Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 12, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Notice of demand u/s 156 - rejecting an application for stay of demand pending disposal of the appeal - penalty u/s 271 (1)(c) - An order for the deposit of the entire penalty is clearly not justifiedd - HC
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Applicability of Section 50C - The contention that the property stood transferred in the financial year 2005-06 when the sale proceeds were received on the basis of the definition appearing from s.2(47)(v) is without any substance. - Designs to evade tax cannot be permitted. - HC
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Interest on loan sanctioned from state government - mercantile system - the liability for payment of interest for all the previous AYs cannot be claimed or allowed in the relevant AY - HC
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Addition merely on the basis of statement u/s. 132(4) - unaccounted income - additions sustaianed - HC
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Foreign exchange loss on account of restatement of CDC loan - whether be treated as a revenue loss? - actual arisen v/s notional - AO to decide in view of Apex Court decision in CIT v. Woodward Governor India (P.) Ltd [2009 (4) TMI 4 - SUPREME COURT] - HC
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TDS - printing of question papers - The purchase of pre-printed material from the printer therefore amounts to contract for sale and not ‘work’ as defined in section 194C(1) - AT
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LTCG - Legislature has intentionally not added word “land“ in the provision of Section 55(2(a) and therefore, the provision of section 55(2)(a)(ii) of the Act would not be applicable while valuing the “cost of acquisition“ of the land - AT
Customs
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Refund - under duress and threat, the partners of the petitioner were forced to deposit - revenue directed to refund the the amount deposited by the petitioner during investigation. - AT
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DBK - “other handicraft of iron & aluminium” Vs. “Furniture” – Circular No. 3/2010-Customs., dated 12-2-2010 issued vide F.No. 609/27/2009-DBK resolves that whole dispute. - CGOVT
FEMA
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Repatriation of Money otherwise than through an authorized person – Appellant acquired the foreign currency by selling his property in Iran - confiscation upheld - HC
Corporate Law
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Cheques bounced - The summoning of a person to face trial is a serious matter as it may jeopardise the liberty of a person - Magistrate has to apply his mind before issuance of summon - HC
Service Tax
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General Insurance Service - Exemption - There is no requirement in the notification that the Janta Personal Accident Policy referred to in the notification must be submitted to the IRDA for its approval - AT
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BAS - Job Work – Process undertaken by assessee on tobacco leaves for his clients – Appellants are prima facie eligible for exemption under Notification No. 14/2004-S.T. - AT
Central Excise
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Penalty under rule 15 of CCR, 2004 or Rule 26 of Central Excise Rules, 2002 - Department cannot be permitted to issue such corrigendum or to issue a fresh show-cause notice after adjudication of the case - AT
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CENVAT credit of service tax utilized for the payment of Central Excise duty at the time of clearance and manufacture of excisable goods - pre deposit waived - AT
Case Laws:
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Income Tax
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2013 (2) TMI 242
Income tax liability - the total liability fastened on the petitioner is Rs.1,255.65 crores & the petitioner has already remitted Rs.868.98 crores - Held that:- As the petitioner has filed Exts.P7 to P12 appeals against income tax liability fastened on him appeals are still pending, thus direct the second respondent to consider Exts.P7 to P12 appeals with notice to the petitioner as expeditiously as possible within a period of six months from the date of receipt of a copy of this judgment. In the meanwhile, having regard to the substantial payments already made by the petitioner, recovery of the balance amount due under Exts.P1 to P6 assessment orders will stand stayed.
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2013 (2) TMI 241
Notice of demand u/s 156 - rejecting an application for stay of demand pending disposal of the appeal - penalty u/s 271 (1)(c) - revised return filled by assessee - Held that:- As appear from the record before the Court that together with the return of income as originally filed, the Petitioner annexed a copy of Form-3C in which there was a disclosure of the amount of Rs.5.86 crores which was treated as a reimbursement in respect of marketing services alleged to have been availed of from Deloitte. The transfer pricing analysis which was filed during the course of assessment proceedings similarly indicated the basis on which the deduction was claimed. When a revised return of income was filed, a disclosure was made to the effect that the return was revised with a view to add back the marketing expenses in the original return filed on 1 November 2004 with a view to avoid litigation in relation to the admissibility of the claim. The deduction under section 10A was stated to have been revised accordingly. That claim has been rejected by the assessing officer and in appeal as well as by the Tribunal. At the present stage, it is necessary for the Court to take note of the provisions of Section 220(6) under which the assessing officer is vested with the discretion, where an assessee has presented an appeal under section 246 or Section 246A and subject to such conditions as he may think fit to impose in the circumstances of the case to treat the assessee as not being default in respect of the amount in dispute in the appeal. When the statute confers a discretion on the assessing officer, that is a discretion which is wielded in the exercise of a quasi-judicial function. As in the present case, both the AO as well as the CIT have failed to exercise their jurisdiction in accordance with law. The CIT adverted to the fact that the quantum appeal had been rejected by the CIT (A) and the ITAT. That in itself would not amount to a valid justification for imposition of a penalty. Before a penalty is imposed, the requirements of Section 271 must be established. Accordingly, it would have been open to the Court to set aside the impugned order in its entirety and to remand the proceedings back to the assessing officer for fresh consideration. However, since arguments before the Court have been addressed on the prima facie merits of the case as well, no need to follow that course of action since that would lead to another round of proceedings before this Court again. Having regard to the circumstances which have been noted an appropriate order for partial deposit of the penalty would be necessitated. An order for the deposit of the entire penalty is clearly not justified - dispose of the petition by directing Petitioner shall deposit an amount of Rs. Fifty lakhs in two equal installments on or before 28 February 2013 and 31 March 2013.
