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Third Stimulus - The Notifications have come - as promised by us (See 'DDT') High-Powered report on making Mumbai international financial centre: Govt claims many steps already taken; CERC issues new Inter-State Trading Regulations for power; Tax fraud through abuse of charities: OECD Survey; TRAI prescribes norms for quality Cable TV service in non-CAS areas; Service Tax: 12 to 10. How to be done? CBEC transfers back Roopam Kapoor, OSD to JS (TRU) to DGCEI; New Integrated terminals at Dehrudun, Jaipur and Amritsar inugurated; Govt admits population of Snow Leopards is on decline; Robotics can help reduce risk to human exposed to hazardous jobs; |
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| Dear Member, Sending the following files: |
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TIOL COMMENTARY Export of Service Rules - CBEC clarifies the obvious - 126 Crores demand on Microsoft becomes a bunch of waste papers; Service Tax: 12 to 10. How to be done? MIXED BUZZ High-Powered report on making Mumbai international financial centre: Govt claims many steps already taken; CERC issues new Inter-State Trading Regulations for power; TRAI prescribes norms for quality Cable TV service in non-CAS areas; Tax fraud through abuse of charities: OECD Survey; Robotics can help reduce risk to human exposed to hazardous jobs; |
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CIT Vs M/s Geoffrey Manners & Co. Ltd (Dated: February 9, 2009) Income tax - assessee produces advertisement film to promote its products - claims the expenses as revenue expenditure - Revenue treats the same as capital expenditure - Tribunal deletes the additions on the ground that no right or benefit of enduring nature was created by the assessee and it was revenue expenditure - held, the correct test to find the nature of an expenditure is that if it is for an ongoing business and there is no enduring benefit it can be held as revenue expenditure, and if it is for a business which is yet to commence the same can be treated as expenditure of capital nature for a product which is yet to be marketed - Revenue's appeal dismissed:BOMBAY HIGH COURT; CIT Vs Krishnakumar R Parmar (Dated: January 19, 2009) Income tax - Search u/s 132 - assessee owns a piece of land - enters into agreement with a developer for payment on the basis of per square meter - notice u/s 158BC - block assessment - Revenue makes addition on the basis of loose paper indicating higher rate than the one claimed by the assessee - CIT(A) partly deletes - Tribunal orders deletion of additions as assessee produces evidence that the details of transactions were disclosed in regular return and the same cannot be made a part of block assessement - held, since nothing contrary to the evidence produced by the assessee was brought to the notice of the Tribunal, there is no infirmity in the order - Revenue's appeal dismissed:GUJARAT HIGH COURT; ACIT Vs Akruti Dyeing & Printing Mills Pvt Ltd (Dated: January 27, 2009) Income Tax - search u/s 132 - assessee makes purchases from three parties - AO alleges they are only accommodation entries and the same were confirmed by the statement recorded from one person who was the link between them - Tribunal deletes the additions on the basis of the fact that the AO did not examine the three parties and if examined, their statements not recorded and the payments were made by crossed cheque - held, since the Revenue failed to produce any cogent evidence, there is no infirmity in the Tribunal's order - Revenue's appeal dismissed :GUJARAT HIGH COURT; 2009-TIOL-124-ITAT-MAD-TM.pdf + export tm story.pdf ACIT, Chennai Vs M/s Tube Investments Of India Ltd (Dated: January 05, 2009) Income Tax – assessee having more than 25% of domestic sales entitled to partial deduction proportionately on export turnover: Profit of domestic sales if it is within the limits of 25% is deemed as profit of export for the purpose of computation of deduction under section 10B . This amount is worked out separately on a proportionate basis and added to the amount of export profits. The relief available on export profit rests on the bedrock of the eligibility criteria laid down under section 10B ( 1). If the assessee derives profits and gains from hundred per cent export-oriented undertaking from the export of articles or things it can claim the benefit of section 10B . The second proviso is an additional incentive which has been granted to the assessee to provide economic flexibility and to allow it to dispose of the export-rejects and byproducts , etc. This proviso in no way governs the eligibility criteria. The eligibility conditions for getting the deduction under section 10B is enshrined in sub- section( 2). No interdict is laid down in the statute to withdraw the total benefit of section 10B in the eventuality of domestic sales being exceeded the 25 per cent limit. There is absolutely no ambiguity in the language of the statute. As such purposive theory should not be resorted to. In the Income-tax Act there is no statutory provision mandating denial of domestic sales to the export-oriented undertaking . Section 10B ( 4) envisages that an assessee could have export turnover and also local turnover. To find out the export profits the profits of the business must be multiplied by export turnover and divided by the total turnover. If we take the interpretation that the benefit of section 10B is not available in the eventuality of domestic sales then the provisions of section 10B ( 4) would become otiose. It is the cardinal principle of law that there is nothing superfluous in the statute. The Supreme Court in the case