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Summons in Service Tax matters - Board amends Circular (See 'DDT') DTA Sale Entitlement of EOUs only against physical exports – DGEP Clarifies; Prime Minister approves CBEC promotion file for 17 Commissioners; A minor reshuffle of Commissioners also on cards; Orders expected soon; Does one vote really count? It may not for a political party but does count for EC! Terrorists fire at Sri Lankan Cricket team; Six players seriously injured; CII seeks 'Industry Status' for Real Estate and Housing Sector; Isle of Man signs tax information pact with Germany; |
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| Dear Member, Sending the following files: |
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TIOL COMMENTARY DTA Sale Entitlement of EOUs only against physical exports – DGEP Clarifies; CASE LAWS + Analysis 2009-TIOL-28-SC-MISC-LB.pdf + bank story.pdf Central Bank Of India Vs State Of Kerala (Dated: February 27, 2009) State Dues vs Dues to banks : DRT Act and Securitisation Act do not provide first charge to banks over State Dues - the two legislations, are intended to create a new dispensation for expeditious recovery of dues of banks, financial institutions and secured creditors and adjudication of the grievance made by any aggrieved person qua the procedure adopted by the banks, financial institutions and other secured creditors, but the provisions contained therein cannot be read as creating first charge in favour of banks, etc. If Parliament intended to give priority to the dues of banks, financial institutions and other secured creditors over the first charge created under State legislations then provisions similar to those contained in Section 14A of the Workmen's Compensation Act, 1923, Section 11(2) of the EPF Act, Section 74(1) of the Estate Duty Act, 1953, Section 25(2) of the Mines and Minerals (Development and Regulation) Act, 1957, Section 30 of the Gift - Tax Act, and Section 529A of the Companies Act, 1956 would have been incorporated in the DRT Act and Securitisation Act. DRT Act and Securitisation Act do not create first charge in favour of banks, financial institutions and other secured creditors and the provisions contained in Section 38C of the Bombay Act and Section 26B of the Kerala Act are not inconsistent with the provisions of the DRT Act and Securitisation Act so as to attract non obstante clauses contained in Section 34(1) of the DRT Act or Section 35 of the Securitisation Act. What about Central Excise? Section 11 of the Central Excise Act, which was considered by the two-Judge Bench in SICOM's case - 2008-TIOL-225-SC- CX , does not contain a provision similar to those in Central legislations like Section 14A of the Workmen's Compensation Act, 1923, Section 11 of the EPF Act, Section 74(1) of the Estate Duty Act, 1953, Section 25(2) of the Mines and Minerals (Development and Regulation) Act, 1957, Section 30 of the Gift Tax Act, 1958 and Section 529A of the Companies Act, 1956, under which statutory first charge has been created in respect of the dues of workmen or gift tax etc.:SUPREME COURT; 2009-TIOL-27-SC-CT.pdf + sales story.pdf M/s DCM LTD Vs CST, Delhi (Dated: February 27, 2009) Sales Tax – Taking Delivery of goods by dealers in Delhi for sale in other States – sales are Inter-State sales On reading the Contract, the Supreme Court found that movement of the goods was the covenant of the Contract. In the circumstances, the Court agreed with the concurring findings of fact recorded by all the Authorities below that the sale of chemicals effected by the assessee to its purchasing dealers who in turn were obliged to effect their sales in their respective territories outside Delhi involved inter-State movement of goods and, therefore, the sales in question were inter-State sales.:SUPREME COURT; MIXED BUZZ Does one vote really count? It may not for a political party but does count for EC! UN to focus on last 16 colonised nations in world: UN Chief CII seeks 'Industry Status' for Real Estate and Housing Sector; Sweden tops UN's IT Development Index; Isle of Man signs tax information pact with Germany; |
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2009-TIOL-05-ARA-IT.pdf + microsoft story.pdf Microsoft Operations Pte. Ltd (Dated: February 27, 2009) Income tax - Indo-USA DTAA - Applicant is a subsidiary of Microsoft Corporation - enters into non-exclusive agreement to manufacture, adapt and distribute Microsoft products in Asia, including India - Applicant enters into agreement with another subsidiary of Microsoft Corporation - Microsoft Regional Sales Corporation (MRSC) - MRSC gets only marketing rights and markets software through a network of distributors and resellers to end-user customers in India - Revenue treats the income from sale of right to use copyrighted product as royalty income under Sec 9(1)(vi) and also under DTAA - Applicant argues that it is a mere sale of copyrighted article and does not involve transfer of any right to use copyright - seeks advance ruling on whether it is liable to deduct tax at source u/s 195 on payments made to Microsoft Corporation - Held, since the legal proceedings initiated against the applicant way back in 2003 have now been