TMI Tax Updates - e-Newsletter
April 26, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
TDS liability - the tax deduction liability is on the Competent Authority of Metro Railways Kolkata who makes the payment to the person receiving compensation. - AT
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Income Tax:
Attachment of account - Bankers have a right to combine one or more accounts of the same customer. But it cannot combine the account belonging to another or to himself alone with another account which is the joint account with another and third person - HC
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Income Tax:
Liability to deduct TDS u/s 194C - trucks - no continuous contract, oral or written - each GR is a separate contract - the provisions of section 194C(3) are not applicable in this case - AT
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Customs:
Merely because IE code was not there, to treat the said goods as ‘prohibited’ would be only on a technical ground and could not be treated as a prohibition in the real sense of the term. - AT
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Customs:
Smuggled goods - if the assessee has neither sold the smuggled goods (foreign currencies) nor the assessee had any knowledge that the foreign currencies are going to be smuggled out of India, the question of invoking Section 121 of the 1962 Act does not arise at all. - HC
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Corporate Law:
Officer in default – whether when the company had a managing director, whole-time director and manager there cannot be any prosecution against the petitioner who was an ordinary director - held yes - HC
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Service Tax:
Payment of service tax on outward GTA services from cenvat credit account - later credit reversed and ST paid in cash - No interest, no penalty - AT
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Service Tax:
Refund claim - unjust enrichment - certificate of Chartered Accountant produced by the appellant was not disputed by bringing on record any other opinion contrary to the CA certificate - refund allowed - AT
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Service Tax:
ST liability was discharged by the GTA itself - the lower authorities cannot shift the entire blame on the appellants for having not produced any authentic documentary evidence - AT
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Service Tax:
Refund - Since the appellant had contested the issue after the deposit of the amount by him on being directed by the investigating authorities, it cannot be said that the appellant had not disputed the amount. - AT
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Central Excise:
Relevant date applicable to the refund claim - by virtue of duty paid deemed to be under protest, time bar as prescribed under Section 11B of the Central Excise Act, 1944 will not be applicable to the present case. - AT
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Central Excise:
There is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2013 (4) TMI 550
TDS liability - Payment of compensation on acquisition of certain immovable property - demands raised on the appellant under section 201 r.w.s. 194 LA for non deduction of tax at source - Held that:- The payment to the actual beneficiary is made by the Competent Authority of Metro Railways Kolkata and not by the Dy FA and CAO of Metro Railways Kolkata. No doubt, the tax deduction obligations are on the person who makes payment to the beneficiary, and it was an undisputed position that the payment for land acquisition was made by the Land Acquisition Officer. In this matter, as in decided in State of MP v. Parwatibai [2002 (10) TMI 740 - MADHYA PRADESH HIGH COURT] the tax deduction obligation are on the person who "had money in his possession and was responsible for making the payment of that income to the assessee (i.e. actual beneficiary of compensation in this case). It is important to bear in mind the fact that the assessee is this case was the person receiving the compensation in his own right and not in any fiduciary capacity. Therefore, even going by this principle, the tax deduction liability is on the Competent Authority of Metro Railways Kolkata who makes the payment to the person receiving compensation. For the reasons set out above, as also bearing in mind entirety of the case, the grievance of the assessee in principle but in effect remit the matter back to the file of the AO for fresh adjudication in accordance with the law, by way of a speaking order and after giving a fair and reasonable opportunity of hearing to the person concerned, i.e. Competent Authority of Metro Railways Kolkata.
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2013 (4) TMI 549
Re opening of assessment - whether the petitioner is entitled to set off the losses of the business in share trading activities under Section 73? - Held that:- It is admitted between the parties that principal business of the petitioner is earning interest on the advances and loans. It also carries on business of purchase and sale of shares from the income derived from the interest. Under the Explanation to Section 73, the business of purchase and sale of shares by the petitioner is speculation business. As decided in CIT Vs. M/S Narain Properties Ltd. [2012 (6) TMI 38 - ALLAHABAD HIGH COURT] the petitioner is covered under Explanation to Section-73 and is entitled to set off the losses from sale and purchase of the share against the profits of the business of the company from loans and advances. Thus proceedings for re-assessment are quashed. In favour of assessee.
