TMI Tax Updates - e-Newsletter
April 4, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Reassessment u/s 147 – Reopening of assessment – when falsity comes to notice the assessee cannot turned around and say that since “you accepted my lie, now your hands are tied and you can do nothing“ - HC
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Income Tax:
The explanation of the assessee that the cash receipts had been suppressed for the purposes of taking care of corruption at various levels also disentitles them for claiming expenditure - HC
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Income Tax:
Any amendment in law, even with retrospective effect, would not authorize the AO to reopen the assessment previously framed after scrutiny beyond the period of four years from the end of the relevant assessment year unless the conditions laid down under the proviso to Section 147 of the Act are fulfilled - HC
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Income Tax:
Claim of deduction u/s 80IB(10) of the Act – Scope of the term Built up area - the area of courtyard cannot be included to calculate the built-up area in terms of Section 80- IB(10) of the Act - HC
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Income Tax:
No requirement for filing of revised return u/s 139(5) for mistake of clubbing of expenses of material purchase under head labour expenses - As it does not result into any change of income or expenditure - AT
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Income Tax:
Even though Rules have provided rate of depreciation on computer software, but that does not lead to any kind of drawing legal inference that all softwares have to be characterized as capital asset - AT
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Income Tax:
Disallowance of interest being prior period - Since assessee follows mercantile system of accounting and accounts are audited, claim disallowed - AT
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Customs:
Waiver of Demurrage/detention charges – Even in cases of mis-declaration, undervaluation and concealment, the certificates are being issued - This is clearly giving premium to dishonesty - HC
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Customs:
Conviction and sentence – movement of opium - Whether association of public witness mandatory – The NCB cannot be held responsible for not producing them in the witness box - HC
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Customs:
Release seized goods – If the application was actually made and inwarded, it is a matter of serious concern why the same did not reach the Commissioner and it is disowned in the affidavit in reply - commissioner of hold inquiry - HC
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Service Tax:
Liability to service tax - Deputation of employees to group company - Manpower Supply Recruitment Agency Service - assessee cannot be said to be a commercial concern engaged in providing such specified services to a client - demand set aside - HC
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Central Excise:
Even if there was a confusion in the mind of the main appellant regarding classification of ‘Leno Gauze Fabrics’ but by changing the description of goods in the selling documents to ‘Bleached Mosquito Net Fabrics’ makes the intention of the main appellant clear for evading Central Excise Duty - AT
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Central Excise:
Clandestine removal of goods - Manufacture of paan masala and gutka - shortage of one of the raw-materials and even the admission by the director cannot be held to be sufficient evidence so as to indicate clandestine removal. - AT
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Central Excise:
CENVAT Credit - Bogus invoices - Interest - Commissioner set aside interest - . Once it is proved that credit has been fraudulently availed on fake invoices, credit has to be reversed with interest for the period of its utilization - AT
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Central Excise:
Duty demand - Discrepancy in RG-1 Register - Shortage in goods - charges of clandestine activities are required to be upheld on the basis of sufficient cogent reasons and evidences - AT
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Central Excise:
CENVAT Credit - Whether the excess credit lying in the books of accounts of the appellant can be transferred when the factory is shifted from one site to another, even if inputs or capital goods are not available for shifting - Held Yes - AT
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VAT:
Whether notification dated 31.3.86 issued under the U.P. Sales Tax Act, 1948 can be treated to be notification u/s 19(3) of U.P. VAT Act, 2008 – Taking of cash security while importing coal at the time of issuing 'Form-38' - Held Yes - HC
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VAT:
Liability to pay Entry tax - The price on which the goods are sold by assessee to its ultimate consumers inside local area cannot be taken as “value of goods“ for the purpose of taxability under Act, 2007 - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (4) TMI 126
Validity of exercise of power u/s 147 of the Act – Reopening of assessment – Reason to believe – Held that:- Section 147 of the Act speaks that, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. Relying upon Jorawar Singh Baid Vs. Assistant Commissioner of Income Tax (Cal.) and others [1992 (2) TMI 40 - CALCUTTA High Court] – The power that can be exercised under section 143(2) to cover the assessment made u/s 143(1) does not exclude the power of the AO to reopen the assessment u/s 147, subject to availability of ingredients of section 147 – it cannot be accepted that reassessment u/s 147 is vitiated, because the Assessing Officer failed to invoke his power to correct the assessment period completed u/s 143 (1) by issuing a notice u/s 143(2) of the Act. The purpose of section 147 is to ensure that a party cannot get up by making false or untrue statement at the time of original statement and when that falsity comes to notice the assessee cannot turned around and say that since "you accepted my lie, now your hands are tied and you can do nothing" - In order to proceed u/s 147, if the, AO has reason to believe that any income chargeable to tax has escaped assessment then he can proceed for reassessment - The only requirement of section 147 is that the AO must have good reason to believe that some income had escaped assessment. The letter dated 14.05.2013 written by the Deputy Commissioner of Income Tax Range-VI Lucknow shows that in the return filed by the petitioner for assessment year 2006-07 the petitioner declared its total income "Nil" - during the year share capital and secured loan increases - the assessee did not explain the source of increment, similarly other current assets also increased - apart from District Valuer Report, there were sufficient reasons for the AO to believe that the income chargeable to tax has escaped assessment – the ingredients of section 147 is available to reopen the proceeding of assessment for the assessment year 2006-07 – thus, there is no reason to interfere with the proceeding for assessment year 2006-07 initiated u/s 147(1) of the Act – Decided against Assessee.
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2014 (4) TMI 125
Disallowance of claim of initial capital - Held that:- The AO has assessed the same based on the investment available and in the absence of any material to show that this was included in the initial capital, deduction was disallowed - This is a reasonable finding based on due appreciation of material and evidence available on record – thus, there is no reason to interfere. Accrued interest on the re-pawned articles – Held that:- The claim has been rejected on the ground that re-pawning was done with various money lenders, and with regard to one of the money lender Shri Jagdish Prasad Sahu, his premises was also raided and amount recovered from him - Accrued interest for re-pawning with the money lender has been allowed and for the remaining amount the explanation has not been accepted on the ground that with regard to re-pawned articles there is nothing to show that the same was reinvested by the Assessee - This has been done based on the material available on record. Imposition of interest u/s 234 B and 234 C of the Act – Held that:- Payment of interest u/s 234 A, 234B and 234C is a mandatory, the assessing authority while passing the original assessment order or while reassessment or rectification order has to pass orders on payment of interest - even if in the order it is indicated that interest be paid in accordance with law, without specifying any particular provision, the benefit has to be given to the Revenue and since payment of interest is mandatory, the interest can be recovered - in the assessment order it is clearly held that interest be charged as per rules – thus, there is no need for any interference in the order – Decided against Assessee.
