MoC clarifies import of jewellery and remaking is authorised manufacturing activity in SEZ;

Enforcing austerity: FM asks S M Krishna and Shashi Tharoor to vacate five-star hotel rooms and go back to 'Bhawans';

Murder of Central Excise Officer - Gutka Manufacturers arrested (See 'DDT')

NCB Zonal Director arrested by CBI;

Massive slowdown in indirect tax collections worries FM; CBEC to administer GST;

Software tools, fonts for six Indian languages released by IT Minister;

Import of sensitive items shoots up by 41% in Q1;

Sahar Airport Customs arrests Nigerian with 910 gm heroin + FC worth Rs 36 lakh from three pax heading for Singapore;

TIOL COMMENTARY

ddt 8 Sept09.pdf

Microsoft doesn't get relief in Delhi High Court;

stgst.pdf

What qualifies as Input Services and as Input Tax credit?

MIXED BUZZ

mbuzz0827.pdf

Massive slowdown in indirect tax collections worries FM; CBEC to administer GST;

mbuzz0826.pdf

Software tools, fonts for six Indian languages released by IT Minister;

mbuzz0825.pdf

Import of sensitive items shoots up by 41% in Q1;

2009-TIOL-22-ARA-IT.pdf

M/s Umicore Finance (Dated: July 6, 2009)

Income tax - Sec 245N(a) - Applicant is a non-resident company, incorporated in Luxembourg - enters into a transaction to purchase of the entire equity share capital of an Indian company - seeks advance ruling on capital gains liability of the Indian company which was earlier a partnership firm, and on conversion into a company, the assets were revalued and the excess of revalued assets was credited to the respective partners' accounts - doubt expressed over maintainability of application - held, the application is maintainable having regard to the wider language of sub-clause (i) of section 245N(a) in contrast with the language employed in sub-clause (ii). There is no specific requirement in sub-clause (i) that determination should relate to the tax liability of a non-resident - the capital gain tax issue arising in the case of the acquired Indian company has a direct and substantial impact on the applicant's business in view of the stipulations in share purchase agreement - Sub-clause (i) has to be construed in a wider sense and moreover a remedial provision shall be liberally construed - the question raised by the applicant falls within the definition of 'advance ruling' under section 245N(a) of the Act.: ADVANCE RULING AUTHORITY;

2009-TIOL-477-HC-DEL-IT.pdf + exports story.pdf

M/s United Exports Vs CIT, Delhi (Dated: August 25, 2009)

Income tax - Sec 40A(2)(a) - Assessee is a partnership firm - deals in export of rice - debits certain sums on account of trading discount given to sistern concern - AO finds 11% as excessive trade discount and reduces it to 3% - CIT(A) hikes it to 8% on the basis of high discounts allowed in the past AYs - Tribunal reduces the same to 5% - held, Tribunal's order is flawed as the trade discount is reduced without any basis or any documents - since a trade discount of 11% was allowed in the past when the sales to the sister concern was low, there is no justification for reducing the same when it has substantially gone up in the current AY - Also held that Sec 40A(2)(a) does not apply to trade discount as it is applicable to only expenditure incurred by the assessee and the payment are made for the same - Assessee's appeal allowed: DELHI HIGH COURT;

2009-TIOL-476-HC-P&H-IT.pdf

CIT, Faridabad Vs Shri Khacheru (Dated: August 18, 2009)

Income Tax - During the assessment proceedings, the claim of the  assessee for partial partition of HUF, not recognized by AO  in view of provisions of Section 171(9) - CIT(A) partly upholds the claim of the assessee - same is affirmed by the Tribunal - Held, partial partition taking place after 1.1.1979, cannot be recognized in respect of an assessee already assessed in the status of HUF, for the period prior to partition. Mere fact that assessment actually takes place on a date after the partition will not affect this position. Revenue's appeal allowed.: PUNJAB AND HARYANA HIGH COURT;