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2013 (4) TMI 548
Attachment of account - recovery notice - petitioner a senior manager of Kamla Nagar Branch of Canara Bank at Agra served with a notice by Tax Recovery Officer for attaching the accounts of three persons Mukesh Kumar Agrawal,proprietor of M/s. Singhal Casting Company Limited, Sardar Paramjeet Singh and M/s. Shivangi Steel Private Limited - It was stated that a sum of Rs.41,43,342/- with interest is due from Mukesh Kumar Agrawal, the assessee, on account of income tax dues - What would be the effect of the first garnishee notice dated 5th of September, 2005 issued for recovery of dues from the bank account of Mukesh Kumar Agrawal with the petitioner's bank? - Whether the impugned order holding the petitioner deemed assessee in default under section 226 of the Act is legally sustainable or not - Held that:- Sufficient force in the argument of the petitioner's that the bank was maintaining multiple accounts of different natures and all these accounts belong to the respective entities. The garnishee notice dated 22.2.2006 being in the name of M/s. Singhal Casting Company, the bank was not supposed to attach the saving bank account of Mukesh Kumar Agrawal in pursuance of the said garnishee notice, even if Mukesh Kumar Agarwal happens to be proprietor of M/s. Singhal Casting Company, specially, when the first garnishee notice was in the name of Mukesh Kumar Agrawal, was not pursued any further by the department. No show cause notice was issued nor further action was taken in pursuance of the first notice after passing of the judgment by this Court in Civil Misc. The petitioner cannot be held as deemed assessee in default in view of the fact that the bank was not debtor of the said assessee on the date of garnishee notice. The position of the bank qua the assessee M/s. Singhal Casting Company was that of creditor of the assessee. The assessee company was indisputably enjoying the open cash credit limit and had debit balance at the relevant point of time. The saving bank account no.9313 which had even if a credit balance on 8th of May, 2006 or 6th June, 2006 belongs to Mukesh Kumar Agrawal, a separate entity, who was not assessee in default, could not be clubbed with the bank account of M/s. Singhal Casting Company. Bankers have a right to combine one or more accounts of the same customer. But it cannot combine the account belonging to another or to himself alone with another account which is the joint account with another and third person. Since the very inception, plea of Banker's lien was set up as a defence by the petitioner. The said plea has not been meted out by the respondent no.2, properly. Such a vital issue, touching the jurisdictional fact, has been disposed off with the remark that no lien was recorded with respect to saving bank account of Mukesh Kumar. The plea should have been considered in the light of the loan agreement and other related documents. The department has failed to discharge its burden that plea in defence is false. It would not be appropriate to hold the petitioner deemed assessee in default to make him personally liable to pay a sum as demanded when the matter relating to determination of tax liability of M/s. Singhal Casting Company is subjudice before the Settlement Commission and/or CIT (A) as admitted by the parties - the writ petition succeeds and is allowed and the impugned order dated 26.6.2007 passed by the respondent no.2 is quashed with cost of Rs.10,000/- payable by the respondent no.2 to the petitioner.
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2013 (4) TMI 547
Rectification/recall of the order of the Tribunal seeked - Held that:- The Tribunal has rendered its decision, after hearing both the parties to the dispute, and the decision to dismiss the appeal of the Revenue, treating the same as non maintainable on the ground that the tax effect was less than Rs.3 lakhs, was duly pronounced in the open court at the conclusion of hearing. The finding of the Tribunal that the tax effect was less than Rs.3 lakhs was a finding of fact and the same was not disputed by the DR when the decision was pronounced in the open court at the conclusion of hearing. The department, having not raised any contentions, to dispute the said finding of the Tribunal, as to the tax effect involved, and by adducing necessary evidence to substantiate the said contentions, at that stage, it cannot be said that there was any mistake apparent from record in the order of the Tribunal dated 17.10.2012. - application of the Revenue Rejected.
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2013 (4) TMI 546
Penalty u/s 271(1) - As per AO the assessee has debited various expenses to the P&L account for the year under consideration which were actually not related to the project - objection raised by the assessee about the lack of satisfaction recorded by the A.O. for initiating penalty - Held that:- As rightly submitted by the assessee, the genuineness of the said expenses, however, was not doubted or disputed by the A.O. and there is nothing in the orders of the authorities below to doubt the bonafide of the assessee in claiming the said expenses as per the practice consistently followed. Moreover, all the material particulars relating to the said claim made on account of the expenses were furnished by the assessee and there is no allegation made by the A.O. that any such particulars furnished by the assessee were found to be incorrect or inaccurate. As decided in Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) that a mere making of the claim, which is not sustainable in law, by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee and merely because thus the assessee’s claim for deduction has not been accepted, penalty u/s 271(1)(c) cannot be attracted especially when there is no allegation that any particulars filed by the assessee in relation to his claim were found to be incorrect or inaccurate. It is also pertinent to note that the impugned disallowance of expenses was made by the A.O. on the ground that the same were not allowable in the year under consideration but were allowable in the subsequent year on commencement of the corresponding projects which clearly shows that the dispute was only relating to the year in which the said expenses are allowable and not about the very deductibility of the said expenses as the genuineness - penalty deleted - in favour of assessee.
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2013 (4) TMI 545
Addition (i.e. 30% of Rs. 1,50,000) on account of alleged low household expenses - Held that:- As decided in assessee's own case for AYs. 2007-08 & 2008-09 both the authorities below have not at all brought on record the size of the family, their monthly expenditure, what is the meaning of the status etc.. At least some facts are required to be brought on record when a particular finding is to be given. CIT(A) deleted 70% of the addition but without giving any convincing reasons sustained 30% addition. Thus judicial propriety demands that there should be some justification even to sustain 30% addition - orders to delete addition sustained by the CIT(A) in both the years - against revenue.
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2013 (4) TMI 544
Assessment of Interest income - 'Income from Other sources' v/s 'Business Income' - Held that:- The assessee is not engaged in the business of financing. That apart, the income earned from term deposit with the bank cannot be considered as business income. It has necessarily to be and has been rightly held as falling under the head 'income from other sources'. Whether the assessee can claim deduction of the expenses claimed by it against the income from other sources - Held that:- Although the assessee was in the business but could not turn any business income. In such circumstances the expenses which are otherwise deductible against the business income cannot be denied deduction. Considering the facts and circumstance of the instant case we set aside the impugned order and remit the matter to the file of A.O. for considering the deductibility of expenses claimed by the assessee under the head "profits and gains of business or profession" and thereafter allow set off of loss under the head "business income" against "income from other sources" as per the provisions of section.