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2014 (4) TMI 124
Reliability of statement u/s 133A of the Act – Statement recorded on oath – cash receipts had been suppressed for the purposes of taking care of corruption at various - Held that:- Even u/s 133A of the Act dealing with survey proceedings, the revenue authorities are entitled to record the statement of any person which may be useful or relevant to proceedings under the Act - a statement u/s 133A of the Act does not lose its evidentiary value merely because it is made on oath - the statement is one of the evidences being relied upon and not the sole evidence - the Tribunal has recorded that the addition of income is based not only on the statement of the assessee - the appellant assessee has not been able to show that the statement made is not correct and/or unbelievable – thus, there is no substantial question of law arises for consideration – Decided against Assessee. Reliability of statement u/s 133A of the Act – Statement recorded after midnight – Held that:- The Tribunal has rendered a finding of fact to the effect that there is no evidence to show that the statement u/s 133 A of the Act was recorded during the middle of the night - This is a finding of fact and the appellants have not been able to demonstrate that the finding of fact as recorded by the Tribunal is perverse and/or arbitrary - no ground has been raised before the Tribunal regarding the statement being recorded in the middle of the night, thus, it cannot be relied upon - thus, there is no substantial question of law arises for consideration – Decided against Assessee. Shift made in onus to prove not appreciated – Held that:- The Tribunal rightly held that the explanation offered later is clearly an afterthought as also been held by the lower authorities - during the survey proceedings, the assessee in his statement recorded on 6 September 2007 has categorically stated that the discrepancy in the figures of receipts shown in the books of accounts and actual collection of figures are required to meet corruption at various levels - with regard to loose "Page No.17" the assessee had stated that he will offer the same as additional income - there was certain additional undisclosed income was further substantiated by the AO pointing out certain undisclosed income being invested in property at lower value than that of its value for the purpose of stamp on the property - thus, there is no substantial question of law arises for consideration – Decided against Assessee. Affidavit ignored by the Tribunal – Explanation of Loose paper provided in affidavit – Held that:- Tribunal was of the view that the affidavit of Mr. Ramesh Shetty is not credit worthy to be examined - on the basis that there was no evidence to show Mr. Ramesh Shetty's appointment as consultant or any evidence of fees being paid to him - no credence can be given to the affidavit filed by Mr. Ramesh Shetty – thus, there is no substantial question of law arises for consideration – Decided against Assessee. Undisclosed receipts treated as income - Adhoc net profit rate of 90% applied – Held that:- The Tribunal was of the view that whatever extra expenses had been incurred by the appellant assessee out of its undisclosed receipts have already been booked as expenses in his Income and Expenditure Account - in any case the appellant has not shown any evidence in support of his claim for the cash expenses incurred which were not recorded in the regular books of account of the appellant – the explanation of the appellant assessee that the cash receipts had been suppressed for the purposes of taking care of corruption at various levels also disentitles them for claiming expenditure - the expenditure incurred to make payments of bribe etc. cannot be allowed as an expenditure incurred for the purpose of business or profession in view of the Explanation to Section 37 of the Act - the appellant had not led any evidence before the authorities and/or even before the Tribunal to show that any expenditure was incurred out of undisclosed income which was not recorded in his books of account – thus, there is no substantial question of law arises for consideration – Decided against Assessee.
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2014 (4) TMI 123
Reopening of assessment u/s 147 of the Act – Income escapement could not pointed out - Short levy of Tax – Held that:- The AO did not point out that income chargeable to tax had escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts - the entire formation of belief is founded on the material already on the record - in addition to there being no suggestion by the AO that income chargeable to tax had escaped assessment for the reason of the assessee failing to disclose truly and fully all material facts, demonstrably, from the record it emerges to the contrary - The notice for reopening having been issued beyond the period of four years from the end of the relevant assessment year and original assessment having been completed after scrutiny, the additional requirement emerging from proviso to Section 147 of the Act that income chargeable to tax had escaped assessment for the failure of the assessee to disclose truly and fully all material facts, must be satisfied. Any amendment in law, even with retrospective effect, would not authorize the AO to reopen the assessment previously framed after scrutiny beyond the period of four years from the end of the relevant assessment year unless the conditions laid down under the proviso to Section 147 of the Act are fulfilled – Relying upon Denish Industries Limited v. IncomeTax Officer [2004 (7) TMI 72 - GUJARAT High Court] - An assessee cannot be imputed with clairvoyance - When the return was filed, the assessee could not possibly have known that the decision on the basis of which cash compensatory support had been claimed as not amounting to the assessee’s income ceased to be operative by reason of retrospective legislation - there was no failure on the part of the assessee to disclose truly and fully all material facts - Therefore, the condition precedent for invocation of the powers under section 147 read with sections 148 and 149 was not fulfilled – thus, the notice is set aside – Decided in favour of Assessee.
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2014 (4) TMI 122
Claim of deduction u/s 80IB(10) of the Act – Scope of the term Built up area - Whether the rear courtyard enclosed by walls of a residential unit could be included as built-up area of the residential unit - Held that:- The definition of the words 'built-up area' was inserted by the Finance Act of 2004 w.e.f. 01.04.2005 much before the plans were approved - The built-up area would mean the inner measurements of the residential unit at the floor level including the projections and balconies as increased by the thickness of the wall but does not include the common area shared with other residential unit - the built-up area is to be worked out from the wall of the residential unit –The area which is sought to be included by the Tribunal to calculate the built up area is the rear courtyard - in order to include an area to be a built up area to avail of deduction u/s 80-IB(10) of the Act, something has to be built on in order that such area can be included for calculating the built-up area. Relying upon Commissioner of Income Tax V/s G.R. Developers [2012 (7) TMI 91 - KARNATAKA HIGH COURT] - the area of courtyard cannot be included to calculate the built-up area in terms of Section 80- IB(10) of the Act – the Tribunal was not justified to come to the conclusion that the area of the courtyard is to be included to calculate the built-up area and thereby holding that the residential unit was more than 1500 square feet which would disentitle the appellant to claim such deduction – the Tribunal has misconstrued the provisions of Income Tax Act and the material on record to deny the benefit of deduction to the appellant in terms of Section 80-IB(10) of the Act – Decided in favour of Assessee.
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2014 (4) TMI 121
Commission received for sale of tea – Commission amount to be included in the income or not - income of individual or income of establishment – Held that:- the assessee respondent acted on behalf of the establishment and it is the commission for the establishment – thus, there is no reason to interfere in the matter as no substantial question of law arises for consideration – Decided against Revenue.
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2014 (4) TMI 120
Maintainability of appeal – Quantum of tax less than 2lakhs – Held that:- The decision in Commissioner of Income Tax Vs. Suresh Chand Goyal [ 2007 (1) TMI 90 - MADHYA PRADESH HIGH COURT ] followed - The Board had issued directions that the appeals will be filed only in cases where the tax effect exceeds Rs. 2 Lakhs in the matter of High Court in appeals u/s 260-A or Reference u/s 256(2) - The instructions of the Board are binding to all the authorities working under the Board including the appellant - This appeal which was filed on 10.1.2005 is fully covered by the instructions issued by the Board on 27.3.2000, and the appeal could not have been filed - the orders passed by the appellate authorities on 26.8.2004 and the tax liability is less than Rs. 2 Lacs –thus, the Department had no right to file the appeal – Decided against Revenue.
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2014 (4) TMI 119
Validity of recovery made during the pendency of appeal - Bank account attached - The contention of the assessee appears to be misconceived - When the second appeal is pending before the Tribunal, the assessee ought to have made a prayer for stay or refund of the money before the Tribunal itself – any mandatory order by way of interim relief cannot be ordered - the order passed by the AO and confirmed by the CIT(A) against the assessee, and the department have effected the recovery – there is no reason to interfere in the order – the Tribunal is directed for early disposal of the matter as it involves substantial amount of tax – Decided against Assessee.
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2014 (4) TMI 118
Jurisdiction of CIT(A) - Direction for disposal of appeal expeditiously - Appeal not decided by the CIT(A) – Held that:- The Assessee contended that he is being assessed to income tax in the State of Assam by the ITO, Silchar, thus, he rightly filed an appeal before the CIT(A) N.E Region against the assessment order which has territorial jurisdiction to entertain the appeal - The CIT(A), Aayakar Bhawan, M.G.Road, Shillong, Meghalaya, is directed to ensure expeditious disposal of the appeal filed by the assessee, preferably within a period of three months as an outer limit from the date of production of the order - the appeal shall be decided strictly in accordance with law after affording an opportunity of being heard to the assessee – Decided in favour of Assessee.
