TMI Tax Updates - e-Newsletter
August 21, 2014
Case Laws in this Newsletter:
Income Tax
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Exemption u/s 10(23C)(iiiad) – computation of limit of ₹ 1 crores - sale proceeds of land and bonds cannot be equated to annual receipts as stated u/s 10(23C) - HC
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Income Tax:
Unsecured loan obtained from companies u/s 68 – Creditworthiness and genuineness of transaction – assessee was rerouting its own funds was based on surmise - no addition - HC
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Income Tax:
Grant of recognition u/s 80G(5) - registration cannot be refused on the ground that in the past for some period the petitioner had not applied 75% of the income of the trust for the purpose of trust - HC
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Income Tax:
Whether the electricity unit is an undertaking for the purpose of Section 80-IA and whether “profit and gain“ from captive consumption of electricity supplied from the generator set and which cannot be sold to any third person will qualify for deduction u/s 80-IA - Deduction allowed - HC
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Income Tax:
Reopening of assessment – Period of limitation u/s 153 - consequence of or to give effect to any finding or direction in pursuance of order for another year - bar of limitation under section 149 would not be applicable - HC
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Service Tax:
Computer Reservation System (CRS / GDS) - services relating to the reservation of ticket availability position through on line computer system - demand of service tax and penalty set aside - AT
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Service Tax:
Franchisee service - registration of website domain names - Reverse charge mechanism - no service tax is leviable under the franchise service - AT
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Service Tax:
Information technology service - Inasmuch as the appellant has discharged the sales tax/VAT liability on such software, there is merit in the contention of the appellant that liability to pay service tax does not arise on a sale transaction - AT
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Service Tax:
Adjustment of excess tax paid - the excess amount of tax paid during the month can be adjusted against his tax liability during other months and in this regard, there cannot be any monetary limit - AT
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Service Tax:
Order beyond the scope of show cause notice - appellate authority having moved outside the scope of the show cause notices or the impugned order, makes the order passed by him as unjustified and unwarranted - AT
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Central Excise:
Imposition of penalty equivalent to duty demanded vide Section 11AC - penalty under Section 11AC of the Act cannot be set aside merely on the ground that the duty was paid before issue of show-cause notice - AT
Articles
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (8) TMI 568
Notice for reopening of assessment u/s 148 – Full and true disclosure – Change of opinion - Held that:- In case of an assessment completed u/s 143 (1), the requirement of recording "reasons to believe" are mandatory – Relying upon THE COMMISSIONER OF INCOME TAX-V Versus ORIENT CRAFT LTD. [2013 (1) TMI 177 - DELHI HIGH COURT] - The foundation of the AO’s jurisdiction and the raison d’etre of a reassessment notice are the "reasons to believe"- it should have a relation or a link with an objective fact, in the form of information or facts external to the materials on the record - external facts or material constitute the driver, or the key which enables the authority to legitimately re-open the completed assessment - In absence of this objective "trigger", the AO does not possess jurisdiction to reopen the assessment - if there are no "reasons to believe" based on new, "tangible materials", then the reopening amounts to an impermissible review - there is nothing to show what triggered the issuance of notice of reassessment – no information or new facts which led the AO to believe that full disclosure had not been made - The notice of the AO’s order rejecting the objections, and the arguments of the Revenue nowhere indicate how the AO was impelled to seek re-opening of the assessee’s case – the reassessment notice cannot be sustained – Decided in favour of Assessee.
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2014 (8) TMI 567
Approval of depreciation granted – Fixed assets taken over under Scheme of amalgamation - Whether the Tribunal was justified in approving the depreciation granted when the profits of the Indian undertaking of nonresident parent company were computed in accordance with the provisions of Rule 10 of the Income Tax Rules – Held that:- The income accruing or arising to any non-resident person, whether directly or indirectly, through or from any business connection in India or through or from any property in India etc., will be, for the purposes of assessment to income tax, calculated on any amount which bears the same proportion to the total profits and gains of the business of such person, as the receipts so accruing or arising, bears to the total receipts of the business - This computation has to be done in accordance with the provisions of the Income Tax Act - the U.K. Company was being assessed to income tax in India right from the AY 1960-61 in respect of profits of its Branch in India. The authorities below gravely misdirected themselves in adopting the method that they did - there is no concept of depreciation being allowed on a notional basis or that the same can be granted implicitly as held by the ITAT - The depreciation has to be actually allowed – Relying upon Madeva Upendra Sinai Versus Union of India And Others [1974 (11) TMI 7 - SUPREME Court] - the written down value of fixed assets of the U.K. Company had to be calculated on the basis of the actual cost less the depreciation “actually allowed” to the U.K. Company - The written down value could not have been arrived at on the basis that depreciation had been granted on a notional basis - depreciation on the fixed assets taken over by the Assessee Company under the Scheme of Amalgamation, ought to be granted by taking the written down value of the fixed assets at ₹ 1,72,78,297/- and not ₹ 93,14,942 – Decided in favour of Assessee.
