TMI Tax Updates - e-Newsletter
May 15, 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:
Power of rectification u/s 154 of the Act - Rejection of Securities Transaction Tax - the controlling expression is any mistake which has wider connotation and includes mistakes committed by the parties also - HC
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Income Tax:
Validity of notice u/s 148 of the Act AO was required to dispose of the objections of the assessee before finalizing the assessment. - HC
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Income Tax:
Addition u/s 41(1) - excess provision written back - provisions were made during the period when NDDB was enjoying the tax exemption. - Section 41 (1) of the Act would not apply - HC
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Income Tax:
Withdrawal of the interest - Whether interest allowed u/s 244(1) can subsequently be withdrawn in view of creation/restoration of demand in subsequent appeal - Held yes - HC
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Income Tax:
Penalty u/s 271D - Acceptance of loan in Cash by the appellant firm from its agriculturist customer - violation of provisions of section 269SS - penalty confirmed - HC
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Income Tax:
Non-speaking order - Restriction of addition Section 145 not invoked -orders of the ITAT being stereo typed, nonspeaking, unreasoned, arbitrary and whimsical, and we have no option except to remand the matter back to the ITAT to re-visit the issue afresh - HC
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Income Tax:
Book profit u/s 115JB of the Act MAT - changed the method of depreciation from straight line method to written down value method - it is not permissible for the AO to make book adjustments - AT
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Income Tax:
STCG treated as income from undisclosed sources What is apparent has to be taken as real, unless any material or evidence has been brought on the record to prove the contrary - the short term capital gain shown by the assessee cannot be held to be non-genuine - AT
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Income Tax:
Computation of LTCG Capital receipts in lieu of inheritance FMV - the property is inherited the cost of acquisition of the property has to be treated as per the fair market value as on 01.04.1981 - AT
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Customs:
Town seizures - whether customs duty is required to be paid by owner of goods - Customs duty cannot be demanded in town seizures in addition to redemption fine from person from whose possession the smuggled goods are seized - AT
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Customs:
Refund of differential duty claim Liability of duty on Transaction value or as per tariff value fixed by the Central Govt. - assessees are entitled to refund provided the conditions of Section 27 are fulfilled - AT
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Service Tax:
Demand of service tax - Separate entity or single entity - Service Tax may not be payable for rendering service by one division to another division of the same legal entity. - stay granted - AT
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Service Tax:
Demand of service tax from Cooperative Society - principle of mutuality - Consultancy service - no demand - HC
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Service Tax:
Demand of service tax - Coercive measures taken for recovery - while accepting the explanation and unconditional apology tendered on behalf of the respondents (Revenue), these matters deserve to be closed and need not be proceeded further - HC
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Central Excise:
CENVAT Credit - Transfer of unutilized CENVAT Credit from 1 unit to another - assessee has stopped the manufacturing activity at Unit No. 1 - transfer allowed even if no inputs - AT
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Central Excise:
CENVAT Credit - shortage of space in their factory - some inputs were temporarily stored in other premises outside the factory - as the goods have been received back in their factory, the assesses are entitled to take credit. - AT
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Central Excise:
100% EOU - non payment of Countervailing Duty including SAD on goods cleared to sister DTA units - revenue neutral exercise - stay granted partly. - AT
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Central Excise:
Penalty - Notification No. 6/2006-CE - cenvat credit in respect of common inputs - entire facts were with the Revenue - imposition of penalty to the extent of 100% in terms of Rule 15 (1) of Cenvat Credit Rules is not justified. - AT
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VAT:
Works contract or contract of sales - as the goods used by the dealer transformed into a different good, after manufacturing, the transaction of a mosaic to the contractor would amount to sale and not works contract - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (5) TMI 449
Power of rectification u/s 154 of the Act - Rejection of Securities Transaction Tax - Whether the Tribunal fell into error in rejecting the assessees claim for credit of Securities Transaction Tax (STT), proof of which was concededly attached to the return Held that:- The power of rectification extends to amendment of intimation or deemed intimation under Section 143- This power enures even after the matter has been considered and decided in any proceeding by way of appeal or revision - this power extends even at the stage of the appeal and the further appeal to the ITAT - Even after such decision, it is open to the AO to amend the intimation u/s 143 (1) if the circumstances so warrant - Commissioner of Income Tax Versus Sam Global Securities Ltd. [2013 (9) TMI 876 - DELHI HIGH COURT] - the technicalities in the given circumstances of the case ought not to obscure the justice - The justice demands that there is no impediment to relief - That appears to have been overlooked in entirety by the lower authorities and the Tribunal had failed to notice that the controlling expression in Section 154 is not an error which is somewhat colored by the exercise of power by the authorities - instead, the controlling expression is any mistake which has wider connotation and includes mistakes committed by the parties also Decided in favour of Assessee.
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2014 (5) TMI 443
Unexplained investment Deletion made - The deletion of the addition of ₹ 1 crore on account of the unexplained investment, the CIT(A) and the Tribunal have deleted the addition on examination of facts - no question of law arises for our consideration - The facts do not point conclusively to unexplained investment of ₹ 1 crore in cash by the assessee particularly because the MoU as well as the receipt in question were unsigned documents and the transaction had not materialized - as the deletion of the addition of ₹ 57 lacs on account of the Udyog Vihar property is concerned, the difference is that there was not even an unsigned receipt nor any payment through cheque - even the agreement was an unsigned document - The Tribunal found that there was not even an iota of evidence to establish the revenues contention that any unexplained investment in cash had been made by the assessee in respect of the Udyog Vihar property - the findings of the Tribunal are also pure findings of fact and no question of law arises for consideration Decided against Revenue.
