TMI Tax Updates - e-Newsletter
March 25, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS - It would be wholly unreasonable to deduct tax at source on an amount which has not accrued to the Petitioner as income during the financial year in question, the entitlement of the Petitioner being contingent on the outcome of the challenge to the arbitral award. - HC
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Income Tax:
Waiver of Interest for defaults in payment of advance tax u/s 234B rejected - since the entire amount was not spent the question of any allowable expenses being deducted in computing the income from the profits and gains of the appellant does not arise. - Interest not waived - HC
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Income Tax:
Disallowance of bad debts - AO wrongly placed reliance on Section 72A which pertains to carry forward and set off of the accumulated loss and unabsorbed depreciation allowance in case of amalgamation of company - HC
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Income Tax:
Jurisdiction u/s 263 by CIT(A) - AO has failed to take recourse to the provisions of Section 14A - The interference by the C.I.T. was based on facts and not any change of opinion, thus the order of the CIT is restored. - HC
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Income Tax:
Notice issued u/s. 153C - assessment upon a dissolved company is impermissible as there is no provisions in Income Tax Act to make an assessment thereupon - AT
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Income Tax:
Registration u/s 12AA - violation of various conditions in S 13(1)(d) cannot be examined at the time of granting registration and can be examined only while giving exemption u/s 11. - AT
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Income Tax:
Depreciation disallowed on medical instruments given on lease due to closure of business - The word 'used' would include actual use or at least keep ready for use - depreciation allowed treated as 'passive' user. - AT
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Customs:
Filling an appeal by department - committee of commissioners - Since the authorisation granted to the lower authorities is without jurisdiction, appeal is not maintainable - AT
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Customs:
Interest on the differential duty for the period prior to amendment in 2006 - the amendment cannot be considered to be retrospective in nature; and cannot be made applicable to pending proceedings. - Tri
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Service Tax:
Appeal against the order of CESTAT directing deposit of 1 crore as pre-deposit - inclusion of reimbursement of expenses - Insofar as the balance Rs. 60 lacs is concerned, stay granted - HC
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Service Tax:
Letter issued by the Superintendent is not an appealable order issued by a competent authority. - AT
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Service Tax:
Condonation of delay in filing an appeal - Commissioner (Appeals) has vested discretionary power to condone delay beyond first 3 months if appeal is within next 3 months. - AT
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Central Excise:
Petitioner has challenged the Trade Notice issued by Commissioner - any order or circular cannot nullify the statutory provision. - HC
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Central Excise:
Duty paid at the time of clearance of the product, which was not required to be paid on account of non-manufacture activity, amounts to reversal of the entire Cenvat credit and in such a situation, the demand of Cenvat credit cannot be sustained. - AT
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Central Excise:
Input service credit availed on CHA services, Port services, GTA services, Courier services and Business Auxiliary Services - in the case of export of goods, the place of removal is the port from where the goods are exported. - AT
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VAT:
Composition scheme was opted under UPTT but no composition scheme was opted under UP Vat Act for the same contract - AO can not demand tax under composition scheme on UPVAT, when not opted - HC
Articles
News
Case Laws:
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Income Tax
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2013 (3) TMI 441
Unaccounted stock of 18869 Metric Tones (M.T) of ore - survey u/s 133(a) by DDIT(Inv) - application before ITAT for bringing additional evidence on record rejected as the relevant material was available with the assessing officer - Held that:- No substantial question of law will arise in this appeal as all the three authorities have taken into consideration material which is on record and have carefully given their finding. Inspite of the several opportunities given to the appellant the documentary evidence was not produced on record to establish the same and only at the time of hearing of the appeal before ITAT an application for bringing additional evidence on record was filed even then the said application was considered and was rejected by reasoned order. Therefore, no case is made out for interfering with the orders passed by the authorities below. All the authorities have considered the evidence on record. The appellant on the other hand is not being in a position to establish or to give satisfactory reason in respect of unaccounted iron ore to the tune of 18869 M. T - against assessee.
