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TMI Tax Updates - e-Newsletter January 27, 2015 Case Laws in this Newsletter: Income Tax Customs FEMA Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes Income Tax: Charitable activity - The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. - HC Visit to Get Source Income Tax: Treatment to agriculture income - none of these two aspects were established by the assessee i.e. the ownership of the agricultural land in the hands of the assessee and the basis of computing agricultural income - additions confirmed - AT Visit to Get Source Income Tax: TDS u/s 194C - If the Assessee claims that the amount paid to the C&F agent by the Assessee represents reimbursement, the onus is on the Assessee to prove that it represents the reimbursement of the claim - TDS liable to be deducted - AT Visit to Get Source Income Tax: Depreciation - the vehicles are not allowed to be used without insurance, which was done after the end of the year - assessee had placed these vehicles in its showroom for Demo purposes - depreciation allowed - AT Visit to Get Source Income Tax: Goodwill - The principle of ejusdem generis would strictly apply while interpreting the said expression - Goodwill is an asset under Explanation 3(b) to section 32(1). - AT Visit to Get Source Customs: Constitutional validity of circular - When larger public interest is sought to be sub-served by denying exemption to such Advance License holders from the condition of furnishing of bank guarantee that we are of the opinion that the mandate enshrined in Articles 14 & 19(1)(g) of the Constitution of India has not been violated - HC Visit to Get Source Service Tax: CENVAT Credit - Outdoor catering service - assessee has employed less than 250 persons in the factory premises - credit denied by the tribunal is incorrect - credit allowed - HC Visit to Get Source Central Excise: Clandestine Removal - Goods not accounted in RG-1 Register - It is settled legal position that the demand cannot be worked on the basis of mere meter readings or power consumption - AT Visit to Get Source Central Excise: Denial of refund claim - Once the demand in respect of export vehicles stands dropped by the Commissioner vide his order dated 9-11-1998, the reasoning of non-availability of original documents by the Assistant Commissioner adopted in his order dated 23-1-1996 is no longer available to the Revenue for denial of a part of the amount deposit so made by the assessee - AT Visit to Get Source Central Excise: Non-filing of RUDs with the memorandum of appeal is of no consequence and does not amount to violation of Rule 16 of CESTAT (Procedure) Rules, 1982. The contention, repeatedly asserted by the ld. AR is frivolous and wholly irrelevant. - AT Visit to Get Source Articles Official Liquidator is a dealer, liable to pay Sales tax: Supreme Court The Assessee is eligible to avail remaining 50% of Cenvat credit on Capital Goods which were cleared during the same Financial Year of its receipt Circulars / Instructions / Orders FEMA - 64 - dated 23-1-2015 External Commercial Borrowings (ECB) Policy – Simplification of Procedure Case Laws: Income Tax 2015 (1) TMI 928 Charitable activity - First Proviso to Section 2(15) - challenged as arbitrary and unreasonable and has no rational nexus with the object sought to be achieved and is thus violative of Article 14 of the Constitution of India - order passed by the respondent under Section 154 denying exemption earlier granted under Section 10 (23C) (iv) - Held that:- The expression "charitable purpose", as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. Thus, while we uphold the Constitutional validity of the proviso to Section 2(15) of the said Act, it has to be read down in the manner indicated by us. As a consequence, the impugned order dated 23.01.2013 is set aside and a mandamus is issued to the respondent to grant approval to the petitioner under Section 10(23C)(iv) of the said Act within six weeks from the date of this judgment. - Decided partly in favour of assessee. 2015 (1) TMI 927 Levy of surcharge - AO charged surcharge at the rate of 10% under section 113 of the Act - CIT(A) deleted the addition - Held that:- CIT(A) was justified in deleting the surcharge levied by the Assessing Officer. The Tribunal confirming the decision of the CIT(A) came to the conclusion that for the block period under consideration there was no proviso to section 113 of the Act. We are not giving any elaborate reasons in view of the decision of the Apex Court in Vatika Township [2014 (9) TMI 576 - SUPREME COURT]. The Tribunal is justified in coming to the conclusion that surcharge could not be levied, as, on the date of search, such provision for levy of surcharge was not there on the Statute Book. - Decided in favour of assessee. 2015 (1) TMI 926 Addition made u/s. 43B on account of deferred electricity duty - ITAT deleted addition - Held that:- We are in complete agreement with the concurrent findings arrived at by the Tribunal and CIT(A) and do not see any reason for interference. It is true that the State Government has issued the notification with a view to alleviate the adverse effect caused to industrial units under Deferment Scheme due to operation of Section 43B of the Act. The very object of the scheme is to give a subsidy to such units failing which the very scheme shall be frustrated. Therefore, considering the decisions cited by the learned advocates for both the sides and considering the materials on record, we are of the view that the authorities below have rightly concluded that the disallowance cannot be sustained and the same is rightly deleted. - Decided in favour of assessee. 2015 (1) TMI 925 Treatment to agriculture income - shown in the return of income as income from other sources - Held that:- issue was decided by CIT(A) against the assessee on two counts; first basis of the decision of CIT(A) is that the ownership of ancestral land in the hands of the parents cannot be equated with the ownership of agricultural land in the hands of the assessee and therefore, there cannot be any agricultural income in the hands of the assessee in his individual capacity. The second basis of the decision of CIT(A) is that apart from failure of the assessee to establish the ownership of the land in question, the assessee has also not brought on record any evidence for the said agricultural income by bringing on record bills of sale proceeds and expenses incurred for agricultural operations. Before us also, none of these two aspects were established by the assessee i.e. the ownership of the agricultural land in the hands of the assessee and the basis of computing agricultural income by bringing evidence on record in respect of agricultural sale proceeds and expenses incurred for carrying out agricultural activities. Under these facts, we do not find any reason to interfere in the order of CIT(A) on this issue. - Decided against assessee. Unexpalined money - collection of cheque (received by the appellant on sale of jewellery) in his bank account of the appellant/his wife - Held that:- In assessment year 2005-06, we have already held that benefit should be allowed to the assessee to the extent of 100 gms. of gold jewellery as per CBDT Circular No. 1916 dated 11th May 1994 and on the same line, in the present year also, we hold that the benefit should be allowed to the assessee in respect of ownership of jewellery by his wife to the extent of entire jewellery because the same is less than 500 gms. However, the capital gain on sale of this jewellery has to be assessed and for this reason, we restore the matter back to the file of the Assessing Officer for fresh decision. The assessee has to bring evidence on record regarding cost and year of acquisition. If the assessee can establish that the said jewellery was acquired prior to 01/04/1981 then Fair Market Value as on 01.04.1981 should be accepted as cost of jewellery and thereafter indexation of benefit should be allowed to the assessee and long term capital gain, if any, should be computed. With these observations, the matter is restored to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Cash found in course of search - Held that:- As per the assessment order in the case of Shri K. N. Singh Patel, we find that no doubt disclosure has been made of ₹ 10 crore which included ₹ 25 lac on account of cash seized but it is also seen in the same assessment order that the searches were carried out at 19 places, as listed on page No. 220 of the paper book. The name of the assessee is also appearing in that list at S.No. 13 but it is not shown to us or to any of the authorities below that how much cash was found and seized at these 19 places where searches were carried out. If the assessee could have shown that the cash found and seized were ₹ 25 lac or less then it can be accepted that the entire cash found and seized in all searches were covered in the disclosure made by Shri K. N. Singh Patel but in the absence of that, it cannot be said that all the cash found and seized in course of all these 19 searches were included in the disclosure made by Shri K. N. Singh Patel on account of cash found. Hence, we do not find any merit in this explanation of the assessee regarding the cash found and seized in the hands of the present assessee. Benefit to the extent of ₹ 65,375/- is already allowed by the authorities below because against the cash found of ₹ 8,65,365/-, addition of ₹ 8 lac only was made. Considering all these facts, we do not find any reason to interfere in the order of CIT(A) on this issue also. - Decided against assessee. 2015 (1) TMI 924 Ascertaining the correct amount of foreign currency expenses and telecommunication costs for exclusion from “Export Turnover” for working out the deduction u/s 10A - CIT(A) restored the matter back to the AO - Held that:- Set aside the impugned order of the ld. CIT(A) on this issue and the AO is directed to reduce the expenses incurred in foreign currency and telecommunication from the export turnover as well the total turnover while working out the deduction u/s 10A of the Act. - Decided in favour of revenue. Disallowance u/s 14A read with rule 8D - CIT(A) deleted the addition - Held that:- By keeping in view the ratio laid down in the case of CIT Vs Holcim India (P.) Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] and CIT Vs M/s Lakhani Marketing (2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT) are of the considered view that no disallowance u/s 14A of the Act can be made if there is no income earned. - Decided against revenue. License fee paid to DOT - Revenue v/s Capital - Held that:- Facts of the present case appears to be similar to the facts involved in the case of CIT Vs Bharti Hexacom Ltd. (Delhi) (2013 (12) TMI 1115 - DELHI HIGH COURT), we, therefore, restored this issue to the file of the AO to be decided in accordance and if any expenditure on account of licence fee was payable up to 31.07.1999, it should be treated as capital expenditure and the licence fee on revenue sharing basis after 01.08.1999 should be treated as revenue in nature. - Decided in favour of assessee for staistical purposes. 2015 (1) TMI 923 Revision u/s 263 - computation of book profits u/s.115JB questioned - Held that:- While computing book profit u/s 115JB for a given year the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account, is required to be reduced. Nowhere it suggests that one has to compare the year wise unabsorbed depreciation or business loss as desired by the CIT. Thus, no fault can be found in the order of AO, so as to brand it erroneous and prejudicial to the interest of justice. As held in the case of Amline Textiles P. Ltd [2008 (11) TMI 438 - ITAT MUMBAI] aggregate amount of unabsorbed depreciation or brought forward losses of the years taken together which losses was to be reduced for the purpose of computing book profit u/s. 115JB. It cannot be considered on a year to year basis. The ground raised by the assesse is accordingly allowed. - we do not find any merit in the order passed by CIT u/s.263. - Decided in favour of assessee. 