TMI Tax Updates - e-Newsletter
March 7, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Depreciation u/s 32 - for claiming higher rate of depreciation, there is no requirement under the Act of usage of the assets by the assessee himself - HC
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Income Tax:
Deletion made u/s 40A(3) - the payments were not expended by the assessee and that therefore would not come within the meaning of expenditure be it based on section 40(a)(ia) or section 40A(3) - HC
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Income Tax:
LTCG or STCG - the right accrued to assessee in 2004 came to be transferred along with M/s.Damodar Sons & Co only in 2005 thus, the Assessing Officer was justified in saying it is a short term capital gain and not long term capital gain - HC
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Income Tax:
Penalty u/s 271(1)(c) - it is one of the rare cases wherein even working of section 50C cannot really be effective at all inasmuch as the very asset, which was required to be valued by DVO, was demolished before valuation could take place - penalty deleted - AT
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Income Tax:
Demand raised u/s 201 r.w. section 194H of the Act TDS not deducted The onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax - AT
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Income Tax:
Rectification petition u/s 154 - CIT(A) was of the view that the assessee could not substantiate existence of the said party - The scheme of section 154 of the Act does not permit correction of such errors, even if there is any error - AT
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Income Tax:
Levy of penalty u/s. 271(1)(c) of the Act - Profit earned from undisclosed business - The interest of justice requires that minimum penalty at the rate of 100% may be levied - AT
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Income Tax:
Profit motive - Exemption u/s 11 and 12 - even if principle of res judicata does not apply to the Income-tax proceedings, but the Income-tax Authorities shall have to follow the rule of consistency - AT
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Income Tax:
When the services rendered by the assessee fall within the scope of Section 44BB, the said Section would be applicable but, where the services are of the type which do not fall under that Section but are more general in nature, then, Section 44DA would be applicable - AT
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Income Tax:
Selection of comparables - TPA - There is an extra-ordinary event which resulted in high operating margin of that company the AO is directed to exclude these companies from the list of comparables - AT
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Customs:
Export of Ketamine from India in the guise of Alfa Olefin Sulphonate (AOS) - Identification of exporter - Entire chain of evidence successfully proved malafide of both appellants. - AT
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Customs:
Import of goods declaring as Hydrogenated Vegetable Oils (Vanaspati Ghee) - mis-declaration - This is not a case to be leniently considered at all when adulteration is harmful to the human consumption. Therefore, re-export ought not have been allowed. - AT
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Customs:
Non maintenance of appeal - Appeal not signed - it is an rectifiable error - appeal restored before commissioner (appeals) - AT
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Service Tax:
Refund of cenvat credit due to export - refund cannot be refused for the reason that the respondent had not taken registration before taking cenvat credit - AT
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Central Excise:
Payment of Merchant Overtime (MOT) - The assessee should not hesitate to pay for the services which are required to be performed beyond the normal place of work of the customs officers and beyond the normal hours of duty - AT
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Central Excise:
Undervaluation - MRP based valuation u/s 4A - change in MRP subsequent to removal of goods - non declaration of the actual MRP on ceramic glazed tiles - Demand set aside - AT
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Central Excise:
Manufacturing of Paan Masala - The dispute in the present appeals relates to the percentage of betel nuts - Appellants made a request for re-test of the samples - no justifiable reason for denying the said request of the appellants - AT
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Central Excise:
Cenvat Credit of service tax paid on GTA service - upto the place of removal - The interpretation of Rule 2(t) of the Cenvat Credit Rules, 2004, which is in conflict with the provision of Central Excise Act, 1944, has to be avoided. - AT
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Central Excise:
Interest on delayed refund - adjudicating authority directed to pay the interest to the appellant on delayed refund on expiry of period of three months from the date of receipt of application under Section 11B(1) - AT
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Central Excise:
Concessional rate of duty - use of imported chemicals being calcium carbide for ripening of apples to accelerate the process - held as consumables instead of raw material - benefit of exemption allowed - AT
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Central Excise:
Cenvat Credit - welding electrodes - goods used for repair & maintenance of plant and machinery are eligible for Cenvat Credit - AT
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VAT:
Against the order of rectification passed resulting in the modification of the original order passed, the assessee has the right of appeal before the appellate forum - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (3) TMI 186
Cancellation of Penalty u/s 271(1)(c) of the Act - Whether the Tribunal is justified in cancelling the penalty levied u/s. 271(1)(c) of the Act inspite of the fact that the quantum appeal is kept alive by the same ITAT Bench Held that:- Assessee was unable to controvert the facts thus, the very basis of the Tribunals order on penalty disappears - when the Tribunal linked the issue of penalty with the order of CIT [A] dated 13th July 2011 and the order itself was later on setaside then, of course with consequential directions, the Tribunals order dated 4th May 2012 requires reconsideration thus, the present order is also set aside and the matter remitted back to the Tribunal for fresh consideration Decided in favour of Revenue.
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2014 (3) TMI 185
Deletion of disallowance u/s 32 of the Act - Claim of higher depreciation on leased back assets Held that:- The decision in I.C.D.S. Ltd. vs. Commissioner of Income-Tax and another [2013 (1) TMI 344 - SUPREME COURT] followed - for claiming higher rate of depreciation, there is no requirement under the Act of usage of the assets by the assessee himself - The vehicles were purchased by the assessee from manufacturer and leased out to customers - Such vehicles were used in the course of leasing business thus, the assessee would be entitled for the depreciation - There is nothing on record even otherwise to suggest that the transaction itself was sham or bogus Decided against Revenue.
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2014 (3) TMI 184
Deletion made u/s 40A(3) of the Act - Whether the Tribunal has erred in upholding the decision of the CIT(A) for deleting the addition made u/s 40A(3) of the Act being payment made in contravention with the provisions of sec.40A(3) of the Act Held that:- In strict sense the question of disallowance under section 40A(3) of the Act was not an issue before the Court earlier case of the assessee but, from the portion of the order, it can be seen that the Court did advert to such an issue in the context of the findings of the CIT (Appeals) as well as the Tribunal and approved the same - if such issue was arising in the assessment year 2005-06, the question is, why did the Revenue not raise such a question before the High Court - and can in the present case the revenue can raise such a question the appeal of the Revenue cannot be entertained thus, the view of the CIT (Appeals) and the Tribunal is upheld - that the payments were not expended by the assessee and that therefore would not come within the meaning of expenditure be it based on section 40(a)(ia) or section 40A(3) of the Act Decided against Revenue.
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2014 (3) TMI 183
Deletion of interest expenses u/s 37 of the Act - Inter corporate deposits - Divergence between interest bearing borrowings funds to noninterest bearing ICDs - Whether the ITAT has erred in confirming the order of CIT (A) deleting the addition out of interest expenses on Inter Corporate Deposits Held that:- The appellant had proved before the AO that financial position of both the sister concern to whom advances were given - The Tribunal uphold the Commissioners exercise of revisional powers the Tribunal did not examine the contentious issues touched by the Commissioner in revisional order - The Tribunal only satisfied itself that the grounds for taking the order of Assessing Officer under revision exist thus, the Tribunal in its own order later on examining the additions on merits cannot be found fault with. CIT (A) as well as Tribunal both noted that Sunrise Fincap Limited ie., the creditor had negative growth - The income of the company was reducing day by day and the company had no concrete business plan - Both the sides have agreed that the assessee would forgo the interest, if the principal amount of Rs. 1.5 Crores is paid by the company before the specified date - the company had incurred losses - The company was not in a good condition to repay the principal and even interest and had become sick - The appellant had therefore no reason to charge interest from these two companies - It was on this count that the CIT (A) as well as Tribunal both deleted the additions on the principal and charging tax on real income there was no reason to take a different view - the assessee company had accumulated business loss which were being carried forward in future years Decided against Revenue.
