TMI Tax Updates - e-Newsletter
January 30, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

Notifications

VAT - Delhi

1. F.7(239)/P-I/VAT/ 2009/1130-1143 - dated 23-1-2013 - DVAT

Oriental Bank of Commerce and Vijaya Bank added for e-tax payment.

Circulars / Instructions / Orders

VAT - Delhi

1. 28 OF 2012-13 - dated 24-1-2013

Filing of online returns for December, 2012 and third quarter of 2012-13.

2. 27 OF 2012-13 - dated 23-1-2013

The last date of online filing of return for the third quarter of 2012-13 is extended upto 01.02.2013. The last date of filing of hard copy of the return for the above return period is also extended upto 05.02.2013.

3. F.CST/CTB/DP/Security/3256-79 - dated 19-1-2013

Security arrangement in vyapar Bhawan in connection with Republic Day Celebration 2013.

Highlights / Catch Notes

Income Tax

• Court Denies Trust Registration Due to Ingenuine Activities u/s 12AA(1)(a) of Income Tax Act.

  Case-Laws - HC : Registration under Section 12A - the introduction of donors, shows in-genuineness of activities of the trust - sufficient reason to decline registration u/s 12AA(1)(a)- HC
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• High Court Rules DTA Supply Not Export; Inclusion in Export Turnover Is Opinion Change, Not Assessment Reopening Basis.

  Case-Laws - HC : Re opening of assessment - DTA supply in India does not constitute export out of India then why it has been included in export turnover? - This is a clear case of change of opinion - HC
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• Section 40(a)(i) does not apply to depreciation disallowance for non-deduction of TDS; focuses on other deductions.

  Case-Laws - AT : Disallowance of depreciation u/s 40(a)(i) for non deduction of TDS - no reason to disallow depreciation on capitalized amount as s. 40(a)(i) does not deal with deduction of depreciation - AT
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• Commissioner of Income Tax Highlights Assessing Officer's Dual Role as Adjudicator and Investigator u/s 263 for Accurate Assessments.

  Case-Laws - AT : Validity of assessment made u/s 263 by CIT - The role of the Assessing Officer under the Income-tax Act, is not only that of an adjudicator, but also of an investigator. - AT
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Customs

• High Court Reduces Penalty for Non-fulfillment of Export Obligation under Value-Based Advance License to Rs. 1 Lakh.

  Case-Laws - HC : Penalty on non fulfillment of export obligation in respect of the value based advance license - penalty reduced to an amount of Rs.1.00 lakhs. - HC
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• Awareness of Facts: Omission by One Party Doesn't Equal Suppression in Customs Law Extended Limitation Cases.

  Case-Laws - SC : Extended period of limitation - Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. - SC
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Service Tax

• Refund Approved for Service Tax Paid on Transport of Empty Containers under Notification No.41/2007-ST.

  Case-Laws - AT : Refund under Notification No.41/2007-ST, dt.06.10.2007 - appellants are entitled for refund of the Service Tax paid on goods transport agency service received by them for bringing the empty containers in the factory premises - AT
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• Settle Service Tax Before Show Cause Notice to Waive Penalty u/s 76 Using Section 80.

  Case-Laws - AT : Non-imposition of penalty u/s 76 - invoking section 80 - if Service Tax liability is discharged before issuance of show cause notice, the provision of Section 80 can be brought into play and penalty can be waived - AT
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Central Excise

• Non-inclusion of drawing and designing charges in assessable value was a bona fide mistake, not tax evasion.

  Case-Laws - AT : Non inclusion of drawing and designing charges in the assessable value - it was a bonafide mistake and there was no intention to evade Central Excise duties as they have already discharged service tax on the drawing and designing charges - AT
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• CENVAT Credit Allowed for Tool and First Aid Kits Sold with Motorcycles; Qualify as 'Inputs' for Credit Purposes.

