Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 23, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Highlights / Catch Notes
Income Tax
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Validity of order passed by CIT u/s 263 - The penalty order dropping penalty proceedings u/s 271(1)(c), merely because it is cryptic order cannot be held to be erroneous or prejudicial to the interest of revenue - AT
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Power of ITAT to entertain new Ground - Even de hors Rule 27 of the ITAT Rules, it is open to the respondent in an appeal before the Tribunal to raise a new ground in defence of the Order appealed against - AT
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It is possible that Central Excise Tariff Act (CETA) deems certain processes as manufacturing by placing certain products in a particular chapter for the purpose of excise duty even if they do not fulfil strict criteria of a manufacturing process but for the purpose of Income-tax we have to find out whether the product meets the test of manufacturing activity. - AT
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TDS u/s 194C or 194I - Payment for hiring helicopter services - Assessee had not taken possession of those helicopters from M/s. GVHL and responsibility of operating and maintaining of the helicopters was of M/s GVHL only - falling u/s 194C only - AT
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Set off of the loss - benefits u/s 72A (4) - The Act does not state that the under-taking being demerged ought to be a going concern at the time of demerger - AT
Customs
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Interest - Drawback becomes payable to the appellants only based on the order passed by the Hon’ble CESTAT - appellants are not eligible for interest for the period earlier to Hon’ble CESTAT’s order - AT
Corporate Law
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Copyright infringement - On piercing the Corporate veil, it was observed that, the defendant No.1 company has been floated by defendant No.2 to circumvent the orders passed by the Court - HC
Service Tax
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Once it is established that location of service receiver is sufficient for determining whether service was export of service and the service receiver was located aboard, the only requirement for assessee to get the refund should be to show that he had actually realized the amount for the services rendered - AT
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Commissioner has jurisdiction to decide the issue of non-payment of Service Tax on the taxable value received by the Appellant for the services rendered through various branch offices and the value of such services duly accounted for, finally in their consolidated Balance Sheet and Profit & Loss account, prepared at Kolkata - AT
Central Excise
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As trading activities have never been recognized by the statute as taxable services, prima facie, the appellant was not entitled to take CENVAT credit on input services which were used in trading activities during the material period - AT
VAT
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Stay application - The expression ' undue hardship' has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he is likely to exonerate from the total liability on disposal of his appeal. - HC
Case Laws:
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Income Tax
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2014 (1) TMI 1140
Whether education expenses of directors is allowable business expense - Held that:- Following Hansraj Mathuradas Vs ITO [2012 (10) TMI 300 - ITAT, MUMBAI] - As per Board Circular No. 8/2005 dated 29-08-2005 - Fringe benefit tax is levied on the expenses incurred by the employer irrespective of whether the same are incurred for official or personal purposes - Once fringe benefit tax is levied on such expenses as has been done in the present case, it follows that the same are treated as fringe benefits provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenses incurred wholly and exclusively incurred by the assessee for the purpose of its business. Following Sakal Papers Pvt. Ltd. Vs CIT [1977 (11) TMI 36 - BOMBAY High Court] - The expenditure in question has been incurred by the assessee for the professional higher education of its employees (directors) for reaping the benefit of the said higher education and accordingly the said expenditure is an allowable business expenditure - Decided in favour of assessee. Ad-hoc disallowance of Vehicle Expenses & Depreciation on Vehicle - Held that:- No specific averment or incident has been brought on record to indicate that the vehicle has been used other then the business purposes - Even otherwise in the case of company if it is found that the vehicle has been used for personal purpose then it can be considered as perquisites in the hands of the user employee - Decided in favour of assessee. Disallowance of bad debts - Held that:- The assessee has failed to establish that the amount paid to the employee was for the purpose of the business of the assessee - Advancing loan which is not the business activity of the assessee and further having no nexus with the business of the assessee cannot be allowed as bad debts or business loss, if the assessee is not able to recover the same - Decided against assessee.
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2014 (1) TMI 1139
Supressed purchases – Held that:- The ld. AO has issued notice u/s 133(6) of the IT Act to M/s. Hadia Steel Limited - A perusal of the information as provided by the seller when compared to the ledger account maintained by the assessee clearly show that all the purchases made by the assessee from the said party is a continuous account - The purchase account of the assessee also clearly shows that the purchases from the said party are duly reflected in the ledger - The ld. CIT(A) has verified the reconciliation of the figures and no defect has been found. Cessation of liability – Held that:- The assessee is the creditor in respect of M/s. Haldia Steel Limited - It can never be said that Haldia Steel Ltd. has surrendered its claim against the assessee - The finding of ld. CIT(A) in holding that the provision of section 41(1) of the IT Act in respect of closing balance of assessee would not apply, is right. Disallowance of labour charges, loading and unloading expenses – Held that:- No defect in the books of account or accounts maintained by the assessee, in respect of the labour charges or loading or unloading charges have been pointed - The ld. CIT(A) was right in deleting the estimated addition made by the AO - Decided against Revenue.
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2014 (1) TMI 1138
Penalty u/s 271(1)(c) for not disclosing sales - Held that:- The Tribunal held that the sales have been considered by the assessee in working out the income, there can be no separate additions of any separate sales, particular when the purchases are also stand admitted - There is no justification in making any addition on account of estimated profit on the sales, unexplained investment and unexplained debtors in the years under appeal - Following K.C. Builders and another Vs. ACIT [2004 (1) TMI 7 - SUPREME Court] - Where the additions made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment - In such a case no penalty can survive and the penalty is liable to be cancelled - Decided against Revenue.
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2014 (1) TMI 1137
Deduction u/s 80IB - Held that:- Following assessee's own case for A.Y. 2006-07 - The claim of the Assessee for A.Ys 2004-05 and 2005-06 have been allowed - When deduction is allowed in the initial assessment order, there is no reason for disallowing the claim in the year under consideration - The AO has confirmed that the activities undertaken by the Assessee qualifies to be regarded as manufacture and allowed the claim of the Assessee for A.Y. 2004-05 - The principles of consistency would apply and hence it is not open for the Department to question the validity of the allowability of the claim of deduction u/s 80IB(4) for the impugned assessment year by holding that the activities undertaken by the Assessee cannot be regarded as manufacture more particularly when there is no change in the facts and circumstances of the case of the Assessee - Decided against Revenue. Deduction u/s 10B - Held that:- As per section 10B(4) - The deduction available u/s 10B(1) will be the amount which bears to the profit of the business of the eligible undertaking the same proportion as the export turnover bears to the total turnover - The scrap sale is part of the profit of the business of the undertaking - The CIT(A) has rightly re-calculated the exemption available to the Assessee u/s 10B(4) by including the sale of the scrap in the profits of the business of the undertaking for the purpose of computation of the deduction in respect of profit derived from the exports in accordance with the provisions of Sec. 10B(4) - Decided against Revenue.
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2014 (1) TMI 1136
Deduction u/s 10BA - Held that:- Following assessee's own case for A.Y. 2008-09 - 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. Disallowance out of travelling expenses - Held that:- The Assessing Officer has not pointed out any instance where the expenses in question were incurred by the assessee for non-business purposes - The appellant has stated that all the above expenses are relate to wholly and exclusively for the business purpose - The disallowance is cannot be sustained being totally based on presumption - Decided against Revenue.
