TMI Tax Updates - e-Newsletter
July 19, 2016
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:
Transfer of cases - The present Writ Petitions are only an attempt to thwart the assessment proceedings, especially when, the assessment beyond 31.03.2016, would become time barred. The Assessing Officer has concluded the hearing on 18.03.2016 and passed the assessment order on 30.03.2016, which is subject matter of challenge before the appellate authority. Therefore, it is one more reason to reject the relief sought for in this Writ Petitions. - HC
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Income Tax:
Project development expenditure - there is no concept of deferred revenue expenditure in the Act, except under specific section, i.e. where amortisation is specifically provided for such as in section 35D of the Act. - AT
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Income Tax:
TDS u/s 194C or 194J - payments made for supplying copies of final negative - TDS needs to be deducted under section 194C - AT
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Income Tax:
Eligibility for deduction u/s. 80IB - the exchange rate fluctuation gain does not have any first degree nexus with the export sales of the assessee. In the absence of the first degree nexus - AT
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Income Tax:
Bogus purchase - The supplier parties to whom cheque payments were made for purchases booked in books of account, returns the corresponding cash back to the assessee after deducting certain commission, and this cash is available for making subsequent cash purchases. In such circumstances, only the peak of the unexplained cash utilized in cash purchases can be added to the income of the assessee. - AT
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Income Tax:
Merely because the assessee had divided bigger plot into small plots does not establish the same to be business activity carried on by the assessee or adventure in the nature of trade, keeping in view the other circumstances of the case. - AT
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Income Tax:
Bogus purchase - Though purchases were from bogus parties nevertheless purchases themselves were not bogus. - in the absence of the purchases, there could not be sales - If the AO's version is accepted then the gross profit works out at 83 per cent. which is unbelievable and unimaginary as sales cannot be the profits - AT
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Income Tax:
Revision u/s 263 - AO considered the FMV at ₹ 300 per sq.ft. as on 1.4.1981 as submitted by the assessee without bringing any comparable cases or referring the matter to the DVO for valuation. This itself is an error committed by the AO that aspect involves the rejection of tax, which is prejudicial to the interests of the revenue. - AT
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Income Tax:
Depreciation u/s 32 - registration of vehicles has not been transferred in the name of the appellant under the Motor Vehicles Act - the assessee has rightly claimed depreciation on the vehicles having possession and dominion over the income and control over their operations. - AT
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Income Tax:
Non- genuine purchases - when the sales effected by the suppliers are accepted in their hands, the purchases made from them by the assessee cannot be held to be non- genuine. - AT
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Service Tax:
Bail application - Criminal prosecution for non payment of service tax - monetary jurisdiction - o leniency can be shown to such an applicant who only desires to prolong the issue. Hence, this revision application deserves to be dismissed - HC
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Service Tax:
Adjustment of excess payment of service tax - service tax alleged to have been adjusted without adhering to the provisions of Rule 6(4A) and 6(4B) of Service Tax Rules, 1994 - No demand - AT
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Service Tax:
Refund of accumulated cenvat credit - Visa charges was explained by the learned counsel for appellant to be service tax paid on services consumed for visa interview of employees to go abroad. The services were availed from M/s. OSI Consulting Services. - these services are not eligible for refund - AT
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Central Excise:
Tribunal granted the full waiver from pre-deposit without assigning any reason - revenue in appeal - prejudice to the interest of public revenue - As the Tribunal has not assigned any reasons why it considered it appropriate to hear the appeal without any requirement of pre-deposit, the order under appeal is set aside - HC
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Central Excise:
Rebate/Refund claim - proper document - It is a settled issue that benefit under a conditional notification cannot be extended in case of non-fulfilment of conditions and/or non-compliance of procedure prescribed therein. - CGOVT
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Central Excise:
Rebate/ Refund claim - merchant exporters - The duty was paid @ 10% instead of 4% - rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No. 4/06-CE dated 1.03.06 as amended, as applicable on the relevant date on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. - CGOVT
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VAT:
The point of sale of the crude oil - sale of crude oil by the petitioner from the Barmer Oil Fileds to MRPL etc., all nominated by the Central Government, under clause 1.23 of the PSC is an inter state sale and the Commercial Taxes Department of the State of Rajasthan has no jurisdiction to levy any tax under the provisions of the RVAT Act, 2003. Central Sales Tax at the rate applicable from time to time would however be leviable by the Commercial Taxes Department. - HC
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VAT:
Blocking TIN Number of the petitioner-company from accessing the facility i.e. the website of the respondents-authorities - even if any tax is due from the petitioner, denial of the way-bills is not the proper way to recover the tax. - HC
Articles
News
Case Laws:
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Income Tax
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2016 (7) TMI 712
Guarantee commission receipt - taxability in India - Held that:- As decided in assessee;s own case for Assessment Year 2009-10 guarantee commission earned by the assessee from the two associate Indian concerns cannot be held to be taxable in India. - Decided in favour of assessee. Surcharge and education cess is payable in addition to tax of 10% payable on royalty income - Held that:- Since clause (1) of Article 2 provides that the taxes governed would include taxes and surcharge thereon, we find no reason for the Revenue to levy the surcharge and education cess, which is also in the nature of surcharge, over and above the cap of 10% prescribed in Article 13 as the tax rate for royalty income. In any case, the provisions of Article 13 of the India-France DTAA, prescribing a cap of 10% on the rate of tax, read with Article 2 thereof would prevail over the provisions of the domestic income-tax law and thus the tax liability on royalty income shall be capped at 10%. The aforesaid plea of the assessee, in our view, is clearly in tune with the phraseology of the India-France DTAA and is fully supported by the precedents cited before us. As a consequence, we direct the Assessing Officer to re-compute the tax liability on royalty income accordingly. - Decided in favour of assessee.