  Case-Laws - AT : CENVAT credit wrongly availed - Whether tool/first aid kits sold along with motorcycle fall within the purview of the definition of ‘input’ - held yes - AT
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Case Laws:

• Income Tax

• 2013 (1) TMI 630
  Penalty u/s 271(1) (C)(iii) - appellant has transferred majority of his shares to a firm closely connected at a lower rate - the loss emanating from such deliberately chosen transaction of sale of shares is a false loss - Held that:- As decided in CIT Vs. Sangrur Vanspati Mills Limited [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] that for levy of penalty, there should be conclusive evidence that the assessee has concealed the particulars of income. Thus the tests specified therein are wholly satisfied in the present case. It is proved that the appellant has concealed the particulars of his income by giving inflated losses. Such finding of fact does not give rise to any substantial question of law - penalty confirmed - against assessee. Dismissed.

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• 2013 (1) TMI 629
  Additions u/s 69 - search conducted u/s 132 - notice u/s 153C - valuation of properties referred to District Valuation Officer (DVO) - ITAT deleted the addition - Held that:- No reason to differ from the view taken by the Tribunal as no material was found in the search and seizure operations, which would justify the AO’s action in referring the matter to the DVO for his opinion on valuation of the said properties. If that be the case, then the valuation arrived at by the DVO would be of no consequence. In any event, the Tribunal has also, on facts, held that the DVO’s valuation was based on incomparable sales, which is not permissible in law - in favour of assessee.

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• 2013 (1) TMI 628
  Registration under Section 12A - assessee has failed to prove the genuineness of its activities - Held that:- The list of 87 donors shows that the only names are mentioned without any address. The lack of information in respect of parentage, age, address or PAN Numbers in the list of donors are the good reasons for declining the registration of the assessee as a charitable trust. The list of such donors is sufficient to infer that about the genuineness of the activities of the trust as contemplated and required to be considered by the AO in terms of Section 12AA(1)(aa). Thus on the basis of enquiry conducted and the information submitted by the respondent, the introduction of donors, shows in-genuineness of activities of the trust. Therefore, it is a sufficient reason to decline registration in terms of Section 12AA(1) (a) - in favour of the Revenue

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• 2013 (1) TMI 627
  Gift tax on the value of the bonus shares - whether ITAT was right in law in holding that the provisions of section 16B(3) were applicable to this case - Held that:- As decided in assessee's own case in [2013 (1) TMI 608 - SUPREME COURT] where the order of the High Court has been set aside & remanded back for de novo consideration. In view thereof, the judgment and order in appeal in these cases is also set aside.

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• 2013 (1) TMI 626
  Computation u/s 80 HHC - scrap sale - Held that:- The expenditure is incurred by the assessee not for generation of the scrap but for generation of the finished product. There is and cannot be any expenses which are incurred for generation of scrap. Scrap is bi-product of the manufacturing activity. Therefore, there are no expenses which could be excluded from the sale of scrap. Since the question of law stands answered by this Court in favour of assessee as decided in CIT, Ludhiana Vs. Bicycle Wheels [2010 (10) TMI 496 - PUNJAB AND HARYANA HIGH COURT], Kar Mobiles' case [2010 (1) TMI 618 - KERALA HIGH COURT]& Mahavir Cycle Industries [2013 (1) TMI 610 - PUNJAB AND HARYANA HIGH COURT ] - substantial question of law answered in favour of assessee.

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• 2013 (1) TMI 625
  Re opening of assessment - DTA supply in India does not constitute export out of India then why it has been included in export turnover? - Held that:- Petitioner had filed his return pursuant to the notice and had also given his objections to the said notice which had been disposed of by an order dated 07.12.2009, rejecting the petitioner’s objections. The said order dated 07.12.2009 is also impugned in this writ petition. This is a clear case of change of opinion as it is writ large from the records of the case as AO had specifically raised a query with regard to the supplies made in the domestic tariff area and the assessee had given a detailed reply to the same. The AO, after considering the reply furnished by the assessee, framed the assessment order in which, he made specific references to exports in the domestic tariff area and / or constructive exports. While computing the claim for exemption u/s 10B AO has included the supply made in the domestic tariff area, both in the main body of the assessment order as also in Annexure-A thereto, which was the calculation of the deductions. Therefore, it is absolutely clear that the AO had applied his mind to the very issue which is now sought to be raised under Section 147. That would mean that the present venture of invoking Section 147 is nothing but a mere change of opinion, which is impermissible in law. It is also a case which was beyond the jurisdiction of the revenue audit which had pointed to the so-called discrepancies on points of law, particularly, on an interpretation of Section 10B as an audit party could not have commented on a point of law and, particularly, on an interpretation of Section 10B - writ petition allowed - in favour of assessee.