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2014 (1) TMI 1135
Order of CIT(A) passed in violation of principles of natural justice - Held that:- The assessee has produced voluminous evidences - The assessee has also given the reasons for non- furnishing of these documents which was mainly due to the fact that the assessee company was running into heavy losses and was not in the commercial operation - These evidences ought to have been considered by the learned Commissioner (Appeals) in the interest of substantial justice - A very high pitch assessment has been made - These evidences goes to the very root of the various issues involved - The power of the learned Commissioner (Appeals) is co-terminus with that of the Assessing Officer and during the appellate proceedings, the learned Commissioner (Appeals) can not only entertain various evidences but also can also carry out necessary enquiry through the Assessing Officer after calling for the remand report - The issue was restored for fresh adjudication.
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2014 (1) TMI 1134
Disallowance u/s 14A - Held that:- As per sub-section (2) of section 14A - The Assessing Officer has to determine the amount of expenditure incurred in relation to such exempt income, if the Assessing Officer having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure relating to exempt income - In the case of assessee no such exercise has been done by the Assessing Officer - No borrowed funds have been utilized for the investment purposes - Regarding the administrative expenditure, no satisfaction about the correctness of the assessee's claim has been looked into - The disallowance on account of administrative expenditure is too excess than the expenditure claimed in the Profit & Loss account and without rebutting the correctness of the assessee's claim - The order passed by the learned Commissioner (Appeals) is set aside - Decided in favour of assessee.
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2014 (1) TMI 1133
Unexplained cash credits – Held that:- The assessee discharged its initial onus to prove identity, genuineness and credit worthiness with respect to unsecured loan by filing confirmation of the party, bank statement of the party and ledger account - The Assessing Officer has disregarded the same and merely relied on the report of the Investigation Wing and statement of Shri Suresh Kumar Gupta, Director of M/s Galaxy Mines & Stones Pvt. Ltd. recorded by Investigation Wing - None of the above evidences was confronted to the assessee for rebuttal in respect of specific request made by letter filed during assessment proceedings - No inquiries were conducted by the Assessing Officer for verifying the above mentioned evidences filed by the assessee - Following Anmol Colour India Pvt. Ltd. Vs. ITO [2008 (6) TMI 249 - ITAT JAIPUR-A] - Where the evidences filed by the assessee were to be examined by the Assessing Officer, it would be in the interest of justice to restore the matter to the file of the Assessing Officer – The issue was restored for fresh adjudication.
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2014 (1) TMI 1132
Brokerage expenses - Held that:- Following CIT vs. H.G. Gupta & Sons [1983 (12) TMI 54 - DELHI High Court] - If a particular type of expenditure is not specifically provided to be deductable under section 23 & 24 of the I.T.Act, the same cannot be claimed as deduction out of the annual letting value observing that the provisions of section 23 & 24 of the Income Tax Act are exhaustive - The payment of maintenance charges etc. paid to the housing society is an allowable deduction on the principle that the same is in the shape of taxes and charges etc. which have a considerable bearing on the actual letting value of the property - Whereas the payment of brokerage for arranging for a lessee cannot be said to have any bearing effect on the annual letting value of the property - Decided against assessee. Professional fees – Held that:- The assessee paid amount for attending to all meetings, drafting and settling letter of intent/lease agreement etc. in respect of leasing out of the property - Neither the letting out of the property was business of the assessee nor any steps taken for letting out the property in question were related to business of the assessee - Following CIT vs. H.G. Gupta & Sons [1983 (12) TMI 54 - DELHI High Court] - The said expenditure cannot be said to be having any bearing on the annual letting value of the property - As such any expenditure incurred for payment of professional fees etc. as mentioned above cannot be said to be an allowable deduction - Decided in favour of assessee. Advise and consultation – Held that:- The said expenditure has been incurred for payment as consultation charges in relation to rain water harvesting system installation in the building - The business of the assessee has been development and sale of the property and the installation of rain water harvesting system was a part of the development activity and the consultation charges were paid in relation to installation of the said system - It can be said to be incurred in relation property development business of the assessee - The same is an allowable deduction. Era architechts – Held that:- The above expenditure has been claimed to be incurred towards interior designing work of the single screen cinema - Apart from property development business, the assessee was also in the cinema business - The said business was suspended for some time and the same has been revived during the year 2010 - The payment towards designed work of single screen cinema can be said to be towards improvement/development of the said property - The same is an allowable deduction. Expenses for valuation of property – Held that:- The said expenditure has been claimed to be incurred for getting the valuation of the property done for the purpose of its letting out - The said expenditure cannot be said to be in relation to the business of the assessee as the letting out of the property has never been the business of the assessee – The expenses are not allowable.
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2014 (1) TMI 1131
Penalty u/s 271(1)(b) - Held that:- The alleged notice was in fact in the name of Mafatlat individual not Mafatlal HUF (assessee) and on the date fixed reply was filed in that case - It was further submitted that the assessee was still ready to provide the required details - It is not a case where the assessee without any reasonable cause had failed to comply with the notices issued under section 143(2) and 142(1) of the Income Tax Act - The revenue has not placed any copy of the alleged notice which was issued and served in the name of the assessee - The assessee had given the reply that though no notice under sections 143(2) and 142(1) of the Income Tax Act was served upon it, yet it was ready to submit the required details - But in this case, the AO simply rejected the explanation given by the assessee without rebutting the same - The ld. CIT(A) also upheld the levy of penalty in a mechanical manner without correctly appreciating the facts - The assessee in the subsequent proceedings produced the relevant material in response to the fresh notices issued by the AO under section 143(2) and 142(1) and the assessment proceedings were completed - It is not the case where the assessment proceedings were completed ex-parte or where the assessee had not produced the relevant material/evidences during the assessment proceedings - Decided in favour of assessee.