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2013 (2) TMI 240
Withdrawal of registration u/s 12AA - reopening of assessment - notice issued u/s 226(3) to the Branch Manager of Bank of India calling upon the bank to pay over an amount of Rs.11.72 crores towards the demands raised on the Petitioners - applications for stay of demand pending before the CIT(A) - Held that:- The admitted position before the Court is that against the orders of assessment that were passed for A.Ys. 2004-05 and 2006-07 after the original assessments were reopened, appeals have been filed before the CIT(A), which are pending. Similarly an appeal is pending for the A.Y.2009-10. Though the appeals are pending since 24 January 2012 for nearly a year, no decision has been taken on those appeals. There is a request of the Petitioner for keeping the demands in abeyance. In a situation such as the present where the appeals filed by the assessee are pending before the CIT (A) and the assessee had sought an opportunity of being heard and filed applications for stay, there was no justification whatsoever to proceed hastily with the enforcement of the recovery of the demand without disposing of the application for stay. Applications for stay cannot be treated by the assessing officers or for that matter by appellate authorities as meaningless formalities. It would be appropriate for the Court to ensure that sufficient funds are restored to the bank account of the Petitioner with a view to allow it to carry on its activities for a period of 45 days within which recourse can be taken to the pending stay application before CIT(A) and if an adverse order is passed, thereafter to such remedies as may be available in law. Considering that the total demand is of Rs.11.72 crores, it would meet the ends of justice if the Revenue at this stage is permitted to retain an amount of Rs.3.76 crores and to put back an amount of Rs. One Crore in the account of the assessee.
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2013 (2) TMI 239
Deduction u/s. 80IB(10) - Tribunal allowed the claim for the project approved prior to 1/10/1998 & for a project approved on 28/8/1997- Held that:- Tribunal held that in the facts of this particular case the respondent-assessee would be entitled to the benefit of Section 80IB for all the three assessment years i.e. 2004-05, 2005-06 and 2006-07 as the buildings were constructed on the basis of plan approved only in 2002. Further the activity of construction commenced only on 22/1/2002 when the commencement certificate was issued. Therefore, the Tribunal while upholding the order of the CIT (A) held that for all the three assessment years the approval of the authorities and commencement certificate are post 1/10/1998. Similarly, the Tribunal upheld the finding of the CIT(A) in holding that DVO has certified that combined area of the flats was less than 1500 sq. ft. Consequently, Tribunal while upholding the order of the CIT(A) held that Section 80 IB(10) are complied with and the respondent-assessee is entitled to the benefit of Section 80IB of the Act for assessment years 2004-05, 2005-06 and 2006-07. Thus CIT(A) as well as the Tribunal have based their decisions on a concurrent finding of fact & conclusion reached by the Tribunal based on findings of fact cannot be found fault with as the revenue has not been able to show that the impugned order is perverse warranting an interference by this Court - in favour of assessee.
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2013 (2) TMI 238
Reopening of assessment - capital subsidy was outstanding in respect of the business and if this is taken into account the income is likely to increase by the same while computing the gains on account of slump sale - ITAT quashed reassessment order - Held that:-As decided in Shriram Singh's case (2008 (5) TMI 200 - RAJASTHAN HIGH COURT) & CIT v. Jet Airways [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] that unless the AO assesses the income with reference to which he had formed a reason to believe within the meaning of Section 147 it would not be open to him reassess or assess any other income chargeable to tax which has escaped assessment and comes to his notice in reassessment proceedings. In this case, admittedly the ground on which reassessment notice u/s 148 was issued was dropped while passing the reassessment order dated 27.03.2006 under Section 143(3) read with Section 147. Thus no occasion to entertain the proposed question of law - in favour of assessee.
