TIOL-DDT 1065 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1065</font><br> 04.03.2009<br> Wednesday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Taxable services provided to SEZ developers and units – Exemption with conditions and complexities</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> a long hiatus, the much needed up-gradation of Notification No. 4/2004-ST dated March 31, 2004 which earlier provided exemption to taxable services provided to SEZ developers and units (including units under construction) is here. However, the Government issued a Notification in supersession of Notification No. 4/2004-ST exempting taxable services provided in relation to the authorized operations in a SEZ and received by a developer or units of a SEZ with certain conditions. The previous exemption notification restricted the exemption to services provided by service providers for consumption within the SEZ whereas the new notification provides for exemption whether or not the taxable services are provided inside the SEZ.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, this time around the exemption is provided by way of refund of service tax paid on the specified services used in authorized operations subject to the satisfaction of the Jurisdictional Assistant/Deputy Commissioner. Unfortunately, what is unclear from this Notification is where do the developer or units of SEZ have to file the refund claim – Is it the Assistant/Deputy Commissioner having jurisdiction over the SEZ or that of a service provider?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The exemption is available to developer or units of SEZ provided:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) the developer or units of Special Economic Zone shall get the list of services specified in clause (105) of section 65 of the said Finance Act as are required in relation to the authorised operations in the Special Economic Zone, approved from the Approval Committee (hereinafter referred to as the specified services);</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) the developer or units of Special Economic Zone claiming the exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) the developer or units of Special Economic Zone claiming the exemption has actually paid the service tax on the specified services;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) Exemption or refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone shall not be claimed except under this notification.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further the following conditions are prescribed to claim the benefit of this exemption notification:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of SEZ and used in relation to the authorised operations in the SEZ , and such person shall not be eligible to claim exemption for the specified services:</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the developer or units of SEZ shall claim the exemption by filing a claim for refund of service tax paid on specified services;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) the developer or units of SEZ shall file the claim for refund with the jurisdictional Assistant/Deputy Commissioner of Central Excise;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) the developer or units of SEZ who is not registered as an assessee under the Central Excise Act, 1944 or the rules made there under, or the said Finance Act or the rules made there under, shall, prior to filing a claim for refund of service tax under this notification, file a declaration in the prescribed Form (annexed to the Notification) with the respective jurisdictional Assistant/Deputy Commissioner of Central Excise; </font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Where is it prescribed that developer or units of SEZ have to get registered under Central Excise?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) the jurisdictional Assistant/Deputy Commissioner of Central Excise shall, after due verification, allot a service tax code (STC) number to the developer or units of SEZ within seven days from the date of receipt of the said Form;</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Where is the need for allotment of a separate service tax code to developer or units of SEZ ? Is it not an unwarranted bureaucratic hassle?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) the claim for refund shall be filed, within six months or such extended period as the Assistant/Deputy Commissioner of Central Excise shall permit, from the date of actual payment of service tax by such developer or unit to service provider;</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is the time frame up to which the extension can be provided by the jurisdictional officer? Will it be within the purview of s. 11B of Central Excise Act, 1944?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) the refund claim shall be accompanied by the following documents, namely:-</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) a copy of the list of specified services required in relation to the authorised operations in the SEZ as approved by the Approval Committee;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) documents evidencing payment of service tax;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) a declaration by the SEZ developer or unit, claiming such exemption, to the effect that such service is received by him in relation to authorised operation in SEZ.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) the Assistant/Deputy Commissioner of Central Excise shall, after satisfying himself that the said services have been actually used in relation to the authorised operations in the SEZ, refund the service tax paid on the specified services used in relation to the authorised operations in the SEZ;</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>When the copy of list of specified services required for authorized operations in SEZ as approved by the Approval Committee is given along with the refund claim, where is the need for an Assistant/Deputy Commissioner to satisfy that they are actually used in the authorized operations. All that the officer has to do is to satisfy himself if they are specified taxable services eligible for exemption as per the preamble of the notification.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made there under, as if it is a recovery of service tax erroneously refunded.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Services provided by SEZ in DTA still remain in the realm of doubt.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2009/stnot09_009.htm" target="_blank">Notification No. 9/2009-ST Dated: March 3, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Are SEZ Units outside India or within India? -the paradox continues</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A close examination of the Service Tax notification No 9/09 explained above, would certainly rake up the controversial issue again.