of CIT V. Distributors(Baroda) P. Ltd., has held that no part of a provision of a statute can be just ignored by saying that the Legislature enacted it not knowing what it was saying . Where an expression is used by the legislature the court must assume that the legislature deliberately used that expression and that it intended to convey some meaning thereby. Interpretation: Interpretation postulates the search for the true meaning of the words used in the statute. If the language of the statute is plain, obvious meaning is to be applied. Rules of interpretation are applied only to resolve the ambiguities. The object and purpose of interpretation is to ascertain the mens legis , i.e. the intention of the law, as evinced in the statute. The freedom for the search of the "Spirit of the Act" or the mischief at which it is aimed opens the possibility of liberal interpretation. This finer aspect cannot be narrowly watched. It is that delicate and important branch of judicial power, the concession of which is dangerous but the denial is disastrous. At one stream stands Lord Denning who said: "We do not sit here to pull the language of the Parliament to pieces and make nonsense of it. That is an easy thing to do. We sit here to find out the intention of Parliament and carry it out. We do this better by filling in the gaps and making sense of the enactment than by opening to destructive analysis . Viscount Simonds called it 'a naked usurpation of the legislative function under the thin guise of interpretation ." The intention of legislature is a very slippery phrase. When the language of the statute is transparently plain, it is wrong to give it colour according to the temper of time. When the language implied by the enactment is clear, there is no question of interpreting the provisions in any manner except by giving them their plain and obvious meaning.:CHENNAI ITAT (THIRD MEMBER); Tecumseh Products India Pvt Ltd Vs ITO, New Delhi (Dated: February 6, 2009) Income Tax – Section 115JA – AO rectified appeal effect order to disallow royalty expenditure shown as payable to holding company while computing the book profits u/s 115JA – AO held, following Apex Court decision that the amount was not deductible considering that RBI approval for payment was not received by assessee and thus it was a contingent liability – Held, that the royalty agreement of assessee was approved by central government and that the RBI approval was a condition required only for remittance of money – Held further following EDS Data Electronics Systems (2008-TIOL-587-HC-DEL-IT) that the liability accrued under the agreement as the assessee was following mercantile system of accounting and thus the assessee was entitled to deduct the said some while computing its book profits u/s 115JA.:DELHI ITAT; |
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| SERVICE TAX SECTION 2009-TIOL-338-CESTAT-MAD.pdf + suprasesh story.pdf M/s Suprasesh General Insurance Services & Brokers Pvt Ltd Vs CST, Chennai (Dated: November 17, 2008) Service Tax – Insurance Auxiliary Service – Reinsurer - The insurer and the insured under a contract of reinsurance are, respectively, called the reinsurer and the reinsured. It would follow that an ‘insurer' defined under Section 65(58) also included a ‘reinsurer'. The inclusion of ‘reinsurer' in the definition of ‘insurer' under Section 65(58) from 01.05.2006 should be taken as express statement of the obvious. Even without this amendment, the definition of ‘insurer' was wide enough to include a ‘reinsurer' and consequently ‘insurance auxiliary service' concerning general insurance business, provided to a reinsurer by an intermediary or insurance intermediary or insurance agent was taxable under Section 65(105)(zl) of the Finance Act, 1994 prior to 1.5.2006. ( Para 13) Export of service – Convertible foreign Currency - The appellants identified reinsurers located abroad for the Indian insurance company and negotiated terms of contract of reinsurance between them. By and large, what they provided was a service to the Indian insurance company. Of course, they also served the foreign company by remittance of the ceded premium [after deducting ceding commission and brokerage] to that company. Further, it is not in dispute that the appellants received their brokerage in Indian currency. For the Notifications 2/99, 6/99 and 21/2003 to be applicable, there must be physical receipt of remuneration in convertible foreign exchange. Going by the nature of the transactions, the claim of the appellants that there was ‘export of service' by them is not acceptable. ( Para 12) Extended Period - Limitation - The show-cause notice was issued and the same was adjudicated upon without gathering all the relevant facts for the period of dispute. In this scenario, the allegation of suppression of facts is not sustainable against the appellant. Consequently, the demand for the period beyond the normal period of one year preceding the date of issue of show-cause notice cannot be sustained. However, for the period prior to 10.9.2004 [the date on which Section 73(1) of the Finance Act, 1994 was amended], mere omission or failure of the assessee in the matter of filing returns etc. was enough for the Department to invoke the larger period of limitation. Suppression of facts etc. was not necessary. In the present case, omission of the appellants to include reinsurance brokerage in the taxable value for the period from 16.7.2001 to 9.9.2004 is not in dispute and the same was enough to invoke the proviso to Section 73(1) of the Finance Act, 2006 as this provision stood prior to 10.9.2004. In the result, the tax liability of the appellants should be