TMI Tax Updates - e-Newsletter
February 1, 2014
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:
Application of Section 50B - Slump sale u/s 2(42C) - amalgamation - where a person carrying on business, transfers assets to a company in consideration of allotment of shares, it would be a case of exchange but not of sale - AT
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Income Tax:
Whether the loss in the cement division be set off against the profits from the finance division - The income tax authorities are not empowered to enforce the provisions powers of the RBI Act - HC
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Income Tax:
TDS on salaries - The employer while making deduction of tax at source is only required to have a broad picture of the estimated income on which tax is to be deducted. He is not supposed to calculate the income minutely to precession - HC
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Income Tax:
Whether the sale of property was adventure in the nature of trade - Held no - The sale of agricultural plot was not by way of business purpose - HC
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Income Tax:
Whether sale consideration of a going concern be taxed as capital gains prior to the amendment introducing section 50B - Slump sale - Merely because the assessee has given split up figures and received the consideration from the purchaser, it would not take the goods out of slump sale - HC
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Income Tax:
Depreciation on the loss incurred units of CANSTAR or revenue expenditure - The assessee would be entitled to the claim as expenditure incurred in the business - HC
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Income Tax:
Exemption u/s 54EC and 54F - LTCG - Merely because the original site which was allotted was cancelled, yet another site was allotted and the said site was also cancelled and thereafter the present site was allotted, in law - would make no difference - HC
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Income Tax:
Penalty u/s 271B - Tax Audit - It does not differentiate between commodities sold under the head speculative business or normal business - penalty confirmed - AT
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Corporate Law:
Tenancy - Petitioner Company did not vacate tenanted premises even after amalgamation - once the company stood dissolved the tenancy would automatically perish - Order of Amalgamation would not protect the tenancy - HC
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Service Tax:
There is no service tax liability on underwriting fee or underwriting commission received by the primary dealers for dealing in Government securities; the same logic would apply in respect of brokerage also - AT
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Service Tax:
Computer Data Processing comes under Information Technology Service and is excluded from the scope of Business Auxiliary Service - AT
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Central Excise:
Rebate of Automobile Cess levied and collected under Automobile Cess Rules, 1984 and S.O. No. 247(E), dated 22-3-1990 is not admissible under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. - CGOVT
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Central Excise:
Cenvat credit - When there is a specific entry in a rule and the said entry pre-supposes that for the purpose of eligibility of credit of duty of inputs, those inputs must be used for manufacture of final products or for any other purpose within the factor of production, the assessee cannot take shelter under a different entry. - HC
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Central Excise:
The furniture manufactured was cleared in CKD condition for ease of transportation and the respondents were only assembling the parts of the furniture at site - demand set aside - AT
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Central Excise:
Duty of excise on promotional pack and trade pack - D Merely because the same is supplied free-of-cost, it does not obliterate the liability to pay excise duty of the promotional pack - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (1) TMI 1600
Application of Section 50B of the Act- Slump sale u/s 2(42C) of the Act - The entire assessment is based on the fact that the Assessing Officer has treated the transfer of assets to M/s. Novapan Industries Ltd. as a slump sale attracting the provisions of section 50B of the Act – Held that:- As per the scheme of amalgamation, there is no monetary consideration received by the assessee-company for transfer of the manufacturing division - Section 50B of the Act provides for computation of capital gains in the case of ‘slump sale’ - Relying upon CIT vs. R.R. Ramakrishna Pillai [1967 (5) TMI 7 - SUPREME Court] - where a person carrying on business, transfers assets to a company in consideration of allotment of shares, it would be a case of exchange but not of sale - since there is no monetary consideration involved in transferring the manufacturing division with all its assets and liabilities to M/s. Novapan Industries Ltd. under scheme of amalgamation approved by the Hon’ble High Court - it cannot be considered to be a slump sale within the meaning ascribed under section 2(42C) of the Act so as to attract the liability of the capital gain under section 50B of the Act – the order of the CIT(A) upheld – Decided against Revenue.
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2014 (1) TMI 1599
Treatment of income – Income from business and profession or STCG – Held that:- The assessee has shown all the purchases under the investment portfolio - Nowhere it is provided that if the transactions are frequent and voluminous then the claim of the assessee is not allowable as short term capital gain or long term capital gain as the case may be - the gain on account of sale of shares has to be treated as short term capital gain – thus, the AO is directed to treat the gain on account of sale of shares as short term capital gain. Disallowance u/s 14A of the Act r.w Rule 8D(3) of the Rules – Held that:- The decision in Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - the Rule 8D is applicable from assessment year 2008-09 - The year under consideration is assessment year 2006-07 and Rule 8D is not applicable for the year under consideration – the mater remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee.
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2014 (1) TMI 1598
Ddetermination of date commencement of business - Application for admission of additional evidences under Rule 29 of the Appellate Tribunal Rules, 1963 – Held that:- The assessee-appellant is working on a project, the KYC project, and which would only be in pursuance to some agreement or understanding, with one or more entities, its customers - What is the critical stage or point of time when the project is or can be said to be complete, so that it is ready to be delivered or in an operable state, would need to be determined, and which can only be on the basis of hard facts and evidences - The matter is clearly factual - there has to be a matching of the expenditure with the revenue, so that the relevant costs can be set off there-against - if a particular cost has no direct bearing on the revenue, but stands incurred all the same, the same would need to be written off in the year it is incurred - The matter needs to be properly examined, which it has not been at any stage - the blame falls clearly on the assessee inasmuch as the onus to prove its case or lead evidence in its respect is only on it - the matter requires proper examination after admission of the additional evidences as being sought to be admitted, as the matter has necessarily to be decided in accordance with the law. The assessee, on whom the onus to establish its claims lie, would also be at liberty to raise any additional claim before the A.O. In view of the said decision, we do not consider it necessary to admit the assessee's additional ground, which becomes infructuous. - The matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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2014 (1) TMI 1597