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2013 (2) TMI 237
Applicability of Section 50C - Assessee contended that Tribunal erred in applying section 50C to the case of the assessee because the valuation of the land for the purpose of stamp duty was yet to be assessed - as going by the definition of word ‘Transfer’ from s.2(47)(v) the sale was completed when the consideration was received in the financial year 2005-06 and the possession had already been given in the year 1996 pursuant to an agreement for sale - Held that:- Not been impressed by this submission as it is true that ‘Transfer’ has been defined in Section 2(47) but the aforesaid definition was made before Section 50C was introduced to the Income Tax Act. After section 50C was introduced in the year 2003, the value of the land or building or both sold or otherwise transferred has to be the value assessed by the authority of the State Government for the purpose of stamp valuation. The submission that in the financial year 2005-06 when the consideration was received, the Deed of Conveyance had not even been executed has not found favour for the simple reason that the intention of the Parliament is that in a case where the land or building or both are sold or otherwise transferred, such transfer shall be deemed to have taken place only after the stamp duty has been assessed by the State Government, because it is on the valuation made for the purpose of stamp duty that the tax is payable under the Income Tax Act. By adopting devices to defeat the provision, the assessee cannot be heard to contend that section 50C would not be applicable merely because the Deed of Conveyance had not at that time been executed or registered. The contention that the property stood transferred in the financial year 2005-06 when the sale proceeds were received on the basis of the definition appearing from s.2(47)(v)is without any substance. Designs to evade tax cannot be permitted. The appeal raises no substantial question of law and is, therefore, dismissed.
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2013 (2) TMI 236
Interest on loan sanctioned from state government - @ 8% or interest free - assessment year - applicant is a wholly U.P. Government owned corporation established for the purposes of promoting Small Scale Industries - Held that:- It is not in dispute that the State Government when it had sanctioned the loan of Rs.10,00,000/- on 6.7.1972 had clearly stipulated that the loan would carry an interest of 8% per annum. Merely because the assessee had disputed its liability to pay the interest and the loan could be treated interest free loan would not make any difference. The stand of the State Government was consistent throughout and the State Cabinet thoroughly stuck to the earlier stand. The assessee had been following mercantile system of accounting and, therefore, the liability for payment of interest for all the previous assessment years cannot be claimed or allowed in the relevant assessment year. Applying the principles laid down in Swadeshi Cotton and Flour Mills Private Ltd. [1964 (4) TMI 8 - SUPREME COURT] & New Victoria Mills Co.Ltd [1965 (7) TMI 39 - ALLAHABAD HIGH COURT] to the facts of the present case admittedly the applicant was under an obligation to pay an interest at the rate of 8% per annum on the amount of loan advanced by the State Government and merely because it has disputed its liability by contending that it should not be charged, the liability to pay interest was always there and this plea is of no consequence. The liability was ascertained and, therefore, the Tribunal had rightly held that the claim of interest relating to the previous assessment years is not admissible for deduction during the assessment year in question - in favour of Revenue.
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2013 (2) TMI 235
Addition merely on the basis of statement u/s. 132(4) - unaccounted income - Held that:- Not only that the initial confessional statement made by the assessee on 19.1.2006 was not retracted for months together, in between also he made one such similar statement. the fact remains that initial statement was not retracted for several months. In his retraction statement, the assessee made out a ground that the search had started at 8.30 in the morning and ended on the next day and thus it continued for a period of nearly 24 hours suggesting mental harassment and fatigue for having made such a disclosure. He did not suggest any undue pressure or allurement. And quite apart from such statement dated 19.1.06, at the time of search, the assessee had made yet another confessional statement on 28th March 2006. He had never referred to such a statement in his retraction. He did not offer any explanation why quite apart from the statement made at the time of search operation, he had two months later repeated his offer. The authorities have further recorded that both the statements were made in presence of the Chartered Accountant of the assessee. In addition to such circumstances, the Commissioner (Appeals) noted that the appellant was not maintaining personal books of accounts. Revenue authorities and the Tribunal on the basis of evidence on record came to the conclusion that the addition of Rs.50 lacs was justified. No question of law is arising. The entire issue rests solely on appreciation of evidence on record. Particularly when the assessee having made such a statement and repeated the same two months later and in the letter retracting the statement never offered any explanation as to the reason why he made a confessional statement two months after the search, no reason to interfere with the concurrent findings of facts of two Revenue authorities and the Tribunal - against assessee.
