Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 2, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Notice issued for reopening of assessment is bad in law as it does not even carry a whisper that there has been a failure on the part of the assessee to fully and truly disclose all material facts - HC
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Payment of liquidated damages - Capital or Revenue in nature - the claim of assessee on liquidated damages deducted under the agreed condition of the contract is allowable u/s 37(1) - AT
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Provision for retirement gratuity written back already stood allowed - unilateral act of the assessee in writing back would not be treated as remission or cessation of the trading liability - HC
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Veracity of appeal by revenue - Instruction issued by the CBDT are applicable for the pending cases also - monetary tax limit for not filing the appeal before the ITAT is Rs. 3.00 lakhs - AT
Customs
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Refund of the excess anti-dumping duty - denial as refund claim as pre-mature - The payment of provisional anti-dumping duty is subject to the finalization of the anti-dumping duty and refund becomes automatic after the final notification is issued. - HC
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Recovery towards the duty drawback and a fiscal penalty of Rs.5 lakhs on the Director - The manner in which both the authorities have dealt with the case is thoroughly unsatisfactory, there being an apparent violation of the principles of natural justice. - HC
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Notification 21/2002 – import duty on tags, labels, stickers, belts, buttons or hangers - Benefit of notification cannot be declined to the assessee merely because import was button in parts and not in made up form - HC
Corporate Law
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Scheme of amalgamation - whether a Company Judge was competent enough to direct Central Government to carry on investigation and that too, by a named agency? - direction for continuation of the proceeding for investigation upheld - but free to choose the agency - HC
Indian Laws
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Adjournment - Repeated Adjournments - faith and hope of the people in the constitutional system. - Delay gradually declines the citizenry faith in the system. It is the faith and faith alone that keeps the system alive. It provides oxygen constantly. - SC
Service Tax
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Valuation – Providing study materials, test papers etc. is a part of coaching services and is required to be included in the value. - AT
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Recovery proceedings against a deceased assessee – demand confirmed on the basis of aforesaid SCN cannot be sustained. - AT
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Denial of refund claim – Although the appellant paid the service tax to the department by calculating the instalment as cum-service tax, but it does mean that they have collected / included the service tax amount in their instalment. - AT
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Activity of technical testing of the LPG tankers - technical inspection and testing under the Indian Explosive Act, 1884 is a statutory obligation, therefore the same is not liable to service tax - AT
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Business Auxiliary Services – Assessee received sum in respect of services rendered for registration of vehicle with the RTO authorities. – Liable for Service tax under the BAS. - AT
Central Excise
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Section 11A(2B) – In the instant case escape of duty was not intentional or there was a reason of deception – No penalty shall be levied - HC
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Whether education cess and higher education cess paid through PLA is refundable in terms of Notification No. 56/2002-C.E - Unit is located J&K - held No - AT
Case Laws:
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Income Tax
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2013 (2) TMI 29
Canceling registration granted to the assessee u/s 12AA - the activities of the assessee do not qualify to fall within the meaning of charitable purpose as per proviso to section 2(15) inserted with effect from 1.4.2009 - Held that:- Such an objection cannot be the basis of invoke section 12AA(3) so as to cancel the registration already granted to the assessee under section 12A. Registration already granted to the assessee could not have been re-visited by the Commissioner on the basis of the reasoning aforesaid, since his power to cancel registration under section 12AA(3) was confined to the examination as to whether the activities of the assessee society/association are genuine or that the same are not being carried out in accordance with the stated objects. In the light of the discussion emerging form the order of the Commissioner action taken by the Commissioner does not fall within the parameters of section 12AA(3) and, therefore, the impugned order is bad in law - in favour of assessee.
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2013 (2) TMI 22
Undisclosed income from proprietorship concern - ITAT deleted the addition - assessment made under Section 158BC - Held that:- CIT (Appeals) had found as a fact that from the assessment year 1997-98 it was the assessee's wife Mrs. Pallavi Sood who was the owner of M/s Trans World International. It was on that basis that she had filed the return of income and the finding of the CIT (Appeals) was also accepted by the Revenue. The finding of fact has not been challenged in this court as perverse. It seems that the Revenue, having accepted the finding in the assessee's wife's case, cannot take a different view in the assessment of the husband. That would amount to taking contradictory or inconsistent stands without any just cause. Therefore, no infirmity or error of law in the decision of the Tribunal. Its order does not give rise to any substantial question of law as it is based on not only the findings of fact but also on the Revenue's own conduct - against revenue.
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2013 (2) TMI 21
Unexplained investment - claim of the Revenue is based upon the paper recovered during survey - ITAT deleted the addition - Held that:- Tribunal has returned a finding that the said document does not show anything and it is very difficult to say that the document represents certain loans given by the assessee to various persons. Also that after discovery of the document during survey, the Revenue should have either obtained further information or in any case should have conducted more enquiries to prove the contents of the document and that without such enquiry or any material on record, it is not possible to return a finding that the figures are in terms of lakhs and lead to addition to income. No substantial question of law arises for consideration of this court.
