TMI Tax Updates - e-Newsletter
June 25, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Penalty u/s 272(1)(c) - discrepancies in the books of account, absence of reliable research reports, lack of original bills, it is a case of issue of accommodation bills etc, penalty confirmed - AT
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Income Tax:
Arms' length price adjustment - There is no reasoning and justification for applying the margins earned in trading activity to indenting activity as the two are distinct and separate - AT
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Income Tax:
Minimum penalty being 100% of the tax sought to be evaded on account of non-disclosure of commission income on account of sale of the above plots should be levied - AT
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Income Tax:
Disallownace u/s 14A r.w.r. 8D - While rejecting the claim of the assessee with regard to expenditure or no expenditure in relation to exempted income, the AO has to indicate cogent reasons for the same - AT
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Income Tax:
Royalty / FTS - Insertion of Explanation to section 9 by way of amendment by Finance Act, 2010 with retrospective effect from 01-06-1976 - whether it changes the position of law? - AT
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Income Tax:
Both the purchases and sales are bogus and only book entries. - Such transactions are generally made to extend bogus entries to other concerns in order to help them to evade tax - AT
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Service Tax:
Commercial training or coaching service - affiliation with foreign university - they were also conducting courses which resulted in award of degrees, diplomas, etc. recognized under the Indian laws, the appellant would be outside the purview of Service tax - AT
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Service Tax:
Mandap Keeper - Split of the charges - hall charges and supply of food - levy of service tax - the services rendered by the mandap keepers as caterer would also be liable to service tax under the category of ‘Mandap Keeper Services'. - AT
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Service Tax:
Sharing of manpower between group companies - reimbursement of the expenditure - Levy of service tax - Such an activity does not, prima facie, come under the purview of the Business Auxiliary services - AT
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Central Excise:
Export without payment of duty - preparation ARE-1, furnishing of B-I Bond, and CT-I form cannot be altered as per individuals company’s internal policy and cannot be treated as just minor/technical procedural lapses - CGOVT
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Central Excise:
Interest on differential duty - price escalation clause - Levy of interest confirmed. - HC
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Central Excise:
Differential duty - Change of duty on Cigarettes - Finance Bill, 2012 - effect of amendment to Finance Bill while passing the bill in the lok sabha - prima facie, duty during the period 17.03.2012 to 07.05.2012 cannot be demanded. - AT
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Central Excise:
Stay - valuation - motor vehiles - payment of duty of chassis - body builders fabricate/build the body of the vehicle on the supplied Chassis - directed to make predeposit of 25% - AT
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VAT:
Tribunal has the authority in exercise of its appellate power to direct for release of the goods on a lesser amount of security than 40% of the estimated value of goods seized.- HC
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (6) TMI 553
Penalty u/s 271(1)(c) - furnishing of inaccurate particulars of income - Held that:- Why the assessee paid to the Swiss Consultancy and M/s. Premium Investments and what are the business or professional or research services rendered by them to become entitled for the impugned payments. The assessee is under the obligation to explain. For the said failure only, the Tribunal confirmed the additions in quantum proceedings. It is the finding of fact that the transaction in question constitutes 'sham transaction'. In effect, the above details supports the allegation of the AO that the assessee has deflated the income by debiting the impugned claims. Further, the discrepancies between the sundry debtors' account of the assessee qua the Swiss Consultancy are beyond the reconciliation. Assessee's request for one more opportunity at this point of time cannot be seen as a genuine attempt for reconciliation in view of the principle of limitations. Thus considering the overall factual matrix of the case ie discrepancies in the books of account, absence of reliable research reports, lack of original bills, the facts brought in by the Tribunal it is a case of issue of accommodation bills etc, penalty confirmed by the CIT (A) does not call for any interference. Against assessee.