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2014 (3) TMI 182
Excess drawings effected by the partners - Addition made u/s 68 of the Act - Amount not disclosed in the Return Deletion made u/s 40A(3) and 40(a)(ia) of the Act Held that:- The first appellate authority as well as the assessing officer did not have the benefit of checking any of the records which were produced before the Tribunal as a paper book - Some of the documents which were part of the paper book produced before the Tribunal are placed as additional documents by filing an Interlocutory Application. The entire system of accounting maintained by the respondent/assessee is by way of cash -similar accounting system is maintained so far as the sister firms and also the accounts of the partners including Mr.George Jacob - The stand of the respondent/assessee before both the appellate authorities was, the funds coming to the respondent/assessee was belonging to one of the partners, i.e. Shri.George Jacob and the funds reached him through other sister firms, therefore, there is proper explanation so far as ₹ 12.18 Crores - So far as non-payment of interest on excess amounts drawn by the partners of the firm they claim that certain capital amounts were available with the firm in respect of each of the four partners who had drawn excess amount, and as no interest was paid in the previous financial year, they did not charge any interest for the assessment year in question. The Tribunal placing reliance on paper book filed by the respondent/assessee in question which never was the subject matter of consideration before the assessing officer and the first appellate authority - the controversial issues raised before cannot be analyzed with reference to the factual situation - Even otherwise, the Court need not go into the veracity and genuineness of the facts placed on record now - In the absence of the additional documents for consideration before the assessing officer and CIT(Appeals), one cannot conclude that the opinion of the assessing officer and CIT (Appeals) were erroneous - Similarly Tribunal refers to several documents which persuaded reversal of the opinion of the assessing officer and CIT(Appeals) thus, the matter is remitted back to the AO for fresh consideration Decided in favour of Revenue.
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2014 (3) TMI 181
Relevant date of transfer u/s 2(47) of the Act Nature of gains LTCG or STCG - Whether the date of MOU i.e 22/06/2001 or 11/02/2004 i.e. the date of payment of entire amount of Rs.3 crores as per MOU is to be considered as date of transfer as defined under Section 2(47) of the Act Held that:- The possession of the property was not handed over to the assessee as on the date of MOU in 2001 - The terms and conditions of MOU clearly indicates that property will not be transferred either in the name of appellant/assessee or his nominee till entire amount agreed upon as per the terms of MOU is paid - Mere MOU would not confer any right to assessee to transfer the property in favour of third parties - The right is acquired only after payment of entire amounts as per MOU - It would happen only with the fulfilment of terms and conditions under MOU which apparently occurred in 2004. Whatever right accrued to assessee under MOU accrued only with the complete payment of amounts as per the terms and conditions of MOU on 11/02/2004 - Till this right accrued to the assessee, he could not have ventured to transfer any limited right accrued to him under MOU, to third parties - In the absence of any regular document of conveyance in his favour or unless M/s.Damodar Sons & Co joined him in signing the documents of sale deed, he could not have transferred any right even if it was limited right - The execution of sale deed occurred in 2005 - the right accrued to assessee in 2004 came to be transferred along with M/s.Damodar Sons & Co only in 2005 thus, the Assessing Officer was justified in saying it is a short term capital gain and not long term capital gain Decided against Assessee.
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2014 (3) TMI 180
Validity of Assessment - Escapement of income Assessment reopened within four years Particulars not furnished Held that:- The order of the CIT(A) is not correct on the facts of the case as the proviso to section 147 can only be invoked in a case where the assessment has been reopened after the end of four years from the end of the A.Y - the assessment under section 143(3) has been done in this case - the assessment has been reopened before the end of four years from the A.Y., this proviso will not apply - The order of the CIT(A) was not correct on the given facts of the case thus, without going into the other merits of the assessees contentions, the objections of the Revenue is upheld - the order of the CIT(A) set aside the matter remitted back to the CIT(A) for fresh consideration Decided in favour of Revenue.
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2014 (3) TMI 179
Deletion of Penalty u/s 271(1)(c) of the Act Valuation u/s 50C of the Act Inaccurate particulars furnished for income of LTCG Held that:- The assessee has duly disclosed not only the consideration actually received by her but also the fact of applicability of section 50C has also taken stand on the same in her return of income itself - It was a very transparent and fair way of making a claim - The mere fact that the claim has not been found to be acceptable does not negate the fact that the assessee had a reasonable explanation for capital gain declared by her and that the conduct of the assessee cannot be faulted the original property was destroyed much before the valuation carried out, the valuation as per DVOs report is essentially estimate based on too many presumptions - it is one of the rare cases wherein even working of section 50C cannot really be effective at all inasmuch as the very asset, which was required to be valued by DVO, was demolished before valuation could take place it is not a fit case of penalty as there was no good ground to reject assessees explanation thus, the order of the CIT(A) was justified in deleting the penalty Decided against Revenue.
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2014 (3) TMI 178
Demand raised u/s 201/201(1A) of the Act r.w. section 194H of the Act TDS not deducted Held that:- A short deduction of tax at source by itself does not result in a legally sustainable demand u/s 201(1) and u/s 201(1A) the decision in Hindustan Coca Cola Beverage Pvt. Ltd. Vs. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] - the taxes cannot be recovered once again from the assessee in a situation in which the recipient of income has paid due taxes on income embedded in the payments from which tax withholding requirements were not fully or partly, complied with. The onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, and it is only when the primary liability is not discharged that vicarious recovery liability can be invoked - Once all the details of the persons to whom payments have been made are on record, it is for the Assessing Officer, who has all the powers to requisition the information from such payers and from the income tax authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld - The lapse on account of non-deduction of tax at source is to be visited with three different consequences penal provisions, interest provisions and recovery provisions - Recovery provisions under section 201(1) can be invoked only when loss to revenue is established, and that can only be established when it is demonstrated that the recipient of income has not paid due taxes. Interest under section 201(1A) is compensatory interest in nature and it seeks to compensate the revenue for delay in realization of taxes the decision in Bennett Coleman & Co Ltd Vs ITO [1984 (11) TMI 58 - BOMBAY High Court] thus, levy of interest u/s 201(1A) is applicable whether or not the assessee was at fault - since it is only compensatory in nature it is applicable for the period of the date on which tax was required to be deducted till the date when tax was eventually paid - in a case in which the recipient of income had no tax liability embedded in such payments, there will obviously be no question of delay in realization of taxes and the provisions of section 201(1A) will not come into play at all - The computation of interest is to be redone in the light of this legal position thus, the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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2014 (3) TMI 177
Rectification petition u/s 154 of the Act Facts properly not appreciated Held that:- The decision in ITO vs. Volkat brothers [1971 (8) TMI 3 - SUPREME Court] followed - a decision on debatable point of law is not a mistake apparent from record and that a mistake apparent on record must be obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinion - In the original order the CIT(A) has taken note of the fact that notice under section 133(6) of the Act could not be served to Shyam Agro Industries - CIT(A) was of the view that the assessee could not substantiate existence of the said party - whether ld. CIT(A) reached this conclusion rightly or wrongly and whether balance sheet entry itself was sufficient to dislodge this conclusion is beyond the inherently limited scope of mistakes which can be rectified under section 154 of the Act - The scheme of section 154 of the Act does not permit correction of such errors, even if there is any error the order of the CIT(A) upheld Decided against Assessee.