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2014 (4) TMI 117
Rejection of revision petition u/s 264 of the Act – Claim of expenses disallowed by the AO – Held that:- The owners of the property are the partners in their individual capacity and as such the enduring benefit of conversion from residential to commercial enures to the owners – the advantage and benefit that the property has acquired by payment of conversion charges will continue to enure to the individual partners irrespective of the assessee discontinuing to do the business of guest house from the said property - Since the advantage of enduring nature is attached to the property, the benefit of the same will enure to the owners of the property - The expenditure for acquiring the advantage is an expenditure incurred purely for the individual partners - There is no justification and reason, why the assessee firm made the payment and on what terms/ basis payment was made - The expenditure cannot be treated as running business expenditure and cannot be claimed as a deduction u/s 37 of the Act by the assessee. Individual owners and the partnership firm are two distinct tax entities for the purpose of the Act and are liable to pay income tax on their income after reducing revenue expenditure - the nature of expenditure is clearly capital and incurred on account of the individual partners and is neither a capital nor revenue expenditure of the partnership firm respondent assessee – thus, there is no infirmity in the order rejecting the application of the assessee u/s 264 of the Act – Decided against Assessee.
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2014 (4) TMI 116
Quantum of Disallowance - Disallowance of interest payments – Held that:- in absence of any appearance on behalf of assessee, unable to ascertain correctness of working of learned Departmental Representative - Set aside impugned order of CIT(A), and restore matter to file of Assessing Officer, with direction to re-determine issue afresh - He shall afford reasonable opportunity of hearing to assessee, and re-determine quantum of disallowance, if any warranted, in accordance with law – Decided partly in favour of Revenue.
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2014 (4) TMI 115
Trading Income as LTCG u/s 10(33) – Claim on trading income as Long Term Capital Gains [LTCG] earned on share transaction – Held that:- shares purchased by assessee were listed/quoted shares in recognized stock exchange - Rate of purchase are verifiable from rates quoted at stock exchange - Shares were held and possessed by her for more than 12 months - Entire transactions of purchase and sales of shares are duly recorded and found supported by broker’s contract notes, bills for purchase and sales of shares issued by approved stock brokers - From evidence available on record, it is proved that assessee’s transactions of purchase and sale of shares are genuine - Department failed to disprove claim of assessee - Do not find any fallacy or infirmity in finding of CIT(A) and uphold same – Decided against Revenue.
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2014 (4) TMI 114
Transfer pricing adjustments - Adjustment u/s 92CA – assessee is pleading that Ld. DRP should have passed a proper and speaking order dealing with the objections and submissions of the assessee - Held that: - settled law that appellate orders even in administrative case should be consistent with Rule of natural justice - Interest of justice in this case will be served, if matter is remitted to file of Ld. DRP - Ld. DRP is directed to consider issue afresh and properly deal with objections and submissions of assessee by way of passing a speaking order - Following the decision of Hon'ble Jurisdictional High Court in the case of Vodafone Essar Ltd. vs. DRP & Others [2011 (12) TMI 22 - Delhi High Court], matter remanded back – Decided in favor of Assessee.
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2014 (4) TMI 113
Deduction of TDS u/s 194J or u/s 194C - Nature of agreement - AO was of the view that the "dubbing expenses/print processing fees" and "production expenses" were in the nature of 'fees for technical services’ and 'royalty’ respectively, and hence the tax should have been deducted under section 194J of the Act @10%,instead of @2% deducted by the assessee under section 194C - Held that:- The assignment or vesting of copy rights etc. in the programme are incidental to the main object of the agreement or transactions in question. When a contactor produces a programme on behalf of other, it is obvious that all the rights including copy rights etc. will vest in the producer and the assigned producer/contractor will not be left with any control or right over the programme and such rights of the producer have been recognized with the said assignment clause, which is incidental to the main object of the contract. The observation of the AO that assigned producer has an absolute contract over the rights of the programme is falsified from the perusal of the different clauses of the agreement. - agreement in question was an agreement to produce the programme by the assigned producer i.e., contractor on behalf of the producer i.e., assessee. Clause (b) to Explanation III to section 194C specifically covers activity of production of programmes whereas provisions of section 194J are general in nature - Provisions of section 194C would prevail over section 194J of Act - Section 194C clearly states that payment for production of programmes constitutes payments for 'work’ under section 194C - Assessee rightly deducted TDS u/s 194C at rate of 2% on payments made to contractor - CIT(A) has rightly observed that production of programmes is nothing but combination of processes right from planning - He rightly held that dubbing charges and processing fees being a part of production of television serials and programmes, are squarely covered under ambit of specific provisions of section 194C of Act and liable to TDS at rate of 2%. - General provisions of section 194J are not attracted in this case - Findings of ld. CIT (A) upheld - Decided against Revenue.
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2014 (4) TMI 112
Transfer pricing adjustments - AMP Expenses u/s 92CA(3) - Addition in relation to advertisement, marketing and promotion ('AMP') expenses under section 92CA(3) of Act – Held that:- ITAT, Special Bench in case of LG Electronics India (P.) Ltd. [2013 (6)TMI 217 - ITAT DELHI] has already dealt with legal issues raised in appeal - For quantification, issue has been restored back to file of Assessing Officer - Therefore, in interest of justice and equity, find it appropriate to restore issues to file of Assessing Officer to be decided in view of decision of ITAT, Special Bench in case of LG Electronics India (P )Ltd. [2013 (6) TMI 217 - ITAT DELHI] – Decided in favour of Assessee.
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2014 (4) TMI 111
Disallowance of labour charges u/s.40(a)(ia) - TDS u/s 194C – assessee submitted that most of the amount pertain to purchase of raw material but was wrongly grouped under the head labour charges. - Held that:- Assessee’s contention before AO as well as CIT(A) was correct as all the invoices reflect that these relate to purchase of material from various persons only - AO had issued summons to various persons asking details of sale made to assessee during financial year 2006-07 - In response, these persons have also confirmed sale made to assessee and also informed about payment received by them on such sale of materials - Once these evidences have not been rebutted, do not find any reason to deviate from elaborate findings recorded by CIT(A) and accordingly, same is hereby confirmed – Decided against Revenue. Need to Revised return u/s 139(5) – Held that:- no requirement for filing of revised return u/s 139(5) for mistake of clubbing of expenses of material purchase under head labour expenses - As it does not result into any change of income or expenditure - Confirm the entire findings of CIT(A) and dismiss grounds raised by department – Decided against Revenue.
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2014 (4) TMI 110
Disallowance u/s 40(a)(ia) – Non deduction of Tax at Source (TDS) u/s 194A on interest paid to M/s Konkan Railway Corporation Ltd., on mobilisation advance - Held that:- When interest on mobilisation advance was recovered by contractee from running bills before releasing contract charges to assessee, cannot be said that assessee has credited interest paid or payable to account of assessee - Cannot be said that there is any violation of provisions of section 194A of Act - Liability cannot be fastened on assessee or a default cannot be attributed to assessee for not discharging an obligation which is impossible on its part to perform. Decision of High Court in case of Viswapriya Financial Services and Securities Ltd., vs. CIT [2002 (10) TMI 88 - MADRAS High Court] is also not applicable to facts of present case as in that case assessee actually made payment but did not treat it as interest - Do not find any infirmity in order of CIT(A). Further, perusal of Notification Number SO No.3489 dated 22-10-1970 makes it clear that provisions of section 194A of Act are not applicable to interest paid to company whose shares are held by either Central or State Government - Provisions of section 194A of Act will not apply to said company in view of Notification in S O No.3489 dated 22-10-1970 - Interest payment to such company is outside purview of section 194A and consequently no disallowance can be made by applying provisions of section 40(a)(ia) of Act - Decided against Revenue.
