TMI Tax Updates - e-Newsletter
March 30, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Deduction u/s 35(2AB) - in house research - If by utilizing the staff or resources of an organization, research is conducted within the organization rather than through utilization of external use of resources or staff, it can be stated to be an in-house research. - HC
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Income Tax:
Reopening of assessment - the assessee disclosed the initial payment of Rs. 28.65 lakhs on 9 December 1994, but carefully avoided disclosure of the fact that the payment of Rs. 2.57 crores was made only on 30 January 2004. - reassessment justified - HC
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Income Tax:
Disallowance of advance written off - assessee cannot be allowed to approbate and re-approbate. It cannot say that the purchases were all bogus but, advances were genuine. - AT
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Customs:
DTA clearance of cut-flowers by 100% EOU would attract customs duty in an amount equal to customs duty chargeable on import of such cut-flowers - AT
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Customs:
Mega Power Project - Exemption under Notification no. 21/2002 - Project Import - Import of ‘gas turbine components’ and ‘generator transformers’ - Benefit of exemption denied - AT
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Corporate Law:
Winding up petition - Even if it is “proved to the satisfaction” of the Court that the Respondent company is unable to pay its debts, the Petitioner would also have to show that the company “neglected to pay the sum or to secure or compound for it to the reasonable satisfaction” of the Petitioner. - HC
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Indian Laws:
Notice Inviting Tender - the Courts, while judging the constitutional validity of executing decisions, must grant a certain measure of freedom of “play in the joints“ to the executive. - HC
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Service Tax:
Laying of WBM service to RCC road will come within the purview of Management, maintenance and repairs of roads and hence will not be taxable. - AT
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Service Tax:
Issue of SCN in the name of proprietor - Proprietorship concern is known by the proprietor of the firm and there is no entity can be identified without the proprietor - Demand confirmed. - AT
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (3) TMI 539
Deduction u/s 35(2AB) - Expenses incurred outside the approved R&D facility - whether would get weighted deduction based on the word under "on in house" - whether the assessee who has incurred expenditure for scientific research, which was not in the in-house facility, could be covered for deduction under section 35(2AB)? - Held that:- The assessee carried out scientific research in its facility approved by the prescribed authority. It incurred various expenditure including on clinical trials for developing its pharmaceutical products. These clinical trials were conducted outside the approved laboratory facility. The Tribunal observed that the term 'in-house' used in section 35(2AB) must be viewed in the context of which it has been used. If by utilizing the staff or resources of an organization, research is conducted within the organization rather than through utilization of external use of resources or staff, it can be stated to be an in-house research. The Tribunal committed no error. The Explanation to section 35(2AB)(1) provides that for the purpose of said clause, i.e. clause (1) of section 35(2AB), expenditure on scientific research in relation to drugs and pharmaceuticals shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority and filing an application for a patent under the Patents Act, 1970. The whole idea thus appears to be to give encouragement to scientific research. By the very nature of things, clinical trials may not always be possible to be conducted in closed laboratory or in similar in-house facility provided by the assessee and approved by the prescribed authority. It cannot be imagined that such clinical trial can be carried out only in the laboratory of the pharmaceutical company. The activities of obtaining approval of the authority and filing of an application for patent necessarily shall have to be outside the in-house research facility. Thus the restricted meaning suggested by the Revenue would completely make the explanation quite meaningless. Merely because the prescribed authority segregated the expenditure into two parts, namely, those incurred within the in-house facility and those can were incurred outside by itself would not be sufficient to deny the benefit to the assessee under section 35(2AB) of the Act. In favour of assessee.
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2013 (3) TMI 538
Deduction u/s 80M - whether the ITAT was correct in directing that deduction would be worked out after reducing the interest from the gross dividend income when the whole of the interest has been incurred by the assessee for the purpose of earning dividend and was liable to be deducted u/s 57 (iii) while computing the dividend income for the purpose of deduction u/s 80M - the assessee made investments in Unit Trust of India giving rise to the dividend income - Held that:- No error is found in the order passed by the Tribunal as though the assessee was maintaining Master Account, but the fact remains that the Tribunal has been able to find out as a fact that the loan from three Banks i.e. Bank of America, American Express Bank and Grindlays Bank, is related to purchases of the units by the assessee and interest paid for availing such loan alone is liable to be deducted for arriving at the net dividend income. Such calculation was accepted by the departmental representatives before the Tribunal. The finding of the Tribunal that the amount of interest as is relatable to the dividend income alone is liable to deducted from determining the dividend income is in accordance with the judgment in Distributors (Baroda) P.Ltd. case ( 1985 (7) TMI 1 - SUPREME COURT). It has been held that the dividend income is to be arrived at after adjusting the interest on loan availed for making investment, giving rise to dividend income and not the interest paid by the assessee on other borrowings during the relevant assessment year. No substantial question of law arises for consideration by this Court - against revenue.
