Sale at duty free shops is outside India, not liable to VAT-Supreme Court0 comments Tuesday, February 7, 2012Supreme Court of India has held in a very important following case that duty free shops are deemed to be outside India and hence sales effected in these duty free shops is sales outside India and during the cource of Import and hence is covered u/s 5 of Central Sales Tax Act, 1961 and hence outside the perview of State Government to levy VAT. Facts: M/s Hotel Ashoka, is managed by India Tourism Development Corporation Limited (hereinafter referred to as `the Corporation’). The Corporation is having its duty free shops at all major International Airports in India. At the said duty free shops, the appellant sells several articles including liquor to foreigners and also to Indians, who are going abroad or coming to India by air. We are concerned with a duty free shops situated at an International Airport at Bengaluru. The appellant is registered as a dealer under the Act as well as under the Central Sales Tax Act, 1956 (hereinafter referred to as `the Central Act’). In the return filed under the Act as well as under the Central Act for the relevant period, the appellant had stated that though liquor, cigarettes, perfumes and food articles were sold at the duty free shops at the Bengaluru International Airport, no tax was payable by the appellant as the goods which had been sold at the duty free shops were sold directly to the passengers and even the delivery of goods at the duty free shops was made before importing the goods or before the goods had crossed the customs frontiers of India. The Appellant contended no tax can be levied under the Act or under the Central Act when the goods are sold in the course of import or before the goods have crossed the customs frontier of India as per the provisions of Section 5 of the Central Act and so far as the Act is concerned, no tax can be levied, if the sale takes place before the goods crosses the customs frontiers of India as no State can tax the sale or purchase of goods which are outside the concerned State i.e. the State of Karnataka in the instant case, as per the provisions of Article 286 of the Constitution of India. Inspite of the above stand of the appellant, the assessing authority directed to pay a sum of Rs.4,20,70,900/- by way of sales tax. Aggreived by it the writ petition was filed before single bench of Karnataka High Court which was dismissed stating that the appellant should exhaust alternative remedy of filing appeal. On further appeal to division bench of the High Court the same was dismissed upholding the decision of single Judge. On Appeal to Supreme Court it was held as under: It is an admitted fact that the goods which had been brought from foreign countries by the appellant had been kept in bonded warehouses and they were transferred to duty free shops situated at International Airport of Bengaluru as and when the stock of goods lying at the duty free shops was exhausted. It is also an admitted fact that the appellant had executed bonds and the goods, which had been brought from foreign countries, had been kept in bonded warehouses by the appellant. When the goods are kept in the bonded warehouses, it cannot be said that the said goods had crossed the customs frontiers. The goods are not cleared from the customs till they are brought in India by crossing the customs frontiers. When the goods are lying in the bonded warehouses, they are deemed to have been kept outside the customs frontiers of the country and as stated by the learned senior counsel appearing for the appellant, the appellant was selling the goods from the duty free shops owned by it at Bengaluru International Airport before the said goods had crossed the customs frontiers.(Para 18) Upon perusal of the aforestated provision of Section 5 of the Central Act, it is clear that a sale or purchase of goods shall be deemed to take place in the course of import of the goods into the territory of India only if sale or purchase takes place before the goods have crossed the customs frontiers of India. Looking to the aforestated legal position, it cannot be disputed that the goods sold at the duty free shops, owned by the appellant, would be said to have been sold before the goods crossed the customs frontiers of India, as it is not in dispute that the duty free shops of the appellant situated at the International Airport of Bengaluru are beyond the customs frontiers of India i.e. they are not within the customs frontiers of India. If this is the factual and legal position, in our opinion, looking to the provisions of Article 286 of the Constitution, the State of Karnataka has no right to tax any such transaction which takes place at the duty free shops owned by the appellant which are not within the customs frontiers of India. (Para 30)They(Revenue)again submitted that `in the course of import’ means `the transaction ought to have taken place beyond the territories of India and not within the geographical territory of India’. We do not agree with the said submission. When any transaction takes place outside the customs frontiers of India, the transaction would be said to have taken place outside India. Though the transaction might take place within India but technically, looking to the provisions of Section 2(11) of the Customs Act and Article 286 of the Constitution, the said transaction would be said to have taken place outside India. In other words, it cannot be said that the goods are imported into the territory of India till the goods or the documents of title to the goods are brought into India. Admittedly, in the instant case, the goods had not been brought into the customs frontiers of India before the transaction of sales had taken place and, therefore, in our opinion, the transactions had taken place beyond or outside the custom frontiers of India. No penalty for non/wrong quoting of PAN of deductees in TDS return, if corrected afterwards in revised return0 comments Monday, February 6, 2012Chandigarh ITAT has held in an important case namely ITO(TDS), Panchkula Vs. Bharat Electronics Ltd.(2012) 47 I.T.Reps 167(ITAT-Chd) that no penalty u/s 272B for wrong quoting of PAN shall be leviable on the deductor when such deductor had quoted invalid PAN in 64 cases out of 645 deductees, which default was corrected by the assessee on coming to know of it and filed revised return with correct PAN after verifying the same from the deductees.
