CS Final Group III : Direct and Indirect Taxation Law and Practice - December 2007

CS Final - Group III • Direct and Indirect Taxation Law and Practice • December 2007

This Paper has 40 answerable questions with 0 answered.

Roll No………
Time allowed : 3 hours	Maximum marks : 100
Total number of questions : 8	Total number of printed pages : 3

PART—A (Answer any two questions from this part.)

PART—A
(Answer any two questions from this part.)

1.	(a)	Discuss the provisions of section 80JJAA of the Income–tax Act, 1961 relating to deduction in respect of employment of new workmen.		(0)
	(7 marks)
	(b)	There are many factors that should be kept in mind while designing the salary package of employees having regard to the need for minimising the tax impact on them. Discuss briefly.		(0)
	(7 marks)
	(c)	Discuss briefly the provisions governing ‘deemed fringe benefits’ given in section 115WB(2) of the Income–tax Act, 1961.		(0)
	(6 marks)
2.	(a)	What is the remedy available against the revisional order passed by Commissioner under section 264 of the Income–tax Act, 1961 ? Explain briefly.		(0)
	(5 marks)
	(b)	Joel Ltd., a foreign company, owns a property in Mumbai. It is given on rent (rent being 5,000 US dollar per month) to Peter Ltd., another foreign company. The two companies are non-residents in India. The agreement is made outside India. Rent is payable in foreign currency outside India. As per agreement, rent is accrued outside India. Discuss whether the rental income of Joel Ltd. is chargeable to tax in India under the Income–tax Act, 1961.		(0)
	(5 marks)
	(c)	Can an assessee claim a particular deduction, which he has failed to claim in his original return of income, otherwise than by filing a revised return ? Discuss.		(0)
	(5 marks)
	(d)	Strong Ltd. has taken a machinery on rent. The rent is payable in advance on the first day of each month @ Rs.12,000 per month. Explain in brief whether the rent for the financial year 2006–07 is subject to tax deduction at source or not under section 194–I of the Income–tax Act, 1961.		(0)
	(5 marks)
3.	(a)	A non–resident company having business connections in India seeks your advice in respect of the following issues under the Wealth–tax Act, 1957 :
		(i)	Taxability of its assets and debts located outside India.	(0)
		(ii)	Urban land situated within the jurisdiction of New Delhi Municipal area.	(0)
		(iii)	Motor cars used for transportation of employees of the company.	(0)
		(iv)	Due date for filing return of wealth.	(0)
		(v)	Time limit for filing belated or revised return of wealth, if necessary.	(0)
	(2 marks each)
	(b)	What is the difference between ‘slump sale’ and ‘demerger’ ?		(0)
	(5 marks)
	(c)	How would you explain ‘wealth escaping assessment’ under the Wealth–tax Act, 1957 and when can it be assessed ? Is there any time limit for wealth escaping assessment ?		(0)
	(5 marks)

PART—B (Answer any four questions from this part)

PART—B
(Answer any four questions from this part)

(a)

Discuss the provisions of Rule 5 of the Central Excise (Appeal) Rules, 2001 relating to production of additional evidence before the Commissioner (Appeals).

(0)

(5 marks)

(b)

State whether the following services attract service tax :

(i)

Service provided in the State of Andhra Pradesh by a person having place of business in the State of Jammu and Kashmir.

(0)

(ii)

Service provided in the State of Jammu and Kashmir by a person having place of business in Mumbai.

(0)

(iii)

Service rendered to a foreign citizen in India.

(0)

(iv)

Service rendered abroad by an Indian company.

(0)

(v)

Service received in India which is provided by a person from outside India.

(0)

(1 mark each)

(c)

When can directors of a private company be made liable for the central sales tax dues of the company ?

(0)

(3 marks)

(d)

Adarsh has come to know that a clerical mistake has occurred in the bill of entry submitted by him to the proper officer of customs. Give your advice to Adarsh on the course of action available to him to get the mistake rectified under the Customs Act, 1962.

(0)

(2 marks)

(a)

Noble Plastics manufactures plastic trays on job work basis at its factory situated at Pune by using the ingredients supplied by another company, Bright Industries. Noble Plastics has received a show cause notice from the central excise department demanding duty on the sale price of Bright Industries. Noble Plastics contends that it is only a job worker for Bright Industries and it is not the owner of the ingredients and therefore not liable to pay duty on the price at which plastic trays are sold by Bright Industries. Discuss, with the help of decided case law, if any, whether the contention of Noble Plastics is justified.