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• 2013 (1) TMI 624
  Unexplained share application - addition u/s 68 - ITAT deleted the addition - Held that:- The facts of the present case are more in line with facts of Lovely Exports (P) Ltd. (2008 (1) TMI 575 - SUPREME COURT OF INDIA) wherein held that if the share application money is received by the assessee-Company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to re-open their individual assessments in accordance with law - not to be treated as undisclosed income. As in the present case there was a clear lack of inquiry on the part of the assessing officer once the assessee had furnished all the material. In such an eventuality no addition can be made under section 68 - in favour of assessee.

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• 2013 (1) TMI 623
  Disallowance of club membership fee - Held that:- It is clear from the details that the expenditure is only towards entrance fee, subscription and other services of the club. AO has allowed the expenditure incurred for the services availed from the club and has not doubted the payment of the entrance fee and service charges for the club membership. Therefore,no discrepancy in the details of the expenditure which is towards entrance fee and subscription of member ship and not for any resort. Thus as similar disallowance made AO for the AYs 2004-05 to 2006-07 has been deleted by the CIT (A) and the revenue has accepted such orders - As AO has not brought out on record that there is a change in the facts and circumstances with respect to the claim of the assessee for the current AY rule of consistency has to be followed - in favour of assessee. Disallowance of sale discount u/s 40(a)(ia) - Held that:- Though the assessee has claimed that the discount was given to the distributor under the sale scheme expenses however, when this amount is not as per the obligation under the contract, then the assessee was required to produce the relevant records and material in support of its claim that such scheme of giving the benefit/incentive to the distributor was duly approved by the Board of Directors of the assessee company. As the assessee has failed to produce any material such as the scheme under which the benefit has been given to the distributors set aside this issue to the record of the AO to verify and examine the relevant record as to be filed by the assessee and then to decide this issue as per law - in favour of assessee for statistical purposes. Disallowance of depreciation claim on Foster's Brand u/s 40(a)(i) - Held that:- As decided in case of M/s Mark Auto Industries Ltd. [2013 (1) TMI 448 - PUNJAB AND HARYANA HIGH COURT] deduction u/s 32 is not in respect of the amount paid or payable which is subjected to TDS, but is a statutory deduction on an asset which is otherwise eligible for deduction of deprecation - Revenue was unable to substantiate that in the absence of any requirement of law for making deduction of tax out of the expenditure on technical know-how which was capitalized and no amount was claimed as revenue expenditure, the deduction could be disallowed u/s 40(a)(i). There was also no reason to disallow depreciation on such capitalized amount as the aforesaid provision does not deal with deduction of depreciation - In favour of assessee. Disallowance for not withholding of taxes on payment made on account of license fees u/s 40(a)(i) - Held that:- Following the decision of Sonata Information Technology Ltd. Versus Deputy Commissioner of Income-tax [2012 (9) TMI 335 - ITAT MUMBAI] and accordingly held that when the royalty for transfer