TMI Tax Updates - e-Newsletter
March 6, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
Income Tax
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Validity of notice u/s 147 / 148 - belief were communicated to the assessee independent of the document sought to be disclosed - Thus, the non-disclosure of the 2G Spectrum Report does not affect the notice - HC
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Reversal of CIT(A)’s order - CIT(Appeals) decided the issue in favour of the assessee without pointing out as to which additional evidence admitted by the tribunal and considered by him had clinched the issue in favour of the assessee - HC
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Rejection of registration u/s 12AA - When the school is running on commercial lines under the clad of charitable purpose, the parties were justified making enquiries and rejecting the application - HC
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Claim of deduction towards rent for the entire period between 1990 to 1997 – There is nothing on the record to suggest that liability for such prior period expenses crystallized during the said period - HC
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Addition u/s 41(1) - waiver of sales tax liability - the assessee following mercantile system of accounting must surrender the benefit when the right is accrued and cannot wait for the actual repayment- HC
Customs
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Permission to re-export Synchronous Digital Hierarchy (SDH) Transmission Equipment - abandoned goods - the goods in question here are entitled to be treated and cleared for re-export - HC
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Exemption under Notification 21/2002-Cus denied on the ground that ground that the goods imported are not complete kits but only a raw material for making such kits - Revenue has nothing to prove that this item is not used in diagnostic kits for HIV - AT
Indian Laws
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Offence under Section 138 of the Negotiable Instruments Act, 1881 - where a particular time is given from a certain date within which an act has to be done, the day of the date is to be excluded. - SC
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Bar on the person to practice before CESTAT who was appointed as member of CESTAT - The provision in question must be read to mean that the bar would not be applicable to a Member who demits the office while on probation - HC
Central Excise
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Rectification of mistake - issue of limitation was not considered - Tribunal was correct in exercising its jurisdiction u/s 35C(2) of the Act and correct its mistake by considering the issue of limitation - HC
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Manufacture - Classification of wooden vessel hull - if the goods have been exported, there cannot be any demand of duty and the minor procedural irregularities, if any, ought to be condoned - AT
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Refund of unutilized cenvat credit - export of goods - appellant has not executed any bond for export of the goods. If the goods are exempted, execution of bond was not required. - appellant are entitled for refund claim - AT
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Availment of CENVAT Credit - input credit on the items which were used for repairs and maintenance of the capital goods is eligible to the assessee - AT
Articles
Notifications
News
Case Laws:
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Income Tax
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2014 (3) TMI 154
Reassessment proceedings u/s 147 / 148 - validity of notice - non supply of documents to the assessee i.e. 2G Spectrum Report – Held that:- The order sheet entries demonstrate a clear and chronological compliance with the earlier order of the Court - In any case, the previous order of the Court expressly bars any objections by the petitioner to the fresh notice on the ground that the Revenue “had earlier issued notice under Sections 147/48 dated 5 July, 2011 - the petitioner’s present argument is that the proceedings are vitiated because the reasons in this case were recorded before the earlier notice was dropped – the argument is attempting to play the legality of the second notice against the existence of the first notice – was one that the previous order of this Court foresaw and specifically barred in terms of the order dated 28.5.2012, which is now final and binding upon both parties – thus, the notice is required to be set aside would set to nought the direction of the Court in the earlier writ petition – Decided against Assessee. Adequacy of the material disclosed to justify reassessment proceedings - Whether the Revenue is within its right to keep the 2G Spectrum Report from the assessee on the ground of confidentiality or whether the failure to supply the report vitiates the proceedings and Whether the reasons to believe that income has escaped assessment in this case meet the test under Section 148 and judicial directives in that regard – Held that:- Far from holding that all documents used by the AO, let alone specific documents indicated by the assessee, are to be disclosed - Only when the privilege is claimed as regards the reasons recorded or when no material is provided in addition to the mere assertion of the subjective satisfaction of the AO, may the principle denying privilege or confidentiality operate - Even then, the claim for privilege may still prevail in that the Court may consider the manner in which the documents are to be inspected, but such questions does not arise in cases such as the present, where concrete and specific details – which support the belief under Section 147/148 – are communicated to the assessee independent of the document sought to be disclosed - Thus, the non-disclosure of the 2G Spectrum Report does not affect the notice – Decided against Assessee with costs.
