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Case Laws
Showing 401 to 420 of 1288 Records
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2014 (9) TMI 893
Availment of concessional rate of tax under Section 3(3) of the Tamil Nadu General Sales Tax Act - Liability to tax in terms of sub-section (4) of Section 3 of the Tamil Nadu General Sales Tax Act. - Held that:- ratio laid down in Tube Investments case (2010 (10) TMI 938 - MADRAS HIGH COURT), is equally applicable to the case on hand, following the said ratio, this tax case revision is also liable to be dismissed. - Decided against Revenue.
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2014 (9) TMI 892
Reopening of assessment u/s 148 Bar of limitation Details of depreciation claimed given by assessee - Held that:- The notice issued u/s 148 for reopening of case of the assessee for AY 2005-06 dated 26.12.2012 directed the petitioner to produce accounts and documents as also the information in respect of the concerned assessment year - The reasons for reopening u/s 147 does not say anywhere that on account of any failure on the part of the assessee, excessive depreciation had been allowed - The assessee had claimed and was allowed the depreciation at the rate of 25% on construction of offshore platform - the original assessment for the captioned year i.e. 2005-06 was completed u/s 143 (3) after the scrutiny and the notice was issued on 30.3.2012 which is after expiry of 4 years from the end of relevant assessment year i.e. 31.3.2006 and, therefore, case of the petitioner is that its case is not covered under first proviso to section 147 of the Act.
Assessee had given details of depreciation claimed by the company - It had specified that there is no sale nor any act of discard of any depreciable assets during the year under question and additions were made - the assessee had stated that supporting documents are bulky and voluminous and it showed willingness to produce the same for verification at the time of assessment proceedings - In the assessment order passed on 30.12.2008, nowhere there is any reference of non-compliance of the direction of the AO - It also does not mention anywhere the absence of production of record ensured to be done at the time of assessment proceedings - in absence of any specific averment in the reasons recorded for reopening of the assessment, that there was any failure on the part of the assessee to disclose fully and truly all material facts, it would not be possible for the Court to allow the notice u/s 148 to be sustained,which is wholly without any backing of law.
Structure of such kinds are not so uncommon that its true picture/ meaning cannot be grasped, without furnishing more details than already provided by the petitioner - Again, assuming without accepting that onus was entirely on the assessee to bifurcate all the three structures (i) The module large pre-built units meant for accommodation, production and drilling zones (ii) The Jacket foundation on which platform sits (iii) Derrick -the highest area of platform for drilling, it can be noticed that when specific query was already raised in relation to this in scrutiny assessment and answered by the petitioner as detailed hereinabove, documents were also offered while replying to such query, if they were not found necessary to be called while carrying out original assessment despite due application of mind to the very issue, this case surely does not lend jurisdiction to the AO to reopen the assessment beyond the period of four years from the end of the assessment year under question.
Offshore platform as per the reasons recorded consisted of module, jacket and derrick - If there was any clarification that was further needed after the description of the items purchased and put to use, was particularly replied to by the assessee on 6th July, 2007, it was open for the AO to further raise the queries and call for more documents - In the event of the AO not being satisfied with the reply, he could have denied the depreciation as a claim made in the particular year by the assessee which was almost 50% of the total amount of claim of deprecation which ran into 56.77 crores - being a special knowledge of the assessee company dealing with the subject concerned, non-furnishing of those particulars should amount to not having revealed the primary facts necessary to be revealed by the assessee - in any case this being the reopening beyond the period of 4 years in absence of any material to indicate the failure on the part of the assessee to disclose fully and truly all material facts, when the assessee had discharged onus of having revealed the primary facts, on jurisdictional ground itself, notice must fail Decided in favour of assessee.
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2014 (9) TMI 891
Taxability of license fee - Whether entire license fee received or paid under the agreement dated 14th July, 1995 is taxable in the year of receipt or it should be spread over three years Held that:- The students were required to make deposit of the whole fee for the entire course, but it was held that the amount deposited also included deposit or advance and it cannot be said that the entire fee had become due at the time of deposit - The fee was paid in advance presumably as there should not be any default in payment by the students during the term of the course - assessee adopted another line of argument - It was submitted that the appellant-assessee would have been liable for damages in case of defective technology - Therefore the amount received had not accrued or arisen and it would have accrued or arisen only after end of three years - There is no specific stipulation in the agreement relating to damages in case the technology made available between 1991-94 was found to be defective - unknown and off chance claim for damages in the present factual matrix is certainly not equivalent to claim for warranty, which are to be allowed only on the basis of past data, as products sold and consideration are taxable and, therefore, the expenses which have to be incurred to meet the warranty claims computed on scientific and actuarial basis, have a co-relation with the receipt - Contingent liability is not an expenditure and even when an assessee is following mercantile system of accounting, it cannot be allowed as a deduction u/s 37 of the Act - The submission does not have any merit as it relates to unascertained liability, the happening of which was dependent on a doubtful and uncertain contingency in future.
