CA Terminal

Saturday, 15 June 2013

Payment for clearing and warehousing services outside India isn’t FTS; out of clutches of withholdin

IT/ILT : Payments to non-residents for clearing and warehousing services, rendered outside India is not fees for technical services

No sec. 41(1) addition if no evidences were produced to prove remission or cessation of liability

IT : Where Tribunal on basis of material on record, found that certain liability shown in assessee's books of account was genuine which was duly paid subsequently by account payee cheques, impugned addition made by revenue authorities under section 41(1) in respect of said liability was not sustainable

Cleaning of hospital building isn’t liable to service tax under ‘cleaning services’

ST : Where an assessee is filing returns regularly and its unit is audited periodically, Department is aware about fact of services rendered by them, there can't be any charge of suppression so as to invoke extended period

No sec. 254 rectification after lapse of 4 years if no reasonable explanations were given by petitio

IT : Where petitioner was very well aware that order of Tribunal had been construed to restore not all grounds of appeal but only one ground, petition filed for setting aside that order on basis that all grounds had not been dealt with particularly after lapse of prescribed time was to be dismissed

Issues of jurisdiction for re-assessment can be raised in an appeal for first time

IT : Question relating to jurisdiction assumed under section 147/148 goes to very root of matter and it can be raised in appeal for first time

Registration of a trust can’t be quashed due to amended sec. 2(15) as long as its activities are gen

IT : Even though objects of institution were no longer toward a 'charitable purpose' in view of amended law, registration under section 12A could not be reviewed and withdrawn in absence of stipulation in section 12AA(3) regarding continuing satisfaction

Managing affairs of organization isn’t covered under ‘Management Consultancy Service’

ST : If a person himself is managing affairs of organization, prima facie, it does not fall under 'Management Consultancy Service'

Central Excise Notification No 21/2013 dated 13-06-2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 21/2013 - Central Excise

New Delhi, dated the 13^th June, 2013

G.S.R. 372 (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, on being satisfied that it is necessary in the public interest so to do , hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 30/2012- Central Excise dated the 9^thJuly, 2012 , published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 542(E), dated the 9^th July, 2012, namely :-

In the said notification, in paragraph 2, in condition (a),-

for the word and figure “Volume I”, the words and figures “Volume I in terms of entitlement under paragraph 3.14.2 or against the exports to the countries or regions specified in paragraph 3.14.4 (e) or paragraph 3.14.5(e) of the Foreign Trade Policy, as the case may be” shall be substituted;

in the first proviso, for the words “the Focus Market Scheme”, the words and figures “paragraph 3.14.2 of the Foreign Trade Policy” shall be substituted;

after the first proviso, the following proviso shall be inserted, namely:-

“Provided further that for the purpose of calculation of export performance or for computation of entitlement under paragraph 3.14.4 or paragraph 3.14.5 of the Foreign Trade Policy, the incremental growth shall be in respect of each exporter [Importer Exporter Code (IEC) holder] without any scope of combining the export for group company or for transferring export performance from any other IEC holder and the incremental growth shall be in terms of freely convertible currency to the designated markets. The following categories of exports shall not be counted for calculation of export performance or for computation of entitlements:

Export of imported goods or exports made through trans-shipment;

Export from SEZ/ EOU /EHTP /STPI /BTP/FTWZ;

Deemed Exports;

Service Exports;

Third Party exports;

Diamond, Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones;

Ores and concentrates of all types and in all formations;

Cereals of all types;

Sugar of all types and all forms;

Crude / petroleum oil and crude / primary and base products of all types and all formulations;

Export of milk and milk products;

Export performance made by one exporter on behalf of other exporter;

Supplies made to SEZ units;

Items, export of which requires an export authorisation (except SCOMET);

Export of Meat and Meat Products;

Exports to Singapore, UAE and Hong Kong,

SEZ/EOU/EHTP/BTP/FTWZ products exported through DTA units;’’.

