TMI Tax Updates - e-Newsletter
January 28, 2013

Case Laws in this Newsletter:

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

News

1. Anand Sharma meets Walmart CEO at Davos

Notifications

Income Tax

1. 4/2013 - dated 24-1-2013 - IT

Deduction Of Tax At Source - Interest Other Than Interest On Securities

Highlights / Catch Notes

Income Tax

• Disallowance of Commission Upheld for Payments to Firm Where Director Holds Substantial Interest Under Income Tax Law.

  Case-Laws - AT : Disallowance of Commission - Paid to firm in which director has substantial interest - the firm has earned the commission only from the assessee & not from any other party - Disallowance confirmed - AT
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• Section 54F Tax Exemption: Farmhouses Qualify as Residential Houses Based on Intended Use, Not Continuous Occupancy.

  Case-Laws - AT : Exemption u/s. 54F - Since a house is called residential house with reference to the purpose of its users, it may not be necessary that somebody should live in it continuously. It is enough if it was a house for residence. A farmhouse is also a residential house. - AT
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• Appeal Filed in Wrong Court Highlights Importance of Adhering to Jurisdictional Boundaries for Legal Compliance.

  Case-Laws - HC : Jurisdiction of High Court - The doctrine of precedents - Rule of binding efficacy of law - Revenue file appeal with P&H High court instead of Delhi High court - No Territorial Jurisdiction - HC
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• High Court: Assessing Authority Can't Refer to DVO for Property Valuation If Assessee's Books Aren't Rejected.

  Case-Laws - HC : Undisclosed investment - Construction of property - assessing authority could not have referred the matter to the DVO when there was no rejection of books of account maintained by the assessee. - HC
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Customs

• Illegal Sheep Import Case Highlights Unusual Smuggling Activity, Suggests Reduced Penalty Due to Low Smuggling Risk.

  Case-Laws - AT : Illegal Foreign origin sheep import without payment of Customs duty - Sheep is not an item which is regularly smuggled or commodities prone to smuggling thus supports the case for reduced penalty - AT
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• Party Seeks Penalty Waiver for Illegal Peacock Feather Export; OIO Lacks Clarity on Notice Service Attempts.

  Case-Laws - AT : Illegal export of Peacock Feathers, prohibited goods - seeking waiver of penalty - OIO is silent as to whether another attempt was made to serve the notice or not. - There is violation of natural justice - AT
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Service Tax

• Court Waives Pre-Deposit Requirement, Grants Stay on Service Tax Demand for Co-Owners Receiving Separate Rent Payments.

  Case-Laws - AT : Service tax on renting - Co-owner of a property - Tenant issues different cheques to all the individuals as they are co-owners - Waive pre-deposit and Stay granted - AT
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• Service Tax Without Invoice: Deposit Obligation and Unjust Enrichment u/s 12B Clarified.

  Case-Laws - AT : Refund - Unjust enrichment u/s 12B - When there is no invoice raised or issued for collection of an amount as Service Tax, the question of depositing the same with the Government does not arise. - AT
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• Court Rules Entire Service Tax Deposit Made Under Protest; Letter Cannot Be Split to Suggest Partial Compliance.

  Case-Laws - AT : Refund of ST paid under protest - Whether the deposit of service tax was under protest or not - it can be very clearly concluded that it was the entire deposit which was under protest and the said letter cannot be segregated into two different parts. - AT
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Central Excise

• High Court Confirms Recovery Halt During Stay Application as Per Circular No. 967/01/2013-CX on Central Excise.

  Case-Laws - HC : Recovery of confirmed demand during pendency of stay application - Circular No.967/01/2013-CX dated 01.01.2013 - there will be an order of interim stay - HC
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• Trademark Dispute: "Mankoo" Use Since 1981 Unaffected by M/s. Mankoo International Industries' Registration; SSI Exemption Involved.

  Case-Laws - AT : SSI exemption – Brand name of another - The appellant has been using the trade mark ‘Mankoo’ continuously since 1981. Therefore, registration of trade mark ‘Mankoo’ in favour of M/s. Mankoo International Industries prima facie would not affect the right already vested in the appellant. - AT
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• Remission of Duty Granted for Molasses Damaged by Weather; No Evidence of Clandestine Removal Found.

  Case-Laws - AT : Remission of duty – In the absence of any evidence to show that the molasses were removed clandestinely, same were destroyed or damaged on account of weather conditions and rainy season. The remission has to be granted - AT
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• Cenvat Credit Denial: Assessee Entitled to Credit; Extended Limitation Period Not Applicable.

  Case-Laws - AT : Denial of Cenvat credit - As this is an issue of interpretation as to whether the assessee are entitled to credit or not, therefore, extended period of limitation is not invokable. - AT
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VAT

• Court Rules Leasing Company Can't Claim Proportionate Input Credit Under VAT Act and Rules.

