TMI Tax Updates - e-Newsletter
December 27, 2013

Case Laws in this Newsletter:

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

Articles

1. No tax deduction on labour and service part of works contract under Punjab VAT-Commissioner clarifies

   By: AMIT BAJAJ ADVOCATE

2. Co-existence of subsidy and taxes

   By: dipsang vadhel

3. Proceedings for rectification and reassessment are not mutually exclusive- both can be undertaken in view of retrospective amendment says Delhi High court. Whether retrospective amendment are valid? Some thoughts by author.

   By: DEVKUMAR KOTHARI

News

1. Offices Handling Service Tax Shall Remain Open on 28.12.2013 & 29.12.2013

2. Inauguration of Silver Refining Plant At India Government Mint, Hyderabad (A Unit Of Spmcil)

3. Third Quarter Review of Monetary Policy 2013-14 on January 28, 2014

4. RBI Reference Rate for US $ and Euro

5. Unconventional Monetary Policy: The Indian Experience with Crisis Response and Policy Exit (Speech by Shri Deepak Mohanty, Executive Director, Reserve Bank of India at the Reserve Bank Staff College (RBSC), Chennai, December 26, 2013)

Notifications

Central Excise

1. 32/2013 - dated 26-12-2013 - CE

Seeks to amend the notification No. 12/2012- Central Excise, dated 17th March, 2012 by adding the name of Kameng Hydro Electric Power Project, (600 MW) of North Eastern Electric Power Corporation Ltd. (NEEPCO)

2. 31/2013 - dated 26-12-2013 - CE

Seeks to amend Notification No 30/2012 - CE, dated 09.07.2012

Customs

3. 53/2013 - dated 26-12-2013 - Cus

Seeks to amend the notification No. 12/2012-Customs, dated 17th March, 2012 by adding the name of Kameng Hydro Electric Power Project, (600 MW) of North Eastern Electric Power Corporation Ltd.

4. 52/2013 - dated 26-12-2013 - Cus

Seeks to amend notification no. 93/2009-Cus, dated 11.09.2009

DGFT

5. 61 (RE-2013)/2009-2014 - dated 26-12-2013 - FTP

Export Policy of Onions.

Service Tax

6. 17/2013 - dated 26-12-2013 - ST

Seeks to amend notification No. 6/2013- Service Tax, dated the 18th April,2013

Circulars / Instructions / Orders

Companies Law

1. 20/2013 - dated 27-12-2013

Clarification with regard to holding of shares or exercising power in a fiduciary capacity - Holding and Subsidiary relationship under Section 2(87) of the Companies Act, 2013.

Highlights / Catch Notes

Income Tax

• High Court: Section 147 Reassessment Needs More Than DVO Report; Additional Evidence Required for Validity.

  Case-Laws - HC : Whether reopening of assessment u/s 147 based on DVO's report constitute reason to believe - There has to be something more than the report of DVO for the belief of the Assessing Officer - HC
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• Interest from Fixed Deposit Receipts is not business income; AO correctly disallows Section 32AB deductions, categorizing it as other income.

  Case-Laws - HC : Whether interest income earned on surplus amount of funds involved in FDRs be treated as business income - The AO had rightly disallowed the deductions under Section 32AB out of the interest income treating the same as income from other sources - HC
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• High Court Allows Reassessment u/s 147 Based on Audit Report; No Jurisdictional Error by Assessing Officer Found.

  Case-Laws - HC : Whether reopening of assessment u/s 147 is permissible on the basis of audit report - The Assessing Officer did not commit any jurisdictional error in issuing the notices - HC
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• Tribunal's Unreasoned Order Challenged: Emphasizing the Need for Well-Reasoned Judicial Decisions in Income Tax Cases.

  Case-Laws - HC : Unreasoned order of Tribunal - Valid or not - Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases - HC
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• Court Reviews 80G Exemption Renewal: No Fund Misuse Found, Hospital Yet to Start, Funds in Fixed Deposit.

  Case-Laws - HC : Application for renewal of exemption u/s 80G - There was no occasion to misuse the funds as the hospital had not yet started and thus the plant and machinery could not be purchased from the grant, which was kept in fixed deposit - HC
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Customs

• Anti-dumping duty on NTCF imports from China upheld; appellants denied refund due to unchallenged sunset review findings.

  Case-Laws - AT : Imposition of anti-dumping duty - Imports of NTCF from China - The appellants cannot claim refund of duty already levied in as much as they have not specifically challenged the findings of the sunset review - AT
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Service Tax

• Court Rules Pre-Tax Services Not Included in Taxable Value If Payment Received After Tax Implementation.

  Case-Laws - AT : Small scale exemption - There was no merit in the argument that value of services rendered when the service was not taxable should be included in the aggregate value of clearance, if such value is received after the service became taxable - AT
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Case Laws:

• Income Tax

• 2013 (12) TMI 1267
  Business income vs Capital Gain - Income from sale of shares – Held that:- Following the principles laid down in Sugamchand C. Shah vs. ACIT [2010 (1) TMI 942 - ITAT, Ahmedabad] - if shares are not held even say for a month, then the intention is clearly to reap profit by acting as a trader and he did not intend to hold them in investment portfolio - Where shares are held for more than a month, they should be treated as investment and on their sale short term capital gain should be charged - When shares are held for less than a month, gain on them should be treated as profit from business – Following assessee’s own case for A.Y. 2006-07 - basic data required to work out the frequency of transactions of holding period is not collected by the AO – The issue was restored for fresh decision.

