TMI Tax Updates - e-Newsletter
January 30, 2015

Case Laws in this Newsletter:

Income Tax Customs FEMA Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Export of service or not - providing the service of repair & maintenance on behalf of foreign clients to Indian buyers - refund allowed -Tri

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• Transfer pricing adjustments - Acceptance of the Order of the High Court of Bombay in the case of Vodafone India Services Private Limited

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Articles

1. Where Stay application against the Order sanctioning refund claim has been rejected, there is no reason for the Revenue to stop refund

   By: Bimal jain

2. SERVICE TAX EXEMPTION ON EDUCATIONAL SERVICES (PART – I)

   By: Dr. Sanjiv Agarwal

News

1. RBI Reference Rate for US $

2. Mandatory use of jute in packaging for the Jute Year 2014-15 (1st July, 2014 to 30th June, 2013)

3. Grant of subsidy to Jute Corporation of India to maintain its infrastructure for MSP operations

4. Proposal of the HDFC Bank Limited for (i) maintaining the permissible foreign holding in the bank up to 74% of the total paid up capital and (ii) issuance of equity shares aggregating to an amount of ₹ 10,000 crore to NRIs/FIIs/FPIs subject to aggregate foreign shareholding not exceeding 74 percent of the post issue paid up capital

5. Proposal of M/s Lupin Limited for increase in aggregate limit of investment by FIls and their sub accounts registered with SEBI, from 33 percent to 49 percent

6. Acceptance of the Order of the High Court of Bombay in the case of Vodafone India Services Private Limited

Notifications

Income Tax

1. 05/2015 - dated 20-1-2015 - IT

Section 10(46) of the Income-tax Act, 1961 – Central Government notifies for the purposes of the Section 10(46) “Tamil Nadu Water Supply and Drainage Board” constituted by the Tamil Nadu Water Supply and Drainage Board Act, 1970 in respect of certain specified income arising to the said body

2. 04/2015 - dated 20-1-2015 - IT

U/S 10(23A) of the Income Tax Act 1961 - Central Government approves the "Indian National Group of the International Association for Bridge and Structural Engineering” for the purpose of the Section 10(23A) for the Assessment Years 2013-14 to 2015-16 subject to the certain conditions

Circulars / Instructions / Orders

Income Tax

1. Instruction No. 02/2015 - dated 29-1-2015

Acceptance of the Order of the Hon'ble High Court of Bombay in the case of Vodafone India Services Pvt. Ltd.-reg.

Customs

2. 05/2015 - dated 28-1-2015

Collection of anti-dumping duty beyond the validity period – Regarding.

Highlights / Catch Notes

Income Tax

• Keyman Insurance Premium for Two Partners Initially Disallowed, Later Approved by Assessing Officer Decision.

  Case-Laws - HC : Keyman Insurance Premium - insurance cover for the life of two partners - The disallowance was purely a matter of conjecture and surmise on the part of the Assessing Officer - claim of expenditure allowed - HC
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• Advance Tax Payment Mandatory u/ss 115JA & 115JB; Delays Attract Interest Penalties.

  Case-Laws - HC : MAT - even an assessee covered by the provisions of Sections 115JA and 115 JB of the Act is under obligation to pay advance tax and delay or failure to pay that, would entail in levy of interest. - HC
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• Assessee Denied Deduction u/s 80P(2)(a)(i) as It's Classified as a Primary Co-operative Bank.

  Case-Laws - AT : Assessee has to be regarded to be a primary co-operative bank as all the three basic conditions are complied with - Assessee is not entitled for deduction u/s 80P(2)(a)(i). - AT
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• AO Must Allow Developer's Bank Liability Claim for Taxpayer's Share u/s 48 of Income Tax Act.

  Case-Laws - AT : Computation of Capital gain - AO directed to allow claim in respect of bank liability of the developer repaid by the assessee and other co-owners, to extend of assessee’s share u/s. 48(i)/(ii) - AT
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• Section 68 of Income Tax Act: Assessing Officer Fails to Verify Investor Details, No Income Addition Made.

  Case-Laws - AT : Addition u/s 68 - whether investors are mere entry operators? - AO has not made any further enquiry or verification in regard to details, evidence and explanation submitted before him - No addition - AT
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Customs

• Anti-dumping duty collection limited to five years unless DGAD initiates sunset review before expiration.

  Circulars : Anti-dumping duty - In cases where the DGAD has not initiated any sunset review before the expiry of aforesaid five years, no anti-dumping duty can be collected beyond the period of five years from the date of its imposition.
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• Export of Decorated Female Figure Halted in India Pending Antique Status Decision Due to Historical Significance.

  Case-Laws - AT : Stay on export of decorated female figure with two hands and legs missing - Product antique or non antique - Considering the nature of the product has historical value, the product cannot be permitted to leave India till finalization of decision in the case. - AT
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• Court Criticizes Customs for Imposing Unnecessary Technical Demands on Importer Despite Valid License and DGFT Authority.

  Case-Laws - HC : Validity of import licence - power of DGFT - the insistence of the Customs authorities that they should have their pound of flesh despite the fact that the culpability of the importer is not apparent, seems to this Court, an insistence on hyper technicalities with a view to asserting power.- HC
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• High Court Orders Refund for Illegal Auction of Confiscated Goods Held Without Appellate Court Permission.

  Case-Laws - HC : Illegal auction of confiscated goods - Department has committed a serious blunder by auctioning the goods which was a subject matter of an appeal and without prior permission of the appellate court - entire value of of the goods to be refunded - HC
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Indian Laws

• High Court of Bombay Upholds Transfer Pricing Adjustments for Vodafone India, Setting Precedent for Multinational Taxation Cases.

  News : Transfer pricing adjustments - Acceptance of the Order of the High Court of Bombay in the case of Vodafone India Services Private Limited
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Service Tax

• High Court Questions Tribunal's Decision on Adjournment Request in Service Tax Case Without Legal Representation.

  Case-Laws - HC : Request for adjournment - Whether ground for adjournment is tenable or not is another aspect of the matter. We think that the learned Tribunal should have considered this request though not made through the lawyer - HC
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• Refund Granted: Maintenance Services for Foreign Clients Recognized as Export of Service, Eligible for Tax Refund.

  Case-Laws - AT : Refund claim - Export of service or not - Appellant are providing the service of maintenance of equipment on behalf of their foreign clients to Indian buyers - refund allowed - AT
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• Appellants' Use of CENVAT Credit for Service Tax Deemed Acceptable; Demand Against Them Set Aside.

  Case-Laws - AT : CENVAT Credit - Service tax paid by the head office under reverse charge - Appellants were availing the CENVAT credit of the service tax so paid by the head office and distributed by them and were utilising the same for discharge of their service tax liability - demand set aside - AT
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Central Excise

• Appellant Entitled to Input Service Credit for Machinery Installation Under Cenvat Credit Regulations.

  Case-Laws - AT : Cenvat Credit - appellant has availed the services of erection and installation of machinery is part of the business. Therefore, the appellants are entitled for input service credit. - AT
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• CENVAT Credit Valid: Branch Office Invoices Processed Through Head Office as Input Service Distributor Confirmed Legal.

  Case-Laws - AT : CENVAT Credit - Invoice in the name of branch office - The payments are accounted at the head office which is registered as an ISD. The availment of credit and the distribution by the head office are legal and proper. - AT
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• Debate Over Embroidery Classification: Does Dyeing or Printing Affect Chapter 58 Note 8 Applicability? Stay Granted.

  Case-Laws - AT : Classification of goods - embroidery on the visible ground or without the visible ground - there are two possible views which can be taken. The first view is that if there is dyeing or printing on the fabrics, then it would fall within the scope of Note 8 to Chapter 58. The other equally plausible view is that the embroidery itself cannot be considered as fabrics and, therefore, Note 8 to Chapter 58 would not apply. - stay granted - AT
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VAT

• Uttarakhand VAT Act Section 58: Tax Authorities Can Impose Penalties Post-1976 Amendment to Central Act Section 9 (2A.

