TMI Tax Updates - e-Newsletter
April 27, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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Income Tax:
India Netherlands DTTA - the income from ground handling and technical handling services is not chargeable to tax in India. - AT
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Service Tax:
Excise duty paid on inputs and service tax paid on input services used in the construction of immovable property can be taken and utilized while discharging service tax liability on the renting of such immovable property - Stay granted - AT
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VAT:
Reassessment orders - sale or works contract - bifurcation of order - it is a case of escaped assessment - HC
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VAT:
Revisional jurisdiction under Section 20(1) - After six years from the date of order of assessment - revision order is wholly without jurisdiction and barred by limitation - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (4) TMI 579
Addition u/s 68 - AY 2003-04 and 2004-05 - assessee contested against non providing of ample opportunity before making addition - Held that:- In the absence of explanation regarding nature of transaction, the argument of the assessee's cannot be appreciated. When any amount found credited in the books of account of the assessee for the assessment year under consideration, the assessee is bound to explain the identity of the parties, capacity of the creditors and genuineness of the transactions. As the assessee has been given ample opportunity to lead the evidence & the assessee failed to furnish requisite details, thus no violation of principles of natural justice. Gifts received in A.Y. 2004-05 - assessee pleaded that these gifts of Rs. 6 lakhs received by the assessee from his family members and they are income-tax assessees with duly reflected in their financial statement of the respective donors - Held that:- Assessee pleaded before AO that the gift was received from assessee's parents however before the CIT(A) he stated that it was received from brother, mother, father and other relatives in different denominations. Though it was pleaded that there were enough drawings from these parties to make the gift to the assessee, however, the assessee failed to establish specific withdrawal which indicates gift to the assessee. Further, considering the status of those donors, drawings made by them is not enough to make gift to the present assessee. Assessee has not provided the basic details like names, identity and addresses of the parties - addition confirmed. Against assessee. Addition u/s 68 - AY 2005-06 - Held that:- Mr. Sreenivasulu is having no capacity to advance such amount of Rs. 19.65 lakhs as his only income is only Rs. 35,000 per month. See R.B. Mittal vs. CIT (2000 (8) TMI 54 - ANDHRA PRADESH High Court). Also there is no violation of principles of natural justice since the lower authorities gave ample opportunity to the assessee to put forth his case. Addition u/s 68 - AY 2006-07 - Held that:- Gifts received from close relatives and friends, the assessee failed to furnish basic information such as name, identity and particulars of donors along with the purpose on which these gifts were made. See CIT vs. P. Mohanakala (2007 (5) TMI 192 - SUPREME Court) - confirm the addition. Addition u/s 68 - AY 2007-08 - Held that:- As decided in CIT v. Lanco Industries Ltd. (1999 (12) TMI 45 - ANDHRA PRADESH High Court) while rejecting the Revenue appeal, the High Court observed that merely by reason of unsatisfactory explanation relating to the source of investment by the shareholders, the money invested in shares cannot be treated as income of the assessee. In order to add it to the income of the assessee there must be a further finding that in fact the shareholders were name lenders and the money allegedly invested by the really belongs to the directors of the assessee company. In the present case, the Department having accepted the returns of income filed by the ostensible shareholders, it cannot go back while making the assessment of the assessee to hold that those shareholders are money lenders and investments were unexplained. Invoking provisions of section 2(22)(e) - Addition u/s 68 - Held that:- As brought to notice there was a subcontract between Sri P. Muddukrishna Reddy and M/s. AMRCL and it was offered to tax. The Assessing Officer did not bring on record the fact that no work was carried and payment was made without any work. The Assessing Officer observations are not based on any cogent material on record and rather on presumption basis. No bogus nature of the sub-contract works proved - invoking provisions of section 2(22)(e) is not justified. Addition u/s 68 - AY 2008-09 - Held that:- The Department is doubting the creditworthiness of Sri Jayaram Reddy. In our opinion, there is no necessity to doubt the creditworthiness of Sri Jayaram Reddy as he has received the money from Sri Hanumantha Reddy which is duly reflected in the books of account. In these circumstances, if the Department is having any doubt it should be questioned in the hands of Sri Hanumantha Reddy only - delete the addition. Addition with regard to the addition made in the name of Surendra Babu & Smt. Saroja - Held that:- As mere filing of confirmation letter does not discharge the assessee in proving the genuineness of the transaction and capacity of the creditor. Only identity is proved. Hence placing reliance in the judgement of jurisdictional High Court in the case of R.B. Mittal (2000 (8) TMI 54 - ANDHRA PRADESH High Court) confirm the addition.] Addition on seized material as incurred from the unaccounted sources - Held that:- In this case the addition is made on the basis of entries in the loose sheets. In the loose sheets it does not contain date. Thus these loose sheets cannot be considered as a basis for addition unless supported by corroborative evidence. The addition is based only on surmises and conjectures. It is a dumb document that cannot be acted upon as it is not supported by corroborative material to substantiate Department's version. Addition u/s 68 - AY 2008-09 - application of provisions of section 2(22)(e) for bringing the amounts received from Sri Nukala Srinivasa Rao to tax - Held that:- The ratio of the decision of CIT vs. Tania Investments (P) Ltd. (2009 (3) TMI 473 - BOMBAY HIGH COURT) is squarely applicable in this case, wherein the creditors were examined by the Assessing Officer, during the assessment proceedings, who maintained the books of accounts, which could not have been brushed aside. Thus, the addition made on account of amount is not acceptable. Addition of Rs. 3 lakhs u/s. 68 in the name of Sri N. Vijay Kumar - Held that:- This amount of Rs. 3,00,000 was received in cash from Mr. Vijay Kumar towards advance for purchase of land. There is no details regarding the location of the land, agreement of sale etc. Under these circumstances, no infirmity in the action of the CIT(A) in confirming the addition.
