TMI Tax Updates - e-Newsletter
April 6, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Insurance claim - There was neither any insurance claim received nor was any claim for damage debited to the profit and loss account and the claim having been settled in the subsequent financial year - no addition - HC
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Income Tax:
Deduction U/s 10B - export turnover - payment made to the canvassing agent is not for any professional or technical service, no deduction is called for in terms of Explanation 2(iii) of Section 10B(9A) - HC
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Income Tax:
Business perquisite - the perquisites of business are taxable under clause (iv) of Section 28 of the Act, which contemplates that the value of any benefit or perquisite - HC
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Income Tax:
Escaped assessment U/s 147 - retrospective amendment not sufficient for reopening an assessment beyond a period of four years unless there was a failure on the part of the assessee to fully and truly disclose all material facts - HC
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Income Tax:
TDS - payment was made without deducting TDS u/s 194 - Later on TDS amount debited to running account of payee - amount of TDS deposited before filing of return u/s 139 - Amount disallowed u/s 40(a)(ia) - AT
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Income Tax:
Cash loan / advances - the amounts were received in cash because of urgency of business needs. - amount received from brother - question of reasonableness established - no penalty - HC
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Service Tax:
Export of services - Refund claim under Rule 5 of the CENVAT Credit Rules, 2004 read with the Notification No. 05/2006-CE(NT) - various issues - decided partly in favor of assessee - AT
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Service Tax:
Cenvat credit denied on the basis of invoices issued by the Input Service Distributors (ISD) - Cenvat credit of services used at Mumbai Offshore - Credit allowed - HC
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Central Excise:
If the assessee has collected excess excise duty, then it is bound to deposit such excess amount in view of the provisions of Section 11D of the Central Excise Act - HC
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Central Excise:
Vacation of stay order after 180 days - after 180 days the Revenue has a right to bring to the notice of the Tribunal the conduct of the assessee in delay or avoiding the decision of appeal, so as to warrant an order of vacation of stay. If the provision is not read down in the manner mentioned above, such condition suffers from illegality rendering the right of appeal as redundant. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (4) TMI 120
Deleting the addition of insurance claim - Fire had taken place in the business place of the assessee - Huge number of cars were damaged - The Insurance Company, as a special gesture granted ex gratia - Held that:- We agree with the authorities that the ex gratia claim being accepted only on November 19, 2003 and the amount of Rs. 60,00,000/- having been debited by the Insurance Company directly to the finance company, the entire original cost of Rs. 1,24,88,980/- was reflected as closing stock as on March 31, 2003 and on receipt of ex gratia by the financiers, balance loss of Rs. 58,53,130/- was adjusted by the assessee against the waiver granted by the financier - we are of the opinion that the Tribunal rightly approved the deletion of addition by the Assessing Officer. There was neither any insurance claim received nor was any claim for damage debited to the profit and loss account and the claim having been settled in the subsequent financial year, no adjustment on this count was called for in the present assessment year. - Decided against the revenue.
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2013 (4) TMI 119
Deduction U/s 10B of the Income Tax Act - The assessee has DTA sales, deduction U/s 10B(4) of the Act, which provides for working out proportionate profit on export turnover from the total profit - The Assessing Officer reduced therefrom the canvassing commission paid by the assessee to foreign agents in convertible foreign exchange and took only the net export turnover realised for the computation of export profit for deduction - Held that:- There is nothing to indicate from the records that the canvassing agent has rendered any technical or professional knowledge justifying deduction of the amount paid to them to determine the export turnover, on which the assessee has been granted deduction. Since the finding of the lower authorities are to the effect that payment made to the canvassing agent by the assessee is not for any professional or technical service, no deduction is called for in terms of Explanation 2(iii) of sub Section (9A) of Section 10B for the purpose of computation of deduction under sub Section (4) of Section 10B - Appeals filed by the Revenue is dismissed.
