TIOL-DDT 1315 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1315 </font><br>
10.03.2010 <br>
Wednesday</strong> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Modification of Electricity Act for Deemed Licensing to SEZ Developers </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> terms of the <font color="#663399"><em><strong>Guidelines for Power Generation, Transmission and Distribution in Special Economic Zone (SEZ) dated February 27, 2009</strong></em></font> issued by the Commerce Ministry vide <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=259&filename=sez/sez_notifications/power_guidelines_SEZs.htm" target="_blank"><strong>N.o P.6/3/2006-SEZ.1 dated 27th February, 2009</strong> </a>it is stipulated as follows: </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Requirement of License </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">While a generating company may establish, operate and maintain a generating station without obtaining a license under Electricity Act, 2003 subject to compliance of the technical standards as specified in the said Act and conforming to the definition of generating company under the provisions of the said Act, distribution of power is a licensed activity as specified in section 14 of the Electricity Act 2003 except the situation specified in the 8th proviso to the said Section. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">…………. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">………… </font></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Distribution Licence </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In concerned and upon the recommendation of the State Govt., Deptt. of Commerce will issue necessary Notification under Section 49 of the SEZ Act in consultation with the Ministry of power. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that any State Government can recommend to the Department of Commerce that any power distribution facility coming up in any SEZ in that State can be granted distribution license by the Department of Commerce in consultation with the Ministry of Power. Department of Commerce will issue necessary notification under Section 49 of SEZ Act. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">All the provisions of the Electricity Act, 2003 and Electricity Rules, 2005 as amended form time to time by the Ministry of Power along with various power resolutions issued by the Ministry of Power will be applicable wherever warranted to power generating units, whether stand alone or captive power generating units, transmission facilities and power distribution facilities in the SEZs.</font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Further the provisions of Section 14 and clause(b) thereof of the Electricity Act, 2003 reads as follows: </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 14 (Grant of Licence) </font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Appropriate Commission may, on an application made to it under Section 15, grant a license to any person – </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">a)……………. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">b) to distribute electricity as a distribution licensee; or </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">c)…………….</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">in any area as may be specified in the licence </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">……………… .. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now to overcome this licensing requirement for distribution of electricity by SEZ developers and in pursuance of the policy guidelines issued by the Commerce Ministry generation, transmission and distribution of power in SEZ, as extracted above, the Central Government by virtue of its powers under Section 49(1)(b) of the SEZ Act, 2005, notifies that the provisions of Section 14(b) of the Electricity Act, 2003 shall apply to all SEZs notified under Section 4(1) of SEZ Act, 2005 subject to certain modifications to the relevant provision of Electricity Act, 2003. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And
the modification to Section 14(b) of the Electricity Act, 2003 in so far
as it relates to SEZ is notified as follows by inserting the following proviso
there under: </font></p>
<blockquote>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">“Provided that the Developer of a Special Economic Zone notified under subsection (1) of section 4 of the Special Economic zones Act, 2005, shall be deemed to be a licensee for the purpose of this clause, with effect from the date of notification of such Special Economic Zone;” </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So any entity in the SEZ other than the SEZ developer will still be governed by the provisions of Section 14 of the Electricity Act, 2003 minus the above proviso. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=259&filename=sez/sez_notifications/sez_notification_228_10.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ Notification S.O. No. 228(E), Dated: March 3, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Procurement, Import and Export of Prohibited and Restricted Goods by SEZ Units – Guidelines Regarding </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the current Foreign Trade Policy, SEZ units cannot export “prohibited items of exports”. However, they do not require any permission to export “restricted items of export”. To appreciate the perspective and background of this Policy, interactions with the O/o DGFT revealed that prohibitions on exports is imposed keeping the National requirements in view. Therefore, SEZ units should not be permitted to procure these items from domestic area and export the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of this policy requirement, references were received from units by the Department of Commerce, to permit them to import raw materials to make such finished products whose export, at present, is prohibited. Since inputs were not procured from Domestic Area, it was suggested by the said units that the policy on prohibition of exports should not apply to them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In terms of the provisions of the Foreign Trade Policy, an item whose import is restricted can be imported under Customs Bond for export, export of imported logs/timber is not prohibited. Hence, these exceptions in the Foreign Trade Policy are in line with the suggestion of the units. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Keeping the above in view, it has been decided that SEZ units should be permitted: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) to export prohibited items, provided they import raw-material for the same. However, each such case will be placed before BOA for approval so that views of DGFT, DoR and others can be considered before taking a decision. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In respect of items which are prohibited for import, SEZ units will be permitted to import the same provided they export goods made out of the same . As in the case of exports, each such case will be placed before BOA for consideration and approval. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) In respect of supply of Restricted Items by a DTA unit to SEZ Developer/Unit, the DTA unit can supply such items to a SEZ Developer or unit for setting up infrastructure facility or for setting up of a unit. It can also supply raw material to SEZ unit for undertaking a manufacturing operation except refrigeration, cutting, polishing and blending. However, it will require prior approval of BOA. </font></p>
