Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 9, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Jurisdiction of AO u/s 158BD - Undisclosed income of any other person - As such the very first mandatory condition precedent for assuming jurisdiction under Section 158BD and subsequently under Section 158 BC has not been satisfied. - HC
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Waiver of interest u/s 220(2A) - the facts, prima facie substantiate the case of the petitioner that he had no business or source of income and that payment of interest as demanded, would cause genuine hardship. - HC
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Reopening of assessment - it is not for the petitioner to advise the assessing officer as to what inference he should draw as to nature of the expenditure–whether it is revenue or capital in nature. - notice issued u/s. 148 quashed - HC
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Benefit of Section 80IC - whether the assessee is involved in manufacturing activities in Uttarakhand from its industrial unit situate therein? - Held yes - HC
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Delay in filing registration under Section 12A/ 12AA and 80G - Between the claims of the public revenue and of the taxpayers, the Tribunal must maintain a judicial balance. - Tribunal committed no error in condoning the delay - HC
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TDS u/s 194J - reimbursement was on cost to cost basis - reimbursement of such expenses cannot be categorized as in the nature of fees towards professional and technical services. - AT
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Computation of undisclosed income under section 158BB(1) - the deduction under Chapter VI-A has to be given while computing total income or loss. - HC
Customs
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Jurisdiction of court - DEPB licenses - Merely because the officer of DRI issued a summons to the petitioners during the course of investigation, would not give any jurisdiction to us to entertain this petition. - HC
FEMA
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External Commercial Borrowings (ECB) Policy – Non-Banking Financial Company – Infrastructure Finance Companies (NBFC-IFCs) - Circular
Service Tax
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Cenvat Credit - input services used in relation to storage of inputs outside the factory will not be eligible for the credit. - AT
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Business Auxiliary Service -Job Work - denting and painting - these processes per se also are defined to be process of manufacture because these processes are essential for transforming the semi-finished bus body into a complete and finished article. - in favor of assessee - AT
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Commercial Coaching or Training Services - prima facie view that the word “commercial“ in definitions at section 65 (26) and 65 (27) and 65 (105) (zzzc) cannot be considered to be superfluous and the explanation added by Finance Act, 2010 may not be a sufficient reason to take a view that the impugned training to be a “commercial training“ - AT
Central Excise
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CBEC - Issues Transfer and Postings in the Grade of 17 Commissioner of Customs and Central Excise - Order-Instruction
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Enhancement of penalty -It is borne on record that the CENVAT credit of CVD taken by the appellant was reversed by them soon after the changed circumstances were noted by them. The enhancement of penalty by the lower appellate authority is, therefore, not justifiable. - AT
Case Laws:
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Income Tax
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2013 (1) TMI 167
Disallowance of freight charges in terms of section 40(a)(ia) - Non deduction of TDS - CIT(A) deleted the addition - Held that:- As from the various details filed by the assessee and nature of the assessee’s business of clearing and forwarding agents, it is found that the assessee is nothing but an intermediary between the exporters and the shipping lines. The assessee facilitates the contract for carrying goods for and on behalf of its client i.e. exporters or importers, and the principle contract for carrying goods is between the exporter/importer and the shipping lines. As decided in Commissioner of Income Tax vs. Cargo Linkers (2008 (3) TMI 619 - DELHI HIGH COURT) from the nature of the contract between the parties concerned it was found as a matter of fact that the contract was actually between the exporter and the airline, and the assessee was only an intermediary. It was, therefore, held that the assessee is not a person responsible for deduction of tax at source in terms of sec. 194C. Thus the present assessee, who is carrying on the business of clearing and forwarding agents, is not a person responsible for deducting the tax at source in terms of sec. 194C as the assessee is only an intermediary between the exporters and the shipping lines and it merely facilitates the contract for carrying the goods - provisions of sec. 40(a)(ia) cannot be invoked - in favour of assessee.
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2013 (1) TMI 162
Jurisdiction of AO u/s 158BD - Undisclosed income of any other person - search under Section 132 - AO treated the claim of the assessee regarding receipt of service charges as income from house property Whether the notice of Search & Seizure dated 28.10.1997 satisfied the requirement of Section 158BD? - Held that:- As decided in MANISH MAHESHWARI and INDORE CONSTRUCTION P. LTD. Versus COMMISSIONER OF INCOME-TAX [2007 (2) TMI 148 - SUPREME COURT OF INDIA] the conditions precedent for invoking the provisions of Section 158-BD are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132-A of the Act. There is no recording of any satisfaction that any undisclosed income belongs to the respondent/assessee. The communication dated 28.10.1997 merely indicates that books of accounts pertaining to the respondent assessee/assessees were seized and were lying in the custody of the Assessing Officer in respect of the Mody Group of cases. It was further indicated in the communication that since the AO at New Delhi had jurisdiction over the assessee, it was proposed that necessary proceedings may be adopted against the assessee in accordance with the provisions of chapter XIVB of the said Act. There is no satisfaction recorded by the said AO of the Mody Group of companies that any undisclosed income belonged to the assessee. As such the very first mandatory condition precedent for assuming jurisdiction under Section 158BD and subsequently under Section 158 BC has not been satisfied. This failing on its own would render the entire proceedings to be without jurisdiction - in favour of assessee.
