India: Indirect Tax Newsletter - November 1, 2012

Last Updated: 11 December 2012

CUSTOMS & INTERNATIONAL TRADE Customs

Notification No. 57/2012-Cus. dated October 18, 2012

Amends Notification No. 39/96-Cus., dated July 23, 2012 to provide for exemption upto November 25, 2012 on import of machinery, equipments, instruments, components, spares, jigs, fixtures, dies, tools, accessories, computer software, raw materials and consumables required for the Long Range Surface to Air Missile ("LR-SAM") Programme of the Ministry of Defence from custom duty leviable thereon.

Sanjivani Non-ferrous Trading Pvt. Ltd. Vs. CC&CE [2012 (284) ELT 559 (Tri. Del.)]

Assessee paid higher amount of custom duty. On discovery of mistake, assessee filed for re-assessment of bill of entry within stipulated time period of six months. Reassessment order was passed on July 13, 2007 and assessee filed an application for refund of excess duty paid on July 30, 2007. Refund application was rejected on the ground of limitation. Referring to Section 27 of the Customs Act, 1962 ("the Customs Act"), the Tribunal allowed refund claim of assessee on the ground that where duty becomes refundable as a consequence of judgment, decree, order or direction, limitation shall commence from the date of such judgment. Therefore, period of limitation was held to commence from the date of order of reassessment.

Vasco Da Gama Distilleries Pvt. Ltd. Vs. CCE [2012 (284) ELT 417 (Tri. - Mumbai)]

The Tribunal held that merely because assessee obtained higher discount from foreign supplier as compared to other importers, it, by itself, cannot be a reason for rejection of transaction value under Section 14 of the Customs Act.

CENTRAL EXCISE, SERVICE TAX, VAT & GST

Central Excise

Notification No. 38/2012-CE dated October 18, 2012

Amends Notification No. 64/95-CE, dated March 16, 1995 to provide for exemption upto November 25, 2012 to machinery, equipments, instruments, components, spares, jigs, fixtures, dies, tools, accessories, computer software, raw materials and consumables supplied to LR-SAM Programme of Ministry of Defence from excise duty leviable thereon.

Sudhir Deoras Vs. CCE [2012 (284) ELT 326 (Jhar.)]

The High Court of Jharkhand held that authority issuing summons under Section 14 of the Central Excise Act, 1944 ("the Excise Act") must issue summons to a witness only when the authority considers it necessary for summoning. The High Court also observed that before summoning a person from a company registered under the Companies Act, 1956 to give evidence under Section 14 of the Excise Act, enquiry officer should examine relevant issue because of the reason that every person of the company may not be a relevant person at all for the purpose of inquiry, even if he may be holding highest position in the company. In order to avoid unnecessary delays, it is always appropriate to first ask the company to send a duly authorized person well acquainted with facts and issues involved in the inquiry so that thereafter the company may not take evasive or false stand that person who deposed was either not authorized or had no knowledge etc. At the same time, it is not binding upon the enquiry officer to accept person nominated by the Company as the only witness who can be examined. The Enquiry Officer, if not satisfied with statements of such person on the ground of it being unreliable or because any further explanation is required from other person who may be found to be relevant by it from statement of such witness, can summon any other person irrespective of his status in the company.

Cenvat credit

Global Advertisement Services Pvt. Ltd. Vs. CCE [2012-TIOL-1478-CESTAT-MUM]

Assessee, a unit in the Special Economic Zone ("SEZ"), exported taxable output service without payment of service tax. This resulted in accumulation of unutilized credit of service tax availed on input service for which assessee filed a refund claim in terms of Rule 5 of the Cenvat Credit Rules, 2004 ("the Credit Rules"). Refund claim was rejected on the grounds that firstly, input services procured by assessee from Domestic Tariff Area were unconditionally exempt from service tax and, therefore, assessee should not have paid any duty, and, secondly, seeking refund of input service tax credit for activities undertaken within SEZs was not consistent with the scheme of refund under Rule 5 of the Credit Rules. The Tribunal held that nowhere in Rule 5 of the Credit Rules, it is stated that a unit in SEZ cannot apply for refund. The Tribunal further held that assessee is eligible for refund of service tax paid (which was not required to be paid) under Section 11B of the Excise Act itself, provided assessee has filed refund claim within prescribed time-limit.

CCE Vs. Rohan Dyes & Intermediates Ltd. [2012 (284) ELT 484 (Guj.)

Assessee engaged in manufacture of dyes purchased raw materials and send them to a job-worker for conversion. Job-worker, instead of sending intermediate products without payment of duty under challans, decided to pay duty and cleared goods under invoice. Revenue contended that assessee should have reversed Cenvat credit taken before sending goods to job-worker because job worker did not follow procedure and paid duty in spite of exemption under Notification No. 214/86 –CE dated March 25, 1986 read with Section 5A(1A) of the Excise Act. The Tribunal rejected contention of the Revenue and held that such a procedure is permissible under Rule 4(5)(a) of the Credit Rules.