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2013 (2) TMI 234
Non deduction of TDS on Retainership charges - CIT(A)allowed after admitting fresh evidence - assessee submitted that the payments were of the nature of reimbursement of expenditure thus TDS provisions were not applicable - Held that:- From the order of CIT(A) it is not clear as to how payments represented reimbursement of expenditure. The order of CIT(A) is not a reasoned and speaking order. Since AO has given a clear finding that no evidence had been produced regarding reimbursement of expenditure CIT(A) was required to give opportunity to AO regarding any evidence produced in support of reimbursement of expenditure - order of CIT(A) can not be sustained thus restore the issue back to him for passing a fresh order after allowing opportunity of hearing to the AO - appeal of the revenue allowed for statistical purposes.
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2013 (2) TMI 233
Foreign exchange loss on account of restatement of CDC loan - whether be treated as a revenue loss? - actual arisen v/s notional - Assessee is a financial company - Held that:- As decided CIT v. Woodward Governor India (P.) Ltd [2009 (4) TMI 4 - SUPREME COURT] that while even a notional loss can be claimed by way of a business loss deductible item in computing the income of the assessee for the year, made dependent on the manner of conduct of the assessee in respect of the earlier assessment period and particularly as to the assessee has been following this uniformly over a period of years and the test being when there was a notional gain as to whether it had been offered for tax etc. Such claim will have to be examined in the light of the fulfillment of the conditions as indicated by in the case supra for which purpose, the matter may have to go before the assessing officer, who has to apply this test to the claim made by the assessee and then either admit the claim or reject it.
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2013 (2) TMI 232
Non deduction of TDS - printing of question papers from printers - Held that:- The material used for printing the question papers in this case is procured by the printer himself as per the specifications laid down by the assessee. The purchase of pre-printed material from the printer therefore amounts to contract for sale and not ‘work’ as defined in section 194C(1). As decided in C.I.T. vs. Dy. CAO, Markfed (2008 (2) TMI 260 - PUNJAB AND HARYANA HIGH COURT) held that purchase of particular printed packing material by the assessee was a contract for sale and outside the purview of section 194C. In the case of BDA Ltd. vs. C.I.T. [2004 (3) TMI 11 - BOMBAY HIGH COURT ] held that if a manufacturer purchases material on his own and manufactures a product as per the specific requirement of a customer, it is a case of sale and not a contract for carrying out any work. Thus no infirmity in the order of the CIT(A) wherein printing of question papers by the assessee from printers was treated as contract for sale and not work contract and therefore, outside the purview of section 194C - in favour of assessee.
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2013 (2) TMI 231
Applicability of provision of section 55(2)(a)(ii) - Disallowing indexed Fair Market Value as on 1-4-1981 in respect of the Leasehold Land acquired as the appellant had not incurred any cost for acquiring the said leasehold land i.e. NIL value - Held that:- Where the assessee has acquired some land for NIL value prior to a year starting from 1.4.1981, even then the provision of section 48 shall be applicable and the fair value of the land in question as on 1.4.1981 along with indexed cost of acquisition has to be determined in order to arrive at the figure of "long term capital gain" and the value for which the assessee has acquired the land in question prior to 11.4.1981 is not relevant for determining the "fair market value" of the land as on 1.4.1981. It is well settled that when certain provision of law has clear language and leaves no room for ambiguity, there should be no violence to the provision as enacted by the Legislature and no words should be added or omitted while reading a specific provision of law. As find that the Legislature has intentionally not added word "land" in the provision of Section 55(2(a) and therefore, the provision of section 55(2)(a)(ii) of the Act would not be applicable while valuing the "cost of acquisition" of the land for the purpose of computation of "long term capital gain" of the assessee. Accordingly, the value of the lease-hold rights in the land in question of the assessee, has to be determined in accordance with the provision of section 48 by valuing "fair market value" of the land as on 1.4.1981 and the index cost of acquisition has to be determined in order to assess long term capital gains in the hands of the assessee. Fair market value of the land in question as on 1.4.1981 for the lease hold right of the assessee in the land at Ashram Road, Ahmedabad - Held that:- Approved valuer's valuation report has one glaring mistake by not making suitable deduction on account of assessee's right in the land being only that of "lessee" for 98 years and the assessee not being owner thereof. As the approved valuer has recorded that he has taken into consideration surrounding sales and its location, size, frontage, neighbourhood, prospects of developments, distance to the commercial establishments etc. while determining the land rate of Rs. 1200/- per square yard as on 1.4.1981, this value of the land estimated may be reasonable for a free hold land as on 1.4.1981, but the value of a free hold land could not be equated with the value of leasehold rights of "lessee" in a particular piece of land. Considering the entire factual matrix of the case, and holding that fair market value of the land in question as on 1.4.81 has been reasonably estimated at Rs.1,200/- per square yard by the approved valuer as on 1.4.1981, it shall be fair and justified to value the leasehold rights of the assessee in the land at Ashram Road as on 1.4.1981 at Rs.800/- per square yard after making suitable deduction on account of the land not being free hold and the assessee's right being that of "lessee" for long period of time - appeal of the assessee partly allowed.
