CORPORATE AND PROFESSIONAL UPDATE ON INDIRECT TAXES

CORPORATE AND PROFESSIONAL UPDATE ON INDIRECT TAXES

  • Purchase of goods for use in works contract from other state – interstate movement of goods against Form-C – Denial of exemption claim – Notification dated 28.04.1993 – Revision petition filed by the revenue dismissed- (C.T.O., Jodhpur Versus M/s Chagni Ram Gehlot, Jodhpur – 2015 (11) TMI 1497 – RAJASTHAN HIGH COURT).
  • Sale of goods in the SEZ – works contract – Appellate authority has failed to appreciate the fact that it is not possible to abide by sub-rule (2A) of rule 42 of the rules having regard to the nature of the contract which is a works contract wherein the goods which are sold to the buyer are used in the execution of the works contract and it is only after execution that the invoices are raised. – Demand set aside- (State of Gujarat Versus Shandong Tiejun Electric Power Engineering Company Ltd. – 2015 (11) TMI 1496 – GUJARAT HIGH COURT).
  • Seeks to levy definitive anti-dumping duty on import of Cold Rolled Flat Products of Stainless Steel originating in, or exported from the People’s Republic of China, Korea, European Union, South Africa, Taiwan   (Chinese Taipei), Thailand and USA for a period of five years.
  • Imposition of personal penalty on 3 persons for duty evasion by the manufacturer – the requisite evidence necessary for levy of penalty on each of the Appellants under Rule 26 of the CE Rules 2002 was not brought on record by the Department – no penalty – HC – Central Excise- (Rakesh Kumar Garg, Santosh Kumar Garg, Devi Dass Garg Versus Commissioner of Central Excise – 2015 (12) TMI 592 – DELHI HIGH COURT) 
  • Services provided to group companies – adjudicating authority has correctly classified the services rendered by the employees of the appellant under Business Support Service and Management Consultancy Services- (M/s Forbes Polymerton Pvt Ltd Versus Commissioner of Central Excise, Pune-I – 2015 (12) TMI 547 – CESTAT MUMBAI)
  • Demand of interest – Supplementary invoices – whether interest is leviable u/s 11AB on the differential duty amount paid under supplementary invoices due to price increase by virtue of price variation clause in the sale contract – SC referred the matter to larger bench- (M/s. Steel Authority of India Ltd. Versus Commissioner of Central Excise, Raipur – 2015 (12) TMI 594 – SUPREME COURT)
  • Government to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a concessional rate of basic customs duty in respect of tariff item 84082020 [engines of a kind used for the propulsion of motor vehicles – of cylinder capacity exceeding 250 cc] and 87084000 [gear box and parts thereof, of motor vehicles], w.e.f. 1st of January, 2016 at 5.94% and 8.13%, respectively, when imported under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA).
  • Business Support Service – owner allowed to use its entire infrastructure to the assessee – assessee was manufacturing and doing the business in the name of owner and received huge money as conducting charges – The nature of the transaction would not fall within the meaning of support services for business or commerce- (The Commissioner of Central Excise And Service Tax Versus M/s. Karan Agencies, Camp, M/s The Kolhapur Sugar Mills Ltd – 2015 (12) TMI 93 – BOMBAY HIGH COURT).
  • It is here by introduced to further amend notification No 12/2012-Central Excise dated 17.03.2012 so as to increase the Basic Excise Duty rates on Petrol and Diesel(both unbranded and branded).
  • Applicability of service tax on the services received by apparel exporters in relation to fabrication of garments.
  • Activity of painting pasting displaying and/or maintaining the same on side panel of buses on behalf of the client – Demand of service tax with interest and penalty confirmed – (Pioneer Publicity Corporation Pvt. Ltd. Versus Commissioner of Service Tax, Mumbai – 2015 (12) TMI 22 – CESTAT MUMBAI).
  • ST:Services provided to group companies – adjudicating authority has correctly classified the services rendered by the employees of the appellant under Business Support Service and Management Consultancy Services – M/s Forbes Polymerton Pvt. Ltd. Vs. CCE, Pune-I (2015 (12) TMI 547 – CESTAT Mumbai)
  • Service Tax : Hiring is different from renting and therefore, hiring of cabs cannot be taxed under rent-a-cab services [2015] 64  126 (Mumbai – CESTAT) Commissioner of Central Excise v. P.B. Bobde
  • ST:So long as an assessee is not undertaking manufacture of dutiable and exempted goods or providing taxable and exempted services unless the credit is exclusively used for providing exempted services or manufactured goods credit cannot be denied in respect of services listed in Rule 6(5) – Larsen & Toubro Ltd. Vs. C.C.& C.E, Hyderabad-III (2015 (12) TMI 746 – CESTAT Bangalore)
  • ST exemption available on rent-a-cab services provided to SEZ employees even if they are residing outside SEZ
  • Service Tax : Rent-a-cab services provided to a unit located in SEZ for transportation of employees to and from their residences located outside SEZ, are eligible for exemption from service tax [2015] 64  21 (Mumbai – CESTAT) ORIX Auto Infrastructure Services Ltd. v. Commissioner of Service Tax,
  • According to Management Consultancy Services , 1994, agreeing to the “obligation to refrain from an act, or to tolerate an act or a situation, or to do an act” constitutes a service. This covers the return or forfeiture of money ahead of the stipulated notice or bond period and thus service tax could be levied. Source – economictimes.indiatimes.com
  • Service Tax : Overseas commission agent provides services exclusively related to export of goods, therefore service tax paid thereon is eligible for refund under notification no. 41/2007-ST and subsequent notifications [2015] 64  22 (Mumbai – CESTAT) Zodiac Clothing Company Ltd. v. Commissioner,Service Tax
  • Excise & Customs : Non-consideration of assessee’s principal contentions by adjudicating authority/Commissioner (Appeals) amounts to violation of principles of natural justice; therefore, writ petition filed against order of Commissioner (Appeals) is maintainable because appeal remedy before Tribunal is not effective in such cases [2015] 64  56 (Gujarat)  Vadilal Gases Ltd. v. Union of India
  • ST:Lump sum contract – specific job work of the parts on required by Tata Motors deputing their persons – the activity cannot be equated with Man Power Recruitment or Supply Services – demand of service tax set aside – Shivshakti Enterprises Vs. C.C.E., Pune (2015 (12) TMI 682 – CESTAT Mumbai)
  • ST:Penalty u/s 76 – Adjudicating authority was correct in not imposing any penalty as there being no invocation of any provisions of imposition of penalties for wrong availment of CENVAT Credit in the show cause notice – S.T, Mumbai Vs Hazira Marine Engg. & Const. Mgmt. P. Ltd. (2015 (12) TMI 810 – CESTAT Mumbai)
  • ST:Job Work Vs Manpower supply services – CBEC Clarified the issue with regard to services received by apparel exporters in relation to fabrication of garments – Circular No.190/9/2015, dt.15 DEC 2015.
  • Seeks to levy definitive anti-dumping duty on Abendazole, originating in, or exported from the Peoples Republic of China, for a period of five years.
  • CST & VAT: West Bengal VAT – Where Appellate Authority apart from dealing with four issues raised by assessee, suo motu dealt with two new issues and without issuing any notice disallowed input tax credit and TDS already allowed by Assessing Authority, it was mandatory to provide assessee opportunity of being heard before passing order affecting it adversely [2015] 64  146 (WBTT)
  • DVATextends the last date of filing of Reconciliation Return for the year 2014-15 in CST Form-9 up to 15 JAN 2016.
  • CST & VAT: In partial modification to this department’s Circular No.28 of 2015-16 on the subject cited, above and in exercise of the powers conferred under Rule 49A of ‘ the Delhi Value Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax’ Act, 1956, I, S.S.Yadav, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2014-15, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 15/01/2016.
  • VAT & CST:Levy of penalty under Section 10-A of the Central Sales Tax Act – Even the exports covered by Form-H have not been taken note of by the assessing officer. They are also packing materials which were covered against Form-H – levy of penalty set aside – M/s A.V. Thomas Leather And Allied Products Pvt. Ltd. VS. AC (CT) (2015 (12) TMI 643 – Madras High Court)
  • CST & VAT: Extension of last date of filing of online return(reconciliation return) for D VAT in Form No. 9 for the year 2014-15.
  • Key Dates:

