Employees First, Customers Second – Management for New Era
This is not a lecture or new theory but some insights into the new management era based on lessons learned from Business leaders and the new management thinking and I strongly believe that there will be a major shift in management philosophy(ies) in next five to ten years.
If we fail to change our notions in the field of management and apply the new management style for our own business or profession, we are planning for a slow death of our organization.
Idea no. 1.Innovation:The first most important aspect in Management today is to innovate on continuous basis[1]
Corollary to Idea No. 1–If not you, Somebody Else:If you are not innovating, somebody somewhere in this world is innovating and they are your direct competition, they are working on building or making something which will make your product or service irrelevant in future or they will become a fierce competitor.
Idea No. 2.– Employees are not yours forever:All other things being equal, employees won't stay with you for longer duration
Corollary to Idea No. 2 – All other things being equal, employees will leave you for better pay or better working environment or better culture of other organization.
Corollary to Idea No. 2 – If you fail to create a better working world in your organization, you will observe a slow-down in business and high employee turnover ratio.
Corollary to Idea no. 2 – Some of your competitors, unlike you, are innovating their management style to compete in better manner. Mind it!
Idea No. 3 – Global Leaders are working towards culture and better working environment: Slowly and gradually business leaders and managers worldwide are realizing that the principles of management they were using for long time and which are not upgraded for last few decades and they are resulting in loss of productivity and loss of revenue ultimately. These business leaders (especially new generation of leaders) are working towards making working world a better place than ever.
Corollary to Idea No. 3- All other things being equal, you can create and run a corporation by spending more money. People will stand in queue if you are providing pay better than others in the industry (Because developing countries are producing skilled and educated workforce). But you need deep pockets for the same, which you may or may not have.In this case, the only chance you have is to create better work environment and culture. One more thing to mention about giving better pay than other players is that it doesn't always retain your super brains, star performers, the innovators and the creative minds.
Idea No. 4 –Generation Y workforce:The next generation employees may not necessarily work for better pay, they may be longing for better working environment and better culture and better opportunities in manifesting their truest self. (Remember the Maslow's Hierarchy of needs)
Corollary to Idea No. 4 – There will be plenty of employers in the industry who will be providing better working world and better culturethan your and that will draw away your talent. Talents who are not working just for money will choose better working world over better pay. (Ref – Maslow's hierarchy of needs)
Idea No. 5 – Employee Turnover is Hindrance to Growth: To grow, employee turnover has to be controlled, less than ten percent turnover is an achievement
In money, there are competitors. In case of infrastructure, there are competitors. What will you compete with?
Idea No. 6- What can be your next Competitive Advantage: After reading all the aspects discussed in above paragraphs, you may be wondering as to how you should compete and what will be your competitive advantage in this case.
Things that cannot be copied are (a) Culture of your organization, (b) The environment of belonging, family, friendships and bonding, (c) The environment of freedom of expression of thoughts and ideas, (d) Environment of appreciation (e) Environment of recognizing the future leaders and developing leaders within the organization (f) Environment of encouraging innovation and creative expression of the employees (g) Work Environment where making mistake is allowed as a part of the learning process (h) Work environment where each individual is respected as human being and not treated as a RESOURCE (as they say it in working world)
Idea No. 7 – What cannot be copied by competitors?
a) How you treat your employees
b) Culture of innovation
c) Culture of freedom of thinking and experimenting that May have been created over a period of time, even if can be copied it cannot be copied immediately. The effect will come into picture after a little longer and not immediately.
d) One more thing that cannot be copied is the environment of family, friendship and bonding that world have been created in the organization
Idea No. 8 –Small is Beautiful: Big organizations won't be able to give the amount of respect you give to your employees in small or medium size enterprises
Corollary to Idea No. 8 – Bigger the size of the organization, tougher it is to create family like environment and open culture
Corollary to Idea No. 8 – Smaller organizations have to compete with invisible forces and not visible forces like better infrastructure and better pay. (it's not feasible for them)
Idea No. 9 –Work is not all about money:Money cannot satisfy all the desires of human beings working at workplaces, it satisfies only one or probably few.
