TMI Tax Updates - e-Newsletter
November 22, 2013

Case Laws in this Newsletter:

Income Tax Customs Law of Competition Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Charitable institutions- not conducting affairs on commercial lines with motive to earn profit, and fulfilling objects of public utility can be allowed exemption even if profit is earned - CIT vs. Lucknow Development Authority

   By: DEVKUMAR KOTHARI

2. FINANCIAL STATEMENT AND BOARD'S REPORT UNDER NEW COMPANY LAW

   By: Dr. Sanjiv Agarwal

News

1. Minutes of the October 23, 2013 Meeting of the Technical Advisory Committee on Monetary Policy

2. RBI releases “Statistical Tables Relating to Banks in India 2012-13”

3. Report on Trend and Progress of Banking in India – 2012-13

4. Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

5. Suggestions Invited for the 5TH and 6TH Tranche of Draft Rules Under the Companies Act 2013

6. Draft Rules (6th phase) under Companies Act 2013

Notifications

Customs

1. 112/2013 - dated 21-11-2013 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from November 22, 2013

Highlights / Catch Notes

Income Tax

• Court Rules Public Deposits in Financial Schemes Are Non-Taxable as Revenue Receipts, Assessee Acts as Custodian.

  Case-Laws - HC : Capital receipt or revenue receipt – financial schemes in which deposits were collected from the Public - The assessee is merely a custodian of the deposit - not taxable as revenue receipt - HC
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• Section 292BB Not Applicable to Assessment Year 2007-08; Applies From 2008-09 Onwards.

  Case-Laws - HC : Applicability of section 292BB – The new provision is applicable for the assessment year 2008-09 and certainly not applicable for the assessment year under consideration i.e. 2007-08 - HC
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• High Court Rules Trust Deed Need Not Include Dissolution Clause for Section 80G(5) Exemption Certificate Eligibility.

  Case-Laws - HC : Dissolution clause in Trust deed – Exemption u/s 80G - For the purpose of the exemption certificate under section 80G(5) there need not be any dissolution clause in the trust deed - HC
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• Court Rules Unaccounted Investments Cannot Be Attributed Without Direct Search; Third-Party Evidence Insufficient for Financial Additions.

  Case-Laws - HC : Unaccounted investment – No search was carried out on the appellant. - The third person evidence cannot be base for addition on the basis of any entries therein. - HC
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• Income Tax Dispute: Firm's Role as Representative Excludes Partnership Taxation on Managed Companies' Income.

  Case-Laws - AT : The assessee firm which is only a representative of these companies and is carrying out its obligation for filing of the return of income as well as managing the entire affairs - Income per-se cannot be taxed in the hands of the assessee as a partnership firm but as a representative of these two companie - AT
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• High Court Remands Case for Reconsideration After Rejection of Tax Certificate Application u/s 197 Without Explanation.

  Case-Laws - HC : No deduction of tax certificate u/s 197 - No reasons were assigned as to why the application of the petitioner has been rejected - matter remanded back for re-consideration - HC
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• Good Faith Share Transactions Not Fraudulent Despite Broker's Unfair Practices with Others.

  Case-Laws - AT : LTCG - merely on the basis of the reason that share broker was involved in unfair trade practice in collusion with others, where a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. - AT
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• Leather Testing Fees for Non-Residents Abroad Not Taxable in India; No Disallowance u/s 40(a)(i) IT Act.

  Case-Laws - AT : Leather testing charges paid to non-resident - services were rendered outside India even if utilized in India, the impugned leather testing fees was not taxable in India - No disallowance u/s 40(a)(i) - AT
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• Section 68 Addition Unwarranted: No Inquiry or Evidence by Assessing Officer on Share Application Money Details Provided by Assessee.

  Case-Laws - AT : Addition u/s 68 – Share application money - where assessee has submitted the details and AO has not conducted any enquiry or has no material in his possession to prove it bogus, no addition u/s 68 - AT
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• Leave Salary Deduction u/s 43B(f) Requires Actual Payment, Mere Provision Not Sufficient for Tax Benefits.

  Case-Laws - AT : Provision for leave salary – The deduction u/s 43B(f) cannot be allowed on the making of a mere provision unless the amount is actually paid - AT
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• Cash Discovery Triggers Rejection of Accounts; Unexplained Credit Addition Permitted Under Income Tax Act Section 68.

  Case-Laws - AT : Cash found during search – rejection of books of accounts - An assessment by estimating income would not preclude an addition on account of unexplained credit u/s. 68 of the Act - AT
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Customs

• High Court Upholds Penalties on Exporters for Defaulting on AEPC Commitments, Citing Public Interest.

  Case-Laws - HC : Despite releasing additional quota to the exporters, the Government could not achieve the desired results and, therefore, imposing penalty on the defaulting exporters in terms of the undertaking given by them to AEPC sub-serves a valid public interest - HC
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• Interest on Differential Duty for Copper Imports Not Applicable Before July 13, 2006 Due to Lack of Legal Provision.

  Case-Laws - AT : Import of copper concentrate - Demand of interest - Prior to 13.7.2006 there were no provision for demand of interest on differential duty on finalization of provisionally assessed Bill of Entry. - AT
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• Appellant's Early Notification to Revenue Authorities Prevents Mis-declaration Charge for Wrong Shipment Before Bill of Entry Filing.

  Case-Laws - AT : Appellant has himself brought the fact of wrong shipment to the notice of the Revenue authorities, without filing the Bill of entry, subsequent filing of bill of entry by him cannot be held to be a cause for mis-declaration - AT
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• Confiscated Goods and Duty Recovery: Lack of Proof from Manufacturer Results in Penalty.

  Case-Laws - AT : Duty drawback - Confiscation of goods - no proof that goods procured from supporting manufcturer - recovery of drawback with penalty confirmed - AT
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• Interest on Refunds Starts 3 Months After Application, Not Refund Order Date.

  Case-Laws - AT : Interest on Refund - liability to pay interest commences from the date of expiry of three months from the date of receipt of application for refund and not on the expiry of the said period from the date on which order of refund is made - AT
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• Importer Can't Be Denied Refund for Not Claiming Exemption Under Notification 29/2010-Cus During Importation.

  Case-Laws - AT : Refund of Special Additional Duty (SAD) - whether an importer can be penalized for not having claimed exemption under Notification No. 29/2010-Cus at the time of importation by refusing to grant refund under Notification No. 102/2007-Cus - Held No - AT
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Service Tax

• Assessee Exempt from Reverse Charge Tax on Tankers per Section 66A as Tankers Not in Indian Territory.

  Case-Laws - AT : Supply of tangible goods (STGU) - Since the tankers were not located during the entire duration of their use by the assessee, within the territory of India, the assessee is not liable to remit tax, under the reverse charge mechanism under Section 66A - AT
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• CESTAT Recognizes Assessee's Case but Orders Pre-Deposit; Grants Full Stay Despite Directive.

  Case-Laws - HC : In spite of the observations and findings that prima facie case is in favor of assessee, CESTAT directed the appellant to make pre-deposit - full stay granted. - HC
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• High Court Dismisses Writ Petition Against Service Tax Demand Letter as Premature; Await Further Proceedings.

  Case-Laws - HC : Challenge to the letter issued by the Superintendent, Service Tax requesting the petitioner to deposit the amount of service tax short paid/not paid as detected by the Audit - writ peitition dismissed being premature - HC
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• Service Tax Not Applicable on Games of Chance; Refunds Permitted for Tax Deposited Under Protest.

  Case-Laws - HC : Levy of service tax on the activity of promotion, marketing, organizing or in any other manner assisting in organizing game of chance including lottery - refund of service tax deposited under protest allowed to be refunded - HC
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• High Court affirms Parliament's power to impose service tax on construction services, including materials in composite contracts.

  Case-Laws - HC : Construction services - challenge to the levy on the ground that the Parliament cannot impose service tax on material or goods used in execution of works/composite contract - levy of service tax upheld - HC
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• High Court Rules Lottery Ticket Transactions Exempt from Service Tax under Finance Act Amendments; Classified as Actionable Claims.

  Case-Laws - HC : Transactions in lottery tickets are not liable to service tax under the provisions of the Finance Act, 1994, as amended by the Finance Act, 2012, under negative list, being actionable claim - HC
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• High Court: Central Government Can't Levy Service Tax on Lottery Promotion Activities, Deems it Unconstitutional.

  Case-Laws - HC : Constitutional validity of levy of service tax on “promotion, marketing, organising or in any other manner assisting in organising game of chance, including lottery - Central Government has no power of levy service tax - HC
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Central Excise

• Egg Shell Powder by 100% EOU qualifies for exemption benefits under Notification No. 23/2003, authorities confirm eligibility.

  Case-Laws - AT : 100% EOU - Egg Shell Powder Manufactured Item or not – Benefit of exemption of Notification No.23/2003 – there is no reason to deny the benefit of this notification to Egg Shell Powder - AT
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• Coal India Wins Refund Case: Excess Amount on Tax Invoice Adjusted with Future Payments, Highlighting Unjust Enrichment and Price Revision.

  Case-Laws - AT : Eligibility for refund – Unjust enrichment - price revision - the document said to be credit notes is actually a tax invoice showing the amount excess collected to enable Coal India to adjust it with the future payments - refund allowed - AT
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• Appellant Granted CENVAT Credit for Services on Fly Ash Extraction Plant at Thermal Power Facility.