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2014 (3) TMI 153
Amount to be taken as LTCG - Whether the ITAT has erred in confirming the order of CIT(A) directing the Assessing Officer to adopt the amount of Long Term Capital gain by adopting the sale consideration as per registered Sale Deed – Held that:- CIT(A) has given a clear finding that the MOU and no other document can be a basis for the conclusion reached by the Assessing Officer and on the basis of these documents, a presumption cannot be raised about receiving the cash by the assessee - no specific evidence is referred to by the Assessing Officer about the allegation that assessee has been paid any amount in excess of the price of Rs. 7.36 crores as per the documents - the price has been accepted by the stamp duty authority and it is not disputed by the authority – thus, there was no infirmity in the order of the CIT(A). The entire issue is based on evidence on record, duly considered by CIT (A) as well as the Tribunal to come to a concurrent factual finding - MOU did reflect the sale price of Rs. 14.71 Crores, nevertheless, the agreement to sale as well as the sale deed recorded the sale consideration of Rs. 7.35 Crorse - There was no material to suggest that any sale consideration in excess of the said amount was actually paid - the CIT (A) as well as the Tribunal both have considered the development and limited use of land to the purchaser - Fifty per cent of the land was likely to be reserved - The AO did not have any other evidence barring the MOU to controvert such evidence - CIT (A) as well as the Tribunal relied on the valuation report of the registered valuer - Without any further evidence, the Assessing Officer could not have substituted such amount - Decided against Revenue.
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2014 (3) TMI 152
Reversal of CIT(A)’s order - Proper explanation not made - Addition made u/s 68 of the Act – Unaccounted cash credit – Whether the assessee offer explanation for different amounts credited in his account – Held that:- The Tribunal had not committed any error so as to give rise to substantial question of law - Entire issue was based on facts - The tribunal on the basis of evidence came to the conclusion that explanation was not acceptable - Different creditors were agriculturists and odd amounts were deposited - There was no explanation for this phenomena - the CIT(Appeals) decided the issue in favour of the assessee without pointing out as to which additional evidence admitted by the tribunal and considered by him had clinched the issue in favour of the assessee – Thus, the CIT(Appeals) in essence shifted the burden of establishing such facts on the Revenue rather than on the assessee – the entire issue is based on appreciation of facts – thus, no question of law arises – Decided against Assessee.
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2014 (3) TMI 151
Admission of additional evidence under Rule 46A of the Act – Held that:- The CIT (A) recorded that the notice of hearing issued by the Assessing Officer on 31st October 2011 was received by the assessee on the date of hearing itself - It was therefore that the assessee could not produce necessary evidence on such date - When subsequently, he attended the office of the Assessing Officer on 25th November 2011 with necessary evidence, he learnt that the order of assessment was already passed on 21st November 2011- on this ground that the CIT (A) permitted additional evidence to be produced – thus, CIT (A) committed no error nor the admission of additional evidence can be stated to be in breach of the requirement of Rule 46A of the Rules - Particularly when the interest of the Revenue was safeguarded by calling for the remand report and permitting the Assessing Officer to comment on such additional evidence – there is no reason to interfere - Decided against Revenue. Deletion confirmed by Tribunal – Held that:- CIT(A) was of the view that the entries of cash deposited are duly reflected in the personal cash book which the appellant has submitted under Rule 46A - The appellant has given documentary evidence relating to loans taken – thus, the source of the same is not questionable - From the contents of the order passed by the CIT (A), it can be seen that the entire issue is based on appreciation of evidence on record - The CIT (A) having undertaken detailed exercise of reconciling the accounts and examined the source of different deposits in cash, limited the addition to ₹ 10,45,000 – thus, there was no question of law arises - Decided against Revenue. Deletion made u/s 69 of the Act – CIT(A) was of the view that the source of cash is duly explained by the appellant with the help of cash book and sources of cash deposited in the cash book and in the bank account – thus, the source of investment in the property is treated as explained - The CIT (A) has given cogent reasons and found no grounds for sustaining the addition made by the Assessing Officer - the source of investment in the property stood explained – the order of the CIT(A) confirmed by the Tribunal – thus, no question of law arises – Decided against Revenue.
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2014 (3) TMI 150
Calculation of days of employment - Entitlement for deduction u/s 80JJAA of the Act – Whether new regular workmen had completed 300 days employment during the previous year - Held that:- The court ordered that the Tribunal shall address the question after giving an opportunity of being heard to the parties and also allowing them to produce further evidence/materials in support of their case, if they so desire – the other question remained open by the court - Decided in favour of Revenue.
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2014 (3) TMI 149
Rejection of registration u/s 12AA of the Act – Application u/s 12A of the Act - Assessee imparting education as a posh international school – Held that:- Even if nomenclature of the trust may indicate it is meant for charitable purpose, but if activities reveal otherwise, that should weigh with the authorities who grant registration – also, while considering claim of exemption, authorities under the Act would look into the actual activity of the institution, especially main activity of the institution - In the absence of facts indicating that the activities carried on attracts definition of charitable purpose, one cannot find fault with rejection of registration - When the school is running on commercial lines under the clad of charitable purpose, the parties were justified making enquiries and rejecting the application – thus, there is no reason to interfere in the order of the Tribunal - Decided against Assessee.
