TMI Tax Updates - e-Newsletter
October 31, 2013

Case Laws in this Newsletter:

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

Articles

1. Companies Act, 2013 – A New Era of Compliance Governance

   By: Debtosh Dey

News

1. RBI Reference Rate for US $ and Euro

2. Unedited Transcript of Reserve Bank of India's Post Policy Conference Call with Media

3. Integrated Processing Development Scheme (IPDS) during 12th Five Year Plan

Notifications

Customs

1. 48/2013 - dated 30-10-2013 - Cus

Seeks to amend notification No. 146/94-Cus. dated 13th July, 1994

SEZ

2. S.O. 3253(E) - dated 23-10-2013 - SEZ

Set up a sector specific Special Economic Zone for engineering and related industries (formerly, light engineering including automotive/automotive components) at Kalwara, Bhamboriya, Bagru Khurd and Jhai village, tehsil- Sanganer, District Jaipur, Rajasthan

Highlights / Catch Notes

Income Tax

• Assessee's 12.5% Rate on Transmission Maintenance Costs Upheld as Capital Expenditure, Favoring Assessee Over Revenue.

  Case-Laws - HC : Classification as Revenue or Capital Expenditure – Expenses for transmission - Establishment and maintenance expenditure – It is only in respect of construction and the maintenance units where major part of work is maintenance of distribution, the assessee uniformly adopted 12/1/2% of such expenditure as capital expenses - decided against the revenue - HC
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• Court Rules on Authenticity of Long-Term Capital Loss Claims for Legitimate Tax Set-Offs.

  Case-Laws - HC : Genuineness of long term capital loss - tax planning - Where transactions were genuine, such long term capital loss can be allowed to be set off. - HC
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• Court Rules Absence of Confirmation Letter Doesn't Invalidate Loan Genuineness If Statement Provided by Concerned Party.

  Case-Laws - HC : Genuineness of loan - Once the statement has been given by the party then merely because they have not given any confirmation letter, additions cannot be made - HC
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• Goodwill Payment to Retiring Partner Not Eligible for Depreciation; Viewed as Capital Share Return, Not Acquisition Cost.

  Case-Laws - HC : Depreciation on amount paid to retiring partner as goodwill from the partnership firm - Share of the capital came to be paid to the retiring partner and it cannot be treated as cost paid to the retiring partner towards acquisition of any right from him. - HC
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• High Court Rules TDS Deduction u/s 194C for Contractor Payments; Section 44AE Not Applicable.

  Case-Laws - HC : TDS to be deducted u/s 194C - payment to contractor during the course of business of plying, hiring or leasing goods carriages in the event the contractor furnishes his Permanent Account Number - Reliance, placed by the department on Section 44AE, seems to be inapposite - HC
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• Commissioner Cannot Solely Rely on Initial Grounds to Reduce or Waive Penalties u/s 273A of the Income Tax Act.

  Case-Laws - HC : Power to reduce or waive penalty under section 273A - if the Commissioner while exercising power under Section 273-A of the Act places sole reliance upon grounds that led to imposition of penalty and interest, such an exercise of power, would in essence, be contrary to power conferred by Section 273-A - HC
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• Provision for Doubtful Debts Added to Book Profit u/s 115JA for MAT Calculation.

  Case-Laws - HC : Addition of provision made for doubtful debts while computing book profit u/s 115JA - Minimum alternate tax (MAT) - Said amount is to be added to the book profit - HC
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• High Court Confirms Rebate u/s 88E Valid for Securities Transaction Tax Despite Alternative Tax Assessment.

  Case-Laws - HC : Whether rebate under Section 88E in respect of securities transaction tax is admissible in a case where the income is assessed under the concept of minimum alternative tax under Section 115 JB - Held yes - HC
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• Income Tax Deduction Disallowed u/s 40(a)(ia) for TDS on Transporter Payments; Case Remanded for Review.

  Case-Laws - HC : Disallowance u/s 40(a)(ia) – TDS deduction u/s 194C - payment to sub-contractors being transporters – filing of Form No. 15J on the basis of Form I - matter remanded back since CIT(A) did not consider the matter on merit - HC
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• High Court: No Penalty u/s 271(1)(c) for Good Faith Expenditure Claims in Profit and Loss Account.

  Case-Laws - HC : Penalty u/s 271(1)(c) of the Income Tax Act – Claim of expenditure made in P & L A/c – there was no lacking in bona fides in the claim of the assessee originally made - no penalty - HC
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• High Court Rules Sachet Supply as Sales Contract, Not Works Contract, u/s 194C; No TDS Deduction Required.

  Case-Laws - HC : TDS u/s 194C - supply of sachets of specification to the effect that the sachets should have emblem, logo, name, quantity and price, etc., printed on the sachets - works contract or sales contract - held as sales contract - no TDS - HC
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Customs

• Ship Breaking Process Qualifies for Benefits Under Notification No. 167/86 Due to Manual Material Retrieval.

  Case-Laws - AT : Import of ship for breaking - the appellant subjects the vessel to a process to retrieve the material from the structure without the use of power - appellant is eligible for the benefit of Notification No. 167/86 - AT
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• Appellant's Allegation of Improperly Clearing Catalysts as Capital Goods Under Sr. No. 1 Deemed Unsustainable Due to EDI System Error.

  Case-Laws - AT : Import of catalysts - the allegation against the appellant is that they have cleared the catalyst at Sr. No. 1 as capital goods. This allegation against the appellant is not sustainable as in the EDI system. Sr. Nos. 1 & 2 were generated but did not include Sr. No. 5 - AT
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• Stay Granted in Case Contesting MRP-Based Valuation of Imported Auto Parts Without Provision in Customs Tariff Act.

  Case-Laws - AT : MRP based valuation of imported goods - import of automobile parts, components and accessories - there was no provision in the Customs Tariff Act enabling the proper officer of customs to determine RSP in a case where the importer did not declare RSP - stay granted - AT
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Wealth-tax

• Are Let-Out Business Premises Assessable Assets u/s 2(ea) of the Wealth Tax Act?

  Case-Laws - AT : Business premises let out - Whether assessable as assets under section 2(ea) of Wealth tax or not - premises were not covered by exclusions provided under section 2(ea)(i) - AT
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Service Tax

• Writ petitions cannot replace original court processes for reviewing and correcting adjudication errors or mistakes.

  Case-Laws - HC : Invocation of Writ Jurisdiction - Writ petitions are not meant to examine and correct errors and mistakes made in the original adjudication as an alternative forum - HC
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• Engineering Firm Faces Penalty for Failing to Deposit Service Tax; Reduced Penalty Option Available if Paid in 30 Days.

  Case-Laws - AT : Penalty - option to pay reduced penalty of 25% - Service of consulting engineer - Service tax collected from clients but not deposited to the exchequer - option given to deposit penalty equal to 25% within 30 days - AT
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• CENVAT Credit Allowed: Coke Oven Battery Inputs Qualify for Credit Despite Civil Structure Foundation.

  Case-Laws - AT : CENVAT Credit – inputs used to provide output services - Just because the Coke Oven Battery was installed on the foundation made using the above goods and that resulted in civil structure that does not disentitle the appellant to the Cenvat credit - AT
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• Aircraft Lease Services: Not Taxable Under "Supply to Tangible Goods" or "Air Passenger Transportation" Categories During Relevant Period.

  Case-Laws - AT : Classification of service - aircrafts taken on lease from the foreign company - supply to tangible goods service or transportation of passenger by air service - prima facie not taxable during the relevant period - AT
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• Soya Bean Meal Storage Not Classified as Agricultural Produce Under Notification; Impacts Service Classification.

  Case-Laws - AT : Storage and warehousing services - as per the definition of ‘agriculture produce’ in terms of the notification, storage of ‘soya bean meal’ in the appellants premises as ‘agricultural produce’, prima facie, cannot be accepted - AT
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• Service Tax Required for Road-Related Facilities, But Construction Costs Exempt; Prima Facie Case Favors Assessee.

  Case-Laws - AT : Construction of Road - Taking a view that except for cost of construction for laying of roads, service tax is required to be paid on other facilities, proceedings were initiated - prima facie case is in favor of assessee - AT
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• Court Rules Translation Services Subject to Service Tax; Misinterpretation by Appellant Not Supported by Prima Facie Case.

  Case-Laws - AT : Translation service - Business support service - The appellant seem to have interpreted this term to mean the one similar to the earlier transactions mentioned in the service and basically they seem to think that translation is not a transaction - Prima facie case not in favour of assessee - AT
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Central Excise

• Lamination and Metallization of Films Ruled as Manufacturing Process by Tribunal Decision Affirmed.

  Case-Laws - HC : Activity Manufacture OR Not – process of lamination or metallization - Printed films were laminated either in two layers or three layers with the help of adhesive or another chemical - order of tribunal holding the process amount to manufacture sustained - HC
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• Petitioner Can Present Realization Certificate and Extension Order Under Regulation 9 for Duty Drawback Recovery.

