TMI Tax Updates - e-Newsletter
May 6, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Amendment to Rule 12 and Forms SAHAJ (ITR-1), ITR-2, ITR-3, SUGAM (ITR-4S), ITR-4 AND ITR-V - substituted - Notification
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Income Tax:
Depreciation on Rail Over Bridge - though Rail Over Bridge is not in the name of the assessee but assessee has physical possession and right to collect the toll - depreciation allowed - AT
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Income Tax:
Addition of disallowance u/s 14A to the book profit computed u/s 115JB - Unless a particular expenditure is debited to the P&L A/c relating to the earning of exempt income, the same cannot be imported into the computation of book profit - AT
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Income Tax:
Special audit - nature of the accounts - complexities - the elaborate reasoning is not required to be given. - opportunity had been provided to assessee - Order u/s 142(2A) sustained. - HC
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Income Tax:
Deduction u/s.80IB - manufacture - standardisation and pasteurization of milk - the issue relating to pasteurization of raw milk amounts to manufacture or not stands decided against the assessee - AT
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Income Tax:
Compensation received – Non-compete fee - for phasing out the production - he second proviso to section 28(va) have been fulfilled and therefore the assessee is entitled to the benefit. - AT
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Income Tax:
Capital gain – benefit of indexation - property received after the death of her father - benefit of indexation allowed since the holding of the father - AT
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Income Tax:
The payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly, the assessee is not liable to deduct TDS under S.194A - AT
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Corporate Law:
Amalgamations - Locus Standi - The creditors of the transferee Company would have no right to intervene in the petition filed by the transferor Company under Section 391 of the Companies Act. - HC
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Service Tax:
Removal as such - There is no such provision to reverse credit of service tax availed in relation to such inputs or capital goods when removed from the factory. - AT
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Central Excise:
Denial of refund claim of Rebate of duty - Mere pendency of revision before the C.G. at the instance of the department, is of no consequence - HC
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Central Excise:
Drawback benefit - The argument of the revenue that since the petitioner paid the excise duty or CENVAT credit subsequently after issuance of show cause notice, hence, the petitioner is not eligible for the aforesaid benefit is not acceptable - HC
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Central Excise:
Cenvat credit on furnace oil - denial of claim - job work - the inputs can be used within the factory of production or in any other factory of the same manufacturer. - AT
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VAT:
Reasoned order - natural justice - Reasons substitute subjectivity by objectivity. - the affected party should know why the decision has gone against him. - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2013 (5) TMI 118
Depreciation on Rail Over Bridge - whether CIT (A) erred in Deleting the disallowance of depreciation although the legal ownership of the said assets was on the assessee company - Held that:- Held that:- Tribunal in the assessee’s own case on the identical set of facts upheld the order of the Ld. CIT (A) in favour of the assessee though Rail Over Bridge is not in the name of the assessee but assessee has physical possession and right to collect the toll on the said bridge as relying on Mysore Minerals Ltd. vs. CIT [1999 (9) TMI 1 - SUPREME Court]. - Decided in favor of assessee. Prior Period Expenses - rebate on Toll Income - CIT (A) deleted the disallowance - Held that:- CIT(A) has followed the Order of the Tribunal in assessee’s own case thus no interference is called for. Appeal of revenue dismissed.
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2013 (5) TMI 117
Addition of disallowance u/s 14A read with Rule 8D to the book profit computed u/s 115JB - MAT - Minimum alternate tax - Held that:- As decided in case of M/s.Essar Teleholdings Ltd. v. DCIT [2013 (5) TMI 116 - ITAT MUMBAI] relying on Goetze (India) Ltd. v. CIT [2009 (5) TMI 615 - ITAT DELHI] the amount disallowed u/s 14A cannot be added to the amount of book profit u/s 115JB. Unless a particular expenditure is debited to the profit and loss account relating to the earning of exempt income, the same cannot be imported into the computation of book profit as clause (f) of Explanation 1 to section 115JB which only refers to the amount debited to the profit and loss account. Prior period expenses - the same have been debited to the profit and loss account - Held that:- Starting point for computing book profit u/s 115JB is the amount of net profit as disclosed by Profit and loss account. Only the items enumerated in Explanation 1 to section 115JB are required to be increased for determining the book profit. There is no reference to increasing the amount of net profit by the prior period expenses in Explanation 1 to section 115JB. CIT(A) was justified in deleting the addition.
