Gangavaram Port goes to Customs (See 'DDT')

Rising food prices: Developing Countries not over-consuming; says PM;

Gas regulator calls for tax exemption to city gas supply networks;

Govt says no to ban on cotton exports;

Korea-India Comprehensive Economic Partnership Agreement: All differences stand ironed out; Formal text to be released by October-end

DAVP hikes advertisement rates by 24% for newspapers;

Inflation rate stays at 12.14% last week;

ddt 26 Sept.pdf

EOUs -CENVAT Credit on the duty paid on Capital goods at the time of de-bonding to be allowed;

mbuzz1006.pdf

OECD Chief calls for raising standards of good corporate governance;

mbuzz1005.pdf

Indo-Korea trade pact to be finalised by Oct-end;

2008-TIOL-449-ITAT-PUNE.pdf + itat tds story.pdf

M/s L&T John Deere Pvt Ltd Vs ASSTT, Pune ( Dated : March 28, 2008 )

TDS is only a vicarious liability and No demand on the tax  deductor  if the deductee has discharged the tax obligation; The law is well settled that tax deduction at source liability is only a vicarious liability and when primary liability itself is extinguished, vicarious liability cannot be invoked. it is clear that no demand visualized u/s 201(1) of the Act should be enforced against the deductor after the tax deductor has satisfied that the taxes due have been paid by the deductee assessee.

But penalty is liable; However, this will not alter the liability to charge interest u/s 201( 1A ) of the Act till the payment of taxes by the deductee or will not alter the liability for penalty u/s 271C of the Act. Therefore, merely because the taxes due have in the meantime been paid by the deductee , this would not absolve the assessee from the liability of penalty u/s 271C of the Act. Therefore, the assessee's contention that no penalty u/s 271C should be imposed for the assessee's alleged default in not deducting the tax at source since the tax liability has already been discharged by the assessee- deductee , is rejected.

No penalty when TDS not made due to confusion and legal opinion; In the present case, the explanation has not been proved to be false or non- bonafide . The advice given by the legal expert M/s. C.C. Chokshi & co ., cannot be said to be non- bonafide acted with any malafide intention. Moreover, the question as to whether the discount of Rs. 129.90 crores availed by the assessee can be considered to be the payment in the nature of interest contemplated u/s 194A also appears to be a debatable one, and thus the confusion existed in relation to the assessee's obligation to make deduction of tax at source can be considered to be a reasonable cause for the assessee not to make such deduction of tax at source, and consequently the penalty u/s 271C may not be attracted.: PUNE ITAT;

2008-TIOL-448-ITAT-HYD.pdf

M/s Meghadoot Drillers Vs ITO, Mahabubnagar ( Dated : May 30, 2008 )

Digging of borewell is not connected with civil construction. In other words, a borewell may be dug even long after civil construction is completed. Thus, it is altogether a different job not connected with civil construction. Therefore, the principle of presumptive taxation underlying the provisions of sec. 44AD will not apply to the case of the assessee. The Circular of the Board cited above, is quite clear in this regard. When it says that works contract will include work related to electrical fittings, plumbing job, landscaping work etc., all these jobs are directly connected with the civil construction and hence only they are to be considered for application of sec.44AD of the Act. Thus, it is held that sec. 44AD is not applicable in the assessee's case.: HYDERABAD ITAT;

2008-TIOL-447-ITAT-MAD.pdf

M/s Orchid Chemicals & Pharmaceuticals Ltd Vs ITO, Chennai ( Dated : March 28, 2008 )

Liability for TDS – payment to non-resident having no P.E. in India – services rendered outside India – payment made outside India – no transfer took place in India – Not liable for TDS Assessee is a 100% EOU engaged in manufacture and export of bulk drugs and formulations. It entered into an agreement with GCRC a Singapore based company for carrying out an assignment for testing a novel drug developed by it on animals infected with specific diseases with a view to test the efficacy of the drug. The entire testing process was carried out at Singapore.