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2014 (1) TMI 1130
Transfer pricing adjustment - Held that:- Following Sony India Pvt. Ltd. vs. CBDT [2006 (10) TMI 88 - DELHI HIGH COURT] - The expression "having regard to" in Section 92C(4) and 92CA(4) enables the AO to consider not only the report of the TPO but any other material that may be placed before him by the assessee to arrive at a different conclusion - The report of the TPO is not binding on the AO - The Assessing Officer is not bound to accept the ALP as determined by the TPO but has to determine the ALP, only after giving an opportunity of hearing to the assessee. In this case, admittedly no such opportunity has been given in terms of sub-section 4 of section 92C read with section 92CA - The issue has been restored for fresh adjudication. Transfer pricing adjustment for A.Y. 2005-06 - Held that:- The TPO has taken into consideration the figure of foreign exchange gain, which was not there in the A.Y.2005-06 - The assessee's explanations for the A.Y. 2005-06 and all its objections and documents have not been considered at all - This shows that the ld. TPO has passed the order without application of mind, which he is required to do so under the provisions of law and equity - Such an order shows an unprecedented bias and pre-determined mind without going into the merits of the case - The issue has been restored for fresh adjudication. Validity of the assessment order passed under section 143(3) r.w.s. 144C(13) – Held that:- Following Commissioner of Income-Tax Versus Bhan Textiles P. Limited. [2006 (9) TMI 129 - DELHI High Court] – As per The Central Board of Direct Taxes Circular No.549, dated October 31, 1989 - A proviso to sub-section (2) provides that a notice under the sub-section can be served on the assessee only during the financial year in which the return is furnished or within six months from the end of the month in which the return is furnished, whichever is later - The Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny - It follows that if an assessee, after furnishing the return of income does not receive a notice under section 143(2) from the Department within the aforesaid period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return - The impugned assessment order passed by the Assessing Officer is void ab initio as the same has been passed without the mandatory requirement of serving the notice under section 143(2) upon the assessee within the time provided in the second proviso – Decided in favour of assessee. Transfer pricing adjustment in respect of marketing services provided – Held that:- The TPO has not examined properly the assessee's contention and submissions made before him -How the comparables selected by the assessee were functionally different and how the TPO has selected his own comparables and bench marked the margin – The TPO has not properly appreciated the entire marketing expenditure which has been reimbursed by the A.E. - The principal agreement has not been filed before the Tribunal - Even the manner in which the operating income has been shown has not been properly clarified as to whether it forms part of the income or it is a compensation received from the A.E. - The issue has been restored for fresh adjudication keeping in view the principal agreement and all other documents filed by the assessee. Disallowance on account of AIR information – Held that:- The details of information have not been provided to the assessee - The assessee has not been given opportunity to examine this information and make proper submissions - The issue has been restored for fresh adjudication. Disallowance of set- off of brought forward unabsorbed business loss – Held that:- Following General Motors India Pvt. Ltd. v/s DICT [2012 (8) TMI 714 - GUJARAT HIGH COURT] - The amendment in section 32 is applicable from the assessment year 2002-03 and subsequent years and unabsorbed depreciation available in the earlier years will be allowed to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not be set-off till the assessment year 2002-03, then it would be carried forward till the time it is set-off against the profits and gains of subsequent years - The issue has been restored for fresh adjudication in the light of aforesaid judgement.
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2014 (1) TMI 1129
Validity of order passed by CIT u/s 263 - Held that:- In assessee's own case for A.Y. 2005-06 - The tribunal has held that no penalty is leviable in relation to claim for deduction of excess depreciation and interest on amount borrowed for building which was incomplete - Keeping in view the same order the Tribunal for the current year also deleted the penalty - The bona fide belief of the assessee has been upheld by the ITAT. A cryptic order per se cannot be held to be erroneous - Ld. CIT has erroneously assumed that bonafide belief was not considered by assessing officer - Once the assessee has filed the written reply and attended the proceedings it cannot be held that necessary inquiries were not carried out - Assessee cannot be visited with penalty u/s 271(1)(c) - The penalty order dropping penalty proceedings u/s 271(1)(c), merely because it is cryptic order cannot be held to be erroneous or prejudicial to the interest of revenue - It amounts to multiplicity of proceedings on hyper technical issues - Decided in favour of assessee.
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2014 (1) TMI 1128
Validity of re-opening of assessment u/s 147 - Unexplained cash credit - power of ITAT to entertain new Ground - Held that:- Following ITO vs. Smt. Gurinder Kaur [2006 (6) TMI 144 - ITAT DELHI-A] - Even de hors Rule 27 of the ITAT Rules, it is open to the respondent in an appeal before the Tribunal to raise a new ground in defence of the Order appealed against - Even assuming that Rule 27 is not strictly applicable, the Tribunal has inherent powers u/s 254 (1) of the Act to entertain the argument of the Respondent which amounted to a new ground; that Rule 27 is not exhaustive of the powers of the Tribunal; and that it is merely not procedural in character and does not, in any way, circumscribe or control the powers of the Tribunal under the Act - The application of the assessee under Rule 27 is maintainable. There was no tangible material with the Assessing Officer to conclude that there was escapement of income from assessment - The reasons recorded do not have any link, much less any live link with the formation of belief of escapement of income - The reopening of the completed assessment, in view of the full disclosure of the material facts relevant to the assessment of the assessee for Assessment Year 2004-05, was nothing other than a mere change of opinion, which is impermissible in lawThe reasons recorded do not lay out any failure on the part of the assessee to disclose fully and truly any material fact necessary for its assessment for Assessment Year 2004-05 – For reopening the assessment, the proviso to Section 147 comes into play - Once the assessee had duly disclosed all material facts necessary for its assessment fully and truly before the Assessing Officer in the scrutiny assessment proceedings, for Assessment Year 2004-05, no action ought to have been taken u/s 147 of the Act, as envisaged by the proviso to Section 147 – Decided against Revenue.
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2014 (1) TMI 1127
Eligibility for deduction u/s 80IC - Held that:- the definition of “manufacture” as defined in s. 2(29BA) though not applicable but certainly can be used as a guide. As per clause (b) of section 2 (29BA) the definition of "manufacture" means “bringing into existence a new and distinct object or article or thing with a different chemical composition or integral structure - for the purpose of income tax it needs to be found out as to whether the process undertaken by an Assessee meets the test of manufacturing so as to become eligible for deduction for undertaking the manufacturing activity - Following Nemat Enterprises (P) Ltd vs ACIT [2010 (12) TMI 268 - ITAT, MUMBAI] - It is possible that Central Excise Tariff Act (CETA) deems certain processes as manufacturing by placing certain products in a particular chapter for the purpose of excise duty even if they do not fulfil strict criteria of a manufacturing process but for the purpose of Income-tax we have to find out whether the product meets the test of manufacturing activity. Following COMMR. OF INCOME TAX-V, NEW DELHI Versus M/s ORACLE SOFTWARE INDIA LTD. [2010 (1) TMI 9 - SUPREME COURT OF INDIA] - In each case when an issue of this nature arises for determination, the Department has to study the actual process undertaken by the assessee - If an operation/process rendered a commodity fit for use for which it would otherwise not be fit, the operation/process fell within the meaning of the word "manufacture" - The Department that, in all such cases, they should have a panel of experts who may be engaged in appropriate cases so that the cases need not be remitted - CIT(A) has not obtained any report from an expert to conclude that the new product which has come into existence by undertaking the process of mixing and grinding is on account of manufacturing process but has accepted the contention of Assessee - A definite finding is required to determine as to whether the activity of the assessee can be termed as manufacture in the light of the requirement of the Act so as to enable the Assessee to claim deduction u/s 80IC. Higher gross profit – Held that:- The Assessee has submitted the reason for having gross profit in excess of 70% to be on account of saving in excise duty, VAT, higher price charged on account of longer credit period and lower administrative cost - There is no finding on the said aspect by CIT(A) and he has accepted the contention of Assessee – The issue is restored for fresh adjudication.