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2013 (6) TMI 552
Income from other sources - amount received for the permit room area - Held that:- It is a fact that the there are two amounts ie Rs 4.8 lakhs and Rs 2.4 lakhs received by the Club from the same contractor of course for specified uses of the facilities/premises of the club. It is admitted fact that the assessee originally offered general compensation of Rs. 2.4 lacs, which is now being claimed as exempt. Of course, the sum of Rs 4.8 lakhs is always claimed as exempt in the Return of income and the same is rejected by the AO/CIT(A). In any case, after admission of the additional ground, the basis of conclusion given in the impugned order becomes non existant and therefore, both the receipts ie Rs 4.8 lakhs and Rs 2.4 lakhs are open for fresh adjudication by the CIT(A). Now he has to adjudicate giving reasons as to how these receipts does not fall in the scope of the 'principles of mutuality'. He needs to adopt the judgment in the case of Bangalore Club (2013 (1) TMI 343 - SUPREME COURT) and make use of the guidelines set by the Apex court for determining the true nature of the impugned receipts under question. Therefore the issues relating to taxability of permit room compensation of Rs. 4.8 lacs as well as the general compensation of Rs. 2.4 lacs should be set aside to the files of the CIT (A) for fresh adjudication - appeal of the assessee is partly allowed for statistical purposes.
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2013 (6) TMI 551
Jurisdiction of AO to refer the matter to the valuation officer u/s 55A ignoring the fact that the fair market value of the property differs by more than 15% - CIT(A) deleted the addition - Held that:- In view of decision of HIABEN JAYANTILAL SHAH Versus INCOME-TAX OFFICER AND ANOTHER [2008 (4) TMI 292 - GUJARAT HIGH COURT] reference by the AO to the DVO u/s. 55A for valuation of FMV of the property as on 1.4.1981 is not valid for the reasons that FMV declared by the assessee as per Government registered valuer's report was more than the FMV as estimated by the DVO. Since determination of the FMV as on 1.4.1981 was based on the report of the DVO, the same is held to be invalid. Consequently, estimation of the FMV of the property as on 1.4.1981 as made by the assessee is directed to be accepted. Ground of the assessees is allowed.
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2013 (6) TMI 550
Arms' length price adjustment - addition on account of understatement of arm's length price in respect of commission income earned from its Associated Enterprises (AE) - whether TPO erred in altering the business model of the Appellant by re-characterizing the commission transactions as trading transactions, and by applying the Gross Profit margin earned from trading transactions with non-associated enterprises on the value of goods on which commission income has been earned by the Appellant - Whether the TPO on facts was justified to treat the indenting activity at par with the trading activity - Held that:- On a consideration of the business profile of the assessee as available on record and the nature of services rendered and the risk profile of the assesse TPO erred in considering that the activity of a service provider is similar to the activity of a trader. The unrebutted facts available on record is that the assessee is a service provider to the extent of 88.67% of its total earnings. As per the contracted terms and the unrebutted stand of the assessee it is merely providing indenting services. At no point of time the title in goods or possession of the merchandise is in assessee's hands. The contract is entered into by SCJ and Indian customers directly whether for export or import. The negotiations are directly done by SCJ and the Indian customers and the assessee merely functions as a facilitator. Looking at the nature of services rendered and the arguments advanced which also remain unrebutted and as such are taken to be correct the assessee does not need to incur cost either for maintaining or storing the inventory or for the transportation as the title in goods is never held by the assessee for its indenting activity as a service provider. Consequently the assessee is not exposed to any credit risk in maintaining the inventory nor is the assessee exposed to price risk or the risk linked with offering credit sales. From the nature of the risk profile of the assessee and on considering the functions performed and the assets deployed it can be safely concluded to be that of a low risk business, which has also been the claim of the assessee. It is a matter of record that in these years the assessee has also shown profits on its own trading with non AEs. In the facts available on record, nothing has been brought on record by the TPO to either justify that the assessee has made a wrong claim on facts while claiming to be engaged in indenting activities or was infact performing all or some of the functions of a trader, in which eventuality the TPO would have been well within his rights to re-characterize the assessee's indenting activities as a trading activity. It is an accepted economic principle that the trader acting as an entrepreneur is exposed to price risk, cost risk, credit risk, warranty risk etc, which would necessitate the contract being entered into and negotiated by assessee. In its indenting activity these facts are not evident There is no reasoning and justification for applying the margins earned in trading activity to indenting activity as the two are distinct and separate. Merely because the assessee was also having a small level of trading activity in its own name, there is no reason available on record either justifying the action of re-characterizing the nature