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2014 (8) TMI 566
Deduction u/s 80HHC - Deemed credit under CENVAT credit scheme – Part of business profit or not – Held that:- The Tribunal was rightly of the view that the CENVAT incentives are in the nature of export incentives and hence allowed for the purpose of calculating business income whilst calculating a deduction u/s 80HHC of the Act - under the provisions of section 80HHC, the Assessee would be entitled to a deduction to the extent of the profits referred to in sub-section (1-B) thereof derived by the Assessee from the export of such goods or merchandise - No other provision was brought to notice that would justify the disallowance of CENVAT incentive whilst computing the admissible deduction u/s 80HHC of the Act – no substantial question of law arises for consideration – Decided against Revenue.
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2014 (8) TMI 565
Exemption u/s 10(23C)(iiiad) – Sale of bonds and property – Capital receipt or non-recurring receipt - Whether the Tribunal was right in holding that the receipt from the sale of bonds and property had to be excluded from the aggregate receipts received during the year by treating the receipts as capital receipt and non-recurring receipt in nature and thereby arriving at the aggregate receipts of less than 1 Crore and consequently holding that assessee is entitled to exemption under Section 10(23C)(iiiad) – Held that:- CIT(A) while accepting the plea of the assessee that the sale proceeds of land and bonds is capital in nature and not recurring income, 85% of the sale proceeds have been expended by the assessee in furtherance of the object of the Trust – CIT(A) has rightly classified the annual receipts during the financial year 2003-04 being the annual and recurring income of the assessee - The sale proceeds of land and bonds which are capital receipts in nature, are not recurring and are once in a lifetime - The key emphasis is on the words annual receipts - The sale proceeds of land and bonds cannot be equated to annual receipts as stated u/s 10(23C) of the Act - The sale is in the nature of conversion of a capital asset from one form to another –no substantial question of law arises for consideration – Decided against Revenue.
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2014 (8) TMI 564
Unsecured loan obtained from companies u/s 68 – Creditworthiness and genuineness of transaction – Held that:- CIT (A) and Tribunal was rightly of the view that the balance sheet of the lender as of 31 March 2009 had been placed on the record - The assessee had placed all the bank accounts of the lender and the confirmatory certificates in respect of borrowings made by the lender Company - CIT (A) held that identity of the lender, its creditworthiness and the genuineness of the transaction had been established - assessee was rerouting its own funds was based on surmise - The CIT (A) had the benefit of considering the balance sheet of the lender as well as confirmatory certificates in respect of the advances which the lender in turn had received - There was no material to establish that the assessee was engaged in a transaction for routing its own funds - Decided against Revenue.
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2014 (8) TMI 563
TDS deduction u/s 194C @ 2% or u/s 194I – Rent for hiring vehicles – Held that:- The provisions of Section 194C and not Section 194I of the Act would apply in the case of a transport contract - the assessee had entered into a transport contract with the service provider for the transportation of its employees and had deducted tax at source in terms of Section 194C of the Act – Decided against Revenue.
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2014 (8) TMI 562
Liability to deduct TDS u/s 194C or under amended section 194I – TDS on Pick and drop facilities for students and staff - Held that:- The assessee deducted the tax at source u/s 194C of the Act - the Tribunal is correct in coming to a conclusion that the tax was liable to be deducted at source u/s 194C of the Act, which the assessee had correctly deducted - The agreement between the assessee and the transporter clearly provided that the transporter was under a contractual obligation to provide and maintain the buses and to meet out all expenses on the running and maintenance of the vehicles and for hiring of drivers and other staff – Decided against Revenue.
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2014 (8) TMI 561
Grant of recognition u/s 80G(5) - Whether the Tribunal is justified in law and on facts in directing to grant recognition u/s 80G(5) of the Income Tax Act to the assessee trust – Held that:- Following the decision in NN. Desai Charitable Trust Versus Commissioner Of Income-Tax [1999 (5) TMI 11 - GUJARAT High Court] - inquiry should be confined to finding out if institution satisfies prescribed conditions as mentioned in Section 80G of the Act - the Commissioner refused the application for registration u/s 80G(5) of the Act on the ground that in the past for some period the petitioner had not applied 75% of the income of the trust for the purpose of trust - in the past for some period the petitioner has not applied 75 per cent of the income of the trust for the purposes of the trust, therefore, the income of the assessee was liable to be included in the taxable income and the assessee did not fulfill the condition of s. 80G(5)(i) of the Act - it cannot be said that the Tribunal has committed any error in quashing and setting aside the order passed by the Commissioner refusing to grant recognition u/s 80G(5) of the Act to the respective assessee trust – Decided against revenue.
