TMI Tax Updates - e-Newsletter
January 15, 2014

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Clarifications with regard to levy of service tax on services provided by RWA to its own members

   By: Bimal jain

2. CENVAT CREDIT – ACCOUNTS, RECORDS AND INVOICES

   By: Dr. Sanjiv Agarwal

News

1. RBI penalises Rajkot Nagarik Sahakari Bank Ltd., Rajkot (Gujarat)

2. Text of the Speech of the Union Finance Minister Shri P. Chidambaram at the Valedictory Function of the Petrotech 2014 Conference

3. The Gandhidham Mercantile Co-operative Bank Ltd, Dist Kutch (Gujarat) - Penalised

4. Total Number of Companies in the Official Registry

5. Investor Awareness Programmes During the Current FY Cross the 1100 Mark

6. Government Approves Five Proposals of Foreign Direct Investment (FDI) Amounting to About Rs. 1133.41 Crore

7. Extension of Special Package of Industrial Incentive for the States of Himachal Pradesh and Uttarakhand

8. ASSOCHAM Series of National Seminar on “SERVICE TAX” New Delhi, Chennai & Chandigarh

9. RBI Reference Rate for US $ and Euro

10. Government Defers the Auction of Dated Securities Amounting to Rs. 15,000 Crore Scheduled on January 17, 2014

11. Index Numbers of Wholesale Price in India (Base: 2004-05=100) Review for the month of December, 2013

Notifications

Income Tax

1. 04/2014 - dated 10-1-2014 - IT

Amount received in the form of grants-in-aid from the Central Government – Orissa State AIDS Control Society.

Circulars / Instructions / Orders

FEMA

1. 93 - dated 15-1-2014

Clarification- Establishment of Liaison Office/ Branch Office/ Project Office in India by Foreign Entities- General Permission

DGFT

2. 12 (RE-2013)/2009-2014 - dated 15-1-2014

Type Approval Certificate issuing agencies under Policy Condition number 7 and 9 of Chapter 87 of ITC(HS) 2012

Highlights / Catch Notes

Income Tax

• Section 12AA Registration Cannot Be Denied for Inactivity; Focus on Genuine Objectives of Trusts Instead.

  Case-Laws - AT : Registration u/s 12AA - The registration could not have been refused on the ground that the trust has not yet commenced the charitable or religious activities - At this stage, the genuineness of the objects have to be tested and not the activities which have not commenced - AT
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• High Court Emphasizes Need for Adequate Documentation to Challenge Presumptions Under Income Tax Act Section 132(4A.

  Case-Laws - HC : In the light of the presumption under section 132(4A), the assessee ought to have produced other documents to disprove the entries made in the loose sheets - HC
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• Section 41(1) of Income Tax Act: No Additions if Expenditure Claimed Leads to Unsettable Loss u/s 72.

  Case-Laws - AT : Additions u/s 41(1) – If the assessee claims expenditure but ultimately if there is a loss and such loss cannot be set off u/s 72 - section 41(1) of the Act cannot be invoked - AT
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• Reimbursement for Warranty Claims Denied as Revenue Expenditure Under Business Purchase Agreement.

  Case-Laws - AT : Disallowance on account of reimbursement of warranty claims - even if any liability is taken over by the assessee as a part of business purchase agreement, discharge of such liability cannot be claimed as a revenue expenditure - AT
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• Assessee Agrees to AO's Order; No Appeal Allowed on Agreed Additions Under Legal Principles.

  Case-Laws - AT : Assessee has agreed and consented to the order of the AO in raising the demand against the assessee - It is well settled law that no appeal lies on the agreed additions - AT
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• ESOP Taxation: Only Portion of Stock Options for Services Rendered in India is Taxable.

  Case-Laws - AT : As the assessee has not rendered service in India for the whole grant period, only such proportion of the ESOP perquisite as is relatable to the service rendered by the assessee in India is taxable in India. - AT
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• Cash Purchase of Bricks Exempt from Disallowance u/s 40A(3) Due to Payments Below Rs. 20,000 Threshold.

  Case-Laws - AT : Disallowance u/s 40A(3) – purchase of bricks for Rs. 2,52,000/- though made in cash but each voucher was for below Rs. 20,000/- section 40A(3) will not apply - AT
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Customs

• High Court Rules Recovery Illegal Due to Non-Compliance with Section 50 in Narcotic Drugs Case u/s 15.

  Case-Laws - HC : Offence under Section 15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Rights of the accused - Since the aforesaid notice does not meet the strict requirement of Section 50 of the Act, the recovery pursuant to the said notice cannot be said to be legal - HC
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• Refund Granted for Additional Customs Duty on Imported E-bikes in CKD Condition if VAT Paid on Sale.

  Case-Laws - AT : Refund of SAD - Import of E-bikes in CKD condition - respondents are entitled to refund of ACD paid by them at the time of import of the goods when subsequently they were sold as E-bikes and upon discharge of VAT - AT
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Indian Laws

• CAG Empowered to Audit Telecom Companies' Revenue for Transparency and Accountability as per Constitutional Requirement.

  Case-Laws - HC : Power of the CAG of India to conduct revenue audit of telecommunication companies – The Rule and the Section fits perfectly into the constitutional scheme of every rupee flowing into the Consolidated Fund of India, by way of revenue, to be audited by the Comptroller and Auditor General of India - HC
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Service Tax

• Extended Limitation Period Inapplicable to Subsequent Notices if Prior Notice Issued; No Presumption of Continued Incorrect Practice.

  Case-Laws - AT : Extended period of limitation - subsequent SCN - Revenue cannot imagine that the appellant will continue to follow a wrong practice inspite of earlier show cause notice issued to them - AT
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• Appellant Entitled to 67% Service Tax Abatement; Demands Beyond Limitation Period Deemed Unsustainable.

  Case-Laws - AT : Completion or finished work or renovation or restoration of building or civil structure - whether the appellant is eligible for the abatement of 67% or not - demand beyond normal period of limitation not sustainable - AT
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• Service Tax Demand on Shared Expenditure with Group Companies Under BAS Not Sustainable; Stay Granted.

  Case-Laws - AT : Sharing of expenditure with group companies - demand under the BAS category prima facie not sustainable - assesse being paying service tax as BSS w.e.f. 1.4.2006, stay granted - AT
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• Advertising Costs Not Payment for Agency Services: Clarifying Valuation of Media Advertisements.

  Case-Laws - AT : Valuation of service - the amount spent for flashing an advertisement in a particular print media or electronic media, cannot be said to have been paid towards the services rendered by the advertising agency - AT
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• Appellant Liable for Service Tax on Domestic Management and Repair Services, Despite Export Argument; Partial Stay Granted.

  Case-Laws - AT : Export of service or not - Management, maintenance or repair service -admittedly, the service was performed within India and hence the appellant is liable to pay service tax on the service - stay granted partly - AT
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VAT

• Road Construction Equipment Classified as Plant and Machinery Under Bihar VAT Act, 2005; Affects Tax Rates.

