TMI Tax Updates - e-Newsletter
October 12, 2013

Case Laws in this Newsletter:

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

Articles

1. FOCUS ON COMPLIANCES UNDER COMPANIES ACT, 2013

   By: Dr. Sanjiv Agarwal

News

1. Welcome to India: State of the Indian economy, banking sector and factoring services (Opening Address by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India at International Factors Group’s Annual Conference on October 7, 2013 in New Delhi)

2. Quick Estimates of Index of Industrial Production and Use-Based Index for the Month of August, 2013 (Base 2004-05=100)

Circulars / Instructions / Orders

Income Tax

1. 08/2013 - dated 10-10-2013

INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2013-14 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

Highlights / Catch Notes

Income Tax

• Understanding 10% Tax on Long-Term Capital Gains from Equity Shares: Section 112(1) Proviso Interpretation Challenges.

  Case-Laws - HC : Rate Tax on long term capital gain - tax rate of 10% without indexation - Sale of equity shares - It is not possible to decipher and clearly elucidate the exact legislative purpose and object behind the proviso to Section 112(1) in a categorical and unambiguous manner. - HC
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• Court Rules Project Report Costs as Revenue Expenditure, Affecting Tax Treatment.

  Case-Laws - HC : Amount paid for preparation of project report, a revenue expenditure of capital expenditure – held as revenue in nature - HC
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• Income Tax Act Amendment: Unabsorbed Depreciation Can Be Carried Forward Indefinitely u/s 32(2.

  Case-Laws - AT : Time limit for carry forward of unabsorbed depreciation – Applicability of amendment in section 32(2) vide Finance Act 2001 – it would be carried forward till the time it is set off against the profits and gains of subsequent years without any limit whatsoever - AT
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• Income from Undisclosed Receipts Assessed at 8% Net Due to Unrecorded Expenses Noted in Case on Income Accrual.

  Case-Laws - AT : Accrual of income - determination of income out of the receipt not disclosed in the books of account - when the receipts were out of the books of accounts, the payment on account of expenses may also be out of the books of accounts - net income will be 8% - AT
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• Bridge Construction Cost for Factory Classified as Revenue Expenditure for Tax Purposes.

  Case-Laws - AT : Revenue expenditure or capital expenditure - The assessee contributed towards part of the expenditure for construction of a bridge to prevent the sea water entering into the factory premises of the assessee - held as revenue expenditure - AT
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• Tax Deducted at Source Mistake Rectified: Discount Treated as Commission u/s 194H Confirmed by Court.

  Case-Laws - AT : Rectification of mistake in the order - TDS u/s 194H - The assessee has not disputed the fact that the alleged discount was not reduced/adjusted from the total turnover as per the original invoices for the purpose of sales tax - order treated the same as commission confirmed - AT
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• Depreciation on Website Purchase for Associated Enterprise Allowed Under Arm's Length Principle in Transfer Pricing Case.

  Case-Laws - AT : Transfer pricing - ALP - purchase of website for AE - Since the said website was used in the business, there is no necessity for disallowing depreciation. - AT
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Customs

• Customs Duty Exemption Denied Over Technicalities Despite Accurate Documentation for Reexport of Short Consignment Goods.

  Case-Laws - AT : Exemption from duty of customs on import of goods subject to reexport - the objection of the lower authorities is too technical - When the exporters is accepting the fact of short consigning of the goods, the customs authorities in India should not reject the same on some technical ground, especially when the air-way bill as also bill of entry mentioned the correct weight - AT
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• Authorities Validate NIDB Data for Assessing Import Value of Misclassified Watch Batteries.

  Case-Laws - AT : Assessable Value – import of Watch Batteries - mis-declaration of classification - No infirmity in respect of applying NIDB data to the batteries imported by the appellant - AT
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• High Alumina Refractory Cement reclassified as "other hydraulic cement" under Notification No. 21/2002; no classification disputes.

  Case-Laws - AT : Benefit of Notification No. 21/2002 - classification - Once the tariff heading changed and the High Alumina Refractory Cement was classified under other hydraulic cement, no doubt the question of the product which is known in the trade as High Alumina Refractory Cement would be under the relevant heading in the tariff and there cannot be any dispute on this aspect. - AT
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• Second-Hand Supply Vessels Classified Under CTH 8901 for Duty Exemption: Primarily Designed for Cargo and Passenger Transport.

  Case-Laws - AT : Import of second hand vessel - Exemption from duty - supply vessel or multipurpose support vessel - classification under heading 8905 or 8901 - Nevertheless, these vessels remain supply vessels designed for transport of cargo and persons and therefore, they are rightly classifiable under CTH 8901 - AT
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Service Tax

• Tamil Nadu's Fly Ash Removal Not Infrastructural Support; Exempt from Business Support Service Tax.

  Case-Laws - AT : Business Support Servcie - Infrastructural support service - Removal of fly ash - removal of Fly ash as per rate of the order of Government of Tamil Nadu would not constitute ‘infrastructural support service’ - AT
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• Stay Granted in Service Tax Case on Lift Irrigation Works Contracts Involving Water Transfer and Distribution.

  Case-Laws - AT : Execution of works contract in respect of Lift Irrigation Schemes for lifting the water from source to the canal and for further transmission of water. - stay granted - AT
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• Clarification on "Commercial" Scope for Training Services u/s 65(105)(zzc) Affects Service Tax Interpretation.

  Case-Laws - AT : Commercial training or coaching - scope of the term 'Commercial' - retrospective amendment - Section 65(105)(zzc) - Larger bench decides the issue - AT
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Central Excise

• High Court Upholds Tribunal's Relief for Appellants in Cigarette Case Due to Financial Strain.

  Case-Laws - HC : Clandestine Production and Removal of Cigarettes – selling the goods without issue of invoices - stay - The Tribunal has given substantial relief based on the financial position of the appellants - there was not any ground to interfere with the common order passed by the Tribunal - HC
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• Court Grants Stay on MRP-Based Duty for Cement; Reviews Rule 3 Interpretation for Institutional Consumers.

  Case-Laws - AT : MRP Based duty - Valuation - supply of cement to construction company - Interpretation of Rule 3 of Packaged Commodity Rules - Construction company are covered by the expression Institutional Consumers appeared in Rules - stay granted - AT
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• Court Grants Unconditional Stay in Case on Related Party Transactions Impacting Goods Valuation Under Central Excise Laws.

  Case-Laws - AT : Valuation - related parties - exclusive sale to units in which assessee holds shares as many as 7.7% and 12.85% – Unconditional stay granted. - AT
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• Scrap Wires and Cables May Be Excisable Under Amended Section 2(d) of Central Excise Act; Marketability Key Factor.

  Case-Laws - AT : Excisability of Scrap of Wires and Cables - Marketability - Amended provisions of Section 2(d) – Prima facie case is against the assessee. - AT
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• Determining VCDs' Assessable Value Requires Reasonable Criteria Due to Lack of MRP; 2001 MRP Not Applicable.

  Case-Laws - AT : Assessable Value of Goods - since there was no MRP of VCD during the period of dispute, the same has to be determined on the basis of some reasonable criteria and in this regard, the MRP prevailing in 2001 cannot be adopted. - AT
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VAT

• Revised assessment u/s 16(1)(a) of TNGST Act barred by limitation; writ petition stands valid.

  Case-Laws - HC : The petitioner has established that the revised assessment proceedings issued under Section 16(1)(a) of TNGST Act is statutorily barred by limitation and therefore the writ petition cannot be dismissed on the ground of alternative remedy - HC
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Case Laws:

• Income Tax

• 2013 (10) TMI 431
  Allowability of benefit of the provisions of Section 10 (23-B) of the Act – Held that:- Requires in sub-clause (i) of the proviso that the institution applies its income, or accumulates it for application, solely for the development of Khadi or village industries or both and sub-clause (ii) read with first proviso requires of taking an approval for the time being, for the purpose of this clause by the Khadi and Village Industries Commission – In the present case, the requirement s are not fulfilled – Benefit not allowed – Decided in favor of Revenue.

