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2009 (6) TMI 972
The Gujarat High Court set aside the Tribunal's order and remanded the matter back for reconsideration of the applicability of section 11AC of the Central Excise Act in light of specific judgments. The appeal was disposed of accordingly.
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2009 (6) TMI 971
Issues Involved:
1. Exemption and refund under Notification No. 33/99-CE dated 8.7.99.
2. Amendments to Notification No. 33/99-CE and their retrospective application.
3. Interpretation of "CENVAT credit availed of" under the proviso to Clause 2(b) of the Notification.
4. Authority and scope of Section 153 of the Finance Act, 2003.
5. Recovery of duty not collected or wrongly refunded.
6. Concept of unjust enrichment of the State.
Issue-Wise Detailed Analysis:
1. Exemption and Refund under Notification No. 33/99-CE dated 8.7.99:
The Notification initially provided for exemption from payment of central excise duty on goods cleared from units in the north-eastern region. This exemption was equivalent to the amount of duty paid by the manufacturer from the account current maintained under Rule 9 read with Rule 173G of the Central Excise Rules, 1944. The refund was to be granted monthly upon proper verification.
2. Amendments to Notification No. 33/99-CE and Their Retrospective Application:
Notification No. 33/99-CE was amended by Notification No. 35/01-CE effective from 1.7.2001, which excluded the amount of duty paid by utilization of CENVAT credit from the exemption. Further amendments were made by Notification No. 61/02-CE effective from 23.12.2002, introducing a proviso that the refund shall not exceed the amount of duty paid less the amount of CENVAT credit availed of. The Finance Act, 2003, retrospectively applied these provisions from 8.7.99 to 22.12.2002.
3. Interpretation of "CENVAT Credit Availed Of" Under the Proviso to Clause 2(b) of the Notification:
The proviso to Clause 2(b) of the Notification No. 33/99-CE dated 8.7.99 was interpreted to mean that the refund amount shall not exceed the amount of duty paid minus the total CENVAT credit available to a manufacturer, regardless of whether such credit was utilized for payment of duty or not. This interpretation was supported by the clear language of the proviso and the understanding of the petitioners, who had started utilizing available CENVAT credit by bringing the account to nil as on 31.3.2003.
4. Authority and Scope of Section 153 of the Finance Act, 2003:
Section 153 of the Finance Act, 2003, retrospectively amended Notification No. 33/99-CE and contemplated recovery of duty not collected or wrongly refunded during the period 8.7.99 to 22.12.2002. The scope of this power was to recover any refund that included the component of unutilized CENVAT credit, which was deemed unauthorized under the amended provisions.
5. Recovery of Duty Not Collected or Wrongly Refunded:
The jurisdictional Deputy/Assistant Commissioners issued orders directing manufacturers to return amounts equivalent to unutilized CENVAT credit available in their accounts from the refund sanctioned. This recovery was justified under Section 153(4) of the Finance Act, 2003, as the refund granted during the period 8.7.99 to 22.12.2002 included the component of unutilized CENVAT credit, which was not permissible.
6. Concept of Unjust Enrichment of the State:
The argument that recovery of such refund would result in unjust enrichment of the State was considered. However, it was concluded that debiting the CENVAT credit account of the manufacturer at the stage when the Finance Act, 2003, came into force was not possible and legally impermissible. Retention of the refunded amount equivalent to the unutilized CENVAT credit became unlawful and unauthorized under the Notification No. 33/99-CE dated 8.7.99, and recovery of such unauthorized refund was contemplated by Section 153(4) of the Finance Act, 2003.
Conclusion:
The Court held that the impugned orders were legally sustainable and dismissed the appeals. The interpretation of the proviso to Clause 2(b) of the Notification No. 33/99-CE dated 8.7.99 was upheld, and the scope of recovery under Section 153(4) of the Finance Act, 2003, was clarified. The Court did not address the validity of Section 153 of the Finance Act, as the challenge to its validity was not urged during the hearing. The order did not preclude the petitioners from seeking remedies under Section 11B of the Central Excise Act, 1944.
