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Showing 441 to 460 of 2855 Records
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2015 (10) TMI 2422
Addition on account of “Interest paid to bank” - disallowance u/s 14A - Held that:- is undisputed fact that the assessee has more interest income than interest paid on OD. Besides this he has also disclosed short term capital gain at ₹ 9,07,828/- in the income of the assessee, it is also taxable. The ld Assessing Officer had not established the nexus between the interest bearing borrowings with utilizing the fund in interest free investment. When the assessee has shown income from the short term capital gain, it is evident that he has been in the business of share trading. Further the ld Assessing Officer has not brought on record the amount deployed in shares for investment purposes. The case laws cited by the assessee CIT Vs. Hero Cycles [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] are squarely applicable, therefore, the addition confirmed by the ld CIT(A) is reversed and the assessee’s appeal is allowed on this ground
Trading addition U/s 68 - credit appearing in the name of Shri Kanha Ram Agarwal - Held that:- It is revealed from the assessment order that Sh. Kanha Ram Agarwal, brother of the assessee has declared additional income U/s 132(4) of the Act on 27/08/2008. IN answer to question No. 22, he has disclosed ₹ 1.5 crores during the search under the various heads. It is also fact that the AR of the assessee submitted different confirmation before both the authorities. Now before us, he has filed different confirmations, therefore, the Assessing Officer is directed to verify the confirmation from the books of account of Shri Kanha Ram Agarwal. Accordingly, this issue is set aside to the Assessing Officer for limited purpose to verify and take decision as per law. - Decided on favour of assessee for statistical purposes only.
Trading addition by applying GP rate of 15% as against 12.57% declared by the assessee and invoking the provisions of Section 145(3)- Held that:- The defects pointed out by the Assessing Officer are not specific in nature. He has not brought on record any discrepancy in the books of account produced by the assessee but the compared case with M/s Supreme Carpet and Carpet palace who are in the export business. The assessee was trading goods for local market. The case is audited U/s 44AB of the Act as claimed by the assessee. The case law referred the assessee are squarely applicable. Further during the course of search, no incriminating documents were found and seized, therefore, lump sum addition made by the Assessing Officer and partly confirmed by the ld CIT(A) is not justified. Accordingly we reverse the order of the ld CIT(A) and allow the assessee’s appeal on this ground. - Decided on favour of assessee
Trading addition by applying GP rate of 35% as against 26% declared by the assessee and invoking the provisions of Section 145(3) - Held that:- It is admitted fact that the assessee has admitted the difference on the basis of stock found during the course of survey and stock prepared on the basis of books of account at ₹ 1,96,668/-. It is undisputed fact that the books were not complete at the time of survey. The assessee also had not prepared trading account at the time of survey to determine the exact stock as per books of account and any difference on physical verification when purchase and sale bills available with the assessee. The assessee’s argument was that the old stock was also included in the closing stock which has lesser value due to various reasons but in closing stock the ld Assessing Officer has valued the carpet at average rate which neutralize the higher rate of per sq.ft of carpet and lower rate of carpet, therefore, this argument is not acceptable. Further the assessee has not produced any evidence that old stock had been sold by the assessee at lower rate, therefore, keeping in view of the facts and circumstances of the case, we confirm the addition of ₹ 2 lacs in case of assessee. The assessee gets relief of ₹ 7,89,668/- - Decided partly in favour of assessee.
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2015 (10) TMI 2421
Disallowance of total contract expenses - rejection of books of account of the assessee - CIT(A) allowed part relief - Held that:- The assessee has shown total turnover during the year at ₹ 14.71 crores on which net profit has been shown @ 5.02%, which was ₹ 27.98 crores and net profit rate @ 5.77% in immediate preceding year. The assessee claimed that he produced the books of account but the Assessing Officer was not available in the office but books were examined by the Inspector on behalf of the Assessing Officer. The ld Assessing Officer applied Section 145(3) and rejected the book result on the ground that required details of contract expense were not submitted before him. Therefore, we confirm the order of rejection U/s 145(3), which has not been challenged by the assessee. However, estimate made by the ld Assessing Officer and confirmed by the ld CIT(A) is higher side, which would give net profit rate of 12.84% before depreciation, which is not possible in contract business. It is also fact that required details of contract expenses were not submitted before the Assessing Officer and net profit has declined for which the assessee explained that price has gone up. He also referred the cost of inflation index for this purpose, which supports the assessee’s claim. The lower authorities also have not compared the case with other assessee’s for estimating the NP rate, therefore, in the interest of justice, we apply N.P. rate @ 5.1% on turnover of ₹ 14,71,70,861/- and remaining addition is deleted. The Assessing Officer is directed to calculate the income as per the above finding. - Decided in favour of assessee partly.