  Case-Laws - HC : Recovery of duty drawback for non realization of Foreign Exchange - the petitioner is entitled to at least one opportunity to produce the realization certificate as well as the order of extension, if any, passed in favour of the petitioner in terms of proviso to Regulation 9 before the original authority - HC
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• Transformers for Tamnar Power Project Qualify for Deemed Export Benefits Under Clause (f) with Zero Duty Import.

  Case-Laws - AT : Supply of transformers for setting up a mega power project at Tamnar (Raigarh) - A bare reading of the clause (f) would indicate that supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of such goods at zero percent duty, is given the benefit of deemed export - AT
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• Tobacco Industry Gains Flexibility: Abatement Available Without Full Monthly Duty Payment Under Compounded Levy Scheme.

  Case-Laws - AT : Compounded Levy Scheme – Chewing Tobacco and Unmanufactured Tobacco Packing Machines - It is not necessary to pay the entire monthly duty first in a month before availing abatement - stay granted - AT
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• Buyer-Supplier Agreement Challenges Excise Duty Demand u/s 11D; Stay Granted Due to SSI Exemption.

  Case-Laws - AT : Demand u/s 11D - The agreement is very clear - Both the buyer and the supplier had understood that during the period when the SSI exemption was available, excise duty is not payable even though the Column 10 of the Schedule showed the excise duty separately - stay granted - AT
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• Separate Units, Separate Claims: Commissioner's Decision on Gandhar Unit Doesn't Apply to Other Units u/s 11B(1).

  Case-Laws - AT : Time-Barred Refund Claim as per Section 11B(1) - Argument of the appellant that a favourable decision taken by the Commissioner with reference to their Gandhar unit should be taken as a deemed protest for the appellants unit is not acceptable as each registered unit is a separate legal entity - AT
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VAT

• Appeal Dismissal for Lack of Prosecution Doesn't Bar Restoration Application After 12 Months, Legislative Intent Supports Consideration.

  Case-Laws - HC : Restoration of appeal - when the appeal is dismissed for want of prosecution just before expiry of 12 months, the restoration application which will naturally be filed after 12 months would not become maintainable, which in our considered view cannot be the intention of the legislature - HC
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Case Laws:

• Income Tax

• 2013 (10) TMI 1240
  Exemption u/s 10B – The assessee failed to furnish the approval of the Board appointed by the Central Government in exercise of power conferred by section 14 of the Industries - The assessee also failed to submit the ratification by the Development Commissioner as envisaged in the Instruction dated March 9, 2009 - Held that:- The assessee produced the registration from Software Technology Park of India which was notified by the Ministry of Commerce, Government of India vide Notification No. 33/(RE)/92-97 dated March 22, 1994. The notification states that the Software Technology Park (STP) Scheme is a 100 per cent. export-oriented undertaking scheme – The registration certificate was produced only before CIT(A) but not before AO – The issue set aside for fresh adjudication after consideration of necessary material.

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• 2013 (10) TMI 1238
  Classification as Revenue or Capital Expenditure – Expenses for transmission - Establishment and maintenance expenditure – Disallowance of Rs.14,92,70,091/- by the assessing officer as capital expenditure – Held that:- In the facts and circumstances of the case and also as matter of general practice adopted by all electricity boards to bifurcate its establishment and general expenses in between capital and revenue expenses depending on the extent of capital work going on in each particular unit/division. It is only in respect of construction and the maintenance units where major part of work is maintenance of distribution, the assessee uniformly adopted 12/1/2% of such expenditure as capital expenses - In other electricity boards much lesser percentage of expenses is being capitalised in similar circumstances and at the same time the assessee having adopted the uniform method of capitalizing 12/1/2% of the expenditure ever since study undertaken by the Board in the year 1968, the accounts prepared by the assessee should have been accepted – Decided against the Revenue.

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• 2013 (10) TMI 1237
  Deduction u/s 80HH of the Income Tax Act - Non-furnishing of Form-C along with return of income – Held that:- Reliance has been placed upon the judgment of Hon’ble Andhra Pradesh High Court in the case of Commissioner of Income Tax Vs. Hemsons Industries [2001 (7) TMI 109 - ANDHRA PRADESH High Court], wherein it has been held that the mere fact that the assessee failed to enclose the audit report along with the return itself would not disentitle it the benefit under Section 80 HH of the Act, if it files the audit report before the assessment order is passed. If the accounts have not been audited, Form-C, even it is submitted subsequently may not be accepted for benefit. The non-furnishing of Form-C along with return of income where the accounts have been actually audited by filing the return is a technical defect for which the assessee cannot be denied the benefit of deduction under Section 80HH of the Act, if the defect is removed subsequently - In the present case, we find from the assessment order that the audited balance sheet was filed and was relied on by the AO for making assessment. The assessee in response to the notice under Section 154 of the Act, filed Form 10C, in which no defect was found by the AO – Decided against the Revenue.

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• 2013 (10) TMI 1236
  Genuineness of long term capital loss - tax planning - Whether transaction of transferring the shares of the group companies at low price causing long term capital loss and sale of shares of Mackhinon & Mackenzie Co. Ltd., at high price, making short term capital gains, thereby setting off the short term capital gains against the long term capital loss, is a colourable device to evade tax – Held that:- Price at which the Respondents had purchased the shares and thereafter has sold the shares, is not in dispute - The transaction in respect of the sale of shares of Hede Navigation Ltd, resulting in long term capital loss had preceded the transaction involving the short term capital gains selling the shares of Mackinon & Mackenzie Ltd. The Commissioner also noted that the loss transactions therefore cannot be said to have been influenced by the gain transactions - Assessment Officer has not disputed about any of the transactions that have been duly completed under the law nor that the consideration received was not the market price. It is further noted that the shares of Mackinon & Mackenzie Ltd., were sold at the price quoted at the Stock Exchange whereas low price of M/s. Hede Navigation Ltd., shares at the rate of 10 paisa per share stands explained by the fact admitted by the Assessing Officer that the said Company was in red. The Commissioner also noted that even in case the second transaction had not taken place, the long term capital loss would have been accepted by the Assessing Officer and the Company would have been allowed to carry forward the said loss - Where transactions were genuine, such long term capital loss can be allowed to be set off. In the Mcdowells case [2009 (5) TMI 27 - SUPREME COURT ], it has been held that approach of both the corporate and tax laws, particularly in the matter of corporate taxation, generally is founded on separate entity principle i.e. treat a company as a separate person. The Income Tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies and other entities subject to income tax. Companies and other entities are viewed as economic entities with legal independence vis-à-vis their shareholders/participants. It is fairly well accepted that a subsidiary and its parent are totally distinct taxpayers. Consequently, the entities subject to income tax are taxed on profits derived by them on stand-alone basis, irrespective of their actual degree of economic independence and regardless of whether profits are reserved or distributed to the shareholders/participants. Furthermore, shareholders/participants that are subject to (personal or corporate) income tax, are generally taxed on profits derived in consideration of their shareholding/ participations, such as capital gains. Nowadays, it is fairly well settled that for tax treaty purposes a subsidiary and its parent are also totally separate and distinct taxpayers. In the present case, Tribunal has not committed any error in coming to the conclusion that the transaction arrived at by the Respondents was legitimate within the framework of law. As such, there is nothing on record to assume that the transaction was dubious and that the exercise was to avoid tax by a colourable device. The Tribunal found that the transactions were in accordance with law and have been duly implemented – Decided against the Revenue.

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• 2013 (10) TMI 1235
  Genuineness of loan - additions made in the absence of confirmation letters from the parties - Held that:- the persons who appeared before the authorities have confirmed having given loans to the assessee in their sworn statements. Once such statements had been given and merely because they have not given any confirmation letter, the said credits cannot be excluded appears to be wrong. - decided against the revenue. Disallowance of Commission paid - Increase the commission from 1% to 2.5% - AO had permitted commission in the absence of any other evidence to prove the same at 1% of the total turnover taking into account the commission paid by similar agencies. - Held that:- It is not in dispute that none of the vouchers produced by the assessee was signed by any of the persons who had received the commission. Therefore, normally such amounts are to be added to the income of the assessee. For deletion of such income, necessarily evidence has to be adduced. No evidence worth appreciating was available other than a general contention that commission had been paid - Assessing Officer permitted allowance of 1% as commission and there is no any reason for the appellate authority to have increased the said commission to 2.5% - Such an approach has been made purely based on surmises – Decided in favor of Revenue.

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• 2013 (10) TMI 1234
  Dismissal of appeal solely on the ground that the departmental representative when asked could not point out any infirmities in the order of the learned CIT(A) – Non-speaking order passed by the Hon’ble Tribunal – Held that:- Ld. Tribunal has not given its own independent finding with respect to the order passed by the CIT(A) impugned before it. It appears that there is no independent application of mind by the learned tribunal with respect to the order passed by the CIT(A) impugned in the appeal before it. The impugned order passed by the tribunal is absolutely a nonspeaking order with respect to legality and validity of the order passed by the CIT(A) impugned in the appeal before it. Under the circumstances, the impugned order passed by the ITAT cannot be sustained and the same deserves to be quashed and set aside - Matter is restored to file of learned tribunal for fresh adjudication on merits – Decided in favor of Revenue.

