TMI Tax Updates - e-Newsletter
May 10, 2012
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Central Excise
CST, VAT & Sales Tax
Articles
By: DEVKUMAR KOTHARI
Summary: The article discusses the case of a public limited company, SREI Infrastructure Finance Ltd., which approached the Income Tax Settlement Commission for the assessment years 2009-10 and 2010-11. The company initially reported a significant loss for 2009-10 but later disclosed additional income under the Minimum Alternate Tax (MAT) during settlement proceedings. The Delhi High Court addressed the taxability of capital gains under Section 50B related to a slump sale. The author critiques the company's decision to seek settlement instead of filing revised returns, suggesting potential carelessness or overconfidence, and questions the applicability of Section 115JB given the company's financial situation.
By: CSSwati Rawat
Summary: The Finance Bill 2012, introduced by the Indian Finance Minister, proposed significant amendments to Indian Tax Law, including the General Anti-avoidance Rule (GAAR) and taxation on indirect asset transfers in India. GAAR's implementation is delayed by a year to allow more time for addressing related issues, with new provisions for transparency and taxpayer recourse. Retrospective amendments will not override existing tax laws, affecting only transactions through low or no tax countries without treaties with India. Other changes include reduced tax rates on long-term capital gains from unlisted securities, exemptions for start-up investors, and a lower withholding tax rate for infrastructure-related borrowings.
By: CSSwati Rawat
Summary: Section 56(2) of the Income Tax Act is proposed to include a new clause treating share premium exceeding fair market value as taxable income under "Income from other sources." This applies to private companies receiving share consideration from residents, excluding venture capital undertakings. Companies can substantiate fair market value claims to the Assessing Officer using prescribed methods or asset valuation, including intangible assets. This amendment is effective from April 1, 2013, applicable to the assessment year 2013-14 onwards.
By: CSSwati Rawat
Summary: The article discusses proposed amendments to the Income-tax Act concerning Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) provisions. It highlights issues with deductors failing to submit timely and accurate TDS statements, causing delays in tax credit and refunds. To address this, a fee of Rs.200 per day for late submissions and penalties between Rs.10,000 to Rs.1,00,000 for incorrect information are proposed. Amendments also allow waiver of penalties if reasonable cause for delay is proven. These changes, effective from July 1, 2012, aim to improve compliance and accuracy in TDS/TCS reporting.
By: CSSwati Rawat
Summary: Section 68 of the Income Tax Act addresses the taxation of unexplained cash credits in an assessee's books. If the source of funds is not satisfactorily explained, the amount is taxed as income. Judicial rulings have highlighted the need to prevent unaccounted money being disguised as share capital, especially in closely held companies. An amendment effective from April 1, 2013, requires these companies to explain the source of funds from shareholders unless they are regulated entities like Venture Capital Funds. Additionally, unexplained credits under sections 68, 69, 69A, 69B, 69C, and 69D will be taxed at 30%, with no deductions allowed.
News
Summary: India and Germany are set to surpass their trade target of 20 billion Euros by 2012, with bilateral trade reaching nearly US$ 23.64 billion last year. The Indian Minister of Commerce and Industry met with the German Federal Minister of Economics and Technology to discuss enhancing economic ties, especially in the pharmaceutical sector, where opportunities for collaboration in generics are significant. The ministers also reviewed mutual investments, noting over 1,600 collaborations and 600 joint ventures. The ongoing German Year in India and the upcoming Days of India in Germany celebrate the 60th anniversary of diplomatic relations between the two countries.
Summary: SAFTA member countries, part of the South Asian Association for Regional Cooperation (SAARC), are working towards liberalizing trade arrangements by removing protectionist trade barriers. This initiative is being discussed in trade-related meetings and is progressing with input from stakeholders. The information was shared by the Minister of State for Commerce and Industry in response to a query in the Rajya Sabha.
Summary: India and Pakistan have agreed to enhance trade through the newly established Integrated Check Post at Attari, as per a joint statement from a bilateral meeting between their Commerce Ministers in April 2012. Pakistan has committed to lifting existing restrictions on items that can be imported via the Wagah land route. This information was provided by the Indian Minister of State for Commerce and Industry in response to a query in the Rajya Sabha.
Summary: The US Emergency Border Security Supplemental Appropriations Act, 2010, raises visa fees for H1B and L1 categories for companies with over 50 employees in the US or more than 50% of their workforce on non-immigrant visas. This measure is viewed as discriminatory against Indian software companies, which are significantly affected by the "50/50 rule." The Indian Department of Commerce plans to seek consultations with the US under the WTO's Dispute Settlement Understanding. Major Indian firms like TCS, Infosys, Wipro, and Mahindra Satyam are impacted, though the effect on US companies remains unclear.
Summary: The Government of India's Foreign Trade Policy allows the free export of cotton, contingent upon the prior registration of contracts with the Directorate General of Foreign Trade (DGFT). This registration aims to monitor export quantities. No export quotas have been set by the government for cotton. This information was provided by the Minister of State for Commerce and Industry in a written response to a question in the Rajya Sabha.
Summary: The Government of India has imposed an anti-dumping duty on certain grades of Mulberry raw silk imported from China. This measure, effective for five years starting January 6, 2009, aims to counteract the dumping of raw silk from China, despite the import of raw silk being generally free under the ITC (HS) Classification for Export and Import Items. This decision was disclosed by the Minister of State for Commerce and Industry in a written response to a query in the Rajya Sabha.
Summary: The Government of India has not imported wheat and non-basmati rice in the past three years. To address domestic price concerns and supply-demand gaps in pulses, two subsidy schemes were implemented. From December 2006 to March 2011, four public sector agencies imported and supplied around 21 lakh tonnes of pulses domestically. A second scheme, operational from November 2008 to April 2012, involved five agencies supplying approximately 7 lakh tonnes of imported pulses to state governments. This information was provided by a government minister in response to a parliamentary question.
Summary: India's tea exports have been consistent at around 200 million kilograms annually over the past five years, but face stiff competition from countries like Kenya, China, and Sri Lanka. To address this, India is focusing on five key markets: the USA, Russia, Kazakhstan, Iran, and Egypt, through dedicated promotional efforts. Strategies include participation in international fairs, promotional support, ensuring the authenticity of Darjeeling tea, media publicity, and facilitating buyer-seller interactions. The Tea Board is also assisting exporters with additional transport costs. These measures aim to enhance India's competitiveness in the global tea market.
Summary: Bilateral discussions between India and Pakistan have highlighted the potential for enhancing economic and trade relations, focusing on power and petroleum products. Joint Working Groups have been established to facilitate this trade. While petroleum product trade is already underway, trading in power requires the construction of transmission connectivity, for which no decision has been made yet. This information was provided by the Indian Minister of State for Commerce and Industry in a written reply to a question in the Rajya Sabha.