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2014 (4) TMI 109
Disallowance of interest - interest expenditure claimed u/s. 37(1) – Interest free loan given to Murugappa Employees Foundation - borrowings have been made by the assessee for advancing the amount to the Trust formed by the assessee for acquiring shares of the group companies to be allotted under ESOP Scheme - Held that:- The benefits accruing to employees by allotment of shares under the scheme is in the form of perquisite. The difference between the market value at which the shares are acquired by the Trust and the value at which the employees were allotted shares is assessable as perquisite in the hands of the employees. CIT(A) has rightly pointed out that, when company provides benefit or amenity to its employees through intermediary institution, it is not necessary to that such intermediary institute should operate solely for the similar company - What is important is that value of benefit has been conferred to employees irrespective of manner in which or through whom they obtain the benefit as long as source of benefit is employer of benefit get taxed in hands of employees - CIT(Appeals) remitted file back to Assessing Officer with direction to proportionately disallow expenditure if shares have been allotted to employees of other group companies - However, disallowance so made shall be allowed in hands of respective group companies - Do not find any infirmity in impugned order of CIT(Appeals) - Findings of CIT(Appeals) confirmed - Decided against Revenue.
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2014 (4) TMI 108
Disallowance of expenditure - expenditure being not genuine, fictitious, bogus or inflated. - Whether CIT(A) rightly confirmed disallowances of expenditure made by Assessing Officer – Held that:- Assessee is not carrying on any business in trading in steel from past many years - Therefore, there is no question of allowing any business expenditure - Merely by changing colour of rent received from sub-letting of property and showing it as income from other sources, would not entitle assessee to claim employee cost on account of salaries, wages, bonus, contribution to Provident Fund and staff welfare - Fail to understand relevance of claiming expenditure on account of freight and delivery, postage, telex & telephone, travelling & conveyance, vehicle expenses, legal & professional charges, sales tax, export promotion expenses and other miscellaneous expenses - Decided against the assessee. Adhoc disallowance – repairs and maintenance expenditure - Held that:-the income shown under the head "income from other sources" is, in fact, rental income though not assessed as such - Assessing Officer has disallowed only 20% of expenditure, which has been confirmed by CIT(A), do not want to interfere with findings of CIT(A) – Decided against Assessee.
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2014 (4) TMI 107
TDS on V-ST charges – Deletion of disallowance u/s 40(a)(ia) – Held that:- payment of V-SAT charges covered by decision of Bombay High Court in CIT v/s Kotak Securities Ltd. [2011 (10) TMI 24 - Bombay High Court] - Therefore, there was no requirement for deducting TDS and consequently no disallowance under section 40(a)(ia) can be made - Set aside issue of transaction charges to file of Assessing Officer, to verify, whether in earlier years transactions charges have been paid and any disallowance has been made in earlier years or not - If assessee has paid transaction charges in earlier years and no disallowance has been made by Department, then in view of the decision of Jurisdictional High Court in case of Kotak Securities Ltd. [2011 (10) TMI 24 - Bombay High Cour ] no disallowance should be made in this year because in that way it constitute a reasonable cause for not deducting TDS in this year also - Matter is restored to file of Assessing Officer - Decided partly in favour of Revenue. Disallowing Expenditure as capital expenditure - software expenditures - Held that:- software application expenses are nothing, but up-gradation of efficient working of operations through computers in day-to-day business management, which keeps on changing periodically and thus any expenditure on such an upgradation or buying of software is revenue expenditure only - Even though Rules have provided rate of depreciation on computer software, but that does not lead to any kind of drawing legal inference that all softwares have to be characterized as capital asset - Grounds raised by assessee in cross objection treated as allowed - Decided in favor of assessee.
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2014 (4) TMI 106
Disallowance of interest being prior period - for the earlier year assessee has not debited the interest on unsecured loan in the profit and loss account even though it follows mercantile system of accounting - Held that:- The argument that even if the interest would have been debited to the profit and loss account in those years the same would have still been disallowed since the assessee was not in a position to deduct and pay the TDS and the same would have been allowed in the impugned assessment year after payment of the TDS in our opinion is without any force. It is not the case of assessee that he was not aware of rate of interest and amount involved - Since assessee follows mercantile system of accounting and accounts are audited as per Companies Act as well as under provisions of Income Tax Act - Therefore, assessee was duty bound to prepare its accounts properly and not in casual manner like it has maintained by not debiting interest expenditure relating to concerned assessment year - Under these circumstances and in view of detailed order passed by Ld.CIT(A), no infirmity in same and same is upheld – Decided against Assessee. Disallowance u/s 40A(2) – excessive interest in excess of 12% - Held that:- since company had stopped it operation at Chipri no banker would have financed its business for which borrowing from Directors were inevitable and loans have been taken during impugned assessment year - Loans have been obtained without pledging of any title deed or security and without going through any cumbersome process which is otherwise applicable to loans obtained from banks and other financial institutions - Payment of interest @15% p.a. under facts and circumstances of case cannot be considered as excessive or unreasonable – Decided against Revenue.
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2014 (4) TMI 105
Deduction u/s 80C - Repayment on housing loan - Whether CIT(A) erred in allowing deduction U/s.80C of Act relating to repayment of housing loan – Held that: - details asked for by AO pertaining to interest on housing loan u/s 24(b) on self-occupied property and deduction claimed u/s 80C were not provided at assessment stage - But were placed on record before CIT(A), who considered same and deleted addition made - From impugned order of CIT(A), cannot be gathered that any opportunity was provided or issue was remanded back for AO's comments - In interest of justice, restore issues to file of CIT(A), who shall re-adjudicate them, after seeking comments from AO and confronting same to assessee – Decided in favour of Assessee. Modification of turnover - Whether, CIT(A) erred in directing AD to modify turnover of assessee even though issue was not in grounds of appeal – Held that:- certain basic and primary details were there before AO, which incited him to ask for further details - It is from these details, that AO was able to extract figures of Rs.2,42,75,433/- and Rs.24,68,210/- Since the income has to be estimated on turnover, CIT(A) has correctly adopted figure of Rs.2,67,43,643/- and estimated income @ 8% on this figure, because, Rs.24,68,210/- was nothing but part & parcel of turnover of business activity - No reason to disturb finding of CIT(A) which should be sustained – Decided against Revenue.
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2014 (4) TMI 104
Disallowance u/s 14A r.w. Rule 8D - Relief to assessee on issue of disallowance u/s 14A r.w. Rule 8D - Held that: - order of AO as well as CIT(A) shows that none of them have given any specific findings with regard to source of funds from which investments which are likely to yield tax free income were made - Loans were for specific purpose and were not capable for being used for making investments - None of authorities have gone into any of aspects which are necessary for invoking provisions of section 14A of Act - Order of CIT(Appeals) is set aside and matter is remanded to Assessing Officer for fresh consideration - Decided in favor of Revenue.
