TMI Tax Updates - e-Newsletter
December 10, 2013

Case Laws in this Newsletter:

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

Articles

1. Wrong Calculation of Interest u/s 201(1A) by TDS CPC

   By: KAMAL AGARWAL

2. COMMITTEES TO BE CONSTITUTED BY A COMPANY UNDER COMPANIES ACT, 2013

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Apparel Sector Earns Rs. 49,200 Crores During April-October, 2013, Registering growth of 26% : Dr. K S Rao

2. CCI Issues Order Against CIL and its Subsidiaries For Abusing Dominant Position, Imposes Penalty Of Rs. 1773.05 Crores

3. Finance Minister to Inaugurate two Days Delhi Economics Conclave Tomorrow

4. RBI Reference Rate for US $ and Euro

5. Government Approves one Proposal of Foreign Direct Investment

6. Government Approves one Proposal of Foreign Direct Investment (FDI) Amounting to About Rs. 31.92 Crore

7. Women Directors on Boards of Corporate Companies

8. Use of Unclaimed Funds Lying With Companies

9. Recruitment to Serious Fraud Investigation Office

10. Penalties Imposed by the Competition Commission of India

11. Amendment of Accounting Standards

Notifications

Income Tax

1. 93/2013 - dated 6-12-2013 - IT

Section 120(1) and (2) of the Income-tax Act, 1961 - Jurisdiction of (transfer pricing officers) Amendment in Notification No. 231/2007 Dated 22-08-2007.

Circulars / Instructions / Orders

VAT - Delhi

1. 28/2013-14 - dated 3-12-2013

Procedure for Voluntary Disclosure of Tax Deficiency u/s 87(6) of the DVAT Act 2004.

2. F.6(7)/DVAT/L&J/2013-14/747 - dated 2-12-2013

Delegation of powers under the DVAT Act, 2004

Income Tax

3. F. No. 173/158/2013-ITA.I - dated 10-12-2013

Standardizing the process of filing application for approval of an Electoral Trust-reg.

Highlights / Catch Notes

Income Tax

• High Court Rules NRI Gifts Must Show Donor's Love, Affection, and Financial Capacity to Be Genuine.

  Case-Laws - HC : Gift from stranger - NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor - HC
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• No Penalty for Assessee u/s 271(1)(c) Due to Good Faith Belief in Charitable Dharmada Collections.

  Case-Laws - AT : Penalty under section 271(1)(c) – assessee in bona fide belief that Dharmada collections were not part of its income but were diverted by an overriding title towards charity - No penalty - AT
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• Court Allows Deductions for Expenses Protecting Business Assets, Despite Business Closure; Depreciation and Travel Costs Still Disallowed.

  Case-Laws - AT : Discontinued Business - Disallowance out of depreciation and disallowance out of travelling, repairs, insurance expenses – expenses incurred to protect the business assets should be allowed as deduction - AT
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• Entities Qualify for Section 12A Registration if Their Main Goal is Public Welfare, Recognized as Charitable Purpose.

  Case-Laws - AT : Registration under section 12A – If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be a charitable purpose - AT
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Service Tax

• Expenses Reimbursed to Private Company Ineligible for CENVAT Credit, Leading to Refund Claim Denial.

  Case-Laws - AT : Denial of refund claim - The fact that expenses are re-imbursed by the appellant to M/s. American Express (I) Pvt. Ltd. does not make them eligible to CENVAT credit in respect of these services. - AT
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• Residential Complex Construction Services Exempt from Service Tax Pre-June 2007 if VAT Paid on Works Contract Activity.

  Case-Laws - AT : Construction of residential complex services cannot be liable to Service Tax prior to 01.06.2007, if the appellant has paid VAT on the impugned activity as Works Contract - AT
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• Passport and Visa Facilitation Not Taxable Under Business Auxiliary Services, Exempt from Service Tax Per Current Regulations.

  Case-Laws - AT : Business Auxiliary Services - Facility for passport and visa related work to individuals - Service rendered by the appellant does not fall under any category of services leviable to service tax - AT
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Central Excise

• Ultra-Sound Scanner Exemption: Probe Must Be Essential Component for Central Excise Recognition.

  Case-Laws - AT : Eligibility for the Exemption Notification -Ultra-Sound Scanner system - the scanner has to be considered as the main item and the 'probe', a part of the scanner and a necessary part - AT
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• Duty Remission Applies for Goods Destroyed by Fire, Defined as "Natural Causes" or "Unavoidable Accident" with Practical Interpretation.

  Case-Laws - AT : Remission of duty – Goods destroyed in fire – the expression “natural causes” and “unavoidable accident” are required to be given reasonable and liberal meaning and a more practical approach is required to be taken - AT
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Case Laws:

• Income Tax

• 2013 (12) TMI 373
  Depreciation on wind mills installed - Held that:- Following Commissioner of Income Tax Vs. VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] - While claiming the deduction under Section 32(1)(iia) of the Income Tax Act setting up will mill has nothing to do with the power industry and what is required to be satisfied in order to claim additional depreciation is that the setting up of new machinery or plant should have been acquired and installed by an assessee, who was already engaged in the business of manufacture or production of any article or thing - Depreciation is allowed - Decided against Revenue.

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• 2013 (12) TMI 372
  Unexplained cash credit - Held that:- CIT(A) was satisfied with respect to the genuineness of the transaction and creditworthiness of Shri Ishwar Adwani - The said loan amount has been repaid by the assessee to Shri Ishwar Adwani in the immediate next financial year and the Department has accepted the repayment of loan without probing into it - Decided against Revenue.

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• 2013 (12) TMI 371
  Gift from stranger - Held that:- The Assessing Officer and the CIT (A) were justified in holding that the gift in question was bogus and the Tribunal committed patent error in accepting the gift as genuine - The donor had no relationship with the assessee - He had no occasion to give the gift - He was not produced - His financial capacity was not established - His bank statement was not produced - The Tribunal failed to appreciate these facts - It committed patent error of law in holding that the assessee discharged onus on him to prove the genuineness of the gift - NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor - The assessee was also required to substantiate that the donor had the means and the gift was genuine which he had failed to establish - Even when the donor had the means to make the gifts, there being neither any relationship nor there being any circumstance to show natural love and affection of the donor for the donee nor there being any occasion to make such gifts to the assessee and the authority of jurisdictional High Court being against the assessee - Decided against assessee.

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• 2013 (12) TMI 370
  Bad Debts - Held that:- The claim for provision for bad and doubtful debts is created as per the provisions under Section 36(1)(vii) of the Act - The Tribunal accepted the contention of the assessee that since the balance outstanding in the provision account made under Section 36(1)(vii) was only Rs.1,81,00,000/- the bad debts can be debited only to that extent - Even if the assessee debits the entire bad debts of Rs.7.51 crores to the provision account then the said account will show a debit balance of Rs.5.7 crores which has to be closed by transferring it to the profit and loss account - Both the method will show the same results - Decided against Revenue. Excess provision written back - Held that:- The Tribunal found that there was no discussion about the same in the assessment order - The matter requires examination by the Assessing Officer - The issue was restored for fresh decision.