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2013 (3) TMI 440
TDS - Denial of certificate u/s 197 - Admissibility as Income - Whether an amount which was permitted to be withdrawn against a bank guarantee represents income? - Whether when an existing arbitral award which is pending, the amount which has been awarded can be included in the income of the awardee? - Whether income tax can be levied on the right to receive compensation - Whether tax can be deducted at source even if the income has not accrued to the assessee - Petitioner is a Company incorporated in accordance with a scheme for rehabilitation sanctioned by the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 - The arbitral tribunal made an award in the amount of Rs. 179 crores. Held that:- Under the Income Tax Act, 1961, income chargeable to tax is income that is received or is deemed to be received in India in the previous year relevant to the year in which assessment is made or the income that accrues or arises or is being accrued in India during such year. As decided in CIT vs. Shoorji Vallabhdas and Co., (1962 (3) TMI 6 - SUPREME Court “the substance of the matter is the income”. Also in Poona Electric Supply Co. Ltd. vs. CIT, (1965 (4) TMI 20 - SUPREME COURT) it was held that “Income-tax is a tax on the real income i.e., the profits arrived at on commercial principles subject to the provisions of the Income Tax Act.”. These principles were followed in the judgment in Godhra Electricity Co.Ltd. vs. CIT [1997 (4) TMI 4 - SUPREME COURT] in holding that even though the assessee was following a mercantile system of accounting and had made entries in its books regarding enhanced charges for the electric supply made to the consumers, no real income had accrued in respect of those enhanced charges in view of the fact that soon thereafter the assessee had been subjected to litigation in a suit filed by the consumers. It would be wholly unreasonable to deduct tax at source on an amount which has not accrued to the Petitioner as income during the financial year in question, the entitlement of the Petitioner being contingent on the outcome of the challenge to the arbitral award. Moreover, it has also not been disputed on behalf of the Petitioner and it is fairly conceded by Counsel for the Petitioner that if the challenge to the arbitral award ends in favour of the Petitioner, the Revenue would be entitled to bring to tax the amount accrued in the corresponding year. The ITO (TDS-I), Nashik was not justified in denying a certificate u/s 197 despite the fact that such a certificate has been issued earlier for three preceding F.Ys. 2009-10, 2010-11 and 2011-12.. No other objection to the grant of a certificate u/s 197 has been asserted on behalf of the Revenue at the hearing First Respondent directed to issue a certificate u/s 197 for financial year 2012-13 - in favour of assessee.
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2013 (3) TMI 439
Interest for defaults in payment of advance tax - Application for waiver of interest levied u/s 234B rejected - Petitioner filed returns of income tax for the AY 1997-98 declaring loss of Rs. 13,32,280/- whereas respondent no. 3 assessed petitioner's income at Rs.54,49,180/- thus raising a demand for tax with interest as the petitioner has not actually spent any amount - Held that:- The assessee had not spent entire amount which was claimed by him and, as such, since the entire amount was not spent the question of any allowable expenses being deducted in computing the income from the profits and gains of the appellant does not arise. The ratio of the judgment in the case of Gogte Minerals (1995 (9) TMI 20 - KARNATAKA HIGH COURT) as relied on by assessee will not apply to the facts of the present case in the said case it was concluded that there was no obligation on the part of the assessee to fill up the pit at the end of the contract and in that context Karnataka High Court observed that the expression “undertake”means to make a promise to do something at future date, according to the Tribunal, but what the rule provides for, is to perform in a phased manner the restoration, reclamation and rehabilitation within the time stipulated under the rule. In the said case on facts whether actual amount has been spent during the assessment year was not considered by the Court and as such ratio of the said judgment will not apply to the facts of the present case. Therefore no reason to interfere with the impugned order passed by respondent no.1 levying interest - against assessee.
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2013 (3) TMI 438
Disallowance of bad debts - Postpone of claim of bad debts which had already become bad before amalgamation - ITAT deleted the disallowance - Held that:- Where the amalgamating company carried certain doubtful debts which were, till date of amalgamation, not written off as bad debts and only after amalgamation, they were written off as bad debts in the succeeding year, the transferee company i.e. assessee company could write off such doubtful debts as bad debts. Once amalgamation took place, there could hardly be a matter of dispute that such debts being the liability of the company passed on to the transferee company and after the amendment, it needed to be allowed in the year it was written off in the books. As held in T.R.F. Ltd. Vs/. Commissioner of Income-tax reported in [2010 (2) TMI 211 - SUPREME COURT] after the amendment of section 36(1)(vii) in order to obtain a deduction of bad debts, it is not necessary for the assessee to establish that the debt, in fact, had become irrecoverable; it is enough if the bad debts are written off as irrecoverable in the accounts of the assessee. Also in the case of CIT V.T. Veebadhrarao & K. Koteshwerarao & Co. & Co. [1974 (1) TMI 23 - ANDHRA PRADESH HIGH COURT] it was opined that once firm/company is taken over by the successor-firm, the successor-firm can claim deduction of the predecessor firm under Section 36(2) of the Act. AO wrongly placed reliance on Section 72A which pertains to carry forward and set off of the accumulated loss and unabsorbed depreciation allowance in case of amalgamation of company but in the present case,this was not a case of any carry forward of loss or depreciation of the assessee company, but claiming of bad debts with respect to certain doubtful debts of the amalgamating company were written off as bad debts after amalgamation - in favour of assessee. Late payment of employees' provident fund contributions u/s. 36 (1)(va)- CIT(A) deleting the addition as confirmed by ITAT - Held that:- Tribunal has confirmed the view of CIT(A) under which he had directed the AO to allow the benefit, if it was paid within five days of grace period. Amount involved is also not very large, thus no reason to interfere with this question - in favour of assessee.
