TMI Tax Updates - e-Newsletter
September 19, 2014
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:
Income from inherit property - Status of three brothers - Individual status or Association of persons (AOP) - This basic test to determine the status of AoP is absent in the present case. - SC
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Income Tax:
Failure to deduct TDS – Offence u/s 194A – Complaint u/s 482 Cr.P.C read with section 276B of IT Act – mere failure to deduct tax is no longer offence under Section 276-B of the Income Tax Act - HC
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Income Tax:
Levy of surcharge on tax u/s 113 - Block assessment u/s 158BC - Effective date of proviso appended to Section 113 of the Income Tax Act vide Finance Act, 2002 - the amendment is prospective - SC
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Income Tax:
Allowability of exemption u/s 11 – the Tribunal concludes that the Assessee is giving training in the area to seamen - All the courses may not be approved by the Director General of Shipping but that by itself is no ground to hold that the purpose is not charitable - HC
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Income Tax:
Power of CIT(A) to enhance the income - He could have done that only after issuing a notice u/s 251(2) - Since no such notice was issued, the order dated 13.03.1997 passed by the Commissioner suffered a serious illegality and it is contrary to Section 251(2) - HC
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Income Tax:
Entitlement for claim of depreciation on tanker – he tanker was not used during the closure of the accounting year – thus, the order of the Tribunal denying the depreciation is upheld - HC
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Income Tax:
Claim of deduction u/s 80IB for Unit II – The new unit has also not been formed by transferring to the new business machinery and plant previously used for any purpose - deduction allowed - AT
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Customs:
Failure to fulfil the export obligations - The licence granted a time limit of eight years for the petitioner to fulfil the export obligations. Even before the expiry of the period of eight years, the Department issued a show cause notice in the year 2008 itself - demand set aside - HC
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Customs:
Restoration of appeal - approval for delayed receipt of foreign exchange received late - tribunal dismissed the appeal for non-compliance of order of pre-deposit - appeal restored before CESTAT - HC
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Service Tax:
Valuation - Goods Transport Agency - inclusion of amount received towards hamaii charges and handling charges - demand confirmed - HC
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Service Tax:
Import of services - programme producer's service - non-residents, were required to produce audio-visual coverage of the cricket matches conducted by BCCI and the digitalized images of the coverage were uploaded for broadcasting for the viewers of the cricket match all over the world - services are liable to tax - AT
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Service Tax:
Refund claim - issue of taxability - period of limitation - service tax was paid as builder/developer prior to 1.7.2010 - claim of refund by the buyer of flats - refund to be allowed subject to conditions - AT
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Service Tax:
Classification of service - incidental activity - scope of the contents of agreement - Storage and Warehousing services or not - MIPL is running a container freight station (CFS) - providing space in the warehouses by MIPL - demand confirmed - AT
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Central Excise:
North East Exemption 32 and 33/1999-CE, dated 8.7.1999 - recovery proceedings - non issuance of SCN - It would not be appropriate to give an opportunity to the appellant to prefer statutory appeals and allow it to enjoy the benefit of stay of recovery on the basis of a bank guarantee. - SC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2014 (9) TMI 587
Income from inherit property - Status of three brothers - Individual status or Association of persons (AOP) - the property in question which was acquired by the Government, came to the respondents on inheritance from their father i.e. by the operation of law. - interest income due to compulsorily acquiring the said land - Held that:- the case is squarely covered by the ratio of the judgment laid down in Meera & Company [1997 (3) TMI 6 - SUPREME Court] inasmuch as it is not a case where any “Association of Persons” was formed by volition of the parties for the purpose of generation of income. This basic test to determine the status of AoP is absent in the present case. - Decided against the revenue. Spread of interest over the years - taxability of the interest on enhanced compensation - Held that:- This issue is covered by judgment of this Court in Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT], albeit, in favour of the Revenue. In that case, the court drew distinction between the “interest” earned under Section 28 of the Land Acquisition Act and the “interest” which is under Section 34 of the said Act. The Court clarified that whereas compensation given to the assessee of the land acquired would be 'income', the enhanced compensation/consideration becomes income by virtue of Section 45(5)(b) of the Income Tax Act. - it would be taxed in the year in which it is received. It would mean that converse position i.e. spread over of this interest on accrual basis is not permissible. - Decided in favor of revenue.
