TMI Tax Updates - e-Newsletter
August 27, 2014
Case Laws in this Newsletter:
Articles
By: Dr. Sanjiv Agarwal
Summary: Refund claims for unutilized Cenvat credit on inputs or input services taxed under reverse charge must be filed semi-annually using 'Form-A' with the jurisdictional Assistant or Deputy Commissioner of Central Excise. Claims must be submitted within one year from the due date of the half-year return. Refunds are not available for credits prior to July 1, 2012. The refund amount is calculated based on the unutilized Cenvat credit and service tax paid. Conditions include filing a single claim per half year and ensuring claims are supported by the respective half-yearly return. The Assistant or Deputy Commissioner will verify claims before sanctioning.
News
Summary: The Government of India has revised its Foreign Direct Investment (FDI) policy in the defense sector, increasing the equity cap from 26% to 49% under the government route. Investments above 49% require approval from the Cabinet Committee on Security, especially if they involve advanced technology. The policy mandates that companies be Indian-owned and controlled, with management comprising resident Indian citizens. Safety, security, and quality assurance protocols are emphasized, and arms produced are primarily for government purchase. Applications for FDI are processed by the Foreign Investment Promotion Board, with decisions typically communicated within ten weeks.
Summary: The Reserve Bank of India urges income tax assessees to pay their dues well before the deadline to avoid congestion at RBI offices. Assessees are encouraged to use alternative payment methods, such as select agency bank branches or online payment facilities, to bypass long queues. The rush at the RBI for tax payments peaks towards the end of September, overwhelming the bank's capacity despite additional counters. Twenty-nine agency banks, including major national and private banks, are authorized to accept income tax payments, providing taxpayers with multiple convenient options to fulfill their obligations.
Summary: The Reserve Bank of India set the reference rate for the US dollar at Rs. 60.4960 and for the Euro at Rs. 79.9100 on August 26, 2014. The previous day's rates were Rs. 60.4270 for the US dollar and Rs. 79.7436 for the Euro. Additionally, the exchange rates for the British Pound (GBP) and Japanese Yen (JPY) against the Indian Rupee were updated, with GBP at 100.3266 and JPY at 58.24 on August 26, 2014. The Special Drawing Rights (SDR) to Rupee rate will be determined based on the reference rate.
Summary: The 27th Conference of State Finance Secretaries in Mumbai addressed key financial challenges, including tackling the Current Account Deficit, growth slowdown, and inflation management. The Governor of the Reserve Bank of India emphasized strengthening State Level Coordination Committees to enhance financial inclusion and protect public savings from unauthorized entities. The SEBI Chairman highlighted recent legislative changes to curb unauthorized deposit schemes and sought state cooperation in investor protection. Discussions included fiscal consolidation, e-banking standardization, and preventing unauthorized deposit collection. The conference underscored the importance of coordinated efforts between state and national regulators to safeguard financial stability and promote economic growth.
Summary: The Competition Commission of India imposed a penalty of Rs. 2544.64 crores on 14 car companies for violating the Competition Act, 2002. An investigation revealed these companies restricted market access for spare parts and after-sales services, harming consumers and independent repairers. They imposed restrictive agreements with suppliers and dealers, abused their dominant market position, and charged high prices for spare parts. The Commission directed these companies to cease anti-competitive practices, ensure availability of spare parts, and allow independent repairers market access. The penalty, calculated at 2% of their average turnover, must be paid within 60 days.
Notifications
Central Excise
1.
25/2014 - dated
25-8-2014
-
CE (NT)
Seeks to amend Cenvat Credit Rules, 2004
Summary: The Government of India, through the Ministry of Finance, has issued Notification No. 25/2014-Central Excise (N.T.) to amend the CENVAT Credit Rules, 2004. This amendment, effective upon publication in the Official Gazette, modifies rule 12AAA by adding the term "provider of taxable service" after "first stage and second stage dealer." This change expands the scope of entities covered under the CENVAT Credit Rules. The principal rules were initially published in 2004 and have been amended multiple times, with the last amendment occurring in July 2014.
Customs
2.