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Customs
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2013 (2) TMI 229
Refund claim of amount deposited during investigation - claim rejected as pre mature - adjudication of the said show-cause notice is still pending - Held that:- As decided in Raghu Exports vs. Union of India [2008 (7) TMI 88 - HIGH COURT PUNJAB & HARYANA] there is no amount outstanding against the petitioner but still under duress and threat, the partners of the petitioner were forced to deposit revenue is directed to refund the impugned amount deposited by the petitioner during investigation. As in the present case it is not disputed that the appellant has paid the amount during the course of investigation but there is no adjudication order and no confirmation of demand as on today against the appellant in these circumstances set aside the impugned order and allow the appeal with consequential relief - expedite the case and sanction the refund claim within thirty days of receipt of this order.
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2013 (2) TMI 228
DBK - “other handicraft of iron & aluminium” Vs. “Furniture” – Assessee are engaged in the manufacture and export of handicrafts of Iron & Aluminium – Filed rebate claims for export of goods described as “other handicraft of Iron & Aluminium” and classified under Drawback Schedule Heading No. 732602 which covers “other handicraft of Iron and Steel” – there was four consignments contained goods such as chair, table bird cage, plant stand, tray and stand, etc. – Department claims that table, chairs etc. are very well covered by the definition of furniture, and “Furniture” are specifically covered under Chapter 94 (under sub-heading 9403), hence the claimed classification under DBK Heading 732602 as “other handicraft of Iron & Steel” appeared incorrect. Held that:- Chapter sub-heading 9403 simply cover other furniture and part thereof, made out of iron and steel whereas the Drawback Schedule Heading No. 732602 specifies “other handicraft of Iron and Steel”. Assessee claimed their drawback under Drawback Schedule No. 732602 and submitted a certificate bearing No. DC/(H)/Tex/PSICII/ NR/1(14)/2003-04/123, dated 10-9-2008 issued by Assistant Commissioner (H), Northern Regional Office, New Delhi. This certificate is not questioned/rejected by the department - Circular No. 3/2010-Customs., dated 12-2-2010 issued vide F.No. 609/27/2009-DBK resolves that whole dispute. Board vide Circular No. 128/39/95-CX., dated 25-5-1995 had clarified that since the office of Development Commissioner (Handicraft) has treated imitation or real zari as handicrafts the same may be treated as handicrafts by the Customs and Central Excise Authorities – The board reiterated these guidelines vide Circular No. 32/99-Cus., dated 4-6-1999. The Board vide subsequent Circular No. 56/99-Cus., dated 26-8-1999 advised the field formations that they can accept the certificates issued by either the Development Commissioner (Handicrafts) or by the Export Promotion Council for Handicrafts (EPCH) - ). A decision to reject the certificate issued by the Development Commissioner (Handicraft)/EPCH Certifying the goods as artware/handicraft has to be taken only with the approval of the Commissioner of Customs/Central Excise and after discussion with the certificate issuing authority – Against the revenue.
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Corporate Laws
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2013 (2) TMI 227
Cheques bounced - summons issued - Held that:- It is not in dispute that the complaint was presented with regard to bouncing of Cheque but there is no mention in the summoning order with regard to the said cheque. It clearly shows that without perusing the complete facts, the Judicial Magistrate Ist Class, Chandigarh, has passed the summoning order as a matter of routine. The summoning of a person to face trial is a serious matter as it may jeopardise the liberty of a person. Therefore, the Magistrate has to apply his mind after taking into consideration the correct facts and then to pass a summoning order. The said test has not been applied in the case in hand. Therefore, the impugned summoning order is hereby set aside & matter is remitted back to the Judicial Magistrate Ist Class, Chandigarh, to pass fresh orders in accordance with law.