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• 2013 (10) TMI 430
  Rate Tax on long term capital gain - tax rate of 10% without indexation - Sale of equity shares - Availability of benefit of proviso to Section 112(1) of the Act – Held that:- The proviso to Section 112(1) of the Act does not state that an assessee, who avails benefits of the first proviso to Section 48, is not entitled to benefit of lower rate of tax @ 10%. The said benefit cannot be denied because the second proviso to Section 48 is not applicable. The stipulation for taking advantage of the proviso to Section 112(1) is that the aggregate of long-term capital gains to the extent it exceeds 10% of the amount of capital gains, should be before giving effect to the provisions of second proviso to Section 48. Inflation indexation shall be ignored. In case the Legislature wanted to deny the said advantage/benefit where the assessee had taken benefit of the first proviso to Section 48, it was easy and this would have been specifically stipulated, that an assessee, who takes advantage of neutralization of exchange rate fluctuation under the first proviso to Section 48 would not be entitled to pay lower rate of tax @10%. Legislature had a far easier and simpler way to deny benefit of the proviso to Section 112(1) by using different words and phrases had thus been the intention. The legislature in fact did not intend to deny the said benefit. It is not possible to decipher and clearly elucidate the exact legislative purpose and object behind the proviso to Section 112(1) in a categorical and unambiguous manner. The purpose and object behind the proviso to Section 112(1) itself is somewhat debatable, except that the legislative intention was to tax long-term capital gain on listed shares, bonds and units @ 10%, without benefit of indexation under second proviso to Section 48 of the Act. Legislative policy and object is nothing more, and it is impermissible to read into the said provision an affirmative legislative intention on assumption and guess work and this would be beyond the acceptable principles of interpretation. Further, Certainty is integral to rule of law. Certainty and stability form the basis foundation of any fiscal laws – Reliance has been placed upon the judgment in the case of Vodafone International Holding B.V. Vs. Union of India, [2012 (1) TMI 52 - SUPREME COURT OF INDIA], wherein Hon’ble Supreme Court observed that foreign direct investment flows towards a location with a strong governance infrastructure which includes enforcement of laws and how well the legal system work. There should be consistency and uniformity in interpretation of provisions as uncertainties can disable and harm governance of tax laws. Authority should follow their earlier view, unless there are strong grounds and reasons to take a contrary view, but in the present case there is no compelling justification and reason to override and disturb the earlier view - Petitioner will be entitled to benefit of proviso to Section 112(1) of the Act on sale of equity shares - Other conditions of first proviso to Section 112(1) of the Act are satisfied – Decided in favor of Assessee.

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• 2013 (10) TMI 429
  Amount paid for preparation of project report, a revenue expenditure of capital expenditure – Held that:- If the expenditure incurred was in respect of the same business, and was for expansion of the existing business and there was unity of control and common funds, then such expenditure could be treated as business expenditure. But, if a new asset has come into existence which was of enduring benefit, then such expenditure would be of capital nature – In the present case, feasibility report was for the same and subsisting business with common administration and fund – Further, no new asset was created – Decided against the Revenue.

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• 2013 (10) TMI 428
  Revision u/s 263 - deduction u/s 80HHF - an order erroneous and prejudicial to revenue - power of CIT(A) - Held that:- Jurisdictional pre-conditions stipulated in Section 263 of the Act are not satisfied - The Assessing Officer did conduct investigation and accepted the claim under Section 80HHF on being satisfied that the conditions stipulated in the said Section are satisfied. It is not the case of "no investigation". It is also not a case where per-se further investigation was required - Power of review under Section 263 of the Act can be invoked only if the order is erroneous and for this the Commissioner must record the reason that the order was erroneous and the claim under Section 80HHF was wrongly allowed. Once the said claim was considered and examined by the Assessing Officer, Commissioner cannot set aside the order without recording contrary finding. This will be contrary to Section 263 of the Act - Order under Section 263 must be clear and must set out logical ground and reason as to why the assessment is erroneous and prejudicial to the interest of the Revenue - Decided against the Revenue.

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• 2013 (10) TMI 427
  Genuineness of sale consideration declared for computation of capital gains - Respondent-assessee, owner of a lease hold land allotted by the Delhi Development Authority, had entered into an agreement on 14.10.1996 with M/s Devika Builders Pvt. Ltd. for construction of a building. The builder was to construct the building at their own cost and on completion 50% of the building was to be handed over to the respondent assessee. M/s.Devika Builders Pvt. Ltd. had also paid Rs.30 lacs to the assessee – Held that:- M/s. Devika Builders Pvt. Ltd., they had spent Rs.2,78,60,136/- on construction of the building as on 31st March, 2002 - 50% share was Rs.1,39,30,068/- - Figure given in the books of account was the most authentic figure as that was the actual amount which was spent on construction. No discrepancies were found in the books of accounts of M/s. Devika Builders Pvt. Ltd. Valuation report per se have an element of discretion and are a matter of opinion. To this figure of Rs.1,39,31,000/-, an amount of Rs.30,00,000/- paid to the respondent-assessee by M/s. Devika Builders Pvt. Ltd. was added. Thus, the sale consideration received on transfer was computed at Rs.1,69,31,000/ - - Decided against the Revenue.

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• 2013 (10) TMI 426
  Penalty under section 271(1)(c) of the Income tax act – Mistake in classification of head of income – Held that:- The income of the assessee for the year under consideration as finally assessed is less than the income returned by the assessee and this being the undisputed position, no penalty u/s 271(1)(c) of the Act can be imposed as it cannot be said that the assessee has sought to evade any tax by declaring its rental income as business income – Decided in favor of Assessee.

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• 2013 (10) TMI 425
  Time limit for carry forward of unabsorbed depreciation – Applicability of amendment in section 32(2) vide Finance Act 2001 – Held that:- Amendment made by Finance (No.1) Act was clarified by CBDT vide circular No.14 of 2001. The said amendment is applicable from assessment year 2002-03 and subsequent years. That unabsorbed depreciation available to an assessee on first day of April 2002 (assessment year 2002-03) will be dealt with in accordance with the provisions of section 32(2) of the Act as amended by Finance (No.01) Act, 2001 and not by provisions of section 32(2) as it stood before the said amendment - Provisions of section 32(2) as amended by Finance (No.1) Act, 2001 would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999- 2000, 2000-01 and 2001-02 to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not set off till the assessment year 2002-03, then it would be carried forward till the time it is set off against the profits and gains of subsequent years without any limit whatsoever – Decided in favor of Assessee.

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• 2013 (10) TMI 424
  Estimation of income - Whether can be applied Net Profit rate of 10% in view of the decision of the ITAT, Amritsar Bench in the case of Assessing Officer vs. Pooja Construction Co [1998 (8) TMI 111 - ITAT AMRITSAR] – Held that:- CIT(A) has not brought on record any comparable case and the fact of sub-contract has not been rebutted with the A.O. and therefore, the ld. CIT(A) is not justified to decide the issue at the back of the A.O. without affording opportunity of being heard to the A.O. - CIT(A) is not justified to reduce the net profit rate of 10% to 8%. Thus, the order of the A.O. is restored and the decision of the ld. CIT(A) is reversed. – Decided against the Assessee. Additions on account of violation of provisions of section 40A(3) of the Act - Non deduction of TDS at source under sections 194C & 194J with regard to hire charges of machinery and legal expenses and with regard to the disallowance u/s 40(a)(ia) – Held that:- Additions discernible from the books of accounts should not have been made because the books were rejected by the A.O - Profit has been estimated after rejection of books of accounts, other provisions of the Act have become redundant - Certain disallowances like 40A(3) and 40(a)(ia) have been incorporated in the Act to curb the menace of bogus expenditure through the instrument of banking transactions and TDS provisions respectively. The addition for violation of these provisions are treated as deemed income which is by fiction of law are not ordinarily the real income. When it has come to notice that the appellant has not complied with the provisions of section 40A(3) and 40(a)(ia) then it is liable for additional income irrespective of the fact that what is total quantum of receipt and what should have been the reasonable profit out of it. - Decided against the assessee.