Idea No. 10 –Money can't buy happiness: It is becoming increasingly clear that money can't buy happiness after reaching a certain level of earning and class. More money does not mean more success, as a corollary of the idea.
As a second corollary to idea no. 10, talented people will slowly find their way to finding happiness and joy of work rather than better pay always.
Idea No. 11- Meaning in Life and Job:There are great chances that you will lose your top talents of you don't provide meaning in their lives and fun, joy, fulfillment of contributing something to Society or the world.
Idea No. 12 –Purpose for life:You need to make it very clear what purpose they are serving in the world by working for your organization. (Remember Aaron Hurst on purpose economy)
Hope this article will help you in creating and rethinking your management style for the new era.
Works Cited
Hamel, G. (2000). Leading the Revolution. New York: Penguin Group.
Chip Conley, American hotelier, author, and speaker.
Tony Hseih, Tony Hsieh is an American internet entrepreneur and venture capitalist. He is the CEO of the online shoe and clothing shop Zappos.com
Why an assessee should avoid sending an appeal by speed post?
Anand Mishra, Advocate, Amlegals
The service of an order has had always been the sole issue before the courts of law when they had to dispose an application for condonation of delay .
The said issue was dealt in detail by Honourable High Court of Bombay in matter of Amidev Agro Care Pvt Ltd Vs U.O.I & Ors as reported in 2012-TIOL-395-HC-MUM-CX = 2012 (279) E.L.T. 353 (Bom.) = 2012 (26) S.T.R.299 (Bom.) Their Lordship held in their operative order as below :
"4. Section 37C of the Act reads thus :
"Section 37C. Service of decisions, orders, summons etc.
(1) Any decision or order passed or any summons or notices issued under this act or the rules made thereunder, shall be served,
(a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorized agent, if any;
(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended;
(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.
(2) Every decision or order passed or any summons or notice issued under this Act or the rules made thereunder, shall be deemed to have been served on the date on which the decision, order, summons or notice is tendered or delivered by post or a copy thereof is affixed in the manner provided in subsection (1)."
5. As per Section 37C(1)(a), it was mandatory on the part of the Revenue to serve a copy of the order of Commissioner of Central Excise (Appeals) by registered post with acknowledgment due to the assessee. Admittedly in the present case, a copy of the order has not been sent by registered post. In these circumstances, it could not be said that the requirement of Section 37C has been complied with. The CESTAT was wrong in relying upon the judgment of the P & H High Court in the case of Mohan Bottling Company (P) Limited (supra), as in that case a copy of the order was sent by registered post, whereas in the present case, the order is said to have been sent by speed post and there is no evidence of tendering the decision to the assessee.
6. In these circumstances, in our opinion the decision of the CESTAT that the requirements of Section 37C have been complied with cannot be accepted. As per Section 37C(1)(a) of the Central Excise Act, 1944, it was obligatory on the part of the Revenue, either to tender a copy of the decision to the assessee or to sent it by registered post with acknowledgment due to the assessee or its authorized agent. In the present case, neither of the above have been complied with by the Revenue. Accordingly, the contention of the assessee that a copy of the order of Commissioner of Central Excise (Appeals) was received for the first time on 26th February 2010 would have to be accepted. Consequently, the decision of the CESTAT that the appeal filed by the assessee was time barred cannot be sustained."
The same ratio was upheld in the recent decision of Honourable Tribunal in the matter of BPL-BBC Joint Venture Vs Commissioner of Service Tax, Mumbai II as reported in 2014-TIOL-2572-CESTAT-MUM
Conclusive Ratio
1. As per Section 37C(1)(a), it was mandatory on the part of the Revenue to serve a copy of the order of Commissioner of Central Excise (Appeals) by registered post with acknowledgment due to the assessee .
2. The onus always lies on the authority passing an order to prove with documentary evidence that a particular order after being passed was properly served as well .
