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2012 (12) TMI 993
Issues Involved:
1. Jurisdiction of the High Court in issuing directions.
2. Impleadment of respondent No.1 in proceedings before the Charity Commissioner.
3. Suppression of material facts by the petitioners.
4. Conduct of the petitioners and trustees.
5. Validity of the High Court's order directing a fresh auction.
6. Right to specific performance of agreements by the petitioners.
Issue-wise Detailed Analysis:
1. Jurisdiction of the High Court in Issuing Directions:
The core issue was whether the High Court over-stepped its jurisdiction in directing the Charity Commissioner to proceed with the auction of the Trust land. The Supreme Court upheld the High Court's decision, noting that while the High Court might have over-stepped, it acted in the best interest of the trust under Section 36 of the Bombay Public Trust Act, 1950. The High Court's directions were seen as necessary to protect the trust's interests.
2. Impleadment of Respondent No.1:
The High Court directed that respondent No.1 be impleaded in the proceedings before the Charity Commissioner. The Supreme Court agreed with this decision, noting that the High Court had no option but to ensure the Charity Commissioner considered all bids, including those of respondent No.1, to protect the trust's interests. This decision was made to avoid any potential collusion between the trustees and the petitioners.
3. Suppression of Material Facts by the Petitioners:
The petitioners were found guilty of suppressing the material fact of the Joint Charity Commissioner's (JCC) order dated 2nd May 2003, which had attained finality. The Supreme Court emphasized that litigants must disclose all facts and not decide unilaterally what is material. Due to this suppression, the Court declined to grant special leave to appeal.
4. Conduct of the Petitioners and Trustees:
The trustees and petitioners were found to be indulging in a "flip-flop" and taking advantage of the absence of clear statutory measures. The JCC had rightly rejected their applications for extension of time due to their lack of bona fides and the non-beneficial nature of the transactions for the trust. The Supreme Court noted the suspicious nature of the compromise between the trustees and petitioners and their overall conduct, which left much to be desired.
5. Validity of the High Court's Order Directing a Fresh Auction:
The High Court's order for a fresh auction was deemed necessary due to the collusion between the trustees and petitioners and the significant increase in the land's value over time. The Supreme Court referenced previous judgments, emphasizing that trust properties should be sold through public auctions to get the best price. The High Court's order was seen as aligning with the trust's best interests and Section 36 of the Act.
6. Right to Specific Performance of Agreements by the Petitioners:
The petitioners' right to specific performance of the agreements was not upheld. The Supreme Court noted that the conditions for the first agreement were not met, and the JCC did not sanction the subsequent agreements. The petitioners' claim to specific performance was therefore not valid, and the High Court's order did not set aside the earlier order collusively obtained by the petitioners and trustees.
Conclusion:
The Supreme Court declined to grant special leave to appeal due to the suppression of material facts by the petitioners and directed the Charity Commissioner to re-evaluate the sale of the Trust land. The Charity Commissioner was permitted to allow fresh offers and issue a new public notice if necessary, ensuring the sale price would not be less than Rs. 3.87 crore. The petitioners were ordered to pay costs of Rs. 15,000 to the Charity Commissioner.
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2012 (12) TMI 992
Penalty u/s 271(1)(c) - CIT(A) deleted the penalty - Held that:- This is not a fit case for levying penalty as in this case neither the assessee has concealed the particulars of income nor has furnished inaccurate particulars of income. This is simply a case of bonafide mistake which has occurred due to change of law applicable in this year. The assessee had been claiming and was being allowed similar claims of deductions in earlier Assessment Years also. After giving our thoughtful consideration to the facts of this case vis-a-vis the legal position narrated above, we are of the considered opinion that when a wrong claim is made under some bonafide mistake, that cannot be a ground for imposition for penalty u/s 271(1)(c) of the Act. The assessee has been making similar claim and the same were being allowed in earlier assessment years. Due to sudden change in law, this claim was not allowed and the assessee also corrected its mistake by fling a revised return, it is not a case of willful wrong claim. Therefore, we do not find any mistake in the order of the ld. CIT(A) and confirm the deletion of impugned penalty. - Decided in favour of assessee.
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2012 (12) TMI 991
Maintainability of appeal - Dismissal of appeal for non-prosecution by ITAT - Held that:- In the instant case, as could be noted from the order impugned, that the Tribunal has chosen to dismiss the appeal on the ground of non-prosecution. It also noted that RPAD was sent and the same had returned with the remark of the postal department as none having claimed the same. Instead of deciding the matter on merits, it chose to dismiss the same for want of prosecution and this order in our opinion is contrary to the provision of law.