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2014 (9) TMI 583
Failure to deduct TDS – Offence u/s 194A – Complaint u/s 482 Cr.P.C read with section 276B of IT Act – petitioner argued that the complaint was filed under Section 276-B, which provision has been amended after 01.04.1989 and only failure to pay tax deducted at source has been made offence. - Held that:- Petitioner S.C. Kumar was appointed as a nominee Director in M/s Sukhna Paper Mills Limited by the Industrial Finance Corporation of India - There is also nothing in the complaint to show that the present petitioner was responsible for managing day-to-day affairs of that company - a person appointed as a Director on behalf of the corporation will not be liable to incur any obligation or liability. Amendment to section 194A - retrospective or prospective - Held that:- Section 194A has been amended to provide that the tax will be deducted at source on accrual of interest in the end of the accounting year or at the time of crediting to the account of payee or at the time of payment, whichever is earlier and it further states that it was done with a view to prevent postponement of liability relating to such deduction of tax at source. Thus the explanatory note itself reveals that there was a lacuna or loop hole in the unamended provisions of Section 194A which enabled the concerned person to postpone the liability relating to such deduction of tax at source and thus dwindling the tax collection. - there is absolutely no doubt that Explanation to subsection (1) of Section 194A has created a fresh penal liability and it cannot be said to be a simple Explanation of the existing provisions of this section. If that is so, then this Explanation cannot have retrospective operation. Scope of section 276B – Held that:- The perusal of amended Section shows that now mere failure to deduct tax is no longer offence under Section 276-B of the Income Tax Act. The Hon'ble Supreme Court also in M/s General Finance Company vs. Assistant Commissioner of Income Tax, [2002 (9) TMI 3 - SUPREME Court] while examining the provisions of Section 269SS concluded that even if the offence was committed at the time of filing of the complaint, the same could not be continued after the omission of the provision. - after the omission of the provision of failure to deduct tax at source, the trial cannot be continued against the petitioners. - Decided in favour of assessee.
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2014 (9) TMI 576
Levy of surcharge on tax u/s 113 - Block assessment u/s 158BC - Effective date of proviso appended to Section 113 of the Income Tax Act vide Finance Act, 2002 - Amendment retrospective or prospective - Held that:- the intention of the legislature was to make it prospective in nature. This proviso cannot be treated as declaratory/statutory or curative in nature. - the rate at which the tax is to be imposed is an essential component of tax and where the rate is not stipulated or it cannot be applied with precision, it would be difficult to tax a person. - Decided against the revenue. At the same time, it is also mandated that there cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. This is a well established principle of statutory interpretation, to help finding out as to whether particular category of assessee are to pay a particular tax or not. No doubt, with the application of this principle, Courts make endeavour to find out the intention of the legislature. At the same time, this very principle is based on “fairness” doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax. This principle also acts as a balancing factor between the two jurisprudential theories of justice – Libertarian theory on the one hand and Kantian theory along with Egalitarian theory propounded by John Rawls on the other hand. General Principles concerning retrospectivity - Held that:- The obvious basis of the principle against retrospectivity is the principle of 'fairness’, which must be the basis of every legal rule as was observed in the decision reported in L’Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co.Ltd (1994) 1 AC 486. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. For the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India & Ors. v. Indian Tobacco Association [2005 (8) TMI 113 - SUPREME COURT OF INDIA], the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. - Decided against the revenue.
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2014 (9) TMI 575
Allowability of exemption u/s 11 – Object of Trust - The Tribunal rightly held that the exemption u/s 11 of the Act can be availed of by the Assessee - the objects of the trust are to set up, administer and maintain technical training institution at various places in India for pre-sea and post-sea training for the ships and maritime industry as a Public Charitable Institute for education - That is to provide onboard and offshore training and continuing technical education for Officers, both on the deck and engine side - One of the object was to register with the Director General of Shipping and obtain other necessary approvals at the State and Central levels - the Tribunal concludes that the Assessee is giving training in the area to seamen - All the courses may not be approved by the Director General of Shipping but that by itself is no ground to hold that the purpose is not charitable - The exemption u/s 11 can be claimed and bearing in mind the object of the Trust - the Tribunal rightly held that the assessee is entitled to exemption u/s 11 of the Act - This is not a case where the purpose can be said to run a coaching class or a centre - This is an institution which imparts education in the area of pre-sea and post sea training to seamen so as to prepare them for all duties – no substantial question of law arises for consideration – Decided against revenue.
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2014 (9) TMI 574
Power of CIT(A) to enhance the income - Claim for deduction of loss disallowed – Notice u/s 251 not issued - Whether it was competent for the Commissioner to have fastened a higher liability upon the assessee than the one imposed under the order of assessment – Held that:- The grievance of the assessee was mostly in relation to the disallowance of deduction of loss to have been incurred in the Saw Mill business for particular AYs - The Commissioner is conferred with the power not only to confirm the order of assessment or reduce the tax liability but also to enhance such liability or annul the very assessment - the Commissioner made certain observations, as to why the grievance of the assessee cannot be said to be genuine - Had he stopped at that and dismissed the appeals, there would not have been any other complications - he proceeded to issue certain directions, which are certainly detrimental to the interest of the appellant - He could have done that only after issuing a notice u/s 251(2) - Since no such notice was issued, the order dated 13.03.1997 passed by the Commissioner suffered a serious illegality and it is contrary to Section 251(2) of the Act – thus, the order of the Commissioner is set aside and the matter is remitted back to the Commissioner for fresh adjudication – Decided in favour of assessee.
