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<div><p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#663399" size="3">TIOL-DDT 1288</font> <br/>29.01.2010 <br/>Friday </strong></font></p><p align="center"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2">
  Service Tax - Applicability of limitation under Section 11B when service was not taxable. Single judge Order in KVR Constructions stayed</font></strong></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>IN</strong> <em>KVR CONSTRUCTIONS Vs COMMISSIONER OF CENTRAL EXCISE, BANGALORE </em><strong>- </strong></font><font face="Verdana, Arial, Helvetica, sans-serif" size="1"><strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&amp;filename=legal/hc/2010/2010-TIOL-68-HC-KAR-ST.htm" target="_blank">2010-TIOL-68-HC-KAR-ST</a></strong></font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>, </strong>a single judge of the Karnataka High Court held - <em>Amount paid due to misunderstanding of law, when no tax was payable – limitation under Section 11B of Central Excise Act not applicable: Section 11B provides for making a claim to refund duty. Admittedly, the sums deposited by the petitioner is held to be a deposit and not as a duty, therefore, there was no necessity for the petitioner to have made a claim invoking Section 11B of the Act for refund. </em></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The Single Judge had ordered refund Rs. 1,23,96,948/- to the petitioner forthwith, in any event within a period of two weeks from the date of the order. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">We had carried this case on 22.01.2010. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">On the same day we got a mail from the Senior Central Government Standing Counsel for Indirect Taxes, High Court of Karnataka, Bangalore. </font></p><blockquote><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2">Please be informed that as against the Order passed in the Writ petition bearing No 6773/2009 an appeal has been filed in Writ Appeal No. 2992-93/2009, in which the Division Bench comprising of Justice Shylendra Kumar and Justice Aravind Kumar was pleased to stay the operation of the Order of the learned Single Judge vide order dated 24th of August, 2009. The appeal has been posted for final hearing and not attained finality. The same may kindly be published for the benefit of the viewers. </font></p></blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">We asked him for a copy of the order. He promptly sent it and said, “Please be kind enough to publish the same for the information of the public” </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Thank you Sir! Your keen interest in ensuring that judgements are made known to the Public is laudable. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">There is a feeling among Government officials that publications usually don't carry orders favourable to Revenue. Though this is not a fact as very few lawyers would like to win cases by hiding judicial decisions, we had contacted several Assistant Solicitors General in High Courts, CIT(DR)s in ITAT and DRs in CESTAT and Commissioners in the field and requested them to send us orders favourable to Revenue. And the response has been anything but encouraging. In fact there is an SDR in CESTAT who meticulously collects all orders favourable to Revenue and uploads them in his site in almost unreadable pdf form. We offered to carry all their cases and even offered free access to other DRs, but <em>bureaucrase </em>prevents him from giving us those cases. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">A CIT(DR) in ITAT was mighty excited when we offered to carry all important cases, he has won, but in two years he gave us one order! An ASG in a High Court who rarely won a case promised to give us all the orders – in four years, he gave us one!, not that he had not won more cases! We only asked him to give us the case numbers. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">In such a situation, we are simply bowled over by the interest shown by the Senior Central Government Standing Counsel in Bangalore, in bringing the orders of the Court into the public domain. Court Orders need to be made public, whether they are in favour of the Revenue or the assessee and <strong><font color="#ff6633">TIOL</font> </strong>considers it a duty and will spare no effort in bringing you all the important decisions. </font></p><p><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Please see </strong></font><font face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&amp;filename=legal/hc/2010/2010-TIOL-89-HC-KAR-ST.htm" target="_blank"><font face="Verdana, Arial, Helvetica, sans-serif" size="1">2010-TIOL-89-HC-KAR-ST</font></a></strong></font></p><p align="center"><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Prevention of Money - laundering Amendment Rules, 2009 - Obligation of Banks / Financial Institutions </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>GOVERNMENT</strong> of India vide its <em>Notification No.13/2009/F.No.6/8/2009-ES</em> dated November 12, 2009, has amended the Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">In view of amendments to the above Rules, banks are required to: </font></p><blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">i) Maintain proper record of all transactions involving receipts by non- profit organizations of value more than rupees ten lakh or its equivalent in foreign currency and to forward a report to FIU-IND of all such transactions in the prescribed format every month by the 15th of the succeeding month. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">ii) In case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction is equal to or exceeds rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, the customer's identity and address should be verified. </font></p></blockquote><p><a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=1&amp;filename=wnew/rbi_notification.htm" target="_blank"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>RPCD.CORRB.AML.BC.No.49/03.05.33(E)/2009-10 Dated: January 28, 2010 </strong></font></a></p><p align="center"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><font color="#006600">Jurispruden</font><font color="#ff6633" size="5">tiol</font><font color="#006600"> – Monday's cases</font></strong></font></strong></font></p><p><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong><img align="left" alt="Legal Corner Icon" border="0" height="84" hspace="5" src="https://taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" width="100"/>Central Excise </strong></font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Excess amount collected from dealer over and above actual amount incurred towards Road Delivery Charges (RDC) is liable to be added to the assessable value and charged to duty – however, excess RDC is to be treated as cum-duty price – CESTAT </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>THE</strong> case of the department is that as per the definition of transaction value under new Section 4 of Central Excise Act, 1944 each transaction is separate and independent. Excess recovery of freight would result in under-valuation of the goods and it is on this ground that differential duty has been demanded. Since the assessment is to be made on each transaction, the appellants cannot adjust excess recovery of freight in one transaction against the short recovery of freight in another transaction. </font></p><p align="justify"><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Income Tax </strong></font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Transfer Pricing - Assessee is part of MNC Group - extends interest-free loan to non-resident AEs - Revenue for levy of tax on notional interest income - Interest-free loan between two related parties is a case of transfer of profit from India which is not permissible u/s 92: ITAT </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>IT</strong> is settled law that a company can provide interest-free loan to its subsidiaries out of commercial expediency. But, does the same logic or the legal ratio of various judicial pronouncements apply to international transactions? Can an MNC which has multiple associated enterprises (AEs) situated in various parts of the world, claim similar exemption like a domestic company? Or, arm's length price (ALP) is to be attributed to such cross-border transactions? In this instant case the Tribunal has held that the Chapter X of the Income Tax Act contains special provisions which govern all international transactions. As per Sec 92 of the Act, ALP is to be computed for all cross-border transactions, and an MNC cannot escape its tax liability by arguing that its interest-free loan was actually capital contribution to its AEs. </font></p><p align="justify"><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Customs </strong></font></p><p align="justify"><font color="#ff6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>Denial of Drawback on ground that investigations are pending - when an alternative remedy is effectively and efficaciously available, no writ is maintainable – Petitioner directed to Appellate Authority:– High Court </strong></font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>WHEN</strong> an appeal remedy is statutorily provided, it is the obligation on the part of the petitioner to prefer such an appeal, before approaching this court. Though the respondent has indicated in his order itself that an appeal would lie against the order impugned, without exhausting the appeal remedy, the petitioner has challenged the impugned proceedings before this court. Therefore, when an alternative remedy is effectively and efficaciously available to the petitioner, it is appropriate for them to exhaust such remedy as provided under the Rules. Accordingly, the petitioner is directed to prefer an appeal to the appellate authority against the order impugned in this petition. </font></p><p align="justify"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2">See our columns Monday for the judgements </font></strong></p><p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Until Monday with more <strong>DDT </strong></font></p><p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Have a nice Weekend. </font></p><p align="justify"><font color="#ff6666" face="Verdana, Arial, Helvetica, sans-serif" size="2">Mail your comments to</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p></div>
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