TMI Tax Updates - e-Newsletter
February 9, 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:
Penalty u/s 271(1)(c) - after detection has been made by the Department the surrender made by the assessee does not absolve him from penalty proceedings under Section 271(1)(c). - HC
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Income Tax:
Charitable purposes - section 2(15) - the business of insurance was carried under trust for carrying on the primary purpose of charitable activities thus, Section 11 was applied and it cannot be excluded - HC
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Income Tax:
Disallowance of speculation loss - Explanation to Section 73 would apply even when entire business consists of purchase and sale of shares. - AT
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Income Tax:
Doctrine of Res judicata – There is no question of its being a res judicata so as to bind the A.O. appellate authority or the Tribunal in tax matters so as to decide the matter according to the past transaction only. - HC
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Income Tax:
Transfer of TDRs amounts to transfer of a Capital Asset - taxing under the head capital gain cannot be sustained as there is no cost of acquisition - provisions of section 55(2) do not apply - AT
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Income Tax:
Hyper technical process of manufacturing - Assembling vs. Manufacturing - in each case when a issue of this nature arises for determination, the Department has to study the actual process undertaken by the assessee - HC
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Income Tax:
Notice u/s 143(2) - objection as to territorial jurisdiction has to be raised at the earliest and is otherwise deemed to have been waived. - On the same analogy, notice under section 143(2) cannot be held to be void for want of jurisdiction - HC
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DGFT:
Amendment/ Modifications in the Handbook of Procedures, Vol.II (SION Book):- Flax Fabrics dyed - Public Notice
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Corporate Law:
As all suits including that of recovery are not hit by Section 22 (1) of the SICA, but, only those suits which have the effect of execution, distress or like action against the properties of sick company - HC
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Corporate Law:
Right to retain the money as forfeited - Limitation Act - Article 24 would apply only if the money was recoverable immediately upon receipt by the defendant, and not on account of any facts which transpire subsequently - In the present case Article 113 is applicable - refund of forfeited money allowed - HC
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Service Tax:
BAS - Activity of procuring milk and milk products and selling it at a price fixed by the supplier - the appellants are an agent of the supplier and covered under the Business Auxiliary Service - AT
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Service Tax:
Work contract service - taxability prior to 1-7-2007 - Abatement of 67% - Prima facie case against the assessee - directed to make a pre-deposit of 25% of service tax. - AT
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Service Tax:
Refund claim - refund under rule 5 of cenvat credit rules, 2004, for the period prior to the date registration under service tax - refund allowed - AT
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Central Excise:
Reversal of input credit - waste - residue - by-product - sludge was exempted - appellants are not required to reverse the input credit availed by them which is attributable to sludge. - AT
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Central Excise:
Transfer of CENVAT Credit - Rule 10 of CCR, 2004 - Shifting of factory - denial of credit is not justified. - AT
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Central Excise:
Rebate Claim - third party goods in addition to own goods exported after testing and repacking and duty paid at removal from Cenvat credit taken is available as rebate - CGOVT
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Central Excise:
Commencement of Period of limitation for filing refund claim - the appellant would be entitled for refund within one year from the date of communication of the order because that will be the date on which the assessee can be said to have come to the conclusion that the credit has lapsed and cannot be adjusted any more - AT
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VAT:
Input Tax Credit - BSNL is a company incorporated under the provisions of the Companies Act, 1956 and a company cannot be described as an autonomous body to be covered by the circular relied on by the petitioner. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (2) TMI 182
Liability of tax - Held that:- There is a huge demand against the petitioner, a communication directing the petitioner to pay Rs. 5,00,000/- by 10.1.2013 is fair and reasonable so as to secure the interest of the revenue and also granting relief to the petitioner so as to permit the Appellate Court to hear the appeal on merits as well. Petitioner is duty bound to pay the duty amount of tax and the penalty. The petitioner was granted indulgence at one stage for deferring the payment of tax and penalty but subsequently, on a request made by the petitioner, an additional order has been passed. Since, the payment of tax and penalty is a statutory duty, no case is made out for interference in the writ jurisdiction of this Court.