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2013 (5) TMI 116
Disallowance u/s 14A r.w.r. 8D - Held that:- In the light of the decision of Godrej Boyce Vs DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) set aside the orders of the authorities below and hold that no disallowance u/s. 14A shall be made by applying the method provided u/R 8D of the I.T Rules, in the present assessment year which is prior to A.Y. 2008-09 and the disallowance has to be worked out by the AO on some ‘reasonable basis’ and not Rule 8D - restore the matter to the file of the AO for deciding the quantum of disallowance. Addition of disallowance u/s 14A to the book profit computed u/s 115JB - Held that:- As decided in Goetze (India) Ltd. v. CIT [2009 (5) TMI 615 - ITAT DELHI] the amount disallowed u/s 14A cannot be added to the amount of book profit u/s 115JB. Unless a particular expenditure is debited to the profit and loss account relating to the earning of exempt income, the same cannot be imported into the computation of book profit as clause (f) of Explanation 1 to section 115JB which only refers to the amount debited to the profit and loss account - in favour of the assessee.
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2013 (5) TMI 108
Special audit - nature of the accounts - complexities - in the interest of the Revenue - Held that:- It reflects from the report that Auditor have pointed out many infirmities in the Assessee's account. In Purvanchal Vidyut Vitran Nigam Ltd. Versus UOI reported in [2010 (2) TMI 625 - Allahabad High Court] it has been held that the object behind enacting Section 142 (2A) is to assessed the A.O. in framing a correct and proper assessment based on the accounts maintained by the assessee and when the assessing officer finds the accounts of the assessee to be complex, in order to protect the interest of the revenue. Further it was held that where the opportunity has been given to the assessee and their proper reason for framing the opinion that the nature of the accounts is complex and in the interest of the revenue, special audit is necessary and the direction for special audit cannot be said to be without material and the approval granted by the Commissioner of Income Tax cannot be said to be mechanical and without application of mind. Furthermore, the proceedings under Section 142 (2A) of the Act is not strictly a judicial proceeding and, therefore, the elaborate reasoning is not required to be given. In the instant case, notice issued to the petitioner has contained issues in brief, which the A.O. thinks to be necessary and the reasons assigned therein is perfectly justified and opportunity has also been provided to the petitioner prior to impugned order. - Decided against the assessee.
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2013 (5) TMI 107
Whether Tribunal was justified in granting relief u/s 80HHC to assessee on the issue of gain on forward currency contract without appreciating the fact that the gain on exchange difference is nothing but speculation profit and not related to the business of the assessee? - Whether Tribunal justified in directing AO not to exclude this income from the profits eligible for deduction u/s. 80HHC without appreciating that when the assessee enters into a forward contract the assessee stands to benefit by the fluctuations in foreign exchange irrespective of the fact whether the trade agreement exists or not?" - Held that:- Considering the finding of the High Court on the aforesaid questions in [2010 (6) TMI 668 - GUJARAT HIGH COURT] those questions would certainly need consideration and decision by the High Court. Therefore, without expressing any opinion on those questions on merits, remand the matter to the High Court with a request to the High Court to examine Questions as proposed by the appellant,
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2013 (5) TMI 106
Deduction u/s.80IB - manufacture - standardisation and pasteurization of milk - Held that - There is no dispute to the fact that the issue relating to pasteurization of raw milk amounts to manufacture or not stands decided against the assessee by the decision of the Special Bench of the Tribunal (Pune) in the case of B.G. Chitale Vs. JCIT reported in [2008 (6) TMI 303 Pune] Therefore, the issue has to be decided against the assessee. Since the jurisdictional High Court in the case of the assessee for the preceding two years has already admitted the substantial question of law which has already been mentioned above, therefore, in view of the declaration u/s.158A(1) filed by the assessee in Form No.8, we direct the Assessing Officer to amend the order, if the issue is decided in favour of the assessee at a later date. We hold and direct accordingly. Disallowance out of the travelling, conveyance, repairs and maintenance of vehicles, postage and telephone etc. - Held that - After hearing both sides we find the assessee claimed an amount of Rs.13,35,085 towards travelling and conveyance, vehicle repairs and maintenance, guest entertainment and postage and telephone expenses etc. for the impugned assessment year. The Assessing Officer disallowed an amount of Rs.75,000 out of the said claimed expenses on estimate basis in absence of maintenance of log book for vehicles and telephone call register with the observation that possibility of their use for personal purposes cannot be totally ruled out. The Ld. CIT(A) has upheld the same. Since the assessee could not improve its case before the Tribunal, we are not inclined to interfere with the orders of the authorities below. Accordingly dismissed.
