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Income Tax
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2013 (12) TMI 1321
Carry forward of capital loss. - Whether sale of polymer division and sale of land in Gujarat are separate transactions – Held that:- The polymer unit which is at Vizag was acquired in the year 1978 - The industrial land in Gujarat was acquired in the year 1997 to set up a polymer unit - The assessee has spent some money towards salaries, wages, conveyance, telephone, interest, etc., in connection with the land at Gujarat - That by itself would not make the said land the property of the polymer unit - These properties are separate and distinct - The first appellant authority as well as the Tribunal was justified in holding that it is not one and the same transaction - As they are two independent transactions, the loss sustained in one transaction cannot be set off against the profit made in the other transaction - Decided against Revenue. Genuineness of commission - Held that:- Following assessee's own case [2006 (9) TMI 147 - KARNATAKA High Court] - The allowance of the commission payment requires interference - Decided in favour of Revenue.
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2013 (12) TMI 1320
Validity of proceedings u/s 263 - Held that:- Following Commissioner of Income Tax versus Atma Ram Tulsyan [2011 (5) TMI 820 - Allahabad High Court] - At no stage, except doubting the sale transactions, the Department doubted the documents which were produced by the assessee to substantiate his claim with regard to capital gains - The Tribunal on appreciation of evidence has rightly found that the transactions in question are genuine transactions - It is a finding of fact based on appraisal of evidence - In the absence of any contrary material the assessment order was framed on presumptions and assumptions - Decided against Revenue.
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2013 (12) TMI 1319
Undisclosed investment in property - Held that:- The Tribunal recorded finding of fact that the document of possession (kabzanama) dated 16.1.1992 in respect of the house contained agreement with the vendor agreeing to pay Rs.2,60,000/- on her behalf to the Kanpur Development Authority for discharging liabilities of the vendor - The purchaser of the property were not party to the 'kabzanama' and no amount was paid by them in cash - Decided against Revenue. Estimation of cost of construction on reference to valuation officer - Held that:- The Tribunal rightly held that the appellant assessee's assessment was being made in consequence of the search - The assessment was to be limited on the basis of the material discovered or information received in the search - The A.O. could not have referred the matter and relied upon the report of the Valuation Cell to work out the unexplained investment - The A.O. could not have referred the matter and relied upon the report of the Valuation Cell to work out the unexplained investment which could be relied upon under Section 158BB - Decided against Revenue.
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2013 (12) TMI 1318
Validity of reopening of assessment - Held that:- The AO has wrongly calculated the deduction u/s 80HHC - He did not examine the issues claimed in regard to various expenses despite the fact that the respondent-assessee had clearly disclosed under the head "other income" various items of income, which were mentioned in Explanation (baa) - It was a case of remissness on the part of AO or wrong application of law to the primary facts available on record - The assessee had disclosed the material facts and there was no dispute regarding the nature and quantum of other income - When the material facts were available on record, the AO was required to apply the law correctly on the material facts available for assessment - When all materials were disclosed on the basis of which the assessment under Section 143 (3) was completed, and the revised return was treated as non-est, as it was beyond limitation - It could be taken as information only if the AO could form the opinion that the material facts were not placed on record and that the revised return contains those facts which are sufficient to form an opinion that the income had escaped assessment; or that the assessee had understated the income, or claimed excessive loss, deductions, allowance or relief in the return or on any of such grounds under Explanation-2 - Decided against Revenue.
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2013 (12) TMI 1317
Writ petition against Notice u/s 194C and 148 - TDS on transportation charges and service charges, and on royalty under Sections 194C and 194J - alternative remedy - Held that:- When a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file return and if assessee so desires, to seek reasons for issuing notices - The AO is bound to furnish reasons within a reasonable time - On receipt of reasons, the notice is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order - As the reasons have been disclosed in proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years. The notices both under Section 194C, where the objections are yet to be decided, and the notices under Section 148 of the Act - All the writ petitions are thus premature - No prejudice has been caused to the petitioners at this stage nor any demands have been created, to interfere and to decide factual issues, calling for interpretation of the conditions of contract and verification of payment - All the writ petitions dismissed on the ground of alternative remedy. - Decided against petitioner.
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2013 (12) TMI 1316
Penalty u/s 271(1)(c) - Held that:- The bald allegations against the counsel do not lend credence to the story of the assessee - He had not only made claim for false refund but had also received the refund and encashed it - If he was cheated, he should have been made complaint against the counsel - He did not make any complaint or refer the matter to any of the authorities to investigate the offence - The Tribunal has further found that the circumstance of the case shows that the assessee had connived with his Advocate - He not only claimed and filed false return but also received and encashed it - The Tribunal has rightly found that if he had voluntarily returned the amount, he could have proved the benefits - The imposition of penalty does not suffer from any error of law - Decided against assessee.
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2013 (12) TMI 1315
Taxability of reimbursement of excise duty - Held that:- this amount has not been debited in the P & L A/c, and it was only balance sheet entry which reflected this amount - The Excise Duty was never charged from the Govt. Department to whom the goods were supplied by the appellant - On the removal of goods from the premises of the appellant, Excise duty was kept by the appellant as per the requirement from the concerned Government Department in lieu of Central Excise Duty paid earlier - In the net result, the appellant was not in receipt of any amount from the Government Department to whom goods were sold - Decided against Revenue.