F.No.437/92/2014-Cus IV - dated
25-8-2014
-
Cus (NT)
Appointment of Common Adjudicating Authority - M/s Mortex (India), Room No.1A, 3rd Floor, 20 British India Street, Kolkata
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has appointed the Commissioner of Customs (Port) in Kolkata as the Common Adjudicating Authority for a Show Cause Notice issued by the Directorate of Revenue Intelligence. This notice, dated November 29, 2013, concerns M/s Mortex (India) and others. The appointment is made under Notification No.15/2002-Customs (N.T.) and is intended for adjudication purposes. The order is documented under reference number F.No.437/92/2014-Cus IV, dated August 25, 2014. Copies of the order have been distributed to relevant customs officials and departments.
3.
F. No.437/94/2014-Cus IV - dated
25-8-2014
-
Cus (NT)
Appointment of Common Adjudicating Authority - M/s Vedika Metals Private Ltd., 201, Annapurna Building, Shyam Kunj Complex, 12A, Lord Sinha Road, Kolkata
Summary: The Government of India's Ministry of Finance has appointed the Commissioner of Customs (Port) in Kolkata as the Common Adjudicating Authority for a case involving M/s Vedika Metals Private Ltd. This decision follows the issuance of a Show Cause Notice by the Directorate of Revenue Intelligence, Kolkata. The appointment is made under Notification No.15/2002-Customs (N.T.) and pertains to the adjudication of matters related to the Customs Act, 1962. The notification details the assignment of responsibilities to ensure proper adjudication of the case.
4.
F. No.437/91/2014-Cus IV - dated
25-8-2014
-
Cus (NT)
Appointment of Common Adjudicating Authority - M/s Rohit Ferro Tech Ltd., SKP House, 132A, S.P. Mukherjee Road, Kolkata
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, has appointed the Commissioner of Customs (Port) in Kolkata as the Common Adjudicating Authority for a case involving M/s Rohit Ferro Tech Ltd. This decision is based on a Show Cause Notice issued by the Directorate of Revenue Intelligence, Kolkata Zonal Unit. The assignment is made under the provisions of the Customs Act, 1962, as amended by Notification No.15/2002-Customs (N.T.). The order is intended for the adjudication of the case by the designated authority.
5.
F. No. 437/98/2014-Cus IV - dated
25-8-2014
-
Cus (NT)
Appointment of Common Adjudicating Authority - M/s Vidres India Ceramics Private Limited, 306, Sarthik Square, Nr. Pizza Hut, S.G. Road, Ahmadabad, Gujarat
Summary: The Government of India's Ministry of Finance has appointed the Commissioner of Customs in Ahmedabad as the Common Adjudicating Authority to handle a Show Cause Notice issued by the Directorate of Revenue Intelligence. This notice pertains to M/s Vidres India Ceramics Private Limited and others, and was originally issued by the Additional Director General, Directorate of Revenue Intelligence, Zonal Unit, Ahmedabad. This appointment is in accordance with Notification No.15/2002-Customs (N.T.) and is intended to facilitate the adjudication process under the relevant provisions of the Customs Act, 1962.
6.
F. No. 437/90/2014-Cus IV - dated
25-8-2014
-
Cus (NT)
Appointment of Common Adjudicating Authority - M/s Gayson & Co. (P) Ltd., 18-D Everest, 46C Chowringhee Road, Kolkata
Summary: The Ministry of Finance, Department of Revenue, has appointed the Commissioner of Customs (Port) in Kolkata as the Common Adjudicating Authority for a case involving M/s Gayson & Co. (P) Ltd. This appointment follows a Show Cause Notice and a Corrigendum issued by the Directorate of Revenue Intelligence, Kolkata Zonal Unit. The notification, dated August 25, 2014, is pursuant to an amended notification under the Customs Act, 1962. The Commissioner will oversee the adjudication process for this case and related parties. Copies of this order have been distributed to various customs officials across India.
7.
F. No. 437/12/2014-Cus IV - dated
25-8-2014
-
Cus (NT)
Appointment of Common Adjudicating Authority - M/s Sun Infonet (P) Ltd., 3/31 West Patel Nagar, New Delhi
Summary: The Government of India, through the Ministry of Finance and the Central Board of Excise & Customs, has appointed a Common Adjudicating Authority for a case involving M/s Sun Infonet (P) Ltd. and others. The Show Cause Notice issued by the Directorate of Revenue Intelligence, Delhi Zonal Unit, is assigned to the Commissioner of Customs at the Inland Container Depot, Tughlakabad, New Delhi, for adjudication. This appointment is made under the authority of Notification No.15/2002-Customs (N.T.) as amended, in accordance with the Customs Act, 1962.