2015 (1) TMI 922 Transfer pricing adjustment - markup of 9% on the entire cost of high value services as the payment to Jeena cannot be a pass through cost as stated by the assessee as held by TPO - Held that:- The compensation paid to the assessee is based on functions performed by it, i.e. rendering of custom clearance services to the AE on the operation costs incurred by it and not on the cost of services sourced from the third party in India. Thus, TP adjustment by applying 9% mark-up on the cost of customs clearance service rendering through Jeena cannot be made for bench marking the ALP of the assessee and accordingly such adjustments stands deleted. - Decided in favour of assessee. Disallowance of bad debts written off a business loss - Held that:- Once, the assessee was unable to recover the amount, then it has to be allowed as bad debts. Even if such amount is not allowed as bad debts then the same has to be allowed as business loss as held by the Hon’ble Bombay High Court in the case of Harshad J Choksi (2012 (8) TMI 710 - BOMBAY HIGH COURT). Further, in CIT V/s Shreyas S Morakhia (2012 (3) TMI 103 - BOMBAY HIGH COURT), in the context of share broker, it was held that unrealized value of shares from the clients can be claimed as bad debts u/s 36(1)(vii) of the Act, as the brokerage from the clients is taken to the profit and loss account, therefore, the same is to be allowed as bad debts. Here in this case also, the assessee is earning services fees for rendering such services and if any such amount paid by the assessee on behalf of the parties remained unrecoverable, then the same can be allowed as bad debts. Thus, from both the angles, we do not find any reason to confirm the disallowance of ₹ 28,76,102, and accordingly, the same is deleted.- Decided in favour of assessee. 2015 (1) TMI 921 Transfer pricing adjustment - most appropriate method for determination of the ALP - TNMM v/s CUP method - payment of royalty for using the technology and technical know-how - Held that:- As found payment of royalty is independent of the purchase of raw materials, components, tools, packing materials, fixed assets etc. The royalty is exclusively towards the use of know-how in the manufacturing process undertaken by the assessee and is therefore not in any way interlinked or inter-connected with other transactions and it would not lead to inaccurate result if it is analyzed separately. In such a situation, we are of the opinion that the contract of payment of royalty can be analyzed separately and the ALP of such a payment can be determined independently. Where comparable uncontrolled transactions are not available, establishing arm’s length price or royalty rate may not be a straight forward exercise and may require a flexible approach that need not be strictly based on specified transfer pricing methods. Therefore, in such a situation, the perfect approach for indirectly bench marking royalty payments is to bench mark the profit margin left in the tested party, after payment of lump sum fee or royalty with the profit margins of comparable uncontrolled companies. Therefore, we are of the opinion that even if the royalty payment is to be analyzed separately, TNMM is the most appropriate method for determining the ALP. The fact that the assessee was engaged in the activity of manufacture itself proves the use of technical know-how by the assessee and therefore, as held by the Hon’ble Delhi High Court in the case of EKL Appliances (cited supra), the AO or the TPO cannot question the commercial expediency of the assessee or the quantum of benefit the assessee derived while making the payment. We agree with this contention of the assessee. Remand the issue for determining the ALP under the TNMM, the assessee as well as the Revenue have to search for comparable companies. Therefore, we remit this issue to the file of the AO/TPO to determine ALP of royalty by adopting TNMM after giving the assessee a fair opportunity of hearing. - Decided in favour of assessee for staistical puroses. 2015 (1) TMI 920 Transfer pricing adjustment - selection of comparables - Held that:- AVANI CIMCON TECHNOLOGIES LIMITED is to be excluded from the company from the list of comparables as this company is functionally dissimilar and different from assessee. E-ZEST SOLUTION LTD be excluded from the set of comparables as while assessee is into software development services, this company i.e. e-Zest Solutions Ltd., is rendering product development services and high end technical services which come under the category of KPO services. INFOSYS TECHNOLOGIES LTD. is not functionally comparable since it owns significant intangibles and has huge revenues from software products. It is also seen that the break-up of revenue from software services and software products is not available. In this view of the matter, we hold that this company ought to be omitted from the set of comparable companies. KALS INFORMATION SYSTEMS LTD be excluded as this company is functionally different from the software activity of assessee as it is into software products. TATA ELXSI LTD is not to be considered for inclusion in the set of comparables in the case on hand as it is engaged in development of niche product and development services which is entirely different from the assessee company. WIPRO LTD cannot be considered as a comparable to the assessee as it is engaged both in software development and product development services. There is no information on the segmental bifurcation of revenue from sale of product and software services. Risk adjustment - Held that:- Consequent to our decision on comparables the risk adjustment may vary. Therefore AO/TPO is directed to re-workout the same after giving due opportunity to assessee for making submissions. Therefore, issue of risk adjustment is restored to the file of the Assessing Officer/TPO for fresh consideration. Charging of interest under sections 234B and 234D - Held that:- The charging of interest under the aforesaid sections is consequential and mandatory and the Assessing Officer has no discretion in the matter and in this view of the matter, we uphold his action in charging the said interest. The Assessing Officer is, however, directed to re-compute the interest chargeable under section 234B/234D of the Act, if any, while giving effect to this order. - Appeal decided in favour of assessee for statistical purposes 2015 (1) TMI 919 TDS u/s 194C - Non deduction of tds on payment of demurrages to parties in India - additions made u/s 40(a)(ia) r.w.s sec. 194C deleted by CIT(A) - Held that:- Assessee has issued cheque bearing no. 46101 dt. 16.5.2008 for total amount of ₹ 2,05,660/- which according to the Assessee includes the sum of ₹ 1,25,272/- relating to the air freight cartage. We noted that from the covering of the bill that the bill is issued by Jet Air Freighters and not by the C&F agent as contended by the ld. AR. The amount paid by the Assessee through the cheque is also ₹ 2,05,660/- and not ₹ 1,25,272/-. The invoice nowhere states that it represents reimbursement of the air freight but it is the invoice made by Jet Air Freighters. This document, in our opinion, does not prove that the Assessee has reimbursed the air freight paid by the C&F agent. The bills raised by Jet Air Freighters are directly in the name of the Assessee. In view of these facts, we do not agree with the contentions of the Assessee. The onus, in our opinion, lies on the Assessee to prove that the payment made by it to the C&F agent represents the reimbursement and not the amount paid for any services rendered by them. Board has clearly laid down in Circular no. 715 dt. 8.8.1995 that “As regards payments made to clearing and forwarding agents for carriage of goods, the same shall be subjected to tax deduction at source u/s 194C of the Act.‟ The ld. AR could also not adduce any evidence that the C&F agent deducted tax at source while making payment to the carrier so as to prove that the amount which was paid by the Assessee to the C&F agent represents reimbursement of the freight paid by the C&F agent on behalf of the Assessee to the airlines. It is not the intention of the legislature that neither the C&F agent deducts the tax when it makes the payment to the carrier nor the Assessee deducts the tax at source when it makes payment to C&F agent. If the Assessee claims that the amount paid to the C&F agent by the Assessee represents reimbursement, the onus is on the Assessee to prove that it represents the reimbursement of the claim. In our opinion, provisions of Sec. 194C are clearly applicable in the case of the Assessee. - Decided in favour of revenue 2015 (1) TMI 918 Penalty u/s 271G - Penalty for failure to furnish information or document under section 92D - CIT(A) deleted the levy - Held that:- As during TP proceedings no intimation was given to the assessee alleging any delayed filing of TP report. There is no allegation of any specific non-compliance. The assessee on receipt of show cause notice reverted back to TPO asking for details of alleged non-compliance. In reply, the TPO instead detailing the nature of allegation again made a vague assertions that assessee's case was liable for penalty u/s 271G of the Act. From the record, we are unable to comprehend as to what exact nature of non-compliance is made by the assessee. It is trite law that in penalty proceedings, the assessee needs to be made aware of the exact nature of charge which is leveled against him. This is so because the assessee is suppose to give a reply on the specific allegation and not on the assumptive allegation. In order to impose any penalty, it is obligatory on the part of the Officer to indicate specific allegation. In the absence whereof, the penalty proceedings are not sustainable. Hence, we uphold the order of the ld. CIT(A) deleting the penalty. - Decided in favour of assessee. 