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2013 (2) TMI 181
Penalty u/s 271(1)(c) - extra liability in respect of sundry creditors - Held that:- Tribunal has held that except reiterating its stand that the balances shown in its books of account are correct no material was placed in support of the assertion. Thus, the explanation as given has not been substantiated. No supportive evidence was furnished in support of the correctness of the balances as shown in the books of account. The Tribunal has further found that after detection has been made by the Department the surrender made by the assessee does not absolve him from the charge for which he has to be proceeded against under the provisions of Section 271(1)(c). It has further held that the confirmation of third parties in regard to the balances appearing in books of account which differ from the ones recorded in the books of the assessee is an evidence against the assessee, which he must rebut with the material available with him and not only no efforts were made to do so the assessee kept on seeking adjournments till he was cornered by the third parties to prove inaccurate particulars of income shown by him. The Tribunal has held that from mere surrender would not absolve him from the charge against as levied. Thus the aforesaid finding recorded by the Tribunal clearly shows that at no point of time the assessee offered any explanation regarding the correctness of the balances shown in the sundry creditors' account and only when he was cornered and he had surrendered the amount. The decision of this Court in the case of Saran Khandsari Sugar Works (1999 (9) TMI 15 - ALLAHABAD HIGH COURT) would not be applicable as in the aforesaid case the Tribunal has held that the assessee had agreed to a higher assessment on the condition that no penalty would be imposed which was a finding of fact and further the Tribunal has held that no actual concealment was established and, therefore, the assessee was to be held to be discharged the onus under the Explanation to Section 271(1)(c). On the contrary in the present case the Tribunal has recorded findings which are against the appellant - against assessee.
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2013 (2) TMI 180
Charitable purposes as defined in section 2(15) - dominant object of the assessee-society - whether not exempt u/s 11 keeping in view Section 13(1)(bb) - Held that:- The dominant purpose of the respondent society was advancement of general public utility and not for education alone. Sub-clause (k) of Clause (2) of the aims and objects was to work and establish agencies and depots for the purchase and sale of goods of all descriptions, borrow money and to get insurance agencies of the different companies and to do insurance work for the purpose of applying income there from for objects mentioned above. As decided in M/s. Radhasoami Satsang, Agra vs. Commissioner of Income Tax, [1991 (11) TMI 2 - SUPREME COURT] strictly speaking res judicata does not apply to income tax proceedings but where a fundamental aspect permeating through the different assessment years has been found as fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year unless there was any material change justifying the Revenue to take a different view of the matter. Also see Bharat Sanchar Nigam Ltd. And another vs. Union of India and others, (2006 (3) TMI 1 - SUPREME COURT). As in the assessment year 1973-74, 1974-75, 1975-76 and 1976-77 the Tribunal has taken the view that the assessee society was established for advancement of any other object of general public utility. The view expressed by the Tribunal for the Assessment Year 1973-74 has been approved by this Court thus,no different view is to be taken here in this year. The question of applicability of Section 13(1)(bb) would not arise for the reason that the Tribunal has found that the business of insurance was carried under trust for carrying on the primary purpose of charitable activities thus, Section 11 was applied and it cannot be excluded - in favour of assessee.
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2013 (2) TMI 179
Disallowance of speculation loss - CIT(A) treating the share trading loss as normal business loss and allowed expenses relating thereto which had been disallowed by the AO - Assessee is a company whose gross total income consists of house property, capital gain, other sources and loss from trading of shares & entire business consists of purchase and sale of shares - whether the provisions of Explanation to section 73 would apply ? - Held that:- As decided in Arvind Investments Ltd. (1990 (3) TMI 5 - CALCUTTA HIGH COURT) Explanation to Section 73 would apply even when entire business consists of purchase and sale of shares. Treatment of loss from different heads included in the gross total income - Held that:- This issue is covered by the judgment of Park View Properties (P.) Ltd. (2003 (1) TMI 69 - CALCUTTA HIGH COURT) following the judgment of CIT v. Harprasad & Co. (P.) Ltd. [1975 (2) TMI 2 - SUPREME COURT] and CIT v. J.H. Gotla [1985 (8) TMI 5 - SUPREME COURT] wherein held that loss is negative income, held that while considering the different constituents of gross total income, the figures in absolute terms should be considered whether positive or negative. The Hon'ble Court followed the earlier judgment in case of Eastern Aviation & Industries Ltd. (1993 (7) TMI 41 - CALCUTTA HIGH COURT) in which it was held that when the income from house property, capital gain and other sources even if positive is lower than figure of loss from business activities, it will not be a case of gross total income consisting mainly of income from house property, capital gain and other sources. Since the figure of loss in absolute terms in share trading was higher then income from other sources taken together, it was held that the provisions of Explanation to Section 73 would be applicable. Situation in the present case is identical. Therefore, following the above judgments it has to be held that case of the assessee will be covered by the provisions of Explanation to section 73. No contrary judgment of any other High Court or Apex Court has been brought to our notice or has been referred to by CIT(A) who has only relied on the decisions of the Tribunal. Thus trading loss in this case has been rightly treated as speculation loss by AO and accordingly the disallowance of expenses attributable by AO towards trading activities confirmed - against assessee.