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2013 (5) TMI 105
Granting of interest on MAT credit u/s 244A - Held that - The assessee was entitled to a refund of excess tax paid over and above the tax which was computed as being due and payable. Interest under section 244A was allowable. In the absence of any distinguishing feature brought on record by the Revenue, we respectfully following the decision of the Hon'ble jurisdictional High Court in CIT vs. Tulsyan NEC Ltd. [2010) 12 TMI 23 SC] which is binding on us. In this view of the matter we are of the view that there is no mistake in the order of the Tribunal, therefore, the Misc. Applications filed by the Revenue for the assessment years 1998-99 & 1999-2000 are rejected.In the result, Revenue's Misc. Applications stand dismissed.
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2013 (5) TMI 104
Addition in income – unexplained income - investment in land - entire payment for purchase of land in cash - Held that - It is a fact that during the course of assessment the assessee was asked to furnish name, address, PAN number along with identity proof and confirmation to whom the payments have been made but there was no compliance by the assessee. There is nothing on record to demonstrate that the aforesaid details were produced even before CIT(A). - we are therefore of the view that to meet the ends of justice the matter be sent back to the file of the A.O. with a direction to him to decide the matter afresh.
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2013 (5) TMI 103
Compensation received – Non-compete fee - for phasing out the production - whether capital receipt or revenue receipt – Held that - Since the ld. CIT(A) has considered the various details furnished by the assessee before him and satisfied himself that the compensation received by the assessee was for phasing out the use of CTC as required under the multilateral fund of the Montreal Protocol, therefore, the provisions of the second proviso to section 28(va) have been fulfilled and therefore the assessee is entitled to the benefit. - Decided in favor of assessee. Decision in ACIT Versus Tarak Chemicals (P) Ltd. [2012 (6) TMI 659 - ITAT, Mumbai] followed.
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2013 (5) TMI 102
Capital gain – benefit of indexation - asset transferred as gift - Benefit of deduction claimed on account of indexed cost of acquisition while computing the long term capital gain. - According to the AO, the assessee had received the property after the death of her father in the financial year 2001-02 and since she was possessing/owning the said property only from that year, the indexation was to be allowed only from the financial year 2001-02. Held that - Respectfully following the decision of Bombay High Court DCIT vs. Manjula J. Shah reported in [2011 (10) TMI 406] (Mumbai) we uphold the impugned order of the learned CIT(Appeals) giving relief to the assessee on this issue and dismiss the appeal filed by the Revenue.
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2013 (5) TMI 101
Rejection of claim exemption u/s 11 & also of depreciation – Assessee has not obtained approval u/s. 10(23C)(iv) of the Act. None appeared for respondent - dispose of this appeal ex-arte =qua – Held that - if donations are received compulsorily for the admission of students, by whatever name it may be called, i.e. donation, building fund, auditorium fund, etc. over and above the prescribed fee, from the students, the assessee would not be entitled for exemption either under S.10(23C) or under S.11 of the Act. In consonance with the consistent view of the Tribunal in similar matters, we set aside the impugned order of the CIT(A) and restore the matter to the file of the Assessing Officer for fresh examination of the matter in relation to the issue in dispute. The Assessing Officer is accordingly directed to verify in respect of each asset on which depreciation is claimed, as to whether the value of such asset was in fact allowed under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
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2013 (5) TMI 100
Addition u/s 40(a)(ia) - TDS on the chit dividend paid to the subscribers. - Held that - the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly, the assessee is not liable to deduct TDS under S.194A - Decided in favor of assessee. Restricting the proportionate disallowance of expenses on collection made by the assessee on behalf of its subsidiary companies - Held that - The CIT(A) has rightly observed that it is only the staff in certain branches which would be collecting subscription on behalf of the subsidiary companies. In the aforesaid view of the matter, the order passed by the CIT(A) in restricting the disallowance appears to be reasonable and calls for no interference. Accordingly, we uphold the order of the CIT(A). - Decided against the assessee. TDS u/s 194C - composite contract - division of work order - addition u/s 40(a)(ia) - Held that - the payments have been artificially broken up to avoid the TDS provisions. If the payments have been made in terms with the MoU for carrying out certain work then certainly the TDS provisions are attracted and the assessee was obliged under the Act to deduct tax at source. Even as per the break up given by the assessee certain payments have been made towards hire charges of plants, generators, and other equipment which certainly attract TDS provisions. As the assessee has not deducted at source from the payments made to M/s Ushakiran Movies Ltd., in our view, the disallowance made u/s 40(a)(ia) was justified. - Decided against the assessee.
