Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 22, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Status of the assessee - Merely because PAN was issued by the Department erroneously, there cannot be any insistence that return should be filed in the same capacity. Erroneous description in the PAN would not change the reality that no such partnership firm ever existed - HC
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Photo copy of the receipt taken for the purpose of assessment - 'chargeability of income' - he genuineness of the receipt and also the contents thereof are duly corroborated by all the assessees in their respective statements. - additions confirmed - HC
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Government was substantially financing and interested in the management of the respondent-assessee and, therefore, were eligible for exemption under Section 10(23C)(iiiab) of the Act. - HC
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Interest u/s 234C - the liability to pay interest under Section 234C of the Act qua the capital gains was held to be unwarranted in view of the specific provisions of the Act - HC
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Donation of gold chhabba - whether in light of explanation to Section 2(24) (iia) of the Act, the Dera is not a deemed trust? - The cumulative effect of all the factors shows that all the transactions done by the appellant-assessee, were in his individual capacity - no exemptions - HC
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TDS u/s 194J or 192 - payments made to doctors who are regular employees of the hospital - it is not a case of employer-employee relationship between the assessee and the doctors. - TDS liable to be deducted u/s 194J - HC
Customs
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Denial of the benefit of EPCG license - Import of cars - export obligations - proceedings are pre-mature as HEL is still in possession of the cars and registered the same as tourist vehicle - AT
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Valuation - Rule 4 - includibility/ non includibility of the expenses on advertising and sales promotion etc. - loading of 12.5% is not sustainable in terms of Rule 4 of the CVR, 2007 - AT
FEMA
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Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Thirteenth Amendment) Regulations, 2015 - Notification
Corporate Law
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Statutory Auditor (Chartered Accountant), Cost Auditor or Secretarial Auditor has to report the fraud in the company in the prescribed manner. - Notification
Service Tax
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CENVAT Credit - inputs and capital goods were used in construction of jetty for rendering port service. There is no reason to deny CENVAT credit on such input and capital goods. - AT
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Royalty charges received by the appellant from Licensee as per Licence Agreement for Development of VII Berth as Container Terminal, operation and maintenance on BOT basis is chargeable to service tax under Port Service - AT
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Refund claim of accumulated CENVAT Credit - 100% EOU - export of services - period of limitation - the date of export invoice should be treated as the relevant date. The time limit of one year prescribed under Section 11B of the Central Excise Act would be computed from this date - AT
Central Excise
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Demand of interest - whether interest is chargeable on the cenvat credit wrongly taken, though the same is reversed before utilization of the credit - Held No - AT
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Levy of interest u/s 11AA - Demand of differential duty - value addition of charity amount in the assessable value - Appellants are liable to pay interest from the first day of the month following the month where the duty has become due. - AT
VAT
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Taxability of Sodexo Meal Vouchers - Paper based vouchers - affiliates are bound to honour - appropriate test would be as to whether such vouchers can be traded and sold separately. The answer is in the negative. Therefore, this test of ascertaining the same to be 'goods' is not satisfied. - SC
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Sale of hypothecated vehicles - disposal of repossessed cars by the bank - sale of the repossessed cars by the Appellant Bank is incidental or ancillary or in connection with the Appellant’s business - HC
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In case where the sale or purchase is exempt from tax, the dealer would not be in a position to recover the additional tax from the purchaser, thereby frustrating the very object of the provision namely, to tax the sale or purchase and would result in taxing the dealer instead of the sale or purchase. - HC
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Amendment in Delhi Value Added Tax Rules, 2005 - Notification
Case Laws:
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Income Tax
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2015 (12) TMI 1082
Additions under section 68 - ITAT deleted the addition - whether the impugned additions have been made under section 153A /143(3) of the Act without reference to any material found as a result of search? - Held that:- It was for the fact- finding authorities to finally examine the evidence on record and determine whether the Assessee could satisfactorily explain the credit entry in its books and could establish the genuineness of the transactions claimed to have been entered into by it. Clearly, the ITAT has not examined the facts relating to the Assessee. The ITAT had simply proceeded on the basis of the facts obtaining in the case of Pranjul Overseas (P) Ltd. on the statement of the parties that the facts of that case were similar to the facts in the case of the Assessee. However, an examination of the documents filed before us, it does not appear that the facts in the case of Pranjul Overseas (P) Ltd. were similar to that as obtaining in the present case. While it appears that in the case of Pranjul Overseas (P) Ltd., the Assessee disputed that any search took place at its registered office, the written submissions filed by the Assessee in this case, does not indicate that any such dispute was raised. Even before us it has not been contended that no search took place at the declared registered office of the Assessee. In the circumstances, we find it is necessary to remand the matter to the Tribunal to examine the facts relevant to the Assessee for determining whether an addition under Section 68A of the Act was sustainable. Needless to mention that it would also be open for the ITAT to remand the matter for further enquiries if it is so considered necessary. It is not open for the Assessee to challenge the validity of the search under Section 132 of the Act or the assumption of jurisdiction under Section 153A of the Act, as those issues had not been pressed by the Assessee before the ITAT - Decided in favour of the Revenue
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2015 (12) TMI 1081
Assessment u/s 153C - assumption of jurisdiction by the AO under Section 153C - Held that:- Admittedly, the Assessee was not one of the entities that was subjected to search and seizure operation under Section 132 of the Act. The assessments were also framed under Section 153C of the Act; although the assessments order reflect that the assessments were framed under Section 143(3)/153A(b) of the Act, the orders passed by the CIT(A) indicates the same to be a typographical error. Section 153C of the Act provides for assessment/reassessment in cases where assets/documents have been found during the search and seizure operations and the same do not belong to the searched person(s). It is seen that the facts and the issues involved are similar in all material aspects to the facts and issues involved in Pr. Commissioner of Income Tax - 06 v. Nikki Drugs & Chemicals Pvt. Ltd. [2015 (12) TMI 304 - DELHI HIGH COURT]. Thus, for the reasons stated in therein we find no infirmity with the view of the ITAT that the proceedings under Section 153C of the Act were without jurisdiction. In the circumstances, it is not necessary to consider the other issues sought to be raised by the Revenue. - Decided against revenue
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2015 (12) TMI 1080
Penalty u/s 271 (1) (c) - period of limitation - Held that:- The period of limitation prescribed under Section 275 of the Act is apparently clear, namely, that the order of penalty must be passed within six months from the end of the month in which the appellate order is received. The said order of the Tribunal was received by the Commissioner of Income Tax on 28.06.1999. Six months would expire on 31.12.1999. The period of limitation cannot be extended merely because an application under Section 254 of the Act was filed by the assessee. The Department cannot take advantage of the filing of the application by the assessee. There was no embargo upon the Assessing Officer in not completing the penalty proceedings within the period of limitation. The decisions cited by the learned counsel for the Department in the cases of Hind Wire Industries Ltd. Vs. Commissioner of Income Tax, (1995 (1) TMI 2 - SUPREME Court) and Henri Isidore Vs. Commissioner of Income Tax, [1997 (10) TMI 16 - MADRAS High Court] have no application in the present case. Consequently we are of the opinion that the Tribunal was justified in rejecting the appeal and deleting the order of penalty holding it as barred by limitation. The appeal is, accordingly, dismissed. The question of law, as referred, is answered in favour of the assessee
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2015 (12) TMI 1079
Reopening of assessment - uncounted share application money received - change of opinion - Held that:- The questionnaire and, particularly, question No. 3, specifically raised the issue with regard to the shares. The responses were given by the assessee from time to time and what is more important is that the Assessing Officer had directly issued letters to all the share applicants, who had, in turn, given their confirmations along with their PAN numbers and bank details. After having received the said information, the Assessing Officer did not think it fit to make an addition and that itself would amount to forming an opinion, as indicated in CIT v. Usha International Limited (2012 (9) TMI 767 - DELHI HIGH COURT ) and Lahmeyer Holding GMBH (2015 (5) TMI 654 - DELHI HIGH COURT ). Therefore, the present exercise of issuing the notice under Section 148 of the said Act would be nothing but one of change of opinion, which is impermissible. As decided in Swarovski India Limited v. Deputy CIT: [2014 (9) TMI 4 - DELHI HIGH COURT ] wherein a notice under Section 148 of the said Act was quashed for being issued after the expiry of four years from the relevant assessment year, wherein there was no specific mention of which material facts were not disclosed by the assessee in the course of its original assessment proceedings under Section 143(3) of the said Act. In the present case also there is not even a whisper of the allegation that there has been a failure on the part of the assessee to disclose fully and truly all material particulars necessary for assessment. - Decided in favour of assessee
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2015 (12) TMI 1078
Commission payments made to nonresident sales agents - disallowance u/s 40(a)(i) - Held that:- There was no occasion to deduct tax at source in respect of the payment made to the nonresident agent. The income of nonresident commission agent cannot be considered as income arising or accruing in India. Therefore, the provisions of Section 40(a)(i) would have no application for the two Assessment Years under consideration. Not only the entire issue stands concluded in favour of the Respondent-Assessee in the present facts by the CBDT Circular Nos. 23 of 2969 and 786 of 2000 which were in force during the subject Assessment Years but also by the decision of the Apex Court in Toshoku Ltd. (1980 (8) TMI 2 - SUPREME Court ) in favour of the Respondent-Assessee. - Decided against revenue Disallowance of interest - availability of sufficient free funds - ITAT deleted the addition - Held that:- It is undisputed that the Respondent-Assessee has interest free funds aggregating to ₹ 16.09 Crore. The advances and interest made to group companies by the Respondent-Assessee is to the tune of ₹ 26.55 lakhs. The amounts borrowed in the aggregate being to the extent of ₹ 6.81 lakhs i.e. both working capital and term loans. Thus, as held by this Court in CIT v/s. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ] that where both interest bearing funds and interest fee funds are available then a presumption would arise that investments to sister companies would be out of its interest free funds - Decided against revenue
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2015 (12) TMI 1077
Existence of partnership firm - AOP - PAN issued - Held that:- The insistence of the Department, however, on the firm filing return since the PAN was issued on the name of the firm does not appear to be valid. Even according to the Department, no such partnership firm existed. Merely because PAN was issued by the Department erroneously, there cannot be any insistence that return should be filed in the same capacity. Erroneous description in the PAN would not change the reality that no such partnership firm ever existed. However, with respect to the members of the AOP and the grievance of not being able to get credit of the tax deducted at source, we are afraid, the same cannot be resolved at this distant point of time. We are referring to the years 2005 and onwards till the fresh PAN was issued in favour of the AOP in the year 2011. Assessments would have been over or time-barred.
