- Daily Mail Update


Thursday, June 28, 2012

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News Flash

LTU - A well-intentioned Experiment calls for major revamp efforts (See 'Cob(Web) Column)

Negative Blues-VII: No more rebate of Service tax paid on export of service (See 'ST - New Law +VE or -VE' Column)

Dr. Manmohan Singh takes over Finance Ministry - Singh Syncs (See 'DDT' Column)

Negative Blues-VIII: Checklist for Service Tax compliance after July 1, 2012 (See 'ST - New Law +VE or -VE' Column)

Negative Blues-VI: GTA reverse charge (See 'ST - New Law +VE or -VE' Column)

PM as FM likely to clarify on tax policy in next 15 days

CBDT invites applications for 10 posts of Under Secretary

CBEC amends 12/2012 to insert BG with Fixed Deposit Receipt

Herding Cats: Human capital management is the way (See 'The Third Eye')

Common Basket


DDT (Daily Dose of Taxation)

Dr. Manmohan Singh takes over Finance Ministry - Singh Syncs


Negative Blues-VI: GTA reverse charge

Negative Blues-VII: No more rebate of Service tax paid on export of service

Negative Blues-VIII: Checklist for Service Tax compliance after July 1, 2012


LTU - A well-intentioned Experiment calls for major revamp efforts


Filling up the posts of Under Secretary to the CBDT



Direct Tax Basket


CIT Vs Continental Carbon India Ltd

Income Tax – Sections 37(1), 68, 133(6), 260A – Whether disallowance of sundry creditors can be made on the ground of non-submission of reply of notice u/s 133(6) – Whether invoices received but not booked in the previous year can be considered as prior period expenses, hence disallowed – Whether depreciation on spares can be disallowed on the basis they are not ready to use, is justified in law - Revenue's appeal dismissed: DELHI HIGH COURT


CIT, Bombay Vs Shri Abid A Kalvert

Income Tax – Sections 2(47), 45, 47(ii), 256(1) – Whether when a partner receives certain amount on dissolution of the partnership firm, such sum is liable to capital gains tax. - Assessee’s appeal allowed : BOMBAY HIGH COURT


Larsen And Toubro Ltd Vs CIT, Bombay

Income Tax – Section 256(1) – Whether when the assessee engaged in manufacture of cement build-up machinery sets up plant for inhouse cement manufacture, the professional fees paid to consultants are to be treated as capital expenditure. - Assessee's appeal dismissed: BOMBAY HIGH COURT


M/s Mark Construction Vs ITO, Kolkata

Income Tax - Sections 40(a)(ia), 44AD, 194C – Whether when the assessee has declared more than 8% of gross receipt as profits, any addition can further be added u/s 40(a)(ia) sans disputing the profits. - Revenue's appeal dismissed : KOLKATA ITAT


Cadila Healthcare Ltd Vs Addl.CIT, Ahmedabad

Income tax - Sections 14A, 32(1)(ii), 35(2AB), 37(1), 43(4), 80IB(8A), 92CA(3), 115JB, 143(3), 144C(5), 234B, 271(1)(c) - Whether pre-operative legal expenses incurred for expansion of the same line of business but with a new production facility can be said to be revenue in nature - Whether expenditure incurred on product Registration, Trade-mark Registration fees and Patent Registration creates any intangible asset and hence it is capital in nature not allowable as deduction u/s 37(1) – Whether clinical trial expenditure incurred by the assessee is eligible for weighted deduction u/s 35(2AB) even if it was incurred outside the approved R&D facility - Whether, for the purpose of deduction u/s 80IC, the profit of the eligible Undertaking has to be worked out by excluding the indirect cost incurred towards exploitation and free usage of the marketing network established by the assessee over a number of years and also the value of the self-generated brand and allocating such cost to the said Unit. - Assessee's appeal partly allowed : AHMEDABAD ITAT

Indirect Tax Basket


2012-TIOL-765-CESTAT-MUM + Costal story

Costal Gujarat Power Ltd Vs CST, Mumbai

Banking & Financial Services - Appellant borrowing funds under the scheme of External Commercial Borrowing from foreign lenders – commitment charges, up-front fee, arrangement fee, agency fee etc. whether chargeable to Service Tax under reverse charge mechanism - issue involves interpretation of various provisions of law such as Article 246, 253 of the Constitution of India, the various provisions of ADB and IFC Act and the provisions of United Nations (Privileges and Immunities) Act, 1947 and Finance Act, 1994 – prima facie case for full waiver of pre-deposit – Stay granted and matter referred to CBEC Chairman for opinion[ paras 7, 8, 9, 10 & 11 ] : MUMBAI CESTAT