Summary: The Government of India reported on the export achievements of the leather sector over three years, noting exports of $3,404.57 million in 2009-10, $3,844.86 million in 2010-11, and $3,611.38 million up to December 2011. Under the 11th Five Year Plan, the Department of Industrial Policy Promotion initiated projects for environmental protection in the leather sector, including six projects in Tamil Nadu with a budget of Rs.92.50 crore. The government identified leather as a Focus Sector in the 2009-14 Foreign Trade Policy, offering incentives like duty-free imports and duty credit scrips to boost exports.
Summary: India is implementing measures to enhance its business environment and attract Foreign Direct Investment (FDI). Between 2008 and 2012, FDI equity inflows totaled Rs. 487,650 crores. The country's ranking in the World Bank's Doing Business 2012 report improved to 132 out of 183 countries. Initiatives include e-Governance, liberalized investment policies, single window systems for tax payments, and the eBiz Project, which aims to streamline business processes by providing a single online portal for registrations and approvals. These efforts are part of a broader strategy to create an investor-friendly ecosystem across various government levels.
Summary: The Delhi-Mumbai Industrial Corridor (DMIC) project has identified 24 investment regions and industrial areas, with seven regions selected for development in Phase I, including areas in Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat, and Maharashtra. The Ratlam-Nagda Investment Region in Madhya Pradesh is tentatively identified for Phase II. The first phase focuses on developing industrial cities, with state governments recommending specific regions for inclusion. The information was provided by the Minister of State for Commerce and Industry in a written reply to the Rajya Sabha.
Summary: The Finance Minister addressed the challenges facing India's economy, emphasizing the need for unity in addressing fiscal issues and international influences. He highlighted the resilience of the Indian economy despite global crises and the importance of fiscal consolidation to sustain growth. The Minister discussed the impact of subsidies on fuel prices and the necessity of tax reforms like GST and DTC for economic improvement. Concerns over the current account deficit, trade deficit, and sovereign credit ratings were acknowledged, with a focus on corrective measures. He also mentioned efforts to enhance export policies and manage resources effectively, including addressing black money concerns.
Summary: The Government of India is addressing the rising current account deficit (CAD), which reached 4% of GDP by December 2011, primarily due to increased imports of petroleum, oil, lubricants, and gold. To mitigate this, the 2012-13 Union Budget proposes raising the basic customs duty on standard gold bars, high-purity gold coins, and platinum from 2% to 4%, and on non-standard gold from 5% to 10%. Additionally, the Reserve Bank of India has implemented measures to limit loans against gold by Non-Banking Financing Companies. These steps aim to manage the CAD by curbing gold imports.
Summary: The Reserve Bank of India provides data on the outstanding credit of Scheduled Commercial Banks (SCBs), not on loans disbursed. As of March 31, 2008, the outstanding credit was Rs. 20,85,984 crore, increasing to Rs. 29,84,424 crore by March 31, 2010, with annual growth rates of 25.04%, 19.74%, and 19.48% respectively. Outstanding credit to public sector entities, including government departments and corporations, rose from Rs. 3,48,863 crore in 2008 to Rs. 5,55,679 crore in 2010, with growth rates of 75.06%, 36.25%, and 16.90%. This information was disclosed by a government official in the Rajya Sabha.
Summary: Life Insurance Corporation of India (LIC) and Unit Trust of India (UTI) have made significant investments in ITC Limited, with LIC holding 93,52,41,572 shares and UTI holding 89,68,68,810 shares. LIC invests in government securities, infrastructure financing, and companies, including private sector entities, within regulatory norms. UTI, established under the UTI Act 1963, invests in various public and private sector companies across different industries, with its investment in ITC Limited being one such example. This information was disclosed by a government official in response to a query in the Rajya Sabha.
Summary: The Income Tax Department seized assets valued at Rs. 905.61 crore in the 2011-12 financial year, an increase from Rs. 774.98 crore in 2010-11. The government has been actively verifying information about foreign remittances and undisclosed bank accounts under international agreements. Verified cases of tax evasion are subjected to penalties, and prosecution proceedings are initiated when necessary. The department continues to combat tax evasion through various measures, including scrutiny, surveys, and search and seizure operations. No new schemes are currently being considered by the government regarding these issues.
Summary: The Income Tax Department of India, after thorough evaluations and discussions, has outsourced its infotech functions without any detected cases of data leaks or refund frauds involving vendor personnel from the Centralised Processing Centre and e-filing services. The department ensures the service provider's operations are regularly assessed, with third-party audits conducted to certify compliance with Service Level Agreements, including security protocols. This information was disclosed by the Minister of State for Finance in response to a query in the Rajya Sabha.
Summary: The Indian government set a disinvestment target of Rs. 30,000 crore for the fiscal year 2012-13, following a revised estimate of Rs. 13,144.55 crore for 2011-12. In the previous year, Rs. 13,894.05 crore was raised through disinvestment in Power Finance Corporation Limited and Oil and Natural Gas Corporation Limited. As of the current fiscal year, Rs. 124.97 crore has been received from disinvestment in National Building Construction Corporation Limited. This information was provided by the Minister of State for Finance in a written response to a query in the Rajya Sabha.
Summary: The Government of India has implemented various measures to boost GDP growth, which was estimated at 8.4% for 2009-11 and 6.9% for 2011-12. The slowdown in 2011-12 was due to global factors like the eurozone crisis and domestic factors such as tightened monetary policy. The Twelfth Five Year Plan aims for 9% annual GDP growth, focusing on agriculture, job creation in manufacturing, and infrastructure development. Initiatives include increased investment in agriculture and irrigation, support for MSMEs, and infrastructure projects through Public-Private Partnerships, alongside legislative measures for financial sector development.
Summary: The government has advised Public Sector Banks (PSBs) and Public Sector Insurance Companies to create action plans to turn around their loss-making branches. While these institutions operate based on board-driven policies and regulatory guidelines, the government, as a promoter shareholder, is emphasizing the need for such plans. Additionally, banks have been urged to meet financial inclusion targets, which remain a government priority. This directive was communicated by the Minister of State for Finance in response to a query in the Rajya Sabha.
Summary: India's external debt reached US$334.9 billion by the end of December 2011, marking a US$11 billion increase from the previous quarter. This rise was primarily due to higher external commercial borrowings and short-term debt. The current account deficit was typically financed by a capital account surplus, but in 2011-12, a higher trade deficit and reduced capital inflows led to a drawdown of foreign exchange reserves. This information was provided by a government official in response to a parliamentary question.
Summary: The Central Government addressed allegations reported in a newspaper regarding foreign investment in Aircel by Global Communication Services Holdings Ltd, Mauritius. The government refuted these claims as factually incorrect and reiterated the correctness of a previous press release from April 28, 2012. The investment proposal followed standard procedures, with application and approval dates from September to October 2006, involving the Foreign Investment Promotion Board and final approval by the Finance Minister. The government emphasized that the process was conducted normally and criticized the persistence of unfounded allegations.