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2015 (12) TMI 1076
Transfer pricing adjustment - Tribunal restricting the Transfer Pricing (TP) adjustment only to the transaction between the Associated Enterprises (AEs.) - Held that:- in terms of Chapter X of the Act, redetermination of the consideration is to be done only with regard to income arising from International Transactions on determination of ALP. The adjustment which is mandated is only in respect of International Transaction and not transactions entered into by assessee with independent unrelated third parties. This is particularly so as there is no issue of avoidance of tax requiring adjustment in the valuation in respect of transactions entered into with independent third parties. The adjustment as proposed by the Revenue if allowed would result in increasing the profit in respect of transactions entered into with nonAE. This adjustment is beyond the scope and ambit of Chapter X of the Act. - Decided in favour of assesee Appeal admitted on Question Nos.(b)Disallowance of payment of royalty, project engineering and manufacturing drawing fees - ITAT allowed the claim and (c)Disallowance of payment of liquidated damages - ITAT allowed the claim
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2015 (12) TMI 1075
Entitlement for claim for exemption under section 54F - whether the same amount of sale consideration had not been utilized towards the purchase of property prior to the date of sale as per the said provisions? - whether the assessee in order to avail benefit of Section 54F of the Act is required to utilize the amount for the purchase of the new asset from the sale proceeds of the original capital asset only? - ITAT deleted the addition - Held that:- he assessee has to purchase or construct a house property during the period specified under Section 54F of the Act in order to get benefit thereunder. Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilized for the purchase or construction of a house property. No provision has been made by the statute that in order to avail benefit of Section 54F of the Act, the assessee has to utilize the amount received by him on sale of original capital asset for the purposes of meeting the cost of the new asset. Once that is so, the assessee was entitled for benefit under section 54F of the Act. It has been categorically recorded by the Tribunal that the assessee had made investment in between February 2008 upto August 2008 i.e. well within the stipulated period. The property was purchased for ₹ 3.32 crores whereas the shares which were sold had resulted in capital gain of ₹ 1.93 crores. The investment was more than the capital gain earned by him. In the present case, the investment made by the assessee being within the stipulated time and more than the capital gain earned by him, the addition of ₹ 1,21,32,636/- was rightly deleted by the Tribunal under the head long term capital gain. Learned counsel for the revenue has not been able to point out any error in the approach adopted by the Tribunal reversing the findings recorded by the CIT(A) and the Assessing Officer, warranting interference by this Court. - Decided against revenue
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2015 (12) TMI 1074
Penalties under section 271D - violation of Sections 269SS - ITAT deleted penalty - Held that:- The amount received by the assessee towards share application money would not fall under loan or deposit under section 269SS of the Act. Consequently, the penalty under Section 271D of the Act was not leviable. The Tribunal was right in deleting the penalty. - Decided in favour of assessee.
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2015 (12) TMI 1073
Photo copy of the receipt taken for the purpose of assessment - 'chargeability of income' - Whether the 'hypothetical income' can be brought to charge under section 5 of Income Tax Act, 1961 dehors the provisions of section 2(c) read with section 10 (Indian Contract Act, 1872), Section 5 (Transfer of Property Act, 1882), Section 17 (The Registration Act, 1908) and the provisions of Indian Stamp Act, 1899? - Held that:- The photocopy of the receipt is specific in that it evidence receipt of ₹ 55 lakhs is cash from Shri Joginder Singh and Mrs. Harjinder Kaur, being the purchasers, on 15.9.2000. It is duly signed by all the assessees in token of having received the aforesaid sum of money in cash. The name of the purchasers as also the date of receipt of the aforesaid sum of money are also mentioned in the receipt in unambiguous terms. The fact that the receipt carries signature of the recipient of the aforesaid money on the revenue stamp affixed on the receipt further establishes the genuineness of the contents of the receipt. If the AO had the original of the receipt in his possession and shown the same to the assessees, the assessees could have done no better than what they have done by seeing the photo copy of the receipt. Besides, the receipt is relevant to the fact in issue and establishes in unambiguous terms the receipt of ₹ 55 lakhs in cash over the apparent consideration. Secondly, the authenticity of the receipt, the authenticity of the signatures of the assessees on the receipt, and the fact that a sum of ₹ 55 lakhs was actually received by them in cash have been confirmed by the assessees in their respective statements recorded on oath by the ADIT (Inv.). In other words, the genuineness of the receipt and also the contents thereof are duly corroborated by all the assessees in their respective statements. It is not a case where the departmental authorities are acting merely on the basis of photo copy of the receipt. Thirdly, and more importantly, the assessees have not placed any evidence on record to rebut the contents of the receipt or even the contents of their statements. In this factual setting, we are unable to hold that the said receipt is irrelevant material for the purpose of making assessment. We therefore hold that the Assessing Officer has rightly acted upon the contents of the receipts which are duly corroborated by the assessees in their respective statements, for making the assessment under challenge before us - Decided against assessee
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2015 (12) TMI 1072
Disallowance of business loss claimed u/s 41(1) - damaged stock of paddy - disallowance based on auditors note/ certificate - Held that:- The matter is required to be remanded keeping in view the facts urged by the assessee that certain amount out of the damaged stock of paddy of ₹ 5.08 crores was received by the assessee in the financial year 1997-98 relating to the assessment years 1998-99 onwards upto assessment year 2003-04 and that the amount so received was taxed in the year of receipt - Decided in favour of assessee by way of remand.
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2015 (12) TMI 1071
Eligibility for exemption u/s 11 denied - CIT(A) held that the assessee was not eligible for exemption under Section 10(23C)(iiiab) - ITAT allowed assessee appeal holding that the institution/society run by the assessee had received substantial Government aid for the purpose of claiming exemption under Section 10(23C)(iiiab) - Held that:- In the present case, there has been financing by the Government when examined on individual institution basis to be ranging from 41% to 82% whereas when the percentage is taken for the society as a whole then it comes to 44.52% and 45.15% for the two years. The Tribunal after appreciation of evidence correctly held that the Government was substantially financing and interested in the management of the respondent-assessee and, therefore, were eligible for exemption under Section 10(23C)(iiiab) of the Act. Karnataka High Court in Indian Institute of Management's case (2010 (8) TMI 890 - KARNATAKA HIGH COURT) held where there was financing of 37.85% by the Government held the assessee to be entitled to eligible for exemption under Section 10(23C)(iiiab) - Decided against revenue.
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2015 (12) TMI 1070
TDS u/s 194C - Addition on account of labour charges - Held that:- As decided in Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal & Sons [2015 (8) TMI 177 - PUNJAB & HARYANA HIGH COURT ] the assessee claimed deduction in respect of labour charges paid to about 50 labourers. The Assessing Officer reduced this amount having come to the conclusion that only a few labourers were traceable at the given addresses and some of the addresses were not even confirmed. The Tribunal kept in mind the ground realities in such cases.There were comparable results in expenses of labour charges in earlier years. The deductions were allowed to the assessee. The quantum of expenditure can be compared to the production done by the labour. The labour was engaged on piece rate bases. It was found that there was a co-relation between the production as well as the number of labour engaged. The issue really is a question of fact and appreciation of facts. We are unable to say that this analysis and the findings of the CIT(A) and of the Tribunal are perverse or absurd. - Decided in favour of the assessee. Addition on account of shortage in production - Held that:- As decided in Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal & Sons [2015 (8) TMI 177 - PUNJAB & HARYANA HIGH COURT ] the Assessing Officer made an addition to the assessee's income having rejected the assessee's case that there was a shortage in production. The CIT(A) found, as a matter of fact, that the assessee had been maintaining the complete details/particulars of opening stock, purchase, consumption, production and sales, which were in fact verified and accepted by the Assessing Officer. The finding is that the addition was made purely on imagination and assumptions without bringing any documentary material on record. The finding is neither absurd nor perverse. - Decided in favour of the assessee. TDS u/s 194C - Disallowance under section 40(a)(ia) - Held that:- The assessee has made payments to the three transporters mentioned in the assessment order for each order of transport executed by them. The assessee has no contract for transport with any transporter. Thus each GR Note becomes a separate contract and since the value of such contract does not exceed ₹ 20,000/- the assessee was not required to deduct tax at source from the said payments. It was further submitted that this is also borne out by the Board Circular No.715 dated 8.8.1995 - Decided in favour of the assessee.