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• 2013 (10) TMI 1233
  Validity of revisionary order u/s 263 passed by the CIT – Held that:- Order of the Commissioner passed under Section 263 of the Act is a detailed order discussing each of the nine points raised by the revisional authority - Ultimately, following the decision of Apex Court in Malabar Industrial Co. Ltd. v. CIT [ 2000 (2) TMI 10 - SUPREME Court], Tribunal also confirmed the opinion of the Commissioner that there was no application of mind while considering the assessment under Section 143(3) of the Act, therefore, it is not only erroneous, but also prejudicial to the interest of revenue – Decided against the Assessee.

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• 2013 (10) TMI 1232
  Interest on refund u/s 244A of the Income Tax Act – Interest to be computed from which date i.e. from the date when self assessment tax paid or from the date of deposit in pursuance of demand u/s 156 - Held that:- No differentiation can be made to the provision of section 244A(1) and explanation does not give a different meaning at all. Any amount due to the assessee under the Act mentioned in section 244(1) clearly takes in all forms of refund, either self assessed tax or tax paid as per notice under Section 156 of the Act – Decided against the Revenue.

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• 2013 (10) TMI 1231
  Depreciation on amount paid to retiring partner as goodwill from the partnership firm - During the course of its business new partners were introduced and all partners, one after the other, retired from the partnership firm in the successive years - Held that:- When one partner retires from the business, there is no severance of status so far as the partnership is concerned, as the retiring partner would take his capital investment and retire from partnership and the others continue to carry on the business. By adopting this method, four partners, who decided to go out of the business, have not transferred the entire business concern to the new partners, but have chosen to continue for some time and at their leisure, they retired from partnership one after the other. Therefore, the assets and liabilities of the firm continued as such without any change including tangible and intangible. Share of the capital came to be paid to the retiring partner and it cannot be treated as cost paid to the retiring partner towards acquisition of any right from him. Partner who retire from the partnership firm takes its initial investment and profit, if any, payable to him. Similarly, if he is accountable for any loss in a particular assessment year, that would also be worked out at the time of retiring from partnership business - In view of the matter, there is no transfer of any interest and the money paid is only towards the share of the capital invested by that partner along with some profit - Therefore, the question of each year some money paid towards the goodwill would not arise in the facts of the present case, therefore, the Income Tax Appellate Tribunal was justified in disallowing goodwill claimed by the appellant assessee – Decided against the Assessee.

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• 2013 (10) TMI 1230
  Best judgment assessment u/s 144 of the Income Tax Act - Assessee not maintaining any books of accounts nor filing profit and loss account and balance sheet – Held that:- Assessment does not suffers on account of the absence of any opportunity granted to it by the Assessing Officer before passing the order under Section 144 of the Act - Profit margin in the earlier years to refix the income at 5% of the gross turnover. Consequently, no any justification in the Tribunal straightaway restoring the assessment at 8% of the gross turnover without any discussion on the merits of the Commissioner of Income Tax (Appeals) order – Matter restored to the Commissioner(Appeals) – Decided in favor of Assessee.

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• 2013 (10) TMI 1229
  TDS to be deducted u/s 194C - payment to contractor during the course of business of plying, hiring or leasing goods carriages in the event the contractor furnishes his Permanent Account Number - The Income Tax Officer (TDS) relying on Section 44AE, in particular second explanation there-under, has held that the petitioner, in law, will have to be treated as owner and was, therefore, liable to set apart the requisite amount as has been demanded in terms of order dated 28th March, 2013. – Held that:- Since the demand is in respect of subsequent period after 1st October, 2009, prima-facie, there can be no difficulty in accepting the stand of the petitioner that the petitioner was bound by the provisions of Section 194C(6) of the Act. Reliance, placed by the department on Section 44AE, seems to be inapposite as that provision is independent provision and moreso the non-obstante clause is with reference to Sections 28 to 43C and not 194C(6) of the Act as such - Section 194C(6) is an independent provision which was binding on the petitioner and prohibition from deducting the amount from the account of the contractor

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• 2013 (10) TMI 1228
  Whether demurrage and dead freight are to be allowed while calculating the relief under Sec.80 HHC for the assessment year 1996-97 – Held that:- Revenue does not dispute the fact that the assessee had exported molasses worth Rs.6,14,87,164/-. The Revenue also does not dispute the fact that there was an agreement between the assessee and the foreign buyer as regards the liability of either of the party on demurrage, as per which, the demurrage and dead freight was payable by the assessee on account of its delay in boarding of Molasses and consequently, the charges payable thereon were to be paid by the assessee. Accordingly, the foreign company deducted the amount towards demurrage and dead freight and remitted the balance amount to the assessee. This does not mean that the sale consideration was anything less than Rs.6,14,87,164/- for the purpose of claiming deduction under 80 HHC of the Act. There is nothing on material to show that the parties had agreed that the balance after adjusting demurrage and dead freight charges alone would be the safe consideration – Decided against the Revenue.

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• 2013 (10) TMI 1227
  Reassessment under section 147 – Notice issued u/s 148 for the re-opening of assessment - payment of managerial remuneration in excess of the prescribed limit which was not approved by the central government - disclosure in the balance sheet – Held that:- Assessee/petitioner had disclosed full and true material particulars and had discharge its obligations under law. Material facts were stated and it is not a case where inference had to be deduced or some application of mind was required to understand and deduce any other fact. There was nothing hidden or imbedded in the document or the accounts. It is not the case of the Assessing Officer that any material had come to its possession or knowledge post the assessment under Section 143(3) of the Income Tax Act. The factual material was already before the Assessing Officer and had been fully and truly disclosed by the petitioner. The Revenue thus had to satisfy the additional requirement as mentioned in condition No. (v) as laid down by the judgment in Usha International case [2012 (9) TMI 767 - DELHI HIGH COURT] i.e. there was failure or omission on the part of the Assessee to disclose full and true material facts – In the present case, there is no such failure of disclosure – Decided in favor of Assessee.

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• 2013 (10) TMI 1226
  Power to reduce or waive penalty under section 273A - power of CIT to reduce penalty where income was surrendered voluntarily – Held that:- Perusal of Section 273-A of the Act, reveals that the case of the petitioner falls under Section 273-A(1)(ii)(a)(b) of the Act and, therefore, required the Commissioner of Income Tax to consider if the petitioner disclosed income prior to issuance of notice under Section 139(2) of the Act voluntarily and made full disclosure of her income in good faith etc. Section 273-A of the Act commences with the words "notwithstanding anything contained in this Act" thereby postulating that the Commissioner shall while considering an application under Section 273-A of the Act, confine his consideration to factors referred to in Section 273-A of the Act and to no other factor. Thus, if the Commissioner while exercising power under Section 273-A of the Act places sole reliance upon grounds that led to imposition of penalty and interest, such an exercise of power, would in essence, be contrary to power conferred by Section 273-A of the Act. While exercising power under Section 273-A of the Act the Commissioner is required to confine his consideration to factors set out in the sub-sections of Section 273-A of the Act and to no other factor.

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• 2013 (10) TMI 1225
  Nature of expenditure – Capital or revenue expenditure – Expenditure is made on acquisition of software – Held that:- When the life of a computer or software is less than two years and as such, the right to use it for a limited period, the fee paid for acquisition of the said right is allowable as revenue expenditure and these softwares if they are licensed for a particular period, for utilizing the same for the subsequent years fresh licence fee is to be paid. Therefore, when the software is fitted to a computer system to work, it enhances the efficiency of the operation. It is an aid in manufacturing process rather than the tool itself. Though certain application is an enduring benefit, it does not result into acquisition of any capital asset. It merely enhances the productivity or efficiency and, therefore, it has to be treated as revenue expenditure – Decided against the Revenue. Addition of provision made for doubtful debts while computing book profit u/s 115JA – Held that:- The Explanation to the section states for the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under subsection (2) as increased by the amount mentioned in the Explanation. One such amount is in sub-clause (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities – Reliance has been placed on the judgment in the case of COMMISSIONER OF INCOME TAX AND OTHERS VERSUS M/s WEIZMANN HOMES LTD. [2013 (5) TMI 123 - KARNATAKA HIGH COURT] - Said amount is to be added to the book profit – Decided in favor of Revenue. Interest u/s 234B of the Income tax act – Held that:- Reliance has been placed upon the judgment of the Hon’ble Supreme Court in the case of Rolta India Ltd. reported in [2011 (1) TMI 5 - SUPREME COURT OF INDIA] – Also, as per Circular No. 13 of 2001, it has been clarified that section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and, consequently, the provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable – Decided in favor of Revenue.

