Printed books import fraud case: 16 officers at Delhi ICD Customs suspended; Kolkata happens to be origin of fraud but Chief Commissioner waiting for direction from CBEC! (See 'DDT' Column)

Dear FM, time is ripe to cut corporate tax and personal tax rates by 5%; Need to soften hard shell of FBT (See 'Budget Run-Up')

'Reforms with human face': Manmohan's mohan raag (See 'Legal Potpourri' Column)

SEZ issue: Govt clarifies on validity of 'Formal Approval' + reimbursement of duty in lieu of drawback for supply of goods to SEZ developers against IC;

Industrial production logs 1.4% growth in April, 2009;

Spurt in violence may derail peace process in Nepal: UN;

Railroad pact to link 28 nations in Asia and Europe comes into effect;

CII partners with Univ of Calcutta for R&D on nanotechnology;

PM asks his PMO team to think creatively and improve delivery;

Inflation down to 30-yr-low to 0.13%; Will it prompt banks to cut rates further?

TIOL COMMENTARY

ddt 12 June.pdf

Customs officers suspended again – container smuggling;

Budget runup05.pdf

Dear FM, time is ripe to cut corporate tax and personal tax rates by 5%; Need to soften hard shell of FBT;

potpourri.pdf

Frontiers of the Doctrine of Ex Debito Justitiae;

MIXED BUZZ

mbuzz0564.pdf

Spurt in violence may derail peace process in Nepal: UN;

mbuzz0563.pdf

Industrial production logs 1.4% growth in April, 2009;

mbuzz0562.pdf

Railroad pact to link 28 nations in Asia and Europe comes into effect;

mbuzz0561.pdf

CII partners with Univ of Calcutta for R&D on nanotechnology;

2009-TIOL-302-HC-KAR-IT.pdf + jindal story.pdf

Jindal Thermal Power Company Ltd Vs DCIT, Bangalore ( Dated : March 16, 2009 )

Indo-USA DTAA –Income tax payable on rendering of services in India and utilisation of services in India; TDS to be deducted and if not deducted, payer liable to pay the TDS to Government - no tax on services purely off-shore and outside India: The twin criterion of rendering of services in India and utilisation of services in India becomes evidently noticeable in respect of "start up services and overall responsibility." However, in respect of "technical services" the rendering of services being purely off-shore and outside India, the remuneration whatever paid towards technical services does not attract tax liability. However, the split up remuneration paid towards "start up services and overall responsibility", Assessee had duty in law to effect TDS. The failure to do so makes Jindal vicariously liable to pay the tax on the amounts paid to non-resident towards, "start up services and overall responsibility." However, assessee would not incur any liability to pay tax towards the amount paid in respect of "technical services." Jindal would be entitled to refund of Tax in respect of payment made to non-resident towards "technical services."

Locus Standi of tax deductor to appeal against tax liability: In law, if TDS is not effected by the payer (Jindal), the payer would be ultimately responsible to pay the tax liability of the payee (non-resident). The conjoint reading of Section 195, 201 read with Section 246(1)(i) and Section 248 makes it clear that the assessee as a payer has every right to question the tax liability of its payee to avoid the vicarious consequences. Therefore the contention that Jindal has no right of appeal is to be rejected.: KARNATAKAHIGH COURT;

2009-TIOL-358-ITAT-MUM.pdf

DCIT,Mumbai Vs M/s Chemolink Industries (Dated: March 25, 2009 )

Income Tax - Assessee disclosed long term capital gain (LTCG) in respect of sale land and factory shed - AO bifurcated the sale consideration into two parts, i.e. one for the factory shed and another for the land underneath and beneath thereto and calculated STCG and LTCG respectively - CIT(A) disapproved the bifurcation - Held, assessee had disclosed LTCG in respect of the factory shed and the land and the claim of the assessee that no value was fixed or agreed for factory shed separately has not been rebutted by any evidence - Held, when on enquiry, AO found that the creditor was not existing at the given address and the assessee had been given an opportunity to establish the genuineness of the credit, it is for the assessee to establish the genuineness of the same - Revenues appeal partly allowed. :MUMBAI ITAT;

