Tax Briefly Stay on Top

February 2013 www.deloitte.com/in

Contents

Snapshot 3 Direct & International Tax 4 Transfer Pricing 14 International Tax Developments 16 Indirect Tax 19 Glossary 30

Snapshot

Direct & International Tax Non-compete fees neither considered as intangible asset for depreciation nor allowable as revenue expenditure Depreciation being statutory deduction and not an outgoing expenditure cannot be disallowed Interest on housing loan already claimed as deduction in computing income from house property can again be deducted as cost of acquisition Income from sale of carbon credits is a capital receipt Capital gains on sale of tenancy rights in India and on sale of shares whose value is derived principally from immovable property situated in India is taxable in India No requirement to make payment of taxes abroad in the previous year relevant to the assessment year under consideration for claiming credit Gains on transfer of shares of a foreign company to another foreign company not taxable in India Interest from FDs placed by a club with its bank corporate members is not tax-exempt on the grounds of 'mutuality' No tax liability on salary received in India, by a nonresident, if services are rendered outside India AMP expenses held as an international transaction, warranting the taxpayer to be compensated on arms length principle by applying Bright Line Test Indirect Tax Registration and payment of service tax under negative list regime to continue with the erstwhile categories of taxable service Reminder letters issued by life insurance companies for payment of renewal premium not to be considered as point of taxation for invoking service tax liability Re-classification of ongoing contracts as works contract on date of introduction of the said service and composition scheme not available Applicability of service tax on re-imbursement of expenses under Rule 5(1) of STVR is ultra vires of the sections Franchise / collaboration fees for permitting the use of the brand name are subject to service even if it is provided by non-profit organization with the motive of charity Penalty cannot be levied under both section 76 and 78 of the Finance Act Main activity of the entity is only relevant for examining the eligibility of CENVAT credit and not the ancillary resultant activity

No service tax liability on toll collection under Business Auxiliary service Time limit for filing refund claim i.e. 1 year should be considered from the date of settlement of dispute and not from date of availment, where eligibility of CENVAT credit is in dispute Recovery proceedings under central excise and service tax to be initiated within time prescribed even if application for stay is pending, except for reasons beyond the control of assessee Manufacture and sale of goods not bearing brand name but sold from branded outlets not eligible for SSI exemption Re-importation of goods from Bhutan for repair or re-conditioning within 10 years from exportation to be eligible for exemption from basic and additional duties of customs Security furnished in the form of FDR for availing exemption in relation to mega or ultra-mega power projects may be replaced with bank guarantee The process of cutting and slitting cannot be considered as manufacturing provided goods remain the same even after the process Seized goods are required to be released unconditionally provided notice is not issued for seizure of goods within period stipulated under the Act Incremental Exports Incentivisation Scheme notified Annual average export obligation for EPCG Authorizations for the year 2011-12 to be re-fixed for products showing decline of more than 5% in exports Recipient of goods may claim TED refund upon producing appropriate disclaimer from supplier Amendment in reward/ incentive schemes of Chapter 3 of FTP EHTP/ STP can apply to jurisdictional RA for status recognition Pending customs clearance, goods can be transferred from foreign containers to domestic shipping containers under customs supervision Revised guidelines for AEO Programme prescribed and specific provisions introduced for Customs Cargo Service Provider and Customs House Agent authorized under AEO Programme Changes in rates of excise and customs duty applicable to specified gold bars, gold dore bars, gold ores and concentrates Sharing of towers between telecom infrastructure companies and telecom operators not subject to VAT Input tax credit admissible on goods used for generation of captive power which is used in manufacture of finished products
Tax Briefly 3

Direct & International Tax

Business income Income from property let out to a director is business income in the hands of the company The Taxpayer Company engaged in the business of letting out of properties, had let out its property partly to the managing director and partly to a shareholder on rent. It declared the rental income received on such property as business income as the property was held as a business asset. The AO considered the rental receipt as income from house property. The Tribunal held that the property occupied by the director of the company has to be considered as used for business and the income derived therefrom was assessable as business income and the balance rent received on letting out to a shareholder was assessable as income from house property. Woodland Associates (P) Ltd. v. ITO [2013] 29 taxmann. com 216 (Mum- Trib) Depreciation Purchase of commercial right to do business with clientele base eligible for depreciation as intangible asset The Taxpayer, a share broker, purchased the entire clientele business from a sub broker company. The consideration was considered as goodwill and depreciation was claimed thereon. The AO disallowed the claim as the purchase of clientele business could not be considered as an intangible asset and that the commercial right purchased has not been put to use during the year.

The Tribunal in allowing the claim held that the purchase of clientele business is a right which can be used as a tool to carry on the business and is eligible for depreciation. The Tribunal further held that even assuming that the payment is made for purchase of goodwill it has to be accepted that in share broking business, the goodwill of the broker is paramount. By purchase of rights to do business with the clients of the sub-broker, the Taxpayer has actually purchased the goodwill of the sub-broker. India Capital Markets (P) Ltd v. DCIT [2013] 29 taxmann. com 304 (Mum - Trib) Definition of 'owner' under MV Act cannot deny depreciation claim to lessor-owner The Taxpayer, a NBFC engaged in the business of hire purchase, leasing, real estate etc., purchased certain trucks and leased them to its customers. Thereafter, the Taxpayer had no physical affiliation with the trucks and the lessees were registered as the owners, as per the certificate of registration issued under the MV Act. The Taxpayer claimed depreciation on these vehicles at a higher rate as the trucks were used in the business of running on hire. The Taxpayers claim of depreciation was rejected on the ground that it had merely financed the purchase of these assets and was neither the owner nor user of these assets. The SC held that as long as the asset is utilized for the purpose of business of the Taxpayer, notwithstanding non-usage of the asset itself by the Taxpayer. The lessee has not claimed depreciation but has been granted deduction of lease rent whereas lease rent has been assessed in hands of the Taxpayer as business income.

Further the MV Act, defines ownership for the purposes of the MV Act, and not in general. From the relevant clauses of the agreement the SC observed that the Taxpayer was exclusive owner at all points of time and accordingly depreciation was allowable to Taxpayer along with the claim for higher depreciation. I.C.D.S. Ltd. - [2013] 29 taxmann.com 129 (SC) Depreciation is allowable on payments made by way of royalty for acquiring brands The taxpayer claimed depreciation on royalty paid for acquiring brands/trademarks which was disallowed by the AO. Relying on the finding of fact by the Tribunal that the royalty payment formed part of the cost of acquisition of the brand, the High Court upheld the taxpayers claim for depreciation CIT v. Glenmark Pharmaceutical Ltd. [ITAT NO. 2170 OF 2009 (BOM)] Non-compete fees neither considered as intangible asset for depreciation nor allowable as revenue expenditure The taxpayer paid a non-compete fee for a restraint period of seven years and claimed the same as revenue expenditure. The AO considering it as capital expenditure of enduring value disallowed the same.The taxpayers alternate claim for depreciation was rejected by the appellate authorities. The HC held that the amount was capital in nature as the arrangement was to endure for a substantial period. HC observed that the words similar business or commercial rights have to necessarily result in an intangible right enforceable against the world at large to qualify for depreciation. Since the non-compete rights acquired by the taxpayer was restrictive and purely personal in nature the same was not entitled to depreciation. Sharp Business Systems v. CIT [2012] 211 Taxman 576 (Del)(HC) Business expenditure Mere purchase of right to use technology is revenue expenditure The Taxpayer engaged in manufacturing and selling of air conditioning, refrigerators and accessories,

obtained an exclusive right and licence to use technical know-how from its group company to manufacture air conditioners for a consideration payable in three equal installments. The Taxpayer claimed the first installment as revenue expenditure. The AO disallowed the same stating that the transaction resulted in acquisition of technical know which is capital in nature. The CIT(A) allowing the appeal held that mere acquisition of exclusive and non-transferable right and license to use technology to manufacture did not result in acquisition of any know-how. The group company continues to own such technology and the Taxpayer had not acquired any asset or benefit of enduring nature. On appeal by revenue, the Tribunal upheld the order of CIT(A). ITO v. Dakin Air Conditioning (India) Pvt. Ltd ITA No.1328/Del/2011 (Del-Trib) Interest payable to non-scheduled bank not subject to disallowance The taxpayer had taken a loan from a Bank, which was not a scheduled bank. The interest on the loan remained unpaid up to the date of filing of the return of income. The AO disallowed the unpaid interest. The HC, observed that the said bank was neither mentioned in the second schedule to the Reserve Bank of India Act, 1934 nor covered by any other banks mentioned in the Explanation to section 11(5)(iii) of the Act. Therefore, the HC held that interest payable to the bank would not be disallowable under section 43B. CIT v. Upendra T. Kapadia [ITA NO.602 OF 2011 (BOM)] Disallowance will not be triggered where payment of interest is made by a book adjustment and not by actual payment The taxpayer was entitled to a subsidy from the Bihar State Financial Corporation (BSFC) and was also liable to pay interest on a loan borrowed from BSFC. The Corporation made a book entry and adjusted the amount of interest receivable with the amount of subsidy payable to the taxpayer. Since the taxpayer had not actually paid the interest to BSFC and the said payment was by way of adjustment, the AO contended that it was not entitled to deduction. The HC observed that discharging of a liability in a
Tax Briefly 5

debtor and creditor relationship by mere book entry would constitute actual payment and hence the said amount could not be disallowed. CIT v. Shakti Spring Industries Pvt. Ltd. [TS-4-HC-2013 (Jharkhand) Business disallowances Depreciation being statutory deduction and not an outgoing expenditure cannot be disallowed The Taxpayer, engaged in the business of manufacturing and sale of beer, capitalized the payment made to the non-resident for purchase of brand and claimed depreciation thereon. The AO on account of non-deduction of tax at source on such payment disallowed the depreciation claimed. The Tribunal held that the said section refers to the outgoing amount chargeable under the Act and subject to withholding taxes. Depreciation is not an outgoing expenditure but a statutory deduction and it is obligatory on the AO to allow the deduction of depreciation on the eligible asset irrespective of any claim made by the Taxpayer. Hence any payment capitalized as part of cost of asset, depreciation in respect of such payment cannot be disallowed on such an account. SKOL Breweries Ltd. v. ACIT [2013] 29 taxmann.com 111 (Mum-Trib) Purchase of software not in the nature of royalty and disallowance cannot be made for non-deduction of tax at source The Taxpayer, engaged in the business of purchase and sale of computer software, made payments for the purchase of software from persons resident in India. The Taxpayer did not deduct tax at source on such payment. The AO held that the payment was made for acquiring a right to use the software which is in the nature of royalty and hence subject to deduction of tax. Accordingly in the absence of any withholding of tax the same was not allowable as expenditure. The Tribunal held that the purchase of computer software as a good cannot be treated as payment of royalty and hence not liable to withholding taxes. ACIT vs. Sonata Information Tech Ltd [2012] 28 taxmann.com 113 (Mum-Trib)