When the Supreme Court decided the case of S. Chenniappa Mudaliar (1969 (2) TMI 10 - SUPREME Court), no amendment in Rule in the Income-tax Appellate Tribunal Rules was made as yet. Rule 24 of the Income Tax Rules, 1963 makes it abundantly clear that the Tribunal cannot dismiss the appeal without adverting to the merits. Even on the day on which the hearing is adjourned, the appellant chose not to appear in person or through an authorised representative. It is incumbent upon the Tribunal to dispose of the appeal on merits after hearing the respondent and afterwards if the appellant appears and satisfy the Tribunal, sufficient cause for its non-appearance on the date of hearing, the Tribunal can set aside the ex parte order and restore the appeal. Thus the impugned order passed by the Tribunal is hereby quashed and set aside and the appeal is restored to the file of the Tribunal which shall decide the same afresh on merits - Decided in favour of assessee.
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2012 (12) TMI 990
The appellant was not eligible for benefits under Notification No. 50/2003-CE as they did not exercise the option in writing before the first clearance. This requirement was mandatory, as per a Supreme Court judgment. The appeal was dismissed by the High Court.
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2012 (12) TMI 989
Issues involved: Protection of petitioners' interest pending revision petition with the Government.
Summary:
The petitioners sought protection of their interests until the revision petition pending with the Government is decided. The Commissioner's order dated 24.7.12 was challenged as it did not grant interest on delayed payment to the petitioners. The Commissioner initiated coercive recovery before the limitation period was over, leading to some recovery already being made. The High Court granted stay against coercive recovery until the revision petitions are decided. The interim protection was limited until the revision petition is decided, with no further reasons required. The revisional authority was encouraged to expedite the final disposal of the revision petitions, and the petitions were disposed of accordingly.
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2012 (12) TMI 988
Issues involved: Appeal against imposition of penalties under Section 112 and Section 114AA of the Customs Act, 1962.
Section 112 Penalty Issue:
The appellants contested penalties imposed under Section 112 of the Customs Act for alleged violation of Section 111(d). The appellant Suketu Jhaveri was accused of using another person's IEC, resulting in confiscation of goods. The Tribunal analyzed the provisions of Section 111(d) and concluded that no violation occurred as the imported goods were not prohibited by any law, misdeclared, or in contravention of Customs Act or other Acts. Consequently, penalties under Section 112 were deemed not applicable and were set aside.
Section 114AA Penalty Issue:
Regarding penalties under Section 114AA of the Customs Act, the Tribunal referenced a High Court ruling stating that using another person's IEC does not constitute an offense under the Customs Act. As the appellants did not breach any Customs Act provisions, penalties under Section 114AA were also deemed inapplicable and set aside. The impugned order against the appellants was overturned, and their appeals were allowed with any consequential relief.
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2012 (12) TMI 987
Issues involved: Interpretation of Cenvat credit rules, eligibility of availing credit on leased factory, transfer of unit affecting Cenvat credit.
Interpretation of Cenvat Credit Rules:
The appeal was filed by the Revenue against the Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal. The Commissioner (Appeals) accepted the respondent-assessee's proposition that they are eligible to avail Cenvat credit on the lessor factory. The Tribunal acknowledged the existence of Cenvat credit to the account of the respondent-assessee due to the transfer of the unit. The Tribunal concluded that no question of law arose in this context and dismissed the appeal, emphasizing that no costs were to be incurred.
Eligibility of Availing Credit on Leased Factory:
The Commissioner (Appeals) noted that during the financial year 2002-03, the lessor unit had instructed the raw material supplier to deliver to the job worker's premises. The job worker then sent the final products to the lessor unit after payment of duty. Despite a technical lapse in the non-stipulation of the quantum discovered later, the respondents were allowed to avail credit on the invoices relating to the lessor unit. The Tribunal concurred with this decision, highlighting that the credit should be treated as lying as unutilized credit in the account of the lessor unit as per Rule 8 of the Cenvat Credit Rules, 2002.
Transfer of Unit Affecting Cenvat Credit:
The Tribunal's decision recognized that the transfer of the unit had indeed resulted in a Cenvat credit to the account of the respondent-assessee. This transfer of the unit was a crucial factor in determining the eligibility of the respondent to avail the Cenvat credit. Ultimately, the Tribunal found no substantial question of law in this matter and dismissed the appeal without imposing any costs.