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2013 (3) TMI 537
Jurisdiction power u/s 263 by CIT(A) - ITAT quashed the order of CIT(A) u/s 263 in respect of the items which do not form the subject matter of the show cause notices - whether ITAT was right in holding that a written notice was necessary regarding admissibility of otherwise of its claim u/s 32 AB and 80 HHC? - Held that:- Section 263 empowers CIT(A) to call for and examine the record of any proceeding, if he finds that any order passed therein by the ITO is erroneous in so far as it is prejudicial to the interests of the revenue, but such order can be passed after giving an opportunity of being heard to the assessee. Since the show cause notice was limited to the matters u/s 32 AB and 80 HHC therefore, the assessee has not been given any opportunity of hearing, which alone will permit the CIT to exercise the revisional jurisdiction under Section 263. Therefore, no illegality in the order passed by the Tribunal, which may give rise to any substantial question of law. The argument that matter should have been remanded by the Tribunal is a question of law does not merit. In fact, the order of the Tribunal is categorical that the show cause notice was quashed only in respect of matters which were not subject matter of the show cause notice. There was no bar with the Revenue to issue show cause notice in respect of matters not covered by the earlier show cause notice. Having not done so, the petitioner cannot be permitted to reopen the concluded assessment at this stage.
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2013 (3) TMI 536
Reopening of assessment - as per AO there was a short term capital gain of Rs. 2.80 crores which was not offered to tax as a result of which there was an under assessment of income by Rs. 2.80 crores - Held that:- The computation of income that was filed by the assessee together with the return of income stated that the assessee had purchased 10 lakh shares of DFPCL on 9 December 1994 at a cost of Rs. 2.86 crores. The assessee claimed that it sold the shares on 10 May 2004. It was on this basis that the assessee claimed the benefit of indexation. What the assessee failed to disclose in the computation was the fact that the payment of Rs. 2.57 crores for the shares was in fact made on 30 January 2004. This was a fact which ought to have been disclosed to the AO, but which was not disclosed even in the further letter of the assessee dated 24 September 2007. In that letter, the assessee disclosed the initial payment of Rs. 28.65 lakhs on 9 December 1994, but carefully avoided disclosure of the fact that the payment of Rs. 2.57 crores was made only on 30 January 2004. Finally, it was on 30 January 2004 that the assessee addressed a communication to the Assessing Officer containing as many as fourteen annexures. One of them was a share certificate of DFPCL. That share certificate contained an endorsement to the effect that the assessee has paid the final call on 30 January 2004. Explanation (1) to Section 147 provides that the production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer would not amount to a disclosure within the meaning of the proviso. The nature of the disclosure has to be assessed in the facts and circumstances of each individual case. In the present case, there was a failure on the part of the assessee to make a disclosure that was candid, frank and true of the fact that it was only on 30 January 2004 that the assessee had made a payment of Rs. 2.57 crores for the acquisition of the shares of DFPCL. In these circumstances it cannot be said that the invocation of the jurisdiction to reopen the assessment beyond the period of four years did not fulfill the jurisdictional requirement. AO acted within jurisdiction since the record would indicate that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year - against assessee.
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2013 (3) TMI 535
Deduction u/s 80IB(10) of the I.T. Act - construction of building projects - Held that:- In our opinion, the CIT(A) committed an error in simply excluding 656.75 sq.metres from the area of 4600 sq.metres without appreciating that the exclusion is only for the purpose of D.P. Road which does not reduce the size of the plot as a whole. We are therefore satisfied that there is no violation of the conditions prescribed by clause(b). Order of the CIT(A) on this issue has to be reversed. Similarly it was held that:- As far as completion of the construction is concerned, the certificate of KDMC dated 31/3/2008 is clear that Building No.9 to 14 were completed and occupation certificate was given. The AO’s stand that project was only partly completed cannot therefore, be sustained. The deduction under section 80 IB(10) was claimed only in respect of the project Vidhi Complex which comprise of building No.11 to 14. As far as this project is concerned there could be no doubt that the construction was completed on 31/3/2008. We upheld the order of the CIT(A) The appeal of the revenue is dismissed.