The amount received was not an inchoate amount depending upon any contingency before it could be appropriated - The appellant-assessee was not under an obligation to refund the said amount under any of the clauses - Liability to pay damages under the law of contract for breach of a contract does not make the receipt an inchoate receipt - revenue accepts that if ₹ 15,68,50,000 is taxed in the AY 1996-97, then the bifurcated differential amount should not be taxed in the AYs 1997-98 to 1999-2000 thus, the order of the Tribunal is upheld Decided against assessee.
Levy of penalty for concealment u/s 271(1)(c) Inaccurate particulars filed or not Held that:- The assesee had discharged the onus, there is no allegation that full details with regard to the agreement, quantum of receipt, the factum why the payment was made and also the fact that the receipts had been offered for taxation in four separate assessment years, were duly disclosed and stated - assessee had claimed that technical know-how would be used for three years and, therefore, consideration received was relatable to three years - the assessee did not try to draft the agreement in a way, which could have ensured that the amount received was bifurcated/divided as income of four assessment years - in view of the explanation offered by the assessee it is not a fit case, where penalty for concealment of income u/s 271(1)(c) should be imposed - The assessees conduct shows that they had acted in a bona fide manner and also furnished all material facts and particulars Penalty u/s 271(1)(c) is directed to be set aside Decided in favour of assessee.
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2014 (9) TMI 890
Validity of notice u/s 148 Reason to believe - Capital gains income had escaped assessment or not - Conversion from lease hold to free hold resulting into short term capital gains or not - Held that:- The AO has wide powers to reopen the assessment if he has reasons to believe that the income chargeable to tax has escaped assessment - this wide power is circumscribed and does not give jurisdiction to the AO to reopen a completed assessment on a mere change of opinion - AO recorded that the assessee has sold her property but no capital gains income had been shown in the return of income and, therefore, there was reasons to believe that capital gains income had escaped assessment for the AY 1997-98 - the notice was issued after four years but before six years - the reasons so recorded by the AO was not sufficient to initiate proceedings u/s 148 of the Act relying upon Ganga Saran And Sons Private Limited Versus Income-Tax Officer And Others [1981 (4) TMI 5 - SUPREME Court] - no satisfaction has been recorded by the AO in his "reasons to believe", that there was omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment.
Assessee had disclosed fully and truly all material facts necessary for his assessment - The fact that short term capital gains tax is to be paid or long term capital gains tax is to be paid is a different issue and for this purpose, reassessment proceedings, if any, ought to have been drawn within four years which, in the present case had not been done - where a notice is issued after four years the jurisdiction of the AO is conferred where he has reasons to believe that income chargeable to tax has escaped assessment and that such under assessment has occurred by reason of omission or failure on the part of the assessee to make a return of his income or omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in that year - the conversion of the rights of the lessee in the property from lease hold to free hold was only an improvement of the rights over the property, which the assessee enjoyed and this would not have any effect on the taxibility of capital gains from such property.
Since the property was held by the petitioner for more than three years, short term capital gains would not be applicable - The conversion from lease hold to a free hold being an improvement of the title, does not have any effect on the taxibility of profits as short term capital gains the assessee cannot be non-suited on this ground at this stage, especially when the writ petition was entertained in the year 2003, 2007 and 2008 and since affidavits have been exchanged, it would be unfair at this stage to relegate the petitioner to avail an alternative remedy - the notices issued u/s 148 of the Act does not comply with the proviso to Section 147 and 149 of the Act - The reasons recorded does not indicate that the assessee has failed to disclose fully and truly all material facts necessary for his assessment and that the escaped income was likely to be ₹ 1 lac or more - the notices issued u/s 148 of the Act cannot be sustained and are quashed - All proceedings initiated in pursuance of the notices u/s 148 of the Act would be wholly illegal and without jurisdiction and are also quashed Decided in favour of assessee.