  Case-Laws - AT : Services have been availed for erection, installation & commissioning, repairing and maintenance and insurance of the fly ash extraction plant installed by the appellant at the Thermal Power Plant - cenvat credit allowed - AT
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• No Penalty for Appellant Due to Merchant Manufacturer's Incorrect Fabric Declaration.

  Case-Laws - AT : Under-declaration - processed fabric – Job Work - The under-declaration was on account of wrong declaration given by the merchant manufacturer and not the appellant - no penalty - AT
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• Penalty Imposed u/s 11AC for Discrepancy in RG-1 Register; Sufficient RG-23A Balance Not a Defense for Duty Evasion.

  Case-Laws - AT : Penalty u/s 11AC - Shortage of finished product vis-a-vis balance recorded in the RG-1 register – the appellant having sufficient balance in the RG-23A register, cannot be the ground for concluding that there was no intention to evade the payment of duty. - AT
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• Cenvat Credit Denial on Duplicate Invoices Ruled Incorrect; Penalties for Wrong Credit Claims Overturned.

  Case-Laws - AT : Cenvat Credit - duty paying documents - denial of Cenvat Credit on the basis of Carbon copy/extra copy of the invoices and imposition of penalty for taking wrong Cenvat Credit is not correct - AT
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• Cenvat Credit Approved for Welding Electrodes Used in Machinery Maintenance, Recognized as Necessary Inputs for Operational Efficiency.

  Case-Laws - AT : Eligibility for Cenvat credit of the welding electrodes used for repair and machinery of the plant and machinery – credit allowed - AT
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• Unused Cenvat Credit Inputs Removed as Waste Must Match Original Credit Amount Claimed.

  Case-Laws - AT : The liability of the assessee at the time of removal of the Cenvat credit availed inputs as obsolete inputs or waste, which are nothing but the inputs cleared as such without having been used, would be the Cenvat credit originally taken - AT
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VAT

• Trade Tax Exemption on Rice Sales: 2004 Notification Applies Only Prospectively, Not Retrospectively.

  Case-Laws - HC : Reopening of assessment - Exemption of trade tax on the sale of rice - The notification dated 30.09.2004, which carries exclusion of some goods will apply prospectively and not with retrospective effect. - HC
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Case Laws:

• Income Tax

• 2013 (11) TMI 979
  Capital receipt or revenue receipt – financial schemes in which deposits were collected from the Public - Held that:- Following Commissioner of Income Tax vs. Sahara Investment India Limited [2003 (11) TMI 57 - ALLAHABAD High Court] - No part of the deposit is the income of the assessee. The assessee is merely a custodian of the deposit. The income arises from the deposits i.e. dividend, interest etc- Although any amount which was earned by the assessee on these deposits made with it, minus any legitimate expenses incurred in the business, would amount to income of the assessee the deposits themselves could not amount to income - There was no forfeiture of any deposit and did not discharge the onus which was cast on it to prove that the deposits were revenue receipts and therefore, liable to tax – Decided against Revenue.

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• 2013 (11) TMI 978
  Applicability of section 292BB – Held that:- Notice was served after 1.4.2008 i.e., after the date of incorporation of Section 292BB of Income Tax Act - CBDT Circular No.549 of 1989 concedes that if the assessee after furnishing the return of income does not receive a notice under section 143 (2) of the Act within the stipulated period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return - The provision of Section 292BB of the Act has been inserted by the Finance Act, 2008 w.e.f. 01.04.2008 - The new provision is applicable for the assessment year 2008-09 and certainly not applicable for the assessment year under consideration i.e. 2007-08 – Decided against Revenue.

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• 2013 (11) TMI 977
  Bad debts or business loss – Held that:- The assessee miserably failed to prove that the present transaction was in the nature of a `business transaction' - The amount given as advance was never given with the intention of doing any business in "real estate". The assessee never intended to carry on such business of real estate - This solitary transaction of paying Rs.37.50 lakh to M/s.ZEPL was with the object or making an "Investment" and the non-receipt of refund of Rs.15 lakh out of such transaction cannot be characterized as anything but a loss of capital nature – Following Bengal & Assam Investors Ltd. VS. CIT [1965 (11) TMI 31 - SUPREME Court] - The object clause in M/A is not decisive because question is not what business company professes to carry on but what business it actually carries on – Decided against assessee. Sale of shares – Business income or capital gain - Held that:- The assessee valued such shares at cost price in the respective balance-sheets from the date of purchase - If these shares had been treated as "stock-in-trade", then these would have been valued at `Cost or market price, whichever is less' - The fact that the mistake in disclosing these shares as "Stock-in-trade" was rectified by way of the Board's resolution also substantiates the claim that these shares were in fact held as "Investment" - Nomenclature of a transaction is not relevant. It is the real character of the transaction which is looked into - The facts and circumstances of the case should be considered - The period of holding of more than two years and the valuation of such shares at cost price in the earlier balance-sheet shows that the shares were in fact held as "Investment". Once the shares are held as `Investment, any profit or loss from their transfer has to be considered under the head `Capital gains' and not as `Business income' – Decided against Revenue. Disallowance u/s 14A – Held that:- Following Dhanuka & Sons VS. CIT [2011 (4) TMI 861 - CALCUTTA HIGH COURT] - Disallowance u/s 14A is attracted even when the securities fetching exempt income are held as stock in trade. Following Godrej & Boyce Mfg. Co. Ltd. VS. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D of the IT Rule, 1962 is applicable from AY 2008-09 - The disallowance u/s. 14A of the Act can be made on "reasonable basis" in the years anterior to AY 2008-09 – For the AY 2006-07 the disallowance is required to be made u/s. 14A of the Act on some reasonable basis - The Kolkata Bench of the Tribunal has sustained addition in several cases u/s. 14A at the rate of 1% of the exempt income in the years prior to the A.Y. 2008-09 – Partly allowed in favour of assessee.

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• 2013 (11) TMI 976
  Dissolution clause in Trust deed – Exemption u/s 80G - Held that:- Earlier exemption certificate was granted to the assessee / trust which was valid for the period from 23rd May 2001 to 31st March 2004 - For the purpose of the exemption certificate under section 80G(5) there need not be any dissolution clause in the trust deed – Decided against Revenue.

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• 2013 (11) TMI 975
  Penalty u/s 271(1)(c)- Held that:- When the addition has been set aside in the quantum appeal, there is no question of levy of penalty under section 271(1)(c) of the Income Tax Act - Decided against Revenue.

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• 2013 (11) TMI 974
  Registration u/s 12AA – Held that:- In view of the magnitude of the income in the previous year relevant to assessment year under appeal, the charitable activities carried out cannot be called as low magnitude – The assessee trust is in the first year of its operation – Decided against Revenue.

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• 2013 (11) TMI 973
  Penalty u/s 271(1)(c) – Set off of business loss - Held that:- Due to bonafide mistake of the Tax Consultant of the assessee, the claim of set off of carry forward business loss was made against the income from other source during the year under consideration, which was not admissible - Immediately when it was brought to the notice of the assessee, a revised working of the total income was furnished - In absence of any supporting Affidavit of the Chartered Accountant that it was his bonafide mistake, both the learned CIT(A) as well as ITAT have not considered the aforesaid submission - The assessee has placed on record before the authorities Affidavit of the Chartered Accountant submitting that it was his bonafide mistake – The issue was restored for fresh decision.

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• 2013 (11) TMI 972
  Unaccounted investment –Held that:- During the search carried out in the case of one Shri Vikas A. Shah agreement to sell of the land was found - Third party statement of Vikas A. Shah was used without allowing cross examination of third party which is against the principle of natural justice. This land had registered document and the value has been accepted to be correct by registering authority to the charge of stamp duty. There was no material or evidence that any on money was paid by the appellant on the transaction - The statement given by Vikas A. Shah was self service statement without any supporting evidence - No search was carried out on the appellant. The seized papers were found in the possession of Shri Vikas A. Shah. The third person evidence cannot be base for addition on the basis of any entries therein. The order passed by the ITAT in the case of the co-purchaser-Abhalbhai Arjanbhai Jadeja was further carried before this Court - When in the case of the co-purchaser, similar addition was deleted by the CIT(A) - The tribunal has not committed any error in dismissing the appeal preferred by the revenue and consequently confirming the order passed by the CIT(A) deleting the addition of Rs.92,00,000/- made on account of unaccounted investment – Decided against Revenue.

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• 2013 (11) TMI 971
  PF and ESIC – Belated payments – Held that:- Following Commissioner of Income Tax Vs. Alom Extrusions Ltd, reported in [2009 (11) TMI 27 - SUPREME COURT] - The assessee was entitled to the exemption as the amount was paid during grace period permissible / available under the Provident Fund Act - The asseessee shall be entitled to exemption / deduction under section 43 to the extent payment was made within the grace period – Amendment to section 43B apply retrospectively with effect from 1st April, 1988 - Decided against Revenue.

