Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 1, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Remuneration to partners - where the partner is working partners and remuneration provided is within the limits prescribed u/s 40(b)(v), AO cannot disallow any part of the remuneration on the ground that it is excessive. - HC
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Delay in filing appeal - assessee filed fresh appeal before the Tribunal once the entire reason for challenging the Commissioner's order changed, therefore, delay was technical in nature and well explained. - Delay caused in filing the appeal before the Tribunal stands condoned. - HC
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Depreciation on the Uninterrupted Power Supply (“UPS”) - UPS would definitely fall under the head of’ Automatic Voltage Controller’ eligible for claiming 100% depredation on UPS - AT
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Refund adjusted against demand – Section 245 is clear in its mandate regarding the requirement of prior intimation in writing to the assessee whose refunds are being adjusted against amounts payable to the Revenue; the assessee has to be given notice, and heard. - HC
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Capital gain - Nature of land - Sale of agricultural land – There is no requirement in any Act more especially the I.T. Act that only the self-cultivated land will be treated as agricultural land. - Just because after the sale, the purchaser was going to put the land to non-agricultural use, it does not mean that on the date of sale the land has ceased to be agricultural land. - AT
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Method of Accounting - Assessee switch over from the cash system to the mercantile system of accounting - assessee had to follow the mercantile system and during the transition period alone the hybrid system had arisen. - HC
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Validity of notice u/s 148 – Reason to believe - The mere fact that a transfer pricing order had led to a partially adverse order, or that in the subsequent year, the amount claimed was disallowed, does not constitute a valid basis for issuance of the notice. - HC
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Penalty u/s 271D & 271E - acceptance and repayment of loan or deposit in excess of Rs. 20,000/- there existed reasonable cause in mobilizing these deposits in rural and semi-urban areas within the meaning of Section 273B. - HC
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Unexplained investment – Gifted jewelleries cannot be treated as unexplained as the same is duly supported by such corroborative evidence like gift certificate etc. - AT
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Depreciation in the case of succession - when the assessee transferred its B Unit to the 100% subsidiary company, it was entitled to claim depreciation apportioned in terms of what is provided for under the fourth proviso to Section 32(1) - HC
Customs
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Concealment of medicinal powder in the Shampoo and Talcum Powder bottles - the criminal proceedings pending before the trial court cannot go on, against the petitioner, since the petitioner has been fully exonerated by the Joint Secretary to the Government of India, and same has attained the finality. - HC
Service Tax
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Business Auxiliary Service - toll tax collection in terms of the agreement entered into assessee & M/s National Highways Authority of India (NHAI)- the activity cannot be held to be falling under BAS - appeal filed by the Revenue was dismissed. - AT
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Logistic services - appellant are logistic division of M/s. Mahindra and Mahindra Limited who providing various logistics services to another division - Merely by taking two separate service tax registrations it cannot be said that both are separate legal entities. - AT
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Management Consultancy Service - 65(105)(r) - If a person does the activity of collecting of debts of a company that person cannot be considered to be doing management consultancy service though debt collection is a responsibility of the management. - AT
Central Excise
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Demand u/s 11D - Reversal of cenvat credit and collected the same from the purchasers - The contention of the Department that by doing so, the respondent passed on Cenvat credit to the purchaser to be availed by them ultimately which credit such purchasers were not entitled to, cannot be brushed aside. - Demand u/s 11D confirmed - Order of Tribunal reversed - Decided in favor of revenue and against the assessee. - HC
VAT
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Classification - VAT - Commissioner of Taxes is directed to adopt the twin test for determining the classification, meaning thereby the common parlance test such as the functional utility and pre-dominance of the primary uses of the commodity apart from taking into account other understanding in common parlance such as to consider the product literature and label etc. and thereafter to determine the composition and character of the product on resorting to the scientific test. - HC
Case Laws:
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Income Tax
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2012 (12) TMI 904