  Case-Laws - HC : Rate of tax - Classification - Interpretation of Motor vehicle - road construction equipments, although are mounted on the wheels or the chassis, are necessarily plant and machineries within the meaning of entry 91 of Schedule III to the Bihar Value Added Tax Act, 2005 - HC
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Case Laws:

• Income Tax

• 2014 (1) TMI 673
  Registration u/s 12AA - Held that:- Before grant of registration u/s. 12AA, the ld. CIT has to satisfy himself about the objects and genuineness of the activities of the assessee trust or institution. Other conditions are not relevant at the stage of grant of registration. The recognition u/s. 80G(5) is consequential to the grant of registration - Following Hardayal Charitable and Educational Trust vs. CIT-II, Agra [2013 (3) TMI 377 - ALLAHABAD HIGH COURT] - Most of the objections raised by the ld. CIT in the impugned order are not relevant for the purpose of grant of registration u/s. 12AA of the IT Act and approval of exemption u/s. 80G(5) of the IT Act - For grant of registration u/s. 12AA, The Commissioner of Income Tax is not required to look into the activities where such activities have not or in the process of its initiation - The objects of the Institution shall have to be seen - The issue of receipt of donations is not relevant - The registration could not have been refused on the ground that the trust has not yet commenced the charitable or religious activities. The assessee has filed copy of the aims and objects of the society, which shows that the assessee exists for educational and charitable purpose only, which is also supported by the report of DCIT - The assessee is at the stage of setting up the educational institution, the assessee society was set up to achieve its objects of establishing educational institution is in the process of establishing such institution and received donations - At this stage, the genuineness of the objects have to be tested and not the activities which have not commenced - The reasons given by the ld. CIT in the impugned order for rejection of applications are not relevant at this stage which may be a separate issue and arise whenever the return of income would be filed by the assessee and would be examined at assessment stage - Decided in favour of assessee.

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• 2014 (1) TMI 660
  Whether an assessment order regarding undisclosed income passed on the basis of loose sheet of papers has no evidentiary value - Held that:- The lease agreement entered into between the assessee and the landlord concerning the first-floor of the premises at Safdarjang Enclave, New Delhi, was in existence for the said period - The documents identified as document no.6 contained entries regarding higher rent paid for the said premises for various periods - Based on the entries, the Assessing Officer and the CIT(Appeals) arrived at the concurrent findings of fact that higher rent was paid for the rented premises - The Assessing Officer observed that the rented premises was in the heart of the city of New Delhi at Safdarjang Enclave and the rent is not likely to be Rs.6000/- per month and that to be it would not remain fixed for all the four years. Since loose-sheets seized are documents within the meaning of section 158B(b), there is presumption raised under section 132(4A) regarding the documents seized - In the light of the presumption under section 132(4A), the assessee ought to have produced other documents to disprove the entries made in the loose sheets - The assessee has not adduced any rebuttal evidence to show that the entries made in the diary/loose sheets were not income in the hands of the assessee - The lower authorities recorded concurrent findings of fact and the Tribunal was justified in confirming the additions – Decided against assessee.

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• 2014 (1) TMI 659
  Centralization of search cases - Powers u/s 127(2) - Held that:- The petitioner Company had fully understood the object and purpose of centralizing the cases at Varanasi - It could not place sufficient facts and material, which were relevant for the purpose of supporting the objection - The Company is carrying its entire business activity at Varanasi - Apart from Didwania brothers, the Company has two other directors who have not disclosed their connection with Didwania brothers - They hold one-third share in the Company and that one of the directors Sri Atul Kumar Didwania surrendered Rs.60 lacs and another Rs.15 lacs during search - In the circumstances in the interest of revenue, it was found necessary to centralize the petitioner assessment at Varanasi – Decided against petitioner.

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• 2014 (1) TMI 658
  Non-consideration of substantial questions of law by High Court - Held that:- The High Court shall keep in view the order dated 4.3.2013 passed by this Court in C.I.T.-II, Ahmedabad, Gujarat vs. M/s. Mastek Ltd [2013 (3) TMI 309 - SUPREME COURT] while considering whether or not the two questions of law which the petitioner intends to press for consideration by the High Court need to be framed at the time of hearing of the appeal - The observations made by the High Court in the impugned order do not survive – Decided in favour of Petitioner.

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• 2014 (1) TMI 657
  Validity of order passed u/s 263 - Held that:- Following M/s WNS Global Services Pvt. Ltd. [2012 (8) TMI 432 - ITAT MUMBAI] - If a provision in a statute is unconditionally omitted without any saving clause in favour of the pending proceedings, all actions must stop where such an omission is found - Once the provisions of subsection 9 have been omitted, then it can be safely inferred that such an omission will be applicable wherever omitted section comes into play - Subsection 9 to section 10A, which has been omitted from the statute w.e.f. 1st April 2004, has to be read to be obliterated from the statute book or at least it will not have any effect from the year in which it was omitted - Even if there was any change in the ownership through acquisition of shares in earlier year 2003-04, exemption under section 10A, cannot be denied on this ground in the assessment year 2004-05. There was a transfer of 1.5% (3 lacs shares) of the assessee company in favour of Altana Pharma AG by wholly owned subsidiary - The original shareholders maintained 51% shareholding pattern as on 31.3.2003 - Decided in favour of assessee.

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• 2014 (1) TMI 656
  Penalty u/s 271(1)(c) - Bad debts relating to amount given to suppliers - Held that:- Merely because the claim of the assessee was disallowed would not automatically lead to the conclusion that the assessee has furnished inaccurate particulars of income or conceal the particulars of income - The assessee has explained and given the complete details of the advance given to the suppliers - Even if the claim of the assessee has not been accepted by the A.O the same would not automatically attract the provisions of Section 271(1)(c). Bad debts relating to advance given for purchase of car - Held that:- When the assessee has furnished the complete detail and explanation about the claim and advance given then it cannot be said that the assessee has concealed the income or furnished inaccurate particulars of income - This issue is also a debatable issue and does not fall in the category of a bogus or absolute incorrect claim. Expenses for repair and maintenance - Held that:- The assessee has given the full details of the expenditure incurred on the repair and maintenance - When no finding by the authorities that any new asset came to existence as a result of this expenditure then the claim of the assessee cannot be termed as bogus or inherently not permissible - The claim is a highly debatable issue as well as a bonafide claim of the assessee and disallowance of the same would not lead to the conclusion that the assessee has concealed income or furnished inaccurate particulars of the income on this account - Decided against Revenue.

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• 2014 (1) TMI 655
  Recall of order – Rectification of mistake apparent from record u/s 254 of the Act - Rebate treated as cessation of liability - Disallowance u/s 72(1) of the Act - Loss on account of excess cost of electricity incurred – Held that:- In sec. 41(1), the Legislature has used the words "loss" also - If the assessee claims expenditure but ultimately if there is a "loss" and such "loss" cannot be set off u/s 72 of the Act – Thus, section 41(1) of the Act cannot be invoked - the assessee could get the benefit of the brought forward business losses from the A.Y. 1993-94 as well as depreciation allowance and the tax liability of the assessee is reduced - Relying upon Tirunelveli Motor Bus Service Co. (P) Ltd. Vs. CIT [1970 (8) TMI 2 - SUPREME Court] - even if the rebate relates to the tariff which is debited to the P & L a/c in the respective assessment years but the fact remains that the losses which were worked out after debiting the said tariff had lapsed - Both the parties have not brought any direct decision on this crucial issue but to our conscious, considering the intention of the Parliament to enact sec. 41(1) creating fiction is not to put any extra burden of tax on the assessee but to take away the benefit which is enjoyed by the assessee by reducing the tax liability under the charging provisions of the Act – the AO directed to verify the record and reduce amount from addition made u/s 41(1) in the year – Decided partly in favour of Assessee.

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• 2014 (1) TMI 654
  Deletion of Penalty u/s 271(1)(c) of the Act – Held that:- Following COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] - By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars and in Dilip N. Shroff Versus Joint Commissioner of Income-tax And Another [2007 (5) TMI 198 - SUPREME Court] - A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - Such claim made in the Return cannot amount to the inaccurate particulars - Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1)(c) – Decided against Revenue.