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• 2013 (12) TMI 1266
  Disallowance of entertainment expenses – The assessee was carrying on the business of network marketing for procuring and promoting the business he had to travel outside and had to incur expenses on entertaining the people - Held that:- The assessee could not provide the bills for the expenses incurred – Bills cannot be provided for such small expenses incurred for entertaining people – The appeal was partly allowed in favour of assessee. Disallowance of travelling and conveyance – Held that:- No receipt can be obtained from Taxi operator or for local conveyance, auto rikshwa or manual rikshwa - The expenditure made for refreshment to various agents for which vouchers may not be available – Partly allowed in favour of assessee. Disallowance of personal expenses – Telephone and mobile expenses - Held that:- For telephone only 10% of the telephone expenses is to be treated for personal usage – Depreciation on mobile phone should be allowed as the expenses have been treated as capital expenditure – Partly allowed in favour of assessee. Car running and maintenance expenses – Held that:- In the absence of details of personal usage, confirmation of personal usage cannot be denied - In case of motor car expenses only 10% of the expenses, can be disallowed towards personal a usage – Partly allowed in favour of assessee. Addition on account of household expenses – The assessee has shown a sum of Rs. 30,000 towards household withdrawals - The assessee's wife had also shown household withdrawals of Rs.13,756 – Held that: - Keeping in view the gross receipts of Rs. 23 lakhs of assessee, the AO estimated household expenses of Rs.10,000/- per month - Many expenses which has been claimed were held to be bogus by the Assessing Officer - Sufficient cash which is shown to have been incurred towards such bogus expenses, is available with the assessee – Decided in favour of assessee.

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• 2013 (12) TMI 1265
  Exemption u/s 10A – The assessee earned profit in STPI unit whereas incurred loss in non-STPI business - Held that:- Following CIT v. Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court] - “Total income” used in Section 10A was to be understood as the total income of the STPI unit, which was clear from the first proviso to Section 10A(1) which made a reference to the total income of the undertaking and not to the total income of the assessee - Assessee was entitled for claiming deduction considering its STPI unit separately - CIT fell in error in concluding that giving-effect order suffered from any error prejudicial to the interests of Revenue – Twin conditions for invoking power of CIT under Section 263 of the Act were not satisfied - Decided in favour of assessee. Payment towards gratuity scheme of LIC – Held that:- Following assessee’ own case for A.Y. 2002-03 [2007 (6) TMI 273 - ITAT MADRAS-C] - The assessee company has a scheme with the LIC of India and the payment is made to LIC of India - LIC of India is an approved institution for maintaining gratuity funds – The issue was restored for fresh examination. Employee’s contribution to ESI and PF – Held that:- Following CIT v. Alom Extrusion Ltd. [2009 (11) TMI 27 - SUPREME COURT] - Amendment to Section 43B made by Finance Act, 2003, would act retrospectively with effect from 1st April, 1988 – Amount should be paid during the year irrespective of the fact that the contribution was deposited after due date - Decided against Revenue.

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• 2013 (12) TMI 1264
  Interest u/s 234B and 234C – A search and seizure operations u/s 132 were carried out at the premises on 13.03.2008 - Cash amounting to Rs. 3,86,11,000/- was seized - The appellant company requested the assessing officer to adjust the aforesaid amount of Rs. 3,86,11,000/- as advance tax paid by the appellant - Held that:- Following Commissioner of Income Tax vs K.K. Marketing [2005 (5) TMI 58 - DELHI High Court] - Seizure of cash belonging to the assessee firm could be adjusted against its advance tax liability since there is a request by the assessee to adjust the seized cash against the advance payment of tax – Following Commissioner of Income Tax vs Arun Kapoor [2010 (7) TMI 610 - Punjab and Haryana High Court] - On request for adjustment of advance tax liability against seized cash, the assessee is liable to pay interest u/s 234B and 234C - The assessee is also entitled to get benefit of payment of advance tax out of seized cash from the date of making application for adjustment of seized cash as advance tax towards tax liability – Decided against Revenue.

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• 2013 (12) TMI 1263
  Disallowance of interest on capital borrowed for capital WIP - Held that:- AO did not give clear finding on the issue and made adhoc disallowance of 15 % from the profit and loss account - There is no finding recorded by AO that the textile project was not by way of expansion of business - The interest on the borrowed amount for the project was to be allowed as revenue expenditure, as held by the Tribunal - The Tribunal being final court of accepting any finding has found justification in the order of CIT (A) in deleting the addition of 14,52,654/- because on the facts of the case that the assessee had used the funds for the purpose of its business - Decided in favour of assessee.

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• 2013 (12) TMI 1262
  Rejection of registration u/s 12AA - Held that:- nothing has been brought on record, by the learned Commissioner of Income Tax before denying registration under section 12AA of the Act and approval under section 80G of the Act - Tribunal is a final fact finding authority and has found that - As per the aims and objectives of the trust, registration should be granted - Decided against Revenue.

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• 2013 (12) TMI 1261
  Evasion of taxes - Held that:- The appelant filed revision u/s 264 of the Act - The Commissioner, allowed the appellant to produce the materials in support of the alleged expenditure incurred for improvement of the land sold by the appellant - After having gone through the entire materials/evidence, the revisional authority held that all the documents produced by the appellant in support of his case are fabricated - Spot inspection was also conducted by the revisional authority and it was found that the claim of the appellant in respect of the development/improvement of the land was not genuine - Decided against petitioner.

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• 2013 (12) TMI 1260
  Validity of assessment u/s 147 - Held that:- Notice has been issued within the stipulated time and cannot be treated as barred by time - The AO has also furnished reasons recorded by the assessing officer for reopening the case - The appeal has no merits - Decided against assessee.

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• 2013 (12) TMI 1259
  Deduction u/s 80HHC on goods manufactured and traded by self - Held that:- The deduction u/s 80HHC was a legally debatable issue - After the judgment of Apex Court in IPCA Laboratories (supra) the entire provisions of Income Tax Act under Section 80HHC were modified - If assessee's entire claim had been disallowed because of the decision of the Supreme Court in IPCA vs. DCIT [2004 (3) TMI 9 - SUPREME Court] that would not have tantamounted to assessee concealing its income or furnishing inaccurate particulars of its income, because the assessee has made calculation of deduction u/s 80HHC as per the then prevailing interpretation - In such case the conditions necessary for levy of penalty under Section 271 (1) (c) of the Act are not fulfilled - The Income Tax Authorities did not find that the assessee had either concealed the particulars of his income or furnished inaccurate particulars of such income, to attract the levy of penalty - Decided against Revenue.

