Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 31, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Transfer of Development Rights (TDR) - The land and building earlier in the possession of the Assessee continued to remain with it - even after the transfer of the right or the additional FSI, the position did not undergo any change - no taxable income - HC
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Whether the Tribunal is right in deleting the addition u/s 36(1)(iii) being the amount of interest paid by the assessee on the borrowing which amounts the assessee lent to another party with whom the assessee had business dealings - held Yes - HC
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Addition of interest on NPA - assessee has credited the gross amount of interest on credit side of the Profit & Loss Account and simultaneously shown on the debit side of the Profit & Loss Account, the amount of interest on NPAs - net effect of the said presentation is the same - no addition - AT
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Deduction u/s 80IB - If the job work has been done from the raw material supplied by the customers and assessee has manufactured the goods from those raw materials, then it amounts to manufacturing from the industrial undertaking - AT
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The expenditure claimed by the assessee on higher education of the grand-daughter of the Managing Director of the assessee was not wholly and exclusively for the purpose of business of the assessee - AT
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Merely because the AO did not agree with the submission made by the assessee, the same cannot be said to be furnished of inaccurate particulars of income for the purpose of levying penalty u/s 271(1)(c) - AT
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Method of accounting - Assessee rightly contended that if bills raised are realized in that very financial year, then it cannot be a basis to come to the conclusion that assessee was not following mercantile system of accounting - AT
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Validity of confirmation of penalty u/s 271(1)(c) – ssessee miserably failed to offer an explanation for the cash credit raised in the form of share application money - penalty confirmed - AT
Customs
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Computation of redemption fine - Whether the Tribunal is justified in holding that the misdeclared value of the goods cannot be reduced to the actual market value of the goods attempted to be exported - Held Yes - HC
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Extended period of limitation - suppression of facts - import of raw material, viz., spring steel wires - this issue ought to have been agitated by the Department within the period prescribed - HC
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Valuation of goods - Discount received by assessee - it is very clear that the importer is getting additional discount of 25% which is not available to anybody - invoice value would be loaded to 25% instead of 40% for the purpose of amendment of Bill of Entry. - AT
Corporate Law
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Vicarious liability upon Non executive Director of the Company in case of dishonor of cheques - Continuation of the criminal proceedings against the appellant under Section 138 read with Section 141 of the N.I. Act is a pure abuse of process of law and it has to be interdicted at the threshold. - SC
Service Tax
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Power to conduct service tax audit / Revenue Audit – Validity of Rule 5A of Service Tax Rules, 1994 - Supreme Court stayed the order of High Court - SC
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Denial of refund claim - Department is trying to enrich itself, at the cost of the petitioner. amount which remained unpaid, shall be refunded to the petitioner with interest - HC
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Manpower Supply Services - employees deputed by Dell International from abroad - There is no exclusive relationship of employer-employee was maintained not only in Indian company but foreign company - prima facie case is against the assessee - AT
Central Excise
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SSI exemption - flow of funds - mutuality of interest - common partner, common premises, common purchase of raw materials, exchange of raw material from one unit to another, common managerial control, transfer of fund from unit to another - revenue failed to prove the allegations - exemption allowed - AT
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CENVAT Credit - Invocation of extended period of limitation - Suppression of facts - mere procedural violations CENVAT credit cannot be denied cannot lease to allegation of evasion of duty with malafide intention - AT
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Marketability - Manufacture of sugar solution (concentrated sugar syrup according to the Revenue) - Captive consumption - just because the product can be kept for a week, it cannot be said that the same is marketable - AT
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Denial of cenvat credit on the ground that supplier of goods has paid excess duty then required - central excise authorities having jurisdiction over the recipient/manufacturer cannot review the assessment of duty at the end of the supplier/manufacturer. - credit allowed - AT
VAT
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Valuation - inclusion of amount of discount given on sale of petroleum products - GVAT - Merely because for computation of royalty payable to the State, it is the full and not discounted price which is taken into account would not alter the situation - no addition - HC
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Direction to be made for release the Tanker - illegal detention - to be released with per day damages to be granted or not @ ₹ 5,000/- - HC
Case Laws:
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Income Tax
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2014 (12) TMI 1069
Transfer of Development Rights (TDR) - Chargeability to capital gain - Invocation of section 50C - Addition under the head LTCG – computation of the sale of TDR – Held that:- The Tribunal was rightly of the view that while it is true that the AO invoked section 50C and computed these gains, in the decision of New Shailaja Co-operative Housing Society Ltd. Versus Income-tax Officer [2008 (12) TMI 442 - ITAT MUMBAI] it has been held that the sale of TDR does not give rise to any capital gains chargeable to tax - Following the decision in Union of India vs. Cadell Weaving Mill Co. P. Ltd. and Anr. [2005 (1) TMI 13 - SUPREME Court] wherein it has been held that an asset which is capable of acquisition at a cost would be included within the provisions pertaining to the head "Capital gains" as opposed to assets in the acquisition of which no cost at all can be conceived - the situation was that the FSI/TDR was generated by the plot itself - There was no cost of acquisition, which has been determined and on the basis of which the AO could have proceeded to levy and assess the gains derived as capital gains - It may be that subsection (2) of section 55 clause (a) having been amended, there is a stipulation with regard to the tenancy rights. It was also argued that the tenancy rights now can be brought within the tax net and in the present case the asset or the benefit is attached to the property - It is capable of being transferred. - all this may be true but as the Hon'ble Supreme Court holds it must be capable of being acquired at a cost or that has to be ascertainable - additional FSI/TDR is generated by change in the D. C. Rules - a specific insertion would therefore be necessary so as to ascertain its cost for computing the capital gains - Therefore, the Tribunal was in no error in concluding that the TDR which was generated by the plot/property/land and came to be transferred under a document in favour of the purchaser would not result in the gains being assessed to capital gains - what the Assessee sold was TDR received as additional FSI as per the D. C. Regulations - It was not a case of sale of development rights already embedded in the land acquired and owned by the Assessee - the Assessee had not incurred any cost of acquisition in respect of the right which emanated from 1991 Rules, making the Assessee eligible to additional FSI - The land and building earlier in the possession of the Assessee continued to remain with it - even after the transfer of the right or the additional FSI, the position did not undergo any change - Revenue could not point out any particular asset as specified in subsection (2) of section 55 – the order of the Tribunal is upheld – Decided against revenue.
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2014 (12) TMI 1068
Interest paid on borrowings - Whether the Tribunal is right in deleting the addition u/s 36(1)(iii) being the amount of interest paid by the assessee on the borrowing which amounts the assessee lent to another party with whom the assessee had business dealings – Held that:- The Tribunal was rightly of the view that the assessee is having business dealing with GMMSS Ltd. - assessee could sell its goods to the extent of ₹ 157 lakhs during the year to GMSS Ltd. - assessee company also earned ₹ 4.04 Lakhs GMMSS Ltd. - assessee company could also earn 45% gross profit out of the sale made to GMMSS Ltd. - it cannot be said that the interest free advances were made without business consideration - the funds have been borrowed by the assessee company - the transactions are genuine and they are also not entered into with any malafide intention to deprive the Department from lawful revenue, which is otherwise payable by the assessee - The dominant intention of these transactions was for ultimate benefit of the assessee and, thus, the same was entered into with business considerations - as decided in S.A.Builders Ltd. Vs. Commissioner of Income Tax (Appeals) and Another, [2006 (12) TMI 82 - SUPREME COURT] - assessee borrowed the funds, such funds have been borrowed for the purpose of business, the assessee has also paid interest on such funds, the case of the assessee is also not covered under the provisions of Section 40A(2) - the interest is allowable under the provisions of Section 36(1)(iii) – the order of the Tribunal is upheld – Decided against revenue.
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2014 (12) TMI 1067
Assessment framed u/s 153C quashed – Assessment of income of any other person - Whether there is no satisfaction recorded by the AO having jurisdiction over the searched person – Held that:- The Tribunal was rightly in not accepting the initiation of the action u/s 153C - This action has to be taken against a third party in respect of the incriminating materials brought out in connection with search and seizure conducted on another party - Section 153C of the Act specifically says that the AO must be satisfied that such action is required to be initiated - the AO having jurisdiction over third party on receipt of the seized material or books of accounts or document being handed over to him shall record his own satisfaction after examining the same independently without being influenced by the satisfaction of the Seizing Officer – the section mandates recording of satisfaction of the AO(s) is a pre-condition for invoking jurisdiction and it is not a mere formality because recording of satisfaction postulates application of mind consciously as the documents seized must be belonging to the any other person other than the person referred to in Section 153-A of the Act - when a thing is to be done in one particular manner under law this has to be done in that manner alone and no other way – the Tribunal has correctly followed the principle – the order of the Tribunal is upheld – Decided against revenue.
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2014 (12) TMI 1066
Application of mind by Tribunal - Amount received as part payment of consideration for sale or flat or not - Whether the Authorities below erred in law to utterly ignore the well-evidenced fact that during the AY 2000-2001, the appellant had received a sum of ₹ 2,90,000/- towards part payment of consideration for the sale of his flat – Held that:- There is no application of mind by the authorities below on the aspect that a sum of ₹ 2,90,000/- was in fact received by the assessee in the financial year ending on 31/3/2000 towards part of the consideration for the sale of the old flat by minutely examining the effect thereof while passing the orders - The authorities have failed to examine the aspect, and as such, they were not justified to come to the conclusion that the addition of ₹ 2,66,000/- is to be effected - revenue was unable to point out that the material pointed out by Shri Usgaonkar – thus, the matter is to be remitted back to the Tribunal for fresh decision – Decided in favour of assessee.