(Sanjay Kumar)

Under Secretary to the Government of India

[F.No.605/10/2013-DBK]

Note- The principal notification number 30/2012 - Central Excise, dated the 9^thJuly, 2012 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 542 (E), dated the 9^th July, 2012 and was last amended by notification No. 17/2013 - Central Excise dated the 16^th May,2013 vide number G.S.R. 315 (E) dated the 16^th May,2013.

Service Tax Notification No 11/2013 (ST) dated 13-06-2013

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 11/2013 - Service Tax

New Delhi, the 13^th June, 2013

G.S.R. 373(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 6/2013 - Service Tax, dated the 18^thApril, 2013 , published in the Gazette of India, Extraordinary, Part II, section 3, subsection(i), vide number G.S.R. 254(E), dated the 18^th April, 2013, namely:-

In the said notification, in para 3, in condition (a),-

for the word and figure “Volume I”, the words and figures “Volume I in terms of entitlement under paragraph 3.14.2 or against exports to the countries or regions specified in paragraph 3.14.4(e) or paragraph 3.14.5(e) of the Foreign Trade Policy, as the case may be” shall be substituted;

in the first proviso, for the words “the Focus Market Scheme”, the words and figures “paragraph 3.14.2 of the Foreign Trade Policy” shall be substituted;

after the first proviso, the following proviso shall be inserted, namely:-

Export of imported goods or exports made through trans-shipment;

Export from SEZ or EOU or EHTP or STPI or BTP or FTWZ;

Deemed Exports;

Service Exports;

Third Party exports;

Diamond, Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones;

Ores and concentrates of all types and in all formations;

Cereals of all types;

Sugar of all types and all forms;

Crude or petroleum oil and crude or primary and base products of all types and all formulations;

Export of milk and milk products;

Export performance made by one exporter on behalf of other exporter;

Supplies made to SEZ units;

Items, export of which requires an export authorisation (except SCOMET);

Export of Meat and Meat Products;

Exports to Singapore, UAE and Hong Kong,

SEZ or EOU or EHTP or BTP or FTWZ products exported through DTA units;’’.

(Sanjay Kumar)

Under Secretary to the Government of India

[F. No. 605/10/2013-DBK]

Note- The principal notification No. 6/2013-Service Tax, dated 18^th April, 2013 , was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 254(E), dated 18^th April, 2013.

Customs Notification No.32/ 2013 dated 13-06-2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 32/2013 - Customs

New Delhi, the 13^th June, 2013

G.S.R. 371 (E).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 93/2009 - Customs, dated the 11^thSeptember, 2009 published in the Gazette of India, Extraordinary , Part II, Section 3, subsection (i), vide number G.S.R. 659 (E), dated the 11^th September, 2009, namely :-

In the said notification,-

in the opening paragraph, in condition (i), for the word s and figure “Volume I of the Foreign Trade Policy”, the words and figures “ Volume I in terms of entitlement under paragraph 3.14.2 or against exports to the countries or regions specified in paragraphs 3.14.4(e) or 3.14.5(e) of the Foreign Trade Policy, as the case may be” shall be substituted;

in paragraph 2, for the words “under the scheme”, the words and figures “under paragraph 3.14.2 of the Foreign Trade Policy” shall be substituted;

after paragraph 2 and before the Explanation, the following paragraph shall be inserted, namely:-

“3. For the purpose of calculation of export performance or for computation of entitlement under paragraph 3.14.4 or paragraph 3.14.5 of the Foreign Trade Policy, the incremental growth shall be in respect of each exporter [Importer Exporter Code (IEC) holder] without any scope of combining the export for group company or for transferring export performance from any other IEC holder and the incremental growth shall be in terms of freely convertible currency to the designated markets. The following categories of exports shall not be counted for calculation of export performance or for computation of entitlements:

Export of imported goods or exports made through trans-shipment;

Export from SEZ/ EOU /EHTP /STPI /BTP/FTWZ;

Deemed Exports;

Service Exports;

Third Party exports;

Diamond, Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones;

Ores and concentrates of all types and in all formations.