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2013 (12) TMI 1314
Deduction u/s 80I - Whether industrial alcohol is covered by the word "other alcoholic spirit" under Schedule 11 of the Act - Held that:- As per the doctrine of ejusdem generis which means"of the same kind" - It means words of similar class - Where general words follow the enumeration of particular classes of things, the general words will be construed as applying only to things of the some general class as those enumerated - On perusal of Item 1 of Schedule 11 of the Act, there appears to be no ambiguity - Language is clear and speaks for beer and wine followed by the words 'other alcoholic spirits' - The latter words indicate the same species i.e. of liquor falling within the category of beer and wine fit for human consumption - Legislature to their wisdom points out beer and wine and other identical or alcoholic spirits - Industrial alcohol constitute separate class seems to be undisputed fact - The order passed by tribunal does not suffer from any impropriety or illegality - Decided against Revenue.
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2013 (12) TMI 1313
Validity of recalling its own order by Tribunal - Held that:- The AO wrongly allowed the credit of TDS to the assessee which was later on rectified by ITAT as per the provisions of Section 154 of the Income Tax Act, 1961 that mistake was rectifiable after giving an opportunity of hearing - The credit of which could not be given u/s 199 because the Sikkim state did not credit the amount deducted to the account of Government of India - As the credit of T.D.S. was wrongly given to the assessee which was subsequently rectified invoking powers under Section 154 of the Act, hence the assessee is not liable to pay interest for the late payment of Income Tax - Decided partly in favour of Revenue.
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2013 (12) TMI 1312
Whether deduction u/s 16 is allowed on remuneration paid to directors - Held that:- There was no appointment letter or agreement specifically laying down the terms of the so-called appointment of the assessee/appellant as an employee/whole time Director - The only material placed before the Tribunal to prove the relationship of the employer and employee was in the form of Article of Association and resolutions - The Tribunal further observed that in the said resolution, there is no mention of duties and functions assigned to the assessee/appellant - The appellants failed to establish the relationship of an employee and employer - The Directors appointed as Whole Time Director cannot be considered to be the employee of the Company - Tribunal has approved the findings recorded by the Commissioner, Income Tax - Commissioner of Income Tax (Appeals) as well as the Tribunal has recorded a concurrent finding of fact that the appellant has failed to bring on record any document to prove the relationship of Master and Servant between the assessee and the company - Decided in favour of Revenue.
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2013 (12) TMI 1311
Validity of recalling its own order by Tribunal u/s 254(2) - Held that:- Though the Tribunal had referred to the judgment in M/s. Swadeshi Cotton Mills [1979 (9) TMI 26 - ALLAHABAD High Court], but later on, on the application given by the assessee that it wrongly applied the principle of law in M/s. Swadeshi Cotton Mills to the present case, found that there is difference between hypothecation and pledge of the stock - The hypothecation of the goods could not be treated as same as in the case of pledge - The Tribunal realized its mistake in wrongly applying the principles laid down in M/s. Swadeshi Cotton Mills, and rectified the mistake - In the absence of power of review, where the tribunal finds that there was apparent mistake in its order, which has caused serious prejudice to the assessee, in view of the judgments in Honda Siel Power Products Ltd [2007 (11) TMI 8 - Supreme Court of India], it could have rectified the mistake, which was apparent on record - Decided against Revenue.
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2013 (12) TMI 1310
Genuineness of gift - Held that:- response the assessee had submitted a part of transcript of NRE account of Dr. Chitranjan Jain with the City Bank Delhi. As a proof with regard to creditworthiness of Dr. Chitranjan Jain, a copy of income tax return filed in USA was also enclosed - The brother and his wife has income of 1,16,680 $ in previous assessment year - When the income of the donor has not been disbelieved by the Assessing Authority then payment of meager amount of Rs. 10,00000/- should not be doubted - Merely because the entire transcript of NRE account was not furnished shall not make out a case to disbelieve the amount paid - Assessing authority was not seized with the case of donor to assess his income under the Income Tax Act - He was only to verify the genuineness of transaction and creditworthiness - Decided against Revenue.
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2013 (12) TMI 1309
Unexplained cash credit - Held that:- The Assessing Officer did not record any finding regarding the explanation offered by the assessee - AO did not record that the explanation was not found to be satisfactory - Only additions were made without considering the explanation, which were found to be sufficient by the appellate authority - Decided against Revenue.
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2013 (12) TMI 1308
Whether non-issuance of notice u/s 143(2) affect the validity of block assessment order - Held that:- In the present case the admitted position is that the notice under Section 143 (2) of the Act was not issued, and thus question of service, or improper service is not relevant. The question nos.(i) to (v), framed by the Court are thus decided in favour of the assessee and against the department. - Decided in favor of assessee.
