TMI Tax Updates - e-Newsletter
May 3, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Re opening of assessment - once the claim was fully examined, power of reopening was simply not available. - HC
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Income Tax:
Loss due to embezzlement by an employee - loss on account of theft be treated as business loss - no interference reuired - - HC
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Income Tax:
Interest under Section 40A(2) - whether a particular expenditure or loan was excessive and unreasonable, was essentially a question of fact and did not involve any issue of law. - HC
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Income Tax:
Tribunal was wrong in holding that if one profit level indicator of a comparable, out of a set of comparables, is lower than the profit level indicator taxpayer, then the transaction reported by the taxpayer is at an arm’s length price.- HC
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Income Tax:
Slump sale - whether Section 50 is not attracted - The mere execution of a conveyance of immovable property by itself, do not constitute sale of itemized assets. - HC
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Income Tax:
Though the reopening has taken place beyond the period of four years, the reasons which have been indicated to the assessee have a sufficient nexus with the proviso to Section 147 so as to justify the reopening - HC
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Customs:
The conduct of the importer resulted in delay thereby incurring more liability to pay detention charges/demurrage which could have been minimized by promptly getting the goods released. - No waiver - HC
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Corporate Law:
An application under Section 543 of the Companies Act, 1956 cannot be made in vague terms and it cannot be used as a power to conduct a roving enquiry in these proceedings and to ascertain as to whether there is any act of misfeasance on the part of erstwhile directors. - HC
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Indian Laws:
Dishonor of cheque – High Court was perfectly justified in its conclusion that the prosecution had failed to make out a case against the accused and in acquitting him of the charges. - SC
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Service Tax:
Penalty - waiver u/s 73(3) - payment of service tax on being pointed out but before issuance of SCN - no penalty - AT
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Service Tax:
Predeposit – non payment of service tax – petitioner shall pay the pre-deposit amount as ordered by the respondent appellate authority - HC
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Central Excise:
Clandestine removal - demand on goods seized at the dealers’ premises is confirmed without adequately proving the case that there was excise duty liability to be discharged in respect of the goods and such liability was not paid - demand set aside. - AT
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Central Excise:
Manufacture - process of printing and varnish/plastic coating of plain cartons received by the appellant does not amount to manufacture and as such no duty is chargeable on the same. - AT
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VAT:
Sale transaction which is the subject matter of the instant case, is not an intra-state sale but is an inter-state sale and State of U.P. lacks jurisdiction to impose tax (VAT) - HC
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VAT:
Delayed payment of entertainment tax - the petitioner did not give correct information - willful mis-statements and suppression of facts thus the imposition of penalty is not in violation of the principles of natural justice. - HC
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VAT:
Rate of tax on electrical washing machines - electrical appliances are quite different from electronic appliances and therefore electrical goods which are not to be covered under the entry electronic equipments. - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2013 (5) TMI 53
Interest over unpaid payment of lease rent which had been deducted at source and deposited with the Income Tax Department- petitioner is a company engaged in manufacture of IC Engine based on power products & started deduction of tax at source from the date of amendment in 2004 of Income Tax - Held that:- Question as to whether Noida Authority is exempted from payment of Income Tax or not is subjudice. Therefore, petitioner shall deposit the demand of amount of Rs.16,83348/- with the respondents within three weeks from today. Such deposit shall be kept in an interest bearing account. The petitioner shall continue to deduct income tax at source from the lease rental and deposit the same with the Income Tax Department.A similar amount shall also be deposited with the respondents and the amount shall be kept in an interest bearing account. The petitioner shall continue to abide by the above directions, so long a decision has not been taken as to whether respondents no. 1 to 4 are liable to pay tax or not.
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2013 (5) TMI 52
Re opening of assessment - AO was acutely conscious about the petitioner not having deducted tax on labour payment charges and the petitioner’s contention that it was so done because provision for TDS was not applicable - Held that:- As in the scrutiny assessment, AO had thoroughly and fully scrutinized the assessee’s claim of deduction of labour expenditure. To the extent he was inclined to disallow the same, he did so. By no stretch of imagination it can be stated that the issue was not at large before the Assessing Officer in the original scrutiny assessment. Any reexamination of such a question at this stage would only amount to change of opinion. Remedy of reopening the assessment, therefore, was simply not available. In the decision of the Supreme Court in case of Commissioner of Income Tax Vs. Kelvinator of India Ltd. reported in [2010 (1) TMI 11 - SUPREME COURT OF INDIA] it was held that if the Revenue was of the opinion that the AO erroneouly and to the prejudice of the interest of the Revenue allowed certain claim, in a given situation, it would have been open for the appropriate authority to exercise revisional powers. However, once the claim was fully examined, power of reopening was simply not available. In favour of assessee.