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• 2014 (1) TMI 653
  Status of Assessee – Taxability of Income – Applicability of Article 8A of DTAA with Netherlands - Held that:- CIT (A) upheld the assessment order in so far as relief under Article 8A is concerned - However, the second aspect of the assessment order, being the assessee having a PE in India and resultantly the income becoming taxable - Following Hoyer Global Transport [2014 (1) TMI 385 - ITAT MUMBAI] - There is no appeal filed on behalf of the assessee - it is clear that the provisions of Article 8A of the DTAA cannot be made applicable to the assessee as was originally contended before the AO – the order set aside and the matter remitted back to the AO for fresh consideration. Charging of interest u/s 234B of the Act– Held that:- Where income is subject to TDS provisions, then it is the duty cast on the payer to deduct tax at source - On the failure of the payer to do so, no interest can be imposed on payee assessee u/s 234B of the Act – Decision of DIT (International Taxation) v. NGC Network Asia LLC Ltd. [2009 (1) TMI 174 - BOMBAY HIGH COURT] followed – Decided partly in favour of Assessee.

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• 2014 (1) TMI 652
  Addition on ad hoc basis - Cash payment made to various truck/tempo operators – Compliance of provisions of section 194C of the Act – Deduction of TDS – Held that:- The Assessing Officer made addition of 25% of the claim and in the first appeal, the Commissioner of Income Tax(A) restricted the disallowance to 10% of expenses being made in cash by the assessee but these ad hoc disallowances are based on surmises and conjectures - the ad hoc disallowance and addition cannot be made on the basis of hyper technical approach or imaginary observation - The Assessing Officer is bound to bring some element or material to substantiate the fact that the assessee has inflated its expenditure or there was some element of personal use pertaining to the amount claimed by the assessee as expenses. The addition made by the Assessing Officer and partly confirmed by the CIT (A) is not sustainable – there is no valid reason to make ad hoc disallowance and addition only on the basis of imaginary allegation without substantiating the fact that there was some element of inflated claim or personal use by the assessee – Decided in favour of Assessee.

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• 2014 (1) TMI 651
  Interpretation of section 153C r.w. Section 153A of the Act – Held that:- CIT(A) after going through the submissions of assessee has held that the documents seized from the premises of another person were copies of acknowledgement of return and copies of final accounts of the assessee company - The DR has not brought anything contrary to the findings of CIT(A) and has not brought any fact which could substantiate that there were other incriminating documents upon which the Assessing Officer had relied to estimate the turnover of the company - if the seized documents contain only such documents which CIT(A) has narrated then these cannot be said to be incriminating unless some difference are pointed out by the Assessing Officer in the documents seized and those in the Department’s possession in the form of part of IT returns – Decided against Revenue.

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• 2014 (1) TMI 650
  Disallowance on account of reimbursement of warranty claims - Nature and allowability of Expenses – Expenses incurred to be treated as business expenses or not – Held that:- HML is the seller and not the assessee company - even if any liability is taken over by the assessee as a part of business purchase agreement, discharge of such liability cannot be claimed as a revenue expenditure - the purchase of business is a purchase of a capital asset - so far as customers are concerned, they are duly satisfied because their rights under the warranty have been met by HML - So far as customer satisfaction is concerned, it is irrelevant whether the assessee reimbursed the liability to HML or not - reimbursement of the warranty claims by the assessee to HML has no business expediency – Decided against Assessee. Disallowance of Depreciation on capitalization of professional charges – Held that:- The cost of the assets was determined after allocation of professional charges - the Department cannot take a different stand in different years in respect of allowability of depreciation in respect of professional charges capitalized and allocated to the cost of various assets. In this case, in the first two years, i.e., AY 2006-07 and 2007-08, the Assessing Officer has disallowed the depreciation - in the subsequent years, as per the contention of the assessee, the depreciation on the professional charges has been allowed in the orders passed under Section 143(3) – thus, there would not be any justification for disallowance of depreciation on the professional charges in the earlier years – order set aside and the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (1) TMI 649
  Disallowance of deduction of Gratuity expenditure – Held that:- Following The Asst. Commissioner of Income-tax Versus Vs. M/s. Sri Krishna Drugs Ltd. [2013 (11) TMI 111 - ITAT HYDERABAD] - The amount paid towards an unapproved gratuity fund can be deducted under sec. 37 of the I.T. Act, though not under sec. 36(1)(v) - even if any payment is made to an unapproved gratuity fund, it has to be allowed under sec. 37 – order of the CIT(A) set aside – Decided in favour of Assessee.

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• 2014 (1) TMI 648
  Maintainability of Appeal – Introduction of additional ground - The CIT(A) has specifically noted in the order that AO's action has been accepted by the assessee and short taxes along with interest have been deposited – thus, the appeal of the assessee has become infructuous and was accordingly dismissed- It would amount that the assessee has agreed and consented to the order of the AO in raising the demand against the assessee - It is well settled law that no appeal lies on the agreed additions – Relying Jivatlal Purtapshi Vs CIT [1967 (2) TMI 8 - BOMBAY High Court]. The assessee did not challenge this finding of the CIT(A) in the present appeal - the appeal of the assessee would not be maintainable in the present form - the assessee admitted his mistake in short deduction of tax and produced copies of bills and evidences of tax demand and interest - the grievance of assessee against the order dated 05.03.2009 has already been taken care of by the AO in rectification proceedings - No appeal lies before the CIT(A) against the same order - Though the assessee has raised the present additional ground, but no supporting documents have been filed to prima facie prove that whatever payments have been made to these parties - whether they have declared the same income before the Income-tax Authorities and have paid taxes on the same or not - additional ground could not be taken into consideration in the absence of any evidence – Decided against Assessee.

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• 2014 (1) TMI 647
  Addition on account of Employee stock option scheme – Amount to be taxed in India – Held that:- Only proportionate salary would be taxable in India, if a part of activity done by the assessee has no relation to any India specific job or activity - the assessee was in India only for a short period i.e. 1.4.2006 onwards and that prior to it, he has not done any service connected with any activity in India – as the assessee has not rendered service in India for the whole grant period, only such proportion of the ESOP perquisite as is relatable to the service rendered by the assessee in India is taxable in India. Addition on account of hypo tax - Held that:- Following CIT vs. Dr.Percy Batlivala [2009 (12) TMI 811 - DELHI HIGH COURT] – Tax equalization policy provides that the company shall bear assessee's tax liability arising out of his foreign assignment - But company's liability will be restricted only to the extent of additional liability over and above that would have arisen had the assessee been in USA - if the assessee had no foreign assignment in India for which he is to be compensated by net of tax salary - the income arising in India is actual salary plus the incremental tax liability arising on account of Indian assignment - the claim of the revenue rejected – Decided against Revenue.

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• 2014 (1) TMI 646
  Determination of Arm's Length Price - License fees for use of intangible/intellectual property – Addition of Licence Fees paid to AE - DTAA with Switzerland - Held that:- Following SGS India (P.) Ltd. [2014 (1) TMI 388 - ITAT MUMBAI] - the royalty at 5% to 8% was accepted as per FIPB Instructions issued by the Ministry of Commerce, Government of India - the assessee's international transaction of payment of licence fee at 3% was accepted by the Tribunal at ALP - the rate of licence fees at 3% paid by the assessee at ALP. Non-adjudication by the CIT(A) – Benefit of Article 10 of Switzerland Double Taxation Avoidance Agreement – Held that:- When a particular issue is raised before the ld. CIT(A) for the first time, it becomes his duty to first discuss the admission aspect of the same and then decide on its merits, if he is agreeable with its admission - As there is no discussion worth the name in the order on these aspects – matter restored to the CIT(A) for adjudication – Decided Partly in favour of Assessee.