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2014 (3) TMI 148
Claim of deduction towards rent for the entire period between 1990 to 1997 – User rent liability towards GIDC – Held that:- There was nothing on the record to suggest that the liability for the earlier years crystallized during the year under consideration - The assessee was following mercantile system of accounting - The assessee had to account for the expenditure during the year when the liability crystallized - There was no elaboration how such liability crystallized during the period - As the Company is having mercantile accounting system, expenses are accounted on accrual basis – thus, lease rent payable to GIDC Ankleshwar/Bharuch has been accounted under Prior Period Expenses during the year - If for some reason even after laying the pipeline, the liability had not crystallized and was therefore open for the assessee to postpone the expenditure or the provision - the assessee had to demonstrate how during the current year, such liability could be claimed as having crystallized - There is nothing on the record to suggest that liability for such prior period expenses crystallized during the said period – Decided against Assessee.
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2014 (3) TMI 147
Restriction of addition – Bogus purchases made - Applicability of Section 40A(3) of the Act - Whether the Tribunal has substantially erred in restricting the addition made by the Assessing Officer to 5% of the total bogus purchases made – Held that:- The entire issue is based on materials on record - The Tribunal did not accept the Revenue’s stand that the purchases were bogus, in the sense that no material was received - the Tribunal held that the material was actually received for which payments were made - The Tribunal has not committed any error so as to give rise to any question of law - The Tribunal looking to the material retained portion by giving cogent reasons - the assessee could produce before the authorities the precise rate at which the purchases were made from M/s. Vishal Traders and other suppliers to demonstrate that the purchases made on the same day carried the same price - This would substantially eliminate the angle of the purchase price being artificially inflated - the Tribunal also noted other parameters such as higher net and gross profit rates of the present year compared to the earlier years of the recent past – thus, no question of law arises – Decided against Revenue
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2014 (3) TMI 146
Option given under clause (2) of Explanation to Section 11 (1) of the Act - Unspent income of the Trust –Held that:- The assessee did exercise the option as is apparent from the letter supplied by the assessee - the assessee conveyed to the Department that the assessee gave a notice of option exercised by the Trust to allow to spend surplus amount that may remain at the end of the previous year ended on 31st March 2009, during the immediately following the previous year ie., 2009-10 - Two things are thus abundantly clear – firstly, that such option was exercised before last date of filing the return, which was 30th September 2009 and secondly, that such option was exercised in terms of clause (2) of Explanation to Section 11 (1) of the Act - This was clearly not an option under subsection (2) of Section 11 - The caption of the communication dated 22nd September 2009 as well as the contents of the letter make this clear – thus, the assessee cannot be precluded from pursuing the option on the ground as was done by the Assessing Officer that no declaration in the prescribed form was made – the declaration was required only if the assessee’s option was to be covered by the provision of Section 11 (2) of the Act. The Tribunal has taken note of facts on record namely that the option in fact was exercised within the time permitted under the statute - It was a bona fide error to indicate a wrong figure - The intention to avail carryover of the unspent income to the next year was clear - Relying upon Trustees of Tulsidas Gopalji Charitable And Chaleshwar Temple Trust v. Commissioner of Income Tax [1993 (9) TMI 75 - BOMBAY High Court] Commissioner of IncomeTax v. Ziarat Mir Syed Ali Hamdani [2000 (11) TMI 110 - JAMMU AND KASHMIR High Court] - the requirement of exercising an option within the time permitted under clause (2) of Explanation to Section 11 (1) of the Act is directory and not mandatory - Substantial compliance thereof would therefore be sufficient - the Tribunal had committed no error in granting the benefit to the assessee for the entire amount since it was a mere oversight or bona fide error in not indicating the correct and full amount for the option under clause (2) of Explanation to Section 11 (1) of the Act – Decided against Revenue.
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2014 (3) TMI 145
Disallowance of excess Interest u/s 40A(2)(a) of the Act - Commercial expediency not proved - Held that:- The assessee paid interest in the range of 12% to 18% on unsecured loans - in the business of making beedies finances were needed for steady flow of cash to keep the business going - The interest rates were related to old borrowings - In the earlier years, such interest rate was accepted by the Revenue – also, the directors in question were in the highest tax bracket – thus, there is no reason to interfere in the findings of the Tribunal – thus, there was no question of law arises - Decided against Revenue. Addition made u/s 41(1) - waiver of sales tax liability – Mercantile system of accounting followed - Held that:- The Revenue submitted that the Karnataka Government had issued a circular during the previous year relevant to the assessment year under consideration waiving sales tax liability to the tune of Rs.22.51 lacs, but it was during the year that the liability thus ceased - The assessee instead accounted for such amount much later during the year when the refund was actually paid - the assessee following mercantile system of accounting must surrender the benefit when the right is accrued and cannot wait for the actual repayment – thus, the question is admitted for consideration – Decided partly in favour of Revenue.
