Destination Sri Lanka for Indian IT Companies? Service Tax – a good reason (See 'DDT')

Chennai Airport Customs seizes USD 34500 from pax heading for Hong Kong;

Govt asks local bodies to create alternate streams of revenue;

Govt notifies special allowance for childcare for women with disabilities and allowance for disabled children of Govt employees;

Second Administrative Commission calls for anti-terror law and federal agency to curb terrorist activities;

CBEC launches IT-enabled and ADB-aided audit training programme for officers;

SC says unfilled quota in educational institutions to go to General category;

ddt 16 Sept.pdf

Butt it's an offence;

Office Memorandum.pdf

Recommendations of the Sixth Central Pay Commission-implementation of decisions relating to Special Allowance for child care for women with disabilities and Education Allowance for disabled children of Govt. employees;

mbuzz970.pdf

India phases out CFCs 17 months ahead of schedule to protect ozone layer;

mbuzz969.pdf

Second Administrative Commission calls for anti-terror law and federal agency to curb terrorist activities;

mbuzz968.pdf

CBEC launches IT-enabled and ADB-aided audit training programme;

mbuzz967.pdf

CSIR launches open source drug discovery programme;

2008-TIOL-170-SC-IT.pdf + sc it story.pdf

ACIT, Rajkot Vs Saurashtra Kutch Stock Exchange Ltd (Dated: September 15, 2008)

Rectification of 'mistake apparent' by ITAT u/s 254(2) - Rectification flows from fundamental principle that justice is above all; No error of law or jurisdiction was committed by Tribunal when it came to know of jurisdictioinal HC order on same issue and corrected its decision

WHAT is 'mistake apparent from the record'? - The consensus view of the Apex Court decisions in the past and the recent period is that there cannot be an exhaustive criteria to describe one as 'mistake apparent'. What could be a 'mistake apparent' for one judge, may not be the same for another. However, what is well-established is that an error which requires elaborate arguments and a long-drawn process of reasoning on points where there may be two views cannot be treated as an error apparent. A 'mistake apparent' has to be the one which should appear so at the first look, be self-evident and manifest on the face of records. And once a 'mistake apparent from the record' is detected, it must be corrected in the interest of justice. Rectification of an error stems from the fundamental principle that justice is above all. But rectification can be only of an error of law and not a fact through writ petitions. And this is evident from this case in which a decision of the jurisdictional High Court was not brought to the notice of the Tribunal which had ruled in favour of the Revenue. And when the same was brought to its notice by an RoM, the Tribunal was justified in correcting the same u/s 254(2).:SUPREME COURT;

2008-TIOL-449-HC-MUM-IT.pdf + goldsmith story.pdf

Shri Mahendra D Jain Vs ITO, Mumbai ( Dated: September 5, 2008 )

Income Tax - Assessee is a goldsmith - deals in import of gold bars - DRI raids business premises and seizes gold bars on charges of smuggling - Assessee gives up on litigation with Customs - AO makes additions u/s 69A for the seized golds as undisclosed income - Assessee claims deduction by treating the same as business loss - Tribunal disallows - Held, since the assessee was into lawful business, the loss arising out of infraction of Customs Act cannot be treated as incidental to the business - Assessee's appeal dismissed: BOMBAY HIGH COURT;

2008-TIOL-448-HC-DEL-IT.pdf

CIT, New Delhi Vs Indian Visit Com Pvt Ltd ( Dated: September 5, 2008 )

Income Tax - Assessee deals in hotel, air and taxi booking for tourists - Expenditure on creating a website for regular business - claims deduction - AO disallows it by invoking enduring benefits theory - Tribunal allows the assessee's appeal - Held, merely because an expenditure may result in enduring benefits it cannot be classified as expenditure of a capital nature - Revenue needs to examine the real intent and purpose of the expenditure and to see whether there is any accretion to the fixed capital of the assessee - Since the purpose of creating a website is not to acquire an asset but to promote the business it is revenue expenditure - Revenue's appeal dismissed:DELHI HIGH COURT;

