CIT vs. Anil Kumar Bhatia (Delhi High Court)

S. 153A applies if incriminating material is found even if assessments are completed

Pursuant to a search u/s 153A, the AO passed an assessment order in which he assessed various amounts. The Tribunal (1 ITR (Trib) 484) upheld the assessee's appeal on the ground that (a) no "incriminating material" was found in the course of search and (b) as ROIs for the said 6 years disclosed the particulars of the subject additions and these had been accepted by the AO u/s 143(1), no assessment was pending so as to have abated. It was held that s. 153A was not a de novo assessment or a normal/ regular assessment and the additions made therein have to be necessarily restricted to the undisclosed income unearthed during the search. On appeal by the department to the High Court, HELD reversing the Tribunal:

(i) U/s 153A, the AO is empowered to assess or reassess the "total income" (which includes the disclosed & undisclosed income) of 6 years. This is a significant departure from the earlier block assessment scheme (s. 158BC) in which only the undisclosed income could be assessed. U/s 153A, there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. If the assessment proceedings are pending completion when the search is initiated, they will abate making way for the AO to determine the total income of the assessee in which the undisclosed income would also be included. If the assessment proceedings have already been completed, there is no question of any abatement since no proceedings are pending & the AO will have to reopen the assessments (without having the need to follow the strict provisions or complying with the strict conditions of s. 147, 148 & 151) and determine the total income of the assessee;

(ii) The Tribunal's view that since the returns filed by the assessee for the six years had been processed u/s 143(1)(a) before the search took place, s. 153A cannot be invoked is not correct. The AO has the power u/s 153A to make assessment for all the six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that ROIs were filed which stood processed u/s 143(1)(a);

(iii) On facts, the Tribunal's finding that no material was found during the search is factually unsustainable since the entire case and arguments had proceeded on the basis that the document embodying the transaction was recovered from the assessee. If a document is found in the course of the search, s. 153A is triggered & it is mandatory for the AO to complete the assessment u/s 153A.

Noncompliance, the provisions of the Hazardous Wastes Rules, 1989, should be declared as unconstitutional

Posted on 11 August 2012 by Diganta Paul

Court

Supreme Court of India

Brief

The basic grievance of the Writ Petitioner was with regard to the import of toxic wastes from industrialized countries to India, despite such wastes being hazardous to the environment and life of the people of this country. The Writ Petitioner sought to challenge the decision of the Ministry of Environment and Forests permitting import of toxic wastes in India under the cover of recycling, which, according to the Petitioner, made India a dumping ground for toxic wastes. It was alleged that these decisions were contrary to the provisions of Articles 14 and 21 of the Constitution and also Article 47, which enjoins a duty on the State to raise the standards of living and to improve public health. In the writ petition it was also contended that Article 48A provides that the State shall endeavour to protect and improve the environment and to safeguard the forests and wildlife of the countre

Citation

RESEARCH FOUNDATION FOR SCIENCE, PETITIONER TECHNOLOGY AND NATURAL RESOURCE POLICY VS. UNION OF INDIA & ORS. … RESPONDENTS

Judgement

REPORTABLE

IN THE SUPREME COURT OF

INDIA

CIVIL ORIGINAL JURISDICTION

WRI T PETITIO N (C) No.65 7 o f 199 5

RESEARCH FOUNDATION FOR SCIENCE, PETITIONER

TECHNOLOGY AND NATURAL RESOURCE

POLICY

VS.

UNION OF INDIA & ORS. … RESPONDENTS

J U D G M E N T

ALTAMA S KABIR , J .

1. This writ petition has been filed by the Research Foundation for Science Technology and Natural Resource Policy, through its Director, Ms. Vandna Shiva, for the following reliefs:

"1. direct the Union of India banning all imports of all hazardous/toxic wastes;

2. direct amendment of rules in conformity with the BASEL Convention and Article 21, 47 and 48A of the Constitution as interpreted by this Court;

3. declare that without adequate protection to the workers and public and without any provision of sound environment management of disposal of hazardous/toxic wastes, the Hazardous Wastes (Management & Handling) Rules, 1989 are violative of Fundamental Rights and, therefore, unconstitutional;"

On 29th October, 1995, this Court directed notice to issue on the writ petition and also on the application for stay.

2. The basic grievance of the Writ Petitioner was with regard to the import of toxic wastes from industrialized countries to

India

, despite such wastes being hazardous to the environment and life

of the people of this country. The Writ Petitioner sought to challenge the decision of the Ministry of Environment and Forests permitting import of toxic wastes in

India

under the cover of recycling, which, according to the Petitioner, made

India

a dumping ground for toxic wastes. It was alleged that these decisions were contrary to the provisions of Articles 14 and 21 of the Constitution and also Article 47, which enjoins a duty on the State to raise the standards of living

and to improve public health. In the writ petition it was also contended that Article 48A provides

that the State shall endeavour to protect and improve the environment and to safeguard the forests and wildlife of the country.

3. In the writ petition, Ms. Vandna Shiva, the Director of the Petitioner Foundation, who is a well-known environmentalist and journalist, while highlighting some of the tragedies which had occurred on account of either dumping or release of hazardous and toxic wastes into the atmosphere, such as the tragedy which took place in the Union Carbide factory at Bhopal in 1984, referred to the BASEL Convention on the Control of Transboundary Movements of Hazardous Wastes and their disposal. It was submitted that an international awareness had been created under the BASEL Convention against the movement of hazardous wastes and their disposal in respect whereof the United Nations Environment Programme (UNEP) had convened a Conference on the Global Convention on the Control of Transboundary Movements of Hazardous Wastes pursuant to the decision adopted by the Governing Council of UNEP on 17th June, 1987. The said Conference met at the European World Trade and Convention Centre, Basel, from 20th to 22nd March, 1989.

India

also participated in the Conference. On the basis of

the deliberations of the Committee, the BASEL Convention on the Control of Transboundary Movements on Hazardous Wastes and their Disposal was adopted on 22nd March, 1989. It was the grievance of the Writ Petitioner that since

India

became a signatory to the BASEL Convention on 22^nd September, 1992, it should have amended the definition of "hazardous wastes", as provided in Article 3 read with Articles 4.1 and 13 of the said Convention. It was the further grievance of the Writ Petitioner that

India

should have enacted laws in regard to the Transboundary Movement procedures with regard to hazardous wastes. Some of the relevant provisions of Article 4 of the aforesaid Convention have been quoted in the writ petition and are extracted hereinbelow:

1. (a) Parties exercising their right to prohibit the import of hazardous wastes or other wastes for disposal shall inform the other parties of their decision pursuant to Article 13.

(b) Parties shall prohibit or shall not permit the export of hazardous wastes and other wastes to the Parties which have prohibited the import of such wastes, when notified pursuant to sub-para (a) above.

(c) Parties shall prohibit or shall not permit the export of hazardous wastes and other wastes if the State of import does not consent in writing to the specific import, in the case where that State of import has not prohibited the import of such wastes.

2. Each Party shall take the appropriate measures to:

xxx xxx

(c) Ensure that persons involved in the management of hazardous wastes or other wastes within it take such steps as are necessary to prevent pollution due to hazardous wastes and other wastes arising from such management and, if such pollution occurs, to minimize the consequences thereof for human health and the environment;

(d) Ensure that the transboundary movement of hazardous wastes and other wastes is reduced to the minimum consistent with the environmentally sound and efficient management of such wastes, and is conducted in a manner which will protect human health and the environment against the adverse effects which may result from such movement;

xxx xxx

(g) Prevent the import of hazardous wastes and other wastes if it has reason to believe that the wastes in question will not be managed in an environmentally sound manner."

4. Even restrictions on transboundary movement between parties contained in Article 6 of the Convention, inter alia, provide that the State of export shall not allow the exporter to commence the transboundary movement until it has received written confirmation that the notifier has received from the State of import confirmation of the existence of a contract between the exporter and the disposer specifying environmentally sound management of the wastes in question.

5. On 25th March, 1994, 65 countries which participated in the Convention agreed by consensus to ban all exports of hazardous wastes from OECD to Non-OECD countries immediately. It is the grievance of the Writ Petitioner that inspite of suchconsensual decision to ban all exports of hazardous wastes from OECD to Non-OECD countries, consistent efforts were made by the industrialized countries to break down the Non-OECD solidarity and to weaken the resolutions adopted at the BASEL Convention, and, in the process, Asia was fast becoming a vast dumping ground for international waste traders.

6. In the Writ Petition various instances were provided of the type of toxic wastes imported into

the country under the garb of recycling. The Writ Petitioner has also drawn the attention of the Court to the provisions of the Hazardous Wastes (Management & Handling) Rules, 1989, hereinafter referred as the H.W.M.H. Rules, 1989, and complained of the fact that the same had not been implemented both by the Central Government and the State Governments and Union Territories and their respective Pollution Control Boards.

7. Based on the said allegations, this Court initially asked all the State Governments and Union Territories and their respective Pollution Control Boards to submit affidavits as to how far the provisions of the aforesaid Rules had been implemented. The Central Government was asked to file a comprehensive affidavit in respect thereof.

From the affidavits filed, this Court appears to have come to the conclusion that the States and their respective authorities did not seem to appreciate the gravity of the matter and the need for taking prompt measures to prevent the adverse consequences of such neglect. In the said background, this Court by its order dated 13^th October, 1997, appointed a High-Powered Committee, with Prof. M.G.K. Menon as its Chairman, and referred 14 issues to the Committee on which it was required to give its report and recommendations. Since the said 14 terms of reference are of great relevance in the matter of disposal of the writ petition, the same are reproduced hereinbelow:-

"(1) Whether and to what extent the hazardous wastes listed in the Basel Convention have been banned by the Government and to examine which other hazardous wastes, other than listed in the Basel Convention and the Hazardous Wastes (Management and Handling) Rules, 1989, require banning.