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Customs
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2014 (3) TMI 136
Permission to re-export Synchronous Digital Hierarchy (SDH) Transmission Equipment - abandoned goods - Held that:- It is clear from Dugar (1992 (1) TMI 103 - SUPREME COURT OF INDIA) that when the goods are virtually abandoned by the importer/purchaser, as in this case, so long as ownership continues with the supplier, his request for their return through re-export cannot be turned down. In the present case, the order impugned by the petitioner does not allege that the goods were either mis-declared or wrongly classified or valued. In fact the revised PO supports the petitioner’s grievance that the importer was categorical in its intention not to take the goods and incur further anti-dumping duty liability. The importer- like in Dugar (1992 (1) TMI 103 - SUPREME COURT OF INDIA), abandoned the matter and even withdrew the appeal which it appeared to have filed before the CESTAT, primarily to aid the petitioner. There is nothing on the record indicative of mis-declaration or suppression or wrongful valuation of the goods at the time they were brought in. Clearly the importer in effect abandoned them once it became aware of the liability to pay anti-dumping duty. The importer also averred positively that the petitioner is the owner of the goods. - the goods in question here are entitled to be treated and cleared for re-export - Decided in favor of petitioner.
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2014 (3) TMI 135
Whether the CESTAT is right in law in directing the revenue to release the confiscated vessel while exercising its jurisdiction under Section 129E of the Customs Act, 1962? - Held that:- The order dated [2014 (3) TMI 82 - CESTAT MUMBAI] which is impugned before us is not an order passed under proviso to Section 129 of the Customs Act 1962 but is an order passed by the Tribunal in its inherent jurisdiction in exercise of it powers as an appellate authority in a pending appeal. In the above view of the matter the question of law as proposed by the revenue is not a substantial question of law and therefore, we see no reason to entertain the present appeal. - appeal dismissed - decided against the revenue.
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2014 (3) TMI 134
Exemption under Notification 21/2002-Cus., dated 1-3-2002 (S. No. 83) - Adjudicating authority denied the exemption on the ground that the goods imported are not complete kits but only a raw material for making such kits - Whether an exemption available for “HIV Diagnostic Kit” can be extended to an essential item used to make the kit work - Held that:- What we notice is that the exemption notification uses broad description rather than specific descriptions supported by Section Notes and Chapter Notes of the Tariff. The exemption is available to goods classifiable under Chapter 28, 29, 30 or 38 - exemption was meant also for something like the item imported which is not the reactive agent. The question is whether the exemption is to be given only when the entire kit is imported together. This does not stand to reason because this is a beneficial notification for providing exemption to Life Saving Diagnostic Kits as seen from the description given in the Table to Notification. Revenue has nothing to prove that this item is not used in diagnostic kits for HIV. To argue that the exemption will be extended when the equipment is imported and exemption will be denied when consumable is imported does not make sense in the case of a notification like the one being interpreted - exemption is to be extended to the impugned goods - Decided against Revenue.
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Corporate Laws
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2014 (3) TMI 133
Winding up of company - Inability to pay debts - Statutory notice has been duly served upon the respondent-Company, however, no reply has been given nor requisitions of the said statutory notice have been complied with - Held that:- it clearly transpires that the petitioner advanced loan of Rs.5,00,000 and even though, the same is confirmed, the respondent-Company has neglected to pay the same - it is clearly established that the respondent-Company has lost its financial substratum and it has become commercially insolvent, hence, it would be just and proper to direct that the respondent-Company 'Amadhi Investments Limited' be wound up. Accordingly, the respondent-Company Amadhi Investments Limited is hereby ordered to be wound up. The Official Liquidator attached to this Court appointed as Provisional Liquidator as per order dated 01.10.2013 is hereby appointed as Official Liquidator of the respondent-Company and the Official Liquidator is directed to take over the possession of the entire assets of the respondent-Company i.e movable, immovable as well as Bank Accounts etc. The Official Liquidator is further directed to do the needful for winding up of the respondent-Company as provided under the Act. The Official Liquidator shall submit a report within a period of three months - Decided in favour of assessee.
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PMLA
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2014 (3) TMI 137
Principle of natural justice - appellant contends that if the appellants have a right in law to cross-examine the witnesses whose testimonies are intended to be used against the appellants, why should this Court not interfere at this stage itself instead of allowing the Adjudicating Authority to proceed on a futile exercise and which will only result in multiplicity of proceedings. - Proceedings under Prevention of Money Laundering Act, 2002. Held that:- The Adjudicating Authority is currently seized of and in seisin of the complaints. We, at this stage, do not know as to which way the order of the Adjudicating Authority will go. It cannot also be said at this stage whether the Adjudicating Authority even if deciding against the appellants will rely upon the material before it qua which the appellants claim a right of cross-examination. All this can be known only when the Adjudicating Authority passes an order and qua which if the appellants are aggrieved, the appellants shall have their statutory remedy. Any interference by us at this stage in the proceedings of which the Adjudicating Authority is seized is thus uncalled for and would result in a situation which the Supreme Court has warned the High Courts to avoid. - The Supreme Court [2006 (11) TMI 543 - SUPREME COURT OF INDIA] held that the writ jurisdiction being discretionary, should not ordinarily be exercised by quashing a show cause notice. - Decided against the petitioners.
