PwCIndirectTaxNewsletter_February2012

8/10/2019 PwCIndirectTaxNewsletter_February2012

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In the issue

CENVAT

Staying UpdatedIndirect Tax Newsletter

In this Issue

CENVAT

Notifications/ Circulars

Area based exemptions in Himachal Pradeshand Uttarakhandwould continue even aftertransfer of ownership of factory to new owner.

Case Law

Manufacture

service tax.

Case Law

Retrospective applicability of service tax onrenting services constitutionally valid.

Business for Sec. 65 (105) covers all servicesundertaken as occupation regardless of profit.

Reversal of CENVAT Credit before utilization isnon availment.

Rule 6 of the CENVAT Credit Rules not

Sales Tax/VAT

Contacts

Conversion of aluminium foil in jumbo rolls into

blister rolls for packing medicine and items doesnot amount to manufacture

Ferrous waste generated out of worn out capitalgoods arises during the manufacturing processand is subject to excise duty

CENVAT/MODVAT

CENVAT credit on capital goods used in captivepower plant is admissible, even if only a part ofelectricity is used in the manufacture ofdutiable final product

Others

Supplementary invoice raised on account ofprice variation clause would attract interestliability from the original date of clearance ofgoods.

Service Tax

Notifications / Circulars

Toll collected from road users not chargeable to

applicable on services provided to SEZ

units/developers

VAT

E-filing of returns has been made mandatory inDaman & Diu and Orissa

Sales Tax

Sales of goods by duty free shops atinternational airport to inbound and outboundpassengers not liable to sales tax.

Reimbursement of cost of parts to dealers in lieuof warranty arrangement between manufacturerand the customer liable to sales tax

Goods of general household use such as lunchboxes, casseroles are covered under themeaning of Utensils for levy of VAT in MadhyaPradesh.

Duty drawback received under customs andexcise laws is not includible in sales price forlevy of sales tax.


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In the issue

CENVAT

Service Tax

Sales Tax/VAT

Contacts

In Gammon India Ltd. Vs. CCE(A) (2012(275) ELT 442), the Tribunal has held that

supplementary invoice raised on accountof price variation clause would attractinterest liability from the original date ofclearance of goods.

In a revision petition filed before theDepartment of Revenue in ParshvaOverseas (2012 (275) ELT 261), theGovernment of India has held that the

rebate of duty paid on inputs used inexport goods is admissible when theassessee had reversed the CENVAT creditas it tantamount to non-availment ofCENVAT credit.

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In the issue

CENVAT

Service Tax

Sales Tax/VAT

Contacts

Service Tax

News

The Chennai High Court has restrainedtheatre owners and film distributorsassociations in Tamil Nadu from deductingservice tax from film distributors share ofincome in line with the recent clarificationof the CBEC.

(www.indianexpress.com dated

20.01.2012) The negative list of services is proposed to

be introduced from 01/04/2012.

(The Business Standard dated 10.01.2012)

Notifications/Circulars

The CBEC has clarified that toll collected

Case Laws

In Glyph International Ltd. Vs. UOI [2012(25) S.T.R. 209], the Allahabad High Courthas held that the levy of service tax underSection 66A of the Act on services receivedfrom outside India is intra vires theConstitution.

The Madhya Pradesh High Court, inEntertainment World Developers Ltd. Vs.UOI [2012 (25) S.T.R. 231], has held thatretrospective applicability of service tax onrenting services is within the legislativecompetence of the Parliament.

The Punjab & Haryana High Court, inPunjab Ex-Servicemen Corporation Vs.UOI [2012 (25) S.T.R. 122], has held thatfor taxing statutes the term business need

from road users is not chargeable to

service tax except when collected throughan agent whose services would be taxableasBusiness Auxiliary Services.

(Circular No. 152/3/2012-S.T. dated22.02.2012)

The CBEC has clarified that the value offree of cost supplies are not includible inthe gross amount' for valuation of a workscontract where the contract was executedor payment (except through bookadjustments) was made prior to07/07/2009.

(Circular no. 150/1/2012-S.T. dated08.02.2012)

not necessarily imply a profit element and

would cover all services undertaken as amatter of occupation.

The Gujrat High Court, in CCE Vs.Dynaflex Pvt. Ltd. [2012 (25) S.T.R. 277],has held that reversal of CENVAT Creditwrongly availed prior to its utilizationamounts to non availment and no interestis payable on such reversal.

The Punjab & Haryana High Court, in CCEVs. Nahar Industrial Enterprises Ltd.[2012 (25) S.T.R. 129 (P&H)], held that inview of the legal fiction created by Sec. 68(2) of the Finance Act, 1994 (Act), servicetax on Goods Transport Agency Services ispermitted to be discharged by utilization ofavailable CENVAT Credit.

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In the issue

CENVAT

Service Tax

Sales Tax/VAT

Contacts

The Tribunal, in GMK Concrete MixingPvt. Ltd. Vs. CCE [2012 (25) S.T.R. 357],

has held that no service tax is chargeableon ancillary services provided inpursuance of a contract for supply ofgoods.

