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2010 (1) TMI 1155
Legal judgment by Supreme Court in 2010 (1) TMI 1155 - SC Order, by S.H. Kapadia and Aftab Alam, JJ. Review petitions and relevant documents were considered, and it was found that no case for review of the order was made out on merits. Review petitions were dismissed.
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2010 (1) TMI 1154
Judgment: Supreme Court dismissed civil appeals. \nCitation: 2010 (1) TMI 1154 - SC Order \nJudges: S.H. Kapadia and Swatanter Kumar, JJ.
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2010 (1) TMI 1153
Prohibited goods - import - Held that: - Applying the ratio of the judgment in the case of Om Prakash Bhatia v. Commissioner of Customs, Delhi [2003 (7) TMI 74 - SUPREME COURT OF INDIA], the assessee did not fulfil the basic eligibility criteria, which makes the imported item a prohibited goods - SLP dismissed - decided against petitioner.
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2010 (1) TMI 1152
Issues Involved:
1. Proof of export and submission of AR-4 forms.
2. Liability to pay Central Excise Duty.
3. Application of the doctrine of res judicata.
4. Adherence to procedural requirements.
5. Rectification of mistake application.
Detailed Analysis:
Proof of Export and Submission of AR-4 Forms:
The primary issue is whether the clearances of goods for export were established. The Commissioner (Appeals) dismissed the departmental appeal, noting that the matter for the same period and amount had already been decided by the Joint Secretary in a revision order. The department contended that the clearances were not established as no copies of the application and AR-4 forms were filed with the Range Office. The Triplicate copies of AR-4 were not signed by the Range Officer, and no Central Excise invoices were submitted for verification of export. The Commissioner (Appeals) failed to consider these grounds.
Liability to Pay Central Excise Duty:
The department argued that the liability to pay duty on goods cleared for export but not exported lies with the manufacturer. The Commissioner (Appeals) had earlier ruled that the duty liability, if any, is on the Merchant Exporter, not the manufacturer. The department cited the Bombay Dyeing case, where the Revisionary Authority remanded the matter to ascertain proof of export from the bond-accepting authority. The department maintained that the manufacturer is responsible for submitting proof of export, as they approach the Assistant Commissioner for clearance of goods for exports under the bond executed by the Merchant Exporter.
Application of the Doctrine of Res Judicata:
The respondent argued that the present revision application is an attempt to re-adjudicate issues already decided between the same parties. The doctrine of res judicata precludes the department from reopening the same issue. The respondent cited the Supreme Court judgments, including Commissioner of Central Excise, New Delhi v. India Thermit Corporation Ltd., which states that no two proceedings on the same issue are permissible. The earlier adjudications on the same issue for part of the period had been accepted, and the department cannot re-agitate the same point for the remaining period.
Adherence to Procedural Requirements:
The respondent contended that the Commissioner (Appeals) had already decided the issue in accordance with the law and based his findings on the Circular of the Board and decisions of the Tribunal. The order of the Commissioner (Appeals) could not be faulted for not examining the facts and merits of the case. The department's rectification of mistake application was not maintainable as there is no provision under Section 35EE of the Central Excise Act, 1944, for rectification of mistakes by the Revisionary Authority.
Rectification of Mistake Application:
The department filed an application for rectification of mistake against the order dated 28-4-2006. The respondent argued that the provisions for rectification of mistakes apply only to orders passed by the Appellate Tribunal under Section 35C of the Act, not to orders passed by the Revisionary Authority under Section 35EE of the Act. The Government observed that there is no provision in Section 35EE for rectification of mistakes by the Revisionary Authority. The application for rectification of mistake was deemed not maintainable.
Conclusion:
The Government considered both oral and written submissions and perused the orders passed by the lower authorities. It was observed that the revisionary authority had already decided the case vide order No. 310/06, dated 28-4-06. In light of the Supreme Court judgment in CCE, New Delhi v. M/s. India Thermit Corporation, the department cannot re-agitate the same point. The application for rectification of mistake was not maintainable as there is no provision under Section 35EE for such applications. The revision application was rejected as devoid of merit.
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2010 (1) TMI 1151
Exemption u/s 11 - whether the activities of the applicant came within the definition of “income of educational institution”? - Whether an educational institution would cease to exist ‘solely’ for educational purposes and not for purposes of profit merely because it has generated surplus income over a period of 4/5 years after meeting its expenditure?
(B) Whether the amount spent on acquiring/ constructing capital assets wholly and exclusively becomes part of the total income or it becomes entitled to exemption u/s 10 (23C)(vi)?
