Sunday 1 September 2013
INCOME TAX APPELLATE TRIBUNAL,KOLKATA BENCHES : KOLKATA CONSTITUTION OF KOLKATA BENCHES FROM THE PERIOD FROM 26.08.2013 TO 30.08.2013
Assessee can't claim depreciation on a machinery used by its affiliate for business purposes
Bad-debts can be written off in between closure of accounting period and approval of books by direct
ST paid on storage and warehousing charges incurred at depot is eligible for input service credit
Charge withheld by bank from credit card collection is not a commission; out of ambit of sec. 194H
Service tax defaulters: Finance Ministry to publicise amnesty scheme
Buoyed by initial response from service tax defaulters declaring to pay Rs 650 crore to the government, the Finance Ministry has decided to publicise its first-of-its-kind amnesty scheme more on various visual and print media platforms to encourage others.
It has started giving advertisements on television, newspapers and radios besides putting hoardings outside some of its allied offices to publicise Voluntary Compliance Encouragement Scheme (VCES)--for service tax defaulters to pay their dues without any penalty or late payment charges, officials said.
The ministry is considering to publicise the scheme more through other modes of communication and finalising its plan in this regard, they said.
Finance Minister P Chidambaram has already given a stern warning to service tax defaulters to either take advantage of the voluntary compliance scheme and come clean or face punishment.
As many as 1,400 declarations have been filed under the scheme by defaulters liable to pay Rs 650 crore to the government, according to latest data.
The VCES announced by Chidambaram in his Budget speech has come into effect from May 10.
The objective of the scheme is to encourage disclosure of tax dues and compliance of service tax law by the persons who have not paid service tax dues for the period from October, 2007 to December, 2012, either on account of ignorance of law or otherwise.
On payment of the tax dues relating to the said period there will be complete waiver of interest, penalty and other proceedings or consequences, the officials said.
Under the scheme, a person may make a declaration to the designated authority on or before December 31, 2013.
The Finance Ministry has decided to go after about 12 lakh service tax assesses who had stopped filing returns.
In a related development, the Finance Ministry has also started sending letters to service tax, customs and excise duty defaulters asking them to come clean on certain dubious transactions carried out by them.
The aim behind sending such letters is to remove bureaucratic hassles and develop faith in people about tax authorities, they said.
The Finance Ministry has set indirect tax collection target of Rs 5.65 lakh crore for 2013-14, up from Rs 4.73 lakh crore in the last fiscal.
Cotton Exports May Remain Flat At 100 Lakh Bales In 2013-14
1-Sep-2013
NEW DELHI: India's cotton exports are likely to remain flat at around 100 lakh bales (170 kg each) in the 2013-14 season due to lesser demand from China, according to a government official.
China is the biggest importer of the Indian natural fibre. Cotton season runs between October and September. "In the 2013-14 cotton season, the natural fibre exports are expected to remain flat at 100 lakh bales owing to lesser demand from China as it is already sitting on a huge inventory of cotton," the official told PTI.
According to the recent estimates of the Cotton Association of India (CAI), production is estimated to be higher at around 372 lakh bales in the 2013-14 season against 355 lakh bales in the current year.
"The natural fibre output is expected to be higher this time on account of good and timely rains, particularly in cotton growing states, which would result in higher yields," the official said.
The Cotton Advisory Board (CAB), which is under the Textiles Ministry, has not come out with its review on cotton for the current year or for the the next year. CAB, which usually meets every quarter to estimate cotton output, consumption, exports and imports has not come with any review since April this year.
In terms of cotton acreage there won't be much of a change and it may remain at the same level of around 115 lakh hectares, the official said.
Gujarat, which is the highest yielding state in India, has seen an increase of more than 10 per cent in acreage on the back of a good monsoon, he said.
As per the CAI projections, the domestic consumption may also remain flat at around 260 lakh bales in the upcoming season.
"There has hardly been fresh investments in textiles sector. Thus, the demand is expected to remain stagnant," the official said.
The price of a cotton candy (356 kg) is hovering around Rs 45,000 at present.
Source:- economictimes.indiatimes.com
'Jnpt Hopeful Of Handling 10 Million Teus In Next Three Years'
Pointing out that India is not even among the top 20 countries in terms of maritime profile, chairman-in-charge of Jawaharlal Nehru Port Trust (JNPT) N N Kumar says the PPP model will help achieve ambitious targets for the port sector, such as a capacity only 10 other ports across the world can boast.