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2014 (5) TMI 442
Accrual of income - Treatment of income based on TDS deducted - It was submitted that the amount continued to be treated as an advance and were appropriated towards the expenses actually incurred - Whether the Tribunal fell into error in holding that the sum had to be treated as income and brought to tax Held that:- The DRP and the Tribunal appear to have accepted the merit of the assessees contention, they have not fully endorsed the position, consistently projected by it, that the amounts received were not in the nature of income - As to the exact arrangement that existed between the assessee and its customers who used to remit the amounts towards the expenditure to be incurred by them, has not been discussed - the 18 invoices raised and the net income reported - in the absence of any investigation as to the contractual arrangement that existed between the assessee and its customers, the AO had to necessarily carry out the necessary enquiry or investigation to see the amounts received and how they were expended the matter is remitted to AO for fresh consideration Decided in favour of Assessee.
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2014 (5) TMI 441
Treatment of income as business income instead of long term capital gain Exemption u/s 10(38) - transactions in shares - Held that:- None of these facts are disputed neither the dates are disputed nor the nos. of shares nor the price of sale or purchase revenue has also not attempted to upset the finding of the CIT(A) inasmuch as that the assessee was maintaining two separate portfolios one for Investment and one for business - the finding that there was no intermingling of shares in the two portfolios and that the two were separate and distinct has also not been shown to be incorrect on facts - Relying upon CIT v. Sutlej Cotton Mills Supply Agency Ltd. [1975 (7) TMI 2 - SUPREME Court] all along the assessee demonstrated that she had an intention to maintain two separate portfolios wherein there was no mixing up in the two portfolios remains unrebutted on record as nothing to the contrary has been placed by the Revenue - there is no intermingling of shares in the two portfolios has been verified by the CIT(A) after considering the balance sheets of the last 7 years and also the P&L A/c no substantial question of law arises for consideration –- Decided against Revenue.
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2014 (5) TMI 440
Validity of notice u/s 148 of the Act Claim of set off of brought forward unabsorbed depreciation allowance against income from long term capital gains Held that:- Following GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT] - while providing for a mechanism for supplying the reasons recorded for reopening the assessment has further provided that the assessee would be entitled to file objections to issuance of notice and the AO would be bound to dispose of the same by passing a speaking order - the AO was required to dispose of the objections of the assessee before finalizing the assessment. The very basis for the AO to upheld a belief that income chargeable to tax had escaped assessment lacks validity - On this ground itself, the notice is set aside - The reference to the order of Supreme Court would be of no avail to the revenue since in such order all that was provided was that the question of law was kept open This does not mean that the decision of the Court was reversed or that the decision by a cognate Bench would not continue to bind Decided in favor of Assessee.
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2014 (5) TMI 439
Deletion of addition u/s 41(1) of the Act - Whether claim of deduction by excess provision written back amounts to double deduction Held that:- Assessee NDDB was enjoying exemption from payment of income tax till A.Y 2002-03 - During the previous year relevant to A.Y 2007-08, the assessee wrote back certain provisions made in the earlier years - The provisions were made during the period when NDDB was enjoying the tax exemption. What is primarily required is that there is allowance or deduction made by the assessee in respect of loss, expenditure or trading liability incurred by the assessee - as held by the CIT (A) as well as the Tribunal, what the assessee did was only make a provision for a possible expenditure or liability - It was thus neither an allowance nor deduction - not for any loss, expenditure or trading liability incurred by the assessee - the Tribunal correctly held that Section 41 (1) of the Act would not apply - CIT (A) has permitted the AO to re-verify whether any deduction towards such provision was allowed in the AY 2003-04 to 2007-08 - if any amount of such provision is found allowed, for the years to that extent, the provision on written back is to be taxed u/s 41 (1) of the Act Decided against Revenue.
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2014 (5) TMI 438
Extension of period of stay Held that:- The assessee had duly applied for an interim stay which was granted by the Tribunal subject to an order of deposit of Rs. two crores which amount has been deposited non-disposal of the appeal has not been occasioned by any default on the part of the assessee - the Tribunal had finally heard the appeal in September 2013 after which the appeal was placed for re-hearing and was finally heard on 28 March 2014 when the judgment was reserved it will be appropriate to grant the stay till the disposal Decided in favour of Assessee.
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2014 (5) TMI 437
Withdrawal of the interest - Whether interest allowed u/s 244(1) can subsequently be withdrawn in view of creation/restoration of demand in subsequent appeal Held that:- The interest u/s 244(IA) would be payable by taking into consideration the result of any appellate order - the AO rightly withdrew the interest which was not payable after giving the appeal effect Relying upon On a similar issue, the Hon'ble Calcutta High Court in the case of ANZ Grindlays Bank Pl. Vs. C.I.T. [1999 (8) TMI 29 - CALCUTTA High Court] - where on completion of the regular assessment the amount on which the interest so paid under sub-sec.(1) has been reduced, the interest shall be reduced accordingly, and the excess, if any paid, shall be deemed to be tax payable by assessee and the provisions of this Act shall apply - where the tax deducted at source and advance tax paid by the assessee did not exceed the tax assessed either on regular assessment or after giving effect to the orders or the Tribunal, interest u/s 214 & 244 (IA) granted to the assessee was not due at all and had to be recovered from the assessee no substantial question of law arises for consideration Decided against Assessee.
