Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 18, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Highlights / Catch Notes
Income Tax
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Whether excise duty is excluded form value closing stock - while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed - HC
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Penalty under Section 158BFA (2) is not mandatory. - HC
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Whether in cases of negative income the appelant revenue is debarred from filing appeal - Only because clarification came in the subsequent circular dated 15.5.2008, would not mean that previously the Board desired that such appeals should be filtered out - HC
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Computation of long term capital gains (LTCG) - Benefit of indexation - inheritance - The benefit of indexation shall be available from the year when previous owner first acquired it - HC
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Carry forward and set off of unabsorbed depreciation of preceding years - The purpose of legal fiction in section 32(2) is to make the unabsorbed carried forward depreciation partake the same character as the current depreciation in the following year - AT
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Povision created on account of unidentified Motor Third Party claim will not fall under sub-section 115JB(2) Explanation 1(c) - No addition is required to be made while computing the tax liability u/s 115JB - AT
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Activities of the Liaison Office (LO) - assisting the Indian manufacturer to manufacture the goods according to its specification is to see that the said goods manufactured has an international market, therefore, it could be exported - not taxable in India - AT
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Disclosure of sale proceeds deposited in bank account – There is no rule that the amount credited to the Bank A/c. must be taken as income from other sources - AT
Customs
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Evasion of custom duty - Suppression of facts - Non declaration of dutiable goods - Confiscation of 14500 Pound gold and diamond - The petitioners cannot be permitted to take benefit of their-own misrepresentation. - HC
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Even if it is presumed that goods being exported represent a mixed lot of imported and indigenous Flanges then also for imported goods proportionate drawback under Sec 74 of the Customs Act 1962 would be admissible to the appellant. - AT
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Smuggling of gold - Detention under COFEPOSA - Confiscation of goods - In case of smuggling there is no need to apply the same standard of proof. - AT
Corporate Law
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Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it - SC
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Appointment of arbitrator - The designated Judge, while dealing with an application under Section 11(6), on an issue raised with regard to the excepted matters, was not justified in addressing the same on merits whether it is a dispute relating to excepted matters under the agreement in question or not - SC
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Dishonour of Cheque - Failure for repayment of friendly loan - an offence can be compounded at any stage before the sentence, if any awarded to an accused under the provisions of the aforesaid Act is fully executed. - HC
Service Tax
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Delay in payment of service tax - it was the appellant’s claim that the contractor had paid the tax and therefore as a subcontractor he was not liable to pay and even in respect of that amount, the appellant had paid the tax without contesting the same - penalty waived - AT
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If a party files a refund claim on the ground that he had paid the tax on the basis of billed amount but the same had not been received, the refund can be sanctioned after verifying whether the amount has been received or not. - AT
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Levy of service tax on Lease of ropeway installed - appellant had not acted as “tour operator” within the meaning of Section 65(115) of the Act for which the taxing Entry 65(105)(n) thereof is not attracted - AT
Central Excise
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Reversal of Cenvat credit to be made – Capital goods used for manufacturing Briquette which is further utilised for the manufacturing of final product soda ash - stay granted - AT
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Cenvatable invoices issued without clearance of duty-paid goods to their customers – There is no evidence of their customers having been penalized – Penalty imposed on the assessee waived and stayed till the disposal - AT
VAT
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Enhancement in composition rates - Dealing in hides and skins - Tax liability - assessee was not properly advised when he questioned the notifications before the High Court - SC
Case Laws:
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Income Tax
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2014 (1) TMI 816
Penalty u/s 271(1)(c) - Unexplained credit entries - Held that:- The assessee could bring confirmation with regard to 15 transaction but with regard to 5 whose parties became untraceable, the revised return was filed deleting the said entries - The revised return was filed only for the reasons that the dealers belong to a particular community who had left the Town or otherwise refused to give confirmation letter - The assessee opted to surrender the amount to end the litigation - The assessee surrendered the credits appearing in the name of those five persons to by peace and to cooperative with the department - The present is not a case of concealment of particulars of any income of the assessee - Decided against Revenue.
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2014 (1) TMI 815
Transfer of assessment proceedings - Held that:- As per section 127 - The transfer can take place only after sufficient compliance of principles of natural justice - The notice issued to petitioner does not indicate the reasons which have led to the revenue being of the view that the transfer of assessments from Mumbai to Bangalore is necessary for proper investigation - Following Shikshan Prasarak Mandal vs. CIT [2013 (3) TMI 153 - BOMBAY HIGH COURT] - Giving of notice for proposed transfer must contain reasons for the same - This alone would enable a party to respond to the same and satisfy the audi alterm pa rtem rule - The reasons set out by the Commissioner on 29 October 2012 in support of the impugned order dated 2 November 2012 should be treated as a show cause notice and the Petitioner would respond to the same - Decided against assessee.
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2014 (1) TMI 814
Tax effect of appeal - Held that:- None of the circulars presented before us intended to bar the tax appeals even where potential tax effect would be enormous, simply because in the year in question, the assessee had earned negative income - In the circular dated 15.5.2008 it is provided that in the case of loss, notional tax effect should be taken into account - This clarification contained in circular dated 15.5.2008 and absence of any such clarification in the previous circulars, is of no consequence - Such a clause can, at the best, be seen as clarificatory declaration by the Board to put the controversy beyond any shadow of doubt or debate - It cannot be stated that only on and from 15.5.2008 the Board desired that on the basis of notional tax effect in cases of loss the appeals should be filed Only because clarification came in the subsequent circular dated 15.5.2008, would not mean that previously the Board desired that such appeals should be filtered out - The notional tax effect would have to be above the limits prescribed by the Board from time to time for presentation of such appeals - In all these cases since it is stated that the notional tax effect would be higher than the limits prescribed by the Board in different circulars - The Tribunal committed an error in dismissing the Revenue’s appeals as being not maintainable - Decided in favour of Revenue.
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2014 (1) TMI 813
Whether excise duty be included in total turnover for the purpose of Section 80HHC - Held that:- Following Commissioner of IncomeTax vs. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] - Under Section 2(24) of the Act the word "income" includes profits and gains - The charge is not on gross receipts but on profits and gains - Gross receipts or sale proceeds, however, include profits - Such profits have to be got to be ascertained on ordinary principles of commercial trading and accounting - Profits should be computed after deducting the expenses incurred for business though such expenses may not be admissible expressly under the Act, unless such expenses are expressly disallowed by the Act - Therefore, schematic interpretation for making the formula in Section 80HHC workable cannot be ruled out. Just as interest, commission etc. did not emanate from the "turnover", so also excise duty and sales tax did not emanate from such turnover - Since excise duty and sales tax did not involve any such turnover, such taxes had to be excluded - Excise duty and sales tax are indirect taxes. They are recovered by the assessee on behalf of the Government - Decided against Revenue.
