TMI Tax Updates - e-Newsletter
December 7, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Once the Officer has accepted the cause shown by the assessee or their Counsel for the purpose of adjournment, and adjourned the matter for a subsequent date, the Commissioner cannot fall back on the reasons assigned, or on account of the fact that the case was adjourned seven times, to reject the appeal - HC
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Income Tax:
Deduction u/s 80HH - The profit, which has been derived in relation to the manufacturing activity of the cement, has to be taken into consideration and not for other manufacturing activity particularly for mining activity - HC
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Income Tax:
Bottling of gas into gas cylinders, which requires a very specialized process and an independent plant and machinery, amount to production of ‘gas cylinders’ - deduction u/s 80IB allowed - HC
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Income Tax:
Power of revision u/s 263 - Such a power cannot be equated to, or regarded as approaching in any way the appellate jurisdiction of even the ordinary revisional jurisdiction conferred on the CIT u/s 264 - HC
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Income Tax:
Violation of section 40A(3) - payment in cash in excess of prescribed limit for purchasing of scrap from the Railways - No disallowance - HC
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Income Tax:
Transfer of goodwill - Capital gains - Amounts received on retirement by a partner is not subject to capital gains tax - HC
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Income Tax:
Income in this line of business has to be estimated at 5% of sales made by the assessees – The claim of the assessee for further deduction towards remuneration and interest to partners cannot be accepted - AT
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Income Tax:
Deduction u/s 80-IA – activity of blending, processing and packaging of tea - The assessee's activity amounts to processing only and it does not amount to either manufacture or production - no deduction - AT
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Customs:
Refund under Notification No.102/2007 - Commencement and termination of time - if the word from is used, the day on which that event has taken place has to be excluded. - AT
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Customs:
Penalty under the provisions of Section 117 read with Section 72 of the Customs Act, 1962 - Non clearance of the goods from the warehouse within one year - penalty reduced - AT
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Corporate Law:
Merely because company formed a part of family arrangement, it would not cease to be an independent juristic person being governed by Companies Act. - HC
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Service Tax:
Denial of CENVAT CRedit - Nexus with manufacture - credit taken on supplementary invoices allowed - AT
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Service Tax:
Demand of service tax - Maintenance and Repair Service - They act only as trustee or as pure agent. When the co-operative society is formed even the deposit account is shifted to Flat Owner's Co-operative Society - demand set aside - AT
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Service Tax:
CENVAT Credit - premium for group insurance/mediclaim policy - no allegation that the insurance cover provided by the appellant also covered the family members of the employees - credit allowed - AT
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Service Tax:
Demand and penalty - extended period of limitation - providing the cars/scooter parking facilities in various areas in the Airport - levy of penalty confirmed - no waiver u/s 80 - AT
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Service Tax:
Demand of service tax - Services provided by the Respondents can not be said to have been provided on behalf of the client and accordingly they also become ineligible for exemption under Notification 14/2004 and 25/2004 - AT
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Service Tax:
Show Cause Notice in this case was issued on 23.09.2003. ST-3 Returns were submitted by the appellants on 22.11.2002 for the earlier period - period of limitation to be computed from the date of filing of return - AT
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Service Tax:
CENVAT Credit - centralized registration - It was an addition to their offices listed in the certificate and is only for the purpose of information and centralized registration involves issue of a single registration certificate - credit allowed - AT
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Central Excise:
Scope of Section 35G – appealable order or writ petition to be filed against an interim order passed by CESTAT against Application for waiver of Pre-deposits - the order in question is appealable - HC
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Central Excise:
Allegation that they manufacture white sugar on which duty is liable to be discharged but cleared the same as Khandsari Sugar claiming exemption - revenue failed to substantiate its case - demand set aside - AT
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Central Excise:
Remission of duty - The fire caused by short circuiting cannot be avoided by taking precautionary measures - nobody intentionally invites such accidents to happen - have to be held as unavoidable accident - AT
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Central Excise:
Refund claim hit by bar of unjust enrichment or not - sale through depot - there is no evidence on record that the appellant subsequently recovered the amount from their customers - AT
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Central Excise:
Prima facie, TMT bars cleared to various mega power projects, even if falls under Chapter Heading 72 of Central Excise Tariff Act,1985 would be eligible to the benefit of Notification No. 6/2006 - AT
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VAT:
When a notice is sent by registered post and is returned with a postal endorsement “refused“ or “not available in the house“ or “house locked“ or “shop closed“ or “addressee not in station“, due service has to be presumed - HC
Articles
News
Case Laws:
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Income Tax
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2013 (12) TMI 256
Validity of assessment u/s 148 - Held that:- The assessee has challenged the reassessment orders in appeal before the Commissioner (Appeals) - The objections of the assessee concerning validity of the notice under Section 148 of the Act if raised in the appeal before the Commissioner shall be examined by the appellate authority in accordance with law uninfluenced by the observations made - Revenue will be entitled to place before the Commissioner (Appeals) all necessary pleas justifying the issuance of notice under Section 148 of the Act - Petition disposed off.
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2013 (12) TMI 255
Reference to other case - Held that:- The case of the appellant has not been examined by the High Court at all - The facts of the case of the appellant are materially different from the facts narrated in the judgment of the High Court relating to M/s J.R. Solvent Industries (P) Ltd [2012 (6) TMI 411 - PUNJAB AND HARYANA HIGH COURT] - The case of the appellant has not been examined by the High Court at all. - The impugned judgment dated April 16, 2012 deserves to be set aside and the two appeals require reconsideration by the High Court - The judgement was set aside for fresh consideration.
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2013 (12) TMI 254
Deduction u/s 10B - AO doubted the status of assessee being 100% EOU - production of additional evidence before CIT(A) under rule 46A - Held that:- The assessee had filed the TDS Certificates and details of tax deduction at source in respect of the job work charges and clearing agent charges - This has not been adverted to by the Assessing Officer - Their status as a 100% Export Oriented Unit was accepted - It is not known as to why the Assessing Officer doubted the assessee's status as a 100% Export Oriented Unit - The assessee along with the return, had produced copy of the green card and filed the return of income within the due date and also produced the certificate in Form 56G from the Chartered Accountant - The assessee has been denied fair and reasonable opportunity to put forth their contentions - Once the Officer has accepted the cause shown by the assessee or their Counsel for the purpose of adjournment, and adjourned the matter for a subsequent date, the Commissioner cannot fall back on the reasons assigned, or on account of the fact that the case was adjourned seven times, to reject the appeal - The issue was set aside for fresh adjudication.
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2013 (12) TMI 253
Unexplained credit entries - Held that:- The deposits as well as withdrawals of contract receipts have not been properly reflected in the books of accounts and as such no reliance can be placed on this bank account - The CIT(A) was fully justified in deleting the addition of Rs.1,98,298/- made by the A.O. - Decided against Revenue. Estimation of income - Rejection of books - Held that:- Account books once rejected, are ruled out of consideration and cannot be pressed into service whether by the assessee or the revenue - When account books are rejected, it would follow, as a necessary corrolary, that entries in the account books whether suspicious or not cannot be relied by the revenue or the assessee - The income has been estimated at 10% gross profit rate - Decided in favour of assessee.
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2013 (12) TMI 252
Deduction u/s 80HH - Held that:- The assessee is having two independent industrial undertakings, one is mining activity and the other is cement manufacturing activity - Apportionment of the profit derived from cement manufacturing activity should bge made in order to find the profit derived from mining activity - The segregation of profit of two different business activities is permissible under law - Section 80HH of the said Act uses the words "profit derived from" and not "attributable to - The provision of Section 80HH of the said Act, the profit derived from the cement manufacturing activity is deductable thereunder and not otherwise - The words "derived from" in Section 80HH of the said Act must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking - The profit, which has been derived in relation to the manufacturing activity of the cement, has to be taken into consideration and not for other manufacturing activity particularly for mining activity as the legislature has expressly excluded the mining activities from the purview of Section 80HH - While interpreting the provision of a statute, this has to be considered literally as it appears, and it cannot be given a purposive meaning - Decided against assessee.
