Incorrect utilisation of CENVAT credit for payment of service tax on input services (See 'DDT')

Let's audit the Audit (See 'DDT')

Inflation on downturn - latest figure is 11.8%;

Advance tax payment slows down; Banks contribute much less;

India, Japan FTA: Breakthrough eludes on-going talks before PM's visit;

FM takes off for USA to attend G-20 summit on global financial mess;

SC says HCs have powers to re-appreciate and re-consider acquittal orders;

FM says liquidity will improve in economy in coming months;

ddt 10 oct.pdf + excise_exemption.pdf

Excise duty exemption in respect of formulations of Artemisinin-CBEC clarifies in a private letter;

cobweb.pdf

Indian taxman is arbitrary! - Microsoft convasses for coalition of MNCs to forge partnership with Revenue!

IMF story.pdf

IMF forecasts 3% world growth rate; near zero growth for advanced economies;

2008-TIOL-491-HC-HP-CT.pdf

S E Hydel Vs AE & TC, Shimla ( Dated : August 27, 2008 )

H.P. General Sales Tax - Supply of electric meter by the Electricity Board to the consumer on payment of periodical hire charges does not amount to “sale”: The consumer has no right to connect the meter with any electricity supply line except the one fixed by the licensee. It is common knowledge that the consumer has no right to even break the seals of the meter. The seals are affixed by the licensee. All that can be said in favour of the revenue is that the meter is fixed at the site provided by the consumer and it is used to measure the supply of electricity made to the consumer. This, in our opinion, does not amount to transfer of any right in the meter to the consumer. The consumer has no right to change the meter. He has no right to remove the electricity supply wire. He has no right to remove or replace the supply line to the meter. He cannot break the seals of the meter. The meter is installed more for the benefit of the licensee than for the consumer. The licensee can ascertain and measure the electricity supply only through the use of a meter. It is only then that he can bill the consumer. There is no transfer of interest in the meter. What the Electricity Board is doing is that it is charging for the supply of electricity. The meter is hired out only for the purpose of measuring the electricity supply. This is done under the statutory provisions. Unless the meter is connected with the electricity supply wire and electricity is supplied, the meter is of no use. No doubt, rent is being charged for the meter but this has to be read in the context of the Section 26 of the Indian Electricity Act, 1910.

No right in the meter has been transferred to the consumer. : HIMACHAL PRADESH HIGH COURT;

office_memorandum.pdf

Pay Revision of employees of Quasi-Government Organizations, Autonomous Organizations, and Statutory Bodies, etc. set up by and funded/controlled by the Central Government.;

rbi08cir020.pdf

External Commercial Borrowings Policy - Liberalisation;

mbuzz1049.pdf

India-China bilateral trade nears about USD 38 bn;

mbuzz1048.pdf

Core Sector again lets down economy; grows only by 2.3% in August ;

mbuzz1047.pdf

FM welcomes 1% cut in CRR by RBI; sets up panel to suggest more measures ;

mbuzz1046.pdf

Money Order - 2500 Post Offices switchover to electronic transmission without extra charge;

mbuzz1045.pdf

RBI directs banks not to levy any charge on electronic products ;

mbuzz1044.pdf

Rajkot Excise recovers Rs 8 Cr from Essar Oil ;

ORDER

cbdtorder137_2008.pdf

CBDT issues transfer order of 7 CITs;

CASE LAWS

2008-TIOL-496-HC-DEL-IT.pdf + repair story.pdf

CIT, Delhi-IV Vs M/s Hi Line Pens Pvt Ltd ( Dated: September 15, 2008 )

Income Tax - Assessee takes office premises on lease - spends on repairs - claims deduction u/s 30(a)(i) - AO allows deduction u/s 32 and does not treat the expenses as revenue expenditure - CIT(A) allows the appeal on the ground that expenses did not bring into existence any new asset - Tribunal upholds the CIT(A) order

