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2007 (11) TMI 616
The Supreme Court dismissed the special leave petition after condoning the delay. The citation for the case is 2007 (11) TMI 616 - SC. The High Court reference is 2007 (1) TMI 250 - BOMBAY HIGH COURT. Justices involved are Mr. S.H. Kapadia and Mr. B. Sudershan Reddy. Petitioner represented by Mr. Gopal Subramanyam, ASG, Ms. Shilpa Singh, and Mr. B. Krishna Prasad.
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2007 (11) TMI 615
Settling/co- relating the documents with the goods - Held that: - the two premises shall be visited by the concerned Authorities under the Customs Act for the purpose of settling/co- relating the documents with the goods on 11th and 12th December, 2007 at 11.00 AM - application allowed.
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2007 (11) TMI 614
Whether the Faculty under the 1951 Act has unqualified right to grant affiliation to such institutions or colleges which are not following the BAMS course prescribed by CCIM through regulations under the 1970 Act?
Whether the provisions of the 1982 Act which seek to regulate institutions imparting training in Ayurvedic and Unani Systems of Medicine shall cover and regulate even those institutions which have been granted affiliation by the Faculty?
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2007 (11) TMI 613
Issues involved: Interpretation of provision for warranty claims by a new company u/s 263 of the Income Tax Act, 1961.
The judgment pertains to a case where the Assessee, a new company manufacturing engines for vehicles, estimated warranty claims and made a provision of &8377; 16,56,404. The Assessing Officer initially accepted this claim, but the Commissioner of Income Tax (CIT) u/s 263 set aside the order, stating that there was no basis for the Assessee to make such a claim. The Tribunal, however, overturned the CIT's decision, emphasizing that the warranty clause was a part of the sale documents and could be ascertained based on certain parameters, including the Assessee's sales during the year. The Tribunal also cited the decision in Bharat Earth Movers Ltd. v. Commissioner of Income Tax, [2000] 245 ITR 428, to support its conclusion.
The key issue revolved around whether a new company like the Assessee could reasonably estimate warranty claims despite lacking past experience in this regard. The Assessing Officer initially accepted the provision made by the Assessee, but the CIT u/s 263 disagreed, leading to a legal dispute. The Tribunal ultimately sided with the Assessee, highlighting that the warranty clause was a valid liability based on sales documents and could be quantified using specific parameters, thereby justifying the Assessee's provision for warranty claims.
In its decision, the High Court upheld the Tribunal's ruling, stating that the Tribunal did not err in its interpretation. The Court found no merit in the Revenue's appeal and consequently dismissed it.
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2007 (11) TMI 612
Issues involved: Interpretation of Modvat benefits on a water treatment plant as an integral part of the manufacturing process.
Summary:
The High Court of Karnataka addressed the question of law regarding the entitlement of Modvat benefits on a water treatment plant, which was considered an integral part of the manufacturing process of a company. The company, M/s. Murudeshwar Ceramics Ltd., had established a Granite Plant in a specific village and had availed credit on a "Waste Water Clarification Plant" under the Modvat Rules. A show cause notice was issued by the Revenue challenging the availed credit, stating that the plant was used solely for recycling polluted water and not for production purposes. The Additional Commissioner upheld the demand for repayment, which was further confirmed by the Commissioner (Appeals). Subsequently, a Civil Petition was filed before the High Court, leading to the formulation of the question of law for consideration by the CEGAT.
The Court considered the precedent set by the Hon'ble Supreme Court in the case of Indian Farmers Fertilizers Coop. Ltd. v. C.C.E., Ahmedabad, where it was established that pollution control apparatus used in effluent treatment plants should be deemed an integral part of the manufacturing process. The Supreme Court had ruled that Modvat benefits should be granted to such plants and machineries. In light of this precedent, the High Court concluded that the question of law raised in the petition had already been addressed by the Supreme Court. Therefore, the High Court dismissed the petition, following the judgment of the Supreme Court.
