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Income Tax
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2013 (12) TMI 1424
Stay of demand - Held that:- As per the CBDT Instruction, which is prevalent as of now is that in the normal course, the payment will not be stayed but can only be done for valid reasons and merely because an appeal has been preferred against the assessment order would not entitle a party to the stay - The petitioner-Trust is admittedly having Rs. 120 Crores in its account and, therefore, is in a position to make the payment - The Tribunal has, while taking into consideration the liquidity position of the petitioner-Trust and also keeping in view the interest of revenue, proceeded to stay 75% of the outstanding demands in dispute and has only required the petitioner to make payment of 25% of the outstanding demand - The petitioner has only been asked to deposit Rs. 11,40,43,550/- on or before 31.12.2013 - On such deposit and production of the original receipt before the Registry, the main appeals of the petitioner have been directed to be fixed in the month of January, 2014 - Decided against petitioner.
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2013 (12) TMI 1423
Validity of reassessment u/s 147 - service of notice - Held that:- The assessment proceedings were reopened after giving notice in terms of Section 148(1) of the Act - The assessee's accountant had received the notice and the assessee has subsequently attended the proceedings - A perusal of assessment records goes to reveal that Shri Tarsem Pal, Accountant was duly authorised to receive the notices and the services were rightly effected u/s 282 of the I.T. Act - Action of the AO in reopening the case under Section 147 of the Act as also of service of notice under Section 148(1) of the Act on the assessee through its representative, to be valid and legal - Decided against assessee. Undisclosed octroi income - Held that:- The assessee has failed to show supporting entries showing payment of octroi - Decided against assessee. Reserves on account of Sundry World Bank Account - Held that:- It was entire sale price charged in advance - The assessee did not refund the balance amount immediately at the time of delivery of tractor - The amount received as sale price in advance was clearly in the nature of trading receipt and the entire amount is clearly assessable as income of the assessee - The adjustment on account of refunds should be made in the year in which the deposits was actually received between the assessment year 75-76 to 77-78 - Decided against assessee.
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2013 (12) TMI 1422
Validity of assessment u/s 147 - Held that:- Chart of computation of income was furnished along with the return, share of the assessee was mentioned as 20% in the rental income, whereas during scrutiny of the cases, it was found that the assessee had not disclosed her income truly in the income tax return - When pursuant to notice under section 148 of the Act, the assessee had furnished the return, income was declared disclosing 25% share in the income of the property - It was thus clearly a case of escape of income from the assessment - It was not at all a case of 'change of opinion' but was a clear case of 'escapement of income from assessment' - Decided against assessee. Whether simple interest or compound interest charged by the bank on the amount borrowed by the assessee be allowed - Held that:- As per section 24(1)(vi) of the Act - Amount of interest payable on capital borrowed, for construction of the property yielding income, is an admissible deduction - Only interest payable on such borrowed capital is to be deducted while computing income chargeable to income tax under the head 'income from house property” - Interest paid on interest levied by the bank, because of non-payment of instalments of borrowed capital to the bank, does not qualify for an admissible deduction - Decided against assessee.
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2013 (12) TMI 1421
Whether question of law raised first time before Tribunal be entertained - Held that:- On transfer of flats by the assessee the AO treated the capital gain as short term whereas the CIT(A) treated it as long term term capital gain - The issue was of gain being either short term or long term - The Revenue neither before the Assessing Authority nor before the First Appellate Authority claimed it as business income - For the first time, before the Tribunal without any factual foundation, the said contention could not have been raised - The Tribunal is justified in declining to entertain the appeal on that ground - Decided against Revenue.
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2013 (12) TMI 1420
Whether expenditure incurred in excavating a drain to discharge effluents is revenue or capital - Held that:- Following Commissioner of Income Tax V/s Glen View Rubber Co. (P) Ltd. [2007 (1) TMI 121 - KERALA High Court] - Any expenditure incurred in complying with statutory requirements particularly where the asset concerned would enure to the benefit of the assessee from year to year, would necessarily be an asset of enduring nature - Such asset should be categorised as capital expenditure - The mere fact that the land is not owned by the assessee, is irrelevant as by excavating the drain through forest land on the basis of approval granted by the Forest Department, the assessee has been able to overcome statutory requirements for release of effluents as prescribed under the Pollution Control Act - Expense incurred upon construction of the drain for release of effluents have conferred benefit of an enduring nature upon the assessee - Decided in favour of Revenue. Compensatory afforestation - Held that:- The assessee had offered gross amount of interest including TDS to tax in the Assessment year 1992- 93 - The assessee was not allowed credit for the TDS for want of TDS Certificates - The assessee could not obtain TDS certificates - Following Sutlej Cotton Mills Limited v. CIT [1978 (9) TMI 1 - SUPREME Court] - What is material is the factors or the circumstances which cause loss and the true nature and character of loss - If the loss occurred during the course of carrying on the business, it is incidental to it and hence allowable - The assessee having suffered loss, the expenditure had to be allowed as revenue expenditure - Decided against Revenue.
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2013 (12) TMI 1419
Product Development Cost - Capital or Revenue - Held that:- The development was on account of scientific research - The evidence on record shows most of the money is spent towards cost of the employees, who had developed the product, multi channel customer relationship management solution, which provides sales, marketing, services, human resources and finance through the medium of e-mail, chat, wireless, fax, phone, etc. to the end users - The expenditure in respect of the scientific research, even if it is capital in nature as it was incurred in relation to the business carried on by the assessee under Section 35(1)(iv) of the Act - the said expenditure is to be deducted - Decided against Revenue.