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2013 (12) TMI 1307
Validity of notice u/s 148 - Held that:- The assessing authority have relevant material or that the reasons given by him under Section 148 (2) of the Act are not required to be considered by us for adjudication at this stage - The petitioner has been served with notice under Section 148 - It was open to him to file objections - If the matter has not been decided by the assessing authority, it is still open to him to file objections to the issuance of notice, which the assessing authority is bound to consider and decide by passing speaking order. The petitioner was to be assessed by the Asstt. Commissioner of Income Tax, Range-4, Agra. The matter was transferred, in accordance with the assignments made by the Chief Commissioner of Income Tax - Partly allowed in favour of assessee.
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2013 (12) TMI 1306
Compulsory levy of interest under section 234B - Held that:- Following CIT-II Kanpur versus M/s Deep Awadh Hotels P Ltd., Kanpur [2012 (5) TMI 320 - ALLAHABAD HIGH COURT] - In the absence of any mention of charging of interest in the assessment order, interest cannot be charged by issuing a notice of demand - If the assessment order contained the imposition of interest, only then, a notice of demand of interest could be issued under section 156 of the Act - The expression "shall" used in the sections 234A, 234B, 234C cannot be construed as "may" - Prior to the Finance Act 1987, the corresponding sections pertaining to imposition of interest used the expression "may". The change thus brought about by the Finance Act 1987 is indicative of the intention of the Legislature to make the collection of interest mandatory - The said expression "shall" has been used deliberately - Decided against Revenue.
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2013 (12) TMI 1305
Disallowance u/s 14A - Held that:- The provisions of Section 14A are attracted whether or not the shares are held as stock in trade or as investments, even though the provisions of rule 8D(2)(ii) and (iii) cannot be invoked in such a case , and even though the provisions of rule 8D(2)(i) are much narrower in scope than the scope of Section 14A - The matter was restored for fresh adjudication.
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2013 (12) TMI 1304
Levy of penalty under section 271(1)(c). - taxability of income in the hands of trust or beneficiary - applicability of provisions of Section 61(1) - Held that:- Following CIT vs. T.A.V. Trust [2003 (3) TMI 39 - KERALA High Court] - By virtue of the provisions of s. 161(1) of the Act income from property received by the trust cannot be treated as income from property in the representative assessment which has to be made on the trustee - In the case of a trust which is having income from business as well as income from house property, by virtue of the provisions of s. 161(1A) of the Act, the income from the business earned by the trust shall be taxed at the maximum marginal rate treating it as a single unit and the income from house property has to be assessed in the hands of the trustee in the manner provided in s. 161(1) of the Act - The trust is a representative assessee and to that extent of income tax leviable on the incomes of the beneficiaries, assessment can be made either in the hands of the respective beneficiaries or in the hands of the assessee to that extent only, indicating the tax liability of respective beneficiaries by consolidated order - The Assessing Officer has not followed either of the procedures but still contending to hold that the entire income received on the fixed deposit is taxable in the hands of the assessee- trust, violating the directions of the learned CIT(A) and also violating the provisions of the Act - The orders of AO levying penalty is not only bad in law but also on facts - Penalty cannot be levied - Decided in favour of assessee.
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2013 (12) TMI 1303
Disallowance of crane hiring charges, depreciation on machinery and other payment - Held that:- The assessee has made payments by way of cheques and hence they should have been encashed through some bank accounts only - The examination of the payees bank accounts will throw light about the genuineness of the transactions - The tax authorities have taken adverse view on the basis of enquiries conducted without examining the payees bank accounts - The statement given by Shri N Mohammed has been relied upon without confronting the same to the assessee - The enquiries conducted by the assessing officer are incomplete - The matter was restored for fresh adjudication.
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2013 (12) TMI 1302
Taxability of amount collected from members of Housing Society - Exemption of share transfer fee, nominee occupancy charges and non-refundable security deposit - Held that:- Following assessee's own case for the A.Y. 2007-08 - All these itmes whether received from out coming or incoming members is not liable to tax because of principle of mutuality - Decided against Revenue. Interest Income - Held that:- The principle of mutuality relates to the notion that a person cannot make a profit from himself - The concept of mutuality has been extended to defined groups of people who contribute to a common fund, controlled by the group, for a common benefit - Any amount surplus to that needed to pursue the common purpose is said to be simply an increase of the common fund and as such neither considered income nor taxable - The issue was restored for adjudication.
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Customs
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2013 (12) TMI 1301
Confiscation of goods - Penalty u/s 112 - Conditional release of goods - Duty free import of goods - Notification No. 203/92 - Held that:- goods were cleared for home consumption under Section 47 of the Customs Act without payment of duty subject to fulfilment of the conditions set out in the exemption notification - post clearance conditions of the exemption notification have been violated. Therefore, the goods have been confiscated under Section 110(o) with an option to redeem the same by imposing fine in lieu of confiscation under Section 125(1). In such a case, the duty becomes payable on confiscation and in terms of Section 125(2) the assessee who is admittedly the owner of the goods is liable to discharge the duty liability on imposition of fine in lieu of confiscation, even if the assessee chooses not to redeem the confiscated goods. duty-free imported materials were cleared under Advance Licence accompanied with DEEC Book vide exemption Notification No. 203/92 and 204/92. DEEC book is part of the exemption notification, wherein the information would be recorded for monitoring the clearance of duty free import material, export of resultant product, name and address of the factories and its ancillaries when resultant products are manufactured and details of materials on which condition of notification are not complied with etc. It is pertinent to note that there is a time limit prescribed for fulfillment of export obligation in Advance Licences - penalty imposed under Section 114A and demand of interest under Section 28AB are liable to be set aside. But, penalty to the extent of 50% of the duty demanded is liable to be imposed under Section 112 of the Act on Appellant. Goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine - Decided partly in favour of assessee.
