TMI Tax Updates - e-Newsletter
February 14, 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:
Additions made on the protective basis deleted by ITAT - Order of ITAT confirmed. - HC
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Income Tax:
Exemption u/s 80(G)(5) - Once the statute has given perpetuity to the exemptions granted under Section 80(G)(5) the same could not be withdrawn without issuing show cause notice - HC
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Income Tax:
Reopening of Assessment - if the reason on which the assessment is reopened fails, the AO can not proceed to assess some other income - HC
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Income Tax:
Deduction u/s 80IB – Housing project in slum areas - Notification after 5 years with a condition of time limit - Such a time limit can defeat the basic purpose of the proviso for which it was enacted - AT
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Income Tax:
Provisional cost of site development - Accrual accounting - Deduction u/s 37(1) - there are certain requirements to be met before such provisions are allowed and they revolve around reasonable estimations. - AT
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Income Tax:
Penalty u/s. 271-A - non-maintenance of books of account required u/s. 44AA - assessee claimed lower profit - Non compliance of section 44AF - Penalty confirmed. - AT
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Customs:
Reward to Informer - reward is an exgratia payment and subject to the guidelines and may be granted on the absolute discretion of the authority competent and further that no one can claim the reward as a matter of right. - HC
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Indian Laws:
Identical Trademark - Right in the trademark “Procare” - damages in the sum of Rs. 5 lacs along with the cost of the suit are awarded in favour of the Plaintiff and against the Defendant. - HC
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Service Tax:
Cenvat Credit of Service Tax paid – if the service was received by the factory, credit is admissible even if the document is in the name of registered office - AT
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Service Tax:
Adjustment of excess payment of Service Tax – centralized registration - Rule 6(4A) of STR ,1994 would be applicable and Rule 6(3) would not be applicable - AT
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Service Tax:
Pandal or Shamiana Contractor’s services. - claim of the appellant for classifying their activity under the head “Erection, Commissioning or Installation Services” is prima facie untenable - AT
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Service Tax:
Housing construction and building activities carried on by a private or statutory body - the same constituted 'service' - service provider is accountable before the competent consumer forum - SC
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Central Excise:
Free after sale service - valuation - the PDI and free after sales services charges can be included in the transaction value only when they are charged by the assessee to the buyer - AT
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Central Excise:
Input Services - Cenvat credit in respect of insurance service of factory premises allowed - AT
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Central Excise:
Committee on Dispute declined permission to pursue the appeal - matter which has been considered and decided by the Committee on Dispute cannot be reopened. - AT
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Central Excise:
SSI Exemption - Brand name of other - Inasmuch as the trade marks are yet to be registered, the question of the appellant owning the brand name by virtue of the assignment deed does not arise at all - AT
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Central Excise:
Condonation of Delay - Looking into the delay in the proceeding which is now almost 27 year caused due to the Appellant's non-cooperation in the proceeding - delay of 3187 days not condoned - AT
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VAT:
TNVAT Act - Cancellation of registration certificate - it is mandatory to issue notice before cancellation of registration and to give opportunity of personal hearing - HC
Articles
Notifications
Customs-
18/2013 - dated
31-1-2013
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Cus (NT)
Amendment of Notification No. 63/1994-Customs (N.T), dated the 21st November, 1994 – Appointment of Loksan, Nagarkata and Kulkuli as Land Customs Stations on India-Bhutan Border
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15 /2013 - dated
31-1-2013
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Cus (NT)
Amendment of Notification No 61/1994-Custom(N.T.) dated 21.1.1994
SEZ-
S.O. 340(E) - dated
7-2-2013
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SEZ
Rescinds the sector specific Special Economic Zone for IT/ITES sector at Bidhannagar Township Durgapur District Burdwan, West Bengal
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S.O. 300(E) - dated
30-1-2013
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SEZ
Rescinds the sector specific Special Economic Zone for Biotechnology at Electronic City, Phase III, Bangalore in the State of Karnataka
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S.O. 298(E) - dated
30-1-2013
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SEZ
Set up a Special Economic Zone in the port at Vallarpadom, Mulavukadu/Fort Kochi Village, Ernakulam District, in the State of Kerala
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S.O.302(E) - dated
29-1-2013
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SEZ
Set up a multiproduct Special Economic Zone at Villages Regadichelika, Racharlapadu, Chowduputtedu, Uchaguntapalem, North Ammuluru, Bodduvaripalem; Mandals Kodavaluru, Dagadharthi, Allur; District Nellore in the State of Andhra Pradesh
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S.O.301 (E) - dated
29-1-2013
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SEZ
Rescinds the sector specific Special Economic Zone for IT/ITES sector at Sanathal (Sarkhej-Bavla Highway) Taluka Sanand, District Ahmedabad, Gujarat;
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (2) TMI 305