Khatau Narbheram & Company Vs CCE, CC & ST, BBSR-II

Service Tax - Refund claim for services utilized for export of iron ore fines under Notification No. 41/07-ST - Claim rejected for GTA services availed on the ground that export invoice numbers were not mentioned in lorry receipt and shipping bills as required under Notification No. 41/07-ST - Matter remitted to original authority for verification of appellants claim of use of GTA service by establishing a link between lorry receipt and export invoices and also export invoices and shipping bills - Appeal allowed by remand: KOLKATA CESTAT


M/s Nilachal Iron And Power Ltd Vs CCE & ST, JSR

Service tax - Business Auxiliary Services - Service of mobilisation of mutual funds units - Place of rendering service - Jurisdiction - Levy of service tax under reverse mechanism - Limitation - Stay / Dispensation of pre-deposit - The service providers are rendering their services to the distributors of various mutual fund companies and not to the Mutual Fund Companies directly. Hence, prima facie, are not strictly covered under the principle of levy of service tax under reverse mechanism . On the aspect of jurisdiction, in the case of levy of Service Tax it is difficult to ascertain where the services are rendered and where the services are received unless a finding is recorded on these facts. At no point of time the service provider has questioned or disputed the authority/jurisdiction of the department but consciously submitted to the jurisdiction of the Commissioner Central Excise, Jamshedpur. Therefore, prima facie, Commissioner, Jamshedpur has jurisdiction over the issue. There is no financial hardship pleaded. Pre-deposit of 25% of service tax confirmed is ordered. (Para 5) - Pre-deposit ordered / Conditional Stay granted: KOLKATA CESTAT





CBEC amends 12/2012 to insert BG with Fixed Deposit Receipt


2012-TIOL-464-HC-MUM-CX + Castrol story

CCE, Mumbai Vs M/s Castrol India Ltd

Central Excise - When the legislature specifically fixes the time limit within which the duty with interest and penalty at 25% is to be paid for availing the incentive, it would neither be open to the appellate authority nor any other authority to permit the assessee to pay 25% penalty at any time other than the time prescribed under Section 11AC: Bombay High Court [para 25]

When the liability to pay 25% penalty under the first and the second proviso to Section 11AC is required to be paid within thirty days from the date of communication of the order of the Central Excise Officer determining duty under Section 11A(2), it would not be open to the appellate authority or the Court to direct the assessee to pay 25% penalty beyond the date stipulated in the first and the second proviso to Section 11AC. [para 27]- Revenue appeal allowed : BOMBAY HIGH COURT


M/s U P State Spinning Co Ltd Vs CCE, Allahabad

Central Excise - Exemption Notification - Matter remanded by Tribunal - Scope of re-adjudication - In the remand order the Tribunal has returned a categoric finding that merely because of failure to file certificate from NHDC before the clearance of the yarn the benefit of the Notification No. 5/98-CE and 5/99-CE could not be denied. The adjudicating authority while deciding the matter afresh after remand has given a contrary finding to the effect that because of the failure to produce NHDC certificate before the clearance of the yarn the appellant is not entitled to the benefit of those notifications. The effect of the said order-in-original amounts to countermanding /reversing the decision of the Tribunal, which is not permissible under law as a inferior authority in judicial hierarchy has no right / jurisdiction to overturn the finding of superior authority . Only recourse was to file an appeal against the order of the Tribunal.  (Para 9)

Non-speaking order -  Appreciation of evidence - Remand - The impugned order is a cryptic non speaking order as the conclusion is drawn without any reference to the evidence. The matter is remanded again to the adjudicating authority to decide it afresh by giving a reasoned order referring to the evidence on record for coming to a conclusion. (Para 11) - Matter remanded: DELHI CESTAT





CBEC amends 12/2012 to insert BG with Fixed Deposit Receipt



P Bhaskar Naidu, CEO Vs CC, Chennai

Customs – Export of red sanders - Goods entered for export and declared in the relevant shipping bill were granite cobble stones, whereas actual goods found in the container brought to the customs area for export was red sander logs - Hence, the contravention of Section 113(i) is established in view of the mis-declaration of description of goods as well as consequent mis-declaration of value etc. In such a case, it is not even necessary to establish mens rea for imposition of penalty on the exporter – Penalty under Section 114 of Customs Act, 1962 upheld, but reduced to six lakhs. - Appeal rejected:CHENNAI CESTAT


M/s Natvar Parikh & Co Pvt Ltd Vs CC, Chennai

Customs – CHA – Forfeiture of the security amount from CHA, charging them with violation of Regulation 13(a) and (d) and they did not have any authorization from the importer - There is nothing to indicate that the appellant-CHA has acted mala fide in any manner - The fact that the bill of lading having title to the goods and also the required Customs bonds etc., were obtained from the importers and given to the CHA through the logistics company, clearly shows that the appellant-CHA did not act malafide and they had the tacit authorisation of the importers – Impugned order cannot be sustained.- Appeal allowed:CHENNAI CESTAT

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