Disallowance of interest and bank charges - Held that:- As decided in Ganesh Chawala Vs. Income Tax Officer [2008 (5) TMI 651 - ITAT JAIPUR] is squarely applicable wherein it has been held that the assessee having purchased properties in the preceding years out of interest-free funds, no disallowance of interest having been made in those years and there being no material on record to show that loans raised for business purposes were utilised in purchasing properties in personal name of the assessee and therefore, AO was not justified in disallowing interest The facts and circumstances of the case are identical to the case of Ganesh Chawala Vs. Income Tax Officer (supra). There was also fact that netting of interest is positive, therefore, no disallowance can be made by the Assessing Officer without establishing the direct nexus with interest bearing borrowings to immovable properties purchased. The assessee’s capital was ₹ 2,81,21,267/- is more than investment made in immovable property at ₹ 1,54,71,217/-, therefore, the ld CIT(A) was not right in confirming the addition on account of interest at ₹ 17,48,663/-. Accordingly, we reverse the order of the ld CIT(A) and allowed the assessee’s appeal on this ground. - Decided in favour of assessee.
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2015 (10) TMI 2420
Unverifiable purchases - Rejection of books of account - purchases made by the appellant are not genuine and are not verifiable - trading addition - Held that:- In view of the decision of this Coordinate Bench in the case of Anuj Kumar Varshney vs. ITO and others Gems and Jewellery cases [2015 (4) TMI 533 - ITAT JAIPUR] addition is restricted to 15% of unverifiable purchases which will be worked out by AO accordingly. - Decided in favour of assessee in part.
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2015 (10) TMI 2419
Transfer pricing adjustment - selection of comparable - Held that:- The issue relating to comparable nature of nine out of above eleven companies (companies in original grounds as well as additional grounds taken together), viz. other than Flextronics Software Systems Ltd. (Seg.) and Helios & Matheson Information Tech. Ltd. has come up for consideration before this Tribunal for assessment year 2007-08 itself and in the case of Sumtotal Systems India P. Ltd., Hyderabad [2014 (8) TMI 870 - ITAT HYDERABAD] has accepted the contentions for exclusion of these nine companies under consideration before it.
Comparable nature of Flextronics Software Systems Ltd.(Seg) and Helio & Matheson Information Tech Ltd., has been rejected by coordinate bench of the Tribunal in the case of M/s. Axsys Heathcare Ltd. [2014 (6) TMI 371 - ITAT HYDERABAD] on the ground of High Turnover- functionally dissimilar.
In the case of Sumtotal Systems India P. Ltd., Hyderabad [2014 (8) TMI 870 - ITAT HYDERABAD] wherein the Tribunal vide its order has rejected the contentions of Assessee for inclusion of all the six companies under consideration before it [Aztec Soft Ltd., Birla Technologies Ltd., Indium software India Ltd., Larsen & Toubro Infotech., PSI Data systems Ltd. (SEG) and VMF Softech Ltd.]
Computation of deduction under S.10A - reducing the communication charges from the export turnover considering it as attributable to the delivery of computer software outside India, but not reducing the same from the total turnover - Held that:- this Tribunal in similar cases, including in assessee’s own case for the assessment year 2006-07 have directed the Assessing Officer to exclude the communication charges from export turnover as well as total turnover while computing deduction under S.10A of the Act. In this view of the matter and respectfully following the decision of the Bombay High Court in the case of Gemplus Jewellery (2010 (6) TMI 65 - BOMBAY HIGH COURT) and Sak Soft Limited [2009 (3) TMI 243 - ITAT MADRAS-D] we allow this ground of Assessee
Penalty under S.271(1)(c) - difference in the value of Arm’s Length Price - CIT(A) deleted penalty levy - Held that:- The determination of the Arm’s Length Price is a result of an estimation on the basis of different variables by both Assessee and the Assessing Officer, and the difference in the value of Arm’s Length Price arrived at by the Assessing Officer was due to its re-working by using different filters and consequently different comparables. This difference is merely a difference of opinion, which cannot be termed as concealment of income on the part of Assessee. Further observing that there is no suggestion in the TPO’s analysis or the assessment or penalty orders that there was any inaccuracy or incorrect in the information submitted by Assessee, and relying on the decision of the Supreme Court in the case of CIT V/s. Reliance Petro-Products Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT), the CIT(A) cancelled the impugned penalty. - Decided in favour of assessee.