Interest on non-business advances Held that:- there being no nexus between the borrowed funds and the alleged advances, there is no justification in disallowing the interest presuming that the advances were instead out of borrowed funds - the receivables are more than payables, therefore, even no such disallowance can be contemplated from any angle. Disallowance u/s 40A(2)(b) - Related parties transactions comparison of rentals between bare premises let out by the assessee with full facilities loaded business premises hired by it - Held that:- Sec. 40(A)(2b) mandates a comparison based on same set of facilities and not of incomparable - The non-maintenance of register cannot be a fatality in as much as revenue has not denied the existence of assets, their disclosure in books, schedule of fixed assets and balance sheet, depreciation expenditure has been duly allowed thereon. Purchase of UPS and repairs to building Capital or revenue in nature - Held that:- Decision of CIT(A) wherein he held that UPS is a part of computer peripheral, depreciation @ 60% should be allowed confirmed. Antivirus software expenses Held that:- The expenditure is to be allowable revenue in nature - There is no concept of deferred revenue expenditure under the Act - Decision in CIT v. Asahi India Safety Glass Ltd. [2011 (11) TMI 2 - DELHI HIGH COURT] followed. Addition on account of Fresh cash Credits u/s 68 Held that:- Compliance with RBI regulations and KYC norms was reasonable discharge of the assessees onus u/s 68 - There is no basis to hold that assessee was instigating depositor to be non-cooperative - Compliance of summons cannot be enforced by assessee - sec. 68 cannot be applied in estimated, ad hoc or generalized manner Decision in Commissioner of Income Tax Versus SAHARA INDIA FINANCIAL CORPORATION LTD. [2012 (9) TMI 845 - DELHI HIGH COURT] followed. Change in rate of interest, whether amount to change in method of accounting - Held that:- Assessee has discretion to change the rate of interest including with retrospective effect on outstanding balances depending on circumstances. Thus change in rate of accrual of interest cannot tantamount to change in method of accounting - Claim of assessee qua provision of interest is fully justified - CIT(A) should not have retained part of provision by applying cash system of accounting for interest provision and indirectly converting it into hybrid system is not permissible u/s 145. Outstanding creditors u/s 41(1) Held that:- Decision in the case of Commissioner of Income Tax v. Shri Vardhman Overseas Limited [2011 (12) TMI 77 - DELHI HIGH COURT] followed - The assessee had not unilaterally written back the accounts of the sundry creditors in its Profit Loss Account - The liability was shown in the balance sheet - The amount was not assessable under section 41(1). Disallowance of expenditure incurred on employee for their visits to zonal/regional offices Held that:- The expenditure in question was incurred wholly and exclusively for the business of the appellant on its employees and expenses are actually incurred by the assessee - Claim is further supported by code numbers of employees and Form -16 issued by the appellant. Disallowance of expenditure in relation to disproportionate allocation of advertisement expenses Held that:- AO was not correct in comparing BCCI fee with neon sign advertisement - Both modes are entirely different and extent of one mode of expenditure cannot be applied to other on surmises and conjectures - CIT(A) has given detailed and justifiable reasons to allow them. Pre-acquisition interest incurred at the time of purchases Held that:- The amount paid for acquiring securities consists of two distinct elements, cost price of the security and future interest due thereon - Due to advance payment of interest some discount etc. is transacted depending on the market conditions qua the interest element - After acquisition assessee on matching principle debits the cost of security to investment a/c and interest component to interest a/c, the due interest when received is credit to interest a/c - AO failed to appreciate the effect of components of amount paid for transfer of securities. Prior Period Expenses Held that:- merely because periodical supply or up gradation of software was governed by an earlier agreement, will not detract from the fact that it is supplied in this year - The liabilities crystallized in this year and disallowances being revenue neutral as the assessee and department are in perpetual litigation. Write-off of principal amount of NCD's Held that:- As a RNBFC the assessee has to carry on the business of investment in RBI approved investments - It is in this year only the advance is finally treated as bad and written off, therefore, it is eligible to be allowed in this year - CIT(A) was right in holding it to be business investment Decision in TRF Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] followed - Any loss of business investment or stock is allowable as write off or loss in the year of write-off. Provision for diminution in investment Held that:- Investments are in the nature of stock-in-trade for the business of the appellant - Assessee follows this method consistently - Diminution in the value of business investments is an allowable business expenditure u/s 28 or u/s 37(1) - CIT(A) was right in holding that in any case, revenues interest is protected by the write back of increase in value up to cost-level, and booking of income at sale minus cost on disposal Decision in CIT v. State Bank of Patiala and American Express International Banking Corporation [2002 (9) TMI 96 - BOMBAY High Court] followed. Additions of interest earned on non-performing assets not recognized as income Held that:- The advances/loans in question had become NPA and sticky there is no dispute on these facts - Advances becoming NPAs on the concept of real income, prudential RBI norms and relevant AS issued by ICAI No Addition. Disallowance under section 14A Held that:- Relying upon Chandigarh Bench of the Tribunal in the case of ACIT v. Punjab State Co-op. Marketing Federation Ltd. [2011 (9) TMI 187 - ITAT Chandigarh] in any case the disallowance u/s 14A cannot exceed tax free income of the assessee. If mechanical method of rule 8D is applied - As the interpretation of provisions of sec. 14A r/w rule 8D is leading to unanticipated absurdities which cannot be the intention of legislature - it will be reasonable to estimate and disallow, 50% of exempt income. Interest on FDRs Held that:- Mere existence of alternate remedy cannot be a ground to deny the due relief when the eligibility to relief is also expressed by CIT(A) The court is of the view that this type of relief based on consideration of avoiding unnecessary exercise in case of revenue neutral issues has been granted to assessee Decision in CIT v. Excel Industries [2013 (10) TMI 324 - SUPREME COURT] followed.
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2014 (1) TMI 1596
Validity of Tribunal's order - Held that:- In view of the law laid down in Liberty India Vs. CIT [2009 (8) TMI 63 - SUPREME COURT] - The Tribunal has passed the order in total defiance of law - DEPB/Duty drawback are incentives which flow from the Schemes framed by Central Government or from Section 75 of the Customs Act, 1962, hence, incentives profits are not profits derived from the eligible business under Section 80IB - They belong to the category of ancillary profits of such undertakings - Decided in favour of Revenue.
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2014 (1) TMI 1595
Net disclosed income of diesel and oil expenses - Held that:- The respondent assessee was to receive the gross freight amount from BPCL with whom he had a contract - The net amount was paid by the BPCL to the assessee and the payment was made directly to the Petrol Pump on the basis of Fleet Card -BPCL had issued monthly statements showing recovery towards diesel charges - The contract with BPCL also reflected that the same was as per the contract - The lower authorities have correctly decided the issue based on findings - Decided against Revenue. Suppression of income - Held that:- The TDS certificate as well as certificate issued by Yatayat Sangam Petrol Pump clearly reflects that the amount has been received by them directly from BPCL and not from the assessee - The CIT(A) was satisfied with the explanation - Decided against Revenue.
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2014 (1) TMI 1594
Consultancy charges - Genuineness - Held that:- Any assessee would not claim such bogus expenditure, when it is eligible for 100% deduction under section 80IA of the Act - On the basis of other material on record, the services rendered by N.M. Consultants were not found doubtful, doubt was only with regard to the quantum of service - The payment was through the channel of bank and tax also was deducted at source and N.M. Consultants is not found to be related to the respondent assessee - The Tribunal was justified in allowing claim of expenditure - Decided against Revenue.
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2014 (1) TMI 1593
Whether the loss in the cement division be set off against the profits from the finance division - Held that:- The assessee was persuing both financiang and manufacturing activity simultaneously - The orders of CIT(A) also mentions a circular dated 1.7.2005, which categorically states that it is the RBI alone which is authorised to permit or refuse non-banking finance activity - The income tax authorities are not empowered to enforce the provisions powers of the RBI Act - Decided against Revenue.