  Case-Laws - HC : Penalty u/s 58 of Uttarakhand Value Added Tax Act, 2005 – after Section 9 (2A) of the Central Act was inserted by the amendment in 1976, there is power to visit an assessee with penalty in the circumstances made out u/s 58 of the Act - HC
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Case Laws:

• Income Tax

• 2015 (1) TMI 1073
  Condonation of delay - 1100 days - sufficient cause - Held that:- In the present case, we find that the appellants have been lackadaisical in their approach and in a nonchalant manner they have tried to seek condonation of delay. The Supreme Court in the decision Esha Bhattacharjee V. Managing Committee of Raghunathpur, Nafar Academy and others, [2015 (1) TMI 1053 - SUPREME COURT] has deprecated such practice of showing leniency in condoning the delay. The parameters laid down by the Supreme Court when not to condone delay get squarely attracted to the facts of the present case and we find no reason to condone the delay and the Tribunal was correct in dismissing the appeal on that score. The plea of illness, payment of tax at some point of time, adjustment of payment before the Sub-Court, Kancheepuram are all matters on merit. That stage has not come. In any event, we are not inclined to go into such issue, as we are now concerned only with the plea of condonation of delay of approximately more than 1100 days in filing the appeal before the Tribunal in each one of the case. A faint plea has been made by the learned counsel appearing for the appellants that attachment orders have not been served on the appellants and therefore, there is a breach of law and the said issue has not been raised and considered by the Tribunal. The appellants can agitate this issue before an appropriate forum, if legally permissible. At present, we are only concerned with the issue of condonation of delay and this Court, after detailed consideration, finds that the appellants have not shown sufficient cause for condoning the delay. The parameters laid down by the Supreme Court in the above-said decision when not to condone delay gets attracted to the facts of the present case. Therefore, we are not inclined to interfere with the order of the Tribunal. - Decided against assessee.

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• 2015 (1) TMI 1072
  Entitlement to deduction under section 80-IA - Reopening of assessment - Held that:- In the present cases, there is no dispute that losses incurred by the assessee were already set off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised the option under section 80-IA(2). From a reading of the above, the Rajasthan High Court in CIT v. Mewar Oil and General Mills Ltd [ 2003 (10) TMI 12 - RAJASTHAN High Court] held that it is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under section 80-I for the purpose of computing admissible deductions thereunder. Thus all the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in each of the appeal falls within the parameters of Section 80IA of the Income Tax Act. - Decided in favour of assessee.

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• 2015 (1) TMI 1071
  Levy of interest for default in furnishing return of chargeable interest - Interest Tax Act 1974 - whether there being default in compliance of the notice under Section 10 of the Act by the appellant? - Held that:- Section 12 is applicable only when a voluntary statement filed by the assessee is beyond 31st December of that year or filed beyond the date prescribed in the notice under Section 7(2). When the assessee has filed the return within the period prescribed under Section 7(2) and when the notice is issued under Section 10 of the Act, the liability to pay interest under Section 12 is not attracted. The authorities have proceeded on the assumption, as the assessee has not filed any return at all from the due date prescribed under the statute till the date he files the return, he is liable to pay interest. The said levy runs counter to the statutory provisions contained in Section 12 of the Act. May be a person who has filed a belated return under Section 7 would be in a worst position than a person who has not filed the return. It is for the legislature to remedy such an absurdity. The Courts cannot place any interpretation on these Sections which do not fall from the words used there in. In that view of the matter, the impugned orders passed by the authorities are unsustainable, as they are contrary to the statutory provisions contained in Section 12, and they are liable to be set aside. The assessee is not liable to pay any interest under Section 12 of the Act. - Decided in favour of the assessee.

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• 2015 (1) TMI 1070
  Keyman Insurance Premium - insurance cover for the life of two partners - CIT(A) deleted the addition - Held that:- The record indicated that the partnership firm comprised of two partners. It was dealing in securities and shares. The policy was obtained for the benefit of the firm inasmuch as the firm's business would be adversely affected, in the event, one of the partners met with an untimely death. It is, therefore, concluded by the Tribunal that such being the nature of the expenses and the business of the firm being of dealing in securities for protecting it this policy was obtained. The premium expenditure was incurred in the above factual backdrop. There was no basis, therefore, for making any deduction or disallowance. The disallowance was purely a matter of conjecture and surmise on the part of the Assessing Officer. It is in these circumstances the Commissioner correctly deleted this disallowance. Decided in favour of assessee. Under valuation of closing stock of shares and bonds - Held that:- We find that when the cost actually paid is considered, there is no concept of any notional valuation. The average cost is worked out by considering the total cost actually paid for purchasing the shares and the dividend by the number of shares. It has been held that the Assessee has been following this method of valuation of closing stock for the last 16 years. In these circumstances, unless some distinguishing features were on record, the Assessing Officer should not have interfered with this method of valuation, is the finding which the Tribunal renders. It concurs fully with the finding of the Commissioner when he holds that the method of valuation or stock followed by the Assessee was an accepted method and in consonance with law as well as Accounting Standards. We do not find that such a finding of fact rendered by the Tribunal can be termed as perverse. - Decided in favour of assessee.

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• 2015 (1) TMI 1069
  Disallowance u/s. 43B(b) - due date for payment of employers contributions to PF etc. not to be reckoned with reference to date of actual payment of salaries/wages but with reference to close of the concerned month to which salaries/wages pertain - Held that:- Tribunal was not justified in coming to the conclusion that payment of employer’s contribution to P.F., ESI etc is not to be reckoned with reference to date of disbursement or payment of salaries/wages but with reference to close of the month to which salaries/wages pertain. See Commissioner of Income Tax Vs. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] - Decided in favour of assessee

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• 2015 (1) TMI 1068
  Levy of interest U/s. 234B and 234C - assessee did not have any taxable income under regular provisions of the I.T.Act and tax was levied only upon invoking deemed income created by the legal fiction as per provisions of Sec.115 JB of I.T. Act - Held that:- Supreme Court in Joint Commissioner of Income Tax v. Rolta India Ltd. [2011 (1) TMI 5 - SUPREME COURT OF INDIA], took the view that even an assessee covered by the provisions of Sections 115JA and 115 JB of the Act is under obligation to pay advance tax and delay or failure to pay that, would entail in levy of interest. The view taken by the Tribunal totally accords with this. - Decided against assessee.

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• 2015 (1) TMI 1067
  Addition in the value of closing stock towards excise duty - ITAT and CIT(A) deleted the addition as - Held that:- In view of the earlier decision of this court in case of Assistant Commissioner of Income Tax Vs. Narmada Chematur Petrochemicals Ltd. [2010 (8) TMI 263 - Gujarat High Court] wherein held excise duty is required to be excluded at the time of valuation of the closing stock on finished goods at the end of the accounting period, the question is answered accordingly. The Tribunal was justified in law in holding that the excise duty should not be taken into account for valuation of the closing stock. - Decided in favour of assessee.

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• 2015 (1) TMI 1066
  Addition u/s 69 - Assessment u/s 153A - unaccounted investment - Held that:- Department could not bring on record any reliable material to prove that the assessee made actual investment of 3,25,51,000/- in the previous year relevant to Assessment Year 2005-06, 6,51,00,000/- in Assessment Year 2006- 07 and 3,25,50,000/- in Assessment Year 2007-08. As per the provisions of Section 69, before making an addition under that section, the onus is on the Revenue to bring on record the material to conclusively prove the factum of making an investment by the assessee and only thereafter the onus shifts upon the assessee to explain the nature and source of such investment. In the instant case, we find that the only reliable material which was brought on record by the Revenue was agreement to sale dated 18.01.2005. The assessee has not denied the fact that the agreement was executed by him also. The agreement only proves that 11,00,000/- was paid by the assessee on 18.01.2005 and agreed to pay the balance amount on future dates. In the facts of the instant case, the said agreement does not prove the balance agreed amount was actually paid at any time leave aside at the stipulated time. Therefore, in our considered view, the agreement is a material to conclude that investment of 11,00,000/- was made by the assessee on 18.01.2005 and for no further investment. Therefore, in the circumstance, the addition of an amount more than 11,00,000/- made in the Assessment Year 2005-06 and the amounts for which the additions were made in Assessment Year 2006-07 and 2007-08 are not sustainable. Further, in respect of 11,00,000/-, the assessee claimed that the amount was paid by cheque and the said cheque was taken back by the assessee; whereas, Shri Somabhai A. Prajapati in his statement claimed that 11,00,000/- was received by him in cash. We find from a reading of the agreement that nowhere the agreement shows that 11,00,000/- was paid by cheque. The assessee could not bring any material to show that 11,00,000/- was paid by him to Shri Somabhai A. Prajapati was by cheque and was not cash. In this circumstance, we find that the assessee making investment of 11,00,000/- is established and not even denied by the assessee. The assessee claimed source of the same from bank but the same could not be satisfactorily substantiated by the assessee. Therefore, in our considered view, addition to the extent of 11,00,000/- made in Assessment Year 2005-06 is justified and needs to be upheld. - Decided partly in favour of assessee for Assessment Year 2005-06 and allow the appeals of the assessee for Assessment Years 2006-07 and 2007-08.

