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2010 (7) TMI 956
Issues Involved:
1. Penalty under Section 11AC of the Central Excise Act.
2. Interest on differential duty under Section 11AB of the Central Excise Act.
3. Reduction of penalties under Rules 209 and 210 of the Central Excise Rules, 1944.
Detailed Analysis:
1. Penalty under Section 11AC of the Central Excise Act:
The appellant, a 100% Export Oriented Unit (EOU), was found to have used imported raw materials in the manufacture of goods cleared to the Domestic Tariff Area (DTA) while claiming benefits under Notifications 8/97-C.E. and 13/98-C.E., which required the use of only indigenously procured raw materials. The adjudicating authority found that the appellant had suppressed this fact with intent to evade duty and imposed a penalty under Section 11AC. The Tribunal affirmed the demand of duty but vacated the penalties and interest, which was challenged by the Revenue and remanded by the High Court for reconsideration.
Upon reconsideration, the Tribunal held that the appellant had indeed suppressed and misdeclared facts with intent to evade payment of duty. The Tribunal referenced the Supreme Court's judgments in UOI v. Dharamendra Textiles Processors and UOI v. Rajasthan Spinning & Weaving Mills, which mandated penalties under Section 11AC when intent to evade duty was established. Consequently, the Tribunal imposed a penalty equal to the amount of differential duty.
2. Interest on Differential Duty under Section 11AB of the Central Excise Act:
The Tribunal was directed by the High Court to reconsider the interest-related issue under Section 11AB. The appellant argued that they had no intent to evade duty as the declarations were countersigned by the proper officer of Customs. However, the Tribunal found no evidence that the relevant fact of using imported raw materials was disclosed to the department before the investigation. The Tribunal concluded that the appellant's intent to evade duty was evident from the misdeclarations in the invoices. Therefore, the Tribunal held that the appellant was liable to pay interest on the differential duty for the period of delay in payment.
3. Reduction of Penalties under Rules 209 and 210 of the Central Excise Rules, 1944:
The original adjudicating authority had imposed separate penalties of Rs. 25,000/- and Rs. 5,000/- under Rules 209 and 210, respectively. The Commissioner (Appeals) had reduced these penalties, but the Tribunal found no valid reason for imposing any penalties under these rules. Therefore, the Tribunal granted relief against these penalties.
Conclusion:
The Tribunal upheld the demand of differential duty and imposed a penalty equal to the duty under Section 11AC, along with interest under Section 11AB. However, the penalties under Rules 209 and 210 were vacated. The appeal was disposed of with these modifications.
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2010 (7) TMI 955
Issues:
1. Tribunal setting aside Order-in-Original due to goods not being notified under Sec.123 of Customs Act, 1962.
2. Revenue's misc. application for rectification of mistake dismissed by Tribunal.
3. High Court remanding the matter to Tribunal for fresh consideration.
4. Whether Electronic Calculators were notified goods under Notification No. 204-Cus.
5. Imposition of duty liability, fine, and penalty on the appellant for confiscated goods.
Analysis:
1. The appeal was initially allowed by the Tribunal based on the ground that the goods alleged to be smuggled were not notified under Section 123 of the Customs Act, 1962. The Tribunal held that the burden lies on the Department to prove smuggling, which was not done, leading to the Order-in-Original being set aside.
2. Despite the Revenue's misc. application for rectification of mistake, seeking to establish that Calculators were notified goods, the Tribunal dismissed the application. The High Court later found that the Tribunal had erred in not considering the facts and directed a fresh consideration based on the notification produced by the Revenue.
3. The High Court remanded the matter to the Tribunal for a fresh review, emphasizing the need to consider the case of the Revenue in light of the notification. The Tribunal was instructed to reevaluate the case in accordance with the law.
4. Upon reevaluation, the Tribunal found that the Electronic Calculators in question were indeed notified goods under Notification No. 204-Cus. The Tribunal determined that the Calculators were liable for confiscation due to being imported in violation of the law. The appellant was held responsible for duty liability and fine accordingly.