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• 2013 (10) TMI 423
  Genuineness of transaction - Capital loss suffered by the assessees on sale of shares was not genuine – Held that:- Both the parties submitted that the matter may be restored to the file of the AO with direction to frame the assessments de novo, after discarding the evidence of Shri Ashok Gupta, on the basis of other evidence on record, and after giving opportunity of hearing to the assessee - It shall be in the interest of justice to restore these issues to the file of the AO with direction to frame de novo assessments in these cases, after discarding the evidence of Shri Ashok Gupta, on the basis of other material/evidence and after allowing sufficient opportunity of hearing to the assessees.

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• 2013 (10) TMI 422
  Addition made towards variation in the valuation of closing stock – Held that:- Reliance has been placed on the judgment in the case of Loknete Balasaheb Desai SSK Ltd.,[ 2011 (6) TMI 48 - BOMBAY HIGH COURT] - In respect of excisable goods manufacture and lying in stock, the excise duty liability will get crystallized on the date of clearance of goods and not on the date of manufacture - The liability for excise duty did not crystallize, the provisions of section 145A are not applicable to assessee's case – Decided against the Revenue. Writing off of stores – Revenue expenditure or capital expense – Held that:- Assessee had written off the stores on the basis of recommendation of expert committee. The stores being day to day consumable materials, write of the same is nothing but revenue expenditure which has to be allowed as revenue expenditure – Decided against the Revenue.

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• 2013 (10) TMI 421
  Household expenses alleged to be met out of income from undisclosed sources – Held that:- When the source of income from agricultural activities on the land in the name of assessee and HUF of the assessee's husband, income from dairy farming of the assessee, salary income of the husband of the assessee and the interest income on FDR of the assessee was accepted, which was sufficient for the household expenses - Household expenses were not incurred from the undisclosed income – Addition deleted – Decided in favor of Assessee.

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• 2013 (10) TMI 420
  Accrual of income - determination of income out of the receipt not disclosed in the books of account - difference between the total receipts shown by the assessee in his books of accounts and by the contractee in Form No. 26AS - Held that:- when the receipts were out of the books of accounts, the payment on account of expenses may also be out of the books of accounts. In such circumstances, the only way to determine the income is application of NP rate. In the instant case, the assessee in the earlier years was showing the income under section 44AB of the Act, which provides that the NP rate must be applied at 8%. Since, the contract receipts amounting to Rs. 22,29,386/- (Rs. 24,09,162/- - Rs. 1,79,776/-) were not shown by the assessee, so the NP rate was to be applied on those receipts Disallowance on account of section 40A(3) of the Income Tax Act – cash payment in each day exceeded to Rs. 20,000/- Held that:- Assessee made the payments towards meals charges to labourers and staff members to Shri Amar Singh Solanki and the said payments during the year under consideration amounted to Rs. 5,11,800/- - Payments made to Shri Amar Singh Solanki were on account of dining charges i.e. for meals of the labourers and the staff members - When the Assessing Officer himself admitted that those payments were made on account of meals provided to the labourers, then it can't be presumed that the payments were made only for one person in a single day and not for fooding charges of many persons. However, as the details of such employees/labourers were not provided to the Assessing Officer and in absence of the details, the disallowance was made under section 40A(3) of the Act - Remanded the issue back to the file of Assessing Officer to verify from the details, if any, submitted by the assessee as to whether the impugned amount was reimbursement of the meal charges to Shri Amar Singh Solanki or it was payments towards expenses exceeding to Rs. 20,000/-

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• 2013 (10) TMI 419
  Mercantile system of accounting - AO noticed that there were discrepancies in receipts shown in the books of accounts of the Assessee and as per the TDS certificate issued to Assessee by the companies. The Assessee was asked to reconcile the total receipts with the TDS certificates. – Held that:- Submissions of the assessee and the TDS reconciliation statement filed by the Assessee along with the method of accounting followed for booking the income and claimed of TDS credit needs verification - Remitted the issue to the file of A.O.

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• 2013 (10) TMI 418
  Deduction u/s 80IB – Built up area more than prescribed limit i.e. 1500 sq.ft. – Held that:- No merit in the contention of the Revenue - With respect to the construction of the 26th bungalow, the assessee has categorically denied and had replied that it had raised bills for construction of 25 bungalows and not for 26 bungalows. The Revenue had only stated that from the two bills raised by the assessee dated 31.03.2005 and 31.03.2006 of Rs. 50 lacs each mentioned that the fees charge was for 13 bungalows in each bill which meant that the fee was charged for 26 bungalows. Other than this statement, there is not finding by the assessee to establish that the assessee had constructed the 26th bungalow. Further, it is pertinent to note that the DVO's report also do not suggest conclusively that the construction was carried out by the assessee. This is evident from the report of the DVO – Decided in favor of Assessee. Whether construction of commercial space in the project is in excess of 5% of the aggregate built up area – Held that:- Reliance has been placed upon the judgment in the case of Manan Corporation vs. ACIT [2012 (9) TMI 700 - Gujarat High Court] - Amendment of s. 80-B(10) and the insertion of cl. (d) w.e.f. 1 April, 2005 is prospective only and cannot be applied retrospectively; assessee's two housing projects having been approved prior to 31st March, 2005 and the built-up area of commercial use being 5.12 per cent and 3.5 per cent respectively, it was entitled to deduction under s. 80-IB(10) – In the present case, permission of development was granted by AUDA on 16.10.2002 and BU permission was granted on 01.03.2004. The amendment by way of insertion in clause (d) of 80-IB(10) came to effect from 01.04.2005 and it is prospective in nature and therefore, it cannot be applied for housing projects approved prior to 01.04.2005 – Decided in favor of Assessee.

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• 2013 (10) TMI 417
  Revenue expenditure or capital expenditure - By contributing towards the bridge built by the State Government for replacing annual recurring expenses towards piling up of cement bags to prevent sea water entering into the premises of the assessee during rainy season, the assessee derived benefit of an enduring nature whereas, as per the assessee, the contribution is towards replacement of the recurring revenue expenditure – Held that:- Assessee does not have any ownership or right over the bridge constructed by the State Government. The assessee contributed towards part of the expenditure for construction of a bridge to prevent the sea water entering into the factory premises of the assessee which naturally hurt the commercial interest of the assessee and for which the assessee was making a certain recurring expenditure annually in preventing the sea water entering into its premises. Replacement of annual recurring expenditure by one time contribution is revenue expenditure - Expenditure did not bring any capital asset of an enduring benefit or advantage and the object of making the payment was purely one of commercial expediency – Decided in favor of Assessee.

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• 2013 (10) TMI 416
  Rectification of mistake in the order - TDS u/s 194H - Disallowance made u/s 40(a)(ia) - whether the transaction in question was in the nature of commission or discount - Held that:- when this issue has not been raised by the assessee in the sales tax matter and the assessee has admitted that the turnover shown for the purpose of sales tax is the amount as per the original invoices without reducing the amount of so called discount then the finding of this Tribunal is not based only on legal aspect but by considering the entire facts and circumstances relevant for adjudication of the issue. The assessee has otherwise not disputed the fact that the alleged discount was not reduced/adjusted from the total turnover as per the original invoices for the purpose of sales tax therefore, the decision of Hon'ble Supreme Court would not help the case of the assessee - no error or mistake in the order - Decided against the assessee. Regarding non consideration of decision in case of Jai Drinks (2011 (1) TMI 1035 - Delhi High Court) as well as Pearl Bottling (P) Ltd. (2011 (2) TMI 42 - ITAT, VISAKHAPATNAM). - A finding given on merit cannot be reviewed in the proceedings u/s 254(2). The evidence considered while deciding the issue cannot be re- evaluated or re-appreciated in the proceedings u/s 254(2). - Decided against the assessee.

