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Reliance's Tax Advisor & ex-IRS Officer Sandeep Tandon dies of cancer Bad News for NDT-Delhi High Court decides to hear paternity suit against Tiwari filed by Rohit Shekhar, who claims that he is biological son of ND Tiwari Haryana Assembly okays Special Economic Zone (Amendment) Bill, 2010, which seeks to provide for refund of stamp duty on registration of land collected from developers of SEZs in the state before notification of SEZ Microsoft loses 106 million dollar Patent verdict Sensex hits 17500 Points in early trading FM says inflation may hit double digit in March Authority for Advance Ruling rules the payments made to ABB Research Ltd., Zurich towards the applicant's share of the cost incurred in respect of R&D activities are not liable to be taxed under the Income Tax Act, 1961 as business income in the absence of permanent establishment in India, having regard to Art.7 of the Tax Treaty- Nor can it be subjected to tax as royalty or fees for technical services under Article 12 of the Treaty-AIT-2010-94-AAR Tariff Value for import of Brass Scrap is 3801 and for poppy seeds 4256-Customs Non-Tariff Notification No. 20 No approval for procurement of service “Rental” of immovable property for office outside the Special Economic Zone/FTWZ can be given-SEZ Instruction No. 49 on Clarifications on FTWZ issues Consolidated list of default authorized operations which can be undertaken by the developer/approved co-developer by default from the date of notification-SEZ Instruction No.50 Himachal Government hikes VAT from 4 per cent to 5 per cent on all items, except edible oils and foodgrains Authority for Advance Ruling rules no capital gains accrued or arose at the time of conversion of partnership firm into a private limited company under Part IX of the Companies Act and therefore, notwithstanding the non-compliance with clause (d) of proviso to Section 47(xiii) of the Income Tax Act, by reason of premature transfer of shares, the said company is not liable to pay capital gains tax-AIT-2010-93-AAR Authority for Advance Ruling rules if the purchasers are non-residents other than the applicant, the applicant is liable to pay tax in India on the amount received by it for the support services rendered through the branch office in India-AIT-2010-92 -AAR Jurisdiction of Dispute Resolution Panel-Income Tax Order No.3 Employment of washing process in the manufacture of agglomerates etc from imported plastic waste and scrap-SEZ Instruction No.48 Haryana Government imposes surcharge ranging from 0.25 per cent to 0.7 per cent on VAT Service Tax Notification No. 17/2010 which exempts the taxable service providing packaged or canned software, intended for single use and packed accordingly amended-Service Tax Notification No.18 Procurement, Import and Export of Prohibited and Restricted Goods by SEZ Units-SEZ Instruction No. 47 Authority for Advance Ruling rules the amounts received/receivable by Technopromexport from NTPC under contract for Offshore supply of all plant and equipment including mandatory spares are not liable to tax in India under the provisions of the Income-tax Act, 1961 and DTAA between India and Russia-AIT-2010-79-AAR

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FinMin spoils Rebate Party of J&K and North-East on AIT Report

AIT News Network

NEW DELHI. Acting on the Report of Allindiantaxes ; Finance Ministry has finally spoiled the Rebate Party of Jammu & Kashmir,North-East,Kutch and Sikkim Units by issuing directions to the concerned Officials that the Units working in Excise Free Zones are not entitled to Rebate on export as they are not paying any Central Excise duty but are availing exemption from duty. The officials have also been directed to issue notices to all those Units to whom Rebate claims have been irregularly sanctioned by the Department.

The Government had also taken the Opinion of Law Ministry who opined that the term ‘duty paid’ used in rule 18 of Central Excise Rules does not include that portion of duty, which is subsequently refunded to the manufacturer. It was also opined that the amount so refunded to the manufacturer is to be treated as an exemption and rebate of the said amount cannot be paid.

The Story reported by Allindiantaxes is as under:

FinMin in Santa Mode: Doles out Rebate when no duty paid: Double Your Money Scam all set to shake North Block

AIT News Network

JAMMU. What may perhaps be another Rs.100 Crore scam going to shock even the mandarins of the Finance Ministry; is grant of Rebate by Maritime Commissioners on goods manufactured in Tax Heaven of Jammu & Kashmir on which no duty is legally paid but the rebate is being illegally claimed on export of these goods.

Though on one hand Hon’ble Finance Minister is leaving no stone unturned for plugging the Revenue leakage, Double Your Money in no time is the new buzzword for manufacturers and exporters.

The modus operandi is simple:

Step 1. Set up a Unit in Jammu & Kashmir and avail the benefit of Central Excise Notification No. 56/2002.

Step2: Pay Rs.10 lakh on goods manufactured and cleared as prescribed under Notification No.56/2002

Step 3: Get Refund of Rs.10 lakh paid as provided under Notification No.56/2002

Step 4: Export the same goods. Get Rebate of another Rs.10 Lakh.

Thus on an investment of Rs.10 Lakh ; the Government is in fact giving a return of Rs.20 Lakh.

According to sources this incentives without legal backing are being given to some of the manufactures allegedly on the basis of unreported clarification given to the field formations by the Central Board of Excise & Customs.

R.S.Sharma, Well Known Indirect Tax Expert told allindiantaxes.com that granting of Rebate of duty under Rule 18 of the Central Excise Rules, 2002 on the goods directly exported from Jammu Units through Merchant Exporters, in addition to the refund granted under the said Notification No.56/2002-CE is illegal as the Notification No. 56/2002-CE is an exemption notification issued under Section 5A of the Central Excise Act, 1944 granting exemption to the goods manufactured in the specified areas of Jammu region. A suitable mechanism has been incorporated in exemption Notification to operationalize the exemption wherein the the manufacturer is first required to pay the excise duty and thereafter, whatever is paid in cash is to be refunded. In terms of Rule 12 of the CENVAT Credit Rules, 2004, there is a special dispensation to the manufacturers to take CENVAT credit of duty paid on the goods bought from the units of Jammu region and used in the manufacture of subsequent final products. However, there is no such special dispensation for admissibility of rebate under Rule 18.

Under Notification No. 56/2002-CE, effectively no duty is being paid on the goods cleared and in addition, they are getting rebate of duty @ rate of 16% of value of goods which is never paid.

It has been reportedly learnt that the alleged clarification given by the Board has given indication that payment of duty under the said Notification is also payment of duty for the purpose of granting rebate under Rule 18. It seems to be incorrect in as much as since Notification No. 56/2002-CE is an exemption Notification under Section 5A i.e. no duty is being paid effectively, grant of rebate under Rule 18 in the absence of special dispensation as in the case of CENVAT Credit Rules, 2004, is a double benefit resulting into revenue loss in crores of rupees, which needs to be addressed immediately.

In view of above Allindiantaxes.com suggests:

FinMin should give equal opportunities( as guaranteed under Constitution of India) to all manufacturers exporters to double their money by claiming first Refund and thereafter Rabate of the same amount by issue of a Circular that the Rebate is also admissible in addition to Refund under the said Notification and Rebate Party is open for all manufacturers exporters as granting of rebate in addition to refund in the above manner has resulted in loss of business opportunity to those manufactures who are not claiming such rebate vis-à-vis manufacturers who have claimed rebates and have offered lower prices of the products to their buyers.

Immediate directions should be issued to stop Rebate Party and to recover the rebate granted erroneously. Possibility of the same fate for North East units or units in Kutch region cannot be ruled out. But whether Intelligence Agencies will be able to trace merchant exporters who have availed the Rebate or not; is a big question as their addresses are neither verified at the time of issue of IEC Code nor at the time of grant of Rebate.