Like CBI, maintain impartiality and integrity at every cost - CBI Chief Ashwini Kumar (See 'DDT')

Cadre Review and Restructuring of the Income Tax Department; Similar exercise in Central Excise, Customs and Service Tax (See 'DDT')

Central Excise and Customs collections continue to log negative growth; Service tax mop-up also down to 16% in Oct ;

High net FII outflows and sharp rise in trade outflows for crude contributing to falling Rupee;

NPPA asks pharma companies to cut prices by 2.84% in view of excise duty cut;

Union Cabinet gives nod to proposal to set up National Investigating Agency; Bill to be tabled in Parliament soon

House Panel asks Govt to regulate TRP system for broadcasters;

ddt 16 dec.pdf

Measures To Promote Scientific Research And Development – It Relief;

tiol spl guest.pdf

All about VAT and GST in India;

mbuzz1265.pdf

Central Excise and Customs collections continue to log negative growth; Service tax mop-up also down to 16% in Oct ;

mbuzz1264.pdf

High net FII outflows and sharp rise in trade outflows for crude contributing to falling Rupee ;

mbuzz1263.pdf

Delhi-Mumbai Industrial Corridor: First phase to be over by 2012 ;

mbuzz1262.pdf

New Wholesale Price Index: Govt still studying product basket ;

mbuzz1261.pdf

Central aid to Growth Centre Scheme to end on March 31, 2009;

mbuzz1260.pdf

NPPA asks pharma companies to cut prices by 2.84% in view of excise duty cut;

cbdt_cadre review.pdf

Cadre Review and Restructuring of the Income Tax Department;

CASE LAWS

2008-TIOL-626-ITAT-MUM.pdf + notice story.pdf

Zeus Air Services Pvt Ltd Vs ACIT, Mumbai (Dated: October 13, 2008 )

IT - As the Assessing Officer failed to issue the notice within the period of 12 months from the end of the month in which the assessee filed the block return, the assessment is null and void - the provisions of section 143(2) of the Act though it is a procedural one is mandatory and the Assessing Officer is bound to follow that if the Assessing Officer decides to determine the undisclosed income of the assessee. As the Assessing Officer failed to issue the notice within the period of 12 months from the end of the month in which the assessee filed the block return, there is fetter on the power of the Assessing Officer to make the assessment and hence the assessment made by the Assessing Officer is null and void.:MUMBAI ITAT ;

2008-TIOL-625-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Anl Container Line Pty Ltd (Dated: November 25, 2008 )

Income tax - India-Australia DTAA - Assessee is a tax resident of Australia - engaged in shipping business - files return but claims exemption under tax treaty - AO asks for details of feeder vessels and nexus between the goods transported by the feeder vessels and loaded on the mother vessels at Singapore - Assessee furnishes some details which were admitted as additional evidence by CIT(A) who allows 100% relief - Held, the expression 'Operation of Ships or Aircrafts' appearing in Article 8 of the tax treaty has not been defined in the treaty, therefoe one may look up commentatires on this subject. And, as per Klaus Vogel's commentaries activities of trasnporting cargo by feeder vessels is incidental to the main acitivity of shipping goods by mother vessels but nowhere it spells out that there is no need for a nexus between between the transporation of goods by feeder vessels and the same being loaded on the mother vessels starting voyage from Singapore to Australia. Relief allowed for some of the consignments where it was established that the goods transported by feeder vessels were finally transported by mother vessels chartered by the assessee from Singapore to Australia. For other consignments the matter is remanded to the AO for verification and no benefit to be allowed if the mother vessels are found to be not owned, leases or chartered by the assessee or ships belonging to the pool to which the assessee is a Member :MUMBAI ITAT ;

2008-TIOL-624-ITAT-MUM.pdf

M/s Commercial Leasing Corporation Pvt Ltd Vs ACIT, Mumbai (Dated: August 22, 2008 )

Income Tax - depreciation - assessee is into leasing business - enters into agreements with customers - claims depreciation on assets leased - AO terms them as financial arrangement, hire financing agreements and bogus transactions and disallows the claims - CIT(A) agrees with the AO

Held, the dispute is two-fold - the first part are those transactions where the agreements have been held to be bogus, the second part are those agreements which have been held to be hire financing agreements. As far as the first part is concerned, in the light of the principles of natural justice, the findings recorded by the lower authorities cannot be sustained. The orders of the CIT(A) to that extent are set aside and consequently, he is directed to re-adjudicate the matter.