Disallowance of expense cannot be invoked on account of short deduction of tax at source The taxpayer deducted tax at source for payments made to sub-contractors whereas the AO contended that the payment made was in the nature of machinery hiring charges and tax was required to be deducted on the rates specified for rental income. Accordingly, the proportionate amount of rent was disallowed on account of short deduction of tax. The HC held that the provisions for disallowance of expenditure could be applied only when tax is deductible but not deducted and the same could not be invoked when tax has been deducted under a bona fide belief and applying wrong provisions. It further held that in the case of any difference of opinion as to the taxability or nature of payments falling under various withholding provisions, the Taxpayer can be declared to be an assessee in default but no disallowance can be made in respect thereof. CIT vs. S. K. Tekriwal [TS-902-HC-2012(CAL)] Non-residents Capital gains on sale of tenancy rights in India and on sale of shares whose value is derived principally from immovable property situated in India is taxable in India The Applicant, a Dutch citizen since 1984, having a 1/4th interest in tenancy rights of a flat in India and holding shares in a dormant company ( holding ownership rights in an immovable property) received consideration for the release and relinquishment of tenancy rights in the immovable property and on the sale of said shares. The AAR held that the tenancy rights in respect of real estate would be gains derived from alienation of immovable property. As the immovable property is situated in India, the gains are taxable in India under Article 13.1 of DTAA between India and Netherlands. In connection with the gains derived from sale of shares of 'A' Pvt. Ltd., the AAR held that since value of shares is derived principally from immovable property situated in India, same are also taxable under Article 13.4 of DTAA in India. Mrs. Punnika Parikh, In re [2012] 349 ITR 533 (AAR)

Taxability of a composite contract Bangalore Metro Rail Corporation Limited (BMRC) had floated a tender for 'design, manufacture, supply, installation, testing & commissioning of signaling/train-control and communication systems. The Applicant, a French company, along with other three companies entered into a consortium agreement to prepare and submit the tender floated by BMRC. The Applicant contended that as one of consortium members, it was concerned with offshore supply of plant and materials including supply of spare parts and offshore designing and training of operating and maintenance personnel and payments received for those activities were not taxable in India. The AAR held that the contract provided for the payment for the work in lump sum and it cast a joint and several liabilities on the consortium for carrying out the work. Further the contract in the context of the tender floated, it appeared that the contract involved herein is a composite contract and it cannot be dissected into parts. For the purpose of taxation, the contract must be taken as one, for installation and commissioning of a project in India. Further the Vodafone ratio of non-dissecting approach to a transaction can be applied to a case like the present one and accordingly such a contract has necessarily to be read as a whole and it cannot be split up to treat a part of it as confined to offshore supply of equipment not capable of being taxed in India. Therefore, income from contract has to be taxed as a whole. It was further held that since members of consortium came together with common object to perform contract and earn income therefrom, applicant, along with other members of consortium, formed an AOP and is liable to be taxed as such. The members dividing obligation among themselves, after bid is knocked down in favour of consortium, cannot alter status they acquire while entering into a contract with a common purpose and incurring a joint liability thereby. Alstom Transport SA, In re [2012] 349 ITR 292 (AAR) Payment for voice charges is not fees for included services under India-U.S. tax treaty The taxpayer was engaged in business of IT enabled services had made payments towards voice charges to

non-resident vendor based out of the United States. The AO treated such payments as fees for technical services and disallowed the entire payment for failure to withhold tax. The taxpayer contended that such payments for voice charges are not fees for technical services and that such business income would not be taxable in India in the absence of permanent establishment under the India-U.S. tax treaty. The Tribunal held that the non-resident vendor had rendered voice related services which are not in the nature of any services of managerial, technical or consultancy as required by the definition of fees for technical services and hencevoice charges availed outside India cannot be termed as fees for technical services. Clearwater Technology Services (P.) Ltd. v. ITO (Bang) (Trib) Payment for client coordination fees is not royalty under India-U.S. tax treaty Taxpayer, a company incorporated in the United States, acted as a communication interface between multinational clients and taxpayers group concerns working in respective regions across the world. In this respect, the taxpayer incurred costs such as salaries, overheads, etc. which were recharged to its regional group entities. The taxpayer claimed that such business income received from its regional group entities being business income is not taxable in India in the absence of permanent establishment in India under Article 7 of India US tax treaty. The AO disagreeing held that such payments are in the nature of royalty. The Tribunal held that client coordination fees cannot be considered as royalty because it is not a consideration for the use of right or to use any of the specified terms mentioned in the definition of royalty under Article 12 of India-U.S. tax treaty. It was held that coordination fees can be taxed only as business income and only if the taxpayer has a permanent establishment in India as provided for in Article 7 of India-U.S. tax treaty. DDIT v. Euro RSCG Worldwide Inc. (MumTrib) No requirement to make payment of taxes abroad in the previous year relevant to the assessment year under consideration for claiming credit The HC held that the object of section 91(1) of the Act is to give relief from taxation in India to the extent
Tax Briefly 7

taxes have been paid abroad for the relevant previous year. While granting benefit of deduction of taxes paid abroad under section 91(1) of the Act, there is no requirement that the payment of taxes should have been made in the previous year relevant to the assessment year under consideration. Petroleum India International- ITA No. 3653 OF 2009; (Bom HC) dated 10 January 2013 Gains on transfer of shares of a foreign company to another foreign company not taxable in India under India France tax treaty On 10 July 2009, share purchase agreement was entered into between MA/GIMD as the sellers and Sanofi Pasteur Holding SA, France (Sanofi) as the buyers for the acquisition of the entire share capital of ShanH SAS, France (ShanH) for a consideration of 550,000,000. The Indian tax authorities assessed Sanofi to pay tax on long term capital gains resulting from transfer of shares of Shanta Biotechnics Ltd (SBL), an Indian company incorporated on 10 March 1993. The HC held that ShanH is an entity with commercial substance. ShanH is the legal and beneficial owner of SBL shares, being the registered shareholder, having been recorded as such in the shareholders register of SBL. Further, HC held that it is not necessary to lift corporate veil of ShanH as the Revenue has failed to establish that ShanH is an entity of no commercial substance or business purpose and/or that ShanH was interposed only as a tax-avoidance vehicle. Moreover, the HC held that there is no warrant for lifting the corporate veil of ShanH and even on looking through the ShanH corporate persona there is no material to conclude that there is a design or stratagem to avoid tax. It was held that the transaction in issue is for alienation of 100% ShanH shares and constitutes neither the transfer nor the deemed transfer of shares or of the control, management, or underlying assets of SBL. Article 14(5) of the India-France DTAA neither incorporates nor accommodates a see through. The transaction in issue is of alienation of ShanH shares which would be covered by Article 14(5) of India-France DTAA and accordingly, such capital gains would be taxable exclusively in France and not in India. The High Court clarified that the retrospective amend8

ments to the Act (vide the Finance Act, 2012) have no impact on interpretation of the DTAA. The transaction in issue falls within Article 14(4) of the India-France DTAA and the tax resulting therefrom is allocated exclusively to France. The High Court quashed the advance ruling and also the assessment order including tax demand raised on Sanofi. Sanofi Pasteur Holding SA v. The Department of Revenue., [AP HC] dated 14 Feb 2013 Capital gains Transfer of TDR is a transfer of a capital asset but in the absence of computation mechanism for the cost of acquisition, there can be no capital gains The Taxpayer, a residential society entered into a comprise with the vendor in respect of the development of the FSI, wherein it received a sum of money as consideration. The AO observed that the Taxpayer was entitled to utilize the TDR in respect of the portion of land owned by it. Hence the AO held that the consideration received was for the transfer of the said TDR. He therefore computed capital gain by spreading the cost of acquisition of 3367 square meter of land over the increased TDR. The Tribunal held that TDR entitlement is a capital asset and assignment of such a right amounts to transfer of a capital asset. However, even though the transfer of TDR amounts to transfer of a capital asset, the same cannot be subjected to tax under capital gains for the reason that there is no cost of acquisition in acquiring the right which has been transferred and the mode of computation under section 48 thus fails in such a case. Land Breez Cooperative Housing Society Ltd. v. ITO [2012] 28 taxmann.com 196 (Mum- Trib) Interest on housing loan already claimed as deduction in computing income from house property can again be deducted as cost of acquisition The Taxpayer claimed interest on housing loan as a deduction while computing income from house property. Subsequently, the Taxpayer sold the house property and offered the resultant long term capital gains to tax. While computing the capital gains from the sale of house, the Taxpayer included the interest on