(C) Whether an institution registered as a Society under the Societies Registration Act, 1860, lose its character as an educational institution, eligible to apply for exemption under Section 10 (23C)(vi) -
HELD THAT:- Our answer to the aforesaid questions would be the same as has been given in Pinegrove International Charitable Trust’s case[2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] and the same reasoning is adopted. It is pertinent to notice that Question No. (A) has been answered in favour of the assessee and against the revenue. Questions Nos. (B) and (C) have been answered jointly in favour of the assessee and against the revenue. The omnibus principles of law have been culled out in para 8.13. All these principles would apply to the facts of each of the cases in this bunch of petitions as well because the guidance for grant of exemption u/s 10(23C)(vi) has been derived from proviso 13th (un-numbered) by their Lordships’ of Hon’ble the Supreme Court in American Hotel and Lodging Association’s case [2008 (5) TMI 17 - SUPREME COURT].
In the light of the discussion, the first thing which becomes evident is that capital assets acquired/constructed by the educational institutions have been treated as income in a blanket manner without recording any finding whether the capital assets have been applied and utilised to advance the purpose of education. It is obligatory on the part of the prescribed authority while considering the application for grant of exemption, whether expenditure incurred as capital investment is on the object of education or not. It is appropriate to mention that in all these cases, the impugned orders passed by the Chief CIT are similar in substance and appears to have been inspired by the view in the case of M/s Queens Educational Society [2007 (9) TMI 347 - UTTARAKHAND HIGH COURT], which we have not accepted in the main judgment rendered today in the case of Pinegrove International Charitable Trust’s case[2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT]. The competent authority is also required to consider the question of advancement of loanto the employees of the college, which was given to one Shri O.P. Joshi, Principal of the institution in its proper perspective. The advancement of loans to the employees of the institution cannot be regarded as mis-application of he fund because good service conditions for its employees would always attract talented persons to an educational institution. If facilities like housing, loan, car loan etc., which have prevalent in the Public Sector and Government institutions, are given then necessarily it would be regarded as expenditure spent on the object of education and not to any other purpose.
Likewise, it would be a relevant factor if an institution has enjoyed exemption for the last 2½ decades - The competent authority should have recorded findings of facts insofar as the remunerations paid to Shri Suresh Chander, who is Director of the School and to his wife Smt. Usha Rani, who is teacher in the school, are concerned. If the remunerations have been paid in their capacity as an employee rendering the service to the school as Director or Teacher then it would be proper to interpret the same to be for education purpose. But if the remunerations have been paid farcically then the payment made to such persons must be reckoned to have been spent on a purpose other than education. In order to avoid any reference to all individual cases, it is suffice to mention that the competent authorities should not have read the judgment in the case of M/s Queens Educational Society like a statute. The Chief CIT should have followed the Full Bench judgment of this Court rendered in the case of Punjab Financial Corporation [2001 (12) TMI 50 - PUNJAB AND HARYANA HIGH COURT], holding that submission of Audit Report in Form 10BB is not mandatory and it could be filed even after the filing of return. The aforesaid difficulty has arisen - The respondents could have easily awaited the outcome of the appeals pending before Hon’ble the Supreme Court. It would have avoided unnecessary litigation, time and expenses.
These petitions are allowed and the impugned order passed by the Chief CIT refusing to grant exemption u/s 10(23C)(vi) or renew the same are hereby quashed. However, we leave it open to the respondents to pass any fresh orders, if any such necessity is felt after considering every individual case in the light of various propositions of law culled out by us in the preceding paras.
The writ petitions stands disposed of in the above terms.
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2010 (1) TMI 1150
Issues Involved:
The issues involved in this case are the addition of alleged trading liability under section 41(1) of the Income-tax Act, 1961, unexplained cash credits, and disallowance of interest and certain expenses.
Addition of Alleged Trading Liability:
The appellant, engaged in trading M.S. steel and allied products, declared a gross profit percentage for the year. The Assessing Officer noted outstanding liabilities towards two entities, M/s. Gayatri Enterprises and M/s. Om Steel Traders. Despite explanations provided by the appellant, the Assessing Officer deemed the liabilities as ceased due to non-payment for several years. The Commissioner of Income-tax (Appeals) upheld this decision. However, the appellant contended that subsequent reassessment proceedings proved the genuineness of M/s. Gayatri Enterprises and that liabilities were settled in later years. The appellant relied on legal precedents to support their case. The Departmental representative argued that the liabilities had ceased as the appellant failed to prove their existence. The Tribunal observed that the liabilities were acknowledged by the appellant and not written off, thus rejecting the addition under section 41(1) for both entities.