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2013 (1) TMI 161
Waiver of interest u/s 220(2A) - assessee not produce any proof that he had no other business or source of income - Held that:- It is an admitted case of the respondents that the entire properties of the petitioner are under attachment and that the interest liability of the petitioner was satisfied from out of the compensation amount remitted by the Corporation of Cochin. These facts, prima facie substantiate the case of the petitioner that he had no business or source of income and that payment of interest as demanded, would cause genuine hardship. Default committed in complying with the conditional waiver order and the instalment facility was for the reason that he had no source of money to comply with the same - orders rejecting the waiver application quashed.
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2013 (1) TMI 160
Reopening of assessment - proceedings initiated after a period of four years - disallowance of the royalty paid as capital expenditure - assessment years 2002-03 and 2003-04 - Held that:- The assessing authority cannot keep improving his case from time to time and that the reassessment proceedings have to stand or fall on the basis of what was stated in the reasons recorded u/s. 148(2) and nothing more. No failure to furnish full and true particulars relating to the royalty payments, including the failure to file the relevant agreements, has been alleged in the reasons recorded. If anything, the reasons are an admission that it was the assessing officer who did not draw the inference that the royalty payments were capital in nature. It was for him to draw the appropriate inference and not for the assessee to tell him what inference of fact or law should be drawn from the primary facts furnished. See Calcutta Discount Co. Ltd., (1960 (11) TMI 8 - SUPREME COURT) - thus the reassessment notices for the assessment years 2002-03 and 2003-04 are quashed . Reopening “based on information received from Revenue Audit” - Assessment year 2004-05 - within the period of four years - Held that:- It is difficult to sustain the notice issued u/s. 148 as the audit objection is only an inference that the royalty payment resulted in a capital benefit, such an opinion expressed by the audit cannot constitute tangible material on the basis of which the assessment can be reopened. As decided in Indian Eastern and Newspaper Society v. CIT, (1979 (8) TMI 1 - SUPREME COURT) information as to correct legal position must come from a formal source or body which is competent to pronounce upon the issue and that revenue audit is not competent to pronounce on issues of law. The alleged non-deduction of tax from the royalty which would authorise the disallowance under section 40(a)(i) is a fact that is mentioned for the first time in the counter-affidavit and it does not find place in the reasons recorded. As noted earlier, it is impermissible to look into any record other than the reasons recorded to judge the validity of the reopening of the assessment. Further, the statement in the counter- affidavit that the facts relating to the past years disclosed that the petitioner was wholly dependent on the parent company for the technical inputs goes against the revenue, in the sense that it was always known to the revenue that the petitioner did not develop any technology of its own but was dependent on the technology from the parent company. Moreover, it is not for the petitioner to advise the assessing officer as to what inference he should draw as to nature of the expenditure – whether it is revenue or capital in nature. thus the notice issued u/s. 148 for the AY 2004-05 is also without jurisdiction & be quashed - appeal in favour of assessee.
