TMI Tax Updates - e-Newsletter
April 27, 2012
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Service Tax
Central Excise
Articles
By: Dr. Sanjiv Agarwal
Summary: The article discusses service tax terminology related to agriculture as per the proposed Section 65B. It defines "agriculture" as the cultivation of plants and rearing of animals, excluding horses, for various products. "Agricultural extension" involves applying scientific research to farming through education. "Agricultural produce" refers to products of agriculture that undergo minimal processing, retaining their essential characteristics for marketability. It includes produce from agriculture, horticulture, animal husbandry, and related fields. The text also references various legal interpretations and definitions of agricultural produce, emphasizing that only processing that does not alter essential characteristics qualifies as agricultural produce.
News
Summary: The Indian government is considering establishing a Cyber Coordination Centre to detect and issue alerts on malicious cyber activities, aiming to mitigate cyber-attacks through coordinated efforts among government, academia, and industry. Between January and March 2012, 133 government websites were hacked. In 2010, 2232 internet fraud cases were reported, involving significant financial losses. Measures to combat cyber-crime include the Information Technology Act, 2000, CERT-In's early warning system, security guidelines, regular audits, and training programs. The government has also developed a Crisis Management Plan for cyber-attacks and is promoting cybersecurity skills development.
Summary: The Government of India is not planning a stamp scheme for fertilizer subsidies. Instead, it provides subsidies on 25 grades of P K fertilizers and Urea, which is sold to farmers at a statutory price significantly lower than the production cost. The government covers the cost difference as a subsidy. Under the Nutrient Based Subsidy Policy, a fixed subsidy is allocated for these fertilizers, with the Maximum Retail Price set by fertilizer companies. For the fiscal year 2012-13, the government has allocated Rs. 65,592.13 crore for fertilizer subsidies, as stated by the Minister of State for Chemicals and Fertilisers in the Lok Sabha.
Summary: The National Pharmaceutical Pricing Authority (NPPA) observed significant price differences between imported and domestically produced drug formulations containing the same active ingredients. Most formulations are imported from foreign principals. To address this, the NPPA decided that importers must provide details of the cost, insurance, and freight (CIF) prices to monitor and control the higher prices of imported formulations. This measure was announced by the Minister of State for Chemicals and Fertilisers in a written reply to the Lok Sabha.
Summary: The Government of India is contemplating a mandate requiring at least one woman director on the boards of certain classes of companies, as per Clause 149 of the Companies Bill 2011. This was announced by the Minister of State in the Ministry of Corporate Affairs in the Lok Sabha. However, the government is not considering an increase in the overall percentage of women representation in Indian companies by eight percent.
Summary: The Ministry of Corporate Affairs in India reported that no complaints have been received regarding companies in the National Capital Region violating guidelines on keeping female employees in the office beyond permissible hours. The Minister of State stated that companies are not obligated to file such information with the Registrar of Companies or the Regional Director. This was in response to a query in the Lok Sabha concerning potential guideline violations in areas like Noida, Ghaziabad, and Gurgaon.
Summary: The international crude oil price for the Indian Basket increased to $115.57 per barrel on April 24, 2012, from $115.14 the previous day. In rupee terms, the price rose to Rs 6100.94 per barrel from Rs 6013.76, influenced by both the rise in dollar-denominated prices and the depreciation of the rupee, which stood at an exchange rate of Rs 52.79 per US dollar compared to Rs 52.23 the previous day. This data was reported by the Petroleum Planning and Analysis Cell under India's Ministry of Petroleum and Natural Gas.
Summary: The export of textile items from India increased significantly during the period of April to December 2011-12 compared to the same period in the previous financial year. Textile clothing exports grew by 23.87%, cotton yarn and fabric by 18.57%, and manmade yarn and fabrics by 32.03%. Woolen yarn and fabrics saw a substantial increase of 56.45%, while natural silk yarn and fabrics experienced a decline of 40.61%. Raw cotton exports also rose, with a 63.77% increase in quantity and a 32.68% rise in value. This data was provided by the Minister of State for Textiles in a parliamentary session.