Unexplained Cash Credits:
The appellant challenged the addition of unexplained cash credits in the names of M/s. Mahesh Textiles and M/s. Jaideep Synthetics. The Tribunal found that these amounts were received on account of sales of goods and not simple cash credits under section 68 of the Act. As the amounts were proceeds from the sale of goods, the addition under section 68 was deemed unwarranted, leading to the deletion of these additions.
Disallowance of Interest Expenses:
The appellant contested the disallowance of interest expenses related to borrowed funds used for interest-free loans/advances to associate concerns. The Tribunal noted that the appellant failed to demonstrate that the advances were made from interest-free funds. As the borrowed funds were diverted without charging interest, the disallowance of interest expenses was upheld.
Other Disallowances:
Grounds related to disallowances of car and scooter expenses and telephone expenses were not pressed at the time of hearing and were dismissed for want of prosecution.
In conclusion, the Tribunal partly allowed the appeal, ruling in favor of the appellant on the issues of alleged trading liability and unexplained cash credits, while upholding the disallowance of interest expenses.
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2010 (1) TMI 1149
Maintainability of appeal - appropriate forum - CENVAT credit - operation, maintenance of captive wind mill plant - Held that: - this Tax Appeal filed u/s 35-G of the CEA, 1944, is admitted, as the issue involves question of law and the questions of law referred to hereinabove are formulated for determination and consideration of this court - appeal admitted.
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2010 (1) TMI 1148
Whether an assessee would be entitled to the adjustment of tax while they pay the sales tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959, to the extent of tax paid under the provisions of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 or not?
Held that:- There is no dispute that the respondent-assessee is a dealer in automobiles and they had imported automobiles from other States and also paid the entry tax in terms of section 3 of the Entry Tax Act. If that be the position, in view of section 4 of the said Act, their liability under the TNGST Act is reduced to the extent of tax paid under the Entry Tax Act.
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2010 (1) TMI 1147
Whether the proceedings under section 21(2) of the U. P. Trade Tax Act is without any material?
Held that:- Perusal of the order of the Additional Commissioner reveals that there was no material on the basis of which belief has been formed that tax has been wrongly assessed on the liquid glucose except that according to his view the correct rate of tax has not been applied by the assessing authority and the order of the Tribunal is subject-matter of consideration before this court. The assessing authority in the notice under section 21 of the Act has also not recorded any reason on the basis of which belief of escaped turnover has been formed.
Thus the proceedings under section 21(2) of the Act is without any material on the basis of which belief of escaped assessment could be formed, namely, that the tax on the liquid glucose has been wrongly assessed to tax. W.P. allowed.
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2010 (1) TMI 1146
When the petitioner's remedy of filing an appeal is barred, can he invoke the extraordinary jurisdiction under article 226 of the Constitution of India?
Held that:- The reliefs as sought for in the writ petition are reliefs which ordinarily could be granted by the appellate authority. Therefore, there is no extraordinary situation for invoking the power under article 226 of the Constitution of India, even if this writ petition is filed within the period of limitation. This court would have declined to exercise jurisdiction under article 226 of the Constitution. If that be so, there is an added ground as to why it will not entertain the writ petition. When admittedly such remedy is available, but not availed. Resultantly, the writ petitions fail and are accordingly dismissed.
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2010 (1) TMI 1145
Whether the price declared before customs authorities is much less than the floor rate fixed?
Held that:- Argument of the appellant cannot be accepted as the basis for challenging the validity of circular issued by the Commissioner fixing the price because it is for the customs authorities to examine whether invoice price or the declared price for payment of duty is right. In fact the correct procedure to fix the price for timber for the purpose of collection of advance tax is to collect from the market the prevailing retail market price at a given time and reduce therefrom the dealer margins to fix the dealer's price which is the price at which advance tax could be collected. As we have already observed going by the current market price of varieties of imported timber for which the Commissioner has fixed floor rate price for the purpose of payment of advance tax, the price fixed cannot be said to be unreasonable or arbitrary, more so when the appellant has no case that sales are made at below the floor rate fixed by the Commissioner. Appeal dismissed.
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2010 (1) TMI 1144
Whether the petitioner-assessee for the years 1994-95 and 1997-98 is liable to pay tax at the rate of 16 per cent and 20 per cent, respectively, or at eight per cent?
Held that:- As far as the application of clarification dated February 27, 1995, which was issued prior to insertion of section 28A into the Act 60 of 1987 was introduced with effect from November 6, 1997 is concerned, we may point out that such clarification has no legal backing and therefore, it cannot be put against the assesse even though it was made at the instance of the assessee himself.