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2014 (3) TMI 176
Estimation of profit @ 16% - Rate of profit charged high and excessive - Held that:- CIT(A) was of the view that the income has to be determined by estimation only - The CIT(A) has also accepted additional turnover as business receipts the assessee is engaged in construction business thus, considering the nature of business of the assessee, estimation of profit at 16% is certainly on the higher side - More so, when it is found that assessee is found to have offered the total receipts as income and even has shown advances received for future projects as income - The Tribunal has been consistently taking a view that in case of estimation of profit in respect of construction business on rejection of books of account, net profit rate would be 12.5% before depreciation or 8% including depreciation thus, the net profit adopted at 16%, being on the higher side, it has been held that the profit rate of 8% would be fair and reasonable considering the nature of business carried on by the assessee thus, the AO is directed to estimate the profit by applying rate of 8%, net of all deductions, on the turnover declared by the assessee Decided partly in favour of Assessee. Disallowance of expenditure u/s 40(a)(ia) of the Act Held that:- The decision in Commissioner Of Income-Tax Versus Banwari Lal Banshidhar 1997 (5) TMI 37 - ALLAHABAD High Court] followed - When a net profit rate is applied, there remains no scope for further disallowance of any expenditure thus, no separate disallowance u/s 40(a)(ia) of the Act can be made when the profit of the assessee has been estimated thus, the AO is directed to delete the addition made Decided partly in favour of Assessee. Addition on account of incorrect credits in bank accounts - Chit loss - Held that:- The CIT(A) was justified in deleting the addition as the so-called unexplained credits in the bank have been reconciled by the assessee and considered as a turnover in the return filed in response to section 153A of the Act - the addition would not survive - Similarly with regard to chit loss of the CIT(A) has noted the fact that the chit in fact was subscribed by him with Margadarshi Chit Fund Pvt. Ltd. - the bid amount was taken to the books of account thus, when the amount was utilized for the purpose of business, the chit loss arising becomes allowable expenditure thus, there is no reason to interfere in the findings of the CIT(A) Decided against Revenue. Addition on account of negative cash balance Held that:- The addition is not justified, as it is not disputed that book cash negative balance was on the basis of original set of books - The CIT(A) has also not disputed the fact that as per the revised books of account based on the seized material the resultant incremental turnover as well as the incremental expenditure have been considered and there is no negative cash balance - assessee has filed the return of income in response to notice u/s 153A of the Act on the basis of revised books of account thus, when the profit is estimated by rejecting the books of account, no separate addition can be made the AO is directed to delete the addition made Decided in favour of Assessee. Addition made on account of unaccounted investment in jewellery Held that:- The CIT(A) made clear that he did not dispute the fact that gold jewellery belongs to the assessee as well as other family members who are also staying with the assessee thus, without quantifying the amount of jewellery actually belonging to each family member, the CIT(A) could not have treated the amount of 460 grams as belonging to assessee thus, the addition made by the CIT(A) set aside Decided in favour of Assessee. Disallowance of expenditure on estimate basis Held that:- The CIT (A) has proceeded to estimate the profit from business by observing that the assessee's books of accounts is deemed to have been rejected - once the CIT (A) has resorted for estimation of profit by rejecting the books of account, he cannot again pick up individual items of expenditure for disallowance - When profit is estimated by applying a fixed rate, then it is deemed that all other expenditure/disallowances have been taken care of Relying upon Assistant Commissioner Of Income-Tax. Versus Indwell Lianings (P) Limited. [2008 (6) TMI 281 - ITAT MADRAS-A] the AO is directed to delete the addition made Decided in favour of Assessee. Estimation of income by applying the rate of 15% of the total turnover Held that:- The net profit of 15% adopted by the CIT (A) is on the higher side - the Tribunal is consistently holding the view that in case of civil construction work estimation of profit after rejection of books of accounts is to be made at 12.5% before depreciation or at 8% net of depreciation - a net profit rate of 8% net of all deductions would be just and reasonable thus, net profit rate of 8% will be fair and reasonable thus, the AO is directed to estimate the net profit at the rate of 8% on the total turnover disclosed by the assessee Decided partly in favour of Assessee. Addition on account of difference in bank balance Held that:- It was incumbent on the part of the Assessing Officer as well as CIT (A) to verify the actual cash balance as shown in the bank account vis-a-vis reconstructed books of accounts on the basis of which return was filed in response to notice issued u/s 153A of the Ac - The revenue authorities having not made any effort to verify this aspect, the addition cannot be sustained Decided in favour of Assessee. Addition on account of unexplained expenditure Held that:- The CIT (A) was not justified in sustaining the addition which was made on the basis of old set of books of accounts - Without verifying the revised books of accounts, and claim of the assessee that as per which there is no negative cash balance the revenue authorities are not justified in making the addition on the basis of old books of accounts which admittedly were found to be defective thus, the addition cannot be sustained and set aside Decided in favour of Assessee. Addition on account of money receipts Held that:- The remand report submitted by the AO as well as the observations made by the CIT(A) would clearly show that they have accepted the fact that the said amount has been accounted for thus, there cannot be any scope for further addition on that account - the CIT(A) has noted that the assessee has offered the amount as additional income in the form of extra receipts for the year under reference - If it has already been offered as additional income, then, it cannot be again added to the income of the assessee thus, the matter is remitted back to the AO for verification Decided partly in favour of Assessee. Addition on account of money Held that:- There was no infirmity in the finding of the CIT(A) - the assessee apart from stating that the amount represented the cost of extra work which has not been paid by the customer has not brought any material on record to substantiate such claim - the assessee having failed to explain with evidence that the amount of Rs. 9,04,750/- was not received by him, the addition is required to be sustained Decided against Assessee. Addition in absence of seized material Held that:- While in the original return the assessee has disclosed gross receipts at Rs. 22,85,000/-, in the return filed in response to notice u/s 153C the assessee disclosed gross receipts of Rs. 42,52,000 thus, the contention of the assessee that there was no seized material is without any basis - It is very much clear from the materials on record that at the time of filing of original return, the assessee only disclosed gross receipts through cheques totally suppressing receipts in cash which came to light only as a result of search thus, the contention of the assessee that the addition cannot be made in absence of seized material is without any basis Decided against Assessee. Addition on account of difference between actual and admitted consideration Held that:- There is no other evidence before the AO either by way of seized material or any other material to show that the assessee has suppressed the receipt in respect of all the flats - by applying the single instance of suppression of receipt, if at all there be any, the AO could not have quantified the unaccounted receipt that too by assuming that receipts shown by the assessee represents 60% of the total consideration - the assessee taking into consideration the information available in the seized materials has declared the gross receipts of Rs. 1,20,10,000/- in the return furnished in response to notice issued u/s 153C as against the receipts of Rs. 26,40,000/- shown in the original return thus, the conclusion drawn by the CIT(A) that the unaccounted receipts from sale of flat has already been taken care of by enhancing gross receipt of Rs. 1,20,10,000/- cannot be disregarded thus, there was no infirmity in the order of the CIT(A) in deleting the addition Decided against Revenue. Addition of 10% of expenses Held that:- The CIT(A) has held that no disallowance can be made u/s 40(a)(ia) as the AO has not established the default by assessee - Even so far as allegation of non-furnishing of bills and vouchers are concerned, the CIT(A) has observed that though vouchers were available with the assessee, the AO refused to verify them and made the addition solely on the basis of special audit report - The CIT(A) restricted the disallowance to 10% of the expenditure claimed the AO is directed to disallow 5% instead of 10%, considering the fact that some amount of inflation on expenditure cannot be ruled out Decided partly in favour of Assessee.