(0)

(5 marks)

(b)

Venus Udyog Ltd. imported copper scrap for using it as raw material in the manufacture of copper oxy–chloride. It cleared the imported goods by paying the applicable customs duties including additional customs duty. However, on coming to know that imported copper scrap was exempt from payment of additional customs duty under Notification No. 35/81 dated 1^st March, 1981, it filed an application for refund of the same. The refund claim was rejected on the ground of unjust enrichment. The contention of the company is that the doctrine of ‘unjust enrichment’ is not applicable in case of captive consumption of imported material. Discuss the validity of the contention of the company in the light of the decided case law, if any.

(0)

(5 marks)

(c)

Banjara Ltd. imported asbestos fibre for using it as raw material in the manufacture of asbestos sheets. The customs authorities have demanded additional duty of customs on the imported goods under section 3(1) of the Customs Tariff Act, 1975. Banjara Ltd. has contended that additional duty of customs is not leviable as a like article is not manufactured in India. What is your view in the matter ? Support your answer with case law, if any.

(0)

(5 marks)

(a)

State the circumstances under which duty drawback is not allowed to an exporter.

(0)

(6 marks)

(b)

Distinguish between ‘transit of goods’ and ‘transhipment of goods’ under the Customs Act, 1962.

(0)

(3 marks)

(c)

Clean Tooth Ltd. manufactures tooth pastes at its factory in Nagpur. The following maximum retail prices (MRP) are printed on the packet :

MRP in Punjab
MRP in Assam
MRP in other places

:
:
:

Rs. 35
Rs. 37
Rs. 33

What is the assessable value of tooth paste cleared for sale in the State of Andhra Pradesh as per section 4A of the Central Excise Act, 1944 ? Give reasons for your answer.

(0)

(3 marks)

(d)

Dhruva Engineering Ltd. deposited the service tax due for the month of May, 2006 by cheque in the designated bank on 5^th June, 2006. The cheque was realised by the designated bank on 9^th June, 2006. The service tax authority has issued a notice to the company under section 75 of Chapter V of the Finance Act, 1994 demanding interest for the delayed period. Is the demand justified ? Give reasons for your answer.

(0)

(3 marks)

(a)

Maharaja, a manufacturer of dutiable as well as exempted goods, furnishes the following information for the month of January, 2007 :

(i)	Assessable value of dutiable goods Rs.250 lakh (rate of duty 16%);
(ii)	Price of exempted goods cleared from the factory Rs.200 lakh;
(iii)	CENVAT credit of input X (used only in the manufacture of exempted goods) Rs.10 lakh;
(iv)	CENVAT credit of input Y (used only in the manufacture of dutiable goods) Rs.15 lakh;
(v)	CENVAT credit of input Z (used commonly in manufacture of exempted as well as dutiable goods but no separate accounts are maintained in respect of such input Z) Rs.20 lakh; and
(vi)	CENVAT credit of capital goods (used partly for manufacture of exempted goods also) Rs.25 lakh (total amount of duty).

Compute the amount of excise duty and any other amount payable by Maharaja for the month of January, 2007.

(0)

(6 marks)

(b)

Calculate the amount of duty drawback allowable under section 74 of the Customs Act, 1962 in following cases :

(i)

Salman imported a motor car for his personal use and paid Rs.5,00,000 as import duty. The car is re-exported after 6 months and 20 days.

(0)

(ii)

Nisha imported wearing apparel and paid Rs.50,000 as import duty. As she did not like the apparel, these are re–exported after 20 days.

(0)

(iii)

Super Tech Ltd. imported 10 computer systems paying customs duty of Rs.50 lakh. Due to some technical problems, the computer systems were returned to foreign supplier after 2 months without using them at all.

(0)

(2 marks each)

(c)

A registered dealer of Ajmer (Rajasthan) sold cotton fabrics worth Rs.26,00,000 (including sales tax @ 4%) to a registered dealer of Amritsar (Punjab) on Form–C. Goods worth Rs.5,20,000 were returned after 8 months. Calculate the amount of central sales tax payable.

(0)

(3 marks)

(a)

What are the circumstances under which a manufacturer can claim refund of CENVAT credit in cash ?

(0)

(4 marks)

(b)

Star Ltd. has received a sum of Rs.25,000 as hire charges for letting out open land owned by it for organising a social function. The department has demanded service tax on hire charges under the category of mandap keepers. Star Ltd. has contended that it has not let out any hall and therefore not liable to service tax. Is the contention of Star Ltd. tenable in law ?

(0)

(4 marks)

(c)

Who is a ‘tourist’ under the Baggage Rules, 1998 ?

(0)

(2 marks)

(d)

What is the time limit prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957 for submission of declarations in Form–C or Form-F to the assessing authority ?

(0)

(2 marks)

(e)

State whether the following statements are true or false giving reasons for your answers :

(i)

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) may, at its discretion, refuse to admit an appeal against an order levying penalty not exceeding Rs.50,000.

(0)

(2 marks)

(ii)

Service tax is payable on the amount actually received and not on the amount of invoice.

(0)

(1 mark)

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