Service Tax
8.
19/2014 - dated
25-8-2014
-
ST
Seeks to amend the Service Tax Rules, 1994 - Service Tax (Second Amendment) Rules, 2014
Summary: The Government of India has issued Notification No. 19/2014 to amend the Service Tax Rules, 1994, effective from October 1, 2014. The amendments introduce Rule 11, which specifies that the rate of exchange for determining the value of taxable services will align with generally accepted accounting principles on the taxation date as per the Point of Taxation Rules, 2011. Rule 12 grants the Board or Chief Commissioners of Central Excise the authority to issue supplementary instructions for implementing the provisions of the Act. This amendment follows previous modifications made in July 2014.
9.
18/2014 - dated
25-8-2014
-
ST
Seeks to notify the date on which Clauses A, B, C of the section 114 of the Finance (No.2) Act 2014 becomes effective.
Summary: The notification issued by the Government of India, Ministry of Finance, Department of Revenue, designates October 1, 2014, as the effective date for Clauses A, B, and C of Section 114 of the Finance (No.2) Act, 2014. This decision is made under the authority granted by the mentioned clauses of the Act. The notification is identified as Notification No. 18/2014-Service Tax, dated August 25, 2014, and is intended for publication in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i).
Circulars / Instructions / Orders
FEMA
1.
Press Note No. 7 (2014 Series) - dated
26-8-2014
Review of the policy on Foreign Direct Investment (FDI) in Defence sector amendment to `Consolidated FDI Policy Circular 2014'.
Summary: The Government of India has revised the Foreign Direct Investment (FDI) policy in the defence sector, amending the Consolidated FDI Policy Circular 2014. The FDI cap for the defence industry has been increased to 49% through the government route, with investments above 49% requiring approval from the Cabinet Committee on Security on a case-by-case basis, especially if they involve modern technology. The policy outlines that companies must be Indian-owned and controlled, with management in Indian hands. Applications for FDI are to be submitted to the Foreign Investment Promotion Board, and decisions are typically communicated within 10 weeks.
Highlights / Catch Notes
Income Tax
-
Assessing Officer's Error u/s 147: Reopening of Assessment Scrutinized; First Appellate Authority Not at Fault.
Case-Laws - AT : Reopening of assessment u/s 147 – The chronology of events prove in unequivocal terms that if somebody had erred it was the AO and not the FAA - He has tried to improve upon his case lately in form of grounds of appeal filed before us - AT
-
Sales Tax VAT Incentives Classified as Government Benefits, Not Eligible Business Profits u/s 80IB(2)(iii) for Tax Deductions.
Case-Laws - AT : Deduction u/s 80IB(2)(iii) - assessee received sales tax VAT incentives is the first degree and it is Govt. benefit and it is not industrial undertaking benefit, it is not a profit derived from eligible business - AT
-
Society Not a Primary Co-operative Bank; Section 80P(4) Provisions Inapplicable Due to Unmet Conditions.
Case-Laws - AT : Assessee society cannot be regarded to be a primary co-operative bank as all the three conditions are not complied with and it is not a co-operative bank and the assessee is not hit by the provision of section 80P(4) - AT
-
Consultancy Fees and Bank Charges Deemed Necessary, Registration Expenses Deleted for Business Operations This Year.
Case-Laws - AT : Registration expenses deleted - payments made under the heads consultancy fees, bank charges and other expenses cannot be held to be not incurred for the business for year - AT
-
Section 68: Assessee's Responsibility in Justifying Share Premium Collection Based on Case-Specific Facts.
Case-Laws - AT : Addition u/s 68 - justification for collection share premium - The onus on the assessee – it of course cannot be required to prove a negative, would depend on the facts and circumstances of the case - AT
Customs
-
Customs House Agent License Revocation Upheld; Security Deposit Forfeiture Stands; New Deposit Required to Resume Operations.