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2013 (2) TMI 20
Reopening of assessment - disallowance u/s 80-IC could not be made as the conditions as laid down in that section are not fulfilled - Held that:- Notice issued for reopening of assessment is bad in law in this case as the impugned reasons behind the notice dated 28.03.2012 issued after four years from the end of the relevant assessment year as it does not even carry a whisper that there has been a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment. Even the order rejecting the objections does not indicate as to what material fact has not been disclosed by the assessee - writ petition allowed - in favour of assessee.
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2013 (2) TMI 19
Disallowance of liquidated damages - CIT(A) held the amount as capital expenditure not allowable u/s 37 - Held that:- The assessee company has been incorporated to carry out business of supply of various electrical and optical connectivity equipment and the liquidated damages claimed by the assessee were incurred under contract with the purchasers of these equipments. Thus as per condition no. 0702(a) of the contract, the assessee supplier (seller) company was under obligation to deliver the ordered goods to the Railway company and other public sector undertaking enterprises (purchasers) within the period fixed for delivery in the contract and in case the assessee supplier(seller) company failed to deliver the ordered goods to purchaser enterprise within the period fixed for delivery in the contract, then liquidated damage @2% of the price of stores was to be recovered from the assessee supplier company by the purchaser Railway company. In this condition, it is specifically mentioned that the payment of liquidated damages would not be considered as penalty. Thus respectfully following the judgment of Commissioner of Income Tax, Pune vs R.D. Sharma and Co.(1982 (3) TMI 52 - BOMBAY HIGH COURT) wherein held that the delay in completion of contract is incidental to the business and liability of compensation arising because of delay is an allowable deduction under the Act. In the case in hand, admittedly, the assessee company claimed liquidated damages paid to the Railway department and other government undertaking enterprises as per contract and due to the delay in completion of supply contract. Therefore, this is an allowable expenditure and the authorities below were not justified in disallowing the same - findings of the CIT(A) that the payment of liquidated damages was capital in nature is not sustainable and deserves to be set aside. Thus the claim of the assessee company for liquidated damages is allowable u/s 37(1) of but the calculation of deduction has to be done by the AO because he has observed that the copies of the contract with M/s Bharat Electronics Ltd., Ghaziabad, Panchkula and Bangalore have not been furnished before him and the details furnished by the assessee before the Assessing Officer for the claim of liquidated damages was at much more percentage than prescribed in the contract - thus the claim of assessee on liquidated damages deducted under the agreed condition of the contract as allowable u/s 37(1) subject to the verification of actual claim by the AO - restore the issue of calculation of allowable amount to the file of AO.
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2013 (2) TMI 18
Jurisdiction u/s 263 assumed by CIT(A) - assessment finalized u/s 143(3) - payments made to related parties u/s 40A(2)(b) by the assessee has been allowed by AO without checking the reasonableness of expenditure and without investigation/verifying any evidence for actual rendering of services - Held that:- AO had completed assessment u/s 143(3) and vide questionnaire seeking detail of commission and syndication fee with nature of services rendered and assessee do replied to that query explaining Rs.57,36,986/- which was part of earlier year expenditure of Rs.95 lakhs. As from the reading of questionnaire it can be concluded that AO wanted to know about commission and syndication fees only which he might have noted from computation of income wherein the assessee had claimed deduction a sum of Rs.57,36,986/- being out of earlier year expenses. AO did not enquire about the guarantee fees paid to M/s Religare Holding Ltd. and M/s Oscar Investment Ltd. and neither the assessee explained it. The contention of Assessee that adequate enquiry was conducted by the AO during course of original assessment proceedings is not correct. Though break up of expenses of finance charges and syndication fees was available with the AO yet he did not raise any question regarding the reasonability and genuineness of expenses. The written submissions filed before AO on dated 20.12.2007 & 21.6.2008 & 29.8.2008 does not anywhere deal with the payments of guarantee fee amounting to Rs.33,06,000/- & Rs.77,14,000/- - Observations of CIT that assessment order was erroneous and prejudicial to the interest of revenue is correct & had rightly initiated proceedings u/s 263 but the action of the CIT in not considering the merits of objections raised by assessee and just remitting back to AO for re-adjudication was not appropriate. Thus remit the file back to the office of CIT for adjudication and recording his findings on the objections to show cause notice which were filed by assessee vide letter dated 11.1.2010.
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2013 (2) TMI 17
Provision for retirement gratuity written back already stood allowed - Revenue invoked provisions of section 41(1) - Held that:- As decided in CIT Versus Sugauli Sugar Works Pvt. Limited [1999 (2) TMI 5 - SUPREME COURT] the obtaining by the assessee of a benefit by virtue of mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the Department to say that s.41 would apply and the amount should be included in the total income of the assessee. Thus unilateral act of the assessee in the present case in writing back the amount of gratuity of Rs. 32,39,929/- which was allowed as expenditure in the Assessment Year 1972-73 would not be treated as remission or cessation of the trading liability so as to attract the provisions of Section 41(1) and the principles laid in the case Sugauli Sugar Works (P.) Ltd. (supra) are squarely applicable - against revenue.