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• 2013 (12) TMI 1258
  Penalty u/s 271(1)(c) - Held that:- The firm was reconstituted and that even if the relevant AY, was the first year of the business of the new firm, where the entry in favour of the one of the partners, which was to be paid to her, was not sufficiently explained - Nothing was produced to support the argument that there is no concealment - There was no documentary proof as to the payment of goodwill. If it was goodwill what was the basis for its calculation is also not shown - The Tribunal is a final fact finding authority and it was of the view that income has been concealed - Decided against assessee.

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• 2013 (12) TMI 1257
  Genuineness of unsecured loans and creditworthiness of lenders - Held that:- After the initial burden was discharged by the appellant-assessee, the AO did not accept the application to summon the creditors and proceeded to examine the records namely the bank accounts to find out whether the unsecured loan transactions were genuine - He considered each and every loan transaction and found that none of the individual unsecured creditors could be said to be creditworthy to advance loans for such amounts - The findings recorded by the AO about the creditworthiness of some unsecured loans out of total unsecured loans, does not suffer from any error of law - The AO didnot failed to exercise his jurisdiction in refusing to summon the file of unsecured creditors other than one who had appeared and was examined - Decided against assessee.

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• 2013 (12) TMI 1256
  Whether surplus amount of sale of land is assessable as long term capital gain or adventure in trade - Held that:- The CIT (A) considered the facts and relied upon relevant principles of law, as well as the case laws in arriving at a conclusion that in the given circumstances, the agreement with the coloniser, who had to develop the plots and ultimate sale of the plots to the nominees of the colonisers, at a price to be fixed by the coloniser in which the assessee had no share of excess profits, was not in the nature of any adventure in the nature of trade - The assessee was not engaged in any trade or business of selling land - The transaction was only to get best price of his land, which the coloniser was ready to pay - The ITAT did not commit any error on facts or in applying the principles of law in upholding the findings of CIT(A) - Following Ram Narain Sons (P) Ltd. v. IT Commissioner [1960 (12) TMI 3 - SUPREME Court] - In consideration whether a transaction is or is not an adventure in the nature of trade, the problem must be approached in the light of the intention of the assessee having regard to the "legal requirements, which are associated with the concept of trade or business - Decided against Revenue.

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• 2013 (12) TMI 1255
  Unexplained commission paid – Held that:- The Assessing officer has accepted the payment of commission by Santosh Kumar Agarwal - When the amount has already been assessed in his hands, then the same amount cannot be added in the hands of the assessee to avoid double taxation – There is no justification for making the addition of Rs.16,40,000/- in the hands of the assessee. Unexplained payment - Held that:- The ITAT found that M/s. Mohan Lal Jain & Sons was having transaction with Sri Santosh Kumar Agrawal only. He was not having any transaction with the assessee firm. M/s. Mohan Lal Jain & Sons have repeatedly asked Sri Santosh Kumar Agarwal, whose wife was a partner in the assessee firm, for making the payment, and Sri Santosh Kumar Agrawal has also confirmed it. Net Profit rate - Held that:- Profit @ 8 % was justified and accordingly an addition of Rs. Rs.9,649/- was confirmed, and relief of Rs.1,11,149/- was granted - Decided against Revenue.

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• 2013 (12) TMI 1254
  Reference to valuation officer for valuation of land - Held that:- The assessee had purchased the plot in question from the UPSIDC - The UPSIDC had informed the Revenue authority through its letter dated 7.1.1997 that the cost of plot as on 1st April, 1981 was Rs.9.75 per square yard, which has not been disputed by the assessee then in such a situation it was not necessary for the assessing authority to refer the matter to the valuation officer - Once from the documentary evidence and material on record, it is established that the cost of land is Rs. 9.75 per square yard then there appears to be no reason to invoke the provisions of Section 55A of the Income Tax Act - The power conferred in Section 55A deals the controversy to refer to valuation officer, in case there is dispute or doubt or inability to find out the fair market value of capital assets - Decided against assessee.

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• 2013 (12) TMI 1253
  Penalty for concealment of income - Undervaluation of closing stock - Held that:- The assessment was not based on estimation - The assessee had concealed the income by reducing the value of the closing stocks at absurdly lower rate, which was much less than the purchase price without any evidence or material to show that the stock of foodgrains had deteriorated to such an extent, that the valuation would be lesser than the purchase price - The AO applied the lowest of the purchase rates for each of the commodities constituting the assessee's closing stock as obtaining in the month of its purchase - The AO did not estimate such value - In the absence of any other material produced by the assessee he accepted the lowest of purchase price as the value of the closing stock - Decided against assessee.

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• 2013 (12) TMI 1252
  Whether reopening of assessment u/s 147 based on DVO's report constitute reason to believe - Held that:- The Tribunal found that the DVO's report is based on his opinion, and not on any material, which could form the basis of reopening of the cases, and thus it can at best be treated as an information, which will not be sufficient material for recording 'reason to believe' to proceed in the matter - The opinion of the DVO, as to what would be reasonable percentage of architects fees and the supervision charges by the Directors, would not constitute tangible material for exercising powers of reopening the assessment - Following Assistant Commissioner of Income-Tax v. Dhariya Construction Co. [2010 (2) TMI 612 - Supreme Court of India] - The DVO's report per se is not an information for the purposes of reopening assessment under Section 147 of the Act - The Assessing Officer has to apply his mind on the information, if any, collected and must form a belief thereon on reopening the assessment - There has to be something more than the report of DVO for the belief of the Assessing Officer - Decided against Revenue.

