TMI Tax Updates - e-Newsletter
January 24, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Rejection for registration u/s 12AA - No documentary evidence in support of activities of general public utility was furnished by the assessee society - CIT was, justified in holding that none of the expenses incurred by the assessee are related to any charitable activity - AT
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Income Tax:
Special audit u/s 142(2A) - CIT as approving authority will consider whether the special audit is required to be carried out for the purposes of understanding the accounts maintained by the assessee - HC
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Income Tax:
Block assessment - The addition is subject to ascertainment of facts on proper verification by the AO – thus, the contention based upon interpretation of section 34 of the Indian Evidence Act, is misconceived and liable to be rejected - HC
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Income Tax:
Sections 131 and 132 of the Act are but the means to an end and not an end in themselves - It is evident that the petitioners perceived that if the means could be scuttled, the end would not come - HC
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Income Tax:
Method of Assessment – Once the assessee recognised the income in accordance with the supplementary agreements, the CIT(A) cannot substitute his assessment to say that the assessee has postponed the tax liability - AT
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Income Tax:
Rejection of books of accounts – Merely assuming that the buyer and seller might have connived with each other, cannot itself be a ground to call upon the assessee to disprove such type of assumption which is even not based on any relevant incriminating evidence or fact on the file - AT
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Income Tax:
Where the assessee has not claimed certain expenditures clearly evident from records and it comes to the knowledge of Assessing Officer at the time of assessment proceedings, AO should grant relief to the assessee - AT
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Income Tax:
Penalty u/s 271(1)(c) - assessees cannot plead ignorance year after year - The assessees have not proved the bonafides of making a wrong claim which amounts to furnishing of inaccurate particulars of income - AT
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Income Tax:
Validity of order passed u/s 263 - CIT had travelled beyond the reasons mentioned in the show cause notice - order of CIT set aside - AT
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Customs:
Any goods which are moved into 100% EOU are exempted from payment of customs duty. In the same way, the additional duty of customs also cannot be levied - AT
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FEMA:
Contravention of provisions of Section 18(2) - Failure to secure export value - Tribunal was not right in law in saying that the burden with respect to proof of surrendering the export incentive shifted to the Directorate of Enforcement on account of their not producing any documents with respect to the extent of the export incentive availed of by the exporters. - HC
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Corporate Law:
Amalgamation of Indian company with foreign company - it would be necessary for the transferor company to fulfill all requirements under the laws applicable in Mauritius and it would be obligatory for the transferor as well as the petitioner - HC
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Service Tax:
Renting of immovable property - Whether long term leases of immovable property are outside the purview of the taxable service enumerated and defined in Section 65(105) (zzzz) - Held Yes - AT
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Service Tax:
Stay - Renting of immovable property - extended period of limitation - appellant despite knowing the law, did not choose to follow the law and therefore, the plea of time bar taken by the appellant cannot be accepted - AT
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Service Tax:
Denial of refund claim - Notification No. 17/2009-S.T.- Once the invoices describing the type of service stand issued by the service provider and Service Tax stand paid on the same, we find no justifiable reason to deny the benefit of refund of such Service Tax to the assessee - AT
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Service Tax:
Waiver of pre-deposit of Service Tax - sending of adjudication order by speed post is not a valid service as per Section 37C of the Central Excise Act, 1944 as the order is to be sent by registered post with acknowledgement due - AT
Articles
Notifications
News
Case Laws:
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Income Tax
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2014 (1) TMI 1193
Transfer pricing adjustment - Held that:- The appellant by an Internal CUP (Travelex / HSBC) has demonstrated that counting fees for export of currency entails more expense than corresponding service fees or / incentive receipts - It has passed the test of comparability - Counting fees for currency exported is charged by third parties (HSBC / Travelex) and so if the appellant AE did not charge it last year or this year, does not in any way negate the crucial fact that a third independent part would have charged it any case - The fundamentals underlying transfer pricing involves setting of prices within an MNE in line with what third parties would have negotiated in similar circumstances - In the present case had the AE insisted on charging counting fees for currency exported then it would have been more than the corresponding incentives / service for income and the appellant would have been worse off – The addition has rightly been deleted by CIT(A) – Decided against Revenue. Disallowance of expenditure u/s 14A – Held that:- CIT (A) has rightly held that in view of the judgment in the case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT, the provisions of Rule-8D cannot be applied to the assessee for the assessment year under consideration 2005-2007 - 2% of the exempt income was considered as reasonable disallowance u/s 14A - This figure is approximately works out to 5% of the investments as on 31.3.2005 – Decided against Revenue. Depreciation on leasehold premises - Held that:- The asset was never put to use till date - It is not legally correct that the leased premise was capitalized and added to the block of assets - Such ineligible asset, which hass not fulfilled the conditions of section 32 of the Act should not have been included in the block of assets - Decided against assessee.
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2014 (1) TMI 1192
Rejection for registration u/s 12AA - Held that:- Section 12AA of the IT Act provides procedure for grant of registration and the ld. CIT shall have to satisfy himself about the objects of the trust or institution and the genuineness of its activities before granting or refusing to grant registration under the above provisions - The objects of the assessee and genuineness of its activities shall have to be considered in the light of the material produced on record - The ld. CIT required the assessee to produce relevant documents/records of the assessee society - The ld. CIT quoted three of the objects of the society in the impugned order and found that dominant objects of the assessee are for the benefit of Agarwal Community only - The assessee society earned income of Rs.17,96,148/- and incurred expenditure of Rs.20,74,763/- in organizing "Shree Maharaja Agrasen Jayanti etc.", the activities meant for Agrawal community. The other expenses shown by the assessee society were for donation, website expenses, stationery, bad debts, bank charges, misc. expenses, salary expenses and scooter expense. It was, therefore, evident that the assessee society has incurred expenses mainly on organizing Shree Maharaja Agrasen Jayanti etc. and other expenses incurred by it are not related to any charitable activity - No documentary evidence in support of activities of general public utility was furnished by the assessee society - It can be inferred that the assessee has no intention to carry out any activity for general public and its objects are merely on paper - It could be inferred that even though the assessee has taken certain other objects in its memorandum of association, but the same have never been acted upon or brought into existence to take care of general public - The ld. CIT was, justified in holding that none of the expenses incurred by the assessee are related to any charitable activity - The ld. CIT, found that no charitable activities for general public utility have been carried out by the assessee society - Decided against assessee.
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2014 (1) TMI 1191
Maintainability of Appeal - Leviability of surcharge on undisclosed income – Held that:- The appeal can be filed where the tax effect exceeds the limit as prescribed - Since the tax effect involved in the present appeal is only Rs.74,948/-, in view of instruction no. 2/2005, dated 24.10.2005, the appeal filed by revenue is not maintainable – Decided against Revenue.