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2014 (4) TMI 103
Capital asset u/s 2(14) – agriculture land or not - Whether, AO erred in considering agricultural land of assessee as capital asset u/s 2(14) - Held that:- Piece of agricultural land sold by assessee is situated within 8 kms of Municipal limits but the population of that municipality is not more than 10,000 - For purposes of section 2(14)(iii) of Act, a specific gazette notification dated 6.1.1994 has been issued by Central Government – As per notification, if any agricultural land which is situated within 8 kms of a notified municipality etc, it will be treated as a capital asset, subject to condition that population of that Municipality - If case piece of agricultural land falls within 8 km of stated municipality, but population of that municipality is not more than 10,000 , then in that case agricultural land sold cannot be treated a as capital asset - Therefore, in given facts and circumstances of this case, it would be apt to restore this issue to file of A.O. with direction that he must decide this issue in specific light of our above stated observations - Matter remanded back - Decided in favor of Assessee.
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2014 (4) TMI 102
Charitable purpose u/s 2(15) - Withdrawing/cancelling registration u/s.12A – Whether registration u/s.12A/12AA of Act could be cancelled or withdrawn u/s.12AA(3) - whether an object/s which is not, or better, can no longer be regarded as, charitable, in view of the amended law, would yet entitle an entity for the continuation of its registration, or not so, under the Act - Held that:- Both the assessee and the Revenue have made their contrary claims de hors and without any reference to any material on record. In fact, for all we may know, there may well be truth in both the statements, so that both of them are true, albeit partly. What we are concerned here with, we may clarify, is not the legal aspect of the matter, but of the applicability of section 12AA(3), invoked by the Revenue, on the facts of the case. Issue of applicability or otherwise of section 12AA(3) in instant case being factually indeterminate - Consider it fit and proper in facts and circumstances of case to restore this matter back to ld. DIT(E) for allowing assessee a reasonable opportunity to present its case - Ld. DIT(E), though not restricted to facts and figures for particular year, shall restrict his inquiry to factual aspect of case, i.e., qua satisfaction of condition/s of section 12AA(3) on facts - Assessee’s case would require being examined by tribunal thereon only if same survives an examination on facts, i.e., satisfies test of s. 12AA(3) on facts – Matter remanded back - Decided in favor of Assessee.
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Customs
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2014 (4) TMI 101
Waiver of Demurrage/detention charges – Certificate of waiver issued u/s 6(1)(l) of the Handling of Cargo under Customs Area Regulations, 2009 - Despite the letter dated 6.11.2012, CELEBI refused to waive off the demurrage/detention charges - Whether the CELEBI is entitled to charge demurrage/detention charges for the period the goods were detained by the customs authorities – Held that:- Custom authorities are issuing waiver directions even in cases where the importers are clearly at fault and fine, penalty, personal penalty and/or warning has been imposed by the customs authorities - Even in cases of mis-declaration, undervaluation and concealment, the certificates are being issued - This is clearly giving premium to dishonesty - The waiver should be granted in genuine cases where the importers are ultimately found not at fault. In cases where the importer is found innocent and there is no imposition of any fine, penalty, personal penalty and/or warning by the customs authorities, the Policy for Waiver would be applicable and the importer would be entitled to be considered for its benefit provided a certificate entitling him to be so considered is issued by the custom authorities. The importer would not be automatically exempt but would be covered under the Policy for Waiver and eligible for waiver which would be granted subject to other compliances. Where the importer is clearly at fault and fine, penalty, personal penalty and/or warning is imposed by the customs authorities, making the regulations applicable and granting the benefits of waiver would be clearly unreasonable and would grant benefit of waiver, with the person who has provided space suffering. This was and is not the intention and purpose behind HCCAR. Regulation recognises and accepts that any other law in force is not abrogated or repealed. The existing provision applicable stands protected. Petitioner shall be entitled to release of the goods by furnishing a security bond and a Bank Guarantee securing the demurrage charges and undertaking that the Petitioner would pay the demurrage charges in case on conclusion of the adjudication proceedings any fine, penalty, personal penalty and/or warning is imposed by the customs authorities. - Decided partly in favor of petitioner.
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2014 (4) TMI 100
Conviction and sentence – movement of opium - Whether association of public witness mandatory – Statement u/s 67 of NDPS Act in contrary to statement u/s 313 Cr.P.C. - Held that:- Appellant in his statement u/s 313 Cr.P.C. denied the allegations against him, claimed to be innocent and claimed not be the owner of the truck though he knew driving - A perusal of the record would show that neither Mahender Singh was found residing at the Rangpuri address given by him nor was Neki Ram found at the Chhawla Village address - Obviously either the witnesses gave wrong address to NCB or they shifted from the place where they were earlier residing without intimating the new address to the NCB officials - The NCB cannot be held responsible for not producing them in the witness box - Moreover, since the recovery was effected at a public place in a day time, it was not mandatory to associate public witnesses with the search of the truck in which the contraband was found. Proof of recovery – Proof beyond reasonable doubt – Held that:- The appellant in his statement u/s 313 Cr.P.C. did not even admit either that he was driving the aforesaid truck or that the said truck was stopped and seized by NCB officials at Kapashera border - The deposition of PW5 with respect to seizure of the opium from the truck being driven by the appellant finds full corroboration from PW6 Vikas Kumar in whose presence the seizure was effected - Therefore, the respondent NCB has proved beyond reasonable doubt that the appellant was driving the truck from which the substance in question was recovered by its officials, in the morning of 4.3.2006, at Kapashera border. Whether statement u/s 67 of the NDPS Act can be basis of conviction when it was denied u/s 313 Cr.P.C. Held that:- The seizure of the drug from the truck being driven by the appellant finds corroboration from the statement which he made under Section 67 of the NDPS Act - Though the aforesaid statement was denied by him in his statement u/s 313 Cr.P.C., the statement has been duly proved by PW5 who had recorded the same, and this is not the case of the appellant that it is not signed by him - The appellant does not even claim that the aforesaid statement was obtained from him by subjecting him to any kind of duress or inducement - Therefore, the said confessional statement having been voluntarily made, can be safely used for convicting the appellant - Since the conviction of the appellant is not based solely upon the statement made by him u/s 67 of the NDPS Act, the same being only a piece of corroborative evidence, there is no merit in the contention that the conviction of the appellant could not have been based on the said statement. Whether the notice u/s 50 of the NDPS Act was meaningless since the appellant did not know reading or writing either English or Hindi – Held that:- A perusal of the said notice Ex.PW5/B would show that the it is a printed document in Hindi as well as English - It has come in evidence that the contents of the aforesaid notice were duly explained to the appellant and the meaning of the expression “Gazetted Officer” was also explained to him - There is no reason to disbelieve the deposition of NCB officials in this regard - Vide aforesaid notice, the appellant was clearly informed of his legal right to be searched in the presence of a Magistrate or a Gazetted Officer - Therefore, there was due compliance with the requirement of Section 50 of the NDPS Act - No ground for interference with the conviction of the appellant and the fine imposed on him - It is, however, directed that in case of default of payment of fine, the appellant shall undergo SI for three (3) months as against one year awarded by the trial court - Appeal disposed of – Decided against appellant.
