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2008 (5) TMI 634
... ... ... ... ..... ent of cash discount, sales tax etc. from the assessable value is permissible on the basis of the actuals in terms of the definition of transaction value given under Section 4 as amended. 4. It appears from the submissions of the appellants representative and the SDR that this matter must be remanded to the original authority, now that the Revenue has acknowledged the assessee s preparedness for providing the actual figures for the purposes of claiming deduction from the assessable value. Accordingly, the orders of the lower authorities are set aside and the original authority is directed to pass fresh orders of finalization of provisional assessments after considering the relevant particulars furnished by the assessee and the Chartered Accountant s certificates in proof thereof, and after giving them a reasonable opportunity of being heard. 5. Both the appeals stand allowed by way of remand. The stay applications also get disposed of. (Dictated and pronounced in open court)
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2008 (5) TMI 633
Order Passed u/s 263 by CIT(A) without jurisdiction - Claim for interest due on sticky loans - Whether the Tribunal was right in law in allowing the assessee’s claim regarding interest due on sticky loans? - Claim discount on bonds and debentures as allowable expenditure - HELD THAT:- The CIT has power to exercise jurisdiction, if the order of the Income-tax Officer is erroneous and prejudicial to the interest of the Revenue. An incorrect assumption of fact or an incorrect application of law would satisfy the requirement of the order being erroneous - The expression "prejudicial to the interest of Revenue" as understood in its ordinary meaning is of wide import and not confined to the loss of tax alone. If due to an erroneous order of the AO, the revenue is loosing, as lawfully payable by a person, it should be certainly prejudicial to the interest of Revenue [Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT], Rampyari Devi Saraogi v. CIT [1967 (5) TMI 10 - SUPREME COURT] and Smt. Tara Devi Aggrawal v. CIT [1972 (11) TMI 2 - SUPREME COURT].
While setting aside the assessment order, the CIT noted that the Income-tax Officer passed the order without any material on record. Admittedly, the Circular has also not been considered by the AO. In our view, the AO failed to apply its mind in its correct perspective and the order passed by him is erroneous. There is no material on record to support the decision arrived at by the Tribunal. In this background, the Tribunal, therefore, was wrong in arriving at its conclusion that the CIT had exceeded its jurisdiction while setting aside the same. The CIT rightly exercised his power u/s 263(1) of the Act - Questions of law Nos. 1 and 3 are answering accordingly.
Whether the Tribunal was right in law in holding that the discount pertaining to bonds issued up to 31-3-1976 and thus relating to AY 1976-77 was allowable in the AY 1977-78, the previous year in respect of which ended on 31-3-1977? - This issue is squarely covered by a decision rendered by this Court in H.P. Financial Corpn. Ltd. v. CIT [1997 (5) TMI 19 - HIMACHAL PRADESH HIGH COURT] held that it is not necessary for the assessee to make out a case of actual expenditure before claiming allowable deduction under the provisions of section 37 of the Act - Question is answered accordingly as admittedly having been covered by the aforesaid decision.
The matter is remanded back to the AO to frame fresh assessment order in view of our aforesaid observations.
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2008 (5) TMI 632
Whether all similar Rules/Government Orders/Office Memoranda, in respect of all services under the State, whether civil, judicial, police, or other service (except the military), will hence also be illegal and are therefore liable to be ignored?
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2008 (5) TMI 631
Whether the Income-tax Appellate Tribunal was correct in law in disallowing sales incentive claimed by the assessee under the incentive scheme which had expired on 30-4-1981 but which continued till 30-6-1981 as having no relevance for the assessment year 1983-84 ?
Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing by way of revenue expenditure the payment of royalty to foreign collaborators ?