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2014 (1) TMI 1190
Validity of proceedings u/s 142(2A) of the Act – Special audit -Opportunity of being heard – Held that:- The exercise of power to direct special audit depends upon the satisfaction of the Income-tax Officer with the added approval of the Commissioner - But he must be satisfied that the accounts of the assessee are of a complex nature and in the interests of the Revenue, the accounts should be audited by a special auditor - The special auditor is also an auditor like the company's auditor, but he has to be nominated by the Commissioner and not by the company - The accounts are again to be audited at the cost of the company - This is the substance of the statutory provisions - The power cannot be lightly exercised - The satisfaction of the authorities should not be subjective satisfaction - It should be based on objective assessment regard being had to the nature of the accounts - The nature of the accounts must indeed be of a complex nature. Relying upon the pleadings of the parties, the provisions of section 142(2A) of the Act and the principles of law laid down Swadeshi Cotton Mills Company Limited Versus Commissioner Of Income-Tax And Another [1987 (3) TMI 20 - ALLAHABAD High Court] - A.O. should reconsider the issue as to whether a direction should be issued under Section 142(2A) of the Act after considering the objections of the assessee and affording a reasonable opportunity of being heard, in terms of Section 142 (2A) of the Act - It is only after the A.O. reaches to a fair conclusion after considering the reply given by the petitioner, and affording an opportunity of hearing, the CIT as approving authority will consider whether the special audit is required to be carried out for the purposes of understanding the accounts maintained by the assessee – Decided in favour of Assessee.
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2014 (1) TMI 1189
Block assessment - Evidentiary value of assessment order u/s 34 of Evidence Act – Order for undisclosed income passed on the basis of loose sheets of paper – Held that:- The Tribunal and the CIT (Appeals) have found that the proper cross verification was not made by the Assessing Officer before making such an addition and therefore, the matter has been remitted to the Assessing Officer for proper examination and cross verification - The addition is therefore subject to ascertainment of facts on proper verification by the Assessing Officer – thus, the contention of the petitioner based upon interpretation of section 34 of the Indian Evidence Act, is misconceived and liable to be rejected - The addition made in the income of the Assessee, based upon the entries made in ledger seized from the premises of another Firm, was not justified as no such actual payments could be proved on appreciation of evidence - in the wake of clear provisions contained in section 158B(b) read with section 132(4A) of the Income Tax Act, the addition of undisclosed income on the basis of entries made in the loose sheet is dependent upon the investigation of facts and cross verification by the Assessing Officer - The substantial questions of law is accordingly answered against the Assessee – Decided against Assessee.
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2014 (1) TMI 1188
Legality of seizure operation u/s 132 of the Act – Seizure made at the residence and office- Held that:- Grammatically, it would make a mockery of the expression “or the authorised officer referred to in sub-section (1) of Section 132 before he takes action under clauses (i) to (v) of that sub-section”, which has parenthetical commas at either end to suggest such expression being a whole unto itself and an alternative to the cases of the authority under the provision being exercised by the Director General or a Director or a Joint Director or an Assistant Director or a Deputy Director by virtue of the opening lines of the sub-section preceding the relevant clause - It is elementary on any reading of Section 131(1A) of the Act that the five categories of officers, other than the authorised officer referred to in Section 132(1) of the Act, may exercise the authority under such provision, subject to meeting the other statutory requisites but without being impaired by the search and seizure process having been conducted under Section 132(1) of the Act - With respect, the provision admits of no other construction or interpretation. Since the notices under Section 131(1A) of the Act were issued in this case by a Deputy Director, he had due authority therefor - such officer possessed the treasure trove of information pertaining to the aforesaid four companies connected with the EMTA group and the petitioners’ nexus therewith, he had enough reason to suspect that income had been concealed or was likely to be concealed by the petitioners who were subject to his jurisdiction - There is no requirement, far less any statutory fiat, for the reasons to suspect or the basis for the suspicion to be disclosed in any notice issued under Section 131(1A) of the Act - In any event, the first of such notices that the petitioners assail, the one dated October 28, 2013, refers to a previous notice under Section 131(1A) of the Act that required the petitioners to appear before the Deputy Director on August 2, 2013 - The factum of such previous notice having been issued has been ignored by the petitioners - the petitioners have not been able to demonstrate any averment in the subsequent application filed in court that the petitioners did not receive such notice - Sections 131 and 132 of the Act are but the means to an end and not an end in themselves - It is evident that the petitioners perceived that if the means could be scuttled, the end would not come – Decided against Assessee.
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2014 (1) TMI 1187
Opportunity of being heard - Original return filed u/s 139 of the Act – Genuineness of transactions – Held that:- The impugned order kept in abeyance and the petitioner is directed to appear before the respondent on the given date without insisting upon a fresh notice from the authority – If respondent is of the opinion that modification is required in the impugned order, then he is entitled to do so – Decided in favour of Assessee.
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2014 (1) TMI 1186
Delayed return filed – Intention to avoid tax - determination of date of which possession of property was handed over - Held that:- There is no term in the aforesaid agreements, which expressly says that possession has been delivered by the assessee to the builder - If 96 apartments were ready for sale, it is quite possible that constructions had taken two years - 30.6.1994 is the date of agreement. If on 18.12.1996 they were ready for sale, the finding recorded by the authorities that possession delivered on the date of the agreement is probable - When the agreement does not specify the delivery of possession and in the absence of any material produced by the assessee to show that when the possession is delivered, which shows foundation had been laid for all the even phases and constructions were almost complete in 4 phases, and it had to be finished. Coupled with the fact that in 1996, Power of Attorney was executed to sell the flats, an obvious inference that can be drawn from the material on record is that possession has been delivered under the agreement; payment of Rs.10 lakhs was paid, that is the reason why roughly about Rs.35 lakhs has been paid between 30.6.1994 and 31.5.1996 - It is a joint development agreement - Without possession of the property, no construction can be taken - the finding recorded by the authorities that possession was taken on 30.6.1994 is probable one and that being a concurrent finding of fact, it is not open for the court, in the absence of clinching material to hold otherwise - No substantial question of law does arise for consideration in the appeal – Decided against Assessee.
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2014 (1) TMI 1185
Deduction allowed u/s 80IB of the Act – Entitlement for 100% deduction - Unit II only Extension of Unit I – Held that:- The decision in Bio-Vet Industries Versus DCIT [2010 (2) TMI 911 - ITAT, Mumbai] deleted - The items produced in Unit-I was mainly taxing which was not very costlier while Unit-II produced mainly Vitamins which were costlier – Unit-II is a separate industrial undertaking which is entitled to deduction u/s.801B - No addition could be made, Assessing Officer could not have made any addition without brining on record any material to show that the entries in this register were not correct - the AO is directed to grant deduction u/s.80IB in respect of Unit-II after apportioning the expenses – the order of the CIT(A) upheld – Decided against Revenue. Classification of Interest receipts – Business income OR Income from other sources - Set-off of interest payment against interest receipts – Held that:-The decision in M/s Liberty India Versus Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] followed - only the net interest income should be considered for the purpose of computing the deduction under section 80IB and interest payment should be set-off against the interest receipts – thus, the AO is directed to compute the relief to be given – Decided partly in favour of Assessee.