Summary: The export of Indian handicrafts and handmade carpets declined in 2008-09 due to a global recession but has since shown an upward trend from 2009-10 to 2011-12. To boost exports, the Indian government has implemented initiatives such as participation in international fairs, thematic displays, buyer-seller meets, brand promotion, and hosting the Indian Handicrafts Gifts Fair. Additionally, the government offers financial incentives, including a 2% interest subvention on export credit, and supports the sector through schemes focused on development, marketing, research, and welfare for artisans. This information was provided by the Ministry of Textiles in a Rajya Sabha session.
Summary: The Government of India has developed the Ammonium Nitrate Rules, 2012, following stakeholder discussions, to regulate the manufacture, import, transport, sale, and possession of ammonium nitrate due to its use in terrorist activities, such as the bomb blasts in Pune, Delhi, and Mumbai. Ammonium nitrate is not allowed as a fertilizer under the Fertilizers Control Order, 1985, and is classified as an explosive under the Explosives Act, 1884. The new rules aim to prevent misuse and ensure safe usage, protecting the public from accidental explosions. This was disclosed by a government official in a written reply to the Rajya Sabha.
Summary: The tea industry in India's North Eastern Region, contributing 52% of the country's tea production, is receiving financial incentives from the Tea Board for modernization and development. These incentives support the modernization of processing factories, quality certification, value addition, and the establishment of factories for various tea types. During the XI Plan, approximately Rs.354 crores were allocated for development activities in the region, with Rs.49 crores specifically for factory modernization. This information was disclosed by the Minister of State for Commerce and Industry in a written reply to the Rajya Sabha.
Summary: Pakistan's cabinet decided to move forward with granting India Most Favoured Nation (MFN) status, transitioning from a Positive List to a Negative List of 1,209 items for imports from India, as per a notification dated March 20, 2012. This Negative List is expected to be phased out by the end of 2012, allowing preferential access to all items not on the SAFTA sensitive list at a peak tariff of 5%. The bilateral trade between India and Pakistan was $2.67 billion in 2010-11, with plans to increase it to $6 billion within three years.
Summary: The import policy for pulses and oilseeds in India is unrestricted, except for seed quality. In the fiscal year 2011-12, Public Sector Undertakings (PSUs) contracted 292,650 metric tons of pulses, with specific contributions from different PSUs: STC (98,490 MT), MMTC (11,000 MT), and PEC (183,160 MT). No oilseeds were imported by any PSU. The cost of importing pulses varies based on the exporting country, import timing, and Indian port of entry. Major sources for these imports include Australia, Canada, China, France, Tanzania, Myanmar, and the USA. This was reported in a written reply by the Minister of State for Commerce and Industry in the Rajya Sabha.
Summary: There are approximately 7,200 industrial clusters in India across traditional handloom, handicrafts, and modern SME sectors, with around 2,500 being unmapped rural clusters. These clusters are distributed regionally, with the highest concentration in the west. The Indian government emphasizes the need for modern technology integration for cluster development. Initiatives include the Micro and Small Enterprise Cluster Development Programme, Scheme of Fund for Regeneration of Traditional Industries, Industrial Infrastructure Upgradation Scheme, Mega Food Park Scheme, Scheme for Integrated Textile Parks, and AYUSH cluster development. This information was disclosed by a government official in the Rajya Sabha.
Notifications
Companies Law
1.
F. No.17/292/2011 CL-V - dated
17-4-2012
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Co. Law
Alterations in the Schedule XIV of the Companies Act, 1956 in respect of Intangible Assets
Summary: The Central Government has amended Schedule XIV of the Companies Act, 1956, to include provisions for intangible assets, specifically those created under Public-Private Partnership models like Build, Operate and Transfer (BOT). The notification outlines the method for calculating the amortization rate of intangible assets such as toll roads. The amortization amount is determined by multiplying the cost of the intangible asset by the ratio of actual revenue for the year to projected revenue over the concession period. The total projected revenue is subject to annual review and adjustment to ensure full amortization over the concession period.
Customs
2.
38/2012 - dated
26-4-2012
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Cus (NT)
Rate of exchange of conversion of each of the foreign currency with effect from 1st May, 2012
Summary: The Government of India, through the Ministry of Finance's Department of Revenue and the Central Board of Excise and Customs, issued Notification No. 38/2012 on April 26, 2012. This notification, effective May 1, 2012, sets the exchange rates for converting specified foreign currencies into Indian Rupees for import and export purposes. The rates are outlined in two schedules, with Schedule I detailing rates for individual currency units and Schedule II for 100 units of Japanese Yen. This notification supersedes the previous Notification No. 26/2012, except for actions completed prior to its issuance.