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Service Tax
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2014 (3) TMI 144
Imposition of equivalent penalty u/s 78 - Benefit of Notification No.32/2004-ST dated 03.12.2004 - Abatement of 75% from the gross taxable value of the services - Held that:- applicant had produced necessary declaration in support of their claim of abatement under Notification No. 32/2004-ST dated 03.12.2004, as amended - original documents are required to be scrutinized, for verifying their claim of abatement. In the result, the matter be remanded to the original authority for consideration of these evidences and examine the eligibility of the benefit of Notification No. 32/2004-ST dt. 3.12.2004 - Decided in favour of assessee.
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2014 (3) TMI 143
Waiver of predeposit of service tax - Imposition of equal amount of penalty imposed under Section 78 and penalty imposed under Section 76 - Held that:- Applicant had received the service of M/s. Fels Cranes Pvt. Ltd., Singapore, an overseas company, against a contract for designing, manufacturing, supplying, installing, testing and commissioning of 4 numbers of Rubber Tyred Cranes - Prima facie the entire contractual value had been assessed to customs duty, considering the same as goods. Consequently, even if it is considered as ‘works contract’ comprising the value of goods as well as the services, the principle of vivisecting the contract, at this stage, cannot be considered as the issue had been referred to the Larger Bench. Besides, we find that the Applicant Company being a Government of India Undertaking and the issue, prima facie, being not settled, the Applicant could able to make out a case for total waiver of the dues adjudged. Consequently, predeposit of all dues adjudged is waived and its recovery stayed during pendency of the Appeal - Stay granted.
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2014 (3) TMI 142
Denial of cenvat credit - Outdoor Catering Service received in the factory canteen and used for supplying food to the workers/employees – Waiver of Pre-deposit – Held that:- The food supplied to the workers/employees was subsidised to the extent of 50% - Following Commissioner vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] - subsidy in the matter of serving food to workers by making use of outdoor catering service was held to be immaterial insofar as the manufacturer’s claim of CENVAT credit on the service was concerned - the appellant directed to pre-deposit an amount of Rupees One lakh as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.
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2014 (3) TMI 141
Waiver of the pre-deposit - Demand of service tax - Cargo handling services - Held that:- contract talks about transportation of goods as well as loading and unloading of the goods either at the stock yard or at the godowns. Since the entire issue needs to be appreciated from the evidence on record and the findings recorded by the lower authority, we are of the view that the appellant has not made out a prima facie case for the complete waiver of the pre-deposit of the service tax liability confirmed by the lower authorities - Conditional stay granted.
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2014 (3) TMI 140
GTA services can be treated as output service or not – Suo moto credit allowed or refund u/s 11B to be filed - Waiver of Pre-deposit – Held that:- The show cause notice itself mentions that the recredit had been reflected in the ER-I Return as Cenvat credit statement had been filed with the ER-I Return and that it is from this statement that the department came to know about the recredit - the appellant have declared the fact of re-credit in their ER-I Return and this return was available with the department - the demand prima facie appears to be time barred - Pre-deposit of cenvat credit demand, interest and penalty waived till the disposal – Stay granted.
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Central Excise
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2014 (3) TMI 132
Reversal of CENVAT Credit - Held that:- Following decision of decision of the Tribunal in the case of Commissioner of Central Excise Vadodara Vs. Asia Brown Boveri Ltd. reported in [2000 (7) TMI 110 - CEGAT, NEW DELHI] and in the case of Commissioner of Central Excise, Coimbatore Vs. American Auto Service reported in [1995 (6) TMI 33 - CEGAT, MADRAS] where the Tribunal held that in case of input or capital goods were cleared as such the manufacturer to reverse the credit in view of the provisions of Rule 57AB of the Central Excise Act, 1944 - Decided in favour of assessee.
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2014 (3) TMI 131
Waiver of pre deposit - Held that:- there is prima facie evidence to suggest that the appellant recovered service tax at the rate of 10.30% and not at the rate of 12.36% from the customers. They also disputed service tax liability at the said higher rate. Under the circumstances, the undisputed rate of duty, which was actually collected by the appellant from the customers, was 10.30%. Taking into account such figure, the principal liability of tax which cannot be disputed by the appellant comes to ₹ 19 lakh. Out of total tax demand of ₹ 72 lakh, this would leave a disputed figure of ₹ 53 lakh. We are of the opinion that by way of predeposit, the appellant should be made to deposit the entire undisputed amount, which in the present case has been recovered by the appellant from the customers and 25% of the disputed tax demand - Conditional stay granted.