  Case-Laws - HC : Whether a leasing company shall avail the Input Credit available to them on proportionate basis? - the question of spreading over his credit, proportionately or otherwise, is unfeasible and in any case not borne out by the VAT Act or the Rules - HC
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• High Court Rules Leasing Activities Qualify as Resale, Allowing Input Tax Credit Claims Under DVAT 2004 Section 9.

  Case-Laws - HC : Entitlement to claim input tax credit having regard to Section 9 of the DVAT 2004 - leasing activity carried on by the assessees does amount to resale. - HC
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Case Laws:

• Income Tax

• 2013 (1) TMI 574
  Penalty u/s 271(1)(c) - penalty set aside by Tribunal - survey under Section 133A - Unaccounted share capital receipt - assessee surrendered the income under "income from other sources" - Held that:- Revenue is right in contending that there was absolutely no explanation from the assessee in respect of the amount of Rs.40,74,000/- when the AO called upon the assessee to produce the evidence as to the nature and source of the amount received as share capital, the creditworthiness of the applicants and the genuineness of the transactions the assessee simply folded up and surrendered a sum of Rs.56.49 lacs in its hands initially, which was later scaled down to Rs.40,74,000/-. The assessee merely stated that with a view to avoid litigation and buy peace it surrendered the income under the head “income from other sources”. In the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 is attracted. It cannot be denied that the nature and source of the amount surrendered are facts material to the computation of the total income of the assessee. The Revenue is entitled to know the same and if the nature and source of the amount are not explained, it is entitled to draw the inference that the amount represents the assessee's taxable income. It is the assessee who has received the monies & in the absence of any explanation is statutorily considered as amounting to concealment of income - the Tribunal fell into error in setting aside the penalty imposed by the AO and upheld by the CIT(Appeals) - against the assessee

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• 2013 (1) TMI 573
  Addition u/s 68 - rejecting the gift received by appellant - reopening of assessment - Held that:- As specific information was received that the loans/credit entries given by Ganga Ram Agarwal Group of Companies who were indulging in giving bogus entries and therefore, the assessment has rightly been reopened as it is based on relevant materials and information. So far as the factum of gift is concerned perusing the gift deed even though the donor and donee belonged to the same religion, but the relationship has not been mentioned. It is not clear as to whether the donor was related to the donee or not. Further, notice u/s 133(6) was sent and no reply was filed. It was the obligation and duty of the appellant to give the address or to produce the donor because the appellant was claiming that she had received the amount of Rs. 5 lakhs as gift, which is not liable to tax. She having failed to discharge the burden, the authorities have rightly treated it as income - against assessee.

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• 2013 (1) TMI 572
  Addition u/s 68 - assessee could not discharge his onus of providing the genuineness of the share transaction - ITAT deleted the addition by assessing the income under the head LTCG as shown by the assessee - Held that:- The assessee was in possession of the shares in question and had sold the said shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence since the same were seized by the Revenue Department, there is no fault lies with the assessee. From the aforesaid facts it is clear that the shares in question were allotted to the assessee in the public issue which were held in demat a/c of Stock Holding Corporation of India Ltd. The shares were transferred to Abhipra Capital Ltd. The sale consideration was received by demand draft. Therefore, the transaction in question cannot be said to be fake and is a genuine transaction. The Tribunal has not committed any error in upholding the order of CIT(Appeals) by deleting the addition - in favour of assessee.

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• 2013 (1) TMI 571
  Deduction u/s 80-P (2) (a) (i) - interest received from non-members - revenue contested against Tribunal in allowing the deduction as clause 41 of the bye laws of the society clearly mentioned that loans and advances be given to women members only - Held that:- As decided in CIT, Muzaffarnagar Versus Muzaffarnagar District Co-Operative Bank Ltd. [2012 (12) TMI 493 - ALLAHABAD HIGH COURT] & Commissioner Of Income Tax, Ghaziabad Vs. M/s Ghaziabad Zila Sahkari Bank, Ghaziabad [2013 (1) TMI 553 - ALLAHABAD HIGH COURT] & [2013 (1) TMI 552 - ALLAHABAD HIGH COURT] that the income arising out of banking activities by Cooperative Bank is exempted under Section 80P (2) (a) (i) - in favour of assessee.

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• 2013 (1) TMI 570
  Addition made u/s 68 - unexplained receipt - assessee could not prove the sale of jewellery - ITAT deleted the addition - Held that:- The assessee had submitted sufficient material and evidence to show that he was in possession of the requisite jewellery as the same was declared under the Voluntary Disclosure of Income Scheme, 1997, which was also accepted and tax was paid. Further, Sri Bishan Chand, partner of M/s. Bishan Chand Mukesh Kumar was examined on oath by AO who categorically stated that he had purchased the jewellery in question from the respondent assessee and had made the payment through bank draft. Assessment under the Delhi Sales Tax Act had also been made on the turnover and further, all the purchases and sales have been accepted by the Assessing Authority under the Income Tax Act while completing the assessment for the instant year under Section 143 (3) - order of the Tribunal does not suffer from any legal infirmity as no unaccounted receipt is confirmed - in favour of assessee.