5. The Tribunal concluded that the confiscated goods were liable for penalty and imposed a redemption fine on the appellants. The fine and penalty were calculated based on the value of the goods, with the appellant given the option to redeem the goods on payment of the specified fine. The appeal was partially allowed with modifications to duty liability, fine, and penalty.
This comprehensive analysis covers the key issues addressed in the legal judgment, detailing the Tribunal's decisions, the Revenue's applications, the High Court's directions, and the final determination regarding the confiscated goods and associated penalties.
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2010 (7) TMI 954
Whether examination of all witnesses cited in the complaint is sine qua non for taking cognizance by a Magistrate in a case exclusively triable by the Court of Sessions?
Whether examination of all the witnesses cited in the complaint or whose names are disclosed by the complainant in furtherance of the direction given by the Magistrate in terms of proviso to Section 202(2) is not a condition precedent for taking cognizance and issue of process against the persons named as accused in the complaint and the High Court committed serious error in directing the Chief Judicial Magistrate to conduct further inquiry and pass fresh order in the light of proviso to Section 202(2)?
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2010 (7) TMI 953
Claim of depreciation - block of plant & machinery @ 25% - HELD THAT:- the nature of assets i.e. electrical installation that consists of electrical wires, switches, plugs, cables, MCB box and electrical items, which cannot function independently, rather, this is a part of plant & machinery and it cannot be classified under furniture and fittings. Accordingly, we are of the view that assessee is eligible for depreciation under the block of plant & machinery @ 25%. We allow the claim of the assessee and this issue of the assessee’s appeal is allowed.
confirming the disallowance of interest - HELD THAT:- We find that AO has disallowed interest expenses of ₹ 1,97,226/- on the interest free loan given to others aggregating to ₹ 16,43,558/-. The CIT(A) also confirmed the action of the AO. In view of the facts, once there is surplus share capital and reserve & surplus available with the assessee, the interest on advances cannot be disallowed. Accordingly, we reverse the order of lower authorities on this issue. This issue of the assessee’s appeal is allowed.
CIT(A) in confirming the disallowance of additional depreciation on plant and machinery - The facts in the present case before us are on better footing that the assessee-company’s installed capacity in “made-ups” has increased substantially i.e. more than 25%. From the facts, We also find that the assessee has filed audit report in Form No.3AA under rule 5A as prescribed in respect of “made-ups” division of the assessee-company, whereby the assessee has increased the capacity of bed sheets from 15.60 lakh to 20 lakh in the present year. The capacity is based on number of sewing machines installed in the year under consideration and according to the auditor there has been substantial addition in the number of sewing machines that resulted into increase in the installed capacity substantially. Respectfully following the decision in the case of Hindustan Newsprint Ltd. [2009 (3) TMI 1006 - KERALA HIGH COURT], we allow the claim of the assessee.
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2010 (7) TMI 952
Issues Involved:
The judgment involves the issue of whether the photography services provided by the petitioner as a commercial artist in his studio in Patna constitute works contract under section 3 of the Bihar Finance Act, 1981.
Issue 1: Period 1986-87
The petitioner submitted returns for the period 1986-87, where the assessing officer determined the figures. The petitioner contested that the amount for photography services is not a works contract and not liable for sales tax. Citing the Supreme Court judgment in Rainbow Colour Lab v. State of Madhya Pradesh, the petitioner argued against the imposition of tax on photography services. The court agreed with the petitioner, stating that photography services do not qualify as works contract under the Act. The court found that the State erred in levying sales tax on the photography contracts for this period.
Issue 2: Period 1989-90
Similarly, for the period 1989-90, the petitioner raised a grievance that his photography services should not be subject to tax. The court reviewed the submissions and upheld the petitioner's argument based on the Rainbow Colour Lab case. It was concluded that the photography services provided by the petitioner do not involve the sale of goods and, therefore, cannot be considered a works contract for tax purposes.