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2016 (7) TMI 711
Transfer of cases - Held that:- The petitioner has sought for a direction to transfer their cases pertaining to the assessment proceedings for the assessment years 2008-09 to 2014-15 to some other officer inspite of the first respondent. However, the fact remains, the first respondent has concluded the proceedings and passed an order of assessment, which has been communicated to the petitioners and the petitioners have filed appeals before the Commissioner of Income Tax (Appeals) on 21.04.2016. Thus, the assessment proceedings having already been concluded and the petitioners having received the copies of the assessment orders and filed appeals against such orders, the question of issuing a direction to transfer the case cannot be consider On a perusal of the grounds of appeal filed by the petitioner before the Appellate Authority against the assessment order, the petitioner has raised a ground stating that the Assessing Officer erred in relying upon a bogus fax and letter which has no evidenciary value. Thus, the petitioners having raised this issue before the appellate authority as one of the grounds of challenge to the assessment order, this issue need not be decided in this Writ Petition in the light of the prayer sought for. The present Writ Petitions are only an attempt to thwart the assessment proceedings, especially when, the assessment beyond 31.03.2016, would become time barred. The Assessing Officer has concluded the hearing on 18.03.2016 and passed the assessment order on 30.03.2016, which is subject matter of challenge before the appellate authority. Therefore, it is one more reason to reject the relief sought for in this Writ Petitions. There was no prohibitory order prohibiting the department from proceeding further in accordance with the provisions of the Act. Therefore, it cannot be inferred that the order of attachment was passed in a hurried manner or for certain other collateral purpose. Further, the third respondent was functioning as a Deputy Director of Income Investigation for the period from 17.06.2013 to 18.07.2014 and thereafter, he has been transferred and posted as a Deputy Commissioner of Income Tax, Corporate circle-6(2), Chennai. The assessment proceedings were carried on by the first respondent and the hearings commenced only on 12.10.2015, much after the second respondent was transferred from Coimbatore i.e., on 18.07.2014. In fact, even on the date when the notice was issued under Section 142(1) of the Act on 26.12.2014, the second respondent was not functioning at Coimbatore.
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2016 (7) TMI 710
Depreciation on assets put into use - assets have been claimed by the assessee as an application of income for charitable activities - Held that:- Allowing exemption on the application of income on the capital asset acquired during the relevant year and further, allowing depreciation in the subsequent years, at any stretch of imagination, could not be construed as double deduction. Allowing depreciation in subsequent years, on the capital asset, which has already availed the benefit of deduction in computing the income of the trust in the year of its acquisition is considered by the Punjab and Haryana High Court in the case of Market Committee, Pipli (2010 (7) TMI 374 - Punjab and Haryana High Court ) and held that the income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee. It is also to be noticed that while in the year of acquiring the capital asset, what is allowed as exemption is the income out of which such acquisition of asset is made and when depreciation deduction is allowed in the subsequent years, it is for the losses or expenses representing the wear and tear of such capital asset incurred if, not allowed then there is no way to preserve the corpus of the Trust for deriving its income as held in Society of Sisters of St.Anne [1983 (8) TMI 44 - KARNATAKA High Court ]. This judgment of co-ordinate Bench of this Court is binding on us and we have no reasons to disturb the settled position of law at this length of time/depart from the said reasoning. As such, the arguments advanced by the Revenue apprehending double deduction is totally misconceived. Section 11[6] of the Act is prospective in nature denying the depreciation deduction in computing the income of Charitable Trust and operates with effect from 01.04.2015. This is further clarified when compared with certain other provisions which have been made retrospectively in the same Finance Act. - Decided against revenue
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2016 (7) TMI 709
Registration under Section 12AA(a)(ii) - what should be the effective date for acceptance of the application for registration? - Held that:- The view expressed by different High Courts is about the requirement to submit audited accounts along with the application. The requirement is held to be directory in nature and not mandatory. If filing of the the audited accounts is not mandatory, the application submitted by the non-appellant cannot be said to be defective. The registration should have been allowed from the date the application was submitted and not from the date when alleged defects in the application were cured. The Tribunal and the revenue have not pointed out any other defect in the application than for filing of the audited accounts. In the light of the aforesaid, we do not find it to be a case of relating back of the date of registration from the date of its filing. The application was filed without any defect and the audited accounts were submitted later on because submission of audited accounts along with the application was not mandatory.
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2016 (7) TMI 708
Depreciation claimed on civil foundation as well as on electric turbine generator for the wind mill - Held that:- The issue before the Madras High Court in the case of Hi Tech Arai Ltd. [2009 (9) TMI 60 - MADRAS HIGH COURT ] was again of a wind mill where depreciation on power generation was claimed. It was found that main business of the assessee was not of producing or generating electricity and thus, the Madras High Court decided the issue in favour of the assessee and against the revenue. The issue having been confirmed by the Apex Court on dismissal of appeal, we are unable to take a different view as has been taken by the Madras High Court and has to be applied herein also. - Decided against revenue
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2016 (7) TMI 707
Entitlement for exemption under Section 11 (1)(a) - Held that:- The assessees are entitled to claim set off of the expenditure incurred in excess of the income in the earlier years against the income of subsequent year, merely because the assessees have incurred the expenses in excess of income, may be out of accumulated fund, the question of denying the benefits of exemption to the assessees under Section 11 (1)(a) of the Act, in respect of the income in previous year relevant to the assessment year, which was admittedly applied for charitable purposes, does not arise. It is not out of place to mention here that the income of the assessees, which are Agriculture Produce Market Committees, constituted under the statute engaged in marketing of the agriculture produce stands exempted by virtue of provisions of Section 10(26AAB) w.e.f. 1.4.09. Thus the decision of the ITAT in holding the assessees entitled to claim exemption under Section 11 (1)(a) of the Act during the relevant assessment year is absolutely justified and does not warrant any interference by this court. - Decided against revenue
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2016 (7) TMI 706
Reopening of assessment - "reason to believe" that income chargeable to tax had escaped assessment - whether material collected by the Department and relied upon, namely the entries/notings made as indicated in the loose slip has no nexus to the petitioner and therefore, the entire proceeding should be quashed.? - Held that:- When we analyse the material available on record, we find that it is a case where the enquiry into the matter by the Income-tax Department is still in progress and considering the fact that the Revenue has indicated that the petitioner was a key person having control over the decision making process, it is not appropriate for this court to hold that material produced are not sufficient enough or reliable enough to proceed in the matter. On the contrary, when the law says that sufficiency or correctness of the material is not to be looked into at this stage by a writ court, this court has to leave everything to the Assessing Officer, who, after considering each and every aspect of the matter including the judgments relied upon by the petitioner and the objections to be raised to decide the matter. It is indicated by the Revenue that the petitioner played a key role in controlling the decision making process which ultimately led in eliminating all other companies, shortlisting the two companies in question and it has been held that by acting as intermediate between Nagar Nigam and Commissioner of Urban Administration and Development, the petitioner was indicated in various steps pertaining to award of contract. Therefore, merely, because it is said that the petitioner had gone on deputation he cannot be exonerated of the charges levelled. That being the reason which weighed with the Revenue authorities to proceed further in the matter, therefore, it is not appropriate for a writ court exercising limited jurisdiction in a petition under article 226 of the Constitution at this stage to interfere as enquiry into various aspects of the matter which was the prime consideration which weighed with the Revenue for proceeding in the matter may be required. The Revenue on a just and proper consideration has taken the decision and therefore, we are not inclined to accept this contention advanced by Shri Kishore Shrivastava. In the present set of circumstances we are not inclined to interfere into the matter because for interfering into the matter we will be required to assess the material available on record and say that they are not sufficient enough to proceed in the matter and we find that when the assessment proceedings are still on discharging this function at this stage by this court in a petition under article 226 of the Constitution is not warranted. - Decided against assessee.