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2014 (1) TMI 1126
Demand u/s 201(1) and 201(1A) r.w.s. 194I - Held that:- Following ITO vs. Roshan Publicity Pvt Ltd [2005 (5) TMI 551 - ITAT MUMBAI] - In acquiring the right of displaying advertisement at hoarding site and making payment to hoarding site owners does not involve lease, sub-lease or tenancy and therefore, sec. 194-I is not applicable as the payment cannot be termed as rent - The advertising company who hires the hoardings will fall within the purview of 194I and not the person who pays advertisements charges - From the details of advertisement charges submitted it is clear that only the part of the amount relates to hoardings, the remaining part is for other services referred in appellant's reply such as business promotion, printing and stationary Brand Building etc - Decided against Revenue. Demand u/s 201(1) and 201(1A) r.w.s. 194J - Held that:- Following ACIT vs. Gujarat State Petronet Ltd [2013 (12) TMI 1046 - ITAT AHMEDABAD] - Appellant made payments of transmission of gas for which it deducted tax u/s 194C - On perusal of contract with GSPL, it is clear that transmission charges are based on gas quantity transmitted - The charges are not based on time or length of the pipeline - This also indicates that appellant did not use any equipment but the same were used by GSPL transmitted gas through its pipeline - For bringing any payment in the nature of rent within the purview of section 194-1, there has to be use of asset or equipment by the payer. If the same is used by the receiver for the work of the payer, it will fall within the provisions of see. 194C - Sec. 194C clearly includes carriage of goods and passenger by any mode of transport other than railways, the transportation of gas through pipeline is covered by this - The gas transmission agreement, mode and basis for payment use of pipeline for transmitting gas for many consumers, operation and maintenance of pipeline by GSPL and no possession or exclusive right to use the pipeline at any given point of time clearly indicates that the payment for gas transmission by the appellant will not attract the provisions of Sec. 194I - Decided against Revenue. Demand u/s 201(1) – Payment for hiring helicopter services - Held that:- Assessee had executed a service contract with M/s Global Vectra Helicorp Ltd on 23-11-2007 for availing helicopter services in relation to air logistic support for crew and personnel of the assessee and any of its consultants or suppliers as well as supply of essential cargo to and from offshore rig - Assessee while making payment to Global Vectra Helicorp Ltd has deducted tax @ 2 % as per provisions of section 194C - As per contract between assessee and M/s GVHL, the helicopter services were hired by the assessee for air lift of crew including company’s and company’s third party personnel and essential cargo required at the rig - Assessee had not taken possession of those helicopters from M/s. GVHL and responsibility of operating and maintaining of the helicopters was of M/s GVHL only - Following CIT vs. Reliance Engineering Associates P. Ltd [2012 (6) TMI 234 - GUJARAT HIGH COURT] - This contract between assessee and GVHL falls under section 194C of the Act - The lower authorities were not justified in holding that payment made by the assessee to M/s GVHL for hiring of helicopters for transportation of his employees falls under the category of equipment hiring and TDS @ 10% was deductable on this payment u/s 194I of the Act – Decided in favour of assessee. Payment made for use of gas pipeline – Held that:- Though services provided by M/s 3rd Eye Event Management are managerial in nature - These services were taken for managing a 20-20 cricket tournament only - The expenses incurred by the assessee on organizing of cricket tournament have been claimed by the assessee against its business income as if the same were incurred for business purposes - It cannot be said that managerial consultation services of Third Eye Event were not for its business - The assessee cannot take contrary stand to avoid its TDS liability – Demand u/s 201(1) is leviable alongwith ineterst u/s 201(1A) - Decided against assessee.
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2014 (1) TMI 1125
Unexplained cash credits - Held that:- The appellant had accepted the loans through brokers - The source of loan for the appellant is broker - The appellant submitted the confirmation from broker as well as from the creditors also source as well as source of source also explained - The appellant had discharged the primary onus by filing the relevant details - The assessee has filed copies of discharged promissory notes, copy of account and the confirmation of all the creditors - Ten brokers out of twelve also attended the proceedings before the AO and have confirmed the arranging and giving loans to the assessee - The evidences and material on record were, therefore, sufficient to prove that the assessee has genuinely taken the loans through brokers - The assessee has thus been able to prove that the genuine credits have been obtained in a sum of Rs.45,30,500 - The ld. CIT(A) was, justified in deleting the addition to that extent and interest paid thereon - Decided against Revenue.
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2014 (1) TMI 1124
Eligibility for exemption u/s 11 - Held that:- The registration u/s 12AA was cancelled/withdrawn by the DIT(E) and further the activities of sale of liquor, canteen, daily card games, guest fees are in the nature of trade, business and commerce and therefore hit by the proviso of Section 2(15) of the Income Tax Act - The CIT(A) has decided the issue solely on the basis of withdrawal/cancellation of registration u/s 12AA without going into the issue of applicability of proviso to Section 2(15) of the Act - The registration u/s 12AA has been restored by the Tribunal vide order dated 10.7.2013 therefore, the impugned order of CIT(A) has been set aside for fresh adjudication to decide the issue on the question of applicability of proviso to Section 2(15) of the Act.
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2014 (1) TMI 1123
Depreciation on windmills - Held that:- Following Union of India v. Azadi Bachao Andolan [2003 (10) TMI 5 - SUPREME Court] - The word sham, if it has any meaning in law, it means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the Court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create for acts or documents to be a ‘sham’, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a ‘shammer’ affect the rights of a party whom he deceived - If the Court finds that notwithstanding a series of legal steps taken by an assessee, the intended legal result has not been achieved, the court might be justified in overlooking the intermediate steps, but it would not be permissible for the court to treat the intervening legal steps as non- est based upon some hypothetical assessment for the ‘real motive’ of the assessee - The court must deal with what is tangible in an objective manner and cannot afford to chase a will-o’- the-wisp. The transaction of purchase of WEGs by the assessee cannot be termed as a sham transaction - WIL sold 28 WEGs to IEL on 15.3.2006 and the same have been accounted for as sale in its books of account for the year-ended 31.3.2006 and also accounted for the income from the said sale proceeds for the AY 2006-07. No depreciation was claimed on those WEGs for the year ended 31.3.2006 by WIL or IEL - IEL confirmed the sale of WEGs to the assessee as on 15th and 24th of March 2006 which have been duly accounted for as sale for the year-ended 31.3.2006 - the assessee had purchased the WEGs from IEL on 15th and 24th March 2006 and as such it was the actual and legitimate owner of those WEGs as on 31.3.2006 and, accordingly, claimed depreciation for the year-ended 31.3.2006 - Neither WIL nor IEL had claimed depreciation for the F.Y. ending 31.03.2006 - income from the sale of power generated from WEGs for the period from 15.3.2006 ending on 31.3.2006 has been duly accounted for and offered to tax by the assessee and NOT either by IEL or WIL. This assertion amply exhibits that the assessee was the legitimate owner of those WEGs in the month of March, 2006 itself - The transaction was genuine and the assessee should be allowed depreciation. Set off of the loss pertaining to the rectified spirit Unit - Held that:- The scheme of demerger has been approved by the Hon’ble High Courts of Andhra Pradesh and Karnataka clearly vouch that the transfer of the under-taking was on a ‘going concern’ basis - The assets, liabilities, employees, debts, obligations, rights etc., of the undertaking prior to the demerger stand vested with the assessee upon demerger - The assessee is eligible to the benefits u/s 72A (4) of the Act - The Act does not state that the under-taking being demerged ought to be a going concern at the time of demerger - It only states that the under-taking being demerged should stand transferred in a manner similar to the manner in which a ‘going concern’ is transferred - Decided in favour of assessee. Disallowance of interest - Held that:- Decision in CIT v. Reliance Utilities and Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] followed - If there were funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest-free funds were sufficient to meet the investments - The interest was deductible - Decided in favour of assessee. Disallowance of prior period expenses - Held that:- The issue has not been dealt with properly either by the AO or the first appellate authority for that matter - The reasoning of the AO in disallowing the claim of the assessee as well as the finding of the CIT (A) in sustaining the stand of the AO is very cryptic - The issue is restored on the file of the AO with a specific direction to look into the issue afresh with reference to the details which will be furnished by the assessee.
