01 January 0001

Tax Amicus: November 2013

Obligation to tolerate an act which is a declared service is the topic of discussion this month. Article in this issue of Tax Amicus discusses at length various issues while concluding that a case can be made to argue that fines, damages and penalties do not characterize a transaction of an activity for a consideration with express or implied contractual reciprocity. Customs portion of this issue covers CBEC Circular granting exemption from basic customs duty (BCD) and countervailing duty (CVD) under different notifications. Mumbai Bench of CESTAT has held that SAD refund under CBEC Notification No. 102/2007-Cus. cannot be denied even where there is absence of declaration of non-availability of credit. The tribunal also allowed the plea seeking exemption from SAD under Notification No. 23/2003-C.E., in a different case on stock transfer of goods from EOU to Domestic Tariff Area (DTA).

DTA clearance of cut flowers by an EOU has been held as not liable to Central Excise duty. Under Service Tax, this issue covers exemption from service tax granted to factory canteens having air-conditioning or central air-heating facility. Madras High Court has held that service tax on temporary transfer of permitting use of copyright is not unconstitutional. Other developments highlighted in this issue include introduction of Voluntary Disclosure Scheme under Punjab VAT Act and order of Calcutta High Court holding that banks and NBFCs selling hypothecated vehicles are ‘dealers’ under West Bengal VAT Act, 2003. Income Tax portion of this newsletter covers Mumbai ITAT Order deliberating upon retrospective amendment to Section 9 and holding that liability cannot be created on the basis of such retrospective amendment.

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