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2013 (5) TMI 51
System of accounting - as per AO bad and doubtful debts provisions are not allowable - additions made to the total income of the assessee - Held that:- C.I.T.(A) and the I.T.A.T. accepted the method of accounting of the assessee and & relying on CIT Versus Vasisth Chay Vyapar Ltd. & others [2010 (11) TMI 88 - Delhi High Court] which was in accordance with the Instruction No.9949 of the Reserve Bank of India and therefore, addition was deleted. no question of law is involved. Loss due to embezzlement by an employee - whether treated as accidental to the business - Held that:- I.T.A.T. after relying upon the judgment of Dinesh Mills Ltd. Vs. C.I.T. (2001 (12) TMI 65 - GUJARAT High Court) and Harijan Evam Nirbal Varg Avas Vs C.I.T. reported in (1995 (12) TMI 2 - ALLAHABAD High Court) observed that the loss on account of theft be treated as business loss - no interference reuired - No question of law is involved.
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2013 (5) TMI 50
Interest under Section 40A(2) - excessive interest having been paid by the assessee to his relatives - Held that:- As decided in CIT v. Oriental Structural Engineers Private Limited [2010 (2) TMI 21 - NEW DELHI HIGH COURT] whether expenses claimed by an assessee were excessive or not under the provisions of Section 40A(1) was essentially a question of fact. As decided in Upper India Publishing House (P) Limited v. CIT [1978 (12) TMI 2 - SUPREME COURT] that the question whether a particular expenditure or loan was excessive and unreasonable, was essentially a question of fact and did not involve any issue of law. Thus in view of the authoritative pronouncement by the Supreme Court on the issue of expenses being excessive or not in terms of Section 40A(2) the present question sought to be raised by the revenue is not a question of law but is a question of fact which has been determined finally by the Tribunal by virtue of its impugned order. In favour of assessee.
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2013 (5) TMI 49
Arms length price determination - selection of comparable - Whether the finding of the Tribunal that if any one margin of a comparable, in a given set of comparables is lower than the margin of the taxpayer, then the transactions are at arm’s length, is correct as per Section 92C(2) - Held that:- Tribunal had reduced the list of comparables to merely four which is not a right approach to be adopted by the Tribunal. The Tribunal should have stopped at the point where it decided on facts that the comparables given by the respondent/assessee were to be accepted and those searched by the Transfer Pricing Officer were to be rejected. The only option then left to the Tribunal was to derive the arithmetical mean of the profit level indicators of the comparables which were accepted by it. In this case such comparables happen to be those of the respondent/assessee. The Tribunal, in selecting only one profit level indicator out of a set of profit level indicators had clearly erred in law. However, in the facts of the present case that would not make any difference to the respondent/assessee’s case inasmuch as even if the arithmetical mean of the comparables as accepted by the Tribunal are taken into account, the profit level indicator would, whether the seven companies are taken into consideration or all eight companies are taken into consideration, be less than 6.99 % which is the profit level indicator of the respondent/assessee for the relevant year, that is, financial year ending 31.03.2002. Also the reference to the OECD guidelines by the Tribunal in the impugned order are in the context of the reliance placed by the Transfer Pricing Officer on the very same guidelines. In the present case, there are specific provisions of sub-rules (2) and (3) of Rule 10B of the said Rules as also of the first proviso to section 92C(2) of the said Act which apply. Therefore, the question of applying OECD guidelines does not arise at all. Thus it is clear that the Tribunal was wrong in holding that if one profit level indicator of a comparable, out of a set of comparables, is lower than the profit level indicator taxpayer, then the transaction reported by the taxpayer is at an arm’s length price. The proviso to section 92C(2) is explicit that where more than one price is determined by most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices. To this extent the appeal is allowed. However, as pointed out above, if this principle is applied to the comparables suggested by the assessee (which have not been rejected by the Transfer Pricing Officer), the arm’s length price suggested by the assessee would yet be acceptable in law. There shall be no orders as to costs.
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2013 (5) TMI 48
Slump sale - whether Section 50 is not attracted as per Tribunal - Held that:- The mere execution of a conveyance of immovable property by itself, do not constitute sale of itemized assets. If the assets transferred constitute running business, then it would be a case of slump sale. Mere conveyance of land and building would not take away the case from a case of slump sale. If the land and building, plant and machinery and other accessories are sold, it would constitute a slump sale. In the instant case, the recitals in the sale deed make it clear that what is sold is land and Hotel Pentagon Commercial Building and other appurtenances thereto with all easement appurtenances to the said property. The valuation report prepared, after the sale also gives description of the particulars of the properties, which are sold and the value thereof. Still from the aforesaid materials, it is not possible to make out whether any other movable assets, which were used by the transferor or the assessee was also the subject matter of sale. The said material could not be produced because such a contention was not taken before the Assessing Authority as well as the First Appellate Authority. Though the Tribunal was justified in considering the case from that angle, it committed an error in recording a finding of fact without there being sufficient material to arrive at such conclusion. Thus the finding recorded by the Tribunal, that it is a slump sale is not supported by legal evidence on record. Thus set-aside the matter and remand the matter back to the Assessing Authority to enable the assessee to produce such material in support of his contention that it is a slump sale.
