TMI Tax Updates - e-Newsletter
January 13, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India working in India can open foreign currency account with a bank outside India and receive salary from India subject to payment of Income Tax in India - Notification
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Income Tax:
Income on betting - Set off of business losses against betting and gambling income - total winnings from betting of the assessee should be brought to tax at the rate of 40% (Now 30%) u/s 115BB set off denied - HC
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Income Tax:
Rate of depreciation - 80% or 15% - a wind mill, which obviously cannot supply electricity without power evacuation infrastructure as integral to its very functioning and use - higher depreciation allowed - HC
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Income Tax:
Penalty u/s 271G - filing of document within two months before Transfer pricing officer (TPO) - Ambiguity or doubt in the mind of the Assessing Officer does not justify imposition of penalty, when the actus reas itself is not proved and established. - HC
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Income Tax:
Validity of reopening of assessment - The reasons recorded by the Assessing Officer do not meet and satisfy the said basic and limited pre-jurisdictional requirement. - HC
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Income Tax:
Deduction u/s 31 - current repair to machinery or plant - replacement of parts -The mere fact that the new parts are different from those that were replaced, in terms of cost, or efficiency; by itself does not lead to the conclusion that the assessee has acquired new item of machinery - claim allowed - HC
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Income Tax:
The non-impleadment of the legal heir of late assessee effectively meant that the Tribunal passed an order in respect of a dead person and thereby rendered its order a nullity in law.- HC
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Income Tax:
Waiver of interest levied u/s 220(2) - Financial difficulty - it would be necessary for the 1st respondent to reconsider the matter regarding levy of interest under Section 220(2) - HC
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Income Tax:
TDS u/s 192 - Gift coupons were given to employees - The salary of employees comes from the revenue of the PSU and when huge amount of TDS is made from regular salary, we see no reasons as to why, a Central Government PSU, will commit default to pay TDS on such small payment. - HC
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Income Tax:
Payment of bonus - Disllowance u/s 43B - The only thing he can verify is as to whether bonus has been paid as a matter of fact. If it is paid, deduction has to be permitted - bonus was paid before filing of return, deduction allowed - HC
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Customs:
Refund claim - Export of ROM - The appellant had not challenged the assessment order and file the refund claim and in the refund claim they challenged the assessment order which is not allowed - refund denied - AT
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Corporate Law:
Validity of auction sale - Right of the auction buyer - Since the proper procedure for effecting the sale was not followed, it will have to be held that the price fetched through the Appellant cannot be held to be the correct price for the mortgaged property involved in these proceedings. - SC
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Central Excise:
Valuation of goods - Transaction Value - Related Person - tribunal has said that both parts of Rule 9 of 2000 Rules are not fully attracted as it is and, accordingly, it considered the matter in light of Rule 11 of 2000 Rules - order of tribunal sustained - SC
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Central Excise:
Denial of Central excise registration - property was purchased by the assessee in auction - default of excise duty by the earlier registrant - registration allowed - AT
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Central Excise:
Manufacture of R.C. Mattresses (Rubberised Coir Mattresses) - coir products or not - reliance by the Commissioner on some dictionary meaning for the purpose of deciding whether the impugned goods are coir product does not sustain. - held as coir products - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (1) TMI 440
Violation of Sections 269SS and 269T - Receipt and payment of cash loan along with interest - Unexplained income - Surrender of Income - Tribunal deleted whole addition made by Assessing Officer - Held that:- substantial surrender was made during the course of search. Reference was made to the statement of Yogesh Gupta wherein he had accepted that there were unaccounted for transactions in cash, but no question was put to him about the details of the writer or the recipient i.e. the details of the person, who had received the said amounts. At that time, the officers were duly satisfied with the investigation and the surrender. It is further recorded that the allegation that loans/deposits must have been taken in cash was a mere suspicion, which could have been a cause for further verification and investigation, but mere suspicion cannot be a ground to hold that loan/deposits were received in cash - Revenue has not filed before us any document or material to show that in fact loan was taken and interest payment was made. The persons to whom allegedly interest was paid, their details and particulars were not ascertained, verified and examined - Following decision of assessee's own previous case [2015 (1) TMI 420 - DELHI HIGH COURT] - Order of tribunal is not preverse - Decided against Revenue.
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2015 (1) TMI 439
Income on betting - Set off of business losses against betting and gambling income - Tribunal observed that only the net income is to be taxed under Section 115BB of the Income Tax Act - Held that:- A bare reading of the circular No.461, dated 9.7.1986 and the provisions makes it clear that Section 115BB of the Act envisages taxation at the flat rate of 40% on the total amount of winnings from betting etc. In view of the specific provision contained in Section 115BB of the Act under Chapter XII of the Act, which provides for determination of tax in certain special cases, the special rate of tax is applicable for the entire income of winnings from horse racing and should be subject to tax at the special rate provided therein. It is not the case of the assessee that the income being brought to tax is earned from owning and maintaining the horses. Therefore, in our considered opinion, the provisions of Section 58(4) of the Act will not come into play. We are at a loss to understand as to how the Tribunal concurred with the decision of the Commissioner of Income Tax (Appeals), while making a diametrically opposite observation that Section 58(4) of the Act is not applicable. - total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside. Accordingly, the order passed by the Tribunal is set aside.- Decided in favour of Revenue.
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2015 (1) TMI 438
Deduction under Section 32AB - income from the lease rent - Business income or income from other sources - Tribunal observed that Assessing Officer in error in rejecting the claim of the appellant for deduction U/s. 32AB in respect of the least rent. - Held that:- After the unit was set up, the assessee had admittedly never carried out the manufacturing activities for manufacturing of shoe polish. Further, The Tribunal rightly held that the facts of the case clearly indicated that the assessee wanted to exploit the asset as a commercial asset for commercial gain. It is further to be noted that leasing out had been done in the accounting year 1988-1989 and for the preceding assessment years, the assessee had shown the lease rent as business income, and the same had been accepted by the A.O. The Tribunal further held that the principle of res judicata was admittedly not applicable to the Income Tax Proceedings. - the income of the assessee is a business income. - Deduction u/s 32AB allowed - Decided against Revenue.
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2015 (1) TMI 437
Revision u/s 263 - CIT noted that there is huge difference in valuation - prejudicial and erroneous order - Held that:- A perusal of the inventory regarding finished goods reveals that finished blankets are 13822 pieces, but while arriving at the figure of 25687 of finished blankets, the CIT included unfinished goods and raw material. We have also perused a copy of the paper book filed before the ITAT which contains the inventory of finished, unfinished goods and raw material that prove the factual error committed by the CIT. The Tribunal has after referring to these errors rightly recorded a finding that at its best the case against the assessee was one short assessment which had already been taken care of by the Assessing Officer by adding a substantial amount to the income of the assessee. - Decided against Revenue.
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2015 (1) TMI 436
Rate of depreciation - 80% or 15% - Renewable energy device - nature of power evacuation infrastructure attached to a wind mill - Held that:- Assessing Officer after a laboured attempt to separate the renewable energy devices, in the case a wind mill for the power evacuation infrastructure referred to the nature of renewable energy, wind mills etc. and held that power evacuation infrastructure is not an integral part of a renewable energy devices and, therefore, proceeded to hold that depreciation shall be calculated at 15%. - CIT(A) set-aside this order and by holding that the power evacuation infrastructure is an integral part of the renewable energy devices and allowed depreciation @ 80%. - A wind mill, which is admittedly a source of renewable energy, cannot possibly function without power evacuation infrastructure and, therefore, to hold that it is not integral to a wind mill would be travestying of facts and justice. It would be necessary to clarify that we are not dealing with an ordinary device, where transmission lines and electricity generation devices are involved but a wind mill, which obviously cannot supply electricity without power evacuation infrastructure as integral to its very functioning and user. Consequently, we answer questions of law against the revenue - Decided against Revenue.
