TMI Tax Updates - e-Newsletter
May 8, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Addition on account of interest @ 2% on advances - Section 144 does not at all apply to the present proceedings because the present proceedings originate from an assessment under Section 143(3) of the said Act. The addition on account of a notional income on advances is deleted - HC
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Income Tax:
Taxability of Receipt of fees after Discontinuation of legal profession after being elevated to the post of Judge of High Court - if the income is not taxable u/s 4, charging section, that cannot be brought to tax u/s 176 - HC
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Income Tax:
Whether income earned by the assessee from rendering legal consultancy is to be treated as exempt u/s 11 or 12 - the activity which is carried out by the assessee is a purely commercial activity, howsoever altruistic be the motive, and it cannot be treated as an educational or charitable activity - AT
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Income Tax:
Claim of brought forward of unabsorbed depreciation - change in shareholding - applicability of restriction u/s 79 - Assessee is not carrying forward and setting off any loss but has unabsorbed depreciation, which is guided by the provisions of section 32(2) and not section 79 - AT
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Income Tax:
Penalty u/s 271(1)(c) - Since the department itself has accepted assessee’s claim for such writing off of preliminary expenses in the immediately preceding assessment year, disallowance of similar claim in subsequent year will not make it a fit case for levy of penalty - AT
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Income Tax:
Books of account maintained by assessee in regular course of business have to be treated as authentic unless there are strong evidence brought on record to show that entries made in the books of account are not reliable, hence, books of account have to be rejected - AT
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Income Tax:
Disallowance of unutilized MODVAT/CENVAT Credit - The purchases which have been debited in the P & L account alongwith MODVAT account and appearing in the closing stock are also with MODVAT account. Thus, no adjustment u/s. 145 was required to be made - AT
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Customs:
Denial of refund claim - refund of 4% additional duty of Customs (SAD) upon sale of goods imported - CBEC circular cannot curtail the scope of benefit available under the Notification. - AT
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Service Tax:
Storage and Warehousing Service provided in relation to Gas / Liquid gas - activity is taxable - since the appellant is State Government undertaking demand beyond the normal period of limitation set aside as there is no suppression of facts - AT
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Service Tax:
Penalty u/s 77 non submission of ST-3 return - reverse charge mechanism - situation of revenue neutrality - imposition of penalty under section 77 shows the non application of mind by the authorities below - penalty waived - AT
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Service Tax:
CENVAT Credit - Invoices in the name of other company wrongly - later corrected on the basis of letter - appellant is legally entitled for the CENVAT credit on all the subject six invoices - AT
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Central Excise:
Rebate / Refund claim - Bar of limitation - delay of only few days - all claims for rebate/refund have to be made only under Section 11B with one exception - where a statute is struck down as unconstitutional. - The limitation period of has to be strictly applied - SC
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Central Excise:
Invocation of extended period of limitation - Valuation of goods - It is not disputed that non-inclusion of the cost of amortization was not disclosed to the department and therefore this vital fact was suppressed - appellant have subscribed in the invoice to fake declaration that price is the sole consideration for sale and no other consideration in any form is flowing back to them - AT
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Central Excise:
Availment of irregular CENVAT Credit by the job worker - Invoices in name of other person i.e. Principal manufacturer - Credit allowed - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2015 (5) TMI 213
Receipt of fees after Discontinuation of legal profession after being elevated to the post of Judge of High Court - Taxability of income under the head 'Income from business or professions' - whether Tribunal fell into error in its consideration of Section 176(4)and holding that a sum of ₹ 67,86,669/- reported by the assessee in AY 2009-10 would not be subjected to tax - Held that:- Having regard to the previous rulings, judgments of this Court and the reasoning adopted and with the omission to carry forward things to bring to tax such amounts by indicating the relevant head of income under section 14, the question is fairly well-settled. This is also in accord with the ruling of the Supreme Court in CIT v. Ajaz Products Ltd.(1964 (10) TMI 21 - SUPREME Court) that the subject is not to be taxed unless the charging provision clearly says so. This view has been followed by the Tribunal in this case. One has to look merely at what is clearly said, nothing is to be read in, nothing is to be implied, there being no room for any intendment, one can only look fairly at the language used. See CIT vs. Justice R.M. Datta of Calcutta High Court [1989 (7) TMI 59 - CALCUTTA High Court] We are further of the opinion that the view expressed by the Tribunal is in conformity with the opinion of several High Courts and its own Benches in different States; furthermore, the revenue itself has not thought it appropriate to carry the matter in appeal to the Supreme Court, thus accepting the ruling. The court is also of the opinion that the Tribunal's reasoning does not call for any interference. - Decided in favour of assessee.
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2015 (5) TMI 193
Deduction under Section 80IB(10) as applicable prior to 01.04.2005 - whether project which is cleared as "residential plus commercial" project cannot be treated as housing project and therefore, this direction is contrary to the provisions of Section 80(I)(B)(10)? - Held that:- Projects which are approved by the local authorities as housing projects with commercial element therein. Reading the direction in its entirety and particularly the first sentence thereof, we find that commercial user which is permitted is in the residential units and that too, as per DCR. Examples given before us by the learned counsel for the assessee was that such commercial user to some extent is permitted to the professionals like Doctors, Chartered Accountants, Advocates, etc., in the DCRs itself. Therefore, we clarify that direction (b) is to be read in that context where the project is predominantly housing/ residential project but the commercial activity in the residential units is permitted.