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• 2013 (10) TMI 1224
  Revision u/s 263 - technical educational trust - AO allowed the exemption - CIT revised the assessment order and disallowed the exemption o the ground that information collected by the Assessing Officer was not considered by him after due application of mind - Held that:- Families of the trustees have been paid interest whereas in terms of the deed of trust, the members of the trust are not to be paid any benefit or profit from the trust. It was also found that the Assessing Officer has failed to examine the issue of deduction of tax at source while crediting interest to the family members of the trustees. Similarly, it was found that 50 per cent. of the development fund has been utilised whereas the balance was to be utilised after ten years. The Commissioner found that there is no data of creation of development fund and the year-wise break up of opening balance is also not available – Therefore, no exemption u/s 11 – Decided against the Assessee The assessee has disputed the show-cause notice justifying the return filed. It was never the stand of the assessee that even if the said aspects are taken into consideration, still the income of the assessee would be nil. In the absence of any plea that the additions made will not cause loss to the Revenue, we find that the appellant cannot be permitted to raise such questions in appeal without there being any factual basis. - Decided against the assessee.

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• 2013 (10) TMI 1223
  Whether rebate under Section 88E in respect of securities transaction tax is admissible in a case where the income is assessed under the concept of minimum alternative tax under Section 115 JB of the Income Tax Act – Held that:- Reliance has been placed on the Commissioner of Income Tax vs. M/s. Horizon Capital Ltd.[ 2011 (10) TMI 489 - KARNATAKA HIGH COURT], wherein it was held that contention that this benefit is not available to the assessee whose total income is assessed under Section 115JB has no substance - When the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid under Section 88E is given deduction, by way of rebate, under Section 87 of the Act. This is the legislative intent. That is a promise to give deduction of the tax already paid – Decided against the Revenue.

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• 2013 (10) TMI 1222
  Disallowance u/s 40(a)(ia) – TDS deduction u/s 194C - payment to sub-contractors being transporters – filing of Form No. 15J on the basis of Form I - Held that:- The assessee was served with a show-cause notice as to why the amount paid to the sub-contractors on account transportation charges should not be disallowed. The assessee in reply never took the point that it did not or could not in law deduct the tax because Form No. 15-I had been submitted by the transporters. Therefore, the case that the assessee had submitted Form No. 15J on the basis of Form No. 15-I received from the transporters was inconsistent with the reply given to the show-cause notice by the assessee himself. In the absence of any satisfactory explanation as to why was this case not made out in reply to the show-cause notice, the contention that such Form 15J had been submitted on the basis of Form 15-I lost credibility. The Commissioner of Income-tax (Appeals) did not go into the relevant questions and straightaway proceeded to hold that Form No. 15-I were received by the appellant from the transporters and on the strength of those Forms he did not deduct the tax. This was not even the case of the assessee in reply to the show-cause notice. Under sub-rule 2, the Commissioner of Income-tax (Appeals) is required to record in writing the reasons for admission of the additional evidence. The Commissioner of Income-tax (Appeals) did not do so – Decided in favor of Revenue.

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• 2013 (10) TMI 1221
  Whether penalty levied under section 271(1)(c) in respect of disallowance made on account of curtailment of deduction under section 80-IB of the Income-tax Act, is correct – Held that:- The Assessing officer curtailed the deduction claimed under section 80-IB of the Act and consequent thereto levied penalty on account of curtailment of deduction - It was an instance of disallowance of a claim and not a case of concealment of income or furnishing inaccurate particulars of income – Penalty not to be levied – Decided against the Revenue. Whether penalty levied under section 271(1)(c) in respect of disallowance made on account of duty draw back and dividend income from foreign companies offered to tax only when the case was selected for scrutiny is justified – Held that:- Amount of duty draw back and dividend income from foreign companies was offered to tax by the assessee voluntarily and not after detection on the part of the Assessing Officer – Penalty not to be allowed – Decided against the Revenue.

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• 2013 (10) TMI 1220
  Penalty u/s 271(1)(c) of the Income Tax Act – Claim of expenditure made in P & L A/c – Held that:- Reliance has been placed upon the judgment in the case of CITv. Reliance Petro Products P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - So long as the assessee had not concealed any material or the factual information given by him has not been found to be incorrect, there would be no imposition of penalty under section 271(1)(c) of the Income-tax Act. Even if the claim made by the assessee is unsustainable in law, so long as the assessee substantiated the explanation offered by him or the same is found to be bona fide, Explanation 1 to section 271(1)(c) would not stand attracted. However, when the assessee does not substantiate the explanation or the same is found to be lacking in bona fide, Explanation 1 to section 271(1)(c) would stand attracted – In the present case, there was no lacking in bona fides in the claim of the assessee originally made – Decided against the Revenue.

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• 2013 (10) TMI 1219
  TDS under section 194C - supply of sachets of specification to the effect that the sachets should have emblem, logo, name, quantity and price, etc., printed on the sachets - works contract or sales contract – Held that:- As per KPTCL's case [2012 (6) TMI 204 - Karnataka High Court], the amendment to the definition of "work" under section 194C(7)(iv) of the Act is clarificatory in nature and retrospective. In the light of the said ratio, if the facts of this case are read, the assessee has not supplied any material. However, the tenderer has secured the material from other source and has supplied the same to the assessee. May be, in the instant case, some of the features of works contract may overlap, but, however, that should not have been taken as necessary criteria to determine the nature of work. The Explanation "works contract" has a definite legal connotation. What is stated in the section 194C (1) is for "carrying out any works" between the contractor and specified person. The work is also defined to exclude the situation where the material is not supplied by the assessee. In view of the specific definition of work, it is to be held that contract amounts to sale and not works contract. - Decided against the Revenue.

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• Customs

• 2013 (10) TMI 1261
  Confiscation - classification and valuation - conditions for release of goods - The petitioner filed seven bills of entry for clearing the said goods in 31 containers on different dates in January 2011 but the custom authorities did not allow clearance on the ground that the material so imported was not scrap but re-rollable metal attracting 5% basic custom duty - On furnishing a declaration in the form of an affidavit that the party will not challenge the value and identity of the seized goods during the course of adjudication or prosecution proceedings, if any As the Department is already retaining a sum of Rs. 2 crores, the interest of the revenue stands protected. In the facts and circumstances, the conditions imposed in the present order under clauses No.2 to 5 providing furnishing of bank guarantees to the tune of the determined FOB value in the case of both the petitioners and for submission of solvency certificate and thirdly, the condition of furnishing of undertaking that the identity and quantity of the goods would not be disputed are onerous and are hereby quashed. The respondents are directed to release the goods to the petitioners within a period of 2 weeks from the date of receipt of a certified copy of this order after ignoring the conditions imposed in clauses No.2 to 5. - Following decision of AMIT ENTERPRISES Versus UNION OF INDIA [2011 (5) TMI 375 - PUNJAB & HARYANA HIGH COURT] and Era International Versus UOI and Ors. [2011 (8) TMI 885 - Punjab and Haryana High Court], decided in favor of assessee.

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• 2013 (10) TMI 1260
  Waiver of pre deposit - Evasion of payment of custom duty - Undervaluation of imported electronic goods - Penalty u/s 112 - Held that:- prima facie view of CESTAT that show cause notice issued by the Adjudicating Authority and the order-in-original indicate that the appellant was the mastermind behind the import of various goods and that the entire , activity of M/s. Parth Marketing and M/s. Chinmay Corporation were controlled and managed by the appellant through his staff and that the proprietor of M/s. Parth Marketing and M/s. Chinmay Corporation were receiving only monthly compensation for renting/lending their names and the transactions were undertaken by the appellant cannot be faulted - proprietor of M/s. Parth Marketing and M/s. Chinmay Corporation were receiving only compensation for renting/lending their names and the transactions were undertaken by the appellant. It is observed by the Tribunal prima facie that the intention to evade duty by misdeclaration of goods is clearly discernible when one goes through the evidence on reord against the appellant - Prima facie case not in favour of assessee - Stay denied.