Our total coastline is 7,500 km, so we are among the top five coastal countries. But if you see the maritime profile of India, we are not even among the top 20 (countries). JNPT is the biggest container port in the country and throughput is 4.2 million TEUs (twenty-foot equivalent units). Recently, the Centre drafted a new maritime agenda wherein combined port capacity of both major and non-major ports has been pegged at 32,000 metric tonnes as against 984 metric tonnes as of March 2013. JNPT is similarly working at 120 per cent capacity as against an installed capacity of 3.8 million. We thus decided to enter public-private-partnership (PPP) mode to add capacity. Our fourth container terminal project will increase capacity to 10 million TEUs.
There has been a delay from the past seven years owing to various issues. Now, the request for quotation (RFQ) has been issued. Nine parties have come forward. After that, I have to go for security clearance as well as the triple PSE for approval of the RFQ, so the process will take time. Our target is December-end or January 2014. I am hopeful that this time we will be able to allot it.
In the earlier RFQ, a liquid jetty, which is jointly being developed by us, BPCL and IOC, was a hindrance. The selected vendor had to create an equal matching facility, keeping the liquid jetty in mind. We have asked Central Water Power Research Station, which does the modeling for the terminals, if we could dredge 100 or 200 metres ahead to address this problem and make the project simpler. Secondly, the Tariff Authority for Major Ports (TAMP) was a major issue as it didn't allow a level playing field. Non-major ports did not have any tariffs compared to major ports in government sector. With the new guidelines on TAMP, the vendor now knows he can fix his own price, so that makes this RFQ attractive.
Source:- indianexpress.com
Direct tax mopup misses target in five months to August
India's direct tax collection rose 12% year-on-year in the five months to August but remained far below the projected growth target of 20% for the fiscal, offering policymakers only a temporary respite in times of economic gloom. Collection totalled about Rs 140,000 crore until August 29, according to data collated by the income tax department. Of this, corporate tax collection accounted for Rs 70,000 crore and income tax Rs 67,000 crore, the data showed. "So, far, the collection is up. But there is an uncertainty over the total collection at the end of fiscal. We are yet to collect the September installment of advance tax payments," a senior I-T official told ET. While advance tax is collected every quarter, Tax Deducted at Source (TDS) and Securities Transaction Tax (STT) are collected through the fiscal year. |
Govt Working On Standards To Check Sub-Standard Goods' Imports
1-Sep-2013
NEW DELHI: The government is working out mandatory standards for imported goods, such as chemical and engineering, with a view to check inward shipments of sub-standard items from various countries, including China.
The Commerce Ministry has been tasked to coordinate with all the departments on the matter.
"We have asked all ministries and departments to come out with standards so that we can only permit import of high quality products. Those standards will be uniform and not directed towards a particular country," Commerce Secretary S R Rao told PTI.
Rao said that two ministries - food and electronics have already moving ahead on the issue.
"We are looking at other ministries to come out with the mandatory standards for products like chemicals, pharmaceuticals and engineering," he added.
The Secretary said that all the concerned officials are regularly meeting on the matter.
"We keep on doing quarterly meetings to follow up these things. As a result, two ministries are already moving ahead," Rao said.
An expert said that sub-standard products are coming in India because of policy lacuna.
"Unfortunately, we have these norms for only few 100 products. Because of policy lacuna sub-standard goods are coming into India mainly from China. These items are not good for health and safety of consumers," former Director of Indian Institute of Foreign Trade (IIFT) K T Chaco said.
Chaco said that as per the international laws, domestic manufacturers also have to conform to those norms.
He added that mandatory rules would help in containing imports as high import bill is putting huge pressure on India's current account deficit.
The government had earlier come out with mandatory standard norms for imports of products like toys and mobile phones. In 2009, India had banned imports of toys from China on grounds of public health and safety but later lifted it and fixed international safety norms for imports.
In June 2009, the government had also banned import of mobile phones that lack the unique IMEI number, which helps authorities track users. These phones were mostly coming from China.
More than a dozen countries in Asia, including India and Africa, have banned milk and dairy product imports from China due to melamine content, the dangerous chemical that can cause kidney stones as well as failure of the organ.
Sub-standard products like from chemical industry have negative effects on the environment. Destruction of such items can be a costly process that creates considerable waste.
Source:- economictimes.indiatimes.com
Rs 1.27 Lakh Cr Of Indirect Taxes Locked Up In Litigation?
1-Sep-2013
The Comptroller and Auditor General of India (CAG) on August 23, 2013, had presented report no. 17 of 2013 - Union government (compliance audit) for the year ended March, 2012. The audit report highlights the performance of the ministry/department entrusted with the revenue receipts consisting of central excise and service tax.