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2014 (1) TMI 1184
Validity of deduction u/s 36(1)(vii) of the Act – Bad debts - Held that:- The decision in TRF Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT] followed - it is no longer necessary for the assessee to establish the irrecoverability of the debt written off to validate its claim qua the same u/s.36(1)(vii) of the Act - The write off of the sum as irrecoverable by the assessee in its accounts, or the bona fides, is not in doubt or dispute – When bad debt occurs, the bad debt account is debited and the customer’s account is credited, thus, closing the account of the customer. In the case of Companies, the provision is deducted from Sundry Debtors - Absence of any examination of the assessee's claim in respect of the said sum, which would fall for consideration u/s. 37(1) of the Act – this aspect of the matter needs to be re-adjudicated - the issue id remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee.
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2014 (1) TMI 1183
Disallowance u/s 14A of the Act r.w Rule 8D of the rules – Dividend income – Held that:- The entire expenditure debited by assessee in its profits and loss account could not be said to have been incurred only for earning exempt income under the Act - A reasonable allocation of expenditure has to be made which can be attributed to the income which is chargeable to tax particularly bank interest income as against dividend income – the expenditure as worked out by assessee, the details of which are mentioned by AO is reasonable to make disallowance u/s 14A with Rule 8D - the disallowance restricted to Rs.7,21,927 – Decided in favour of Assessee.
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2014 (1) TMI 1182
Method of Assessment – Held that:- The assessment of subsequent assessment years also is done in accordance with the supplementary agreements - The Department cannot thrust the additional tax liability on the assessee by not recognising the supplementary agreements - The apparent agreement should be considered as true and correct unless there is an evidence to show that it is a device followed by the assessee to defer the taxability - Once the AO accepted the supplementary agreement in assessing the assessee's income in subsequent assessment years, for the assessment year under consideration it cannot be overlooked - The reason given by the AO for not considering the supplementary agreements is that the supplementary agreements are entered at the far end of the year - It is a business decision to enter into supplementary agreements in the interest of business of the assessee, the AO cannot thrust upon the assessee to pay tax though there is a valid agreement which was submitted before him - the assessee is following the same method of accounting consistently - The AO cannot thrust upon the assessee to pay tax in accordance with the original agreement without recognising the supplementary agreement. Rejection of method of accounting As per AS 7 – Computation of profits – Held that:- The CIT(A) was of the opinion that the AO simply by rejecting the method of accounting followed by the assessee is not proper since assessments have been completed in other assessment years cases based on the same accounting method – there was force in the finding of the ClT(A) for the reason that since the assessing officer rejected the method of accounting followed by the assessee but he accepted the same method of accounting followed by assessee in subsequent assessment year - The assessing officer has not given a clear finding mandated under section 145(3) of the Act and yet re computed the profit from the projects done by the assessee company - The additions made by the assessing officer are not supported by any facts and figures which can demonstrate that the impugned method of accounting policy adopted by the assessee company resulted in under estimation of profit - Although the assessing officer discussed in detail about the accounting aspects in his order, however no conclusion has been reached by the assessing officer. The assessing officer has taken estimated revenue from the projects without considering the fact that whether the units are sold or not. In other words, profit is being estimated on unsold stock also – as pre revised AS 7 issued by the ICAI in the year 1983 specifically included companies undertaking construction activities on their own, builders and developers - As per revised AS 7 in the year 2002, such specific inclusion was missing –thus, AS 7 does not apply to the builders and real estate developers. The method followed by the assessee company cannot be called as an unreasonable method and any change in the method would only be tax neutral. Validity of order u/s 143(3) of the Act – Additions made – Consistent accounting policy followed by assessee – Held that:- CIT(A)) found flaws in the computation and he has made the revised computation - he cannot substitute one more computation in place of assessee's computation as well as AO's computation - The assessee has recognised the income in accordance with the true terms of the agreement and if there is any inconsistency in recognising the income then only revenue authorities can disturb the same - Once the assessee recognised the income in accordance with the supplementary agreements, the CIT(A) cannot substitute his assessment to say that the assessee has postponed the tax liability - The CIT(A) observed that there is no basic deviation in the method followed by the assessee regarding recognising of income - However, he observed in the same breath that there is basic flaw in the method followed by the assessee to have threshold limit of 30% as the threshold limit can be differed by various means - When there is no deviation in recognising the income by the assessee, the CIT(A) cannot recompute the profit of the assessee by observing that there is basic flaw in the method followed by the assessee to have threshold limit of 30% as the said threshold limit can be differed by various means, which is unwarranted – the order of the CIT(A) for the additions made is set aside – decided in favour of Assessee.
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2014 (1) TMI 1181
Rejection of books of accounts – Estimation of income - No incriminating evidence/material against Assessee – Held that:- Merely because in the opinion of the revenue authorities the income declared by the assessee was less as compared to his annual turnover, that itself cannot be a ground to reject the books of the accounts of the assessee which had been maintained regularly in the due course of business - When the CIT(A) had given a finding that there was no defect in the books of the accounts of the assessee and even no cogent or convincing incriminating material was found against the assessee during the course of search action, then under such circumstances, there was no reason for him to reject the books of the accounts of the assessee. There was no incriminating evidence available with the revenue - the Revenue merely rely on the weakness of the evidences produced by the assessee to make any adverse presumption or conclusion of his indulging in such activities without being there any direct or even circumstantial evidence on record against him - Merely assuming that the buyer and seller might have connived with each other, cannot itself be a ground to call upon the assessee to disprove such type of assumption which is even not based on any relevant incriminating evidence or fact on the file – there was no justification in the action of the CIT(A) in confirming the income on estimation basis at the rate of 0.5% of the turnover even having given a finding that there was no defect in the books of account of the assessee or any incriminating evidence found against the assessee – the order of the CIT(A) set aside and the AO directed to accept the books of accounts of the assessee and make the assessment accordingly – Decided against Revenue.