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2013 (4) TMI 118
Stay petition - Held that:- The impugned order of the first respondent, dated 17.2.2012, is set aside. The first respondent is directed to hear the stay petition filed in the appeals preferred by the petitioner, before the third respondent, for the assessment years 2005-06, 2006-07 and 2008-09, on merits and in accordance with law, after giving an opportunity of hearing to the petitioner, within a period of two weeks from the date of receipt of a copy of this order - The respondents shall not proceed against the petitioner to recover the income tax arrears said to be payable by the petitioner, as per the notice of demand issued under Section 156 of the Income Tax Act, 1961, until appropriate orders are passed by the first respondent, in the stay petition filed by the petitioner, as stated above.
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2013 (4) TMI 117
Fixation of net profit rate - Business perquisite - Deemed profit accrued U/s 28(iv) (foreign travel expenses ) - Held that:- even though the Appellate Tribunal had concurred with the findings of the first appellate authority on consideration of the materials and records produced by the assessee and the Revenue on factual aspects, it erred in fixing the net profit percentage at 4 percent for all the three years. We feel that a net profit percentage of 3 percent for all the three years would be proper and reasonable and accordingly modify the order of the Appellate Tribunal to this extent. Regarding Foreign Trip - business perquisite - Held that:- the perquisites of business are taxable under clause (iv) of Section 28 of the Act, which contemplates that the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession shall be chargeable to income tax under the head "profits and gains of business or profession we set aside the orders of the lower authorities only insofar as the determination of Rs.5,00,000/- in the absence of any details furnished by the assessee and remit the matter to the assessing officer to arrive at the quantum on the basis of materials/details furnished by the assessee in this regard. Such exercise shall be done in any case within a period of two months from the date of receipt of a copy of this order. - however, no materials have been either produced before the lower authorities or before us as to the basis on which the amount of Rs.5,00,000/- has been arrived at - matter remanded back for limited purpose for determination of correct amount to be added u/s 28(iv). - Decided partly in favor of assessee.
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2013 (4) TMI 116
Escaped assessment U/s 147 of the Act - Period of limitation - Recomputing of income U/s 115JB - Held that:- In view of the retrospective amendment of law by Parliament, the court held that the Assessing Officer may have reason to believe that income has escaped assessment. But that in itself was not held to be sufficient for reopening an assessment beyond a period of four years unless there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. In Sesa Goa Ltd. v. Joint CIT [2007] (2004 (5) TMI 54 - BOMBAY High Court) , a Division Bench of this court has held that a subsequent decision of a court cannot justify the reopening of an assessment after a period of four years by itself, as the subsequent decision would not necessarily mean that there was a failure on the part of the assessee to disclose fully and truly all material facts. + In CIT v. K. Mohan and Co. (2013 (2) TMI 628 - Bombay High Court ), a Division Bench of this court dealt with an appeal arising from a decision of the Tribunal cancelling reassessment proceedings initiated by the Assessing Officer beyond a period of four years from the end of the relevant assessment year. The assessment was sought to be reopened as a result of a retrospective amendment to section 80HHC introduced by the Taxation Laws (Amendment) Act, 2005, with effect from April 1, 1998. - Decided in favor of assessee.
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2013 (4) TMI 115
Speculative transaction - nature of transaction - purchase of shares - genuine transaction or fictitious transactions - set-off of that speculative loss from the speculative profit - Held that:- the Commissioner of Income Tax (Appeals) and the Tribunal, on the basis of materials placed by the assessee, concurrently came to the conclusion that there was speculative profit of Rs.28,90,460=00 and the amount of Rs.10,79,875=00 being the speculative loss having already been found in the earlier litigation to be correct, the assessee was entitled to get benefit of set-off of that speculative loss from the speculative profit. The aforesaid findings cannot be said to be one based on 'No evidence' nor can it be said that the same was perverse finding of fact justifying interference within the narrow scope of Section 260A of the Act - Appeal of the revenue is dismissed.
