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Tax Amicus: October 2014

Issues relating to time limit for availment of Cenvat credit, as introduced recently, have been taken up for analysis in October 2014 issue of Tax Amicus. According to the author, there are number of issues like, time limit in case of re-credit, delayed receipt of goods from job worker, credit availment after crossing SSI exemption limit, etc., involved here, and all such issues require suitable clarification from the Indian Government.

Central Excise portion of this Amicus covers recent circular issued by Central Board of Excise & Customs (CBEC) clarifying the recently introduced mandatory pre-deposit provisions in Excise, Customs & Service tax laws. Larger Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in two different orders has held that it has the power to extend stay of recovery of dues beyond 365 days and that aluminium dross is liable to excise duty after amendment in the definition of ‘excisable goods’ in 2008. It has also been held that filing of declaration as per the condition contained in Notification No. 50/2003-C.E. (area based exemption) is a formality. All these important orders are included in this issue of the newsletter.

Under Customs, benefit under Focus Product Scheme (FPS) has been revised for specified products, while Delhi High Court has held that status holder is not required to furnish bank guarantee for advance authorization in excess of entitlement. Mumbai Bench of CESTAT has held that EOUs are not required to pay duty on inputs used in R&D activity. CESTAT, Chennai has reduced the quantum of addition of profit margin in the case of related persons, taking note of the fact that the supplier was procuring goods on global basis in order to maintain standard and then supplying the same to its group companies around the globe. Readers may see this issue for more information on this order.

C.B.E.C. has clarified applicability of service tax on taxable services provided by members of a joint venture (JV) to the JV and vice versa and inter se between the members of the JV. Further, Service Tax portion of this Amicus covers order passed by Ahmedabad Bench of CESTAT holding that technical certification is an input service for pharma industry and hence is eligible for Cenvat credit. CESTAT Delhi has held that premium paid to lessor for transfer of interest in property is not liable to service tax.

VAT portion of this issue of Tax Amicus covers Circular issued under Delhi VAT provisions clarifying that on issuance of credit notes by the seller to the purchaser in certain specified situations, the seller will not reduce the output tax paid and the same would not require reversal of ITC by the buyer. Bombay High Court has held that license fees and airtime charges are not includible in the value of pager within the meaning of Section 2(29) of the Bombay Sales Tax Act, 1959 and a summary on this order can be seen in this issue.

October, 2014/Issue-40 October, 2014/Issue-40
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