TMI Tax Updates - e-Newsletter
December 12, 2013

Case Laws in this Newsletter:

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

Articles

1. FILING OF RETURN - FORM – I UNDER TAMIL NADU VALUE ADDED TAX, 2006

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. DRI Asked to Focus on Better Trade Facilitation, Use of Latest Technology and Sharing of Information with Other Intelligence Agencies for Achieving Optimal Results : FM

2. “Lok Adalat” Commences in Company Law Board

3. SPMCIL Contributes Rs. 1 Crore Towards Relief and Rehabilitation Activities in Uttarakhand

4. Issue of Rs.500 Banknotes with incorporation of Rupee symbol (Rs.) without inset letter

5. Issue of Rs.100 Banknotes with incorporation of Rupee symbol (Rs.) without inset letter

6. Issue of Rs. 50 Banknotes with incorporation of Rupee symbol (Rs.) without inset letter

7. NIMZs Under NMP

8. Increase in Incoming Investment

9. Priority for Setting Up of Private Industrial Parks

10. Setting Up of a Regulatory Authority to Monitorentry of FDIs

11. Long Term Vision on Trade and Commerce

12. Trade Deficit with China

13. FSA Support Issue at WTO Ministerial Conference, Bali

14. Issue of MSP in Ninth WTO Ministerial Conference

Highlights / Catch Notes

Income Tax

• Court Upholds Disallowance u/s 43A(3) for Cash Payment to Lorry Driver; No Evidence of Dual Role Found.

  Case-Laws - HC : Cash payment to lorry driver - assessee's only claim before the authorities was that the driver acted in dual capacity, for which there is no evidence - disallowance u/s 43A(3) confirmed - HC
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• Foreman dividends from chit funds are taxable for businesses seeking profit, disqualifying mutuality principle claims.

  Case-Laws - AT : Chit funds - Taxability of foreman dividend - The assessee was a business concern and its aim was to make profits and, thus, the principles of mutuality could not be applied to it - AT
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• Company's Short-Term Loans and Deposits Taxed as Business Profits Under Business Gains Tax Rules.

  Case-Laws - AT : On occasions when the company left with surplus business funds, which were deployed in making short-term inter-corporate deposits and loans and advances - net of the interest to be taxed under the head profits and gains of business - AT
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• Section 43(5) Inapplicable to FIIs: Securities Income Classified as Capital Gains u/s 115AD Explanation.

  Case-Laws - AT : Sec. 43(5) has no application to FIIs in respect of “securities” as defined in Explanation to sec. 115AD, income from whose transfer is considered as short term or long term capital gains - AT
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• Appellate Authority Can Consider Unclaimed Deductions; Section 10A Deduction Granted to Appellant.

  Case-Laws - AT : The first appellate authority has power to entertain a claim of deduction not made before the Assessing Officer - The appellant is eligible for deduction u/s 10A - AT
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• CIT Must Verify Fund Source and Use Before Granting Charitable Status u/s 12AA; Application Rejected.

  Case-Laws - AT : Rejection of application for registration u/s 12AA – Before deciding the entitlement for registration as charitable institution, CIT should verify the source of funds and utilisation of the same - AT
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• Additions in Section 153A Assessment Removed Due to Lack of Seized Material or Concrete Evidence.

  Case-Laws - AT : Assessment u/s 153A – The addition was made on estimated basis and on assumptions without referring to the specific information in the seized material or any other material - additions deleted - AT
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• Charitable Institution Seeks Renewal of Tax Exemption u/s 80G(5) for Income Used Exclusively for Charity.

  Case-Laws - AT : Renewal of exemption u/s 80G(5) - During the course of carrying on charitable activities, the charitable institution may earn some income but the income so earned has to be utilized for charitable purposes only - AT
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• Assessee Entitled to Claim Interest on Arbitrarily Withheld Interest Amount Without Justifiable Reason.

  Case-Laws - AT : The withholding of interest without any justifiable reason in an arbitrary manner will entitle the assessee to claim interest on interest - AT
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• Prepaid distributor discount classified as commission; subject to tax deduction u/s 194H.

  Case-Laws - AT : The amount of discount offered to prepaid distributor was in nature of commission and liable to tax deduction at source under Section 194H - AT
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• Section 292BB Bars Contesting Assessment Validity During Appeals u/s 143(3) of Income Tax Act.

  Case-Laws - AT : Validity of assessment u/s 143(3) - Insertion of S.292BB has taken away the right of the assessee to challenge the validity of assessment or reassessment proceedings during the course of appellate proceedings - AT
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Service Tax

• Conditional Stay Granted on Service Tax for Tamil Nadu Slum Clearance Board Housing Project; Government Retains Ownership.

  Case-Laws - AT : Construction of residential complexes - construction is done for Tamil Nadu State Slum Clearance Board which is a extended arm of the State Govt and the Govt appears to continue to the owner of the flats - Conditional stay granted - AT
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• SEZ and DTA units are separate entities for service tax; tax applies only with two distinct legal persons.

  Case-Laws - AT : Units in SEZ and DTA Seperate legal entity or not - In the case of service tax levy, presence of two persons is a must and these persons have necessarily to be legal persons since there is no definition of person in the Service Tax Act which would mean person has to be understood the way it is understood otherwise - AT
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Central Excise

• Stay Extension Granted Due to Tribunal Backlog and Supply/Demand Mismatch, Not Appellants' Actions.

  Case-Laws - AT : Extension of stay - Pendency of the appeals are not on account of any conduct of the appellants but on account of pendency of a large number of older appeals and a critical supply/demand mismatch in the Tribunal - stay extended - AT
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• Brown Sugar Not Classified as Waste; Rule 6(3)(b) of Cenvat Credit Rules Still Applies for Tax Purposes.

  Case-Laws - AT : Brown Sugar is a residue of a manufactured product and cannot be considered as waste like Baggasse or Mother Liquor - Classification of the product would not alter the position about the applicability of Rule 6 (3)(b) of Cenvat Credit Rules - AT
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• Zero Duty Demand for Used Glass Bottles and Plastic Crates u/r 16 of Central Excise Rules 2002.

  Case-Laws - AT : Duty demand under Rule 16 of the Central Excise Rules, 2002 - no Cenvat Credit was taken at the time of receipt of used glass bottles/plastic crates – thus, amount to be paid at the time of clearance will be zero. - AT
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• Ground Rent Excluded from Taxable Value: Considered Interest on Receivables, Not Storage Charges or Part of Assessable Value.

  Case-Laws - AT : Ground Rent includible in the assessable value or not – Department's plea that the 'ground rent' is the storages charges for the period of delay in lifting of the goods by the customers - held that the 'ground rent' is nothing but interest on receivables - AT
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• Capital goods written off but not cleared from the factory don't incur duty liability when they remain on-site.

  Case-Laws - AT : Capital goods written off but not cleared – Duty liability - as the goods have not cleared from the factory, duty is not payable. - AT
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Case Laws:

• Income Tax

• 2013 (12) TMI 486
  Stay of demand - Held that:- It is open to the petitioner to appear before the Deputy Commissioner of Income Tax and satisfy him that an amount of Rs.1,48,79,983/- has been paid so far - The petitioner will pay to the revenue the balance amount so as to make it 50% of Rs.3,04,25,790/- within 10 days from today - Upon such deposit, the balance outstanding demand of 50% of the Rs.3,04,25,790/- will be stayed - The respondent not to take any coercive steps for recovery of the tax demand for a period of 10 days from today and on the petitioner paying in the aggregate 50% of the outstanding demand of Rs.3,04,25,790/- within 10 days from today, there shall be a stay for recovery of the balance of 50% of the tax - The petition is disposed off.