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2014 (1) TMI 812
Whether excise duty is excluded form value closing stock - Held that:- Following Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd. [2010 (8) TMI 263 - Gujarat High Court] - the issue / dispute in the present case is with respect to the period prior to amendment in the Act i.e. 1/4/1999 - The duty of Central excise if added to enhance the value of closing stock would result in enhanced opening stock on the first day of the next accounting period - So the next year’s profits would get depressed accordingly - Over a period of time the whole excise would even out, in other words, be revenue neutral. At the same time while disturbing the value of the closing stock the assessing authority could not change the method of accounting regularly employed - Decided against Revenue. Whether interest from Bank Guarantee Deposits, letter of Credit be eligible for deduction u/s 80IA - Held that:- Following Liberty India Vs. Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] - They should be treated as separate items of revenue or income and accounted for accordingly - These cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking - Decided against Revenue. Interest on delayed payments - Held that:- Following Nirma Industries Ltd. Vs. Deputy Commissioner of Income Tax [2006 (2) TMI 92 - GUJARAT High Court] - While computing special deduction under section 80I, interest received from trade debtor towards late payment of sale consideration is to be included in the profits of the industrial undertaking - Decided in favour of revenue.
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2014 (1) TMI 811
Whether amendment to the proviso to sec.43B by the Finance Act, 2003, w.e.f. 01/04/2004 is retrospective nature – Held that:- Following Commissioner of Income Tax Vs. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] - Particularly when the second proviso to Section 43B came to be deleted and there is amendment in first proviso to section 43B, which is held to be operative retrospectively - When the assessee deposited the amount with the department within extended grace period under the Provident Fund Act, the tribunal has not committed any error and/or illegality in holding that the assessee would be entitled to the deduction as claimed – Decided against Revenue. Whether income from duty drawback be excluded from the profits eligible for deduction under Section 80IB – Held that:- Following Liberty India Vs. Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] - Duty drawback receipt and DEPB benefits do not form part of the net profits of eligible industrial undertakings for the purpose of deduction under section 80- I/80-IA/80-IB of the Income Tax Act - Duty drawback receipt and DEPB benefits are incentives which flow from the Scheme framed by the Central Government or from section 75 of the Customs Act, 1962 - Such incentives profits are not profits derived from eligible business under section 80-IB – Decided against assessee.
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2014 (1) TMI 810
Penalty u/s 158BFA - Held that:- Held that:- Following Commissioner of Income Tax v. Becharbhai P. Parmar [2012 (4) TMI 418 - GUJARAT HIGH COURT] - It is true that Section 273B of the Act which provides that penalty shall not be imposed in certain cases on the assessee proving that there was reasonable cause for failure to pay tax refers to several provisions such as Section 271, 271A, etc., makes no mention of Section 158BFA(2) - This still does not mean that penalty under Section 158BFA(2) is mandatory - Penalty under Section 158BFA (2) is not mandatory. The Tribunal has not looked into the aspect of quantum of penalty - The issue has been restored for fresh adjudication.
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2014 (1) TMI 809
Whether in cases of negative income the appelant revenue is debarred from filing appeal - Held that:- The circulars issued prior to 15.5.2008 provided for different conditions on which the Revenue could prefer appeals before the Tribunal and Courts which included the monetary limits specified from time to time - None of these circulars provided that by virtue of assessment of loss by the Assessing Officer, different from that declared by the assessee, even if the possible tax effect is huge, no appeals should be presented before the Tribunal, High Court or the Supreme Court; merely because ultimately the income of the assessee was negative. By virtue of subsequent clarifications contained in circulars dated 15.5.2008 and 9.2.2011 the position prevailing prior to such circulars gets amplified - In cases of loss returns, notional tax effect should be taken into account - This clarification, contained in circular dated 15.5.2008 and absence of any such clarification in the previous circulars, is of no consequence - Such a clause can be seen as clarificatory declaration by the Board - Only because clarification came in the subsequent circular dated 15.5.2008, would not mean that previously the Board desired that such appeals should be filtered out - Decided in favour of Revenue.
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2014 (1) TMI 808
Whether excise duty be included in total turnover for the purpose of Section 80HHC – Held that:- Following Commissioner of IncomeTax vs. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] - Under Section 2(24) of the Act the word "income" includes profits and gains - The charge is not on gross receipts but on profits and gains - Gross receipts or sale proceeds, however, include profits - Such profits have to be got to be ascertained on ordinary principles of commercial trading and accounting - Profits should be computed after deducting the expenses incurred for business though such expenses may not be admissible expressly under the Act, unless such expenses are expressly disallowed by the Act - Therefore, schematic interpretation for making the formula in Section 80HHC workable cannot be ruled out. Just as interest, commission etc. did not emanate from the "turnover", so also excise duty and sales tax did not emanate from such turnover - Since excise duty and sales tax did not involve any such turnover, such taxes had to be excluded - Excise duty and sales tax are indirect taxes. They are recovered by the assessee on behalf of the Government - Decided against Revenue.
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2014 (1) TMI 807
Whether penalty u/s 271(1)(c) be levied in case of negative income - Held that:- Following Income Tax vs. Gold Coin Health Food Pvt. Ltd. [2008 (8) TMI 5 - SUPREME COURT] - Explanation 4(a) to section 271(1)(c)(iii) intended to levy penalty not only in a case where after addition of concealed income, a loss returned, after assessment becomes positive income, but also in a case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss or a minus figure - The learned ITAT has not gone into other grounds and has not entered into the merits of the case whether penalty order is justified or not more particularly when the assessee had not preferred the appeal against the quantum additions - The issue has been restored for fresh adjudication at Tribunal level.
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2014 (1) TMI 806
Benefit of indexation - inheritance - Cost Inflation Index of the year in which the said bungalow was constructed or of the year in which the said passage of ownership of bungalow were passed on her in the year after the demise of her husband - Held that:- Following CIT vs. Manjula J Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] - The benefit of indexation shall be available from the year when previous owner first acquired it - If expression "held by assessee" interpreted differently to give benefit of indexation from the period when assessee acquired it, would defeat the purpose of statute - If the object of the legislature is to tax the gains arising on transfer of a capital acquired under a gift or will by including the period for which the said asset was held by the previous owner in determining the period for which the said asset was held by the assessee, then that object cannot be defeated by excluding the period for which the said asset was held by the previous owner while determining the indexed cost of acquisition of that asset to the assessee - Decided against Revenue.
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2014 (1) TMI 805
Penalty u/s 271AAA - Held that:- It is found that the difference between the disclosed income and the assessment was very meagre - There was no material to indiciate that the assessee has not disclosed the proper income - The assessee had offered to show an additional income of 1.21 crores to avoid unnecessary controversy in the matter - The Tribunal came to a finding that the imposition of penalty was bad in law - Decided against Revenue.