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• 2013 (11) TMI 970
  Taxability of freight receipts – Held that:- The assessee firm is the managing owner and in that capacity only, it manages the affairs of these two companies for which it is remunerated as per the relevant terms agreed between the parties - It cannot be held that whatever income accrues during the carrying on such business belongs to the assessee firm - The entire infrastructure including the vessels which are deployed in the international traffic belongs to the two companies, the income accruing from exploiting / deployment of such assets / vessels cannot belong to the assessee firm - The assessee can be compared to a CEO of a company who is managing the affairs of the company and this does not lead to any inference that the income of the company belongs to the CEO - The assessee is only representative and the actual shipping business and freight receipts belong to these two companies - The assessee firm is separate and distinct from two companies and any income accruing on account of shipping operations does not belong to the assessee, but to these two companies only - The assessee firm which is only a representative of these companies and is carrying out its obligation for filing of the return of income as well as managing the entire affairs - Income per-se cannot be taxed in the hands of the assessee as a partnership firm but as a representative of these two companies – Decided against Revenue. Sharing of global software cost - Payments received from gropup company Maersk India Pvt. Ltd – Held that:- The assessee is not rendering any service of managerial, technical or consultancy to its agent or group entities by allowing its group companies to be usage of software. The assessee's main income is only from freight receipt received from operations of ships and it is not providing any technical service to them. It has developed a software for running of shipping business globally in a more effective and efficient manner and access of such software has been provided to various agents / group companies - They are reimbursing the cost to the assessee without any mark-up. Such a recovery of a cost cannot be held to be fees for technical services - The cost recovered from the various agents/ group companies towards usage of software are directly connected with the shipping operations then the same has to be treated as covered under Article-9(1) and, hence, it cannot be taxed in India – Following assessee's own case right from the assessment year 2001-02 to 2007-08 - Such payments received by the assessee towards recovery of cost is not fees for technical services – Decided against Revenue. Management fees received and the reimbursement of expenditure – Held that:- The payment has been made by non-resident company i.e., two Danish companies to another non-resident i.e., a partnership firm established under the laws of Denmark - Since the payment has been made from one non- resident to another non-resident in connection with the entire global business in Denmark only - Such a payment can be taxed in India either as fees for technical services or as royalty - By virtue of Article-13(6), such a payment cannot be taxed in India, because it has nothing to do with the MIPL as the main criteria that such a payment has to be deductible in the hands of the P.E. is not at all applicable in the present case - The treaty benefit is available to the assessee - Decided in favour of the assessee. Treaty benefit under India and Denmark DTAA – Held that:- If the income of the partnership firm is fully taxed in the other contracting State (say, India) and the same income is also taxed in the hands of the partners in the resident State (say, Denmark), then it will result into double taxation - The partnership firm is a transparent entity but once its income and profit is taxed in the hands of the partners, the treaty benefit should be extended to the partners - Following Linklaters LLP Versus ITO [2010 (7) TMI 535 - ITAT, MUMBAI] - The assessee firm is entitled for the treaty benefit and if any such income of the assessee is not liable for tax under the Articles of the treaty, the benefit has to be given - The resident State has a right to tax the income of the partnership firm irrespective of the fact that the same is being taxed from the partners - It has to be treated as fiscal domicile of that State within Article-4 – Decided in favour of assessee. Interest under section 234D – Held that:- Following CIT v/s Reliance Energy Ltd. [ 2013 (10) TMI 280 - SUPREME COURT] - Having regard to the legal position which has been clarified by the Parliament by insertion of Explanation (2) in Section 234D - Section 234D cannot be applied retrospectively – Decided against assessee.

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• 2013 (11) TMI 969
  No deduction of tax certificate – Held that:- The application made by the petitioner under Section 197 has been rejected without giving details as to the outstanding demand and as to whether the petitioner's case falls within the scope of section 197 and the rules made thereunder or not - No reasons were assigned as to why the application of the petitioner has been rejected - Revenue is directed to reconsider the application made by the petitioner in the light of the various materials which have been placed by the petitioner and in accordance with law – The issue was restored.

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• 2013 (11) TMI 968
  Long term capital gain - Purchase and sale of shares Genuine transaction or not Held that:- Following Arun Kumar Agarwal (HUF) Others [2012 (8) TMI 398 - JHARKHAND HIGH COURT] - Where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. No suspicion can be raised when the shares were purchased years before the unusual fluctuation in the share price - The shares of some of the companies were purchased by the assessees even five years ago from the time of sale and those purchasers were already disclosed in the Balance Sheet of the assessee - The assessees had held the shares much prior to 12 months of the sale of the shares Decided against Revenue.

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• 2013 (11) TMI 967
  Transfer pricing adjustments - TPA - ALP - Selection of five additional companies arbitrarily – Held that:- The TPO is very much within the statutory limitations in picking up the data for the last three years including that of the current year (AY 2008-09) for TP study. Therefore, AY 2007-2008 falls within that limitation. Therefore, no fault can be found on this - Ld Counsel has not brought any evidence to suggest that data of these companies used for the TP study relates to the AY 2007-2008 and not of the AY 2008-2009 – No evidence was not brought to our notice to demonstrate that the FAR analysis, PLIs etc of these additional 5 comparables considered by the TPO in that case relate to that of the AY 2007-08 - Decided against assessee. Inappropriate filters for screening companies – Turnover filter, employee cost and onsite revenue - Held that:- On the filter relating to providing maximum turnover limit when the minimum turnover limit is proscribed, the comparables Infosys Technologies Ltd and Wipro Ltd are the target companies - The issue is not adjudicated by revenue authorities meaningfully - The TPO should have provided maximum limits too and he should not have pickup up the comparable such as Infosys and Wipro Ltd which are giants with huge turnovers - If these two companies with high turnover and margins are excluded, the assessee PLI is at arm's length and consequently, the TP adjustments are not required – The issue was remanded back for fresh adjudication. Functionally comparable companies – Held that:- The giant companies namely, Infosys Technologies and the Wipro Ltd are not good comparables on the grounds of the nature of services, risk profile, revenues, ownership of intangibles, onsite vs offshore works, expenditure on advertising, sales promotion and R& D developments etc - The onus is on the assessee to demonstrate that the turnover' factor has impact on the operating profits' of the company - The orders of AO/TPO/DRP do not contain reasoning for inclusions of these two comparable - They do not contain any reasoning rejecting the objections raised by the assessee - On the issue of giantness – It is a generic function and the turnover constitutes one of the factors contributing to the giantness - Assessee needs to demonstrate that the turnover factor influences the operating profits of the said comparables – The issue was remanded back for fresh adjudication. Selection of comparable companies – Non consideration – Held that:- Loss making companies should not be deemed as good comparable considering the TNMM method - Loss and super profits are the extremities and the onus is on the assessee to explain the reasons with evidences to substantiate these extreme results in loss and super profits - As per the OECD TP guidelines, the losses or unusual profits/losses constitute extreme results and such results demands further examination into the reasons for such results - If such examination results in detection of the cogent reasons causing such losses there is need for adjustments to the margins or exclusions of that case for the purpose of comparability studies – Following Willis Processing Services (I) (P.) Ltd. Versus Deputy Commissioner of Income-tax 2(3), Mumbai [2013 (3) TMI 415 - MUMBAI TRIBUNAL COURT] - Decided against assessee. Operating Margins – Held that:- The TPO considered the interest on the loan as the non-operating one and he considered the related foreign exchange loss on interest on loan as the operating expense – The foreign exchange loss on interest on loan warrants a similar treatment - Decided in favour of assessee. Working capital and risk adjustments – Held that:- The orders of the Revenue do not contain the relevant analysis before rejecting the claim of the assessee in this regard - The order of the DRP and TPO in this regard was non-speaking order – The issue was remanded back for fresh adjudication.

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• 2013 (11) TMI 966
  Leather testing charges – paid to non-resident - Tax not deducted at source - Held that:- Following Channel Guide India Ltd. v. ACIT [2012 (9) TMI 95 - ITAT MUMBAI] – The law cannot cast the burden of performing the impossible task of performing tax withholding obligations with retrospective effect, and, accordingly, the disallowance under section 40(a)(i) cannot be made in a situation in which taxability is confirmed only as a result of retrospective amendment of law - The amount paid to the foreign enterprise was not taxable in India in the light of the legal position at that point of time - It became taxable in India only as a result of the retrospective amendment in Section 9(1), the said payment cannot be disallowed by invoking section 40(a)(i) - It is only as a result of the amendment in Section 9(1), by the virtue of Finance Act 2010, that amount can be said to be taxable in India - Even though the amendment is said to be merely clarifiactory in nature – Following the case of Ishikwajima Harima Heavy Industries Ltd. v. DIT [2007 (1) TMI 91 - SUPREME COURT] and in view of the fact that services were rendered outside India even if utilized in India, the impugned leather testing fees was not taxable in India - The disallowance under Section 40(a)(i) cannot be invoked on the facts of this case – Decided in favour of assessee.

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• 2013 (11) TMI 965
  Provision for bad debts or trading loss – held that:- claim of bad debts which is a provision made in the books of account not allowed - Regarding claim of trading loss, . If a bad debt cannot be allowed as a deduction on the general commercial principles, then how a trading loss could be allowed, specially when could not be supported by specific evidences. If the assessee wanted to claim bad debt as a trading loss then it was accepted to place on record the supporting evidences. It is worth to quote an observation of the A.O - Decided against the assessee. Deduction u/s 80HHC - Held that:- In the present case there was no export turnover of the impugned amount of bad-debt so no question to consider the same for the deduction u/s 80HHC - The assessee was asked to furnish the computation of deduction u/s 80HHC but at all stages of proceedings the assessee had not furnished the same - The four ingredients for allowance of deduction u/s 80HHC have not been fulfilled in the present case - The sales should have been shown in either year under consideration or past years and over which on the profit the assessee ought to have got the benefit of deduction u/s 80HHC – Deduction not permissible – Decided against assessee. Penalty u/s 271(1)(c) – Held that:- The assessee had not appeared before the Revenue Authorities - In the light of the order now pronounced by department pertaining to the quantum addition, the assessee deserves right to explain his case pertaining to the concealment of penalty to learned CIT(A) – The issue was restored for fresh decision.