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2014 (1) TMI 1592
Tax deduction at source on salaries - Held that:- Relying upon the decision in Gwalior Rayon Silk Co. Ltd. Vs. Commissioner of Income Tax [1982 (9) TMI 53 - MADHYA PRADESH High Court] - Where the regular assessment of an employee had been completed the Commissioner of Income Tax, TDS has no jurisdiction under Section 201 of the Act to demand further tax from the employer in respect of tax shortly deducted at source relating to such employees - The employer while making deduction of tax at source is only required to have a broad picture of the estimated income on which tax is to be deducted. He is not supposed to calculate the income minutely to precession - Decided in favour of assessee.
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2014 (1) TMI 1591
Whether the sale of property was adventure in the nature of trade - Held that:- The assessee has sold the property by way of single transaction - The impugned property has been shown as fixed asset in the books of the company and agricultural income from the said property was also returned by the company - Relying upon the decision in Commissioner of Income-Tax Versus Mohakampur Ice And Cold Storage [2005 (5) TMI 23 - ALLAHABAD High Court] - In order to treat a transaction within the purview of adventure in the nature of trade, it is to be seen whether the property had been purchased or acquired by the assessee with the intention to sell the property, to earn profit by indulging in several transactions of sale or to earn profit on its investment - The sale of agricultural plot was not by way of business purpose - Decided against Revenue.
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2014 (1) TMI 1590
Interest-tax Act, 1974 - Whether the transaction entered into by the assessee was a loan transaction - Held that:- - Unless there is involvement of loan transaction, the question of payment of interest does not arise - The owner under the hire purchase agreement enters into a transaction of hiring out goods on the terms and conditions - In some hire purchase agreement there is no agreement to buy goods - The hirer being under no legal obligation to buy, has an option either to return the goods or to become its owner by payment in full of the stipulated hire and the price for exercising the option - This class of hire purchase agreement must be distinguished from transaction in which the customer is the owner of the goods and with a view to finance his purchase he enters into an arrangement which is in the form of a hire purchase agreement - Decided against Revenue.
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2014 (1) TMI 1589
Whether sale consideration of a going concern be taxed as capital gains - Slump sale - Held that:- Relying upon the decision in PNB Finance Ltd. V/s. Commissioner of Income-Tax [2008 (11) TMI 7 - SUPREME COURT] - Section 45 charges the profits or gains arising from the transfer of a capital asset to income-tax - The charging section and the computation provisions together constitute an integrated Code and when in a case the computation provisions cannot apply, such a case would not fall within Section 45 - The said sale has taken place prior to the amendment introducing section 50B the concept of slump sale - Merely because the assessee has given split up figures and received the consideration from the purchaser, it would not take the goods out of slump sale - Decided against Revenue.
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2014 (1) TMI 1588
Disallowance of loss on unrealized sale proceeds - Held that:- The assessee has not claimed the business loss during the assessment year under consideration, the claim cannot be accepted in the year under appeal - Decided against Assessee.
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2014 (1) TMI 1587
Whether deduction u/s 80HHC be allowed without reducing therefrom deduction u/s 80IB - Held that:- Section 80HHC of the Act is not a self contained provision - The deduction cannot be allowed ignoring the restrictive clause contained in Section 80-IA(9)- The restrictive clause in Section 80IA makes it abundantly clear that wherever deduction under any other section of Chapter VI-A(C) is claimed, the computation will be subject to the restrictions laid down in Section 80-IA (9) - When provisions of Section 80IB(13) are read in conjunction with Section 80IA(9) of the Act, it becomes clear that deduction under Section 80HHC of the Act is to be computed on the eligible business profits only after reducing therefrom the portion of profit on which deduction has already been availed by the assessee under section 80IB - Decided against assessee.
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2014 (1) TMI 1586
Estimation of expenditure for disallowance u/s 14A - Held that:- The assessee has received the dividend income direct credit in bank account through NEFT, RTGS and also DEMAT Accounts - No human agency is involved in collecting these dividends and interest for which the assessee has to incur any expenditure - These aspects has not been taken note of and the notional expenditure is calculated pre modernization - When the assessee has not incurred any expenditure for realizing this income, the question of holding that 2% of the gross total income is an expenditure is unsustainable - Decided in favour of assessee. Depreciation on the loss incurred units of CANSTAR or revenue expenditure - Held that:- The object of purchasing the units is to gain public confidence and to mitigate the hardship that is caused to the public - The assessee has invested Rs.999.16 crores for purchase of units and only Rs.500.11 crores was realized on its redemption after maturity, thus, incurring a loss of Rs.499.05 crores - It is in the nature of an expenditure and assessee is entitled to the benefit of Section 37(1) of the Act - The claim of the assessee for depreciation on the basis of diminution of value of the capital asset or even loss sustained in the business would not be appropriate - The assessee would be entitled to the claim as expenditure incurred in the business because the entire amount was invested as commercial expediency with the intention of preserving their goodwill in the business - Decided in favour of assessee.
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2014 (1) TMI 1585
Exemption u/s 54EC and 54F - Held that:- Relying upon the decision in Smt. Saroj Aggarwal v. Commissioner of Income-tax [1985 (9) TMI 6 - SUPREME Court] - It is not necessary that after payment of cost of acquisition, a title deed is to be executed in favour of the assessee - Even in the absence of a title deed, the assessee holds that property - It is the point of time at which he holds the property, which is to be taken into consideration in determining the period between the date of acquisition and date of transfer of such capital gain in order to decide whether it is a short-term capital gain or a long-term capital gain. Merely because the original site which was allotted was cancelled, yet another site was allotted and the said site was also cancelled and thereafter the present site was allotted, in law - would make no difference - The consideration paid on 21.9.1988 is treated as the consideration for the sale dated 27.2.2008 - The assessee has invested the amount of capital gains as per the law - The assessee has rightly claimed the benefit of exemption under Section 54EC and 54F of the Act - Decided against Revenue.
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2014 (1) TMI 1584
Rectification of mistake - Held that:- The Tribunal has given its finding that the machinery in question was never used by the assessee company - It was used only by the sister concern of the assessee company and the assessee was not entitled to claim depreciation on the said machinery - It can be inferred that the Tribunal has not only considered the submissions of the assessee but has given a categorical finding on all of the issues which were raised before the Tribunal by the ld. counsel for the assessee - Neither any new fact nor any law has been brought by the ld. counsel for the assessee which may be said to be escaped the attention of the Tribunal - The other contentions raised by the assessee through this application have already been duly considered and adjudicated in the impugned order - There is no mistake apparent on the record in the said order which may require any rectification - Decided against assessee.
