Leaf No:    005
Month:   August
Year:   2010
latest news


#   Supreme Court affirms that there is no export duty on clearances to SEZ.

#  In line with the words of wisdom of the great Kautilya, who said that the taxing of the subjects shall be like getting the honey without plucking the flower, our Income Tax department celebrated its glorious 150th year of tireless h(m)oney suction!!!

#  Instructions issued for removal of goods from Special Economic Zone to bonded warehouse. The removal will have to be effected under yellow Bill of Entry and the rewarehousing certificate is to be submitted to the customs with in 45 days of date of Clearance.

#  Amendment brought about in construction service by Finance Act, 2010 subjecting any amount received prior, during or post construction to service tax has been challenged in writ before Hon’ble Highcourt of Mumbai.

#  Karnataka Highcourt directs BSNL to pay ` 560 crore to government in a notice issued under VAT seeking recovery 6600 crores on ground that by providing bandwidth to customers through optical fibre cables, BSNL had effected sale of light energy .

#  The Delhi High court directed the Insurance Regulatory and Development Authority (IRDA) to ensure that the medical policy holders are not denied treatment under the cashless policy schemes due to the rift between the insurance companies and the city hospitals

#  In order to facilitate an uniform and better administration and control of such EOUs and also to facilitate the shift to Goods and Services Taxes (GST) regime in future, the Board has decided that the EOU units functioning in the jurisdiction of Customs including port cities, will henceforth be under the Administrative Control of the respective jurisdictional Central Excise Commissionerate with effect from 31-07-2010, as communicated by D.G. (Export Promotion) vide letter F. No.DGEP/EOU/120/2007 dated 18/5/2010... Click here for the Trade notice

circulars & notifications



A Circular has been issued under Andhra Pradesh Value Added Tax Act,2005 instructing the CTO/DCTO and ACs to issue way bills without insisting on utilisation particulars. This measure has been to do away with the problem faced by dealers when Department insist on issuing new way bills after exhausting all existing way bills issued to them. ..Please see 2010 31 VST 64.

It has been clarified by Commissioner of Commercial Taxes, Andhra Pradesh that transit sales under Section 6 (2) of Central Sales Tax Act, 1956 can be made to a pre determined buyer. The only criteria to be followed is that transfer of documents of title should have passed on to the buyer while goods are in transit ...CCT’s Ref . A III(2)91/2010 dated 07-05-2010.


As a Prelude to GST, Draft Point of Taxation (for Services Provided or Received in India) Rules released shifting liability of payment from receipt to accrual basis. ...Click here for copy of Draft Rules.

CBEC issues Section 11C notification granting waiver on service tax demands in respect of distribution and transmission of electricity prior to new levy...Click here for Notification.


Goods meant for Mega Power Projects exempted from Central Excise duty.. Click here for Notification.

genie in aladdin’s lamp
Bringing some clarity on much debated nature of Land owner-Developer arrangements, Hon’ble Highcourt of Karnataka has held that when land owner is transferring land to developer and developer has spent a certain amount for development of land, such amount is to be treated as consideration for land and the land is deemed to be sold for the purpose of Income Tax although the transaction does not fall under Transfer of Property Act since there is no absolute transfer of land.... Click here for Judgment.


Buffer subsidy received by sugar manufacturers from government cannot be held as consideration towards provision of service ... Click here for Judgment

In its recent judgment Kerala Highcourt has brought out distinction between Franchisee and agent. Most of the times agreements are couched with expressions ’Franchisee’ when the activity will be in nature of agency transactions. The distinction has been made relying on scope of Franchisee service as per the definition of ‘Franchise’ as given under Finance Act, 1994 .. Click here for Judgment.

The Hon’ble Highcourt of Karnataka has held that letter directing payment of service tax is an appealable order and recovery should not be effected before issuing show cause notice... Click here for Judgment.

Receipt in foreign currency has been held to be not as condition precedent for claiming export benefits for period prior to 16-06-05 ...Click here for Judgment.


In an advance ruling, it has been held by the Commissioner of Commercial Tax , that no input credit of VAT paid on materials used in construction of civil structures as boundary walls, flyovers and roads will be available to manufacturer ... Click here for Advance Ruling in A.R.Com/116/2007 dated 28-04-2010.

Yet another interesting clarification from authority of Advace Rulings in context of interstate works contract. It has been held that a contractee engaging a contractor from outside the state for supply of materials and construction will have to deduct tax at source at the rate of 4 % as per Rule 18 of APVAT Rules ....Click here for Advance Ruling .

Advance Ruling has been given in case of free supplies by contractee to the effect that value of goods supplied by contractee on cost recovery basis is liable to tax under APVAT... Click here for Order

Supply and installation of modular kitchen has been held to be sale and not works contract... Click here for Order.


Cenvat credit is eligible on inputs tested for quality control and after testing removed as scrap although the same has not been used directly in manufacture. Quality control has been held to be an integral part of manufacturing process .. Tata Engineering & Locomotive Co. Ltd vs. CCE 2010 256 ELT 56 (Bom).

The views expressed and the information provided in this newsletter are of general nature and is not intended to address the circumstances of any particular individual or entity. Further the above content should neither be regarded as comprehensive nor sufficient for making decisions. Although we endeavor to provide accurate and timely information, there is no assurance or guarantee in this regard. No one should act on the information or views provided in this publication without appropriate professional advice. It should be noted that no assurance is given for any loss arising from any actions taken or to be taken or not taken by anyone based on this publication.

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editor’s desk  
Dear Readers,

Greetings from Team SA.  

ELT! Every practitioner in indirect tax knows it better than his initials. It is the Bible, Kuran and Gita of indirect tax, whereby, its editor, the legendary icon, Mr. R.K.Jain is the architect of this glorious edifice who has held the mantle and lead from the front, over decades.

Over years, his pen has been filled with a fearless ink of impartial and brutal honesty and his explosive editorials have been more deadly than the “Little Boy” dropped on Hiroshima and Nagasaki!!!

In a landmark decision on a contempt petition filed against this icon, the Hon’ble Supreme Court has not only dismissed the contempt petition but has also hailed his cynosure !!!

There is no appropriate time for this decision than our Independence Day!!!


sa corner

Is sales tax incentive an additional consideration?

   - r.subramanya, advocate

Can the sales tax incentive given by the state governments, where the manufacturer charges and collects the sales tax / VAT from there buyer, but retains with themselves, upto a limit fixed by the state government, be considered as an additional consideration under Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
read more ...

guest  column 

B Venugopal, Advocate & Pallavi Sridhar,Law Student

An incisive analysis of sale in the course of import under Central Sales Tax Act
read more ... 
gst corner               - yoga
The revised draft of GST will be discussed with the EC on August 18. Once approved by EC, the government will send it to the Cabinet and the President for their approval to table it in Parliament. The government will have just about a week to place it in Parliament unless the session is extended beyond August 27.

At the meeting with the empowered committee of state finance ministers on July 21, Finance Minister Pranab Mukherjee had said the Centre would fully compensate the states for any revenue loss on account of CST reduction in 2009-10 and release the balance outstanding amount immediately.
“I am now waiting for the empowered committee’s recommendations on the CST compensation formula for the year 2010-11. I am confident that this decision would reaffirm our resolve to engage constructively with difficult issues and find mutually-acceptable solutions,” Mukherjee said.
While the total compensation package for the states worked out to Rs 14,000 crore for 2009-10, Rs 5,000 crore will be paid out of the total transfer of proceeds from tax on 33 services to the states. This leaves Rs 9,000 crore to be paid in compensation to the states.


before parting ... -jk


“True Lies”


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