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2013 (5) TMI 99
Income earned from sale of shares as long term capital gain - Business income or capital gains - intention of the assessee - Held that - the Assessing Officer as well as the CIT(A) have not examined the issue from this angle. The lower authorities have also rejected the assessee's claim under a misconception that share transactions were not routed through Demat account, which the assessee has proved to be wrong by producing the copy of the Demat account before us. Considering the fact that the revenue authorities have not properly dealt with the facts, we deem it fit and proper to remit the matter back to the file of the Assessing Officer, who shall examine all the documents submitted before him in this regard and consider the issue afresh keeping in view the parameters laid down by the Hon'ble Jurisdictional High Court in case of PVS Raju and Anr. V. Additional CIT, [2011 (7) TMI 818]. Needless to mention the Assessing Officer shall afford a reasonable opportunity of being heard to the assessee before finalizing the proceedings.
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Customs
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2013 (5) TMI 98
Pre deposit – Condition precedent for entertaining the appeal – Petitioner submits it cause undue hardship – The DRI Officers intercepted a container of the petitioner and proceeded against the petitioner by that the goods did not possess the basic shape of the shoe upper and more than 50% of the consignment was unusable/used waster and the actual value of the goods was declared wrongly by the petitioner accordingly penalty of Rs.50 lakhs was imposed u/s 114 and 114-A in addition to recovery of the drawback amount. Petitioner filed appeal before the first respondent-CESTAT, the CESTAT came to the conclusion to entertain the appeal on condition of pre-deposit to be made by the petitioner, as extracted above. Held that:- In this case, the CESTAT took into account all the above legal principles and was lenient in ordering only Rs.20 lakhs as pre-deposit as against Rs.50 lakhs, by waiving the balance penalty and the drawback amount in this regard, it is worthwhile to notice a decision of a Division Bench of this Court reported in Trendy Moods Vs. Customs, Excise and Gold Control [2008 (12) TMI 215 - HIGH COURT OF JUDICATURE AT MADRAS], wherein, the Division Bench, after taking into account the various decisions of the Supreme Court, for and against, ultimately came to the conclusion that the capacity of the appellant therein to pay the amount having been noticed and in the absence of any financial burden, it cannot be construed that there is an undue hardship for the appellant therein to resort to claim waiver of pre-deposit. Hence, it is not proper for the petitioner to approach this Court and challenge the impugned order of the CESTAT. Considering the submissions of the petitioner, he shall go before the first respondent-CESTAT and comply with the impugned order of the CESTAT, within a period of two weeks from the date of receipt of a copy of this order.
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2013 (5) TMI 97
Appellant imported food products and declared assessable value through bill of entry which n the view of department is not correct/undervalued. – Accordingly demand of differential duty/interest & penalties imposed - Held that - However, in this case there is admission by the appellant admitting undervaluation to the extent of 30%. Since that is the only evidence available the differential duty demand should be restricted to loading of declared price by 30% only. Further we reduce the redemption and penalty. Accordingly appeal is partially allowed.
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2013 (5) TMI 96
Revenue appeal - Valuation dispute of imported goods – Nobody appeared for respondents – Enhancement of value was without any reason disclosed by the Revenue and without first establishing the transaction value as incorrect and made on the basis of NIDB data – Held that - It is well settled that without adducing reasons for rejecting transaction value and without demonstrating that the data taken from NIDB satisfies the requirement of Rule 4 or Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and without giving an opportunity to the importer to argue how the goods imported by him were not comparable, NIDB data cannot be blindly used to enhance the value of any imported goods. We accordingly reject the appeal.