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• 2014 (1) TMI 645
  Deduction u/s 10BA with reference to DEPB, DDB etc. – Held that:- Following M/s. Maral Overseas Limited Vs ACIT [2012 (4) TMI 345 - ITAT INDORE] - As per the amended section 10B(4) - Only the profits of the business of the undertaking only is to be considered for working out the profits and gains as are derived by an undertaking from export out of India of eligible articles or things - The profits and the gains of the business of the undertaking is to be worked out as per the provisions of section 28(i) - This does not include the profits of items under sub-sections (iiia), (iiib), (iiic), (iiid) and (iiie) etc. Duty Draw Back and any profit on transfer of DEPB. The plain reading of Section 10BA which deals with export of certain articles or things will make it clear that ‘such profits’ as are derived from the export out of India shall be allowed from the total income of the assessee - The sale proceeds of DEPB cannot be considered as part of turnover as it is not the sale proceeds of the articles or things manufactured and sold by the assessee, then the profits from sale of DEPB cannot apportioned on treated on profit derived by the undertaking from export out of India - The exemption provisions in 10BA have to be liberally interpreted unless the credit of DEPB and DDB is expressly taken away – Decided in favour of assessee. Netting of interest and the method of computation u/s 80HHC of the Act – Held that:- Following Tata Sponge Iron Limited Vs. C.I.T [2007 (4) TMI 211 - ORISSA High Court] - In the case of exporters the interest paid by the assessee is liable to be reduced from interest received by it while calculating deduction u/s 80HHC(1) r.w. Explanation [baa] - Decided in favour of assessee. Brokerage on Export-Shipping-Freight – Held that:- This is not income but it is paid as part of shipping freight by the assessee, it has to be obviously, set off against such payment so as to arrive at the export profit eligible for deduction u/s 10BA of the Act – Decided in favour of assessee. Disallowance out of the telephone, travelling and coun. Expenses and depreciation on cars – Held that:- Both the A.O. and the ld. CIT(A) have made adhoc disallowances – It would be justified if the disallowance is further reduced to 1/10th of the total claim – Partly allowed in favour of assessee. Deduction u/s 80HHC – Method of computation - Held that:- Entire positive and negative incomes of other than business has been separately accounted for and only the resultant figures have been considered in the final accounts - The net result is a negative income debited to P&L account which mainly relates to the expenses on interest for the business of goods other than handicrafts, the Id. Assessing authority though accepted the contention of assessee that the interest receipt is business income, but holding that the interest income and income from other than export is not eligible for deduction u/s 80HHC of the Act - The Assessing Officer have deviated from the consistent method of calculating profits derived from the export for the purpose of deduction u/s. 80HHC and ignored the provisions contained u/s. 80HHC(3) – The issue was set aside with a direction to the Assessing Officer to recalculate the export profit by apportioning the total business profits on the basis of export turnover to total turnover and allow deduction accordingly. Addition on account of low G.P. rate – Held that:- The A.O. has not pin-pointed any defect much less any material defect in the books of account - The slight fall in the gross profit rate was due to huge increase in the turnover of this year - The slight fall in the gross profit rate was not even material - Only on account of difference in gross profit rate alone books of account cannot be rejected and no addition can be made u/s 145(3) of the Act – Decided against Revenue.

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• 2014 (1) TMI 644
  Penalty u/s 271(1)(c) - The computation was made u/s. 115JB and tax was payable - Held that:- Following M/s. Ruchi Strips & Alloys Ltd vs. DCIT [2011 (1) TMI 171 - ITAT MUMBAI] - No penalty could have been imposed on the assessee because there was no tax sought to be evaded because the addition in respect of which penalty was imposed was made while computing total income under the normal provisions of the Act and ultimately the total income of the Assessee was determined on the basis of book profits u/s.115JB – The said concealment has no effect on evasion of tax - Decided in favour of assessee.

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• 2014 (1) TMI 643
  Disallowance u/s 40A(3) – purchase of bricks for Rs.2,52,000/- though made in cash but each voucher was for below Rs. 20,000/- - Held that:- The amendment in section 40A(3) is w.e.f. A.Y. 2009-10 as per C.B.D.T. Circular No.1/2009 dated 27.03.2009 - The amended provisions is not applicable in A.Y. 2008-09 - Following CIT vs. Kothari Sanitation & Tiles (P). Ltd. [2006 (1) TMI 61 - MADRAS High Court] – The words used are "in a sum" i.e. single sum, irrespective of any number of transactions where the amount does not exceed the amount in each transaction, section 40A(3) will not apply - Decided in favour of assessee.

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• 2014 (1) TMI 642
  Estimation of income - Rejection of books of accounts – Non-production of bills or production of kachcha bills - Held that:- The assessee is contractor and engaged in the road construction business - The assessee maintained regular books of account, which are audited also - The nature of business of the assessee clearly proves that even sometimes grits are purchased from un-organized sectors, therefore, pukka bills would not be issued by the parties because the purchases are made from remote areas also - Even if books of account of the assessee are not reliable, the profit of the assessee shall have to be estimated on reasonable basis considering the history of the assessee and the profit margin – Decided against Revenue.

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• 2014 (1) TMI 641
  Validity of revision order u/s 263 – Held that:- The provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous then the section will be attracted - The AO did not discuss/consider various issues pointed out by the Ld CIT in his revision order - the decision taken by Ld CIT in setting aside the assessment order on the impugned issues is in accordance with the law - The Ld CIT has directed the assessing officer to do the assessment on the lines discussed by him - Such a direction infringes with the power entrusted to the assessing officer by the Statute – Partly allowed in favour of assessee.

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• Customs

• 2014 (1) TMI 640
  Offence under Section 15 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Rights of the accused - an opportunity to the appellant for holding any search in the presence of a Gazetted officer or a Magistrate - Necessity to comply with Section 50 of the NDPS Act - Quantification of punishment - Held that:- appellant was not informed that he had a legal right to the effect that the bag being carried by him could be searched in the presence of a Magistrate or a Gazetted Officer. The appellant was only informed that if he so desired he and the bag being carried by him could be searched in the presence of a Magistrate or a Gazetted Officer. This intimation would not amount to conveying to the appellant that he had a legal right to be searched in the presence of a Magistrate or a Gazetted Officer. It is quite possible that had the appellant been informed of such a legal right being available to him he would have chosen to exercise that right instead of allowing the police officers to search him. Since the aforesaid notice Ex.PW1/A does not meet the strict requirement of Section 50 of the Act, the recovery pursuant to the said notice cannot be said to be legal - Decided in favour of assessee.

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• 2014 (1) TMI 639
  Over valuation of consignments of carpets/floor coverings - Claim of higher drawback and gain benefit of excess exports - Violation of principle of natural justice - Cross examination of witness - Held that:- cross examination request by the appellants as made vide their letter dated 23.5.2012 was allowed. If that be so, the adjudicating authority is bound to produce witnesses as requested by the appellants for cross examination. In any case, if the adjudicating authority subsequently changed his mind, he was duty bound to intimate the same to the appellants, about the reasons for change of his mind not to grant cross examination of experts to the appellants. In any case, we find that even on 22.8.2012 the customs officers were tendered for cross examination and there was no reference of panch witnesses. Appellants have received fax message for cross examination only in the evening of 21.8.2012 intimating that the adjudicating authority has allowed cross examination which would be taken on 22.8.2012. One day prior notice for conducting cross examination cannot be held to be a sufficient notice to the advocate as also to the party who were located in Amritsar - Cross examination of the witnesses may require much more than 3 personal hearings and the Commissioner's reference to the provisions of the said section for justifying his passing of the impugned order without any further hearing cannot be appreciated. It is cardinal principle of law that nobody should be condemned without hearing and affording the accused person a reasonable opportunity to put forth his defence - impugned order has been passed in gross violation of principles of natural justice. As such, without expressing any opinion on the merits of the case, we deem fit to set aside the impugned and remand the matter to the Commissioner for de novo adjudication - Decided in favour of assessee.