housing loan as cost of acquisition. The Tribunal observed that a perusal of the two provisions makes it clear that neither of them exclude the operation of the other. Deduction for interest is claimed when the Taxpayer declares income from house property whereas the cost of the same asset is taken into consideration when it is sold and capital gains are computed. Since both provisions are altogether different, the Tribunal held that the Taxpayer is also entitled to include the interest in the cost of acquisition in the computation of capital gains. ACIT v. C. Ramabrahmam [2012] 27 taxmann.com 104 (Chen Trib) Exemption on account of investment is available for two financial years separately falling within six months from the date of sale The Taxpayer, a non-resident individual, sold agricultural property and invested Rs.50 lakhs in March and Rs.50 lakhs in June in eligible bonds and claimed exemption of Rs.1 crore from the long term capital gains. The AO restricted the exemption to Rs.50 lakhs. The Tribunal referred to CBDT Circular no. 3/2008 and observed that the Government only intended to restrict the investment in a particular financial year and did not intend to restrict the maximum amount of exemption permissible.. Accordingly, the Tribunal held that the Taxpayer is entitled to total deduction permissible spread over a period of two financial years at Rs.50 lakhs each on investment made in eligible bonds. Shri Vivek Jairazbhay v. DCIT ITA No.236/Bang/2012 (Bang-Trib) Capital receipt Income from sale of carbon credits is a capital receipt The Taxpayer, engaged in the generation of power through biomass power generation unit, received carbon credits for the project activity of switching off fossil fuel. The Taxpayer sold the carbon credits to a foreign company for a consideration. The Taxpayer contended that carbon credit is in the nature of an entitlement received to improve world atmosphere and at best it can be regarded as a capital receipt and cannot be taxed as a revenue receipt. On the other hand the AO held that the sale proceeds to be revenue in nature

stating that carbon credit is a tradable commodity and even quoted on a stock exchange. The Tribunal observed that carbon credit is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business and the credit for reducing carbon emission can be transferred to another party It does not increase profit and does not need any expenses. Accordingly, the sale of carbon credits is to be considered as a capital receipt. My Home Power Ltd. v. DCIT [2012] 27 taxmann.com 27 (Hyd-Trib) Interest Interest not chargeable on tax liability arising out of retrospective amendment The Taxpayer filed the return of income for the assessment year 2005-06. Based on the retrospective amendment made by the Finance (No.2) Act, 2009 to the provisions of computing book profit, the AO made an addition to the computation of book profits and the AO levied interest on the tax demand arisen out of such addition. The Taxpayer challenged the levy of interest arising due to retrospective amendment in law. The Tribunal held that the amended provisions cannot be invoked to hold a Taxpayer as a defaulter with respect to the payment of advance tax. The Tribunal held that what has to be seen is the law that was existing on the date when the Taxpayer was required to pay advance tax and allowed the appeal in favour of the Taxpayer. Essar Investment Ltd v. ITO in ITA no.6444/Mum/2011 (Mum-Trib) Deductions Disallowance of expenses cannot be included in the profits for the business purpose of computing deduction The Taxpayer, an individual, claimed deduction u/s 80-IB(10) of the Act. The AO disallowed the deduction and also made a disallowance u/s 40(a)(ia) of the Act. The Tribunal allowed the deduction u/s. 80-IB(10) from the profits of the business. However as regards the inclusion of the addition made u/s.40(a)(ia) in the eligible profits, the Tribunal held that the legal fiction created by virtue of section 40(a)(ia) cannot be extended
Tax Briefly 9

to determine the profit of the business for the purpose of computing deduction under section 80-IB(10). Accordingly the Tribunal held that one has to strictly follow the provisions of section 80-IB and compute the deduction accordingly without infusing any other provision of the Act. DCIT v. Rameshbhai C. Prajapati [2013] 29 taxmann. com 64 (Ahd-Trib) Loss of undertaking can be set off against other taxable business income The Taxpayer, engaged in the business of developing software, had an undertaking eligible for deduction under section 80-IC of the Act. The Taxpayer incurred a loss in the eligible undertaking and set off the loss against its other taxable business income. The AO added back the loss of the eligible undertaking stating that the loss is not allowable for set off as the eligible undertaking has to be treated as a standalone unit and only the net profits are eligible for deduction. The Tribunal held that section 80-IA(5) only prescribes the method by which the quantum of deduction has to be computed. The words as if contained in section 80-IA(5) specifically narrate that the profits of the eligible business have to be computed on a separate footing and doesnt bar the Taxpayer from claiming set off of losses of eligible undertaking against other business income. Wipro Ltd v. Addl CIT [2012] 28 taxmann.com 188 (Bang- Trib) Deemed dividend Transferable occupancy rights of a flat given to shareholder of a company, deemed dividend The Taxpayer, a shareholder of a closely held company, obtained occupancy rights of flats built by the company on a perpetual basis. The Taxpayer could transfer the rights to a third party subject to the transferee depositing an interest free refundable security deposit. The AO held that the distribution of occupancy rights amounted to distribution of stock in trade among shareholders and considered it as deemed dividend. The Tribunal held that the value of flats received is nothing but dividend given in the form of assets by the

company and accordingly upheld the order of the AO. Shantikumar D. Majithia v.. DCIT [2012] 28 taxmann. com 149 (Mum-Trib) Others Payment of advance tax per se cannot indicate Taxpayers intention to disclose income when tax return is not filed by due date During a search operation, the AO found that though the Taxpayer had taxable income for the assessment year 1995-96, no return of income had been filed by the due date 31st October, 1995, or the date of the search, i.e., 23rd February, 1996. The Taxpayer contended that since advance tax has been paid for assessment year 1995-96, income for that period could not be deemed to be undisclosed. The Supreme Court held that payment of advance tax does not absolve a Taxpayer from the obligation to file a return of income nor absolve the failure to file return of income by the due date. The payment of advance tax, which is based upon estimated income cannot tantamount to the disclosure of the total income which must be declared in the return. A.R. Enterprises - [2013] 29 taxmann.com 50 (SC) Interest from FDs placed by a club with its bank corporate members is not tax-exempt on the grounds of 'mutuality' The Taxpayer, a club claimed exemption from tax in respect of interest earned on fixed deposits kept with certain banks, which were corporate members of the Taxpayer, on the basis of the doctrine of mutuality. The AO disallowed the Taxpayer's exemption claim. The SC held that since the funds have been used by the banks in their loan business the arrangement lacks a one to one identity between the contributors and participators, the funds are also not used in furtherance of the objects of the club nor were the funds been expended solely on the contributors. Therefore the arrangement fails the principle of mutuality and the interest accrues on deposit like in the case of any other deposit made by an accountholder with the bank. The amount of interest earned by the taxpayer from the member banks will not fall within the ambit of mutuality principle and would

10

therefore be taxable in hands of taxpayer. SC further observed that the taxpayer is already availing the benefit of doctrine of mutuality in respect of the surplus amount before it is deposited with Bank. Bangalore Club - [2013] 29 taxmann.com 29 (SC) Personal taxation No tax liability on salary received in India, by a nonresident, if services are rendered outside India The taxpayer was sent to Philippines on a long-term international assignment. For the year 2007-08, the taxpayers residential status was non-resident in India and resident in Philippines. The taxpayer filed income tax returns and paid taxes in Philippines in respect of the salary received in India. Based on this and further to the provisions of Article 16(1) of DTAA between India-Philippines, the taxpayer claimed exemption from India taxes on the salary received in India. However, the AO rejected the claim stating that the the salary being received in India was taxable here irrespective of his residential status. On appeal filed by the Revenue, the Tribunal held that salary received in India by a non-resident for services rendered in Philippines is not taxable in India by virtue of Article 16(1) the DTAA. ITO v.. Arjun Bhowmik (ITA No 3484/Del/2012) Circulars Clarification regarding issues relating to export of computer software -Direct tax benefits CBDT has issued clarifications regarding issues in relation to Direct tax incentives under sections 10A, 10B and 10AA of the Act. The issues covered are deemed exports, tax holiday after slump sale, continuation of tax holiday in respect of inter transfer of units between SEZ for unexpired period etc. Circular No. 01/2013 (F. No. 178/84/2012-ITA.I) dated 17 January 2013 Notifications Centralized Processing of Statements of tax deducted at source scheme, 2013 CBDT has made a scheme for centralized processing of statements of tax deducted at source. The scheme has been framed to cover the rules pertaining to processing of TDS returns, amendment/rectification in the TDS

returns, appeal proceedings with CIT (appeals) and service of notice or any other communication to the deductor. Notification dated 15 January 2013 No deduction of tax at source in certain cases of specified payments as per section 197A(1F) CBDT has for the purpose of section 197A (1F) notified the specified payments and institutions from which tax need not be deducted at source. Accordingly deduction of tax at source is not required in the case of notified payments made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank. The notified payments are (i) bank guarantee commission; (ii) cash management service charges;(iii) depository charges on maintenance of DEMAT accounts; (iv) charges for warehousing services for commodities; (v) underwriting service charges; (vi) clearing charges (MICR charges); (vii) credit card or debit card commission for transaction between the merchant establishment and acquirer bank. This notification comes into force from the Ist day of January, 2013. Notification No. 56/2012 [F. NO. 275/53/2012-IT(B)], Dated 31-12-2012 Amendment in Rules 11U and 11UA CBDT has notified rules amending the determination of fair market value (FMV) for the purpose of Section 56 and Rule 11U which defines certain terms used in Rule 11UA. Rule 11UA is amended to prescribe the method for determination of fair market value of shares. As per the rule, the value of unquoted shares can at the option of the Taxpayer be the value as per the prescribed method or discounted free cash flow method determined by a merchant banker or an accountant. Similarly definitions of Accountant, Balance-sheet and Valuation date under Rule 11U are also amended. Notification No. 52/2012 [F.No. 142/19/2012-SO (TPL)]/ SO 2805(E), dated 29-11-2012 CBDT extends time limit for filing ITR-V forms for AY 2010-11, AY 2011-12 and AY 2012-13 The CBDT has extended the time limit for filing the
Tax Briefly 11

acknowledgement in ITR-V for Income Tax Returns filed electronically (without digital signature) as follows: Till 28 February 2013 for the ITR filed in Financial Year 2011-12 for Assessment Year (AY) 2010-11; Till 28 February 2013 for the ITR filed on or after 1 April 2011 for AY 2011-12 and Till 31 March 2013 or 120 days from the date of uploading of the electronic return data, whichever is later, in respect of ITRs filed for AY 2012-13 Notification 01/2013, dated 7 January 2013 Agreement between India and other countries Nature of Agreement Exchange of Information with respect to taxes Protocol amending the convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital Benefits of the convention would now be available to partners of the UK partnerships to the extent income of UK partnership are taxed in their hands Withholding taxes on the dividends would be 10% or 15% and would be equally applicable in UK and in India Provision for effective exchange of information to be incorporated Anti-abuse provision to be incorporated Protocol amending the convention for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital Rate of Dividends/Interest/Royalties/Technical fees shall be substituted by 10% as against 15% Protocol amending the convention for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital Article relating to Exchange of Information replaced Country Macao Date Signed 3-01-12 Date of coming into force 16-04-12 To be notified Effective from 16-04-12 To be notified