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2014 (1) TMI 1583
Whether the shares transferred were long term capital asset or not - Held that:- The assessee has filed share transfer form and share certificate to proof that the shares were purchased on 25.10.2005 - If the Assessing Officer had any doubts on these documents, he could have carried out further investigation and gathered evidence to disprove the claim of the assessee - He instead accepted the assessee's claim - The bank entries for receipt of consideration shows that the AO was wrong in doubting the transaction - The Assessing Officer could have summoned the purchasers or taken confirmations from them, in case he disbelieved the transfers - The order of CIT(A) upheld. Whether the assessee was owner of a residential house at Gadaipur - Held that:- The property was purchased by the appellant in financial year 1995-96 for Rs.60,000/- and the same was shown as agricultural land in the balance sheet as on 31.3.96 - There is no improvement on this property since it is being shown at the same value till financial year ending on 31.3.2007 - The sale deed shows that the property was a piece of agricultural land - The AO didnot considered the facts correctly - The assessee is not a fractional owner of the property at Gadaipur, and hence eligible for deduction u/s 54 of the Act - Decided against Revenue.
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2014 (1) TMI 1582
Penalty u/s 271B - Tax Audit - The assessee failed to furnish bonafide reasons for not getting the books of accounts audited either before the AO or the FAA - Held that:- The assessee's total turnover of the business in transacting shares was higher than the prescribed limit u/s 44AB - It does not differentiate between commodities sold under the head speculative business or normal business - The provision of section 271B of the Act is an enabling provision empowering the AO to direct payment of penalty for non-compliance with the provisions of section 44AB. Section 271B has to be read with provisions of section 44AB of the Act - Decided against assessee.
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2014 (1) TMI 1581
Disallowance of expenses of Net Present Value as compensation paid - compensation paid by the assessee to Forest Department for utilization of forest land for non-forest purposes. - Held that:- Decision in ACIT v. Rungta Sons (P) Ltd. [2014 (1) TMI 1515 - ITAT KOLKATA] followed - The said payment is not a voluntary one and it is a payment on the basis of the direction given by the Government of India - When a payment is made as per specific direction of Government, it cannot but be in the business interest of the assessee-company to abide by such directions of the Government of India - This payment is a statutory requirement and the expenditure has been considered wholly and exclusively for the purpose of business and has got a direct connection with the business activity of the Company - The expenditure resulting in a capital asset in the hands of a third party, is to be taken as revenue expenditure because no asset arises to the trader by reason of such expenditure - Where law imposes on the assessee, an obligation to incur expenses for being permitted to pursue its trading activity, the expenditure would be an outgoing from the profits of the trade. The said expenditure paid by the assessee as NPV to enable the assessee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) of the Act - Decided against Revenue.
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2014 (1) TMI 1580
Estimation of profits u/s 44BB - Mobilization fee for work carried outside India - Held that:- Relying upon the decision in Sedco Forex Inc. v. CIT [2007 (9) TMI 196 - UTTARAKHAND HIGH COURT] - Mobilization charges paid to assessee by ONGC had no nexus with the actual amount incurred by assessee for transportation of drilling units of rigs to India – Mobilization charges weren’t reimbursement of expenditure – In view of fictional taxing provision u/s 44BB, AO is justified in adding the amount received by assessee towards mobilization charges for the purpose of imposing income tax - Decided against assessee. Reimbursement of communication charges and repair of equipments - Held that:- Relying upon the decision in CIT v. Halliburton Offshore Service Inc. [2007 (9) TMI 230 - UTTARAKHAND HIGH COURT] - As per section 44BB - All the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive - This amount is the basis of determination of deemed profit and gains of the assessee at the rate of 10% - Section 44BB provides by a legal fiction to be the profits and gains of the non-resident assessee engaged in the business of exploration at the rate of 10% of the aggregate amount specified in sub section (2) - The Assessing Officer added the said amount which was received by the non resident company rendering services as per provisions of sec. 44BB to the ONGC - Decided against assessee. Reimbursement of service tax - Held that:- Relying upon the decision in M/s Sedco Forex International Drilling Inc C/o Nangia & Company Versus Assistant Director of Income Tax, International Taxation [2014 (1) TMI 1322 - ITAT DELHI] - service tax being a statutory liability cannot form part of gross receipts for the purpose of deemed profit u/s 44BB - Decided in favour of assessee.
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2014 (1) TMI 1579
Disallowance u/s 14A - Held that:- The assessee had sufficient interest free funds which it had invested in mutual funds and moreover the assessee instead of incurring expenditure in the form of interest has earned income - Ld CIT(A) has rightly deleted the interest component from the disallowance of Rule 8D - Decided against Revenue. Whether adjustment of disallowance u/s 14A be deleted while computing book profits u/s 14A - Held that:-The provisions of clause (g) to section 115JB refers to the amount of expenditure incurred for earning exempt income which has to be added back to the profit as per P&L A/c for the purpose of calculation of book profits u/s 115JB - The assessee has not incurred any expenditure in earning exempt income - Disallowance u/s 14A has been deleted by the CIT(A) - Decided against Revenue. Whether income derived from operations & maintenance of SEZ be deleted from book profits when the same has not been claimed by the assessee - Held that:- As per clause (6) of section 115JB - The provision of this section shall not apply to the income accrued or arising on or after the Ist day of April, 2005 from any business carried on or services rendered by an entrepreneur or a developer in a unit or SEZ - The assessee was eligible for exclusion of income from SEZ business for the purpose of section 115JB - The claim of assessee with respect to SEZ income has not been examined by the Assessing Officer or by ld CIT(A) - The issue has been restored for fresh adjudication.
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Customs
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2014 (1) TMI 1578
Stay application - Waiver of pre deposit - Stay on imposition of redemption fine - Partial assessment duty paid - Held that:- The stay on redemption fine would normally follow from a stay of the order being challenged before the Tribunal. The jurisdiction of the Tribunal to stay the order being appealed against before it is not under Section 129E of the Act but is in the exercise of its inherent power as an Appellate Authority. This power is to be exercised in exceptional circumstances. In this case, nothing has been brought to our notice to show circumstances which would warrant the Tribunal exercising its inherent power to stay the order dated 30 November 2011 of the Commissioner of Customs or the redemption fine imposed therein - appeal itself would be listed for final hearing in the near future, we are of the view that the interests of justice would require that the respondent-revenue be restrained from adopting any coercive proceedings for recovery of redemption fine of Rs.78 lakhs till the final disposal of the appeal before the Tribunal - Decided in favour of assessee.
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2014 (1) TMI 1577
Request for early hearing - Lower appellate authority has directed the appellant M/s Ketan Pharma to approach the learned adjudicating authority, who shall pass a speaking order as per Section 17(5) of the Customs Act, 1962 - However, in spite of the said direction, the learned adjudicating authority has not passed the speaking order - Held that:- there is no fault in lower appellate authority directing the adjudicating authority to pass a speaking order with regard to denial of benefit of exemption claimed by the appellant in Bill of Entry. If the adjudicating authority has not followed this direction, the remedy lies in taking up the matter with the jurisdictional Executive Commissioner. This Tribunal being an appellate authority does not have any authority to control the functioning of the Customs Officer in a particular Commissionerate - Decided against assessee.