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• 2013 (12) TMI 485
  Depreciation on assets - Held that:- The Tribunal should have made an open remand for considering the depreciation on assets that the assessee used in the business - The direction of the Tribunal is contrary to law - Without being influenced by the observation made, the Assessing Officer shall consider the claim of the appellant/assessee as regards the depreciation on the fixed assets, for the purposes of finding out the compliance of Section 11 of the Act - Decided in favour of assessee.

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• 2013 (12) TMI 484
  Penalty u/s 271AAA - Surrender of income at the time search - Held that:- The AOP consisted of Virendara Kumar Gupta, Sarad Jain and Sudhir Jain - Initially, the AOP had declared the entire undisclosed income - AOPs are taxed at maximum marginal rate, whereas individuals are taxed on cascading scale. The Assessing Officer had himself given tax credit to individual members of the tax paid by AOP - Taxes and applicable interest were paid on the undisclosed income - Details of nature of undisclosed income and manner of earning was recorded in the statement of Virendara Kumar Gupta - The income was derived from trading transactions not recorded in the books - Decided against Revenue.

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• 2013 (12) TMI 483
  Cash payment to lorry driver - disallowance u/s 43A(3) - Held that:- There is hardly any material to substantiate the case of the assessee that the lorry driver acted in the dual capacity one of which happened to be as the agent of the assessee - A reading of the affidavit extracted filed show that the lorry owner collected the freight from the assessee through the driver for the concerned lorry - Lorry freight was paid in cash by the assessee to the lorry drivers because they needed cash to purchase diesel, tyres and spare parts and for repairs en route - The lorry drivers acted only on behalf of the lorry owners and collected the freight from the assessee - The reason why they collected cash was that they do not have any bank in that place like Virudhanagar - The payers were not in a position to furnish the affidavit that the lorry payments had already been recorded in their books of accounts and they were assessed to tax before their respective Assessing Officer - The assessee's only claim before the authorities was that the driver acted in dual capacity, for which there is no evidence - Being pure question of fact without any material to substantiate the case of the assessee - Decided against assessee.

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• 2013 (12) TMI 482
  Undisclosed investment - Held that:- The A.O. and CIT(A) have taken the different methods for calculating the initial investment in the form of gold - Different figures were emerged as undisclosed investment in purchases - The facts are quite contradictory, as different figures were claimed by the counsels during the course of arguments - The same needs fresh determination - The Tribunal has not examined properly the facts pertaining to the availability of investment - The finding of facts are not clear and the material available on record was ignored - The issue was restored for fresh adjudication. Cash found during search - Held that:- The cash belonged to the assessee's relative - The assessee has filed an affidavit in this regard - The said affidavit which is self explanatory was accepted by the CIT(A) as well as by the Tribunal and accordingly addition in question was deleted - Following Kamala Ganapathy Subramaniam And Another Versus Controller Of Estate Duty [2001 (2) TMI 132 - SUPREME Court] - The Tribunal is a final fact finding authority - Decided in favour of assessee.

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• 2013 (12) TMI 481
  Bad debts on running and terminated chit funds - Held that:- Following assessee's own case for AY 2009-10 - The amount of loss incurred by the assessee has to be allowed on both running and terminated chits if irrecoverable if the prized chit amount has gone out of the hands of the assessee - Bad debts can be allowed to the extent of instalments defaulted by the prized subscribers and written off as bad debt in the books of the assessee - The issue was remitted back for fresh adjudication. Taxability of foreman dividend - Held that:- Following assessee's own case for earlier A.Y. 1991-92 to 1994-95 - The assessee was a business concern and its aim was to make profits and, thus, the principles of mutuality could not be applied to it - The assessee had earned income for the purposes of its business and to be utilised only for the purposes of its business - The assessee company participated in chits promoted by other companies or entities - Profit earning was the motto of the assessee- company - The profits in question arose and accrued from the trade or vocation which it carried on. The principles of mutuality are based on the concept that no one can make profits out of himself. The essence of mutuality is of complete identity between the contributor and the participator - Decided against the assessee. Commission on cancelled chits - Held that:- Following assessee's own case for A.Y. 2009-10 - The amount that is payable to the defaulting subscriber consequent to his replacement by another person the company is entitled to deduct 5% as commission - This has nothing to do with the regular commission Income of the assessee - The commission Income accrues when the accounts have been finally settled to the defaulting non subscriber - In case of a non-prized subscriber the amount of 5% would be deducted from the amounts due to him much before the settlement of his account and recognised as income by way of transfer from current liabilities to profit and loss account - Decided against Revenue. Royalty payment - Held that:- The payment of royalty at 0.5% of having regard to the business requirements of the assessee is for legitimate benefit taken in the course of business and from any standard, it cannot be said that payment of Rs.1 lakh as royalty is sufficient to produce the business of the magnitude procured by the assessee over the years - The holding company has entered into similar agreements with other subsidiary companies and the CIT(A) has considered the same to be reasonable business outflow property under a specific agreement executed by the parties is very much reasonable and should have been accepted as a business expenditure allowable as deduction - Decided against Revenue.

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• 2013 (12) TMI 480
  Cess on green leaf - Held that:- Following CIT vs AFT Industries Ltd. [2004 (7) TMI 81 - CALCUTTA High Court] - Deduction is eligible after computing the income under Rule 8 and the apportionment is to be made only after the income is so computed - Such apportionment cannot be made before the deduction. Rule 8 of the Income-tax Rules, 1962, requires that the computation is to be made as if by fiction the entire income out of the tea grown and manufactured as income assessable under the Income-tax Act, 1961 - Decided against Revenue. Employees' Contribution to ESI and PF - Held that:- Following CIT vs M./s Vijay Shree Limited [2011 (9) TMI 30 - CALCUTTA HIGH COURT] - The amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature - It is applicable retrospectively with effect from 1st April, 1988 - Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act - Decided against Revenue. Interest income - Held that:- The interest income as liable to be assessed only under the head 'profits and gains of business' and that too only the net of the interest - The assessee is carrying on the business for past several years - In the course of carrying on of its business, the assessee borrowed funds on which interest is paid - On occasions when the company left with surplus business funds, which were deployed in making short-term inter-corporate deposits and loans and advances - Such activity of lending money is carried on systematically and in an organized manner with a view to commercially exploit the business funds of the assessee company - The interest income is assessable as business income, more so when admittedly, the return from these loans was much higher than yield form the bank deposits - Decided against Revenue.

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• 2013 (12) TMI 479
  Share application money - Held that:- The assessee has produced the bank accounts statement of the creditorsand the confirmation from the parties from which share application money was paid to the assessee - The transactions of payment of application money was through bank accounts - The Assessing Officer has not made any inquiry to prove that the evidence produced by the assessee is not correct or bogus - The assessee has furnished the complete details of the bank accounts including the amounts deposited in the bank accounts and sources of the said deposited, then the assessee has discharged its onus of proving the capacity and the sources of the application money - The assessee has refunded the entire share application money to the parties because allotment of shares could not be materialized which further strengthen the case of the assessee that the transaction is genuine - The assessee has discharged its onus of proving the identity and the capacity of the creditors as well as the genuineness of the transactions - The creditors didnot have any nexus or relation with the assessee except being investors by making payment of the application money - Decided in favour of assessee.