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• 2013 (11) TMI 964
  Addition u/s 68 – Share application money received - Held that:- Following CIT vs. Lovely Export [2006 (11) TMI 121 - DELHI HIGH COURT] - If the identity of the shareholders have been established, even if there is a case of bogus share capital, it cannot be added in the hands of the company unless any adverse evidence is not on record. In the instant case the appellant has provided evidence in the form of PAN, ROC details, copy of IT return filed and copy of confirmation and affidavit to establish the genuineness of the transaction – Following Fair Finvest Ltd [2012 (12) TMI 170 - DELHI HIGH COURT] - Where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders' register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon - No addition can be made in the hands of the company under sec.68. In this case - Except asking the assessee to produce the directors 8 days prior to framing the assessment no inquiry what-so-ever has been initiated by assessing officer - Neither any summons u/s 131, notice u/s 133(6) or any cross inquiry of the investors whose entire income-tax record was furnished by the assessee was ever conducted by the assessing officer - There is no reference to any issuance of summons u/s 131 or notice u/s 133(6). In the absence of any inquiry or any adverse report based thereof, the plethora evidence furnished by the assessee cannot be brushed aside in a summary manner – Decided against Revenue.

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• 2013 (11) TMI 963
  Provision for leave salary – Held that:- SC has stayed the decision of CIT Vs. Exide Industries Ltd [2007 (6) TMI 175 - CALCUTTA High Court] wherein it was held that, the amendment to section 43B by way of insertion of clause (f), as unconstitutional. - The deduction u/s 43B(f) cannot be allowed on the making of a mere provision unless the amount is actually paid - The assessee has admittedly not made the payment of the amount – Deduction cannot be allowed – Decided against assessee.

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• 2013 (11) TMI 962
  Disallowance u/s.14A – Held that:- Following CIT vs. Reliance Industries Ltd. [2009 (4) TMI 516 - Bombay High Court] - The onus to establish that the indirect expenditure has no bearing on the income not forming part of the total income is squarely on the assessee, failing which Rule 8D will apply subject to the expenditure actually incurred and claimed would follow – The issue was restored for fresh decision.

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• 2013 (11) TMI 961
  Disallowance u/s 40A(2)(b) – Interest paid to sister concerns - Held that:- Outside parties had also supplied goods and services to assessee to whom no interest had been paid for delayed payments - Payments of interest to sister concerns is apparently excessive compared to market value - CIT(A) has however allowed relief on the ground that interest payment made have been inbuilt into the price charged by the sister concerns - Prices charged by the sister concerns were not favourable to the assessee compared to other parties - The order of CIT(A) giving relief cannot be upheld - This aspect requires fresh consideration at the level of AO as the same had not been examined either by AO or by CIT(A) – The issue was restored for fresh consideration. Addition u/s 68 – Loan taken - Held that:- Necessary details and evidence in support of the transactions had been filed before CIT(A) which had also been sent to the AO for verification and report - The assessee has filed confirmation from the party along with PAN No. of the party which have been placed on record - The assessee has also filed copy of ledger account in the books of the assessee as well as copy of the assessee's account in the books of the other party - Copy of the bank account in which these transactions were recorded had also been filed along with reconciliation statement - The loan taken by the assessee was as per hire purchase agreement, copy of which had also been filed - The assessee had discharged the burden of explaining the transactions satisfactorily with support of documentary evidences – Decided against Revenue.

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• 2013 (11) TMI 960
  Cash found during search – rejection of books of accounts - Held that:- The assessee has not produced books of accounts before AO and CIT(A) – Following CIT v. Devi Prasad Vishwanath Prasad [1968 (8) TMI 5 - SUPREME Court] - An assessment by estimating income would not preclude an addition on account of unexplained credit u/s.68 of the Act - There is no question of estimating income upon rejection of books of account as the same were never produced before the A.O. - The income being assessed without reference to, and in disregard of, the assessee's book results – The issue was restored for fresh decision.

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• Customs

• 2013 (11) TMI 1013
  Import of timber - Notification No.102/07 - Refund of SCVD paid upon sale of the goods in local market (SAD) - Whether the respondents fulfilled all the conditions of exemption notification dated 14.9.2007 or not - Held that:- whether the conditions are to be satisfied or not, has to be viewed from attending facts and circumstances of the case. The words "when imported into India for subsequent sale" or "the sale of said goods", cannot be seen in isolation. It is not in dispute that except for the above mentioned objection of the department, all other conditions specified in the exemption notification, have been fulfilled by the respondents. It is also not in dispute that the proper documents were filed and that the goods were imported after paying the SCVD, upon which ultimately the goods were sold in the local market and Sales tax or VAT, as applicable, was also paid. Respondents imported the goods after paying SCVD. At the time of its sale in the local market, they also paid local taxes such as sales tax or the Value Added Tax as may be applicable. Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer than 40 feet. If only for cutting length of the logs, which were in excess of 40 feet, sawing operations were carried out and after some cleaning and scaring was done, timber logs of smaller pieces were sold, we do not see how respondents can be stated to have breached any of the conditions of the exemption notification dated 14.9.2007 - Decided against Revenue.

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• 2013 (11) TMI 1001
  Forfeiture of Bank gurantee - Utilization of export entitlements - Non utilization of FCFS Quota - Held that:- despite releasing additional quota to the exporters, the Government could not achieve the desired results and, therefore, imposing penalty on the defaulting exporters in terms of the undertaking given by them to AEPC sub-serves a valid public interest. In the absence of such penalty, there may be further shortfall in the quota utilization as there would be no pressure on the exporters to achieve the desired target. In any case, there is no material before the Court to show that in the years in which there was shortfall in utilization of second part of the quota on the part of the petitioners, the country was able to achieve 100% or at least 89% capacity utilization. The plea taken by the petitioners, therefore, is liable to be rejected - Decided against assessee.

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• 2013 (11) TMI 1000
  Recovery of sums due to Government u/s 142 of Customs Act, 1962 - attachment and taking possession of property - Duty drawback payments received by forged declarations and documents - Assessee voluntarily surrendered various movable and immovable properties including the flat in question towards the recovery of the dues - the predecessor-in-interest of the First Petitioner informed the Assistant Commissioner of Customs of the flat having been taken on leave and licence - Predecessor-in-interest of the First Petitioner called upon to vacate the premises – Held that:- Neither the provisions of Section 142 of the Customs Act, 1962 nor the provisions of the Rules framed thereunder provide for the vesting of the property without encumbrance - There is no provision under which any encumbrance in respect of the property is to get divested - On the contrary, it is evident from Rule 23(1) that what is vested in the purchaser is the right, title and interest of the defaulter in the property. Authenticity of the leave and licence agreement - Licensor failed to refund the security deposit – Whether the Licensee was entitled to continue use of the Premises till the refund was made without being liable to pay any compensation – Held that:- It would not be appropriate to exercise the jurisdiction under Article 226 of the Constitution to enquire into a wholly disputed question in regard to the authenticity of the purported leave and licence agreement - The discrepancies to which a reference has been made earlier only indicate to the Court that in a matter which involves a dispute in regard to the authenticity of the document, it would not be appropriate for this Court under Article 226 to determine whether the document which is produced on the record is infact genuine. Petitioners are in use and occupation of the residential flat - As the material on the record would indicate, the use and occupation of the Petitioners as been to the knowledge of the Customs Authorities right at least from July, 1998 - It has not been necessary for the Court to consider the legitimacy of the attachment notice that was levied by the Customs Authorities - it is a matter of some significance that the Seventh Respondent as the owner of the residential flat has consciously refrained from challenging the attachment notice that was levied by the Customs Authorities – the challenge cannot be entertained at the behest of the Petitioners, particularly when the licence agreement upon which the Petitioners rely is a wholly disputed document - Order set aside but the Department is given liberty to seek possession of the premises by taking recourse to due process of law – Decided in favour of Petitioner.

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• 2013 (11) TMI 999
  Import of copper concentrate - Demand of interest - Held that:- Prior to 13.7.2006 there were no provision for demand of interest on differential duty on finalization of provisionally assessed Bill of Entry. The provision came in force with effect from 13-7-2006 and the same is applicant on the imports made after 13-7-2006. Admittedly, in this case, imports have been made during the period 1999-2003; therefore, the provision of Section 18(3) of the Customs Act, 1962 for demand of interest is not applicable in this case - Decided in favour of assessee.

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• 2013 (11) TMI 998
  Rejection of refund claim - unjust enrichment - Claim rejected after finalization of provisional assessment for the period prior to 13.07.2006 when Section 18 of Customs Act, 1962 was amended to make the provisions of Section 27 of Customs Act, 1962 applicable to the provisional assessment also - Held that:- reference to provisions of Section 27 of the Act which generally deals with claim for refund of duty cannot be of any assistance to the revenue. Similarly the definition of the term assessment under Section 2(2) of the Act also cannot help the revenue in light of the specific provisions of Section 18 of the Act which override all other provisions of the Act. The contention that the Court should not permit a person to derive unjust benefit also does not merit acceptance. The Court can only read the provisions and the statute as they stand, and if necessary, interpret the same but the Court cannot legislate - on interpretation of provisions of Section 18 of the Act, on finalisation of assessment if any excess duty is found to have been paid at the time of provisional assessment Revenue is bound in law to make the refund without any claim being required to be made by an assessee. This would be the position in law upto 12-7-2006 and not thereafter. - Decided in favour of assessee.