2015 (1) TMI 917 Transfer pricing adjustment - selection of comparables - Held that:- Coral Hubs Ltd. (Vishal Information Technologies Ltd.) has to be excluded from the list of final comparables on the ground that this company has outsourced its considerable portion of its ITES business, whereas the assessee is carrying out entire operation by itself. M/s. Eclerx Services Ltd. has to be excluded from the list of final comparables as if the functions actually performed by the assessee company for its AEs are compared with the functional profile of M/s. eClerx Services Pvt. Ltd. and Mold-Tec Technologies Ltd., it is difficult to find out any relatively equal degree of comparability and the said entities cannot be taken as comparables for the purpose of determining ALP of the transactions of the assessee company with its AEs. Accentia Technologies Ltd. cannot be considered to be comparable in the present year for bench marking the margin of the assessee’s company as it is evident from the annual report for the A.Y. 2008-09 that it has not started its data processing outsourcing or KPO services, it cannot be held to be a good comparable for bench marking the assessee’s margin. R. System International Ltd. (Segmental), TPO himself has accepted it as a good comparable and DRP in A.Y. 2008-09 has also accepted the same to be comparable, which has been upheld by the Special Bench, therefore, we do not find any reasons to deviate from such a precedence of the earlier years, so as to come to a different conclusion without any material difference on record for this year. Thus, we direct the TPO/AO to include R. System International Ltd. in the list of final comparables for bench marking the assessee’s margin. Allsec Technologies Ltd. was considered to be a good comparable right from the A.Y. 2005-06 to 2007-08. In A.Y. 2008-09, it was not accepted to be comparable as there was an extraordinary event of merger. So far as TPO’s allegation that it is a consistent loss making company, we find that it is only in this year i.e., in A.Y. 2009-10 it has incurred loss, otherwise it was profit making company as stated above. This cannot be the sole ground for rejecting it as comparable. TPO/AO is directed to work out the final average mean of the comparables as per the directions given above and bench mark the assessee’s margin. If the margin of the comparables falls within +/- 5 range, then needless to say that, no adjustment should be made. - Decided in favour of assessee for staistical purposes. Software license expenses disallowed - Held that:- This matter should be restored back to the file of the AO to consider the allowabilty of software expenses in the light of decision of Delhi High Court in the case of CIT Vs. Asahi India Safety Glass Ltd. (2011 (11) TMI 2 - DELHI HIGH COURT ) and CIT Vs. Raychem RPG Ltd. (2011 (7) TMI 953 - Bombay High Court) wherein held that the software expenses should be allowed as revenue expenses.. - Decided in favour of assessee for staistical purposes. Addition on account of mismatch of interest income as per certificate of TDS vis-a-vis interest income shown as per books of account - Held that:- assessee had shown accrued interest for ₹ 39,64,386/- in its P&L Account in the A.Y. 2008-09. As per the TDS certificate for the year ending 31st March, 2008, interest of ₹ 26,92,977/- has been shown to be earned in A.Y. 2008-09. Thus the assessee seems to have offered excess interest income on accrual basis. There is thus apparent mismatch in the interest income as per the books and TDS certificate. Therefore, in the interest of justice, we restore this matter back to the file of the AO, to examine this issue and if the interest income which is a part of TDS certificate in this year has already been taxed in the earlier years, then the same should not be doubly taxed here in this year also. The assessee will furnish requisite reconciliation and information to the AO. - Decided in favour of revenue for statistical purposes. 2015 (1) TMI 916 Taxability of certain rental income in the hands of the assessee - Inheritance at Muslim Law - right of assessee to divide the property or to divide the rent among the family members - Held that:- We are not convinced with the claim of the assessee that the incomes are to be divided according to the Muslim Law. Had assessee taken recourse to legal proceedings and got the property divided between the legal heirs through a court of law, may be the contentions can be accepted. However, assessee chose to enter into MOU so as to divide only the incomes. Therefore, we are not convinced with the assessee's argument. It is assessee's contention that the property devolved on him and that is against the personal law. This contention is also not correct. As seen from the declaration given on 10-08-1998, extracted in page 2 of this order, what assessee got from the declaration of Smt. Sadath Khatoon, was only enjoyment of property during his life time. It is very clear that assessee does not enjoy any absolute right on the property and only his two daughters shall be entitled to half equal share in the said property and they shall hold and enjoy their respective shares as exclusive owner and to use the same in any manner they like. This indicates that Smt. Sadath Khatoon, has not bequeathed the property to assessee but only power to enjoy the property during his life time. In that way, assessee's right in the property limited to the income is exclusive and to 100% of the income. In this context also, assessee's contention that he has only 25% right is not correct. Looking at either way, assessee's contentions cannot be accepted. In view of this, we affirm the orders of the authorities for the above reasons. - Decided against assessee. 2015 (1) TMI 915 CIT(A)jurisdiction to complete assessment - notice u/s.143(2) issued was barred by limitation of time - addition made while computing the income u/s.115JB of the Income Tax Act (Act) - Held that:- As rightly pointed out by the Ld.CIT(A), the Assessing Officer did record ‘reasons to believe’ and initiated proceedings much before the amendment to the Act was carried out subsequently. However, since assessee has asked for the reasons subsequently after a year, Assessing Officer instead of communicating the exact reasons as recorded by the Assessing Officer in the order sheet, communicated in his own way relying on the retrospective amendment. Consequently, assessee has objected to the re-opening before the Ld.CIT(A). Since Ld.CIT(A) clarified on the issue of exact noting in the order sheet, we are of the opinion that the objections raised by assessee that assessment was re-opened on non-existent amendment, raised on Ground No.1(a) and change of opinion in Ground No.1(b) does not survive. Even though the notice was issued and served beyond the time, it is covered by the provisions of Section 292BB. Therefore, the proceedings are held to be valid. The order of Ld CIT(A) on this is upheld. Decided against assessee. Issue of demand raised u/s.234D - Held that:- This issue requires re-examination by the Assessing Officer. As seen an intimation u/s.143(1), as noted in the assessment order, was issued on 06-05-2003 i.e., before 01-06-2003. The provisions u/s.234D were introduced effective from 01-06-2003 and it was already held by various High Courts that if the refund is issued after that date, interest under Section 234D can be levied, even for the Assessment Years prior to AY.2004-05. Therefore, the crucial issue to be examined is whether the refund was issued prior to 01-06-2003 or later. - Decided in favour of assessee for statistical purposes 2015 (1) TMI 914 Disaallowance of showroom expenses - CIT(A) deleted the addition - Held that:- The appellant had not reverted the finding given by the learned CIT(A) with respect to showroom expenses, therefore, we confirm the addition made by the learned CIT(A). He was reasonable to accept the assessee’s submission, therefore, revenue’s appeal is dismissed on this ground. - Against revenue. Disallowance of repair and maintenance expenses - Held that:- The assessee’s arguments has been found convincing. He also furnished copy of evidence at page Nos. 17 to 19 of paper book, which has also been submitted before the Assessing Officer, which shows that the assessee had purchased the cable from Frig Care Centre, 7, Aerodrame Circle, Kota vide bills No. 1133 dated 06/8/2007 and 1117 dated 04/8/2007, ₹ 80,840/- paid to JVVN Ltd. as per paper book page No. 20-21. However, expenditure incurred by the assessee under this head at ₹ 20,21,020/-. The Assessing Officer disallowed 10% out of total expenses at ₹ 2,02,102/-, which was restricted by the Assessing Officer at ₹ 1,25,000/-. The learned A.R. has not controverted the findings given by the learned CIT(A) as well as the Assessing Officer that the assessee was unable to produce the complete bills and vouchers related to repair and maintenance. Therefore, he was reasonable to restrict the disallowances at 5%. - Decided partly in favour of assessee. Disallowance of foreign traveling expenditure of directors, employees - the employees were directors’ wives, who travelled with the directors due to their personal relation - Held that:- Considering both the sides and case laws referred by the learned A.R., which are not squarely applicable on the case of assessee as the relative in all the case laws referred by the assessee were on foreign tour related to business purposes. However, in case of assessee, no evidence was produced before the lower authorities as well as before us that purpose of the directors as well as their wives and directors employees was for business. Therefore, we confirm the order of the learned CIT(A).- Decided against assessee. Ad hoc disallowance under the head Staff Welfare Expenses - Held that:- After considering the assessment order as well as finding given by the learned CIT(A) we hold that no specific defects had been pointed out by the lower authorities except holding that they were claimed on self made vouchers. The assessee had incurred these expenses on staff welfare, which are required to maintain the cordial relation with the staff, so that the company’s target can be achieved. We find that these expenses were incurred wholly and exclusively for the business purposes, therefore we delete the addition confirmed by the learned CIT(A) on this ground. - Decided in favour of assessee. Disallowance of depreciation on vehicles - the vehicles are not allowed to be used without insurance, which was done after the end of the year ignoring that the vehicles were registered by the RTO as on 31/3/2008 - Held that:- both the vehicles were registered on 31/3/2008 and vehicles were used for Demo purposes which can safely be placed at the business premises for the purpose of Demo. Even on Demo vehicles, the insurance is required but the assessee had placed these vehicles in its showroom for Demo purposes, which proved that the assets were used on last date for the purpose of business, accordingly, depreciation claimed by the assessee is justified. - Decided in favour of assessee. Disallowance of road tax for trucks by treating the same as prepaid expenditure - Held that:- The payment of road tax in advance is allowance U/s 43B even pertained to subsequent year.- Decided in favour of assessee. 2015 (1) TMI 913 Disallowance u/s 14A - Audit Fees and Bank charges - Held that:- These two item of expenditure i.e. audit fee and bank charges do not fall under the category of the expenditure incurred for a composite activity resulting taxable and non taxable income, therefore, there is no direct or proximate nexus of these two expenditures with the earning of dividend income. Under the provisions of section 14A, the apportionment of an expenditure is required to be made only when the expenditure is incurred for a composite activity or indivisible activity which results taxable and non taxable income. In the absence of any nexus of the expenditure in question with earning of the dividend income, no disallowance is called for u/s 14A of the Act. Accordingly we delete the disallowance made u/s 14A on account of administrative expenditure. - Decided in favour of assessee. Reduction of claim u/s 54F - C.I.T. restricted the claim to ₹ 5,20,65,966/- and thereby disallowing deduction to the extent of ₹ 23,62,8401- (Rs.9,90,0001- plus ₹ 13, 72,8401-) - Held that:- It is pertinent to note that apart from ₹ 9.90 lakh as sum of ₹ 25,600/- was also paid by the assessee to the society as entry fee which was allowed by the Assessing Officer as part of the cost of the acquisition of flat. Thus it is clear that for entrance in the society, the charges were only ₹ 25,600/- which has been allowed. There is no mandate of payment of ₹ 9.90 lakh to the society as a pre condition for transfer of flat in question when the entrance fee is separately paid by the assessee. Further it was paid for maintenance and development fund of the society and has no connection with acquisition of or transfer of flat in question. The stand of the society in the assessment proceedings of the society is that the amount is collected from the members for carrying out repair of the building of the society and not of any particular flat. Such repair is carried out once in every 10 to 12 years, therefore, when the payment is not for acquisition or transfer of flat then it cannot be part of the cost of the new flat for the purpose of exemption u/s 54F of the Income Tax Act. Accordingly, we do not find any error or illegality in the order of CIT(A) qua this issue. - Decided against assessee . Reduction of deduction u/s 54F on account of expenditure on renovation - Held that:- In the case in hand, no such evidence was produced by the assessee to show that the house was not in a habitable condition and the expenditure was incurred for making it habitable. Accordingly, we do not find any error or illegality in the order of CIT(A) qua this issue. - Decided against assessee . Unexplained cash credit - CIT(A) deleted the addition u/s 68 - Held that:- it is clear that the assessee produced the record to show the payment towards construction of the property in question from the year 2000 till 31.03.2007 total amounting to ₹ 60,95,000/-. As per MOU the assessee has received back only the invested amount of ₹ 60,95,000/- without any surplus or gain on the same. Thus find any error or illegality in the order of CIT(A) qua this issue. - Decided against revenue. 