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2013 (1) TMI 159
Unaccounted Cash Credit - survey u/s. 133A - computer back up files found on the system at the assessee's premises - could any addition be made in the hands of the assessee, the recipient or the beneficiary of these funds? - Held that:- The transactions of availing monies from 'P' having not been recorded in the assessee's books of account, section 68 could not be said to be applicable. However, that would be to no consequence, as the admission of the transaction/s itself implies of the corresponding amount/s in the assessee's hands in the form of cash on the relevant date/s and sections 69, 69A, etc., will apply. CIT(A) has relied on the decisions in the case of Sunil K. Malhotra v. CIT [1995 (7) TMI 60 - ALLAHABAD HIGH COURT] and Laxmi Narain Gupta v. CIT [1979 (10) TMI 41 - PATNA HIGH COURT]. The document to be considered as true, admittedly reflects the transaction/s of money being provided by 'P' for their use by, among others, the assessee. That is, it shows an effective or constructive receipt of money by or on assessee's behalf. Where it was used can only be explained by the assessee, and which it has chosen not to. The receipt of money by the assessee is manifest per the document, which is, rather, not denied by the assessee. The acquisition of money by the assessee as at the relevant date/s, thus, cannot be and, in any case, is not in question. The same (money, in the form of cash), which is covered by section 69A, being not recorded in the assessee's books of account, the said provision would apply to the transaction. Consider this a bank pass book of the assessee, which definitely does not form part of the assessee-bank account holder's books of account, is found during search/survey, reflecting deposit/s and/or credit/s therein. The amount/s may have been withdrawn subsequently, so that it cannot be said that a deposit/s is 'found' as on the date of search, yet it is so found on the relevant date/s (of deposit/s), so that the assessee is obliged to explain the same as to its nature and source, where not reflected in its regular books of account and the date/s fall in the year/s of assessment. Thus, find no legal hindrance or barrier to the invocation of the said sections, or s. 69A in the instant case. It is only when both the nature and source of the money has been satisfactorily explained, that the assessee's obligation under the deeming provision stands discharged and which, thus, cannot be said to be in the facts and circumstances of the present case. The deeming of section 69A would, thus, be clearly applicable, and stand validly applied by the Revenue in the facts and circumstances of the case. However, the same shall only extend to the 'money' with the assessee, and cannot, by any account, extend to the money provided by 'P' for persons other than the assessee. Whether the assessee has any connection with them; it clearly with-holding facts, is irrelevant, as in any case they are separate persons, and their income, if so, cannot be assessed in the assessee's hands merely because a document is recovered from its premises. Accordingly, the assessee's income stands validly assessed to the extent of Rs. 5,61,000/-, and the balance Rs. 12.83 lacs stands to be deleted - partly in favour of assessee. Addition u/s. 69 C effected on the basis of print-outs of computer back up file - CIT(A) deleted the addition - assessee's contested that its' name being reflected neither in the payments nor toward receipt of money - Held that:- Presumption u/s. 292C can only result in the document being read as what it would convey to a normal, un-interested person of ordinary prudence. Of course, in a given case, the reading may yield grotesque situations, as where the person/s stated in the document does not exist, or (say) the person/s stated to be providing the material resources is admittedly a man of no means, so that the document could not be considered as a valid piece of information. However, in such a case, the onus to show so would be on the person so alleging. The AO has done no such exercise. The Revenue has also not brought on record any interest of the assessee in the relevant properties. The document, as we see it, has no bearing on the assessee. The document may be true, and the assessee may well be in know of its contents, as it would only have been prepared by or under its supervision and knowledge, and only for some purpose. However, if the assessee doe not choose to divulge the same, it cannot be in consequence applied to it. Under the circumstances, CIT(A) had rightly deleted the impugned addition - against revenue.
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2013 (1) TMI 158
Benefit of Section 80IC - whether the assessee is involved in manufacturing activities in Uttarakhand from its industrial unit situate therein? - The Assessing Officer found that instead of bringing the flowers, thus purchased, on the basis of job work, assessee extracts the oil contents from the flowers at Uttar Pradesh and, thereafter, such oil is brought in the factory of the respondent assessee situate in Uttarakhand and with the help of the extracted oil, the essence is manufactured. The Assessing Officer felt that in the whole process, the most important part of the manufacturing activity is undertaken in the State of Uttar Pradesh and the minimal in the State of Uttarakhand and, as a result, respondent assessee is not entitled to the benefit of Section 80IC Held that:- The distilled oil, which is used as a raw material in the processing unit of the assessee situate in Uttarakhand, is available in the market. To that, there is no dispute. Instead of buying the same from the market, assessee gets the same processed in the State of Uttar Pradesh. - Benefit u/s 80IC allowed - Decided in favor of assessee.
