Core sector growth slows down to 5.1% but improves on August performance;

No Service Tax on Alcohol Manufactured by Job Workers;

HRD Minister to address VCs of Central Univs + Directors of Central Technical Institutes;

CBEC file on promotion to Chief Commissioner-level comes back from DoP&T with a query relating to lapse of two posts;

Raj Thackeray-led anti-North Indian drive: SC says 'all of us are Indians' ;

ddt 07 nov.pdf + truliquor.pdf

2008-TIOL-543-HC-MUM-FEMA.pdf + fera story.pdf

Shantilal J Sheth Vs Appellate Tribunal For Foreign Exchange & Others (Dated : October 22, 2008)

FERA - Pre- Deposit of Rs. 75 Lakhs – Petitioner has no money. If he is to be believed, no waiver can be granted as Government revenue is not safeguarded; If he is not believed, waiver cannot be granted as it is assumed he has the money: BOMBAY HIGH COURT ;

vacancies_dri.pdf

DRI (Hqs) looking for IOs;

office_memorandum_16.pdf

Advances to Government servants - Rate of interest for purchase of conveyances during 2008-2009;

mbuzz1139.pdf

Antony asks Defence PSUs to reduce dependence on imports;

mbuzz1138.pdf

Foreigners buying immovable property in India: MoF alerts State Govts about fulfilment of conditions;

2008-TIOL-542-HC-MAD-IT.pdf

M/s Sterlite Industries (India) Ltd Vs ACIT, Chennai (Dated: August 28, 2008)

The High Court is not supposed to satisfy itself as to whether the income, profits or gains chargeable to income tax, have been under-assessed or such under-assessment has occurred either due to omission or failure on the part of the assessee to make a return of his income or omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the year. It was for the assessing officer/ITO to satisfy those aspects, but he failed to satisfy those conditions in the present case: From the records, it is clear that the Revenue failed to satisfy that the assessing officer had reasons to believe that ( i ) the income, profits and gains, chargeable to income tax, have been under-assessed and (ii) the assessing officer had also reason to believe that such under-assessment had occurred by reason of either (a) omission or failure on the part of the assessee to make a return of his income or (b) omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the year. All the aforesaid conditions having been not satisfied by the assessing officer, we hold that the assessing officer had no jurisdiction to issue the notice under Section 148 of the Act, relating to the income escaping assessment u/s 147 of the Act, for the assessment or re-assessment beyond the period of four yeas , but within the period of eight years from the end of the year in question. : MADRAS HIGH COURT ;

2008-TIOL-540-ITAT-MUM.pdf + search TM story.pdf

Shri Nandlal M Gandhi Vs ACIT, Mumbai-21 (Dated : July 16, 2008)

Income Tax - by passing a restraint order u/s. 132(3), the time limit available for framing the assessment cannot be extended; the department is seeking the extension of time limit for framing the assessment on the strength of prohibitory order issued u/s. 132(3) on 29-7-1997 which was finally revoked on 8-9-1997. The revenue wants the period of limitation for the purpose of Sec. 158BE to be reckoned from 8-9-1997 when the prohibitory order u/s. 132(3) was revoked and a panchanama was prepared stating that the search is finally concluded. However, from the facts of the case it is evident that so far search is concerned, it was already completed on 29-7-1997 when the premises of the assessee was completely searched and all the assets found were inventorised and a panchanama prepared. Thereafter no action for further search had taken place and after the verification of the assessee's explanation with regard to jewellery and shares, the prohibitory order in respect of jewellery was revoked on 1-8-1997 and in respect of share certificates on 8-9-1997.

A panchanama prepared on the revocation of prohibitory order u/s. 132(3) wherein the only thing mentioned is 'search is finally concluded', is not a valid panchanama – Therefore, the panchanama prepared on 8-9-1997 cannot be said to be a panchanama prepared in pursuance to the warrant of authorization for search within the meaning of See. 158BE ( 1) of the Act. If a panchanama prepared on the revocation of prohibitory order u/s. 132(3) wherein the only thing mentioned is 'search is finally concluded', is held to be a panchanama prepared on the conclusion of search within the meaning of Explanation to Sec. 158BE , it would amount to an extending the period of limitation for completion of assessment on account of restraint order u/s. 132(3). It would be contrary to the decision of jurisdictional High Court in the case of Mrs. Sandhya P. Naik :MUMBAI ITAT;

2008-TIOL-539-ITAT-MUM.pdf

Idea Cellular Ltd Vs ITO, Mumbai (Dated : October 08, 2008)