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2013 (12) TMI 251
Bottling of gas into gas cylinders - Production activity for section 80IB - Held that:- Following Commissioner of Income Tax-I vs. M/s.Hindustan Petroleum Corporation Ltd. [2013 (5) TMI 124 - BOMBAY HIGH COURT] and Supreme Court in Commissioner of Income Tax vs. Vinbros & Company [2012 (9) TMI 802 - SUPREME COURT] - Every activity which bring into existence a new product would constitute production - The process of bottling the LPG Gas into cylinder makes the same marketable on execution of the process - Neither loose gas nor an empty cylinders can be sold to customers and it is only “gas cylinder” containing gas is a marketable product which the assessee produces - When the assessee produces the gas cylinder containing gas, in our opinion, a new product comes into existence - The process of bottling of gas into gas cylinders, which requires a very specialized process and an independent plant and machinery, amount to production of ‘gas cylinders’ containing gas for the purpose of claiming deduction under Section 80IB of the Act - Decided in favour of assessee.
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2013 (12) TMI 250
Validity of Revision u/s 263 - power of CIT - Held that:- The scope of interference under Section 263 is not to set aside merely unfavourable orders and bring to tax some more money to the treasury nor is the section meant to get at sheer escapement of revenue which is taken care of by other provisions in the Act - The prejudice that is contemplated under Sec. 263 is prejudice to the income tax administration as a whole. Section 263 is to be invoked not as a jurisdictional corrective or as a review of a subordinate's order in exercise of the supervisory power but it is to be invoked and employed only for the purpose of setting right distortions and prejudices to the Revenue which is a unique conception which has to be understood in the context of and in the interest of revenue administration - Such a power cannot be equated to, or regarded as approaching in any way the appellate jurisdiction of even the ordinary revisional jurisdiction conferred on the Commissioner under Section 264 - The assessee-Trust cannot be said to have made the payment of estate duty on behalf of the settler - Decided against Revenue.
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2013 (12) TMI 249
Violation of section 40A(3) - payment in cash in excess of prescribed limit - Held that:- The assessee is a scrap dealer purchasing scrap from the Railways - Railways is a concern of the Union of India. If any cash is paid towards purchase of the scrap the same cannot be disputed by the revenue since such payment has to be considered as a legal tender - Decided against Revenue.
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2013 (12) TMI 248
Transfer of goodwill - Capital gains - Held that:- Following Supreme Court in the case of CIT V/s. R. Lingamallu Rajkumar [1997 (1) TMI 74 - SUPREME Court] - Amounts received on retirement by a partner is not subject to capital gains tax - Decided against Revenue.
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2013 (12) TMI 247
Tax effect - Held that:- As per Section 268A inserted by the Finance Act, 2008 with retrospective effect from 01/04/99 and the CBDT Instruction No.3 of 2011 dated 09.02.2011 - The CBDT has revised the monetary limit to Rs. 3,00,000/- for filing the appeal before the Tribunal - The Revenue should not have filed the instant appeal before the Tribunal - Following CIT v. Delhi Race Club Ltd [2011 (3) TMI 1488 - High Court of Delhi] - the instructions issued in the Circulars by CBDT are applicable for pending cases also - Decided against Revenue.
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2013 (12) TMI 246
Validity of reopening of assessment u/s 147 - Held that:- The assessment was reopened on the reasons recorded in the A.Y. 2005-06 that receipts in pursuance of offshore services contract are in the nature of royalties and in pursuance to the contract for deputation of specialists and offshore training contract are in the nature of fees for technical services - The assessment order of AY 2005 -06 stood merged with the order of the CIT[A] - The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities - The AO has given appeal effect to the order of the Ld. CIT(A) prior to the date of issuing notice u/s. 148 of the Act - As the entire reopening was based on what happened in assessment year 2005-06 that very basis being struck down by the first appellate authority, there was no reason before the AO to believe that the income has escaped assessment - On the date of the issue of notice u/s. 148 of the Act, the AO was very much in possession of the First appellate order and the very reasons for reopening the assessment did not survive by virtue of the findings of the First appellate authorities which were binding upon the AO - Decided in favour of assessee.
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2013 (12) TMI 245
Condonation of delay - sufficient cause - Held that:- In case a party is found to be negligent, or for want of bonafide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay - The application is to be decided only within the parameters laid down by this court in regard to the condonation of delay - If a party has not acted diligently or remained inactive that cannot be treated as sufficient cause for not filing the appeal within the period of limitation - In the instant case the delay was on account of the fact that the impugned order was not forwarded by the Operating Office to the Taxation Department at New Delhi - Decided against assessee.
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2013 (12) TMI 244
Rejection of books of accounts - Held that:- Books of accounts were not produced before the AO during the course of the assessment proceedings but were furnished for the first time before the Ld. CIT(A) - It was not possible for the assessee to complete assessee's books of account in response to summons issued u/s. 131(1) of the Act - the assessee was prevented by reasonable cause for not complying with the summons - The reason for delay in preparation of the books of account has been admitted by the Tribunal - There is no justified reason why the same were rejected as being non admitted by the lower authorities - At the most the books cannot be said to be contemporary but the entries in the books are contemporary and based on the seized documents and bank statements including contract notes - As the reasons for the delay in the preparation of the books of accounts have been conclusively established and accepted - There is no reason why the Ld. CIT(A) should have rejected the book results - The issue was restored for fresh adjudication. Unaccounted investment - Held that:- The AO issued letters to various companies to know the holding in shares of those companies by the assessee in cases where the companies reported higher than the accounted holding - No evidence collected behind the back of the assessee could be used against the assessee unless an opportunity is given to the assessee to rebut the same. As the Revenue authorities have grossly erred in relying upon the evidences collected behind the back of the assessee, the additions based on such materials deserves to be deleted - Decided in favour of assessee. Interest expense - Held that:- Following assessee's own case for A.Y. 1996-97 - The issue was restored for fresh adjudication.
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2013 (12) TMI 243
Transfer pricing adjustment pertaining to import – Held that:- Following assessee’s own case for the A.Y. 2006-07 [2012 (1) TMI 60 - ITAT Pune] and IL Jin Electronics (I) (P.) Ltd. Versus Assistant Commissioner of Income-tax [2009 (11) TMI 669 - ITAT DELHI] - The transfer pricing adjustments are to computed not considering the entity level sales - It should be done ideally considering the relatable sales drawing the quantitative relationship to the imports from the associate enterprises, i.e. controlled cost - The principle of proportionality is relevant here - Decided in favour of assessee. Unadjusted margins on account of working capital differences – Held that:- Following the assessee’s own case for the A.Y. 2006-07 [2012 (1) TMI 60 - ITAT Pune] - After considering working capital adjustment as against the unadjusted arm’s length margin of the comparable companies adopted by the Transfer Pricing Officer - The difference in working capital materially affects, the margins of the comparable companies for the purposes of benchmarking the assessee's international transactions – The matter was restored for fresh decision. Additional expenses incurred for import of raw materials – Held that:- Following Skoda Auto India P. Ltd. v. Asst. CIT [2009 (3) TMI 249 - ITAT PUNE-A] – The issue was restored for fresh decision. Computation of Arm’s length price – Variation of 5% - Held that:- The issue was restored for fresh decision in view of amendment to section 92C made by the Finance Act, 2012. Material handling solutions – Whether Assembling/ manufacturing, sales/ distribution, providing technical and after sales services can be clubbed for benchmarking the international transactions - Held that:- It is only on account of the manufacturing activity that the activity of commissioning and installation of the equipment arises and pertinently all the aforesaid activities are negotiated and contracted for at one instance - The activity of installation and commissioning/engineering services is “closely linked” with the manufacturing activity and deserves to be aggregated and construed as a single transaction for the purposes of determining the arm’s length price as per the method adopted – In appropriate circumstances where closely linked transactions exist, the same should be treated as one composite transaction and a common transfer pricing analysis be performed for such transactions by adopting the most appropriate method - The issue was restored for fresh decision.
