India: Indirect Tax Newsletter - December 15, 2012

Last Updated: 4 January 2013
Article by Amit Kapur


Auto Creaters Vs. Union of India [2012- TIOL-989-HC-DEL-CUS]

The High Court of Delhi held that in terms of Section 110 of the Customs Act, 1962 ("the Customs Act"), if on expiration of seizure period of six months (or one year in case extension is sought), no show cause notice is issued, seized goods have to be released unconditionally and there are no statutory guidelines for reckoning out time taken in adjudication of provisional release issue from six month or one year period.

CCE Vs. STI India Ltd. [2012-TIOL-1867- CESTAT-DEL]

The Tribunal following own Larger Bench decision in the case of Paras Fab International Vs. CCE [2010 (256) ELT 556 (Tri. - LB)] held that there is nothing under the Customs Act requiring filing of ex-bond bills of entry or payment of duty before taking imported goods for manufacture in bond or there is any provision to treat such goods as deemed to have been removed for the purpose of Customs Act.


CCE Vs. Connaught Plaza Restaurant Pvt. Ltd. [2012-TIOL-114-SC-CX]

The Supreme Court held that 'Soft Serve' served at McDonalds is classifiable as 'Ice Cream' under Tariff Heading 2105 of the Central Excise Tariff Act, 1985. The Supreme Court also observed that in the absence of definition of the term 'Ice Cream' or 'Soft Serve', classification is to be determined on the touchstone of common parlance test.

Cenvat credit

CCE Vs. ACE Designers Ltd. [2012-TIOL-978- HC-KAR-ST]

The High Court of Karnataka held that ACE Designers Ltd. were entitled to Cenvat credit of service tax paid on outdoor catering services availed for providing food to their staff.

CCE Vs. Advani Oerlikon Ltd. [2012-TIOL- 970-HC-CHATTISGARH-CX]

The High Court of Chattisgarh held that assessee was entitled to Cenvat credit on Hot Melt Unit used in packing of finished goods (i.e. welding electrodes) as packing being in the nature of incidental or/ and ancillary to the main manufacturing activity is one of the essential components of manufacturing process of finished goods.

Service Tax

Intercontinental Consultants and Technocrats Pvt. Ltd. Vs. Union of India & Anr [2012-VIL-106-DEL-ST]

The High Court of Delhi struck down constitutional validity of Rule 5 of the Service Tax (Determination of Value) Rules, 2006 to the extent it includes reimbursement of expenses in value of taxable services for the purpose of charging service tax on the ground that it ultra vires Section 66 and 67 of Chapter V of the Finance Act, 1994 ("the Finance Act") because it goes beyond charging provisions.

Infinity Infotech Parks Limited Vs. Union of India [2012-TIOL-987-HC-DEL-ST]

The High Court of Delhi held that where the Commissioner finds that service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud; or collusion; or willful mis- statement; or suppression of facts; or contravention of the Finance Actor the rules thereof with intent to evade payment of service tax, the Commissioner is bound to disclose reasons for formation of such belief.


Meet Traders Vs. State of Gujarat [2012- VIL-110-Guj.]

The High Court of Gujarat held that input tax credit cannot be denied on purchases made from a dealer prior to cancellation of his VAT registration.

Teccon Services (P) Limited Vs. The Assistant Commissioner [2012-VIL-109- MAD]

Department denied exemption to a dealer on turnover of sales to exporter against Form 'H'. Goods sold were found to be relatable to the shipping documents. The High Court of Madras held that it cannot be said that there was no documentary evidence at all produced to show proof of export. If the authority is not convinced with the documents already furnished, it is open to such authority to ask for a foreign buyer's order or copies of the relevant packing list. The Court further held that in exercise of power under Section 9(2) of the Central Sales Tax Act, 1956 ("the CST Act"), an authority cannot act in an arbitrary and capricious manner.

Sales Tax Bar Association (Regd.) Vs. Govt. of NCT of Delhi & Ors [2012-VIL-108-DEL] The High Court of Delhi upheld constitutional validity of scheme of default assessment of tax and penalty without giving an opportunity of hearing to assessee enshrined under Section 32 and Section 33 of the Delhi Value Added Tax Act, 2004, respectively. The Court further observed that once legislative scheme is not found to be in contravention of the Constitution of India or as causing any prejudice to assessees, the Court will not interfere therewith merely because practitioners in the field of VAT find themselves reluctant to change to new law or because it introduces a new scheme.

M/s Dayaram and Company Vs. State of Haryana [2012-VIL-103-P&H]

The High Court of Punjab & Haryana held that service of notice on friend of assessee is not a valid service of notice under the Haryana Value Added Tax Act, 2003 and Rules thereof.

Tata Steel Limited Vs. State of Jharkhand & Ors [2012-VIL-107-Jhar.]

The High Court of Jharkhand held that a revisional order passed by authority below the rank of officer who passed the original assessment order is wholly without jurisdiction and liable to be set aside. GST may not materialize before next Loksabha Polls: Mr. Sushil Modi [The Economic Times, December 15, 2012] Mr. Sushil Modi, Chairman of the Empowered Committee of State Finance Ministers on GST indicated that GST would take more time to be implemented as no Government would bring taxation reform ahead of Loksabha elections.

CST: Centre's deadlock with States continues [Live Mint; December 11, 2012] The deadlock over CST compensation continues with the Centre and the States having failed to reach an agreement during their meeting last week. The meeting, held on December 5 and 6, was aimed at ensuring a faster rollout of goods and services tax by resolving concerns of the States over CST payouts and the design of this indirect tax reform.

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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