</blockquote>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/2006/sez09ins047.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ Instruction No. 47, Dated: March 4, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption regarding setting up of offsite ATMs and branches in SEZs by Banks </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Central Government, in exercise of its powers under Section 49(1) of the SEZ Act, 2005, hereby declares that the provisions of clause (u) of section 2 of the Special Economic Zones Act, 2005, would not apply to Special Economic Zones in so far as they relate to setting up of </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) offsite Automated Teller Machines in the Special Economic Zones; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) branches in Special Economic Zones by Banks, not licensed as Offshore Banking Units; with the prior permission of the Reserve Bank of India under Section 23 of the Banking Regulation Act, 1949. </font></p>
</blockquote>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=259&filename=sez/sez_notifications/sez_notification_527_10.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">SEZ Notification S.O. No. 527, Dated: March 3, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Supreme Court appeals to Supreme Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=10230" target="_blank">TIOL-DDT 1277 13.01.2010</a></strong> while reporting on the Larger Bench ruling of the Delhi High Court that Chief Justice of India is a public authority under the RTI Act, we said that the Doctrine of Necessity may compel the Supreme Court to file an appeal before itself against this High Court judgment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On Monday, the Supreme Court did just that. It filed an appeal before itself against the High Court judgment. Now what remains to be seen is whether Supreme Court will uphold the Delhi High Court ruling and set an example of judicial accountability thereby enhancing public confidence in the higher judiciary, which has hit a low in recent years because of various corruption scandals involving members of higher judiciary. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Ship or vessel supplied on hire for being used in prospecting operation of exploration of mineral oil- second limb of Section 44BB was clearly attracted - AAR</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> question
before the AAR was whether the operations of seismic survey and related services
is an integral part of the exploration/prospecting activities for mineral
oil (petroleum and natural gas) and, therefore, they fall under the ambit
of Section 44BB of the IT Act and the income has to be computed in accordance
with that provision. An identical issue has already been decided by the AAR
in </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=183&filename=legal/ara/2009it/2009-TIOL-32-ARA-IT.htm" target="_blank">2009-TIOL-32-ARA-IT</a></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">.
It was held again that the second limb of Section 44BB was clearly attracted
for the reason that the ‘plant and machinery' which includes a ship or vessel
has been supplied on hire for being used in the prospecting operation of
exploration of mineral oil and tax has to be withheld from the payments made
by the applicant would be 4.223%. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=183&filename=legal/ara/2010it/2010-TIOL-11-ARA-IT.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see 2010-TIOL-11-ARA-IT.</font></strong></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"> – Thursday's cases</font></strong></font></strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><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">Income Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Indo-USA DTAA - Indian applicant joins hands with University of Texas to commercialise Indian innovations in global market space - FTS under Art 12.4 - Orientation towards business and inculcation of entrepreneurial outlook do not amount to 'making available' technical knowledge or skills - No TDS u/s 195: Advance Ruling</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Applicant is awarded a job contract to facilitate commercialisation of Indian innovations in domestic and global market space. It joins hands with the IC2 Institute of University of Texas for providing managerial, technical and consultancy services. The issue is whether payment made to the non-resident institute is 'fee for included services' as per para 4(b) of Article 12 and whether TDS is to be deducted u/s 195 on such payments made by the applicant. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Condonation of Delay filed by appellant – In peculiar circumstances of the case, offer made to Revenue to accept a remand by directing appellant to make a pre-deposit as department would get a portion of revenue – Since DR not interested, application rejected: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> order is unique in more than one respect. The CESTAT had earlier rejected the applications filed by the appellants for condonation of delay of 418 days in filing the appeal. The appellants took the matter to the High Court and the Bench was directed to pass a speaking order. And so, the applications are before the CESTAT once again. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Order of original authority saying that a provision of law which was in existence did not exist cannot be sustained even for a moment – Appeal allowed by way of remand: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOTH</strong> the lower authorities denied the benefit of CENVAT Credit to the assessee on the sole ground that the appellant's name did not figure on the four invoices. Aggrieved, the matter is taken in appeal before the CESTAT. </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="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more <strong>DDT</strong> </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p>
<p><font color="#FF6666" 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>
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