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2013 (3) TMI 534
Disallowance of interest - Disallowance of notional interest - Disallowance u/s 40(a)(ia) - Held that:- In our considered opinion, acquiring shares in Sameera Electronics Pvt. Ltd. by the assessee is not connected for the purpose of business. Therefore, the acquisition of shares in Sameera Electronics Pvt. Ltd. is not for the purpose of the business and the interest paid thereon is not allowable either in the section 36(1)(iii) or section 37 of the Act The issue raised by the assessee, i.e. assessee having sufficient own funds, was neither examined by the AO nor by the CIT(A). Therefore, in the interest of justice, we set aside the order of the CIT(A) and restore the issue to the file of the AO with a direction to examine the issue and decide the same after considering the decision Hon’ble Bombay High court in the case of Reliance Utilities and Power (2009 (1) TMI 4 - HIGH COURT BOMBAY ) after providing reasonable opportunity of hearing to the assessee. As per section 196 a statutory corporation, which is established under law is exempt from the TDS. In this case, in our opinion, whether the assessee has to deduct the tax in view of section 196 or not has to be examined. Therefore, neither the AO nor CIT(A) examined the issue in proper perspective. Thus, we restore issue to the AO with a direction to decide the issue afresh in the light of section 196 of the Act. Appeal of the assessee is partly allowed
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2013 (3) TMI 533
Penalty u/s.271(1)(c) - Disallowance of interest - Notice u/s.148 – Badla interest is assessed under the head “Income from other sources” then the bad debts cannot be allowed as there is no income assessable under the head “business” - Held that:- In the case of Dilip Shroff (2007 (5) TMI 198 - SUPREME Court)has explained the expression “concealment” and “inaccurate particulars”. Merely because the claim is rejected by the A.O., which is not otherwise mala fide no penalty can be levied. In the present case, Once the legal interpretation is to put into process but otherwise all particulars are on record it cannot be said that the assessee has filed any inaccurate particulars or concealed particulars of income. In our opinion, the assessee’s claim of bad debt cannot be treated as a mala fide claim. This is not fit case for levying the penalty u/s.271(1)(c). - No penalty - Decided in favor of assessee.
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2013 (3) TMI 532
Disallowance of advances written off of Rs 100,000/-. - Held that :- we are of the view that the assessee’s claim of loss of Rs 1,00,000/- arising on account of write-off of the advances given to M/s Vitara Chemicals Ltd. is allowable as a business loss under section 28 of the Act. - Decided in favor of assessee. Repairs of factory building - Revenue or capital in nature - Held that:- the assessee is right in contending that under the above circumstances, no enduring benefit results on account of such expenditure inasmuch as an existing shed has been merely strengthened and therefore, the expenses are only for regular repairs. - the expense is liable to be treated as revenue expenditure - Decided in favor of assessee. Deduction u/s 80HHC of the I.T. Act - Held that:- On the aspect of application of clause (1) of the Explanation (baa) of section 80-HHC to ‘Service Charges’ and also other receipts in question, we set aside the order of the Commissioner of Income-tax (Appeals) and remit the matter back to his file to be adjudicated afresh in line with the directions of our co-ordinate Bench and the judgments of the Hon’ble Bombay High Court in the case of Pfizer Ltd. [2010 (6) TMI 433 - Bombay High Court] and Dresser Rand India P Ltd. [2010 (4) TMI 153 - BOMBAY HIGH COURT]. - Decided in favor of assessee. Deleting the addition of commission - Held that:- the practice of paying commission to dealers/agents, stand established - the appellants have been able to substantiate their claim of commission payment. The appellants had submitted detailed justification for the payments. A majority of the payees selected randomly by the AO had confirmed the receipt of commission payment. The AO has not raised any serious questions regarding the veracity of the information received from these parties. - Decided against the revenue. Depreciation on software expenses U/s 32(1)(ii) or deduction u/s 37 as revenue expenditure - Held that:- We do not find any infirmity in the findings of the Commissioner of Income-tax (Appeals) on this aspect. The instant issue stands squarely covered in favour of the assessee and against the Revenue by the judgements in (i) CIT v Varinder Agro Chemicals Ltd. [2008 (10) TMI 100 - PUNJAB AND HARYANA HIGH COURT]; (ii) CIT v Sundaram Clayton Ltd. [2008 (6) TMI 327 - MADRAS HIGH COURT] - Decided against the