Refund adjusted against demand – Adjustment of refund without prior notice or intimation - Demand stayed by order of High Court – Violation of Stay order – Later on Revenue, in respect of a later period, sought to adjust the amounts due to the writ petitioner, by way of refund - Held that:- When an order of stay of recovery in simplistic and absolute terms is passed, it would be improper and inappropriate on the part of the Revenue to recover the demand by way of adjustment. Revenue’s contention is insubstantial & over-reach and circumvent the stay order. Therefore, the impugned adjustment sought to be made by it, was contrary to the Court’s order. Violation of provision of Section 245 - Procedure to set off amounts due to an assessee from the demands pending against him – Held that:- Section 245 is clear in its mandate regarding the requirement of prior intimation in writing to the assessee whose refunds are being adjusted against amounts payable to the Revenue; the assessee has to be given notice, and heard. The revenue clearly did not follow the provision, and give any notice or hearing before making adjustments. Appeal decides in favour of assessee
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2012 (12) TMI 903
Validity of order u/s 263 - Block assessment - Chapter XIVB - Whether revision u/s 263 is possible for block assessment order when the same has been passed with previous approval of Commissioner. Held that:- Following the decision in case of Smt. Annapoornamma Chandrashekar (2011 (10) TMI 475 - KARNATAKA HIGH COURT) that the act of approval is not for a mere passing of an order u/s 158BC, but an approval which takes note of the subject matter of assessment and there is application of mind before granting the approval. When approval is given it means the approving authority has full knowledge about the contents of what is approved and confirmed authoritatively the order of the lower authority Therefore, on the approval given by the Commissioner, the order to be passed u/s 158BC and the Commissioner cannot exercise jurisdiction u/s 263 to revise the order of assessment passed under Chapter XIV B. Appeal decides in favour of assessee
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2012 (12) TMI 902
Disallowance u/s 40A(3) - Assessee engaged in the business of jewellery – Cash purchase of jewellery – Exchange of old jewellery with new Jewellery - Rule 6DD - Held that:- The assessee used to account the purchase of old Jewellery/diamond from the customer as cash purchase for control purpose though actual cash outflow is not made, these are only day book entries. Therefore, such transactions could not be considered as violative of Section 40A(3), just for a reason that contra entries appeared in the cash book. In favour of assessee Violation of Rule 46A – Held that:- As the A.O. has nowhere mentioned that assessee had failed to produce any records or books called for. Just because assessee could point out to CIT (Appeals), by producing the same cash book as produced before the A.O., that there were no cash purchases whatsoever effected by it from its customers, will not be a reason to say that there was any violation of Rule 46A. Bogus Purchase – Held that:- In the nature of trade of the assessee, it may not always be possible to get the address of all its customers. Even if customers give their address, there is no means available to the assessee to ensure that such addresses were right. Assessee, in the nature of its trade, cannot insist for an identification process akin to Know Your Customer (KYC) rules applied by banks. Just for the reason that purchases effected from certain parties did not carry full address, in our opinion, a disallowance ought not have been made. In favour of assessee
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2012 (12) TMI 901
Validity of notice u/s 148 - Gift - Re-assessment u/s 147 - Without a reasonable cause - Merely on the directions of another officer – Jurisdiction of officer - ACIT issued notice on the basis of some information received from the ADIT (Inv) about bogus gift Held that:- If the assessee fails to urge the question of territorial jurisdiction, he cannot call it into question later. The reason is apparently founded on public policy, not to allow questions of territorial jurisdiction to be urged and destabilize entire proceedings, once they proceed on merits There was nothing on the record for the AO to assume that the information about the gifts in question being bogus, was believable, or reasonably credible to warrant reopening of assessment. The entire reassessment proceedings’ initiation was premised on a vague suspicion. “Reasons to believe” as emphasized by the court are reasonable inferences based on objective information, verified in a prima facie manner. In favour of assessee
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2012 (12) TMI 900
Capital gain - Nature of land - Sale of agricultural land – Exemption u/s 54B - Whether self-cultivated land will only be treated as agricultural land – Agricultural operation was carried out by brother of assessee on the said land – Held that:- There is no requirement in any Act more especially the I.T. Act that only the self-cultivated land will be treated as agricultural land. The Tehsildar is the concerned revenue Officer who on the basis information/report of revenue Patwari issues a certificate. Since the brother of the assessee was doing agricultural operation, therefore, any income derived out of it will be treated as agricultural income. Even if less income has been shown, the assessee cannot be denied the character of agricultural income. Whether Tehsildar is a competent authority to issue a certificate regarding distance of land from the municipal limit – Land sold was beyond 8 kms from the municipal limit – Held that:- Following the decision in case of Shri Lal Singh (2009 (11) TMI 63 - PUNJAB AND HARYANA HIGH COURT) that Tehsildar is the most competent revenue Officer to certify the proof of agricultural operation, distance of land from a particular place, rate of land, etc. Land was sold to developer – Held that:- Just because after the sale, the purchaser was going to put the land to non-agricultural use, it does not mean that on the date of sale the land has ceased to be agricultural land. If in the revenue record, the particular land is recorded as agricultural land and till the date of sale, it is exploited as agricultural land and the owner of the land has not taken any step to indicate his intention to exploit the land for non-agricultural purposes then such land to be regarded as agricultural land Therefore said land was agricultural land. In favour of assessee