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2009 (6) TMI 970
The Bombay High Court dismissed the appeal stating that the question raised was covered by a previous judgment, and no substantial question of law arose. The appeal was dismissed with no order as to costs.
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2009 (6) TMI 969
The High Court of Madras dismissed the appeal in the case of K. Raviraja Pandian and P.P.S. Janarthana Raja.
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2009 (6) TMI 968
The Madras High Court dismissed a stay petition as the liability of the assessee was negatived by CEGAT, and the liability stands postponed until the appeal is successful.
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2009 (6) TMI 967
CENVAT credit - rent-a-cab services - car maintenance service - photography service - outdoor catering service - Held that: - the issue stands settled in favour of the respondents by the decision of the larger Bench of the Tribunal in Commissioner of Central Excise, Mumbai vs GTC Industries Ltd. [2008 (9) TMI 56 - CESTAT MUMBAI] holding that CENVAT credit is admissible on "outdoor catering service" as 'outdoor catering service' is an input service relating to business.
Rent-a-cab service - photography service - repair and maintenance of vehicles - Held that: - the credit of service tax on all the above services involved in the present batch of the appeals is held to be available to the respondents.
Appeal dismissed - decided against Revenue.
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2009 (6) TMI 966
Levy of penalty u/s 271C - delay in deposit of Tax deducted at source (TDS) - belated remittance of the TDS - Quantum of penalty which in this case is above ₹ 1.1 crore - Counsel for the appellant has drawn a distinction between clauses (a) and (b) of Section 271C (1). According to him penalty under clause (a) is only for failure to deduct tax as required under any of the provisions of Chapter XVIIB.
HELD THAT:- We are unable to accept the contention because the first part of clause (b) of Section 271C(1) i.e. failure to pay whole or any part of tax as required, takes in the tax deducted under clause (a) under any of the provisions of Chapter XVIIB. In our view, failure to deduct or failure to remit recovered tax, both will attract penalty u/s 271C. the contention of the appellant fails and we uphold the finding of the Tribunal dismissing the challenge against levy of penalty.
Quantum of penalty - The Tribunal has not considered challenge against quantum of penalty in so much details probably because in the penalty order it is stated that only minimum penalty is levied. So far as failure on the part of the assessee to remit the tax recovered at source is concerned, we do not think there can be any justifying circumstance for delay in remittance because assessee cannot divert tax recovered for the Government towards working capital or any other purpose.
Defence available u/s 273B does not cover failure in payment of recovered tax. However, if there is failure to remit on account of failure to recover for any reason whatsoever, then the case calls for reduction of penalty, if not waiver. Similarly, we feel recovery and remittance of tax, though with delay but with interest, before detection is certainly a mitigating circumstance for waiver or reduction of penalty. Further, if full amount of tax with interest was paid before levy of penalty, we feel quantum reduction is called for by the AO. Therefore, we direct AO to reconsider the quantum of penalty.
The appeal is accordingly disposed of upholding the order of the Tribunal on the levy of penalty, but with direction to the AO to grant further reduction in penalty, if any new fact or circumstance is brought to the notice
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2009 (6) TMI 965
Demand of tax and penalty levied under section 30B(3) of the Kerala General Sales Tax Act, 1963 - Held that:- In this case goods started its movement from Tuticorin to Karnataka through Kerala and it never reached Karnataka. Therefore the appellant cannot treat the local sale of timber in Kerala during its movement as an inter-State sale from Karnataka. The Central sales tax if any paid in Karnataka is a clear violation of section 9(1) of the Central Sales Tax Act. Therefore all the contentions of the appellant fail. However we feel even now that the appellant can be exonerated from penalty provided the entire tax with interest up to date payable under section 30B(3) read with section 23(3A) is paid within one month from receipt of this judgment. If the appellant settles the tax liability with interest payable under section 23A as above before the officer concerned, he will revoke the penalty.
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2009 (6) TMI 964
Whether the Tribunal was justified in confirming disallowance of exemption claimed on the purchase tax payable under section 5A of the Kerala General Sales Tax Act, 1963, on paddy under SRO No. 1729 of 1993?