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2015 (5) TMI 192
Addition on account of interest @ 2% on advances - Held that:- there was nothing to show that the assessee had, in fact, received interest or that the company to whom the loan was given had, in fact, paid interest to the assessee. There was also nothing on record to show that the alleged interest was not reflected in the accounts. The only finding recorded was that the assessee “ought to” have charged interest. Referring to an earlier decision of the Guwahati High Court, in Highways Construction Co. Private Limited v. CIT: [1992 (11) TMI 86 - GAUHATI High Court] the Court observed that their attention had not been invited to any provision of the Income-Tax Act empowering the income-tax authorities to include in the income, interest which was not due or not collected. In similar vein, when asked Mr Sahni, appearing for the respondent to point out some provision of the Income Tax Act, whereunder such "notional‟ interest could be made the subject matter of tax, the only reference he made was to Section 144 of the said Act. However, we are clear that Section 144 does not at all apply to the present proceedings because the present proceedings originate from an assessment under Section 143(3) of the said Act. The addition on account of a notional income on advances is deleted. - Decided in favour of assessee.
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2015 (5) TMI 191
Assessment completed invoking 153A - Whether the amendment to Section 80HHC(3) by inserting three provisos with retrospective effect from 01.04.1998 could have been invoked to disallow the amounts in respect of concluded assessments for AY 1999-2000 in the assessee’s case - Held that:- The burden was upon the Revenue to prove that the restrictions imposed by the amending Act are reasonable. We find that the Revenue has failed to discharge that burden by pointing out the reason for making classification based on the two aspects which have no reasonable connection with the object of amendment. The appellants are entitled to the reliefs claimed by them to the extent it is admissible - in line with the final order of the Supreme Court in CIT-5 and Anr. v. M/s. Avani Exports and Anr.[2015 (4) TMI 193 - SUPREME COURT]. Accordingly, the substantial question of law relating to the rejection made is answered in favour of the assessee. The matter shall be re-examined by the AO in the light of the Supreme Court’s final order. Since this Court has already ruled upon the merits of the disallowance made, the question as to whether the assessments could have been made under Section 153A is rendered academic; the same is accordingly kept open
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2015 (5) TMI 190
Stickering income received from MRF for labeling 'MRF' on the toys and packing - Eligibility of business income for the purpose of deduction under Section 80HHC - Held that:- In the case on hand, it is evident from the records that the nature of activity carried on by the respondent/assessee and the receipts realised therefrom by the assessee/respondent does not fall under any of the heads mentioned in Explanation (baa) to Section 80HHC and, therefore, the provisions of Explanation (baa) to Section 80HHC does not stand attracted to the receipts received by the respondent/assessee. The decision of the Bombay High Court in Bangalore Clothing Co. case (2003 (1) TMI 89 - BOMBAY High Court ), relied on by the Tribunal is squarely applicable to the facts of the present case. Further, the decision in K.R.M. Marine Exports Ltd. - Vs - ACIT (2006 (1) TMI 116 - MADRAS High Court), on which reliance was placed by the Department, the Tribunal held that in para-20 of the said decision, it has been categorically held that operational activity is one of the parameters for grant of benefit under Section 80HHC. In the case on hand, the activity of the assessee in carrying out labelling 'MRF' on toys using its machinery would squarely fall within the ambit of operational activity. Tribunal was right in holding that the stickering income received from MRF for labeling 'MRF' on the toys and packing, as eligible business income for the purpose of deduction under Section 80HHC - Decided in favour of assessee.
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2015 (5) TMI 189
Reopening of assessment - beyond the period of 4 years - “Software License Fees” paid to the foreign companies was in nature of “Royalty” and thus, “Capital Expenditure” and therefore, it attracts section 195 of the Income Tax Act and therefore payment made without withholding of tax at source - also the assessee had not fulfilled the conditions for eligibility of deduction u/s 10B & the deduction was not in order - Held that:- It is required to be noted that in the original assessment, full particulars with respect to “Software License Fees” by the assessee to the foreign companies was disclosed. Not only that the assessee claimed the same as revenue expenditure. The notice was issued under section 143(3) of the Act and the Assessing Officer also vide communication / notice dated 28/7/2011 called upon the assessee to furnish necessary documents which include the complete details of “Software License Fees”. The assessee was also directed to furnish relevant documentary evidences to establish and prove that “Software License Fees” is in nature of revenue. The assessee submitted complete details of “Software License Fees” and justified its claim that the “Software License Fees” is in the nature of revenue expenditure and not capital expenditure. Only thereafter the Assessing Officer while framing the assessment, treated the payment of “Software License Fees” made to the Foreign Companies as revenue expenditure and allowed the deductions claimed and also accepted the claim of the assessee of deduction under section 10(B) of the Income Tax Act. It cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment with respect to Software License Fees paid to foreign companies and also with respect to deduction claimed under sec.10(B) of the Act, and therefore, the income chargeable to tax has been escaped due to the failure on the part of the assessee to disclose fully and truly all material facts. Under the circumstances, the condition precedent for invoking powers under section 147 of the Income Tax Act to initiate reassessment proceedings beyond the period of 4 years are not at all satisfied. See Niko Resources Ltd. Versus Assistant Director of Income Tax,(2014 (9) TMI 892 - GUJARAT HIGH COURT) as well as Gujarat Lease Financing Limited (2013 (10) TMI 101 - GUJARAT HIGH COURT) - impugned notice u/s 148 is hereby quashed - Decided in favour of assessee.