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2012 (12) TMI 986
The High Court of Madras rejected Civil Miscellaneous Appeal No. 3557 of 2005 based on the substantial questions of law regarding manufacturing processes in relation to Central Excise Rules. The decision was influenced by a previous case involving Commissioner of C. Ex., Ponndicherry v. Sunco Rubbers Ltd. where the questions of law were answered against the Revenue.
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2012 (12) TMI 985
Delay in filling Appeal – Order not communicated in person – Petitioner contended that he had not received order-in-original for long time and therefore had not filed appeal earlier – Tribunal by impugned order rejected appeal holding that signature contained in acknowledgment slip matched with admitted signature of petitioner – Held that:- true that Department relies on acknowledgment however, it was not clear why order was communicated in person as opposed to normal practice of serving orders through RPAD – Tribunal was not quite justified in recording that signature in acknowledgment slip was same as those of admitted signatures of partner – In larger interest of justice, proceedings remanded to Commissioner (Appeals), who shall hear appeal on merits – Impugned orders of Tribunal quashed – Decided in favour of Assesse.
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2012 (12) TMI 984
Set off of interest income from share application money against public issue expenses - Tribunal allowed claim - Held that:- Tribunal had in the impugned judgment allowed the benefit of set off of interest income from share application money as followed the decision of this Court in Panama Petrochem Ltd. case [2011 (7) TMI 1110 - GUJARAT HIGH COURT] wherein held the assessee was statutorily required to keep share application money in the separate account till the allotment of shares was completed. Interest earned on such separately kept amount was adjusted towards expenditure for raising share capital. We are therefore, of the opinion that interest earned was inextricably linked with requirement of company to raise share capital and was thus adjustable towards the expenditures involved for the share issue - Decided against revenue
Disallowance u/s.35D - Tribunal remanded the issue for fresh consideration - Held that:- Revenue rightly pointed out that the Tribunal remanded the issue for fresh consideration erroneously relying on a remand order passed in Mandvi Mercantile Co Op Bank Ltd. case [2005 (12) TMI 554 - GUJARAT HIGH COURT] for the assessment year 2001-02. She pointed out that such issue had reached the Tribunal after a round of remand and full consideration by the Assessing Officer and CIT(Appeals). The Tribunal was, therefore, required to examine the issue on merits and give its decision. Such issue, therefore, shall have to be placed back before the Tribunal for consideration on merits.
Disallowance of deduction u/s 80IA on account of Exchange rate fluctuation, Excise credit, Kasar/vatav and Excess provision written back of bonus - Held that:- Tribunal has granted certain benefits as claimed by the assessee for deduction under section 80IA of the Act without full discussion. Tribunal has not given any specific verdict on some of the issues raised at the hands of the assessee in rectification application. We are sure, the Tribunal will consider the same and take steps on such application irrespective of the order in this appeal.
Disallowance out of shares and debentures issue expenses - Held that:- Tribunal has remanded the issue once gain relying on a remand in the case of this very assessee for another year. Here also, the issue had been discussed and decided by the Assessing Officer and the CIT(Appeals) on merits. The Tribunal, therefore, would have to judge issue on merits rather than remanding the issue all over again.
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2012 (12) TMI 983
Product Containing Lactic Acid – Product prohibited or not – Respondents sealed and seized petitioner's food products and raw material on ground that they contain lactic acid – Whether use of lactic acid in petitioner's products were permitted – Held that:- petitioner does not deny fact that its products contain lactic acid (SRP 9/28 ASWPL28980.12) whereas respondents contend that it was not permissible ingredient – Provisions of Regulation 3.1.1(1) permits use of food additives in food products as specified in "regulations and in Appendix A" – Use of word "and" in regulation does not indicate that food additive must be stated to be permissible both in regulations and Appendix A – Lactic acid is food additive and is used in food as acidulant, buffering agent, neutralising agent – No dispute that petitioner uses lactic acid as buffering agent – Provisions of Prevention of Food Adulteration Act, 1954 and revision published by Bureau of Indian Standards were additional factors which supported conclusion of Petitioner – Decided in favour of Petitioner.