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2013 (3) TMI 437
Jurisdiction u/s 263 by CIT(A) - as per CIT(A) AO has failed to take recourse to the provisions of Section 14A to disallow the expenditure in relation to the income which does not fall a part of the total income - Tribunal reversed the order of the C.I.T. as his observation are not based upon appreciation of the facts as the assessee has itself disallowed a sum of Rs.1.33 crores in its computation of income - Held that:- The assessee did not maintain any separate accounts for the purpose of the exempt income. The assessee did not give one to one co-relation between the funds available and the funds deployed.It was, therefore, not possible to follow with any amount of certainty as to the part or portion of the sum of Rs.4,49,02,775/- paid on account of interest relatable to the exempt income. The assessee has admittedly earned interest amounting to a sum of Rs.2,68,75,491/-. which could not have been set off against the sum of Rs.4,49,02,775/- because the sum of Rs.2,68,75,491/- earned on account of interest is clearly taxable. The interest paid by the assessee amounting to Rs.4,49,02,775/- is both on account of taxable income and the exempt income. It was for the assessee to furnish the actual amount of interest paid for the purpose of earning the dividend income which the asessee did not do. The assessee, as such, did not discharge its burden and, therefore, the assessee could not have claimed that only a sum of Rs.1,33,51,132/- was relatable to interest paid for the purpose of earning the exempt income. There was, as such, reason enough to hold that the assessment was erroneous and was also prejudicial to the interest of the Revenue. Thus the Tribunal did not realize the facts and circumstances correctly. The interference by the C.I.T. was based on facts and not any change of opinion, thus the order of the CIT is restored.
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2013 (3) TMI 436
Notice issued u/s. 153C - CIT (A) upheld the assessment on a company which has been dissolved / amalgamated under section 391 and 394 of the Companies Act, 1956 as invalid - CIT (A) deleted the addition made on account of unexplained purchase u/s. 69C & addition on account of expenses and depreciation - Held that:- Fully accepting the finding of the CIT (A) that a company incorporated under the Indian Companies Act is a juristic person. It takes its birth and gets life with incorporation and it dies with the dissolution as per the provision of the Companies Act. On amalgamation, the company seizes to exist in the yes of the law. Thus, assessment upon a dissolved company is impermissible as there is no provisions in Income Tax Act to make an assessment thereupon. CIT(A) has rightly held that assessment on a company which has been dissolved by amalgamation u/s. 391 and 394 of the Companies Act, 1956 is invalid as admittedly, assessee company in the present case stood dissolved on 19.9.2010 on amalgamation with M/s Lakhanpal Infrastructure Pvt. Ltd. and the assessment order in the present case was framed on 31.12.2010 - in favour of assessee.
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2013 (3) TMI 435
Registration u/s 12AA rejected - Commissioner observed that activities of the Society do not qualify in the nature of charity within the meaning of Section 2(15) - Held that:- At the stage of application for registration, what is required is the authorities can pursue the objects of the society as well as verify the genuineness of the activities.From the Memorandum of Association of the Society, it becomes clear that the society is mainly floated for the purpose of education and also to provide scholarships to the students and to do other general charitable works like establishing and maintenance of parks, gardens, gymnasiums, sports clubs, Dharamshalas and rest houses and rest houses for the use of public in general. Thus it is clear that the society is mainly registered for the charitable purposes. The observation of Commissioner that mere provisions of education is not charitable, is not correct in view of the decision of High Court in case of Pinegrove International Charitable Trust V. Union of India [2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA ]. Further it has been observed by the Court that at the stage of registration only genuineness of the activities of the society, are required to be gone through. Thus as Commissioner has nowhere doubted the genuineness of the activities. Merely because the assessee society has taken over the furniture and fixtures of existing school, would not to alter the situation. It is wrongly observed that particulars regarding lease of land were not furnished when the lease deed itself was filed before him. He has further wrongly observed that lease rent was only Rs. 15,000 pa whereas same is shown at Rs. 15,000 pm for the first 10 years then Rs. 22,500 for the next 10 years and Rs. 30,000 for the llast 10 years. The contention of the revenue that after the lapse of lease period of 30 years, the building etc. would revert black to the lessor who is closely related to the General Secretary of the Society, would not make difference as at best, it can be construed a benefit which can be construed to have been passed on to a relation etc. in violation of various conditions in S 13(1)(d) of the Act. But this part cannot be examined at the time of granting registration and can be examined only while giving exemption u/s 11. Therefore, registration has been wrongly denied to the assessee - in favour of assessee.