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2015 (5) TMI 188
Taxability of Receipt of fees after Discontinuation of legal profession after being elevated to the post of Judge of High Court - whether amount received taxable under the head 'Income from business or professions'? - assessee received certain outstanding dues from his past clients - Held that:- Perusing the records of the case/s, we are unable to persuade ourselves to take a different view than that which is taken by the Tribunal to hold that Section 176(4) of the Act does not contain any deeming provision which treats such receipts as as incomplete and which would fall within the head Provisions 'Gains of Business Profits or vocation and it cannot be taxed as income from other sources under Section 176 of the Act. Following the decision in the cases of CIT vs. Justice R.M. Datta of Calcutta High Court [1989 (7) TMI 59 - CALCUTTA High Court] the provisions pertaining to chargeing Section if they cannot apply, such a case was not intended to fall within the charging section. - Decided in favour of assessee.
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2015 (5) TMI 187
Exemption u/s 11 or 12 - whether income earned by the assessee from rendering legal consultancy is to be treated as exempt under section 11 or 12 of the Act - Held that:- assessee is carrying out an educational activity inasmuch as in the process of giving the legal advice to, and carrying out legal work for, the clients, the junior professionals are getting very useful legal education and hands on experience - In the view expressed by Supreme Court in [1975 (8) TMI 1 - SUPREME Court], on the job training to young professionals, even if that be so, is not covered by 'education' in the sense in which income tax law recognizes it. In any event, the activity which is carried out by the assessee is a purely commercial activity, howsoever altruistic be the motive, and it cannot be treated as an educational or charitable activity. - carrying out of the business activity is not incidental to achievement of the main objectives of the trust and, therefore, profits and gains of this business activity cannot be covered by the scope of section 11(4A) either. Just because the profits generated by a business activity are used also for charitable activities does not, by itself, entitle the business profits to be exempted from tax under section 11(4A). - Decided against Assessee.
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2015 (5) TMI 186
Claim of brought forward of unabsorbed depreciation - change in shareholding - applicability of restriction u/s 79 - Carry forward losses already exhausted - Held that:- Assessee is not carrying forward and setting off any loss but has unabsorbed depreciation, which is guided by the provisions of section 32(2) and not section 79. In view of the factual position on record of the AO, the submissions made before the undersigned and in view of the ratio laid down in the case of Subhulaxmi Mills Ltd.[1995 (9) TMI 2 - SUPREME Court] by the Hon'ble Supreme Court the grounds of appeal are allowed. The AO is directed to allow the appellant the claim of set off of carried forward "unabsorbed depreciation" - Decided against Revenue.
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2015 (5) TMI 185
Penalty u/s 271(1)(c) - Disallowance on account of preliminary expenses written off and bad debts writing off - Bar of limitation - Held that:- Assessee filed an appeal before the Tribunal, therefore, as per our considered view the time limit for imposition of penalty is governed by the main provisions of Section 275(1)(a) and no by the proviso to section 275(1)(a). Since the penalty order was passed well within the period of six months from the end of the month, order of ITAT was received by Chief Commissioner, we do not find any merit in the contention of ld. AR that order so passed was barred by limitation. Assessee was proportionately claiming preliminary expenses every year. During the year under consideration assessee has also claimed ₹ 1,10,000/-, which was disallowed by the AO. We found that similar expenses was allowed by the AO in the scrutiny assessment framed u/s.143(3) for immediately preceding year i.e. A.Y.2003-04. Since the department itself has accepted assessee’s claim for such writing off of preliminary expenses in the immediately preceding assessment year, disallowance of similar claim in subsequent year will not make it a fit case for levy of penalty. Accordingly, we do not find any justification for levy of penalty in respect of disallowance of preliminary expenses of ₹ 1,10,000/- written off during the year under consideration. Since the advances were not recovered the same was written off as employees have left the job, which is clear from the page No.3 of the assessment order. However, the AO has disallowed assessee’s claim of bad debts u/s.36(1)(viii) of the I.T.Act and levied penalty/s.271(1)(c) with reference to such disallowance. Similar issue has been dealt by the Hon’ble Delhi High Court in the case of DCM Ltd., [2013 (9) TMI 760 - DELHI HIGH COURT] , wherein it was held that mere disallowance of loss claimed in respect of advances given to subsidiaries which is disallowed in the course of regular assessment, will not entitle the AO to levy penalty for such disallowance. It was observed that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible. When such a claim is made during the course of regular or scrutiny assessment, penalty cannot be imposed as necessarily the claim was bound to be carefully scrutinized both on facts and in law. - Decided partly in favour of assessee.