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2013 (12) TMI 1418
Penalty u/s 271(1)(c) - Held that:- The assessee has himself disclosed his additional income vide letter before passing of assessment order - Following Commissioner of Income Tax, Ahmedabad Vs. Reliance Petro-products Private Ltd [2010 (3) TMI 80 - SUPREME COURT] - There has to be concealment of the particulars of the income of the assessee and secondly, the assessee must have furnished inaccurate particulars of his income in order to be covered u/s 271(1)(c) - The assessee himself disclosed the value of land and calculated long term capital gain - Decided against Revenue.
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2013 (12) TMI 1417
Allowance of burning loss - Held that:- Following assessee's own case for earlier years - The Tribunal had not at all examined the various factors which were taken by the Commissioner of Income Tax (Appeals) in accepting the burning loss shown by the appellant - It had rejected the trading loss by invoking sub-section (1) of Section 145 of the Act - Provisions of sub-section (1) of Section 145 of the Act has rightly been invoked, the estimate of income has to be based on some materials - The Commissioner of Income Tax (Appeals) had taken into consideration various factors while accepting the burning loss shown by the appellant which in our considered opinion the Tribunal had failed to advert into - The issue was set aside for fresh adjudication.
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2013 (12) TMI 1416
Loan taken at higher interest rate than bank rate - Held that:- The Tribunal has confirmed the finding of CIT (A) and AO - The appellant borrowed from the outsiders at 18%, the capital borrowed from family members and sister concern was at 24% - Bank rate was not more than 21% - The A.O. tried to enter into the true nature of transaction in which he found it unreasonable for the assessee to borrow from the family members at a higher rate than the borrowings from outsiders - The payment of interest to the family members and sister concern at 24% was diversion of profits - It was found highly unusual for a person to borrow from the family at higher rate than the rate prevailing in the market and the rate of interest to be paid to the bank - Decided against assessee.
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2013 (12) TMI 1415
Depreciation for the purposes of section 115JA - Held that:- Following Apollo Tyres Ltd Vs. CIT [2002 (5) TMI 5 - SUPREME Court] - Company as well as Registrar of Companies is obliged to satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies Act - The book profits u/s 115JA, depreciation shall be computed on the same method and rates, which have been adopted for calculating the depreciation for the purpose of preparing the profit and loss account laid before the company at its Annual General Meeting in accordance with the provisions of Section 210 of the Companies Act, 1956 - The department did not bring anything on record, which could have established that the accounts of the company were not maintained in accordance with the requirements of the Companies Act - Decided against Revenue.
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2013 (12) TMI 1414
Whether transactions of purchase and sale of shares constitutes business income - Held that:- The facts in the impugned year do indicate that the transaction cannot be considered as investment in shares - Regarding transactions in F&O - There is no delivery of the shares - Shares of Cybermedia were purchased and sold on the same day - Therefore these should also be treated as business income - The authorities are of the view that remaining transactions should also be treated as business activity - There can not a situation where part of transaction can be treated as business and other as investment - The period of holding has never exceeded 150 days - It cannot be considered that assessee's intention is to invest in shares as there is large turnover within a short period - The intention is not to make investments for long periods as the frequency of transactions is very high - Decided against assessee.
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2013 (12) TMI 1413
Deletion of Confirmation of Gross receipt – Held that:- Only profit portion has to be brought to tax after considering the facts and reasonably estimating the profit margin of the appellant - the appellant has acted only as a mediator between the consigner and the truck-owner/driver and the consideration is only commission and not freight - He does not have any vehicles of his own - the appellant is only a commission agent - The CIT (A) has followed the order of the Tribunal while directing the Assessing Officer to apply net profit rate of 7% - There was no infirmity in the direction given by the Ld CIT (A) to the Assessing Officer to apply net profit rate of 7% - decided against Assessee. Confirmation of Addition of 40% of Expenses of office expenses and fuel expenses - Held that:- The appellant has not submitted anything - the appellant has miserably failed in substantiating his claim and discharging his onus of proving the genuineness of expenses - the disallowance made by the A.O. confirmed - No material has been placed before us to rebut the findings recorded by the CIT (A) - the expenses are not fully vouched – Decided against Assessee.
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2013 (12) TMI 1412
Deletion on account of expenditure claimed towards shifting of plant and machinery – Held that:- The expenditure incurred was towards shifting of plant, machinery, equipments files and records, etc., to the second location at Balanagar consequent upon sale of its industrial land at Kavadiguda where these plants and machineries were earlier located - No new plant or machinery has been set up by the assessee - The Assessing Officer has not given any reason as to why he considers the expenditure as capital in nature - during the remand proceeding though the assessee has produced all evidences with regard to the expenditure incurred towards shifting, the Assessing Officer has not offered any comment why he considers the expenditure as capital in nature - the expenditure incurred was towards shifting existing plant, machinery equipments, records, etc. - The incurring of expenditure did not result in any benefit of enduring nature to the assessee – Thus, the expenditure incurred is revenue expenditure and as such is allowable. Relief on account of Computation of book profit by AO u/s 115JB(2)(vii)of the Act – Held that:- The period for which the assessee becomes entitled for deduction under the aforesaid provision commences from the assessment year in which it becomes a sick industrial company and ends in the assessment year during which the net worth becomes equal to or exceeds the accumulated losses - for the first time the net worth has exceeded the accumulated losses during the impugned assessment year - the provision contained in clause (vii) to Explanation 1 of section 115JB is very much applicable to the assessee - the assessee is entitled to claim deduction under the provision - the AO has not correctly interpreted the provision of the Act – the letter relied by AO reveals the fact that nowhere the Board has made any adverse comment with regard to the assessee's claim of deduction under clause (vii) to Explanation 1 of section 115JB(2) for the impugned assessment year – Decided against Revenue.