The audit report has observed quite a few gaps in the operations and performance of the department concerned. The most highlighted figure in the report would be the total amount of tax receipts locked in tax litigation and exemptions. According to the report, a whopping Rs 3,23,037 crore consisting of Rs 1,95,590 crore on account of central excise exemptions and Rs 1,27,447 crore on account of tax receipts that are the subject matter of tax litigations are pending with different authorities for adjudication/final orders.
It is quite astonishing for the fact that the amount of tax foregone as exemptions under central excise is more than the annual tax receipts on account of central excise.
This article, however, intends to deliberate on the second part of the figure, the amount of money which is locked up in litigation. As on March 31, 2012, central excise duty to the tune of Rs 54,172 crore and service tax to the tune of Rs 73,275 crore was under litigation. The audit report points a twelve fold increase in service tax litigation over a period of five years from financial year 2008 to 2012.
The call book maintained by the department for cases that cannot be adjudicated for the reasons such as department has gone in appeal, injunction from courts, etc, reports over 30,000 central excise cases including over 20,000 cases which are pending for over one-year period and another 9,500 case pending under service tax.
It is an admitted fact on the part of Central Board of Excise and Customs (CBEC) and that of the finance ministry that as in March, 2012, there were over 100,000 pending cases pertaining to indirect taxes. Also the fact that the success rate of department in litigation over the same period at CESTAT level was only about 20 per cent and at the Supreme Court the record was worse at just under 10 per cent.
The low success rate of appeals reflects the poor quality of appeals, frivolous issues with very little merit being filed in the tribunals and courts. Many a time appeals are filed to avoid any possible repercussions to the concerned officer of not filing the appeal. On the other hand the results of adjudication at commissioner/ commissioner (appeals) level invariably go in favour of the department and assessee's appeals are routinely rejected.
It is worth mentioning here the recent central excise circular no. 967/01/2013 issued on January 1, 2013, to regulate the initiation of recovery proceedings where the stay appeal remains pending beyond 30 days of filing an appeal with the tribunal. The circular also specified the situations where the recovery could be initiated almost immediately and even before the expiry of statutory time period of 90 days from the date of issuance of order confirming the demand. This measure would have been justifiable one had the success rate of the department in tribunal and courts was of 90 per cent winning rather than losing. Some legal experts and trade associations even went on to label the circular as draconian in nature.
From the trade and industry perspective, this means that they have to deal with a tax department that will raise demands on every conceivable pretext, and they would have to go in appeal up to the tribunal for relief. Therefore, the amount that is supposedly locked up in litigation is, to the tune of 80 per cent at the tribunal level, going to be retained by the assessee due to the case not being very strong on the department's side.
It would be great if someone in the government took a policy decision that this is a waste of time on the government's part and a needless challenge on the part of industry, and must end now. This challenge is far from being unique to India. All countries have had to find a solution to the dilemma of focusing the efforts of their tax departments in an optimal manner. The answer that most have found is to have a target win percentage. Anyone who is significantly below the target range is considered to be taking on frivolous cases and will be adversely evaluated.
Eliminating unwarranted litigation would not only reduce the tax expenditure of the government, this would also provide the extra time and efforts to build-on and improve the quality of appeals in cases where they are strong on merits. By doing this the department could give itself a reasonable chance of success in courts.
Source:- business-standard.com
Duty Cut May Not Boost Iron Ore Exports, Says Survey
1-Sep-2013
Reduction in export duty on iron ore to 20 per cent from the present 30 per cent may not be beneficial to exporters, unless the railway tariff charged on iron ore meant for exports is withdrawn or made on par with domestic tariff rate.
Export duty reduction would hardly benefit them to the extent of Rs 700-900 per tonne, while any reduction in the railway freight could ease the flow of iron ore and allow transportation of higher volumes, according to a survey of miners. It would also reduce the issues related to road transportation.
As it is, increasing diesel prices as a result of depreciating rupee against the dollar has made things difficult for the miners, when they move the ore through lorries.
According to a survey conducted by Delhi-based mining and metal information website, OreTeam, reducing export duty by 50 per cent to even 15 per cent for iron ore fines from the present 30 per cent would only save the exporters a mere Rs 700-900 per tonne.
OreTeam conducted the survey to analyse if the mining and trading lobby was happy with a reduction in export duty or would be happier with a reduction in the railway freight meant for exports. Ultimately, reducing the railway freight will help the production of iron ore to restart quicker and in bigger proportions as more material would be able to move from the mine heads as compared to the same cargoes being transported through trucks.