2015 (1) TMI 912 Addition on account of under valuation of closing stock - Held that:- As find from the sale bill that the rough diamonds of 1240.08 carat was sold on 04.04.2005 for ₹ 18,39,039/-. Thus, as the consistent method of valuation of closing stock was cost or market value whichever is less, the assessee valued 1240.08 carat of diamonds at its market value of ₹ 18,36,660/-. We find that no material was brought on record by the Revenue to show that the rough diamonds of 1240.08 carat was not sold on 04.04.2005 for ₹ 18,39,039/- and the same in fact was sold at a higher value. We find that it is not stated by the Departmental Representative that the name and address of the parties to whom diamonds in question were sold was not submitted before the lower authorities. In the above circumstances, in our considered view, the addition of ₹ 18,40,177/- made on account of undervaluation of closing stock is not sustainable. We, therefore, delete the addition of ₹ 18,40,177/- - Decided in favour of assessee. Addition on account of low Gross Profit - Held that:- in working out the gross profit at 0.023%, the foreign exchange difference is not considered by the assessee. Therefore, we do not find any infirmity in the orders of the lower authorities in estimating Gross Profit of the assessee @ 0.21% at ₹ 27,43,564/-. We have, while deciding the Ground No.1 of the appeal above, held that the addition made in respect of undervaluation of closing stock is not sustainable. Thus, the assessee is not entitled for benefit of telescoping and consequentially, the addition of ₹ 27,43,564/- on account of low Gross Profit is sustained. Thus Assessing Officer is directed to withdraw the benefit of telescoping. - Decided against assessee. Disallowance of 20% foreign travelling, conveyance and telephone expenses - Held that:- As the facts and circumstances of the year under consideration are similar to the facts and circumstances of the immediately preceding year, and the disallowance made in the year is in tune with the amount of disallowance confirmed by the Tribunal in the immediately preceding year; therefore, we do not find any good reason to interfere with the orders of the lower authorities.- Decided against assessee. Disallowance of brokerage expenses u/s 40(a)(ia) - Held that:- Where payments were made to sub-contractors for the period from April 2004-February 2005 on which TDS has been paid on 24.05.2005, no disallowance of the expenditure claimed could be made u/s 40(a)(ia) of the Act as the payments were made by the assessee before the due date of filing of return of income u/s 139(1) of the Act, as the amendment made by Finance Act, 2010 with effect from 1st April 2010 was retrospective in operation.” Therefore, we delete the disallowance of ₹ 2,74,787/- - Decided in favour of assessee. Penalty u/s 271(1)(c) deleted by CIT(A) - Held that:- We find that no specific error in the finding of the CIT(A) could be pointed out by the Revenue. In the instant case, the addition was made because of the inability of the assessee to substantiate its claim by producing the seller and purchaser. We find that no positive material could be brought on record by the Revenue to show that any particular of income furnished in the Return was incorrect or any income actually earned was undisclosed. In the above facts, we find no good reason to interfere with the conclusion as arrived at by the CIT(A) in deleting penalty. - Decided against revenue. 2015 (1) TMI 911 Short surrender of cash - revision u/s 263 as AO finalized the assessment without giving any finding with respect to short disclosure of cash to the extent of ₹ 76,76,080/- - Held that:- The Assessing Officer gave the reasonable opportunity of being heard on short disclosure of income in the return on account of cash, which has been replied by the assessee and considered by the Assessing Officer with detailed evidences. It is true that he has not given detail findings in his order but does not mean, has not considered the assessee’s reply on this count. The appellant also explained this difference before the DDIT at the time of search, which has been again reiterated before the Assessing Officer at the time of assessment and also during the course of 263 proceedings. The statement recorded U/s 132(4) of the Act is an evidence under the Income tax proceedings but is rebuttable. The appellant had calculated the difference of cash on the basis of cash sales bill book which had not been considered during the search proceedings. The learned CIT DR had not found any defect in the computation made by the appellant regarding cash sales and receipts not posted up to 20/10/2009, payment remained/posted up to 20/10/2009. Mainly cash sales at Lalkothi branch, cash sales as per machine at Lalkohti shop, mainly cash sales at Ajmer Road branch, cash sales as machine at Ajmer Road shop, sales worked out from seized material, cash sales as per bill book No. 3101 to 3200, recovery from debtors, payment for expenses and payment for purchases, therefore, we do not find Assessing Officer’s order erroneous and prejudicial to the interest of the revenue. Accordingly, the order of the learned CIT passed U/s 263 of the Act is set aside. - Decided in favour of assessee. 2015 (1) TMI 910 Addition u/s 40A(2)(b) - royalty/supervision charges - CIT(A) deleted the addition - Held that:- No material has been brought on record by the Assessing Officer to show that M/s. Alkyl Amines and Chemicals Ltd was not in possession of technical know-how and technical now-how was not provided to the assessee. Further, no material was also brought on record to show that the royalty @ 2% of the sale value was in excess of the fair market value prevailing at the material time for the technical know-how in consideration of which the royalty was paid. In such circumstances, in our considered view, no interference with the order of the CIT(A) is warranted.Similarly, in respect of sale commission and supervision charges, we find that no material was brought on record by the Revenue to controvert the claim of the assessee that the same was paid for services received or to show that the payments were more than the fair market value of such services. We, therefore, do not find any good reason to interfere with the order of the CIT(A) which is hereby confirmed and the grounds of appeals of the Revenue are dismissed. - Decided against revenue. Depreciation on goodwill - Held that:- Explanation 3 to section 32(1) states that the expression ‘asset’ shall mean an intangible asset, being know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature. A reading of the words ‘any other business or commercial rights of similar nature’ in clause (b) of Explanation 3 indicates that goodwill would fall under the expression ‘any other business or commercial rights of a similar nature’. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3 (b) (para 4). In view of the above, it is opined that ‘Goodwill’ is an asset under Explanation 3(b) to section 32(1). (Para 5). - Decided in favour of assessee. Carpeting of existing road - revenue v/s capital - Held that:- it is not in dispute that the expenditure of ₹ 2,26,191/- was incurred for resurfacing of existing road. Thus, the expenditure incurred was on account of maintenance of existing road. No material was brought on record by the Revenue to show that the expenditure in question was incurred for acquiring any new asset, hence revenue innature. - Decided against revenue 2015 (1) TMI 909 Disallowance of interest - inter corporate deposits - assessee company was engaged in the business of financing and investment activities - Held that:- In the present case it is an admitted fact that the assessee was a Non-Banking Financial Company and its Memorandum of Association and Articles of Association authorized it to do the business of Financing and Investment. The assessee in the preceding year received unsecured loans of ₹ 5,50,00,000/- which were initially utilized for giving Inter Corporate Deposits. In the instant case it is an admitted fact that the AO allowed the claim of the assessee regarding interest on borrowed capital in the preceding year i.e. the assessment year 2006-07 and there is no change in the facts for the year under consideration vis-à-vis the preceding year, moreover, the loan received in the year under consideration was utilized for making the repayment of the old loans. Therefore, no disallowance was called for in the year under consideration even by keeping view the principles of consistency. In the present case also the assessee made the investment in share application money for a sum of ₹ 4,25,00,000/- whereas the Share Capital alongwith Reserve & Surplus was amounting to ₹ 5,60,39,195/-(Rs. 2,25,00,000/- + ₹ 3,65,39,195/-) which clearly established that interest-free funds available with the assessee were more than the investments made in share application money. Therefore, the disallowance made by the AO on account of notional interest was not justified and the ld. CIT(A) arbitrarily confirmed the same. We, therefore, delete the disallowance made by the AO and sustained by the ld. CIT(A). - Decided in favour of assessee. Customs 2015 (1) TMI 934 Constitutional validity of circular dated 4th March, 2013 - Ultra vires to Articles 14 & 19(1)(g) of the Constitution of India and/or Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - show cause notice was issued alleging that assessee were not eligible for availing Cenvat Credit in respect of the storage and warehousing charges of the Acetic Acid on the ground that part of Acetic Acid was also traded by the petitioners, and trading being an exempt service, the Cenvat Credit was not eligible. - Suppression of facts - Invocation of larger period - Imposition of penalty. Held that:- A bare perusal of the circular would reveal that it prescribed revised norms for execution of bond and bank guarantee under Advance License and EPCG Schemes. It expressly refers to the Foreign Trade Policy and the exemptions thereunder in favour of such exporters who have export turn over of at least ₹ 5 Crores. The hand book of procedures has been referred to and in cases of direct import, before clearance of goods through customs, licence holder shall execute a legal undertaking / bank guarantee with the Customs Authority in the manner as may be prescribed by them. In the light of the policy provisions (FTP) the issue regarding execution of bonds / bank guarantee under the aforementioned schemes was reviewed by the Board and in supersession of the earlier circular, the circular dated 21st October, 2004 was issued. Revised norms could have been prescribed by the Board, namely, Central Board of Excise and