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2013 (12) TMI 242
Penalty imposed under section 271(1)(c) – In the assessment year 2006-07, originally return was filed showing a loss of ₹ 16,86,25,367 while the return under section 153A was filed on December 23, 2008 reducing the loss to ₹ 15,66,37,622 due to less claim of depreciation on the revised figures of capital work-in-progress as capitalised during the year - Held that:- Action under section 132 was taken against the assessee which led to reopening of the assessment. A notice under section 148 was served on him and pursuant thereto he filed revised returns of income for these assessment years showing higher income - The assessment orders were passed and the returns submitted were regularised under section 148 - Following CIT v. Suresh Chandra Mittal [1999 (7) TMI 34 - MADHYA PRADESH High Court] - The assessee had not surrendered at all - The had done so on the persistent queries made by the Assessing Officer - Once the revised assessment was regularised by the Revenue and the Assessing Authority had failed to take any objection in the matter - The declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of the vexed litigation could be treated as bona fide in the facts and circumstances of the case - Decided against Revenue.
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2013 (12) TMI 241
Addition on account of sale of films – The assessee was involved in export to various countries - As regards U. S. and U. K. markets are concerned, the assessee has set-up wholly owned subsidiary namely GPIL in U. K. (Garware Polyester International Ltd.) GPF, U. S. A., (Global Pet Films IMC), to undertake the marketing, promotion, business development and distribution of the assessee's products – Held that:- The approach of the Transfer Pricing Officer of comparing high volume associate enterprises transactions with low volume solitary transactions of the appellant with its non-associate enterprises customers does not meet with comparability standards required under the comparable uncontrolled price method – The comparison done by the Transfer Pricing Officer is not permissible in terms of law and on facts – Decided against Revenue. Adjustment on account of commission paid to associated enterprise – The Transfer Pricing Officer has made the adjustment in commission rate of 12.5 percent paid to the associate enterprises - The commission rate paid to the non-associate enterprises foreign agents which were ranging from three percent to 10 percent - Held that:- The arm's length rate of commission @ 10% has been determined with regard to several agency arrangements of appellant with its non-associate enterprises foreign agents - Internal comparable uncontrolled price - Rate of 10 percent is quite reasonable when it is analysed with a case where there is less risk and commission rates ranges between three percent and 10 percent – The CIT(A) has given the benefit of arm's length range of +/- five percent in terms of the proviso to section 92C - The statute does not provide any kind of standard deduction - The benefit of +/- five percent given by the learned Commissioner (Appeals) is set aside – Partly allowed in favour of Revenue. Disallowance of interest related to capital work-in progress under section 36(1) (iii) – Held that:- Following assessee's own case for the assessment year 2004-05 - The proviso of section 36(1) (iii) as amended by the Finance Act, 2003, with effect from April 1, 2004 - Proportionate interest has to be disallowed in view of the amended provisions – The issue restored to the files of AO. Levy of interest u/s 234B - Shortfall of payment of advance tax payable under section 115JB – Held that:- Following Emami Ltd [2011 (6) TMI 163 - CALCUTTA HIGH COURT] - any provisions which has been amended retrospectively, no interest under section 234B is chargeable - The amended provision of section 115JB having come into force with effect from April 1, 2001 - The assessee cannot be branded as a defaulter in payment of advance tax – Decided in favour of assessee. Deduction under section 80HHC on the book profit under section 115JB – Held that:- Following Ajanta Pharma Ltd. v. CIT [2010 (9) TMI 8 - SUPREME COURT] - If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then Section 115JB will cease to be a self-contained code. In Section 115JB, as in Section 115JA, it has been clearly stated that the relief will be computed under Section 80HHC(3)/(3A), subject to the conditions under sub-clauses (4) and (4A) of that Section. The conditions are only that the relief should be certified by the Chartered Accountant. Such condition is not a qualifying condition but it is a compliance condition. Therefore, one cannot rely upon the last sentence in clause (iv) of Explanation to Section 115JB (subject to the conditions specified in sub-clauses (4) and (4A) of that Section) to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department. - We need to keep in mind the Upward and Downward Adjustments and if so read it becomes clear that clause (iv) covers full export profits of 100% as "eligible profits" and that the same cannot be reduced to 80% by relying on Section 80HHC(1B) – Decided in favour of assessee. Depreciation on know-how fees – Held that:- Following assessee's own case for the assessment year 2002-03 - The learned Commissioner of Income tax (Appeals) has not examined the issue - The Assessing Officer should examine as to whether depreciation claimed on technical know-how is different from the one-sixth deduction of expense on technical know-how claimed by the assessee under section 35AB – The issue was set aside for fresh adjudication.
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2013 (12) TMI 240
Estimation of income – allowability of remuneration and interest paid to partners - Held that:- Income in this line of business has to be estimated at 5% of sales made by the assessees – The claim of the assessee for further deduction towards remuneration and interest to partners cannot be accepted. - Decided against Revenue.
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2013 (12) TMI 239
Addition on account of undervaluation of closing stock of land – The company M/s. Amritsar Rayon and Silk Mills P. Ltd. filed a suit against the assessee on March 11, 2006 which had an adverse impact on the market value of the impugned asset - The assessee had paid Rs. 70 lakhs to M/s. Amritsar Rayon and Silk Mills P. Ltd. - Held that:- The Legal dispute has adversely impacted the price of land - The assessee had paid Rs. 70 lakhs to M/s. Amritsar Rayon and Silk Mills P. Ltd. and finally the matter was settled at Rs. 2.30 crores - M/s. Amritsar Rayon and Silk Mills P. Ltd. had filed a suit for recovery of Rs. 1,08,00,000 being the double of advance amount paid as earnest money to the tune of Rs. 54 lakhs - The Revenue, itself did not challenge the opening stock of the impugned asset in the subsequent assessment year, while passing the assessment order under section 143(3), and accepted the same. There is no change in the method of valuing of the closing stock - As cost or market price whichever is less was consistently followed – The copy tax audit report for the assessment year 2006-07 filed shows method of valuation of closing stock as cost or net realizable value whichever is less - Against the column 'details of deviation, if any from the method of valuation prescribed under section 145A and effect thereof on the profit and loss' it is clearly mentioned nil – This shows that there was no change in method of valuation of closing stock – Decided against Revenue.
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2013 (12) TMI 238
Exemption u/s 10B – The assessee failed to furnish the approval of the Board appointed by the Central Government in exercise of power conferred by section 14 of the Industries - The assessee also failed to submit the ratification by the Development Commissioner as envisaged in the Instruction dated March 9, 2009 - Held that:- Following ITO v. Selectsys India P. Ltd. [2013 (10) TMI 1240 - ITAT HYDERABAD] - The assessee produced the registration from Software Technology Park of India which was notified by the Ministry of Commerce, Government of India vide Notification No. 33/(RE)/92-97 dated March 22, 1994. The notification states that the Software Technology Park (STP) Scheme is a 100 per cent. export-oriented undertaking scheme – The registration certificate was produced only before CIT(A) but not before AO – The issue set aside for denovo assessment after consideration of necessary material.