Summary: The Competition Commission of India (CCI) has established an Eminent Persons Advisory Group (EPAG) to provide guidance on market and competition issues, international practices, and advocacy. The group will engage with the CCI two to three times annually and includes members from diverse sectors such as the corporate world, academia, NGOs, regulatory bodies, and financial institutions. Notable members include former leaders from Infosys, the Reserve Bank of India, and Biocon. The first meeting of EPAG is tentatively scheduled for July 2012.
Notifications
Central Excise
1.
26/2012 - dated
8-5-2012
-
CE
Amends notification No. 15/2010-Central Excise - Exempts all items of machinery, and components, required for initial setting up of a solar power generation project or facility.
Summary: The Government of India has amended Notification No. 15/2010-Central Excise to exempt machinery and components needed for setting up solar power projects from excise duties. The amendment requires a Deputy Secretary from the Ministry of New and Renewable Energy to recommend the exemption, certifying the necessity of goods for the project. Additionally, the project's CEO must provide an undertaking to ensure goods are used solely for the project. Non-compliance will result in the project developer paying the excise duty that would have been applicable without the exemption.
2.
25/2012 - dated
8-5-2012
-
CE
Amends notification No. 10/1996-Central Excise - Exemption to goods within the factory of their production in the manufacture of specified goods.
Summary: The Government of India, through the Ministry of Finance, has amended Notification No. 10/1996-Central Excise, originally issued on July 23, 1996. This amendment, under Notification No. 25/2012-Central Excise, revises the exemption criteria for goods produced within a factory. Specifically, it updates the entry for S. No. 12 in the notification's table to include footwear and hawai chappals, excluding leather, with a retail sale price not exceeding Rs. 500 per pair. This change is made under the Central Excise Act, 1944, in the interest of public welfare.
3.
24/2012 - dated
8-5-2012
-
CE
Amends notification no. 12/2012-Central Excise - Prescribes effective rate of duty on goods falling under chapter 1 to 96.
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 24/2012-Central Excise, amending the previous Notification No. 12/2012-Central Excise. These amendments, effective from May 8, 2012, prescribe the effective rates of duty on goods classified under chapters 1 to 96. Key changes include the insertion of new serial numbers with specified duty rates, alterations to existing entries, and the introduction of exemptions for certain goods such as polyester staple fiber and specific types of footwear. The amendments aim to align duty rates with public interest considerations.
4.
23/2012 - dated
8-5-2012
-
CE
Articles of jewellery exempted from whole of Excise Duty. - PARTS OF RAILWAY OR TRAMWAY LOCOMOTIVES OR ROLLING-STOCK Exempted subjected to conditions.
Summary: The Government of India, through Notification No. 23/2012-Central Excise dated May 8, 2012, exempts certain goods from excise duty under the Central Excise Act, 1944. Specifically, articles of jewellery are exempt from the whole of excise duty. Additionally, parts of railway or tramway locomotives or rolling stock are exempted, provided they are manufactured by a factory belonging to the Central Government and intended for use by any department of the Central Government. This notification was later rescinded by Notification No. 27/2012-Central Excise on May 30, 2012.
5.
25/2012 - dated
8-5-2012
-
CE (NT)
Seeks to amend CENVAT credit Rules, 2004 (Fifth Amendment). - No reversal for supplies made for setting up of solar power generation projects or facilities
Summary: The Government of India has issued Notification No. 25/2012-Central Excise (N.T) to amend the CENVAT Credit Rules, 2004, specifically the Fifth Amendment. This amendment, effective from its publication date, modifies sub-rule (6) of rule 6. It substitutes references to previous notifications with those dated 17th March 2012 and adds a new provision exempting the reversal of CENVAT credit for supplies made for setting up solar power generation projects or facilities. This change aims to support the establishment of solar energy infrastructure by easing financial processes related to excise duties.
Customs
6.
32/2012 - dated
8-5-2012
-
Cus
Amends Notification No.21/2012-Customs - Exempts import of goods from additional duty leviable u/s 3(5).
Summary: The Government of India issued Notification No. 32/2012-Customs, amending Notification No. 21/2012-Customs, to exempt imported goods from additional duty under section 3(5) of the Customs Act, 1962. The amendments include changes to conditions regarding the state of destination and registration numbers for VAT or sales tax. Additionally, the term "solar thermal power" in the notification is replaced with "solar power." These amendments are made in the public interest and were published in the Gazette of India on May 8, 2012.
7.
31/2012 - dated
8-5-2012
-
Cus
Amends Notification 12/2012 – Customs - Prescribes effective rate of duty on import of goods.
Summary: The Government of India has issued Notification No. 31/2012-Customs, amending Notification No. 12/2012-Customs to prescribe effective rates of duty on imported goods. Changes include updates to tariff entries for specific goods, such as orthopaedic implant materials, pulp of wood for manufacturing newsprint and paper, and adult diapers. Adjustments also include a change in the duty rate for certain items to 10%, and modifications to the specifications of goods like screen sizes. Some previous provisions have been omitted. These amendments are made under the Customs Act, 1962, in the public interest.
8.
30/2012 - dated
8-5-2012
-
Cus
Exemption from CVD not applicable for certain goods when imported for Defence, Coast Gaurd, Deptt. of Revenue, Police Forces, HAL, specified ordnance Factories and for ATVP, IGMDP, SAMYUKTA, LCAP, SANGRAHA, DIVYA DRISHTI and DHANUSH Programmes etc.
Summary: The Government of India, under Notification No. 30/2012-Customs dated May 8, 2012, amends the previous customs notification No. 39/96-Customs. This amendment specifies that the exemption from the additional duty under section 3 of the Customs Tariff Act does not apply to certain goods. These goods include hand-held metal detectors, postal bomb detectors, explosive containers, metal detectors (portable or fixed), deep search metal or mine detectors, mine impactors, non-magnetic mine prodders, and under-vehicle search mirrors. This amendment affects imports for defense, coast guard, revenue, police forces, and specific defense programs.
9.
24/2012 - dated
28-3-2012
-
Cus
Seeks to amend Notification 12/2012 – Customs - Prescribes effective rate of duty on import of goods.
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, issued Notification No. 24/2012-Customs to amend Notification No. 12/2012-Customs. This amendment, effective from March 28, 2012, modifies the customs duty rate on certain imported goods. Specifically, in the table of the original notification, for Serial No. 200, item (i), the duty rate is changed to "1%". This adjustment is made under the authority of Section 25(1) of the Customs Act, 1962, in the public interest.
10.
37 /2012 - dated
23-4-2012
-
Cus (NT)
Amendment in Baggage Rules, 1998. - Increase in limit of baggage in case of Passengers returning from countries other than Nepal, Bhutan, Myanmar or China
Summary: The Government of India, through the Ministry of Finance, has amended the Baggage Rules, 1998, increasing the baggage allowance limit for passengers returning from countries other than Nepal, Bhutan, Myanmar, or China. The amendment, effective from its publication date, raises the allowance from Rs. 6,000 to Rs. 15,000 as specified in Appendix A of the rules. This change is enacted under the powers conferred by section 79 of the Customs Act, 1962, and is documented in Notification No. 37/2012-Customs (N.T.), dated April 23, 2012.