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2014 (9) TMI 573
Entitlement for claim of depreciation on tanker – Tanker not used during the year - Held that:- The Tribunal rightly was of the view that the tanker was not used during the accounting year - there was a discrepancy even about the in the hire charges said to have been received by the assessee for transport of water - The explanation that was offered on behalf of the assessee that the tanker was used for transporting water on hire, to check the leakages, if any, the hire charges were allowed to be taken by the driver cannot be accepted - the tanker was not used during the closure of the accounting year – thus, the order of the Tribunal denying the depreciation is upheld – Decided against the assessee.
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2014 (9) TMI 572
Validity of reopening of assessment – Failure to disclose the material fact – Interpretation of Clause 14 DTA - Liability to pay capital gain tax – Held that:- The assessee is a resident of India - the AO did not apply his mind and moreover, it was an assessment u/s 143(1) of the Act, the return was accepted - Once this mistake was noticed, proceedings were initiated and the amount was brought to tax - All the three authorities have concurrently held that it is not a case of change of opinion and the levy of tax is proper – relying upon CIT v. Rinku Chakraborthy [2011 (1) TMI 1160 - Karnataka High Court] – Decided against assessee.
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2014 (9) TMI 571
Claim of exemption by the society u/s 80G – Registration u/s 12AA not granted – Held that:- The exemption u/s 80G of the Act was granted to the trust for the first time on 19.10.1978 from 1.4.1977 to 31.3.1978 which was subsequently renewed on 29.1.2004 up to 31.3.2009 - The objects of the trust and the society were similar - The Tribunal rightly noted that the objects of the trust and those of the society are similar - No, be it a trust or a society, the legal status of either is that of a body of individuals and the benefit in either case inures to the same indeterminate public - there is nothing on record to show that the management of the trust has been taken over by the society, or that the property of the trust, post registration as society, belongs to the society – there was no mistake likely to occur on grant of further exemption u/s 80G - The assessee are the indeterminate beneficiaries - the order passed by the CIT is cancelled - The application filed by the assessee trust is allowed - CIT is directed to grant exemption u/s 80G of the Act to the assessee – The order of the Tribunal is upheld – Decided against revenue.
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2014 (9) TMI 570
Admission of additional evidence – Violation of Rule 46A - Addition u/s 68 – Unexplained share application money – Whether the CIT(A) was justified in admitting the additional evidence in such circumstances and then deleting the addition by holding that the assessee discharged the initial burden to prove the genuineness of the credit entries - Held that:- A notice has been issued u/s 142(1) of the Act, and the assessee was asked to furnish copies of the Annual accounts with Schedules and Computation of income, which were not furnished - The assessee intentionally ignored the assessment proceedings and no effective case has been made out that it was prevented by a sufficient cause in producing the books of account and relevant evidence before the AO during the course of assessment proceedings. The assessee did place such things before the CIT(A) and the further fact that the purpose of assessment is to determine correct total income, the assessee should be granted with one more opportunity to adduce necessary details and books of account etc. before the AO enabling him to finalize the assessment as per law - the requirement of sub-rule (3) of Rule 46A can be met under the given circumstances, if either the CIT(A) is directed to send the additional evidence to the AO by communicating that his threshold objection was not acceptable and he may examine the additional evidence on merits or the matter is restored to the AO with a direction to decide this issue afresh after taking into consideration the additional evidence filed by the assessee before the CIT(A) and allowing a further opportunity to the assessee to lead further evidence, if any - the second course of action is more befitting and time saving as well – thus, the order is set aside and the matter is remitted back to the AO for fresh adjudication for the question of addition u/s 68 – Decided in favour of revenue. Prior paid expenses for sales tax disallowed – Held that:- Following the decision in DCIT Vs Glaxo Smithkline Consumer Healthcare Ltd. [2007 (7) TMI 334 - ITAT CHANDIGARH] - deduction for sales tax or other tax and duty etc. is allowable u/s 43B on payment basis - As the nature of the amount paid by the assessee, being sales tax is not disputed and the further fact that such sum was paid during the previous year, CIT(A) was justified in allowing the claim – Decided against revenue. Various expenses disallowed - Marketing expenses, reduction in foreign travelling expenses, unexplained foreign travelling expenses, miscellaneous expenses and depreciation on certain additions to the fixed assets - Held that:- The assessee did not furnish supporting bill/vouchers of such expenses before the AO for examination - CIT(A) has deleted the addition by relying on the additional evidence in contravention of rule 46A(3), thus, the matter on these issues is liable to be remitted back to the AO for fresh adjudication – Decided in favour of revenue.
