Collect Service Tax from SEZ - CBEC exhorts the field (See 'DDT')

FM approves 12 FDI proposals worth Rs 1414 Cr; Polycab Wires (Rs 551 Cr investment) also okayed;

MoF says no payment crisis in Indian capital markets;

Cabinet to decide on creation of internal security ministry;

Commerce Secretary hints at withdrawal of export sops related to exchange rate

ADB lowers India's growth prospects to 7.4%

MoC to write to RBI to classify SEZ as infrastructure status

India, Nepal decide to review trade and transit treaty

RBI asks Lehman Brothers' NBFC not to remit money without its approval;

ddt 17sept.pdf

Collect Service Tax from SEZ - CBEC exhorts the field;

spl down.pdf

Taxability of outright sales in India by non-resident Cos;

fdi.pdf

FM approves 12 FDI proposals worth Rs 1414 Cr; Polycab Wires (Rs 551 Cr investment) also okayed;

post_AD_enforce.pdf

Filling up of the post of Assistant Director of Enforcement, Grade-I in the Directorate of Enforcement on deputation basis.;

mbuzz974.pdf

Oil tanker hijacked with 18 Indian crew by Somalian pirates is safe: Govt;

mbuzz973.pdf

WIndo-French trade: Nath calls for widening of export basket;

mbuzz972.pdf

India welcomes Multi-Facility Economic Zone for Indian firms in Zambia;

mbuzz971.pdf

WB urges Europe to eliminate social exclusion of Roma population;

2008-TIOL-429-ITAT-MUM-SB.pdf + sb story.pdf

ACIT, Mumbai Vs Shri Prakash L Shah ( Dated : August 22, 2008 )

IT – Section 80 HHC - Foreign exchange fluctuation gain is part of export turnover and is part of export turnover of the year in which export is made and not the year of realization: Irrespective of the fact that the Indian currency has assumed northward or southward sojourn vis-à-vis the other foreign currency, the amount realized in Indian rupees remains attributable to the exports made in foreign currency.

There is no effect on the computation of deduction in the year of export, whether the difference in export realisation due to fluctuation in the foreign currency rate is received in the same year or within six months from the end of the previous year or within such further period as may be allowed by the competent authority . Once the amount be so received, it would relate to export turnover of the year in which the export was actually made. We further note that when the definition of export turnover was amended by the Finance Act, 1990, by which the words 'received in or brought into India" were substituted for the word "receivable" The effect is that the assessee can claim deduction on the foreign exchange fluctuation gain in the year of export and not the subsequent year in which the income has been realized and recognized in the books of account.: MUMBAI ITAT (SPECIAL BENCH);

2008-TIOL-428-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Eleder Pharmaceuticals Limited ( Dated : March 13, 2008 )

Income Tax Act – Income from undisclosed sources – Section 158BC – Payment of LC Charges - does not come under the purview of block-assessment since those expenditures have already been disclosed in the regular books of account maintained by the assessee. The expenditure incurred by the assessee-company might be lawful or unlawful, which is altogether a different issue. The condition to be satisfied for making an addition in a block assessment is that the amount sought to be added should not have been disclosed to the Department before the search - LC charges were reflected in the books of account maintained by the assessee and thereby already disclosed to the Department - admission made by the assessee during search proceedings is tentative subject to correction that might be warranted on further examination of the books of account and other details and reconciliation of figures that might be arrived at in the course of verification.: MUMBAI ITAT;

2008-TIOL-427-ITAT-DEL.pdf

CGR Mercantile Finance Pvt Ltd Vs ITO, New Delhi ( Dated : July 18, 2008 )

Expenditure disallowance – since no adverse remark made by AO addition deleted.

Whether share application money on which shares are not allotted changes character as loan depend on the last date by which shares are to be allotted as per Companies Act.  

Stoppage of business not proved by AO so as to justify disallowance of expenses claimed. No adverse inference made by AO regarding the expenditure incurred during the year. Further the fact that assessee made recovery of earlier debts itself proves that the business was being continued. Hence disallowance of expenses, is not justified.

Since shares were not allotted during the year, Share application money was treated as loan and provisions of sec. 2(22)(e) applied to bring it under tax net as deemed dividend. To decide this issue, last date as per which shares are to be allotted as per Companies Act, is crucial which will determine the status of advance made ie. whether it is share application money or loan. To ascertain this fact, issue remitted back to AO.: DELHI ITAT;

2008-TIOL-14-ARA-IT.pdf + ara story.pdf

Anapharm Inc ( Dated : September 11, 2008 )

:Fee received from Indian pharmaceutical companies for undertaking clinical and bio-analytical studies is not subject to tax in India in accordance with Double Taxation Avoidance Agreement between India and Canada: DTAA does not define the expression ‘make available' either in Article 12 or anywhere else. As such, we will have to look to other sources for understanding it. The Indo-US Convention on avoidance of double taxation contains a provision which is pari materia with Article 12(4) of the Indo-Canada DTAA . Though Indo-US Convention also does not define the expression ‘make available' in the main body, but it has a protocol annexed to it, which was signed along with the said convention. The protocol declares that its provisions shall form integral part of the convention. The Protocol has an MOU attached to it which is intended to give guidance both to the taxpayers and the tax authorities of the two countries in interpreting certain aspects of Article 12 relating to the scope of included services. By merely acquiring knowledge of the testing methods one does not get any insight as to how a new drug could be developed.