"The hiking diesel costs can also be mitigated to an extent if railway freight for exports is brought to equilibrium with the domestic freight rates. In this manner a complete solution can be framed for the iron ore and steel industries in one go. Also, discounting railway freight for exports in line with the domestic freight rates, would help the miners and traders save nearly Rs 1,200-1,500 per tonne, almost Rs 500 per tonne more than a reduction on the duty front," OreTeam said.
Reducing export duty may only help some miners, as majority of miners and traders in India will still be using trucks instead of rakes for moving their iron ore, which would cost them a heavier burden. Also, another factor, which the government has to investigate, is that cutting down the export duty would mean the government is cutting down its own revenues and allowing the profits to grow on the miners' front. This wouldn't allow the government or the opposing lobbies to stay content for a longer time.
Many miners in the recent past had issues related to truck or road transportation in the East and were forced to lighten their cargoes as major jams were visible near Paradip and Vizag ports. Similarly, the truckers were commanding the miners with hiked rentals on the back of delays in transportation, hiked fuel costs and heavy vigilance checks on major highways. Many miners were unhappy with the delays in road transportation and had even reached the top authorities of the state to intervene. Reducing railway freight might help such miners and traders and ease such issues, OreTeam said.
OreTeam conducted a survey, which received nearly 56 responses over the last week and on the basis of the responses the respondents also feel that reducing railway freight will have more impact than reducing the export duty.
About 42 miners and 16 traders from across the country responded to the survey and nearly all 16 traders said that reducing railway freight rates will be more beneficial to the industry.
But of the 42 miners who responded, majority (69 Per cent) had the same opinion of railway freight reduction giving them better margins than export duty cut. On the trading front, the support came from nearly 86 per cent of the total 14 respondents.
OreTeam survey did not include any respondents from Karnataka but had few from Goa as iron ore exports from Goa is the lifeline of the state and soon Goa would be back in business.
Source:- business-standard.com
Coal Imports May Lead To Hike In Power Tariff
The plummeting rupee has already begun to show its debilitating impact on the economy. Petrol and diesel prices have gone up bringing along ominous forebodings for the people, of rise in prices of virtually all commodities.
A delayed blow, however, is in waiting for all the power consumers, to be served next year. Power tariff, in all probability, is set to go up tremendously owing to the devalued rupee and the resultant financial burden due to coal imports for thermal power generation.
Earlier, imported coal price would form an integral part of the Fuel Surcharge Adjustment (FSA), which was nothing but the deferred uniform tariff per unit payable across the board on electricity consumption. FSA constituted the unforeseen exigencies, and unplanned expenditure which could not be factored into the tariffs proposals by discoms at the beginning of the financial year.
All fluctuations in the prices of imported coal would be accordingly accommodated in the FSA to be calculated for every quarter, and charged in the subsequent quarters.
Hefty FSAs
For nearly two years, the consumers have been reeling under the burden of hefty FSAs of two previous quarters being simultaneously charged in their monthly bills. Increasing their agony is the steeply raised power tariff for the current year, which the discoms hoped, would subsume all the unforeseen costs, thereby precluding the need of FSA.
The State Electricity Regulatory Commission has recently scrapped the Fuel Surcharge Adjustment being charged quarter on quarter, and given orders so that the whole burden for the year could be included in the next year’s tariff.
With rupee on the downslide like never before during recent times, coal imports are set to cost more, thereby making thermal power production more expensive than before. However, with power generation units already stacking up imported coal to face the monsoon crisis, the devalued rupee might not hit them immediately. But in due course of time, they too will have to face the heat, experts say.
“According to the provisions of the Power Purchase Agreements we entered into with various private producers, we will have to allow for the cost escalation when fixing the price per unit. If the cost of coal imports hit the power generating companies, we will have to pay more, and propose to transfer the burden on to the consumers through tariff hikes,” says a highly placed official from CPDCL.
Source:- thehindu.com
India To Save $8.5 Billion In Oil Imports From Iran: Veerappa Moily To Pm
1-Sep-2013
NEW DELHI: India plans to save over $ 8.5 billion in foreign exchange this fiscal by increasing crude oil imports from Iran, Oil Minister M Veerappa Moily has told Prime Minister.
India, which paid about $ 144.29 billion last fiscal for importing oil, is renewing imports from Iran as unlike imports from other countries it pays the Persian Gulf nation in rupees.
Detailing plans to save $ 20 billion in foreign exchange spending, Moily on August 30 wrote to Prime Minister Manmohan Singh saying about 11 million tonnes of crude will be imported from Iran in the remainder of the fiscal.