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2014 (5) TMI 436
Penalty u/s 271D - Acceptance of loan in Cash by the appellant firm from its agriculturist customer - violation of provisions of section 269SS - Refusal to take cognizance of extract of cash book Documentary evidence furnished or not Held that:- it was noticed by the appellate authority that the plea of due exigency was not acceptable as according to it the loan was taken for discharging another bank loan and in such circumstances it could be by cheque. - it was concluded that the assessee had failed to establish that there existed reasonable cause in taking or accepting any loan or deposit otherwise than by an account payee cheque or account payee bank draft. - The view which has been taken by the Assessing Officer, CIT (A) and the Tribunal concurrently is a plausible view and it cannot be said that there was any error in the approach adopted by them. The assessee-firm had accepted loan in cash on 29.12.2005 from Shri Jugraj Singh - The assessee-firm was issued repeated show cause notices dated 19.1.2009, 24.4.2009 and 14.5.2009 but the assessee did not avail the opportunity to give any explanation justifying the transaction of accepting loan of ₹ 5 lacs from Jugraj Singh in cash in violation of provisions of Section 269SS of the Act - cash book showing deposit of ₹ 5 lacs from Jugraj Singh and on the other side there was entry of ₹ 5,10,726/- in cash deposited with PSB is submitted - even this was unsigned and in any case this by itself would not justify taking of loan in cash from Jugraj Singh. There is no reason to interfere in the order - Tribunal had recorded finding of reasonable cause under Section 273B of the Act and on that basis, it was held that no substantial question of law arose. Decided against Assessee.
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2014 (5) TMI 435
Non-speaking order - Restriction of addition Section 145 not invoked - Liquor contractors Held that:- Relying upon KRANTI ASSOCIATES PVT. LTD. Versus MASOOD AHMED KHAN [2010 (9) TMI 886 - SUPREME COURT OF INDIA] - In an order of affirmation, repetition of the reasons elaborately may not be necessary but even then the arguments advanced/points urged deserves to be dealt with - Reasons for affirmation have to be indicated, though in appropriate cases they may be briefly stated - Recording of reasons is part of fair procedure and reasons are harbinger between the mind of the maker of the decision in the controversy and the decision or conclusion arrived at and they always substitute subjectivity with objectivity - the orders of the ITAT being stereo typed, nonspeaking, unreasoned, arbitrary and whimsical, and we have no option except to remand the matter back to the ITAT to re-visit the issue afresh de-novo in accordance with the guidelines.
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2014 (5) TMI 434
Rejection of grant of approval u/s 80G of the Act - Construction of school and hospital Charitable Activity or not Held that:- Registration u/s 12A/12AA is a prerequisite for the grant of approval u/s 80-G, which could be withdrawn u/s 12AA (3) - according registration or not withdrawing the same, as the case may be, is itself inconsistent with the non-grant of approval u/s 80-G in-as-much as a satisfaction as to the genuineness or otherwise is also a criteria for according or, as the case may be, withdrawing registration - any authority granting an approval has an inherent power to withdraw it if the condition/s of the approval are no longer met or stand violated at any stage. Section 292C specifically provides for power of such withdrawal - all that the Legislature has done is to bring the law as to the grant of registration under the Act and approval u/s. 80-G at par, so that, once granted, the same would continue to obtain unless the condition/s of its grant are found to be violated or breached Relying upon Sinhagad Technical Education Society vs. CIT [2012 (3) TMI 262 - BOMBAY HIGH COURT] - only because a power operates with respect to past transactions does not imply that the relevant provision is retrospective - post 01/10/2009, subject to the satisfaction of s. 292C, section 80-G approval could also be withdrawn for a period prior to 01/10/2009 - where the activities leading to the withdrawal, stand undertaken prior the date - the Revenue is not justified in not granting approval u/s 80-G(5) to the assessee the competent authority directed to grant approval u/s 80-G(5) to the assessee with effect from 04/11/2009 Decided in favour of Assessee.
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2014 (5) TMI 433
Determination of book profit u/s 115JB of the Act Minimum alternate tax (MAT) - changed the method of depreciation from straight line method to written down value method - Held that:- The assessee has changed the method of depreciation from straight line method to written down value method - Deprecation has been calculated in accordance with the new method from the date of assets coming into use - depreciation for the current year was higher and profit was lower by the same amount Relying upon Kinetic Motor Co. Ltd. Versus Deputy Commissioner of Income-Tax [2003 (1) TMI 47 - BOMBAY High Court] - under the Companies Act both the straight line method and written down value method are recognized - once the amount of depreciation actually debited to the profit and loss account was certified by the auditor, it was not permissible for the AO to make book adjustment - depreciation actually debited to the profit and loss account was certified by the auditors - it is not permissible for the AO to make book adjustments the AO is directed to delete the addition on account of adjustments made u/s 115JB of the Act Decided in favour of Assessee.
