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Showing 401 to 420 of 1287 Records
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2014 (11) TMI 889
Interpretation of section 15(6) Gift Tax Act r.w. Rule 11A of income tax Rules – treatment of difference in sales transaction as Gift - Bonafide transaction - Reference to Valuation officer - Whether the Tribunal is right in deleting gift tax levied by invoking the provisions of section 4(1) of the Gift Tax Ac and in doing so, erred in interpreting section 15(6) read with Rule 11A of the Income Tax Act and the Rules – Held that:- Provisions of sec. 4(1)(a) of the G.T. Act cannot be invoked in case of transactions which are bonafide and no attempt of evasion of tax is discernible – in Commissioner Of Gift-Tax, Tamil Nadu-I Versus Indo Traders And Agencies (Madras) Pvt. Limited [1979 (6) TMI 8 - MADRAS High Court] it has been held that unless the price realised for transfer was such as to shock the conscious of the Court, if would not be possible to hold that the transaction is otherwise than for adequate consideration.
Rule 11A of the GT Rules as well as rule 3B of the WT Rules fairly bring out the legislative intention for accepting the declared value of an asset for the purposes of wealth tax and gift assessments if the difference between the declared value and the fair market value is less than 33 1/3% or ₹ 50,000 - the market value as determined by the DVO under the W T Act as on 31.3.84 is ₹ 178.49 lakhs whereas the realised value shown by the assessee is ₹ 143.50 lakhs - The difference being merely ₹ 35 lakhs which is much less than the percentage prescribed in Gift tax Rules or Wealth-tax Rules - the transaction involving sale of Kashmir House by the assessee to its 100% subsidiary is a bonafide transaction and does not reflect any attempt of tax evasion on the part of the assessee company - provisions of sec. 4(1)(a) of the GT Act cannot be invoked for treating the sale transaction as a deemed gift – thus, the order of the Tribunal is upheld – Decided against revenue.
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2014 (11) TMI 888
Disallowance u/s 40(b) - Whether the dis-allowance of the finance, commission paid to proprietary concern of the partner under provisions of Section 40(b) was justified – Held that:- Section 40(b) deals with the commission or interest etc. made to a partner and not to an individual, where amounts were advanced by such individual from his personal fund - Shri. Doshi was the sole proprietor of Saurashtra Metal Supplying Co. and Jayant Trading Company, which provided financial assistance to the assessee - the Tribunal held that what was paid to Mr. Doshi, whether, it is ‘Commission’ or ‘interest’, is liable to be disallowed u/s 40(b) - the advances made by Mr. Doshi to the assessee firm were from his personal fund and the commission or interest paid by the assessee to Shri. Doshi was in his individual capacity and not as a partner – it was not liable to be disallowed in view of the clear provisions of Section 40(b).
In the case of Trust also, which provided financial assistance to the assessee, Shri. Doshi was one of the trustees and on the basis of the same, the AO hold that the amount was paid by the assessee to one of the partners, i.e. Shri. Desai, which is also quite contrary – relying upon Chhotalal And Co. Versus Commissioner Of Income-Tax, Gujarat [1984 (4) TMI 40 - GUJARAT High Court] - the AO could not have disallowed the amounts paid by the assessee to Shri. Doshi – Decided in favour of assesee.
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2014 (11) TMI 887
Interest on investment in shares deleted - Notional interest attributable to investment in shares - Whether the Tribunal was right in confirming the order passed by the CIT(A) deleting the interest attributable to investment in shares – Held that:- Following the decision in ACIT Versus EMTICI ENGG. LTD. [2014 (11) TMI 858 - GUJARAT HIGH COURT] – the Tribunal was justified in granting benefit of the earlier years’ orders to the assessee, which are final - the issue involved was never carried in appeal before the Court and therefore, the earlier years’ orders, on which the Appellate Tribunal placed reliance, had become final – Decided against revenue.
