India: Indirect Tax Newsletter - August 1, 2012

Last Updated: 3 December 2012



Notification No. 65/2012-Cus.(NT) dated July 26, 2012

Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 amended to provide for procedure to revoke registration of authorized couriers. Pacificorp (HK) Ltd. Vs. CC [2012 (281) ELT 522 (Mad.)]

The Madras High Court held that where the importer has abandoned goods due to alleged financial constraints, foreign exporter continues to be owner of goods and has a right to request Customs authorities to reexport such goods.

Delta International Limited Vs. CC [2012 (281) ELT 400 (Cal)]

The Calcutta High Court held that where notice was devoid of grounds or reasons or particulars in support of demand for duty, assessee is not in a position to answer the notice. Missing ingredients in show cause notice cannot be incorporated by High Court based on submissions in affidavit/ notes.

FTP & Environment

Notification No. 8 (RE-2012) /2009-2014 dated July 26, 2012

Foreign Trade Policy, 2009-2014 amended to provide for conditions for importing spares under Export Promotion Capital Goods license and new definition of 'capital goods', which will take effect from June 5, 2012.

Tata Teleservices (Maharashtra) Ltd. Vs. UOI [2012 (281) ELT 484 (Bom)]

The Bombay High Court held that Policy Interpretation Committee of the Directorate General of Foreign Trade ("the DGFT") must assign reasoning to their orders especially since their findings are final and binding, and arbitrary rejection of assessee's claims is not tenable.


Central Excise

CCE Vs. PRS Rolling Mills Pvt. Ltd. [2012 (281) ELT 560]

The Customs, Excise and Service Tax Appellate Tribunal ("the CESTAT") held that assessee and customer could not be said to be related where invoices indicate that sale was at factory gate and price charged was as per invoices.

Shri Jay Kumar Lohani Vs. CCE [2012-TIOL- 511-HC-MP-CX]

The Madhya Pradesh High Court held that there is no legal provision that authorities have to first adjudicate notice issued regarding confiscation before issuing notice regarding recovery of duty and penalty.

Kodak India Ltd. Vs. CCE [2012-TIOL-875- CESTAT]

The CESTAT held that in the absence of a show cause notice amount deposited by assessee cannot take colour of 'duty'. Thus, refund not barred by limitation.

Service Tax

CST Vs. LSG Sky Chef India Pvt. Ltd. [2012 (27) STR 5]

The Karnataka High Court held that contract for outdoor catering is a composite contract and service tax is payable on service aspect and sales tax is payable on deemed sales aspect.

Mayo College Vs. CST [2012 (27) STR 53] Meeting for educational discussion was organised and fee was collected by assessee from delegates. The CESTAT held that money collected was used for mutual benefit of delegates in the conference; delegates who attended the conference were not clients of the assessee and therefore, no service tax was chargeable on amount received from delegates.

Synergic India Pvt. Ltd. Vs. CST [2012-TIOL- 861-CESTAT]

The CESTAT held that although installation was not being charged separately but included in the cost of goods sold, installation activity is exigible to service tax.

Cenvat Credit

Refron Valves Ltd. Vs. CCE [2012 (281) ELT 447]

The CESTAT held that where goods are cleared from one 100% Export Oriented Unit ("EOU") to another 100% EOU such clearance is to be treated as physical export and not deemed export for the purpose of granting refund of unutilized Cenvat credit.

Adani Enterprises Ltd. Vs. CCE [2012 (27) STR13]

The CESTAT held that since Rule 5 of the Cenvat Credit Rules, 2004 allows an assessee to apply for refund where Cenvat credit cannot be availed; inverting this rule there is no infirmity in availing of Cenvat credit where an assessee does not wish to apply for refund.


Larsen and Toubro Ltd. Vs. Union of India [2012-VIL-40-Del]

The High Court of Delhi upheld validity of Section 5 of the Delhi Value Added Tax Act, 2004 ("the Delhi VAT Act"). The petitioner contended that the Delhi VAT Act do not provide for a mechanism to compute taxable turnover after deducting turnover of subcontractors who are registered dealers themselves, thus leading to double taxation. The High Court held that even though there is no specific provision like the Andhra Pradesh Value Added Tax Act, 2005 ("the AP VAT Act") in the Delhi VAT Act (to exclude turnover of sub-contractors), it cannot be a ground for judicial review of legislative action. The High Court further observed that the Delhi VAT Act allows input tax credit of tax paid by sub-contractor to main contractor and hence it does not result in double taxation.

Reversal of Input Tax Credit under the Delhi VAT Act in case of inter-state sale

The Delhi Value Added Tax (Amendment) Act, 2012 amended Section 9(10) and Section 10(3) of the Delhi VAT Act to provide for reversal of prescribed percentage of input tax credit on inter-state sale of goods against Form C.

Notification No. F.7(453)/Policy/VAT/ 2012/361-371 dated July 23, 2012

The Commissioner, Value Added Tax, Delhi, has directed that no security would be required to be furnished by such dealers, who apply for registration with the department during the months of August and September Notification No. S.O.102 dated June 22, 2012

The Governor of Bihar amended Bihar Value Added Tax Act, 2005 enhancing rate of deduction of TDS in Bihar in respect of works contract executed in the State of Bihar to 5% from 4%.

Good and Service Tax ("GST")

Modi bats for GST Implementation [Times of India, July 16, 2012]

Addressing a national seminar on 'GST-Key Issues and Challenges', the Chairman of the Empowered Committee of State Finance Ministers said states should not be frightened of implementing GST, as proposed tax regime would bring lots of benefits, including reduction in number of indirect taxes and minimization of tax incidence. GST would also put a check on cascading effects of tax on tax, besides simplifying taxation mechanism.

The Chief Minister of Uttar Pradesh against implementation of GST [Times of India, July 18, 2012] The Chief Minister of Uttar Pradesh, Mr. Akhilesh Yadav feels that GST is not in the interest of common man and his party may oppose GST in the forthcoming monsoon session of Lok Sabha. He stated that the Government can achieve aim of imposing a single tax across India through Value Added Tax and by bringing in GST the Union Government would end up adversely affecting revenue generation by states which would ultimately exert pressure on common man.

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