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2013 (3) TMI 434
Depreciation disallowed on medical instruments given on lease - Held that:- Assessee claimed depreciation on C.T. Scan machine and Angio machine were claimed in last two years as these machinery were leased out to Biva Park Radiology Pvt. Ltd. and earning lease rentals from last two years but during April, 2003 due to internal problem the lessee company temporarily closed their business and after two years, it again started the business and assessee got rental income. No doubt, according to assessee, during this year, these assets were leased out but actually lessee company was unable to use due to closure of business but that does not mean that assessee is not entitled for depreciation. The word 'used' would include actual use or at least keep ready for use which would mean that non-user even for temporary period qualifies for being treated as 'user', which embraces 'passive' user. Regarding depreciation of flat no. 1(4WA) and 111(5E) assessee is providing hospitality in these two flats to the customers of assessee for its business and it has provided guest house facility. The assessee has filed copies of lease agreement between assessee and Biva Park Radiology Pvt. Ltd. for lease of medical instruments and appliances. The assessee has also filed copy of lease agreement received in respect of medical instruments and appliances during the year ending on 31.03.2001, 31.03.2002, 31.03.2003, 31.03.2006 and 31.03.2007. From the above, it is clear that the assessee has put to use i.e. passive use of the medical equipments and also the flats were put to use for the business purposes as the same were used for company's business as guest house - thus the depreciation could have been allowed - in favour of assessee.
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Customs
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2013 (3) TMI 433
Filling an appeal by department without having a proper authorization to appeal. - committee of commissioners - Held that:- We find from the records that in this case, the committee which has directed the lower authorities to file an appeal was comprising Commissioner Customs (Kandla) and Incharge Commissioner of Customs (Prev.), Jamnagar. The said Committee of Commissioners of Customs, in our considered view do not have the authority to review the order of Commissioner (Appeals), Rajkot. - Since the authorisation granted to the lower authorities is without jurisdiction, we find that appeal is not maintainable before us. - The Revenue authorities may consider to file another appeal by getting proper authorisation if they so advised to do so. The appeal is rejected on the preliminary objections itself.
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2013 (3) TMI 432
Interest on the differential duty for the period prior to amendment - Section 18(3) was inserted by way of Taxation Laws (Amendment) Act, 2006 - Retrospective or prospective - Provisional assessment - Final assessment - Section 28-AB of the Customs Act, 1962 - Held that:- This case of the Revenue is not acceptable inasmuch as the charging provision for interest on any differential amount of duty paid on finalization of provisional assessment is Section 18(3) of the Act. This is a substantive provision of law, which, in the absence of express mention of retrospective effect, cannot be given retrospective operation so as to cover the provisional assessment made prior to 13.07.2006. It is not possible to agree with the contention of revenue that such amendment has to be understood as clarificatory in nature. This is more so, when one reads the amendments made in 1998 and the amendment made in Rule 9B of the Central Excise Rules in 1999 considering the pronouncement of the Apex Court as to the distinction between making of a refund and claiming of a refund; the amendment cannot be considered to be retrospective in nature; and cannot be made applicable to pending proceedings. - Decided against the revenue.
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Corporate Laws
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2013 (3) TMI 431
Eligibility Criteria for Seeking registration as a Credit Rating Agency ("CRA") - rejection of application as to produce Audited Annual Accounts of the respondent's promoters for the two years ending December, 2010 - appellant submitted that the certificate of the Chartered Accountant submitted by him is evidence of the required net worth of the promoter, in strict conformity with Regulation 4(e) of the SEBI (Credit Rating Agencies) Regulations, 1999 - whether the Board was within its power to ask for the Audited Accounts of the applicant for the 5 years preceding the date of the application - SAT has remanded the matter back to the appellant to consider the application of the respondent seeking registration - Held that:- The certificate of Chartered Accountant did not conform to the provisions contained in the regulations which requires that the certificate should be in confirmation of the Audited Accounts of the promoters/applicant for the five years preceding the date of the application. Unable to approve the observations made by SAT that "neither the regulations nor the eligibility criteria in Form A requires the applicant to produce the annual accounts of the promoter." Also unable to approve the observations of SAT that "it is doubtful whether the Board could have asked for this information without doubting the veracity or the correctness of the certificate of the Chartered Accountant that accompanied the application." The certificate of the Chartered Accountant is evidence of the required net worth of the promoter. Therefore, it has to be in strict conformity with Regulation 4(e). Since the certificate issued by the Chartered Accountants did not categorically state that it is based on the audited accounts for the 5 years preceding the date of application, the Board certainly had the power to direct the respondent to produce the audited accounts. That being so, under Regulation 6, it was the duty of the Board to have rejected the application of the respondent. Surprisingly, however, the Board continued to grant further time to the respondent to remove the objections even beyond the maximum sixty days permissible under the proviso to Regulation 6. It appears that the enquiries continued from 20th August, 2009 till March 1, 2011 when the show cause notice was issued to the respondent. The application of the respondent is not rejected till 21st July, 2011. The delay in the rejection of the application of the respondent was wholly unwarranted. It allowed the respondent a latitude not permissible under the regulations who taking advantage of this latitude has provided the Audited Accounts for the five years preceding the date of application. Not only this, by now the respondent has even produced before this Court in a sealed cover the Audited Accounts of M/s. Coment (Mauritius) Limited for the subsequent two years upto 31st December, 2010 also. Since the Board had extended the time to the respondent, even though not permissible in law, we are not inclined to modify the directions issued by the SAT. Especially in view of the submission of Mr. Suri that respondent is willing at this stage to produce the Audited Accounts of the promoter even for the subsequent two years.