of right to use of computer software does not fall under Explanation 2 to sec. 9(1)(vi), but the same falls under Explanation 4 to sec. 9(1)(vi), then in view of the Explanation to sec. 40(a)(i), the said amount cannot be disallowed under the provisions of sec. 40(a)(i) - in favour of assessee. Disallowance of interest for diversion of funds to the group companies u/s 36(1)(iii) - Held that:- This issue has not been examined on the aspect whether the assessee was having its own sufficient funds other than the borrowed funds to advance these amounts to the group companies namely M/s SAB Miller (A&A) Pty Ltd., and M/s MBL Investment Ltd. Hence, this issue is set aside to the record of the AO with the direction to examine the issue by taking into account all the relevant facts and availability of the assessee's owned funds as well as the above observations - in favour of assessee for statistical purpose. Arms length Price - when the payment of royalty is within the prescribed limit of press note no.9 of 2000 FDI policy, the same is at ALP - Held that:- As the assessee did not furnish the comparable data in respect of uncontrolled transactions which are similar to the transaction of the assessee as to that of AE has merely relied upon the Press Note no.9 of 2000 issued by the Ministry of Commerce and Industry in respect of FDI policy allowing the percentage of royalty in foreign exchange. Thus in agreement with the contention of the DR that the press note issued regarding FDI policy and prescribing the percentage of the royalty to the sales allowed under automatic route and cannot substitute as ALP to be determined under the provisions of the Act and Rules. FDI policy permitting certain percentage of payment of royalty is only for remittance of the amount in foreign exchange and therefore, such permission given in an entirely different context and purpose cannot be considered as relevant for determination of the ALP. See Nestle India Ltd [2011 (5) TMI 566 - DELHI HIGH COURT] - no substance or merit in the assessee's stand that when the payment of royalty is within the prescribed limit of press note no.9 of 2000 FDI policy, the same is at ALP - against assessee. Adjustment made by the TPO by determining the ALP - Held that:- It is manifest from the order of the TPO that the adjustment was made on the basis of comparing entity level result of the assessee with the entity level result of the comparables by applying TNMM method. There is no dispute that the international transaction in the case of the assessee constitutes only 3.93% of the total operating cost.Therefore, comparing the entity level result of the assessee with the entity level result of the comparables is absolutely in contravention of the provisions of the Transfer Pricing regulations as provided under the I T Act. In any case the international transaction has to be compared with the benchmarking as arrived at by taking into consideration the comparables of uncontrolled transaction. Therefore, the TPO proceeded in total disregard to the relevant provisions of the TP regulations by comparing entity level results of the assessee instead of comparing only the international transactions. Also in the subsequent year i.e 2008-09 & 2009-10 the cup method as adopted by the assessee for benchmarking its international transactions has not been disputed by the revenue, thus it is appropriate to determine the ALP by adopting the same method as it was accepted in the subsequent year - set aside the issue of determination of the ALP to the record of the AO to decide the same by adopting the cup method - in favour of assessee