of assessee's activity from a service provider to that of a trader. As observed, neither the TPO has lead any discussion nor has the DRP cared to throw any light on the aspect for upholding the action of the TPO. Where all the critical functions were being performed by the AE, the services provided, as a facilitator, by the assessee cannot be treated as a trading activity. The record shows that at no point of time the assessee was ever exposed to any of those risks as such, the two activities could not be treated at par and thus invited a similar treatment. Thus unable to agree with the TPO who chose to re-characterize the activities of the service provider and treated them at par with the activities of a trader since the nature of the activities of a trader and service provider are materially distinct and different. The "costs" referred to in Rule 10 B (1)(e)(i) does not suggest that in the facts of a case like the present case the 'costs' would mean the FOB value of goods. The assessee demonstrably is a low risk entity as a service provider functioning as a facilitator who is not exposed to price risk, warranty risk, inventory risk, etc., whose funds are not locked in the cost of goods, title in goods never vests with the assessee contracts are entered in the name of SCJ and its affiliates at one end and the customers in India also in their own names. In these unrebutted facts on record, the TPO was not correct in holding that the 'costs' as per the Rule were FOB value of goods. The unrebutted fact on record is that the assessee has been able to render services utilizing the network of the AE and all intangibles and patents etc. utilized internally belong to the AE and the level and degree of the qualification required of the personnel of the assessee is low and skill requirement is so low that no specific skills are required by the personnel who replace the existing personnel who may choose to move on for better options. The assessee does not need to and cannot restrain the leaving personnel from utilising any skills which they may have acquired during employment as no specific skills for indenting are required for indenting and acting as a facilitator. It is not the case of the department that the assessee is performing critical functions which admittedly are performed by the AE or that the assessee is contributing by way of analysis, reports and opinions, being provided as such value added services are being performed wherein the analysis/opinions may turn out to the correct or grossly wrong as such due to the high risks of both eventualities occuring the personnel are necessarily highly qualified sought after experts, commanding high salaries.The simple performance of a low risk activity of facilitator does not lead to the conclusion that a human intangible is being created. It is seen that there is no material on record as to how supply chain intangibles are being created as the assessee is using the network and intangibles of its AE. There was no justification for TPO to apply trading margins to assessee's indenting activity under TNMM Thus it would necessitate re-iterating the distinctions in the two separate sets of activities and the conclusions on the detailed FAR analysis. Accordingly relying on the same there is no justification to apply the margins of trading activity to indenting activity in the facts of the present case. Since in the facts of GAP International Sourcing the assessee had applied cost plus 15 % ALP and the entire commission of Li & Fung Group to Li & Fung India was worked out as per the calculations provided by the assessee's counsel, his suggestion that the OP/TC of Li & Fung India worked out of 32.43 % be applied. The said proposal of the assessee was accepted and 32% cost plus mark up was accepted in GAP International. As the assessee has assailed the action of the TPO upheld by the DRP in limiting depreciation to 15% in regard to the computer peripherals as opposed to the 60 % as per assesses claim. It is seen that the issue is no longer res integra as the same stands covered by the judgment of the jurisdictional High Court in assessee's favour in the case of CIT v. BSES Rajdhani Limited [2010 (8) TMI 58 - DELHI HIGH COURT] - AO is directed to grant necessary relief. Assessee's appeal allowed for statistical purposes.
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2013 (6) TMI 549
Unaccounted purchases - not supported by any evidence such as bills or evidence of payment etc. - disallowance of labour charges - Held that:- There is no dispute to the fact that the assessee, during the course assessment proceedings, has not furnished the full details of the labour charges for which the AO made disallowance of Rs.50 lakhs out of the labour charges paid in cash to the tune of Rs.50,42,100/-. CIT(A) after obtaining the remand report from AO sustained addition of Rs.19,42,515/- out of the addition of Rs.50 lakhs & noted that certain unaccounted payments are recorded in the ledger in the form of cash paid to various persons mostly labour contractors/labour supervisors whereas no such payments are recorded in the cash book. It is the submission of the assessee that the addition of Rs.19,42,515/- on account of labour charges brings the margin of profit to 25%, which is not possible in this line of business & under identical facts and circumstances the same AO in assessee's own case for A.Y. 2008-09 has estimated the profit from contract work at 8%. Thus finding force in the above contention of assessee & the fact that during the impugned assessment year there are certain defects, i.e. entries found in the ledger are not found in the cash book, estimation of profit @10% of the turnover will meet the ends of justice - ground raised by the assessee is partly allowed.
