Tax havens: Let the Sun shine (See 'Legal Potpourri' Column)

Lack of clarity on tax sops for natural gas: Govt defers roadshow for NELP VIII;

2009 is going to be an 'awful year': Says IMF Chief;

Advani again urges Govt to bring back black money vaulted in offshore financial centres;

Smugglers and traffickers often prey on refugees, says UNHCP Chief;

Heavy fighting resumes after two-day pause in Lanka: UN;

Bermuda, a known tax haven, signs eight new tax information exchange pacts;

India Busines Forum in China launched;

President of India appoints two Addl Judges for Kerala HC;

TIOL COMMENTARY

ddt 17 April.pdf

Input Service Distributor also a Service Provider – Benefit of 6/2005-ST, whether available?

poutpurri.pdf

This London Economic Summit: An Evaluation;

CASE LAWS

2009-TIOL-185-HC-DEL-CESTAT.pdf + hc story.pdf

P C Jain Vs UoI (Dated: April 13, 2009)

Former members cannot practise in CESTAT

It is often said that the law acts ex-post facto. In the instant case, the legislature has acted in pursuance of what is perceived as undesirable - which is the right of a member/president/ vice-president of the Customs Excise Service Tax Appellate Tribunal ('CESTAT') to appear, act and/or plead on their demitting office before the very same Tribunal. The legislature has sought to debar all such like persons, by insertion of sub-section (6) to Section 129 of the Customs Act, 1962. The said provision was introduced by Section 110 of the Finance Act, 2007 w.e.f . 11.05.2007.

There was a time when a son would appear in the court presided over by his father and no questions were asked. It is said Boswell earned most part of his income at the Scottish Bar appearing before his father Lord Auchinleck . The legislative wisdom ideally caters to times we live in and the social mores and norms that surround us. Alas! as is often found steps towards what the law makers consider a desirable goal, which is wisdom that courts accord to a legislature, are often agonisingly slow.

No unregulated right of practice – the validity of a statute cannot be judged only on the basis rights of an individual when an individual's right are pitted against a greater public weal. Individual rights have to give way to a greater public interest. And who best knows the public interest but the legislature unless shown otherwise - while always bearing in mind that the courts as the sentinel of the Constitution are fully empowered to defend and protect an individual's fundamental rights, if an act of the Parliament trenches upon inalienable right of an individual which are in conflict with interest of the majority. The burden is heavy. There is a presumption of constitutionality in respect of an Acts of a legislature.:DELHI HIGH COURT;

2009-TIOL-184-HC-MAD-VAT.pdf + aster tele story.pdf

M/s Aster Tele Services Pvt Ltd Vs State Of Tamil Nadu (Dated: March 25, 2009)

Works Contract Composition Scheme - Section 6 of TN VAT Act – Interim stay granted:MADRAS HIGH COURT;

RBI CIRCULAR

rbi08cir061.pdf

Exim Bank's Line of Credit of USD 4.3 million to the Government of Suriname;

MIXED BUZZZ

mbuzz0395.pdf

Bermuda, a known tax haven, signs eight new tax information exchange pacts;

mbuzz0394.pdf

Smugglers and traffickers often prey on refugees, says UNHCP Chief;

mbuzz0393.pdf

Heavy fighting resumes after two-day pause in Lanka: UN;

mbuzz0392.pdf

India Busines Forum in China launched;

mbuzz0391.pdf

Organised crime has gone global, says UN anti-crime Tsar;

2009-TIOL-231-ITAT-AHM-TM.pdf + forex story.pdf

ITO, Ahmedabad Vs Banyan Chemicals Pvt Ltd (Dated : December 29, 2008)

Income tax - Sec 10B - Assessee is an exporter - receives exports proceeds in US Dollar - deposits the same in EEFC Account - makes exchange gains due to fluctuation in US Dollar rates on date of realisation of sale proceeds in Indian rupee - claims deduction u/s 10B - AO diallows - Difference of opinion among Tribunal Members as one Member does not find it linked to the activity of exports business - held, since the export proceeds in the US Dollar are deposited in EEFC Account of the assessee as per the Govt guidelines and in this account, the receipts are to be kept in the foreign currency rather than converting it into Indian currency, the exchange gain accounted by the assessee in the form of excess rupee value of the US Dollar on the date of realisation of sale proceeds credited is nothing but the sales realistion of the billed amount in the US Dollar and is to be treated as income derived from the export of goods and articles. Assessee is eligible for deduction u/s 10B - Revenue's appeal disallowed:AHMEDABAD ITAT "THIRD MEMBER";