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2007 (11) TMI 611
Issues:
1. Application for security under Order 38 Rule 5 CPC.
2. Consideration of prima facie case for attachment before judgment.
3. Exercise of power under Order 38 Rule 5 CPC by the court.
4. Interference by the High Court in revisional jurisdiction.
Analysis:
1. The plaintiff filed an application under Order 38 Rule 5 CPC seeking security for the suit claim of Rs. 99,200. The trial court dismissed the application as the plaintiff did not provide specific details of dishonored cheques or a prima facie case. The plaintiff challenged this order in revision, highlighting the defendants' attempt to remove machinery. The High Court allowed the revision, directing the defendants to furnish security within four weeks.
2. The purpose of Order 38 Rule 5 CPC is to prevent defendants from obstructing decree realization. The court must be satisfied of a prima facie case before granting attachment before judgment. Mere valid claim is insufficient; the plaintiff must show the defendant's intention to dispose of assets to defeat a future decree. The power under this rule is drastic and should not be used to coerce settlements.
3. Shifting business or machinery alone does not warrant attachment before judgment. The plaintiff must demonstrate a bonafide and valid claim while proving the defendant's intent to obstruct decree execution. The court should adhere to established principles for granting such attachments, ensuring fairness and justice in the process.
4. In this case, the trial court rightly rejected the application due to the lack of a prima facie case. However, the High Court, swayed by the defendants' asset shifting, interfered in revisional jurisdiction. The Supreme Court held that the High Court's interference was unjustified, overturning its decision and reinstating the trial court's order.
This judgment emphasizes the importance of establishing a prima facie case before seeking attachment before judgment under Order 38 Rule 5 CPC. It cautions against misuse of this power and highlights the need for courts to carefully consider all aspects before granting such relief.
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2007 (11) TMI 610
Applicability of section 80IA(3) - Offshore drilling - claim made in respect of section 33AC - Whether the 'Deep Sea Mat drill' purchased by the assessee is a ship or not - We are of the opinion that only one view is possible, namely, that the 'Deep Sea Matdrill' is a ship. Even if learned counsel for the revenue is right in contending that the 'Deep Sea Matdrill' is not a ship, we do not think that exercise of power u/s 263 of the Act by the CIT would be justified only because the assessing officer has taken a view in favour of the assessee. The law requires the view to be erroneous and that has not been substantiated by learned counsel for the revenue .
Deduction u/s 80-IA(3) - We find that under section 148 of the Act, the assessing officer had specifically mentioned in the reasons recorded that he was prima facie of the view that the vessel had been used in the Indian territorial waters prior to its acquisition by the assessee. A response was given by the assessee to the notice in which it was categorically mentioned that the ship was never used in India so deduction u/s 80-IA(3) could not be denied to the assessee.
In all the three issues that have been urged by learned counsel for the revenue , no substantial question of law arises.
The appeal is dismissed.
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2007 (11) TMI 609
Issues involved: Rejection of cenvat credit on capital goods exclusively used for manufacturing exempted goods.
Summary:
1. The appellant contended that the capital goods in question were used for manufacturing excisable goods cleared on duty payment before 9.7.04. From 9.7.04 to 31.3.05, they opted for Notification No.30/04 and did not pay duty on manufactured goods meeting the notification's conditions. In June 05, the machines were again used for excisable goods cleared with duty payment, showing that modvat credit was not solely for exempted products.
2. Referring to the case of PSL Ltd. Vs. CCE, Visakhapatnam, it was held that modvat credit cannot be denied when goods are used for both exempted and dutiable products in different periods. The Tribunal ruled that the intention to manufacture both types of goods should be considered, and the period cannot be divided into parts for credit denial. Rule 57AD(2) does not mandate daily manufacturing of both types of goods, supporting the appellant's claim for credit.