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2015 (1) TMI 435
Hireing of plastic moulds - Nature of expenditure incurred on plastic moulds - TDS liability u/s 194C - Applicability of findings recorded by the Settlement Commission relating to valuation of good for levy of excise duty in the Income tax proceedings - Held that:- There is no dispute about the payments made by the respondent-assessee to the overseas group entities for hire of moulds. The international transactions were not made subject matter of any transfer pricing adjustments. - it is difficult to understand the logic and reasoning of the Assessing Officer and the stand of the Department that hire charges paid for the moulds, which were used to manufacture the products sold by the respondent-assessee after being manufactured at their behest and cost, should not be treated as expenditure under Section 37(1) of the Act. TDS u/s 194C- Held that:- Reliance placed on Section 194C is also misconceived as the respondent-assessee had not charged any amount from Dart Manufacturing India Private Limited and Innosoft Technology Limited. In fact, Section 40(a)(ia) was not invoked and applied by the Assessing Officer. On hire charges paid to the overseas group companies, tax at source would have been deducted under Section 195 of the Act. It is not stated that tax at source had not been deducted. Provision for obsolete stock - valuation of stock - Held that:- One cannot appreciate and understand how the principle of matching can apply, without examining the question whether the market price of obsolete and unsalable items was less than or lower than the manufacturing costs. If the market price of obsolete or unsaleable items is less than or lower than the cost price, the said position can be the basis for computing closing stock. It is noticeable that the respondent-assessee has been following this practise for several years and similar issue had arisen in the assessment year 2005-06, but the Revenue has not filed any appeal in respect of the said year. In fact, in the assessment year 2008-09, some of the obsolete items were sold and sale consideration received has been duly accounted for. This fact has been noted by the Tribunal in the impugned order. Thus, on the second issue, we see no reason to interfere. - Decided against Revenue.
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2015 (1) TMI 434
Deduction u/s 80HHC - Income from fixed deposits in Banks - held that:- as is evident from the order of the Tribunal, the appellant/assessee did not pursue the matter sincerely before the Tribunal, but remained exparte. The appellant/assessee should have appeared before the Tribunal and explained the above position, which he had done before the CIT (Appeals) as is evident from the reasoning as reflected in the order of the CIT (Appeals). However, inspite of a finding by the CIT (Appeals) in his order about the need for deposit to be made for the purpose of availing credit facility, there is no reference to the above letter of the bank in the proceedings of the original authority or the Tribunal, but a reference about that portion of the findings of the CIT (Appeals) is found in the order of the Tribunal. The Tribunal was not in a position to consider this document, in the absence of the assessee/appellant and, therefore, it fell in error in coming to a conclusion that it is not a business income eligible for benefit under Section 80 HHC of the Act. - Matter remanded back - Decide din favour of assesse.
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2015 (1) TMI 433
Block Assessment - Addition on account of payment made for for purchasing of a plot - Held that:- plea of the appellant was that the amount was held by the company and that it was paid to the owner of the land. The transaction did not fructify and it was paid back to the company. Neither the person, who is said to have received the amount nor any other individual, were examined to prove that the payment was by; or, for and on behalf of the appellant herein. The plea of the appellant was that the department did not cross-verify the matter from any authorized representative of the company. Therefore, whether one goes by the factum of the Department itself treating the only documents, namely, receipts as not true; or their failure to record the statements of any individual including the authorized representative of the company, the very basis for the proceedings ceases to exist. - Assessing Officer as well as the Tribunal proceeded on the assumption that the appellant was under obligation to explain the factum of payment. When the amount was not recovered nor was said to be in the control and custody of the appellant, there was no basis for initiating that proceedings. - Decided in favour of assessee.
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2015 (1) TMI 432
Penalty u/s 271G - filing of document within two months before Transfer pricing officer (TPO) - Doubt whether assessee complied with obligation as per Rule 10D - Silence on part of TPO - Penalty based on assumption - Held that:- The total value of the international transactions was ₹ 65,91,48,060/-. This figure was not disturbed. It can be inferred that as per documentation filed, no addition was required. In spite of the Assessing Officer not being factually sure and certain, whether or not there was violation of Section 92D of the Act read with Rule 10D of the Rules, penalty @ 2% of the value of international transactions of ₹ 1,31,82,960/- was imposed. Penalty cannot be imposed unless and until the Assessing Officer is sure and certain that there was a violation. Ambiguity or doubt in the mind of the Assessing Officer does not justify imposition of penalty, when the actus reas itself is not proved and established. The penalty order is self contradictory. Commissioner of Income Tax (Appeals) deleted the penalty, which order has been affirmed by the Tribunal. The Commissioner of Income Tax (Appeals) specifically recorded a finding that the documentation was filed by the assessee within the extended period of 30 days, i.e., within 60 days, and hence, no penalty was leviable. - Revenue has taken a different stand, which was possibly not taken before the Tribunal. It is stated that the documentation filed with the letter dated 16th May, 2007 did not enclose documentations to be maintained under Rule 10D of the Rules. It is clear that this was not the stand taken by the Revenue before the Tribunal and it was not the stand or ground taken by the Assessing Officer while imposing penalty. - No merit in appeal - Decided against Revenue.
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2015 (1) TMI 431
Validity of reopening of assessment - Escapement of income - Held that:- time period stipulated for issue of notice under Section 143(2) of the Act had expired and, therefore, the Assessing Officer could have only issued notice under Section 148 of the Act, if the jurisdictional pre-conditions mentioned in Section 147 of the Act were satisfied. The Assessing Officer should have formed a prima facie opinion that income chargeable to tax had escaped assessment and recorded these reasons in writing. The reasons so recorded should have some basis or support and not a mere gossip. The reasons cannot be a mere pretence and should be held in good faith. - Reason to suspect cannot amount to reason to believe. As it is the beginning of the inquiry, having a prima facie opinion is sufficient; and irrebuttable conclusive evidence or finding is not required. But the prima facie formation of belief should be rational, coherent and not ex facie incorrect and contrary to what is on record. As noticed in paragraph 3 above, the facts recorded are incorrect. Secondly, the reasons must have live nexus and must disclose on what basis or evidence the Assessing Officer feels and has reason to believe that income chargeable has escaped assessment. The reasons must be germane and genuine. For grounds elucidated in paragraph 4 above, this requirement falters. The reasons recorded by the Assessing Officer do not meet and satisfy the said basic and limited pre-jurisdictional requirement. There is no rational connection between the reason recorded and the formation of belief that income had escaped assessment. - Decided against Revenue.
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2015 (1) TMI 430
Deduction u/s 31 - current repair to machinery or plant - replacement of parts - Capital expenditure or Revenue Expenditure - Held that:- From a perusal Section 31, it becomes clear that an assessee would be entitled to deduct the expenditure incurred for any current repair to machinery or plant; and the one incurred for payment of premium of insurance. What constitutes current repairs was explained by various Courts. The Bombay High Court in Commissioner of Income Tax v. Chowgule and Co. (P) Ltd. 214 ITR 523 identified about 8 parameters, in this behalf. The gist thereof is that irrespective of the expenditure incurred, the replacement of a part of an existing machinery would constitute current repairs, and such expenditure cannot be treated as capital expenditure; and that in the name of causing repairs, an assessee shall not be entitled to bring an altogether a new asset, into existence. - The mere fact that the new parts are different from those that were replaced, in terms of cost, or efficiency; by itself does not lead to the conclusion that the assessee has acquired new item of machinery. It is not uncommon that the parts of an item of machinery, which is an independent unit, have different efficiency and endurance. Though the new part, which replaced the old one, in a machinery, is costlier and more efficient, it would not lead to an inference that an item of new machinery has been acquired, much less the cost incurred therefore can be treated as capital expenditure. - Decided against Revenue.
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2015 (1) TMI 429
Capital asset - Construction of theatres on leased land - whether, on the facts and in the circumstances of the case, and in law, the Income Tax Appellate Tribunal is right in coming to the conclusion that "Floor Space Index" is a capital asset - Held that:- Floor Space Index is an asset which is attached with the property and not with the business. Therefore, we are of the considered opinion that the Tribunal has not committed any error in dismissing the appeal of the revenue. - Decided against Revenue.