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2014 (11) TMI 886
Relief u/s 80HH and 80I - Whether the Tribunal is right in directing to allow separate relief under sec. 80HH and 80I – Held that:- As decided in DY. CIT Versus Versus MOTI POLYMERS PVT. LTD. [2011 (6) TMI 725 - GUJARAT HIGH COURT] – the Tribunal had rightly placed reliance on JP. Tobacco Products (Pvt.) Limited Versus Commissioner Of Income-Tax [1996 (8) TMI 29 - MADHYA PRADESH High Court] - The Appellate Tribunal is right in law in directing to allow separate relief u/s 80HHA and 80I – Decided against revenue.
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2014 (11) TMI 885
Matter remitted by Tribunal to AO for fresh consideration – Whether the assessee's statement that the purchase of raw materials for construction of the building complex was made from genuine parties – Held that:- Since the Tribunal has made an open remand for de novo consideration of the materials that may be placed by the assessee, the original authority as well as the appellate authority was rightly of the view that no material was produced by the assessee at the first instance - Therefore, on remand, it is incumbent on the part of the officer to verify the genuineness of any document that may be produced by the assessee, in the light of what has been recorded earlier by the original authority and the appellate authority - The de novo proceedings should not be taken as a ruse by the assessee to fill up the lacuna and create records to supplement for what was missing earlier - The original authority, on remand, should go into the explanation submitted by the assessee on merits and the genuineness of the purchases alleged to have been made and thereafter decide the issue for the relevant assessment years – thus, there was no reason to entertain the appeal – Decided against revenue.
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2014 (11) TMI 884
Power to invoke section 263 – Direction made by the Tribunal to CIT for adding back the provision for bad and doubtful debts – Whether the Tribunal was right in holding that the jurisdiction exercised u/s 263 of the Act to treat the provision declared as diminution in the value of shares/assets to be added back under Clause (c) of the Explanation to Section 115 JB of the Act - Held that:- In COMMISSIONER OF INCOME-TAX Versus MAX INDIA LTD. [2007 (11) TMI 12 - Supreme Court of India] it has been held that while dealing with the retrospective operation of amendments and the exercise of powers under Section 263 of the Act, the phrase "prejudicial to the interests of the revenue" u/s 263 has to be read in conjunction with the expression "erroneous" order passed by the AO - Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the revenue - the mechanics of the section have become so complicated over the years that two views were inherently possible - Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 - though the amendment is retrospective, in this case, the Revenue cannot have the benefit of the same while proceeding u/s 263 – Decided against revenue.
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2014 (11) TMI 883
Determination of Profit Level Indicator (PLI) - Whether Return on Capital Employed (RoCE) is correct PLI under the facts and circumstances of the case – Held that:- There is commonality of the transaction with AE and Non-AEs and due to such commonality it is not practical to compute separate capital employed or profitability in respect of transactions with AEs - Following the decision in Gold Star Jewellery Design Pvt. Ltd. vs. ITO [2014 (11) TMI 904 - ITAT MUMBAI] - as per computation made by the assessee which is based on the figures given in TPOs order, the arithmetical margin of comparable will be 8.60% and assessee’s margin on the basis of OP/TC will be 10.63% and as the PLI of the assessee is higher than the arithmetical margin of the comparables no TP adjustment can be made in respect of international transactions on account of application of TNMM - OP/TC has been accepted by the TPO and to support such contention TPO’s order for A.Y 2009-10 and 2010-11 are enclosed in the paper book - in view of principle of consistency also different method cannot be adopted for the year under consideration to compare PLI particularly in absence of distinguishable facts and circumstances existing for justification of the same - the calculation of PLI on the basis of OP/OC and by adopting that method the transaction of the assessee is found to be at arms length is approved – Decided in favour of assessee.