2009-TIOL-475-HC-P&H-IT.pdf

M/s Mahashwari Synthetics Pvt Ltd Vs CIT, Ludhiana & Another (Dated: August 11, 2009)

Income Tax - search and seizure action in the premises of the directors/partners of the assessee company - seizure of cash, jewellery and other valuables and also incriminating books of account and other documents - Block assessment - Tribunal remands the matter to the AO  to determine NP  rate - After remand, assessment  made but assessee appeals to the Tribunal – Tribunal  remands the matter again to the AO With the  direction that AO to estimate the reasonable profit on suppressed sales on the basis of material on record in consonance with the earlier order of the ITAT - Held, where material is enough, the appellate Court should normally determine the issue on merits, even if such issue has not been dealt with by the original authority. However, power of remand can be exercised when as a result of finding of the appellate authority, re-determination of issue becomes necessary - Assessee Appeal dismissed.: PUNJAB AND HARYANA HIGH COURT;

2009-TIOL-554-ITAT-DEL.pdf

ITO Budaun, UP Vs Pandit Vijay Kant Sharma (Dated: May 29, 2009)

Income Tax Act – Section 271(1)(c) – Limitation u/s 275 – assesse argued that in terms of the proviso to clause (a) of sub-section (1) of section 275, the AO was bound to pass penalty order within one year from the end of the financial year in which the order of the CIT(A) was received by the CIT – department argued that the order was in time in terms of the main provision contained in the aforesaid clause (a) – Held that clause (a) contains the general rule, to which only exceptions can be provided by way of proviso to the clause. This proviso places an outer limit of one year from the end of the financial year in which the order of the CIT(A) was received by the Commissioner. If assessee's plea is accepted the consequence will be that this provision overrides a part of the provision contained in clause (a) relating to the time limit in a case where the order of assessment was made subject matter of appeal before the Tribunal. Proviso is meant to carve out an exception and not to abrogate a part of the main provision. Thus the only meaning which can be placed on the proviso is that in a case where the assessment proceeding come to an end with the order of the learned CIT(A), then, the outer limit of passing the order will be one year from the end of the financial year in which the order of the learned CIT(A) was received; and in cases where the matter is carried further in appeal to the Tribunal, the time limit shall be six months from the end of the month in which the order of the Tribunal is received by the CIT – Held therefore penalty order was passed within the time prescribed by the statute u/s 275(1)(a).: DELHI ITAT;

SEZ - INSTRUCTION

sez09ins037.pdf

Clarification on whether import, re-melt, re-make and export of imported finished jewellery is an authorized activity in SEZ;

SERVICE TAX SECTION

2009-TIOL-1421-CESTAT-DEL.pdf

M/s Dwarikesh Sugar Industries Ltd Vs CCE, Meerut-II (Dated: May 20, 2009)

Service Tax – Credit availed on strength of TR-6 challans for GTA service not deniable – Impugned order set aside: DELHI CESTAT;

2009-TIOL-1420-CESTAT-MUM.pdf

Vikram Ispat Vs CCE, Raigad (Dated: December 31, 2009)

Service Tax – Break up of usage of mobile phone service and rent-a-cab service for private use and business use not given, security service not availed in the factory but at Rail yard, no correlative data to indicate association service linked to manufacturing activity – Pre-deposit of Rs. 50,000 ordered: MUMBAI CESTAT;

2009-TIOL-1419-CESTAT-AHM.pdf

M/s Daman Polyfab Vs CCE & CC, Vapi (Dated: July 30, 2009)

ST - Cenvat credit - Onward transportation of the goods from the place of removal is input service as the same is covered by words "activities relating to business'' - issue is already decided by the Larger Bench in the ABB Ltd case in favour of the assessee - Assessee's appeal allowed: AHMEDABAD CESTAT;

