TIOL-DDT 2089
22.04.2013
Monday

AN advocate practicing Income Tax is before the Delhi High Court seeking a direction to the Income Tax Department to supply the copy of the Central Board of Direct Taxes (in short CBDT) circular/ instruction dated 19.06.2009. The information sought under the RTI Act from the Department was refused and the advocate did not succeed in his appeals till the CIC.

The Department's argument is that in order to ensure that, there is no unfairness in selection of cases for scrutiny; guidelines are issued to the Assessing Officers in this behalf which, if revealed, would enable the assessees to manipulate their returns; that the information falls within the realm of Section 8(1)(a) of the RTI Act and thus stands excluded as it would impact the economic interest of the country.

The Delhi High Court was not impressed. The High Court observed,

"The expression, economic interest, thus takes within its sweep matters which operate at a macro level and not at an individual, i.e., micro level. By no stretch of imagination can scrutiny guidelines impact economic interest of the country. These guidelines are issued to prevent harassment to assessees generally. It is not as if, de hors the scrutiny guidelines, the I.T. Department cannot take up a case for scrutiny, if otherwise, invested with jurisdiction, in that behalf. This is information which has always been in public realm, and therefore, there is no reason, why the respondents should keep it away from the public at large. Thus, provisions of Section 8(1)(a) of the RTI Act would have no applicability in the instant case.

The High Court directed the Income Tax Department to supply the relevant scrutiny guidelines to the petitioner for the financial year 2009-10. They shall hereafter upload the guidelines with regard to scrutiny on their website.

Please see 2013-TIOL-303-HC-DEL-RTI

Release of Annual Supplement 2013 -14 to FTP 2009-14

Highlights-

- THE Zero Duty EPCG Scheme was scheduled to expire in March 2013. In a major decision, the Government has decided not only to extend the Zero Duty EPCG scheme beyond March 2013, but also merge it with 3% EPCG Scheme. Now the Zero Duty EPCG benefits will be available to all sectors . A major simplification of the EPCG scheme has also been undertaken and the details are mentioned in the notifications issued.

- Further, for units located in J&K, North East and Sikkim, exporters would be required to achieve 25% of normal export obligation under the scheme. Time period for completion of export obligation for BIFR units has been extended to 9 years instead of 6 years in normal cases .

- In order to encourage exporters to procure capital goods domestically it is decided that if a EPCG authorization holder procures capital goods from domestic market, the export obligation of such authorization shall be reduced by 10%.

- Hitherto, any exporter who had obtained benefits under the Technology Up-gradation Fund Scheme was ineligible for obtaining benefits under Zero Duty EPCG Scheme. It is now decided that even an exporter who has obtained benefits under TUFS Scheme, will be eligible for benefits of Zero Duty EPCG Scheme.

- Incremental Export Incentive Scheme was introduced in December, 2012 for a period of 3 months under which an additional incentive of 2% of FOB value of exports was provided on the incremental exports during that period over the corresponding period last year. This Scheme was made available for exports to USA, Europe and Asia. The Government, considering the popularity of the Scheme, has decided to extend the benefits of this Scheme for this year as well and to cover 53 countries of Latin America and Africa apart from the earlier notified markets .

- The government had earlier extended 2% interest subvention to specified labour intensive sectors coving Handlooms, Handicrafts, Carpets, SMEs, Toys, Sports Goods, Processed Agricultural Products and Ready-Made Garments till 31st March 2013 and in December this facility was extended upto March 2014. Now, it has been decided to extend this facility to textile made up articles listed in Chapter 63 of ITC and specified items in Engineering sector.

- Norway is added as a new market under the Focus Market Scheme, taking the total number of markets to 125. Venezuela has been added for the eligibility under the Special Focus Market Scheme with 4% duty credit, taking the total number of countries to 50. 47 new items have been added to the Market Linked Focus Product Scheme (MLFPS) and benefits for exports to USA and EU for chapter 61 & 62 pertaining to the textile sector, which has been extended by another year till March 2014. 126 items of engineering, pharmaceuticals, chemicals and textiles sector have been added to the Focus Product Scheme (FPS) and two new items have been added in the Vishesh Krishi and Gram Udyog Yojana (VKGUY) Scheme .

- Earlier, the scrips under Chapter 3 Schemes were eligible for utilization for offsetting excise duty in case exporter procures from domestic market to give a focused thrust for manufacturing in domestic industry. The same is further allowed utilization of duty credit scrip issued under FMS, FPS and VKGUY for payment of service tax on procurement of services.

- All duty credit scrips under Chapter 3 are now made eligible for payment of application fee, composition fee and value-wise shortfall in export obligation.

