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2012 (2) TMI 467
Penalty levied under section 271(1)(c) - estimation of income by applying flat rate of gross profit - Held that:- Certain defects were found in the account books of the assessee and therefore the same was rejected and flat rate of gross profit was applied by the Department. We find that it is well settled that no penalty under section 271(1)(c) of the Act could be imposed merely on the ground that there were defects in the account books of the assessee and the account books were rejected and the flat rate of the gross profit is applied to arrive at the gross profits of the assessee. Merely because in the case of the assessee a survey action was undertaken, it does not follow that the penalty under section 271(1)(c) was imposable on the estimated trading profit of the assessee. Accordingly, we find no justification for imposition of penalty under section 271(1)(c) of the Act on this issue, which is cancelled.
Issue of transaction with "SC" - assessee retained 3 per cent. on account of sales tax - Held that:- We find that the facts of the case may justify the confirmation of the addition made on this count by the Revenue authorities, but are not sufficient for sustaining the penalty imposed under section 271(1)(c) of the Act. We find that no evidence or material was brought on record by the Department to suggest that the assessee has retained 3 per cent. or part thereof on account of sales tax with it. The assessee has filed an explanation, which could not be termed as not bona fide. In the absence of any corroborative evidence to prove the charge that any part of 3 per cent. being sales tax on the transaction remained with assessee, we are unable to sustain the penalty imposed under section 271(1)(c) of the Act on the assessee, which is cancelled.
Unexplained cash credits under section 68 - Held that:- We find that there was sufficient reason for the assessee for its filing the necessary evidences before the Commissioner of Income-tax (Appeals). In the facts of the case, we consider that it shall be in the interest of justice to set aside the issue of addition of ₹ 8,09,100 under section 68 to the file of the AO with direction to decide the same afresh in accordance with law after allowing reasonable opportunity of being heard to the assessee. We direct accordingly.
Excessive or unreasonable payments of job work charges under section 40A(2)(b) -Held that:- We find that the assessee could not lead any evidence to show that the payment for job work were not excessive or unreasonable. The assessee has not given any comparable figures of job work rate prevailing in the market with regard to other parties in similar line of the trade for the relevant period. The assessee has given job work only to M/s. Krishna Organics and M/s. Jyoti Industries and both these firms are admittedly the sister-concerns of the assessee. The comparison of job work rate with the earlier year is not relevant. What is more relevant is the prevailing market rate of similar service rendered by the parties to the unrelated business firm. In the facts of the case, we hold that the pre-dominance of probabilities is against the assessee and accordingly the disallowance made by the AO under section 40A(2)(b) of the Act is confirmed
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2012 (2) TMI 466
... ... ... ... ..... f this judgment applies to the facts of the present case. The contention of the petitioner that the levy is opposed to the settlement arrived at with the entertainment tax authorities and goes much beyond that and, therefore, should not be upheld, is untenable. There can be no settlement in the matter arising under a fiscal statute, in the absence of any specific provision in the statute. No such provision was pointed out to us. In any case, there can be no estoppel against the statute. In Mathra Parshad and Sons v. State of Punjab 1962 13 STC 180 (SC); AIR 1962 SC 745, it was pointed out by the Supreme Court that if the law required that certain tax is to be collected, that cannot be given up and any assurance that it will not be collected will not bind the Government, whenever it chose to collect the same. We need not dilate further on this aspect. For the aforesaid reasons, we find no merit in this writ petition. The same is dismissed. There shall be no order as to costs.
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2012 (2) TMI 465
Itch Guard Cream and Dermicool powder - classification - Held that:- The learned counsel for the State has conceded that the item Itch Guard Cream is used only for treatment of certain medical conditions and cannot be used otherwise merely for cosmetic purposes and therefore this item would fall within the entry 11 of Part IV of Schedule II.
Dermicool powder which is described as a prickly heat powder is also commonly understood to be of use in treating prickly problem and not as an ordinary talcum powder. We are of the opinion that the item Dermicool powder must be held to be a medicine taxable under entry 11, and not a medicinal preparation of a cosmetic within the meaning of those words as used in entry 41 or 49 quoted above.