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2014 (5) TMI 432
STCG treated as income from undisclosed sources Genuineness of trading of scrip - Held that:- The SEBI has analysed and investigated the credibility and the reliability of Karuna Cables Ltd. and also the possible fraudulent practice of hiking the share value in the stock exchange by leaps and bounds - SEBI order is only a credible information which can only go to create a doubt, but after having received such information, it was incumbent upon the AO to carry out necessary enquiry in the case of the assessee, as to whether the shares have been purchased and the amount which has been received in the bank account of the assessee is also fictitious - the SEBI order has recognised that Karuna Cables Ltd. was a listed company in BSE and NSE and it has also accepted that its share price has arisen from Rs. 22.40 per share to Rs.159 per share during the period. Any transaction has been undertaken by any person in the open market, then it cannot be held that such person was in connivance with the said company - In the entire assessment order, the AO has only spoken about general modus operandi and the order of the SEBI without carrying out any independent enquiry to prove that the assessee has not made any sales or any unaccounted money has been routed through this channel - What is apparent has to be taken as real, unless any material or evidence has been brought on the record to prove the contrary - the short term capital gain shown by the assessee cannot be held to be non-genuine so as to be taxed under the head income from other sources - Decided in favour of Assessee.
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2014 (5) TMI 431
Maintainability of the Appeal Validity of re-opening of assessment u/s 148 of the Act - Loan received Deemed dividend u/s 2(22)(e) of the Act Held that:- Relying upon CIT vs. Bhaumik Colour P. Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E ] - it cannot be said that the AO could not entertain or hold a honest belief that the assessee was liable to be assessed in respect of deemed dividend u/s 2(22)(e) r/w s. 56 of the Act - income to that extent had escaped assessment - the deemed dividend could only be assessed in the hands of the share-holder, i.e., for whose benefit the loan or advance is given or considered as given - a sum advanced could be deemed as dividend u/s 2(22)(e) only in case of a person who is a shareholder of the payer company, both registered as well as beneficial - the amount cannot be considered as the income of the debtor or the recipient concern or company -there could be no escapement from assessment qua the same - the view entertained by the AO is without any basis in law - there was no valid assumption of jurisdiction in the first place - the reopening of the assessment on that ground per section 148 is bad in law Decided against Revenue.
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2014 (5) TMI 430
Confirmation of the amount as LTCG Capital receipts in lieu of inheritance FMV as on 01.04.1981 - Held that:- The AO has taken a firm stand that what the assessee has received is towards surrender of her right in the property - If the consideration received is towards surrender of inherited rights in property, then the same has to be taxed within the light of the provisions of Section 45 read with Sections 47 and 48 of the Act - the property is inherited the cost of acquisition of the property has to be treated as per the fair market value as on 01.04.1981- Material on record shows that the assessee has also filed a valuation report to substantiate her claim of fair market value as on 01.04.1981 - The AO has completely ignored this fact holding that the cost of acquisition has to be taken at nil, which is not a correct proposition of law - the transaction involves capital gains tax liability, it has to be computed as per the provisions of law thus, the matter is required to be remitted back to the AO for determination of the cost of acquisition of the property as on 01.04.1981 by referring the matter to the valuation cell or in alternative accept the valuation report of the assessee and re-determine the Long term capital gains after giving a reasonable and sufficient opportunity of being heard to the assessee Decided in favour of Assessee.
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2014 (5) TMI 429
Maintainability of the Appeal Validity of re-opening of assessment u/s 148 of the Act - Loan received Deemed dividend u/s 2(22)(e) of the Act Held that:- Relying upon CIT vs. Bhaumik Colour P. Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E ] it cannot be said that the AO could not entertain or hold a honest belief that the assessee was liable to be assessed in respect of deemed dividend u/s 2(22)(e) r/w s. 56 of the Act - income to that extent had escaped assessment - the deemed dividend could only be assessed in the hands of the share-holder, i.e., for whose benefit the loan or advance is given or considered as given - a sum advanced could be deemed as dividend u/s 2(22)(e) only in case of a person who is a shareholder of the payer company, both registered as well as beneficial - the amount cannot be considered as the income of the debtor or the recipient concern or company -there could be no escapement from assessment qua the same - the view entertained by the AO is without any basis in law - there was no valid assumption of jurisdiction in the first place - the reopening of the assessment on that ground per section 148 is bad in law Decided against Revenue.
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2014 (5) TMI 428
Deletion in the value of closing stock Stock register not maintained - Disallowance of purchase Benefit of telescoping Held that:- The assessee has offered additional income of Rs.25 lacs towards stock difference and other omissions noted during the survey - the CIT(A)s order show that on every count the CIT(A) has given a categorical findings of fact for sustaining the additions of Rs.23,26,514 - The assessee is not in appeal against this finding of the CIT(A) there was no error or infirmity in the findings of the CIT(A) for allowing the benefit of telescoping of additional income offered amounting to Rs.25 lacs to be set off against the total addition sustained by the CIT(A) at Rs.23,26,514 - It would be just and reasonable to allow such telescoping in order to ensure that the same income is not taxed twice Decided against Revenue.
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2014 (5) TMI 427
Addition of block assessment proceedings u/s 153A or 153B of the Act Held that:- Following CIT Vs. Anil Kumar Bhatia [2012 (8) TMI 368 - DELHI HIGH COURT] - in the block assessment, no addition can be made unless some incriminating material is found during the search in behalf of additions - while making the assessment or reassessment, in block assessment u/s 153A or 153C no addition can be made in the absence or reference to any incriminating material qua the addiitons. Estimation of net profits @ 5% of gross sale of shares - Admission of additional evidence Contravention of Rule 46A of the Act Held that:- Assessees books of accounts are duly audited and no specific or general fault has been found - CIT(A) has rightly held that there is no scope for rejecting the books and estimating the profits without any incriminating evidence or giving any cogent reasons in this behalf the AO has not referred and least of all not indicated to any incriminating material for rejecting the books and estimating the profits - Thus, the additions in questions are bereft of any support or relevance to any incriminating material whatsoever the view of the CIT(A) in admitting the additional evidence is perfectly valid and tenable - No infirmity thereto can be found - the AO cannot sit over the requisition of a superior appellate authority - CIT(A) for submitting the directed remand report - the record reflects that no adverse comments are offered by the assessing officer on the additional evidence and merits - the books of accounts are duly audited - no specific or general fault is indicated by the AO - there is no reliance on any incriminating material there was no infirmity the order of CIT(A) in deleting the additions Decided against Revenue.