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2014 (1) TMI 1576
Maintanability of appeal - Powers conferred under Regulation 21 under CHALR 2004 - Held that:- appeal before this Tribunal lies against the decision passed by the Commissioner (General) under Regulation 20 or Regulation 22(7) of CHALR, 2004. Therefore, we hold that this appeal does not lie before us. Accordingly, we dismiss this appeal as not maintainable, with liberty to appellant to take up alternative remedy before appropriate forum - Decided against assessee.
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2014 (1) TMI 1575
Confiscation of goods - Import of Vanaspati ghee - Imported Goods not as Prevention of Food Adulteration Act (PFA) Rules - Penalty u/s 114A - Held that:- Commissioner has allowed re-export without any redemption fine. Inasmuch as the Revenue has not appealed against the said part of the impugned order, the re-export without any fine is confirmed. It already stands observed by the Tribunal that there was no mala fide on the part of the importer and it was only a question of samples having failed as regards PFA standards - Following decision of assessee's own previous case [2011 (8) TMI 718 - CESTAT, DELHI] - Decided in favour of assessee.
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2014 (1) TMI 1574
Drug Import - Confiscation of goods - Whether the imported goods, which bears a mark that the goods are “feed grade and not for medicinal/human use” being a drug can be imported without obtaining NOC from the Drugs Controller or not - Held that:- appellants are entitled for the benefit of exemption under Rule 43 of the Drugs and Cosmetics Rules, 1945 subject to the undertaking that the end use of the imported goods shall not for medicinal/human use and therefore, the goods are not liable for confiscation, accordingly, the impugned order is set aside. Appeal is allowed with consequential relief. The adjudicating authority is directed to release the impugned goods within seven days on receipt of this order on production of undertaking with regard to the end use - Decided in favour of assessee.
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Corporate Laws
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2014 (1) TMI 1573
Tenancy of property - Petitioner Company did not vacate tenanted premises even after amalgamation - Petitioner paid rents to the landlords whereas landlords would contend, although rent was paid by Petitoner, they did not recognize them as tenant because landlords continued to issue rent receipts in the name of Standard Pharmaceuticals Limited, the original tenant - Held that:- Standard Pharmaceuticals Limited stood dissolved long ago that was not in the knowledge of the landlord hence, they continued to issue rent receipts in the name of the original tenant. Ambalal, although paid rent, did not inform about the change. They also did not protest and accepted rent receipts issued in favour of Standard Pharmaceuticals Limited a non-existent Company. In an Order of Amalgamation, the shareholders at large as well as the transferee company in their wisdom would decide to merge one with the other, as a consequence of merger the assets and liabilities of the transferor would automatically vest unto the transferee and the transferor would become a non-existent entity and in course of time would get dissolved. Same is the situation here; once the company stood dissolved the tenancy would automatically perish. The order of amalgamation, although an order in rem, is rendered at the instance of the shareholders of both the companies including the transferor tenant hence, the Order of Amalgamation would not protect the tenancy. Shareholders of the transferor Company decided to merge with Ambalal. It was their wisdom that would have no bearing on the landlord who was not taken in confidence. Be it assignment, be it transfer, be it sub-letting, the tenancy is a non-transferable object that could only extend to others either by an explicit contract or by a clear statute. In the present case, neither there is any statute law to support transfer of tenancy on amalgamation nor any agreement executed between the landlord and the tenant to deal with such eventuality. Voluntary act of the tenant making its own position vulnerable would have no bearing on the landlord - Decided against Petitioner.
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Service Tax
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2014 (1) TMI 1611
Sale of Reserve Bank of India (RBI) Bonds issued by the RBI - Receipt of brokerage - Held that:- As per notification dated 13/03/2003 issued by the Government, the tax savings bonds have been issued as part of the borrowing programme of the Government from the public. As per the clarification issued by the RBI vide letter dated 28/10/2004, copy of which is available on record, the said bonds issued under Section 2 (2) of Public Debt Act, 1944, constitute a Government security and the bonds were issued by the Government for raising a public loan. Therefore, there is no doubt that the tax savings bonds issued by the RBI and sold by the appellant bank is a Government Security. For this transaction in Government securities, the appellant bank has received a brokerage for sale of the security. From the Circular dated 10/08/2010 issued by the CBE&C, it is clear that there is no service tax liability on underwriting fee or underwriting commission received by the primary dealers for dealing in Government securities; the same logic would apply in respect of brokerage also - sale of RBI bonds would amount to statutory/sovereign function and cannot be subjected to any tax liability - Following decision of Canara Bank Vs. CST, Bangalore [2012 (6) TMI 274 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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2014 (1) TMI 1610
Penalty u/s 76 - Delay in payment of service tax - Suppression of facts - Held that:- it is difficult to know on what basis the penalty amount of Rs.4 ,58,772 /- has been arrived at. Copy of the worksheet said to have been attached to the show-cause notice has not been submitted by the appellant at all and unfortunately during the course of hearing also the worksheet was not available - during the course of audit of the accounts of the assessee and reconciliation of ST-3 returns with P & L Accounts, it was noticed that appellant has received an amount of Rs.10 ,66,938 /- from M/s. Bharati Airtel during the year 2006-07 on which service tax was not paid - If service tax was collected from M/s. Bharati Airtel and it was not shown in the ST-3 returns and it was found out on going through the P & L accounts of the assessee and comparing the same with ST returns, in my opinion, it would amount to suppression of facts and violation of provisions of law. However, there were no clear observations on these aspects - Therefore, it is extremely difficult to come to the right conclusion since the facts are not clear, the legal position is not clear. Therefore the impugned order is set aside and the matter is remanded to the original authority.
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2014 (1) TMI 1609
Waiver of pre-deposit of penalties - Business auxiliary service and cargo handling service - Held that:- Provisions of Section 73(3) of the Finance Act are interpreted by the High Court in the case of Adecco Flexione Workforce Solutions Ltd. (2011 (9) TMI 114 - KARNATAKA HIGH COURT). As per the provisions of Section 73(3) of the Finance Act, where the tax has been paid along with interest, no notice shall be served. In the present case as the service tax along with interest has been paid before issuance of the show cause notice. The provisions of Section 73(3) of the Finance Act prohibit issuance of show cause notice for recovery of penalties. I find that in the present case there is no allegation of suppression, therefore the impugned order whereby the penalties under Sections 76, 77 and 78 of the Finance Act are imposed, are set aside - Stay granted.
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2014 (1) TMI 1608
Demand of service tax - Business Auxiliary Service - Information Technology Service - Classification of service - Held that:- activity of the Respondents is receiving information from M/s. TPSL, United Kingdom which was recorded and processed and the processed information in that form of data was transmitted back to United Kingdom digitally via the international data leased circuits, commissioned through international service providers - Computer Data Processing comes under Information Technology Service and is excluded from the scope of Business Auxiliary Service - Following decision of CS E-serve Ltd. vs. CST, Mumbai II [2013 (9) TMI 70 - CESTAT MUMBAI] - Decided against Revenue.