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2013 (4) TMI 114
Deduction of TDS out of payment made to payee - Disallowance U/s. 40(a)(ia) of the Income-tax Act - TDS was deductible u/s 194C but it was not deducted by the assessee at source out of the payments - Claimed Tax deducted by debiting the running account of M/s J.B. Construction and the same was deposited with the Government before the due date specified in sub-section (1) of section 139 - Held that :- The amount claimed by the assessee to have been deducted by debiting the account of the sub-contractor on 31.3.2006 cannot be said to have been deducted at source, as mandated by law, out of the amounts paid without TDS. In order to save a payment from disallowance u/s 40(a)(ia), an assessee must therefore show that the tax is either not deductible at source out of such payments or, if it is deductible, has been deducted at source and also paid to the Government within the specified time limit. In the present case, the assessee claims deduction in respect of payments made to M/s J.B. Construction without deduction of tax at source and therefore its deductibility is squarely hit by section 40(a)(ia). - The assessee has failed to deduct the tax at source out of payments made to the sub-contractors and therefore the judgment of the Hon'ble Calcutta High court in CIT v. Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT] is not applicable to the case of the assessee. - Decided against the assessee.
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2013 (4) TMI 113
Deleting the penalty imposed under Sections 271-D and 271-E of the Income Tax Act, 1961 - Violation of provision of Section 269-SS of the Act - Held that:- It was pointed out that it has been established from the materials on record that the amounts were received in cash because of urgency of business needs. It is further pointed out that the Tax Payer being a Civil Contractor required urgent funds and he approached his brothers Shri Jayeshbhai Thakkar and Shri Raghubhai S. Bhatt and received cash for incurring day-to-day business expenditure. From those facts, it was pointed out that there was nothing to suggest that the aforesaid transactions were not genuine. Similarly, as regards the question of penalty imposed on the Tax Payer under Section 271-E of the Act - Held that:- The payment of Rs.81,970/- was made through pay order and not in cash by the Tax Payer to M/s. I.V.P. Ltd. In such circumstances, it was found by the CIT (Appeals) that it was neither a cash payment nor a repayment of loan. In view of the aforesaid facts, we find that no substantial question of law is involved. The finding on the question of reasonableness as provided under the Act is basically the question of facts and we do not find any reason to interfere with such concurrent findings based on appreciation of evidence - Appeal is allowed in favour of assessee.
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2013 (4) TMI 112
Rejection of books of accounts invoking section 145 of the Act - Addition on account of suppression of production - Section 44AB of the Act - Held that:- :- We find that the findings of fact recorded by the authorities below are quite reasonable and neither can it be said to be vitiated by any error of law nor can it be branded as perverse findings justifying interference in this appeal preferred under section 260A of the Act. CIT [Appeals] held that the assessee maintained the books of accounts which were audited under the Companies Act and also under section 44AB of the Act The Tribunal took into consideration the contention of the assessee that variation in consumption of electricity might be caused due to various reasons such as break down of machinery, quality of raw materials, thickness of finished goods and frequency of power failure etc. and such facts could not be controverted by the Assessing Officer. The Tribunal further observed that the argument of the assessee was rather accepted by the Assessing Officer to the extent of 30%, for which no basis could be cited. - Decided against the revenue.
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2013 (4) TMI 111
Disallowance on account of unverifiable purchase - Held that:- In the above circumstances, in our considered view, the Commissioner of Income Tax(Appeals) was fully justified in deleting the disallowances, which were made on surmises and conjectures alone. The assessee had pointed out that the payments were made through cheque and that there was some further evidence of receipt of goods. No interference is called for. This our view is also supported by the decision of Hon'ble Jurisdictional High Court in the case of ACIT v. Akruti Dyeing & Printing Mills Pvt. Ltd (2009 (1) TMI 104 - GUJARAT HIGH COURT ), wherein exactly the same issue, went before Hon'ble High Court and it is confirmed - Revenue's appleal is dismissed.
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Customs
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2013 (4) TMI 110
Despite the order of this Tribunal the revenue is not releasing the bank guarantees - Held that:- We find that this tribunal has passed the order on 30.10.2012 which was pronounced in the Open court and as per the Board's Circular no. 802/35/2004-CX dated 8.12.2004, when an issue is decided by the Tribunal in favour of the assessee, Revenue is bound to release the Bank guarantee within 90 days of the said order. As per the Board's Circular, the Revenue is bound to release the bank guarantees unless and until it is stayed by the higher forum. No stay is obtained by the Revenue as per the report filed by them - Therefore, in the interest of justice, Revenue is granted 10 days time to comply with the Tribunal's order dated 30.12.2012 (sic), failing which the concerned official shall face the consequences. The matter to come up on 08/04/2012 (sic).