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2014 (3) TMI 130
Power of tribunal to rectify the mistake - In the process of rectifying its mistake it considered the issue of limitation for the first time which was not considered earlier. - Held that:- the issue of limitation though argued before the Tribunal, was not considered while passing the order dated 1 September 2004. The decision relied upon by Mr.Bhate in the matter of Deva Metal Powders Pvt. Ltd. (2007 (12) TMI 221 - SUPREME COURT OF INDIA) in fact very categorically holds that a mistake capable of being rectified is not confined to clerical or arithmetical mistake but any error apparent from the record. A mistake which can be rectified is one which is patent, obvious and whose discovery is not dependent on argument or elaboration. In this case, the Tribunal rectified its mistake in not having considered the issue of limitation earlier. In the process of rectifying its mistake it considered the issue of limitation for the first time which was not considered earlier. This consideration by the Tribunal was well within the exercise of its jurisdiction under Section 35C(2)of the Act to rectify a mistake apparent on the record. Gujarat High Court in Baroda Rayon Corporation Ltd. Vs. Union of India [2005 (10) TMI 104 - HIGH COURT OF GUJARAT AT AHMEDABAD] observed that where the findings of a Tribunal are a result of ignoring the facts on record or failing to consider the averments made in the memorandum of appeal, then such an error is an error apparent on record. In such cases, the Court held that the Tribunal should not feel shy to accept that it had committed an error. Tribunal was correct in exercising its jurisdiction under Section 35C(2) of the Act and correct its mistake by considering the issue of limitation. - Decided against the revenue.
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2014 (3) TMI 129
Penalty u/s 11AC - Whether in the facts and circumstances of the case and in law, the Tribunal is justified in reducing the penalty imposed under Section 11AC of the Act having regard to the mandatory language of Section 11AC of the Act - Held that:- Tribunal has upheld a finding of fact of the authorities below that there was an intention on the part of the assessee to evade payment of duty on due date. Thus, equivalent penalty under Section 11AC of the Act was warranted. However, purporting to exercise its discretion, the Tribunal has by the impugned order reduced the penalty - However, in the present facts and circumstances of the case there is no need of remand as authorities under the Act have already given a finding of fact that there was an intention to evade the duty on the part of the Respondent-Assessee - Decided in favour of Revenue.
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2014 (3) TMI 128
Cenvat Credit on inputs - Activity of supplier amounting to manufacturing activity or not - conversion of black bars / coils into bright bars - Held that:- The Tribunal in the case of CCE Vs. Punjab Lighting Aids P. Ltd. - [2011 (6) TMI 221 - CESTAT, DELHI] held that, wires had been received by the respondent during the period from August, 2003 to 8-7-04, i.e., during the period for which the 1st and 2nd provisos had been added to sub-rule (3) to Rule 16. Therefore, the amount paid by the manufacture-suppliers of wire on the clearance of wire has to be treated as duty and respondent who had received the wire would be eligible for its CENVAT credit. The only aspect which has to be checked in as to whether the wire manufacturers had obtained refund of the duty paid by them on the wire and in case they have taken the refund, the respondent would not be eligible for CENVAT credit. Matter remanded back for denovo adjudication in the light of the observations made in the case of Punjab Lighting Aids P. Ltd. - Decided in favor of assessee.
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2014 (3) TMI 127
Manufacture - Classification of wooden vessel hull - manufacturing of wooden hull motor yacht - Job work - export of goods - M/s. ABG had received a wooden structure from M/s. WBB for further fittings in their shipyard - ABG had discharged the service tax liability on such job work undertaken by them - M/s. ABG had been always stating that the yacht is to be exported from their premises which has been allowed by the port officer as well as customs authorities. - Held that:- adjudicating authority has erred in coming to the conclusion that the yacht was cleared from the M/s. ABG shipyard to home consumption. The holding the services as being manufacturing activities may not arise as there is no dispute to the fact that M/s. WBB had cleared a wooden hull with super structure to the appellant, on which further activities were undertaken; the resultant structure was cleared for further fitment to Dubai, in terms of these, it cannot be held that the appellant M/s. ABG had intention to evade duty and hence misclassified the product. - there is strong force in the contentions raised by the ld. Counsel that if the goods have been exported, there cannot be any demand of duty and the minor procedural irregularities, if any, ought to be condoned. - Demand with interest and penalty set aside - decided in favor of assessee. Issue of classification of Hull - Held that:- The appellants M/s. WBB have been canvassing before the authorities that they had bonafide belief that the said hull cleared by them gets classified under 89.06 and not under 89.03 and at the most it can be a question of misclassification which does not require invocation of extended period for demand of duty - matter remanded for re-adjudicating the case.