SEZ
3.
S.O. 632(E) - dated
28-3-2012
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SEZ
U/s. 4 of the SEZ Act, 2005 - Set up a sector specific Special Economic Zone for handicraft sector within the village limits of Kalwara of Tehsil-Sanganer in the District of Jaipur, in the State of Rajasthan.
Summary: The Central Government has approved a proposal by a private company to modify a Special Economic Zone (SEZ) for the handicraft sector located in Kalwara, Tehsil Sanganer, Jaipur, Rajasthan. Originally notified in 2009, the SEZ's area has been adjusted by denotifying 1.095 hectares and adding 52.093 hectares, resulting in a total area of 153.7639 hectares. This adjustment complies with the requirements of the Special Economic Zones Act, 2005, and relevant rules. The changes involve specific survey numbers and areas as detailed in the notification.
4.
S.O. 583(E) - dated
26-3-2012
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SEZ
Under Section 4 of the Special Economic Zones Act, 2005 - Set up a Sector Specific Special Economic Zone for Free Trade and Warehousing Zone at Village Dhrub, Taluka Mundra, district Kutch in the State Gujarat M/s. Adani Ports and Special Economic Zone Limited
Summary: Under the Special Economic Zones Act, 2005, the Central Government has approved the establishment of a sector-specific Special Economic Zone (SEZ) for Free Trade and Warehousing at Village Dhrub, Taluka Mundra, Kutch, Gujarat, by a private company. The notification, dated March 26, 2012, confirms that all legal requirements have been met, and the area is designated as an SEZ. An Approval Committee, comprising various government officials and a representative from the developer, is constituted to oversee the SEZ. The SEZ is also recognized as an Inland Container Depot under the Customs Act, effective from the same date.
VAT - Delhi
5.
No.F.7(433)/Policy-II/VAT/2012/011-22 - dated
12-4-2012
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DVAT
Addition of kerosene oil in the exceptions mentioned in respect of petroleum products in the Notification No.F.7 (433)/Policy-II/VAT/2012/1464, dated 23.03.2012.
Summary: The Government of the National Capital Territory of Delhi, through the Commissioner of Value Added Tax, has amended Notification No.F.7 (433)/Policy-II/VAT/2012/1464, dated March 23, 2012, to include kerosene oil in the list of exceptions concerning petroleum products. This amendment is issued under the authority granted by the Delhi Value Added Tax Act, 2004, and is effective immediately.
Circulars / Instructions / Orders
FEMA
1.
113 - dated
24-4-2012
External Commercial Borrowings (ECB) for Civil Aviation Sector
Summary: The circular issued by the Reserve Bank of India allows airline companies in the civil aviation sector to avail External Commercial Borrowings (ECB) for working capital under certain conditions. Eligible airline companies must be registered under the Companies Act, 1956, and hold a scheduled operator permit from the DGCA. ECBs must be raised within 12 months with a minimum maturity period of three years, with a sector ceiling of USD 1 billion and a cap of USD 300 million per airline. ECBs cannot be rolled over, and applications require a chartered accountant's certification. These changes are effective immediately, with other ECB policies unchanged.
DGFT
2.
59 (RE-2010) /2009-14 - dated
24-4-2012
File applications for 53 SEZ ports codes - reg.
Summary: The Directorate General of Foreign Trade (DGFT) has issued a circular announcing the assignment of SEZ port codes to 53 Special Economic Zones (SEZs) across India. These codes are now available on the DGFT website for use in applications related to the Foreign Trade Policy 2009-14 and the SEZ Act and Rules. The SEZs are located in various states, including Gujarat, Karnataka, Kerala, Maharashtra, and Tamil Nadu. Applicants are instructed to use these codes when filing applications through the DGFT server. This circular has been approved by the DGFT.
Highlights / Catch Notes
Income Tax
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High Court Reviews if Penalty u/s 158BFA of Income Tax Act is Mandatory or Discretionary in Block Assessments.
Case-Laws - HC : Block assessment - Penalty u/s 158BFA - whether mandatory or discretionary - HC
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High Court Upholds Denial of Waiver for Interest u/ss 234A, 234B, 234C of Income Tax Act.