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2014 (12) TMI 1065
Settlement order by Income Tax Settlement Commission u/s 245D(1) - Rejection of applications for settlement for some of the AYs on the ground that there were no pending proceeding for those AYs – Held that:- As held in M/s. Shriniwas Machine Craft PVT LTD vs. The Income Tax Settlement Commission [2014 (1) TMI 1090 - BOMBAY HIGH COURT] even if it is assumed that the submission is correct, the submissions cannot be accepted that it should be read with retrospective effect particularly when the amendments of 2014 is specifically made effective from 1 October 2014 - the order under challenge has to be examined in the light of the law in force at the time when the application was filed and the impugned order was passed – the order of is upheld – Decided against assessee.
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2014 (12) TMI 1064
TPA - Erroneous computation of operating margin of Caliber Point Business Solutions Ltd. ("Caliber") in the final set of comparable - IT enabled services/business process outsourcing services provided to group companies –Held that:- Assessee contended that the TPO while computing the operating margin of Caliber Point Business Solutions Ltd., has not reduced/apportioned unallocated cost of ₹ 3,96,39,162/- for which the margin of the comparable has gone up to 18.55% as compared to the correct working of 8.70% - revenue has no objection for the same – thus, the matter is remitted back to the AO for determination of working of margin of comparable – Decided in favour of assessee. Selection of outliers companies as comparable – Accentia Technologies Ltd. - Held that:- Following the decision in Capital IQ Information Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax (International Taxation) [2014 (3) TMI 626 - ITAT HYDERABAD] - certain extraordinary events took place in the case of Accentia Technologies Ltd. for which it warrants exclusion of this company as a comparable - extra-ordinary event like merger and de-merger will have an effect on the profitability of the company in the financial year in which such event takes place - It is clear that during the previous year there were extra ordinary events that took place in the company which warrants exclusion of the company and this company cannot be considered as a comparable. Coral Hubs Ltd. (Formerly known as Vishal Informatics Technologies Ltd. – Held that:- In Symphony Marketing Solutions India (P.) Ltd. Versus Income-tax Officer [2014 (2) TMI 83 - ITAT BANGALORE] it has been held that Coral Hubs Ltd. cannot be considered as a comparable - assessee has objected for this company being taken as comparable mainly on the ground that the activities of the company is not only functionally different, but the business model of the company is also different as it sub-contracts majority of its ITES works to third party vendors and has also made significant payments to those vendors - The payments made to vendors towards the data entry charges also supports the fact that the company outsources its works – ‘Coral Hub’ is not a suitable comparable to the taxpayer and hence needs to be dropped from the final list of comparables - assessee is not engaged in e-publishing business, therefore, Coral Hubs Ltd. cannot be considered as comparable – Decided in favour of assessee.
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2014 (12) TMI 1062
Allowability of deduction u/s 10B – Set off of brought forward business losses against the profits of the year – Effect of amendment u/s 10B w.e.f. 1.4.2001 - Whether the provisions of Sec.10B of the Act are deduction provisions or exemption provisions - Held that:- The similar matter has already been decided in The Deputy Commissioner of Income Tax, LTU Versus M/s. Biocon Limited [2014 (12) TMI 838 - ITAT BANGALORE] wherein it has been held that if the provisions are considered as exemption provisions then they will not enter the computation of total income and therefore the loss of the eligible unit cannot be set off against the profits of the non-eligible unit - the claim as made by the Assessee for carry forward of loss of the non-eligible unit had to be allowed without set off of profits of the 10A/10B unit - the claim made by the assessee deserves to be accepted. Payment made to M/s Novatel of the USA disallowed u/s 40(a)(i) –Whether the fact that according to section 5(2)(b) total income includes income deemed to accrue or arise in India and the source of such payment being in India and the source rule reigning over the situs rule the same is chargeable under the provisions of the Act or not - Held that:- As decided in assessee’s own case for the earlier assessment year, as decided in Clearwater Technology Services (P.) Ltd. Versus Income-tax Officer, Ward-11(1), Bangalore [2012 (11) TMI 903 - ITAT BANGALORE] wherein it was held that the payment was not fees for technical services rendered by the non-resident but was business income in the hands of the non-resident and since the non-resident did not have a permanent residence in India, the same is not chargeable to tax in the hands of the non-resident in India - there was no obligation on the part of the Assessee to deduct tax at source - the disallowance made by the AO u/s 40(a)(ia) of the Act relating to the payment made to M/s Novatel of the USA is deleted. Explanation 2 to section 195 inserted with retrospective effect from 1.04.1962 by the Finance Act, 2012 or not – whether a liability to deduct tax at source can be fastened on an assessee on the basis of a retrospective amendment to the law - Held that:- Though the Explanation 6 to sec. 9(1)(vi) inserted by Finance Act, 2012 is clarificatory in nature, the assessee cannot be held to be liable to deduct tax at source from the Pay Channel Charges – the AO was not justified in disallowing the claim of pay channel charges by invoking the provisions of sec. 40(a)(ia) – Decided against revenue.
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2014 (12) TMI 1061
Addition of interest on NPA’s - Assessee is a co-operative bank carrying on banking business – Held that:- Following the decision in ACIT vs. The Omerga Janta Sahakari Bank Ltd. [2014 (12) TMI 355 - ITAT PUNE] - the interest income on NPAs is not recognizable on accrual basis. The aforesaid matrix is not challenged by the Revenue also - the stand of the Revenue is that the income, though relatable to NPAs, is deemed to have accrued since assessee has credited it in its Profit & Loss Account, and the corresponding debit in the Profit & Loss Account is only a Provision for overdue interest and it is not an allowable deduction - assessee is registered as a co-operative society and is carrying on the banking business - the interest on NPAs have been credited in the Profit & Loss Account and thus its accrual has been accepted by the assessee and that the contra entry by way of debit in the Profit & Loss Account is to be understood as a mere Provision and, since a Provision is not an allowable deduction, the amount of ₹ 47,01,85,366/- has been added to the total income. The assessee bank is following the mercantile system of accounting - However, with regard to the recognition of income on NPAs, it has applied the RBI guidelines which say that such income is not to be recognized on accrual basis but is to be recognized as income only when it is actually received - The RBI guidelines also prescribe the manner in which the interest in relation to NPAs is to be shown in the Annual financial statements - In terms of the Master Circular on Income Recognition, Asset Classification, Provisioning & Other Related Matters issued by the RBI on 4th July, 2004 in chapter 4 of ‘Income Recognition’, the accrued interest in relation to NPAs should be computed and shown separately, though not accounted as income of the bank for the relevant period - with a view to ensuring uniformity in accounting the accrued interest in respect of both the performing and non-performing assets, the RBI guidelines inter-alia, prescribe that interest accrued in respect of NPAs should not be debited to borrowal accounts but shown separately under ‘Interest Receivable Account’ on the ‘Property and Assets’ side of the Balance-Sheet and corresponding amount shown under the ‘Overdue Interest Reserve Account’ on the ‘Capital and Liabilities’ side of the Balance-Sheet - ‘Overdue Interest Reserve Account’ cannot be regarded as a ‘reserve’ or a part of the owned funds of the bank, as it is not created out of the real income received by the bank - the assessee has not debited the interest on NPAs to the accounts of the respective borrowals but it has been shown separately under ‘Interest Receivable Account’ on the ‘Property and Assets’ side of the Balance-Sheet and corresponding amount has been shown under ‘Overdue Interest Reserve Account’ on the ‘Capital and Liabilities’ side of the Balance-Sheet - Thus, the depiction in the Balance-Sheet is in adherence to the prescription contained in the Banking Regulation Act, 1949 (as applicable to Co-operative Societies), a statute under which assessee is bound to carry out its banking business. Assessee has drawn up its annual financial statement in compliance with the requirements of the statutes under which it functions and/or is incorporated - the RBI guidelines permit that interest income on NPAs be parked in a suspense account and it is not necessary that it has to be brought to the Profit & Loss Account by the assessee - assessee has credited the gross amount of interest on credit side of the Profit & Loss Account and simultaneously shown on the debit side of the Profit & Loss Account, the amount of interest on NPAs - instead of netting of the interest the two amounts have been shown separately one on the credit side and other on the debit side - The net effect of the said presentation is the same - Therefore, the lower authorities have misguided themselves in rejecting the claim of the assessee for non-recognition of interest income on NPAs – the order of the CIT(A) is set aside – Decided in favour of assessee. Addition of interest on Agricultural Stabilization Fund and interest on Corpus Fund – Held that:- No fault can be found with the order of the CIT(A) on this count as it has been justifiably concluded by him that the impugned interest is only an appropriation of profits towards specific purpose and it does not constitute a business expenditure of the assessee - The constitution of the Agricultural Credit (Stabilization) Fund per the resolution of the Government of Maharashtra reflects that it is created by appropriation of the profits of the assessee bank, and the yearly credit of interest @ 3% on the balance to the credit of Fund, is not a charge against the Profit & Loss Account - the order of the CIT(A) is upheld – Decided against assessee.
