CHENNAI: The Finance Bill 2007 has for the first time brought the Indian law fully in tune with India's obligations under the World Trade Organisation regime in the matter of transaction value of goods.

The amendment to Sec. 14 of the Customs Act will help businesses, which have often been facing arbitrary action by Customs officials, according to Lakshmi Kumaran, advocate and consultant.

Addressing a seminar organised by the Institute of Business Laws here on Monday, Mr. Lakshmi Kumaran pointed out that even in cases where there was an arm's length relationship between the buyer and the seller and there was no other payment involved, Customs officials tended to refuse to accept the declared value of the goods in view of the fact that the Revenue Department had only sought to give effect to the international norm, agreed to by India in 1998, through executive instruction, without amending the statute.

Negative development

Mr. Lakshmi Kumaran said a negative development was that the scope for intervention by the Settlement Commission (SC) (for indirect taxes) had been curtailed, and powers to grant immunity from prosecution under other laws, including the Indian Penal Code, had been removed as also the power to grant immunity from payment of interest. Submissions made to the commission could be used as evidence in law courts had also been withdrawn.

These changes would lead to harassment for those who had committed genuine errors in filing returns and would discourage assessees from resorting to the services of the commission, Mr. Lakshmi Kumaran said.

K. S. Venkatagiri, Advocate, said that apart from bringing a few activities like renting and works contracts under service tax, the budget had widened the scope of taxation under hitherto existing heads like manpower recruitment services, telecommunication, business or management consultancy and space and advertisement selling.

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