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Service Tax
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2013 (3) TMI 449
Appeal against the order of CESTAT directing deposit of 1 crore as pre-deposit - inclusion of reimbursement of expenses - valuation - extended period of limitation - held that:- the issue of levying and charging service tax on reimbursable expenditure has been settled by the decision of this Court in Intercontinental Consultants & Technocrats Pvt. Ltd (2012 (12) TMI 150 - DELHI HIGH COURT). Any how even if we assume that the expenditure, which has been reimbursed to thepetitioner could be the subject matter of levy of service tax, that amount would have to be restricted, prima facie, to the sum of ₹ 14.22 crores and not to the figure of ₹ 37.55 crores which has been taken by the revenue. This is so because we do not find any material which would indicate that the petitioner received anything in excess of ₹ 14.22 crores by way of reimbursement from its clients. The figure of ₹ 37.55 crores includes the direct expenditure incurred by the petitioner for which no reimbursement was claimed nor given. The petitioner has been able to make out a very good prima facie case that no additional tax is payable by it in respect of the service rendered by it. - However, since the petitioner has already paid a sum of ₹ 40 lacs, following the directions of the Tribunal, we are not inclined to interfere with that part of the order. - Insofar as the balance ₹ 60 lacs is concerned, stay granted.
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2013 (3) TMI 448
Whether letter issued by Superintended is an appealable order - issue involved in this case is regarding reversal of cenvat credit - held that:- letter issued by the Superintendent is not an appealable order issued by a competent authority. It is also recorded that since a show cause notice on the same issue has already been issued to the appellant herein, the outcome of such adjudication proceedings is an appealable order before higher judicial fora.
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2013 (3) TMI 447
Taxability of material handling charges received for handling materials inside the plant - stay - held that:- improper adjudication shall not yield Revenue. - matter remanded back for readjudication.
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2013 (3) TMI 446
Compliance of an order u/s 35F of CEA, 1944 - non deposit of service tax as per stay / interim order - held that:- appellant deposited the entire amount of Service Tax involved in this case. - In these circumstances, as the Ld. Commr. (Appeals) has not decided the issue on merit, with the consent of both sides, the matter is remitted back to the Commr. (Appeals) to decide the issue afresh without insisting any further pre-deposit.
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2013 (3) TMI 443
Condonation of delay in filing an appeal - Section 85 of Finance Act, 1994. - None present for the appellant, nor there is any adjournment application. - Commissioner (Appeals) has vested discretionary power to condone delay beyond first 3 months if appeal is within next 3 months. Held that:- Matter is remanded to the Commissioner (Appeals) if any, to exercise his discretionary power, upon application if any, made by appellant explaining delay. If such an application is made, learned authority shall pass appropriate order granting fair opportunity to the appellant.