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2013 (5) TMI 47
Notice U/s 148 of the Income Tax Act, 1961 - Escaped assessment U/s 147 - The assessee had not filed his return of income for A.Y. 2006-07 for which the time limit had expired - Has obtained accommodation entries - Held that:- The Assessing Officer stated that further he was in possession of information which suggested that the Petitioner had obtained accommodation entries from one Bhavesh Lakhani, proprietor of Pratik Sales Corporation - The appellate authority specifically referred to the extract from the reasons furnished to the assessee and stated that the Assessing Officer had proceeded on the basis that the assessee had not filed his return of income though he has taxable income. Consequently, the order of the CIT(A) (which in any event has not attained finality) did not bar fresh proceedings under Section 148 - Though the reopening has taken place beyond the period of four years, the reasons which have been indicated to the assessee have a sufficient nexus with the proviso to Section 147 so as to justify the reopening - This is not a case involving a change of opinion since the Assessing Officer has come in possession of material which would indicate that there has been an escapement of income - We do not find any reason to interfere in these proceedings under Article 226 of the Constitution - The Petition shall stand dismissed in favour of Revenue.
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2013 (5) TMI 46
Jurisdiction under Sec.263 of the I.T. Act - Claim under Sec.54A - Treating the sale as long term capital gain and not as short term capital gain - Held that:- The revisional authority should exercise their power under Section 263 of the Act - The order of revisional authority should indicate the error committed by the Assessing Authority and consequential prejudice caused to the revenue because of the erroneous order - Unless these two conditions exist, the revisional authority does not get jurisdiction to pass any order under Section 263 of the Act. Seen from that angle, in the impugned order though we could make out what is the error committed by the revisional authority, certainly there is no iota of evidence to show how it is prejudicial to the interest of the revenue. On the contrary the assessee has demonstrated that in no event the order passed by the Assessing Officer is prejudicial to the interest of the revenue. That aspect has not been considered and there is no reference to that aspect in the entire order passed by the revisional authority and by a cryptic order, the matter is remanded to the Assessing Authority - Though the Tribunal was not expected to go into the merits of the case, in order to demonstrate that the order passed by the Assessing Authority even if it is erroneous, is not prejudicial to the interest of the revenue, they have set out computation of capital gains and demonstrated that the order was not prejudicial - Therefore, the order passed by the revisional authority is illegal and rightly it has been set aside - The substantial question of law is answered in favour of the assessee and against the revenue - The appeal is dismissed.
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2013 (5) TMI 45
Default U/s 201(1) & Interest U/s 201(1A) of the Income Tax Act - TDS on royalty - Held that:- The Tribunal held that once the agreement itself is cancelled, consequential payment of royalty also stood cancelled - For the entire period from inception up to 30th July 2002 there was no liability for making payment on behalf of the assessee - When there is no liability to pay royalty and consequential interest, there was no liability to deduct TDS. It is clear that agreement with regard to payment of royalty was cancelled, no royalty was payable and therefore, the question of deducting TDS on such royalty does not arise. These facts are not in dispute - Therefore, in the facts and circumstances of the case we are of the view that the order passed by the Tribunal is correct.
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2013 (5) TMI 44
Revision u/s 263 of the Act - AO Allowed deduction U/s 10B on the business income without setting-off unabsorbed depreciation amount - The Commissioner of Income tax in his jurisdiction under Section 263 of the Income Tax Act was of the view that the same resulted in excess deduction allowed under Section 10B of the Act and incorrect determination of loss was carried forward. - The Tribunal held that Assessing Officer had adopted one of the permissible views and such an order cannot be said to be erroneous in view of the decision of the Apex Court in the case of Malabar Industrial Company Ltd., V/s. CIT [2000 (2) TMI 10 - SUPREME Court] - Held that:- following the decision in Commissioner of Income Tax, LTU, V/s. M/s. Yokogawa India Ltd., [2011 (8) TMI 845 - Karnataka High Court] and in view of the fact that no substantial question of law arises for consideration in this appeal, the additional question with regard to the jurisdiction under Section 263 of the Revisional Authority becomes purely academic and therefore, that question is not answered. - Decided against the revenue.