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2016 (7) TMI 705
Lease income out of leasing out commercial property - business income or income from house property - Held that:- It has been categorically recorded by the Tribunal on appeal by the Revenue that perusal of the memorandum of understanding dated August 27, 2002 between the assessee and the lessee, i.e., M/s Pizza Hut showed that the property in question was given for use for a period of 12 years which was renewable for a further period of 12 years. It was nowhere shown that the intention to let out was only for a temporary period. Thus, the Commissioner of Income-tax (Appeals) was not held to be justified in concluding that the letting out was to be taken as commercial exploitation of the property. The intention of the assessee was to enjoy rental income from the letting out of the property which was rightly treated as income from house property by the Assessing Officer. Thus the view adopted by the Tribunal is a plausible view based on appreciation of material on record and the relevant case law on the point.
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2016 (7) TMI 704
Reopening of assessment - notices issued without jurisdiction - Held that:- In the instant case, the fact is not in dispute that on the request of the petitioner the respondent has provided copy of the reasons recorded by respondent No. 3 as well as the copy of the order passed under section 151 of the said Act. So no case of prejudice caused to the petitioner has been made out. In the light of the discussion made in the foregoing paras, we are of the view that there is no merit in the petition filed. The impugned notices cannot be said to be issued without jurisdiction or bad in law. So also we find no infirmity in the impugned order dated September 16, 2015 passed by the Deputy Commissioner of Income-tax. In view of this, the petition filed by the petitioner is devoid of merits and substance therein and therefore the same is liable to be dismissed - Decided against assessee
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2016 (7) TMI 703
Assessment u/s 153A - Mandatory requirement of issuance of notice under section 143(2) of the Act in respect of assessment proceedings under section 153A - Held that:- The question is no longer res integra as the Delhi High Court in Ashok Chaddha's case (2011 (7) TMI 252 - Delhi High Court ) delving into identical matter had opined in the negative holding that there was no specific provision in the Act requiring the assessment made under section 153A of the Act to be after issuance of notice under section 143(2) of the Act - Decided against assessee
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2016 (7) TMI 702
Denial of deduction u/s. 36(1) (viii) - FAA rejected the claim made by the assessee, that in the AY 2012-13, in similar circumstances the CPC had accepted the claim made by the assessee - Held that:- FAA is empowered to entertain a new claim, even if a fresh return of income is not filed by the assessee . It is also a fact that for the subsequent year the CPC has allowed the similar claim of deduction made by it. Therefore, we are of the opinion that in the interest of justice, matter should be restored back to the file of the FAA for fresh adjudication, who will decide the issue. Decided in favour of the assessee in part.
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2016 (7) TMI 701
Penalty u/s. 271 (1)(c) - whether amount received by the assessee from two parties for surrendering its rights in a property,taxable u/s. 55 (2)(a)? - Held that:- It is not the case of the AO that the stand taken by the assessee was totally against the provisions of the Act or that prima facie it was inadmissible. Maximum it could be said that there was difference of opinion. Thus, the claim made by the assessee was a legally plausible claim. It is a different issue that in the appellate proceedings the stand of the assessee was negated. The AO had gathered the information about the transaction from the return of income filed by the assessee. Thus, disclosure of primary facts was there. So, there was no concealment of particulars of income per se. Once basic facts have been disclosed by the assessee it has to be held that he had not concealed the particulars of income. Besides, particulars were not inaccurate as it had made the claim that it considered to be bonafide. Considering the peculiar facts and circumstances of the case, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. The cases, relied upon by the AR, also endorse the view taken by the FAA. So, confirming his order, we decide the effective ground of appeal in favour of the assessee
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2016 (7) TMI 700
Penalty proceedings u/s. 271(1)(c) - disallowance made by the AO with regard to depreciation on goodwill, was deleted by the ITAT while deciding the quantum appeal - Held that:- Penalty order would not survive, once the addition made by the assessee has been deleted in the quantum appeal. Effective Ground of appeal, filed by the assessee, stands decided in its favour.
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2016 (7) TMI 699
Penalty under section 271(1)(c) - outstanding capital gains tax - inaccurate particulars of income - whether assessee was under bonafide belief that there was no liability to capital gains tax? - Held that:- There was no intention of the assessee to evade tax. That full particulars were disclosed. The assessee had not declared capital gains under bonafide belief that it was not liable to pay any tax on this income. After considering the above submissions of the assessee and going through the order of the Ld. CIT(A), we find that the Ld. CIT(A) has committed no mistake while deleting the penalty levied by the AO under section 271(1)(c) of the Act upon the assessee. We do not find any infirmity in the order of the Ld. CIT(A) in deleting the penalty - Decided in favour of assessee
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2016 (7) TMI 698
PE in India - Indo-US Treaty - addition made being a profit margin of 5% of the sale made by the assessee in India - Held that:- As decided in assessee's own case for the assessment years 2004-05, 2005-06 & 2008- 09 the assessee did not have PE in India in the year’s under consideration in terms of Article 5(1),5(2),5(4) and 5(5) of the India-US treaty and the additions made by the AO to the income of the assessee being a profit margin of 5% on the sales made by the assessee were ordered to be deleted by the Tribunal. Respectfully following the afore-stated orders of co-ordinate benches of the Tribunal in the assessee’s own case , we hold that the assessee did not have not have PE in India in the year under consideration in terms of Article 5(1), 5(2), 5(4) & 5(5) of the Indo-US Treaty and the addition made by the A.O. being a profit margin of 5% of the sale made by the assessee in India is not sustainable - Decided in favour of assessee Interest u/s 234B is not leviable in the case of non-resident - Decided in favour of assessee
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2016 (7) TMI 697
Interest income - taxability on Accrual or Receipt basis- Addition of interest income on the Inter Corporate Deposits (ICD) - company had filed winding up petitions - Held that:- After considering the submission of the assessee and the assessment order the FAA held that it was a recurring issue which had been dealt with during the assessment proceedings during 143(3)as well as in the assessment proceedings u/s. 153A r. w. s. 143(3) of the Act in respect of AY. s 2001-02 to 2007-08, that the assessee had filed winding up petition before the Court, that in the notes on account year after year the assessee had mentioned that the interest receivable on ICDs would be accounted for on receipt basis, that the AO had been ignoring the stand taken by the assessee, that the FAA and the Tribunal had deleted the additions made by the AO, that the Hon'ble High Court had dismissed the 260A application filed by the department. Finally, he allowed the appeal filed by the assessee. - Decided in favour of assessee.
