Anomalies in 'India' under different Indirect Taxes (See 'DDT')

Serial bomb blasts in Bangalore; two killed & many injured; Blast in Customs staff quarters area also reported;

Law Commission invites suggestions on 'Legal Reforms to combat road accidents'

Indian-origin South African judge N Pillay named as UN's new Human Rights chief

CCEA gives nod to M/s A Volvo, Sweden to invest for 45.6% equity share in Eicher Motors India Ltd + Scheme on National Mission on Medicinal Plants

Inflation marginally dips to 11.89%; Commodity Group of 19 articles shows no increase ;

ddt 25 july.pdf + vatcircular.pdf + vatcircular1.pdf

DVDs will cost more : Anti Dumping Duty imposed;

The Insider

Central Excise formations affected by power outages!

mbuzz821.pdf

Aluminium, cement & thermal plant show improvement on environmental front;

mbuzz820.pdf

Unsolicited issue of credit cards: RBI puts onus on issuing banks;

mbuzz819.pdf

States agree to take penal action against fake univs & other institutions: HRD Minister;

cbdtorder104_2008.pdf

CBDT transfers 3 CITs;

CASE LAWS

2008-TIOL-337-ITAT-DEL-SB.pdf + SB story.pdf

ITO, New Delhi Vs M/s Ekta Promoters P Ltd ( Dated : July 11, 2008 )

No retrospective application for Section 234D : “There is no dispute to the proposition that court cannot read anything into a statutory provision which is plain and unambiguous A statute is the edict of the legislature. The language employed in a statute is a determinative of the legislative intent and according to the first and primary rule of construction the intention of the legislation must be found in the words used by the legislature itself and the function of the court is only to interpret the law and court cannot legislate, if a provision of law is misused and subjected to the abuse of the process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. Legislative causus omissus cannot be supplied by judicial interpretative course.” Thus, on the basis of argument that legislature has brought this provision just to fill the lacuna in the law and, therefore, these provisions should be construed retrospective cannot be accepted more particularly when these provisions have been inserted on the statute w.e.f . 1st June, 2003 and not with retrospective effect. The legislature has specifically mentioned the date of applicability i.e., 1st June, 2003 and the legislature was not incompetent to make retrospective provision, if it was so intended. Therefore, merely on the basis of interpretation, retrospective effect cannot be given to the provisions of Section 234-D.

Heydon's Rule is not applicable: The argument of the DR is that there was a mischief and, therefore, applying the Heydon's Rule it has to be held that provisions of Section 234-D are retrospective. The Heydon's Rule is also known as purposive construction' or mischief rule' which enables consideration of four matters in construing an act

( i ) What was the law before the making of the Act,

(ii) What was the mischief or defect for which the law did not provide.

(iii) What is the remedy that the Act has provided; and

(iv) What is the reason of the remedy

The rule then directs that the courts must adopt that construction which "shall suppress the mischief and advance the remedy."

The contention of the DR that the provision of Section 234-D being under the Chapter XVII under the head ‘Collection and Recovery' should be construed to be a procedural or machinery section and, therefore, should be applied retrospectively IS REJECTED.

The tribunal held, “If the provisions of Section 234-D are substantive, then the same cannot be held to be retrospective unless specifically provided in the statute itself; the provisions of Section 234-D are substantive and they cannot be applied retrospectively.”

Section 234-D which has been brought on the statute from 1st June, 2003 cannot be applied to assessment year 2003-04 or earlier years, but it will have application only with effect from Assessment year 2004-05. :DELHI ITAT (SPECIAL BENCH);

2008-TIOL-336-ITAT-DEL.pdf

M/s Virtual Software & Training Pvt Ltd Vs ITO, New Delhi ( Dated : April 4, 2008 )

Income Tax - As the matter regarding slump sale was pending before the Tribunal AO levies penalty holding that short term capital gains added in the income was a concealed income - CIT (A) upholds it - Meanwhile, the Tribunal decided the transaction as slump sale but differed on the point of computation of short-term capital gains with the direction to adopt the market value of shares allotted as the sale considerations as per the law laid down by the Supreme Court - penalty order cannot stand as AO has to pass a fresh assessment order on computing the total income. At that time, he can initiate penalty proceedings u/s 271(1)(c)  if so warranted by the facts and circumstances of the case. Earlier penalty order has no legs to stand and is not enforceable. Assessee's appeal  allowed for statistical purposes. :DELHI ITAT;