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• 2013 (10) TMI 415
  Re-opening of assessment u/s 147 after the period of 4 years – Held that:- Nothing new which has come to the notice of the Assessing officer after the original assessment u/s 143(3) - The accounts had been furnished by the petitioner when called upon - Thereafter, the assessment was completed under section 143(3) of the Income-tax Act - The proviso to section 147 of the Income-tax Act requires a failure on the part of the Assessee to make a proper return - In the present case, no such case is made out on the record - Reopening is based on a mere relook of the same set of facts and documents which were already available before the AO at the time of original assessment and it was merely a change of opinion - The Assessing officer also has not pointed out what was the failure on the part of the Assessee to disclose fully and truly the particulars required for making the assessment - It is a well settled principle that reopening after 4 years from end of the relevant Assessment year, when the Assessment under sec 143(3) has been completed and the Assessee had furnished full facts, is not permissible under proviso to sec 147(1) – Reliance has been placed upon the judgment in case of CIT Vs M/s Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Reopening is without jurisdiction and hence invalid – Decided in favor of Assessee.

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• 2013 (10) TMI 414
  Transfer pricing - ALP - purchase of website for AE - depreciation on website - Held that:- the assessee has capitalized the purchase price of the website and has not debited to the P&L A/c, therefore, the addition of the income as determined by the TPO was not called for. However, the disallowance of depreciation in this case is also not warranted. - As seen from the order of DRP, the DRP stated that valuer arrived at the cost of website at Rs. 5,38,31,832/-, as against the cost valued by the Valuer at Rs. 3,67,82,863/-. We are unable to understand from where the said price was taken up by the TPO/DRP. Be that as it may, the assessee has paid only the cost price to its AE and justified the same by providing a valuation report as external CUP. Nothing has been brought on record by the TPO or by the DRP to determine the ALP against the value shown by the assessee. - Since the said website was used in the business, there is no necessity for disallowing depreciation. Power of TPO to restrict the ALP at Nil - Market promotion expenses amounts to Rs. 53,88,834/- - Held that:- Market promotion expenses are reimbursement of the expenses paid to third party for services rendered by them in marketing the website - TPO and DRP considered it as intra-group services and analysed the same on the benefit principle – However, reimbursement of expenditure, the issue of benefit principle may not arise in this case - Both the TPO and DRP went on wrong consideration in determining the market promotion expenses at Nil, treating the transaction as intra-group service – Reliance has been placed upon the judgment of Hon’ble Delhi High Court in the case of CIT Vs. EKL Appliances Ltd [2012 (4) TMI 346 - DELHI HIGH COURT], wherein it has been held that TPO has no power to restrict the ALP at Nil, but is supposed to have determined the ALP of the international transaction as per the methods provided. The TPO has to examine the price paid by the assessee and determine the ALP under the provisions of Transfer Pricing and its Rules. It does not authorize the TPO to disallow any expenditure on the ground that it was not necessary or prudent for the assessee to have incurred the same nor on the reason that the assessee has not justified the benefit principle - Since TPO/DRP have not examined that this expenditure is only reimbursement of expenditure, directed the AO to examine the nature of expenditure and if the amount is only reimbursement paid through AE to third party for their services, AO to allow the expenditure as claimed after due verification - Examination of the expenditure/claim of reimbursement is restored to the file of the AO – Decided in favor of Assessee.

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• Customs

• 2013 (10) TMI 413
  Exemption from duty of customs on import of goods subject to reexport - Short Shipment of Goods – Difference in the quantity of goods in bills - Whether the goods received by the appellant were of 91 Kgs. weight as reflected in the airway bill as also in the bill of entry or the same were 179 Kgs, as reflected in the invoices - Held that:- The short receipt of the goods were also informed by the appellant to the department, as soon as they detected the same and the matter was taken up with foreign suppliers, who agreed with the short shipment and accordingly issued a new invoices -The new invoice stand rejected by the lower authorities on hyper technical grounds that new invoices mentioned the goods short received whereas the same should have mentioned short-shipped - the objection of the lower authorities is too technical - When the exporters is accepting the fact of short consigning of the goods, the customs authorities in India should not reject the same on some technical ground, especially when the air-way bill as also bill of entry mentioned the correct weight – Decided in favour of Assessee.

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• 2013 (10) TMI 412
  Assessable Value – import of Watch Batteries - mis-declaration of classification - Power to enhance value as per the provision of Rule 9 of the Valuation Rules - Exemption of Additional Duty of Customs - Held that:- t there is no dispute about description and the result of the examination conducted in presence of the representative of the importer. The non-declaration of the brand and the specification of the goods does have impact on the valuation of the goods under import. In respect of batteries the country of origin was declared by the importer as 'Made in China' whereas on examination the batteries were found to be made in Japan and as such there was a mis -declaration in respect of country of origin of the batteries. Appellant submitted that the batteries were purchased in stock lot. No evidence has been submitted by the importer in support of his contention that the transaction in respect of the batteries was a stock lot transaction. Number of batteries imported by the appellant is 1 ,25,933 dozen and value of these batteries was declared by the importer as 0.06 USD per dozen (Rs.0.226 per piece). On the basis of NIDB data available with the department in respect of batteries of Japan origin, the department loaded its value to Rs.4 per piece. The lower authorities have applied the NIDB data after taking the lowest value of identical or similar goods found during the relevant period. No infirmity in respect of applying NIDB data to the batteries imported by the appellant - Decided against the assessee by majority decision.

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• 2013 (10) TMI 411
  Mis-declaration of value – Waiver of Pre-deposit – Held that:- They had in the Bill of Entry filed indicated the value of the goods under importation wrongly, they had also enclosed the high seas sale agreement and the invoices which indicated a higher value - there was no intention on the part of the appellant herein to mis-declare the value or to evade any Customs duty - Therefore, imposition of penalty on the appellant is not warranted. The decision in the case of S.K.Colombowala's Vs. CC (Import), Mumbai [2007 (7) TMI 514 - CESTAT, MUMBAI] is still pending before the Hon'ble High Court of Bombay, it would be appropriate to await the outcome of the said case, before taking a final decision in the matter - It will also be appropriate, at this stage, to grant waiver from pre-deposit of penalty adjudged against the appellant - waiver from pre-deposit of penalty granted against the appellant and stay recovery during the pendency of the appeal – Stay granted.

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• 2013 (10) TMI 410
  Benefit of Notification No. 21/2002 - Whether the ‘Aluminous Cement’ imported by the appellant is eligible for exemption under Sl. No. 448A of Notification No. 21/2002 Cus. or not - Held that:- Aluminous Cement or cement containing high portion of alumina may be classified under Aluminous Cement. In the absence of any heading in the tariff for cement containing high percentage of alumina, the only conclusion that would arise would be that High Alumina Refractory Cement containing high percentage of alumina would be classified under Refractory Cement only. Once the tariff heading changed and the High Alumina Refractory Cement was classified under other hydraulic cement, no doubt the question of the product which is known in the trade as High Alumina Refractory Cement would be under the relevant heading in the tariff and there cannot be any dispute on this aspect. In the information of General Manager of the appellant, Aluminous Cements, Calcium Aluminate Cements, High Alumina Refractory Cements or Refractory Cements are variously termed by suppliers and all of them would mean that they are Refractory Cements. The General Manager seems to opine that all these products are under one category. This is further confirmed by the European Standards produced by the learned counsel. In the European Standards it has been mentioned in Note 2 that Calcium Aluminate Cement has previously been known by several alternative names in different countries, e.g. High Alumina Cement, Aluminous Cement, High Alumina Melted Cement. This shows that Calcium Aluminate Cement and Aluminous Cement are used for the same category of cement which is what the General Manager is saying in his statement. Thus we find at least a portion of the statement of the General Manager is confirmed by the European Standards also. Claim of the appellant that there was no intention to mis-declaration and by and large the Calcium Aluminate Cement and Aluminous Cement etc. come under one category, seems to be prima facie correct - stay granted.