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2015 (1) TMI 428
Right to represent on behalf of deceased father - Impleadment by legal heir - While the appeal against the assessment order before the tribunal, the assessee was died - Held that:- in Ext.P3 order, the 3rd respondent Tribunal erroneously assumed that Sri.N.K.Mahamood who had filed the appeal before it against Ext.P2 order of the 2nd respondent, had died even before the filing of the said appeal. On the basis of the said finding, the 3rd respondent Tribunal did not permit the petitioner to implead the legal heirs of late N.K.Mahamood as appellants in the appeal before the Tribunal, for the purposes of pursuing the said appeal before the Tribunal. This was a patent mistake committed by the Tribunal and I am of the view that, the 3rd respondent Tribunal ought to have considered and passed orders permitting the petitioner to implead herself as the legal heir of late Sri.N.K.Muhamood who had died on 12.01.2006 during the pendency of the appeal before the Appellate Tribunal. The non-impleadment of the legal heir of late Sri.N.K.Mahamood effectively meant that the Tribunal passed Ext.P3 order in respect of a dead person and thereby rendered its order a nullity in law. - Directed to permit the petitioner to implead herself as the legal heir - Decided in favor of petitioner. Penalty proceedings u/s 271(1)(c) - Held that:- The petitioner has not demonstrated any valid reason for interfering with the said order at this stage, in proceedings under Article 226 of the Constitution of India. Accordingly, leaving it open to the petitioner to challenge Ext.P6 order before the appellate authority under the Income Tax Act - If the petitioner files an appeal against Ext.P6 order within a period of one month from the date of receipt of a copy of this judgment, the appellate Authority under the Income Tax Act shall consider the said appeal on merits and pass orders within a period of six months from the date of receipt of the appeal, by which time he would also have the benefit of considering the order of the 3rd respondent Tribunal in the appeal against Ext.P2 order of the 2nd respondent. - Matter remanded back.
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2015 (1) TMI 427
Deduction u/s 80HHC - Whether in the facts and circumstances of the case, the Appellate Tribunal was right in law in allowing claims for deduction u/s 80HHC of the Income Tax Act, 1961 holding that service charges, interest, delivery and distribution charges cannot be excluded while computing the profit of business for the purpose of deduction - Held that:- From a perusal of the orders of the CIT(A) as well as the Tribunal, it appears that while answering the issue raised in these appeals in favour of the assessee, both the authorities below placed reliance on a decision of the Kerala High Court in "BABY MARINE EXPORTS VS. ACIT" (Supra), wherein, the Kerala High Court laid down that the service charge is a part of the price for sale of the merchandise and that it is neither brokerage, commission, interest charges or collection or any amount of similar nature and on the basis of the same, CIT(A) and the Tribunal held that the 90 per cent of the export premium cannot be deducted while computing the deduction u/s.80HHC of the Act. - High Court of Kerala has now been confirmed by the Apex Court vide its decision in "CIT VS. BABY MARINE EXPORTS" (Supra), wherein, the Apex Court has held that according to Section 80HHC(1), the export house in computing its total income is entitled to deduction to the extent of the profit derived by the assessee from the export of the goods or merchandise, whereas, according to section 80HHC(1A), the assessee being supporting manufacturer shall be entitled to a deduction of profit derived by the assessee from the sale of goods or merchandise. Thus, we do not find that the the Tribunal committed any error in passing the impugned order. - Tribunal was right in law in allowing claim of the assessee for deduction u/s 80HHC of the Act, holding that service charges cannot be excluded while computing the profit of business for the purpose of deduction under the aforesaid section - Decided against Revenue.
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2015 (1) TMI 426
Registration u/s 12AA - Registration applied after more than 12 years - Held that:- the Income Tax Appellate Tribunal, by Ext.P9 order dated 03.11.2009, had set aside Ext.P6 order passed by the 5th respondent and directed him to pass a fresh order, on the application preferred by the petitioner, on merits. The order to be passed by the 5th respondent, pursuant to the directions of the Appellate Tribunal in Ext.P7 order, would have a bearing on the eligibility of the petitioner for exemption in respect of the assessment years prior to 2005-2006. It is therefore necessary that the 5th respondent passes orders expeditiously on the application preferred by the petitioner, for granting the effect of the registration granted under Ext.P3 from 05.02.1992, the date on which the petitioner association was incorporated. Unless the 5th respondent passes orders pursuant to the directions in Ext.P7 order of the Tribunal, there will be no meaningful adjudication of the appeal preferred by the petitioner against Ext.P1 assessment for the assessment year 2003-2004, where the issue of whether or not the petitioner has a registration under Section 12AA of the Income Tax Act would have a bearing. - pending final orders to be passed by the 3rd respondent in the appeal preferred by the petitioner against Ext.P1 assessment order, no recovery steps for realisation of any differential tax amount shall be pursued against the petitioner. - Decided partly in favor of assessee.
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2015 (1) TMI 425
Waiver of interest levied under Section 234A, B and C, and Section 220(2) - Financial difficulty - Held that:- The 1st respondent has come to the definite conclusion that the case of the petitioner does not fall within the purview of the Board's Circular and therefore there was no scope for granting any waiver of interest under Sections 234A, B and C in the instant case. - Decided against the assessee. Waiver of interest u/s 220(2) - Held that:- The financial condition of the petitioner is stated to be precarious, and, further, it is stated that of the two brothers who formed the partnership in the petitioner firm, one has since expired and the other is presently convalescing in a hospital after undergoing a surgery to treat a brain hemorrhage. It is also pointed out that there are several financial claims raised against the petitioner firm from various quarters, which are also in various stages of adjudication before the authorities concerned. In that view of the matter, I feel that it would be necessary for the 1st respondent to reconsider the matter regarding levy of interest under Section 220(2) of the IT Act in the case of the petitioner, taking into account the peculiar circumstances in this case - Matter remanded back - Decided partly in favour of assesse.
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2015 (1) TMI 424
TDS u/s 192 - Gift coupons were given to employees - perquisites - Penalty u/s 271C - Short deduction of tax - revenue contended that Gift coupons were given to employees for performance of their duty and not as mementos - Held that:- Assessee acted under the bona fide belief that the gift coupons, being in the nature of mementos to commemorate conferment of awards, were not in the nature of payment of salary. The salary of employees comes from the revenue of the PSU and when huge amount of TDS is made from regular salary, we see no reasons as to why, a Central Government PSU, will commit default to pay TDS on such small payment. - no penalty - Decided against Revenue.
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2015 (1) TMI 423
Disllowance of interest - Whether on the facts and in the circumstances of the case, the Tribunal was right in disallowing the interest treating the amount borrowed for the purpose of bringing the assets into existence for the purpose of establishment of plants for manufacturing ONCB,PNCB, ONT and PNT - Held that:- Following decision of GUJARAT STATE FERTILIZER AND CHEMICALS LTD. Versus ASSISTANT COMMISSIONER OF INCOME-TAX [2008 (8) TMI 313 - GUJARAT HIGH COURT] - respondent is not in a position to show any later decision of the Apex Court taking a contrary view than that taken in these matters - Decided in favour of assesse.
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2015 (1) TMI 422
Payment of bonus - Disllowance u/s 43B - purview of sec. 143(1)(a) - prima facie adjustments - Held that:- Even where the appropriate Government does not issue any ordinance or notification or in the absence of any agreement, an industry has its own discretion to pay the bonus of its choice, subject to statutory requirements. It is no facet of the power of the assessing officer to tell upon the justification or otherwise as to the percentage of bonus paid by an assessee. The only thing he can verify is as to whether bonus has been paid as a matter of fact. If it is paid, deduction has to be permitted under Section 43B of the Act and otherwise not. Payment of bonus, no doubt, was made after 31st March of the concerned year. However, it was before the due date for submission of returns. The proviso to Section 43B of the Act is to the effect that the amount must be actually paid by the assessee on or before due date applicable in his case for furnishing the return of income. Admittedly, the payment was made before the due date for filing of the return. - Following decision of Commissioner of Income Tax v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] - Decided against Revenue.