Pepsico India Holding P. Ltd. Vs. CCE [2012 (284) ELT 514 (Tri. - Mumbai)

The Tribunal held that there is no requirement under the Central Excise Rules, 2002 that invoice number should be printed on the body of invoice. The only requirement is that invoice should be serially numbered. Accordingly, Cenvat credit is admissible on invoices where invoice number is handwritten.

Service Tax

Inductotherm India Pvt. Ltd. Vs. Union of India [2012-VIL-87-GUJ-ST]

Dispute before the High Court of Gujarat was whether for the period prior to introduction of Section 66A of Chapter V of the Finance Act, 1994 ("the Finance Act"), department can recover service tax from a service recipient on the strength of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 ("the Service Tax Rules"), where service provider is a nonresident and does not have any office in India. The High Court held that in the absence of any charging section, recipient of service tax could not be made liable to pay tax merely by virtue of provisions contained in Rule 2(1)(d)(iv) in the Service Tax Rules .

VAT / GST

Bharti Televentures Ltd. Vs. State of Karnataka [2012-VIL-91-BANG.]

Question before the High Court of Karnataka was whether 'recharge cards', 'recharge pins' and 'recharge double scratch cards' are exigible to VAT or not. The Court relied on judgment of the Supreme Court in the case of Idea Mobile Communication Ltd. Vs. CCE [2012 (72) KLJ 65 (SC)] and held that 'recharge cards', 'recharge pins' and 'recharge double scratch cards' are not goods and consideration received from subscribers on their sale is for purpose of service rendered by the telephone company on which service tax is payable.

Tata Steel Ltd. Vs. State of Odisha [2012- VIL-90-ORI]

The question before the High Court of Orissa was whether imposition of entry tax under the Orissa Entry Tax Act, 1999 on the goods purchased from outside India ultra vires Article 286 of the Constitution of India ("the Constitution"). The High Court of Orissa relied upon judgment of the High Court of Gauhati in the case of Primus Imaging Pvt. Ltd. Vs. State of Assam [2007 9 VST 528 (Gau.)], which held that restriction under Article 286 (1) of the Constitution is on levy of tax on sale or purchase of goods, which takes place in the course of import into the territory of India and not on tax on entry of goods into a local area for consumption, use or sale thereof. Accordingly, imposition of entry tax on goods purchased outside India after they cross customs frontier was held not to ultra vires the Constitution.

Aspick Engineering Pvt. Ltd. Vs. State of Tamil Nadu [2012-VIL-89-MAD]

The High Court of Madras held that the criteria for considering whether transaction is an intra-State or inter-State sale is whether movement of goods is intimately connected with sale. The fact that purchaser had borne insurance charges or seller had borne insurance charges or that purchaser had moved goods at his own cost would not be a decisive factor for the purpose of determining nature of sale as intra-State sale or inter-State sale.

Durga Projects Inc. Vs. State of Karnataka [2012-VIL-92-BANG]

The High Court of Karnataka has held that in the absence of specific entry providing for rate of tax on works contract prior to April 1, 2006, tax should be levied as per rate applicable on value of each class of goods involved in execution of works contract for the period prior to April 1, 2006.

The West Bengal ICT Incentive Scheme 2012

The State Government of West Bengal has announced the West Bengal ICT Incentive Scheme, 2012 ("the Scheme") for IT/IT Enabled Services Projects of large, medium, small and micro units ("IT Units") to be set up in the State. The Scheme shall remain valid for the period of five years commencing from August 2012 and ending on July 31, 2017. An eligible unit under the Scheme will be entitled to refund of 100% of Central Sales Tax ("CST") paid by it until abolition of CST or five years whichever is earlier apart from other benefits in the form of capital investment subsidy, interest subsidy, waiver of electricity duty, employment generation subsidy, refund of stamp duty etc.

Notification No. 6805 dated October 17, 2012

The Commissioner, Commercial Tax Department, Bihar has extended date of filing of returns for second quarter of Financial Year 2012-12 by a period of fifteen days for all classes of dealers specified under Notification No. 6083 dated August 28, 2012.

GST Network to be set up by end of this financial year [Business Standard, October 28, 2012]

The Ministry of Finance has extended the deadline for setting up GST Network ("GSTN") till the end of current financial year which was originally proposed to be completed before August 2012. The Ministry has extended tenure of the Empowered Committee on GSTN headed by Mr. Nandan Nilekani upto September 2013.

Centre, States ironing out differences on GST [Livemint, October 25, 2012]

Mr. Sushil Kumar Modi, Chairman of the Empowered Committee of State Finance Ministers on GST said that only a few issues remain unresolved between the States and the Centre on roll-out of GST. Mr. Modi is also slated to meet Finance Minister Mr. P. Chidambaram on November 8, 2012 to finalize a formula for payment of compensation to State governments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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