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2013 (4) TMI 578
Order of CIT u/s. 263 - as per CIT Settlement of inter branch accounts was not in order - An amount credited P&L Account on account of settlement of inter branch accounts and the same was reduced while computing the income claiming it to be exempt from tax - the assessee, a banking company and subsidiary of the State Bank of India - Held that:- Respectfully following the consistent view taken by various benches of the Tribunal in M/s. Punjab National Bank, New Delhi V/s. Addl. CIT [2012 (5) TMI 437 - ITAT, New Delhi] on the issue of income attributable to inter- branch transactions in respect as of a banking company the said income is not liable to tax and in any event, the Commissioner of Income-tax is not justified in invoking the revisionary powers under S.263 of the Act in relation to that issue.In favour of assessee. Non-existent set off of losses - as per CIT AO while computing the income non-existent set off of losses were allowed - Held that:- Not convinced with the observation of the CIT that the brought forward loss of assessment year 2005-06, sought to be set off by the assessee from the income of the year under appeal, was a non-existent one, in view of income determined on assessment, or re-determined based on subsequent appellate orders of that years. As whatever loss of the earlier year has been brought forward by the assessee, as per its books of account, has to be set off against the income determined for the year under appeal. Thus AO was correct in accepting the claim of the assessee for set off of brought forward loss of assessment year 2005-06. In favour of assessee.
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2013 (4) TMI 577
Excess deduction under section 80-IA - Held that:- Allocation of expenditure is based on the expenditure of utilization of the goods and services under various Heads during the relevant period and this method is being regularly followed by the assessee and accepted by the department for past several years. The Assessing Officer has resorted to adhoc disallowance of a round-sum. If the Assessing Officer had any apprehension as to the correctness of the allocation of expenditure, he should have examined and ascertained the same and pinpointed as to how the various items of expenditure are not allocated properly. In these circumstances, the issue is remitted back to the Assessing Officer to allocate overhead expenses between the eligible units in the power generation unit and the non-eligible units in the cement manufacturing unit, clearly pinpointing the expenditure to be allocated. This appeal is therefore, set aside for statistical purposes.
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2013 (4) TMI 576
Inclusion of rental income from the property in the hands of assessee - period from 1.4.2000 to March 2001 - Held that:- As assessee stated that the agreement to sale has been entered into on 1.4.2000. Clause 22 in the agreement for sale provides that the intending seller is ready to pay the rent from 1.4.2000 to 31.3.2001 to the intending purchaser. There is nothing on record to show that the purchaser was handed over possession on 1.4.2000 & the tenant was aware of the change in ownership and had agreed for paying the rent to the intended purchaser. In fact the agreement for sale requires the vendor (the Assessee herein) to obtain IT clearances and has also provided for obligation on the part of purchaser to maintain the property in good condition till such time. Thus CIT(A) has rightly held that the assessee continues to be a owner of the property atleast till March 2001 when the consideration was paid and hence the rental income from 1.4.2000 to March 2001 should be assessed in the hands of the Assessee - dismiss the Assessee's appeal on this issue. Addition u/s.68 - Held that:- The AO examined the submissions of all the partners and concluded that the introduction of capital in respect of partners who are assessed to tax have not been reflected in the returns. In the case of Smt. Ratan Bai Kothari introduction of Rs.1,90,000 cannot be sustained as she had not given reasonable proof of the source of her savings. This has been further examined by the CIT(A) and the addition was confirmed. There was no further details submitted in the course of the hearing to persuade a different view. In the circumstances appeal of the assessee dismissed.