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2013 (2) TMI 16
Jurisdiction power u/s 263 by CIT(A) - exemption u/s. 10(38) on LTCG on transfer of equity shares of companies and units of equity oriented mutual funds - AO had omitted to examine the dates of acquisition of these shares and units - No evidence for receipt of dividends such as dividend warrants - AO ignored the provisions of Sec 14A - Held that:- Perusal of the assessment order passed by AO does not show any application of mind on his part. The evidence available on record is not enough to hold that the return of the assessee was objectively examined or considered by the AO as an order becomes erroneous because inquiries, which ought to have been made on the facts of the case, were not made and not because there is anything wrong with the order if all the facts stated or the claims made in the return are assumed to be correct. Thus, it is mere failure on the part of the Assessing Officer to make the necessary inquiries or to examine the claim made by the assessee in accordance with law, which renders the resultant order erroneous and prejudicial to the interest of the revenue. Nothing more is required to be established in such a case. Adverting to the facts of the present case, there is no enquiry by the AO as he just accepted the claim of set off of earlier year unabsorbed depreciation in the assessment year under consideration. The argument of the assessee that there are decisions in favour of the assessee. Therefore, the view adopted by the AO is one of the possible views. The general law on the question of revisional jurisdiction is that an order passed by the AO cannot be held to be erroneous, if the AO has followed one of the possible views on the subject. But in this case the AO not adopted any view on the issue raised by the CIT. Further, the assessee's counsel harped upon that the bonus shares of 56,400 were allotted to the assessee in relation to original equity shares of 28,200 and 14,408 bonus shares were allotted with regard to original shares held by the assessee at 8,209. In support of this, the assessee filed a letter dated 27th November, 2012 from Megasoft Ltd., Chennai. Carefully going through the arguments as well as contents of the letter from Megasoft Ltd. & comparing this letter with the Demat account it is noticed that as on 14th August, 2000 the assessee is holding only 8,209 shares. Consequent to this on 21st September, 2000 the assessee got bonus offer at 16,418 shares. Thus, the total balance on this date is at 24,627 shares. Later, on 27th September, 2000 there was an entry by transaction No. 3238 with narration "by transaction No. 3238 by corporation action" at 56,400 shares. It is to be noted herein that there is no mention of anything about bonus offer or mention of any original shares in relation to which 56,400 shares were allotted. The argument of the assessee's counsel is totally misleading and faraway from truth. Being so, not in a position to give any credit to the letter filed by the assessee from Megasoft Ltd., as the Demat account having no mention about the original shares of 28,200 against which purported to be bonus shares were allotted. On this issue, we have no hesitation to confirm the order of the CIT who has taken great pain in bringing the various true facts related with this issue. Regarding the other issue, the CIT has only given the direction to the AO to enquire and redo the assessment in accordance with law. No infirmity in the order of the CIT passed u/s. 263 and the same is confirmed - against assessee.
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2013 (2) TMI 15
Deduction u/s 80-IA on the profits derived from the business of windmill - AO computed the deduction u/s 80-IA after reducing the notional brought forward losses and depreciation of windmill unit - what would be the initial A.Y for the purposes of Section 80IA(5)? - Held that:- As decided in Serum International Ltd. Vs. Addl. CIT Range 6, Pune 2013 (1) TMI 688 - ITAT PUNE] after following the decision of Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT [2010 (3) TMI 860 - MADRAS HIGH COURT] that loss in the year earlier to the initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided in section 80-IA(5). When the assessee exercises the option, only the losses of the years beginning from the initial A.Y. are to be brought forward and not the losses of the earlier years which have been already set off against the income of the assessee. As DR has not brought to the notice of the Bench any decision contrary on the issue in question it is to be held that the assessee is eligible for claim of deduction u/s 80-IA for the year under consideration in a manner whereby the initial assessment year referred to in section 80-IA(5) is to be taken as the A.Y. 2006-07 and not the A.Y. 2001-02 as canvassed by the Revenue as the assessee has opted to claim this deduction only in this assessment year. Resultantly,set aside the order of the CIT(A) and direct the AO to recompute and allow the deduction to the assessee u/s 80-IA - in favour of assessee. Disallowance invoking section 40(a)(ia) - interest payment liable for deduction of tax at source u/s 194A - plea of assessee that the amount has been actually paid before 31-3-2006 and nothing was outstanding - Held that:- Sec. 40(a)(ia) mandates that the expenditure specified therein shall not be allowed as deduction in cases where the tax deductible at source as per Chapter XVII-B of the Act on such payment, has not been deducted by the assessee or after deduction has not been paid within the period prescribed. The case made out by the assessee is that sec. 40(a)(ia) refers to “amounts payable” and not to amount actually paid during the year. As the amount in question is not outstanding as on 31-3-2006 and therefore, even if the requisite tax has