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• 2015 (1) TMI 1065
  Disallowance of interest expenses - Held that:- Impugned disallowance has been sustained by the CIT(A) observing that detailed particulars of payments have not been furnished by the assessee either before the assessing officer or before him. Since the assessee before us claims to be now in possession of the details of payments, which have been furnished at pages 261 and 264 of the paper-book, we deem it fair and proper to restore this issue to the file of the assessing officer, for fresh consideration. - Decided in favour of assessee for statistical purposes. Disallowance of the claim of capital loss - Set-off of capital loss against the capital gains income - Held that:- As per Section 94(7), if any person buys securities or units within three months prior to the record date and such person sells or transfers such securities within three months after such record date, loss on such sale of securities/units shall be ignored for computing income chargeable to tax. As verified from the record, assessee purchased these units and held them for more than three months period as on record date. Therefore, condition (a) specified in the section has not been fulfilled. We agree with the assessee s contention that the transactions does not come within the purview of Section 94(7). Therefore, the loss as claimed is to be allowed. - Decided in favor of assessee. Disallowance of deduction u/s.80IA in respect of the profits earned from eligible and notified BTS Project - infrastructure project - Held that:- Since both the Assessing Officer and the Ld.CIT(A) considered the application under automatic rule, they have raised objection whereas assessee s application does not fall under Automatic Approval Scheme, but under Non-automatic Approval Scheme. In view of this, since there is already approval from the relevant authorities and also from the CBDT, we direct the Assessing Officer to grant the deduction u/s.80IA subject to verification of computation.- Decided in favor of assessee for statistical purposes. Non-grant of TDS credit without assigning any reason - Held that:- CIT(A) noted that an amount of 8,02,73,441/- was being granted as TDS credit and directed the Assessing Officer to look into the TDS claim and grant proper claim as per law. Even though there is direction from the CIT(A), it is assessee s contention that credit has not been given. Assessing Officer is directed to examine the claims of assessee and allow the credit after due verification. - Decided in favor of assessee for statistical purposes.

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• 2015 (1) TMI 1064
  Transfer pricing adjustment - Held that:- In view of the detailed findings and reasons considering the evidence filed and the arguments on behalf of the parties, we deem it appropriate to restore the issue back to the file of the TPO with the direction that the assessee shall place a copy of the Articles & Memorandum of Association before the TPO and address the primary object for which the assessee was incorporated. The assessee shall also categorically take a stand whether there is any other agreement linked to address its stated claim of providing sales and support services sales made through AEs or VARs. The taxpayer shall ensure that it is made available to the TPO. All the relevant evidences including the specific document on the basis of which the services have been called upon for rendering and the basis on which the invoices have been raised needs to be made available to the Revenue. The evidence placed on record in the absence of any explanation as to how the figures have been arrived at in the invoice cannot be said to be sufficient and cogent evidence. Needless to say that apart from above direction the TPO is at a liberty to call for any other document as proof of evidence which he so considers it necessary for deciding the issue. Similarly the assessee is also at liberty to place fresh evidence if any in support of its claim. The TPO thereafter shall consider the same and shall pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Needless to say that the TPO after a FAR analysis characterizing the assessee shall carry out the exercise of search for comparables in order to decide whether the transaction is at arms length or not. - Decided in favour of assessee for statistical purposes.

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• 2015 (1) TMI 1063
  Transfer Pricing Adjustment - arm s length price - selection of comparable - Held that:- For ACCENTIA TECHNOLOGIES LTD. (Seg.) as during the previous year there were extra ordinary events that took place in this company which warrants exclusion of this company as a comparable. We therefore hold that this company cannot be considered as a comparable. For ACROPETAL TECHNOLOGIES LTD. (Seg.) said company was excluded on the differentiation of high end services being provided by this company. Assessee does not provide high end services as submitted. Therefore we are of the opinion that functions of assessee are not similar to the above Company. We direct the TPO/AO to exclude this company. For COSMIC GLOBAL LTD. while there was no objection for assessee objecting to the comparable even at a later stage when it comes to know of new facts, what we noticed is that the assessee’s objections before the DRP have not been addressed by the DRP. It is for the TPO to determine whether this company falls within the filters as adopted by the TPO himself. If the company fails the employee cost filter, then the same cannot be accepted as a comparable company. In order to examine this aspect, we are of the opinion that selection of this comparable is to be restored to the file of the TPO for fresh examination, after giving due opportunity of hearing to the assessee. The issue is restored to the file of the TPO. For ECLERX SERVICES LTD. (seg.) this company cannot be regarded as a comparable for the reason that it was having extraordinary event and super normal profits. For GENESYS INTERNATIONAL CORPORATION LTD. from the notes to accounts of this company, it is seen that this company is engaged in providing geographical information services comprising of photogrammetry, remote sensing cartography, data conversion related computer based services and other related services. Further the business of this company requires skilled manpower and scientists, civil engineers, etc. Besides the above, this company also carries out R ble Special Bench in case of ITO vs Banyan Chemicals P. Ltd., (2008 (12) TMI 296 - ITAT AHMEDABAD) has held that foreign exchange gain on account of fluctuation qua exports business is eligible for exemption u/s 10B. Thus we direct AO to treat Foreign exchange gain as business income and allow the deduction accordingly. - Decided in favour of assessee. Reduction of communication charges from the export turnover without reducing it from the total turnover while computing deduction u/s 10A of the Act - Held that:- his issue is squarely covered in favour of the assessee by the judgment of Hon’ble Bombay High Court in case of CIT vs. Gem Plus Jewellery Ltd (2010 (6) TMI 65 - BOMBAY HIGH COURT) and the decision of Income-tax Appellate Tribunal, Chennai Special Bench in case of ITO vs. Sak Soft Limited (2009 (3) TMI 243 - ITAT MADRAS-D (AT)], thus we direct the Assessing Officer to reduce communication charges both from the export turnover as well as the total turnover for computing exemption u/s 10A of the Act. - Decided in favour of assessee.

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• 2015 (1) TMI 1062
  Eligible for deduction under section 80P(2)(a)(i) - Held that:- Section 80P(4) clearly excludes primary agriculture credit society from its domain. As already stated that section 80P(2)(a)(i) nowhere talks of co-operative credit society and therefore the distinction made under the Banking Regulation Act cannot be imported u/s 80P(2)(a)(i). We have also gone through the decision of Tararani Mahila Co-operative Credit Society Ltd [2014 (3) TMI 293 - ITAT PANJI] to which the undersigned is the author similar finding as has been given in this are given in that case also. The decision of Karnataka High Court in the case of CIT vs Sri Biluru Gurubasava Pattana Sahakari Sangh Niyamitha[2015 (1) TMI 821 - KARNATAKA HIGH COURT] relates to an appeal filed against the order passed u/s 263 and the question involved was whether the Revisional Authority was justified in invoking his power u/s 263 without the foundational fact of the assessee being co-operative bank. Therefore, this decision is not applicable. We, therefore, in view of our aforesaid discussion hold that the Assessee has to be regarded to be a primary co-operative bank as all the three basic conditions are complied with, therefore, it is a co-operative bank and the provisions of Sec. 80P(4) are applicable in the case of the Assessee and Assessee is not entitled for deduction u/s 80P(2)(a)(i). We, therefore, set aside the order of the CIT(A) allowing deduction u/s 80P(2)(a)(i) to the assessee. - Decided in favour of revenue.

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• 2015 (1) TMI 1061
  Interest Income and miscellaneous income - Income from other sources v/s Business Income - Held that:- In absence of any supporting material, we are unable to accept the submission of learned Authorised Representative that the nature of income earned by the assessee as interest on FDRs, is in the nature of business. Similar is the position with other miscellaneous income, which is in the nature of providing copy of building plan, Memorandum of Articles of Association, car stickers and miscellaneous facilities etc. Thus we reject the principal argument of learned Authorised Representative that nature of this income is "business income". However, to examine the alternative claim of the assessee i.e. for considering the set off of these incomes against brought forward business losses, the matter is required to be restored back to the file of learned CIT(A) or the Assessing Officer, we accept such submission of the assessee and this matter is restored to the file of the Assessing Officer with the direction to examine this claim of the assessee as per provisions of law after giving the assessee a reasonable opportunity of hearing. - Decided partly in favour of assessee for statistical purposes. Calculation u/s. 115JB - ITAT confirmed the order of CIT(A) in deleting the addition of 1.98 crores made by the Assessing Officer while computing the book profit under section 115JB - when the assessee has submitted audit report in Form No. 29B certifying that the profit and loss account has been prepared as per Parts II & III of Schedule VI of the Companies Act then, whether the Assessing Officer has power to contend that the profit and loss account has not been prepared in accordance with the Provisions of Companies Act, 1956? - Held that:- The question been clearly answered in the decision in the case of Adbhut Trading Co. (P). Ltd. (011 (7) TMI 716 - Bombay High Court ), wherein it has been held that in such a situation, it is not open to the Assessing Officer to contend that the profit and loss account has not been prepared in accordance with the provisions of Companies Act, 1956. Therefore we reverse the order of learned CIT(A) in respect of ground No. 2 for A.Y. 2007-08 and allow this ground of appeal of the assessee.