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2013 (4) TMI 575
India Netherlands DTTA - Charges received by the assessee from various airlines on account of rendering of ground handling services - whether are covered under article 8 of the Indo- Netherlands Treaty as part of 'operation of aircraft' OR under article 7 of the Treaty - whether these services were rendered under any 'pool' or 'joint' business' in article 8(3) - Held that:- Facts of the year under consideration are identical to the earlier years i.e. AY 2004-05, 2005-06, 2006-07 & 2007-08. In the earlier years, three different Benches of the ITAT, one Bench for AY 2004-05 & 2005-06 and another Bench for AY 2006-07 and third Bench for AY 2007-08, have considered this issue and have arrived at a similar conclusion that the income from ground handling and technical handling services is not chargeable to tax in India. Therefore, no merit in the Revenue's contention that the decision of ITAT for AY 2004-05, 2005-06 and other years requires reconsideration and the matter needs to be referred to the Larger Bench. The issue is squarely covered in favour of the assessee by the above decisions of the ITAT for AY 2004-05 to 2007-08. The Revenue is already in appeal before the Hon'ble Jurisdictional High Court in the earlier years. However, so long as the decision of earlier year is not modified or reversed by the Hon'ble Jurisdictional High Court, ordinarily, the same should be followed by the subsequent Coordinate Bench. Merely because the Revenue is not satisfied with the decision of the ITAT in earlier year would not be a sufficient ground for referring the matter to the Larger Bench. In view of the above, respectfully following the decision of ITAT the income from ground handling and technical handling services is not taxable in India. Accordingly, the assessee's appeal is allowed.
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2013 (4) TMI 574
Entitlement for deduction u/s. 80P(2)(a)(vi) - CIT allowed the claim - assessee is a co-operative society and is engaged mainly in running restaurants - Held that:- Assessment order is silent about the claim of the assessee for deduction u/s 80P(2)(a)(vi) of the Act. Before us also, the assessee did not furnish any material to show that it did make a claim before the assessing officer. Even if it is assumed that the assessee would have made such a claim, AO did not discuss anything about the eligibility of the assessee for deduction u/s 80P(2)(vi). The issue of eligibility of the assessee to claim deduction u/s 80P(2)(a)(vi) cannot be decided unless a detailed examination of the bye-laws and other relevant materials are carried out. Both the AO and CIT(A) has not carried out the required verification/examination as such an examination is required to be carried out at the end of the assessing officer, since the assessment order is silent about the issue of sec. 80P(2)(a)(vi). Accordingly order of CIT(A) on this issue and restore the same to the file of the AO for fresh consideration. Since main issue has been restored the issue relating to sec. 40(a)(ia) may also be examined afresh by the assessing officer.
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2013 (4) TMI 573
Reopening of assessment - Credit appearing in the capital account brought to tax under 'other sources' - Held that:- Assessee could not substantiate her claim with any material that the cash credit found in the capital account represent business transactions that too relating to exports. D.R further contention that the claim of the assessee that the said cash credit represents export profits, the same cannot be allowed as deduction during the year under consideration as it is a profit of an earlier year merits here. Further the assessee has to satisfy various conditions prescribed under sec. 80HHC in order to avail deduction under that section. The assessee, without demonstrating compliance of all the conditions, simply seeks deduction u/s 80HHC. Under these circumstances, no infirmity in the decision of the CIT(A) in confirming the action of the AO in assessing the same under the head 'income from other sources'. Addition relating to shortage of stock - assessee is only disputing the value to be adopted for 6141 bags placing reliance on the claim of "High seas sales" made to her sister concern and accordingly claims that the sales value declared in the documents relating to high seas sales viz., Rs.1,62,11,217/- should be considered as the income - Held that:- CIT(A) did not accept the theory of high sea sales and accordingly determined the value of 6141 bags, on the basis of average sales rate, at Rs.1,85,60,113/- finds merit as the transaction of alleged high seas sales have been entered with the sister concern of the assessee, the alleged transactions of high seas sales/purchases have not been recorded in the books of the assessee as well as in the books of the sister concern, the high seas sales invoice as well as high seas sales agreement are self- generated documents within the control of the assessee and hence lacks credence. No external documents were brought on record in support of claim - uphold the order of CIT(A) on this issue. Disallowance of claim of payments relating to group gratuity scheme - Held that:- It is well settled proposition of law that the re-opening of the assessment u/s. 148 is only for the benefit of the Revenue as held by in CIT vs. Sun Engineering Works P. Lt., [1992 (9) TMI 1 - SUPREME Court]. Admittedly, the assessee did not claim the payment made to group gratuity scheme during the course of original assessment proceedings. Hence assessee cannot claim the same in the reassessment proceedings Denial of deduction u/s. 80HHC - Held that:- Considering the cases of A.C.G. Associated Capsules Pvt. Ltd. [2012 (2) TMI 101 - SUPREME COURT OF INDIA] & Topman Exports Vs. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] wherein held held that 90% of not the gross rent or gross interest but only net interest or net rent which has been included in the profits of the business of the assessee as computed under the head profits and gains of business is to be deducted under clause (1) of Explanation (baa) to sec. 80HHC of the Act for determining the "profits of the business" requires fresh examination at the end of the assessing officer in the light of various decisions cited supra. Denial of deduction u/s. 80IB - Held that:- The assessee failed to show that she is eligible for deduction under sec. 80IB of the Act, even after exclusion of incidental incomes, which are not related to the manufacturing activity. Accordingly, confirm the order of the CIT(A) on this issue.