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2015 (5) TMI 184
Rejection of books of account - estimation of profit - specific defect or deficiency not pointed - Held that:- books of account maintained by assessee in regular course of business have to be treated as authentic unless there are strong evidence brought on record to show that entries made in the books of account are not reliable, hence, books of account have to be rejected. We are of the view, before rejecting the books of account AO should not only give adequate opportunity to assessee to explain the entries made therein, but also point out any specific defect or deficiency in the books of account - Matter remanded back - Decided in favour of assessee.
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2015 (5) TMI 183
Disallowance u/s 40(a)(ia) - CIT(A) held that amendment in the section are clarificatory and retrospective - Held that:- When there was no dispute that the impugned TDS was deposited before the due date of filing of return then we can hold that the intention behind the amendment u/s.40(a)(ia) was to ensure the deposit of TDS and that the evidence of deposit of tax should be placed along with returned filed. In view of the legal position as discussed hereinabove, we are not inclined to disturb the factual as well as legal finding of learned CIT(A), and the same is hereby confirmed - Decided against Revenue.
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2015 (5) TMI 182
Disallowance of deduction of expenses - Whether the CIT(A) is justified in deleting the addition of ₹ 1,14,63,360/- made by the AO on account of provision of expenses - Held that:- CIT(A) has categorically held that the expenses, which are claimed amounting to ₹ 1,14,63,360/- are accrued and ascertained liability and the same was credited to the provision account instead of vendor’s account, in the absence of the final bill/invoice being received from the vendor. The CIT(A) further held that these expenses are not claimed on ad hoc basis nor it a non-existing liability. The CIT(A) was of the view these expenses have accrued in the current year and same is to be allowed as deduction because the assessee admittedly has been following the mercantile system of accounting. The Revenue has not placed on record any material to dispel the categorical findings of the CIT(A). - Decided against Revenue.
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2015 (5) TMI 181
Deduction u/s. 80IB - Held that:- no additional facts have been brought by the AO except that the activity undertaken by the assessee is not a manufacturing activity, but only assembling activity - Following decision of Bhagat Textile Engineers Versus Department of Income Tax [2013 (4) TMI 231 - ITAT AHMEDABAD] - CIT(A) has already treated acitivity of assessee as manufacturing one and held that assessee is eligible for deduction u/s. 80IB - Decided against Revenue.
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2015 (5) TMI 180
Disallowance of unutilized MODVAT/CENVAT Credit - unutilized MODVAT/CENVAT credit was required to be included in the total income of the assessee - Failure to substantiate the reason for not doing do - Held that:- Assessing Officer had taken debit balance entry of MODVAT/CENVAT credit, as credit balance. Assessee is debiting its purchases and crediting sales, inclusive of MODVAT and is also following the method of valuing its closing stock with the MODVAT amount. Balance appearing in the MODVAT receivable under account was on account of fact that while excise duty on purchases of input (yarn) was 12%, which was available to assessee for set off against payment of excise duty on cloth manufactured by it, rate of excise duty on cloth manufactured was only 4%. - CIT(A) was justified in holding that debit balance appearing in MODVAT receivable account is amount which the assessee has already debited in books of account alongwith purchases and since it has opted out of scheme of excise duty payment on manufactured cloth from the MODVAT account, assessee has not been able to set off the above receivable account against any payment of excise duty under the MODVAT scheme. The purchases which have been debited in the P & L account alongwith MODVAT account and appearing in the closing stock are also with MODVAT account. Thus, no adjustment u/s. 145 was required to be made. Accordingly, CIT(A) was justified in deleting addition of ₹ 14,32,533 - MODVAT credit was an irreversible credit available to manufacturers upon purchase of duty-paid raw material. It would not amount to income which was liable to be taxed under Income Tax Act, 1961 - Following decision of CIT vs. Indo Nippon Chemicals Co. Ltd. [2003 (1) TMI 8 - SUPREME Court] - Decided against Revenue.
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2015 (5) TMI 179
Maintainability of appeal - Monetary limit - Applicability to pending cases - Held that:- Board's instruction or directions issued to the income-tax authorities are binding on those authorities, therefore, the department ought not to have filed the appeal in view of the above said provisions mentioned in section 268A of the Act since the tax effect in the instant case is less than the amount prescribed for not filing the appeal. - It is noticed that the CBDT has issued Instruction No.5 of 2014 dated 10.07.2014, by which the CBDT has revised the monetary limit to ₹ 4,00,000/- for filing the appeal before the Tribunal. - CBDT Instruction No.5 of 2014 dated 10.07.2014 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal - instructions issued in the Circulars by CBDT are applicable for pending cases also. Therefore, by keeping in view the ratio laid down in the aforesaid referred to cases [2011 (3) TMI 1488 - High Court of Delhi], we are of the considered view that Instruction No.5/14 dated 10.07.2014 issued by the CBDT are applicable for the pending cases also and in the said instructions, monetary tax limit for not filing the appeal before the ITAT is ₹ 4.00 lakhs. - Decided against Revenue.