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2015 (1) TMI 421
Depreciation on Goodwill/intangible assets - Disllowance on the ground that valuer while bifurcating the figure of total consideration had separately assigned a value to the intangible assets representing specific intellectual property rights in the form of 'brands', and also assigned values to the tangible assets, and the balance 'slump' price, which could not be allocated to any other specific tangible or intangible asset, was given a consolidated value as goodwill acquired by the company - held that:- facts of the present case are identical to the facts in assessment year 2008-09 wherein the assessee in addition to the earlier acquisition of Animal Health Care and Diagnostics Business of Ranbaxy Laboratories Ltd. had further acquired entire biomed division of Wipro Ltd. and entire Medical Diagnostics business of Godrej Industries. - Following decision of assessee's own previous case [2013 (9) TMI 188 - ITAT CHANDIGARH] - Decided in favour of assesse.
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Customs
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2015 (1) TMI 444
Suspension of CHA License under Regulation 20 (2) of CHALR 2004 - Held that:- initial suspension order dated 11.5.2012 was issued under Regulation 20 (2) of CHALR, 2004 and which was continued by the impugned order dt. 6.6.2012 issued under Regulation 20 (3) of CHALR, 2004. It is seen that no proceeding was initiated under Regulation 22 of CHALR, 2004 in so far as no show cause notice was issued to the appellant under Regulation 22 (1) of Regulations 2004, which is required to be issued within 90 days from the date of receipt of offence report. - Following decision of Manjunatha Shipping Services Versus Commissioner of Customs (Imports), Chennai [2013 (10) TMI 1002 - CESTAT CHENNAI] this decision was upheld by High Court - impugned suspension order cannot be sustained - Decided in favour of appellant.
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2015 (1) TMI 443
Seizure of the Indian currency - sale proceeds of contraband gold biscuits of foreign origin - retraction of statement - Held that:- Appellant at the time of seizure of the Indian currency stated that the amount in question was the sale proceeds of the contraband gold. It is seen that subsequently the appellant by his representation dated 27.4.1985 to the Collector of Central Excise, Madurai stated that the amount in question was taken as loan from Shri S.S. Arumugam @ Raja Rathinam of Sri Lanka. We find that this issue went up to the ITAT. The Income Tax Officer by order dated 19.9.1989 for the Assessment Year 1986 - 87 added the amount of ₹ 5,50,000/- as borrowed from S.S. Arumugam of Melur during the previous year. - There are no materials to indicate that the sum of ₹ 5,50,000/- represents the concealed income of the assessee. Although when the customs authorities searched the assessee s premises it was stated that the money represented sale proceeds of contraband gold biscuits, the contention of the assessee is that such statement was signed by the assessee out of force and immediately thereafter on 27.4.1985 the assessee stated before the authorities that the seized money represents the deposits received from Rajarathinam, a Srilankan. Sri Rajarathinam on 8.4.85 has field before the assessing officer an intimate that he had migrated from Sri Lanka to India and he has also stated that he brought a sum of ₹ 7,95,000/- out of his earnings in Sri Lanka. The ITO has acknowledged this declaration on 9.4.85. Amounts as seized from the appellant was lent by Shri S.S. Arumugam @ Rajarathinam which is accepted by the ITAT and so there is no reason to consider the said amount as sale proceeds of contraband goods. At this stage, the learned AR for Revenue doubted the authenticity of ITAT orders. We find that the appellant filed photocopy of ITAT orders in their appeal before the Tribunal. There is no need to say that the Revenue is always at liberty to verify the authenticity of the ITAT orders - Impugned order set aside - Decided in favour of assesse.
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2015 (1) TMI 442
Waiver of pre deposit - Demand of differential duty - CVD on the coal - It is the case of the Revenue that the appellants have mis-classified the coal imported by them as steam coal in order to avail in-eligible benefit of exemption Notification No.12/2012-Cus, dt.17.03.2012 - held that:- Revenue’s entire case is based upon the interpretation of the tariff heading 27011200. Sub-heading Note 2 of Chapter 27 has been interpreted to hold that the goods which are imported by the appellant would fall under category of ‘Bituminous Coal’ for which the benefit of exemption Notification No.12/2012-Cus, dt.17.03.2012 is not available. We find that when the appellants imported coal, they filed Bills of Entry and various other documents which specifically describe the product as ‘Steam Coal’. It is the appellant’s case that prior to material period in question and post material period, the appellants have been importing these coals from their suppliers and classifying the same as steam coal. It is also their submission that there is no need for them to mis-declare the goods as Chapter Heading 27011990 more specifically 1927011920 makes the classification of the steam coal. In our considered view, the entire issue is an arguable one and contentious, needs to be gone in detail in as much as the interpretation of their heading and has to be considered in its proper perspective. It is the case of the assessee that the coal which has been imported from SAARC/ASEAN countries is eligible for lower rate of Customs duty and CVD. We also note the points raised by the counsel that if the goods are imported, the levy of CVD is incorrect as the coal whether in India or abroad is never manufactured but extracted from the mines. There is a case for re-quantification of duties based on the imports from ASEAN/SAARC nations. In our considered view, all these arguments can be considered at length at the time of final disposal of appeals. In our view, in order to hear and dispose the appeals on merit, all the appellants need to be put to some condition. - Partial stay granted.
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2015 (1) TMI 441
Refund claim - Export of ROM - duty was paid without availing the benefit under Notification No. 62/2007-Cus dated 3.5.2007 - Appellant filed Shipping Bills in respect of export of ROM (Mixture of Iron Ore Fines and Lumps) and paid the duty as per the Tariff - Held that:- In the Shipping Bills the appellant had not declared the goods as Iron Ore Fines. The consignment is in fact of ROM. On assessment of Shipping Bills and in pursuance to that the appellant had paid the duty. It is well settled law that the assessment order passed by the assessing authority is an appealable order under Section 28 of the Customs Act, 1962. The appellant had not challenged the assessment order and file the refund claim and in the refund claim they challenged the assessment order. We find that the Hon'ble Supreme Court in the case of CCE, Kanpur vs Flock (India) Pvt Ltd (2000 (8) TMI 88 - SUPREME COURT OF INDIA) held that the assessment order cannot be challenged in the refund claim. In the case of Priya Blue (2004 (9) TMI 105 - SUPREME COURT OF INDIA) the Hon'ble Supreme Court followed the decision in the case of Flock (India) Pvt Ltd (supra). The Hon'ble Supreme Court while interpreting the words "in pursuance of an order of assessment" under Section 27 of the Customs Act only indicate that the party/person who can make a claim for refund. In other words, they enable a person who has paid duty in pursuance of an Order of Assessment to claim refund. These words do not lead to the conclusion that without the Order of Assessment having been modified in appeal or reviewed a claim for refund can be maintained. We find that in the present case as the duty has been paid in pursuance of the assessment made by the assessing officer and that order has not been challenged. - Decided against assesse.