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2013 (2) TMI 178
Doctrine of Res judicata – Legal & Professional charges – Due to shifting of HO, supporting were not traceable – Tribunal had taken note from the past years payment as well as subsequent years and allowed the claim – Held that:- There is no question of its being a res judicata so as to bind the A.O. appellate authority or the Tribunal in tax matters so as to decide the matter according to the past transaction only. What is important is that all facts and circumstances in which the fact of previous year payments has been considered and that can be said to be relevant, i.e., relevant and it cannot be said that the said consideration is absolutely impermissible. Merely mentioning that since such amount was paid by the assessee against the head of the legal and professional charges in other years, does not mean that this was treated to be res judicata, it was used for quantification in want of exact and accurate particulars of the legal and professional charges, therefore, for the purpose of determination and quantification only this amount of previous year has been taken into account by the Tribunal which cannot be said to be impermissible at all. – In favour of assessee
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2013 (2) TMI 177
Capital gains income - Transfer of Development Rights (TDR) - liability to be taxed as capital gains of the appellant society - charging interest u/s 234B - Held that:- The concept of TDRs originates from the regulation of "Development Control Regulation of Greater Mumbai" i.e., "DCR, 1991", wherein it was provided that the owner or a lessee of a plot, which was reserved for public purpose under the development plan of DCR, would be eligible for award of compensation by way of development right certificate of equivalent Floor Space Index (FSI). Such a right is definitely a "Capital Asset" held by the assessee and assignment of such a right in favour of the developer amounts to transfer of capital asset. Thus transfer of TDRs amounts to transfer of a "Capital Asset". The law is trite, and there is no dispute on the said position, that when an asset has no cost of acquisition, the gains on sale or transfer of same cannot be brought to tax as decided in the case of Shri B.C. Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] & Jethalal D. Mehta v. Dy. CIT [2005 (1) TMI 595 - ITAT MUMBAI] The perusal of section 55(2)(a) reveals that cost of acquisition is to be taken at nil in those cases where the capital asset transferred is either goodwill of business or the trademark or a brand name associated with business or a right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carrier permits or loom hours. In the present case, the assessee is not carrying on any business and the right to construct additional floors is not covered by any of the assets mentioned in the aforesaid sub-section (2) of section 55. Therefore, the amended provisions of section 55(2) do not apply to the present case and the lower authorities were not justified in taking the cost of acquisition of the capital asset being right to construct the additional floors as nil. Therefore the transfer of TDR amounts to transfer of a capital asset, however, the same cannot be subjected to tax under the head "Capital Gain" for the reason that there is no cost of acquisition in acquiring the right which has been transferred and computational mode given in section 48, therefore, taxing under the head capital gain by the AO cannot be sustained - in favour of assessee.
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2013 (2) TMI 176
Addition on undisclosed income - Treating the advance as unexplained entry – Whether CIT(A) and ITAT was right in deleting the addition made by AO - During the assessment proceedings, it was found that the assessee had shown liability towards an advance consideration received on account of sale of a commercial plot – Held that:- The assessee produced a copy of the agreement to sell and the purchaser’s statement in which he stated that an advance was given to the assessee - Concluded that the amount which was shown in the balance-sheet as advance was not the undisclosed income - Decided against the Revenue. Addition by AO of an amount which represented repayment of amount out of undisclosed resources - Whether CIT(A) and ITAT was right in deleting the addition made by AO – Held that:- Amount was re-paid out of the amount received as advance from one of the purchaser (in above para) of commercial plot - Also assessee received a cheque, from the person to whom amount repaid, in lieu of amount repaid - Concluded that repayment was made not from the undisclosed resources - Decided against the Revenue.
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2013 (2) TMI 175
Hyper technical process of manufacturing - Assembling vs. Manufacturing - Appellant is engaged in the business of manufacturing electrical goods. It is having its one unit at Mandideep and another at Parwanoo - Parwanoo unit is manufacturing electrical goods which are used in generation of the power - appellant which is manufacturing Advanced Microprocessor based Fast Bus Transfer Scheme for power generation segment - contention of the appellant is that it is a manufacturing process while the Tribunal has found that it was an assembling process – Held that:- Until and unless some technical expert person examines this aspect, the nature of the product cannot be ascertained whether this is a manufacturing process or is an assembling process. The Apex Cout in Oracle Software India Ltd [2010 (1) TMI 9 - SUPREME COURT OF INDIA] considering similar questions held that in each case when a issue of this nature arises for determination, the Department has to study the actual process undertaken by the assessee. As per case of the appellant, it was a hyper technical process of manufacturing - In each case, where a issue of this nature arises for determination, the department should study the actual process undertaken by the assessee - Find it appropriate to remand the matter to the Assessing Officer to call an opinion of the expert in the subject or if panel of experts is available in the department, to take assistance of such panel and after getting an opinion of the experts, to decide that the product namely.
