555. Clarification regarding reopening of assessments on account of retrospective amendment made in section 80HHC in respect of counter sale to foreign tourists in shops and emporia, etc., located in India
Circular No. 624 was issued by the Central Board of Direct Taxes on 23 January 1992. Its subject is 555. Clarification regarding reopening of assessments on account of retrospective amendment made in section 80HHC in respect of counter sale to foreign tourists in shops and emporia, etc., located in India.
This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.
Tells Assessing Officers not to reopen completed assessments merely to check whether counter sales to foreigners had been allowed as exports under section 80HHC. The Finance (No. 2) Act, 1991 inserted clause (aa) in the Explanation after section 80HHC(4A), with retrospective effect from 1-4-1986, providing that 'export out of India' does not include a sale or other transaction in a shop, emporium or other establishment in India that involves no clearance at a customs station as defined in the Customs Act, 1962. Because the amendment reaches back, it would otherwise touch closed assessments. Where, though, the record clearly shows that relief was in fact given on such counter sales, the Assessing Officer must act to rectify the mistake.
Whether over-the-counter sales to foreigners in India were exports had been much litigated; the amendment was made to give finality to the Department's long-held view, and the Board wished to see that assessees were not harassed by a general reopening on that account.
| Under the 1961 Act | Now |
|---|---|
| s.80HHC | no counterpart recorded |
555. Clarification regarding reopening of assessments on account of retrospective amendment made in section 80HHC in respect of counter sale to foreign tourists in shops and emporia, etc., located in India
The issue whether sale of goods to foreigners in shops or other establishments situated in India is "export", has been a subject-matter of considerable litigation. The Department’s view, all along, has been that such sales over the counters within India do not constitute exports and, therefore, are not eligible for the tax concession under section 80HHC. To give finality to this view and to end all judicial controversies, a clarificatory amendment has been made by inserting clause (aa) in the Explanation after section 80HHC(4A) through the Finance (No. 2) Act, 1991. Under the Explanation, "export out of India" shall not include any transaction by way of sale or otherwise, in a shop, emporium or any other establishment in India not involving clearance at any customs station, as defined in the Customs Act, 1962.
2. Since the amendment with regard to sales over the counters has retrospective operation with effect from 1st April, 1986, it would normally apply even to completed assessments. However, to ensure that the assessees are not subjected to harassment, it has been decided that past cases where assessments have already been completed would not be reopened with a view to check up whether "counter" sales have been treated as exports for purposes of relief under section 80HHC. Where, however, the records of the assessee clearly show that such sales over the counter have been given relief under section 80HHC, the Assessing Officer will have to take necessary action to rectify the mistake.
Circular : No. 624, dated 23-1-1992.
On an old section 148 notice or a section 154 rectification proposal withdrawing 80HHC relief on counter sales.
Source: the Income Tax Department’s own published text — its page for this instrument.