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• 2013 (12) TMI 369
  Review of the earlier order [2010 (9) TMI 679 - GAUHATI HIGH COURT] - Deduction u/s 80-IB - Whether the High Court can hear the appeal without forming substantial questions - Held that:- The court did not formulate the substantial questions of law for adjudication before hearing of the appeal on the merits - There can be no escape from the conclusion that hearing of the appeal prior to its admission has to be treated as a hearing on the admission of the appeal in order to determine if the substantial questions of law, as contended by the appellants, had or had not arisen - It was only upon having formulated the questions of law, which, according to the High Court, were the substantial questions of law for adjudication in the appeal that the appeal could or ought to have been heard. Following Grindlays Bank Ltd. v. Central Government Industrial Tribunal [1980 (12) TMI 181 - SUPREME COURT] - Supreme Court held that when a review is sought due to a procedural defect, the inadvertent error committed by the court or tribunal must be corrected ex debito justitiae to prevent the abuse of its process and such power inheres in every court or tribunal. Following Lily Thomas v. Union of India [2000 (5) TMI 1045 - SUPREME COURT] - When an order is passed by a High Court in breach of the procedure, which a statute (i.e. section 260A) has laid down, such a procedural defect shall remain open to correction by the High Court by taking resort to its plenary power of review or ex debito justitiae to prevent the abuse of its process. Following Distributors (Baroda) P. Ltd. v. Union of India reported in [1985 (7) TMI 1 - SUPREME Court] - The law should be settled permanently as that it should be settled correctly. But there may be circumstances, where public interest demands that the previous decision be reviewed and reconsidered - The doctrine of stare decisis should not deter the court from overruling an earlier decision, if it is satisfied that such decision is manifestly wrong or proceeds upon a mistaken assumption in regard to the existence or continuance of a statutory provision or is contrary to another decision of the court - To rectify it is the compulsion of judicial conscience - Comfort and strength is derived from the wise and inspiring words of Justice Bronson in Pierce v. Delameter AMY - A judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn great and honest enough to discard all mere pride of opinion and follow truth wherever it may lead and courageous enough to acknowledge his errors – Decided in favour of petitioner - order to be reviewed and recalled.

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• 2013 (12) TMI 368
  Deduction u/s 80HHC - Held that:- The Tribunal has taken note of every item of evidence, including the three statements of the Sheikh - None of the documentary evidence has been impeached on behalf of the Revenue - The Tribunal has also taken due notice of the statements of the Sheikh and has preferred to accept the retraction, supported later by the affidavit - No material has been brought on record or in the course of the proceedings before the Tribunal to throw any doubt on the credibility of the affidavit sworn to before the Indian Consulate in Dubai - There was copious documentary evidence in support of the exports - The findings of the Tribunal are essentially findings of fact and they cannot be subjected to the criticism of being unreasonable or perverse or irrational - Following CIT v. Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME Court] - Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as a reasonable men, could come to the conclusion to which they have come ; and this is so, even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal - Such a finding can be reviewed only on the ground that there is no evidence to support it or that it is perverse - The assessees was entitled to the deduction under section 80HHC of the Act in respect of the export of goods to Taj - Decided against Revenue.

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• 2013 (12) TMI 367
  Stay of recovery - Held that:- The stay application has not yet been disposed of by the Commissioner of Income Tax (Appeals) - More than two months have gone by now - Object of filing of the stay application is to get instant relief - If the department authority has not taken care to disposed of the stay application, this Court is left with no option but to grant an interim protection to the petitioner, till the appeal is finally adjudicated upon - An aggrieved person should not be left remedyless. Non consideration of stay application and pressing the demand is arbitrary exercise of power - The stay application may be heard and disposed of preferably within a period of four weeks and till the disposal of the stay application, the recovery shall be kept in abeyance - Decided in favour of petitioner.

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• 2013 (12) TMI 366
  Contributions under instructions of State Government - Whether allowable as deduction u/s 37(1) or not - Held that:- Business expediency is a wide term and includes all those decisions or actions which are taken by the company itself wholly or exclusively for the business purpose. The decision should be taken by the company itself and not by the outsider - Under the Companies Act or Income Tax Act, no privilege has been conferred on the government except exemption granted in pursuance to the provision contained therein - So far as running of business by the government companies incorporated under Section 617 of the Act is concerned, it must be done by the Company itself and not by the government - Government may take policy decision but does not seem to have got right to interfere with the routine functioning of the government companies with regard to business expediency - The expenditure made like in the present case on the direction of the government shall not be business expenditure and deduction shall not be allowable. Diversion of fund by the government to meet out the requirement of a government departments seems to be not permissible - It was not a policy decision to secure business interest of the assessee but the decision to meet out the requirement of 'estate department' - No decision was taken by the Board of assessee in terms of letter of government that it requires houses for its officers at Lucknow to meet out the business expediency - In the absence of any decision by the Board or the Managing Director, the expenditure incurred seems to be not business expenditure and no deduction is allowable - Decided against assessee.

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• 2013 (12) TMI 365
  Penalty u/s 271(1)(c) - Held that:- The Commissioner of Income Tax has applied his mind to the facts of the case and granted substantial relief to the petitioner - It is not a case of any financial hardship to the petitioner and this Court should not interfere in the present matter in exercise of its jurisdiction - The Court cannot express any opinion on the merits of the case - The Commissioner of Income Tax Appeal has considered the facts of the case objectively and has granted the relief staying 70% of the total demand - If the petitioner deposits the first installment within a week from today, the appeal shall be heard and decided within one month thereafter, and till the disposal of the appeal the recovery of balance amount shall remain stayed - Partly allowed in favour of assessee.

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• 2013 (12) TMI 364
  Concealment of income - Held that:- Following Commissioner of Income Tax Vs. Gold Coin Health Food P. Ltd. [2008 (8) TMI 5 - SUPREME COURT] - Explanation 4 to Section 271(1)(c) is clarificatory and not substantive - The penalty is leviable even in case of return of loss - The issue was restored for fresh adjudication.

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• 2013 (12) TMI 363
  Tax effect - Held that:- As per Board Circular dated 27.3.2000 issued under Section 268A of the Act - The monetary limit has been fixed for filing an appeal under various forums and the limit fixed for this High Court is four lakhs - The tax effect in the present case is less than prescribed limit - Decided against Revenue.

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• 2013 (12) TMI 362
  Addition of income u/s 69A – During the course of survey u/s 133A - The assessee, had received Rs.2.39 crores in cash from Marvel group – The assessee has also received Rs. 1.61 crores through cheque as an advance for agreement to sale - Held that:- The transaction involves huge amount - No agreement for entering into the transaction or for cancellation of the deal was produced - These were oral agreements and no formal MOU was entered into – The failed to prove whether any subsequent sale has taken place of the said property, the value of such sale and whether MRDL is a party to any such agreement or not - The details of cash transactions and cheque transactions were found from the premises of MRDL and entries relating to cheque transactions in the books of MRDL tallies with the entries in the books of the assessee which shows that such cash transactions are genuine – The matter was set aside for fresh adjudication.

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• 2013 (12) TMI 361
  Penalty under section 271(1)(c) – Furnishing inaccurate particulars of income - The assessee has collected “Mahumai” amounts from its customers – The assessment was made and addition was done on account of Mahumai amounts collected treating it to be the part of total turnover - Held that:- Following CIT Vs. Bijli Cotton Mills (P) Ltd. [1978 (11) TMI 1 - SUPREME Court] – In assessee’s own case for A.Y. 2001-02 order passed that there was an overriding title created in favour of charity on the Mahumai amount collected does not form part of income – Keeping in mind the above judgement the assessee in bona fide belief that Dharmada collections were not part of its income but were diverted by an overriding title towards charity, filed returns for the impugned Assessment Years excluding the Dharmada collections from its turnover - The assessee was not making a frivolous claim - There was not any filing of inaccurate particulars of income. Following Dharmandra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] - Willful and deliberate suppression on the part of assessee was necessary for levy of penalty under section 271(1)(c) – Following Reliance Petro Products Pvt Ltd. [2010 (3) TMI 80 - SUPREME COURT] - A mere claim will not amount to furnishing inaccurate particulars regarding the income of the assessee - Decided against Revenue.