2009-TIOL-357-ITAT-MUM.pdf

DCIT, Mumbai Vs M/s Gujarat Ambuja Cements Ltd (Dated: February 11, 2009)

Income tax - Penalty u/s 271(1)(c) - assessee is into manufacture of cement - claims deduction for guest house expenses and payments made to SEB for providing power connectivity - AO disallows both and the same is confirmed by the CIT(A) and Tribunal - AO initiates penalty proceedings - CIT(A) does not find mens rea and deletes the penalty - held, in view of the Apex Court decision in the case of Dharmendra Textile case, CIT(A) order is not sustainable but since the issue of guest house expenses and payment made to SEB being claimed as revenue expenditure were not settled at the time of filing return, no penalty is called for in the totality of facts of the case - Revenue's appeal dismissed :MUMBAI ITAT;

2009-TIOL-356-ITAT-DEL.pdf

ACIT, New Delhi Vs M/s Eicher Ltd (Dated: March 16, 2009)

Income Tax - Section 14A - CIT(A) deletes disallowance made by the A.O. u/s 14A on account of interest payment - Held, disallowance u/s 14A stands decided by the Special Bench in the case of Daga Capital Management. The issue is set aside to the file of the AO to decide the matter afresh after taking into consideration the aforesaid Special Bench decision of the Tribunal.

On the issue of disallowance being the expenses incurred for the purchase of software disallowed by the AO as capital expenditure - Held, in view of the Special Bench decision in the case of Amway India Enterprises the matter is to be decided on the basis of the functional test. The issue is set aside to the file of the AO to decide the issue afresh after taking into consideration the Special Bench decision of the Tribunal. Appeals partly allowed :DELHI ITAT;

sez09ins016.pdf

Validity of Formal Approval;

sez09ins015.pdf

Reimbursement of duty in lieu of drawback for supply of goods to SEZ Developers against Indian Rupees.;

SERVICE TAX SECTION

2009-TIOL-900-CESTAT-DEL.pdf + cf story

M/s Padam Chand Mutha & Co Vs CCE, Jaipur-II (Dated: May 15, 2009)

Service Tax – C&F Agent – selling of tea for the principal – No return filed due to a bona fide belief – Demand barred by limitation – issue not decided on merits: In the present case, it is contended by the Revenue that the appellants failed to submit the Return and to observe the procedure. Tribunal held that procedural failure on the part of the appellants was a result of bona fide belief. As such, demand of tax is barred by limitation and the impugned order is liable to be set aside. The impugned order set aside on limitation without going into the merits of the case. Appeal is allowed with consequential relief. :DELHI CESTAT;

2009-TIOL-899-CESTAT-DEL.pdf

M/s Bharti Airtel Vs CCE, Chandigarh (Dated: April 30, 2009)

ST - Cenvat credit - Assessees are telecom service providers - avail credit on duty paid towers treated as capital goods - Revenue disallows and argues that duty paid capital goods do not fall under any headings of Chapter 85 and also as per Board's instruction, tower not to be allowed as input for availing credit - held, without going into classifiability of goods as capital goods at this stage, pre-deposit of Rs 20 lakh ordered :DELHI CESTAT;

CENTRAL EXCISE SECTION

exciseletter.pdf

Proper maintenance of 335 J registers;

CASE LAWS

2009-TIOL-898-CESTAT-MUM.pdf

CCE, Nagpur Vs M/s Bilt Graphic Paper Products Ltd (Dated: March 20, 2009)

Assessee sending papers in roll to job worker for coating purposes and clearaning from job worker's end for which permission in terms of rule 4(6) granted by Assistant Commissioner – Job worker purchasing some chemicals for processing paper and later preparing fresh invoices in assessees name for passing on Cenvat credit – assessee availing Cenvat Credit – Prima facie, assessee is not entitled to avail Cenvat as rule 3(1)(i) and rule 4(1) of the CCR, 2004 requires that inputs must be received in the factory – Pre-deposit ordered. :MUMBAI CESTAT;