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2014 (9) TMI 889
Liability to deduct TDS u/s 195(1) Remittances made to Non-resident Article 12 of Indo-Canada DTAA - cost sharing agreement and payments were made by the assesee for reimbursement of cost/expenses - Whether the Tribunal was correct in holding that the payments made by the assessee for utilizing intranet facilities provided by the non-resident assessee is not liable to tax in India and no TDS need be made as the provisions of Section 195(1) read with section 9(1)(vi) and (vii) read with Article 12 of the DTAA between India and Canada are not applicable Held that:- Relying upon CIT v. Synopsis International Old Ltd. [2013 (2) TMI 448 - KARNATAKA HIGH COURT] - without entering into an agreement, the assessee was not permitted or allowed to use the facility which exclusively belongs to the Canadian Company - The cost is paid for use of the said facility - By use of such facility, a right is conferred on the assessee - But a restriction is put on the assessee to sell or license or lease or in any manner transfer the right so conferred - The assessee was given the right to use the said facility for its purposes on payment of cost stipulated - the terminology of the said agreement would not conclusively decide the nature of transaction between the parties.
Canadian Company under the agreement has permitted or allowed the assessee to use the facilities which they have developed at considerable cost to be paid - Merely because the agreement provides that the term 'Cost' does not include any mark-up and is limited to the actual cost, it makes no difference in the eye of law - But one thing that clearly emerges from the said agreement is that in developing the facility or tool, it is the Canadian Company which has invested the entire money - Prior to the development of the facility, there was no agreement between the Canadian Company and the assessee for sharing the cost of development of the said tool - even after payment of cost, the product used would absolutely vests with the Canadian Company - The assessee under no circumstances, would get any title to any extent in the facility developed by the Canadian Company and the right conferred is only for its user - it is nothing but a license though it is styled as the Cost Share Agreement.
Some right is assigned to the assessee under the agreement on payment of cost - That right is a right to use the facility notwithstanding the fact that the cost is paid - it is clear that the cost is paid for using the computer software - When the assessee is allowed to use the said facility, it is nothing but a license to use the said facility - If really the cost paid represents the assessee's share of cost for developing the internal telecommunication and communication tool, on such payment, the Canadian Company can never claim to be the absolute owner of the said intellectual property - If CGI group companies were to pay costs for using the said facility, then the title of the facility i.e. intellectual property should equally vest proportionate to the cost share by this group companies - That is not the intention behind this agreement - this Cost Sharing Agreement is only a device to avoid payment of tax as contemplated under the aforesaid provision -It is nothing but a royalty thus, the order of the Tribunal is set aside Decided against assessee.
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2014 (9) TMI 888
Disallowance of 50% of expenses on making charges paid to karigars Held that:- The AO in the remand report could not point out and controvert the documents and details provided - Genuineness of the documents was not doubted - The similar expenditure had been allowed in the earlier years also there was no reason to interfere with the order passed by the Tribunal - The submission that the Tribunal has not gone into specific details and the order requires interference is without merit Decided against revenue.
Additions u/s 68 of the Act and other additions unverified or unexplained cash credit - failure to substantiate and file confirmation of loans - Held that:- Due to paucity of time and the fact that many cases were taken up simultaneously, relevant details and confirmations could not be furnished - The additional evidences were then furnished to the Assessing Officer for his comments, who in the remand report, given by the Deputy Commissioner of Income Tax, Central Circle-XXIII, stated that in view of the additional evidence furnished, credit/loan was genuine - this would not affect and should not be construed as a positive finding by the High Court on question of telescoping surrender and the impact or effect.
Notice u/s 153A Held that:- The AO in the second remand report on several accounts/additions accepted that the additional evidence placed on record was sufficient to show that the transactions were genuine and addition could not be sustained - In respect of other amounts/transactions, not accepted by the AO in the remand report, Revenue was aggrieved by the order passed by the CIT(A) and was the appellant before the Tribunal thus, the order fo the Tribunal is upheld Decided against revenue.
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2014 (9) TMI 887
Income deemed to accrue or arise as per Explanation to Section 9(1)(i)(b) or not Activities amounts to purchase of goods in India or not - Held that:- If an assessee carries on operations which results in purchase of goods in India for the purpose of export and the income so accrued or arising out of such transactions are exempted from payment of income tax - The whole object of this provision being to encourage export of merchandise from India which enables Indian manufacturer to earn and when it is exported the country would earn foreign export - An incentive is given to a nonresident to carry on business in India - Otherwise the explanation would have no meaning and that is precisely what the Tribunal has held.