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2013 (12) TMI 1411
Allowance of the claim of exemption under Section 54F of the Act – Held that:- The possession of the property has already been given by the assessee - the registration which was made on 1-9-2005 was a formality - the crucial date of transfer has to be taken into consideration as 16-4-2005 - Even and otherwise, the assessee has invested huge amounts before this date and the assessee claimed deduction only of Rs.33 lakhs or odd – there was no infirmity in the order of CIT(A) – The deduction u/s 54F allowed - Relying upon ACIT Vs. Dr. P.S.Pasricha [2008 (1) TMI 649 - ITAT MUMBAI] - the deduction under Section 54F is allowable even the funds were taken on loan – decided against Revenue.
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2013 (12) TMI 1410
Addition on account of unexplained investment based on statement – Held that:- during the course of search statement u/s 132(4) was recorded of the assessee by which it was admitted that he will disclose a sum of Rs. 60 Lakh for the year in consideration and amount of Rs. 65 Lakh for assessment year 2008-09 - while filing the return no such amount was declared by the assessee as assessee retracted from the statement, for the reasons that no such investment was made in shares as only Rs. 2.50 lakh was given as advance on account of purchase of share - Neither there was any purchase was made by the assessee nor any incriminating documents were found. If there no shares were purchased and assessee has paid only 2.50 Lakh in advance then ofcourse, addition should not have been made only on the basis of statement made u/s 132(4) - there should be some corroborative evidence – but there was no corroborative evidence found from which it can be said that assessee has made investment of Rs. 60 Lakh - Only on the basis of statement recorded u/s 132(4) this addition has been made and sustained - no addition could be made or sustained simply on the basis of statement recorded at the time of survey/search - AO made addition on the basis of statement recorded and no other enquiry has been made, neither case has been examined properly, nor the fact that the company in which the assessee is a director has surrendered additional income – The matter should go back to the file of the Assessing Officer –Decided in favour of Assessee.
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2013 (12) TMI 1409
Object of “general public utility” – Held that:- Following the assessee’s own case for the A.Y. 2008-09 - On performance in the nature of Dance, Drama, Music education and making auditorium available for school and colleges, theatre groups and taking nominal charges for making the auditorium available for such activities cannot be termed as unreasonable – The assessee was considered as charitable organization – Activity of making available to other institution for the purpose of promoting dance, drama music etc. is in the nature of charitable activities and same does not result in any earning to the trust - To earn income for the purpose of carrying on the charitable activities, the trust had partly let out the premises so as to earn regular income - Decided against Revenue.
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2013 (12) TMI 1408
Additions on account of undisclosed stock - Non-granting adequate opportunity to produce the evidences – Held that:- The assessee had not been granted adequate opportunity to explain the stock of jewellery in respect of the customers who had given the gold jewellery for making the ornaments - The assessee had not been granted adequate opportunity to explain the issues in the course of assessment - The additions had been made only on surmises and conjectures without giving the assessee adequate opportunity to explain the individual items - The assessee has produced certain fresh evidences before the Tribunal in the form of affidavits – The issue was restored to AO for fresh adjudication.
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2013 (12) TMI 1407
Disallowance u/s 37(1) – Held that:- The AO has only disallowed these expenditures because he is of the view that such expenditure need not be incurred when the assessee has income assessable as per the provisions of section 48 of the Act - The assessee is a company and the expenditure was required to be incurred as the company had to maintain its staff and office as also the management fees had to be incurred in respect of various investments that the assessee did in the course of its business - The ld. CIT(A) has considered the fact that the assesee is an investor and is in the business of making investments the income from some of which are exempt from tax – Decided against Revenue.
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2013 (12) TMI 1406
Addition on account of unexplained cash deposit – Agricultural income form land - Held that:- a person can be expected to have a reasonable cash in hand when he is having the bank account - Nothing has been brought on record by either of the parties what was the position of the attempts made by the assessee and what was the standard of the family of the assessee - The agricultural income have been accepted during the year and to that extent the Revenue has allowed the credit to the assessee, while accepting the course of the deposit of Rs.4 lakhs to the extent of Rs.2,10,360 - It cannot be denied that the assessee was not having any opening cash in hand – Partly allowed in favour of the assessee.
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2013 (12) TMI 1405
Deduction u/s 80HHC – Whether loss can be set off against duty drawback received - Held that:- in view of amendment made by Taxation Laws (Amendment) Act, 2005 with retrospective effect from 1.4.1992 by inserting Fifth proviso to section 80HHC(3) - The total turnover of the assessee is export turnover - Assessee is entitled to set off 90% of the incentive received by way of duty draw back against loss in respect of its trading activity - Assessee is entitled to get the deduction u/s.80HHC – Decided in favour of assessee.