Issue 3: Period 1990-91
For the period 1990-91, the assessing officer determined the gross figures for photography activities. The petitioner contested the imposition of sales tax on these contracts as well. The court, after considering the legal precedents and arguments presented, found that the photography services provided by the petitioner do not meet the criteria of a works contract as defined under the Act. Consequently, the court set aside the portion of the orders imposing sales tax on the photography contracts for this period.
Conclusion:
In conclusion, the High Court of Patna ruled in favor of the petitioner, holding that the photography services provided by the petitioner in his studio in Patna do not fall under the category of works contract as per the Bihar Finance Act, 1981. The court found that the State erred in imposing sales tax on the photography contracts for the periods 1986-87, 1989-90, and 1990-91. As a result, the court allowed the writ petition and set aside the orders of the assessing officer that imposed sales tax on the photography contracts for the mentioned periods.
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2010 (7) TMI 951
Issues:
1. Setting aside the order of remand for verification of place of business and registration of selling dealer.
2. Legality of deletion of surcharge and penalty by the Tribunal.
Issue 1:
The Appellate Assistant Commissioner remitted the matter for liability ascertainment, which the Tribunal set aside based on legal precedents. The key question was whether the respondent was entitled to tax exemption for a second sale. The Revenue argued that since the first sale was not by a registered dealer, the exemption for the second sale should not be allowed. The contention was that the seller's registration was retrospectively canceled, making the purchase by the respondent from an unregistered dealer invalid. The court referred to a previous decision stating that if a sale is taxable and the respondent's sale is a second sale, exemption can be claimed. The court rejected the argument that sales by unregistered dealers are not taxable, emphasizing that all sales by dealers engaged in business are taxable. The court held that if there is a prior sale in the state, subsequent sales cannot be taxed as second sales. As the questions raised were covered by the previous decision, the court upheld the Tribunal's order, ruling against the Revenue's appeal.
Issue 2:
The court found no grounds to interfere with the Tribunal's decision based on the legal principles established in the previous judgment. As the questions of law raised in the revision petition were directly addressed by the earlier decision, the court dismissed the tax case revision, stating that it failed and no costs were awarded.
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2010 (7) TMI 950
Whether the revisional authority was justified in interfering with the order of the appellate authority which had directed adjustment of tax paid under section 4(1) of the Karnataka Special Tax on Entry of Certain Goods Act, 2004, when the assessee was not claiming any benefit in pursuance of the judgment of this court which has struck down the charging section 3 of the said Act?
Held that:- The appellate authority on the admitted facts of this case, held that there is no prohibition under the Act for such adjustment when section 41 specifically provides for adjustment. The appellate authority directed the assessing officer to give the benefit to which the assessee is entitled to under section 4(1) of the Act. In the assessment order, the figures are quantified. It discloses what is the amount paid under the Act, what is the amount payable under the KST Act and what is the amount excess paid. The excess paid is either to be adjusted towards any tax liability or to be refunded to the assessee. Hence, the order passed by the appellate authority was legal and valid.
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2010 (7) TMI 949
Whether the third proviso to section 5(3)(a) of the Karnataka Sales Tax Act, 1957 is attracted to the facts of this case?
Held that:- The transactions referred to are neither sham or unreal. Though we could see that these three companies are floated with the intention of avoiding payment of tax, as long as the said act is within the frame work of law and is not a sham transaction, the benefit of the law or the loopholes in the law would enure to the benefit of the assessee. After seeing how this loophole has been exploited within the four corners of law, the Parliament has promptly now amended the law plugging the loophole. Therefore, by any judicial interpretation we cannot read it into the section which was not intended by the Parliament at the time of enacting this provision. Therefore, the order passed by the Tribunal is in consonance with the law of the land. The substantial question of law raised in this appeal is answered against the Revenue and in favour of the assessee.