Deduction u/s 80HHE – assessee had not taken into consideration the expenditure incurred in foreign currency when computing deduction under section 80HHE – Held that:- It is well settled that expenses incurred in foreign exchange to provide technical services outside India cannot be included for the export turnover – Certificate issued by the chartered accountant as required under section 80HHE(4) would clearly show that the amount that is received is towards providing technical services outside India, in connection with production and development of software and not in connection with export of software or its transmission to its place in India – Expenditure incurred pertains to technical services outside India, the same has to be excluded from the turnover for the purpose of arriving at the deduction admissible under section 80HHE of the Act – In favour of the Revenue. Membership fee of Club – revenue or capital expenditure – Held that:- As decided in assessee's own case [2013 (2) TMI 305 - Karnataka High Court ] wherein expenditure on membership of the club was treated as revenue expenditure – Against the Revenue. Contribution made to traffic police - Held that:- It is well settled that in order to claim deduction under section 37 the expenditure should be wholly for the purpose of business of the assessee and it is well settled that it is the duty of the police to regulate the traffic and the amount spent towards regulation of traffic can at the most be considered as donation – Further as decided in CIT v. Neelavathi [2010 (2) TMI 176 - KARNATAKA HIGH COURT] contribution made to traffic police would not qualify for deduction under section 37 of the Act – In favour of revenue. Expenses incurred for repairs and maintenance of the leased premises - premises had been taken on lease for a period of six years - Held that:- As building required extensive repairs and renovation and the same has been done in connection with the business of the assessee to improve the ambience of the office and expenditure was revenue in nature – Mere fact that it was taken on lease for six years would not itself render the expenditure capital in nature – Repairs that are carried out to use the premises as the office, as there was strict competition in the business and the expenditure cannot at all be said to be capital expenditure - Against the Revenue
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2013 (2) TMI 303
Non deduction of TDS from cost of uniform items, stitching charges, washing expenses etc., reimbursed to the employees - demand raised by u/s. 201(1) & 201(1A) - default u/s 194-I, 194J etc. - assessee contested of paying FBT on the same - Held that:- FBT is payable on any expenditure incurred on employees’ welfare excluding those expenditures which are incurred to fulfill any statutory obligation or to mitigate occupational hazards etc. This is not in dispute that FBT was paid by assessee-company on this expenditure and this is also admitted position that this expenditure is in the nature of employees’ welfare. As per sub-section 2 of section 115WB, it is provided that fringe benefit shall be deemed to have been provided by the employer to its employee if the employer has in the course of business incurred any expenditure on or made any payment for various purpose which includes employees’ welfare. As per clause-E of this sub-section, it does not come out that it has to be enquired and looked into whether the employee has incurred the amount given to him by the employer for the same purpose for which it was given to the employee. Thus for this reason the employer has paid FBT on a particular expenditure, it is considered as payment of income tax only on deemed income of the employee out of various expenditures incurred by the employer and hence, this is not relevant as to whether the employee has actually incurred those expenditures as intended by the employer in view of this fact that FBT was actually paid by the assessee-company on the impugned expenditure on uniform, washing allowance etc., the same cannot be considered as perquisites in the hands of the employees and therefore, there is no liability of the assessee-company to deduct TDS therefrom. See R & B Falcon (A) Pty Ltd. Versus Commissioner of Income Tax [2008 (5) TMI 2 - SUPREME COURT] - in favour of assessee. Non deduction of TDS on conveyance, maintenance, reimbursement expenditure (CMRE) to its employees every month based on their status, designation - Held that:- Employer is paying fringe benefit tax on CMRE cannot be ignored. Regarding this expenditure also this could not be shown or established by Revenue that FBT is not payable on this expenditure. This expenditure is also not incurred to fulfill any statutory obligation or to mitigate occupational hazards or fall in any other exclusion as specified in Explanation to clause-E of sub-section-2 of section 115WB. This also is an admitted fact that FBT was paid by the assesseecompany on this expenditure also there is no liability of the assessee-company to deduct TDS therefrom - in favour of assessee. Whether TDS was required to be deducted from hiring charges of CMRE u/s 194C @ 2% or u/s 194I @ 10% - CIT (A) has directed the AO to re-compute the liability after the assessee provides the required details regarding charges paid for CMRE - Held that:- As the assessee has submitted that the A O may be directed to decide this entire issue afresh after necessary details are filed by the assessee before him and after providing reasonable opportunity of being heard to the assessee, in the interest of justice, the AO may be directed to do so and hence, order of CIT(A) on this issue is set aside and restore this entire matter back to the file of AO for fresh decision - in favour of assessee for statistical purposes. Payment for hiring of equipments i.e., xerox machine and hiring of car jeeps - TDS u/s 194C or 194I - Held that:- This issue is squarely covered in favour of assessee by two judgments of rendered in the case of Swayam Shipping Services P. Ltd. (2011 (1) TMI 797 - GUJARAT HIGH COURT ) and CIT v. Shree Mahalaxmi Transport Co. (2011 (1) TMI 1104 - GUJARAT HIGH COURT ) wherein held that the TDS will be charged u/s 194C. Seismic job service and short hole and hire of plant and equipments - assessee invoking explanation-2 to Section 9(1)(viii) that the impugned payment cannot be considered as fees for technical services - Held that:- As clearly noted by the CIT(A) that mining and exploration was business activity of the assessee and the parties to whom the payments has been made for rendering technical services are not in the business of mining but they are in business of providing technical services for pre-mining / preparing for mining i.e. conducting seismic survey and rendering connected services. Hence, the impugned payment is not covered under exception carved out in Explanation- 2 to Section 9(1)(vii). As per CBDT instruction No. 1862 dated 22-10-1990 also, it is opined by Attorney General of India that Explanation-2 to Section 9(1) (vii) covers rendering of services like in parking of training and carrying out drilling operations for exploration or exploitation of oil and natural gas. In the present case, it is not the case of the assessee that impugned payment was made for imparting of training. In the present case project of exploration of oil and natural gas is undertaken by the assessee and not by the recipient. The recipient has only provided technical services and therefore even after considering CBDT instruction No. 1862 dated 22-10-1990, the impugned payment is not covered by Explanation-2 to Section 9(1)(vii) - Thus no case could be made out by assessee that impugned payment is not for fees for technical services or that it falls within the Exclusionary clause as per Explanation-2 to Section 9(1)(vii) - no reason to interfere in the order of CIT(A) and this issue is decided against the assessee.