restricted to the normal period and beyond upto 10.9.2004 only. Matter remanded to requantify the demand accordingly. ( Para 14) Penalty - The dispute agitated is highly interpretative of the various provisions of the Finance Acts 1994 and 2006, the IRDA Act, 1999 and the IRDA (Insurance Brokers) Regulations, 2002. In the circumstances, any penalty on the appellants is not justified and is set aside. ( Para 15):CHENNAI CESTAT; Life Insurance Corporation Of India Vs CCE, Jaipur (Dated: January 19, 2009) ST - Insurance Service - assessee makes payment to club agents in the name of club expenses - Revenue for including such payments in the gross value of taxable service - Board has clarified that if expenses like travelling and boarding are reimbursed on actual basis, the same not to be subjected to service tax - case remanded and assessee directed to produce evidence:DELHI CESTAT; M/s Pillai & Sons Motor Company Vs CCE, Trichy (Dated: January 27, 2009) Service Tax - Free After Sales Service – Service Tax not payable by dealers as no extra charges are collected and the same has already been subjected to Sales Tax - Assessee's appeal allowed. :CHENNAI CESTAT; M/s Rane Trw Steering Systems Ltd Vs CCE, Trichy (Dated: January 29, 2009) Service tax – Stay / Dispensation of pre-deposit – CENVAT Credit on outdoor catering service – prima facie case for waiver of pre-deposit in view of the Larger Bench decision holding the same as input service.:CHENNAI CESTAT;
NOTIFICATION CBEC amends notifications allowing duty free spares to granite EOUs; CASE LAWS 2009-TIOL-340-CESTAT-AHM.pdf + trade story.pdf M/s Apar Industries Ltd Vs CCE, Surat (Dated: January 7, 2009) Central Excise – Valuation – Trade Discount to dealers not commission, not includible in assessable value: The moot question as identified correctly by Commissioner is whether the transactions can be considered as between a dealer and the manufacturer or a principal and an agent. The Commissioner has omitted to note the last two lines of the agreement of the clause which provide that the agent has no right to dispose or hypothecate etc. the goods till full payment for product is made. Thus we find considerable force in the argument advanced by the ld. Advocate for the appellants that clause 'g' was mainly meant for protecting the rights of the appellants as an unpaid seller and it cannot be held to mean that the appellants retain the right to deal with the goods till it is sold by the dealer. Once payment was made, the dealer is put under no restriction to deal with the goods. Further, the other points raised by the ld. Advocate that Form 'C" was obtained and sent by the dealer and Form 'C' is meant for dealers, the dealers raised invoices in their own name and the dealers paid sales tax and subjected themselves to sales tax assessment support his views and support the argument that the transactions in this case have to be treated as between the dealer and the manufacturer. The remaining points as already mentioned by us are basically dealers' remuneration, maintenance of suitable stores, sales, steps to be taken for storage are all normal trade requirements and do not really affect the character of the transactions.:AHMEDABAD CESTAT; Erste Ingenieure (I) P Ltd Vs CCE, Chennai (Dated: October 31, 2008) Central Excise – Duty paid before issue of show cause notice - Penalty – I t is not open to any quasi-judicial authority under the Central Excise Act to impose penalty under Rule 173Q or Rule 25 on any person who has paid duty before issue of SCN. However, penalty for default in payment of duty under Rule 27 sustained. ( Para 2):CHENNAI CESTAT; Madhav Marbles And Granites Ltd Vs CCE, Salem (Dated: October 31, 2008) Central Excise – EOU – Finished goods damaged in transit – Demand – Granite slabs removed from the EOU were damaged in road accidents when the goods were in transit to the point of export. The damaged slabs were scrapped and abandoned under intimation to the department and claim of insurance. The intended export of the granite slabs did not come through on account of accident, which was beyond appellant's control. In the absence of willful default of export of goods by the EOU, the bond was not liable to been formed against them and consequently the demand of duty is not warranted. Moreover, the appellants could also claim the benefit of Notification No.24/2003-CE dt. 31.3.2003 which exempted all excisable goods produced or manufactured in an EOU, from payment of duty of excise. This exemption, however, was not applicable to such goods ‘if brought to any other place in India '. In the present case, the granite slabs cleared by the EOU never reached the DTA. They ended up as “scrap”, which was abandoned. Thus the appellants could legitimately claim the benefit of the Notification. Hence appeal is allowed. ( Para 3):CHENNAI CESTAT;
CUSTOMS SECTION NOTIFICATION + CIRCULAR Duty Free Import Authorization (DFIA) Scheme - availment of facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or Cenvat credit under CENVAT Credit Rules, 2004 under Notification number 40/06-Cus dated 1.5.06 - reg. Certification of invoices for supply of goods from DTA to EOUs for claiming deemed export benefits – reg.; Allows re-import of pharma samples to EOUs; CASE LAWS 2009-TIOL-341-CESTAT-BANG.pdf + cus story.pdf Standard Consultants Ltd Vs CCE, CC & ST, Hyderbad (Dated: September 1, 2008) Customs – In Customs Notification No.21/2002, when no duty rate is mentioned against CVD in Column 5, the rate at column 4 applicable as per General Rules of interpretation – Duty in excess of 5% available as refund:BANGALORE CESTAT; |
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