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2013 (4) TMI 109
Waiver of penalties - Principle of Natural justice - Held that:- It can be seen that the show cause notice directs all the applicants/appellants to reply to Commissioner of Customs, Custom House, Navrangpura, Ahmedabad for showing the cause to show cause notice issued to them - In our view, if show cause notice directs assessees/noticees to reply a particular Commissioner/Commissionerate, it is for that Commissioner to hear and adjudicate the case, until and unless there is any change in jurisdiction - On this point itself, we find that the entire order is passed in violation of principles of natural justice. Accordingly, without expressing any opinion on the merits of the case, keeping all the issues open - we set aside the impugned order and remit the matter back to the adjudicating authority to reconsider the issue afresh - Needless to state that the adjudicating authority should follow the principles of natural justice, before coming to any conclusion - Stay petitions and appeals disposed of by way of remand.
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Corporate Laws
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2013 (4) TMI 108
Winding up petition - consequent to serious defaults in repayments of the amounts proceedings were initiated by the bank for recovery of the amounts due. - Held that - This petition needs to be allowed for the reason that the respondent-Company has not been able to pay its undisputed debts and has chosen neither to dispute the debt, assail the judicial order nor contest this petition. There is no other equally efficacious remedy available with the petitioner and that in the facts and circumstances of the case and background, it would be just equitable for the Company to be wound up. Under the facts and circumstances, the respondent-Company is ordered to be wound up.
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Service Tax
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2013 (4) TMI 122
Review petition –Against the constitutional validity of Section 65(105)(zzzz)and Section 66 of the Finance Act, 1994 as amended by Finance Act, 2010 providing for levy of service tax on renting of immovable property service which is based on Full Bench decision of Delhi High Court in Home Solutions Retails (India) Ltd V. Union of India and others [2011 (9) TMI 46 - DELHI HIGH COURT] - Special leave petition is filed against the said decision of Court. Held that - further interim orders, if any, issued by Honorable Supreme Court modifying the stay orders in the special leave petition pending against the judgment of Delhi High court in Home Solutions Retails (India) Ltd case (supra), will be applied in the case of all respondents. Review petitions are disposed of as above.
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2013 (4) TMI 104
Refund claim under Rule 5 of the CENVAT Credit Rules, 2004 read with the Notification No. 05/2006-CE(NT) - CENVAT credit - Regarding condition required to constitute export of service as provided in Rule 3(2) for the period post 27/02/2010 - Held that:- There is no dispute in the present case that the appellant has received the consideration for the service rendered from the service recipient abroad in convertible foreign exchange both in respect of offshore services and onsite services rendered by them - the appellant will be eligible for the refund amounts covered by these orders. Regarding condition required to constitute export of service as provided in Rule 3(2) for the period post 27/02/2010 - Held that:- Two conditions were required (i) such service provided from India and used outside India and (ii) payment for such service provided outside India is received by the service provider in convertible foreign exchange. In the present case, there is no dispute about satisfaction of the second condition. It is clear that in respect of overseas customers, the subsidiaries performed the onsite services on behalf of the appellant at the customers' premises abroad. The appellant' subsidiaries located outside India are independent entities and they are not appellant's agents - Therefore, it cannot be said that the onsite services provided by the subsidiary have been rendered from India to the appellant's customers abroad. Thus the first condition that the service should be provided from India to constitute export is not satisfied. Regarding allowing CENVAT credit - Duty paying documents - Held that:- On the ground that PAN based registration nos. were not mentioned in the input invoices - The matter needs to be considered by the adjudicating authority in the light of Board's Circular No. 112/6/09-ST dated 12/03/2009 and 120/01/10-ST dated 19/01/2010. If payment of service tax can be confirmed from the particulars available in the invoices and receipt of input services by the appellant can be established, there is no reason to deny the CENVAT credit merely because the PAN based registration number is not quoted in the input service invoices. Similarly, in the case of Manikchand Galaria unit which was earlier not included in the centralized registration, the department has to verify whether the said unit was used for the purpose of export of services and if so, the rent paid for the said premises would be an eligible input service and the appellant would be eligible for the CENVAT credit of the service tax paid on the renting of the said property. Therefore, we direct the adjudicating authority to verify the particulars as discussed above and if found satisfactory, to allow the CENVAT credit in accordance with law. - Decided partly in favor of assessee.