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• 2013 (12) TMI 478
  Loss from derivative transactions - Capital loss or business loss - Held that:- Income arising to a FII from the transfer of `securities” as specified in Explanation (b) to sec. 115AD can only be considered as short-term or long-term capital gain - It is impermissible to consider such income as falling under the head "Profits and gains of business or profession". Such income arising from the transfer of securities shall be charged to tax under the head "capital gains" alone. Once inclusion of such income from the transfer of securities is held to be falling only under the head "Capital gains", it cannot be considered as `Business income”, whether speculative or non- speculative - Sec. 43(5) has no application to FIIs in respect of “securities” as defined in Explanation to sec. 115AD, income from whose transfer is considered as short term or long term capital gains - It is a well settled legal position that specific provisions override the general provisions - Decided in favour of assessee.

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• 2013 (12) TMI 477
  Deduction u/s 10A - Held that:- The assessing officer could not entertain the claim made by the assessee otherwise than through a revised return, nothing prevented the learned Commissioner of Income-tax(Appeals) from considering the claim of the assessee, which the assessee had specifically, raised in its ground of appeal - This decision of Hon ble Apex Court is limited to the power of assessing authorities for considering a claim made by the assessee which was originally not there in the return - The first appellate authority has power to entertain a claim of deduction not made before the Assessing Officer - The appellant is eligible for deduction u/s 10A - Decided against Revenue.

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• 2013 (12) TMI 476
  Unexplained investment u/s 69 - Addition of income on the basis of peak theory – The assessee issued cheques of Rs.15,000/- on 29-08-2007 towards payment of SBI Card - The assessee has given one cheque to Raman Leela Sales and as per the enquiry from the bank, it is revealed that the said party deals in mobile sales and repairing therefore, this is also expenditure for purchase of mobile or for its repairing which is personal in nature - Held that:- If addition is made on the basis of peak then, any expenditure incurred or investment made prior to the date of peak is to be added in the peak amount and if there is any income after the peak date, the same is also to be added – The peak has been worked out as on 01- 11-2007 and 10-09-2007 - The learned CIT(A) has added in the income for the post-peak period, but there is no observation of the learned CIT(A) regarding expenses/investment prior to peak date - The working of peak by the learned CIT(A) is not sustainable – The addition should be made on the basis of peak and not for entire credit in the undisclosed bank account – The matter was set aside for fresh decision.

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• 2013 (12) TMI 475
  Rejection of application for registration u/s 12AA – The object of the trusts is relief to the poor, education, medical relief, propagation of Christian belief, gospel work without distinction of caste or creed - Held that:- Following Norka Roots [2009 (3) TMI 353 - KERALA HIGH COURT] - Before deciding the entitlement for registration as charitable institution, the Commissioner should verify the source of funds and utilisation of the same - the object of the institution should be ascertained with reference to the source of funds and the application of the same - If in the name of promoting interests of non-resident Keralites, the appellant is engaged in collection of charges from them and making a profit, then certainly it is a profitable organization, no matter that no dividend is declared by virtue of registration granted under section 25 of the Companies Act – The lower authorities have not examined the sources and application of funds - The matter set aside for fresh decision.

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• 2013 (12) TMI 474
  Application u/s 254(2) for rectification of order – Mistakes apparent from record observed – Held that:- The assessee was suffering from financial stringency - The assessee has not been disputed this matter either in the grounds of appeal or in the course of appeal hearing, and it is too late in the day for the assessee to claim that there was no violation in terms of S.249(4) – The assessee has admitted that there was shortfall in the payment of admitted and undisputed tax to the extent of Rs.93 lakhs – The appeal of the assessee is devoid of merit – Decided against assessee.

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• 2013 (12) TMI 473
  Violation of Rule 46A – The assessee has filed additional evidence before CIT – Held that:- The CIT(A) accepted the additional evidence without any enquiry and without giving any reasonable opportunity to the assessing officer to examine the evidence or document or to cross examine the witness produced by the appellant - , the Commissioner of Income-tax(A) has granted entire relief only on the basis of the additional material filed by the taxpayers – There was a gross violation of Rule 46A – The order was set aside for fresh decision.

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• 2013 (12) TMI 472
  Assessment u/s 153A – Whether addition can be made on basis of certain notings made on loose sheets seized during search - Held that:- AO should bring other cogent and corroborative evidence on record to establish that the notings in loose sheets actually represent undisclosed income - The assessee as well as Sri Jitender Kedia in their statements stated that an amount of Rs.2 crores was advanced to Sri Jitender Kedia for taking on lease M/s Kedia Alloys Pvt. Ltd., and as the deal did not work out Sri Jitender Kedia returned an amount of Rs.2.70 crores to the assessee and other partners of M/s Padmavati Ispat, along with other amounts spent - The addition was made on estimated basis and on assumptions without referring to the specific information in the seized material or any other material – The AO has not given any specific logic on which basis he has computed the figure of Rs Rs.48,49,000/- Decided against Revenue.

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• 2013 (12) TMI 471
  Assessment u/s 153C - The assessee has received Rs.89.50 lakhs through three demand drafts; Rs.5 lakhs through cheque and a further amount of Rs.89.50 lakhs in cash, for services rendered by him in connection with sale/purchase of land by DLF group of companies – Held that:- The assessee did not appear before the AO for confronting the questions – CIT(A) only considered the documents submitted in the Lok Adalat - It is not clear whether the assessee was a party in the proceedings before the Lok Adalat or he was given opportunity to explain on this aspect – Although the assessee has lodged complaints with the Police and Bank authorities – In view of natural justice the assessee was given one more opportunity to substantiate his claim – The matter was set aside for fresh examination.

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• 2013 (12) TMI 470
  Whether the income arrived on sale of shares is business income of the assessee – The frequency and regularity of buying and selling of shares, by the assessee is very high. The period of holding of shares is also very less - The assessee has held 1,16,139 shares for a period of one day to fifteen days only - Held that:- The mode of buying and holding of shares reveals that the intention of the assessee is not to hold on these shares for a longer period for earning dividend, but to use the shares for trading purposes only - The assessee has acquired scrips of as many as 90 companies during the year and purchases of which were also not made at once but on multiple occasions and in different quantities - Following ACIT V/s. Shri Anil Kumar Jain and another - The assessees have made several transactions of purchase of shares during the relevant year under consideration, and if there high volume, frequency and regularity of the activity carried on by the assessee in a systematic manner, it would partake the character of business activities carried on by the assessee in shares, and it cannot be said that the assessees have merely made investments in shares - The assessee has carried on the activity in a systematic and organized manner with an intention to earn profit - In subsequent assessment years i.e. in 2009-10 and 2010-11 also the assessee has treated the transaction in shares as business. In fact for the assessment year 2010-11 the assessee has disclosed a profit of Rs.2,14,80,187/-as profit from sale of shares and has paid tax of Rs.66.40 lakhs - Decided against Revenue.

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• 2013 (12) TMI 469
  Unexplained trade creditors u/s 68 – The assessee has shown total trade creditors of Rs.56,86,924/- out of which the confirmation letters were received only from the trade creditors of Rs.9,70,524 - Held that:- The notices sent to 20 trade creditors having an amount of Rs. 22,02,349/- were returned by the postal authorities with the remark "no such firm / addresses" - Other trade creditors having amount of Rs. 15,53,815/- to whom notices were served but failed to file any confirmation letters – In respect of other trade creditors either the addresses were not furnished or have denied any business relationship with the assessee - The assessee has not filed any fresh list with complete and correct addresses of trade creditors which the assessee has alleged to be genuine creditors - No effort was made to summon trade creditors to the tune of Rs.15,53,815/- to whom notices were served but have not replied – The issue was remitted back to Assessing Officer only for limited purpose of verification again from the trade creditors who have been earlier served but failed to file any confirmation letters.