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2014 (4) TMI 99
Release seized goods – four refrigerators and memory cards - It is the case of the petitioner that promptly after the earlier order was passed by the High Court, the petitioner filed an application dated 21st September 2011 in terms of the said order and requested that in exercise of the powers under Section 110A of the Customs Act, such goods be released on reasonable conditions. The case of the Department is that the said application was never received. - Held that:- w.r.t. the seized goods in question court had not passed any specific order of releasing – only provided that it would be open for the petitioner to press for application u/s 110A of the Act, which was stated to have been filed – It was provided that if no such application was filed, the authorities shall take a final decision thereon, the Commission did not flouted the Court’s order - Court only required the Commissioner to decide an application for provisional release of the goods - If such an application is already filed or if not filed, the same may be filed and that the Commissioner shall decide the same expeditiously. Receiving of assessee application u/s 110A of the Act – Whether application was actually made and inwarded - Held that:- There is some ambiguity about application dated 21st September 2011 of the petitioner having been received by the Department - Assessee showed this Court the office copy of application on which stamp is affixed received by the Inward Clerk on 13th September 2011 - This stand of assessee is not in dispute - Nevertheless, in a writ petition, it would not be possible for us to conclude in a document that the application was actually made and inwarded – This issue cannot be closed in this manner - If the application was actually made and inwarded, it is a matter of serious concern why the same did not reach the Commissioner and it is disowned in the affidavit in reply - Thus, the Commissioner is required to hold an inquiry in this respect and if found that the letter was actually received by the Department but not placed before him, to take necessary steps departmentally as found appropriate. - Decided against the assessee.
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Service Tax
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2014 (4) TMI 133
Failure to deposit service tax - one time amnesty or relief scheme - Rejection of Exemption notification dated 10.09.2004 - Notification No.3/2010 - petitioner deposited 50% of the amount due before the time stipulated - Held that:- Scheme was introduced to give benefit of one time amnesty or relief to service tax defaulters or those who had not paid their dues fully. In its terms, the assessment as to the liability has to be made and if the declaration or application is found to be in order and compliant with the provisions, the authority would accept the application and grant immunity from prosecution and also exempt interest and penalty liability. Keeping in mind the spirit of the Scheme, certain safeguards and conditions have been indicated. The first and perhaps foremost one is that the applicant should deposit 50% of the admitted liability with the declaration itself on or before 31.12.2013 and the balance should be paid latest by 31.12.2014. The second is in respect of the subject matter that there should be no issue pending or determined before any of the tax authorities or Tribunals for adjudication. The object of this is to avoid multiplicity and reopening of settled matters. Therefore, the view of the designated authority that the pendency of the issue or question of the petitioner’s liability for a past period when it sought to avail the advantage of the exemption notification bars the remedy under Section 106 is clearly in error - Decided in favour of assessee.
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2014 (4) TMI 132
Liability to service tax - Deputation of employees to group company - Manpower Supply Recruitment Agency Service - Whether activity of Respondent would cover under Manpower Supply Recruitment Agency Service - Held that:- definition of Manpower Supply Recruitment Agency is wide and would cover within its sweep range of activities provided therein - such definition would not cover the activity of the respondent - To recall, the respondent in order to reduce his cost of manufacturing, deputed some of its staff to its subsidiaries or group companies for stipulated work or limited period. All throughout the control and supervision remained with the respondent. As pointed out by the respondent, company is not in the business of providing recruitment or supply of manpower. Actual cost incurred by the company in terms of salary, remuneration and perquisites is only reimbursed by the group companies. There is no element of profit or finance benefit. The subsidiary companies cannot be said to be their clients. Deputation of the employees was only for and in the interest of the company. There was no relation of agency and client. It was pointed out that the employee deputed did not exclusively work under the direction of supervision or control of subsidiary company. All throughout he would be under the continuous control and direction of the company. The definition though provides that Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client. It is true that the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise. However, fundamentally recruitment of the agency being a commercial concern engaged in providing any such service to client would have to be satisfied - No question of law arises - Decided against Revenue.
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2014 (4) TMI 131
Waiver of pre deposit - Quantum of pre deposit - Whether the Hon'ble Tribunal was correct in directing the appellant to deposit a sum of Rs.12,50,000/- in appeal without considering the fact that during the relevant period no Service at all had been provided by them - Held that:- Amount requested to make pre deposit is reduced to Rs. 3 Lacs - Time period to make pre deposit is extended - Decided partly in favour of assessee.
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2014 (4) TMI 130
Quantum of pre-deposit - Whether the Tribunal is justified to direct deposit of 50% of tax along with interest when the Appellant has provided services of storage of foodgrain and not renting of immovable property - Held that:- After hearing learned counsel for the parties and keeping in view the totality of the facts and circumstances of the case, another sum of ₹ 50 lacs be deposited as a condition precedent for hearing of the appeal which would meet the ends of justice - Time limit to make pre deposit extended - Decided partly in favour of assessee.
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Central Excise
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2014 (4) TMI 98
Classification of goods - Bleached Leno Gauze Fabric - Classification under Chapter Heading 58.03 or under CETH 52.07 - Advalorem rate of duty - Bar of limitation - Penalty - Held that:- Tribunal has held in the appellant’s own case in [2009 (2) TMI 290 - CESTAT, AHMEDABAD], that ‘Bleached Leno Gauze Fabric’, manufactured by the appellant is correctly held to be classifiable under Chapter heading 58.03 of the Central Excise Tariff Act, 1985. Therefore, the main appellant was not eligible to clear said ‘Bleached Leno Gauze Fabric’ under compounded levy scheme as held by the adjudicating authority. Extended period of limitation - Held that:- Evidences collected by the investigation make it evident that main appellant was changing the description of bleached fabrics as ‘Bleached Mosquito Net Fabrics’ when orders were placed on them by the buyers for ‘Bleached Leno Gauze Fabric’ Even if there was a confusion in the mind of the main appellant regarding classification of ‘Leno Gauze Fabrics’ but by changing the description of goods in the selling documents to ‘Bleached Mosquito Net Fabrics’ makes the intention of the main appellant clear for evading Central Excise Duty. This is further fortified by the fact that main appellant was also paying central Excise duty with respect to certain clearances of ‘Bleached Leno Gauze’ fabrics under 58.03. Such a mis-declaration on the part of the appellant could not be detected from the classification declarations, copies of invoices and monthly returns filed by the appellant in compliance to the provisions of central excise law and procedures. We, therefore, hold that this is clear case of intentional evasion of duty on the part of the appellant willfully mistaking/suppressing the facts, warranting recovery of duty under proviso to sub-section (1) of section 11A of the Central Excise Act, 1944. Therefore, the demand of duty is not time barred and extended period has been correctly invoked in these proceedings while confirming the demand - Decided against the assessee.
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2014 (4) TMI 97
Duty demand - Clandestine removal of goods - removal of fresh fans in the guise of repaired one - Whether the fans which were purportedly cleared by the Applicant Firm as a repaired/re-conditioned one, show any correlation with the defective fans received at the service centre or not, and whether the conditions of Rule 16 in the event of repairing/re-conditioning are satisfied in this case or not - Held that:- Applicants plea that the defective fans received at the service centre, were duly reflected in their record and the movement of component spares etc. to the factory, after dismantling of the defective fans took place under proper challans, need further examination. According to the Applicant, the fact they were eligible to credit, is also not discussed by the ld. Commissioner. Regarding demand raised on shortage of bearings (in Annexure-C-4), the ld. Commissioner has not considered the fact that rejection is bound to take place during manufacture and the evidences adduced by the Applicant/Appellant before him, were discarded. The Applicant/Appellant has categorically stated that even the stock-taking report refers to rejection of the bearings and therefore, such rejection reflected in their books of accounts, should be considered before arriving at their shortage. In case of duty demanded (in Annexure-C-5) on spares shown to be removed under private challans, the ld. Advocate submitted that it was only a financial adjustment. The invoice-cum-challan clearly shows such short receipts to take care of financial accountal of such short receipts, the Applicant firm used to issue invoice-cum-challan specifying the components and their value for debiting from the accounts of the concerned branches. The ld. Commissioner observed that no audited certificate could be produced to this extent. It is the contention of the Appellant that they were never asked to give any such certificate. The ld. Advocate stated that all the documents including challans and invoices have been seized by the Department and they are in the possession of the Department and that they could explain satisfactorily from the said document that there were no duty evasion on any counts. In view of the above facts, we find that Order of the ld. Commissioner has not considered in detail, all the issues raised by the Appellant. In these circumstances, we are of the view that the case may be remitted back to the ld. Adjudicating Commissioner for fresh decision, after considering all the issues raised by the Applicant/Appellant firm - Decided in favour of assessee.