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Central Excise
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2013 (3) TMI 430
Chargeablity to central excise duty - Wheeled Tractor Loader Backhoe (WTLB) and Vibrating Compactor (VC) - Denial under sub-heading no. 84295900 and 84305090 for the period June, 2006 to June, 2011 - Held that:- WTLB and VC are classifiable under Headings 8429 and 8430 respectively and parts and components of these machinery would be covered under Heading No. 8431. However, during the period till 28-4-2010, Sl. No. 100 of the 3rd Schedule to the Central Excise Act, 1944 covered “parts, components and assemblies of Automobiles”. Thus so far as the period prior to 29-4-2010 is concerned, the Department’s stand in the impugned order is not correct. It is settled law that the words, in a statute are to be understood in their context and a statute must be read as a whole, and extension of this rules of context permits reference to other statute in pari materia i.e. statute dealing with the same subject matter or forming the part of the same system. As decided in MSCO Pvt. Ltd. v. Union of India (1984 (10) TMI 44 - SUPREME COURT OF INDIA) it is hazardous to interpret a word in a statute, in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with the cognate subject. Thus meaning of the term “Automobile” in Entry No. 100 of the Third Schedule to the Central Excise Tariff Act, 1944 should therefore, be understood on the basis of how the term “Automobile” is understood in the cognate statute of Central Excise Tariff Act, 1985 and its schedule. The definition of “Automobile” in Motor Vehicle Act, 1988 or Air (Prevention and Control of Pollution) Act, 1981, which deal with altogether different subjects, cannot be adopted for construing this term in Central Excise Act, 1944. When in the schedule to the Central Excise Tariff Act, WTLB and VC are understood as construction machinery falling under Chapter 84 and not as “Automobile” of Chapter 87, it would be totally wrong to apply definition of the term “Automobile” in Motor Vehicle Act, 1988 and Air (Prevention and Control of Pollution) Act, 1981 which are for altogether different purposes, and hold that this term covers WTLB and VC also. More so, when the Board’s Circular No. 167/38/2008-CX., dated 16-12-2008 also supports the appellant’s stand. As regards the period w.e.f. 29-4-2010, prima facie, the goods in question are covered by S. No. 100A of the 3rd Schedule of the Central Excise Act, 1944 and have packing/re-packing of parts of WTLB and VC would attract excise duty. But for this period, it is not disputed that the appellant have paid the duty of Rs. 1,79,75,486/-. Besides this, it is also not denied that they have paid an amount of Rs. 60 lakhs during investigation, besides furnishing the guarantee of Rs. 1,15,84,774/-. Therefore, the amount already deposited by the appellant is sufficient for hearing of these appeals. The requirement of pre-deposit of balance amount of duty demand, interest and penalty is, therefore, waived for hearing of the appeals and recovery thereof is stayed till the disposal of the Appeal.
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2013 (3) TMI 429
Writ Petition - Petitioner manufacturing sponge iron, which is excisable commodity. Petitioner has challenged the Trade Notice issued by Commissioner of Central Excise & Customs, by which it has been declared that duty is required to be paid by the assessee at the time of clearance of goods from factory gate even for those goods which are sold through depot and the duty shall be levied at the price declared at depot. According to petitioner, as per section 4(2) the excise duty cannot be levied on the goods on transportation from the place of removal to the place of delivery, which has been made explicitly clear by the Hon’ble Supreme Court in the detailed judgment delivered in the case of Union of India & Ors. v. Bombay Tyre International Ltd. & Ors. reported in [1983 (10) TMI 51 - SUPREME COURT OF INDIA, NEW DELHI]. The petitioner has also challenged the vires of Section 4(4)(b)(iii) inserted by Section 74 of the Finance Act, 1996 as illegal and ultra vires of Entry 84 of List-I of Seventh Schedule of Constitution, as, according to the petitioner, the said Entry authorizes and gives power for levy of imposition of duty on goods manufactured or produced in India. It has been contended that said provision is ultra vires of the charging Section i.e., Section 3 of the Act. Held that:- After considering the submissions and in the judgement of passed by the Hon’ble Supreme Court in Union of India & Ors. v. Bombay Tyre International Ltd. & Ors. reported in [1983 (10) TMI 51 - SUPREME COURT OF INDIA, NEW DELHI]. In view of the above reasons, when there is statutory provision, any order or circular cannot nullify that statutory provision. Court are of the considered opinion that the Trade Notice issued by Commissioner of Central Excise & Customs is illegal and contrary to the statutory provisions of Section 4(2) of the Act of 1944 and runs contrary to the law laid down by the Hon’ble Supreme Court. Therefore, the writ petition of the petitioner deserves to be allowed on this Count. Hence the writ petition is allowed
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2013 (3) TMI 428
Cenvat Credit - Clearance of final product on payment of Central Excise Duty higher than the Cenvat credit availed by them - appellant contested that entire exercise was revenue neutral as by paying duty at the time of furnace of the goods, which according to the Revenue was not liable to be paid, the appellant have reversed the entire input credit - Held that:- The decisions of Crompton Greaves Ltd. (2008 (5) TMI 180 - CESTAT MUMBAI), Vickers systems International Ltd. (2007 (12) TMI 140 - CESTAT, MUMBAI), Ajinkya Enterprises (2009 (7) TMI 944 - CESTAT, MUMBAI) states that the duty paid at the time of clearance of the product, which was not required to be paid on account of non-manufacture activity, amounts to reversal of the entire Cenvat credit and in such a situation, the demand of Cenvat credit cannot be sustained. Thus consequential relief to the appellant granted.