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2013 (4) TMI 103
Cenvat credit denied on the basis of invoices issued by the Input Service Distributors (ISD) - It was alleged that the Cenvat credit distributed by the Input Service Distributors (ISD) pertains to input services availed of and used exclusively at the oil fields of Mumbai Offshore & since crude oil and natural gas are exempted from excise duty, it was alleged that Cenvat credit of services used at Mumbai Offshore was not admissible - Whether Tribunal was right in holding that the Appellants are not eligible to CENVAT Credit even on a prorata basis ? - Held that:- The expression "input service" means any service used by the manufacture, whether directly or indirectly or in or in relation to the manufacture of final products. It is impossible to accept the hypothesis that would assert, that input services that are utilized by the Appellant in or in relation to the process of manufacture that takes place at Mumbai Offshore is not a service that is used by the manufacturer in or in relation to the manufacture of dutiable final products. The dutiable final products that are manufactured by the Appellant at its Uran plant are fundamentally premised upon the manufacturing process which commences at Mumbai Offshore. There can be no manner of doubt that the input services which go into the process of production at Mumbai Offshore meet the description of services that are utilised by the manufacturer directly or indirectly in or in relation to the manufacture of dutiable final products. The manufacture of the dutiable final products cannot take place without the process in question. To accept the contention of the Revenue would be to completely ignore the implication of the words "used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products." Such a construction as proposed by the Revenue is impermissible. These words used in the subordinate legislation fulfill the statutory object and purpose of presenting a cascading effect and burden of duty. They must be given their plain and natural meaning. At the same time, it would be necessary to clarify that Cenvat credit can be availed of only on that quantity of input service which is used in the manufacture of dutiable goods. See Escorts Ltd. v. Commissioner of Central Excise, Delhi (2004 (8) TMI 106 - SUPREME COURT OF INDIA) wherein test which was laid down by the Supreme Court was that so long as the final product was dutiable, the assessee would be entitled to the benefit of Modvat credit & Collector of Central Excise v. Solaris Chemtech Limited (2007 (7) TMI 2 - SUPREME COURT OF INDIA) wherein keeping in mind the expression "used in relation to the manufacture" in Rule 57A the assessees were entitled to MODVAT credit on LSHS. Inputs used for generation of electricity will qualify for MODVAT credit only if they are used in or in relation to the manufacture of the final product, such as cement, caustic soda etc. Therefore, it is not correct to state that inputs used as fuel for generation of electricity captively consumed will not be covered as inputs under Rule 57A. Thus to conclude the Tribunal was in error in coming to the conclusion that the Appellant was dis-entitled to the benefit of Cenvat credit in respect of the input services used in or in relation to the manufacture of dutiable final products on the ground, as the Tribunal held, that crude oil which is subject to a further process of manufacture at the Uran plant for the production of dutiable final products is exempted from central excise duty - in favour of assessee.
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Central Excise
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2013 (4) TMI 107
Writ petition – preliminary objection raised by department regarding maintainability of the petition related to order of waiver of condition of pre-deposit of duty is an appealable order in terms of Section 35G of the Central Excise Act, 1944 – Held that – Relying on the cases of Raj Kumar Shivhare Vs. Assisstant Director, Directorate of Enforcement [2010 (4) TMI 432 - SUPREME COURT] and Indoworth India Ltd. Vs. CESTAT, [2010 (3) TMI 411 - BOMBAY HIGH COURT], Auram Jewellery Export (P) Ltd. Vs. Union of India [2008 (12) TMI 350 - ALLAHABAD HIGH COURT] respectively, we find that an order passed by the Tribunal on an application for waiver of pre-deposit of duty is an order passed in appeal and is, thus, appealable in terms of Section 35G of the Act.