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• 2013 (10) TMI 1259
  Benefit of Notification No. 167/86 - Exemption from CVD - Import of ship for breaking - Rectification of mistake - Non consideration of one of the appeals - Appeal against the imposition of Additional Duty of Customs - Held that:- Final Order dated 6-8-2012, in the preamble, mentions that we have disposed off two appeals of the appellant. The mere perusal of our order dated 6-8-2012, clearly indicate that we had not considered the submissions made in respect of Appeal No. C/1/2008, which is against the imposition of Additional Duty of Customs (CVD) on the vessel M.V. Jagat Priya, imported for breaking - Since there is an error apparent on the face of record, our final order dated 6-8-2012, which is in respect of C/1/2008, needs rectification of mistake - Rectification granted. Benefit of Notification No. 167/86 - Exemption from CVD - Import of ship for breaking - Whether the appellants are liable to pay additional duty in respect of a vessel brought in by them for breaking up in terms of the provisions of the Customs Tariff Act, 1975 - Held that:- The vessels imported by the appellant are not seaworthy and they are admittedly for the purpose of breaking. There is a separate entry for this purpose both under the Customs Tariff Act and Central Tariff Act. The product actually imported is the material that can be retrieved from the ship; the structure by itself is of no value and the appellant subjects the vessel to a process to retrieve the material from the structure without the use of power - Therefore, appellant is eligible for the benefit of Notification No. 167/86 - Following decision of ENGEE INDUSTRIAL SERVICES (P) LTD. Versus UNION OF INDIA [2003 (5) TMI 458 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• 2013 (10) TMI 1258
  Benefit of the Notification 97/2004-Cus., dated 17-9-2004 - Import of catalysts - Ommission of consumable from benefit of Notification - Whether appellant are entitled to claim exemption for catalyst imported as spares or not - Held that:- as the FTP 2004-2009 and EPCG licence issued thereunder, clearly specifies that ‘catalysts’ are different from ‘consumables’ and are covered under para 5.1A of the policy as spares, catalysts, etc. Therefore, following the decision of Suttons & Sons (India) P. Ltd. (1994 (2) TMI 298 - HIGH COURT OF CALCUTTA) the Notification in question is to be read harmoniously with the provisions of FTP 2004-2009. The provisions of Foreign Trade Policy shall prevail over the Notification of the Customs authorities as the customs authorities do not have any power to curtail the import unless such curtailment is warranted by the import policy. Therefore, during the impugned period the appellant are entitled for the benefit of the Notification No. 97/2004 as amended - as per Notification 97/2004-Cus., dated 17-9-2004, the exemption for spare parts is given at Sr. No. 5 but the allegation against the appellant is that they have cleared the catalyst at Sr. No. 1 as capital goods. This allegation against the appellant is not sustainable as in the EDI system. Sr. Nos. 1 & 2 were generated but did not include Sr. No. 5. As per the FTP para 5.1A the appellant are allowed to import ‘catalyst’. Para 5.1A deals with only spare parts, catalyst and at the time of clearance of goods, the EPCG licence were produced by the appellant before the customs officers for endorsement in their licence. Therefore, after examining the licence, the goods were assessed and allowed to be cleared duty free. In that situation, the allegation of suppression against the appellant again does not survive. Admittedly, in this case goods were imported during the period 2007-2008 and show-cause notice have been issued on 31-3-2010 invoking the extended period of limitation on the ground of suppression with an intend to evade payment of duty. As the allegation of suppression is not sustainable against the appellant, therefore, the demand against the appellant is time-barred - Decided in favour of assessee.

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• 2013 (10) TMI 1257
  Classification of Goods – import of silver, and gold coins and medallions - appellant claim that these are classifiable under Chapter Heading 71.08 covered by Notification No.62/04 dt. 12.5.04 - Revenue was of the view that it has numismatic value and classifiable under Chapter 97.05 - Waiver of Pre-deposit - Held that:- The main contention of the applicant is that they imported large quantity specially ordered and freshly minted in Germany for commemorating events or distribution during celebration - the manufacturer and supplier confirmed that they have manufactured against order and such goods have no numismatic value - the evidences would be appreciated at the time of appeal hearing - ICICI Bank Ltd. imported silver, gold coins on behalf of applicant - It is seen that whatever the quantity imported through ICICI Bank Ltd., they have deposited the entire amount - Considering the amount paid by the applicant and prima facie case, we direct the applicant to deposit further amount - Upon such deposit, the predeposit of balance duty along with interest and penalty in respect of this applicant as also in respect of other applicants shall stand waived and recovery is stayed during pendency of appeals – Partial stay granted.

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• 2013 (10) TMI 1256
  MRP based valuation of imported goods - import of automobile parts, components and accessories - Valuation of Goods u/s 4A of CE Act – Waiver of Pre-deposit - The department took the view that the importer should have declared RSP at the time of import - The imported parts/accessories were meant for sale in retail by the importer - The assessable value thereof should have been determined in terms of Section 4A of the Central Excise Act – Held that:- Following ABB Ltd. vs. Commissioner of Customs, Bangalore [2010 (12) TMI 1027 - CESTAT, BANGALORE ] - there was no provision in the Customs Tariff Act enabling the proper officer of customs to determine RSP in a case where the importer did not declare RSP on the imported package and, on this basis, the demand of duty, interest and penalty were set aside – Stay granted.

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• 2013 (10) TMI 1255
  Mis-declaration of Goods - Duty Drawback – personal penalty on directors - Waiver of Penalty – Held that:- The Adjudicating Authority has not imposed any penalty on the directors however the commissioner (appeal) Imposed penalty on all the three directors - He only reconsidered imposition penalty on all the three directors - Order refers to directors and not partners - There was wide difference of 47.5 kg out of total decleared quantity of 150 kg clearly indicating their was clear intent to avail higher drawback - Considering overall facts of the case and gravity of availing higher drawback claim, this is a fit case there is no leniency is required to be shown as prima-facie appellants are not able to make any case of waiver of penalty - all the three stay applications for waiver of penalty on directors are rejected - stay rejected.

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• Corporate Laws

• 2013 (10) TMI 1254
  Sanction to the Scheme of Amalgamation - Held that:- In view of the approval accorded by the shareholders and creditors of the Petitioner Transferor company, representations/reports filed by the RD and the OL to the proposed Scheme, there appears to be no impediment to the grant of sanction to the proposed Scheme. Consequently, sanction is hereby granted to the proposed Scheme under Sections 391 and 394 of the Act. The Petitioner Transferor company will comply with the statutory requirements in accordance with law - A certified copy of the order be filed with the ROC within 30 days from receipt of the same. In terms of Sections 391 and 394 of the Act and in terms of the Scheme, the property, assets, rights and powers of the Petitioner Transferor company shall be transferred to and vest in the Transferee company without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Petitioner Transferor company shall be transferred to the Transferee company without any further act or deed. Upon the scheme coming into effect, the Transferor company shall stand dissolved without winding up - Petition allowed.

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• 2013 (10) TMI 1253
  Winding up - Mistake in inventory - Held that:- agreement itself stipulated that an inventory would be prepared of the articles lying at the factory site in the presence of the representative of the Respondent No.1. Admittedly, such exercise was never performed and the Appellant cannot be allowed to take advantage of this breach committed by the Appellant itself - list of missing items, which was prepared on 19th September, 2003, was made after comparing with the inventory prepared in the year 1994 when the O.L. had taken possession of the factory premises on his appointment as the provisional liquidator. It is further noted that admittedly, from 1994 to 1996 some other security agency was deployed at the factory premises and the applicant came on the scene in the year 1996 and before giving the security arrangement to the applicant, no inventory was prepared. The learned Single Judge has also noted that a Local Commissioner was also appointed at the request of the applicant to visit the factory premises and his report indicated that the theft, if any, which took place in the meantime cannot be attributed to the applicant inasmuch as the premises were sealed by the O.L. at the time of deploying the applicant as security agency, which seals were intact even at the time when the Local Commissioner visited the premises - Appeal dismissed.

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• Service Tax

• 2013 (10) TMI 1278
  Cenvat credit - proof of receipt of capital goods - duty paying document - responsibility of manufacturer to ensure about the existence of the supplier-factory - Waiver of pre-deposit of duty u/s 11A of the Central Excise Act, 1944 r.w. Rule 14 of Cenvat Credit Rules, 2004 - Penalty u/s 11AC of Central Excise Act, 1944 – Held that:- Department did not submit anything to controvert the contention of the applicant that they availed cenvat credit on the basis of invoices issued by the manufacturer having Central Excise Registration, that they have paid the amount by Account Payee Cheques and the machines are in existence in the factory of the applicant – The Tribunal in Sunvik Steels Ltd. Vs. Commr. of Central Excise, Bangalore [2011 (8) TMI 926 - CESTAT, BANGALORE] allowed the appeal of the assessee in respect of goods supplied by the same supplier -the applicants are able to make out a prima-facie case for total waiver of pre-deposit - the requirement of pre-deposit of all dues waived and recovery stayed till the disposal – Stay granted.

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• 2013 (10) TMI 1274
  Invocation of Writ Jurisdiction - Held that:- The order on merits can be examined and decided in the appellate proceedings - it is not proper and correct for the petitioner to bypass the appellate remedy, which is adequate and prescribed by law - Writ petitions are not meant to examine and correct errors and mistakes made in the original adjudication as an alternative forum - Writ proceedings are extraordinary in nature and are invoked in extraordinary circumstances - there is no dispute in respect of inherent or subject matter jurisdiction – Decided against Petitioner. Reliance placed by the petitioner on Kamlakshi Finance Corporation Ltd. (1991 (9) TMI 72 - SUPREME COURT OF INDIA) is misconceived. It is noticed that in the said case the assessee therein had exercised the appellate remedy and thereafter the matter had reached the Supreme Court. In paragraph 6 of the said decision observations have been made that the adjudicating authorities are bound and should follow the appellate orders.