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2012 (2) TMI 464
Additional duty on non production of proof - exemption denied - Held that:- The conditions imposed for claiming exemption in no way contemplate a dealer providing proof of payment of additional duties of exemption by the manufacturer. A proof of this nature is obviously not contemplated in the Scheme of this Act. The exemption granted in respect of the items figuring in entry 3 are not qualified by a condition that it should be purchased from a manufacturer.
Thus the argument on behalf of the Revenue to the effect that the dealer having never made good that his purchase turnover was one corresponding to the very description of the goods as in the Schedule to the Additional Duties of Excise Act in the absence of production of proof of payment of additional duty of excise and is not entitled for exemption and therefore, the order passed by the Additional Commissioner is justified and to be sustained on such logic is not a tenable argument.
The Additional Commissioner did not issue show-cause notice proposing for revision either on the ground that the dealer had not made good the precise goods which he had purchased were covered under the Schedule to the Excise Act or on the premise that they have not been sold as such, but utilised in manufacturing. Show-cause notice was only one confining to non-production of the proof of payment of additional duties and the order for denying exemption is also on the same reason and therefore, the order passed by the Additional Commissioner cannot be sustained. Appeal allowed.
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2012 (2) TMI 463
Revision of assessment order - petitioner was treated as liable under section 6A of the 1957 Act by the revisional authority - Held that:- The petitioner was treated as liable under section 6A but without any mention or discussion of his liability under section 6A of the 1957 Act, in the show-cause notice dated September 20, 1994. As established in State of Andhra Pradesh v. Loharu Steel Industries Limited [1994 (11) TMI 408 - ANDHRA PRADESH HIGH COURT] that a revisional authority cannot engraft a liability without notice to the assessee/dealer.
Thus order of the revisional authority determining the liability of the revision petitioner under section 6A of the 1957 Act must therefore be held to be unsustainable for transgression of the audi alteram partem principle, particularly in view of non providing an opportunity to show cause against the proposed enhancement.
Reasoning of the Tribunal to impose liability under section 6A of the 1957 Act is fallacious as burden is upon assessee to show that they purchased a part of the turnover for milling and the rest for sale. Therefore, if the order of exemption under G.O. Ms. No. 621, dated June 28, 1989 were be restrictively interpreted as confined to the turnover relating to milling by the Federation, then the burden is upon the Federation as an assessee (that the Federation is also a dealer under the provisions of the 1957 Act is not in dispute) to establish that they were in fact in the business of trading as well and had purchased part of the turnover for sale. Tax revision allowed.
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2012 (2) TMI 462
Joint Commissioner order exercising appeal jurisdiction - whether erroneous for the reason that the dealer/assessee who had claimed as an export sale insofar as manufacture of mould is concerned, for which the dealer had received payment in advance called as "tool development charges" amounts to a sale transaction attracting section 4 of the Act for the reason that the goods, i.e., the moulds were never actually exported, but remained with the dealer?
Permanent wire tightener manufactured - whether classifiable within the scope of entry No. 67 of the Third Schedule to the Act as aluminium extrusions or as residuary entry taxable at the general rate of tax in terms of section 4(1) (b) of the Act?
Held that:- In the instant case, though it is contended the goods never left the premises of the assessee and therefore, no sale in the eye of law, we find it difficult to accept this submission for the reason that the assessee has received payment and the moment the goods have come into existence, the payment is with reference to the goods so finished and the transaction gets completed and therefore, the assessee holds the goods on behalf of the buyer. View taken by the Additional Commissioner on this aspect in restoring the assessment order by setting aside the order is perfectly justified as, the moment the assessee had received the payment and payment is appropriated with reference to the identified goods the sale has taken place
The words or phrase "aluminium extrusion" is one of many forms. Aluminium metal amongst many items described under this entry and what one can notice here is that several items in this entry are one fitting into a basic presentation of aluminium metal as a commodity either in moulds or in billets or in aluminium extrusion, etc. In fact, the assessee also has described that and sells it as permanent wire tightener and not as aluminium extrusion or any form of aluminium. May be the mould used is aluminium, but that in no way detracts from the end-product which is distinctly identified as a product and not merely as a form of aluminium in which the aluminium metal can be sold. It is for this reason we reject the argument that it should have been brought within the scope' of entry 67 of the Third Schedule to the Act. Decided against assessee.