- Last year, the government had allowed transferability of the Status Holder Incentive Scrip (SHIS) subject to the condition that the transferee is a status holder manufacturer. The scope of transferability has been expanded inasmuch as such transfers within a group company of a status holder are allowed provided the group company is a manufacturer.

- Duty credit scrips equivalent to 10% of free foreign exchange earned is issued under Served from India Scheme (SFIS), but currently is allowed for imports relating to any service sector business of applicant. However, recognizing that a group company of service sector provider may also be engaged in manufacturing, the Government has decided to allow usage of SFIS scrips for import or domestic procurement of capital goods including spares related to manufacturing sector business of such service provider .

- In order to encourage export of services, especially in the tourism sector , the government has allowed use of SFIS scrips for import or domestic procurement of motor cars, SUVs, all purpose vehicles for hotel, travel agents, tour operators, companies owning/operating golf resorts for tourist purposes . However, users will be required to submit proof of registration for tourism purposes within 6 months and these vehicles will not be allowed to be imported under EPCG scheme .

- Status Holder exporting agricultural products are allowed Agri-Infrastructure Incentive Scrip (AIIS) equivalent to 10% of FOB value of agricultural exports. Currently this is subject to ‘actual user' condition and is non-transferable. The government has now allowed transferability of these scrips from the Status Holder to Supporting Manufacturer of the Status Holder.

- In order to promote exports of agricultural produce, minor forest produce, gram Udyog products, forest based products, VKGUY scheme provides for duty credit scrip equivalent to 5% of FOB value of exports. The Scheme has a stipulation that in case exporter is eligible for duty drawback of more than 1%, VKGUY scheme scrips will be available at a reduced rate of 3%. This condition is being done away and all exporters availing benefits under VKGUY will now get 5% duty scrips.

- At present duty free import of specified 10 raw materials for manufacture of handlooms made ups, for cotton made ups or manmade made ups is allowed up to 5% of FOB value of preceding year in case of handloom made ups and 1% of FOB value in case of cotton made ups or manmade made ups. Now, in addition to 10 raw materials allowed earlier, embroidery threads, sewing threads, poly-wadding materials, quilted materials and printed bags have also been allowed within these duty free limits.

- For enhancing exports of sports goods, import of 16 specified items is allowed duty free to the extent of 3% of FOB value of exports in the preceding year. The list is being expanded to include 5 more items.

- It has now been decided to dispense with requirement of submission of physical form of Export Promotion copy of shipping bill to the Regional Authority of DGFT in order to obtain Export Obligation Discharge Certificate in case of Advance Authorization, Duty Free Import Authorization and EPCG scheme.

- In order to make IT exports more flexible, the Government has extended the facility of ‘Work from Home' to STPI and EOUs.

Amnesty Scheme: There are several Advance Authorization and EPCG authorizations of the past which are pending for closure on account of non-fulfilment of export obligation. In order to clean up such cases, one time relief has been provided to such authorization holders who would be able to close these cases on payment of custom duty and interest and the total amount of duty and interest shall not exceed two times of amount of the duty saved.

A package of reforms has been announced for reviving investor interest in SEZs.

They are -

++ In view of the acute difficulties in aggregating large tracts of uncultivable land for setting up SEZs, while ensuring vacancy and contiguity, Govt has decided to reduce the Minimum Land Area Requirement by half. For Multi-product SEZ from 1000 hectares to 500 hectares and for Sector-specific SEZ from existing 100 hectares to 50 hectares;

++ To provide greater flexibility in utilizing land tracts falling between 50-450 hectares, it has been decided to introduce a Graded Scale for Minimum Land Criteria which would permit a SEZ an additional sector for each contiguous 50 hectare parcel of land. This will also bring about more efficient use of the infrastructure facilities created in such an SEZ;

++ Further flexibility to set up additional units in a sector specific SEZ is being provided by introducing Sectoral broad-banding to encompass similar / related areas under the same sector;

++ On the issues relating to Vacancy of Land, while the existing policy allows for parcels of land with pre-existing structures not in commercial use to be considered as vacant land for the purpose of notifying an SEZ, it has now been decided that additions to such pre-existing structures and activities being undertaken after notification would be eligible for duty benefits similar to any other activity in the SEZ;

++ IT Exports constitute a very significant part of India's exports and IT SEZs have a major contribution in it. Exports from IT SEZs during financial year 2012-13 have exceeded Rs. 1.40 lakh crore registering a growth of over 70% over the previous year's exports.

