CBEC directs Airport / Seaport Customs to prominently display prohibited items in Middle East but commonly used in India for benefit of departing passengers;

CBEC notifies more ports for export / import under various export promotion schemes;

Indirect taxes collections continue to be negative in October;

Import of sensitive items jumps by 30% in first five months this fiscal;

First GST Discussion Paper - A Damp Squib?

First Discussion Paper on Goods and Services Tax - Looking forward !!

First Discussion Paper brings clarity on many issues!

Empowered Committee releases disccusion paper on GST; proposes dual GST, dual exemption thresholds; dual rates and dual exemption lists;

India to review all 77 DTAAs to comply with OECD transparency norms: FM;

Chennai DRI seizes Red Sander logs worth Rs 2.6 Crore; Two persons arrested;

TIOL RUN UP TO GST

gst_story_1.pdf

gst_story_2.pdf

GST White Paper - A Damp Squib?

gst_story_3.pdf

First Discussion Paper brings clarity on many issues!

TIOL COMMENTARY

ddt 11 nov.pdf

GST is not simply VAT plus service tax - First Discussion paper – It's all 'win-win-win'?

MIXED BUZZ

mbuzz1018.pdf

Indirect taxes collections continue to be negative in October;

mbuzz1017.pdf

Import of sensitive items jumps by 30% in first five months this fiscal;

mbuzz1016.pdf

India, Columbia sign bilateral investment promotion pact

2009-TIOL-611-HC-DEL-IT.pdf

Motor & General Finance Ltd Vs CIT, New Delhi (Dated: October 30, 2009)

Income tax - Sec 244A - refund - interest on interest - Assessment u/s 143(3) made - demand raised - Assessee deposits tax in instalments - CIT(A) grants partial relief - Assessee goes to Tribunal which grants more relief - thus, assessee becomes entitled to refund - Revenue grants refund with interest - Assessee demands interest on interest on the ground that the AO had made unjustified addition - held, when refund of tax becomes payable as a result of orders passed in appeal or other proceedings, this refund is to be given along with interest, which is to be calculated as per Section 244 of the Act. If that interest is paid along with the excess tax, no further payment is to be made. It is only when the excess amount of tax is refunded but the interest is not refunded, the retention of interest amount would become unjustified and interest on interest would also become payable. The reason is simple. It is the tax which was paid in excess by the assessee which became refundable. The assessee would be compensated by paying interest thereupon. It is only when the interest is not refunded along with excess tax that the withholding of the said interest becomes unjustified and it becomes an 'amount due' to the assessee on which the assessee can claim further interest. Such a situation has not happened in the present case as the amount of interest is calculated and refunded along with the refundable tax amount. Revenue's appeal allowed:DELHI HIGH COURT;

2009-TIOL-610-HC-MAD-IT.pdf

CIT, Chennai Vs M/s Rajini Investment Pvt Ltd (Dated: October 5, 2009)

Income tax - Sec 36(2)(i) - Assessee is in the business of money-lending - writes off bad debts and claims deduction - AO disallows on the ground that the business was subsequently discontinued - Tribunal allows it - held, discontinuation of the business in future cannot be a ground for disallowance - as long as the bad debt represents money lending in the ordinary course of business of banking or money-lending it cannot be denied - Revenue's appeal dismissed:MADRAS HIGH COURT;

2009-TIOL-609-HC-MAD-IT.pdf

Dr S Panneerselvam Vs ACIT ( Dated: October 21, 2009)

Income tax - Sec 254(1), 254(2) - Writ petition - Assessee files Miscellaneous application for rectification of mistake - Tribunal recalls its order passed u/s 254(1) and passes order u/s 254(2) - Assessee files another MA on MA after two years - Tribunal rejects the same - held, no MA can be filed on MA as once rectification order is passed, the only remedy the assessee has is to go in appeal - no relief can be granted by writ route - Assessee's petition dismissed:MADRAS HIGH COURT;

2009-TIOL-700-ITAT-DEL.pdf + cargill story.pdf

ACIT, New Delhi Vs M/s Cargill Global Trading (I) (P) Ltd (Dated: October 9, 2009)

Income tax - Sec 195, 40(a)(i) - Assessee is a trader-exporter - discounts bill of exchange - pays discounting charge to Singapore-based company - whether discounting charges are interest payments u/s 2(28A) on which TDS is deductible u/s 195 - whether it is a business income for the non-resident as per India-Singapore DTAA

The assessee-exporter exports goods to foreign buyers - in place of waiting to realise full exports proceeds, the assessee discounts the bill of exchange for immediate realisation of payment - AO treats the discount paid to the non-resident as interest under Sec 2(28A), and since the assessee fails to deduct TDS, the AO disallows the payment u/s 40(a)(i) - CIT(A) holds that the discounting charges paid by the assessee is not an interest as neither any money is borrowed nor any debt is incurred - held,

++ The word “Interest” is differently defined under Interest Tax Act. As per section 2(7) of Interest Tax Act, “interest” means interest on loans and advances made in India and includes - (a) commitment charges on unutilized portion of any credit sanctioned for being availed of in India; and (b) discount on promissory notes and bills of exchange drawn or made in India.