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2014 (1) TMI 804
Deduction u/s 10B - Held that:- The assessee has subsequently produced the said documents claiming exemption - Authorities declined the assessee’s claim and proceeded on the assumption that the appellant is not entitled to the benefit - In the remand proceedings the Tribunal has not looked into the documents and has refused to grant exemption sought for by the appellant without looking into the documents whether the certificate enabled the assessee to claim exemption or not and whether the audit report is available - It is settled law, that the documents may be filed before the first appellate authority, which is also justified - Therefore, the authorities having not properly applied their mind to the contentions raised as well as to the statutory provisions has passed the orders in the assesse’s case on two occasions - The issue has been restored for fresh adjudication.
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2014 (1) TMI 803
Whether the retrospective amendment of law and subsequent judgment of apex court be a basis for reopening for assessment u/s 147 - Held that:- The assessee cannot be blamed for filing a return by contemplating a possible amendment to Section 80-HHC of the Act - One cannot state that there was an escaped assessment of tax which could be reopened within a period of four years from the end of the relevant assessment year - Subsequent amendments or subsequent interpretation of the statute is not a ground to reopen concluded transactions - Decided against Revenue.
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2014 (1) TMI 802
Carry forward and set off of unabsorbed depreciation of preceding years - Held that:- Following CIT v. Virmani Industries (P.) Ltd. [1995 (10) TMI 1 - SUPREME Court] - As per section 32(2) - The depreciation allowance for the current year to which full effect cannot be given due to the paucity of profit, has been referred to as "Unabsorbed depreciation allowance" - This is so that unabsorbed depreciation allowance for the assessment years 1997-98 to 2001-02 strictly comes under section 32(2) with a special name and character of 'Unabsorbed depreciation allowance' changing its situation from section 32(1) - The purpose of legal fiction in section 32(2) is to make the unabsorbed carried forward depreciation partake the same character as the current depreciation in the following year - The object of the provision is to treat the whole or part of the depreciation allowance under section 32(1), which could not be adjusted in the first year, as the current depreciation under section 32(1) in the second year and so on - Decided in favour of assessee.
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2014 (1) TMI 801
Applicability of Rule 8D - Held that:- Following Godrej & Boyce Mfg. Co. Ltd. vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Applicability of Rule 8D of the Rules is prospective and not retrospective w.e.f. assessment year 2008-09 - A.O. was directed to recompute the disallowance in case there is a nexus for expenses with exempt income - The disallowance u/s 14A of the Act was restricted to 1% of total exempt income - Partly allowed in favour of assessee. Computation of book profit u/s. 115JB with regard to provisions of unidentified third party claim of motor accident - Held that:- Following assessee's own case for A.Y. 2001-02 - The povision created on account of unidentified Motor Third Party claim will not fall under sub-section 115JB(2) Explanation 1(c) of the I T Act - No addition is required to be made while computing the tax liability u/s 115JB of the I.T. Act - Decided in favour of assessee.
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2014 (1) TMI 800
Validity of order passed u/s 263 - Held that:- Sec. 263 makes it clear that the pre-requisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the AO is erroneous in so far as it is prejudicial to the interests of the Revenue - Once the business income has been accepted, it proves beyond all reasonable doubts that the business has been set up - The assessee is lawfully entitled to claim all business expenditure and allowances - The AO has allowed depreciation after examining the depreciation chart filed by the assessee - The AO must have been satisfied with the claim of depreciation vis-à-vis set up of business vis-à-vis business income - The order of the AO may be brief and cryptic but that by itself is not sufficient reason to brand the assessment order as erroneous and prejudicial to the interest of the Revenue - Writing an order in detail may be a legal requirement but the order not fulfilling this requirement cannot be said to be erroneous and prejudicial to the interest of the Revenue. The AO has adopted a course permissible in law backed by facts and judicial decisions and the AO has taken one view with which the Commissioner does not agree - The order of the assessment cannot be treated as erroneous order and prejudicial to the interest of the Revenue unless the view taken by the AO is unsustainable in law or on facts – Following CIT VS Max India Ltd [2007 (11) TMI 12 - Supreme Court of India] - The order of CIT is set aside and that of the AO. Is restored - Decided in favour of assessee.
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2014 (1) TMI 799
Income deemed to accrue or arise in India - Activities of the Liaison Office (LO) - Non Resident - Section 9(1)(i) - assisting the Indian manufacturer to manufacture the goods according to its specification is to see that the said goods manufactured has an international market, therefore, it could be exported - Held that:- Following Nike Inc v. ACIT [2013 (8) TMI 194 - KARNATAKA HIGH COURT] – The assessee is enabling the manufacturer to purchase goods of a particular specification which is required by a foreign buyer to whom the manufacturer sells - As the orders are placed by the assessee with the manufacturer and the goods are manufactured according to its specification which is the requirement of the buyer and even if it is held, though the goods are supplied to the buyer, it is deemed to be supplied to the assessee, the whole object of this transaction is to purchase goods for the purpose of export - Once the entire operations are confined to the purchase of goods in India for the purpose of export, the income derived there from shall not be deemed to accrue or arise in India and it shall not be deemed to be an income under section 9 - If one keeps the object with which the proviso to clause (b) of Explanation 1 to section 9(1)(i) was deleted, the object is to encourage exports thereby the country can earn foreign exchange - The activities of the assessee is assisting the Indian manufacturer to manufacture the goods according to its specification is to see that the said goods manufactured has an international market, therefore, it could be exported - In the process, the assessee is not earning any income in India - If at all it is earning income outside India under a contract which is entered outside India, no part of its income could be taxed in India either under section 5 or section 9. Explanation 1(b) to s. 9(1)(i) of the Act is clearly applicable to the assessee's case - No income was derived by the assessee in India through its operations as LO in India. It is ordered accordingly – Decided in favour of assessee.
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2014 (1) TMI 798
Disclosure of sale proceeds deposited in bank account – Held that:- No material was found during search to suggest that the impugned receipts are from any other source, then it is natural to infer that the assessee had deposited business receipts only into the Bank A/c - There is no clear evidence to suggest that the assessee deposited the amounts into the account of Andhra Bank from any sources other than business receipts - The assessee's only plea since beginning is that the deposits in the Andhra Bank A/c. represent sale proceeds of the assessee - Unless and until the Department locates any particular source of income, it has to be treated as business receipt of the assessee - The entries found in the Bank A/c. may be assessed as business profit or as income from other sources, as the case may be - There is no rule that the amount credited to the Bank A/c. must be taken as income from other sources - It always depends upon the evidence and explanation furnished by the assessee - It is appropriate to estimate the income at the same rate of net profit as applied to the undisclosed turnover of the assessee i.e., at 15% instead of 100% as considered by the AO – Decided in favour of assessee.
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2014 (1) TMI 797
Penalty u/s 271(1)(b) - Held that:- There was service of notice u/s 142(1) through affixture of notice at the residential premises of the assessee - The Department could not serve the notice through speed post as the same were returned by the Postal Authority with the remarks "Left" - This clearly indicates that at the relevant time the assessee was not residing at the said address - This is not a fit case for levying penalty u/s 271(1)(b) of the Income-tax Act, 1961 - Therefore, penalty of Rs.10,000/- levied by the Assessing Officer u/s 271(1)(b) of the Income-tax is hereby cancelled – Decided in favour of assessee.