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• 2014 (1) TMI 638
  Denial of refund claim - Import of E-bikes in CKD condition - Exemption Notification No. 102/2007-Cus., dated 14-9-2007 - Refund of the Additional Duty of Customs if imported goods were sold after the discharge of VAT - Commissioner allowed refund claim - Held that:- goods were assessed at the time of their import as E-bikes in CKD condition and not as part of E-bikes. If that be so, we really are unable to appreciate the Revenue’s contention that for the purpose of refund of ACD, same has to be considered as E-bikes part. Revenue relies on Boards Circular No. 15/2010-Cus., dated 29-6-2010 is not appropriate inasmuch as in the said circular reference was made to the imports of ‘timber logs’ which were ‘sawn’ or ‘cut logs’ and were sold as ‘sawn’ and ‘cut log’. Similarly, Revenue’s reference to the Chapter Note 6 of Section XVII does not advance their case inasmuch as the same is in respect of incomplete or unfinished articles having essential character of that article but not ready for direct use - admittedly the imported goods were E-bikes in CKD condition and same were assessed to duty as E-bikes. If that be so, the respondents are admittedly entitled to refund of ACD paid by them at the time of import of the goods when subsequently they were sold as E-bikes and upon discharge of VAT - Decided against Revenue.

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• 2014 (1) TMI 637
  Confiscation of goods - Import of oil - Mis declaration of goods - Held that:- principles laid down by the Customs (Provisional Duty Assessment) Regulations, 1963 would be binding for provisional release of the goods in the absence of any method for safeguarding the interest of Revenue - Revenue directed to provisionally release the goods subject to deposit of 20% differential duty as sought to be assessed by the department and subject to execution of bond of the full proposed value of the consignment - Decided in favour of assessee.

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• 2014 (1) TMI 636
  Stay application - Export of brass sanitary fittings - Duty drawback - Held that:- Commissioner has held that these impugned goods are nuts & bolts without producing any evidence on records as on what basis the goods are to be held as nuts & bolts. Therefore, prima facie the applicant has made out a case. Accordingly, we stay the operation of the impugned order till final disposal of the appeal - Stay granted.

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• 2014 (1) TMI 635
  Exemption at Serial No. 347B of Notification 21/2002-Cus - Import of helicopter - Commissioner granted exemption - use the helicopter for “Non-Scheduled Passenger Operations” for which also an exemption was available - Held that:- Commissioner was required to base his decision on the documentary evidence which was in existence at the time when the goods first cleared for import. When the goods were first cleared for import in 2008, the import clearance granted to the respondent issued by DGCA was very much valid and was expired only on 1-7-2009. Therefore on this ground we do not find any fault in the order - Provisions of Section 149 governs the amendment of import documents and export documents. Amendment of Bill of Entry is permissible on the basis of documentary evidence which was in existence of time when the goods were cleared. When the goods were cleared, Customs Notification 21/2002 (unamended) was in existence. As its amendment through corrigendum was retrospective in effect, the amended Notification should be deemed to have been in existence at the time of clearance of the goods and, consequently, in terms of Section 149, the subject Bills of Entry were open to be amended - as the respondent has complied with condition no. 32(c) of the said Notification and the contract comes to an end, the post-importation obligation is also comes to an end. As it is not continuing obligation, the exemption then become absolute. Therefore no action under Section 111(o) of the Customs Act, 1962 would lie against the respondent - respondent has completed the contract with Reliance Industries Ltd. and fulfilled the condition under Sr. No. 217 of Notification 21/2002 and on the date of import the respondent were entitled to claim the benefit under Sr. No. 347B of the said Notification for home consumption, therefore, we do not find any infirmity with the impugned order - Decided against Revenue.

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• Corporate Laws

• 2014 (1) TMI 634
  Dismissal of petition under Section 397/ 398 - Oppression and mismanagement - Non-disclosure of any fresh cause of action - Whether the CLB was justified in rejecting the company petition on the ground that it did not disclose any fresh cause of action within the meaning of Order VII Rule 11 of the CPC - Held that:- CLB cannot dismiss a petition under Section 397/ 398 of the Act as not maintainable, unless the petition raises issues which are absolutely unarguable or frivolous or in a case where the petition does not disclose the satisfaction of the basic requirements of these sections - It should be the effort of the CLB to bring to an end all matters complained of and towards this end the CLB is empowered to make such order as it thinks fit. It is the interest of the company that is the paramount consideration under Section 397/ 398. Therefore, the permission granted by the CLB to the petitioners to withdraw the petition and file a fresh petition on a fresh cause of action should not be viewed on the basis of the parameters for a strict implementation of Order VII Rule 11 (a) of the CPC. It should be looked at more as a substantive compliance, particularly when the fresh petition did not abandon or omit the earlier cause of action but merely added one more cause of action namely the expiry of the lock-in period on 20.12.2012. Obviously it was during the pendency of the first petition that the lock-in period expired. The expiry of the lock-in period undoubtedly facilitated a possible arrangement under which the CLB could direct either party to acquire the shares of the other party. The expiry of the lock-in period could have even been brought to the notice of the CLB in the course of the oral submissions made before the CLB. The withdrawal of the first petition might even have been prompted by the discovery, in the course of the argument before the CLB on 14.01.2013, that the lock-in period had expired - though the provisions of the CPC are not applicable to CLB, there is no prohibition in applying the principles evolved in the CPC. There can be no quarrel with such an argument, subject to the caveat that the well recognised principles embedded in the elaborate provisions of the CPC can be invoked to the proceedings before the CLB with a view to suppressing the mischief and advancing the cause of justice. This seems to be the purpose of Regulation 44 of the CLB Regulations. CLB in the present case was not justified in any manner in throwing out the fresh petition on the basis of the principle behind Order VII Rule 11(a). In addition to the reasons which I have earlier given, on the basis of the vast powers conferred upon the CLB in petitions complaining of oppression and mis-management and the expectation of the Companies Act that the disputes arising out of acts of oppression and mis-management should be effectively put an end to by the CLB, I would add that the principle embedded in Order VII Rule 11(a) ought not to have been invoked in the present case to defeat the right of the appellants to the remedy against acts of oppression and mis-management allegedly committed by the respondent, without even examining the petition on merits. It is difficult to visualise the possibility of such an opinion being formed by the CLB without examining the acts of the oppression and mis-management complained of or without inquiring into the question whether there is substance in the complaint or not. The CLB not only has to form such an opinion but shall further pass such order as it thinks fit with a view to bringing to an end the matters complained of. It needs no emphasis that the interests of the company are paramount in moulding the relief and the remedy under Section 397 is an alternative to winding-up. A company is a corporate personality and is normally promoted to foster economic growth of the country. Its proper functioning is, therefore, essential for the economic strength of the country. The provisions of Section 397 and 398 are a step towards ensuring that companies formed for this purpose do not get derailed because of lack of probity or merely because of egoistic disputes between the men behind the company. Rejection of the petition filed under Section 397/ 398 of the Act on a technical or a preliminary ground leaves the disputes unsettled which goes against the mandate of the provision. Though the appellant's petition before the CLB was dismissed as not maintainable for not disclosing a fresh cause of action, the petition filed by the respondents before the CLB in C.P. No.24(ND)/2013, also under Sections 397 and 398 of the Act, complaining of acts of oppression and mis-management against the appellants, is still stated to be pending before the CLB pursuant to an order passed by the CLB on 19.02.2013. On this date the CLB passed an order for listing the petition filed by the respondents herein along with the fresh petition filed by the appellants before the CLB. However, the fresh petition filed by the appellants was dismissed, though the petition filed by the respondents was adjourned and is kept pending. When both the petitions were initially directed to be listed together for hearing it would have been just and equitable that the mutual allegations were examined and an opinion was formed as to whether the affairs of the company were being conducted in a manner prejudicial to public interest or oppressive to any member or members and it was eminently desirable that the CLB passed an order with a view to bringing to an end the matters complained of. Taking up both the petitions together for hearing would have given an opportunity to the CLB to see the points of view of both the sides in order to arrive at a just decision. Therefore, impugned order passed by the CLB should be set-aside. I hold accordingly and remand the matter to the CLB which will now deal with the petitions filed by the appellants herein under Section 397 and 398 and dispose them of on merits and in accordance with law - Decided in favour of Petitioner.