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2014 (9) TMI 569
Claim of deduction u/s 80IB for Unit II – Held that:- Once the wire is cut and stripped after going through different process and testing an entirely new product comes which has a different utility which is being used in electronic industry for elevators - This wire harness has independent identity and can be sold in the market - This product no more remains the ordinary wire – thus, the contention of the assessee is accepted that Unit-II is engaged in manufacturing of a separate product - Both the units are having independent identity, manufacturing different products, having different machinery - They are not inter-dependent for manufacturing their product, therefore, it cannot be said that the units are not independent - The new unit has also not been formed by transferring to the new business machinery and plant previously used for any purpose - the CIT(A) has given a clear-cut finding that there are more than 10 employees employed in Unit-II in addition to the contract and casual labour – Decided against revenue.
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Customs
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2014 (9) TMI 579
Failure to fulfil the export obligations - validity of SCN and OIO - a show cause notice was issued within the period of eight years granted under the licence, calling upon the petitioner to show cause as to why duty should not be imposed. Unfortunately, the petitioner did not give a reply, leading to the Original Authority passing an order in Original on 02.08.2010. - The petitioner woke up to this order after a gap of about three years and attempted to file an appeal. Since the Commissioner of Customs (Appeals), did not have the power to condone the delay, he rejected the appeal. The said order was confirmed by CESTAT on 18.09.2013. Held that:- this is a case where the very initiation of the proceedings, was completely arbitrary and faulty. The licence granted a time limit of eight years for the petitioner to fulfil the export obligations. Even before the expiry of the period of eight years, the Department issued a show cause notice in the year 2008 itself. Ultimately what is to be seen in such cases is as to whether an exporter was within the boundaries of law and had fulfilled his obligations or not. If on facts the petitioner had fulfilled the export obligations as per the licence conditions, the technicality of the petitioner missing the bus at every time, should not be put against him, as substantial justice will fail in such cases. - Decided in favor of assessee.
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2014 (9) TMI 578
Release of confiscated goods - The petitioner says that while the appeal was pending, the authority concerned had sold the seized goods and precisely for such reasons the said authority is showing reluctance in addressing the prayer made by the petitioner for return of the seized goods. - Held that:- the action of the authority concerned, being the respondent No. 2 herein, in withholding the seized goods and not returning the same to the petitioner after the order of the assessing authority was set aside by the appellate authority, is not proper and cannot be justified. - department directed to release the goods - Decided in favor of assessee.
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2014 (9) TMI 577
Restoration of appeal - approval for delayed receipt of foreign exchange received late - tribunal dismissed the appeal for non-compliance of the previous conditional stay of pre-deposit order - Held that:- there is no dispute about the appellant’s substantial compliance requirement of having to export the goods in terms of the notification. However, the show cause notice was on account of fact that the remittances from the foreign purchaser were not received in time. - Post facto approval to the appellant to receive the amount, was concededly given much later in 2013. Immediately on becoming aware of the same, an application was moved before the Tribunal to have the appeal restored. It is evident that the receipt of remittances and more importantly the extension of time were factors entirely beyond the appellant’s control. Undoubtedly, the order dated 2-1-2007 passed by the Tribunal achieved finality; at the same time we are of the opinion that in the facts of the case the Tribunal did not cease to have any discretion in the matter and having taken into account these facts could have restored the appeal given that the post facto approval in respect of almost 90% of the amount in question was received in 2013. Decision in the case of Lindt Export [2011 (9) TMI 609 - DELHI HIGH COURT] distinguished - appeal restored - decided in favor of assessee.
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Service Tax
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2014 (9) TMI 599
Valuation - Goods Transport Agency - inclusion of amount received towards hamaii charges and handling charges - Held that:- We are surprised and pained to note that the appellant in this case though claims that he filed an application for condonation of delay, we find no such application has been enclosed in the typed set of papers or there is no reference in the order of the Commissioner (Appeals) that there was an application for condonation of delay. Even assuming that it is within the condonable period, in the absence of any such application seeking condonation of delay, we fail to see how the Commissioner (appeals) could entertain the appeal. In fact, there was no application even before the Tribunal for the condonation of delay. Hence, we do not find any reason to entertain this appeal. - Decided against the assessee.
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2014 (9) TMI 598
Import of services - programme producer's service - non-residents, were required to produce audio-visual coverage of the cricket matches conducted by BCCI and the digitalized images of the coverage were uploaded for broadcasting for the viewers of the cricket match all over the world. - Held that:- The services received by the appellant, BCCI from the non-resident service providers, namely, M/s. Taj TV Ltd., Dubai/Mauritius, M/s. TWI-U.K.Ltd. London, Nimbus Sports International Pte. Ltd., Singapore, M/s. Hawkeye Innovations Ltd., U.K. and IMG Media, London merit classification under 'programme producer's services as defined in sections 65 (86a), 65 (86b) read with 65 (105) (zzu) of the Finance Act, 1994 and the appellant is liable to pay service tax along with interest thereon on the consideration paid for the services received under the provisions of section 66A of the said Finance Act. However, the services of hotel booking and transportation received from IMG, South Africa do not fall within the scope of the said service and hence demand of service tax on this service under the category of programme producer's service is not sustainable in law. - Decided partly in favor of assessee. Extended period of limitation and levy of penalty - Held that:- There has been no undue delay on the part of the department either in completing the investigation or in issue of the show cause notices. Further, we observe that though the appellant has claimed bonafide belief, no material has been placed before us, either by way of expert opinion or otherwise, as to the basis for entertaining such belief. - A belief can be said to be bona fide only when it is formed after all reasonable considerations are taken into account as held by this Tribunal in the case of Interscape Vs. Commissioner of Central Excise, Mumbai- I [2005 (9) TMI 192 - CESTAT, MUMBAI] - Appellant has suppressed material facts from the department and hence, extended period of time has rightly been invoked for confirmation of service tax demand. - levy of penalty confirmed - Decided against the assessee.