Held, the assessee's claim is rightly allowed by the Tribunal as there is a clear distinction between the expressions repairs and current repairs. It is obvious that the word repairs is much wider than the expression current repairs. This fact has also been taken note of by the Supreme Court in the case of Saravana Spinning Mills P.Ltd. ( 2007-TIOL-147-SC-IT ). The expression current repairs is much more restricted than the word repairs because the latter is qualified by the word current. What the assessee has done in the present case has been construed to be repairs by the Tribunal as a finding of fact. It has not brought about any new asset and more importantly it was not the intention of the assessee to bring about any new capital asset. The expenses that were incurred by the assessee were towards repairing the premises taken on lease so as to make it more conducive to its business activity. Such expenses would clearly fall within the expression of repairs to the premises as appearing in Section 30(a)(i). The legislature has made a distinction between expenses incurred by a tenant for repairs of the premises and expenses incurred by a person who is not a tenant towards current repairs to the premises. This distinction has to be given meaning. Perhaps the logic behind the distinction was that a tenant would, by the very nature of his status as a tenant, not undertake expenditures as would endure beyond his likely period of tenancy or create a new asset. Whereas, an owner may undertake expenditures so as to even bring about new assets of capital nature. It was, therefore, necessary to qualify the expenditure on repairs. The deduction was, therefore, limited to expenditure on current repairs only. : DELHI HIGH COURT;

2008-TIOL-495-HC-DEL-IT.pdf

CIT, Delhi-I Vs M/s C J International Hotels Ltd ( Dated: September 24, 2008 )

Income tax - CIT invokes powers u/s 263 and orders for re-computation of income u/s 115JA in view of excess depreciation claimed - In view of SC decision in Apollo Tyres case ( 2002-TIOL-185-SC-IT ) the Tribunal holds that the AO correctly passed the order and the same was not errorneous which is one of the pre-conditions for invoking Sec 263 - Although the Tribunal unnecessarily went into the issue of applicability of Sec 115JB and observed that Sec 115JA and Sec 115JB are analogous as the instant case is covered by Sec 115JA but it correctly applied the SC decision to set aside the CIT order - No substantial question of law - Revenue's appeal dismissed : DELHI HIGH COURT;

2008-TIOL-494-HC-DEL-IT.pdf

Central Government Employees Consumer Cooperative Society Ltd Vs CIT ( Dated: September 19, 2008 )

Income Tax - provision of funds for wage revision - AO disallows as it was not ascertained liability - CIT(A) allows the appeal - Since a decision to effect the wage revision from a back date was not available on the date of filing of the balance-sheet, it cannot be allowed - Assessee's appeal rejected : DELHI HIGH COURT;

2008-TIOL-493-HC-RAJ-IT.pdf

CIT, Ajmer Vs M/s Tirupati Enterprises ( Dated : July 4, 2008 )

Income tax - W h ere regular return is filed or any assessment made w.r.t previous year(s) included in the block period, the undisclosed income so calculated in the block period has to be reduced by the income assessed or disclosed in the return already filed - Appeal filed by the Revenue has no force : RAJASTHAN HIGH COURT;

2008-TIOL-472-ITAT-MAD.pdf

M/s Marg Constructions Ltd Vs JCIT, Chennai (Dated: January 31, 2008)

Penalty under sec. 271C & 272A(2)© upheld since no satisfactory explanation from assessee for the default.

Assessee failed to deduct tax at source on interest payments – According to the assessee the sums were not actually paid and were only credited to the account of parties and that in some cases the amount was below the limit and in some other cases the recipients paid tax on their income and thus there is no revenue loss. Since no plausible explanation for default was made, penalty upheld.

On penalty under sec. 272A(2)© assessee contended that since it was not liable to deduct tax, there was no need to file TDS return. Since the claim of assessee is against facts on record, penalty upheld.