not been deducted at source on such payments such expenditure could not be disallowed u/s 40(a)(ia) as the amounts have been actually paid. Also see Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - in favour of assessee. Addition of process loss - invoking section 145(3) and rejecting the book results declared - Held that:- It is not in dispute that the loses occured due to storage, transit, handing and processing. Merely because the records are not maintained to show the quantity loss at each of the above stages, the same cannot by itself be fatal to say that the accounts of the assessee are unreliable. Pertinently, there is no evidence to suggest that there has been any unaccounted production or that there has been any transaction either of purchase or sale outside the account books. Also the assessee's product is subject to the levy of excise and before the CIT(A), the assessee had asserted that its account books have been subject to audit wherein no discrepancy has been found. The ratio of Bastiram Narayandas Maheshwari (1993 (12) TMI 31 - BOMBAY HIGH COURT) as relied by Revenue to make additions will not be applicale as in the present case, there is no dispute to the position that the accounts of the assessee clearly bring out the difference in the input quantity of raw material and output quantity of finished product therefore - against Revenue. Disallowance of job work charges, rent and hire charges, repairs and maintenance, labour welfare and office expenses - claimed expenses were not fully vouched and some of repairs and maintenance expenditure was of capital in nature - Held that:- As it is evident that the AO made a generalized observation and has not referred to any particular expense or vouchers to indicate the discrepancy stated by him. It is also evident that no particular expenditure out of repairs and maintenance is sought to be pointed out as capital in nature. Thus AO was not justified in making disallowance - CIT(A) has restricted the disallowance to Rs.50,000/- as against Rs.7,00,000/. which is affirmed as the assessee has not agitated the same - against revenue.
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2013 (2) TMI 14
Addition u/s 40(a)(ia) - TDS on reimbursement of expense – Held that:- It is not disputed that M/s Mercator Lines Limited had deducted TDS on salaries paid by it on behalf of assessee. Under such circumstances assessee was not required to deduct TDS on reimbursement being made by it to M/s Mercator Lines Limited. Also following the decision in case of Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) that no amount remained payable at the year-end, provisions of section 40(a)(ia) are not applicable – In favour of assessee Deemed income from sale of books - Disallowance of technical books written off – Assessee claimed short term capital loss on the technical books - no sale proceeds had been shown by the assessee – Held that:- The AO was not justified in making addition on account of deemed income from sale of books without any adverse material evidence on record and without rejecting the books of account. And also the short term capital loss claimed u/s 50 was justified, does not appear to be correct. AY 2008-09 also the issue regarding depreciation is in dispute before the Tribunal. To decide the issue taking into consideration for AY 2008-09 - Remand back to A.O.
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2013 (2) TMI 13
Veracity of appeal by revenue - Appeal filed by the Revenue for A.Y. 2002-03 - Tax effect in this appeal is less than the amount prescribed by the CBDT - Instruction No.3 of 2011, dated 09.02.2011 – Section 268A has been inserted by the Finance Act, 2008 with retrospective effect from 01/04/99 - Held that:- Following the decision in case of Oscar Laboratories Pvt. Ltd. (2009 (2) TMI 28 - PUNJAB AND HARYANA HIGH COURT) that the instructions issued in the Circulars by CBDT are applicable for pending cases also. Therefore, by keeping in view the ratio laid down in the aforesaid referred to cases, we are of the considered view that Instruction No.3/11, dated 09.02.2011 issued by the CBDT are applicable for the pending cases also and in the said instructions, monetary tax limit for not filing the appeal before the ITAT is Rs. 3.00 lakhs – Against revenue
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2013 (2) TMI 12
Admission of additional evidences - Principles of natural justice – Method of accounting - Revenue opposed the said admission and mentioned that these papers were actually available with the assessee at the relevant point of time but the same were not filed for the reasons better known to the assessee - Assessee follows the ‘mercantile system of accounting’ – In audit report u/s 44AB assessee follows the ‘cash system of accounting’ - whether the assessee follows mercantile system of accounting or not and whether the assessee received the services from Shri Dharmesh Sheth to become for such payments – Held that:- By considering the ‘principles of natural justice’ for verifying the genuineness of these documents as well as the contents mentioned therein, these documents must be remanded to the files of AO for examination and their use in deciding the relevant issues raised – In favour of assessee Disallowance u/s 40(a)(ia) – TDS - Amounts “payable” and to the sums already “paid” during the financial year - Held that:- Following the decision in case of Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) that payments if made by the assessee before the end of the Financial Year, the same should not be disallowed invoking the provisions of section 40(a)(ia) of the Act merely for want of not making of TDS – In favour of assessee
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Customs
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2013 (2) TMI 11