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2015 (10) TMI 2418
Addition representing forefeiture of warrants u/s. 28(iv) - Held that:- An identical issue was considered in M/s. Graviss Hospitality Ltd. case [2014 (12) TMI 139 - ITAT MUMBAI] wherein on identical set of facts the Tribunal has held that the amount of forefeited share application money transferred to "warrant forefeiture account" in the capital reserve, is a capital receipt only and cannot be taxed as income of the assessee, either u/s. 28(iv) or u/s. 41(1) of the Act. We find that while deciding this issue, the Tribunal has considered the decision of T.V. Sundaram Iyengar & Sons [1996 (9) TMI 1 - SUPREME Court] - Decided in favour of assessee.
Addition made u/s.14A - CIT(A) deleted the addition - Held that:- We find that the facts are identical to the facts considered in earlier assessment years. We, therefore, direct the AO to recompute the average investments in the line of A.Yrs. 2005-06 & 2006-07. We, therefore, do not find any error/infirmity in the findings of the Ld. CIT(A) - Decided in favour of assessee.
Disallowance of depreciation in respect of portion of value shown in the books which represented over invoicing of assets as detected during the course of survey - Held that:- disallowance of depreciation made by the AO is not sustainable in law. This decision of the Tribunal was followed in A.Y. 2007-08 - Decided in favour of assessee.
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2015 (10) TMI 2417
Registration u/s. 12A(1)(aa) rejected - applicant-company is incorporated u/s. 25 of the Companies Act - Held that:- The decision of the Tribunal, Mumbai Bench in the case of CEO Clubs India Vs DIT [2012 (10) TMI 895 - ITAT MUMBAI] is worth mentioning wherein the assessee was incorporated as a Pvt. Ltd. Company u/s. 25 of the Companies Act. The assessee submitted that it was a non-profit association registered as such u/s. 25 of the Companies Act for a charitable purpose.
In that case also the DIT was not satisfied with the claim of the assessee holding that the objects as spelled out were clearly not for the benefit of public as a whole but rather are confined to specific members only and the Tribunal at para-9 of its order following the decision of the Hon’ble Supreme Court in the case of Surat Art Silk Cloth Manufacturers Association (1979 (11) TMI 1 - SUPREME Court) has held that object which seeks to promote or protect the interest of a particular trade or industry are object of public utility and finally held that the objection of the DIT for denying registration on this ground is therefore found to be without any basis. Considering the similarity in the facts of the case in hand with the facts of the judicial decisions referred to hereinabove, we are of the considered opinion that the DIT (Exem) have grossly erred in rejecting the application of registration. We, therefore, set aside the order of the DIT (Exem.) and direct him to grant registration to the applicant company. - Decided in favour of assessee.
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2015 (10) TMI 2416
Carry forward of excess expenditure of earlier years against the current year income - Held that:- The principle that the loss incurred under one head can only be set off against the income from the same head is not of any relevance, if the expenditure incurred was for religious or charitable purposes, and the expenditure adjusted against the income of the trust in a subsequent Year, would not amount to an incidence of loss of an earlier year being set off against the profit of a subsequent year.
The object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expenditure, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. The High Court relied on the decision in the case of CIT Vs. Society of Sisters of ST. Anne (1983 (8) TMI 44 - KARNATAKA High Court). - Decided in favour of assessee.