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2014 (12) TMI 1060
Disallowance of claim of deduction u/s 80IB deleted – job work done by the assessee amounted to carrying out manufacturing activity by an industrial undertaking or not - Held that:- The assessee’s claim for deduction u/s 80IB is mainly on account of job work which was carried out from the plant and machineries installed by the assesse for its own manufacturing purposes - the only requirement for claim of deduction u/s 80IB is that, income should be derived from the industrial undertaking and assessee is liberty to manufacture the goods for itself or for others - The section does not make any difference for the purpose of claiming deduction u/s 80IB - If the job work has been done from the raw material supplied by the customers and assessee has manufactured the goods from those raw materials, then it amounts to manufacturing from the industrial undertaking - CIT(A) noted that the plant and machinery were used for manufacturing of plastic bags and polypropylene sheets to carry out the job work for others - The only difference is that assessee instead of its own raw material, has used raw material supplied by others - Thus such an income from job work is nothing, but income derived from industrial undertaking as per the provisions of section 80IB – CIT(A) is upheld – Decided against revenue. Disallowance on sale if manufactured product to be treated as "trading receipt" deleted – Held that:- The genesis of the controversy started when the AO noted that in the P&L Account, the assessee as debited more labour charges has compared to the labour charges shown in the TDS certificate - When required to reconcile the difference, the assessee submitted that the amount of ₹ 98,08,414/- was not on account of labour charges but on account of trading receipts - such a reconciliation statement given before the AO was not correct as the correct position is that, the said amount represents sales of manufactured goods and no trading receipt - the assesse had shown income from two kind of activities, one form job work of manufacturing and sale of manufactured goods and other on account of trading activities - under the head manufacturing, the assesse had shown opening stock of manufactured goods as on 31.07.2007 at ₹ 95,57,961/-The sale of manufactured goods was shown at ₹ 3,13,34,736/- which also included sale on account of job charges out of ₹ 2,15,25,722/- The amount was finally reconciled in the accounts - Though there has been some misrepresentation of facts before the AO, CIT(A) has duly verified the same from sales register and also copy of sale memos and has given a categorical finding that it pertains to sale of manufactured goods and not trading receipts - Thus such a finding of fact appears to be correct from the material placed on record, thus, there was no reason to disturb such a finding of fact – Decided against revenue. Disallowance of reallocation of expenditure such as interest charges, repairs & maintenance and insurance charges between trading and manufacturing activity deleted – Determination of net profit by AO – Held that:- The finding of the Ld.CIT(A) appears to be correct, firstly, the assessee has maintained separate books of account, one for the manufacturing activity and other for trading account - The book results of manufacturing and trading activity has not been disturbed by the AO in as much as, no discrepancy with regard to the allocation of the expenses by the assessee - The entire basis of the AO for reallocation of expenses is based on presumption that certain expenses are more in the job work activity - so far as the major component of interest expenditure, the CIT(A) has analyzed the loan taken from the bank and the purpose of which the loans were taken - the finding of the CIT(A) is upheld – decided against revenue.
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2014 (12) TMI 1059
Educational expenses on granddaughter of the Managing Director – Held that:- The AO has given amble opportunity to the assessee to lead evidence to justify the claim of the assessee, but the assessee has failed to avail the same - revenue has claimed that there was no resolution to this effect by the Board of Directors of the assessee-company - there is no penalty clause whatsoever in the MOU entered into between the assessee-company and the trainee, Payal Parikh that in case of failure on the part of the trainee to comply with the terms and conditions of the MOU how the trainee shall compensate the assessee-company for the heavy expenditure incurred on her higher education - the MOU entered into by the trainee with the assessee-company is merely a self-serving document - there is no evidence brought on record on behalf of the assessee to show that her selection for higher education was on merits and not due to the fact that she was closely related to the Managing Director of the assessee-company - there is no scheme laid down by the assessee-company to send employees abroad for training and employment thereafter with the assessee-company - the expenditure claimed by the assessee on higher education of the grand-daughter of the Managing Director of the assessee was not wholly and exclusively for the purpose of business of the assessee, the order of the CIT(A) is upheld – Decided against assessee. Depreciation on intangible assets disallowed – Intangible asset treated as goodwill – Held that:- The issue of allowance of depreciation on intangible asset in the form of “goodwill” is covered in favour of the assessee as held in Commissioner of Income-tax v. Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] – after going through the Memorandum of Transfer of Business, a copy of which has been filed in the compilation before us, which is dated 1.4.2001 wherein it is specifically provided that all the trade names, trade-marks, permits and licenses, goodwill and knowhow attached to the business carried on in India or elsewhere were transferred to the assignees i.e. the assessee-company - the goodwill is an intangible asset entitled to depreciation - The quantification of goodwill at ₹ 75 lakhs seems to be reasonable - The assessee has filed a copy of working of the valuation of the goodwill as given by M/s. Anmol Sekhri & Associates, Mumbai, valuer, and a copy of which has been filed in the compilation before the Tribunal – the valuation report justifies the reasonableness of the valuation of the goodwill as claimed by the assessee - the claim of the assessee for depreciation on goodwill was justified – Decided in favour of assessee. Deletion of disallowance on commission – Held that:- The payments were made to out-station parties per cheque - The commission was paid at the rate of 1% on the sale effected by these parties - The TDS as applicable was made at the time of making the payment of commission to the payees - Complete details of the payment of commission were maintained in the account books of the assessee - The assessee has also filed affidavits of the payees of the commission payment, copy of which has been filed in the compilation - CIT(A) has recorded that the assessee has made a request to the AO to call for the concerned parties by issuing summons, but he has not considered this request - the CIT(A) has recorded that all important evidences in the form of PAN, addresses, contra account and confirmation including affidavits from all such commission agents were submitted by the assessee - there were no mistake in the order of the CIT(A) in holding that all these evidences were sufficient to discharge the onus of the assessee for claiming such expenditure – Decided against revenue. Deletion of penalty u/s 271(1)(c) – Held that:- On the issue of validity of penalty imposed for disallowance of expenses incurred for higher education of grand-daughter of the MD of the assessee-company, the assessee has made full disclosure all the material facts in its account statement, and also in the audited report of its accounts for the relevant period - There could always be an honest difference of opinion between the assessee and the Revenue regarding allowability or otherwise of a particular expenditure incurred by the assessee - the assessee has incurred expenditure on higher education of the trainee and all these facts were disclosed in the account statements of the assessee - no penalty u/s 271(1)(c) of the Act was imposable on the assessee on account of disallowance of expenditure for higher education of grand-daughter of the MD, and accordingly order of the CIT(A) on this issue is confirmed - penalty on disallowance of depreciation on goodwill, the disallowance itself has been deleted while deciding the quantum appeal of the assessee for the relevant AY 2004-05, thus, there remains no basis for imposition of penalty on the assessee - since the assessee has disclosed all the facts at the time of filing of the return itself, and claim of the assessee for depreciation on goodwill was bona fide, the penalty u/s 271(1)(c) could not be levied on the assessee – the order of the CIT(A) is upheld – Decided against revenue.
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2014 (12) TMI 1058
Levy of penalty u/s 271(1)(c) - Assessee furnished inaccurate particulars at the time of assessment proceedings and claimed deduction u/s 10A at an amount higher than the actual eligibility or not – Held that:- No penalty u/s 271(1)(c) of the Act can be justifiably be levied on the facts - Revenue Authority has failed to establish that in the return of income the assessee has either shown as incorrect or inaccurate particulars of income - merely because the AO did not agree with the submission made by the assessee, the same cannot be said to be furnished of inaccurate particulars of income for the purpose of levying penalty u/s 271(1)(c). Disallowances of expenditure cannot result in automatic levy of penalty - If an assessee has been able to offer an explanation, which is not found by the Revenue Authority to be false, and assessee has been able to prove that such explanation is bonafide and that all the facts relating to the same have been disclosed by the assessee - assessee shall be out of the clutches of Explanation1 to section 271(1)(c) of the IT Act and in such cases no penalty shall be imposed – relying upon CIT vs. Reliance Petro Products Pvt. Limited [2010 (3) TMI 80 - SUPREME COURT] - no penalty u/s 271(1)(c) of the Act can be imposed because the Revenue Authority has not disclosed any facts in its return of income - even otherwise Revenue Authority has failed to establish that in the return of income assessee has either been shown as inaccurate or incorrect particulars of its income - merely because the expenditure claimed by the assessee has been disallowed by the Revenue Authority does not lead to an inference that it is a case of furnishing inaccurate particulars of income - assessee has offered its bona fide explanation which was not proved false by the Revenue Authority – FAA has passed the well-reasoned order and the order of the CIT(A) is upheld – Decided against revenue.
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2014 (12) TMI 1057
Various expenses disallowed - Discrepancy in the account of M/s Nadoka Crushers – rate of net profits to be 8.65% reasonable or not – Held that:- Assessee could not furnish required details for verification of the AO as well as the CIT(A) - The genuineness of the expenses is to be seen by the AO as the onus is on the assessee to prove that the expenditure wholly and exclusively was incurred for business purposes - non business purposes cannot be ruled out under these heads - CIT(A) confirmed the addition appears to be higher side, therefore, the additions under the head jeep vehicle expense, except depreciation on jeep and motor cycle is upheld and telephone expenses up to 10% - the expenses disallowed out of Diwali expenses is reasonable - out of expenses for labour, which is major in nature - The assessee’s maintenance record is poor and further lower authority has not specified the particular defects in muster roll except in the month of August, 2005 the main receipt from the labour supply of the assessee. The addition of Rs. One lac in the interest of justice as against the confirmation of ₹ 1.5 lacs - CIT(A) was reasonable to confirm 10% addition under the head staff mess expenses for non-business purposes - with respect to difference in the M/s Nakoda Crushers, the assessee himself has not shown the expense for which, the argument taken by the assessee not acceptable as who has prevented to the appellant for claiming these expense - assessee himself admitted different cheque given and amount credited by the M/s Nakoda Crushers at ₹ 410 - M/s Nakoda Crushers had shown receipt of cheque of ₹ 23,662/- has not been reconciled with evidence before the lower authorities, for which sufficient time has been given to the assessee - the order of the CIT(A) under this head is upheld - the last ground of appeal is against working of net profit @ 8.65% by making the additions – substantial relief given in case of the assessee is upheld, therefore, after appeal effect, the assessee’s net profit will be reasonable – Decided partly in favour of assessee.