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• 2013 (12) TMI 1251
  Whether interest income earned on surplus amount of funds involved in FDRs be treated as business income - Held that:- Following Totgar's Co-operative Sale Society Ltd v. Income-Tax Officer [2010 (2) TMI 3 - SUPREME COURT] - The interest on the FDRs cannot be treated as income from profits and gains of business - The word 'income' has been defined in Section 2 (24) (i) of the Act to include 'profits and gains'. Sub-section is an inclusive. The business profits have been specifically included in the word 'income' - The assessee-company had invested the surplus funds, which were not immediately required by it, in FDRs, which were later on encashed and used for expansion of business - The deposits made by the company were not in the regular course of business, nor it was the business of the company to make deposits and earn interest - The interest income cannot be said to be attributable to the activities of the company. The interest had accrued on the funds, which were not immediately required by the assessee-company for its business purposes and which were invested in FDRs - The assessee company is engaged in the business of manufacture of oxygen and nitrogen gas; re-rolling of steel; and fabrication of railway wagons. The surplus profits retained by the company were kept in FDRs - The interest earned on such income was not earned out of business regularly carried out by the assessee company - Decided in favour of Revenue. Deduction u/s 32AB of interest earned on FDRs - Held that:- The AO had rightly disallowed the deductions under Section 32AB out of the interest income treating the same as income from other sources - Decided in favour of Revenue.

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• 2013 (12) TMI 1250
  Whether reopening of assessment u/s 147 is permissible on the basis of audit report - Held that:- The audit report was not the only information, which persuaded the assessing authority, to issue notice under Section 142 (1) of the Act - The audit report was submitted on 17.11.2008, and was available on record - The Assessing Officer after examining the judgments of the Supreme Court in Liberty India [2009 (8) TMI 63 - SUPREME COURT] - The AO formed an opinion to issue notice under Section 142 (1) of the Act, fixing 15.06.2012 to submit the specified documents mentioned in the questionnaire attached with the notice dated 31.5.2012. The Assessing Officer did not commit any jurisdictional error in issuing the notices - Decided against petitioner.

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• 2013 (12) TMI 1249
  Unreasoned order of Tribunal - Valid or not - Held that:- Though tribunal has extended the benefit of its earlier judgement while deciding the controversy as raised, but not indicated as to what and in which manner the case is identical to the earlier judgment - It was incumbent upon the tribunal to discuss the similarity between two controversy, one which was decided earlier and the other i.e. the case in hand - If the tribunal would have compare the similarity between two disputes the one of which was decided earlier and thereafter parity have been extended then finding should have been recorded with regard to similarity of dispute – Following Assistant Commissioner, Commercial, Tax Department, Works Contract and Leasing, Quota Vs. Shukla and Brothers [2010 (4) TMI 139 - SUPREME COURT OF INDIA] - It shall be obligatory on the part of the judicial or quasi judicial authority to pass a reasoned order while exercising statutory jurisdiction - Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases - The tribunal has been failed to discharge his obligation by not discussing the evidence and material available on record extending parity to the respondent - The order is unreasoned and decided without discussing the similarity between the case in hand and the earlier judgement of tribunal – The issue was restored for fresh adjudication.

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• 2013 (12) TMI 1248
  Application for renewal of exemption u/s 80G - Held that:- The petitioner neither misutilised the grant nor utilised it for any business - The observations of CIT that the interest was utilised for business is not based on any material and the discussion of the manner in which the interest was utilised - He also did not record any finding that the respondent assessee did not comply with the terms and conditions of the utilisation of the grant - Section 80G(5)(i)(b) provides the condition for exemption or rejection of the application for renewal, if the donation made to the institution or funds are not used by it directly or indirectly for the purpose of such business - The Commissioner did not record any such finding that the funds, which was earmarked and was kept in separate account in fixed deposit was not used by the respondent assessee directly or indirectly - There was no occasion to misuse the funds as the hospital had not yet started and thus the plant and machinery could not be purchased from the grant, which was kept in fixed deposit - Decided against Revenue.

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• Customs

• 2013 (12) TMI 1247
  Utilization of advance license - Whether the petitioner proprietorship of U.K. Paint (India) Limited can utilise advance licences in respect of goods imported earlier - Held that:- advance licences could be issued subsequently, even after the goods had been imported or arrived. The only stipulation was that the goods should not have been cleared. It is not the case of the Revenue that the goods had been cleared. The Advance license in terms of paragraph 65 of the policy could have been used for clearing the goods in question. Section 72 does not relate to clearance of goods but refers to the term “removal of goods” and the duty payable on deemed removal. The case of the Revenue/respondents is that the duty had to be paid and was calculated in terms of Section 72(1) on the date the period of warehousing came to an end, i.e., on 27th January, 1996. Whether the petitioner is liable to pay interest under Section 61(2) of the Customs Act, 1962 - Held that:- as the petitioner has already paid custom duty in terms of the interim order, we do not think it will be appropriate to ask petitioner to furnish advance/duty free licences with DEEC book at this stage. This may also not be in the interest of the respondents as they will have to refund duty paid, with interest. Accordingly, it is directed that customs duty paid by the petitioner in terms of the interim order dated 25th February, 1999 will be treated as final and binding and “no interest for delayed payment will be recoverable” - Decided in favour of assessee.

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• 2013 (12) TMI 1246
  Imposition of anti-dumping duty - Imports of NTCF from China - manner of decision - principles of natural justice - Held that: - Anti Dumping Duty was rightly imposed in the fitness of the circumstances of the case. Recommendations of DA notifying no cessation of antidumping duty are not at all faulty since he had carried out a detailed examination of various facts to come to the conclusion that the subject goods originating in or exported from Chinese Taipei, Indonesia and EU (excluding France) have been exported below their normal value, resulting in dumping. He also came to the conclusion that in the case of revocation of anti dumping duties, the dumped imports from these countries are likely to continue to cause injury to Domestic Industry. The resultant customs notification issued by Ministry of Finance imposing anti-dumping duty is based on sound reasons. Both the notifications are therefore upheld. All the grounds raised by the appellant in the present appeal against mid-term review initiated at its instance being devoid of merit, the appeal is liable to be dismissed. If one person hears and other decides, then personal hearing becomes an empty formality. In the present case, admittedly, the entire material had been collected by the predecessor of the DA; he had allowed the interested parties and/or their representatives to present the relevant information before him in terms of Rule 6(6) but the final findings in the form of an order were recorded by the successor DA, who had no occasion to hear the appellants herein. In our opinion, the final order passed by the new DA offends the basic principle of natural justice. Thus, the impugned notification having been issued on the basis of the final findings of the DA, who failed to follow the principles of natural justice, cannot be sustained. It is quashed accordingly. The appellants cannot claim refund of duty already levied in as much as they have not specifically challenged the findings of the sunset review, and therefore, the findings in relation to the existence of dumped imports, material injury to domestic industry and causal link between dumped imports and material injury to domestic industry remain unchallenged - Following decision of AUTOMOTIVE TYRE MANUFACTURERS ASSOCIATION Versus THE DESIGNATED AUTHORITY & ORS. [2011 (1) TMI 7 - SUPREME COURT OF INDIA] - Decided against assessee.