(2) To verify the present status of the units handling hazardous wastes imported for recycling or generating/recycling indigenous hazardous wastes on the basis of information provided by the respective States/UTs and determine the status of implementation of the Hazardous Wastes (Management and Handling) Rules, 1989 by various States/UTs and in the light of directions issued by the Hon'ble Supreme Court.

(3) What safeguards have been put in place to ensure that banned toxic/hazardous wastes are not allowed to be imported?

(4) What are the changes required in the existing laws to regulate the functioning of units handling hazardous wastes and for protecting the people (including workers in the factory) from environmental hazards?

(5) To assess the adequacy of the existing facilities for disposal of hazardous wastes in an environmentally sound manner and to make recommendations about the most suitable manner for disposal of hazardous wastes.

(6) What is further required to be done to effectively prohibit, monitor and regulate the functioning of units handling hazardous wastes keeping in view the existing body of laws?

(7) To make recommendations as to what should be the prerequisites for issuance of authorisation/permission under Rule 5 and Rule 11 of the Hazardous Wastes (Management and Handling) Rules, 1989.

(8) To identify the criteria for designation of areas for locating units handling hazardous wastes and waste disposal sites.

(9) To determine as to whether the authorisations/permissions given by the State Boards for handling hazardous wastes are in accordance with Rule 5(4) and Rule 11 of the Hazardous Wastes Rules, 1989 and whether the decision of the State Pollution Control Boards is based on any prescribed procedure of checklist.

(10) To recommend a mechanism for publication of inventory at regular intervals giving area wise information about the level and nature of hazardous wastes.

(11) What should be the framework for reducing risks to environment and public health by stronger regulation and by promoting production methods and products which are ecologically friendly and thus reduce the production of toxics?

(12) To consider any other related area as the Committee may deem fit.

(13) To examine the quantum and nature of hazardous waste stock lying at the docks/ports/ICDs and recommend a mechanism for its safe disposal or re-export to the original exporters.

(14) Decontamination of ships before they are exported to

India

for breaking."

Each one of the said terms of reference are of special significance as far as the reliefs prayed for in the writ petition are concerned. The said High Powered Committee, comprised of experts from different fields, submitted its report after making a thorough examination of all matters relating to hazardous wastes.

8. On 14th October, 2003, the Writ Petition was taken up by this Court to consider the report of the High Powered Committee on the Terms of Reference which had been made to it. Although, initially, the deliberations with regard to the contents of the Writ Petition were confined to different toxic materials imported into India, at different stages of the proceedings, a good deal of emphasis came to be laid on the issue relating to imported waste oil lying in the ports and docks, as well as on ship breaking. This Court observed that the ship breaking operations could not be allowed to continue, without strictly adhering to all precautionary principles, CPCB guidelines and upon taking the requisite safeguards, which have been dealt with extensively in the report of the High Powered Committee, which also included the working conditions of the workmen.

9. One of the other issues which was required to be dealt with was the disappearance of hazardous waste from authorized ports/Indian Container Depots/Container Freight Stations and also as to how to deal with the containers lying there. Since disappearance of hazardous waste was one of the Terms of Reference, by order dated 10th December, 1999, this Court directed that a list of importers who had made illegal imports be placed on record.

Since the same was not done, this Court on 3^rd December, 2001, directed the Government to inquire into the matter, which resulted in the appointment of an eight-member Committee by the Government, chaired by Mr. A.C. Wadhawan. The report dated 26^th July, 2002, submitted by the said Committee suggested that action should be taken against the importer for illegal import under the Customs Act, 1962, and also under the Central Excise Act, 1944.

This Court categorized the matter into two parts. The first part related to imports made and cleared, where the consignments had already found their way to the market. The second part related to the stocks of hazardous waste lying at various ports/ICDs/CFSs. The question which arose was as to how the said stock was to be cleared from where they were lying. This Court was of the view that the stock in question could be divided into two categories; one, relating to imports of goods which were banned under the H.W.M.H. Rules, 1989, as amended up to date or falling under the banned category as per the Basel Convention and the other relating to waste in respect whereof there was no ban and being regulated, it was permissible to recycle and reprocess the same within the permissible parameters by specified authorized persons having requisite facilities under the Rules, as amended up to date. The Court directed that the said consignments falling under the said category were to be released or disposed of or auctioned in terms of the Rules, to the registered recyclers and reprocessors. However, in case the importer of such goods remained untraceable, the authorities were directed to deal with the same at the risk, cost and consequences of the importer. It was specified that the consignment of such importer could not be allowed to remain at the ports etc. indefinitely, merely because the importer was not traceable.

10. For the purpose of dealing with such consignments where the importer could not be traced, this Court was of the view that the same should be dealt with, disposed of/auctioned by a Monitoring Committee which was appointed by the ourt by the said order itself. The Monitoring Committee was comprised of existing members of the Committee constituted by the Ministry of Environment and Forests, along with one Dr. Claude Alvares, NGO and Dr. D.B. Boralkar. The Committee was directed to oversee that the directions of this

Court were implemented in a time-bound fashion.

11. One of the other issues which came up for consideration before this Court was the MARPOL Convention which made it compulsory for signatory nations to allow discharge of sludge oil for the purposes of recycling. In the wake of the other issues which were taken up by this Court while considering the report of the High Powered Committee and that of the Wadhawan Committee, the issue relating to the provisions of the MARPOL Convention was set apart for decision at a later stage.

12. The original MARPOL Convention was signed on 17th February, 1973, but did not come into force. Subsequently, in combination with the 1978 Protocol, the Convention was brought into force on 2nd October, 1983. As will be noticed from the acronym, the expression "MARPOL" is the short form of "Marine Pollution". The same was signed with the intention of minimizing pollution on the seas, which included dumping, oil and exhaust pollution. Its object was to preserve the marine environment through the complete elimination of pollution by oil and other harmful substances and the minimization of accidental discharge of such substances. As far as this aspect of the matter is concerned, the Central Government was directed to file an affidavit indicating in detail how the said oil was dealt with. The issue relating to the import of such sludge oil was left unresolved for decision at a subsequent stage.

13. However, during the course of hearing in regard to the import of waste oil purportedly in violation of the H.W.M.H. Rules, 1989, the two dominating principles relating to pollution, namely, the polluter-pays principle and precautionary principle, were examined at length. The report of the Committee indicated that the hazardous waste oil was imported into the country in the garb of furnace oil and, in fact, the containers and the vessels in which they were being transported, were also highly polluted, causing a tremendous risk to the environment and to human existence.

Ultimately, by the said order of 14th October, 2003, certain directions were given regarding the procedure to be adopted, with regard to ship breaking, to the Central Pollution Control Board, to prepare a national inventory for rehabilitation of hazardous waste dump sites. The State Pollution

Control Boards were directed to ensure that all parties dealing in hazardous chemicals which generated hazardous wastes, displayed online data in that regard outside their respective factories, on the pattern of Andhra Pradesh. The Ministry of Environment and Forests were also directed to consider making provision for Bank Guarantees. Certain recommendations were also made with regard to legislation in order to destroy any transboundary movement of hazardous wastes or other wastes and to punish such illegal trafficking stringently.

14. The matter rested there and only interim directions were given from time to time till it surfaced again before the Court on 25th January, 2003. On this occasion, the focus of this Court was directed towards the presence of hazardous waste oil in 133 containers lying at Nhava Sheva

Port, as noticed by the High Powered Committee. On the directions of the Court, the oil contained in the said 133 containers was sent for laboratory test to determine whether the same was hazardous waste oil or not. After such examination it was found to be hazardous waste. Considering the detailed report submitted by the Commissioner of Customs (Imports), Mumbai, and the Monitoring Committee, and after hearing learned counsel for the parties, this Court observed that the issue to be determined in the proceedings was limited to the environment and in giving proper directions for dumping consignments in question, having regard to the precautionary principle and polluter-pays principle. The main question before the Court was whether only a direction was required to be issued for the destruction of the consignment in order to protect the environment and, if not, in what other manner could the consignments be dealt with. Having considered the provisions of the Basel Convention on the Control of Trans-Boundary Movement of Hazardous Wastes and their disposal, and the report of the Monitoring Committing recommending destruction of the consignments by incineration, but also keeping in mind the fact that import of waste oil was permitted for the purpose of recycling, this Court directed that where the consignment was found fit for recycling, the same should not be destroyed, but recycling should be permitted under the supervision of the Monitoring Committee. However, it was also recorded that if recycling was not considered advisable by the Government, the said consignment would also have to be destroyed by incineration along with other consignments. In such a case the cost of incineration was to be borne by the Government.

15. Taking further note of the precautionary principle forming part of the Vienna Declaration and also having regard to the polluter-pays principle, this Court directed that it would be feasible to dispose of the oil under the supervision of the Monitoring Committee by incineration which would have no impact on the environment. It was directed that the 133 containers in question be destroyed by incineration as per the recommendations of the Monitoring Committee and under its supervision, at the cost of the importer which was assessed by the Monitoring Committee at Rs.12/- per kilo, which would have to be paid by the importers in advance. In the order dated 9th May, 2005, this Court took up for consideration the Fifth Quarterly Report of March 2005, filed by the Monitoring Committee from which it was seen that the waste oil contained in the 133 containers had not been destroyed in terms of the direction given on 5th January, 2005, on account of non-payment of the cost of incineration by the importers. None of the importers had made the payment for incineration, though, a direction had been given to deposit the cost of incineration within four weeks from the date of the order.

However, while taking serious note of non-payment of the incineration cost, this Court also felt that the destruction of the waste oil could not be delayed any further and directed immediate destruction of the waste oil in terms of order dated 5th May, 2005, by the Monitoring Committee and for the said purpose the cost of incineration was to be initially borne by the Customs Department, to be recovered from the importers. Simultaneously, a further opportunity was given to the importers to deposit the cost of incineration with the Monitoring Committee within two weeks, failing which they were directed to remain present in the Court on 18th July, 2005, and to show-cause why proceedings for contempt should not be taken against them. The Monitoring Committee was directed to file a report in that regard on the next date.