Held that: - If the petitioner's contention is accepted, then every commodity when assessed under section 5A will become taxable at the point of last purchase and so much so, benefit of notification will be available. This is obviously not intended by the Government while issuing the notification because applying this logic, every commodity when purchased and consumed in manufacture by an SSI unit becomes taxable at the point of last purchase in the State and will be entitled to exemption - notification has to be read consistent with the other provisions of the Act - petition dismissed - decided against petitioner.
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2009 (6) TMI 963
The High Court of Madras, in the 2009 case of 2009 (6) TMI 963, heard an appeal by the State against an order made by the Sales Tax Appellate Tribunal on July 4, 2002. The State had revised the assessment for the year 1993-94 under section 16(1) of the Tamil Nadu General Sales Tax Act, 1959, due to concerns over the production of duplicate form F declarations for consignment sales. The respondent-assessee then appealed to the Appellate Assistant Commissioner, producing original form F declarations that matched the duplicates previously submitted to the assessing authority. The Appellate Assistant Commissioner, after verifying the originals and finding them in order, allowed the appeal and set aside the revised assessment. However, the assessing authority appealed this decision to the Sales Tax Appellate Tribunal, which upheld the Appellate Assistant Commissioner's order.
The High Court, after hearing arguments from the State's representative, found that both the Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal had made concurrent findings based on the verification report of the assessing authority. This report confirmed that the original form F declarations produced by the assessee matched the duplicate declarations and that the agents' statement of accounts from other states were also in order. The court concluded that the State's challenge to the orders of the Appellate Assistant Commissioner and the Tribunal was unfounded, and therefore dismissed the writ petition. No costs were awarded, and the connected miscellaneous petition was closed.
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2009 (6) TMI 962
Penal interest levied applying section 24(3) of the Tamil Nadu General Sales Tax Act for belated payment of additional sales tax - Held that:- On the above limited ground of not giving notice and opportunity of hearing to the petitioner before imposing penalty, the impugned orders are set aside and the matters are remitted back to the respondent. The first respondent is directed to issue notice to the petitioner with regard to the liability of the petitioner to pay penalty amount, within a period of two weeks from the date of receipt of copy of this order.
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2009 (6) TMI 961
Penalty levied under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 - Tribunal deleted the penalty - Held that:- In the case on hand, a perusal of the order of the assessing authority dated December 29, 2000 does not disclose in any part of the order that the account particulars furnished by the respondent were either incorrect or incomplete. On the other hand, the assessment of tax came to be made by accepting the accounts particulars furnished by the respondent, while rejecting the stand of the respondent that the business activities of the respondent do not call for levy of any tax liability.
Thus we are convinced that the levy of penalty as imposed by the assessing authority and as confirmed by the first appellate authority was wholly improper and was not in conformity with the stipulations contained in section 12(3)(b) of the Act. Consequently, the order of the Tribunal in having interfered with the same is perfectly justified.
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2009 (6) TMI 960
Depreciation in the computation of taxable turnover for works contract of the respondent for the year 1997-98 - Held that:- In the absence of any specific provision in section 5C, depreciation on machinery or tools is not eligible for any deduction in the computation of taxable turnover on works contract. Besides this “charges for obtaining on hire or otherwise” in sub-clause (c)(ii) can only mean charges paid for obtaining machinery or tools under any other arrangement other than hire. In other words, if the charges are paid on any other terms, i.e., other than on hire arrangement for availing of the facility of machinery and tools, then only such charges are eligible for deduction, which certainly does not include depreciation because notional expenditure in the form of amortisation of cost of machinery and tools owned by the contractor is not visualised in section 5C(1)(c)(ii) of the Act. Sales tax revision allowed.
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2009 (6) TMI 959
Issues:
1. Whether charges for "amenities" collected by the respondent along with the sale bill for the sale of liquor and food in the bar hotel constitute turnover for the purpose of levy of turnover tax.