In Ambika Overseas Vs. CCE [2012 (25)S.T.R. 348 (P&H)], the Tribunal has heldthat sales support services received froman foreign commission agents are input

services under Rule 2(l) of CENVAT CreditRules, 2004 and admissible as credit.

The Tribunal, in CST Vs. Gowri Computers(P) Ltd. [2012 (25) S.T.R. 380], has heldthat a demand for penalty under Section78 of the Act is not legally sustainable inthe absence of any allegation of

notice.

In Rahul Trade Links Vs. CCE [2012 (25)S.T.R. 178], the Tribunal has held thatpenalty under Ss. 76 and 78 of the Actarise from different ingredients of offencesand may be imposed simultaneously.

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In the issue

CENVAT

Service Tax

Sales Tax/VAT

Contacts

VAT

Notifications/ Circulars

Daman and Diu

Online filing of returns has been mademandatory for all class of dealers, alongwith payment of tax, interest, penalty etcwef January 31, 2012.

[Notification No No.DMN/VATSoft/2010-11/1847 dated February 10, 2012]

Delhi

The gross turnover limit for the accountsto be audited has been linked to the limitsfixed under Section 44AB of the IncomeTax Act, 1961, which is currently Rs 60lakhs. Earlier, the prescribed limit was Rs

Nagaland

Composition Scheme has been introduced

for the retail VAT dealers whose grossturnover is above Rs 3 lakhs but does notexceed Rs 40 lacs, with an option to payVAT @ 0.50% of the annual grossturnover.

[Notification No. FIN/REV-3/VAT/2001dated January 09, 2012]

Orissa Online filing of returns has been made

mandatory for all dealers wef April 1, 2012.

[Circular No. III(I)38/09-1398/CT Dateddated January 31, 2012]

.

Reduction of input tax credit on declaredgoods on account of stock transfer hasbeen reduced from 50% to 40% of the taxpaid on purchase of such goods.

[Notification No. F.3 (23)/Fin(Rev-I)/2011-12/DSIII/68 Dated January 27,2012]

Online filing of Annexure 2A & 2B by

dealers filing quarterly returns has beenmade mandatory for the quarter endedDecember 2011 and onwards.

[Circular No. F.7(420)/Policy/VAT/2011/1189-1196 dated January 30, 2012 ]

Sa es Tax

Case Laws

The Supreme Court, in M/s Hotel AshokaVs. Assistant Commissioner of CommercialTaxes & ANR [(2012) VIL 03 (SC)], hasheld that sales by duty free shops situatedat international airports both to inboundand outbound passengers were madebefore/after the goods have crossed the

customs frontiers of India. Consequently,such sales are not liable to sales tax as thesame qualify as sale in the course ofimports/exports covered by section 5 ofthe CST Act, 1956.

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In the issue

CENVAT

Service Tax

Sales Tax/VAT

Contacts

The Bombay High Court in Navnit MotorsPvt. Ltd. Vs. State of Maharashtra [(2012)

47 VST 511 (Bom)], relying on the SupremeCourt decision in Mohd. Ekram Khan &Sons Vs. Commissioner of Trade Tax[(2004) 136 STC 515 (SC)], has held thatthe transactions involving FOCreplacement of spare parts under thewarranty arrangement where the cost ofsuch spare parts are subsequentlyreimbursed by the manufacturer by issue

of credit note, are covered under thedefinition of sales and hence liable to salestax.

The Madhya Pradesh High Court in P. K.Plastics Vs. Commissioner of CommercialTax [(2012) VIL 20 (IND)], while decidingthe classification of general household

between the parties and the same has norelevance to sales transaction at the time

of or before delivery of goods.

pro ucts ( i e unc oxes, pet ott es,

plastic containers, casseroles etc) underthe entry description of All Utensils hasapplied the common parlance test andheld that utensils means the items of dailyhousehold use generally used forpreparing, serving or keeping food orbeverages and the scope of utensils cannotbe restricted to items which are only usedin Kitchen.

The Madras High Court in Garware WallRopes Vs. The State of Tamil Nadu [(2012)NTN (Vol. 48) 161], has held that dutydrawback received by the dealer under theCustoms and Excise laws cannot beincluded in the sale price for levy of salestax as the receipt of such drawback hasnothing to do with the sale transaction

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Contacts

Delhi

Vivek Mishra/R. MuralidharanPh: +91(124) 3306000

MumbaiDharmesh Panchal/S SatishPh: +91 (22) 6689 1000

KolkataSomnath Ballav/Siladitya Sarkar

Ph: +91(33) 2357 9100/ 4404 6000

BangalorePramod BanthiaPh: +91(80) 4079 6000

HyderabadPramod Banthia /N V RamanPh: +91(40) 6624 6394

ChennaiB Sriram/Niranjan JVPh: +91(44) 4228 5000

PuneSuresh Rohira/G.P Kawathekar

Ph: +91(20) 4100 4444

AhmedabadDharmesh Panchal/Niren ShethiaPh: +91 (22) 6689 1000

In the issue

CENVAT

Service Tax

Sales Tax/VAT

Contacts

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PwCIndirectTaxNewsletter_February2012