Cereals of all types;

Sugar of all types and all forms;

Crude / petroleum oil and crude / primary and base products of all types and all formulations;

Export of milk and milk products;

Export performance made by one exporter on behalf of other exporter;

Supplies made to SEZ units;

Items, export of which requires an export authorisation (except SCOMET);

Export of Meat and Meat Products;

Exports to Singapore, UAE and Hong Kong,

SEZ/EOU/EHTP/BTP/FTWZ products exported through DTA units.’’.

(Sanjay Kumar)

Under Secretary to the Government of India

[F.No.605/10/2013-DBK]

Note: The principal notification number 93/2009 - Customs, dated the 11^th September, 2009 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 659 (E), dated the 11^th September, 2009 and was last amended by notification No. 29/2013 - Customs, dated the 16^th May, 2013 vide number G.S.R.316 (E), dated the 16^th May, 2013.

Matter remanded to consider the nature of exp. incurred on a computer software in light of licensed

IT : In absence of agreement licensing software to assessee, issue whether licensing fee was revenue expenditure or capital expenditure could not be decided

Excess sale proceeds owing to forex fluctuation are eligible for sec. 10A relief; no relief for deem

IT : Assessee is not entitled to exemption under section 10A in respect of deemed export to another Special Economic Zone

Cenvat credit not allowable on goods not forming part of value of services

ST : Where value of free supplied materials were not included in gross amount, assessee was not eligible for abatement of 67% ; hence, levy of service tax on value addition made was justified

Friday, 14 June 2013

Any onerous disposition in course of winding up won’t come within the scope of sec. 446(2) adjudicat

CL : Any onerous disposition in course of winding up would come within scope of adjudication under section 446(2), no matter whether order of winding up was subsequently stayed or not

Tax collections may fall short of target this fiscal year

Finance and banking companies are likely to pay 5-10% more advance tax for the first quarter of the current fiscal, but the overall trend suggests that total tax collections for the full fiscal year are likely to fall short of target—worrying news for a finance minister that’s trying to rein in its fiscal deficit.

Indicative advance tax payment numbers by the 25 top firms show an increase of 20.96% over last year, said income-tax (I-T) officials on condition of anonymity. A clearer picture will emerge when more companies pay advance tax, the last date for which is 15 June.

Indian companies pay advance tax a fortnight before the end of every quarter on projected earnings and these numbers are seen by analysts as a reflection of their financial performance. Companies are required to pay 15% of their total advance tax in the first quarter, followed by 30%, 30% and 25% in the next three quarters, respectively.

“We need a growth of 19% to achieve the overall target. But it looks difficult at this point of time. However, financial institutions and banking companies are likely to pay 5-10% more,” said one of the income tax department officials cited above.

About 1,200 companies pay more than 75% of corporate tax and account for more than 50% of direct tax collections.

Finance minister P. Chidambaram is bidding to rein in the fiscal deficit to 4.8% of gross domestic product (GDP) this year from 5.2% last year, with increased tax collections playing a key role in the exercise. India’s economy is seen recovering this fiscal from decade-low growth of 5% last year.

The budget estimate for corporate tax collection for the financial year is Rs.4,19,520 crore, 17.71% more than last year’s corporate tax collection. The total direct tax collection target for financial year 2013-14 is Rs.6,68,109 crore, about 19.69% more than last year’s figure.

Although the finance minister on Thursday expressed confidence that the government will not have to go in for expenditure compression to meet its fiscal deficit target, analysts are sceptical of the government meeting its revenue targets.

“This year the problem will be more in revenue rather than expenditure. Besides tax revenues, the government has taken a huge gamble with respect to revenues from spectrum auction and disinvestment, which are dependent on external factors,” said Madan Sabnavis, chief economist at CARE Ratings. “...the government may have no option but to look at expenditure compression this year also to meet the fiscal deficit targets.”