16. One other aspect was also taken note of with regard to the directions given to the Jawaharlal Nehru Port Trust, Mumbai Port Trust and the Commissioner of Customs, to furnish requisite information with regard to the 170 containers, which were lying unclaimed, to the Monitoring Committee. Since the same had not been filed within four weeks, as directed, the Chairperson of

the Jawaharlal Nehru Port Trust, the Mumbai Port Trust and the Chief Commissioner of Customs Department, were directed to file personal affidavits as to why the order of the Court had not been complied with. Subsequently, suo-motu contempt proceedings, being No.155 of 2005, in Writ Petition(C) No.657 of 1995, were initiated for noncompliance of the directions contained in the order of 9th May, 2005.

17. As far as the suo-motu contempt proceedings are concerned, the same are an off-shoot of the various orders passed in the writ proceedings and the same will have to be considered separately from the reliefs prayed for in the writ petition itself.

18. At the very beginning of this judgment we have set out the reliefs prayed for in the writ petition, which, inter alia, include a prayer for a direction upon the Union of India to ban imports of all hazardous/toxic wastes and for a further direction to amend the rules in conformity with the

BASEL Convention and Articles 21, 47 and 48A of the Constitution. Apart from the above, a declaration has also been sought that without adequate protection of the workers and the public and without any provision of sound environment management of disposal of hazardous/toxic wastes, the Hazardous Wastes (Management & Handling) Rules, 1989, are violative of the Fundamental Rights guaranteed under the Constitution and, therefore, unconstitutional.

19. Since the proceedings became a continuing mandamus, this Court from time to time took up

several issues emanating from the first prayer in the writ petition to ban imports of all hazardous/toxic wastes. However, in the process, one of the Conventions, namely, the impact of the MARPOL Convention, though referred to, was not decided and left for decision at the final hearing.

Accordingly, that aspect of the matter has to be decided also in these proceedings.

20. In one of the earlier orders passed on 5th May, 1997, two Hon'ble Judges had occasion to deal with the enormous generation of hazardous wastes in the country each day and Their Lordships were of the opinion that the said fact alone indicated sufficiently the magnitude of the problem and the promptitude with which it was needed to be tackled before the damage became irreversible. Their Lordships observed that prompt action was required to be taken, not only by the Central Government, but also by the State Governments and the Central and the State Pollution Control Boards. Accordingly, notice was given to all the State Governments and the State Control Boards to file their replies, and directions were also given that with effect from that date no authorization/ permission would be given by any authority for the import of wastes which had already been banned by the Central Government or by any order made by any Court or any other authority. In addition, it was also directed that with effect from the date of the order, no import would be made or permitted by any authority or any person of any hazardous waste, which was already banned under the Basel Convention or was to be banned subsequently, with effect from the date specified therein. Notice was also issued to the State Governments to show cause as to why an order should not be made directing closure of the units utilizing the hazardous wastes where provision had already been made for requisite safe disposal sites. In addition, the State Governments were also directed to show cause as to why immediate orders should not be made for the closure of all unauthorized hazardous waste handling units.

21. Thereafter, during the pendency of the matter, a fresh Special Leave Petition was filed, being SLP(C)No.16175 of 1997, by Dr. Surendra Dhelia against the Union of India and others regarding import of contaminated waste oil and their disposal, since despite directions given to the State Governments and the Union of India, no affidavits were forthcoming and, as a result, on 4^th February, 2002, a direction was given to the Secretary in the Ministry of Environment and Forests to file affidavits in compliance with the orders passed on 14th September, 2001 and 3^rd December, 2001. A sum of Rs.10,000/- was also imposed as costs against the Ministry of Environment and Forests.

22. The matter came up again before the Court on 24th September, 2003, in which the H.W.M.H. Rules, 1989, fell for consideration having regard to Section 11 of the Customs Act, 1962, which empowers the Central Government to prohibit either absolutely or subject to such conditions as may be specified in the notification, the import and export of the goods, if satisfied that it is necessary so to do for any of the purposes stated in Sub-Section (2). Since on behalf of the Central Government it was submitted that the import of 29 items had already been prohibited under Schedule 8 of the Hazardous Waste Rules, the Court directed the Central Government to issue a notification without further delay under Section 11 of the Customs Act, 1962, prohibiting the import of the said 29 items. Their Lordships also noted that the BASEL Convention had banned 76 items. Their Lordships were of the view that the remaining items were also required to be examined and, if necessary, to issue additional notifications to comply with any ban that may have been imposed in respect of remaining items.

23. What is more important is the fact that the Hon'ble Judges took note of the provisions of the

Hazardous Waste Rules which allowed import of certain items subject to fulfillment of certain conditions. This Court directed that before the imported consignment was cleared, the requisite notification was to be issued making the compliance of the said conditions mandatory. In particular, in paragraph 7 of Their Lordships' order, a direction was given to the Competent Authority to the effect that while disposing of hazardous waste, in exercise of power under Sections 61 and 62 of the Major Port Trusts Act, 1963, they were required to ensure that the H.W.M.H. Rules, as amended up to date, and in particular, Rules 19 and 20 thereof, were complied with.

24. The said direction becomes relevant in relation to the third prayer made in the writ petition, as referred to hereinabove, relating to the constitutionality of the H.W.M.H. Rules, 1989. One thing is clear that even at the interim stage, there was no challenge as such to the constitutionality of the aforesaid Rules and that, on the other hand, directions were given by the Court to ensure compliance thereof.

25. Then came the orders relating to the import of 133 containers of hazardous waste oil, in the garb of lubricating oil, which led to the appointment of a Monitoring Committee to oversee the destruction by incineration of the waste oil, as well as the containers thereof. Detailed orders having been passed in relation to the destruction of the waste and hazardous oil imported into the country in the garb of lubricating oil, and the directions given to the Monitoring Committee regarding re-export of the same, we will consider the impact of the MARPOL Convention against such background.

26. The MARPOL Convention, normally referred to as "MARPOL 73/78", may be traced to its beginnings in 1954, when the first conference was held and an International Convention was adopted for the Prevention of Pollution of Sea by Oil (OILPOL).

The same came into force on 26th July, 1958 and attempted to tackle the problem of pollution of the seas by oil, such as,

(a) crude oil;

(b) fuel oil;

(d) lubricating oil.

27. The first Convention was amended subsequently in 1962, 1969 and 1971, limiting the quantities of oil discharge into the sea by Oil Tankers and also the oily wastes from use in the machinery of the vessel. Prohibited zones were established extending the setting up of earmarked areas in which oil could be discharged, extending at least 50 miles from the nearest land. In 1971, reminders were issued to protect the Great Barrier Reef of Australia. 1973 saw the adoption of the International Convention for the Prevention of Pollution from Ships. The said Convention, commonly referred to as MARPOL, was adopted on 2nd November, 1973, at the International Marine Organization and covered pollution by:

(i) oil;

(ii) chemicals;

(iii) harmful substances in packaged form;

(iv) sewage; and

(v) garbage

Subsequently, the 1978 MARPOL Protocol was adopted at a Conference on Tanker Safety and Pollution Prevention in February, 1978.

28. The overall objective of the MARPOL Convention was to completely eliminate pollution of the marine environment by discharge of oil and other hazardous substances from ships and to minimize such discharges in connection with accidents involving ships. The MARPOL 73/78 Convention has six Annexures containing detailed regulations regarding permissible discharges, equipment on board ships, etc. They are as follows:

Annex I: Regulations for the Prevention of Pollution by Oil, 2 October, 1983.

Annex II: Regulations for the Control of Pollution by Noxious Liquid Substances (Chemicals) in Bulk, 6 April, 1987.

Annex III: Regulations for the Prevention of Pollution by Harmful Substances Carried by Sea in Packaged Form, 1 July 1992.

Annex IV: Regulations for the Prevention of Pollution by Sewage from ships, 27 September 2003.

Annex V: Regulations for the Prevention of Pollution by Garbage from Ships, 31 December 1988.

Annex VI: Regulations for the Prevention of Air Pollution from Ships and Nitrogen oxide.

Will enter into force on 19 May 2005

29. Apart from the said Regulations, the MARPOL Convention also contains various Regulations with regard to inspection of ships in order to ensure due compliance with the requirements of the Convention.

30.

India

is a signatory, both to the BASEL Convention as also the MARPOL Convention, and is, therefore, under an obligation to ensure that the same are duly implemented in relation to import of hazardous wastes into the country. As we have noticed earlier, the BASEL Convention prohibited the import of certain hazardous substances on which there was a total ban. However, some of the other pollutants, which have been identified, are yet to be notified and, on the other hand, in order to prevent pollution of the seas, under the MARPOL Convention the signatory countries are under an obligation to accept the discharge of oil wastes from ships. What is, therefore, important is for the concerned authorities to ensure that such waste oil is not allowed to contaminate the surrounding areas and also, if suitable, for the purposes of recycling, to allow recycling of the same under strict supervision with entrusted units and, thereafter, to oversee its distribution for reuse.

31. As far as the first two prayers in the writ petition are concerned, the same have already been taken care of by the orders dated 13th October, 1997 and 14th October, 2003. By the first of the two orders, this Court appointed the High-Powered Committee with Prof. M.G.K. Menon as its Chairman and 14 issues were referred to the said Committee.