Case-Laws - HC : Denial of waiver of interest, levied under Section 234A, B and C of the Income Tax Act - HC
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Dispute Over Rs. 1,78,562: Determining the Previous Year Liability Crystallized for Prior Period Adjustments.
Case-Laws - AT : Disallowance of Rs.1,78,562 being prior period adjustments - The entire dispute thus hinges on the question as to the previous year in which liability to pay has crystallized and there is no dispute about admissibility of the claim per se - AT
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Appellant Challenges Asset Sale Classification u/s 50B; Claims Itemized Sale, Not a Slump Sale.
Case-Laws - AT : Invoking the provisions of section 50B to sale of assets of the M Seal Division of the Appellant - assessee contented that it was an itemized sale - Slump sale - AT
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Trust Found in Default for Not Deducting Tax at Source u/s 194J for Hospital Payments via MOUs.
Case-Laws - AT : Assessee in default - TDS u/s 194J - Trust directly makes payments to various hospitals as per the MOUs it entered with such hospitals. - AT
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High Court Clarifies Manufacturing Start Date for Section 80IB Tax Deductions, Impacting Business Tax Liabilities and Incentives.
Case-Laws - HC : Deduction u/s 80IB - Date of commencement of manufacturing activity - - HC
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High Court examines tax deduction denial u/s 80-I(9) due to close relations with foreign buyer; burden of proof debated.
Case-Laws - HC : Deduction u/s 80-I - denial of deduction u/s 80-I(9) - Close relations between the assessee - company and the foreign buyer - burden of proof - Deduction u/s 10A read with section 80-I(9) - maintenance of separate books - HC
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Expenses Disallowed for Non-Deduction of TDS on Subcontractor Payments for Tippers and Excavators u/s 40(a)(ia.
Case-Laws - AT : Disallowance u/s 40(a)(ia) - Sub contractor - Non deduction of TDS under Section 194C - hiring charges - tippers and excavators- AT
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Assessing Officer Can Scrutinize Accounts for Compliance with Companies Act, 1956 u/s 115JB MAT Provisions.
Case-Laws - AT : MAT - 115JB - AO has powers to go behind the accounts and see whether same have been prepared in accordance with the requirements of Part II and Part III of Schedule VI of the Companies Act, 1956. - AT
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Section 10(33) Excludes Transfer of Capital Assets from Taxation, Not Just Capital Gains, for Economic Reasons.
Case-Laws - AT : The economic reasons for insertion of Sec. 10(33) of the Act clearly shows that the source viz., transfer of capital asset being units of US 64 itself that has been excluded by the will of the Legislature and not the capital gain alone.- AT
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Petitioner Challenges Seizure of Rs. 1,60,000; Claims Funds Not Considered Advance Tax Per Section 132B(4).
Case-Laws - HC : Search and seizure - Claim of interest under section 132B(4) - The petitioner claims that an amount of Rs. 1,60,000 seized from him was neither appropriated nor treated as advance tax - HC
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Court Ruling Highlights Importance of Accurate Record-Keeping for Asset Depreciation Classification to Avoid Tax Issues
Case-Laws - AT : Depreciation - Reclassification - AT
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Monetary limit for tribunal appeals can't rely solely on negative income outcomes; issues shouldn't be dismissed as academic.
Case-Laws - HC : Determination of monetary limit for filing appeal before tribunal - merely on the ground that even if the Assessing Officer's order is restored, the net result would be a negative income, the issue cannot be treated to be one of academic interest - - HC
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Lack of Definition in Income Tax Act's Sections 10A and 10B Causes Confusion Over Business Profits Deductions.
Case-Laws - AT : Deduction u/s 10A/10B - sections 10A/10B having no definition of the expression "profits of the business" - AT
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Court Rules Gifts Must Be Proven Genuine to Avoid Tax as Unexplained Cash Credits; Documentation Essential for Legitimacy.
Case-Laws - HC : Addition in respect of the gift received as unexplained cash credits as well as non-genuine - HC
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Section 10B Income Tax: Understanding Extended 10-Year Exemption and "Undertaking" Definition for Tax Relief.
Case-Laws - AT : Exemption/deduction u/s 10B - extended period of ten years - meaning and scope of the term undertaking - AT
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Land Not Depreciable Under Income Tax Act Section 50; Eligible for Exemption u/s 54EC.