DGFT
11.
116 (RE – 2010)/2009-2014 - dated
8-5-2012
-
FTP
Export Policy of Onions.
Summary: The Government of India amended the export policy for onions, allowing their export without any Minimum Export Price (MEP) until further notice, overriding the previous restriction effective until July 2, 2012. Thirteen designated State Trading Enterprises (STEs) are required to report daily to the Directorate General of Foreign Trade (DGFT) regarding the quantities registered for export. The notification mandates specific reporting details, including the applicant's name, quantity allotted, and IEC number. This policy change aims to facilitate the export process by removing the MEP requirement temporarily.
12.
115 (RE-2010) /2009-2014 - dated
7-5-2012
-
FTP
Amendment in paragraph 6.9 of FTP.
Summary: The amendment to paragraph 6.9 of the Foreign Trade Policy (FTP) 2009-2014 clarifies that supplies from Export Oriented Units (EOU), Electronic Hardware Technology Parks (EHTP), Software Technology Parks (STP), and Bio-Technology Parks (BTP) to the Domestic Tariff Area (DTA) will be counted for fulfilling positive Net Foreign Exchange (NFE) requirements. However, these supplies will not include marble unless it is an inter-unit supply as specified in paragraph 6.9(c). This change restricts EOUs from supplying marble to the DTA under the specified conditions.
Income Tax
13.
16/2012 - dated
30-4-2012
-
IT
Income-tax (Fifth Amendment) Rules, 2012 - Insertion of rule 2F.
Summary: The Income-tax (Fifth Amendment) Rules, 2012 introduces Rule 2F, detailing guidelines for establishing an Infrastructure Debt Fund (IDF) for tax exemption under section 10(47) of the Income-tax Act, 1961. The IDF must be set up as a Non-Banking Financial Company aligning with Reserve Bank of India directions. Investments are restricted to specific infrastructure projects and bonds issued must comply with RBI and Foreign Exchange Management regulations. Non-resident investors face a minimum five-year bond maturity and a three-year lock-in period. The IDF's investment in any single project is capped at 20% of its corpus, and it must file income returns as mandated. Non-compliance results in loss of tax-exempt status.
VAT - Delhi
14.
F.7(433)/Policy-II/VAT/2012/75 to 86 - dated
7-5-2012
-
DVAT
Amendment to notification dated 23.03.2012 relating to movement of specified goods.
Summary: The notification issued by the Commissioner of Value Added Tax for the Government of the National Capital Territory of Delhi amends a previous notification dated 23.03.2012. It specifies that the earlier notification will apply solely to the movement of goods related to interstate sales, stock transfers, and exports. This amendment is enacted under the authority provided by the Delhi Value Added Tax Act, 2004, and is effective immediately.
Circulars / Instructions / Orders
Service Tax
1.
158/9/ 2012 - dated
8-5-2012
Clarification on Rate of Tax - regarding.
Summary: The service tax rate has been increased to 12% effective from April 1, 2012. Clarification is provided for cases where invoices were issued before this date but payments are made after. For eight specified services provided by individuals, proprietary, or partnership firms, and services under reverse charge, the applicable tax rate is determined by the payment date. If payments occur on or after April 1, 2012, the 12% rate applies. Supplementary invoices may be issued to reflect the new rate, and Cenvat credit can be claimed based on these invoices and tax payment challans, adhering to Cenvat Credit Rules 2004.
FEMA
2.
120 - dated
8-5-2012
Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI scheme allowed under the Government route.
Summary: The circular addresses the issuance of equity shares under the Foreign Direct Investment (FDI) scheme via the Government route in India. It highlights that the conversion of imported second-hand machinery is excluded from this provision to promote the use of advanced, energy-efficient technology. Other guidelines from previous circulars remain unchanged. Authorized Dealer Category-I banks are instructed to inform their clients about these changes. Amendments to relevant regulations are to be notified separately. The directions are issued under the Foreign Exchange Management Act, 1999, and do not affect any other required permissions or approvals.
3.
121 - dated
8-5-2012
Foreign investment in Commodity Exchanges and NBFC Sector - Amendment to the Foreign Direct Investment (FDI) Scheme.
Summary: The circular addresses amendments to the Foreign Direct Investment (FDI) Scheme concerning foreign investments in commodity exchanges and the Non-Banking Financial Company (NBFC) sector. It specifies that government approval is now required only for the FDI component in commodity exchanges, while investments by registered Foreign Institutional Investors (FIIs) do not require such approval. The FDI policy permits up to 100% investment in 'financial leases' under the automatic route, excluding 'operating leases.' The circular instructs banks to inform their clients and notes that necessary regulatory amendments will be notified separately.
DGFT
4.
110/2009-2014 (RE-2010) - dated
7-5-2012
Indo – China Border Trade.
Summary: The Directorate General of Foreign Trade has updated the list of items for Indo-China border trade by adding five new import items and seven new export items. The new import items include readymade garments, shoes, quilts/blankets, carpets, and local herbal medicine. The new export items include processed food items, flowers, fruits and spices, religious products, readymade garments, handicraft and handloom products, and local herbal medicine. The trade will continue through the land customs stations at Gunji (Uttarakhand), Namgiya Shipkila (Himachal Pradesh), and Nathu La (Sikkim). Other provisions from previous notices remain unchanged.
Customs
5.
13/2012 - dated
8-5-2012
Enforcement of Intellectual Property Rights on imported goods - Clarification on the issue of parallel imports – regarding.
Summary: The circular addresses the enforcement of Intellectual Property Rights (IPR) on imported goods, specifically concerning parallel imports. It clarifies that parallel imports, which involve importing genuine products legally acquired abroad without the IPR holder's permission, are subject to specific legal provisions. Under the Patents Act, parallel imports are allowed if the product is bought from an authorized seller. The Trade Marks Act permits resale of goods lawfully acquired, provided they are not altered. However, parallel imports are not allowed under the Designs Act, and the Geographical Indications Act does not address them. Copyright issues await further clarification. Customs authorities are instructed to follow these guidelines.
Highlights / Catch Notes
Income Tax
-
When Should Tax Assessment Start: From DTA Manufacturing Date or EOU Start Date?
Case-Laws - AT : Whether the period of ten consecutive assessment years is to be reckoned from the date of commencement of the manufacturing as a DTA Unit or from the date of commencement of manufacture as a EOU Unit. - AT
-
Petitioner Disputes Reopening of Assessment u/s 148, Claims Non-Resident Status and No Additional Taxable Income in India.
