13 May, 2014

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Updates that Matter (UTM # 9)

Dear Friend,
Please find below the "Updates that Matter (UTM # 9)",
Ø  Service Tax & VAT :- VAT not leviable on 40% of the restaurant bill, which is subject to service tax

(Hon'ble Uttaranchal HC)

Ø  Haryana VAT: - Developer Related Circular No. 259/ST-1 constitutional validity challenged. Recovery Stayed by

Ø  Central Excise : HC permits transfer of unutilized Cenvat credit from one division to another division of same assessee
Ø  Service tax Arrest Provisions do not have retrospective Effect.
(Hon'ble Calcutta HC)

Ø  VAT (Works Contract) :- HC affirms deduction of 25% for labour charges for work contract in absence of any books of account

(Hon'ble Karnataka High Court)

Ø  FDI :- Foreign Direct Investment(FDI) in India - Reporting mechanism for transfer of equity shares
Ø  Supply and Installation of Lifts is a Works Contract
(Hon'ble Supreme Court)

Ø  Central Excise :- No Credit reversal under Cenvat Rule 6 in case of manufacture of exempted by-product

(Hon'ble Supreme Court)

Ø  Delhi VAT: - Digital Signature now effective for Filing. Only DVAT-56 required to be submit.

a)      Service Tax & VAT :- The High Court allowed the revision application filed by the assessee and held that, where the element of service has been declared and brought to tax vide notification dated 6 June 2012, by which Service tax is levied on 40% of the billed value in restaurant, no VAT can be imposed thereon.  

Valley Hotels & Resorts vs. The Commissioner, Commercial Tax, Dehradun [TS-129-HC2014 (UTT)-VAT].

b)    Haryana VAT:  VAT - Circular 259/ST-1 dated 10.2.2014 issued by Haryana VAT authorities stating that builders under composition scheme need to include the value of land transferred to the flat buyers, External Development Charges (EDC), Infrastructure Development Charges (IDC), Licence fee, Processing fee etc. in the gross turnover for computation of VAT - demand raised - Writ Petition filed challenging the assessment and also challenging the constitutional validity of the Circular.

Held: Ordered that no coercive steps be taken against the petitioner to recover the amount till the matter is heard on 06.05.2014: High Court - Recovery stayed : PUNJAB AND HARYANA HIGH COURT

ABW Suncity Vs State of Haryana (TIOL)

c)    Central Excise: Hon'ble Madras High Court has held that where assessee is granted single registration in place of two separate registrations of two divisions in same premises, credit pertaining to one division can be transferred to Cenvat credit register of another division, as Cenvat credit can be used for payment of duty on any product.

Commissioner of Central Excise, Madurai v. Rajshree Sugars & Chemicals Ltd. [2014] 43 taxmann.com 257 (Madras)

d)    Service Tax :- As held by Hon'ble Calcutta HC, It is correct that the offence is alive till now but it is not less than correct that when it was originated, the offence was bailable in view of the observation made by the Hon'ble Apex Court [2010 (12) TMI 1085 - SUPREME COURT]. It is also reckoned that the new Act does not have any retrospective effect.

Sudip Das Versus Union of India 2014 (3) TMI 589

e)    VAT:- It was held by Karnataka HC that, where assessee was engaged in execution of works contract and it had not maintained books of account and had also not produced bills and vouchers pertaining to labour charges, Assessing Authority was justified in allowing deduction towards labour charges and like expenses to an extent of 25 per cent as per rate specified under Entry No. 14 of Table given below rule 3(2)(m) of Karnataka Value Added Tax Rules, 2005

Creative Markings & Controls (P.) Ltd. v. Additional Commissioner of Commercial Taxes [2014] 44 taxmann.com 159 (Karnataka)

f)     FDI :- Reporting mechanism for transfer of equity shares/ fully and mandatorily convertible preference shares/ fully and mandatorily convertible debentures   
RBI/2013-14/ 577  dated May 2, 2014 {A.P. (DIR Series)Circular No.127}
g)    Works Contract :- Supply & Installation of Lifts is Works Contract

The Constitution bench of the Supreme Court in the case of M/S. Kone Elevator India Pvt. Ltd. vs. State of Tamil Nadu and Ors. (Writ Petition (C) No. 232 OF 2005) vide its order dated 6.5.2014 has overruled the decision of the three-Judge bench in the case of State of A.P. v. Kone Elevators (India) Ltd, reported at (2005) 3 SCC 389

h)    Cenvat: - The Supreme Court in its order has held that Rule6 is not applicable and no amount of cenvat credit is required to be reversed in case exempted by-products are being manufactured along with dutiable final products.

Order no. C.A. No. 8621 of 2010 dated 6.5.2014

i)     DVAT :- Please note that returns can now be filed with digital signature and in that case there will no need for submitting the hard copy of DVAT 56.

Source :- Dvat.gov.in
CA.Ankit Gulgulia (Jain)|B.COM(H), C.A, C.IFRS, C.B.V
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