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2014 (5) TMI 426
Addition made on payment of commission Held that:- CIT(A) rightly considered the fact that most of the commission has been verified and accepted as reasonable and assessee also furnished confirmation along with Form 16A, noticed that insisting of income tax return may be an excess requirement but that is not required for establishing the payment as genuine there was no reason to interfere in the order of the CIT(A) Decided against Revenue. Disallowance u/s 40(a)(ia) of the Act Held that:- Following CIT vs. Valibhai Khanbhai Mankad [2012 (12) TMI 413 - GUJARAT HIGH COURT] - failure to comply with requirement to furnish details to income tax authority in prescribed Form within prescribed time by payee may result in some adverse consequences but such failure cannot be visualised by adverse consequences provided u/s 40(a)(ia) there was no reason to interfere in the order of CIT(A) Decided against Revenue. Payment for farmers awareness programme Held that:- There is nothing on record to indicate that the expenditure is not genuine - farmers awareness programme was being conducted regularly by the assessee and assessees turnover is also increasing corresponding with the expenditure - Mr. Ummaheswara Rao has confirmed the payment and being an assessee also on record and the amounts were paid by way of cheque in the later year, there is no need to doubt the expenditure which was incurred in the course of business the order of the CIT(A) is upheld Decided against Revenue.
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Customs
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2014 (5) TMI 448
Waiver of Pre-deposit for admission of appeal - Import of Re-rolling Scrap - Pre-Shipment Inspection Certificate of DGFT - Held that:- Prima facie, it appears that there was no intention to contravene any of the provisions of the law and assessee had complied with the provisions to the best of their knowledge and no harm has been caused by import of prohibited goods Although, there appears to be a technical violation - The issue whether fine and penalty needs to be imposed in such circumstances can be examined at the time of appeal hearing - It is proper to waive the requirement of pre-deposit of penalty arising from the impugned order for admission of appeal - stay granted.
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2014 (5) TMI 447
Evasion of Anti-Dumping Duty Mis-declaration of imported goods as Electrical goods CFL or Other than CFL - Whether the impugned goods are CFL (with/without choke) attracting Anti-Dumping Duty or as the case may be, other than CFL - Held that:- The items such as, Discharge Tube mounted on shell cover, plastic cone, sealed glass tubes etc. when imported separately, were not considered as CFL - It is held that these were parts, as they required various other components like choke, PCB assembly and plastic end caps which could be fitted to form CFL - Also Boards Circular issued under letter F.No.528-53/2007-Cus.TRU dated 25.10.2007 clarified that Anti-Dumping Duty is leviable on CFL and parts of CFL - Assessees have been disputing to the findings of Test Reports and the Trade Enquiry - While the ld. Adjudicating Authority had accepted their request for retesting of the samples and asked the ADG (DRI) for arranging to draw fresh samples, but the same had not been complied with Samples were not re-tested in spite of the importers disputing the earlier Test Report and that the direction of the ld. Adjudicating Authority for re-testing was not followed Principle of natural justice was not followed in this case and therefore, in the interest of justice, it would be prudent to remit back the case to the ld. Adjudicating Authority for fresh order Decided in favour of assesse.
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2014 (5) TMI 446
Town seizures - whether customs duty is required to be paid by owner of goods - Date of seizure of goods in India - fine in lieu of confiscation for seizures Held that:- As per provisions contained in Customs Act, 1962, the relevant date for determining the rate of duty is the date when the Bill of Entry is filed - In case of town seizures, such a date will not be available - Therefore, it will be impossible for adjudicating officer at the time of allowing redemption to determine rate of duty and accordingly the quantum of duty - It is rightly held by Commissioner (A) that assessee is not importer of goods - The word importer has to be read in context of the time between their importation and till they are cleared for home consumption, which is the time when the imported goods are in Customs area - Customs duty cannot be demanded in town seizures in addition to redemption fine from person from whose possession the smuggled goods are seized because the value/price of the seized/confiscated goods is deemed to include the duty element levied/leviable with respect to such goods and officer adjudicating the case has considered the same while imposing redemption fine. Reduction of Penalty Held that:- The Commissioner (A) in his order reduced the penalties on the ground that the same has been imposed on a higher side - It has not been brought out in the grounds of appeal of the Revenue as to why findings given by Commissioner (A) are not acceptable Decided against Revenue.
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2014 (5) TMI 445
Refund of differential duty claim Liability of duty on Transaction value or as per tariff value fixed by the Central Govt. - Fulfillment of conditions for granting of refund Section 14(1) (2) & 27 of the Customs Act, 1962 - Held that:- In case where tariff value is fixed by Central Govt., section 14 (1) are not applicable and therefore, duty was not required to be assessed on the basis of transaction value and required to be assessed on the basis of tariff value fixed by Central Govt. Thus, assessees are entitled to refund provided the conditions of Section 27 are fulfilled - Commissioner (A) has already held that claim was submitted in time, but neither original authority nor Commissioner (Appeals) has examined refund on ground of unjust enrichment - Matter is remanded back to original authority for examination of refund on the principles of unjust enrichment as applicable u/s 27 Decided against revenue.