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2015 (12) TMI 1069
Interest u/s 234A, 234B and 234C - CIT(A)'s jurisdiction to entertain the first appeal under Section 246 against the chargeability of interest - ITAT upholding the order of CIT(A) in deleting interest u/s 234A and 234C and to restrict the levy of interest u/s 234B - Held that:- Apex Court in Central Provinces Manganese Ore Co. Ltd. v. CIT (1986 (5) TMI 3 - SUPREME Court) observed that the levy of interest is the part of the process of assessment. Although Sections 143 and 144 of the Act do not specifically provide for the levy of interest but it is nevertheless a part of the process of assessing the tax liability of the assessee. The Supreme Court held that since levy of interest is a part of the process of assessment, it could be challenged in appeal provided the assessee disputes the chargeability of interest on the ground that he is not liable to the levy of interest at all. It was clarified that where the assessee claims waiver or reduction of the interest levied, that could not be agitated in appeal under Section 246 of the Act but more appropriately by resorting to revisional jurisdiction of the Commissioner. It was further observed that before the revisional jurisdiction of the Commissioner can be invoked for waiver or reduction, the assessee is required to demonstrate before the Assessing Officer that there is a case for waiving or reducing the levy of interest. Thus the appeal filed by the assessee laying challenge to the very levy of interest under Sections 234A, 234B and 234C of the Act before the CIT(A) was clearly maintainable. As the assessee had paid due taxes within 4 days of the receipt of the cheque in the month of September, 2007 and filed the return voluntarily, thus, the CIT(A) had rightly held that interest under Section 234A of the Act be not charged for the reasons that the sale was conditional sales which was to be completed only after the realization of the last cheque and thus considerations were beyond the control of the assessee. Further, interest under Section 234B of the Act was also restricted by directing the Assessing Officer to charge it only on the amount of capital gain worked out after taking sales consideration at the amount received by the assessee during the financial year 2006-07 and deducting proportionate indexed cost of acquisition and allowing exemption under Section 54EC of the Act for ₹ 50 lacs out of the capital gain so worked out. Still further, the liability to pay interest under Section 234C of the Act qua the capital gains was held to be unwarranted in view of the specific provisions of the Act and the CIT(A) was correct in deleting the interest levied under Section 234C of the Act - Decided against revenue
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2015 (12) TMI 1068
Computation of capital gains - adoption of FMV - Held that:- The CIT(Appeals) had applied the value determined by the stamp Valuation authorities as to be fair market value of the property on the date of transfer, against which revenue is not in appeal. Hence the value assessed in the hands of the assessee is ₹ 1.25 crores as against the value assessed by the DVO at ₹ 2.97 crores. The perusal of the grievances raised by the assessee reflects that all the grievances were against the valuation framed by the Valuation Officer and even if the value is reduced as per the said grievances, there is no substance in the grievance of the assessee where reduced value has been adopted by the CIT(Appeals) as fair market value of the property. In the entirety of the facts and circumstances, we find no merit in the stand of the assessee and the objections raised against the valuation report have no meaning including the stand of DVO to have adopted commercial rates for valuing the said property as the assessment in the hands of the assessee has not been made on such valuation report but on a much lesser value of ₹ 1.25 crores and even if credit is given on account of all the objections raised by the assessee, the value of property adopted in the hands of the assessee is much lower than the value determined by the DVO. Hence we uphold the order the CIT (Appeals) in adopting the value assessed by the Stamp Valuation authorities as the fair market value of the property on the date of transfer in computing the income of the assessee also confirmed by ITAT. - Decided against assessee
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2015 (12) TMI 1067
Addition made u/s 145(3) on account of valuation of closing stock - ITAT deleted the addition - whether invoking of provisions of Section 145(3) were validly invoked as the assessee had valued the closing stock on LIFO basis as per his previous practice? - Held that:- We do not find any merit in the appeal. The assessee is engaged in the business of sale and purchase of jewellery. The Tribunal had noticed that the assessee was following LIFO method for valuing its closing stock from year to year which is one of the prescribed methods of accounting standards issued by the Institute of Chartered Accountants of India for valuation of inventory. The said method was also followed by the assessee in the assessment year 2007-08 and in the said year, the Assessing Officer had made an addition of ₹ 32,08,977/- on account of valuation of closing stock of gold ornaments. The Tribunal relating to the assessment year 2007-08 in the case of the assessee upheld the decision of the CIT(A) deleting the addition made by the Assessing Officer as on the basis of the doctrine of consistency in relation to method of calculation of inventory as also the decision of the jurisdictional High Court in assessee's own case, recorded findings in favour of the assessee.
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2015 (12) TMI 1066
Release of amount of TDS from the compensation of their acquired land seeked - Held that:- Examining the issue of taxability of interest under Section 28 of the Act, in Commissioner of Income Tax v. Bir Singh (HUF) [2010 (10) TMI 581 - PUNJAB & HARYANA HIGH COURT ] it was held by the Division Bench of this Court that the interest awarded by court on enhanced compensation under Section 28 of the Act was chargeable to tax as income from other sources in the year of receipt In view of the above, the tax at source has been rightly deducted and the petitioners can claim the refund, if any, admissible to them by filing the income tax returns in accordance with law. - Decided against assessee.
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2015 (12) TMI 1065
Nature of expenses - ITAT estimated the revenue expenditure and came to the conclusion that 70% expenditure was revenue and 30% was capital - Held that:- As the case here relates to the assessment years 2000-01 and 2001-02 where the allowability of the expenditure is not in dispute but the issue is whether it had to be allowed in one year as revenue expenditure or by way of depreciation under Explanation 1 to Section 32 of the Act by spreading it over the years. At present, the number of years that have gone by from the initial year has been about more than thirteen years. Learned counsel for the revenue has not been able to demonstrate that there had been any change in the rate of taxation during these years. Thus, even if the substantial portion of the expenditure had been capitalized and depreciation allowed under Explanation 1 to Section 32 of the Act, at the prevalent rate admissible under the Act and the Income Tax Rules, 1962, the entire amount would have been allowed as deduction on account of depreciation by now and the case would be revenue neutral. Therefore, in such circumstances as well, we do not find any justification in interfering with the order of the Tribunal. - Decided against revenue
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2015 (12) TMI 1064
Donation of gold chhabba - whether in light of explanation to Section 2(24) (iia) of the Act, the Dera is not a deemed trust? - Held that:- There is no force in the argument of learned counsel for the appellant that entire activities done by the appellant were of charitable and religious in nature and were being done in the name of Dera. It is completely devoid of any merit, because the Dera, Sant Amir Singh Ji, of whom, the appellant-assessee is claiming himself to be a Mukh Sevadar, is admittedly, not registered under Section 12AA of the Act or under the Societies Registration Act, 1860. There is also no trust deed of it, showing its activities as charitable or religious nature. It has also not obtained any certificate under Section 10 (23C) (iv) of the Act. Its account were never audited under any law. Even no approval under Section 80G(5) of the Act was ever obtained from any prescribed authority. It was evident before the Revenue Authorities that the entire affairs of the Dera, i.e donations/collections were solely managed and controlled by the appellant-assessee, according to his own whims and fancies in his individual capacity. The Tribunal has rightly observed that the collection certificates were also stereo-typed without any PAN etc. Even no effort was made to produce any so called donation affirming the same. Bank accounts were found in the sole name of the appellant-assessee without indicating any adverse eventuality. The nomination of his son by him in the bank accounts, clearly required to draw an inference that all the bank accounts were his personal accounts and not of the Dera. The appellant has miserably failed to show before the authorities that any charitable activities was ever been carried out by him as prescribed under Section 2(15) of the Act. Its affiliation with any other charitable institution was also not proved. The Assessing Officer, the CIT(A) and the Tribunal as well have found on the basis of material before them that the appellantassessee had purchased LIC policy, gas connection, cylinder etc. from the so called funds of the Dera, which were indicative of the fact that the bank account was being operated by him for his personal use. The cumulative effect of all these factors shows that all the transactions done by the appellant-assessee, were in his individual capacity and thus, no case to differ with any of the findings of the Tribunal upholding the decision of the CIT(A) and that of the Assessing Officer has been made out. - Decided against assessee
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2015 (12) TMI 1063
TDS u/s 194J or 192 - payments made to doctors who are regular employees of the hospital - whether there does not exist an employer/employee relationship between the doctors and the hospital? - Held that:- In the present case, it has been categorically recorded by the CIT(A) that the contract for service implies a contract whereby one party undertakes to render services i.e. professional or technical services whereas contract of service implies relationship of master and servant and involves an obligation to obey orders in the work to be performed and also as to its mode and manner of performance. The professional doctors are not entitled for LTC, concession in medical treatment of relatives, PF, leave encashment and retirement benefits like gratuity. They are required to follow some defined procedure to maintain uniformity in action and some administrative discipline but this does not mean that they have become employees of the hospital. Further, the department had not taxed the payments received by any of the doctors from the assessee under the head 'income from salary'. Concurring with the findings recorded by the CIT(A), it has been correctly held by the Tribunal that there does not exist employer-employee relationship between the assessee and the persons providing professional services. It has been further recorded that on consideration of the agreement in its entirety vis a vis the case law relied upon by the assessee, it is evident that it is not a case of employer-employee relationship between the assessee and the doctors. Assessing Officer was not right in concluding on the combined reading of the above stipulations that the income of the doctors was salary. ITAT was correct in treating chargeability of payments made to doctors who are regular employees of the hospital as per the provisions of Section 194J - Decided against revenue
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Customs
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2015 (12) TMI 1047
Revocation of CHA License - Forfeiture of security deposit - Held that:- Appellant has an alternative remedy of appeal to Customs, Central Excise and Service Tax Appellate Tribunal under Regulation 21 of the Customs Brokers License Regulations, 2013 r/w Section 129(A) of the Customs Act, 1962. Therefore, we see no reason to entertain the appeal - period of limitation for filing an appeal has been now expired. But the order in original was dated 20.10.2014 and the writ petition was filed by the appellant on 05.11.2014, within a period about 16 days. The writ petition ultimately came to be dismissed by an order dated 15.07.2015 and the above appeal was filed within the period of limitation. Therefore, the period during which the appellant has prosecuting the remedy before this Court, has to be excluded while calculating the period of limitation for filing a statutory appeal. - Decided against appellant.