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2013 (12) TMI 237
Nature of assessee - Whether the assessee is a credit co-operative society or a co-operative bank – The assessee has income from banking and non-banking activities - Held that:- The aims and objects does not allows the assessee-co-operative society to accept deposits of money from the public for the purpose of lending or investment - the prime object or principal business of the assessee is not the banking business - The assessee cannot be regarded to be a primary co-operative bank - It cannot be termed as a co-operative bank as defined under Part V of the Banking Regulation Act 1949 - The assessee is eligible for the deduction under section 80P(2)(a)(i) - Following Deputy CIT v. Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd [2012 (8) TMI 185 - ITAT PANAJI] - Decided against Revenue. Deduction u/s 80P(2)(a)(i) - Income from investment made in joint venture - Held that:- The provisions of section 80P(2)(a)(i) restricts the deduction only to the income which has been earned on providing credit facilities by the society to its member - Article 4(ii)(h) of the bye laws of the co-operative society permits the membership of the co-operative society to the AOP if it has been approved by the Central Registrar – The issue restored to AO for fresh examination. Deduction u/s 80P(2) (a)(i) - Locker rent – Held that:- the assessee is not carrying on the business of banking. It is carrying on the business of providing credit facilities to its members. This income in our opinion cannot be regarded to be the profits and gains of business attributable to providing credit facilities to its member – The provision of safe deposit vaults is part of ordinary banking business – Decided against assessee. Deduction u/s 80P(2)(a)(i) - Purchase of vehicle fund - Provision for investment fluctuation reserve – Held that:- The investment fluctuation reserve is directly linked with the income from investment business - The deduction is allowed when the provision is made out of such investment income - If the provision for purchase of vehicle fund is made out of the income earned by the assessee from the business of providing credit facilities to members on which the assessee is entitled for deduction under section 80(2)(a)(i), the assessee will be entitled for deduction otherwise not – The issue set aside for fresh decision. Addition u/s 2(24)(x) – Employer’s contribution in provident fund or S.F. – Held that:- All the payments of provident fund contribution were made within the accounting year – Decided in favour of assessee. Addition as cash receipt – The Assessing Officer noted that seized document No. A21 page 47 has noting of cash transaction/payment amounting to ₹ 8,98,420 - Held that:- If the assessee has filed a plausible explanation, the onus get shifted on the Assessing Officer as to how he did not agree with the explanation of the assessee – No corroborative evidence was found to show that the explanation given by the assessee is wrong – The AO also did not prove anything contrary – Decided in favour of assessee. Addition u/s 68 - Unidentified deposit - During the course of search a document (a) A29 was seized page 1 of the said document consists of handwritten notings regarding deposits and receipts of various dates – Held that:- The onus is on the assessee to prove to the satisfaction of the Assessing Officer the nature and source of the cash credit - The assessee failed to comply with the KYC norms. Deposits to be business income or income from other sources – Held that:- The assessee is engaged in the business of providing credit facilities to its members - The credit facilities cannot be provided until and unless the assessee receive the deposits - The deposits have been received during the course of business of the assessee – – Decided against assessee. Deduction u/s 80P(2)(a)(i) – Held that:- Following Shri Mahavir Nagari Sahakari Pat Sanstha Ltd. v. Deputy CIT [2000 (2) TMI 234 - ITAT PUNE] – The assessee satisfied the conditions laid down under section 80P(2)(a)(i) – The assessee was entitled to deduction cash credit, even if taxed, would be considered as income from the same business - Decided in favour of assessee.
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2013 (12) TMI 236
Deduction u/s 80-IA – Held that:- The assessee was engaged in the activity of blending, processing and packaging of tea in its small scale industrial undertaking - In order to claim exemption under section 80-IA it is not enough that the unit should fall in the expression "industrial undertaking" for the purposes of sub-section (1) of section 80-IA alone, rather section 80-IA(1) itself prescribes that the exemption is available to an industrial undertaking, "to which this section applies" which reflects the import of the fulfilment of condition prescribed in sub-section (2) of section 80-IA - The assessee's activity amounts to processing only and it does not amount to either manufacture or production - The term "processing" has not been included in section 80-IA on account of clause (iii) of sub-section (2) of section 80-IA - The assessee is not entitled for deduction under section 80-IA – Decided in favour of Revenue. Validity of reopening of assessment – Held that:- There was no fresh material or a rational belief that certain income had escaped assessment on account of allowance of deduction under section 80-IA - The objection taken by the assessee has not been dealt with by the Commissioner of Income-tax (Appeals) in its proper perspective - The revisionary proceedings for the assessment year 2003-04 under section 263 has been initiated by the CIT on November 15, 2006 - The notice under section 148 in the instant assessment year was issued on March 30, 2006. Therefore, the CIT(Appeals) was wrong in his belief that the revisionary proceedings under section 263 by the Commissioner for the assessment year 2003-04 would constitute "information" for the AO in the instant assessment year – The issue was restored for fresh decision.
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2013 (12) TMI 235
Whether transfer of transferable development rights (by way of additional floor space index) chargeable to tax under the head "Capital gains" – The society in which the assessee has acquired the flat became entitled to the right to allow the usage of additional floor space index (FSI) of an area equivalent to existing floor space index - The transferable development rights were sold to the builder for a consideration - Held that:- Following Jethalal D. Metha [2005 (1) TMI 595 - ITAT MUMBAI] - Even though the transfer of transferable development rights amounts to transfer of a capital asset - The same cannot be subjected to tax under the head 'Capital gains' - There is no cost of acquisition in acquiring the right which has been transferred – Decided against Revenue.
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2013 (12) TMI 234
Disallowance of Interest – Nexus between interest received and interest paid - Held that:- Following assessee’s own case for A.Y. 2005-06 - Consistent with the past practice and in the absence of any justification for the departure, the interest claim ought to have been allowed – Following CIT vs. Sridev Enterprises [1991 (1) TMI 52 - KARNATAKA High Court] - If interest has been allowed as a deduction in the earlier years and there is no evidence to show that there were fresh borrowings during the relevant accounting year, the interest paid by the assessee on the opening balance of the creditors account should normally be allowed as a deduction – Decided in favour of assessee. Income from house property - Annual rental value – Held that:- the annual rateable value as fixed by the Municipal Corporation Act, is taken as annual value because the same is based on the cost of construction of the building - Annual Municipal value if available itself could be the annual letting value and if the actual rent received or receivable is more than the annual Municipal value, then the actual rent may be taken as the annual value – The authorities were not justified in recalculating the annual letting value of the Capri and Kodinar flats owned by the assessee, and which were vacant during the entire previous year - The assessee has furnished the certificates given by the Brihanmumbai Mahanagarpalika showing the rateable value of the flats – Decided in favour of assesse. Valuation of rights – Held that:- The Assessing Officer was not given an opportunity by the CIT(A) before admitting the additional evidence and, therefore, the matter be restored to the file of the CIT(A) – The issue was restored for fresh decision.
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Customs
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2013 (12) TMI 233
Waiver of pre-deposit of duty - Import of injection moulding machines took place by misdeclaring the assessable value - No proper authorization for clearance of the goods - Held that:- There are decisions of this Tribunal holding that for non-obtaining proper authorization, penalty cannot be imposed under Section 112(a) of the Customs Act. For lending of IEC, there is no violation of the Customs Act and if at all any violation is found only Foreign Trade (Development and Regulation) Act will apply and under Customs Act no penalty can be imposed - applicant has agreed to make the pre-deposit of differential duty - Therefore applicant directed to make the pre-deposit of the agreed amount within four weeks and report compliance - The CHA and the IEC holder have made out the case of waiver of pre-deposit, therefore pre-deposit is waived and stayed recovery thereof during the pendency of the appeals - Partial stay granted.
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2013 (12) TMI 232
Refund under Notification No.102/2007 - Commencement and termination of time - Held that:- according to the Notification No.102/2007, the importer is required to file the claim for refund before expiry of one year from the date of payment of additional duty of customs. The Notification does not explain the exact meaning of the word from - the provisions of Sec.9 of General Clauses Act, 1987 has been correctly applied in view of the manner in which Sec.9 has been enacted - It can be seen that in any of the Central Act or Regulations, if the word from is used, the day on which that event has taken place has to be excluded. Because of this reason, nowhere in Central Acts or Notifications, when the words from and to are used, the meaning thereof is explained. In the circumstances, the impugned order is in accordance with the law - Decided against Revenue.