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2013 (4) TMI 571
Addition on sham and bogus transactions - Held that:- The assessee during the course of assessment proceedings has filed confirmation letters from the companies, their PAN number, copy of bank statements, affidavits and balance sheet. Thereafter AO had asked the assessee to produce the said Directors/ parties. Assessee expressed its inability to produce them but AO did not consequent thereto conduct any inquiry and closed the proceedings. This is a case where the Assessing Officer has failed to conduct necessary inquiry, verification and deal with the matter in depth specially after the affidavit/confirmation along with the bank statements etc. were filed. Thus in the absence of these inquiries and non-verification of the details at the time of assessment proceedings, the factual findings recorded by the AO were incomplete and sparse.
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2013 (4) TMI 570
Whether garden expenses and foreign registration fees can be treated as revenue expenditure – Held that - It cannot be gainsaid that the expenses for garden had nexus with business activity. It can well be treated for business purpose and can be claimed as revenue expenditure. The expenses for foreign country registration was for business purpose only, because the same helped the assessee in marketing its products in the foreign countries and promoting the sales. The Tribunal committed no error. Its findings are proper and in no way are perverse. No substantial question of law arises for consideration. Dismissed.
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Customs
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2013 (4) TMI 569
Classification of goods – claiming of exemption - The respondents had claimed classification of the goods under Customs Tariff Item (CTI) 8901 10 40 and had claimed exemption 21/2002-Cus S. No.352. During the pendency of the investigation, the importer gave up the claim for classification under CTI 8901 10 40 and claimed classification under CTI 8905 9090 along with benefit of Notification No. 21/02-Cus. Sl. No. 353. The importer was provisionally allowed to clear the goods as per the said classification. After provisional release of the goods, the Department made a two-fold case against the respondent on the following issues namely, (i) the respondent mis -declared the description of the goods for claiming exemption available to goods classifiable under CTI 8901 10 40 and (ii) the classification under which the goods were provisionally cleared that is CTI 8905 90 90 is not correct and the goods should be classified under CTI 8905 20 00 which would result in demand of differential duty. Held that - we give the benefit of doubt to the respondents and hold that there was no attempt on the part of the respondents to mis -declare the goods to evade payment of duty. In the matter of classification, we hold that the goods imported did not have a capability of drilling or productivity anything from seabed and therefore the classification under which the goods cannot be classified under CTI 8905 20 00 and therefore the CTI 8905 90 90 under which the adjudicating authority has classified the goods is most appropriate. Therefore, the appeal filed by the Revenue is rejected accordingly.
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2013 (4) TMI 568
Private Bonded Warehouse for storage of imported goods, namely, Aircraft Parts, Aviation Parts, Oils, Lubes etc. - Licence U/s 58 of the Customs Act, 1962 - The licence was valid initially for a period of one year and was thereafter extended upto 5 June 2011 - Imported without the payment of duty - Sought an extension of the bond period in respect of seven bonds - Held that:- We allow the Petition by setting aside the order of the Chief Commissioner as reflected in the communication dated 20 June 2011 of the Assistant Commissioner of Customs (Exhibit-E) and the consequential order which has been passed on 23 January 2012 (Exhibit-K). We direct that the Chief Commissioner shall pass a fresh order in accordance with law, after furnishing to the Petitioner an opportunity of being heard. Since the subject matter of the dispute now survives in respect of eight bonds, the competent authority shall pass orders in respect thereof - The Petition is accordingly disposed of.