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2014 (1) TMI 1180
Addition made as fringe benefits u/s 115 WE(3) of the Act – Various expenses made – Held that:- The break-up of expenses grouped under Event Management Expenditure account along with documentary evidences were furnished before the AO as well as the CIT (A) by the assessee -, the CIT (A)-LTU, after analysing the provisions of s. 115 WB (1), 115WB(1)(a) of the Act, was of the view that the nature of expenses claimed make it abundantly clear that such expenses were in the nature of ‘entertainment’ liable to be treated as a deemed benefit u/s 115WB (2)(A) of the Act rather than as expenditure incurred towards conference liable to be taxed u/s 115WB(2)(C) of the Act - none of the expenses were incurred by the assessee to endure any benefit to the employees whatsoever - The entire expenses incurred by the assessee cannot be regarded as FB and, therefore, FBT is not chargeable on the sum - Therefore, the CIT (A) was not justified in invoking the provisions of s. 115 WB(2)(A) of the Act to bring the said sum of Rs.6.47 lakhs under the ambit of FBT. Addition made for staff training – Held that:- The authorities below have justified in their stand that the expenses as part of ‘employee welfare’ u/s 115WB(2)(E) of the Act – However, they have failed to appreciate that the expression of ‘welfare’ in general parlance would mean the health, fortunes of a person or a group - they have failed to justify that the staff training falls within the sphere of ‘employee welfare’ - The purpose of providing training to its employees by its employer was to perform their official duties efficiently which will definitely enhance the productivity thereby the ultimate beneficiary would be the employer in carrying on its business more effectively and not the employees - If the purpose of incurring the expenses was to protect the employer’s business interest and not the welfare of the employees and, as such, it cannot be termed as employees’ welfare - These aspects have neither been considered by the AO nor by the CIT (A) - the comprehensive details of expenses incurred for the staff training have neither been furnished before the authorities below nor during the course of hearing before the Bench by the assessee to ascertain as to whether the assessee’s claim that such expenses were not liable to FBT – thus, the matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee.
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2014 (1) TMI 1179
Disallowance u/s 37(7) of the Act - Revised return filed – Held that:- The decision in CIT Vs. M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT] followed - The assessee had filed revised computation of income before the Assessing Officer at the time of assessment proceedings claiming expenditure which were erroneously disallowed u/s.37(7) while filing the return of income - the assessee has not filed any fresh claim - It is not the case where the assessee is claiming additional deduction or exemption - The assessee is only claiming expenditure which was left out at the time of filing of original return - During assessment proceedings, the Assessing Officer has power to make upward and downward adjustment in the income returned by the assessee - Where the assessee has not claimed certain expenditures clearly evident from records and it comes to the knowledge of Assessing Officer at the time of assessment proceedings, the Assessing Officer should grant relief to the assessee – order of the CIT(A) set aside – Decided in favour of Assessee.
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2014 (1) TMI 1178
Penalty u/s 271(1)(c) - Held that:- Further verification has not been made by the AO from the Registrar of Companies as to whether the shares have been transferred or not - Merely because they are off market transactions it cannot be concluded that they are non-genuine transactions - Therefore the Tribunal concluded that the transactions are genuine - The assessees miserably failed to prove that they have been traded in Stock Exchange - Being a managing director of the company ignorance of fact cannot be assumed - The assessees were given sufficient opportunity before levying penalty - The AO has applied his mind to the issue of levying of penalty, for furnishing inaccurate particulars by the assessees herein, for making a claim of exemption under section 10(38) of the Act - The Tribunal had also not taken into consideration the fact that it is not one solitary transaction but the transactions of several individual family members and it is difficult to believe that none of them have ever thought of verifying as to whether STT was paid or not and in particular a Managing Director of a listed company can be assumed to know that transactions not carried out in Stock Exchange are liable to tax under the head ‘capital gains' since no STT is payable and the assessees cannot plead ignorance year after year - Following Zoom Communication P. Ltd [2010 (5) TMI 34 - DELHI HIGH COURT] - The assessees herein have not proved the bonafides of making a wrong claim which amounts to furnishing of inaccurate particulars of income - Decided against assessee.
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2014 (1) TMI 1177
Deduction u/s 10A - Whether sale of hardware components be excluded from the export turnover - Held that:- Following Income-Tax Officer. Versus Sak Soft Limited. [2009 (3) TMI 243 - ITAT MADRAS-D] - There should be uniformity in the ingredients of both the numerator and the denominator of the formula, since otherwise it would produce anomalies or absurd results - In the case of s. 80HHC, the export profit is to be derived from the total business income of the assessee, whereas in s. 10A, the export profit is to be derived from the total business of the undertaking - If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator - The reason being the total turnover includes export turnover. 'The components of the export turnover in the numerator and the denominator cannot be different - Though there is no definition of the term 'total turnover' in s. 10A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. If what is excluded in computing the export turnover is included while arriving at the total turnover, when the export turnover is a 'component of total turnover, such an interpretation would run counter to the legislative intent and impermissible - If that were the intention of the legislature, they would have expressly stated so - If they have not chosen to expressly define what the total turnover means then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover - The issue has been restored for fresh adjudication. Foreign travel expenditure – Held that:- The expenses incurred in foreign currency outside India are mainly for the personnel of the assessee deployed abroad for on-site development of the software and not for providing any technical services outside India – Expenses are not to be excluded from the export turnover and also from the total turnover - Decided in favour of assessee. Notional interest on interest free loan given to its subsidiary concern – Held that:- The authorities below have not recorded any relevant reasons for making either addition or sustaining the same - The AO should have recorded his reasons by way of a speaking order, highlighting what constitutes for resorting to such an addition - The Revenue has also failed to prove the nexus between the interest bearing loan availed by the assessee and interest free advance extended to its subsidiary – The issue has been restored for fresh adjudication.
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2014 (1) TMI 1176
Validity of order passed u/s 263 - Held that:- There must be nexus between the reasons given in the show-cause notice and the order of the Commissioner under section 263 - For invoking provisions of section 263 of the Act, contents of the show cause notice and the final order should not be different or rather they should be same - Assessee comes to know about the proposed revision, for the first time, when he receives a notice from the CIT. Accordingly, he files his explanation - If the CIT, while passing final orders u/s.263 of the Act, directs the AO to revise or modify the order on some other ground the assessee would not get any chance to defend himself. Such an order passed by the CIT would fall in the category of ex-parte orders. If the CIT without confronting an assessee, by way of show cause notice, decides some issue against him while passing the final order, same cannot be endorsed, though he is vested with revisionary powers. It is said that power and duty go together or cannot be separated - It is the duty of the CIT that; while using his powers as envisage by the provisions of Sec.263 of the Act; he should not to travel beyond the reasons recorded in the show cause notice. While issuing the show cause notice CIT had informed the assessee that deduction u/s.10B of the Act ought to have been allowed in respect of profits of the EOU I and EOU II undertakings after setting off of the losses incurred by the EOU III undertaking - While passing the final order CIT has held that section 10B dealt with exemption, that setting off of losses was not allowable if a claim pertained to an exemption-section - If the CIT was of the opinion that provisions of section 10B,being exemption section, did not allow setting off of losses she should have mentioned the same it in the show cause notice issued by her - It would have given the assessee an opportunity to deal with question raised by the CIT – CIT had travelled beyond the reasons mentioned in the show cause notice - Decided in favour of assessee.