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2013 (3) TMI 427
CENVAT credit denied on M.S. Angles, Channels, Plates etc. used for repair and maintenance of plant and machinery - Held that:- As decided in Union of India v. Hindustan Zinc Ltd. (2006 (5) TMI 44 - HIGH COURT RAJASTHAN) M.S./S.S. Plates used in the workshop for repair and maintenance of the machinery, which is used for the manufacture of final product are eligible for Cenvat credit. Also in the case of Ambuja Cements Eastern Ltd. v. CCE, Raipur (2010 (4) TMI 429 - CHHAITISGARH HIGH COURT) held that welding electrodes used for repair and maintenance of the plant and machinery are entitled for Cenvat credid relieng upon the judgment of Union of India v. Hindustan Zinc Ltd. (supra).Thus the items used for repair and maintenance of plant and machinery would be eligible for Cenvat credit and the Commissioner (Appeals)’s order denying Cenvat credit in respect of the same is not sustainable - In favour of assessee. Eligibility of asbestos jointing sheets for Cenvat credit - Held that:- Since the same is used for plugging the leakages in the pipes, it has to be treated as an item used for repair and maintenance and hence the same would be eligible for Cenvat credit. See Oswal Overseas Ltd. v. CCE, Meerut-II (2010 (1) TMI 522 - CESTAT, NEW DELHI) wherein held that asbestos jointing sheets used for plugging the holes in the pipelines installed in the factory and thereby allowing smooth flow of liquid from one equipment to another during the process of manufacture, are components/integral part of the machinery and hence, are eligible for Cenvat credit as capital goods - In favour of assessee. Eligibility of rough castings, unmachined steel castings, HRCS castings etc. - Held that:- For Cenvat credit these items are used as a replacement for parts of the machinery and hence the same have to be treated as components and accessories of the cement, plants and machinery. Therefore, the Commissioner (Appeals)’s order denying Cenvat credit in respect of these items is not sustainable - In favour of assessee. Eligibility of M.S. Angles, Channels, Joists, Iron and Steel structures, supporting frame etc. used for erecting supporting structures - Held that:- Thus calim settled against the appellant by the judgment of Vandana Global Ltd. v. CCE, Raipur (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)), wherein this Tribunal held that foundation and supporting structures embedded to earth are capital assets and the same do not qualify as capital goods as defined in Rule 2(a) of Cenvat Credit Rules and hence the steel items used for erection of the supporting structures are not eligible for Cenvat credit. Against assessee Eligibility of aluminium conductors - Held that:- As the same are classifiable under sub-heading 7614.90 of the tariff which is not the heading specified in the definition of capital goods. It is also not the case of the appellant that the aluminium conductors are components or accessories of any item of capital goods. Thus as decided in Sarita Steel & Industries Limited v. CCE, Visakhapatnam-I (supra) the aluminium conductors falling under sub-heading 7614.90 of the Tariff are not covered by the definition of capital goods. Thus the Cenvat credit has been rightly denied in respect of this item - Against assessee. Eligibility of nitrogen gas used in connection with repair and maintenance jobs - Held that:- It has been held to be eligible for Cenvat credit in view of the judgment in the case of CCE & Cus., Guntur v. Andhra Cements Ltd. reported in 2009 (2009 (3) TMI 807 - CESTAT, BANGALORE) wherin held that oxygen, nitrogen and welding electrodes used for repair and maintenance of plants and machinery would be covered by the definition of ‘input’ as given in Rule 2(k) of the Cenvat Credit Rules, 2004, as the same is very vide and would cover even the items used for repair and maintenance of the plant and machinery - In favour of assessee. Eligibility of PVC sheets and synthetic rolls of plastic sheets and fibre glass sheets - Held that:- The CCE (Appeals) has denied Cenvat credit in respect of these items without going into the user of these items to find out whether the same were used in or in relation to the manufacture of the finished goods. In view of this, it difficult to uphold the order of CCE (Appeals) in this regard - in favour of assessee.
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2013 (3) TMI 426
Input service credit availed on CHA services, Port services, GTA services, Courier services and Business Auxiliary Services - Held that:- As decided in Ultratech Cement (2010 (10) TMI 13 - BOMBAY HIGH COURT) any service availed by a manufacturer of excisable goods in the course of business is entitled for input service and in a series of cases, this Tribunal time and again has held that in the case of export of goods, the place of removal is the port from where the goods are exported. All the services availed by the respondents qualify the definition of Rule 2(l) of CCR'04 and squarely applicable to the facts of Amalgamations Repco Ltd. (2011 (10) TMI 508 - CESTAT, CHENNAI). In favour of assessee.