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Customs
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2013 (5) TMI 43
Offence under Section 21(c) NDPS Act - appeleant acquitted of the charges under Section 29 read with Section 21(c) sentenced to undergo RI for ten years with fine Rs. 1 lac , each. - appellants were found in possession of 5.022 kg. of Heroin - Held that:- Contradictions, discrepancies and improvements highlighted by counsel do not affect the core issue of recovery of contraband from the conscious possession of the accused. These do not go to the root of the case to throw away the otherwise unimpeachable testimony of official witnesses. Testimonies of official witnesses have to be considered at par with that of independent witnesses. Testimony of complainant was corroborated by confessional statements of the accused persons. It was further corroborated by recovery memo and other documents which had been prepared at the time of recovery and proved before the Trial Court. All the contentions raised by the appellants have been dealt with in the impugned judgment and no interference is called for. No merit in the appeals preferred by the appellants and the same are dismissed. Conviction and sentence of both the appellants are maintained.
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2013 (5) TMI 42
Transaction Value as per Bill of Entry, filed by a third party - Held that:- The learned counsel appearing for the respondent had not been in a position to show that a copy of the Bill of Entry No.539734, had been furnished to the petitioner before the value of the imported goods had been fixed, based on the said Bill of Entry filed by a third party - It is seen that proper opportunity had not been given to the petitioner to challenge the decision of the respondent. The respondent is directed to furnish a copy of the bill of entry to the petitioner, before fixing the value of the goods imported by the petitioner, within ten days from the date of receipt of a copy of this order, for the levy of the customs duty payable by the petitioner - The other clauses of the impugned order shall remain without any alteration - On receipt of the copy of the said Bill of Entry, the petitioner shall raise its objections, if any, within a period of ten days thereafter - On receipt of the objections to be raised by the petitioner, the respondent shall consider the same and pass appropriate orders thereon, on merits and in accordance with law, as expeditiously as possible - The writ petition is ordered accordingly.
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2013 (5) TMI 41
Duty under the Customs Act - Remitting of demurrage/detention charges was declined - Acts of omission and commission - Consignment/goods imported by respondent were found to be as per the bills of entries - The respondent used to place orders and foreign suppliers sent the goods which reached the International Containers Deport - The goods used to be got released by the respondent from there on completing the formalities - Held that:- Learned Single Judge has only considered the statement of PW-1 that the goods were illegally detained by Custom Authorities, without caring to look into the documents produced especially the communication by respondent to its indenting agent and the description of the goods imported which necessitated the detention and testing. The bona fide of Custom Department can be gathered from the fact that 80% of the goods were released by the Custom Authorities without any delay. After the detention certificate was issued by the Custom Authorites, instead of getting the goods released without further delay, a three tier approach was adopted by the respondent - Firstly requesting the Shipper and CCI to release the goods without any detention charges/demurrage in view of the detention certificate issued by the Custom Authorities - Thereafter writing letters to them expressing inability to get the goods released on paying detention charges/demurrage which were more than the value of the goods - Finally getting the goods released on payment without prejudice - This conduct of the respondent resulted in further delay thereby incurring more liability to pay detention charges/demurrage which could have been minimized by promptly getting the goods released. Thus, we find that neither on facts nor on law, the impugned judgment can be sustained - We allow the appeal and set aside the ex parte judgment and decree dated 22-3-2002 Suit filed by the respondent is dismissed - Parties shall bear their own cost all throughout - Appellant is entitled to restitution.
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Corporate Laws
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2013 (5) TMI 39
Extra-Ordinary General Meeting with the objective of appointing four new directors and removal and replacement of one director on the Board of TFCI - Whether law prescribes any particular form of requisition under section 169(3)? - Appellant-company (IFCI), holding 37.85 per cent shares in respondent company (TFCI), on 26-11-2010, sent a requisition to respondent for convening an EOGM with objective of reconstitution of board of respondent - invalidity of requisition by the respondent on ground that though it was signed by company secretary of IFCI, but specific authorization/board resolution to file such requisition had not been annexed - Subsequently, on not getting any information, TFCI, through its board meeting held on 14-12-2010, decided not to convene EOGM of TFCI & on receiving that information, IFCI, on 15-12-2010, initiated process under section 169(6) for convening an EOGM on 17-1-2011 and on same day filed petition under sections 398 and 402 against respondent - on 22-3-2011 CLB passed final order wherein it held requisition dated 26-11-2010 issued by IFCI as invalid on ground that it did not bear signature of requisitionist - Held that:- The mere fact that IFCI did not reply to TFCI's letter dated 2-12-2010 did not mean that any legal presumption could be drawn that the requisition dated 26-11-2010 was not authorised