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2014 (1) TMI 1175
Activity of sale and purchase of shares - Business income or capital gain - Held that:- Decision The Commissioner of Income Tax Versus Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] followed - The assessee has shown certain income from share transactions as income from business and rest as income from short term capital gain - It is open to an assessee to maintain two separate portfolio, one relating to investment in shares and another relating to business activities involving dealing in shares. With regard to similar entries the department in the earlier as well as subsequent years has accepted the claim of the assessee that the shares shown as investment give rise to an income which is assessable under the head "capital gain" - In assessment years 2007-08, 2009-10 and 2010-11 similar transactions have been accepted as giving rise to income assessable under the head capital gain and only during the year under consideration a different view has been taken - There ought to be uniformity in treatment and consistency when the facts and circumstances are identical - It can be noted that the average period of holding does not vary much as for the year under consideration it is 99 days when they are compared to A.Ys 2009-10 and 2010-11 which is 91 days and 118 days respectively - The number of transactions and number of scrips dealt by the assessee is on higher side but that alone cannot be said to be a factor to deviate from the view taken in earlier and subsequent years - amount of short term capital gain shown by the assessee cannot be assessed as business income. - Decided in favour of assessee.
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2014 (1) TMI 1174
Expenses on periodical technical training programme - Capital or revenue in nature - Held that:- As per the Technical License Agreement, the assessee company shall bear the cost of round trips, meals, lodging and other expenses of the personnel of the Korean Company sent for training - The expenditure has been incurred towards the reimbursement of expenses incurred towards, Korean Company’s engineers visiting the assessee-company for providing technical support and training - The expenditure is clearly revenue in nature - Decided against Revenue.
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Customs
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2014 (1) TMI 1172
Confiscation of goods - Imposition of penalty - Held that:- Commissioner has been quite harsh in deciding the quantum of penalty. Once it is concluded that omission is procedural in nature, it should be nominal and only to ensure that such mistakes do not happen again. Therefore in my view in this case penalty also has to be in nominal terms just to ensure that legal provisions are not ignored even by mistake - Penalty reduced - Decided partly in favour of assessee.
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2014 (1) TMI 1171
Exemption under Notification No. 53/97-Cus dated 03.6.1997 as superseded by Notification No. 52/2003 dated 31.3.2003 - Import of High speed diesel - Demand of additional duty of customs - Held that:- appellant had transferred the High Speed Diesel (HSD) and had cleared the same to be used in the factory premise who is 100% EOU. Any goods which are moved into 100% EOU are exempted from payment of customs duty. In the same way, the additional duty of customs also cannot be levied - Decided in favour of assessee.
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2014 (1) TMI 1170
Enhancement in the value of the imported rough marble blocks - Enhancement done on bill of entry - Held that:- to adopt the value of the contemporaneous imports, the transaction value is required to be rejected as incorrect/false on the basis of same evidence. Secondly, the contemporaneous imports value is required to be picked up after establishing that the goods match in the quality, quantity and country of origin and time period. There is nothing on record to reflect upon such facts - Decided against Revenue.
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2014 (1) TMI 1169
Notification 90/2004-Cus - Import of saffron - Revenue contends that item imported is too expensive a material to be used in the manufacture of the goods exported - Held that:- From condition 2(c) of Notification 46/2002-Cus. it is very clear that the need to ensure that the goods imported under a DFRC is of the same technical characteristics, quality and specification as the inputs used in the goods exported applied only to goods specified in para 4.31 of Hand Book of Export Import Procedures. Admittedly saffron is not one such item. That being the case all what is required to be ensured is the goods imported fits into the description, value and quantity of materials specified in the license. We see that no case is made out that such requirements are not met. The Revenue’s objection that saffron is a high value item is of no consequence because when the per unit value is high the quantity that can be imported gets restricted on account of the value restriction of the license. Further when the matter stands clarified by both DGFT and C.B.E. & C. supporting the case made out by the Respondent - Decided against Revenue.
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2014 (1) TMI 1168
Valuation of goods - Commssioner accepted higher value - Held that:- Import was made in October, 2007 from China and the value is not accepted by them and the same was enhanced. Now the Revenue is relying on the imports made during the period 10-4-2007 to 10-5-2007. There is no evidence to show that the goods are of the same quantity, quality. In view of this, we do not want to interfere with the order passed by the Commissioner (Appeals) - Following decision of M/s. Eicher Tractors Limited [2000 (11) TMI 139 - SUPREME COURT OF INDIA] - Decided against Revenue.
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Corporate Laws
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2014 (1) TMI 1167
Winding up of company - Inability to pay debts - Payment not made for consignment received - Held that:- there is a specific averment that the respondent company is unable to make the payment and is commercially insolvent. The defences taken by the respondent company are without any substance and appear to be mere moonshine. In these circumstances, I am satisfied that the respondent company is unable to pay its debts to the petitioner and therefore should be wound up - OL attached to this Court is appointed as the Provisional Liquidator ("PL") of the Respondent. The OL is directed to take over all the assets, books of accounts and records of the Respondent forthwith. The OL shall also prepare a complete inventory of all the assets of the Respondent before sealing the premises in which they are kept. He may also seek the assistance of a valuer to value the assets. He is permitted to take the assistance of the local police authorities, if required - Decided in favour of Petitioner.
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2014 (1) TMI 1166
Amalgamation of Indian company with foreign company - Dissolution of transferee company - Held that:- if the transferor company is a “body corporate” as contemplated under Section 394 (4)(b) then though the transferor company is not incorporated and registered in India, it can be amalgamated with the transferee company so long as the transferee company is incorporated and registered in India. However, it would be subject to the condition that such amalgamation must not be in violation of the provision contained under Reserve Bank of India Act, 1934 and / or Foreign Exchange Management Act, 1999 and also the provision of the Act or any other law. Such amalgamation also should not be in violation of any provision applicable to the transferor company i.e. should not be in violation of the laws applicable to the companies in the Country where the transferor company is formed and registered and situate. Transferor company is incorporated, registered and situated outside India i.e. in Mauritius and under the provisions of the laws prevailing and applicable in Mauritius. From the proposed scheme and the details mentioned in present petition it comes out that the said transferor company fall within the purview of the terms “body corporate” which is defined under Section 2(7) read with Section 394(4)(b) of the Act and the petitioner transferee company is incorporated, registered and situated in India. In light of the provisions in the scheme, it would be necessary for the transferor company to fulfill all requirements under the laws applicable in Mauritius and it would be obligatory for the transferor as well as the petitioner - transferee company to obtain, before the scheme can be implemented from all concerned and appropriate authorities, all types and categories of permission, approval, consent etc. as may be necessary under the relevant and applicable laws, for implementation of the scheme - subject to diligent and strict compliance of the conditions mentioned hereinabove there is no objection against proposed scheme and it does not appear to be prejudicial to the interest of the shareholders of the petitioner company, and therefore it transpires that there is no reason or justification to not sanction the proposed scheme of amalgamation, but of course on the condition that the petitioner company shall strictly and diligently address all the objection raised by the Regional Director and abide by the declaration, stipulation and undertaking contained in the affidavit dated 21.6.2011 read with the scheme - scheme of arrangement would not be prejudicial to the interest of the companies and their members - Decided in favour of petitioner.