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• 2013 (12) TMI 360
  Disallowance out of depreciation and disallowance out of travelling, repairs, insurance expenses – The assessee-company has discontinued its operation of pigment manufacturing at Kavesar factory and there was no activity of manufacturing carried out in the said factory - Held that:- Following Hindustan Chemical Works Ltd. v. CIT [1979 (2) TMI 16 - BOMBAY High Court] - The expenses incurred to protect the business assets should be allowed as deduction - The assets of any other unit having already entered the block of assets of the assessee, depreciation thereon could not be disallowed on the ground of non-user as the use of block of assets was to be considered and not the use of individual assets – Decided in favour of assessee. Disallowance of deduction under section 35D – The expenses were incurred in relation to the issue of right shares - Held that:- Following the decision in assessee’s own case for the A.Y. 1999-2000 – The expenses are allowed as deduction – Decided in favour of assessee. Disallowance of expenses u/s 14A – The assessee has earned dividend income of Rs. 3,58,40,888 and interest on tax-free bonds of Rs. 1,17,45,137 - Held that:- Following assessee’s own case for the A.Y. 2001-02 and Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances – Decided in favour of assessee. Addition on account of transfer pricing adjustment – Held that:- The rate of 4 per cent. taken by the Transfer Pricing Officer as arm's length rate of royalty has also been justified/supported by him by pointing out that the royalty of 5 per cent. paid to associated enterprise was also for use of a particular trade mark of that company to which he attributed the royalty payment to the extent of one per cent. on the basis of Government policy of automatic route - the use of trade mark was undoubtedly allowed by Oshima Japan to the assessee along with supply of technology for a royalty payment of 5 per cent. of domestic sales and irrespective of whether the assessee had manufactured the goods with the said trade mark or not, it was entitled to do so on payment of royalty at the rate of 5 per cent. as agreed between the parties - There is nothing brought on record to point out any infirmity in the rate of 4 per cent. determined by the Assessing Officer/Transfer Pricing Officer as arm's length rate of royalty paid/payable by the assessee to its associate enterprise - The learned Commissioner of Income-tax (Appeals) has already allowed a further relief to the assessee by revising the said rate upwardly at 4.5 per cent – Decided against assessee. Disallowance on account of Deduction u/s 80HHC – Held that Following assessee's own case for the earlier years, i.e., assessment years 2000-01 and 2001-02 and CIT v. K. Ravindranathan Nair [] - 90 per cent. of the other income such as, insurance claim, interest, rent etc. was liable to be excluded from the profits of the business while computing deduction under section 80HHC – the amount of sale of raw material was liable to be included in the total turnover of the assessee for the purpose of computation of deduction under section 80HHC - Decided against assessee. Disallowance of interest on the loans taken from bank as well as on fixed deposits received from public – Held that:- Following judgement in assessee's own case for the assessment year 2001-02 – If the assessee has sufficient interest-free funds at the relevant time to make investment in the shares of its subsidiary company, it is presumed that the investments are made from non interest bearing funds – Decided in favour of assessee.

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• 2013 (12) TMI 359
  Disallowance of expenditure on account of double claim of expenses – The assessee is the managing director of Hyderabad House P. Ltd. - Also having his own catering business under the name and style of MBA Catering Services - Search and seizure operations under section 132 of the Act were conducted on December 12, 2007 in the case of Hyderabad House P. Ltd. and at the residential premises of the assessee – Held that:- The authorities failed to prove with sufficient evidence – The assessee has not claimed the same expenses twice – The expenses claimed by the assessee have been incurred for the purpose of MBA Catering Services – Decided against Revenue. Disallowance of expenses @ 8 percent – The assessee could not produce bills and vouchers for most of the expenses incurred in cash - Held that:- Following GSP Infratech Development Ltd. [2013 (11) TMI 374 - ITAT HYDERABAD] - The disallowance at 5 per cent. of cash expenses other than statutory payments and payments to the Government authorities and the amount subjected to TDS is sufficient - In view of the data furnished and comparing the ratio of expenses incurred to turnover for the earlier years - The scope for some inflation of such expenses should be given – Decided against Revenue. Whether the income from agricultural land is agricultural income or income from other sources – The assessee has shown agricultural income in his original return of income – No material or evidence was found during search showing assessee’s ownership of agricultural land - Held that:- In view of the details of agricultural land holding and document numbers and relevant records furnished - The assessee is the owner of the agricultural lands - In the assessment year 2006-07, the agricultural land was sold and was offered to capital gains – Decided against Revenue. Whether the Assessing Officer is required to confine himself only to the material found during the course of search operation – Held that:- The assessee has filed a letter dated November 24, 2009 explaining that the ownership of the agricultural land purchased in the year 1986 and 87 - The assessee has substantiated the fact of holding agricultural land by way of proper evidence – No question of observing material found during search – Decided against Revenue. Addition u/s 68 – The assessee had received certain unsecured loans - The assessee filed confirmation letters and other details in respect of some of the creditors and in respect of other creditors the information filed was either incomplete or no information was filed at all - Held that:- Following CIT v. Maduri Rajaiahgari Kistaiah [1975 (12) TMI 8 - ANDHRA PRADESH High Court] – Even on rejection of books of account and when business income is estimated the addition towards unexplained cash credit can be separately valued – The issue was restored back for re-examining the facts and circumstances.

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• 2013 (12) TMI 358
  Assessment of incme u/s 143(1) – While filing the e-return, the assessee has shown interest received as income under the head "Income from other sources" at Rs.3,38,345 and at the same time under the very same head has shown interest paid as Rs. -2,33,535 – During processing of return the negative figure was ignored and the income was assessed at Rs. 3,38,345 - Held that:- The assessee was not aware of the fact that negative figure is not accepted by the server – The department cannot benefit from the ignorance of the taxpayers using the latest technology - This is not ignorance of law but ignorance of the usage of the latest technology - In the interest of justice and fair play to the taxpayer – This issue is restored back to the files of the Assessing Officer.

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• 2013 (12) TMI 357
  Registration u/s 12AA – The assessee company was registered under section 25 of the Companies Act, 1956 with the object of education, social and economic empowerment - Held that:- As per the Circular No. 11 of 2008 dated December 19, 2008 - where the purpose of a trust or institution is relief of the poor, education or medical relief, preservation of medical environment or preservation of historic monuments, it will constitute charitable purposes even if it incidentally involves commercial activities – The object clause of the company shows that it has been incorporated with the aim of providing education, facilitate social and economic empowerment, economic development programs, literacy programs, training programs for villagers and downtrodden people - The application cannot be rejected merely on the assumption that commercial activity will be carried out - Decided in favour of assessee.