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2013 (4) TMI 543
Initiation of proceedings u/s. 153A - whether CIT(A) erred in not adjudicating the appellant's contention that initiation of proceedings u/s. 153A are bad-in-law even though no assessment or re-assessment proceedings in relation to this year were pending as on the date of the search u/s. 132 - Held that:- The issue stands covered against the assessee by the decision of the ITAT Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT [2012 (7) TMI 222 - ITAT MUMBAI(SB)]. Thus view taken by the CIT(A) confirmed and dismiss ground No. 1 of the assessee. 30% of addition made on account of alleged low household expenses - Held that:- There is nothing on record to prove that the assessee was enjoying a lavish life style. At the relevant point of time, around Rs. 30,000/- per month was sufficient to maintain a comfortable life and hence, without bringing any specific material on record, the AO as well as the CIT(A) erred in making an estimate towards household expenditure, which is not in accordance with law. In particular he has submitted that the learned CIT(A) assumed that for the subsequent year the expenditure declared was only Rs. 3,43,870/- and added to that Rs. 45,000/- (30% of the addition made by the AO) and hence the total household expenditure estimated by the CIT(A) works out to Rs. 3,88,870/- whereas the fact remains that the assessee had withdrawn a sum of Rs. 4,40,206/- towards household expenses. Thus the addition made by the AO as well as the CIT(A) was purely on estimate basis which has no legs to stand - in favour of assessee.
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2013 (4) TMI 542
Unexplained cash credit in respect of share application and share premium money - as per AO the onus to prove the identity and creditworthiness of the share applicants and the genuineness of the transactions which lay upon the assessee was not completely discharged - CIT(A) deleted the addition - Held that:- As decided in CIT Vs Lovely Exports (P) Ltd [2008 (1) TMI 575 - SUPREME COURT OF INDIA] the share application which share capital cannot be taxed in the hands of the assessee as unexplained cash credit who have followed the procedure of obtaining the share capital in accordance with the provisions of the Companies Act. Share holders could not be bogus therefore, settled the issue to the extent that the Assessing Officer was to reopen the cases of those assessees Companies and not tax the same in the hands of the assessee. The assessee therefore has rightly pointed out that the law has been amended u/s.68 when specifically the share capital and share application money have been inscribed along with the cash credit which may be subjected to verification when the onus which lay upon the assessee remained undischarged has been made applicable w.e.f. 1.4.2013 only. In this view of the matter, CIT(A) is justified in deleting the impugned additions in the instant case, which we uphold and dismiss the appeal of the Revenue. Deletion of the expenses disallowed by the Assessing Officer - CIT(A) has partly sustained the disallowances indicating the nature which part only could be disallowed and has been accepted by the assessee respondent as per their Cross objection on record. As no further material has been placed by the rival parties the order of the CIT(A) upheld - appeal of revenue dismissed.
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2013 (4) TMI 533
Liability to deduct TDS u/s 194C - addition u/s 40(a)(ia) - CIT(A) deleted the addition - Held that:- Circular No.715 dt 8-8-1995 issued by the CBDT states that the at source has to be deducted from the payments made to clearing and forwarding agents for carriage of goods if the payments are made under contract. The said circular also clarifies that each GR can be said to be a separate contract, if the goods are transported at one time. If the goods are transported continuously pursuance of a contract for a specific period or quantity, each GR will not be a separate contract and all GRs relating to that period or quantity will be aggregated for the purposes of TDS. In the instant case, there is no continuous contract, oral or written between the Appellant and Rupal Roadways as regards quantity period and rate. Hence each GR is a separate contract. As per assessee the payment for each trip is less than Rs.20,000/- and the aggregate payment in a year to a single truck owner/driver is less than Rs.50,000/-. Hence the provisions of section 194C(3) are not applicable in this case & consequently section 40(a)(ia) will also not come into play. The presumption of the AO that there is an open and continuous contract between he Appellant and Rupal Roadways is contrary to the facts. No infirmity in the order passed by CIT(A) holding that provision of Section 194C(3) are not applicable in this case and consequently no addition u/s 40(a)(ia) can be made. In favour of assessee.
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Customs
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2013 (4) TMI 541
Non procuring the IEC number - assessee imported a consignment of Canvas Office bags intended to be distributed to the employees of the newly opened branch office - violation of Section 7 of the Foreign Trade (Development & Regulation) Act, 1992 order of the original authority stated to be a case of import not in commercial quantity and not for commercial purpose. - Held that:- Apparently, there is a violation in not taking an IE code before import of the goods. Original authority has imposed a penalty of Rs. 2,000/- under Section 117 of the Customs Act. Even before the Tribunal the relevant details as to the number of bags and the value of import has not been furnished. Bill of entry copy is also not enclosed. Apparently, the imported goods have been subjected to assessment and duty stands collected. Merely because IE code was not there, to treat the said goods as ‘prohibited’ would be only on a technical ground and could not be treated as a prohibition in the real sense of the term. As the goods are apparently cleared and not available for seizure, the question of confiscating them at this stage also does not arise. There is no valid ground adduced to interfere with the order of the Commissioner (Appeals) which has upheld the order of the original authority penalizing the respondent under Section 117 for violation of importing without IE code.