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2014 (1) TMI 1122
Validity of order passed u/s 263 - Held that:- As per section 263 - The two conditions for invoking power under this section must be fulfilled - From the assessment order itself it is evident that the AO had in fact applied his mind and duly understood the facts of the case as well as the law applicable - AO has also made sufficient inquiry - On these two counts, it is not an erroneous assessment order. The next step is to ascertain whether some prejudice was caused to the interest of the Revenue - According to law, an erroneous order is an order which suffers from a patent lack of understanding of facts as well as law - While attracting the provisions of Section 14A, it is necessary to examine whether there was a proximity cause for disallowance which is its relationship with exempted income - Following Gillete Group India Pvt. Ltd. [2012 (6) TMI 406 - ITAT DELHI] - A disallowance u/s 14A cannot exceed the expenditure actually claimed by the assessee - The learned Commissioner was not justified in invoking the provisions of Section 263 of IT Act - Decided in favour of assessee.
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2014 (1) TMI 1121
Penalty u/s 271(1)(c) - Held that:- During the course of survey excess stock was found - The assessee had disclosed the material facts before the AO - When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars thereof - Penalty for concealment cannot be levied - Decided in favour of assessee.
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Customs
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2014 (1) TMI 1120
Import of mobile phones - Mis declaration of goods - Under valuation of goods - Held that:- whatever special customs duty (SAD) was required to be paid on the import of the goods, was refundable to the assessee at the time of sale of the mobile phones upon payment of VAT. In fact, we find that confirmation of SAD relates to previous 27 consignments, which were cleared by the Customs authorities and were subsequently sold by the assessee in the open market and the SAD paid by the importer at the time of clearance of those 27 consignments stand refunded to the said assessee - even if higher SAD would have been paid by them at the time of import of earlier 27 consignments, the same would have been refunded to the importer. Revenue has not initiated proceedings against the assessee in respect of SAD already refunded to them. As such, we are of the view that differential SAD now being confirmed against the assessee, by way of impugned order, is also eligible to be refunded to them, thus making the entire situation revenue neutral. As regards the balance amount of duty, falling under the category of education cess and higher education cess, totally amounting to ₹ 16.32 lakhs, we find that the appellants bank guarantee of ₹ 13.98 lakhs is sufficient to cover the said amount. We accordingly direct the appellant to keep the said bank guarantee alive during the pendency of the appeal subject to which balance amount of duty and penalties imposed upon all the applicants shall stand waived and its recovery stayed during pendency of the appeal - Conditional stay granted.
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2014 (1) TMI 1119
Suspension of CHA License - Inquiry to be conducted under CHALR - Held that:- Commissioner of Customs (General), New Customs House, Mumbai directed to complete the inquiry proceedings under CHALR with a period of one month from the date of receipt of this order and take a decision on the continuance of suspension of the CHA licence - Commissioner of Customs directed to complete the inquiry and take a decision within one month, the appeal filed by the appellant also stands disposed - Decided in favour of assessee.
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2014 (1) TMI 1118
Jurisdiction of Tribunal - Interest on drawback - Held that:- initial order refusing grant of drawback was passed by the jurisdictional Commissioner and the appeal was heard and decided by the Tribunal allowing grant of the drawback. The issue now before the Tribunal is rejection of claim for interest by the appellants for delayed payment of drawback. I find that in a similar case in M/s. Marvel Apparels (2010 (8) TMI 225 - CESTAT, CHENNAI), the Tribunal has distinguished the decision of the Tribunal in the case of Mercury Exports and Manufacturing (2009 (4) TMI 629 - CESTAT, KOLKATA) and has decided that Tribunal would have jurisdiction to decide an appeal relating to interest on drawback where the drawback was allowed by the Tribunal. I see no reason to take a different view in this case. I also notice that the appellants had initially approached the revision authority in the matter but their revision applications have not been considered saying that the said authority has no jurisdiction to deal with the matter - Decided in favour of assessee. The claim if any with regard to drawback arose only as a subsequent event to the export inasmuch as till the issue of the CESTAT’s order in favour of the appellants, the Order-in-Original passed by the Commissioner of Customs, Trichy holding that the export itself did not take place holds goods. The CESTAT in its final order gave the benefit of doubt to the appellants by rejecting the port documents and allowed the appeal of the appellants. Therefore, the drawback become payable w.r.t. Section 75(A)1 of Customs Act, 1962 and the appellants become legitimate claimant for the drawback only from the date of the CESTAT’s Final Order issued and until then the Order-in-Original was holding good. Further, the appellants have not produced the required documents listed as per the provisions of Rule 13(2) of Drawback Rules for claiming the said drawback. Drawback becomes payable to the appellants only based on the order passed by the Hon’ble CESTAT dated 24-6-2008 and the relevant date for claiming interest under Sec. 75A is after expiry of one month from the date of receipt of abovesaid Hon’ble CESTAT order and not for the earlier period. Further, the appellants have not produced the required documents as per Rule 13(2) of Drawback Rules. In absence of any such relevant required documents, the appellants are not eligible for interest for the period earlier to Hon’ble CESTAT’s order - Decided against assessee.
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2014 (1) TMI 1117
Classification of goods - Onus to prove classification - Held that:- for deciding the issue of classification the onus is on the Revenue and for claiming the benefit of the notification, the onus is on the assessees who claim the benefit of the notification to show that the claimant has fulfilled the conditions of notification - As the issue is in respect of the classification of the imported goods, therefore, we find that the onus is on the Revenue to show the goods are classifiable under Heading 1301.10 of the Tariff. In the present case also, the appellants have produced certificate of the supplier to show that the goods in question were manufactured without the aid of power and there is no evidence on record to show that certificate is not genuine - Following decision of Dujodwala Products Ltd. [1997 (8) TMI 202 - CEGAT, MUMBAI] - Decided in favour of Assessee.
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2014 (1) TMI 1116
Fake CHA License - Laches on part of Revenue to issue show case notice - Without proper examination of Regulation and bringing out mala fide of CHA, impugned order forfeituring security was passed - Held that:- while lapse at one end is noticeable on the other, the authority whether has made any investigation from 5-2-2009 to trace revenue loss, if any, by engagement of the employee remained in dark. It is high time that Central Board of Excise & Customs (C.B.E. & C.) should take appropriate steps to prescribe inbuilt provision of verification of certificates within a prescribed time and take action within a prescribed time without permitting aforesaid act. No one knows what sort of injury that shall be caused to revenue, if fake certificate holders enter into stream of Revenue Administration - Authority has not risen to the occasion expeditiously, it is the necessary to send a copy of this order to the learned Member (L&J), C.B.E. & C. for appropriate measure - Decided in favour of Assessee - Stay granted.