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• 2013 (12) TMI 356
  Assessment under u/s 143(3) read with section 147 – The assessee is a non-residential banking company – Loss on sale of investments - Held that:- Following Bank of Baroda [2003 (3) TMI 80 - BOMBAY High Court] – The assessee is required to make investment in securities for its capital growth purpose - Such an investment is a part of banking business only - Any loss arising on sale of such investments will be in the nature of business loss – Decided in favour of assessee. Profit on sale of shares not credited to profit and loss account – Held that:- The profit on sale of shares is separately added to the income computed as per income tax provisions – The income has not escaped assessment - Decided in favour of assessee. Indexation of purchase cost of shares – Held that:- Keeping in view provisions of section 48 The proviso to section 48 are not applicable to the assessee - The "reasons recorded" by the Assessing Officer do not meet the requirement of law - The entire proceedings based on such "reasons recorded" are void ab initio – Decided against Revenue.

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• 2013 (12) TMI 355
  Disallowance of depreciation of Rs. 36,43,57,347 under section 32 – The assessee has claimed depreciation of Rs.36,43,57,347 on two dredgers, namely, Ta Lung and Ta Hsing - The aforesaid two dredgers were shown to have been purchased during the financial year 2007-08 relevant to the assessment year 2008-09 from M/s. Hung Huo Construction Co. Ltd., Taiwan and M/s. Jung Hsing Marine Construction Co. Ltd., Taiwan - Held that:- The agreement to sale stipulates that till the payment of last instalment the seller was vested with exclusive charge over the dredger - In case of default in payment of instalments or extension of bank guarantee the seller had the authority to terminate the agreement, take back possession of the dredger and forfeit the amount already paid - The assessee had no dominion over the dredger in exclusion of the seller before payment of the last instalment - The assessee not being the owner of the dredgers either wholly or partly is not entitled to claim depreciation on the dredgers – Decided against assessee. Whether the instalment payment for purchase of asset be treated as hire charges - TDS u/s 195 – Held that:- There is nothing on record to suggest that the dredgers were given on hire and the assessee paid hire charges of USD 7,00,000 per month for each dredger - Payment of USD 7,00,000 commencing from January, 2008 was towards monthly instalment of the purchase price payable for the dredgers – Even assuming that USD 7,00,000 per month is towards hire charges, the same cannot be allowed as deduction in view of section 40(a)(i) as the assessee has not deducted tax at source as per the provision contained under section 195 of the Act - Decided in favour of Revenue.

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• 2013 (12) TMI 354
  Refusal of registration under section 12A – The assessee, a trust, is established by the State Act called "Rajasthan Urban Improvement Act, 1959" by the State of Rajasthan and the predominant purpose of the assessee is the development of the urban areas in the State of Rajasthan - Held that:- The main objects of the assessee are to construct the roads, provide the water and electricity facility, to construct the drainage system, to improve the gardens and open space, to provide housing facility by allotting the residential plots, etc., which are in the nature of general public utility and even though the assessee might be carrying on with a profit motive but such activity was incidental to the objects of the assessee - Following CIT v. Improvement Trust [2008 (10) TMI 80 - PUNJAB AND HARYANA HIGH COURT] - If the predominant object of such activity is to carry out the charitable purposes of the trust or institution then such activity will not lose its character of a charitable purpose merely because some profit arises from the activity – Following CIT v. Gujarat Maritime Board [2007 (12) TMI 7 - SUPREME COURT OF INDIA] - The expression 'any other object of general public utility' include all objects which promote the welfare of the general public - If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be a charitable purpose – Decided in favour of assessee. Penalty u/s 271B – The assessee was not granted registration u/s 12A and exemption u/s 11 - The assessee had shown gross receipts of Rs. 1,42,02,845 - Held that:- In view of the order of the Tribunal to grant the assessee registration u/s 12A – Penalty cannot be imposed - Decided in favour of assessee.

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• Customs

• 2013 (12) TMI 353
  Valuation of goods - Import of consignments of batteries and fluorescent tubes - Commissioner, after enhancing the value as proposed, ordered the goods to be confiscated and imposed redemption fine and penalty - Held that:- variation between the landed cost based on value declared by the appellant and the sale price in the local market is very wide and is about 10 times in some cases. This fact has not been disputed by the appellant in their appeal memorandum. Their submission is that they have not paid any amount in excess of what has been declared in the Bills of Entry. We further notice that the appellants have admitted to the enhancement of the value at the time of investigation and cleared the goods after giving bank guarantee as directed by the Hon'ble High Court - appellants have not made out a strong case for full waiver of differential duty involved especially when the goods have already been cleared and sold in the market. No financial hardship has also been pleaded except stating that they would be put to hardship if they were directed to deposit the penalty - Prima facie case not in favour of assessee - Stay granted partly.

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• 2013 (12) TMI 352
  Waiver of pre deposit - Seller of DEPB Scrip inflated the value of the exported goods to get undue DEPB Scrip and sold it to Assessee - Import was made against that DEPB Scrip - Held that:- there is no finding in the adjudication order that applicant connived with M/s. Rajat Pharmachem Ltd. to DEPB Scrip fraudulently. The duty liability is admitted by M/s. Rajat Pharmachem Ltd. before the settlement Commissioner and the same has been paid. In the absence of finding that applicant connived with M/s. Rajat Pharmachem Ltd, in obtaining the advance licence. Prima facie the applicant has a strong case, therefore the pre-deposit of interest and penalty is waived and recovery of the same is stayed during the pendency of the appeal - Stay granted.

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• 2013 (12) TMI 351
  Refund claim of additional duty of customs - Exemption Notification No. 102/2007-Cus., dated 14-9-2007 - Unjust enrichment - Held that:- Commissioner (Appeals) has recorded a finding that the Central Excise invoice issued by the appellant did not show that duty element separately, in absence of duty element shown separately in the Central Excise invoice and in view of the fact that Chartered Accountant’s certificate certifying that respondent did not collect duty and the decisions of the Tribunal cited by the learned Chartered Accountant, no merit in the appeal filed by the Revenue and the same has to be rejected - Following decision of COMMISSIONER OF CENTRAL EXCISE, SURAT-I Versus SHRINATHJI DYG. [2009 (12) TMI 641 - CESTAT, AHMEDABAD] - Decided in favour of assessee.

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• 2013 (12) TMI 350
  Conversion of five shipping bills from EPCG Drawback Scheme to EPCG Drawback and Advance Licence Scheme - Held that:- adjudicating authority has rejected the claim for conversion under Section 149 of the Customs Act read with Circular No. 4/2004-Cus., dated 17th Jan.’04 - according to the circular, conversion can only be allowed when the benefit of export promotion scheme claimed by an exporter has been denied by the DGFT/Ministry of Commerce/Customs due to any dispute. In the absence of rejection of the claim under a scheme due to any dispute, the conversion request has been rejected. there is no reason for rejection under the statutory provision, as according to Section 149, conversion is possible on the documents in existence at the time of export. The shipping bills in question are supported by a certificate from the Chartered Engineer and there is also an endorsement in the Chartered Engineer’s certificate with the export particulars, namely, shipping bills nos. etc. The export has taken in the month of Mar.’10 and the request for conversion is in the following month. In the above circumstances, the request for conversion claimed by the exporters is to be allowed - Decided in favour of assessee.