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• 2013 (10) TMI 409
  Import of second hand vessel - Exemption from duty - supply vessel or multipurpose support vessel - classification under heading 8905 or 8901 - Held that:- vessel is designed to carry cargo and persons, is self-propelled and has navigational capability. From the details of the speed parameters, it can be seen that the vessel is not a stationary vessel even when delivering service. These parameters are very crucial for classification of the impugned vessels. The Revenue’s reasons for classification under CTH 8905 is mainly based on two documents, namely, the permission given by the Indian Navy and the contract entered into by the appellants with the ONGC. The Naval Security Clearance is given by the Indian Navy from the security point of view and it has nothing to do with the classification of the vessel. As regards the contract with the ONGC, the said contract stipulates the various services to be rendered to them by the service provider. In the contract, the technical specifications of Multi-purpose Support Vessel are enumerated - technical paper makes it abundantly clear that Offshore support vessels are nothing but supply vessels for the supply of cargo and personnel to offshore platforms with additional features of underwater diving and inspection, fire-fighting operations, etc. The vessels under importation have some of these additional features so that they can perform the various operations that are required and expected of offshore support vessels. The contract given by ONGC requires certain operations to be performed in addition to supply and transport of cargo and personnel. Nevertheless, these vessels remain supply vessels designed for transport of cargo and persons and therefore, they are rightly classifiable under CTH 8901 and we hold accordingly. Extended period of limitation - Held that:- The goods were examined by the Customs before assessment and all the type approval certificates given by the statutory authorities and the technical data relating to the vessels were made available to the customs authorities. The allegation of the customs is that the copies of the contract entered into with the ONGC were not made available. There is no statutory requirement for submission of contracts with ONGC to the customs authorities. The documents required to be submitted at the time of filing of the bill of entry are only invoices /purchase orders for the goods, product literature/catalogue applicable to the goods. In the case of vessels, the registration and class certificates are also required to ascertain the nature of the vessels. All these documents were submitted by the appellants at the time importation. How the vessels would be put to use or is there any contract for the future use of the imported goods are not relevant considerations for assessment of customs duty. Therefore, we hold that the entire demand is time barred and on that ground also the customs duty demands fail. Once the classification claimed by the appellants is upheld, the question of differential duty demand, confiscability of the goods, and imposition of penalty, etc. do not sustain and we accordingly set aside the same - Decided in favour of assessee.

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• Corporate Laws

• 2013 (10) TMI 408
  Recovery - Liquidation of Company - On the basis of the dishonored bills of exchange, the plaintiff submits that a total sum of Rs. 18,40,886 was due and payable by the defendants as on January 1991 - interest claimed by the plaintiff was 18% - Held that:- There are certain letters placed on record sent by the defendants to the plaintiff on various dates enclosing Bank Drafts for different amounts. But these letters are dated sometime in November 1990 i.e. before the bills of exchange were drawn by the plaintiff. Thus I find these letters are irrelevant to the transactions which are in dispute in the suit - Since the defendants have not lead evidence to refute the contentions of the plaintiff right from the stage of filing a written statement, and since all the relevant documents are found on record and have been exhibited, decree ought to be passed in favor of the plaintiff as prayed for - Appeal allowed.

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• 2013 (10) TMI 407
  Removal of membership - member of ICAI - professional misconduct - Confirmation of punishment - Held that:- complainant settled the matter with the complainant before Company Law Board and then wrote to the petitioner that he does not press his complaint against the contesting respondent, the disciplinary committee and the council were not justified in continuing with the proceedings as the very basis of the proceedings, i.e., the complaint on the basis of which the proceedings had been initiated, had become non-existent. It is not the case of the petitioner that the settlement reached before the Company Law Board and request of the complainant that he does not press the complaint were not in the knowledge of the disciplinary committee and the council. The two documents, in fact, form part of the report of the disciplinary committee. No reasons have been given for ignoring the settlement and as regards request of the complainant not to press the complaint - Neither the disciplinary committee nor the council has referred to the evidence on the basis of which the charge is stated to have been proved. Finding of the disciplinary committee and decision of the council, therefore, are found to be perverse and not backed by evidence - Appeal dismissed.

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• Service Tax

• 2013 (10) TMI 438
  Extension of time - Service Tax to be deposited within 8 weeks - Held that:- Appellant ready to pay tax as per Tribunal's order - But need more time - Extension of time for pre deposit granted.

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• 2013 (10) TMI 437
  CENVAT Credit - Credit of inputs used in construction of building - Held that:- the appellant-DLF Cyber City Developers Limited have been asked to deposit Rs. 8.7 crores as against demand of more than Rs. 50 croes and DLF Limited has been asked to deposit Rs. 1.11 crores as against demand of nearly Rs. 39 crores - Financial stringency was not alleged or stated either before the tribunal or before us -impugned order is fair, just and proper. We clarify that the observations made above are tentative and prima facie and will not be binding on the tribunal when they hear the appeals on merits.

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• 2013 (10) TMI 436
  Business Support Servcie - Infrastructural support service - Removal of fly ash - Whether removal of Fly ash as per rate of the order of Government of Tamil Nadu would constitute ‘infrastructural support service’ under the definition of ‘Support Service of Business or Commerce’ - Held that:- Services rendered by a person must have a direct or a proximate relation to the subject matter of the taxing entry and the context in which the words ‘in relation to’ are used has to be borne in mind to judge the extent of the scope of an entry which may be of wide amplitude - orders issued by the appellant to the cement and asbestos sheet companies do not disclose that the appellant provided any service to the companies. The appellants as per order of Government of Tamil Nadu removed the Fly ash from the site and collected rate as prescribed therein from the said companies. At the best, the amount collected by supply Fly ash utilized for water, lighting, road maintenance etc. in their site as referred in letter dated 10.5.2007 appears to be in conformity with the utilization of Fly ash as mentioned in Draft Notification dated 6.11.2008 issued by the Central Government, wherein the Thermal Power Stations are permitted to sell Fly ash. There is no mention in the contract between the appellant and cement and asbestos sheet companies that the appellant is providing any service to them. Activity of collection and removal of Fly ash as per rate of the order of Government of Tamil Nadu would not constitute ‘infrastructural support service’ under the definition of ‘Support Service of Business or Commerce’. We have noticed that Government of India, Ministry of Environment and Forests issued Notification dated 14.9.1999 to the effect that Fly ash should be supplied free of cost. Subsequently, by notification dated 6.11.2008, issued by Ministry of Environment and Forest, Thermal Power Stations are permitted to sell Fly ash to the user agencies. It makes it clear that the consideration received by the appellant from the cement and asbestos sheet companies for supply of Fly ash seems to be for sale of fly ash. In our opinion, it is not for any service provided to the persons taking delivery of Fly ash, notwithstanding the name under which, it is collected. Hence, the demand of service tax along with interest is not sustainable - Following decision of Indian National Shipowners Association Vs. Union of India & Others [2009 (3) TMI 29 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2013 (10) TMI 435
  Evasion of service tax on works contract service - Execution of works contract in respect of Lift Irrigation Schemes for lifting the water from source to the canal and for further transmission of water. - Held that:- meaning of the words 'in respect of', prima facie concludes that the expression covers the work undertaken which is in relation to canals. Undisputedly, the pump house and other facilities were erected by the appellant to lift the water from lower level to higher level of canals. In these circumstances, the appellant has made out prima facie case for complete waiver in view of the fact that the period involved is subsequent to October 2009 and during the relevant period, exemption notification was available. Stay application - Held that:- where the projects executed for Government which are not for commerce and industry are not liable to tax, the appellant cannot be found fault with if they entertained a belief that service tax may not be payable, benefit of doubt has to be extended. In such a situation, the demand for the period beyond one year may not be sustainable - Stay granted.

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• 2013 (10) TMI 434
  Service tax liability - Hiring of Ship services - revenue got the bank accounts of the assessee frozen - Held that:- Appellant's account has been debited with the entire amount of service tax liability as has been confirmed by the adjudicating authority. On perusal of the record, we find it so. Since the entire amount of service tax liability has been debited by the State Bank of India and the appellant is contesting the issue on merits, we consider the said amount as enough deposit to hear and dispose the appeal. - Stay granted. Lower authorities directed to issue a letter to the Bank to allow the appellant to transact the business from the said bank - Decided partly in favour of assessee.