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2014 (8) TMI 560
Stay of recovery proceedings - tribunal has already rejected the stay application – Held that:- The petitioner was granted sufficient installments - the application for stay of recovery proceedings has been rejected by the Tribunal - The installments initially granted contemplated full payment between October 2013 and February 2014 - the petitioner is granted liberty to pay an amount of ₹ 20.00 lacs, which is for the defaults for the months of April, May, June and July 2014, no later than within a period of one week from today – if the assessee shows his bona fides by complying with the directions, he shall thereafter have a further opportunity to strictly abide by the time schedule for depositing the remaining installments as fixed in the order - on depositing an amount of ₹ 20.00 lacs within a period of one week from today, the prohibitory order which has been issued by the Department, shall remain suspended so long as the petitioner abides by the time schedule fixed for making payment of the outstanding dues – Decided in favour of Assessee.
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2014 (8) TMI 559
Deduction u/s 80HHC - Receipt of insurance claim – Receipts on sale of raw materials, tools, stores, scraps - Held that:- Following the decision in Commissioner of Income Tax Vs. Punjab Stainless Steel Industries and Others [2014 (5) TMI 238 - SUPREME COURT] - The term ‘turnover’ would show the sale effected by a business unit - It may happen that in the course of the business, in addition to the normal sales, the business unit may also sell some other things - the word “turnover” would mean only the amount of sale proceeds received in respect of the goods in which an assessee is dealing in - the sale proceeds of the scrap cannot be included in the term ‘turnover’ for the reason that the assessee’s-unit is engaged primarily in the manufacturing and selling of steel utensils and not scrap of steel - the proceeds of scrap would not be included in ‘sales’ in the Profit and Loss Account of the assessee - insurance claim, sale of raw materials, tools, stores, scraps cannot form part of turnover for the purpose of computation of deduction u/s 80HHC of the Act – Decided against Revenue. Reduction of net interest income or gross interest income – Held that:- Following the decision in Commissioner of Income Tax and Another Vs. Krone Communication Ltd. [2010 (7) TMI 631 - Karnataka High Court] - in the definition in sub-section (4C) of section 80HHC of the Income-tax Act, 1961, it is specifically mentioned that what is to be reduced in 90 per cent of any receipts by way of commission "included in such profits" - clause (baa) to the Explanation is itself based on the assumption that 10 per cent of the income would be an expense – Decided against Revenue. Deduction u/s 80HHE - Expenses in foreign currency for providing technical services outside India – Held that:- The consideration in respect of computer software received in or brought into India by the assessee in convertible foreign exchange is deducted from the profits of the business - the assessee is not liable to pay any income tax on such consideration received from export of computer software - the export turnover does not include freight, telecommunication charges or insurance attributable to the delivery of computer software outside India or expenses if any incurred in foreign exchange in providing technical service outside India. The services are technical in nature it does not fall within clause (ii) of subsection (1) of section 80HHE of the Act of providing technical services outside India in connection with the development or production of computer software - It falls under sub-clause (1) of sub-section (1) of Section 80HHE of the Act - the expenditure cannot be excluded in computing export turn over – Decided against Revenue.
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2014 (8) TMI 558
Deduction u/s 80IA – Profit and gain from captive consumption of electricity - Whether the electricity unit is an undertaking for the purpose of Section 80-IA and whether "profit and gain" from captive consumption of electricity supplied from the generator set and which cannot be sold to any third person will qualify for deduction u/s 80-IA – Held that:- Sub-section (10) would not be directly applicable which relates to captive consumption, the provision postulates re-working of the profits in cases where more than expected profits stand declared by the eligible undertaking because of proximity and close connection between the eligible undertaking and the persons to whom goods and services were supplied – Relying upon CIT Vs. Orissa Cement Ltd. [2001 (11) TMI 60 - DELHI High Court] - Revenue’s submission that one cannot earn profit by indulging in the business with oneself, was rejected to negate the claim. The finding of the Tribunal that the profits derived by the respondent-assessee’s power generation unit would be eligible for deduction as a separate undertaking u/s 80IA - the Tribunal has passed an order of remand on the question of computation of profit and gain from business in terms of sub-section (8) to Section 80IA - the AO is competent to decide the question as per law and the hands and power of the AO have not been curtailed and the order does not give any specific or clear finding/direction – Decided against Revenue.