revenue. Deleting the disallowance U/s 36(1)(va) and 43B of the I.T. Act, 1961 - Held that:- We have carefully considered the submissions of the parties. We find that the assessee has made the payment within the grace period under the Provident Fund Act and therefore, the payment could be regarded as having made within due date as per provisions of section 36(1)(va) of the Act. - Decided in favor of assessee. Not treating the provision for Warranty as contingent liability (Not on any scientific basis) - Held that:- In the instant assessment year, it emerges from the assessee’s submissions before the Commissioner of Income-tax (Appeals) and which have not been controverted that the warranty provision in this year comes to 0.37% of the net sales. In this background, the claim of the assessee during the year can be accepted as reasonable in view of the precedent and the same deserves to be allowed. - Decided against the revenue. Allowing the expenses on account of CST liability - Held that:- In our considered opinion, the Commissioner of Income-tax (Appeals) made no mistake in deleting the impugned disallowance. The assessee has established that the liability on account of CST even though pertained to earlier period, has in-fact crystallized during the previous year relevant to the assessment year under consideration and is thus allowable as a deduction in this year. Deleting the addition of on account of stock written off - Held that:- It is further pointed out that such policy of identifying and making a provision for diminution of value of obsolete stock was accepted by the department in the past and no disallowance was made till the instant assessment year. - Decided against the revenue. Not excluding foreign exchange gain, miscellaneous receipts from eligible business profits for the purpose of calculating deduction u/s 80HHC - Held that:- We set aside the order of the Commissioner of Income-tax (Appeals) and remit the matter back to his file to be adjudicated afresh in line with the judgment of the Hon’ble Bombay High Court in the case of Pfizer Ltd. [2010 (6) TMI 433 - Bombay High Court] and Dresser Rand India P Ltd. [2010 (4) TMI 153 - BOMBAY HIGH COURT]. - Partly decided in favor of revenue by remanding the matter back.
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2013 (3) TMI 531
Disallowance Warranty provisions - The assessee, prior to the receipt of the order of the Settlement Commission, in its original return had reversed the excess provision made for the earlier years against the provision for the impugned assessment year - Not filed a revised return - Deletion of disallowance paid to one Shri Pawar - Deletion of disallowance of interest - Held that :- We find much substance in the claim of the assessee that Settlement Commission’s order dated 24.3.2008 might not have been readily available to the assessee by 31.3.2008, being the last date available for filing a revised return. It was therefore left with no other go other than to file a revised computation. Assessing Officer has not disputed that the above amount could not be considered as income of the assessee for impugned assessment year, but, disallowed claim for withdrawal only for a reason that revised return was not filed. Regarding deletion of dissallowance set aside the orders of ld. - CIT(Appeals) and A.O. in this regard and remit the issue back to A.O. for verifying the claim with evidence produced by the assessee in support of the claim. If the assessee is able to prove that the claim was based on invoices raised by Shri Pawar and if the transactions are genuine, it will have to be allowed irrespective of the treatment given by Shri Pawar in his books. The A.O. shall give an opportunity to the assessee for proving its case. Regarding disallowance of Interest, the loans were given to subsidiary companies. Also, without doubt, such subsidiary companies were all in Karnataka and had acquired lands for the purpose of erection of wind farms and the assessee’s business was to erect, commission and sell windmills. In our opinion, commercial interest of the assessee in its subsidiaries stood well demonstrated. - ld. CIT(Appeals) was well justified in relying on the decision of Hon’ble Apex Court in the case of S.A. Builders [2006 (12) TMI 82 - SUPREME COURT] for deleting the disallowance. - Decided against the revenue. Regarding deletion of disallowance of advance written off by the assessee - the claim of advance itself cannot be accepted when by assessee’s own version, its transactions of purchase from M/s Sambhav Steel Distributors were all bogus. - assessee cannot be allowed to approbate and re-approbate. It cannot say that the purchases were all bogus but, advances were genuine. - It cannot say purchases were bogus only for Settlement Commission but, these were true when the matter comes before the Tribunal. - Decided in favor of revenue.