Transfer pricing adjustment – Non-charging of interest from AE – Held that:- The observation of CIT(A) is incorrect as the approach of the assessee in non-charging the interest from its AE and non-AEs is uniform except there being some more delay in receiving the payment from AE - The uniform approach is depicted in the fact that either the assessee is charging interest from AE and non-AE and not charging any interest from them - The approach of the assessee is uniform so as it relates to non-charging of interest from AEs as well as non-AEs – relying upon DCIT vs. Indo American Jewellery Ltd. [2012 (2) TMI 366 - ITAT MUMBAI] wherein it has been held that there being complete uniformity in the act of assessee in not charging interest from both the AE and Non-AE debtors for almost equal delay in realization, no such adjustment can be made as assessee is not avoiding any tax by intentionally not charging any interest from the AEs - if there is a complete uniformity in the act of the assessee in not charging interest from both the AE and non-AEs debtors and the delay in realization of the export proceeds in both the cases is same then the Tribunal was right in deleting the notional interest on outstanding amount of export proceeds which were realized belatedly - no notional interest can be added to determine the ALP to the extent of delay of 173 days from AE transaction as to that extent, in any case, (even according to CUP method), no adjustment can be made.
What would be the interest rate applicable for remaining 20 days – Held that:- The calculations of the assessee have not been disputed by the Revenue at any stage of the proceedings - addition, if any, can be made only to the extent of ₹ 9.70 lacs as calculated above and this amount will also fall within the +/-5% range, therefore, no addition can be made as transfer pricing adjustment even on account of non-charging of interest for belated payment received from AEs - no addition on account of TP adjustment in the present case is called for and the addition confirmed by CIT(A) is set aside – Decided in favour of assessee.
Computation of book profits u/s 115JB – Inclusion of profits u/s 10A – Held that:- CIT(A) has rightly granted relief to the assessee on the basis of Genesys International Corpn. Ltd. vs. ACIT [2012 (12) TMI 491 - ITAT MUMBAI] the benefits which are to be provided to the newly established unit in SEZ as per section 10AA of the Act will also be available to the existing units in SEZ - sub-section (6) to section 115JB was also inserted providing that provisions of section 115JB shall not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as the case may be. Hence, income of units located SEZ will not be included while computing book profit for the purpose of MAT as per section 115JB(6) of the Act – Decided against revenue.
Claim of assortment charges – Held that:- CIT(A) rightly was of the view that the AO also in his order did not mention the exact circumstances under which he applied section 40A(2)(b) as requirement of the section is that AO has to form an opinion that expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accrued to him there from so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction - before AO certain details were submitted and it was shown that during the year under consideration quantum of small diamonds were in large numbers - CIT(A) rightly granted relief only to the extent of 50% - Decided against revenue.
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2014 (11) TMI 882
Denial of exemption u/s 11 – Scope of term charitable purpose u/s 2(15) - Assessee was constituted under the Act of the Government for making better planning and regulating development and use of land in planning areas delineated for the purpose, preparation of regional plans/master plans and implementation thereof and also for guiding and directing the planning and development process in the State - Held that:- No activity can be carried on efficiently, properly unless and until it is carried out on business principle but it does not mean that the provision is misused in any manner under the garb of charity and any institution be allowed to become richer and richer under the garb of charity by making it a non-tax payable organization – in Additional Commissioner of Income-Tax, Gujarat Versus Surat Art Silk Cloth Manufacturers Association (And Other References) [1979 (11) TMI 1 - SUPREME Court] it was held that what is predominant object of the activity- whether, it is to carry out a charitable purpose and not to earn profit-the purpose should be that it should not lose its charitable character - the similar activities are performed by big colonizers/developers who are earning a huge profit - If this income is exempted u/s. 11, then we will open a pandora box and anybody will claim the exemption from tax - If the activities of the assessee are analysed, it has turned into a huge profit-making agency for which it is taking money from the general public - no charity is involved and if any institution of public importance like schools, community centers are created/developed, the assessee is charging the cost of it from the public at large and the money is coming from the coffer of the Government - at best, the assessee can be said to be an authority created to help it to achieve certain objects.