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2013 (2) TMI 174
Block assessment - computation of period of Block - undisclosed income - Search - sum of Rs.50 lakhs detected as a loan given to Sri T. Balakrishna - which had not been recorded in the books of account - Held that:- object of introducing Chapter XIV-B into the statute book is to ensure that the need for invoking reopening provision, viz., section 147 of the Act and a limitation placed therein are all in the interests of the Revenue - also counter productive for the Revenue and the purpose of providing a degree of protection to honest assessees, who had already filed their returns of income - Provisions of Chapter XIV-B call for a strict construction and not to either vaguely or loosely relieve an erring assessee from the rigour of these statutory provisions. If an undisclosed income is found to attract the provisions of Chapter XIV-B, then there is no escape for an assessee from the applicability and the consequences that follow on the application of this provision of law. As per the statutory provision, the exclusion of the income from assessment of block period, if it is attributable to the part of the accounting period of the year in which the search has been conducted, it is possible only of and only when the assessee has produced before the AO such of his books of account which are maintained in the normal course of business activity of the assessee, wherein is recorded the entries indicating the generation of income to the part of the accounting period and then only to exclude that part of the income from that segment of accounting period and allow the assessee to file a return excluding the income in the later assessment and not otherwise. In the present case, the assessee never made any offer for bringing to the notice of the Assessing Officer such a possibility by producing relevant material and in fact we find that the assessee is not even informed about the activity to the Revenue - Therefore this appeal is to be allowed against the order of the Appellate Tribunal being without any rhyme or reason and not in consonance with the statutory provisions and not even in consonance with the material on record - In favour of the Revenue
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2013 (2) TMI 173
Assessee is a NRI - filed return for the assessment year 2007-08 on July 31, 2007 at Jalandhar - Notice dated September 17, 2008, was issued under section 143(2) of the Act by the Assistant Commissioner of Income-tax, Jalandhar, - Thereafter, he was served with a notice along with a questionnaire calling for further information, which was followed by notice dated November 24, 2009, by the Director of Income-tax (International Taxation), Chandigarh. - vide notification dated September 28, 2007, under section 120 of the Act, the Central Board of Direct Taxes authorized the officers specified therein to exercise powers of Assessing Officers and other authorities- contention raised in the writ petition is that - In spite of the said notification, power has been exercised by respondent No. 2, i.e., Joint Commissioner of Income-tax (International Taxation) – Further assessee contended that notice dated September 17, 2008 under section 143(2) is barred by limitation. Held that:- Under section 143(2) of the Act, limitation for issuing notice was 12 months from the end of the month in which the return was filed. In the present case, return was filed on July 31, 2007, and limitation for issuance of notice under section 143(2) of the Act was up to July 31, 2008. However, by virtue of amendment by the Finance Act, 2008, with effect from April 1, 2008, limitation stood extended up to six months from the end of the financial year in which the return was furnished, i.e., up to September 30 2008. It is well settled that a statute of limitation is a procedural statute and is applicable to pending proceedings. However, limitation law is prospective as it does not revive an action which may have become time barred on the date of enforcement of the changed law nor the changed law extinguishes a subsequent cause of action Even though the order under section 143(1) of the Act was after notification dated September 28, 2007, under section 120 of the Act, the said order cannot be held to be nullity. It is well settled that objection as to territorial jurisdiction has to be raised at the earliest and is otherwise deemed to have been waived. On the same analogy, notice under section 143(2) cannot be held to be void for want of jurisdiction. Reference may be made not only to section 21 of the Code of Civil Procedure but also to section 124(3) of the Act- The Chandigarh authority while issuing notice under section 142(1) of the Act, was acting in continuation of the notice already issued by the adjudicating authority. This being the factual position, the plea of lack of territorial jurisdiction did not vitiate notice under section 143(2) of the Act. No prejudice is shown to have been caused to the assessee. The effect of notification under section 120 of the Act is to transfer jurisdiction to Chandigarh but in the absence of prejudice to the assessee, proceedings which took place at Jalandhar prior to actual transfer of record, i.e., October 29, 2009, could not be held to be nullity – Against the assessee.