Customs for the purpose of furnishing bond and bank guarantee under the schemes. Para 3.1 of this circular refers to the Star Export House. The bank guarantee exemption in para 3.1 is admissible subject to the conditions stipulated in this circular and para 3.2(c) further stipulates that the license holder should not have been penalized under the provisions of the Customs Act, 1962 and the Central Excise Act, 1944. Further, every misuse of Advance License scheme dis-entitles the holder of the license from availing of the benefits and privileges. Thus, consistent with the stipulations and the conditions in the Foreign Trade Policy the norms have been prescribed and revised and which always stipulated that the benefits or bank guarantee exemption is admissible subject to the license holder not being proceeded or penalized under the Central Excise Act, 1944. Circular further revised the norms and which have been prescribed by the earlier circular dated 21st October, 2004 which itself came to be amended by circular No.17/2009 and 32/2009. It was further amended by circular No.6/2009 dated 18th January, 2011. The last amendment and which has been put in issue before us contained in para 3.2(c) is now notified by the Central Board of Excise and Customs vide this circular of 4th March, 2013. It has been stated that prior to the issuance of the amended circular of 2011 one of the explicit criteria for denying benefit to the license order is that license holder should not have been penalized. However, the issue of penalty imposed for technical offences had arisen. Therefore an affidavit was insisted from the license holder with regard to the offences recorded as other than technical offences and for which the said license holder had been booked during the three previous financial years. If that was revealed then in cases of such violations benefit of exemption from bank guarantee should not be extended. Attention of the Board was invited by Exporters Trade Association's and Field Forming to the fact that by these amendments the benefit of availing of bank guarantee will be denied even before the show cause notice imposing penalty has been adjudicated. That is how the Board reviewed the matter and it restored the position prior to issuance of the circular No.6/2011 dated 18th January, 2011. When larger public interest is sought to be sub-served by denying exemption to such Advance License holders from the condition of furnishing of bank guarantee that we are of the opinion that the mandate enshrined in Articles 14 & 19(1)(g) of the Constitution of India has not been violated. The benefits are under the export promotions / reward schemes and which finds recognition in the Foreign Trade Policy as well. When the Foreign Trade Policy and consistent therewith the Board circulars aim at not giving any privileges, special status and exemptions to the category of persons who are proceeded against for violations or breaches of the aforementioned enactments then the insistence by the Commissioner on the petitioners' furnishing a Bank guarantee of 25% vide communication dated 9th December, 2014, cannot be faulted. We do not think and as a result of the discussion that the Foreign Trade Policy has been amended or overridden by any stipulations in the Customs Department circular or the communication impugned in the present Writ Petition. Far from taking such a stand or step the Customs authorities have acted consistent with both the Foreign Trade Policy and the Foreign Trade Act, 1992. The mandate of both Acts, namely, Foreign Trade Act and the Customs Act, 1962 do not favour grant of any exemptions or special privileges to those who have been penalized or proceeded against or booked for cases which are referred to in para-4 of the circular / notification dated 4th March, 2013. - Decided against petitioners. 2015 (1) TMI 933 Conviction under Section 20(B)(II)(C) N.D.P.S. Act - Sentence of rigorous imprisonment for 15 years with fine of ₹ 1 lac. In default of payment of fine each of accused appellant has been ordered to undergo further rigorous imprisonment for 1 1/2 years - Recovery of charas and ganja in huge quantity - Held that:- Perusal of statements of accused-appellants Anil Kumar Jaiswal and Jagram recorded under Section 313 Cr.P.C. shows that they have admitted arrest by party of Customs and Excise Department at the time and place alleged by prosecution and this fact has been supported by statement of D.W. 1 Ram Chandra Yadav. According to accused-appellants as well as their witness D.W. 1 Ram Chandra Yadav, accused-appellants Anil Kumar Jaiswal and Jagram were not with car. They were going to their shop. In the way where Ambassdor car was standing, Officers of Customs and Excise Department asked them to become witnesses but they declined to become witnesses, thereafter, accused-appellants were brought with car to office of Customs and Excise Department and were forced to sign false statement and have been falsely implicated. Neither accused-appellants have stated in their statement under Section 313 Cr.P.C. nor their witness D.W. 1 Ram Chandra Yadav has stated that no narcotic drug was recovered from the car standing on the spot. Accused-appellants have not stated in their statements under Section 313 Cr.P.C. that false recovery of Charas and Ganja have been planted by officers of Customs and Excise Department. No suggestion has been given to prosecution witnesses on behalf of defence that the recovery of Charas and Ganja has been planted by the departmental officer. - prosecution has fully proved the arrest of accused-appellants on spot along with Ambassdor car having Charas and Ganja in it. Therefore, in view of above pronouncement of Hon'ble Apex Court rendered in the case of Khet Singh Vs. Union of India (supra), the preparation of recovery memo in the office of department is not fatal for prosecution case. In this context, it is relevant to mention that after recovery of narcotics drugs in such a huge quantity, the preparation of recovery memo on road appears quite inconvenient. Recovery of Charas and Ganja is alleged to have been made on 25.8.1988. The case property has been produced before trial court during examination of P.W. 3, Ramesh Chandra Shukla on 25.4.2003 after lapse of 15 years. Therefore,due to lapse of such a long time the seals and slips as well as signatures might have been damaged, destroyed or defaced. - it is also relevant to mention that in crossexamination, P.W. 3 Ramesh Chandra Shukla has not been given any suggestion on behalf of defence to the effect that the case property produced before trial court is not the case property related to this case. It is also relevant to mention that the accusedappellants have stated that they have been falsely implicated but they have not denied recovery of Charas and Ganja from car as alleged by prosecution. - Therefore, considering all facts and circumstances of the case as well as evidence on record, I am of the view that the prosecution case may not be disbelieved merely on the ground that the case property brought before trial court was not in a good condition. Perusal of recovery memo as well as statements of witnesses examined by prosecution shows that Charas has been recovered in two bags kept on back seat of car and Ganja has been recovered from the dicky of the car kept in packets and small bag. - Perusal of recovery memo as well as statement of witness examined by prosecution shows that the car was in possession of accused-appellants as well as deceased co-accused Ram Chandra Yadav. The alleged recovery of Charas and Ganja has been made on 25.8.1988 and statement of P.Ws. has been recorded before trial court in year, 2003 after lapse of 15 years. Therefore, due to lapse of such a long time. The memory regarding incident may not remain fresh. Therefore, there may be some variation in the statement of witnesses but after having gone through whole statements of witnesses examined by prosecution, it is apparent that there is no material contradiction in their statements and there is no sufficient ground to disbelieve their testimonies. - In the statements recorded under Section 313 Cr.P.C. accused-appellants have stated that after having assaulted, their statements have been taken and forged documents have been prepared. Perusal of records shows that before statements of accused-appellants recorded under Section 313 Cr.P.C. no complaint has been made by accused-appellants either before remanding Magistrate or trial court or any other authority alleging that accused have been forced to give false statements Considering whole facts and circumstances of the case as well as evidence on record, I am of the view that the conviction recorded by trial court against accused-appellants is in accordance with law and evidence. The trial court has considered whole evidence and all points relevant for determination of the case. The conclusion drawn by trial court is based on judicious analysis of evidence and is accordance with law. - Considering quantity of Charas and Ganja alleged to have been recovered from the possession of accused-appellants as well as facts and circumstances of the case, I am of the view that sentence awarded by trial court to accused-appellants is not excesive. - there is no sufficient ground for interference in the impugned judgement and order passed by trial court. - Decided against appellants. 2015 (1) TMI 932 Classification - Exxsol Hexane RD and Hydrosol n-hexane - classification under Chapter 29 or classification under Chapter 27 - Supreme Court after condoning the delay admitted the appeal of Revenue filed against the decision of tribunal [2013 (3) TMI 240 - CESTAT, KOLKATA] - wherein Tribunal decided the classification and penalty issue in favour of assessee. 2015 (1) TMI 931 Classification – Refrigerator originating from Thailand - benefit of notification No. 85/04-Cus - assessing officer classified the goods under CTH 84181090 on the ground that the goods under importation were combined refrigerators-freezers, fitted with separate external doors and therefore, not eligible for the aforesaid exemption – Supreme Court after hearing the parties found no merit in the appeal of assessee and consequently dismissed the appeal filed against the decision of Tribunal [2012 (12) TMI 554 - CESTAT, MUMBAI] - Wherein Tribunal held that Classification of combined refrigerator-freezer with separate external doors would be under sub-heading 8418.10 and not under 8418.21 as was being followed by certain customs field formations. Accordingly these goods are not covered under sl.No. 50 of notification No. 85/2004-Cus dated 31-8-2004. 