Case-Laws - HC : Land is not a depreciable asset and hence can not form part of block of assets u/s 50 - investment eligible for exemption u/s 54EC
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Section 40(a)(ia) Income Tax Act: No Expense Disallowance if TDS Paid by Section 139(1) Due Date, Retroactive from 2010.
Case-Laws - AT : Amended provisions of sec. 40(a)(ia) w.e.f. 1.4.2010 with retrospective effect - No disallowance if the TDS is paid on or before the due date specified in sec. 139(1)
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DTAC Article 13: Marketing, Strategy, and Training Services Classified as Consultancy for Tax Purposes in India-France Agreement.
Case-Laws - AAR : Article 13 of the DTAC between India and France - Services rendered on marketing, strategy and training to optimize sales techniques come within the purview of consultancy services.
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Senior Vice President and Vice Presidents gain new powers in Tribunal Zones, replacing 2006 order. Effective immediately.
Notifications : Delegation of specified powers and functions to Senior Vice President and Vice Presidents of various Zones of Tribunal with immediate effect - Supersession of Order No. VI(A)/2006, dated 20-9-2006 - Ntf. No. VI(A) - AD(AT)/2010, Dated: October 19, 2010
Customs
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Customs Notification No. 38/2012 sets new foreign currency exchange rates for customs duties effective May 1, 2012.
Notifications : Rate of exchange of conversion of each of the foreign currency with effect from 1st May, 2012 - Ntf. No. 38/2012- Customs (N.T.) Dated: April 26, 2012
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Customs Valuation and Penalties Imposed on Imported Used Rubber Tyres; Redemption Fine Applied Instead of Confiscation.
Case-Laws - AT : Import of old, used and discarded rubber tyres – Department enhanced value of tyres, imposition of redemption fine in lieu of confiscation and penalty - AT
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Debate on Using MRP vs. Transaction Value for Countervailing Duty on Imports: Legal Insights and Case Laws.
Case-Laws - AT : Valuation of imported goods - MRP based valuation or transaction value - CVD - AT
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Customs Classification Challenge: Composite Absorbent Material of Cellulosic and Polymeric Components Reviewed for Import Duty Rates.
Case-Laws - AT : Classification of 'Composite absorbent material composed of celllulosic material (pulp) bonded/treated with polymeric absorbing material and additives with pre-made laminate of non-wovens' - AT
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Foreign Trade Policy Update: Reduction in Benefits for Star Export Houses per Circular M.F. (D.R.) No. 58/2004-Cus.
Case-Laws - HC : Curtailing benefits and privileges conferred under the Foreign Trade Policy - Circular M.F. (D.R.) No. 58/2004-Cus., dated 21-10-2004 - star export house - HC
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Importer Not Liable for Duty When Goods Relinquished; Property Transfers to Department u/s [Specify Section.
Case-Laws - HC : Once a relinquishment of title to the goods is made by the assessee then the said goods become the property of the Department and as a consequence of which no duty is payable by the importer. - HC
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Entitlement to 20% DEPB Rate on Woven Jackets Upheld; Promissory Estoppel Prevents Enforcement of Revised Rates.
Case-Laws - HC : DEPB scheme - Revision in DEPB rates - Doctrine of promissory estoppel - respondent is entitled to DEPB rate as in the policy with effect from 15th April, 1998 @ 20% applicable to the woven jackets without any value cap. as existing before revision - HC
DGFT
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File Applications for 53 SEZ Port Codes as per Circular No. 59 (RE-2010) for 2009-14 Compliance Updates.
Circulars : File applications for 53 SEZ ports codes - reg. - Cir. No. 59 (RE-2010) /2009-14 Dated: April 24, 2012
SEZ
-
New Special Economic Zone for Free Trade & Warehousing Established in Kutch, Gujarat u/s 4 of 2005 Act.
Notifications : Under Section 4 of the Special Economic Zones Act, 2005 - Set up a Sector Specific Special Economic Zone for Free Trade and Warehousing Zone at Village Dhrub, Taluka Mundra, district Kutch in the State Gujarat M/s. Adani Ports and Special Economic Zone Limited - Ntf. No. S.O. 583(E) Dated: March 26, 2012
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Handicraft Sector SEZ Established in Kalwara, Jaipur u/s 4 of SEZ Act, 2005 via Notification S.O. 632(E).