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• 2014 (1) TMI 633
  Appointment of Court receiver - Jurisdiction of Court - whether this application filed under section 9 of the Arbitration & Conciliation Act, 1996, is maintainable - Held that:- Even in the petition it was averred that this court had jurisdiction to entertain that petition. The petitioner was a party respondent to the said petition. It was prayed in the said petition that pending constitution of arbitral tribunal, arbitral proceedings adjudication and disposal of all disputes between the petitioner and respondent no. 1 (petitioner herein) by the arbitral tribunal by an award, Standard Chartered Bank should be restrained from releasing Rs.10 Crores. It is thus clear that both the parties have proceeded on the premise that not only Gujarat Court had jurisdiction but this court also has jurisdiction to entertain the proceedings arising between the parties - Therefore, court had jurisdiction to entertain try and dispose of this petition. There was no application filed by the petitioner under section 11 before Gujarat High Court in so far as the said “SSA” is concerned and thus question of applicability of section 42 of the Arbitration & Conciliation Act in respect thereof would thus not apply in respect of the subject matter of the said “SSA” - prima facie company had received notices from various authorities for payment of labour cess, income tax, entry tax liability, service tax liability, ESIS for the period subsequent to the date of the execution of the said two agreements - The demand from all such authorities is substantial amount as brought on record in the arbitration petition - Even if some part of the claim made by the petitioner before the arbitral tribunal is for damages, other than claims made arising out of notice of demand/claim made by various parties, claim made by the petitioner arising out of such notice of demand for payment of statutory dues is also substantial. Having taken prima facie view that respondent nos. 1 to 4 would be liable to reimburse the petitioner in respect of the said claims, in my view the petitioner's claim is liable to be protected/secured at least in respect of the said demand made by the parties against the said company. This court in my view has ample power under section 9 of the Arbitration and Conciliation Act, 1996 to grant interim measures even in respect of the properties which are not subject matter of the dispute in arbitration Claim made by the petitioner can be disproportionate to the consideration paid by the petitioner to respondent nos. 1 to 4 for acquisition of shares of the said company - prima facie, petitioners have good chance of succeeding in the arbitration proceedings and if the interim measures are not granted so as to secure the claim of the petitioner, even if the petitioner succeeds in arbitration proceedings, petitioner would not be able to recover any amount from respondents - Decided against Petitioner.

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• Service Tax

• 2014 (1) TMI 671
  Waiver of pre-deposit - Stay of recovery - Denial of CENVAT Credit - Credit taken on reimbursable expenses - Whether the services rendered by M/s. GHL to the appellant could be considered as input services within the ambit of the definition under Rule 2(l) of the CCR 2004 - Held that:- documents on the basis of which the credit in question was taken are styled as invoices but these documents do not show the description of the services. They merely mention the amount of expenses reimbursed during the period specified therein and the service tax paid thereon. However, in the annexures to the so-called invoices, the particulars of the expenses are seen stated. On a perusal of such particulars, we find that M/s. GHL appear to have paid service tax on a variety of items such as freight, handling charges, postage and telephone charges, rent & lighting, conference expenses, commission and discount, staff welfare, CFA expenses, CFA rent, CFA remuneration, salaries & bonus etc - question has to be examined afresh by the learned Commissioner and, in that process, the finer question regarding the essentiality of the aforesaid expenses for the rendering of BAS also will have to be addressed by way of a closer scrutiny of the annexures to the so-called invoices - Decided in favour of assessee.

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• 2014 (1) TMI 670
  Demand of service tax - Bar of limitation - Invocation of extended period of limitation - Held that:- Once on an issue a show cause notice was issued to the appellant than it was also appellant s duty to inform the Revenue that inspite of earlier show cause notice appellant continued to follow the earlier practice of declaring incorrect value of services in their ST-3 return vis-`-vis balance sheets. Revenue cannot imagine that the appellant will continue to follow a wrong practice inspite of earlier show cause notice issued to them - Following decision of M/s Robot Detective & Security Agency vs CCE., Chennai 2008 (12) TMI 141 - CESTAT, CHENNAI] - Decided against assessee.

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• 2014 (1) TMI 669
  Completion or finished work or renovation or restoration of building or civil structure - Abatement of 67% - Notification No.15/2004-ST dated 10.9.2004 - Bar of limitation - Whether the appellant is eligible for the abatement or not - Held that:- services undertaken by the appellant in this case is under the category of repair, alteration or restoration or similar services in relation to building or civil structures. With effect from 2005, renovation was also added to the definition and in 2007; the activity was also brought under ‘works contract’ but only when the work is undertaken in respect of a new building. Therefore, there is no dispute that the activities undertaken by the appellant are in the category of completion or finished work or renovation or restoration of building or civil structure. The only question that arises is whether the appellant is eligible for the abatement or not. It is noticed that Notification No.15/2004-ST dated 10.9.2004 was the first Notification which provided the benefit of abatement subject to the condition that an assessee should not have availed the benefit of Notification No.12/2003-ST dated 20.6.2003 which provides for exemption to the extent of goods sold during the process of rendering the service subject to conditions - appellants cannot be found fault with if they claimed a bona fide belief that what they were doing was correct. The appellants had taken the registration themselves; were paying service tax regularly; filing returns regularly; moreover the issue as to whether a contract can be divided or not for the purpose of levy of service tax has been referred to 5-Member Bench recently. Reference to 5 member Bench is another important aspect which would show that extended period could not have been invoked in this case - Decided in favour of assessee.

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• 2014 (1) TMI 668
  Demand of service tax - Clearing and forwarding agent service - Held that:- respondent was merely procuring/booking orders for JEWL on payment of commission basis. We also take note of the decision of Larger Bench of Tribunal in case of Larsen & Toubro Ltd. Vs. CCE - [2006 (6) TMI 3 - Appellate Tribunal, New Delhi] in which Tribunal held that persons engaged in mere procurement of orders on commission basis are not covered under clearing and forwarding agent service under Section 65(25) of the Finance Act. Commissioner (Appeals) has set aside the order-in-Original following this decision of Larger Bench of Tribunal - Decided against Revenue.

