TMI Tax Updates - e-Newsletter
May 30, 2015
Case Laws in this Newsletter:
TMI SMS
Articles
By: CA Akash Phophalia
Summary: The Goods and Services Tax (GST) is a comprehensive value-added tax applied to the supply of goods and services, excluding alcoholic liquor for human consumption. It subsumes various central and state taxes, including excise duty, service tax, sales tax, and others. GST is divided into Integrated GST (IGST), Central GST (CGST), and State GST (SGST), with respective laws enacted by central and state governments. Expected tax rates range from 16% to 20%, aiming for revenue neutrality. The GST system allows cross-utilization of credits between goods and services, eliminating the cascading effect and double taxation issues. States may levy an additional 1% tax on inter-state goods supply temporarily.
By: Dr. Sanjiv Agarwal
Summary: Recent amendments to Rule 14 of the Cenvat Credit provisions, effective from March 1, 2015, address the recovery of Cenvat credit that has been wrongly taken or erroneously refunded. The rule outlines recovery processes for credit taken but not utilized, credit taken and utilized wrongly, and credit erroneously refunded. Recovery is made under specific sections of the Central Excise Act and Finance Act, depending on whether the credit was taken by manufacturers or output service providers. Additionally, credits taken during a month are deemed to occur on the last day, with utilization following a specified order of priority.
News
Summary: The Finance Minister will inaugurate a new bank note paper line at the Security Paper Mill in Hoshangabad, with a capacity of 6,000 MT. This initiative, part of the indigenization efforts by the Security Printing and Minting Corporation of India Limited (SPMCIL), aims to reduce reliance on imported bank note paper. Additionally, a joint venture in Mysore will add 12,000 MT capacity, leading to a combined production of 18,000 MT and saving approximately Rs. 1,500 crore in foreign exchange. The project, completed at a cost of Rs. 495 crore, will boost local employment and economy while enhancing security features in currency production.
Summary: The 11th India-Saudi Arabia Joint Commission Meeting focused on strengthening bilateral cooperation, knowledge exchange, and economic ties. Co-chaired by India's Finance Minister and Saudi Arabia's Minister of Commerce and Industry, the two-day event addressed issues in trade, education, health, communication, culture, and IT. Both parties emphasized exploring investment opportunities and reaffirmed their longstanding relationship. Representatives from 22 Indian ministries, including the Ministry of External Affairs, attended. The next meeting is scheduled for 2016 in Saudi Arabia.
Summary: The Reserve Bank of India is set to announce its Second Bi-monthly Monetary Policy Review for the fiscal year 2015-16 on June 2, 2015, at 11:00 a.m. The announcement will be made via a press release.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 63.7615 on May 29, 2015, down from Rs. 63.9010 on May 28, 2015. Consequently, the exchange rates for other currencies against the Rupee were adjusted: the Euro was at Rs. 69.9081, the British Pound at Rs. 97.7974, and 100 Japanese Yen at Rs. 51.48 on May 29, 2015. These rates are determined based on the US Dollar reference rate and the middle rates of cross-currency quotes. The Special Drawing Rights (SDR) to Rupee rate is also influenced by this reference rate.
Summary: The Reserve Bank of India (RBI) has issued draft guidelines on the Net Stable Funding Ratio (NSFR) as part of the Basel III Framework on Liquidity Standards for banks. These guidelines aim to ensure banks maintain a stable funding profile relative to their assets and off-balance sheet activities, reducing reliance on short-term funding and enhancing funding stability. The RBI seeks public feedback by June 26, 2015, and plans to implement NSFR for Indian banks by January 1, 2018. This initiative follows global reforms proposed by the Basel Committee to strengthen banking sector resilience post-2007 financial crisis.
Notifications
Central Excise
1.
31/2015 - dated
28-5-2015
-
CE
Seeks to further amend notification no 12/2012 - Central Excise dated 17/03/2012 - Goods supplied go Mega Power Projects - Change in name of one Project from Talcher STPP Stage-III, Orissa - 2x660=1320 MW (NTPC) to Talcher TPP Stage-III, Orissa - 2x660=1320 MW (NTPC)
Summary: The Government of India has issued Notification No. 31/2015-Central Excise, dated 28th May 2015, amending Notification No. 12/2012-Central Excise. This amendment pertains to goods supplied to Mega Power Projects, specifically changing the name of a project from "Talcher STPP Stage-III, Orissa - 2x660=1320 MW (NTPC)" to "Talcher TPP Stage-III, Orissa - 2x660=1320 MW (NTPC)" in the relevant annexure list. This change is made under the authority of section 5A of the Central Excise Act, 1944, in the interest of public necessity.
Customs
2.
35/2015 - dated
28-5-2015
-
Cus
Seeks to further amend notification no 12/2012 - Customs dated 17/03/2012 - Import of goods Required for Mega Power Projects - Change in name of one Project from Talcher STPP Stage-III, Orissa - 2x660=1320 MW (NTPC) to Talcher TPP Stage-III, Orissa - 2x660=1320 MW (NTPC)
Summary: Notification No. 35/2015-Customs, issued by the Government of India, amends Notification No. 12/2012-Customs concerning the import of goods for Mega Power Projects. The amendment involves changing the name of a project from "Talcher STPP Stage-III, Orissa - 2x660=1320 MW (NTPC)" to "Talcher TPP Stage-III, Orissa - 2x660=1320 MW (NTPC)" in List 32A, item No. 48 of the Annexure. This change is enacted under the powers granted by section 25 of the Customs Act, 1962, and is deemed necessary in the public interest.