"About 2 million tonnes crude oil has been imported from Iran so far during the current financial year. An additional import of 11 million tonnes during 2013-14 would result in reduction in forex outflow by $ 8.47 billion (considering the international price of crude oil at $ 105 per barrel)," he wrote.
The plan is in response to Prime Minister's call to the ministry seeking $ 25 billion cut in oil import bill to narrow current account deficit.
Moily, who also wrote an almost identical letter to Finance Minister P Chidambaram, said he has "worked out some concrete measures which could result in a saving of around $ 19-20 billion in the current financial year."
The biggest component of the plan is restarting import of oil from Iran. As US and western sanctions blocked all payment routes, India pays Iran in rupees in a Uco BankBSE 1.54 % branch in Kolkata.
Other measures include asking state-owned oil firms to keep crude imports at 2012-13 level of 105.96 million tonnes that will save $ 1.76 billion in foreign exchange.
Also, a mega fuel conservation campaign to limit fuel consumption growth to last year's 4.1 per cent will save another $ 2.5 billion, he said.
The plans outlined by Moily are part of government's efforts to prop up the rupee, which has slipped 23 per cent against the US dollar this fiscal.
India, which last fiscal imported 13.1 million tonnes of oil from Iran, has been, since July 2011, paying in euros to clear 55 per cent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 per cent due amount was remitted in rupees in accounts Iranian oil company opened in Kolkata-based Uco Bank.
Payments in euro through Turkey ceased from February 6 this year and now Iran is paid only in rupees. Rupee payment helps save foreign exchange outgo, thereby reducing CAD.
India in June won another 180-day waiver from the US sanctions after it cut crude oil imports from Iran by over 27 per cent. But its public sector firms did not buy any oil from the Persian Gulf nation in first four months of current fiscal as insurance firms refused to provide cover to refiners processing Iranian oil.
Imports have, however, resumed last month with Mangalore Refinery and Petrochemicals LtdBSE 1.46 % (MRPL) getting the first shipload on August 17.
Indian OilBSE 0.57 % Corp ( IOCBSE 0.57 %) and Hindustan PetroleumBSE 0.84 % Corp Ltd ( HPCLBSE 0.84 %) are likely to follow suit shortly while private sector Essar OilBSE 1.91 %, the other customer of Iranian oil, has continued to import oil from Tehran.
India had in 2012-13 imported 13.14 million tonnes of crude oil from Iran, down from 18.11 million tonnes of 2011-12. Iran was till 2010-11 India's second largest supplier after Saudi Arabia but has since slipped to the sixth place.
Source:- economictimes.indiatimes.com
Gold Makes A Comeback As Demand For Jewelry In India, China Pushes Its Price Higher
2-Sep-2013
Gold is having a summer revival. The price of gold touched $1,420 an ounce this week, a three-and-a-half month high, as escalating tensions in the Middle East, volatile currency markets and renewed demand for jewelry in China and India pushed prices higher.
Gold has rebounded 15 per cent to $1,396 an ounce since sinking to $1,212, its lowest level in almost three years, on June 27. A gain of 20 percent or more would put the metal back in a bull market.
Gold's resurgence follows a rough ride this year. Gold slumped 4.8 per cent in the first three months of 2013 as the outlook for the economy improved while inflation remained subdued.
For many years prior to that, large investors, like hedge funds, bought the metal as a way to protect their investments against rising prices and a slumping dollar. They feared that the Federal Reserve's stimulus program could cause prices to rise. But inflation remained subdued and that reduced the need to buy gold. Also, signs in January that the dollar was strengthening diminished the appeal of owning gold.
Then in April, the bottom fell out. A proposal that Cyprus sell some of its gold reserves to support its banks rattled traders, prompting concern that Spain, Italy and other weak European economies might also sell and flood the market.
Gold plunged by $140 an ounce, or nine percent, on April 15 as investors unloaded their holdings. That was the biggest one-day decline in more than 30 years.
While the price of gold is still down 17 percent this year, the metal is on the rise.
Source:- indiatoday.intoday.in
Indian Rupee Opens Weak By 39 Paise At 66.09/Dollar
The Indian rupee opened weak by 39 paise at 66.09 per dollar agianst 65.70 on Friday.
Agam Gupta, Standard Chartered said, "Weak growth data on Friday is expected to keep the rupee subdued. Aggressive selling by nationalised banks on behalf of RBI is expected to continue, keeping the rupee strong. The range for the day is seen between 65.60-66.60/USD."
The dollar trades at a 4-week high of 82.26 on safe haven buying. Conversely, the euro slipped to 1.31/USD levels while the dollar-yen trades at 98 levels.
Source:- moneycontrol.com