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• 2013 (12) TMI 1245
  Partial clearance of goods - Imposition of redemption fine and penalty - Violation Intellectual Property Rights of Hindustan Unilever - Held that:- impugned cosmetics other than DOVE and AXE have been found fit for release by the Assistant Drugs Controller and its restriction of import through particular ports is in view of non-availability of testing facilities for drugs and cosmetics. As such, the violation in regard to these cosmetics imported through Tuticorin Port, which in any case have been subsequently tested and found to be fit for releasing, is a technical violation - the reduction in fine and penalty ordered by the lower appellate authority requires no interference - the lower appellate authority cannot be faulted with taking a similar decision in the present case and allowing re-export of the impugned goods namely, DOVE and AXE import of which has been made contravening Intellectual Property Rights - Decided against Revenue.

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• 2013 (12) TMI 1244
  Refund claim – unjust enrichment – Held that:- adjustment of amount paid on provisional assessment, doctrine of unjust enrichment is not attracted - Chartered Accountant is an expert who has knowledge and training of the accounting system and his certificate could not be brushed aside summarily as is being sought to - this is not a case where doctrine of unjust enrichment is applicable. The appellant is entitled for the refund sanctioned - Decided in favour of assessee.

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• 2013 (12) TMI 1243
  Duty demand - Benefit of concessional rate of duty under Sr. No. 425 of Notification No. 21/2002-Cus. dated 1-3-2002 - Applicants had not used the imported goods for specified purposes - Held that:- goods imported by availing the benefit of Notification No. 21/2002-Cus. As per the condition 5 of the Notification, the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 is to be followed. As per Rule 8 of the above mentioned Rules, the jurisdictional Assistant Commissioner of Central Excise or Dy. Commissioner of Central Excise shall ensure that the goods imported are used by the manufacturer for the intended purpose and in case of violation, the jurisdictional Assistant Commissioner of Central Excise or Dy. Commissioner of Central Excise is empowered to issue notice to recover the Customs duty under Section 28 of the Customs Act. In the present case, the show-cause notice is issued by the Commissioner of Customs for demanding duty for violation of the conditions of Notification. As the Commissioner of Customs is not a competent authority to issue show cause notice, we find that the applicants have made out a strong prima facie case in their favour for complete waiver of dues adjudged - Stay granted.

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• Service Tax

• 2013 (12) TMI 1281
  Small scale exemption - Amount received less than the limit prescribed – Entitlement for exemption under Notification No. 6/2005 – Held that:- There was no merit in the argument that value of services rendered when the service was not taxable should be included in the aggregate value of clearance, if such value is received after the service became taxable - the contention that non-filing of declaration when the assessee crossed value limit of Rs. 3 lakhs is fatal to the claim of the respondent for exemption under Notification No. 6/2005 cannot be accepted - Revenue has mechanically raised demands without looking into exemptions available to the assessee – also the assessee was a small service provider, the Department was duty bound to provide proper guidance – Decided against Revenue.

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• 2013 (12) TMI 1277
  Pre-deposits ordered to be made – Reduction of the amount of pre-deposit – Plea of financial hardship - Held that:- Assessee contended that they had been incurring losses - the activities of the appellant company are closed down and the order passed by the Tribunal requires modification - the interest of justice would be served taking into account the correct financial condition of the appellant if it is directed to make a pre-deposit of Rs.55,00,000 – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.

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• 2013 (12) TMI 1276
  Stay application - Demand of service tax - Works Contract Service - Held that:- department should have provided better guidance to the applicant when he appeared before them to give a statement. Considering the facts and circumstances of the case, the applicant is directed to deposit Rs.24,000/- (Rupees Twenty four thousand only) within a period of 4 weeks and report compliance by 25.6.2013 for admission of appeal. Upon such deposit, predeposit of balance dues arising from the impugned order is waived and there shall be stay on collection of such dues during pendency of appeal - Prima facie case not in favour of assessee - Stay granted partly.

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• 2013 (12) TMI 1275
  Entitlement for cenvat credit - Scope of Input service under Rule 2(l) of the CENVAT Credit Rules 2004 – Services used in relation to business activity or not – Held that:- Following CCE, Nagpur Vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] -the question whether CENVAT credit on sponsorship service and renting of immovable property service was admissible to the respondent during the period of dispute requires to be addressed afresh by the Commissioner (Appeals) – order set aside in so far the services is concerned and the said question regarding 'CENVAT ability' of the two services (sponsorship service and renting of immovable property service) is directed to be reconsidered by the learned Commissioner (Appeals) – Decided against Assessee.

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• 2013 (12) TMI 1274
  Demand of tax - Collection of certain expenditure towards documentation, inspection and royalty charges from the importers - Calculation of taxable value - Reimbursable expenses - Held that:- amount deposited by the respondent could be kept with the Revenue till disposal of the appeal. Prima facie, it appears that the respondent admitted that the expenses were charged from the customers. Hence, it is ordered that the deposit made by the respondent would be kept with the Revenue till disposal of the appeal - Decided in favour of Revenue.

