Refund of service tax under notification No. 41/2007-ST - Board clarifies (See 'DDT')

No change in appointment policy of judges, says Govt;

Lok Sabha exonerates Ahmed Patel and Amar Singh in cash for votes case;

Govt working on another stimulus package exclusively for exporters;

CBEC amends tariff value of brass scarps and poppy seeds;

Mumbai terror attack a handiwork of LeT, says British Prime Minister;

WTO drops proposal to hold ministerial meet this month;

ddt 15 dec.pdf

CBEC Chief launches speed-boats in Mumbai;

guest.pdf

TDS on works contract under Andhra Pradesh VAT;

Insider in Pitara

Revenue Boards and history of their attitude towards deputationists!

2008-TIOL-228-SC-CT.pdf + sales story.pdf

Sales Tax - Whether Value representing the credit notes issued by the manufacturers to the distributors were to be included in the taxable turnover – Depends on what amount tax was originally paid – The basic issue can be better appreciated by way of an illustration. Hypothetically taking the sale price to be Rs.100/-, the tax to be paid by the selling dealers has to be on 100. He may collect 90, after giving discount. If the sale price of the intermediate seller is 110 his liability to pay tax shall be on 10 i.e. 110-100. The department's stand is that it should be 20 i.e. 110-90. This stand will not be correct if the first seller had paid tax on 100. Therefore, it has to be verified as to what was the amount on which tax was paid on the illustrative figures given above by the selling dealer.”

Personal Hearing is must: The stand of the assesses before the Tribunal and the High Court was that they were not given personal hearing and only on consideration of their objections, the orders were passed by the authorities. The Tribunal and the High Court held that since objections were considered, there was no need for giving personal hearing. The Supreme Court held that, “Such conclusion is clearly unsustainable.” :SUPREME COURT;

mysore_treade_notice.pdf

Filing of refund claims under Notification No. 41/2007 –ST dated 06.10.2007 - reg ;

mbuzz1259.pdf

Govt to amend IT Act to prevent obscenity in e-form;

mbuzz1258.pdf

No proposal to change appointment policy of judges: Govt ;

mbuzz1257.pdf

Govt has taken many steps for physical rehabilitation of disabled: Minister ;

mbuzz1256.pdf

All labour laws are applicable to SEZs: Labour Minister;

mbuzz1255.pdf

World Bank sanctions USD 14 bn for infrastructure and poverty eradication in India;

mbuzz1254.pdf

Nano technology: Challenge is to do something for masses, says V-P;

NOTIFICATION

it08not107.pdf

Income-tax ( Eleventh Amendment) Rules, 2008 Expenditure on scientific research: CBDT issues 11th Amendment Rules and prescribes Form No 3CF-III;

CASE LAWS

2008-TIOL-621-ITAT-MUM.pdf + brazil story.pdf

DCIT, Mumbai Vs M/s Cia de Navegacao Norsul, Brazil (Dated: November 25, 2008 )

Income tax - India-Brazil DTAA - assessee is a non-resident company - engaged in the business of shipping of persons and cargo of goods - claims exemption under Article 8 of tax treaty - AO disallows on the ground that assessee fails to link transporation of cargo by feeder vessels to mother vessels which ultimately carried the goods in international traffic - CIT(A) allows the appeal on the basis of commentaries of OECD Model Convention - Held, resorting to OECD commentaries is illogical and avoidable if certain expressions have been defined within the DTAA. Since the expression 'operation of ships' has been defined in Article 8 of the DTAA and such an operation cannot be delinked from ownership or lease or charter of ships or aircraft, benefits will not be admissible if ships are not owned by the assessee which is the fact in this case. However, if facts are established that the goods were transported by ships owned by a consortium to which assessee is a memebr from mid-way port to the destination, benefits will be available to the assesse on income attributable to the onward voyage - Revenue's appeal partly allowed : MUMBAI ITAT ;

2008-TIOL-620-ITAT-DEL.pdf

ACIT, Dehradun Vs M/s Enron Global Exploration & Production Ltd (Dated: October 24, 2008 )