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• 2013 (1) TMI 569
  Disallowance of Commission - commission paid for high seas sales to a firm [(M/s Motilon Synthetics] in which the directors hold substantial interest - AO invoked the provisions of S. 40A(2b) - Held that:- No document has been furnished which would substantiate the rendering of service by the firm to the assessee or any evidence to show that firms were introduced by the firm or the sales were brought in by the firm. From the copy of the letter dated 1.4.2000 appointing Motilon Synthetics as sole selling agent cointain certain conditions to be complied but nothing has been brought on record to prove the compliance of the aforesaid conditions. - From the schedule of the profit and loss account it is seen that Motilon has earned the commission only from the assessee & not from any other party and therefore it could not be established that Motilon is in the business of commission agency and has also earned commission from other parties - no reason to interfere with the order of CIT(A) - CIT(A) following the decisions of Apex Court (1972 (9) TMI 4 - SUPREME COURT) and (1966 (9) TMI 30 - SUPREME COURT) - Decided against the assessee. Disallowance of Interest - loan from Motilon Synthetics (sister concern) - assessee has given interest free advance to Baba Synthetics (also its sister concern) - Held that:- Considering the undisputed fact that the assessee has paid interest on borrowed funds and had also lend interest free loan to its sister concern. CIT(A) while upholding the decision of AO has given a finding that assessee has not been in a position to prove the commercial expediency whereby it was required to give interest free loans to Baba Synthtics. As assessee could not controvert the findings of CIT(A) by bringing any material on record no reason to interfere with the order of CIT(A) - against assessee.

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• 2013 (1) TMI 568
  Exemption u/s. 54F - disallowance of claim as the advances were paid for the purpose of construction only after 31.07.2008 i.e., after the due date of filing the return - Any portion of the sale consideration was not deposited in the capital gain scheme account as mandated by sec. 54 within the stipulated time - Held that:- Admittedly, in this case the assessee purchased a property measuring 17 acres 47 cents along with the building for a consideration of Rs. 2.25 crores and also incurred expenditure of Rs. 21,37,800 towards registration charges. The assessee also claimed expenditure of Rs. 27,03,100 towards settling the claims of two persons viz., Sri J. Subramanyam Naidu and B.C. Reddappa Reddy. The fact of purchasing the above property cannot be disputed. This property was purchased through the High Court order from Official Liquidator. As DR produced a letter that the vital documents filed by the assessee are not available in the assessment folder. To that extent there is a contradiction between the AO and the CIT(A)'s order. These facts are to be examined. As the expression "residential house" used in section 54F has not been defined in the Income-tax Act. The popular meaning of the word "house" is a place or a building used for habitation of persons. Since a house is called residential house with reference to the purpose of its users, it may not be necessary that somebody should live in it continuously. It is enough if it was a house for residence. A farmhouse is also a residential house. Thus if the evidence brought on record by the assessee to show that there was a dwelling unit in the present property and the investment has been made by the assessee for construction or remodelling of the existing building as stipulated herein below the claim of the assessee has to be allowed - claim of the assessee cannot be rejected on any superficial ground that the assessee had not made investment within the time stipulated and the building constructed by the assessee is not a residential house - remit the issue back to the file of the AO who will examine the issue afresh in the light of the evidence brought on record by the assessee - Also the amount incurred by the assessee towards settling certain claims at Rs. 27,03,100 cannot be considered for deduction u/s. 54F as the new property acquired by the assessee is through the High Court order from Official Liquidator and thud unable to see any reason to incur such an amount - in favour of assessee for statistical purposes.

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• 2013 (1) TMI 567
  Non deduction of TDS u/s 194C - hiring of lorry for carrying the goods - Held that:- The legislature with effect from 01-04-1995 inserted Explanation 4(c) to Section 194C to include the term "work" - carriage of goods or passengers by any mode of transport other than by railways. Therefore, the contract shall be for carriage of goods or passengers other by railway. As in the present case, admittedly, the carriage of goods was not entrusted with the lorry/truck owners from whom the taxpayer has hired the lorries/trucks or with the taxpayer himself. Admittedly the responsibility of carriage of goods remains with M/s Logos Logistics Pvt Ltd. No work of carriage of goods was entrusted either with the taxpayer or with the lorry/truck owners from whom the taxpayer hired the lorries/trucks. Therefore, there is no contract for carriage of goods between the taxpayer and the lorry/truck owners from whom the trucks/lorries were hired. As such provisions of section 194C are not applicable to this transaction. See Mythri Transport Corpn. case (2009 (1) TMI 337 - ITAT VISAKHAPATNAM), Cochin Goods Transport Association (1998 (10) TMI 68 - KERALA HIGH COURT) & Associated Cement Co. Ltd. v. CIT [1993 (3) TMI 1 - SUPREME COURT] Moreover, the taxpayer has admittedly paid hire charges to lorry owners. Thus as decided in Merlyn Shipping & Transporters v. Asstt. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM ] in respect of amount paid on or before the last day of the financial year and it was held that the amount which was already paid cannot be a subject matter of deduction u/s 40a(ia) - in favour of assessee