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• 2015 (1) TMI 1060
  Computation of Capital gain - assessee claimed the deduction (to the extent of 1/6th of his share) while computing the Capital Gain on the sale of development rights in the property at ‘E’ Ward, Dabholkar Corner, Kolhapur in respect of the loan taken by M/s. Mehta Construction but which was not repaid by him and the assessee had to repay the loan to clear encumbrance created by the developer - Held that:- In the present case the loan was borrowed by the Developer M/s. Mehta Construction Co. and we find that it was part of the terms and conditions of the Development Agreement as the developer was allowed to raise the loan against the mortgage of the property for development purpose only. In our opinion the principles laid down by the Hon ble jurisdicitional High Court in the case of Roshanbabu Mohammed Hussein Merchant (2005 (1) TMI 53 - BOMBAY High Court ) in fact help the assessee as the charged on the property was not by the assessee and other co-owners. We are inclined to allow the grounds taken by the assessee and direct the Assessing Officer to allow claim in respect of bank liability of the developer repaid by the assessee and other co-owners, to extend of assessee’s share u/s. 48(i)/(ii) of the Act. Appeal allowed.

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• 2015 (1) TMI 1059
  Interest income on Non Performing Assets - CIT(A) deleted the addition - Held that:- No reasons to interfere with the ultimate conclusion of the CIT(A) in deleting the impugned addition relating to interest income in respect of NPAs as interest on NPA assets cannot be said to have accrued to the assessee Since it was a common point between the parties that the facts and circumstances in the present case are identical to those considered by us in the case of The Omerga Janta Sahakari Bank Ltd. (2014 (12) TMI 355 - ITAT PUNE), following the said precedent the present claim of the assessee deserves to be upheld. Thus, the order of the CIT(A) is hereby affirmed and the Revenue has to fail on this aspect. - Decided in favour of assessee.

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• 2015 (1) TMI 1058
  Low gross profit shown - sale of mobile hand sets and mobile recharge coupons - CIT(A) deleted the addition - rejection of books of accounts - Held that:- As find from the written submissions of assessee to ld.CIT(A) placed at Paper Book page 85 that combined GP of assessee for Asstt. Year 2006-07 to 2008-09 ranged from 0.89% to 1.09% and the declared combined GP ratio in the present year is 1.17%. Therefore, GP declared by assessee in the present year is in line with earlier years. Moreover, we find that A.O. in the remand report has not raised any objections against written submissions filed by the assessee and the ld. CIT(A) has passed a well reasoned and speaking order. As regards the contention of ld.DR that detail of profit passed on to Retailers & Spoke were not provided, we find that the billing rates were fixed by Bharti Airtel Ltd., for Retailers & Spokes and bills were raised at pre-determined prices as fixed by Bharti Airtel Ltd. and assessee was entitled to only its share only out of total gross profit of 4.27%. In view of the above, we do not find any infirmity in the order of ld.CIT(A). - Decided in favour of assessee.

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• 2015 (1) TMI 1057
  Income escaping assessment - proceedings u/s 147/148 - AO seeking to tax capital gain in the hands of the assessee in assessment year 1999-2000 on account of the agreement with MTDC dated 26.03.1999 - Held that:- Revenue has not demonstrated any reason in the present cases so as to justify departure of the Department from its accepted stand in similarly placed other cases where capital gains in pursuance to agreement with MTDC dated 26.03.1999 have been taxed over the years and not in assessment year 1999- 2000. It is also not denied that the assessee has declared capital gains in the return for assessment year 2003-04 onwards on the basis of the entitlement certificates issued by MTDC in terms of the agreement dated 26.03.1999. Infact, in the case two of the appellants before us, namely, S/Shri Amol Krishna Ashtekar and Atul Krishna Ashtekar, the Assessing Officer has made scrutiny assessment for assessment year 2007-08 u/s 143(3) dated 17.12.2009 wherein the capital gains declared by the assessee in the returns of income have been assessed. Ostensibly, such assessments, which are in line with the stand of the Department in the cases of other farmers who are similarly placed as the assessee, itself show that in the impugned proceedings, Revenue has departed from its accepted position. There is no justification brought out by the Revenue for such a departure. Therefore, on the principle of uniformity of approach which is required to be adopted by the Revenue in relation to similarly placed assessees as laid down by the Hon’ble Supreme Court, in our view, the action of the income-tax authorities in the present case to initiate proceeding u/s 147/148 to assess capital gains on the basis of the agreement dated 26.03.1999 with MTDC is not justified. - Decided in favour of assessee.

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• 2015 (1) TMI 1056
  Revision u/s 263 - jurisdiction of CIT(A) challenged - claim of exemption u/s 54F allowed by AO - debatable issue - Held that:- It is a settled law that an issue on which two views are possible, and the Assessing Officer has followed one of them, it cannot be a subject-matter of consideration by the Commissioner while exercising his revisionary jurisdiction u/s 263 of the Act. The Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, (2000 (2) TMI 10 - SUPREME Court) has also approved that where two views are possible and the Assessing Officer has taken one of the views with which the Commissioner does not agree, such order of the Assessing Officer cannot be treated as erroneous or pre9ju dicial to the interests of the Revenue unless the view taken by the Assessing Officer is found to be unsustainable in law. In the present case, having regard to the judgements of the Hon’ble Delhi [2013 (3) TMI 101 - DELHI HIGH COURT] and Karnataka High Courts [2008 (10) TMI 99 - KARNATAKA HIGH COURT], it cannot be said that the view taken by the Assessing Officer of allowing exemption u/s 54F of the Act under the given facts and circumstances is unsustainable in law. Therefore, in our view, the Commissioner was denuded from exercising his revisionary jurisdiction u/s 263 of the Act having regard to the facts and circumstances of the present case. Resultantly, the impugned order of the Commissioner is set-aside and the assessment order dated 22.12.2009 (supra) qua the allowance of exemption u/s 54F of the Act is hereby restored. - Decided in favour of assessee.

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• 2015 (1) TMI 1055
  Maintainability of appeal - Monetary limits for filing of appeals before ITAT - Held that:- On query from the Bench, the Ld. Sr. DR could not point out any of the exceptions as provided in the Circular as that this is a loss case having tax effect more than the prescribed limit, which should be taken into account, or that this is a composite order for many assessment years where tax effect will be more than the prescribed limit as per para 5 of above instructions, or that this is a case, where, in the case of revenue, where constitutional validity of the provision of the Act or I.T. Rules 1962 are under challenge, or that Board s order, Notification, Instruction or Circular has been held to be illegal or ultra vires, or that Revenue Audit Objection in the case has been accepted by the Department and the same is under challenge. The Ld. DR could not point out any of the exceptions as provided above. Accordingly, this being a low tax effect case, we dismiss the appeal of the revenue in limine without going into merits. - Decided against revenue.

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• 2015 (1) TMI 1054
  Addition u/s 68 - CIT(A) deleted the addition - whether investors are mere entry operators? Held that:- We reach to a logical conclusion that the present case falls in the second category as the AO has not made any further enquiry or verification in regard to details, evidence and explanation submitted before him rejected and dismissed the same by only relying on the information of the Investigation Wing proceeded to make addition u/s 68 of the Act. Hence, we are inclined to hold that the present case is squarely covered in favour of the assessee by the decision of Hon ble High Court of Delhi in the case of CIT vs. Gangeshwari Metal (2013 (1) TMI 624 - DELHI HIGH COURT) and we are unable to see any ambiguity, perversity or any other valid reason to interfere with the impugned order of the CIT(A). - Decided against revenue.