After the said Committee submitted its Report, another Committee under the Chairmanship of Mr. A.C. Wadhawan was appointed to enquire into the disappearance of hazardous wastes from various ports and container depots, and the question relating to the working conditions of the workmen who handle such wastes. After the Wadhawan Committee submitted its Report, various directions were given with regard to the handling of such hazardous wastes. Furthermore, the contamination risks involved in ship breaking also came into focus in the light of the provisions of the Hazardous Wastes Rules, 1989, and directions were given as to how ships, which were carrying wastes, were to be dealt with before entering into Indian waters, which included the prohibition on the exporting country to export such oil or substance without the concurrence and clearance from the importing country. During the course of hearing, an issue was raised by Mr. Sanjay Parikh, learned counsel appearing for the petitioner, that some conditions may be laid down in relation to vessels containing hazardous wastes entering Indian waters without proper compliance with the provisions of the BASEL and the MARPOL Conventions. However, since the question of ship breaking and distribution of hazardous wastes are being considered separately in the contempt proceedings, in these proceedings we expect and reiterate that the directions contained in the BASEL Convention have to be strictly followed by all the concerned players, before a vessel is allowed to enter Indian territorial waters and beach at any of the beaching facilities in any part of the Indian coast-line.

In case of breach of the conditions, the authorities shall impose the penalties contemplated under the municipal laws of

India

32. The directions contained in the second order is based on the polluter pays principle, which is duly recognized as one of the accepted principles for dealing with violation of the BASEL Convention and the H.W.M.H. Rules, 1989, and the same will be applicable whenever such violations occur. However, till such time as a particular product is identified as being hazardous, no ban can be imposed on its import on the ground that it was hazardous. Such import will, however, be subject to all other statutory conditions and restrictions, as may be prevailing on the date of import. Accordingly, the general prayer made in the writ petition that the Government of India should put a total ban on all hazardous wastes, can be applied in respect of such hazardous wastes as have been identified by the BASEL Convention and its

Protocols over the years and/or where import into the country have been restricted by the municipal laws of

India

. In respect of such banned items, directions have already been given in the order dated 13th October, 1997, to issue a notification to ban the import of such identified hazardous substances. In the event, any other items have since been identified; the Central Government is directed to issue appropriate notifications for banning the import of such hazardous substances as well.

33. The third prayer, that in the event of noncompliance, the provisions of the Hazardous Wastes

(Management & Handling) Rules, 1989, should be declared as unconstitutional, cannot be granted, since the same are in aid and not in derogation of the provisions of Articles 21, 39(e), 47 and 48A of the Constitution. In fact, as mentioned hereinabove, even at the interim stage, directions were given for compliance with the said Rules, particularly in the matter of destruction of the waste oil contained in 170 containers by incineration at the cost of the importer.

34. The writ petition has been entertained and has also been treated by all concerned not as any kind of adversarial litigation, but litigation to protect the environment from contamination on account of attempts made to dump hazardous wastes in the country, which would ultimately result in the destruction, not only of the environment, but also the ecology as well and, in particular, the fragile marine bio-diversity along the Indian Coast-line. The petitioner Foundation has played a very significant role in bringing into focus some very serious questions involving the introduction of hazardous substances into the country, which needed the Courts' attention to be drawn having regard to the BASEL Convention, aimed and protecting marine biology and countries having coast-lines alongside seas and oceans.

35. The writ petition is, therefore, disposed of by reasserting the interim directions given with regard to the handling of hazardous wastes and ship breaking in the various orders passed in the writ petition from time to time and, in particular, the orders dated 13th October, 1997 and 14th October, 2003. The Central Government is also directed to ban import of all hazardous/toxic wastes which had been identified and declared to be so under the BASEL Convention and its different protocols. The Central Government is also directed to bring the Hazardous Wastes (Management & Handling) Rules, 1989, in line with the BASEL Convention and Articles 21, 47 and 48A of the Constitution. The further declaration sought for that without adequate protection to the workers and public, the aforesaid Rules are violative of the Fundamental

Rights of the citizens and are, therefore, unconstitutional, is, however, rejected in view of what has been discussed hereinabove.

36. In the peculiar facts of the case, there will be no order as to costs.

………………………………………………………J.

(ALTAMAS KABIR)

………………………………………………………J.

(J. CHELAMESWAR)

Income by non resident company is to be taxed only after considering the provision of DTAA

Posted on 11 August 2012 by Diganta Paul

Court

INCOME TAX APPELLATE TRIBUNAL

Brief

The grounds of appeal read as under:- i) The Ld. Commissioner of Income Tax (A)-II, Dehradun has erred in law and in the facts and circumstances of the case in upholding the order passed by the Assessing Officer u/s. 143(3)/254 of the I.T. Act, 1961, whereby the receipts of Noble Denton and Associates Ltd. from Oil and Natural Gas Corporation Limited were brought to tax u/s. 44D read with section 115A of the I.T. Act, 1961, and in not directing the Assessing Officer to treat such receipts as exempt from tax in India. ii) Without prejudice to the preceding ground, the Ld. Commissioner of Income Tax (A)-II, Dehradun has erred in law and in the facts and circumstances of the case in not directing the Assessing Officer to bring the receipts of Noble Denton and Associates Ltd. from Oil and Natural Gas Corporation Limited to tax u/s. 44BB of the Income Tax Act, 1961

Citation

ONGC as representative assessee of Noble Denton & Associates Ltd., C/o DGM (F&A)- I/c, CTD, Oil and Natural Gas Corporation Ltd., Corporate Tax Division, Room No. 244, Old Secretariat Building,Tel Bhavan, Dehradun – 248003 (PAN: AAACO1598A) (Appellant) Vs. Dy. Director of Income Tax, International Taxation, Aayakar Bhavan, 13-A, Subhash Road, Dehradun – 248 001 (Respondent)

Judgement

IN THE INCOME TAX APPELATE TRIBUNAL

DELHI BENCH "SMC": NEW DELHI

BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER

ITA No. 3907/Del/2011

A.Y.: 2002-03

ONGC as representative assessee of

Noble Denton & Associates Ltd.,

C/o DGM (F&A)- I/c, CTD,

Oil and Natural Gas Corporation Ltd.,

Corporate Tax Division,

Room No. 244, Old Secretariat Building,

Tel Bhavan,

Dehradun – 248003

(PAN: AAACO1598A)

(Appellant)

Vs.

Dy. Director of Income Tax,

International Taxation,

Aayakar Bhavan, 13-A,

Subhash Road,

Dehradun – 248 001

(Respondent)

Assessee by: Sh. Kaveesh Sayal, CA

Department by: Dr. B.R.R. Kumar, Sr. D.R.

O R D E R

This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-II, Dehradun dated 02.6.2011 pertaining to assessment year 2002-03.

2. The grounds of appeal read as under:-

i) The Ld. Commissioner of Income Tax (A)-II, Dehradun has erred in law and in the facts and circumstances of the case in upholding the order passed by the Assessing Officer u/s. 143(3)/254 of the I.T. Act, 1961, whereby the receipts of Noble Denton and Associates Ltd. from Oil and Natural Gas Corporation Limited were brought to tax u/s. 44D read with section 115A of the I.T. Act, 1961, and in not directing the Assessing Officer to treat such receipts as exempt from tax in India.

ii) Without prejudice to the preceding ground, the Ld. Commissioner of Income Tax (A)-II, Dehradun has erred in law and in the facts and circumstances of the case in not directing the Assessing Officer to bring the receipts of Noble Denton and Associates Ltd. from Oil and Natural Gas Corporation Limited to tax u/s. 44BB of the Income Tax Act, 1961.

iii) The appellant craves permission to add, alter and / or amend any ground(s) of appeal before or at the time of hearing.

3. In this case assessee filed return of income of ` 46445/- u/s. 143(3) of I.T. Act, 1961. During the relevant previous year M/s Noble Denton & Associates Ltd., Dubai, UAE (non-resident) was paid a sum of US $ 9400 equivalent to ` 4,43,177/- against work order No. MRBC/DBG/RM&S/ZA/2000 dated 1.8.2000. Assessing Officer held that the non-resident was engaged by ONGC and the receipts by the non resident company which were offered for taxation u/s. 44BB of the I.T. Act is assessable as fees for technical services as per the provisions of section 44 D read with section 115A of the Act and not u/s. 44BB of the Act.

4. Upon assessee's appeal Ld. Commissioner of Income Tax (A) held that as per the terms of the contract, the contract was not providing 'services or facilities' as contemplated u/s. 44BB but the assessee was hired only for consultancy services and technical evaluation. Thus, Ld. Commissioner of Income Tax (A) held that the provisions of section 44D read with Section 115A applies and not section 44BB.

5. Against the above order the Assessee appealed before the ITAT and ITAT in I.T.A. No. 5101/Del/2004 (A.Y. 2002-03) vide order dated 09.2.2007 held as under:-

"8. We find that the issue being identical that receipt by the non resident company is to be taxed under the provisions of section 44BB of the Act and not u/s. 44D read with section 115A of the Act. Similar view has been taken by the Tribunal in other cases relied on by the appellant. The Assessing Officer is accordingly directed to compute the income under the provisions of section 44BB of the Act.

9. In ground nos. 2 & 3 the appellant has raised an issue that the income is not chargeable to tax in view of the Article 22 of Double Tax Avoidance Agreement between

India

and UAE. Since it has been held that the income is to be taxed u/s. 44D of the Act still the issue is whether the same is charged to tax in view of Article 22 of DTAA between

India

and UAE. The Assessing Officer is directed to look into the matter and to give a specific finding as to whether the assessee is entitled to any relief under Article 22 of DTAA between

India

and UAE and if so, grant the same

as per law. The assessee is directed to place the relevant material in this regard."