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2014 (1) TMI 1607
Waiver of pre-deposit of the service tax - Reversal of CENVAT Credit availed - applicant are now providing renting of immovable property service, management and maintenance or repair service, availed the credit of tax paid in respect of services used for construction of Mall - Held that:- in respect of the service, ‘commercial or industrial construction service' the service tax has been paid by availing the benefit of notification which provides exemption up to 66% on the ground that credit in respect of the duty paid on inputs and capital goods is not availed. In view of this fact, we find that applicant is not entitled to take credit in respect of inputs and capital goods. The applicant had already reversed the credit on the inputs used in the construction of the mall. The applicant had also pleaded financial hardship on the ground that the applicant are under loses as the commercial shops which are constructed are not fully rented out - Following decision of Galaxy Mercantiles Ltd. Vs. Commissioner of Central Excise, Noida [2013 (10) TMI 820 - CESTAT NEW DELHI - LB] - Conditional stay granted.
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2014 (1) TMI 1606
Valuation - construction service - inclusion of value of free supply - Penalty u/s 77 & 78 - Held that:- The value of goods and materials supplied free of cost of by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994 - Value of free supplies by service recipient do not comprise the gross amount charged under Notification No.15/2004-S.T., including the Explanation thereto as introduced by Notification No. 4/2005-S.T - imposition of penalties under Section 77 & 78 of the Finance Act, are not sustainable - Decided in favour of assessee.
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2014 (1) TMI 1605
Waiver of pre-deposit of service tax, interest and penalty - Violation of Section 68 read with Rule 6 of the Service Tax Rules - Held that:- we are not able to infer with any degree or certitude that amounts not received were also included the received value of services provided. In the summary of the adjudication order, the authority records that if no revenue was collected, the assessee did not disclose the same in its chart and hence there is no question of outstanding amounts of service tax not received from defaulter subscribers. The adjudicating authority also records that the demand is arrived at on the basis of assessee's reported figures of revenue collected including service tax deposited - even if there be some error in the adjudication order with regard to determination of the quantum of the liability, considerable responsibility for such possible error is attributable to the assessee - Conditional stay granted.
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2014 (1) TMI 1604
Imposition of penalties under Sections 76, 77 and 78 - Delay in payment of service tax - Held that:- applicant has not disputed the liability to tax. Part of the tax has been paid before issuance of the Show Cause Notice and part of the tax and interest has been paid after issuance of the Show Cause Notice - Applicant cannot become illiterate to pay service tax after collecting it from the customers. In any case this cannot be criterion for payment of tax. Applicant has collected the amount from his customers and raised the bills. After collecting the amount there is no reason why the collected amount is not deposited with the Government. Prima facie the applicant has not made out a case for total waiver of pre-deposit of penalties - Conditional stay granted.
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2014 (1) TMI 1603
Demand of service tax - Marketing research in relation to steel products - Imposition of interest and penalty - Held that:- Show Cause Notice the appellant specifically gave details of his activities which is not in respect of market research agency service. The payment made by M/s Kalyani Carpenter also in respect of professional fee in respect of metal development. In view of this, appellant had not provided any taxable service in respect of market research agency - Decided in favour of assessee.
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2014 (1) TMI 1602
Penalties under Section 76, 77 and 78 - Demand of service tax - Business Auxiliary Services - Computerised data processing services - Held that:- In the show cause notice it was alleged that the customers of the bank submitted physical documents at the bank's branches and the appellant performed computerised processes on the input submitted to the bank using the bank's systems and saved the output on the bank's system, which amounted to services incidental or auxiliary to the customer care services rendered by the bank, whereas the reasoning recorded in the impugned order is that the appellant collected data from the clients' customers, and the banks during the course of providing banking services also provided customer care services, and the services rendered by the appellant to the bank would be incidental or auxiliary to the customers care services provided by the bank. Thus, there is a complete variation between the ground alleged in the show cause notice and the grounds on which the demands have been confirmed. On that ground alone the impugned order is liable is to be set aside. Since bulk of the service has been rendered to clients located abroad and the payments has been received in convertible foreign exchange, the appellant is not liable to pay service tax on the export of services undertaken by them. In any case the exemption under Notification NO. 21/2003 dated 20/11/2003 would have been available to them since the consideration for the services rendered was received in foreign currency. For the period prior to 20/11/2003, Board's circular dated 24/05/2003 clarifies that no service tax would be leviable on export of services for which consideration is received in convertible foreign exchange - Decided in favour of assessee.
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Central Excise
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2014 (1) TMI 1572
Rejection of rebate claim of Automobile Cess - Claim rejected on the basis of C.B.E. & C. clarification issued vide F. No. 262/01/2007-CX-8, dated 20-3-2007 - Notification No. 19/2004-C.E. (N.T.) - violation of provision of condition No. 2(b) of Notification No. 19/2004-C.E. (N.T.) - Held that:- Government observes that rebate of duty paid on exported goods is to be allowed as per statutory provision contained in the Rules 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. The duties to be rebated are specified in Explanation-I of Notification No. 19/2004-C.E. (N.T.) - Similar provision has been made under Section 94 in respect of Education Cess collected as part of customs Duty and under Section 95 Education Cess levied and collected as part of Service Tax. In other words, levy of surcharge under Sections 93, 94 and 95 on respective taxes was the levy for the purpose of Union and was to be utilised by the Union to fulfil the commitment of the Central Government to provide and finance universalised quality of basic education, as has been given out under Section 91 of the Act. The very fact that the surcharge is collected as part of levy under three different enactments goes to show that scheme of levy of Education Cess was by way of collecting special funds for the purpose of Government project towards providing and financing universalised quality of basic education by enhancing the burden of Central Excise Duty, Customs Duty, and Service Tax by way of charging surcharge to be collected for the purpose of Union. But, it was made clear that in respect of all the three taxes, the surcharge collected along with the tax will bear the same character of respective taxes to which surcharge was appended and was to be governed by the respective enactments under which Education Cess in the form of surcharge is levied & collected. The Section 93 specifically says that Education Cess levied under Section 91 shall be a duty of excise. Section 91 also stipulates that these shall be levied and collected as surcharge, a cess to be called Education Cess. Hon’ble High Court observed that it was made clear that in respect of these taxes the surcharge collected along with tax will bear the same character of respective taxes to which surcharge was appended and was to be governed by respective enactments under which Education Cess in the form of surcharge is levied and collected. Hon’ble High Court has finally allowed the writ petition and allowed the rebate of surcharge on excise duty appropriated by Union of India as Education Cess for funding universalised quality of basic Education Programme. However, Government notes that the Automobile Cess is not levied and collected as surcharge and also there are no parallel provisions with reference to Automobile Cess as contained in Sections 91, 92 and 93 of Finance Act, 2004. Moreover the Automobile Cess is levied and collected in terms of Notification No. S.O. 247(E), dated 22-3-1990 and not under Central Excise Act, 1944. Rebate of Automobile Cess levied and collected under Automobile Cess Rules, 1984 and S.O. No. 247(E), dated 22-3-1990 is not admissible under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. Provisions of Para 1(iii) of the Part I of Chapter 8 of Supplementary Instructions, 2005 and condition 2(b) of Notification No. 19/2004-C.E. (N.T.) stipulate that excisable goods shall be exported within six months from the date on which they were cleared for export from the factory of manufacture or warehouse. In this case initially goods were not cleared for export but it was a stock transfer to their own unit at Hosur on payment of duty. Since the goods are exported from Hosur unit on ARE-1/Invoice, the said goods are cleared for export on the date of preparation of ARE-1 at Hosur unit. Since the goods are exported within six months of their clearance from Hosur unit (date of ARE-1/invoices), the allegation of violation of condition 2(b) of the Notification No. 19/2004-C.E. (N.T.) does not survive and hence, rebate claims cannot be disallowed on this count - Decided partly in favour of assessee.