In respect to second part the AO has not examined the lease agreement in detail and the findings of the lower authorities are not supported by reasons and the orders of the AO suffer from legal infirmity in the sense that in case depreciation is to be disallowed then lease rent received by the assessee cannot be assessed as income and in its place only the interest component can be assessed. The orders of the CIT(A) are set aside and the matter is remitted to the file of the AO for fresh adjudication in the light of the judgment of the Apex Court. In case the AO comes to the conclusion that agreements in question are financial lease, then he may disallow the depreciation but as a necessary corollary he will exclude the lease rentals from the total income of the assessee and assess only the interest 'component relating to the years under consideration.:MUMBAI ITAT ;

2008-TIOL-623-ITAT-MAD.pdf

ACIT, Coimbatore Vs M/s Precott Mills Ltd (Dated: October 24, 2008 )

Income Tax Act – Section 154 - The original assessment order was passed on 30.3.1999 u/s 143(3). The next rectification order dated 15.2.2001 was in connection with rectification of a mistake pertaining to Section 80G deduction, which had crept in the Revision Order dated 24.10.2000 passed to give effect to the Commissioner of Income Tax (Appeals)'s order against original assessment order. The next rectification order dated 20.4.2001 was related to allowance of depreciation of replaced machinery of assessment year 1993-94. The next revision order dated 1.7.2003 again pertained to excess depreciation allowed on replaced machinery during assessment year 1993-94. The next rectification order dated 30.1.2004 was passed for adopting the correct depreciation on the capitalized machineries for the assessment years 1994-95, 1995-96 and 1996-97 and also for further considering TDS amount. The next rectification order dated 10.8.2005 was giving effect to the order of Madras High Court – Held, that in none of these intervening rectification orders, the issue of exemption u/s 10B was dealt with. In the notice u/s 154(3) to the assessee dated 17.3.2005, AO sought to rectify u/s 154 the rectification order dated 30.1.2004 for rectifying the mistake that had crept into the working of exemption u/s 10B – Held therefore, that the matter pertaining to working of exemption u/s 10B was neither dealt with in the rectification order dated 30.1.2004 nor in any of the intervening rectification orders. Hence, by the impugned rectification order dated 3.3.2006, the AO had rectified the mistake which, if at all it was there, was only in the original assessment order u/s 143(3) dated 30.9.1999 – Also held that, any of the intervening rectification orders did not get substituted for the original order on this issue. Hence, as per clear mandate of Section 154(7), the rectification being sought by AO was beyond four years from the date of original order. : CHENNAI ITAT ;

2008-TIOL-622-ITAT-MAD.pdf

M/s Sreeja Hosieries Vs ACIT, Tirupur (Dated: October 24, 2008 )

Deduction u/s 80HHC – computation - Gross interest received from banks to be deducted from profits of the business. Deduction u/s 80HHC – computation – Deduction computed u/s 80 IB not to be reduced. Interest u/s 234B – not to be levied on the additional liability of tax consequent to retrospective amendment to sec. 80 HHC.

While computing the deduction under sec. 80 HHC, gross interest received from banks on deposits for securing export credit facilities was reduced by the A.O. from the purview of 'profits of business' under cl. (baa). Tribunal upheld this view following the decision of Madras High Court in the case of Dollar Apparels v. ITO ( 2007-TIOL-350-HC-MAD-IT ) and held it as assessable under the head 'income from other sources' and not under the head 'income from business'.

Regarding the levy of interest under sec.234-B on the additional liability fastened on the Assessee by virtue of an insertion of fifth proviso to sec.80HH(C) of the Act with retrospective effect by Taxation Laws (Amendment) Act, 2005, it was submitted that when the liability to pay advance tax accrued, the amendment was not available and hence it was impossible on the part of the assessee to anticipate the incidence of tax on account of this amendment. Tribunal agreed with the assessee and held that it was impossible on the part of the assessee to visualise till the due date of last instalment of advance tax that computation under section 80HHC would be in a different manner and thus held that there is no question of charging interest under section 234B.

Following the decision of Madras High Court in M/s. SCM Creations v. ACIT Tribunal held that the relief under sec.80-IB should not be deducted from profits and gains of business before computing relief under sec 80HHC.