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• 2013 (10) TMI 433
  Commercial training or coaching - scope of the term 'Commercial' - retrospective amendment - Section 65(105)(zzc) - Whether "Commercial coaching or Training" as defined in Sections 65(26), 65(27) and 65(105)(zzc) of the Act accommodates a distinction between imparting of a specific skill by an institution on the one hand and a broader format of education imparted by an institution of higher learning - Held that:- The other facet of the definition, of 'commercial training or coaching centre' in Section 65(27) defines the expression with reference to the nature and objectives of the activity pursued by a commercial training or coaching centre. In this definitional regime, training or coaching for imparting skill, knowledge or lessons on any subject or field constitutes commercial training or coaching. Though complexly drafted, this part of the definition seeks to define the contours of 'training or coaching' in the very provision and an identical expression employed in Section 65(27) as well. Any institute or establishment imparting skills/ knowledge/lessons on any subject or field would be providing commercial training or coaching. The definition itself excludes certain entities/institutes/ establishments. In terms of the exclusionary clause, a pre-school - training and coaching centre or any institute or establishment which issues a certificate, diploma, degree or any other educational qualification recognized by extant law, is excluded from the definition, of 'commercial training or coaching centre'. Consequently, commercial training or coaching provided by such entities are outside the fold of the defined service. Commercial training or coaching on any subject or field of sports is also specifically excluded. The taxable service of "commercial training or coaching" occurs when any institute or establishment is engaged in the activity of imparting skill, knowledge or lessons on any subject or field (excluding sports), irrespective of whether such imparting of skill, knowledge or lessons is in respect of particular discipline or a broad spectrum of disciplines/ academic areas; irrespective of the nomenclature or description of the institute or establishment, as a coaching or training centre or an educational institution; regardless of whether an institute or establishment is incorporated by or registered under any law; and irrespective of distinctions on the basis of curriculum, course content, teaching methodology, course duration or otherwise. Activities of imparting skills, knowledge, lessons on any subject or field or when provided by any entity, institution or establishment which is excluded by a specific and legislated exclusionary clause would alone be outside the fold of the taxable activity.

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• Central Excise

• 2013 (10) TMI 406
  Clandestine Production and Removal of Cigarettes – selling the goods without issue of invoices. - Omission and Commission under Rule 26 of CE Rules - Held that:- Capt.Raj Kumar Gupta and Shri Vidyut Raj were actively involved in the functioning of M/s Musk Tobacco - They indulged in clandestine production and clearance and abetted M/s Musk Tobacco in evasion of the Central Excise duty on the cigarettes - Capt. Raj Kumar Gupta and Shri Vidyut Raj were in full knowledge of the fact that the Cigarettes removed by Musk Tobacco clandestinely were liable to confiscation under Central Excise Law - Capt. Raj Kumar Gupta and Shri Vidyut Raj are liable to penal action, for their acts of omission and commission under Rule 26 of the Central Excise Rules, 2002. The role of Shri Raghu / Shri Raghuvar Dayal, who never appeared to explain the contents of the documents recovered from his residence inspite of repeated summons - He deliberately avoided his presence from the officers as several important documents relating to Capt. R.K.Gupta and M/s Musk Tobacco were found in his residence - they had full knowledge that the Cigarettes removed by Must Tobacco clandestinely were non-duty paid which were liable to confiscation under Central Excise law - Shri Shankar Pal Pradhan and Shri Raghu Raghuvar Dayal are liable to penal action for their acts of omission and commission under Rule 26 of the Central Excise, 2002. Waiver of Pre-deposit – Relying upon Benara Valves Ltd. & Or. v. Commissioner of Central Excise & Anr. [2006 (11) TMI 6 - SUPREME COURT OF INDIA ] - Tribunal has not committed any error of law in directing the appellants to deposit Rs. 1 crore for stay of remaining amount of excise duty and penalties - The Tribunal has directed the appellants to deposit a lumpsum amount of Rs. 1 crore giving benefit for excise duty and penalty as also various amounts of penalties imposed on the appellants - it was found that all the appellants had acted with common design and purpose to evade excise duty by clandestinely removing excisable goods, the demand on lumpsum basis does not suffer from any arbitrariness - The Tribunal has given substantial relief based on the financial position of the appellants - there was not any ground to interfere with the common order passed by the Tribunal - Decided partly in favour of Assessee.

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• 2013 (10) TMI 405
  Refund / Cash assistance - Delay and Laches - The petitioner claims that they became entitled to refunds/cash assistance in terms of the policy of the respondents incorporated in letter No.F.1/2/69-EAC dated 7th January, 1970 concerning cash assistance in lieu of excise duty payable on supplies made under IBRD/IDA projects in India. - The petitioner acknowledged that they had paid the excise duty and had simultaneously mentioned that they had “finally lost the case before the Supreme Court” - the petitioner has submitted that the appeal filed before the Supreme Court was admitted and the civil appeal was dismissed on 21st December, 1989 – Held that:- The petitioner after the initial rejection had preferred appeals - The petitioner did not wait till decision of the Supreme Court to prefer appeals - The petitioner thereafter has waited from 1984 till 23rd August, 1990 to file the present writ petition - The delay in the present case is almost of six years - This delay cannot be explained and washed away on the ground that the Special Leave to Appeal was pending before the Supreme Court and was decided on 21st December, 1989 - The civil appeal pending before the Supreme Court related to a different issue; and related to classification of the goods manufactured by the petitioner under Tariff Item No.29A - Pendency of the litigation before the Supreme Court had not barred or prohibited the petitioner from making claim for refund of duty already paid. The petitioner is a company which has been involved in several litigations and is not an illiterate litigant, who lacked resources and thereby was unable to invoke writ jurisdiction earlier - They had made specific applications after making payment of the duty and had also filed appeals - when the appeals were rejected, the petitioner simply waited and slept - They did not approach the Court within a reasonable time - The writ petition was filed in 1990, after a lapse of six years from the date of rejection of the claims by the appellate authority - The claims relate to an earlier period between 1979 to 1983 - there is weeding out of files/records in Government departments - It is almost impossible to fully examine, ascertain and verify old claims - The respondents in the counter affidavit have stated that they do not have record of the petitioner’s claim or applications and have solely relied upon the documents annexed with the writ petition. The petitioner has not specifically challenged or questioned the appellate orders or the orders of rejection - All appellate orders and orders of rejection have not been enclosed with the writ petition or the rejoinder affidavit - In the absence of the actual orders in all cases, it cannot be said with absolute certainty that the order of rejection in each case was identically worded or for similar reasons - Failure to specifically challenge the orders is another legal flaw and difficulty – Decided against Petitioner.

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• 2013 (10) TMI 404
  CENVAT Credit on Capital Goods - 100% credit availed in the first year – Waiver of Pre-deposit – Held that:- The appellant has taken credit on capital goods wrongly, which was not due to them in the first year, the appellant is liable to pay interest on such credit wrongly availed from the date of taking of the credit till the end of the financial year - the interest liability would be approximately Rs.3.25 lakhs - on the wrongly availed credit of Rs.14.42 lakhs, the interest liability would be approximately Rs. 3 lakhs - the appellant was liable to make pre-deposit of Rs.6.25 lakhs – upon such submission pre-deposit of balance of dues against the appellant shall stand waived till the disposal – Partial Stay granted.

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• 2013 (10) TMI 403
  MRP Based duty - Valuation - manufacture of Cement - supply to construction company - Interpretation of Rule 3 of Packaged Commodity Rules - Waiver of Pre-deposit - Held that:- Construction company are covered by the expression Institutional Consumers appeared in Rules – Following Grasim Industries Ltd. vs. CCE, Jaipur II [2003 (12) TMI 230 - CESTAT, NEW DELHI] Addition of the word ‘institutional’ in new Rule 3 is not making much difference inasmuch as the wider expression ‘any other services’ institutional consumer remains to be there in new rule 3 - The expression ‘institutional’ has already been interpreted to cover the construction company - Prima facie new Rule 3 would also cover the case in issue - the condition of pre-deposit of duty and penalty dispensed – unconditional stay granted.