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2013 (12) TMI 231
Penalty under the provisions of Section 117 read with Section 72 of the Customs Act, 1962 - Non clearance of the goods from the warehouse - Held that:- Appellant had imported various consignments and inadvertently has not cleared the consignment of 4.99 MT within a stipulated period of one year, as provided under Section 72 of the Customs Act, 1962. I find that the appellant has cleared the consignment from the warehouse almost after a period of three years from the date of expiry of the period of one year and during which period holdup the consignment in warehouse. Appellant has violated the provisions of Section 61 and is liable to be penalised under Section 72 of the Customs Act, 1962. Considering the amount of duty involved in this case, I find that the ends of justice would be met, if the penalty imposed on the appellant is reduced to a nominal penalty - Decided partly in favour of assessee.
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2013 (12) TMI 230
Condonation of delay - Adjudication order not received - Held that:- show cause notice was issued on 16-1-2007 for personal hearing for 29-9-2008 and the applicants were represented by the advocate. Order-in-appeal was passed on 13-10-2008. Thereafter vide letter dated 7-3-2009 the applicant asked for the status of the appeal. It was informed that the appeal has already been decided and order has already been dispatched. Then the applicant repeatedly asked for copy of the order and same was supplied only by letter dated 15-7-2009. From the order-in-appeal we find that copy of the order was not marked to the Advocate who appeared at the time of personal hearing. In these circumstances, we find that applicant has explained the delay. In these circumstances, we find merit in the contentions of the applicant. The delay, if any, is condoned - Delay condoned. Waiver of pre deposit - Held that:- applicant had already deposited 50% of the duty at the time of hearing before the Commissioner (Appeals). Keeping in view the facts and circumstances of the case, the amount already deposited is sufficient for hearing of appeal - Stay granted.
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2013 (12) TMI 229
Import of goods without payment of duty - Goods were cleared by filing 26 bills of entry in the name of the appellants - Appellant claimed that he was not aware of any import of goods covered by said 26 bills of entry - Held that:- there are imports by covered by 26 bills of entry and the whereabouts of these consignments are not known. The appellants claimed that they have not imported these consignments and therefore the question of their receiving in the factory does not arise - department is not in a position to disclose the basis for issue of show cause notice - Prima facie case in favour of assessee - Stay granted.
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Corporate Laws
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2013 (12) TMI 228
Separate legal entity - Oppression and mismanagement u/s 397 and 398 of the Companies Act, 1956 - Company's ownership became a part of family arrangement – Held that:- Merely because company formed a part of family arrangement, it would not cease to be an independent juristic person being governed by Companies Act. Stay of company proceedings – Held that:- It cannot be said that the issues involved in the two matters, i.e., the company petition and civil suit are directly and substantially the same - The inquiry in the two proceedings operate in different arena and different field - the issues involved in the company petition are within the exclusive jurisdiction of the authority/Court envisaged by the Act of 1956 - The suggestion about operation of the interim order as passed in the civil suit remains entirely misplaced and is of no avail for the appellants - it appears to be wholly untenable a proposition that because of an order for maintaining status quo in a suit for partition of properties amongst the members of family, an inquiry on the allegations of oppression and mismanagement in a company governed by the Act of 1956 may also be stalled – Decided against Appellant.
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Service Tax
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2013 (12) TMI 271
Availability of Input service under Rule 2(1) (ii) of the Cenvat Credit Rules 2004- Service of landline telephone service and Courier service – Held that:- Following Maruti Suzuki Ltd. Vs. Commissioner [2009 (8) TMI 14 - SUPREME COURT ] - input service credit is available on landline telephone service as it is used for business purpose - mobile telephone service is also entitled for credit - CBEC circular (supra) is also relevant - input service credit is available on telephone services utilized for business purpose. Following CCE, Vapi Vs. Apar Industries Ltd. [2010 (8) TMI 407 - CESTAT, AHMEDABAD ] – courier services used for placing orders, filing quotation for procurement as well as marketing, dispatch instructions, issuing cheques for procurement, sending stock transfer documents to depots, receiving dispatch instructions from marketing/depots/head office, etc., were held to be ‘input services’ - Cenvat Credit paid on courier service utilized for dispatching their final product was also eligible for credit – Decided in favour of Assessee.
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2013 (12) TMI 270
Denial of CENVAT CRedit - Nexus with manufacture - Held that:- appellant had provided the services of Sanitation, Gardening, Water Supply etc. to their factory and maintenance of staff colony - But services of gardening, plantation, sanitation, water supply etc. to the appellant’s manufacturing unit and to the residential colony cannot be excluded from the ambit of Rule 2 (l) of Cenvat Credit Rules, 2004 - courier services used in sending documents/invoices to various customers and other offices are definitely relating to manufacturing activity undertaken by the appellant and therefore credit of service tax paid on courier service is allowable. As regards credit taken on supplementary invoices, there is no dispute that the service tax was paid on the differential amount through these supplementary invoices. Since the credit has been taken on the amount which was paid as service tax and relevant particulars are available in the said invoices, therefore, the credit cannot be denied in this case also - Decided in favour of assessee.
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2013 (12) TMI 269
Demand of service tax - Maintenance and Repair Service - Assessee contends that they do not provide any maintenance or repair service they are just agents - Held that:- appellants are required to make payment relating to Revenue assessment, insurance, all other taxes, levies, electricity and water charges and deposits in respect of common electrical and water pumps and other installations. In addition they are paying for the maintenance and repair of common areas and facilities, wages or watchmen, sweepers etc. and some expenses relating to maintenance of the housing blocks - appellants are obliged to maintain a separate account in any bank of the deposits taken and use the same amount towards the outgoings. Further section 6 puts responsibility for payment of outgoings on the appellants till the property is transferred. Appellants are not in the business of maintenance or repair service or management of immovable property. The appellants cannot be held as provider of maintenance or repair service as they are only paying on behalf of various buyers of flats to various authorities (Municipal Corporation, Revenue authorities etc.) and various service providers (such as security agency, cleaning service providers etc.) and they are not charging anything on their own. The payments are made cost on cost basis and the same is debited from the deposit account. They act only as trustee or as pure agent. When the co-operative society is formed even the deposit account is shifted to Flat Owner's Co-operative Society. We also note that this is a statutory obligation on the appellants in terms of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, sale, management and transfer) Act, 1963 - Therefore, appellants are not providing the maintenance or repair service to the buyers of the flats - Decided in favour of assessee.
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2013 (12) TMI 268
Denial of refund claim - Service tax paid under Technical Inspection and Certification Service - Refund filed for exemption on technical testing and analysis service in relation to human beings or animals - Adjudicating authority sanctioned refund claim - Commssioner ser aside refund sanctioned - Held that:- applicants are not providing any certification in respect of the testing and the testing is done by visual examination. Therefore, prima facie we find that the applicants have not made out a case for total waiver of dues - Partial stay granted.
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2013 (12) TMI 267
Penalty u/s 76 & 78 - Service tax liability for four customers discharged after issuing show cause notice - Held that:- appellant had paid the service tax from own pocket and none of the four customers who had received this service had paid the amount of service tax even though they were PSUs. The claim of the appellant is that he entertained a bona fide belief that when service is provided to PSUs and service tax is not collected, he may not be liable to pay service tax. It is to be believed having regard to the nature of service, the service provider and the transactions involved - it is appropriate that in this case provisions of Section 80 of Finance Act, 1994 is required to be invoked in favour of the appellant. Accordingly the appeal is allowed by way of setting aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994 - Following decision of CCE, Mangalore vs. Tiger Service Bureau [2010 (8) TMI 270 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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2013 (12) TMI 266
CENVAT Credit - premium for group insurance/mediclaim policy - Held that:- department’s allegation is that the appellant have taken Cenvat credit of service tax paid on the premium paid for group insurance/mediclaim/life insurance policies in respect of employees as per Annexure A to the show cause notice. Annexure A to the show cause notice also gives the details of the credit taken on the insurance services availed for the employees. In the show cause notice there is absolutely no allegation that the insurance cover provided by the appellant also covered the family members of the employees. In view of this, the original Adjudicating Authority and the 1st Appellate Authority, have gone totally wrong in travelling beyond the show cause notice. When the group insurance/mediclaim/life insurance cover to the employees of manufacturer is a requirement of Section 38 of the Employees State Insurance Act, 1948 and in this case it is not disputed that the provisions of this Act are applicable to the appellant, the appellant have to provide insurance cover as per the provisions of this Act to their employees failing which, they would face penal action. Therefore, the availment of the insurance services for providing insurance/mediclaim/life insurance has to be treated as an activity in or in relation to manufacture and would be covered by the definition of input service. In view of this, the impugned order is not sustainable - Decided in favour of assessee.