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• 2013 (1) TMI 622
  India-Indonesia DTAA - Royalty receipt - Held that:- After going through the orders of Group Companies of McKinsey where similar issue has been adjudicated in favour of the assessee no need of further deliberation into the issue. AO has nowhere established that pieces of information supplied by the assessee were arising out of exploitation of the know-how generated by the skills or innovation of the persons who possesses such talent. Information received by McKinsey India was in the nature of data and same cannot be held to payment received as Royalty. Word Royalty in taxation-terminology has its distinct meaning and the amounts received by the assessee does not fall in that category. As far as taxing the receipts under the head Other Income is concerned, it is to be opinion that residuary head is analogous to sections 56-57. If a certain receipt cannot be taxed under any other head, only then the sections dealing with Income from Other Sources , come into play in domestic taxation matters. Likewise, under the DTAAs, if a sum can be taxed under any other Article, provisions of Article 22 will not be applicable. Thus in light of the earlier decisions of the Mumbai Tribunal income received by the assessee-company form McKinsey India is not to be treated as Royalty-rather it has to assessed as business income as per Article 7 of the DTAA - in favour of the assessee.

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• 2013 (1) TMI 621
  Validity of assessment made u/s 263 by CIT - Order of A.O. sought to be revised is erroneous and also prejudicial to the interests of the Revenue – Held that:- The role of the Assessing Officer under the Income-tax Act, is not only that of an adjudicator, but also of an investigator. He cannot remain passive in the face of a return which apparently may be in order but calls for further enquiry. He must discharge both the roles effectively. The assessment order passed by the A.O. should reveal that there is proper investigation and enquiry made by the A.O. and he has applied his mind to the material available before him before coming to his conclusions. In favour of revenue Tonnage Taxation - Chapter XIIG – Whether gain on account of foreign exchange fluctuation is related to the activity of operating qualifying ships has to be taxed under the Tonnage Tax Scheme or income from other sources - Held that:- Following the decision in case of Dredging Corporation of India Ltd. (2011 (7) TMI 584 - ITAT VISAKHAPATNAM) the gains realized on the foreign exchange fluctuation normally take the colour of the primary transactions. The assessee has entered into certain transactions in foreign currency in connection with its core activity. Accordingly the exchange difference arising out of such activities should be treated as related to the core activity – In favour of assessee Disallowance of Gratuity – CIT doubting the credibility of the report of the actuary – Revenue argued that there is no evidence of accrual of the liability by the close of the relevant accounting year, the expenditure cannot be allowed in terms of Sec.43B – Assessee had deposit said amount in gratuity fund with bank before the due date of filling of return - Held that:- The CIT was not justified in discarding the evidences produced before him, on doubts and presumptions only without properly verifying them. If the fact of payment of gratuity is established from the evidence available on record, then the deduction claimed by the assessee cannot be disallowed invoking the provisions of Sec.43B. Direct the A.O. to verify the bank account – Remand back in favour of assessee Disallowance of expenses for issuing Foreign Currency Convertible Bonds (FCCB) – Revenue or capital expenditure - Assessee has issued the FCCBs giving an option to the bond-holders for converting the bonds into shares – Held that:- A.O. has enquired about the issue of FCCB and the expenditure claimed in that regard, however, in the assessment order there is not even a whisper on this issue. Nothing is also available on record before us which reveals that the Assessing Officer has applied his mind to this issue and has made an in depth enquiry to find out the exact nature of the expenses claimed - Remand back to A.O.

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• Customs

• 2013 (1) TMI 620
  Penalty on non fulfillment of export obligation in respect of the value based advance license - Held that:- As there was a scheme of arrangement dated 17 December 1992, under which a division of Apar Limited was spun off to Apar Lamps Private Limited, which came to be named on 22 January 1993 as GE Apar Lighting Private Limited. The sequence of events in the present case took place shortly thereafter, the export having taken place within six months thereafter. Under the terms of the Exim Policy 1992-1997, both a merchant exporter or manufacturer exporter would otherwise be eligible for duty free licenses on certain conditions. There is no dispute about the fact that exports have been made and that foreign exchange has been realized. In this view of the matter,the imposition of a penalty in the amount of Rs. 5.60 lakhs is disproportionate. Ends of justice would be met if the penalty which has been imposed by the adjudicating authority is reduced to an amount of Rs. 1.00 lakhs. The order of the adjudicating authority as confirmed in appeal, shall stand modified accordingly.

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• 2013 (1) TMI 619
  Maintainability of WRIT Petition - Valuation - Under invoicing – Rejecting the invoice price - Under valuation of imported goods - Assessee engaged in the imported furniture business - Declaration filed by the exporters which shows different declared values in the country from where import made - Whether the petitioner was entitled for waiver of pre deposit of the entire amount of duty and penalty – Held that:- The remedy of appeal is provided under the Act which is evident from a reading of Section 130 itself, on a substantial question law. It is therefore clear that an efficacious remedy of appeal is guaranteed under the Act – In favour of revenue

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• 2013 (1) TMI 616
  Levy of customs duty on the import of furnace oil - also the penalty u/s 112 - assessee contested aginst demand of the duty along with the penalty being barred by limitation - Held that:- Not convinced by the reasoning of the Tribunal on arriving at the conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts. If that were to be true, failure to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. The main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. As decided in Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay [1995 (3) TMI 100 - SUPREME COURT OF INDIA] Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. Extended period of five years under the proviso to section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Section 28 of the Act clearly contemplates two situations, viz. inadvertent non-payment and deliberate default. The former is canvassed in the main body of Section 28 of the Act and is met with a limitation period of six months, whereas the latter, finds abode in the proviso to the section and faces a limitation period of five years. For the operation of the proviso, the intention to deliberately default is a mandatory prerequisite. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso, and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant - in favour of assessee.