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2013 (4) TMI 540
Sale proceeds of smuggled goods - Whether pay orders though obtained in respect of genuine transactions but not encashed represented sale proceeds of smuggled goods? - orders for confiscation of pay orders with penalty levied - Held that:- On plain reading of Section 121 of the 1962 Act, it is clear that the confiscation of the sale proceeds under Section 121 would be permissible, provided, firstly, there must be sale of smuggled goods, and secondly, the person selling the said goods must have knowledge or reason to believe that the goods are smuggled goods. In the present case, the finding of fact recorded by the adjudicating authority is that the foreign currencies were sold by the assessee in the normal course of the business. If the foreign currencies were sold by the assessee in the normal course of the business, then obviously it cannot be said that the assessee has sold the smuggled goods, because it was not the business of the assessee to sell smuggled goods. Moreover, in the present case, the adjudicating authority has declined to impose penalty on the assessee on the ground that the assessee had no knowledge that the foreign currencies were going to be smuggled out of India and that there was no breach of the provisions of the 1962 Act committed by the assessee. Therefore, if the assessee has neither sold the smuggled goods (foreign currencies) nor the assessee had any knowledge that the foreign currencies are going to be smuggled out of India, the question of invoking Section 121 of the 1962 Act does not arise at all. The decision of this Court in the case of LKP Merchant Financing Ltd. (2010 (1) TMI 610 - BOMBAY HIGH COURT) would be squarely applicable to the facts of the present case as so long as the pay orders represent the sale proceeds of the foreign currencies sold by the assessee in the ordinary course of business and the foreign currencies sold by the assessee were not smuggled goods, the amounts under the pay orders cannot be confiscated as sale proceeds of the smuggled goods. Appeals allowed by quashing the impugned orders and the respondents are directed to refund the amounts under the pay-orders with interest quantified @ 6% per annum from the date of encashment of the pay orders till payment.
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Corporate Laws
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2013 (4) TMI 539
Maintainability of orders under section 11C of the SEBI Act - as according to the petitioners orders impugned in the writ petitions which have been issued under section 11C of the SEBI Act are not sustainable as the said provision is only prospective in nature and the same is not applicable to the petitioners since the transactions, which are said to have been done by the petitioners, were prior to the Amendment Act 59 of 2002 - whether section 11C is purely procedural in nature or it is a substantive provision creating rights and liabilities - The petitioners were in the business of buying, selling or dealing in shares of NEPC group of companies & SEBI by impugned order required the petitioner to furnish details/information relating to the transactions, which were done during the relevant period, for the purpose of completing the investigation under section 11C - Held that:- If a provision is held to be, pure and simple, procedural, it is always retrospective unless a different intention is shown in the statute itself. On the contrary, if the provision is substantive in nature, creating either rights or liabilities, unless a different intention is shown in the Act itself, the said provision shall, undoubtedly, be prospective in nature. Undoubtedly, as guaranteed under article 20(1) of the Constitution of India, no person shall be convicted for any offence except for violation of a law in force at the time of commission of the Act, nor be subjected to penalty greater than which might have been inflicted under the law in force at the time of commission of the offence. In the instant cases, if the petitioners fail to comply with the orders made under section 11C(1), for the said non-compliance or disobedience, they are liable to be punished as provided in section 11C(6). Such punishment is not for any violation or disobedience of any provision, then in force, i.e., prior to the introduction of section 11C(6). It is for non-compliance of the orders made under section 11C(1), that they are liable to be punished as the non-compliance which constitutes offence takes place after the introduction of section 11C(1). Thus, section 11C(6) is not attempted to be applied retrospectively in the instant cases as it is projected by the petitioners. Section 11C(6), which creates criminal liability, is substantive in nature and thus, it is prospective. As the investigation itself does not directly result in either penalty or punishment or any other civil consequences & after the investigation, the investigating authority has to submit a report to the Board under section 11C(1). On receipt of such report, the Board will consider the same and after affording sufficient opportunity to the persons concerned, the Board will have three options before it to do. The first option is to go in for prosecution under section 24; the second option is to impose a penalty under section 15A; and the third option is to issue any suitable direction under section 11B. Penalty under Chapter VI-A or any conviction under section 24 will be by means of appropriate adjudication by the competent authority/court after affording sufficient opportunity to the persons concerned. Thus, investigation is only a means to collect evidences by the investigating authority by following the prescribed procedure and such investigation by itself does not result in penal or civil consequences. Therefore, the investigation, as provided in section 11C(1), by itself is not substantive in nature. Per contra, it is purely procedural. Therefore, as per the settled law, section 11C(1) is retrospective in nature. The language used in section 11C(1)(b ) is not similar to the language used in section 11C(1)(a). In section 11C(1)(a), the language used is 'transaction in securities are being dealt', whereas the language in section 11C(1)(b ) is 'has violated any of the provisions of the Act or Rules or Regulations, etc.,'. This clearly shows that section 11C(1)(b) covers the past transactions. In other words, section 11C(1)(a) deals with the transactions, which are in progress, whereas, section 11C(1)(b) deals with the past transactions as well. Thus, section 11C(1)(a) and 11C(1)(b) are to be read disjunctively as they deal with different aspects. That is the reason why, Parliament has aptly used the word 'or' in between these two provisions. Therefore, the word 'or' as employed in between these two provisions should not be read as 'and' as it is contended by the petitioners. In other words, these two provisions should be read disjunctively and not conjunctively. No merit in the writ petitions and the same are to be dismissed. [Para 28]
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2013 (4) TMI 538