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2014 (8) TMI 557
Jurisdiction of AO for reopening of assessment – Period of limitation u/s 153 - consequence of or to give effect to any finding or direction in pursuance of order for another year - Addition u/s 68 - Whether the Tribunal fall into error in holding that the AO lacked jurisdiction to reopen the assessment for the purpose of making addition overlooking Section 150 – Held that:- Relying upon Rural Electrification Corporation Ltd. Vs. Commissioner of Income Tax and Anr., [2013 (7) TMI 317 - DELHI HIGH COURT] - The legislative history including purpose behind enactment of sub-section (2) to Section 150 and Explanations 2 and 3 to Section 150 of the Act was discussed - on a combined reading of sub-section (1) of section 150 and sub-section (3) of section 153, it is apparent that in cases falling under clause (ii) of sub-section (3) of section 153 read with Explanation 2 thereunder, the provisions of subsection (1) of section 150 would be applicable and the bar of limitation under section 149 would not be applicable. While section 150(1) and section 153(3) contemplate issuance of notice u/s 148 and completion of assessment, reassessment and re-computation respectively, in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision, Explanation 2 to section 153(3) contains a deeming provision which provides that where by an order referred to in clause (ii) of sub-section (3) any income is excluded from the total income of an assessee for an assessment year, then an assessment of such income for another assessment year shall for the purposes of section 150 and section 153 be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order – Decided in favour of Revenue.
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Service Tax
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2014 (8) TMI 592
Computer Reservation System (CRS / GDS) - services relating to the reservation of ticket availability position through on line computer system - whether "Online Database Access or retrieval Service" was received by the appellant from foreign based CRS service provider and liable to service tax in terms of section 66A of the Finance Act, 1994 on reverse charge mechanism basis - Difference of opinion - Majority order - Held that:- The said services were being received in respect of various computer reservation system from various CRS companies like M/s. Galilio International Partnership, USA; M/s. Abacus Distribution System Pvt. Ltd. Singapore, M/s. Amadeus Marketing SA Spain, and M/s. Sabre Travel Information Network etc. Said services were being provided by M/s. CRS or GDS Company to the head office of the air lines in terms of agreement entered between them and their head office. The above matters were heard by the undersigned as Third Member along with difference of opinion in the matter of British Airways [2014 (6) TMI 626 - CESTAT NEW DELHI (LB)] - the matter on merits as also on limitation was in favor of assessee - By adopting the final decision of British Airways vide my Order [2014 (6) TMI 626 - CESTAT NEW DELHI (LB)] demand set aside - Decided in favor of assessee.
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2014 (8) TMI 591
Franchisee service - registration of website domain names - Reverse charge mechanism - whether the appellants are a franchisee service provider - Held that:- demand notices have been issued under the Franchise Service. The terms "Franchisee" and "Franchiser" have been defined under Section 65 (47) and 65 (48) of the Finance Act, 1994 - It would thus be seen from the definitions that franchisee means an agreement by which the franchisee is granted representational rights to sell or manufacture goods or to provide service or undertake any process identified with franchisor. Appellants provided registrar service as per the powers under Article II of powers for ICANN, ICANN is prohibited from acting as registrar. From the agreements or from the bylaws, we are not able to find any process that has been developed by the ICANN and being used by the appellants. We find what is being done by the ICANN is to set minimum standards for the performance of registration function and recognize that the appellants are meeting those standards. Revenue has not been able to pinpoint to us either any service or any process for which ICANN is known and that process is being used or being provided by the appellants. In the absence of any such service or process we are unable to agree with the Revenue that the appellants are franchise service of ICANN. Even the agreement which permits the use of ICANN symbols clearly indicates that appellants are ICANN Accredited Registrar and nothing beyond that. Agreement between ICANN and Registry has not been produced either by Revenue or the appellant. We find that Revenue have not been able to bring on record any service or process identified with ICANN which is required to be provided by various registries accredited by ICANN. It appears that registries are also accredited like registrars. ICANN might have provided minimum standards for registries but that does not imply that registries are providing any service or process identified with ICANN. Resellers are specifically prohibited from using the name of ICANN. They only represent the appellant. In fact they are reselling the services of registrar being provided by the appellant. After selling the services of the registrar they remit the money to the appellant as per the agreement. We find that the agreement is of a nature of principal to principal basis and resellers cannot be considered as franchisee or associate franchisor of ICANN. Appellant cannot be considered as a franchisee of ICANN and therefore resellers cannot considered as franchisee of the associate franchisor. In view of above position, in our view the Revenue's contention that the resellers are providing the franchisee services of the ICANN does not hold water. In view of the above analysis we do not find any strength in the second demand notices also. Accordingly we hold no service tax is leviable under the franchise service and hence demand and penalties are not sustainable - Decided in favour of assessee.