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2013 (1) TMI 157
Delay in filing registration under Section 12A/ 12AA and 80G - whether ITAT erred in condoning delay - order passed by the DGIT (Exemption) u/s 263 set aside by ITAT - A.K. Sikri, its erstwhile treasurer responsible for the forgery of the certificate u/s 80G - Held that:- The evidence in the form of statement of A.K. Sikri, complaint to the police authorities (both by the assessee and also by the income tax department), investigation by the police and their reports, proceedings before the criminal courts, the bail application of Sikri are all evidence to show the complicity or involvement of Sikri in the alleged forgery or irregularities in the issue of the certificates of registration/ approval under sections 12A and 80G. The evidence contained Court proceedings and were complementary to each other and cannot be brushed aside as the DIT (Exemptions) has done, as having no evidentiary value. The Tribunal, therefore, held that the DIT (Exemptions) was not justified in refusing to take cognizance of those vital documents in coming to the conclusion that the assessee – society or its trustees/ governing body members connived or colluded with Sikri. Order of the Tribunal states that the assessee – society took the action immediately on receipt of the complaint from M. P. Mansinghka Trust of Mumbai referring to the confession of Sikri in the meeting of the governing body owning up responsibility for having misled the assessee – society by representing that the necessary application for registration were made in time, it has also referred to the action taken by the assessee – society against Sikri when it found that Sikri was not taking adequate steps to remedy the situation, police complaints filed by the assessee – society & income tax authorities against Sikri which indicated that they also viewed Sikri to be responsible for the mis-representation, fake certificates of registration, etc. Moreover, the Tribunal has taken note of the fact that the Metropolitan Magistrate, acting on the police complaint, remanded Sikri to custody and also referred to the fact that in the bail application, Sikri had again owned up responsibility for the fake certificates of registration. Thus Tribunal came to hold the view that it was because of the irregularities, illegalities and mis-representations of Sikri that the assessee – society was led to believe that appropriate applications were already filed with the income tax authorities for registration. The assessee – society was thus under the belief, though mistaken but honest, that there was no delay and once it came to know on 06.12.2005 about the irregularities on a complaint from M. P. Mansinghka Trust of Mumbai and on further enquiry conducted on 14.12.2005 by the governing body, it hastened to take remedial action by filing applications for registration both under section 12A and 80G, which were followed up by another set of applications filed directly with the DIT (Exemptions) on 21.12.2005; these applications were obviously delayed and the condonation application was filed on 14.03.2006 narrating the events that led to the delay. Thus the Tribunal has, in making its decision, kept in mind the principles adumbrated in Esthuri Aswathiah v. CIT [1967 (4) TMI 14 - SUPREME COURT] that the Tribunal cannot make arbitrary decisions cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the taxpayers, the Tribunal must maintain a judicial balance. Its order cannot, therefore, be branded as perverse or unreasonable or irrational - In Ram Nath Sao @ Ram Nath Sahu and Ors Vs. Gobardhan Sao and Ors., (2002 (2) TMI 1280 - SUPREME COURT) it was observed that acceptance of the explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona fides can be imputed to the defaulting party. In the present case, the Tribunal has found that the assessee – society has taken prompt remedial action and put Sikri on the dock and he also admitted his fault, though he tried to shift the blame to his employee whose whereabouts were never known. Even in his bail application he had confessed to his role in the alleged irregularities and illegalities. There has been no want of bonafides on the part of the assessee, nor did it fail to take immediate action once it was apprised of the irregularities in its affairs by M. P. Mansinghka Trust of Mumbai. In these circumstances, the Tribunal committed no error in condoning the delay - in favour of the assessee.
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2013 (1) TMI 156
Payments towards services availed from HSL for operating and maintaining an integrated Steel plant - whether in the nature of reimbursement? - whether attracts the provisions of s.194J or not? - Held that:- As per SAA the share capital of Hospet Steel Ltd [HSL] was held by the assessee and Mukund Ltd [ML] in equal proportion and the investment in the said steel making facilities has been made by SAA constituents in the ratio of 41.38 and 58.62 by the assessee and ML respectively. As per the terms of SAA, the assessee and ML have reimbursed the expenses incurred by HSL in performance of its obligations. As rightly argued by the AR, the said reimbursement was on cost to cost basis and the same is evident from the P&L account and debit notes raised by HSL on the assessee and ML for the concerned assessment years. Therefore, the said payments did not comprise of any income component. Thus, the reimbursement of such expenses incurred by HSL cannot be categorized as in the nature of fees towards professional and technical services. As decided in DECTA v. CIT [1996 (5) TMI 385 - AUTHORITY FOR ADVANCE RULINGS] the amount of contribution received/receivable to recover part of the cost of technical assistance provided by the applicant under the provisions of its aid programme to the companies assisted by it in India is neither income of the appellant under the provisions of the Income-tax Act nor fees for technical services. Thus taking into account the facts and circumstances of the issue the reimbursements of payment by the assessee and ML to HSL cannot be regarded as income in the hands of HSL. Relying on CIT v. Expeditors International (India) (P) Ltd. [2011 (12) TMI 104 - DELHI HIGH COURT] the said payments being in the nature of reimbursements on cost to cost basis and thus, the said payments did not constitute income in the hands of HSL and, therefore, the assessee as well as ML were not liable to deduct tax at source u/s 194J - in favour of assessee..
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2013 (1) TMI 155
Bogus cash credit - reopening of assessment - Held that:- No appeal is required to be filed when tax effect is less than Rs. 2 lakhs. The conditions mentioned in Clause-3 of the Circular dated 27.3.2000 i.e. where prosecution proceedings are contemplated against the assessee, are not attracted in this appeal. The circular has been issued by the Central Board of Direct Taxes and is binding upon the Department. In view of the aforesaid circular, the appeal is not maintainable and is dismissed as such.