Case-Laws - AT : Revocation of CHA License - The forfeiture of security deposit shall remain. The appellant has to furnish fresh security deposit as per law for resuming work as CHA. - AT
-
Shipping Bill Conversion Approved: 'Advance Licence' to 'DEPB Scheme' Granted After Over a Year Delay.
Case-Laws - AT : EXIM - Shipping bill - Conversion from ‘Advance Licence to DEPB Scheme’ - Request made after more than one year of export - conversion allowed - AT
-
"Notice is Given" Phrase in Customs Not Limited by Specific Timeframe for Show Cause Notices.
Case-Laws - HC : Period of limitation – issuance of SCN or Delivery of SCN - the expression “notice is given” does not logically translate to the conclusion that “notice must be issued within the stipulated period” - HC
-
Invoice Price Accepted as Valid Transaction Value; No Revenue Authority Dispute or Market Price Deviation Found.
Case-Laws - AT : Transaction value of goods - as the invoice price at the relevant time has not been disputed by the revenue that same is not correct as per prevailing market price during that time, the transaction value cannot be rejected. - AT
Wealth-tax
-
Land Unfit for Construction Not Taxable as Urban Asset Under Wealth Tax Act, Section 2(2ea)(ii) Exemption Applied.
Case-Laws - AT : Value of the land for Wealth Tax - Exemption u/s 2(2ea)(ii) - t if on a plot of land construction of a building is not permissible under any law then the said plot of land could not form part of urban land or the asset to be taxed under the Act - AT
Service Tax
-
CENVAT Credit for General Insurance Services by Agents in J&K Not Taxable Under Reverse Charge; Refund Allowed.
Case-Laws - AT : CENVAT Credit - General Insurance Services provided by the agents in Jammu and Kashmir - not taxable as reverse charge - CENVAT Credit taken by the appellant is nothing but refund of the service tax paid by them - allowed - AT
-
Court Examines Tax Classification of Computerized Reservation Systems: Business Auxiliary or Air Travel Agent Service? Partial Stay Granted.
Case-Laws - AT : Classification of service - computerised reservation system - Business Auxiliary Service - air travel agent service - stay granted partly. - AT
-
Service Tax Penalty Avoided If Paid with Interest Before Show-Cause Notice is Issued u/r 6(3).
Case-Laws - HC : Issuance of SCN and levy of penalty where service tax with interest paid before issuance of show cause notice - authorities are precluded from issue of show-cause notice - HC
-
Booking Orders for Commission Isn't Clearing & Forwarding Agent Service, Says Tax Regulation Interpretation.
Case-Laws - AT : C&F agent service - mere procuring or booking orders for the principal by an agent on payment of commission would not amount to providing C&F Agent Service. - AT
-
Exemption Granted for Services Under Business Auxiliary Service: Liberal Interpretation Required for Input Procurement Classification.
Case-Laws - AT : Business Auxiliary Service - services relating to Procurement of goods or services, which are inputs for the client - Once the appellant falls within the scope of exemption, a liberal construction has to be adopted. - AT
Central Excise
-
Relax Drum Machine Not a Dryer: Affects Tax Exemptions Under Exemption Notification No. 6/2002-CE.
Case-Laws - AT : Exemption under Exemption Notification No. 6/2002-CE - There is thus no doubt that the machines Relax Drum Machine (Relax Drum washer) is not a drying machine - AT
-
No need for separate records if CENVAT Credit isn't claimed for inputs in exempt goods production.
Case-Laws - AT : CENVAT Credit - Once the CENVAT Credit itself is not taken, in respect of inputs utilized for exempted goods totally, and if this fact is coming out from the records, naturally there would be no need to maintain separate records - AT
-
Government Subsidies Not Considered Additional Value for Excise Duty on Fertilizers, Clarifies Valuation Rule.
Case-Laws - AT : Valuation of goods - subsidy received by fertilizer companies from the Government - the subsidy cannot be considered as an additional consideration - AT
-
Cenvat Credit Case: Goods Removal vs Trading Activity, Demand Set Aside as Credit Reversal Not Disputed by Department.
Case-Laws - AT : Cenvat Credit - removal of goods as such versus Trading activity - reversal of credit is not disputed by the department - demand set aside - AT
9911796707