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2014 (8) TMI 590
Classification of service - information technology service - Intellectual Property Rights Services - trading activity or service activity - purchase and sale of third party's standardised software products - sale of in-house developed customised software - sale of hardware - refund of services tax for services provided in SEZ - Held that:- The fact of purchase and resale of software and payment of VAT/ST on the software also point to the fact that the transaction entailed ‘sale of goods' and not supply of services. Similarly, sale of hardware would be clearly a trading activity. Therefore, this is also clearly outside the purview of information technology software service. As regards the sale of in-house developed software, we have seen the product literature furnished by the appellant. From the product literature for the software developed in-house, it is seen that they are standard software, which are sold to a particular class of buyers, such as banks, insurance companies, mutual funds and various other financial service providers, under a trade/brand name. Therefore, they appear to be goods, which can be marketed or sold. Inasmuch as the appellant has discharged the sales tax/VAT liability on such software, there is merit in the contention of the appellant that liability to pay service tax does not arise on a sale transaction. - prima facie case is in favor of assessee - stay granted. Refund for services provided to the SEZ unit - Held that:- t is clear that exemption has to be claimed in the manner prescribed and the manner has been provided vide Notification No. 9/2009-ST dated 3-4-2009. In the present case it is an admitted fact that the said procedure has not been followed. Therefore, prima facie in the absence of compliance to the procedure prescribed, the appellant cannot claim exemption from levy of service tax. - assessee directed to make pre-deposit of ₹ 1.40 crore for services provided in SEZ - stay granted partly.
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2014 (8) TMI 589
Adjustment of excess tax paid - Telephone services - Whether the assessee during the period of dispute were permitted to adjust excess amount of service tax paid for certain months against their service tax /education cess liability for the subsequent months - The department's contention is that for such adjustments under Rule 6(4A) read with Rule 6(4B), the assessee should have obtained centralized registration under Rule 4(2) - The other conditions are that an assessee with centralized registration under Rule 4(2) can adjust excess payment in one month against this tax liability in other months without any limit, for other assessee, there is a monetary limit of Rs. One lakh for such adjustment. Held that:- The excess payment referred to in sub-rule (4A) read with sub-rule (4B), is like advance payment under sub-rule (1A) of Rule 6. There is no condition in Rule 6(4A) read with Rule 6(4B) providing that for availing of the adjustment facility, the assessee must have opted for centralized registration under Rule 4(2). Moreover when an assessee during certain months, for reasons other than interpretation of law, taxability, classification, valuation or applicability of exemption, has paid service tax in excess of his actual tax liability, the Government cannot retain the excess tax paid by the assessee by refusing its adjustment against his tax liability during other months and refusing adjustment of such excess tax payment during a month against tax liability during other months and appropriation and retention of the same would amount to collection of tax without the authority of law which is contrary for the provisions of Art 265 of the Constitution of India. Therefore, if excess payment of tax in a month is not on account of reasons involving interpretation of law, taxability, classification, valuation or applicability of exemption notification and is purely on account of inability of the assessee to exactly determine the total amount collected during the month against the bills raised, as a result of which he had determined his tax liability or estimation basis, the excess amount of tax paid during the month can be adjusted against his tax liability during other months and in this regard, there cannot be any monetary limit - Decided in favour of assessee.
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2014 (8) TMI 588
Waiver of pre-deposit of amount of Service Tax liability - renting out of immovable property - Held that:- Benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008, grants the benefit of exemption of Service Tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. Prima facie, we find that the appellants have made out a case for waiver of pre-deposit of amounts involved - Stay granted.
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2014 (8) TMI 587
Waiver of pre-deposit of Service Tax - Business auxiliary services - export of services - Held that:- Services rendered by the appellant is on specific appointment of him by the foreign buyers. It is also undisputed that the acceptance of the finished goods i.e. processed foods are done only on an approval/inspection done by the appellant. At this juncture, we find that prima facie, the services rendered by the appellant may get covered under BAS, as per the Board’s Circular dated 24-2-2009, which specifically talks about the non-taxing of services, even when all the relevant activities though taking place in India, benefits of these services are accrued outside India. We find that the appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved. Accordingly, application for the waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.