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Corporate Laws
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2014 (1) TMI 1115
Copyright infringement - Copyright in e-tendering solution - Unauthorizedly obtaining the access to the plaintiff product - Permanent injunction - Held that:- plaintiff is a copyright holder in the software programme. Even though no original document has been filed despite admission/ denial of documents, nothing dissuades the plaintiff from still proving the same during trial. Further, there is already a decree in favour of the plaintiff against the Tendercity and defendant No.2 whereby they have been injuncted from infringing the copyright of the plaintiff company in the software E-solutions. Moreover defendant No. 2 as director of Tendercity has already acknowledged the proprietary rights of the plaintiff in the software. Hence, merely because the plaintiff has not filed any documents in support of its copyright, the plaint cannot be dismissed for want of cause of action. Defendant No.2 undertook not to even develop a software comparable to that of the plaintiff. The defendant No.2 already suffers a decree against him in this regard. Indubitably, a company is a separate legal entity from its shareholders and thus can be sued in its own name. However, in order to avoid a mala-fide exercise and if an act of the company is prima facie meant to circumvent the orders passed by the Courts, this Court will certainly pierce the Corporate veil and find out the true position. Despite an apology being tendered before this Court on 26th November, 2007 in Contempt Petition 35/2005, an independent company i.e. defendant No.1 had already been incorporated on 28th March, 2006 with the wife of defendant No.2 being its majority shareholder. On piercing the Corporate veil, I am of the considered opinion that the defendant No.1 company has been floated by defendant No.2 to circumvent the orders passed by this Court. Hence, the interim injunction granted vide order dated 28th July, 2010 is made absolute till the disposal of the suit - Decided in favour of Appellant.
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Service Tax
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2014 (1) TMI 1152
Waiver of pre deposit - Demand of service tax - Manpower recruitment or supply agency service - Held that:- appellant did not reply to the relevant show-cause notice despite many opportunities available to them. They also did not attend any of the several personal hearings offered by the adjudicating authority. Indeed, the indifference of the appellant is writ large on the impugned order - appellant did not pay interest on the service tax and education cesses paid on the retainer fees even though the tax liability was not disputed. It further appears that, to the extent of non-dispute of such tax liability, the appellant has a penal liability also - Appellant diected to make a pre deposit - Decided partly in favour of assessee.
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2014 (1) TMI 1151
Denial of refund claim - Business auxiliary service, consulting engineer and transport of goods by road services - Non fulfillment of conditions under Rule 3(2) of Export of Services Rules - Nexus between debit notes and services rendered - Held that:- debit notes comply with the requirement of invoices and there is proper linkage for realizing all the amounts. In fact, the Rules provided for the details to be contained in invoices and the name of the document is not relevant. Further the Rules also provide in the case of assessees who availed CENVAT credit on the basis of documents containing certain deficiencies, the deficiencies in the invoices can be ignored - The original adjudicating authority himself admitted that as per the Board Circular 111/05/09-ST dated 24.2.2009, the location of the service receiver and not the place of performance is the relevant factor. Service receiver was located abroad. Once it is established that location of service receiver is sufficient for determining whether service was export of service and the service receiver was located aboard, the only requirement for assessee to get the refund should be to show that he had actually realized the amount for the services rendered by providing documentary evidence and he has actually paid the service tax. These two requirements have been fulfilled when we go through the debit notes, FIRCs and the CA certificates. As regards unjust enrichment, even as per the provisions of Section 11B of the Central Excise Act, in case of rebate in respect of exported goods, this need not be examined. The claim of the appellant is similar to rebate. Only the name has not been mentioned since the claim has been made on the ground of export of service. Therefore, unjust enrichment clause itself may not be applicable. From the debit notes it is quite clear that no service tax was charged and therefore the collection of service tax apparently has not been made. FIRCs amount tallies with the debit note. Under these circumstances it cannot be stated that the appellants have charged service tax - respondents are eligible for refund which has been sanctioned - Decided against Revenue.
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2014 (1) TMI 1150
Stay application - Waiver of pre deposit - Held that:- Undisputedly the applicant are manufacturing oral contraceptives on behalf of the principal M/s. Organon (India) Ltd. It is also not in dispute that the said goods are entirely processed in their factory and the same process would amount to manufacture within the definition of section 2(f) of Central Excise Act, 1944. This Tribunal in the case of Daurala Sugar Works (2008 (6) TMI 108 - CESTAT NEW DELHI) has allowed the stay application of the Applicant against demand of Service Tax under the category of Business Auxiliary Service, where the process of blending and bottling of Indian made foreign liquor, was held as amounting to manufacture - Stay granted.
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2014 (1) TMI 1149
Waiver of pre deposit - Penalty u/s 78 - Held that:- The Applicant during the course of investigation, had paid an amount of Rs.9,36,732.00 and the said amount was deducted from the total demanded amount by the ld. Commissioner in the impugned Order. In these circumstances, we direct the Applicant to deposit 25% of the Service Tax amount confirmed i.e.Rs.48,19,950.00, within a period of 8 weeks and report compliance on 27.05.2013. On compliance, the balance amount of the dues adjudged would stand waived and recovery of the same stayed during pendency of the Appeal.
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2014 (1) TMI 1148
Waiver of pre deposit - Held that:- Present case is appreciation of evidence relating to supply of bought out items against the work orders issued by their clients. The Applicants claim that they had supplied the materials, but due to reflection of the material-value along with the services provided in the balance sheet, the confusion has been created. In these circumstances, the offer made by the ld. Advocate to deposit Rs.33.00 lakh is accepted. The Department is at liberty to verify the payment particulars of Rs.17,62,909/-. Consequently, the Applicant are directed to make the predeposit of Rs.33.00 lakh in addition to Rs.17,62,909/- already deposited, within a period of 8 weeks and report compliance on 29.05.2013. On deposit of the said amount, the balance amount of dues adjudged would stand waived and its recovery stayed during pendency of the Appeal - Decided against assessee.
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2014 (1) TMI 1147
Demand of service tax - Commission paid to foriegn agents - Penalty u/s 76 & 77 - Held that:- Appellant was informed of their liability to pay the service tax, the appellant promptly paid the same before issue of show-cause notice with interest. The entire amount of service tax due has been paid within the normal period. According to the provisions of Sec. 73(3) of the Finance Act, 1994 where an assessee pays the entire amount of service tax with interest as determined by himself or by the Central Excise Department, no show-cause notice shall be issued by the Central Excise officers and the amount paid is correct - Since the appellants have correctly paid the amount ascertained by themselves with interest before issue of show-cause notice and as the same is not in dispute, I consider that the show-cause notice should not have been issued in this case. Under these circumstances, appeal filed by the appellant is to be allowed - Decided in favour of assessee.