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2013 (2) TMI 226
Winding up petition - Appellant seeks balance payment of Rs. 2 crore in respect of sale of his leasehold rights under an agreement - Respondent-company disputed said claim stating that amount of 2 crore had been utilized to settle claims of third parties as agreed in agreement - Held that:- It is found that not only the agreement provides the names of the parties whose claims have to be settled but the respondents have also filed an affidavit with supporting evidence pointing out the persons to whom the payment was made and in support thereof evidence of the reasons for the same. The entire case of the appellant that the documents under which payments were made were fraudulent is a matter which would require investigation/adjudication by way of suit. As the appellant may have a very good case on merits and would possibly be able to establish in an appropriate proceeding that the respondent have acted in a fraudulent manner and defrauded him to Rs. 2 crore. However, in proceedings for winding up the company, the Court cannot adjudicate upon a bona fide disputed debt as it is well settled principle of company law that wherever there is a bona fide disputed debt, the petition for winding up of a company is not appropriate remedy to enforce the debt - appeal dismissed.
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FEMA
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2013 (2) TMI 230
Repatriation of Money – Appellant acquired the foreign currency by selling his property in Iran - Gave a declaration in CDF when he brought major chunk of foreign currency in January and October, 1999 – His vendor sent the money through nineteen persons each getting $ 5000 – Further contention of appellant is that he has 180 days to keep the money before en-cashing through an authorized person – Held that:- Section 3(c) of the FEMA prohibits any person from receiving foreign currency otherwise than through an authorized person –The law requires remittances to be made only through an authorized person as defined in Section 2(c), which means money changer, off-shore banking unit or any person authorized under Section 10(1) to deal in foreign currency or foreign securities. Regulation 5 of the Repatriation Regulations which obliges any person to sell the realized foreign exchange to an authorized person within seven days from the date of its receipt - Appellant un authorizely acquired foreign currencies and retained the currency in contravention of relevant Regulations. Appellant got the foreign currency towards consideration of sale of his immovable property in Iran. Even if such a transaction is assumed to be true, he could not have got or received the money the way he got - No agreement was produced and the affidavit filed by the buyer did not give the details of the amount sent through nineteen (19) persons – Appeal fails and is accordingly dismissed – Against the assessee.
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Service Tax
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2013 (2) TMI 246
Power of Commissioner Appeal to remand back of case to AO - Demand and penalty of Service Tax - Interest u/s 75 - Penalties u/s 76 to 78 – Partnership Firm - One of the partners, had passed away on 22/02/2008 - Before issue of the SCN – Whether the partnership firm stood dissolved on 22/02/2008 or continued thereafter Held that:- Following the decision in case of MIL INDIA LTD. (2007 (3) TMI 8 - SUPREME COURT OF INDIA) that the power of remand by the Commissioner (Appeals) had been taken away by Parliament by amending Section 35A of the Central Excise Act w.e.f. 11/05/2001. The partnership firm of 4 partners in this case stood dissolved on 22/02/2008 with the death of Ch. Devadanam unless the partnership deed contained a contract to contrary. Whether the partnership deed expressly or by necessary implication provided continuance of the firm in the event of death of one of the partners is a pure question fact and the same has to be settled by the original authority after giving all the surviving partners as well as the legal heir of the deceased partner a reasonable opportunity of adducing evidence The Commissioner (appeals), albeit without the power of remand, took the correct view that the matter required to be readjudicated. Therefore, uphold the reason recorded by him for sending the case to the original authority. Accordingly, the present appeal is allowed by way of remand to the original authority with a direction to undertake de novo adjudication of the show-cause notice after giving the surviving partners and the legal heir of the deceased partner. Remand back to AO
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2013 (2) TMI 245
Business Auxiliary Services - Appellants are engaged in providing Business Auxiliary Services - was not paying any Service Tax till 8-7-2004 and after withdrawal of exemption given to Commission Agents in Budget of 2004 which it came into effect from 9-7-2004, the appellant took registration as a service provider of Business Auxiliary Service and started paying Service Tax from 9-7-2004 - Held that:- Appellant entertained a bona fide belief that they are not liable to Service Tax since they were only acting as commission agent for the 3 customers - Amount of Service Tax and the interest was paid within one year except for 1 or 2 months would also show that the appellant is entitled to benefit of provisions of Section 73(3) of Finance Act, 1994 which provides that if the appellant makes the payment of Service Tax and interest, no further proceedings will be initiated - Amount received by the appellant from the customers was mainly commission especially when we take into account that the fact that the activities undertaken by the appellant consisted of collection of bills, wherein they were getting percentage for having collected the amount – Appellant cannot be found fault with for entertaining a bona fide belief that they were acting as commission agent – In favour of assessee.