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Corporate Laws
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2013 (4) TMI 567
Oppression on part of majority shareholders over minority shareholders - appeal under Section 397 r.w.s. 398 and 85 of the Companies Act, 1956 - Whether if a shareholder fails to get elected as a director of company as he does not acquire requisite shares to get elected, it is a ground for winding up of company on just and equitable grounds or would amount to an act of oppression on part of majority shareholders over minority shareholders? - Piercing or Lifting the Veil - Held that:- The instant case is not a case of one group of family members trying to dominate the other group and are trying to exclude the minority shareholders from participating in the management of the company. On the contrary an attempt was made by a person who did not have a shareholding in the company to acquire shares and render the family which had the majority share to the status of a minority shareholder and wanted to takeover the company. It is because the said design was stopped by the majority of the shareholders, the instant petition is filed. Therefore, as requested by the respondents, when the veil is pierced and seen, the undisputed facts of instant case, this is what emerges. Therefore, the said legal principles which are well settled has no application to the facts of instant case. Regarding Allotment of Preference Shares - Held that:- From sections 85 and 86, it is clear that a person who acquires preference share capital would not acquire any voting rights. By such allotment the voting pattern has not been altered to any extent to the detriment of the respondents. As the allotment of the said preferential shares has in no way altered the voting rights of the shareholders and it was done to prevent the company being a defunct company and now that the company has come forward to allot equal number of preferential shares to the petitioners also, if they wish to have it, the said ground does not constitute a just and sufficient cause for winding up of the company. It does not constitute an act of oppression and mis-management. Exclusion from Management - Held that:- In a corporate democracy if a shareholder wants to hold a post of director he must secure the requisite votes in the general body meeting and become a director. If the members in a general body meeting do not vote and he is not elected, he cannot, complain against the company. If the majority shareholders in such corporate democracy do not vote for a shareholder in whom they have no confidence and thereby see to it he is defeated, they are exercising their just lawful rights in such corporate democracy based on their rights which are vested in them by virtue of the share which they hold. The said act cannot be construed as an act which justifies an order of winding up on just and equitable grounds or it would constitute an act of oppression as sought to be made out. It is only an act vis-a-vis shareholder which can be a ground for passing an order under section 397(2) and if that shareholder also happens to be the director and if the director has any grievance, he has to work out remedies in a manner known, to law and not by invoking section 397(2). The complaint which is upheld by the CLB, is in respect of the so called injustice done to a director and not to a shareholder and, therefore, the said finding is unsustainable. Unfortunately, the CLB has not appreciated the facts in a proper perspective and seems to think that as the petitioners are holding 44 per cent of the shares, they should not be excluded from the management, they should be given representation in the board proportionate to their shareholding, which concept has no legal basis. On the contrary, it runs contrary to the corporate democracy which finds statutory provisions in the provisions of the Companies Act. Therefore, the CLB committed a serious error in recording its finding. Execution of Lease Deeds - Held that:- In the minutes it is expressly stated that, as the first petitioner has a substantial interest in the companies in favour of which these leases are executed, he has not participated in those proceedings. Therefore, these leases have come into existence at an undisputed point of time when the relationship between the family members were very cordial. When the leases were granted in favour of the companies where the petitioners had substantial interest, the first petitioner though he was a director of the company, has not participated in those proceedings. Therefore, it is not a case where any lease is created without the knowledge of the director of the company in a clandestine manner and given to the respondents to make any wrongful gain. If provision is not made for periodical enhancement of rent, the blame squarely falls on the members of both groups. Obviously, it was not done because it was beneficial to the members of both the groups. Unfortunately, the CLB has not properly applied its mind, has not taken into consideration the point at which the lease deed came into existence, who were the persons in management of the company and who were the directors of the company on the date of those lease deeds. Non-Sending of Notice - Held that:- It is not in dispute that the company is declaring dividends for the last 10 years. The dividend certificates have been handed over to the petitioners without any acknowledgement, which they have encashed. It is only in respect of this particular General Body Meeting, it is contended, they had no notice. If the notice is served and no acknowledgement is taken as of the practice, it is not possible for the respondents to show by any documentary evidence whether notice is served. But in the facts of this case, we are satisfied that, the plea is taken is only an after thought to show that the respondents in a bad position, before the Company Law Board. None of the grounds urged by the petitioners or all grounds put together would not constitute a ground for passing up of a winding up order on the ground of just and equitable clause. It is not enough to show that there is just and equitable cause for winding up the company, though that must be shown as preliminary to the application of section 397. It must further be shown that the conduct of the majority shareholders was oppressive to the minority as members. The averments in the objection statement as well as the documents produced in the case clearly discloses that the company is a profit making company. They have declared 50 per cent dividend for the last 8 years. The dividend warrants have been promptly sent to the petitioners who have encashed them. In those circumstances, there is absolutely no case either for winding up of the company or for exercise of power under section 397(2). Once they hold 44 per cent shares and the company is running under profit and proportionate to their shareholding they are paid dividend to the extent of 50 per cent their request for winding up is wholly misconceived and is actuated with mala fide intention. Therefore, the CLB misdirected itself and has not applied its mind to this basic requirement of law before it exercised the power under section 397 Therefore, the impugned order passed by the CLB cannot be sustained.
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2013 (4) TMI 566
Recovery of outstanding dues - It is claimed that credit facility was duly granted, however the loanee failed and neglected to make payment of the outstanding dues of Rs.2,234,296,346.43 which comprised of the invoked Letter of Credit amount of Rs.2,200,271,866.33 and outstanding SBLC commission of Rs.34,024,480.10. - Held that - when the application for interim relief was made there was no document to show that the appellant was the mortgagee nor it was a lender to any company for which any security has been furnished. However, on granting leave this appellant filed supplementary affidavit annexing certain documents. It appears from these documents that the appellant is not mortgagee and rather one M/s. 3i Infotech Trusteeship Services Limited is mortgagee and one M/s. Bhartiya Hotel is the mortgagor. we think that the direction given by the learned Trial Judge at the instance of the appellant cannot be deleted. we do not find any reason to grant any relief on this appeal.