The assessee acquires land at nominal rates and after developing the same, the same land (is sold) on high profit which cannot be said to be a charitable activity - even just for argument sake, if registration is granted, then every private colonizer will claim charity - The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the commercial developers/builders and if certain facilities like parks, community center, school are provided is not only basic requirement, rather a tool of attracting the investors wherein the hidden cost of these facilities is already included - In the absence of these facilities, normally the purchaser may not invest and the prices may be less - the claim of the assessee has been rightly rejected by the CIT(A) – the order of the CIT(A) is upheld – Decided against assessee.
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2014 (11) TMI 881
Application of Chapter X - Transfer pricing adjustments - International Transaction or not - Validity of SCN without jurisdiction – Additions towards shortfall in value of equity shares - TPO further held that this difference between the ALP and the issue price (including premium) was required to be treated as deemed loan given by the Petitioner to its holding company and deemed interest on such deemed loan at ₹ 88.35 Crores was also treated as interest income. - Held that:- Issue of shares at premium by the Petitioner to its non-resident holding company does not give rise to income in an International Transaction.
The application of Chapter X of the Act to such transaction is without jurisdiction - the sine qua non to apply Chapter X of the Act would be arising of Income under the Act out of an International Transaction - This income should be chargeable under the Act, before Chapter X can be applied - The definition of income does not include within its scope capital receipts arising out of capital account transaction unless so specified in Section 2(24) of the Act as income - There is no charge in the Act to tax amounts received and/or arising on account of issue of shares by an Indian entity to a nonresident entity in Sections 4,5,15,22,28,45 and 56 of the Act.
This is as it arises out of Capital Accounts transaction and, therefore, is not income - Chapter X of the Act does not contain any charging provision but is a machinery provision to arrive at ALP of a transaction between Associated Enterprises – and Chapter X of the Act does not change the character of the receipts but only permits re-quantification of income uninfluenced by the relationship between the Associated Enterprises - The order of reference made by AO to TPO is set aside to the Show Cause Notice dated 17 January 2014 issued by the TPO - and the order dated 29 January 2014 passed by the TPO under Section 92CA(3) of the Act – Decided in favour of assessee.
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2014 (11) TMI 880
Default assessment under Section 32 of the DVAT Act - period of limitation - extended period of six years in terms of proviso to Section 34(1) of the DVAT Act - scope of the term 'reason to believe' - Held that:- on reading of the default assessment order, we do not find that there is any averment or assertion that there was concealment, omission or failure on the part of the appellant assessee to furnish material particulars. The default assessment order dated 11.05.2011, therefore, will falter and not meet the statutory requirements. It is not the case of the respondent-revenue nor has it been asserted that there is another document or note, recording "reason to believe" by the Commissioner/authority.
The appellant assessee had filed objections under Section 74 of the Act before the Objection Hearing Authority and had specifically pleaded that the default assessment was barred by limitation.
The Objection Hearing Authority, cannot record "reason to believe". These, as per the statute, should be recorded by the Commissioner/competent authority and that too, before or at the time of passing of the default assessment order under section 32 of the DVAT Act. The reason is simple that the power conferred must be exercised in the manner prescribed and mandated, especially when it is a jurisdictional pre-condition and requirement. Section 34(1) postulates and prescribes upper time limit for passing of the default assessment order as four years, but extends the said period to six years on satisfaction of pre-conditions laid down in the proviso. This extended period is an exception and not the rule. So pre-conditions in the proviso must be satisfied before or with the passing of an order under Section 32 and not afterwards or by the Objection Hearing Authority.
The default assessment order as recorded does not disclose and states as to why and for what reason the Commissioner/competent authority had formed the belief that there was concealment, omission or failure to disclose full material particulars. In the absence of satisfaction of the said condition and requirement, the extended period of six years cannot be invoked to pass the default assessment order. - Decided in favor of assessee.
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2014 (11) TMI 879
Rejection of applications for exemption from payment of sales tax - Punjab General Sales Tax Act, 1948 - Scope of the term 'Unit' - revenue submitted that petitioner being a registered dealer has been granted exemption from payment of sales tax amounting to rupees six crores vide exemption certificate dated June 3, 1993. The applications for availment of sales tax incentive in respect of other two branches of the petitioner have been rightly rejected as they are not a "unit" within the meaning of clause (xxvii) of rule 2 of the 1991 Rules.
