Revenue gets a breather more time to file appeal in Supreme Court (See 'DDT')

Chandrayaan successfully launched early morning today; President and PM congratulate ISRO scientists;

No windfall tax on oil refineries: Govt;

Advani not averse to taxing polluting industries;

Raj Thackeray arrest leads to arson in Kalyan and other parts of Maharashtra;

ddt 22 oct.pdf

Revenue gets a breather – more time to file appeal in Supreme Court;

spl down.pdf

Special Economic Zones or 'Special Exploitation Zones'?

punjab vat story.pdf + 2008-TIOL-510-HC-P-H-VAT.pdf

Nand Kishore & Co Vs State of Punjab (Dated: August 13, 2008)

Punjab VAT – discriminatory tax on import of sugar from other states unconstitutional - Article 304 of the Constitution of India authorises the State Legislature to levy tax on goods imported from other States or Union Territories, but levy of such tax should not discriminate between the goods so imported and similar goods manufactured or produced within the State. Clause (a) of Article 304 of the Constitution of India though worded in a positive language has a negative aspect. It is, in truth, a provision prohibiting discrimination against the imported goods vis -a- vis the goods manufactured or produced within the State. The basic object of the provision is to check the States from creating what may be called “tax barriers” or “fiscal barriers” with the object to ensure enjoyment of right guaranteed under Article 301 of the Constitution of India to the freedom of trade, commerce and intercourse throughout the territory of India. The object is to emphasise upon oneness of the territory of India.

The inescapable conclusion is that the action on the part of the respondents in levying sales tax on sale of sugar imported from outside the State of Punjab except levy sugar is clearly violative of Articles 301 and 304(a) of the Constitution of India. In fact, upto 5.11.2007, there was no discrimination as such in the levy of tax on the sugar manufactured in the State of Punjab or imported from outside the State of Punjab as single entry No. 49 existed in Schedule `A' to the VAT Act providing for tax free goods. The levy of discriminatory tax came into force with the issuance of impugned notifications, whereby entry 49 in Schedule `A' was substituted, thereby providing for no tax on the sale of sugar manufactured in the State of Punjab and entry 152 was added in Schedule `B' providing for tax on the sale of sugar imported from outside the State of Punjab. From a plain reading of the two notifications, it is clearly made out that discriminatory tax was imposed on the imported sugar as against the sugar manufactured in the State of Punjab, which cannot stand scrutiny in the light of the provisions contained in Articles 301 and 304(a) of the Constitution of India.: PUNJAB AND HARYANA HIGH COURT;

Post of Dir TRU.pdf

TRU in CBEC looking for Director-level deputationists;

mbuzz1091.pdf

WB grants USD 400 mn loan to Power Grid Corpn for power exchange;

mbuzz1090.pdf

88% of India's exports caters to dollar-dominated economies;

mbuzz1089.pdf

Law Commission for decriminalisation of attempt to suicide;

mbuzz1088.pdf

CBN hosts global meet on drugs; INCB urges all countries to monitor trade in precursor chemicals ;

2008-TIOL-199-SC-IT.pdf

CIT Vs Ambejogai Sahkari Sakhar Karkhana Ltd (Dated: October 17, 2008)

Condonation of delay-period extended from 200 days to 300 days for tax cases:SUPREME COURT ;

2008-TIOL-198-SC-IT.pdf + sc it story.pdf

CIT, Ahmedabad Vs Sarabhai Holdings Pvt Ltd (Dated: October 21, 2008)

Income Tax – Penalty – law permits the contracting parties to lawfully change their stipulations – What is material in the tax jurisprudence is the evasion of tax, not the beneficial lawful adjustment therefor . In the commercial world, the parties are always free to vary the terms of contract and, therefore, the assessee and the vendee had no legal impediment in modifying the terms of their contract. Merely because by Resolution the assessee agreed to defer the payment of interest, would not mean that it tried to evade tax.

Mens rea has to be shown for penalty under Section 273(2)(a): there has to be a satisfaction of the Assessing Officer that the estimate of advance tax furnished by the assessee was not only untrue, but the assessee also knew or had reason to believe the same to be untrue. While the levy of interest under Section 215 of the Act is automatic, that is not the case with the penalty under Section 273(2 )( a) of the Act, where the mens rea on the part of the assessee would have to be shown to the extent, it has been indicated in the language of the Section, where, therefore, there was some scope for the assessee to justify the estimate given by it and that the penalty could not be inflicted : SUPREME COURT ;

2008-TIOL-197-SC-IT.pdf + SC IT2 STORY.pdf

Vijay Ship Breaking Corpn Vs CIT, Ahmedabad (Dated: October 1, 2008)

Income tax - Ss 80HH and 80I benefits - assessee is into ship-breaking - AO disallows the benefits on the ground that the ship-breaking activity does not produce new article - Held, the connotation of the word 'production' has much wider connotation than the word 'manufacture'. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. Further, the Legislature has used the words 'manufacture' or 'production'. Therefore, it is settled judicial view that the word 'production' cannot derive its colour from the word 'manufacture'. Further, even according to the dictionary meaning of word 'production', the word 'produce' is defined as something which is brought forth or yielded either naturally or as a result of effort and work. Thus the ship-breaking activity results in production of a distinct and different article. And such an activity cannot be denied the benefits of Ss 80HH and 80I.