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• 2013 (1) TMI 566
  Addition in respect of interest on borrowed capital - CIT(A)deleted the addition - Held that:- Considering the documentary evidences produced by the assessee that he had not availed any specific loan which has been used for addition to capital assets with no bank borrowing in order to acquire fixed assets & whatever banking loan was availed it was used for working capital as assessee had sufficient interest-free funds for procuring fixed assets revenue could not controvert the above findings of CIT(A) with any cogent evidence & on perusing the statement of Chartered Accountant's of the assessee company that “borrowing costs are recognized as expenses in the period in which they are incurred, except to the extent where borrowing costs that are directly attributable to the acquisition, construction, or production of an asset till put for its intended use is capitalized as part of the cost of that asset, it is apparent that the assessee has not charged any interest expense attributable to purchase of fixed asset to the profit and loss account of the assessee - against revenue. Disallowance of depreciation and other expenses - CIT(A)deleted the addition - Held that:- As decided in assessee's own case [2010 (11) TMI 841 - ITAT AHMEDABAD] in regard to ownership of the vehicle it is purchased by the assessee-company in the name of Director and it is not in dispute that fund for purchase of the vehicle was from the assessee-company as assessee filed complete funds flow statement which proves that the vehicle was purchased from the assessee-company’s funds. As decided in CIT v. Mohd. Bux Shokat Ali [2001 (2) TMI 26 - RAJASTHAN HIGH COURT] assessee company-firm was entitled to depreciation on vehicle purchased by it for its business purpose but registered in the name of one of the partners- car expenses cannot be disallowed in the hands of a company as there cannot be any personal expenses in case of a company as decided in Sayaji Iron & Engineering Co. case [2001 (7) TMI 70 - GUJARAT HIGH COURT] - against revenue. Disallowance by capitalizing Repairs and Maintenance expenses - CIT(A) deleted the addition - Held that:- The reasons pointed out by the assessee for treating the payments for purchase of various items as revenue expenditure has not been duly confronted by the AO and made a finding on the same as to why these payments are to be treated as capital expenditure. Since, the amount involved was meager compare to the overall transactions of the appellant company, CIT(A) judiciously allowed the appeal of the assessee in its favour. Thus as the amount involved is negligible and no resource needs to be unnecessarily wasted on this issue therefore confirm the order of CIT(A) - against Revenue. Addition u/s 40A (2) (b) - CIT(A)deleted the addition - Held that:- CIT(A) was right to hold that the price difference was due to the nature of trading i.e. wholesale and retail. Moreover, as observed by the CIT(A), AO has not brought out any material on record to establish that the appellant had sold the products to its sister concern below the prevailing market rate. Thus in total conformity with the order of the CIT(A) and, therefore, uphold the same - against revenue.

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• 2013 (1) TMI 565
  Territorial Jurisdiction – Jurisdiction of High Court - The doctrine of precedents - Rule of binding efficacy of law - The assessment order, u/s 143(3) was passed by the ITO, Ward-14(1), New Delhi - Partly allowed by the CIT(A), New Delhi – Appeal before Tribunal, Delhi Bench 'F', also partly allowed – In Lieu of u/s 127, whereby the assesse's case had been transferred from ITO, Ward-14(1), New Delhi to DCIT/ACIT, Central Circle-II, Chandigarh - Revenue file appeal with P&H High court instead of Delhi High court Held that:- The said order dated 21.12.2010 would not confer jurisdiction on this Court as the assessment order was passed in December, 2008 and the CIT(A), New Delhi, decided the appeal on 24.02.2010. Once the respondent-assessee was being assessed by the ITO, Ward-14(1), New Delhi who had territorial jurisdiction over the assessee respondent, this Court would have no jurisdiction to hear the present appeal filed u/s 260-A. A conjoint reading of the aforementioned provisions makes it evident that the DG or Chief CIT or CIT is empowered to transfer any case from one or more A.O. subordinate to him to any other A.O. It also deals with the procedure when the case is transferred from one A.O. subordinate to a DG or Chief CIT or Commissioner to an Assessing Officer who is not subordinate to the same Director General, Chief Commissioner or Commissioner. The aforementioned situation and the definition of expression 'case' in CIT to jurisdiction of an A.O. is quite understandable but it has got nothing to do with the territorial jurisdiction of the Tribunal or High Courts merely because Sec. 127 dealing with transfer has been incorporated in the same chapter The present appeal is dismissed by holding that this Court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer at New Delhi. Consequently, the appeal is returned to the Revenue for filing before the competent Court of jurisdiction in accordance with law. No Territorial Jurisdiction