Held that:- The Department of Industries and Commerce having exercised its mind, and having granted the final eligibility certificate (which was valid at all material times), the Commercial Taxes Department could not go beyond the same. More so when the Commissioner, Sales Tax, had accepted the eligibility certificate issued to the appellant and had separately notified the appellant's eligibility for exemption under the 1993 G. O. In these circumstances the DCCT certainly could not assume that the exemption was wrongly granted nor did he have the jurisdiction under section 20 of the State Act to go behind the eligibility certificate and embark upon a fresh enquiry with regard to the appellant's eligibility for the grant of the benefits. - sales tax authorities had no jurisdiction to call in question grant of eligibility certificates issued by the District Industries Centre. - Decided in favor of assessee.
Scope and purpose of the term 'Unit' - Scanning of the purpose with which the 1989 Policy and 1991 Rules have been formulated - Held that:- The definition of the term "unit" in a restrictive manner as has been sought to be canvassed by learned State counsel does not spell out from the reading of rule 2(xxvii) defining "unit" and justify the tenor of the policy and the rules framed. Under the circumstances, the State could not restrict the benefit of 1991 Rules to only one unit of the petitioner. - respondent No. 4 directed to issue eligibility certificate to the petitioner in respect of two other units as well - Decided in favor of assessee.
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2014 (11) TMI 878
Settlement of arrears of tax - TNVAT / TNGST - Deferral scheme of sales tax - Cancellation of scheme and demand of tax for the entire period - option of settlement of case - Held that:- we have seen as to how the Settlement Act works and now the issue to be considered is as to whether the petitioners applications were dealt with as per the procedure contemplated under the Act. Before proceeding further, it has to be pointed out that the applications filed by the petitioners were kept pending for two years and there is no reason assigned in the counter affidavit for such a long delay and the delay remains unexplained.
The issue to be decided at the first instance is whether these applications were verified as per the provisions of Section 6(1). It is only thereafter the question of considering the further amount payable would arise under Section 6(2). This again is a procedural infirmity, which goes to the root of the matter.
In a case, where the designated authority is not in possession of the relevant record, obviously he has to direct the petitioner/applicant to produce the records. In such circumstances, an opportunity of personal hearing is inevitable and in fact the disputed question of facts can very well be thrashed out if the assessee is called upon by the designated authority to state as to how they computed the amount based on their books of accounts or records. Therefore, though the statute does not prohibit an opportunity of personal hearing while considering the application under Section 6(1), going by the scheme of the Act, there is no error on the part of the designated authority to afford an opportunity of personal hearing so as to ensure fairness and transparency in procedure and also to satisfy the cardinal rule, Audi alteram partem.
In view of the above procedural defects, the impugned orders passed by the designated authority rejecting the petitioner's applications are liable to be set aside with a direction to the designated authority to re-consider the entire matter in terms of the scheme of the Act.
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2014 (11) TMI 877
Capital Investment Incentive (General) Scheme 1995-2000 - sales tax incentives as measures to attract investments into such backward areas with a view to generate greater employment in less industrially developed areas - Gujarat Sales Tax Act, 1959 - recovery of sales tax - Held that:- When it has been found by the State Level Committee that by condoning the break in production to the petitioner, the purpose and object of the scheme is not likely to be achieved i.e. generating employment in the backward area and thereafter when the application of the petitioner for condonation of break in production has been rejected, the same is not required to be interfered with in exercise of power under Article 226 of the Constitution of India.
Now, so far as the contention on behalf of the petitioner that impugned decision / communication dated 28.6.2006 is contrary to the interim direction issued by this Court issued in its order dated 5.5.2006 is concerned, the aforesaid has no substance. It is the case on behalf of the petitioner that while directing the State Level Committee to reconsider its earlier decision, the Division Bench in its interim direction / order dated 5.5.2006 specifically directed the State Level Committee not to consider the factum of stoppage of production subsequently and the unit being closed subsequently and despite the same while taking the decision which has been communicated on 28.6.2006 the State Level Committee has taken into consideration the subsequent closure of the unit and therefore, the same is not permissible and therefore, the impugned order / decision is against the interim direction issued by this Court.