Refunds 2011-12-TDS credit to be allowed if mismatching in TDS doesnot exceed Rs. one lac0 comments Saturday, February 4, 2012Section 143 of the Income-tax Act, 1961 –Assessment – General – Processing of returns of assessment year 2011-12 – Steps to clear backlog Instruction No. 01/2012 [F.NO.225/34/2011-ITA.II], dated 2-2-2012 The issue of processing of returns for the Asst. Year 2011-12 and giving credit for TDS has been considered by the Board. In order to clear backlog of returns, the following decisions have been taken: Analysis-Date of Issue of notice u/s 143(2) is relevant, not the date of service of notice-P&H HC0 comments Friday, February 3, 2012The Punjab & Haryana High Court has in held in the following case that the notice u/s 143(2) shall be deemed to be served on the assessee within time if the notice is issued by the revenue within time. The Hon’ble High court considered the word serve in the proviso to section 143(2) as meaning the date of issue of notice. It is notable here that notice u/s 143(2) of Income Tax Act, 1961 should be served within six months from the end of assessment year to which the notice belongs. Specification of remuneration to partners in partnership deed is necessary-P&H HC0 comments Thursday, February 2, 2012Charitable Trusts-Manner of Application of funds are outside the purview of CIT while examining application for registration u/s 12AA.0 comments Wednesday, February 1, 2012Punjab & Haryana High Court has held in the following case that while granting registration u/s 12AA to Charitable Trusts, Commissioner should examine genuinness of the objectives of the trust so as to grant registration u/s 12AA, rather than the manner of application of funds by the trust. The application of funds by the Trust has to be seen after the return is filed by the trust. It is also held that the quantum of activities undertaken by the trust after its creation cannot be a basis for examining registration application under section 12AA. Due date for submittimg ITR-V for A.Y 2011-12 extended to 31.03.2012 or 120 days whichever is later0 commentsCBDT has extended the due date of submitting ITR-V form to Bangalore for the A.Y. 2011-12 to 31-03-2012 or 120 days whichever is later. ITR-V form is required to be submitted by ordinary or speed post to Bangalore CPC after efiling the return without digital signature, within 120 days of efiling the return
Despite voluntary surrunder penalty u/s 271(1)(c) is justified if surrunder made after incriminating material is found0 comments Sunday, January 29, 2012I have found the following order of Delhi ITAT as very good one on the issue of levy of penalty u/s 271(1)(c). In this case it has been held that If an assessee surrenders any income after department has collected incriminating material with regard to such income, it cannot be called a voluntary surrender for purpose of section 271(1)(c).