UK and the Northern 30-10-12 Ireland

Uzbekistan

11-04-12

20-07-12

Articles -1,2,3,4 & 6 for Financial year 2013-14 and subsequent financial year Article 5 from 20-07-12 2-11-12

Netherlands

10-05-12

2-11-12

Avoidance of double taxation and the prevention of Malaysia fiscal evasion with respect to taxes on income and on capital

9-05-12

26-12-12

1-04-13

Notification No. 43/2012 dated 10-10-2012, Press Information Bureau Government of India, Ministry of Finance dated 1-11-2012, Notification No. 49/2012 dated 7-11-2012, Notification No. 2/2013 dated 14-01-2013 and Notification No. 7/2013 dated 29-01-2013
12

Specified Territory Notified The Central Government notifies Sint Maarten, a part of Kingdom of Netherlands, the area outside India as the specified territory for the purposes of section 90 of the Act. Notification No. 54/2012 dated 17-12-2012 Others Shome Committee Final Report on General Anti Avoidance Rule (GAAR) Expert Committee under the chairmanship of Dr. Parthasarathi Shome was constituted by the Prime Minister to undertake stakeholder consultations and to finalise the guidelines for GAAR. The Expert Committee published its draft report on September 1, 2012 which contains various recommendations for amendment of GAAR provisions, for the guidelines to be prescribed and for clarifications and illustrations to be given through circulars. The Expert Committee after considering the responses to the draft report, submitted its final report on September 30, 2012 which is published on 14 January 2013. Expert Committee Final Report read with Press Release, dated 14-01-2013 Statement of the Finance Minister on GAAR The Central Government has accepted the major recommendations of the Expert Committee on GAAR with certain modifications. The GAAR will now be effective from 1 April 2016 (as against the current provision of 1 April 2014). Press release dated January 14, 2013

EPFO internal guidelines on quasi-judicial proceedings wherein basic wages was interpreted kept in abeyance The EPFO issued internal guidelines on the procedures to be adopted for quasi-judicial proceedings. In this guideline, the EPFO also interpreted the term basic wages so as to encompass all payments except specified exclusions (expressly referred in definition and no other). The guidelines further clarified that commission or any other similar allowance payable to the employee is not a separate expression but a continuous one. The above guidelines faced strong opposition and were challenged on various counts. The EPFO has therefore kept the guidelines in abeyance. No. 7(1)2012/RCs Review Meeting/21224 dated 18th December 2012 of the EPFO Social Security Agreement Update India has signed SSAs with Canada, Japan, Sweden, and Austria on 6 November 2012, 16 November 2012, 26 November 2012 and 4 February 2013 respectively. These SSAs are yet to come into force.

Tax Briefly

13

Transfer Pricing

Taxpayers claim of rendering low end services cannot be accepted if the facts tell otherwise The Tribunal rejected the taxpayers claim of rendering low end services as it was contrary to the Transfer Pricing Study report filed by the taxpayer. It held that the nature of business and the type of transactions are of great importance in adjudicating the transfer pricing matters and that such contrary claim made loosely cannot be countenanced. The Tribunal further rejected the taxpayers argument that the TP adjustment cannot exceed the total profits earned by the group, as it would lead to an anomalous situation. It further rejected the taxpayers claim towards risk and capacity utilization adjustments on the ground of insufficient data / material, without going into which argument on risk adjustment made by each party was correct. Interra Information Technologies India Pvt. Ltd. TS-701ITAT-2012 (Delhi - Trib.) No cost contribution, cost reimbursement or payment for management support services to the AE is required as it is only incidental and passive association benefit received by the Indian company. The Tribunal upheld the determination of ALP for 'management support fees & SAP' as NIL on the ground that it is only incidental and passive association benefit
14

received by the Indian company from AE. It rejected the use of TNMM for benchmarking these transactions as the same are not 'closely linked with each other' and upheld the use of CUP Method over TNMM. Knorr-Bremse India Pvt. Ltd. TS-700-ITAT-2012(Delhi-Trib.) AMP expenses held as an international transaction, warranting the taxpayer to be compensated on arms length principle by applying Bright Line Test The Delhi Special Bench of the Tribunal held that the AMP expenses incurred by a taxpayer constitute an international transaction and that bright line test is acceptable for determining ALP of such transactions. It further held that while expenses incurred directly on promotion of sales, leads to brand building, the expenses in connection with sales are only sales specific and are not a part of AMP expenses. LG Electronics India Pvt Ltd. TS-11-ITAT-2013(DEL)-TP -(Delhi-Trib.) Rate of guarantee commission depends on several factors. Internal CUP can be applied after proper analysis. The taxpayer provided corporate guarantee to enable the subsidiary in obtaining funds from ICICI Bank Bahrain branch, for working capital requirements and

capital expenditure and charged guarantee commission at the rate of 0.5%. The TPO based on the information gathered from various banks and lending companies in India, held that 3% of the amount of guarantee would be appropriate and made an upward adjustment. The Tribunal held that payment of guarantee fee is included in the expression international transaction. However, the methodology applied by the TPO, was not any of the methods prescribed. The Tribunal also held that the universal application of a rate of 3% for guarantee commission cannot be upheld in every case as it is largely dependent upon several major facts, such as the terms and condition, on which loan has been given, risk undertaken, relationship between the bank and the client, economic and business interest which have to be taken into consideration. Everest Kanto Cylinder Limited v.DCIT (LTU), Mumbai, TS-714-ITAT-2012(Mum) Transactions between two domestic related parties cannot be covered under the extended definition of International Transaction The taxpayer entered into transactions with its domestic AE for payment towards project execution, project management and reimbursement of expenses. The TPO invoking the transfer pricing provisions held that these

transactions are in the nature of deemed international transaction. The Tribunal held that the transfer pricing provisions would apply to cases where two AEs intend to have an international transaction but want to avoid transfer pricing provisions by interposing a third party as an intermediary. This deeming provision needs at least one of the parties to the transaction to be non-resident. As in the present case both the taxpayer and its AE are residents transfer pricing provisions would not be applicable. Swarnandhra IJMII Integrated Township Development Co Pvt. Ltd. v. DCIT ITA No. 2072/Hyd/2011 dated 31st December 2012

Tax Briefly

15

International Tax Developments

New Zealand Fundamental changes proposed to thin cap rules The Policy Advice Division of New Zealands Inland Revenue released an issues paper on 14 January 2013 that proposes significant changes to the thin capitalization rules to ensure that New Zealand captures its fair share of tax from investments made by nonresidents in the country, particularly in the case of private equity investment. There is concern that private equity investors often work together in groups in a way that mimics control by a single controlling investor. The thin capitalization rules also are said to be ineffective when debt funding from an entire global group comes from ultimate shareholders, rather than third parties. If enacted, the changes to the rules are proposed to take effect from the income year beginning after the enactment of relevant legislation (at the earliest, as from the 2014 income year). Although the issues paper focuses on private equity investment vehicles, certain aspects of the proposed changes could inject uncertainty and potential overreach into the thin capitalization rules. Taxpayers currently subject to the rules also could face increased compliance costs. The key proposed changes would: Broaden the thin capitalization rules for inbound investment to include investments that are not controlled by a single nonresident. The rules would apply to investments held 50% or greater by groups of nonresidents as long as those investors were acting together, either by explicit agreement or because they were being coordinated by a party; and Exclude related party debt when calculating the worldwide debt-to-asset ratio in applying the 110% safe harbor. Other proposed changes include bringing certain New Zealand trust structures within the scope of the thin capitalization regime, excluding capitalized interest from asset values and ignoring accounting value uplifts arising from transactions between associated parties. European Union The European Commission has published an updated edition of its list of VAT rates applied throughout the EU. The list provides a snapshot of rates in force in each EU

member state as of 14 January 2013. It also provides details of the geographical rates (e.g. the special VAT rates that Portugal applies in the Azores and Madeira) and the history of rates applied in each member state. OECD The OECD has published report on Base Erosion and Profit Shifting (BEPS). The report concludes that there is a need for increased transparency on effective tax rates of multinational companies. Key pressure areas are: international mismatches in entity and instrument characterization; application of treaty concepts to profits derived from the delivery of digital goods and services; the tax treatment of related party debt financing, captive insurance and other intra-group financial transactions; transfer pricing, in particular in relation to transactions between entities that would rarely take place between independents; the effectiveness of anti-avoidance measures; and the availability of harmful preferential regimes.