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Customs
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2014 (1) TMI 795
Evasion of custom duty - Suppression of facts - Non declaration of dutiable goods - Confiscation of 14500 Pound gold and diamond - Imposition of redemption fine - Held that:- Bill which was found from the possession of the petitioner No.2 - Meenaben Ashokkumar Patel, the valuation of the jewellery in question is mentioned as 14,500 British Pounds. Not only that even the VAT refund was received from the British authority considering the valuation of the jewellery in question at 14,500 British Pound. Under the circumstances, when the very petitioners for the purpose of getting VAT Refund from the British authority put the valuation of the jewellery in question at 14,500 British Pound, thereafter it is not open for them to contend that the valuation of the jewellery in question is less. The petitioners cannot be permitted to take benefit of their-own misrepresentation. If the contention on behalf of the petitioner is accepted, it would be giving a premium to such a dishonesty on the part of the petitioners of putting higher valuation for the purpose of getting VAT refund from the British Authority and the same would tantamount to giving a premium to the illegality committed by the petitioners. In the facts and circumstances of the case and considering the Bill No.p 21288 dtd. 26/6/2010 issued by M/s. P.B.L. Jewellers Ltd. in the name of Meenaben A. Patel -petitioner No.2 herein, for the purchase of the jewellery in question, which was found from the possession of the petitioner No.2 and considering the valuation mentioned therein, no illegality has been committed by the authorities below in considering the valuation of the jewellery in question at 14,500 British Pound and consequently no error and/or has been committed in passing the order of confiscation and redemption - Decided against assessee.
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2014 (1) TMI 794
Denial of drawback claim - reexport of goods - Imposition of redemption fine and penalty - Confiscation u/s 113 - Penalty u/s 114(iii) - Held that:- appellants have furnished detailed re-conciliation statements, tally sheets and the records maintained by them to the lower authorities. These records establish a continuous link from the time of filing the bills of entry to the processing activities done and their re-export. These details include supplier name, number of pieces, appellant heat number, test number, lot number etc. Tally sheet and chartered engineers certificate is also furnished to that effect. It is not distinguished by the adjudicating authority as to why the documentary evidence produced by the appellant are not acceptable. There are no allegations of diversion of imported goods. It is also not the claim of the Revenue that 100% goods being exported are of indigenous manufacture. Even if it is presumed that goods being exported represent a mixed lot of imported and indigenous Flanges then also for imported goods proportionate drawback under Sec 74 of the Customs Act 1962 would be admissible to the appellant. Burden of proof to establish the indigenous nature of goods and the extent being exported lies with the investigation and an exporter cannot be denied the export incentives on the basis of presumptions/doubts raised by some statements for which even no cross examination was extended to the appellants. From the perusal of the case records, it has not been declared by the appellant in the customs documents filed before the Revenue that goods being exported are manufactured in India. On the contrary, appellant has always claimed it to be a case of re-export of imported goods under claims of Sec. 74 drawback. Therefore, confiscation of export goods under Sec 113 of the Customs Act 1962 and imposition of redemption fine is not justified and needs to be set aside. Penalties imposed upon the appellants under Sec. 114(iii) are also required to be set aside - Decided in favour of assessee.
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2014 (1) TMI 793
Smuggling of gold - Detention under COFEPOSA - Confiscation of goods - Held that:- statement of the appellant and also of the co-accused during investigation given before the customs officers which pointed out towards appellant as the person who played a major role in the smuggling activity - As regards the material discrepancy based on House Airway Bills produced by B. Ramu on 14-09-2001 and supplied to the appellant as part of all the documents collected during investigation, we agree with the argument of Revenue that these documents are not prima facie genuine documents because if it is accepted it would appear that the gold worth Rs.56.27 lakhs each in the two consignments remained concealed and idle for the period of over 2 months in the custody of cargo agents which will not happen in the normal course of smuggling. Further the Master Airway Bills do not show any co-relation to the documents produced though the documents produced show the number of Master Airway Bill. In case of smuggling there is no need to apply the same standard of proof. In this case, statement of the accused is corroborated by statement of others who were involved in the activity - Shri Natesan Rajaramu and Shri Santha Padaiyachi Ramaswamy were not the main persons responsible for the impugned smuggling because they had no knowledge of concealment of gold in the goods. The main persons were in fact the Shri. Mohamed Rawthar and the appellant. Shri. Mohamed Rawthar could not be traced and hence proceedings against him is kept in abeyance. The appellant who had knowledge about the said person did not provide any information to trace the said person. There is no reason for giving any benefit to the appellant for having successfully shielded that person - Decided against assessee.
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2014 (1) TMI 792
Request for information - Right to information - Held that:- information requested for by the appellant is fully and entirely disclosable to him. Hence, the Commissioner of Customs (General), Mumbai, is hereby directed to provide para-wise information to the appellant through his CPIO - statistical information is also disclosable under the provisions of the RTI Act. Hence, the Commissioner of Customs (Gen.), Mumbai, hereby directed to disclose this information also to the appellant, free of cost - Decided in favour of appellant.
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2014 (1) TMI 791
Valuation of goods - Misdeclaration of goods - Confiscation of goods - Held that:- declared description of the goods was ceiling light complete with tubes, gate lights, coconut trees etc. and the goods on examination were found to be as per declaration. As regards the allegation of misdeclaration of value, we find that the main basis for not accepting the declared value is that the per kg. price of the goods is less than the average price of the raw materials - plastic, glass, steel, etc. However, the department has neither in a show cause notice nor in order-in-original nor the impugned order-in-appeal has clarified as to whether the prices of the raw materials mentioned are the price in India or the prices in China and if so, what is the source for this information and also what is the cost of manufacture of these items in China, as these goods are of Chinese Origin. For making the allegation of under-valuation and rejecting the declared transaction value, the department cannot adopt the price of raw materials of the goods in India and allege that the declared price of the goods is less than the average price of the raw materials. No iota of evidence in support of the department's allegation of misdeclaration of value and absolutely no evidence of contemporaneous import of identical or similar goods in comparable quantity at higher price had been produced. Just because the partner of the importer firm agrees for determination of the value under Rule 7 of the Valuation Rules, the department cannot allege that the value has been mis-declared. Moreover, the determination of value under Rule 7 has also been done in a very strange manner, as the department has not mentioned as to which the importer of identical or similar goods had been selling the goods in India at the wholesale price which had been adopted in this case for determination of assessable value under Rule 7. In view of these circumstances, we hold that there is absolutely no basis for rejecting the declared transaction value and making the allegation of under-valuation against the appellant - Therefore, neither the duty demand on the basis of upward revision of assessable value nor the confiscation of the goods under Section 111(m) for alleged misdeclaration of value of the goods is sustainable - Decided in favour of assessee.