In so far as the assessment year 1991-92 is concerned, the Tribunal without proper application of mind has held the said assessment order is barred by limitation. It is not in dispute that there was an order for deferment under section 12(6) of the Act which saved limitation and, therefore, that portion of the order of the Tribunal is liable to be set aside and in favour of the Revenue. As the Tribunal has remanded the matter back to the assessing officer for reassessment after carefully scrutinizing the factual aspects of the case, in doing so the assessing officer shall not take into consideration the third proviso to section 5(3)(a) of the Act again and is at liberty to pass appropriate orders excluding the said portion.
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2010 (7) TMI 948
Maintainability of appeal - Non-deposit of 25% tax - section 62(5) of the PVAT Act - jurisdiction - Held that: - In view of undisputed position that the petitioner has paid more than 25 per cent of the amount, the view taken by the appellate authority that 25 per cent should be worked out on the balance amount of tax due, cannot be accepted - matter remitted to the appellate authority for a fresh decision on the merits - appeal allowed by way of remand.
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2010 (7) TMI 947
Whether the nature of the transactions between the State Government and distributors in relation to lottery tickets is not in the nature of sale?
Held that:- The value of lottery tickets without the promotional and marketing activity of the petitioner is 70 paise, which by reason of marketing and promotional activity of the petitioner becomes ₹ 1 when the same reaches the ultimate purchaser of lottery tickets. The petitioner thus makes a value addition to the activity of organizing or conducting or promoting games of chance as that of lottery by the State Government from 70 paise to ₹ 1 by providing marketing and promotional service thereto by its activities as above. There is thus value addition by the petitioner in relation to game of chance, organized, conducted or promoted by the client of the petitioner, namely, the State Government.
It was not urged that the residuary clause contained in List I of the Seventh Schedule to the Constitution of India or entry 92C thereto does not authorize levy of service tax on service provided in relation to an activity which though may not be service or which may be res extra commercium, but a legal and permissible activity. Appeal dismissed.
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2010 (7) TMI 946
Levy tax on "direct-to-home" (DTH) broadcasting services - Held that:- The amendments incorporated by the Uttarakhand Legislature through the Uttarakhand (the Uttar Pradesh Entertainments and Betting Tax Act, 1979) (Amendment) Act, 2009, notified on March 16, 2009, were fully within its legislative competence, and that, the aforesaid amendments did not encroach upon an area over which the Parliament exclusively had the authority to legislate. The levy of entertainment tax on the petitioner-company under the Entertainments Act, 1979 being fully justified, the challenge raised by the petitioner to the same is liable to be declined, and as such, is hereby declined. W.P. dismissed.
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2010 (7) TMI 945
Issues:
Refund of excess payment under West Bengal Taxation Tribunal Act, 1987.
Analysis:
The petitioner, a company under the Companies Act, sought intervention regarding non-receipt of refund of &8377; 7,86,330 from the Sales Tax Officer for the fourth quarter ending on March 31, 2007. A demand notice showed the excess payment, but the assessment order stated a different amount payable, attributed to a clerical error. The petitioner requested a refund in accordance with the West Bengal Value Added Tax Act, 2003 and its rules. The assessing authority was required to issue a refund adjustment order for excess payments, allowing adjustments or refunds as per the rules. The petitioner requested a refund in August 2009, but it was withheld due to a revision petition challenging the assessment decision. The Tribunal found the reasons for withholding the refund unconvincing and directed the respondents to refund the amount by a specified date, irrespective of the pending revision petition. The petition was allowed with no costs incurred.