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2013 (12) TMI 1300
Condonation of delay - Delay of 1234 days - Non delivery of order - Held that:- Merely explaining the revision remedy was sought, appellant is not absolved of its obligation to adhere to the limitation prescribed by law. Laxity does not add to longevity to a remedy which exhaust with the passage of time following doctrine of resjudicate. Casual approach of appellant shows its scanty regard to law. Had there been bonofide, the appellant would have pursued its right with the Previsional Authority. But that has also not come to record. No vigilant attitude of appellant is visible from record. Length of deliberate delay cripples a litigant to be successful applicant without a bonafide cause. Painting a gloomy picture, a litigant causes prejudice to other side and that is one of the ways of abuse of process of law. When a litigant prefers to postpone his remedial measure without being vigilant and unmindful of the consequence of delay and neither before limitation nor after that, he is conscious of his right of remedy within limitation, he forgoes his remedy with the lapse of time. An indolent without being vigilant, losses his right. A man of prudence and diligence does not prefer to prejudice his interest seeking remedy of appeal belatedly. While a vigilant only gets leniency for condonation of delay, an indolent fails to get such consideration - there is no ground in condonation of delay that too a length of 1234 days in absence of bonafide - Condonation denied.
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2013 (12) TMI 1299
Mis declaration of goods - Goods declared as spare parts - Notification No. 29/99-Cus dated 28.2.99 - Whether the duty paid by the assessee at the time of import of goods stand collected by them from their buyers so as to make themselves unjustly enriched - Held that:- importer was entitled to the benefit of notification and was entitled to duty free clearance. However, they paid the duty under protest for clearance of the goods. The claim for refund of duty paid by the appellant under protest stand rejected by the lower authorities on the ground of unjust enrichment - Merely because the importers, in the table produced before the Commissioner (Appeals) has shown the landed cost of CD pick up lense unit as Rs. 109.49 which is inclusive of higher duty paid by them, does not mean that customs duty paid by them at the time of clearance of said pick up lense unit makes an integral component of their final product, which stand sold at the price lower than the manufacturing cost which stands arrived at by then by including the higher landed cost of the imported goods. The appellants have only tried to establish that after the higher duty paid cost of CD pick up lense is added in the manufacturing cost, the same comes to Rs.123/- which is admittedly higher than the unit sale price of the goods - If that be so, the differential duty paid on the imported goods i.e. CD pick up lense unit cannot be said to have been collected by the assessee from their customers - appellant has not recovered said amount from their customers and as such, the refund is not hit by provisions of unjust enrichment - Decided in favour of assessee.
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2013 (12) TMI 1298
Change of cause title - Appeal filed against main Respondent only - Held that:- by filing this application the appellants have chosen a route to implead the respondents by this application as respondents to their main appeal which is not permissible in law as they have not filed any appeal against the intended respondents. Moreover, they have filed the main appeal against the main appellant, i.e., M/s. Chokhani Silk Mills Pvt. Ltd., in April, 2008 and they have made this application in November, 2010 - no appeal has been filed against the intended respondents, which are intended to be impleaded as respondents - change of cause title is not permissible - Following decision of CCE, Mangalore v. L.P. Shenoy [2003 (2) TMI 138 - CEGAT, BANGALORE] - Decided against Revenue.
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2013 (12) TMI 1297
Classification of the goods under CTH 5806.10 or CTH 5806.32 - Import of manmade fabrics - Held that:- in absence of technical test report, nothing can be presumed against the respondent - In absence of any appeal by Revenue and no information in that regard given to us, following the judicial discipline in Viva International v. CC, Delhi [2004 (10) TMI 495 - CESTAT, NEW DELHI] - Decided against Revenue.
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Service Tax
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2013 (12) TMI 1332
Denial of refund claims - Refund in connection with export of the goods under Notification No.41/2007 - Limitation period enhanced from the 'relevant date' the Notification No.17/2009-ST dated 7.7.2009 - Whether these refund claims would be governed by the Notification No.17/2009-ST and the limitation period prescribed therein or would be governed by Notification No.41/2007-ST and limitation period of six months prescribed therein - Held that:- Notification No.17/2009-ST dated 7.7.2009 had been issued in supersession of the Notification No.41/2007-ST and at the time of filing of refund claim, it is this Notification was in force. In terms of the Board's Circular No.354/256/2009-TRU dated 1.1.2010, new Notification No.17/2009-ST does not bar its applicability to the exports that have taken place prior to its issuance and, therefore, the scheme prescribed under Notification No.17/2009-ST would be applicable even for such exports subject to conditions that refund claims are filed within the stipulated period of one year and no previous refund claims have already been filed under the previous notification. conditions prescribed in the Board's Circular are satisfied inasmuch as the refund claims had been filed within one year from the relevant date and there were no refund claims filed under the previous Notification. The impugned order rejecting the refund claims on the ground that same should have been filed under previous notification and within limitation period prescribed therein is therefore not sustainable and is liable to be set aside - while holding the refund claims have been correctly filed under new Notification No.17/2009-ST dated 7.7.2009 and are within time, the impugned orders are set aside and the matters are remanded to the original adjudicating authority for deciding returns of the considering the eligibility of the services for refund in terms of the notification - Decided in favour of assessee.