Notifications : U/s. 4 of the SEZ Act, 2005 - Set up a sector specific Special Economic Zone for handicraft sector within the village limits of Kalwara of Tehsil-Sanganer in the District of Jaipur, in the State of Rajasthan. - Ntf. No. S.O. 632(E) Dated: March 28, 2012
FEMA
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New Guidelines for Civil Aviation Sector on External Commercial Borrowings to Boost Financial Support for Aircraft Acquisition.
Circulars : External Commercial Borrowings (ECB) for Civil Aviation Sector - Cir. No. 113 Dated: April 24, 2012
Corporate Law
-
Companies Act 1956, Schedule XIV amended: New rules for intangible assets impact taxation and asset management.
Notifications : Alterations in the Schedule XIV of the Companies Act, 1956 in respect of Intangible Assets - Ntf. No. F. No.17/292/2011 CL-V Dated: April 17, 2012
Service Tax
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Court Analyzes Whether Service Tax Applies to Respondents' Activities: Service to Buyers or Own Construction?
Case-Laws - AT : Whether the respondents were doing any service for the prospective buyers or were doing the construction activity for themselves - AT
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A refund claim was denied based on Clause 2(f) of Notification No.17/2009-ST, dated July 7, 2009.
Case-Laws - AT : Claim of refund rejected on the ground that according to the Clause 2(f) of Notification No.17/2009-ST, dt.7.7.09 - AT
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Eligibility for Refunds under Notification No.41/2007-ST: Criteria and Case Laws for Port and Transport Services.
Case-Laws - AT : Eligibility of refund under Notification No.41/2007-ST, dt.06.10.2007 -Port services, Terminal Handling Charges, CHA services, GTA services, Wharfage charges - AT
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Court Examines Eligibility for Service Tax Refund Under Notification No. 14/2004; Criteria for Claim Scrutinized.
Case-Laws - AT : Refund of service tax paid - Notification No. 14/2004, dated 10-9-2004 - AT
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CENVAT Credit Eligibility for Cellular Services: Classification of Antennas, Towers, and Green Shelters as Capital Goods Analyzed.
Case-Laws - AT : CENVAT credit for cellular telephone service - Meaning and scope of the term capital goods - (i) antenna, (ii) tower and parts thereof and (iii) green shelter (same as PFB) - AT
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Court to Decide If Appellant Can Claim Full Cenvat Credit on Agent Commissions and Insurance Premiums Tax Paid.
Case-Laws - AT : Cenvat credit - whether the appellant is eligible to take credit for the full amount of tax paid on the commission paid to the Agents and for the full amount of tax paid on insurance premium paid - AT
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Dam Construction Dispute: Principal and Sub-Contractor Argue Over Service Tax Liability on Provided Services.
Case-Laws - AT : Construction of Dam or not - principal contractor as well as the sub-contractor, are denying the liability of Service Tax on the services which have been rendered by them - AT
Central Excise
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Polymer and Crumbled Rubber Modified Bitumen Not Classified as Bituminous Mixtures for Tax Purposes Under Chapter 27150090.
Case-Laws - AT : Polymer Modified Bitumen (PMB) and Crumbled Rubber Modified Bitumen (CRMB) cannot be treated as Bituminous mixtures falling under Chapter sub-heading No.27150090 - AT
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Tribunal Rules on Interest for Delayed Cenvat Credit Refunds u/r 5 of Cenvat Credit Rules, 2002.
Case-Laws - AT : Claim of interest on refund as Rule 5 of CCR, 2002 - AT
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Must Modvat/Cenvat Credit Be Reversed for Duty-Exempt Final Products? Exploring Input Use in Manufacturing.
Case-Laws - HC : Whether the Modvat/Cenvat credit on the inputs in process and in finished products is liable to be reversed/paid back when the final product becomes exempt from payment of duty - HC
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Supplies to SEZs are considered "exports," exempting them from Cenvat Credit recovery u/r 6 of CCR, 2002/2004.
Case-Laws - AT : The supplies made to SEZ are held to be "export", the application of provisions of Cenvat Credit Rules for recovery of amounts on goods supplied to SEZ units in terms of Rule 6 of CCR, 2002 / CCR, 2004 does not arise - AT
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Valuation Method u/s 4A: Including Optional Service and Rust Proof Charges with MRP for Tax Purposes.