Housing Development Finance Corp. Ltd (HDFC) paid Rs.360 crore compared with Rs.300 crore in the year-ago quarter. Yes Bank Ltd paid Rs.104 crore, up from Rs.75 crore. HDFC Bank Ltd paid Rs.685 crore, compared with Rs.500 crore a year ago.

According to figures given by tax officials, the country’s second biggest bank, ICICI Bank Ltd, paid Rs.600 crore for the reporting quarter against Rs.500 crore. They added that Bank of Baroda paid Rs.325 crore (Rs.300 crore last year), Dena Bank Rs.110 crore (Rs.80 crore), Kotak Mahindra Bank Ltd Rs.110 crore (Rs.75 crore), Accenture India Rs.33 crore (Rs.28 crore), Lafarge India Rs.25 crore (Rs.25 crore) and ITC Ltd Rs.385 crore (Rs.315 crore). Mangalore Refinery and Petrochemicals Ltd isn’t expected to pay advance tax.

Life Insurance Corporation of India paid Rs.679 crore (Rs.638 crore), Tata Steel Ltd Rs.270 crore (Rs.270 crore) and Mahindra and Mahindra Ltd Rs.120 crore (Rs.90 crore).

Details of the highest tax paying firms, State Bank of India and Reliance Industries Ltd, aren’t known at this point of time.

HDFC and Yes Bank confirmed the tax payments, while the other firms could not immediately be contacted for comment.

The gloomy tax outlook comes a day after Chidambaram sought to rally investor sentiment by promising a fresh round of policy initiatives to stimulate economic activity.

The World Bank on Thursday cut its global forecast for 2013 on the back of slower growth projections for emerging economies such as China and India, and a prolonged contraction in Europe. In a report, the bank said the world economy will expand 2.2%, less than a January forecast for 2.4% growth and slower than last year’s 2.3%. While India’s growth projection was lowered to 5.7% from 6.1%, China’s growth outlook was cut to 7.7% from 8.4%.

I-T dept initiates Vodafone conciliation process to resolve tax dispute

The income-tax department has formally written to British telecom major Vodafone, agreeing to a conciliation process to resolve the long-running tax dispute.

The letter to the company stems from last week's cabinet decision that allowed a non-binding conciliation with the company under the Indian Arbitration and Contracts Act, said a government official privy to the development.

The company had sought conciliation under the United Nations Commission on International Trade Law, but the cabinet agreed to the conciliation process only under Indian laws.

A company spokesperson declined to comment.

The Income-tax department would keep the tax demand, which includes interest and penalty, in abeyance during the process. Both sides will appoint representatives to carry out the negotiations.

"Two conciliators will sit together and they would come out with an outcome. It is not an arbitration. They will suggest an outcome, a modified outcome and it is a step by step approach. Everything is in public domain," finance minister P Chidambaram had said after the cabinet decision on June 4.

The Central Board of Direct Taxes, the apex body in charge of administration of direct taxes, is agreeable to waiving off a certain component of the interest and penalty on the total tax liability but the company is pushing for waiving both the interest and penalty and also a part of the principal. A panel headed by Parthasarthi Shome, now an advisor in the finance ministry, had recommended that penalty and interest should not be imposed in cases where law had been amended retrospectively.

Vodafone had acquired Hutchison Essar in 2007 from Hong Kong-based Hutchison Whampoa through a $11.2-billion overseas transaction. Indian income-tax authorities slapped a Rs 20,000-crore tax bill on the company including penalty and interest for not withholding tax on the payment made to Hutchison.

Tax authorities' lost in the Supreme Court, but the government amended the income-tax law retrospectively in the last budget making the company liable to pay tax.

Hotel chain evaded service tax by under invoicing

Assessing the books of accounts of the last five years, the service tax department has found that the group — promoted by former bureaucrat Sanjay Gupta promoted Neesa Leisure Limited (NLL) — had not paid any duty for an income of Rs60 crore which means it is liable to pay Rs3.40 crore as service tax.

Highly placed sources in the service tax department have claimed that the group was found guilty of not paying service tax by under-invoicing stay at its hotels and resorts.