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2014 (12) TMI 1056
Method of accounting to be adopted by assessee – Rejection of mercantile system of accounting - Held that:- The findings of the CIT(A) is mechanical, bordering on the laconic - the fact that the say of the assessee is contrary to the finding of the AO, is the reason an appeal was filed before her - She was required to examine the rival contentions, on the basis of the books of account and submissions tendered - It was no reason for dismissal of an appeal, that too in the second round – as long as income is billed, received, and accounted for in a given year, the system is mercantile - This would get tested only if the AD is able to point out an instance where services stand billed, but payments have not been received, and for this reason, income is not recognized - No such instance has been pointed out, since no such instance exists - income has been recognised on accrual basis, and the method of accounting is clearly mercantile -expenses in any case have been accepted as genuine. Assessee rightly contended that if bills raised are realized in that very financial year, then it cannot be a basis to come to the conclusion that assessee was not following mercantile system of accounting, unless it is demonstrated that services were rendered in one financial year and bill for the same realized in subsequent assessment year- interest income of ₹ 12,127.91 was accounted for on accrual basis – thus, the claim of assessee is accepted – Decided in favour of assesee.
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2014 (12) TMI 1055
Validity of confirmation of penalty u/s 271(1)(c) – Assessee failed to offer any explanation regarding the deposit - Penalty proceedings initiated on addition of unexplained deposit made u/s 68 – Held that:- The assessee claimed to have received share application money from one person which the Director (Inv.) had found to be engaged in the business of accommodation entries and assessee was found to be the beneficiary of the same - assessee had no answer to the query of the revenue authorities - Section 68 clearly states that if a credit appearing in the books of account of the assessee is not explained regarding its nature and source then this amount will be treated as income of the assessee - the assessee has not furnished any explanation regarding this cash credit, therefore, AO rightly treated it as income of the assessee - assessee has failed to offer any explanation regarding this deposit. Therefore, explanation I to Section 271(1)(c) comes into play - the provisions of Section 271(1)(c) not only covers the cases in which assessee has concealed the income or has furnished inaccurate particulars of income - even without there being anything to indicate noteworthy deeming fiction for concealment of income comes to play and it covers the cases where the assessee does not offer any explanation for any material concerning the computation of total income - the assessee miserably failed to offer an explanation for the cash credit raised in the form of share application money - the case of the assessee is squarely hit by the provisions of Section 271(1)(c) – thus, the order of the CIT(A) is upheld – Decided against assessee.
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Customs
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2014 (12) TMI 1079
Waiver of pre deposit - Tribunal has directed the assessee to deposit an amount of ₹ 20,00,000 /- by way of pre-deposit - benefit of notification No.12 /2012 as amended under SI. No.123 - Reclassification of goods - Held that:- Having regard to the overall facts of this case, it is not possible to state that the impugned order does not conform to the principles enunciated - As regards the decision of the Kerala High Court in Binani Zinc Ltd. v. Asst. Collector of Central Excise (1994 (10) TMI 74 - HIGH COURT OF KERALA AT ERNAKULAM) on which reliance has been placed on behalf of the appellant, the same turns upon the facts of the said case wherein though there was an arguable case, the Tribunal has directed pre-deposit of a huge amount as a condition precedent for the hearing of the appeal. In the present case, as noted hereinabove, the Tribunal had directed the appellant to pre-deposit a small fraction of the entire liability under the order-in-original and hence, the said decision would not be applicable to the facts of the present case. The decision of the Delhi High Court in the case of Sri Krishna v. Union of India (1998 (7) TMI 97 - HIGH COURT OF DELHI) also does not carry the case of the appellant any further inasmuch as in the facts of the said case, the petitioners therein were poor persons and were not in a position to deposit the amount as directed by the Tribunal and consequently would have been denied of the valuable right of their appeal being heard and decided on merits, whereas in the facts of the present case, it is not the case of the appellant that is not in a position to deposit the amount as directed by the Tribunal. Tribunal, while considering the appellant's application under section 129E of the Act, has exercised its discretion judicially. Under the circumstances, it is not possible to state that there is any legal infirmity in the impugned order so as to give rise to any question of law, much less a substantial question of law, so as to warrant interference - Decided against assesse.
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2014 (12) TMI 1078
Imposition of fine and penalty - Valuation of goods - Whether the Hon'ble Tribunal is justified in holding that the misdeclared value of the goods cannot be reduced to the actual market value of the goods attempted to be exported specially when the Act and the rules do not whisper so. - Imposition of redemption fine and penalty - Held that:- On a plain reading of the language of the substantive part of sub-section (1) of Section 125, it is clear that the legislature has not imposed a restriction of the kind which has been sought to be implied on behalf of the appellant. What the proviso to sub-section (1), however, stipulates is a ceiling on the fine in lieu of confiscation, insofar as it stipulates that such fine shall not exceed the market price of the goods confiscated. Now, it is in the background of the provisions of Section 125 that the legality of the order would have to be assessed. Quantum of fine is concerned) so long as the quantum of redemption fine was not in excess of the stipulation contained in the proviso to sub-section (1) to Section 125. In fact, before the Tribunal, it was sought to be urged, as recorded in the impugned order, that the value declared in respect of the mis-declared goods must be reduced to the extent of the value of the actual goods in the consignment. The Tribunal was justified in holding that no such exercise could be carried out and the Court has no jurisdiction to do so, so as to legalize a patent illegality. The case of the appellant was that the goods were mis-declared as a result of a mistake of its labourers. That is besides the point, because the fact does remain that, in his declaration of the goods which were meant for export, the appellant had mis-declared the goods. A case for confiscation of the goods was, therefore, clearly made out. The order of the Tribunal, on a considered view of the matter, reducing the redemption fine and the penalty to the extent indicated in the order, is fair and does not call for interference in the appeal by the exporter. - No substantial question of law arises - Decided against assesse.
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2014 (12) TMI 1077
Extended period of limitation - suppression of facts - import of raw material, viz., spring steel wires - The allegation of the DRI is that the raw material imported under the advance licenses as replenishment, were different from the raw material used in the manufacture of exported goods in terms of character, thickness, etc. - Notification Nos.149/1995-Customs dated 19.9.95, 30/1997-Customs dated 1.4.97, 31/1997-Customs dated 1.4.97 and 51/2000-Customs dated 27.4.00 - Held that:- Tribunal, on a perusal of the records, has held that the licences and documents were furnished at the time of export and also at the time of import of the raw materials for replenishment and such details were furnished to the licencing authority, which includes, DEEC passbook and other export documents. The said documents have been scrutinized by the DGFT and customs authorities and, thereafter, the goods were allowed clearance by an order passed by the appropriate officer. If that be the case, this issue ought to have been agitated by the Department within the period prescribed. The question of suppression does not arise in the light of the finding of the Commissioner himself, which clearly shows that goods imported and exported tally as per licence. In the light of the above finding of the Commissioner, as extracted by the Tribunal, this Court is of the considered view that the Tribunal was justified in coming to the conclusion that there was no case of suppression. As a result, the entire cause of action for issuance of show cause notice does not survive. This Court is in entire agreement with the findings recorded by the Tribunal and is of the considered view that it warrants no interference. Accordingly, the first question of law answered against the Revenue and in favour of the respondent - Decided against Revenue.
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2014 (12) TMI 1076
Penalty u/s 114(i) - Aiding and abetting for smuggling of foreign currency - Held that:- In the case of M/s. Wall Street Finance Ltd. the guidelines of RBI were not issued during the relevant time therefore, in that case the contention of the learned AR that for travellers cheques were issued without the issue of application and passport is not sustainable as there is no guidelines during the impugned period. Further, I find that as the statement shows that this travellers cheques were issued to the broker/agent to whom he has handed over his passport. When the appellant had issued currency after verifying the particulars of the passport. Therefore, it cannot be denied that this traveller cheques has not been issued in the name of the persons who is denying the statement and I also find that in this case the currency have been detected after 2½ years of issuance of travellers cheques which has passed various hands before the interception. In these circumstances, I hold merely on the ground that the appellant was not due diligence at the time of issuance of the travellers cheques which may be used in smuggling of foreign currency, the allegation is not sustainable. Therefore, following the decision of the Trade Wings Ltd. (2008 (10) TMI 524 - CESTAT, MUMBAI), I set aside the penalty imposed on the appellants. With regard to the penalty imposed on M/s. Rose Travels, I find that the appellant has produced the application form and passport of the persons to whom the travellers cheques were issued. In fact the address of a person is to be verified by the concerned police station. In these circumstances, the allegation of aiding and abetting smuggling of travellers cheques is not sustainable merely saying that the persons are not available on the given address in the absence of any cogent evidence that these passports are fake. Further, in one of the case it is no doubt the travellers cheque has been issued in the name of the passport holder, in the show cause notice there is no allegation that the signature of the said person is not the same as in the application and the in the passport. Further, no statement of such person has been placed on record. In these circumstances, merely saying that he is not the same person cannot be the ground for the allegation in show cause notice. In these circumstances, I hold that the penalty on M/s. Rose Travels is not imposable. - Decided in favour of assessee.
