Leaf No:    002
Month:   May
Year:   2010
latest news

#   Justice Sarosh Homi Kapadia, 62, has sworn in as the 38th Chief Justice of the Supreme Court of India, succeeding Justice K.G. Balakrishnan. On his first day in office, Justice Kapadia spelt out his priority of tackling frivolous litigation. Presiding over Court No One, he made it clear that non-serious litigants could be slapped with costs for wasting the time of the court. The message was candidly conveyed by the CJI, while dismissing a petition. 

#    ICAI (Institute of Chartered Accountants of India) to facilitate e-filing of Excise/Service tax returns:- ICAI and CBEC have signed an MoU whereby ICAI would set up facilitiation centres across the country to assist assessee in filing returns as per ACES procedure. The Institute of Chartered Accountants of India is in the process of setting up utility for online filing of application by members to obtain certificate under the scheme whereupon CBEC will provide user name and password to members to activate the facility. A Certified Facilitation Centre (CFCs) is a facility, other than the physical front offices or Facilitation centres of CBEC, which will be set up and operated by practicing Chartered Accountants in individual capacity or as proprietor or firm. An assessee is required to pay nominal fixed fees (maximum Rs 600/- for entering return data and Rs.200/-per return for uploading returns with ACES) for availing services of CFCs.

#    In a survey by the Centre for Budget and Governance Accountability in 2008, India did not even feature among the top 10 out of 85 countries that maintain transparency and openness in their Budget-making process. The survey, in fact, said India is among the 27 countries that provide incomplete information to its citizens on the Budget. 

#    Land value may be excluded from levy under construction service - The Finance Ministry is planning to exclude land value from ambit of new explanation issued under construction service. As per the new explanation proposed in Finance Bill,2010 any amount received by a builder at any stage of constructed is deemed to be received towards construction service. (Indian Express-New Delhi )

circulars & notifications
  • Export duty exemption to raw cotton and cotton waste withdrawn by amending Notification 100/89-Cus dated 01-03-09...Click here for Notification Nos. 43 & 44 - Cus dated 09-04-2010
  • Sl.No.17 of Notification 6/06-CE dated 1-03-06 amended exempting goods as microprocessor, floppy disc, hard disc, CD-ROM etc meant for fitment inside CPU housing /laptop body. The goods will be subject to duty at 4% if same is meant for any other use. The same notification also amends conditions regarding exemption for goods supplied to megapower projects as specified in Sl.No.91B... Click here for Notification - 25/2010 –CE dated 07-05-2010.
  • A recent circular has clarified that the "associated enterprises" can avail credit of service tax paid on basis of book entries. the same circular has also clarified that in cases where the amount paid by the service recipient is less than the invoice amount , credit can be taken of service tax actually paid...Click here for Circular No.122/03/2010 dt 30-04-2010
  • Date of realisation of value of service exported to be treated as relevant date for claiming/sanctioning of rebate under Export of service Rules, 2005 - Chief Commr.of Central Excise, Pune, Trade Facility No.1/2010 dated 13-04-2010. {2010 (18) STR C25}
  • A latest DGFT Policy circular clarifies that receipt of foreign currency in cash for services can be counted towards export obligation of EPCG. This is however subject to cap prescribed by RBI. The service provider also will have to maintain separate register for such transactions including name, passport number and date and amount of foreign exchange received in cash. - DGFT Policy Circular No.27/2009 dated 25-03-2010 reported in {2010 (18) STR C26}
  • Government has imposed export duty of Rs.2,500 a tonne on raw cotton and 3% of free on board value of cotton waste with effect from 09-04-10. The government has also withdrawn drawback facility and DEPB benefit extended to cotton manufacture.... Click here for Notification No.59/2010 dated 10-05-2010.
genie in aladdin’s lamp
On a reference to Larger bench as to whether ‘capital goods’ include plant, structures embedded to earth and whether credit can be taken on goods as angles, joist, beams etc that has gone in to fabrication of such structurals it has been held that since structurals are not excisable goods, cement , steel etc used for laying foundation and for building supporting structures cannot be treated either as inputs for capital goods or as inputs in relation to final products and therefore no credit of duty paid on same can be allowed under Cenvat Credit Rules, 2004. It is also to be noted that while holding so the tribunal has also found that Explanation 2 to Rule 2 (l) is clarificatory in nature and is therefore retrospective. (Click here for copy of LB Order
CCE Raipur vs. BSBK PVT LTD 2010 –TIOL-646-CESTAT-DEL –LB  
Larger bench has held that composite-turnkey contracts can be vivisected and each service component can be discerned and subject to tax under its independent category . While holding so, the larger bench has over ruled the decision of CESTAT in Daelim Industrial Co. Ltd vs. CCE, Vadodara (2003-TIOL-110-CESTAT-DEL). The decision may have an impact on similar issues pending prior to introduction of Works contract service. The LB has discussed at length divisibility of an indivisible contract in to value of goods and services on basis of 46th constitutional amendment and various precedents on the issue. The position that indivisible contracts under Article 366 (29A) can be artificially split is not in dispute after the 46th constitutional amendment. But what will happen in cases where a contract consists of a combination of various services and although each service is independent and is discernible it will be impossible to ascertain value of independent services. This position has not been clarified in the judgment . as such how to the issue will be on valuation of an individual service in a cluster of services. For example, construction service may have components of site preparation, architect service etc. Although these services are discernible, how can the value attributable to such service be determined? Moreover what happens to classification guidelines prescribed in Section 65A . ... Click here for copy of LB order.
KBACE Tech Private Limited vs. CST - 2010 TIOL 564 CESTAT -BANG  
A recent decision of Bangalore CESTAT has held that refund claims are ineligible in respect of services which are not consumed for provision of output service. This interpretation is in view of express language used in Section 94 of Finance Act, 1994. This decision after discussing circular No.120 dated 19-01-10 and amendment of Finance Act, 2010 has found them to be not in accordance with parent provision –section 94. This comes as a major jolt when both department and government is spreading its arms wide to relax conditions governing refund of credit on input service....Click here for the CESTAT Order 
Antrix Corporation vs. Asst. Commr - CT 2010 29 VST 308-Kar (VAT)   
It has been held by Hon’ble High Court of Karnataka and confirmed by the Hon’ble Supreme court that the lease of space segment capacity in satellites is deemed sale and is subject to VAT. The transaction has been held to fall under transfer of right to use goods and is covered under Article 366 (29A)(d). The demarcating line between sale and service in cases of transfer of right to use is the fact of effective possession and control. Effective possession and control has been interpreted by the Hon’ble High court as legal control and not technical control as on perusal of terms of agreement it was held that there is delivery of possession of goods by transferor to transferee.
CCE vs. Solid & Correct Engineering Works  - 2010 –TIOL- 25- SC- CX 
A machine that is fixed, embedded or assimilated in a permanent structure becomes immovable property and is not dutiable under Excise Act. But if there is no assimilation of machine to structure permanently and the machine is fixed by nuts and bolts with out intention to permanently attach the same would be moveable property and is subject to excise duty. ...Click here for the judgement.
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 -sindhu