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• 2013 (12) TMI 349
  Convert the encashment of the bank guarantee into the bank guarantee - Tribunal instructed the department not to encash the bank guarantee during the pendency of appeal but Revenue encashed the bank guarantee - Held that:- before the said stay order was passed on 15-3-2011, the Assistant Commissioner had already written to the bank on 7-3-2011 for encashment of the bank guarantee. Presumably, the letter written by the appellant to the department on 15-3-2011 must have been filed in the late hours of the day inasmuch as the order was pronounced in the early hours of the day. It is not necessary that the letter filed in the Receipt Section of the department reaches in the hands of the concerned officer on the same very day itself, especially when it was filed in the late hours of the day. As such, the earliest time at which the said letter intimating the Tribunal’s decision would have reached in the hands of the concerned officer would be the next morning i.e. on 16-3-2011. Before the action could be taken by the concerned officer, the bank has already converted the bank guarantee into the demand draft on 17-3-2011. In these circumstances, it cannot be concluded that the action on the part of the Revenue for getting the bank guarantee encashed was after their knowledge of the Tribunal’s stay order, and was an intentional defiance of the Tribunal’s stay order. The benefit of doubt has to be extended to them - Decided against appellant.

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• Corporate Laws

• 2013 (12) TMI 348
  Winding up Petition – Inability to pay dues – Held that:- The parties have amicably resolved their dispute - It has been agreed among the parties that out of the amount of Rs. 13 lakhs deposited with the Calcutta High Court, the respondent is permitted to withdraw Rs. 10 lakhs and the remaining amount of Rs. 3 lakhs shall be returned to the appellant - The winding up proceedings shall be dropped or permitted to be withdrawn and the hearing of Civil Suit filed by the appellant along with its sister concern against the respondent and others, before the Calcutta High Court shall be expedited.

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• Service Tax

• 2013 (12) TMI 384
  Denial of refund claim - Denial of CENVAT Credit - Notification No.5/2006 (EX(NT), dated 14.03.2006 - Whether services were input services - Held that:- credit denied on the ground that this invoice is for the purchase of equipment and not for services received - appellant is receiving the services from M/s. American Express (I) Pvt. Ltd. and the said company has received the service of rent-a-cab/car rental services and the service tax on these services were provided the service provided. These services were utilised by M/s. American Express (I) Pvt. Ltd. and not by the appellant. The fact that these expenses are re-imbursed by the appellant to M/s. American Express (I) Pvt. Ltd. does not make them eligible to CENVAT credit in respect of these services. The original authority has denied the credit on these invoices as the nature of the services are not clear. The invoices in question referred to the words ‘Real Estate Agents’ along with their service tax registration number. The Commissioner (Appeals) after going through the service agreement came to the conclusion that the service agreement nowhere mentions the ‘Real Estate Agents’ service, whereas the invoices in question referred to ‘Real Estate Agents’ service. These invoices cannot be connected to the service agreement. In the absence of which, the Commissioner (Appeals) has rightly denied the CENVAT credit to the appellant. Commissioner (Appeals) did not treat services on ‘movers and packers’ as input services in the absence of any evidence to the fact that shifting of goods from the guest house or guard hut from one premises to another was in any way related to rendering of the output services. Accordingly, I find no infirmity in the findings of the Commissioner (Appeals) in denying the CENVAT credit to the appellant - Decided against assessee.

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• 2013 (12) TMI 383
  Waiver of pre-deposit of service tax - Authorized service station - Repair and maintenance of vehicles during the warranty period - The activities undertaken by the dealers of the applicants and the dealers are paying service tax on this activity. Further, the applicants are also taking credit of the service tax paid by the dealers - applicants are financing the vehicles manufactured by them by way of loan. The interest on the loan is not liable to service tax as per the provisions of the Finance Act. In respect of the activity such as processing charges, pre-closure charges, termination charges etc. the applicants are paying appropriate service tax. The applicants are also paying service tax in respect of lease agreements. In cases where the applicants were selling the debits to various banks, we find that the applicants are receiving consolidated amount in respect of the assignment of the loan and the buyer of the debts will get the amount in due course as per the terms and conditions of the loan, under which it has been disbursed to the customers - applicants had undertaken to deposit an amount - Therefore, assessee directed to make a pre deposit - Partial stay granted.

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• 2013 (12) TMI 382
  Denial of CENVAT Credit - Excise duty paid on prototypes - Consulting Engineer's Service - Benefit under Notification No.167/71 - Held that:- any service used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products would be eligible for Cenvat Credit. When a manufacturer receives “Consulting Engineer's Service” for the design of the vehicle and utilised those services in the manufacture of prototypes, the usage is in relation to the manufacture of vehicles - Therefore, consulting engineers service which they received from the foreign as well as domestic service provider are in relation to the manufacture of commercial vehicles by the appellant and therefore, the appellant is eligible for the benefit of service tax paid thereon. CBE&C vide order dated 29/11/1973 held that the appellant would be eligible for the benefit of the said notification only when the prototypes manufactured by them get destroyed in the process of testing of the goods or it is scrapped after testing and experimentation is over. It is also on record that the appellant had cleared the prototype goods on payment of duty either for export or for other purposes. If that be so, the prototypes cannot be construed as exempted goods. In such scenario, provisions of Rule 6 (5) of the Cenvat Credit Rule come into play. As per the said Rule, when input services are used both in the manufacture of dutiable goods as also in exempted goods, then the appellant is eligible to avail Cenvat credit of service tax paid on certain specified services manufactured by the said rule. “Consulting Engineers Service” is one of the specified services under sub-rule (5) of the said Rule 6. Viewed from this perspective, the appellant is not required to reverse any credit of the service tax paid on consulting engineers service and we hold accordingly. The adjudicating authority has not considered the issue on merits and therefore, the Revenue's appeal has to be allowed by way of remand and the adjudicating authority is directed to consider whether the appellant is eligible for Cenvat credit of the service tax paid on these services - Decided in favour of assessee by way of remand.

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• 2013 (12) TMI 381
  Waiver of pre-deposit of Service Tax - Penalty u/s 78 - Commercial construction services - Held that:- services have been rendered under the category of commercial construction services by the appellant to various agencies as mentioned above. It is the claim of the appellant that they have rendered the services to Government authorities viz. Eastern Railways and others wherein the service tax liability would not arise - However, since there has been a mismatch between the figures of demand raised in the show cause notice and the reply submitted alongwith documentary evidences by the appellant, the Ld. Commissioner has confirmed the demand. In these circumstances, in the interest of justice, we are of the view that the case deserves to be remitted back to the original authority to examine the evidences now produced by them to ascertain their claim whether the services rendered by them and claimed to fall under the exempted category is correct or otherwise - Decided in favour of assessee by way of remand.

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• 2013 (12) TMI 380
  CENVAT Credit - GTA Service - Whether the appellant is eligible for CENVAT credit of service tax paid on GTA service utilized in respect of transportation of their final product to the customers’ premises from the place of removal on FOR destination basis - Held that:- phrase and expression ‘activities relating to business’ admittedly covers transportation upto the customer’s place was entirely unnecessary - when the claims are put forth on the basis of the said circular of 23-8-2007. for benefit of CENVAT credit, even in the cases where the aforesaid conditions are not satisfied relying on the words clearance of final products from the place of removal, the Central Government thought it fit to amend the provision from 1-4-2008 by substituting the word ‘upto’ in place of from , in Clause (ii) of Rule 2(l) making the intention clear i.e. whether it is an inward transportation of input of capital goods or clearance of final products upto the place of removal, any service rendered and service tax paid would fall within the definition of input service . Therefore, it is clear that till such amendment made effective from 1-4-2008 notwithstanding the clarification issued by the Central Government by way of their circular, transportation charges incurred by the manufacturer for ‘clearance of final products from the place of removal’ was included in the definition of input service - Following decision of CCE vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT] - Decided against Revenue.