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2013 (6) TMI 548
Undisclosed bank accounts - survey u/s.133A - statement of brother of the assessee recorded on oath since the assessee was not available - revised return filled by assessee whether non-est? - Held that:- The assessee in the instant case has filed his return of income on 16-08-2010 declaring total income of Rs.2,77,35,954/- & AO in the instant case has issued notice u/s.142(1) to the assessee on 03-03-2010. As per the provisions of section 139(5) if an assessee, who has filed a return in response to notice u/s.142(1), discovers any omission or any wrong statement therein he may furnish a revised return at any time before the expiry of 1 year from the end of the relevant assessment year or before completion of the assessment, whichever is earlier. However as find CIT(A) has not considered the provisions of section 139(5) while holding the revised return filed by the assessee as non-est. Even AO is also silent on this issue, therefore, the revised return filed by the assessee is not non-est and the AO should have considered the revised return filed by the assessee before completing the assessment - thus restore the issue to the file of the AO with a direction to consider the revised return and complete the assessment in accordance with law after giving due opportunity of being heard to the assessee - appeal filed by the assessee is allowed for statistical purposes.
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2013 (6) TMI 547
Penalty u/s.271(1)(c) - assessment order passed u/s.143(3) r.w.s.153C - During the course of search and seizure action at the residential premises of Sri Chandrakant Kankaria, a real estate broker certain documents in loose paper were seized with some belonging to the assessee - assessee by not offering the commission received has concealed the income - Held that:- Since the assessee was due to receive commission on the basis of sale of plots and since 7 plots have been sold during the F.Y. 2006-07 relevant to A.Y. 2007-08, therefore, the assessee was supposed to offer commission income on account of sale of the above plots. Therefore, by not offering the commission income on account of sale of the above plots during A.Y. 2007-08 there is concealment of particulars of income and penalty is leviable on account of commission relatable to sale of the above plots. Argument of the assessee that the same shall be shown once all the plots are transferred is not a valid explanation as the assessee cannot shift the year of taxability of the commission income after the sale of the particular property by explaining that the same shall be offered to tax once all the plots are transferred. If the above proposition of the assessee is accepted then in that case an assessee can indefinitely shift his tax burden say by not transferring one plot out of 1000 plots where 999 plots have been sold and commission income is received. Therefore, assessee was supposed to have declared commission income of plots which were sold after due registration. By not offering the commission income the assessee has furnished inaccurate particulars of income for which penalty u/s.271(1)(c) is leviable. Minimum penalty being 100% of the tax sought to be evaded on account of non-disclosure of commission income on account of sale of the above plots should be levied. AO shall verify the above details including any left over item and compute the commission income relatable to sale of these plots, calculate the tax on that and levy the penalty u/s.271(1)(c). So far as the balance plots are concerned they all relate to F.Y. 2007-08, 2008-09 and 2009-10 and do not relate to any of the years under appeal. Therefore, merely because the assessee has received the commission income in the preceding years which has been shown as advance penalty u/s.271(1)(c) should not be levied since the registration of the plots, which is a pre- condition for getting the commission, is yet to be done. Thus appeal for A.Y. 2007-08 is partly allowed for statistical purposes and appeal for other years are allowed.
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2013 (6) TMI 546
Suppressed purchase - addition on account on account closing stock - Held that:- Contention of the assessee is justified more so because it is not the case of the AO to have found involvement of the assessee in trying to hold separate books of accounts for the purpose of support at the time of the assessment before the AO when a survey has been conducted after the end of the financial year and the soft copy of the financial statements which were yet to be audited and verified by the auditor were to be held u/s 292C. It is the usual practice that the accounts which are maintained on the computer are subject to audit and the basic mistakes or errors committed by the accountant are to be rectified on the objections of the audit team which are rectified may or may not be corrected in the soft copy, in so far as, the hard copies generated of the surveyed e-filing of the return which figures cannot be disturbed as a matter of suppression or willful declaration for undisclosed income has been considered by the authorities below on presumption only. No so called additions as raised by the assessee appellant in the grounds above would stand to nullity in so far as they stood corrected to the extent that their reconciliation would determine the excess income rendered by the assessee were reconciliation to the additions and disallowances made by the AO and complied with as per provisions of Section 44AB r.w.s. 145(1) and 145(2). This arithmetical accuracy lead to finalization of accounts which has not been challenged by the AO and the CIT(A) & thus inclined to hold that the survey operation impounding the CD under the provision of section 292C was to be addressed for accuracy under the accounting system accepted by him u/s 44AB. The additions so made by the AO are directed to be deleted - in favour of assessee.
