CA Terminal: 02/17/15

Tuesday 17 February 2015

No addition under sec. 41(1) of balance sales tax on prepayment of total sales tax liability

IT : Where assessee made premature payment of deferred sales tax at Net Present Value against total liability and credited balance amount to its capital reserve account, same could not be remission or cessation of a trading liability under section 41(1)

HC unhappy with shortage of benches at CESTAT but refrains itself from giving direction to establish

Excise & Customs : Where Department/Assessees submitted that there were only two division benches and one single member bench at CESTAT, New Delhi to deal with matters from eight States and requested direction to Central Government to establish more benches citing huge pendency of matters, High Court refrained from passing any such direction

Issue of levying of Education Cess on DTA clearance by 100% EOU isn't appealable before High Court

Excise & Customs : Question 'whether manufacturers being 100 per cent EOU are required to pay education cess on computation of customs duty/excise duty on their DTA clearances' relates to 'rate of duty'; hence, not appealable before High Court

Writing off bad debt and reducing it from debtor’s account is enough to claim deduction: HC

IT: Once amount of bad debt is debited to profit and loss account and simultaneously reduced from asset side, same is to be allowed; it was not necessary for assessee to close individual account of each of its debtors in its books

No demand of CST from assessee as he had merely purchased goods on behalf of his principal

CST & VAT: CST- Where assessee purchased paddy for and on behalf of Ex. U.P. Principal, namely, 'A', Punjab, and dispatched same to him, who manufactured rice from paddy and then exported rice, movement of paddy from State of U.P. to State of Punjab was deemed inter-State sale falling under section 6A of Central Act

Assessee developing Industrial infrastructure with profit motive wasn't entitled to sec. 11 relief

IT: Where assessee, engaged in development of industrial infrastructure in State of Kerala, carried on its activity with profit motive and in same manner in which a private builder of large township would conduct his business, assessee's case would fall in proviso to section 2(15)

Sum paid to hire vehicles for exclusive usage would attract TDS under sec. 194C and not under sec. 1

IT: Where buses/vehicles were hired by assessee for fixed tenure and for its exclusive usage, section 194C and not section 194-I would be attracted

HC quashes CLB's order of replacing board with an administrator as there was no merit in oppression

CL: Where even though CLB had passed impugned order appointing administrator to oversee affairs of company to protect interest of both parties, in order to achieve said object, order replacing Board of Directors was too harsh as even though allegations of non-convening meetings were made, material on record showed that meetings were convened and appellant/respondent had already made a substantial investment in company

Survey and map-making services provided by engineer weren't classifiable as 'consulting engineer's s

Service Tax : 'Survey and Map-making, etc.' of various projects of M/s. GAIL and ONGC does not amount to 'consulting engineer's services', as there is no advice/consultancy/technical assistance involved; it is classifiable as 'survey and map-making services' and taxable only from 16-6-2005

ITAT allows credit for tax accrued but not yet paid in Brazil under Article 23 of India - Brazil DTA

IT/ILT : Where assessee gave loan to its AE outside India, while computing ALP of interest income, domestic prime lending rate would have no applicability and international rate fixed being LlBOR plus basis point would come into play

Value of intermediate goods used to manufacture exempted goods is includible in computing SSI limit

Excise & Customs : Goods wholly exempt under other notifications cannot be considered as 'specified goods'; hence, intermediate goods used therein cannot be considered as 'used in manufacturing specified goods' and are, therefore, includible in computing SSI-exemption limit

No penalty proceedings of FEMA against petitioner if there was stay against payment of penalty

FERA: Where there was a clear stay order against payment of penalty amount, no proceedings could have been initiated against petitioners under section 57 of FERA

IRDA introduces transitional provisions for investments made by insurers

INSURANCE : Transitory Investment Provisions Insurance Laws (Amendment) Ordinance, 2014 - Clarification on Approved Investments

CBEC launches a system of monitoring Court cases to ensure timely filing of reply affidavits by Govt

ST LAWS/EXCISE & CUSTOMS LAWS : Monitoring of Cat/Court Cases – Need for Development of An Effective System of Monitoring of Court Cases to Avoid Imposition of Penalty by Courts on Account of Delay in Filing or Non-Filing of Reply Affidavits in Respect of OAS/CWPS Filed in Cats/Courts

Handicraft Exporters Join E-Commerce Boom

Eyeing a pie of growing e-commerce sector in the country, handicraft exporters are joining hands with big portals to tap the domestic market.

"There is a huge demand of handicraft products in India and e-commerce portals are the best medium to tap those consumers. Several of the handicraft players are joining hands with e-commerce companies," Export Promotion Council for Handicrafts (EPCH) Vice-Chairman Rajesh Kumar Jain told PTI here.