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following provisions of SEZ Act or Rules give the Special Economic Zones (SEZ Units or Developers) a status of territories outside India;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec. 2(m) </strong> stipulates that supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; would constitute export</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec 7. </strong> Any goods or services exported out of, or imported into, or procured from the Domestic Tariff Area by (i) a Unit in a Special Economic Zone; or (ii) a Developer; shall, subject to such terms, conditions and limitations, as may be prescribed, be exempt from the payment of taxes, duties or cess under all enactments specified in the First Schedule.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec 51. (</strong><em>1</em><strong>)</strong> provides that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sec 53. </strong>A Special Economic Zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rule 31 </strong> The exemption from payment of service tax on taxable services under section 65 of the Finance Act, 1994 rendered to a Developer or a Unit (including a Unit under construction) by any service provider shall be available for the authorized operations in a Special Economic Zone.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Rule 47. Sales in Domestic Tariff Area - </strong> (1) A Unit may sell goods and services including rejects or wastes or scraps or remnants or broken diamonds or by- products arising during the manufacturing process or in connection therewith, in the Domestic Tariff Area on payment of Customs duties under section 30.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now the New Notification:</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>This notification again highlights the inconsistency among Central Excise Act, Finance Act, 94 and SEZ Act as to the treatment of SEZs.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Though this notification removes controversy regarding usage of services within the zone, now the controversy would be built around the very usage of services in relation to authorized operations.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Service Tax notification 9/09 make it necessary the payment of service tax by the SEZ unit or Developer on the services they procure from DTA and then claim refund This is against the provisions of the SEZ Act (Section 7) and SEZ Rules (Rule 31).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The notification again leaves a doubt whether supplies to SEZ unit or developer constitute an export (this is again against the definition of Export given in SEZ Act). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The notification at Proviso (e) mentions that : <font color="#FF6600">no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004;</font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How will Cenvat provisions apply to the Units in SEZ (as they are treated as outside India and movement of goods or services into or outside the zone are governed by Customs provisions) . Further, what will the unit do with the Cenvat credit so taken? Can they use such credit earned? On clearances to DTA , the SEZ units are required to pay Customs Duties and not excise duties. And even Section 3 of the Central Excise Act excludes SEZs from the liability tom pay excise duty.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now SEZ units/Developer are required to obtain Service Tax Registration and they are brought under the control of Central Excise officers. <strong>And automatically the AG audit will also sneak in.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The notification mentions that sanction of refund is subject to the “satisfaction” of the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, that the said services have been actually used in relation to the authorised operations in the Special Economic Zone, refund the service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This provision will again lead to controversy. For example a rent-a-cab service can be interpreted as not being used in relation to authorized operations</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why do we put in so great efforts to make our laws so complicated? It would have been better to exempt the services provided to SEZ units treating them as exports (if the government so wants they can restrict extension of the export benefits to supplies to SEZ)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And of course there is the GTA angle. SEZ Unit/Developer availing GTA services are required to pay service tax under Sec. 68(2) and claim refund.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The whole purpose of this notification seems to be to remove the earlier restriction that the services should be consumed in SEZ only. Now that they are exempt irrespective of their place of usage, inside SEZ or outside SEZ , a blanket exemption to exempt the service providers may result in misuse by the service providers. So this model has been worked out to ensure that the services are not exempt in the hands of the service provider. He has to pay service tax even for services rendered to SEZs.</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import of Raw Sugar – AU Condition not to apply</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Duty Free Imports against an Advance Licence or Advance Authorisation under Notification No. 93/2004-Customs and against an Advance Licence for Annual Requirement or Advance Authorisation for Annual Requirement under Notification No. 94/2004-Customs, are subject to Actual User Condition.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now these Notifications are amended to stipulate that the actual user condition specified shall not be applicable in respect of authorisation issued for import of raw sugar for imports made from 17 th February, 2009 till 30 th September, 2009 and the export obligation may also be fulfilled by procuring white sugar from any other factory with effect from the 17 th February, 2009.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2009/ctariff09_022.htm" target="_blank">Notification NO. 22/2009- Cus ., Dated: March 2, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Procedure for import of Vegetable Fats under India-Nepal Trade Treaty 2002</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The India-Nepal Treaty of Trade 2002, as renewed with effect from 6th March 2007 for a period of five years, has fixed a Tariff Rate Quota (TRQ) of 1 lakh Metric Tonnes of Vegetable Fat (Vanaspati Ghee) as Nepalese manufactured article and allowed its entry into India free of customs duty. The Vegetable Fat (ITC HS Code No 151620) within TRQ is allowed to be imported into India in accordance with the canalization process agreed between both parties. Pursuant to discussions on the request of the Government of Nepal, in order to facilitate export of vegetable fat from Nepal under the Treaty, following revised procedure has been agreed and notified:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. The Department of Commerce, Government of Nepal, as designated by the Government of Nepal, will be the authority for allocation of TRQ among its vanaspati ghee manufacturers on an annual basis</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. The quota so allocated to each manufacturer/exporter on a quarterly basis would be communicated by the designated authority of Nepal (Department of Commerce) to Directorate General of Foreign Trade (DGFT), Department of Commerce, Ministry of Commerce and Industry, Government of India in the first fortnight of the Indian Financial Year 1st April to 31st March.