2015 (1) TMI 930 Penalty u/s 112(a) - Import of Equipment - Restricted item or not - Transmitter Broadcasting Equipment Sub-system (Data Processing Unit with transmitting capabilities for broadcasting, software and other standard accessories - The classification of the goods was claimed as "Transmitter Broadcasting Equipment Sub-System" under Heading No.85255030 which as per the Exim Policy, is a freely importable item without any import licence - Held that:- The equipment is meant for one to one communication between the field and the studio with the help of GSM cellular network. It is at the studio that the signals are processed for the broadcast to the audience at large. In other words, the usage of the equipment is for transmitting the audio-video signals till the studio and not beyond that would necessarily suggest, the broadcasting from the studio to the public at large is done by a separate set of equipment available at the studio. The aspect of usage/function of the equipment, imported is a pure question of fact and no substantial question of law arises for the consideration of this Court in this appeal. Even on the aspect of perversity, we find the appellant has not placed along with the appeal, the copy of the literature relating to the equipment. We do not think, it is a fit case for this Court to interfere with the impugned order. - Decided against Revenue. FEMA 2015 (1) TMI 929 Condonation of delay - whether for the purpose of counting delay in appeals against orders of adjudicating officer to the Appellate Board, the provisions of Foreign Exchange Regulation Act, 1973 or Foreign Exchange Management Act, 1999 shall apply - Held that:- The impugned order was passed by the Adjudicating Authority on 11.08.2007. It is pleaded on behalf of the appellant and was not disputed by respondents that the said adjudication order was served on the appellant on 25.10.2007. - Therefore, we hold that even u/s 52 of FERA the Appellate Board was empowered to condone the delay, as the appeal was filed before 90 days and not later than 90 days - Following decision of Thirumalai Chemicals Ltd. v. Union of India and others [2011 (4) TMI 489 - SUPREME COURT OF INDIA] - Decided in favour of appellant. Service Tax 2015 (1) TMI 956 Denial of refund claim - CENVAT Credit - Nexus with manufacturing activity - Held that:- In all these cases, the services are having a nexus with the manufacturing activity from the place of removal as was required during the relevant time. In the case of export of goods on FOB basis, the place of removal has to be treated as the port and substantial portion of the service relates to freight outward, CHA inward, security charges, building service charges etc. Since the port is considered as place of removal, freight outward upto the place of removal would be a eligible service and freight inward in any case is eligible and CHA charges also relating to inputs would be eligible. After consideration of various services listed in the year, I find that appellant is eligible for the refund and in any case the policy of Government is not to export taxes. Under these circumstances, I do not find any merit in the appeal filed by the Revenue - Decided against Revenue. 2015 (1) TMI 955 Waiver of pre deposit - Maintenance or repair service - Absence of agreement - Held that:- In the absence of an agreement, the service tax cannot be levied on repair work undertaken. We find that the decision applies to the facts of this case. Therefore following decision in [2011 (7) TMI 949 - CESTAT, CHENNAI], in this case also the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeal. - Stay granted. 2015 (1) TMI 954 Waiver of pre deposit - Technical testing and analysis service - Misdeclaration of services - Held that:- Following decision of M/s. BA Research India Ltd. Versus CST Ahmedabad [2010 (5) TMI 89 - CESTAT, AHMEDABAD] - Stay granted. 2015 (1) TMI 953 CENVAT Credit - renting of immovable property service - credit availed on LED Score Board - Held that:- Regarding demand under renting of immovable property service, it was submitted that the amount includes amounts received for various warehouse and godown and other hire charges, ground hire charges for matches and practice, service contract receipts, stadium maintenance recovery, etc. That being the position, the demand under this head without identifying the specific category of service under each amount received can be classified and how it amounts to rendering classifiable service has not been examined. Except extracting the statutory provision, no findings have been given on specific arguments put forth by the appellant. It was also submitted that the learned Commissioner failed to consider the appellant's submission that the activity of renting of rooms does not attract service tax and the rooms were mostly occupied by non-members and therefore, it could not be considered as a service provided to the members. As regards the CENVAT credit availed on LED Score Board, he submits that LED was not only utilized for displaying of scores during the cricket matches but the same was also used for other functions for displaying of programmes and other items. In such cases the appellants paid service tax under the category of ‘Mandap Keeper Service' and therefore CENVAT credit was admissible. He submits that CENVAT credit has been denied on the ground that CENVAT credit has been used for club or association service. However, in our opinion, accepting the submission that the LED display board was used for other functions also, the situation would be that credit would be available in the books. Once CENVAT credit is available and taken, there is no strict rule that it has to be used for same output service for which it is an input service. Therefore rejection for CENVAT credit on this ground in our opinion cannot be sustained. Therefore prime facie CENVAT credit appears to be admissible. - Partial stay granted. 2015 (1) TMI 952 Manpower supply services - Disbursal of employee's salary - Held that:- In the absence of any agreement between the manpower supply service provider as held by the department and the service receivers; in the absence of any proof to show that there was an understanding to that effect; and in the absence of any remuneration paid to the appellants and in view of the fad that the Provident Fund (PF) was directly paid by the service receiver to the PF authorities, we consider that appellants have made out a prima facie case for waiver of pre-deposit. Accordingly, the requirement of pre-deposit is waived and stay against recovery is granted during the pendency of appeals - Stay granted. 2015 (1) TMI 951 Benefit of VCES - Held that:- Matter could be caused to be considered by the second respondent, who is the appellate authority before whom Ext. P4 appeal preferred under Section 85 of the Finance Act, 1994 is pending. If no appeal is maintainable and if an arbitrary and illegal order is passed by an authority, even exceeding the power and jurisdiction, the only remedy is to approach this Court invoking the power and procedure available under Article 226 of the Constitution of India. Insofar as Section 85 of the Finance Act, 1994 is there, and since no other provision is referred to with reference to Finance Act, 2013, which however makes a reference to Chapter V of the Finance Act, 1994 under Section 105 (1), it is for the second respondent to consider whether Ext. P4 appeal preferred by the petitioner is maintainable and also as to the merits of the case involved. - second respondent is directed to consider and pass appropriate orders on Ext. P4, after giving an opportunity of hearing to the petitioner, which shall be done at the earliest, at any rate, within one month from the date of receipt of a copy of this judgment. Coercive proceedings pursuant to Exts. P3 and P3(a) shall be kept in abeyance till such time - Petition disposed of. 2015 (1) TMI 950 Service tax liability - Banking and other Financial services - Renting of immovable property service - Denial of CENVAT Credit on the ‘input services’ - NOTIFICATION NO.29/2004-ST, DATED 22.9.2004 - Held that:- So far as the claim relating to the charges on discounting of the bills are concerned, the petitioner has shown the same in the separate account and treated the same as interest which is not eligible to service tax. - The meaningful reading of the notification dated 22-9-2004, prima facie, suggests that the discount earned on discounting of the bills, if shown separately, is exempted from the taxable services in equivalence to the amount of interest on the overdraft or the credit. The interpretation made by the authority that exemption on account of interest is limited to the over draft facility and the cash credit and not on the amount while discounting the bills are not free from any doubt. The notification clearly provides for discounting of the bills to be exempted from the purview of the taxable services and, therefore, this Court does not accept the interpretation tried to be given to such notification by the Tribunal. - strong prima facie case has been made out by the petitioner for waiver of the amount pertaining to the service tax on the charges collected by the bank while discounting the bills. So far as the availment of CENVAT credit is concerned, according to the petitioner, the authorities have invoked the amended provision which cannot be made applicable to the case of the petitioner as the period for which the proceeding has been initiated is prior to the date of coming in force of the said amendment. It appears that the authorities have recorded that the petitioner has not maintained a separate account on the input service used in providing taxable service and the exempted services and, therefore, the CENVAT credit which the petitioner bank utilised was wrongly availed of. From the reply also this Court finds that the petitioner bank says that they have not maintained the separate account. This Court, therefore, finds that so far as the CENVAT credit is concerned, the bank has not been able to make out a strong prima facie case. This Court, therefore, grants a total waiver of pre-condition deposit of an amount which relates to the bill discounting charges/interest to the tune of ₹ 11.02 crores are concerned; so far as the sum of ₹ 5.99 crores on account of wrong availment of the CENVAT is concerned, this Court does not find that the petitioner has been able to make out strong prima facie case for full waiver. - Decided partly in favour of assessee. 2015 (1) TMI 949 Valuation - inclusion of reimbursement of expenses - Whether in the facts and circumstances of the case, the Assessee was liable to pay Service Tax on the amount received under the head - Primary claim/Retailer scheme or not - Held that:- Section 67 of the Act is titled as ‘Valuation of taxable services for charging Service Tax’. It defines how the valuation of taxable service is to be calculated on which the Service Tax is to be paid by the Assessee. - The amount shown under the head of primary claim/retailer scheme is the amount which the service provider had given to the retailers on behalf of SBL for achieving certain quota of sales. It was then reimbursed to it. - Commissioner (Appeals) after discussing the material on record, has recorded a finding that this was the expense that was done by the Assessee as a pure agent of SBL and this finding has been upheld by the Tribunal. - There is no illegality in the reasoning or in the finding. - Decided against Revenue. 2015 (1) TMI 948 CENVAT Credit - Outdoor catering service - Held that:- judgment [2011 (4) TMI 201 - KARNATAKA HIGH COURT] has been noticed by the Tribunal but the relief sought was denied to the assessee on the ground that the assessee has employed less than 250 persons in the factory premises and therefore, the assessee is not entitled to the said benefit. In the aforesaid judgment of this Court, it is not laid down that to be eligible for the Cenvat credit, there should be an obligation under Section 46 of the Factories Act for the assessee to run a canteen. A canteen is run for the welfare of its employees to see that they get the best food and they are able to perform well in the factory premises, which has a direct nexus with the production of the goods and therefore, all input tax which results in the production of the goods is to be given set off by way of Cenvat credit. Therefore, the finding recorded by the Tribunal cannot be sustained. - Thus., this is the correct legal position. In that view of the matter, the impugned order passed by the Tribunal is liable to be set aside. - Decided in favour of assessee. 