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2014 (1) TMI 790
Duty demand - Import of Heavy Melting Scrap of iron - Notification No. 21/2002-Cus., dated 1-3-2002 - Submission of end-use certificate for partial amount imported - Held that:- letters, give reference to selling of metal scrap having received under the cover of Bill of Entry No. 00500, dated 24-9-2005 i.e. the same Bill of Entry under which the appellant imported the goods. The requirement of the notification is that the goods should be used for the purpose of melting and jurisdictional Central Excise Officer, under whose jurisdiction the said goods have been so used in such unit, end-use certificate should be produced by the appellant. It is seen that the appellant have applied for issue of such certificate to their jurisdictional Excise Officers. It is not responded by the proper officer. Issue of end-use certificate is in the hands of proper officer after necessary verification and manufacturer concerned having made application, cannot do anything beyond that - impugned order is set aside and remand the matter to the adjudicating authority for afresh decision. Needless to say that the appellant shall produce the application made by their buyers before their jurisdictional authority, who after ascertaining the fact would issue end-use certificate. If not issued, he may call for report from the concerned officer for not issuing the said certificate till date i.e. even after lapse of five years - Decided in favour of assessee.
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Corporate Laws
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2014 (1) TMI 830
Nature and scope of Section 45 of Arbitration agreement - Several agreements entered between parties - All parties to agreement are not same - Some agreement contain arbitration clause whereas some do not - Whether dispute between parties can be referred to arbitration - High Court denied to adjudicate dispute and referred it for Arbitration - Held that:- Within ambit and scope of Section 45 of 1996 Act, multiple agreements, where some contain an arbitration clause and others don’t, a composite reference to arbitration is not permissible. There has to be clear intention of parties to refer dispute to arbitration - If parties are referred to arbitration and award is made under these provisions of Convention, then it shall be binding and enforceable in accordance with provisions of Sections 46 to 49 of 1996 Act. In Section 45, expression ‘any person’ clearly refers to legislative intent of enlarging scope of words beyond ‘parties’ who are signatory to arbitration agreement. Of course, such applicant should claim through or under signatory party. Once this link is established, then Court shall refer them to arbitration. Use of word ‘shall’ would have to be given its proper meaning and cannot be equated with word ‘may’, as liberally understood in its common parlance. Expression ‘shall’ in language of Section 45 is intended to require Court to necessarily make a reference to arbitration, if conditions of this provision are satisfied. Right to reference is a legal right which has its own contours and is not an absolute right, free of any obligations/limitations - Normally, arbitration takes place between persons who have, from outset, been parties to both arbitration agreement as well as substantive contract underlining that agreement. But, it does occasionally happen that claim is made against or by someone who is not originally named as a party. These may create some difficult situations, but certainly, they are not absolute obstructions to law/ arbitration agreement. Arbitration, thus, could be possible between a signatory to an arbitration agreement and a third party. A non-signatory or third party could be subjected to arbitration without their prior consent, but this would only be in exceptional cases. Transaction should be of a composite nature where performance of mother agreement may not be feasible without aid, execution and performance of supplementary or ancillary agreements, for achieving common object and collectively having bearing on dispute. Besides all this, Court would have to examine whether a composite reference of such parties would serve ends of justice. Once this exercise is completed and Court answers same in affirmative, reference of even non-signatory parties would fall within exception afore-discussed. Provisions of Section 45 cannot be effectively applied or even invoked. Unlike Section 24 of 1940 Act, less than 1996 Act Court has not been given power to refer to arbitration some of parties from amongst parties to suit. Section 24 of 1940 Act vested Court with discretion that where Court thought fit, it could refer such matters and parties to arbitration provided same could be separated from rest of subject matter of suit. Absence of such provision in 1996 Act clearly suggests that Legislature intended not to permit bifurcated or partial references of dispute or parties to arbitration. Without prejudice to this contention, it was also argument that it would not be appropriate and even permissible to make reference to arbitration when issues and parties in action are not covered by arbitration agreement. Corporate structure of Companies involved in present litigation clearly shows that name of Capital Control Company Inc., incorporated in year 1994, and was changed to Severn Trent Water Purification Inc. with effect from April, 2002. Thus, both these companies together were subsidiaries of holding company Severn Trent Services (Delaware) Inc. Joint venture agreement was executed between Chloro Control (India) Pvt. Ltd. and erstwhile Capital Control Company Inc. resulting into creation of joint venture company, Capital Control (India) Pvt. Ltd. Principal Agreement specifically referred to various agreements or even terms and conditions thereof. Clause 7 of agreement provided for execution of International Distributor Agreement which was Appendix II to this Agreement. Financial and Technical Know-how License Agreement was executed in furtherance to clause 14 thereof. Similarly, Trademark Registered User License Agreement was required to be executed between parties in terms of clause 15 of this Agreement. Other terms and conditions of Principal Agreement referred to management of company by appointment or reappointment of Directors or Managing Directors inasmuch as Clause 8.6 contemplated execution of agreement which was appended as Appendix III. Still, certain other clauses of Principal Agreement specifically dealt with sale of goods manufactured by joint venture Company, nationally and internationally. This resulted in signing of International Distribution and Export Sales Agreement between parties. May be all parties to lis are not signatory to all agreements in question, but still they would be covered under expression ‘claiming through or under’ parties to agreement. Interests of these companies are not adverse to interest of principal company and/or Joint Venture Company. On contrary, they derive their basic interest and enforceability from Mother Agreement and performance of all other agreements by respective parties had to fall in line with contents of Principal Agreement - some agreements contain arbitration clause, while others don’t. Shareholders Agreement, Financial and Technical Knowhow License Agreement and Export Sales Agreement contain arbitration clause, while International Distributor Agreement, Managing Directors Agreement and Trade Mark Registered User Agreement do not contain arbitration clause. Arbitration clause contained under clause 30 of Shareholders Agreement and that under clause 26 of Financial and Technical Knowhow License Agreement are identical. They both require disputes to be referred to arbitration in London as per ICC Rules. However, arbitration clause contained in clause 18 of Export Sales Agreement provides for reference of disputes to arbitration at Pennsylvania, USA, in accordance with rules of American Arbitration Association. Disputes referred to and arising from multi-party agreements are capable of being referred to arbitral tribunal in accordance with agreement between parties - Expression ‘person claiming through or under’ would mean and take within its ambit multiple and multi-party agreements, though in exceptional case. Reference of non-signatory parties is neither unknown to arbitration jurisprudence nor is it impermissible - Court is always vested with power to delete name of parties who are neither necessary nor proper to proceedings before Court. In cases of group companies or where various agreements constitute a composite transaction like mother agreement and all other agreements being ancillary to and for effective and complete implementation of Mother Agreement, court may have to make reference to arbitration even of disputes existing between signatory or even non-signatory parties. However, discretion of Court has to be exercised in exceptional, limiting, befitting and cases of necessity and very cautiously - Therefore, it is held that dispute can be referred to arbitration - Decision of High Court upheld - Decided against Appellant.