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• 2013 (12) TMI 1273
  Demand of service tax - Intellectual Property Services - Imposition of interest and penalty on the goodwill towards transfer of trademark licences - Held that:- Goodwill is assigned with the Trademark of the business concern. The value of Goodwill pertaining to right to use would be paid for a period of 10 years from 01.05.2007. Thus, the applicant failed to make out a prima facie case for waiver of pre-deposit of the entire amount of adjudged dues - Conditional stay granted.

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• 2013 (12) TMI 1272
  Waiver of pre-deposit of the Service Tax interest and penalties - Exemption under Notification No. 24/2004-S.T., dated 10-9-2004 - Held that:- applicant is an Institute providing Vocational Training Courses to various students like fashion designing, graphic arts, media communication and digital communication etc. These courses are only vocational course and not an academic course and they are covered by the exemption under Notification No. 24/2004-S.T., dated 10-9-2004 and not required to get themselves registered with Service Tax department - applicants are entitled for benefit of exemption Notification No. 24/2004 having a strong prima facie case on merit. Therefore, we grant waiver of pre-deposit of entire amount of Service Tax along with interest and various penalties and stay recovery thereof during pendency of the appeal - Stay granted.

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• 2013 (12) TMI 1271
  Demand of service tax - Club or Association Services - Following decision in the case of M/s. Indian Performing Right Society Ltd. - prima facie the activity undertaken by the appellant is not covered under the category of “Club or Association Services” - Stay granted.

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• 2013 (12) TMI 1270
  Demand of service tax - Commercial and Industrial Construction Services - Held that:- appeal of the appellant have been dismissed for non-compliance of the stay order wherein the appellants were asked to make a pre-deposit of service tax along with interest. As the impugned order is passed without considering the merits of the case, we feel that the matter should be heard on merits by the Commissioner (Appeals) and thereafter pass an appropriate order on merits of the case. In view of this observation, we remand the matter back to the Commissioner (Appeals) for deciding the issue on merits without insisting any pre-deposit for hearing the appeal - Decided in favour of assessee.

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• 2013 (12) TMI 1269
  Waiver of pre deposit - Service Tax demand - ‘Club or Association’ service - Held that:- The applicant are receiving remuneration on the licence allotted by them to their clients. Out of the total remuneration received by them, they distribute the money to the various members of their society who has assigned their copyright to them and retains certain amount for their own expenditure. Revenue wants to demand service tax on the amount retained by the applicant for their expenditure and membership fees received from the members of the society under the category of ‘Club or Association’ service - prima facie, the activity undertaken by the applicant are not covered under the relevant category ‘Club or Association’ service. Accordingly, we waive the requirement of pre-deposit of the entire amount of service tax, interest and various penalties and stay recovery thereof during the pendency of the appeal - Stay granted.

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• 2013 (12) TMI 1268
  Availment of CENVAT Credit - Rent-a-cab service - Clearing & forwarding service - Whether ‘rent-a-cab’ service used by them as conveyance for their employees and ‘clearing & forwarding’ service used for transportation of goods from factory to the port for export during the period of dispute (June, 2005 to June, 2008) are covered by the definition of ‘input service’ under Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that:- Rent-a-Cab service is provided by the assessee to these workers to reach the factory premises in time which has a direct bearing on the manufacturing activity. In fact the employee is also entitled to conveyance allowance. It also would form part of a condition of service and the amounts spent on the conveyance of the employees is also a factor which will be taken into consideration by the employees in fixing the price of the final product. By no stretch of imagination can it be construed as a welfare measure. It is a basic necessity. To ensure that the work force comes on time at the work place, the employers have taken this measure which has a direct bearing on the manufacturing activity. At any rate it is an activity relating to business - appellant is entitled to Cenvat credit on rent-a-cab service used for conveyance of their employees to and from factory. In respect of the export consignments, the Bill of Lading inter alia serves as the document indicating ownership - incurring the freight and incurring charges for transit insurance could not be a sole consideration to decide the ownership or the point of the sale of the goods. In the present case, undisputedly, the ownership transfer takes place through Bill of Lading, which is issued at the port of export after loading of the goods on board the ship - Therefore view taken by the lower authorities against the party in relation to C & F service cannot be sustained - Following decision of COMMISSIONER OF CENTRAL EXCISE, MADURAI Versus M/s STANGL PICKLES & PRESERVES [2011 (2) TMI 462 - CESTAT, CHENNAI] and Commissioner v. Stanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] - Decided in favour of assessee.

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• Central Excise

• 2013 (12) TMI 1280
  Duty liability as per Rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 – Waiver of Pre-deposit – Held that:- Rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is applicable when there is addition of packing machines in the factory during a particular month - the appellant has installed two new packing machines in the month of July 2009 - when there is addition or installation of a new machine on any particular day of the month, it has to be treated that the total number of machines working on any particular day were working for the entire month - As such the duty for the entire month is prima facie payable by the appellant – there was no prima facie case in favour of Assessee – thus, the assessee is directed to deposit the entire amount of pre-deposit – stay not granted.

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• 2013 (12) TMI 1242
  Penalty set aside – payment of duty on parts of pressure cookers – Held that:- The reasoning given by the Tribunal cannot be said to be illegal or unwarranted - The assessee was entitled to exemption by virtue of notification dated 1.3.2002 - The notification was withdrawn on 27.4.2002 – Thus, The non payment of duty for some time after withdrawal of exemption will not lead to finding of intentional evasion of duty – there was no substantial question of law arises for consideration – Decided against Petitioner.

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• 2013 (12) TMI 1241
  Abatement claim as per Rule 96ZO(3) of Central Excise Rules, 1944 due to closure of furnace – Failure to comply with the Obligations under the rule – Held that:- Omission of a Rule as opposed to a mere repeal or deletion, does not confer legitimacy on pending proceedings as they would necessarily come to an end but this principle of law does not apply to the present case – Relying upon Shree Bhagwati Steel Rolling Mills V/s Commissioner of Central Excise, Chandigarh [2006 (10) TMI 17 - HIGH COURT OF PUNJAB & HARYANA (CHANDIGARH)] - With the introduction of Section 38A in the Central Excise Act, 1944, the omission or otherwise of Rule 96ZO(3) of the Rules would not affect any obligation or liability that had already accrued or incurred – thus, the contention that omission of Rule 96ZO(3) of the Rules would render adjudication of proceedings of abatement based upon Rule 96ZO(3) of the Rules a nullity, are without merit – Decided against Appellant.