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• 2013 (10) TMI 402
  Valuation - related parties - exclusive sale to units in which assessee holds shares as many as 7.7% and 12.85% – Waiver of Pre-deposit – Held that:- Following Alembic Glass Industries Ltd. [2002 (4) TMI 75 - SUPREME COURT OF INDIA] purchaser and the seller having some shares in each other and having common chairman and three directors would not be the reason to hold that buyer company is the related person - Revenue has gone to the costing method and has found that sale price was less than the cost price - there are no details given by the Revenue as to how such costing arrive at by them and for which period - The appellant have categorically denied having provided any costing structure to the Revenue - costing arrived in today’s date would not be relevant for the past period starting from 2005 onwards - the appellant has good prima facie case in his favour so as to dispense with the condition of pre-deposit of entire amount of duty and penalty – Unconditional stay granted.

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• 2013 (10) TMI 401
  Export or merely a paper movement of goods - Proof of export - Waiver of Pre-deposit - Duty Demand – Revenue was of the view that the goods were not exported and ineligible cenvat credit was availed by the appellant on the invoices – Held that:- The issue involved in the case needs deeper consideration as to whether there was really an export or merely a paper movement - This can be done only at the time of final disposal of the appeals - Prima facie, a letter issued by the Office of Superintendent of Central Excise as acceptance the proof of export, was enough evidence to consider that the goods cleared from the appellants factory were exported - The amounts deposited by the main appellant as enough deposit to hear and dispose the appeals - Stay Granted.

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• 2013 (10) TMI 400
  Excisability of Scrap of Wires and Cables - Marketability - Amended provisions of Section 2(d) – Held that:- The contention of the Revenue is that after amendment to the definition of excisable goods prescribed under section 2(d) of the Central Excise Act, earlier judgements would no more become good law. Prima facie, we do not agree with the contention of the Revenue inasmuch as the applicability of the amended provision has to be analyzed in the context. It is possible only after an interpretation of the earlier provision vis-`-vis the present one, so as to arrive at a conclusion that whether the said amendment is applicable or otherwise. - Prima facie case is against the assessee. Application u/s 35F of the Act – Held that:- Following INDU NISSAN OXO CHEMICALS INDUSTRIES LTD. Versus UNION OF INDIA [2007 (12) TMI 220 - SUPREME COURT OF INDIA] and METAL BOX INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI [2003 (4) TMI 111 - SUPREME COURT OF INDIA] - Section 35F of the Excise Act was pari materia with Section 129E of the Customs Act, 1962 - it was not possible to hold that CESTAT had committed any error in law while passing the impugned order - In absence of any legal infirmity no interference was called for in the order. Waiver of Pre-Deposit - The contention of the learned Counsel for the petitioner that by dint of the fact that the petitioner was registered as a sick unit with the BIFR, the petitioner was entitled to full waiver of the amount of pre-deposit, does not merit acceptance - no infirmity can be found in the impugned orders of the Tribunal so as to warrant any intervention by this Court – Keeping in view the applications filed under Sec.35F of CEA,1944, and also keeping in view the interest of Revenue -the applicant was directed to deposit of 25% - upon such submission rest of the duty to be waived till the disposal.

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• 2013 (10) TMI 399
  Exemption Notification No. 6/2002-CE - Assessee was engaged in the manufacture of asbestos cement pressure pipes used for conveying drinking water falling under Chapter 68 – Revenue was of the view that the appellants employees did not allow them to conduct the investigation at their end, they shifted focus of investigation at the end of suppliers of fly ash – Held that:- Held that:- Prima facie there seems to ample evidence against the appellant indicating that the procurement of fly ash was not actually being done by them and only the records showing receipt of the same were being maintained - The Revenue had conducted investigations at the suppliers end, at the transporters end and at dharmakanta end - It had come out that the fly ash was being lifted by the transporter who was initially accepted the transportation but subsequently denied it - However, the evidentiary value of these statements can be appreciated only at the time of final disposal of the appeal. the statement of Shri Mahmood Ahmad and Shri V.K. Agrawal, Assistant Engineers of M/s Kota Thermal Power were vital piece of evidence indicating that they maintained all the records in their factory showing the parties lifting the fly ash and the appellants name does not appear in the records - The appellants stand that such lifting was being done from outside the pond where fly ash dumped, it was done by the transporters and as such their name had not appeared in the records of Kota Thermal Power Plant, can be examined only at final disposal. Bar of Limitation - In such a scenario even the aspect of plea of limitation may not be, prima facie, available to the appellant, inasmuch as the entire case of Revenue was that records were being maintained only to show the receipt of consumption of fly ash, which had turned out to be false. Waiver of Pre-Deposit – Prima Facie the appellant does not have a case in his favour - The appellants have not pleaded any financial hardships and have not placed on record any evidence to show their poor financial condition – applicant was directed to deposit 50% of the confirmed duty – Upon such submission rest of the duty to be stayed till the disposal – Partial Stay Granted.

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• 2013 (10) TMI 398
  Valuation under Rule 8 of the of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – Detergents and Sulphonic acid supplied to sister concern – Held that:- Cost of production as certified in the Chartered Accountant certificate dated 7-9-2002 i.e. Rs. 52,000/- per M.T. for Surf Excel, the detergent powder and Rs. 62,000/- per M.T. for sulphonic acid should have been adopted, while according to the appellant this costing had been wrongly done on the insistence of the department by including the head office expenses and marketing and distribution expenses which are not required to be included in the costing in terms of CAS-4 – Costing certificate are not in the CAS-4 format and accordingly it cannot be said as to whether the costing had been done in terms of CAS-4 costing standard or not - Matter has to be remanded for de novo adjudication after determining the cost of production of both the products during each financial year during the period of dispute strictly in terms of CAS-4 standard and in that format by a Cost Accountant appointed by the department and in the light of the Cost Accountant’s certificate regarding the cost of production of the products, in question, during each financial year, the matter must be re-adjudicated. Limitation - Appellant submitted the Chartered Accountant certificate for the period from 1-7-2000 to December 2002 only on 27-3-2003 and that while after 1-7-2000 on the introduction of new Valuation Rules, the appellant were supposed to submit costing certificate from 1-7-2000 immediately, they in spite of repeated requests made by the Range Officer submitted the same only on 27-3-2003 claiming a much lower cost of production, than that certified in the certificate dated 7-9-2002 – Held that:- Commissioner’s order is silent on the appellant’s claim that they had informed the department from time to time during the period of dispute regarding the assessable value of sulphonic acid done Surf Excel bulk detergent along with the Chartered Accountant’s certificate, for correct determination of the question of limitation and the linked question of imposition of penalty under Section 11AC, the matter remanded for de novo adjudication - Impugned order is set aside and the matter is remanded to the Commissioner for de novo adjudication.

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• 2013 (10) TMI 397
  Assessable Value of Goods - Revenue was of the view that the assessable value for calculation of the duty on the VCDs cleared was determined on the basis of MRP as it had not been declared by the assesse - Held that:- Duty would be chargeable on the clearances of VCD players cleared for free supply along with sale of certain models of CTVs and the duty had to be charged on the basis of the assessable value determined in terms of the provisions of Section 4A i.e. after giving the abatement from MRP of the VCD player during this period - since there was no MRP of VCD during the period of dispute, the same has to be determined on the basis of some reasonable criteria and in this regard, the MRP prevailing in 2001 cannot be adopted. De novo Quantification of duty - Order set aside – Matter Remanded back to the original adjudicating authority for de novo decision for re-quantification of the duty demand in accordance with our above observations and also re-determination of the quantum of penalty imposable under Rule 25(1)(a) of the Central Excise Rules, which would be in proportion to the quantum of duty demand confirmed against the assesse.