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• Corporate Laws

• 2013 (1) TMI 618
  Direction upon the Official Liquidator(OL) - make over possession of the concerned premises - as OL has no use of the concerned premises for the beneficial winding up of the Company thus is under a duty to disclaim the premises in favour of PDGD - disclaimer will release the Official Liquidator and the Company in liquidation from performing onerous covenant - also direction upon the OL to remove the trespassers from the premises and to make over possession to them - Held that:- The property in question were of no use to the Company nor it can be used or utilized for the purpose of winding up of the Company. The property in the tenancy right of the Company is an onerous one which was also admitted by the OL in Court. Thus although, the OL did not take possession of premises in question, it is in view of Section 446 of the Companies Act he would be deemed to have been in possession, as the property in the tenancy right were admittedly an asset of the Company. Thus in view the present owner the applicant PDGD herein is entitled to get the property released in their favour. Eviction of Tenant - occupation of an area of 1645 sq. ft. - Held that:- As it is undisputed fact that Bangur Brothers Limited, the Company (in liquidation) was a tenant in respect of property in question governed by the provisions of the West Bengal Premises Tenancy Act 1956. The said Bangur Brothers Limited inducted the interveners as alleged sub-tenants and realised rents from them. According to the provisions contained under the Rent Act both old and new, creation of sub-tenancy without written consent of the landlord is a ground of eviction of the tenant. In the instant case two different agreements were disclosed by the interveners wherein it was stipulated that prior permission of landlord was obtained for induction of sub-tenant but no written permission was ever produced by any of the occupants being the interveners who are claiming to be lawful sub-tenants. Considering period of occupancy and making payment of rent to the Company (in liquidation), etc. this Court is of the view that the issue should be resolved by filing a suit before the Company Court - liberty granted to the applicant/landlord to institute a suit against the Company (in liquidation) as well as the interveners which the Company Court is entitled to entertain under Section 446 (2) of the Companies Act, 1956. So far the balance area of 1030 sq. ft. is concerned no one intervened nor there is any objection by anyone. Therefore, OL is also directed to remove trespassers if any from the said area and hand over vacant possession to the applicant & will seek police assistance from the concerned Police Station if required. Exercise of jurisdiction vested upon the Company Court under Section 446 (2) - a plain reading of the provisions of Section 446 make it clear that exercise of power and/or jurisdiction under the same is discretionary in nature. Even if the section is not mentioned in the application, in appropriate case the Company Court can exercise it’s power and decide any question whether of law or fact which may relate to or rise in course of the proceedings. As decided in Pushpa Devi Jhunjhunwalla (2000 (3) TMI 1037 - CALCUTTA HIGH COURT) that in liquidation proceedings summary eviction can be ordered in appropriate case and no suit regularly filed is necessarily called for before such order is passed. This application is thus allowed.

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• Service Tax

• 2013 (1) TMI 635
  Refund under Notification No.41/2007-ST, dt.06.10.2007 - CENVAT Credit of Service Tax paid by the transport agency for transporting empty containers from Inland Container Depot or airport to the factory of the respondent - Held that:- This issue stands settled by the decision in the case of Choice Sanitaryware Industries Vs CCE Bhavnagar (2009 (2) TMI 116 - CESTAT AHMEDABAD) wherein it was held that the appellant is entitled to avail CENVAT Credit of Service Tax paid on goods transport agency service received by them for bringing the empty containers in the factory premises as also the Service Tax paid on handling/agency charges in respect of services enjoyed at the port of export. Reference was also made in the case of CCE Rajkot Vs Rolex Rings Pvt. Ltd. (2008 (2) TMI 770 - CESTAT, AHMEDABAD) and CCE Rajkot Vs Adani Pharmachem Pvt. Ltd. [2008 (7) TMI 102 - CESTAT AHMEDABAD). Thus appellants are entitled for refund of the Service Tax paid on goods transport agency service received by them for bringing the empty containers in the factory premises - in favour of assessee.