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2015 (10) TMI 2415
Condonation of Delay under Section 14 of Limitation Act, 1963 – Appellant claims to exclude time consumed in disposal of writ petition before Court in computation of delay – Appellant contends that matter has not been properly appreciated by Commissioner (Appeals) and delay may be condoned which is approximately of 16 months and matter may be remanded back – Revenue contends that no error committed by Commissioner (Appeals) - Delay was not condonable under section 85(3A) of Finance Act, 1994 – Appeal could have been preferred within 60+30 days maximum if preferred beyond 90 days, delay is not condonable - Section 14 is not applicable as there was no want of jurisdiction.
Held That:- No reason found to entertain this writ petition as period of limitation is sixty days and delay can be condoned by Commissioner (Appeals) if there is reasonable reason but not beyond thirty days - No error committed by Commissioner(Appeal) in not condoning delay as it was beyond period of condonable delay – Section 14 not applicable as writ petition which was preferred after limitation period was over for preferring appeal U/s 85(3A) and is applicable only when the proceeding is bonafide in court without jurisdiction – Appeal dismissed – Decided in favour of Revenue.
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2015 (10) TMI 2414
Cenvat Credit - Use of capital goods in providing Airport services – Chassis of motor vehicles were converted into toilet carts and water carts - Revenue alleged that during the period in question Respondent was providing both taxable and exempted services – Further alleged that credit availed in excess of permissible limit of 20% on output services and motor vehicle chassis do not qualify capital goods in relation to airport services – Respondent contended that Notification No. 33/2007-SERVICE TAX only exempts services provided to a foreign diplomatic mission or consular post in India.
Held That:- No factual basis found for CCE(A) to have concluded that on account of bills for providing services having been raised on German Embassy and payments having been made by German Embassy, nature of services rendered was an exempted service - It was incumbent on Revenue to have placed some material on record to prove that services were provided not to German Air Force but to German Embassy.
Eligibility of credit on Capital Goods - Chassis of motor vehicles were converted into toilet carts and water carts and were not registered - Used only for cargo handling services and not on roads – Same eligible to be capital goods – credit allowed. Decided against the Revenue.
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2015 (10) TMI 2413
Rejection of Refund Claim under Rule 5 of Cenvat Credit Rules, 2004 – 100% EOU – Period pertaining to July 2005 to December 2005 - Maintenance or Repair of Software (MRS) - Refund not claimed on software development and software consultancy – Appellant stated that maintenance of software is a taxable service under category of 'management, maintenance or repair service' under Section 65 (64) – Revenue contends that appellant could not have got refund under Rule 5 but they could have got rebate under Notification No. 12/2005-ST - Appellant did not produce all export invoices and corresponding agreement to prove they are providing service of management, maintenance and repair of computer software.
Difference in opinion – Majority order.
Held That:- In order to claim refund it is necessary to provide copy of invoices issued during July to December 2005 and corresponding agreement between appellant and service receiver and along with category of service under which service claimed is provided - Commissioner (Appeals) did not examine all contracts in order to decide whether the activity is of "maintenance or repair" and has to quantify separately the amount involved relating to maintenance and repair service as also other service - It is necessary to examine whether appellant is eligible for availing the credit under Rule 3 before granting of refund under Rule 5 - Matter remanded back to Commissioner.
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2015 (10) TMI 2412
Franchise Service – appellant, it is alleged, granted franchise for manufacture of firebricks of specifications, design and quality prescribed by it to some other small manufacturing units located at Katni. - Whether service rendered by appellant to manufacturers fell under scope of franchise service? - Appellant contends that it is not a franchise agreement and there was no franchise fee and goods manufactured were property of appellant and so called franchisees had no right over them - Sales tax was paid on entire value and thus service tax could not be levied on the same.
Held That:- It comes out loud and clear from agreement that manufacturers did not have any representational right to manufacture goods identified with appellant - Appellant did not provide any service to manufacturers nor did manufacturers make any payment to appellant for any service - Merely because words 'franchise' and 'franchisee' have been used in agreement does not ipso facto mean that as per that agreement franchise service was rendered and thus agreement miserably fails to qualify as franchise agreement - Goods were sold to appellant and were consigned only to those persons whom he directed manufacturer to consign them to – Actual transactions between appellant and manufacturer are also in conformity with agreement – Impugned demand not sustainable – Decided in favour of assessee.