Analysis:
The case involved a revision filed by the State questioning the Tribunal's decision on the justification of considering charges for amenities collected by a bar hotel as part of turnover for tax purposes. The respondent, a bar attached hotel with a restaurant, claimed that additional charges for amenities were justified due to facilities like lawn, air-conditioning, parking, etc. The State argued that these charges were merely bifurcated from the sale price to avoid tax. The respondent presented bills showing separate charges for amenities, even though no specific facility or service was mentioned for the charges. The critical question was whether these separately charged amenities should be excluded from turnover. The Court emphasized that turnover tax is payable on all amounts received for the sale of goods, which includes charges for services provided. The Court noted that the respondent's method of bifurcating prices between cost and amenity charges was a dubious attempt to evade tax.
The Court referred to Explanation 2 to section 2(xxvii), which includes sums charged for services provided by the dealer in the price for which goods are sold. The Court highlighted that charges for amenities provided in a bar hotel or restaurant are part of the price for goods sold. The respondent's total collection under the amenity head was significant, indicating a clear correlation between charges levied and amenities provided to customers. The Court cited a judgment by the Bombay High Court, which held that luxury charges by a hotelier form part of turnover. Drawing a parallel, the Court concluded that the respondent's bifurcation of prices under the "amenities" head was akin to the concept of luxury charges and should be considered part of turnover.
In light of the above analysis, the Court allowed the revision case by overturning the Tribunal's decision and restoring the assessment of amenity charges as part of turnover. The judgment emphasized that charges for amenities provided in conjunction with the sale of goods, such as liquor and food in a bar hotel, are integral to the turnover calculation for tax purposes.
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2009 (6) TMI 958
Deduction towards labour charges claim disallowed - Held that:- The honourable Tribunal and revisional authority are right in disallowing the deductions claimed by the petitioner as a works contractor in view of rule 6(4)(m) of the KST Rules and the law laid down by the honourable Supreme Court in the case of Gannon Dunkerley [1992 (11) TMI 254 - SUPREME COURT OF INDIA].
Questions of law framed by the petitioner do not arise for consideration as the impugned judgment and review order is based on facts and law and therefore we answer the same against the petitioner as the Appellate Tribunal has granted the reliefs to the petitioner after noticing the fact that not giving deductions of ₹ 3,96,826.72 paid by him towards labour charges in which as per the decision of the Supreme Court referred to supra, the assessing authority has to examine the claim of the petitioner including the claim of ₹ 9,22,611.46 said to have paid towards the labour charges. Appeal dismissed.
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2009 (6) TMI 957
Arrears of tax and penalty relating to the assessment years 1998-99 and 2001-02 - whether service of notice is not made as contemplated under rule 52(1) of the Tamil Nadu General Sales Tax Rules, 1959?
Held that:- Nowhere, either in the Tamil Nadu General Sales Tax Act or in the Rules, service of notices at the residential address is mandated. If the address of the dealer is known to the assessing authority, the mode of service would be registered post or if none of the modes is practicable, the affixture in some conspicuous place at the last known place of business or residence is the proper mode of service.
In this case, after passing of the final orders, the same were served on the assessee on February 28, 2004 and June 7, 2003 respectively by way of affixtures. Therefore, service of notices was done by following rule 52(1)(c) and (d), which could be sufficient service, thus do not find any infirmity in the mode of service. As such, the writ petitions fail and stand dismissed.
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2009 (6) TMI 956
Issues:
- Correctness of Sales Tax Appellate Tribunal's order confirming tax levy on lease rental turnover and penalty imposition.
- Validity of writ petition filed after the limitation period.
- Interpretation of Section 3A of the Tamil Nadu General Sales Tax Act, 1959 regarding tax on right to use goods.
- Dispute over whether lease rental received for leasing lorries constitutes taxable turnover under Section 3A.
- Assessment of ownership transfer and tax liability on lease rental.