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2013 (12) TMI 1331
Stay application - Service tax payable on the service of unloading of coal from the ship to the hoppers kept on the port-docks - Held that:- Since at some stage the applicant was taking Cenvat credit on the input services it would prima facie appear that the impugned services availed by them is input service for applicant rather than a reimbursable expense. A final view in the matter can be taken during final hearing of the matter. What we find is that the service tax demand confirmed is Rs.5,78,92,139/- against the applicant. According to the applicant, they are eligible for credit of about Rs.5,74,12,309/- not yet utilized. So, we direct the applicant to deposit the entire amount of service tax demanded which can be very easily complied with because according to her own submission they have credit of Rs.5,74,12,309/- as input service credit. The principle is accepted by the impugned order though quantum is not verified. If there is any dispute in the figure, this can be reviewed at the time of reporting compliance - Prima facie case not in favour of assessee - Stay granted partly.
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2013 (12) TMI 1330
Stay Application - Free service provided during the warranty period - Benefit of exemption notification No.12/03-ST - Held that:- The entire dispute arises out of the fact that this service being provided is commonly referred to in this industry as free service. This is not free service at all. This is rendered at a cost both for the services and for the parts which are paid by the manufacturer to the appellant. However, the owner of vehicle is one of the beneficiaries of the activity. The vehicle manufacturer is also a beneficiary because such services enhances his brand value and the reputation of his goods and customer satisfaction which helps in further business. So the manufacturer pays for it and naturally it is a service provided to the manufacturer of vehicles. Similarly the person who pays for the parts is the person to whom goods are sold. Therefore, we are of the view that there is sale of goods in this case and the benefit of exemption notification No.12/03-ST dt. 20.6.2003 is prima facie available to the applicant - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1329
Waiver of pre-deposit - on the ground that the appellant is not eligible for availing abatement of 75% of the value of the freight charges, as they have not given the declaration on the consignment notes as required by law - It is undisputed in these four cases the question is of eligibility to 75% abatement of the freight charges by the goods transport agency a service provider - Held that: even Board Circular No. 37B also indicates that the procedure prescribed in the Board Circular, is that a declaration by the service provider, in all such cases, on the consignment note, to the effect that the conditions of the aforesaid exemption notification have been satisfied, would be sufficient for availing of the benefit under the said notifications - The Tribunal in the case of IOCL Vs. CCE [2011 (7) TMI 741 - CESTAT, KOLKATA] has taken a prima facie view that declaration given by the transport operators in a consolidated manner should serve the purpose and declaration on each consignment note need not be insisted upon - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1328
Cenvat credit on Goods Transport Agency services – goods exported out of India – Held that:- In case of export goods are contracted on FOB basis under which responsibility of the delivery of exported goods, till the same are put on board, is with the exporter of goods - it has been rightly held by the Commissioner (A) that for goods meant for export the place of removal of goods will be the port of export and not the factory gate - the place of removal in case of FOB based export has to be treated as port of export - Decided against Revenue.
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2013 (12) TMI 1327
Stay application - Classification of service - Rule 3(i)(iii) of Export of Service Rules 2005 - Held that:- The services provided by the assessee throughout during the period of dispute are classifiable as "Business Auxiliary Service" under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994 and the same have been exported in terms of the provisions of Rule 3(1) (iii) read with Rule 3(2) of the Export of Service Rules 2005 and hence no service tax is payable - Following decision of M/s Paul Merchants Limited & Others Versus CCE, Chandigarh [2012 (12) TMI 424 - CESTAT, DELHI (LB)] - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1326
Demand of service tax - Service not disclosed in adjudication order - Held that:- show cause notice does not show what was the service provided by the appellant. The adjudicating authority also did not whisper about the nature of service which caused demand - appellate authority did not find whether the liability arose out of adjudication related to that service. Without a foundation in show cause notice, orders of the authorities below failed to get approval by judicial scrutiny - adjudication is to be confined to the tax and interest paid by the appellant. There shall be no penalty at all under any of the provisions of the Finance Act, 1994. Even it would not be proper to penalize the appellant under Sections 76 and 78, when the first appellate authority waived the penalty under Section 77 itself - Decided partly in favour of assessee.