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2013 (2) TMI 244
Appellant is entered into an agreement with the Government of U.P. for providing Personal Accidental Insurance - Agreement had been entered under the Janta Personal Accident Insurance Plan. There is an exemption Notification No. 3/94-S.T., dated 30-6-1994 exempting certain specified insurance schemes from whole of the service tax - department was of the view that the insurance policy provided by the appellant to the Govt. of U.P. is not as per the standard of insurance policy - Janta Personal Accident Policy covered under Notification No. 3/94-5 - Held that:- Notification No. 3/94-S.T., dated 30-6-95 specifically exempts from the service tax the Janta Personal Accident Policy - Board vide its letter dated 18-1-2011 has specifically clarified that since description of JPAP Policy is not given in the notification, customized group JPAP Insurance schemes by various insurance companies as per specifications of the State Govt. concerned, to extend risk cover to target populations and to fulfill the prescribed ‘rural or social sector’ obligation, are covered by the Notification No. 3/94-S.T - There is no requirement in the notification that the Janta Personal Accident Policy referred to in the notification must be submitted to the IRDA for its approval. Impugned order is not correct and asking the appellant to pre-deposit service tax would cause undue hardship - Requirement of pre-deposit of service tax demand, interest and penalty is, therefore, waived - stay application allowed.
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2013 (2) TMI 243
Notification No. 14/2004-S.T – Process undertaken by assessee on tobacco leaves for his clients – Whether this amounts to rendering of “Business Auxiliary Services” – Or it is “manufacture” for the purpose of levy of duty of excise and, and no Service tax is leviable – Department alleged that the process undertaken by them on tobacco leaves amounted to rendering of “Business Auxiliary Services” by virtue of the amended definition and therefore they were liable to pay Service tax for the material period – Held that:- After the examination of the processes undertaken by the appellant on tobacco leaves, Prima facie, it was found that the product emerging at the end of this process had the essential character of the input (tobacco leaves). Therefore, the principle enunciated in the Board’s circular is prima facie applicable. - Appellants are prima facie eligible for exemption under Notification No. 14/2004-S.T. – Full waiver of pre-deposit and stay of recovery granted against the Service tax demanded under ‘BAS’. GTA services – In Lakshminarayana Mining Co. v. CST[2009 (9) TMI 71 - CESTAT, BANGALORE] it was held that a ‘Goods Transport Agency’, as statutorily defined, should provide service in relation to transport of goods by road by issuing consignment note - Commissioner observed to the fact that there was “plenty of case laws” against the assessee, but none was cited in the impugned order. Suffice it to say that the appellant in Appeal No. ST/410/2011 has made out a prima facie case against demand of Service tax under GTA services on the strength of decision of this Bench - Full waiver of pre-deposit and stay of recovery granted.
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Central Excise
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2013 (2) TMI 225
Non imposition of redemption fine and for extending benefit of discharge of penalty of 25% of the amount of duty confirmed - revenue appeal - Held that:- As appeals filed by the assessees were allowed by way of remand with specific and clear finding keeping all the issues open and have not given any opinion on the merits of the case. Since the entire issue is kept open this appeal also needs to be allowed by way of remand to the adjudicating authority - Revenue's appeal is allowed by way of remand to the adjudicating authority to reconsider the issue.
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2013 (2) TMI 224
Penalty under rule 15 of CCR, 2004 or Rule 26 of Central Excise Rules, 2002 - Held that:- As it is not in dispute that the appellant issued CENVATable invoices without supply of the materials specifically described in such invoices, their conduct would attract sub-rule (2) of Rule 26 of the Central Excise Rules, 2002. This provision had come into force w.e.f. 01/03/2007. The above offence was committed by the appellant in April 2007. The Department could very well have invoked Rule 26(2) to penalize the offender.However, they chose Rule 15 of the CCR, 2004. As the party, in their reply to the show-cause notice, did not claim inapplicability of Rule 15 and, in such circumstances, it did not occur to the Department that a corrigendum should be issued to correct the legal error. It appears, it was before the Commissioner(Appeals) that the party, for the first time, took the contention that Rule 15 ibid was not applicable. This contention is being reiterated before the Tribunal. Thus on the facts of this case, it cannot be gainsaid that Rule 15 is not applicable and, therefore, the penalty imposed thereunder is liable to be set aside, and it is ordered accordingly. In the result, the appeal succeeds. Mistake of fact cannot be rectified at later stage whereas a mistake of law is rectifiable subject, of course, to legal constraints. In the present case SCN was issued to the appellant for the sole purpose of penalizing them for the offence alleged therein. It alleged the facts correctly but invoked the law wrongly. There being no period of limitation for an action for penalty, the Department could have issued a corrigendum to the show-cause notice. But such corrigendum should have been issued before adjudication of the show-cause notice. The Department cannot be permitted to issue such corrigendum or to issue a fresh show-cause notice after adjudication of the case for, to allow them to do so would amount to multiplicity of proceedings.