Acquitted of the charges under Narcotics Drugs and Psychotropic Substances Act, 1985 (NDPS Act) - non-compliance of Section 50 of the NDPS Act, possession of alleged contraband being not in a conscious possession and that the case property was not secured properly by the prosecution - whether the prosecution has been able to prove that the contraband recovered was kept in a safe custody and the same was not tampered with - Held that:- While the Investigating Officer was exhibiting the case property the learned defence counsel demonstrated that the steel container could be removed from the cloth pullanda without tampering with the seals on the paper slips and at the bottom. It is thus apparent that the case property was not secured properly and without tampering with the seals on the paper slip the case property could be removed from the cloth pulanda after opening the stitches. In a case of recovery of narcotic drug it is the paramount duty of the prosecution to prove beyond reasonable doubt that the case property allegedly recovered from the accused was kept in safe custody and no tampering was done therewith. Where the case property can easily be removed without tampering with the seals, the sacrosanct onus cast on the prosecution has not been discharged. Thus the learned Trial court committed no error in coming to the conclusion that the case property had not been secured properly. It is evident from the statement of the Respondent that he was given the two suit cases by Sukhjinder Singh a US citizen, known to the Respondent's family at the departure. Further the cross-examination of PW9 on this point is also relevant wherein the Investigating Officer admitted the suggestion that he did not verify the foreign address of the recipient of the bag at USA since he believed the statement of the accused recorded under Section 67 of the NDPS Act to the effect that the said bags were handed over to him by Sukhjinder Singh for delivery at USA and he was not aware of the contents of the same. Once the Investigating Officer was satisfied that the Respondent was not in the conscious possession of the contraband he ought to have made investigations qua Sukhjinder Singh. However, in this regard the Investigating Officer himself stated that he made no interrogation from Sukhjinder Singh nor tried to trace him. The case of prosecution in the present case is based only on the testimony of PW9 as the two panch witnesses PW3 Ashit Roy and PW12 and Himanshu have turned hostile. No doubt, conviction can be based solely on the testimony of the Investigating Officer as regards the recovery however, in the present case the testimony of PW9 the Investigating Officer is full of blemishes. Further PW11 in his examination-in-chief states that only Shri Serge Dhaliwal @ Sunny offered in the absence of the Respondent to carry one suit case of his grand daughter in case she had any excess baggage to take in flight to USA on 24th May, 2009. In any case PW11 had handed over only one bag and the second bag was of Mr. Sukhjinder Singh. In view of the deficiencies in the investigation carried out, not a fit case to convict the Respondent even for the possession of 81.1 grams of morphine. The Trial Court rightly did not raise the presumption under Sections 35 and 54 of the NDPS Act in view of the fact that the prosecution has failed to discharge its initial burden where after the presumption could be raised against the Respondent.
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2013 (2) TMI 4
Notification 21/2002 – Granting exemption from import duty on tags, labels, stickers, belts, buttons or hangers imported by bonafide exporters – Whether assessee is entitled to duty exemption on import of parts of buttons used for making garments for export – Assessee not imported the buttons in full but imported only parts of buttons – Held that:- Buttons, when fixed on the garment turn to be full – Benefit of notification cannot be declined to the assessee merely because import was button in parts and not in made up form – Decided against the revenue.
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Corporate Laws
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2013 (2) TMI 28
Domestic factoring facilities - petitioner No.1 is the borrower, respondent is the ‘Factor' and M/s Liverpool Retail India Limited are the purchasers - petitioners were granted domestic factoring facilities by the respondent to the tune of Rs. 2,00,00,000/- with the condition of maximum pre-payment of 80% - petitioner gave the cheques of security amounting to Rs. 2,00,00,000/- without date towards guarantee as guarantee of Liverpool Retail India Limited who too issued the cheques for the said amount which got dishonoured for insufficient funds - complaint u/s 138 of the Negotiable Instruments Act - Held that:- As per Clause 9.1 of the Agreement entered between the parties in case the said cheques were ever dishonoured, the respondent was given the right to proceed under Section 138 of the Negotiable Instrument Act. As per Clause 2 of the Undertaking, the respondent did not issue a notice of demand before filing the complaint is in itself not sufficient to exercise the jurisdiction under Section 482 Cr.P.C for quashing of the complaint, in as much as, all the ingredients of Section 138 of the Negotiable Instrument Act are satisfied. Para 10 of the complaint specifically states that vide legal notice dated 07.07.2010, the complainant company through their counsel called upon the accused persons to make the payment of the amount covered by the dishonoured cheques. The said notice was sent to the accused persons through Regd. A.D. The postal authorities have delivered the notice sent to the accused person through Regd. A.D. In view of the above discussion, it is not a fit case for exercising the jurisdiction under Section 482 Cr.P.C for quashing of the complaint.