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2013 (12) TMI 1325
Waiver of pre-deposit of Service Tax - C & F agent - Held that:- appellants are only engaged for handling the railway wagons through which the final product of M/s. Oswal Chemicals and Fertilisers Ltd. is being transported. The various activities of C & F agent as enumerated in the Board’s Circular No. B-43/7/97-TRU, dated 11-7-1997 requiring C & F agents to perform various functions like receipt of material from the principal, dispatch of the same to the customers, receiving orders from principal, arranging dispatch of the goods as per direction of the principal, preparing invoices on behalf of the principal and maintaining records of receipt and dispatch of the goods. Apart from the fact that we find that the agreement entered into by the appellant and M/s. Oswal Chemicals and Fertilisers Ltd. does not satisfy the condition of C & F agent, we also note that there is clear finding of the fact by the Commissioner that the appellants was not issuing any invoice on behalf of the companies and the bills raised by them are against loading and transportation of the goods from Railways to the godown - appellant has good case on merits, making him entitled to unconditional dispensation with the requirement of pre-deposit - Stay granted.
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2013 (12) TMI 1324
Demand of service tax - Management consultancy - Licence for manufacture of lubricating oil and providing assistance for making sale - Held that:- taxing entry in Section 65(105)(r) of the Finance Act, 1994, brings management consultancy service into the fold of service tax. Mandate of this entry is that service provided by management or business consultant in connection with the management of any organisation or business in any manner shall be management consultancy. This taxing entry read with the enabling definition in Section 65(65) of Finance Act, 1994 requires a service provider necessarily to be a management consultant and its principal activity should be so. Service Tax can be levied on the economic activity if such activity is declared by law taxable. By no stretch of imagination any activity can be taxed. In absence of existence of management consultant there is no scope to call the appellant as management consultant when terms of the agreement is read - Decided in favour of assessee.
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2013 (12) TMI 1323
Demand of service tax - Business Auxiliary Service - Mining and grading of iron ore - Held that:- A given activity can be classified only under one Head of taxable service and such classification of taxable service is a part of the scheme of the levy. Further, we have found prima facie case for the appellant inasmuch as they have been paying service tax in respect of the same activity from 1-6-2007 (the date with effect from which “mining service” became taxable) under the Head, Mining Service after obtaining the requisite registration from the department. Apparently “Mining Service” has been accepted as the appropriate service rendered by the appellant. The fact that they have been paying service tax under this category ever since it became a taxable service under this category shows that the appellant did not want to hide anything from the department or to evade tax. Prima facie, the extended period of limitation was invoked without any basis - Following decision of CCE, Hyderabad v. Vijay Leasing Company [2010 (12) TMI 782 - CESTAT, BANGALORE] - Stay granted.
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2013 (12) TMI 1322
Waiver of pre deposit - Commercial Training and Coaching Service - Exemption under Notification No. 24/2004-S.T., dated 10-9-2004 - Held that:- prima facie case for the appellant against the demand raised under the head ‘commercial training and coaching service’. There is substance in the submission of the learned counsel that, prior to 1-5-2011, the date with effect from which the definition of ‘commercial training and coaching centre’ was amended, appellant was not liable to pay service tax on the amounts collected by them from trainees and students attending short term courses - appellant was working as a ‘vocational training institute’ during the material period. They got affiliated with the National Council for Vocational Training in 2009. Therefore, the claim of exemption is also prima facie sustainable. Insofar as the demand under the head ‘consulting engineer service’ is concerned, the submission is that they were rendering advisory assistance to industries on the directions of the State Government and were receiving financial aid from the Government. The services were rendered to both PSU and other industries. No remuneration was collected from those industries - Following decision of Central Power Research Institute v. Commissioner of Central Excise, Bangalore-II [2006 (5) TMI 26 - CESTAT, BANGALORE] - Stay granted.
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Central Excise
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2013 (12) TMI 1296
Denial of SSI Exemption Notification No. 8/2003 – Goods to be treated as branded shoes – Waiver of Pre-deposit – Held that:- The applicant had exceeded the exemption limit of Rs.100 Lakh prescribed under the Notification - the entire amount of duty for the shoes had been discharged, which has not been disputed by the Revenue - since the amount of duty involved on the goods were already paid, thus the Applicant could make out a prima facie case for total waiver of amount – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 1295
Clandestine Removal of Goods – Undervaluation of tiles manufactured – Clearance made by improperly declaring the retail sale price – Waiver of Pre-deposit – Held that:- The Tribunal has been following judgment of Hon’ble High Court of Gujarat that an assessee should deposit 8% of the amount of duty confirmed - The appellant has deposited an amount which is more than 8% of the duty liability - the amount already deposited is enough to hear and dispose the appeals – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 1294
Eligibility of cenvat credit - Duty paid on MS channels, angles plates and TMT bars – Goods used in fabrication - Extended period of limitation - Waiver of Pre-deposit – Held that:- The show cause notice is dated 21.04.11 and has invoked extended period of time to seek the reversal of cenvat credit availed by the appellant on these items - the appellant had filed monthly returns with the authorities - Prima facie, the demand is hit by limitation - The arguments as regards the appellant cannot have a bonafide belief post 2008, needs to be addressed which can be done at the time of final disposal of the appeal - the appellant has made out a prima facie case for the waiver of the amounts – Pre-deposits stayed till the disposal – Stay granted.