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2012 (12) TMI 982
Search and seizure of contrabands without warrant – Trial Court convicted accused of offence punishable under Section 15 of NDPS Act, 1985 and awarded 10 years’ rigorous imprisonment with fine – Impugned order of conviction was challenged for non-compliance of section 42 – Held that:- PW1 deposed that upon receiving secret information, information was neither reduced to writing nor communicated to senior officer as required under Section 42 – No effort was made by PW1 to reduce information into writing and inform his higher authorities instantaneously or even after reasonable delay– On contrary PW 1 had more than sufficient time to comply with provisions – No documentary evidence available to show what Investigating Officer was doing for two hours and what prevented him from complying with provisions of Act – Impugned judgment of conviction set aside – Appeal allowed – Decided in favour of Appellant.
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2012 (12) TMI 981
Penalty u/s 271(1) (c) - Income revised in revised return filed after survey - Held that:- We are however of the opinion that in the impugned judgment of CIT v. Manu Engg. Works [1978 (9) TMI 18 - GUJARAT High Court ] , the Tribunal has committed no legal error. It was not a case where the assessee had discovered some inadvertent omission or an unintended wrong statement which had crept up in the return filed. It was found that the assessee was even at the time of filing of return aware of the falsity of the statement and incorrectness of particulars of income.
We are of the opinion that the Tribunal committed no error in confirming the penalty imposed by the Assessing Officer and confirmed by the CIT(appeals). Even if the assessee had made any further declarations in the revised return, we cannot lose sight of the fact that such return was filed only after the survey was carried out by the Revenue and further that such revised return was rejected as non-est.
It is not necessary for us to go into this aspect any further since we find that the Assessing Officer had come to a definite finding that the penalty was required to be imposed since the assessee had concealed the particulars of income. We therefore, need not disturb the Tribunal's ultimate conclusion merely for the fact that the Tribunal rejected the assessee's contention may be on some erroneous premise when we find that such contention even other-wise was not required to be accepted in law. - Decided against the assessee.
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2012 (12) TMI 980
Validity of Tribunal's order - whether the Tribunal was justified in allowing the appeal filed by the assessee and thereby, was justified in setting aside of the order passed by the Commissioner (Appeals) - Held that:- since the Tribunal did not advert to the factual aspects of the case in hand in detail and nor gave a clear cut finding of fact as to how and on what basis, the appellant was entitled to claim the benefit of Modvat on the inputs which according to assessee were produced by them and then, sent from one unit to another, in the light of relevant case law and principle of law, we are constrained to allow this appeal and set aside the impugned order passed by the Tribunal for deciding the appeal afresh on merits. The appeal is accordingly remanded to the Tribunal for its decision on merits - Decided in favour of Revenue.
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2012 (12) TMI 979
Cenvat Credit - reasonable steps before availing credit - original manufacturer of fabrics were alleged to be fictitious - endorsed invoices - period of limitation - Held that:- Tax appeal is disposed on the same lines of the decision of this Court in case of Prayagraj Dying & Printing Mills Pvt. Ltd. & Ors. Vs. Union of India & ors (2013 (5) TMI 705 - GUJARAT HIGH COURT). - Decided in favour of assessee.
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2012 (12) TMI 978
Disallowance under section 40A(2)(b) - labour charges paid by the assessee to its vendor at Deesa - Held that:- Neither the assessee has provided any comparable rates to the revenue authorities nor the revenue authorities have made any attempt either by asking the assessee to provide for the comparable nor they suo moto collected any data from the market. What the revenue authorities have done is that they have relied on the internal comparable only to arrive at a figure of estimated charges per carat. In fact, the AO should have collected independent data or have asked the assessee to provide comparable periodic rates prevailing in the market at Deesa to set the bench mark. This exercise has not been done by the AO or by the CIT(A), which according to us, the revenue authorities should have done to arrive at some definite estimate.
In these circumstances, we are of the opinion that in the interest of justice to both the sides, the AO must make enquiries and examine the comparable rates from the third parties at Deesa and then benchmark the average job work rate for the financial year in question and compute the job work charges.We, therefore, set aside the order of the CIT(A) on the issue of addition of ₹ 43,97,624/- with the above direction to the AO, who shall afford adequate and reasonable opportunity to the assessee to present its case. - Decided in favour of assessee for statistical purposes.
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2012 (12) TMI 977
Denial of rebate claim - Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 - applicant was clearing goods by availing exemption Notification No. 29/2004-C.E. and 30/2004-C.E. simultaneously - Held that:- Notification No. 30/2004-C.E., dated 9-7-2004 is a conditional notification. The proviso as at para 8 unambiguously states that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs had been taken under the provisions of Cenvat Credit Rules, 2004. The applicants had in fact taken Cenvat credit on inputs used in the manufacture of exported goods as declared on the ARE-1’s and had cleared the goods on payment of duty. When the condition of the notification was not satisfied, there was no way the applicants could have availed exemption under Notification No. 30/2004-C.E., dated 9-7-2004.