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2016 (7) TMI 696
Project development expenditure - Treatment of expenditure in the return of income - disallowance of claim for deduction u/s 37(1) - Held that:- Under the income-tax law, the profit of a particular store cannot be separately computed. Thus, the profits of the retail business have to be computed by taking the entire business as ‘one’. Since the assessee is already having incomes from its retail business, the admitted fact would be that the business of the assessee is already ‘set up’ as per facts and well settled legal position. It is well settled position of law that all the expenses incurred subsequent to the setting up of the business shall be allowable to the assessee. The assessee had wrongly capitalised these expenses under some misconception and misunderstanding of accounting standards. Hon’ble Supreme Court in the case of Taparia Tools Ltd vs JCIT (2015 (3) TMI 853 - SUPREME COURT) wherein observed that the fact that a different treatment was given in the books of account by an assessee could not be a factor which would bar the assessee from claiming the entire expenditure as a deduction. Once a return is filed in a particular manner, the AO is bound to carry out the assessment applying the provisions of the Act and not to go beyond the return. There is no estoppel against the statute and the Act enables and entitles the assessee to claim the entire expenditure in the manner it can be claimed under the law. It has been further clarified by the Hon’ble Supreme Court that under the income-tax, there is no concept of deferred revenue expenditure in the Act, except under specific section, i.e. where amortisation is specifically provided for such as in section 35D of the Act. In the case before us, no such law has been applied by the AO. The assessee has claimed the entire expenditure as revenue expenditure. Keeping in view the nature of these expenses and business of the assessee, we find no reason and justification to deny the claim of the assessee - Decided in favour of assessee
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2016 (7) TMI 695
Disallowance on account of excess provisions written back - Held that:- We find that the FAA had upheld the disallowance, made by the AO, that he had held that the assessee had not filed the returns of income, P&L A/c. s for the earlier years. Considering the fact that these basic documents were available to AO as well as FAA, we are of the opinion that before taking an adverse view they should have verified the facts from the available records or should have directed the assessee to file the same. Considering the peculiar facts and circumstances of the case, we are of the opinion that the issue needs further verification. So, in the interest of justice we are restoring back the matter to the file of the AO to decide the issue afresh after going through the returns of income, P&L accounts, balance sheet of the earlier years. Assessee is directed to provide these basic documents to the AO - Decided in favour of assessee by way of remand. Disallowance on account of the late payment of PF - Held that:- We find that in the case of Ghatge Patil Transports (2014 (10) TMI 402 - BOMBAY HIGH COURT ), the Court had held that if the payments were made before the due date of filing of return of income, no disallowance can be made as per the provisions of section 36(1). Respectfully, following the above judgment of the Hon'ble Bombay High Court, we decide Ground in favour of the assessee. Disallowance of travelling and conveyance expenditure - Held that:- We find that the assessee had filed additional evidence before the FAA who had forwarded it to the AO for comments, that the AO had not filed the remand report till the FAA passed his order. In our opinion, issue needs further verification. So, in the interest of justice, we are restoring the matter to the file of the AO. He is directed to afford a reasonable opportunity of hearing to the assessee - Decided in favour of assessee by way of remand.
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2016 (7) TMI 694
TDS u/s 194C or 194J - payments made for supplying copies of final negative - Held that:- As per section 194J the concerned company has to provide some technical input, as stated by Assessing Officer himself in the assessment order, that print processing charges included professional work such as processing of colour negative, etc., which is not the case in such process. The system is that one master print, number of prints are taken and send to the various distributors for exhibition. Thus printing of various prints from the master piece is known as print processing. However, as per section 194C, sub-clause 7(iv)(e) the work shall include manufacturing and supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer. It is noted that while completing the assessment under section 143(3), the learned Assessing Officer while dealing with identical issue for Assessment year 2007-08 himself mentions that TDS needs to be deducted under section 194C. Identical view was taken by the learned CIT(A) for Assessment year 2007-08 and the addition made by the Assessing Officer under section 40(a)(ia) was deleted saying that TDS has been deducted at appropriate rate. The certificate issued under section 197 by the Department to Adlabs itself mentions that TDS has to be deducted under section 194C and the annexures also mentions the name of the present assessee. Thus we find no force in the conclusion of the Assessing Officer. - Decided against revenue
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2016 (7) TMI 693
Eligibility for deduction u/s. 80IB - exchange rate difference - CIT(A) has allowed the claim of deduction u/s. 80IB heavily relying upon the decision of Amba Impex [2005 (12) TMI 58 - GUJARAT High Court ] - Held that:- In the light of the aforementioned decision of the Hon’ble High Court, we find that there is clear dissimilarity of the facts in as much as in the case of the assessee, the gain has arisen out of the hedging made by the assessee. The assessee has entered into a forward contract and has been benefitted by the fluctuations in foreign exchange irrespective of the fact whether trade agreement exists or not. In other words, the exchange rate fluctuation gain does not have any first degree nexus with the export sales of the assessee. In the absence of the first degree nexus the ratio laid down by the Hon’ble Supreme Court in the case of Liberty India [2009 (8) TMI 63 - SUPREME COURT ] squarely apply. Since the ld. CIT(A) has decided the issue in favour of the assessee, heavily relying upon the decision of Amba Impex (supra) and since we have substantively distinguished the facts of the case in hand with the facts of the case before the Hon’ble High Court (supra). We set aside the findings of the ld. CIT(A) and restore that of the A.O. - Decided in favour of revenue Allowability of depreciation on plant - Held that:- CIT(A) was of the opinion that there is a merit in the case of the assessee. The plant and machineries were used during the year and, therefore, eligible for depreciation and accordingly directed the A.O. to allow the depreciation as per the law. As before us, the ld. D.R. could not bring any cogent material evidence on record to controvert the findings of the ld. CIT(A), as the findings of the ld. CIT(A) are based on the verification of direct evidences, we decline to interfere. - Decided in favour of assessee
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2016 (7) TMI 692