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2015 (10) TMI 2411
Rejection of Refund Claim – Management Consulting Services - Exported “Banking and other Financial Services”– Appellant contends that remittance against export of services was received in Indian Rupees but through foreign bank and have issued FIRC - CENVAT credit for Clearing services, Car Hire Charges, Professional charges for assisting in MIS reporting requirement are used for providing output services which has been exported thus qualifies as input services, credit is admissible.
Held That:- Even though appellant received payment in Indian rupees but same is deemed to be convertible foreign exchange and condition provided under Rule 3(ii) of Export of Service Rules, 2005 stand complied with and refund should not be rejected only on ground that foreign remittance received in Indian Rupees – Services, whether it falls under banking and financial services or under management consultant services, services have been exported thus admissible to be input service – Appeal allowed - Decided in favour of appellant.
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2015 (10) TMI 2410
Liability of Service Tax and Penalty Imposed – CENVAT Credit on input services – Maintenance of computer software and Manpower recruitment service – Appellant contended that as per specific amendment under section 65 of Finance Act under category of maintenance and repair service w.e.f. 1.6.2007 where maintenance of software specifically includes computers and will have retrospective effect – Further contended that they are providing IT Services which became taxable only w.e.f. 16.5.2008 where software services brought under service tax net and were entitled to avail 20% credit - service tax was demanded on the gross value of service, without allowing cum tax benefit.
Held That:- Maintenance of computer software - Board clarified that software is considered as "Goods" under section 65 (64) towards "Maintenance or Repair Service" - Amendment cannot have retrospective effect prior to 1.6.2007 – Demand liable to be set aside.
Man Power Recruitment Service - Appellant's contention that they are not covered under Man Power Recruitment Service on ground that they have not utilized service and their another contention that providing of technical engineers from company is only incidental to software service is not acceptable – Demand is sustainable.
Credit on input service utilized towards "Man Power Recruitment Service" during the period 10.9.2004 to 31.3.2006 - Once held that service tax is payable on Man Power Recruitment Service, appellants are entitled to avail credit on input service subject to verification by authorities - When service tax demanded, cum tax benefit is eligible on total gross value of services on Man Power Recruitment Service – Penalty set aside – Decided partly in favour of assessee.
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2015 (10) TMI 2409
Stay on Refund of cenvat credit - Banking and financial services and technical inspection and certification services – Import of Rough Diamonds - Revenue contends that scope of Notification 17/2009-S.T is very specific and no scope for allowing refund of credit pertaining to services utilised by Respondents.
Held That:- Contentions of Revenue that service tax paid on 'banking and other financial services' and 'technical inspection and certification services' cannot be correlated to export of goods manufactured and that services are also in respect of rough diamonds imported, are totally baseless - Banking services are utilised for raising finance for import as well as for export of goods manufactured - There cannot be two different yardsticks, one for permitting credit and other for eligibility for granting rebate - Definition of 'input service' on banking charges has to be allowed as they are in relation to business of manufacture whether same is prior or subsequent to manufacture – Decision made in case of Meghmani Dyes & Internationals Ltd. v. CCE [2014 (1) TMI 558 - CESTAT AHMEDABAD] followed – Stay rejected.
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2015 (10) TMI 2408
Commercial training or coaching service – Appellant contested SCN on grounds that they are charitable institution and courses conducted by them are of vocational in nature thus eligible for benefit of Notification No.9/2003-ST - extended period of limitation – Revenue contends that there is nothing on record to show that after completing the training, students would get employment or self-employed – Held That:- Notification No.9/2003-ST exempted services provided by Commercial Training or Coaching Institutes if they impart skills to enable trainee to seek employment or undertake self-employment – Impugned order set aside – Decision made in case of Doon Institute of Information [2014 (4) TMI 253 - UTTARAKHAND HIGH COURT] followed – Decided in favour of assessee.
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2015 (10) TMI 2407
Valuation – Demand of service tax on reimbursable/out of pocket expenses incurred by appellant while rendering services to various service radicands – Held That:- Issue is no more res integra as demand on reimbursable services cannot now survive in light of case of Enter Continental Consultants and Technocrats pr. Ltd. vs. Union of Indian [2012 (12) TMI 150 - DELHI HIGH COURT] which struck down the provisions of roll find (1) of service tax valuation rolls – Impugned order set aside – Decided in favour of assessee.