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2013 (2) TMI 10
Scheme of amalgamation - whether a Company Judge was not competent enough to direct Central Government to carry on investigation and that too, by a named agency? - Learned Judge directed payment of cost of rupees seventeen thousand - Held that:- From the orders discussed it is found that the matter appeared from time to time before the single Judge on various occasions when Central Government did appear and object to the said petition being allowed. Appeal being a continuation of the original proceeding, was also unsuccessful and the Central Government was dragged to the Court of appeal. Taking a sum total of the situation, His Lordship directed payment of cost of rupees seventeen thousand.Thus the cost of rupees seventeen thousand would be paid within two weeks from date. Rupees eight thousand five hundred should be paid to the Central Government whereas the balance sum of rupees eight thousand five hundred be paid to the State Legal Service Authority, West Bengal. As at the admission stage the order of restraint stayed subject to the assurance of the appellants that they would not suppress the orders of this Court passed in these proceedings in case any subsequent scheme was brought. The order of restraint passed by His Lordship restraining the appellants from moving an identical application for five years, is set aside. The appellants would however be obliged to state in detail, the sequence of events resulting in disposal of this appeal and would annex all orders in the present proceeding passed by the learned single Judge as well as by the Division Bench from time to time. The Central Government’s objection was consistent. The Central Government made queries. They did have the expertise to verify answer to such query. They were within their right to insist upon clarification being made on the issues raised by them. It is true, the Court should either allow a scheme of amalgamation or reject the same, if not satisfied. Such question however, may not be germane herein as the appellants did not proceed further. They withdrew the scheme. The learned Judge directed investigation at a stage as when the appellants were proceeding with their scheme. Thus once the investigation was directed that must come to a logical conclusion. The direction for continuation of the proceeding for investigation is upheld to the extent, Central Government would be free to choose the agency through whom they would carry on such investigation and would be free to take any step as it may be found appropriate in this regard. The direction for continuation of such investigation must be treated as a declaration under Section 237(a)(ii) of the Companies Act 1956 and not a mandate upon the Central Government to carry on such investigation.
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Service Tax
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2013 (2) TMI 25
Stay Petition - Rent-a-Cab service - Held that:- Following the decision in case of Deepak Transport Bus Service (2012 (6) TMI 390 - CESTAT, MUMBAI) direct the petitioner to deposit 50% of demand as pre-deposit.
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2013 (2) TMI 24
Service tax on commission received from General Insurance Company Ltd. - respondent works as a licensed agent - Held that:- The provisions of Rule 2(1)(d)(ii) of the Service Tax Rules, 1994 clearly casts responsibility on the insurance company to discharge the service tax liability on the commission paid by them to their licensed agent. As in the current case, that defence is enough for the respondent herein to state that the amount received by them from M/s. IFFCO-TOKIO General Insurance Company Ltd. has already been taxed by the government in the hands of the insurance company FAA was correct in allowing the appeal filed by the respondent.
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2013 (2) TMI 23
Delay in filing refund claim - refund under Notification No. 15/2009 dated 20.5.2009 refund should be filed within six months from the date of actual payment of service tax - Held that:- The adjudicating authority as well as the FAA has not considered the representation made by the appellant along with the reply to the show cause notice which specifically states that due to the distance between their head office and the factory premises, this information was not captured in the general accounts of the appellant. As this letter should have been considered by the lower authorities in its proper perspective and a view should have been taken it was ignored. Therefore, both the lower authorities should be given a chance to reconsider the issue - See APK Identification vs. CCE Noida [2012 (5) TMI 46 - CESTAT, NEW DELHI] remit the matter back to the adjudicating authority to reconsider the issue afresh.
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2013 (2) TMI 6
Penalty u/s 76, 77 and 78 – Assessee is providing services of collection of bill amount, customer care services etc. on behalf of M/s TTSL for which getting commission – Applied for Service Tax Reg. No. – But not paid Service Tax – Non-payment was detected by officers and determined service Tax liability – Assessee discharged the liability along with interest – Subsequently department issued a show cause notice confirming the tax liability and interest and also imposing penalty u/s 76, 77 and 78 of FA. 1994 – Held that:-– Since non-payment was due to their ignorance of law, this is a fit case for for invoking Section 80 of the Finance Act, 1994. Though the appellant have not disputed their service tax liability, it would not be correct to impose penalty under Sections 76 and 78, as this is possible that the total turnover of their taxable services in respect of customer care may be within the exemption limit – Penalty imposed was set aside – In favour of the assessee.
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2013 (2) TMI 5
Business Auxiliary Services – Incentive/commission received from Bank/Financial Instituition should be treated as Business Auxiliary Services or not – Assessee is a dealer of motor vehicle and claims to have provided some space in their premises to the bank/financial institution – Received amount from the bank and recorded the same as incentive received – Held that:-Amounts received from the bank/financial institution have been recorded as incentive. Therefore, the claim that it was towards providing office space along with furniture is not substantiated. Prima facie, the applicant has sponsored the services provided by the bank/financial institution and received commission/incentive for their activities – Liable for Service tax under the BAS – Against the assessee. Assessee received sum in respect of services rendered for registration of vehicle with the RTO authorities. – Liable for Service tax under the BAS. – Against the assessee.
