeds are proposed to be utilised for funding the on-going expansion of its software development facilities, upgrading infrastucture and the augmentation of its working capital resources. The cost of expansion of its facilities and deployment for infrastructure is estimated at Rs 90 crore, while the balance has been earmarked for acquisitions and investments in joint ventures.

Currently, custom solutions contribute 43 per cent of MSL’s revenue while 29 per cent comes from application maintenance outsourcing. Notably, E-business solutions contributed to around 11 per cent in 1999 and this segment is expected to contribute significantly in the year to come. The company’s e-business is involved in strategic consulting, design development and implementation of business applications over the net, web enabling existing legacy systems, which is expected to be a major growth driver in the near future.

Now, while acquisitions can be a double-edged sword especially for India companies without the requisite level of experience in the field, MSL, has a distinctive advantage in the form of its holding company, iGate, which enjoys a successful track-record as far as acquistions are concerned. On the financial front, MSL’s track-record has been fairly good with its turnover in the post-restructuring growing at an impressive CAGR of 68 per cent over the past three years.

The company’s bottomline has risen sharply up Rs 24.37 crore during 1999 and the same is expected to further multiply to around Rs. 49.54 crore for 2000-01. Provided these projections materialise, which, from the looks of it should, the EPS would stand at around 28 which suggests that at an offer price of Rs. 480, the shares of the company will be discounted around 17 times, which suggests that there is scope for medium to long-term appreciation.

The one minus point that sticks out like as a sore thumb in this issue is the fact that the promoters have doled themselves a very generous bonus issue just a few months ago, thus depleting the reserves and although the same could be explained as a capital structuring exercise, it does leave a bad taste in the mouth.

Yet, at the end of the day, the pluses outweight the minuses and investors willing to bide their time could still laugh their way to the bank. Keep an eye on the listing price of this company. I know a handful of fund managers who are hoping its opens below par so that they can lap it up. Well, depends on the Nasdaq, really!

SALES TAX ISSUES

by A.K. Sachdeva

Q: During the assessment year 1997-98, our firm despatched certain goods to our agent based outside the State for sale on consignment basis. Sale proceeds and other documents were received by us against these despatches except form ‘F’ which is required to be issued under section 6A of the Central Sales Tax Act, 1956. In the course of the assessment proceedings for this year we have submitted before the assessing authority copies of the statement of sales as well as goods receipts and challans in support of the deductions claimed from the gross turnover on account of consignment despatches. The assessing authority, however, opines that in the absence of form ‘F’ in the event of transfer of goods otherwise than by way of a sale, benefit of tax exemption cannot be allowed. Kindly advise.

— Surinder Kumar, Batlala

Ans: It is true that burden of proof under section 6A in case of consignment transfers of goods lies upon the assessee who claims deductions from the gross turnover. However, production of form ‘F’ is not a mandatory requirement of law. It is open to the assessee claiming exemption from payment of tax on account of consignment despatches to furnish in lieu of form ‘F’ other documentary evidence before the assessing authority showing that movement of goods from one State to another occasioned otherwise than by way a sale in the course of inter-state trade or commerce. Since documentary evidence by the queriest stands furnished to the assessing authority, burden of proof should be taken to have been duly discharged and that the production of form ‘F’ cannot be insisted upon.

Even if form ‘F’ has not been filed in support of the deductions claimed, still the assessee is entitled to claim exemption from payment of tax.

Q: We are registered as a dealer both under the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. Last month we sold certain goods and realised 10 per cent sales tax in the bill of sale issued to the buyer. While the goods were en route, these were intercepted and subsequently detained by an Excise and Taxation Officer on the ground that 12 per cent tax ought to have been charged as the goods sold attracted higher rate of tax. We got the goods released against surety bond but the penalty proceedings are still pending consideration. Kindly advise if the checking officer is authorised to impose penalty under sub-section (6) of section 37 of the Haryana General Sales Tax Act, 1973 for this lapse?

— S.K. Mittal

Ans: Recourse to sub-section (6) of section 37 of Haryana General Sales Tax Act, 1973 is possible only if the checking officer is satisfied on the basis of the material available on record that the party sought to be proceeded against has made an attempt to evade the tax due under the Act.

Simply because a registered dealer has realised 10 per cent sales tax as against 12 per cent which allegedly becomes payable under the provisions of law, it does not mean that there has been an attempt to evade the tax due under the Haryana General Sales Tax Act, 1973. It is only during the course of the assessment proceedings that the assessing authority can examine these points and assess the transactions but the checking officer has no jurisdiction to invoke the provisions contained in section 37.

The validity of the proceedings initiated by the checking officer under sub-section (6) of section 37 of the Act ibid can be objected to by way of filing a reply to the show cause notice.

CHECK OUT

by Pushpa Girimaji

Consumers denied interest on deposits

I wish Communications Minister Ram Vilas Paswan would consider this long-pending subscriber demand as sympathetically as he does the demands of employees. Well, I am not referring to the general plea for better service, because as I see it, it is only competition and a strong regulator that would force the service provider to improve its services. What I would like to bring to the notice of the Communications Minister however is the fact that the services provider collects from subscribers, varying amounts of deposit, but never bothers to pay any interest on it. At least now, the DTS should start paying interest on this amount and adjust it against the subscribers’ bills.