Held that:- The assessee has been able to make out a case in its favour particularly in view of the judgment of Gujarat High Court in Saurashtra Cement & Chemical Industries Ltd. v. CIT [1994 (10) TMI 30 - GUJARAT High Court]
Since the agreement was merely an agreement for the right to use the technical know-how the question referred to us in the affirmative and in favour of the assessee and against the revenue
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2008 (5) TMI 630
Whether in the absence of any rebuttal by the respondents to the fact that the promissory note was for consideration as required, which gave rise to the presumption under Section 118 of the Negotiable Instruments Act, the courts below were justified in holding that since the appellant had given evidence inconsistent with such presumption, no decree could be passed on the basis of such presumption?
Held that:- The mere denial, if there be any, by the respondents that no consideration had passed would not have been sufficient and something probable had to be brought on record to prove the non-existence of consideration. In this view of the matter, we are, therefore, of the view that once the execution of the pronote has been proved, the appellant would be entitled to the benefit of the presumption under Section 118(a) of the Negotiable Instruments Act because the respondents had failed to discharge the initial burden and therefore, the High Court was in error in appreciating the evidence of the appellant to come to the conclusion that since such evidence was inconsistent with the pronote being Ex.A-21, the appellant could not be given the benefit of the presumption.
Appeal is allowed and the judgments of the courts below are, therefore, modified to the extent that the suit of the appellant must stand decreed in its entirety.
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2008 (5) TMI 629
Vires of rule 43(4)(a) of the U.P. Trade Tax Rules, 1948 challenged - Held that:- The learned counsel for the petitioner could not show that rule 43(4)(a) of the Rules, in any manner, as such, is inconsistent to any provision of the Act.
We are not impressed by the submission of the learned counsel for the petitioner that rule 43(4)(a) is against the spirit of the exemption/concession granted under section 4A and, therefore, is liable to be struck down.
We are not inclined to hold that the petitioner is entitled for issuance of mandamus directing the respondents to dispense with the requirement of rule 43(4)(a) of the Rules upon the petitioner as that would amount to make a statutory provision by judicial order inapplicable upon the petitioner, though otherwise, by operation of law, it is applicable, binding and cannot be dispensed with. In view thereof, no error in the order dated September 16, 2002, impugned in this writ petition, passed by respondent No. 1. The petitioner is not entitled for any relief as sought in this writ petition.
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2008 (5) TMI 628
... ... ... ... ..... revisional authorities to dispose of the pending appeals and revisional cases in respect of the period four quarters ending on March 31, 2002, March 31, 2004 and March 31, 2005 within four months from the date of filing such appeals and revisions. The respondentauthorities will also not press for realization of the dues for the four quarters ending on March 31, 1998 as it represents exclusively the interest levied for alleged short-payment made for the said assessment period. We further make it clear that neither the respondent-authorities will demand interest for the assessment period four quarters ending on March 31, 1998 nor the applicants will claim any interest in respect of the excess amount determined for the assessment period four quarters ending on March 31, 1997. The judgment of the Appellate and Revisional Board dated July 20, 2007 thus stands modified accordingly. The application, thus, stands disposed of. No order as to costs. PRADIPTA RAY (Chairman). - I agree.
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2008 (5) TMI 627
Deferment of sales tax - Held that:- Writ application is allowed; Explanatory Note appended to rule 3 of the Rules is declared repugnant to the Industrial Policy Resolution,1989. Resultantly the order dated February 3, 2000 of the State Level Committee holding that the petitioner shall be entitled for the incentive of deferment on the incremental production above the installed capacity is set aside.
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2008 (5) TMI 626
... ... ... ... ..... hing a form in relation to a sale effected, it is not permissible to withhold furnishing of such form as a measure to compel the person entitled to such form to accede to what the person obliged to supply such form is contending. We, therefore, allow the writ petition by directing the State Beverage Corporation Limited to furnish to the petitioner form D-III in relation to the sales effected by it to the petitioner on and from November 15, 2006 without insisting on payment of the differential tax, as mentioned above. The writ petition is thus disposed of. It goes without saying that this order will not stand in the way of the State Beverage Corporation Limited to recover any amount including those mentioned above if the same is due and payable by the petitioner to it by taking such recourse to law as it may be advised. Let the forms, as above, be issued as quickly as possible but not later than two months from the date of service of a copy of this order upon the Corporation.