6. In accordance with the above directions, Assessing Officer considered the case once again. Before the Assessing Officer assessee inter-alia submitted that in this case the ITAT vide its order dated 9.2.2007 directed to compute the income under the provisions of section 44BB. It was further submitted that the matter had been remanded by the ITAT to the Assessing Officer for considering the other arguments regarding the applicability of India-UAE DTAA. Assessee further submitted that subsequently the Hon'ble High Court of Uttarakhand has held that the receipts of the non-residents are taxable as FTS. The Hon'ble High Court of Uttarakhand vide its order dated 08.10.2007 in I.T.A. No. 121 of 2007 in the case of C.I.T. vs. ONGC as representative assessee of M/s Noble Denton and Associates Ltd., Dubai, UAE has held as under:-

"Ld. Counsel for the parties agree that the controversy involved in this appeal, on facts and law, is squarely covered and has already been resolved by our judgement dated 20.9.2007 renderred in I.T.A. No. 86 of 2007, the C.I.T., Dehradun and other vs. ONGC (As agent of M/s Rolls Royce Pvt. Ltd. Singapore). This appeal is disposed of in the terms and conditions of the aforementioned judgement. Accordingly, the appeal is allowed. The question is answered in favour of the Revenue and against the assessee."

7. As per the order dated 20.9.2007 the Hon'ble High Court of Uttarakhand in the case of C.I.T. vs. ONGC as representative assessee of M/s Rolls Royce Pvt. Ltd. Singapore had held that the services rendered under the contract are technical in nature and accordingly, it was held that the services rendered was technical services squarely covered under Explanation 2 appended to clause (vii) to sub-section 1(1) of Section 9 which has been adopted by reference under Section 44D and section 115A of the Act. Considering the above, Assessing Officer held that keeping in view the fact that the Hon'ble High Court of Uttarakhand has upheld the services rendered by the assessee in the assessee's own case as technical services, the assessment was completed giving the effect of the order of the Hon'ble High Court, Uttarakhand. Accordingly, Assessing Officer held that the Revenue earned by the assessee to the extent of ` 443177/- under the contract are brought to tax u/s. 44D read with section 115A of the Act.

8. Upon assessee's appeal Ld. Commissioner of Income Tax (A) considering that the Hon'ble Jurisdictional High Court had adjudicated on this issue in favour of the Revenue affirmed the Assessing Officer's order.

9. Against the above order the Assessee is in appeal before me.

10. I have heard the rival contentions in light of the material produced and precedent relied upon. I find that on the issue as to whether section 44BB applies or section 44D read with section 115A, the Hon'ble High Court of Uttarakhand as mentioned above has decided the issue in favour of the Revenue and against the assessee. In that view of the matter, it cannot be said that there was any error in the order of the Ld. Commissioner of Income Tax (A) which followed the ratio from the Hon'ble Jurisdictional High Court as above.

11. However, it was also noted that assessee has submitted before the Tribunal that Ld. Commissioner of Income Tax (A) has erred in not directing the Assessing Officer to treat such receipts as exempt from tax in

India

. In this regard, I find that the Tribunal in order dated 09.2.2007 has noted that the assessee's contention is that the income is not chargeable to tax in view of the Article 22 of Double Tax Avoidance Agreement between India and UAE. The tribunal has also noted that this issue of chargeability of tax in view of Article 22 of DTAA between

India

and UAE has to be looked after by the Assessing Officer. The Assessing Officer was directed to look into the matter to give a specific finding as to whether the assessee is entitled to relief under Article 22 of DTAA between

India

and UAE and if so granted the same as per law. I find that the Assessing Officer has not given a finding on this issue.

12. Undoubtedly, the Hon'ble Jurisdictional High Court has held that the services rendered under the contract are technical in nature and accordingly, the service rendered was technical service squarely covered under explanation 2 appended to clause (vii) to Sec. 1(1) of Sec. 9 which has been adopted by reference u/s. 44D and section 115A of the Act. However, the ld. Counsel of the assessee has brought to my notice that Hon'ble Jurisdictional High Court was not considering the issue as to whether the assessee was entitled to relief under Article 22 of the DTAA between

India

and UAE. Ld. Counsel of assessee further brought to my notice that this issue was also earlier remitted by the Tribunal to the file of the Assessing Officer and Assessing Officer has not considered the above.

13. I have carefully considered the submissions and perused the records. I find that undoubtedly Hon'ble Jurisdictional High Court has held that income in this case is chargeable u/s. 44D read with section 115A of the Act. However, I also note that tribunal in earlier round remitted the issue to the file of the Assessing Officer to give the finding as to whether the assessee is entitled to exemption under DTAA between the

India

and UAE. In this view of the matter, I find considerable cogency in the submissions of the assessee's counsel that the matter needs to be referred back to the Assessing Officer to consider the same. Accordingly, I remit the issue to the file of the Assessing Officer to look into matter and give a finding as to whether the assessee is entitled for relief under Article 22 of the DTAA and if so, grant the same, as per law. Needless to add the assessee should be given adequate opportunity of being heard.

14. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.

Order pronounced in the open court on 07/8/2012.

SD/-

[SHAMIM YAHYA]

ACCOUNTANT MEMBER

Date: 07/8/2012

SRBhatnagar

Copy forwarded to: -

1. Appellant

2. Respondent

3. CIT

4. CIT (A)

5. DR, ITAT

TRUE COPY

By Order,

Assistant Registrar, ITAT, Delhi Benches

If there is sufficient cause for non appearance than the ex-party order can be recalled

Posted on 11 August 2012 by Diganta Paul

Court

INCOME TAX APPELLATE TRIBUNAL

Brief

We have carefully considered the submissions of the rival parties and perused the material available on record. After having satisfied about the reasons submitted by the assessee and considering the facts and circumstances of the case, we are of the view that there was sufficient cause for non-appearance of the assessee or his authorized representative on the date of hearing and accordingly the ex-parte order dtd. 19-1-2012 passed by the Tribunal is recalled. Parties are to appear without waiting for any notice on 04-10-2012. Accordingly the Misc. Application filed by the assessee is allowed

Citation

Shri Dhananjay G. Mishra, Prop. M.S. Yeoman Marine Services, 29, Neelgiri Indl. Estate, T.J. Road, Sewri (W), Mumbai – 400 015. PAN: AFLPM 1475K Applicant V/s Asst. Commissioner of Income-Tax 24(1), C-13, BKC, Bandra,Mumbai 400 051. Respondent

Judgement

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI BENCHES, 'D', MUMBAI

BEFORE S/SHRI DINESH KUMAR AGARWAL, JM

AND N.K. BILLAIYA, AM

M.A. No. 107/Mum/2012

Arising out of ITA No. 2458/Mum/2011

(Assessment Year 2007-08)

Shri Dhananjay G. Mishra,

Prop. M.S. Yeoman Marine

Services,

29, Neelgiri Indl. Estate,

T.J. Road, Sewri (W),

Mumbai – 400 015.

PAN: AFLPM 1475K

Applicant

V/s

Asst. Commissioner of Income-Tax 24(1),

C-13, BKC, Bandra,

Mumbai 400 051.

Respondent

Date of Hearing: 03-08-2012

Date of Pronouncement: 03-08-2012

Applicant by: Shri Satish R. Mody

Respondent by: Shri Rajarshi Dwivedi

O R D E R

PER DINESH KUMAR AGARWAL (JM)

This Misc. Application filed by the assessee for the A.Y. 2007-08 is directed against the order passed by the Tribunal in ITA No. 2458/Mum/2011 dtd. 19-1-2012.

2. The applicant in the Misc. Application dtd. 14-2-2012 supported by Affidavit of Shri Chaitanya C. Dalal, stated in para 5 & 6 of the Affidavit as under:-

"5. I state that I inadvertently did not notice that the date of hearing of the said appeal was also mentioned on the said Acknowledgment – Cum-Receipt.

6. I state that I was under the bonafide belief that the Hon'ble Tribunal will issue a notice of hearing for the said appeal filed."

It was, therefore, submitted that the ex-parte order passed by the Tribunal be recalled.

3. At the time of hearing, the ld. counsel for the assessee submits that for the reasons as mentioned in assessee's Misc. Application supported by affidavit, the ex-parte order passed by the Tribunal be recalled, which was not seriously objected to by the ld. D.R.

4. We have carefully considered the submissions of the rival parties and perused the material available on record. After having satisfied about the reasons submitted by the assessee and considering the facts and circumstances of the case, we are of the view that there was sufficient cause for non-appearance of the assessee or his authorized representative on the date of hearing and accordingly the ex-parte order dtd. 19-1-2012 passed by the Tribunal is recalled. Parties are to appear without waiting for any notice on 04-10-2012. Accordingly the Misc. Application filed by the assessee is allowed.

5. In the result, the Misc. Application filed by the assessee is allowed.

Order pronounced in the open court on 3rd August, 2012.

Sd/ - Sd/ -

(N.K. BILLAIYA) (DINESH KUMAR AGARWAL)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated 3rd August, 2012.

RK.

Copy to:

1. Appellant

2. Respondent

3. CIT , Concerned, Mumbai

4. CIT(A) – Concerned, Mumbai

5. DR "D' Bench

6. Guard file.

BY ORDER

ASSTT. REGISTRAR,

ITAT, MUMBAI

Respected Dipak Shah,
In this newsletter, we summarize the important amendments, Case laws and current issues in the field of indirect taxes of the past week. We hope this newsletter help you to abreast of all the latest happening in the indirect tax discipline and information needs. We look forward for your feedback at pradeep@capradeepjain.com.

