March 2017 Newsletter



Exemption – The ST exemption under Entry 9(b) of MEN for services provided to educational institution is applicable only to Pre-school education institution and higher secondary schools w.e.f from 1st April 2017 –Notification No. 10/2017-Service Tax, dated 8th March 2017

ExemptionExemption available to service provider on Online Information Data Access and Retrival services shall also be available as a recipient of the service since Sec.66A of FA 1994 mandates that taxable service shall be treated as if provided by the recipient of service in India; benefit cannot be denied on legal fiction – M/s United News of India Vs C.S.T. New Delhi, 2017 (3) TMI 17


To conclude a transaction as bogus, based on substantive material, adequate opportunity had to be given to the petitioner to meet the charge. – Sun Powers Vs CTO, Park Road Circle, Erode, 2017 (3) TMI 1009

 The Court has dealt with several matters in respect of  assessments made based on Web Report and observed that Centralised Mechanism has to be evolved for passing such order of assessment. Further, to impose penalty u/s 22(4) of the TNVAT Act, 2006, an opportunity of personal hearing should be given to the assessee – M/s. Sri Amman Agencies Vs CTO, Ambur, Vellore District, 2017 (3) TMI 1273


forklift handling container box loading to freight train



The date of payment of duty in the Deferred Payment of Import Duty Rules, 2017 has been amended w.e.f the date of publication in the official gazette. The time line has been brought down by one day in the amended rules. –Notification No. 28/2017-Customs (N.T.) dated 31st March, 2017

Rejection of more than one SAD Refund Claim is only for the convenience of the Department; not sustainable– the Circular No. 6/2008-Cus dated 28.04.2008 is for the convenience of processing of the refund claims on regular periodicity; a Circular cannot take away a substantial benefit granted by law- Rockwell Automation India Pvt. Ltd. Vs  Commissioner of Customs, 2017 (3) TMI 345 – CESTAT NEW DELHI

Remission of duty- Capital Goods destroyed by fire due to which the export obligations were not fulfilled. The remission application was rejected on the ground that the duty must be paid prior to applying for remission and that the goods were not put to intended use and that the export obligations are not fulfilled. The Tribunal held that there is no pre-condition to pay the duty for claiming the remission as it would then be meaningless to call upon the assessee who has lost the goods imported, to pay the duty and then request for remission of the same. Held that the rejection of Remission to be unjustified. – M/s Laxai Avanti Life Sciences Pvt. Ltd. Vs CC, CE & ST, 2017 (3) TMI 451 – CESTAT HYDERABAD


Transffer pricing

Whether abnormal forex loss is operating cost or not–Forward contract cancelled by the Assessee due to unavoidable circumstances is abnormal in nature vis-à-vis other years of Assessee and is absent in the comparables with whom the assessee’s transaction is being bench marked, an  adjustment has to be made to factor the material difference in the PLI.Thus, the loss on account of cancellation of forward contracts out of total forex loss needs to be 

 eliminated from the operating cost.- Pangea3 and Legal Database Systems Pvt. Ltd. Vs ITO – 2017 (3) TMI 267

Adjustment on FCD/ ECB’s interest – DR adopted 500 bps instead of adopting 200 bps.We cannot adopt the 200 bps as universal rate for all types of loan. The Pricing of Interest on term loans are determined based on the security, net worth, ratings, term of loan etc. The more risk involved, the pricing decision of the banks will change. Based on the RBI guidelines, the term up to 5years, can have spread of 300 bps and beyond 5 years, it can be 500 bps. In our considered view, the rates of interest or spread cannot be the same for all the international loans irrespective of their terms, risk etc.- Dy. CIT Vs Devgen Seeds and Crop Technology Pvt. Ltd. – 2017 (3) TMI 1333

Notional interest on receivables from A.E – The assessee parked huge funds for a long time with its AE. If the funds are repatriated to India, the assessee would have been in a position to earn better profit from appropriate investment of those repatriated funds. Therefore, it is required to keep the TP adjustments towards notional interest on receivables.- Professional Access SoftwareDevelopment Pvt Ltd. Vs DCIT – 2017 (3) TMI 479