3. Following the precedent, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.
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2007 (11) TMI 608
Issues involved: Appeal against order of Commissioner (Appeals) regarding clearance of capital goods to job workers, eligibility for availing credit, imposition of penalty, and applicability of Notification No.214/86.
Summary:
The appellant, a manufacturer of resins, dyes, and chemicals, received goods like Electric Motors, Gear Boxes, etc., and took credit of duty paid on them as capital goods. They supplied these goods to job workers under Rule 57S(7)/57AC(5)(a) of Central Excise Rules, receiving back sigma machines/reactor vessels for manufacturing excisable goods. The original authority ordered recovery of cenvat credit, imposed penalties, and demanded interest. The Commissioner (Appeals) upheld these decisions.
The appellant argued that Rule 57S permits removal of capital goods to job workers without reversing credit, claiming the assembly done was not full-fledged manufacture but assembly on a job work basis. They also cited an amendment to Notification No.214/86 for eligibility. The SDR contended that full-fledged manufacture occurred at job workers' premises, making the appellant ineligible for credit. The Tribunal found that a new product emerged due to manufacture by job workers, and the clearance by the appellant did not conform to Section 57S conditions.
The Tribunal remanded the matter to the original authority for reconsideration after hearing the appellant, specifically to determine the correct valuation by job workers, the nature of goods returned, and the applicability of Notification No.214/86. The issue of invoking an extended period for duty payment was left open for fresh consideration.
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2007 (11) TMI 607
Issues involved: Appeal against demand and penalties u/s 5,62,417/- for denial of credit on short received raw material.
Summary:
The Revenue appealed against an order setting aside a demand of &8377; 5,62,417/- and penalties due to denial of credit for short received raw material. The respondents, engaged in manufacturing lead and copper sulphate solution, received zinc lead of copper concentrate from mines located 80-100 Km away. They cleared the concentrates on duty payment from the mines and claimed duty credit upon receipt in the factory. A stocktaking revealed a minor shortage (<0.05%) in the factory, which the Revenue argued rendered the respondents ineligible for credit as the inputs were not used in final product manufacture. The respondents contended that minor losses during transportation due to moisture evaporation from wet concentrates justified the shortage, citing a Tribunal decision in Hindustan Zinc Ltd. Vs. CCE. With losses below 0.05% deemed negligible and no evidence of duty evasion, the impugned order was upheld, dismissing the appeal.
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2007 (11) TMI 606
Issues involved: Violation of provisions of section 269SS of the Income Tax Act in accepting a loan exceeding Rs. 20,000 otherwise than by account payee cheque or account payee draft, penalty under section 271D of the Income Tax Act.
Summary:
The appeal was filed against the order of the Tribunal, Madras 'B' Bench for the assessment year 2001-02 regarding the violation of provisions under section 269SS of the Income Tax Act and the penalty imposed under section 271D. The assessing officer initiated penal proceedings due to the receipt of cash loan exceeding Rs. 20,000 without account payee cheque or draft. The Commissioner (Appeals) deleted the penalty, which was confirmed by the Tribunal.
The Tribunal found that the cash received was on account of sale and shown as trade credit, not a loan or deposit within the meaning of section 269SS. Referring to a previous court decision, it was established that transactions like deposit and withdrawal from a current account do not constitute a loan or advance. The Tribunal concluded that there was no violation of section 269SS in the present case.
Based on the above findings, the appeal was dismissed as no substantial question of law was involved. The judgment highlighted that the cash received was not considered a loan or advance, and the transaction was in the nature of a current account, not violating section 269SS of the Income Tax Act.
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2007 (11) TMI 605
The High Court of Karnataka held that income from long term capital gains should be taxed under section 112 of the Act, not as part of book profits under section 115JA. The tribunal's decision was justified, and section 234C was not applicable. The appeal by the revenue was dismissed.
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2007 (11) TMI 604
Issues involved: Service tax demand, education cess, penalty imposition, operation and maintenance agreement, larger period of limitation, Major Maintenance Reserve (MMR), routine maintenance cost, consumables, service tax liability, Gross Taxable Value, limitation period, prima facie case.