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2013 (2) TMI 296
Additions made on the protective basis deleted by ITAT - revenue argued that the substantive assessment of PACL India Limited is still pending before the Tribunal, therefore, protective assessment in the hands of the assessees should not have been finalized - Held that:- No substantial question of law arises for consideration. On account of the finding recorded by the Tribunal, the amount disclosed by the assessees as their income has been assessed to tax as income in terms of Section 44-AD . If in the proceedings against PACL India Limited, a finding is recorded that the transactions were not genuine, then the same would be liable to be added back to the income of PACL India Limited but if finding is recorded that the transaction is genuine, the order of assessment passed by the Tribunal would require no interference so far as the assessees in the present appeal are concerned. The finalization of the assessment proceedings against the assessees has, thus, no effect in respect of the assessment of PACL India Ltd. No substantial question of law arises for consideration by this Court in the present appeals.
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2013 (2) TMI 295
Disallowance of expenditure incurred on coal and fuel - undisclosed income for the block period as provided u/s 158BB(1) - Held that:- Assessment can be framed on the basis of material received during the course of search and seizure. Since the spiral pads, the basis of assessment in the year 2003-04 and 2004-05, were recovered during the search carried out on the residential and business premises of the appellants, the disallowance on account of excessive coal is based upon the material recovered during the search operations. In fact, CIT (Appeals) has given benefit to the assessee in respect of adding made in other years only for the reason that material taken in possession pertains to the year 2003-04 and 2004-05. No question of law arises on the basis of such finding of disallowance recorded by the CIT(A) and affirmed by the Tribunal. Disallowance of consumables - Held that:- Tribunal has set aside the findings recorded by the CIT(A) on the basis of statement of Shri Raghuvir Singh Dhiman, Factory Manager, recorded on 28.09.2004 and also the payment of cheques shown in the account of other coal traders though the payment was made to M/s S.P. Industrial Corporation. It was found that material available on record suggests the invariability of the expenses claimed by the assessee under the impugned heads. Such finding is a finding of fact on the basis of the documents recovered during the process of search. No substantial question of law arises for consideration in the present appeals.
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2013 (2) TMI 294
Exemption granted u/s 80(G)(5) withdrawn - Whether approval once granted shall continue in perpetuity as per Circular No. 5/2010? - ITAT set aside the withdrawal orders - Held that:- The order of the Tribunal setting aside the order of CIT is based on sound reasoning as asseesse had valid exemption on 1.10.2010 when the provisions of Section 80G were amended so as to dispense the periodic renewal of the exemptions. Such statutory provisions were clarified by Circular No. 5 of 2010 and Circular No.7 of 2010 issued by CBDT. Once the statute has given perpetuity to the exemptions granted under Section 80(G)(5) the same could not be withdrawn without issuing show cause notice in terms of the statutory provisions in the manner prescribed by law.
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2013 (2) TMI 293
Exemption granted u/s 80(G)(5) withdrawn - Whether approval once granted shall continue in perpetuity as per Circular No. 5/2010? - ITAT set aside the withdrawal orders - Held that:- The order of the Tribunal setting aside the order of CIT is based on sound reasoning as asseesse had valid exemption on 1.10.2010 when the provisions of Section 80G were amended so as to dispense the periodic renewal of the exemptions. Such statutory provisions were clarified by Circular No. 5 of 2010 and Circular No.7 of 2010 issued by CBDT. Once the statute has given perpetuity to the exemptions granted under Section 80(G)(5) the same could not be withdrawn without issuing show cause notice in terms of the statutory provisions in the manner prescribed by law.
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2013 (2) TMI 292
Reopening of Assessment - The assessee contended that the Assessing Officer had no jurisdiction to travel beyond the reasons for reopening the assessment. - Held that:- Explanation (3), Section 147 of the Act, however, by no stretch of imagination, can be construed as to provide that if the reason on which the assessment is reopened fails, the AO still can proceed to assess some other income which according to him had escaped assessment and which came to his light during the course of the assessment. For assuming jurisdiction to frame an assessment under Section 147 what is essential is a valid reopening of a previously closed assessment. If the very foundation of the reopening is knocked out, any further proceeding in respect to such assessment naturally would not survive. If the stand of the revenue is accepted, a very incongruent situation would come about if ultimately the AO were to drop the ground on which notice for reopening had been issued but to chase some other grounds not so mentioned for issuance of the notice. In such a situation, even if a case where notice for reopening has been issued beyond a period of four years, the assessment would continue even though on all the grounds on which the additions are being made, there was no failure on the part of the assessee to disclose true and full material facts. In such a situation an important requirement of failure on part of the assessee to disclose truly and fully all material facts would be totally circumvented. As already noted, except for the Punjab and Haryana High Court in case of Majinder Singh Kang v. Commissioner of Income-Tax and anr (2012 (6) TMI 616 - PUNJAB AND HARYANA HIGH COURT) all courts have uniformly taken a view that Explanation 3 to Section 147 of the Act does not change the situation insofar as the present controversy is concerned. Leading decision of Bombay High Court in case of CIT. v. Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] has been followed by different High Courts wherin the High Court, in its elaborate decision considering the statutory provisions, different judicial pronouncements and the explanatory memorandum for introduction of Explanation 3 to Section 147 ruled in favour of the assessee. Punjab and Haryana High Court in case of Majinder Singh Kang v. Commissioner of Income-Tax and anr (supra) ofcourse has sounded a different note, however, the explanatory memorandum to Explanation 3 to Section 147 of the Act was not brought to the notice of the High Court in the said decision. The High Court gave considerable importance on such Explanation 3 to Section 147 and the language used therein. In the result, we answer the question in the affirmative i.e. in favour of the assessee and against the revenue.