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii. The import of allocated quota will be allowed into India based on production of Tariff Rate Quota Certificate (TRQC) and Certificate of Origin (COO) issued by the designated authority in Nepal, namely Department of Commerce. The TRQC shall be issued in advance in duplicate. The TRQC will be sent by the Nepalese exporter to Indian importer.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iv. Import quota of one quarter shall not be allowed to be carried over to the next quarter. Date of import for this purpose shall be reckoned with reference to the bill of lading date.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">v. The designated authority in Nepal (Department of Commerce) will ensure that quarterly quota would be so allocated that its export to India is evenly distributed in Indian states without adversely affecting markets in any particular state.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">vi. Government of Nepal shall send a statement of actual exports, indicating state-wise destination, made by exporters who were allocated the quota one week after the end of every quarter, to DGFT in format prescribed.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn157.htm" target="_blank">DGFT Public Notice No. 157 (RE-2008)/2004-09, Dated: March 2, 2009</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revalidation of DFIAs – DGFT Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Trade and Industry have represented that due to varying interpretation of the provisions of DFIA scheme, as per FTP and the corresponding Customs Notification for the period 1.5.2006 to 31.3.2007, DFIAs , in particular, the DFIAs endorsed with transferability, could not be utilized in time for import clearances. The Department of Revenue have now issued the Customs circular no. 11/2009 dated 25.2.2009 (please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8661" target="_blank">DDT-1061</a>) </strong> clarifying the provisions and utilization of DFIAs. Accordingly, it has been represented that DFIAs issued during the aforesaid period may be revalidated for a further period of 6 months from the date of endorsement.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has decided to revalidate the DFIAs (even if endorsed with transferability) issued during 1.5.06 till 31.3.07 for a period of 6 months from the date of endorsement subject to the following conditions:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. Request for revalidation may be submitted to the concerned Regional Authority (who have issued the DFIA) within a maximum period of 30 days from the date of the issuance of this Public Notice. DFIA shall be revalidated for a period of six months from the date of endorsement of revalidation. RAs shall endorse revalidation within a period of maximum 7 working days from the date of receipt of the request.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii. This facility shall not be available where misrepresentation/fraud has come to the notice of any authority.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn158.htm" target="_blank">DGFT Public Notice No. 158 (RE-2008)/2004-09, Dated: March 2, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">–Tomorrow's cases</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Haryana GST</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Withdrawal of Eligibility Certificate for non production of NOC – Valid</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NON-PRODUCTION</strong> of NOC/CLU certificate' by itself cannot be a ground for withdrawal as it is not one of the grounds/circumstances mentioned in clause (a) of sub-rule (8). What therefore remains to be considered is whether it can be said that the eligibility certificate was obtained by the respondent by fraud, deceit, misrepresentation, misstatement or concealment of facts.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What An <em>Idea </em>Sir jee - exempted and taxable service – restriction on 20% credit not applicable to Capital Goods Credit - CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EVEN</strong> if the provisions of Rule 6 (3) (c) are attracted, the limit of '20% of the service tax payable' on utilization of tax credit for payment of service tax on telephone service is not applicable in respect of capital goods CENVAT credit and service tax credit in respect of 17 input services specified in Rule 6 (5).</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs & Central Excise</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether redemption fine can be imposed when goods are not available for confiscation – Larger Bench settles the issue once for all</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is the reference –</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>"Whether the goods can be confiscated and redemption fine imposed even if they are not available for confiscation (excluding the cases where the goods are initially seized and provisionally released) or the same cannot be confiscated and fine in lieu of confiscation cannot be imposed.. “</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please wait till tomorrow to know the decision.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Indo-US DTAA - Liaison Office - LO acts as buying agent for affiliate companies of global Group - Since activities of LO are limited to mere purchase of goods for exports, it fits into Explanation (1)(b) of Sec 9(1)(i) and its commission income is not taxable in India: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> this case, the non-resident company has a Liaison Office (LO) in India. Its main activity is to act as a buying agent for the affiliate companies of its Group and ensure that the goods of desired specification are exported by Indian manufacturers to its affiliates. To perform its function efficiently it also undertakes various activities of training etc and Revenue tends to treat the LO as PE and holds that its income is taxable in India.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, the Tribunal has taken a different view and held that the activities of the LO are confined only to the purchase of quality goods which are directly exported to its affiliates and invoices are also raised in their favour, with the LO acting only as a purchase agents for exports goods. Thus, it fits into the Explanation (1)( b) of Sec 9(1)(i) and the income of the LO which is the commission, is not taxable in India.</font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns tomorrow for the judgements</font></strong></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>