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• 2014 (1) TMI 667
  Business Auxiliary Service - Management, Maintenance or Repair Service - Sharing of expenditure with group companies - Collection of maintenance charges/deposits from the flat buyers - Held that:- The notice demands tax under clause (ii) of the BAS which relates to promotion or marketing of service provided by the client and under clause (vi) which deals with any incidental or ancillary support service such as billing, collection or recovery of cheques, maintenance of accounts and remittance, inventory management, evaluation of prospective customer or vendor, public relation services, w.e.f. 10/09/2004. By sharing common facilities, the appellant does not promote or market the services of the group companies nor the services rendered can be considered under the category of services incidental or ancillary to the marketing services. In any case, the appellant has been discharging service tax on the said activity under Business Support Services effective from 01/04/2006 and the department has been accepting such payment. Appellant is collecting security/maintenance deposits from the flat owners. Till such time, the flats are actually handed over to the flat owner, the appellant is liable to discharge statutory obligations such as property tax, water charges, electricity charges, etc. under the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, which is a statutory requirement. Since the amount is collected for discharging statutory obligations and amount is utilised for incurring those statutory obligations, it cannot be said that the appellant was rendering management, maintenance or repair service to the flat owners. Further, any excess amount collected, over and above the actual, were reimbursed to the housing cooperative society when the flats were actually given possession and handed over to the flat owners. Thus the appellant was acting as a pure agent and was performing custodial functions. Therefore, the demand of service tax under ‘Management, Maintenance or Repair service' does not appear to be sustainable in law - appellant has made out a strong case in their favour for grant of waiver - Stay granted.

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• 2014 (1) TMI 666
  Valuation of service - Inclusion or otherwise of charges for display of advertisement in the assessable value of the services provided by the appellant - Held that:- amount paid by the advertisement agency for space and time and in getting the advertisement published in the print media or electronic media will not be included in the value of the taxable services for the purpose of levy of service tax. Admittedly, such circulars are binding on the departmental authorities. We further note that the Hon’ble Madras High Court in the case of Adwise Advertising Pvt. Ltd. vs. Union of India [2001 (3) TMI 1 - HIGH COURT (MADRAS)] observed that the amount spent for flashing an advertisement in a particular print media or electronic media, cannot be said to have been paid towards the services rendered by the advertising agency. As such, we find that prima facie, the issue stands covered in favour of the assessee, thus entitling them to unconditional stay - Decided in favour of assessee.

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• 2014 (1) TMI 665
  Export of service or not - Management, maintenance or repair service - Waiver of pre deposit - Held that:- appellant has, prima facie, satisfied the said condition also inasmuch as the benefit of repairs and maintenance was enjoyed by the service recipient only when the vessels were in voyage. However, an amendment to the Export of Service Rules w.e.f. 27/02/2010 is found to be adverse to the appellant inasmuch as, as per this amendment, the service, to be held to have been exported, should have been performed outside India. In the present case, admittedly, the service was performed within India and hence the appellant is liable to pay service tax on the service for the period from 27/02/2010 - Conditional stay granted.

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• 2014 (1) TMI 664
  CENVAT Credit - Interpretation of Input service - Custom clearing agent services, erection and installation services, counter services and credit card services - Held that:- all the services stand considered by various decisions and stand held as eligible input services. However, as regards, catering services, we find that the Hon’ble Bombay High Court in the case of Ultratech [2010 (10) TMI 13 - BOMBAY HIGH COURT], has observed that catering services would be eligible for Cenvat input services only if the assessee is not charging the employees. The learned Advocate has not been able to show any evidence to the above effect and submits that the demand on the above catering services falling within the limitation period is not being contested by him. We accordingly allow the Cenvat credit in all the services except a part of the demand falling within limitation period on catering services - Stay granted.

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• 2014 (1) TMI 663
  Waiver of pre deposit - Demand of service tax - Denial of the benefit claimed under Notification No.31/2010-ST dt. 22/06/2010 - Held that:- whenever the Central Government intended to exempt activities performed by a service provider within ports governed by the provisions of the Indian Ports Act, it was expressly stated so in the relevant notification as is seen from Notification No.41/2010-ST ibid. There is no reference to such ports (including Kakinada) in Notification No.31/2010-ST dt. 22/06/2010 and hence the appellant cannot claim its benefit - Conditional stay granted.

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• 2014 (1) TMI 662
  CENVAT Credit - Service tax paid on premium of insurance policy - Whether the appellant would be eligible for Cenvat credit of the service tax paid on the premium of the above insurance policy - Held that:- appellant who have obtained the accident insurance policy for the workers and paid the premium for the same and this is required to be done in terms of the provisions of the Workmen’s Compensation Act, 1923. Since getting the workers, even if the contract workers, insured is the requirement of the law, insurance service has to be treated as an activity service in or in relation to the manufacture of the finished products and would be covered by definition of input service - Stay granted.

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• Central Excise

• 2014 (1) TMI 632
  Erroneous refund claim granted - Freight and insurance charges to be added in the assessable value or not – Waiver of Pre-deposit – Held that:- As per the terms of the contract, the goods are to be delivered at customer’s place, and freight and insurance charges are part of the transaction value – Following CCE, Chandigarh vs. Punjab Tractors Ltd. [2010 (7) TMI 392 - CESTAT, NEW DELHI] - Prima facie, the Applicant has strong case in their favour – Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 631
  Revenue’s Interest to be taken care of - Classification of goods - Classification of CTPD under 27060090 attracting nil rate of duty OR under 27081010 alleging that the product is not CTPD but PCM - Waiver of Pre-deposit – Held that:- The appellants themselves have accepted that their product now mentioned as CTPD, was previously known as PCM - In disposal of the application seeking waiver of predeposit under Section 35F of the Central Excise Act, 1944, besides, prima-facie case, the interest of revenue is also need to be kept in mind – Following COMMR. OF C. EX., GUNTUR Versus SRI CHAITANYA EDUCATIONAL COMMITTEE [2011 (1) TMI 356 - HIGH COURT ANDHRA PRADESH ] – to meet the ends of justice and keeping in view the interest of Revenue and also the fact that the applicant being a Public Sector Undertaking - the applicants directed to deposit Rupees five crores as pre-deposit – Upon such submission rest of the amount to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 630
  Fake invoices issued – No movement of Steel ingots made Ingots to the second stage dealer – Waiver of Pre-deposit – Held that:- Goods were actually not received since the original dealer has admitted that transactions were not only on paper and there could not have been any movement of the goods – the appellant have not been able to made Prima facie case in their favour – the appellant directed to deposit Rs.24,000 as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 629
  Bar of Limitation - Classification of Goods – Denial of the benefit of Notification No. 3/2006-CE – Waiver of Pre-deposit – Held that:- There was no prima-facie case in favour of appellant - the goods were cleared during the material period are prima facie classifiable under heading 3823 of the CETA schedule - on limitation, they appear to have made out a case inasmuch as the only ground raised in the show-cause notice to invoke the proviso to Section 11A (1) of the Central Excise Act is that the appellant misclassified the goods with intent to evade payment of duty - No mens rea has been attributed to them other than the misclassification - Pre-deposits waived till the disposal – Stay granted.

