TMI Tax Updates - e-Newsletter
April 25, 2012
Case Laws in this Newsletter:
Articles
By: DEVKUMAR KOTHARI
Summary: The article discusses a legal issue concerning the application of a limitation period for issuing notices under Section 143(2) of the Income Tax Act. Until March 31, 2007, notices could be issued within twelve months from the end of the month in which the return was filed. An amendment effective April 1, 2008, reduced this period to six months from the end of the financial year. In a case involving the assessment year 2007-08, the court ruled in favor of the taxpayer, holding that the pre-amendment limitation period applied, rendering the notice issued by the tax authorities invalid.
By: Dr. Sanjiv Agarwal
Summary: The Finance Act, 2012 introduced a negative list for Service Tax, making all services taxable unless listed as exceptions. This shift aims to ensure constitutional validity by avoiding taxation of services exclusively under state jurisdiction, as outlined in the Seventh Schedule of the Constitution. Until the Goods and Services Tax (GST) is implemented, services within the state domain should remain in the negative list to prevent constitutional breaches. The inclusion of "declared services" like renting, hire purchase, and food supply in the taxable category raises concerns about jurisdictional overreach and potential legal challenges, emphasizing the need for clear legislative demarcation.
News
Summary: The Government of India set a target for agriculture credit flow in 2011-12 at Rs. 4,75,000 crore, with Rs. 3,93,410.99 crore disbursed by January 31, 2012. Of this, Rs. 1,65,440.16 crore was allocated to small and marginal farmers. The National Bank for Agriculture and Rural Development reported no complaints about loans meant for small farmers being diverted to wealthier farmers in Delhi. Crop loans extended by banks in Delhi amounted to Rs. 39.13 crore in 2010-11 and Rs. 23.50 crore up to December 31, 2011. This information was provided by the Minister of State for Finance in the Rajya Sabha.
Summary: The India Banks Association has updated its Model Educational Loan Scheme, allowing member banks to adopt and modify it as needed. The scheme is inclusive of all students, including those from minority communities, who have gained admission to professional or technical courses in India or abroad through entrance exams or merit-based selection. Complaints about loan processing issues are addressed with the banks for prompt resolution. Public Sector Banks' performance under this scheme is continuously monitored, and they are instructed to process loan applications promptly. This information was provided by the Minister of State for Finance in a Rajya Sabha session.
Summary: The Government of India allocated Rs. 43,580 crore for oil subsidies in the 2012-13 budget, with Rs. 40,000 crore designated for compensating oil companies for under-recoveries from petroleum product sales and Rs. 3,580 crore for post-APM subsidies. In 2011-12, Rs. 3,481 crore was spent on subsidies for PDS kerosene, domestic LPG, freight for remote areas, and natural gas supply to the North Eastern region. The government also covered Rs. 65,000 crore, addressing under-recoveries from the previous year. While diesel prices are set to become market-determined, cooking gas prices remain regulated to protect consumers from inflation.
Summary: The services sector's contribution to India's GDP increased from 50.4% in 2000-01 to 59.0% in 2011-12. Industrial growth has helped reduce poverty by generating 36.1 million jobs between 1999-00 and 2009-10. Key industrial segments like automobiles and machinery saw double-digit growth from 2009-11, while others, such as chemicals, grew less. To boost growth, India is enhancing infrastructure investment through an Infrastructure Debt Fund, promoting public-private partnerships, and implementing new manufacturing and banking policies. The Reserve Bank of India's recent 50 basis point rate cut is expected to further improve growth prospects.
Summary: The Finance Minister urged the sugar sector to adopt the latest technology to enhance production, productivity, and quality, and to improve sugar recovery from sugarcane. Highlighting the sector's significance in India's agricultural economy, he emphasized its role in rural development and economic progress, involving around 50 million farmers. The government has implemented policies like duty-free sugar imports to stabilize prices and support the industry. Key areas for technological improvement include sugar quality, energy conservation, and environmental considerations. The minister called for global cooperation in research and development to maximize the industry's potential, particularly in developing countries.