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• 2013 (10) TMI 1273
  Penalty - option to pay reduced penalty of 25% - Service of consulting engineer - Service tax collected from clients but not deposited to the exchequer - ST-3 Returns not filed - Held that:- appellant had paid tax amount along with interest before issue of show cause notice, the adjudicating authority should have brought to the notice of the appellant the option available for payment of 25% of tax demand as penalty under section 78 of Finance Act 1994 for final closure of the matter. Since this was not done by the lower authorities I follow the decision of the Hon’ble Delhi High Court in the case of KP Pouches (P) Ltd. Vs UOI-[2008 (1) TMI 296 - HIGH COURT OF DELHI] - option given to the assessee to deposit 25% of penalty within 30 days from the date of order to avail the benefit of reduced penalty u/s 78. - Decided in favor of assessee partly.

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• 2013 (10) TMI 1272
  Maintainability of appeal – Non application of mind - Held that:- No opinion is formed by the Committee of Commissioners about the illegality of the order as required under Section 35B of the Central Excise Act - There was no authorization by the Committee of Commissioners to file appeal on its behalf - record also does not disclose that these two officers applied their mind to the issue and recorded any opinion, as per the requirement of Section 35B of the Central Excise Act that the order of the Commissioner (A) was not legal or proper and warranted to be challenged by filing an appeal - there should be a meaningful consideration which should be reflected on the note sheets in order to comply with the requirement of Section 35(2) of the Act - file does not show any such satisfaction or opinion having been recorded by the Committee of Commissioners. Mere signing on draft note mechanically does not constitute sufficient compliance with the requirement of application of mind by the Commissioners comprising the Committee, to the Twin requirements of the decision making process namely, due consideration of the material pertaining to the adjudication/appellate order and the appropriateness/desirability of preferring an appeal - Decided against Revenue.

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• 2013 (10) TMI 1271
  Business Support Service – Waiver of pre-deposit - The appellant is providing translation service to the customers – Held that:- Similar issue came up in [2013 (10) TMI 1239 - CESTAT BANGALORE] - From the definition, it can be seen that applying the principle of ejusdem generis, the transaction processing has to be considered along with the other terms used and when that is taken into account, translation work undertaken by the appellant cannot be covered by the definition - prima facie the demand was within normal period of limitation - the appellant is directed to deposit an amount of Rs.7,00,000 – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.

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• 2013 (10) TMI 1270
  CENVAT Credit – inputs used to provide output services - Waiver of Pre-deposit - Whether the excise duty paid on cement, angles, channels, CTD bars or TMT bar are eligible to enjoy Cenvat credit to provide the output service of erection, installation and commissioning by the appellant. – Held that:- CCE, Visakhapatnam - II vs. Sai Sahmita Storages (P) Ltd. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] - All these goods were used to provide output service for which those are eligible to get Cenvat credit of the excise duty paid - Just because the Coke Oven Battery was installed on the foundation made using the above goods and that resulted in civil structure that does not disentitle the appellant to the Cenvat credit - the law existing prior to amendment, prima facie, it appears that calling for pre-deposit is unwarranted at this stage before hearing appeal in detail – Stay granted.

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• 2013 (10) TMI 1269
  Air Travel Agents service - Waiver of pre-deposit - The impugned interim order of the respondent, passed under Section 35F , directing the petitioner to pay the entire amount of service tax, as a pre-deposit, as a pre-condition for hearing the appeal filed by the petitioner, is onerous in nature - in view of the averments made in the affidavit filed in support of the writ petition and the impugned order of the respondent is modified directing the petitioner to deposit 30% of the amount of service tax On the petitioner complying with the said condition, the respondent shall hear and dispose of the appeal on merits and in accordance with law - Following decision of M/s. Asveen Air Travels (P) Limited, Versus The Commissioner of Central Excise (Appeals) [2011 (3) TMI 317 - MADRAS HIGH COURT] - Decided in favour of assessee.

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• 2013 (10) TMI 1268
  CENVAT credit - duty paying documents - Ineligible documents - Held that:- The learned advocate submits that the entire amount of CENVAT credit has been reversed with interest and the amount has been appropriated. However in appeal, the appellant is challenging the decision regarding reversal. Therefore, we consider that the reversal of CENVAT credit with interest is sufficient for the purpose of pre-deposit to hear the appeal - stay granted Classification of service - aircrafts taken on lease from the foreign company - supply to tangible goods service or transportation of passenger by air service - taxability - period from 2006-07 to 2008-09 - held that:- While the appellant was receive certain minimum fixed monthly charges on account of certain minimum flying hours per calendar month, in addition to this, they also receive remuneration on per hour basis during the period when the helicopter had been operated for transportation - Prima facie the appellant's activity is transportation or persons within India by air and not supply of tangible goods and as such during the period of dispute the same was not taxable - Following decision of Mesco Airlines Ltd. Versus CST New Delhi [2013 (3) TMI 522 - CESTAT NEW DELHI] - stay grated. Maintenance or repair of aircrafts for the period from 1.1.2008 to 7.10.2008 - Held that:- prior to this period up to March 2008, the appellant had produced evidence to show that M/s. Kingfisher had paid the service tax on these operations and for the subsequent period also M/s. Kingfisher airlines was liable to pay according to the agreement between the parties and moreover M/s. Deccan Charters Ltd. was not an independent entity and cannot be considered as an independent entity unless they receive a permit from DGCA. The issue requires detailed consideration of the provisions - stay granted.

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• 2013 (10) TMI 1267
  Financial difficulty in paying service tax dues - appellants are not disputing the service tax liability at all and she says that the appellants have not paid the amount on the ground that they are facing financial difficulties because M/s. Kingfisher Airlines have not paid their dues amounting to more than Rs.3 crores - Held that:- the service tax collected from other clients have been utilized to tide over the financial crisis arising as a result of non-payment of service charges by one of the clients. Under these circumstances, appellants cannot be said to have made out any case whatsoever for waiver of pre-deposit. Nevertheless, having regard to the difficulties pleaded, we consider it sufficient if the appellant deposits the entire amount of service tax with interest for the purpose of hearing the appeal which is the least they should do. - stay granted in respect to penalty only.

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• 2013 (10) TMI 1266
  Waiver of pre deposit - Port services - extended period of limitation - Held that:- during the relevant period, the issue whether stevedoring services would fall under the category of port services or not, different Benches of Tribunal i.e. in the case of Konkan Marine Agencies and Velji P. & Sons etc. were of the view that their services are not covered under port services, can be held as a bonafide belief. At the same time, we find that some portion of the demand of the tax is within limitation, which, on specific query when the Bench was informed of will be approximately Rs.5 lakhs and he also agreed to deposit the said amount within four weeks for prosecuting the appeal. The appellant is directed to deposit an amount of Rs.5 lakhs within a period of four weeks from today - stay granted partly.

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• 2013 (10) TMI 1265
  Demand - Utilization of more than 20% CENVAT Credit in payment of service tax - Held that:- demand of Rs. 58,30,168/- is on the ground that the appellant utilised CENVAT credit in excess of 20%. Extended period cannot be invoked since, in fact, appellant was filing ST-3 returns regularly which would show the CENVAT credit taken and utilised. In these circumstances, the appellant has made out a prima facie case in respect of this demand - Decided in favour of assessee. Storage and warehousing services - Storage of soya bean meal as agricultural produce - Held that:- as per the definition of ‘agriculture produce’ in terms of the notification, storage of ‘soya bean meal’ in the appellants premises as ‘agricultural produce’, prima facie, cannot be accepted. - As regards limitation, we find that appellant simply claimed exemption without mentioning notification number or further details. Therefore, it would be appropriate to take a view that the appellant has exercised their own judgment to determine their eligibility for exemption - Mere collection of rent cannot be considered as ‘storage and warehousing’ charges. However, ongoing through the invoices, we find that what they charged is stock management charges for storing ‘soya bean meal’ and further, they charged in terms of quantity of ‘soya bean meal’. The invoice does not mention actual space provided at all. Therefore, we find that appellants do not have a case on merits - stay granted partly.

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• 2013 (10) TMI 1264
  Construction of Road - Levy of service tax on facilities constructed created alongside of toll plaza - works contract - Section 65(105)(zzzza) - Taking a view that except for cost of construction for laying of roads, service tax is required to be paid on other facilities, proceedings were initiated. - Waiver of pre deposit - Held that:- appellant has made out a prima facie case in their favour in view of the decisions of the Tribunal in MMK Toll Road Pvt. Ltd. Vs. CST-II, Mumbai [2013 (10) TMI 1263 - CESTAT MUMBAI] - A highway needs to have the kind of facilities which have been provided and we cannot read the definition of ‘works contract’ in an isolated manner. Moreover as submitted by the learned counsel, the toll plaza ultimately gets demolished after recovery of the cost of construction of road by the appellants. It is a temporary structure built for recovery of cost by the appellants. As regards rest rooms etc., they are required to maintain the road and also looking after the toll plaza staff. They may also be used by the drivers. Over all, we find that the appellants have made out a case that all these facilities are part of the highway and therefore prima facie case for waiver has been made out - Archistructural Constructions India Pvt. Ltd. Vs. CCE, Coimbatore [2010 (11) TMI 594 - CESTAT, CHENNAI] - Decided in favour of assessee.