In the light of the above discussion interpreting the expression ‘make available', it follows that clause (b) of Article 12(4) relied upon by the Revenue does not come into play and the services in question cannot be considered to be “fees for included service” within the meaning of this provision.

Is it royalty? Paragraph (3) of the Article 12 states that royalty is payment of consideration for the use of, or the right to use any, copyright, patent, secret formula, process, information concerning industrial, commercial or scientific experience. Paragraph (2) of Article 12 of OECD Model Convention also defines royalty in a manner similar to paragraph (3) of Article 12 of DTAA . While discussing paragraph (2) of Article 12 of the OECD Model Convention, OECD Commentary at paragraph 11 states that information concerning industrial, commercial or scientific experience alludes to the concept of know-how which is all the undivulged technical information that is necessary for the industrial reproduction of a product or process directly.

Know-how represents what a manufacturer cannot know from mere examination of the product and mere progress of the technique. The Commentary further states that a know-how contract differs from contracts for the provision of services, in which one party undertakes to use the customary skills of his calling to execute the work himself for the other party. Payment made under the latter contract generally come in the category of business income.

As such, the fees received by the applicant are to be treated as business income and not royalty income.

Fee paid by Sandoz Private Limited, Ranbaxy Research Laboratories to the applicant in respect of bioequivalence tests conducted by it is in the nature of ‘business profits' under Article 7 of the DTAA and the same is not taxable in India as the applicant does not have a permanent establishment situated in this country. : ADVANCE RULING AUTHORITY;

CENTRAL EXCISE SECTION

2008-TIOL-1515-CESTAT-MUM.pdf + cattle story.pdf

M/s Vasantdada SSK Ltd Vs CCE, Pune-II (Dated: August 1 ,2008)

Molasses used in manufacture of exempted Cattle feed and other dutiable goods – since separate accounts not maintained of common inputs viz. phosphoric acid, caustic soda, water treatment chemicals, 8% amount to be paid under rule 6 of CCR, 2002:MUMBAI CESTAT;

2008-TIOL-1514-CESTAT-AHM.pdf

M/s ONGC Ltd Vs CCE, Surat (Dated: July 22 ,2008)

Central Excise - Valuation - SKO cleared through Public Distribution System on payment of duty on value fixed by administrative price mechanism is in accordance with the law even after 1.7.2000 - demand of duty set aside.: AHMEDABAD CESTAT;

2008-TIOL-1513-CESTAT-DEL.pdf

Bharat Heavy Electricals Ltd Vs CCE, Bhopal (Dated: June 17 ,2008)

Central Excise - Stay/Dispensation of pre-deposit - CENVAT Credit - goods exported under bond and re-imported on payment of  CVD cannot be treated as goods received back for re-processing under Rule 16 of the Central Excise Rules for taking credit - no prima facie case made out for waiver of pre-deposit.:DELHI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1518-CESTAT-MUM.pdf + outdoor story.pdf

GKN Sinter Metals Ltd Vs CCE, Aurangabad (Dated: September 5 ,2008)

Cenvat credit of Service Tax paid on Outdoor Catering Services – Stay granted as matter referred to Larger Bench:  Credit of S.Tax on Garden Maintenance Services – No prima facie case – Pre-deposit ordered:MUMBAI CESTAT;

M/s Scan Synthetics Ltd Vs CCE, Jaipur-I (Dated:August 18 ,2008)

ST - GTA Service - Assessee is recipeint of GTA service and utilises cenvat credit for payment of tax on output service - Held, assessee can utilise credit and the issue is no longer res integra.:DELHI CESTAT;

2008-TIOL-1516-CESTAT-MAD.pdf

CCE, Coimbatore Vs T Stanes & Company Ltd (Dated: May 22 ,2008)

Service Tax – Statutory minimum penalty – can be reduced by Commr (A) : Hon'ble High Court of Bombay had laid down the law that the authorities were vested with the discretion to impose suitable penalty despite the provisions of Section 76 defining the jurisdiction as between Rs.100 /- per day and Rs.200 /- per day subject to the maximum of tax found not paid. In both the decisions of the Tribunal, relied on by the Revenue, it was held that authorities had discretion to refrain from imposing maximum penalty in terms of Section 76 if the assessee proved that there was reasonable cause for the failure for which the assessee was sought to be penalized. In the instant case the authorities have themselves found that the failure on the part of the respondents to pay the full tax in time had occurred due to incorrect interpretation of the statutory provisions and not due to any wanton omission. In the circumstances, the Commissioner (Appeals) exercised his discretion correctly and in accordance with law in reducing the penalty from Rs.39 ,750 /- to Rs.10,000 /-. :CHENNAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08not039.pdf

Export of non-basmati rice: DGFT again changes policy;

cnt08_107.pdf

CBEC revises tariff value of poppy seeds + brass scraps;

cnt08_106.pdf + cnt08_105.pdf

Mr S S Rana designated as DG (Safeguards);

CASE LAWS

2008-TIOL-1512-CESTAT-DEL.pdf

M/s Suzuki Powertrain India Ltd Vs CCE, New Delhi (Dated: May 8 ,2008)

Customs - refund - refund claim without challenging the order of assessment is not maintainable..:DELHI CESTAT;