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Customs
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2013 (2) TMI 188
Challenge to circular dated 1 January 2013 issued by CBEC - circular issues directions to Chief Commissioners of Central Excise and Customs in regard to the procedure to be adopted for the recovery of outstanding demands in situations where an appeal is filed against the order of the adjudicating authority before the Commissioner (Appeals) or thereafter before the CESTAT, the High Court or the Supreme Court - assessee's stay application pending - Held that:- An assessee who moves an application for waiver and is diligent in pursuing the application cannot be blamed for the inability of the appellate forum to dispose of the stay application. The reasons such as the absence of adequate infrastructure which lead to an accumulation of a backlog or the unavailability of the appellate officer or a duly constituted Bench of the Tribunal are matters which lie beyond the volition of an assessee. If at all, these are matters over which the executive arm of the State has control. Hence, to blame an assessee who is not in default and to initiate recoveries against an assessee who has filed an appeal together with an application for stay merely because the application has remained pending on the file of the decision making authority would be to penalize the assessee for a situation over which the assessee has no control. This would be patently arbitrary and violative of Article 14 of the Constitution. Revenue's submission that during the course of the hearing the field officers of the Revenue who initiate recovery action are independent of the adjudicating or appellate forum and hence have no means of verifying the status of the applications for stay and it is hence for the assessee, when recovery action is initiated to inform the jurisdictional Commissioner of the pendency of the stay application cannot be treated as a valid justification for penalizing an assessee whose conduct is otherwise free from blame. Thus the provisions contained in the impugned circular dated 1 January 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to an assessee who has filed an application for stay, which has remained pending for reasons beyond the control of the assessee. Where however, an application for stay has remained pending for more than a reasonable period, for reasons having a bearing on the default or the improper conduct of an assessee, recovery proceedings can well be initiated. Thus request the CESTAT to take up the stay application for early disposal and preferably within a period of eight weeks of the date on which an authenticated copy of this order is produced before it.
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2013 (2) TMI 172
Waiver of Pre-deposit - Mis-declaration or suppression of fact - Undue DEPB benefit - Assessee manufactured and exported the goods describing as ‘Roller for Auto Brake Shoe' - Revenue argued that the applicant wrongly described the goods as Roller For Auto Brake Shoe' whereas in fact the goods were ‘Slack Adjuster Assembly Held that:- Shipping Bill the applicant declared the goods as Roller For Auto Brake Shoe (Slack Adjuster Assembly). In respect of the earlier export, the matter was examined by the Customs authorities and it was decided that the applicant are entitled for DEPB benefit in respect of the same goods. Now the Revenue wants to deny the benefit on the ground that Roller for Auto Brake Shoe are different from Slack Adjuster Assembly. In these circumstances, as the applicant declared Slack Adjuster Assembly also in the Shipping Bill, prima facie, there is merit in the contention that the allegation of misdeclaration or suppression of fact is not sustainable. Stay granted
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2013 (2) TMI 171
Import Audio Cassettes and Digital Video Discs - Customs Notification No. 24/2005 dated 01.03.2005 - Goods were subject to MRP based CVD - DGFT Notification No. 44/(Re-2000)/1997 - Public notice No. 27/2000 - Commissioner (Appeals) directly entertained the appeal of the respondent for excess payment of custom duty - The clerical error corrected u/s 154 of the Customs Act by Commissioner (Appeals) Held that:- Ongoing through the provisions of Section 154 of the Customs Act, it is noticed that the correction can be carried out by the officer who had issued the order. It is also not clear from the order-in-appeal that on which documents or evidence he has relied upon to come to the conclusion that there were clerical errors in the order of assessment issued by the lower authority. Moreover, the goods which are assessed by the said order of assessment have already been cleared by the respondent. - In favour of assessee.
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Corporate Laws
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2013 (2) TMI 169
Review application - the petitioner company was entitled of benefits u/s 22 of the Sick Industries Companies Act, 1985 (SICA) thus imposition of condition of deposit of 50% of the suit amount was contrary to the provisions of Section 22 of SICA - Held that:- No merit in the instant review application as the law as to the continuation of a suit filed against a sick company is no longer res integra as well laid by in Saketh India Ltd. Vs. W. Diamond India Ltd. (2010 (4) TMI 621 - HIGH COURT OF DELHI) & also by the Supreme Court in Raheja Universal Ltd. Vs. NRC Ltd., (2012 (10) TMI 233 - SUPREME COURT). As all suits including that of recovery are not hit by Section 22 (1) of the SICA, but, only those suits which have the effect of execution, distress or like action against the properties of sick company, which would be hit by this provision. In a simple suit for recovery of money where the properties of sick company are not threatened by the proceedings including the interim ones such as appointment of receiver, execution, distress or the like, such suits could continue without the permission under Section 22. In the present suit for recovery, it cannot be said that the suit is of a nature which has the impact of or threat to the properties of the petitioner to affect the scheme of its revival.Thus, the present suit being the simple suit of recovery under Order 37 CPC, would not be hit by the provision of Section 22 of the SICA. There is no cogent reason warranting review of the said order.