Service tax demand and penalty imposition: The Commissioner demanded service tax and education cess amounting to over Rs. 1.3 crores from the appellants for the period July '03 to March '06 u/s 73(1) of the Finance Act, 1994, along with a significant penalty. The demand was based on the exclusion of certain elements from the Gross Taxable Value related to the operation and maintenance of a power plant under an O&M agreement with M/s. Samalpatti Power Company Pvt. Ltd. The department contended that service tax should have been paid on these excluded elements, leading to the issuance of a show-cause notice and subsequent adjudication by the Commissioner.
Contention regarding Major Maintenance Reserve (MMR) and consumables: The Senior Advocate for the assessee argued that the MMR, being an amount held as a deposit with the principal company, should not be included in the Gross Taxable Value. Additionally, it was asserted that consumables used in routine maintenance, having already incurred sales tax, should not be considered for service tax levy as they are deemed to have been sold. Reference was made to a previous decision by the Bench which supported the position that no tax should have been paid on amounts collected for operation and maintenance services. The counsel also highlighted the absence of willful suppression by the assessee to justify the invocation of the larger limitation period.
Prima facie case and waiver of pre-deposit: Upon review of the submissions, the Tribunal found merit in the Senior Advocate's arguments, particularly in light of the previous decision regarding the nature of services provided in similar cases. It was noted that the exclusion of certain elements from the taxable value was evident from the invoices, indicating no deliberate suppression by the assessee. Consequently, a waiver of pre-deposit and stay of recovery for the tax and penalty amounts were granted, considering the absence of willful suppression and the prima facie case presented by the Senior Advocate.
Early posting of appeal: Due to the significant stakes involved in the case, the Tribunal agreed to the SDR's request for an early hearing of the appeal. The appeal was scheduled for a hearing on 29-1-2008 to expedite the resolution of the matter.
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2007 (11) TMI 603
Capital gain - acquisition of land - Determining the assessment year - exigible to tax - HELD THAT:- Till the assessment year 1984-85, the assessee was required to invest the capital gain in the specified securities, like capital gain bonds issued from time to time or in a residential house under the various provisions of the Income-tax Act, 1961, from section 54 onwards within the time specified therein as computed from the date of transfer. It is obvious that in order to invest the money in the specified items, the assessee must first receive the money. Therefore, accepting the contention of the department would mean depriving the assessee of those benefits or tax relief in all cases where section 17 of the Land Acquisition Act, 1894, has been applied.
The only case which deals with the situation where section 17 of the Land Acquisition Act, 1894 has been invoked in Nawab Mahmood Jung Bahadur’s case [1987 (11) TMI 61 - ANDHRA PRADESH HIGH COURT]. Apparently, in that case, the possession of the land was taken on 12-1-1967 and because section 17 had been invoked, therefore, the award was given on 2-11-1970. The revenue wanted to tax the capital gain in the assessment year 1973-74. This plea was turned down and the questions were answered in favour of the assessee. The said decision does not take into account the aforementioned consequences. Therefore, we are unable to agree with the view taken by the Andhra Pradesh High Court.
We, therefore, hold that for the assessment year 1984-85, that is before the 1991 amendment was made, the ITAT was justified in holding that no capital gain is exigible to tax in assessment year 1984-85 on the facts and circumstances of the case. The application of the department under section 256(2) is, accordingly, dismissed.
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2007 (11) TMI 602
Issues:
Appeal against judgment of High Court in Second Appeal regarding adverse possession.