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2012 (12) TMI 899
Validity of notice u/s 148 - Assessee engage in manufacture and sale of Tea - Re-opening of assessment u/s 147 - Escaped assessment – Change of opinion – Reason to believe - AO argued that payment made by assessee was in fact the commission paid against sale and there was no TDS deducted therefore, expenditure was required to be disallowed u/s 40(a)(ia) and hence, this income has escaped the assessment Held that:- At the time of original assessment, in reply to the specific query raised, specific reply had been furnished with regard to the amount of discount paid by way of trade incentive slab scheme and the query also was whether on the amount paid, tax was deducted at source or not. Having furnished all the requisite details, if the AO chose not to deem it fit to reflect its consideration in the assessment order originally passed after scrutiny, on the very same grounds and materials when it seeks to reopen the assessment on the ground of escapement of income it is required of the respondent to point out as to how this is not a mere change of opinion and what are the cogent and relevant materials available with it to form an opinion that the said expenditure was required to be disallowed u/s 40(a)(ia), for not having deducted TDS. In favour of assessee
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2012 (12) TMI 898
Addition on account of excess interest expense – Interest on Fixed deposit – Assessee is a financial enterprise – Interest paid in excess of the limit under Kerala Money Lenders Act - Explanation to Section 37 – Expenditure prohibited by law or constitutes an offence Assessee contended that even where the income was found to be illegal, it was held that loss could be claimed as a deduction. If the income is tainted and he is forced to pay the tax, he poses the question as to how it could be held that the amount which is paid in excess of the legal limit under the Money Lenders Act should not be allowed to be deducted from the income Held that:- Even though the purpose for which the amount was expended may not lead to the commission of an offence, the expenditure by way of payment of interest in excess of the limit imposed under the Kerala Money Lenders Act is prohibited. The grant of interest at the rate an excess of 14% is prohibited. The amount of deduction claimed by the appellant represents money paid as interest in excess of 14%. Therefore, the expenditure is in the teeth of the explanation to Section 37 which is the legal provision applicable. In favour of revenue
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2012 (12) TMI 897
Whether accrued interest on cash basis and payment of interest is allowable on mercantile basis is valid in law. - Whether interest expenditure is allowable on cash basis even though the assessee is following mercantile system of accounting is valid in law. – For same assessment year Assessee switch over from the cash system to the mercantile system of accounting - the receipts and expenditure for the year were maintained under mercantile system of accounting - In respect of interest paid on loans and advances, cash system of accounting was maintained Held that:- Following the decision in case of Carborandum Universal Limited (1983 (8) TMI 39 - MADRAS HIGH COURT) held that switching over from cash system of accounting to mercantile system was on account of statutory compulsion, we have no hesitation in agreeing with the assessee's contention that the interregnum period in the process of switching over would certainly have a mixed system, where there is a cash system of accounting in respect of certain expenditure while the receipts and other expenditure would be maintained under mercantile system of accounting. The revenue has not disputed the fact that the assessee had to follow the mercantile system and during the transition period alone the hybrid system had arisen. In favour of assesse
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2012 (12) TMI 896
Cost of replacement of machinery - Revenue or capital in nature - Assessee is engaged in manufacture of yarn in Textile mill - Held that:- Following the decision in case of SARAVANA SPINNING MILLS P. LTD.(2007 (8) TMI 16 - SUPREME COURT OF INDIA) that contention of revenue was correct and set aside assessee claim. In favour of revenue
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2012 (12) TMI 895
Validity of notice u/s 148 – Reason to believe - Deduction on account of royalty - Adverse comment in the Audit report in relation to the royalty amount for the assessment year - Held that:- As the “reasons to believe” are a mere recital of events, including the previous order of assessment, which permitted the deduction, the order of the TPO, the assessment order of the subsequent year which made disallowance for royalty. The notice does not anywhere indicate what was the new material which came to light, that threw into focus the fact that the assesse’s behavior in not disclosing material particulars, attracted the provision u/s 148. Following the decision in case of Eastern Newspaper Society (1979 (8) TMI 1 - SUPREME COURT) that the opinion rendered by the audit party in regard to the law cannot for the purpose of such belief, add to or colour the significance of such law. In short, the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax officer Assessing Officer can re-open an assessment under Section 147 of the Act, only if there is 'tangible material' to show that income has escaped assessment. The Assessing Officer shall not be allowed to arbitrarily re-open assessment. The mere fact that a transfer pricing order had led to a partially adverse order, or that in the subsequent year, the amount claimed was disallowed, does not constitute a valid basis for issuance of the notice. On the contrary, the materials on record disclose a detailed inquiry into the nature and character of the royalty, which had been dealt with by the AO in the first instance. Therefore, that the impugned notice, to the extent it was based on the report and opinion of the audit report, is indefensible. In favour of assessee