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2013 (4) TMI 106
Manufacture – Criteria - Waiver of pre-deposit - Demand of duty/interest /penalty - process of printing and slitting of cork tipping paper on job work basis from large jumbo roll of the base paper - amounts to manufacture or not - Held that – Relying on the judgement of Apex Court in C.C.E., New Delhi-I v. S.R. Tissues Pvt. Ltd. reported in [2005 (8) TMI 111 - SUPREME COURT OF INDIA] and in Tribunal in its own decision in same matter RGL Convertor v. C.C.E., New Delhi – [2003 (3) TMI 157 - CEGAT, NEW DELHI]. Based on this tribunal accordingly, dispense with the condition of pre-deposit of duty demand, interest and penalty for hearing of appeal and stay the recovery thereof. Stay application is disposed of.
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2013 (4) TMI 105
Deposit of duty in Government's account U/s 11D - It was noticed that the respondent has collected the full excise duty from the customers(Availing Notification No. 130/83-CE and 132/83-CE ), but has not deposited the full amount as under the Government Order it was entitled to deposit the concessional amount - Held that:- The controversy involved in this Reference is covered by the judgment of Supreme Court in Kisan Sahakari Chini Mills Ltd. vs. Collector of Central Excise, Allahabad(2005 (3) TMI 124 - SUPREME COURT OF INDIA ), in which the Supreme Court has held that under the incentive scheme, exemption of excise duty at the concessional rate has been granted to the assessee, but the Government Order does not permit the assessee to collect more than what they have to pay to the Government under the scheme. If the assessee has collected excess excise duty, then it is bound to deposit such excess amount in view of the provisions of Section 11D of the Central Excise Act Since the controversy has already been decided by the Supreme Court - Accordingly, this Reference is fully covered by the judgment of the Supreme Court. We hold that the applicant/manufacturer is liable to deposit the entire sum collected as duty from the purchasers and cannot be permitted to retain the differential amount of duty, i.e. the difference in between the normal rate of duty and concessional rate - Reference is answered in against the assessee and in favour of the Department.
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2013 (4) TMI 102
Initiation of recovery proceedings relying on Circular No.967 /01/2013-CX dated 1.1.2013 - as per dept. assessee had availed cenvat credit of service tax paid on different services in relation to maintenance and repair works of its residential colony which did not appear to be eligible input services - assessee contested against recovery as not only the appeal is pending, its prayer for stay of realization of the cenvat credit alongwith Interest and penalty has not yet been considered and disposed of on merits - Held that:- A plain perusal of the circular dated 1.1.2013 would unequivocally demonstrate that it is in the form of administrative instructions issued by the CBEC New Delhi obligating the concerned authorities to initiate recovery proceedings against the confirmed demands in the eventualities narrated therein fixing periods therefore. Broadly, three situations have been contemplated (1) where no appeal has been filed against a confirmatory order in original (2) where an appeal has been filed without stay application against a confirmatory order in original and (3) where an appeal has been filed with a stay application against such order. Assertive plea made on behalf of the petitioners that the office of the Commissioner (Appeals) Jaipur-I is lying vacant for which there is no possibility in near future that the appeals and interim applications would be heard and disposed of, has not been refuted. Having regard to the statutory obligations past for timely disposal of the appeals and the interim applications, its is constrained to conclude that the contemplated recovery of the demands in this factual scenario even otherwise, if approved, would be grossly unfair, unjust and unreasonable and would amount to allowing the respondents-authorities to take advantage of their own lapses and failings. The petitioners- assessees , whose appeals alongwith interim applications are pending without any decision for no fault of theirs, can by no means be left exposed to the megrim of the departmental authorities test the statutory guarantee engrafted in Chapter VIA of the Act is rendered illusory. The plea that the power of issuing earlier circulars on the same issue with some protective features vis -a- vis the assesses now recalled envisages permissibility to withdraw the same lacks persuasion. In absence of any legal endorsement of the impugned circular dated 1.1.2013, it, flies in the face of the provisions contained in Chapter VIA of the Act testifying a contrary legislative enjoinment and thus, cannot be sustained vis -a- vis the contingencies where the appeals with stay and interim applications for dispensing with the deposit of duty demanded or penalty levied are pending without being attended to or in which no final orders have been passed. See Larsen Toubro Ltd. V/s The Union of India and ors. [2013 (2) TMI 188 - BOMBAY HIGH COURT] - in favour of assessee.