As such, the applicant though was having an alternative but has stated to have duly maintained the separate account for goods availing of Notification No. 29/2004-C.E. and goods availing of Notification No. 30/2004-C.E. Under such circumstances, Government finds that rejection of applicant’s rebate claim for the reasons stated above is not tenable. The applicant is claiming to have maintained proper Cenvat credit accounts for their clearances of exports after payment of duty which stands duly submitted to the jurisdictional Central Excise office. Applicant has claimed that they were availing actual Cenvat credit on the inputs which are to be used only for the goods to be cleared on payment of duty. This pleading has not been considered by lower authorities especially the certifications from the jurisdictional Superintendent of Central Excise, dated 13-5-2010.
Applicant exporter herein is eligible for rebate in the manner it was granted by the original rebate sanctioning authority subject to verification that applicant had complied with the procedure laid down in C.B.E. & C. Circular No. 795/28/2004-CX., dated 28-7-2004. - Government sets aside both the impugned Orders-in-Appeal and restores the impugned Order-in-Original No. 513/10-11, dated 5-7-2010 subject to condition that applicant had complied with the procedure laid down in C.B.E. & C. Circular No. 795/28/2004-CX., dated 28-7-2004. - Decided conditionally in favour of assessee.
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2012 (12) TMI 976
Waiver of pre deposit - Denial of refund claim - CENVAT Credit - Notification No. 6/2006-C.E. - Held that:- In view of the provisions of the Notification No. 6/2006-C.E. as refund claims of the applicants are already rejected by the lower authorities therefore prima facie we find that the applicants are not entitled for the credit availed of the amount equal to the amount of duty paid in excess in view of the provisions of Notification No. 6/2006-C.E. - applicants directed to deposit 50% of the duty within eight weeks - Partial tay granted.
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2012 (12) TMI 975
Waiver of pre deposit - Opportunity of hearing not granted - Whether the Tribunal was justified in imposing the condition of deposit of ₹ 30 lakhs, in para 8 of impugned order, while allowing the assessee’s appeal and setting aside the order, passed by the Commissioner of Central Excise & Customs, Raipur (Adjudicating Authority), impugned in the said appeal - Held that:- having regard to the controversy involved in the case and the fact that the matter was remanded back to the adjudicating authority, there was apparently no justification on the part of the Tribunal to direct the appellant (assessee) to deposit a sum of ₹ 30 lakhs, in cash, with the adjudicating authority. It was not in dispute that adjudication order was yet to be passed and the matter was remanded only for the purpose of holding enquiry as to whether the assessee was liable to pay the amount demanded from them pursuant to the show cause notice issued by the adjudicating authority. - Let the adjudicating authority give opportunity to appellant (assessee) to file reply to show cause notice under consideration. The reply shall be filed by the appellant (assessee) within two weeks from the date of parties’ appearance before the adjudicating authority on a date fixed by this Court. The Adjudicating authority shall decide the case within three months from the date of filing of reply. No adjournment shall be granted to the appellant (assessee), in case, if they do not file reply to show cause notice within time fixed by this Court. - Decided in favour of assessee.
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2012 (12) TMI 974
Denial of CENVAT Credit - inputs and capital goods used for generation of power - whether the appellant would be eligible for Cenvat credit in respect of inputs and capital goods used in the captive power plant - Held that:- Renusagar Power Plant, which is a captive power plant of the appellant company, together with the cement factory of the appellant company constitute one integrated unit and it is not disputed that except of small quantity of electricity generated being used in the Renusagar township, the remaining quantity is used in the appellant’s factory for production of aluminium. Therefore, the Cenvat credit in respect of capital goods and inputs used in the captive power plant located at Renusagar cannot be denied just because the power plant is located at some distance from the factory.
Since, admittedly, some quantity of electricity generated is used in the township and is not used in the factory of the appellant company for manufacture of excisable goods, to that extent, the input duty credit would not be admissible in view of judgment of the Apex Court in the case of CCE v. Solaris Chemtech Ltd. [2007 (7) TMI 2 - SUPREME COURT OF INDIA]. However, for determining the quantum of input duty credit, which would be inadmissible on this ground, the matter would have to be remanded to the original Adjudicating Authority. - Decided in favour of assessee.
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