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2012 (12) TMI 894
Penalty u/s 271D & 271E - acceptance and repayment of loan or deposit in excess of Rs. 20,000/- in cash from/to any other person - violation of the provisions of Section 269SS and Section 269T - ITAT deleted the levy - Held that:- Order of the Tribunal stating that since the business of the assessee itself is to collect and repay deposits, there can be no violation of the provisions of Section 269SS and Section 269T is not the only reason given by the Tribunal for approving the orders of the CIT(Appeals) cancelling the penalties. Facts taken into consideration by the Tribunal in accepting the assessee's explanation that there existed reasonable cause in mobilizing these deposits in rural and semi-urban areas within the meaning of Section 273B. The Tribunal has in substance relied on its earlier order in the case of M/s Sahara India Financial Corporation Ltd., (a group company) () that the finding of the Tribunal that there was reasonable cause for the default within the meaning of 273B is a question of fact which cannot be disturbed by the High Court as there was no material or evidence brought before the Court to show that the finding was perverse or was of such nature that no reasonable person, duly instructed on the facts and the legal position, would have reached. In the present case also the revenue has not been able to bring on record any material to show that the finding of the Tribunal as to the existence of reasonable cause is perverse - also as decided in CIT v. Parma Nand [2002 (11) TMI 13 - DELHI HIGH COURT] and CIT v. ITOCHU Corpn. [2004 (5) TMI 53 - DELHI HIGH COURT] that whether or not there was reasonable cause for the default is a question of fact which does not give rise to a substantial question of law unless the finding is perverse or irrational. Thus having regard to the finding of fact entered by the Tribunal that there was reasonable cause for the defaults, no substantial question of law arising for consideration - in favour of assessee.
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2012 (12) TMI 893
Unexplained investment – Search and seizure u/s 132(1) - Addition on account of diamond jewelry - Found at the residence and from the bank locker – Assessee claimed most of the items were gifted / purchased from drawings Held that:- As the assessee had given the explanation with regard to all the another jewelleries found at the time of search along with the evidences and details as were available. Assessee has filed details of cheque payments for the purchase of jewellery and the bank statement along with the summary of purchases made through jewelers, date, cheque number and amount, right from the assessment year 2002-03 up to the date of search. There was no occasion for the CIT(A) to go into such a theoretical concepts laid down by various High Courts / Supreme Court, he should have confined himself to the findings given by the AO and the contentions of the assessee about the evidence and explanation furnished in support of jewellery found. Gifted jewelleries cannot be treated as unexplained as the same is duly supported by such corroborative evidence like gift certificate issued by the mother of daughter-in-law and photographs of marriages shown before the investigation unit. Issue decides in favour of assessee Addition on account of art work and painting - Unexplained investment – Search and seizure u/s 132(1) - Valuation of art work and painting - AO noted that some of the art works could not be explained properly by the assessee with regard to the source of acquisition – Held that:- There could be possibility that the assessee may have acquired certain painting at a very low cost either from a flea market or from abroad or by way of gift from friend or relative for which such a high valuation cannot be taken. Issue of unexplained investment in art works / painting is restored to the file of the AO for denovo adjudication. Issue remand back to AO
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2012 (12) TMI 892
Non deduction of TDS on lorry hire charges - disallowance u/s 40a(ia) - assessee contented that he has already made payments and remaining outstanding as on 31 st March, 2006 - Held that:- As decided in Merilyn Shipping & Transports Versus Assistant Commissioner of Income-tax, Range-1, Visakhapatnam [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] section 40(a)(ia) is applicable only to expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without deducting tax at source - confirm the disallowance to the extent of Rs. 5,65,175/- the amount outstanding as on 31.03.2006 and direct the AO to delete the balance amount of Rs.61,66,953/- as already paid - partly in favour of assessee. Transportation hire charges - TDS u/s. 194C - Held that:- Since the facts regarding assessee having contract with the transporters or truck owners is not examined by the lower authorities, this issue is restored back to the file of the AO. to decide the issue whether there exists any contract or not so as to attract TDS u/s. 194C on hire charges for carrying on the job - in favour of assessee by way of remand.