Today, a subscriber applying for a telephone connection in one of the metros, for example, pays Rs 3,000 as deposit at the time of registering an application for a connection. Now this amount remains with the service provider so long as the subscriber is availing of this service. However, the department pays interest on this amount only from the time the amount is remitted till the time of installation of the telephone connection. After that, it stops paying any interest on it to the subscriber and utilises this interest-free deposit. If you ask the department, its explanation is that this is a security deposit against failure of the subscriber to pay the telephone charges. Fine, but that still does not explain why the department does not pay interest on that amount, particularly when it collects from the subscriber, interest or “surcharge” for even a day’s delay in payment of bills after the pay-by-date.

Of course it is not only the DTS which is enjoying interest-free deposits from consumers. Several other service providers too do it and this demand for payment of interest should apply to all of them. When you get your cooking gas connection for example, you pay a security deposit of Rs 900 per cylinder and here again, the deposit remains with the service provider as no one surrenders it, except perhaps for a transfer of the connection from one city to another. And on this amount too, no interest is paid to consumers. Similarly, varying amounts are collected by the state electricity boards as deposits and while some have provided for payment of interest on the deposit in their rules, some others have clearly stated that no interest would be payable on the security deposit.

Consumers have time and again tried to get the law courts to help them get what is due to them, but without success. In the case of Ferro Alloys Corporation vs the AP State Electricity Board (1993) for example, the Supreme Court turned down the demand of consumers that the electricity boards pay interest on the security deposit on the ground that there was no statutory provision that cast an obligation on the board to pay interest on security deposit nor such claim could be founded under the Interest Act, 1978, or under common law or equity. The court also pointed out that the boards supplied energy to consumers on credit, as they raised the bill only two or three months after supply. And the security deposit was hardly sufficient to secure payment to the board by the time the formal bill was raised.

Subsequently, when a similar case came up before the National Commission against the telephone department (Union of India vs Hardev Singh, 1993), it said the apex court judgement applied to this case too and the telephone department was not under any obligation to pay interest on the deposit. The Commission said the telephone bill was received by subscribers only after these were made and in the meanwhile the telephone department had to bear expenses for maintaining the telephone exchange, telecommunication lines and the work force. Besides, the security amount, was nothing but a provision to enable adjustment towards the bill if the bill was not paid.

Now, first of all, consumers are not asking the services providers to bill them after two or three months. In fact if the system of billing is efficient and payment not cumbersome, it would be far better for a consumer to pay every month. It is the utilities that have decided on this to suit their convenience. Besides, eventually when they do raise the bill, they take into consideration all expenses incurred for running that service. So when a consumer is already paying for it, it does not make sense for the utility to usurp the interest on deposits too. Besides, services like power supply was once heavily subsidised. But gradually, State Government have been withdrawing or reducing the subsidy. In fact today, the utilities need to urgently cut down flab and increases their efficiency. In the absence of these measures, consumers are already paying much more than they should. Why should they also lose out on the interest on these deposits?

AVIATION NOTES

by K.R. Wadhwaney

Stop travel agents’ entry into airports

STAR Alliance, a combination of 11 airlines, has taken affective measures to make travelling easier than has been the case for many years. As many as 500 airport lounges around the world will be available for passengers, known as frequent flyers.

“Our lounge offering will be further expanded by the addition of facilities operated by new members as they enter the alliance” said Per Stendebakken, Star Alliance Vice-President, Product and Service Department.

SAS and Lufthansa have extended their operations taking their flights 12 times a week from Delhi. Lufthanse, which started operating from November 1, 1959, has non-stop daily service from Delhi, five times a week form Mumbai and three times from Chennai to Frankfurt.

Beginning operations in 1946, SAS has an agreement among Denmark, Norway and Sweden. The airlines has about 200 aircraft operating more than 1000 flights a day. With five non-stop flights a week from Delhi, to Copenhagen, SAS connects to more than 80 European destinations.

Security at airports: The flights of Kathmandu have been resumed, but Indian Airlines has taken adequate measures in security aspect so that there is no recurrence of hijacking, as it took place on December 24, 1999.

In order to streamline functioning of the security, a unified work force, trained adequately, has been inducted in the aviation sector. The officials chosen are form the Central Industrial Security Force (CISF).

The Minister of State for Civil Aviation Chaman Lal Gupta said that CISF personnel had already taken their positions at 12 airports. They are: Jaipur, Patna, Port Blair, Ranch, Guwahati, Agartala, Vadodars, Rajkot, Bhopal, Ahmedabad, Hyderabad, and Cochin.

According to Mr Gupta, the CISF will undertake all kinds of duties pertaining to security, that is, watch and ward functions as also frisking of passengers and their hand-baggage. Local police officials, stationed at airports, will assist the CISF staff in matters pertaining to anti-hijacking and anti sabotage.

Says Mr Gupta: “Civil Aviation Ministry has evolved a three-point security check system before passengers board the aircraft. The checks will be at the entrance, in security zone and at the ladder point. Commandos in plain clothes may also board the flights on certain sectors.

The analysts feel that the deployment of the CISF personnel at 12 airports may be understandable, but there remains a lot duplicity. There is an urgent need to have a trouble shooter who coordinate activities at every airport.

The security arrangements at the Indira Gandhi International Airport (IGIA), for example, are far from top class. Despite measures undertaken, many unscrupulous persons still stroll about the sensitive areas of the airport. This evil will continue until issuance of passes is further restricted. Why should travel agents be issued passes? Their agents have no business to be at terminal buildings.

Similar lax control obtains at other international airports. Airports Authority of India has to exercise greater vigilance as it continues to be an apex body at airports.

New appointments: Reshma Zaheer has been appointed Area Sales Manager North and East India, based in Delhi, of British Airways. Kamal Kikani is the Area Sales Manager of Central and South India with headquarters in Mumbai.