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FEMA
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2014 (1) TMI 1173
Contravention of provisions of Section 18(2) - Failure to secure export value - Held that:- exporters had discharged the burden placed on them by producing before the Board two cheques of Rs.1,88,176/- and Rs.1,17,841/-, which they claimed to have sent to the Commissioner of Customs. Admittedly, the cheques referred to above were never encashed by the Commissioner of Customs. Obviously the cheques could not have been encashed by him without first verifying the extent of export incentive availed by the exporters in respect of GRs which were subject matter of RBI communication dated 24.4.2003. Tribunal was not right in law in saying that the burden with respect to proof of surrendering the export incentive shifted to the Directorate of Enforcement on account of their not producing any documents with respect to the extent of the export incentive availed of by the exporters. The burden in this regard, particularly, in view of the RBI communication dated 24.4.2003, always continued to remain with the exporters and it was for them to satisfy the Adjudicating Officer that all the export incentives which they had availed of in respect of GRs which were subject matter of the RBI letter dated 24.4.2003 had been fully surrendered by them. Even otherwise, an information of this nature is not expected to be in possession of the Directorate. The respondents had to either locate their own record or obtain the relevant information from the concerned Department, and then produce it either before the Bank, or before the Directorate of Enforcement - order passed by the Tribunal is set aside and the matter is remanded back to the Special Director of Enforcement to consider it afresh in the light of the additional documents which the respondents have filed along with affidavit - Decided in favour of Revenue.
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Service Tax
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2014 (1) TMI 1204
Pre–deposit of duty - intermediary services - Appellant was providing services to connect the user of service with the provider to fulfil the object of each other consuming the service provided - the appellant was remunerated satisfying the need of the destination based consumption tax - Tribunal order deposit in five equal monthly installments - Held that:- appellant had developed certain data which was utilised with the telecom companies on revenue sharing basis, i.e., as a joint venture and it was incorrect to hold that the appellant had rendered service to the telecom companies. It is submitted that the ultimate consumer, i.e., the mobile phone users had availed the services and had paid service tax and second or double taxation for the same service should not be permitted and was unacceptable. - Stay granted on this issue. Regarding demand of service tax on Software or development and maintenance of websites service - Held that:- Software or development and maintenance of websites service were exempt from service tax in terms of Circular No. 70 dated 17th December, 2003 till 1st June, 2007. It is pointed out that the demand in question relates to the period 2004-05 to 31st March, 2006 - appellant themselves had started paying service tax on the aforesaid service, with effect from 1st April, 2006 under the head “online information” The appellant should pay and deposit ₹ 1 crore as a pre-condition for hearing of the appeal. - Amount to be deposited in two installments. - Decided against the assessee.
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2014 (1) TMI 1203
Demand of service tax - Imposition of equivalent penalty u/s 78 - Renting of immovable property - Whether long term leases of immovable property are outside the purview of the taxable service enumerated and defined in Section 65(105) (zzzz) - Held that:- On a true and fair construction of this provision it is clear that a service provided in relation to renting of immovable property for use in the course of or in furtherance of business or commerce is the taxable service. The provision does not restrict the ambit of the taxable service to only short term leases nor identifies or classifies leases in terms of the duration. A lease is defined in Section 105 of the Transfer of Property Act, 1882, as transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crop, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. In the absence of any restrictive signification in Section 65 (105)(zzzz), of a legislative intent to exclude long term leases of immovable property from the purview of the taxable service defined and enumerated in said provision, we find no authority to hold that long term leases (so-called) are outside the purview of the taxable service. Renting of vacant land - Held that:- renting of vacant land by way of lease or licence (irrespective of the duration or tenure), for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1.7.2010, and not so, earlier to this date. Since the show cause notice did not specifically demand nor the assessee care to furnish details and particulars of the lease transactions and of the several categories of receipts, in respect of vacant lands leased by it for business or commercial purposes; nor had asserted in defence, which of the leases were not in furtherance of business or commerce; and since the adjudicating authority also did not, in the circumstances, advert to this aspect of the matter, we are not inclined to go into the contention (urged in oral arguments) that part of the lease transactions were for furtherance of purposes other than business or commerce. If any such transactions of the appellant/assessee are in respect of leases for non-commercial or non-business purposes, since we are remitting the matter, the Authority shall consider this aspect of the matter. The appellant may submit clear and a categorical pleadings, by way of detailed written submissions, coupled with the relevant transactional documents in support of any assertion, that some of its leases were in respect of non-business or non-commercial purposes. Appellant is seen to have inadequately and incoherently pleaded its defence and claims for exclusion of some of its receipts, from the ambit of the gross consideration received from the taxable "renting of immovable property" transactions/leases; such as industrial or commercial penalty; industrial or commercial forfeiture, building plan fee, advertisement charges, interest on lease rent etc; on the ground that these are not legitimate components of considerations received for the taxable "renting of immovable property" service - adjudication order is quashed and matter remitted to the said authority for passing a fresh adjudication order, commencing from the stage subsequent to the show cause notice - Decided in favour of assessee.
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2014 (1) TMI 1202
Stay - Renting of immovable property - extended period of limitation - Imposition of equivalent penalty - Statutory proceeding not followed - Held that:- appellant themselves got registered with the department under the category of ‘Renting of Immovable Property Service' as early as in July, 2007. Therefore, the appellant cannot plead ignorance of law or confusion about the levy. Thereafter, they did not follow any of the statutory procedures nor did they discharge any tax liability. The law was retrospectively amended in 2010 to provide for deeming the activity of renting as a taxable service. In the Finance Act, 2012 it was also provided that if the service tax liability along with interest liability is discharged on or before 26/11/2012, there will not be any penalty on the service providers. Thus, adequate opportunity was provided to the defaulting service providers to discharge service tax liability. In this particular case, the appellant has not chosen to avail the said facility. From the conduct of the appellant, it is clear that the appellant despite knowing the law, did not choose to follow the law and therefore, the plea of time bar taken by the appellant cannot be accepted - appellant does not have prima facie case at all - Following decision of SQL Star International Ltd. Versus CC, CE and Service Tax Commissionerate [2011 (7) TMI 868 - Andhra Pradesh High Court] - Conditional stay granted.
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2014 (1) TMI 1201
Waiver of pre deposit - Insurance Auxiliary Service - Availment of CENVAT Credit - Held that:- Service is for providing group insurance policy, which is a part and parcel of the salary and perks given to the employees and, therefore, it would qualify as an eligible input service for CENVAT credit. As regards the Real Estate Agent Service, even though the appellant claims that it is towards part of the employees perks, there can be a dispute whether it is a service activity or a welfare activity. In the case of Event Management Service, the claim of the appellant is that the events are conducted to attract customers and to promote business of the bank, but from the nature of the events conducted, prima facie, we are not convinced that the events have been conducted to attract business for the bank. Buying movie tickets and supplying the same, by no stretch of imagination, can be considered to be promotion of business activities - Stay granted.