pending before the ITAT, any exercise of discretion by the Authority may create an anomalous situation if the Tribunal rules against the applicant and the Authority may rule in its favour. It would have been a different matter if the applicant would have approached the authority for an advanc ruling at the initiate stage rather than waiting for the outcome of the assessment proceedings. Now that the assessment and the order of the first appellate authority have gone against the assessee, it has come for a ruling which is not called for - application rejected:ADVANCE RULING AUTHORITY; 2009-TIOL-108-HC-DEL-IT.pdf + iocl story.pdf Indian Oil Panipat Power Consortium Limited Vs ITO (Dated: February 26, 2009) Income tax - Assessee is a joint venture between IOCL and a Japanese company - non-resident contributes additional share capital for purchase of land for setting up power plant - legal tangle delays acquisition of land - Fund deposited with bank till land issue is sorted out - AO treats the income earned on FDRs as 'income from other sources' - CIT(A) finds that the interest income is 'inextricably linked' to the capital of the business and treats it as capital recceipt - Tribunal reverses the CIT(A) decision - held, ++ The income of a newly set up business, post the date of its setting up can be taxed if it is of a revenue nature under any of the heads provided under Section 14 in Chapter IV of the Act. For an income to be classified as income under the head “profit and gains of business or profession” it would have to be an activity which is in some manner or form connected with business. The word “business” is of wide import which would also include all such activities which coalesce into setting up of the business. ++ Once it is held that the assessee's income is an income connected with business, which would be so in the present case, in view of the finding of fact by the CIT(A) that the monies which were inducted into the joint venture company by the joint venture partners were primarily infused to purchase land and to develop infrastructure – then it cannot be held that the income derived by parking the funds temporarily with Bank, will result in the character of the funds being changed, in as much as, the interest earned from the bank would have a hue different than that of business and be brought to tax under the head "income from other sources”. ++ It is well-settled that an income received by the assessee can be taxed under the head “income from other sources” only if it does not fall under any other head of income as provided in Section 14 of the Act. The head “income from other sources” is a residuary head of income. since the income was earned in a period prior to commencement of business it was in the nature of capital receipt and hence was required to be set off against pre-operative expenses. In the case of Tuticorin Alkali Chemicals (supra) it was found by the authorities that the funds available with the assessee in that case were 'surplus' and, therefore, the Supreme Court held that the interest earned on surplus funds would have to be treated as 'income from other sources'.:DELHI HIGH COURT; Motwane Manufacturing Co Pvt Ltd Vs CWT, Mumbai (Dated: February 20, 2009) Wealth Tax - Sec 40(3) - Assessee is a limited manufacturing company - owns a plot of land with several structures on it - claims exemption for internal roads within the factory and the playground for workers - Tribunal diallows the assessee's appeal - Since open vacant land is not listed in the exemption list, there is no fault in the Tribunal's order - Assessee's appeal dismissed:BOMBAY HIGH COURT; Industrial Development Bank Of India Vs DCIT, Mumbai (Dated: December 19, 2008) Income Tax - Assessee filed return which was reopened by the AO after the expiry of 4 years - CIT(A) confirmed the order - Held, under Sec 10 of Interest Tax Act, 1974, if AO has reason to believe that by reason of omission or failure on the part of the assessee to disclosed fully and truly all material facts necessary for the assessment then the assessment can be reopened at any time but in cases where the assessing officer has, in consequence of information in his possession, has reason to believe that chargeable interest has escaped assessment, then the reopening on such a ground would have been done within four years from the end of the assessment year - Held, there is neither any allegation whatsoever in the reasons recorded for reopening by the assessing officer that the assessee has failed to disclose fully and truly all material facts required for the assessment nor the AO has come into possession of income information after the completion of the original assessments - Assessee's appeal allowed:MUMBAI ITAT; |