Relying upon Commissioner of Income Tax International Taxation v. Nike Inc [2013 (8) TMI 194 - KARNATAKA HIGH COURT] - once the entire operations are confined to the purchase of goods in India, for the purpose of export, the income derived therefrom shall not be deemed to accrue or arise in India and it shall not be deemed to be an income under Section 9 of the Act - The object is to encourage exports thereby the Country can earn foreign exchange - The activities of the assessee in assisting the Indian manufacturer to manufacture the goods according to their specification is to see that the said goods manufactured has an international market, therefore, it could be exported - the whole object of the respondent assessee is giving its services both to the foreign buyer and the Indian purchaser is to export the merchandise to the foreign buyer which results in earning foreign exchange - Merely because the assessee do not place orders for purchase, in law it makes no difference - Without placing an order in its name the assessee is enabling a foreign buyer to place order directly with the manufacturer after the assessee approves the manufacturer and requirement and the assessee takes the responsibility of maintaining quality and dispatch of the goods to the destination - The purchase and export of merchandise takes place and therefore the object with which the provision is inserted is achieved thus, the assessee is entitled to the benefit of exemption Decided against revenue.
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2014 (9) TMI 886
Interpretation of Karvivad Samadhan Scheme - Levy of 35% amount on the component of interest and penalty Tax in arrears - Whether the transaction fits into Clause (a)(iii), or Clause (a)(iv) of Section 88 of the Act Held that:- An analysis of Clauses (a)(iii) and (a)(iv) of Section 88 of the Act would present some extraordinary features - A person, who is in arrears of tax, is exposed to higher obligation, whereas the one, who is in arrears of tax, interest and penalty, is relieved of a substantial obligation - That, however was the intention of the Parliament and the Courts or for that matter, the respondents cannot look into the reasons - The clarification issued by the Board, in a way adds some more dimensions and angles to the Scheme - the Board can neither expand nor restrict the scope of the Act, but can only issue instructions and clarifications, for effective implementation - the view expressed by the authorities under the Act, vis-a-vis the claim of the petitioner that benefit under the Scheme cannot be sustained in law the assessee has already paid the amount in accordance with Clause (a)(iii) of Section 88 of the Act, it is declared that he is not in arrears of any tax nor he is under obligation to pay any further amount, with reference to the assessment year 1996-97 Decided in favour of assessee.
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2014 (9) TMI 885
Interest expenses utilized for business purpose or not - Whether the Tribunal erred in concurring to the views of the CIT(A) in deleting the entire disallowances made by the AO on account of interest expenses, when the loan was not utilized for the purpose of business Held that:- Both the CIT(A) as well as the Tribunal have recorded concurrent findings of fact to the effect that the assessee was also running a sarafi business and the funds obtained from the bank had got merged with the funds of other businesses - Having regard to the total funds available from the sarafi business, the Tribunal has found no reason to believe that bank funds have been diverted as interest free/lower interest advances - no material has been brought on record by the revenue either to demonstrate that the sarafi business was bogus or to establish diversion of interest bearing funds as low/interest free advances - revenue is not in a position to point out any material to the contrary so as to dislodge the concurrent findings of fact recorded by the CIT(A) and the Tribunal - the Tribunal has based its conclusion on the concurrent findings of fact recorded by it upon appreciation of the evidence on record thus, the order of the Tribunal is upheld Decided against revenue.
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2014 (9) TMI 884
Allowability of deduction on Gross total income or Net total income u/s 80HHC - Whether the Tribunal is correct in holding that the deduction U/s. 80 HHC to be allowed on the gross total income and not on net total income Held that:- The gross total income is nothing but the total income, before any deductions under Chapter-VIA are made - If the Act provides for deduction of any amount from the gross total income, it is axiomatic that the deduction of that nature must take place at the first instance and thereafter, the other deductions can be made - once the deductions u/s 80-HHC are to be made from total income, there may not be any justification to insist that it shall be the first of all the deductions - If that were to be so, the Parliament would have employed the expression gross total income u/s 80-HHC also, instead of the expression total income.