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2014 (8) TMI 586
Recall of final order - Dismissal of appeal for want of clearance of the Committee on Disputes - Held that:- Appellant’s application to the COD for clearance to pursue this appeal was pending with that Committee when the Hon’ble Supreme Court in the case of Electronics Corporation of India Ltd. [2011 (2) TMI 3 - Supreme Court] recalled its earlier judgments on the subject thereby revoking the subject mechanism. In the circumstances, the appellant was virtually incapacitated in the matter of pressing their application before the COD. In the absence of COD itself, it cannot be expected that the appellant would obtain the above clearance as suggested in final order. Moreover, with the revocation of the said mechanism, the appellant should be deemed to have regained their right to pursue this appeal and, thereby, to move the present application before us. This view is also in consonance with the view expressed by the C.B.E. & C. in instruction dated 24-3-2011 issued to the field formations. Indeed, the said instructions virtually disabled the respondent from opposing the present application - Order recalled - appeals restored.
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2014 (8) TMI 585
Waiver of pre deposit - non discharge of service tax liability on the amounts which were charged by the foreign bank towards service charges - Reverse charge mechanism - Held that:- Appellant herein produces the LC to the Indian Bank, makes the payment against such LC. It is his submission that the appellant is not receiving any services from foreign banks for the collection against the LCs. We find that the amount charged by foreign bank, prima facie cannot be considered as service received by the appellant. We are of the view that the appellant made a strong case for the waiver of pre-deposit of the amounts involved. Accordingly, application for the waiver of the pre-deposit of the balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Stay granted.
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2014 (8) TMI 584
Denial of refund claim in terms of Notification No. 5/2006-C.E., dated 14-3-2006 in respect of non-registered unit - Commissioner by the Order-in-Revision has restricted the refund claim to only three units covered by the common registration and ordered recovery of refund already sanctioned relating to credit attributable to the Gurgaon unit - Held that:- Considering the fact that there is no dispute that the applicant had exported the services rendered from Gurgaon unit also and that the Bangalore unit was reportedly raising the invoices for export proceedings in respect of the BPO units, the denial of refund of credit in respect of the Gurgaon unit is not justified. In view of the above, there shall be waiver of pre-deposit of dues as per the impugned order and stay of recovery thereof till the disposal of the appeal - Stay granted.
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2014 (8) TMI 583
Waiver of penalty u/s 80 - benefit of reduced penalty u/s 78 to 25% - Manpower Supply Services - Held that:- Appellant was very prompt in collecting the Service and having collected it is surprising that the appellant chose not to deposit the amount with the Government. Under these circumstances, it would be impossible to take a view that the appellant was ignorant of law and because of remote location tax was not paid and returns were not filed - once Service Tax has been collected and neither registration was obtained nor returns were filed, provisions of Section 80 cannot be invoked - In that case the appellant had taken registration and was filing the return and on that ground a view was taken that suppression of facts or mis-declaration could not have been invoked. Admittedly, in this case the facts are entirely different. Therefore, this is not a fit case for invoking the Section 80 of the Finance Act, 1994. However, I find that in this case both the lower authorities have not given an option to pay the tax, interest and penalty within 30 days of the communication of the order in view of the decision of this Tribunal in the case of Swati Chemicals Inds. Ltd. - [2009 (7) TMI 1038 - CESTAT AHMEDABAD] and the Hon’ble Gujarat High Court in the case of CCE, Ahmedabad v. Akash Fashion Prints Pvt. Ltd. - [2009 (1) TMI 113 - GUJARAT HIGH COURT]. Such an option can be extended by this Tribunal. In this case, the appellant has already paid the Service Tax and interest and, therefore, only penalty remains to be paid. If the appellant makes payment of 25% of the penalty amount within 30 days of the communication of this order, the balance amount of penalty need not be paid - Decided partly in favor of assessee.
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2014 (8) TMI 582
Classification - Business Auxiliary Service or Advertising Agency Service - Held that:- On going through the specimen of the publication produced before us which clearly shows that the appellant are advertising the materials supplied by their clients and they are providing the space/slot for advertisement in their publication for their clients. The said activity is covered under the category of ‘Advertising Agency Service’ and the same is liable to service tax for sale of space/slot for advertisement. The appellant are also paying service tax on the said activity w.e.f. 1-5-2006 onwards - activity of the appellant does not cover under the category of ‘Business Auxiliary Service’ - Decided in favour of assessee.
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2014 (8) TMI 581
Waiver of pre deposit - movement of goods from railway sliding within the factory premises to the place of storage within the same premises - Cargo handling service or not - Assessee paying tax under Manpower supply - Held that:- The impugned order nowhere discloses about the scope of work embodied in the work order. The authority tried to make effort in para 10 of the order but has also not demonstrated the case of the Revenue with sound reason. When the authority passed the order on 16-10-2010 by that time, decision of the Tribunal in the aforesaid two cases were available before him. But he has not at all looked into those decisions - Prima facie, we are satisfied that balance of convenience is in favour of the assessee. - stay granted - matter remanded back for appreciation of facts.