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2014 (5) TMI 444
Stay Petition - Waiver of pre-deposit Imposition of Penalty - Section 114(1) and Section 114AA of Customs Act, 1962 Held that:- The report of Chief Chemist, Regional Agmark Laboratory, Mumbai, specifically indicates that consignment which has been declared by the appellant as being basmati rice, needs to be checked as indicated in notification of DGFT authorities - The issue may be covered by the judgment of Tribunal in the case of GLOBAL AGRO IMPEX Versus COMMISSIONER OF CUSTOMS, NOIDA [2013 (9) TMI 851 - CESTAT NEW DELHI] - Accordingly, the application for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till the disposal of appeal stay granted.
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Service Tax
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2014 (5) TMI 465
Cenvat credit on the Service Tax paid - Payment of bills made at discounted rates - Held that:- No evidence has been brought on record that reduced service tax has been paid by the appellant to the service provider. On the basis of facts available on records, credit of full service tax shown to have been paid on the duty paying document will be admissible to the appellant in view of the CBEC Circulars relied upon by the appellant. - Decided in favour of assessee.
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2014 (5) TMI 464
Demand of service tax - Separate entity or single entity - commissioning and installation services and maintenance and repair services - whether M/s. Tata Steel Ltd.(Growth Shop) and M/s. Tata Steel Ltd. are different legal entities or one and the same entity, whereby, the services rendered by M/s. Tata Steel Ltd.(Growth Shop) to M/s.Tata Steel Ltd.(Steel Division) would come under the scope of Service Tax - Held that:- Prima facie, we find that M/s.Tata Steel Ltd.(Growth Shop) has been appointed to provide services by floating tenders by M/s.Tata Steel Ltd. through M/s.M.N.Dastur & Co.. From the argument of the Ld.Advocate, we find that M/s.Dastur & Co. has only been appointed for the purpose of inviting tenders and selection of bidders. Also, from the submission of the Ld.Advocate we find that M/s.Tata Steel Ltd.(Growth Shop) and M/s.Tata Steel Ltd.(Steel Works) are not separately, incorporated as companies under the Companies Act, 1956. He submits that even though separate PAN based registrations were taken, but the entire liability relating to Income Tax and prescribed Income Tax Returns are filed from their Head Office on behalf of the units against a single PAN number and prima facie, we find that the Applicant and M/s.Tata Steel Ltd. (Steel Works) are not two separate legal entities, but units of Tata Steel divisions. In absence of any contrary judgement placed by the Revenue to the decisions of M/s.Indian Oil Corporation Ltd. [2007 (5) TMI 135 - CESTAT, KOLKATA] and Precot Mills Ltd. (2006 (2) TMI 25 - Appellate Tribunal, Bangalore), prima facie, we are of the view that Service Tax may not be payable for rendering service by one division to another division of the same legal entity. In the result, the Applicant could able to make out a prima facie case, for total waiver of pre-deposit of dues adjudged - Stay granted.
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2014 (5) TMI 463
Demand of service tax from Cooperative Society - principle of mutuality - Consultancy service - Held that:- society is engaged for commercial activities, the fact remains that the respondent/ society is a Cooperative Society established by the M,P, Cooperative Societies Act and in the matter of consultancy being undertaken, it has been appointed as a nodal agency by the State Government. By administrating and managing the Milk Unions, the Appellant is only fulfilling its statutory responsibility and obligations towards its constitutent members. If any service is rendered in connection with the promotion and furtherance of its objects by the Appellant, the same would amount to rendering service to itself. Therefore, the Appellant can not be held to be a service provider and the Milk Unions service recipients. This finding was reconsidered by the Appellate Tribunal and the Appellate Tribunal has also affirmed the same mainly on the ground that the society is not conducting any commercial activities in the matter of consultancy service but only rendering consultancy service to various Milk Unions, i.e. the member societies which are functioning under its guidelines being Apex society and a nodal agency - Decided against Revenue.
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2014 (5) TMI 462
Demand of service tax - Coercive measures taken for recovery - SCN Issued pursuant to Circular No. 967/01/2013-CX dated 01.01.2013 - Held that:- Court was forced to express rather its dismay that the respondents, with impunity, were issuing such demand notices with reference to the very same Circular, despite the same having been declared non-est - prima facie, the demand notices as issued in these cases were considered to be the show of total disrespect to and defiance of the order passed by this Court when the legal position had been concluded by this Court long back; and, in no uncertain terms, the impugned Circular had been declared non-est. Hence, while admitting these petitions and while staying the operation, effect and execution of the impugned demand notices, separate suo motu contempt petitions were ordered to be registered against the officers concerned. Now the respondents do admit that coercive recovery against the writ-petitioners is not pursued and specific Circular has been issued by the Commissioner of Excise in this regard. In the totality of the circumstances, we are of the view that while accepting the explanation and unconditional apology tendered on behalf of the respondents, these matters deserve to be closed and need not be proceeded further - Decided in favour of assessee.