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2013 (4) TMI 565
Windng up – Circumstances in which company may wound up - Held that – After interpretating the clauses as mentioned in the STSA and based on the judgment passed by Hon'ble Supreme Court in IBA Health (India) (P.) Ltd. v. Info-Drive Systems Sdn. BHD [2009 (10) TMI 533 - HIGH COURT OF KARNATAKA] held that a company petition cannot be pursued in respect of a contingent debt unless the contingency has happened and it has become actually due. The judgment of the Hon'ble Supreme Court is directly applicable to the case on hand. In the present case also, the contingencies of arriving at the figure after setting off the accumulated losses and after arriving at the future profits, etc is yet to ascertained. Hence, on this ground also petition is liable to be dismissed.
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Service Tax
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2013 (4) TMI 583
Waiver of predeposit – Demand of service tax/Interest/penalties - The appellate authority required the appellants to predeposit various amounts under Section 35F of the Central Excise Act but none of the appellants made any deposit within the prescribed period. Having found no evidence of predeposit, the Commissioner (Appeals) rejected all the appeals on the sole ground of non-compliance with Section 35F ibid without examining the merits of the cases. The appeals before us are all directed against such orders of the Commissioner (Appeals). - Held that - we set aside the impugned orders and allow these appeals by way of remand with a request to the Commissioner (Appeals) to dispose of the assessees appeals on merits without insisting on any predeposit. The stay applications also stand disposed of.
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2013 (4) TMI 582
Penalties - u/s 76, 77 & 78 - appellant filed appeal on the ground that 25% penalty imposed under Section 78 of the Finance Act, 1994 has already been deposited by them and therefore penalty under Section 76 & 77 of the Finance Act, 1994 are not attracted. Held that - We are of the view that the judgment of division Bench of the Kerala High Court in the case of the Assistant Commissioner of Central Excise v. Krishna Poduval reported in [2005 (10) TMI 279] runs counter to the express provisions contained in Sections 76 and 78. In fact, in support of our contentions, we would like to point out that by Finance Act, 2008 (18 of 2008) which came into force from 10-5-2008, the Parliament has made the legal position clear by introducing a proviso to Section 78. It reads as under : provided also that if the penalty is payable under this section, the provision of Section 76 shall not be attracted. In view of the above judgment, it is clearly held that amendment carried out in Section 78 of the Finance Act, 1994 is only clarificatory in nature and the position of not imposing penalty under Section 76, when penalty under Section 78 was already imposed, will hold good for the period prior to the amendment also. Based on the above observations it is held that penalty under Section 76 of the Finance Act, 1994 is not imposable once penalty under Section 78 was imposed and 25% of such penalty has already been paid by the appellant. Based on the above observations the appeal filed by the appellant is partially allowed to the above extent only.
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2013 (4) TMI 581
Imposition of penalty – simultaneous u/s 76 & 78 - Respondent argued that the SCN has been issued after the amendment of Section 78 of the Finance Act, 1994 – Held that - In the judgment, the Hon’ble Karnataka High Court in the case of Motor World [2012 (6) TMI 69] has held that the amendment carried out u/s 78 of the Finance Act, 1994 is only a clarificatory in nature and therefore simultaneous imposition of penalty under Section 76 & 78 of the Finance Act, 1994 are not imposable for the period prior to 10/05/2008 also. The order passed by the Commissioner (A) is required to be upheld. Accordingly, the Department appeal is rejected.
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2013 (4) TMI 580
Denial of Cenvat credit – Input services - appellant is providing the services of renting of immovable property service and availing credits on input services - Revenue contended that the services which are availed are not utilized for providing of output service – Held that - Following the judgment of the Hon'ble High Court of Mumbai in the case of Coca Cola India Pvt.Ltd. [2009 (8) TMI 106] as their Lordships have categorically stated that the input services would be the services which are used relating to the business activity. In the case in hand, the output service provided by the appellant is intrinsically co-related the services received by them from various service providers. I find that the appellants have made out a case in their favour. Accordingly, the impugned order is liable to be set aside.
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2013 (4) TMI 572
CENVAT credit of the service tax paid on construction service or works contract service - denied of claim consequent to CBEC Circular No.96/7/2007-ST dated 23/08/2007 as amended by Circular No 98/1/2007-S.T., dated 04/01/2008 clarifying - stay seeked by assessee - Held that:- As decided in Sai Sahmita Storage (P) Ltd. (2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT)] and Navratna S.G. Highway Property Pvt. Ltd. (2012 (7) TMI 316 - CESTAT, AHMEDABAD) that excise duty paid on inputs and service tax paid on input services used in the construction of immovable property can be taken and utilized while discharging service tax liability on the renting of such immovable property. In the light of these decisions, the appellant has made out a strong prima facie case in their favour for grant of unconditional waiver of pre-deposit of the dues adjudged against them. Accordingly, unconditional waiver from the pre-deposit of the dues adjudged against the appellant granted and stay recovery therefore thereof during the pendency of these appeals.