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2013 (4) TMI 101
Vacation of stay order after 180 days - whether the order of waiver of pre-deposit of duty passed by the Tribunal stands vacated after expiry of 180 days, if the appeal is not decided in terms of the provisions inserted by Section 140 of the Finance Act, 2002 with effect from 11.05.2002 - assessee challenged the Circular issued by the CBCE on 01.01.2013 raising a demand raised in pursuance of such Circular - Held that:- Sub-section (4A) inserted in Section 35A vide Section 128 of the Financial Act, 2001 with effect from 11.05.2001 contemplates that the Commissioner (Appeals) shall where it is possible to do so, hear and decide every appeal within a period of six months from the date on which it is filed. The provision contemplating that the Commissioner (Appeals) should decide application within 30 days is directory. Such intention is evident from the fact that it contemplates that Commissioner (Appeals) shall "where it is possible to do so", decide application to dispense with the requirement of deposit of duty demanded and penalty levied within 30 days. The assessee in no way can insure that the Commissioner (Appeals) shall decide his application for dispensation of the duty demanded and penalty levied within a period of 30 days. In the present case, the Appellate Authority has a power to waive or reduce the amount of pre-deposit, but such power is sought to be taken away only if the Commissioner (Appeals) is not able to decide the application for stay within 30 days. Such a condition is relevant and meaningful, if the Central Government is in a position to ensure that all appeals and/or the applications for dispensation of duty demanded and penalty levied can be decided within a period of 30 days. If the Central Government has no power to control the working of the Appellate The Circular is purportedly issued in terms of judgment in Krishna Sales (P) Ltd. case (1993 (9) TMI 124 - SUPREME COURT OF INDIA). The said judgment lays down that mere filing of an appeal does not operate as stay or suspension of the order appealed against. But the Board over-looked the fact that the assessee is not seeking stay only on account of filing of an appeal, but for the reason that the assessee has sought dispensing with the pre-deposit of duty demanded and penalty levied and has a right to demand decision on such application, the right which is created by the Statute. Therefore, the very basis of the Circular is untenable, misconceived, wholly illegal and arbitrary. Therefore, the condition of recovery, if no stay is granted within 30 days, is illegal, arbitrary, unjustified and consequently set aside. Considering the case of LARSEN & TOUBRO LTD & OTHERS Versus UNION OF INDIA AND OTHERS [2013 (2) TMI 188 - BOMBAY HIGH COURT] it can be concluded that the provisions contained in the impugned circular dated 1 January, 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to an assessee who has filed an application for stay, which has remained pending for reasons beyond the control of the assessee. Where however, an application for stay has remained pending for more than a reasonable period, for reasons having a bearing on the default or the improper conduct of an assessee, recovery proceedings can well be initiated as explained in the earlier part of the judgment. Therefore right of consideration in appeal and on an application for waiver of pre-deposit, is a right conferred by the Statute and such right cannot be defeated on the basis of Circular, which contemplates that the recovery can be effected, is stay is not granted within 30 days. Therefore, such condition in the Circular is not legal and is therefore set aside with the observation that till such time, the application for waiver of pre-deposit is decided in an appeal filed in terms of the Statute, the Revenue shall not proceed to recover the same . Though the right of appeal is a creation of Statute and it can be exercised only subject to the conditions specified therein, but the conditions specified have to be in relation to the assessee as something which is required to be complied with by the assessee. But where the assessee has no control over the functioning of the Tribunal, then the provision of vacation of stay cannot be sustained. The assessee having preferred appeal and that Tribunal being satisfied that condition for dispensing with the pre-deposit of duty demanded and penalty levied is made out, is compelled to pay the duty demanded and penalty levied, if the appeal is not decided within 180 days. The assessee has no control in respect of matters pending before the Tribunal in the matter of availability of infrastructure the members of the Tribunal and the workload. Therefore, for the reason that the Tribunal is not able to decide appeal within 180 days, the vacation of stay is a harsh and onerous and unreasonable condition. The condition of vacation of stay for the inability of the Tribunal to decide the appeal is burdening the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum is sought to be annulled for no fault of assessee. Therefore, in terms of judgments and Seth Nandlal cases (1980 (5) TMI 101 - SUPREME COURT), such condition of automatic vacation of stay on the expiry of 180 days, has to be read down to mean that after 180 days the Revenue has a right to bring to the notice of the Tribunal the conduct of the assessee in delay or avoiding the decision of appeal, so as to warrant an order of vacation of stay. If the provision is not read down in the manner mentioned above, such condition suffers from illegality rendering the right of appeal as redundant.