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2013 (1) TMI 154
Deductions under Chapter IV and VI-A of the Income tax Act, 1961 claimed in regular assessment allowed while computing the undisclosed income under section 158BB(1) - Held that:- As earlier total income or loss was computed in accordance with Chapter IV, however the word 'Chapter IV' was substituted by the word 'the Act' by Finance Act, 2002 with effect from 1st July, 1995 and, therefore, while computing the undisclosed income or loss deduction under Chapter VI-A is admissible. The Tribunal had rightly held that the deduction under Chapter VI-A has to be given while computing total income or loss. Goodwill received on retirement added as undisclosed income - Tribunal deleted the addition - whether Tribunal justified in holding that the income which was duly disclosed in original assessment could not form part of undisclosed income as defined in Section 158 B (b) - Held that:- Sum of Rs. 1,50,500/- received on assessee's retirement was disclosed in the regular return filed for the assessment year 1993-94 which has been taken into consideration while passing regular assessment order under section 143(3) therefore, the said amount cannot be included under sub-clause (b) of section 158B - The order of the Tribunal does not suffer from any legal infirmity.
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2013 (1) TMI 153
Reopening of assessment - assessee has failed to disclose all material facts truly and fully - Held that:- Revised return of income for the assessment year 2002-03 in March 2004 and filing the return of income for the assessment year 2003-04 on 2.12.2003 that the loss of Rs.2,52,14,220/- was not claimed in the revised return of income for the assessment year 2002-03 and the reversal of the aforesaid loss in the books of account for the year ended 31.03.2003, relevant to the assessment year 2003-04 could not be subjected to tax for that assessment year. This was consistent with the position that neither the income nor the loss relating to the paper board division could be considered to belong to the petitioner on and after 01.10.2001. The reduction of the income for the assessment year 2003-04 by the loss of Rs.2,52,14,220/- was therefore consistent with the memorandum of understanding, the petitioner had also reduced the income for the assessment year 2003-04 by the aforesaid loss. The ultimate position was that since the loss relating to the paper board division incurred between 01.10.2001 to 31.3.2002 was reduced from the loss of the petitioner company to show a reduced loss for that year, the profit shown for the year ended 31.3.2003 relating to the assessment year 2003-04 should correspondingly be reduced by the aforesaid loss. This position was duly informed to the assessing officer in the return and the documents and accounts accompanying it. The factual position thus show that the complete particulars relating to the memorandum of understanding and its impact on the profit and loss of the petitioner company was disclosed by the petitioner in its return of income. There was no failure on the part of the petitioner to disclose the primary facts causing no escapement of income - notice u/s 148 is therefore, without jurisdiction - in favour of assessee.
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Customs
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2013 (1) TMI 152
Unjust enrichment - refund sanctioned - Held that:- The amount has been paid by the appellant as provisional duty, while taking provisional clearance of the goods from the department. Since the matter stands remanded to the adjudicating authority to reconsider the issue afresh only on the ground of unjust enrichment, no reason to interfere in such an order. Accordingly, appeal filed by the assessee dismissed and as directed by the adjudicating authority should consider the issue afresh from the angle of unjust enrichment, after following the principles of natural justice.
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2013 (1) TMI 151
Jurisdiction of court - DEPB licenses - Petitioners purchased through their agents, three DEPB licenses - DEPB licences were obtained through fraud - Customs authorities refused to permit imports against such license – Held that:- The DEPB licences were issued in favour of M/s. Yash Exports at Varanasi. The port of export was shown at Varanasi. The licences were issued by DGFT, New Delhi. Such licences were transferred in favour of the petitioners also by the same authority. On the basis of purchase of such licences the petitioners imported goods which landed at Mumbai. The customs authorities at Mumbai refused to permit imports thereof on the basis of the DEPB licences so purchased by the petitioners. Clearly no part of the cause of action can be stated to have arisen within the local limits of this court. The ultimate order that the Joint Director of Foreign Trade passed was also at New Delhi. The ultimate order cancelling the licences which the petitioners have challenged in the petition subsequently, was also passed by the authority at New Delhi. Merely because the officer of DRI issued a summons to the petitioners during the course of investigation, would not give any jurisdiction to us to entertain this petition. In favour of revenue
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Corporate Laws
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2013 (1) TMI 150
Scheme of Amalgamation - Held that:- Dispensed with the requirement of convening meetings of all the Equity Shareholders and Unsecured Creditors of both the Petitioner Companies and Unsecured Debenture holder of Petitioner Company- II - Petition seeking sanction of the Scheme of Amalgamation published in English, Delhi Edition and Hindi, Delhi Edition. Official Liquidator's report stating no complaint against the proposed Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Petitioner Company -I do not appear to have been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. Transferor Company give an undertaking for all compliances from Reserve Bank of India as required under FEMA/FIPB for above transactions involving foreign entities, if deemed fit & proper by the Hon'ble Court - The provisions of section 4(7) does not apply to the Petitioner Companies as both the Petitioner Companies are the subsidiaries of Gold Hotels and Resorts Pte. Ltd. (“Parent Company”), a private limited company, incorporated under the laws of Singapore In view of the approval accorded by the Shareholders and Creditors, reports filed by the Regional Director (Northern Region), MCA and OL there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction granted - Petitioner Companies will comply with the statutory requirements by filing certified copy of the order be filed with the ROC within 30 days from the date of receipt of the same - the whole of the undertaking, the property, rights and powers with all the liabilities and duties of the Transferor Company/ Petitioner Company -I be transferred to and vest in the Transferee Company/ Petitioner Company -II without any further act or deed - the transferor company shall stand dissolved without winding up - this order will not grant exemption from payment of stamp duty or taxes or any other charges - Petitioner Companies would voluntarily deposit a sum of Rs. 1, 00,000/- in the Common Pool fund of the Official Liquidator within three weeks from today.