Officer in default – whether when the company had a managing director, whole-time director and manager as mentioned in clauses (a) to (c) of section 5 of the Act there cannot be any prosecution against the petitioner who was an ordinary director of original accused No. 1-company as he cannot be said to be "officer who is in default” - Criminal proceedings were instituted against company, its managing director and directors for breach of section 150 as pursuant to inspection, it was found that the company had not maintained the register of members and index of members - The petitioner contested that he only the director of accused No. 1-company at the relevant time and there was already a managing director appointed by accused No. 1-company and, therefore, considering section 5, the petitioner could not be said to be 'Officer in default' and, it could not be said that the petitioner had committed any offence as alleged - Whether petitioner who was an ordinary director of the company could be said to be 'officer who is in default'? Held that:- As decided in Ravindra Narayan Versus Registrar of Companies [1994 (1) TMI 208 - HIGH COURT OF RAJASTHAN] and considering section 5 of the Act it is held that the Directors are Officer in default only where company does not have managing director, whole-time director or manager. Department of Company Affairs have also issued Circular No. 6/1994 [F. No. 3/41/93-CL-V] dated 24th June, 1994 that where penal provisions provide for punishment of ‘officers in default' prosecution be filed against the managing director(s); whole-time director(s) and manager, apart from the secretary, if any, and the company and only in those cases where there is no such managerial personnel, i.e., managing director/whole-time director/manager, prosecution be filed against all ordinary directors, apart from the secretary, if any, and the company. Considering the aforesaid, to continue the criminal proceedings against original accused No. 6, who was at the relevant time only ordinary director, would not be maintainable and the same would be abuse of process of law and the court and, therefore, this is a fit case to exercise the powers under section 482 of the Code and to quash and set aside the criminal proceedings against the petitioner-original accused No. 6. However, the same would be without prejudice to the rights and contentions of respondent No. 2 and prosecution against rest of the accused persons, who may be tried in 'accordance with law and on its own merits, without, in any way, being influenced by the present order. In view of the above and for the reasons stated hereinabove, the present petition succeeds. The impugned complaint, being Criminal Case No. 610/ 1999 filed by respondent No. 2 herein-original complainant pending in the Court of learned Additional Chief Metropolitan Magistrate, Ahmedabad is hereby quashed and set aside so far as the petitioner-original accused No. 6 is concerned. However the same shall be without prejudice to the rights and contentions of respondent No. 2-original complainant as well as the prosecution against other accused persons, who shall be dealt with and tried by the concerned learned Magistrate in accordance with law and on its own merits, without, in any way being, influenced by the present order, which would be qua the petitioner-original accused No. 6 only. Rule is made absolute accordingly.
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2013 (4) TMI 537
SEBI function - Power to issue directions by SEBI - Whether SEBI functions in an inquisitorial capacity while examining issue, whether reasonable grounds exist to believe that transactions in securities are being dealt with in a manner detrimental to investors or securities market or, whether any intermediary or any person associated with securities market has violated any of provisions of SEBI Act or Rules & Regulations made thereunder, or directions issued by Board? - When can SEBI direct an investigation by an investigating authority under section 11C? Respondent No. 2 i.e. complainant had entered into business transactions with respondent No. 3, SEPL in the year 2006 as controlled by two promoters, namely, DHDL and DREDL, both of whom were wholly owned subsidiaries of DLF, the petitioner. In connection with its proposed public issue, the petitioner filed a Draft Red Herring Prospectus (DRHP) with the SEBI with the said DRHP, indicated that SEPL was one of the joint ventures of DLF which was, subsequently, withdrawn by the merchant bankers of the petitioner and a fresh DRHP was submitted, in which SEPL was not mentioned as being associated with DLF. Held that:- The instant petition, is to be dismissed as petitioner did not have a right to hear the submissions of respondent No. 2 complainant, and it had only the right of making its own submissions before SEBI, i.e., respondent No. 1 in terms. One of the reasons for the Court not exercising jurisdiction under article 226 of the Constitution is that the matter involves technicalities, which are best left to be dealt with by experts in the field. This is one of the reasons given by the Court for its decision in Rose Valley Real Estates & Construction Ltd. (2011 (3) TMI 1476 - HIGH COURT OF CALCUTTA). But the issues raised by the petitioner in the instant case are purely legal & not factual, and do not involve any technicality. The submission of the petitioner that it ought to have been granted a full-fledged hearing by the board cannot be accepted as if accepted, it would lead to a piquant situation where the board shall, only on the basis of a prima facie assessment return its findings which would, in turn, impinge upon the functions to be discharged by the investigating authority to be appointed to investigate into the matter. There is no merit in the submission of the petitioner that the impugned order has been passed without jurisdiction inasmuch as, the jurisdictional facts were lacking, to cause the board to have reasonable grounds to believe that an investigation is called for into the affairs of the petitioner-company, either on account of the transactions in securities are being dealt with in a manner detrimental to the investors or the securities market or any intermediary or any person associated with the securities market has violated any of the provisions of the Act or the rules or the regulations made or directions issued by the board thereunder. A perusal of the impugned order shows that the board has taken note of the submissions of respondent No. 2, he complainant as well as those of the petitioner-DLF, and of SEPL (though SEPL did not appear at the stage of hearing)& noted that the FIR was registered against SEPL and others. The board also notes that SEPL did not take the plea that it was not aware of the FIR. The board also takes note of the fact that the closure report filed by the police stated that they had interrogated the aforesaid individuals in connection with the FIR. The board, therefore, observes that in all probabilities, SEPL was aware of the FIR registered against it. In relation to the ignorance feigned by the petitioner-DLF about the filing of the FIR, the board observes that it is unable to be convinced with the submission of the petitioner-company