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• 2013 (12) TMI 468
  Renewal of exemption u/s 80G(5) - As per the income and expenditure statement as on 31.3.2009, 31.03.2010 and 31.03.2011 there is surplus of income over expenditure to the tune of Rs. 34,01,445 - The gross receipts of the assessee society for the three years were Rs.3,65,99,748/-, Rs.3,01,39,572/- and Rs.3,66,37,960/- respectively – Held that:- The assessee trust runs Working Women's Hostel, M.R. School, Home for disabled persons, Empowerment Centre etc. on purely commercial basis - The assessee has shown in its books of account profit grants from Government and other forums - The main expenditure has been incurred only with regard to running of the school - The assessee has not been able to place any document on record to show that the assessee is actually utilizing the funds towards charitable activities - During the course of carrying on charitable activities, the charitable institution may earn some income but the income so earned has to be utilized for charitable purposes only – Decided against assessee.

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• 2013 (12) TMI 467
  Interest on refund due to assessee – The assessee was granted less amount of interest u/s 244A – Held that:- Following Sandvik Asia Ltd. [2006 (1) TMI 55 - SUPREME Court] - The withholding of interest without any justifiable reason in an arbitrary manner will entitle the assessee to claim interest on interest - The amount of refund had been paid on different dates between the period from 12.01.1991 to 26.12.1996, after passing the assessment order and there is no inordinate delay on the part of the Revenue in refunding the amount - In the order passed under Section 154 of the Act, the amount refundable have been determined only vide order dated 4.2.2003 - No amount of interest have been withheld - If there is any delay in assessment and refund of the amount, the question of payment of interest would arise and not otherwise – The assessee as well as the AO has not mentioned the period of delay of refund - The case was remitted back to the Assessing Officer for the limited purpose of calculation of interest on interest, if any arising out of delay in payment of interest.

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• 2013 (12) TMI 466
  Whether cash discount on payments made to the assessee in advance by agents for sale of SIM cards covered under section 194H – Held that:- Following CIT v Idea Cellular Ltd [2010 (2) TMI 24 - DELHI HIGH COURT] - Prepaid or post paid connections are provided to the subscribers through distributors called “Prepaid Market Associates (PMAs)” appointed by the assessee – The agreement with the assessee and prepaid distributors were that of Principal and Agent at all times and prepaid distributors were selling a prepaid SIM Card/recharge coupon – The amount of discount offered to prepaid distributor was in nature of commission and liable to tax deduction at source under Section 194H- It does not amount to 'sale' of goods as unsold SIM cards are to be returned to the assessee and it is required to make payment against them. This is an antithesis of 'sale' – Decided against assessee. Levy of interest u/s 201(1A) – The assessee has not provided the details of recipients and the particulars of payment of taxes by them - Held that:- Following Ramakrishna Vedantha Math v ITO [2012 (8) TMI 128 - ITAT, KOLKATA] - When the Assessee furnishes lawfully maintained information about the recipients, the AO should first ascertain the related facts about payment of taxes directly by the recipients – Following Hindustan Coca Cola beverages Ltd v CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA] – If the recipients have paid the tax on the amount of commission receivable by them, then the Assessee cannot be visited with liability u/s 201(1), but interest for non deduction of tax may be levied till the date of filing of return by the recipient – The issue was restored to the files of the AO for fresh decision.

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• 2013 (12) TMI 465
  Whether any income accrued or arosed in the hands of the assessee joint venture – Held that:- Following IVRCL-KBB-MEIL(JV) [2012 (10) TMI 563 - ITAT HYDERABAD] - If the entire business/contract receipts received by the JV are transferred to the constituent members of the JV - There is no accrual of income in the hands of the assessee-JV – But if there is retention of any portion of contract receipts received by the JV, it has to be taxed in the hands of the assessee in accordance with law – The issue was restored back to the files of AO. Validity of Demand notice issued – The assessment order for A.Y. 2003-04 passed under S.143(3) was signed by ITO Ward 7(1) Hyderabad on 20.6.2005 - The demand notice under S.156 dated 23.12.2008 was issued by the DCIT Circle 16(3) and served on the assessee on 29.12.2008 - Held that:- Following CIT V/s. Purshottamdas T.Patel [1993 (8) TMI 21 - GUJARAT High Court] - In the absence of any evidence to indicate that the assessment orders were ever issued to the assessee earlier - The demand notice in terms of section 156 was served on the assessee only on 29.12.2008 - The assessments for the years under appeal to be barred by limitation in terms of section 153 – Decided against Revenue.

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• 2013 (12) TMI 445
  Validity of assessment u/s 143(3) - Held that:- The notice under S.143(2) was served more than 12 months after the month of filing of the return - Following Kuber Tobacco Products (P) Ltd. V/s Dy. CIT [2009 (1) TMI 304 - ITAT DELHI] - As per the amendment brought by the Finance Act, 2008 w.e.f. 1.4.2008 - Insertion of S.292BB has taken away the right of the assessee to challenge the validity of assessment or reassessment proceedings during the course of appellate proceedings. Disallowance of depreciation - Held that:- The business of the assessee was not yet set up by the end of the previous year relevant to the assessment year under consideration - This is the factual finding given by the CIT(A), against which no contrary evidence is produced before the Tribunal. Reopening of assessment u/s 147 - Held that:- In view of proviso to Explanation 3 to S.147 inserted by the Finance (No.2) Act, 2009, with effect from 1.4.1989 - The AO can go into other aspects which have not been recorded in the reasons for reopening the assessment and which only came to notice during the reassessment proceedings - The provision is applicable to all the pending proceedings. Preliminary expenses - Salaries, travelling and office maintenance expenses - Held that:- Following Pohoomal Bros V/s. CIT [1958 (3) TMI 55 - BOMBAY HIGH COURT] - The expenditure to be allowable should have been incurred for the business being carried on - The assessee was yet to commence the business, the expenditure claimed is not allowable - The CIT(A) directed the AO to consider the amortization of the expenses claimed under S.35B of the Act as preliminary expenses - Decided against assessee.