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• Customs

• 2015 (1) TMI 1100
  Seizure of Indian currency concealed in clothings in the hand baggage - Seizure on the suspicion that it is the sale proceeds of smuggled gold sent from Malaysia and Singapore - violation of Regulation 3 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 - Held that:- Once it is found that the goods in question, namely Indian Currency are liable to confiscation under Section 113 and once it is found that a penalty in addition to confiscation is also possible under Section 114 of the Act, it may not be possible for this Court to order provisional release. After all, the petitioner is entitled to an opportunity in terms of Section 124 to show cause against confiscation. The adjudicating authority is obliged to give an option under Section 125 (1) of the Act, to pay fine in lieu of confiscation. The Respondents have a time limit of six months under Section 110(2) of the Act to initiate the proceedings. A period of three months has nearly expired. Therefore, at this stage, I do not wish to order the release of the Currency. This is for the simple reason that it may not be possible for the Respondents to even recover the fine, if ultimately the adjudication goes against the petitioner. Cash seized from the office premises of the petitioner in the second writ petition is on suspicion. Suspicion cannot take the place of proof, however, strong it may be. Therefore, refusing to order the provisional release of the cash seized from the premises of the petitioner in the second writ petition, may give a leverage or licence to the Respondents to stamp any item or cash seized from any office premises as the sale proceeds of smuggled goods. The scheme of Sections 113 read with Sections 121 to 124 do not appear to authorise such a course. As I have pointed out in para 17 above, two pre-conditions are to be satisfied for invoking Section 121 of the Act to order confiscation. There is no prima facie evidence to show that both these pre-conditions are satisfied in the second case on hand. The Constitutional guarantee with respect to the right to property under Article 300A cannot be allowed to be infringed at the drop of the hat, by allowing the officers to walk into any office and seize cash on the ground that they represent the sale proceeds of the smuggled goods. Therefore, I am of the view that the second writ petition deserves to be allowed. - Decided partly in favour of appellants.

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• 2015 (1) TMI 1080
  Stay on export of decorated female figure with two hands and legs missing - Product antique or non antique - Commissioner held product as non antique - Held that:- This is issue of technical nature and requiring in depth specialized knowledge of the statue which are being exported. Detailed procedure was followed by ASI including appeal to the Director General, ASI as well as the matter finally went to Hon'ble High Court of Rajasthan. On the basis of direction of High Court, the matter was re-examined by the special constituted committee. The committee after detailed analysis allowed one of the statute non antiquity. However, regarding decorated female figure with two hands and legs missing, they maintained that it is antiquity on the basis of treatment of ornaments, eyes, nose, rounded face and drapery this female image in red sandstone is assigned to 10th - 11th century. - Once a specialized committee have re-examined the matter and came to the conclusion, Commissioner (Appeals)'s view does not have finality in the matter. Considering the nature of the product has historical value, the product cannot be permitted to leave India till finalization of decision in the case. Accordingly, it is a fit case for grant of stay on the operation of Commissioner (Appeals)'s order. - Decided in favour of Revenue.

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• 2015 (1) TMI 1079
  Re-export of goods - Liability to port charges - Revenue contends that bar of Res-judicata applies - Held that:- Bar contained in Section 11 of the Code of Civil Procedure shall not apply to this case because the learned Trial Court did not decide the issue. Unless an issue has been heard and finally decided there can be no res judicata. In that view of the matter, it is clarified that the aforesaid order directing the writ petitioner to pay the port charges shall not stand in the way nor shall constitute res judicata in deciding the issue as to whether the delay was on account of the laches on the part of the Customs authority and in deciding the issue as regards the consequences thereof. - Appeal disposed of.

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• 2015 (1) TMI 1078
  Request to release the consignment of Snap Fasteners, Sliders, Elastic Tapes and Sewing Needles and other goods and permit the petitioner to re-ship the consignment of Snap Fasteners, Sliders, Elastic Tapes and Sewing Needles and other goods lying in the custody and control of the respondents in the Chennai Port - Held that:- It is the case of the petitioner that the alleged goods have been wrongly shipped along with the declared goods. According to the petitioner, since the importer has disowned the goods, they may be permitted to re-ship the goods. It is also the case of the petitioner that the show cause notice has been issued only to the importer and not to them. The petitioner claims to be the owner of the goods. - The contention of the petitioner that the staff of the warehouse have wrongly dispatched the goods instead of the declared goods has to be proved only by way of adjudication. Therefore, the relief sought for by the petitioner to release the goods or reshipment cannot be granted at this stage. However, since the importer has disowned the goods, there is no impediment for the authority to permit the petitioner to participate in the adjudication process, as they claims to be the owner of the goods. Further, the petitioner company is a foreign company and the allegation against them is that the goods have been smuggled into India and as the importer has stated that he has never given any such order at all, to safeguard the interest of the revenue, there should be a condition to permit them to seek for either release or return of the goods. Therefore, the petitioner is permitted to participate in the adjudication proceedings. However, since huge amount has been involved in respect of anti-dumping duty to the tune of two crores, the petitioner, in order to show their bona fide, shall produce bank guarantee for a sum of 50,00,000 before the respondents and on such production of bank guarantee, the respondents will issue notice to the petitioner for adjudication. The petitioner is also directed to appear before the authority on the date to be fixed by them for adjudication process. Since the goods have been lying in the Port, the respondents are directed to complete the adjudication process within a period of four months from the date of receipt of a copy of this order, after affording reasonable opportunity to the petitioner as well as the importer. - Petition disposed of.

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• 2015 (1) TMI 1077
  Penalty u/s 114 - Whether the first respondent authority and the second respondent Tribunal is correct in holding that the charges of Section 114(i) of Customs Act, 1962 is made out in the facts and circumstances of the case against the appellants warranting imposition of penalty against the appellant - Held that:- The Adjudicating Authority after considering the allegations in the show cause notice, the reply given by the appellant, and after affording an opportunity of personal hearing to the appellant, has elaborately discussed about the complexity and the involvement of the appellant in the smuggling of Red Sanders Wooden logs, which are prohibited items. - Court exercising jurisdiction under Section 130(1) of the Customs Act is not inclined to re-appreciate the factual findings recorded by the Adjudicating Authority and confirmed by the Tribunal. In the absence of any error of law pointed out by the appellant, this Court is not inclined to interfere with the order of penalty. - Decided against assessee.

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• 2015 (1) TMI 1076
  Validity of import licence - power of DGFT - Commissioner held that DGFT has no powers to issue import licence to validate as imports made in past and as such, the import licence is invalid - Tribunal reversed the findings of the commissioner - appellant are engaged in the business of distribution of Satellite channels in India imported de-coders of model CDE 2002 -BMAC not sure as to be freely importable or required licence wrote DGFT for clarification - Held that:- it is not disputed that on 11-2-1995, the importer sought clarification from the DGFT as to the necessity of possessing the import licence. Concededly, the DGFT clarified that no such import licence was required. On that understanding, the goods in question were imported. It is not in dispute that the goods were cleared after they were classified under Heading 8528, in tune with the Supreme Court’s judgment in Commissioner of Customs, New Delhi v. C-Net Communication (I) Pvt. Ltd., [2007 (9) TMI 15 - Supreme court of India]. In these circumstances, the insistence of the Customs authorities that they should have their pound of flesh despite the fact that the culpability of the importer is not apparent, seems to this Court, an insistence on hyper technicalities with a view to asserting power. In effect what the Customs authorities are contending is that they do not agree with the issuance of licence by the DGFT which covered the said import, and that they could still treat the goods as invalidly brought in and take punitive action. Having regard to the totality of facts and circumstances, this Court is of the opinion that no question of law arises for consideration. - Decided against Revenue.

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• 2015 (1) TMI 1075
  Illegal auction of confiscated goods - The defendant had approached the Custom authorities at Lucknow and came to know that goods were already disposed of for a consideration of 1,04,481/-. Later, the same was offered to be refunded provided fulfilment of certain formalities, but the assessee has claimed entire value of the goods i.e. 3,80,000/- - Appellate authority allowed to refund entire claim. - Held that:- Supreme Court in the case of Northern Plastics Ltd. v. Collector of Customs & Central Excise - [1999 (9) TMI 86 - SUPREME COURT OF INDIA] as well as in the case of Shilps Impex v. U.O.I. - [2002 (1) TMI 62 - SUPREME COURT OF INDIA] held that during the pendency of the appeal confiscated goods could not have been auctioned without prior permission of the appellate court. Matter was sub judice before the appellate court, but the Department in a haste manner has disposed of the goods without seeking permission from the appellate court where the matter was sub judice. Thus, the Department has committed a serious blunder by auctioning the goods which was a subject matter of an appeal and without prior permission of the appellate court, is not permissible to sale the same, as per the case laws and the circulars which have already been discussed by the appellate authority in their orders. - Decided against Revenue.

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• FEMA

• 2015 (1) TMI 1074
  Violation of procedure contemplated in Rule 4 - Rejection of request of cross examination - Held that:- On a bare reading of the show cause notice it is seen that a complaint was made under section 16(3) of FEMA for contravention of the provisions of FEMA. The adjudicating authority on a perusal of the complaint and after considering the cause assigned by the complainant in the said complaint, stated that it appears that there is contravention in the said complaint against the petitioners of the provisions of section 3(c) read with section 42(1) of FEMA, as mentioned in the complaint. Therefore, the petitioner was required to submit reply to the show cause notice in writing within thirty days from the date of notice as to why the adjudicating proceedings as contemplated under section 13 of FEMA should not be held against them for contravention of the provisions of section 3(c) of FEMA as mentioned in the complaint, which was enclosed along with the show cause notice. The attention of the petitioners was invited to Rule 4 of the Rules. Further, the petitioners were directed to appear either in person or through their Legal Practitioners/Chartered Accountants duly authorised by them to explain and produce such documents as may be useful or relevant to the subject matter of enquiry. There is nothing to indicate that the adjudicating authority has straight away proceeded to the stage contemplated under sub rule (4) of Rule 4. The show cause notice does not indicate any such conclusion nor it may be stated that the respondent has violated the procedure under Rule 4 of the Rules. In fact, the attention of the petitioners has been drawn to Rule 4 of the Rules. Therefore, the plea raised by the petitioner that the show cause notice is vitiated for having not following the procedure under Rule 4 of the Rules, deserves to be rejected. - Decided against the petitioner.