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2014 (3) TMI 175
Levy of penalty u/s. 271(1)(c) of the Act - Profit earned from undisclosed business - Held that:- The decision in Jyoti Laxman Konkar vs. CIT [2006 (7) TMI 165 - BOMBAY High Court] and CIT vs. Rakesh Suri [2010 (5) TMI 576 - Allahabad High Court] followed - It is clear case of concealment of income because the assessee has concealed the bank account maintained with ICICI Bank Ltd. from the Revenue department - The assessee admittedly accepted the order of the AO in maintaining the addition because no appeal was preferred before any authority against the addition - The assessee had admitted that he has earned unaccounted income from undisclosed business - in the penalty proceedings, finding of fact recorded by the AO which have reached finality cannot be disturbed. The AO in the quantum order has specifically mentioned that he was satisfied that the assessee has concealed the particulars of his income - The AO also held that Explanation 1(A) of section 271(1)(c) is also squarely applicable in the case of assessee and in fact the explanation offered by the assessee was found to be false - The ld. CIT(A) also found that the assessee has not filed any satisfactory explanation before him - Therefore, the AO is correct in holding that the assessee has willfully concealed the particulars of his income by not disclosing the fact of maintaining bank account with ICICI Bank - The concept of "reasonable cause" or exception as contended by the assessee has no applicability to the penalty proceedings u/s. 271(1)(c) of the IT Act - The assessee was maintaining unaccounted bank account and made huge cash deposits in the bank account and when the details were called for from the bank, the assessee had to make surrender of such income Decided against Assessee. Quantum of penalty Held that:- It may not be a case of levy of maximum penalty or at least 200% penalty - The interest of justice requires that minimum penalty at the rate of 100% may be levied thus, the quantum of penalty is modified and the AO is directed to levy minimum penalty at the rate of 100% - Decided partly in favour of Assessee.
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2014 (3) TMI 174
Deletion of addition made on surplus derived - Exemption u/s 11 and 12 of the Act Held that:- The amendment to section 2(15) of the Act was applicable from AY 2009-10 and not to the year under consideration, therefore the AO was legally and factually incorrect to invoke provisions of section 2(15) of the Act - the appellant was granted registration u/s 12A of the Act by the Hon'ble ITAT for AY 2004-05, therefore, surplus derived was exempt u/s 11/12 of the Act - The nature of activities of the assessee are same as were carried out in earlier assessment years and subsequent year as have been considered by the AO in assessment year. The Revenue accepted the claim of assessee for grant of exemption on surplus u/s 11 of the IT Act - even if principle of res judicata does not apply to the Income-tax proceedings, but the Income-tax Authorities shall have to follow the rule of consistency - Relying upon Radhswami Satsang vs. CIT [1991 (11) TMI 2 - SUPREME Court] and Commissioner Of Income-Tax Versus Godavari Corporation Limited [1983 (12) TMI 4 - MADHYA PRADESH High Court] - there is no justification to interfere with the order of the CIT(A) in deleting the addition The AO has not brought any evidence on record to suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit - The AO merely considering the activities of construction of flats and selling held the same to be business in nature thus, the registration u/s. 12AA is effective Decided against Revenue.
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2014 (3) TMI 173
Valuation of Property - Determination of market value of marble slabs Validity of assessment order passed by the A.O. u/s 143(3) r.w section 153A and 254 of the Act Held that:- The Valuation Officer has not sent the comments and the order was getting time barred by 31.12.2010 - The CIT directs the AO to give one more opportunity to the assessee by furnishing copy of the DVO letter dated 06.03.2013 and determine the market value of the property as directed by the ITAT - the comments of DVO came much later - Had AO waited for the same orders could have barred by time - Then AO has no option than to complete the proceedings in the way he did. The opinion was already confirmed by the ITAT - even if an opportunity was given to the assessee again, the AO has to estimate the market value as on that date as there will be no way of examining the actual value in the absence of vouchers maintained by the assessee or books of accounts thus, there is no reason to set aside again to give one more opportunity and estimate the values again - AO has already determined the same considering the DVO's original report, no further purpose would be served by setting aside the orders - Assessing Officer's adoption of values would depend on the original values adopted by the DVO and the objections raised by the assessee, to determine the market values thus, the order passed by the CIT(A) u/s 263 of the Act set aside Decided in favour of Assessee.
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2014 (3) TMI 172
Estimation of income u/s 44DA or Section 44BB Production Testing Surface equipment (along with accessories) in operation condition and services - extraction or production of, mineral oils including petroleum and natural gas - fees for technical services - Held that:- The decision in Director of Income-tax-II Versus OHM Ltd. [2012 (12) TMI 422 - DELHI HIGH COURT] followed - The provision of Section 44BB is a special provision while Section 44DA is a general provision - when the services rendered by the assessee fall within the scope of Section 44BB, the said Section would be applicable but, where the services are of the type which do not fall under that Section but are more general in nature, then, Section 44DA would be applicable. The scope of the work of the assessee falls squarely within the ambit of Section 44BB because the first contract is for hiring of production testing surface equipment in operation condition for carrying out production testing of high pressure exploratory and development wells - The second contract is for providing of mud services on service contract to drill 17 nos. of horizontal and multilateral wells - wells were drilled for the purpose of exploration/production of mineral oil - the services provided by the assessee squarely fall within the ambit of Section 44BB(1) the CIT(A) rightly directed the AO to compute the income u/s 44BB of the Act Decided against Revenue. Cancelation of penalty u/s 271(1)(c) of the Act Held that:- This is not a fit case for levy of penalty under Section 271(1)(c) - As per profit & loss account, there was a loss - merely because the income of the assessee is directed to be determined by the deeming provision of Section 44BB, it cannot be said that assessee concealed the income or furnished inaccurate particulars of income - It is nowhere mentioned either in the assessment order or in the penalty order that assessee concealed any fact or any details furnished by the assessee were found to be wrong or false The decision in CIT Vs. Reliance Petroproducts Pvt.Ltd. [2010 (3) TMI 80 - SUPREME COURT] followed the CIT(A) rightly cancelled the penalty levied under Section 271(1)(c) Decided against Revenue.