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2008 (5) TMI 625
Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in rejecting the accounts and estimating the turnover only on the basis of alleged low gross profit?
Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in observing that the burden of proof is on the assessee when actually the burden is on the Revenue to prove the higher rate of profit based on which assessment has been completed. Is it justified to ask the assessee to prove the negative fact?
Whether, on the facts and in the circumstances of the case, the addition is justified when there is no inspection, stock variation, penalty, compounding or any other discrepancy in the accounts and actually the gross profit and the volume of trade showed a better trend than the previous year?
Held that:- The questions of law framed by the assessee is answered in favour of the assessee and against the Revenue. Accordingly, we allow the revision petition. We direct the assessing authority to accept the conceded gross profit declared by the assessee in its annual returns filed for the assessment year 2002-03 and pass fresh assessment order in accordance with law, as expeditiously as possible, at any rate, within four months from today and issue a fresh demand notice.
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2008 (5) TMI 624
... ... ... ... ..... in hair cutting saloon. This is a general goods and not covered under the word utensils . Being general goods scissors are covered by Schedule CA taxable at 12.5 per cent. Knife is of two types - one used in kitchen with plastic or wooden handle. Such type of knife is utensils covered under serial No. 7 of Schedule C taxable at four per cent. The knife used in dining table as cutlery is entirely made of steel and not so sharp as the one used in the kitchen as an implement. The knife entirely made of stainless steel is not a utensil and is covered by item Schedule CA taxable at 12.5 per cent. Fork is generally used on the dining table. As such, it is not an utensil and is covered by Schedule CA taxable at 12.5 per cent. Accordingly, the order of the Commissioner of Sales Tax dated April 2, 2007 is modified to the extent indicated above. The application is allowed in part, but under the facts and circumstances with no order as to costs. PRADIPTA RAY (J.) (Chairman). - I agree.
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2008 (5) TMI 623
Case of compounding - tax calculated as ₹ 14,25,132 being two hundred per cent of the tax liability for the assessment year 2001-02 - Held that:- In the facts of this case, admittedly when the petitioner has given exhibit P5 and what is more, when there was no order granting permission under rule 30, it was not open to the authority under exhibit P9 series issued in the year 2005 to take the view that the petitioner must be held to the earlier application for compounding. All the more so, the unrebutted allegations in the writ petition would show that the petitioner was filing monthly returns and paying tax which were being accepted. Thus considerable force in the contention taken by the petitioner. In view of the fact that there is no order permitting compounding of the assessment, it is to be completed under section 5. Exhibit P9 is quashed.
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2008 (5) TMI 622
Provisional assessment - Held that:- The order of Tax Board remains unexceptionable and calls for no interference. Even when the assessing authority in the final assessment order has left the matter regarding penalty aside due to pendency of appeal before the Tax Board, paragraphs 21 and 22 (22 and 23 of VST) of the decision in Mahaveer Timber Mart [2007 (5) TMI 586 - RAJASTHAN HIGH COURT] operate squarely against the contention on competence of appeal in relation to the provisional assessment order after passing of final assessment order. The revision petition fails and is, therefore, rejected.
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2008 (5) TMI 621
Reassessment proceedings and orders passed under section 21 of the Act - Held that:- Section 15(c) of the Central Act provides reduction of tax leviable on the turnover of rice under the U.P. Trade Tax Act with the tax levied on the paddy out of which such rice was procured. It does not provide any reduction of tax under the Central Act by the tax paid on paddy under the State law out of which such rice was procured.
The proceedings under section 21 of the Act have been initiated without any material on the basis of which belief could be formed that there was escaped assessment, namely, that the tax levied on the interState sales of rice under the Central Act has been wrongly reduced by the tax levied on paddy under the U.P. Trade Tax Act out of which such rice was procured except on account of change of opinion.