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2015 (12) TMI 1046
Suspension of CHA License - Appellants were prohibited to operate at Mumbai Customs Commissionerate - Held that:- Present case is squarely covered under the Hon’ble High Court order in appellants' own previous case, where we find that the adjudicating authority after suspension of the license SCN has been issued under Regulation 20 for revocation of license, which was before the Hon’ble High Court and the Hon’ble High Court set aside the entire proceedings, the question of continuation of suspension does not arise. - impugned order suspending the CHA license is set aside - Decided in favour of Appellant.
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2015 (12) TMI 1045
Denial of the benefit of EPCG license - Import of cars - export obligations - cars were not put to proper use inasmuch as they were not used for providing transport facilities to the guests of the hotel to earn foreign exchange. - cars were insured as personal vehicles - cars were carrying the registration number in the incorrect colour code and different perceptions about the use to which the cars were put. The statements of drivers indicate that the cars were used by the Directors - benefit of Notification No. 97/2004-Cus dated 17.6.2004 - Held that:- Condition for import clearly stipulates that the car imported by HEL were to be used by HEL in their service industry - Handbook of Procedure mandates that every EPCG authorisation holder has to maintain for a period of three years from date of redemption, a true and proper account of exports/supplies made and services rendered towards fulfilment of export obligation. This Policy does not envisage that a service provider importing the goods under EPCG authorisation will have to change the character of service depending upon the goods imported which means that a hotel importing laundry equipment will have to render service of washing clothes of foreign tourists and earn foreign exchange in the process. Therefore, it cannot be construed that hotel importing cars will have to provide transportation to the foreign tourists and earn foreign exchange in the process. It only means the cars are to be used by HEL for providing hotel services to foreign guests. The export obligation means in relation to importers rendering services receiving payments in freely convertible foreign exchange for the services rendered through the use of capital goods. Therefore, the export obligation in relation to HEL rendering hotel services means receiving the payment in convertible foreign exchange for the hotel services rendered through the use of cars by HEL. - cars have been used by HEL for providing hotel services to foreign guest by using the car by their Directors. It is not the case of the Revenue that these cars were not used by Directors who are ultimately managing the hotel. Therefore, in this case the cars have been indirectly used by HEL in providing hotel service to foreign guest. It is not the case of the department that the cars have not been put to such indirect or lateral use to discharge for export obligation. The custom notification does not provide for such indirect or lateral use of the capital goods imported under EPCG scheme. The export obligation for the importer rendering service means receiving payment in convertible foreign exchange for service rendered through the use of capital goods. Therefore, if the cars were used directly or indirectly for providing the hotel services from which the foreign exchange is earned, the conditions no where suggest that the nature of service to be provided by the importer or to be governed by the type of capital goods provided. As in the case of other goods like lift and chair do not envisage the use by foreign tourist, the car are to be used by foreign tourist, implying thereby that while other capital goods could be used indirectly or laterally, the cars could not be so used and were to be used by foreign tourists. - HEL has not obtained export obligation discharge certificate and the licences have not been redeemed and during the course of adjudication, HEL has been able to show that the cars in question have been used by the foreign tourist and that is intended the use and there was (still) time available to discharge export obligation and so the action by DRI was premature. - proceedings initiated against HEL and its Directors for violation of condition of notification or the EPCG licence are not sustainable as the same are pre-mature as HEL is still in possession of the cars and registered the same as tourist vehicle. Consequently, the impugned orders are not sustainable in the eyes of law. Accordingly, the impugned orders are set aside. - Decided in favour of assessee.
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2015 (12) TMI 1044
Enhancement of value on the second hand plant and machinery (entire refinery) imported by the appellants under 123 Bills of Entries, and cleared through Chennai, Pondicherry, Karaikal and Cuddalore ports - different approach by different authorities for valuation - Held that:- On perusal of the contract agreement entered with the foreign supplier M/s. UHDE, Gmbh, Germany, we find that it is for the supply of entire refinery equipments from the existing mobil refiney, Germany on “as is where is condition” and includes dismantling, packing, freight etc. As per the terms of the agreement, the existing mobil refinery to be dismantled and supplied to the appellant s site. As per the scope of the contract, and article (2) of the agreement , the said contract covers supply of refinery equipments including containers and documentation from outside India as per the Annexure-A and includes dismantling, shifting services as listed in Annexure-B. The entire refinery equipment will be delivered at CIF terms to the Ports viz Chennai, Pondicherry, Karaikal and Cuddalore. As per article 4 of the agreement, the consideration for the supply of the second hand refinery equipment was around 220 million DM. Vide amendment to the said contract agreement dated 09.04.99, it has been enhanced. Consequent on the finalization of five bills of entries by Chennai Customs, the jurisdictional authorities at Pondicherry, Cuddalore and Nagapattinum have taken up the finalization of assessment of the B/Es and finalized and loaded the value by simply relying the Chennai Customs order dated 04.03.2011. No independent findings given for rejecting the transaction value. On appeal, the Commissioner (Appeal) Trichy had upheld the impugned order of loading the price by 2.195 times and LAA, Chennai set aside the OIO of the AC, Puducherry. Adjudicating authorities at Puducherry, Cuddalore and Nagapattinam failed to determine the value of the second hand machineries in accordance with custom valuation Rules (CVR) read with Board’s Circular, instead adopted the percentage of loading done by the DC, Chennai. Interestingly, we find that the two LAAs passed two contra orders, one upheld the OIO of Cuddalore and other LAA set aside the OIO of Puducherry, resulting in both assessee and revenue are before this Tribunal. It is pertinent to see that the order of DC, Chennai, which is adopted by other three authorities is non-exist now as the same has been set aside by LAA, Chennai order dated 27.7.2012. Therefore, in view of the peculiar nature of this case and considering the overall circumstances of the case and without going into the merits of the case, we are convinced that it is a fit case to be remanded to the original authority - whole issue relates to a single project and relates to a single refinery plant to be set up at Cuddalore and requires to examine and re-determine the value afresh by original authority. - Matter remanded back - Appeal disposed of.
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2015 (12) TMI 1043
Valuation - Rule 4 - includibility/ non includibility of the expenses on advertising and sales promotion etc. - Related person - transaction value of identical goods - Held that:- It is pertinent to note that the appellant has conceded that the appellant and the supplier being related persons and Revenue was justified in having reason to doubt the truth or accuracy of the value declared. In terms of Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rule, 2007, this is sufficient to allow determination of value as per Rules 4 (onwards) of the said Valuation Rules. Distribution agreement does not specify any amounts which are required to be so spent and the approval to be obtained for incurring expenses cannot be read to mean that the exporter had the right to dictate as to how much amount the appellant was required to spend in these areas. Further, such sales promotion / advertisement cannot be said to be for the benefit of exporter alone inasmuch as the appellant also would get the benefit thereof and therefore to treat this entire amount as additional consideration for import of goods in order to arrive at the loading factor is not sustainable. But as stated earlier, we are only concerned with Rule 4 of CVR, 2007 (which the adjudicating authority has used for loading the value) and not with Rule 10 thereof while the contention of ld. DR falls within the ambit of Rule 10 (which has not been used by the adjudicating authority to arrive at loading) and for this reason it is not necessary to discuss this contention of ld. DR or for that matter the contention of the appellant that expenses incurred were not incurred as condition of sale of goods and so the judgments cited by both sides regarding inclusion (or otherwise) of the expenses incurred by the appellant in the assessable value in terms of Rule 10 do not remain germane to the issue - loading of 12.5% is not sustainable in terms of Rule 4 of the CVR, 2007 - Decided in favour of assessee.