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• 2013 (10) TMI 1263
  Construction of Road - contracts were on Build, Operate and Transfer (BOT) basis. The consideration for the services rendered under these contracts was recovered by collection of toll charges for a fixed tenure and appropriating the same towards the cost incurred. - The case of the Revenue is that collection of toll charges under the contracts comes within the purview of 'Business Auxiliary Services' - Held that:- The activity undertaken by the appellants herein is construction of roads. The same is excluded specifically from the scope of levy of service tax under the category of 'Commercial and Industrial Construction Service' under Section 65(105)(zzq) and 'Works Contract Service' under Section 65(105)(zzzzq). Further, under 'Maintenance and Repair Service' under Section 65(105)(zzg) the activity has also been exempted from levy of service tax and the same has been given retrospective effect from the date of inception of the levy. Thus, it is very clear that the construction and repair of roads have been specifically excluded from the scope of levy of service tax by the Government. The appellants have been providing services of construction of roads. To finance/compensate the cost of construction, the contractors have been allowed to collect toll charges and the toll charges have been collected on their own behalf and for themselves. If that be so, they cannot be said to have rendered any 'Business Auxiliary Service' for someone else. - Prima facie case is in favor of assessee - stay granted.

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• 2013 (10) TMI 1239
  Translation service - Business support service - Demand of service tax - Stay application - Held that:- during the course of investigation, the appellant s representative had stated that they had consulted legal experts and received an opinion that the service provided by them is not covered by the ‘business support service’. Further, in the definition of ‘business support service’ also, the translation as such does not figure as an individual category but has been held to be covered by other transaction processes. The appellant seem to have interpreted this term to mean the one similar to the earlier transactions mentioned in the service and basically they seem to think that translation is not a transaction. In our opinion, this kind of opinions and consideration of definition and consultation with legal experts can give a feeling that they are not liable to pay tax even though a tax payer who is responsible for paying, assessing service qualifying same and paying the tax, cannot be considered and cannot be allowed to take such a view without proper consultation and without proper appreciation of the facts - Prima facie case not in favour of assessee - Stay granted patially.

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• Central Excise

• 2013 (10) TMI 1252
  Activity Manufacture OR Not – purchase of duty paid film - process of lamination or metallization - Passing of Cenvat Credit on Inputs - Revenue was of the view that the respondents were not engaged in manufacture and therefore could not have passed Cenvat credit on inputs to the purchasers of the printed laminated/metalized material – Held that:- The Tribunal has referred to the process of production adopted by the respondent - The respondent first print bare or metalized polyester film purchased from the market i.e. the inputs - Printed films were laminated either in two layers or three layers with the help of adhesive or another chemical - After referring to the process adopted by the respondent, the Tribunal has held that this would be covered by the definition of manufacture under Section 2(f) of the Central Excise Act, 1944 - The process actually undertaken, as recorded by the Tribunal, is not disputed - facts found relating to the process undertaken - There was no substantial question of law arises for consideration - Perhaps the appellant should be satisfied with the reasoning – Decided against Revenue.

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• 2013 (10) TMI 1251
  Maintainability of Appeal to High Court u/s 35L of CE Act 1944 – SSI Exemption – Held that:- Following Commissioner of Central Excise, Panchkula Vs. Special Machine [2009 (8) TMI 143 - PUNJAB AND HARYANA HIGH COURT] - the dispute as to whether the assessee was covered by the exemption notification, was related directly and proximately to rate of duty applicable – thus the appeal on question of law before the High Court would not be maintainable and an appeal u/s 35L of the Central Excise Act, 1944 would be maintainable before the Supreme Court – the only remedy available to the revenue is to file appeal before the Supreme Court u/s 35L of the Central Excise Act, 1944 - Registry is directed to return all the Tax Appeals to the appellant to present it before the competent Court having jurisdiction – Decided against the revenue.

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• 2013 (10) TMI 1250
  Recovery of duty drawback for non realization of Foreign Exchange - Opportunity of being heard – Production of Realization certificate against export of goods - Held that:- The 3rd proviso to Regulation 9 of Foreign Exchange Management (Export of Goods & Services) Regulations, 2000, specifically provides that the Reserve Bank or subject to the directions issued by that Bank in this behalf, the authorized dealer, may, for the sufficient and reasonable cause shown, extend the period of 6 months or 15 months as the case may be - the petitioner is entitled to at least one opportunity to produce the realization certificate as well as the order of extension, if any, passed in favour of the petitioner in terms of proviso to Regulation 9 before the original authority – order set aside – matter remanded back to the original authority – Decided in favour of Appellant

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• 2013 (10) TMI 1249
  Recovery proceedings - circular dated 1-1-2013 – Held that:- Following Bharat Hotels Ltd. vs. Union of India [2013 (5) TMI 654 - DELHI HIGH COURT] - till the decision is taken by the appellate authority, no coercive measure to recover the amount pursuant to the demand notice be taken – Decided in favour of Petitioner.

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• 2013 (10) TMI 1248
  Restoration of Appeal - Opportunity of Being Heard - Whether in the light of the decision of Electronics Corporation of India Limited v. Union of India & Ors. [2011 (2) TMI 3 - Supreme Court] the appeals, which have been dismissed by the appellate authority for want of clearance from the Committee on Disputes constituted in the light of the orders passed in ONGC-II Versus COLLECTOR OF CENTRAL EXCISE [1991 (10) TMI 58 - SUPREME COURT OF INDIA] are required to be restored – Held that:- Permission to prefer appeal has been granted to the Revenue by the Committee of Disputes and same has been denied to the writ petitioner and therefore, the matter was pending before the Tribunal relating to the same issue arising out of the original order but as has been raised by the Revenue only. Denial of opportunity to pursue the appeal to the writ petitioner cannot be justified in the light of the reasons given by the Hon’ble Supreme Court, for which even Hon’ble Supreme Court had to recall its own earlier orders of even constitution of Committee of Disputes - the petitioner’s contention is that in one of the appellate orders, the same issue has been decided in favour of the petitioner and against the Revenue - thus the issue certainly requires consideration by the Tribunal - the Tribunal committed error of law by dismissing petitioner’s application for restoration of appeal, which was dismissed on 10-9-2008 – Decided in favour of Petitioner.

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• 2013 (10) TMI 1247
  Reversal of Cenvat credit – Waiver of Pre-deposit - Whether Goods Manufactured are inputs or capital goods OR not - plates, angles, channels etc. falling under Chapter 72 of Central Excise Tariff were sued in the supportive structures - Held that:- The appellant was entitled to entertain a bonafide belief about their eligibility for CENVAT credit since during a portion of the relevant period there were contrary views taken by different Benches of the Tribunal which came to be finally decided against the assessee in the case of Vandana Global Ltd. Vs. Commissioner of Central Excise, Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] - the appellant had reversed the CENVAT credit and paid the interest on an assurance given by the audit party that if the CENVAT credit and interest are paid, no further proceedings will be initiated - assessee has made out a prima facie case for stay against the recovery during the pendency of the appeal – Stay granted.

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• 2013 (10) TMI 1246
  Show Cause Notice issued to whom – Held that:- The show-cause-notice dated 29.07.1999 issued to M/s. Western Electrical company also indicates that the Western Transformers and two other persons as co notices, there is no doubt as the fact that extended period was invokable in this case as there was suppression of the facts. Penalty under Rule 173Q of Central Excise Rule 1994 - Held that:- Penalty under Rule 173 Q (i) of the Central Excise Rules 1944, can be invoked if and when the ingredients are present which are so in the case - Penalty of Rs. One Lakh is disproportionate, and ends of justice will be met if such penalty is reduced to Rs. 10,000 as there is no doubt that appellant has not maintained statutory records properly – Penalty imposed under Rule 173 Q (i) of the Central Excise Rules, 1944 is reduced to Rs. 10,000/- from Rs. 1 lakh. Penalty u/s 11AC of Central Excise Act 1944 – Held that:- The period from April-1994 to 27.09.1996 will not be covered under the provisions of section 11AC of the Central Excise Act, 1944 for imposition of penalties - the provisions was brought into statute only on 28.09.1996, to that extent, the claim of for not imposition of equivalent penalty for the demand of the duty from April-1994 to 28.09.1996 is valid - Penalty equivalent to the amount of duty payable from April-1994 to 28.09.1996 set aside. Penalty u/s 11AC of Central Excise Act 1944 For the period from 28.09.1996 to March-1998 – Held that:- The appellant had admitted removal of goods by availing ineligible benefit, and not contested the duty liability - Penalty imposed u/s 11AC for the demand of duty on 28.09.1996 to March March-1998 upheld - The amount of duty liability has already been discharged and hence the appellant are eligible to get the benefit of the reduced amount of penalty of 25% of the amount of duty liability - The penalty imposed u/s 11AC of the Central Excise Act, 1944 for the period 28.09.1996 to March-1998 the benefit of section 11AC extended – the appellant directed to pay the penalty @ of 25% of the amount of duty for this period Interest Liability u/s 11AB of the Central Excise Act, 1994 – Held that:- The interest liability need to be worked out for the period post 28.09.1996 till March-1998 - The provision of section 11AB was brought into statute w.e.f. 28.09.1996 - The lower authorities will calculate the interest to be paid by the appellant on an amount of duty liability for the period 28.09.1996 to March 1999 - the appellant is not required to discharge any interest on the amount of duty for the period April-1994 to 28.09.1996 – Decided partly in favour of Assessee.