2008-TIOL-335-ITAT-DEL.pdf

Punjab & Sind Bank Vs ACIT, New Delhi ( Dated : March 28, 2008 )

Income Tax - AO makes additions for interests on investments made in bonds - Assessee pleads that since the issue is subjudice in a court of law, it did not account for the interests earned - Issue goes back to the AO for fresh order after the matter is decided by the High Court

AO considers  steel furniture, counters and electric fittings as furniture and fixtures for the purpose of depreciation - Assessee contends that steel furniture such as lockers, counters, safe, electric fittings etc. are “plant” therefore assessee is eligible for depreciation at a higher rate prescribed for plants - Following the earlier decision of the Tribunal assessee's claim allowed.

Assessee's Appeal allowed in part. :MUMBAI ITAT;

2008-TIOL-334-ITAT-MUM.pdf

M/s Floreat Investments Ltd Vs ITO, Mumbai ( Dated : March 26, 2008 )

The assessee company had undertaken a redevelopment project. By seven agreements executed in May/August, 1994 with the co-owners of land and building thereon, the assessee was to redevelop the property on the terms and conditions mentioned therein. The agreements were still valid and subsisting. There were 10 (old) buildings on this land and the company was redeveloping the land under the Development Control Regulation for Greater Bombay, 1991 in accordance with MHADA's Redevelopment Scheme. For development of the entire land, 10 existing buildings on land are to be demolished and the tenants are to be rehoused in the redevelopment project as per stipulation of MHADA. Assessee was following project completion method of accountinf which was accepted by revenue in past. The Assessing Officer during the year under consideration concluded that assessee had completed one building for which assessee has nearly received the entire sale consideration and concluded that the assessee was liable to be assessed on profit arising on sale of building which had been completed during the year under consideration.

Held, after considering facts of the case that the project undertaken was one project, which was in progress and was not completed .In the case of assessee it was an admitted fact that revenue had accepted the method of accounting followed by assessee as project completion method in earlier and subsequent assessment years. In the book of accounts no defect or mistake was found by the A.O. It was not the case of A.O. that income of assessee cannot be deduced properly from the method of accounting followed by assessee. :MUMBAI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-1176-CESTAT-DEL.pdf

M/s Bosch Chasis Systems (I) Ltd Vs CCE, Delhi-III (Dated: June 17, 2008)

Differential duty paid on clearances from one unit to another – Department alleges suppression of facts pertaining to cost of production – Differential duty paid before the issue of show cause notice – CENVAT credit taken by the other units of the same company on the strength of supplementary invoices – Tribunal disagrees with Essar Steel Judgment where in it was held that approaching the Settlement Commission does not amount to admission of guilt – Eligibility of such CENVAT credit needs to be looked afresh when there is allegation of suppression of facts - Matter to be placed before Larger Bench to decide:

Eligibility of CENVAT credit on supplementary invoices when differential duty is paid before issue of SCN wherein suppression of facts is alleged

Whether filing of application before Settlement Commission amounts to admission of allegation of suppression of facts and wilful evasion

Whether Settlement Commission to record a specific finding with regard to suppression of facts and in the absence of which can a mere application to the Commission construe suppression of facts thereby disentitle CENVAT credit of differential duty paid : DELHI CESTAT;

2008-TIOL-1175-CESTAT-MUM.pdf

CCE, Mumbai Vs M/s Sunshied Chemicals Pvt Ltd (Dated: September 20, 2008)

Central Excise – penalty in cases where duty is paid before issue of the Show Cause Notice – iwhere there exists fraud, collusion etc, penalty is imposable even when the duty is paid before issue of the notice – Commissioner( Appeals) order vacating the penalty set aside and revenue appeal allowed. : MUMBAI CESTAT;

2008-TIOL-1174-CESTAT-MAD.pdf

M/s India Cements Vs CCE, Salem (Dated: April 3, 2008)

Central Excise – Stay / dispensation of pre-deposit - Cenvat Credit – credit on MS Sheets , MS Channels, MS Flats etc used for construction of cement plant – prima facie the appellants have made a strong case against the duty demand – pre-deposit waived. :CHENNAI CESTAT;