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• 2013 (11) TMI 997
  Valuation of goods - Import of Pneumatic tyres - Supplier wrongly sent tyres to assessee - Assessee asked permission for re-export of goods - Mis declaration of goods - Held that:- appellant, after the import of the goods and before filing the bill of entry took up the matter with the foreign supplier who agreed to have sent the wrong consignment to the appellant. As such, the prayer was made by them to re-export the goods. However, instead of deciding on the said prayer of the appellant, they were advised to file a Bill of entry. It was in these circumstances that the appellant filed a Bill of entry along with invoice numbers. When the appellant has himself brought the fact of wrong shipment to the notice of the Revenue authorities, without filing the Bill of entry, subsequent filing of bill of entry by him cannot be held to be a cause for mis-declaration of the quality or the value of the goods - imposition of any redemption fine or penalty on the allegations and findings of mis-declaration cannot be held to be justified - Decided in favour of assessee.

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• 2013 (11) TMI 996
  Duty drawback - Confiscation of goods - Imposition of redemption fine - Held that:- Commissioner in para 27 of the order has categorically found that under General Note No.11 of Notification No.22/97-Cus (NT), dated 30.05.1997 in the case of Merchant Exporter, who procures the goods from the open market, the benefit of All Industry Rate of Duty Drawback shall be restricted to the Customs allocation only and export goods purchased from the open market shall be treated as having availed MODVAT/CENVAT facility and not entitled to Central Excise allocation of All Industry Rate of Drawback. In the present case, the exporter claimed the goods manufactured and supplied by M/s. SR Traders but on verification by the Department, there is categorical report of the Asst. Commissioner intimating that the supporting manufacturer is not available at the given address and it is also a fact that the appellant exporter is not able to provide any details or clue of M/s. SR Traders despite opportunities given to them by the Department. In the absence of any such evidence, the Commissioner s conclusion that goods have been procured from the open market by exporter cannot be faulted and accordingly, I uphold the same and hold that demand of Drawback amounting to Rs. 1,92,908/- has rightly been confirmed by the Commissioner and penalty also rightly imposed on the exporter - Redemption fine set aside - Decided partly in favour of assessee.

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• 2013 (11) TMI 995
  Interest on Refund - Commencement of liability of revenue to pay Interest - expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made - interest against the provisions of Section 27A read with section 27 of the Customs Act, 1962 - Held that:- liability of the revenue to pay interest commences from the date of expiry of three months from the date of receipt of application for refund and not on the expiry of the said period from the date on which order of refund is made - Following decision of Ranbaxy Laboratories Ltd. Versus Union Of India and Ors. [2011 (10) TMI 16 - Supreme Court of India] - Decided against Revenue.

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• 2013 (11) TMI 994
  Refund of Special Additional Duty of Customs - Notification No. 102/2007-Cus dated 14.9.2007 and Notification No.29/2010-Cus. dated 27.10.2010 - Exemption from SAD for all pre packed goods intended for retail sale - whether an importer can be penalized for not having claimed exemption under Notification No. 29/2010-Cus at the time of importation by refusing to grant refund under Notification No. 102/2007-Cus, when both the notifications were in operation on the date of importation and date of claiming refund - Held that:- this is not a case where the importer is seeking change in assessment made at the time of importation of goods. Only in such a situation, the decision of the Apex Court in Priya Blue Industries (2004 (9) TMI 105 - SUPREME COURT OF INDIA) would apply. Even in such cases, the Hon’ble Delhi High Court has clarified that the said decision would apply only in a case where there was a dispute between the Department and the importer at the time of importation of the goods and the matter was adjudicated either through assessment of BE or through further proceedings. Refund is not claimed under section 27 of the Customs Act. The appellant is not requesting for change of the assessment made at the time of importation. For grant of refund of SAD as per notification 102/07-Cus re-assessment of Bills of Entries are not prescribed under the notification - In the case of Central Excise duty there is a consequence in paying duty on exempted goods because the assessee will be able to pass on the duty incidence on the raw material and capital goods to the next stage by paying duty whereas such incidence cannot be passed on if the goods are exempted. Thus there is an adverse consequence to revenue when excise duty is paid on an exempted product - no reason to deny refund under Notification No. 102/2007-Cus if the appellant satisfies the conditions therein - Decided against Revenue.

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• Law of Competition

• 2013 (11) TMI 993
  Violation of principle of natural justice - Notice or hearing opportunity not given - Whether the Competition Commission of India is required to give notice or hearing to the person against whom an information is given or a reference is made, in terms of Section 19 of the Competition Act, 2002 before the Commission directs further investigation, in exercise of the powers conferred upon it by sub-section (7) of Section 26 of the Act - Held that:- Though, the principles of natural justice do necessitates hearing the affected party before a quasi-judicial or even an administrative decision which adversely affects his interest is taken, the order directing further investigation cannot be said to be an order prejudicially affecting the person against whom information is provided or a reference is made to the Commission. An order of this nature does not visit the person against whom information is provided or a reference is made to the Commission, with any civil consequences nor does it in any manner impair any legal right of such a person. Procedure adopted by the Commission would not be rendered unfair or unreasonableness or arbitrary in case no notice or hearing to the affected party is given before directing further investigation under sub section (7) of section 26 of the Act. In fact, even an accused in a criminal case is not entitled to a hearing before a Magistrate passes an order for further investigation in exercise of the powers conferred upon him by sub section (8) of section 173 of Code of Criminal Procedure. The person against whom an information is given or a reference is made to the Commission in terms of section 19 of the Act cannot be placed on a footing higher than that of an accused in a criminal trial. Regulation 41(5) of the Competition Commission of India (General) Regulation, 2009 confers upon the Commission or the Director General, to direct evidence by a party to be led by way of oral submissions and if deemed necessary or expedient grant an opportunity to other party or parties, as the case may be, to cross examine the person giving evidence. Thus, the opportunity to cross examine the witness is to be given to the opposite party when a party before the Commission or the Director General is allowed to lead evidence by way of oral submissions. Commission has permitted the informant to cross examine only the witness of the petitioner and the cross examination has been restricted to the questions which are relevant and germane to the issue raised in the matter. Obviously, such cross examination can take place only if further investigation is directed by the Commission - Decided against Appellant.

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• Service Tax

• 2013 (11) TMI 1011
  Supply of tangible goods (STGU) - transfer of possession and effective control of the tankers - import of services - Levy of service tax on reverse charge basis - Section 65(105)(zzzzj) of the Finance Act, 1994 - extended period of limitation - Held that:- the transactions in issue (covered by the two long-term agreements both dated 31.3.01 for charter of the tankers "Disha" and "Raahi" and the short-term charter agreement dated 30.4.09, for charter of the tanker "Trinity Glory") amount to transfer of the right to use tangible goods, with possession and effective control of such goods, in favour of the assessee by owners of the tankers. These transactions fall within the ambit of the exclusionary clause of Section 65(105) (zzzzj) of the Act and are therefore immune to the liability to service tax - Decided in favor of assessee. Import of service or not - Held that:- Since the tankers were not located during the entire duration of their use by the assessee, within the territory of India, the assessee is not liable to remit tax, under the reverse charge mechanism under Section 66A of the Act, in view of the provisions of the proviso to Rule 3(iii) of the Taxation of Service (provided outside India and received in India) Rules, 2006; Regarding agreements entered prior to 16.5.2008 - held that:- The transactions covered by long-term charter agreements - for the tankers "Disha" and "Raahi" are outside the purview of the taxable STGU, under Section 65 (105)(zzzzj); since the agreements and the delivery of these tankers pursuant to the agreements (the taxable event), occurred prior to 16.5.08, the date of introduction of this taxable service; and Penalty u/s 76 to 78 - Held that:- The facts and circumstances justify invocation of the provisions of Section 80, to delete imposition of penalties under Sections 76 to 78 of the Act. Consequently, the imposition of penalties is invalid. The amounts remitted by the appellant towards service tax and interest, under protest, shall be refunded forthwith - Decided in favor of assessee.

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• 2013 (11) TMI 1010
  Waiver of pre-deposit - CESTAT directed the appellant to deposit entire service tax along with proportionate interest - corporate guarantee commission paid by the appellant to the foreign principal - held that:- it is clear that the tribunal has observed that they were persuaded to follow the interim order passed in the case of Kaveri Agri Care Pvt. Ltd. [2010 (11) TMI 153 - CESTAT, BANGALORE] - In spite of the said observations and findings, the tribunal in the last paragraph directed the appellant to make pre-deposit - In view of the findings recorded by the tribunal reproduced above, we feel that the appellant is entitled to complete waiver of pre-deposit. The question of law is accordingly answered. - full stay granted.

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• 2013 (11) TMI 1009
  CESTAT dismissed the appeal on account of failure to fulfill its direction to the Appellant to deposit the entire amount of service tax - extended period of limitation - Held that:- Once the Commissioner (Appeals) has come to a finding that for the relevant period, there was genuine cause for confusion regarding the correct legal position and also scope for doubt about the service tax liability on GTA as the 'Commercial concern' for nonimposition of penalty then the same cause is also to be factored in to conclude that extended period of limitation cannot be invoked. Even if the finding that there was sufficient cause for nonpayment of service tax was rendered in the context of Section 80 of the Act (as it stood at the relevant time). Accordingly, the order dated 3 July 2013 and the order dated 14 May 2013 of the Tribunal directing predeposit of Rs.10,04,928/are set aside. Further, the Tribunal is directed to hear the appellant's appeal from order dated 17 October 2012 of Commissioner (Appeals) on merits without insisting any predeposit.