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2013 (2) TMI 291
Penalty u/s 271(1)(c) - ITAT deleted the levy by granting benefit of immunity arising out of Explanation-5 to Section 271(1)(c) - Held that:- The manner in which the income was derived has also been disclosed and the assessee has thereafter paid the tax and the applicable interest, thus all the requirements of the clause were met by the assessee and, therefore, the Tribunal took the correct view of the matter in allowing the immunity and upholding the view of the CIT appeals and setting aside the order of penalty passed by AO - in favour of assessee.
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2013 (2) TMI 290
Reopening of assessment - AO alleged that complete facts related to investment activity in India and SEBI guidelines have not been disclosed by the assessee - income on sale of shares is chargeable to tax under the head "capital gains" and not "business income" - Tribunal quashed reassessment orders - Held that:- Re-opening was issued on 31st March 2010 which is beyond a period of four years from the end of the relevant assessment year 2003-2004 and the reasons recorded for re-opening the assessment does not allege that there has been any failure on the part of the respondent-assessee to disclose fully and truly all material facts necessary for the purpose of assessment. Therefore, the notice is not sustainable. Set off of business loss against Income from other sources where income from business is not liable to tax in India in the absence of PE in India - held that:- Even on merits the ruling of Authority for Advance Ruling in the assessee's case would not be over-ruled by subsequent decision of the Authority for Advance Ruling in the case of another assessee. Consequently, initiation of action under Section 263 for assessment years 2004-2005 and 2005-2006 was quashed on the ground that the assessment order could not be said to be prejudicial to the Revenue or erroneous as the assessing officer was merely following a binding ruling of the Authority for Advance Ruling. ITAT relies upon the aforesaid facts and holds that the re-opening of assessment is not justified, as the finding of the Authority for Advance Ruling in the assessee's own case will continue to govern the assessee's assessments. This is particularly so as there has been no change in the law - in favour of assessee. Decision in [The Prudential Assurance Company Ltd. Versus 1. The Director of Income-tax (International Taxation) 2. The Union of India (2010 (4) TMI 237 - BOMBAY HIGH COURT)] followed.
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2013 (2) TMI 289
Deduction u/s 80IB – Date of approval of commencement of project by Local authority - Assessee is engaged in the business as builder and developer – Develop housing under the scheme of Slum Rehabilitation Authority (SRA) framed by the Govt. of Maharashtra - Notification dated 3rd August 2010 Held that:- The CBDT which had issued the notification after more than five years of the amendment, has put a time limit of those housing projects which has been approved by the local authority on/or after 1st April 2004. Such a time limit can defeat the basic purpose of the proviso for which it was enacted as in the said proviso, the time limit provided in clause (a) of section 80-IB(10) has not been specifically made applicable, therefore, such a time limit cannot be imposed by way of subordinate legislation It was only after such terms and conditions were fulfilled, the assessee was given the commencement certificate issued after 1st April 2004, i.e., on 17th October 2004 to start the project. In such a case or situation, it cannot be held that the assessee's project is not liable for deduction u/s 80-IB, once all other conditions are fulfilled. One can say that the date of commencement i.e., 17th October 2004, can be taken as the date of approval as it was from this date the approval given by the SRA becomes operative. Thus, the contentions of the revenue cannot be sustained. In favour of assessee
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2013 (2) TMI 288
Disallowance of provisional cost of site development - Whether provisional cost of site development debited to the P&L u/s 37(1) is to be treated as an admissible expenditure as it’s ascertained liability - Whether this expenditure is a crystalised or a contingent liability - Assessee is accounting the sale of plots at the time of registration - Against this sale, the cost of the plot is shown in the P&L which also includes the component of cost of site development Held that:- The liability on accrual basis has to be recognized when the assessee is following the mercantile method of account in accordance with AS-I, which is recognized in section 145. The expenditure committed to be incurred in terms of sale agreement besides the regulations prescribed by the local authorities are expenditures, which are partly actually incurred and partly to be incurred. It is not a mere provision but liability in praesenti As decided in case of Bharat Earth Movers (2000 (8) TMI 4 - SUPREME COURT) there are certain requirements to be met before such provisions are allowed and they revolve around reasonable estimations. In that sense, the revenue’s objection on the quantification of the same is definitely justified. The said judgments concur with each other in allowing such liabilities, as long as such liabilities are capable of being estimated with reasonable certainty. Till these requirements are satisfied, the liability is not a contingent one The assessee is under obligation to explain to A.O. the mode and manner of arriving at the figure of Rs. 250/- per unit towards the site development expenses to be incurred in future. It is not the requirement of the law that the assessee can debit the said expenditure on actually incurring the same. Remand back to AO
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2013 (2) TMI 287
Penalty u/s. 271-A - non-maintenance of books of account required u/s. 44AA - Held that:- The assessee did not maintain any books of account or other documents to show his correct income to support the income declared in the return. The assessee furnished return of income at Rs. 76,620/- which was not filed in accordance with the provisions of section 44AF. Further, the assessee claimed lower profit and gains as against the provisions of section 44AF. Therefore, it was mandatory for the assessee to keep and maintain such books of account and other documents as required u/s. 44AA(2)(iii). Admittedly, the total turnover, sales or gross receipts of the assessee are more than Rs. 10.00 lacs and the assessee failed to support its claim of lower profit. Therefore, merely because the AO computed income subsequently with the aid of section 44AF would not absolve the assessee from maintenance of account books and other documents as required by law. The AO has mentioned that nothing was produced before him for verification of the income declared in the return of income. The AO did not find any alternate except to estimate the income u/s. 44AF. Therefore, the provisions of section 44AA(2)(iii) and 44AF(5) would clearly apply in the case of the assessee - as the assessee did not file return of income as per provisions of section 44AF and claimed lower profit in the return of income, therefore, penalty is attracted in the case of the assessee. No justification to interfere with the orders of penalty as the assessee has not explained any reasonable cause which prevented the assessee from maintaining the books of account in accordance with law - against assessee.
