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By Vijay Kumar

Income Tax

Assessee collects exam fees on behalf of tax-exempt non-resident institutes - Indo-USA DTAA - Such payments are not taxable in India as assessee is not a dependent agency; No question of TDS : Advance Ruling

Thus the Authority concluded that in terms of paragraph 5 of article 5 of the DTAA , the applicant cannot be deemed to be a permanent establishment of API CS and /or AST&L in India .

As regards the TDS, the Authority held that since no income is chargeable to tax in India , no question of TDS arises. Since it has been held that since no tax is attracted on payment of examination fees being made to API CS & AST&L by virtue of paragraph 1 of article 7 of the DTAA , it stands to reason that no deduction of taxes need be made from such payments.

Sales Tax

The 'test of irreversibility' is important criterion to ascertain as to when a given process amounts to manufacture; Courts have to go by principle involved in fiscal legislation: Supreme Court

The "test of irreversibility" is an important criterion to ascertain as to when a given process amounts to manufacture. In the present case that test is not satisfied.

In the present case, the Tribunal has examined the process and has come to the conclusion that by adding impurities to the sandalwood oil the product could become red oil once again.

Service Tax

Export of Taxable Services effected prior to 14.03.2006 also entitled for Rule 5 C C R , 2004 refund: Tribunal

TILL the day the notification 4/2006- C E( N.T ) dated 14.03.2006 came on to the scene & substituted the earlier rule 5 of the Cenvat Credit Rules, 2004, only a manufacturer could claim a refund under the said rule of C ENVAT credit in respect of the input or input service so used in the manufacture of final products cleared for export under bond or under LUT .

What was missing was a reference to the “ service providers ” who were placed in similar situations as the rule contained the following clause – “…and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the, Central Government, by notification:”

See our columns tomorrow for the judgments