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2012 (2) TMI 461
Methodology of payment of subsidy - Cash payment towards subsidy claimed - Held that:- When the appellants themselves have realised their liability for making payment of such subsidy and have indeed issued the orders releasing total arrears of subsidy at ₹ 116.79 crores, a part of this amount ought to be paid to the petitioner-company so as to balance the equities even when the other part could be left for adjustment in the future tax liability. In our opinion, it shall meet the ends of justice if we make a direction for payment of about 50 per cent of the said undisputed amount of ₹ 116.79 crores, i.e., ₹ 58.00 crores, while leaving the remaining ₹ 58.79 crores to be adjusted in the future tax liabilities in the ensuing quarters, of course, together with the future component of subsidy as would accrue from time to time.
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2012 (2) TMI 460
Circular of the Commissioner of Commercial Taxes, Andhra Pradesh bearing Ref. No. AIII(1)/98/ 2010, dated May 22, 2010 challenged on the ground that it is contrary to proceedings dated November 21, 2007, October 21, 2008 and November 13, 2009, issued by the first respondent - Held that:- The clarifications in the impugned circular issued by the Commissioner constitute guidelines issued in exercise of powers under rule 16(2)(c) of the APVAT Rules, 2005. As rightly pleaded in the Commissioner's counter and clarified in the impugned circular, rice millers are not entitled to any exemption from liability to tax under the provisions of the APVAT Act, 2005 in respect of any part of turnovers of sales made otherwise than to FCI/State Agencies and no exemption on any part of the turnover of sales made in the open markets, otherwise than towards levy is comprehended in the policy of the Union of India exemplified by the letters dated November 21, 2007, October 21, 2008 and November 13, 2009.
The impugned circular of the Commissioner merely clarifies a position inherent and integral to the policy of the Union as set out in the three letters of the 1st respondent. Thus no illegality in the circular dated May 22, 2010 issued by the Commissioner of Commercial Taxes, Andhra Pradesh, nor in proceedings initiated by the concerned assessment authorities for levy of tax from the petitioners, warranting interference under article 226 of the Constitution. W.P. dismissed.
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2012 (2) TMI 459
Liability to pay any tax on the sale of used equipments, viz., metal detectors, water coolers and lockers - failure to declare the impugned turnover in the return - penalty levy - Held that:- it is very clear that the assessee is in the business of sale of food articles, snacks and beverages. He is registered dealer under the Act. He has opted for composition scheme and he has paid four per cent tax on the total turnover of sale of food articles, snacks and beverages. In November, 2006, he has sold used equipment, viz., metal detectors, water coolers and lockers. The said sale consideration was not reflected in VAT returns filed by the assessee. The aforesaid sale is a onetime sale by which the discarded goods were sold. The assessee is not in the business of the sale of metal detectors, water coolers and lockers. He is not a dealer of those articles. Therefore, the consideration received from the sale of said goods is not leviable to tax under the Act.
Appeal allowed. Levy of tax on the sale of discarded goods totally in a sum of ₹ 1,06,612 is without authority of law.
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2012 (2) TMI 458
Reconveyance of the property - Whether the party has to apply within two years from the date of confirmation of the sale?
Held that:- The legal heirs of the petitioner are entitled to reconveyance of the property, notwithstanding the long delay in approaching the Government for reconveyance, which is in the peculiar facts and circumstances of this case. A democratic Government cannot take a shylockian attitude in such matters, especially when the sales tax authorities have also not done what they ought to have done after the appellate order.
The Government Pleader was not able to satisfy me that the Government has actually taken possession of the property, since no document had been produced in respect of the same. The petitioner has stated in the writ petition that he continued to be in possession of the property even after the sale, about which, he was not aware and had no notice of. Therefore, the legal heirs of the petitioner paying the amounts due as per the appellate order, they are entitled to reconveyance of the property.