This judgment revolves around the issue of refunding an excess payment made by the petitioner under the West Bengal Taxation Tribunal Act, 1987. The discrepancy between the demand notice and assessment order was attributed to a clerical error, which the petitioner did not contest. The petitioner followed the prescribed procedure under the West Bengal Value Added Tax Act, 2003 and its rules by requesting a refund and highlighting non-adjustment of excess amounts. Despite the petitioner's request in August 2009, the refund was withheld due to a pending revision petition challenging the assessment decision for the same period. The Tribunal found the reasons for withholding the refund unconvincing and directed the respondents to refund the excess amount by a specified date, emphasizing that the pending revision petition should not impact the refund process. The judgment underscores the importance of adhering to statutory refund procedures and timely processing of refunds to taxpayers, irrespective of ongoing disputes or petitions challenging assessments.
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2010 (7) TMI 944
Issues:
Challenge to order of Tamil Nadu Sales Tax Appellate Tribunal regarding appeal filing timeline and condonation of delay.
Analysis:
The case involved a tax case revision filed by the Commercial Tax Department against the order of the Tamil Nadu Sales Tax Appellate Tribunal dated December 3, 1992. The assessment year in question was 1985-86, with an assessment order dated May 31, 1991. The issue revolved around the timeline for filing an appeal under section 31 of the Tamil Nadu General Sales Tax Act, 1959, and the power to condone delays. The Appellate Assistant Commissioner had no authority to condone delays if the appeal was filed beyond thirty days. However, an amendment in December 1986 allowed for an additional fifteen days to be granted for filing an appeal beyond the initial thirty-day period.
The respondent filed the appeal on January 27, 1992, which was beyond sixty days from the assessment order date. The Appellate Assistant Commissioner dismissed the appeal based on this delay. The Tribunal, on appeal, directed to determine if there was sufficient cause for the delay in filing the appeal. The High Court noted that the amended Act 76 of 1986 was in effect on the date of filing the appeal, and thus, the provision allowing for an extended period of fifteen days for condonation of delay applied. The Court held that the legal position based on the amended section 31 by Act 76 of 1986 should prevail, allowing for the extended period for condonation of delay. Therefore, the Court set aside the Tribunal's order and allowed the revision petition, with no costs incurred.
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2010 (7) TMI 943
Whether the freight charges collected by the assessee under the invoice as total added value (including transportation charges) is liable to tax under section 3(1) of the Act?
Held that:- The position is clear that the dealer collects freight charges as part of total order value. Though it is specifically mentioned what is the cost component to the said transportation charges, collecting the value before effecting sale of the goods, when sale of goods becomes complete only after the delivery of the goods, therefore, it becomes part of taxable turnover. If after transfer of title to the goods by delivery of the goods, for which he has already collected the price of the goods and after delivery if he receives the transportation charges, then the said amount does not form part of the taxable turnover as it is not a part of the sale consideration or paid prior to sale of the goods. That appears to be a clear manifestation of the intention by the Legislature as contained in various definitions referred to above and the clarifications issued by the Government. In that view of the matter, the order passed by the revisional authority is strictly in accordance with law, whereas the appellate authority was carried away by the legal position prior to the enactment of the Act and thus he got confused himself without looking into the express provisions contained in the Act. The revisional authority was therefore justified in interfering with the order as the order was prejudicial to the remedy. Appeal dismsissed.
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2010 (7) TMI 942
Order passed by the Additional Commissioner, Trade Tax, Aligarh, under rule 6(5) and 6(7) of the Rules by which he has appointed the Assistant Commissioner (Assessment), Trade Tax, Aligarh as the assessing authority of the petitioner challenged
Held that:- So far as the exercise of the power under rule 6(5) and rule 6(7) is concerned, we are of the view that the said power can be exercised on a consideration of the prima facie material that the person is a dealer. Whether a person was only a transporter or he was carrying on business of buying and selling of goods also and is a dealer, is the matter of final adjudication which can be adjudicated by the assessing authority in the assessment proceedings. In the assessment proceedings, it will be open to the petitioner to adduce the evidence in support of its claim. Therefore we are of the view that the order passed by the Additional Commissioner under rule 6(5) and 6(7) is a legal order and does not require interference. Appeal dismissed.