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2015 (12) TMI 1042
Confiscation of import of whole yellow Peas - dutiable or prohibited goods unloaded or attempted to be unloaded l into the two substituted barges - Penalty u/s 112 - Imposition of redemption fine - Held that:- It is observed from the case records and the record of the personal hearing held before the Adjudicating authority that all the three representatives appearing for the present appellants pleaded guilty during adjudication proceedings and requested leniency. This factual aspects have also been recorded by the Adjudicating authority towards the end of para 20 of the Order-in-Original dated 08.07.2014. It is observed that various issues raised by the appellants in their grounds of present appeals, as well as during the course of hearing, have not been deliberated upon by the Adjudicating authority as these issues on merits were not raised before him. In the interest of justice we are of the considered view that the matter should be remanded back to the Adjudicating authority to decide the case afresh after taking on record the submissions made by the appellants on merits in these proceedings. Accordingly Order-in-Original dated 08.07.2014 passed by the Adjudicating authority is set aside and case is remanded back to him to decide the same in denovo proceedings - Matter remanded back - Decided in favour of assessee.
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2015 (12) TMI 1034
Waiver of pre deposit - Confiscation of goods - Imposition of redemption fine and penalty - Held that:- At the time when the appellant filed an appeal against the first order in original dated 29.3.2011, the Tribunal entertained the appeal without any pre-deposit condition and disposed of the appeal at that stage itself. As a matter of fact, the appellant was better off with the first order in original dated 29.3.2011. At that time, he had the option of redeeming the goods upon payment of ₹ 20 lakhs. - appellant is worse off and the Department is better off with an order directing permanent confiscation of the goods worth ₹ 82,83,633/-. Therefore, the question of hardship that could be caused to the appellant has not been examined in the proper perspective by the Tribunal in the impugned order - Pre deposit amount reduced - Decided partly in favour of assessee.
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Corporate Laws
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2015 (12) TMI 1037
Winding up petition - argument regarding equitable set off - Held that:- The company has been able to prima facie establish a strong case that the goods that the petitioning creditor shipped were in fact in lieu of payment for the goods shipped to them by Concast Bengal in 2009. Both the shipments have been proved by invoices, delivery, payment of VAT and so on. But there is no evidence of either party making payment of the price. There is also strong evidence produced by the company to show that each of the companies of the Concast Group was a part of one entity and carried on business as one entity. Shipment of goods by the petitioning creditor in 2011 was sufficient to extinguish its liability for the goods that it received in 2009. The argument regarding equitable set off is premature. It has to be seen, upon scrutiny of the evidence at the trial whether the arrangement between the parties was such that the setting off took place at the time of the transaction or was it pleaded for the first time in the affidavits in opposition. That would determine whether the set off was legal or equitable and whether it could be claimed. Having advanced a substantial defence there is no question of a winding up order being passed. The defence is so substantial that is not even inclined to ask the company to provide security. This winding up applications are disposed of, by refusing to admit the same and relegating the petitioning creditor to a civil remedy as available to it. The period during which these winding up applications have been pending in this Court may be excluded to compute limitation under Section 14 of the Limitation Act, 1963.
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Service Tax
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2015 (12) TMI 1062
Availment of CENVAT Credit - 'Rent-a-Cab', 'Tour Operators', and 'Travel Agent service - Nexus with manufacturing activity - Held that:- There was no dispute even by the Department on the issue that the assessee had consumed for itself various services at various stages in their manufacturing and business activities. Cost was borne by the assessee which also formed a part of the value of the goods manufactured - Rule 2 (l) of the Cenvat Credit Rules, 2004 defines "input service". This definition is couched in means and includes the expression. The definition 'input service' would mean, any service used by the provider of output service, or used by the manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal, and would include various services specified in the said definition. Thus, the term 'input service' would mean any service used by the manufacturer directly or indirectly in or in relation to manufacture of final products and clearance of final product from the place of removal - service in question was 'input service' and the service tax paid thereon would be available to the assessee by way of Cenvat Credit. No question of law, therefore, arises - Decided against the revenue.
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2015 (12) TMI 1061
Waiver of pre-deposit - mandatory pre-deposit @7.5% or substantial amount as directed by the tribunal - underwriters services - assessee had entered into an underwriting agreement with various organisations, for the sale and purchase of American Depository Shares, by the underwriters - Interest u/s 75 - Penalty u/s 76, 77 & 78 - Held that:- at this stage of the hearing of the appeals, the learned Senior counsel, appearing on behalf of the appellant, had submitted that in view of the facts and circumstances of the case, and in view of the fact that, as per the amendment brought forth during the year, 2014, the appellant may be liable to make a pre-deposit of only 7.5% of the demand. In such circumstances, he had offered that the appellant would deposit a sum of ₹ 5 crores, as pre-deposit, towards the service tax, for the hearing of the appeal before the Customs, Excise and Service Tax Appellate Tribunal. It is appropriate to set aside the orders passed by the Tribunal, on 29.5.2015 and 11.9.2015, and to direct the appellant to deposit a sum of ₹ 5 crores, as pre-deposit towards the service tax, within a period of four weeks from the date of receipt of a copy of this order. The penalty and the interest imposed on the appellant stands waived till the disposal of the appeal - Appeal disposed of.
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2015 (12) TMI 1060
CENVAT Credit - scope of input services - Rule 2(l) - Credit on inputs, capital goods and input services used in various output services - Held that:- input Cement and Steel used in the factory of manufacturer shall not be eligible input credit. This explanation is applicable only to the manufacturer and not the service provider. It is to be read strictly as per plain meaning of the statute. There is no indication in the Explanation that it would apply to the service provider. The Hon'ble Gujarat High Court in the appellants own case held that amendment in Explanation-2 in Notification No. 16/2009-CE (NT) (supra) was not clarificatory in nature and the amended definition will not be applicable to the service providers. So, the denial of input credit on Cement and Steel before and after amendment of Explanation 2 of definition Input, cannot be sustained. Jetty is used for loading and unloading of goods. The definition of Port service under Section 65 (82) of the said Act, 1994 covers any service rendered by a port in any manner in relation to a vessel or goods. Thus, jetty is used within the port for loading and unloading of the goods from the vessel. Port cannot function without jetty. So, CENVAT credit on the inputs and capital goods used in the construction of jetty is eligible for output service namely port service. It is noticed from the above decisions that the test of input and capital goods in respect of output service is whether it is used for providing output service. In the present case, it is clearly evident that the inputs and capital goods were used in construction of jetty for rendering port service. There is no reason to deny CENVAT credit on such input and capital goods. Notification No. 25/2007-ST (supra) exempts from payment of service tax on the Commercial or Industrial construction services. It would apply to a Commercial concern in relation to construction of Port or other Port provided service to any person exempted from the whole of service tax leviable thereon. In the present case, the Port was constructed by the contractor appointed by the Appellant for construction of Jetty, the exemption is applicable to the contractor. The contractors are not eligible to avail CENVAT credit. On the other hand, the appellant paid service tax on Port service. Hence, the Appellants are entitled to avail CENVAT credit on the inputs used for taxable output services, Port service. We find that the Hon’ble Gujarat High Court in the Appellant’s own case, as stated above, held that Appellant is entitled for input credit and it cannot be denied since construction of jetty was exempted. So, the findings of the adjudicating authority on this issue, is not sustainable. Various input services - Nexus with output services - Nexus of these Input Services with output service are covered in the inclusive part of the definition viz. services used in relation to business activities . The nexus of inputs Service used in the business related activities would be established by the narration of the services in their accounts. In any event, all the services were duly recorded in the books of accounts, which were audited under the companies Act and other authorities. Further, the services coming under Professional Services (0.67%) and Construction Services (0.10%) are evidently eligible for CENVAT Credit, as observed herein earlier. Appellants have rendered services within Special Economic Zone (SEZ). In terms of Section Rule 6(6)(i) of the Cenvat Credit Rules, the appellant was not required to reverse the Cenvat Credit used in the Special Economic Zone (SEZ). The appellants would be eligible to avail Cenvat Credit as specified under Rule 6(5) of the Cenvat Credit Rules as the same have been used for providing output Services. Central Excise Officers raised the demand after scrutiny of the records on the above Input Services. The various services as detailed mentioned in reply to the show cause notice are also placed before the Tribunal. The nexus between the Input and Output services is clearly evident from the records except for items namely Air Travel Agency, Airport Service, Mandap Keeper Service, Membership of Clubs, Passenger Embarking for Foreigner and Sponsorship Service which requires to be examined by the Adjudicating authority. So, there is no reason to deny CENVAT Credit on the input services except the items mentioned above. It is a case of eligibility of CENVAT Credit on input, input service and capital goods and most of the items are admissible and therefore, imposition of penalty is not warranted. - Substantially decided in favor of assessee.