Income tax - assessee is a cellular company - makes payments to non-resident for providing certain services - No TDS deducted at source in view of the Nil TDS certificate issued by the AO - AO initiates proceedings u/s 163 and treats the assessee as an agent of the non-resident and makes assessment of income by converting the payment made in UK Pound into Rupees - CIT(A) accepts the assessee's plea that it had no business connection with the non-resident but rejected other contentions - Held, as per settled laws, there is no bar in initiating the proceedings against the person making the payment by treating him as an "agent" u/s 163 of the Act. As per Sec 166, AO has the jurisdiction to either assess a non-resident firm or its agent. Thus, the initiation of proceedings of assessment against the principal non-resident cannot be a bar for either continuing those proceedings or initiating fresh proceedings against the resident agent of the non-resident. Merely because the Income Tax Officer did not choose to proceed against the non-resident firm, it does not relieve the obligation of the agent of the firm from the liability to pay tax. The mere issue of certificate by the AO not to deduct tax at source does not affect his powers u/s 163 - Revenue's appeal allowed :MUMBAI ITAT;

2008-TIOL-538-ITAT-DEL.pdf

Sahara Airlines Ltd Vs ITO, New Delhi (Dated : September 11, 2008)

Income Tax - TDS - Assessee is an airlines - gets licensed software and system for ticketing and making reservation from two non-resident companies - makes payments - AO treats it as royalty in the hands of non-resident parties - Assessee deducts TDS but goes in appeal - CIT(A) agrees with the AO - Held, non-resident companies cannot be taxed in India unless it is decided that they have a business connection with India and undertake operation through PEs or if they have agents, remuneration paid to them to be deducted from income and also if certain operations of non-resident companies are not carried out in India it is to be worked out how much of income is attributabel to the PE - Matter remanded for fresh consideration :DELHI ITAT;

2008-TIOL-537-ITAT-DEL.pdf

Royal Jordanian Airlines Vs DDIT, New Delhi (Dated : August 29, 2008)

Income-tax Act - Section 44BBA – Assessee was engaged in business of operation of aircraft in international traffic, filed ‘nil' returns for relevant assessment years on the basis that since it had incurred losses, both in global and Indian operations, no income whatsoever could be brought to tax in India – AO however held that despite losses suffered by assessee provisions of section 44BBA were applicable to it - Held, section 44BBA is not a charging section but a machinery provision for computation of income – Further held, that since assessee had produced its book of accounts in which a loss was declared, income could not be artificially computed by invoking provisions of section 44BBA – Therefore AO was to be directed to recompute income on basis of books of account maintained by the assessee. :DELHI ITAT;

CENTRAL EXCISE SECTION

2008-TIOL-1821-CESTAT-MAD-LB.pdf + LB story.pdf

M/s Bimetal Bearings Ltd Vs CCE, Chennai (Dated: September 30, 2008)

Central Excise – Provisional assessment: Even where duty is paid suo motu before finalization of provisional assessment, the manufacturer liable to interest on the differential duty – In the ordinary course, the assessee is required to pay the duty by the fifth day of the succeeding month on monthly basis. Provisional assessment is a concession allowed to the assessee where he is unable to determine the value of the excisable goods or determine the rate of duty applicable to such goods. The request for provisional assessment can be accepted ‘for reasons to be recorded in writing' which means that the request is not to be routinely granted as a matter of course. Further, under sub-rule (2) of rule 7, the assessee is required to execute a bond in the prescribed form and, also, furnish surety or security to the satisfaction of Assistant /Deputy Commissioner of Central Excise ‘binding the assessee for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed'. Having opted for provisional assessment, on execution of such bond, with surety or security, the assessee cannot deny the liability to pay interest on the differential amount of duty.

“Consequent to” means as a result of , not after “the expression ‘consequent to' contemplates payment of central excise duty as the result of final assessment. The language of the rule is ‘shall be liable to pay interest on any amount' consequent to order for final assessment'. The assessment has to be finalized by the Department. The assessee cannot himself do it. Whether he is liable to pay any further amount in case he has paid the differential duty suo motu - cannot be determined at an earlier stage, much less by the assessee. This can be done only by the Department at the stage of finalization of assessment. If that is so, naturally, interest liability will abide by in the result of final assessment, that is, the quantum of duty finally assessed. Of course, where full differential duty stands paid, along with interest, the assessee will not be liable to pay any interest on the amount after finalization of assessment as stipulated in the Board's instructions and in such a case there is no question of demanding interest on account of delay on the part of the Department to finalise the assessment.