As to whether the clarification issued after the amendment, viz., July 7, 1997 can be of any benefit to the assessee, this question has not been considered by the authorities below, apart from the question as to which of the entry would be applicable to the case on hand as contended by the learned counsel for the assessee was also not considered, we set aside the order on that ground and remit the matter to the assessing officer for consideration as to whether the commodity in question, viz., electronic gas stove ignitor/lighters is liable to tax in terms of entry 36 of Part C of the First Schedule or item No. 18 of Part F of the First Schedule for the period from March 12, 1993 and item No. 5 of Part G of the Fist Schedule from July 17, 1996. In view of the remittal, we have to necessarily set aside the order and for that reason, the common order passed by the Tribunal is set aside.
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2010 (1) TMI 1143
Tax liability increased by tribunal - Held that:- While exercising the jurisdiction under section 11 of the Trade Tax Act this court has got a very limited jurisdiction to interfere with the order of the Tribunal, i.e., only when the question of law arises as in the present case there is no question of law whatsoever arises and only question of fact is involved from the order passed by the Tribunal, which is under challenge. Hence no interference is required in the Tribunal's order.
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2010 (1) TMI 1142
Taxability under sales tax act - Held that:- Even assuming that the provisions of section 2(1)(a)(i) of the Tamil Nadu Additional Sales Tax Act is made applicable to the case of the assessee, it is an admitted fact that the total taxable turnover is ₹ 10,58,688 only and that the total turnover does not exceed ₹ 1 crore. In that event, in the wake of the proviso to clause (i) of that provision, the first ₹ 10 lakhs is to be exempted and is not liable to be taxed. If that 10 lakhs rupees is exempted, the balance amount in the taxable turnover is ₹ 58,688 only, which is not in dispute, for which the assessee is liable to pay tax at the rate of 10 per cent in terms of section 8(2)(b) of the Central Sales Tax Act. However, Mr. S. Ramanathan has submitted that the balance taxable turnover includes the amount of ₹ 6,600 towards iron scrap and that amount also should be deducted, leaving the balance of ₹ 52,088 only to be taxed at 10 per cent. We find force in the said submission. Accordingly, we hold that the assessee is liable to pay tax at the rate of 10 per cent under the Central Sales Tax Act for the amount of ₹ 52,088. Writ petition is partly allowed.
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2010 (1) TMI 1141
Issues Involved:
1. Eligibility for remission of tax u/s 41 of the West Bengal Sales Tax Act, 1994.
2. Validity of the eligibility certificate (E.C.) granted under the 1994 Act.
3. Applicability of the West Bengal Incentive Scheme, 2000.
4. Retrospective cancellation of the eligibility certificate.
Summary:
1. Eligibility for remission of tax u/s 41 of the West Bengal Sales Tax Act, 1994:
The petitioner-company, initially set up as a small-scale industrial unit, applied for an eligibility certificate (E.C.) for remission of tax u/s 41 of the 1994 Act. The Assistant Commissioner granted the E.C. on July 19, 2002, noting that the company was registered as a small-scale unit within the stipulated period. However, the company later registered as a medium-scale unit due to changes in investment limits.
2. Validity of the eligibility certificate (E.C.) granted under the 1994 Act:
The E.C. was granted based on the provisional registration as a small-scale unit. The Deputy Commissioner, in a suo motu revisional order dated July 8, 2008, cancelled the E.C. retrospectively from July 19, 2002. The Tribunal held that an E.C. granted by the competent authority cannot be cancelled with retrospective effect, citing precedents from the Supreme Court and various High Courts.
3. Applicability of the West Bengal Incentive Scheme, 2000:
The petitioner-company was advised to register as a medium-scale unit under the 2000 Scheme after the investment limit for small-scale units was lowered. The company obtained registration as a medium-scale unit and availed benefits like capital investment subsidy and waiver of electricity duty under the 2000 Scheme. The Tribunal noted that the 2000 Scheme did not provide for remission of sales tax, which was available under the 1994 Act.
4. Retrospective cancellation of the eligibility certificate:
The Tribunal emphasized that the retrospective cancellation of the E.C. was contrary to settled law. The Deputy Commissioner's order dated July 8, 2008, cancelling the E.C. from July 19, 2002, was set aside. The Tribunal held that the benefit enjoyed under the E.C. granted under the 1994 Act could not be withdrawn retrospectively by an order passed long after the 1994 Act ceased to operate.