that it was not aware of the registration of the FIR against SEPL. While observing that the original complaints dated 4-6-2007, 19-7-2007 did not contain allegations of the petitioner funding SEPL indirectly through a series of transactions involving its subsidiaries/associates and the manner of purchasing lands and creating development rights on the land acquired by the companies subsidiaries by indirect funding of such purchases, the board observes that in the interest of the securities market, the investors, as also the interest of justice, it would not be proper on the part of SEBI to dispose of the complaint by holding that those additional submissions are extraneous to the original complaint filed by the complainant/respondent No. 2. There is no bar or impediment cast on the board by the SEBI Act, to say that it would not entertain or look into evidence that the complainant may rely upon in support of his complaint earlier made, while considering whether, or not, to direct an investigation. There is no reason to put any such fetters on the powers of the board or to read such restrictions into the statute, which are clearly not there. The petitioner's submission that the Division Bench in its judgment had precluded the board from looking into any additional information/documents that respondent No. 2/complainant may produce in support of his complaints cannot be agreed with. A perusal of the order of the Division Bench in the three LPAs shows that the Division Bench set aside the judgment of the Single Judge because the Single Judge had himself directed investigation into the complaints of respondent No. 2, rather than requiring SEBI to examine the two complaints of respondent No. 2, and discharge its statutory duty under section 11C. This is clear from reading of the order of the Division Bench. Therefore, the submission of the petitioner that the board has taken into consideration the extraneous or irrelevant material while passing the impugned order is to be rejected. A perusal of the impugned order shows that it certainly cannot be said that it has been passed arbitrarily or irrational. The impugned order was clearly based on reasons which were relevant and material. The adequacy or sufficiency of the reasons which weighed with the board in entertaining the reasonable belief with regard to the possible existence of circumstances mentioned in clauses (a ) and (b) of section 11C(1) cannot be gone into. The submission of SEPL that SEBI has no jurisdiction over SEPL for the reason that it is a privately held company and is not traded in the Securities Market, and therefore, no investigation could have been ordered by SEBI against SEPL, also has no merit. The SEBI by the impugned order has directed investigation into the allegations levelled by the complainant-respondent No. 2 against the petitioner about the breach of the SEBI (Disclosure of Investor Protection Guidelines), 2000, read with the relevant provisions of the Companies Act, and in relation to the disclosure of information required to be made in the red herring prospectus by the petitioner-DLF. The involvement of SEPL in the said investigation is only to ascertain whether, or not, at the relevant time, the petitioner was liable to make a disclosure with regard to SEPL in the DRHP which, admittedly, was not made. It is not that SEBI has directed investigation against SEPL. However, since the allegations against the petitioner-DLF pertain to the disclosure of information about the registration of FIR against SEPL, which, the complainant alleges, to be a subsidiary and an associate company of the petitioner-DLF, at the relevant time, the investigation in that respect can and should be made in relation to SEPL. Writ petition is to be dismissed with costs to be shared between the respondent Nos. 1 and 2 equally.
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Service Tax
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2013 (4) TMI 555
Payment of service tax on outward GTA services from cenvat credit account - the appeal as directed by the assessee is only against imposition of penalty u/s 76 and confirmation of demand of interest u/s 75 - Held that:- Considering the case of Topland Exports (2012 (11) TMI 739 - CESTAT, AHMEDABAD) there being no intention to run away from the service tax liability and having deposited the same through the cenvat account, the appellant has not retained any part of the government dues with him with intention to evade the same. Accordingly, the interest liability as confirmed by the lower authorities does not arise at all. As regards penalties imposed under the provisions of Section 76 the said provisions will not apply at all as the appellant had discharged the service tax liability through the cenvat account the penalties imposed by the lower authorities are not warranted and are liable to be set aside. In favour of assessee.
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2013 (4) TMI 554
Refund claim for excess Service Tax paid on being pointed out by the Audit party - rejection of claim on the principle of unjust enrichment and credited to the Consumer Welfare Fund - FAA rejected Chartered Accountant’s certificate indicating it not disclosing accounting practices whatsoever and that the said certificate is based on the accounts - Held that:- Findings of the FAA are far from reality, in as much as it can be seen from the Chartered Accountant’s certificate that it has categorically certified that he has verified the books of accounts like Cash/Bank Book and Ledger Accounts and on verification, he has certified that the amount has not been passed on by the appellant to their clients. See Crane Betel Nut Powder Works [2009 (6) TMI 530 - CESTAT, BANGALORE] & Mangal Textile Mills Pvt.Ltd. (2002 (2) TMI 133 - HIGH COURT OF GUJARAT AT AHMEDABAD) wherein held that certificate of Chartered Accountant produced by the appellant was not disputed by the Revenue authorities, by bringing on record any other opinion contrary to the Chartered Accountants certificate. In favour of assessee.
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2013 (4) TMI 553
Refund claim - as per assessee the construction and erection of Vermi Composite Plant for Urban local bodies for Municipal Solid Waste Management are exempt from Service Tax - rejection of claim by dept. as claimant has failed to submit the copy of agreement with their client and any documentary evidence so as to prove that the services rendered by them are non-taxable in nature - Held that:- The first appellate authority vide his letter dt.29.09.2011, has called for the copy of the agreement with the ULB/GUDC, copy of approved plan of the building or civil construction, balance sheet of GUDC, may be for ascertaining whether GUDC was involved in some commercial activity or not. The appellant has not provided these documents to the Commissioner (Appeals), but has produced the same before the Tribunal. Thus the lower authorities should be given an opportunity to consider the issue based upon the documents. Thus remand the matter back to first appellate authority to re-consider the issue afresh, after following the principles of natural justice.