3. Speed post is not considered as proper service in as much as no acknowledgement can be produced in speed post.
Before departing i must caution that an assessee should also avoid sending an appeal by speed post as there wont be any acknowledgement and this case can be applied in vice versa manner to them as well .
( The author is a leading indirect tax advocate handling cases in CESTAT & High Courts of India. He can be contacted on anand@amlegals.com and for more refer www.amlegals.com)
Goods & Service Tax Council to Monitor Implementation of GST
CA Vishrut Shah
The Constitution (One Hundred & Twenty Second Amendment) Bill,2014 as proposed under Bill No. 192 of 2014 in Parliament on 19th December,2014 focus on setting up of an important key body for smoother , Faster and hassle free implementation of Goods & Service Tax and that is Goods & Service Tax Council.
As per the clause No. 12 of these proposed bill a new article shall be inserted vide Article No. 279A in the Constitution by the order of President within 60 days of commencement of The Constitution (One Hundred & Twenty Second Amendment) Bill, 2014.
These Goods & Service Tax Council shall be governing and monitoring body for proper implementation and periodical up gradation of Goods & Service Tax in All the states of India.
[A] Constitution of Goods & Service Tax Council
(1) Chairperson :-Union Finance Minister
(2) Members :– All Union Minister of state in Charge of Revenue or
– Finance Minister in charge of Finance or Taxation or
– Any other minister nominated by each state Government
(3) Vice Chairperson :- shall be elected by the members of the council as soon as all members are elected.
[B] Role of Goods & Service Tax Council
(1) Make Recommendations for to the Union & States on –
a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
b) the goods and services that may be subjected to, or exempted from the goods and services tax model Goods and Services Tax Laws, principles of levy, apportionment of integrated Goods and Services Tax and the principles that govern the place of supply
c) the threshold limit of turnover below which goods and services may be exempted from goods and services tax
d) the rates including floor rates with bands of goods and services tax
e) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster
f) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur; Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
g) Any other matter relating to the goods and services tax, as the Council may decide.
h) Date on which the GST should be levied on petroleum crude, high speed diesel, motor spirit (Petrol), natural gas & Aviation turbine fuel
(2) Guide for the need for harmonized structure of goods and service tax and for the development of a harmonized national market for goods & Services.
(3) Determination of procedure for performance of its function
(4) Make decisions about the modalities to resolve disputes arising out of its recommendation
[C] Quorum of Meeting
50% of total number of members of the council shall constitute quorum in council meetings.
[D] Decision Making
All decision in a meeting shall be taken with three fourth majority of weighted votes of all the members present and voting. Whereby weightage shall be decided in following manner –
- Vote of the Central Government shall have weightage of one third of total votes cast &
- Vote of all the State Governments shall have weightage of two third of the total vote cast
TDS U/s. 194C attracted on contract of putting up hoarding
The assessee has shownexpenditure on advertisement through outdoor display which includes payment for advertisement on hoarding/board. The A.O. further noticed that the assessee has deducted TDS @ 2% u/s.194C on these payments. The A.O. was of the firm belief that theprovisions of section 194I apply on the facts of the case, drawing support from the CBDTCircular No. 715 dated 08.08.1995. The assessee was asked to justify why TDS has beenmade as per the provisions of section 194C of the Act and why 194I should not be applied. The assessee filed a detailed reply dated 13.01.2012. It was claimed that thecontract between the assessee and the two payee firms is covered under the definition of work contract as given in Explanation to section 194C of the Act, which includes theword 'advertising' in definition of "work". It was further explained that there was no nexus between the assessee and the owner of the land, building, or plant and machinery, etc. Therefore, there is no question of assessee being liable to deduct the tax u/s.194I of
the Act. The explanation filed by the assessee did not find favour with the A.O. The A.O. relied upon certain judicial decisions and held the assessee to be liable forinterest u/s.201(1A) of the Act.