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• 2013 (12) TMI 379
  Service Tax liability - Real Estate Agent - Commercial and Industrial Construction services - In-eligible benefit of abatement from the gross value - Benefit of Notification No.12/2003 - Held that:- appellant herein had developed land owned by various societies/non-trading corporations under various projects - appellant herein had collected the development charges when the said scheme/project was executed and handed over by them - to get covered under the definition of real estate agent and real estate consultant, it has to be brought on record that the person has rendered directly or indirectly any services. It is seen from the records and the agreement entered into by the appellant with various entities, we find that the appellant is liable for the profit or the loss of the said project despite the said project was executed in the name of special purpose vehicles. It is also seen that the entire project was financed by the appellant herein. The said facts are not denied or disputed by the lower authorities. It is to be seen on this factual matrix whether there was any service rendered by the appellant in the category of real estate agent for receiving development charges. It is common knowledge that the real estate agent transacts the business of sale or purchase of the property, leasing or renting of the property and gets an amount as a commission. Though the definition of real estate consultant talks about evaluation, construction, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management of real estate, it has to borne out of the record that such services are rendered. Adjudicating authority has confirmed various other demands on the appellant in a finding that the appellant is not liable to shift the Service Tax liability under the category of Works Contract services, as he has already discharged Service Tax liability under the category of commercial and industrial construction services. It is undisputed that the appellant had discharged the Service Tax liability as understood by him under the category of commercial and industrial construction services and later on shifted to works contract services - construction of residential complex services cannot be liable to Service Tax prior to 01.06.2007, if the appellant has paid VAT on the impugned activity as Works Contract - claim of the appellant that they have correctly discharged the Service Tax liability by availing the abatement as given under Notification No.12/2003, is also justified, in as much as there is nothing on record that the appellant has not used any material for completion of said project - Following decision of Commissioner of Service Tax Versus Sujal Developers [2011 (4) TMI 1023 - Gujarat High Court] and Cemex Engineers Vs CST Cochin [2009 (3) TMI 423 - CESTAT, BANGALORE] - Decided in favour of assessee.

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• 2013 (12) TMI 378
  Demand of service tax - C & F Agent services - Assessee contends that they have simply providing cement from the company as a trader under the company’s sales invoices and sold cement to petty customers from their shop under their own sales bills/cash memos therefore No activity covered by the definition of C & F Agency services was being undertaken by them - Held that:- Original Adjudicating Authority having dropped the demand, the appellant would be on their stay on the above point. Nothing has been shown to us indicating that the appellants were acting as C & F Agent for the principal. On the other hand, we find that the appellants were buying and selling the goods on the basis of the invoices issued by the principal and the sales invoices/cash memos issued by them. As such, at this prima facie stage, we are of the view that the appellant has been able to make out a good case in their favour so as to allow the stay petition - Stay granted.

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• 2013 (12) TMI 377
  Penalty u/s 76 and 78 - C & F Agent on behalf of their principal - Assessee claims that they are consignment agent and are not performing the other functions of C & F - Held that:- appellant was only conducting the job of selling the principal’s product without undertaking the other activities associated with C & F Agent - “and” has to be read as “or” and as such, even if one of the functions of the C & F agent is performed, the same gets covered by the definition of C & F Agent - Therefoe, appellant is entitled to unconditional stay - Following decision of Medpro Pharma Pvt. Ltd. v. CCE [2006 (6) TMI 2 - CESTAT, NEW DELHI], Kulcip Medicines (P) Ltd. [2009 (12 )TMI 851 - SUPREME COURT OF INDIA] - Stay Granted.

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• 2013 (12) TMI 376
  Waiver of pre-deposit - Penalties imposed under Sections 76, 77 and 78 - Manpower Recruitment or Supply Agency - Held that:- On going through the contract of the appellant with IOC, it is found that their contract is for stacking, shifting, destacking, purging, cold repair, etc., of LPG cylinders not for manpower and the rates for the services are per 14.2 Kg./19 Kgs./5 Kg. cylinder handled/repair, etc. We are, therefore, of the prima facie view that the services provided by the appellant are not the services relating to Manpower Recruitment or Supply Agency - Stay granted.

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• 2013 (12) TMI 375
  Waiver of pre deposit - Business Auxiliary Services - Facility for passport and visa related work to individuals - Whether service tax liability would arise on the assistance provided by visa facilitators, to individuals directly, for processing of visa applications - Held that:- Visa facilitators, merely facilitate the procurement of visa and directly assist individuals who intend to travel abroad, to complete the immigration formalities - service tax is leviable on any service provided other than assistance directly to individuals for obtaining visa, falling under the description of any taxable service, as classifiable under the appropriate heading - Service rendered by the appellant does not fall under any category of services leviable to service tax - Therefore, decided in favour of assessee.

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• 2013 (12) TMI 374
  Demand of service tax - Management Consultancy Services - Amount paid to foreign service provider - Held that:- the amount paid by the appellant to foreign based service provider under the category of “SAP and IT Support Services” is sought to be treated as payment towards ‘Management Consultancy Services’, which is prima facie incorrect. Therefore, we hold that the applicant had made out a case for full waiver of the dues as per the impugned order - Stay granted.

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• 2013 (12) TMI 335
  Availment of Cenvat credit - Demand of service tax - Service tax paid by the Gas Authority of India Limited on transportation of natural gas to the appellant’s premises is not in relation to an output service provided by them - Held that:- appellant is engaged in compression of the natural gas, which is amounting to manufacture and is also not in dispute that part of the compressed natural gas is cleared by them on discharge of excise duty. It is also not in dispute that the appellant is distributing the natural gas received from the GAIL to various customers. In our view, if the appellant does not receive natural gas from GAIL, he could not provide any output service nor could he discharge the excise duty on the compression activity undertaken by him - appellant has made out a prima facie case for the waiver of pre-deposit of amounts involved - Stay granted.

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• Central Excise

• 2013 (12) TMI 347
  Application for Restoration – Condonation of Delay - Held that:- Delay of one day condoned –The appellant is not vigilant to pursue its remedy - Merely filing the application for restoration of appeal, the appellant kept quiet to cause appearance and explain his case - for absence of the appellant, the delay condonation application was dismissed observing non-prosecution - The history of the case and absence of the appellant, clearly shows that the appellant is not keen except abusing the process of law making repeated prayer for restoration – application dismissed – Decided against Assessee.

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• 2013 (12) TMI 346
  Condonation of Delay – Delay in filing appeals - Held that:- Relying upon COLLECTOR LAND ACQUISITION, ANANTNAG & ANR. Versus MST. KATIJI & ORS. [1987 (2) TMI 61 - SUPREME Court] - The order were received by the applicant just before passing of Final Order dated 19.8.2010 - It appears from e-mail communication that the Advocate sent the draft appeal on 22.9.2010 - the applicant was vigilant and diligent to follow up the proceedings time to time for the different periods - there was no gross negligence or deliberate inaction or lack of bona fide - if the delay is not condoned, it may lead to grave injustice and the COD applications deserved to be accepted. It is apparent on the face of record that in the applicants own case, for earlier period, the Tribunal passed Final Order, which was upheld by the Hon'ble Supreme Court - Once, it is ascertained that the lapse on the part of the applicant cannot be construed as gross negligence then length of delay is not so relevant - the applicant took initiative to file the appeal as evident from the e-mail communication - the applicant was not negligent and inactive - it is a fit case for condonation of delay of filing the appeals – Decided in favour of Assessee.

