Leaf No : 28
Month : July
Year : 2012
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editor’s desk

Greetings from Team SA!

The Prime Minister has set up a panel to review the taxation issues relating to IT software sector. The panel has been set up under the chairmanship of former Chairman of the CBDT Shri. N. Rangachary. The other members of the panel are Ms. Anita Kapur, Director General of Income Tax, Ms. Rashmi Sahani Saxena, Director of Income Tax (Transfer Pricing) and another member from the Income Tax Department to be nominated by the Chairman.

The terms of reference of this committee are:

i)  Engage in consultations with stakeholders and related government departments to finalise the approach to Taxation of Development Centres and suggest any circulars that need to be issued.
ii) Engage in sector-wide consultations and finalise the Safe Harbour provisions announced in Budget 2010 sector-by-sector. The Committee will also suggest any necessary circulars that may need to be issued.
iii) Examine issues relating to taxation of the IT sector and suggest any clarifications that may be required.

While lauding our PM for this initiative, the natural question that arises is why not the hazy indirect taxation regime on software sector also be studied by an expert panel. The constitution of the present Committee and its terms of reference suggest that they will go only into the direct taxes aspects concerning the software industry.
The issue of double or rather triple taxation of software (excise duty, service tax and VAT) is a perennial problem for the industry. A review of various judicial pronouncements on the subject would reveal our Courts are by and large conservative while dealing with the subject of taxation. If the levy of VAT on software is challenged, the Courts have been upholding the levy by holding the software as goods. If the levy of service tax on software is challenged, the Courts have been upholding the levy of service tax, by taking cognizance of the service elements involved in the industry. While it is not disputed that software is goods, the levy of VAT would apply only when there is either transfer of title or grant of right to use. Anything falling short of such transfer of title or right to use should attract only service tax. In certain cases, there can be a combination of both sales and service also, where the portions liable to VAT and service tax respectively have to be clearly demarcated, by prescribing the method of valuation for both the levies. Due to absolute lack of clarity on the subject...

... read more

sa corner

Articles on Negative List 

1. Negative Blues - X

2. Negative Blues - XI

3. Negative Blues - XII


genie in aladdin’s lamp

# Hon’ble Supreme Court holds that, notwithstanding the provisions of RTI Act, the State Government is not under obligation to provide grounds of detention to detenu prior to his arrest and detention...Subash Popat Lal Dave vs. Union of India 2012 TIOL 50 SC RTI LB.

# Hon’ble Apex Court directs the Government to follow all the instructions strictly to ban import of all hazardous/toxic wastes, which had been identified and declared to be so under the BASEL Convention and its different protocols ...Research Foundation for Science Technology and Natural Resource Policy vs. Union of India 2012 TIOL 49 SC CUS.

# Hon’ble Supreme Court holds that the activity of removal of foreign materials from iron ore to make iron ore concentrate does not amount to manufacture…CCE vs. Steel Authority of India 2012-TIOL-52-SC-CX.

# AP High Court stays the order of CESTAT in the matter of service tax liability on EPC contracts executed for Government under Works Contract Service…Maytas NCC JV vs. Commr of Central Excise 2012-TIOL-520-HC-AP-ST.

# CESTAT holds certain services provided by banks as not taxable…Canara Bank vs CST 2012-TIOL-790-CESTAT-AHM.

# CESTAT holds that the collection of toll on behalf of NHAI are classifiable under Business Auxiliary service…Ideal Road Builders Private Limited vs. Commr of Customs 2012-TIOL-807-CESTAT-MUM.

# CESTAT recalls the order of dismissing the appeal of PSU for want of COD clearance subsequent to judgment of SC doing away with requirement of COD clearance…CCE vs ONGC Corporation Limited 2012 TIOL 876 CESTAT MUM.

# CESTAT holds that a ‘broad nexus’ between the imported and the exported products are sufficient to claim the benefit of the Target Plus Scheme…Gimpex vs. CCE 2012-TIOL-878-CESTAT-BANG.

# CESTAT holds that the designs and drawings are not classifiable under Heading 8479.89 as machinery but under Heading 49.06 and can be imported duty free…National Organic Chemical Industries Limited vs. Commissioner of Customs 2012-TIOL-907-CESTAT-MUM.