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• 2013 (1) TMI 634
  Non-imposition of penalty u/s 76 - invoking section 80 - assessee had short paid the Service Tax before issuance of show cause notice along with interest - Held that:- The justification given by the assessee has been accepted by both the lower authorities that there is no intention to evade Service Tax liability. Thus as decided in Kalamna Market Urben (2010 (7) TMI 200 - CESTAT, MUMBAI) and Singla Finance Services (2010 (6) TMI 136 - CESTAT, NEW DELHI) that if Service Tax liability is discharged before issuance of show cause notice, the provision of Section 80 can be brought into play and penalty can be waived - in favour of assessee.

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• 2013 (1) TMI 633
  Stay petition - Waiver of pre-deposit - Cenvat credit of Service Tax paid by an outside agency, who conducts the repair and maintenance of the product manufactured by the appellant and supplied to their customers - Revenue argue that the documentary evidences provide in respect of only one or two contracts, wherein it was specifically indicated that the appellant has engaged a service provider for rendering the services on their behalf - Assessee contended that they will be able to produce the evidences in respect of all the contracts - Held that:- This issue needs reconsideration by the first appellate authority afresh, after following the principles of natural justice and allowing the appellant to adduce further evidences in support of their claim - Remand back to A.O.

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• 2013 (1) TMI 632
  Denial of CENVAT Credit – Wrongly availed Cenvat credit - Cenvat credit of service Tax on CHA services - Input Service Rule 2(1) CCR, 2004 – Place of removal in case of export of goods – Revenue argue that once the goods are manufactured and cleared from the factory premises, the place of removal is a factory premises and not the port – Held that:- Following the decision in assessee’s own case Micro Inks Ltd. (2012 (6) TMI 122 - CESTAT, AHMEDABAD) on identical issue decides in favour of assessee. – In favour of assessee

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• 2013 (1) TMI 631
  Condonation of Delay - Section 35B(3) of Central Excise Act, 1944 - Committee of Commissioners who had reviewed the order had a difference of opinion and the matter went to the jurisdictional Chief Commissioner - Held that:- Committee of Commissioners has taken more than three months to decide whether the appeal needs to be filed or not. No reason to condone the delay - Against revenue

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• Central Excise

• 2013 (1) TMI 617
  Non inclusion of drawing and designing charges in the assessable value - manufacture of the Air Pollution Control equipment and also renders consulting Engineers services - Held that:- On being pointed out by the visiting audit parties on non inclusion of value of drawing and designing charges in the total assessable value of the equipment immediately they included the said value and discharged differential duty on the revised value. Thus it can be fairly concluded that it was a bonafide mistake and there was no intention to evade Central Excise duties as they have already discharged service tax on the drawing and designing charges at the time of the sale as supported by relevant challans and also ST-3 Returns - no merit in the order passed by Commr. (Appeals) confirming the penalty u/s 11AC of CEA, 1985 - in favour of assessee.

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• 2013 (1) TMI 615
  CENVAT Credit on Service Tax paid in respect of gardening services - Held that:- As decided in Millipore India Pvt. Ltd. case [2011 (4) TMI 1122 - KARNATAKA HIGH COURT ] Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc., of the office premises.That apart, now the concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly, manner, certainly, the tax paid on such services would form part of the costs of the final products. Gardening services are the services which are in relation to the activity conducted in the factory premises and hence are eligible to be availed as an input service - in favour of the assessee.

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• 2013 (1) TMI 614
  Expenses giving rise to the aggregate cenvat credit of Rs.1,53,710/- - Held that:- The pollution Control Board has required appellant to maintain a green belt of adequate width and density for its premises. As a result of that the expenses are incurred. He supports his argument relying on the letter dated 24th June, 2004 issued by Ministry of Environment & Forest. The submission of appellant appears to have sound reason and that needs to be tested threadbare. Without summary disposal both the authority below did not make any effort to examine each and every element of the constituents aggregating to Rs.1,53,710/- to reach to a rational conclusion therefore, matter is remanded to Adjudicating authority to consider grievance of the appellant in the light of letter of Ministry of Environment and Forest and each and every elements of the constituent of cenvat credit aggregating to Rs.1,53,710/- is to be tested in accordance with law.