The initiation of proceedings under section 21(1) of the Act on account of change of opinion are not permissible and, therefore, the initiation of proceedings under section 21 of the Act in the cases of the petitioners are bad in law.
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2008 (5) TMI 620
Whether furnace oil qualifies to be an "input" for the purpose of availing input tax credit?
Held that:- What is required is that consumables should be directly used in the manufacturing process for production of finished product. The expressions "directly go into composition of finished product" and "directly used in manufacturing or processing of finished product" are not one and the same thing. There is a clear distinction. In the former, while the goods directly go into composition of finished product, in the latter, the consumable is directly used in the manufacturing process of finished products. It has already been held that furnace oil is consumable which is directly used in the manufacturing process for production of finished product. Certainly it does not directly go into composition of finished product. In spite of the same, since "input" as defined under section 2(25) of the OVAT Act includes consumables which are directly used in manufacturing of finished products, furnace oil is nothing but an "input" and tax paid on purchase of such input shall qualify for set off against the output tax.
In that view of the matter furnace oil which is used in the process of manufacture of PSF is to be treated as an "input" as defined in section 2(25) of the OVAT Act and the input tax which has been paid on purchase of furnace oil can be claimed as input tax credit under section 2(27) of the OVAT Act against the tax payable on finished product, i.e., PSF. Accordingly, the impugned order dated June 28, 2006 (annexure 6) is quashed. W.P. allowed.
In the result, the writ petition is allowed. There will be no order as to costs.
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2008 (5) TMI 619
Whether the original assessment order dated March 23, 2005 passed by the assessing officer merged with the appellate order dated December 26, 2005 by operation of doctrine of merger?
Whether the appellate authorities in exercise of their power to enhance the assessment, can take into consideration the fresh or new material which was not before the assessing officer but has come to light only after completion of the assessment while disposing of the appeal arising out of the original assessment?
Whether by exercising power of revision the Commissioner can consider any new or fresh material which was not before the assessing officer, but came to light only after completion of the assessment?
Held that:- The original assessment order passed by the assessing officer merged with the appellate order by application of doctrine of merger. In spite of that the assessing officer assumes jurisdiction under rule 12(8) of the CST (O) Rules to assess the turnover escaped assessment from the original assessment by issuing notice under that rule on the basis of new/fresh material which was not the subject-matter in the original assessment, but comes to light only after completion of original assessment.
The appellate authorities while disposing of the appeal arising out of an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment.
We are of the considered view that by exercising power of revision, the Commissioner cannot consider any new or fresh material which was not before the assessing officer and comes to light only after passing of the original assessment order. In the present case, the challenge is not only to the notice issued under rule 12(8) of the CST (O) Rules but also to the order of assessment made on the said notice. Since the assessment had already been made, challenge to the legality of the notice is really without any relevance.
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2008 (5) TMI 618
Whether a person, other than one, who is registered under the Tripura Sales Tax Act, 1976 shall obtain permit, as prescribed in form XVIII, in terms of the provision of rule 46 read with rule 47 of the Tripura Sales Tax Rules, 1976 in order to enable such a person bring, into the State of Tripura, goods, which are taxable under the Act?
Held that:- What cannot be ignored is that though in para 6 of the writ petition, it had been clearly pointed out by the writ petitioner that she was not liable to obtain any permit in form No. XVIII, the respondents have, in their affidavit-in-opposition, seriously disputed such contention of the petitioner and asserted that obtaining of a permit, in terms of the provisions of the Rules, is a condition precedent for bringing taxable goods into the State of Tripura. Thus, the justification offered by the respondents for insisting obtaining of the permit leaves this court with no option, but to hold that the respondents have harassed the petitioner by illegally forcing her to make payment of the said sum of ₹ 17,761 and, in such circumstances, the respondents are liable to pay the interest for withholding the said amount.