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Customs
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2013 (12) TMI 1404
Cross examination of noticee - Held that:- It is for the Commissioner of Customs (Import) to decide whether to grant cross examination of the persons asked for by the petitioner depending upon the facts and evidence arising for consideration in the case - if an order adverse to the petitioner is passed in the adjudication proceedings, it will be open to the petitioner to raise all available contentions including the fact that the petitioner had made the aforesaid applications dated 21 May 2013 and 26 September 2013 for cross examination, in case the applications are not granted.
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2013 (12) TMI 1403
Duty demand - Exemption from duty - Whether the goods in question, imported by the petitioner, under the Bill of Entry No. 7048716, dated 8-6-2012, would fall under the category of Secondary and Defective Galvanized Coils, requiring the certification from the Bureau of Indian Standards, New Delhi, for the levying of Customs duty - Held that:- issue could be resolved, only after the samples of the goods imported by the petitioner are tested by the Bureau of Indian Standards, New Delhi. The samples of the goods, after being tested, may be certified, as to their classification, based on which customs duty would be levied by the authorities concerned. The claim of the petitioner that the goods in question would fall under the category of ‘Scrap’ may also be considered, after the samples of the goods in question are tested by the Bureau of Indian Standards, New Delhi - respondents are directed to send samples of the goods imported by the petitioner, for testing and certification by the Bureau of Indian Standards, New Delhi, to enable the respondents to classify the goods, for the levying of customs duty and for their release. Such process shall be completed by the respondents, within a period of four weeks from the date of receipt of a copy of this order. Thereafter, the goods in question shall be assessed and released - Decided in favour of assessee.
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2013 (12) TMI 1402
Waiver of pre-deposit - Duty demand - Import of certain goods under the advance licence without payment of duty - Denial of the benefit of advance licence obtained - Held that:- as the advance licence under which the goods were imported by the applicant is obtained by submitting forged documents. Therefore it is not a case for waiver of pre-deposit of duty and interest. The applicant is directed to deposit the amount of duty along with interest within a period of eight weeks. On deposit of the above mentioned amount, the pre-deposit of the penalty is waived and recovery of the same is stayed during the pendency of the appeal - Conditional stay granted.
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2013 (12) TMI 1401
Denial of refund claim of customs duty - Import of copper concentrate - Appellant filed refund claim of 2% education cess paid by them on account of basic customs duty, which was debited through D.E.P.B. scrip vide their refund claim dated 30-12-2005 - Held that:- assessments were originally provisional and were finalised subsequently. As such, admittedly, their was an assessment order involving lis between the appellant and the Revenue. The said lis was decided in favour of the Revenue by the final assessment order. Admittedly, the said assessment order having not been challenged by the appellant - Following decision of Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) [2004 (9) TMI 105 - SUPREME COURT OF INDIA] - Decided against assessee.
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2013 (12) TMI 1400
Waiver of pre-deposit of duty - Exemption from Basic Customs Duty and CVD on the goods - Held that:- duty has been paid by making debit entry in the DEPB Scrip. Hence, prima facie we find no merit in the applicant’s case the goods in question are exempted from payment of duty therefore we find no ground to waive the pre-deposit of education cess in respect of duty paid on the goods in question - Decided against assessee.
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Service Tax
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2013 (12) TMI 1438
Demand of service tax - Valuation of taxable service - Held that:- all the service charges are leviable on gross amount charged by the service provider, the service tax has to be paid on such entire gross amount. There cannot be any bifurcation of such gross amount and that the challenge to the valuation of taxable service based on any clarificatory letter issued by the Ministry of Finance, Government of India on the face of the clear provisions of charging section under Section 66 and the valuation of taxable service under Section 67, is not sustainable - value of taxable service includes gross amount chargeable to service tax and which also includes wages and the amount paid towards provident fund and employees state insurance realised from the customers - Decided against assessee.