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• 2013 (12) TMI 444
  Validity of proceedings u/s 143(3) - Held that:- The notice u/s 143(2) was issued on 9-9-2009 i.e. beyond one year from the date of filing of the return - The assessee has participated in the assessment proceedings and fully cooperated for completion of the assessment without raising any objection with regard to belated issuance of notice u/s 143(2) - Section 292 BB of the Act was brought to the statute by the Finance Act, 2008 w.e.f. 1-4-2008 - It is precluded u/s 292BB to raise such an issue after completion of the assessment proceedings before the appellate forum - The provisions of section 292BB shall be applicable to all the pending proceedings as on 1-4-2008 – Following M/s Navayuga Spatial Technologies Pvt. Ltd. Vs DCIT [2013 (12) TMI 445 - ITAT HYDERABAD] - The mistake on account of belated service of notice is a curable mistake and the provision u/s 292BB is applicable to all the pending proceedings irrespective of the assessment years to which they relate – Decided against assessee. Agricultural income – Held that:- The assessee has failed to produce any evidence in support of its claim that the land sold was agricultural land - There were no other details with regard to the extent and nature of land sold and whether any agricultural activity was carried on those lands by the assessee or not – The case shall be decided in accordance with the guidelines laid down by the Supreme Court in Sarifabibi Mohamed Ibrahim vs. CIT [1993 (9) TMI 10 - SUPREME Court] - The issue was restored for fresh adjudication. Disallowance of expenses – Land development expenses, payment of salary, survey expenses, postage and telegram, staff welfare, office maintenance, printing and stationery etc. - Held that:- The assessee has not produced any evidence such as vouchers and bills or any other material in support of the expenses claimed - The disallowance made by the AO under the aforesaid head appears to be on higher side – All the claim of expenses cannot be accepted – It is justified to disallow the aforesaid expenses to an aggregate amount of Rs.10 lakhs – Partly allowed in favour of expenses. Difference in cash book and cash balance – Held that:- The AO has simply made the addition without making a proper enquiry to find out whether the entries indicated actual receipt of the amount or not - When pass book numbers have been mentioned against the entries, the AO should have called for pass books for cross verification. The CIT (A) has also not dealt with this issue in a proper manner - The issue was restored for fresh adjudication. Agricultural Income – Held that:- The assessee did not produce any evidences with regard to the agricultural income earned nor any bills or vouchers are produced with regard to the expenses incurred towards earning of agricultural income - The assessee has claimed land development expenses but no details are available on record as to for development of which land, these expenses have been incurred by the assessee - The land sold were scattered over different places - The CIT (A) has failed to examine whether the agricultural income shown by the assessee will be the expected income from cultivation of 67 acres of land or not - It has to be ascertained that as on the date of sale whether the lands in question were put to agricultural use or not - Whether an agriculturist would have purchased the land for agricultural purposes at the price at which the land was sold - Whether the assessee would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield - These aspects have not at all been examined either by the AO or by the CIT (A) while coming to their respective conclusions - The issue was restored for fresh adjudication. Difference in sundry debtors – Held that:- Any discrepancy by itself cannot be a ground for addition without proving the fact that such discrepancy has resulted in an undisclosed income - As observed by the CIT (A), the AO has not alleged that there are any unexplained credits on this account – Decided against Revenue. Addition on adhoc basis – Possibility of unregistered transactions – Held that:- The AO himself was not certain whether the assessee in fact has made unregistered transaction therefore he has used the word “might have” - When the AO is accepting almost 90% of the transaction – It is not justified on his part to make a disallowance of Rs.10 lakhs on pure conjectures and surmises - Decided against Revenue. Undisclosed investment – Held that:- The investment was made from available source as per the books of accounts and nothing was from outside the books - The assessee has also demonstrated that the payment was made to M/s Kinnera Constructions through account payee cheque - Since the investment has been made out of accounted for money, addition made by the AO was without any basis – Decided against Revenue.

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• Customs

• 2013 (12) TMI 464
  Valuation of goods - Enhancement in value of goods - Held that:- machine was declared by the appellant as second-hand machine in the Bill of Entry and the said declaration has been accepted by the adjudicating authority. Therefore, the machine is new one is not sustainable as the same has not been challenged by them - it is a second-hand machine and has imported by the appellant on negotiated price from the Belgium trader. The invoice price shown by the appellants has also been supported by two Chartered Engineers one from the supplier side and one appointed by the Revenue to ascertain the price of the imported machine. As both the Chartered Engineers have certified that the price of the imported machine in the invoice is reasonable - the charge of undervaluation is not sustainable and there is no question of loading of the value on value shown by the appellant in the Bill of Entry. Accordingly the impugned order is set aside, value shown by the appellant in the Bill of Entry is accepted - Decided in favour of assessee.

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• 2013 (12) TMI 463
  Condonation of delay - Maintainability of application in terms of Section 129DD read with Section 129A(1) of Customs Act, 1962 - Held that:- applicants have filed a revision application before Joint Secretary, Govt. of India, Ministry of Finance, within the time-limit of three months prescribed under Section 129DD(1) of Customs Act, 1962 - The reference application may be filed within four weeks from date of order and if it so filed, the period between this date and date of filing shall not be taken into consideration in computing the period of limitation for filing an application under Section 35G - Following decision of Steel Authority of India Ltd. v. Collector of Central Excise [1995 (8) TMI 69 - SUPREME COURT OF INDIA] - Delay condoned.

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• 2013 (12) TMI 462
  Duty demand - Stay application - Exemption under Notification No. 203/92-Cus - Nexus between the import item and the export item - Held that:- Neither of the lower authorities has denied the benefit to the assessees from the licensing angle. The export item is synthetic shoes. The imported material is, admittedly, polyester fabric 58”. The Norms Committee’s decision is in favour of the assessees. It is to the effect that the polyester fabric 58” can be considered as synthetic lining material for synthetic shoes covered by the relevant item of SION. Prima facie, therefore, the view taken by the authorities below is not correct. Hence there will be waiver of pre-deposit and stay of recovery in respect of the amounts of duty worked out by the appellants on the basis of the finalized assessments. Further, there will be stay of the operation of the impugned order as well - Stay granted.

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• 2013 (12) TMI 461
  Penalty u/s 112(a) - Import of old and used goods - Held that:- mobile phones, on examination, were found to be old and used. The contention of the applicant that these mobile phones are capital goods for development of softwares, prima facie, we are of the view that these mobile phones are not capital goods. Therefore, the applicant has failed to make out a case for waiver of pre-deposit of the penalty imposed on them. Accordingly, we direct the applicant to make a pre-deposit of 50% of the penalty imposed on them within four weeks - Decided against assessee.

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• 2013 (12) TMI 460
  Stay application - Release of seized goods - Redemption facility given - Seizure of betel nuts and vehicles - Held that:- betel nuts under the Import and Export Policy, are not prohibited goods nor restricted goods. Therefore, the adjudicating authority has to give an option to redeem the goods to the owner. In view of the provisions of Section 125 of the Customs Act, I find no infirmity in the impugned Order whereby an option is given to the owner to redeem the goods which are not prohibited or restricted goods - Stay denied.

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• Corporate Laws

• 2013 (12) TMI 459
  Violation of Regulations 4(1), 4(2) (a), (b), (e), (g) and (n) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 - synchronized trade - All trades in shares of Adani Exports Ltd. effected by appellant during investigation were found to be synchronized and those trades were with only one group - Held that:- synchronized trade is per se not illegal. Synchronized transaction would be illegal if it is executed with a view to manipulate the market, is dubious in nature and is executed with a view to avoid regulatory detection, does not involve change of beneficial ownership or is executed to create false volumes resulting in upsetting market equilibrium etc. - save and except recording that trades executed by appellant with one group were synchronized, no other particulars are set out in the impugned order. Neither names of persons forming group with whom appellant had traded nor their connection with appellant has been set out in the impugned order. Unless some connection between appellant and counterparties with whom appellant traded is established, it is difficult to hold that trades in question were carried out with a view to manipulate market by creating false volumes resulting in upsetting market equilibrium. Appellant had stated that while carrying out jobbing transactions some transactions carried out by appellant could have been matching, it cannot be inferred that trades effected by appellant were manipulated. In a screen based trading executed at stock exchanges, it is possible that some persons forming a group in connivance with each other may execute trades in a scrip with a view to create artificial volume in the scrip. However, if there is no direct or circumstantial evidence which is brought on record to suggest that appellant was connected to that group or connived with that group, it would not be proper to hold appellant to be guilty of violating PFUTP Regulations/Broker Regulations merely because trades between that group and appellant were found to be synchronized - Decided in favour of appellant.