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2013 (1) TMI 149
Winding up petition - Recovery of loan - Secured claim – certificate from Debt Recovery Tribunal – Premature proceeding – Held that:- As the Division Bench permitted the Company to raise all admissible pleas however, such liberty given by the Division Bench, in our considered view, cannot override the sound principle of law that order of admission upon a contested hearing would amount to finality on the claim of the petitioning creditor, binding the Company. A claim against a company that could not be resisted by the Company through a bona fide approach having plausible reasons to defend the same would automatically attract the fiction of deemed insolvency that would maintain a winding up proceeding against the debtor company through a creditor As concluding from the facts of the case the Company availed all legal opportunities that they were entitled to in law, to resist the claim. They failed at all stages as noted above. The amount became due and payable by the Company that the Company neglected to pay. An order of winding up as the Company as on that date was insolvent being unable to pay its debts. Its existence would cause threat to the commercial world. In favour of respondent
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Service Tax
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2013 (1) TMI 166
Service tax with education cess on the toll charges collected at Venkatachalam Toll Plaza, Budanam Toll Plaza and Sullurpet Toll Plaza on NH.5 - Held that:- CIDBI was awarded the work of widening the existing two lane highway to four lane highway on both sections of NH.5 and NH.9 mentioned above including construction, strengthening and widening thereof and the operation, maintenance of the same through a concession on BOT basis. Thereafter, a memorandum of agreement dated 19.12.2000 was entered into between NHAI and CIDBI and clause 5 of the said agreement permitted CIDBI to transfer all rights, benefits, interests, duties and obligations of CIDBI under the said agreement to a SPV to be constituted by CIDBI. A concessionaire agreement dated 27.3.2001 was subsequently entered into appointing CIDBI as the Concessionaire inter alia to collect toll also apart from designing, engineering, financing, procurement, construction, completion, operation and maintenance. Later, CIDBI had promoted and incorporated the respondent on 11.5.2001 as a SPV and assigned all its rights to the respondent under the assignment agreement dated 29-06-2001 to which NHAI is also a party. Under Clause 2.1 of the assignment agreement dt.29.6.2001, CIDBI assigned and transferred the concession agreement in favour of the respondent and the respondent unconditionally agreed to accept the said assignment/transfer of the concession agreement and undertook to execute/perform the concession agreement as if the said agreement was entered into between NHAI and the respondent. Clause 2.2 of the agreement states that NHAI agreed to the aforesaid assignment of the concession agreement by CIDBI in favour of the respondent and with the execution of the assignment agreement, the respondent shall be deemed to be the concessionaire under the concession agreement. Clause 2.3 of the agreement provided that with the execution of the assignment agreement, NHAI and CIDBI released each other from their respective rights, duties and obligations under the concession agreement. Clause 2.4 of the agreement states that this assignment agreement shall be annexed to the concession agreement dated 27.3.2001 and shall form an integral part of the concession agreement. A conjoint reading of the above clauses of the assignment agreement dated 29.6.2001 lead to the irrefutable conclusion that the respondent alone was the concessionaire entitled to collect toll as all the rights of CIDBI under the concession agreement dated 27.3.2001 including toll collection, were assigned to the respondent with the consent of NHAI. Revenue pointed out from clause G of the preamble to the assignment agreement dated 29.6.2001 that the word "toll collection" was not mentioned therein and therefore CIDBI continued to be the agency for collection of toll and not the respondent. Thus the preamble to the agreement or clause G would not be relevant and one has to see the operative clauses of the agreement dated 29.6.2001 i.e. clauses 1.1, 2.1, 2.2, 2.3 and 2.4, thus rejection of contention of the counsel for the Revenue.