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2014 (1) TMI 1200
Waiver of pre-deposit of tax - Site formation and clearance service - Held that:- Articles of Association of the applicant-company would indicate that the applicant-company had taken over the entire assets and liability which cover the present duty liability. There is no need to go through the decision as cited by the learned CA. On the other issue, we find that the definition of 'site formation and clearance, excavation and earth moving and demolition" would include drilling, boring and core extraction services for construction, geophysical, geological or similar purposes. It is seen that the applicant under took the activities of blast hole drilling amongst others. Apparently, it would cover the definition of 'site formation service' - Conditional stay granted.
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2014 (1) TMI 1199
Denial of refund claim - Notification No. 17/2009-S.T., dated 17-7-2009 - Description of the services not in line with the services as specified under the said Notification - Held that:- original adjudicating authority has verified and examined the invoices raised by the service provider. Going by the definition of technical testing and analysis, as also by the definition of testing inspection and certification, he has concluded that the services provided by the service providers were covered by the said definition. Similarly, the other services are customs house agent services, Clearing and Forwarding services which are commonly known as terminal handling services, Commissioner (Appeals) has simplicitor gone by the fact that invoices/bills raised by the service provider indicate that they are engaged in providing different type of services than the one specified in the invoice. It is seen that no verification has been done by the Revenue at the service providers end so as to factually verify whether the services actually stand rendered by them or not. Once the invoices describing the type of service stand issued by the service provider and Service Tax stand paid on the same, we find no justifiable reason to deny the benefit of refund of such Service Tax to the assessee - Decided against Revenue.
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2014 (1) TMI 1198
Stay application - Management & Consultancy Services - Held that:- MD of the appellant company also performed the job of MD of M/s. Brembo Brakes India Ltd. for which he was compensated. If at all, any advisory activity was undertaken by the said person, the demand for Service Tax can be made only on him and not on the appellant. Further, there is no evidence on record to show that the MD of the appellant firm rendered any consultancy/advisory services. He actually functioned as the MD of the other company also, therefore, the remuneration received by him through the appellant company does not come under the category of ‘Management Consultancy Services’ in terms of the Board’s Circular - Decided in favour of assessee.
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2014 (1) TMI 1197
Cargo handling service - Whether packing, labelling, loading and unloading of the goods in question shall amount to cargo handling service - Held that:- following the rules of classification enacted in Finance Act, 1994 the activity of packing amounting to manufacture by Central Excise Tariff Act, 1985 shall not be “cargo handling service” while reading Section 65(19) of Finance Act, 1994 excludes manufacturing of excisable goods from the purview of business auxiliary service and immune from Service Tax. This shows that legislature has recognized the activity of “manufacture” to be free from Service Tax - when principal activity is “manufacture” according to Central Excise Tariff Act, 1985 it is not possible to hold that the said activity carried out by appellant shall be cargo handling. We could have come to rescue of Revenue, had there been proper bifurcation of the activities for taxation of the considerations received for each sub-activity carried out - Decided in favour of assessee.
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2014 (1) TMI 1196
Waiver of pre-deposit of Service Tax - Electroplating/painting on the semi-finished goods - Notification No. 8/2005-S.T. - Availment of CENVAT Credit - Held that:- no duty was being paid in respect of goods manufactured in terms of Notification No. 214/86, i.e., job work Notification, the final product cannot be held to be exempted so as to attract the provisions of erstwhile Rule 57CC - Following decision of Sterlite Industries India Ltd. [2004 (12) TMI 108 - CESTAT, MUMBAI] - Stay granted.
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2014 (1) TMI 1195
Condonation of delay - Waiver of pre-deposit of Service Tax - Cable operators service - Bar of limitation - Held that:- adjudication order was sent through speed post twice by the Revenue and the same has been received back undelivered. There is no evidence on record to show that the adjudication order was affixed as per the provisions of Section 37C of the Central Excise Act, 1944 - sending of adjudication order by speed post is not a valid service as per Section 37C of the Central Excise Act, 1944 as the order is to be sent by registered post with acknowledgement due. In these circumstances, we find merit in the contention of the appellant that the impugned order dismissing the appeal as time-barred is not sustainable. The impugned order is therefore set aside after waiving pre-deposit of the dues and the matter is remanded to the Commissioner (Appeals) to decide the application for waiver of dues afresh after affording an opportunity of hearing to the appellant and thereafter to decide the appeal on merits in accordance with law - Decided in favour of assessee.
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Central Excise
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2014 (1) TMI 1165
Waiver of Pre-deposit – Held that:- Assessee contended that the default was made good by making payment through PLA along with interest by 5th July 2011 – Relying upon Solar Chemferts Pvt. Ltd. vs. CCE, Thane-I [2011 (6) TMI 640 - CESTAT, MUMBAI] - in case the default in payment of duty is made good through PLA along with interest and during the period of default cleared the goods by utilising the credit is not contrary to the provisions of Rule 8 of the Central Excise Rules hence the demand is not sustainable – Prima facie the appellant is able to made out a case in their favour – Pre-deposits waived till the disposal – stay granted.
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2014 (1) TMI 1164
Denial of Credit on input services related to trading activity as well as research and development centre - Waiver of Pre-deposit – Held that:- As per the provisions of Rule 6 of the Cenvat Credit Rules whereby the value in case of trading is different between sale price and the cost of goods sold or 10% of the value goods sold, whichever is more, has to be taken into consideration - the total sale value of the traded goods has been taken into consideration while confirming the demand and these figures have been taken from the balance sheet - the offer made by the applicant is sufficient for hearing of the appeal – thus, the applicants are directed to deposit Rupees fifty lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2014 (1) TMI 1163
Activity manufacture or not – Mixing of masala could be treated as manufacture for captive use in the manufacture of final exempted product – Waiver of pre-deposit – Held that:- Prima facie, mere mixing of various ready to use masalas along with some other ingredients for captive consumption, may not be held to be manufacturing activity - instead of first mixing the various masalas, masalas could have also been used directly on the final product - It is for the sake of convenience practicability and uniformity of taste that masalas are first mixed and then sprinkled - with the transfer of such interim product to the appellant’s own factory located elsewhere does not reflect the marketability of the product; in as much as the admittedly said product is not being available in packed condition for a third party to buy the same – Pre-deposits waived till the disposal – stay granted.
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2014 (1) TMI 1162
Correct classification of Goods – Waiver of Pre-deposit - Revenue was of the view that product Calcium Hydroxide which is classifiable as ‘Chemical’ falling under Chapter 28 – Held that:- The report of Chemical Examiner has not described the impurities present in the product which would be very relevant for deciding the classification – appellant was directed to submit Rupees two lakhs fifty thousand as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2014 (1) TMI 1161
Demand of Duty because of suppression of facts – Waiver of pre-deposit – Held that:- The Commissioner observed that the applicant suppressed the fact of production and clearance of products falling under different Headings of the Tariff - Prima facie, the Central Excise audit officers in the beginning did not raise any dispute and the demand appears to be barred by limitation – thus, the assessee directed to deposit 50% of duty as a pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2014 (1) TMI 1160
Denial of CENVAT credit on GTA service - Waiver of Pre-deposit – Held that:- The tenor of the appeal and the submissions of the learned counsel is such that the definition of ‘input service’ as amended with effect from 1.4.2008 has been given a go-by - for the period beyond 31.3.2008, the benefit of CENVAT credit on GTA service used for outward transportation of final products from the place of removal was not admissible to the manufacturer of the final products – the assessee was not to establish prima facie case in their favour – thus, the appellant directed to pre-deposit 50% of the duty – upon such submission rest of the duty to be stayed till the disposal – stay granted.