by the board and/or the company secretary of IFCI did not have the authority to requisition the EOGM. The fact was that the board of IFCI had, vide its resolution dated 29 -11-2001, given specific authority to its company secretary to sign all legal documents. IFCI's subsequent board resolution dated 31-3-2011 passed in favour of its company secretary as a measure of abundant precaution did not prove that there was no prior authorisation in favour of IFCI's company secretary when requisition dated 26-11-2010 was issued. Moreover, the board of IFCI vide its resolution dated 27-10-2010 had taken a conscious decision to reconstitute the board of TFCI. As far as the finding of the CLB that the requisition dated 26-11-2010 was not signed as required under section 169(3) was concerned, the law prescribes no particular form of the requisition. If all the documents served by IFCI was taken as a composite document, there was no iota of doubt that requisition was signed by the company secretary of IFCI. In fact, from a bare reading of TFCI's own letter dated 2-12-2010 as well as minutes of board meeting of TFCI dated 14-12-2010, it was apparent that even TFCI had no doubt that the requisition dated 26-11-2010 was signed by the company secretary of IFCI. Thus in view of the admission by the board of TFCI that the requisition had been duly signed by the company secretary of IFCI, the finding of CLB to the contrary in the impugned order was unsustainable and was to be set aside. The CLB's finding, that IFCI had played fraud upon it, was a finding based on presumptions and surmises. Consequently, the finding of fraud given by the CLB was based on no evidence, thus the impugned order was to be set aside and the requisition dated 26-11-2010 as well as the EOGM dated 17-1-2011 were to be held to be legal and valid. Consequently, subsequent appointment of five directors by TFCI's board on 22-3-2011 was to be set aside, as on the said date there were no vacancies on the board. In the instant case, the subsequent requisition dated 1-4-2011 seeking removal of three directors including CMD whose tenure expired on 19-1-2012 was an act of takeover of management of TFCI by its largest shareholder who only owned about 37.85 per cent shares. At that stage, it could not be ruled out that the intent of the EOGM scheduled for 18-5-2011 was to remove the directors who had not supported the earlier requisitions and resolutions moved by IFCI. Though it was correct that the CMD was not a shareholder of TFCI but she was a professional who had been appointed for a specific tenure to run a financial institution. If their tenure were not protected, it would not only amount to takeover of TFCI's management by IFCI but it would also constitute an act of mismanagement by IFCI. It was pertinent to mention that out of total TFCI's board strength of 15, 2 were to be nominated by the Reserve Bank of India and debenture holders. With the passing of the instant order, 7 out of 13 appointments on the board of TFCI would have been at the instance/recommendation of IFCI. Consequently, if the resolutions in the EOGM scheduled for 18-5-2011 were passed, then it would virtually amount to making TFCI a subsidiary of IFCI. The protection should be granted to all the three directors for their remaining tenures consequently, it was to be directed that EOGM requisitioned by the IFCI for 18-5-2011 would be held on the scheduled date but if the resolution removing the three directors of TFCI was passed therein, then it would not be given effect to till permission for the same was granted by the CLB. For that purpose, IFCI was to be granted liberty to file an application before the CLB in the disposed of petition seeking permission of CLB to give effect to the said resolutions. The instant petition was to be disposed of with the directions that the impugned order dated 22-3-2011 passed by the CLB was to be set aside.The requisition dated 26-11-2010 and EOGM dated 17-1-2011 were legal and valid.Appointment of five directors by TFCI's Board on 22-3-2011 was to be set aside. EOGM scheduled for 18-5-2011 was allowed to be held on the said date but if resolution removing the three directors including CMD, TFCI was passed therein, the same would not be given effect to till permission of the CLB was obtained by IFCI by filing an application in company petition. A retired Judge of the Court was appointed as chairman of the board of TFCI. He would only attend and chair board meetings of TFCI till the term of the CMD would expire.
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2013 (5) TMI 38
Application u/s 543 – Directors of respondent Company abused their fiduciary position – breach of trust - non-furnishing the books of account for completing winding up proceeding and other omissions – O.L. is of the view that (i) there is a willful suppression of materials which has resulted in non-recovery of amounts due to the company in liquidation and (ii) such amounts required to be recovered from the respondent directors and initiated a proceedings against Ex-Directors under Section 454 (5) & (5A) of the Companies Act. Held that - An application under Section 543 of the Companies Act, 1956 cannot be made in vague terms and it cannot be used as a power to conduct a roving enquiry in these proceedings and to ascertain as to whether there is any act of misfeasance on the part of erstwhile directors. In fact, Section 543 proceedings is only proceedings to quantify loss sustained by the company (in liquidation) on account of acts of misfeasance committed by its ex-directors. Until and unless these ingredients are satisfied and official liquidator arrives at the conclusion that the deeds and acts of ex-directors was of such nature which was not expected of a prudent person and thereby it has resulted in non-recovery of the said amount, fault cannot be laid on the door steps of the ex-directors. For the reasons aforesaid, point Nos.(i) and (ii) hereinabove is to be answered against the applicant-official liquidator and in favour of respondents - ex-directors of the company. Dismissed.