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• 2013 (1) TMI 613
  Common inputs - Baggase is waste or by product - Rule 6 of the Cenvat Credit Rules, 2004 - Common inputs on which Cenvat credit has been availed by the appellant have been used for manufacture of various products and also the resultant baggase - Rule 6(3)(i) & 6(3)(ii) of the Cenvat Credit Rules, 2004 – Held that:- Following the decision in case of Balrampur Chinni Mills (2013 (1) TMI 525 - ALLAHABAD HIGH COURT) that bagasse generated during the process of manufacture of sugar, is not a manufactured product. Order set aside. In favour of assessee

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• 2013 (1) TMI 612
  CENVAT credit wrongly availed - Whether tool/first aid kits sold along with motorcycle fall within the purview of the definition of ‘input’ - Whether tool/first aid kits can be termed as accessories of final product as envisaged in the definition of ‘input’ in Rule 2(k)(i) of CCR, 2004 - Department argued that tool/first aid kit is neither inputs of two wheelers essential for its functioning nor the accessories helping in its better performance - the tool/first aid kits are sold by the appellant along with final product and their cost is included in the same Held that:- Driving of the vehicle without tool kit and first aid kit accessories would be violation of Rule 138 of Central Motor Vehicle Rules, 1989 The appellant had supplied the tool/first aid kits to the buyers as per statutory requirements under Central Motor Vehicle Rules, 1989 as accessories to be used in relation to the manufacture of vehicle. Thus, both squarely covered by the definition of ‘input’ given under Rule 2(k)(i) of CCR, 2004 and that the appellant had rightly availed the Cenvat credit. In favour of assessee

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• 2013 (1) TMI 611
  Condoning the delay – Classification – Rebate claim - Rule 18 of the Central Excise Rules, 2002 - Chapter sub heading 73269099 - Notification No.10/03-CE, dated 01.03.03 - Section 5A (1A) of Central Excise Act - Ice Bucket and waste Bucket - Delay in filing the appeal – The appeal filed against Order of Commissioner (A) before Govt. of India as revision application on issue of rebate claim – After the decision of Jt Secretary (RA) appeal filed before Tribunal for consideration of the classification issue Held that:- Where the main issue is export rebate covered by first proviso to Section 35B(1) and if for deciding the issue relating to export rebate, some other issues have also to be decided, the Tribunal would not have jurisdiction and that order of Commissioner (Appeals) can be challenged only before the Jt. Secretary (RA) by filing a revision application. Where the Commissioner (Appeals) in the same order decides two issues one issue relating to export rebate and other issue relating to classification/valuation or Cenvat credit and the two issues are totally independent issues, the order of the Commissioner (Appeals) can be treated as two orders-one in respect of export rebate and the other in respect of classification or valuation or Cenvat credit and only in such a case different portions of the order can be challenged before different authorities. The eligibility of the rebate claim depends on the classification of goods. The same impugned order passed by the Commissioner(A) cannot be subject matter of two different appeals before two different appellant forums. Once the appeal filed there against before Govt. of India as revision application stands rejected by the Joint Secretary on merits, the impugned order cannot be challenged for the second time before Tribunal for consideration of the classification issue. Since the Commissioner (Appeals)'s order had been challenged before the right forum by filing revision application before Jt. Secretary (RA), the facts and circumstances of the case, there is no justification for condoning the delay of 948 days in filing of the appeal, Moreover, when the Jt. Secretary (RA) has rejected the Department's revision application against the Commissioner (Appeals) order and as such the order of the Commissioner (Appeals) stands merged with the order of Jt. Secretary (RA), there is no question of even filing appeal against the order of the Commissioner (Appeals) before the Tribunal. In favour of assessee

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