Benefit of deduction u/s 80P(2) denied - assessee is a cooperative society registered under the Kerala Cooperative Societies Act, 1969 - Held that:- The certificate of registration of the assessee under the Kerala Cooperative Societies Act and the bye-laws are placed on record. It is clear from the perusal of the same that the assessee is primary agricultural credit society and providing agricultural credit facilities to its members. The Hon’ble Jurisdictional High Court in the case of The Chirakkal Service Cooperative Bank Ltd & others [2016 (4) TMI 826 - KERALA HIGH COURT ] has held that such societies are entitled to the benefit of deduction u/s 80P(2) of the Act. In view of the above findings of the Hon’ble Jurisdictional High Court (supra), we allow these appeals of the assessee
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2016 (7) TMI 691
Liability in respect of wages - assessee's failure to furnish the details of such miscellaneous liabilities - Held that:- The details of relevant liabilities were not produced by the assessee before AO and the same furnished before CIT(A) for the first time were relied upon by him to give relief to the asessee without giving any opportunity to AO. There is, therefore, violation of Rule 46A and this position is not disputed even by Ld. A/R. We, therefore, set aside the matter to AO. Addition of ceased liability - addition under the head investment allowance reserve - whether the amount of Reserve has not been utilized for acquiring ‘plant & machinery’ within the period of 8 years from the date of creation and for not filing any evidence by the assessee - Held that:- Sub-Section (1) of Section 32A is clear that there shall be a deduction equal to the 25% of actual cost of machinery or plant installed in the immediately succeeding previous year that in respect of investment reserve created for the business purpose. Sub-Section (6) of Section 32AB defines that if, said investment reserve is not utilized within the specified time and the same is deemed to be profit and gain of business of that previous year. In the present case, the said amount appears to be created in the A.Y 1997-78 debiting to the P & L account and there was no dispute that the factory of assessee was taken over by the Bihar State Financial Corporation on 01.04.1981, then the question would arise whether the AO could add a sum of ₹ 10,50,000/- as ceased liability u/s 41(1) of the Act. In our opinion, the AO can add the same as deemed profit and gain of business of that previous year under Sub-Section (6) of Section 32AB of the Act. In the present case investment reserve was created in the A.Y 1997-78 and there was no business activity of the assessee since 01-04-1981 and the AO can not treat the unutilized investment reserve as deemed profit and gain of business of the year under consideration i.e 2007-08 under Sub-Section (6) of Section 32AB of the Act and the addition under section 41(1) of the Act can not be applied taking into consideration that the assessee was not claimed any deduction in respect of amount ₹ 10,50,000/- under the head investment allowance reserve credited to Profit & Loss account, Therefore, we find no infirmity in the order of CIT-A in finding that the addition of amount ₹ 10,50,000/- u/s 41(1) of the Act by the A.O is not justified as the investment reserve was not created by an allowance or deduction in any year in respect of any Loss, Expenditure or Trading Liability incurred by the assessee. - Decided in favour of assessee
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2016 (7) TMI 690
Profit on sale and purchase of shares - Treatment of income under the head short-term capital gain OR business income - Held that:- The details of the transactions of sale and purchase of shares and the resultant gains arising therefrom are placed in the paper book which we have given an anxious thought. Keeping in view the factual matrix and the peculiar facts and circumstances of the case, we are of the considered view, it will be just and appropriate in the interest of justice that the gains arising from sale of shares held for a period of up to 30 days should be treated as business income and brought to tax as income from business as there is reflected an indica of trade on the part of the assessee in selling the shares within such a short period of time of holding up to 30 days, while gains arising from sale of shares held for a period of holding of shares of more than 30 days and not more than twelve months, the resultant gain arising therefrom should be charged to tax as short-term capital gains as there is reflected an indica of investment where the period of holding is more than 30 days and not more than twelve months. The Assessing Officer is directed to compute the respective business income and short-term capital gain on sale of shares accordingly as indicated by us as above.
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2016 (7) TMI 689
Determination of capital gains on the sale of capital asset - short-term capital gains or long-term capital gains - exemption under section 54 denied - period of holding of property inherited by the assessee from his father - application of the cost of acquisition in terms of section 49(1)(iii)(a) - Held that:- In the present case, the assessee inherited the property on November 20, 2005. However, the said property was purchased by the assessee's ancestors, i.e., grandfather, the late Keshavdas on June 14, 1971, and after that it was bequeathed to the assessee's father, Shri Harichand, on the death of his grandfather on June 24, 2001. Thereafter, the property was gifted to the assessee on November 20, 2005. Accordingly, the cost of indexation to be applied as on April 1, 1981, after fixing the value of asset as on April 1, 1981, and it cannot be said that the assessee acquired the property under dispute on November 20, 2005, so as to compute the capital gains as short-term capital gains. In other words, capital gains has to be assessed as long-term capital gains by fixing the cost of asset as on April 1, 1981, and, thereafter, applying the cost of inflation index in terms of section49(1)(iii)(a) of the Act and, consequently, the assessee is also entitled for exemption under section 54 of the Act. - Decided in favour of assessee.
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2016 (7) TMI 688
Bogus purchase - genuineness & the creditworthiness of the relevant purchase parties not proved - Held that:- The purchases from the supplier parties are not established, however, simultaneously, the sales corresponding to the purchases are not doubted and this obvious contradiction get resolved only when the assessee purchases goods in cash from the open market and supply to the buyer parties. The presumption in such circumstances is that purchases have been made in cash for supplying to the sales parties and at that time unexplained cash has been utilized by the assessee for purchases. The addition is required to be made for such unexplained cash payment made and not for purchases booked in books of account. The supplier parties to whom cheque payments were made for purchases booked in books of account, returns the corresponding cash back to the assessee after deducting certain commission, and this cash is available for making subsequent cash purchases. In such circumstances, only the peak of the unexplained cash utilized in cash purchases can be added to the income of the assessee. Accordingly, we restore the matter back to the file of the Assessing Officer with the direction to compute the peak of the unexplained cash utilized in making cash purchases.