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Corporate Laws
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2015 (1) TMI 463
Redemption of immovable secured asset - Whether under sub-section (8) of Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 a borrower is permitted to redeem the immovable secured asset after the secured asset was sold but before the confirmation of sale by the secured creditor under the Security Interest (Enforcement) Rules, 2002 - Held that:- though the bid amount was accepted by the authorized officer, it does not amount to confirmation by the secured creditor and the bank has the right to cancel/modify the sale before confirmation of the same. An auction purchaser derives title on confirmation of sale only. Though the above case arises under the provisions of Transfer of Property Act and deals with lease, the proposition can be made applicable to the cases arising under the Securitization Act as well. Even according to the respondent-banks, a sale certificate is not required to be registered nor were the banks required to execute a registered sale deed after the sale was confirmed by the banks and merely a sale certificate was required to be issued. It is the appellant who is insisting for registration of a sale deed. In the case before the Supreme Court, the sale was confirmed by the Court in favour of the purchaser and a sale certificate was issued. Be that as it may, in the present case, though the appellant has become the highest bidder and paid the amount, the sale was not confirmed by the banks i.e. the secured creditor which is mandatory and a pre-condition as per the terms and conditions of tender notification. Therefore, in the absence of confirmation of sale by the banks, as required under Rule 9(6), the appellant derives no title to the property in question. It is only on confirmation of the sale by the respondent- banks the property vests in the appellant. Proceedings initiated by the borrower before the DRT are without jurisdiction, needless to state that against the sale proceedings of the authorized officer, the borrower has a right to approach the DRT under Section 17 of the Act. In the instant case, as already held, the sale is not confirmed by the secured creditor and the borrower has approached the DRT on 3.4.2012 and the Tribunal issued directions giving liberty to the borrower to pay the amounts within five weeks which have been complied with by the borrower. Therefore, it cannot be said that the proceedings before the DRT are without jurisdiction. The DRT is well within its competence to take up the matter. - Securitization Act, a borrower has the right to redeem the property under sub-section (8) of Section 13 of the Act at any time before the date the property is transferred to the auction purchaser by confirmation of sale by the secured creditor as required under sub-rule (6) of Rule 9 of the Rules. - Decided against Appellant.
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2015 (1) TMI 462
Constitutional validity of Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - The petitioners availed of loan facility from respondent No.2-Bank and failed to repay the loan amount - Bank issued a notice under Section 13(2) of the Act and called upon the petitioners to make good the payment failing which the Bank would proceed to take over the possession of the secured assets under Section 13(4) - The petitioners were aggrieved by the measures taken by the Bank. In their appeal order under section 17, no interim relief in favour of the petitioners was granted by DRT, Ahmedabad - The appeal thereagainst was still pending before the DRT, Mumbai - In the meantime, the Bank preferred an application under section 14 before the District Magistrate, Surat, requesting to provide for police protection for the purpose of taking over of the actual possession of the secured assets - District Magistrate, Surat directed the Police Inspector of the concerned Police Station to provide for necessary assistance for the purpose of taking over of the possession of the secured assets - petitioners have challenged the legality and validity of Section 14 of the Act on the ground that the same is violative of Articles 14, 19 and 300-A of the Constitution of India. Held that:- Fact that a right of appeal is not available against the order passed under Section 14 of the Act does not render the said provision unconstitutional and void as being violative of Articles 14 and 19 of the Constitution of India on the ground of arbitrariness and reasonableness. - Section 14 of the Act is a valid piece of legislation and is declared intra vires - The District Magistrate or Chief Metropolitan Magistrate, as the case may be, is bound to assist the secured creditor in taking possession of the secured assets and is not empowered to decide the question of legality and propriety of any of the actions taken by the secured creditor under Section 13(4) of the Act. Though Section 14 of the Act provides that no act of the Chief Metropolitan Magistrate or District Magistrate done in pursuance of Section 14 shall be called in question in any Court or before any authority, the right of judicial review under Articles 226 and 227 of the Constitution of India cannot be taken away, but that power can be exercised only in cases where the concerned Magistrate or the Commissioner, as the case may be, exceeds his power or refuses to exercise his jurisdiction vested in him under the law. - Absence of an appeal does not necessarily render the legislation unreasonable as only because no appeal is provided under the Act against the order passed under Section 14 of the Act will not render Section 14 ultra vires the provisions of the Constitution of India. - Decided against Appellants.
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2015 (1) TMI 461
Validity of auction sale - Right of the auction buyer - entitlements of the guarantors who stepped into the shoes of the borrowers as provided under Section 13(8) of the SARFAESI Act - appellant contended that once the sale has been effected and confirmed in accordance with law, merely because someone else can offer a higher amount, the Court should not have interfered with the already confirmed sale as that would become an unending affair if such approach made by parties are entertained. - Interpretation of Section 13(8) of the SARFAESI Act, read with Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002 - Violation of right of redemption - Denial of adequate opportunity and time to repay the borrowed sum - Auction of property without giving proper notice. Held that:- Whole procedure followed by the 4th Respondent-Bank in effecting the sale on 28.12.2007 and the ultimate confirmation of the sale on 11.01.2008, stood vitiated as the same was not in conformity with the provisions of the SARFAESI Act and the Rules framed thereunder. Though, such a detailed consideration of the legal issues was not made by the Division Bench while setting aside the sale effected in favour of the Appellant, having regard to the construction of the provisions of the SARFAESI Act, the RDDB Act and the relevant Rules, we are convinced that the Judgment of the Division Bench [2010 (3) TMI 1050 - KERALA HIGH COURT], was perfectly justified and we do not find any infirmity with the same. Judgment passed in Writ Appeal No.1555 of 2009 dated 08.03.2010, was a self contained one and due to the failure of the 1st and 2nd Respondents in not handing over the Demand Draft for ₹ 2,00,00,000/- to the Appellant within the stipulated time limit, namely, on or before 08.06.2010, the sale effected in favour of the Appellant stood confirmed Inasmuch as we have found there was absolutely no justifiable grounds for the Division Bench to grant further time in its Order dated 18.06.2010, we are of the view that it will be travesty of justice if the earlier Judgment dated 08.03.2010, which worked itself out on 08.05.2010, is to be reversed for the flimsy grounds raised by the 1st and 2nd Respondents that they could not raise funds in spite of two months time granted to them for paying a sum of ₹ 2,00,00,000/- in favour of the Appellant. We have also found that while the time granted by the Division Bench expired by 08.05.2010, the application for extension was filed 40 days later, i.e. on 10.06.2010. Therefore, for such a recalcitrant attitude displayed by Respondents 1 and 2 in respect of a litigation which involved very high stakes, the Division Bench should not have come for their rescue in the absence of any weighty reasons. The reason adduced on behalf of Respondent 1 and 2 is the standard reason which any party used to plead while seeking for extension of time. Since very valuable rights of the Appellant were at stakes and the Order of the Division Bench also remained in force, insofar as it related to the cancellation of the sale deed, which existed in favour of the Appellant till 08.05.2010 and by virtue of the noncompliance of the conditions imposed in the said Judgment dated 08.03.2010 by the 1st and 2nd Respondents the ownership rights of the Appellant got crystallised on and after 09.05.2010, we fail to find any justification at all for the Division Bench to interfere with the said right in such a casual manner by accepting the flimsy reasons of the 1st and 2nd Respondents. Therefore, while upholding the Judgment of the Division Bench dated 08.03.2010 passed in Writ Appeal 1555 of 2009, for the reasons stated herein, the Orders dated 18.06.2010 and 08.07.2010 passed in I.A. Nos.437 and 507 of 2010 are set aside. Value of the property which was knocked out in favour of the Appellant in a sum of ₹ 1,27,00,101/- by confirming the sale by the 4th Respondent-Bank on 31.12.2007 and 11.01.2008, the same was found to be not in accordance with the provisions of the SARFAESI Act. Since the proper procedure for effecting the sale was not followed, it will have to be held that the price fetched through the Appellant cannot be held to be the correct price for the mortgaged property involved in these proceedings. Further, the very fact that in the year 2010 the property could fetch ₹ 2,03,00,000/-, we are of the view that in all fairness even while confirming the Order of the Division Bench, by which the sale in favour of the Appellant came to be confirmed, the difference in the sale price should be directed to be paid by the Appellant. While the price paid by the Appellant was ₹ 1,27,00,101/-, the price ultimately fetched at the instance of the 1st and 2nd Respondents was ₹ 2,03,00,000/-. Therefore, after giving credit to ₹ 1,27,00,000/-, the Appellant would still be liable to pay a further sum of ₹ 76,00,000/- to the 1st and 2nd Respondents. - Decided partly in favour of appellants.
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Service Tax
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2015 (1) TMI 460
Storage and Warehousing Services - appellant is providing storage tank to their customers for storage of gas - Held that:- In this case to decide the taxability of service, the real test is that, when the goods have been passed on to the customer. From the facts of the case, it is emerging that the gas in the storage tank installed at the place of buyer and the goods transferred to the buyer. Therefore, there is no control of the appellant on the goods in storage tank, after gas is stored in the tank the whole responsibility of the goods is with the buyer only. In these circumstances, as the appellant is not having any control over the goods and they are not responsible for the security of the goods, the appellant is not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994. - Decided in favour of assesse.