16

United States Fiscal cliff agreement becomes law US President Obama on 2 January 2013 signed legislation that averts the fiscal cliff by permanently extending the reduced Bush-era income tax rates for lower- and middle-income taxpayers; allowing the top rates on earned income, investment income, and estates and gifts to increase from their 2012 levels for more affluent taxpayers; and permanently patching the individual alternative minimum tax (AMT). The American Taxpayer Relief Act of 2012 also extends dozens of temporary business and individual tax extenders provisions through 2013 and includes a number of changes to federal spending programs. Among its major tax provisions, the new law: Permanently extends most of the individual income tax relief provided in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 for unmarried taxpayers with income of USD 400,000 or less and married taxpayers with income of USD 450,000 or less; Permanently sets the top marginal tax rate at 39.6% (up from 35% in 2012) for unmarried taxpayers with income over USD 400,000 and married taxpayers with income over USD 450,000; Permanently sets the top rate on income from capital gains and qualified dividends at 20% (up from 15% in

2012) for unmarried taxpayers with income over USD 400,000 and married taxpayers with income over USD 450,000; Increases the individual AMT exemption to USD 50,600 for unmarried filers and USD 78,750 for married filers for 2012, permanently indexes those exemption amounts for inflation beginning in 2013, and allows nonrefundable personal credits against the AMT; Permanently reinstates the personal exemption phase-out (PEP) and limitation on itemized deductions (Pease) for single taxpayers with adjusted gross income (AGI) above USD 250,000 and joint filers with AGI over USD 300,000, with the thresholds indexed annually for inflation; Permanently sets the top estate tax rate at 40% for estates worth more than USD 5 million (indexed for inflation); and Renews through 2013 an array of temporary tax extenders provisions, such as the research and experimentation credit, the subpart F active financing exception and the look-through rule for payments between related controlled foreign corporations. The new law does not extend the reduction in payroll taxes that was in effect in 2011 and 2012, nor does it reduce or delay new tax increases on earned and unearned income that were enacted under the Patient Protection and Affordable Care Act of 2010 and that took effect on 1 January 2013.

Tax Briefly

17

Indirect Tax

Service Tax Notifications/Circulars Restoration of service specific registration and accounting codes The levy of service tax under the negative list based regime is not with respect to any specific category or description of taxable service. However, reference to the category of taxable service has been restored for the limited purpose of registration and payment of tax under the Finance Act. A list of 120 descriptions of services (based on the definitions of categories of taxable service under the erstwhile service tax regime) and accounting codes corresponding to each description have been provided. While registrations obtained under positive list approach would continue to be valid, assessees who have obtained registration under all taxable services after introduction of negative list based regime would be required to apply for amendment and opt for registration under relevant service descriptions. [Notification No. 48/2012- Service Tax dated 30 November 2012, Circular No. 165/16/2012- Service Tax dated 20 November 2012] Reminder letters issued by life insurance companies for payment of renewal premium not to be considered as point of taxation for invoking service tax liability Reminder letters/ notices issued by life insurance companies to policy holders to pay renewal premiums
18

only solicit continuation of services and results into service if accepted by policy holder by payment of premium. It has been clarified that the reminder letters/ notices, not being invoices as per Rule 4A of Service Tax Rules, do not give rise to point of taxation and hence would not invite levy of service tax. [Circular No. 166/1/2013- Service Tax dated 1 January 2013] Services of transportation of milk by rail or vessel from one place to another in India covered under list of exempted services It has been clarified that transportation of milk by rail or vessel from one place in India to another would be covered within purview of exemption for transportation of foodstuff provided under Notification No. 25/2012Service Tax dated 20 June 2012. [Circular No. 167/2/2013- Service Tax dated 1 January 2013] Case laws 1. Re-classification of ongoing contracts as works contract and the benefit of composition scheme not available: The question before Honble Apex Court was whether service tax liability in case of ongoing contracts (where service tax is paid under other category), which involve transfer of property in goods can be discharged under works contract composition scheme from the date of introduction of scheme. In this regard, the Honble Apex Court held that Rule 3(3) of Works Contract Rules

provide that the service provider is required to opt for payment of service tax under composition scheme before the payment of service tax on the said contract. Thus, it was also held that assessee cannot opt to pay service tax under composition scheme from 1 June 2007 on ongoing contracts, where service tax is already paid under other category. The circular dated 4 January 2008 providing above position is in accordance with Rule 3(3) of Works Contract Rules. M/s Nagarjuna Constn Co. Ltd. [2012-TIOL-107-SC-ST] 2. Applicability of service tax on re-imbursement of expenses under Rule 5(1) of STVR is ultra vires to Section 67 of the Finance Act Honble Delhi High Court has held that as per Section 67 of Finance Act, consideration for service can only be treated as value of taxable service. It was further held that Rule 5(1) of STVR travels beyond the scope and mandate of the Section 67 of Finance Act and hence, Rule 5(1) of STVR is ultra vires of the section. Intercontinental Consultants and Technocrats Pvt Ltd Vs Union of India & ANR (2012-TIOL-966-HC-DEL-ST) 3. Penalty cannot be levied under both section 76 and 78 of the Finance Act In the present case, the CESTAT dismissed the stay application and directed the appellant to deposit entire amount of service tax liability, interest and penalty levied by adjudicating authority under section 76 and 78 of the Finance Act. The assessee being aggrieved by the said order filed a writ petition before Honble High Court. On the basis of 5th proviso to section 78, Honble High Court held that penalty under section 76 and 78 cannot be imposed together and accordingly modified the order of CESTAT to direct the appellant to pre-deposit service tax, interest and 25% of penalty thereon under section 78 only. Ronak Travels [2013-TIOL-52-HC-AHM-ST] 4. Franchise / collaboration fees for permitting the use of the brand name is subject to service tax even if it is provided by non-profit organization with the motive of charity The Petitioner was a society engaged in running renowned schools and allowing other schools to use their name and brand for consideration in form of non-refundable deposit and annual fee. The

revenue authorities demanded service tax on such non-refundable deposit and annual fee under the category of Franchise services. The appellant contended that they are non-profit organization and are engaged in carrying non-commercial activities. The said contention of the Appellant was rejected by Honble Rajasthan High Court holding that permitting other schools to use their logo and motto is subject to service tax. Mayo College General Council Vs Commissioner of C.Ex (Appeals) Jaipur (2012-28-S.T.R-225) 5. Services in the nature of tour operator will be taxable when provided using hired vehicles The assessee had provided services of tour operator using owned vehicles as well as hired vehicles. Assessee did not pay service tax on services provided using hired vehicles contending that these vehicles are owned by third party and they receive 5% of total receipts as commission. The Bangalore Bench of CESTAT held that activities of assessee are subject to service tax as they are covered within the definition of tour. The fact that the service is provided through own and hired vehicles will not make any difference as far as taxability is concerned. Mangalore Tourist Service Vs. Commissioner of Central Excise, Mangalore [2012-37-STT-117/25 taxmann CESTAT-Bangalore] 6. Main activity of the entity is only relevant for examining the eligibility of CENVAT credit and not the ancillary resultant activity The appellant was engaged in manufacture of writing and printing paper. The appellant availed consultancy services for modernization of own power plant, which resulted into better efficiency and reduction in carbon emission. The electricity produced by such power plant was used in manufacturing dutiable goods. As a result of modernization, carbon emission was reduced and appellant earned income by way of sale of carbon credit arising out of reduction of carbon emission. Revenue contended that these consultancy services are availed for sale of carbon credit, which is not dutiable and hence, credit of service tax paid on the same should be disallowed. The Delhi bench of CESTAT held that main activity of appellant was manufacturing dutiable paper for which electricity was used from captive power plant and consultancy services were used for modernization of such plant. If, as ancillary result, assessee earned income
Tax Briefly 19

by way of sale of carbon credit, such sale cannot be said to have connection with availment of consultancy services and hence, credit is allowable. Shree Bhawani Paper Mills Ltd. V. Commissioner of Central Excise, Lucknow [2012] 26 taxmann.com 270 (New Delhi - CESTAT) 7. Refund of Service tax paid on services such as Terminal Handling Charges, Repo charges, documentation charges availed for export is admissible The assessee had availed various services for export of the goods and paid service tax on the same to service providers. Under Notification 41/2007-ST, assessee claimed refund of such service tax paid. The Ahmedabad Bench of CESTAT held that refund of service tax paid on Terminal Handling Charges, Repo charges, documentation charges is admissible being in the nature of port service, which is a specified service under the notification. However, service tax paid on fumigation charges is not admissible in absence of specific agreement for the same with buyers, which is a condition in the aforesaid notification. Commissioner of Central Excise, Ahmedabad Vs. Amee Castors & Derivatives Limited [2013-TIOL-121-CESTAT-AHM] 8. No service tax liability on toll collection under Business Auxiliary service The appellant was engaged in construction of highways. The PWD of Maharashtra awarded the contract for widening of road and authorized them to collect toll from users of the road under Concessionaire Agreement.