Conclusion:
The Tribunal allowed the application in R.N. 439 of 2008, setting aside the Deputy Commissioner's order dated July 8, 2008. However, it did not interfere with the refusal to grant an eligibility certificate under the VAT Act, 2003. Both R.N. 439 of 2008 and R.N. 114 of 2008 were disposed of without any order as to costs.
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2010 (1) TMI 1140
Whether the High Court was correct in allowing the petition of the respondent and thereby terminating the mandate of the arbitrator and thus appointing a new Arbitrator for deciding the dispute between the parties?
Held that:- Appeal allowed. Set aside the impugned order and remand the case back to the High Court for fresh decision of the application under Section 11(6) of the Act and while considering the application afresh, the High Court is directed to take into consideration the aforesaid decision of this Court as the High Court did not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other conditions necessary to secure the appointment of an independent and impartial arbitrator. Since the requirement of sub-section (8) of Section 11 was not at all dealt with by the High Court in its order, the appointment of an arbitrator without dealing with Sub-Section 8 of Section 11 of the Act became vulnerable and accordingly, such appointment must be set aside
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2010 (1) TMI 1139
Declaring section 19, item 4 of Schedule H of the Punjab Value Added Tax Act, 2005 as unconstitutional as the same would not be applicable in respect of sugarcane and purchase tax thus not leviable under the said Act.
Held that:- There is no possibility whatsoever to reopen the question by opining that the provisions of section 4(1) of the PGST Act, 1948 would not apply and those of the 1953 Act alone would apply.
On account of the binding precedent available in the form of judgment of Jagatjit Sugar Mills' case [1994 (10) TMI 259 - SUPREME COURT OF INDIA] we are not dealing with any of the contentions raised by the petitioners which could have been otherwise examined in the light of the observations made in Gobind Sugar Mills' case [1999 (8) TMI 761 - SUPREME COURT OF INDIA]. W.P. dismissed.
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2010 (1) TMI 1138
Issues: Claim of exemption under section 5(3) of the Central Sales Tax Act for printed labels and hang tags sold to exporters; Extent of exemption based on form H declaration; Imposition of penalty.
Claim of Exemption under Section 5(3): The petitioner, a manufacturer of printed labels and hang tags, sought exemption from tax for a turnover of Rs. 76,19,154 under section 5(3) of the Central Sales Tax Act. The authorities rejected the claim, stating that the goods cannot be considered as packing materials. The court agreed that the goods did not qualify as packing materials and upheld the rejection.
Extent of Exemption Based on Form H Declaration: The assessing officer acknowledged the form H declaration filed by the petitioner, which included details of exported goods. The court analyzed whether the goods, when attached to readymade garments, lost their identity, referencing a previous judgment. It was concluded that the goods retained their identity, making the petitioner eligible for exemption under section 5(3) based on the details provided in the form H declaration.
Imposition of Penalty: The court set aside the tax levied and remitted the matter to the assessing officer for reconsideration of the exemption claim. The imposition of penalty was deemed dependent on the revised orders by the assessing officer. As the tax orders were overturned, the penalty would be determined accordingly. The court allowed the writ petition, directing a reassessment based on the form H details provided by the petitioner.
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2010 (1) TMI 1137
Non-submission of the sales tax clearance certificate - the petitioner had pledged the earnest money in favour of the "IGP" instead of "Inspector General of Prisons - Held that:- Non-consideration of the petitioner’s tender on the ground that the earnest money has not been pledged appropriately is not justified and accordingly I find every reason to declare that non-consideration of the petitioner’s tender by the purchase Board on November 17, 2009 was illegal and cannot be sustained in law.
Selection of a party to execute a supply work through tender process would normally require selection of the party who has quoted the lowest price and in this case the petitioner’s quotation was lower than respondent No. 4 to whom the work order was issued. Considering the lower quotation of the petitioner, he has a better right in my view to secure the contract in question and under such circumstances the work order granted in favour of respondent No. 4 is declared to be illegal. W.P. allowed.
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2010 (1) TMI 1136
Non entitlment to exemption from tax in respect of two machines purchased by it for setting up of a new industrial unit for manufacture of marble slabs and tiles
Held that:- The Tax Board has erred in rejecting the claim of the petitioner-assessee of tax exemption in respect of part of plant and machinery delivered to it after a few days from the date of commencement of commercial production on December 2, 1996 and the process of setting up of a new industrial unit cannot be said to be over merely on the date of commencement of commercial production, as certified by competent authority, particularly when the order for the said plant and machinery in question was placed during the process of setting up of the said industrial unit and the said plant and machinery were procured and installed for the same industrial unit. Revision petition of the petitioner-assessee is allowed
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