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CST, VAT & Sales Tax
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2013 (4) TMI 125
Reassessment U/s 21 on the ground of escaped assessment - Period of limitation - the assessment was completed by the Sales Tax Officer, Thereafter, the department initiated proceedings under Section 21 of the Act for reassessment on the ground that the turn-over of the petitioner has escaped assessment. - Held that:- for initiating reassessment proceedings for the second time, time commences to run from the date of the order of assessment and not from the date of order of reassessment. In this view of the matter, the reassessment proceedings in this case initiated by notice (annexure G) dated 26th December, 1981, must be held to be without jurisdiction. Having regard to the fact, the case on hand, as the order of assessment has not been set aside, the Assessing Authority could not have invoked Section 21(4-A) of the Act. It is not a case of setting aside of assessment order. If the Assessing Authority was of the opinion that the turnover of the dealer has escaped assessment, the proper course was to reopen the assessment if permissible under law, after obtaining permission as provided for in the proviso to Section 21(2) of the Act and not otherwise - The impugned order is bad in law and cannot be allowed to stand & accordingly quashed - All the three writ petitions succeed and are allowed.
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2013 (4) TMI 124
Sales of Poly Urethane Foam - treated as unclassified item taxable at 14.5% under Entry 69 of Part 'C' of the I Schedule to the TNVAT Act, 2006, as against the payment of 4% tax as per the assessee - Held that:- Taking note of the earlier order passed by this Court and also taking note of the fact that the impugned proceedings is only a notice calling for objections, the petitioner is directed to submit objections within 15 days from today and the respondent will consider the objections and pass final orders within four weeks thereafter.
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2013 (4) TMI 123
Revise the assessment orders adopting the higher compounded tax payable on the basis of inclusion of the purchase value of the opening stock - Held that:- As the petitioner did not file any reply to the notices issued for revision or produce any documentary evidence against the proposal in the notices no substance in the challenge raised by the petitioner against Ext.P5 circular on the basis of which the assessment has been completed.
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Indian Laws
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2013 (4) TMI 121
Advertisement - appellant approached the respondent in response to the advertisement published in Times of India regarding available accommodations and he was given the accommodation on payment of certain amount as compensation for the same. The moot question that falls for consideration in this appeal is about the nature of occupation of the premises as to whether the appellant is a 'licensee' or a 'paying guest' in the light of the relevant provisions under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short 'the Act').A Writ petition, however, preferred by the respondent has been allowed by the High Court holding that the appellant before us is a 'paying guest'. Hence, this appeal against the judgment and order of the High Court. Held that - Generally, ordinary meaning is to be assigned to any word or phrase used or defined in a statute. Therefore, unless there is any vagueness or ambiguity, no occasion will arise to interpret the term in a manner which may add something to the meaning of the word which ordinarily does not so mean by the definition itself, more particularly, where it is a restrictive definition. No such compelling reason has been indicated to us by reason of which some more ingredients may be read in the term "paying guest", other than which simply flow from the definition as provided. In the case in hand the definition of the word 'paying guest' begins with "it means". It is to be read and understood in the manner defined. There would be no justification to expand or to further restrict it by including or super-imposing some ingredients or elements which otherwise do not admit of such inclusion and to give a different colour and meaning to the defined word. A person answering the description of 'paying guest' in accordance with Section 5(6A) of the Act is to be treated as such without requiring fulfillment of any other condition. We, therefore, find no infirmity in the orders passed by the High Court. The appeal is, therefore, dismissed devoid of any force. However, considering the fact that the appellant is in occupation of premises since a long time we allow him six months time to handover vacant possession of the premises to the respondents on furnishing usual undertaking to that effect in this court within a period of four weeks from today.
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