Income tax - assessee is incorporated in the USA - its subsidary is registered in Cayman Isaland - both undertake oil exploration in India under production sharing contract (PSC) - claims rendering services on cost to cost basis to the subsidiary for Indian operations - gets reimbursements of expenses - files nil return - Revenue rejects the assessee's contention that there was no profit motive and the payments are reimbursement of expenses and levies tax on 10% of revenue related to work in India and 1% of revenue for work done outside India - CIT(A) deletes the addition on the basis that in terms of PSC, the assessee cannot charge a profit from the joint venture partner as it is an affiliated company and the proof produced also indicates so

Held, no error in the CIT(A) order as there is no profit element in the receipts of the assessee company because the payments were made as per the PSC approved by both the Houses of Parliament and as per the PSC, the payment made by a party to the PSC to any of its affiliated company is to be without any profit;

India-USA DTAA - Since most of the work was done by the assessee outside India it had no PE in India, and even if it had one, only the income attributable to the PE can be taxed. However, since the work was done outside India and expenses were also incurred outside India, any business profit is not taxable in India as income did not accrure in India : DELHI ITAT ;

2008-TIOL-619-ITAT-BANG.pdf

M/s Bhandari Spinning Mills Ltd Vs ITO, Bangalore (Dated: September 12, 2008 )

Income tax – Deduction claimed for payment of brokerage on purchase of raw materials - Assessee's inability to obtain confirmation letters from the raw material suppliers that they supplied cotton through brokers not to be viewed as a refusal on the part of assessee to disclose material facts and information - Brokerage bills, copies of the ledger account, letters from the brokers confirming the services rendered and the receipt of the brokerage and other relevant particulars were produced in the course of the assessment proceedings – Assessee submitted whatever details they had in their possession in support of the deduction claim - Assessee actions cannot be dismissed as not bonafide – Evidence adduced in quantum proceedings to be viewed afresh in penal proceedings - Penalty imposed under s. 271(1)(c) set aside : BANGALORE ITAT ;

2008-TIOL-618-ITAT-MAD.pdf

Smt Fathima Haris Vs ITO, Chennai (Dated: April 10, 2008 )

Disallowance under sec. 40(a)(i) – Commission payments to non-resident – not deducted tax at source – disallowance upheld

Disallowance of service charges and commission – evidence not produced – addition upheld.

Assessee contended that the commission was paid for procuring export orders and since the recipient/agent was situated in Hong Kong, no tax need to be deducted at source, applying the CBDT Circular No. 786 dated 7th February, 2000. On appeal, it was noted that the sales were made through the Delhi based company M/s. Textile Network Ltd. and the payments of commission were also made to this company for booking orders with the foreign buyers in USA, that the even address for communication with the foreign-company was shown to be in Delhi and hence the payments of commission was covered within the ambit of the expression “other sum chargeable under the I.T. Act” as appearing in section 40(a)(i). Though it was stated that there was an agreement between the assessee and M/s. Textile services, Hong Kong, the commission was paid to M/s. Textile Network Ltd, a company situated in India and hence the income in the form of commission was received in India by an agent of the foreign concern. Therefore board circular no. 786 will not help the assessee and the disallowance was rightly made by the A.O.

Service charges paid for the services rendered in obtaining duty drawback claims from concerned departments disallowed by A.O. since no evidences in support of rendering of services, produced. Addition upheld by ITAT.

Disallowance made under sec. 43B relating to contribution made to ESI & EPF deleted in view of Apex Court decision in Commissioner of Income Tax vs. Vinay Cement Ltd. reported in (2007) 213 CTR (SC) 268.= (2007-TIOL-251-SC-IT)

Appeal by assessee partly allowed. : CHENNAI ITAT ;

2008-TIOL-617-ITAT-MAD.pdf

Shri P R Ganapathy Vs DCIT, Chennai (Dated: April 22, 2008 )

Claim of receipt of huge amount as NRE gifts – Claim disallowed on preponderance of probability

An I.T. assessment is completed on the preponderance of probability. The rule of probability is the rule of evidence in so far as matters of civil disputes are concerned. The corner stone of preponderance of probability is that any act or statement of a person shall be answerable to the reasoning of a common man of ordinary prudence. 

Assessee a resident of Chennai claimed to have received NRE gifts of Rs. 46,44,150 from various persons hailing from Kerala. No plausible explanation was offered to establish that the donors are his friends / relatives or the gift is out of natural love and affection. Since explanation offered by the assessee is incredibly unbelievable, claim of receipt of NRE gifts held to be not genuine.