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2014 (1) TMI 789
Appointment of arbitrator - Appointment of expert by High Court - Billing Dispute - Dispute arose between the parties relating to amounts that is due and payable - High Court rejected to decided dispute - Held that:- Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it - as observed in Union of India v. Amrit Lal Manchanda and another [2004 (2) TMI 361 - SUPREME COURT OF INDIA]. The learned Judges have referred to paragraph 19 of SBP & Co. (2005 (10) TMI 495 - SUPREME COURT) and thereafter referred to Section 8 of the Act and opined what the judicial authority should decide. Thereafter the Court proceeded to deal with nature and scope of the issues arising for consideration in an application under Section 11 of the Act for appointment of the arbitrator While considering an application under Section 11 of the Act, the Chief Justice or his designate would not embark upon an examination of the issue of “arbitrability” or appropriateness of adjudication by a private forum, once he finds that there was an arbitration agreement between or among the parties, and would leave the issue of arbitrability for the decision of the Arbitral Tribunal. If the arbitrator wrongly holds that the dispute is arbitrable, the aggrieved party will have to challenge the award by filing an application under Section 34 of the Act, relying upon sub-section (2)(b)(i) of that section. The decisions rendered in Boghara Polyfab Private Limited (2008 (9) TMI 864 - SUPREME COURT) and Chloro Controls India Private Limited are in accord with the principles of law stated in SBP & Co. The designated Judge, as perceived from the impugned order, while dealing with an application under Section 11(6) of the Act, on an issue raised with regard to the excepted matters, was not justified in addressing the same on merits whether it is a dispute relating to excepted matters under the agreement in question or not. The designated Judge has fallen into error by opining that the disputes raised are not “billing disputes”, for the same should have been left to be adjudicated by the learned Arbitrator. The part of the order impugned that reflects the expression of opinion by the designate of the Chief Justice on the merits of the disputes, being pregnable, deserves to be set aside and is hereby set aside.
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2014 (1) TMI 788
Dishonour of Cheque - Failure for repayment of friendly loan - Metropolitan Magistrate acquitted the respondent - Compounding of interest - Settlement outside the Court - Held that:- in view of the non obstante clause contained in the Section, the restrictions and limitations prescribed under the Code of Criminal Procedure with respect to compounding of offences would not be applicable as far as compounding of an offence punishable under the provisions of the aforesaid Act is concerned. Consequently, such an offence can be compounded at any stage before the sentence, if any awarded to an accused under the provisions of the aforesaid Act is fully executed. Hence, there is no legal bar to the compounding of such an offence, either during or even after disposal of an appeal filed either by the accused or by the complainant. Since Section 147 of the N.I. Act does not require permission of the Court for compounding such an offence , no such permission is necessary and the parties therefore can enter into a compromise outside the Court and then get the same recorded in the Court at any point of time before the sentence is fully executed - considering the settlement between the parties, the respondent before this court is acquitted of the charge under Section 138 of the N.I. Act, subject to her depositing 15% of the cheque amount by way of costs with Delhi Legal Services Authority within one month - Appeal disposed of.
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FEMA
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2014 (1) TMI 796
Failure to take steps for realization of export outstanding - Maintanability of appeal - Section 52 of FERA or Section 19 of FEMA - Held that:- Merely because the proviso provides for deposit of penalty while preferring appeal against the order imposing penalty, cannot be said to limit the wide amplitude of the main provision providing for appeal “by any person aggrieved from any order made by the adjudicating authority”. “Any order” would include an order exonerating some of the noticees. Reference may also be made to Section 49(4) of FEMA, being a transitory provision providing for the cases governed by FERA to be continued to be governed by the said Act notwithstanding the repeal thereof. In this regard, it may also be noted that the order dated 26th September, 2003 of the Enforcement Directorate also records the same to have been made under the provisions of the FERA and not under the provisions of FEMA. Once it is held that the grievance as raised in this petition is appealable and once it is admitted that appeal indeed was preferred, this writ petition would definitely be not maintainable - Even if the Appellate Tribunal has not returned any findings on the grievances raised by the petitioner qua the exoneration of the respondents No.3&4, the dismissal of the appeal indicates that the said grievance has also been negatived - If the petitioner is aggrieved of the order of the Appellate Tribunal, she has remedies thereagainst and cannot pursue this petition qua the order which has been subject matter of appeal - Decided against Petitioner.
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Service Tax
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2014 (1) TMI 827
Delay in payment of service tax - Industrial and Commercial Construction Service - Penalty u/s 76 - Suppression of facts - Held that:- Tax was paid before the issue of the Show Cause Notice. There is no suppression of fact alleged against the appellant and the duty along with interest has been paid before the issue of Show Cause Notice. Therefore, provisions of Section 73(3) is applicable in this case and there was no case for issue of Show Cause Notice and imposition of penalty - Decided in favour of assessee.
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2014 (1) TMI 826
Delay in payment of service tax - Stevedoring and C&F Agents service - Storage and Warehousing - Payment made before issue of SCN - Penalty u/s 76 & 77 - Held that:- in this case there is no allegation of any suppression or misrepresentation in the SCN and no penalty was proposed or imposed under section 78. In such a situation, any element which would bar the provisions under section 73 (3) cannot be considered to have existed - Revenue did not deal with a situation where tax amount and interest amounts have been paid before issue of SCN. In the present case, payment made should have been accepted for final closure of the dispute - Since the appellant has not filed ST-3 returns for other services either I do not find any reason to interfere with the penalty imposed under Section 77 - appeal partially allowed by setting aside penalty imposed under Section 76 but confirming the penalty imposed under Section 77 - Decided partially in favour of assessee.
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2014 (1) TMI 825
Penalty for Delay in payment of service tax - sub contractor - Erection, Commissioning and Installation - Invocation u/s 80 - Held that:- due to substantial Confusion/ambiguity on the taxability assessee delayed in filing the service tax returns and there was no intention to suppress the fact and evade service tax liability. He also stated that as an honest tax payer, he had discharged the service tax liability including interest before the issue of show-cause notice and requested that the same may be taken into consideration - respondent is a proprietary concern and admittedly, it was the first year of introduction of service tax on the services rendered by him. Having regard to the fact that it is a proprietary concern and the service tax was paid immediately and in respect of almost Rs.2 lakhs, it was the appellant’s claim that the contractor had paid the tax and therefore as a subcontractor he was not liable to pay and even in respect of that amount, the appellant had paid the tax without contesting the same, I find that this is a case where the Commissioner (A) has correctly invoked the provision of Section 80 of the Finance Act, 1994 - Decided against Revenue.