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2013 (6) TMI 545
Disallownace u/s 14A r.w.r. 8D - Held that:- From the details of the expenditure, it is clear that the expenditure incurred and claimed by the assessee has direct nexus with the professional income of the assessee. It is not the case of the revenue that the assessee has used his official machinery and Establishment for earning the exempt income. AO has not given any finding that any of the expenditure incurred and claimed by the assessee is attributable for earning the exempt income. When the AO has not pointed out that certain expenditure is not incurred for earning the professional income but are incurred in relation to dividend income or such expenditure is incurred for inseparable and indivisible activities comprising professional as well as the activities on which is exempt income has been earned by the assessee, then in the absence of any such instance of expenditure, finding of AO or any material to show that the expenditure incurred and claimed by the assessee against the taxable income has any relation for earning the exempt income, the provisions of section 14A cannot be applied. Thus no disallowance under section 14A is called for when the assessee has not incurred and claimed any expenditure for earning the exempt income. AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D of the Rules. While rejecting the claim of the assessee with regard to expenditure or no expenditure in relation to exempted income, the AO has to indicate cogent reasons for the same but from the facts of the present case it is noticed that the AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ˝% of the total value. Thus respectively following the case of J. K. Investors (Bombay) Ltd. [2013 (5) TMI 580 - ITAT MUMBAI] - appeal of revenue is dismissed.
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2013 (6) TMI 544
Royalty / Fee for technical services - Insertion of Explanation to section 9 by way of amendment by Finance Act, 2010 with retrospective effect from 01-06-1976 - whether it changes the position of law as far as the assessee is concerned? - Held that:- Keeping in view the decision of Carborandum Co. (1977 (4) TMI 2 - SUPREME Court) which was in the context of section 42 which corresponds to section 9(1)(i) and in the case of Toshoku Ltd. (1980 (8) TMI 2 - SUPREME Court) which was in the context of section 9(1)(i) itself, the Hon'ble Bombay High Court, in assessee's case [2008 (12) TMI 30 - HIGH COURT OF BOMBAY] held that the provisions of section 9(1)(i) having been construed by the Hon'ble Supreme Court, the interpretation thereof was no longer res-integra and the issue was decided by applying such interpretation of section 9(1)(i) which was held to be applicable in the case of the assessee for the determination of its taxable income in India. It is no doubt true that reference was also made to the decision Ishikawajima Harima Heavy Industries Ltd. ( 2007 (1) TMI 91 - SUPREME COURT) which was in the context of section 9(1)(vii)(c) however their Lordships were conscious of the fact that the said decision was rendered in the context of section 9(1)(vii)(c) as is evident from para 44 of the order. It was also observed by that with the understanding of law laid down by the Hon'ble Apex Court in the case of Ishikawajima Harima Heavy Industries Ltd. (supra), if one turns to the facts of the case in hand and examines them on the touchstone of section 9(1)(vii)(c), services, which are source of income sought to be taxed in India, must be utilised in India and rendered in India. Therefore find it difficult to concur with the view expressed by the division bench of this Tribunal in the case of Linklaters LLP (2010 (7) TMI 535 - ITAT, MUMBAI ) that the judgment of Hon'ble Bombay High Court in assessee's case for A.Y. 1996-97 is based on the legal premise of interpretation of section 9(1)(vii) and the said premise no longer holds good in view of amendment made by the Finance Act, 2010 in section 9 with retrospective effect from 1st June, 1976. Thus the amendment made by the Finance Act 2010 in section 9 with retrospective effect from Ist June, 1976, which is applicable only in the cases covered under clause (v), (vi) or clause (vii) of section 9(1) and not clause (i) of section 9(1), thus has not negated the decision of Hon'ble Bombay High Court in the case of the assessee for A.Y. 1996-97 and the said decision rendered in the context of section 9(1)(i) still holds good even after the said amendment in so far as the assessee's case is concerned. Therefore answer the question No. 1 in favour of the assessee. True and correct interpretation of the term "Directly or indirectly attributable to Permanent Establishment" in Article 7(1) of the India-UK DTAA - whether it is correct in law to hold that the consideration attributable to the services rendered in the State of residence is taxable in the source State"? - Held that:- As provided in Article 7(1)& 7(3) where a permanent establishment takes an active part in negotiating, concluding or fulfilling contracts entered into by the enterprise, then, notwithstanding that other parts of the enterprise have also participated in those transactions, profits of the enterprise arising out of those contracts shall be apportioned in the ratio of the contribution of the PE to those transactions and the contribution of the enterprise as a whole and such profits as apportioned to the contribution of the PE shall be treated for the purposes of Article 7(1) as being the profits indirectly attributable to that PE. Consequently the profits apportioned to the contribution of other parts of the enterprise to the transactions cannot be treated as profits indirectly attributable to the PE for the purpose of Article 7(1) so as to bring the same to tax in the source country - answer the question No. 2 in favour of the assessee.