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Customs
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2013 (3) TMI 530
Mega Power Project - Exemption under Notification no. 21/2002 - Project Import - Import of ‘gas turbine components’ and ‘generator transformers’ - high seas sale - Appellant sought provisional assessment of the goods on the basis of a provisional Mega Power Project Status Certificate, issued by the Ministry of Power, Govt. of India. Later they also informed the Deputy Commissioner of Customs that the words “expansion project” in of the said certificate were subsequently deleted by the Ministry. A copy of the amendment was also produced by appellant. Appellant had submitted an application to the Deputy Commissioner of Customs for registration of an EPC Contract with its amendments under the Project Import Regulations, 1986 for the purpose of availing the aforesaid exemption for the goods and produced various documents to the department. Held that :- The question whether appellant acquired title to the goods said to have been sold to them at the high seas is remanded for fresh consideration. They should be given a reasonable opportunity of being personally heard. The 2400 MW Power Project can be considered to be setting up of new power plant by SPL and cannot be considered to be an “expansion project”, in the hands of appellant, with reference to 220 MW power plant. The goods covered by Bill of Entry filed by appellant cannot be classified under CTH 9801 and consequently the benefit of project import and exemption under Notification No 21/2002-Cus., read with Notification No. 65/2011-Cus., are not admissible to appellant. The goods covered under the aforesaid two Bills of Entry filed by SPL are liable to be assessed to duty under the respective Headings and, upon such assessment, SPL will be liable to pay the duty and clear the goods in accordance with law. The appeals are disposed of in the above terms.
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2013 (3) TMI 528
Cut Flowers cleared to DTA - whether liability to customs duty arises - assessee is a 100% EOU engaged in the manufacture of Fresh Cut Flowers falling under Chapter Heading N. 0603.10 of schedule to Customs Tariff Act, 1985 - Held that:- As decided in L.R.Brothers Indo Flora Ltd. Vs. Commissioner of Customs, Meerut (2008 (7) TMI 288 - CESTAT, NEW DELHI) after taking into consideration the earlier decision of the Cosco Blossoms [2003 (12) TMI 114 - CESTAT, NEW DELHI] DTA clearance of cut-flowers by 100% EOU would attract customs duty in an amount equal to customs duty chargeable on import of such cut-flowers - against assessee.
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Corporate Laws
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2013 (3) TMI 529
Winding up petition - Petitioner is a company incorporated in People’s Republic of China seeking the winding up of the Respondent, Shilpi Cable Technologies Ltd. - Respondent purchase cables and accessories from the Petitioner - whether there is any admission of liability by the Respondent and if there is no such admission, whether the denial by the Respondent of its liability constitutes a sham defence? - Held that:- For seeking the winding up of the Respondent company there must be an undisputed debt and that the Respondent company is unable to pay the debt. Section 434 of the Act gives instances where the company is deemed to be unable to pay its debts. Even if it is “proved to the satisfaction” of the Court that the Respondent company is unable to pay its debts, the Petitioner would also have to show that the company “neglected to pay the sum or to secure or compound for it to the reasonable satisfaction” of the Petitioner. It has time and again been emphasized by the Supreme Court that the machinery of winding up should not be utilized for recovery of money. [See Pradeshiya Industrial & Investment Corporation of U.P. v. North India Petrochemicals Ltd. (1994 (2) TMI 267 - SUPREME COURT OF INDIA)]. The mere refusal to pay debts should not be understood as ‘inability’ of the Respondent to pay its debts. In the present case, there were undoubtedly three separate contracts entered into between the parties, i.e. supply of cables, supply of accessories like Jumpers, Connectors and Surge Arrestors. Both the parties have been dealing with each other for over seven years. The Petitioner itself being the manufacturer of cables and accessories knew that for the purpose of the business of the Respondent the mere supply of cables without the accessories could not be sufficient. The Respondent was in turn supplying cables and accessories to the telecom service providers including Tata Tele Services Limited (‘TTL’). The mere supply of cables to TTL would not have constituted a complete delivery of goods. The peak period in the telecom industry for the supply