2009-TIOL-230-ITAT-MAD.pdf

M/s Future Focus Infotech Pvt Ltd Vs DCIT, Chennai (Dated : November 20, 2008)

Non-compete fee paid – whether capital or revenue expenditure

Non-compete fee paid by company to the erstwhile partners of a firm who are also Directors of the assessee company. Payment of Rs. 50 lakhs as non-compete fee was claimed as revenue expenditure by the assessee. On appeal it was demonstrated that the payer and recipient are closely related and there was no need to make such payment. Tribunal held that it is a misnomer to call such payment as non-compete fee and instead it is capital payment made to purchase the firm and such not eligible for deduction.

Appeal by assessee dismissed.:CHENNAI ITAT;

2009-TIOL-229-ITAT-DEL.pdf

DCIT, New Delhi Vs M/s Banaras House Limited (Dated : February 09, 2009)

Income Tax - Assessee borrows funds and makes investment in shares and contributes capital in a firm as a partner - earns dividend income exempt u/s 10(33) and earns profit from partnership which is also exempt u/s 10(2A) - AO disallows interest u/s 14A and u/s 37 in proportion to the exempt income - CIT(A) deletes it – Held, in view of the clear finding of the CIT (A) that borrowed funds were invested in the equity shares of a Holland-based company and the dividend received therefrom being not exempt u/s 10(33) read with section 115-O, no disallowance u/s 14A is called for. Similarly, the CIT (A) has recorded a finding that advances to the sister concerns were made not out of borrowed money but out of the sufficient funds available with the assessee on which interest was not paid by the assessee,  the question of disallowance of interest on the assumption that the borrowed funds have been given as interest free advances to sister concerns is not justified. The order of the CIT (A) upheld.

On the issue of allowance of debts written off by the assessee claimed as bad debt initially before the AO which is disallowed as the said amounts were not revenue receipts in the earlier years and, therefore, did not qualify for deduction as bad debt - CIT (A) allows the claim of the assessee - Held, CIT (A) is justified on this account that the debts have become barred by limitation in the earlier years cannot be allowed u/s 28 or 37. Revenue Appeal dismissed.:DELHI ITAT;

2009-TIOL-187-HC-KERALA-IT.pdf

Cochin International Airport Limited Vs DCIT (Dated: April 1, 2009)

Income tax - Sec 197 - Assessee applies to the AO for certificate to receive payment without TDS - payment made without TDS - CIT withdraws the certificate - Assessee challenges the same - held, as per the law the CIT alone is empowered to issue such certificate and his power to withdraw the certificate cannot be questioned but since a certificate was issued by the AO without jurisdiction and everyone acted on thatl it would be mor equitable to allow the same - CIT order to withdraw the certificate upheld but only with prospective effect - Assessee's appeal partially allowed:KERALA HIGH COURT;

2009-TIOL-186-HC-P&H-IT.pdf

CIT, Patiala Vs Industrial Cables (India) Ltd (Dated: January 27, 2009)

Income tax - Sec 154 - Assessee is charged interest u/s 234B for delayed payment of advance tax - the issue finally settled by the Tribunal in favour of the Revenue - AO initiates proceedings u/s 154 to give appeal effect to the tribunal order - Assessee alleges non-compliance with Sec 140A by the AO - Tribunal allows the assessee's appeal - held, when the Assessing Officer had passed the earlier order dated 7.4.2005 he had not abided by the procedure to comply with Sec 140A. It is also not a matter at dispute that the amount now determined by the Assessing Officer while passing the order dated 27.4.2006 is in consonance with the explanation under Section 140A(1) of the Act. Thus the order dated 27.4.2006 is in consonance with the statutory provisions of the Act.