++ The present requirement of 10 hectares of minimum land area has been done away with. Now there would be no minimum land requirement for setting up an IT/ITES SEZ. Only the minimum built up area criteria would be required to be met by the SEZ developers;

++ The minimum built up area requirement has also been considerably relaxed with the requirement of one lakh square meters to be applicable for the 7 major cities viz: Mumbai, Delhi (NCR), Chennai, Hyderabad, Bangalore, Pune and Kolkata. For the other Category B cities 50,000 square meters and for remaining cities only 25,000 square meters built up area norm will be applicable;

++ The present SEZ Framework does not include an Exit Policy for the units and feedback was that this was perceived as a great disadvantage. It has now been decided to permit transfer of ownership of SEZ units, including sale.

Notification/public Notice snapshot -

# A new Chapter 5 of the Foreign Trade Policy, 2009-2014 harmonizing the two versions (Zero Duty and 3% Concessional Duty) of EPCG Schemes is notified. This will replace the existing version with immediate effect.

# Anti-dumping duty and safeguard duty would be leviable on goods imported against transferred DFIAs. Advance Authorisations will no more be available for import/supply of ‘energy'. Value Addition in respect of SEZ (in respect of para 4A.16A of FTP) would be as per SEZ Act.

# The Scheme to incentivize incremental exports for the year 2013-14 and other amendments to Chapter 3 of FTP are being notified.

# When ab initio exemption is available, benefit of TED refund will not be given.

# Import policy of cars manufactured prior to 1st January, 1950 is being revised from 'restricted' to ‘free' for Actual Users with immediate effect.

# The government has also allowed import of cars and vehicles at ICD at Faridabad and Ennore Port.

# Validity of Zero duty EPCG Authorisation will be 18 months from the date of issue.

DGFT Notifications:

01/(RE-2013)/ 2009-2014, Dated: April 18, 2013

02/(RE-2013)/ 2009-2014, Dated: April 18, 2013

03/(RE-2013)/ 2009-2014, Dated: April 18, 2013

04/(RE-2013)/ 2009-2014, Dated: April 18, 2013

05/(RE-2013)/ 2009-2014, Dated: April 18, 2013

06/(RE-2013)/ 2009-2014, Dated: April 18, 2013

DGFT Public Notices:

01/(RE-2013)/ 2009-2014, Dated: April 18, 2013

02/(RE-2013)/ 2009-2014, Dated: April 18, 2013

03/(RE-2013)/ 2009-2014, Dated: April 18, 2013

04/(RE-2013)/ 2009-2014, Dated: April 18, 2013

05/(RE-2013)/2009-2014, Dated : April 18, 2013

Customs Notifications

22/2013-Cus dated 18th April, 2013

23/2013-Cus dated 18th April, 2013

24/2013-Cus dated 18th April, 2013

Central Excise Notifications

14/2013-CE dated 18th April, 2013

15/2013-CE dated 18th April, 2013

Service Tax Notifications

6/2013 - ST Dated: April 18, 2013

7/2013 - ST Dated: April 18, 2013

8/2013 - ST Dated: April 18, 2013

ITAT Bar Association boycotts member

A meeting of the managing committee of ITAT Bar Association, Ahmedabad was held on 19th April, 2013 and the following resolution was passed unanimously:

RESOLVED THAT considering the conduct of Shri A. K. Garodia, the Accountant Member of ITAT Bench at Ahmedabad, it was found that on account of his consistent gross, rude, arbitrary and outrageous behavior with all members of the Bar appearing before him and his doubtful integrity and unethical standards, the committee decided to boycott the Bench consisting of Shri A. K. Garodia from Monday i.e 22nd April 2013 indefinitely, and information of this Resolution is given to the members of the Association through Email as well as SMS with request that all members will observe the boycott of the Bench.

Information of this resolution has been conveyed to the President of ITAT telephonically as well as to the Vice President, Ahmedabad Zone by the committee who met him personally.

The ITAT seems to be in bad shape. The Income Tax Appellate Tribunal, the oldest Tribunal in India established more than 70 years ago, is today without regular President for the last three years and nearly a third of the sanctioned strength of 146 Members is lying vacant. It will be difficult for an Acting President to effectively manage such a Tribunal.

The Government should bestow more attention at least on the Tax Tribunals, instead of rushing to legislate draconian arrears recovery.

New Exchange Rates

GOVERNMENT has notified new exchange rates effective from 19.04.2013 for export and imported goods.

Notification No. 40/2013 - Cus.,(N.T.), Dated: April 18, 2013

Carry your tiffin boxes on 29th April

IN DDT 2082, we carried the story of restaurateur Janardhan Nair from Kalamassery, Kochi and his decision to get rid of the air-conditioners and buy portable air-coolers for keeping his patrons cool and also keep away service tax.