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2013 (12) TMI 265
Liability of service tax - Goods Transport Agency service - Whether the penalty imposed under Section 78 by original authority and confirmed by the Commissioner (Appeal) is sustainable in the law - Held that:- original authority has accepted the reasonable cause shown by the appellants for failure for payment of service tax and the Revenue has not challenged the Order-In-Original in respect of dropping the penalty under Section 76 and 77 of the Finance Act. Therefore there is no reason not to apply the same reasonable cause for failure of payment of service tax in respect of penalty under Section 78 of the Finance Act. We accordingly hold that penalty under Section 78 also is not imposable - Decided in favour of assessee.
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2013 (12) TMI 264
Stay application - Waiver of pre deposit - Penalty u/s 78 - Held that:- adjudicating authority has confirmed the demand following Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 which has been struck down by the Hon'ble Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. (2012 (12) TMI 150 - DELHI HIGH COURT). In these circumstances, we are of the view that the Applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. Accordingly, all dues adjudged is waived and its recovery stayed during the pendency of the Appeal
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2013 (12) TMI 263
Demand of service tax - Management of cars/scooter parking facilities at Indira Gandhi International Airport - Penalties under Section 76, 77 and 78 of the Finance Act - Invocation of extended period of limitation - Suppression of facts - Held that:- assessee is engaged in providing the taxable Airport Service with effect from 10.09.2004 to 31.03.2006 and has received the consideration for services on which the service tax has been demanded by the Department. We find that Airport Services has been brought into service tax net with effect from 10.09.2004 and under Section 65(105)(zzm) of the Act. Assessee has entered into an agreement with the Airport Authority for providing the cars/scooter parking facilities in various areas in the Airport. After examining the various provisions of the agreement between AAI and the assessee and also the various taxable provisions of the Finance Act the Commissioner has concluded that services related to managing the parking facilities at Airports to the passengers as well as to the visitors is fully covered under the taxable Airport Service as defined under Section 65 (105)(zzm) and accordingly he held that demand of Rs. 1,93,55,142/- is payable by the assessee. We find that appellant has not challenged the levy of service tax on the parking facilities and they have challenged the order on the ground of invocation of extended period of limitation under section 73(1) of the Finance Act, on the ground that the appellants/assessee was in communication with the Airport Authority seeking clarification whether service tax is required to be collected by them from customers and it is also the contention of the assessee that since the penalty has not been imposed on assessee there is no case of invocation of extended period of limitation. Assessee had never disclosed the material fact of providing such taxable services and was charging consideration from the service recipients throughout the period 10.09.2004 and 31.03.2006. Assessee had not paid the service tax to the Government account at the prescribed time during the disputed period. These actions on part of assessee amount to suppression of material fact from the Department and assessee had contravened the provisions of the Finance Act, with intention to evade the payment of service tax and therefore the extended period limitation has rightly been invoked by the Commissioner. Once it is held by the Commissioner that extended period is invocable and there was suppression of fact on behalf of assessee there cannot be any reasonable cause for failure of payment of service tax. Accordingly we do not agree with the finding to the Commissioner with regard to benefit granted under Section 80 of Act in not imposing the penalty under Section 78 of the Finance Act. We set aside this finding of the Commissioner and hold that penalty under Section 78 of the Finance Act is imposable on the assessee - Decided against assessee.
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2013 (12) TMI 262
Demand of service tax - Eligibility for exemption under Notification 25/2004 dated 10.09.2004 and 14/2004 dated 10.09.2004 - Business Auxilliary Service - Whether Respondents are promoting or marketing the services of financial institution or providing services on behalf of the client and are eligible for exemption under Notification 14/2004 and 25/2004 dated 10.09.2004 - Respondents is arranging loans from various financial institutions like LIC Housing, IDBI Bank and HDFC Bank. They are procuring customers for these institutions and get the loan sanctioned to these customers and in lieu of this service they receive the Commission from these institutions and this way they are promoting or marketing the services of these institution and are squarely covered under clause (ii) of definition of Business Auxiliary Service. Loans are sanctioned by the Financial Institutions only. It is not the case of Respondents that they are giving the loan amount to the customers and getting the same reimbursed from these Banks. Services provided by the Respondents can not be said to have been provided on behalf of the client and accordingly they also become ineligible for exemption under Notification 14/2004 and 25/2004 dated 10.09.2004 - Service tax demand confirmed - Decided in favor of Revenue.
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2013 (12) TMI 261
Advertising agency service - Short payment of service tax - Penalty under Section 78 - Held that:- The computation of the demand for the respective period has been done on the basis of the gross receipts shown in the respective bank statement/accounts of the appellant. The receipt figure shown in the annexure 'A' to the show cause notice has been disputed by the appellant contending that the entire receipts had not been reflected therein for the respective years - since the reply was not a detailed reply filed by the appellant explaining/reconciling the difference between the receipt figures shown in the bank statements and the gross taxable value shown in ST-3 Returns, the adjudicating authority could not examine the reasons for such differences, as now explained by the appellant. In these circumstances, in the interest of justice and to ascertain the correctness of the service tax liability, the matter requires to be remitted back to the adjudicating authority for determination of all issues afresh. The appellants are directed to furnish their detail reply/explanation so as to facilitate the Department to assess the correct liability - appeal is allowed by way of Remand.
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2013 (12) TMI 260
Penalty u/s 76 - Goods Transport Agency service - Availment of CENVAT Credit - Commissioner set aside penalty - Held that:- Respondent has established a reasonable cause for failure to pay the service tax during the period April, 2007 to March, 2008 through the GAR-7 Challan (although the said liability had already been discharged by debiting the Cenvat credit amount during the relevant period) and hence this is an appropriate case to invoke the provisions of Section 80 of the Finance Act - Following decision of CCE&C, Daman Vs. PSL Corrosion Control Services Ltd. (2010 (3) TMI 784 - GUJARAT HIGH COURT) - Decided against Revenue.
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2013 (12) TMI 259
Demand of service tax - Penalty u/s 76 - Appellants appointed as ‘consignment agent’ - Department imposed demand holding that assessee carrying business of Clearing and Forwarding agents - Assessee contends that they were acting merely agent of the client and their activity did not come within the purview of Section 65(72) of the said Act, as they did not undertake services, normally rendered by Clearing and Forwarding agents - Third show cause notice issued while 2 notices already existing - Extended period - Whether appellants are liable to pay service tax on their activities under Clearing & Forwarding Agents Service - Held that:- appellants did not provide any information to the Department at the time of issue of earlier Show Cause Notice - Therefore, the objection raised by the appellants on Show Cause Notice dated 23.09.2003 are not sustainable - activities of appellant have been classified Clearing & Forwarding Agent Service in appellant’s own case by this Tribunal reported in [2008 (5) TMI 96 - CESTAT, KOLKATA]. Show Cause Notice in this case was issued on 23.09.2003. ST-3 Returns were submitted by the appellants on 22.11.2002. Therefore Show Cause Notice is within one year from date of filing of ST-3 Returns which is relevant date for computing the time limit. We therefore hold that demand is within time limit of normal period. We therefore hold Commissioner has rightly confirmed the Service Tax along with interest against the appellant - Penalty u/s 76 upheld - Decided in favour of Revenue.