Summary: The Competition Commission of India (CCI) has been appointed as a Co-Chair of the Merger Working Group of the International Competition Network (ICN) following its successful introduction of a merger review process in India since June 2011. This appointment, alongside the European Commission and Italy, acknowledges India's efforts in building institutional capacity and regulatory frameworks for merger assessments. The role will allow India to contribute to the development of a global framework for merger review and gain insights from international practices. The announcement was made during the ICN's Eleventh annual conference in Rio de Janeiro, Brazil.
Summary: The Union Minister of Commerce, Industry, and Textiles of India emphasized the importance of maintaining a development focus amid global financial challenges. Addressing the UNCTAD General Debate in Doha, the Minister urged developed countries not to use their financial crises as an excuse to withdraw from their commitments. He highlighted the adverse impacts of global crises on developing nations, particularly LDCs, LLDCs, and SIDS, and called for a swift conclusion to the Doha Round of WTO negotiations. He advocated for enhanced international financial regulation and equitable participation of developing countries in decision-making processes.
Summary: The Indian Minister of Commerce, Industry, and Textiles has requested an urgent supply of 3 million tonnes of LNG from Qatar, with plans to increase this to 15 million tonnes in the next few years. Qatar is interested in collaborating on upstream projects with ONGC. Currently, India imports 7.5 MMTPA of LNG from Qatar under a long-term contract. Both nations are negotiating further agreements, and Qatar is eager to expedite these discussions. Additionally, there is interest in advancing the India-GCC Free Trade Agreement. Bilateral trade has significantly increased over the past five years, with major exchanges in petroleum, chemicals, and manufactured goods.
Summary: The Union Finance Minister of India addressed concerns about the rising and volatile prices of commodities, particularly oil, at the G-20 Finance Ministers and Central Bank Governors' Meeting in Washington D.C. The minister highlighted that these price fluctuations are not aligned with economic fundamentals and contribute to inflation in developing countries like India. The volatility is attributed to factors such as financialization of markets, monetary policy actions, political uncertainties, and demand-supply imbalances. The minister emphasized the need for improved transparency and information in commodity markets, advocating for mechanisms to gather market data and enhance production and productivity to stabilize prices.
Summary: India's Finance Minister emphasized the importance of addressing green growth and climate change at the G-20 Finance Ministers and Central Bank Governors Meeting. He supported Mexico's initiatives and called for discussions that integrate economic, social, and environmental sustainability, aligning with UNFCCC principles. The Minister highlighted the absence of a global definition for green growth and advocated for a transparent process in forming a study group on climate finance commitments. He stressed that progress reviews on climate finance should be conducted by the UNFCCC Conference of Parties, suggesting the study group focus on contentious areas like sustainable development financing.
Summary: The Union Finance Minister addressed the G-20 Finance Ministers and Central Bank Governors, emphasizing the need for cohesive global financial regulation. He highlighted the risks of regulatory arbitrage if standards like Basel III are not uniformly implemented. The Minister stressed the importance of international collaboration to strengthen financial systems and prevent future crises. He advocated for financial inclusion, consumer protection, and addressing unintended impacts on emerging economies. The Minister also called for enhanced tax compliance through the Automatic Exchange of Information and suggested country-by-country financial reporting to combat tax evasion. Regular reviews by the Global Forum were recommended for ongoing effectiveness.
Summary: The Union Finance Minister of India addressed the Joint IMFC-G20 Session, emphasizing the need for augmented IMF resources amid global economic changes. The Minister welcomed the EU's efforts to strengthen its financial firewall and stressed that IMF assistance should support, not replace, these efforts. Contributions to IMF resources should be voluntary and not tied to quota reforms. The Minister highlighted the importance of protecting low-income countries affected by the crisis and expressed disappointment at the slow pace of quota and governance reforms. India supports new funding initiatives and advocates for a quota formula prioritizing GDP, particularly GDP-PPP, for fair voting power distribution.
Summary: The Union Finance Minister of India emphasized the importance of the Financial Action Task Force's (FATF) new international standards to combat money laundering, terrorist financing, and proliferation financing during a ministerial meeting in Washington, D.C. He highlighted the need for international cooperation due to the global integration of economies and threats. The Minister stressed the importance of transparency in legal entities and urged for stronger international cooperation, especially in terrorist financing cases. He assured India's commitment to implementing these standards and contributing to the global effort to maintain financial system integrity.