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2014 (5) TMI 461
Demand of service tax - CENVAT Credit - GTA service - Held that:- The fact that the respondent has been assessed both under the Excise Act and the Service Tax, is not in dispute. It is also not in dispute that in view of the Circular issued by C.B.E. & C., dated 3-10-2005 referred to in the order of the Appellate Authority, when the person discharging Services Tax liability is not the provider of output services, such recipient of taxable services even if they discharge their Service Tax liability under Section 68(2) are not entitled to avail credit of the Service Tax paid on taxable services. However, there is no prohibition for utilizing the credit for the payment of Service Tax. - No question of law arises - CCE, Chandigarh v. M/s. Nahar Industrial Enterprises Ltd. [2007 (3) TMI 201 - CESTAT NEW DELHI] and The India Cements Ltd. v. CCE, Salem [2007 (3) TMI 83 - CESTAT, CHENNAI] - Decided against Revenue.
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2014 (5) TMI 460
Demand (Service tax )- management services - scope of the show cause notice - Demand of service tax for prior period according to the provision which were deleted later Held that:- as culled out above that what was proposed was to impose Service Tax amount of Rs. 90,96,501/- u/s 73(1)(a) of the Finance Act. In view of the explanation submitted in response to the show cause notice, the original authority held that the tax could not have been leviable under the said Act u/s 73(1)(a). However, the original authority proceeded to impose the tax under the head Business Auxiliary Service which is taxable u/s 73(1)(d) and 73(1)(e). The fact that there was no proposal in the show cause notice to include the income as auxiliary business service is indisputable in view of the contents of the show cause notice and therefore in the absence of any notice issued to the respondent in view of the provisions of Section 73, it is clear that imposition of tax and consequently interest and penalty cannot be sustained and the same has been rightly set aside by the Tribunal. As no order to treat the income as Business Auxiliary Service had been passed without proposing the same to the respondent in the show cause notice, the order passed by the Tribunal is justified and substantial question of law has to be answered against the revenue. - Decided against Revenue.
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2014 (5) TMI 459
Demand of service tax - import of services - service provided by an individual residing outside India - Whether the Honble CESTAT is right in holding that the Service Tax was leviable only with effect from 18-4-2006 - Held that:- Tribunal committed any error in setting aside the Service Tax demand. When we find that the charging Section making service recipient liable to pay Service Tax, in certain circumstances was introduced by virtue of Section 65A of the Finance Act, 1994 with effect from 18-4-2006, any demand of Service Tax prior to the said period, merely relying on Rule 2(1)(d)(iv) of the Service Tax Rules was wholly impermissible - Following decision of Unitech Ltd. [2009 (5) TMI 56 - DELHI HIGH COURT ] and Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] - Decided against Revenue.
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Central Excise
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2014 (5) TMI 454
CENVAT Credit - Transfer of unutilized CENVAT Credit from 1 unit to another - assessee has stopped the manufacturing activity at Unit No. 1 - Held that:- The fact of availment of CENVAT credit by Unit No. 2 on 01.08.2000 was in the knowledge of the department and the show-cause notice was issued on 03.09.2001 which is barred by limitation. Further, there is no bar of transfer of CENVAT credit lying unutilized on closure of the unit, although there is no stock of inputs as per the decision in the case of AAR AAY Products Pvt. Ltd. (2002 (7) TMI 204 - CEGAT, NEW DELHI). Therefore, I do not find any infirmity in the impugned order - Decided against Revenue.
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2014 (5) TMI 453
CENVAT Credit - as there was shortage of space in their factory therefore, some inputs were temporarily stored in other premises outside the factory - Held that:- The fact that these inputs were later-on received back by the assessee in their factory and the same has been used for the manufacture of their final product is not in dispute. Therefore, in the light of the judgement in the case of Teletube Electronics Ltd. (2013 (9) TMI 932 - ALLAHABAD HIGH COURT) wherein the Hon'ble High Court of Allahabad held that if the goods on which duty has been paid were removed from the factory premises either for the shortage of space or that the goods were required to be polished, entitled to benefit of credit on re-entry. The learned A.R. has failed to produce any contrary decision to the above decision of the Hon'ble High Court of Allahabad. Therefore, I hold that as the goods have been received back in their factory, the assesses are entitled to take credit. The proceedings initiated against the assessee by way of show-cause notice are dropped and the appeal is allowed with consequential relief, if any - Decided in favour of assessee.
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2014 (5) TMI 452
100% EOU - non payment of Countervailing Duty including SAD on goods cleared to sister DTA units - revenue neutral exercise - exemption under Notification No.23/03-Cus. dated 31.03.2003 - Held that:- Though the decision in the case of Moser Bear Indi Ltd [2009 (6) TMI 48 - CESTAT, NEW DELHI] prima facie supports the case of the appellant, due weight has to be given to revenue neutrality at this tage of considering stay petition. However at this stage, we cannot, go entirely by the argument of revenue neutrality because we do not know whether the bulk drugs in question had gone into the manufacture of dutiable drugs in their sister units. Therefore, we are inclined to follow the earlier order of pre-deposit as wherein the direction was to deposit 50% of the total Excise Duty. - stay granted partly.
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2014 (5) TMI 451
CENVAT Credit - immovable property rent - Credit of service tax paid on immovable property rent' on sales office has been denied on the ground that the same has been availed after the place of removal' and therefore, is not covered under the definition of input services' - Held that:- It can be seen that words "up to the place of removal" figures in two places. The first is after word 'storage' and second is after 'outward transportation'. This would show that while defining 'input services' wherever it is required and wherever the credit is to be restricted 'up to the place of removal', the relevant words were followed by suffix "up to the place of removal". In the Circumstances, I consider that the appellant has made out prima facie case for complete waiver of pre-deposit - Stay granted.