Publish Date:11/08/2012

PJ/Weekly Newsletter/2012-13/019

Tickers

Subject News
•	Packaged tours abroad to cost more
•	'New SEZ norms likely in a month'
•	Service tax: Work in progress for EPC projects
•	Insufficient homework leads to hazy rules
•	Realty check for new service tax regime
•	Companies to pay service tax on insurance, phone and transport perks
•	Regarding 24x7 Customs clearance operations {See Customs Circular No. 22/2012-Cus, dated 07.08.2012 in what's new}
•	Amendment in Notification No. 25/2012 –ST dated 20th June, 2012 {See Service Tax Notification No. 44/2012-ST, dated 07.08.2012 in what's New}
•	Amendment in Notification No.30/2012-ST dated 20th June, 2012 {See Service Tax Notification No. 45/2012-ST, dated 07.08.2012
•	Seeks to Amend Service Tax Rules, 1994 {See Service Tax Notification No. 46/2012-ST, dated 07.08.2012 in what's new}
•	Amendment in Notification No. 63/1994-Customs (N. T.) dated the 21^st November, 1994 {See Customs Notification No. 68/2012-Cus(NT), dated 08.08.2012 in what's new}
•	Order issued for the transfers and postings of 7 commissioners of Customs & Central Excise {See transfer order No. 144/2012, dated 06.08.2012 in what's new}
•	Companies are liable to pay service tax on amount paid to directors under Reverse charge method.
•	Securities services are also under Reverse charge mechanism.
•	The rebate under Rule 18 can be denied in cases of fraud. {See PJ/Case Laws/2012-13/1169 in What's new}
•	Grounds not taken before adjudication authority cannot be raised first time before appellate authority. {See PJ/Case Laws/2012-13/1170 in What's new}
•	The appellate authority should decide all appeals filed by revenue, irrespective of fact that the same may result in excess or less refu nd. {See PJ/Case Laws/2012-13/1171 in What's new}
•	Penalty cannot be imposed if there is difficulty in understanding the notification by common man {See PJ/Case Laws/2012-13/1172 in What's new}
•	Whether the factories under common management can be termed as related person? {See PJ/Case Laws/2012-13/1173 in What's new}
•	Demanding the excess paid drawback on revision/re fixation of brand rate of drawback{See PJ/Case Laws/2012-13/1174 in What's new}
•	Whether an assessee is liable to pay interest on the duty to be paid on non fulfillment of conditions of notification {See PJ/Case Laws/2012-13/1175 in What's new}
•	Prepayment charges are not in relation to Banking and other financial services {See PJ/Case Laws/2012-13/1176 in What's new}
•	Goods imported with label will consider as Beverage Grade and not for use in drugs and medicines. {See PJ/Case Laws/2012-13/1177 in What's new}
•	Custom officer jailed
•	Govt detects Rs 5,995 crore excise, service tax evasions
•	GST likely to miss rollout date as House panel yet to submit report

Budget News
•	Six trucks carrying clinkers seized in Hazaribag
•	Oil India keen to take up to 10-15% stake in HPCL's Barmer refinery
•	Finance Minister Confident of Bringing Economy Back on Desired Track; Gives an Overview of Map for Recovery
•	CST compensation to states under examination
•	Internet access to cost more in India
•	Govt working on strict norms for plastic recycling SEZ units
•	Govt detects Rs 5,995 crore central excise, service tax evasions

Index

Amendments
•	Custom
•	Service Tax
•	DGFT
Case Laws
•	PJ/Case Laws/2012-13/1169
•	PJ/Case Laws/2012-13/1170
•	PJ/Case Laws/2012-13/1171
•	PJ/Case Laws/2012-13/1172
•	PJ/Case Laws/2012-13/1173
•	PJ/Case Laws/2012-13/1174
•	PJ/Case Laws/2012-13/1175
•	PJ/Case Laws/2012-13/1176
Case Study
•	PJ/CASE STUDY/2012-13/18
Queries
•	Dear sir, Namashkar ! I have a small properietorship firm registered with central excise department as tour operator -service provider. We mostly provide services to some of Delhi/Mumbai/bangalore based tour operators. Till date we had been raising our invoice on the service receipant (Delhi-Mumbai etc based ) Agents and depositing service tax locally. We now understand that the service tax will now be paid by Service recipant and we do not have to file the same locally. May I request you to clarify on this. The service recipant say that i will continue to raise the invoice the way i have been doing but the tax will now be deposited by them. How do we file our return. Regards Satya
•	Imported goods under CETSH 84 in India on payment of Customs duty, after import it's quality get check, change the packing, put fresh label, as per Section 2(f)It is amount to manufacture or otherwise?
•	sir I want to know whether printing of school books alongwith cost of paper will come under the category of job work or manufacture, if editorial expenses and royalty to writers of such books are paid by the purchaser of such books.
•	Noe that the Negative list in Service Tax has become effective, are we to again reregister: we are regd as a SERVICE RECEIVER for transportation of goods by Road availing 75% abatement and paying serv. tax on bal. 25%; Kindly guide Sir
•	Sir, My query relates to Service tax liability on export of services. in case if payment is not received within 6 months OR the period as specified by RBI from the date of invoice then we have to pay service tax as per POT 2011. Please tell me now, as on date what is the time period limit according to current provisions of export of service rules or as per RBI ?.
•	Dear Sir, My company is working as 100 % EOU & exports software services hence not registered under the Service tax up to date but S.T.dept. recently made new changes with negative list. we have paid rent,Insurance charges, Internet services manpower services so is it compulsory to get registration with ST Dept & act as non exporter business. Or any other suitable way to deal with ST dept. Kindly suggest us. Thanks Durgesh S
•	One of the company is manufacture Ready mix concrete from march 2011. As excise duty on RMC was applicable from March 2011 itself. Company start production in finacial year 2011-2012 & raise invoice (Manufacture) of Rs. 2.3 Cr. in financial year 2011-2012. I suggest that excise duty should pay on Rs. 0.8 cr (2.3-1.5 cr.) @ 1% with no cenvat credit. But other view is that company is not liable to pay excise duty in financial year 2011-2012 as company got benefit of SSI upto 4 Cr. Pls clarify
•	I have a query regarding basic exemption limit in service tax. My client is a proprietor earning commission income of Rs.6.00 lakhs from ABC company. He has entered into partnership and is earning commission income of Rs.8.00 lakhs from same company ABC. My question is weather for calculating basic exemption limit of proprietorship concern Rs.10.00 lakhs, his share of income from partnership will be taken or not?
•	Concept of naturally bundle service in hotel Hotel has a package i.e Room rent : 2800/day Dry clean : 100/day Health club : 200/day Food : 800/day Total : 3900/day Hotel is taxable @ 60% of value i.e effective rate is 7.2% Is hotel is liable to pay 7.2% on whole 3900/- or item wise as dry clean & health club at full rate
•	i am company given a contract to x for digging of canal for a total consideration of say 10lacs for which i am not supplying any thing i.e me material etc., is this falls under works contract or manpower supply contract
•	whether Cheque return charges" is taxable or not. Actually it is 'tolerating an act or situation' which is declared service. Once an activity is specified as 'declared service' (deemed service) then the arguement that there is no service cannot stand.
•	my Query is, can registered dealer forward cenvat credit to some customer not all customers or full cenvat forward.
•	In the case of WCT like an AMC contract where the vendor is not charging VAT which might be because his turnover is less than exemption limit and also not charging service tax because of exemption limit or supplying free materials and services though the service receiver is aware that is a WCT.Can the SR take the shelter of the fact that the SP is not charging VAT and not pay ST under new RCM though the word used in 'levied' and not 'paod and 'payable' view response
•	Sir One of my client is printing books on job work basis. The purchaser of books provides us the paper and we perform the printing part. Are we liable to service tax ?
•	Respected Sir, I want to Know that if invoice including service tax only whether it will be fall under work contract service also or not and whether both vat and service tax must be mentioned for the judge of work contract?
•	How much Service Tax amount to be Charged / paid on Man Power Supply Bill as per Service provider and Service Receiver. Suppose A Bill amounting Rs. 1000/- then what would be the Service Tax calculation basis vide Notification 30/2012 Service Tax. Please clarify.
•	Construction Sir under old regime ,Prime location charges, car parking construction, transfer charges and other allied charges are liable to tax @ of 10% ( full rate), now w.e.f 01/07/12, new concepts of bundled service introduced. So can these charges be treated as construction service (bundled) and accordingly liable to pay abated scheme i.e tax on 25% (with land) even if charged separately shown in agreement and in invoice. Thanks
Department News
•	Office Order No. 143/2012
•	Office Order No. 144/2012
•	Office Order No. 142/2012
•	Office Order No. 328/2012

Amendments

Custom
	TARIFF NOTIFICATION
	• 38/2012-Cus(ADD), Dated: 06/08/2012
	The anti-dumping duty on imports of 'Hexamine', originating in, or exported from, Saudi Arabia and Russia has been extended by one more year. The earlier definitive Anti dumping duty for five year was imposed by Notification 89/2007-cus d Read More

	NON TARIFF NOTIFICATION
	• Order Dated: 01/08/2012
	Show Cause Notice F.No. VIII/26/221/2011-DRI dated 20.06.2012 issued by Additional Director General, Directorate of Revenue Intelligence, Zonal Unit, Chennai in the case of M/s Kobelco Construction Equipment India Pvt. Ltd., Ground Floor, World Trade Read More

	• Order Dated: 01/08/2012
	Show Cause Notice F.No. DRI/AZU/INV-41/2011 dated 21.03.2012 issued by Additional Director General, Directorate of Revenue Intelligence, Zonal Unit, Ahmedabad in the case of M/s Tirupati Micro tech Pvt. Ltd., Udaipur has been assigned to the Commissio Read More

	• 68/2012-Cus(N.T.), Dated: 08/08/2012
	Hemnagar in North 24 Parganas District of West Bengal has been appointed as a Land Custom Station Land Custom Station for the clearance of all goods or any class of goods imported or exported by land from or to the land frontiers Bangladesh for the r Read More

	• 69/2012- Cus(N.T.), Dated: 09/08/2012
	The Government appoints common adjudication officer for the cases whose jurisdiction falls under various commissionerates or the cases are booked by central investigation authorities like DGCEI or DRI. Under the same power, the Commissioner (adj Read More