He said at a time when the global economic situation is not in a healthy state, domestic market offers huge opportunities for exporters.

"Flipkart and Snapdeal are good platforms where we can sell our goods in India," he said. India's handicraft exports declined by about 10% year-on-year in January to $120 million.

Today, India is one of the fastest-growing e-commerce markets in Asia-Pacific along with China. With increase in internet penetration, adoption of smartphones and lower data rates are completely changing the way India shops.

Furthermore, favoured demographics and growing internet user base helped in aiding the growth. As per estimates, the sector's market size in the country is around $5 billion annually.

Jain added that as handicraft is a labour intensive sector, these platforms would also help in further creation of job opportunities.

The major product categories which can be sold on these platforms include house-ware, home textiles, furniture, glassware, bamboo goods, fashion jewellery and lamp & lighting, he said.

Analysts say online shopping space in India is expanding at a massive scale and the journey is not yet over.

Further talking about the councils' expectations from the forthcoming Budget, Jain said the government will have to take several steps in order to boost the sector's growth domestically and in the global markets also.

"We are aiming to double our share in the global market from the current three per cent and for that we need help in skill development, enhancing quality and standards of our products and help in exploring new markets," he said.

Jain added that the sector is facing challenges in terms of skilled manpower.

"We are trying our best to impart best of the skills. But we need an institution like we have FDDI for the footwear sector. We are expecting some major steps to be announced in the Budget for our sector," he said.

The country's annual handicraft exports ranges between $3 billion to $4 billion. The sector employs about 70 lakh people directly and indirectly.

Source:timesofindia.indiatimes.com

Indian Mangoes Officially Back On The Menu For Eu Consumers

The European Union has officially lifted the import ban on Indian mangoes just in time for the 2015 season, but one importer worries sales might initially be slow due to consumers’ perceptions of the risks.

The regulation was published in the European Commission’s Official Journal at the weekend (Feb. 14), stating Indian mangoes would once again be allowed into member states, subject to the correct phytosanitary certification.

“In light of shortcomings identified by audits carried out by the Commission in India in 2010 and 2013, and the high number of interceptions of harmful organisms on certain plants and plant products of Indian origin at that time, the import of five commodities, which were most frequently intercepted because of the presence of harmful organisms, including plants other than seeds of Mangifera L.,” the regulation says.

“The audit carried out by the Commission in India from 2 to 12 September 2014 showed significant improvements in the phytosanitary export certification system of that country.

“Furthermore, India has provided assurance that appropriate technical measures are available to ensure that the export of plants of Mangifera L. other than seeds originating in India is free from harmful organisms.”

The official easing of restrictions comes a few weeks after a vote during a Standard Committee meeting in Brussels held on Jan. 20 to lift the ban.

Import restrictions remain in place on four other commodities; the taro plant, eggplant and two types of gourd.

Meanwhile, British suppliers are gearing up to receive the first batches of India’s ‘king of fruits’, especially in towns and cities with large Anglo-Indian populations.

Mango importer and distributor Fruity Fresh has historically imported around 20% of the Indian mangoes coming into the U.K., and company representative Monica Bhandari has been heavily involved with the campaign to end the ban since it was first put in place in May 2014.

She is now preparing to receive Indian mangoes once again, but warns that sales could be affected this year as some consumers may have misunderstood why the ban was initially ordered.

“Therefore, we will have to do some damage control in that respect. However, we do know many customers are very excited to be getting their beloved mangoes back and we look forward to a busy season.”

Source:freshfruitportal.com

Tribunal couldn't reduce penalty once charges of suppression were upheld to invoke extended limitati

Excise & Customs : Once charge of suppression is upheld for invoking extended period, evasion penalty is automatic and same must be levied equal to amount specified in section 11AC and Tribunal cannot reduce it on grounds such as 'assessee did not gain anything from evasion'

Notice issued to assessee to show cause why proceedings be not initiated against him wasn't illegal

CST & VAT: West Bengal VAT - Where Assessing Authority issued on assessee a notice to show cause why legal action according to provisions of section 93 should not be taken for wilfully attempting to evade tax on unaccounted sales and assessee prayed for quashing said notice, there was no illegality or infirmity in impugned notice

No time limit is prescribed to recover duty-drawback refund erroneously, rules Gujarat High Court

Excise & Customs : Provisions regarding drawback are self-contained and Drawback Rules nowhere provide for any limitation for recovering any amount of drawback erroneously paid; hence, drawback may be recovered without any time-limit

Gm India Takes Exports Route In Quest Of Profits

General Motors Co.’s (GM) India unit, which has failed to report a profit since it started operations in the country in 1997, on Monday unveiled a radical new plan to turn around the local unit by increasing its focus on selling cars in overseas markets.