Case-Laws - AT : MRP bases valuation under section 4A - Charging Optional Service Charges (OSC in short) and “Rust Proof Protection Charges (RPP in short) over and above the MRP - AT
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Turnover Tax Deductible for Excise Duty Calculations; Exclude from Transaction Value for Accurate Liability Assessment.
Case-Laws - AT : Inclusion in Assessable value - turn over tax is a permissible deduction - tax paid or payable on the goods shall not form part of the transaction value for the purpose discharge of excise duty liability - AT
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Reversal of CENVAT Credit: Duty Payment on Value Addition Alters Credit Management Under Central Excise Regulations.
Case-Laws - AT : Reversal of cenvat credit - payment of duty on value addition on the inputs received by the appellant amounts to reversal of the CENVAT credit as - AT
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Carpets with jute base and polyester or polypropylene surface classified as "other carpets" under sub-heading 5703.90 for tax.
Case-Laws - AT : The carpets which are non-woven carpets with base/ground fabric of jute and exposed surface consisting of polyester/polypropylene fibre, are classifiable as “other carpets” under sub-heading 5703.90 - AT
VAT
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Court Reviews Nutralite Margarine Classification Under MVAT: Vegetable Oil Status Affects Tax Rate.
Case-Laws - HC : Classification - MVAT - Whether the product, nutralite table margarine, manufactured by the respondent-assessee is a vegetable oil covered under Schedule C, entry 100 or Schedule C, entry 102 or not - HC
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Court Supports State's Retroactive Inclusion of Liquor Manufacturers in Tax Deferment Negative List, Aligns with Soft Drinks.
Case-Laws - HC : Benefit of deferment of tax - When soft drink manufactures are put in the negative list, it would indeed be surprising not to have liquor in the negative list, no fault can be found with the notification issued by the State including liquor in the negative list with retrospective effect - HC
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Kerosene Oil Added to Exceptions List in VAT and Sales Tax Regulations as of April 2012 Notification.
Notifications : Addition of kerosene oil in the exceptions mentioned in respect of petroleum products in the Notification No.F.7 (433)/Policy-II/VAT/2012/1464, dated 23.03.2012. - Ntf. No. No.F.7(433)/Policy-II/VAT/2012/011-22 Dated: April 12, 2012
Case Laws:
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Income Tax
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2012 (4) TMI 435
Entitlement to assessee to reduce interest paid on bank overdrafts from the interest received on FDRs and exclude profit from the sale of EDP receipts under the duty remission scheme while calculating deductions u/s 80HHC – Revenue appeal - Held that:- Ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included in the profits of business of the assessee as computed under the head “Profits and Gains of Business or Profession”, is to be deducted under clause (1) of Explanation (baa) to Section 80-HHC for determining the profits of the business” as per clause (1) of Explanation (baa) to Section 80-HHC – in favour of assessee.
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2012 (4) TMI 434
Whether penalty can be imposed on the assessee where additions are made under the normal provisions of the Act but actually the taxable income of the assessee is assessed under Section 115JB and there is no addition for book profits – Held that:- Though there was concealment but that had its repercussions only when the assessment was done under the normal procedure - it is the deemed income assessed under section 115JB of the Act which has become the basis of assessment as it was higher of the two and tax is paid on the income assessed u/s 115JB - the concealment did not lead to tax evasion at all - Penalty not to be imposed – in favour of assessee.
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Corporate Laws
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2012 (4) TMI 433
No response to notices in lieu of Procedure for Early Redemption of Bonds - transfer of unpaid dividend account of a company to the fund established IEPF under Section 205C – Writ Petition – Held that:- Section 205 C is a salutary and virtuous provision enacted to ensure that a company does not unjustifiably and unduly enrich themselves, as the depositors have failed to stake claim and have not been paid for a period of seven years from the date the amount became due – no reason to hold that the said provisions are unconstitutional or they violate Article 14 of the Constitution - serious lapses on the part of the petitioner as no intimation of change of address ,hence could not be communicated about the premature redemption and no bother to read the terms and conditions of allotment including the early redemption clause - when a matter either on question of fact or on a question of law decided between two parties in one proceeding and the decision is final either because no appeal was taken to a higher Court or because the appeal was dismissed, neither party will be allowed in a future proceedings between the same parties to canvas the matter again.