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2016 (7) TMI 687
Treatment of gains arising on sale of plot - Capital gain v/s business income - nature of activity - intention - Held that:- The intention at the time of purchase of land was for the purpose of investment and merely because the bigger plot was sub divided into smaller plots does not establish that the assessee’s intention was to carry on the business activity. In this regard, other circumstances of the case have to be kept in mind i.e. as against the investment in August, 2000, as against part development of projects, the assessee had sold two plots of land during the year and other years, the balance plots of land are still available with the assessee. Merely because the assessee had divided bigger plot into small plots does not establish the same to be business activity carried on by the assessee or adventure in the nature of trade, keeping in view the other circumstances of the case. Accordingly, we find no merit in the order of CIT(A) in this regard and reversing the same, we direct the Assessing Officer to compute the income under the head ‘income from long term capital gains’. - Decided in favour of assessee
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2016 (7) TMI 686
Bogus purchase - Held that:- Though purchases were from bogus parties nevertheless purchases themselves were not bogus. In our opinion, there is a merit in the contention of the learned counsel for the assessee that in the absence of the purchases, there could not be sales worth ₹ 4,03,34,375. Not only this, the Assessing Officer has also accepted the opening and closing stock as shown by the assessee in the books of account. The Assessing Officer has not doubted these sales. If the Assessing Officer's version is accepted then the gross profit works out at 83 per cent. which is unbelievable and unimaginary as sales cannot be the profits. Thus, considering the entire facts and circumstances of the present case, we do not see any justification in making the addition on account of bogus purchases. - Decided in favour of assessee
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2016 (7) TMI 685
Disallowance under section 14A made in respect of expenditure incurred for earning exempt income - Held that:- From the record, we found that the Assessing Officer has correctly computed the disallowance as per rule 8D, in so far as the relevant assessment year under consideration is the assessment year 2008-09. Accordingly, we direct the Assessing Officer to reduce the disallowance by the amount of ₹ 14,03,562 being disallowance of expenses already offered by the assessee in the return of income. Rebate under section 88E - In the computation of income, the assessee has restricted its claim of rebate under section 88E in respect of the securities transaction tax to ₹ 1,95,40,847 as against the actual payment of the securities transaction tax of ₹ 4,38,91,830 - Held that:- However, the Assistant Commissioner of Income-tax has applied the average rate of Income-tax to only direct income from the taxable securities transaction of ₹ 5,12,87,746 instead of the taxable income on the taxable securities transaction under the head "Profits and gains of business or profession" which is ₹ 5,74,89,989. Further, while computing the average rate of tax, the Assistant Commissioner of Income-tax has divided the total income- tax by the gross total income whereas the assessee claims that for the purpose of section 88E, the average rate of tax should be computed by dividing the tax on income under head "Profits and gains of business or profession" by income under the head "Profits and gains of business or profession". We found that applying the same principle, the average rate of Income-tax should be applied to ₹ 5,74,89,989 while computing the maximum ceiling on the amount of rebate under section 88E in respect of the securities transaction tax. It is also a matter of record that a similar claim of the assessee was accepted by the Commissioner of Income-tax (Appeals) in the assessment year 2007-08, against which the Revenue is not in appeal before us. No merit in the action of the lower authorities for reducing the assessee's claim of deduction under section 88E as done by the Assessing Officer.
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2016 (7) TMI 684
Revision u/s 263 - CIT(A) directing the AO to consider the fair market value of the properties as on 1.4.1981 at ₹ 40 per sq.ft. instead of ₹ 300/- as claimed by the assessee - Held that:- Assessing Officer cannot take a view either against or in favour of the assessee without making proper enquiries and without proper examination of the claim made by the assessee in the light of applicable law. In the present case, the Assessing Officer considered the FMV at ₹ 300 per sq.ft. as on 1.4.1981 as submitted by the assessee without bringing any comparable cases or referring the matter to the DVO for valuation. This itself is an error committed by the AO that aspect involves the rejection of tax, which is prejudicial to the interests of the revenue. The CIT is empowered to invoke the provisions of sec.263 of the Act, so as to rectify the errors committed or wrong decision taken by the Assessing Officer. After considering the material on record, in our opinion, it cannot be said that exercise of jurisdiction by the CIT u/s.263 of the Act, is bad in law. Accordingly, we uphold the order of the CIT to the extent that the Assessing Officer is not justified in considering the FMV as on 1.4.1981 at ₹ 300 per sq.ft.. However, the CIT cannot determine the FMV of the property, himself. In the present case, the CIT, himself fixed the FMV of the properties as on 1.4.1981 at ₹ 40 per sq.ft., which is not correct. Accordingly, we direct the AO to refer the matter both, landed properties as well as buildings to the DVO and decide the issue afresh. It is needless to say that the DVO has to consider comparable cases in the immediate vicinity of the properties, where it is located and also give an opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes.
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2016 (7) TMI 683
Disallowance made on account of depreciation claimed u/s 32 - registration of vehicles has not been transferred in the name of the appellant under the Motor Vehicles Act - Held that:- Hon'ble Supreme Court decision in the case of Mysore Minerals Ltd. v. CIT [1999 (9) TMI 1 - SUPREME Court ] has held that anyone in possession of property in his own title exercising such dominion over the property as would enable others being excluded therefrom and having right to use and occupy the property in his own right would be the owner of building for the purpose of section 32(1) though a formal deed of title may not have been executed and registered. The said proposition of law is fully satisfied in the instant case where the assessee has claimed depreciation on the vehicles having possession and dominion over the income and control over their operations. In light of the above, we are of the view that the appellant is eligible to claim depreciation on the vehicles - Decided in favour of assessee Disallowance on account of trip expenses - Held that:- The expense have been disallowed on purely ad hoc basis and no specific expenditure/transaction has been highlighted by the Assessing Officer which suggest that these expenses have not been incurred for the purposes of the business. In the light of that, we delete the ad hoc disallowance - Decided in favour of assessee
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2016 (7) TMI 682
Non- genuine purchases - Held that:- Enough documentary evidences by way of purchase bills, sales bills, ledger copies of suppliers, etc., along with the fact that payments were made through cheque has been brought on record by the assessee to demonstrate that purchases made from the concerned suppliers are genuine. In addition, it is a fact on record that not only the entire purchase transaction has been reflected in the assessee's books of account but the sales effected by the concerned suppliers are also recorded in their books of account which were submitted before the Assessing Officer as well as the first appellate authority. Moreover, all the suppliers are identifiable persons with permanent account numbers and are assessed to Income-tax regularly. There is no material before us to show that sales effected by these persons have been held to be non-genuine at their hands in any Income-tax assessment proceedings. Thus, when the sales effected by the suppliers are accepted in their hands, the purchases made from them by the assessee cannot be held to be non- genuine. In these circumstances, as the Department has failed to bring any substantive evidence/material to controvert the findings of the learned Commissioner (Appeals), we are not in a position to disturb the order of the learned Commissioner (Appeals). - Decided in favour of assessee
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Customs
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2016 (7) TMI 717
Provisional release of the imported goods - Proof of ownership - Held that:- the respondents are directed to release the consignment as substantial amount of money has already been collected from the petitioner and retained with the Department. The goods shall be released provisionally subject to the final adjudication of the show cause notice dated 29.01.2016 along with the Addendum dated 10.02.2016. It is needless to state that the petitioner has to cooperate in the adjudication process. The goods covered in the Bill of Entry shall be cleared within a period of fifteen days from the date of receipt of a copy of this order.