FEMA
3.
341/2015-RB - dated
26-5-2015
-
FEMA
Drawal limit of USD 125000 increased to USD 250,000 per financial year Foreign Exchange Management (Permissible Capital Account Transactions) (Third Amendment) Regulations, 2015
Summary: The Reserve Bank of India, in consultation with the Central Government, has amended the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000. Effective from the date of publication, the amendment increases the drawal limit for resident individuals from USD 125,000 to USD 250,000 per financial year for specified capital account transactions. This limit includes foreign exchange drawal under Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules, 2000. The amendment also prohibits using this foreign exchange for remittances to countries designated as non-cooperative by the Financial Action Task Force.
4.
1/6/EM/2015 - dated
26-5-2015
-
FEMA
Facilities of drawal of foreign exchange for transactions for Individuals and Other person - conditions modified - Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2015
Summary: The Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2015, revises conditions for foreign exchange transactions under the Foreign Exchange Management Act, 1999. Individuals can access foreign exchange up to USD 250,000 for specific purposes like travel, education, and medical expenses, with additional amounts requiring Reserve Bank of India approval. Exceptions are provided for emigration, medical treatment, and education if required by the respective country or institution. Non-individuals need RBI approval for donations exceeding certain limits, commissions for property sales, and consultancy services. The procedure aligns with the Liberalised Remittance Scheme.
Highlights / Catch Notes
Income Tax
-
Assessing Officer Cannot Tax Other Income if Specific Income is Not Assessed in Reassessment Order.
Case-Laws - AT : Re-assessment - when reasons are recorded for bringing to tax ‘X’ income and no assessment is made on the ‘X’ income, the AO does not possess the jurisdiction to tax any other income in the reassessment order - AT
-
Long-term capital gains exemption granted u/s 10(38) for genuine share sale transaction within legal framework.
Case-Laws - AT : Exemption u/s. 10(38) of long term capital gain - genuineness of transaction in shares - transaction of sale of shares were real, genuine and for valuable consideration and were within the framework of law. Consequently, exemption u/s. 10(38) of the Act had to be allowed. - AT
-
Tax Exemption Allowed: Investment in Second Home Qualifies Even After Gifting First Property to Spouse u/s 54F.
Case-Laws - AT : Exemption u/s.54F - investment in second residential house - previous residential property gifted to her husband - There is no stipulation in law with regard to the ownership pattern, or its quantification, i.e., of the assessee’s other family members, including spouse, or even of the transferee/s - exemption allowed - AT
-
Share Trading Loss Classified as Speculative Business Loss Under Explanation to Section 73 of Income Tax Act.
Case-Laws - AT : Treatment of the loss on share trading - the specified income under Explanation to section 73 - the said loss is a loss from a speculation business in terms of Explanation to section 73, and is to be treated as such. - AT
Customs
-
Higher Price Justified for Duty Payment u/r 10A of Customs Valuation Rules 1988; Transaction Value Rejected.
Case-Laws - AT : Valuation of goods - Rule 10A of the Customs Valuation Rules 1988 - higher price at which same goods were imported by contemporaries in the same vessel, was justified for payment of duty and transaction value has been correctly rejected. - AT
-
Project Import Benefit Under Heading 98.01 Requires Contract Registration Before Goods Clearance Per Regulation 4, Project Import Regulations 1986.
Case-Laws - AT : Benefit of project import assessment under Heading 98.01 of CTA,1975 - n terms of Regulation No.(4) of the PIR, 1986, the contract should be registered prior to clearance of the goods and not at the time of warehousing of the goods - Benefit of exemption allowed - AT
FEMA
-
Foreign Exchange Regulations 2015 Amend: Annual Drawal Limit Raised from USD 125,000 to USD 250,000.
Notifications : Drawal limit of USD 125000 increased to USD 250,000 per financial year Foreign Exchange Management (Permissible Capital Account Transactions) (Third Amendment) Regulations, 2015 - Notification
-
Amended Rules Simplify Foreign Exchange Transactions, Clarify Limits and Conditions for Individuals and Entities.
Notifications : Facilities of drawal of foreign exchange for transactions for Individuals and Other person - conditions modified - Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2015 - Notification
Service Tax
-
High Court Rules Service Tax on Employee Mobile Phones Eligible for CENVAT Credit Under Cenvat Credit Rules, 2004.
Case-Laws - HC : CENVAT Credit - Whether, the service tax paid on mobile phones used by employees/staff of a manufacturing company would be eligible for cenvat credit under the Cenvat Credit Rules, 2004 - Held Yes - HC
-
Layperson Drafting Blueprints or Reports Not a Consulting Engineer Under Service Tax Rules.
Case-Laws - AT : Consulting Engineer Service - a lay man making a blue print or typing the project report would not qualify to be called a consulting engineer. - AT
Central Excise
-
Apex Court Rules Goods Not Subject to Central Excise; Criminal Complaint Quashed Due to Lack of Basis.
Case-Laws - HC : Request for quashing of criminal complaint - Revenue could not refute that with the basis for the criminal complaint having been actually removed, with the Apex Court having held that the goods manufactured by the firm of the petitioners are not exigible to Central Excise, the criminal complaint would no longer be maintainable. - HC
VAT
-
Court Approves Interest Claim on Tax Refund Adjusted for Penalty, Allowing Taxpayer Compensation for Delayed Refund.
Case-Laws - HC : Claim of interest on refund - Refund claim was adjusted towards penalty imposed - claim of interest allowed - HC
9911796707