Analysis:
The case involved appeals against a judgment of the Madras High Court in Second Appeal Nos. 1601-04/1986. The respondent had filed a suit for declaration of title and possession of a property, which was decreed by the trial court but overturned by the First Appellate Court. The High Court allowed a second appeal by the respondent, holding that the defendant had not satisfied the requirements of adverse possession. The High Court referred to various precedents to support its decision. The appellant argued that the High Court did not frame a substantial question of law as required by Section 100(4) C.P.C. The Supreme Court acknowledged the lack of a substantial question of law but emphasized that this alone does not invalidate the judgment if no prejudice is caused to the appellant. The Court cited previous decisions where the absence of a specific issue did not vitiate the trial if parties were aware and evidence was led on the matter. The Supreme Court held that in this case, both parties were aware of the issue of adverse possession, and the appellant was not prejudiced by the lack of a substantial question of law. The Court emphasized the need to avoid technicalities that would burden the judiciary further. Ultimately, the Supreme Court agreed with the High Court's finding that the defendant had not proven adverse possession, and the appeals were dismissed. The Court granted time for the appellants to vacate the premises due to their long possession.
This detailed analysis covers the issues involved in the appeal against the judgment of the High Court regarding adverse possession, the arguments raised by the parties, the legal principles applied by the Supreme Court, and the final decision rendered by the Court.
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2007 (11) TMI 601
The Appellate Tribunal CESTAT NEW DELHI granted waiver of pre-deposit of service tax and penalty amounting to Rs. 1,30,831. The applicant's obligation to keep a certain stock of sugar as directed by the Central Government was considered. The waiver was based on a previous stay order in a similar case. The appeal was listed along with other related appeals.
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2007 (11) TMI 600
Issues Involved:
1. Legality of the conviction under Sections 364, 396, and 120B IPC.
2. Compliance with Section 306 Cr.P.C. regarding the approver's pardon and examination.
3. Admissibility and corroboration of the accomplice's testimony under Sections 133 and 114(b) of the Indian Evidence Act.
Issue-wise Detailed Analysis:
1. Legality of the Conviction under Sections 364, 396, and 120B IPC:
The appellants challenged the judgment of the Division Bench of the Jharkhand High Court which upheld their conviction for offences under Sections 364 and 396 read with Section 120B IPC. The trial court had sentenced the appellants to life imprisonment for these offences. The High Court dismissed the appeals, finding no substance in the arguments presented.
2. Compliance with Section 306 Cr.P.C. Regarding the Approver's Pardon and Examination:
The appellants contended that the manner in which Lalit Sanga, the approver, was granted pardon was illegal. They argued that the procedure laid down under Section 306 Cr.P.C. was not followed after the High Court's direction in the first judgment. The High Court had directed the CJM to examine Lalit Sanga as a witness in the presence of the accused and to allow cross-examination. The appellants argued that Lalit Sanga was not granted pardon properly, and his statement did not comply with Section 306 Cr.P.C. requirements.
The High Court noted that the order of the CJM was not set aside, and the procedural requirements were complied with as Lalit Sanga was examined and cross-examined in the presence of the accused before the case was committed to the Court of Sessions. The Supreme Court found no illegality in the procedure adopted by the CJM after the remand of the case, confirming that there was complete compliance with Section 306 Cr.P.C.
3. Admissibility and Corroboration of the Accomplice's Testimony under Sections 133 and 114(b) of the Indian Evidence Act:
The appellants argued that the conviction was based solely on the evidence of the accomplice, Lalit Sanga, and that his testimony did not satisfy the requirements of Section 133 of the Indian Evidence Act. They contended that his confession was not fully truthful and lacked corroboration.
The Supreme Court discussed the legal principles related to the evidence of an accomplice, emphasizing that while Section 133 of the Evidence Act allows for a conviction based on uncorroborated testimony of an accomplice, Section 114(b) suggests that such testimony should generally be corroborated in material particulars. The Court highlighted that the rule of prudence requires corroboration unless the accomplice's testimony is found to be credible and cogent.
The Court reviewed the evidence provided by Lalit Sanga, noting that his testimony was corroborated by other material evidence, such as the recovery of the stolen money and the injuries found on the victim's body. The Court concluded that there was complete corroboration of Lalit Sanga's evidence, making it reliable and sufficient to support the conviction of the accused.