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2013 (2) TMI 168
Right to retain the money as forfeited - Limitation Act - Licence space for hosting exhibition - plaintiff, a registered society & the defendant ITPO a Central Government agency and custodian of a piece of land in New Delhi which houses trade fairs, i.e. the Pragati Maidan - plaintiff claimed refund of advance license fee as it was not interested in holding an exhibition in New Delhi - Held that:- Payment of earnest money, as the expression itself shows, is intended to serve as a proof of bona fides of the vendee so that if the transaction falls through by reason of the fault or failure of the vendee, this amount is liable to forfeiture. On the other hand, in case the transaction goes forward, the earnest money becomes a part of the purchase price. Distinction between earnest money and money paid in advance as part of the purchase price is thus both real and well-recognised. In the facts of the present case, this Court is of the opinion that the money received by the ITPO cannot be described as what was for the plaintiff’s use. It was pure and simple, a deposit, in anticipation of a contract. When given, it was not the intention of the plaintiff to take it back. That is the true test to determine whether Article 24, of the Indian Limitation Act, applies. In the absence of application of Article 24 as it would apply only if the money was recoverable immediately upon receipt by the defendant, and not on account of any facts which transpire subsequently, necessarily the governing provision was Article 113. There is no doubt that the suit was filed within the time prescribed by this latter provision. Thus the Single Judge’s findings and conclusions do not call for interference as Clause 7 (iii) of the guidelines enabled forfeiture of advance payment made in the event the licensee cancelled the space which was booked. This pre-supposed a concluded contract followed by the act of cancellation by the licensee. Thus defendant had no right to retain Rs. 15 lakhs as forfeited amount - the defendant was also directed to pay interest - appeal dismissed.
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Service Tax
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2013 (2) TMI 186
Waiver of Pre-deposit - Business Auxiliary Service - Activity of procuring milk and milk products and selling it at a price fixed by the supplier - Held that:- The appellants are not at liberty to sell the milk at a higher rate or lower rate. In that case, the appellants are an agent of the supplier. Therefore, they are covered under the "Business Auxiliary Service". Accordingly, they failed to make out a case for hundred percent waiver of pre-deposit. Direct the applicant to make a predeposit of 50% of the service tax confirmed. Partly allowed
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2013 (2) TMI 185
Rectification of Mistake under Service Tax - Period of limitation - Section 35C(2) of the Central Excise Act, 1944 - The final order was passed by this Tribunal on 19.02.2010 and the application for ROM was filed by the applicant on 23.03.2011 - Held that:- The application for ROM has been filed beyond the prescribed in the statute book. Therefore, reject the application for Rectification of Mistake on the ground of limitation. In favour of assessee
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2013 (2) TMI 184
Penalty u/s 78 – Work contract service - taxability prior to 1-7-2007 - Abatement of 67% - Waiver of pre-deposit - the main plank of argument advanced on behalf of the applicant that since there is a cross-fall-breach clause specifying that breach of one contract would also constitute breach of other contract, hence, both these contracts should be read together and accordingly the entire project being a turnkey project, the same is taxable as works contract only w.e.f. 1-7-2007 and not prior to that. - held that:- Prima facie we do not find merit in the argument of the applicant saying that due to the said cross-fall-breach clause stipulated in each of the said contract and the project being a turnkey project, therefore, no Service tax is applicable as the said service rendered by them is nothing but ‘works contract’ service. Benefit ofabatement of 67% of the value Notification No. 19/2003-S.T. – Notification No. 1/2006-S.T. from 1-4-2006 – Department argued that there were no supply of goods involved, therefore, the conditions of the said Notification are not satisfied – Held that:- A person who claims exemption or concession must establish clearly that he is covered by the provision(s) concerned and, in case of doubt or ambiguity, the benefit of it must go to the state. [CCE versus Hari Chand Shri Gopal & Ors., (2010 (11) TMI 13 - SUPREME COURT OF INDIA)] Prima facie case against the assessee - directed to make a pre-deposit of 25% of service tax.
