Service tax liability on the services agreed not to be provided and its interesting combinations with Point of Taxation Rules (POT Rules), is the topic of discussion in this months' "Tax Amicus". Central Board of Excise and Customs (CBEC) has also issued clarification on these Rules in relation to change in the rate of tax. In Central Excise, scrips issued under various duty credit schemes have been allowed to be utilized for domestic procurement and there is a CESTAT Order holding that ER-1 Return is not required to be filed by manufacturers working under compounded levy scheme. Under Customs law specified Customs ports will be working 24X7 from 1st September for clearance of facilitated BEs while Gujarat High Court has quashed a Board's Circular seeking Education Cess on imports under DEPB. VAT rate has been enhanced on certain products in Karnataka and Punjab. In case of Income tax, the authorities have clarified that expenses for a purpose prohibited by law cannot be deducted.