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2012 (12) TMI 891
Depreciation in the case of succession - One unit of assessee was transferred to the subsidiary company with all assets and liabilities at the book value on 1.11.1996 - Assessee claim depreciation on the opening WDV of the depreciable assets comprised in unit proportionately between Holding & Subsidiary company - Succession to business otherwise than on death u/s 170 - AO u/s 43(6)(c)(B) held that machineries of unit were sold and hence there could be no WDV to allow depreciation - The assets of unit were transferred to the subsidiary company at the WDV as on 31.10.1996 - As the assets were sold during the accounting period, the sale value had to be reduced from the WDV and only the balance depreciation could be allowed Held that:- Contrary to the view of the Tribunal, we find that Section 170 of the Income Tax Act deals with succession to business, otherwise than on death. On a reading of Section 43(6)(c), Explanation 2 to the Section and Section 170 along with the fourth proviso to Section 32(1), we have no hesitation in agreeing with the assessee's case that when the assessee transferred its B Unit to the 100% subsidiary company, it was entitled to claim depreciation apportioned in terms of what is provided for under the fourth proviso to Section 32(1) of the Income Tax Act. The view of the Tribunal that the assessee was not entitled to any depreciation on the ground that there was only a sale, as both units continued to exist, cannot be sustained. As the fourth proviso to Sec. 32(1), that the entire unit is taken as one before succession and the aggregate deduction is calculated at the prescribed rates as if the succession had not taken place and such deduction, thereafter, is to be apportioned between the predecessor and the successor company in the ratio of number of days, for which the assets were used by them. Therefore, assessee is entitled to the claim of depreciation as provided for in the fourth proviso to Section 32(1) Appeal remand back to AO in favour of assessee
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Customs
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2012 (12) TMI 890
Waiver of pre-deposit of Custom duty - Notification NO.29/2010 - Notification No. 6/2006 - Assessee made imports of microprocessors meant for fitment inside CPU housing/Laptop body - Exempted from payment of additional duty of customs leviable u/s 3(1) Notification No.29/2010 provides nil rate of duty in respect of the goods classifiable under any chapter in respect of all pre-packaged goods intended for retail sale Held that:- Goods in question are in pre-packaged and as per the Notification No. 44(RE-2000)/1997-2002 dated 24.11.2000 issued by the DGFT provides that all pre-package commodities are to be affixed MRP. In view of the above notification as the goods in question are pre-packaged therefore are to be affixed retail sale price. Therefore, prima facie in view of the notification cannot be denied on the grounds that are not after retail sale price. Stay granted
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2012 (12) TMI 889
Concealment of medicinal powder in the Shampoo and Talcum Powder bottles - confiscation order & penalty - Held that:- Another Single Judge of this Court in a petition filed by the mother of petitioner Mrs. Chinta Devi in Chinta Devi Vs. Rajesh Arora Air Custom Officer [2011 (7) TMI 986 - DELHI HIGH COURT] had quashed the proceedings in the aforesaid criminal complaint on the ground that her exoneration by the Joint Secretary, Government of India, had attained finality. Joint Secretary to the Government of India has accepted the contention of the petitioner that she had no knowledge about the substances in the aforesaid shampoo and talcum powder bottles, therefore, in this case there cannot be any mens rea since the petitioner had no knowledge about the substance found in the aforesaid bottles. The Joint Secretary has maintained the order of confiscation and the same has not been challenged by the petitioner since the said two bottles were of the substances which are not permissible to be given to the petitioner. Under the Customs Act, 1962 there is complete restriction on the aforesaid substance, which the petitioner has brought from Hong-kong, without her knowledge, therefore, her state of mind cannot be said to be having an intention to import or smuggle the aforesaid substance - Thus in the present case the criminal proceedings pending before the trial court cannot go on, against the petitioner, since the petitioner has been fully exonerated by the Joint Secretary to the Government of India, and same has attained the finality.