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Service Tax
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2016 (7) TMI 727
Bail application - Criminal prosecution for non payment of service tax - monetary jurisdiction - It was submitted that offence under section 89(1)(d)(ii) of the Finance Act has been inserted to be cognizable and punishment has been enhanced from three years to seven years and made the offence non-bailable. Thus, on and from 10.5.2013 if a person has collected any amount as service tax but failed to pay the amount so collected to the Central Government and if it exceeds ₹ 50.00 lakhs, then only the accused will be liable for punishment upto seven years. Drawing attention of this Court to the break-up of service tax liability shown by the Department for the period 2013-2014 till 31.12.2014, service tax liability even assessed by the Department was ₹ 30,32,939/- only and thus, no provision under section 89(1)(d)(ii) of the Act could have been resorted to by the authority. Held that:- It is important to note that if at all initial partial payment had been made to come out of jail, it cannot be said to be compliance of bail conditions by the applicant and thus, learned Additional Sessions Judge had passed impugned order which is legal and proper and it does not warrant any interference in exercise of revisional jurisdiction more particularly when it is noticed that by one way or the other, the applicant is prolonging the time with calculative move just not to pay the amount which had prima facie appears to have been pocketed. It is also to be noted that the interim order passed by this Court dated 26.10.2015 in this Criminal Revision Application No.566 of 2014 has also not been complied with. Under the circumstances, no leniency can be shown to such an applicant who only desires to prolong the issue. Hence, this revision application deserves to be dismissed. - Decided against the applicant.
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2016 (7) TMI 726
Extended period of limitation - Banking and other Financial Service - adjustment of excess payment of service tax - service tax alleged to have been adjusted without adhering to the provisions of Rule 6(4A) and 6(4B) of Service Tax Rules, 1994 - Held that:- suppression of facts etc. cannot be established and the demand invoking extended period is not sustainable as the same is hit by limitation of time - Decided against the revenue.
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2016 (7) TMI 725
Refund of accumulated cenvat credit - Rule 5 of CENVAT Credit Rules, 2004 - eligible input services - nexus with the output service. - export of services - Held that:- The rent rate for premises rented as well as the charges to be paid for common area maintenance are contained in the same agreement and on taking the premises on rent, the appellant has to pay charges for common area maintenance also. - The appellant has received manpower recruitment services and training services for providing output services. Both these services find place in the inclusive part of the definition of 'input service' and therefore denial of refund is not legal and proper. - Credit allowed. Club membership services - It is true that club membership services fall in the exclusion part of the definition of input service. Therefore I hold that appellant is not eligible for refund of credit/service tax paid on these services. - Visa charges was explained by the learned counsel for appellant to be service tax paid on services consumed for visa interview of employees to go abroad. The services were availed from M/s. OSI Consulting Services. - these services are not eligible for refund Decided partly in favor of assessee.
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Central Excise
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2016 (7) TMI 724
Production capacity based duty - Sec.3A of the Central Excise Act, 1944 - Held that:- R.5 of the Rules,1997 is neither in violation of Art.14 of the Constitution of India nor ultra vires to Sec.3A of the Act,1944. The parties will abide by the final outcome of the pending proceedings before the Apex Court and the petitioner, apart from validity of R.5 of the Rules,1997 which we too have held to be intra vires to Art.14 of of the Constitution of India, will be at liberty to contest the other issues before the Commissioner (Appeals) or the CESTAT, as the case may, if he so wishes and in these terms, the present writ petition stands disposed of.
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2016 (7) TMI 723
Restoration of appeal - appeal was dismissed in absence of fulfilling the condition to pre-deposit under section 35-F of the Act - Held that:- During pendency of the present appeal, appellant deposited entire amount of ₹ 5.50 lac towards pre-deposit, as stated by learned counsel for appellant. In view of aforesaid, we find that if the appellant has complied with the condition of pre-deposit though with delay in given circumstances, appeal needs to be restored. In the background aforesaid, impugned order is set aside and if appellant has already deposited the amount of ₹ 5.50 lac, the Tribunal is directed to hear and decide the appeal on merit after its restoration.
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2016 (7) TMI 722
Levy of penalty upon the appellant under Rule 173Q of the Central Excise Rules, 1944 for clandestine removal of the goods - Held that:- The removal of excisable goods were substantial looking to the further annexures annexed with the show cause notice issued by the respondent-Department and also looking to the Order-in-Original passed by the Commissioner of Central Excise in his order dated 17th October, 2005. Sizable amount of central excise duty was evaded and, hence, no error has been committed while passing the Order-in-Original by the Commissioner of Central Excise, Ranchi as well as by the CESTAT, Kolkata for imposing penalty of ₹ 2 Lakh upon each of the appellants. We see no reason to take any other view than what is taken by the CESTAT, Kolkata. So far as penalty of ₹ 35 Lakhs upon the company is concerned, the matter has already been remanded by the CESTAT, Kolkata. The amount of ₹ 2 Lakh per head of penalty is absolutely just and proper, looking to the nature of clandestine removal of the goods without payment of the duty. There is no substance in these Tax Appeals and, hence, the same are, hereby, dismissed.
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2016 (7) TMI 721
Tribunal granted the full waiver from pre-deposit without assigning any reason - revenue in appeal - prejudice to the interest of public revenue - Held that:- - The jurisdiction, which this Court exercises, under Section 35G of the Act, is only where a substantial question of law arises for consideration. While exercising jurisdiction under Section 35-G of the Act, this Court would not record a finding afresh on facts. The Tribunal was required in law to assign reasons why it considered it appropriate that the appeal should be heard without the requirement of pre-deposit; and to take into consideration undue hardship, if any, as also to safeguard the interests of Revenue. As the Tribunal has not assigned any reasons why it considered it appropriate to hear the appeal without any requirement of pre-deposit, the order under appeal is set aside. - Tribunal to re-decide the matter - Decided in favor of revenue.
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2016 (7) TMI 720
Demand of duty on account of either transferred losses or on failure to furnish re-warehousing certificate - business of refining of crude and marketing various petroleum products thereof. - Held that:- Government notes that the original authority and Commissioner (Appeals) has given detailed findings with regard to factual aspect of submission of re-warehousing certificate and observed that the same were not submitted by the applicant in the prescribed manner and also failed to account for the impugned goods. Such detailed factual findings have not been controverted in grounds of Revision Application by means of any factual submission, duly supported by any relevant documentary evidences. Under such circumstances, the conclusion of appellate authority, based on such incontrovertible factual observations requires to be acceded to. Government thus holds that the applicant has clearly failed to duly account for the impugned goods and to submit the prescribed proof of their receipt/re-warehousing despite several opportunities given to them in remand proceedings from time to time. - Revision application rejected - demand confirmed.