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Customs
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2015 (5) TMI 197
Denial of refund claim - refund of 4% additional duty of Customs (SAD) upon sale of goods imported - refund claim was rejected as not admissible and not maintainable on the ground of partial claim, as per Sl. No. 11 of Public Notice 74/2008-Cus dated 17.10.2008 read with Circular No. 16/2008-Cus dated 13.10.2008 - Held that:- Second part refund claim in question is entertainable for refund of SAD, within the provisions of Section 3(5) of Customs Tariff Act read with Notification No. 102/2007. I further hold, following the ruling of the Hon'ble Apex Court in M/s. Sandur Micro Circuits Ltd. (2008 (8) TMI 3 - SUPREME COURT) that CBEC circular cannot curtail the scope of benefit available under the Notification. The appeal is allowed with consequential benefits. The adjudicating authority is directed to dispose of the refund claim within eight weeks from receipt/service of a copy of this order in the light of findings and observations herein. - Decided in favour of assessee.
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Corporate Laws
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2015 (5) TMI 215
Repayment of deposits as on 31/03/2015 u/s 74(2) of the Companies Act, 2013 - Application for exemption from the requirement of maintaining liquid assets under Rule 3A of the Companies (Acceptance of Deposits) Rule, 1975/ Rule 13 of the Companies (Acceptance of Deposits) Rules, 2014 - Permission to repay the existing deposits as per original terms and tenure as accepted by deposit holders - Track record of being regular in servicing and repayment of deposits - Held that:- On seeing the prayer for permission to repay the existing deposits in accordance with the original terms, it appears it is not possible to grant permission to the company to repay the existing deposits as and when deposits are matured after 31-3-2015. If such a relief is granted, it will become nothing but negating the intention of the legislation in Sec 74(1) of the Act, 2013. It might not be the intention of the legislation in providing discretion to the Company Law Board to grant time to the company to repay the deposits as when they are matured, perhaps it has been legislated to extend time enabling the company to pay it sooner than later. Despite the company has stopped receiving any deposits since 31.3.2014, it appears the company has been making bona fide efforts in making repayments to the depositors. The company has sanction letter on hand from the Bank for release of loan for an amount of about ₹ 1000/- Crores towards repayment of FDs. For the reasons stated above, this Bench grants six months since 31-3- 2015 to the company to comply with Section 74(1) of the Companies Act, 2013 in relation to FDs maturing after 31-3-2015. Notwithstanding the fact of date of maturity of FDs, this extension of six months is applicable to all premature deposits pending with the company, which have not been asked for repayment. In case any request comes within these six months of time for payment of any premature deposit pending, the company shall release the same within 30 days from the day any letter of request reached to the company. In case the company fails to make repayment as directed above, the order now passed will be deemed as vacated. Repayment of deposits as on 31/03/2015 - As to relief for extension of two months time for repayment of outstanding deposits by 31.3.2015, the company is given 30 days since 31-3-2015 to clear all deposits due for payment by 31.3.2015.As to relief (b) for exemption from maintaining liquid assets under Rule 3A of the Companies (Acceptance of Deposits) Rule, 1975, this Bench holds that the company shall not utilise the funds earmarked towards liquid assets under Rule 3A for repayment of deposits. - Decided partly in favour of appellant.
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2015 (5) TMI 196
Application under Sections 391 & 394 of the Companies Act, 1956 - Dispensation with the requirement of convening the meetings of their equity shareholders, secured and unsecured creditors - Held that:- In all the 13 companies (transferor companies) and transferee company , all equity share holders, Unsecured creditors and Secured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meeting of the equity shareholders of the all the transferor companies to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. - The application approved.
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2015 (5) TMI 195
Application for Scheme of Amalgamation under Sections 391 & 394 of the Companies Act, 1956 - Held that:- In response to the notices issued in the petition, Mr. A. K. Chaturvedi, Regional Director, Northern Region, Ministry of Corporate Affairs has filed his report dated 2nd March, 2015. Relying on Clause 9.1 of Part-C of the Scheme, he has stated that, upon sanction of the Scheme of Amalgamation, all the employees of the transferor company shall become the employees of the transferee company without any break or interruption in their services. He has further submitted that in Clause 6.2 of Part-B of the Scheme, it has been stated that the transferee company shall account the amalgamation of the transferor company as per pooling of interest method as set out in Accounting Standards-14. He further submitted that in Clause 13 of Part-C of the Scheme, it has been stated that upon this scheme becoming effective, the transferor company shall stand dissolved without the process of winding up. No objection has been received to the Scheme of Amalgamation from any other party. The petitioner/transferee company, in the affidavit dated 3rd March, 2015 of Mr. Dhritiman Bhattacharyya, Counsel of the petitioner/transferee company, has submitted that they have not received any objection pursuant to the citations published in the newspapers on 31st December, 2014.Considering the approval accorded by the equity shareholders and creditors of the petitioner/transferee company to the proposed Scheme of Amalgamation and the affidavit filed by the Regional Director, Northern Region, not raising any objection to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. - Application for scheme of amalgamation approved.