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Customs
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2013 (2) TMI 286
Waiver of Pre deposit - Held that:- As the assessee has not been able to pre-deposit the asked amount appeal dismissed for non-compliance with Section 129E of the Customs Act. The appeals filed by the Directors of the company will be heard on merits in due course.
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2013 (2) TMI 285
Reward to Informer - Claim to the grant of a reward rejected on procedural lapses - First Petitioner, a Deputy Director in the Mumbai Zonal office of the Directorate of Revenue Intelligence retired on superannuation upon information furnished by the Second Petitioner(informer) furnished information in regard to under valuation of thoroughbred mares/horses imported into India - Held that:- The information recorded in the case by Shri P C K Nair, the then Assistant Director, DRI, Mumbai, is undated, no DRI 1 appears to have been prepared and there is no evidence of DRI 1 having been dispatched to DRI headquarters, which is mandatory, the sealed cover said to contain the original information was delivered to the Custodian of the sealed envelope on 2.12.2002, whereas the first note in the case file is recorded, following the receipt of the information on 30.9.2002. As decided in Union of India Vs. C. Krishna Reddy [2003 (12) TMI 55 - SUPREME COURT OF INDIA] scheme mentions that reward is an exgratia payment and subject to the guidelines and may be granted on the absolute discretion of the authority competent and further that no one can claim the reward as a matter of right. Thus claim of the Petitioners was duly considered by the competent authority thus the reasons which have been extracted earlier cannot be regarded as being extraneous or suffering from any perversity - appeal dismissed.
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Corporate Laws
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2013 (2) TMI 284
De-register the filings - change in name - treat the filings made by respondent no.3 under Registration No.F/202 as null and void - directing Respondent Nos.1 and 2 to initiate prosecution under the Indian Penal Code against the respondent No.3, 4 and 5 - Mr. Vashisht senior counsel for the petitioner sought to contend that the said filing was not the one made to inform the ROC about the change in name but was made to inform the ROC about the change in the constitution of the Board of Directors referring letter dated 22.07.1996 filed by respondent no.3. - Held that:- It is possible that author of letter dated 22.07.1996 read first part of clause (d) of section 593 in a manner, which was disjunct from the latter part of clause (d). As would be noticed, the first part refers to the "name" and the second part refers to "address". It is possible that the author of the letter was of the view that apart from the change in the constitution of Board of Directors which came within the ambit of the provision of clause (c) of section 593, the intimation with regard to the change in name fell within the first part of clause (d) of section 593. Admittedly, there was no change in the address of the entity, which was entitled to accept service on behalf of respondent no.3, which is a foreign company within the meaning of the Companies Act. Consequently, the reference ought to have been to clause (a) of section 593 and not clause (d) of the section 593. This was an obvious error, which was sought to be explained by Sh. Brij Mohan Chhabra in his affidavit of 04.01.2005. Thus the averment to the effect, made by Sh. Chhabra that this was a typographical error can be accepted having regard to the aforesaid aspects. That apart, the accompanying documents, to which reference has been made i.e., the receipt by which fee was deposited dated 05.08.1996, the letter addressed to the ROC dated 17.05.1996 and the permission granted by the RBI in April, 1996 is demonstrable of the fact that there was no good reason for respondent no.3 not to furnish requisite information of change of name to the ROC. There is no denying that respondent no.3 had also intimated this very information to its customers, its clearing agents and world at large between March and April, 1996. Therefore, even if it is assumed that information in the duplicate Form 49, which was filed on 03.04.2002, was inserted on the said date, will not, take away the body of material placed by the official respondents i.e., respondent nos.1 and 2 as also by respondent no.3, to establish that the original Form 49 was filed on 05.08.1996. This brings to the last aspect of the matter i.e., the argument as to why yet another Form was filed on 05.04.2004. The conduct of respondent no.3 in this regard is explained by reference to ROC's letter dated 26.03.2004, whereby they were advised to file a revised duplicate Form by an authorised person to rectify the objections. It is quite possible that having received the said communication, respondent no.3 filed yet another Form on 05.04.2004. Therefore, as long as there is nothing to suggest that the original Form 49 was not filed on 05.08.1996, the subsequent filings would not carry the matter any further in so far as the petitioner is concerned. It is not as if the ROC cannot allow rectification or curing deficiencies, if any, in the information supplied by the applicant companies, to it. This power is available to the ROC and therefore, that by itself cannot further the cause of the petitioner unless one could come to a conclusion that there was no filing made in the first instance by respondent no.3. Having regard to the discussion above unable to come to a conclusion that any of the prayers made in the petition ought to be granted. The petition is devoid of merits and is accordingly dismissed with cost of Rs.1 Lakh. Rs.50,000/- will be paid to respondent nos.1 and 2 while the balance sum of Rs.50,000/- will be paid to respondent no.3.