++ Thus where the legislature was conscious of the fact that even the discount of bills of exchange is to be included within the definition of interest, the same was basically so provided for.

++ However, under the scheme of Income-tax Act, the word “Interest” defined under section 2(28A) does not include the discounting charges on discounting of bills of exchange. Though the circular No.65 was rendered in relation to deduction of tax under section 194A, in respect of payment to a resident, the same will be relevant even for the purpose of considering whether the discount should be treated as interest or not. The CBDT has opined that where the supplier of goods makes over the usance bill/hundi to his bank which discounts the same and credits the net amount to the supplier's account straightaway without waiting for realization of the bill on due date, the property in the usance bill/hundi passes on to the bank and the eventual collection on due date is a receipt by the bank on its own behalf and not on behalf o the supplier.

++ For such cases of immediate discounting the net payment made by the bank to the supplier is in the nature of a price paid for the bill. Such payment cannot technically be held as including any interest and therefore, no tax need be deducted at source from such payment by the bank.

++ The discounting charges are not in the nature of interest paid by the assessee. Rather after deducting discount the assessee received net amount of the bill of exchange accepted by the purchaser.

++ The CFSA, not having any permanent establishment in India, is not liable to tax in respect in respect of such discount earned by it and hence the assessee is not under obligation to deduct tax at source under section 195 of the Act. Accordingly, the same amount cannot be disallowed by invoking section 40(a)(i) of the Act.:DELHI ITAT;

2009-TIOL-699-ITAT-DEL.pdf

DCIT, Dehradun Vs M/s Hundai Heavy Industries Co Ltd (Dated: October 9, 2009)

Income tax - Indo-Korea DTAA - assessee is a Korean company - enters into contract with the ONGC for commissioning and installation work - No PE exists at the time of signing of the contract - payments made for designing and fabrication required for the contract taken on turnkey basis - Whether such income is taxable in India - whether any income arising from such activities carried out outside India can be attributed to the PE

Assessee is an engineering company - undertakes heavy duty engineering contract in oil exploration - gets turnkey project to be carried out for the ONGC - work involves designing and fabrication which is carried outside India - No PE exists - after the work begins, installation PE comes into picture - Revenue for attribution of all profits arising in India and also the income arising from works done outside India - held, in view of the Apex Court decision in the case of assessee itslef, the income arising from works done outside cannot be taxed, and there is no dispute about the quantum of profit, arising from the Indian operations, attributable to the PE - Revenue's appeal dismissed:DELHI ITAT;

SERVICE TAX SECTION

2009-TIOL-117-SC-ST.pdf

CCE, Jaipur Vs M/s Hindustan Zinc Ltd (Dated: August 20, 2009)

Service Tax – services received from outside India – not taxable prior to 01.01.2005 – Department's review Petition dismissed: SUPREME COURT;

2009-TIOL-1837-CESTAT-DEL.pdf + jagjit story.pdf

CCE, Jalandhar Vs M/s Jagatjit Industries Ltd (Dated : September 10, 2009)

Service Tax - Cenvat Credit taken wrongly but not utilized in its entirety – Interest payable only in respect of the portion of credit wrongly utilized: DELHI CESTAT;

2009-TIOL-1836-CESTAT-DEL.pdf

M/s IDEA Cellular Ltd Vs CCE, Meerut-I (Dated : September 25, 2009)

ST - Input credit - assessee is a telecom service provider - avails credit on its customercare project - Revenue denies it - assessee argues providing Customercare service is a mandatory requirement of the DoT - Pre-deposit ordered: DELHI CESTAT;

2009-TIOL-1835-CESTAT-AHM.pdf

M/s Adani Enterprises Limited Vs CST, Ahmedabad (Dated : October 16, 2009)