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Service Tax
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2013 (5) TMI 57
Services rendered by goods transporters - Service tax demanded from the Appellant as receiver of the service as per provisions of Rule 2(d)(xvii) of the Service Tax Rules, 1994, during the period 16-11-1997 to 2-6-1998 - whether the retrospective amendments made were good enough for collecting the tax liability from the service receivers who did not file any returns and did not pay the tax - Held that:- As decided in CCE v. Eimco Elecon Ltd. [2010 (7) TMI 477 - GUJARAT HIGH COURT] till the point of time Section 73 of the Finance Act, 1994 came to be substituted w.e.f. 10-9-2004 provisions of the said section could not be made applicable despite retrospective amendment in Sections 68 and 71A of the Finance Act, 1994. In these circumstances, admittedly, the assessee could not be faulted with for not having filed a return after getting himself registered. More particularly, when one considers the language employed in the Proviso below sub-section (1) of Section 68 and the provisions of Section 71A of the Finance Act, 1994, it is not possible to state that the language of the Statute is so clear that any default can be fastened on the respondent-assessee. Thus following the decisions of the High Courts as cited above and hold that the demands issued after in 2004 or later in respect of the short levies in dispute in the three cases filed by assessees are not maintainable.
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2013 (5) TMI 56
Penalty - u/s 73 - Appellant had not paid the differential service tax during the material period in question but has paid the same on being pointed out by the audit party and claimed that they have paid the entire tax before the issuance of notice. – Held that - The appellant having discharged the entire service tax liability before the issuance of notice has correctly sought the invocation of the provisions of Section 73(3) of the Finance Act, 1994 which talks about non issuance of SCN for imposition of penalties. I find that the appellant was correct in bringing to my notice that the judgment of the Hon’ble High Court of Gujarat in the case of Rita Dyeing & Printing Mills (P) Ltd. [2012 (10) TMI 501] will squarely cover the issue in his favour. In view of the foregoing, the entire demand is set aside as already paid twice and the penalties imposed under Section 73(3) of the Finance Act, 1994 are also set aside.
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2013 (5) TMI 55
Business Auxiliary Service - Non payment of service tax on the amount paid by the appellant to the visiting engineers of foreign company from whom they have purchased the technical evaluation - Accordingly demand of duty, interest & penalties arise. - Held that - from 18.04.06, the appellant is liable to discharge the service tax liability. It is seen from the records that the audit party pointed out this anomaly to appellant and appellant had, on issuance of show cause notice discharged the service tax liability and interest thereof. Regarding Penalty - Hon’ble High Court of Karnataka in the case of Motor World [2012 (6) TMI 69] has laid down the law as to when the provisions of Section 80 (Penalty not be imposed in certain cases) can be invoked and fully applicable in the case. I invoke the provisions of Section 80 of Finance Act, 1994 and set aside the penalties imposed by the lower authorities on the appellant under the provisions of Section 76 & 78 of the Finance Act, 1994.
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2013 (5) TMI 54
Predeposit – non payment of service tax – The original authority has passed an order for payment of tax with interest and penalty, as against which, the petitioner has gone on appeal before the respondent-Commissioner of Central Excise (Appeals) along with stay petition. After considering the petitioner's grievances, financial burden and other difficulties, the respondent ultimately came to the conclusion and ordered pre-deposit to be paid in cash on u/s 35-F. It was also observed in the order that if the pre-deposit is not paid as ordered, the subject appeal would stand dismissed automatically. Held that - Law is well settled that the capacity of a party to pay the pre-deposit amount had to be noticed and the financial burden and undue hardship for the party to resort to claim waiver of the pre-deposit, have also to be considered. With regard to the undue hardship and other difficulties expressed by the petitioner, much less what is now claimed, the respondent himself has come to a conclusion while ordering the pre-deposit amount with a lenient approach. Therefore, in my considered opinion, there is no merit in this writ petition. Thus, the petitioner shall pay the pre-deposit amount as ordered by the respondent within 2 weeks from the date of receipt of a copy of this order, and on such payment, the respondent shall dispose of the appeal itself, on merits and in accordance with law.
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Central Excise
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2013 (5) TMI 37
Entitlement of deemed credit – availing benefit of Notification No.01/93-CE – Appellant SSI manufacturer availed MODVAT Credit for the inputs used in the manufacture of final products and also availed deemed credit on the ingots and re-rollable materials of iron and steel purchased from outside. As per Board's letter F.No.TS/36/94 the re-rollers availing the exemption under Notification No.1/93-CE were eligible for availing the Deemed Credit on the inputs. Revenue denied the same. In the appeal preferred by the Appellant, following the decision of the Tribunal in Digambar Foundary v. CCE, [2000 (3) TMI – 78], the Tribunal held that the aggregate value of clearances in the financial year had exceeded ₹ 75 lakhs and Appellant was not eligible for the benefit. Held that - In the present case, Appellant is a SSI manufacturer who can availed the benefit up to the given value limit i.e. ₹ 75 lakhs will continue to be categorised as one still availing and entitled to the benefits of the Notification even after the value limit is crossed and also the same has not crossed the value of clearance of ₹ 200 lakhs during the preceding financial year and availed full exemption under Notification No.1/93-CE and thereafter started paying duty. Therefore, Appellant cannot said to be not availing exemption under Notification. The Deputy Commissioner had recorded factual finding that the Appellant satisfied the conditions Notification No.1/93-CE and Ministry's Deemed Credit Order TS/36/94 TRU and applying the ratio laid down by the Division Bench of Himachal Pradesh High Court in Sood Steel Industrial (P) Limited v. Commissioner of Central Excise [2009 (4) TMI-62]. Thus, the order of Tribunal cannot be sustained. Appeal is allowed.