In this case some incriminating material showing possible income of the assessee was found, which was confronted to the assessee, but instead of rebutting the same, the assessee surrundered the amount as his income, whereby penalty u/s 271(1)(c) desipite of surrunder was levied which was upheld by the Tribunal in this case. Due date for efiling of vat returns in Punjab for the quarter Oct.-Dec., 2011 extended to 31.01.20120 comments Friday, January 27, 2012Due date of efiling VAT returns for the quarter 01-10-2011 to 31-12-2011 has been extended by one day from 30th January, 2012 to 31st, January 2012 due to elections to be held in Punjab on 30th January, 2012. The relevant public notice is being produced herebelow: CBDT launched special drive for verification of High Value Transactions0 commentsPRESS RELEASE NO. 402/92/2006-MC (03 OF 2012), DATED 18-1-2012 The Central Board of Direct Taxes has directed the Income Tax department to launch a special drive, from 20th January to 20th March, 2012, for verifying high value transactions (investments/deposits/expenditure) from persons who are not assessed to income tax or who have not furnished their PAN while entering into such transactions. In an instruction issued today, the CBDT issued proforma for query letters and responses to be issued to the high value investors/depositors/spenders. Delay in issue of notice u/s 143(2) renders reassessment proceedings invalid0 comments Thursday, January 26, 2012Delhi High Court in an important following case has held that delay in the issue of notice u/s 143(2) in reassessment proceedings renders the whole proceedings as invalid, more so when the objection to delay in serving the notice is raised during the assessment proceedings in view of section 292BB of Income Tax Act. It is notable here that after 01.10.2005 it is mandatory to issue notice u/s 143(2) of Income tax Act before reassessment proceedings u/s 147/148 are started. CIT(Appeals) has inherent powers to grant stay on disputed income tax demands0 comments Monday, January 23, 2012The HC held: “The powers of the appellate authorities are indisputably concurrent and co-extensive with that of the Assessing Authority but wider and superior in nature. Section 251 of the Act clearly stipulates that in disposing of an appeal, the CIT (Appeals) can confirm, reduce, enhance or annul the assessment. Section 251(1)(c) of the Act further provides that in other cases, he may pass such orders in appeal as he thinks fit. Peak Credit and telescoping theories in assessment proceedings under Income Tax.2 comments Sunday, January 15, 2012There may be some cases under Income Tax Assessment proceedings where there are a large number of unexplained credit and debit enteries of a person standing in books of account of an assessee. In such case the AO may tend to add all the aggregate enteries as unexplained income. Changed rate of tax on certain goods under Punjab VAT Act, 20050 comments Saturday, January 14, 2012Punjab Government has changed rate of VAT on certain items under Punjab VAT Act, 2005. These items with changed rate of tax are as follows:
Sales made to Punjab State Power Corporation Ltd. and Punjab State Transmission Corporation Ltd.for generation, transmission and distribution of electrical energy against a certificate duly filled and signed by the Designated officer 5% Powers of Excise & Taxation Inspectors equivalent to ETOs extended till 31-12-20120 comments Wednesday, January 11, 2012The powers of excise and Taxation Inspectors under Punjab VAT Act, 2005 to act as designated officers u/s11,13,14,26,27,28,29,30,31,32,36,38,39,40,41,45,46,47,48,49,52,53,54,55,56,57,
58,59,60,66,76,77,83, have been extended from 31st December, 2011 to 31st December, 2012. The above powers include important powers like to make assessments, levy penalties and interest, Power of audit, Provisional assessments, grant & withhold refunds, Power to search & seizure, survey etc. Due date of service tax return for period ending Sept. 2011 extended to 20-1-20120 comments Tuesday, January 10, 2012F. No. 137/99/2011 – Service Tax Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs, ****** ORDER NO 1 /2012 – Service Tax Deduction of depericiation on machinery and tools from the works contract should be allowed.1 comments Sunday, January 8, 2012There are two components in every works contract one is material component and other is labour component. Material incorporated in a works contract is considered as deemed sales to the contractee and hence is liable to VAT or sales tax. To arrive at the material component involved in a works contract deductions for labour component are allowed. Specified provisions of Income Tax Act which shall apply to Centralised Processing of Returns Scheme, 20110 comments Saturday, January 7, 2012Section 143 of the Income-tax Act, 1961 – Assessment – General – Specified provisions of the Act which shall apply to Centralised Processing of Returns Scheme, 2011 Notification No. 3/2012 [F. No. 142/27/2011-SO (TPL)], dated 4-1-2012 In exercise of powers conferred by sub-section (1B) of section 143 of Income Tax Act, 1961 (43 of 1961), for the purpose of giving effect to the Centralised Processing of Returns Scheme, 2011 made under sub-section (IA) of section 143 of the said Act, the Central Government hereby directs that, the following provisions of the Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as specified hereunder, namely: - CBDT notifies Centralised Processing of returns scheme 20110 commentsCBDT has notified Centralised Processing of Returns Scheme, 2011, wherein the various terms and conditions relating to the Centralised processing of returns have been prescribed.
Centralised processing of returns is being going on in CPCs for some years now, but the scheme for such centralised processing has been finally made now, which answers a lot of questions regarding processing of efiled returns, which many people had in their minds unanswered. No penalty merely because audit report is not furnished in time, unless deliberation on part of assessee0 comments Friday, January 6, 2012I have found the following order of ITAT Mumbai as very important as it has been held that Merely because, the assessee did not furnish the report before the due date of filing of the return, that may not automatically attract the penalty.
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