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2013 (12) TMI 1437
Support services of business or commerce- The applicants filed this application for waiver of predeposit of service tax and penalties. Held that- the applicants only given on\hire one crane. Therefore, prima-facie, merit in the contention of the applicants and predeposit of amounts of service tax, interest and penalties are waived and recovery of the same is stayed during pendency of the appeal - Following decision of INDUSTRIAL SERVICES (GASES) Versus COMMISSIONER OF C. EX., HALDIA [2010 (4) TMI 339 - CESTAT, KOLKATA] - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1436
Convention service - Rent-a-cab Service used for conveyance of employees – Waiver of Pre-deposit - ‘Rent-a-cab service’ was partly used for transportation of food from the Hosur unit of the company to the appellant-unit - no break-up of the CENVAT credit availed on ‘Rent-a-cab service’ is available on record and hence there is no way to ascertain the amount of CENVAT credit attributable to the transportation of food - the appellant was entitled to take CENVAT credit of the service tax paid on the convention service by the service provider inasmuch as the very definition of ‘input service’ included ‘coaching and training’ - Prima facie view in favour of the appellant in respect of ‘convention service’ as also in respect of ‘rent-a-cab service’ to the extent this service was used for conveyance of employees – appellant directed to deposit Rupees Twenty thousand as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (12) TMI 1435
Stay application - Demand of service tax - Construction of residential complex - Acitivity done by own labor - Held that:- Board’s clarification is about a person owning land who is constructing residential complex, using labour engaged by him because in such a situation there is no separate service provider and service receiver. If the person having land engages the services of another contractor for getting the complex constructed the contractor provides service of construction of residential complex to the land owner. In this case, the land is registered in the name of prospective buyers of residential units and thereafter the complex is constructed. So there is a service provided to the land owners by the applicant and the position is legally clear and made clear in the circular referred to by the applicant - Following decision of LCS City Makers Pvt. Ltd. Vs CST Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI] - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (12) TMI 1434
Stay Application - Free service provided during the warranty period - Benefit of exemption notification No.12/03-ST - Held that:- The entire dispute arises out of the fact that this service being provided is commonly referred to in this industry as free service. This is not free service at all. This is rendered at a cost both for the services and for the parts which are paid by the manufacturer to the appellant. However, the owner of vehicle is one of the beneficiaries of the activity. The vehicle manufacturer is also a beneficiary because such services enhances his brand value and the reputation of his goods and customer satisfaction which helps in further business. So the manufacturer pays for it and naturally it is a service provided to the manufacturer of vehicles. Similarly the person who pays for the parts is the person to whom goods are sold. Therefore, we are of the view that there is sale of goods in this case and the benefit of exemption notification No.12/03-ST dt. 20.6.2003 is prima facie available to the applicant - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1433
Penalty u/s 76 & 78 - Commissioner set aside penalty - Held that:- Section 80 of the Finance Act,1994 provides notwithstanding any contained in Sections 76,77 or 78 of the Act no penalty is imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was a reasonable cause of the said failure - Respondent had paid the service tax of Rs.1,14,33,254/- for the period in dispute and there was a short payment of only Rs.15,41,427/- That also had been paid before the adjudication order. Appellant also paid the interest. In these circumstances, we find merit in the contention of the Respondents that there was a calculation mistake and there was no intention on the part of the Respondents to evade payment of service tax - Decided against Revenue.
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2013 (12) TMI 1432
Construction service - Construction of canteen building covered under the definition of Input services under Rule 2(1) of Cenvat credit Rules 2004 OR not – Held that:- Canteen can to be considered as integral part of the factory and cannot be considered as outside the factory - the construction service used in constructing the canteens should not be allowed - canteen is an integral part of factory and factory cannot be limited to the manufacturing area alone - Input service includes services used in relation to setting up of the factory as also, for an office relating to such factory - for purpose of definition of the input services as the definition of input services includes not only the factory but also the office relating to such factory - Relying upon Commissioner of Central Excise, Ahmedabad-I Vs. Ferromatik Milacron India ltd. [2010 (4) TMI 649 - GUJARAT HIGH COURT] - The appellant would be eligible to take the input service credit relating to construction services at the material time i.e. July 2005 - The definition of input service has undergone change w.e.f 1.3.2011, the situation may not be the same from that date – Decided in favour of Assessee.
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2013 (12) TMI 1431
Penalty u/s 78 - Waiver of penalty u/s 80 - Repeated failure to discharge service tax liability - Appellant also failed to submit statutory ST-3 returns from April 2008 onwards - Held that:- appellant had collected service tax from the customers but failed to remit the same to the exchequer. The failure on the part of the appellant to discharge the tax liability has taken place several times during the impugned period. Every time the department pointed out the mistake, the appellant used to make good the short-payment in service tax along with interest. It is also a fact that the appellant did not file ST-3 returns within the statutory period prescribed. The argument of financial difficulty raised by the appellant is bereft of any logic. If service tax amount has been collected from the customer, the appellant cannot plead financial difficulty in remitting the same to the exchequer. The argument that the appellant is only a matriculate is also not sufficient reason for non-compliance with the statutory provisions. From the records of the case, it is evident that the appellant was aware of the legal procedures and requirement. The appellant collected the service tax from the customers but failed to remit the same to the exchequer - Therefore, penalty is justified - Decided against assessee.
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2013 (12) TMI 1430
Waiver of pre deposit - Demand of service tax - Held that:- on a rough estimate of the amount involved is the tax amount on the differential value of the freight amount which is about Rs.35 lakhs in the two appeals together we direct the applicant to make a pre-deposit of Rs.7 lakhs within a period of six weeks from today for admission of the appeals - Stay granted partially.
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2013 (12) TMI 1429
Demand of service tax - Receipt of parchee fees - Classification under business auxiliary service - Parchee fees collected from the members engaged in transport business - Held that:- From the scheme and object of the law notified in Gazette aforesaid, it is difficult to construe the appellant to be commercial concern acting in a ‘commercial manner’. The very object of Section 15 of the Act aforesaid was to provide welfare measure without acting as a commercial concern. Accordingly, it is not practicable to direct the appellant to suffer service tax for the impugned period under adjudication for which appeal is allowed - Decided in favour of assessee.
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2013 (12) TMI 1428
Waiver of pre-deposit - Service Tax liability - Renting out of immovable property - SSI exemption as granted by Notification No. 6/2005-S.T., dated 1-3-2005 and amended vide Notification No. 8/2008-S.T., dated 1-3-2008 - Held that:- benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008, grants the benefit of exemption of Service Tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. Prima facie, we find that the appellants have made out a case for waiver of pre-deposit of amounts involved - Stay granted.