When the law requires that the deduction of the amounts are required to be made from the corresponding total income, the inescapable conclusion is that the deduction must take place, at the threshold, before the left over total income referable to that activity merges in the other head, of the income of the assessee Relying upon Commissioner of Income-Tax Versus Shirke Construction Equipment Limited [2007 (5) TMI 194 - SUPREME Court] - once the deduction is to be made from total income, in contra distinction to gross total income, the assessee must be given the facility, as to the stage of deduction - Law provides the assessee, the freedom to arrange his affairs in a manner, which is beneficial to him, as long as the same is not prohibited by or is contrary to any provision of an enactment Decided against the revenue.
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2014 (9) TMI 883
Refund of customs duty as part of incentive measure Capital or revenue in nature - Whether the refund of customs duty received by the assessee on the imported components/machinery for their fertilizer plant pursuant to the notification of the Ministry of Fertilizers & Chemicals, Government of India is to be treated as a capital receipt or as a revenue receipt Held that:- The Tribunal was rightly of the view that the amount received has gone into the reduction of capital expenditure in the establishment/expansion of the fertiliser units - the subsidy received by the assessee in fact had gone into reduction of the capital expenditure - The fact that incidentally on account of reduction in the capital cost the assessees product would be more competitive in the market thereby increasing their revenues would not in any way alter the position that the subsidy received as a matter of fact had gone to reduce the cost of the capital - the finding of the Tribunal that the amounts received by the assessee from the Central Government by way of refund of customs duty of the capital receipts cannot be found fault Decided against revenue.
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2014 (9) TMI 882
Valuation - inclusion of reimbursement of expenses - whether the ocean freight, currency adjustment charges, bunkering charges, advance manifest charges collected by the appellant on behalf of the shipping lines can be subjected to levy of service tax - Held that:- most of these charges form part of the transaction value in respect of customs matters and therefore, the question of levy of service tax on a customs transaction would not arise at all. If the appellants have collected these charges and remitted the same to the shipping lines, the whole amount received and transmitted cannot be said to be a consideration for the services rendered. What can be levied to service tax is the service rendered by the appellant either as a steamer agent or BAS in respect of collection of freight and other charges and only on the consideration received for the services rendered, service tax can be levied. In this view of the matter, the impugned order is clearly not sustainable in law and the matter has to go back to the adjudicating authority for denovo consideration - Matter remanded back - Decided in favour of assessee.
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2014 (9) TMI 881
Inclusion of cost of material used during the provision of services - Repair and maintenance service - whether the cost of goods supplied while rendering a service can be subjected to levy of service tax - Held that:- issue has been settled by the larger bench of the Tribunal in the case of Hindustan Aeronautics Ltd. (2013 (11) TMI 1410 - CESTAT CHENNAI (LB)) which has considered all the relevant decisions and has come to the conclusion that there cannot be a service tax levy on supply of goods. Respectfully following the said decision in the present case also, we are of the prima facie view that the cost of goods supplied while rendering a repair service cannot be subjected to levy of service tax. Thus the appellant has made out a case for grant of stay - Stay granted.
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2014 (9) TMI 880
Discrepancy in ST-3 returns and balance sheet - Manpower Supply Service - payment made in foreign exchange to the foreign service providers - International Financial Corporation is not notified as international agency to which rendering of service is exempt from service tax. - Held that:- regarding services provided to SEZ units, no service tax is payable on services provided to SEZ units - stay granted on this issue.
On the issue of demand due to difference in ST-3 return, the contention of the appellant is correct inasmuch as the demand has been confirmed only on the basis of the difference found between the figures in their ST-3 returns and their balance sheet without mentioning for which taxable service the demand is confirmed. - stay granted on this issue.
Implementation of the development programme aimed at training rural BPL youths - Held that:- Aim of the said skill development programme is training, skill development and capacity building of the rural poor to enhance their employability or capacity for self-employment. Indeed, it is similar to what the Govt. run Industrial Training Institutes (ITIs) do. Looking at the definition of Manpower Recruitment Supply or Agency, prima facie appellants cannot fall thereunder and consequently they cannot be held to have provided manpower recruitment and supply service. - stay granted on this ground.
Services provided to International Financial Corporation - international agency or not - held that:- IFC is not listed in the list of International bodies eligible for the exemption availed of by the appellants. The appellant's contention that IBRD and IFC are both constituents of World Bank and as IBRD is mentioned as one of the eligible organisations for such exemption, the same should be made available to IFC also even if IFC is not so mentioned, is totally untenable and mis-conceived. - prima facie case is against the assessee - stay granted partly.