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2015 (1) TMI 459
Waiver of pre-deposit - Business auxiliary servcies - Export of services - Held that:- Applicant is procuring purchase orders for their associates located outside India by conducting market survey. We do agree with the applicant that the services falls under the category of Business Auxiliary Service and as per the Export of Service Rules, 2005 the applicant's service falls under Rule 3 (1) (iii) of the said Rules. As per the said rules, the applicant is procuring the order for their associates located outside India, therefore the user of the service is located outside India. - applicant had complied with the condition of the Export of Service Rules, 2005 therefore the applicant has made out a case for total waiver of the pre-deposit. - Stay granted.
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2015 (1) TMI 458
Demand on interest and penalty on late payment of service tax - Revenue neutral exercise - availability of cenvat credit - reverse charge mechanism - Held that:- Simply because a situation leads to revenue neutrality does not imply that tax need not be paid on time. When law requires tax to be paid it has to be paid as per time specified. The Ld. Counsel has relied on the case of Reliance Industries (2014 (1) TMI 52 - CESTAT AHMEDABAD) to say that interest is not demandable. I note that this case refers to situation where the question of payment of duty on intermediate products was the issue. In the facts of the present case, it is clear that the tax has been paid much later than the date on which it was due. The time to be considered for interest purposes is this time between the due date and the payment day. It cannot be said that the Government has not lost interest between the two dates, notwithstanding the fact that Cenvat Credit could have been availed on the same date if duty had been paid on time. This aspect was not considered in the citations referred. I hold that interest is payable under Sections 75 of the Finance Act. - Although the appellants are paying regularly service tax regularly, two transactions were missed due to oversight and tax could not be paid in respect of these two transactions. Intention to evade payment of duty is not established when clearly the appellants are eligible for taking Cenvat Credit as soon as duty is paid by them. The case of Patel Alloys Pvt. Ltd. (2013 (12) TMI 167 - CESTAT AHMEDABAD) supports this case. - Interest is payable; however penalties are set aside - Decided partly in favour of assesse.
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2015 (1) TMI 457
Denial of refund claim - developer of SEZ - Consulting Engineering and Business Auxiliary Service - notification No. 9/2009 dt. 3.3.2009 - Held that:- Notification No. 9/2009 does not state that the list of services required in relation to authorized operations in the SEZ should be got approved from the approval committee before providing the services. The appellants have pointed out that they had filed the refund claim after the list was approved. Thus, the claim is in consonance with the requirement of notification. It is also noted that the SEZ Act, clearly provides under Section 50 (1) that it will have overriding effect over the provisions of any other law. As both the SEZ Act and Service Tax Act, have been passed by Parliament, the provisions of Section 51 have to be given effect to. The reliance placed on the DHL Logistic Pvt. Ltd. (2012 (6) TMI 458 - CESTAT, MUMBAI) by the A.R. relates to exemption notification No. 4/2004 which did not incorporate the refund mechanism. On the other hand, in the case of Intas Pharma Ltd. Vs. CST reported in [2013 (7) TMI 703 - CESTAT AHMEDABAD], it was held that provisions of SEZ Act have overriding effect. Therefore, there appears to be no reason to deny the refund claim. Notification No. 9/2009 does give the authority to the Assistant Commissioner law to collect extension for filing of refund claim. The appellants were registered in 2009; thereafter took various approvals under SEZ Act and this being their first refund application, the same was filed beyond the six months period. They also needed time to ensure that the service provider not taken refund. The Assistant Commissioner should have examined the issue in total perspective while exercising his power under this clause (2f) of para 2 of the notification. The appellants have been filing refund claims thereafter which are receiving sanction. It would not meet the ends of justice, if the refund claim is denied when no service tax is payable under the provisions of SEZ Act. - Decided in favour of assesse.
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2015 (1) TMI 456
Business Auxiliary Service - Revenue is of the view that the additional handling charges and the facilitation charges are leviable to service tax under the category of Business Auxiliary Service - Held that:- In this case, although ZIL placed an order on the appellant for procurement of Naptha and furnace oil, as per the agreement the transactions are on principal to principal basis i.e. the appellant is the seller, ZIL is the buyer. The appellant has imported the impugned goods in their own account and in their own name and thereafter they have sold goods to ZIL. In these circumstances, whatever expenses have been incurred before transfer of the goods, form part of the sale price of the impugned goods. In these circumstances, relying on the decision of Nahar Industrial Enterprises (2010 (1) TMI 400 - PUNJAB & HARYANA HIGH COURT) we are of the view that the appellant is paying these charges for their own purposes. Therefore, same cannot form part of the service tax liability under Section 65(19) clause (4) of the Finance Act, 1994 i.e. Business Auxiliary Service. - Decided in favour of assesse.
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2015 (1) TMI 455
Construction of Commercial/Industrial Complex Service - Invocation of extended period of limitation u/s 73 - Penalty u/s 76, 77 & 78 - Whether the services provided by the appellants during the period of demand fell under the category of ‘Construction of Commercial/Industrial Complex service’ when the contracts allotted were ‘Works contracts’ - Held that:- Services provided by the appellants were taxable during the entire period of demand. Further, the appellants during the investigation proceedings did not provide the documents sought for by the department so that specific nature of the contract/s could be examined and demand could be raised accordingly. The department has resorted to best possible available means to determine the classification of the services provided even when there was intentional avoidance by the appellants to join the investigations or provide the documents/contracts which could enable the department to arrive at the correct classification. Such assessees cannot be let off, but have to be dealt with stringent action so as to have deterrent effect on them. I thus, hold that the demand is sustainable and services are classifiable under ‘Construction of Commercial/Industrial Complex Service’ for the period prior to 1-6-2007 and under ’Works Contract Service’ w.e.f. 1-6-2007. Thus, the demand has correctly been raised and confirmed vide the impugned order which needs no interference on this count. Thus, the first issue stands decided against the appellants. For the ongoing contracts which were classified where service tax has been paid in the respective specified services before being classifiable under the ‘works contract service’, the benefit of composition scheme would not be applicable. Conversely, if no service tax has earlier been paid, the benefit of the scheme would be admissible to assessee. In the instant case the appellants were not registered with the department and they had have not paid any service tax under the category of ‘Construction of Commercial/Industrial Complex Services’ till the filing of appeal. Hence, in view of my deliberations supra, all the pre-requisites of availing the facility under Rule 3(1) of the Composition Scheme, are met with. Benefit under the composition scheme, is admissible to the appellants and the service tax liability needs to be quantified at the prevalent rates specified under the composition scheme during the relevant period and the impugned order requires modification on this issue to the extent discussed above. The second issue thus, decided in favour of the appellants. However, the jurisdictional Deputy/Assistant Commissioner, is required to re-compute the demand within 15 days of the receipt of this order and convey the same to the appellants. The appellants have also contested that the demand was time barred, though no reason whatsoever has been attributed for their claim. On the contrary I observe that the appellants suppressed the fact of provision of services from the department and in spite of initiation of investigations, and repeated communications, did not provide the information sought for. This clearly speaks of their intent to evade payment of service tax by suppressing the facts from the department. Hence, extended period had rightly been invoked and confirmed and the same stands upheld in the present proceedings also. Demand has been made by invoking the extended period of limitation and no period of demand is beyond five years. Hence, this plea of the appellants is devoid of any merits. There is no justification in imposing penalty under Section 76 when penalty under Section 78 of the Act has been imposed. Accordingly, penalty imposed under Section 76 is set aside. As regards imposition of penalty under Section 77 and 78 of the Act, the appellants have not put forth any contentions. However, since the appellants failed to take registration and fulfil the formalities of the Service Tax Law, penalty under Section 77 of the Act has rightly been imposed and stands upheld by me. Further, in view of my observations in para 11 above, I hold that penalty is imposable on the appellants under Section 78 of the Act. - Decided partly in favour of assessee.