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2013 (1) TMI 165
Cenvat Credit of service tax paid on input services used for ammonia storage tank - denial of Credit as storage tanks are attached to earth and therefore are immovable property and also that the services are being used outside the factory premises - Held that:- As under Rule 4(7) there is no such restriction about the use of input services outside the factory but Rule 4(7) is to be read with definition of input service under Rule 2(l) of the Cenvat Credit Rules stating that only those services will qualify for the input services which are used after input stage or those input services are used in the manufactured or produced from input or said service Ammonia is imported by the appellant and after goods are cleared from the port and the goods are delivered to the appellants. Procurement of the input is over after taking delivery of the goods. Thereafter appellants are eligible for credit of service tax paid on inward transportation of the inputs as per definitions of the input service. Thus finding that Consulting Engineer Service, Technical Inspection and Certification Service, Construction Service and erection, commissioning and installation service are used in installation of storage tanks outside the factory. Inclusive definition of input service also includes input services used in relation to storage upto the place or removal. Storage upto place of removal will include the storage of final products and not storage of inputs because whenever legislature wanted to give the benefit, in respect of inputs it has done so by specifically mentioning as procurement of inputs and inward transportation of the inputs. Therefore, input services used in relation to storage of inputs outside the factory will not be eligible for the credit. Since the appellants were not eligible for the Cenvat Credit penalty under Rule 15A and also the interest has rightly been confirmed by the adjudicating authority - against assessee.
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2013 (1) TMI 164
Business Auxiliary Service - production or processing of goods for or on behalf of, the client - demand of service tax along with interest and penalties - assessee contested that the impugned processes amount to manufacture - Held that:- Examining the processes of denting and painting undertaken by assessee such processes are carried out before the bus body was cleared out of the factory. The process are essential for completion of manufacture of bus bodies and having no reason to hold that these processes cannot be considered to be manufacturing activities within the meaning of section 2 (f) of Central Excise Act, 1944. Further going by note 6 of section XVII of Central Excise Tariff, these processes per se also are defined to be process of manufacture because these processes are essential for transforming the semi-finished bus body into a complete and finished article. Thus the argument of Revenue fails. Whether shifting of goods within the factory premises amounts to "production or processing of goods for, or on behalf of, the client" - Held that:- Obviously the word "production" cannot cover shifting of goods. The word "processing" used in the company of "production" cannot be understood to cover any activity on the goods but only those activities which bring about some change in goods. These words cannot cover activities like shifting, transportation, storage etc within its scope. Shifting of waste arising in the process of manufacturing is one stage further removed from manufacturing activity. So no merit in the argument of Revenue. Exemption under notification 08/2005-ST denied - non producing evidence of duty payment - Held that:- The appellant was doing these jobs within the factory of JCBL who regularly submits excise returns to the excise department which administers service tax levy also. The whole case is made out based on scrutiny of the records of JCBL Ltd & there is no effort made by the department to identify exempted clearances of JCBL Ltd. Thus there is an approach of selectively looking at the records of JCBL Ltd. At least when pointed out by the appellant, there was an onus on the department to reexamine the records, thus the exemption under notification 08/2005-ST has been denied arbitrarily.
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2013 (1) TMI 163
Commercial Coaching or Training Services - period 01-04-2005 to 31-03-2010 - Held that:- As decided in Administrative Staff College of India Versus Commissioner of Customs & Central Excise, Hyderabad [2008 (8) TMI 194 - CESTAT, BANGALORE] the very fact the word commercial has been used indicates that the word 'commercial' Qualifies the Commercial coaching or training centre. It doesn't qualify coaching or training. It qualifies the centre. As long as the institution is registered under the Societies Registration Act and also exempted from income-tax, it cannot be considered as a commercial centre. Therefore, no service tax is leviable under the category of Commercial Coaching or Training & in Ahmedabad Management Association Versus Commissioner of Service Tax, Ahmedabad [2008 (11) TMI 126 - CESTAT, AHMEDABAD] that service tax on various seminars and meetings under convention service not justified as tax is leviable only if it is rendered by a commercial concern prior to 1-5-2006. The decision in the case of Administrative Staff College (supra) has been upheld by the Apex Court as reported at Commissioner v. Administrative Staff College of India [2010 (3) TMI 906 - SUPREME COURT OF INDIA] & Ahmedabad Management Association has been set aside by the Apex Court and remanded for denovo consideration in the light of the retrospective amendment made by Finance Act, 2010 as reported at Commissioner v. Ahmedabad Management Association (2010 (10) TMI 908 - SUPREME COURT OF INDIA). Having considered all the aspects above prima facie view that the word "commercial" in definitions at section 65 (26) and 65 (27) and 65 (105) (zzzc) cannot be considered to be superfluous and the explanation added by Finance Act, 2010 may not be a sufficient reason to take a view that the impugned training to be a "commercial training". As substantial part of the demand is confirmed invoking extended period of five years and such extended period may not be available while demanding short paid taxes on account of such interpretational issues - waiver of requirement of pre-deposit of dues for admission of the appeal and there shall be stay on collection of dues arising from the impugned order during the pendency of the appeal -in favour of assessee.