Decision of Supreme Court in the case of Mangalore Chemicals and Fertilizers Limited [1991 (8) TMI 83 - SUPREME COURT OF INDIA] distinguished wherein it was held that, non fulfillment of requirement for benefit of exemption was only formal and procedural and not fatal to the application for grant of permission. - In the present case non compliance of the conditions cannot be said to be formal or procedural. - Decided against the assessee.
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2014 (11) TMI 876
Classification of service - activity of shooting the programme prepared by the advertising agency - Advertising Agency Service or Video Tape Production Services - Held that:- Revenue wants to classify the activity undertaken by the Respondent under Advertising Agency Service. As per the provisions of Section 65 (53) of the Finance Act, 1994, advertising agency means any person engaged in providing any service connected with the making preparation, display or exhibition of advertisement and includes an advertising consultant. In the present case, the Respondents are registered with the Revenue authorities as provider of Video Tape Production Service with effect from 7.8.2001 and paying appropriate service tax. The activity undertaken by the Respondent is not connected with the preparation, display or exhibition of advertisement. The respondents are only shooting the programme prepared by the advertising agency. Hence the activity does not fall under the category of advertising agency service.
In respect of limitation also we find that the Respondents are registered with the Revenue as provider of Video Tape Production Service since beginning and paying appropriate service tax by filing statutory returns. Therefore the allegation of suppression with intent to evade payment of service tax is also not sustainable - Decided against Revenue.
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2014 (11) TMI 875
Maintainability of writ - Application for issuance of Writ of Prohibition - service tax liability was confirmed and order in original was passed - Prohibition on the respondents from levying and collecting service tax on the transfer of right to use copyright - Liability to pay service tax on copyright service - service tax on the royalty charges - Held that:- Petitioner having already agitated their rights before the Tribunal with regard to the earlier period was not entitled to maintain a Writ Petition before this Court, when show cause notice was issued for the subsequent period. That apart, the issue as to whether service tax is liable to be paid on the nature of transaction done by the petitioner with its group companies, whether the logo which is registered under the Copy Right Act was used as an artistic work or merely with the purpose to show that the products marketed by their group companies also belong to the TTK group and whether in that regard, it was in the nature of a trade mark are all issues which involve adjudication of disputed questions of fact. These issues cannot be permitted to be raised for being adjudicated in a Writ Petition. Issue raised by the petitioner being an issue relating to classification, there is a clear bar of jurisdiction imposed under the statute if even entertaining an appeal as against the order passed by the Tribunal as the appeal shall lie only to the Supreme Court. - Decided against assessee.
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2014 (11) TMI 874
Commercial or industrial construction service - Whether the appellant is liable to pay service tax on the ground that appellant has provided commercial or industrial construction service in respect of cargo agent building constructed by them for M/s. GMR Hyderabad International Airport Ltd. - Held that:- According to Aircraft Act, 1934, aerodrome means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures thereon or appertaining thereto. She submits with the help of a diagram that cargo agent building constructed by them is appertaining to the parking area of cargo aircrafts and therefore is covered by the definition and therefore is to be excluded from the definition of airport services for payment of service tax. She also relies upon the decision in the case of Archistructural Constructions India Pvt. Ltd. Vs. CCE, Coimbatore [2011(22) STR 663(Tri. Chennai)] wherein it was held that air catering unit constructed at the airport can be considered as part of airport and excluded. - after going through the diagram and the submissions made, we find that prima facie case is in favour of the assessee - Stay granted.
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2014 (11) TMI 873
Valuation of service - Whether the value of free supply of cement, steel etc. is required to be added to the gross amount charged in providing the commercial or industrial construction taxable service to compute the assessable value for the purpose of service tax - Held that:- Following decision of Bhayana Builders (P) Ltd. vs. CST, Delhi reported in [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] - Decided in favour of assessee.