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2013 (12) TMI 1427
Abatement of 67% - Works contract - Held that:- There was no scope for classification before the adjudicating authority when there was no issue in that regard. If Revenue’s fresh ground of classification is entertained that shall cause prejudice to the interest of justice when the issue framed against the respondent at adjudication stage was not on that score. Therefore, it is not possible to make a fresh adjudication on a fresh ground at second appeal stage - Decided against Revenue.
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2013 (12) TMI 1426
Demand of service tax - Repair of damaged electric motors - Penalty u/s 75A and 76 - Held that:- As per entry at Section 65(64) as it stood at the relevant time and reproduced above only activities carried out under a maintenance contract was covered in clause (i). The appellants had no maintenance contract with their customers. Clause (ii) was applicable only to a manufacturer of the goods or persons authorized by him. The appellants were not the manufacturer of the goods or a person authorized by such manufacturer. So the activity was not covered by the definition at Section 65(64) at the relevant time. So the demand is not maintainable. Consequently interest and penalties also does not arise - Decided in favour of assessee.
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2013 (12) TMI 1425
Penalty u/s 75A, 76 and 78 - Invokation of power u/s 80 - Business Auxiliary Service - Held that:- appellant is not contesting the Service Tax amount and interest demanded. The appellant is a small service provider and the levy in question was in the initial stage of implementation. The very name of the service viz “Business Auxiliary Service” does not give any clarity and the entry covered different types of activities. So there was confusion in the minds of people about the actual scope of such service. For that reason, the appellant was not able to claim the Service Tax amount from the HDFC Bank and consequently there was some delay in remitting the tax to the Government. In this type of situation, it is proper to invoke powers under Section 80 of Finance Act, 1994. The Adjudicating Authority rightly did so and there was no reason to reverse such order and impose penalty on the appellant - Decided in favour of assessee.
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Central Excise
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2013 (12) TMI 1399
Waiver of Pre-deposit – Held that:- Following Bharati Tele Ventures Limited Vs. Commissioner of Central Excise, Pune-III [2010 (11) TMI 77 - BOMBAY HIGH COURT] - Pre-deposits waived till the disposal and the matter needs to be decided on merit – Stay granted.
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2013 (12) TMI 1398
Goods detained because of non-payment of duty - Manner of payment of duty under Rule 8(3A) - Whether the petitioner was correct in making use of the Cenvat credit for the purpose of discharging the duty liability – Held that:- There is no question of invoking the Cenvat Credit Rules, 2004 in its entirety except for understanding the meaning of the term ‘duty’ or ‘duty of excise’ - the rigour of Section 8(3A) operates notwithstanding anything contained in sub-rule (1) and (4) of Rule 3 of Cenvat Credit Rules - Sub-rule 4(b) of Cenvat Credit Rules permits utilisation of Cenvat credit for payment of duty of excise on any final product - This provision makes the position very clear that Cenvat credit cannot be used as a matter of right for payment of duty of excise, in case the assessee defaults in payment of duty before the cut off period under Rule 8(3A) of Central Excise Rules, 2002. The purpose of explanation that the expression ‘duty’ or ‘duty of excise’ shall also include the amount payable in terms of the Cenvat Credit Rules, 2004, would not amount to a permission for utilising the Cenvat credit for paying the excise duty - Rule 8(3A) is very specific when it provided that the entire duty should be paid without utilising the Cenvat credit - There is no question of utilising the explanation for the purpose of using the Cenvat credit for paying the outstanding duty amount – Thus, the assessee is liable to pay the excise duty in accordance with the Central Excise Rules, 2002 with interest for the belated period and there is no provision for utilising the Cenvat credit for such belated payment - The petitioner is liable to pay the entire duty amount with interest without utilising the Cenvat credit - decided against Petitioner.
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2013 (12) TMI 1397
Availment of benefit of Cenvat credit - Inputs/capital goods used for manufacture and clearance of dutiable and exempted finished goods – Held that:- The remand had been made to the Tribunal and in the order of remand, it was also directed to consider the provision of section 11AC and the Tribunal had specifically noted that none of the two authorities below had availed any option to the assessee to pay duty demand with interest and penalty of 25% of the duty within 30 days from the date of adjudication - the Tribunal in its order maintained that the case of the assessee is squarely covered by the explanation to Section 11AC. The duty determined under Section 11AC (2) was subsequent to the year 2000 - the case would be covered by the explanation to Section 11AC of the Central Excise Act - When no option was given by any of the adjudicating authorities after determination for payment of duty, interest and penalty of 25% of the duty – Decided against Revenue.
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2013 (12) TMI 1396
Extension of stay – Held that:- ITAT cannot extend stay orders u/s 35C (2A) or Section 129B of the Central Excise Act, 1944 and Customs Act, 1962 – ITAT cannot extend the stay orders which have been granted by the Tribunal due to the specific provisions of Section 254 (2A) of the Income Tax Act - Following JP. Transformers Versus CCE, Kanpur [2013 (8) TMI 709 - CESTAT NEW DELHI] - Tribunal has got an authority to extend the stay orders which have been passed – thus, extension for stay granted – decided in favour of assessee.