Summary: The G-20 Finance Ministers and Central Bank Governors met in Washington D.C. to address economic challenges and promote growth. They noted a modest global recovery but highlighted ongoing risks such as high indebtedness and unemployment. The group reaffirmed commitments to structural reforms and fiscal sustainability, and agreed on enhancing IMF resources for crisis prevention. Progress was made on financial regulatory reforms, transparency, and financial inclusion. The meeting also addressed energy market transparency, commodity price volatility, and climate finance. The ministers emphasized the importance of job creation and infrastructure financing as central to their initiatives.
Summary: The Union Finance Minister discussed India's economic prospects in a globalized world at the Peterson Institute of International Economics. He highlighted the structural changes in the global economy, notably the rise of emerging economies like India and China, which now account for nearly half of the world's output. The Minister emphasized the need for advanced economies to engage with emerging markets through trade and policy cooperation. He addressed challenges such as the eurozone crisis and India's own economic hurdles, including inflation and fiscal deficits. India aims to sustain growth through reforms, infrastructure investment, and leveraging its demographic dividend.
Notifications
Customs
1.
36/2012 - dated
23-4-2012
-
Cus (NT)
Appointment of Common Adjudicating Authority.
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has appointed a Joint Commissioner or Additional Commissioner of Customs at the Inland Container Depot in Sahnewal, Ludhiana, as the Common Adjudicating Authority. This authority will oversee adjudication for customs matters involving specific locations in Ludhiana, Chennai, Mumbai, Nhava Sheva, and Kolkata. The adjudication pertains to a Show Cause Notice issued to M/s Jupiter Tools Corporation and M/s Suri & Co. by the Directorate of Revenue Intelligence in Ludhiana concerning a case initiated in February 2012.
2.
35/2012 - dated
23-4-2012
-
Cus (NT)
Seeks to amend Notification No.12/97-Customs (N.T.) - Inland Container Depots for loading and unloading of goods .
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 35/2012 to amend Notification No. 12/97-Customs (N.T.) concerning Inland Container Depots (ICD) and Land Customs Stations (LCS). This amendment, effective from April 23, 2012, adds Wardha in Maharashtra to the list of locations authorized for unloading imported goods and loading export goods. This change is made under the authority granted by the Customs Act, 1962. The principal notification was initially published on April 2, 1997, and has undergone several amendments, the most recent being on April 20, 2012.
3.
34/2012 - dated
20-4-2012
-
Cus (NT)
Seeks to amend Notification No.12/97-Customs (N.T.) - Inland Container Depots for loading and unloading of goods .
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 34/2012 to amend Notification No. 12/97-Customs (N.T.) concerning Inland Container Depots. The amendment specifically pertains to the State of Orissa, where the entry for Balasore in the notification's table is renumbered as item (i). Additionally, a new entry for Kalinganagar is added as item (ii), designating it for the unloading of imported goods and loading of export goods. This change is authorized under the Customs Act, 1962, and is documented in the Gazette of India.
Highlights / Catch Notes
Customs
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Common Adjudicating Authority Appointed for Customs Matters to Streamline Decision-Making and Enhance Efficiency under Notification No. 36/2012.
Notifications : Appointment of Common Adjudicating Authority. - Ntf. No. 36 / 2012 - Customs (N.T.) Dated: April 23, 2012
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Amendment to Customs Notification Updates Rules for Inland Container Depots to Improve Efficiency and Compliance.
Notifications : Seeks to amend Notification No.12/97-Customs (N.T.) - Inland Container Depots for loading and unloading of goods . - Ntf. No. 35 / 2012 - Customs (N.T.) Dated: April 23, 2012
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Amendment to Notification No. 12/97-Customs (N.T.) for Inland Container Depots detailed in Notification No. 34/2012-Customs.
Notifications : Seeks to amend Notification No.12/97-Customs (N.T.) - Inland Container Depots for loading and unloading of goods . - Ntf. No. 34/2012 - Customs (N.T.) Dated: April 20, 2012
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