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2014 (5) TMI 450
Penalty - Notification No. 6/2006-CE - cenvat credit in respect of common inputs - Held that:- Demand along with interest is confirmed, as not contested by the appellant. As regards penalty we agree with the ld. Advocate that this was a bonafide mistake on their part. There was no intention to evade duty inasmuch as the entire facts of availment of cenvat credit in respect of common inputs and clearance of their final products under an exemption notification, were being reflected by them in their monthly returns. As such, the entire facts were with the Revenue and the appellant was also never guided by the Department to reverse the 10% amount. As such, we are of the view that imposition of penalty to the extent of 100% in terms of Rule 15 (1) of Cenvat Credit Rules is not justified. However, inasmuch as there has been a procedural and technical offence, though without any malafide, we deem it fit to put the appellant to some penalty. We accordingly reduce the penalty to 10% of the duty amount. - Decided partly in favour of assessee.
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CST, VAT & Sales Tax
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2014 (5) TMI 458
Levy of penalty u/s 78(5) of the Rajasthan Sales Tax Act, 1994 - Declaration form ST 18-A u/r 53 r/w Section 81 not completely filled up Held that:- Only because invoice number and date was left to be filled in - the form could not have been re-used - when all material particulars namely quality, weight, description of the goods, value, name of the transporter, name of the consignor and consignee had been duly filled in, apprehension of the department that the form could have been re-used, is not sustainable - Tax Board as well as the DC (Appeals) justified in deleting the penalty imposed against the assessee - The order passed by the Tax Board is affirmed - Decided in favour of assessee.
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2014 (5) TMI 457
Nature of agreement - Works contract or contract of sales - "supply, laying and polishing of the mosaic tiles" - involvement of manufacturing activity - definition of "works contract" u/s 2(u) of the TN GST Act, 1959, which includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, "manufacture", of any moveable or immoveable property and the conclusion of the AO and first appellate authority - Held that:- When the dealer purchases a commodity, which had already suffered tax and out of such commodity, manufactures another commercial commodity and uses the commercial commodity in the execution of works contract, if such commercial commodity purchased by the dealer is not used in the execution of the works contract in the same form in which it was purchased, in such case, what is used in the execution of works contract is a distinct and different commodity. Assessee has admittedly purchased sand, cement, colour and so on, which goods had suffered tax - But when these goods were used in the manufacturing activity, those goods are transformed into another commercial commodity, namely, mosaic - The transaction would be considered as one of sale - Relying upon Apparels and Handloom Exporters Association and Others v. State of Tamil Nadu and Others [2001 (9) TMI 1114 - MADRAS HIGH COURT] this Court considered the meaning of "whether as goods or in some other form" employed in Article 366 (29-A) of the Constitution of India and Observed that whether the goods purchased by the dealer are used in the works contract in the same form and even after such use, the commodities used lose their character are the test to determine as to whether it is a works contract or sale. In a case of manufacture of mosaic tiles, in our opinion, the same yardstick cannot be applied inasmuch as the goods used by the dealer transformed into a different good, viz., mosaic and the cement, colour, sand and chips lose their individual identity by that transformation. In that sense, the transaction of a mosaic to the contractor would amount to sale and not works contract. - All the questions raised are answered against the assessee - Revisions are dismissed - Decided against assessee.
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2014 (5) TMI 456
Allowability of Second Exemption - Whether Tribunal was right in affirming the allowance of second sales exemption in respect of 50% of the turnover ordered by the Appellate Assistant Commissioner (CT) when there was no further evidence of movement of goods in addition to the fact that some dealers were non-existent and registration cancelled in respect of some dealers - absence of evidence of movement of goods and dealers non-existent and registration cancelled - Held that:- For the purpose of second sales, it is enough for the assessee to produce the particulars that the purchase was made from the dealer and in such event the burden had been discharged. When the assessee has not produced any material to show that the purchases have been made and the goods had suffered tax that too from the registered dealers, the reliance placed on the above judgment cannot be accepted - Inasmuch as the assessing authority as well as the first appellate authority factually found that the purchases were effected by the assessee from non-existing dealers and their registration certificates were cancelled prior to such purchases, the first appellate authority as well as the Tribunal cannot come to a different conclusion contrary to the materials to hold that the dealers had valid registration certificates on the date of purchase by the assessee - To this extent, the findings of both the first appellate authority and Tribunal are perverse - When once it is found that there were no materials to show that the purchases were made from the dealers with valid registration certificates, the only course open to the authorities is to deny the exemption as to the second sales Decided in favour of Revenue.
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2014 (5) TMI 455
Writ petition against the show cause notice - Rate of Tax Classification Whether cotton seed oil per se is edible oil and so leviable at the rate of 1 per cent for the purpose of sales tax assessment the precise grievance of the petitioner is that the respondents have without any justification created the additional demand by levying the tax @ 4% instead of 1% - Held that:- Judgment in State of Punjab and others v. Milkhi Ram Oil and Dall Mills [1991 (7) TMI 328 - PUNJAB AND HARYANA HIGH COURT] followed - It is a question of fact which could not be examined by the Court under Article 226 of the Constitution - writ petitions dismissed since petitioner(s) did not exhaust the remedy available to them - Decided against the assessee.
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