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• 2013 (11) TMI 1008
  Waiver of pre-deposit - Commissioner (Appeals) directed the appellant to deposit full amount of demand - cleaning services of residential complex - held that:- After going through the contents of the agreement and definition of the cleaning activities as given in Clause (24b) of Section 65 of the Finance Act, 1994, there may be prima facie force in the submission of the learned counsel for the petitioner that the cleaning activities may not include the activities undertaken by the petitioner when it is for the residential complex or colony and the plea of the petitioner that the work awarded to the petitioner of the nature mentioned even in the order passed by the original authority may not fall in the category of “maintenance”. There is also prima facie, force in the submission of the learned counsel for the Revenue that there are overlapping works, hence, some of the works have been clearly mentioned in the agreement to be the work of maintenance. The writ petition of the petitioner is partly allowed - The application of the writ petitioner is allowed to the extent that the writ petitioner may now deposit 50% of the confirmed demand before the appellate authority within a period of one month from today - decided partly in favor of assessee.

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• 2013 (11) TMI 1007
  Challenge to the letter issued by the Superintendent, Service Tax requesting the petitioner to deposit the amount of service tax short paid/not paid as detected by the Audit along with interest, and to furnish report to the office immediately treating it as most urgent, keeping in view the limitation of time - Held that:- the reliefs claimed in the writ petition are premature. - The show cause notice as required under sub-section (1) of Section 73 has not been issued so far. The petitioner has been requested to submit its comment on the audit objections. In the circumstances, we do not propose to go into the detailed arguments of the petitioner and the cases cited by him on the jurisdiction of the Central Excise and Service Tax authorities and the grounds on which the show cause notice may be given. - Decided against the assessee.

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• 2013 (11) TMI 1006
  Rectification of error - levy of service tax on the activity of promotion, marketing, organizing or in any other manner assisting in organizing game of chance including lottery - [2013 (11) TMI 1002 - SIKKIM HIGH COURT] - held that:- We have no hesitation to hold that paragraph 21 of the judgment calls for a review and is accordingly reviewed as being “an error apparent on the face of the record”. Consequently, paragraph 21 of our judgment dated 29-11-2012 shall stand substituted as under:- Since the Petitioners secured registration and paid service tax under the impugned provision under protest and that this Court by its Order dated 07-06-2011 in WP(C) No.23 of 2011 had made clear “that any levy or payments made under the Legislation under challenge shall be subject to the outcome of this writ petition”, the Petitioners shall be entitled to refund of the amount of service tax paid by them under the impugned Clause with effect from 01-07-2010 as prayed for in paragraph (c) of WP(C) No.23 of 2011 and paragraph (iii) of WP(C) No.36 of 2011.

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• 2013 (11) TMI 1005
  Validity of Amendment / corrigendum to the Show Cause Notice - additional notice - change in the scope of period of limitation invoked in the SCN - Held that:- revenue submitted that this is acceptable to the department and the show cause notice dated 22.4.2013 will be treated as corrigendum or in continuation to earlier notice dated 17.10.2012, without disturbing or increasing the limitation period. - writ petitions disposed of. Repeated issue of demand-cum- show cause notice for the same period, leads to inconvenience and in some cases harassment of assessee as the for the same period they have to engage professionals and furnish accounts, documents etc. all over again. It also duplicates the work of the officrs. The CBEC will examine the said aspect. If required and necessary, appropriate directions or orders may be issued to ensure that repeated show cause notices are only issued when circumstances justify and are permitted under the law.

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• 2013 (11) TMI 1004
  Construction services - challenge to the levy on the ground that the Parliament cannot impose service tax on material or goods used in execution of works/composite contract. Central Sales Tax is payable and levied on material used in “works contract” with effect from 11th May, 2002 after amendment of the Central Sales Tax Act, 1956 vide Finance Act, 2002. - Power of levy service tax on “composite or works contracts” - validity of abatement of 67% - Held that:- After 46th Amendment to the Constitution, composite contracts can be bifurcated to compute value of the goods sold/supplied in contracts for construction of buildings with labour and material. The service portion of the composite contracts can be made subject matter of service tax. Aspect doctrine is applied for bifurcating/vivisect the composite contract Service tax can be levied on the service component of any contract involving service with sale of goods etc. Computation of service component is a matter of detail and not a matter relating to validity of imposition of service tax. It is procedural and a matter of calculation. Merely because no rules are framed for computation, it does not follow that no tax is leviable. The notifications in question are in alternative and optional. An assessee may take advantage or benefit of the notifications, but cannot be compelled to pay service tax on the proportion or value of a composite contract as per the notification. This is because the formula framed by way of delegated legislation is presumptuous and based on assumption. However, if an assessee wants to take benefit of the notification, he must comply and adhere to the terms and conditions stipulated as per the notification. An assessee to claim benefit or advantage as per a notification must meet the preconditions or stipulations stated therein. An assessee cannot take benefit or advantage of a part of a notification but claim that the other part of the notification should be ignored and thus not acted upon. Notification has to be applied in entirety. Notification has to be read as a whole keeping in mind its objective and purpose. Notification may provide a convenient, hassle free and adopt a non-discretionary formula for computing value of the service element in a composite contract. This curtails litigation, ambiguity, ensures clarity and consistency. A notification cannot be declared as invalid or ultra vires for this reason, provided it is optional. Authorities cannot compel and force an assessee to accept the notifications in question and pay tax accordingly, as seeking coverage under the notification is voluntary. An assessee can state that the service component of a composite contract should be computed in a fair and reasonable manner and accordingly taxed. The notifications meet the tests laid down under Section 93 and 94 of the Act because they relate to manner and mode of computation of service tax in a composite contract. The object and purpose is not to tax as non-service element or to include non-taxable part of the composite contracts. It has not been shown and established that the formula or the value prescribed in the notifications is absurd or irrational. The said notifications are not per se an arbitrary exercise and contrary to data or formula for computing service element. In taxation matters, classification should not be struck down as discriminatory unless there are strong and compelling reasons that show absurdity and, therefore, violation of Article 14 of the Constitution. All writ petitions dismissed - Decided against the assessee.

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• 2013 (11) TMI 1003
  Constitutional validity of levy of service tax on promotion, marketing, organising and assisting in organising games of chance including lottery services under negative list - Notification No.36/2012-ST dated 20-06-2012 - Held that:- (i) In the light of Sub-Section (1) to Section 65B read with Sub-Section (44) thereof lottery is excluded from the definition of ‘service’ being ‘actionable claim’; Even under Sub-Section (34) of Section 65B read with Sections 66B and 66D lottery stands excluded from the purview of service tax under the Finance Act, 2012 as being one in the ‘negative list’; The activity of the Petitioner comprising of promotions, organising, reselling or any other manner assisting in arranging of lottery tickets of the State Lotteries does not establish the relationship of a principal or an agent but rather that of a buyer and a seller and, on principal to principal basis in view of the nature of the transaction consisting of bulk purchases of lottery tickets by the Petitioner from the State Government on full payment on a discounted price as a natural business transaction and, other related features like there being no privity of contract between the State Government and the stockists, agents, resellers under the Petitioner. The impugned letter C. No.V(3)7/ST/FGSIPvt Ltd/GTK/2009/295 dated 06-07-2012 does not have the sanction and authority of either the Constitution or the law as there is no provision anywhere for imposing of service tax on ‘lottery’ and the action of the Respondents to impose such tax on the Petitioner on the basis of Notification No.36/2012-ST dated 20-06-2012 and the Service Tax Rules is ultra vires the very provisions of the Finance Act being in excess of the powers vested therein. Transactions in lottery tickets are not liable to service tax under the provisions of the Finance Act, 1994, as amended by the Finance Act, 2012. - Decided in favor of assessee.

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• 2013 (11) TMI 1002
  Constitutional validity of levy of service tax on “promotion, marketing, organising or in any other manner assisting in organising game of chance, including lottery - Held that:- the activities of the lottery distributors i.e. the petitioners herein do not constitute a service and thus beyond the purview of “taxable service” as statutorily defined under clause (zzzzn) of sub-section 105 of Section 65 of the Finance Act, 1994 as amended vide Finance Act, 2010. The activity of promotion, marketing, organizing or in any other manner assisting in organizing game of chance including lottery is an activity included in the expression “betting and gambling” as incorporated under Entry 34 and 62 of List II to Seventh Schedule of Constitution of India. (iii) The activity of promotion, marketing, organizing or in any other manner assisting in organizing game of chance including lottery being an activity of “betting and gambling” under Entry 62, List II to Seventh Schedule of Constitution of India, the State Legislature alone is competent to levy any tax on such activity under Entry 62. The Parliament has the competence and jurisdiction to levy taxes on any subject matter including “service tax” under Entry 97, List I, read with Article 248 of the Constitution of India except where such powers are traceable to any of the entries in List II and III to Seventh Schedule of Constitution of India. Power to tax the activity of “betting and gambling” as explained above being within the exclusive domain of State Legislature under Entry 62, List II, the Parliament in exercise of its residuary power under Entry 97, List I to Seventh Schedule of Constitution of India lacks legislative competence to impose any tax including “service tax” on such activity. Clause (zzzzn) to sub-section 105 of Section 65 of Finance Act, 1994 strike down as unconstitutional - Decided in favor of assessee.