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2014 (3) TMI 171
Selection of comparables - Exensys Software Solutions Ltd. Four Soft Ltd, Infosys,., Sankhya Infotech Ltd., Thirdware Solutions Ltd, Tata Elexi (seg) - Held that:- There is a merit in assessees contentions about noncomparability of various comparable companies selected by the TPO - There is a merger of Holool India Ltd. and in the directors report - there is a clear mention that the companys income is possible with the amalgamqation of Holool India Ltd. - Assessee company has got benefit by advanced latest technical expertise on various technology domains of the transferor company - claim was with reference to the AS-14 and also due to amalgamation of two companies - Not only in the correspondence with the TPO that Assessee expressed its inability to furnish separate accounts for two amalgamated companies but also further it has clearly mentioned to the TPO that there is a gap in the expenditure expected to incur and actual expenditure incurred which made the company record high operating margin on cost. These factors indeed support assessees contention that this exceptional profit with the fact of amalgamation effected operating profit of the company and this cannot be taken as comparable - Relying upon Intoto Software India (P.) Ltd. Versus Assistant Commissioner of Income-tax, Circle -2(1), Hyderabad [2013 (10) TMI 599 - ITAT HYDERABAD] - There is an extra-ordinary event which resulted in high operating margin of that company thus, the AO is directed to exclude these companies from the list of comparables - Decided in favour of Assessee.
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Customs
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2014 (3) TMI 169
Export of Ketamine from India in the guise of Alfa Olefin Sulphonate (AOS) - Identification of exporter - Held that:- Investigation revealed that M/s Vikash Exporter had not exported Ketamin through the shipping bills in question. Both the appellants know each other to defraud Revenue even opening fake account in Andhra Bank by a benamidar account holder who was an employee of Shri Mahesh Kumar Gupta and all remittances of export were transacted through that dummy account. That account was parking place of fraudulent considerations. Both were so intimate and connected with each other that they used a known IEC of another concern and opening bank account in the name of that concern smuggled Ketamin. It was further established that the real owner of Aggarwal Industries brought out a law suit against Shri Mahesh Kumar for fraudulent use of his firms name. All these evidence go against both appellants. Entire chain of evidence successfully proved malafide of both appellants. They were not innocent. But were the sole designer of fraud to defraud customs. They made undue gain at the cost of Revenue. When interest of nation is affected due to export of narcotic substance by these appellants they should not be leniently dealt under the law. Adjudication does not suffer from any legal infirmity for which adjudication sustains and both appeals are liable to be dismissed. Redemption fine is imposable on the exporter Shri Devinder Pramod but not jointly on Shri Devinder Pramod and Shri Mahesh Kumar Gupta. Other than this modification, entire consequence of adjudication is confirmed and both the appeals are dismissed. - Decided against the appellants.
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2014 (3) TMI 168
Import of goods declaring as Hydrogenated Vegetable Oils (Vanaspati Ghee) - mis-declaration - reexport - exemption under notification 02/2007-Cus dated 5.1.2007 - Upon testing the sample of the said goods, customs authorities found that the goods imported were not edible oil and did not conform to the standard of vanaspati laid down under PFA Rules, 1955 - Held that:- When the imports of both the goods were deliberately imported and mis-declaration was made for unjust enrichment at the cost of exchequer, it cannot be said that the imports were bonafide. It is also surprising to note that in both the case when the offending goods were unfit for human consumption under the PFA Rules, 1955 how such goods were allowed to be re-exported without having regard to the hazardous character thereof. This is not a case to be leniently considered at all when adulteration is harmful to the human consumption. Therefore, re-export ought not have been allowed. Offending goods were hazardous in nature for human life, there is no scope to hold that the imports were stray import. Accordingly quantum of redemption fine and penalty imposed in adjudication should not be interfered. Whatever the quantum of import may be, when the goods become offending goods that contravenes the provisions of law of Customs and causes serious prejudice to public interest under Section 11(u) read with Section 11(k) of customs Act, 1962 which deals with offence relating to human life. Therefore both appeals should be dismissed. Penalty and Redemption fine - Held that:- The quantum of import is extremely high and because he brought huge quantity of vegetable oil in appeal No. C/736/07, he found it easier to hide the offending goods in the guise of vegetable oil and attempted to clear such goods availing benefit of exemption notice. Similarly, being an experienced appellant, he could attempt to bring spurious bakery shortening which is covered by appeal No. C/192/08. - Levy of penalty and Redemption fine confirmed.
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2014 (3) TMI 167
Non maintenance of appeal - Appeal not signed - Held that:- Though the appellant should have been careful in filing the appeal properly, un-signing of the appeal is a rectifiable error which could have been rectified by issuing a defect notice by the first appellate authority. Suffice it to say that the appellant should not be deprived of his right to make appeal before the higher authorities, in my view, the impugned order rejecting the appeal only on the ground of un-signing of the appeal, which is a rectifiable error, needs to be set aside with direction that the first appellate authority, will restore the appeal to its original number after directing the appellant to rectify the error and on such rectification of the error, the first appellate authority will take up the appeal for disposal after following the principles of natural justice - Decided in favor of assessee.
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Corporate Laws
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2014 (3) TMI 166
Validity of proceedings initiated - Proceedings initiated much after offense committed - Held that:- The other Directors were named as Accused Nos.1 to 3 even though they had retired from the Directorship and stood discharged by orders of this court. It is alleged in the complaint that there was a notice dated 27.11.2002 to the present applicants to produce books, records and papers and all properties of the company in liquidation and that though the notice was acknowledged, there is failure to comply and therefore, were said to have committed an offence punishable under Section 538(1)(c) of the Act. Therefore, the complaint is silent of the subsequent events and subsequent orders passed by this Court which were clearly overlooked in alleging that the present applicants had not complied with the directions issued. Company having stopped its activity in the year 1997, the present applicants being residents of Mumbai, were not in the know of the affairs of the company and in spite of this having got to the attention of the respondents time and again, the present proceedings initiated are unjust and would result in punishing the applicants for no fault of theirs. In any event, even if there was a default in production of all the books and records as claimed by the respondents, in the absence of any further action being taken expeditiously, the prosecution having been launched much after there was alleged non-compliance, the applicants were in a position where they would not be able to comply having regard to the sheer lapse of time and the applicants not being in possession of any such documents or records - Decided in favour of appellants.