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2014 (1) TMI 1159
Clandestine removal of goods - Benefit of an exemption Notification No. 3/2004 – No separate accounts maintained – Waiver of Pre-deposit – Held that:- Prima facie case could not be found in the favour of assessee - they were not maintaining separate accounts in respect of inputs used in the manufacture of dutiable and exempted final products - Their claim to the contra appears to be just an ipse dixit - the conduct of the appellant also discloses that they felt that they were entitled to collect 10% of the sale price of the exempted goods from their customer - The purchase order placed on the appellant by the customer indicates this fact - Prima facie, the recovery of money by the appellant from the customer was as agreed between the two - the conduct of the appellant fairly shows that the appellant was proceeding on the premise that they were not maintaining separate accounts in respect of the inputs. The applicability of the provisions invoked by the department, Rule 14 of the CCR, 2004 was invocable for recovery of the amount payable by the party in terms of sub-rule (3) of the Rule 6 vide Explanation III to Rule 6 - Rule 14 expressly mentions Section 11A for such recovery - the legal plea is also not prima facie tenable - Assessee is liable to pre-deposit the amount demanded in terms of Rule 6(3) of the CCR, 2004 - the appellant has already paid an amount of Rs. 11,21,394 – hence, the appellant should pre-deposit the balance amount of Rupees Ten lakhs eighty two thousand eight hundred seven as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2014 (1) TMI 1158
Dutiable as well as non-dutiable products manufactured – Waiver of Pre-deposit – Held that:-The appellants were manufacturing dutiable as well as exempted final products and were using common modvatable inputs, after availing Cenvat credit - Following Unison Metals Ltd. Vs. CCE [2006 (10) TMI 171 - CESTAT, NEW DELHI]- 8% amount paid in terms of Rule 6 and collected from the buyers would not attract the provisions of Section 11D inasmuch as the amount collected from the buyer already stands deposited with the Revenue – the condition of pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 1157
Entitlement of canvat credit on molasses - Denatured spirit cleared – Revenue was of the view that the rectified spirit is not an excisable product – Waiver of pre-deposit – Held that:- Following Ugar Sugar Works Vs. CCE [2007 (4) TMI 31 - CESTAT,BANGALORE] - by paying 5% of the value of rectified spirit in terms of the provisions of Rule 6 the appellant has already reversed the credit to the extent of 40 lakhs approximately – pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 1156
Activity amounts to manufacture or not – Cutting of empty boxes – Waiver of pre-deposit – Held that:- Prima-facie, even though the cenvat credit is not admissible on aluminum foil and foil packing empty box as the applicant himself admitted that the process of cutting the same, did not amount of manufacture - while clearing the aluminum foil and foil packing empty box after cutting into small sizes, they have discharged duty on the finished goods which was equivalent to the cenvat credit availed – Thus, pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 1155
Clandestine removal of final product - Goods manufactured and cleared to own unit – Waiver fo Pre-deposit – Held that:- Prima facie, the demand stands confirmed against the applicants - Once the Tribunal has held that there was no receipt of raw material by the Rania unit clandestinely manufactured and cleared their final product - the allegation cannot be sustained - Prima facie the assessee is able to establish a case in their favour – pre-deposits waived till the disposal – Stay granted.
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CST, VAT & Sales Tax
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2014 (1) TMI 1206
Penalty u/s 78(5) of Rajasthan Sales Tax Act, 1994 - Whether penalty in the facts of the present matter could not have been imposed on the owner of the goods merely for the reason that section 78(5) was amended for certain purposes on 22.03.2002 - Held that:- amendment to Section 78(5) of the Act of 1994 brought about on 22.03.2002 was merely clarificatory in nature and therefore retrospective. The obtaining legal position thus is that even at the time of goods in transit and the checking thereof on 22.03.2001, the owner of the goods aside of the person in-charge of the goods was liable for penalty under Section 78(5) of the Act of 1994 in the event of any contravention of the mandate of Section 78(2) of the Act of 1994, Rule 53(1)(a) of the Rules of 1995 and notification issued therein being found. Not only the goods in transit i.e. PVC sheets were not accompanied by the requisite statutory declaration, but also in spite of show cause notice no attempt was made to file the requisite declaration by the respondent- assessee. Contrarily as earlier indicated it was conceded and admitted before the assessing authority that the respondent-assesseee was in breach of Section 78(2) of the Act of 1994, Rule 53 of the Rules of 1995 as also notification dated 30.03.2000 and was willing to pay the penalty - Following decision of Assistant Commercial Taxes Officer Vs. Bajaj Electricals Limited [2008 (11) TMI 374 - SUPREME COURT OF INDIA] - Decided in favour of Revenue.
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2014 (1) TMI 1205
Imposition of tax liability - Bar of limitation - Whether Tribunal was justified in confirming order of Deputy Commissioner (Appeal) IInd, Trade Tax, Allahabad rejecting appeal on the ground of limitation and declining to condone delay - Held that:- Normally, this court does not favour a lax litigant who sleeps over his rights but in the present case, from the facts stated it appears that there was some serious confusion with regard to date fixed before Assessing Authority, which resulted in non appearance of the assessee. Since the order passed by Assessing Authority was not immediately known to the assessee and therefore, some delay occurred which was aggravated due to illness of assessee - assessee should not be non suited only on the ground of limitation and particularly when appeals are against ex parte orders and instead ends of justice would be met if the delay is condoned subject to payment of cost of Rs.100/- to the revenue in each set of the revision - Decided partly in favour of assessee.
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Indian Laws
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2014 (1) TMI 1194
Request for inspection of documents - Right to information - Partial documents provided - Held that:- CPIO and the AA passed the impugned orders in their quasi-judicial capacity as distinguished from their administrative capacity. Both the authorities are mandated to apply their mind while taking a decision. They are not expected to pass mechanical orders. Nor can Appellate Authority ask the CPIO to put up draft order before him for blindly appending his signatures thereon. As noted above, Shri Vijay Kumar, CPIO, has communicated in writing to the appellant that as desired by the Appellate Authority, he had put up a draft order which was signed by the Appellate Authority. This clearly demonstrates non-application of mind on the part of Appellate Authority. Hence, this order cannot be allowed to stand and is hereby quashed and the matter is remanded to the Appellate Authority with the direction to decide afresh after affording an opportunity of personal hearing to the appellant - Decided in favour of appellant.
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