2008-TIOL-447-HC-MUM-IT.pdf

CIT, Mumbai Vs M/s Indo Saudi Service Travel Pvt Ltd ( Dated: August 20, 2008 )

Income Tax - Assessee is an airlines ticket agent - appoints several sub-agents, including its sister company - Commission - Higher commission paid to sister concern - AO disallows it u/s 40A(2)- Held, in the light of CBDT circular in respect of disallowance u/s40A(2) appellant not in a position to point out how the assessee evaded payment of tax by alleged payment of higher commission to its sister concern since the sister concern was also paying tax at higher rate and copies of the assessment orders of the sister concern were taken on record by the Tribunal. Appeal dismissed: BOMBAY HIGH COURT;

2008-TIOL-13-ARA-IT.pdf

Burmah Castrol Plc ( Dated : September 8, 2008 )

Income Tax - Transfer of shares - Ruling from Authority sought on capital gains - Admission of application - Revenue opposes by arguing that since the it is seized of the matter and the AO is handling the case, the authority entertaining the application would lead to judicial disarray and chaos - Held, since the case before the AO was related to TDS u/s 197 and the same has been decided by passing an order, the issue raised before the authority is not pending before any court or the AO and the authority has its own distinct jurisdiction which is not in conflict with the jurisdiction of any other court of law - The applicant which has been deducting tax at 20% rate exclusive of surcharage and cess has a right to seek advance ruling for future to obliterate uncertainty and there is no ground for rejecting the application - Application u/s 245R(2) is ordered to be admitted: ADVANCE RULING AUTHORITY;

CENTRAL EXCISE SECTION

2008-TIOL-450-HC-MUM-CX.pdf + excise story.pdf

CCE, Goa Vs Sona Tapes Pvt Ltd ( Dated : June 5, 2008 )

Central Excise – appeals – not using the phrase “not legal or proper” and instead using “bad in law” – Commissioner's Review order is not bad in law: The phrase 'bad in law' really means something which may be inapt or which cannot be sustained or held to be valid. Surely, this term is interchangeable with the words of the Statute 'not legal or proper.' It would have been an entirely different matter if the order of the Commissioner directing an appeal to be filed would have been passed without any application of mind and had merely said that the order is bad in law or for that matter not legal or proper. But the Commissioner has clearly given his reasons for directing that an appeal be filed and that in his opinion, the Commissioner (Appeals) has wrongly allowed the benefit of Modvat credit on inadmissible items by applying a notification retrospectively.: BOMBAY HIGH COURT ;

2008-TIOL-1506-CESTAT-MAD.pdf

M/s Lucas Indian Service Ltd Vs CCE, Chennai-II (Dated: June 20,2008)

Central Excise – Stay/Dispensation of pre-deposit – interest on differential duty paid price revision – since the matter has been referred to Larger Bench in 2008-TIOL-575-CESTAT-MAD , pre-deposit waived.:CHENNAI CESTAT;

2008-TIOL-1505-CESTAT-MAD.pdf

M/s Brakes India Ltd Vs CCE, Chennai (Dated: June 19,2008)

Central Excise – Stay/Dispensation of pre-deposit – interest on differential duty paid on supplementary invoices – since the matter has been referred to Larger Bench in 2008-TIOL-575-CESTAT-MAD , pre-deposit waived.:CHENNAI CESTAT;

SERVICE TAX SECTION

NOTIFICATION

sercir105.pdf + ST story.pdf

CBEC directs field formations to conduct survey to identify SEZ units not paying service tax on services provided outside SEZ;

CASE LAWS

2008-TIOL-1510-CESTAT-DEL.pdf + stgst.pdf

M/s Unitech Limited Vs CST, Delhi (Dated: August 25 ,2008)

Architect – commercial concern need not register : - Architect means any person whose name is, for the time being, entered in the register of architects maintained under Section 23 of Architect's Act, 1972 [20 of 1972] and also includes any commercial concern engaged in any manner, whether directly or indirectly in rendering the services in the field of architecture; it will be seen that there are two parts of definition. The first part covers any person whose name is entered in the register of architects maintained under Section 23 of the Architect's Act, 1972 and the second part i.e. the inclusive part, covers any commercial concern engaged in any manner, whether directly or indirectly in rendering the service in the field of architecture. While there is requirement of registration in the register of architects maintained under Section 23 of the Architect's Act, 1972 for individual persons covered by the first part of the definition, there is no such registration requirement for the second part of the definition, which covers the commercial concern engaged in any manner, whether directly or indirectly in rendering the services in the field of architecture.