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FEMA
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2014 (3) TMI 170
Issue of notice at old address - principle of natural justice - proceedings under Foreign Exchange Regulation Act, 1973 imposing penalty of Rs. 50 lacs on each of the petitioners. - Held that:- though respondent no. 2 was aware as far back as 17th July, 2000 about the new address of petitioners (as is apparent from the summons issued to the petitioners by respondent no. 2 itself), yet on 20th August, 2002, it issued show cause notices to the petitioners at their old address. It is pertinent to mention that at the old address, the petitioners were not served and the service report states that they are no longer residing there. Consequently, this Court is of the opinion that in the present cases, there has been violation of principles of natural justice and the petitioners had no opportunity to defend themselves. Regarding alternate remedy available to petitioners - Held that:- alternative remedy is only a rule of prudence and not a statutory prohibition. It is settled law that when there is violation of principles of natural justice, a writ petition is certainly maintainable as held by the SC in In Whirlpool Corpn. Vs. Registrar of Trade Marks [1998 (10) TMI 510 - SUPREME COURT] - matter remanded back.
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Service Tax
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2014 (3) TMI 192
Waiver of pre deposit - Demand of service tax - Man Power Recruitment or Supply Agency - Held that:- Applicants obtained licence under the Contract Labour (Regulation & Abolition) Act. Prima facie, it appears that the applicant is a contractor and supplied the labourers to M/s.TAFE, which would come within the definition of "Man Power Supply" - all the applicants are individual persons and the demands except in two cases are barred by limitation - we direct the applicants to pre-deposit the amounts - Upon making deposit, predeposit of balance amount of tax along with interest and penalty is waived and its recovery is stayed during pendency of the appeal - Conditional stay granted.
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2014 (3) TMI 191
Refund of cenvat credit due to export - in the case of mPortal India Wireless Solutions (P) Ltd. Vs CST [2011 (9) TMI 450 - KARNATAKA HIGH COURT], It has been decided that refund cannot be refused for the reason that the respondent had not taken registration before taking cenvat credit. Since the respondent was not providing any taxable service, they were not required to get registration. - refund to be allowed.
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2014 (3) TMI 190
Waiver of predeposit - Valuation - inclusion of value of materials used in repair work - Held that:- the applicant satisfied all the conditions of Notification No.12/2003-ST, since Revenue has not come in appeal against the finding given by the Commissioner. In the previous case of the same assessee [2013 (11) TMI 641 - CESTAT CHENNAI] for a different unit, we called for pre-deposit of about 10% because the applicant did not produce documents to justify submissions before the lower adjudicating authority. In the instant case, no such observation is seen in the adjudication order. - stay granted.
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2014 (3) TMI 189
Demand of service tax - Advertisement Agency Service - Held that:- applicant was carrying out the work for the advertising agency. The Commissioner (Appeals) observed that the invoices and the payment receipts are not related to each other. It is also observed that the applicant had not produced the invoices and payments receipts for it. Hence, prima facie, we are of the view that the Boards circular is not applicable in this case. In any event, if they are not producing the documents of payment receipt and other necessary documents then it cannot be shifted to the advertising agency - Conditional stay granted.
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2014 (3) TMI 188
Waiver of pre deposit - Penalty u/s 76 - Application of Section 80 - Whether the penalty imposed on the assessee under Section 76 is liable to be sustained - Held that:- entire amount of service tax and education cesses was paid with interest in October 2011 after the original authority adjudicated upon the show-cause notice - provision of sub-section 2 of Section 80, prima facie, inapplicable. In the result, the prayer for waiver and stay in respect of the penalty cannot be acceded to - Stay denied.
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Central Excise
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2014 (3) TMI 195
Payment of Merchant Overtime - Supervision on export undertaken during office hours - Whether the appellant Export Oriented Unit (EOU), is required to pay Merchant Overtime (MOT) charges for supervision of exports undertaken by the Central Excise officers during office hours - Held that:- Board's Circular dated 7-4-2003 merely refers to an earlier Circular dated 2-1-2000 and states that EOUs would be given an option of either using the services of Customs/Central Excise officers on payment of cost recovery charges or on payment of MOT. This provision of providing an option appears to have been done to facilitate small EOUs and reduce their cost of operation. Normally, the EOUs which work under a customs bond outside the places where Custom Houses are located and customs officers are posted, have to bear the cost recovery charges for posting one or more officers specially to look after the work relating to EOUs. The small EOUs do not have sufficient work and bearing such charges would become costly. Hence, the circular gives a beneficial option to enable such EOUs for requiring the services of officers for a limited period of time on MOT. As such, the provisions of this circular could neither be held to be perverse or in any way contravening the provisions of the parent Act. As regards the MOT charges, the same are required to be collected as per Customs (Fees for Rendering Services by Customs Officers) Regulations, 1998 which has been framed in exercise of the statutory powers vested in the Board. The practice of charging MOT is on age old practice not only under the present Customs Act framed in 1962 but also prevalent under the older Sea Customs Act, 1878. There appears to be nothing repugnant in the practice of charging MOT. The assessee should not hesitate to pay for the services which are required to be performed beyond the normal place of work of the customs officers and beyond the normal hours of duty - small amounts of MOT charged under the impugned orders are not unreasonable and the same are payable in accordance with the Regulations framed by the Board. The appellants, of course, have an option of paying cost recovery charges which definitely would be much more than the MOT charges considering the increased salary and allowances presently payable for the Customs and Excise officers - Decided against assessee.
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2014 (3) TMI 165
Duty demand - excess quantity in the injection - whether assessee required to pay duty on excess quantity or not - Held that:- The appellant is filling the excess quantity in the injection as per the Drugs & Cosmetics rules, 1945. As the appellant is required to fill excess quantity as per the provisions in the Drugs & Cosmetics Rules, 1945, the appellant are not required to pay duty on this excess quantity. As duty is not payable, question of interest and penalty does not arise - as duty paid on account of control samples on inputs, inputs on machines trial are not contested, no order is passed on this aspect, but duty on excess quantity filled in the injection and interest and penalty confirmed in the appellant are waived - Decided in favour of assessee.
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2014 (3) TMI 164
Undervaluation - MRP based valuation u/s 4A - change in MRP subsequent to removal of goods - non declaration of the actual MRP on ceramic glazed tiles and vitrified tiles - two periods i.e. prior to 01.03.2008 and post 01.03.2008. - demand of differential duty and levy of penalty - Held that:- 3 decisions of the Tribunal i.e. M/s Millennium Appliances India Ltd [2009 (3) TMI 855 - CESTAT, BANGALORE], M/s Ravi Foods Pvt. Ltd. [2010 (12) TMI 290 - CESTAT, BANGALORE], M/s ABB Ltd [2010 (12) TMI 1027 - CESTAT, BANGALORE] have held a view that prior to 01.03.2008, in the absence of any provisions for re-determining the RSP, in the form of prescribed rules, the Revenue authorities cannot re-determine the RSP under any of the provisions available to them. It has to be noted that there is no contrary view which has been taken by the Tribunal. The ratio laid down by Apex Court in the case of M/s Mahim Patram Pvt. Ltd. [2007 (2) TMI 73 - SUPREME COURT OF INDIA] does not in any manner support the case of the Revenue. There being no contrary judgment to the views expressed by the 3 decisions of the co-ordinate benches of the Tribunal on this issue, even assuming that there was mis-declaration of RSP, period prior to 01.03.2008 the RSP cannot be re-determined by the Revenue in any manner. Yet another angle to the entire case is absence of evidence as to there being alteration of RSP; in as much as when the investigations were conducted by the authorities, we find that the investigating authorities have not seized a single carton of the offending goods in the Pan India operation at different dealers premises, wherein different RSP was declared. It would be beyond imagination that the dealers could not have had any stocks of glazed/vitrified tiles received from the appellants, in their hands when the investigation took place. In the absence of such a crucial evidence, we are unable to hold that the appellant herein can be saddled with a liability of Central Excise duty based upon re-determined RSP, for the period prior to 01.03.2008. Further, the manufacturers may be unaware that the RSP on the box was obliterated or altered after the removal from their place of manufacturer, as none of the dealers have stated that the RSPs were changed on direction of manufacturer; or manufacturer was instrumental to order such a charge. Demand set aside - Decided in favor of assessee.