Case-Laws - HC : Reopening assessment - notice u/s 148 - petitioner contested that he is a non-resident and had no income chargeable to tax in India other than what was declared - HC
-
Supreme Court Calls for Reconsideration of Tax Treatment on Interest-Free Loans to Subsidiaries in S. A. Builders Case.
Case-Laws - SC : Interest free loan to wholly owned subsidiary - Decision in the case of S. A. Builders Ltd. v. CIT (Appeals) [2006 - TMI - 3364 - SUPREME COURT] needs reconsideration. - SC
-
Charges for Overloading Wagons by Railways Deemed Compensatory, Not Disallowed u/s 37(1) of Income Tax Act.
Case-Laws - AT : Punitive charges paid to Railways for overloading of the wagons is compensatory in nature, therefore, the same cannot be disallowed by invoking the provisions of Explanation to section 37(1) - AT
Customs
-
Amendment to Baggage Rules 1998: Changes in Customs Regulations for Personal Effects and Goods Declaration by Travelers.
Notifications : Amendment in Baggage Rules, 1998. - Ntf. No. 37 /2012-Customs (N.T.) Dated: April 23, 2012
-
Notification No. 32/2012-Customs exempts imports from additional duty u/s 3(5), easing tax burdens on goods.
Notifications : Amends Notification No.21/2012-Customs - Exempts import of goods from additional duty leviable u/s 3(5). - Ntf. No. 32/ 2012 - Customs Dated: May 8, 2012
-
Effective Duty Rates on Imports Updated in Notification 31/2012-Customs, Amending 12/2012-Customs.
Notifications : Amends Notification 12/2012 – Customs - Prescribes effective rate of duty on import of goods. - Ntf. No. 31/2012-Customs Dated: May 8, 2012
-
Countervailing Duty Exemption Unavailable for Imports by Defence, Coast Guard, and Specified Organizations per Notification No. 30/2012-Customs.
Notifications : Exemption from CVD not applicable for certain goods when imported for Defence, Coast Gaurd, Deptt. of Revenue, Police Forces, HAL, specified ordnance Factories and for ATVP, IGMDP, SAMYUKTA, LCAP, SANGRAHA, DIVYA DRISHTI and DHANUSH Programmes etc. - Ntf. No. 30/2012-Customs Dated: May 8, 2012
-
Customs Circular Clarifies Enforcement of IPR on Parallel Imports, Balancing IP Protection and Legitimate Trade.
Circulars : Enforcement of Intellectual Property Rights on imported goods - Clarification on the issue of parallel imports – regarding. - Cir. No. 13/2012-Customs Dated: May 8, 2012
-
Cargo ships are classified under Heading 8901 regardless of their navigability level.
Case-Laws - AT : Classification – Cargo ship is specifically classified under Heading 8901 irrespective of the extent or degree of its navigability. - AT
-
Unjust Enrichment Doctrine Inapplicable to Customs Fines Refunds; Fines Distinct from Taxes and Fees.
Case-Laws - AT : Refund – doctrine of unjust enrichment would not apply to fine and penalty - AT
DGFT
-
DGFT Issues Updated Onion Export Policy in Notification No. 116 (RE - 2010)/2009-2014, Effective May 8, 2012.
Notifications : Export Policy of Onions. - Ntf. No. 116 (RE – 2010)/2009-2014 Dated: May 8, 2012
-
Amendment to Foreign Trade Policy 2009-2014, Paragraph 6.9, Announced by DGFT via Notification No. 115 (RE-2010.
Notifications : Amendment in paragraph 6.9 of FTP. - Ntf. No. 115 (RE-2010) /2009-2014 Dated: May 7, 2012
-
DGFT Circular Outlines Indo-China Border Trade Regulations for 2009-2014 to Enhance Compliance and Facilitate Transactions.
Circulars : Indo – China Border Trade. - Cir. No. 110/2009-2014 (RE-2010) Dated: May 7, 2012
FEMA
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India Allows Equity Shares via FDI Scheme under Circular No. 120; Governed by FEMA for Foreign Investors.
Circulars : Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI scheme allowed under the Government route. - Cir. No. 120 Dated: May 8, 2012
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Foreign Investment Boost: FDI Scheme Now Open to Commodity Exchanges and NBFCs per Circular No. 121, May 8, 2012.
Circulars : Foreign investment in Commodity Exchanges and NBFC Sector - Amendment to the Foreign Direct Investment (FDI) Scheme. - Cir. No. 121 Dated: May 8, 2012
Indian Laws
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Finance Minister Discusses Tax Reforms and Fiscal Policies to Boost Indian Economy, Emphasizes Balanced Taxation and Sustainable Development.
News : Speech of Honourable Minister of Finance - SHRI PRANAB MUKHERJEE
Wealth-tax
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Sanctioning Criminal Tax Proceedings: Balancing Taxpayer-Friendly Policies with Deterring Tax Evasion u/s 35-B.
Case-Laws - HC : Sanction for initiation of criminal proceedings - the implementation of the Tax Legislation should be tax payers friendly and at the same time the tax evaders should not be spared. Had the sanctioning authority approached the case, keeping the same in his mind, the sanctioning authority would not have granted sanction for prosecuting the petitioner under section 35-B of the Act. - HC
Service Tax
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Circular No. 158/9/2012-ST clarifies applicable service tax rates, resolving ambiguities and guiding taxpayers on compliance.
Circulars : Clarification on Rate of Tax - regarding. - Cir. No. 158/9/ 2012 – ST Dated: May 8, 2012
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Supply and Installation of Gas Equipment Taxable from April 1, 2008, Under "Tangible Goods Service" Section 65(105)(zzzzj.
Case-Laws - AT : Supply and installation of storage tanks, vaporizing coils, and plant & machinery for generation of gases - prima facie, activity became taxable w.e.f. 1.4.2008 under supply of "Tangible Goods Service" as defined under section 65 (105)(zzzzj). - AT
Central Excise
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Fifth Amendment to CENVAT Credit Rules 2004 Updates Tax Credit Regulations for Improved Compliance and Efficiency.
Notifications : Seeks to amend CENVAT credit Rules, 2004 (Fifth Amendment). - Ntf. No. 25/2012-Central Excise (N.T) Dated: May 8, 2012
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Central Excise Amendment: Notification No. 25/2012 Modifies Exemption Rules for In-Factory Goods Production.
Notifications : Amends notification No. 10/1996-Central Excise - Exemption to goods within the factory of their production in the manufacture of specified goods. - Ntf. No. 25/2012-Central Excise Dated: May 8, 2012
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Excise Duty Update: Amendment to Notification No. 12/2012 Sets Effective Duty Rates for Goods in Chapters 1-96.
Notifications : Amends notification no. 12/2012-Central Excise - Prescribes effective rate of duty on goods falling under chapter 1 to 96. - Ntf. No. 24 /2012 –Central Excise Dated: May 8, 2012
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Full Excise Duty Exemption Granted for Jewelry Under Notification No. 23/2012-Central Excise to Ease Industry Tax Burden.