	• 70/2012-Cus(N.T.), Dated: 09/08/2012
	Joint Commissioner or Additional Commissioner of Customs, Custom House, Near Akashvani, Navrangpura, Ahmedabad, has been appointed to act as a common adjudicating authority to Show Cause Notice pertaining to M/s ;Kiri Dyes and Chem Read More

	• 71/2012-Cus(N.T.), Dated: 09/08/2012
	Joint Commissioner or Additional Commissioner of Customs, Inland Container Depot (GRFL), Sahnewal, Ludhiana has been appointed as a common adjudicating authority for cases relating to M/s Aggarwal Ispat Udyog, Mandi Read More

	• 72/2012-Cus(N.T.), Dated: 09/08/2012</ th>
	Joint Commissioner or Additional Commissioner of Customs (Export), Jawaharlal Nehru Custom House, NhavaSheva, Post-Uran, District-Raigad, Maharashtra will be adjudicatoe for cases related to M/s Ranjan Suitings Pvt. Ltd., Read More

	• 73/2012-Cus(N.T.), Dated: 09/08/2012
	Joint Commissioner or Additional Commissioner of Customs (Export), Jawaharlal Nehru Custom House, Nhava Sheva, Post-Uran, District-Raigad, Maharashtra will be adjudicating authority over the Show Cause Notice relating to M/s M/s& Read More< /tr>

	CIRCULAR
	• 22/2012-Cus, Dated: 07/08/2012
	In order to further facilitate importers and exports the it has been decided to begin on a pilot basis 24X7 Customs clearance with effect from September 1st. 2012 (1.9.2012) at identified Air Cargo Complexes and Seaports in respect of speci Read More

Service Tax
	NOTIFICATION
	• 44/2012-ST, Dated: 07/08/2012
	Amendments have been made in Notification No.25/2012-Service Tax, dated the 20th June, 2012. Earlier in said notification the exemption was available from the whole of service tax to Services by way of slaughtering of bovine animals. Now from th Read More

	• 45/2012-ST, Dated: 07/08/2012
	In Guidnace note as well as PPT, it was provided by CBEC that the bonus, commission, sitting fees paid to directors is liable to service tax. Even a draft circular was also issued to invite the suggestions. Then question was raised that the execut Read More

	• 46/2012-ST, Dated: 07/08/2012
	Company has been made liable for the services to be provided by director to the company under Revese charge method. Already, there are many services are included in Reverse charge method. Now, this as well as security servcies are also included in Read More

DGFT
	POLICY NOTICE
	• 14(RE-2012)/2009-14, Dated: 09/08/2012
	Import items viz, PP Granules, LLDPE Granules, PP Granules for lamination/coating, PE Liner, Thread, Filler Cord/Rope, Packing Material have been allowed for the final product Flexible Intermediate Bulk Containers under amended Standard Input & Read More

Case Laws

•	PJ/Case Laws/2012-13/1169
	Case:- INRE: JHAWAR INTERNATIONAL Citation: - 2012 (281) E.L.T. 460 (G.O.I) Issue: - The rebate under Rule 18 can be denied in cases of fraud. Read More

•	PJ/Case Laws/2012-13/1170
	Case:M/S. Cargo Motors (Guj.) Pvt. Ltd. V/s. Commissioner of Customs Excise , Vadodara Citation:2012-TIOL-270-CESTAT-AHM Issue: Grounds not taken before adjudication authority cannot be raised first time before appellate authority. Read More

•	PJ/Case Laws/2012-13/1171
	Case:-M/s LUPIN LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, LTU, MUMBAI Citation: - 2012-TIOL-921-CESTAT-MUM Issue: - The appellate authority should decide all appeals filed by revenue, irrespective of fact that the same may result in excess or less refund. Read More

•	PJ/Case Laws/2012-13/1172
	Case:M/S. Bestilo Packaging Pvt. Ltd. V/s. Commissioner of Customs Excise, Chandigarh-II Citation:2012 (25) S.T.R. 440 (Tri.-Del.) Issue: Penalty cannot be imposed if there is difficulty in understanding the notification by common man Read More

•	PJ/Case Laws/2012-13/1173
	CASE: COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD V/S KISSAN INDUSTRIES LTD. CITATION: 2012 (280) E.L.T 276 (TRI. - AHMEDABAD) ISSUE:- Whether the factories under common management can be termed as related person? Whether all the overheads can be loaded in costing method when factory not running on full capacity? Read More

•	PJ/Case Laws/2012-13/1174
	Case: IN RE: 3M INDIA LTD. Citation: 2012 (281) E.L.T. 465 (G.O.I.) *Issue:*- Recovery of excess drawback – Whether the drawback sanctioning authority is right in demanding the excess paid drawback on revision/re fixation of brand rate of drawback? Read More

•	PJ/Case Laws/2012-13/1175
	CASE: - COMMISSIONER OF CUSTOMS, BANGLORE-I V/S WIPRO LTD. (INFO TECH GROUP) CITATION:- 2012 (280) E.L.T 174 (KAR.) ISSUE: - Whether an assessee is liable to pay interest on the duty to be paid on non fulfilment of conditions of notification. Read More

•	PJ/Case Laws/2012-13/1176
	Case:- HOUSING & DEV CORPORATION LTD (HUDCO) VERSUS C.S.T., AHEMDABAD Citation: - 2012 (26) S.T.R. 531 (Tri-Ahmd) Issue: -The Appellant has filed the present appeal on the following issue : (i) Prepayment charges are not in relation to Banking and other financial services and therefore not liable to Service Tax. (ii) Reset charges are not in relation to Banking and other financial services and therefore not liable to Service Tax. (iii) The reset charges/prepayment charges are not the consideration for providing any value addition to the services, therefore not liable to Service Tax. (iv) Reset charges/prepayment charges charged to the customers by the appellant is in the nature of additional interest only and, therefore, not liable to Service Tax. (v) The agreements of lending entered prior to 10-9-2004 by the appellants are not chargeable to Service Tax. (vi) Extended period of limitation cannot be invoked as they are a wholly owned Government company and there cannot be any mala fide on their part to evade payment of tax. Read More

Case Study

•

PJ/CASE STUDY/2012-13/18

Port Services – Requirement of payment of service tax to service provider for receipt of port services is only while allowing refund. Refund of service tax not to be denied on the ground that service provider was not authorized by the port.
Goods Transport Agency Services – Refund of service tax has been denied on ground that prescribed document issued by service provider was not furnished. Statement showing detailed value of services received is sufficient and can be verified by original adjudicating authority in case of doubt. Non-submission of self-certified copies of document is a curable defect rather than a tool to reject the claim. Read More

Queries

•	Dear sir, Namashkar ! I have a small properietorship firm registered with central excise department as tour operator -service provider. We mostly provide services to some of Delhi/Mumbai/bangalore based tour operators. Till date we had been raising our invoice on the service receipant (Delhi-Mumbai etc based ) Agents and depositing service tax locally. We now understand that the service tax will now be paid by Service recipant and we do not have to file the same locally. May I request you to clarify on this. The service recipant say that i will continue to raise the invoice the way i have been doing but the tax will now be deposited by them. How do we file our return. Regards Satya
	Firstly your question is not clear. Secondly under reverse charge mechanism (where receiver is liable ) only some service are covered e.g work contract, hiring of motor vehicle design to carry passenger, supply of manpower, sponsorship etc. The Tour operator service is not covered under the reverse charge mechanism. So service tax is to be paid only by service provider if covered under the tour operator service. Read More

•	Imported goods under CETSH 84 in India on payment of Customs duty, after import it's quality get check, change the packing, put fresh label, as per Section 2(f)It is amount to manufacture or otherwise?</ th>
	Section 2(F) manufacture includes any process: (i) incidental or ancillary to completion of manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the first schedule to the Central Excise Tariff Act, 1985 as amounting to manufacturing or (iii) which in relation to goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods render the product marketable to the consumer Thus, the process undertaken by you will amount to manufacture if the goods falls under Third schedule. The Third schedule relates to goods falling under MRP based valuation under Section 4A of Central Excise Act. Read More

•	sir I want to know whether printing of school books alongwith cost of paper will come under the category of job work or manufacture, if editorial expenses and royalty to writers of such books are paid by the purchaser of such books.
	Firstly your question is not clear that you want to know from the point of view of service tax or otherwise. We presume that the above query relates to new service tax regime of Negative list applicable from July 1, 2012. The service tax is not applicable if any process amount to manufacture or production of goods. The relevant entry in Section 66D containing Negative list reads as follows:- "(f) any process amounting to manufacture or production of goods." If the process undertaken by you amounts to manufacture or production then no service tax is applicable on the same. Moreover, the Megha exemption notification also provides a clause for the printing industry, which is reproduced below:- "30. Carrying out an intermediate production process as job work in relation to:– (a) agriculture, printing or textile processing;" Thus, if the process undertaken by you is intermediate process then no service tax is applicable on the same. Since the facts of the case is known to you only, please see your reply in guidance of above. Read More

•	Noe that the Negative list in Service Tax has become effective, are we to again reregister: we are regd as a SERVICE RECEIVER for transportation of goods by Road availing 75% abatement and paying serv. tax on bal. 25%; Kindly guide Sir
	No, you are not required for re-registration or to amend your existing registration. Now the negative list has been effective and accordingly classification of services is not there. The fo rm for service tax registration i.e. has also been amended and in service classification column of ST-1, the only one entry is shown for all the services as follows: "Service other than in the Negative List" So the above description of service will common for all assessees and there is no requirement of amend the service tax registration Read More

•	Sir, My query relates to Service tax liability on export of services. in case if payment is not received within 6 months OR the period as specified by RBI from the date of invoice then we have to pay service tax as per POT 2011. Please tell me now, as on date what is the time period limit according to current provisions of export of service rules or as per RBI ?.
	If payment is not received within the statutory time limit as allowed by RBI, the Point of taxation will be determined as per Rule 3 (i.e. earlier of Advance received, Invoice issued or Completion of provision of service). According to the RBI, current time limit for receipt of payment is 6 months. Read More

