TMI Tax Updates - e-Newsletter
January 2, 2015
Case Laws in this Newsletter:
Articles
By: Bimal jain
Summary: The Central Excise Act's Section 11B time-limit does not apply to refunds of wrongly paid Service tax, as determined by the CESTAT, Mumbai. In a case where an individual purchased a residential unit and was wrongly charged Service tax by the builder, the refund claim was initially sanctioned but later contested by the Revenue on the grounds of being time-barred. The CESTAT ruled that since no Service tax was due on the residential unit, the amount paid was not considered Service tax, thus exempting it from the Section 11B time-limit, and ruled in favor of the individual.
By: DEVKUMAR KOTHARI
Summary: The Supreme Court addressed whether dishonored post-dated cheques issued as advance payments for purchase orders could be considered as discharging a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act. The Court ruled that such cheques, when issued as advance payments, do not constitute a liability since there is no existing debt at the time of issuance. Consequently, dishonoring these cheques does not amount to a criminal offense under Section 138. The Court emphasized the distinction between civil and criminal liabilities, asserting that civil remedies are available for breach of contract, but not criminal liability in such cases.
News
Summary: The government has replaced the Planning Commission with NITI Aayog, aiming to transform India's governance structure. NITI Aayog will serve as a think tank, providing strategic and technical advice to central and state governments. Its objectives include fostering cooperative federalism, developing village-level plans, incorporating national security into economic strategies, and focusing on inclusive growth. The institution will also promote partnerships with national and international think tanks and maintain a resource center for good governance practices. The organizational structure includes the Prime Minister as Chairperson, with a Governing Council of Chief Ministers and Lt. Governors, along with various appointed members and experts.
Summary: The government announced an increase in the basic excise duty on both branded and unbranded petrol and diesel by Rs. 2 per litre to fund an infrastructure development program focused on constructing 15,000 kilometers of roads over the current and next financial year. This measure aims to boost economic activity and employment in the road construction sector. The new excise duty rates will be effective from January 2, 2015. Other excise duty rates on these commodities remain unchanged.
Summary: The government has established NITI Aayog, replacing the Planning Commission, to provide strategic input into India's development process. This new body aims to foster a genuine partnership with states, moving away from the previous one-way policy flow. NITI Aayog will act as a think-tank offering strategic advice, enhancing inter-ministry and centre-state coordination, and promoting cooperative federalism. It will focus on inclusive development, technology upgrades, and capacity building. Key goals include leveraging India's demographic dividend, eliminating poverty, addressing inequalities, supporting small businesses, and safeguarding environmental assets, while engaging the middle class and leveraging India's human capital and diaspora.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 63.3213 on January 1, 2015, slightly down from Rs. 63.3315 on December 31, 2014. The exchange rates for other currencies against the Rupee were also updated: the Euro was Rs. 76.5998, the British Pound was Rs. 98.6356, and 100 Japanese Yen was Rs. 52.91 on January 1, 2015. These rates are determined based on the reference rate for the US Dollar and the middle rates of cross-currency quotes. The SDR-Rupee rate will also be calculated using this reference rate.
Notifications
Customs
1.
49/2014 - dated
31-12-2014
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ADD
Seeks to levy definitive anti-dumping duty on imports of Pentaerythritol, originating in or exported from Chinese Taipei, for a period of five years.
Summary: The Government of India has imposed a definitive anti-dumping duty on imports of Pentaerythritol from Chinese Taipei for five years. This decision follows a review that confirmed ongoing dumping and potential injury to the domestic industry if the duty were revoked. The duty, specified in US dollars per metric ton, applies to Pentaerythritol of any grade, whether originating in or exported from Chinese Taipei. The duty is payable in Indian currency, with the exchange rate determined by the Ministry of Finance at the time of the bill of entry.
2.
39/2014 - dated
31-12-2014
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Cus
Seeks to amend notification No.12/2012-Cus dated 17.3.2012 so as to extend zero customs duty on chickpeas(gram) upto 31st March, 2015
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 39/2014-Customs to amend a previous notification (No. 12/2012-Customs dated 17th March 2012). This amendment extends the period for zero customs duty on chickpeas (gram) until 31st March 2015. This decision is made under the powers granted by the Customs Act, 1962, and is deemed necessary in the public interest. The amendment changes the expiration date from 1st January 2015 to 1st April 2015.
3.
04/2014 - dated
31-12-2014
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Safeguard
Seeks to levy safeguard duty on imports of Sodium Citrate, for a period of three years
Summary: The Government of India has imposed a safeguard duty on imports of Sodium Citrate to protect domestic producers from increased imports causing serious injury. The duty is set at 30% ad valorem from December 31, 2014, to December 30, 2015, 20% from December 31, 2015, to December 30, 2016, and 10% from December 31, 2016, to December 30, 2017. This duty does not apply to imports from developing countries, except for the People's Republic of China. This action follows the findings and recommendations of the Director General (Safeguards).
DGFT
4.
104 (RE – 2013)/2009-2014 - dated
31-12-2014
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FTP
Permission for export of buffalo tallow
Summary: The Government of India has amended the Foreign Trade Policy to permit the export of buffalo tallow. Previously, the export of tallow, fat, and oils of any animal origin, excluding fish oil and lanolin, was prohibited. The new amendment allows buffalo tallow to be exported, but only from APEDA-registered integrated meat plants with rendering facilities. These exports are subject to a compulsory pre-shipment bio-chemical test by APEDA-approved laboratories. This change is effective immediately as per the notification issued by the Director General of Foreign Trade.
Circulars / Instructions / Orders
DGFT
1.