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2013 (4) TMI 552
Service tax liability on outward transportation facility (GTA) - ST liability discharged by the GTA - Held that:- On perusal of the certificates issued by the transport companies, these transporters have categorically stated that the service tax liability for the invoices raised on the appellant has been discharged by them and they had also mentioned their service tax registration number and PAN number in their certificates. As against such documentary evidences, the first appellate authority’s findings as to no authentic documentary evidence has been produced, seems to be incorrect. Since the certificates clearly indicate the service tax registration number, the least that could have been expected from the Revenue, was to call for the details from the concerned jurisdictional service tax authorities. Having not done, the lower authorities cannot shift the entire blame on the appellants for having not produced any authentic documentary evidence. The decision of this bench in the case Navyg Alloys Pvt. Ltd. (2008 (8) TMI 100 - CESTAT AHEMDABAD), Mandev Tubes (2009 (5) TMI 102 - CESTAT, AHMEDABAD) and Geeta Industries Pvt. Ltd (2010 (1) TMI 715 - CESTAT, NEW DELHI) will squarely cover the issue in favour of the assessee. In favour of assessee.
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2013 (4) TMI 551
Refund - Authorized Service Station - appellant were considered as direct Selling Agent by the dept. - Tribunal allowed the appeal after which the appellant had preferred the present refund claim - refund claim was rejected by the adjudicating authority on the ground of unjust enrichment - Held that:- Since the appellant had contested the issue after the deposit of the amount by him on being directed by the investigating authorities, it cannot be said that the appellant had not disputed the amount. It is a settled law that once an assessee files an appeal against any amount which has been deposited by him or confirmed against him, he has raised a dispute. In this case the judgment of Jayant Glass Inds. (P) Ltd. (2003 (5) TMI 81 - CEGAT, NEW DELHI) and Parle International Ltd. [2000 (2) TMI 112 - HIGH COURT OF GUJARAT AT AHMEDABAD]will squarely apply. Appeal of the assessee allowed and direction to the lower authorities to grant the refund of the amount to the appellant.
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Central Excise
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2013 (4) TMI 536
Interest payable on wrong credit taken - Held that:- As decided in UOI Vs. Ind-Swift Laboratories Ltd.[2011 (2) TMI 6 - Supreme Court] that interest is payable also in cases where credit is wrongly taken but not utilized. This is a case of interest due as per the above said decision of the Apex Court which dues was adjusted from rebate sanctioned. Commissioner (Appeal) has gone beyond the issue for which SCN was issued and has granted refunds without due regard to provisions in section 11B of the Central Excise Act and without filing of any refund claim. Thus the order of the Commissioner (Appeals) is not proper and therefore set aside the same and restore the adjudication order. The appeal filed by Revenue is allowed.
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2013 (4) TMI 535
Relevant date applicable to the refund claim - Held that:- It is a settled law that once an issue is being agitated by an assessee before the Appellate Channels, it has to be considered that any payments made by the assessee during contesting the case is deemed to be paid under protest. The amended provision with respect to the relevant date also came into operation with effect from 11/12/2007 whereas the refund claim was filed by the appellant on 28/12/2007. However, by virtue of duty paid deemed to be under protest, time bar as prescribed under Section 11B of the Central Excise Act, 1944 will not be applicable to the present case. Accordingly appeal filed by the appellant is allowed with consequential relief.
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2013 (4) TMI 534
Default in payment of Central excise duty - period from December 2010 to May 2011 - show cause notice requiring the payment of excise duty on each consignment in cash, without utilizing Cenvat Credit until payment of outstanding amount together with interest - Held that:- As under Sub-Rule (1) of Rule 8 of Central Excise Rules, 2002 if an assessee, failed to pay the duty within the time stipulated i.e. on the 6th day of following month if it is paid electronically through internet banking or on the 5th day of following month in any other case, and a further period of 30 days under Sub-Rule (3A) is disentitled to make use of the Cenvat Credit. In the admitted facts, petitioner defaulted in the payment of duty for the months of December 2010 to May 2011, but did so with interest on 21.5.2011 in a sum of ₹ 20,45,600/- towards duty and ₹ 84,324/- towards interest and also payment of ₹ 10,45,749/- towards duty by utilizing the Cenvat Credit, without disclosing the particulars against which it was paid nor the date of payment. Hence, it is not possible for this Court, at this stage to accept the plea of the petitioner. The order impugned does not suffer from serious infirmities occasioning grave injustice to the petitioner calling for interference in exercise of extraordinary writ jurisdiction under Article 226 of the Constitution of India.
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2013 (4) TMI 532
Remission of duty upon destruction of final product - whether the manufacturer is required to reverse the Cenvat Credit on the inputs used in manufacturing such final product? - Held that:- Cenvat is a scheme under which a manufacturer is allowed to utilize the duty paid on inputs by taking the same from the duty payable on the final product subject to certain procedures prescribed under the Rules. Thus finding substance in the contention of respondent that in a taxing statute one has to look at what is exactly or clearly stated and there is no room for ascertaining any intendment of the legislature. One must look fairly at the language used [Baidyanath Ayurved Bhawan (P) ltd. v Excise Commissioner, UP [1970 (10) TMI 28 - SUPREME COURT OF INDIA] Going through the provisions of the Rules relating to Cenvat as it stood in the Cenvat Credit Rules prior to September 7, 2007, there is no scope of application of equitable doctrine against the assesse and in favour of the Revenue on the ground that it will amount to conferring of double benefit. The moment sub-rule (5C) was introduced, the Legislature made its intention clear that from the date of coming into force of the said amended rule, in case of future remission on the ground mentioned in the said sub- rule, there will be reversal of the credit. As the amendment has been effected from a particular date and at the same time, prior to such amendment, there was no provision of reversal as introduced in the Rules by way of amendment under the circumstances stated therein. Thus, it is creation of a new right in favour of the Revenue and in such circumstance, in the absence of any contrary intention reflected from any of the provisions of the Statute, the amendment must be held to be prospective. Such being the position, sub-rule (5C) of the Rules is effective from September 7, 2007 and for input credited earlier, there is no scope of reversal of the credit if the finished product becomes unfit for human consumption unless any condition has been imposed for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002 making it clear that the credit already taken is to be reversed.