The assessee carried the matter before the ld. CIT(A) andreiterated its claim after considering the facts and the submissions, the ld. CIT(A) at para5.9 of his order observed as under :
'5.9 The Appellant had booked hoarding sites through hoarding contractors on behalf of its clients for display of their advertisements. The Appellant neither puts up a hoarding nor does it take any space on rent from the hoarding contractors. It only obtains the right of displaying the advertisement on hoardings put up by the hoarding contractors. In other words, the Appellant had subcontracted the work for putting up the hoardings to hoarding contractors. The prime responsibility of payment of rent of the sites is of the hoarding contractor and not of the Appellant who acts as the main contractor. The subcontractor (hoarding contractor), in turn hires the sites and is responsible to put up the hoarding. Accordingly the provisions of the section 194C would be attracted and not the provisions of section 194-1, as held by the AO.'
and finally concluded by holding that the payments made by the assessee do not fall in the category of the rent. Hence the tax was not required to be deducted u/s. 194I of the Act.
Hon'ble ITAT Concluded that Considering all the facts in totality, we find that the assessee has entered into acontract with other parties for display of advertisement of its client and the transaction is purely in the nature of contract for the work of advertising as defined in clause VA of Explanation to section 194C of the Act. We decline to interfere with the findings of theld. CIT(A) and the appeals filed by the Revenue are accordingly dismissed.
No violation of sec. 11(5) alleging investment in foreign co. if Will transferring foreign shares was under dispute
December 20, 2014[2014] 52 taxmann.com 98 (Delhi)/[2014] 367 ITR 723 (Delhi)
IT : Where will in question, transferring shares in a foreign company in favour of trust, was under legal dispute, there was no violation of section 11(5)
IT : Advance paid for raising a memorial by trust could not be treated as an investment covered under section 11(5)
Renting Vs Hiring By Uttrakhand High Court
CA Pradeep Jain &
CA Neetu Sukhwani
The main thrust of the present article is to analyse the landmark judgment given by the Hon'ble Uttrakhand High Court recently, in the case of Commissioner of Customs & Central Excise Vs Sachin Malhotra, Raj Kumar Taneja, and M/s Shiva Travels [2014-TIOL-2039-HC-UTTRAKHAND-ST] wherein the difference between renting and hiring has been reported for the purpose of levying service tax under the category of "Rent a cab services". The highlights of the decision are summarised as follows:-
- Service tax is leviable under 65(105)(o) of the Finance Act, 1994 under the category of "Rent-a-cab" if and only if there is renting of cabs. Mere hiring of cabs will not be leviable to service tax.
- Hiring means when the owner of the vehicle, who may or may not be the driver, will provide the services while retaining the control and possession of the vehicle with himself. The customer is merely enabled to make use of the vehicle by travelling in the vehicle and is expected to pay metered charges which are usually collected on the basis of the number of kilometres travelled. Hence, the essence of hiring is that the control and possession of the vehicle is not transferred to the person hiring the vehicle.
- Renting refers to a situation wherein the control and possession of the vehicle is being transferred by the owner to the person hiring the vehicle thereby meaning that the hirer is endowed with the freedom to take the vehicle wherever he desires with the obligation to keep the owner informed of his movements from time to time.
IMPACT IN PRE NEGATIVE LIST ERA:- It is worth observing that the above decision is being given in the context of provisions contained in the statue when the positive list of services was prevalent and service tax was leviable on the provision of specified services. Moreover, if a particular activity was held to be not covered by the definition of taxable service as defined in the statue, the same was outside the ambit of service tax. Therefore, it is pertinent to determine whether the activity of hiring of vehicle, could be considered as leviable to service tax under any other category of service or not. If the specified list of services as prevalent during the positive list tax regime is examined, the probable category of service that may be made applicable to the activity of hiring is the "Supply of Tangible Goods Service". The section 65(105)(zzzzj) defined the taxable service as "any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances."
It is also important to note here that the Article 366(29A) of the Constitution defines six categories of deemed sales, amongst which, one is transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. Needless to mention that as sales tax is levied on the deemed sales, no service tax can be levied on said deemed sales.