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Central Excise
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2013 (1) TMI 148
Waiver of pre-deposit - Stay of recovery - Demand of interest - On issuing supplementary invoices - Increase in labour and material cost - the price was increased in view of the increase in view of the increase in the electricity tariff - Held that:- Following the decision in case of BHARAT HEAVY ELECTRICALS LTD.(2010 (4) TMI 439 - KARNATAKA HIGH COURT) that price escalation is due to increase in input labout and other costs which was determined by All India Industrial Price Indices, the demand of interest on differential duty is not sustainable. The price was increased in view of the increase in the electricity tariff by the Power Grid Corporation of India. Waive the pre-deposit
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2013 (1) TMI 147
Waiver of pre-deposit – Stay of recovery - Valuation – Inclusion and exclusion from transactional value - bought out items - commissioning and erection - design and drawing - escalation charges – Held that:- The appellant is a sick unit and is in the process of getting revived and therefore, we follow the yardstick adopted in the stay orders. Direct the appellant to pre-deposit a sum of Rs. 2.50 lakhs. Partly allowed
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2013 (1) TMI 146
Waiver of pre-deposit - Stay of recovery - Common input - Maintenance of separate accounts of inputs - Eligibility for exemption - Supplies made under international competitive bidding - Rule 6 of the CENVAT Credit Rules, 2004 - Manufacturers of copper cables - Notification No.6/2006-CE dt. 01/03/2006 - Notification No.67/95-CE dt. 16/03/1995 - Manufacturing both dutiable and exempted final products - Held that:- Prima facie, when goods are cleared without payment of duty under Notification No.6/2006-CE, the Rule 6(6) of CCR stipulates that provisions of sub-rules(1),(2),(3)and(4) shall not be applicable. Therefore, the requirements of maintenance of separate accounts of inputs going into the manufacture of exempted products etc. do not arise. We have not been shown that the appellants have failed in fulfilling any obligation in terms of Rule 6 of the CCR, 2004. Waive Pre-deposit. Stay granted. In favour of assessee
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2013 (1) TMI 145
Enhancement of penalty - Wrong availment of CENVAT credit - Rule 12 of the CENVAT Credit Rules, 2002 - Penalty under Rule 15(1) - Import duty-free inputs under advance licences issued by the DGFT - Excisable goods manufactured from these inputs were supplied to Power Grid Corporation of India Limited (PGCIL) without payment of duty in terms of Notification No.108/95-CE dated 28.8.1995 - These products were intended to be used in the execution of PGCI's project financed by World Bank - However, as World Bank loan did not materialize, a major condition attached to Notification No.108/95-CE remanded without compliance - PGCIL decided to discharge central excise duty liability in respect of the goods supplied to them by the appellant - Also paid the custom duties (BCD + CVD + SAD) foregone in respect of the inputs (components) imported by the appellant under DEEC scheme - Following this payment of duties of customs by PGCIL, the appellant took CENVAT credit of the CVD - Subsequently, World Bank funding of PGCIL's project was cleared and eventually the customs duties paid by PGCIL came to be refunded to them - SCN issued on ground that challan used for availing CENVAT credit was not a valid document for such availment of credit Held that:- It is borne on record that the CENVAT credit of CVD taken by the appellant was reversed by them soon after the changed circumstances were noted by them. The enhancement of penalty by the lower appellate authority is, therefore, not justifiable. In favour of assessee
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2013 (1) TMI 144
Waiver of pre-deposit - Stay of recovery - Non-compliance with Section 35F - Pre-deposit was not made within the stipulated period - Assessee's appeal against the Order-in-Original came to be rejected - Assessee pleaded a strong prima facie case on merits as well as on the ground of limitation also - Held that:- After perusing the records and have not been able to discern a strong prima facie case for the appellant. The plea of limitation is debatable. Direct assessee to predeposit 25% of the duty amount. Impugned order is set aside and this appeal is allowed by way of remand
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