Assessee's appeal dismissed. : CHENNAI ITAT ;

2008-TIOL-616-ITAT-MUM.pdf + mobile story.pdf

DCIT, Mumbai Vs M/s B S Exports (Dated: October 29, 2008)

Income Tax – Expenditure on Mobile phones partly used for personal calls and residential telephones – 20% disallowed; The counsel for the assessee has pointed out that the Assessing Officer has made the disallowance of 20% in respect of all the telephones. It was contended that there was no telephone installed at the residence of the partners. It was however, contended that the mobile phones have partly been used by the partners for personal calls. It was, therefore, suggested that 20% out of the mobile phone expenses may be sustained and no disallowance in respect of telephone installed at the office be upheld. Since the suggestion given by the AR is reasonable, the Tribunal upheld the disallowance of 20% in respect of mobile phones or telephones installed at the residence of partners and in respect of telephones installed at the office premises, no disallowance is justified and the same is accordingly deleted. The Assessing Officer is directed to work out the disallowance accordingly.

Revenue appeal against a decision not made by CIT( A) – dismissed – ITAT: The counsel for the assessee contended that this ground of appeal raised by the Revenue is misconceived as there is no such direction contained in the order of the CIT(A). The D.R. was unable to point out such a decision having been taken by the CIT( A). The ground of appeal raised by the Revenue, being misconceived, is accordingly dismissed. : MUMBAI ITAT ;

CENTRAL EXCISE SECTION

2008-TIOL-2046-CESTAT-BANG.pdf

M/s Akzo Nobel Coatings India Pvt Ltd Vs CCE, Larger Tax Payers Unit, Bangalore (Dated: July 1, 2008)

Central Excise – Returned Goods – Denial of credit – assessee's documents ought to have been verified by Department – matter remanded : BANGALORE CESTAT;

2008-TIOL-2045-CESTAT-BANG.pdf

M/s A R Trading Company Vs CCE, Bangalore (Dated: July 1, 2008)

Tribunal while setting aside the impugned order,  remits back the case to Commissioner (A) to decide the case on merits after following the Principles of Natural Justice. : BANGALORE CESTAT;

2008-TIOL-2044-CESTAT-BANG.pdf

CCE, Hyderabad Vs M/s Koya & Company Construction Pvt Ltd (Dated: June 20, 2008)

Central Excise – Valuation - cost of transportation, laying, jointing, testing and commissioning, by any stretch of reasoning, cannot be considered to be the elements of price of goods at the factory gate. : BANGALORE CESTAT;

2008-TIOL-2042-CESTAT-MAD.pdf

CCE, Trichy Vs M/s Giri Tex (Dated: June 6, 2008)

Central Excise - Interest payable even if duty paid before SCN : CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-2050-CESTAT-KOL.pdf + st penalty story.pdf

M/s Remac Marketing Pvt Ltd Vs CST, Kolkata (Dated: October 1, 2008)

Service Tax realized from clients but not deposited in Government treasury – Conscious disregard to law – Tribunal says there is no alternative than to prevent future recurrence by appropriate dose of penalty.

Double penalty could not be imposed under sections 76 and 78 of the Finance Act, 1994 in view of the Tribunal decisions in The Financers Vs. Commissioner of Central Excise, Jaipur ( 2007-TIOL-1778-CESTAT-DEL ) and Opus Media and Entertainment Vs. Commr. of C. Excise, Jaipur ( 2007-TIOL-1802-CESTAT-DEL ).

Penalty under section 76 of the Finance Act, 1994 –

Argument of the Appellant did not throw light why tax realized was not deposited into the treasury and whether there was reasonable cause to grant impunity under the law.

Bonafide of the appellant could not come forward nor any reasonable cause was placed before us to consider the reason of failure to make deposit of the tax due.

Appellant's plea that entire tax having been deposited before issue of show cause notice it is entitled to immunity from penalty would tantamount to condoning violation of law by the assessee with impunity and the appellant having resorted to defiance attitude, it should not be exonerated from penalty.

We are, therefore, of the opinion that for admitted violation of law, the appellant will undoubtedly be liable to penalty under law for breach thereof.

Conscious disregard to the law was made by Appellant and we are of the opinion that the Appellant has left us with no alternative than to prevent future recurrence by appropriate dose of penalty.