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2013 (2) TMI 183
Refund claim - Whether assessee is entitled for refund for the period prior to the date registration under service tax - Rule 5 of the CENVAT Credit Rules, 2004 - Filed refund claim of the services exported by them prior to 13.12.2008 - Registration took on 13.12.2008 - Held that:-Following the decision in case of mPortal India Wireless Solutions (P.) Ltd.(2011 (9) TMI 450 - KARNATAKA HIGH COURT) and M/s. Varizon Data Services (I) (P) Ltd. (2012 (6) TMI 143 - CESTAT, CHENNAI) that assessees are entitled for refund claim. In favour of assessee
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Central Excise
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2013 (2) TMI 170
Denial of input credit - Reversal of input credit - waste - residue - by-product - Circular No.3445/61/97-CE, dated 23.10.1997 - Assessee engaged in manufacturing of 'Paper' and 'Paper Boards' - Sludge generated during manufacturing process which was sold by them for a nominal value - Sludge was cleared by them without payment of duty - Held that:- Following the decision in case of THE AMARAVATHI CO-OPERATIVE SUGAR MILLS LTD. (2012 (8) TMI 377 - CESTAT, CHENNAI) waste product was chargeable to 'nil' rate of duty in the Tariff, hence held to be non-excisable but in this case, sludge is exempted by an Exemption Notification. Therefore the appellants are not required to reverse the input credit availed by them which is attributable to sludge. In favour of assessee
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2013 (2) TMI 167
Discrepancy in Daily Stock Account Register - Duty demand with interest & penalty theron - assessee claimed the benefit of 25% of reduced penalty u/s 11AC as they have paid the entire amount of dues along with interest within 30 days from the date of communication of the order - Held that:- The order was issued by the Adjudicating Authority on 31.8.2009 and the Corrigendum was issued later on 23.10.2009 making certain corrections on the amount of duty confirmed in the said order. Therefore, the date of Corrigendum i.e. 23.10.2009, should be taken as the relevant date for computing 30 days for availing the benefit of reduced penalty as prescribed under Section 11AC The appellants claimed that they had paid all outstanding dues on 7.10.09 & 4.11.09, hence, in the interest of justice, it is necessary to remand the matter to the adjudicating authority to ascertain whether the entire amount of dues were paid within 30 days from the date of issue of Corrigendum i.e. on 23.10.2009 - in favour of assessee by way of remand.
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2013 (2) TMI 166
Denial of CENVAT Credit - Transfer of CENVAT Credit - Rule 10 of CCR, 2004 - Shifting of factory - Intimation to their jurisdictional proper officer on 13.4.2009 - Registration certificate was amended with new address on 1.5.2009 - Whether change of address will result in denial of credit already available with them Rule 10 of CCR, 2004, which allows a manufacturer of excisable goods to transfer all the assets and liabilities to their new place of shifting. There is no dispute that inputs as also capital goods and final products were shifted from the old address to new address, denial of credit is not justified. In favour of assessee
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2013 (2) TMI 165
Clearance made to SEZ - Export of dutiable goods - Rule 3(5) of the CENVAT Credit Rules, 2004 - Assessee has cleared inputs and capital goods to a unit in SEZ - Clearance to be treated as dutiable goods or exempted goods - Held that:- Following the decision in case of SUJANA METAL PRODUCTS LTD.(2011 (9) TMI 724 - CESTAT, BANGALORE) that the assessee for the clearance of the input or capital goods to an SEZ are to be treated as export of dutiable goods. Therefore, they are not liable to reverse the CENVAT credit. In favour of revenue
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2013 (2) TMI 164
Power of Commissioner(Appeal) - Power to remand back the case - Held that:- The Commissioner (Appeals) in his order has clearly set aside the order of the adjudicating authority. Therefore, it is not a mere remand without deciding the issue on merits. Thereafter, he has given one more opportunity to the department to consider the matter in terms of the guidelines he has stated, for reconsideration of the matter in terms of Board's circulars issued in this regard and also judgments on the issue. Therefore, the Commissioner (Appeals) order cannot be said to be an order of remand. Decision against revenue
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2013 (2) TMI 163
Rebate Claim - Applicant had filed a claim of rebate of duty paid on chassis cleared from Vellivayalchavadi Unit for export - Exported goods were originally manufactured at Applicants’ Unit at Hosur and subseqnelty transferred to Vellivayalchavadi Unit under Rule 16 and cleared for export after testing – Details of production and clearance of the said chassis were not shown in the ER-1 return of Vellivayalchavadi Unit – Held that:- Credit of duty paid and subsequently reversal made thereof in cases of export rebates represents nothing else but duty already discharged. What is necessary here is fact of discharge of duty and export of the same very goods. As decided in the case of CCE, Raigarh v. M/s. Micro Ink Ltd [2011 (3) TMI 1272 - BOMBAY HIGH COURT ] denial of rebate on the ground that the duty has been paid by reversing the credit cannot be sustained. Goods were received from their Hosur Unit-II who had paid duty vide Central Excise Invoice No. 14152 dated 29-3-2007, on the basis of which applicant had availed/reversed Cenvat credit under Rule 16 of Central Excise Rules, 2002. The goods were brought to their factory for emission testing as the said facility is not available at Hosur Plant. Hon’ble Tribunal has held in the case of CCE, Ahd. v. Tapsheel Enterprises[2007 (5) TMI 97 - CESTAT, AHMEDABAD] that third party goods in addition to own goods exported after testing and repacking and duty paid at removal from Cenvat credit taken is available as rebate - The provision of Rule 16 are rightly availed by applicant and therefore goods exported within six months from date clearance from their factory. Boards Circular No. 294/97-CX., dated 30-11-1997 clearly sates that when certain goods having special characteristics and are clearly identifiable with a unique engine No. and chassis No. it is possible to correlate the goods exported and payment of duty thereupon. In this circular the condition of direct export from the factory or payment of duty is also relaxed where such correlation and duty paid nature is established - ARE-1 original/duplicate contains the endorsement of customs that goods mentioned in ARE-1 have been exported vide said Shipping Bill. As such the export of said goods stands established – Rebate of duty on exported goods is admissible under rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004