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• Service Tax

• 2013 (12) TMI 500
  Demand of service tax - Bank accounts freezed - Held that:- petition dispose of with a direction to the respondents to withdraw the letter dated 4 March 2013 freezing the petitioner's bank account or any subsequent communication regarding the petitioner's bank account upon the petitioner furnishing the bank guarantee - It will be open to the United Bank of India, Dahisar (W) Branch to utilise the amount lying in the petitioner's account for the purposes of giving the bank guarantee as required by the petitioner - It will be open to the petitioner to give the bank guarantee of United Bank of India or any other Nationalized Bank. The bank guarantee will be subject to the satisfaction of the Commissioner of Service Tax, Mumbai - Decided in favour of assessee.

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• 2013 (12) TMI 499
  Demand of service tax - Service rendered outside India - Notification No.14/2004-ST dated 10.9.2004 - Held that:- Foreign Trade Policy 2004-09, on the services rendered outside, the service tax payable thereon, has to be exempted or remitted and considering the fact that the payment, however, will have an adjustable effect through MODVAT Credit, the entire exercise is neutral - Even though the relevance or otherwise of the Notification relied on by the assessee, and the Foreign Trade Policy is a matter for consideration in the appeal filed before the Tribunal, considering the prima facie plea of the assessee that the entire exercise ultimately, would be only revenue neutral and considering the balance of convenience made out by the assessee - Order of Tribunal set aside - stay granted - tribunal directed to decide the issue on merit.

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• 2013 (12) TMI 498
  Waiver of pre-deposit - Availment of ineligible CENVAT Credit - Cenvat credit availed on the computer generated invoices issued by the service provider - Held that:- Service providers have not issued any certificates nor any correspondence is available to come to a conclusion that such service providers have, in fact, issued these invoices to the appellant - Appellant has not made out a case for complete waiver of pre-deposit of the amounts involved - Conditional stay granted.

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• 2013 (12) TMI 497
  Eligibility for cenvat credit on couriers and Goods Transport Agencies services - Services used for removal of exisable goods beyond factory gate - Scope of Definition of Input Service - Revenue was of the view that after the amendment of ‘Input Services’ at Rule 2(l) of Cenvat Credit Rules, 2004 with effect from 01.04.2008 – Held that:- Following CCE, Nagpur Versus Ultratech Cement Ltd., [2010 (10) TMI 13 - BOMBAY HIGH COURT ] - Cenvat credit on Courier services and GTA services decided in favour of the applicant - the claim that the appellant have paid excise duty on the value inclusive of the value of Courier services/ GTA services has not been examined - This is a very relevant fact to decide whether it should be considered as an input service - The most relevant issue to be decided is what is the place of removal because even after the amendment dated 01-04-2008 services for removal up to the place of removal is included in the definition of input services – Pre-deposits waived till the disposal – Stay granted.

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• 2013 (12) TMI 496
  Demand of service tax - Free service during the warranty period - Reimbursable service - Held that:- prima facie information booklet for Extended Warranty that such service is provided by Maruti Suzuki Ltd. only and consideration for such services if taxable is to be taxed in the hands of Maruti Suzuki Ltd. and not in the hands of the person who canvasses the business and takes commission. The value of warranty service though received in the hands of applicant, prima facie it does not form part of the value of services rendered by the applicant. We also notice that they have paid service tax on the actual amount retained by them for the services provided namely canvassing of business of extended warranty. Therefore, we waive the requirement of predeposit of dues arising out of impugned order for admission of appeal - Stay granted.

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• 2013 (12) TMI 495
  Demand of service tax - Construction of residential complexes - Held that:- appellant was a NGO and construction was done for a Rural Development Society which is not the arm of the State Government and its members were not staying in the houses constructed whereas in this case construction is done for Tamil Nadu State Slum Clearance Board which is a extended arm of the State Govt and the Govt appears to continue to the owner of the flats - Following decision of Khurana Engineering Ltd. Vs CCE Ahmedabad [2010 (11) TMI 81 - CESTAT, AHMEDABAD] - Conditional stay granted.

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• 2013 (12) TMI 494
  Deviation from the spirit of Notification No. 9/2009-S.T., dated 3-3-2009 - Clause (105) of Section 65 - Whether or not the said taxable services are provided inside the Special Economic Zone, are exempt from the whole of the service tax leviable thereon under Section 66 of the Finance Act - Held that:- Para 2 of the Notification prescribes the condition of exemption. When the conditions were spelt out the adjudication ought to have categorically brought out the deviation and manner of deviation thereof. Satisfaction has been recorded about the authenticity of the claim of the appellant in page 63 of appeal folder exhibiting the adjudication order. Nothing can be doubted against the appellant as to its claim when materials were provided to him. But authorities came to an abrupt conclusion. Had the Commissioner brought out the deviation in clear terms in the light of Para 2 of notification there would have been a case for Revenue for interference. But summary conclusion drawn does not call for approval thereof when the order is neither self speaking nor showing departure of compliance with terms of notification - Decided in favour of assessee.

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• 2013 (12) TMI 493
  Waiver of pre deposit - Penalties under Sec. 77 & 78 - Renting out of immovable property - Held that:- benefit of SSI exemption Notification No. 6/2005-S.T., dated 1-3-2005 as amended vide Notification No. 8/2008-S.T., dated 1-3-2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. In these cases, if the cheques for rent are received individually by all the appellants, it was indicated in the agreement between the individuals for the purpose of renting out of premises to another person so as to make it specific that individually they are renting out the property to a person. On perusal of the said notification, we find that the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit - Stay granted.

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• 2013 (12) TMI 492
  Demand for Service Tax, interest and penalty - Units in SEZ and DTA Seperate legal entity or not - Definition of persons read with Rule 19(7) of SEZ Rules - Held that:- SEZ units do not have separate balance-sheet and audited accounts and they are considered as divisions of L & T for all statutory and other SEZ purposes - Therefore, merely the fact that invoices have been issued and agreement was entered into cannot discriminate against the appellants to take a view that SEZ units are separate entity irrespective of legal position - merely because invoices have been issued and agreement has been entered into, SEZ unit do not become separate legal entities. What is required to be done is whether in the eyes of law these units have been treated is separate entity, which is rightly submitted, has not been contradicted by the Revenue - it has not been shown as either an association of person or a body corporate, the domestic units of SEZ are separate persons either in the eyes of law or in the eyes of appellants themselves as the above discussion about issue of invoices and accounts would show. Therefore in our view in terms of definition of person, it cannot be said that the units in SEZ and DTA units can be considered as separate person. The goods as soon as they are manufactured become liable to duty irrespective of the fact whether they are sold or not. This is the reason while Central Excise statute has separate provision for remission of duty in case of goods which are destroyed in accident or fire etc. before removal and in the case of goods which become non-marketable and therefore are to be destroyed. On the other hand, service is levied on the transaction between a person and another person. In the case of service tax levy, presence of two persons is a must and these persons have necessarily to be legal persons since there is no definition of person in the Service Tax Act which would mean person has to be understood the way it is understood otherwise - Revenue has failed to show that service tax levy is attracted on the services rendered by SEZ units to DTA units of L & T unit in this case - Decided in favour of assessee.

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• 2013 (12) TMI 491
  Rejection of refund claim - Port services - Claim rejected for Stevedoring and documentation charges - Notification No. 17/2009-S.T., dated 7-7-2009 - port service is one of the services notified under Notification No. 17/2009-S.T. There is also no clear cut finding that Service Tax has not been paid by the service provider under the category of port services. Certificates which were produced show that the service provider was registered under port services category. Further, the service provider was authorized to provide services in Navlakhi port for providing services for stevedoring and documentation. Though the services are provided in the category of port services, the finding is that in reality it is cargo handling services and there is no service tax liability. If it was felt that the service tax was not payable, but paid action was required to be taken at the end of service provider - service tax has been paid under the category of port services, denial of service tax cannot be sustained - Decided in favour of assessee.