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2014 (3) TMI 126
Clandestine manufacture and clearance of cotton / manmade fabrics - Shortage in stock found during the course of stock verification - Held that:- In respect of cotton fabrics, the evidence like shortage of cotton fabrics of the main appellant found in the second unit and the statements of all those who were associated with the manufacturing activity of the main appellant create a very strong suspicion that the appellant is involved in clandestine manufacturing and removal of fabrics. Above evidence are sufficient to hold that main appellant has carried out manufacturing and clandestine removal of cotton fabrics - Demand of duty alongwith redemption fine confirmed. - Decided against the assessee. Demand in respect of man made fabrics (MMF) - Held that:- Under the circumstances simply on the basis of few statements and private records of the appellants, it cannot be held that the main appellant was carrying out the manufacture of man made fabrics, which was agitated by the appellants throughout the proceedings before the Adjudicating Authority of the appellate authority. Confirmation of demands, mentioned in Para 5(iii) by the lower authorities does not survive. - Decided in favor of assessee. Benefit of Notfn No. 253/82. - Held that:- Lower authorities have confirmed demands of ₹ 5,36,670/90 as indicated in Para 5(iv) above on the ground that benefit of ‘NIL’ rate of duty under Notfn No. 253/82 has been wrongly availed as these fabrics were presumably have been subjected to dutiable processes and not exempted processes. It has been rightly contested by the main appellant that addresses of those buyers, who got the fabrics after undertaking exempted processes, were exiting in the records of the main appellant. - that demands cannot be confirmed against a manufacturer simply on the basis of few confessional statements and some note books/private records maintained by the workers/employees of a manufacturer. - Demand set aside - Decided in favor of assessee. Demand on the basis of a sample registrar found in the premises of M/s Jindal Synthetics - Held that:- It is strange that Revenue is conveniently considering a record available in the premises of M/s Jindal Synthetics to be the one pertaining to the main appellant but does not want to accept that those records, found in factory premises of the main appellant, could also contain the entries of M/s Jindal Synthetics. - Demand set aside. In conclusion, demand in respect of shortage in stock and cotton fabrics confirmed - demand on other aspects set aside - Decided partly in favor of assessee.
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2014 (3) TMI 125
Unaccounted production and clearance of copper enamelled wires - clandestine removal - retracted statments - Held that:- Both the excise clerk, production supervisor have confirmed that private notes/chits which contains the details of clandestine removal of goods were written and maintained by the employees of the appellant No. 1; if the recovered documents are admitted to have been maintained by the production supervisor and were in the factory premises (at the security gate), the said evidence is sufficient to prosecute the appellant, supported by the statements of Chief Executive and directors. There is nothing on record to show statements made by the clerk, production supervisor, and the directors were retracted. In the absence contrary evidence of retraction by others, I am of the view that the lower authorities were correct in confirming the demand raised against the appellant alongwith interest and imposed penalties. - Decided against the assessee. Benefit of reduced penalty 25% of the amount duty liability - Held that:- The law has been settled by the Hon. High Court of Gujarat in the case of Akash Fashions Prints Pvt. Ltd - [2009 (1) TMI 113 - GUJARAT HIGH COURT] as to that Tribunal can also extend the benefit of reduced penalty of 25% of the amount of duty, if it was not extended by the lower authorities - penalty imposed on appellant No. 1 should be 25% of the amount of duty confirmed on them as per the provision of section 11AC of the Central Excise Act, 1944, subject to the condition that the entire duty liability and the interest and said penalty as indicated herein above is paid within 30 days of the receipt of this order. - Decided partly in favor of assessee.
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2014 (3) TMI 124
Refund of unutilized cenvat credit - export of goods - Notification no. 5/2006 - manufacturers of exempted goods - goods were not exported under bond - applicability of provisions of Rule 6(6)(v) of CENVAT Credit Rules, 2004 - Held that:- The issue came up before the Hon'ble High Court of Bombay in Repro India Ltd. (2007 (12) TMI 209 - BOMBAY HIGH COURT) wherein the Hon'ble High Court held that CENVAT credit used in the manufacture of final product being exported irrespective of the fact that final product are otherwise exempted by provisions of Rule 6(6)(v) of the CENVAT Credit Rules, 2004 are applicable. In the case of Salzer Controls Ltd. [2000 (12) TMI 870 - CEGAT, CHENNAI] and Paras Ship Breakers Ltd. [2003 (5) TMI 377 - CEGAT, NEW DELHI] this Tribunal has held that non-execution of bonds are only technical lapse. Further, in the case of Well Known Polyester Ltd. (2011 (1) TMI 664 - CESTAT, AHMEDABAD) wherein the exempted goods were exported without bond or LUT by an assesee who was not even registered without bond or LUT by an assessee who was not even registered with the Central Excise department. This tribunal has held that execution of bond/LUT was only procedural lapse for which refund could not be denied. In this case, appellant has not executed any bond for export of the goods. If the goods are exempted, execution of bond was not required. - appellant are entitled for refund claim - Decided in favor of assessee.
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2014 (3) TMI 123
Waiver of pre-deposit - Clandestine removal of goods - computation of excess production on the basis of average consumption of electricity - demand of duty and levy of penalty - Held that:- more or less, similar evidence/circumstances, as referred to in Shridhar Casting’s case(2012 (9) TMI 170 - CESTAT, MUMBAI) have been brought out on record by the Revenue against the Applicants in the present set of Appeals. The ld. Consultant for the Applicants vehemently argued that besides consumption of electricity, other material evidences, like transporter’s documents, raw materials purchased, etc. are necessary as held in Orange Alloys case (2012 (11) TMI 374 - BOMBAY HIGH COURT) by the Hon’ble High Court, while directing pre-deposit. The said argument of the Applicants though may sound plausible, but on a cumulative reading of the above observations along with the facts and circumstances narrated in Sridhar Casting’s case(2012 (9) TMI 170 - CESTAT, MUMBAI), we do not find force in the said argument for the simple reason that Their Lordships, while directing pre-deposit followed the judgment of Hon’ble Supreme Court in Bhagwati Ispat Pvt. Ltd.’s case(2006 (11) TMI 222 - SUPREME COURT OF INDIA). Even though the Applicants have all along been disputing the basis of consumption of electricity for confirmation of the demand, but could not bring out any materials on record, justifying the high consumption of electricity, which varied significantly. Appellant directed to make pre-deposit of 25% of duty confirmed - stay granted partly.