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2015 (12) TMI 1059
Denial of CENVAT Credit - whether appellants are entitled to use the Cenvat Credit to discharge their service tax liability in regard to GTA and BAS service, when they are not the service provider for such services - Held that:- Finance Act, 1994 is the law which deals with taxability of services. Taxation of Service Rules, 2006 enacted under the Finance Act, 1994 inter alia lays contains provisions governing the services which are provided from outside India and received in India. Rule 5 of the said Rules prevents the utilization of credit for discharging Service Tax on taxable services provided from outside India and received in India. In view thereof the demand of service tax as deemed provider of BAS services as per the impugned order does not warrant any interference. The same is upheld. The impugned order to the extent of demand of service tax on account of GTA services as discussed above, is set aside. Commissioner (Appeals) has upheld the penalty imposed under Section 76 of Finance Act, observing that the appellant ought not to have paid the service tax from Cenvat credit, but should have paid in cash. The issue being interpretational and as the appellant has already discharged the service tax, we consider that imposing penalty would not be appropriate and the same is set aside in terms of section 80 of the Finance Act, 1994. We would also like to observe that though the Commissioner states that the penalty imposed under Section 70 read with Rule 7(2) is proper and upheld, no such penalty is seen imposed by the original authority. - Decided partly in favour of assessee.
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2015 (12) TMI 1058
Demand of service tax - Consulting engineer service - Held that:- Appellant was given the work which included design, engineering, procurement, manufacture, supply, civil works, erection, testing commissioning, reliability run, demonstration of performance guarantees as well as total project management in an integrated manner and on turnkey basis, and any other works reasonably required for the completion of the Facility and/or for safe, trouble free, normal operation of the facility. Therefore, there is force in the appellant s contention that merely because it had entered into four contracts for completing the scope of work would not take away from the fact that it was an operation of erection and commissioning on a turnkey basis and therefore the service rendered was works contract service which was not liable to service tax prior to 1.6.2007 in the light of the judgement of Supreme Court in the case of Larsen & Toubro (2015 (8) TMI 749 - SUPREME COURT). - period of dispute in this case is August 2003 to November 2005. Thus during the relevant period, the appellant being a body corporate was not covered under the definition of consulting engineer as per the above quoted judgement of Delhi High Court and consequently, the service rendered by the appellant could not be classified under Consulting Engineer Service under which the impugned demand is confirmed. - impugned demand is not sustainable. - Decided in favour of assessee.
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2015 (12) TMI 1057
Demand of service tax - Royalty charges or lease rental - whether the monthly Royalty charges collected by the appellant towards Development of VIIth Berth as Container Terminal and its operation and maintenance on BOT basis is taxable under port services or otherwise - Penalty u/s 76 & 78 - Held that:- As per Article 7.3.5 of the agreement in consideration of the said agreement there is a initial lump sum payment of ₹ 45 Million for the licence. In addition there is a monthly royalty payment as stipulated in Article 7.3.5.2. and the present demand is only on the monthly royalty charges collected for the licencee and not on the lumpsum payment. From the above it is proved beyond doubt that the royalty charges received by the appellants is for overall consideration towards the development of VIIth Berth as container terminal under the above BOT agreement and rightly falls under “port services” and the amount of royalty charges are rightly chargeable to service tax under port services. Therefore, the appellant s contention that they have not provided any service except leasing/ renting of the berth and the amount is only towards lease/rent of vacant land is not at all justified and not supported by law. The licencee cannot change the design and drawing once approved by the appellant without prior consent of the TPT. This clearly shows the indirect activities/services rendered by the appellant on the development of the above project which clearly falls under Port Services. The appellant contended that the said Royalty Charges are received only towards Renting/leasing of the vacant land and not for any services rendered whereas on perusal of the entire Licence Agreement, we failed to see the word "Renting or Leasing of the Property" is used in any of the articles of the agreement. Further, we find that the Licence agreement dt. 15.7.98 entered by appellant for development of Container Terminal is a self-contained document envisaging every details of the project. It is not only lists out terms and conditions of operation and maintenance but brings out minute details, specification of the logistics, staffing, reporting. Therefore, BOT agreement cannot be compared or equated to any normal agreement of leasing of property. The term Licence used in the present BOT agreement is to include the Licensor, Licensed Premises and Licence period and they are used with full meaning and these cannot be by any stretch of imagination can be called or termed as Lessor or Leased Premises or Lease Period. Therefore, the appellant's claim that they have only leased out portion of the port area and received lease amount as Royalty charges has no basis and the monthly Royalty charges are worked out as per Appendix 12, based on Tonnage handling is in totality of all the services rendered either direct or indirect as stipulated in the various Articles of the Agreement and it is only for the port services i.e. Development of Container Terminal for handling of vessels and goods. There is no obligation of GMB brought out in the said order. Further, GMB has granted rebate of 80% wharfage to be adjusted against the cost of construction of jetty by UCL. Whereas in the present case there is a clear obligation of Licensor i.e. TPT is set out in the agreement and there is no rebate granted by TPT to PSA towards construction cost. TPT received Lump sum payment in addition to Royalty charges. The agreement of GMB in the above case is entirely different from the Licence agreement of TPT in the present case. Therefore, we find that the ratio of the Hon'ble Supreme Court case law of GMB case relied by appellant is clearly distinguishable on the facts and the same is not applicable to the present case. Similarly, the Tribunal decisions relied by the appellant in the case of Cochin Port Trust and Gujarat Chem Port Terminal also clearly distinguishable from the facts of the present case. Royalty charges received by the appellant from Licensee as per Licence Agreement for Development of VII Berth as Container Terminal, operation and maintenance on BOT basis is chargeable to service tax under Port Service. - service tax demand was confirmed on the gross monthly royalty charges received during the disputed period without allowing cum tax benefit. It is settled law that appellants are eligible for the cum tax benefit on the total amount received as monthly royalty charges. Accordingly, we hold that appellants are eligible for cum tax benefit on the gross amount received and after allowing the cum tax value benefit the revised demand is liable to be upheld. As regards imposition of penalty on the appellant, both under Section 76 and 78 of Finance Act, we find that the appellants, a PSU are duly registered with Department and paying service tax regularly on the Port Services rendered from the beginning. The appellants are under bonafide belief that the said charges are not taxable during the relevant period. We also find that the appellants regularly paying service tax on the Royalty charges w.e.f. 1.6.2007. Therefore, we are of the view that there was a reasonable and bonafide cause for appellant's failure to pay service tax. Therefore, by invoking Section 80 of Finance Act, we set aside the penalty imposed under Section 76 and 78. Monthly Royalty Charges received by the appellants from their Licensee during the period under dispute for the development of Seventh Operation and Maintenance on BOT basis as per the Licence Agreement dt. 15.7.1998 are chargeable to service tax under "Port Services". The demand is upheld but for the cum tax benefit. The penalty imposed under Section 76 and 78 are waived - Decided partly in favour of assessee.
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2015 (12) TMI 1056
Refund claim of accumulated CENVAT Credit - 100% EOU - export of services - period of limitation - Held that:- as notification 27/2012-CE (NT) dated 18.06.2012 specifically mentions that the time limit mentioned under Section 11B would be applicable for refund of CENVAT credit. The next factor to be considered would be the relevant date for computing the time-limit prescribed under Section 11B for this aspect, we find force in the submission of the learned Counsel that the date of export invoice should be treated as the relevant date. The time limit of one year prescribed under Section 11B of the Central Excise Act would be computed from this date and refund claims submitted within the said time limit of one year from the said date would be eligible for refund. We find fort for our view from the decision of the Hon'ble Madras High Court in the case of GTN Engineering (I) Limited vs. CCE, Coimbatore read with the decision of the Hon’ble Gujarat High Court in the case of CCE. & Cus., Surat vs. Swagat Synthetics (2008 (7) TMI 208 - HIGH COURT GUJARAT ) and the Tribunal decision in the case of Apotex Research Pvt. Limited and Others vs. Commissioner of Customs, CCE & ST, Bangalore (2015 (3) TMI 346 - CESTAT BANGALORE). A careful and harmonious reading of these decisions would reveal that CENVAT credit though not a duty, by making Section 11B applicable to refund of CENVAT credit, CENVAT credit has been equated with duty, by way of Notification No. 27/2012 dated 18.06.2012. Therefore, the time limit would be as prescribed in Section 11B. However, as per the decision of the Hon'ble Gujarat High Court the relevant date would be the date when the cause for refund has arisen, and this would obviously be when the export has taken place, as is also held by this Tribunal in the case of Apotex Research Pvt. Limited (supra) - we modify the orders of the lower authorities to the extent to hold that the refund claims filed within one year of export invoice would not be hit by the mischief of time-bar - Appeal disposed of.