The revenue authorities demanded service tax on such toll collection under the category of Business Auxiliary Service. The Mumbai Bench of CESTAT held that if the contractor is authorized to collect the toll charges from the users of the roads for undertaking construction of road on the basis of an agreement between the State Authority and the concessionaire and the entire activity is done on Build-Own/Operate-Transfer basis roads, there is no service tax liability. M/s Ideal Road Builders Pvt. Ltd. Vs. Commissioner of service tax CCE, Mumbai [2013-TIOL-136-CESTAT-MUM] 9. Time limit for filing refund claim i.e. 1 year should be considered from the date of settlement of dispute and not from date of availment, where eligibility of CENVAT credit is in dispute The appellant, 100% EOU had availed CENVAT credit on various input and input services used in manufacturing goods to be exported. The revenue disputed the eligibility of such credit contending that these are not used for export. This dispute was settled by higher authority in favour of appellant allowing such credit. Following the settlement in favour, the appellant filed refund application for such disputed CENVAT credit. However, revenue rejected the same on the ground of limitation. In this regard, the Chennai bench of CESTAT held that date of settlement of dispute is relevant date and period of limitation should be considered from the said date. India Trimmings Private Limited Vs. Commissioner of Central Excise & Service tax, Coimbatore [2013-TIOL-144-CESTAT-MAD]

20

Excise Notifications/Circulars Initiation of recovery proceedings It has been provided that recovery proceedings against a confirmed demand shall be initiated as under: Where demand is confirmed in Order-in-Original appealable to Commissioner (Appeals) or Order-inOriginal appealable to Tribunal or demand is confirmed by Commissioner (Appeals) for the first time: If no appeal is filed against such order Recovery proceeding to be initiated after expiry of statutory period prescribed* for filing appeal from the date of communication of order

Change in effective rates of duty Effective rate of excise duty on the following goods is increased from 3% to 5%: Gold bars, other than tola bars, bearing manufacturers engraved serial number and weight expressed in metric units manufactured in a factory starting from the stage of (a) Gold ore or concentrate; (b) Gold ore bar Gold bars, other than tola bars, bearing manufacturers or refiners engraved serial number and weight expressed in metric units and gold coin of purity not below 99.5% [Notification No. 1/2013- Central Excise dated 21 January 2013] Case laws 1. Words in taxing statutes be construed in terms of commercial understanding in absence of statutory definition In a case relating to classification of goods, the SC held, that in absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding or according to popular meaning. It was observed that resort to rigid interpretation in terms of scientific and technical meanings should be avoided. Commissioner of Central Excise, New Delhi v. Connaught Plaza Restaurant Pvt. Ltd., New Delhi [2012-TIOL-114-SC-CX] 2. Manufacture and sale of goods not bearing brand name sold from branded outlets not eligible for SSI exemption The assessee in the instant case manufactured and sold cookies in containers/ pouches and in loose over the counter from its branded retail outlet. While excise duty was paid on the goods sold in container/ pouches bearing brand name, the assessee sought to claim SSI exemption in respect of goods sold loose which did

If appeal is filed without Recovery proceeding to be initiated on filing of such an application for stay on appeal without waiting for the statutory period for recovery with the respective filing appeal to expire appellate authority If appeal is filed along with an application for recovery of stay with the respective appellate authority Recovery proceeding to be initiated on earlier of: 30 days after filing appeal, if no stay is granted Disposal of application for stay in accordance with conditions, if any, of stay In other situations: All cases where Commissioner (Appeals) confirms demand in Order-in-Original Cases where Tribunal or the High Court confirms the demand Recovery to be initiated immediately on the issue of Order-in-Appeal

Recovery to be initiated immediately on issuance of the Order by the Tribunal or the High Court, if no stay on recovery is in operation
*The prescribed period for filing appeal against Order-in-Original appealable to Commissioner (Appeals), Order-in-Original appealable to Tribunal, Order wherein demand is confirmed by Commissioner (appeals) for the first time is 60 days, 90 days and 90 days respectively.

[Circular No. 967/1/2013- Central Excise dated 1 January 2013]

Tax Briefly

21

not physically bear inscription of brand name. The SC held that the test of whether the goods are branded or unbranded is not physical presence of the brand name on the goods but whether a connection is conveyed between such specified goods and person using the brand name/ mark in the course of trade. Therefore, it was held that the cookies sold loosely and not physically bearing a brand name from the exclusive branded retail outlet shall qualify to be branded goods and not eligible for SSI exemption. Commissioner of Central Excise, Chennai-II v. M/s Australian Foods India Ltd [decided on 14 January 2013] 3. Recovery proceedings not to be initiated impending Stay application for reasons beyond the control of assessee The petitioners challenged the Circular no. 967/1/2013-CX dated 1 January 2013 issued by the CBEC which directed the field formations to initiate recovery of outstanding demands in situations where appeal is filed against the order before the Appellate authorities. The Mumbai HC held that the provisions of the Circular cannot be applied to an assessee whose Stay application is pending for reasons beyond its control. However the HC clarified that the recovery proceedings can be initiated in case the Stay is pending for reasons having a bearing on the default or improper conduct of the assessee. The HC also observed that there is no justification to commence recovery immediately following an order in appeal in light of the fact that a certain time period has been specified for challenging the decision of the Appellate Authority. Larsen & Toubro Ltd v. Union of India & Others [2013-TIOL-99-HC-MUM-CX] 4. Classification of combination pack of articles would depend on material/ component giving it essential character Referring to Rule 3B of General Rules of Interpretation, the Tribunal held that in matters of classification of combination pack of articles which are individually classifiable under different tariff headings, classification of the material/ component which gives the combination pack its essential character shall be relevant. It was further held that the material/ component which gives essential character needs to be

evaluated from a buyers perspective. Karamchand Appliances Pvt. Ltd v. Commissioner of Central Excise, Chandigarh [2012 (84) ELT 692 (Tri. Del.)] 5. Education Cess and SHE Cess not covered by excise duty exemption notification In the facts of the case, exemption from excise duty was available under Notification 56/2002- CE dated 7 November 2002. The Appellant sought to avail exemption of education Cess and SHE Cess in addition to exemption of excise duty, which was denied by the revenue authorities. The Tribunal relying on ratio of decisions of another bench, Guwahati HC and Apex Court held that exemption from duty of excise under the notification does not entitle the assessee for exemption from Education Cess and SHE Cess. Tawi Chemical Industries Ltd v. Commissioner of Central Excise, J&K [2012-TIOL-1422-CESTAT-DEL] 6. CENVAT of SAD admissible on goods procured from 100% EOU The Tribunal held that CENVAT Credit of all additional duties of customs levied under Section 3 of the CTA, 1975 on goods procured by a DTA unit from a 100% EOU shall be admissible under Notification no. 22/2009CE (NT) even for period prior to 7 February 2009. The referred Notification allowed credit of SAD and was held to be clarificatory in nature. The Tribunal set aside the contention of the revenue that credit shall be available prospectively pursuant to said amendment. M/s Metaclad Industries v. CCE, Mumbai-II [2012-TIOL-1577-CESTAT-MUM] 7. Trade discount should be known and clearly understood prior to or at the time of removal of goods to be eligible for deduction from assessable value The Tribunal upheld the deduction of trade discount from assessable value which was passed on to the customers by way of credit notes and not as deduction from invoice value. The Tribunal observed that what is material is that discount should be known and understood prior to or at the time of removal of goods. M/s Vardhman Spinning & General Mills v. Commissioner of Central Excise, Ludhiana

22

[2012-TIOL-1421-CESTAT-DEL] 8. Refund admissible in case prices revised downward with retrospective effect in terms of price variation clause in agreement The Tribunal upheld the refund claim of the assessee on account of downward reduction in price with retrospective effect by virtue of a price variation clause in contract. The adjudicating authority denied the claim on the ground that reduction in price subsequent to clearance of goods cannot result in reduction of excise duty already paid. The Tribunal held that refund shall be admissible in case of downward revision in price in terms of price variation clause in the agreement and even if the assessment was not made provisionally at the time of clearance of goods. Commissioner of Central Excise, Ghaziabad v. M/s Mahavir Cylinders [2013-TIOL-48-CESTAT-DEL] Customs Notifications/Circulars Re-importation of goods from Bhutan for repair or re-conditioning to be eligible for exemption if goods are re-imported within 10 years from date of exportation Re-importation of goods from Bhutan for repair or reconditioning will be eligible for exemption from basic and additional duties of customs if goods are re-imported within a period of 10 years from the date of exportation and all other conditions specified in the Notification for claiming such exemption are satisfied. [Notification No. 60/2012- Customs dated 6 December 2012] Security furnished in the form of FDR for availing exemption in relation to mega or ultra-mega power projects can be replaced with bank guarantee It has been clarified that an importer/ project developer who has furnished security in the form of FDR for obtaining exemption in relation to mega or ultra-mega power projects has the option of replacing the FDR with bank guarantee. [Circular No. 2/ 2013- Customs dated 1 January 2013]

Transfer of goods from foreign containers to domestic shipping containers under customs supervision for cost efficiency of imports Section 49 of the Customs Act provides for facility of storing goods in a warehouse pending clearance of the same where goods cannot be cleared within a reasonable time. In terms of the above referred provision, it has been clarified by CBEC that an importer has option to de-stuff goods from foreign containers and keep the same in the CFS/ ICD including in empty domestic containers under customs supervision. Further, the goods so stored can be subsequently cleared under the provisions of the Customs Act. [Instruction vide F. No.450/95/2012-Cus.IV dated 20 November 2012] Revised guidelines for AEO Programme Various amendments have been prescribed to the AEO Programme introduced in the year 2011. Under the said programme, any one engaged in the international movement of goods can be approved by customs authorities if compliant with the supply chain security standards and given benefits such as simplified customs procedures and reduced customs intervention. The changes, inter alia, include the following: Stringent requirements with respect to business partner security, procedural security, etc. AEO Programme extended to authorized couriers and custodians. AEO importers will be given benefit of furnishing reduced bank guarantee not exceeding 5% of bond amount, wherever applicable. AEO exporters, for export consignments shipped to sensitive places identified in CBEC Circular No. 6/2002Customs dated 23 January 2002, will be given benefits of reduced percentage of examination as per the scale cited in the recent Circular. [Circular No. 28/2012- Customs dated 16 November 2012] Specific provisions for a Customs Cargo Service Provider authorized under AEO Program A Customs Cargo Service Provider authorized under AEO Programme will not be required to furnish bank guarantee or cash deposit under Handling of Cargo in Customs Areas Regulations, 2009. Further, approval