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• 2013 (12) TMI 345
  Eligibility for the Exemption Notification - Revenue was of the view that what was being manufactured by the appellant was not sub-assembly of scanners but in reality was Ultra-Sound Scanner system – Held that:- Software CD cannot be considered as a part in the present technological regime - the scanner can be said to consist of only two main parts as received in the hands i.e. scanner assembly and the probe - the scanner has to be considered as the main item and the 'probe', a part of the scanner and a necessary part - the appellant/assessee has not been able to make out a case and what is cleared by them is not a part of scanner and thus is not eligible for the benefit of exemption notification – Decided against Assessee. Invocation of Extended Period of Limitation – Held that:- It is a settled principle that merely because an assesee chooses an interpretation beneficial to him, there can be an allegation of suppression or misdeclaration - Appellant cannot be found fault with for coming up with an interpretation and availing the benefit which was not available to them - the order of the Commissioner limiting the demand to the normal period and not imposing the penalty was an order which rendered justice to the appellant/assessee without being unfair to the Revenue – Decided against Revenue.

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• 2013 (12) TMI 344
  Application for Rectification of Mistake – Bar of Limitation - Power to condone delay of how much days – Delay of 233 days - Whether the Commissioner (Appeals) can condone the delay beyond the period of 30 days in terms of Section 35 was decided against assessee – Held that:- The appellants advocate, at the time of appearance before the Tribunal on 7.2.2012 fairly agreed that there was delay of 233 days in filing the appeal before Commissioner (Appeals) and the legal issue that the Commissioner has no power to condone the huge delay - The submission that the advocate, appearing today as he was not the advocate who caused appearance on 7.2.2012, when the other advocate appearing for the appellant agreed to the date of receipt of order by the assessee and consequent delay of 233 days in filing the appeal cannot be accepted – there was no reason to interfere in the order of the Tribunal inasmuch as there is no mistake – Decided against Assessee.

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• 2013 (12) TMI 343
  Restoration of Appeal – Doctrine of merger - Assessee contended that subsequent to dismissal of appeal by the Hon’ble Supreme Court they have deposited the amount of Ten Lakhs Rupees – Held that:- There is no direction by the High Court for recalling of the order of dismissal - In the absence of the same and in the light of the fact that the Tribunal’s order stand merged with the High Court and subsequently with the Apex Court order, the Tribunal has no powers to recall such orders - Following Commissioner of Customs vs. Lindt Exports [2011 (9) TMI 609 - DELHI HIGH COURT ] - when the order of the Tribunal dismissing appeals on account of non-deposit is upheld by Hon’ble High Court, the same is merged with the Hon’ble High Court’s order and attains finality - Tribunal has no jurisdiction to entertain application for restoration of the appeals as it becomes functus officio – Decided against Assessee.

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• 2013 (12) TMI 342
  Export obligation not fulfilled - Goods partly diverted out of EHTP - Violation of post-import conditions of the Notification No. 13/81-Cus. read with Notification No. 53/97-Cus. – Contravention of the condition of Bond and Notification No. 1/95-CE and under Rule 196 of the erstwhile Central Excise Rules, 1944 - Central Excise duty benefit availed on the indigenous material procured under CT-3 - Held that:- The applicant had not intimated the non-availability of the relied upon documents but they only requested for extension of time to file reply to the show-cause notice - they have not filed any reply to show-cause notice - the jurisdictional Superintendent stated that in the factory location, there is no building or machinery belonging to the applicant but a housing project is being executed at that site by another company by name M/s. Akshaya Pvt. Ltd. - BIFR recorded that the possession of the assets of applicant-company has been taken over by M/s. Kotak Mahindra Bank Ltd. under Section 13(4) of SARFAESI Act and abated the reference in accordance with third proviso to Section 15(1) of SICA - the secured creditors and Government Departments are at liberty to file/pursue suit, if already filed, before the competent court of law to recover the dues from the company. Non-production of References – Waiver of Pre-deposits of Excise duty as well as custom duty – Held that:- The applicants have failed to produce any reference that official liquidator stands appointed in the matter - at the location of the factory a housing project is being constructed by Akshaya Pvt. Ltd. - the applicants directed to deposit the entire amount of customs duty and the excise duty along with interest as pre-deposit – stay not granted.

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• 2013 (12) TMI 341
  Quantity- based exemption - Cenvat credit taken on input services lapsed on 1.4.2008 - Recoverable under Rule 14 of the CENVAT Credit Rules, 2004 – Waiver of Pre-deposit – held that:- The appellant opted out of the CENVAT credit scheme on 1.4.2008, with effect from which date they were availing quantity- based exemption from payment of duty on their final product - The demand is in terms of sub-rule (2) of Rule 11 of the CCR, 2004 - the appellant should pre-deposit the amount of CENVAT credit, in case they have already utilized and, if the credit has not been utilized, they shall not utilize it till the final disposal of the appeal - the CENVAT credit have already been utilized, the appellant shall pre-deposit the amount – stay not granted.

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• 2013 (12) TMI 340
  Penalty under Rule 26 of the Central Excise Rules, 2002 - Chakdo rickshaws cleared – Waiver of pre-deposit – Held that:- The appellant is a proprietor of M/s. Raj Auto Industries and has accepted in his statement that they were doing some work for M/s. Rajshakti Automobile Works in assembling chakdo rickshaws - the issue involved in this case as regards the penalty imposed on the appellant needs to be gone into detail as to the evidences which are laid by the appellant in his defences - the appellant has not made out a case for complete waiver of the pre-deposit of the amount - the appellant is directed to deposit an amount of Rs.20,000 as pre-deposit – Upon such submission rest of the duty to be stayed till the disposal – partial stay granted.

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• 2013 (12) TMI 339
  Penalty under Rule 25 of the Central Excise Rules, 2002 – Clandestine removal of chakdo rickshaws – Whether is appellant is job worker or not for M/s. Raj Auto Industries – Waiver of pre-deposit – Held that:- The appellant has been penalised under Rule 25 of the Central Excise Rules, 2002 - the appellant is a job worker and is also holding a central excise registration as a manufacturer and cleared three-wheel vehicles on payment of central excise duty - In the absence of any demand of the duty from the appellant, it is not understandable how the penal provisions under Rule 25 can be fastened on the appellant and he be penalised under violation of the provisions of the Central Excise Act - the appellant has made out a prima facie case for the waiver of pre-deposit of the amounts involved – Pre-deposits waived till the disposal – Stay granted.

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• 2013 (12) TMI 338
  Activity manufacture or not – Mis-declaration of Yacht Ashena as being wooden cargo vessel – Waiver of Pre-deposit – Held that:- The appellant has brought to notice that the boat/yacht which was further worked upon by them was in fact shown to be as constructed/manufactured by M/s. Wadia Boat Builders - the appellant had only done part of the work like fitting of pipelines, fuel tanks and engines - The issue is arguable one as to whether appellant is a manufacturer or not needs to be gone into detail, which can be done only at the time of final disposal of the appeal - the amount deposited by the appellant is enough deposit to hear and dispose the appeal – pre-deposits waived till the disposal - Stay granted.