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Service Tax
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2015 (5) TMI 212
Storage and Warehousing Service provided in relation to Gas / Liquid gas - Invocation of extended period of limitation - Imposition of penalty u/s 78 - Held that:- From the letter dtd 7.11.2011 of the Manager of the appellant company addressed to the Deputy Commissioner, Service Tax, it is found that on account of situational problem and commercial experience the appellant company are sharing the common expenses incurred for usage of storage tank to store HCN received 'from M/s RIL and. other expenses. "Storage and Warehousing Service" defined under Section 65(102) of Finance Act 1994 means Storage and Warehousing includes storage and Warehousing Services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage, The taxable service of Storage, and Warehousing Service under Section 65(105)(zza) of Finance Act 1994 means any service provided or to be provided to any person, by storage or in relation to storage and warehousing of goods. It is evident from the definition that the Service Tax is leviable on Storage and Warehousing Service for goods including liquids and gases. On the demand of Service Tax for the extended period is to be set aside. We do not find any material in respect of suppression of fact with intent to evade payment of tax. It is contended by the Learned Advocate that the appellant is a State Government undertaking and entered into agreement for sharing the common expenses with M/s GACL. There is no gain on the part, of the appellant. In our considered view, the demand of tax for the extended period of limitation cannot be sustained. Similarly, imposition of penalty under Section 78 is not warranted. - demand of service tax for the extended period and imposition of penalty under Section 78 are set aside - Decided partly in favour of assessee.
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2015 (5) TMI 211
Penalty u/s 76 for late deposit of service tax - penalty u/s 77 not submission of ST-3 return - reverse charge mechanism - situation of revenue neutrality - Held that:- Appellant was required to pay service tax under reverse charge mechanism. After that they have paid the service tax in time, same was available to them as Cenvat credit. By not paying the service tax in time, appellant has already suffered interest and have not taken credit of the service tax paid. Therefore it is a situation of revenue neutrality. Penalty under section 76 is dropped. However, I consider that imposition of penalty under section 77 shows the non application of mind by the authorities below. As under section 77 penalty cannot be imposed for non-filing of SRT 3 return. In these circumstances, penalty under section 77 is also, set aside. - Decided in favour of assessee.
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2015 (5) TMI 210
Disallowance of CENVAT Credit - Invoices in the name of other company wrongly - later corrected on the basis of letter - Held that:- Six invoices on which the appellant claimed CENVAT credit are in the name of M/s. Hemraj Cable Network. However, the appellant claimed that the name was wrongly mentioned by the service-provider whereas, the invoices were meant for the appellant only. On a careful perusal of all the documents submitted by the appellant, I find that though the name in the invoices was mentioned as Hemraj Cable Network but the same stand corrected on the basis of letter by distributor of M/s. Zee-Turner Ltd., who certified that this mistake is due to feeding error in the computer. This clearly shows that the invoices were issued to M/s. Shivraj Cable Network only and not for anyone else. On a scrutiny of the records such as invoices, account ledger, bank statement, etc. it is clearly found that for all these six invoices the payment was made by the appellant i.e., M/s. Shivraj Cable Network to the service-provider M/s. Zee-Turner Ltd. through banking channel. If any of the particulars required is not mentioned in the document and the Dy. Commissioner of the Assistant Commissioner, as the case may be, is satisfied that the goods or services covered by such documents have been received and accounted for in the books of account of the receiver, CENVAT credit can be allowed. It is found in the present case, that except name of the appellant, on the basis of all the documents submitted by the appellant, it is established that the services were received by the appellant and the same has been accounted for in their books and the payment for the said services were made by the appellant to the service-provider i.e., M/s. Zee-Turner Ltd. - appellant is legally entitled for the CENVAT credit on all the subject six invoices - Decided in favour of assessee.
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Central Excise
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2015 (5) TMI 214
Denial of rebate claim - Bar of limitation - Claim filed beyond period of 6 months / i year - delay of only few days - Held that:- From the law laid down by the decision [Mafatlal Industries (1996 (12) TMI 50 - SUPREME COURT OF INDIA)] it is clear that all claims for rebate/refund have to be made only under Section 11B with one exception - where a statute is struck down as unconstitutional. Further, the limitation period of six months has to be strictly applied. It is clear from Section 11B(2) proviso (a) that a rebate of duty of excise on excisable goods exported out of India would be covered by the said provision. A reading of Mafatlal Industries (1996 (12) TMI 50 - SUPREME COURT OF INDIA) would also show that such claims for rebate can only be made under Section 11B within the period of limitation stated therefor. This being the case, the argument based on Rule 12 would have to be discarded as it is not open to subordinate legislation to dispense with the requirements of Section 11B. Equally, the argument that on a bond being provided under Rule 13, the goods would have been exported without any problem of limitation would not hold as the exporter in the present case chose the route under Rule 12 which, as has been stated above, is something that can only be done if the application for rebate had been made within six months. - Decided in favour of Revenue.
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2015 (5) TMI 205
Power of Commissioner to enhance penalty - Violation of principle of natural justice - Held that:- Appellate order suffers from legal infirmity in absence of notice for enhancement of penalty. Accordingly, the appellate order is set aside - Decided in favour of assessee.