Interest is a measure of compensation . It is not a penalty and cannot be treated as a burden on the assessee. Where any amount is payable as duty, and only part thereof is paid by way of provisional assessment or even later, suo motu , it results in deprivation of differential duty to the exchequer, that is, financial loss to the exchequer and corresponding financial gain to the assessee. Therefore, whether differential duty is paid prior to or subsequent to final assessment, but beyond the due date, will make no difference. It is difficult to appreciate as to how an assessee can deny the liability to pay interest on the amount of duty. : CHENNAI CESTAT
( Larger Bench );

2008-TIOL-1820-CESTAT-AHM.pdf

M/s Twenty First Century Printers Ltd Vs CCE, Surat-II (Dated: September 19, 2008)

Central Excise - MODVAT Credit - denial of credit on the ground that the Bill of Entry was not endorsed for diversion of material to the appellants - It is well settled that in the absence of any doubt about the duty paid character of the inputs that received in the factory and their utilization in the manufacture of final products, cleared on payment of duty, the denial of credit on the technical and procedural grounds is not called for. : AHMEDABAD CESTAT;

2008-TIOL-1819-CESTAT-MAD.pdf

V R Foundries Vs CCE, Coimbatore (Dated: April 22, 2008)

Central Excise – Manufacture of rough castings – Castings for PD pumps exempt and castings for other applications dutiable - Consumption of common inputs for dutiable and exempted products – No dispute with regard to maintenance of books of accounts for the said final products – Demand of 8% on the price of exempted castings and imposition of penalty not sustainable .: CHENNAI CESTAT;

2008-TIOL-1818-CESTAT-MAD.pdf

M/s Aquasub Engineering Vs CCE, Coimbatore (Dated: March 28, 2008)

Central Excise – Demand - Approval of classification and applicable rate of duty are the functions of the department - After having extended exemption for clearances for several years no demand can be raised contrary to the classification declaration filed with the department invoking larger period – Demand hit by limitation : CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-1816-CESTAT-MUM.pdf + st story.pdf

M/s Electronica Finance Ltd Vs CCE, Pune III (Dated: September 18, 2008)

Services of Financial leasing provided to clients – Whether service tax to be paid at the rate prevailing at the time of receipt of EMI or at the time of entering the lease agreements – Tribunal finds prima facie case in favour of applicant in view of decision in M/s Art Leasing Ltd. vs. CCE, Cochin [ 2007-TIOL-1493-CESTAT-BANG ] – Waives pre-deposit. : MUMBAI CESTAT;

2008-TIOL-1815-CESTAT-DEL.pdf

M/s Hindustan Auto House (P) Ltd Vs CCE, Jaipur (Dated: September 4, 2008)

ST - Assessee is a car dealer - Revenue demands tax and levies penalty for not paying tax on free services provided to car purchasers and getting reimbursements from car manufacturers for the same - assessee pleads the service charges for free service are included in the assessable value for paying excise duty and sales tax by manufacturers - Since the Revenue fails to clearly show any such payment either by service recipients or manufacturers, demand is set aside : DELHI CESTAT;

2008-TIOL-1814-CESTAT-AHM.pdf

M/s Kirlburn Engg Ltd Vs CCE, Vadodara-II (Dated: September 22, 2008)

Service tax - Supervision charges for installation and commissioning of plant cannot be held to be covered under the heading Consulting Engineers – Issue involved for the period August 1997 to November 2001, assessee registered with Central Excise – Revenue cannot allege suppression when assessee was issued show cause notice to include the said charges in the AV of the final products – Impugned order liable to be set aside : AHMEDABAD CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff08_120.pdf

Air pellets of air rifles or air pistols, of 0.177 calibre exempted;

corrigendum.pdf

Amends 110/2008-Cus;

CASE LAWS

2008-TIOL-1817-CESTAT-AHM.pdf

M/s Shrimandhar Fabrics P Ltd Vs CC, Ahmedabad (Dated: August 19, 2008)

Customs - goods imported under EPCG - non-fulfilment of export obligation - in view of the clear cut finding by the DGFT about export obligation, action of the Department in demanding duty with interest and also encashing the bank guarantee cannot be found fault with - plea that since Bank Guarantee was given, no interest is payable is not accepatable - If the appellant deposited full amount for obtaining bank guarantee, it does not mean that the amount stands deposited in the Govt. treasury and has been credited in the Govt. account. : AHMEDABAD CESTAT;