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• 2013 (10) TMI 1245
  Supply of transformers for setting up a mega power project at Tamnar (Raigarh). - Entitlement for Duty free Exemption under Notification No. 6/2006 - Revenue was of the view that the Project Authority Certificate has been issued under clause 8.2 (g) of Chapter 8 of the Foreign Trade Policy and not under clause 8.2 (f) of the Chapter/Policy – Held that:- Whatever has been stated at serial No.1 of the certificate is not relevant for granting the benefit of Exemption Notification and is relevant only for the purpose of Foreign Trade Policy - Chapter 8 of the Foreign Trade Policy deals with deemed export - Clause 8.2 lists out the categories of supply which will be considered as deemed export for the purpose of Foreign Trade Policy. A bare reading of the clause (f) would indicate that supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of such goods at zero percent duty, is given the benefit of deemed export - clause (g) states that the supply of goods to power projects and refineries even if not covered by clause (f) above will get the deemed export benefit - clause (e) or clause (g) is relevant for granting the deemed export benefit and has no relevance whatsoever for granting exemption under Notification 6/2006-CE - the benefit of the Exemption Notification has been correctly availed - demand of duty set aside - Since the demand of duty had set aside, the interest and penalties on all the notices do not survive – Decided in favour of Assessee.

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• 2013 (10) TMI 1244
  Payment of Duty – Compounded Levy Scheme – Waiver of Pre-deposit - Whether or not a manufacturer under the Rules has the option to pay duty under compounded levy only for the days he intend to run the machines for which intimation as prescribed are given to the department – Chewing Tobacco and Unmanufactured Tobacco Packing Machines - Held that:- Relying upon M/s. Pm Products vs. CCE, Ahmedabad [2013 (10) TMI 1199 - CESTAT AHMEDABAD] - It is not necessary to pay the entire monthly duty first in a month before availing abatement – assessee had made a prima facie case in their favour - complete waiver from confirmed dues and penalties are allowed in these appeals till their final disposal – Stay granted.

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• 2013 (10) TMI 1243
  Demand u/s 11D - Allegation of recovery of duty while availing SSI Exemption - The price charged by the appellant for the medicines remains the same throughout the year even though the appellant is entitled to exemption as an SSI unit and upto the first clearance of Rs.1.5 crores, the appellant does not pay any excise duty – Held that:- The appellant never collected excise duty during the period when he was availing SSI exemption - even though the price was fixed during throughout the year, both the buyer and the supplier had a clear understanding that no excise duty was payable during the period when the appellant was enjoying SSI exemption. The agreement is very clear - Both the buyer and the supplier had understood that during the period when the SSI exemption was available, excise duty is not payable even though the Column 10 of the Schedule showed the excise duty separately – Following Mayfair Polymers Pvt. Ltd. Vs. CCE, Ahmedabad [2007 (9) TMI 519 - CESTAT, AHMEDABAD] - charging of such a fixed price cannot be considered as having included the excise duty during the period when SSI exemption was availed - The appellant is on a better footing in the case – the appellant has made out a prima facie case for waiver - the requirement of pre-deposit waived during the pendency of appeal – Stay granted.

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• 2013 (10) TMI 1242
  Application for Review – Held that:- Revenue’s appeal was dismissed by Hon’ble Supreme Court - it is difficult to entertain prayer of Revenue at this stage - Tribunal has no power to review its own order for which Misc. application is dismissed – Decided against Revenue.

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• 2013 (10) TMI 1241
  Time-Barred Refund Claim as per Section 11B(1) - whether duty paid should be treated as paid under protest – Held that:- The period of duty payment is June 2000 to October 2005, which is clearly made after a period of one year from the payment of duty - Argument of the appellant that a favourable decision taken by the Commissioner with reference to their Gandhar unit should be taken as a deemed protest for the appellants unit is not acceptable as each registered unit is a separate legal entity so as payment of duty is concerned - it cannot be held that duties were paid under protest by the appellant - Commissioner (Appeals) has correctly rejected the appeal filed by the appellant - refund claim has been correctly held as time barred – Decided against Assessee.

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• CST, VAT & Sales Tax

• 2013 (10) TMI 1276
  Rejection of application to set aside ex parte order - Petitioner could not appear in previous hearing due to ill health - Authority rejected case as time barred - Held that:- impugned order passed by the appellate authority cannot be sustained. Admittedly, the petitioner’s appeals were dismissed vide orders for want of prosecution - It was necessary for the appellate authority to have decided the said applications filed under Rule 61 (4) of the VAT Rules 2006, on merits. However the appellate authority has wrongly applied the time limit fixed under Section 46 (8A) of the VAT Act for deciding the appeals. In our considered view, the time limit fixed under Section 46 (8A) of the VAT Act, will not override or curtail the right of the appellant to invoke provisions of readmission/rehearing of the appeal which suffered dismissal for want of prosecution under Rule 61 (4) of the VAT Rules, 2006. On invocation of the provision of Rule 61 (4) the appellate authority is duty bound to consider the prayer made in it irrespective of the expiry of time fixed under Section 46 (8A) for deciding the appeal as the both the provisions operate in different spheres. The view taken by the appellate authority if allowed to stand, would render provisions of Rule 61 (4) of the VAT Rules, 2006, to be redundant, as in the cases when the appeal is dismissed for want of prosecution just before expiry of 12 months, the restoration application which will naturally be filed after 12 months would not become maintainable, which in our considered view cannot be the intention of the legislature - Decided in favour of assessee.

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• 2013 (10) TMI 1275
  Sales tax liability - Sale of rice - Held that:- units of Khadi Gram Udyog Board were entitled for exemption of trade tax on the sale of rice under the Government Order dated 31.01.1985 and Government Order dated 27.02.1997. Accordingly, the exemption from trade tax liability on the sale of rice claimed on the basis of Government Order dated 27.02.1997, was rightly given - sale of rice is not exempted Khadi and Gramodyog units from imposition of trade tax after 1.10.2004 - Decided against assessee.

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• Wealth tax

• 2013 (10) TMI 1277
  Business premises let out - Whether assessable as assets under section 2(ea) of Wealth tax or not - Held that:- The premises were not occupied by the assessee for the purpose of business or profession . The rental income from letting out of the properties had been offered by the assessee as income from house property - Letting out of properties cannot be considered as business of the assessee - The premises could also not be considered as commercial establishment or commercial complex - These premises were not covered by exclusions provided under section 2(ea)(i) – Decided against assessee.

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• Indian Laws

• 2013 (10) TMI 1262
  Tenders for grant of leasehold rights - Held that:- It is not in dispute that the open spaces available at Doraisamy Reddiar Market is public property. Therefore, the same cannot be disposed of by private negotiations and the members of the appellant, who have unauthorisedly occupied the open spaces cannot be allowed to retain those spaces. Respondent No.2, which is an institution of self- Government (Article 243P(e) read with Article 243Q of the Constitution), is required to undertake and execute several schemes i.e. water-supply, lighting, drainage, sewerage, laying and maintaining of public streets etc. for the benefit of the residents of the municipal area. For fulfilling its obligation under the 1920 Act and carrying out the duties and functions which may be entrusted to it under Schedule XII of the Constitution, respondent No.2 requires substantial fund. The contribution made by the State Government to municipal bodies, like, respondent No.2 is negligible. Therefore, they are required to augment the sources by grant of lease etc. of their properties by auction or by adopting appropriate mechanism consistent with the doctrine of equality and no fault can be found with the exercise undertaken by respondent No.2 to invite tenders for holding auction for the open spaces available in Doraisamy Reddiar Market - there cannot be any policy, much less, a rational policy of allotting land on the basis of applications made by individuals, bodies, organisations or institutions dehors an invitation or advertisement by the State or its agency / instrumentality. By entertaining applications made by individuals, organisations or institutions for allotment of land or for grant of any other type of largesse the State cannot exclude other eligible persons from lodging competing claim. Any allotment of land or grant of other form of largesse by the State or its agencies/instrumentalities by treating the exercise as a private venture is liable to be treated as arbitrary, discriminatory and an act of favouritism and/or nepotism violating the soul of the equality clause embodied in Article 14 of the Constitution - respondent No.2 did not commit any illegality by inviting sealed tenders for conducting open auction for grant of lease of the spaces occupied by members of the appellant - Decided against Appellant.

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