Tax Briefly

23

granted to such Customs Cargo Service Provider under the said Regulations may be extended for a longer period of 10 years at a time as against the usual period of 5 years. [Notification No. 104/2012- Customs (Non-tariff) dated 16 November 2012] Specific provisions for a Customs House Agent authorized under AEO Program A license granted to a Customs House Agent authorized under the AEO Programme will be valid till the time of validity granted to such agent under AEO Programme as against the usual period of validity of 10 years. [Notification No. 105/2012- Customs (Non-tariff) dated 16 November 2012] Change in effective rates of duty Effective rate of basic duty of customs on the following products is increased from 4% to 6%: Gold bars, other than tola bars, bearing manufacturers or refiners engraved serial number and weight expressed in metric units, and gold coins having gold content not below 99.5%, imported by the eligible passenger Gold bars, other than tola bars, bearing manufacturers or refiners engraved serial number and weight expressed in metric units, and gold coins having gold content not below 99.5%, other than imports of such goods through post, courier or baggage Platinum Effective rate of additional duty of customs on the following products is increased from 2% to 4%: Gold ores and concentrates for use in the manufacture of gold Gold dore bar, having gold content not exceeding 95% [Notification No. 1/2013- Customs dated 21 January 2013] Case laws 1. If notice is not issued for seizure of goods within period stipulated under the Act, seized goods are required to be released unconditionally In the present case, the imported goods were seized by customs authorities and were provisionally released.
24

However, SCN was not issued to importer for such seizure of the goods within time limit prescribed under section 110(2) of the Act. The Honble Delhi High Court held that the subject goods are required to be released unconditionally as no notice is issued to the importer for such seizure of goods within prescribed time limit. Jatin Ahuja [2012-TIOL-986-HC-DEL-CUS] 2. Value of imported goods cannot be enhanced without discarding transaction value or having any evidence to doubt the same Chennai Bench of CESTAT held that revenue should discard the transaction value on the basis of evidence or should reflect upon some evidence to cast doubt in respect of the same for enhancing the value of the imported goods. Commissioner of Customs, Amritsar Vs. Neeldhara transfers [2012 (284) E.L.T 673 - CESTAT-DEL] 3. Relationship between supplier and importer is relevant ground for investigation but not for loading the value. The impugned order should state the basis of adopting proposed value of imported goods Delhi bench of CESTAT held that relationship between supplier and importer is ground for investigation but not for loading the value. Further, it was also stated that the impugned order should state the basis of rejecting the transaction value and adopting proposed value of imported goods. That the appellant had agreed to loading in the past is not a valid reason to continue to load the declared value. Sew - Curodrive (I) Private Limited Vs. Commissioner of Customs [2012 (284) E.L.T 294 - CESTAT-DEL] 4. The process of cutting and slitting cannot be considered as manufacturing provided goods remain the same even after the process, refund of SAD was allowed The question of law before the CESTAT was that whether refund of SAD paid on import of goods is allowed even if the process of cutting and slitting is undertaken on the same. The Ahmedabad Bench of CESTAT held that refund of SAD is allowed if the same imported goods are sold as such. Further, on the basis of several decisions, CESTAT held that the process of cutting and slitting does not amount to manufacture and does not change the identity of imported goods.

Hence, condition of sale of imported goods as such is satisfied even if above mentioned process is undertaken on them and refund should not be rejected on the above ground. M/s Posco India Delhi Steel Processing Limited Vs. Commissioner of Customs, Kandla [2012 TIOL-1769-CESTAT-AHM] 5. The transactions in duty free shops are governed by terms and conditions of license issued for duty free shops The owners of duty free shop in an airport are permitted to stock duty free imported goods and sell the same to passengers under a specified license. Due to space constraint in duty free shops, the appellant stored these imported goods in a bonded warehouse on execution of bond and removed the same within prescribed time limit. In such cases, generally the bond is kept valid till the removal of goods from the warehouse. Revenue authorities demanded duty on such imported goods contending that the bond was not kept valid after their removal from the warehouse till the goods are actually sold. The Mumbai bench of CESTAT held that the transactions of duty free shops are governed by license issued for the same. If all conditions of license are adhered and goods are removed from warehouse within stipulated time, there is no requirement of keeping bond valid till the date of their sale. Commissioner of Central Excise Vs. India Tourism Development Corpn. Ltd. [2013-TIOL-117-CESTAT-MUM] Foreign Trade Policy Notifications/Circulars/Public notices Notification of Incremental Exports Incentivisation Scheme Incremental Exports Incentivisation Scheme has been notified with effect from 1 January 2013. Under the Scheme, an IEC holder would be entitled to duty scrip of 2% on the incremental growth achieved on the FOB value of exports by the IEC holder for the quarter ending on 31 March 2013 over the corresponding quarter of the previous financial. The salient features of the scheme are as under: The Scheme is region specific and will cover exports to USA, Europe and Asian countries only.

Incremental growth should be in terms of freely convertible currency to designated markets. Incremental growth shall be computed for each exporter separately without any scope for combining the exports for Group Company. Export performance shall not be allowed to be transferred from any other IEC holder Specified exports such as export from SEZ/ EOU/ EHTP; service exports; exports to Singapore, UAE and Hong Kong; export of diamond, gold, silver and other precious metals; etc. will not be taken into account for computing the export performance or entitlement under this Scheme. The duty credit scrip will be freely transferable and will also be eligible for domestic sourcing. Benefit under this Scheme will be over and above the benefit claimed by exporter under any other scheme. The benefit of the scheme is available on realization basis and consequently applications can be filed after 1 April 2013. [Notification No. 27 (RE-2012)/ 2009-2014 dated 28 December 2012, Public Notice No. 41 (RE- 2012)/ 2009-2014 dated 28 December 2012] Recipient of goods may also claim TED refund With retrospective effect from 1 March 2011, recipient of goods can also claim TED refund. However, he is required to produce a disclaimer from supplier stating that the supplier has not claimed and does not wish to claim any benefit of TED refund in respect of the said goods. Format for disclaimer from supplier has been prescribed. [Public Notice No. 31 (RE- 2012)/ 2009-2014 dated 21 November 2012] Amendment in reward/ incentive schemes of Chapter 3 of FTP Provisions of reward/ incentive schemes contained in Chapter 3 of FTP 2009-14 have been amended to add/ delete certain products for benefits under Vishesh Krishi and Gram Udyog Yojna, Focus Product Scheme; add markets for Focus Product Scheme, etc. [Public Notice No. 42 (RE- 2012)/ 2009-2014 dated 31 December 2012]

Tax Briefly

25

Re-fixation of annual average export obligation for EPCG Authorizations for the year 2011-12 The provisions of FTP permit re-fixation of annual average export obligation for EPCG Authorizations in case export in any sector/ product group decline by more than 5% as compared to exports for previous year. In terms of the said provisions, a list of 223 product groups showing decline of more than 5% in exports during the year 2011-12 as compared to the year 2010-11 has been published. Some of the product groups covered in the said list are copper wire, zinc ores and concentrates, textile wall coverings, printed circuits, etc. In view of the said list, all Regional Offices have been instructed to re-fix the annual average export obligation for EPCG Authorizations for the year 2011-12 accordingly. [Circular No. 9 (RE- 2012)/ 2009-2014 dated 27 December 2012] EHTP/ STP can apply to jurisdictional RA for status recognition EHTPs and STPs can file an application of status recognition under Chapter 3 of FTP to jurisdictional RA. [Public Notice No. 45 (RE- 2012)/ 2009-2014 dated 29 January 2013] Value Added Tax Delhi Framing of Default Assessment Order under CST Act Default assessment for FY 08-09, 09-10 and 10-11 to be completed by 28th February 2013 where dealers have not filed all their statutory declaration forms along with DVAT 51 and notice u/s 59 of the Delhi Value Added Tax Act, 2004 seeking information has been issued. In case where no apparent discrepancies exist, statutory declaration forms are complete and notice has not been issued u/s 59 no assessment order need to be passed. [Circular No. 23 of 2012 -13 dated 03rd December 2012 read with Circular No. 29 of 2012-13 dated 31st January 2013]

Submission of Information in Form T-2 Implementation of Online Form T-2 giving details of imports, CST purchases and branch transfer inwards into Delhi has been deferred to 1st March 2013 for dealers having Gross Turnover (GTO) of Rs.10 Crores & total liability of tax Rs.50 Lakhs and to 1st April 2013 for all other dealers. [Notification No.F.7 (433)/Policy-II/VAT/2012/1070-81 Dated 31st January 2013] Extension in Time limit for filing DVAT 51 Time limit for furnishing of reconciliation return for all the quarters for FY 2011-12 in Form DVAT-51 has been extended from 31st December 2012 to 28th February 2013. [Order No. No.F.3(33)/P-II/ VAT/ Misc./2006/ Dated: 26th December, 2012] Increase in WCT-TDS Rate for Registered Dealers Rate of TDS, in case of registered contractors has been increased from 2% to 4%. [Notification no. F.14(13)/LA-2012/Cons2law/179 Dated 28th December 2012]

Intimation of Permanent account number (PAN) and Importer Exporter Code (IEC) Registered dealers are mandatorily required to intimate PAN in form DVAT 52 and IEC under a cover letter latest by 15th March 2013. [Notification no. F.14(13)/LA-2012/Cons2law/179 Dated 28th December 2012] Himachal Pradesh Levy of penalty for incorrect/false claim of Input Tax Credit If a dealer falsely claims excessive input tax credit with the intent to adversely affect revenue interest, a penalty equal to twice the amount of such claim or credit shall be levied. If a dealer incorrectly claims excessive input tax credit due to wrong calculation without any