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2014 (12) TMI 1075
Import of Crude Palm Oil (CPO) - Availment of concessional rate of Customs duty - CPO converted to Refined Oil with the help of job worker - Held that:- Words ‘take action to recover’ have been interpreted differently by the Tribunal in two different orders. Even though, the decision of the Tribunal in the case of PCS Industries Ltd. (2013 (7) TMI 344 - CESTAT MUMBAI) was rendered on 12-6-2013 and the decision in the case of Molex (I) Ltd. (2010 (12) TMI 1046 - CESTAT, BANGALORE) was rendered on 1-12-2010, the decision in the case of Molex (I) Ltd. was not brought to the notice of the Tribunal in the case of PCS Industries Ltd. Nevertheless, the fact remains that there are contrary decisions on the same issue. It has to be noted that the decision in the case of Molex (I) Ltd. considered the relevant provisions in greater details and provided an explanation for coming to the conclusion. In view of the above, in our opinion, the appellants have made out a case for complete waiver of pre-deposit and stay against recovery during pendency of the appeals. - Stay granted.
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2014 (12) TMI 1074
Valuation of goods - Discount received by assessee - Finalization of provisional assessment - whether the appellant is eligible for 40% discount as shown in the invoices - Held that:- Rule 4(3)(a) of Valuation Rules, 1988 provides that where seller and buyer are related, the transaction value shall be accepted provided the examination of the circumstances of the sale of the imported goods indicate that relationship did not influence the price. In the present case, on perusal of the adjudication order, it is seen that on verification of import invoices and bills of entry and local invoices that the importer gets 34% profit and this profit margin is abnormal for aluminium industry. We find that sub-clause (b) of sub-rule (3) of Rule 4 of Valuation Rules provide that in a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to values ascertained at or about the same time. We find that the appellant had not placed any material to establish that the relationship had not influenced the price. Such as, international price list to show that discount is to all the buyers. They have only produced a price list generated in their own system. Discount is a general practice in the trade. On a perusal of the impugned order, it is seen that Commissioner (Appeals) observed that it is very clear that the importer is getting additional discount of 25% which is not available to anybody. In our considered view, the appellant is not eligible for additional discount as referred by the Commissioner (Appeals). After considering the facts and circumstances of the case, we direct that the invoice value would be loaded to 25% instead of 40% for the purpose of amendment of Bill of Entry. - Decided partly in favour of assessee.
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Corporate Laws
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2014 (12) TMI 1071
Appointment of Arbitrator u/s 11(6) of the Arbitration and Conciliation Act, 1996 – Dispute related to the respective rights and liabilities of the parties under the JVA – Held that:- Clause 30.2 of JVA, on a reasonable and meaningful construction thereof, would mean that in case the parties are not able to name a sole Arbitrator by mutual agreement, the Arbitrator is to be appointed by the SIAC inasmuch as the entity contemplated in clause 30.2 i.e. “Singapore Chamber of Commerce” is admittedly not an Arbitration Institution' having its own Rules for appointment of Arbitrators - the most reasonable construction of the clause would be to understand the reference to “Singapore Chamber of Commerce” as to the “SIAC” - the respondents at one time had suggested the name of a retired judge of the Supreme Court of India as the sole Arbitrator, which was not agreed to by the petitioner, who in turn, was inclined to nominate another learned judge. Be that as it may, in such a situation, the respondents by invoking Arbitration clause 30.2 had approached SIAC for appointment of an Arbitrator - This was on 5th September, 2014 i.e. before the present proceeding was instituted by the petitioner. Though the notice of the request was served on the petitioner on 11th September, 2014, no steps were taken by the petitioner to pre-empt the appointment of a sole Arbitrator by SIAC. Mr. Steven Y.H. Lim came to be appointed as the sole Arbitrator by the SIAC on 29th September, 2014 - The petitioner has submitted to the jurisdiction of Mr. Steven Y.H. Lim - Even if it is held that such participation, being under protest, would not operate as an estoppel, what must be acknowledged is that the appointment of the sole Arbitrator made by SIAC and the partial award on the issue of jurisdiction cannot be questioned and examined in a proceeding u/s 11(6) of the Act which empowers the Chief Justice or his nominee only to appoint an Arbitrator in case the parties fail to do so in accordance with the terms agreed upon by them - To exercise the said power, in the facts and events that has taken place, would really amount to sitting in appeal over the decision of SIAC in appointing Mr. Lim as well as the partial award dated 27th November, 2014 passed by him acting as the sole Arbitrator - Such an exercise would be wholly inappropriate in the context of the jurisdiction under Section 11(6) of the Act, as the same has already been decided in Antrix Corp. Ltd. vs. Devas Multimedia P. Ltd. [2013 (5) TMI 402 - SUPREME COURT] – thus, the application u/s 11(6) of the Act failed – Decided against petitioner.
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2014 (12) TMI 1070
Vicarious liability upon Director of the Company in case of dishonor of cheques - Whether the appellant is liable for prosecution u/s 138 r.w. Section 141 of the N.I. Act for the offence of dishonor of cheques committed by the default Company – Held that:- The appellant was wife of the Managing Director, and appointed as a Director of the Company— M/S Elite International Pvt. Ltd. on 1st July, 2004 and had also executed a Letter of Guarantee on 19th January, 2005 - The cheques were issued during April, 2008 to September, 2008 - So far as the dishonor of Cheques is concerned, admittedly the cheques were not signed by the appellant - the appellant was not the Managing Director but only a non-executive Director of the Company - Non-executive Director is no doubt a custodian of the governance of the Company but does not involve in the day-to-day affairs of the running of its business and only monitors the executive activity - To fasten vicarious liability under Section 141 of the Act on a person, at the material time that person shall have been at the helm of affairs of the Company, one who actively looks after the day-to-day activities of the Company and particularly responsible for the conduct of its business - Simply because a person is a Director of a Company, does not make him liable under the N.I. Act - Every person connected with the Company will not fall into the ambit of the provision - only those persons who were in charge of and responsible for the conduct of the business of the Company at the time of commission of an offence will be liable for criminal action - a Director, who was not in charge of and was not responsible for the conduct of the business of the Company at the relevant time, will not be liable for an offence under Section 141 of the N.I. Act – the same has been held in National Small Industries Corpn. Ltd. Versus Harmeet Singh Paintal [2010 (2) TMI 590 - SUPREME COURT OF INDIA] – Continuation of the criminal proceedings against the appellant under Section 138 read with Section 141 of the N.I. Act is a pure abuse of process of law and it has to be interdicted at the threshold. Validity of dismissal of Writ petition by HC - Held that:- The High Court did not deal the issue in a proper perspective and committed error in dismissing the writ petitions by holding that in the Complaints filed by the Respondent No. 2, specific averments were made against the appellant - But on the contrary, taking the complaint as a whole, it can be inferred that in the entire complaint, no specific role is attributed to the appellant in the commission of offence - to attract a case under Section 141 of the N.I. Act a specific role must have been played by a Director of the Company for fastening vicarious liability – the appellant was neither a Director of the accused Company nor in charge of or involved in the day to day affairs of the Company at the time of commission of the alleged offence - There is not even a whisper or shred of evidence on record to show that there is any act committed by the appellant from which a reasonable inference can be drawn that the appellant could be vicariously held liable for the offence with which she is charged – thus, the criminal complaint is set aside. So far as the Letter of Guarantee is concerned, it gives way for a civil liability which the respondent No. 2—complainant can always pursue the remedy before the appropriate Court - So, the contention that the cheques in question were issued by virtue of such Letter of Guarantee and hence the appellant is liable under Section 138 read with Section 141 of the N.I. Act, cannot also be accepted in these proceedings - Decided in favour of appellant.
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Service Tax
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2014 (12) TMI 1099
Power to conduct service tax audit / Revenue Audit – Validity of Rule 5A of Service Tax Rules, 1994 - instruction of the Central Board of Excise and Customs (“CBEC”) no. F. No. 137/26/2007-CX.4 dated 1.1.2008 - whether special audit can be ordered by recourse to Section 72-A of the Finance Act, 1994 - Supreme Court stayed the operation of the impugned judgment of High Court in [2014 (8) TMI 200 - DELHI HIGH COURT].
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2014 (12) TMI 1098
Waiver of pre deposit - Repair and maintenance service - Construction service - Held that:- The impugned order directing the appellant to deposit 40% of the demand is sans any reason. The order is cryptic running into six lines recording that such cases of maintenance, repair and cleaning service have been heard earlier also and the appellant was directed to deposit 40% of the service tax demanded and report compliance by 11.04.2013. There is no other reason recorded in the order. Neither there is consideration, even worth the namesake of any prima facie case of the appellant nor there is any reason, much less finding with respect to the undue hardship. it was incumbent upon the Tribunal to have addressed the issue of prima facie case of the appellant and also that of undue hardship. impugned orders passed by the Tribunal on the waiver application, are not liable to be sustained and are set aside. As a consequence, the impugned orders passed by the Tribunal dismissing the appeals for non-compliance of the condition of pre-deposit also stands set aside. - Matter remanded back - Following decision of Mehsana Dist. Co-OP. Milk P.U. Ltd. Vs. Union of India [2003 (3) TMI 113 - SUPREME COURT OF INDIA] - Decided in favour of assesse.