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• 2013 (1) TMI 564
  Undisclosed investment - Construction of property - Escaped assessment - Whether reopening of assessment on the basis of report from District Valuation Officer u/s 147 as valid, whereas books of account produced by the assessee were never rejected - Unexplained cost of construction – Held that:- Following the decision in case of Sargam Cinema (2009 (10) TMI 569 - SUPREME COURT OF INDIA) that the assessing authority could not have referred the matter to the DVO when there was no rejection of books of account maintained by the assessee. In favour of assessee

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• Customs

• 2013 (1) TMI 563
  Illegal Foreign origin sheep import without payment of Customs duty - Held that:- Considering the assessee's submission that they are poor persons and the very fact that they had brought sheep of foreign origin in the vessels for a small consideration would show that they were not professional smugglers and the activities were undertaken at the request of local resident and sheep were brought to India. Thus the value of the sheep involved and the very fact that the sheep were brought in four vessels and found in farm house in Ahmedabad would lend credence to the claim of the assessee. Sheep is not an item which is regularly smuggled or commodities prone to smuggling thus supports the case for reduced penalty - substantial reduction in fine and penalty is warranted - reduce the redemption fine on the four vessels to Rs. 50,000/- each and penalty on both the appellants to Rs. 5,000/- each.

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• 2013 (1) TMI 562
  Illegal export of Peacock Feathers, prohibited goods - seeking waiver of penalty imposed - assessee contested against non granting of personal hearing - Held that:- As the appellant vide his letter dated 04.6.2012 addressed to The Commissioner of Customs, Custom House, Ahmedabad again reminded that he has not received any communication from their office. OIO seems to have been passed on 06.6.2012 which records that appellant was issued the notice of hearing but the same was received back as not claimed. OIO is silent as to whether another attempt was made to serve the notice or not. Appellant's conduct in this case also needs to be reprimanded as he failed to follow up the need for personal hearing, after filing the reply to the show cause notice. There is violation of natural justice, therefore, in order to ensure that appellant appears for the personal hearing that may be granted, on remand, it is necessary to direct the appellant to deposit an amount of Rs. 1,00,000/- within eight weeks from today and report compliance on 24.01.2013.

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• Corporate Laws

• 2013 (1) TMI 561
  Scheme of Merger - applicant for recalling of order sanctioning scheme of merger of petitioner-transferor company with transferee-company as it was the case of the applicant that no information about the merger of the companies had ever been intimated to the applicant who was a majority shareholder of the transferor-company with stake of 52.47 per cent - Whether applicant was entitled to notice of meeting even though he had not taken any steps to get into register of members of company? - Held that:- There is no dispute that the name of the applicant was never entered into the register of members qua the 52,470 shares. On the date of the issuance of notices by the Chairperson for the meeting proposed for 17-4-1999, applicant was also not a member qua the 100 shares which were earlier held by him as on 27-2-1999 as he had transferred these shares in favour of Bhushan Dua as evident from transaction No. 4 reflected in the annual return 1998-99. The register of members maintained by the company from its inception, i.e., on 3-6-1982 evidenced that applicant had been registered as a member on 3-6-1982 and he ceased to be a member on 27-3-1999 as his 100 shares which he was holding were sold on 27-2-1999 this is the first requirement. It must also be completed in all respects. In the instant case the share transfer forms (relied upon by the applicant shows that they were unstamped. They are also admittedly only a photocopy of the original forms which is even otherwise not stamped. The mandate and requirements of section 108 have not been met. The company could not register the unstamped shares in favour of the petitioner. Thus transaction in non-compliance of section 108 would be void Thus to conclude rights as a member could be exercised by applicant qua the company only if his name had been entered into the Register of Members. In the absence of this registration, no right would accrue to him. Facts of instant case do not make out any such allegation of fraud. Record shows that the name of the petitioner was never entered into the register of members as a holder of 52,470 shares; his own case is that the share transfer forms were available with him in 1998; he however took no steps to get himself onto the register of members; fault was entirely of the petitioner; he thus, not being a member of the register of the members of the company; when the notices were issued by the Chairperson 23-3-1999 for the proposed meeting of the merger of transferor-company transferee company - Objections raised by the petitioner are wholly without any merit.