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Central Excise
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2013 (4) TMI 564
Denial of Cenvat credit on input services used as packing material - intermediate product - as per Notification No.67/95-CE liable to pay duty on said product - Held that - authorities have not disclosed convincing grounds & small amount of duty involved we are inclined to grant waiver and stay in respect of the adjudged dues including the CENVAT credit denied.
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2013 (4) TMI 563
Cenvat Credit – non receipt of goods - stya – Transportation of imported goods - Held that:- findings are to the effect that the goods imported at Mumbai was diverted to Tughlakabad and disposed of there and documents were prepared to show as if the materials have been received in the Hyderabad factory. The evidences of the CHAs confirm such diversion. CENVAT credit merely based on documents without actually receiving the goods and the transporters also have disowned transporting goods to the Hyderabad factory and that they prepared consignment notes at the instance of one – part amount directed to be deposited.
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2013 (4) TMI 562
Assessee availed benefit of Notification No. 5/98-C.E. - Revenue Authorities were of the view that the benefit of said Notification is available only when he does not avail credit of duty paid on manufactured products. - appellate authority noticed that there were two registered unit situated in the same factory premises and was manufacturing finished products one of which was availing the benefit of Modvat credit, while another unit was claiming exemption. Accordingly demand of duty, interest & penalties arise. First appellate authority set aside the Order-in-Original on merits as well as limitation. Revenue file an appeal. Held that – None appeared on behalf of assessee. After interpretation of notification we confirm the demand against the appellant. However, the same is required to be re-quantified after extending the benefit of Modvat credit. The benefit of cum-duty price is also to be extended and demand is required to be re-calculated. Appeal is disposed of accordingly”. The department chose to issue show cause notice on 15-4-2003 by invoking the extended period of limitation and demanded duty for the period from June, 1998 to March, 2000. We find that the findings recorded by first appellate authority as regards limitation are uncontroverted. Accordingly, we find that the impugned order is liable to be upheld as it is correct and legal on the ground of limitation hence the Revenue’s appeal is rejected.
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2013 (4) TMI 561
SSI Exemption - Clubbing of clearance - Holding and subsidiary company - Notification No. 175/86-CE & Notification No.1/93-CE - Held that - We find that in the present case the issue is whether the appellants are entitled for the benefit of Notification 175/86-CE and subsequently Notification 1/93-CE, therefore the ratio of the decision of the Hon'ble Gujarat High Court in CCE, Surat-II vs. Catalco Chemicals (P) Ltd. reported in [2011 (9) TMI 774 Gujarat High Court] is fully applicable on the facts of the present case. Revenue has to establish that there was mutuality of interest or financial flow back of the funds and in such cases the clearances of the holding and subsidiary private limited companies can be clubbed. In the present case we find that even in the show cause notice there was no such allegations. In the show cause notice the only allegation is that the holding company has share capital in the subsidiary company. There is no evidence regarding financial flow back on record. In these circumstances the impugned order is set aside and the appeals are allowed. - Decided in favor of assessee.
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2013 (4) TMI 560
Distribution of Cenvat Credit - input services - distribution of input credit relation to one unit of a manufacturer/service provider to another unit of the same manufacturer/service provider - Appellant submitted that in the case of Mercedes Benz India Pvt. Ltd. vs Union of India – [2010 (3) TMI 300 - BOMBAY HIGH COURT] the Hon'ble High Court of Bombay held that the Tribunal has to follow the order passed by another co-ordinate bench in the identical set of facts for the earlier period and prays that following the ratio of the above decision, their appeals be allowed. Held that – In a multi-judge court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, the matter should be referred to a larger Bench. Therefore, as in the appellant's own case for the earlier period on an identical issue wherein this Tribunal held that the appellants are entitled for input service credit and as held by the Hon'ble High Court of Bombay in the case of Mercedes Benz India Pvt. Ltd. (supra). - Decided in favor of assessee.
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2013 (4) TMI 559
Interest and Penalty on Payment of differential duty after the dates of clearance of the impugned goods – Held that – in the case of M/s. SKF India (2009 (7) TMI 6 - SUPREME COURT), the Hon'ble Supreme Court has waived the imposition of penalty as the cases dealt in thereunder were cases of short-payment of duty which was completely unintended and without any element of deceit etc. The present cases are not of the same category as the appellants were clearly aware of the subsequent cost calculation as per CAS-4 standard for the relevant years but did not voluntarily pay the duty amounts till the department detected the short-payment and advised them to pay the differential duty. - Hence, we are of the view that imposition of some amount of penalty is justified in both these cases.