Appeal by assessee dismissed. : CHENNAI ITAT ;

CENTRAL EXCISE SECTION

2008-TIOL-188-SC-CX.pdf + sc cx story.pdf

CCE, Jaipur Vs M/s Mewar Bartan Nirman Udyog (Dated: September 30, 2008)

Central Excise – exemption notification - While interpreting the exemption notification, one cannot go by rules of interpretation applicable to classification. Items made from copper attract duty at the rate of Rs.3500 PMT whereas circles made from brass attract nil rate of duty - A notification of exemption has to be interpreted in terms of its language. Where the language is plain and clear, effect must be given to it. While interpreting the exemption notification, one cannot go by rules of interpretation applicable to cases of classification under the Tariff. Tariff items in certain cases are required to be interpreted in cases of classification disputes in terms of HSN , which is the basis of the Tariff. In this case, we are not concerned with interpretation of Tariff. In fact, as stated above, the product in question falls under Chapter Heading 74.09. It is the dichotomy which is introduced by the exemption Notification which needs to be interpreted. Items made from copper attract duty at the rate of Rs.3500 PMT whereas circles made from brass attract nil rate of duty. As stated above, in this case, the Department has not disputed the fact that the circles were manufactured by the assessee from brass. This is expressly recorded in the findings given by the Tribunal.: SUPREME COURT;

2008-TIOL-492-HC-KERALA-CX.pdf

Malabar Cements Ltd Vs CCE, KZD ( Dated : September 22, 2008 )

Central Excise – Original ground plan which included mines misplaced by the Department – Evidence in the form of Jurisdictional Asst. Commissioner's letter accepting the original ground plan available – Assessee cannot be directed to submit a new ground plan by excluding the mines – Letter issued to the assessee seeking to modify the ground plan quashed – Writ of Certiorari issued to authorities for accepting the ground plan based on the originally approved plan for the purpose of record to govern all future transactions in Excise matters : KERALA HIGH COURT;

2008-TIOL-1648-CESTAT-AHM.pdf

CCE, Ahmedabad Vs M/s Macro Tech P Ltd & 4 Ors (Dated: August 1, 2008)

Central Excise - buying various computer parts and installing the same at the office or residence would not amount to manufacture. : AHMEDABAD CESTAT;

2008-TIOL-1647-CESTAT-MAD.pdf

M/s Sree Lakshmi Narasema Textiles Vs CCE, Coimbatore (Dated: July 21, 2008)

Central Excise – clandestine clearances - there is no dispute that the appellant had admitted to have made clandestine clearances and that the receipts shown on a daily basis from the buyers in the diary were towards such clearances  - though the  confessional statement was retracted the initial statement had adequate support from the records authenticated by the assessee – demand upheld. :CHENNAI CESTAT;

2008-TIOL-1646-CESTAT-MAD.pdf

Sundaram Fastners Ltd Vs CCE, Chennai (Dated: July 17, 2008)

Central Excise – refund – post clearance adjustments by issuing credit notes are not to be recognized while deciding the bar of unjust enrichment. :CHENNAI CESTAT;

2008-TIOL-1645-CESTAT-KOL.pdf + usha story.pdf

M/s Usha Martin Ltd Vs CCE, Jamshedpur (Dated: July 3, 2008)

Central Excise - Valuation - clearances from Depots / Consignment Agents' premises - the DGCEI is  trying to make out a case by wrongly applying the law and selectively quantifying the duty demand in respect of some of the consignments ignoring the total duty paid and that too beyond the lapse of the normal period of limitation prescribed under the law - demand set aside.:KOLKATA CESTAT;

SERVICE TAX SECTION

2008-TIOL-1652-CESTAT-DEL.pdf + st jobwork story.pdf

SARA Services & Engineers Pvt Ltd Vs CCE, Meerut (Dated: September 16, 2008)

Service Tax – Management Consultancy service - No doubt, that the appellant is rendering a variety of services in areas like procurement of raw material, packing of finished goods, documentation etc. in addition to undertaking job work. The activities are in the nature of providing some employees undertaking certain job work, procuring raw materials, sharing certain common facilities and sharing the expenses, etc. procurement of raw material. All these activities, will not amount to rendering management consultant service.:DELHI CESTAT;