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• Service Tax

• 2013 (1) TMI 579
  Denial of CENVAT Credit - Whether services of CHA availed for export of goods on FOB basis is an eligible ‘input service' as defined in Rule 2(l) of the CENVAT credit Rules, 2004 as these are performed/received outside the place of removal - Service tax paid on CHA services - Travel agency service - Export of goods - Penalty under rule 15 - Held that:- Yes, Following the decision in case of LEELA SCOTTISH LACE PVT LTD (2010 (1) TMI 1188 - CESTAT BANGALORE) that the CHA services have been availed in respect of export of goods and as per the terms of contract of export, it is an FOB basis - In favour of assessee Travel agency services - CENVAT Credit availed for booking of tickets for travel of the employees for business purpose - Held that:- Following the decision in case of Ultratech Cement Ltd.,(2010 (10) TMI 13 - BOMBAY HIGH COURT) that any service which has a nexus with the business of manufacture comes within the scope of ‘input service' as defined in Rule 2(1) of the CENVAT credit Rules, 2004. The employees gone to abroad for purpose of export promotion, the same is integrally connected with the manufacturing activity of the appellant since export promotion is directly linked to the business of manufacture. In favour of assessee

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• 2013 (1) TMI 578
  Waiver of pre-deposit - Stay Petition - Penalties u/s 77 - Renting out of immovable property - Co-owner of a property - Tenant issues different cheques to all the individuals as they are co-owners - Availing SSI exemption - Notification No. 08/2008-ST dated 01.03.2008 - Held that:- 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. Waive pre-deposit and Stay granted

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• 2013 (1) TMI 577
  Waiver of Pre-deposit - Sponsorship Service - Applicant sponsored the cricket tournament of Indian Premier League(IPL) - Held that:- Following the decision in case of Kingfisher Airlines Ltd.(2012 (11) TMI 976 - CESTAT, MUMBAI)that pre-deposit has been waived on same ground. Sponsorship was a sports event and was exempted during the period of dispute. Waived the Pre-deposit and stay granted

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• 2013 (1) TMI 576
  Refund - Unjust enrichment u/s 12B of Central Excise Act, 1944 - Section 73A - Refund claim for the amount paid by him mistakenly on the amount collected from non-members – Department contended that gross charges collected from the clients is inclusive of Service Tax which implies that certain portion of the gross amount is collected as representing Service Tax – Held that:- Following the decision in case of SUBAH ENGINEERS PVT. LTD. (2005 (3) TMI 499 - CESTAT, CHENNAI) that this matter is no longer res Integra and the Respondent is eligible for the refund claim and, therefore, we order that the refund amount should be paid to the Respondent forthwith. When there is no invoice raised or issued for collection of an amount as Service Tax, the question of depositing the same with the Government does not arise. In favour of assessee

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• 2013 (1) TMI 575
  Service tax paid under protest - Refund of tax paid under protest - Whether the deposit of service tax was under protest or not - Appellant manufacturing country liquor for other – Business auxiliary services - Revenue demand Service Tax - Tax paid under protest – Subsequently there were decisions of various High Courts laying down that such activity is a manufacturing activity and will not attract Service Tax - Appellant claimed refund of service tax paid by them - Held that:- It has to be taken as if the payment for the past period was also under protest. This conclusion is further strengthened from para-5 of the above letter which uses the expression ‘paid under protest’. Admittedly the word ‘paid’ has to refer to service tax which is deposited by the appellant and the only deposit is for the period April, 2008 to June, 2008. As such it can be very clearly concluded that it was the entire deposit which was under protest and the said letter cannot be segregated into two different parts. Issue of limitation would not come into play. Order set aside – In favour of assessee

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• Central Excise

• 2013 (1) TMI 559
  Writ Of Certiorari - Petitioner challenges the Circular No.967/01/2013-CX dated 01.01.2013 and the consequential notice for recovery dated 09.01.2013 - Held that:- An appeal has been filed to the third respondent, the Commissioner of Customs (Appeals) on 22.12.2011 along with the stay application and no hearing has been granted so far. In the meanwhile, recovery notice has been issued on 09.01.2013 based on the impugned Circular dated 01.01.2013. despite filing of the stay application, the direction for recovery makes it mandatory for the authority to recover the amount within a period of 30 days after the filing of the appeal even if there is a stay application pending and has not been disposed of. The plea taken is that the proviso to section 129-E of the Customs Act does not specify any time limit. In such view of the matter, it is pleaded that the circular overreaches the provisions. Direction to post the matter on 31.01.2013 & there will be an order of interim stay till then.