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• 2014 (1) TMI 628
  Denial of Cenvat credit - MS angles, channels, TMT bars used in civil construction work – Credit taken on Xerox copies of invoices – Waiver of Pre-deposit – Held that:- The appellant is prima facie entitled to claim CENVAT credit on the steel items used in the manufacture of storage tanks inasmuch as an order passed by this bench allowing such credit to another party – relying upon CCE, Bangalore vs. SLR Steels Ltd.[ 2012 (9) TMI 169 - KARNATAKA HIGH COURT ] - The appellant has not made out prima facie case against denial of CENVAT taken on Xerox copies of invoices. However, with regard to CENVAT credit taken on steel items used for fabricating structural support to boiler, pipelines etc. – Following Vandana Global Ltd. Vs. CCE, Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)]- the appellant directed to pre-deposit an amount of Rupees Two crore Ninety Three lakhs as pre-deposits – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 627
  Denial of cenvat credit - SS sheets, Plates, Channels, Bars, Beams - Benefit of exemption under 67/95 - Waiver of Pre-deposit – Held that:- Names of fabricated items and the quantity of HR/SS plates used in fabricating these items have been given - there are several items fabricated by the appellants which appear to be components/accessories and therefore the definition of ‘inputs’ appear to apply for the same - The appellant and their failure to mention the items manufactured within the factory in the ER-1 return would render them ineligible for the CENVAT credit and would make them liable for demand of CENVAT credit availed by them by invoking extended period – Following Vandana Global Ltd. Versus CCE [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] - the amount already deposited by the appellant is sufficient for the purpose of hearing the appeal - the requirement of pre-deposit on balance waived till the disposal – Stay granted.

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• 2014 (1) TMI 626
  Scrutiny of rival claims - Correctness of inclusion and/or exclusion of clearance documents/invoices in the recapitulation statement and consequent discharge of duty – Waiver of Pre-deposit – Held that:- It is a pure question of appreciation of facts and evidences, which could be possible only at the time of hearing of the appeal – the assessee made an offer to deposit Rupees Six Crores as pre-deposits which is accepted – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 625
  Denial of cenvat credit - Calculation of the use of input Naptha - Waiver of Pre-deposit – Held that:- The appellant had periodically submitted the data relating to consumption of input Naptha in their factory as well as sent to M/s HPL Cogeneration Ltd to be used in the generation of electricity and steam - The relevant data relating use of electricity in their factory and at other utilities were submitted and proportionate CENVAT Credit availed on the Naptha had been reversed depending on its use - Prima facie, the data submitted by the applicant were not disputed by the department, but on its interpretation, the department arrived at a conclusion that the amount of CENVAT Credit debited by the Applicant, were not correct - There was no merit that incorrect interpretation of data by the assesse, would result in suppression of fact or mis-statement of fact - the assessee made an offer to deposit Fifteen Lakhs within the normal period is accepted – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2014 (1) TMI 624
  Interpretation of Rule 14 of the CENVAT Credit Rules 2004 – Waiver of Pre-deposit – Held that:- The appellant has no valid grounds to resist the demand of interest - Word or appearing between the expressions taken and utilized in the text of Rule 14 could not be read as and - for levy of interest on an amount of CENVAT credit wrongly taken and subsequently reversed, non-utilization of such credit is immaterial - Whether or not utilized, CENVAT credit in question would carry interest under Rule 14 from the date of taking to the date of reversal – Following UOI and Ors. Versus Ind-Swift Laboratories Ltd. [ 2011 (2) TMI 6 - Supreme Court] - The appellant is directed to pre-deposit the entire amount of interest as pre-deposit – Stay not granted.

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• 2014 (1) TMI 623
  Clandestine removal of goods - MS ingots removed without payment of duty - Waiver of Pre-deposit – Held that:- The proceedings against the show cause notice dated17.05.2005 for demanding duty were dropped by the Tribunal’s order dated 30.08.2007 - The Appellant have explained that for the same cause, the duty has been demanded for the 2nd time - the applicants are able to make out a prima facie case for waiver of amount – pre-deposits waived till the disposal – Stay granted.

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• CST, VAT & Sales Tax

• 2014 (1) TMI 674
  Maintainability of appeal u/s 78 - Held that:- it is required to be noted that what was challenged before the learned Tribunal was the order passed by the Commissioner in exercise of suo motu revisional powers under Section 75 (1)(a) of the Act. The Commissioner did not exercise the revisional powers on any application and as stated above exercise the suo motu revisional powers. Under the circumstances considering Section 75(1)(b) of the Act against the order passed by the Commissioner passed in exercise of suo motu revisional powers only revision application before the learned Appellate Tribunal was maintainable and therefore, as such the learned Appellate Tribunal rightly entertained the revision applications and has rightly passed the impugned judgment and order in exercise of the revisional jurisdiction. That being so considering Section 78(1) of the Act and as the impugned order passed by the learned Appellate Tribunal is passed in revision applications shall not in appeal and therefore, Tax Appeal before this Court under Section 78(1) of the Act would not be maintainable. Considering Section 78(1) of the Act an appeal shall lie to the High Court from every order passed in Appeal by the Tribunal. In view of the above, it is held that the present appeals preferred under Section 78(1) of the Act would not be maintainable - Decided against Revenue.

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• 2014 (1) TMI 672
  Rate of tax - Classification u/s 77 - Interpretation of Motor vehicle - Held that:- “Motor Vehicle” is not specifically mentioned in any of the Schedules to the Act of 2005. A common entry “Plant and machineries of all description” is found at item No.91 of Schedule-III. It is also not in dispute that neither the term “Plant and machinery” nor the term “Motor Vehicle” is defined in the Act of 2005 - motor vehicle is one which transports goods or the passengers. For example, a chassis without a body attached to it is a motor vehicle within the meaning of the Motor Vehicles Act. However, in common parlance no person would ever consider a chassis to be a motor vehicle. So far as the present matter is concerned, none of the aforesaid equipments is meant for or designed to transport goods or passengers - equipments are not the “motor vehicle” as held by the Commissioner of Commercial Taxes under the impugned order dated 24th March 2011. Plant in a common parlance will be a series of machineries, apparatus and the accessories used for the manufacture of the end product. A plant may be a continuous set of machineries or may be divided in segments. But those machineries, apparatus and the accessories all are necessary for manufacture of the end product. There is no dispute that the above referred equipments are indeed used for construction of the roads. Without the said equipments, no business engaged in construction of the roads can function. Even the Road rollers, which undoubtedly ply on the road is a construction equipment insofar as it has no use other than for pressing the soil, grit and tar on the road surface. Without a Road Roller, no road can be completed - Decided in favour of assessee.

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• Indian Laws

• 2014 (1) TMI 661
  Power of the CAG of India to conduct revenue audit of telecommunication companies – Held that:- The bodies or authorities accounts would be subject to an audit by the Comptroller and Auditor General of India would be the ones as suggested by the petitioners and that the private telecom companies would not be the bodies or authorities conceived of by Article 149 of the Constitution of India - the interpretation of every statutory provision must keep pace with changing concepts and values and it must, to the extent to which its language permits or rather does not prohibit, suffer adjustments through judicial interpretation so as to accord with the requirement of the fast changing society which is undergoing rapid social and economic transformation. Under the terms of the licence agreement the licensee has undertaken the accounting responsibility for the Central Government as well as itself - the accounts of the licensees, in relation to the revenue receipts can be said to be the accounts of the Central Government and thus subject to a revenue audit as per Section 16 of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971. Neither Rule 5 of the Telecom Regulatory Authority of India, Service Providers (Maintenance of Books of Accounts and other Documents) Rules, 2002 is ultra vires Section 16 of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971 nor is Section 16 ultra vires Article 149 of the Constitution of India - The Rule and the Section fits perfectly into the constitutional scheme of every rupee flowing into the Consolidated Fund of India, by way of revenue, to be audited by the Comptroller and Auditor General of India - The Rule, the Section and the constitutional provisions as interpreted by us perfectly fit the critical features of the new emerging regulatory State which has to reconstruct institution on the ruins of the club government requiring displacing the key feature of the club with standardization and formality - the provision of systematic information accessible both to insiders and outsiders and strengthening the control mechanism and public reporting – Decided against Petitioner.

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