79 /(RE-2013)/2009-2014 - dated
31-12-2014
Amendments in “Detailed Guidelines for Issue / Modification of Importer Exporter Code Number (IEC)” as notified vide Public Notice No. 76 dated the 27th of November, 2014 and Para 9.1 of Handbook of Procedure vol.1 (2009-14)
Summary: The Director General of Foreign Trade has amended the guidelines for issuing or modifying Importer Exporter Code Numbers (IEC). The amendments require specific documents for different business entities such as proprietorships, partnerships, LLPs, registered societies, and HUFs. These documents include digital photographs, PAN cards, identity proofs, property ownership or rental agreements, and bank certificates. Additionally, changes to the IEC, such as name or address modifications, require an online application and a fee of Rs. 500. The amendments aim to streamline the process and ensure the inclusion of necessary documentation for IEC modifications.
Highlights / Catch Notes
Income Tax
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Assessee Avoids Penalty for Late Self-Assessment Tax Payment Due to Installment Option for Share Trading Losses.
Case-Laws - HC : Penalty u/s 140A(3) r.w. Section 221 – The assessee on account of having incurred heavy losses in share trading was not in a position to make payment of self-assessment tax at the relevant time and the revenue itself had granted installments to the assessee - no penalty - HC
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High Court Decision: Repeal of Section 10B Erases Its Existence, Impacting Past and Future Income Tax Claims.
Case-Laws - HC : Effect of repealing section – Benefit of section 10B - once the section is omitted from the statute book, the result is it had never been passed and be considered as a law that never exists - HC
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Section 14A Deductions Rule Exemption for Insurance Companies on Income from Investment Sales.
Case-Laws - AT : Applicability of provision of section 14A on insurance companies – in the present situation the provisions of s. 14A need not to apply while granting exemption to an income earned on sale of investment - AT
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Tax Officer Mistake: Ignored Negative Figures in ITR, Leading to Incorrect Income Assessment. Accurate Accounting Essential.
Case-Laws - AT : Correction / modification in the ITR - AO is not correct in taking the positive figure and ignored the negative figure - he cannot refuse to determine the correct receipts - AT
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Assessee's Expense Claims Disallowed Due to Non-Appearance; Ex Parte Order Issued by Tax Authorities.
Case-Laws - AT : Disllowance of various expenses - Ex parte order - assessee has not appeared before the CIT( A) or before us to make out a case that any expenses which was allowable has been disallowed by the Assessing Officer. - AT
Customs
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DGAD's Anti-Dumping Duty Investigation Extended Per Rule 17(1) Proviso; Original Deadline Lapsed.
Case-Laws - HC : Levy of anti dumping duty - Extension of time period for completing the investigation by the DGAD - extension granted under the first proviso to Rule 17(1), after the expiry of the original period, was perfectly valid. - HC
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High Court Denies Petitioner's Delay Condonation Request, Citing Attempt to Benefit from Previous Wrongdoing.
Case-Laws - HC : Condonation of delay - Petitioner is trying to take advantage of its own wrong committed earlier in approaching this Court - condonation denied - HC
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Exemption for Import of Mobile Devices for Software Development Under Notification No. 52/03-Cus., Dated 31-3-2003.
Case-Laws - AT : Import of mobile for software development - Notification No. 52/03-Cus., dated 31-3-2003 - Exemption allowed - AT
Service Tax
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Interest on Delayed Service Tax Payment Waived Due to Sufficient CENVAT Credit Balance: No Interest Required.
Case-Laws - AT : Levy of interest on service tax demand when the assessee has sufficient balance in CENVAT Credit - delayed payment of service tax through cenvat credit - demand of interest set aside - AT
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Refund Denied Due to Unclear Correlation Between Service Tax and Export Documents; Case Remanded for Further Review.
Case-Laws - AT : Denial of refund claim - Notification No. 41/2007-ST - It is also not clear from the findings of the lower authorities as to why service tax paid on the documents cannot be correlated with the export documents - matter remanded back - AT
Central Excise
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Rebate claim approved for habitual offender despite missing export proof; Rs. 10,000 penalty imposed.
Case-Laws - CGOVT : Duty demand - failure to produce proof of export - Habitual offender - rebate claim allowed with penalty of ₹ 10,000/- - CGOVT
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Appellant Accused of Unauthorized Manufacturing and Removal of Goods Amid Detected Excesses and Shortages During Official Visit.
Case-Laws - AT : Clandestine manufacture - No doubt the outcome of cross examination has to be given due importance but keeping in view the overall facts and circumstances of the case including the fact of alleged excess and shortages detected at the time of visit of officers, and the fact of deposit of duty, has to be taken into consideration which lead only to one and one fact of clandestine removal of the appellants final product - AT
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CENVAT Credit Claims Invalidated Due to Fraudulent Invoices in Transactions with M/s. Pasondia Steel Profiles and M/s. Ayushi Steel.
Case-Laws - AT : CENVAT Credit - Bogus invoices - When the transaction between M/s. Pasondia Steel Profiles and first stage dealer M/s. Ayushi Steel were bogus, the subsequent transaction will also be bogus - AT
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Testing Charges Part of Moulds' Assessable Value for CVD; Eligible for CENVAT Credit.
Case-Laws - AT : CENVAT Credit - Merely because testing charges have been shown separately, it does not mean that these charges are not to be considered part of assessable value of the moulds and CVD levied on these charges should not be available as Cenvat Credit - AT
VAT
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Conversion of Syrup to Soft Drink Via Carbonation is Manufacturing for VAT and Sales Tax Purposes Under UPTT.
Case-Laws - HC : Scope of manufacture under UPTT - treating or adopting of the syrup and converting into soft drink after subjecting the syrup through carbon dioxide in a fountain machine - the commercial product is outcome of a process to manufacture - HC
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