2008-TIOL-1651-CESTAT-MAD.pdf

S R Agency Vs CCE, Madurai (Dated: June 20, 2008)

Service tax - penalty - from the facts of the case, there is no justification for the authority to have found that the appellants had intention to evade payment service tax - there was no valid ground for imposition of penalty under Section 78 of the Finance Act 1994 - However, the appellants have not made out a valid case for against the penalties under other provisions. :CHENNAI CESTAT;

2008-TIOL-1650-CESTAT-DEL.pdf

M/s JCB India Limited Vs CST, Delhi (Dated: August 6, 2008)

ST - Consulting Engineer Service - Liability pertains to period March 2004 to July 2004 - Assessee pleads the case is covered by the Larger Bench decision which ruled the service was not taxable prior to 1.1.2005 - Revenue cites SC decision in the case of Kerala State Electricity Board ( 2007-TIOL-226-SC-ST ) where service recipient was held to be liable to tax - The present case is clearly covered by the Larger Bench decision in Hindustan Zinc Ltd case ( 2008-TIOL-1149-CESTAT-DEL-LB ) :DELHI CESTAT;

2008-TIOL-1644-CESTAT-DEL.pdf

M/s Bhagwati Security Services Vs CCE, Meerut-I (Dated: August 22, 2008)

Service Tax - Demand raised and penalty imposed under various sections - Commissioner (A) reduces penalty but confirms the demand - Appeal to Tribunal - Case remanded on the point of working out tax on cum-duty basis - Assessee appeals against quantum of penalty and argues that the peanlty before remand was reduced and the same attained finality as revenue did not appeal against and the remand was only to decide the cum-duty issue - Held, failure to challenge any order amounts to acceptance of the decision and on remand it was open to the adjudicating authority not to impose penalty but was not open to pass more disadvantageous order - the assessee surely had not come to the tribunal for enhancement of penalty and the remand was not to give authorities liberty to do so - it would amount to going beyond the remand order - Assessee's order allowed :DELHI CESTAT;

CUSTOMS SECTION

2008-TIOL-497-HC-P&H-CUS.pdf + DRI story.pdf

M/s Prime Leathers Vs Union of India ( Dated: May 29, 2008 )

Customs - Spot recovery in DRI case – amount of Rs. 70 Lakhs realised ordered to be released – bank guarantee also released - DRI has no legal or moral right to ask the petitioner to furnish any bank guarantee in the absence of any demand raised: the stand of respondent Nos. 1 and 2 is not only unfair and unreasonable but extremely arbitrary because admittedly there was no demand raised by respondent Nos. 1 and 2 against the petitioner till that day. Secondly, the goods exported by the petitioner were subjected to multiple rigorous tests. The goods were even matching with the declaration made in the shipping bills. The petitioner might have given another description of the same goods in the invoices issued to its foreign buyers. The respondents have no legal or moral right to ask the petitioner to furnish any bank guarantee in the absence of any demand raised. : PUNJAB AND HARYANA HIGH COURT;

2008-TIOL-1649-CESTAT-DEL.pdf

M/s L R Brothers Vs CC, Meerut (Dated: July 17, 2008)

Customs - 100% EOUs - Cut flowers cleared in DTA - when the finished goods cleared in DTA are non-excisable, the appellant is liable to pay customs duty leviable on such finished goods cleared in DTA - the plea that only duty foregone on the inputs used is payable is not acceptable for the period prior to 18.5.2001, since the notification 126/94 Cus was amended only on 18.5.2001 to demand duty on inputs used in such cases - the amendment cannot be given retrospective effect. : DELHI CESTAT;

2008-TIOL-1643-CESTAT-AHM.pdf

M/s PCL Oil & Solvent Ltd Vs CC, Kandla (Dated: August 8, 2008)

Customs – exemption from payment of 4% SAD for the goods imported under DEPB scheme under notification No 34/97 – Since the Commissioner (Appeals) has not given any findings on the issues raised by the appellants, matter remanded. : AHMEDABAD CESTAT;