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2014 (9) TMI 597
Refund claim - issue of taxability - period of limitation - service tax was paid as builder/developer - appellants contended that service was not taxable before 01.07.2010 and therefore they are eligible for the refund. - Held that:- prior to 01.07.2010 the service in dispute in these cases was not taxable - transactions before us where individuals have entered into agreements for purchase of flats/residences with the builder/developers, in our opinion, is not covered by the definition. Period of limitation of one year where levy is unauthorized and illegal - When the levy is unauthorized or illegal, the refund has to be sanctioned under Limitation Act according to the appellants. - Held that:- It is not a case of payment during investigation and collected as arrears from buyers or customers. It is an assessment made by the service provider in accordance with law, collected by him in accordance with law and deposited with the government in accordance with law. The character of such deposit of the duty or tax does not change just because subsequently it is found that tax was not payable. It remains a tax collected in accordance with law and can be refunded under the provisions of the relevant law. - provisions of section 11B are applicable. - Decided against the assessee. Claim of refund by the service recipient (buyers) - revenue contended that refund can be made only when the claimant shows that the tax has been paid to the Government. - Held that:- Nowhere we find the word 'government' in relation to the refund claim made by a buyer under the section and Section does not provide that only when there is evidence to show that tax has been paid to the Government refund would be admissible to the buyer of the goods/services. - it is sufficient if the buyer shows that he has paid the service tax to the registered service/goods suppliers/providers and there is evidence to the effect that the service tax has been collected from him by the registered service provider. - Decided against the revenue. Determination of relevant date for claiming refund - whether the service tax which was assessed by an assessee and paid to the Government can be considered as covered under the provisions of Section 73A at all. - Held that:- the provisions for refund in section 73A of 1994 Act cannot be applicable to the situation where a service tax is collected in a legal manner in accordance with law and paid to the Government in accordance with law under a wrong assumption that service tax was liable to be paid. Therefore the remedy is in Section 11B of the Act and not under Section 73A of 1994 Act. - Decided against the assessee. Unjust enrichment - Held that:- buyer who is claiming the refund should produce (a) a copy of the Sale Deed to show that he had purchased the property after the agreement ended. (b) Further, he should also show proof that service tax was charged and he had paid the same. (c) Further, at the time of filing the refund claim it should be shown that he had not parted with the property and had not sold it. (d) For this purpose, an Encumbrance Certificate (EC) obtained from the Registrar, which will show that the buyer was in possession at the time of making refund claim would be one of the documents, in our opinion, would be sufficient for the purpose. (e) An undertaking may also be given by the claimants stating that they have not passed on the liability of service tax to any other person and the entire amount of service tax has been paid and borne by them. Matter remanded back to the original adjudicating authority who shall proceed to decide the matter afresh after giving opportunity to the appellants to present their case in line with the observations made hereinabove. - Decided partly in favor of assessee.
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2014 (9) TMI 596
Classification of service - incidental activity - scope of the contents of agreement - Storage and Warehousing services or not - MIPL is running a container freight station (CFS) - providing space in the warehouses by MIPL - The department was of the view that the provision of space in the warehouses by MIPL came under the category of “storage and warehousing services” and liable to service tax - The appellant contested the demand and submitted that the reservation of space was in the context of cargo-handling of export cargo which was specifically excluded from the scope of “cargo handling service” and hence the demand is not sustainable. Held that:- It is a settled position in law that the substance of an agreement has to be considered and not the wording used in the agreement as held by the hon'ble apex court in the case of Bhopal Sugar [1977 (4) TMI 151 - SUPREME COURT OF INDIA]. Therefore, we reject the contention of the appellant that the storage and warehousing services rendered by the appellant to specific customers on specific terms and conditions are activities incidental to cargo handling in respect of export cargo and hence not liable to service tax. From the scope of the levy, as clarified by the Board, which is the apex agency of the Government implementing service tax levy, it is clear that such service rendered by a Container Freight Station is also covered within the scope of the levy. - from the contract, entered into by the appellant, it is seen that the appellant has been undertaking all these activities and therefore squarely come within the definition of storage and warehousing services. Though the clarification issued by the Board is not binding on this Tribunal, it has a persuasive value and should be given due weight. - contention of the appellant rejected - Decided against the assessee. Storage facility in port is a requirement of law as per section 42 of the Major Port Trusts Act, 1963 and therefore, it forms an integral part of the “port services”, This is not the position obtaining in the case before us. The appellant has not produced any evidence before us that storage and warehousing is a statutory requirement under any law governing container freight stations. The very fact that the appellant is providing the said service only to selected customers on collection of separate charges itself would show that this is not a statutory requirement. - Decided against the assessee. Extended period of limitation - Held that:- The various charges for handling of cargo was substantially increased as detailed in paragraph 4 (iii) above. This manipulation is very evident. Therefore, the ld. Adjudicating authority rightly observed that the appellant suppressed collection of service charges by manipulation for the period 1-2-2005 onwards and confirmed the service tax demand. The appellant is operating under the self-assessment regime and therefore, it is his responsibility to correctly assess and discharge the tax liability and reflect the transaction in the ST3 returns filed. - Decided against the assessee. Levy of penalty - Held that:- the penalty imposed under section 76 of the Finance At, 1994 is fully justified in the facts of the present case. However, with respect to the penalty imposed under section 78, in our considered view, the same is not warranted as the issue related to a classification dispute and it is well settled that in classification matters, imposition of penalty is not required. Accordingly we set aside the penalty imposed under section 78. Demand of service tax with interest and penalty u/s 76 confirmed - penalty u/s 78 waived - Decided partly in favor of assessee.