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2013 (12) TMI 1293
Reversal of Credit being 8% or 10% - Baggasse/press mud cleared from the factory - the inputs utilised in the manufacturing of sugar – Waiver of Pre-deposit – Held that:- Following INDIAN POTASH LTD. Versus COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD [2012 (12) TMI 347 - CESTAT, NEW DELHI] which is decided in favour of assessee - the appellants have made out a case for the waiver of amounts – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 1292
Clandestine Removal of Goods – Clearance made by improperly declaring the retail sale price – Waiver of Pre-deposit – Held that:- The Tribunal has been following judgment of Hon’ble High Court of Gujarat that an assessee should deposit 8% of the amount of duty confirmed - The appellant has deposited an amount which is more than 8% of the duty liability - the amount already deposited is enough to hear and dispose the appeals – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 1291
Imposition of Penalty u/s 11AC r.w. Rule 13 of the Central Excise Rules, 2002 – Held that:- As per the section 3 of the Central Excise Act, 1944, as the goods were lying in the factory of the assessee – thus, they were not required to pay duty - the respondents are not contesting duty liability and interest paid by them - as the duty is not payable, question of mandatory penalty does not arise – Decided against Revenue.
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2013 (12) TMI 1290
Classification of chemical preparations - Revenue was of the view that the chemical preparations made during the processing of the films are classifiable as “chemical preparations for photographic uses" under CETH 3707 of the Central Excise Tariff – Held that:- The Tribunal while remained the matter back had clearly directed the adjudicating authority to apply his mind independently on the submissions made by the appellant as regards the marketability of the products and give a detailed and speaking order on the issue - Revenue has not led any iota of evidence which shows that the various chemical preparations made by the appellant while processing of the cinematographic films are marketable or are marketed – Following CCE Vs. Famous Cine Laboratory [1992 (2) TMI 241 - CEGAT, NEW DELHI ] - Prasad Film Laboratories, Famous Cine Laboratories and Navrang Cine Center (P) Ltd. (cited the chemical preparations used in the processing of cinematographic films are not goods known to the market and hence are not exigible to duty. The expert's opinion also clearly shows that the preparations are mixed prior to their usage and such mixed chemical preparations are prone to oxidation and other chemical reactions which could make them less effective and such chemicals are not marketed - The department has not tested any of the samples to ascertain the shelf life/other parameters relevant for examining the issue of marketability of the products - Merely because certain chemicals are marketed cannot lead to the conclusion that the chemical preparations made in situ by the appellant are also marketable and no effort whatsoever has been made by the Revenue to establish the marketability and Revenue has failed miserably in this regard - various chemical preparations produced by them in situ and captively consumed are not marketable goods falling under CETH 3707 of the Central Excise Tariff. Classification of Silver residue arises out of manufacture - Revenue was of the view that the processing of the film, silver residues which are also obtained are classifiable under Chapter 26 of the Central Excise Tariff – Held that:- The duty demand on silver residue which is arising during the processing of the film, as per Chapter Note to Chapter 26, silver waste arising in the processing of the cinematographic films stands excluded from Chapter 26 and are properly classifiable under Chapter 71 and during the material period, the silver residue was exempt from excise duty – Thus, the excise duty demand in respect of silver residue also does not sustain - Once the duty demands fail, all consequential demands towards interest and penalties also fail – Decided in favour of Assessee.
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2013 (12) TMI 1289
Benefit of Cenvat credit denied as per Rule 8(3A) of Central Excise Rule, 2002 - Default persisted more than 30 days – Waiver of Pre-deposit – Held that:- Following Manjunatha Industries Versus CCE [2013 (4) TMI 534 - KARNATAKA HIGH COURT] - Cenvat Credit was unavailable, the question of utilizing such credit would be an exercise in nullity - the appellant directed to make a pre-deposit of ₹ 7,36,74,043 – upon such submission rest of the duty to be waived till the disposal – Partial stay granted.
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2013 (12) TMI 1288
Undervaluation of goods – Held that:- From the debit notes, it is evident that the charge of undervaluation is in respect of the AC Compressor which the appellant has manufactured and supplied - it is the appellant who has charged for the drawings and designs of the dies and the purpose for which the same is charged and the goods manufactured using these drawings and designs are very well known to the appellant – thus, it cannot be pleaded that the appellant did not know in respect of which item, the undervaluation has been alleged and the differential duty is being demanded – Includability of the value of charges of drawings and design of dies etc. for the purpose of excise duty demand has been decided by the SC in Moriroku UT India (P) Ltd. Vs. State of UP[2008 (3) TMI 513 - SUPREME COURT OF INDIA] - amortized cost should be included in the price of auto components supplied for the purpose of levy of excise duty. The cost of the product sold would include not only the cost of raw materials, labour charges and other costs but also the various cost incurred in the manufacture such as cost of capital goods like machinery, tools, dies, etc. - if the appellant has not included the amortized cost of dies or the cost of drawings and designs developed for the manufacture of excisable goods, the consideration received would be includable in the assessable value of the goods manufactured using these drawings and designs. Demand of Service Tax - Consulting Engineers Service – Extended period of limitation - Held that:- The appellant is a manufacturer and not a Consulting Engineer - Only w.e.f. 1.5.2006, the law was amended to include any ‘body corporate' rendering such services liable to pay Service Tax. Since in the present case, the period involved is prior to 1.5.2006, the Service Tax demand on the appellant is not sustainable in law - The fact of developing designs/drawings etc. and collecting charges separately were not disclosed by the appellant to the department – hence, the charge of suppression of facts and consequent invocation of extended period of time to demand excise duty sustainable in law – Decided partly in favour of Assessee.