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Central Excise
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2013 (2) TMI 9
Cenvat credit availed fraudulently on the strength of 23 invoices issued without the physical receipts on goods mentioned therein - assessee seeking waiver of pre-deposit on duty, interest or penalty - Held that:- Evidence on record indicates the likelihood of the allegations of the duty evasion being upheld and if there is slightest risk to the Revenue, the dispensation from the provisions of Section 35F should not be given. A perusal of order passed by the CIT reveals that each of the arguments, as is sought to be raised before this Court, has been examined in detail by the Commissioner of Income Tax. At the stage of waiver such findings cannot be brushed aside only for the reason that the show cause notice issued to supplier is still pending adjudication. The finding recorded against the appellants is of availing cenvet credit without physical receipt of the goods. Such allegation of fraud does not call for any indulgence at this stage from this court - against assessee.
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2013 (2) TMI 8
Cenvat credit - capital goods which are cleared as waste and scrap - Held that:- FAA was correct in coming to the conclusion that the issue is no more res-integra in as much as that the division bench of the Tribunal in the assessee's own case [2010 (8) TMI 274 - CESTAT, AHMEDABAD] wherein held waste and scrap of metal generated out of dismantling of machinery are due to wear and tare of machine parts cannot be treated as excisable goods leviable to duty as waste and scrap as defined in note 8(A) of Section 15 of CETA 1985 - Tribunal had taken a view that scrap which is generated from capital goods is not covered by this definition as held in the favour of the assessee.
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2013 (2) TMI 7
Cenvat credit on HR Coils, MS Plates, Channels, HR Plates denied - Held that:- As there was no allegation that the storage tanks which were fabricated out of these inputs were embedded to the earth the factual findings of the FAA are not disputed in the grounds of appeal anywhere nor is there any allegation in the show cause notice thus eligible to avail cenvat credit, as decided in cases Ispat Industries Limited case [2005 (9) TMI 171 - CESTAT, MUMBAI], KCP LTD. [2008 (10) TMI 177 - CESTAT, BANGALORE], SHREE VIRANGANA STEEL LTD[ 2007 (11) TMI 295 - CESTAT, MUMBAI.
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2013 (2) TMI 3
Whether education cess and higher education cess paid through PLA is refundable in terms of Notification No. 56/2002-C.E - Unit is located in the area specified – Assessee is manufacture of transformers - For manufacture of transformers they also make HV/LV Coils - HV/LV Coils used in the repair of transformers – Assessee paying Central Excise duty and to the extent the duty was being paid through PLA, they were getting its refund in terms of Notification No. 56/2002-C.E - Held that:- Following the decision in case of MODI RUBBER LIMITED (1986 (8) TMI 60 - SUPREME COURT OF INDIA) that Notification No. 56/2002-C.E. does not cover the education cess. The Commissioner (Appeals)’s order permitting the benefit exemption under Notification No. 56/2002-C.E. in respect of education cess and Secondary and higher education cess is not correct – In favour of revenue Whether HV/LV Coils are excisable and whether the duty paid on the same is refundable in terms of Notification No. 56/2002-C.E. – Held that:- Following the decision in case of PUNJAB STATE ELECTRICITY BOARD (1994 (12) TMI 181 - CEGAT, NEW DELHI) that HV/LV coils made by assessee would have to be treated as non-excisable. Since no duty was payable in respect of HV/LV Coils, there is no question of extending the benefit of Notification No. 56/2002-C.E – In favour of revenue
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2013 (2) TMI 2
Rebate Claim – Whether rebate sanctioned to the assessee should be credited to their cenvat account– Commissioner (A) allowed a consequential relief against the Orders-in-Original – Thereafter lower adjudicating authority, sanctioned rebate under Rule 18 of CER 2002 read with Section 11AB and CCR 2004 by way of Cenvat credit – Held that:- The C.B.E. & C. vide Circular No. 687/3/2003-CX., dated 3-1-2003, in respect of claims pertaining to refund of duty paid through cenvat account, on export, had clarified that there is no discretion with the sanctioning authority to give the refund of duty paid on goods exported through credit account. Therefore duty paid through the actual credit or deemed credit account on the goods exported MUST BE refunded in cash – Lower Authority was directed to issue cheque/cash without any further delay – In favour of assessee. It was also clarified that interest also should be paid under Section 11BB on this delayed sanction of rebate. In the case of Gujarat Paraffins Pvt. Ltd. v. Joint Secretary, M.F., Govt. of India[2004 (2) TMI 82 - HIGH COURT OF GUJARAT AT AHMEDABAD] it was held that Petitioner is entitled for interest – Therefore assessee is eligible to claim interest on the delayed payments under Section 11BB of the Central Excise for period commencing from the date of expiry of three months from date of making rebate application, till the day the cheque for the amount is issued to – In favour of assessee.