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2014 (1) TMI 824
Denial of Refund claim - Notification No.15/2009 - Held that:- refund can be allowed if exemption has not been claimed - appellant has produced the certificate/declaration of the services having been received by the SEZ unit just because the address of the receiver has been mentioned wrongly, in my opinion, credit could not have been denied and benefit of provision of Rule 9(2) of CENVAT Credit Rules, should have been allowed - The appellants are advised to produce necessary evidence to show that service tax has been paid under the categories by the service providers and these services are listed in the list of authorized services. If this is done, in my opinion even though invoice mentions the services as ‘garden maintenance’ and ‘waste disposal’, if service tax has been paid under the category of services listed in the services of the SEZ, benefit should be allowed. Claimant of the refund is required to show that he has paid the service tax to the service provider/to the Government as the case may be. The appellant had not provided any evidence. Learned Chartered Accountant submits that initially they did not produce the evidence since bank statements were running into hundreds of pages and they felt it was very voluminous and not required. However, before Commissioner (A) it was produced. However, the Commissioner (A) has not examined the same, since he felt that the appellant was not eligible for refund otherwise. Since, I propose to remand the matter to the original adjudicating authority to examine the refund claim afresh in the light of observations made by me in this order, the bank statements also can be produced before the original adjudicating authority who shall consider the same and satisfy himself that service tax has been paid by the appellant and proceed to consider the refund claim - Decided in favour of assessee.
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2014 (1) TMI 823
Denial of refund claim - Writing off of claims - Held that:- service tax is payable on the receipt of the amount for the services provided. If a party files a refund claim on the ground that he had paid the tax on the basis of billed amount but the same had not been received, the refund can be sanctioned after verifying whether the amount has been received or not. This is because if and when the amount is received, in the concerned month the appellant is duty bound to pay service tax on the amount so collected - even though provisions of section 11B of Central Excise Act, 1944 have been made applicable to service tax matters, the levy of service tax and levy of excise duty are on different basis all together. The liability for excise duty arises as soon as the goods are manufactured and the payment has to be made at the time of removal. That is the reason why even when the goods are destroyed, the duty on goods have to be remitted and if the same is not remitted by the concerned proper officer, the excise duty becomes payable. Therefore, it has to be seen whether the liability to pay has arisen or not. Quite often the write off of a debt takes place after a long time of the event taking place because man lives on hope. There is always a hope that the other person may pay and therefore one chooses to wait for the same. Further, it can be said that there is a legal remedy available and the service provider may choose to file a civil suit against the person who has received the service. Till such civil suit is finalized, the amount may not be written off. We all know how long it takes for civil suits to get finalized in this country - after the order was passed by the learned Commissioner (A), the refund was sanctioned by the concerned refund sanctioning authority and a protective show-cause notice has been issued raising the same grounds which are in the appeal filed by the Revenue. It was also submitted that now the amount has been written off and Chartered Accountant s certificate to that extent is available. If that is the position, the objection taken by the Revenue also gets sorted out. Under these circumstances, the show-cause notice can be decided taking the observations made hereinabove into consideration - Decided against Revenue.
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2014 (1) TMI 822
Denial of CENVAT Credit - Job worker - Guest house facility - whether CENVAT credit could be taken on security services availed by the appellant for guarding the inputs which they had sent to the premises of the job-worker, where the goods were converted into an intermediate product and sent back to the factory of the appellant - whether CENVAT credit can be taken on security services availed at the guest houses maintained by the appellant near their factory for use of their employees during their visit to the factory for doing work relating to manufacture or other business activities - Held that:- credit of tax paid on any input service, used in the manufacture of intermediate products, by a job worker availing the benefit of exemption specified in Notification No. 214/86-C.E. be allowed. I find that the orders relied upon by the departmental representative has not examined the express provision under Rule 3 of Cenvat Credit Rules or the recent clarification dated 19-1-2010 issued by C.B.E. & C. in the matter - there is no reason to deny Cenvat credit of security services utilized by the appellant at the premises of the job workers and paid for by the appellant. Guest house facility is that, which can be utilized both for the personnel engaged in the manufacturing process and business process as well for satisfaction of their personal needs. Since the precedent decisions are to the effect that Cenvat credit cannot be allowed for tax paid for services utilized at guest houses - Decided partly in favour of assessee.
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2014 (1) TMI 821
Waiver of pre-deposit of service tax - Security service - Held that:- applicant are providing security service for consideration to Food Corporation of India, we find that applicant has not made out a fit case for total waiver of Service tax demand - Conditional stay granted.
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2014 (1) TMI 820
Levy of service tax on Lease of ropeway installed - Assessee claims refund of service tax paid because they were of the view that they will not be covered by the definition of tour - whether the appellant is a tour operator - Held that:- Once tourists are not governed by any planning, scheduling, organising or arranging for their journey and not dependent on the licensee appellant for such planning, scheduling, organizing or arranging for their tours but only avails the facility of ropeway provided by appellant licensee during working hours from 6 A.M. to 11 P.M. on payment of fees prescribed by Clause 8 of licence deed, they were not beneficiary of any planning, scheduling or arranging of tours since tour to be taxable has to follow its preceding activities enumerated by Section 65(115) of the Act. Accordingly, the appellant had not acted as “tour operator” within the meaning of Section 65(115) of the Act for which the taxing Entry 65(105)(n) thereof is not attracted. There shall not be liability to tax - decision in the case of CCE, Meerut-I v. M/s. Usha Breco Ltd [2013 (2) TMI 357 - UTTARAKHAND HIGH COURT] followed. - The issue decided in favor of assessee by the larger bench.
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2014 (1) TMI 819
Availment of CENVAT Credit - Hiring JCB crane - Uprooting of trees under permit of Government of Rajasthan for use thereof to get charcoal to ultimately use the same in manufacture of calcium carbide - Held that:- appellant cannot be disentitled to Cenvat credit of Service Tax paid for hiring JCB crane which was not found to have been used in carrying out above activity. Adjudication is accordingly unsustainable - Decided in favour of assessee.
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2014 (1) TMI 818
Waiver of pre deposit - Demand of service tax - Clearing & Forwarding Agent services - Held that:- appellant in this case in order to be covered under the Clearing & Forwarding Agent Services, has not done any activity of clearing the coal from the mines. It is on record that the appellant is only supervising the loading of the coal in the railway yard and has not been given any activity for doing the supervision at the mine end - in order to get covered under the Clearing & Forwarding Agent services, the assessee is required to clear as well as forward the goods. In this case, there being absence of both the activities, prima facie, we find that the appellant has made out a case for waiver of pre-deposit of the amounts involved - application for waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Following decision of Kulcip Medicines Ltd [2009 (2) TMI 89 - PUNJAB AND HARYANA HIGH COURT] - Stay granted.
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Central Excise
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2014 (1) TMI 787
Cenvat credit availed on sale of used capital goods – Waiver of Pre-deposit – Held that:-Following Harsh International (Khaini) Pvt. Ltd. [2012 (6) TMI 340 - DELHI HIGH COURT] - the goods purchased prior to 13.11.2007, the amended provision of CENVAT Credit Rules will not apply and the transaction of such capital goods needs to be considered for discharge of duty liability - the appellant has made out a case for waiver of amount - Pre-deposit waived till the disposal – Stay granted.