Therefore it is hereby directed that the respondents shall pay the said sum of ₹ 17,761, within one month from today, with interest at six per cent per annum from October 8, 1998 until realisation of the said amount. This apart, in face of the peculiar facts and circumstances of the present case, the respondents shall also be held liable to pay a sum of ₹ 500 as minimum possible cost of the legal proceeding.
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2008 (5) TMI 617
Whether the trade discount given by the petitioner to its distributors and dealers through credit notes has rightly been disallowed and tax imposed thereon?
Held that:- Since the facts in this regard at not at all clear, it will be appropriate if the matter is dispassionately re-examined by the Joint Commissioner limited only to the question whether the petitioner has passed on the tax burden to its dealers and distributors or not. If it is found that the petitioner has passed on the tax burden, then, on the principles of unjust enrichment, the petitioner will not be entitled to a refund for that amount. But if it has not passed on the tax burden then, of course, the petitioner will be entitled to a refund. To this extent, while we quash the order No. 437 dated October 20, 2006 we direct the Joint Commissioner to take a decision within six weeks from today limited to the question whether, despite the trade discounts given by the petitioner, it has passed on the tax burden to its dealers and distributors or not. Of course, the petitioner will be entitled to produce all its documents to show that the tax burden has not been passed on to the dealers and distributors.
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2008 (5) TMI 616
... ... ... ... ..... r." Upon a reading of the aforesaid observation of the Supreme Court, it becomes clear that where taxes have been collected by the dealers from the actual purchasers/consumers and thereby resulted in the taxes being passed on to such purchasers/consumers, there is no question of refund to the dealer as that would amount to the dealer's unjust enrichment which is not permissible. In respect of Central excise duty with regard to the issue of unjust enrichment, the decision of the Supreme Court in the case of Mafatlal Industries v. Union of India 1998 111 STC 467 is also apposite. In this writ petition, it has not been controverted by the petitioner that the taxes were in fact collected from the customers, implying thereby that the tax had been passed on to the customers. Therefore, directing refund would amount to unjustly enriching the petitioner. This is not permissible in view of the discussion above. Accordingly we dismiss this writ petition. No order as to costs.
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2008 (5) TMI 615
Whether, on the facts and in the circumstances of the case, the declaration furnished by the selling registered dealer in form of ST-14 is sufficient compliance of the proviso of section 18 of the Act?
Whether, on the facts and in the circumstances of the case, the non-deposit of tax by the selling registered dealers during currency of their registration certificate makes the purchasing registered dealer liable to pay the tax, in spite of the fact that the selling registered dealer has furnished declaration to the effect that tax has been paid?
Whether, on the facts and in the circumstances of the case, the department can only proceed against the selling registered dealer in view of the fact the registered dealer has been furnished a false certificate and tax has been paid?
Whether, on the facts and in the circumstances of the case, the Tribunal is right in law to maintain order of the Assessing Authority when the requirements of section 18 have been fully complied with by the petitioner-assessee?
Held that:- For claiming deduction from payment of tax on a subsequent sale of goods on which tax has been paid by the first seller, the dealer (second seller) has to furnish the certificate in the prescribed form and manner and signed by the registered dealer from whom the goods were purchased to the effect that the tax on such goods has been paid at the first stage. As per requirement of section 18 of the Act, there was no further step required to be taken by the petitioner to verify the payment of tax.
In view of the law laid down by the Madras High Court in Raichael Chacko's case [1983 (12) TMI 272 - MADRAS HIGH COURT] and Raman & Co. case [1990 (10) TMI 364 - Supreme Court of India] , the dealer is entitled to claim deduction from the payment of sales tax on a subsequent sale for goods on which tax has been paid at the stage of first sale and it is not the duty of the subsequent seller to pay tax if the first seller has not paid the tax. Thus, we are of the view that the aforementioned questions of law do arise in the present case and, therefore, we direct the Sales Tax Tribunal, Haryana to draw a statement of the case and refer to this court for its decision the questions of law as aforementioned which arise out of the order of the Tribunal dated February 10, 1992.
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