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2013 (12) TMI 1395
Clandestine clearance of goods – PCC poles cleared without paying the duty – Held that:- The goods which require testing and get consumed during such testing cannot be held to be marketable and hence excisable and duty not required to be paid on the said poles – Relying upon Collector of Central Excise v. M/s. Sudershan Beopar Co. Ltd [1992 (8) TMI 190 - CEGAT, NEW DELHI] - testing of PCC Poles is essential for making the goods marketable and without such testing the goods cannot be sold - no duty is required to be paid in respect of such Poles which get utilized in the factory for testing purposes - quality control test in respect of cement concrete Poles, being a mandatory requirement before the goods produced could be considered as fully manufactured are not required to discharge duty liability when such cement concrete Poles get destroyed. Failure to maintain records – Held that:- The appellant have duly entered such PCC Poles in their daily stock account - If there was any mala fide intention on the part of the appellant to clear the said poles without payment of duty, the same would not have been entered by them in the statutory records - no duty liability can be fastened on the appellants in respect of such damage/broken poles - onus to prove the clandestine clearance is on the Revenue, which is required to be discharged by production of sufficient evidence – the entire case have been made out on the basis of non-production of records in respect of broken poles – Decided in favour of Assessee.
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2013 (12) TMI 1394
Classification of Goods - Chyawanprash Awaletha to be classified under Chapter Sub- Heading No.3003.30 of CETA, 1985 as Ayurvedic medicaments OR under Chapter Heading 2107.91 or 2107.90 of CETA,1985 as other edible preparations - Waiver of Pre-deposit – Penalty under Rule 173Q of erstwhile Central Excise Rules, 1944 – Held that:- Prima facie, there was force in the contention in the argument that the same products of the assessee manufactured at other locations have been assessed as Ayurvedic medicaments by other Commissionerates - uniformity and certainty is an important cannon of Taxation - same goods be classified uniformly irrespective of its place of manufacture – Thus, the applicant could able to make out a prima facie case for total waiver of amount – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 1393
Availment of Cenvat credit – Goods used in the factory as inputs or capital goods – Waiver of Pre-deposit – Held that:- The period involved in the present case is from April, 2005 to June, 2009 and major portion of the demand has been raised beyond the normal period of limitation - The Tribunal has been taking a consistent view by allowing the stay petition un-conditionally in those cases, where cenvat credit is availed on the angles, channels, beams etc. used in the factory as capital goods or in the manufacture of capital goods – Following Vandana Global Ltd. Vs. CC Ex., Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)]- Pre-deposit directed for the normal period – Assessee is directed to deposit Rupees Seven lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2013 (12) TMI 1392
Penalty u/s 11AC of Central Excise Act r.w. Rule 15 of the Cenvat Credit Rules and Rule 25 of the Central Excise Rules – Reversal under Rule 3(5) of Cenvat Credit Rules, 2004 - Held that:-Commissioner has imposed penalty on the ground simplicitor that there has been procedural and technical violation of the Rules, even though he has held that there was no intention on the part of the assessee to do so – the detection of mistake was by the assessee himself - penal provisions are relatable to mala fide intention of the assessee, who is being penalized - As such it has to be first seen as to whether the provisions of Section 11AC are invocable or not – Following Union of India v. Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA] - Section 11AC of Central Excise Act is not applicable to every case of non-payment or short-payment of duty - Conditions mentioned in Section 11AC should exist for imposition of penalty thereunder - the Commissioner has himself held that there is no mala fide on the part of assessee, thus, there was no reason to uphold the imposition of penalty upon the appellant – penalty imposed upon the assessee set aside – Decided in favour of Assessee.
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2013 (12) TMI 1391
Penalty u/s 11AC - Held that:- The assessee's intention was not to evade payment of duty as the assessee extended all possible help to finalise the issue - The appellants supplied the computerized ledger and paid the amount at the spot along with interest - The clearing of duty and part of interest prior to the completion of the proceedings pointed out their bona fide intention - As there was no intention to evade payment of duty by way of suppression of facts or misrepresentation penalty u/s 11AC cannot be imposed - Decided in favour of assessee.
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2013 (12) TMI 1390
Wrong credit of duty paid on inputs - Held that:- The supplier has wrongly paid the duty - The recipient of any inputs have no control over the supplier regarding whether they should pay the duty under a particular heading or not - The circumstances under which the supplier paid the duty is not forthcoming as no notice has been issued to them. The officers incharge of the manufacturing unit who may receive materials from several units cannot be allowed jurisdiction to determine whether each of the suppliers have rightly paid the excise duty or not - The denial of credit to the recipient of the materials on the ground that the supplier need not have paid the duty has been made without jurisdiction - Decided against Revenue.
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2013 (12) TMI 1389
Penalty on clandestine removal of goods - Held that:- Shortage of goods admitted to have been cleared from the factory without preparing Central Excise invoices and payment of duty - During investigation no question has been asked which could reveal the knowledge or even intention on the part of the authorised signatory - Penalty on a person cannot be imposed on assumption and presumption - The department has chosen to pursue vigorously such a case without disclosing how the finding of facts by the Commissioner (Appeals) is incorrect - Decided against Revenue.