of cables was the first three months of the year. Therefore, the failure on the part of the Petitioner to supply the accessories would adversely affect the corresponding obligations of the Respondent to its customers. For some reason the Petitioner has in its narration of facts not referred to two emails, the first dated 26th March 2009 whereby the Respondent asked for reasons why it had not received Jumpers, Surge Arrestors and Connectors by that date. The second was the email dated 3rd April 2009 again adverting to the above issue. This explains the emails dated 9th May 2009 and 22nd May 2009 by which the Respondent asked the Petitioner to stop despatching further cables. It is apparent that there were disputes between the parties on whether the supplies by the Petitioner were complete and whether the Respondent was justified in not accepting delivery of the consignments. It is difficult, in the circumstances, and at this stage, to conclude that the defence of the Respondent is a sham one. In the present case the seller had itself imposed the conditions of opening of L/C. The B/L for the five shipments was made to the order of IOB which was no longer a banker of the Respondent. This was a CIF contract and as explained by the Supreme Court in Phulchand Exports Limited v. O.O.O. Patriot [2013 (3) TMI 493 - SUPREME COURT] one of the requirements was that the shipping documents had to accompany the despatch of the consignments. These include the invoices, B/L and the policy of insurance. With the documents accompanying the consignments not in order, they had to necessarily be amended as requested by the Respondent to facilitate the payment even on DP basis. For some reason this was not facilitated by the Petitioner. The contention of the Respondent that the above facts do not reflect any deliberate failure to make payment cannot in the circumstances be rejected as a sham defence. For the purposes of Sections 55 and 56 SGA, the Petitioner would have to show that the neglect or refusal by the Respondent to pay for the goods was wrongful. This would require the examination of evidence to find out whether the buyer was justified in refusing to pay for the goods. The minutes of meeting dated 20th August 2009 of the Petitioner and the Respondent discussing about defective quality. Subsequently on 24th May 2010 the Respondent raised the issue of defective quality of the cables and attached photographs of the damaged lengths of the cables with nail marks. Thus, it appears that it was not the first time that this objection was raised. Yet, the complete picture will become clear only when the evidence that may be adduced by both parties is examined in detail in the civil suit stated to be pending. It is not possible for this Court to conclude at this stage that the refusal by the Respondent to make payment for the goods was deliberate or wrong. While the pendency of a suit will not per se preclude the exercise of the winding up jurisdiction of the Company Court, on the facts of the present case, the Court is not persuaded to hold that the Respondent is unable to pay its debts and is, therefore, required to be wound up under Sections 433(e) and 434 of the Act. Consequently, the petition is dismissed with costs of Rs. 20,000 which will be paid by the Petitioner to the Respondent within four weeks from today.
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Service Tax
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2013 (3) TMI 544
Service tax on WBM service to RCC road - management, maintenance or repair of roads - Held that:- As per section 97 of the Finance Act, 1994 inserted with effect from 28-5-2012, no service tax can be levied or collected in respect of management, maintenance or repair of roads during the period on and from 16-6-2005 to 26-7-2009 (both days inclusive). So laying of WBM service to RCC road will come within the purview of Management, maintenance and repairs of roads and hence will not be taxable.
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2013 (3) TMI 543
This appeal is related to admissibility of Cenvat Credit on outward freight period prior to 01-04-2008. The appellant made reliance on the case of Commissioner of C.Ex. & S.T., LTU, Bangalore vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT]. The Department denied the same and initiated proceeding which is confirmed by lower authority. Both sides challenged the order before ld. Commr.(A). ld. Commr.(A) confirms the amount of demand. Aggrieved by this appellant filed an appeal before Tribunal. Held that - Tribunal find that the demand is not maintainable and made reliance on the above mentioned case of Karnataka High Court and accordingly the impugned order passed by ld.Commissioner(Appeals) is not sustainable. Moreover once the demand itself is not sustainable the penalty is not warranted. The appeal is allowed.