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• 2013 (12) TMI 1240
  Jurisdiction of Tribunal - Whether the learned Tribunal was justified in recording the finding on merits while dealing with an application for dispensation of pre-deposit – Held that:- The Tribunal in exceptional cases can assess the prima facie case treating the same to be a hardship for maintaining the appeal by dispensation of pre-deposit – in the present case, the Tribunal while doing so observed adversely on merit of the case - the Tribunal cannot do it in a negative way – Thus, the portion which starts with the words "the issue is covered by the precedent Tribunal's decision in the case of LCS City Makers Pvt. Ltd. v. CST [2012 (6) TMI 363 - CESTAT, CHENNAI] - The Commissioner shall decide the matter independently, without being influenced by the observations made – the petitioner directed to make a payment of 50% of the demanded amount as directed by the Tribunal – Decided partly in favour of Petitioner.

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• 2013 (12) TMI 1239
  Liability to pre-deposit the duty u/s 35F of the Central Excise Act, 1944 – Held that:- A plain reading of the provision shows that pre-deposit is not mandatory in all appeals filed under Section 35B of the Act, but in certain appeals specified therein pre-deposit is not required at all - the order dated 30.11.2011 itself shows that the writ petitioner was not heard before passing the order - the matter had already undergone several adjournments at the instance of the petitioner and there was no representation on behalf of the petitioner despite notice - the Tribunal could not be found fault with in proceeding with the matter in the absence of the petitioner, the Tribunal is bound to pass an order on merits assigning the reasons for its conclusion - the CESTAT directed the assessee to pre-deposit 50% of the duty demanded is absolutely without any reasons. The Tribunal did not go into the petitioner's plea of financial hardship, particularly the plea that the petitioner company has been referred to BIFR – Thus, the CESTAT is not justified in concluding that the petitioner failed to comply with the condition of pre-deposit of 50% of the duty demanded - the petitioner deserves to be provided an opportunity to renew its request for waiver of pre-deposit – Decided in favour of Petitioner.

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• 2013 (12) TMI 1238
  Extended period of limitation – Held that:- The Court recorded that the classification list had been approved after carrying out verification - one consignment in transit was seized when the goods were found containing labels of foreign brand - RT-12 returns were being regularly filed - there was a finding to the effect "the invoices containing description of the goods have all been regularly approved by the Department” - all facts were within the knowledge of the Department - there was no justification for invoking the extended period of limitation. Branded and unbranded product cleared - The declaration filed with effect from 5th April, 1994 was a false declaration - The basic reason is the RG-1 register, followed by RT-12 returns, the letter of Superintendent of Central Excise dated 14th November, 1994 and the reply dated 30th November, 199 – Hence, the RG-1 register which reflects the entries in RT-12 returns, does not have basic documents to support the entries made - unless special knowledge of the appellant is inserted, it would not be possible to ascertain which customer had received the branded product and which customer received own branded/unbranded product.

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• 2013 (12) TMI 1237
  Vacancy due to retirement in the Tribunal – Stay application could not be taken up – Held that:- There was a vacancy for considerable time in the Tribunal on account of absence of a technical member and it was not functioning till very recently for that reason - although a new member is appointed to fill the said vacancy, it would still take time for it to deal with all the pending stay applications in the appeals which have been filed before it since the said vacancy arose – the respondents are restrained from making recovery of the disputed duty, interest and penalty from the petitioners – Decided in favour of Petitioner.

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• 2013 (12) TMI 1236
  Eligibility of Notification No.70/92 - Job-worked goods cleared by the Applicant – Waiver of Pre-deposit – Held that:- Prima facie, the condition of Notification has not been complied with and relying upon Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal [2010 (11) TMI 13 - SUPREME COURT OF INDIA] the benefit of the Notification cannot be extended to the Applicant - the second show cause notice invoking extended period of limitation on the same issue, may not be correct - the Applicant could not be able to make out a prima facie case for total waiver of pre-deposit of amount - the Applicant is directed to deposit Rs. 10.50 Lakhs as pre-deposit – upon such submission rest of the duty to be stayed till the disposal – Partial stay granted.

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• 2013 (12) TMI 1235
  Entitlement for Exemption Notification No.6/2006 – Compliance of procedure under Rule 6(3) (b) of the CENVAT Credit Rules, 2004 – ‘Gear box assembly' and 'Gear motor assembly' manufactured –Waiver of Pre-deposit – Held that:- Rule 6(3)(b) Rule 6 of CENVAT Credit Rules, 2004 (as it stood upto 31.03.2008), "if the exempted goods are other than those described in condition (a), the manufacturer shall pay an amount equal to 10% of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory" - by Notification No.10/2008-CE(NT), dated 01.03.2008 (effective from 01.04.2008), the manufacturer has an option to pay 10% of the value of the exempted goods or pay the amount equivalent to the CENVAT credit attributable to inputs/input services based on a formula under clause (b) of sub-rule 3(A) of Rule 6 of the said Rules - Rule 6 was amended retrospectively by the Finance Act, 2010 - the applicant had already reversed the credit of Rs.97,85,380 - the applicant is directed to deposit a further amount of Rupees Twenty Lakhs as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.

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• 2013 (12) TMI 1234
  Process manufacture or not – Waiver of Pre-deposit – Held that:- The applicant had availed credit and paid the duty which is more than the credit now denied in Commissioner of Central Excise, Pune Versus Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] - once the duty on final products has been accepted by the department, Cenvat credit availed need not be reversed even if the activity does not amount to manufacture - Prima facie the applicant has made out a strong case in their favour - The pre-deposit of dues waived till the disposal – stay granted.