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2014 (1) TMI 786
Waiver of Pre-deposit of Penalty under Rule 15 of Cenvat credit Rules, 2004 and Rule 26 of Central excise Rules, 2002 – Held that:- There is a statement of the appellant who is a proprietor indicating that he has only issued invoices, which is also corroborated by the transporter’s statement -All legal points as regards stock lying in the factory premises of M/s Kothi Steel Ltd and various other statements, can be considered only at the time of final disposal of appeal - the appellant has not made out a strong case for complete waiver of amount – the appellant is directed to deposit Rupees Two lakhs 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 785
Disallowance of Cenvat credit - Mere paper transaction made to get input credit – Waiver of Pre-deposit – Held that:- The appellant failed to convince the authority as it has recorded for the manipulation of record which came to light by investigation - clear admission of no movement of input has come to record - mere paper credit was availed by the appellant without receiving any input in his factory to cause manufacture of final product – the appellant directed to deposit Rs. 87,44,929 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 784
Duty paid though Cenvat account not proper – Arrears to be recoverable as per Rule 8(4) of cenvat credit rules – Waiver of Pre-deposit – Held that:- The specific provisions of Rule 3(4) and Rule 8(3A) respectively the applicant is liable to pay excise duty and interest without utilizing CENVAT Credit - they have already paid through an amount of Rs.3,82,000 - Appellant is directed to pay 25% of the remaining amount of duty involved in cash/PLA as pre-deposit – upon such submission rest of the duty to be waived til the disposal – partial stay granted.
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2014 (1) TMI 783
Reversal of Cenvat credit to be made – Capital goods used for manufacturing Briquette - Waiver of Pre-deposit – Held that:- Briquette is manufactured separately and he has also indicated the process of manufacturing of Briquette and use - the Circular dated 25.09.2002 specifically talks about non denial of cenvat credit on the capital goods used in the manufacturing of intermediate goods, which are exempted from payment of duty and are used captively in the manufacture of finished goods chargeable to duty - Briquettes are manufactured in the factory premises which is further utilised for the manufacturing of final product soda ash - the appellant has made out a prima facie case for the waiver of pre-deposit of amount till the disposal – Stay granted.
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2014 (1) TMI 782
Restoration of Appeal – Stay application rejected – Held that:- On perusal of order dated 30.7.2012 these citations were cited by the revenue to drive home their point that application for restoration of appeal should be dismissed - the decisions were distinguished by theBench in the order dated 30.7.2012 - the current appellant Shri Arvind Panchal and the appellant there Shri Mafatlal Harakchand Shah are similarly placed – Thus, the ratio of order dated 30.7.2012 will have more persuasive value – final order dated 10.10.2011 is applicable to the current applicant – Stay application restored – Decided in favour of Assessee.
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2014 (1) TMI 781
Waiver of pre-deposit – Deposits already made sufficient or not – Held that:- The duty payable comes to Rs.13,29,803 - asessee contended that more than this has been pre-deposited by the assessee - the assessee directed to deposit further amount – the assessee offered to make a pre-deposit of a further sum of Rs.3 lakhs which is accepted – upon such submission rest of the amount to be stayed till the disposal – Partial stay granted.
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2014 (1) TMI 780
Duty liability prior to 01.01.2003 - kits included in the third schedule to the Central Excise Tariff Act only w.e.f. 01.06.2006 or not – Waiver of Pre-deposit – Held that:- The conduct of the party is such that there are contradictions with regard to the date of manufacture of the kits - the dates of clearances were handwritten by the assessee on computer-generated invoices - The assessee, by such conduct, appears to have landed themselves in a shadow of doubt - Such a party cannot claim prima facie case against the demand – assessee directed to pre-deposit only an amount of Rupees Ten lakhs 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 779
Cenvatable invoices issued without clearance of duty-paid goods to their customers – Waiver of Pre-deposit of penalty under Rule 25 of the Central Excise Rules 2002 read with Section 11AC of the Central Excise Act – Personal penalty on director under Rule 26 of the Central Excise Rules 2002 – Held that:- The offence alleged by the department pertains to a period after 1.3.2007, the date with effect from which Sub-rule (2) of Rule 26 came into force providing a penalty for a dealer issuing ‘cenvatable’ invoices without goods - The question whether, in lieu of Rule 26(2), Rule 25(1) could be invoked against the dealer has been debated before me at length - There was no intention to evade payment of duty which can be attributed to the company - Rule 25(1)(d) could be applied to a person who was concerned in selling or dealing with goods which were liable to confiscation - This view was taken in proceedings where the department proposed to penalize not only the dealer who issued invoices without goods but also his customer who took CENVAT credit on the basis of such invoices without receiving goods - There is no evidence of their customers having been penalized – Penalty imposed on the assessee waived and stayed till the disposal – Stay granted.
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CST, VAT & Sales Tax
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2014 (1) TMI 829
Contravention of Section 5(3)(7) of the KGST Act - Penalty u/s 45 A(g) - Held that:- assesses M/s. Apollo Tyres Ltd., have contravened the provisions of Section 5(3) (7) of the KGST Act, 1963 by purchasing Carbon black and Rubber chemicals to the tune of Rs.1,64,24,079.10 by issuing form 18 declarations for the period from 12/82 to 3/83. Out of this Rubber chemicals and carbon black for Rs.1,34,79,016/- were utilized for the production of tyres, tubes & flaps transferred to other Branch offices outside the Kerela for sale - Therefore, there is no infirmity in the impugned judgment(s) and order(s) which would call for interference - Decided against assessee.
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2014 (1) TMI 828
Enhancement in composition rates - Dealing in hides and skins - Tax liability - Held that:- A perusal of the Section 5A of the Act would indicate that the composition benefit is available to a dealer under the Act in case it is liable to pay either the sales tax under Section 4 of the Act or the purchase tax under Section 4-B of the Act. If that is so, since the assessee claims that it is not liable to pay any tax under Sections 4 and 4-B, it cannot take the benefit or the advantage of the composition scheme under the impugned notifications issued by the State Government and hence could not have challenged the said notifications in the Writ Petition before the High Court - assessee was not properly advised when he questioned the notifications before the High Court - Decided against assessee.
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Indian Laws
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2014 (1) TMI 817
Request for document - Right to information - Enquiry Report is pending with competent authority for taking appropriate action - Denial under Section 8(1)(h) of RTI Act - Held that:- provisions of Section 8(1)(h) will not apply in this case because no further investigation is pending. The action that is to be taken on the report cannot be considered as “a process of investigation”. Therefore the CPIO is directed to furnish the information asked for by the appellant within 20 days from receipt of this order - Decided in favour of Appellant.
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