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2014 (1) TMI 1571
Waiver of pre-deposit of duty and equivalent penalty - petitioner is manufacturing the chassis of the motor vehicles and getting the body built on the chassis from other parties - Payment of the excise duties on the manufactured body of the said vehicle - Duty to be paid by builders - Held that:- petitioner is the manufacturer of the motor vehicle chassis and they sale the chassis of the vehicle on the payment of appropriate excise duty, for which M/s. Tata Motors entered into an agreement with various body builders of the vehicle to pay the duty of the vehicle on the manufactured chassis - merely establishing of a prima facie case, interim order of protection should not be passed. But, if on a cursory glance, it appears that the demand raised has no leg to stand on and it would be undesirable to require the assessee to pay full or substantive part of the demand. Petition for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring the assessee to deposit full or part of the demand and then held that there can be no rule of universal application in such matters and the order has to be passed keeping in view the factual scenario involved - hardship to be “undue” it must be shown that the particular burden to observe or perform the requirement is out of proportion to the nature of the requirement itself and the benefit, which the applicant would derive from compliance with it. The word “undue” adds something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. Where the petitioner itself knowing about the interim order dated 25-3-2011 passed in its own case and did not just choose to rely upon the said interim order before the Tribunal and invited a detailed order on merits, wherein, in fact the case has been considered on the facts of the case in hand, of the writ petitioner, which is not the position in the order dated 25-3-2011, then no interference is required. However, it is necessary to maintain the judicial discipline by following even the interim order, which has been passed but earlier order had different fat situation, wherein that aspect of the matter has not been taken into consideration and different view also can be taken here in this case. If the Tribunal was not made aware of the order dated 25-3-2011, at the cost of repetition, we would like to observe that the reasons given in the order dated 21-12-2011 are quite different and distinct reasons, which are not be available in the order dated 25-3-2011 - However, Six weeks time is granted for depositing the requisite amount before the Tribunal - Decided against assessee.
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2014 (1) TMI 1570
Cenvat credit availed in favour of naphtha used for the generation of electricity and supplied to their units - Application of Rule 57C - Held that:- assessee used furnace oil in the generation of steam. A part of the steam was transferred to a unit situated outside their factory. Though there is no dispute about the inputs, the fact remains that the steam generated was not used within the factory of production. It is not the case of the assessee that M/s. Futura Industries Limited is a 100% export oriented unit. Rule 57C allows credit of duty in respect of export oriented undertakings. When there is a specific entry in a rule and the said entry pre-supposes that for the purpose of eligibility of credit of duty of inputs, those inputs must be used for manufacture of final products or for any other purpose within the factor of production, the assessee cannot take shelter under a different entry. Admittedly, the assessee has used furnace oil in the generation of steam and the said steam was transferred altogether to a different unit situated outside the factory premises. Therefore, the case of the assessee would come under Rule 57B(1)(iv) - Rule 57C(1)(ii) has to be decided by the CESTAT on merits - The matter is remanded to the CESTAT for consideration regarding the eligibility to claim credit on the basis of Rule 57C(1)(ii) - Decided in favour of Revenue.
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2014 (1) TMI 1569
Waiver of pre deposit - Commissioner dismissed on the ground of delay - Held that:- Commissioner has not discussed the merit of the case but dismissed the appeal on the ground of delay of two days in filing the appeal before him. From the submission of the Ld. Advocate, prima facie we find that if due date was Saturday, and the appeal was filed on Monday then there was no delay. However, these facts are need to be scrutinized and verified - Matter remanded back - Decided in favour of assessee.
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2014 (1) TMI 1568
Duty demand - show cause notice was issued to the respondents on the ground that the respondents are engaged in the manufacture of office furniture system falling under Chapter Heading 9403 of the Tariff - Commissioner (Appeals) set aside the demand on the ground that the respondents were only assembling the duty paid parts of the furniture as the furniture was manufactured by M/s. Kemp & Co. - Held that:- there is no allegation in the show cause notice that the respondents were not receiving all the parts of the furniture. In fact the manufacturer has paid duty under Chapter Heading 9403 of the Tariff which covers ‘other furniture'. The furniture manufactured was cleared in CKD condition for ease of transportation and the respondents were only assembling the parts of the furniture at site. In view of this we find no infirmity in the impugned order - Decided against Revenue.
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2014 (1) TMI 1567
Denial of CENVAT Credit - Credit on return clearances to Shipping Corporation of Karwar of Electrostatic Liquid Cleaner - Credit taken when goods were not in factory - Held that:- Goods have been returned back to the appellant although after a gap of 3 days and same has been cleared on payment of duty. Therefore, the only lapse on the appellant is that they have not followed the proper procedure. For not following the proper procedure, credit cannot be denied. Accordingly, I hold that the appellant are entitled to credit as said goods have been cleared on payment of duty. Therefore, impugned order for denial of CENVAT credit is set aside to the extent only - Decided in favour of assessee.
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2014 (1) TMI 1566
Goods Transport Agency Service - Availment of CENVAT Credit - Held that:- On Goods Transport Agency Service which was availed by the appellant, service tax has been paid, and appellant has taken the credit of the service tax paid. It is immaterial who has paid the service tax. Ld. Commissioner (Appeals) has failed to appreciate the fact that the service has suffered service tax and any payment towards duty or service is entitled for input service credit/input credit. Therefore, the finding of the lower authorities that in the case of Goods Transport Agency Service, service tax is required to be paid by the service recipient is not tenable - Decided in favour of assessee.
