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Tax Amicus: August 2013

Recent amendment in the Legal Metrology (Packaged Commodities) Rules, 2011 regarding “industrial consumers” and “institutional consumers” has been discussed elaborately in this August 2013 issue of Tax Amicus. The authors are of the view that the amendments have complicated certain simple and settled issues. Under Customs, this issue caries report relating to Foreign Trade Policy (FTP) changes as per which while goods imported under the Served from India Scheme (SFIS) can now be transferred after some time, use of alternative inputs has been restricted under Advance authorization. CESTAT, Mumbai has upheld the discount of 35% given to the sole distributor by related exporter. Central Excise portion of this newsletter covers CBEC clarification on excise duty on sedans and exemption notification under Section 11C to packing materials bearing brand name of another.

Service Tax Voluntary Compliance Encouragement Scheme (VCES) has also been clarified explaining the scope of ‘tax dues’, etc. Ratio decidendi in this portion covers order passed by CESTAT, New Delhi on quantum of Cenvat credit admissible when amount has been withheld partly by service recipient. Delhi VAT Rules have been amended to make certain changes in determination of taxable turnover of sales by residential hotels and Madras High Court has upheld constitutional validity of Section 19(11) of Tamil Nadu VAT Act, 2006. These developments have been captured in this issue. On direct tax front, CBDT has issued guidelines for weighted deduction of expenditure incurred on skill development and has clarified that Sections 10A, 10AA and 10B of the Income Tax Act are deduction and not exemption provisions and these guidelines along with other important orders are discussed.

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