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CST, VAT & Sales Tax
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2013 (3) TMI 445
Revision application dismissed - delay of 1 year, 8 months and 26 days - Held that:- It is not in dispute that the assessment order was served on the counsel of the petitioner and not to the petitioner. As per the affidavit of the counsel, copy of the order was tagged by his clerk in a disposed of file and could not be traced out within the time period of limitation within which the revision could have been filed. See Rafiq and another Vs. Munshill and another (1981 (4) TMI 255 - SUPREME COURT) wherein held that an innocent party should not suffer for the inaction, deliberate omission, or mis-demeanour of his counsel. Thus there is no an iota of doubt that because of the mistake of the counsel, the party should not be suffered - delay ought to have been condoned.
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2013 (3) TMI 444
Composition scheme under section 6 of the U.P. VAT Act - W.e.f. 1st of January, 2008 the U.P. Trade Tax Act has been repealed and simultaneously the U.P. VAT Act, 2008 was enacted - The petitioner did not apply for composition under the new Act i.e. the U.P. VAT Act, 2008 as after the 1st of January, 2008 no new contract was awarded and the existing contracts for electrical works were in progress - petitioner ultimately assessed to tax for the AY 2008-2009 under the U.P. VAT Act at the rate of 6 per cent on the goods brought in the State of U.P. exceeding the value more than 5 per cent of total receipts of the payment - assessee contested against tax levy as there was no such condition restricting the import of goods up to 5 per cent of the contract amount in U.P. VAT Tax Act - Held that:- Admittedly, the petitioner has not opted to pay the composition fee under the new scheme framed under section 6 of the U.P. VAT Act for the subsequent years i.e. 2008-2009. The impugned assessment order is in respect to the Assessment Year 2008-2009 and it shall continue to be governed by the scheme, as it then existed, framed under section 7-D of the U.P. Trade Tax Act. The Assessing Authority, thus, could levy and demand the tax from the petitioner as per the terms of the scheme under which the petitioner had opted and not under the new scheme. The contention of the petitioner that under the old scheme the compounding fee was 2% which could not have been enhanced under the U.P. VAT Act to 4% was repelled. There the petitioners had applied under section 6 of the U.P. VAT Act which is no so in the case on hand. Thus the order passed by the respondent no.3 in so far as it demands the composition amount/fees at the rate of 6 per cent under the Composition Scheme of 2008 issued under the U.P. VAT Act, 2008 is hereby quashed in favour of assessee.
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Indian Laws
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2013 (3) TMI 442
Writ Petition - Petition is filed against the decision of the CIC preferred under Section 19 of the Right to Information Act, 2005 whereby the petitioner has been directed to provide the relevant records in its possession as sought by the Respondent herein. The respondent by an application filed under Section 6 of the Act, sought the following Information from the petitioner inspection of the records and other many documents relating to the proposed disciplinary action and/or imposition of penalty against Shri G.S. Narang, IRS, Central Excise and Customs Officer of 1974 Batch and also inspection of records, files, etc., relating to the decision of the UPSC thereof. The CPIO of the petitioner, however, declined to provide the same on the ground that the information sought pertained to the disciplinary case was of personal nature, disclosure of which has no relationship to any public activity or interest. The petitioner, therefore, claimed exemption from disclosing the information under Section 8(1)(j) of the Act. The Respondent, consequently, filed an appeal under Section 19 of the Act, before the 1st Appellate Authority of the Petitioner. The Appellate Authority dismissed the Appeal on the same ground. Being aggrieved by the said decision, the Respondent preferred an appeal before the CIC. Setting aside the decision of the ‘First Appellate Authority’, the CIC held as follows. CIC are of the view that the CPIO was not right in denying this information. Being aggrieved by the order of CIC Petitioner filed the writ petition. Petitioner submits that the information sought by the Respondent in his RTI application is not with the Petitioner and stated that the said information relates to the actions of the concerned Ministry/Department and as such no record thereof is available and rest of the Information sought by the Respondent is exempt from disclosure under Section 8(1)(e), 8(1)(g) and 8(1)(j) of the Act. The Respondent, on the other hand, has at the outset submitted that the CIC has merely directed the disclosure of the records in possession of the UPSC. It has not directed the Petitioner to procure records from the concerned Ministries and the same is not exempted under Section 8(1)(e), 8(1)(g) or 8(1)(j) of the Act. Held that : - After Examining the Section 8(1)(e), 8(1)(g) or 8(1)(j) of the Act. In view of above, the decision of the CIC is upheld, subject to the modification that the petitioner may, examine the case with regard to applicability of Section 10 of the Act, in relation to the names of the officers who may have acted in the process of opinion formation while dealing with the case of concerned charge officer.
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