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2013 (2) TMI 283
Whether the interim order granted by the CLB is in accordance with law or not – Appeal filed under section 10F of the Companies Act, 1956 - Challenge was made to an interlocutory order passed by the CLB - Held that:- Order has been passed without disclosing any reasons and it does not show application of mind. It is now well-settled that the conferment of quasi-judicial power implies that the person concerned must follow the rules of natural justice and must give reasons for making the order which he is empowered to make. Purely administrative bodies are also bound to act justly and fairly which may bring in the requirement of natural justice as also the duty to give reasons. Even a non-statutory private body which is not a State under article 12 of the Constitution, but which exercises public functions is bound to follow the principles of "fairness" and "good faith" and to act reasonably and its orders are amenable to judicial review. Section 4(1)(d) of the recently enacted statute, the Right to Information Act, 2005, also requires every public authority of India to "provide reasons for its administrative or quasi-judicial decisions to affected persons". Reading of the impugned order, makes it is clear that no reason has been given by the authority for staying the proceedings of the appellant-company - The order, therefore, suffers from inherent defect of not following the rules of natural justice – For these reasons, set aside the impugned order – Remanded the matter to the Company Law Board with a direction to decide the interlocutory application afresh, in accordance with law after following the principles of natural justice – In favour of appellant
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Service Tax
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2013 (2) TMI 301
Cenvat Credit of Service Tax paid – Whether the registered office is required to be registered as input service distributor when there is only one factory – Invoice was received in the name of registered office but credit has been taken by factory and assessee has only one factory – Held that:- There is only one factory and therefore the question of distribution does not arise – As decided in Modern Petrofils if the service was received by the factory, credit is admissible even if the document is in the name of registered office – Decided in favour of the assessee.
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2013 (2) TMI 300
Adjustment of excess payment of Service Tax – Whether adjustment of excess payment can be made without it refunded to customer – Assessee made excess payment of service tax during the period April 2005-Sep.2005 – Assessee adjusted this amount during Oct. 2005-Mar.2006 under Rule 6(4A) of STR ,1994 without submitting any documentary evidence – Assessee has not shown that the amount alleged to have been excess paid, and whose adjustment is sought, had been refunded to the customers – Held that:- Regional office, at Delhi which had obtained centralized registration, was discharging service tax liability on behalf of all their branches within this region – This registration has to be treated as centralized registration under Rule 4 (2) of Service Tax Rules, 1994. Therefore Rule 6(4A) of STR ,1994 would be applicable and Rule 6(3) would not be applicable – order is set aside and the matter is remanded to the Commissioner (Appeals) for de novo decision – Adjustment allowed – In favor of assessee.
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2013 (2) TMI 299
“Pandal or Shamiana Contractor’s services.” Vs.“Erection, Commissioning or Installation services” – Activity undertaken by the appellant consists of erection of temporary structures for their clients who wanted such structures for conducting business functions such as trade fair, exhibitions, etc –Appellant have been paying Service tax on this activity from 1-5-2006 under “Erection, Commissioning or Installation services” – SCN issued for the period November, 2004 to December, 2005 on 01.09.2008 – Held that:- After the amendment brought to the definition of “Erection, Commissioning or Installation” w.e.f. 1-5-2006, the service provided by a commissioning and installation agency in relation to erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise would also come within the purview of “Erection, Commissioning or Installation Services”. Prima facie, the term “structures” appearing in the amended definition of “Erection, Commissioning or Installation Services” should be understood ejusdem generis with the terms “plant”, “machinery” and “equipments” figuring prior to it. In this view, the claim of the appellant for classifying their activity under the head “Erection, Commissioning or Installation Services” is prima facie untenable. Extended period of limitation – In this case appellant had not disclosed the relevant materials to the department voluntarily before the department’s auditors visited them. Prima facie, relevant facts were suppressed with intent to evade Service tax which was leviable under the head “Pandal or Shamiana Contractor’s services” - Therefore plea of limitation is prima facie unacceptable – There is no financial hardships. Appellant was directed to pre-deposit the amount within 6 weeks and report to the Assistant Registrar - Subject to compliance, there will be waiver of pre-deposit and stay of recovery in respect of interest on tax, penalties and the balance amount of Service tax.