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2015 (10) TMI 2406
Back to Back transactions - exemption of sales of motor spirit made at the retail outlet. - The shipping vessel places an enquiry for required quantity of HSD with the Petitioner - Petitioner in turn places a back to back purchase order/nomination of the same quantity on any of the Oil Marketing Companies - After the delivery of the HSD to the nominated vessel is complete, the Petitioner raises an invoice on the shipping line, based on the BDN - Recovery of sales dues from the bankers and debtors of the petitioner.
Whether the sales made and subject matter of the order of assessment in the first Petition are within the State of Maharashtra so as to be taxable under the Maharashtra Value Added Tax Act, 2002 and therefore the action of the Respondents treating it as such can be said to be exfacie illegal. - Held that:- It is the goods which have been produced or manufactured or refined by the oil companies and which are drawn from their storage tanks in fixed quantity that are supplied on demand to the Petitioner. The manufacturers as also the refineries are very much within the State of Maharashtra viz. at Mumbai. The Petitioners are at Mumbai. Meaning thereby, their place of business is at Mumbai. It is from that place that the Petitioner requests the oil companies to supply to it the high speed diesel. It is received by the Petitioner from the oil companies at Mumbai. It may be that the Petitioner treats this as a contract on which they paid the sales tax as a component of the price. However, it is that very high speed diesel and supplied to the Petitioner at Mumbai which is carried from Mumbai in furtherance of a contract with parties like M/s. Leighton, which contract is also placed and finalised from Mumbai, through the barges of the Petitioner to the vessels of M/s Leighton and which may be stationed in territorial waters.
There is sufficient territorial nexus for the Maharashtra Value Added Tax Act to apply and to be invoked to the later sale by the Petitioner of the same goods to M/s. Leighton and other entities similarly placed. We do not see how the Petitioner can escape compliance with this legislation and by contending that the contract of M/s. Leighton being a distinct contract, the sale taking place in territorial waters that the sales tax legislation or the VAT legislation of the Maharashtra State would be applicable. Its applicability has to be tested by applying the above principles and particularly the nexus theory. After having found sufficient territorial connection, namely, between the back to back transaction and the taxing authority that we are not in a position to agree with Mr. Sridharan that MVAT Act is inapplicable.
Without expressing any opinion on the rival contentions as far as the exemption Notification is concerned, we would leave the Petitioners to pursue their remedies under the Act. - no relief can be granted to the Petitioners in these petitions. Rule in each of these petitions is discharged, but without any order as to costs. - Decided against assessee.
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2015 (10) TMI 2405
Inter state sale or intra state sale - movement of levy rice from Yanam in the Union territory of Pondicherry to Kakinada (AP) - scope of control order - Jurisdiction of tax authorities in Andhra Pradesh - violation of Article 269 and 286 of the Constitution - Suppression of facts - Held that:- It is no doubt true that the question, whether a particular sale is an "inter-state" or an "intra-state" sale, is a mixed question of fact and law, (Sumukha Veereswari Rice Mill [1987 (3) TMI 508 - ANDHRA PRADESH HIGH COURT]), and this Court would, ordinarily, not take upon itself the task of examining such questions in Writ proceedings under Article 226 of the Constitution of India. - The questions, which this Court is called upon to examine, are on the basis of undisputed facts available on record. As the facts, necessary to determine whether the subject sales are inter-state or intra-state sales, are not in dispute, we see no reason to non-suit the petitioners on this score.
Validity of order - violation of article 269 and 286 of the constitution - power of state (Andhra Pradesh) to levy tax of sale of levy rice from Yanam in the Union territory of Pondicherry to Kakinada (AP) - interstate sale or not - Held that:- In order to determine whether the sale of levy rice by the Yanam Rice Millers to FCI, Kakinada is an inter-state or an intrastate sale, it is necessary to refer to the relevant provisions of the CST Act and the A.P. VAT Act. Before doing so, however, it is necessary to examine whether the petitioners, rice millers at Yanam, are bound by the control orders issued by the Government of Andhra Pradesh under Section 3 of the Essential Commodities Act, 1955.