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• Service Tax

• 2015 (1) TMI 1099
  Request for adjournment - It appears from the findings of the learned Tribunal that no one appeared for the appellant on the day when the impugned order was passed. - Waiver of predeposit - Held that:- Tribunal should have considered the request of adjournment in either way. The learned Tribunal thought that it was not an application for adjournment made lawfully and that could be done only by a lawyer engaged. We record our disagreement with this approach of the learned Tribunal. Learned counsel is nothing but a recognized agent and the application for adjournment is always made by the litigant not the lawyer. Whether ground for adjournment is tenable or not is another aspect of the matter. We think that the learned Tribunal should have considered this request though not made through the lawyer. - It was the duty of the lawyer to appear before the learned Tribunal or if for any reason he does not appear, it is his primary duty to inform the Court or the Tribunal concerned as to his inability to appear and ask it to disengage from the matter. We think that it was the apparent lapse on the part of the learned lawyer, whether deliberate or indeliberate is not know to us. The learned Tribunal should have taken note of this fact. Unfortunately, it was not considered. Then, we notice that the learned Tribunal without having any application or prayer for waiver of pre- deposit, passed the impugned order. According to us, such an order is without jurisdiction. Unless a prayer is made, the learned Tribunal cannot pass a suo motu order and at the most it could have dismissed the appeal for default although it has power to pass appropriate order if the facts and circumstances of the case so warranted. Tribunal has recorded the version of the Revenue and decided that order of entire amount of pre-deposit and interest should be passed. As we have already recorded that this order is without jurisdiction when there is no such prayer or grievance is made. The learned Tribunal virtually passed order of recovery of tax and interest without having any recovery proceedings. - Decided in favour of assessee.

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• 2015 (1) TMI 1098
  Denial of refund claim - Export of service or not - Held that:- Appellant are providing the service of maintenance of equipment on behalf of their foreign clients to Indian buyers. They have provided the service on behalf of their foreign clients. We further find that during the warranty period, the repairs and maintenance service was to be provided by the foreign supplier and the appellant acted on behalf of the foreign supplier only. It is an admitted fact that the Indian buyer has not paid any amount towards the service provided by the appellant to the appellant during warranty period whereas the appellant who provided the service to Indian buyers has paid the service tax on maintenance service after the warranty period. No hesitation to hold that as the appellant has provided the service of procuring purchase orders for their foreign clients and providing maintenance service to the Indian buyers during the warranty period on behalf of their foreign clients on the instructions of foreign clients are covered by the Rule 3(3) of Export of Taxable Service Rules, 2005. Therefore, the appellant are not required to pay service tax during the impugned period for their activity. Accordingly, they are entitled for refund claim. - in this case appellant had provided services of business support and maintenance and repairs to their client located outside India and performed in India on behalf of client located outside India. Therefore, it is the case of export of services. For the period prior to 2005 when the export of services and goods came into force the appellant is covered by the CBEC circular no.53/5/2003-ST dated 25.04.2003 - appellants are not liable to pay service tax at all. Therefore, question of imposition of penalty does not arise. Consequently, we set aside the impugned order - Decision of Blue Star Ltd. Vs. Commissioner of Service Tax [2014 (12) TMI 25 - CESTAT MUMBAI] followed - Decided in favour of assessee.

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• 2015 (1) TMI 1097
  Clearing and forwarding service - Penalty u/s 76 & 77 - denial of cum tax benefit - waiver of penalty under Section 80 - Held that:- As regards cum tax benefit, following decision of Commissioner Vs Advantage Media Consultant [2008 (10) TMI 570 - SUPREME COURT] - appellants are eligible for the cum tax benefit. As regards penalty u/s 76, following decision of Transport Solution Group Vs CCE Mumbai-IV [2013 (6) TMI 607 - CESTAT MUMBAI], Commissioner (Appeals) order of reducing penalty under Section 76 is liable to be set aside. - Decided party in favour of Revenue.

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• 2015 (1) TMI 1096
  Restoration of appeal - Online information and database access and or retrieval service – Penalty u/s 75A, 76, 77 and 78 of the Finance Act, 1994 – Held that:- At this stage of the hearing or the writ, petition, the learned counsel appearing on behalf of the petitioner had submitted that the petitioner would comply with the conditions imposed by the second respondent-Tribunal, by its order, dated 9-1-2007, made in Stay Order No. 31 of 2007, within the period specified by this Court. In such circumstances, the second respondent-Tribunal may be directed to take on file the appeal filed by the petitioner, in Appeal [2013 (11) TMI 1258 - CESTAT CHENNAI] and dispose of the same, on merits and in accordance with law, on the petitioner complying with the conditions imposed by the second respondent-Tribunal, while granting the stay order, on 9-1-2007. - final order of the second respondent-Tribunal, in Final Order No. 135 of 2007, dated 15-2-2007, is set aside. - Decided in favour of assessee.

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• 2015 (1) TMI 1095
  Demand of service tax - SCN issued for as to why for the period effective from 2008, it should not be assessed to service tax as a service provider, covered by Section 65(105)(zzzzj) i.e. services provided in relation to supply of tangible goods for use - Held that:- petitioner should first respond to the Show Cause Notice and take recourse to such remedies as are available in law in the circumstances of the case. In the given facts, it is open to the petitioner to file a reply or appropriately respond to the impugned Show Cause Notice within four weeks from today. All rights and contentions of the parties are hereby reserved. - Petition disposed of.

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• 2015 (1) TMI 1094
  Waiver of pre deposit - Exemption under Notification No. 17/2005-S.T. - site formation and clearance, excavation, earth moving and demolition services - Held that:- in respect of the services of excavation provided in respect of the Hydro-electric Dam Project being executed by M/s. L 3 crores in respect of service of site preparation provided to WBHIDC and hence, while granting waiver from the requirement of pre-deposit, Revenue’s interests have to be safeguarded to this extent. - Partial stay granted.

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• 2015 (1) TMI 1093
  Denial of CENVAT Credit - Transfer of credit - Service tax paid by the head office under reverse charge - Appellants were availing the CENVAT credit of the service tax so paid by the head office and distributed by them and were utilising the same for discharge of their service tax liability - Bar of limitation - Held that:- On going through the provisions of Section 66, we find that the same is charging Section and provides for levy of service tax on the taxable services referred in Section 65(105). In respect of the services so specified in Section 65, clause 105, if provided by a person located in a country other than India and received by a person located in India, the same has to be treated as per Section 66A, as if the recipient of the services has himself provided the said services in India and he is required to pay service tax under Section 66A even though actually the said services do not stand provided by him. Merely because the recipient of the services in question has been made to be a “deemed provider” of such services, in terms of Section 66A, will not change the complexion of the said services from input services to output services for the purpose of Cenvat Credit Rules, 2004. If such services are otherwise used as input services by the manufacturer of an excisable product or provider of an output taxable service, the Cenvat credit of service tax paid by the service recipient would be available to him. A head office is entitled to get himself registered as input service distributor and then to issue invoices/bills for the purpose of distributing the credit of service tax. There is nothing in the said Rule to suggest that the head office or the office of the manufacturer should be himself in a position to provide any output service or to manufacture any excisable goods. The basic requisite condition for the distribution of the said credit is that he receives the invoices towards purchase of input services and pays the service tax. Admittedly, in the present case, the head office has received the disputed services of “Intellectual Property Service”, “Consulting Engineering Service” and “Management Consultant Service” and has discharged its service tax liability as a recipient of the said services. The head office is admittedly registered with the Department as input service distributor. Being a registered input service provider, the head office was admittedly entitled to distribute the credit to its manufacturing unit. If the appellants would have received the said services directly at their Nodia factory and would have paid the service tax themselves, they were admittedly entitled to the credit. Merely because the invoices by the foreign suppliers were raised in the name and address of the head office, who paid the entire consideration along with the service tax, credit cannot be denied on the said ground. It may be mentioned here that credit is available qua the manufacturer and not qua the factory. Admittedly, the manufacturer is M/s. Moser Baer India Ltd. Merely because their head office is located at a place different from the place of the factory cannot be adopted as a reason for denial of the credit. The factory as also the head office is belonging to the same manufacturer, i.e., M/s. Moser Baer India Ltd. and cannot be considered to be two separate entities. Otherwise also, it is a well settled law that the invoices raised in the name of the head office cannot be held to be a ground for denial of the credit. As such even if the head office was not registered as an input service distributor, the appellants’ factory located at Noida was entitled to the credit of the service tax paid by them through their head office, as all the accounts are being maintained at the head office. Demand to be barred by limitation. Admittedly, the head office was a registered input service provider and was issuing invoices to the factory for the purpose of availing the credit. The credit so taken by the appellants was being reflected in their statutory records. We really fail to appreciate the reasoning of the Commissioner that as the appellants were availing the credit on the strength of the documents/advices issued by their head office, but they were fully aware of the every aspect related to the payment of service tax being made by the head office. Inasmuch as the credit was being availed on the basis of the invoices issued by registered input credit distributor and were being reflected by the assessee in their statutory returns, we find that no positive suppression having the colour of mis-statement or with any mala fide can be attributed to them so as to invoke the longer period of limitation. Accordingly, we hold the demand as barred by limitation. - impugned order is set aside - Decided in favour of assessee.