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• 2013 (12) TMI 490
  Waiver of pre-deposit of duty, interest and penalty - Process of manufacture or works contract - Goods cleared by the applicants are used in the manufacture of exempted goods - Held that:- Commissioner (Appeals) vide order set aside the demand which was confirmed on same grounds for the past period - as the applicant is already paid Service Tax on the same activity. The pre-deposit of duty, 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 489
  Penalty u/s 76 - Delay in filing return - Original authority considered that penalty is not imposable under Section 76 - Revisional authority imposed penalty under Section 76 for 6 days’ delay - Held that:- The adjudication nowhere throws light about analysis of Section 80 to the case of the appellant. The only consideration before the adjudicating authority was that there was 6 days delay and the appellant had no mala fide. No doubt, in his testing under Section 80 of Finance Act, 1994 pleading of appellant was agreed. The order recorded by revisional authority does not show such pleading. But the delay was only 6 days in filing return as is recorded by the adjudicating authority. The pleading of the appellant was that there were financial crisis and period of dispute was prior to extraordinary tax friendly scheme. When the matter was not decided by the adjudicating authority specifically invoking Section 80, the revisional authority lacks scope to proceed in a new premise. The reasons recorded by the adjudicating authority read with plea of the appellant demonstrates mitigating factor for waiver of penalty. The revisional order rather appears to be unreasonable and becomes unsustainable for a small taxpayer at the initial stage of levy - Decided in favour of assessee.

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• 2013 (12) TMI 488
  Waiver of pre deposit - Service Tax demand - Development of telecom infrastructure - Held that:- Prima facie, RCIL is involved in rendering services by developing the infrastructure for the applicant and ultimately when the infrastructure is ready, the applicant is required to pay charges depending upon the extent of use. The payments received by the applicant is only in the nature of reimbursement of expenses which are required to be made by the later for the purpose of creating the infrastructure facility as per the MOU. Therefore, prima facie, these payments cannot be treated as payment towards support services rendered by the applicant to RCIL and therefore, we hold that the applicant has made out a prima facie case for full waiver of the dues as per the impugned order - Stay granted.

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• 2013 (12) TMI 487
  Demand of CENVAT Credit - Service of preparing techno feasibility report regarding rehabilitation - Stay application - Held that:- The service of preparing feasibility report for rehabilitation of the company had been received by the appellant from M/s. SBI Capital in terms of the directions of the BIFR. Without such feasibility report from the M/s. SBI Capital rehabilitation package could not be finalized by the BIFR. Therefore, the service received by the appellant from SBI Capital has very much nexus with their manufacturing business and is covered by the term “activities relating to business” in the inclusive part of the definition of “input service”, as given in Rule 2(l) - Stay granted.

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• Central Excise

• 2013 (12) TMI 458
  Modification of order – Reduction of Pre-deposits ordered – Leviability of Excise duty on fatty acid - Held that:- The residues were in the form of Gums/Waxes and Recovered Oil/Fatty Acids and those goods are marketable, and considering the factual situation and considering the Notification, the Tribunal granted the relief - palm fatty acid is the main disputed item – Following CCE VIZAG V. JOCIL LTD. [2010 (12) TMI 24 - Supreme Court of India] - palm stearin emerging as a by-product during the manufacture of crude oil, is a dutiable product and classifiable under Chapter 38 of the Central Excise Tariff Act - the issue has to be decided only at the final adjudication of the appeal filed by the appellant before the Tribunal - Appellant is directed to deposit reduced amount of Rupees Seventy Five lakhs as pre-deposits.

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• 2013 (12) TMI 457
  Extension of stay - operation of the orders expired in terms of the 2nd and 3rd pvosisos to Section 35C(2A) of the Central Excise Act, 1944 – Held that:- An order of waiver of pre-deposit granted under provisions of Section 35F does not, either expressly or by any compelling implication, have a legislatively enjoined sunset period. Waiver of pre-deposit granted always operates during pendency of the appeal. Pre-deposit is a threshold requirement for triggering the substantive jurisdiction of the Tribunal. Pendency of the appeals are not on account of any conduct of the appellants but on account of pendency of a large number of older appeals and a critical supply/demand mismatch in the Tribunal - it is appropriate to grant extension of the stay orders earlier granted, to operate during the pendency of the appeals – Decided in favour of Assessee.

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• 2013 (12) TMI 456
  Restoration of stay application – Waiver of Pre-deposit – Held that:- It is apparent that where an exemption from whole of duty of excise has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods - The reading of section 5A (1A) would make us understand that where there is any other duty leviable such as Tariff rate, the assessee has to avail exemption notification granted absolutely - both the notifications have granted exemption without any condition - Notification No.58/09 granted whole exemption which is in consonance with the wordings of Section 5A (1A) of the Act – the applicant failed to make a prima facie case for waiver of pre-deposit of entire amount of duty – assessee directed to make a pre-deposit of Rupees one Lakh 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 455
  Restoration of Appeal – Held that:- The first application for restoration of appeal was dismissed and that order was upheld by their Lordship by an order dated 07.10.2004, which we were informed was maintained by the Apex Court in an SLP fled by the applicant – Thus, the question of restoring Appeal in the Tribunal’s record does not arise inasmuch as, its dismissal has been upheld by the highest court – there was no merit in the second application filed by the applicant – Decided against Assessee.

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• 2013 (12) TMI 454
  Duty demand under Rule 6(3)(b) of cenvat credit Rules, 2001 – Brown sugar emerged as residue in manufacture of sugar – Held that:- Brown Sugar is not an agriculture waste (like Baggase and press mud) or a waste of an input after its use like HCL but a residue of manufactured product viz sugar not meeting the specification of standard sugar and is brown in colour - This is reprocessed and converted into normal sugar – it cannot be considered as waste or unmanufactured product, it is residue of manufactured product and can be reprocessed to manufactured product viz. sugar 8% amount is correctly demanded under Rule 6 (3) (b) of Cenvat Credit Rule, 2001. Brown Sugar is a residue and also sugar but not meeting the specifications of standard white sugar and requires reprocessing to convert into standard sugar - There is no dispute that inputs have been used in the manufacture of such sugar - Brown Sugar is a residue of a manufactured product and cannot be considered as waste like Baggasse or Mother Liquor - Classification of the product would not alter the position about the applicability of Rule 6 (3)(b) of Cenvat Credit Rules, 2001 – Decided against Assessee.

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• 2013 (12) TMI 453
  Duty demand under Rule 16 of the Central Excise Rules, 2002 on the used empty glass bottles and used plastic crates cleared by Pune Unit to other units of M/s. Hindustan Coca Cola Beverages Pvt. Ltd – Held that:- In respect of used glass bottles/ used plastic crates, no separate duty has been paid at the time of removal as these were part of liquid beverage being cleared by the appellants - Duty was paid by the original manufacturer of glass bottles/plastic crates and credit of the duty so paid has already been taken by some or other unit of appellant - no Cenvat Credit was taken at the time of receipt of used glass bottles/plastic crates – thus, amount to be paid at the time of clearance will be zero. The nature of goods is such identification with a particular unit is not practically possible - it is neither possible for the assessee nor the department to prove one way or the other - the used glass bottles/crates were cleared on reversal of Cenvat Credit by the Nashik Unit - availment of Cenvat Credit by Wada Unit cannot be denied on the grounds that Cenvat Credit was not required to be reversed at Nashik unit – Relying upon Commissioner of Central Excise, Chennai Vs. CEGAT [2005 (1) TMI 125 - HIGH COURT OF JUDICATURE AT MADRAS] - once duty paid inputs received, Modvat Credit cannot be denied on the grounds that such inputs were not liable for duty - If any action for wrong payment of duty is required to be taken, it should be at the place where the duty was paid - Demand set aside – Decided in favour of Assessee.