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2014 (1) TMI 1565
Valuation of goods - Duty on promotional pack and trade pack - Demand of differential duty - Penalty u/s 11AC - Imposition of redemption fine - Held that:- to constitute a combination package it should be a package containing dissimilar commodities. In the present case, it is an undisputed fact that the trade packs and the promotional packs are packed separately and they are not packed in a single package. They are also dispatched to the dealers and the retailers separately. Therefore, it is difficult to accept the contention of the appellant that they constitute a combination package. The very conduct of the appellant in not packing them together and discharging excise duty separately on both of them, i.e., under Section 4A of the Central Excise Act in respect of the trade pack and under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 in respect of promotional pack clearly shows that the appellant themselves did not treat them as a combination package. The promotional pack is also a cosmetic product classifiable under Chapter 33 of the Central Excise Tariff and there is no dispute in this regard. Merely because the same is supplied free-of-cost, it does not obliterate the liability to pay excise duty of the promotional pack. It is a well settled position in law that excise duty is on manufacture and not on sale of the goods. Therefore, irrespective of the fact whether the goods are sold or otherwise dispose of, liability to excise duty is attracted, the moment the goods are manufactured. Therefore, notwithstanding the fact that the promotional packs are given free, they are liable to excise duty - notwithstanding the non-availability of the normal sale price under Section 4(1)(a) of the Act, by reason of the goods being specified under Section 4A(1) making the retail sale price i.e. MRP as its deemed value, the appropriate rule governing the valuation of physician's samples would continue to be rule 4. Appellant cannot take the plea that they become aware of the correct position of law only in 2008 which does not stand to any reason. Since the legal position was settled way back in 2006 itself, the appellant could not have entertained any bona fide belief with regard to their liability to discharge excise duty under Rule 4 read with Rule 11. This is all the more so when the appellant company's advocate Mr. Karl Shroff has also advised that duty liability has to be discharged in terms of Board's Circular dated 25/04/2005 as admitted by Shri Shailendra Goel in his statement before the investigating agency. Thus, the alibi of bona fide belief fails flat on its face - When the law stipulates imposition of mandatory penalty on account of suppression of facts, the same cannot be set aside or waived. The goods were seized and thereafter they were released on execution of bond/bank guarantee. Therefore, the decision to confiscate the goods and imposition of fine in lieu thereof is correct in law - Decided against assessee.
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2014 (1) TMI 1564
Refund of pre-deposit amount - unjust enrichment - Commissioner (Appeals) has held that for pre-deposit made by the assessee is not hit by the bar of unjust enrichment - Held that:- Respondent has paid the disputed amount at the time of consideration of their appeal before he Commissioner (Appeals) as pre-deposit and as per Section 11B of the Central Excise Act, 1944 bar of unjust enrichment is applicable to the duty paid by the assessee only. Admittedly, the stay amount paid by the respondent at the time of considering of their stay application is not the duty. It is only for consideration of their appeal. Therefore, provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of the case - Therefore bar of unjust enrichment is not applicable - Following decision of Suvidhe Ltd. vs. UOI [1996 (2) TMI 136 - HIGH COURT OF JUDICATURE AT BOMBAY] - Decided against Revenue.
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2014 (1) TMI 1563
Penalty u/s 11AC - Under valuation of goods - Appellants had cleared two consignments under the same serial number of the invoice and accounted for only one consignment in respect of each invoice - Held that:- ingredients contemplated for imposition of mandatory penalty under Section 11AC are in existence and therefore prima facie penalty under Rule 25 of Central Excise Rules could have been imposed. Total duty involved may be around Rs.13 lakhs on the goods and redemption fine of more than Rs.21.65 lakhs has been imposed for redeeming the goods, in my opinion, if the appellant deposits an amount of Rs.2/- lakhs that should be sufficient as pre-deposit for the Commissioner (A) to hear the appeal - Commissioner (A) is requested to hear the appeal and decide the issue on merits after noting compliance with the requirement of pre-deposit - Decided against assessee.
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CST, VAT & Sales Tax
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2014 (1) TMI 1613
Provisional assessment under Section 25 (1) of UP Value Added Tax Act, 2008 - Held that:- The provisions of Section 25 (1) (iii) authorise the assessing officer to make provisional assessment on the basis of material available on record with him. Whenever it appears to the assessing authority that the turnover of sale or purchase or both disclosed by the dealer is not worthy of credit, he can make provisional assessment after giving notice to the assessee of such proposed assessment - The petitioner has filed the returns. The assessing officer has not referred to any material in the notice. He has however stated in the last sentence of the second paragraph of the notice that the petitioner has constructed flats and has sold them which amount to deemed sale, on which he has not accepted the liability of payment of tax and has given a show cause notice to the petitioner to appear before him to give a reply. The assessing authority has not yet exercised jurisdiction to make a provisional assessment under Section 25 (1) of the Act. He has given the notice inviting objection on assumption of facts on which he may exercise his authority. If the petitioner satisfies the assessing authority that he has not sold any flats during the relevant period, the assessing authority may not make any assessment. His satisfaction will depend on the reply to be given by the petitioner. At this stage it cannot be said that there are no jurisdictional fact existing on which the power to make provisional assessment has been initiated - Decided against assessee.
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2014 (1) TMI 1612
Maintainability of appeal - Whether against the impugned judgment and order passed by the learned Appellate Tribunal in revision application, in exercise of powers under section 75 of the Act, present appeal before this Court under section 78 of the Act would be maintainable or not - Held that:- considering Section 75(1)(b) of the Act against the order passed by the Commissioner passed in exercise of suo motu revisional powers only revision application before the learned Appellate Tribunal was maintainable and therefore, as such the learned Appellate Tribunal rightly entertained the revision applications and has rightly passed the impugned judgment and order in exercise of the revisional jurisdiction. That being so considering Section 78(1) of the Act and as the impugned order passed by the learned Appellate Tribunal is passed in revision applications shall not in appeal and therefore, Tax Appeal before this Court under Section 78(1) of the Act would not be maintainable. Considering Section 78(1) of the Act an appeal shall lie to the High Court from every order passed in Appeal by the Tribunal. In view of the above, it is held that the present appeals preferred under Section 78(1) of the Act would not be maintainable - Decided against Revenue.
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Indian Laws
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2014 (1) TMI 1601
Request for information - Delay in providing information - Held that:- All that the Appellant wants to know is about the number of cases reserved for orders in which no order has been passed even after a lapse of two months or more. This is plain factual information. As admitted by the CPIO himself in his reply, there is a practice followed in the High Court under which the Court Masters are supposed to compile such lists to be furnished to the Chief Justice of the High Court every month. Thus, this information should be available not only with the Court Masters but also in the office of the Chief Justice. Even if it is admitted that the office of the Chief Justice may not be compiling and collating such data received from the Court Masters, it should suffice if photocopies of the reports furnished by the Court Masters are provided to the Appellant. Besides, the disclosure of such information would serve a larger public interest as the litigating public would come to know about the time being taken by the High Court in finally disposing of the cases. It is well-known that the pendency of cases before the courts is one of the major concerns among the people - it would suffice if this information is provided for a period of two years only preceding the date of the RTI application. However, if a cumulative list of such pending reserved orders in the High Court is being compiled anywhere in the High Court including the office of the Chief Justice, it would also suffice to provide a copy of that to the Appellant - Decided in favour of appellant.
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