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2014 (9) TMI 879
Service Tax Voluntary Compliance Encouragement Scheme - Person who may make declaration of tax dues - Assessee filed declaration under Service Tax Voluntary Compliance Encouragement Scheme - Department rejected said declaration on ground that for period from 1-10-2004 to 31-3-2009, a notice under section 73 dated 19-3-2010 had culminated into an order dated 23-12-2010 and since issue in question was already covered by said notice/order, no declaration could be filed for subsequent/coinciding period 1-10-2007 to 31-12-2012 in view of second proviso to section 106(1) - Held that:- the contention of the counsel for the petitioner has been that in the show-cause notice dated 19/03/2010 culminating in the order dated 23/12/2010, there was no invocation of Section 73A of the Act and therefore the proviso does not apply in the instant case, but the impugned order does not take into consideration that aspect of the matter. There is considerable force in the aforesaid submission inasmuch as the findings given in the order dated 23/12/2010 prima facie was with regard to Section 73 of the Act and not Section 73A. But the matter does not rest here.
The other aspect of the matter is, one of the reasons given in the impugned order was that the earlier show-cause notice and the order dated 23/12/2010 was for the period October 2004 to March 2009, part of which period is covered under the Scheme, which was from 01/10/2007 up to 31/12/2012. It was reasoned by the respondent officer that for the period October 2007 to March 2009, there was already an order passed on 23/12/2010 and therefore, the petitioner was not entitled to file the application under the Scheme. That reason is not correct in view of the fact that the period for tax dues is 01/10/2007 up to 31/12/2012. That period cannot be related to any period in respect of which an order has been passed by the authority under Section 73 of the Act. If there were any dues between the aforesaid dates, then the eligibility to file the application under the Scheme would arise provided no order was passed prior to the enforcement of the Scheme on any issue. Therefore, linking the period of tax dues under the Scheme with the period in respect of which the order dated 23/12/2012 has been passed in petitioner's case is not correct as that order was prima facie not in respect of Section 73A of the Act
Commissioner Service Tax to reconsider the issue in light of whether the earlier show-cause notice dated 19/03/2010 culminating in the order dated 23/12/2010 in respect of which certain issues arose are the very same issues which have arisen for the subsequent period namely, April 2012 to December 2012 in respect of which, the petitioner seeks benefit under the Scheme. - Matter remanded back - Decided in favour of assessee.
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2014 (9) TMI 878
Export of services - Receipt of commission in convertible foreign exchange from their principal - Revenue was of the view that since the dividends have been repatriated and since dividends arise out of the appellant companys activities including exports, it would amount to repatriation of export proceeds - Benefit of Notification No. 6/99, dated 9-4-99 and 21/2003-S.T., dated 21-11-2003 - Held that:- Appellant has rendered the service of steamer agents and has earned income in convertible foreign exchange. Vide Notification Nos. 6/99-S.T. and 21/2003-S.T., Service Tax levy has been exempted if consideration for the services rendered is received in convertible foreign exchange subject to the condition that the export proceeds are not repatriated from India - On perusal of the balance-sheet of the appellant company, it is seen that appellant earns income not only from steamer agents services but also from various other services such as container freight, equipment maintenance and repair, service-centre income, detention/collection fees, crew fees and so on. They have also earned income by way of interest on loans/deposits and also rental income - After deducting the expenses from the income, profit is arrived at and dividend is declared out of profits. In other words, the dividend declared is not only from the income earned from steamer agent services rendered by the appellant and profits earned therefrom but from a lot of other activities. Therefore, it cannot be said that the export proceeds earned by the appellant have been repatriated by way of dividends to the equity holder - Decision in the caes of Gillette India Ltd [2011 (5) TMI 611 - CESTAT, NEW DELHI] followed - Decided in favour of assessee.