Notifications : Exemption on Articles of jewellery from whole of Excise Duty. - Ntf. No. 23 /2012-Central Excise Dated: May 8, 2012
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Central Excise Notification Exempts Machinery for Initial Setup of Solar Power Projects from Duties.
Notifications : Amends notification No. 15/2010-Central Excise - Exempts all items of machinery, and components, required for initial setting up of a solar power generation project or facility. - Ntf. No. 26/2012-Central Excise Dated: May 8, 2010
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Interest Demand for June 2007 Issued on August 5, 2009, Without Using Extended Limitation Period.
Case-Laws - AT : Demand for interest relates to the month of June 2007, SCN was issued on 5-8-2009 without invoking extended period of limitation - AT
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Trade Notice No. 20/2001 on textile job work contradicts Board's Order No. 24/14/93/Cx, issued December 31, 1993.
Case-Laws - AT : Job work in textile industry – Trade Notice No. 20/2001 dated 24.03.2001 was clearly in contravention of law and against the direction of the Board issued vide Order No. 24/14/93/Cx Dated 31.12.1993- AT
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Rebate Allowed on Countervailing Duty Paid for Imported Inputs in Export Goods: Rule 18, Central Excise Rules 2002.
Case-Laws - HC : The rebate of duty paid as CVD on the Imported inputs utilized in the manufacture/processing of exported goods is admissible under Rule 18 of the Central Excise Rules, 2002 - HC
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Converting M.S. round bars to bright bars is not considered manufacturing, per legal ruling.
Case-Laws - AT : Conversion of M.S. round bars into bright bars through an activity of pickling, cutting, drawing and polishing does not amount to manufacture. - AT
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CENVAT Credit Allowed Despite Invoice Description Error: C.R. Sheets vs. H.R. Sheets.
Case-Laws - AT : Whether appellants are entitled to take cenvat credit on the strength of invoices where the goods described as C.R. Sheets instead of H.R. sheets or not - held yes - AT
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Cenvat Credit Allowed for Unmachined Steel and Rough HRCS Castings Used in Cement Plant Machinery Repairs.
Case-Laws - AT : Whether unmachined steel castings and rough HRCS castings used for replacement of damaged parts of the cement plant and machinery are eligible for Cenvat credit - held yes - AT
VAT
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Amendment to March 2012 Notification Alters VAT and Sales Tax Rules for Transporting Specified Goods.
Notifications : Amendment to notification dated 23.03.2012 relating to movement of specified goods. - Ntf. No. F.7(433)/Policy-II/VAT/2012/75 to 86 Dated: May 7, 2012
Case Laws:
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Income Tax
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2012 (5) TMI 111
Contract for ‘services for supply, installation and commissioning of 36 manometer gauges’ with ONGC - Held that:- On a proper reading of the Invitation to Tender and the contract entered into it is a contract for installation of equipment which the tenderer itself is to supply - it is an indivisible contract - the object in floating the tender is in furtherance of oil extraction - all payments received by the applicant under the composite contract with ONGC is income chargeable to tax in India - The contract cannot be treated as an independent one for offshore supply of 36 manometer gauges and another one for erection of it – against assessee. Part of the payment towards price of the manometer gauges cannot be considered divorced from the payments received for the performance of entire obligations under the contract. Payment received by the applicant for installation, erection and commissioning of the manometer gauges – Held that:- The contract of services for supply, installation and commissioning of manometer gauges is chargeable to tax under section 44BB of the Act, if it is found that the contract is for providing services or facilities in connection with prospecting for, or extraction of mineral oil – the services are rendered in connection with the prospecting and / extraction of oil by ONGC, hence section 44BB of the Act is attracted - against assessee.
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2012 (5) TMI 110
Disallowance interest expenses holding that the assessee has not commenced its business – Held that:- As per provision of section 36(1)(iii) interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession; for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. By implication this proviso is also applicable when assets are acquired for new business – against assessee. Disallowance administrative and other expense by holding that the assessee has not commenced its business – Held that:- Merely taking land on lease, by any stretch of imagination cannot be treated as the commencement / setting up of it's hotel business – against assessee. Right to transfer or sell the plot or the building constructed thereupon (as trading commodity) – assessee contested that land has been shown as stock-in-trade - Held that:- Perusal of clause 5 of the Memorandum of Association of assessee running of hotel is one of the its main objects and not its other object - the assessee can use the hotel plot leased to it only for construction and running of hotel, with no right to transfer the same - although the assessee company has shown it as a stock in its balance sheet and profit and loss account it will not alter the legal position because the substance of a transaction is important and not its entry in the books of account or its treatment by the assessee company - against assessee. Disallowed expenditure to be allowed to be capitalized - in favour of assessee.
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2012 (5) TMI 109
Levy of penalty u/s 271(1)(c) – Claim of deduction u/s 10B and 80HHE – Held that:- Not a case where the assessee has not disclosed full details at the time of filing of returns or during the course of assessment proceedings - assessee claimed that export sales of Rs.549.76 lacs were not realized before the end of six months from the end of the FY 2003-04 and that company was yet to file an application for extension of time - mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty when there is nothing on record to show that the explanation offered by the assessee adverse – no levy of penalty – in favour of assessee.
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2012 (5) TMI 108
Write off of old unrecoverable earnest money deposits deductible u/s. 37(1) - appeal against disallowance of claim – Held that: - Assessee could not place on record any evidence showing that the amounts in question were given in earlier years on account of earnest money deposits to its business associates and the said parties refused to refund such amount to it - matter is restored to the file of AO to give one more opportunity to the assessee to lead evidence in support of its claim. Direction given to the AO to recompute the disallowance u/s. 14A – Held that:- Direction given to the AO by CIT(A) in conformity with the judgment of the Hon’ble jurisdictional High Court in the case of Godrej & Boyce Mfg. Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT) is correct as disallowance u/s 14A. Rule 8D is not retrospective. Rule 8D applicable from Assessment Year 2008-09 – in favour of assessee. Disallowance made by the AO u/s.14A as per Rule 8D – Held that:- Disallowance u/s.14A is called for when the AO is not satisfied with the assessee’s claim of having incurred no expenditure or some amount of expenditure in relation to exempt income - satisfaction of the AO as to the incorrect claim made by the assessee in this regard is sine qua non for invoking the applicability of Rule 8D - computing disallowance u/s.14A as per Rule 8D without rendering any opinion on the correctness or otherwise of the assessee’s claim is incorrect way - restore the matter to the file of AO to re-compute disallowance - in favour of assessee.