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2016 (7) TMI 719
Rebate/Refund claim - proper documents - applicant had submitted photocopies of clearance documents viz ARE-1 and Central Excise Invoice for sanction of rebate claim - Export of goods manufactured by third party - Held that:- Government notes that original copy of ARE-I and Excise invoice among other documents are essential documents for claiming rebate. Any non-submission of documents in the manner prescribed thus imparts a character of invalidity to the rebate claim. Also in the absence of the original copies of ARE-I duly endorsed by the Customs, the export of the same duty paid goods which were cleared from the factory cannot be established which is a fundamental Requirement for Sanctioning rebate under Rule 18 read with Notification 19/2004-CE(NT) dated 06.09.2004. It is a settled issue that benefit under a conditional notification cannot be extended in case of non-fulfilment of conditions and/or non-compliance of procedure prescribed therein. - Claim was rightly rejected.
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2016 (7) TMI 718
Rebate/ Refund claim - merchant exporters - The duty was paid @ 10% under Notification No. 2/08-CE dated 01.03.2008, as amended. However, the rebate sanctioning authority, has held that the effective rate of duty on the export goods was 4% vide Notification No. 4/2006-CE dated 01.03.2006 as amended. Hence the claimant was eligible for rebate of duty @ 4% adv. paid on export goods. However the rebate claim was rejected on the grounds that in ARE-I No. 04/10-11 dated 29.052010 the chapter heading mentioned on the Central Excise Invoice, ARE-I and shipping bill was different. Held that:- Government finds that there is no merit in the contentions of applicants that they are eligible to claim rebate of duty paid @10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @ 4% or 5% in terms of exemption Notification No. 4/06-CE dated 01.03.06 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No. 4/06-CE dated 1.03.06 as amended, as applicable on the relevant date on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. As regards the discrepancies in Chapter heading in ARE-I, Excise invoice viz-a-viz Shipping Bills, the applicant themselves admitted to have committed the mistake. They have further stated to have applied for amendment before custom authorities. However, even after more than 4 years of such application, the applicant could not submit any order of appropriate authority allowing the amendment. As such, the applicant's contentions on this ground cannot be accepted. Thus the lower authorities have rightly held that the discrepancy in description of the product exported on the shipping bill and corresponding excise invoice would mean that the impugned goods have not been exported by the assessee and hence the applicant is not entitled to rebate. Decided against the applicant.
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CST, VAT & Sales Tax
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2016 (7) TMI 716
Waiver of pre-deposit - tribunal declined a complete stay on the disputed tax-liability - Held that:- Financial condition/hardship is an important consideration but then the businessmen, dealer etc. has to place relevant material in this regard showing dire financial condition. Income-tax Return are relevant material in this regard. - Thus, the discretion vested in the learned Tribunal and First Appellate Authority in matters of interim relief under a Taxing Statute such as the one under consideration is to be exercised judicially and it should be guided by the principles of law enunciated by precedents as aforesaid and not in dis-regard thereof as has been done in the present case. Matter remanded back to the First Appellate Authority for considering the applications for interim relief afresh keeping in mind the observations made hereinabove and a decision thereon within a period of thirty days from the date of receipt of a certified copy of the order.
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2016 (7) TMI 715
The point of sale of the crude oil - shifting of delivery point/s for the sale of Barmer Crude oil outside the state of Rajasthan - the petitioner was then concerned with certain reports in the vernacular press that respondent state was seeking to impose Value Added Tax (VAT) at the rate of 4% then prevailing treating the sale of crude oil from the Barmer Oil Fields as a local sale (Intra State Sale) instead of an inter state sale-as it palpably was, on which the then extant CST @ 2% against C-form was leviable. Held that:- The defence of the respondent State to the writ petition overlooks the fundamental aspect of sale transaction between the petitioner and nominated buyers of crude oil where movement of goods is inevitably occasioned out of the State of Rajasthan in one unbroken transaction, following the sale, as all nominated buyers such as MRPL etc. have their refineries in State of Gujarat and Karnataka. There is no third party. There is no third party transaction. Further in terms of the judgments of the Apex Court referred to above, where the sale and delivery takes place has been relegated to an inconsequential event when the sale seamlessly occasions the movement of goods outside the state. It is thus evident that the sale transaction of crude oil by the petitioner in the facts of the case, even with the point of sale being in Rajasthan, partakes the character of an inter-state sale. The purport of the undertaking by the petitioner in its letter dated 23-10-2008 as also the subsequent the letter dated 7-1-2009 was only that the change of the delivery point by the Central Government from the outward flange of the petitioner’s delivery facility at Barmer to Salaya on 30-4-2008 would not facilitate stock transfer of Barmer crude oil to Gujarat such that the State of Rajasthan would stand deprived as the originating state, of its revenue on inter-state sales at the applicable rate. The undertaking did not at all state that RVAT would be paid. The levy was only to be dependent on the sale being a local sale or inter-state sale. In the instant case the sales on the facts relevant thereto being an inter-state sale, as the originating state in terms of Section 9 of the CST, the State of Rajasthan is entitled CST at the rate applicable to an inter-state sale. Besides it is preposterous to argue that sales tax would be leviable contrary to law and the mandate of Article 265 of the Constitution of India on the basis of a purported undertaking by the petitioner. It is held that the sale of crude oil by the petitioner from the Barmer Oil Fileds to MRPL etc., all nominated by the Central Government, under clause 1.23 of the PSC is an inter state sale and the Commercial Taxes Department of the State of Rajasthan has no jurisdiction to levy any tax under the provisions of the RVAT Act, 2003. Central Sales Tax at the rate applicable from time to time would however be leviable by the Commercial Taxes Department.
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2016 (7) TMI 714
Seeking revision of the order - CST - Delay in submission of declaration forms in Form C, F, E I and E II subsequent to the orders passed - Held that:- a reading of Section 9(2) of the CST Act shows that it is exhaustive and clearly specifies that the Authorities under the State Law can exercise all or any of the functions under the State for assessment, review, revision, re-convey measures, etc., for the purpose of assessment and recovery of tax due under the Central Act. Therefore, the respondent has power to invoke Section 84 of the TNVAT Act and revise the assessment under the CST Act. - Accordingly, the writ petition is partly allowed, the impugned order dated 27.6.2016 is set aside and the matter is remitted back to the respondent for fresh consideration.
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2016 (7) TMI 713
Blocking TIN Number of the petitioner-company from accessing the facility i.e. the website of the respondents- authorities (www.tgct.gov.in) for issuing statutory “C” Declaration Forms/Way-bills to its sellers - Held that:- even if any tax is due from the petitioner, denial of the way-bills is not the proper way to recover the tax. Having regard to the facts and circumstances of the case and following the judgment dated 12.03.2014 passed by this Court in W.P.No. 39097 of 2013, we are of the considered view that the action of the respondent-sauthorities in blocking the TIN Number of the petitioner-company from accessing the facility i.e. the website of the respondents- authorities (www.tgct.gov.in) for issuing the statutory “C” Declaration Forms / Way-bills to its sellers even if tax is due from the petitioner, is not proper.
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