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Corporate Laws
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2012 (12) TMI 888
Appointment of credit rating agents - non disclosure of methodology of rating of the petitioner's instruments - breach of obligation committed by respondent No.1 - whether the Trial Judge without adding, or allowing, the second respondent to intervene in the suit, is justified in discharging effectively, earlier interim order - Held that:- It appears from the records that no such notice was given to SEBI, and SEBI itself came forward with the application on which the impugned judgment and order was passed. Thus from initial perception of the learned Trial Judge it is clear that SEBI is required to be heard at the interlocutory stage. While overruling the submission of Mr. Sarkar, Advocate appearing for the appellant Trial Judge has jurisdiction to vary, modify or discharge the interim order passed earlier even without formally adding second respondent as it is affected by the interim order in exercise of inherent power on the principle that action of the Court does not unjustly injure or affects anyone else. Admittedly the plaintiff-appellant have engaged two rating agencies for the said instruments and both of them in their own way have rated making gradation. Earlier respondent No.1 presently sole defendant graded AA, but this time the moment respondent No.1 sounded that this time the rating might be down graded to A+, the plaintiff terminated the two contracts alleging breach of obligation arising out therefrom and further not adhering to the norms and guidelines issued by SEBI. It is the case of the appellant-plaintiff that the moment contract was terminated the respondent No.1 attempted to publish such mala fide and arbitrary rating in the print and electronic media. Thus it is opined that without intending to bind this finding at the time of final hearing of the application before the Trial Judge that the plaintiff has to establish prima facie in a suit of this nature under the contract the first respondent has committed breach of obligation exists in favour of the appellant and lawful termination. It is not an ordinary contract governed by Indian Contract Act. Here once the contract is entered into the rating agents are bound to discharge their obligation in terms of the agreements conforming to relevant provision of the above regulations which have got statutory force. Keeping in view the aforesaid statutory obligation and having given considerable thought the balance of convenience overwhelmingly lies in favour of discharge of interim order, as it appears prima facie that the appellant of its own showing has said that in spite of proposed rating by way of downgrading does not affect its business on the other hand if the respondent No.1 is not allowed to discharge his duty under the statute it has to face the legal consequences. At this stage vacating interim order is quite justified. Moreover, admittedly another credit rating agency has been employed of international repute as per assertion of the appellant, therefore at present the appellant cannot have any reason of being affected or suffered irreparable injury. Unhesitatingly accept the logic of the learned Trial Judge as balance of convenience is in favour of discharge of the interim order. Regulation 29 clause (c) without any ambiguity empowers the respondent No.2 to investigate into the complaint received from the client in connection with any matter having bearing on act and omission of the credit rating agency - slightly modify interim order to the effect that in terms of the above section SEBI will look into the complaint whether it has been done following norms and also information and material supplied by the plaintiff bona fide or not. For this purpose notice for making enquiry shall be given to appellant who will be prejudiced. On enquiry if it is found that rating is done conforming the guidelines issued by it, and also the Code of Conduct in the said regulation then the respondent No.1 would be free to publish.
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2012 (12) TMI 887
Scheme of Arrangement - Held that:- No proceedings under sections 235 to 251 of the Companies Act, 1956 are pending against any of the Applicant Companies as on the date of the present Application. As the proposed Scheme has been approved by the Board of Directors,Shareholders, Secured and Un-secured Creditors of both the Applicant Companies Scheme of arrangement allowed.