2015 (1) TMI 947 Waiver of pre deposit - Held that:- issue as to the leviability of Service Tax is before the Hon’ble Supreme Court. - until and unless the Supreme Court decides striking down this portion of law, the statute has to be operated. We, therefore, dismiss the appeal. However, time to comply with the order of the learned Tribunal is extended for a period of one month from date. We make it clear that all findings recorded at the prima facie stage by the learned Tribunal or that of our order will not be binding at the final stage of hearing. - Decided against assessee. Central Excise 2015 (1) TMI 944 Interest on refund claim - Refund sanctioned by Tribunal - Refund granted but interest not paid as appeal pending in Higher Court - Held that:- The statutory prescription that the claim for refund, if sanctioned, carries the obligation to pay interest, in the event, it is not remitted in a particular time, is undisputed. The only justification for withholding the sum is that the Revenue has approached the Higher Court and the Appeal of the Revenue is pending. We are of the view that mere pendency of these proceedings and in the given facts and circumstances, would not enable the Revenue to resist the claim as eventually, the principal amount was due and recoverable. That sum has been already remitted. In other words, the Petitioners have received a sum of ₹ 41,01,467/. The balance claim that remains is of interest on this sum. If the statute provides that in the event, amount is not paid within a specified time, then, the Revenue will have to pay interest, unless and until, the Revenue was able to obtain any preventive or prohibitory order and direction. It cannot refuse to release the sum in favour of the Petitioners. The Revenue could have released the sum without prejudice to its rights and contentions and subject to the pending proceedings in this Court and equally the Tribunal. The Rule is made absolute in terms of prayer clause (a) with the direction to the Respondents to pay the sum of interest as quantified in terms of the earlier orders and direction and the provisions of law - The amount as computed and quantified shall be released and paid to the Petitioners within a period of 12 weeks from today - Decided in favour of assessee. 2015 (1) TMI 943 Rebate claim - Section 54(1A) of Central Excise Act, 1944 absolute exemption was available to the applicant being a 100% EOU hence they had no option to, pay duty and claim rebate under Rule 18 of Central Excise Rules 2002 - Held that:- Notification No. 24/03-CE dated 31-03-2003 was issued under section 5A(i) of Central Excise Act 1944. The goods manufactured by 100% EOU and cleared for export are exempted from whole of duty unconditionally. Therefore in view of provisions of subsection (1A) of section 5A, the applicant manufacturer has no option to pay duty. Government notes that there is no condition for availing exemption from payment of duty on goods cleared for exports Normally the 100% EOU has to clear goods for exports as per the EOU scheme. Since there is no condition in the notification for availing exemption to goods manufactured by 100% EOU and cleared for export, the provisions of sub section (IA) of section 5A(1) are applicable and no duty was required to be paid on such export goods - it is quite clear that the amount paid cannot be treated as duty paid and these rebate claim cannot be held admissible under rule 18 of Central Excise Rules 2002. - Following decision of M/s. Orchid Health Care (A division o Orchid Chemicals & Pharmaceuticals Ltd.) Versus Union of India and others [2013 (6) TMI 33 - MADRAS HIGH COURT] and assessee's own previous case - matter remanded back - Decided in favour of Revenue. 2015 (1) TMI 942 Denial of rebate claim - failure to produce original and duplicate copies of ARE-1 Form - held that:- Non-production of the ARE-1 form would not ipso facto result in the invalidation of the rebate claim. In such a case, it is open to the exporter to demonstrate by the production of cogent evidence to the satisfaction of the rebate sanctioning authority that the requirements of Rule 18 of the Central Excise Rules 2002 read together with the notification dated 6 September 2004 have been fulfilled. As the primary requirements which have to be established by the exporter are that the claim for rebate relates to goods which were exported and that the goods which were exported were of a duty paid character. As at this stage that the attention of the Court has been drawn to an order dated 23 December 2010 passed by the revisional authority in the case of the Petitioner itself by which the non-production of the ARE-1 form was not regarded as invalidating the rebate claim and the proceedings were remitted back to the adjudicating authority to decide the case afresh after allowing to the Petitioner an opportunity to produce documents to prove the export of duty paid goods in accordance with the provisions of Rule 18 read with notification dated 6 September 2004 Order No.1754/10-CX dated 20 December 2010 of D.P. Singh, Joint Secretary, Government of India under Section 35 EE of the Central Excise Act 1944 & also placed on the record other orders passed by the revisional authority taking a similar view Garg Tex-O-Fab Pvt. Ltd. (2010 (10) TMI 880 - GOVERNMENT OF INDIA), Hebenkraft – [2001 (3) TMI 124 - GOVERNMENT OF INDIA], Shreeji Colour Chem Industries v. CCE [2007 (10) TMI 523 - CESTAT, AHMEDABAD], Model Buckets & Attachments (P) Ltd. v. CCE (2007 (2) TMI 520 - CESTAT, BANGALORE) and CCE v. TISCO 2003 (2003 (3) TMI 191 - CEGAT, KOLKATA) Thus as in the present case the Petitioner has inter alia relied upon the bills of lading, banker's certificate in regard to the inward remittance of export proceeds and the certification by the customs authorities on the triplicate copy of the ARE-1 form the rebate sanctioning authority directed to reconsider the claim. - Following decision of UM Cables Ltd. Versus Union of India And Others [2013 (5) TMI 459 - BOMBAY HIGH COURT] - Matter remanded back - Decided in favour of assessee. 2015 (1) TMI 941 Clandestine Removal - Goods not accounted in RG-1 Register - Held that:- Admittedly the entire case has been made out on the basis of loose papers resumed from the factory premises of the Appellants. The Appellants have contended that the documents do not bear the name of factory and it is not written that commodity packed in bags was cement. I have perused these loose slips and found that the said slips carry neither the name of Company nor the description of goods. No doubt these slips have been resumed from the factory premises of the Appellants but that is not sufficient to establish the charge of clandestine manufacture and clearance of goods. I find that many names had been mentioned in the said loose slips. However, statement of none of these persons had been brought on record to establish the fact that the said slips pertained to the Appellants and reflected the transactions in bags of cement effected by both Appellants 1 and 2. It is well settled that the charge of clandestine manufacture and clearance of goods is a very serious charges and is required to be proved beyond doubt. It has been held by Courts and the Tribunal that suspicion however strong cannot be a substitute for evidence. Department has not adduced any corroborative evidence to support the charge of clandestine manufacture and removal of goods. The Adjudicating authority has drawn inferences from the recovery of the slips without any independent material that since the slips had been recovered from the factory premises, these relate to cement bags only. The presumption made by the learned Commissioner is not supported by any independent material on record. It has been mentioned in the impugned Order that the sheets were signed by workers of the factory. However, there is no statement of any workers on record to establish the said fact. - Adjudicating authority has himself mentioned in the impugned Order that there are references of truck nos. in the sheets and the investigation with respect to the truck owners/drivers would have been relevant. It is felt that as the investigation has not been conducted from the truck owners/drivers, the said sheets do not establish conclusively that the Appellants had manufactured and removed alleged bags of cement clandestinely. The Adjudicating authority has presumed without any basis that the statements of the truck owners/drivers would have had a corroborative value for the Department s case and not the Assessee. This presumption could not replace evidence to properly corroborate the clandestine activity. It is settled legal position that the demand cannot be worked on the basis of mere meter readings or power consumption. The demand has been computed on the basis of formula of 45 bags production per unit consumption of power. I find that there is no reference in the impugned show cause notice and the Adjudication Order about any specific study undertaken in this regard. No technical basis of such calculation has been arrived at. The charge of clandestine activities is required to be corroborated by production of independent evidences. In the present case, no evidence is record to show the receipt of raw materials and removal of finished goods and details of transportation with truck numbers. - clandestine manufacture and clearance of cement based on generator reading have not been uphold. Penalty is imposed on Mr. B.P. Aggarwal, partner of M/s. Portland Chemicals and Mr. S.P. Aggarwal, Director of the Portland Cement (India) Limited and partner of M/s. Portland Chemical are set aside. - Decided Partly in favour of assessee. 2015 (1) TMI 940 Determination of the fact whether there is short payment of duty on account of mis-classification of “Super Kishan Biri No. 51”, chargeable to specific rate of duty - packing of biris the aid packing machine - classification under sub-heading No. 2403 10 39 or otherwise - Held that:- The show cause notice was issued to the Applicant alleging short payment of duty because of incorrect classification of biris. It is alleged that since the machines running with the aid of power, had been used in packing biris known as “Super Kishan Biri No. 51”, therefore, it would be classifiable under sub-heading No. 2403 10 39 instead of sub-heading No. 2403 10 31. It has not been an issue for determination whether labelling, re-labelling, re-packing from bulk pack, etc. resulted into ‘manufacture’ under Chapter Note 3 of Chapter 24 of CETA, 1985. On the contrary, we find that the circumstances involved in the present case are squarely covered by the judgment of this Tribunal in the case of Hindustan Biri Manufacturing Company’s case (2007 (3) TMI 106 - CESTAT, KOLKATA), wherein it has been categorically held that the biri is not manufactured with the aid of power by use of machine for the sole purpose of packing of biris in pre-printed plastic wrapper brought from outside. In the result, there is no merit in the Orders-in-Appeal. Consequently, the same are set aside - Decided in favour of assessee. 2015 (1) TMI 939 Denial of the benefit of captive consumption Notification No. 67/95-C.E., dated 16-3-1995 - final products were exempted from payment of Central Excise duty - Held that:- Vitamin premix and mineral premix are mixtures of starch preparations to which nutrients i.e. vitamins and minerals are added and merit classification under CETH 1901 as preparation of starch attracting Nil rate of duty. The ld. Counsel made additional submissions in writing to the effect that in any case the goods i.e. premixes will be exempted intermediate products under Notification No. 67/95 as amended by Notification No. 35/2001. According to him after the amendment by insertion of new clause at serial No. 6 under which exemption is available to intermediate products even if used in the manufacture of exempted final products provided the manufacturer discharged the obligation prescribed in Rule 6 of the Cenvat Credit Rules. Since we have already decided the classification under Chapter 19 attracting Nil rate of duty. We do not find it necessary to go into the issue of Notification No. 67/95 - Decided against Revenue. 