Accordingly, this writ petition is disposed of with the directions to first respondent directing to pass fresh orders. If the legal heirs of the petitioner pay the amounts due as per the said assessment with interest at statutory rate till payment and meet the expenses for reconveyance, the property shall be reconveyed to the legal heirs of the original petitioner notwithstanding the fact that the petitioner did not apply within two years.
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2012 (2) TMI 457
Whether in the facts and circumstances, the Tribunal is right in holding that there is no under invoicing under section 12A of the Tamil Nadu General Sales Tax Act in respect of sales made to the sister concern of the assessee?
Held that:- We are not inclined to remit the matters and we hold, on the given facts and circumstances of the case, the application of section 12A read with rule 18C is not justified and the Tribunal is right in setting aside both the orders, accepting the case of the assessee. The substantial question raised in the revisions is answered in the negative, i.e., against the Revenue and in favour of the assessee.
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2012 (2) TMI 456
... ... ... ... ..... ancelled only on the basis of sufficient reasons. However, the impugned order passed by the respondent does not contain such reasons, as contemplated under the said provision. Further, clause (15) of section 39 of the said Act, makes it clear that such cancellation can be made only after affording an opportunity of personal hearing to the dealer. 9. It is also noted that the impugned order is contrary to the principle laid down by this court, reported in Indo Germa Products Limited v. Assistant Commissioner (CT) 2011 45 VST 236 (Mad). As such, the impugned order of the respondent is liable to be set aside. Hence, it is set aside. Accordingly, the writ petition stands allowed. However, it goes without saying that it would be open to the respondent to cancel the registration of the petitioner, as per law, after issuing an appropriate notice and by affording an opportunity of personal hearing to the petitioner. No costs. Consequently, connected miscellaneous petition is closed.
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2012 (2) TMI 455
Natural justice - pre-deposit - order was passed without giving an opportunity of hearing to the writ petitioner and the writ petitioner had no knowledge of the date when this matter was taken for consideration before the Commissioner (Appeals) - Held that: - merely because the petitioner was not given opportunity of being heard, the petition is allowed - decided in favor of petitioner.
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2012 (2) TMI 454
Whether reassessment framed by the assessing authority is within the parameter of limitation provided under section 11A of the Punjab General Sales Tax Act, 1948?
Held that:- The Supreme Court in the case of State of Punjab v. Bhatinda District Coop. Milk P. Union Ltd. [2007 (10) TMI 300 - SUPREME COURT OF INDIA] has engrafted a five years period of limitation in section 21 of the Act holding that if no period of limitation has been prescribed then the statutory authority is obliged to exercise jurisdiction within a reasonable period. Even if we construe the notice issued in December 2008 as a notice under section 21 of the Act for exercise of revisional jurisdiction, it would also be required to be issued within a period of five years from the date when the assessment year comes to an end in respect of which a revisional jurisdiction is sought to be exercised.
As a sequel to the above discussion, the order of reassessment dated March 31, 2009 (P10) is hereby quashed. Consequently, the demand raised in the order of even date (P11) is also quashed.
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2012 (2) TMI 453
Exemption in respect of inter-State sales granted by a notification dated February 19, 1991 - whether the petitioner was entitled to continue to avail of the exemption even after the amendment of 2002 without furnishing form C?
Held that:- There is no good ground for questioning the legislative competence to prescribe conditions subject to which the exemption can be availed for future transactions.
The contention of the learned counsel for the petitioner that the amendment by section 152 of the Finance Act, 2002 has been applied with retrospective effective is not correct. The said Finance Act 2002 casts an obligation of production of form C in respect of transactions which take place subsequent to that amendment.
If a person availed of that exemption without production of form C in respect of transactions after the 2002 Amendment, he is liable for such action as may be permissible by law which includes section 28(1) of the Act. W.P. dismissed
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2012 (2) TMI 452
Input tax credit - disallowance on the ground that the registration of M/s. Karat 24, from whom the petitioner purchased bullion, was cancelled on February 28, 2010 - Held that: - section 13(1) of the 2005 Act entitles input-tax credit to the VAT dealer for the tax charged in respect of all purchases of taxable goods, made by that dealer during the tax period. The failure on the part of M/s. Karat 24 to file returns or remit the tax component of the sales made to the petitioner cannot per se be a ground to deny input-tax credit - the invoices produced by the petitioner are not fraudulent or in dispute that it had been issued by M/s. Karat 24 or that the purchaser did not in fact obtain the invoices from the registered dealer - input tax credit cannot be denied - petition allowed - decided in favor of petitioner.