Appeal of assessee partly allowed. : CHENNAI ITAT ;

CENTRAL EXCISE SECTION

2008-TIOL-2057-CESTAT-MUM.pdf + Betts India Story.pdf

CCE, Goa  Vs M/s Betts India Pvt Ltd   (Dated: November 21, 2008)

Larger Bench decision in Modernova Plastyles Pvt. Ltd . claims its first casualty – Removal of capital goods after use should be after reversal of credit initially taken – Tribunal.

Facts: Respondent clearing used modvatted/cenvatted capital goods to their own unit in Solan , Himachal Pradesh by reversing credit of Rs.29,80,217/- on the depreciated value of the machinery by applying Rule 57S(2) – Revenue contending that entire credit needs to be reversed in terms of Rule 3(5) of Cenvat Credit Rules, 2004 and demands balance credit of Rs. 9,77,548/- and seeks imposition of penalty and interest – Jt. Commissioner confirms demand and imposes equivalent penalty and interest – Commissioner (A) drops demand based on Tribunal decisions in Madura Coats P. Ltd. [ 2005-TIOL-891-CESTAT-BANG ] and Salona Cotspin [ 2006-TIOL-1773-CESTAT-MAD ]- Revenue appeals to Tribunal.

Tribunal's observation –

The respondents are not disputing the fact that as held by the Larger Bench in the case of Modernova Plastyles P Ltd. [ 2008-TIOL-1771-CESTAT-MUM-LB ] the words “as such” would include used capital goods also and, therefore, credit is required to be reversed on clearance of such used capital goods. The only dispute is regarding the quantum of credit required to be reversed.

In this case, the respondents have placed reliance on the decision of the Tribunal in the case of Cummins India Ltd. [ 2007-TIOL-1620-CESTAT-MUM ] which has been upheld by the Bombay High Court. I, however, note that in the case of Cummins India Ltd., the capital goods were cleared by the assessee as old, used and scrap machine at much reduced price. Therefore, in that case first the machines were in scrap condition, probably not useful as machines as such and secondly there was a sale at a much reduced price.

In the present case, there is no sale of the goods nor any sale price is available. The respondents have arrived at a depreciated price in terms of Rule 57S(2) which was no longer there in the statute book on the date of clearance . Once Rule 57S(2) did not exist on the date of clearance, the question of its applicability to the respondents case simply does not arise.

Once no sale value is available as was the case in Cummins India Ltd. , the question of applying the decision of the Tribunal, as upheld by the Bombay High Court, to the respondent's case does not arise.

The law during the relevant time was very clear as under Rule 3(5) of the Cenvat Credit Rules, 2004, the respondents were required to pay an amount equivalent to the credit availed in respect of capital goods cleared as such .

Duty/Cenvat: R espondents were required to reverse the entire credit and hence the Commissioner(Appeals) order to the said extent is required to be set aside and the order-in-original confirming the demand of duty of Rs.9,77,548/- is to be restored .

Penalty - As the Tribunal itself had taken a contradictory view in the case of Madura Coats P Ltd., [ 2005-TIOL-891-CESTAT-BANG ] and others holding that no credit is required to be reversed, issue being of interpretation, penalty not imposable.

Interest – Held imposable on the duty short paid/cenvat short reversed.

Revenue appeal partly allowed. :MUMBAI CESTAT;

2008-TIOL-2056-CESTAT-MAD.pdf

CCE, Pondicherry Vs M/s Kernal Technologies Ltd (Dated: May 22, 2008)

Central Excise - Cenvat Credit – Supplier's details not furnished in the invoice – supplier not traceable – credit rightly denied : CHENNAI CESTAT;

2008-TIOL-2055-CESTAT-MAD.pdf

M/s Tenneco Rc India Pvt Ltd Vs CCE, Chennai (Dated: July 23, 2008)

Clearances to own unit – revenue neutral – demand set aside : CHENNAI CESTAT;

SERVICE TAX SECTION

2008-TIOL-626-HC-RAJ-ST.pdf + stgst tak.pdf

UoI Vs M/s Amit Kumar Maheshwari (Dated: December 8, 2008 )

Service Tax – Amnesty Scheme was really no scheme, not a 37B order – as such there is no scheme, rather it is only a communication in the form of D.O. letter, from the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, addressed to the Chief Commissioners: Obviously, therefore, the communication has to be read, interpreted, understood, and appreciated, with this spirit, viz. to provide benefit to the defaulters on the one hand, and to cast the net of service tax wider and wider, so also to augment the revenue, on the other hand.