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2014 (4) TMI 96
Clandestine removal of goods - Manufacture of paan masala and gutka - Cash found in office premises - Unaccounted sale of gutka and paan masala - Shortage of raw-materials - Held that:- Revenue, apart from referring to the shortages noticed by the visiting officers, has not referred to any other evidence to substantiate the allegation of clandestine removal. It is well settled law that the shortages by itself cannot be held to be sufficient evidences so as to lead to the inevitable conclusion of the clandestine removal - shortages in one of the raw-materials cannot be adopted as the basis for alleging clandestine manufacture and removal in the absence of any independent evidence available on record - shortage of one of the raw-materials and even the admission by the director cannot be held to be sufficient evidence so as to indicate clandestine removal. - Decided in favor of assessee. Demand in respect of sada paan masala and Gutka - Held that:- The Revenue has failed to advance any evidence to show as to how such huge quantum of final product allegedly manufactured and cleared by the appellants, without payment of duty was transported, sold to whom and how the consideration for the same was received. There is also no evidence for purchase of the unaccounted raw-materials. - Decided in favor of assessee. Confiscation of cash found at factory premises - Held that:- It is well established that the onus to show that the Indian currency was the sale proceeds of the clandestinely removed goods is upon the Revenue, which is required to be discharged by production of affirmative evidences. - Decided in favor of assessee. Confiscation of cash found at residence - Held that:- Admittedly, the residential premises were common residential premises of appellants as also all the brothers and their wives, it is not coming up on record as to at whose instance and as to from which room the said cash was recovered. - Decided in favor of assessee.
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2014 (4) TMI 95
CENVAT Credit - Bogus invoices - Interest - Commissioner set aside interest - Held that:- It is evident that fraud has been committed and fake invoices have been issued enabling dealers/buyers to take fraudulent credit. There is clear admittance of fraud as goods received by the respondent were from the open market. There was absolutely no co-relation. I agree with the revenue that goods have not come to the factory under the cover of specified documents evidencing payment of duty thus there could be no availment of credit. Further in the present case, there is issue of fake invoices without receipt of goods by the suppliers involving fraud. No duty was paid and goods were procured from open market. There could be no availment of Cenvat credit on fake invoices as it involves fraud. Fraud nullifies everything. Once it is proved that credit has been fraudulently availed on fake invoices, credit has to be reversed with interest for the period of its utilization. Commissioner (Appeals)s order justifying availment of credit and subsequent holding that interest is not required to charged does not have legs to stand as fraud is clearly manifested. I am also not able to agree with the findings that since goods were admittedly procured from open market, and receipt has not been disputed in the factory there did not arose any questions of charging interest - Decided in favour of Revenue.
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2014 (4) TMI 94
Duty demand - Discrepancy in RG-1 Register - Shortage in goods - Clandestine removal - Commissioner held that clandestine removal cannot be upheld against the respondents - Held that:- Ongoing through the impugned order of the Commissioner (Appeals), I find that he has passed a detailed order by taking into consideration of the various precedent decisions of the Tribunal as also the provisions of Section 36B of the Act as also the fact there is virtually no evidence of clandestine removal. It is well settled law that the charges of clandestine activities are required to be upheld on the basis of sufficient cogent reasons and evidences - Decided against Revenue.
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2014 (4) TMI 93
CENVAT Credit - Whether the excess credit lying in the books of accounts of the appellant can be transferred when the factory is shifted from one site to another, even if inputs or capital goods are not available for shifting or only part of the inputs or capital goods are available for shifting - Held that:- Rule 10 of the CCR, 2004 envisages that when a factory transferred from one site to another, the credit lying the books of accounts can be transferred. Sub-rule (3) further stipulates that, if any inputs and capital goods are lying, then they should also be transferred to the new site. The said Rule, nowhere stipulates that the credit that can be transferred should be attributable to the inputs or capital goods that are transferred. Even if excess credit is available in the books or accounts, the same can be transferred. Therefore, there is no bar imposed under sub-rule (3) of Rule 10 of CCR, 2004 in transferring excess credit available in the books of accounts which is more than those attributable to the inputs and capital goods lying in stock - appellant has made out a strong case for grant of stay - Following decision of Ispat Industries Ltd. [2013 (7) TMI 308 - CESTAT MUMBAI] and CCE, Pondicherry [2008 (7) TMI 116 - HIGH COURT MADRAS]- Stay granted.
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2014 (4) TMI 92
Waiver of pre deposit - CENVAT Credit - Held that:- all the services in respect which service tax credit was taken were related to business of manufacture and therefore credit was taken correctly. The detailed consideration of each and every service can be done only at the stage of final hearing. However, prima facie I find that the service tax credit of Rs. 3,36,946/- claimed towards insurance premium for parents of employees and service tax credit taken of Rs. 36,975/-towards training of employees (in connection with their marriage) and services of clearance of baggage of Directors/family prima facie does not have anything to do with the business of manufacture. In my opinion, at least in respect of these two services, the appellant may be required to deposit the amount - stay granted partly.
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2014 (4) TMI 91
Duty demand - Unaccounted and undisclosed stock found - Held that:- Grounds of appeal of the appellant do not disclose any cogent evidence for interference to the appellate finding - appellant simply says that panchnama was faulty. Such a ground is not permissible when the manner how that is faulty is not evidenced - appellant’s silence proves that there is no merit in its appeal. Finding of the first appellate authority is based on evidences and is reasoned - Decided against assessee.
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2014 (4) TMI 90
Denial of CENVAT Credit - Delay in making duty payment - Held that:- For the delay in deposit as above the appellant suffered adjudication with the levy of duty with penalty under Rule 25 of Cenvat Credit Rules, 2002. So also interest followed - Subject to verification of deposit particulars as stated above, duty element is confirmed. Cenvat credit, if any, reversed be restored back to appellant’s account. Penalty is confirmed and interest to follow - Decided partly in favour of assessee.
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2014 (4) TMI 89
Rejection of refund claim - Held that:- Both the lower authorities have passed another order in this case, rejecting the refund claim of the appellant for the same amount and arising out of the very same refund claim. Surprisingly, both the lower authorities have not checked their records in earlier matter wherein the refund claim was rejected by the adjudicating authority vide order in original dated 11.12.2009 which has been upheld by the first appellate authority on 31.01.2011. In my view, rejection of the very same refund claim vide order dated 31.01.2011 by a separate order is unwarranted and uncalled for - Decided in favour of assessee.
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2014 (4) TMI 88
Availment of Cenvat credit on the basis of credit notes - Held that:- appellant has taken various grounds before the first appellate authority while assailing the order of the adjudicating authority and has relied upon various case laws which were in his favour. I find that the first appellate authority has not given any finding on the merits of the case and has only come to the conclusion that the appellant has not passed on the incidence of duty. In my view, the impugned order is a non-speaking order. As I am remanding the matter back to the first appellate authority to reconsider the issue afresh - Decided in favour of Revenue.