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• 2015 (1) TMI 1092
  CENVAT Credit - excess utilization of credit more than 20% - Cargo handling service - Imposition of penalty - Held that:- In the absence of detailed information regarding the amount payable every month, the credit available every month, the amount of services provided in DTA, non-taxable services, etc., no conclusion can be reached and no details have been made available in the appeal memorandum. Nevertheless, the one claim made by the learned counsel appears to be a reasonable proposition. The learned counsel submitted that at best the appellants can be said to be liable to pay interest for the amount which was paid from Cenvat credit amount instead of making payment in cash to discharge their service tax liability. - The stand taken by the department which in our opinion is legally correct, would result in a situation where the appellants have to deposit the entire amount of service tax utilized in excess of 20% but they can take back the credit into their account and utilize the same for subsequent period. That being the position, obviously if we require the appellant to pay interest on the excess utilization, it would reduce the complications involved in making payment in cash and taking back the Cenvat credit thereafter and would reduce work for all concerned. In Solar Chemferts Pvt. Ltd. case reported in [2011 (6) TMI 640 - CESTAT, MUMBAI], this Tribunal took a similar view in respect of the contravention of Rule 8(3) of Central Excise Rules. In our opinion, it would be appropriate to follow the same in this case also. Appellants are directed to calculate the amount payable as interest because of excess utilization of credit and make payments of the same. At present, the requirement of pre-deposit in excess of the interest payable is waived and stay against recovery is granted till the directions hereinabove are complied with and a final order about finalizing the stay application is passed by this Tribunal. - Decided partly in favour of assessee.

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• Central Excise

• 2015 (1) TMI 1101
  Benefit of CENVAT Credit - Whether the appellant is eligible to avail cenvat credit of central excise duty paid on P.u. foam blocks which are inputs for their final product which is described by them as P.U. foam sheet - Held that:- appellant is procuring P.U. foam blocks which are covered under Chapter Heading No. 3920 or 3921, on which central excise duty has been discharged by the manufacturer. We also note that the products as got manufactured by the appellant were classified by them under Chapter Heading No. 3926. After classifying the said product under Chapter Heading 3926, the appellant had discharged central excise duty which has been accepted by the Revenue. In the entire proceedings before us, we find that the classification described by the appellant as to the products which are falling under Chapter Heading 3926, remains the same and is not disturbed by the adjudicating authority or the first appellate authority. This itself is an indicator that the original input, P.U. foam block, has undergone change and is now other than the inputs which were procured by the appellant. When the appellant is discharging central excise duty on the products which they consider as manufactured products and the Revenue authorities also having accepted the central excise duty, in our considered view, the appellant eligible, rightfully to avail cenvat credit of the central excise duty paid on the inputs. This is the settled law. - the judgment of the Hon'ble High Court of Gujarat in the case of Creative Enterprises (2008 (7) TMI 311 - GUJARAT HIGH COURT) is directly on the issue and it was held in favour of the assessee inasmuch as the ratio stated is when an assessee considers the activity as amounting to manufacture, then the question of availing cenvat credit cannot be denied by holding that there is no manufacture.- impugned order is unsustainable and liable to be set aside - Following decision of CCE, Pune-III vs. Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2015 (1) TMI 1090
  Denial of CENVAT Credit - credit on rough forged rolls - Held that:- Observation of Commissioner (Appeals) that Machined rolls made from forged rolls being a essential component of rolling mill and classifiable under Central Excise tariff Chapter Heading 84; thus forged rolls are inputs used for manufacture of specified capital goods i.e. machine rolls and as such are admissible for Cenvat credit in terms of Rule 2(k) of Cenvat Credit Rules, 2004, cannot be found faulted. Therefore, same is upheld - Decided against Revenue.

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• 2015 (1) TMI 1089
  Denial of input service credit on erection and installation charges - Held that:- The fact that these charges have been borne by the appellant is not in dispute. Further the machine is inoperative in the absence of erection and installation and therefore, these have been borne by the appellant. In the light of decision of the Hon ble High Court in the case of Ultra Tech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT], wherein it was held that an assessee who is a manufacturer of excisable goods is entitled for input service credit of the services availed by him in the course of their business. Admittedly, in this case, the appellant has availed the services of erection and installation of machinery is part of the business. Therefore, the appellants are entitled for input service credit. Whether the appellant is entitled to take the benefit of exemption Notification 22/03 in the absence of re-warehousing certificate - Held that:- admittedly, the appellant cleared the goods under CT-3 certificates and copy of the same was produced by him before the department at the time of clearance between 2007-08. Within 90 days, the appellant was required to file re-warehousing certificate which they failed to do so but no steps has been taken by the revenue to verify whether the re-warehousing certificate has been obtained or not to deny the benefit of the Notification 22/03. Further, the audit took place in 2010. At that time also, this fact came to the knowledge of the department. Thereafter, the show-cause notice was issued invoking the extended period of limitation on 02.03.2012, and there is no allegation of suppression of facts or wilful misstatement. Therefore, the extended period of limitation is not invocable. Accordingly demand under this head is barred by limitation. - Decided in favour of assessee.

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• 2015 (1) TMI 1088
  Waiver of pre deposit - illegal manufacture and clandestine clearance of the Pan Masala/ Gutkha - Held that:- lot of evidence is required to be scrutinized and examined before arriving at a final verdict. The fact that Shri Vijay Mishra has not been found by the Revenue nor has been produced by the assessee and his address had been found to be fake, coupled with the evidence of recovery of supari and oven machine from the residential premises read with the statements of the workers, tilt the weight of the evidence towards the Revenue. However, keeping in view the fact that there is no inculpatory statement by the appellant and he has produced the rent deed which was not questioned by the Revenue and keeping in view the financial condition of the appellant, who is an individual and not a body corporate, we deem it fit to direct the appellant to deposit an amount of Rs . 10,00,000 within a period of twelve weeks, subject to which the pre-deposit of balance amount of duty and penalty shall stand waive - Partial stay granted.

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• 2015 (1) TMI 1087
  Waiver of pre-deposit of cenvat credit - It is alleged by the Department on the basis of evidences collected that M/s Koolmint Manufacturing Company, do not have necessary infrastructure for manufacture of the inputs, therefore, the receipt and availment of cenvat credit by M/s Kaizen Organics Pvt. Ltd., on the said inputs were, accordingly irregular. - Held that:- an amount of 15.00 lakhs has been deposited by M/s Koolmint Manufacturing Company during adjudication and now the ld.C. A. for the Applicants, makes an offer to deposit further amount of 7.5 lakhs, which, in our opinion, is sufficient to hear their Appeals. In the result, we direct M/s Kaizen Organics Pvt. Ltd., to deposit 7.5 lakhs within a period of eight weeks from today and report compliance on 30.12.2014. On deposit of the said amount, the balance amount of dues adjudged against Applicant No. (i) & (iii) and all dues adjudged against Applicant No.(ii), i.e. Shri Vikash Bajoria, would stand waived and its recovery stayed during pendency of the appeals - Partial stay granted.

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• 2015 (1) TMI 1086
  Denial of CENVAT Credit - Invoice in the name of branch office - Held that:- In view of the fact that the branch offices have no separate accounting system and their accounts form part of the head office accounts, which is registered as an ISD, I hold that the appellant has rightly availed cenvat credit in respect of the services received at the branch office/regional office and consequently, their distribution in the manufacturing unit is also proper. I further hold that the Revenue has erred in disallowing the credit on misconception of the fact that the invoices are not in the name of the appellant-assessee. In the facts and circumstances, the invoices are found to be in the name of the assessee-company, issued to the branch offices. The payments are accounted at the head office which is registered as an ISD. The availment of credit and the distribution by the head office are legal and proper. Thus the appeal is allowed. The impugned order is set aside. The appellant will be entitled to consequential benefits in accordance with law. - Decided in favour of assessee.