If an unregistered person is to get the benefit, registered person should also get – when the person who has not got registered till issuance of the communication, if is intended to be given the benefit of immunity from penalty, the person who has already got himself registered, and is in the default of payment of interest or tax, cannot be denied the immunity from penalty, provided of course, he strictly complies with the requirement of the communication, with regard to deposit of the amount, positively before the cut off date.

In that view of the matter, it cannot be said, that the immunity should be denied to the person who has already got himself registered.

Large Number of uncontested Tribunal judgements to be followed: And therefore there is no occasion for this Court to unsettle the settled position, and now give rise to upheaval, to generate litigation, even in the matters, which stand closed. This is second aspect of the matter. : RAJASTHAN HIGH COURT;

2008-TIOL-2053-CESTAT-DEL.pdf

CCE, Chandigarh Vs M/s BEE BEE Construction Company (Dated: November 19, 2008)

ST - Construction of residential complex - Demand raised - Commissioner(A) sets aside the demand in view of the Guwahati High Court order in the case of Magus Construction Pvt Ltd - No ground for stay of Commissioner(A) order and application rejected : DELHI CESTAT;

2008-TIOL-2052-CESTAT-DEL.pdf

Birla Ready Mix Vs CCE, Noida (Dated: June 23, 2008)

Service Tax - Hiring trucks for transport of ready mix concrete – whether chargeable to tax under GST or from 16.05.2008 (hiring movable property) - Since order passed ex-parte and appellant's request for adjournment on ground of illness not considered, matter remanded. : DELHI CESTAT;

2008-TIOL-2051-CESTAT-DEL.pdf

Hindustan Coca Cola Beverages Pvt Ltd Vs CCE, Jaipur I (Dated: November 5, 2008)

ST - interest - assessee pays service tax on GTA service from cenvat account - when Revenue objects, assessee pays the same in cash after few months - interest demanded - pre-deposit waiver granted : DELHI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08pn116.pdf +.dgft08pn115.pdf

DGFT notifies many village industries products + milk & milk products for VKGUY benefits;

CASE LAWS

2008-TIOL-625-HC-P&H-CUS.pdf + customs story.pdf

M/s Kundan Rice Mills Ltd Vs UoI (Dated: December 15, 2008 )

Customs – Release of seized Goods - mens rea is not essential for invoking the power of confiscation of the goods. In order to secure the interest of the Revenue, if the department has sought a bond for full value of the goods or a bank guarantee, the same cannot be said to be unjustified - The present is a case of fraudulent practice in respect of which reasons have been recorded and the business and the residential premises searched. The investigation into the manner and extent of fraudulent practice is under process. Therefore, in order to secure the interest of the Revenue, if the department has sought a bond for full value of the goods or a bank guarantee, the same cannot be said to be unjustified. Once the order of confiscation is passed, the Revenue is to realise the value of such goods as by that time the goods are out of the hands of the Revenue and, therefore, bond for full value of the goods is necessary consequence to the release of the goods. Similarly, bank guarantee sought is in respect of 10% of the value of the seized goods. Both the conditions are to secure the interest of the Revenue and that in the event of order of confiscation of goods having been passed, the interest of Revenue is secured in a reasonable manner. : PUNJAB AND HARYANA HIGH COURT;

2008-TIOL-2058-CESTAT-AHM.pdf + binani story.pdf

M/s Binani Cement Ltd Vs CC, Kandla   (Dated: November 1, 2008)

Customs - imports under DEPB licences purchased from the exporter which were cancelled by the DGFT ab initio due to fraudulent exports by the licencee - no case of suppression of facts or fraud or mis-representation against the importer - fraud committed by exporter cannot be a ground for invoking longer period against the importer - extended period cannot be invoked against the importer under Section  28 of the Customs Act, 1962.

Validity of licences - the DEPB licences were cancelled long after the importer used the documents for clearance of goods - on the date of import, the licences, lawfully issued by the competent authority, were valid and operative - the imports were made under valid licences and  it is not open to the Revenue to say that the DEPB licences used by the importer were not legally valid documents at the time of the imports. :AHMEDABAD CESTAT;

2008-TIOL-2054-CESTAT-DEL.pdf

M/s Methodex Systems Ltd Vs CC, Indore (Dated: October 7, 2008)

Customs - refund - bar of unjust enrichment is applicable for the refunds arising out of finalisation of provisional assessments - Section 27 of the Customs Act, 1962. : DELHI CESTAT;