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2013 (2) TMI 223
CENVAT credit on MS plates and angles - denial of claim as appellant failed to prove that the above goods were used as components/spares/accessories of any goods - Held that:- The claim of the appellant is that MS plates and angles were used to make cable trays/electrical trenches which are claimed to be capital goods falling under Rule 2(a)(A) of the CCR 2004. Neither the drawings nor the Chartered Engineer's certificate can be accepted as a substitute for evidence of the manner of actual use of the materials. The drawings are not dated, while the Chartered Engineer's certificate was issued on 04/10/2010. Neither of these documents can be said to have proved the manner of use of the plates and angles. Therefore, unable to interfere with the view of lower authorities that the assessee failed to prove that the plates and angles were used as components/spares/accessories of capital goods classifiable under Rule 2(a)(A) of the CCR 2004 - against assessee.
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2013 (2) TMI 222
Non preparation of separate accounts been maintained in respect of inputs or input services - demand to pay 10% of the price (excluding taxes) of the goods cleared to the SEZ developer - Held that:- As decided in Sujana Metal Products Ltd. Vs. CCE, Hyderabad [2011 (9) TMI 724 - CESTAT, BANGALORE] supplies to SEZ from DTA units were exports and hence not to be considered as exempted goods for purposes of Rule 6 of the CCR 2004. The appellant cannot be required to honour the impugned demand as they were clearing only dutiable products to the DTA and hence there was no question of maintenance of separate accounts in respect of inputs or input services and no question of applicability of Rule 6(3) of the CCR 2004 - appeal of assessee allowed.
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2013 (2) TMI 221
CENVAT credit of service tax utilized for the payment of Central Excise duty at the time of clearance and manufacture of excisable goods - pre-deposit of amount with interest and penalty - Held that:- As relying upon the Circular issued by DG Audit vide F.No. 381/23/2010/862 dated 30.03.2010 wherein it has been clearly held that once the credit is admissible and taken it forms part of a common pool and a manufacturer who is paying excise duty on the goods manufactured and also is a service tax assessee liable to pay service tax, can utilize the credit available for payment of service tax or excise duty according to this convenience - pre-deposit of dues are waived - stay granted.
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CST, VAT & Sales Tax
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2013 (2) TMI 247
Entry tax levied - petitioner moved an application for settlement before the respondent No.3 which is stated to be pending, but a recovery has been directed against the petitioner - Held that:- The petitioner has already approached to the Settlement Authority under Section 24-B and as per the procedure prescribed under Section 24-C, the Authority has to decide the matter in accordance with law. Section 24-(8) {Sic 24-C(8)} provided that after settlement of the dispute no penal action shall be initiated against the assessee under any Act administered by the Department after an order of settlement has been passed under this Section. Meaning thereby that a protection is provided to the assessee who had moved an application before the settlement Authority to settle the cases under Section 24-B of the Act. Thus it is appropriate to dispose of this matter as the settlement Authority shall expedite the matter and make an endeavour to decide/settle all the matters expeditiously as far as possible within a period of 6 months from the date of this order but not later than 30th June, 2012. And till the matters are settled by the Authority, no coercive action shall be taken against the petitioner in respect of dues for the assessment years 2003-04 to 2006-07. However, any amount which is not disputed by the petitioner shall be deposited by the petitioner as per provisions as contained under Section 24-B and 24-C within a period of 30 days from today. The settlement Authority shall communicate its final order to the petitioner for its compliance by the petitioner in accordance with law.
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Wealth tax
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2013 (2) TMI 248
Exemption from wealth tax - property used by Director, Manager and Secretary as residential accommodation – Allotted the premises at Door No.20 to the Managing Director for being used as residence – Held that:- A careful reading of the provisions in Section 40(3)(iv b) of the Finance Act would show that the question of holding more than one per cent of equity share for claiming the benefit would arise only in case of an employee of the assessee and not the Director, Manager or the Secretary as the case may be - The second portion of the holding not not less than one per cent of the equity share of the assessee would be applicable only in case of employees of the assessee and not the Director, Manager or the Secretary - even the Manager or Secretary do not hold any share, nevertheless the assessee would be entitled to exemption - Against the Revenue. Wealth tax - inclusion of leased out property into Net Wealth - Assessee, apart from doing printing business, is also doing the business of leasing out the properties – Leased out two properties – Held that:- claim of exemption must be with reference to the nature of the premises – Assessee are doing business in leasing as well and in the course of such business, they have leased out the premises – leasing out the premises owned by a company is part of the company's business and therefore, the asset itself having been commercially exploited – Not includable in the net wealth, - Assessee is entitled to exemption – Against the Revenue
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