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2013 (4) TMI 531
Stay of recovery of the dues seeked - Writ jurisdiction - petitioners contested that in the proceedings before the Tribunal submissions were made only in the stay application seeking waiver of pre-deposit of duties, interests and penalties & no indication was furnished by the Tribunal at the stage of the hearing that the appeals would be taken up for hearing and final disposal and that it was inclined to grant a waiver of pre-deposit - Held that:- Order of Tribunal was breach of principles of natural justice as Tribunal has itself observed in Paragraph 8 of its order that while allowing the said petition, it was of the view that the appeal could be disposed of at that stage. If the Tribunal was inclined to dispose of the appeal, parties ought to have been placed on notice of this in order to enable them to make submissions on the merits of the appeals. That evidently has not been done. The impugned order of the Tribunal therefore suffers from a fundamental breach of the principles of natural justice. As during the course of the hearing, in response to a query of the Court, Counsel appearing on behalf on the petitioners fairly stated that he would have no objection if the order of the Tribunal is set aside in its entirety and the proceedings are remitted back to the Tribunal for consideration afresh. Accordingly the impugned decision of the Tribunal purely on the ground that there was a breach of the principles of natural justice set aside and restore both the stay application and the appeals to the file of the Tribunal.
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CST, VAT & Sales Tax
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2013 (4) TMI 558
Absolute stay of collection of balance of tax and penalty seeked without imposing any condition of furnishing of valid security in the form of Bank Guarantee pending disposal of the appeal - petitioner was assessed by arriving deemed sales value on the ground that the petitioner has effected purchase of lubricant oils and that the petitioner has not reported such sales and accordingly imposed tax and penalty - Held that:- On a perusal of the entire order passed by Appellate Deputy Commissioner, it is revealed that much indulgence has been shown by them keeping in mind that the merits of the case will be ascertained only in subsequent hearings of the case and the final outcome of the appeal is not of immediate imminence to the authority. After taking into account the balance of convenience between the parties and also the interest of the Revenue, the first respondent concluded that 25% of the disputed amount of the tax due, has to be paid by the petitioner on or before 20.03.2013 and with regard to the balance tax and penalty the petitioner was directed to file valid security in the form of Bank Guarantee obtained from any of the Nationalised Banks executed in favour of the Assessing Authority. Thus the indulgence shown by the Assessing Authority in a lenient way cannot be questioned by the petitioner, in this writ petition. The factors to be followed while granting waiver on any conditions have been scrupulously followed by the respondents, in ordering the said petition thus warrants no interference. The only hardship expressed by the petitioner is that the petitioner-Company is a service provider, carrying on the job of operation and maintenance in their petrol bunk premises and their financial condition may be taken note of thus it would be possible only to the extent of ordering modification in the order of stay that the petitioner shall pay a sum being 25% of the disputed amount of tax due before the Assessing Authority. Out of the balance tax and penalty totaling the petitioner shall furnish bank guarantee for 50% of the said amount and for the remaining 50% of amount, he shall execute a personal bond within a period of two weeks from the date of receipt of a copy of this order. The default condition imposed by the appellate authority remains unaltered.
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2013 (4) TMI 557
Non reporting of installation of additional number of spindles - Deferral scheme for payment of Sales Tax - rejecting the details furnished by assessee by the dept. & best judgment assessment was made with an additional tax levied together with penalty under Section 22(2) of the TNGST Act - petitioner contested that neither the Government Order nor the eligibility certificate as well as an agreement entered into with the Commercial Tax department stipulate any condition that whenever additional spindles were employed, the eligibility certificate will get amended - Held that:- The purpose of the section is to grant the benefit to new industrial units to help them tide over the initial teething troubles and to sick industries to assist them to get over their sickness. To this end, the Government is empowered to defer the payment of the whole or any part of the tax payable in respect of any period. If on the other hand, the conditions are not satisfied, then too the State Government may allow the tax due to be repaid in instalments under Section 24(1) but in such a case the assessee would be liable to pay interest under Section 24(3) which provides on any amount remaining unpaid after the date specified for its payment as referred to in sub-section (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at one-and-half per cent per month of such amount for the first three months of default and at two per cent per month of such amount for the subsequent period of default. Writ petitions are liable to be rejected as the petitioner has not availed the appellate remedy provided under the TNGST Act. The petitioner having got the eligibility certificate followed by an agreement had clearly breached the said agreement. Reliance placed by the petitioner in an unreported judgment which will have no relevance. . Thus the argument that installation of additional spindles will not be in violation of the eligibility certificate and the agreement does not stand to reason.
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2013 (4) TMI 556
Condonation of delay of 3 years, 4 months and 12 days - appeal against penalty confirmed - Held that:- There is no basis for the contention of the appellant that they genuinely felt that penalty being consequential order, separate appeal need not be filed. Having regard to the circumstances of the case, it is seen that the explanation offered by the appellant for condoning the inordinate delay of 3 years, 4 months, 12 days is wholly unsatisfactory. Therefore, except the unsubstantiated claim of omission on the part of the counsel, there is no material whatsoever before this court to accept the case of the petitioner and disagree with the conclusions arrived at by the appellate authority.
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