A recent deal between Jet Airways and Etihad Airways, valued at $379 million, forms part of the government's new policy to encourage foreign direct investment in India. It is hoped that the infusion of foreign direct investment into civil aviation will result in improvements to the economy, a growth in traffic at Indian airports and the creation of job opportunities.
A circular issued by the Central Board of Excise and Customs states that credit for service tax paid on the transportation up to a place of sale would be admissible if it could be established by the claimant that the sale and the transfer of property in goods occurred at the place at hand. However, following an amendment to the Credit Rules, the application of this tax has been under dispute. Several courts have set out their views.
The Customs, Excise and Service Tax Appellate Tribunal recently determined the applicability of service tax in relation to Sodexo meal vouchers sold by the appellant under the taxing entry for business auxiliary services. The tribunal argued that the tax should apply as the restrictions imposed on employees redeeming the vouchers were tantamount to promotion of the goods and services of the appellant's affiliates.
The Supreme Court recently declared that filing tax returns is a statutory obligation on the part of the taxpayer/assessee and that failure to do so will make the taxpayer liable for prosecution. The judgment, which concerned a partnership firm, sternly reminds taxpayers of their obligations in filing a return and the serious consequences that will arise from a failure to do so.
The Bombay High Court recently sent a case back to the Income Tax Department's Dispute Resolution Panel, requesting that it determine the applicability of transfer pricing provisions to the issue of shares. The decision comes as a relief to taxpayers that intend to file a writ petition in relation to tax disputes, since the court has held that a petitioner can approach the high court to appeal a Dispute Resolution Panel order.
The Mumbai Bench of the Income Tax Appellate Tribunal has held that an Indian branch of a US entity was not a dependent agent permanent establishment of its group entities. The tribunal held that the branch was not a dependent agent as it had no authority on behalf of the group, it maintained no stock of goods and the orders relating to indent sale were only introduced and liaised by the assessee, not secured by it.
The Kerala High Court recently dealt with the levy of value added tax (VAT) on the transfer of use of trademark under a franchise agreement, holding that royalty payments were not subject to VAT. The court noted that even while the franchise agreement was in force, the assessee could itself enter into concurrent franchise agreements with other parties; hence, the transaction failed the test of 'right to use' for the purposes of VAT.
An anti-dumping duty is valid for a period of five years from the date of imposition, unless revoked earlier. It can be extended for a further period of five years through a sunset or expiry review investigation. If the investigating authority concludes that expiry of the duty is likely to lead to continuation or recurrence of dumping and injury, it may extend the duty for a further period of five years.
A new notification has been issued governing the exemption or refund available in respect of services provided to a unit or developer in a special economic zone (a geographical region that has been designed for the purpose of exporting goods and providing employment). It is hoped that this amendment will prove comparatively beneficial and help to attract or retain special economic zone investment.
A petitioner recently filed a writ of mandamus arguing that the rights under a duty-free scrip issued under the foreign trade policy would accrue to the holder based on the date of its issuance, and that any subsequent change in the foreign trade policy (ie, after the issue of the scrip) would have no bearing on the rights granted thereunder. The Madras High Court agreed.
In India, the export of dual-use items and technologies is either prohibited or permitted under licence. Under the foreign trade policy, dual-use items are listed and prescribed as special chemicals, organisms, materials, equipment and technologies. The category which covers chemical and biomaterial manufacturing and handling equipment and facilities was recently amended to bring it in line with international prescriptions.
The Customs, Excise and Service Tax Appellate Tribunal recently considered the application of the special additional duty (SAD) levied under Section 3(5) of the Customs Tariff Act 1975. The tribunal equated the import of goods into India from outside India with the clearance of goods from a special economic zone to a domestic tariff area for the purpose of claiming an SAD refund, provided that the prescribed conditions are fulfilled.
The Customs, Excise and Service Tax Appellate Tribunal recently held that the provision of telecommunications services to a third party at the behest of the customer did not make the third party the service recipient. The tribunal upheld the appellant's claim that its services qualified as exports, as the payment for such services was received from the foreign network operators in convertible foreign exchange.