Scope of control order - Held that:- While the obligation cast on the Yanam rice millers, in terms of the arrangement between the Government of Andhra Pradesh and the Government of Pondicherry with regards supply of levy rice by Yanam rice millers to FCI at Kakinada, is similar to the statutory obligations placed on rice millers in Andhra Pradesh under the Control Orders, that does not mean that these Control Orders stand, automatically, extended to the Union Territory of Pondicherry also. - The petitioners, rice millers carrying on business at Yanam, cannot be brought within the ambit of the Control Orders which, as noted hereinabove, is limited in its operation only to the territorial limits of the State of Andhra Pradesh, and not beyond.
Interstate movement of goods - Held that:- While Yanam, which forms part of the Union Territory of Pondicherry, is adjacent to Kakinada in the State of Andhra Pradesh, both the 1984 and the 1987 Control Orders did not have extra-territorial operation, and were not automatically applicable to the Yanam rice millers. Though the arrangement, in terms of the Government memo dated 31.10.1983, did not obligate the Yanam rice millers to purchase paddy from agriculturists in the State of Andhra Pradesh, they did so, on their own volition, as they required paddy for carrying on the business of milling rice in their rice mills at Yanam. The said arrangement, in memo dated 31.10.1983, enabled the Yanam rice millers to procure paddy from agriculturists in Andhra Pradesh, and transport paddy from Andhra Pradesh to Yanam on a permit issued by the Government of A.P.; for its being milled at their rice mills in Yanam. Having done so on their own volition, the Yanam Rice Millers were thereafter obligated, in terms of the aforesaid arrangement, to transport the prescribed percentage of levy rice from Yanam for its sale and delivery to FCI/APSCSCL at Kakinada. As the sale of levy rice by the rice millers at Yanam to FCI at Kakinada, (the sale transactions brought to tax under the AP VAT Act by the impugned assessment orders), occasioned the movement of goods (levy rice) from Yanam in the Union Territory of Pondicherry to Kakinada in the State of Andhra Pradesh (from one State to another), it is evident that the sale has taken place in the course of inter-state trade and commerce, and is not exigible to tax as an intra-state sale under the A.P. VAT Act.
Des weighment and ascertaning the quality of Rice at Kakinada (AP) make the sale an Intra-State Sale - Held that:- The State Legislature cannot, by law, treat such sales as "sales within the State" as it is within the exclusive domain of the appropriate legislature i.e. Parliament to fix the location of sale by way of a legal fiction or otherwise. The State, where the goods are delivered in the transaction of an inter-State sale, cannot levy a tax on the basis that one of the events in the chain has taken place within the State. - The movement of levy rice, from Yanam to FCI or APSCSCL at Kakinada in the State of Andhra Pradesh, is an inter-State movement integral to the scheme of arrangement between the Government of Andhra Pradesh, the Government of Pondicherry and the Yanam rice millers, and the sale of levy rice by the petitioners to FCI, Kakinada is an inter-state sale.
The impugned assessment orders levying VAT on the petitioners, (all of whom are rice millers at Yanam), under the AP VAT Act is without jurisdiction and are, accordingly, set aside.
Collection of amount in the name of VAT by the petition from the FCI (AP) but not paid to the state authorities - Held that:- While the Yanam rice millers, in the representation dated 05.10.2007, had contended that they were liable to tax under the AP VAT Act, and had thereby collected 4% extra from FCI, they have avoided payment of VAT, collected by them from FCI, to the Government of A.P contending that sale of levy rice to FCI is an inter-state sale not exigible to tax under the AP VAT Act. While these contradictory stands appear to have been taken by the petitioners only to enrich themselves, by retaining the excess amount paid to them by FCI towards the VAT component, the fact remains that acquiescence or consent would not confer jurisdiction on the assessing authority to levy tax, under the AP VAT Act, on inter-state sales.