2009-TIOL-897-CESTAT-MUM.pdf

M/s Gujarat Reclaim & Rubber Products Ltd Vs CCE, Pune (Dated: March 24, 2009)

Crumbed rubber powder obtained by crushing small pieces of rubber cuttings having same properties and characteristics as input waste is not dutiable as mere changing of physical form does not amount to manufacture – Tribunal decision in own case ( 2006-TIOL-283-CESTAT-MUM ) followed – Appeal allowed.:MUMBAI CESTAT;

2009-TIOL-896-CESTAT-MAD.pdf

M/s Titan Industries Ltd Vs CCE, Chennai (Dated: March 24, 2009)

Central Excise – Provisional Assessment - Refund – Limitation - Refund of the excess duty paid under Rule 9(B)(5) is not governed by the provisions of Section 11B of the Central Excise Act. Only the differential duty allowed as consequential relief following a successful appeal against the order of finalization granting refund by the proper officer under Rule 9(B)(5) is governed by the provisions of Section 11B. There is no need for the assessee to claim refund of the excess duty paid ascertained on finalization of provisional assessment. ( Para 2)

Provisional Assessment - Refund – Unjust enrichment - Section 11B did not apply to grant of refund arising out of finalization of provisional assessment prior to 25.6.99. Refund would not entail unjust enrichment of the assessee. ( Para 3)

Provisional Assessment – Valuation – Clearances from Depot - Admissible deductions – The appellants had claimed amount of each abatement based on a percentage of End Consumer Price ascertained considering the total sales of the outlets and expenditure under each head such as freight and discount, instead of ascertaining the expenses incurred by the outlets relatable to the clearances by the appellant unit and the applicable percentage. Matter remanded to recalculate abatement relating to expenses incurred on account of sales of goods cleared from the appellants unit. ( Para 4):CHENNAI CESTAT;

2009-TIOL-895-CESTAT-MUM.pdf

Mek Slotted Angles (I) Ltd Vs CCE, Belapur (Dated: March 24, 2009)

Remand ordered by Tribunal was for the limited purpose of quantification of duty – no mention about penalty – in such circumstance, the adjudicating authority could not have imposed any penalty under rule 173Q – Penalty u/r 209A on the Managing Director can be imposed only if he had dealt with any excisable goods in the manner contemplated in the rule – Appeal allowed.:MUMBAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

dgft08cir093.pdf

Foreign Trade Policy - incentives for Fast Track Companies

CASE LAWS

2009-TIOL-303-HC-DEL-SD.pdf + soda ash story.pdf

Saint-Gobain Glass India Ltd Vs UoI ( Dated : May 27, 2009 )

Challenge to safeguard Duty on Soda Ash – the levy is in public interest, which is made to give effect to a provision in the statute that domestic industry is to be protected from onslaught of increased quantities of export which cause or threaten to cause market disruption; power is conferred on a senior functionary i.e., the Director General, who is required to exercise the same after due analysis of material and evidence collected by him after taking into account the presence of critical circumstances. In the instant case, the Director General has evaluated the material and criticality of circumstances and come to the conclusion that if the flow of increased imports from China are not stemmed it would cause or threaten to cause market disruption unleashing irreparable damage; the recommendation of the Director General was considered by the Central Government whereupon the rate of provisional duty imposed was 20% ad valorem as against the recommended rate of 31% ad valorem; the decision to levy provisional duty is transitory, which is required to be followed by a final finding by the Director General within a stated time frame after which the levy would dissolve.

Writ Petitions ought to be entertained, when there is either a complete lack of jurisdiction or a palpable error so grave which requires imminent interference by a writ court – Petition dismissed : The scope for interference in matters which have huge economic impact is very narrow. As a matter of fact, actions instituted in courts such as the instant writ petitions have portents of derailing decisions- which could have a cascading impact and inflict resultant damage not only on the domestic industry in issue but even on industries which are vertically integrated to the said domestic industry, as also on their employees and industrial labour, which perhaps at times Courts cannot monetarily quantify. Therefore, the Court should be slow in entertaining such petitions.: DELHI HIGH COURT;