The company, which exported at least 1,000 vehicles in 2014, aims to sell as many as 19,000 units in the current year and 40,000 in following 12 months, according to Arvind Saxena, president and managing director of General Motors India Pvt. Ltd. In comparison, its car sales in India are expected to either decline or remain at the current level. This is despite company’s plans to introduce two new models in the country—a premium sports utility vehicle (SUV) Trailblazer and a multi purpose vehicle (MPV) Spin.

GM will introduce Trailblazer in 2015. The model will be imported from Thailand as a complete built-up unit (CBU) and will be utilized to boost GM’s brand, which took a beating after the controversy over a massive recall of its vehicles in 2013. GM will start selling Spin in India in 2016 and is exploring possibilities to export the model to Mexico. “I’ve been working primarily on how do we restructure our business and how do we make our business far more sustainable—both for us and our dealers,” said Saxena, adding that his company has not firmed up product plans for the medium-to-long term. “We are really focusing on exports for last six months...now we’re fairly geared up to handle bigger volumes and markets.”

“We would be exporting to almost 30-plus markets worldwide, while the major export would be to Chile and Mexico,” said Saxena.

GM has taken a logical step after a long time in India, according to Deepesh Rathore, co-founder and director, Emerging Markets Automotive Advisors (EMMAAA)—a sector specific consulting firm. “Exports offer better margins and it will help them utilize their capacity,” Rathore said.

Exports from India help firms improve profitability and reduce operational costs by utilizing the production capacity. Currently, GM only uses 35% of its 280,000 annual installed capacity at its two plants in the country.

Saxena said that in 2015, the company will sell as many units as it sold last year but a person who is familiar with the company’s plans said GM has drastically reduced the sales target for domestic market for 2015 and 2016. “This year, they aim to sell 55,000 units while the target for 2016 is 50,000,” this person said requesting anonymity.

Sales in domestic market will rise substantially to 93,000 units in 2017 when the company is expected to introduce two models in volume segment, according to this person.

By then, India is expected to be the world’s third-largest market for automobiles, behind only China and the US. GM expects India to be world’s third-largest car market by 2020. Saxena said GM believes in India’s growth story and it is here for the long haul.

The company has outlined product quality as another area of importance in order to make its business more sustainable.

“We would also focus on quality, which would be done by us and we are already seeing some significant improvement in the way we track quality and from the dealer’s point of view, we are focusing on the consumer experience to impact our brand image more positively in the market,” he said.

In July 2013, GM India recalled as many as 114,000 vehicles that failed to meet emission norms. Mint first reported on 11 June 2013 that GM had halted the sale of its Tavera and Sail models over quality issues. On 26 July 2013, Mint reported that as many as 20 senior executives were sacked following the recall.

GM had then admitted to the government that its officials had fudged emission data related to the recalled Tavera vehicles. The then ministry of road transport and highways-appointed panel headed by Nitin Gokarn, chief executive of the National Automotive Testing and R&D Infrastructure Project, which submitted its report to the government on 21 October 2013 in which it termed the whole issue a “corporate fraud”.

On Monday, Saxena said his company is still in process of rectifying problems in the Taveras that it had recalled.

“We have identified and have replaced parts in at least 50% of the Taveras that we recalled. We are trying to identify others as the ownership of vehicles has changed hands multiple times.”

Source:livemint.com

India: Onion Export Down In First Half

Onion export from the country has declined by 3% in the first seven months (April-October) of the 2014-15 financial year as against the corresponding period last fiscal following scarcity of good or export quality onions, hike in the Minimum Export Price (MEP), its inclusion in the essential commodity act and delayed kharif season.

The country exported 765,000 tonnes of onion in the first seven months by October 31 in the current financial year as against 787,000 tonnes during the same period in 2013-14, sources in National Agriculture Co-operative Marketing Federation of India (Nafed) said.

The district contributes 80% of the country's total onion export. Unseasonal rain and hailstorms had damaged the crop last summer, affecting its quality to a great extent. The summer crop, harvested in March and April with a shelf life of six to seven months, continued to reach the market until arrival of the fresh kharif crop, which generally begins from mid-September. Moreover, the kharif season was delayed by two months due to delayed monsoon. The lack of export-quality summer crop, delay in the arrival of kharif crop and hike in MEP of onions altogether led to the decline in export in the first seven months.

National Agriculture Co-operative Marketing Federation of India director Nanasaheb Patil, "The policy the central government adopted in first three four months of the current financial year to stabilize onion prices in domestic market led to decline in onion export of the country. The higher MEP of onions, scarcity of good quality summer crop, inclusion of onions in essential commodity act and delayed kharif season overall led to decline in onion export from the country."

