Udyog Tax News Flash

February 2014

Pre-deposit: should not be pay or perish: AP High Court

Over the past year or two we have witnessed draconian pre-deposit orders from the Andhra Pradesh High Court, which naturally influenced the manner of decision of stay applications in the Tribunal at Bangalore also. In a cautious partial reversal of the trend, the AP High Court last month reduced the pre-deposit amount in the case of Patel Engineering Limited, in a dispute pertaining to whether service tax was payable on works executed for the state government. The court observed that the assessee had not collected the disputed amount from anybody. Certain other observations made by the court are worth quoting: The condition as to pre-deposit of the entire amount involved would certainly put heavy burden on the assessee. Whatever may be the justification in enacting such a provision, the remedy of appeal for a citizen cannot be made so dearer, nor can it be kept beyond the reach of an assessee. Indiscriminate denial of the power of waiver would result in a situation where an aggrieved party would be indirectly told "pay or perish". Just as levy of taxes is an attribute of sovereign power, adjudication of disputes is equally an important attribute of the same species. The only difference is while the former partakes the character of the right of the sovereign Government, the latter is in the form of its duty. Unless it is tempered with an element of reasonableness, the adjudicatory mechanism is prone to be just an eye-wash. http://judis.nic.in/judis_andhra/qrydisp.aspx?filename=10762

Service tax: waiver of past dues for authorized persons/sub-brokers for forward contracts
The central government has issued notification 3/2014-ST dated 3 February 2014 to waive past dues of service tax payable, for the period 10 September 2004 to 30 June 2012, on services provided by the authorized person or sub-broker to a member of a recognized or registered association in relation to a forward contract. This has been done under section 11C of the Central Excise Act, made applicable to service tax by section 83 of the Finance Act 1994. The said section 11C provides that where duty/tax was not levied by prevalent practice, it can be notified as waived for that period. Those who paid it can apply for refund. The notification 3/2014-ST can be seen at http://www.servicetax.gov.in/notifications/notfns-2014/st03-2014.htm

Customs: exemption for tunnel boring machines

The CBEC has issued notification 4/2014-Customs dated 3 February 2014, to exempt customs duty on tunnel boring machines and parts required for assembly of tunnel boring machines. The notification can be downloaded at http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cstarr2014/cs04-2014.htm

Customs: exchange rates notified

The CBEC has notified exchange rates of various currencies for customs purposes under section 14(2) of the Customs Act 1962, effective from 7 February 2014. The US dollar is now notified to exchange for INR 62.95 for valuing imported goods and for INR 61.95 for export goods. The pound sterling is notified at INR 102.90 for imported goods and INR 100.65 for export goods. See the notification 9/2014-Customs (NT) dated 6 February 2014 at http://cbec.gov.in/customs/cs-act/notifications/notfns-2014/cstarr2014/cs04-2014.htm

Central excise: exemption for DCP, iron and steel for railway, tramway tracks
The central government has issued notification 3/2014-CE dated 3 February 2014, by which it has exempted di-calcium phosphate (DCP) of animal feed grade from excise duty; and also provided a concessional rate of duty for iron and steel for construction of railway or tramway tracks. See http://cbec.gov.in/excise/cx-act/notfns-2014/cx-tarr2014/ce03-2014.htm

Central excise: statutorily required relabeling is not deemed manufacture: HC

Excise duty is levied only on products that are the result of a process of manufacture; but the definition of manufacture for this purpose includes some activities that are deemed to be manufacture by legal fiction. The Madras High Court decided a dispute related to this, in which the company imported additives and relabeled them as per requirement of the legal metrology department. The department demanded excise duty on the

additives, on the basis of the deeming provision for that particular class of products, by which labelling or re-labelling of containers and re-packing from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture. The High Court, however, found that the relabeling had done in compliance with statutory requirements and cannot attract the mischief of deemed manufacture. This order in Civil Miscellaneous Appeal 2487 of 2007 and 1354 of 2008 of Commissioner of Central Excise v Indian Additives Limited can be seen at http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=44871

Cenvat credit: suo moto re-credit of reversed amount permitted: HC

If an assessee mistakenly reverses an amount of Cenvat credit, there is much difficulty in re-crediting the amount. The central excise department insists on a refund claim as the only route to re-credit. Some Tribunal decisions also upheld this position. However the Madras High Court, in its order dated 3 January 2014 in Civil Miscellaneous Application 208 of 2013 of ICMC Corporation has observed that it is only an account entry adjustment and not related to payment of any duty, and does not require filing of a refund claim. The High Court allowed the suo moto re-credit. See http://judis.nic.in/judis_chennai/qrydisp.aspx?filename=44786

Code of ethics for customs and excise officers

A code of ethics for customs and excise officers was launched on World Customs Day in Namibia, not in India. Can we look forward to something similar, or are we to remain content with the platitudes mouthed during Vigilance Week each November?
http://www.newera.com.na/2014/02/05/code-ethics-customs-officials-launched/

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SAP E.C.C. 6.0 MFG-QAD eB 2.1 BPCS BAAN FP 7

SAGE Accpac ERP 100 v 5.6 ABAS Adage Oracle

Updated and written by Radha Arun [radha.arjuni@gmail.com], Consultant to Udyog Software (India) Ltd.
Udyog Software (India) Ltd. www.udyogsoftware.com Phone: 022-67993535 Email: ca-service@udyogsoftware.com | sales@udyogsoftware.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.