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2015 (12) TMI 1055
Demand of service tax - waiver of pre-deposit - No detailed reasons have been given on the issues regarding the jurisdiction of the adjudicating authority and whether the service provided by the petitioner was labile to service tax - Violation of principle of natural justice - Held that:- Impugned order has been passed by respondent No.3 without considering the overall material on record including the reply to the show cause notice submitted by the petitioner. No detailed reasons have been given on the issues regarding the jurisdiction of the adjudicating authority and whether the service provided by the petitioner was labile to service tax. Thus, there was violation of principles of natural justice - impugned order dated 8.4.2015 is hereby set aside with the direction to respondent No.3 to decide the matter afresh, after affording full opportunity to the petitioner and considering the reply filed by it against the original notice Annexure P- 3 before the Commissioner of Service Tax, New Delhi, by calling the complete record from there, within three months from the date of receipt of certified copy of this order - Appeal disposed of.
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Central Excise
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2015 (12) TMI 1054
Interest claim - Delayed refund claim - Whether in the facts and circumstance of the case, was the Tribunal right in law in allowing interest on delayed sanctioned of refund from the date of refund application, under Section 11BB of the Central Excise Act, 1944 - Held that:- We has perused a decision of the Hon’ble Supreme Court in the case of Ranbaxy Pharmaceuticals Limited v. Union of India, [2011 (10) TMI 16 - Supreme Court of India ] by which it has been held by the Honourable Supreme Court that the law to pay the interest commences from the date of expiry of three months from the date of receipt of application and not from the decision. In our view, the issue has been covered by the above decision and therefore we are of the opinion that the Tribunal has not committed any error in deciding the issue in favour of the respondents who had applied for the refund of excise duty - Decided against Revenue.
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2015 (12) TMI 1053
Imposition of penalty - Assessee issued the invoices to the traders without actually supplying the goods - Held that:- Assessee contends that as the Directors of both the registered dealers have been penalties to the extent of ₹ 4500/- and they have not filed any appeals, the penalties on the registered dealers may also be reduced. - penalty is reduced imposed in both the cases to the extent of ₹ 5000 on each. But for the above modification in the quantum of penalties, the appeals are other wise rejected - Decided partly in favour of appellant.
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2015 (12) TMI 1052
Denial of CENVAT Credit - whether there is sufficient evidence against the appellant to establish the charge of aiding and abetting M/s. Real Terminal Engineering Works (India) Pvt. Ltd. to avail and utilize inadmissible cenvat credit - Held that:- Though the appellant states that Shri Jaswantlal Shah has helped M/s. Real Terminal Engineering Works (India) Pvt. Ltd. in availing inadmissible cenvat credit, but he has done so in his individual capacity and has nothing to do with the appellant. This submission is devoid of merit keeping in view the evidence on record. Both the authorities below have held that Shri Jaswantlal Shah has played key role in helping M/s. Real Terminal Engineering Works (India) Pvt. Ltd. to avail inadmissible cenvat credit in contravention of the Cenvat Credit Rules, 2002. It is pertinent to note that the appellant is a proprietorship concern and it is unlikely that the activities of Shri Jaswantlal Shah is not in the knowledge of the appellant. Therefore, keeping in view all the facts and circumstances and the evidence on record, I do not find any infirmity in the impugned order. However, I feel that the imposition of penalty of ₹ 1,25,000/- is on a higher side and, therefore, I reduce it to ₹ 50,000 - Decided partly in favour of appellant.
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2015 (12) TMI 1051
Benefit of cenvat credit - Simultaneous benefit of Notification No. 30/2004-CE and Notifications 29/2004 - Non maintenance of separate accounts - Held that:- Appellant can avail the benefit of both the Notifications i.e. 29/2004-CE and 30/2004-CE, at the relevant time of clearing the final product. It is also not in dispute that the appellant has been availing the cenvat credit only to the extent of 20% of the duty paid on various inputs and forgoing the credit to the extent of 80% based on their ratio of turnover of dutiable goods vis-a-vis the exempted goods. This position is reflected in their accounts also. The appellant has been maintaining the requisite records in respect of receipts and consumption of inputs and availment and utilization of cenvat credit. Here it is pertinent to mention the circular issued by the Board vide Circular No.703/19/2003-CX dated 25.3.2003 issued in the wake of revamping of central excise duty structure for textile industry by Finance Budget 2003. Appellant's case is fully covered by the circular cited above. Moreover, the benefit of credit is sought to be denied on purely technical grounds. It is settled law that substantive benefit cannot be denied merely on technical grounds - impugned order is liable to be set aside - Decided in favour of assessee.
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2015 (12) TMI 1050
Demand of interest on the credit wrongly taken and reversed before utilizing the same - whether interest is chargeable on the cenvat credit wrongly taken, though the same is reversed before utilization of the credit - Held that:- it is seen that there are judgements of various High Courts which have taken different views referring to the Hon'ble Apex Court judgement in the case of Indo Swift Laboratories case [2011 (2) TMI 6 - Supreme Court]. I find that the Hon'ble High Court of Madras in Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT] has not only analysed the judgement laid in Ind Swift Laboratories case and M/s.Bill Forge (P) Ltd. case [2011 (4) TMI 969 - KARNATAKA HIGH COURT], but has also gone one step further by considering the subsequent amendment brought forth in Rule 14 of Central Excise Rules, 2004. This Tribunal in the case of Gurmehar Construction Vs. CCE, Raipur [2014 (7) TMI 849 - CESTAT NEW DELHI] followed the judgement in M/s.Bill Forge (P) Ltd. case. In this background of judicial dispositions on the issue, I am inclined to follow the judgement laid by Hon'ble High Court of Karnataka in the case of M/s.Bill Forge (P) Ltd. which has been endorsed by the Hon'ble High Court of Madras in Strategic Engineering (P) Ltd. case. - interest is not chargeable on the credit wrongly taken which was reversed before utilization. - Decided in favour of assessee.
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2015 (12) TMI 1049
Levy of interest u/s 11AA - Demand of differential duty - value addition of charity amount in the assessable value - Held that:- Supreme Court decision is squarely applicable to the present case as the differential duty was determined under section 11A(2) of Central Excise Act and the notice was issued by the proper officer for demanding differential duty and subsequently confirmed and the same was ultimately paid by the appellant. Therefore, by virtue of the Apex Court decision in the case of CCE Vs. SKF India (2009 (7) TMI 6 - SUPREME COURT ). The interest is payable from the first day of the month succeeding the month in which duty ought to have been paid. - order-in-original re-determining the duty and the interest was done after 8.4.2011 when the amended section 11AA came into effect and the adjudicating authority rightly confirmed the interest from the first day of the month following the month where the duty become due. Appellants are liable to pay interest from the first day of the month following the month where the duty has become due. Therefore, we do not find any infirmity in the orders passed by both the authorities below confirming the interest under the provisions of amended section 11AA. - Decided against Assessee.
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2015 (12) TMI 1048
Denial of CENVAT Credit - Goods damaged due to flood - Imposition of penalty - Held that:- During de-novo Adjudication, the Appellants stated before the Adjudicating authority that they do not have any new or other documents except the documents submitted at the time of earlier Adjudication. Thus, the Appellants had not produced any documents in terms of Tribunal s order before the Adjudicating authority in denovo Adjudication - Appellants had not informed the Department about the loss of invoices during the flood. This fact was detected during the audit conducted by the Central Excise officers. Hence, I find force in the findings of the Adjudicating authority. In the facts and circumstances of the case, the extended period of limitation would be invoked. - it is a proprietary-ship firm and therefore, imposition of penalty on the Proprietor cannot be sustained. It is also noticed that the Appellant No.3 is an Authorised Signatory and therefore, no penalty should be imposed upon him. - Decided partly in favour of assessee.