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2010 (7) TMI 941
Whether the petitioner which is a registered dealer with turnover below ₹ 10 lakhs is entitled to collect tax without obtaining a prior permission in terms of rule 10A of the Rules?
Held that:- We allow the O.T. Revision case by declaring that the collection and remittance of tax by the petitioner who is a registered dealer without prior permission does not involve violation of any provisions of the Act and Rules and so much so, no penalty is leviable either under section 67(2) or under section 72 of the KVAT Act. Consequently the Tribunal's order confirming the orders of the lower authorities is quashed. The penalty levied will stand cancelled and assessment will be modified granting input-tax credit to the petitioner.
We hold that the form prescribed is not in order and consequently State or the Commissioner as the case may be, is directed to prescribe form in the place of form 1F under rule 10A for suiting the provisions of section 6(1A)(b) of the Act.
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2010 (7) TMI 940
Whether the tax payable under section 6B of the Act would be in addition to tax payable under section 5B of the Act and that sections 5B and 6B are independent charging sections of the Act and a works contractor is liable to tax under both the charging sections?
Held that:- The tax paid by the registered dealer on the turnover which is the subject-matter of tax under section 5B of the Act and tax paid by the registered dealer which is the subject-matter of clause (x) of the proviso to section 6B are to be excluded from the purview of section 6B of the Act. The resale tax under section 6B of the Act is payable only on the turnover over and above those two turnovers. In that view of the matter, the order passed by the Commissioner runs counter to the express provisions contained in section 6B and cannot therefore be sustained. Appeal allowed.
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2010 (7) TMI 939
Whether the goods have not been sent to the own depot by way of stock transfer and, in respect of the export, the required certificates have not been furnished?
Held that:- There was substantial compliance of rule 77(1)(a) and rule 77(3) of the Rules and, therefore, there was proper service of the notices under section 21(1) on the petitioner in accordance with rule 77. From the perusal of the record it appears that the proceedings under section 21 have been initiated on the basis of information received from STO (SIB), Muzaffarnagar, based on the survey made at the premises of Tomar Transport Co., Shamli Road, Muzaffarnagar, wherein incriminatory materials were found, which have been referred in the order. Therefore, it cannot be said that there was no material to initiate the proceedings. It is the settled principle of law that in the writ jurisdiction under article 226 of the Constitution, this court cannot examine the sufficiency of the material. Appeal dismissed.
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2010 (7) TMI 938
Order, dated February 3, 2010 (annexure E) passed by the second respondent challenged on the ground of without the authority of law and without jurisdiction
Held that:- As the pre-requirement for making further reassessment is not forthcoming from the impugned order, I have entertained these petitions notwithstanding the availability of the alternative remedy of filing an appeal.
In the result, the impugned order is quashed. Further, it is made clear that no opinion whatsoever is expressed on the tax liability of the petitioner. Needless to observe that the prescribed authority can always exercise the power conferred upon it under section 39(2) of the said Act.
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2010 (7) TMI 937
Whether the assessee has collected sales tax on the subsidy and has not passed on the said collected tax to the Department as contended by the Department?
Held that:- The order passed by the assessing officer directing the assessee to make good the difference in the amount which they have collected and which they have actually paid is strictly in accordance with law. The Tribunal committed a serious error in proceeding on the assumption that tax is collected on the net amount excluding the subsidy. The amount of tax is collected before giving deduction to the subsidy. Thus though subsidy amount is deducted but tax collected on subsidy is not deducted. Therefore the difference in amount which the assessee has no right to retain is now ordered to be paid to the Department by the forfeiture order. Therefore, the Tribunal was not justified in interfering with the well considered order passed by the first appellate authority as well as the assessing officer. In that view of the matter, the order of the Tribunal cannot be sustained. Hence the order passed by the assessing officer as confirmed by the appellate authority is restored.
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