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2012 (2) TMI 451
Permission to run the business - Cancellation of the registration of the petitioner - Held that:- The respondent had passed the impugned order cancelling the registration of the petitioner, retrospectively, without giving an opportunity of hearing to the petitioner. As such, the impugned order of the respondent, dated January 13, 2012, is liable to be set aside. Hence, it is set aside. The petitioner is directed to appear before the respondent, on February 23, 2012, along with all the relevant documents to substantiate his claims, pursuant to the notice issued by the respondent, on November 11, 2011. Thereafter, the respondent shall consider the objections filed by the petitioner, if any, and pass appropriate orders thereon, on the merits and in accordance with law, with regard to the cancellation of the registration of the petitioner
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2012 (2) TMI 450
Whether the estimation made for possible suppression on mere surmises is not fair and reasonable in the absence of any suppression of turnover?
Held that:- In respect of the addition, there is factual finding given by the authorities below that the assessee had failed to maintain correct accounts and also had purchased groundnut kernel from undisclosed sources and found excess on the date of the inspection. So, addition of ₹ 3,43,400 was made based upon valid material. Even with regard to levy of tax on a turnover of ₹ 2,37,856 was based on valid material. It was also found that there was excess of stock of oil-cakes found by the officers of the enforcement wing. The assessee also unable to give any other material to take a contrary view. Therefore, the order passed by the Tribunal in respect of the addition made based on valid materials and hence, the same is confirmed.
After going through the order, we also feel that equal addition is unwarranted. It is only based on estimate that too probable suppression. It is only a guesswork. There is no material for making equal amount for probable suppression. Therefore, we confirm the order in respect of addition made by the Tribunal. However, equal addition for probable omission alone is deleted. Question of law raised is answered partly in favour of the assessee.
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2012 (2) TMI 449
... ... ... ... ..... urther, nothing has been shown on behalf of the respondent to substantiate the claim that the respondent has the authority or power to cancel the registration, retrospectively. In such circumstances, the impugned orders of the respondent are set aside. However, it would be open to the respondent to serve notices on the petitioners, at the addresses furnished by the petitioners in the present writ petitions, asking the petitioners to show cause as to why the registrations of the petitioners should not be cancelled. On receipt of such notices, the petitioners shall file its objections, if any, along with the relevant documents. On receipt of such objections, the respondent shall consider the same and pass appropriate orders thereon, on merits and in accordance with law, after giving an opportunity of personal hearing to the petitioners. The writ petitions are disposed of accordingly. No costs. Connected M.P. Nos. 1, 1, and 1 of 2012 and M.P. Nos. 2, 2 and 2 of 2012 are closed.
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2012 (2) TMI 448
Declining to entertain appeal filed by the Department against first appellate authority’s order setting aside assessment and remanding the matter for reconsideration by Tribunal - Held that:- The assessment is made strictly in accordance with the compounding application but with the correct percentage of increase under the statute. The only deviation is the increase from 150 per cent to 200 per cent, which in our view, is only a mistake committed by the assessee as a result of failure to take note of amendment to statute. We could have permitted regular assessment on turnover of the assessee, if the assessee did not follow up compounding application and paid tax every month based on the turnover declared. However, the assessee has been paying tax only at compounded rate which cannot be anything other than the tax payable under section 8(f) of the Act. We do not think the assessee can now revert back for turnover based assessment because returns filed every month were not accompanied by payment of tax on the taxable turnover but tax payment was under the compounding scheme, though by mistake at 150 per cent of previous years’ tax as against correct rate of 200 per cent.
We do not find any justification for the Tribunal or the first appellate authority to interfere with the assessment which is made based on application filed by the assessee but by adopting the correct percentage of tax payable under the compounding scheme under the amended provisions of section 8(f) applicable for the year 2007-2008. We, therefore, allow the revision case by setting aside the orders of the Tribunal and that of the first appellate authority and restore the assessment.
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