However, finding that the penalty imposed appeared to be disproportionate and called for intervention, the Tribunal reduced the penalty to Rs.1,00,000/- saying that it would meet the ends of justice.

Appellant succeeds partly . : KOLKATA CESTAT;

2008-TIOL-2049-CESTAT-DEL.pdf

M/s Agra Steel Corporation Vs CCE, Kanpur (Dated: July 11, 2008)

ST - C & F Service - assessee enters into agreement with a steel manufacturer to act as consignment agent - it stores goods in warehouses, transports the goods from rail station to godowns and also cuts, blends and straightens them - Revenue for tax on gross amount charged by the assessee - Since the assessee raises composite bill for warehousing and transporation charges, tax is to be paid on the sum collected for both these activities but not for cutting, blending and straightening : DELHI CESTAT;

2008-TIOL-2048-CESTAT-AHM.pdf

M/s ESSAR Steel Ltd Vs CCE & CC, Surat-I (Dated: November 4, 2008)

ST - Banking and Financial Services - assessee raises external commercial borrowings and pays charges to non-resident for arranging the same - Revenue raises demand - assessee pays tax with interest but contests penalty on the ground that paying tax was a revenue neutral activity for them as they pay huge amount of excise duty and they can take cenvat credit for the same - Held, there is substance in the assessee's argument that they could not pay tax because of lack of coordinatiron between them and their head office in Mumbai. The assessee is also right that there is an element of revenue neutrality in the case and no allegation of tax evasion can be made. It is a fit case for invoking Sec 80 - Assessee's appeal allowed : AHMEDABAD CESTAT;

2008-TIOL-2041-CESTAT-AHM.pdf

M/s Kumkum Education Academy Vs CST, Ahmedabad (Dated: October 31, 2008)

ST - Commercial coaching and training - assessee surrenders registration certificate in its belief that coaching provided in foreign language is not liable to tax - Revenue raises demand - Tax with interest deposited but penalty contested - Pre-deposit waived : AHMEDABAD CESTAT;

CUSTOMS SECTION

NOTIFICATION

cnt08_131.pdf

CBEC amends tariff value of brass scarps and poppy seeds

ctariff08_133.pdf

CBEC imposes anti-dumping duty on chemicals like MBT, CBS and TDQ;

CASE LAWS

2008-TIOL-2047-CESTAT-DEL.pdf + isd story.pdf

M/s Turnkey Software Solutions Vs CC, New Delhi (Dated: November 14, 2008)

ISD calls at local call rates – the Customs angle – Goods imported by STPI unit diverted for providing ISD calls as local calls – Confiscation of goods and penalty confirmed – The installed equipments were used for unintended and unauthorised purposes. Using these imported equipments and the facility provided by STPI and using the MTNL lines taken in the name of a telemarketing company, they have operated as a parallel Telecom authority. It is clear case of violation the conditions of the Notification No 140/91- Cus dated 22-10-91 and therefore, the goods are liable for confiscation.

Duty payable even if goods are not redeemed – The reliance placed by Revenue in the case of Bombay Hospital Trust ( 2005-TIOL-996-CESTAT-MUM-LB ) in the submission that the duty becomes payable even if the goods are not redeemed is acceptable and the applicable duty shall be "payable irrespective of whether they redeem the same or not independently of Section 125(2) as the duty is recoverable under Section 12.

No penalty on firm and proprietor: As regards the separate penalty of Rs. 50 lakhs imposed on Shri Rakesh Gupta is concerned, the same is set aside, as a separate penalty on the proprietor is not justified.

No permission needed from Development Commissioner: The jurisdiction of the Customs Authorities and the powers to demand duty short levied/ short paid/ not levied are not dependent on any permission of the Development Commissioner as the same flow from the provisions of the Customs Act. If there is any violation of internal arrangement/understanding between the Development Commissioner and the Customs Authorities, the same cannot be a ground to hold that the customs authorities cannot exercise the powers vested on them.: DELHI CESTAT;

2008-TIOL-2043-CESTAT-DEL.pdf

M/s Best & Co Vs CCE, New Delhi (Dated: October 23, 2008)

Customs - classification - "Hardware M-380 point of sale terminals with Primer" - classification under tariff heading 8479.9090 by the department is upheld.

Valuation - value of specially written software for data processing requires to be included in the assessable value of the imported equipment. : DELHI CESTAT;