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Corporate Laws
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2013 (5) TMI 95
Sanction of the Scheme of Arrangement - petition under Sections 391 to 394 of the Companies Act, 1956 - objection of RD that there is no mention whether the Transferor companies have complied with the AS-14 issued by ICAI - Held that:- As regards AS-14 the Petitioner companies have undertaken that to the extent that the Scheme deviates from AS-14, the Transferee company will make proper disclosures of such deviation in its profit and loss account and balance sheet in terms of Section 211 (3B) of the Act read with AS-14. Further it would be placed before the shareholders of Indus for adoption. In Hindalco Industries Limited (2009 (6) TMI 581 - HIGH COURT OF BOMBAY) as held that while approving a scheme, deviation from the AS per se could not be a ground to reject the scheme. This Court is satisfied with the undertaking given by the Petitioners to the above extent. Consequently, this objection of the RD does not survive. Objection concerns the shareholding of the Transferor companies in Indus - Held that:- It seems that there is no change in the overall position of the assets in any of the shares in the Transferee company being issued to the Transferor companies in the same ratio as their contribution of the PIA. Further the PIA proposed to be contributed has been verified by an independent technical agency appointed by it. The explanation offered by the Petitioner companies that no valuation report is required is accepted and this objection of the RD is negatived. Objection concerning the transfer of licences from the Transferor companies to the Transferee company, i.e., Indus - Held that:- Indus itself has registration as IP-I. Therefore, the question of transfer of registration of certificates from the Transferor companies to Indus does not arise. Further a perusal of the registration certificates shows that this is a complete compliance under the requirements of the Indian Telegraph Act, 1885. The change of name of the companies has also been duly recorded by the authority issuing the certificates. Thus there was no third party interest involved in the scheme of merger. The shareholders, secured and unsecured creditors had also given their written consents to the scheme and the share exchange ratio proposed therein, thus this objection of the RD also does not survive. Objection of the RD concerning the stand of PSIPL - Held that:- , it requires to be noted that majority of the unsecured creditors approved the Scheme at a meeting convened for that purpose on 24th December 2011. The report of the Chairperson of the said meeting was perused by this Court and has been enclosed with the affidavit filed by the Petitioners. Indeed, when the requisite majority had approved the Scheme, the fact that one unsecured creditor had objected to it will not make a difference. It has been clarified by the Petitioners in the affidavit dated 11th April 2012 that Indus has no creditor by the name of KEPL however, it has a creditor by the name of Karamtara Engineering Private Limited (‘Karamtara Engineering’) which served notice under the Act. The reply sent by Indus to Karamtara Engineering denying its claim has been enclosed with the affidavit and no further correspondence resulted from the said exchange. It is further submitted that Indus has a sound financial position and the Scheme has been approved by 99.892% in value of the unsecured creditors. In the circumstances, the above objection of the RD is negative. Objections of the ITD - no separate notice was issued in the petition to the Central Government as contemplated under Section 394A of the Act - Held that:- for many years now the practice of the RD accepting notices in petitions under Sections 394A of the Act on behalf of both the MCA and the Central Government has had the statutory backing by way of the notifications issued under the Act. The very purport of the notification under Section 637 (1) of the Act is to obviate multiple notices having to be issued to different departments and Ministries of the Central Government. It is expected that the RD would seek instructions from the concerned departments and Ministries as regards the Scheme submitted for approval. Consequently, this Court rejects the contention of the ITD that the present petition cannot proceed for want of separate notice to the Central Government. Petitioner companies have suppressed the fact that the Petitioners 1 to 3 had entered into an ‘Indefeasible Right to Use Agreement’ (‘IRU Agreement’) with Indus in 2008 with an effective date of 1st January 2009 - Held that:- The grant of sanction of the Scheme by way of the present judgment will not defeat the right of the ITD to take appropriate recourse for recovery of the previous liabilities of any of the Transferor companies or Transferee company. The proceedings arising out of the AOs passed against the Transferor companies or Transferee company will not be affected by the present judgment. In view of the above conclusions, this Court does not consider it necessary to deal with the objection of the Petitioner companies regarding the locus standi of the ITD to oppose the Scheme. Thus there appears to be no impediment to the grant of sanction to the Scheme as whole of the undertaking, the property, rights and powers with all the liabilities and duties of the Transferor companies shall be transferred to and vest in the Transferee company without any further act or deed. Upon the Scheme coming into effect, the Transferor companies shall stand dissolved without winding up & will not be construed as granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law. The Petitioner companies will comply with the statutory requirements in accordance with law.