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2014 (12) TMI 1097
Club Membership - Constitutionality of section 65(105) - laiblity for service tax - Whether services provided by the assessee club to its members would be liable to service tax - the club is rendering service or selling any commodity to its members for a consideration then whether the amounts to sale or not – Held that:- In the case of SPORTS CLUB OF GUJARAT LTD Versus UNION OF INDIA & 3 [2013 (7) TMI 510 - GUJARAT HIGH COURT] the provision of Section 65(25a), Section 65(105) (zzze) and Section 66 of the Finance (No.2) Act,1994 as incorporated / amended by the Finance Act,2005 to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, was declared as ultra vires. - order passed by the Commissioner of Service Tax is required to be set aside - Decided in favour of assesse.
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2014 (12) TMI 1096
Waiver of pre deposit - Renting of immovable property - Held that:- Appellant himself has admitted before the Adjudicating Authority that they would collect service tax from its users and remit the same. Hence, the appellant should not now raise a question that the lease was entered into long before the introduction of Section 65(105)(zzzz) of the Finance Act, 1994 and hence not liable to pay service tax. The appellant has not produced any material showing that they are suffering from financial hardship. - Following decision of P.K.Hospitality Services Ltd. V. UOI reported in [2014 (8) TMI 820 - Supreme Court of India] - appellant is directed therein to pay the arrears in equated monthly instalments - stay denied.
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2014 (12) TMI 1095
Denial of refund claim - Petitioner initially paid service tax and claimed refund as the activity is not liable for service tax – Refund rejected by the original authority, partly allowed by the Commissioner (Appeals) subject to verification of unjust enrichment – Refund not grated even after the order of Commissioner (Appeals) - Held that:- Once the petitioner asserted that it did not pass on the liability of service tax to its customer i.e .. BSNL, it could have been verified as to whether BSNL paid any amount to the petitioner towards service tax. The irresponsibility on the part of the incumbents, who held the office of the 3rd respondent from time to time, is evident from the fact that they just sat over the matter and did not release even a single rupee to the petitioner. If this is the treatment accorded to a Government of India undertaking, one can easily understand the type of treatment, which the officials of that Department are exhibiting towards ordinary citizens. It is to the effect that the Board issued Circular, dated 18.12.2002 clarifying that the activity of laying of cables and erection of equipment would attract service tax, since it falls under the technical assistance rendered by Consulting Engineer. The lack of bona fides on the part of the deponent of the counter affidavit is evident from the fact that though the very Board issued Circular dated 13.05.2004 stating that the Circular dated 18.12.2002 was issued by mistake and stands withdrawn, no reference was made to it. The attitude of the deponent is worse than that of a seasoned litigant. Unfortunately, it is on account of the irresponsible behaviour of such officers, that the entire Department gets bad reputation. By resorting to objectionable means, the Department is trying to enrich itself, at the cost of the petitioner. amount which remained unpaid, shall be refunded to the petitioner with interest, as provided for under the Act, within four (4) weeks - Decided in favour of assesse.
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2014 (12) TMI 1094
Waiver of pre deposit - Manpower Supply Services - employees deputed by Dell International from abroad - Held that:- Assignment letter has been issued by foreign company abroad and not by Dell International Services India Pvt. Ltd. Moreover, the agreement itself in paragraph relating ‘Compensation and Benefits’, the agreement says during the assignment, salary continues to be paid from the home location. Promotional increase, merits salary grade changes, etc. must follow the guidelines of the home location. The assignment letter issued by the company abroad and salary should be paid at home location would show prima facie that the foreign company has provided the ‘manpower supply service’. There is no exclusive relationship of employer-employee was maintained not only in Indian company but foreign company. The Tribunal finally took the view that stay has been granted on the ground of limitation. In this case, the entire demand is within the normal period. Therefore, revenue neutrality may not be appropriate for unconditional waiver of pre-deposit and stay against recovery. - Entire amount of service tax directed to be deposited - interest and penalty stayed - Stay granted partly.
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2014 (12) TMI 1093
Works Contract Service - commercial or industrial service - Held that:- Claim of the appellant that they have paid the entire tax liability in respect of ‘works contract service’ is required to be verified since there is a dispute on this issue. The liability of balance amount attributable to construction of staff quarters, students’ hostel etc. for Polytechnic College, we hold that the demand does not exist. Since there is a dispute regarding the payment of Service Tax claimed to have been made by the appellant, we consider it appropriate that matter has to be remanded to the original authority for the limited purpose of quantifying the correct amount and verifying the payment made by the appellant. In case of any discrepancy, the original authority shall intimate the same to the assessee for making payment. At this stage, learned counsel also undertakes that in case of any discrepancy, they would make payment of the same. As regards penalties, the appellant’s submission regarding non-liability or alternatively request to invoke Section 80 of Finance Act, 1994 may be considered by the original authority. - Matter remanded back - Decided in favour of assessee.
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2014 (12) TMI 1092
Invocation of extended period of limitation - Mandap Keeper Service - Held that:- No doubt, in June 2006, decision in the case of Shree Gujarati Samaj Bhavan [2006 (6) TMI 470 - CESTAT NEW DELHI] was rendered and an argument can be advanced that the appellant who was monitoring the case law for entertaining bona fide belief should have taken note of this decision and started paying service tax. However, we take note of the fact that even the Govt. has chosen to amend the definition in 2007 and therefore it cannot be stated that appellant was not at all entitled to bona fide belief and extended period can be invoked. - appellant had informed the department by writing a letter giving reasons for non-payment and also taking note of the fact that appellant started paying service tax after the definition was amended, we consider that in this case extended period could not have been invoked. Accordingly, the entire demand cannot be sustained. - Decided in favour of assessee.
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2014 (12) TMI 1091
Condonation of delay - Delay in receipt of order - Order retained by acting partner who forgot about the letter - Held that:- A Limitation Act as is well-known is a statute of repose; and after the specified period of limitation is over, the other party to a cause of action is entitled to assume absence of a potential litigative trauma. Due diligence in prosecuting the litigation is also a valid criterion that could legitimately be considered in condoning delay in preferring an appeal. The reasons set out in the present application do not commend acceptance for grant of COD. Since no reasonable cause is shown, we find no justification for condoning the delay - Condonation denied.
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2014 (12) TMI 1090
Penalty u/s 77 & 78 - Payment of service tax as recipient of service - Held that:- Appellants did not to pay service tax in cash as they were entitled to avail Cenvat credit and the same was utilised. In such a situation, there was no need for the appellant to evade tax. When there is no need to evade tax, extended period could not have been invoked. In these circumstances, the penalty under Section 78 of the Act which is to be imposed when there is an intention to evade duty or suppression, fraud or collusion, mis-declaration etc. could not have been imposed. Accordingly, penalty under Section 78 of the Act is set aside. Coming to the penalty under Section 77, this penalty has been imposed for non-filing of returns. It is quite clear that the appellant has failed to file returns. Therefore, the penalty imposed under Section 77 of the Act is sustainable and the same is sustained. - Appeal partly allowed.
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Central Excise
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2014 (12) TMI 1089
Search and seizure of factory - Failure to submit details of clearances of earlier period - Invocation of extended period of limitation - Suppression of facts - Misdeclaration - Held that:- Even though the Appellant had informed about the applicability of excise duty the activity carried out by them, on 25th July, 1997 and promised to furnish details of clearance value for the earlier period, but the same was not submitted. The relevant data could be retrieved only after search and seizure consequent to the visit of their factory on 23.10.97 by the Anti Evasion Unit of the Kolkata I Commissionerate. Thus, it reveals that there was an element of suppression with intent to evade payment of duty for the relevant period in not furnishing the data and also non-payment of appropriate duty for earlier period. In these circumstances, I do not see any justification to interfere with the observations of the ld. Commissioner (Appeals) on the issue of imposition of penalty and confirming the demand invoking extended period of limitation. The contention of the Appellant is that the demand is highly inflated as their sale price was considered as assessable value and not cum-duty price, is also found to be incorrect in as much as in the show-cause notice itself, the sale price was treated as cum-duty price and the assessable value was determined accordingly. The next argument of the ld. Advocate is that in any case, if the demand is confirmed, they would be entitled to modvat credit. The said plea also would not hold good, at this stage, as such plea has been neither raised before the lower authorities nor in their grounds of appeals. Besides, after a period of two decades, it would be difficult and impractical to ascertain from the records about the eligibility of modvat credit. Also, I find that the ld. Advocate has simply advanced the said plea without supporting the same with any evidences. In the result, this contention also merits rejection when examined from all angles. - Decided against assessee.
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2014 (12) TMI 1088
Duty demand under Rule 96 ZO - whether the duty liability of the appellants for the year 1999-2000 is to be assessed in terms of Rule 96 ZO(3) after considering the plea of the appellants that for the financial year 1999-2000 under Rule 96 ZO(3), the option as required under Sub-Rule (3) of Rule 96 ZO had not been given by them - Held that:- As has been recorded by CESTAT in its order dated 7.10.2005 the appellants filed necessary declaration opting to pay duty under Rule 96 ZO(3) in the year 1997 and also again on 1.4.1998. The said Rule does not require filing of declaration on an annual basis. Indeed the format of the declaration prescribed under Rule 96 ZO(4) also makes it clear that the declaration is not for any particular financial year nor is it required to be filed for every financial year. - Even the appellants’ declarations did not indicate that they were valid only for one financial year. Therefore unless the appellants specifically opted out of the scheme, the declarations they filed opting for the compounded levy scheme obviously continued to be valid. The Supreme Court in the case of CCE Vs. Venus Castings Pvt. Ltd. - [2000 (4) TMI 37 - SUPREME COURT OF INDIA] has held that the assessee if they have availed of the procedure under Rule 96 ZO(3) at their option, cannot claim the benefit of determination of production capacity under Section 3A(4) of the Central Excise Act, 1944 which is specifically excluded. This itself means that the assessee can opt out of the scheme at the end of the financial year. It is matter of record that the assessee never opted out of the compounded levy scheme after having opted in for the same. Letters cited by them only show that they were not happy with the quantum of duty liability in terms of the said Rule 96 ZO(3). But such unhappiness can never be equated to a formal opting out of the scheme. For example, expressing unhappiness in a marriage can never be taken to be tantamount to opting for divorce. Thus it is evident that in the wake of the fact that the appellants never opted out [after having opted in for paying under Rule 96 ZO(3)], they continued to be liable to be assessed thereunder. There is not even an iota of doubt that there was no requirement to file the option to opt for the scheme in every financial year. Similarly, there is no ground to even suggest that the declaration to opt for the scheme was valid only for one financial year. Thus once having opted in, one had to expressly opt out of the same. Appellants were liable for payment of duty for the year 1999-2000 under Rule 96 ZO - Decided against assessee.