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2014 (3) TMI 163
Availment of CENVAT Credit - Penalty u/s 11AC - Invocation of extended period of limitation - Held that:- On perusal of the ER-1 returns, it is seen that the appellant had mentioned availment of the CENVAT credit on angles, channels, plates etc. with the supplier s name. It is noted that the appellant availed the credit during the period December 2007 to April 2009, when there was a dispute regarding the eligibility of CENVAT credit on these items - it is clearly apparent that there was a dispute of eligibility of credit on the items and the appellant declared these items in their ER-1 return. - if there is a conflicting opinion of Benches of Tribunal due to which it cannot be said that CENVAT credit wrongly taken or in contravention of provision of rules, no penalty can be imposed under Section 11AC - I modify the impugned order insofar as the demand of duty for the extended period of limitation and the penalty are set aside and the demand of duty for the normal period is upheld - Decided partly in favour of assessee.
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2014 (3) TMI 162
Duty demand - Benefit of exemption notification No. 9/98-CE dated 2.6.98 - Revenue contends that as in between availing small scale exemption notification, the assessee was clearing goods on full payment of duty, which is not permissible inasmuch as after opting for availing the small scale notification an assessee cannot opt out of the same - Held that:- if certain clearances in between are made on full payment of duty, it cannot be as opting out of held notification. The opting out of exemption notification means that an assessee intend to clear all future goods on payment of duty and accordingly inform the revenue, in writing, that they, from that date onwards, would not avail the benefit of the small scale notification in that particular number financial year. Admittedly, this has not been done by the assessee and as such, has to be held that they have not opted out of the notification - few clearances made in the beginning of the financial year on payment of normal duty pending determination whether clearances of the previous year had exceeded the prescribed limit could not the considered as de-fectow opting out of the exemption while was required to the in specific terms in view of proviso to Notification No 1/93-CE - Following decision of Ankit Packaging Ltd. Vs. CCE, Hyderabad [2003 (12) TMI 86 - CESTAT, NEW DELHI] - Decided against Revenue.
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2014 (3) TMI 161
Making pre- deposit though Cenvat Credit in compliance with stay order - Default in payment of duty - Rule 8 - levy of penalty - Revenue entertained a view that in return of provisions of Rule 8, the appellant should have paid duty out of PLA instead of utilizing the Cenvat credit account. - Held that:- matter referred to larger bench with the following questions: i) Whether it is correct in case of default to make payment from current account and direct pre-deposit of duty through current account /cash as held by Member (Technical) OR ii) Decision of Member (Judicial) justifying reversal from Cenvat account towards pre-deposit in relation to default is to be accepted.
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2014 (3) TMI 160
Manufacturing of Paan Masala - The dispute in the present appeals relates to the percentage of betel nuts. - If the same exceeds 15%, the product would get covered under the purview of notified goods as per the provisions of Section 3A of the Central Excise Act, 1944 and the appellants would required to pay duty in terms of Paan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. - Held that:- if the samples were not sent to Shri Ram Institute for Industrial Research, the Revenue has to take a categorical stand and should have contested the said stand of the appellants. If the samples have actually been sent to Shri Ram Institute for Industrial Research and have actually been registered by them, the test report of the same is required to be made known to the appellants and should be relied upon by the adjudicating authority so as to give a justifiable finding. Appellants made a request for re-test of the samples - no justifiable reason for denying the said request of the appellants. The Delhi Test House Report is subsequent to the passing the present impugned order, but in as much as the same shows the presence of betel nut to the extent of 9.8% and in view of the fact that we have already expressed our unhappiness over the manner of sending of samples to CRCL a report of Shri Ram Institute for Industrial Research, we deem it fit to set aside the impugned order and remand the matter to the original adjudicating authority for re-examining the matter in the light of the observations made by us in the preceding paras. - Decided in favor of assessee by way of remand.
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2014 (3) TMI 159
Cenvat Credit of service tax paid on GTA service - transportation of cement from the depots to the customers premises - upto the place of removal - extended period of limitation - Held that:- So far as the Cenvat Credit demand for the period prior to 01.04.08 is concerned, irrespective of the merits of the Appellants case for this period, the longer limitation period under proviso to section 11 A(1) of Central Excise Act, 1944 would not be invokable, as during the period of dispute there were conflicting judgments on the point of admissibility of Cenvat Credit of service tax paid on GTA Service availed for transportation of finished goods from the factory gate/depot to the customers premises. Demand for period with effect from 01.04.2008 - Held that:- the definition of various terms including place of removal given in Section 4(3) are for the purpose of this section only, which is applicable only when the rate of duty chargeable on the excisable goods is with reference to their value and neither the tariff value have been fixed by the Government under section 3(2) for those goods, nor those goods have been notified for determining value on the basis of their MRP under section 4A. Therefore, when the duty on the finished goods is chargeable at ad-valorem rate on value determined under section 4, only then the definition of place of removal as given in section 4(3)(c) can be adopted for the purpose of Cenvat Credit Rules, 2004 and in other cases the natural meaning of the expression place on removal i.e. the place on removal from which the duty on the goods is liable to be paid i.e. the factory gate or Bonded Warehouse, which would have to be adopted. When the place of removal has been defined under section 4(3)(c) for the purpose of determining value under section 4, in our view the definition of place of removal , cannot be adopted for Cenvat Credit Rules, 2004 when the duty on the finished goods is at specific rate or is chargeable at ad-valorem rate on the tariff value fixed under section 3(2) or on value determined under section 4A in which cases the definition of place of removalin Section 4(3)(c) is not relevant. The interpretation of Rule 2(t) of the Cenvat Credit Rules, 2004, which is in conflict with the provision of Central Excise Act, 1944, has to be avoided. For the period w.e.f. 01.04.08, while Cenvat Credit of service tax paid on the GTA Service availed for transportation of the finished goods up to the place of removal would be admissible, the definition of place of removal, as given in section 4(3)(c) would be applicable only in the cases where the rate of duty on the finished goods is chargeable at ad-valorem rate on the value determined under section 4 and in other cases the place of removal would be the factory gate. Where the rate of duty is specific, the place of removal would be the factory gate and as such there would be no question of permitting Cenvat Credit of service tax paid on GTA Service availed for outward transportation of the cement from the factory to Depot/Dump or the Customers Premises. The duty demand in these appeals would have to be worked out by this criteria for which these matters would have to be remanded. - Demand confirmed for the normal period of limitation - No penalty would be levied - Decided partly in favor of assessee.