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2013 (2) TMI 1
Classification – whether the waste arisen during the manufacture of Monofilament yarn is to be classified under TSH 5404 10 00 or TSH 39159050 – Assessee were engaged in the manufacture of ‘Synthetic filament yarn’ falling under Chapter Sub-Heading 3916 10 90 and 5404 10 00 of CETA. During the course of manufacture of Monofilament yarn, wastage of Nylon Monofilament yarn generated. Assessee classified such waste under the Tariff sub-heading 5404 10 00 instead of under tariff sub-heading 3915 90 50 – Held that:- In the market parlance assessee’s end product is not known as plastic, but however the Tariff Heading 3915 covers only waste of plastic. Further Chapter 39 does not apply to materials regarded as textile materials of Section XI and the Chapter 54 is also included under Section XI and hence product being textile waste is not classifiable under TH 3915 – Decision of C.C.E., Mumbai-V v. Nirlon Limited [2008 (7) TMI 677 - CESTAT, MUMBAI] applies here wherein revenue was not able to provide evidence regarding classification under sub-heading 3950.90. In U. O. I. v. Plastic Packaging Pvt. Ltd [1995(10)TMI 200 - S.C.]. no specific entry was provided for waste or scrap for the end product of the assessee falling under Tariff Heading 5404 therefore the Department was precluded to bring the waste in question under Tariff Heading 3915. Waste in question would not merit classification under TH 3915 since the assessee’s end product itself is classified under TH 5404 and besides Chapter 54 there was no specific TH to cover the waste, which arises during the manufacture of final product – Therefore waste arisen during the manufacture of Monofilament yarn should be classified under TSH 5404 10 00 – In favour of assessee
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CST, VAT & Sales Tax
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2013 (2) TMI 26
Madhya Pradesh VAT Act, 2002 – Whether WRIT petition is maintainable where the petitioners having efficacious alternative remedy of filing a statutory appeal against the assessment order - This petition was filed within the period of limitation on 16.5.2012 and during the pendency of this petition, the period of filing statutory appeal has expired – Held that:- We are not inclined to entertain this petition and grant liberty to the petitioner to file statutory appeal against the impugned assessment order. The petitioner may also seek indulgence of the appellate authority for waiver of statutory amount, as is required under section 46(5) of the VAT Act. Allow further 15 days time from today to the petitioner to file an appeal and if during the aforesaid period, the appeal is filed, the appellate authority shall entertain the appeal
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Indian Laws
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2013 (2) TMI 27
Adjournment - Repeated Adjournments - faith and hope of the people in the constitutional system. The virtues of adjudication cannot be allowed to be paralyzed by adjournments and non-demonstration of due diligence to deal with the matter. One cannot be oblivious to the feeling necessities of the time. No one can afford to sit in an ivory tower. Neither a Judge nor a lawyer can ignore “the total push and pressure of the cosmos”. It is devastating to expect infinite patience. - Change of attitude is the warrant and command of the day. We may recall with profit what Justice Cardozo had said: - “It is true, I think, today in every department of law that the social value of a rule has become a test of growing power and importance”. In a democratic set up, intrinsic and embedded faith in the adjudicatory system is of seminal and pivotal concern. Delay gradually declines the citizenry faith in the system. It is the faith and faith alone that keeps the system alive. It provides oxygen constantly. Fragmentation of faith has the effect-potentiality to bring in a state of cataclysm where justice may become a casuality. A litigant expects a reasoned verdict from a temperate Judge but does not intend to and, rightly so, to guillotine much of time at the altar of reasons. Timely delivery of justice keeps the faith ingrained and establishes the sustained stability. Access to speedy justice is regarded as a human right which is deeply rooted in the foundational concept of democracy and such a right is not only the creation of law but also a natural right. This right can be fully ripened by the requisite commitment of all concerned with the system. It cannot be regarded as a facet of Utopianism because such a thought is likely to make the right a mirage losing the centrality of purpose. Therefore, whoever has a role to play in the justice dispensation system cannot be allowed to remotely conceive of a casual approach. It is the duty of the counsel as the officer of the court to assist the court in a properly prepared manner and not to seek unnecessary adjournments. Getting an adjournment is neither an art nor science. It has never been appreciated by the courts. All who are involved in the justice dispensation system, which includes the Judges, the lawyers, the judicial officers who work in courts, the law officers of the State, the Registry and the litigants, have to show dedicated diligence so that a controversy is put to rest. Shifting the blame is not the cure. Acceptance of responsibility and dealing with it like a captain in the frontier is the necessity of the time. It is worthy to state that diligence brings satisfaction. There has to be strong resolve in the mind to carry out the responsibility with devotion. A time has come when all concerned are required to abandon idleness and arouse oneself and see to it that the syndrome of delay does not erode the concept of dispensation of expeditious justice which is the constitutional command. Sagacious acceptance of the deviation and necessitous steps taken for the redressal of the same would be a bright lamp which would gradually become a laser beam. This is the expectation of the collective, and the said expectation has to become a reality. Expectations are not to remain at the stage of hope. They have to be metamorphosed to actuality. Long back, Francis Bacon, in his aphoristic style, had said, “Hope is good breakfast, but it is bad supper”. We say no more on this score. We request the learned Chief Justice of the High Court of Rajasthan as well as the other learned Chief Justices to conceive and adopt a mechanism, regard being had to the priority of cases, to avoid such inordinate delays in matters which can really be dealt with in an expeditious manner. Putting a step forward is a step towards the destination. A sensible individual inspiration and a committed collective endeavour would indubitably help in this regard.
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