     Greetings from Team SA

The overwhelming response to our first SA Newsletter has not only pumped our adrenaline to exotic levels but has also cast a rock of responsibility of living up to your huge expectations.

MAY has always been the mercurial month, with sweltering heat and nauseating sweat. Owing to the growing irresponsibility of global warming and green neglect, year on year, the mercury levels are growing alarmingly steeper. I am really terrified that, in the years to come, our beloved Mother Earth may not remain to be a better habitat, for one and all. I am sure that this continuous assault against the eco-system, would not only extinct the fauna and flora but would annihilate the entire mankind. By this senseless brutality, we are doing a thorough injustice to the entire mankind and the generations to come, that someday, our planet would only remain to be a museum of human existence!!!

I feel its time to levy a Green CESS or an ECO CESS (like the Coal CESS introduced this Budget), on all forms of green neglect (of course with the CENVAT credit!!!), so that, better sense prevail, at least through enforcement...

read more ...
sa corner

Sword of Summons 


24th February, 1944 

A red letter day in the history of Indian Indirect Taxation system, for, on this day, the then Governor General of Biritish India inked his signature on the ‘ The Central Excises and Salt Act, 1944’.  As in those days, the Act is limited to very few manufactured items like Salt, Khandasari Sugar, Oils and more on agricultural products like Tobacco, in order to instil a sense of fear the cadre is made into an Uniform Cadre.  No, I am not trying to write something about Uniform required or not required to the cadre.  What I am trying to bring here is two of the draconian issues that are being used by these Uniformed Officers, even today...

read more ...

guest column

raghavendra rao


 In the guest column of last month’s maiden Newsletter of SA, Mr Suresh Nair, briefed you all about the genesis of SA. In this second Newsletter, I thought I would kick start the voyage slowly into the ocean of taxation, with sharing my thoughts on GST, without bothering you much about the sections, provisos, clauses and sub-clauses. Many of you who receive this Newsletter may be working in indirect tax departments of various organisations. Your job is mainly to ensure tax compliance of the company and assess the impact of the changes in the tax structure and to follow the developments in tax laws as a part of your professional responsibility. But, have you ever approached these developments in the commodity taxation from the perspective of an ultimate consumer? 

read more ... 

gst corner   - yoga

• The Empowered Committee (EC) of State Finance Ministers is scheduled to meet on May 21, 2010 to discuss the differences among the States about implementation of GST.

• As a first concrete step towards introduction of GST, the draft of constitutional amendment to facilitate implementation of GST has been finalized and has been sent to the Law Ministry and then for Presidential reference. The finalized draft suggests three alternatives. First, to introduce a fourth list in the Constitution in addition to the Union, State, and Concurrent lists. The fourth list will specify items to be taxed under GST. The second is to amend Article 246 and the third is taxation by agreement. Under this, the Centre and States will sign an agreement to set up a GST council.

• Ministry of Finance is conducting an internship programme for GST. Those who are possessing first class graduate degree/second class post graduate degree/pursuing post graduation degree or research courses in economics / Finance / man management national schools of economics / Central universities / recognised institutions working in area of public finance, economics, anangement/students pursuing 5yrs integrated course in law in National Lawschools, students pursuing undergraduate/graduate courses in IITS/students who have cleared PE II stage of CAS course will be eligible for the programme. Details are available in http://finmin.nic.in/GST/index.htm

before parting ... -jk


Summons without issue, 

 nothing but a tissue


  chennai coimbatore bengaluru hyderabad ahmedabad