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• 2013 (1) TMI 558
  Abatement of duty in case of non-production of goods - Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 – Whether continuous non-production of excisable goods for 15 days should be during a calendar month - Assessee is engaged in manufacture of Gutkha - Duty on the basis of packing machine - Excisable item, under Chapter 24 - Department argued that 15 days continuous period of non-production which entitle the assessee to abatement has to be in a given calendar month Held that:- The plea taken by department misconceived and is based on incorrect reading of Rule 10. Bare reading of the Rule shows, an assessee is entitled to abatement provided there has been no production in the factory for a continuous period of 15 days. The rule nowhere provides that continuous non-production of excisable goods should be during a given calendar month. There was no production in the factory of the assessee for a continuous period of 36 days. Therefore, claim of the assessee for abatement is fully justified. In favour of assessee

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• 2013 (1) TMI 557
  Waiver of Pre-deposit – Stay Petition - SSI exemption – Brand name of another - Notification No. 8/2003-C.E., dated 1-3-2003 – Trade and Merchandise Marks Act, 1958 - Trade Marks Act, 1999 - Trade mark was registered in the name of M/s. Mankoo International Industries in the year 2004 - Whereas the appellants have using this trade mark which belonged to their family since 1981 onwards Held that:- Following the decision in case of BHALLA ENTERPRISES (2004 (9) TMI 109 - SUPREME COURT OF INDIA) that if the assessee is able to satisfy the assessing authorities that there was no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption. An assessee would also be entitled to the benefit of the exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to such name. As per Sections 33 and 34 of Trade and Merchandise Marks Act, 1958 and Sections 33 to 35 of Trade Marks Act, 1999 that registration of trade mark by someone would not entitle to that person to interfere with or restrain the use of identical trade mark by any person or provided the said person or his predecessor has continuously used their trade mark from a date prior to the registration of trade mark by the third party. The appellant has been using the trade mark ‘Mankoo’ continuously since 1981. Therefore, registration of trade mark ‘Mankoo’ in favour of M/s. Mankoo International Industries prima facie would not affect the right already vested in the appellant. Therefore appellant has been able to make a strong prima facie case. Waiver of condition of pre-deposit. Stay Granted.

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• 2013 (1) TMI 555
  Denial of Cenvat credit - Capital goods as per Rule 2(a) of the Cenvat Credit Rules, 2004 - Non-Alloy Steel Bars - H.R.S.S. Plates - S.S. Plates - Steel doors Corrugated Roof Sheets – Used in their factory workshop for repair of machinery – Expended period of limitation – Penalty u/s 11AC Held that:- Following the decision in case of HINDUSTAN ZINC LTD. (2006 (5) TMI 44 - HIGH COURT RAJASTHAN) that the appellants are entitled to avail Cenvat credit on Non-Alloy Steel Bars, H.R.S.S. Plates and S.S. Plates, which are being used for repair of machinery in their workshop. As these items were not used for constructing support structures, therefore CENVAT credit allowed in respect of these items. In favour of assessee As regards Steel Doors and Corrugated Roof Sheets, the appellants failed to produce any supporting documents to prove that these items are being used in the workshop for repair of their machinery. As these items were not used for constructing support structures therefore, CENVAT credit on these items is denied. In favour of revenue As this is an issue of interpretation as to whether the assessee are entitled to credit or not, therefore, extended period of limitation is not invokable. Therefore, demand is restricted to the normal period of limitation. As this is an issue of interpretation, no penalties were also warranted, therefore, penalty u/s 11AC is waived