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2013 (12) TMI 1388
Classification of goods - Shunt to classified under chapter heading CETH 9030 or CETH 8533 - Held that:- Shunt is an essential part of ammeter, used for measuring current - An ammeter is incomplete without the shunt - Shunts are solely and principally used with the ammeter, for which they are calibrated - Shunts are not general purpose parts and are not having any other function except to measure the current in DC circuits, along with the ammeter - The shunt consists of copper wire which works parallel to the ammeter Copper wire is the least resistant to the electricity, and therefore a best conductor - The role of resistor is to provide resistance - If resistance is required to be provided naturally it cannot be made of copper wire - The definition of ‘shunts’ as laid down in the Concise Chemical & Technical Dictionary reads as “low resistance connected in parallel with electrical mechanism such as ammeter coils to prevent too large a flow of current through the latter.” The very words “low resistance” in para would show that while the role of the shunt is to prevent too much of a flow of current which is not done by providing resistance at all - The very fact that copper wire is used the words “low resistance connected” -As per the product description provided it cannot be considered as a resistant - Decided against Revenue.
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2013 (12) TMI 1387
Recalling of ex-parte order of Tribunal – Held that:- The case was posted for hearing on 16-9-2010, it was the fourth occasion and the appellant had already been given adjournment three times previously - The request for further adjournment was denied - No sufficient cause was shown for the absence on 16-9-2010 either in writing or through a properly authorised Counsel – Decided against assessee.
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CST, VAT & Sales Tax
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2013 (12) TMI 1440
Exemption from Central sales tax - Exemption notification 2000 - Petitioner claims that even after the amendment Act, 2003, the exemption under the Central Sales Tax Act, 1956 which was granted to the industries by way of the Incentive Act, 2000 read with Exemption Notification, 2000 and State Scheme of Incentives for Industries, 2003 continued to be in operation - Enforcement of promissory estoppel - After perusing the Industrial Policy of 1996 of the Government of Sikkim notified in the web-site of the Department of Commerce and Industries, under the caption “Concession on State and Central Sales Tax” wherein it was provided that “Central and State sales tax shall be exempted for a period of 9 (nine) years, from the date of commencement of actual commercial production” - Held that:- The Lease Deed produced by the petitioner itself supports the contention of the Government that the petitioner’s industry was established only on 21.09.2001. Annexure P-6 Certificate dated 06.07.2004 produced by the petitioner itself will show that the petitioner-company started commercial production from 09.10.2003. We do not find any difficulty to accept the argument of learned Additional Advocate General as the petitioner’s industry was established after the repeal of Industrial Policy, 1996 and during the currency of the SIPI Act, 2000. The petitioner-company cannot aspire for the benefit and concession extended to the entrepreneurs under the policy of 1996. Under the notification dated 03.10.2000 concessions of State Excise Duty has been granted for 3 (three) years and for State Sales Tax for 5 (five) years for both existing and new industrial units as classified in paragraph 1 of the above notification. The argument of the learned Addl. Advocate General that the petitioner-company will be entitled only benefits and concessions granted under Annexure R-3 notification is sound and only to be accepted. On a plain reading of the clauses it is clear that the exemption and benefit in the above notification is provided only in respect of State Excise Duty and State Sales Tax. If Sales Tax is interpreted to mean to include Central Sales Tax then the rate of exemption would be much higher than the CST levied. The rate of CST is only 4% whereas, exemption under Clause 3 for Sales Tax is given at 15% and 10%. The position, therefore, is quite clear that the word “Excise Duty and Sales Tax” used in the above notification mean only the State Excise Duty and State Sales Tax. According to us the position is re-clarified by the provisions contained in sub-section (3) of Section 12 (a) of the SIPI Act, 2000, wherein it is provided that the exemption of Central Sales Tax and Central Excise Duty will be governed by various notifications /orders issued by the Government of India in this regard. It is clear from the materials placed on record before us that the three industries were established prior to 06.07.2000 and during the currency of 1996 Industrial Policy. True, the commencing of commercial production by some of these units may have been later and during the currency of SIPI Act, 2000. What is relevant for getting eligibility is establishment of the unit and unlike the petitioner’s unit, all the three units were established during the currency of Industrial Policy, 1996. Thus, the allegation that the petitioner has discriminated against vis-a-vis the three companies is without basis. Petitioner has efficacious alternative remedy available in the form of appeal as provided under Section 20 of the CST Act, 1956, the petitioner is not entitled to seek the above relief under Article 226 of the Constitution of India. We also notice in this context that the petitioner-company has already filed a petition for review before the assessing authority and therefore the petitioner cannot aspire for any order of quashment of the assessment order - Decided against assessee.
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2013 (12) TMI 1439
Liability to Sales tax - supply of printed materials - Whether the Sales Tax Appellate Tribunal is right in proceeding on the footing that since the printed materials supplied by the assessee have no commercial value in the sense that they cannot be marketed in the open market, the impugned transactions were purely ones of work and labour and not liable to tax - Held that:- what was supplied by the dealer was only labels on which certain particulars had been printed to suit the requirements of a particular customer. This Court observed that the labels by themselves could not really be sold in the open market and they had no use since the same were not of any use in the open market. This Court pointed out that on the contractor undertaking to do the work for the particular customer therein, the labels would not necessarily be deemed to sell the materials the fact that in the execution of the contract for work some materials were used and the property / goods so used, passed to the other party would not by itself make the transaction a sale. In other words, the dominant intention was not for sale of labels. Hence, the transaction could not be treated as deemed sale for the purpose of assessing the turnover - Decided against Revenue.