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2014 (8) TMI 580
Demand of service tax - Penalty u/s 76 & 77 - assessee being outside India had no knowledge of breach of law - Held that:- When the reasonable ground as bonafide no knowledge of breach of law was advanced by the learned Chartered Accountant it is proper to waive penalties imposed under Sections 76 & 77 of the Finance Act, 1994 since learned Chartered Accountant also says that the appellant has sought registration subsequently under the law for providing taxable service of the nature covered by original order. In the result, both stay application and appeal are disposed. Service tax levied is confirmed with interest. Only penalty is waived - Decided partly in favour of assessee.
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2014 (8) TMI 579
Order beyond the scope of show cause notice - demand earlier confirmed under Cargo handling service - Commissioner (A) held that removal of the rejects from the pit mouth to the garbage area cannot be held to be falling under the category of Cargo Handling and confirmed demand under GTA services - Held that:- The appellate authority having moved outside the scope of the show cause notices or the impugned order, makes the order passed by him as unjustified and unwarranted. We accordingly dispense with the condition of pre-deposit of duty amount of service tax and interest and stay the recovery of the same - Stay granted.
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Central Excise
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2014 (8) TMI 575
Waiver of pre-deposit of the service tax - Denial of CENVAT Credit - Availment of credit at job worker's premises - Held that:- applicant has not received the services although at the premises of the jobworker. The invoices are also in the name of the applicant even though the address mentioned is of the jobworker. When the service tax has been paid by the applicant for the services received by them therefore, prima facie the applicant is entitled to take CENVAT Credit. Hence, the applicant has made out a case for 100% waiver of pre-deposit. - Stay granted.
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2014 (8) TMI 574
Rectification of mistake - Non consideration of relied upon case law - Held that:- In the said case the question for consideration was whether detention of plant and machinery under Rule 230 of Central Excise Rules, 1944 would also prohibit the manufacturing activity of the manufacture. The Hon'ble High Court held that detention of machinery is for prohibiting the transfer and disposal otherwise of the said goods and not for stopping production in the factory. The said decision has no relevance to the admissibility of appeal in the context of the proceedings under Section 11 of the Central Excise Act, 1944. Thus, the application for rectification of mistake is completely devoid of merits - Decision in the case of Ram Shree Steels (P) Ltd. Vs. Commissioner [2000 (1) TMI 51 - HIGH COURT OF JUDICATURE AT ALLAHABAD] distinguished - Decided against assessee.
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2014 (8) TMI 573
CENVAT credit - input services - goods transport agency service - Held that:- Subsequent to amendment of ‘input service' under Rule 2(1) of the CENVAT Credit Rules, 2004 by Notification No. 10/2008-CE (NT) dated 1.3.2008, substituting the word "from" in the said phrase to "upto" makes it clear that transportation charges were included in the phrase "clearance from the place of removal" upto the date of the said substitution and it cannot be included in the place of activities relating to the business". It has been held that such interpretation is available till 1.4.2008. There is no material available that the applicant delivered the goods at the customers' premises and therefore the decision relied upon by the learned counsel in the case of Hydro S&S Industries Ltd. (2014 (3) TMI 479 - CESTAT CHENNAI) is not applicable in the present case. Regarding the submission of the learned counsel that the demand is partly barred by limitation, the authorities below have observed that the applicant has not declared in their invoice about the place of removal. Hence the ground of limitation would be looked into detail at the time of hearing the appeals at length - Following decision of CCE, Bangalore Vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT] - Partial stay granted.
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2014 (8) TMI 572
Imposition of penalty equivalent to duty demanded vide Section 11AC - Interest under Section 11AB - Held that:- Respondent had paid the entire duty liability even before issue of the show-cause notice and following the decision of the Tribunal in the case of Rashtriya Ispat Nigam Ltd. Vs. CCE - [2002 (11) TMI 234 - CEGAT, BANGALORE] and other decisions, set aside the penalty and interest - Supreme Court in the case of Union of India Vs. Rajasthan Spinning & Weaving Mills - [2009 (5) TMI 15 - SUPREME COURT OF INDIA] held that penalty under Section 11AC of the Act cannot be set aside merely on the ground that the duty was paid before issue of show-cause notice. It has to be examined whether the conditions of penal liability as mentioned in Section 11AC of the Act is applicable or not. In view of the Hon’ble Supreme Court’s decision in the case of Rajasthan Spinning & Weaving Mills (supra), it is appropriate that the matter should be re-examined by the Commissioner (Appeals) on merits. Accordingly, the impugned order passed by the Commissioner (Appeals) is set aside and the matter is remanded to the Commissioner (Appeals) to decide afresh on merits after considering the various decisions on the issue including the decision of the Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills (supra) - Decided in favour of Revenue.