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2013 (2) TMI 298
Housing construction and building activities carried on by a private or statutory body - Consumer Protection Act, 1986 - whether such activity tantamounts to service within the meaning of clause (o) of Section 2(1) of the Act - Held that:- As decided in Lucknow Development Authority v. M.K. Gupta [1994 (11) TMI 364 - SUPREME COURT OF INDIA] as relied upon by High Court the activities of the appellant-company in the present case involving offer of plots for sale to its customers/members with an assurance of development of infrastructure/amenities, lay-out approvals etc. was a 'service' as when a person applies for allotment of building site or for a flat constructed by development authority and enters into an agreement with the developer or a contractor, the nature of the transaction is covered by the expression 'service' of any description. The housing construction or building activity carried on by a private or statutory body was, therefore, held to be 'service' within the meaning of clause (o) of Section 2(1) of the Act as it stood prior to the inclusion of the expression 'housing construction' in the definition of 'service' by Ordinance No.24 of 1993. Having regard to the nature of the transaction between the appellant-company and its customers which involved much more than a simple transfer of a piece of immovable property it is clear that the same constituted 'service' within the meaning of the Act. It was not a case where the appellant-company was selling the given property with all advantages and/or disadvantages on "as is where is" basis, as was the position in U.T. Chandigarh Administration v. Amarjeet Singh [2009 (3) TMI 862 - SUPREME COURT]. It is a case where a clear cut assurance was made to the purchasers as to the nature and the extent of development that would be carried out by the appellant- company as a part of the package under which sale of fully developed plots with assured facilities was to be made in favour of the purchasers for valuable consideration. To the extent the transfer of the site with developments in the manner and to the extent indicated earlier was a part of the transaction, the appellant-company had indeed undertaken to provide a service. Any deficiency or defect in such service would make it accountable before the competent consumer forum at the instance of consumers like the respondents - against service provider.
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Central Excise
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2013 (2) TMI 282
Waiver of pre-deposit - Classification - Assessee is engaged in the manufacture of Tractors - under Chapter Heading 87 of the Tariff as Tractor - Revenue wants to classify the same under sub-heading 8429 5100 of the Tariff specifically as ‘Front End Shovel Loader' - Held that:- Out of total 2978 numbers of machine, only in respect of 405 numbers of machines were cleared with the additional equipments which was fitted at the place of the dealers. It cannot be said that all the machines manufactured by the applicants are classifiable as Front End Shovel Loader classifiable under sub-heading 84295100 of the Tariff. Total waiver of dues - Stay granted
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2013 (2) TMI 281
Valuation - Free after sale service provided by the dealer to the customer - whether includable in the transaction value as additional consideration to the manufacturer from the dealer? - Held that:- As decided in M/s Tata Motors Ltd. vs. Union of India [2012 (9) TMI 244 - BOMBAY HIGH COURT] Section 4(3)(d) of the Central Excise Act, 1944 the PDI and free after sales services charges can be included in the transaction value only when they are charged by the assessee to the buyer - as and when the car is removed out of the factory of the petitioners, Excise duty was payable. The assessable value was to be determined as per the provisions of Section 4(1)(a) as amended as the petitioners and the dealers were not related to each other and the price was the sole consideration. In such a case, the value to be taken up for the purposes of Excise duty was the transaction value. As after a car is sold to a dealer on the terms and conditions entered into mentioned in the dealer’s agreement, a dealer is required to carry out Pre Delivery Inspection as well as said services in regard to a car which is sold to a customer. A dealer is required to pay an amount to the petitioners towards the cost of the car and a dealer cannot charge more than the amount specified by the petitioners. The difference between the price so fixed by the petitioners and the price paid by the dealer constitutes what is called as dealer’s margin. A dealer has to spend money to conduct PDI as well as render said services. Thus inclined to accept the stand of the petitioners that the dealer is required to perform PDI as well as said services as a part of the dealer’s responsibility cast on him as per the dealership agreement. Thus in all cases where the expenses incurred towards PDI and said services are solely borne by the dealer and the manufacturer like petitioners have nothing to do with the said expenses then adding those expenses in the assessable value would be contrary to the provisions of Section 4(1)(a) r/w Section 4(3)(d) of the said Act. Looking to the facts and circumstances of this case, the respondents have not been able to place on record any material to show that the amount incurred towards PDI and said services can fall within the definition of the transaction value - thus as per Section 4(3)(d) of the Central Excise Act, 1944 the PDI and free after sales services charges can be included in the transaction value only when they are charged by the assessee to the buyer - in favour of assessee.