2009-TIOL-1418-CESTAT-AHM.pdf

M/s SMP Constructions Pvt Ltd Vs CCE, Vadodara (Dated: August 4, 2009)

ST - Commercial or industrial construction service - Abatement - Revenue denies abatement on the ground that the assessee availed cenvat credit - Demand confirmed - Assessee pleads it has not taken cenvat credit on conctracts where abatement was availed - Pre-deposit waiver granted on the basis of a similar case heard and stayed by the Tribunal: AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

NOTIFICATION

exnt09_22.pdf

CBEC notifies Cenvat Credit Second Amendment Rules, 2009;

CASE LAWS

2009-TIOL-478-HC-DEL-CX.pdf + 9D story.pdf

J & K Cigrettes Ltd & Ors Vs CCE & Ors (Dated: August 28, 2009)

Central Excise – Constitutional validity of Section 9D of the Central Excise Act, 1944 - Provisions under Section 9-D of the Central Excise Act, which are pari materia with the provisions under Section 32 of the Evidence Act, cannot be held as ultra vires of the Constitution. Validity of a provision would be totally different from the valid exercise of powers conferred upon the authority under such a provision. If powers are not exercised properly and in a legal manner in a particular case, then that particular act of the quasi-judicial authority can be set at naught. This would not be a ground for declaring a provision of the Act itself as unconstitutional. (Para 23)

It cannot be said that the provision gives uncanalised or uncontrolled power upon the quasi judicial authority. Granting of opportunity and passing reasoned order are the conditions inbuilt in exercise of power by any quasi judicial authority and, therefore, it is not necessary that these conditions should be specifically mentioned in the provision. (Para 30): DELHI HIGH COURT;

M/s Piyush Engineering Works Vs CCE, Rajkot (Dated: April 4, 2009)

Central Excise – Irregular availment of CENVAT Credit on fictitious invoices without receipt of materials proved beyond doubt – Demand of duty and imposition of penalty upheld – Penalty imposed on partner of company supplying fictitious documents set aside in view of LB decision in Steel Tubes of India Ltd & Ors 2007-TIOL-1720-CESTAT-DEL-LB – Penalty imposed on exporter receiving finished goods from appellant set aside as the issue is not relevant to facts of the case – Penalty on employee of appellant set aside in view of LB decision in Steel Tubes : AHMEDABAD CESTAT;

2009-TIOL-1416-CESTAT-BANG.pdf

M/s Toshali Cements Pvt Ltd Vs CCE, Visakhapatnam (Dated: May 1, 2009)

Central Excise – Credit on inputs not available when used in production of ‘Ground Granulated Blast Furnace Slag' – Eligibility of credit when GGBFS is exported to be examined when appeal is disposed of finally – Pre-deposit of Rs. 10 lakhs ordered: BANGALORE CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff09_090.pdf

Import from Antartica exempted from Customs duty;

dgft09not006.pdf

Export of shavings of Shed Antlers – relaxation regarding;

dgft09pn008.pdf

Motor cars, pumps for liquid elevators added for new market-linked focus products;

CASE LAWS

2009-TIOL-474-HC-DEL-CUS.pdf

M/s Plasto India Pvt Ltd Vs UoI (Dated: September 3, 2009)

Customs – samples – representation for second testing of sample rejected by revenue – the respondents are directed to send the sample another laboratory for testing in view of the precedent decisions.: DELHI HIGH COURT;

M/s Swati Industries Vs CC, Amritsar (Dated: June 15, 2009)

Customs – Over-invoicing of exports for claim of higher DEPB – Allegation based on comparative domestic prices not sustainable – Confessional statements recorded under continued threat of arrest and freezing of bank accounts have no evidentiary value – No authority under Customs Act, 1962 to recover excess DEPB when exporter had not utilized DEPB scrips for duty free imports or when scrips were not cancelled by DGFT – Impugned order demanding excess DEPB not sustainable – Confiscation and Penalties set aside: BANGALORE CESTAT;