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2013 (6) TMI 543
Addition of Income - estimating net profit at 0.5% on turnover by CIT(A) - case was selected for scrutiny under CASS u/s 143(2) - disallowance of 25% of total purchases by the assessee - Held that:- As per CIT(A)'s conclusion all the parties from whom the assessee had made purchases were assessed to tax and were disclosed in their trading account. The parties from whom the assessee had made purchases had only wrongly classified in their books of accounts as loan instead of showing the balance due to the assessee as receivable from the assessee as debtors.In such circumstances, the transactions of the purchases and sales made by the assessee need not be doubted. As during the year the assessee had a turnover of Rs.18.23 Crores with gross profit at 0.04% and net profit at 0.02%. During the subsequent assessment year, the turnover declared was nil and had shown negligible administrative expenses of Rs.46,187/- and had outstanding debtors and creditors. Thus from this it could be inferred that both the purchases and sales are bogus and only book entries. Such transactions are generally made to extend bogus entries to other concerns in order to help them to evade tax or it could be a circular transaction to generate a healthy balance sheet to deceive financial institutions or for other purposes. Thus the income of the assessee could not be to the extent of 25% of unverifiable purchases. Further, drawing support from the decisions of Vijay Protins Ltd. [1996 (1) TMI 144 - ITAT AHMEDABAD-C] net profit could be estimated at 0.05% on the total turnover of Rs.18.23 Crores. All the findings of the CIT(A) is quite reasonable & either parties did not produce any materials on record to dislodge the findings of the CIT(A, thus no hesitation to confirm the order of the CIT(A).
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Customs
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2013 (6) TMI 556
Order of the Settlement Commission - misdeclaration - knitted fabrics / woven fabric - utilization of DFRC licence for the payment of the balance duty - confiscation and penalty - held that:- The petitioners admitted to the misdeclaration of the description of the goods in their application, but sought to saddle the responsibility upon the foreign supplier for having mistakenly sent woven fabrics without an order. The Settlement Commission has taken a justifiable view in rejecting the defence which was termed as nothing but a lame or feeble excuse. Both on the issue as to whether the petitioners should be permitted to avail of a DFRC licence to pay the balance of the duty and on the extent of the fine imposed in lieu of confiscation, we find merit in the contention of the petitioners that no reasons have been indicated in the order of the Settlement Commission. The order of the Settlement Commission notes in Paragraph 14.2 the submission of the Jurisdictional Commissioner that a blanket opinion as to whether DFRC licences can be used for debit could not be furnished without actually verifying the details of the licences such as date of issue, date of expiry, name of the licence holder and conditions mentioned in the licence. This part of the arguments of the Revenue was, in our view, fair and proper. The Settlement Commission indicated no reasons for rejecting the plea. We are of the view that the matter would necessitate the Settlement Commission to have a fresh look on this aspect. - matter remanded back.
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2013 (6) TMI 555
Denial of the refund claim - as per dept. appellants have failed to pass the burden of unjust enrichment - Held that:- The only reason for denial of the refund claim is that as the Bills of Entry filed on certain dates which are mainly in the month of half of March of that particular year and those amount were not reflected in the balance sheet of that particular year because the amount has been paid in the next financial year i.e. the first week of April of the next financial year. These facts have been supported by the certificate issued by the Chartered Accountant. These facts are not denied in the impugned order and while remanding back, this Tribunal has asked the adjudicating authority to verify only the fact that whether the revenue deposit has been paid or is receivable or not which the appellants have been able to prove before us. Therefore, set aside impugned order and allow the appeal with consequential relief.