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• 2013 (12) TMI 337
  Addition of notional interest - Value of the goods manufactured on job work basis – Held that:- The addition of the advance amount received by M/s. INDAL from M/s. Powergrid Corporation in the hands of present appellant, who is only the job worker, cannot be said to be in accordance with the law - the amount was never received by the appellant and the Revenue has not shown that on account of receipt of said advance by M/s. INDAL the assessable value in the hands of present appellant gets depressed - for adding notional interest on advance received from the customers, Revenue has to establish that the assessable value get depressed on account of such receipt of advance – Following Commissioner of Central Excise, Mumbai vs. ISPL Industries Ltd. [2003 (4) TMI 99 - SUPREME COURT OF INDIA] – the test charges received by M/s. INDAL, from M/s. Powergrid Corporation of India, for conducting the special tests before delivery of the goods, cannot be said to have any relation with the manufacture – Decided in favour of Assessee.

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• 2013 (12) TMI 336
  Remission of duty – Goods destroyed in fire – Held that:- The appellants have adopted the same mode of stocking the goods for the last number of years without their being any mis-happening – it was unintended and, has occurred on account of excessive heat for which appellant cannot be held responsible - nobody intentionally invites such accidents and they happen on account of various natural causes - Following Union of India v. Hindustan Zinc Ltd. [2008 (10) TMI 63 - HIGH COURT RAJASTHAN] – the expression “natural causes” and “unavoidable accident” are required to be given reasonable and liberal meaning and a more practical approach is required to be taken - the fire was not on account of any lapse on the part of the appellant – There was no reasons to deny remission of duty to the appellant in respect of the finally manufactured goods destroyed in fire – Confirmation of duty on goods set aside. Denial of credit of duty on packing material – Held that:- Packing material was lying in the godown of the applicant and was not even issued for further use in the factory - credit in respect of raw material/packing materials (Bleaching Powder) which were not put to use or were not even issued for use as is required to be reversed - the accident occurred on account of unavoidable cause, imposition of penalty upon appellant is not justifiable and set aside – Decided in favour of Assessee.

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• 2013 (12) TMI 334
  Cenvat credit of CVD - Goods imported which were originally exported – Waiver of Pre-deposit – Held that:- The provisions of Notification No.94/96-Cus. as to his role will indicate that the appellant is required to discharge the CVD at the time of importation of the goods - the amount which has been paid as the CVD by the assessee, is eligible to be availed as cenvat credit by the appellant - Prima facie, the assessee has made out a case in their favour – Pre-deposits waived till the disposal – stay granted.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 386
  Demand of tax - Rectification application under Section 66 - Admissibility of appeal - Division Bench while modifying the order of the learned Single Judge directed that unless the modified conditions are complied with the appeal would not be disposed of - Held that:- condition imposed by the Division Bench is against the language of the provision relating to appeal. If the conditions imposed by the Division are not complied with, the appeal would have meet its own fate, but the High Court could not have directed in law that unless the conditions are satisfied, the appeal shall not be heard. It is not permissible - time for payment and furnishing security has expired, we extend the time till end of December, 2013 to deposit the amount as directed by the Division Bench and furnish the security as directed therein within the said period - Decided partly in favour of assessee.

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• 2013 (12) TMI 385
  Rebate of tax to cement manufacturing units using flyash as raw material - Violation of Art. 301 and 304(a) of the Constitution of India - Restriction on trade and commerce - Validity of Notification No. T.T.-2-592/XI-9(226)94- U.P. Act-15-48 - Whether doctrine of severability will apply and therefore if Condition No. 1 in the notification violates articles 301 and 304(a) of the Constitution of India; should the notification be struck down in its entirety or merely the impinging condition in the notification - Held that:- State Government has issued notification dated 27.02.1998 reducing the tax liability of the dealers by twenty five per cent on goods having fly-ash contents between 10 to 30 per cent weight and has reduced the tax liability of the dealer by fifty per cent on goods having fly-ash contents exceeding thirty per cent by weight - The immediate effect of such rebate or tax cut decreases the real revenue of the Government and an increase in the real income of those whose tax rate has been lowered. Article 304(a) of the Constitution is an exception to article 301 of the Constitution of India. Article 304(a) does not prevent levy of tax on goods; what is prohibited is such levy of tax on goods as would result in discrimination between goods imported from other States and similar goods manufactured or produced within the State. The object is to prevent imported goods being discriminated against by imposing a higher tax thereon than on local goods. What article 304(a) demands is that the rate of taxation on local as well as imported goods must be the same. This is designed to discourage States from creating State barriers or fiscal barriers at the boundaries. Article 304(a) ensures only equal rate of tax for incoming goods. So if such goods are taxed at a higher rate or where they are taxed at any rate when indigenous goods enjoy concessional rate of tax, article 304(a) is attracted. They are simple cases of hostile discrimination - The concept of rebate of tax in the instant case is akin to concessional/ reduced rate of tax. Rebate is though ex-hypothesi in the nature of subsidy and other incentives given by the Government but conceptually rebate of tax and incentives are different and it needs to be explained in reference to the purpose and nature of such rebate of tax introduced by the legislature. The legislation in respect of a rebate has taken different forms, one of them is a partial rebate in the tax, where the deduction is given partially on the gross amount and the other is the power reserved for the Government to permit rebate in respect of any goods to the full amount of the tax levied at any point in the series of sales of such goods. A dealer who is entitled to a rebate under any notification will collect the tax from the consumers at the point of purchase and then have to pay the full amount of sales tax due on his turnover in that quarter; and claim rebate in terms of the notification in accordance with the provision in the rules. However, the claim for rebate need not necessarily be handed back to the payer after he has paid the stipulated sum, it can also be paid in advance of payment. It is nothing but a remission or a payment back or it is sometimes spoken of as a discount or a drawback. It is the discretion of the State Government, through its legislature, to grant rebate to the full amount of sales tax, unless its power of taxation is limited by Constitutional provisions. In the facts of the present case, the legislature authorizes the State Government under Section 5 of the Act to issue notification in the public interest to grant rebate up to the full amount of the tax levied on any specific point in the series of sales/ purchase of such goods. Such rebate is only extended to the districts in State of Uttar Pradesh. The Government of Uttar Pradesh has the power to refund or discount to the full amount of rate of sales tax levied on a dealer, provided the power to discount does not overall has effects of a weapon of taxation that would discriminate between the goods imported and manufactured in Uttar Pradesh as laid down in article 304(a) of the Constitution. If the grant of rebate of tax by the State Government under Section 5 of the Act is to the full amount of tax levied, then for the dealers manufacturing cement using fly-ash outside the State of Uttar Pradesh but selling it in Uttar Pradesh, though the State Government contends that the rate of tax is same for the dealers inside Uttar Pradesh and outside Uttar Pradesh, but the overall effect is that there is no tax levied on the net turnover after deductions being made from the gross turnover but, on the other hand, the dealers manufacturing or producing cement using fly-ash outside Uttar Pradesh are taxed at the rate of 12.5%. Therefore, it can be said that the rebate of tax is in the nature of exemption and the instant case can be decided on the basis of catena of decisions of this Court where blanket exemption without reasons are said to be discriminatory and violating article 304(a) of the Constitution of India. Condition No. 1 is discriminatory and violates article 304(a) of the Constitution of India and therefore needs to be severed from the rest of the notification which can operate independently without altering the purpose and the object of the notification - ‘rebate of tax’ granted by the State Government to cement manufacturing units using flyash as raw material in a unit established in the districts of State of Uttar Pradesh alone is violative of the provisions contained in articles 301 and 304(a) of the Constitution of India - Decided against Appellant.

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