India: Indirect Tax Newsletter - November 16, 2012

Last Updated: 7 December 2012

CUSTOMS & INTERNATIONAL TRADE

Customs

Notification No. 98/2012-Cus.(N.T.) dated November 14, 2012

Enhances tariff value of gold from USD 556 to USD 561 per 10 gram and of silver from USD 1039 to USD 1058 per kilogram.

CC Vs. Sujag Fine Chemicals India Ltd. [2012-TIOL-914-HC-MUM-CUS]

The High Court of Bombay, interpreting Notification No.32/97-Cus. dated April 1, 1997 ("Notification 32/1997") which provided for exemption from customs duty to imported goods used for execution of an export order placed on importer by supplier of goods for jobbing, held that in the absence of definition of the term 'jobbing' in Notification 32/1997, general meaning of the word 'jobbing' which means carrying out work as directed by supplier of raw material would be taken and definition of term 'job work' given in excise Notification No. 119/75- CE dated April 30, 1975 cannot be imported.

CENTRAL EXCISE, SERVICE TAX, VAT & GST

Central Excise

MGM Metallisers Ltd. Vs. Union of India [2012-TIOL-890-HC-AHM-CX]

The petitioner stopped manufacturing activities and his factory premises were given on lease to another company. Based on information that large scale evasion of duty was carried out by petitioner, central excise authorities carried out a search operation in factory premises since leased out to another company. The petitioner in civil application before the High Court of Gujarat contended that search warrant was without any legal basis as the petitioner had closed down its business, and premises which were leased out to another company cannot be searched as there was no authorization to search the other company. The High Court held that merely because some other company carried on its manufacturing activities from the same premises cannot be a ground to hold that entire search was invalid.

Prompt Castings Pvt. Ltd. Vs. Joint Commissioner of Central Excise [2012 (284) ELT 641]

The High Court of Calcutta while staying an order imposing penalty on directors of petitioner company under Rule 26 of the Central Excise Rules, 2002 ("the Excise Rules") observed that said rule, which provides for imposition of penalty on any person who acquires possession of, or is any way concerned with transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner dealing with any excisable goods that are liable to confiscation, is prima facie ultra vires Section 11AC of the Central Excise Act, 1944.

CCE Vs. Sutlej Coach Builders (P) Ltd. [2012 (284) ELT 658 (Tri. – Del.)]

The Tribunal held that even if excise duty has been short paid on the basis of any approval, acceptance or assessment by the department, differential duty shall be recoverable from relevant date.

Cenvat credit

Lumbini Beverages Pvt. Ltd. Vs. CCE [2012 (284) ELT 695 (Tri. - Kolkata)]

The Tribunal held that Cenvat credit on PVC crates as inputs which are used in automatic process of placing bottles in crates during manufacture of aerated water and facilitate transportation of bottles within factory available.

Service Tax

Nagarjuna Construction Co. Ltd. Vs. Government of India [2012-TIOL-107-SC-ST]

The Supreme Court held that in respect of works contract, where service tax had already been paid, no option to pay service tax under the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 ["the Composition Scheme Rules"] can be exercised. Assessee who wants to avail of benefit of payment of service tax as per Rule 3 of the Composition Scheme Rules must opt to so do before making payment of service tax in respect of said works contract. Option so exercised would apply to entire works contract, and assessee is not permitted to change option till said works contract is completed.

Mayo College General Council Vs. CCE [2012-TIOL-878-HC-RAJ-ST]

The petitioner is a Society established solely for educational purposes and runs international renowned schools. The petitioner entered into an agreement with four institutions for the purpose of establishment of schools in different parts of India and received collaboration fee in their books of account. Revenue contended that the petitioner provided franchise service to these schools and a show cause notice was issued. The High Court held that permitting other schools to use their name & logo clearly tantamount to providing 'franchise service' to them and the petitioner was duty bound to pay service tax on the same.

VAT / GST

CST Vs. Ramdas Sobhraj [2012-VIL-93-BOM]

The High Court of Bombay held that activity of plate making wherein plates are supplied by customers and are returned after forming an image on plates is a works contract. The Court observed that lacquer and ink are the materials used in plate making and property in the same is passed on during execution of contract of plate making.

National Aluminum Company Ltd. Vs. Deputy Commissioner of Commercial Taxes [2012-VIL-97-ORI]

The High Court of Orissa held that coal, alum, caustic soda and other consumables purchased from market on payment of VAT and used for generation of electrical energy in captive thermal plant which is further used in manufacture of finished products viz. aluminum, aluminum ingots and sheets etc. are inputs as defined under Section 2(25) of the Orissa Value Added Tax Act, 2004 and VAT paid on such purchases can be claimed as input tax credit.

Tamil Nadu Government wants liquor and petroleum products out of GST [Business Standard, November 16, 2012]

Tamil Nadu's Minister for Commercial Taxes and Registration, Mr. BV Ramanaa has said that Government of Tamil Nadu is not in favor of brining petroleum products and alcoholic beverages within the ambit of GST.

Sub-panels to decide on GST compensation [Business Standard, November 16, 2012]

Finance Minister, Mr. P. Chidambaram has announced setting up of two sub-committees to decide on the contentious issues of compensation to States for loss of revenue on account of phasing out of CST and design of GST. The two Committees will work simultaneously and give their reports by December 31, after which the Empowered Committee of State Finance Ministers on GST will discuss their recommendations.

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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