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2012 (12) TMI 886
Rectification of the Register of Members - loss of shares - Held that:- An appeal under Section 10 F of the Companies Act can be filed only on a question of law, a mis-interpretation or mis-reading of document is question of law. There is no dispute that in this case a question of law has arisen as the submission of the appellant is that the correspondences exchanged between the parties were not appreciated by the CLB in its correct perspective. CLB should have returned a finding that no active steps had been taken by respondent No. 1 up to 2009 (when the present petition was filed) and the petition was barred by limitation - Record does not substantiate this submission of the appellant, respondent no. 1 was pursing his case right from the inception and correspondences are prima facie evident of this fact. It is also not the argument of the appellant that respondent No. 1 had not purchased the shares from him, his whole argument is bordered on the issue of limitation, submission being that because of the inordinate delay on the part of respondent No. 1 in taking active steps, the present petition under Section 111 of the Companies Act is liable to be dismissed. Case of the respondent all along has been that he had purchased these shares on 20.05.1992 but they were lost on the same date, accordingly it had been prayed that in the absence of the original documents i.e. share certificates and the share transfer forms a direction be given to the Company to rectify the Share Register entering his name in the list of share holders qua these 100 shares. As noted out of the 200 shares which had formed part of the transaction dated 20.05.1992 Company has already transferred 100 shares in favour of respondent No. 1. Discriminatory attitude of the Company qua respondent No. 1 has been correctly noted by the CLB. In this background, impugned order directing rectification of the Share Register in favour of the respondent No. 1 qua these 100 shares as also for additional bonus shares with a direction to pay the unclaimed dividend to respondent No. 1 calls for no interference.
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Service Tax
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2012 (12) TMI 907
Waiver of pre-deposit - Service tax, interest and penalty - Demand made on the ground that applicants are undertaking the road repairs which is a taxable service - Held that:- The repair of roads are exempted from payment of service tax with retrospective effect vide Section 143 of the Finance Act, 2012. Therefore, order is set aside and the appeal decides in favour of assessee
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2012 (12) TMI 906
Management Consultancy Service - 65(105)(r) - Telecommunication services – Whether liaison work was service within the meaning of "Management Consultancy Service" Held that:- The inclusive portion of a definition cannot restrict the meaning of the "means part" of the definition which defines the general meaning. However, the every name of the service indicates that the entry is meant to cover only consultancy service or advisory service and not all activities got done by management through others Therefore, liaison work is not in the nature of any consultancy or advice. But only one of the temporary functions that was required for the functioning of the company. If a person does the activity of collecting of debts of a company that person cannot be considered to be doing management consultancy service though debt collection is a responsibility of the management. In favour of assessee
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2012 (12) TMI 905
Waiver of pre-deposit - Service Tax, interest and penalty thereon - Abatement - Notification No.1/2006 dated 1.3.2006 which provides 60% abatement for payment of Service Tax on the condition that the assessee shall have to availed the credit on duty paid goods and inputs according to Service Tax on inputs services used for providing such taxable services - Held that:- Assessee had availed credit of Service Tax paid on input services, therefore, the applicant had not made out a case for total waiver of dues. Hence, the applicant is directed to deposit an amount of the credit availed. Partly allowed
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Central Excise
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2012 (12) TMI 885
Duty on bagasse & press-mud - manufacture of sugar and molasses in a sugar factory - seeking waiver of pre-deposit along with interest and penalty - Held that:- As decided in Indian Potash Ltd. vs. Commissioner of Central Excise, Allahabad [2012 (12) TMI 347 - CESTAT, NEW DELHI] & COMMR. OF C. EX., PONDICHERRY Versus CHEYYAR CO-OP. SUGAR MILLS LTD. [2008 (6) TMI 533 - CESTAT, CHENNAI] bagasse and press-mud are waste products and no amount under Rule 6 of the CENVAT Credit Rules can be demanded from the assessee against the exempted clearances made by them - there is no possibility of any input/chemicals having been used at that stage - pre-deposit is waived and stay granted.
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2012 (12) TMI 884
Benefit of Notification No.108/95-CE dated 28.08.1995 denied - as on completion of the project, the motor vehicles supplied by the applicant would not remain with the contractor or with the project - seeking waiver of predeposit of duty and penalty - Held that:- The expression "into" denotes "on-going"/"continuous" meaning thereby the goods in question i.e. motor vehicles should not be withdrawn from the on-going project. Admittedly, the project is financed by United Nations. The goods are still into the project and are not withdrawn from the project, is also not in dispute. In these circumstances, the applicant is able to make out a prima-facie case for total waiver of predeposit of all dues adjudged in this case and recovery thereof would stand stayed during pendency of appeal. Stay allowed.