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2014 (3) TMI 122
Availment of CENVAT Credit - Credit denied on ground that goods does not qualify as capital goods - Held that:- HR Plates, MS Plates, SS Plates, Weld etc have been used for maintenance and repairs of the capital goods. Therefore, as held by the Hon'ble High Court of Rajasthan in the case of Union of India vs. Hindustan Zinc Ltd [2006 (11) TMI 551 - SUPREME COURT OF INDIA] that input credit on the items which were used for repairs and maintenance of the capital goods is eligible to the assessee - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (3) TMI 155
Imposition of penalty under Section 12(5)(iii) - Whether in the facts and circumstances of the case, when the taxability of the portion in respect of the sale of entry 7(a) and 7(b) of Second Schedule of Tamil Nadu General Sales Tax Act was not concluded, the imposition of penalty under Section 12(5)(iii) is legally sustainable - Held that:- once an assessment is made on the basis of the books of accounts, for invoking the provisions of Section 12(5) of the Act to levy penalty, the element of deliberateness, wilfulness or blameworthy conduct on the part of the assessee may not be necessary - assessee was under the bonafide impression as regards the liability of the turnover claimed as exempted in the return, and that it is not the case of the Revenue that the said turnover is not shown in the return - turnover disclosed the return could not be lost sight of while considering the plea of the assessee as regards the bona fide claim to levy penalty - Following decision of CEMENT MARKETING CO., OF INDIA LTD v. ASSISTANT COMMISSIONER OF SALES TAX [1979 (10) TMI 184 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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Indian Laws
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2014 (3) TMI 139
Offence under Section 138 of the Negotiable Instruments Act, 1881 - contention that as a period of six months had lapsed between the date of drawl of the cheque - Held that:- the use of word “from” in Section 138(a) requires exclusion of the first day on which the cheque was drawn and inclusion of the last day within which such act needs to be done. In other words, six months would expire one day prior to the date in the corresponding month and in case no such day falls, the last day of the immediate previous month. Hence, for all purposes, the date on which the cheque was drawn, i.e., 31.12.2005 will be excluded and the period of six months will be reckoned from the next day i.e. from 1.1.2006; meaning thereby that according to the British calendar, the period of six months will expire at the end of the 30th day of June, 2006. Since the cheque was presented on 30.6.2006, we are of the view that it was presented within the period prescribed. Decision in the case Econ Antri Ltd. vs. Rom Industries Ltd. & Anr., AIR [2013 (9) TMI 246 - SUPREME COURT] approving given in Saketh [1999 (3) TMI 591 - SUPREME COURT] and Haru Das Gupta [1972 (2) TMI 88 - SUPREME COURT OF INDIA] followed wherein it was held that where a particular time is given from a certain date within which an act has to be done, the day of the date is to be excluded. Viewed from any angle, the prosecution is not time barred and therefore, cannot be scuttled at this stage on this ground. - Decided against the petitioner.
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2014 (3) TMI 138
Bar on the person to practice before CESTAT who was appointed as member of CESTAT - Appointment of Member (Judicial) of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) - Mr. Ramesh Nair - whether respondent unconditionally accepted the terms of his appointment as per the letter of offer dated September 13, 2012 read with the corrigendum dated September 19, 2012 - Scope of the term ‘hold office’ used in Section 129(6) of the Act in order to determine whether a probationer can be said to be holder of office of Member CESTAT. - Tribunal concluded that a person under probation may not be said to be holding an office for the purpose of section 129(6) of the Act. It was further concluded by the Tribunal that in case of discharge of probationer from service on account of not being not found suitable for being confirmed may not be compared with cessation of office by person who has acquired a lien on it. Held that:- the bar under Section 129(6) would be applicable to a Member holding the post on substantive basis. This we say so for the reason, it is not the case of the respondent that even after demitting office as a confirmed Member (Judicial) he can practice in CESTAT. His case was on demitting office as a probationer, the bar under Section 129(6) would not be applicable. A Member demitting office while on probation does not retire whereas a Member who is confirmed, retires on attaining the age of superannuation, unless he resigns. The rules do recognize Member on probation and a Member who is confirmed as two distinct separate classes. The provision in question must be read to mean that the bar would not be applicable to a Member who demits the office while on probation. - Petition dismissed.
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