2015 (1) TMI 938 CENVAT Credit - Invalidation of advance licenses - Revenue’s objection is that the suppliers of the raw material should have availed the benefit of Notification No. 44/2001-C.E. (N.T.) and should have cleared the raw materials without payment of duty, in which case M/s. Balkrishna Industries Limited was not entitled to avail the credit of duty paid on the inputs procured by them from various raw materials suppliers - Duty confirmed along with imposition of penalty - Held that:- this is well settled law that a manufacturer is entitled to avail the credit of duty “paid” by the input manufacturer and the assessments at his end cannot be reopened on the ground that input supplier should not have paid duty in which case the credit of the same would be available to the manufacturer/exporter - Following decision of M/s OLEOFINE ORGANICS (INDIA) PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE, THANE-I [2013 (7) TMI 157 - CESTAT MUMBAI] - Decided in favour of assessee. 2015 (1) TMI 937 Denial of refund claim - Refund for advance duty paid - Ban on manufacturing and sale of gutkha - Held that:- Appellant clearly informed the Assistant Commissioner that in view of the ban on manufacture and sale of gutkha and pan masala imposed by the State Government with effect from 27-7-2012 they are compelled to stop their manufacturing activities and for this reason they wish to permanently discontinue the manufacture of gutkha from 27-7-2012. There is no dispute that all the machines were sealed in the evening of 27-7-2012 in the presence of Panchas and hence there could not be manufacture of any gutkha from 28-7-2012 onwards. Assistant Commissioner has refunded the disputed amount strictly in accordance with Rule 16 of the Pan Masala Packing Machines Rules, I am therefore of prima facie view that this rule is applicable in the circumstances of this case. The ground on which the Commissioner (Appeals) has reversed the Assistant Commissioner’s order sanctioning the refund is factually incorrect as from the Appellant’s letter to the Assistant Commissioner it is absolutely clear that the appellant wanted to stop the manufacture of gutkha permanently in view of ban on its manufacture and sale. In view of this, the appellant have a strong prima facie case in their favour. The requirement of pre-deposit of the disputed amount of refund is waived for hearing of the appeal and recovery thereof stayed. - Stay granted. 2015 (1) TMI 936 Denial of refund claim - Deposit made in exchequers accounts through making debit in PLA account - deposit were made under protest and letter dated 31-3-1992 was also written by the appellant to the Assistant Collector of Central Excise, Gurgaon detailing about the dispute going on between the Revenue and the assessee as regards the vehicles, which were exported earlier and returned back as damaged vehicles and received by the assessee in their factory - Held that:- Assistant Commissioner sanctioned the refund of ₹ 4.06 crores approximately in his file only on 4-5-1995, by making endorsement on the copy of PLA extract and the relevant TR-6 challan. There was admittedly no order of the Assistant Commissioner in an appealable form, issued after observing the principals of natural justice. It was only a file noting. In fact, it seems that the said sanctioning of refund claim on the file itself was not considered an order, even by the Revenue itself, inasmuch as the Assistant Commissioner subsequently passed a proper order-in-original on 23-1-1996. As such, we fully agree with the assessee that the action on the part of the Commissioner (Appeals) to restrict the refund to an amount of ₹ 4.06 crores is not proper and the assessee would be entitled to the entire refund claim of ₹ 4.50 crores. As regards the Revenue’s appeal, the prayer is to restrict the refund claim to ₹ 2.71 crores, as done by the Assistant Commissioner in his order-in-original impugned before Commissioner (Appeals). However, we find that the said order was passed by the Assistant Commissioner on 23-1-1996 and a part of the refund claim stand rejected on the ground that the requisite original document relatable to export of the vehicles are not available. However, subsequent to the passing of the said order of the Assistant Commissioner, the Commissioner of Central Excise, in a separate proceedings relating to the demand of duties in respect of the export vehicles, dropped the proceedings vide his order dated 9-11-1998. Once the demand in respect of export vehicles stands dropped by the Commissioner vide his order dated 9-11-1998, the reasoning of non-availability of original documents by the Assistant Commissioner adopted in his order dated 23-1-1996 is no longer available to the Revenue for denial of a part of the amount deposit so made by the assessee. As such, we find no merits in the Revenue’s prayer. - Decided against Revenue. 2015 (1) TMI 935 Waiver of pre-deposit - Levy of the duty short-paid along with interest and penalty - Classification of goods - whether the product “Milk Treat” is classifiable under Chapter sub-heading 1905 32 11 (coated with chocolate or containing chocolate) or under sub-heading 1905 32 19 (other) - Held that:- Rule 16 of the CESTAT (Procedure) Rules, 1982 requires that the appellant shall, along with the appeal or within one month of filing of the appeal, submit, inter alia a paper book containing copies of the documents, statements of witnesses and other papers on the file of or referred to in the orders, of the departmental authorities, which he proposes to rely upon at the hearing of the appeal. Non-filing of RUDs with the memorandum of appeal is of no consequence and does not amount to violation of Rule 16 of CESTAT (Procedure) Rules, 1982. The contention, repeatedly asserted by the ld. AR is frivolous and wholly irrelevant. That the ld. AR has refused to make submission on the merits of the stay application, we record, that is a conscious choice made on behalf of Revenue. Be that as it may. We however record our disapprobation of the insistence by the AR that the stay application ought not to be heard till RUDs mentioned in the show cause notice are filed by the petitioner/appellant. - In the light of the decision of the Tribunal in Ravalgaon Sugar Farm Ltd. v. C.C.E., Ahmedabad [2000 (7) TMI 308 - CEGAT, NEW DELHI] and the detailed stay order passed by this Tribunal in the petitioner’s own case (in respect of an earlier period), the petitioner is seen to have a strong prima facie case in its favour. - Stay granted. CST, VAT & Sales Tax 2015 (1) TMI 946 Seizure of articles being transported from Delhi to Tripura – it is alleged that value of the goods had been fixed at a rate much higher than the market rate – Held that:- It is the duty of the registered transporter, carrier or transporting agency to obtain sufficient numbers of Form-XXV in advance and see that they are duly and properly filled in prior to the driver entering the check-post - even when the revision petition was filed neither Form XXV was filed with the revision petition nor the bills and invoices of the goods given - what was produced was only a copy of the manifest giving the value of goods and a copy of the transit form issued by the authorities in Assam - the authority in Assam would be least concerned with the value of goods because they would only be charging transit taxes, if any which would have no bearing with the value of the goods - the Commissioner even gave an opportunity which he was not required to do to the transporter to produce material before him within 7 (seven) days - even thereafter neither Form-XXV was produced nor the bills or invoices of the goods which were actually transported in the truck were produced - what was produced were the bills and invoices of Jira not related the consignment - these are invoices of Jira which had been collected at Agartala but in the petition it is mentioned that these rates reflected in these invoices were accepted by the Churaibari check-post - the action of the Officers at the check-post in seizing the goods and holding that they were being transported with a view to evade tax, is justified and calls for no interference. Whether the goods were properly valued for the purpose of assessing the tax, penalty etc. – Held that:- The petitioner has clearly mentioned that Form-XXVI wherein the value of the Jira was declared to be ₹ 106.99 was declared and accepted by Superintendent of Taxes - the rate of Jira would vary between ₹ 107/- to ₹ 121/- per kilogram and taking even the highest rate we assess the rate of Jira at ₹ 121/- per kilogram - as far as the other goods are concerned, despite opportunity having been given to him has failed to produce any material as to what was the value of the goods - the value of Jira shall be taken to be ₹ 121/- per kilogram and rest of the order of the Commissioner is upheld – Decided partly in favour of petitioner. 2015 (1) TMI 945 Validity of Notices issued based on Circular 33 of 2006 - Whether appellants were transporters and not dealers - Held that:- There was no intention discernible to treat the transporter as a dealer and consequently no obligation was cast on him to pay any tax, interest or penalty; which a dealer is required to pay - only a false declaration and a finding of collusion could invite penalty - the need to make correct and complete declaration and filing of the same before the officer in charge of a check post or barrier, was also upheld on the very same reasoning - the challenge based on violation under 301 of the Constitution of India was hence negatived. Penalty imposed for non-registration and the subsequent issuance of registration - Requirement for registration u/s 15 of the Kerala Value Added Tax Act, 2003 – Held that:- The mandate of registration was upheld on the premise that this too merely aided the authorities in checking the evasion of tax and finding that registration makes it feasible for the authorities to trace out the defaulting dealers through the transporters - a State, making an enactment under Entry 54 of List II of Seventh Schedule would be competent to provide for registration of transporters of goods, intended for sale within or without the State and providing for measures to check evasion of tax, by requiring such registered transporters to file returns and to make declaration as prescribed for effective implementation of the enactments. The power though not specifically enumerated, were held to be incidental and ancillary powers, conferred on the legislature to further the purpose of taxation enactments and to ensure due payment of tax and check evasion thereon - There can be no quarrel that if such provisions are available under a statute, the same have to be upheld on the principles of legislative competence as declared by the aforesaid binding precedents - The reliance placed by the learned Government Pleader, to that extent is only proper - it is not the constitutionality of such provision that arise, and it is the lack of a provision obliging the transporters, to take registration, that has been urged - there is absolutely no bar on the legislature, to provide for registration of transporting agencies, who have an intimate and proximate connection, to the sales and purchase of goods, and also provide for filing of returns, and inspection of accounts of such transporting agencies - The statute have not provided for the same, the Commissioner as was noticed, is not entitled to bring in such transporting agencies invoking the administrative powers conferred u/s 3 of the KVAT Act - the petitioner is not liable to be registered.
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