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2013 (12) TMI 258
Penalty u/s 76, 77 and 78 - Rent-a-cab service - Held that:- there is no justification for imposing penalties both under Sections 76 and 78. We notice that Delhi High Court in Bajaj Travels Ltd. v. C.S.T. -[2011 (8) TMI 423 - DELHI HIGH COURT] has considered this issue and concluded that imposition of penalty under Section 76 and 78, prior to amendment of Section 78 with effect from 16.5.2008, operated in two different fields and penalty was imposable under both provisions separately, even if the violations were committed in course of the same transaction or arose out of the same act - Decided against assessee.
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2013 (12) TMI 257
Denial of CENVAT Credit - Manpower Recruitment or Supply Agency Service - Business Auxiliary Service and Online Information and Database Access or Retrieval Service - Revenue objected for CENVAT credit on the ground that credit was taken in respect of an office which was not registered - Held that:- credit could not have been denied on the ground that the office was not registered. Once the credit could not have been denied and the appellant had a common centralized registration, the appellant was eligible for getting the refund also. Because once the credit is admissible, the accumulated credit is to be refunded. Further, it has to be taken note of that the appellants were not required to register this office at all. It was an addition to their offices listed in the certificate and is only for the purpose of information and centralized registration involves issue of a single registration certificate. Therefore, it cannot be said that each unit is considered as registered separately in the absence of different registration certificates. This is another view that can be taken in the facts of this case - Following decision of mPortal India Wireless Solutions Pvt. Ltd. vs. CCE [2011 (9) TMI 450 - KARNATAKA HIGH COURT] - Decided in favour of assessee.
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Central Excise
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2013 (12) TMI 226
Maintainability of Appeal – Held that:- Four different appeals should have been preferred by the department and in such case each of the appeals would be for an amount lower than ₹ 10 lacs - In any case even if the amount of all four appeals is taken together, the total amount comes to ₹ 9,77,884/-, which is less than ₹ 10 lacs and that the appeal also does not fall in any of the exceptions. Deemed Export - Whether supplies to 100% EOU be treated as export for the purpose of cash refund of accumulated Cenvat credit under Rule 5 of CCR, 2004 – Held that:- The respondent has fairly stated that they will not insist upon cash refund - The respondent company has taken credit of the amount and intimation to that effect has been given to the Assistant Commissioner, Central Excise within time. Applicability of Limitation - Whether the time limit prescribed under Section 11B is applicable in the case of refund claim under Rule 5 of CCR, 2004- Held that:- The amount involved in the appeal is less than ₹ 10 lacs and no question of constitutional validity of any provision of Act or Rule is involved nor any Notification/Instruction/Order or Circular has been held illegal or ultra vires, the appeal in view of the Instructions dated 17.8.2011 issued by the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance is not required to be heard – Decided against Appellant.
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2013 (12) TMI 225
Scope of Section 35G of the Central Excise Act, 1944 – appealable orders or writ petition to be filed against an interim order passed by CESTAT against Application for waiver of Pre-deposits – Held that:- The words "every order passed in appeal" contemplates number of orders, not one or singular, and passing of the same is possible on several issues and problems in connection with appeal - interlocutory proceedings are contemplated to be filed - the Legislature has used the word "in appeal" not "on appeal” - If it were so then it would have been one order meaning final order - But that is not the intention of the Legislature because unless there is appeal, there cannot be any application for dispensation of pre- deposit, as the application of this nature is not independent one unlike when the application is made for dispensation of service of notice under section 80 of the Code of Civil Procedure at the time of filing of the suit against amongst other Government, as this application is an independent of suit not in the suit - the scheme of the provision is that one has to prefer an appeal first and then in connection therewith application for pre-deposit is to be made - Pre- condition of hearing of appeal is either pre-deposit or dispensation thereof either whole or part thereof. The contention that the orders passed on the application for pre-deposit is not covered by Section 35G cannot be accepted – Following M/s. Metal Weld Electrodes, Chennai Vs. M/s. Ellan Industries, Coimbatore [2013 (11) TMI 240 - MADRAS HIGH COURT] - The petitioner would be entitled to prefer appeal if advised in accordance with law - the interim order passed already to operate for a period of ten days from date allowed – Decided in favour of Petitioner.
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2013 (12) TMI 224
Confiscation of the White Sugar - unaccounted stock - revenue allege that they manufacture white sugar on which duty is liable to be discharged but cleared the same as Khandsari Sugar claiming exemption - Proper Examination of evidences not made - Held that:- The appellants had submitted Form No.11 prescribed under Rule 61 of the Gujarat Factories Rules, 1967 – the open pressure pan was not insulated - The certificates up to 2004 were of open pressure pan - from the year 2005, Form No. 11 specifically talks about vacuum pans which were insulated vessels and undisputedly can be used for manufacture of White Sugar - If the appellant’s factory did not have vacuum pan during the period 2002 to December 2004, the appellant cannot manufacture White Sugar - The evidence has been totally over looked by the adjudicating authority and hence the findings that the appellant were manufacturing White Sugar from 2002 to 2005 seems to be incorrect and misdirected. Mere perusal of the process flow sheet of machineries installed in the factory premises at the time of taking the consent indicated that there was manufacturing of only Khandsari Sugar and nowhere had it indicated that there was intention to manufacture White Sugar - All these evidences which were on the file were over looked by the adjudicating authority while coming to a conclusion that appellant had manufactured White Sugar and not Khandsari Sugar - the appellant had in fact, in the application made to GPCB indicated that there was cooling pan in the ATP unit of the appellant - there was nothing on record to indicate that cooling pan which was there in the factory premises of the appellant when they applied for consent from GPCB or can be used with machineries like vacuum pressure pan. The appellant had produced various certificates from the purchasers of Khandsari Sugar during the material period - the purchasers have specifically stated that they were regularly procuring Khandsari Sugar from the appellant and were also dealing in sugar from various manufacturers - The certificates specifically note and record that the purchases made from the main appellant SGSI were of Khandsari Sugar – the attitude of brushing aside of evidence produced by the assessee in his support is incorrect – Following COMMISSIONER OF C. EX., CUS. & SERVICE TAX Versus VISHWA TRADERS P. LTD. [2013 (4) TMI 55 - GUJARAT HIGH COURT] - the order confirming demand of Central Excise duty from the appellant for the period 2002 to 2005, holding that appellant had manufactured and cleared White Sugar, is without any evidence and unsupported reasoning - The order, to that extent set-aside. Duty on molasses - Unaccounted stock – Held that:- The records indicate that the appellant has produced only Khandsari Sugar and it is also brought on record that molasses arising out of manufacturing of Khandsari Sugar has been consumed by main appellant for manufacture of ‘Rotan Gur’ - the benefit of General Exemption No. 52 (Notification No. 6/2002) as extended at Serial No. 6, will be applicable and duty liability will be ‘Nil’ as the molasses arising and captively consumed out of manufacture of Khandsari Sugar - the confiscation of the White Sugar upheld which was found in the factory premises during the visit of investigating officers, the appellant should be penalised for non-recording White Sugar in their books of account – Decided partly in favour of Assessee.
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2013 (12) TMI 223
Remission of duty - Fire broke into the factory to be treated as unavoidable factor or not – Raw materials, semi- finished goods as well as finished goods destroyed by fire -Held that:- The fire broke in the appellants factory on account of short circuiting, which is attributable to electric malfunctioning - The appellants have rightly contended that no sane industrialist will cause huge loss of money invested in plant and machinery in the factory by fire accident, due to negligence - The fire caused by short circuiting cannot be avoided by taking precautionary measures – Relying upon Union of India vs. Hindustan Zinc Ltd. [2008 (10) TMI 63 - HIGH COURT RAJASTHAN ] nobody intentionally invites such accidents to happen and they happen on account of various natural causes’ and have to be held as unavoidable accident. Denial of Remission – Held that:- Following Grasim Industries vs. CCE, Indore [2006 (8) TMI 69 - CESTAT,NEW DELHI ] - When the Larger Bench decision of the Tribunal has decided the issue, the law gets declared on the disputed issue and is required to be followed by all the adjudicating authorities, unless the same is reversed by the higher appellate forum - the Commissioner was bound to follow the Larger Bench decision - rejection of the remission application cannot be upheld. Remission of duty on the semi-finished goods - Held that:- The Revenue cannot call for any duty on the said semi-finished goods - Either they are non-dutiable in which case no duty can be demanded or the same or have to be granted remission from payment of duty, having been admittedly damaged in fire accident – order set aside – Decided in favour of Assessee.