Conclusion:
The Supreme Court found that the appeals lacked merit and upheld the convictions and sentences imposed by the lower courts. The Court confirmed that the procedural requirements under Section 306 Cr.P.C. were met, and the accomplice's testimony was adequately corroborated, thus affirming the legality of the conviction under Sections 364, 396, and 120B IPC.
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2007 (11) TMI 599
Payments made in cash in excess - within the exception clause, rule 6DD(a) of the Income-tax Rules, 1962 or Not - Disallowance of addition u/s 40A(3) - CIT confirming the assessment revised u/s 154 - HELD THAT:- The contention of the petitioner is that payments were made to the account of the suppliers maintained with State Bank of Mysore and Hassan District Co-op. Central Bank Ltd. Counsel for the petitioner contended that all these banks come under clause (ii) of sub-rule (a) of rule 6DD and, therefore these two payments are eligible for exemption from disallowance under section 40A(3) of the Act.
I am in agreement with the contention of counsel for the respondents because the protection under clause (a) of rule 6DD is available only if the payments are made to any of the institutions referred to thereunder. Obviously in order to qualify for the benefit of rule 6DD(a) the beneficiary of the payee should be an institution referred to therein.
Even though counsel for the petitioner contended that payments to any beneficiary in the account maintained in the banks referred to in rule 6DD(a) is also covered by the exception, I do not think the same can be accepted because, some of the institutions referred to in the rule, namely, Reserve Bank of India, State Financial Corporations, Industrial Development Corporation and other financial institutions are not engaged in banking operations.
Therefore, rule 6DD(a) applies only for payments to institutions referred to therein and not for payment made to any party’s account maintained in the institutions referred to therein. In the circumstances, I reject the contention of the petitioner and uphold Ext. P6 order of the CIT confirming the assessment revised u/s 154 of the Act.
O.P. is dismissed as devoid of any merit.
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2007 (11) TMI 598
Refund - Unjust enrichment - the decision in the case of COMMISSIONER OF C. EX., CHANDIGARH Versus VARDHMAN INDUSTRIES LTD. [2005 (8) TMI 543 - CESTAT, NEW DELHI] contested, where it was held that the principles of unjust enrichment are not applicable against the same refund - Held that: - the decision in the above case upheld - appeal dismissed.
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2007 (11) TMI 597
Issues:
1. Claim of Cenvat credit for outward transportation.
2. Claim of Cenvat credit for medi-claim policy, security and depot vehicle insurance, car rental, and pest control.
Analysis:
Issue 1: Claim of Cenvat credit for outward transportation
In the first case, the appellants sought the benefit of Cenvat credit for outward transportation, which was rejected, leading to the confirmation of service tax. The appellant's counsel referenced a similar case pending before a larger bench for final hearing. Considering the matter's referral to a larger bench, the stay application was allowed, granting waiver and staying the recovery of the pre-deposit amount of &8377; 81,525. The registry was directed to link this case with related matters scheduled for final hearing on 26-3-08.
Issue 2: Claim of Cenvat credit for various categories
In the second case, the appellants claimed Cenvat credit for medi-claim policy, security and depot vehicle insurance, car rental, and pest control. However, the revenue authorities did not grant Cenvat credit for these items, citing that they did not fall under the definition of output services. The counsel argued that these were cenvatable categories, emphasizing the recurring nature of the expenses and requesting a waiver for the pre-deposit amount of &8377; 2,67,000. After hearing both parties, the tribunal found the issue to be contentious. It directed the appellants to pre-deposit Rs. one lakh within a month and report compliance by 7th January 2008. The matter was scheduled for further hearing on 26th March 2008.
This detailed analysis of the judgment highlights the specific issues raised by the appellants regarding Cenvat credit claims for different services and the tribunal's decisions in each case, providing a comprehensive understanding of the legal proceedings and outcomes.
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