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2014 (4) TMI 87
Availment of CENVAT Credit - Whether during the period from December 2007 to June 2010, the appellant would be eligible for Cenvat credit in respect of MS Angles, channels, plates, bars etc. used for fabrication of structural supports for induction furnace, fabrication and making of storage tanks, embedded in the earth, fabrication of EOT cranes and for repair and maintenance of inner and outer walls of the induction furnace - Held that:- Steel items used in repair of outer and inner wall of the induction furnace, the same being used in the repair and maintenance of the capital goods would be eligible for Cenvat credit, in view of judgment of Ambuja Cements Ltd. vs. Union of India (2009 (7) TMI 24 - CHATTISGARH HIGH COURT) and also the judgment of Hon’ble Rajasthan High Court in the case of Union of India vs. Hindustan Zinc Limited reported in [2008 (8) TMI 267 - RAJASTHAN HIGH COURT]. As regards the steel items used in fabrication of EOT cranes, I am of the prima facie view that the same would be eligible for Cenvat credit as the EOT cranes are capital goods. The only items which do not appear to be recovered by the definition of capital goods are the supporting structures for the furnace and the storage tanks embedded in the earth. However, I take note of the fact that in respect of storage tank embedded in the earth, there is judgment of Hon’ble Karnataka High Court in the case of CCE, Mysore vs. ICL Sugars Ltd. (2011 (4) TMI 1065 - KARNATAKA HIGH COURT) holding that the storage tanks in a sugar mill even if embedded in the earth are capital goods in terms of the definition of this term as given in Rule 57Q of the Erstwhile Central Excise Rules - At this prima facie stage, this does not appear to be a case for total waiver - Conditional stay granted.
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2014 (4) TMI 86
Duty demand - Denial of benefit of Cenvat credit of duty availed on HR coils and sheets - Held that:- as the credits so availed has been used for payment of duty on the final product, the entire exercise is Revenue neutral and the assessee cannot be called upon to pay back Cenvat once again - Following decision of CCE Vs. Delta Corporation [2013 (2) TMI 31 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2014 (4) TMI 85
Waiver of pre-deposit of duty - Incomplete entry in RG-1 Register - Held that:- major part of the demand stand confirmed against the applicant on the basis of weighment slips recovered from Jain Dharamkanta. We have seen the weighment slips produced before us. It is seen that the name of the appellant does not appear on the said weighment slips and there are no signature of any authorised representative of the appellant. The Revenue has taken the said weighment slips as belonging to the appellant on the basis of the statement of Shri Rajendra Prasad Jaiswal, who could not be cross-examined on account of his demise. - stay granted on this count. Regarding confirmation of demand on the basis of weighment slips recovered from the appellant factory - Held that:- appellant does not have a good prima facie case on the said count. - stay granted partly.
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2014 (4) TMI 84
Stay application - recovery proceedings were initiated - Held that:- Inasmuch as the stay petition was heard on 22.11.2012 but orders could not be passed and the matter stands re-listed, the appellant cannot be held liable for the late disposal of the stay petition. It is well settled law that till the stay petition is disposed of, no coercive action should be taken against the applicant. We are also informed by the ld. Advocate that an amount of Rs.3.06 croes already stands deposited by them as the same has been appropriated from the rebate claim filed by the appellant - Stay granted.
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CST, VAT & Sales Tax
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2014 (4) TMI 129
Quashment of circular - Whether notification dated 31.3.86 issued under the U.P. Sales Tax Act, 1948 can be treated to be notification u/s 19(3) of U.P. VAT Act, 2008 – Taking of cash security while importing coal at the time of issuing 'Form-38' - Held that:- By Section 81(1) of 2008 of Act the U.P. Trade Tax Act, 1948 has been repealed - However, Section 81(2) begins with the non-absente clause that notwithstanding such repeal notifications issued under repealed enactment in force immediately before such commencement so far as it is not in consistent with the provisions of 2008 Act shall be that deemed to have been issued under the corresponding provisions of this Act - Section 81(2) creates a legal fiction - The saving u/s Section 81(2) is explicit and clear that all notifications issued under U.P. Trade Tax Act, 1948, which were in operation at the time of commencement of 2008 Act shall continue - Section 1(3) further provides that the Act shall be deemed to have come into force from April,1, 1948. - Section 1 thus provides that after amendment by U.P. Act No.31 of 1995 the U.P. Sales Tax Act shall be deemed to have come into force from April 1, 1948 - Thus, the mention of U.P. Trade Tax Act 1948 in Section 81 shall also cover the notifications and action taken under U.P. Sales Tax Act, 1948 prior to amendment by the U.P. Act No.31 of 1995. Effect of repeal – Legislative intention - Held that:- Relying on judgment of Gammon India Ltd. Versus Special Chief Secretary and Others [2011 (7) TMI 17 - SUPREME COURT OF INDIA] The principle which has been laid down in this case is that whenever there is a repeal of an enactment, the consequences laid down in section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears - In the case of a simple repeal there is scarcely any room for expression of a contrary opinion - But when the repeal is followed by fresh legislation on the same subject we would undoubtedly have to look to the provisions of the new Act, but only for the purposes of determining whether they indicate a different intention - The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them – This Court cannot, thus, subscribe to the broad proposition that Section 6 is ruled out when there is repeal of an enactment followed by a fresh legislation - Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section - Also relied on Ram Singh Kushwaha Vs. State of U.P. and others [2014 (4) TMI 41 - ALLAHABAD HIGH COURT] held that the abovesaid two decisions fully supports the interpretations of Section 81 of 2008 Act – No merits – The writ petition is dismissed - Decided against assessee.
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2014 (4) TMI 128
Liability to pay Entry tax - Importation of machinery and crude oil - "value of goods" under U.P. Tax on Entry of Goods into Local Areas, 2007 – Held that:- Judgment in Gas Authority of India Ltd. Vs. The Commissioner of Commercial Tax, U.P. [2014 (4) TMI 1 - ALLAHABAD HIGH COURT] followed – The expenses incurred assessee after transporting the goods inside the local area where it has to be consumed, used or sold, would not be a part of "value of goods" for the purpose of tax liability under Act, 2007, but it shall confine upto the stage where the goods are brought inside the local area - In other words, 'sale price' of the goods by importer, inside the local area, cannot be identified as "value of goods" under Act, 2007 - The price on which the goods are sold by assessee to its ultimate consumers inside local area cannot be taken as "value of goods" for the purpose of taxability under Act, 2007 – Judgment of Tribunal modified to the extent and the matter is remanded to Tribunal - Matter remanded back to Tribunal - Decided partly in favour of assessee.
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2014 (4) TMI 127
Jurisdiction of High Court – Alternative remedy available - Appealability u/s 80 of Assam VAT Act – Held that:- Assessee has a statutory right of appeal Tribunal under the Act, against the order of AC taxes, Assam - In a situation like the one where the petitioner has a statutory right of appeal under the Act, this Court was afraid to entertain the writ petition under Article 226/227 of the Constitution of India to examine the legality and correctness of the said order - The normal and ordinary remedy of the petitioner in such case is to take recourse to filing of the statutory appeal which is always considered as an alternative and effective remedy in law - It is only when the statutory remedies available to the petitioner are exhausted, the petitioner becomes entitled to challenge the last order by filing a writ petition under Article 226/227 of the Constitution of India if occasion so arises but not in between. High court held that they were not inclined to entertain the writ petition at this stage for examining the legality and correctness of the order passed by AC Taxes and granted liberty to assessee to file appeal before the Board of Revenue - No opinion on the merits - Petition dismissed in limine – Decided against assessee.
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