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2015 (5) TMI 204
Valuation of goods - Valuation u/s 4 or u/s 4A - While the appellant was clearing the goods u/s 4A of the above Act, in December'98, it wrote a letter to the department for clarification as to the section under which levy shall be made - whether the conduct of the appellant can be appreciated to be bonafide and it was under such belief in the light of the Board's circular No.625/16-2002 dt. 28.2.2002 - Held that:- The circular has ground that there was persisting confusion in industry which has prevented the appellant to bring the goods under Section 4A of Central Excise Act, 1944. In view of the fact that there is no whisper in the show cause notice as to malafide of appellant, it would be proper to rely on the decision cited by learned consultant in the case of Jaiprakash Industries Ltd. (2002 (11) TMI 92 - SUPREME COURT OF INDIA). - appellant has not acted malafide and its bonafides has come to public record - Decided in favour of assessee.
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2015 (5) TMI 203
Invocation of extended period of limitation - Valuation of goods - Revenue contends that supply of moulds free of cost by M/s. Whirlpool India Ltd is additional consideration and amortization cost of the moulds is to be added for arriving the assessable value of the finished product - Held that:- Period involved is from Aug-1998 to Jun 1999. As pointed out by the Ld. A.R. during Aug 1998, the Tribunal decision in the case of Flex Inds. Ltd V/s. CCE, Meerut (1997 (1) TMI 173 - CEGAT, NEW DELHI) was holding the field and appellant was not following the same. Conflicting decision came later on. It is also noted that in Jun 1999, appellant themselves have deposited the duty on 1/7/99, 5/7/1999, 6/7/1999. It is not disputed that non-inclusion of the cost of amortization was not disclosed to the department and therefore this vital fact was suppressed. The appellant have subscribed in the invoice to fake declaration that price is the sole consideration for sale and no other consideration in any form is flowing back to them. Under the circumstances, in our view extended period is correctly invoked and demand is correctly confirmed. Interest will also be chargeable under Section 11AB. - Decided against Assessee.
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2015 (5) TMI 202
Whether the goods processed by a processor belonging to the appellant when cleared for delivery at the depot of the appellant shall be liable to duty - Held that:- manufacturing process was carried out and the goods sent by the appellant to the processor upon payment of duty had undergone value addition. The goods all along carried the title of the appellant till delivered at its depot. Therefore, the value addition is not immune from duty. - Decided against assessee.
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2015 (5) TMI 201
Denial of CENVAT Credit - whether cenvat credit is available on welding electrodes used in repair and maintenance of plant and machinery installed in the factory of the appellant, which is used in the manufacture of final product. - Held that:- It is undisputed fact of the case that the appellant has availed credit on welding electrodes which were admittedly used for repair and maintenance of plant and machinery. Though initially the appellant claimed cenvat credit under input, but during adjudication, they made alternate claim before the adjudicating authority under capital goods. - cenvat credit on welding electrodes if used for repair and maintenance of plant and machinery, is admissible. As regards the reliance placed by the Revenue on the various judgments, it is observed that all the judgments are mainly on the issue whether cenvat credit on welding electrodes is available under input. However, as per the judgments on which reliance is placed by the appellant, wherever the welding electrodes were used for repair and maintenance of plant and machinery, cenvat credit has been allowed. - welding electrodes are used for repair and maintenance of plant and machinery, the appellant is entitled for cenvat credit - Decided in favour of assessee.
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2015 (5) TMI 200
Availment of irregular CENVAT Credit by the job worker - Invoices in name of other person i.e. Principal manufacturer - Held that:- Bill of entry is also a valid document for availment of cenvat credit. I also find that the issue is squarely covered on all fours by the ruling of this Tribunal in the case of Advance Enzyme Technologies (2014 (3) TMI 751 - CESTAT MUMBAI). Thus the appeal is allowed and the impugned order set aside - Decided in favour of assessee.
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2015 (5) TMI 199
Clandestine removal of goods - Confiscation of goods - Imposition of penalty - Held that:- Appellant paid the entire amount of duty along with interest and penalty of 25% of the duty so determined within 30 days of communication of the adjudication order. So, the balance amount of penalty as imposed is liable to be waived. Regarding the confiscation of the goods, it is seen from the adjudication order that the goods are not available and therefore, the confiscation of the goods is not sustainable. The appellant referred to the decision of the Tribunal in the case of CCE Surat-II Vs Kay Bee Tax Spin Ltd - [2014 (11) TMI 150 - CESTAT AHMEDABAD]. So, the confiscation and and imposition of redemption fine are not sustainable. Regarding imposition of penalty on the Authorised Signatory-cum-Partner of the Appellant No.1, the learned Authorised Representative raised serious objection. He submits that it is settled by various decisions of the Tribunal that penalty is imposable on the partner even when penalty is imposed on partnership firm. In this context, he drew attention of the Bench to the relevant decision as referred in the adjudication order. In the facts and circumstances of the case, I find that the penalty was imposed on the partnership under Section 11AC of the Central Excise Act 1944 and therefore the penalty imposed on the partner under Rule 209A of erstwhile rules is not justified. Appeals filed by the appellants against the impugned order is modified to the extent that penalty under Section 11AC imposed on the appellant No.1 would be 25% of the duty as per Clause (c) of Section 11AC (1) of Central Excise Act 1944 and confiscation and redemption fine are set aside. The penalty on appellant No.2 is set aside - Decided partly in favour of assessees.