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2012 (12) TMI 883
Duty exemption under notification no.214/86-CE denied- Cenvat credit in relation to manufacture of polyester chips on job work basis - Held that:- Duty exemption under notification no.214/86-CE to the job worker is available on the undertaking given by the principal manufacturer that he will discharge the duty liability on the final product cleared from his factory. Tribunal in the case of Sterlite Industries (I) Ltd. (2004 (12) TMI 108 - CESTAT, MUMBAI) and the Apex Court in the case of M/s. Escorts Ltd. (2004 (8) TMI 106 - SUPREME COURT OF INDIA) have held that if any manufacturer of certain goods on job work basis, uses his own inputs, the job worker would be entitled to cenvat credit in respect of these inputs and he would not be liable to reverse the same even though the goods have been cleared to the principal manufacturer without payment of duty under notification no.214/86-CE. The ratio of these judgements is squarely applicable to the facts of this case and the appellant appear to be eligible for cenvat credit of the service tax paid on the input service availed in or in relation to the manufacture of the polyester chips on job work basis, which had been cleared to the principal manufacturer without payment of duty under notification no.214/86-CE, hence the requirement of pre-deposit of cenvat credit demand, interest and penalty is waived - Stay allowed.
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2012 (12) TMI 882
Jurisdiction of Commissioner and validity of Show cause Notice – non eligible for benefit of the Notification No.1/93 - Held that:- Commissioner had disposed of the issue in just a small paragraph and this issue and none of the other issues have been considered in detail. After the impugned order was passed judicial pronouncements have become available on the issue and further limitation, availability of Cenvat Credit, revenue neutrality are required to be considered besides jurisdiction since on these issues also interpretation of statute has to be made on the basis of judicial pronouncements and facts of the case. Whether Commissioner, Ahmedabad could not have issued the SCN at all or whether it is a rectifiable error is also a matter which requires fresh consideration. Thus it would be appropriate all the issues are examined by the learned Commissioner & remanded to the original adjudicating authority for fresh consideration. As Hon'ble Supreme Court has already decided that the issue relating to manufacture and the brand name against the appellant, while remanding it is clear that the amount deposited by the appellant, if any, will remain with the department till the issue is decided by the original adjudicating authority. Appellant shall be given reasonable opportunity to present their case before the issue is finally decided. All the issues are kept open.
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CST, VAT & Sales Tax
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2012 (12) TMI 908
Revision petition under Section 72 - Tripura Value Added Tax Act,2004 – Tripura VAT Rules 2005 - Search & seizure – Classification - Twin test for determining the classification - Mis-declaration of goods as – Entry No.183 under Schedule II(b) - Section 3 of Drugs and Cosmetics Act 1940 - Entry No. 67(i) of Schedule 11(a) ‘H.L. medicine’ attracting tax @ 5% but on physical verification during the search was found by the seizing authority that the item is ‘Appetite Tonic’ which is taxable @ 13.5% Held that:- The petitioner declared the product as H.L. medicine in the statutory declaration as was required to be furnished at the time of crossing the barrier. Unless contrary to that is established by the revenue in accordance with the decisions of the Apex Court as referred, it has to be treated as properly declared. Therefore, the order dated 25.03.2011 as passed in Seizure Case No.1549/CRB/2010-11 cannot be sustained in law. The revisional authority, the Commissioner of Taxes, without any test, affirmed the order of the Officer In-charge. The Revenue thus failed to discharge their burden to properly classify the product. As such, the order dated 21.10.2011 is liable to be set aside and accordingly it is set aside. Since there is a controversy as regards the classification of the product or as regards the decision arrived at on the basis of the common parlance test, the Revenue is under obligation to adopt the twin test if the assessee approached for re-determination of the classification. But such approach was the basis of the revision as filed under Section 70 of the TVAT Act, 2004. The Revenue has utterly failed to discharge the said obligation. In view of this, the Commissioner of Taxes is directed to adopt the twin test for determining the classification, meaning thereby the common parlance test such as the functional utility and pre-dominance of the primary uses of the commodity apart from taking into account other understanding in common parlance such as to consider the product literature and label etc. and thereafter to determine the composition and character of the product on resorting to the scientific test. The Commissioner of Taxes shall also be at liberty to take aid from the Deputy Drug Controller, Govt. of Tripura for determining the composition of the product to classify the product in controversy having the brand name of ‘Betonin AST Tonic’ manufactured by M/s Sangfroid Industries Ltd., IDA, Kothur, Andhra Pradesh. The said exercise of determining the classification of the said product shall be completed within a period of 6(six) weeks from the day of receipt of this judgment and order. Prior to determination of classification of the said product, VAT more than 5% shall not be charged on the petitioner against the said import of the product. Order of Seizure set aside and case remand back to Commissioner for classification
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