It is submitted that the Hon'ble High Court has concluded that when the control and possession of the vehicle remains with the owner of the vehicle providing the services of transporting the passengers, the said activity is covered by hiring and is not renting of vehicles. Therefore, no service tax is payable on the hiring of vehicles by the owner under the category of "rent a cab" services. However, as the other aspects and consequences of leviability of service tax on the activity of hiring has not been examined in the said decision, the same is discussed below. The situation of hiring of vehicles may get covered under the category of "Supply of Tangible Goods Service". The situation of hiring of vehicles by the owner satisfies all the criteria of the taxable service i.e.,-
- Service is in relation to supply of tangible goods, i.e., vehicles for use.
- The said tangible goods (vehicles) are supplied without transferring the right of possession and effective control.
Likewise, when the control and possession of the vehicle is transferred to the person hiring the vehicle, it has been held that only then, service tax is leviable under the category of rent a cab service. In this respect, it is worth observing that the transaction of right to use any goods for a consideration without transferring the title of goods is also covered by the concept of deemed sales as stated in Article 366(29A) of the Constitution of India thereby meaning that sales tax is leviable on the said transaction. Consequently, the Central Government has no authority to levy service tax on the deemed sales. However, the ratio pronounced by the High Court has ignored the said concept of deemed sales and has held that when the owner of vehicle transfers control and possession of the vehicle, then only service tax will be leviable under the category of rent a cab services. Accordingly, the distinction made by the High Court between hiring and renting seeks to create ambiguity as regards the levy of service tax under the category of rent a cab services.
IMPACT IN POST NEGATIVE LIST ERA:- The impact of the said decision creating distinction between renting and hiring remains more or less same in the negative list era also. The only difference being that under negative list tax regime, the taxable services are not defined and all services except those specified in the negative list or mega exemption notification no. 25/2012-ST dated 20.06.2012 are chargeable to service tax. Therefore, hiring not being specifically covered by exemption is leviable to service tax. Moreover, the clause (f) of the declared list of services under section 66E specifically covers the activity of hiring without transfer of right to use goods. The clause (f) of section 66E reads as follows:-
"Transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods".
The meaning of the term "transfer of right to use goods" is explained in the Education Guide released by the Board as transfer of possession and effective control over the goods in terms of the judgment of the Supreme Court in the case of State of Andhra Pradesh Vs RashtriyaIspat Nigam Ltd. [2002-TIOL-560-SC-CT]. Hence, the hiring of vehicles will be covered by the clause (f) of the section 66E of the Finance Act, 1994. Further, the ambiguity as regards levy of service tax on renting would prevail, particularly when the taxable service of rent a cab is not defined in the Finance Act, 1994.
Before parting:- First and foremost, the decision by differentiating between hiring and renting has created the dispute of classification of service as hiring attracts service tax at the rate of 12.36% while there is abatement available for the renting of cab. The rent a cab service has been given abatement vide notification no. 26/2012-ST dated 20.06.2012 and is also covered under reverse charge mechanism. The abatement notification seeks to grant abatement of 60% to the renting of motor vehicle designed to carry passengers subject to the condition of non-availment of cenvat credit on inputs and capital goods. It is practically observed that no assessee is aware of the distinction between hiring and renting and normally, service tax is paid by availing the benefit of abatement without even examining whether the services fall under renting of cab or hiring. This decision will give an additional tool to the revenue department to deny the benefit of abatement to the assessees by contending that they are required to pay service tax at full rate instead of claiming the benefit of abatement notification. Furthermore, the service tax on renting of cab is to be paid by the service recipient under reverse charge mechanism if the benefit of abatement is availed and when the service is not provided to a person engaged in similar business. But, when the difference between hiring and renting is not known to assessees, the confusion as regards service tax liability under reverse charge mechanism will also increase. This is for the reason that the renting of cab is covered under reverse charge mechanism while hiring is not covered. The provisions as regards levy of service tax under the rent a cab services are already very complex and this decision pronounced by the High Court adds to the complicacies.
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Renting Vs Hiring By Uttrakhand High Court The main thrust of the present article is to analyse the landmark judgment given by the Hon'ble Uttrakhand High Court recently, in the case of Commissione... | |||||||
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