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2013 (3) TMI 542
Issue of SCN in the name of proprietor and not in the name of proprietorship firm - business of security agency - Contention is that assessee is Veerjawan Securities Services and not Shri S.N. Mahajan. - Further appellant submitted that as there is no allegation of suppression or misrepresentation etc. has been alleged against them in the SCN, therefore penalty under Section 78 is also not sustainable. The same order was challenged before the Commissioner (Appeals) where demands got requantified. Against the said order, appellant is before tribunal. Held that - Proprietorship concern is known by the proprietor of the firm and there is no entity can be identified without the proprietor. Therefore, the person providing the service is only Shri S.N.Mahajan whether he is providing the services in the name of Veerjawan Securities or Jai Jawan Securities. - Demand of service tax confirmed. Regarding penalty - held that:- in the show-cause notice, no allegation has been made against the appellant for fraud, therefore penalty under Section 78 is waived. Penalty under Section 75A and 77 stands confirmed.
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2013 (3) TMI 541
Short payment of service tax - whether reimbursement charges should form part of the gross value for the discharge of Service Tax liability? - Held that:- As different benches are taking different views on includibility or otherwise of the reimbursement charges received by a provider of taxable service in the calculation of gross amount for discharge of service tax it is deem fit to refer the matter to the Hon'ble President to constitute a larger bench and settle the issue of "includibility or otherwise of the reimbursement charges". Registry is directed to place this file before the Hon'ble President for constituting a larger bench.
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Central Excise
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2013 (3) TMI 527
Cenvat credit on common input services used in the manufacture of dutiable and exempted goods without maintaining separate accounts/inventory - Held that:- Superintendent (AR) who has fairly acknowledged the change of law which granted the benefit to eligible persons with retrospective effect subject to compliance with the relevant procedural requirements. Thus after giving careful consideration to the submissions it is a fit case for requesting the Commissioner to consider the appellant’s applications dated 9-7-2010 on merits, taking into account sub-rule (7) of Rule 6 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 2010 giving the appellant a reasonable opportunity of being heard.
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2013 (3) TMI 526
Appeal is made for rectification of Tribunal’s Order. - Revenue in the application has submitted that the Tribunal had decided the issue on Rule 6(1) and 6(2) and had not taken into consideration the Rule 6(3)(a)(vi) of Cenvat Credit Rules, 2002. - Revenue filed appeal against the order of the Tribunal before Bombay High Court as the Tribunal finds it time barred. The Revenue contends that application filed by revenue on is within the time limit as High Court has given them liberty to move to Tribunal for appropriate relief. Held that:- Tribunal cannot decide the incorrect application of law while deciding the issue in application. Therefore, the request of Revenue for considering the issue on Rule 6(3)(a)(vi) of Cenvat Credit Rules cannot be considered in the ROM application.
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2013 (3) TMI 525
Restoration Appeal – CESTAT - This appeal is related to the matter whether the clearance from Committee on Disputes is required to file an restoration appeal before Tribunal. - Appellant submits that as per the decision of the Hon’ble Supreme Court in the case of Electronics Corporation of India Ltd. v. UOI reported in [2011 (2) TMI 3 - Supreme Court], clearance from the Committee on Disputes is no more required. Held that - The Hon’ble Supreme Court in the case of Electronics Corporation (supra) has held that no clearance is required from the COD for filing appeal before this Tribunal. Therefore, tribunal hold that in this case also, the appellant is not required to obtain clearance from the COD to file appeal before this Tribunal. Tribunal direct the concerned authorities not to take any steps for recovery of the impugned demand till the disposal of the stay application.
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2013 (3) TMI 524
MODVAT CREDIT – Small Scale Exemption - whether manufacturer is entitled to exemption under the Notification No. 1/1993-C.E., related to Small Scale Exemption and also under the Modvat scheme. - Tribunal before passing the order made reliance on the case Franco Italian Co. Pvt. Ltd. v. CCE, Mumbai-II [2000 (8) TMI 109 - CEGAT, COURT NO. III, NEW DELHI] wherein it has been held that “subject to the reversal of the MODVAT credit taken with regard to the inputs which were utilised for the manufacture of duty free goods, the manufacturer could avail of the MODVAT credit as well as full duty exemption under the applicable small scale exemption Notification with regard to the same specified goods.” And dismiss the appeal. held that :- Since the Tribunal did not decide the issue in the light of law laid down in the Kamani Food v. Collector of Central Excise – [1994 (1) TMI 109 - CEGAT, NEW DELHI] hence, court consider it opposite to remand the case to the Tribunal for deciding the appeal of the appellant afresh on facts and then pass appropriate orders. The appeal thus succeeds and is allowed. The impugned order is set aside.