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2014 (1) TMI 1146
Territorial jurisdiction of Commissioner - Imposition of equivalent penalty - Held that:- services were rendered by the appellant from their various branch offices/locations other than Kolkata, pursuant to the contracts entered by the said offices with the clients, and also corresponding invoices were raised and payments received from the clients at the respective locations. However, Service Tax Registration was not obtained at the said locations - Commissioner would not assume jurisdiction only when they exercise option for centralized Registration, on account of either having centralized billing system or centralized accounting system, in adjudicating the allegation of non-payment of Service Tax on the gross taxable value of the services received and recorded in their consolidated Profit & Loss account, prepared at the Head Office at Kolkata. As per Section 66 of the Finance Act, 1994 Service Tax is chargeable on the value of taxable service received by the assessee and the appellant’s registered office being at Kolkata and their profit and loss account and balance sheet had been accordingly, prepared at the Kolkata office, on the inputs received in the form of Trial balances from the respective branch offices, as per the provisions of Companies Act, hence, there cannot be any doubt that there has been a centralized accounting system at Kolkata - Commissioner has jurisdiction to decide the issue of non-payment of Service Tax on the taxable value received by the Appellant for the services rendered through various branch offices and the value of such services duly accounted for, finally in their consolidated Balance Sheet and Profit & Loss account, prepared at Kolkata - Decided against assessee. Classification of service - Services rendered to various Electricity Boards, Cement companies - Whether such services would fall under the category of Clearing and forwarding agent - Held that:- Commissioner in the impugned order had recorded a finding that the amount received on account of freight financing were part of clearing and forwarding services rendered by the Appellant connected with clearing and forwarding operation of coal. He has also observed that the value for Service Tax did not include the actual railway freight charged by the Appellant, but on the amount of commission received from such services, hence, its value cannot be excluded from the total demand. On going through the said contract, we find that the services mentioned therein were not of simply making payment for the freight charges, in advance to railways, on behalf of their client, but it also includes services connected with clearing and forwarding operations, rendered to GSEB, hence, in our view the same are chargeable to Service Tax. Bar of limitation - Suppression of facts - Intention to evade tax - Held that:- mere inaction is not sufficient, but some positive action, with intent to evade payment of tax, should be present for invoking extended period of limitation - it is not for the Appellant to show their bona fide in not discharging the Service Tax during the said period. On the contrary, when extended period is invoked, alleging wilful misstatement, suppression of fact etc., the burden is on the Revenue to substantiate the same through material particulars - no specific evidence nor any reasoning in support of the conclusion of wilful suppression of facts with intent to evade payment of Service Tax has been recorded in the impugned Order by the ld. Commissioner. However, in the Show Cause Notice, analyzing the statement of one Shri Kalyan Banerjee, General Manager of the Appellant, it has been alleged that right steps were not taken by him to pay the Service Tax on the services rendered by the principals, which clearly indicates negligence on the part of Shri Banaerjee to comply with the law. We do not find merit in the said allegation of negligence in payment of Service Tax, could result in wilful misstatement or suppression of facts, thus, warranting invitation of extended period of limitation. we set aside the impugned Order and remit the case to the ld. Commissioner, Service Tax, Kolkata for recalculation of the demand, if any, applying the normal period of limitation prescribed under Section 73(1) of the Finance Act, 1994, as was in force at the material time. Also, while calculating the demand, the ld. Commissioner would take into consideration the evidences produced by the Appellant and record a specific finding on the aspect of includability or otherwise of the value of taxable service received against Contracts, with TNSEB & MSEB, in the total demand. Penalty and/or interest, if any, be determined, accordingly - Decided partly in favour of assessee.
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2014 (1) TMI 1145
Waiver of pre-deposit of amounts of Service Tax - Penalties under Sections 76, 77 and 78 - Renting out of immovable property - Benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008 - Held that:- if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit - appellants have made out a case for waiver of pre-deposit of amounts involved - Stay granted.
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2014 (1) TMI 1144
Waiver of pre-deposit of Service Tax - Imposition of penalty of identical amount - Rent-a-cab services - Held that:- applicant was primarily engaged in providing buses to various companies for carrying their employees from their residence to office and back. The appellants jurisdictional Central Excise officer wrote a letter on 16-1-2002 directing the applicant to get themselves registered under the ‘tour-operator-services’. The said letter was contested by the applicant by submitting that they do not fall under the said category and there is no requirement for registration - demand for the longer period is barred by limitation i.e. for the period April, 2000 to September, 2003, show cause notice was issued in January, 2004. Correspondence exchanged between the Revenue and the appellant clearly show that Revenue was aware of the activity of the appellant right from January, 2002 in which case no suppression or mis-statement could be attributable to the appellant. We also further note that the demand of Service Tax which falls within the period of limitation stands deposited by the appellant to the extent of Rs. 50,766/- along with interest of Rs. 12,650/-. As such, considering said deposit of Service Tax which falls within the period of limitation as sufficient deposit for the purpose of Section 35F, we dispense with the condition of pre-deposit of balance amount of Service Tax and entire amount of penalty and stay recovery of the same during the pendency of the appeal - Stay granted.
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2014 (1) TMI 1143
Stay application - Waiver of pre deposit - Advertising agency service - Held that:- there is no dispute about the execution of the agreement as also providing of advertisement service to GRP M to the ultimate client. It is only reading of the agreement by which the Revenue has developed the argument that the entire services of advertisement were being provided by the appellant and the consideration was being routed through GRP M. As per the appellant M/s. GRP M is charging full amount from their client and is only passing a part amount to the appellant as a consideration for their creative inputs in which case the interpretation of the agreement by the Revenue cannot prima facie be sustained - Revenue cannot act against their own Board’s circular No. F. No. 341/43/96-TRU, dated 31-10-1996 which are in favour of the assessee. We also prima facie find favour with the appellant on plea of limitation - Stay granted.
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2014 (1) TMI 1142
Waiver of pre deposit - Stay application - Commercial training and coaching - Imposition of interest and penalty - Notification No. 24/2004-S.T., dated 10-9-2004 - Held that:- Following decision of Ashu Export Promoters (P) Ltd. v. CST, New Delhi [2011 (11) TMI 387 - CESTAT, NEW DELHI] - Wigan and Leigh College (India) Ltd. v. Joint Commissioner [2007 (8) TMI 61 - CESTAT, BANGALORE] - Prima facie case is in favour of assessee - Stay granted.
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Central Excise
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2014 (1) TMI 1114
Exisability of Product – Demand made under Rule 6(3) of CENVAT Credit Rules 2004 – Electricity produced for making use certain inputs – Waiver of Pre-deposit – Held that:- The Commissioner appears to have travelled beyond the scope of the show-cause notice by observing that the assessee ought to have reversed the CENVAT credit taken on inputs used in or in relation to generation of electricity - The show-cause notice had demanded 10% of the price of electricity sold by the assessee - two rounds of litigation have come through before the Commissioner (Appeals) with no consistent view having been taken by any of the authorities having regard to the case of the Revenue as made out in the show-cause notice – pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 1113
Application of early hearing Held that:- Though the application for stay was filed way back in March, 2012, it could not be listed & heard by the Tribunal for no fault of the Applicant - both sides have agreed that the matter should be heard at the earliest - the stay application has been fixed for hearing, with the consent of both sides - Decided in favour of Assessee.