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2012 (5) TMI 107
Search under Section 132 – Tribunal decided that name of the respondent-assessee was not mentioned in the warrant – Held that:- The original warrant of authorization has been shown mentioning the name of assessee clearly readable - it appears that these names were also mentioned on the top of the second page - in the Panchnama, the name of the respondent-assessee is clearly mentioned and the documents which were seized have also been stated - the Tribunal had recorded a wrong factual finding and incorrect observation – in favour of revenue. No addition to be made in the block assessment proceedings as the AO has not relied upon any material collected/seized during the course of search – Held that :- Tribunal have not specifically referred to and dealt with the observations and findings given by the AO - Some general observations have been made by the Tribunal which do not deal with the observations and findings of the AO which are detailed, specific and to the contrary – AO has referred to several factual aspects, documents, account statements, oral statements etc. in support of the contention - Merely stating that the papers etc. do not pertain to the assessee and the contents of the document cannot be utilized do not lead to conclusion against block assessment order - remit back to Tribunal to discuss and examine the matter afresh and decide the factual matrix in detail – in favour of revenue.
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2012 (5) TMI 106
Deemed dividend – Section 2(22) - Held that:- Out of the payment of Rs. 11 lakhs, only Rs. 4,17,600/-was refundable advance and balance Rs. 6,82,400/- was towards salary and incentives on which tax was duly deducted at source, could not be disputed by the Department - it is not fair to treat the whole amount of Rs. 11,00,000/- as deemed dividend under section 2(22)(e) – against revenue.
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2012 (5) TMI 105
Whether CIT(A) was not justified in dismissing the appeal of the assessee on the ground that assessee had not shown reasonable cause for the delay in filing the appeal – Held that:- order of the Assessing Officer u/s 154 of the Act was received by the assessee on 4.4.2011 and the appeal was filed by the assessee before the ld. CIT(A) on 26.4.2011 which was within 22 days of the receipt of the impugned order. Thus, the appeal filed by the assessee was within the period of limitation. matter remanded back to his file for deciding the appeal. appeal of the assessee is allowed
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2012 (5) TMI 104
Whether the amount received by offering subscription based service is taxable in India – social media monitoring service - . It is a platform for users to hear and engage with their customers, brand ambassadors etc. across the internet. - The applicant is wholly controlled and managed from Singapore where the company was incorporated. It was not having a permanent establishment in India. All its directors are non-residents. - Held that:- amount received from offering the particular subscription based service is taxable in India as ‘royalty’ in terms of paragraph 2 of Article 12 of the DTAC between India and Singapore Whether tax is required to be deducted from such amount by the subscribers who are resident in India – Held that:- tax is required to be deducted in terms of section 195 of the Act from the payment made to it by the subscribers who are resident in India
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2012 (5) TMI 103
Unexplained credits - Section 68 - Onus to be discharged – Held that:- amount invested by the share holder company is duly appearing in its audited balance sheets of various years as Investment in unquoted equity shares and such balance sheets were also signed by the directors of the said shareholder company including Mr. Anil Kumar Gupta. - assessees have proved the share capital with overwhelming evidence and there is no adverse legally admissible evidence in possession of Revenue. - Revenue has accepted that the investment has been made by Welcome Coir Industries Limited in the assessees which is evidence from the assessment orders of Welcome Coir Industries Limited placed in the paper book. - Decided against the revenue.
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2012 (5) TMI 100
Withdrawal of registration granted u/s 12AA – Held that:- Objectives of the institution does not fall under the provisions of section 2(15) and therefore, the assessee was entitled to registration u/s 12AA of the Act - CIT was not correct in withdrawing registration already granted by the order of the Tribunal to the Institution - if in any year, the gross receipts of the Institution exceeds Rs. 10 lakhs or Rs. 25 lakhs then in that year, the AO is empowered to examine the allowability of exemption u/s 11 but the same has no effect on granting the registration u/s 12AA of the Act – amended provisions of section 2(15) of the Act does not fall within the permissible limit of section 12AA(3)- in favour of assessee.
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2012 (5) TMI 99
Reopening assessment - petitioner contested that he is a non-resident and had no income chargeable to tax in India other than what was declared - Held that:- No merit in the writ petition - the affidavit filed by department affirmed that he had initiated proceedings for reassessment on the basis of precise information received from the Enforcement Directorate - the petitioner had undisputedly rendered services in connection for the oil under the “Oil for Food Programme” - Clause (i) of sub-section (1) of Section 9 says that all income accruing or arising, whether directly or indirectly, through or from any business connection in India shall be deemed to accrue or arise in India - several documents found by the Enforcement Directorate in the premises of Hamdaan Exports were found to have been addressed to the petitioner which indicated that the petitioner was present in India - the money had come into the bank account of Indrus evidencing to show that certain communications had been addressed to the petitioner in India, the Indian fax number of the petitioner was given in some of the letters addressed to the petitioner which indicated his presence in India – against assessee.
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2012 (5) TMI 98
Addition made for unexplained investment – Clubbing of income - Held that:- AO rejected the submitted copies of all ledger accounts from the books of husband of the assessee indicating proof of source of income in the mutual funds on the ground on doubt and suspicions - once the source of investment is explained, the capital arising thereof is taxable in the hands of the husband of the assessee and not in the hands of the assessee – in favour of assessee.
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2012 (5) TMI 97
Interest free loan to wholly owned subsidiary - Decision in the case of S. A. Builders Ltd. v. CIT (Appeals) [2006 - TMI - 3364 - SUPREME COURT] needs reconsideration.
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2012 (5) TMI 96
Treating short term capital gains in shares as Business income applying maximum marginal rate instead of concessional rate of tax of 10% as per Sec. 111A – Held that:- Where the period of holding is more than six months, the transaction will be in the nature of capital gains and where it is less than six months,it will be in the nature of business - CIT (A) treated the short term capital gains in relation to shares held by the assessee more than six months and the shares held for less than six months have been treated as business income treated not in accordance with the provisions of law - merely because the shares are sold within the short span of one to two months would not change the character of capital gains to the business income - in favour of assessee Assessing short term capital loss on transactions in commodities as Business loss on the basis of nature, volume scale and frequency of transaction – Held that:- AO has not brought any material on record to show that the shares were not held by the assessee as investment - ground in respect of delivery based share transactions, investment and capital loss in respect of commodity transactions on delivery basis both are to be held on account of short term capital gain income and short term capital loss respectively – in favour of assessee. Verify whether the interest paid amounting is compensatory or penal in nature which is not in accordance with the provisions of Section 25(1) – Held that:- Since income to be capital in nature, the direction of ld. CIT(Appeals) about verifying the payment of interest to Indiabulls Financial Services Ltd. becomes infructuous - against revenue.
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2012 (5) TMI 95
Quashing/setting aside the re-assessment proceedings on the ground that the original re-assessment proceedings had abated – Held that:- The tribunal aside the original proceedings on the technical ground and the AO thereafter had recorded fresh reasons and issued notice under Section 147/148 of the Act - the reasons to believe now recorded have to stand independently and separate from the reasons to believe, which were recorded earlier before initiation of the re-assessment proceedings, which abated – thus the said reasons to believe and issue of notice cannot be faulted and rejected on the ground that in the earlier/original assessment or re-assessment proceedings, notice under Section 143(2) was not served on the assessee within the statutory time/period - a valid ground to quash the first/original assessment/re-assessment order cannot be a ground to quash the re-assessment proceedings, which have been initiated afresh after recording reasons to believe – against assessee.