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• 2013 (12) TMI 452
  Ground Rent includible in the assessable value or not – Amount recovered for period of delay – Held that:- The amount being charged as 'ground rent' is for delay in making the payment by the buyers for the goods sold to them - This delay is counted from the date of order - The customer is expected to make the payment for the goods purchased by him within the period of 28 days from the date of sale order and if there is delay in making payment beyond 28 days, amounts at the rates varying from 0.5% of the sale price to 3.25% of the sale price are payable depending upon the period of delay – there is no basis for the Department's plea that the 'ground rent' is the storages charges for the period of delay in lifting of the goods by the customers - the 'ground rent' is nothing but interest on receivables which is not includible in the assessable value – Following Union of India Vs. MRF Ltd. [ 1995 (5) TMI 28 - SUPREME COURT OF INDIA] – Decided against Revenue.

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• 2013 (12) TMI 451
  Differential duty demanded on dipped nylon/polyester fabrics - Goods manufactured on job-work basis – Held that:- The annexures are prepared party-wise and period-wise and not for each job-work - It might have been almost impossible for the adjudicating authority doing de-novo adjudication in 2004 to give finding for each job - there is no means to co-relate various charges with the prices declared by M/s Andrew Yule and Company - the appellant themselves had provided a buffer of additional cost element 1% to 5%, albeit to take into account cost variations on account of exchange rate variation - The SCN or adjudication does not examine the issue as to what extent such buffer already provided did not offset under declaration of value due to any element, if any not included – it is not appropriate to allege any suppression on the ground that they did not include such costs to the materials supplied by others based on similar charges incurred by appellant. In the case of wastages also the calculation is not very clear in as much as the calculation of Revenue only takes into account the wastage of yarn in processing but does not take into account weight gain in processing due to dipping of the fabric in resorcinol formaldehyde latex solution - There is also a moisture regain factor mentioned - Such factors are seen to be taken into account in a few material reconciliation statements given to the parties concerned and forming part of annexures to SCN - the cost construction of Revenue is half baked - Neither there was desired clarity on method of costing to be adopted – thus, suppression with intention to evade payment of duty cannot be held against the appellant - this is not a case where extended period of time could be invoked for demanding duty short paid – Decided in favour of Assessee.

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• 2013 (12) TMI 450
  Capital goods written off but not cleared – Duty liability - Held that:- The capital goods and inputs which have written off by the assessees in their balance sheets were still lying in their factory and duty is payable on the clearance of goods/inputs/capital goods - as the goods have not cleared from the factory, duty is not payable. We, further find that whatever inputs cleared by the assessees have paid duty on the same capital goods/inputs – Decided against Revenue.

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• 2013 (12) TMI 449
  Entitlement for benefit of Notification 5/98 as amended by Notification 6/2000 – Held that:- The item manufactured by them is a boiler and same has been incorporated by the Additional Commissioner in his order and as per the Board Circular no. F-13/36/84-CX-I dated 14.4.1986 the Board has taken the view that the item husk fired boiler can be considered as agricultural and municipal waste conversion device producing energy – there was no infirmity in the order – Decided against Revenue.

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• 2013 (12) TMI 448
  Vacating the stay already granted – Details of movable/immovable properties called off - Held that:- Revenue failed to point out as to under which provisions of law, the assessee is required to give these details – Decided against Revenue.

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• 2013 (12) TMI 447
  Abetment of availment of cenvat credit without receiving inputs - Waiver of Pre-deposit of Penalty under Rule 26 of Central Excise Rules, 2002 – Held that:- The appellant cannot be charged under Rule 26, if it is the case of the Revenue that the main assessee has received only the documents on which the credit was availed, then the provisions of Rule 26(1) will not apply, and the provisions of Rule 26(2) will also not apply as the appellants have not issued any document on which someone has availed the Cenvat credit - the appellant has made out a prima facie case in their favour – Pre-deposits waived till the disposal - Stay granted.

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• 2013 (12) TMI 446
  Clandestine removal and undervaluation of Frit – waiver of Pre-deposit – Held that:- The entire demand raised is based upon the consumption of natural gas – Prima facie, the demand cannot be sustained as for manufacturing of final product, only gas is not the sole material, but it also require other items like Quartz, Feldspar, Zinc, Borax Powder, Calcium and Dolomite –There was no evidence as regards procurement of these items, is brought on record – Following M/s Vishwa Traders Pvt. Ltd., & Others Versus CCE Vadodara [2011 (10) TMI 94 - CESTAT, AHMEDABAD] - on the point of clandestine removal, there is no case made out by the Department - As regards the demand on undervaluation, since the issue needs deeper consideration – Thus, the appellant directed to deposit Rupees Twenty Five lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 502
  Constitutional validity of the entry tax - Violating of Article 301 of the Constitution of India - Re-assessment or exemption - Exemption notification dated 7.7.2004 - Held that:- It is always open to the petitioners to satisfy the assessing authority by any cogent evidence other than the certificate of the assessing officer of the place where the business place of the principal is situate or From-F of the Central Sales Tax Act that the goods imported in the State of U.P. were brought in only for job work and that the finished goods were returned to the principals outside the State of U.P - It will be open to the petitioners to satisfy the assessing authority, if the assessments are pending in reassessments proceedings, or before the appellate authority that the petitioners had only carried out the job work on the imported goods and returned goods imported in the State, to its principals outside the State - Following decision of M/s. A.C.P.L. Jewels Private Ltd. vs. Union of India and others [2009 (12) TMI 898 - ALLAHABAD HIGH COURT] - Decided in favour of Petitioner.

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• 2013 (12) TMI 501
  Transaction treated as outright sale – Supply and laying mosaic to the prescription of the purchaser – Held that:- The assessee has not used in the execution of any works contract, the goods which were purchased by him in the same form - the question of granting exemption under Section 3B(2)(b) of the TNGST Act, does not arise - There was no justifiable grounds to accept the plea of the assessee that they are entitled for exemption under Section 3B(2)(b) of the TNGST Act - the contract is one for manufacture of mosaic tiles and laying of tiles in the business place of the dealer, which is an inevitable works contract, the Assessing Officer in his point of assessment, proposed adoption of 50% for manufacturing process and the other 50% for laying and polishing, there being no separate details for payment of such wages towards manufacturing of mosaic tiles and for laying and polishing in the sites of his customers. Imposition of Penalty u/s 12(5)(iii) of the TNGST Act - Relying upon Apparels and Handloom Exporters Association and Ors., vs. State of Tamil Nadu and Ors. [2001 (9) TMI 1114 - MADRAS HIGH COURT] - The Assessing Officer to redo the deduction particularly with reference to Labour Charges alone adopting 30% as relatable to labour charges liable to be deducted in the books of accounts - Apart from this, the question of penalty levied on the assessee also needs to be reassessed - the Appellate Assistant Commissioner confirmed the levy of penalty under Section 12(5)(iii) of the TNGST Act, the Tribunal reduced the levy of penalty at 50% as against the 150% - Decided partly in favour of Petitioner.

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