•	Dear Sir, My company is working as 100 % EOU & exports software services hence not registered under the Service tax up to date but S.T.dept. recently made new changes with negative list. we have paid rent,Insurance charges, Internet services manpower services so is it compulsory to get registration with ST Dept & act as non exporter business. Or any other suitable way to deal with ST dept. Kindly suggest us. Thanks Durgesh S
	According to section 69(1) "every person liable to pay service tax must mandatory make an application for registration to the designated Superintendent of Central Excise". By notification no. 30/2012-ST, government notifies some service under reverse charge i.e. where service receiver is also liable to pay service tax (partially or wholly). For example in respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services to a business entity, the 100% liability to pay service tax is on business entity (i.e. service recipient ) and in that case service receiver is required to service registration. So if your company is liable to pay service tax either as service recipient under reverse charge, required to service tax registration. The service of manpower supply is one of such service quoted in your query. Hence you have to get registered and pay service tax. Read More

•	One of the company is manufacture Ready mix concrete from march 2011. As excise duty on RMC was applicable from March 2011 itself. Company start production in finacial year 2011-2012 & raise invoice (Manufacture) of Rs. 2.3 Cr. in financial year 2011-2012. I suggest that excise duty should pay on Rs. 0.8 cr (2.3-1.5 cr.) @ 1% with no cenvat credit. But other view is that company is not liable to pay excise duty in financial year 2011-2012 as company got benefit of SSI upto 4 Cr. Pls clarify
	A manufacturing unit is considered Small Scale Industry (SSI) in excise when "total value of clearance of excisable goods for home consumption does not exceed Rs. 4 Crores during previous financial year". In such case "the unit is not required to pay excise duty till its clearance value reaches Rs. 1.50 Crores." The above provisions make it clear that the identification of SSI is based on previous year's turnover not on current year's turnover. Further if previous financial year turnover is less than 4 Crores than the unit is eligible for exemption upto 1.5 Crores only, not 4 Crores. So if your turnover of 2010-11 is less than 4 Crores than you are eligible for exemption upto 1.5 Crores. You are correct that the Excise duty should be paid on 0.8 Crores. Read More

•	I have a query regarding basic exemption limit in service tax. My client is a proprietor earning commission income of Rs.6.00 lakhs from ABC company. He has entered into partnership and is earning commission income of Rs.8.00 lakhs from same company ABC. My question is weather for calculating basic exemption limit of proprietorship concern Rs.10.00 lakhs, his share of income from partnership will be taken or not?
	Partnership is separately eligible for threshold exemption limit of Rs.10 lakh and while calculating basic exemption limit of Rs. 10.00 lakhs for proprietorship, share of income from partnership will not be considered. Further according to notification 33/2012, in case of service provided from more than one premises, the aggregate value of all the premises should be considered for the purpose of availing the exemption of Rs. 10 Lakh. Read More

•	Concept of naturally bundle service in hotel Hotel has a package i.e Room rent : 2800/day Dry clean : 100/day Health club : 200/day Food : 800/day Total : 3900/day Hotel is taxable @ 60% of value i.e effective rate is 7.2% Is hotel is liable to pay 7.2% on whole 3900/- or item wise as dry clean & health club at full rate
	According to clause 3(a) of section 66F, "if various element of such service are natura lly bundled in the ordinary course of business, it shall be treated as provision of single service which gives such bundled essential character;" Since it is told in the query itself that it is naturally bundle service, then the person comes in a hotel for stay in rooms. Hence the room service is single service which gives the bundled service its essential character. Therefore service tax is leviable on 60% value on whole amount of Rs. 3900/- as "renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes" service. Read More

•	i am company given a contract to x for digging of canal for a total consideration of say 10lacs for which i am not supplying any thing i.e me material etc., is this falls under works contract or manpower supply contract
	Work contract is defined in the section 65B, which reads as follows: "(54) work contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such properly" There should be transfer of property in goods involved in execution of the contract which is leviable to tax as sale of goods. Thus, under the digging contract, if there is no transfer of property in goods involved then it will not fall under works contract. But if involved then it will be work contract service. This will not fall under man power supply as the total digging contract is given for Rs. 10 Lakhs and not manpower is supplied to do this job under the supervision of client. Read More

•	whether Cheque return charges" is taxable or not. Actually it is 'tolerating an act or situation' which is declared service. Once an activity is specified as 'declared service' (deemed service) then the arguement that there is no service cannot stand.
	Yes, once an activity is specified as declared service then argument that there is no service cannot stand. Further cheque return charges is not a fine or penalty for violation of any law and it is just a fines or penalty levied during the course of business and are taxable. Read More

•	my Query is, can registered dealer forward cenvat credit to some customer not all customers or full cenvat forward.
	The dealer can pass on the Cenvat credit to his buyers. He cannot pay the duty. If a consignment is entered in RG 23 D register and it is sold into various consignments then central excise invoice is to be prepared. This is irrespective of the fact that the credit is passed on or not. The duty details are required to be shown as the same are essential for return filing also. Read More

•	In the case of WCT like an AMC contract where the vendor is not charging VAT which might be because his turnover is less than exemption limit and also not charging service tax because of exemption limit or supplying free materials and services though the service receiver is aware that is a WCT.Can the SR take the shelter of the fact that the SP is not charging VAT and not pay ST under new RCM though the word used in 'levied' and not 'paod and 'payable' view response
	According to definition of work contract as given in section 65B(54), there should be transfer of property in goods involved in execution of the contract which is leviable to tax as sale of goods. The leviable of tax only means that as per charging section of VAT Act shall be leviable on transfer of property. However it may be exempt by any notification and the exemption by any notification does not mean that the tax is not leviable. Further the service receiver should independently examine that there is his liability or not and not take the shelter of fact that service provider is not charging Service tax or VAT. For example, service provider may be claiming threshold exemption of Rs. 10 Lakhs under Notification 6/2005 but the benefit of the same is not available to service recipient when ST is payable under Reverse charge method. Read More

•	Sir One of my client is printing books on job work basis. The purchaser of books provides us the paper and we perform the printing part. Are we liable to service tax ?
	we have already replied in your earlier query that service tax is not applicable on the job work of printing of books. The Mega exemption notification provides a clause for the printing industry, which is reproduced below:- "30. Carrying out an intermediate production process as job work in relation to:– (a) agriculture, printing or textile processing;" Thus, if the process undertaken by you is intermediate process then no service tax is applicable on the same. Read More

•	Respected Sir, I want to Know that if invoice including service tax only whether it will be fall under work contract service also or not and whether both vat and service tax must be mentioned for the judge of work contract?
	work contract is defined in the section 65B, which reads as follows: "(54) work contract means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such properly" Thus, it is necessary that the transfer of property in goods takes place if a contract has to falls under works contract. In the invoice it may be possible that VAT is not shown because of there is an exemption under the VAT Act or otherwise. So it is not a test for identify work contract service that VAT is shown in the invoice or not. The real test, as narrated above, is transfer of property in goods. Read More

•	How much Service Tax amount to be Charged / paid on Man Power Supply Bill as per Service provider and Service Receiver. Suppose A Bill amounting Rs. 1000/- then what would be the Service Tax calculation basis vide Notification 30/2012 Service Tax. Please clarify.
	As per Item No. 8 of Notification 30/2012-ST, the service tax in respect of manp ower supply service is payable: By Service Provider 25% By Service Receiver 75% The above provisions of reverse charge should be applicable when: "The service shall be provided by individual, HUF, proprietary firm or partnership firm including association of person and received by business entity registered as body corporate" So if value of service is Rs.1000/ and above condition is fulfilled (i.e. provided by be provided by individual, HUF, proprietary firm or partnership and received by business entity registered as body corporate) the service tax payable by service provider and service receiver will as follows: Service provider (100012.36%)25% = Rs. 31 Service Receiver (100012.36%)75% = Rs. 93 Read More

•	Construction Sir under old regime ,Prime location charges, car parking construction, transfer charges and other allied charges are liable to tax @ of 10% ( full rate), now w.e.f 01/07/12, new concepts of bundled service introduced. So can these charges be treated as construction service (bundled) and accordingly liable to pay abated scheme i.e tax on 25% (with land) even if charged separately shown in agreement and in invoice. Thanks
	Section 66F (3) is follows: "(a) If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character (b) If various elements of a bundled service are not naturally bundled in the ordinary course of business, it shall be treated as provision of a service which attracts the highest amount of service tax." The section 66F does not make any difference whether charges billed separately or together. So the above question will be depended on that whether the service are naturally bundled in the ordinary course of business or not? Manner of determining if the services are bundled in the ordinary course of business Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators few of which are listed below – • The perception of the consumer or the service receiver. If large number of service receivers of such bundle of services reasonably expect such services to be provided as a package then such a package could be treated as naturally bundled in the ordinary course of business. • Majority of service providers in a particular area of business provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines. • The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. • Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are – • There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. • The elements are normally advertised as a package. • The different elements are not available separately. • The different elements are integral to one overall supply – if one or more is removed, the nature of the supply would be affected. No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to be individually examined in the backdrop of several factors some of which are outlined above. Read More

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Chartered Accountant Finance

Saturday, August 11, 2012

[aaykarbhavan] Case Received from R R Makwana, Revised Schedule VI Power Point presentation by C A Kishnadwala, Judgements, C A PradeepJain News Letter

Noncompliance, the provisions of the Hazardous Wastes Rules, 1989, should be declared as unconstitutional

Court

Brief

Citation

Judgement

Income by non resident company is to be taxed only after considering the provision of DTAA

Court

Brief

Citation

Judgement

If there is sufficient cause for non appearance than the ex-party order can be recalled

Court

Brief

Citation

Judgement

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