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2015 (1) TMI 454
Cleaning Services and Management, Maintenance or Repair Services - On repeated requests the appellants failed to provide the details of services provided by them and accordingly, the value of services were obtained from the Thermal Plant - Held that:- cleaning activity relating to commercial or industrial building, factory, plant or machinery, tank or reservoir of such commercial or industrial building and premises, is covered under the said category, but it does not include cleaning services in relation to agriculture, horticulture, animal husbandry or dairying as well as non-commercial building and premises thereof. I observe that Generation of electricity is an industrial/commercial activity and therefore, the buildings, where plant and machinery is installed and industrial activities are undertaken, cannot be considered as non-commercial or non-industrial buildings. One thing that comes out very clearly from the above deliberations is the activity of generation of electricity is a commercial activity and the concern engaged in commercial activity is a ‘Commercial Concern’ only. Thus, I observe that the there is not even iota of doubt that the Thermal Plant, Ropar is a ‘Commercial Concern’. Thermal plant was the property of Punjab Govt., and hence being a public concern, no service tax was leviable. I find this plea of the appellants is not relevant for the cases where the any Govt./Municipal Corporation or a statutory body provides services which are for commercial consideration. The exemptions to a Govt, body are admissible only if the services provided and the charges for the same were statutory in nature. This essence can be derived from C. B. E. & C.’s Circular No. 80/10/2004-S.T., dated 17-9-2004 - circular goes on to clarify that Govt. Building or civil constructions used for providing civic amenities would not be taxable. But the Circular also clarifies that even Govt, buildings used for commercial activity would be liable to service tax. In the instant case, the services have been provided to an industry engaged in business and commerce. Though the issue referred to and relied upon by me is in respect of construction services but the essence of the same is that if the Govt. bodies avail the services in respect of buildings to be used for commercial purposes, then the same would be liable to service tax. Services did not involve cleaning of any commercial or industrial buildings or premises, tanks etc but involved only cleaning of paths, drains, approaches to buildings etc. as enumerated above. Such services are not covered within the definition of ‘Cleaning services’. The appellants had received an amount of ₹ 9,79,424/-, for the services so provided and this amount received is liable to be excluded from the taxable value being consideration of non-taxable services. - demand against the appellants is recalculated, after excluding the value of services provided in the Nuhon colony - service tax demand stands reduced along with interest thereon. There is no contention of the party as regards imposing of penalty under Section 77 of the Act is concerned and hence the same is upheld. Similarly, penalty under Section 78 of the Act is not contested. I find that adjudicating authority had held that the party had deliberately evaded payment of service tax by suppressing the material facts from the department and actions of the party call for penalty under Section 78 of the Act. The party has not contested this fact in the present proceedings. Thus, I hold that the party was also liable to penalty under Section 78 of the Act, equivalent to the demand of Service Tax of ₹ 2,41,358/-, upheld in the present proceedings. Thus, the penalty payable under Section 78 of the Act would stand reduced - Decided partly in favour of assessee.
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Central Excise
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2015 (1) TMI 464
Valuation of goods - Transaction Value - Related Person - Held that:- Tribunal has not held that Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 does not apply but the Tribunal held that both parts of Rule 9 of 2000 Rules are not fully attracted as it is and, accordingly, it considered the matter in light of Rule 11 of 2000 Rules and passed the order [2007 (3) TMI 470 - CESTAT, CHENNAI]. - The matters have been decided by the Tribunal on their own facts. No substantial question of law is involved - Decided against Revenue.
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2015 (1) TMI 451
Waiver of pre deposit - Valuation - sale of related period - mutual interest - Demand of differential duty on the basis of the conclusion that the QSP had not been paying any hiring charges for the machinery worth more than ₹ 1.06 crores provided to QSP by Philips. - Issuance of two show cause notice covering the same period - Held that:- we find that appellants has made a prima facie case about relationship and mutuality of interest between the two to determine the value taking a view that both are related parties. Just because there is supervision, in our opinion, it cannot be said that the persons are to be considered as related persons. Other points considered by the learned Commissioner also, in our opinion, do not exactly facilitate the conclusion that they are related persons. On both these issues, there is no supporting evidence cited by the Commissioner in the impugned order; the Commissioner has taken a view that prices are mutually agreed upon also contributes to his observations. - Appellants have made out a prima facie case in their favour for complete waiver of pre-deposit. Accordingly, the requirement of pre-deposit is waived and stay against recovery is granted. - Stay granted.
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2015 (1) TMI 450
Valuation of goods - Section 4 - impugned order held that such sales were to the related person and therefore the valuation has to be done as per the sale - Held that:- It is not that the assessee cleared goods clandestinely. The assessee have contended that they had a bonafide belief that they and M/s. DD Sales Corporation were not related. There is nothing in the Show Cause Notice which brings out wilfull misstatement/suppression. Instead of indulging in as idle parade of familiar authority in this regard, suffice to say that CESTAT itself in the inter partes proceedings for a different period on identical issue vide order dated 30.10.2009 set aside similar penalties and we have no reason to hold differently. - Matter remanded back - Decided in favour of assesse.
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2015 (1) TMI 449
Denial of Central excise registration - property was purchased by the assessee in auction - default of excise duty by the earlier registrant - Held that:- Property in question was taken by the assessee in auction done by the Financial institution, but the question remains whether the registration can be granted or not where in case the dues are pending against the producer of the premises holder. In the case of Manibhadra Processors (2004 (3) TMI 94 - HIGH COURT OF JUDICATURE AT BOMBAY) the facts of the case are peculiar one as in the case it is a habit of the lessor to lease out the property to the lessee who defaulted the Central Excise payment and surrender the registration and thereafter another lessee came to the factory and also defaulted in Central Excise dues. If I consider the facts of the Manibhadra Procesors (supra) in that case initial registration was granted and the registration holder defaulted thereafter another registration was granted which also defaulted. Therefore, in that case the Hon'ble High Court exercised their power in writ jurisdiction and stopped the granting of registration for misusing the factory premises. The issue came up before the Tribunal in PMS Exports P. Ltd. (2012 (8) TMI 247 - CESTAT, AHMEDABAD), the facts of the said case are similar to the facts of the case in hand. In that case the Tribunal after considering the relevant provisions, which are incorporated in para 6 above and came to the conclusion that registration in similar facts can be granted - Decided in favour of assesse.
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2015 (1) TMI 448
Denial of CENVAT Credit - appellants did not produce purchase orders for the finished goods sold by them after processing - Held that:- There is no finding on the claim of the appellants that the finished goods have been processed; there is no finding of the Commissioner that the flow chart was not based on fact; there is no finding on the submission that appellants had maintained detailed accounts and they had documents for issue of the material and use of the same; there is no finding that the processed goods had in fact not been sold in the Indian market / export market by the appellants on payment of duty; there is no finding that the claim of the appellants that the products were sold at much higher price and therefore the CENVAT credit availed by them had been completely reversed is wrong; there is no finding that there was actually no clearances of the finished goods to the customers. Purchase order is not statutory document and in the absence of it being a statutory requirement even if the purchase order is not there, the appellant cannot be found fault with if they had sold the goods and in the absence of any finding that the goods have not been sold or the documents shown regarding sale were fictitious /bogus and in the absence of finding that the goods were not manufactured by the appellant, just because the appellants had made a declaration that they were transferring the finished goods at the time of conversion, it cannot be said that they became disentitled to CENVAT credit. In this case basically, the case is based on complete facts and as per the facts, the appellants used the intermediate products and the finished goods in the manufacture of final products which they cleared on payment of duty/export. That being the position, the appellant is eligible for CENVAT credit utilised by them and in our opinion, there is no case for the Revenue at all. - Decided in favour of assesse.