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Service Tax
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2013 (6) TMI 564
Sharing of manpower between group companies - reimbursement of the expenditure - Levy of service tax - Business Auxiliary Services - Held that:- After examining the memorandum of ASSOCIATION of the appellant company and the group of companies, prima facie it appears to be a case of recruiting staff for the group companies and supplying them to the group companies to deal with the activities undertaken by the group companies. Such an activity does not, prima facie, come under the purview of the Business Auxiliary services as defined under Section 65 (90) of the Finance Act, 1994. - prima facie view that the appellant has made out a case in their favour for grant of stay. - stay granted.
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2013 (6) TMI 563
GTA service for the period 16/11/1997 to 01/06/1998 - Held that:- for the period involved during 16/07/1997 to 02/06/1998, the show-cause notice should have been issued during the said period and the notice issued after the retrospective amendment is not sustainable in law. - Demand set aside.
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2013 (6) TMI 562
Commercial training or coaching service - The appellant are a society registered under Society Registration Act, 1860 and are engaged in organizing various courses in clinical medicine in collaboration with Cranfield University, U.K. - Held that:- though the appellant have pleaded that they had been conducting courses in affiliation with Guru Jambeshwar University, Hisar; Dr. M.G.R. Education and Research Institute (Deemed university), PRIST University, Thanjavur and the degree awarded by the above universities are recognized by UGC and, therefore, the Appellant are not covered by the definition of "commercial training or coaching centre" and as such, no service tax can be demanded from them on the amounts charged by them from the students for the courses in clinical sciences being organized in collaboration with Cranfield University, U.K., no finding has been given by the Commissioner on this plea. In my view, this is the most important point in this case and in course of de novo proceedings, the Commissioner has to give his finding on the above plea of the appellant and if it is found that during the period of dispute, they were also conducting courses which resulted in award of degrees, diplomas, etc. recognized under the Indian laws, the appellant would be outside the purview of the definition of "commercial training or coaching centre", as the same stood during the period of dispute, and no service tax can be charged from them even in respect of the courses being conducted in collaboration with Cranfield University, U.K. - Case remanded back for de-novo decision.
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2013 (6) TMI 561
Classification - Mandap Keeper - Split of the charges - hall charges and supply of food - levy of service tax - Held that:- From the above decision of the hon'ble apex Court in the case of Tamil Nadu Kalyana Mandapam Assn [2004 (4) TMI 1 - SUPREME COURT OF INDIA], it is clear that the services rendered by the mandap keepers as caterer would also be liable to service tax under the category of ‘Mandap Keeper Services'. The decision relied upon by the consultant on the hon'ble High Court of Karnataka [2011 (4) TMI 451 - KARNATAKA HIGH COURT] is with reference to ‘Outdoor Catering Services' rendered in an aeroplane and the other decision of the Tribunal in the case of Daspalla Hotels Ltd [2009 (7) TMI 551 - CESTAT, BANGALORE] it is in respect of evidence relied upon by the appellant with regard to VAT paid on the value of food and beverages sought to be taxed under ‘Convention Services'. Appellant has not made out a case for 100% waiver of pre-deposit of the dues adjudged against him. - demand for the normal period of limitation directed to be deposited - stay granted partly.
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Central Excise
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2013 (6) TMI 560
Export without payment of duty - Furnishing of form-H as proof of export - non compliance of procedure prescribed under Rule 19 of the Central Excise Rules, 2002 and Notification No. 42/2001 - The Applicant submits that they prepared ARE-1 and sent it to their vendor but they refused to sign it due to their company’s policy. - Held that:- nature of above requirement is vital as statutory condition of compulsory requirement of submitting the correct and proper ARE-1 copies is a must because such leniencies led to possible fraud of claiming an alternatively available benefit which may lead to additional/double benefits. This had never been the policy of the Government and it is the spirit of these backgrounds that Hon’ble Supreme Court in case of Sharif-ud-Din. Abdul Gani - [1979 (11) TMI 225 - SUPREME COURT] has observed that distinction between required forms and other declarations of compulsory nature and/or simple technical nature is to be judiciously done. When non-compliance of said requirement leads to any specific/odd consequences then it would be difficult to hold that requirement as non-mandatory. Government finds itself in conformity with the opinion of lower authorities and holds that export of said goods is not proved, Government, therefore holds that preparation of statutory requirement of stipulated ARE-1 and following the basic procedure of compliance of B-I Bond condition/from CT-Is export goods as discussed in paras above cannot be altered as per individuals company’s internal policy and cannot be treated as just minor/technical procedural lapses for the purpose accepting proof of export of goods in this case. - Decided against the assessee.