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2014 (9) TMI 595
Commercial or Industrial Construction Service - tribunal observed that construction of civil structure and reservoir for supply of water to industrial units are covered under ‘Commercial or Industrial Construction Service’ [2013 (9) TMI 517 - CESTAT NEW DELHI] - tribunal have confirmed the demand and penalty invoking the extended period of limitation - SC dismissed the appeal of the assessee - Decided against the assessee.
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2014 (9) TMI 594
Deletion of penalty u/s 80 - Intellectual Property Rights Service - service tax and interest was paid before issuance of show cause notice - bonafide mistake - tribunal deleted the penalty - high court confirmed the order of tribunal [2012 (11) TMI 652 - GUJARAT HIGH COURT] - SC dismissed appeal of the revenue after condoning the delay - Decided against the revenue.
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Central Excise
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2014 (9) TMI 589
Stay application - Non compliance with High Court's order - Held that:- as on date, the Appellants had in no manner defaulted with the direction of the Hon’ble High Court. Also we find that the Hon’ble High Court has set aside our order dated 7th May, 2014 as well as the adjudication order confirming the demand and penalty against the Appellants. The Ld. Advocate submits that as soon as they receive the documents, they would furnish their reply to the show cause notice before the adjudicating authority. On the other hand the Ld. Spl. Counsel Shri S.C. Jana expressed his apprehension that in the event the Appellants fail to submit the reply, within the stipulated period, then there would be contravention of the order of the Hon’ble High Court. At this stage, we do not find that there has been any default on the part of the Appellants in complying with the order of the Hon’ble High Court, therefore, the apprehension expressed by Ld. Spl. Counsel Shri S.C.Jana at this stage has no merit. Since the Hon’ble High Court has already set aside our order as well as the adjudication order, in our opinion, the present Appeals filed against the afore-mentioned adjudication order, become infructuous. - Decided against assessee.
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2014 (9) TMI 588
CENVAT Credit - Welding electrodes - Whether cenvat credit is admissible on the welding electrodes used for repair and maintenance of the plant and machinery during the period from March, 2010 to February, 2011 - Held that:- Though Apex Court in case of Grasim Industries Ltd. [2011 (10) TMI 2 - SUPREME COURT OF INDIA] has held that repair & maintenance of machinery is not manufacture and therefore steal scrap, arising in course of the said activity is not excisable, this judgment does not help the Department, as for determining the eligibility for Cenvat Credit of an item used in an activity, what is relevant is as to whether without that activity in which the item, in question, is used, manufacturing operation are commercially feasible, and it is not relevant as to whether that activity by itself amounts manufacturer. - Following decision of COMMR. OF C. EX., TIRUCHIRAPPALLI Versus INDIA CEMENTS LTD. [2006 (6) TMI 114 - MADRAS HIGH COURT] and M/s. Kisan Cooperative Sugar Factory Ltd. Versus CCE, Meerut-I [2013 (8) TMI 98 - CESTAT NEW DELHI] - Decided in favour of assessee.