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• Central Excise

• 2013 (11) TMI 992
  Admissibility of cenvat credit under Rule 4(5)(b) of Cenvat Credit Rules 2002 – the requirement is to take cenvat credit on the basis of duty paying documents – Held that:- The dies were lying with the job worker since 1980 and at that point of time, the credit of duty paid on the capital goods was not admissible as cenvat credit and there was no procedure requiring dies to be transferred to job worker under challan or by following any procedure under Central Excise Law – The problem has arisen because respondents chose the option and it is only a procedural irregularity - capital goods are used by the job worker for the respondents and they are eligible to send the same - the stand taken by the Commissioner (Appeals) that extended period cannot be invoked does not need to be interfered with – Relying upon CCE, Pondicherry vs. Chemplast Sanmar Ltd. [2004 (12) TMI 125 - CESTAT, CHENNAI] - duty paid by the job worker on repair charges is admissible as far as admissibility of credit on the repair charges is concerned - on merits as well as on limitation – Decided against Revenue.

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• 2013 (11) TMI 991
  100% EOU - Egg Shell Powder Manufactured Item or not – Benefit of exemption of Notification No.23/2003 – Held that:- The processes are minimal and are essentially of a nature required to dispose of the same rather than to do any value addition or change in character of naturally occurring egg shell – thus, the view that Egg Shell Powder cannot be considered as a manufactured product - Following Collector of Central Excise, Patna Vs Tata Iron and Steel Co. Ltd. [2004 (2) TMI 68 - SUPREME COURT OF INDIA ] - The appellant has a strong case in view of the exemption at S. No. 21 of Notification No.23/2003, which exempts waste from food industries manufactured in 100% EOUs - 100% EOU is normally expected to export all its products - for some of the products of residual nature, like egg shell, there may not be an export market and EOUs will be forced to clear such waste into domestic tariff area. The exemption enables 100% EOU producing food products to dispose of waste products, if arising out of indigenous raw materials, without payment of any excise duty to Domestic Tariff Area - If the waste product is not excisable there is no need for the exemption - The notification goes one step further to make the liability clearer by providing that even if any waste product may be considered as manufactured product, duty need not be paid on such product - Egg Shell powder is almost similar to oil cake left behind when vegetable oil is extracted from oil seeds - Oil cakes also are used in making animal feed - For oil cake exemption is provided at S. No. 20 of the notification - Similar exemption can be seen for tea waste and coffee waste at S. No. 19 of the same notification –there is no reason to deny the benefit of this notification to Egg Shell Powder –Decided in favour of Assessee.

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• 2013 (11) TMI 990
  Confirmation of Cevat credit on shortage of goods i.e; Ferro Silicon Lumps/Ferro Manganese correct or not - The appellant’s plea there was no shortage of the goods as the same were available in the factory at the time of stock checking, is difficult to accept, in the background of fact that they have paid the duty involved on the goods found short - If the goods actually were available in the factory, any normal businessman would have pointed this out the very next day and he would not have waited for more than 2 weeks - the appellant’s stand under their letter dated 28/12/07 that there was no shortage of the goods is only an afterthought and that this is a case where the Cenvat credit had been taken without actually receiving the goods, as has been clearly stated by Shri Mahesh Kumar Sharma in his statement. If the shortage was due to inability of Shri Mahesh Kumar Sharma to locate the goods, he would not have given such a categorical statement that no goods had been received - This statement of Shri Sharma had not been retracted by him - Just because the suppliers who had issued the invoices have claimed to have supplied the goods and have claimed to have received the payment, it does not nullify the fact that at the time of stock taking on 12/12/07, the goods covered under these invoices were not available and even for more than 2 weeks after the detection of the shortage, the appellant were not able to produce the goods supposed to have been received under these invoices - there is no infirmity in the order upholding the Cenvat credit demand alongwith interest and imposition of penalty of equal amount. Penalty under Rule 25(1)(a) and (d) – Held that:- The penalty imposed during the period when this fraudulent Cenvat credit had been taken to which the appellant were not entitled, the excisable goods had been cleared by payment of duty through Cenvat credit while there was no sufficient Cenvat credit balance and, as such, those clearances would have to be treated clearances having been made without payment of duty – the penalty has been correctly imposed – Decided against Assessee.

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• 2013 (11) TMI 989
  Duty demand on Clandestine Removal of polyester chips- Failed to reconcile the quantity of polyester chips – Held that:- Whatever be the explanation for the difference, one fact which is clear is that the quantity of polyester chips as on 31.03.96 as recorded in the Central Excise record is 605.665 MT which is more than the closing balance as on 31.03.96 mentioned in the balance sheet for 1995-96 - The assessee’s duty liability is on the quantity reflected in their statutory Central Excise records and the question of an un-account clearances would arises only if the figure of production of clearances, as mentioned in the balance sheet of a particular year, is more than that reflected in the Central Excise records. The closing balance of polyester chips as on 31.03.96 recorded in the Central Excise records on which the duty is supposed to have been paid, is more than the closing balance as on 31.03.96, recorded in the balance sheet – Thus, the duty demand on the difference between the balance of 605.665 MT in the Central Excise records and the balance of 570.590 MT in the balance sheet without any basis - the duty demand on alleged clandestine clearances of 35.075 polyester chips during 1995-96 is not sustainable. Duty Demand on Clandestine Removal of P.P. chip waste – Held that:- In the ER-5 Returns the three types of wastes were being separately reflected and the letter dt. 21.09.04 of the Range Superintendent also mentions the yarn waste, polymer waste and chip waste separately – the quantities of P.P. waste are actually of polymer waste which have been duly accounted for in the Central Excise records - When the very basis for duty demand mentioned in the Show Cause Notice vanishes, the order upholding this duty demand, would not be sustainable – Decided in favour of Assessee.

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• 2013 (11) TMI 988
  Passing of Incidence of duty to the customer – Eligibility for refund – Unjust enrichment - Excess duty paid on bulk supply of explosives on prices determined provisionally – Duty decided in lower side – Held that:- The price was finalized at a lower side and the appellant initially cleared at a higher price with higher duty claimed refund - The higher duty collected from M/s Coal India Ltd., which was not supposed to be collected were computed and intimated in a document called credit note which is actually in the format of a Tax invoice and Coal India since paid higher duty, adjusted the amount against their future payments - Thus, they got back the money/amount paid in excess earlier - the excess duty amount initially paid by IOC has not been passed on to the buyer Coal India - Coal India has not also taken any Cenvat Credit on the duty paid on explosives and those were consumed by them - the document said to be credit notes is actually a tax invoice showing the amount excess collected to enable Coal India to adjust it with the future payments. Following CCEx., Nagpur Vs. Solar Capital Ltd. [2006 (2) TMI 522 - CESTAT, MUMBAI] and Special Blasts Ltd. Vs. CCEx., Raipur [2005 (3) TMI 496 - CESTAT, NEW DELHI ] - bar of unjust enrichment is not attracted – It is not similar to the ‘Credit Notes’ referred in the Board’s Circular - it is a settlement of price either higher or lower side, in the course of finalization of provisional assessment, and not a price reduction subsequent to sale as envisaged in the Board’s Circular - Decided against Revenue.

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• 2013 (11) TMI 987
  Eligibility for cenvat credit of the services of erection, installation & commissioning, repair and maintenance and insurance - Fly ash extraction plant at Thermal Power Plant – Held that:- COMMISSIONER OF C. EX., NAGPUR Versus ULTRATECH CEMENT LTD. [2010 (7) TMI 302 - CESTAT, MUMBAI] - The only basis for denial of cenvat credit is that the appellant company, who have installed fly ash extraction plant at the NTPC’s Power Plant at Unachahar, have manufactured fly ash which is an exempted product - in terms of Rule 6(1), they would not be eligible for cenvat credit. The appellant loaded in the bulk trucks for transportation to the appellant’s cement plant - Just extraction of the fly ash generated in the Thermal Power Plant cannot be said to be ‘manufacture of fly ash’ by the appellant - Fly ash has been manufactured by the Thermal Power Plant not by the appellant - Therefore, Rule 6(1) of the Cenvat Credit Rules, 2004 is not applicable at all - the services have been availed for erection, installation & commissioning, repairing and maintenance and insurance of the fly ash extraction plant installed by the appellant at the Thermal Power Plant, these services have to be treated as the services used in or in relation to the manufacture of the cement by the appellant and would be eligible for cenvat credit – Decided in faovur of assessee.

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• 2013 (11) TMI 986
  Under-declaration of Assessable value of processed fabric – Job Work - Held that:- The under-declaration was on account of wrong declaration given by the merchant manufacturer and not the appellant - This matter relates to the period when the system of filing of price list and getting its approval was still in vogue and the impugned duty payments were made against approved price lists - suppression on the part of the first appellant cannot be held to be proved in this case - the proposal to deny Modvat credit is not sustainable - So demand consequent to such denial is set aside - For the same reasoning the penalties imposed on the first appellant also are set aside. Since duty demand is not contested the same is confirmed. Penalty imposed upon second appellant – Held that:- It was the responsibility of the first appellant to give correct value - even in cases where fabrics were purchased and supplied there was under declaration of value - For giving correct information of value at which goods were purchased no great understanding of law or costing is needed - The argument raised regarding wastages also is not properly explained and not understood - when the matter was pointed out during investigation, the second appellant immediately paid differential duty demonstrating that the second appellant was aware of the mis-declaration – there was no reason to interfere with the penalty imposed on the second appellant. The appeal filed by second appellant is rejected – Decided partly in favour of Assessee.