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2013 (12) TMI 1287
Credit on calcium silica boards, anchors, electrodes availed - Goods to be treated as capital goods or finished goods – Waiver of Pre-deposit – Held that:- The items were cleared with the final product for using them in the kiln/furnace - they have paid duty when these goods were cleared as finished goods - There is no dispute about payment of duty on these items – Following Ashok Enterprises Vs Commissioner of Central Excise, Chennai [2007 (11) TMI 67 - CESTAT, CHENNAI]- assessee has made out a prima facie case for full waiver of the pre-deposit of duty, interest and penalty in their favour – Pre-deposits waived till the disposal – Stay granted.
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2013 (12) TMI 1286
Waiver of penalty and interest - Clandestine removal of excisable goods - Held that:- When the issue was brought out, respondent paid duty payable on the goods along with interest and 25% of the duty amount as penalty immediately on issue of the show cause notice - where the payments as stated in Section 11A(1A) are made, all the proceedings in respect of the assessee and other persons shall be deemed to be conclusive as to the matters stated therein - Decided against Revenue.
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2013 (12) TMI 1285
Rejection of refund claim - Bar of limitation - Held that:- Appellant cleared the goods under the excise invoices showing appropriate payment of duty. The claim of the appellant is that the appellants are job workers and paying duty at the value at which the principal cleared the goods. Subsequent to the clearance of the goods, the principal had given certain discounts to their customs and the principal manufacturers issued credit notes in respect of the excess duty paid - assessments were not provisional, therefore, subsequent change in respect of the value will not affect the payment of proper duty at the time of clearance - Decided in favour of assessee.
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2013 (12) TMI 1284
Duty demand - Exemption of duty - Benefit of Notification No. 50/2003-C.E. - Held that:- exemption should be available to the appellants because the factory premises is within the specified Khasra numbers and only a drainage on the boundary of their land is falling under Khasra No. 281. So we grant waiver of the pre-deposit of dues including the penalty on both the appellants arising out of the impugned order for admission of the appeals - Stay granted.
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2013 (12) TMI 1283
Demand of duty - Held that:- orders have been passed by the original authority and the lower appellate authority subsequent to the order of remand by the Tribunal, which was not challenged by the department. The lower appellate authority has confirmed the order of the original authority in regard to the demand of duty, interest and penalty. The order of review passed by the Committee of two Commissioners nowhere points out to what extent duty demand confirmed by the original authority is wrong nor any basis has been provided for questioning the demand amount confirmed by the original authority. As such, I find no material in the review order requiring interference with the order passed by the lower appellate authority - Decided in favour of Revenue.
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2013 (12) TMI 1282
Classification of goods - Classification under Heading 8427 or under 8431.20 - Held that:- impugned goods are attachments for back hoe and loader, which is classifiable under Heading 8427,which covers fork lift trucks and other works trucks fitted with lifting or handling equipment. As such, the impugned goods require to be classified under 8431.20 which cover parts suitable for use solely or principally with the machinery of Headings 8427 - Following decision of Shinhan Plasto (I) P. Ltd. v. CCE, Chennai [2008 (2) TMI 157 - CESTAT, CHENNAI] - Decided against Revenue.
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CST, VAT & Sales Tax
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2013 (12) TMI 1334
Imposition of penalty - Demand of tax - Whether the Sales Tax Appellate Tribunal is right in setting aside the assessment order on the ground that dyeing does not involve any sale of goods since levying tax on service charges attributing that dyes and chemicals are transferred during the time of processing is improper - Held that:- Since by the operation of law, the transfer of goods involved in works contract would amount to 'sale' taxable under Section 3-B. The assessee therein had purchased the dyes and chemicals from outside the State - there was no suppression of sale in the turnover - Following decision of ASSOCIATED CEMENT COMPANIES LIMITED v. COMMISSIONER OF CUSTOMS [2001 (1) TMI 248 - Supreme court of India] and RAINBOW COLOUR LAB AND ANOTHER v. STATE OF MADHYA PRADESH AND OTHER [2000 (2) TMI 2 - SUPREME COURT OF INDIA] - Decided partly in favour of Revenue.
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2013 (12) TMI 1333
Rectification of mistake - Tribunal held that the petitioner is not a dealer under the Gujarat Sales Tax Act - Wrong mention of Gujarat Sales Tax Act instead of Gujarat Value Added Tax - Tribunal rejected rectification application - Held that:- there is an obvious mistake committed by the tribunal in considering the case of the appellant under the Gujarat Sales Tax Act - tribunal ought to have rectified the mistake and as such ought to have reviewed and recalled the order passed in Appeal No. 11/2006 and ought to have restored Appeal No. 11/2006 on file and ought to have decided the same afresh in accordance with law and on its own merits - matter is remanded to the tribunal to decide Appeal No. 11/2006 afresh in accordance with law - Decided in favour of assessee.
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