On March 3, the central government had removed the MEP of onions due to a rise in late kharif production. On June 17 last year, the Centre introduced the MEP of $ 300 a tonne and again hiked MEP to $500 a tonne on July 2, 2014 to bring under control the rising onion prices. After pressure from farmers, the Union government reduced MEP to $300.

Source:freshplaza.com

Online System To Generate Import-Export Code

Seeking to streamline the procedure, the Commerce Ministry has put in place an online system for instant generation of import-export code on submission of documents.

The move would help companies or an individual wanting to enter the trade sector. Import-Export Code (IEC) is needed for shipments.

"This is a major step towards improving ease of doing business in the country. If all the documents are in place, a trader would get the code in a few minutes. Otherwise, if there is a problem, an automatic email or an sms would be generated and it will be sent to the concerned person," a senior official in the DGFT said. Earlier it used to take weeks to six months to get this code, the official added.

On February 1, the Directorate General of Foreign Trade (DGFT) made it mandatory to submit online applications for IEC. Within a week, the DGFT has got over 2,500 applications for IEC code.

Federation of Indian Export Organisations (FIEO) said that the move would help in reducing transaction costs for both exporters and importers.

The online submission system would also help the DGFT office to save lakhs of rupees which were spent on renting godowns to store these applications. The Delhi office of DGFT used to get about 60,000 applications per year and one application consists of about 20 pages.

The DGFT has set a checklist for its officials through which they can easily process an IEC application. For example to check PAN and DIN details, officials can verify it from the website of Income Tax Department and Ministry of Corporate Affair?s website respectively.

"The new IEC system will reduce time in grant of IEC as applications with all details and attachments will be cleared quickly. The verification of document has been provided online with authorities like CBDT, MOCA etc which will reduce transaction time," FIEO President Rafeeque Ahmed said.

The Commerce Ministry is intensely engaged with different departments, including revenue and shipping, to reduce paper work in a bid to cut transaction cost for exporters and improve the ease of doing business.

The DGFT, under the Commerce Ministry has prepared a report suggesting various ways to improve India's ranking in the World Bank's report of ease of doing business, reduce transactions cost for exporters and boost outward shipments.

The ministry aims at reducing the number of mandatory documents from nine to three (bill of lading, invoice and shipping bill) for exports, and from ten to four for imports.

The government is aiming to improve India's overall ranking in ease of doing business index to 50th position in the next two years from the current 142nd.

Source:igovernment.in

Rupee Ends Higher For The 2Nd Consecutive Day Vs Us Dollar, Up 3 Paise

The rupee today ended higher for the second consecutive day, moving up by another 3 paise to close at 62.16 against the dollar on continued selling of the US currency by banks and exporters.

The rupee resumed higher at 62.15 per dollar as against the last weekend's level of 62.19 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed up further to a high of 62.0750 per dollar on initial selling of dollars by banks and exporters.

However, it washed out initial gains and ended at 62.16 per dollar, still showing a marginal gain of three paise or 0.05 per cent from its last close.

The domestic currency has gained by 15 paise or 0.24 per cent in the two days. The local currency hovered in a range of 62.0750 per dollar and 62.2300 per dollar during the day.

The dollar was lower against the yen in thin and direction-less Asian trade today with investors having a relatively muted reaction to weaker-than-expected Japanese gross domestic product data. Adding to the mood was the closure of U.S. markets for the Presidents Day national holiday.

In the New York market the ICE US Dollar Index finished lower for the third week in a row on last Friday as a mixture of weak US data and signs of growth in the eurozone threatened the buck's seven-month rally.

Veracity Group, CEO, Pramit Brahmbhatt said: "Rupee started the week on positive note. However, it ended the day almost flat. Investors are being cautious and are waiting for the Eurozone meeting which scheduled in the evening even as we have seen the sell-off in the local equities which pushed the dollar up towards near previous day close".

Meanwhile, the Indian benchmark Sensex rose further by 40.95 points or 0.14 per cent to close at 29,135.88.

The forward premia showed a mixed pattern of trading. The benchmark six-month premium payable in July ruled eased to 209-211 paise from 210-212 paise on last Friday while forward contracts maturing in January 2016 moved up further to 421-423 pasie from 420-422 paise. The Reserve Bank of India fixed the reference rate for dollar at 62.2023 and for Euro at 71.0039.

The rupee recovered against the pound to 95.60 per pound from 95.74 previously and rebounded against the euro to 70.95 per euro from 71.00. However, it declined further to 52.42 per 100 yen compared to 52.35 last weekend's level.

Source:economictimes.indiatimes.com

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