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• 2013 (11) TMI 985
  Penalty u/s 11AC of Central Excise Act - Shortage of finished product vis-a-vis balance recorded in the RG-1 register – Held that:- Just because any goods whose production has been recorded in the RG-1 register and subsequently those goods were not found in the factory and there is no satisfactory explanation for such shortage, it has to be concluded that the goods found short and whose shortage has not been explained satisfactorily, have been cleared clandestinely without payment of duty - just because the production of those goods had been entered in the RG-1 register, it cannot be the defence of the appellant that there was no intention on his part to evade the duty - Similarly, the appellant having sufficient balance in the RG-23A register, cannot be the ground for concluding that there was no intention to evade the payment of duty. The penalty under Section 11AC of the Act has rightly been imposed - no cognizance of the earlier finding that this is not a case of clandestine removal, can be taken, and this has to be treated as a case of careless drafting the order - Provisions of Section 11AC are attracted and hence the penalty under this Section has been correctly imposed. The appellants pleaded that since in the case the entire duty demand on goods found short had been paid before the issue of show cause notice and no option to pay reduced penalty under proviso to Section 11AC has been given – Relying upon K.P. Pouches (P) Ltd. vs. Union of India [2008 (1) TMI 296 - HIGH COURT OF DELHI] - the appellant company cannot be denied the benefit of reduced penalty - the plea of learned Counsel of the appellant regarding applicability of proviso to Section 11AC is correct and, as such, the benefit of the proviso cannot be denied - Accordingly, the penalty under Section 11AC is reduced to 25% of the duty demand – Decided partly in favour of Assessee.

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• 2013 (11) TMI 984
  Benefit of reduced Penalty under the Proviso to Section 11AC of Central excise Act – Held that:- There was no option in the orders-in-original given to the assessee to pay lower penalty in terms of proviso to Section 11AC of the act – Following K.P. Pouches (P) Ltd. vs. Union of India [2008 (1) TMI 296 - HIGH COURT OF DELHI] and CCE, Rohtak vs. J.R. Fabrics (P) Ltd. [2009 (4) TMI 72 - PUNJAB AND HARYANA HIGH COURT] - where the entire amount of duty alongwith interest, if any, payable, had been paid before the issue of show cause notice and still in the order-in-original passed by the Adjudicating Authority, no option had been given to the assessee to avail of the option of lower penalty equal to 25% of the duty demand by paying the same within 30 days of communication of the order, the benefit of lower penalty under proviso to Section 11AC cannot be denied - the appellant cannot be denied the benefit of reduced penalty in terms of proviso to Section 11AC - the penalty under Section 11AC on the appellants is reduced to 25% of the duty demand confirmed – Decided in favour of Assessee.

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• 2013 (11) TMI 983
  Admissibility of the Cenvat Credit on the basis of carbon copy of the invoice - Denial of cenvat credit - Production of Original Copies of invoices – The assessee produced Extra carbon copies – Held that:- The Cenvat Credit has been denied only on the basis that the same has been availed on the basis of photocopy/extra copy of the invoices - the very basis on which the Cenvat Credit has been denied is not correct – the appellant have now produced extra copy/carbon copy of the invoices - there is no dispute regarding receipt of duty paid inputs under these invoices and their use in the manufacture of finished goods cleared on payment of duty - It is also not the allegation that Cenvat Credit on the basis of these invoices has been taken more than once – Thus, denial of Cenvat Credit on the basis of Carbon copy/extra copy of the invoices and imposition of penalty for taking wrong Cenvat Credit is not correct – Decided in favour of Assessee.

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• 2013 (11) TMI 982
  Confirmation of Cenvat credit – Assessee contended that there was no real shortage as the weight of the Cenvat Credit availed HR Sheets in stock had been by estimation basis and not by actual weighment – Held that:- There was a weighing machine in the factory in which one or two HR Sheets could be weighed at a time, the weight could also be determined on the basis that average weight of HR Sheet of 1.25met x 2.5 met dimension is 73.5 Kg. - besides this, at the time of stock taking Sh. Puri, was present and at that time he had accepted the method of determination of weight not only by signing the stock verification report but also stating in his statement recorded under section 14 of the Central Excise Act, 1944 he accepts the shortage and agrees to pay the duty on the HR Sheets found short - Once Sh. Puri has taken this position at the time of stock taking and has given a statement under section 14 of the Central Excise Act, at the time of adjudicating and appeal proceedings he cannot reverse his earlier stand in his statement under section 14 accepting the shortage as the same would be act as a estoppel - The appellant’s plea that the method of weighment was not correct is, therefore, no acceptable - just because for setting aside the penalty, the Commissioner (Appeals) has given findings that on the basis of mere shortage clandestine removal cannot be inferred, the confirmation of duty demand cannot be set aside – Decided against Assessee.

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• 2013 (11) TMI 981
  Eligibility for Cenvat credit of the welding electrodes used for repair and machinery of the plant and machinery – Following Hindustan Zinc Limited vs. Union of India [2008 (7) TMI 55 - HIGH COURT RAJASTHAN] and Ambuja Cements Eastern Ltd. vs. CCE, Raipur [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT] - Repair and maintenance is an activity without which manufacturing activity would not be commercially feasible even though theoretically it may be possible to carry out manufacturing activity without repair of plant and machinery. In J.K. Cotton Spg. & Weaving Mills Co. Ltd. vs. Sales Tax Officer, Kanpur [1964 (10) TMI 2 - SUPREME COURT OF INDIA] - while interpreting the scope of the expression used in the manufacture of in Section 8 (3) (b) of Central Sales Tax Act, 1956 has held that if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity, the manufacture may, even if theoretically possible, be commercially inexpedient, the goods intended in that process or activity would have to be treated as used in the manufacture - the scope of the expression used in or in relation to manufacture, whether directly or indirectly’ in the definition of ‘input’ in Rule 2 (k) of the Cenvat Credit Rules, 2004 would be much wider. The question as to whether repair and maintenance is an activity distinct and separate from manufacture has nothing to do with the question as to whether repair and maintenance has nexus with manufacture - the activity of repair and maintenance has to be treated as having nexus with manufacture and hence any item used for repair and maintenance would be eligible for Cenvat credit - Once it is accepted that steel items have been used for fabrication of various items of sugar mill machinery as mentioned passed by the Assistant Commissioner or their repair and maintenance, these steel items would have to be treated as input used in the manufacture of capital goods – thus, would be covered by the definition of input in Rule 2 (k) and would be eligible for Cenvat credit – Decided in favor of assessee.

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• 2013 (11) TMI 980
  Inputs cleared as waste and scrap – Not used in the manufacture of goods - Cenvat credit found short to be reversed – Held that:- The invoices mentioned the clearances as waste/scrap, the fact remains that these are the Cenvat credit availed inputs which had been cleared as such, without being used in manufacture for the reason the same had become obsolete - the clearances of obsolete inputs have to be treated as the clearances of cenvated inputs, as such, and the amount payable in respect of the same would be governed by the provisions of Rule 3 (4) of Cenvat Credit Rules in force at that time - Following EICHER TRACTORS Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2005 (9) TMI 340 - CESTAT, NEW DELHI] - During the period of dispute when an assessee cleared Cenvat credit availed inputs as such, he was required to reverse the credit equal to the duty of excise on the basis of assessable value as had been determined by the original manufacturer at the time of removal of the goods i.e. the credit originally taken, not the duty on the transaction value at the time of sale of the Cenvat credit availed inputs. The liability of the assessee at the time of removal of the Cenvat credit availed inputs as obsolete inputs or waste, which are nothing but the inputs cleared as such without having been used, would be the Cenvat credit originally taken – Thus, the duty demanded is correct - As regards, the demand of credit on the inputs found short, the same has also been correctly upheld on merits as these inputs have not been used in manufacture. Invocation of Extended Period of Limitation – Conflicting decisions – Held that:- The appellant have paid the amount strictly going by the wordings of Rule 3 (4) during the period of dispute, according to which on removal of cenvated inputs as such, an amount equal to duty on the transaction value was payable – With regard to the issue, there were conflicting decisions and for this reason – Following Continental Foundation Joint Venture vs. CCE, Chandigarh - I [2007 (8) TMI 11 - SUPREME COURT OF INDIA ] – when there is scope for entertaining doubt on account of conflicting judgments of the Tribunal, extended period under proviso to Section 11A (1) cannot be invoked – Thus, the short payment of the amount payable under Rule 3 (4) of the Cenvat Credit Rules was a deliberate act on the part of the assessee - the longer limitation period in the case is not invokable - during visit of the audit team, all the information had been made available by the assessee on the basis of which only the Department had detected this short payment and subsequently all the information for quantification of the duty has been furnished by the appellant - the extended period is not invokable - order is not sustainable on limitation. – Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2013 (11) TMI 1012
  Reopening of assessment - Exemption of trade tax on the sale of rice - Notification No. 709 - 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 - the words "processing, packaging and marketing of cereals, pulses, masalas and chhonks" have been used. Thus it was processing of the cereals and not processing of paddy. The word cereal means paddy, rice and all other food grains. Thus the exemption granted to the petitioner on the sale of rice was fully covered in the word 'cereals'. The exclusion of specific goods clearly proves that the excluded goods were included in this clause prior to that date of exclusion. The notification dated 30.09.2004, which carries exclusion of some goods will apply prospectively and not with retrospective effect. The reassessment under Section 21 (2) on the basis of notification dated 30.09.2004, which was not applicable for the Assessment Years 2002-03 and 2003-04, was illegal - Decided in favour of assessee.

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