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2012 (5) TMI 94
Gains/income from sale and purchase of securities – ITAT held to be assessable under the head “capital gains” and not under the head “income from business” – Held that:- CBDT in the Circular No.4/2007 dated 15th June, 2007 has elucidated and explained the tests which are to be applied to find out when income from transactions in shares/securities should be treated as “income from business” or the gain which has to be taxed under the head “capital gains” - it is apparent that the tribunal did not examine the said relevant aspects and aceepted the explanation of the assesee that there was no difference in tax rate - an order of remit to the tribunal to examine the issue holistically keeping in mind the parameters/tests - in favour of the Revenue. Deleting disallowance made by the AO under Section 14A – Held that:- An order of remit passed as Rule 8D of the Income Tax Rules, 1962 is not retrospective, but both the direct and indirect expenses in relation to exempt income have to be disallowed under Section 14A - it has been held that no direct or indirect expenditure whatsoever were incurred in relation to tax free income, but there is no finding to the said effect - merely, because the AO was wrong in making disallowance on ad hoc basis, cannot be a ground to hold that no amount whatsoever was relatable directly or indirectly to the earning of the tax free income - in favour of the revenue.
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2012 (5) TMI 93
Rejection of the application for grant of approval under section 80G(5)(vi)– Held that:- Prior to amendment to section 80G(5)(vi)of the Act, there was a proviso which provide time limit for the approval - the approval granted on 13.8.2007 under section 80G(5)(vi) of the Act to the assessee was valid up to 31.3.2010 and the moment, the amendment to section 80G(5)(vi) has been effected, the approval available to the assessee under sec. 80G(5)(vi) of the Act would be deemed to have been intact and the assessee was not supposed to file the application for renewal - The learned Director of Income-tax (Exemption) indirectly by rejecting the application of the assessee on merit cannot withdraw the approval which is automatically renewed by virtue of Finance Act, 2009 – in favour of assessee.
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Corporate Laws
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2012 (5) TMI 102
Rejection of arbitration application - In the consent Minutes of the Order, parties have agreed to refer disputes to arbitration - Held that:- There was an agreement between the parties that the award would have to be delivered within six months, a period which came to an end on 7 September 2010, the mandate of the Arbitrator stood terminated, that however, does not preclude the Applicant from seeking recourse to its remedies under Section 11 of the Arbitration and Conciliation Act, 1996 - it is not a case where parties have agreed to a situation where there would be an arbitration only before a named individual or that in his absence there would be no arbitration at all - upon the termination of the mandate of the Arbitrator, the jurisdiction of the Court to make a fresh appointment can be invoked - in favour of assessee.
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2012 (5) TMI 92
Appeal against an order passed by CLB dismissing proceedings instituted u/s 397 and 398 of the Companies Act – assessee contested that once a statement was made in the petition asserting the requisite percentage of share-holding in the company, the petition could no longer be rejected out of hand on a point of demurrer in such regard without the appellants being permitted to explain the circumstances in which they claimed to meet the statutory benchmark - they complain that upon the petition having previously progressed to final hearing - which was completed - it was no longer open to the CLB for rejection – the CLB was of the view that the petition before it was hit by the principles of res judicata, constructive res judicata or issue estoppel and, as such, could not progress - Held that:- The impugned judgment betrays a total non-application of mind and worse - the CLB was not aware of the tools necessary for the assessment - Proceedings under Sections 397 and 398 of the Companies Act are an alternative to winding-up and are founded on the principles of justice and equity- If, according to the CLB, the issues that arose in the company petition had already been conclusively decided in previous proceedings for the principles of res judicata or constructive res judicata or issue estoppel to apply, it flies in the face of reason and logic that the CLB would still grant permission or leave to the petitioners before it to resurrect a matter that had already been previously concluded against them - The respondent no.1 will pay costs assessed at 3000 GM to the appellants - matter will now be heard by the CLB afresh open to arrive at the same conclusion as in the impugned order on the objection pertaining to the appellants' share qualification but with cogent reasons in support thereof
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Central Excise
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2012 (5) TMI 101
Demand of excise duty - compounded levy / production based duty - Pan Masala Packing Machines - stay application – Held that:- tribunal after referring to the rules 2008 has taken a view that even if a machine was not working for certain period of the month, the same shall be deemed to be operating packing machine for the entire month. On that basis coming to the said conclusion the tribunal has observed that it was not a fit case of total waiver. - The consequences of sealing of non operating machines by the department itself on a notice given by the appellant have to be looked into for determining the issue. The scope and applicability of second proviso of Sub-Section 2 of Section 3-A of the Act has also to be considered by the Tribunal to which the tribunal has not adverted. - Direction to Pre-deposit reduced from 3 crores to 2 crores.
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2012 (5) TMI 91
Applications for rebate/refund of the CVD or additional duty paid on the inputs utilized for manufacture rejected - Held that:- A harmonious and cumulative reading of provisions of Section 3 of the customs Tariff Act there was no good cause or reason why CVD paid should not be or was not intended to be included in the term “duty” in the notification No. 21/2004 - CVD which is imposed is equal to the excise duty and partakes the character of excise duty - the rebate of duty paid as CVD on the Imported inputs utilized in the manufacture/processing of exported goods is admissible under Rule 18 of the Central Excise Rules, 2002 - The amendment notification No. 12/2007 ensures that it fully applies to all cases and there is no discrimination - person who claims exemption or concession has to establish that he is entitled to the concession or exemption - once the assessee satisfies the eligibility clause/criteria, exemption therein to be construed liberally if the contextual construction does not deserve the strict meaning - in favour of assessee.
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CST, VAT & Sales Tax
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2012 (5) TMI 112
Proceedings under Article 226 – against the order of provisional attachment – Held that:- The material which has been revealed during the course of investigation suggests that the selling vendors are parties without any legitimate business or assets and have been set up only with a view to devise a scheme to defraud the Revenue - Nothing contained in this order would be regarded as the expression of a final or conclusive opinion by the Court on the issues which would arise during the course of assessment - if the entire basis of the claim of set off is found upon assessment to be bogus or fraudulent, the challenge to Section 48(5) cannot be entertained at the behest of the Petitioner - before the issue of constitutional validity is considered, the basic facts would need to be established in the course of assessment proceedings are required –assessee has also not submitted that he would be entitled to a set off even if the underlying transaction of sale is bogus or fraudulent - do not consider it appropriate to exercise the extraordinary writ jurisdiction under Article 226 as observations only prima facie, since the entire matter is still to be investigated following which a regular assessment would be framed – Writ dismissed.
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