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CST, VAT & Sales Tax
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2013 (4) TMI 586
Reassessment orders - sale or works contract - bifurcation of order - petitioner was a partnership firm and engaged in the business of execution of works contract - Held that:- A bare perusal of the assessment order would show that the assessing authority has noticed only this much that the copies of certain documents such as contract and tender agreement etc. were produced which show that the work of supply, installation, commissioning, loading and unloading were included therein. But the assessing authority failed to take note of the fact that the supply of generators and commissioning expenses were shown at ₹ 10,82,101. While the petitioner has shown the purchase of generator for ₹ 5,89,93,249.96, which gives the commissioning expenses to 1.77% of the total amount of supply ₹ 6,11,01,227/-. The attention of the assessing authority escaped this aspect of the case which is vital and goes to the root of the matter. As in the case of M/s. Kone Elevator (India) Ltd. (2005 (2) TMI 519 - SUPREME COURT OF INDIA) 0Apex Court has laid down test to find out as to whether a particular transaction is supply of goods or of work contract & held that the assessee therein divided the execution of the contract into two parts namely work to be initially done in accordance with the specifications laid down by the assessee and "the supply of lift by the assessee". The "work part" in the contract was assigned to the customer and the supply part was assigned to the assessee. Here, the "work part" as well as "supply part" were assigned to the petitioner. It is not necessary to dwell upon the issue any further as it may prejudice the case of either party. Suffice it to say that there is material before the respondents to form a belief that the turnover of the petitioner has escaped the assessment. The assessing authority while framing the assessment order has overlooked the judgment of the Apex Court on the issue given in the case of M/s. Hindustan Shipyard Limited Vs. State of Andhra Pradesh [2000 (7) TMI 864 - SUPREME COURT OF INDIA] and the principle laid down therein has been reiterated in M/s. Kone Elevator (India) Ltd. (supra). Thus it is a case of escaped assessment. In view of the different provisions provided under the Act, even if the contract of the petitioner is taken as a work contract, then also trade tax was payable on the sale of the movable goods supplied under the contract.
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2013 (4) TMI 585
Detention issued U/s 47(2) of the KVAT Act - Held that:- The fact remains certificate of ownership and declaration did not accompany the consignment - Were produced before the Check Post Authorities after the detention Prima facie, I do not find any irregularity in the detention of the consignment. I do not think that pending adjudication, the goods should be kept under detention. In such circumstances, I direct that the adjudication in pursuance of Ext.P3 will be completed - Pending such adjudication, the consignment detained will be released on the petitioner, a registered dealer under the KVAT Act, furnishing a bond for the amount demanded, without sureties - The writ petition is disposed of as above.
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2013 (4) TMI 584
Revisional jurisdiction under Section 20(1) - After six years from the date of order of assessment - Consignment sales as fictitious - Provisional assessment - Disallowing claim for exemption - Period of limiation - Held that:- In HYDERABAD INSULATED WIRES (P) LTD v. COMMISSIONER OF COMMERCIAL TAXES, HYDERABAD {1990 (10) TMI 340 - ANDHRA PRADESH HIGH COURT}, a Division Bench of this Court held that it is impermissible to levy additional tax under Section 5-A of the GST Act in exercise of revisional powers by the Commissioner when such levy of additional tax was not all proposed by the Deputy Commissioner in the revision notice issued to the assessee; In COMMISSIONER OF INCOME TAX V. ALAGENDRAN FINANCE LTD , the Commissioner of Income Tax [2007 (7) TMI 304 - SUPREME Court], while exercising revisional powers under Section 263 of the Income Tax Act, 1961, reopened on 29.3.2004, the orders of assessment only in relation to the issue of "lease equalization fund" which was not subject of the re-assessment proceedings dated 28.3.2002 ( in respect of some other issues ). The Supreme Court held that, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of orders of the assessment and not from the order of re-assessment dated 28.3.2002 and the revisional jurisdiction, invoked by the Commissioner of Income Tax was beyond the period of two years ( at that time ) from the end of the financial year in which the order sought to be revised was passed, and was wholly without jurisdiction and a nullity. We respectfully follow the above two decisions and hold that the very proposal of the respondent are wholly without jurisdiction and barred by limitation prescribed under sub- section (3) of Section 20 of the GST Act as the respondent clearly intended to re-assess the appellant for the assessment year 2000-01, thereby interfering with the order of assessment dated 15.3.2003 of the Deputy Commissioner (CT), Abids while purporting to revise the order dated 28.2.2007 of the Additional Commissioner (CT) Legal, A.P. - Accordingly, the Special Appeal is allowed.
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Wealth tax
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2013 (4) TMI 587
Assessment orders illegal or without jurisdiction or null and void as a wrong section finds mention in the impugned assessment orders - Held that:- As from the photostat copies of the impugned assessment orders and challans it appears that there is overwriting in the assessment orders on the figure (3) of words "section 16 (3)". As nothing turns upon this overwriting, it cannot be taken into account and leave the matter as it is. No merit in the argument of the petitioners as point raised by the petitioners is more technical in nature than substantial one. As decided in United Bank of India Vs. Satyawati Tondon and others (2010 (7) TMI 829 - SUPREME COURT) that in all such cases of tax matters, the court must insist that before availing remedy under Article 226 of the Constitution of India, a person must exhaust the remedies available under the relevant statutes vide para-43 - writ petition dismissed as petitioners have adequate alternative remedy by way of appeal.
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