2008-TIOL-1173-CESTAT-MAD.pdf

CCE, Chennai-III Vs M/s Motherson Automotive Technologies Engg Ltd (Dated: April 4, 2008)

Paint shop falling under Chatper 84 is capital goods – Components, spares and accessories of paint shop are capital goods in terms of Rule 2 (b) of CCR, 2002 – CENVAT Credit of duty paid on parts that go into the manufacture of capital goods allowable – Revenue appeal dismissed : DELHI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1180-CESTAT-MUM.pdf + stgst.pdf

CCE, Nasik Vs Cable Corporation Of India Ltd (Dated: June 27, 2008)

Rent-a-Cab Service is an Input Service – Cenvat Credit is available to the assessee

Rule 2(l) of CCR, 2004 – Input Service - It is very clear that the input services besides being used in or in relation to the manufacture of final products and clearances of final products from the place of removal includes a plethora of other services such as service used in relation to setting up, modernization, renovation or repairs of factory, premises of provider of input service or an office relating to such factory or premises, advertisement or sales, activities of business, accounting, auditing, financing, recruitment, quality control, training and coaching etc. and, therefore, its scope is much larger than being used directly or indirectly in relation to manufacture.

The decision cited by Revenue are not relevant as those decisions have not considered the inclusive part of input service as defined under rule 2(l) of Cenvat Credit Rules and these decisions have only considered the term in or in relation to the manufacture.

Since Rent-a-Cab service is used for bringing employees to work in the factory for manufacture of goods it has to be considered as being used indirectly in relation to the manufacture or as part of business activity for promoting the business as any facility given to the employees will result in greater efficiency and promotion of business - Credit allowed - Tribunal. :MUMBAI CESTAT;

2008-TIOL-1179-CESTAT-MUM.pdf + rom story.pdf

CCE, Pune-I Vs M/s Victor Gaskets India Limited (Dated: July 4, 2008)

Cenvat Credit on Canteen/Catering Services – Revenue's ROM applications thrown to the bin by the Tribunal.

•  Failure on the part of the Revenue to make enquiries is not an error apparent on record and needs no rectification;

•  It cannot be said that the Tribunal has not considered the material evidence on record available before it;

•  Non-citing of an existing judgement and failure to rely on the same before passing of the Final order would not give rise to any mistake in order warranting any rectification;

•  Findings have been given in great detail and after due consideration of all the issues raised before the Tribunal;

•  There is no error apparent on record in the Tribunal's order = 2008-TIOL-409-CESTAT-MUM

ROM applications dismissed by Tribunal. :MUMBAI CESTAT;

2008-TIOL-1178-CESTAT-DEL.pdf

M/s Enchanted Woods Club Ltd Vs CCE, Ludhiana (Dated: June 4, 2008)

ST - Club and Association service - Dispute relates to payments received prior to 16.6.2005 - Revenue argues that since the Club started functioning only from September, 2006 and the services were provided afterwards, the payments collected for the same taxable service in the past is taxable - Prima facie, it is not a fit case for full waiver - Pre-deposit ordered : DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt08_097.pdf+cnt08_096.pdf+ cnt08_095.pdf+cnt08_094.pdf+
cnt08_093.pdf+cnt08_092.pdf+ cnt08_091.pdf

CBEC appoints common adjudicating authorities for Customs cases and amends Notifications;

ctariff08_090.pdf

Govt imposes anti-dumping duty on Cathode Ray Colour TV Pcture Tubes from Thailand, Malaysia & China;

cuscir08_12.pdf

CBEC summarises recent changes in EoU/STP & gems & jewellery export promotion schems;

dgft08pn053.pdf

Net foreign exchange earning: DGFT amends HoP for EoUs;

CASE LAWS

2008-TIOL-1177-CESTAT-MUM.pdf + drawback story.pdf

M/s Amritlal Chemaux Vs CC, Mumbai (Dated: April 25, 2008)

Any issue arising out of the drawback related matters, which entails penal provisions has to be seen and linked in the context of the issue on which the penal action stands and the penalty alone cannot be separated from the core issue – Tribunal cites lack of jurisdiction while dismissing appeal :MUMBAI CESTAT;