Analysis:
The High Court of Madras, in the judgment delivered by Justice K. Raviraja Pandian, addressed multiple issues. Firstly, the court examined the challenge to the Sales Tax Appellate Tribunal's decision upholding the tax levy on lease rental turnover and penalty imposition by the assessing officer. Despite the writ petition being filed after the limitation period, the court considered the matter due to the absence of a statutory bar if valid grounds are presented. The primary dispute revolved around the interpretation of Section 3A of the Tamil Nadu General Sales Tax Act, specifically concerning the taxation of the right to use goods. The crux of the case was whether the lease rental received by leasing lorries to a sister concern falls under the ambit of Section 3A.
Upon reviewing the facts, the assessing officer found that the sister concern exclusively used the motor vehicles, leading to the conclusion that the lease rental was taxable under Section 3A. However, the first appellate authority reversed this decision, focusing on income and freight aspects rather than the transfer of ownership crucial for tax liability under Section 3A. The Tribunal, subsequently, set aside the appellate authority's order and reinstated the assessing officer's decision, including the penalty. The court considered the argument that the lease rental should be treated as freight charges, not subject to Section 3A tax.
The court acknowledged the debatable nature of the issue, referencing a Supreme Court decision and a relevant circular by the Commissioner. Given the circumstances and the circular's applicability to the case, the court confirmed the tax levy while setting aside the penalty imposition. This comprehensive analysis by the court elucidates the complexities surrounding the taxation of lease rental turnover under Section 3A and the nuanced considerations in such disputes.
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2009 (6) TMI 955
Levy of penalty - Held that:- If a registered dealer honestly believes that any particular goods are embraced by the certificate of registration it is only a case under section 10(b). The inclusion of these materials subsequently and made on the belief that use of form C was only for legitimate use for the company and has so made a representation, he cannot be held guilty under section 10(b) of the Act and therefore the Tribunal came to the right conclusion that no levy of penalty could be imposed on the assessee under section 10(b) and cannot be interfered with at this stage. Appeal dismissed.
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2009 (6) TMI 954
Issues involved: Challenge to the order of the Appellate Tribunal u/s 16 of the Tamil Nadu General Sales Tax Act, 1959.
The State challenged the Appellate Tribunal's order in CTSA No. 460 of 2001, questioning the correctness of invoking section 16 of the Act. The assessing officer excluded the turnover of "monafilament niwar" based on a tax exemption circular. However, he later reopened the assessment u/s 16(1)(a) for "escaped assessment." The Appellate Assistant Commissioner held that such reassessment was impermissible, as there was no escapement from assessment. The Appellate Tribunal upheld this view, leading to the State's revision.
Upon review, the court found that the assessing officer lacked jurisdiction to invoke section 16(1)(a) in this case. It was established that the entire turnover related to "monafilament niwar" was disclosed to the assessing officer initially. The officer, aware of the tax exemption circular, made a conscious decision regarding the item. As there was no deliberate or inadvertent concealment by the assessee, the concept of "escapement assessment" did not apply. Therefore, the conditions for invoking section 16(1)(a) were not met.
Consequently, the court determined that there was no legal question warranting the revision. The revision was dismissed, with no costs imposed.
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2009 (6) TMI 953
Non entitlement to payment of tax at compounded rate in respect of works contract executed in the form of supply and installation of kitchen cabinet
Held that:- Clause (ii) applies in respect of every divisible contract and even where specified goods are locally procured such goods will attract tax at scheduled rate as provided under section 6(1)(e) of the Act and the balance portion of work that is fabrication, supply and installation of kitchen cabinets with top, fittings, partitions, etc., by the appellant will be assessed as works contract. In view of the proposed amendment, and in view of the discussion above, we are of the view that there cannot be any absolute bar against payment of tax at compounded rate on the works executed involving fabrication, supply and installation of kitchen cabinets.
While the Commissioner's finding that in respect of supply of specified goods tax is payable at the rate provided in the Schedule is correct, we vacate that part of the order where he says that no compounding is permissible in respect of remaining work relating to fabrication, supply and installation of kitchen cabinets. Appeal partly allowed upholding the impugned order of the Commissioner issued under section 94 of the Act and by directing the assessing officer to consider eligibility for compounding depending upon the nature of contract executed in each case and to make assessment accordingly.
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