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• 2013 (12) TMI 1233
  Clandestine removal of final product from two different units – Joint liability - Held that:- Individual duty liability is to be segregated separately against each different individual and common order in respect of different assessees confirming joint demands cannot be upheld – Following Sree Aravindh Steels Ltd. v. CCE, Trichy [2007 (3) TMI 133 - CESTAT, CHENNAI] - duty should not be demanded from two different person in respect of same goods – demand directed against two persons without arriving at specific charges on whom determination is to be effected and liability should rest, cannot be upheld. The matter do not relate to the lifting of veil about which there could be no doubt - it is a case of clandestine removal against two different manufacturing units - M/s. Rimjhim Ispat Ltd. was manufacturing ingots/billets which according to the Revenue was being clandestinely transferred to Juhi Alloys Ltd. who were manufacturing flats clandestinely and further clearing clandestinely to various flat and rod manufacturers - Based upon the evidence, it is for the Revenue to confirm the demands in respect of billets against M/s. Rimjhim Ispat Ltd. and in respect of flats against Juhi Alloys Ltd. - a joint demand and joint penalty cannot be confirmed against the appellants against two persons – order set aside and the matter remitted back to the adjudicating authority for fresh decision for fixing the liability of each and every individual separately – Decided in favour of Assessee.

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• 2013 (12) TMI 1232
  Maintainability of appeal - Held that:- amount involved in this appeal is 3,92,334/- which is below the monetary limit of 5 lakhs prescribed by the Board for filing appeal to the Tribunal under instruction F. No. 390/Misc./163/2010-JC, dated 17-8-2011 applicable with effect from 1-9-2011 - Decided against Revenue.

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• 2013 (12) TMI 1231
  Valuation of goods - Whether cost of packing material which is supplied free of cost to be included in the assessable value of the goods - Held that:- as the respondents are availing the benefit of credit of duty paid on the packing material, the cost of packing material is to be included in the assessable value. Hence, the impugned order is modified to the extent that the cost of packing material is to be included in the assessable value of the goods manufactured by the respondents - Decided partly in favour of Revenue.

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• 2013 (12) TMI 1230
  Demand of duty - Commissioner (Appeals) allowed the benefit of cum-duty price in respect of duty paid on the scrap - Held that:- demand is made from the present respondent in respect of the scrap cleared by the job worker. Therefore, cum-duty benefit is available while computing the duty liability as per the provisions of Section 4(4)(d)(ii) of the Central Excise Act, 1944 - Decided against Revenue.

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• CST, VAT & Sales Tax

• 2013 (12) TMI 1279
  Demand of tax - Single judge directed that proceedings be kept in abeyance, on remitting 1/3rd of the amount - Held that:- there was no chicken business during the period 2009-10, and the amount is very huge, which was directed to be paid - Order of single judge modified - Decided partly in favour of assessee.

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• 2013 (12) TMI 1278
  Reopening of assessment - Bar of limitation - Concealment of sales - Held that:- in the Sales Tax Act, 1969, reopening of assessment was permissible when the Commissioner had a reason to believe that any turnover of sales, or turnover of purchases of goods chargeable to tax has escaped assessment, or has been underassessed, or assessed at a lower rate. In such cases, if there was any element of concealment of sales, etc., he could issue a notice for reassessment of the escaped turnover within eight years from the end of the period to which such turnover related. In other cases, he could issue such a notice within five years from the said date and not later. The entire Sales Tax Act was repealed by the VAT Act. In the VAT Act, provision for reassessment made significant changes. Under Section 35(1), reassessment is permissible in cases of escapement of assessment or underassessment, or application of lower rate, etc. Subsection (2) of Section 35 of the VAT Act, however, provides that no order shall be made under subsection (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable. Ordinarily period of limitation is considered as a procedural provision and any change in the period of limitation by an amendment in the Act or by enactment of a new statute repealing the original one, is made applicable also retrospectively. This is of course subject to the exception that if under the repealed provision, the cause of action had become time barred as per the period of limitation prescribed any subsequent change or extension in period of limitation would not revive such a cause. Another area where the Courts have taken slightly different view is where in the successor statute, a shorter period of limitation is prescribed and by virtue of the existing provisions of the earlier Act, the limitation has not yet expired but by application of the shorter period of limitation prescribed in the successor Act, the cause would stand barred by limitation. In such cases, the question would arise whether the period of limitation of the successor Act should be applied thereby taking away the right of the party to file proceedings for asserting his right. It would therefore be necessary to ascertain for ourselves whether it can be stated that by the time VAT Act was enacted, the petitioners had under the Sales Tax Act acquired, accrued or incurred any obligation or liabilities. If the case of the petitioners fall within such expression, the Department would be justified in pursuing such cases under the VAT Act with reference to period of limitation contained in the Sales Tax Act despite repeal of the Sales Tax Act. petitioners had filed the returns at the relevant time under the Sales Tax Act. Such returns were also processed as per the provisions of the said Act. Till the Sales Tax Act was repealed by the VAT Act, no further action was taken by the Department. To be precise, no notices for reopening such assessment were issued till the Sales Tax Act was repealed. It is true that the Sales Tax Act permitted period of eight years from the end of the period to which such turnover related for issuance of notice of reassessment, if the Commissioner had reason to believe that the dealer had concealed such sales or any material particulars thereof or knowingly furnished incorrect declaration or returns. However, in our opinion, mere right to issue notice within the said period cannot be equated with accrual or incurring of any obligation or liability. If notices were already issued, it may have been possible for the Department to contend that the assesses having already been visited with such notices, their liability to be so reassessed having already accrued, any repeal of the Sales Tax Act would not obliterate such liabilities by virtue of proviso to subsection (1) of Section 100 of the VAT Act. In the present group of cases for reopening the assessment, provisions contained in the VAT Act and in particular Section 35 thereof, would apply. Admittedly, when such provisions do not permit reopening beyond the period of five years from the end of the period to which the sales relate, and admittedly when no notices much less final orders were passed, the action of the authorities must be held to be lacking jurisdiction. All the cases of reassessment are, therefore, declared invalid - Decided in favour of assessee.

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