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2013 (2) TMI 162
Commencement of Period of limitation for filing refund claim - Lapse of Modvat Credit - manufacturer of tractors - as per the notification any credit of specified duty lying unutilized on the 16th day of March, 1995 shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export. Held that:- In our opinion, when the credit will lapse and how much will lapse can be said to have been decided only when the matter gets finally decided. Even if we decide in this order that the credit shall lapse, the assessee may go in appeal against our order. Therefore whether the credit will lapse or not can be said to have been decided only when both the parties decide to call it a day and stop litigation. Therefore even if we uphold the view taken by the Department that the order passed by the ld. Commissioner before us is correct, the appellant would be entitled for refund within one year from the date of communication of the order because that will be the date on which the assessee can be said to have come to the conclusion that the credit has lapsed and cannot be adjusted any more and we have already taken a view that the words used “For any reason” would include the statutory provision relating to lapsing of the credit. Assessee becomes entitled to entire amount of credit of Rs. 237.7 Lakhs as refund. Adverse report by the cost auditor - held that:- There is no explanation given by the cost auditor as to the logic and rationale adopted by him. He simply says that he could not verify the figures of total purchase and modvat credit availed. If he has not found any discrepancy with regard to specific inventory codes selected by him it cannot be understood how he could not believe the figures given by the company. In case he had found discrepancy even in respect of one inventory code, adoption of an alternative method probably can be justified.
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CST, VAT & Sales Tax
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2013 (2) TMI 187
Input Tax Credit under Section 11(5) of KVAT Act - petitioner purchased substantial quantity of scrap from various offices of the BSNL - inability of BSNL to issue tax invoice - petitioner claimed the benefit of Circular No.18433/B1/2008/TD dated 30th August, 2008 BSNL dind availed the invoices as that they did not have a registration under the KVAT Act at the relevant point of time - Held that:- Rightly pointed out by the Government Pleader that the circular relied on by petitioner is applicable only in respect of sales effected by the Government departments, local authorities and autonomous bodies. Admittedly, BSNL is a company incorporated under the provisions of the Companies Act, 1956 and a company cannot be described as an autonomous body to be covered by the circular relied on by the petitioner. The petitioner contention that that when the Government has chosen to extend the benefit to the sales effected by the Government departments, local bodies and autonomous bodies, there is no reason to deny similar benefit to the petitioner who has effected purchases from a Government company is not acceptable as the question whether such a benefit should be extended to purchases from a Government Company, is a matter for the Government itself to consider, as it is in the realm of a policy decision. Thus going by the return filed and the replies submitted by the petitioner, he effected purchases not from BSNL but from MSTC. Therefore, according to the learned counsel, the claim now made by the petitioner that he effected purchase from BSNL is contrary to his own returns. Although it is true that petitioner seems to have made such an incorrect claim, still as already stated, MSTC itself has filed an affidavit before this Court that it was only an agent of BSNL. Similarly, BSNL has also taken a positive stand before this Court that purchases were effected from them. Thus it will be open to the petitioner to move the Commissioner of Commercial Taxes within two weeks from today for a clarification of Circular & if the petitioner moves for such a clarification and obtains a favourable order, it will be open to him to produce the same before the first respondent who will then consider the claim and pass appropriate consequential orders & if the petitioner does not succeed in obtaining favourable orders from the Commissioner as directed above, it will be open to respondents to proceed with the recovery action, on the expiry of the four months period.
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Indian Laws
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2013 (2) TMI 189
Preventive Detention order - Held that:- If the ordinary law of the land (the Penal Code and other penal statutes) can deal with a situation, recourse to a preventive detention law will be illegal. There seems to be conflict between the decisions cited by Mr. K.K. Mani, learned counsel appearing for some of the appellants, and the decisions cited by Mr. Altaf Ahmed, learned senior counsel l appearing for the State of Tamil Nadu. Hence, the matter should be considered by a larger bench for resolving this difference of opinion.
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