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2015 (5) TMI 198
Denial of rebate claim - Maintainability of appeal - Export made outside India - Held that:- Clause (b) of the first proviso to sub-Section (1) of the Section 35B of the Central Excise Act, 1944 provides that no appeal shall lie to the Appellate Tribunal and the Appellate Tribunal shall have no jurisdiction to decide any appeal referred to in clause (b) of the said sub-Section, if such order relates to rebate of duty of excise on goods exported to any country or territory outside India or on excisable materials used in the manufacture of goods, which are exported to any country or territory outside India. - The appeal, filed by the appellant relating to rebate of duty of excise of goods exported to outside the country, against the order passed by Commissioner (Appeals), is not maintainable before the Tribunal - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (5) TMI 209
Initiation of proceedings under Section 45A - Imposition of penalty of double the amount of tax Held that:- Admittedly, the appellant did not file return or remit tax during the period from April 2005 to January 2006 and November, 2006 and December 2006. This invited proceedings under Section 45A of the KGST Act. Though the maximum penalty of double the amount of tax was levied at the first instance, that is seen reduced by the first appellate authority and what is now levied is only equal amount of tax. The learned Single Judge has also waived the penal interest levied on the appellant. Therefore, maximum leniency has been shown to the appellant. In such circumstances, we do not find any reason to interfere with the judgment in appeal. - Be that as it may, having regard to the waiver of the penal interest ordered by the learned Single Judge, we direct that the said benefit would still be available to the appellant, provided the appellant remits the amount due within three months from the date of receipt of a copy of this judgment. - Decided against assessee.
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2015 (5) TMI 208
Detention of goods - vehicle was carrying the goods to warehouse without any documents, hence, the goods were detained - Held that:- without setting aside the impugned detention notice, there will be a direction to the petitioner to appear before the respondent along with the Demand Draft for ₹ 1,70,600/- as also a copy of this order and produce the same and the respondent shall receive the same and give liberty to the petitioner to file their objection to the detention notice. The petitioner is directed to file their objection in writing before the respondent within a period of three weeks from the date of receipt of a copy of this order. The respondent shall consider the same and pass a speaking order on merits and in accordance with law - Petition disposed of.
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2015 (5) TMI 207
Penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 - Personal hearing not granted - Held that:- On perusal of the show cause notice, dated 28.05.2014, it is evident that there was no proposal made for imposing penalty under Section 27(3) of the Act, therefore, such contention raised by the petitioner merits acceptance. So far as opportunity of personal hearing is concerned, Section 22(4) of TNVAT Act mandates that the dealer should have been heard personally, especially, in a case relating to revision of assessment. This has also not been followed by the respondent while passing the impugned order - The decision of the Honourable Division Bench of this Court in the case of V.Selladurai vs. Chief Commissioner of Income-Tax (OSD) and another, reported in [2007 (8) TMI 69 - HIGH COURT, MADRAS] supports the stand taken by the petitioner, wherein, it has been held that when no personal hearing was granted to the Assessee, there was a clear violation of principles of natural justice. Hence, on the above ground, the impugned order calls for interference. - Decided in favour of assessee.
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2015 (5) TMI 206
Detention of goods - Unregistered dealer - Compounding notice - Held that:- Consignee is an unregistered dealer is the only reason for detention of goods, based on which, the first respondent became suspicious about the transport of goods. The petitioner has clearly explained in its reply dated 24.10.2014, stating that M/s.Tansun Agency has applied for TNVAT registration and a copy of the acknowledgment has been annexed as Annexure-II. However, this has not been verified by the Authority till date and straight away, the impugned compounding notice has been issued. The other ground for detention, is that the goods will be released only after collecting tax and penalty. This observation made in the detention notice is contrary to the Circular issued by the Principal Secretary / Commissioner of Commercial Taxes, Chepauk, Chennai, dated 17.07.2014. Therefore, Ground No.(iv) of the detention notice is illegal. Consequently, the compounding notice demanding tax and compounding fee is held to be bad in law. - Decided in favour of assessee.
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Indian Laws
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2015 (5) TMI 194
Restructuring the loan account - Publish of photographs - Held that:- Whatever has to be done fairly and is also regarded as incidental to or consequential upon those things which the legislature has authorised to do ought not to be held by judicial construction to be ultra vires. In the present case, rule 8 specifically authorised the bank to publish the names and addresses of the wilful defaulters. There is no legal bar either in the said rule or under any provisions of the Act which expressly prohibits the bank from publication of photographs and, therefore, the action of the bank in publishing the photographs cannot be held to be ultra vires. Ratio of the judgment [1982 (3) TMI 258 - SUPREME COURT], in our view, squarely applies to the facts of the present case.
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