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2013 (5) TMI 94
Amalgamations - Locus Standi - Challenge the scheme by a person who is neither a shareholder nor a creditor of amalgamating company - The appellants herein/the original applicants are unsecured creditors of VAL, the demerged Company. They filed an application challenging the scheme of amalgamation on various grounds and more particularly on the ground that if the scheme is sanctioned, it would have adverse civil consequences and it would adversely affect their interest. - whether the appellants who are the creditors of the transferee Company are entitled to be heard in the petition filed under Section 391 of the Companies Act, by the transferor Company. Held that - The creditors of the transferee Company would have no right to intervene in the petition filed by the transferor Company under Section 391 of the Companies Act. Reliance was placed on judgment of learned Single Judge of this Court in the matter of Mayfair Ltd. In re [2003 (6) TMI 339 - HIGH COURT OF BOMBAY]. In this petition, learned Single Judge has come to the conclusion that the creditor of the transferor Company would equally have right to file his objection to the scheme which is not just and fair to him or to the class of creditors to whom he belongs. In our view, we respectfully disagree with the view taken by learned Single Judge since the provision of Section 391 of the Companies Act cannot be extended to such extent that even third parties namely those persons who are not shareholders or creditors of the Company can be allowed to intervene in such petitions filed under Section 391 of the Companies Act. It is an admitted position that the appellants who are the creditors of transferee Company namely VAL, the demerged Company were duly heard in the petition filed by the said Company in the Madras High Court for getting their scheme sanctioned and the judgment of the Madras High Court is awaited. If the objection raised by the appellants in the said Court is accepted and the scheme is not approved by the Madras High Court, then, the entire scheme will fail and as such, it cannot be said that there is violation of principles of natural justice. We are, therefore, unable to accept the view taken by learned Single Judge in the said two decisions and overrule the said judgments. In our view, therefore, there is no merit in the contention raised by the learned Counsel appearing on behalf of the appellants. The appeals and the applications, therefore, are dismissed. Decision of Apex Court in National Textile Workers Union (1982 (12) TMI 126 - SUPREME COURT OF INDIA) distinguished.
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Service Tax
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2013 (5) TMI 119
Removal as such - Reversal of proportionate cenvat credit of service tax paid on the GTA service - as per dept. instead of utilizing the entire quantity of iron ores in the manufacture of final products, they have sold a quantity of 2455.05 MTs of "iron ores" as "iron ore fines" - demand confirmed and an penalty of ₹ 2,000/- u/r 15 of Cenvat Credit Rules, 2004, besides recovery of interest - Held that:- No merit in the allegation of Department as firstly the input iron ores after being brought to the factory, were subjected to the process of screening and process of screening would definitely a part of the manufacturing process. After the iron ores are subjected to the process of screening, the same could not be called as input as such. Secondly, Rule 3 (5) of the Cenvat Credit Rules, 2004, is directed for reversal of cenvat credit on inputs or capital goods and the same is not applicable to the credit availed on the "input services". See Punjab Steels (2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT) & Chitrakoot Steel & Power (P.) Ltd. (2007 (11) TMI 135 - CESTAT, CHENNAI) wherein held that when the credit availed inputs or capital goods are removed from the factory of the assessee, sub-rule (5) of Rule 3 of the Cenvat Credit Rules, 2004 provides for recovery of equal amount of credit. There is no such provision to reverse credit of service tax availed in relation to such inputs or capital goods when removed from the factory. In favour of assessee.
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2013 (5) TMI 112
Business Auxiliary Service - assessee registered as multi-modal transport operators engaged in making arrangements for export of goods and as a registered service tax Assessee - appeal against pre-deposit order passed by the CESTAT - Held that:- When the question whether Assessee's services are classifiable under Business Auxiliary Service has to be adjudicated upon by the Tribunal, there cannot be a full waiver. In the facts and circumstances of the case, Assessee could be directed to deposit ₹ 20 lakhs instead of ₹ 30 lakhs as ordered by the CESTAT, so that the appeal shall be taken up for hearing on merits without further delay by the CESTAT. Accordingly, the order of CESTAT is modified and Assessee is directed to make pre-deposit of ₹ 20 lakhs within a period of four weeks from today. The Civil Miscellaneous Appeal is disposed of accordingly.
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2013 (5) TMI 111
Payments for taxable service of overseas service provider - appeal against penalties confirmed - Considering the amendment to Section 66A appellate authority waived liability for the period prior to 18.4.2006 but confirmed the liability as assessed for the period subsequent to 18.4.2006 - Held that:- Assessee's contention in so far as penalty is confirmed that the failure to remit service tax subsequent to 18.4.2006 is not wilful but on account of a mis-conception of the assessees liability to remit such service tax is not acceptable as the legislative provision clearly and ambiguously enjoins an obligation on the recipient of the service to remit service tax. There cannot be a plea based on ignorance of a legislative provision. Appeal dismissed.