Limitation: Assessee alleges that the period of four years has elapsed and the assessment order cannot be rectified u/s 154 - held, since the rectification proceedings were initiated only after the Tribunal order passed, it cannot be said that it is beyond the limitation period - Revenue's appeal allowed:PUNJAB AND HARYANA HIGH COURT;

SERVICE TAX SECTION

2009-TIOL-612-CESTAT-MUM.pdf

M/s Krishna Fabrications Pvt Ltd Vs CCE, Pune-I (Dated: February 12, 2009)

Cenvat Credit – Service Tax paid on mobile phone services – Appellant not only owns the mobile phones provided to their employees but also pays the bills and which amount stands covered by the sale price of their final products – Strong prima facie case for complete waiver of pre-deposit of service tax demand and penalty – Stay ordered.:MUMBAI CESTAT;

2009-TIOL-611-CESTAT-MAD.pdf

CCE, Chennai-III Vs M/s Greaves Cotton Ltd (Dated: December 31, 2008)

Service Tax – Cenvat Credit – Telephones at residence of Manager entitled:CHENNAI CESTAT;

2009-TIOL-610-CESTAT-AHM.pdf

M/s Prakshal Infotech Vs CST, Ahmedabad (Dated: March 5, 2009)

ST - Commercial coaching and training - assessee provides computer training - fails to pay tax for the brief period of 59 days when exemption was withdrawn - pays tax with interest and also penalty under Sec 78 - contest levy of penalty under Sections 76 and 77 - held, since the tax with penalty is paid and there is no evidenc to indicate that there was any intention on part of the assessee to evade tax, it is a fit case for invocation of Sec 80 - Assessee's appeal allowed :AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-53-SC-CX.pdf + sc story.pdf

CCE, Nagpur Vs Shree Baidyanath Ayurved Bhawan Ltd (Dated: April 13, 2009)

CE – Classification of Dant Manjan Lal – Merely because there is some difference in the tariff entries, the product will not change its character - The primary object of the Excise Act is to raise revenue for which various products are differently classified - Common parlance test continues to be one of the determinative tests for classification of a product – Merely because there is some difference in the tariff entries, the product will not change its character. Something more is required for changing the classification especially when the product remains the same.” The primary object of the Excise Act is to raise revenue for which various products are differently classified There is no doubt that a specific entry must prevail over a general entry DML is a tooth powder which has not been held to be Ayurvedic Medicine in common parlance. Common parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosmetic. There being no change in the nature, character and uses of DML , it has to be held to be a tooth powder - as held in Baidyanath II. DML is used routinely for dental hygiene. Since tooth powder is specifically covered by Chapter Sub-heading 3306, it has to be classified thereunder . :SUPREME COURT;

2009-TIOL-615-CESTAT-DEL.pdf

Moon Beverages Ltd Vs CCE, Ghaziabad (Dated: February 19, 2009)

Central Excise – Receipt of crates from principal as compensation in lieu of reduction in MRP of final products – No express provision in CENVAT Credit Rules to disclose receipt of inputs/packing materials on loan basis or ownership basis – Costing of finished goods not relevant when assessed under s. 4A – Extended period invoked on a different ground from that proposed in the SCN – Prima facie case in favourof assessees – Pre-deposit waived and stay granted till disposal of appeal:DELHI CESTAT;

2009-TIOL-614-CESTAT-MUM.pdf

CCE, Nagpur Vs M/s Manikgarh Cement (Dated: January 16, 2009)

Cenvat Credit on input services viz. repairs and maintenance, civil construction, manpower requirement, cleaning services etc. provided for residential colony – On an identical issue for an earlier period, Tribunal in assessees own case [ 2008-TIOL-133-CESTAT-Mum ] and [ 2008-TIOL-1580-CESTAT-Mum ] has allowed the credit holding that the impugned services are related to business – following judicial discipline, credit allowed – Revenue appeal rejected.:MUMBAI CESTAT;

2009-TIOL-613-CESTAT-MUM.pdf

M/s Krishna Filaments Ltd Vs CCE, Mumbai-IV (Dated: February 2, 2009)

DTA clearances effected under para 9.9 (b) of the EXIM Policy would ipso facto attract the concession under notification 2/95-CE – Apex Court decision in Virlon Textile Mills Ltd. [ 2007-TIOL-69-SC-CX ] relied upon – Matter remanded for re-quantification of duty subject to fulfillment of mandatory conditions of the notification.:MUMBAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08not101.pdf

Corrigendum to Notification No 60 & 98;

dgft08not100.pdf

DGFT two more EoU rice millers to export rice;

CASE LAWS

2009-TIOL-616-CESTAT-AHM.pdf

M/s Maruti Udyog Ltd Vs CC, Kandla (Dated: January 29, 2009)

Customs – Appeals inadvertently filed in another office but within the time period not hit by limitation – Time spent before wrong forum not to be regarded while calculating limitation – Impugned order set aside and matter remanded :AHMEDABAD CESTAT;