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2014 (8) TMI 571
Benefit of Cenvat credit - Assessee manufacturers of vehicles and were purchasing the various forgings from the market - Forgings were being sent by them to their job workers M/s Eicher Engineering Components Ltd., in terms of the provisions of Rule 4(5)(a) - Assessee has again taken credit of the duty paid by M/s Eicher Engineering Components Ltd - Held that:- admittedly M/s Eicher Engineering Components Ltd. had "paid" the duty and M/s V.E. Commercial Vehicles Ltd. has availed the duty paid by M/s Eicher Engineering Components Ltd. It is well settled law that the credit of duty "paid and not payable" is available. The entire situation is revenue neutral. Tribunal in the case of Bharat Heavy Electricals Ltd. vs. CCE & ST, Meerut-I vide [2014 (3) TMI 203 - CESTAT NEW DELHI] has dealt with an identical situation and has held in favour of the assessee. By following the same, we dispense with the condition of pre-deposit of dues against the appellants and allow both the stay applications - Stay granted.
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2014 (8) TMI 570
Denial of CENVAT Credit - Whether the appellants are entitled to avail the CENVAT credit of duty paid on welding electrodes and gases used for repair and maintenance of plant and machinery - Held that;- duty paid on the items used for repairs and maintenance would be available as CENVAT credit - Following decision of Samruddhi Cement Ltd. Vs. C.C.E., Indore [2012 (9) TMI 885 - CESTAT NEW DELHI] - Decided in favour of assessee.
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2014 (8) TMI 569
Interest on differential duty - Whether interest is payable under Section 11AB of the Central Excise Act, 1944 on the differential duty paid on supplementary invoices consequent to price increase - Held that:- Supreme Court in the case of CCE, Pune Vs. SKF (India) Pvt. Ltd. [2009 (7) TMI 6 - SUPREME COURT] has held that interest is payable on the differential duty paid on the basis of supplementary invoice on price escalation. In view of that, No reason to interfere with the order of the Commissioner (Appeals) - Decided against assessee.
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CST, VAT & Sales Tax
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2014 (8) TMI 578
Penalty imposed under Section 12-B(4) - Difference between tax paid and tax due - Held that:- amount was admittedly paid after the assessment order and was wrongly added to as advance tax to determine whether the difference of the amount is more than 15%. This error committed by the Appellate Authority was noticed by the Revisional Authority and in exercise of the powers under Section 22-A(1) of the Act corrected the order passed by the Appellate Authority - No reasons to interfere with the order passed by the Revisional Authority - decided against Assessee.
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2014 (8) TMI 577
Writ petition - Call for records - Held that:- Writ petitions are disposed of, directing the third respondent to serve copies of the relevant documents to the petitioner at the cost of the petitioner forthwith, at any rate, within 'two weeks' from the date of receipt of a copy of this judgment and the proceedings pursuant to Ext. P14 shall be finalized by the 5th respondent/Fast Track Team, after verifying the records and giving an opportunity of hearing to the petitioner to produce all the relevant records and to explain the facts and figures, which shall be done within one month thereafter. It is made clear that the petitioner will not be entitled to raise any 'plea of limitation' with regard to the assessment to be finalized as above, on the basis of the actual merit involved - Decided in favour of petitioner.
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2014 (8) TMI 576
Writ of Certiorarified Mandamus to call for the records - Alternate remedy - Incorrect availment of ITC - Held that:- Additional Government Pleader appearing for the respondents opposed the prayer made in the writ petition stating that as against the impugned order passed by the first respondent, the petitioner is having an alternative remedy under Section 51 of the TNVAT Act, before the second respondent, the Appellate Deputy Commissioner (CT), Madurai, and without availing such remedy, the petitioner has filed the writ petition. Since the petitioner is having an appellate remedy under Section 51 of the TNVAT Act, Court is of the opinion that instead of entertaining this writ petition, liberty could be given to the petitioner to file an appeal under Section 51 of the TNVAT Act before the second respondent, the Appellate Deputy Commissioner (CT), Madurai, as against the order dated 10.06.2013. Accordingly, liberty is given to the petitioner to file an appeal under Section 51 of the TNVAT Act before the second respondent, the Appellate Deputy Commissioner (CT), Madurai, as against the order dated 10.06.2013, on payment of 25% of the disputed tax amount, within a period of two weeks from the date of receipt of a copy of this order. On such filing of the appeal, the second respondent is directed to consider and dispose of the same on merits and in accordance with law, within a period of four weeks thereafter - Decided against assessee.
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