The department had raided the NLL premises this May and seized books of accounts and other records for five years between 2007 and 2012.

“Investigation revealed that taking advantage of one of the rules, the company was raising invoices of Rs999 for visitors instead of the declared tariff of Rs3,500 to Rs16,500 amounting to tax evasion. Also, a batch of 50 people was given same rooms three times in 24 hours,” said a senior official of the department.

Tax is calculated on the difference between invoice amount and declared tariff. “Total difference of under-invoicing is Rs60 crore so far which may go up as assessment is still on,” the official said.

Gupta is currently director and executive chairman of Metro-Link Express for Gandhinagar and Ahmedabad (MEGA) Company to facilitate the Ahmedabad-Gandhingar Metro rail project.

“The group is using its sister concerns to cater to its hospitality business. Service tax charged on the group company is claimed as Cenvat credit (input tax credit) but not deposited with the exchequer,” the official further stated.

“The company has paid Rs1.25 crore in tax liability as well as reduced its claims for Cenvat credit by Rs3.50 crore. However, this is not the final assessment as we are still checking the records,” he added.

New service tax rules

With effect from February 2009, service tax is levied for short-term accommodation in hotels, guesthouses, resorts and other places where the declared tariff is Rs1,000 or more. The declared tariff has been defined within the notification as charges for all amenities provided in the unit of accommodation. Thus, it will include the cost of all electronic gadgets installed in the room and any other facility normally provided by a hotel as part of the stay.

New layer...

AO can’t insist on charging interest paid to partners from net profit remaining after charging the d

IT : For working out disallowance under section 40(b)(iv), in absence of any clear cut guidance that charging of interest has to be on percentage of book profit revenue cannot insist that depreciation being a charge on profit has to be deducted first before considering any interest payment on capital of firm

Receipt of interest by Indian branch from its overseas HO and PEs can’t be charged to tax on grounds

IT/ILT : Interest/commission received by Indian branch from overseas HO and PEs cannot be charged to tax

Kolkata Port Trust Pins Hope On Delhi Meet

KOLKATA: Officers of the Kolkata Port Trust (KoPT) are keeping their fingers crossed. Four days from now, they will get to know whether the port will be allowed to carry out transloading operations at Kanika Sands, off the Odisha coast. The future of Haldia Dock Complex (HDC) depends on this.

With falling draught in the navigation channel outside HDC, the port management was forced to look for other options to increase revenue. One of these was to transload cargo from large vessels to barges at certain locations and bring them to Haldia. The Sandheads, which falls within KoPT's jurisdiction, is one such location. In fact, cargo has been transloaded on to barges and brought to Haldia from the Sandheads.

However, this location suffers from a problem.

"We had to look for another location where lighterage operations can be conducted throughout the year. Kanika Sands is one such location which isn't too far from Haldia. KoPT moved this proposal to the Ministry of Shipping and even got it cleared a couple of years ago. However, the Odisha government was not too keen to allow KoPT to operate so close to its north-eastern coastline as there are private ports operating there. The Odisha government moved the Supreme Court, seeking a reversal of the ministry's order that granted clearance to KoPT," an official said.

After several hearings, the court urged the Centre to convene a meeting with officials from KoPT and the Government of Odisha and find a solution to the problem. The meeting will be held was to be held on Friday but has now been postponed on Tuesday. KoPT officials are hopeful that they would be able to convince the Odisha government that its interests won't suffer if lighterage operations are carried out at Kanika Sands.

"We hope to arrive at a solution in this meeting. If this happens, all parties will move court and submit that the matter has been sorted out," KoPT chairman RPS Kahlon had said a few days ago.

"Lighterage operations are essential for the future of HDC. As draught has fallen, large vessels can't enter the port confines with capacity loads. Importers, on the other hand, want to bring in cargo in larger volumes as this is economical. The only option left with KoPT is to bring in cape-sized vessels to deep-draughted locations like the Sandheads and transload cargo on to barges. In this way, the ships are also not delayed," the official added.

Source:-timesofindia.indiatimes.com