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2014 (3) TMI 158
Interest on delayed refund - Whether the appellant are entitled for claiming interest on delayed refund of the amount paid by them before issuance of the show-cause notice or not - Held that:- interest on delayed refund is payable on expiry of period of 3 months from the date of receipt of the application under Section 11B(1) of the Central Excise Act, 1944. Therefore, I direct the adjudicating authority to pay the interest to the appellant on delayed refund on expiry of period of three months from the date of receipt of application under Section 11B(1) - Following decision of the decision of Ranbaxy Laboratories Ltd. [2011 (10) TMI 16 - Supreme Court of India] - Decided in favour of assessee.
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2014 (3) TMI 157
Denial of benefit of concessional rate of duty - Notification No.13/98-CE dated 2.6.98 and 23/2003-CE dated 31.3.2003 - use of imported chemicals being calcium carbide for ripening of apples - whether the use of chemicals i.e. calcium carbide and use of accelerator i.e. Pectin Enzymes in the manufacture of apple juice concentrate would amount to use of imported raw materials hitting the condition of the notifications - Held that:- if the imported products used in the manufacture of final products are in the nature of catalyst or consumable, the same would not be hit by the condition of the use of indigenous raw materials in the notification - calcium carbide was used by the appellant for ripening of the apples, which admittedly is a process prior to the extraction of juice. The said ripening of the apples can be achieved even on the basis of natural condition. As such it can be concluded that such use of chemicals for ripening of apples is only to accelerate the process. Further, the use of Pectin Enzymes for extraction of juice has again to facilitate the process of extraction of juice which can otherwise be achieved without the use of the said Enzymes. As such, the said two products are required to be considered as consumables, in which case, the same would not amount to use of raw materials thus violating the condition of the notification - Following decision of I G Petrochemicals Ltd. vs. C.C.E., Belapur [2005 (12) TMI 199 - CESTAT, MUMBAI] - Decided against Revenue.
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2014 (3) TMI 156
Cenvat Credit - whether the welding electrodes used in the repair and maintenance of plant and machinery are eligible capital goods for the purpose of Cenvat credit or not. - Held that:- in the case of Triveni Engg. & Ind. Ltd. vs. CCE, Meerut I [2013 (6) TMI 615 - CESTAT NEW DELHI] and after noting the various decisions, it was held that dismissal of SLP by the Honble Supreme Court against the order of the Tribunal in the case of SAIL without going into the reasons does not lay down any law. We further note that the identical dispute was decided in a recent decision of the Tribunal in the case of The Kanoria Sugar and General Manufacturing Company Ltd. [2013 (7) TMI 787 - CESTAT NEW DELHI] wherein all the rival decisions have been taken note and it stands observed that the goods used for repair & maintenance of plant and machinery are eligible for Cenvat Credit - Decided in favor of assessee.
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CST, VAT & Sales Tax
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2014 (3) TMI 194
Liability to additional tax, penalty and interest - Notification dated 27.8.1992 - Notification dated 30.3.2000 - Exemption under Section 15 of the Act of 1994 - Non furnish of Form C - Held that:- A bare look at the notification dated 27.8.1992 would reveal that the notification provided for rate of tax of 4% in case Hydraulic Excavators were sold in the course of inter-State trade or commerce without furnishing 'C-Form' - notification dated 30.3.2000 issued under Section 15 of the Rajasthan Sales Tax Act, 1994, which is general in nature, provides for exemption from tax the sale of goods specified in column 2 of the list to the extent to which the rate of tax exceeds the extent of rate as specified in column 3 and column 3 in the present case provides for extent of rate at 2%. While notification dated 27.8.1992 was specific and provided for levy of 4% tax on account of failure by the assessee in furnishing 'C-Form', the notification dated 30.3.2000 did not provide for any condition regarding furnishing of 'C-Form' in case of inter-State sale for the purpose of availing benefit under the said notification - Therefore, the fact that inter-State transaction took place and the assessee had not furnished 'C-Form' regarding the said transaction is of no consequence. The notification dated 27.8.1992 had no application to the case and once by notification dated 30.3.2000 the rate of tax was prescribed as 2% on account of exemption under Section 15 of the Act of 1994, it cannot be said that the respondent was liable for payment of additional tax, penalty and interest - Decided against Revenue.
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2014 (3) TMI 193
Denial of rectification of mistake - Rate of tax - Levy of additional sales tax without granting basic exemption of the first ₹ 10 lakhs turnover at 2% - Whether for ascertaining the rate of tax under Additional Sales Tax, the turnover for the year has to be taken and the appropriate rate of tax has to be adopted for levy of additional sales tax on the turnover upto 31.7.96 - Held that:- Any order made by an authority declining to correct any alleged errors has the effect of leaving the original order intact. It is only when rectification is ordered, and as consequence, one of the parties is aggrieved by such modification, a remedy is required to be provided. For that purpose Section 55(4) of the Act has been introduced. That new sub-section (4) of Section 55 does not confer a right on an applicant who successfully seeks rectification, to file appeal or revision against the order declining to rectify. If the authority which made the original order is of the view that there are in fact no errors in the order which need to be rectified, or can be rectified under Section 55 of the Act, no further proceedings can be taken by applicant, against the refusal of the authority to make an order in favour of the person applying for rectification - Following decision of STATE OF TAMIL NADU v. SPEEDLINE AGENCIES [1997 (8) TMI 489 - MADRAS HIGH COURT] - Thus, as against the order of rectification passed resulting in the modification of the original order passed, the assessee has the right of appeal before the appellate forum - Decided against Revenue.
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Indian Laws
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2014 (3) TMI 187
Building tax exemption entitlement - High Court of Kerala denied the exemption on the ground that the building of the appellant is not used principally for charitable purposes - Held that:- the application of income derived from a building for charitable purposes does not amount to the building being principally used for charitable purpose. - The argument that the income is applied for charitable purposes can be accepted only if it is known what portion of the income goes into charity i.e. free medical services. Does the percentage of patients receiving free medical services increase every year? If we hold that the income derived from a building is applied for charitable purposes then that has to be clearly proved, and the fact that the institution is set up for charitable purposes as stated in its Memorandum of Association cannot be enough to hold that income is necessarily applied for charitable purposes, especially in the light of the fact that the patients who can afford to pay for it are being charged for medical services. The fact is that the details furnished in the documents produced would go to show that the appellant hospital is earning money by charging from patients and therefore the claim of the appellant that the entire area taxed is used for charitable purpose is not reflected in the documents produced - The High Court has correctly interpreted the Explanation clause to Section 3(1) of the Act to hold that charitable purpose means relief of the poor and free medical relief. The tax herein is on the building. The society already has income tax exemption and the question here is whether the building is used principally for charitable purpose. Only the building utilized for providing free medical aid can be said to be used principally for charitable purpose and it will go against the letter of the law to grant building tax exemption for all the buildings of the hospital irrespective of what it is used for simply on the ground that the overall object of the hospital is charity although it is being predominantly run on a chargeable basis. In this case, the building used for providing free medical aid must be exempted from paying building tax. - Appeal of the appellant hospital dismissed.
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