Service received from Foreign Service Provider not having office in India - Liable to tax only from 1.1.2005: The Larger Bench of the Tribunal vide judgement dated 27/6/08 reported in 2008-TIOL-1149-CESTAT-DEL-LB , held that it is only w.e.f . 1/1/05, the date from which the Notification No. 36/04-ST dated 31/12/06 issued under Section 68 (2) of the Act came into force, the recipient of taxable service from service provider who is non-resident or is from outside India not having any office in India, would be liable to pay the service tax.

It is true that comprehensive provisions for taxing the import of service by all possible modes came w.e.f . 18/4/06 when Section 66A was introduced in the Finance Act, 1994 and simultaneously Taxation of Services (Provided from outside India and Received in India) Rules, 2006 were notified vide Notification 11/2006-ST dated 18/4/06. But so far as the taxable services provided from India by a foreigner or non-resident, not having any office or business establishment in India to a person in India are concerned, these services were taxable even prior to 18/4/06 under Section 66 read with Section 65 (105) of the Finance Act, 1994 and by virtue of Rule 2 (1) (d) (iv) of the Service Tax Rules, 1994 read with Notification 36/04-ST dated 31/12/04 issued under Section 68 (2) of the Finance Act, 1994, the recipient in India, was liable to pay the service tax.

Larger period of limitation and penalty justified - The Department came to know about receipt of taxable services by the Appellants, from M/s Callison , U.S.A. and non-payment of service tax on the same only when inquiry in this regard was initiated in October, 2005. The Appellants, therefore, are guilty of wilfully suppressing the relevant information from the Department and therefore longer limitation period of five years under proviso to Section 73 (1) of the Act has been rightly invoked and penalties under Section 76 and 78 of the Act have been rightly imposed. However, the quantum of penalty to be imposed under Section 78 of the Act has to be re determined in view of reduced tax liability.:DELHI CESTAT;

2008-TIOL-1509-CESTAT-DEL.pdf + sim story.pdf

M/s Hutchison Max Telecom Pvt Ltd Vs CCE, Mumbai (Dated: July 1,2008)

Service Tax - SIM cards imported on payment of Customs duty and Sales tax also paid on sale thereof - SIM card value not addable in Assessable value of service provided:DELHI CESTAT;

2008-TIOL-1508-CESTAT-DEL.pdf

CCE, Delhi Vs M/s Brill Education (India) Pvt Ltd (Dated: July 16,2008)

ST - Commercial training and coaching centre - Part payment of tax and interest deposited before issue of SCN - Commissioner (A), in view of Board letter, treats the issue as deemed concluded on payment of tax and interest - No infirmity in the Commissioner's orde:DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08pn080.pdf

To curb double benefits DGFT replaces sub-clause (a) of Para 4.30A in HoP;

dgft08pn079.pdf

DGFT amends SION entry at Sl . No. A 3016;

dgft08cir031.pdf

Transfer of inputs to notified areas: DGFT clarification eases norms;

CASE LAWS

2008-TIOL-1507-CESTAT-MAD.pdf

M G M Entertainments Pvt Ltd Vs CC, Chennai (Dated: April 25,2008)

Customs – valuation – inclusion of royalty/ technical know how fee in the value of goods imported - the fee is payable to the foreign supplier as a condition of sale of the goods imported and is includable in the value in terms of Rule 9(1)(c) of the Customs Valuation Rules..: CHENNAI CESTAT;