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CST, VAT & Sales Tax
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2013 (3) TMI 546
Input Tax Credit denied - as per the dept. assessee is eligible only for the purchasers from the registered dealers as per Section 19(2) of the Tamil Nadu Value Added Tax Act, 2006 - as per the assessee first respondent is not the competent authority to issue the impugned notice of denial of credit - Held that:- Except raising a plea regarding the competency of the authority, nothing is submitted before this Court by the petitioner to prove his case that the first respondent is not the assessing authority as defined under Section 2(5) of the TNVAT Act, and therefore, the plea of the petitioner is rejected on this ground. However, looking into the impugned notice, it is seen that the petitioner is called upon to explain as to what are all their grievances, by filing objections, and such an opportunity having been already provided in the impugned notice itself, without availing of the same, the petitioner has rushed to this Court challenging the said notice. Thus the notice under challenge is only calling upon the petitioner to make payment of the tax immediately and stating that if the petitioner has any objection, they may furnish the details along with documentary evidence and connected records. When such a course is available to the petitioner to approach the concerned authority, it does not require any interference by this Court in the stage of notice. Therefore, the challenge made by the petitioner to the said notice, is rejected - the petitioner is directed to approach the competent assessing authority and make detailed objections to the impugned notice along with documentary evidence and if already submitted the competent assessing authority is directed to consider the same, after giving an opportunity of hearing to the petitioner.
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2013 (3) TMI 545
The appellant was award a contract by the Railways for supplying specified sized “gitti” - lump-sum payment of tax by way of composition U/s 19 - Held that:- In the impugned order the Appellate Board has found that the supply was not in execution of a works contract. Unless the supply is in execution of a works contract, rule 31(1), quoted below, will not apply. This appeal has no merit and is accordingly dismissed. Rule 31(1) Every registered dealer referred to in Section 19 desirous of making a lumpsum payment by way of composition in respect of the tax payable by him in relation to goods to be supplied in the execution of a works contract or contracts shall within thirty days of the commencement of the execution of the works contract or contracts, unless prevented by sufficient cause, make an application in Form 37 to the appropriate Commercial Tax Officer.
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Indian Laws
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2013 (3) TMI 540
Notice Inviting Tender - Facility Management Services to the Election Department - Relevant provisions of the notice inviting tender - Valid tenders - Respondent Nos.3 and 4 submitted technical bids as well as commercial bids tenders - The technical bid of both petitioner and the respondent no 3 were approved by a technical committee constituted by the respondent authority- Held that :- In the instant case the respondent authority found that it was the tender of Respondent No. 3, which is the valid tender and in that view of the matter made the settlement with Respondent No. 3 at a value lower than the value quoted by the petitioner and I do not find that to be an illegal or unfair exercise of power. Accordingly the contention that the respondent No. 3 was unduly favoured cannot be accepted. The technical committee evaluated and assessed the capability of both the parties and accordingly approved both petitioner and respondent No.3, for opening of the commercial bid. In my considered opinion, it would not be apposite for this court to re-examine and re-evaluate the Technical bid submitted by the respondent no.3 It is found that the offer made by one of the bidders substantially satisfies the requirements of the conditions of notice inviting tender, the employer may be said to have a general power of relaxation in that behalf. Once such a power is exercised, one of the questions which would arise for consideration by the courts would be as to whether exercise of such power was fair, reasonable and bona fide. If the answer thereto is not in the negative, save and except for sufficient and cogent reasons, the writ courts would be well advised to refrain themselves in exercise of their discretionary jurisdiction. In the present case the exercise of power by the respondent in awarding the contract to the respondent No.3 is not mala fide and unreasonable. It is equally true that even in contractual matters, a public authority does not have an unfettered right to ignore the norms recognized by the Courts, but at the same time, if a decision has been taken by a public authority in a bona fide manner by following the procedure prescribed, although not strictly following the norms laid, such decision is upheld on the principle that the Courts, while judging the constitutional validity of executing decisions, must grant a certain measure of freedom of "play in the joints" to the executive. I find that there is no merit in this writ application. Accordingly the same is dismissed. The stay order passed earlier shall stand vacated.
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