After reading our story 'Get hot inside restaurants, thanks to Service Tax', Santosh Shetty from Mangalore wrote to us. He says -

"I have an open-air vegetarian restaurant and an air-conditioned family room attached. Due to Service Tax imposition from 1 st April, 2013, patrons of non AC sections are also required to be billed with the Service Tax component and this always leads to verbal tiffs. Even those who order for parcels at my restaurant are required to be charged the Service Tax amount. For these take-away food customers, I do not provide any service, yet they are to be billed the ST amount. No doubt, till the time their parcel is ready, they sit in my restaurant and also have a glass of ice cold water. So, nowadays, I tell them, it is for this ‘wait' that I charge them service tax! Sir, the government seems to have found in us an easy target to collect service tax. Does the government expect us to leave our job at the cash counter and file service tax returns or are they creating employment opportunities for ST preparers and also an avenue for more corruption for its officers? We used to earlier fight with the State governments regarding imposition of unreasonable amount of VAT and now we are required to deal with the bigger brother. It seems that the government is not eager to listen to us and so we are left with no option but to go on a nationwide closure of all hotels on the 29th April, 2013 demanding the withdrawal of Service Tax."

DDT hopes that the government is taking cognizance of this clarion call.

Scanning & Digitization of APARs

COME the month of April and the APAR season begins. The Central Board of Excise & Customs has reminded all the CCs & the DGs that the Board and DOP&T have been emphasising the need to complete the APARs of officers/employees as per the time schedule fixed by DOP&T that due to non-adherence to the prescribed guidelines various proposals relating to promotions/empanelment/deputation of officers are unduly delayed. So, the Board once again reiterates its instructions. After all, what else can one do?

The Board also informs that it has undertaken a major exercise ‘vide' which all past ACRs/APARs w.e.f FY 1980-81 up to FY 2011-12 have been scanned and data is in the process of being digitized and so on and so forth…

F.No. A 28011/12/2013-SO (Per/EC) dated 12th April, 2013

Jurisprudentiol - Tuesday's cases

Service Tax

Appellant entering into a tripartite agreement with his agents who would negotiate with corporates on his behalf for promotion of their products by agreeing to model himself for advertisement films, TV commercials, still photography etc.- agents discharging ST liability on whole amount of consideration received - no further ST to be paid by appellant - Appeal allowed with consequential relief: CESTAT

Mr. Zaheerkhan B. Khan, Mumbai was providing services to various corporate for promotion of their products by agreeing to model himself for advertisements films, TV commercials, still photographing, footage, press advertisement, etc. For this purpose, he had entered into a tripartite agreement. As per the said agreement, his agents, namely, M/s. Percept D Mark (India) Pvt. Ltd., M/s. Globosport and M/s. Globo Media Solutions (I) Pvt. Ltd. would negotiate with the corporate on his behalf for the activity to be undertaken by him and they would receive consideration from the corporate for the services rendered and would discharge the service tax liability on the whole amount of the consideration received and after deducting the expenses including their commission, they would remit the balance amount to Zaheerkhan .

Income Tax

Whether when assessee, engaged in insurance business, is required to compute income u/s 44, it can still avail exemption u/s 10(34) - YES: ITAT

THE issues before the Bench are - Whether when assessee, engaged in insurance business, is required to compute income u/s 44, it can still avail exemption u/s 10(34); Whether the assessee has correctly taken the negative reserve at ‘0' value as AO has no power to modify the amount after actuarial valuation was done, which was the basis for assessment under Rule 2 of 1st Schedule r.w.s.44 of the I.T. and Whether the profit earned on investments is to be taxed as income from other sources and is to be taxed as income transferred to policy holders' a/c. And the verdict partly favours the assessee.

Central Excise

ROM application by Revenue - 'date of order' mentioned in Section 35C(2) of CEA, 1944 means date of communication of order - since communication has been completed only on 20/06/2011, application filed on 12/09/2011 is not time barred: CESTAT

AGAINST an order dated 08/03/2011 passed by the CESTAT, the Revenue has filed a ROM application on 12/09/2011.

A preliminary objection has been raised by the respondent that the application is time barred inasmuch as since the order was passed on 08/03/2011, the ROM application ought to have been filed by 07/09/2011 whereas it has been filed only on 12/09/2011.

See Our columns Tomorrow for the judgements

Until Tuesday with more DDT

Have a nice day.

Mail your comments to vijaywrite@taxindiaonline.com