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2014 (12) TMI 1087
SSI exemption - clubbing of clearance - flow of funds - mutuality of interest - common partner, common premises, common purchase of raw materials, exchange of raw material from one unit to another, common managerial control, transfer of fund from unit to another - Notification No. 175/86-CE dated 1.3.1986 - Held that:- the Tribunal in the earlier round held that all the units are independent and the benefit of exemption Notification is required to be extended. It is noticed that the order of the Tribunal was not challenged by the Revenue before the higher appellate forum. So, the Revenue is not permitted to proceed on the same grounds in the remand proceedings. Clubbing cannot be established without any evidence of flow of funds. In the case of VIR Industries Vs. CCE, Bombay - [1997 (4) TMI 269 - CEGAT, NEW DELHI], it has been held that the three units having some common partners operating from the same premises and having common facilities, entire production of two units sold to third unit, no finding of special financial relationship involving common funding and financial flow back or manipulation of accounts and therefore clearance cannot be clubbed and assessable value to be the sale price of each unit. In the case of Techno Device Vs. CCE, Chennai - [2009 (6) TMI 219 - CESTAT, CHENNAI], it has been held that maintenance of accounts of various units by a single person and at one office is not a ground for justifying clubbing. - Revenue has not placed any material for clandestine removal of the goods as directed by the Tribunal in earlier order. Regarding, the clubbing of the four units, we have already observed that the Tribunal decided the issue in favour of the respondents. Further, the Commissioner (Appeals) has also given detail findings and we agree with it - Decided against Revenue.
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2014 (12) TMI 1086
Denial of CENVAT Credit - Invocation of extended period of limitation - Suppression of facts - Malafide intention - mere procedural violations - whether extended period is invokable for mere suppression on the part of the appellant or the suppression should be with an ‘intention to evade’ payment of duty - Held that:- So far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word ‘wilful’ preceding the words ‘mis-statement or suppression of facts which means with intent to evade duty. The next set of words ‘contravention of any of the provisions of this Act or Rules’ are again qualified by the immediately following words ‘with intent to evade payment of duty’. It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. Words ‘suppression of facts’, used in Rule 57I of the Central Excise Rules, 1944 are in the company of words like collusion and wilful mis-statement and will have to be understood to mean ‘with intent to evade payment of duty’. The observations made by the Adjudicating authority that ‘no intention to evade’ is required for invoking extended period of 5 years, can not thus be appreciated as the correct interpretation of law. Though there is no dispute that provisions of Section 11A of the Central Excise Act, 1944 are independent of recovery machinery under Rule 57-I of the Central Excise Rules, 1944, but the ratio of the words ‘suppression of facts’ and ‘wilful’ as interpreted by the Apex Court will also be applicable to the recovery provisions of Rule 57-I of the Central Excise Rules, 1944. - Decision in the case of Pushpam Pharmaceuticals Company vs. CCE, Bombay [1995 (3) TMI 100 - SUPREME COURT OF INDIA] followed. Credit was admissible to the appellant but for not filing the required/ proper declaration. Appellant has correctly relied upon the case laws mentioned in Para 2.1 above to the extent that for mere procedural violations CENVAT credit cannot be denied. Though in the present proceedings appellant is not agitating the issue of admissibility of credit but there is no evidence on record that there was any deliberate act on the part of the appellant to avail inadmissible credit. In our opinion extended period of 5 years cannot be invoked in these proceedings for not following the procedure properly when otherwise the credit was admissible. - Decided in favour of assessee.
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2014 (12) TMI 1085
Benefit of Notification No. 5/2006-CE dated 1.3.2006 - clearance of Silver till 16.1.202. Sr No 25 of Notifications - On being amended by Notification No 2/2012-CE dated 16.1.2012 and the word silver was deleted from the entry mentioned at Sr No,. 25 of the said Notification No. 5/2006-CE dated 1.3.2006. As a result of the said amendments, appellant started paying duty on silver from 17.1.2012 onwards - SCN issued for recovery of Central Excise duty on the clearances of silver during the period 1.3.2001 to 16.1.2012 under Section 11A(1) - whether appellant is eligible for the benefit of ‘nil’ rate duty on the ‘silver’ which arises/manufactured during the continuous process of manufacturing of copper cathode or not. - Held that:- It can be seen from the existing entries under Notification No. 5/2006 at Sr No. 25, exempts silver in their primary form and it is undisputed appellant had availed the benefit of this entry. The said Notification No. 5/2006-CE underwent an amendment wherein an entry No. 21C was inserted which indicated that sliver in any form is liable to concessional duty, which arises during copper smelting from copper ore or concentrate. For the period in question in this case i.e., 1.3.2011 to 16.1.2012 both the entries entry No 25 and entry No.21C were present in Notification No. 5/2006-CE. Reasoning recorded by the Adjudicating Authority are incorrect. First of all, when the Notification No. 5/2006-CE was amended, it did not amend the general entry No. 25 in the said notification; secondly, this lacunae was subsequently rectified by Notification No. 02/2012-CE dtd 16.1.2012 wherein the word ‘silver’ from entry No. 25 was deleted. It is undisputed that the appellant was manufacturing ‘silver’ in primary form during the manufacture of copper. When the two benefits are available to the appellant under the same Notification, the most beneficial entry suitable to him can be availed, is the settled law. We find that the apex court in the case of Share Medical Care [2007 (2) TMI 2 - SUPREME COURT OF INDIA] has held so. - Decided in favour of assesse.
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2014 (12) TMI 1084
Marketability - Manufacture of sugar solution (concentrated sugar syrup according to the Revenue) - Captive consumption - Held that:- just because the product can be kept for a week, it cannot be said that the same is marketable. There is no evidence of marketability produced by the Revenue either before the Commissioner or in the appeal memorandum. Further, we also find that the decision of the Hon’ble Supreme Court in the case of Moti Laminates Pvt. Ltd. (1995 (2) TMI 67 - SUPREME COURT OF INDIA) is applicable to the facts of this case as regards marketability. Commissioner has considered the marketability aspect and also use of preservatives. We find that the Commissioner’s order is in accordance with law and principles of classification and determination of liability of goods for excise duty. Hence it requires no interference - Decided against Revenue.
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2014 (12) TMI 1083
Denial of refund claim - Unjust enrichment - additional duty has been paid by the respondent at various appellate stages - Held that:- It is a case where duty has been demanded from the respondent after clearance of the goods. This fact is not in dispute. Further, the fact is that the respondent has not received any amount over and above the amount shown in the invoices at the time of clearance. These facts are also not in dispute. The additional duty has been paid by the respondent at various appellate stages. The Revenue has also not produced any evidence on record that the respondent has recovered any amount towards duty over and above invoices price from the buyers. Apart from bar of unjust enrichment the respondent has produced a certificate from the Cost Accountant that no amount over and above invoices price has been received from the buyers and the same does not form a part of cost of production. In these circumstances, I do not find any infirmity and the same is upheld. - Decided against Revenue.
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2014 (12) TMI 1082
CENVAT Credit - moulds and dies supplied by M/s. Maruti Udyog Limited were old and had been supplied to the appellant on a price much lower than the price of new moulds and dies, but still M/s. Maruti Udyog Limited paid the excise duty on their original value without any depreciation - whether the cenvat credit in respect of moulds and dies available to the appellant would be restricted only to the duty payable on the transaction value of the moulds and dies or whether they would be eligible for Cenvat credit of the duty actually paid by M/s. Maruti Udyog Limited - Held that:- there is no evidence produce by the Department that the assessment of duty in respect of duty payable by M/s. Maruti Udyog Limited on the moulds and dies had been revised by the jurisdictional central excise authorities or that the excess excise duty paid by M/s. Maruti Udyog Limited has been refunded to them. The Cenvat credit available to the appellant can be varied only if the duty paid by M/s. Maruti Udyog Limited had been varied, which is not the case here. In terms of the Apex Court’s judgment in the case of MDS Switchgear Ltd. (2008 (8) TMI 37 - SUPREME COURT), the recipient manufacturer who has received the inputs from a supplier is entitled to avail the Cenvat credit of the duty paid by the supplier/manufacturer and the central excise authorities having jurisdiction over the recipient/manufacturer cannot review the assessment of duty at the end of the supplier/manufacturer. This judgment of the Apex Court in the case of MDS Switchgear Ltd. (supra) is squarely applicable to the facts of this case. The impugned order, therefore, is not sustainable. The same is set aside. - Decided in favour of assesse.