AO considered the payments to GCRC liable for TDS in view of sec. 9(1)(vi)/(vii) r.w.Expl. 2. According to Tribunal, since remittance were made outside India for services rendered outside India by a non-resident having no P.E. in India, Art. 12 of DTAA with Singapore applies. It was further held that neither any right in property nor transfer of technical know-how by GCRC to assessee took place and hence sec. 9(1)(vi)/(vii) has no application. Hence there was no need for deducting tax at source.

Appeal by assessee allowed.:CHENNAI ITAT;

2008-TIOL-446-ITAT-DEL.pdf

M/s Oswal Agro Mills Ltd Vs DCIT, New Delhi ( Dated : August 29, 2008 )

Depreciation – Allegation that purchase of machinery was bogus – could not be proved by AO – Evidence collected against principles of natural justice – could not be relied upon.

Assessee claimed a sum of Rs. 17.3 crores incurred for modernization of its Chembur plant and claimed depreciation on such addition. Subsequently during the course of survey conducted at the premises of one Supplier who alleged to have supplied machinery worth Rs. 8 crores, it was found that the said Supplier does not have means to manufacture such machinery. The Supplier admitted that a part of the sale made by it during the year was bogus and was done for commission receipts. It filed petition before Settlement Commission withdrawing partly the claim of manufacture and sale of machinery as well as claim of deduction under sec. 80 IA on such transaction. AO re-opened the assessment and disallowed depreciation claim as well as made addition for bogus commission payments.

On appeal, CIT(A) upheld re-opening since the petition made by the Seller before Settlement Commission is an fresh information on the basis of which re-opening is valid. However the addition made towards alleged payment of commission was disallowed and also allowed the claim of depreciation. CIT(A) accepted the argument of assessee that the transaction was by way of cheque, evidence for purchase, transportation and installation of machinery was proved by assessee and that AO did not furnish copy of petition filed by seller before the Settlement Commission and also did not offer opportunity for cross-examining the seller in spite of repeated requests.

On further appeal before ITAT by both the assessee and revenue, Tribunal upheld the decision of CIT(A) on merits and made further reasoning that AO has not challenged the increase of capacity from 21000 TPA to 34000 TPA by installing such machineries and also noted the fact that AO relied on evidences against the principles of natural justice.

Appeal by both assessee and revenue dismissed.:DELHI ITAT;

2008-TIOL-445-ITAT-MUM.pdf

UPS Freight Services India Pvt Ltd Vs ACIT, Mumbai ( Dated : September 11, 2008 )

Income Tax - Assessee pays commission to a non-resident company - TDS not deducted as non-resident Co had no PE nor any business connection with India - AO disallows expenditure for failure to deduct tax - Extension of stay sought on the ground that the issue has been pending with the Special Bench - Power to grant stay beyond 365 days - Amendment to 3rd proviso to Sec 254(2A) by Finance Act, 2008 - Revenue argues the amendment is clarificatory in nature and is therefore retrospective - Given that the amendment will come into force from Oct 1, 2008, it is prospective and applicable to only those cases which will come on Oct 1 or afterwards - Extension of stay granted - Assessee's appeal allowed :MUMBAI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-1573-CESTAT-MUM.pdf + grasim story.pdf

Grasim Industries Ltd Vs CC & CCE, Indore (Dated: August 8, 2008)

Electrolyzed - Tribunal confirms a demand of Rs 23 lakhs along with penalties on Used Mercury Scrap ‘produced' by the assessee:MUMBAI CESTAT;

2008-TIOL-1572-CESTAT-MAD.pdf

Thiru Aarooran Sugars Ltd Vs CCE, Trichy (Dated: June 30, 2008)

Central Excise – Stay/Dispensation of pre-deposit – manufacture of dutiable and exempted goods – though the formula for computing the amount of CENVAT credit to be reversed is in force from 1.4.2008, the same can be applied to test the correctness of the amount for the period prior to 1.4.2008 – pre-deposit waived.:CHENNAI CESTAT;