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• 2015 (1) TMI 1085
  Area based Exemption under Notification No. 56/2002-C.E. - certificates produced by the respondents do not mention the base employment figure and the Khasra Number on which the unit, are located are not mentioned in the notification - Held that:- Certificate issued by the Labour Officer, Jammu read with the certificates issued by the General Manager, DIC leave no doubt that the additional investment made by the respondent units has resulted the more than 25% increase in regular employment. The fact of additional investment made for installation of additional machinery is not disputed by the department. In view of this, the condition of additional investment resulting in more than 25% increase in regular employment stands satisfied. - The exemption is applicable to the goods, other than those mentioned in Annexure-I to the notification and which are mentioned in the units located in the industrial area, Growth Centre, etc., specified in Annexure-II. In the Annexure-II the location of the industrial area, growth centre, etc., notified is specified by ;(a) Tehsil and the Police Station/village in which it is located and (b) Khasra number of which the industrial area comprises. In this case both the respondent units are located in “Gangyal Private Local Industrial Area” falling under Gangyal Police Station of Tehsil Jammu. The Khasra number 740 to 778 are mentioned against this industrial area and thus the units whose khasra number are 770 and 770 Min are within this industrial area. The Assistant Commissioner has also got confirmed that Gangyal Private Land Industrial Area falls within the jurisdiction of Police Station Gangyal. In view of this, denial of the benefit of exemption under Notification No. 56/2002-C.E. to the respondent units on the ground that the khasra numbers of their plots of land are not mentioned in the Annexure-II to the notification is incorrect. - Decided against Revenue.

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• 2015 (1) TMI 1084
  Classification of goods - goods were described as Embroidery in strips/motifs manufactured by the appellant with the aid of vertical type automatic shuttle machine with the aid of power - Held that:- As per Fairchild’s Dictionary of Textiles, Embroidery is defined as “an example of the decoration of fabric or leather ground with needle-worked Accessory Stitches made with thread, yarn, or other flexible materials. Although hand embroidery is a widely practiced craft, most commercially produced embroidered textiles are made by machine.” Similarly, as per the definition of Textile Terms and Definitions, Eleventh Edition of the Textile Institute, Embroidery is defined as “a decorative pattern superimposed on an existing fabric by machine stitching or hand needlework.” As per the Explantory Notes, Embroidery can be on visilale ground or without visible ground. In such case, the base fabrics would have been removed either chemically or otherwise. Therefore, Chapter Heading 5805 can cover both embroidery on the visible ground or without the visible ground. - there are two possible views which can be taken. The first view is that if there is dyeing or printing on the fabrics, then it would fall within the scope of Note 8 to Chapter 58. The other equally plausible view is that the embroidery itself cannot be considered as fabrics and, therefore, Note 8 to Chapter 58 would not apply. In view of the two possible views, the appellant has made out a case for grant of stay. - Stay granted.

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• 2015 (1) TMI 1083
  Denial of CENVAT Credit - Captive consumption - Held that:- Oxygen gas manufactured by M/s. IMIL was cleared to M/s. IIL during the period October, 2000 to March, 2001 were through pipeline without any cover of invoice and in March, 2001 on realizing their mistake M/s. IMIL paid the duty along with interest are not in dispute. In these circumstances, the allegation of suppression of facts, fraud, collusion or any wilful misstatement are not sustainable. Therefore, as M/s. IMIL have paid duty along with interest of their own. In these circumstances, we hold that M/s. IIL is entitled to take credit of the duty paid by M/s. IMIL on oxygen gas during the impugned period. In these circumstances, the duty demand confirmed against M/s. IMIL is not sustainable and not warranted as duty has already been paid by M/s. IMIL along with interest. Further, the Cenvat credit availed by M/s. IIL is proper and legal in the eyes of law. Therefore, the impugned order to deny Cenvat credit M/s. IIL is set aside as the demands are not sustainable and further it is held that there is no suppression of facts, fraud, collusion or wilful misstatement. In these circumstances, penalties on the appellants are not imposable. - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (1) TMI 1082
  Enhancement in valuation of goods - Bar of limitation - Imposition of penalties - Held that:- Appellant has written to the department on 23-4-2007 that they are paying duty as per Rule 6 of the Valuation Rules not as per Rule 10A of the Valuation Rules, 2000 and they are also filing regular returns with the department and it was not objected. Moreover, the appellants have challenged the constitutional validity of Rule 10A of the Central Excise Valuation Rules before the Hon’ble High Court of Bombay. In these circumstances, we hold that the extended period of limitation is not invokable and extended period is not invokable. Therefore, the demand of duty beyond the period of limitation is set aside and penalties on both the appellants before us are not imposable - demand of duty within the normal period of limitation is upheld. Cess may continue to be levied and collected on the vehicles on the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis. In the case of S.M. Kannappa Automobiles P. Ltd. v. Commr. of C. Ex., Bangalore reported in [2007 (11) TMI 207 - CESTAT, BANGALORE], the issue came up before this Tribunal and this Tribunal held that as the body builder are not required to pay cess. Cess paid on chassis in this case also on chassis M/s. Tata Motors have paid the cess. Therefore, we hold that the appellants are not required to pay cess as the body on cess paid chassis is built by the appellants. Therefore, demand of cess on automobile is set aside. - Decided partly in favour of assessee.

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• 2015 (1) TMI 1081
  Restoration of appeal - there is no formal order under Section 35B(2) - Held that:- In the notesheet, though there is a proposal to file an appeal against the impugned order, the same had been merely signed by the Commissioners constituting Committee without stating as to whether they agree or disagree with the same and therefore, there is no decision on the notesheet to file appeal against the Commissioner (Appeals)’s order. Besides, no formal order under Section 35B(2) mentioning as to why the impugned order is not legal and proper and authorizing a Central Excise Officer to file the appeal against the same has been produced. In view of this we hold that appeal of the Revenue is not maintainable and there is no merit in the Revenue’s application for restoration. - Restoration denied.

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• CST, VAT & Sales Tax

• 2015 (1) TMI 1091
  Penalty u/s 58 of Uttarakhand Value Added Tax Act, 2005 – Tribunal imposed penalty at the rate of 20% for both the quarters – Absence of power or not – Held that:- The only basis for imposing penalty can only be that there is no sufficient cause - once the sufficient cause is not there, then there can be no doubt that there will be no illegality if the minimum is imposed – the same has been held in Union of India Versus M/s Rajasthan Spinning & Weaving Mills AND Commissioner of Customs and Central Excise Versus M/s. Lanco Industries Ltd. [2009 (5) TMI 15 - SUPREME COURT OF INDIA] - according to the revisionist, this is a case where the revisionist’s case is on better footing - revisionist filed the return on time, but there is no provision as such for granting extension of time to make the payment - what is contemplated is time to file the return - the revisionist had accepted the juridical basis for finding the penalty was leviable, which was the absence of sufficient cause - It is not open to the revisionist to raise the questions and, that too, as substantial questions of law in a challenge against the order of the Tribunal, which was rendered in appeals filed by the Department - the attempt to get the matter re-agitated in a case where the departmental appeals were already disposed of, appears to have been highly belated and, at any rate. Effect of amendment u/s 9 of Central Act carried out in 1976 w.e.f. 5.1.1957 – Held that:- in Manganese Ore (India) Ltd. versus The Regional Assistant Commissioner of Sales Tax, Jabalpur [1975 (11) TMI 164 - Supreme Court of India] it has been held that since penalty is a substantive matter and unless the penalty is provided for in the Central Act, no penalty could be levied by virtue of Section 9 of the Central Act, under the State Law but by validating Act the law was amended with effect from 1956 and Section 9 (2A) of the Central Act was inserted - the penalty of the nature, which is imposed would be permissible under the State Law – Relying upon Commissioner of Sales Tax, U.P., Lucknow versus New Central Jute Mills Co. Ltd. [1979 (4) TMI 148 - ALLAHABAD HIGH COURT] thus, after Section 9 (2A) of the Central Act was inserted by the amendment in 1976, there is power to visit an assessee with penalty in the circumstances made out u/s 58 of the Act – The contention of the revisionist is accepted that it is for the first time and apart from this there is no penalty levied – thus, rather than remitting the matter the penalty is reduced @ 15% in both the quarters in place of 20% fixed by the Tribunal – Decided partially in favour of revisionist.

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