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2014 (12) TMI 1081
Availment of ineligible Modvat credit - shortage of finished products which were not accounted for - clearance of goods without payment of duty - Held that:- As regards the demand of ₹ 9.12 lakhs (approx.) being the Modvat credit involved on the raw materials found short and not used, we find that difference between the quantity of raw materials consumed and finished products manufactured is very negligible and below 0.5 % in all the cases. We also note that as per the standard input of norms, the percentage of wastage for perfumery products is much higher up to 50%. Compared to this, the process loss in the appellant’s case is very low and, therefore, the explanation of processing loss of the material during the manufacturing process is reasonable and has to be accepted. Therefore, we do not find any merit in the contention of the Revenue that ₹ 9.12 lakhs is recoverable from the appellant. Accordingly, we set aside the same. In addition, an amount of ₹ 78,420/- has been confirmed in respect of the shortage of 1269 kgs which occurred at the job-worker’s end out of 14,400 kgs of raw materials and this loss is also reasonable and, therefore, there is no reason for confirmation of duty demand on this count also. As regards the demand of ₹ 1,70,990/-, in the statement recorded under Section 14 of the Central Excise Act, 1944, Mr. J.V. Shah, Manager of the appellant firm had admitted to the clearance of finished products without payment of duty. Only at the time of reply to the show cause notice, new grounds were adduced claiming that the difference in finished product stock was on account of invisible loss and material lying in process. These objections were not raised when stock taking was done. In these circumstances, the plea of invisible loss and material lying in process cannot be accepted and, therefore, the confirmation of demand of ₹ 1,70,990/- has to be upheld with interest - Decided partly in favour of assessee.
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2014 (12) TMI 1080
Compounded Levy Scheme of Section 3A of the Central Excise Act, 1944 read with Rule 96ZO - determination of the annual capacity of production of the appellant - Held that:- When the appellant had informed the department from the very beginning that they are operating only one furnace w.e.f. 1-3-2001 and other furnace of 1.00 M.T. capacity is idle, and when initially the duty liability had been determined provisionally on the basis of both the furnaces being operational, the Commissioner should have passed a final order determining their annual capacity of production after considering the appellant’s representation that the other furnace has never been operated and is lying idle. But no final order was passed. Thus, the department’s action of recovery of differential duty is without any basis. Even if this matter is remanded for re-determination of capacity of production and their duty liability, in view of the judgment of the Hon’ble Gujarat High Court in the case of Krishna Processors (2012 (11) TMI 954 - GUJARAT HIGH COURT), the proceedings for recovery of differential duty, if any, cannot be initiated - order of the department demanding the differential duty is set aside - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (12) TMI 1073
Valuation - inclusion of amount of discount given on sale of petroleum products - Gujarat Value Added Tax - Interpretation of the expression “the amount of sale price received or receivable by a dealer in respect of any sale of goods” - what would be the amount of sale price received or receivable by ONGC from OMC - Whether the Tribunal erred in confirming the demand with respect to the amount of discount given by the appellant to the OMCs on sale of its products instead of calculating the turnover on the finally determined prices – Held that:- ONGC was under an obligation to implement the policy of the Central Government and carry out such directives as may be issued from time to time in public interest - ONGC was bound by the price mechanism created by the Central Government from time to time - it is only such price which the ONGC actually collected from OMCs during the period under consideration - originally invoiced price or the subsequently discounted price would form the basis for sale price of the goods released or realizable - it is the final price which the ONGC received from the OMCs which alone can form part of the taxable turnover - under the price control mechanism, ONGC was under an obligation to sale its specified petroleum products at the rate fixed by the Government of India - To ensure that such petroleum products are available to the consumer at affordable price, the Government of India devised a mechanism where such products would be sold by ONGC and other oil companies to the OMCs at a price less than the market price or may even be less than its procurement price. Such mechanism operates even today and operated during the entire period under consideration - to ensure that the prescribed petroleum products reach the end consumers at affordable cost, the same had to be sold at lower than the market price or at times even lower than the production or procurement cost - Instead of subsidizing this component of loss by the Government, under the said circular dated 30.10.2003, it was envisaged that the 1/3rd of the under recoveries would be borne by the OMCs by cross subsidization through other retail products - The balance of 2/3rd under recoveries would be equally shared amongst OMCs and the upstream sector i.e ONGC and GAIL - It was provided that the contribution from ONGC and GAIL would come in terms of appropriate discounts on the price of crude oil, LPG and kerosene supplied by them to OMCs. It is the final price which the ONGC received from the OMCs which alone can form part of the taxable turnover - under the price control mechanism, ONGC was under an obligation to sale its specified petroleum products at the rate fixed by the Government of India - To ensure that such petroleum products are available to the consumer at affordable price, the Government of India devised a mechanism where such products would be sold by ONGC and other oil companies to the OMCs at a price less than the market price or may even be less than its procurement price. Such component the ONGC and other oil companies had to bear from their other profit making products by cross subsidizing the sale of specified petroleum products - This was in substitution of earlier price control mechanism where Government of India would bear the burden by subsidizing such products - In essence, ONGC could charge only such rate from OMCs as Government of India directed - The precise computation of the rate required complex considerations of economic and other aspects - Various factors such as cost of production for procurement of all products, the international price of the product, the local demand and ofcourse, the other economic considerations such as the ability of the various stake holders to absorb the loss, would enter into consideration - Since all these parameters would not be known before hand, the Government of India would announce provisional prices for such products - the broad formula adopted for such purpose was the crude price in international market minus the last discount which would prevail for a quarter. At the end of the quarter after taking into consideration all the relevant factors, Government of India would declare the final price - Since for the petroleum products already supplied by ONGC to OMCs during such quarter, the invoices would have been raised on the basis of provisional discount, the adjustment would have to be done on the basis of final discount declared by the Government of India - Though in most cases, the final discount may be higher than the provisional discount earlier declared, it is entirely possible that in some cases, such final discount may be lower than the provisional price - ONGC would eventually therefore, adjust its accounts with OMCs by raising either the debit note or credit note as may be required. Merely because for computation of royalty payable to the State, it is the full and not discounted price which is taken into account would not alter the situation - the royalty is paid to a State for exploitation of the natural resources located in the State - The Government of India had specifically provided that for the purpose of computing the royalty, it would be the full and not the discounted rate which would be taken into consideration - The appellate authority and the Tribunal were unduly influenced by this factor. The observations of the Tribunal that “The OMCs are liable to pay the sale price to the appellant as per the invoices raised against them - They might have paid less sale price only because of the fact that they were given compensation for their agreeing not to increase the price of crude oil, PDS kerosene and domestic LPG to the consumers with the increase of international oil prices”, are based on no materials and only on conjectures and in any case, not in any manner relevant - the observation that “Such a practice adopted by the appellant under the mandate of the Central Government is virtually amounting to restrictive trade practice and an artificial determination of sale price which is prohibited under the Competitions Act”, with respect, was not borne out from any material on record – thus, the order of the Tribunal is set aside – Decided in favour of assessee.
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2014 (12) TMI 1072
Direction to be made for release the Tanker No. UP85V9636 with Bitumen lying in the custody of respondent No.2 since 30.6.2014 or not - Held that:- The sole basis for detention of the tanker and seizure of the bitumen was the information collected by him from the toll plaza which revealed that last four digit of the registration number of the tanker in question was similar to the last four digit of registration number of a vehicle recorded in the records of toll plaza - the source of supply of bitumen from Mathura is only the Mathura Refinery of M/s Indian Oil Corporation - neither he took any steps nor the Joint Commissioner nor the Tribunal considered it appropriate to verify the invoice and the information and thus they mechanically passed the orders - Registration number of three tankers containing similar last four digits are registered with the transport department as has been admitted by the Respondents in the supplementary counter affidavit - On verification from the Indian Oil Corporation, Mathura Refinery, Mathura it was found by the authorities concerned that bitumen in the tanker in question was loaded as per invoice accompanying it and thereafter it was not loaded from the Mathura Refinery till 30.6.2014 - The bills of repair of the tanker in question in support of proof that it was under repair from the night of 28.6.2014 till 30.6.2014, were not even verified by the authorities concerned so as dispute its genuineness - In the supplementary counter affidavit dated 20.8.2014 the Respondents have even admitted that the tanker in question was detained and bitumen was seized without any basis. Even if such an order was actually passed by the respondent No.4, yet it was a complete nullity for reasons that firstly no power is conferred under the Act and the Rules to pass such orders, secondly it was wholly impossible to remove the mounted body of the fully loaded big tanker with bitumen weight 24.60 M.T. from body of the engine and thirdly the petitioner was directed merely to take away the body of the engine which could not be of any use for the petitioner who is engaged in the business of running his tanker on hire – thus, the seizure order dated 5.7.2014, the order of Joint Commissioner under proviso to Section 48 (7) of the Act dated 8.7.2014 and the impugned order of the Commercial Tax Tribunal, Bench-I, Agra dated 16.7.2014 passed in IInd Appeal No. 223/2014 cannot be sustained - The provisional release of the tanker and bitumen in question by order dated 28th August, 2014 is confirmed. What amount of compensation may be awarded to the petitioner for illegal detention of the tanker - Per day damages to be granted or not @ ₹ 5,000/- Held that:- The tanker in question was baselessly detained - The detention continued from 1st July, 2014 upto 28th August, 2014 - The state respondents have also not disputed the quantum of loss caused to the petitioner and compensation thereof as prayed – the petitioner is entitled for compensation – Decided in favour of petitioner.
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