2008-TIOL-1571-CESTAT-MAD.pdf

CCE, Chennai-II Vs M/s VRW Refractories (Dated: August 17, 2008)

Central Excise – valuation – bonus received on account of better performance of the refractory bricks – bonus is not includable in the assessable value. :CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1570-CESTAT-AHM.pdf

M/s Avaya Globalconnect Ltd Vs CCE, Ahmedabad (Dated: August 26, 2008)

ST - Business Auxiliary Service - Assessee supplies equipments shipped by their non-resident principal - on demand, provides additional features in software supplied and charges separately for activation of software by overseas supplier - Demand raised and penalty imposed - Assessee argues it only collects payment from local purchasers and remit the same to vendors of equipment / software - Since the assessee's balance-sheet shows a separate head of software activation charges collected, prima facie such a service is covered under BAS - Pre-deposit ordered :AHMEDABAD CESTAT;

2008-TIOL-1569-CESTAT-DEL.pdf

M/s HP State Forest Corp Ltd Vs CCE, Chandigarh (Dated: July 14, 2008)

ST - GTA Service - Assessee is engaged in extraction, conversion and sale of timber - avails GTA service but fails to pay tax - On being pointed out by the Revenue, it pays tax - Penalty imposed - Since the assessee is a State Govt Undertaking and was not aware of the levy, suppression cannot be alleged - invocation of Sec 78 for suppression of value set aside along with other penalties - Assessee's appeal allowed :DELHI CESTAT;

2008-TIOL-1568-CESTAT-DEL.pdf

M/s Sanwal Cables Network Vs CST, Delhi (Dated: July 18, 2008)

ST - Penalty - Assessee deposits tax and penalty as per adjudicating authority order - Commissioner enhances penalty - Since the tax and penalty stand deposited, waiver from pre-deposit granted :DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt08_109.pdf

CBEC amends several entries in the Customs Tariff;

dgft08pn088.pdf

DGFT amends HBP to allow Focus Product Scheme benefits to export auto parts;

dgft08pn087.pdf

DGFT amends HBP to allow Focus Product Scheme benefits to export of motor cars & motor cycles of different capacity + auto parts;

dgft08pn085.pdf

SION rate of Ethylene Glycol Mono Ethyl Ether Acetate revised

CIRCULAR

cuscir08_15.pdf

Authentication of supply invoice by the Central Excise Authorities for Claiming Deemed export benefits- reg .

cuscir08_14.pdf

Issue of installation certificate for the capital goods imported/ procured locally under EPCG scheme- procedure- reg .;

Ban on import of Dairy.pdf + Office Memorandum.pdf

Ban on import of dairy products including milk and milk products from China by DGFT and Advisory issued by Food Safety& Standards Authority of India – reg.;

CASE LAWS

2008-TIOL-183-SC-CUS.pdf + sony story.pdf

CC, New Delhi Vs Sony India (Dated: September 23, 2008)

Customs – Classification - components of TV imported cannot be classified as TVs: in this case the goods brought were not having the essential character of CTVs . We do not find anything to take a view that the goods were in unassembled or dis -assembled condition and they should be taken to be the complete CTVs , particularly when there is no finding recorded anywhere on facts that all these goods could make 1500 CTVs . However, we accept the argument that the goods brought in different consignments separately on the basis of valid import licences would not attract the import duty as if they were the finished goods. Rule 2(a) would apply only when the imported articles presented unassembled or disassembled can be put together by means of simple fixing device or by riveting or welding. In this case, complicated process would be required for the user of those parts.: SUPREME COURT;

2008-TIOL-1567-CESTAT-BANG.pdf

Shri C K Boban Vs CC, Cochin (Dated: April 23, 2008)

Confiscated imported goods not redeemed by appellants – Pre-deposit of penalty waived and stay granted – Amount equivalent to penalty to be pre-deposited if the appellants choose to redeem the goods on payment of redemption fine at a later date : BANGALORE CESTAT;