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2012 (4) TMI 428
Application filed under Section 543(1) by Official Liquidator alleging misfeasance on the part of the Directors of the Company-in-liquidation – Held that:- If the question relating to hypothecation of properties belonging to the company in liquidation is to be considered in an appropriate proceedings and if it is not handed over, the same would not make the respondents liable for misfeasance since it is not shown that the respondents have appropriated the said properties to themselves so as to cause loss to the company in liquidation - no specific evidence to indicate the involvement of the respondents prejudicial to the company in liquidation with no other act attributed to them to arrive at a different conclusion -application rejected.
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Service Tax
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2012 (4) TMI 431
Waiver and stay in respect of service tax and education and also equal amount of penalty - impugned demand is on construction of dams, roads, tunnels and bridges etc. done by the appellant in connection with execution of composite contracts - Held that:- An EPC contract was executed by the appellant under a single composite contract and the construction of dam, roads, tunnels etc. was vivisectable - the definition of “commercial or industrial construction service” permitted the appellant to exclude the cost of construction of dams, roads, tunnels etc.from the gross amount covered by the EPC contract for the purpose of payment of service tax – in favour of assessee.
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2012 (4) TMI 430
Valuation of taxable services - Section 67 - Recovery of amount through Debit notes - unloading, loading and transportation of goods to the plant - No Cenvat credit of tax paid on services of unloading, loading and transportation to bring the goods to their plant - Held that:- The contract by the appellant with their customers is for doing crushing and grading of iron ore and also for doing activities like unloading, loading and transportation necessary for this purpose - transportation activity was done by others and paid by the Appellant along with service tax payable for transportation of goods - that the amounts billed by them form part of the value of taxable service rendered and should have paid tax on the full value under the head applicable for crushing and grading - the services of the sub-contractors were provided to the appellants and the appellants were eligible to take Cenvat credit of tax paid on it subject to the condition that the appellants pay tax on the full value of service including the amount accounted as reimbursement for transportation – decided against the assessee. Classification of service rendered by the transport contractors whether it is Transportation of Goods or Cargo Handling Service – Held that:- When there is composite service the service should be classified as per provisions in section 65A of Finance Act, 1994 - it cannot be considered that transportation is for the purpose of loading and unloading but loading and unloading is for transportation. Any person dealing with the situation perceives the services as one for transportation and not for loading and unloading- against Revenue. Revenue detected short payment of tax for incidental charges received by them for the years 2005-06 and 2006-07 (Rs. 317324) - Held that:- There is a statement by the Appellants in Appeal Memorandum about a payment of Rs. 10,08,225 on 02-06-06 on this count - the matter appears to be arising out of wrong reconciliation - remit the matter to the adjudicating authority to quantify dues if any on this account and pass an order which brings out the issue clearly.
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2012 (4) TMI 429
Eligibility to the appellant for service tax credit paid on Mobile Telephone services on the basis of invoices issued by Head Office as service tax distributor – Held that:- Since the credit was taken on the basis of invoices issued by Head Office, the details of Mobile Phone/phones in respect of which service tax was paid and in whose name the mobile phone is not have been shown or seen by the authorities- as assessee has no objection to produce the documents the matter is remanded to the original adjudicating authority for verification of documents relating to utilization of mobile phone and payment of service tax of such services.
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Central Excise
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2012 (4) TMI 432
Clandestine removal - computation of quantity – assessee contested that the quantity computed by the Tribunal is based upon surmises and conjectures and there is no concrete evidence or material to hold that 768.03 Mt. or resin CP172SG was clandestinely sold – Held that:- Statement of Director present at the time of search admitted to clandestine removal and sale of resin CP172SG and also stated that he had partly used and consumed the resin in the manufacture of Filler Cords and PVC Tapes - the aforesaid quantum of 768.03 Mt., has been calculated by the Tribunal on the basis of the quantity purchased, less the consumption for production of PVC compound as recorded in the records/books. The Tribunal has given benefit of doubt to the Appellant and other appellants on use of resin CP172SG in the manufacture of PVC Tapes to the extent of 230 Mt - under Rule 15(1) of CCR, 2004, any input or capital goods, in respect of which cenvat credit has been taken wrongly, are liable for confiscation, so the illicitly diverted CP1725Sg resin was liable for confiscation – appellant with other parties who had dealt with the illicitly diverted resin knowingly are liable for confiscation and penalty under Rule 26 of CER, 2002 - upheld imposition of penalty - against assessee.
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