ST - Import of business auxiliary service - delay in payment of tax on many occasions - tax deposited with interest - Revenue levies penalty under Sec 76 - held, since SAP software was being installed at assessee's premises and the fact that there were instances of excess payment of service tax and also the fact that a service recipient is liable to tax only from 16.4.2006, it is a fit case for invocation of Sec 80 - Assessee's appeal allowed: AHMEDABAD CESTAT;

CENTRAL EXCISE SECTION

2009-TIOL-1834-CESTAT-AHM.pdf

CCE, Surat-I Vs M/s Hema Exports (Dated : July 30, 2009)

Central Excise – Duty demand to be confirmed as per shortages mentioned in panchnama and cannot be extended – No infirmity in Appellate Commissioner's order – Assessee eligible to pay 25% penalty within 30 days of order of appellate authority: AHMEDABAD CESTAT;

2009-TIOL-1833-CESTAT-MUM.pdf

M/s Jai Prakash Strips Ltd Vs CCE, Nasik (Dated : September 11, 2009)

Shortage of inputs – merely because shortage was admitted by Managing Director it cannot be held that the same need not be proved specially when appellants explained the reasons for shortage – in absence of any incriminating document/record, duty demand cannot be imposed – Appeals allowed with consequential relief.:MUMBAI CESTAT;

2009-TIOL-1832-CESTAT-MUM.pdf

Bajaj Auto Ltd Vs CCE, Pune (Dated : July 27, 2009)

Cenvat Credit – Dies & Tools - Depreciation does not arise in case of claim under revenue expenditure hence the impugned order holding contrary is set aside and appeal allowed with consequential relief.

Dies and Tools- claim for Cenvat Credit rejected on ground of availment of depreciation - Appellants claim for revenue expenditure and not depreciation on value of the said goods was allowed by the Commissioner of Income Tax (Appeals).:MUMBAI CESTAT;

2009-TIOL-1831-CESTAT-MAD.pdf

M/s Axles India Ltd Vs CCE, Chennai (Dated : June 25, 2009)

Central Excise – penalty under Section 11 AC – the show cause notice was issued within the normal period and did not allege suppression of facts by the appellant to invite equal amount of penalty under Section 11 AC – the reduced penalty by the Commissioner (Appeals) is also not sustainable as the issue involved was a bone of contention which was finally settled by the five member Bench of the Tribunal.:CHENNAI CESTAT;

CUSTOMS SECTION

NOTIFICATION

ctariff09_123.pdf

CBEC notifies more ports for export / import under various export promotion schemes;

instruction09_009.pdf

W.P.No.35418/2006 – Public Interest Litigation filed in the High Court of Madras to put display boards / notice boards in Airports / seaports indicating items banned in the Middle-Eastern countries – regarding.

cnt09_172.pdf

Adjudicating authority notified for M/s Electrotherm (India) Limited;

cnt09_171.pdf

Adjudicating authority notified for M/s MMTC Limited;

cnt09_170.pdf

Adjudicating authority notified for M/s A D Adhesive Industries;

cnt09_169.pdf

Adjudicating authority notified for M/s AGS Infotech Private Limited;

cnt09_168.pdf

Adjudicating authority notified for M/s Panchsheel Soap Factory;

cnt09_167.pdf

Adjudicating authority notified for M/s G N International;

cnt09_166.pdf

Adjudicating authority notified for M/s Rachna Seeds Industries;

CASE LAWS

2009-TIOL-612-HC-DEL-CUS.pdf + ostrich story.pdf

UoI Vs Entrack International Trading Pvt Ltd (Dated: October 30, 2009)

Customs – Import of watch straps made of ostrich, calf and alligator leather. The Mississippian species of crocodile does not exist in India. Same is the position in regard to Ostrich. Since these species do not exist in India, there is no question of their protection in this country – Import is free: Once we look into the matter from this angle, the irresistible conclusion is that clearance from the wild life authorities in India under the Wild Life Protection Act is not required. Under such circumstances, these kinds of matters would be covered by CITES and all the nations signatory to the said treaty agreed to bind by the provisions contained in CITES. Thus, when the country of origin has given specific certificates under the provisions of CITES allowing the export from its country on the ground that these items are not restricted, insistence upon additional certificate by the authorities under the Wild Life Protection Act is meaningless in the facts of this case.:DELHI HIGH COURT;

2009-TIOL-1830-CESTAT-MAD.pdf

CC, Tuticorin Vs M/s Oceanic Products (Dated : June 17, 2009)

Customs – refund – original price reduced due to deterioration of the imported goods – claim for refund of excess duty paid – since the assessment was not challenged, refund claim is not maintainable - revenue appeal allowed.:CHENNAI CESTAT;