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2015 (1) TMI 447
Penalty u/s 11AC - Valuation of goods - Inclusion of handling charges - Held that:- Expenses of handling charges were paid by M/s ACC Ltd. to M/s Suraj Logistics and such expenses were not borne by the Appellant. Besides, we find that the demand notice is issued for normal period of limitation and we do not find any materials adduced by the Revenue that the duty has not been paid on account of suppression of facts, mis-declaration etc.. On the contrary, in view of the decision of the Larger Bench in case of Supreme Petrochem Ltd. (2009 (6) TMI 51 - CESTAT, MUMBAI), the Appellant is not required to discharge any duty. In these circumstances, we are of the view that penalty is not warranted under Section 11AC of the Central Excise Act, 1944 and accordingly, we set aside the imposition of penalty - Decided in favour of assessee.
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2015 (1) TMI 446
CENVAT Credit - Utilisation of Cenvat Credit post SSI Exemption as availed during SSI exempiton - Cenvat Credit on Capital goods and input services - Whether appellants can utilize the said service tax credit availed much prior to February, 2010 for payment of excise duty after the said date. - Held that:- Service tax credit availed by the appellants at the time when they were falling within SSI exemption limit and were not paying any excise duty, is not available to them for payment of excise duty. The said service tax credit was availed as an input credit for the services being provided by them and as such was available for utilization towards service tax payable on the output services. Credit on capital goods - Held that:- part of the credit also belonged to the credit of duty paid on the capital goods. The credit on capital goods is not to be allowed only when such capital goods are used exclusively in the manufacture of the exempted final product. In the present case, the appellant s final product was not unconditionally exempted. Such exemption was based upon the value of clearances. As such, the capital goods which would be used for manufacture of the final product, all exhausting of the exemption limit, would become entitled to the credit in terms of the provision of Cenvat credit Rules. - Matter remanded back - Decided in favour of assessee.
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2015 (1) TMI 445
Manufacture of R.C. Mattresses (Rubberised Coir Mattresses) - coir products or not - Denial of benefit of Notification No.6/2006-CE dated 01.03.2006 up to 28.02.2011 and for the benefit of Notification No.1/2011 dated 01.03.2011 for the remaining period - Imposition of penalty - Held that:- CBEC Circular No.23/14/86-CX-1 dated 25.06.1986 is in conformity with the opinion of the Coir Board. In the wake of this, reliance by the Commissioner on some dictionary meaning for the purpose of deciding whether the impugned goods are coir product does not sustain. We find that the exemption Notification No.6/2006 dated 21.06.2006 was applicable to coir products. This exemption was available till 28.02.2011 when it was withdrawn and duty @ 1% was imposed vide Notification No.01/2011 dated 01.03.2011 which was hiked to 2% vide amending Notification No.16/2012 dated 17.03.2012 - Impugned demand for the period up to February 2011 does not survive. For the subsequent period, it is seen that for the period 01.03.2011 to 16.03.2012 the effective rate for coir products was 1% and from 17.03.2012 it was 2% ad val subject to the condition that there was no Cenvat Credit taken on the inputs or input services. The appellants have stated that they have already paid the duty. - there is no justification for imposition of any penalty - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (1) TMI 453
Reopening of assessment on assessments being completed on compounded basis - Whether assessments completed in respect of an assessee on compounded basis can be re-opened subsequently, pursuant to a revision of the assessment for an earlier year, the tax paid in which year was taken as the basis for determination of the amount payable by the assessee in the compounding proceedings – Held that:- Any change in the assessment orders for the previous years could not have affected the tax paid on compounding basis for the year 2006-07 because the reference to the earlier years was only to determine the turnover tax payable as conceded in the return or accounts or the turnover tax actually paid - This data would have been available by the end of the following AY for the purposes of finalising the amount of tax liable to be paid by the assessee for that year on compounding basis - the legislature appears to have deliberately omitted a reference to the assessed tax of the previous years in the formula prescribed for compounding, probably on realising that an assessed tax could be modified in subsequent proceedings by way of appeal or revision, thus depriving the figure of a certainty and finality that is warranted for compounding purposes. Similar matter has been decided in State of Kerala Versus Malabar Ornaments (P.) Ltd. [2011 (1) TMI 1281 - KERALA HIGH COURT] the option of payment of tax at compounded rates is an alternative to the regular method of payment of tax after an elaborate procedure of assessment - Section 7 begins with a non-obstante clause that clearly indicates that the scheme of payment of tax envisaged thereunder is an alternative to the regular method of assessment and payment of tax - thus, when an assessee opts to pay tax at compounded rates and such an option exercised by the assessee is accepted by the department, then it will not be open to the department, at a later point in time, to re-open those proceedings save to the limited extent of rectifying any apparent computational mistakes that have been occasioned during the compounding proceedings - the option of composition of tax is like a bilateral agreement between the parties with an object to dispense with the rigours of regular assessment - the dealer is given a choice to opt for compounded payment of tax and once the option is exercised and the same is accepted by the authority concerned, it is no longer open to the dealer to request for a regular assessment as envisaged u/s 5 and 5A of the KGST Act – thus, the re-opening of concluded compounding proceedings, based on the revised assessments for the AY 2005-06, cannot be legally sustained – thus, the order is set aside. Re-opening of the concluded proceedings was sought on a different ground that while computing the figure representing 140% of the purchase turnover for the year 2006-07, the petitioner had not included the opening stock of that year in the purchase turnover for the year - even if it is accepted that the department had the power to rectify mistakes that were noticed in the computation of tax in the compounding proceedings, the power is one that has to be exercised strictly in accordance with the statutory provision - Section 43 of the KGST Act revealed that the power has to be exercised by the authority passing the original order, within three years from the date of the original order - order permitting the petitioner to pay tax on compounding basis for the year 2006-07 is dated 28.11.2006 and order passed in rectification is dated 29.07.2010, well beyond the three year period prescribed in the statute - as the statutory period of limitation limits the jurisdiction and powers of the authority to exercise his power of rectification, the notice and order cannot sustained – Decided in favour of petitioner.
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2015 (1) TMI 452
Works Contract - Transfer of property in ink and lacquer in the transaction effected in post-46th Amendment era or not – Whether the Transfer of Property in Goods involved in the Execution of Works Contracts (Re-enacted) Act, 1989, read with the 46th Amendment of the Constitution of India - Held that:- Following the decision in Commissioner of Sales Tax Versus Matushree Textile Limited [2003 (8) TMI 478 - BOMBAY HIGH COURT] wherein it has been held that there is a transfer of property in goods, i.e., materials used for dying and bleaching under the Works Contracts Act - the colored shade is passed to the fabrics due to the chemical reaction of the materials used in the process of dyeing - Coloured shade may be due to the chemical reaction of one or more materials - The coloured shade represents the inherent chemical property of the materials used - once there is passing of the chemical property of the materials used in the execution of works contract, then under the Works Contracts Act, there is a deemed sale of the materials used in the execution of the works contract - in the process of dyeing, the coloured shade passed on to the fabrics constitutes sale of the materials used in dyeing, under the Works Contracts Act. To constitute sale, either under the Sale of Goods Act, or under the BST Act, the intention of the parties to transfer the goods by an agreement, determination of price of the goods to be transferred and the actual transfer of goods as per the agreement is necessary - However, under the Works Contracts Act, the concept of deemed sale has been introduced, as a result, irrespective of the criteria laid down under the Sale of Goods Act or the BST Act, if, in the execution of a works contract, the property of the materials used in the execution of that contract passes either in its original form or in some other form, then, there is deemed sale of those materials under the Works Contracts Act - The definition of 'sale' under the Sale of Goods Act and under the BST Act is materially different from the definition given under the Works Contracts Act - to constitute sale under the Works Contracts Act, the only criteria required to be fulfilled is the transfer of property in goods used in the execution of works contract either in its original form or in some other form and not the criteria laid down under the Sale of Goods Act or under the BST Act – lacquer and ink are the materials used in plate making and the property in the same is passed on in the execution of the contract of plate making under the Works Contracts Act – thus, there was a transfer of property in ink and lacquer – Decided in favour of appellant revenue.
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