Petitioners had sought for and were paid by FCI, for the levy rice supplied by them, a higher price than what was paid to rice millers in Andhra Pradesh. The price paid by FCI, for procurement of levy rice, (from rice millers - both in Andhra Pradesh and at Yanam), included the VAT component. While the VAT component was factored into the procurement price prior to 2007-08, it was paid separately for the period subsequent to 2007-08. The VAT component of the procurement price, paid to the rice millers in Andhra Pradesh, was, in turn, paid by them, along with their returns, as VAT to the Government of Andhra Pradesh. On the other hand the Yanam rice millers, having collected the VAT component from FCI along with the procurement price, have retained the said amounts, and have not paid it to the Government of Andhra Pradesh. As the Yanam rice millers were not liable to pay tax under the AP VAT Act, the sale price, which included the VAT component, is, undoubtedly, an excess payment.
As the sale of levy rice by the petitioners, who are all rice millers at Yanam in the Union territory of Pondicherry, to the FCI at Kakinada in the State of Andhra Pradesh, are sales in the course of inter-state trade and commerce falling within the ambit of Section 3(a) of the CST Act, the impugned assessment orders, subjecting these sales to tax under the A.P. VAT Act treating them as intra-state sales, are without jurisdiction and are set aside. - Decided in favour of assessee.
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2015 (10) TMI 2404
MODVAT Credit - Availment on HSD - Held that:- Rule 57A was substituted by notification dated 01.03.1997, but thereuneder also we do not find any substantial alteration so as to exclude HSD from being treated as 'input' and to attract benefit of MODVAT credit. - Explanation to Rule 57A (Clause d), clearly takes within its ambit 'inputs' used for generating electricity which is used within the factory of production for manufacture of final products or for any other product. It is not the case of Revenue that HSD, used in the case in hand by assessee for generating electricity, is not used within the factory of production for manufacture of final products or HSD is not used in generation of such electricity. The exclusion clause, as it stood in explanation does not bring within its ambit HSD used for generation of electricity. - Decided in favour of assessee.
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2015 (10) TMI 2403
Penalty under Rule 26 - fraudulent availment of CENVAT credit - Fraudulent rebate claim - Confiscation of goods - Held that:- so called merchant exporters or Rule 12B manufacturers have dealt with the goods inasmuch as they purchased the goods from market and in order to claim the rebate/or avail CENVAT credit they approached Muni Group of Companies and purchased certain invoices from them so as to fraudulently show as if the goods were purchased from Muni Group of Companies on the invoices of Muni Group and thereafter exported or used in processing. Thus, there are excisable goods which are purported to be cleared on the invoice of Muni Group. In all cases, the investigations have indicated that the goods were never transported from Muni Group of Companies to the appellants or to the port of export. Investigations revealed that the goods were lifted from some dealers in Surat, etc. Further, investigations indicate that some payments were made to Muni Group of Companies through account payee cheques. However, immediately, thereafter, Muni Group of Companies have issued cheques in the name of some other entities. These cheques were, in turn got discounted by the merchant exporter/appellants. In some cases, the amounts were paid by crossed bearer cheques to Muni Group of Companies. However, these cheques were, in reality, not deposited in the accounts of Muni Group of Companies, but were deposited either in the name of certain dealers or got discounted from various bill discounters/shroffs. In nutshell, the money which was purported to have been paid to Muni Group of Companies for purchase of material was not paid to them but either was taken back by the appellants-merchant exporters, or in some cases, some amount was paid to certain dealers in fabric.
Invoices of Muni Group of Companies and the goods purported to be covered by such invoices were dealt by the merchant exporter-appellants. There can be no doubt, that these goods are liable to confiscation under Rule 25(1)(d) of the Central Excise Act, 1994. In view of the above said position, there can be no doubt that penalty is imposable under Rule 26 on the merchant exporter/manufacturer under Rule 12B.
Goods procured from some other sources would be non-duty paid goods otherwise, there was no need for them to get the invoices from Muni Group of Companies. The findings recorded above in respect of merchant exporters equally be applicable in the case of Rule 12B manufacturers and, therefore, penalty is imposable. Thus, these are the cases of fraud wherein the appellants as also Muni Group of Companies were equally involved and would be equally benefitted by getting the money from the government exchequer, in the name of rebate even though in reality, no duty was paid in the scheme of the above fraud, it was fraudulently shown that the duty was paid and the appellants or Muni of Group of Companies would be able to get refund of the duty in the form of rebate which thereafter will be distributed among themselves.
Penalty on merchant exporters is allowed or dismissed on the basis of their involvement in fraudulent transaction. - Appeal disposed of.
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