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| SERVICE TAX SECTION Issuance of summons in service tax matters-regarding; CASE LAWS 2009-TIOL-376-CESTAT-DEL.pdf + stgst.pdf M/s BBC World (India) Pvt Ltd Vs CST, New Delhi (Dated: February 17, 2009) Service Tax – BBC (India) collecting advertisement charges for BBC (UK) – when the same person is providing the broadcasting service and also the Business auxiliary service the latter cannot be treated as an input for the former – Not eligible for Credit - when the same person i.e. the Appellant are providing the broadcasting service, as defined under Section 65 (15) of the Act, to their clients in India and also the Business auxiliary service, as defined under Section 65 (19) of the Act, to BBC, U.K., the latter cannot be treated as an input for the former. The Appellant, even though engaged only in marketing of time slots, collection of billed amount from the clients and remitting the amount to BBC, have to be treated as 'broadcasting agency or organization' providing broadcasting services. Therefore, it is the Appellant, not BBC, who has to be treated as 'broadcasting agency or organization' providing broadcasting service.:DELHI CESTAT; M/s Munjal Sales Corporation Vs CCE, Ludhiana (Dated: January 29, 2009) ST - Assessee provides certain primary and secondary services as 'commission agent' - Revenue treats the same as C & F Service for period between 2002 to 2003 - Then for latter period the same service is taxed as business auxiliary service - Demand raised and penalty imposed - prima facie, the service is covered under BAS - pre-deposit of Rs 10 lakh ordered:DELHI CESTAT; M/s Bharat Sanchar Nigam Ltd Vs CST, Vadodara (Dated: February 6, 2009) ST - assessee pays tax on estimate basis for lack of full information before the due date - excess payment made in one month adjusted against liability of next month - Revenue objects to such self-adjustment and raises demand - extended period also invoked - since the assessee is a PSU, there cannot be any suppression or misdeclaration to evade tax - stay petition allowed unconditionally:AHMEDABAD CESTAT;
CCE, Ludhiana Vs M/s Fas Kusum Ispat (P) Ltd (Dated: February 25, 2009) Central Excise - Sec 11AC - shortage of inputs in stock registers - penalty - Basic requirement for attracting provisions of Sec 11AC is the presence of intention to evade tax and since the Tribunal has given the findings that such an intention cannot be presumed and the reasons for the shortage stand explained, the penalty is not called for - Revenue's appeal dismissed:PUNJAB AND HARYANA HIGH COURT; M/s Sulekhram Steels Pvt Ltd Vs CCE, Ahemadabad-II (Dated: December 11, 2008) Central Excise - clandestine clearances - the allegations of clandestine removal are required to be established by production of positive and tangible evidences and should not be arrived at on the basis of assumptions and presumptions - the charges of clandestine removal being quasi-criminal, are required to be proved sufficiently and such findings cannot be arrived at the assessee in the realm of conjunctions and surmises. Case of the Revenue is based upon the statement of the co-accused which statements are not supported by any independent corroborative evidence - demand set aside.:AHMEDABAD CESTAT; M/s Thiru Arooran Sugars Ltd Vs CCE, Trichy (Dated: November 20, 2008) Central Excise - Captive consumption - The appellants are entitled to the benefit of Notification 67/95 in respect of molasses used captively for manufacture of Rectified Spirit and Denatured Spirit. ( Para 6):CHENNAI CESTAT;
CUSTOMS SECTION NOTIFICATIONS CBEC amends notification to relax actual user condition in respect of Authorisation issued for import of raw sugar; Import licensing note amended for import of marble within quota from Bhutan; Revalidation of DFIAs issued between 2006-07; Procedure for import of Vegetable Fats ( Vanaspati Ghee) under India-Nepal Trade Treaty 2002 ;
Clarification of DTA sale entitlement against the supplies made on deemed export basis by EOU- reg; DTA sale entitlement of EOUs only against physical exports-clarification-reg; CASE LAWS M/s J N Textiles Vs CC, Chennai (Dated: October 24, 2008) Customs – Import – Relevant date – Demand – Non levy / Short levy – Anti dumping duty – Clause (d) of Section 28 (3) of the Customs Act was applied to raise demand as there was non levy of anti dumping duty. In the instant case there was short levy on the goods owing to non levy of ADD. Any short levy on the goods including non levy under a particular act will be covered by clause (d) of Section 28 (3). The appellant had paid duties on 8.7.04 the Show Cause Notice served on the appellant on 12.1.05. This is beyond six months and barred by limitation. ( Para 5.4) Mis-declaration - Bonafide Belief - The appellant had declared the description of the goods as it had ordered with the Chinese supplier. The same description figured in the related invoice and the packing list. There is no evidence that the appellant had deliberately misdeclared the description to evade the anti dumping duty found due on the imported goods namely Mulberry raw silk of 2A grade. As per the purchase order, packing list and invoice of the supplier, the goods were Mulberry raw silk of 4A grade. The certificate of inspection issued by Entry-Exit Inspection and Quarantine of Government of People's Republic of China also showed the grade of the raw silk imported as 4A. In the circumstances, it cannot be held that the appellant had misdeclared the description of the imported goods intentionally to evade paying anti dumping duty on the goods imported. Extended period not available. (Para 5.2):CHENNAI CESTAT; |
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