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2013 (5) TMI 36
Rejection of claim of interest on the belatedly sanctioned rebate claims.- Held that - This Tribunal has no jurisdiction to pass any order and is barred from considering the appeal, same is transferred to the Joint Secretary, Government of India, New Delhi for his further action.
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2013 (5) TMI 35
Waiver of pre-deposits - Demand of credit along with interest & penalties - Appellant avail Cenvat credit on imported inputs – Department contended (i) credit has not been taken on original triplicate copies and (ii) also credit as additional customs duty had been paid through DEPB and the same is not admissible. –Held that - Rule 9 of Cenvat Credit Rules in respect of imported goods, the bill of entry as the document for the purpose of taking Cenvat credit of additional customs duty paid and secondly whether Cenvat credit is admissible of the additional customs duty paid through DEPB tribunal made reliance on Seshasayee Paper and Boards Ltd. v. CCE, Salem – [2007 (8) TMI 53 - CESTAT, CHENNAI] and similar cases. Hence the requirement of pre-deposit is waived for hearing of the appeal and recovery thereof is stayed till disposal of the appeal.
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2013 (5) TMI 34
Clandestine removal - statement of other persons – Search was conducted and some unaccounted goods were seized.– Confiscation - Demand of duty/penalty – Held that – duty demand for goods found short in the premises of the first appellant is payable. Further the first appellant has to explain the nature of the goods found at the premises of Rider Sales Corporation which is its own premises. There is no argument that the goods manufactured at the premises of Deepak Enterprises were being sent to this premises. So in the facts of the case the duty demanded in respect of such goods also is maintainable unless the goods found short at the factory and the goods found at the premises of Rider Sales Corporation are the same. The adjudicating authority may check this aspect and quantify the demand. Regarding goods seized at the premises of various dealers - held that:- the only evidences are the statements of the dealers and the same were not allowed to be cross-examined apparently because they are co-noticees. Once the persons giving statements are not cross-examined the value of the statements as evidence comes down. This aspect also is not considered in investigations and proceedings. Considering all these aspects I am of the view that the duty demand on goods seized at the dealers’ premises is confirmed without adequately proving the case that there was excise duty liability to be discharged by the first appellant in respect of the goods and such liability was not paid. That being the case the confiscation of goods and penalties imposed on the dealers are not maintainable. So the appeal by appellant is partially allowed as per orders above.
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2013 (5) TMI 33
Manufacture - Department raised the questions Whether the printing and plastic/varnish coating of plain paperboard amounts to manufacture; and - If so, whether the printed and plastic/varnish coated paperboard sheets are classifiable under Heading 4811 or under Heading 4911 in which case, the rate of duty would be nil. Held that - We are of the view that the judgment of the Apex Court in Union of India v. J.G. Glass Industries Ltd. reported [1997 (12) TMI 110 – S.C] is squarely applicable to the facts of this case as in this case, admittedly, plain paperboard and printed paperboard, both can be used for making cartons for packaging. Hon’ble Supreme Court in case of Rollatainers Ltd. v. Union of India reported in [1994 (7) TMI 86 – S.C.] which has also been relied upon in its above-mentioned judgment in case of Union of India v. J.G. Glass Industries Ltd. (supra) has held that the plain carton even after printing remains a carton i.e. the product of packaging industry and they do not become the product of printing industry after printing. In view of the above discussion, we hold that the process of printing and varnish/plastic coating of plain cartons received by the appellant does not amount to manufacture and as such no duty is chargeable on the same. The impugned order, therefore, is not sustainable. The same is set aside. The appeal is allowed.
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CST, VAT & Sales Tax
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2013 (5) TMI 60
Inter state v/s Intra state sale - Claim of refund of VAT deposited with interest - U.P. Vat Act - allegation of dept. of inter state sale of natural gas in Uttar Pradesh treating the sale within the State of U.P., therefore eligible to tax under U.P. Vat Act - Held that:- It is not in dispute that instant writ petitioners are also purchasing natural gas from Reliance Industries Ltd. and VAT was charged by the State of U.P., which was assailed by the Reliance Industries Ltd. by filing writ [2013 (5) TMI 32 - ALLAHABAD HIGH COURT] recording a finding that the sale transaction which is the subject matter of the instant case, is not an intra-state sale but is an inter-state sale and State of U.P. lacks jurisdiction to impose tax (VAT), allowed the bunch of writ petitions with all consequential benefits quashed the impugned order and directed the State Government to refund the tax realized to the assessees expeditiously. Thus the State Government also in the present case is directed to refund the tax realized to the assesses, expeditiously.