# CESTAT holds that the vehicle manufacturer is entitled to take input service credit on after sales service provided by the dealer subject to the conditions that the service charges are included in the assessable value of the vehicle...CCE Nasik vs. Mahindra & Mahindra 2012-TIOL-836-CESTAT-MUM.

# CESTAT holds that there is no requirement in the Rules that the invoice number should be printed on the invoice for availing credit ... Pepsico India Holdings Ltd vs CCE 2012-TIOL-787-CESTAT-MUM.

before parting ...         -  jk

latest news

 Shri Pranab Kumar Mukherjee has sworn in as the 13th president of India. 

 State Governments have set deadline of August 7, 2012 for the Centre to decide on the CST compensation if GST is to be implemented by next fiscal year.

 Timelimit for issuance of E-BRC by Banks with DGFT extended till 16.08.2012.


 Growth in Indirect tax collection for Q1 is 13.8%!!!

 CBEC proposes to amend the existing forms EA3, EA4, EA5, CA3,CA4,CA5, ST5,ST6 and ST7 meant for filing appeals to the Tribunal. In the new forms, appellants would be allowed to cite three case laws on which they propose to rely.

1. Central Excise

2. Customs

3. Service Tax

 CBDT has amended Forms ITR-5 and ITR-6.

 The Income Tax Department has started two more taxpayer friendly initiatives 'Register for Home Visit' and 'Online Tax Help'. To avail these facilities, a taxpayer must visit the website www.trpscheme.com and take help of trained professionals either online or at their homes. The taxpayer can choose between ‘online help' or ‘home visit'.

 The Central Board of Excise and Customs (CBEC) released a postage stamp and a coffee table book to mark the Golden Jubilee Year of the Customs Act, 1962. 

 CBEC has launched an interactive Customs Tariff website.

  Indian Railways new All India Time table comes into effect 1st July 2012.

 Cabinet okays proposal for construction of Addl office of Supreme Court for Rs 884 Cr.

 Cabinet okays aid to Electronics Manufacturing Clusters Scheme.

 Committee of Secretaries to be set up to consider suggestions of Pharma Industry: Commerce Minister

circulars & notifications



# Notification granting exemption to capital goods when cleared against a Status Holder Incentive Scheme duty credit scrip... Click here for Copy of the Notification.

# Notification granting exemption to goods and capital goods when cleared against a VKGUY credit scrip... Click here for Copy of the Notification.

# Notification granting exemption to goods when cleared under Focus Market Scheme duty credit scrip... Click here for Copy of the Notification.

# Notification regarding Amendment in FTP (RE-2012)(2009-2014)... Click here for Copy of the Notification.

# CBEC notifies regulations for Courier Imports & Exports... Click here for Copy of the Notification.

# Notification imposing Customs duty of 10% on imported sugar... Click here for Copy of the Notification.

# Amendment to notification nos 92/2009 to 95/2009 and 104/2009 pertaining to exemption on imports under various export schemes... Click here for Copy of the Notification.

# Circular on changes in the Foreign Trade Policy 2009-14 issued on 5.6.12... Click here for Copy of the Circular.

# Circular clarifying changes under various customs notifications subsequent to changes in the Foreign Trade Policy 2009-14 issued on 5.6.12... Click here for Copy of the Circular.

# Circular on verification of genuineness, of duty credit scrips issued under Chapter 3 of FTP, before registration... Click here for Copy of the Circular.

# Public notice regarding amendment of HBP Vol I (RE 2012)/ 2009-14... Click here for Copy of the Public notice.




# Notification issued exempting taxable service provided by Indian Railways... Click here for Copy of the Notification.

# Notification issued exempting commission agents located outside India... Click here for Copy of the Notification.

# Notification issued regarding rebate on export of services... Click here for copy of the Notification.

# Corrigendum to service tax notification Nos. 36/2012-Service Tax... Click here for Copy of the Corrigendum.

# Clarification issued on Point of Taxation Rules in context of the Negative list... Click here for Copy of the Circular.

# Circular issued on Accounting Code for payment of Service Tax under the Negative List... Click here for Copy of the Circular.

# TRU’s letter clarifying various issues on introduction of Negative List... Click here for Copy of the TRU letter.

# CBEC has issued a draft circular clarifying several issues in the new Service Tax Regime... Click here for Copy of the Draft Circular.


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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