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2014 (1) TMI 1112
Waiver of pre-deposit of Interest – Refund of cess and Education cess - Revenue was of the view that self re-credit of cess and education cess was not available – Held that:- Once the department itself contended that cess and education cess is not duty of excise so as to disentitle an assessee to claim the self- refund - a contra stand cannot be taken by the Revenue - The amount of interest does not stand quantified by the lower authority till date - the application is to be dismissed - the applicant is given liberty to file a fresh application as and when the interest amount is quantified – stay application not maintainable – Decided in favor of Assessee.
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2014 (1) TMI 1111
Denial of cenvat credit – Input services used in trading activity – Waiver of pre-deposit – Whether trading activities were ‘exempted services’ or not - Held that:- The demand raised in the show-cause notice was a demand in terms of Rule 6(1) and not anything under Rule 6(3A) - Trading activities came to be christened as exempted services for purposes of Rule 6(3) as late as in 2011 - The legal fiction was created only for purposes of Rule 6(3) - Prima facie, it has nothing to do with Rule 6(1) - CENVAT credit was taken on input services which were used in trading activities, and utilized it for payment of duty on their excisable products - As trading activities have never been recognized by the statute as taxable services, prima facie, the appellant was not entitled to take CENVAT credit on input services which were used in trading activities during the material period – Thus, denial of CENVAT credit cannot be faulted – Appellant is directed to deposit Rupees two lakhs as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2014 (1) TMI 1110
Unaccounted stock of MS ingots - Excess quantity found in transit from factory to job workers premises – Waiver of pre-deposit – Held that:- The assessee admittedly has not paid the fine – Thus, there is no requirement of pre-deposit of the fine - Predeposit is required of only duty and penalty - As regards the duty demanded on the confiscated goods, again, there is no requirement of predeposit vide Section 35F of the Central Excise Act - As regards the duty demanded on the excess goods, the same stands paid and appropriated – Thus, pre-deposits waived till the disposal – Stay granted.
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2014 (1) TMI 1109
Denial of cenvat credit – Proper documents could not be furnished - Held that:- CENVAT credit was denied to the party on the ground that the same was taken as excess credit - With regard to the validity of the documents used by the assessee for availing the rest of the credit, the appellant has not made out a prima facie case – the appellant is directed to make a pre-deposit the balance amount of CENVAT credit – stay not granted.
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2014 (1) TMI 1108
Condonation of Delay – Delay of 177 days – Held that:- The applicant challenged the order before the Hon’ble High Court and it was held that the question whether inclusion of the pre-delivery inspection charges and after sales service charges is justified is a question to be decided in the appeal, if any, filed against the order-in-original - prima facie it is a fit case for condoning the delay in filing the appeals - The COD applications are allowed. Stay application – Held that:- The revenue has challenged the order passed by the High Court - thus, status quo be maintained in respect of the recovery of the dues till then – Stay granted.
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2014 (1) TMI 1107
Reversal of CVD - Waiver of Pre-deposit – Held that:- The applicant had cleared 830 Nos. of wheels on reversal of CVD which were availed as credit in their Sodepur Unit - Assessee contended that they were not even required to reverse the said CVD sets as the same were imported against DEEC Scheme without payment of CVD & SAD – assessee had made an offer to deposit Rupees Ten Lakhs as pre-deposit 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 1106
Restoration of appeal - Clearance from Committee of disputes not granted – Held that:- Following M/s Burn Standard Co. Ltd. Versus Commr. of Central Excise, Kol. II [2013 (11) TMI 615 - CESTAT KOLKATA] - after taking into consideration the opinion of the Larger Bench, once the COD permission has been declined, the issue cannot be reopened again – there was no merit in the application – Decided against Assessee.
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2014 (1) TMI 1105
Exisability of product - Residue emerged as red mud during manufacture of aluminium – Waiver of Pre-deposit - Held that:- Assessee contended that the amendment does not deal with the issue of manufacture at all – Relying upon Commissioner of Central Excise Allahabad, UP Versus M/s. Balrampur Chini Mills [2012 (8) TMI 599 - CESTAT, NEW DELHI] - the amendment made in Section 2 (d) has been considered in the case and the Court ordered that ‘Bagasse’, which is a by-product similar to red mud, emerging in the manufacture of sugar is not excisable goods - The question whether residue and or a so called waste is a manufactured product or not is to be examined with reference to each product and there is already a finding of the Tribunal that red mud is not a manufactured item – there is no reason to upset the decision – thus, pre-deposits waived till the disposal – stay granted.
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CST, VAT & Sales Tax
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2014 (1) TMI 1154
Stay application - 75% stay already granted to applicant - Held that:- where a statutory appeal has been entertained or admitted for consideration and order impugned is likely to visit the party with civil consequences judicial approach requires that during the pendency of appeal the operation of such order must be suspended in order to avoid undue hardship to the party concerned and to preserve the rights of the parties pending adjudication of the lis - Court should not grant interim relief/stay of the recovery merely by asking of a party. It has to maintain a balance between the rights of an individual and the State so far as the recovery of sovereign dues is concerned. While considering the application for stay/ waiver of a pre-deposit, as required under the law, the Court must apply its mind as to whether the appellant has a strong prima facie case on merit. In case, it is covered by the judgment of a Court/ Tribunal binding upon the Appellate Authority, it should apply its mind as to whether in view of the said judgment, the appellant is likely to succeed on merit, if an appellant have strong prima facie case, is asked to deposit the amount of assessment so made or penalty so levied, it would cause undue hardship to him, though there may be financial restrain on the appellant running in a good financial condition. The argument that appellant is in a position to deposit or if he succeeds in appeal, he will be entitled to get the refund, are not the considerations for deciding the application. The order of the Appellate Authority itself must show that it had applied its mind to the issue raised by the appellant and it has been considered in accordance with law. The expression ' undue hardship' has a wider connotation as it takes within its ambit the case where the assessee is asked to deposit the amount even if he is likely to exonerate from the total liability on disposal of his appeal. Assessee has already got the stay of the demand of 75%. Now, there is no justification to grant further stay in the matter - First Appellate Authority directed to decide the First Appeal within a period of two months from today. Till disposal of the appeal, the status quo, as on today, shall be maintained - Decided in favour of assessee by way of remand.
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2014 (1) TMI 1153
Imposition of tax liability - Assessment made on the basis of diary which contain entries relating to assessee - Cross examination of person whose diary was seized not done - Held that:- The revisional jurisdiction can be exercised by this Court under Section 11 of U.P. Trade Tax Act, 1948 and Section 58 of Uttar Pradesh Value Added Tax Act, 2008, the language whereof is pari materia, only when a question of law has arisen in the matter - Statement of Sri Virendra Mistri was relied by Assessee himself and he has filed his affidavit, therefore, question of calling upon Assessee to be cross-examined by Assessee did not arise, and, authorities below have not committed any mistake by not accepting Assessee's request for cross-examination of Virendra Mistri - Decided against assessee.
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Indian Laws
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2014 (1) TMI 1141
Request for information - Right to information - Request denied holding that queries raised did not fall in the ambit of the Section 2(f) - Partial documents provided - Held that:- CPIO has not interpreted Section 2(f) in the right perspective. According to me, all the queries raised by the appellant fall in the ambit of Section 2(f) and should have been responded to by the CPIO. Hence, the order passed by the CPIO is set-aside and he is hereby directed to provide para-wise information to the appellant in 3 weeks - Decided in favour of appellant.
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