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2014 (11) TMI 872
Valuation of goods - inclusion of the value of diesel supplied free of cost - Held that:- Issue of includibility of the value of free supplies in the gross amount charged has been decided by the Larger Bench of CESTAT in the case of Bhayana Builders (P) Ltd. Vs. Commissioner of Service Tax. Delhi - [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], wherein it has been unambiguously held that the value of free supplies by the service receiver to the service provider is not includible in the ‘gross amount charged’ by the service provider from the service receiver. In view of this, any further discussion on the issue involved is unnecessary and unwarranted. It is accordingly held that the demand confirmed on the basis that the value of diesel supplied free of cost by the service receiver is includible in the gross amount charged is unsustainable. When the demand itself is not sustainable, the question of any penalty simply does not arise. - Decided against Revenue.
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2014 (11) TMI 871
Invocation of extended period of limitation - No allegation of fraud, collusion, willful misstatement or suppression of facts - Exemption under Notification No. 34/2004-S.T., dated 3-12-2004 - Held that:- Only on the examination of accounts maintained by the assessee, the proceedings themselves emanated on the allegation of short payment. It is not denied by the Revenue, that the assessee originally placed reliance on the Exemption Notification, not remitting Service Tax on the freight charges exceeding ₹ 750/-. Further on the allegation that the Exemption Notification would not apply to the case, there is no allegation of fraud, collusion, willful misstatement or suppression of facts. Thus, on the allegation of non-payment arising from the examination of accounts, we do not find that the Revenue would be justified in placing reliance on the extended period for limitation as provided for under Section 73(1) proviso of Finance Act.
The proviso under Section 11A of Central Excises and Salt Act, 1944, contains the phrase “with intent” to evade payment of duty in such person. The provision under Section 73(1) of the Finance Act, is no different from what is contained under Section 11A of Central Excises and Salt Act, 1944; thus, with the requirement of ‘with intent’ to evade payment of Service Tax, indicating element of deliberate avoidance or evasion, the show cause notice must contain materials to have the benefit of extended limitation. Thus, when the notice contains no such allegation, the Revenue’s case cannot be brought under the extended time limit to hold that the proceedings are saved by the extended limitation. In the circumstances, we hold that the notice issued on 16-10-2007, for the period from November, 2005 to May, 2006, is without any jurisdiction. Consequently, any demand of tax, penalty of interest in this case, is without jurisdiction. - Decided against Revenue.
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2014 (11) TMI 870
Valuation - inclusion of value of the HSD supplied by the service recipient - Extended period of limitation - Challenge to the Show Cause Notice - Invocation of Rule 5(1) of the Service Tax (Determination of Value) Rules 2006 - Provision has been declared ultra vires by the Division Bench of the Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India reported in [2012 (12) TMI 150 - DELHI HIGH COURT] - Held that:- Value of the diesel supplied free of cost by the service recipient cannot constitute taxable event, the authorities cannot take a contrary stand by placing reliance upon the provision which has been declared ultra vires. This Court, therefore, has no hesitation to hold that the extended period invoked by the authority on the plea of suppression of fact is illegal and renders the same to be invalid.
It is in dispute that one of the period covered in the impugned show cause notice is apparently within the normal period of limitation provided under Section 73(1) of the said Act, even if, this Court accept that such period can be segregated from the rest of the periods for which the extended period is invoked, the impugned show cause notice cannot be validated having based upon the inclusion of the value of HSD supplied free of cost by the service recipient. Furthermore, the foundation of the impugned notice is laid on Rule 5(1) of the said rules, which is declared ultra vires by the Delhi High Court [2012 (12) TMI 150 - DELHI HIGH COURT] - It is found that the value of HSD provided free of cost by the service recipient cannot be brought within the value of the transaction exposed to the charging section and, therefore, the impugned show cause is liable to be quashed and set aside. - Decided in favour of assessee.
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9911796707