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CST, VAT & Sales Tax
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2015 (12) TMI 1041
Taxability of Sodexo Meal Vouchers - whether in the nature of goods - consumability within the municipal limit is relevant or not - levy of entry tax / octroi duty / Local body tax (LBT) - Paper based vouchers - affiliates are bound to honour vouchers - On receipt of the vouchers, the Petitioner reimburses the affiliates after deducting service charges - Maharashtra Municipal Corporations Act, 1949 - Held that:- Sodexo Meal Vouchers cannot be treated as 'goods' for the purpose of levy of Octroi or LBT. - when these vouchers are given by the customers to its employees and the employees present the same to various affiliates with whom the appellant had made the arrangements and those affiliates supply the goods against those vouchers, while reimbursing the cost of these vouchers to the said affiliates, the appellant again takes service charges from these affiliates, which is again a sum of 2. Thus, insofar as the appellant ₹ is concerned, it has made the arrangements with the affiliates for supply of goods against those vouchers. This arrangement is made to help the customers by simply facilitating the provision for making available food items, etc. of a particular amount, represented by vouchers, to the employees of these customers. No doubt, vouchers bear a particular value and for such value, goods are provided to the employees. However, these goods are not provided by the appellant, but by the affiliates. The appellant is only a facilitator and a medium between the affiliates and customers and is providing these services. The intrinsic and essential character of the entire transaction is to provide services by the appellant and this is achieved through the means of said vouchers. Goods belong to the affiliates which are sold by them to the customers' employees on the basis of vouchers given by the customers to its employees. High Court has also wrongly observed that vouchers are capable of being sold by the appellant after they are brought into the limits of the city. These vouchers are printed for a particular customer, which are used by the said customer for distribution to its employees and these vouchers are not transferrable at all. Without the sanction/ authorisation of the RBI to operate such a payment system under the Payment and Settlement Systems Act, 2007, nobody can operate such a system, as the purpose of the said Act is to regulate the payment and settlement thereof by means of 'Paper Based Vouchers'. An insight into the Policy Guidelines dated March 28, 2014 issued by the RBI to regulate such transactions would also clinchingly bears out that the real nature of the transaction is to provide service and by no stretch of imagination these vouchers can be termed as 'goods'. - Amount thus collected has to be kept in the escrow account and the persons, like the appellant herein, are under obligation to use this amount only for making payments to the participating merchant establishments and other permitted payments. - appropriate test would be as to whether such vouchers can be traded and sold separately. The answer is in the negative. Therefore, this test of ascertaining the same to be 'goods' is not satisfied. Value of such free food and non-alcoholic beverage provided by an employer to an employee is treated as expenditure incurred by the employer and amenity in the hands of the employee. It is this perquisite given by the customer to its employees by adopting the methodology of vouchers and for its proper implementation, services of the appellant are utilised. - judgment of the High Court has not discussed and decided the issue correctly and warrants interference. We, thus, allow these appeals and set aside the judgment of the High Court [2015 (5) TMI 777 - BOMBAY HIGH COURT] by holding that Sodexo Meal Vouchers are not 'goods' within the meaning of Section 2(25) of the Act and, therefore, not liable for either Octroi or LBT. - Decided in favour of Assessee.
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2015 (12) TMI 1040
Sale of hypothecated vehicles - disposal of repossessed cars by the bank - whether bank is a dealer - defaulting customers - Held that:- the Petitioner Bank is indeed a ‘dealer’ within the meaning of Section 2 (e) read with Section 2 (c) of DST Act. The sale by the Bank of cars hypothecated to it or offered as security against loans advanced towards financing the purchase of the car is a 'sale' within the meaning of S. 2 (m) of the DST Act. Even if the borrower is the owner in possession of the car, the sale is made by the Bank on the strength of the letter of authorisation executed in its favour by the borrower. With effect from 29th March 1996 the motor vehicle has been subsequently identified as the type of goods which qualify for a single point sale read with Section 5 which would be exempted from any further tax. It is accordingly submitted that even if the Petitioner-bank was held to be a dealer, the sale of motor vehicles by it which has already suffered first point sales tax cannot be subjected to any further sales tax. - In any event, as of date it appears that no demand as such has been raised against the Bank for any period prior to 29th March 1996. Therefore, a question that has not been raised in this appeal is not required to be considered by the Court. Sale of the repossessed cars by the Appellant Bank is incidental or ancillary or in connection with the Appellant’s business - Appeal disposed of.
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2015 (12) TMI 1038
Levy of additional tax under section 4A of the Gujarat Sales Tax Act, 1969 - adjusting the additional tax against the exemption limit - mode and manner of payment of such additional tax - appellant was required to deposit additional tax in cash - Held that:- Exigibility to tax is not the same as liability to pay tax. The former depends upon the charge created by the statute and the latter on the computation in accordance with the provisions of the statute and the rules framed thereunder, if any. Thus, the Supreme Court in the above decisions has held that when there is an exemption, the liability to pay tax remains, but the requirement to pay tax to fulfil such liability is done away with. In other words, while there is a liability to pay tax, in view of the exemption, there is no obligation to pay tax. Liability to pay tax under sections 3, 3A and 4 of the Act would continue despite the fact that the sale or purchase of goods are wholly exempt from payment of sales tax, general sales tax or, as the case may be purchase tax. If no sales tax, general sales tax or purchase tax is payable, there can be no additional tax thereon. While it could be said that having regard to the first part of section 4A of the Act, additional tax is leviable, considering the second part of the section, such additional tax would be nil as the tax payable by the dealer on sale or purchase of goods which are wholly exempt from payment of sales tax, general sales tax or, as the case may be, purchase tax would be nil. If the dealer is called upon to pay the additional tax in cash, an anomalous situation arises, inasmuch as, on the one hand, he has to bear the burden of tax and on the other hand, he cannot pass on the same to the purchaser. The additional tax being a tax on the sale or purchase of goods liable to tax under the Act, the legislative intent would normally be that such tax should be recovered from the buyer of the goods. However, in view of the bar contained in section 56 of the Act, in case where the sale or purchase is exempt from tax, the dealer would not be in a position to recover the additional tax from the purchaser, thereby frustrating the very object of the provision namely, to tax the sale or purchase and would result in taxing the dealer instead of the sale or purchase. The authorities under the Act, therefore, cannot recover additional tax under section 4A of the Act in relation to sale or purchase of goods which are wholly exempt from payment of tax under section 49(2) of the Act by resorting to any fictional basis. It follows as a natural corollary that when the additional tax payable is nil, the question of payment of such tax either in cash or by way of adjustment against the exemption limit would not arise. Till the date of amendment of the exemption notification, viz., 3rd March, 2001, whereby the aggregation clause came to be amended, the question of payment of additional tax, either in cash or by way of adjustment against the exemption limit would not arise. The Tribunal was, therefore, not justified in holding that additional tax was payable under section 4A of the Act by the dealers even for the period prior to 3rd March, 2001, either in cash or by way of adjustment. To that extent, the impugned orders passed by the Tribunal, cannot be sustained. - Decided in favour of assessee.
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Indian Laws
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2015 (12) TMI 1039
Denial of renewal of license - having two licenses - whether the respondents are entitled to reject an application for more than one licence under the provisions of the said Act - Held that:- Far from prohibiting the issuance of more than one licence, the Act contemplates the issuance of more than one licence to an applicant. Further, although the rule making power prima-facie entitles the respondents to impose conditions including restricting the number of licences that an applicant may be issued, it has not been exercised. Thus, under the provisions of the Act and the Rules, an applicant is entitled to apply for more than one licence. - If a licencee indulges in evading VAT on account of holding two licences, the authorities concerned are always at liberty to take appropriate action against the licencee. Mr. Bedi attempted to establish that the petitioners in the present case have failed and neglected to make appropriate declarations and to furnish the requisite information as required by Rule 24(12) and (14) of the Rules. If the licencees have failed to do so and thereby committed breaches of the conditions of the licences, the respondents have the power under Section 10(2) of the Act to cancel the licence or even to refuse to renew the same. The conduct of a party is not relevant in the interpretation of the statutory provisions. There is nothing which prevents the respondents from introducing necessary amendments, even with retrospective effect, prohibiting the grant of licences under both the categories. Mr. Bedi stated that the State of Haryana intends doing so. We obviously cannot at this stage express any opinion about the validity of a provision to which our attention has not been invited and which has not as yet come into force. - respondents directed to consider the petitioners' applications for renewal of licences. The same shall not be refused only on the ground that the petitioners already hold a licence under one of the categories - Stay granted.
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2015 (12) TMI 1036
Petition filed under Section 482 Cr.P.C. seeking quashing of FIR - whether powers under Section 482 Cr.P.C. should be exercised in this case? - Held that:- There are allegations which constitutes an offence. Adequate material has been collected by the prosecution which they would prove at the trial. Considering the allegations and in view of the principles enunciated above, it is of the view that it is not a fit case where the powers under Section 482 Cr.P.C. should be exercised.
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2015 (12) TMI 1035
Commission of offence under Section 55(a) of the Kerala Abkari Act - Seizure of vehicle - Held that:- petitioner has failed to discharge his burden and that a bare statement that he had no knowledge of or complicity in the alleged crime is not sufficient to discharge the burden under Section 67C (2) of the Act. - burden cast on the owner of the vehicle under Section 67C(2) of the Act is a positive one. As has been rightly observed by the appellate authority, a mere passive denial is not sufficient. But the totality of the circumstances give rise to, in my opinion, an unmistakable conclusion that the petitioner, the owner of a private vehicle, belongs to a different State; by no imagination can he be said to be deliberately indulging in transporting liquor of meagre quantity from Karanataka to Kerala through his driver or otherwise. - driver, at the behest of the travelers or otherwise, purchased liquor meant, apparently, for personal consumption. Accepting the said sequence of events which are quite probable, it is hard to believe that the petitioner has any knowledge of, much less any complexity in, the offence alleged to have been committed by his driver. - petitioner has, in fact, discharged his burden under Section 67C(2) of the Act and thus deserved release of the vehicle in his favour. - Decided in favour of assessee.
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