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2013 (12) TMI 222
Cenvat credit taken on Input – Separate account not maintained – Inventory includes dutiable as well as exempted final product - Press mud emerges as waste – 10% duty to be paid as per Rule 6(3) of the Cenvat Credit Rules, 2004 – Held that:- The press mud obtained is nothing but waste from the cane sugar which arises in course of cleaning of the same, that the product is not excisable - The requirement of Rule 6 (2) can be fulfilled only in respect of the final products which a manufacturer wants to manufacture and this requirement cannot be fulfilled in respect of inevitable waste or by product, as when in the manufacture of some final product, some waste or inevitable by-product emerges, the manufacturer, even if he wants to comply with the provisions of Rule 6 (2), cannot do so – Following Narmada Gelatines Limited vs. CCE, Bhopal [2008 (11) TMI 75 - CESTAT NEW DELHI] and Rallis India Ltd. vs. Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] - provisions of Rule 6 (2) and 6 (3) would not apply – order set aside – Decided in favour of Assessee.
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2013 (12) TMI 221
Refund claim hit by bar of unjust enrichment or not - Clearance from the factory gate - Assessee contended that the factory gate sale price was available, thus there was no requirement of adopting depot sale price and demanding differential duty – Held that:- The deposit of duty by the appellant was in respect of number of clearances made from the factory gate and the amount was debited as a result of demand made by their jurisdictional central excise authorities - such deposit of amount was in the nature of deposit made after clearances and at the instructions of the Revenue, which has been held to be as not payable by the Tribunal - clearances had also been effected, there is no evidence on record that the appellant subsequently recovered the amount from their customers - the refund claim of is not hit by bar of unjust enrichment – order set aside – Decided in favour of Assessee.
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2013 (12) TMI 220
Denial of the benefit of Notification No. 6/2006 – Classification of goods - Fabricated items supplied to mega power projects to be classified under Chapter heading 73.08 of CETA,1985 OR under CSH 98.01 of CTA,1975 – Waiver of pre-deposit – Held that:- Following RAMSARUP UTPADAK, UNIT-II Versus COMMR. OF C. EX., KOLKATTA-III [2012 (12) TMI 383 - CESTAT, KOLKATA] - Prima facie, TMT bars cleared to various mega power projects, even if falls under Chapter Heading 72 of Central Excise Tariff Act,1985 would be eligible to the benefit of Notification No. 6/2006 - the applicant could able to make out a prima facie case in their favour for waiver of pre-deposit of dues - Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 219
Inclusion of transportation cost – Rails brought to the factory – Value incurred to be included in finished goods or not - Waiver of pre-deposit – Held that:- Once the value of ‘rails’ are not to be included in the value of the finished goods i.e. railway or tram way track material, manufactured out of such rails, the transportation cost for bringing the rails from Stockyard/Railway siding to the factory of applicants, cannot to be included in the value of finished goods - the applicants are 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 218
Benefit of exemption Notification No. 119/66 - Revenue was of the view that the copper wire bars cannot be treated as virgin copper in crude form – Held that:- Both copper wire rods as well as copper wire bars are covered by Rule 56A for benefit of proforma credit and in respect of both, the rate of duty is at the specific rate at 3000 P.M.T., the benefit of proforma credit of the Additional Customs duty paid in respect of wire bars would be available for discharging duty in respect of wire rods - The entire case would be revenue neutral and the net duty liability of the appellant would be nil. The appellants are not covered by the Section 11C notification - the basis for denying exemption under Notification No. 119/66-C.E., is that wire bars are not copper in crude form/virgin copper - Once it is accepted that copper wire bars were Additional Customs duty paid, the proforma credit of the duty under Rule 56A cannot be denied - once the proforma credit benefit is extended, the net duty liability of the appellants would become nil – order set aside – Decided in favour of Assessee.
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2013 (12) TMI 217
Abetting and aiding clandestine removal – Goods manufactured and cleared from their factory – Waiver of Pre-deposit of Penalty under Rule 26 of Central Excise Rules, 2002 – Held that:- The statement of the appellant seems to be inappropriate Shri Mafatlal Harakchand Shah, has directed in a particular manner to remove the goods clandestinely - The defences taken needs to be gone into detail which can be done only at the time of final disposal of appeal - Prima-facie, the appellant has not made out prima facie case in their favour - Keeping in mind that the appellant is an individual and the unit M/s. Shriram Tubes Pvt. Limited is closed – appellant is directed to submit Rupees one lakh as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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CST, VAT & Sales Tax
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2013 (12) TMI 273
Alternate remedy available or not – Held that:- The Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice - Following Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983 (4) TMI 49 - SUPREME Court] - the party in the ordinary course should approach the appellate authority provided under the Act. High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field – Thus, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation – Decided against Petitioner.
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2013 (12) TMI 272
Mode of Service of orders and notices – Held that:- All the notices were sent to the correct address of the petitioner – Following C.C.Alavi Haji v Palapetty Muhammed [2007 (5) TMI 335 - SUPREME COURT OF INDIA] - when a notice is sent by registered post and is returned with a postal endorsement 'refused' or 'not available in the house', it is presumed that the notice is served - Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business - when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed - The first respondent strictly adhered to the procedure contemplated under Rule 64 of the VAT Rules before passing the assessment order. There was no substance in the contention of the petitioner that the assessment order is in violation of the principles of natural justice - the petitioner cannot straightaway invoke the jurisdiction of this Court under Article 226 of the Constitution of India without resorting to the efficacious alternative remedy available to him under Section 31 of the VAT Act – Decided against Petitioner.
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Indian Laws
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2013 (12) TMI 274
Condonation of delay - High Court rejected to condone delay for no sufficient cause - Held that:- there was a delay of 5-1/2 years in filing the said appeals under Section 54 of the Act before the High Court. The only explanation offered for approaching the court at such a belated stage has been that one of the appellants had taken ill - where a case has been presented in the court beyond limitation, the applicant has to explain the court as to what was the sufficient cause which means an adequate and enough reason which prevented him to approach the court within limitation. In case a party is found to be negligent, or for want of bonafide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay. No court could be justified in condoning such an inordinate delay by imposing any condition whatsoever. The application is to be decided only within the parameters laid down by this court in regard to the condonation of delay. In case there was no sufficient cause to prevent a litigant to approach the court on time condoning the delay without any justification, putting any condition whatsoever, amounts to passing an order in violation of the statutory provisions and it tantamounts to showing utter disregard to the legislature - Condonation denied.
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2013 (12) TMI 227
Validity of Re-auction Notification – Arrears of arrack licensees - Petitioner contended that she has fulfilled all the conditions of the confirmation order with respect to the Arrack Shops – Held that:- The petitioner has paid the entire amount Rupees thirty nine lakhs seventy seven thousand three hundred and eight after adjusting the Earnest Money Deposit - The petitioner agreed to produce documents relating to immovable properties from third parties without producing the documents of those licencees who are in arrears to the Excise Department. Those who are producing documents of defaulters would not be permitted to run the arrack shops, unless the entire amount due from such licencees are paid - In case, such a drastic action is not taken, it would not be possible for the Excise Department to recover the arrears - The chronic defaulters would continue to bid through their Benami, notwithstanding the non-payment of kist amount to the Excise Department - Such practice should be put an end - The petitioner is directed to produce the documents before the respondent to offer as security for due payment of balance amount – Re-auction notification dated 14.11.2013 quashed – decided in favour of Petitioner.
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