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• CST, VAT & Sales Tax

• 2013 (1) TMI 580
  Entitlement to claim input tax credit having regard to Section 9 of the DVAT 2004 - assessee/dealers are engaged in the business of leasing cars/motor vehicles - Held that:- Once it is held that the leasing of a car results in transfer of its right to use, the provisions of Section 9(1) would apply, because the cars were purchased by him, for the purpose of making sales (within the extended definition, i.e as leasing – or selling the right to use) - The concept of right to use would cover a wide spectrum of transactions; most certainly, a lease of the article, for a limited period, would be comprehended within the meaning of “right to use”. Therefore, the Court rejects the first submission of the revenue, and holds that Question No. 1 has to be answered in favour of the assessee, and against the revenue. Whether the Act makes a distinction between “deemed sale”- stipulated under Section 2(1)(zc) (i)-(vii) and sale as explained by the main body of the definition for the purposes of section 9(2), and Sl. No. 2 of List of Non-Creditable Goods as provided in Schedule VII - Held that:- There can be no doubt that “resale” should be construed according to the definition of “sale” under the Act which includes the transfer of right to use goods. The fiction created in defining "sale" as including transactions which otherwise, in the ordinary sense, would not have been but for the deeming provision, must apply as respect the entire Act, its Schedules, and the Rules made under the Act. The fiction has been created with respect to the term "sale", and would definitely extend correspondingly to the word "resale" as well. Thus this is a logical extension of the principle that “where the draftsmen uses the same word or phrase in similar contexts, he must be presumed to intend it in each place to bear the same meaning”. The reasoning of the Tribunal, and its reliance on the Hamdard case (2007 (4) TMI 607 - SUPREME COURT) is upheld. Thus, leasing activity carried on by the assessees does amount to resale. Applicability of value added tax on goods "Unmodified form" - Held that:- Having considered the meaning of the term "form", this Court is of the view that in the context of applicability of value added tax on goods, "unmodified form" would have to be mean that the goods remain in their original state. Mere change/modification by ordinary wear and tear would not amount to modification in form. Generally speaking, form would remain unmodified as long as the basic functionality, structure, and configuration remain unchanged. A complete reading of the relevant entries of the seventh schedule in this case would disclose that while facially, motor vehicles, per se are disentitled to input credit, significantly that entry (Sl. No.1) is subject to Entry No. 2. Entry 1 (i) (motor vehicles) is thus, subject to Entry 2, which, in its controlling part says “…Any entry in clause 1 other than item (ii), (xiii), (xiv) and (xv) shall not be treated as non-creditable goods if the item is purchased by a registered dealer for the purpose of resale in an unmodified form.”. Therefore, the articles in which the assessee deals with fall within the provisions of Sr. No 2 and are thus creditable goods. As a result of this discussion, it is held that the view taken by the Tribunal in favour of the assessee is correct - against the revenue. Whether a leasing company shall avail the Input Credit available to them on proportionate basis? - Held that:- This Court is of the opinion that while the Tribunal was correct in holding that the manner of grant of credit can be regulated by virtue of Section 12 (4), it fell into error in holding that Rule 4 regulated the grant of credit as it merely visualizes three situations in respect of the method of calculating the “amount of turnover or turnover of purchases arising in the tax period in the case of a sale or purchase occurring.”. Its reference, to sale by transfer of right to use, again is only in respect of the extent of sale for the concerned tax period. However, it does not support the conclusion that credit is admissible in respect of different periods, spreading over, as it were, the credit which a dealer can so enjoy for the duration of the agreement proportionately staggering payment of the amounts of input tax deductible towards credit. When a dealer, who is involved in leasing business, purchases cars, the point at which credit can be claimed is the tax period when he makes the purchase. The amount of tax – on the purchase so made can be claimed as a credit, in the turnover which he is obliged to declare to the VAT authorities. That turnover would be the total lease rental received by him, for the corresponding tax period (when the purchase is made by him), as well as any other VATable transaction he may be engaged in. Thus, the question of spreading over his credit, proportionately or otherwise, is unfeasible and in any case not borne out by the VAT Act or the Rules - There is no warrant for such method - question answered in favour of the assessee.

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• 2013 (1) TMI 560
  Sanction of a beer parlour ‘ON’ shop licence - Quashing of grant of exclusive privilege and licence granted - there has been no order relaxing the restrictions on the minimum distance as mentioned in Clauses (d) and (e) relating to the proposed shops in exercise of powers of the said Rule by the State Government - the proposed site was violative of sub-rule 1(c) of Rule 34 of Orissa Excise Rules, 1965 - Held that:- The High Court has opined that there is no order by the State Government relaxing the restrictions enshrined in clauses (d) and (e) of Rule 34(1) of the Rules in relation to the minimum distance between the proposed shops and the Vishnu Temple, petrol pump and bus stand and at a latter part of the judgment has expressed the opinion that there has been infraction of statutory Rule, namely, Rule 34 which casts a statutory duty on the department to pass on order with reasons relaxing the restrictions. Thus disposed to think that the High Court, as far as the first part of the opinion is concerned, has been guided by the factum that the Commissioner-cum-Secretary in his recommendation to the Minister of Excise and Tourism had not specifically referred to clauses (d) and (e) of Rule 34(1) of the Rules. It is pertinent to state here that it is perceptible from the note sheet that the Secretary had referred to the proposal received from the Collector, endorsement made by the Excise Commissioner, the objections raised by the objectors and also expressed the view that the said objections were devoid of merit and, accordingly, recommended for approval. The cumulative effect of the note sheet goes a long way to show that every authority was aware of the distance and recommended for relaxation of clauses (d) and (e) of sub-rule (1) of Rule 34 and the concerned Minister had endorsed the same. Non-mentioning of the Rule or sub-rule, does not tantamount to non-passing of an order. The dominant test has to be the application of mind to the relevant facts. The second part of the order, if properly appreciated, conveys that no reasons have been ascribed. The proviso to Rule 34(1) lays a postulate that the distance as mentioned under clauses (d) and (e) may be relaxed by the State Government in special circumstances. The recommendations made by the Collector refers to the circumstances, namely, that there is a demand for consumption of liquor within the hotel premises, that illegal liquor cases have been booked in the nearby area, and that the proposal is in the interest of the Government revenue. The said recommendations, as is reflectible, have been concurred with by the higher authorities and, hence, there can be no trace of doubt that they constitute the special circumstances. In view of aforesaid analysis, the appeals are allowed and the order passed by the High Court is set aside. It is further clarified that if the Government, if so advised, can invoke the power under the proviso to Rule 34(1) of the Rules for the purpose of relaxation for grant of exclusive privilege and licence pertaining to the said shops in respect of current and subsequent financial years. In the facts and circumstances of the case, the parties shall bear their respective costs - in favour of assessee.

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