TDS u/s 195(1) for usance interest paid for purchase of the vessel for ship breaking - Since the Income Tax Act has been amended since 1983 and Explanatin 2 inserted in the Act declares that usance interest payable outside India by an undertaking engaged in the business of ship-breaking in respect of purchase of a ship from outside India shall be deemed to be the interest payable on a debt incurred in a foreign country in respect of the purchase outside India, the usance interest is exempt from tax if paid outside India. However, TDS is applicable if it is assessable in India.: SUPREME COURT ;

2008-TIOL-196-SC-IT.pdf

CIT, Kolhapur Vs The Ratnakar Bank Ltd (Dated: October 13, 2008)

Income tax - assessee-bank earns interest on government securities - Is such interest liable to be assessed under Sec 2(27) of the Interest Tax Act? - Tribunal and HC hold loans and advances do not include interest on securities, bonds and debentures - It is already settled by two Bombay HC decisions that there is a basic difference between loans and advances on the one hand and investment / securities on the other. Held, the Apex Court is in agreement with the HC decisions: SUPREME COURT ;

2008-TIOL-195-SC-IT.pdf

CIT, Rajkot Vs M/s Gujarat Siddhi Cement Ltd (Dated: October 17, 2008)

Income tax - Sec 43A - assessee claims deduction as investment allowance for increase in the cost of plant and machinery because of fluctuation in exchange rate - AO disallows on the ground that the plant for which an increase being claimed was installed in the earlier years - Tribunal allows the claim and the HC dismisses the Revenue's petition in view of its earlier decision - Held, the provision in Section 43A(1) clearly relates to the fluctuation in the previous year in question. If any extra benefit is taken the same has to be taxed in the year when the liability is reduced as provided in terms of Section 41(1)(a) Explanation 2. Therefore, whenever there is fluctuation in any previous year, Section 43A (1) comes into play. However, the issue remanded to the AO so that the assessee could establish the factual position relating to fluctuation in foreign exchange rate : SUPREME COURT ;

CENTRAL EXCISE SECTION

2008-TIOL-1724-CESTAT-DEL.pdf

M/s Sita Singh & Sons Pvt Ltd Vs CCE, Delhi-IV (Dated: July 16, 2008)

Central Excise – Clearance of bus bodies on payment of duty on the entire value of bus body including chassis without availing benefit of Notification 6/2002-CE – When Section 5A (1A) does not compel the appellant to avail the exemption Notification 6/2002-CE, it cannot be forced on them by interpreting CENVAT Credit Rules as suggested by the Department - CENVAT Credit availed on other inputs cannot be denied by in such instances :DELHI CESTAT;

2008-TIOL-1723-CESTAT-MAD.pdf

CCE, Coimbatore Vs M/s Benkal Tea Facto (Dated: July 16, 2008)

Central Excise – letter of undertaking for availing the benefit under Notification 41/99 CE – relevant date – date on which the letter of undertaking was received by the Assistant Commissioner is the relevant date – but not the date of posting the letter of undertaking.:CHENNAI CESTAT;

2008-TIOL-1722-CESTAT-DEL.pdf

M/s Krishna Cap Box Pvt Ltd Vs CCE, Meerut-I (Dated: June 17, 2008)

Central Excise – Default in payment of excise duty – Entire amount of duty paid by the assessee by 5 th of the following month – Part of this amount i.e. availed by way of CENVAT credit on defective material recd in the factory held irregular subsequently and reversed later – No irregularity in the monthly payment – Rule 8 3(A) of CER cannot be invoked :MUMBAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1728-CESTAT-MAD.pdf + visa story.pdf

Citibank N A Vs CST, Chennai (Dated: September 29, 2008)

Service Tax – payment made by Citibank to VISA – Prima facie no tax prior to April 2006 – Stay granted - it was on 18.4.06 that Section 66A was inserted in the Finance Act, 1994 for making service-recipient liable to pay service tax where the service is received from a foreign party having no office in India. :CHENNAI CESTAT;

2008-TIOL-1727-CESTAT-DEL.pdf

CCE, Allahabad Vs M/s Darpan Colour Lab (Dated: September 1, 2008)

ST - delay in payment of tax - penalty - Commissioner (A) does not agree with the Revenue - Revenue argues that since registration was taken by the assessee before the introduction of amnesty scheme, penalty is leviable - Issue is no longer open for argument and is already settled in favour of the assessee - no penalty called for : DELHI CESTAT;

2008-TIOL-1726-CESTAT-DEL.pdf

M/s Smart Chips Limited Vs CCE, Bhopal (Dated: September 16, 2008)

ST - Business Auxiliary Service - Assessee enters into agreement with the State Transport Department for supplying smart cards with printed personalised information related to driving licence and certificates - Revenue demands tax - Since the assessee is providing service in relation to statutory function of the Govt which may not be treated as 'business activity' fo the Govt and the supply of blank smart cards may not be considered as input to the Govt department, and the processing of smart cards cannot be treated as processing of goods, the assessee makes a prima facie case for waiver of pre-deposit : DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08pn096.pdf

Import of acruylic fibre to be allowed as alternate input for acrylic tow;

dgft08pn095.pdf

SION rate of rice/wheat etc amended;

dgft08pn094.pdf

SION rate of sesame seeds etc amended;

dgft08pn093.pdf

Export of Barley entitled to duty credit scrip: DGFT;

ctariff08_109.pdf

Anti-dumping duty on Vitamin C extended for one year;

CASE LAWS

2008-TIOL-1725-CESTAT-DEL.pdf

M/s Banwari Aromas Pvt Ltd Vs CC, ICTD, TKD, New Delhi (Dated: July 4, 2008)

Customs – rejection of request for relaxation of provisions of Rule 12 (1)(a) of the Customs and Central Excise Duties (Drawback) Rules, 1995 – since the rejection was done without giving the opportunity of personal hearing, matter is remanded. : DELHI CESTAT;