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2014 (9) TMI 586
Confiscation of goods - Penalty u/s 11AC - Redemption fine - Held that:- All the goods had been booked through the transporter M/s. Arun Goods Transport Company. The goods covered under three GRs No. 918, 919 and 920 all dated 24.6.09 and consigned to Shri Chander Prakash of Burhanpur, Shri Raju Bhai of Khandwa and M/s Hemant Traders of Vishnagar had been booked by M/s. Shiva Traders and there is no dispute that the goods covered/under these three GRs, had been manufactured by the Appellant company. M/s. Shiva Traders have been found to be a factitions entity. While in respect of the above mentioned goods seized from the truck there were no Central Excise invoices issued by the manufacturer evidencing payment of duty, on 24.6.09, the appellant have issued 3 invoices No. 14, 15 and 16 dated 24.6.2009 showing clearance of the consignments of snuff to Shri Chander Prakash of Burhanpur, Shri Raju Bhai of Khandwa and M/s Hemant Traders of Vishnagar. Since the goods covered under GRs No. 918, 919 and 920 all dated 24.6.09 seized from the truck were consigned to Shri Chander Prakash of Burhanpur, Shri Raju Bhai of Khandwa and M/s Hemant Traders of Vishnagar and since on the same date the appellant have also issued invoices No. 14, 15 and 16 dated 24.6.2009 to these very persons showing clearance of the goods to them on payment of duty, just because the consignor of the, goods mentioned in the GRs is M/s. Shiva Traders and no invoices has been issued by the Appellant to M/s. Shiva Traders, it cannot be inferred that the goods covered under the three GRs No. 918, 919 and 920 all dated 24.6.09 seized from the truck are different from the goods covered under the invoices No. 14,15 & 16 dt. 24/6/07 and had been cleared by the Appellant without payment of duty, as it is not the Department s case that the seized goods covered under the three G-Rs and the goods covered under the three invoices No 14,15 & 16 dt. 24/6/07 are different in terms of quantity. Since the Appellant have already debited the duty on the goods cleared under invoice Nos. 14, 15 and 16 dated 24.6.2009, duty in respect of same goods cannot be demanded. However, looking to the conduct of the appellant, penalty under Rule 25 would be warranted. In view of this, while the duty demand is set aside, the imposition of penalty on them is upheld. - Decided partly in favour of assessee.
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2014 (9) TMI 585
North East Exemption 32 and 33/1999-CE, dated 8.7.1999 - Retrospective Amendment in 2003 to restrict refund to the excise duty paid minus the CENVAT Credit availed - Recovery of differential duty and excess refund - principle of natural justice - opportunity of being heard not provided - non issuance of Show Cause notice - revenue contended that as the computation and the recovery are to be made within a time frame of thirty days, issue of a show cause notice cannot be read into such a provision. - Held that:- Per contra, Mr. Bagaria has submitted that in the above-referred decision notices have already been given and, therefore, issuance of notice is a must. Ordinarily we would have adverted to said submission advanced at the bar but we find, the assessee had not demonstrably argued this ground and addressed the lis on merits before the High Court and, therefore, we are not inclined to interpret whether the concept of natural justice would be read into the said provision or not. The said question is left open. It would not be appropriate to give an opportunity to the appellant to prefer statutory appeals and allow it to enjoy the benefit of stay of recovery on the basis of a bank guarantee. Therefore, we would direct the assessee to deposit ₹ 2.5 crores before the adjudicating authority within six weeks and after the said deposit is made and the receipt obtained, the appeal would be entertained within the said period. Considering the amount in question in various appeals it is directed that in case the bank guarantees furnished by the assessees have been encashed no deposit shall be made. If the bank guarantees have not yet been encashed the amount as mentioned hereinabove plus rupees five lakhs shall be deposited within the stipulated time frame of six weeks. The appeals stand allowed in part. The judgment and orders of the High Court in writ petitions and writ appeals are set aside and the assessee/appellants are directed to prefer appeals with the conditions precedent as imposed hereinabove.- Decided partly in favour of assessee.
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2014 (9) TMI 584
Condonation of delay - Whether in the facts and circumstances of the case, the Customs, Excise and Service Tax Appellate Tribunal was right in not condoning the delay of 168 days in filing the appeal before it particularly in view of the fact that in the appellant’s own case involving the same issue, the appeal was admitted and unconditional stay was granted - Held that:- The file containing the original order and related documents were handed over to this consultant in the first week of December, 2011. The file was misplaced in the office of the consultant with the couple of more files of other clients due to shifting of office and extensive renovation work thereafter. It is in these circumstances that the consultant has admitted the lapses on his part. We are of the opinion that, for such reasons the delay should have been condoned. These are not matters where the appellants have any control. The lapse or negligence on the part of the consultant should not visit the appellant with dismissal of the appeal. - Delay condoned.
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2014 (9) TMI 582
Waiver of the pre-deposit - Section 35F - divergent views in different judgements - Held that:- Powers conferred under Section 35F of the Central Excise Act, 1944 so far as it relates to the dispensation of the pre-deposit of the duty demanded, is a discretionary one. The discretion should be exercised judicially and not capriciously and/or arbitrarily. While exercising the discretion the Court must record the reasons therefor, which should withstand on the settled legal parameters and does not lead to an inference which no reasonable man could arrive at. The order impugned suggests that the Tribunal has recorded respective submissions and disposed of the aforesaid applications by giving dispensation of deposit of 75% of the duty demanded meaning thereby petitioner is directed to deposit 25% within a stipulated period. There is no reflection in the said, order relating to the net worth of the company or relating to the existence of a prima facie case which is one of the facet for consideration whether the appellant would suffer undue hardship, if the duty demanded is directed to be deposited - tribunal to decide the applications afresh - Decided in favour of assessee.