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2013 (5) TMI 110
Service of transport of goods by road - Assesses are in the business of transportation of coal in tipping trucks from coal stockyard of Northern Coal Fields Ltd. (NCL) including loading of coal into tipping trucks and railway wagons by employing their own pay loaders apart from manual breaking of coal to the stipulated sizes - service tax demand and levy of interest and penalties - Held that:- Services provided by the appellants herein to Northern Coal Fields Ltd. under distinct work orders constitute cargo handling services as defined in Section 65(105)(zzr) and do not constitute transport of goods by road service, as defined in Section 65(105)(zzp) read with Section 65(50b). Since the impugned adjudication orders have failed to consider whether the proceedings against several appellants here are barred by limitation and no extended period of limitation could be invoked in lieu of the transactions having been noticed by the Revenue qua notices issued to NCL and failed to analyse and consider the material on record i.e. that service tax was already assessed/recovered from NCL treating the service/transaction as transport of goods by road, impugned adjudication orders are quashed and the matters remitted to the adjudication authority, to consider and determine whether the extended period of limitation could be invoked in the circumstances and whether service tax liability could again be assessed and levied on the ground that the service provided by the appellants are cargo handling services when the same service and the value thereof was assessed as transport of goods by road and service tax thereon collected from NCL, as the service recipient.
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2013 (5) TMI 109
Condonation of delay - applicant filed these four appeals with a delay of 53 days to 246 days - Commercial Training and Coaching services - Held that:- Applicant failed to give a valid reasoning for such a long delay except the Medical Certificate dt. 29.4.2011 of the Chartered Accountant. It is seen from the Tribunal Order dated 18.4.2011 as referred by the assessee that the applicant engaged counsel to appear hearing before this Tribunal. So, the contention of the assessee that the delay was caused due to sickness of the C.A., cannot be accepted - COD applications dismissed.
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Central Excise
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2013 (5) TMI 93
Denial of refund claim of Rebate of duty - The claim of the petitioner for rebate of duty was denied by the department and the matter was carried in revision before the C.G. who allowed the revision filed by the petitioner and held that the petitioner/applicants are eligible for rebate of Central Excise duty. The matter was remanded back to the original authority for sanctioning rebate. After remand, the department again rejected the claim of the petitioner. The petitioner carried the matter in appeal before the Commissioner (Appeals) Customs and Central Excise Division, Moradabad. The said appeal has been allowed and the order in the appeal has been set aside. Thereafter, the petitioner filed an application for refund of amount. No action is being taken by the department, the present writ petition has been filed. Held that:- Mere pendency of revision before the C.G. at the instance of the department, is of no consequence as held by the Apex Court in the case of Union of India Vs. Kamlakshi Finance Corporation Limited, [1991 (9) TMI 72 - SUPREME COURT OF INDIA]. Therefore refund amounting to ₹ 1,37,833/- alongwith interest has been made out. The petitioner shall be entitled to get interest after expiry of period of three months from the date of application for refund at the rate of 6% per annum i.e. from 13.3.2008 till the date of actual payment of amount. The respondents are also liable to pay the cost of the present writ petition which we assess at ₹ 25000/-. The said amount shall also be paid within a period of one month.
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2013 (5) TMI 92
Miscellaneous application - extension of time for complying with the direction of this Tribunal vide Stay Order seeked - Held that:- Stay order was passed on 23rd August, 2012 on the basis of an offer made by the Applicant No.(i) and sufficient time has been given to the applicants for compliance with the said order from time to time. Also, while passing the order, it was made clear that predeposit of entire amount of other applicants would be waived and its recovery stayed subject to deposit of Rs.2.00 Crores by the Applicant No. (i). The time for compliance has been extended on the request of the applicants but even till date, they have defaulted in making deposit of Rs.75.00 lakhs and also there has been no time frame furnished in the present Miscellaneous Applications for deposit of Rs.75.00 lakhs, instead request for modification of the order dated 22.08.2012, has been sought - Miscellaneous application dismissed.
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2013 (5) TMI 91
Drawback benefit - denial of claim as alleged in the SCN is a concealment, suppression of fact of procurement of inputs without payment of duly for use in the manufacture of export goods and not exporting the said goods on the application in Form ARE-2 which make the Applicant non eligible - Held that:- the petitioner used packing material to manufacture and export of skimmed milk powder, full cream milk powder, butter oil etc. The aforesaid packing material was imported by the petitioner. The petitioner deposited the CENVAT credit and excise duty on the aforesaid material. In such circumstances, the petitioner is eligible to receive benefits of drawback in terms of proviso to Rule 3 (1) of the Rules of 1995. The argument of the revenue that since the petitioner paid the excise duty or CENVAT credit subsequently after issuance of show cause notice, hence, the petitioner is not eligible for the aforesaid benefit is not acceptable because there is no such condition mentioned in the proviso to Rule 3 (1) of the Rules of 1995. See Chandrapur Magnet Wires (P) Ltd. Vs. Collector of C. Excise, Nagpur (1995 (12) TMI 72 - SUPREME COURT OF INDIA) wherein held that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. Also see Commissioner of C. Ex., Mumbai Vs. Bombay Dyeing & Mfg. Co. Ltd. reported in 2007 (2007 (8) TMI 2 - Supreme Court). Thus because the petitioner in the present case had paid the excise duty subsequently to issuance of show cause notice and deposited the CENVAT credit, he was eligible the benefit of drawback - In favour of assessee.