26

intention to affect the revenue interest, a penalty equal to 50% of the amount of such claim or credit shall be levied. [Himachal Pradesh Value Added Tax (Amendment) Act, 2012 Dated January 2013 ] Extension in due date of submission of VAT Audit Due Date for submission of VAT Audit for the period starting1st April 2012 has been extended from 31st October to 15th November of the year following the said period. Due Date for filing of VAT Audit for FY 2011-2012 is extended from 31st December 2012 to 28th February 2013. [Notification No.F-A-3-54-2012-1-V(48)Dated 31st Dec 2012] Maharashtra Clarification with regards to occurrence of statutory due date on Sunday or public holiday If the due date for payment of taxes or filing of returns or any statutory submission occurs on Sunday or public holiday then compliance on the next working day shall be considered to have been made within the due date. [Circular No. 19 T of 2012 Dated 09th November 2012] Punjab Increase in Input Tax Credit (ITC) reversal / retention against stock transfer Rate of retention / reversal of input tax credit for stock transfer have been increased form 4% to 5% w.e.f. 4th December 2012. [Punjab Ordinance no 17 of 2012 dated 4th December 2012] Tripura E return and E payment facility has been introduced w.e.f 20th December 2012. [Notification No. F.1-1(43)-Tax/2005(P-I) Dated 20th December, 2012]

Case laws 1. An arrangement, whether qualifies as a works contract or otherwise shall be decided on the facts of the case In a challenge to Trade Circular dated 6 August 2012 which is liable to be construed by the Assessing Officer as providing a mandate to him that a particular type of contract would necessarily involve an element of works contract or be a works contract, the Mumbai HC clarified that the issue as to whether a particular contract constitutes a works contract or involves an element of a works contract is a matter which shall be decided on the facts of the individual case. The HC also remarked that a Trade Circular issued by the Commissioner of Sales Tax cannot foreclose the quasijudicial powers and/ or functions of the Assessing Authorities. Mr. Ashok R. Gokani & Anr v. State of Maharashtra & Anr [WP (L) no. 2405 of 2012/ decided on 30 October 2012] 2. Input tax credit admissible on goods used for generation of captive power which is used in manufacture of finished products The Orissa HC allowed the Appeal regarding claim for input tax credit on coal, alum, caustic soda and other consumables used for generation of electrical energy in the captive thermal plant of the petitioner. The claim for credit was allowed on the ground that the energy so produced is used in the process of manufacture of finished products viz. aluminum, aluminum ingots, sheets, etc. on which VAT under OVAT is payable. M/s National Aluminum Company Limited v. Dy. Commissioner of Commercial Taxes, Bhubaneshwar [2012-VIL-97-ORI] 3. Sale of used cars by a business entity engaged in manufacture and sale of goods not related to vehicle not subject to Sales tax In the instant case, the petitioner was engaged in the business of manufacture and sale of pharmaceutical products. The petitioner used certain vehicles in the course of business which were sold subsequently. The

Tax Briefly

27

revenue authorities sought to levy tax on impugned sales under the provisions of the DST Act and CST Act. The Delhi HC observed that sale of used cars cannot be characterized as ancillary or incidental to the business of a pharmaceutical company. The HC further observed that the vehicles had already been taxed once under the first point tax regime and hence the levy of tax on already taxed vehicles with little relation to the business will give rise to an anomaly. Based on the above, the HC held that such sale of used cars is not subject to sales tax under DST Act or CST Act. Panacea Biotech Ltd v. Commissioner of Trade and Taxes & Ors [2012-VIL-111-DEL] 4. Sharing of towers between telecom infrastructure companies and telecom operators not subject to VAT The issue before the Karnataka HC in the instant case was whether the tower sharing arrangement between the telecom infrastructure companies and telecom service providers constituted deemed sale under the provisions of KVAT. The Appellant granted permission in the nature of license to have access to the passive infrastructure owned by it. The HC observed that based on the facts of the case, the Appellant had not transferred any right in the passive infrastructure to the mobile operators and no sale or transfer of goods was involved. Accordingly, such arrangements could not be treated as deemed sale and therefore, not subject to VAT. M/s Indus Towers Limited v. The Dy. Commissioner of Commercial Taxes, Bangalore [decided on 7 September 2011]

5. Royalty received for use of trademark and sharing business know how subject to VAT The petitioner in this case received royalty from franchisees for use of its trademark and share of business know how on which service tax was paid under the category of Franchisee services. The revenue sought to levy VAT on the consideration received, treating the transaction as transfer of right to use goods (deemed sale) under the provisions of KERVAT. The single member bench of Kerala HC held that the trademark qualify to be goods and based on the nature of arrangement, the transaction tantamount to transfer of right to use goods. The HC distinguished the attributes laid down by SC decision in BSNL case for a transaction to constitute a transfer of right to use goods by observing that the Apex Court was not dealing with a case involving transfer of intellectual property such as trademark. The HC also observed that legality of levy of service tax on the impugned transaction is not an issue before the Court and it was upto the petitioner to challenge the same in appropriate proceedings. Malabar Gold Pvt. Ltd v. Commercial Tax Officer & Ors [2012-TIOL-1032-HC-KERALA-VAT] 6. No reversal of input tax credit if goods transferred outside State are brought back and sold within the State The issue before the Tribunal was reversal of input tax credit as required under Section 11(3)(b) of the GUJVAT in case goods are sent outside the State of Gujarat. The Tribunal held that no reversal of input tax credit @ 4% shall be required in case goods purchased within the State are sent outside the State for processing, manufacturing or job work and if the goods are received back and sold within the State. M/s Madhusudan Texturisers Pvt. Ltd v. the State of Gujarat [First Appeal no. 365 of 2011/ decided on 27 September 2012]

28

Glossary

AAR: Act: AEO: ALP: AMP: AO: AE: CBEC: CENVAT: CESTAT: CFS: CIT: CUP: Customs Act: CST Act: DST Act: DTAA: EHTP: EOU: EPCG: FDR: Finance Act: FOB: FTP: ICD:

Authority for Advance Ruling Income-tax Act, 1961 Authorized Economic Operator Arms Length Price Advertising, marketing and promotion Assessing Officer Associated Enterprise Central Board of Excise and Customs Central Value Added Tax Customs, Excise and Service Tax Appellate Tribunal Container Freight Station Commissioner of Income tax Comparable Uncontrolled Price Customs Act, 1962 Central Sales Tax Act, 1956 Delhi Sales Tax Act, 1975 Double Taxation Avoidance Agreement Electronic Hardware Technology Park Export Oriented Unit Export Promotion Capital Goods Fixed Deposit Receipts The Finance Act 1994 Free on Board Foreign Trade Policy Inland Container Depot

IEC: EOU: GUJVAT: HC: KERVAT: KVAT: MV Act: OVAT: PWD: RA: SAD: SC: SCN: SEZ: ST: STP: Service Tax Rules: STVR: TNMM: TDS: TDR: TED: TP: TPO: Tribunal: VAT:

Import Export Code Export Oriented Unit Gujarat Value Added Tax Act, 2003 High Court Kerala Value Added Tax Act, 2003 Karnataka Value Added Tax Act, 2003 Motor Vehicle Act, 1988 Odisha Value Added Tax Act, 2004 Public Works Department Regional Authority Special Additional Duty Supreme Court Show Cause Notice Special Economic Zone Service Tax Software Technology Park Service Tax Rules, 1994 Service Tax Valuation Rules Transactional Net Margin Method Tax deducted at source Transferable Development Rights Terminal Excise Duty Transfer Pricing Transfer Pricing Officer Income tax Appellate Tribunal Value Added Tax

Tax Briefly

29

Contacts
Ahmedabad Heritage, 3rd Floor, Near Gujarat Vidhyapith Ahmedabad 380 014 Phone: +91 (079) 6607 3100 Bangalore Deloitte Centre, Anchorage II, 100/2, Richmond Road, Bangalore 560025 Phone: +91 (080) 6627 6000 Baroda 31, Nutan Bharat Society, Alkapuri, Baroda 390007 Phone : +91 (0265) 2333 776 Chennai No. 37th, New No: 52, 7th Floor, ASV N Ramana Towers, Venkatnarayana Road, T N nagar, Chennai 600 017 Phone: +91 (044) 66885000 Coimbatore Shanmuga Mandaram, 41 Race Course Coimbatore 641018 Phone: +91 (0422) 24392801 Delhi/NCR 7th Floor, Building 10 Tower B, DLF Cyber Ciity Complex, DLF City Phase II, Gurgaon 122002 Phone: +91 (0124) 679-2000 Goa 5th floor, Suyash Complex, Panaji, Goa 403 001 Phone: +91 (0832) 2431821 Jamshedpur 8-B ,Circuit House Area, North-East Road No.11, Jamshedpur 831 001 Phone : +91 (0657) 2225883 Kochi First Floor, Wilmont Park, Business Centre Warriam Road, Kochi 682 016 Phone: +91 (0484) 2354305 Kolkata 1st floor, BlockEP & GP, SectorV, Salt Lake Electronics Complex Kolkata 700 091 Phone : +91 (033) 6612 1000 Mumbai Indiabulls Finance Centre Tower 3, 27th-32nd Floor, Senapati Bapat Marg, Elphinstone Road (W), Mumbai 400013 Phone: + 91 (022) 6185 4100 Pune 706, B - Wing, 7th floor, ICC Trade Tower Senapati Bapat Marg, Pune 411 016 Phone : +91 (020) 6624 4600 Hyderabad 1-8-384 & 385, 3rd Floor, Gora Grand, S.P. Road, Begumpet, Hyderabad 500 003 Phone : +91 (040) 40312600

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of DTTIPL, Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network) is, by means of this material,rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this material. 2013 Deloitte Touche Tohmatsu India Private Limited. Member of Deloitte Touche Tohmatsu Limited 32