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2013 (2) TMI 280
Cenvat Credit - Input services - Cenvat credit in respect of insurance service of factory premises - Held that:- In CENVAT Credit Rules, it is nowhere prescribed that input service credit is available only when service has been availed in the factory premises. Following the decision in case of IDEA CELLULAR LTD.(2011 (1) TMI 811 - CESTAT, NEW DELHI) that insurance of vehicles, laptop and insurance for cash during its transit from the cash collection centre to the bank can be treated as input service and is entitled for input service credit. - In favour of assessee
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2013 (2) TMI 279
Committee on Dispute declined permission to pursue the appeal - Assessee contended that there is no requirement for seeking permission from Committee on Dispute to pursue the appeal - Held that:- Following the decision in case of Gas Authority of India ltd. that in case of permission has been already been declined by the Committee on Dispute prior to decision of the in the case of Electronics Corpn. Of India (2011 (2) TMI 3 - SUPREME COURT) has not become a nullity and the matter which has been considered and decided by the Committee on Dispute cannot be reopened. we find no merit in the application for restoration of the appeal
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2013 (2) TMI 278
SSI Exemption - Brand name of other - Whether assessee being eligible for SSI exemption from the date of Deed of Assignment of brand name in favour of assessee - Thereafter the brand names under which the goods have been cleared belong to them - The demand pertains to the period April, 1999 to December 2001 and the first assignment deed has been executed on 10.08.2000 Held that:- There is no assignment deed in favour of the appellant for the period prior to 10.08.2000 and even for the period on or after 10.08.2000, the assignment is not effective since, as per the deed, the assignment takes place when the trade marks are registered. Inasmuch as the trade marks are yet to be registered, the question of the appellant owning the brand name by virtue of the assignment deed does not arise at all - In favour of revenue
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2013 (2) TMI 277
Condonation of Delay - Evasion of central excise duty - undervaluation of goods and clandestine clearance of prime quality of ply wood in the garb of defective and second quality - delay of 3187 days in filing appeal - Held that:- The Appellant, though mentioned the delay of 3187 days have not furnished the detailed date chart explaining such inordinate delay, leave aside the day wise explanation of the delay even they failed to explain the month wise delay. Delay can be condoned only when the approach of the litigant is bonafide and not on account of culpable negligence or on account of deliberate in action or bonafide approach. In the present case, though the show cause notice was issued in 1985 and adjudicated in the year, 1990, the Appellant approached the Hon'ble Gauhati High Court between 1990 and 2006, by filing three Writ Petitions knowing fully well that statutory remedy is always available to them and had they pursued the same the proceeding would have been concluded by now. For this reason the Hon'ble Gauhati High Court dismissed their writ petition twice i.e. on 1996 with a cost of Rs.5000/- and 2006. Therefore, the plea of their filing appeal before the Hon'ble High Court on a wrong belief, cannot be acceptable. As during the pendency of their writ appeal, they filed the statutory Appeal before this Tribunal on being advised by their advocate in Sep.2010, but consequently, from the record it seems that they did not bring this fact to the notice of the Hon'ble High Court nor they withdrew their Writ Appeal from the High Court informing the High Court about it thus no proof to warrant that their conduct that their approach and attitude has been bonafide. Aslo while filing the condonation application on 20.09.2010 along with the Appeal, they had neither indicated the number of days delay nor stated the reasons thereof making it vague and keeping their all options open. Looking into the delay in the proceeding which is now almost 27 year caused due to the Appellant's non-cooperation in the proceeding, no merit on the reasons/grounds advanced by the Applicant through their affidavit to condone the delay of 3187 days - Stay Petition stands disposed of.
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CST, VAT & Sales Tax
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2013 (2) TMI 302
TNVAT Act - Cancellation of registration certificate - Held that:- As per Section 39(14) and (15) of the TNVAT Act, 2006 it is mandatory to issue notice before cancellation of registration and to give opportunity of personal hearing that according to the petitioner has not been granted. As apparently the order under challenge does not show that there was affixture of notice for cancellation on 21.8.2012. Therefore, the present plea of service of notice through affixture cannot be accepted. The mode of service as contemplated under Rule 19 of TNVAT Rules, 2007 has also not been followed in this case - writ allowed.
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Indian Laws
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2013 (2) TMI 297
Identical Trademark - Right in the trademark “Procare” - suit for permanent injunction seeking to restrain the Defendant from passing off, rendition of accounts and delivery up - Plaintiff stated that the trade name/corporate name “Procare” has been registered by the Defendant with the deliberate object of making illegal profit and for trading on the reputation and goodwill developed by the Plaintiff - Held that:- Documentary evidence which is unrebutted on record cumulatively establishes that the Plaintiff is the prior user of the trademark “Procare”, that it enjoys tremendous goodwill in respect of the said trademark and that the C&F agents, distributors, doctors and others related to the pharmaceutical industry identify the said mark with the Plaintiff’s products. There is nothing on record to suggest that the Defendant who is in the same trade as the Plaintiff did not have any express or constructive knowledge of prior adoption and use of the trademark “Procare” by the Plaintiff. The Defendant’s contention that it has never used “Procare” as a trademark and is being used by it only as a firm’s name or trading style is also belied from the documents one of which is a sample of Defendant’s packaging where the trademark “Procare” is used, albeit in a different style. The fact that the Defendant has got incorporated a company using the word “Procare” and is selling its products under the said trademark, which is identical to the trademark under which the Plaintiff is marketing its most prominent range of products, coupled with the fact that the Defendant is also engaged in manufacturing and marketing pharmaceutical/medicinal products implies that there is every likelihood of deception/confusion. In view of the fact that the medicines sold by the Plaintiff under its Procare division are for chronic care, especially cardiology, thyroid disorder and anti-hypertension, and in the event of any accidental negligence and/or confusion or deception the results can be catastrophic the dicta laid down in the case of Cadila Health Care Ltd. (2001 (3) TMI 928 - SUPREME COURT OF INDIA) that the test is to be applied strictly in the case of passing off of medicinal products squarely applies. The Court is, therefore, of the view that the adoption of the word “Procare” by the Defendant as a prominent part of its corporate name/trading style and as its trademark is likely to lead to confusion and/or deception in the minds of customers and others concerned with the pharmaceutical industry, theeby misleading them into believing that the medicinal preparations sold by the Defendant originate from the Plaintiff. Resultantly, the Plaintiff is held entitled to a decree of permanent injunction in its favour and against the Defendant - Procare Laboratories Pvt. Ltd. The Defendant, its principal officers, servants, agents etc. are restrained from in any manner using the Plaintiff’s trademark “Procare” or any other trademark which is deceptively similar to the Plaintiff’s trademark as a part of its corporate name and/or trading style or in any other manner as may constitute passing off of the Defendant’s medicinal preparations or products as those of the Plaintiff’s - damages in the sum of Rs. 5 lacs along with the cost of the suit are also awarded in favour of the Plaintiff and against the Defendant.
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