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2013 (5) TMI 90
Demand of in-eligible CENVAT Credit - Stay Petition - Held that:- As it has been held by Hon'ble High Court that M/s Narmada Fabrics Pvt. Ltd be wind up, the Stay Petition and appeal filed are infructuous. Hence, unable to go into the matter and the Stay Petition and appeal filed by M/s Narmada Fabrics Pvt. Ltd. and are dismissed as abated. As regards the penalties imposed on directors of the appellant M/s Narmada Fabrics Pvt.Ltd. and there is a definite role attached to them by adjudicating authority in his findings & whether the act has been done by the appellant or not, needs to be considered in detail with evidences on record, thus both directed to deposit an amount of Rs.50,000/- each within a period of eight weeks from today and report compliance.
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2013 (5) TMI 89
Cenvat credit on furnace oil - denial of claim - assessee contested that oil which was used by them in the manufacture of goods on job work basis - Revenue appeal that Commissioner (Appeals) has erred by not confirming interest on wrong availment of Cenvat credit - Held that:- In cases of manufacturers like the Appellants the final product is the tractor. The intermediate product would be parts which are manufactured for being used in the tractor. In such a case the parts would not be the final product. Thus Rule 57C would have no application. The mere fact that the parts are cleared from one factory of the Appellants to another factory of the Appellants would not disentitle the Appellant from claiming benefit of Notification No. 217/86-C.E., dated 2nd April, 1986 which itself clarifies that the inputs can be used within the factory of production or in any other factory of the same manufacturer. By applying the ratio of Sterlite Industries (I) Limited vs. CCE, Pune [2004 (12) TMI 108 - CESTAT, MUMBAI] it becomes clear that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Inasmuch as, the matter stands decided by the Honourable Supreme Court, we would hold in favour of assessee. Also see ESCORTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, DELHI [2004 (8) TMI 106 - SUPREME COURT OF INDIA] - In favour of assessee.
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CST, VAT & Sales Tax
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2013 (5) TMI 115
Compounding of offence - KVAT Act - Held that:- Taking note of the submission made by the learned counsel for the petitioner that the petitioner has already satisfied more than 50 % of the liability and since the matter has been entertained by the 3rd respondent leading to Ext. P6 order granting conditional stay, to strike a balance in between, this Court finds it fit and proper to modify the condition imposed vide Ext. P6. Accordingly, the petitioner is directed to satisfy a sum of 'One lakh Rupees' and to furnish security for the balance amount, so as to avail the benefit of interim stay during the pendency of appeal. In view of the fact that the time granted by the appellate authority is about to expire, the petitioner is granted a further period of '10 days' to satisfy the condition as aforesaid.
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2013 (5) TMI 114
Goods detention notice - Release of the goods - Tamil Nadu Value Added Tax Act, 2006 - plastic granuels transported was not supported by transit pass - Held that:- petitioner shall pay the sum of ₹ 1,19,260/-, being the amount of tax demanded by the respondent, within a period of one week from the date of receipt of a copy of this order. As regards the compounding fee, without prejudice to petitioner's right to file a revision before the competent authority, the petitioner shall furnish bank guarantee for the sum of ₹ 2,38,720/- being the compounding fee demanded by the respondent.As and when the petitioner complies with the aforesaid conditions, the respondent shall release the goods detained immediately.
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2013 (5) TMI 113
Reasoned order - natural justice - Classification – Revenue contended that thermoplastic road marking material is chargeable to the tax @ 12.5% as it is unclassified material under Schedule V of the UP VAT - Claim of the revisionist that it is classifiable under Schedule II- Part A at Entry No.29 of Act payable @ 4% VAT. Held that - Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the 'inscrutable face of the sphinx', it can be its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the later before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made. - matter remanded back.
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