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2013 (6) TMI 559
Interest on differential duty - price escalation clause - Held that:- Thus, liability to pay interest on short payment of duty appears to be absolute and reasons for such short payment are not germane. This finding in S.K.F. India Ltd. [2009 (7) TMI 6 - SUPREME COURT] has been endorsed again by the Hon'ble Apex Court in [2010 (1) TMI 151 - SUPREME COURT OF INDIA]. Dismissal of S.L.P. in motion hearing by Hon'ble Apex Court is not sufficient to ignore its binding judgment. It is, therefore, apparent that appreciation of law, as laid down in S.K.F. India Ltd. [2009 (7) TMI 6 - SUPREME COURT] by the apex court needs to be acted upon and implemented by this Court. Thus, the question sought to be raised is already conclusively answered and cannot be treated as a substantial question of law at all. Moreover, the appellant made good the short duty only after it was brought to his notice by the respondents - Levy of interest confirmed.
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2013 (6) TMI 558
Stay - Change of duty on Cigarettes - Finance Bill, 2012 - effect of amendment to Finance Bill while passing the bill in the lok sabha - declaration under Provisional Collection of Taxes Act, 1931 - Held that:- Following the decision in Ultratech Cement Ltd. vs. Commr. of C.Ex., Bolpur [2012 (10) TMI 6 - CESTAT, KOLKATA] as per the proposal in Finance Bill, 2012 Excise duty proposed was specific rate + 10% ad valorem (on 50% of RSP/1000 sticks) said proposed rate was made effective from 17.03.2012 under the PCTA, 1931. On 07/05/2012, the notice of amendment was moved to replace the 10% advalorem duty with increase in specific rate. Therefore, unless and until amendment moved at kept assent of the Hon'ble President of India the proposed amendment cannot become a part of Finance Act. Therefore prima facie we find that duty during the period 17.03.2012 to 07.05.2012 cannot be demanded. - Prima Facie is in favor of assessee - Decided in favor of assessee.
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2013 (6) TMI 557
Stay - valuation - motor vehiles - payment of duty of chassis - body builders fabricate/build the body of the vehicle on the supplied Chassis and clear/transfer the same to the Applicants’ RSO on payment of central excise duty. - demand of differential value between the RSO (Regional Sales Office) Price and the assessable value on which the duty was paid by the body builders - Held that:- the Applicant have transferred the chassis to the body builders under a peculiar arrangement, that is, against a trust receipt and the said Chassis is being held by the body builders as trustee. Further, under the terms and conditions of the said arrangement against the heading, ‘Taxes’, it is mentioned that the excise duty paid by the Applicant would be available as CENVAT credit to the body builders; the body builders are required to pay duty on the completely built-up vehicle only after the set-off of CENVAT credit on chassis and the unutilized CENVAT credit would belong to M/s. Tata Motors, the Applicant. The said condition apparently raises a doubt and leads to an inference that the nature of dealings between the Applicant and the job worker are not on principal-to-principal basis. - prima facie case is against the assessee - directed to make predeposit of 25% - stay granted partly.
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CST, VAT & Sales Tax
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2013 (6) TMI 554
Release of Seized of goods - whether the tribunal is legally justified in reducing the security of 40% of the estimated value of the goods to twice the amount of tax imposable on the value of the goods so estimated. - held that:- The Act only provides for a maximum of amount of security to be demanded and does not specifies any fixed amount of security. The maximum amount of security demanded is also relaxable at the discretion of the Commissioner/Deputy Commissioner for sufficient reasons to be recorded in writing. Such a decision is even appealable before the tribunal having power to confirm, cancel or vary the order appealed against which, certainly leads to a conclusion that the tribunal is vested with the power to demand lesser amount of security and not to stick at the security of 40% of the estimated value of the goods in directing for release of the same. Tribunal has the authority in exercise of its appellate power to direct for release of the goods on a lesser amount of security than 40% of the estimated value of goods seized. - Decided against the revenue.
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