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2014 (9) TMI 581
Constitution of bench of CESTAT as Chandigarh - Held that:- The grievance aired by counsels appears to be bona fide, particularly when the endeavour is to make justice easily accessible and affordable. A large number of litigants are unable to file appeals as they have to travel to Delhi, requiring them to expend time and large sums of money. However, as jurisdiction to establish Benches of the Custom, Excise & Service Tax Appellate Tribunal vests with the Ministry of Finance, Government of India, a recommendation is made to the Secretary, Ministry of Finance, Government of India to consider the feasibility of establishing a Bench of the Custom, Excise & Service Tax Appellate Tribunal, at Chandigarh. - Petition adjourned.
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2014 (9) TMI 580
Cenvat Credit - Inputs - Tool Kits - Scope of Rule 2(k) - held that:- questions of law framed in the appeal have already been answered against the appellant in [2013 (6) TMI 6 - PUNJAB & HARYANA HIGH COURT] - Decided against Revenue.
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CST, VAT & Sales Tax
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2014 (9) TMI 593
Challenge to an order of revision of assessment - Jurisdiction to pass revision order - Held that:- On receipt of such reply on 28.05.2014, the respondent did not reject the request for personal hearing, but proceed to pass final order on 06.06.2014. In the impugned order, it is observed that already opportunity has been given. It is a settled legal position that when complicated facts are involved, where the documents have to be explained, though statue does not specifically provide for an opportunity of personal hearing, fairness in procedure and principle of natural justice would require the authority to offer an opportunity of personal hearing, more so in a case of revision of assessment and when specific request has been made. Therefore, on that ground alone, this Court is inclined to entertain the writ petition. However, on this ground, this Court is not inclined to set aside the order of revisioinal assessment. But, the matter shall stand remitted to the respondent so as to enable the respondent to afford an opportunity of personal hearing within a period of two weeks from the date of receipt of a copy of this order - Decided in favour of assessee.
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2014 (9) TMI 592
Recovery proceedings - Demand notice issued under the provisions of Tamil Nadu Value Added Tax Act 2006 and General Sales Tax Act, 1956 - Whether in case an assessee has filed a defective revision petition, even then, benefit of stay can be granted - Held that:- there will be a direction to the concerned Revisional Authorities to consider the petitioner's stay petitions, if the same have been properly filed and pass orders on the same on merits and in accordance with law, within a period of thirty days from the date of receipt of a copy of this order. The benefit of this order will not enure to the petitioner, if the revision petition is otherwise defective. Adjustment of demand with tax credit - Held that:- the petitioner would state that the dealer have sufficient tax credit and the same has to be adjusted. It will be roughly ₹ 67,000/-, even this claim has to be accepted by the Assessing Officer. Therefore, the petitioner shall pay the amount demanded in Serial No.6 above and the same shall be paid within thirty days from the date of receipt of a copy of this order and such, payment made by the petitioner towards this amount shall be without prejudice to the claim of the petitioner regarding the ITC available/refund order. - Decided partly in favor of assessee.
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2014 (9) TMI 591
Difference in stock - Violation of principle of natural justice - Held that:- Circular No.8/13 dated 18.7.2014 prescribes certain time schedule and as rightly pointed out by the learned counsel for the petitioner, though the surprise inspection was done on 27.6.2013 and the statement was recorded on 2.7.2013, the notice dated 29.5.2014 issued by the respondent reached the hands of the petitioner only on 1.6.2014 and the petitioner has also submitted its response on 11.6.2014. Since Circular No.8/13, dated 18.7.2013, having been issued, the subordinate officials of the Commissioner of Commercial Taxes, Chepauk, Chennai-5, are expected to adhere to the time schedule given in the Circular, but in the case on hand, they have failed to do so. That apart, at the time of making the surprise inspection on 2.7.2013, the officials had collected a sum of ₹ 72,438/- and a perusal of the ICICI Bank statement, Arni Branch, would disclose that the said cheque bearing No.19099 was encashed by the Commercial Tax Officer, on 18.7.2013, and though in the impugned proceedings the collection of tax has been referred to, the amount has not been mentioned and it was also not adjusted while arriving at the proposed taxable turnover. Therefore, this Court is of the considered view, in the light of the infirmities, that the impugned order is liable to be set aside and the matter is once again be remanded to the respondent for fresh adjudication, in accordance with law - Decided in favour of assessee.
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2014 (9) TMI 590
Rejection of revision application - Bar of limitation - Section 54(1) of TNVAT Act - Held that:- it would be suffice to direct the 2nd respondent to entertain the revisions without putting the issue of limitation and dispose of the same in accordance with law. - Decided in favour of assessee.
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