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2014 (9) TMI 877
Benefit of Cenvat credit scheme - Insurance service - Held that:- first part of the definition reads that input service means any service used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of the final product. When employees are at work in the factory, if an accident happens, the employer is liable to pay compensation and a prudent businessman will be interested in taking an accident insurance policy for his worker to cover the business risk and it cannot be considered that such insurance is not relation to the manufacturing activity. Even in the case of health insurance of the workmen, when employees fall sick, it is necessary that they are provided proper treatment so that they are brought back to work without loss of man hours and desruption of manufacturing lines and the employer may take insurance for arranging proper medical attendance for sick workman or other employees of the company. Therefore, the medical insurance in relation to the employees of the company are also within the broad definition of input service given at Rule 2(l) of the Cenvat Credit Rules, 2004.
When there is a direct decision of a High Court [2013 (1) TMI 304 - GUJARAT HIGH COURT], on the particular service in question, it is only proper that the same is followed. Therefore, I follow the decision of the Honble Karnataka High Court in this matter and hold that the Service Tax paid on such service which is attributable to insurance premium for employees will qualify to be taken as Cenvat credit. However, in the case of premium attributable to the families of employees it cannot have any direct nexus and will not qualify as input services. The impugned order is set aside and the matter is remanded back to the adjudicating authority to quantify the eligibility of Cenvat credit. - Decided partly in favour of assessee.
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2014 (9) TMI 876
Interest on delayed payment of refund claim - Held that:- appellant filed the refund claim for the service tax paid in excess. This fact is not in dispute. Therefore, as per the provisions of Section 11B of the Central Excise Act, 1944 they are entitled for the interest from three months after the date of filing of the refund claim till the receipt of the refund. - appellants were issued deficiency memo since they have not filed the refund claim complete in all respects and they have filed refund claim after removing the deficiency in all respects only on 26-3-2009. This fact is also not in dispute. Therefore, the interest on the refund will commence three months after the date of removal of deficiency in the claim i.e. from 26-3-2009 till the date of receipt of the refund. - Decided in favour of assessee.
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2014 (9) TMI 875
Clearing and forwarding agent service - Activity to receive the products manufactured/purchased or otherwise acquired by the Cipal at their premises and to store and dispatch the same in such lots and in such manner and to such parties as may be directed by Cipla from time to time - Held that:- From the terms and conditions specified in agreement entered into by the appellant with Cipla Ltd, the activities of the appellant start from receiving the goods supplied by Cipla, warehousing the same and dispatching as per the instructions given by Cipla. The appellant does not undertake any clearing functions from the premises of Cipla. Thus the activity of the appellant is a forwarding activity. In the Kulcip Medicines case [2009 (2) TMI 89 - PUNJAB AND HARYANA HIGH COURT], the Honble High Court of Punjab & Haryana held that to come under the category of Clearing and Forwarding Agent both the functions, namely, clearing and forwarding should be undertaken and the word and has been used in a conjunctive sense. The Honble High Court also took notice of the Larger Bench decision in the case of Medpro Pharma and overruled the said decision. The SLP filed by the Revenue against the said decision was dismissed by the Honble Apex Court after hearing the Petitioner. In these circumstances, the decision of the Honble P&H High Court in Kulcip Medicines case prevails and have to be followed by all other subordinate authorities - Decided in favour of assessee.
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2014 (9) TMI 874
Business Auxiliary Services - Software design and development service - Reverse Charge Mechanism - Held that:- As per the agreement entered into between TTL & TTL Korea and TDCVL, TTL and TTL Korea have to render Information Technology Services to TDCVL in Korea. The services rendered consist of two components - onsite services rendered by TTL Korea and offshore services rendered by TTL. Nevertheless, the service recipient remained TDCVL and not anybody else, for which they have paid the consideration. As per the agreement, the invoices for the services rendered are raised by TTL Korea on TDCVL for both onsite as well as offshore services. It is also confirmed by the Counsel that VAT/GST liability has been discharged by TTL Korea at the time of supply of services to TDCVL. If that be so, the question of subjecting the same transaction to Service Tax in India at the hands of TTL would not arise at all.
As regards the offshore services rendered by M/s. TTL to TDCVL, the same amounts to export of service in terms of Rule 3(2)(a) of the Export of Service Rules, 2005. Information Technology Software service is classifiable under Rule 3(1)(iii) as category-3 service which relates to service consumed abroad by the recipient who is situated outside India. To consider the transaction as export, two conditions have to be satisfied namely the service should be provided from India and should be used outside India and the consideration for the services rendered should be received in convertible foreign exchange. In the present case, it is not in dispute that these conditions have been satisfied for the offshore service rendered by TTL to TDCVL. - Matter remanded back - Decided in favour of assessee.
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