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2013 (5) TMI 59
Delayed payment of entertainment tax - Petitioner is the proprietor and owner of the Cable T.V. Network - whether interest can be demanded on delayed payments of entertainment tax? - assessee contested against penalty levy as violation of the principles of natural justice - Held that:- From perusal Rule 16 of Rules, 1997, it reflects that installment of entertainment tax, if not paid within the time specified for such payment, the proprietor is liable to pay interest calculated at such rate as may be prescribed in additional to such tax or penalty or installment. Thus, it is clear that there is a liability to pay interest on belated payment of installment. Rule 11 says that the interest can be levied at the rate specified therein from the date the instalment became due but was not paid accordingly. Thus the liability to pay interest existed even earlier to the impugned demand. The quantification of interest was provided under the rule by prescribing the rate of interest in Rule 11 which was made after period in question. But the rule read in that context provides that the interest would be payable from the date the tax became due but was not paid. Thus, it is clear that the impugned demand levying interest on delayed payment is valid. As the appellants had given incorrect information with regard to total number of connections given by them & requisite information was not provided in spite of issuance of notices and requests made to the petitioner before imposition of penalty but in spite of grant of sufficient opportunities, the petitioner did not give correct information - willful mis-statements and suppression of facts thus the imposition of penalty is not in violation of the principles of natural justice.
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2013 (5) TMI 58
Rate of tax on electrical washing machines - 12% or 8% or 5% - notification no.298 dated 29.1.2000 u/s 3-A of the U.P. Trade Tax Act - Held that:- When the finding of the tribunal itself is that the assessee is manufacturing fully automatic washing machines, then the conclusion drawn by the tribunal that it is liable to be covered as electrical item, is not justified in view of judgment of B.P.L. Versus State of A.P. (2001 (1) TMI 87 - SUPREME COURT OF INDIA) wherein held that electrical appliances are quite different from electronic appliances and therefore electrical goods which are not to be covered under the entry electronic equipments. Thus fully automatic machines manufactured by the assessee should be taxed at the rates applicable to the electronic equipments i.e. to say that at the rate of 8%. The impugned order of the tribunal is set aside.
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Wealth tax
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2013 (5) TMI 61
Waiver application u/s 31(2A) of the Wealth Tax Act disallowed - Held that:- It can safely be held that the assessee has co-operated in the assessment proceedings & the business of the assessee has almost been shut down and the assessee is highly indebted to bank to the tune of Rs.658 crores Thus all the three ingredients of section 31(2A), i.e. payment of such amount has caused or would cause genuine hardship to the assessee, default in the payment of amount on which interest has been paid or was payable due to circumstances beyond the control of the assessee and the assessee has co-operated in any inquiry relating to the assessment are present and the Income Tax Commissioner, Meerut was himself convinced of the said fact and it is for the said reason that he allowed the waiver application, though in part. Whether the matter requires to be remitted back to the authorities for consideration of the question whether the waiver application should have been allowed in its entirety - Held that:- Applying the principles of B.M. Malani case [2008 (10) TMI 2 - SUPREME COURT] to the facts of the instant case, it can safely be held that in case the waiver application is being rejected in part, the reasons should have been spelled out. In absence of any reason being recorded in the impugned order for rejecting the waiver application in part, the said part of the order cannot be sustained - application of the assessee under section 31(2A) allowed in its entirety holding that the petitioner has succeeded in making out a case for complete waiver of interest.
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Indian Laws
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2013 (5) TMI 40
Repayment of loan advanced - Dishonor of cheque – This appeal directed against the judgment and order passed by a learned single Judge of the High Court of Madhya Pradesh Bench, whereby the conviction and sentence of one year alongwith a fine of Rupees One Lakh and Twenty Thousand imposed on the appellant for commission of an offence under Section 138 of The Banking Public Financial Institutions and Negotiable Instruments Act, 1988 has been set aside and the criminal revision was allowed. Held that - The absence of any details of the date on which the loan was advanced as also the absence of any documentary or other evidence to show that any such loan transaction had indeed taken place between the parties is a significant circumstance. So also the fact that the cheque was presented on the day following the altercation between the parties is a circumstance that cannot be brushed away. In the totality of the above circumstances, the High Court was perfectly justified in its conclusion that the prosecution had failed to make out a case against the accused and in acquitting him of the charges. With these observations in elucidation of the conclusion drawn by my worthy colleague, I agree that the appeal fails and be dismissed.
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