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• CST, VAT & Sales Tax

• 2013 (10) TMI 440
  Limitation period - Revised assessment - Held that:- original order of assessment for the year 1997-98 was issued in proceedings CST.50386/97-98 dated 11.3.2000. Even though the said assessment order dated 11.3.2000 has not been filed in the typed set of papers, in the revised proceedings dated 2.7.2002, the said proceedings dated 11.3.2000 has been shown as reference No.1. Hence, the said assessment order dated 11.3.2000 is the original assessment order. The proceedings dated 2.7.2002 is only a revised proceedings of the Commercial tax officer considering the representation of the petitioner regarding the disallowance of the exemption on export sales and disallowance of claim of assessment at 4% against the C forms. As rightly contended by the learned counsel for the appellant, the proceedings dated 2.7.2002 is only a revised proceedings and not a original order of assessment, since the original order of assessment for the assessment year 1997-98 is dated 11.3.2000. As per the unamended provision of Section 16(1)(a) of C.S.T.Act, any revision of assessment of the escaped turnover ought to have been made within a period of five years from the expiry of the year to which tax relates. Since the assessment year is 1997-98, in the case on hand, any revision of proceedings ought to have been issued on or before 30.3.2003. But the impugned revision notice was issued on 5.4.2004 and the impugned revised order for the year 1997-1998 was issued on 23.8.2004, which is beyond the period of five years stipulated in Section 16(1) - Decided in favour of assessee.

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• 2013 (10) TMI 439
  Limitation period - Revised assessment proceedings - TNGST Act - Held that:- By reading Section 16(1)(a) it is clear that the limitation period commences from the date of final assessment order. The said provision came into effect prospectively and not retrospectively. There is nothing in the amended provision Section 16(1)(a) that the same was intended to operate retrospectively. Therefore the respondent cannot resort to the amended provision Section 16(1)(a) to sustain the impugned revised proceedings of assessment - since the assessment order was passed on 11.12.2000, much prior to the amended provision came into effect i.e., 1.7.2002, the limitation of five years cannot be calculated from the date of the final order of assessment based on the amended provision Section 16(1)(a). The assessment year in question is 1998-1999. Hence, the five year limitation ends by 31.3.2004 and the revised assessment proceedings dated 23.8.2004 issued beyond the period of five years is barred by limitation - Hence barred by limitation. Dismissal of writ petition - Alternative remedy - Held that:- High Court would not normally exercise its jurisdiction when an alternative remedy is available under the statute and the same can be exercised only when the order is lacking jurisdiction or it is statutorily barred by limitation. The petitioner has established that the revised assessment proceedings issued under Section 16(1)(a) of TNGST Act is statutorily barred by limitation and therefore the writ petition cannot be dismissed on the ground of alternative remedy - Decided in favour of assessee.

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• Indian Laws

• 2013 (10) TMI 432
  Federalism - Single National Eligibility-cum-Entrance Test - Violation of constitutional provisions - Held that:- The direction contained in Sub-section (2) of Section 19A of the 1956 Act makes it a pre-condition for the Regulations and all subsequent amendments to be submitted to the Central Government for sanction. The Council is required to take into consideration the comments of any State Government within three months from the furnishing of copies of the draft Regulations and/or subsequent amendments thereto. There is nothing to show that the MCI ever sent the draft amended Regulations to the different State Governments for their views. The submission of the draft Regulations and all subsequent amendments thereto cannot be said to be directory, since upon furnishing of the draft Regulations and all subsequent amendments thereto by the Council to all the State Governments, the Council has to take into consideration the comments, if any, received from any State Government in respect thereof, before submitting the same to the Central Government for sanction. Right to administer an educational institution would also include the right to admit students, which right, in our view, could not be taken away on the basis of Notifications issued by the MCI and the DCI which had no authority, either under the 1956 Act or the 1948 Act, to do so. The MCI and the DCI are creatures of Statute, having been constituted under the Indian Medical Council Act, 1956, and the Dentists Act, 1948, and have, therefore, to exercise the jurisdiction vested in them by the Statutes and they cannot wander beyond the same. Of course, under Section 33 of the 1956 Act and Section 20 of the 1948 Act, power has been reserved to the two Councils to frame Regulations to carry out the purposes of their respective Acts. It is pursuant to such power that the MCI and the DCI has framed the Regulations of 1997, 2000 and 2007, which set the standards for maintaining excellence of medical education in India. The right of the MCI and the DCI to prescribe such standards has been duly recognised by the Courts. However, such right cannot be extended to controlling all admissions to the M.B.B.S., the B.D.S. and the Post-graduate Courses being run by different medical institutions in the country. At best, a certain degree of control may be exercised in regard to aided institutions, where on account of the funds being provided by the Government, it may have a say in the affairs of such institutions. The rights of private individuals to establish and administer educational institutions under Article 19(1)(g) of the Constitution are now well-established and do not require further elucidation. The rights of unaided and aided religious and linguistic minorities to establish and administer educational institutions of their choice under Article 19(1)(g), read with Article 30 of the Constitution, have come to be crystalised in the various decisions of this Court referred to hereinabove, which have settled the law that the right to admit students in the different educational and medical institutions is an integral part of the right to administer and cannot be interfered with except in cases of maladministration or lack of transparency. The impugned Regulations, which are in the nature of delegated legislation, will have to make way for the Constitutional provisions. The freedom and rights guaranteed under Articles 19(1)(g), 25, 26 and 30 of the Constitution to all citizens to practise any trade or profession and to religious minorities to freedom of conscience and the right freely to profess, practise and propagate religion, subject to public order, morality and health and to the other provisions of Part III of the Constitution, and further to maintain institutions for religious and charitable purposes as guaranteed under Articles 25 and 26 of the Constitution, read with the rights guaranteed under Article 30 of the Constitution, are also well-established by various pronouncements of this Court. Over and above the aforesaid freedoms and rights is the right of citizens having a distinct language, script or culture of their own, to conserve the same under Article 29(1) of the Constitution. Right to admit students, being an essential facet of the right to administer educational institutions of their choice, as contemplated under Article 30 of the Constitution, the State Government or the University may not be entitled to interfere with that right, so long as the admission to the unaided educational institutions was on a transparent basis and merit was adequately taken care of. The learned Judges went on to indicate that the right to administer, not being absolute, there could be regulatory measures for ensuring educational standards and maintaining excellence thereof, and it was more so in the matter of admissions to professional institutions. Whether the rights of minorities to establish and administer educational institutions of their choice would include the procedure and method of admission and selection of students - minority institution may have its own procedure and method of admission as well as selection of students, but such a procedure must be fair and transparent and the selection of students in professional and higher educational colleges should be on the basis of merit and even an unaided minority institution should not ignore the merit of the students for admission while exercising its right to admit students to professional institutions. On the question whether the rights of minority institutions regarding admission of students and to lay down the procedure and method of admission would be affected, in any way, by receipt of State aid, the learned Judges were of the view that while giving aid to professional institutions, it would be permissible for the authority giving aid to prescribe conditions in that regard, without, however, affecting the right of such institutions to actually admit students in the different courses run by them. Regulations on Graduate Medical Education (Amendment) 2010 (Part II) and the Post Graduate Medical Education (Amendment) Regulation, 2010 (Part II) , whereby the Medical Council of India introduced the single National Eligibility-cum-Entrance Test and the corresponding amendments in the Dentists Act, 1948, are ultra vires the provisions of Articles 19(1)(g), 25, 26(a), 29(1) and 30(1) of the Constitution, since they have the effect of denuding the States, State-run Universities and all medical colleges and institutions, including those enjoying the protection of the above provisions, from admitting students to their M.B.B.S., B.D.S. and Post- graduate courses, according to their own procedures, beliefs and dispensations, which has been found by this Court in the T.M.A. Pai Foundation case (2002 (10) TMI 739 - SUPREME COURT), to be an integral facet of the right to administer. In our view, the role attributed to and the powers conferred on the MCI and the DCI under the provisions of the Indian Medical Council Act, 1956, and the Dentists Act, 1948, do not contemplate anything different and are restricted to laying down standards which are uniformly applicable to all medical colleges and institutions in India to ensure the excellence of medical education in India. The role assigned to the MCI under Sections 10A and 19A(1) of the 1956 Act vindicates such a conclusion.

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