Payment of D-VAT TDS for November (DVAT 20): 15/12/2015

Payment of Advance Income Tax: Companies (75%) & Others (60%): 15/12/2015

E-Payment of Provident Fund for November: 15/12/2015 (cheque to be cleared by 20th)

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; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)

TP : LIBOR IS THE BEST BENCHMARK FOR INTEREST-FREE LOAN GRANTED TO AE

LIBOR IS THE BEST BENCHMARK UNDER TRANSFER PRICING FOR INTEREST-FREE LOAN GRANTED TO AE

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DCIT V. GEODESIC LTD. [MUMBAI ITAT] ITA NO. 1656 OF 2013, DATE OF DECISION: AUGUST 12, 2015

FACTS OF THE CASE
The assessee has undertaken transaction of giving unsecured interest free loan to its subsidiary Geodesic Technology Solutions Ltd. (Hong Kong) (GTSL), which is its Associated Enterprise (AE). The TPO has applied interest rate @ 20.72% based on his consideration of credit rating of AE in the Category “B”. He also analyzed financial ratios like, earning per share, debt equity ratio and interest coverage ratio of the AE and based on such credit rating he held that interest rate of 20.72% is to be charged.

DECISION OF THE TRIBUNAL
The Appellate Tribunal held that the manner in which credit rating had been assigned to the AE was not a correct approach, because there was ‘no specific information’ with regard to the AE and making assumption of various factors for giving the credit rating actually would destroy the estimation of risk assumed. In international transactions LIBOR, is the best basis for benchmarking the interest rate.  Since, there was no independent CUP rate available to benchmark the said international transaction; RBI guidelines should be looked into in respect of ECB rates for the borrowing by the Indian corporates for the purposes of capital account transactions.

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; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com  or call at 9555555480

Disclaimer: 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; before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. carajput.com is committed to helping entrepreneurs and small business owners to start, manage and grow their business with peace of mind. Our goal is to support the entrepreneur on legal and regulatory requirements and to be a partner throughout the entire business life cycle, offering support to the company at every stage to ensure that it is compliant and consistently growing. Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 09811322785/4 9555 5555 480)