TMI Tax Updates - e-Newsletter
February 24, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Stamp papers some suggestions about timely use though they may not have any expiry period ,the limitation is only for claiming refund against unused stamp papers.

   By: DEVKUMAR KOTHARI

2. DE FACTO DOCTRINE.

   By: DR.MARIAPPAN GOVINDARAJAN

3. DVAT for Works Contractors – Jargon Simplified

   By: CA.Ankit Gulgulia

4. TELECOM CONSUMERS COMPLAINT REDRESSAL REGULATIONS, 2012.

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST will bring about a Paradigm Shift in the Arena of Indirect Taxation in the Country; asks CBEC to make extra efforts to meet the Targets Of Indirect Tax Collections for the Current Fiscal : FM.

2. Task Force on an Aadhaar Enabled Unified Payment Infrastructure Submits Report to Finance Minister.

3. Fourth INTOSAI-Doner Steering Committee Meeting begins at Jaipur.

4. Indian Carriers Permitted to import Aviation Turbine Fuel.

Notifications

Central Excise

1. 02/2012 - dated 22-2-2012 - CE (NT)

Amends Notification No.21/2004-Central Excise (N.T.), dated the 6th Sept., 2004.

Customs

2. 13/2012 - dated 22-2-2012 - ADD

Rescinds Notification No. 58/2011-Customs, dated the 8th July, 2011.

DGFT

3. 97 (RE-2010) /2009-2014 - dated 21-2-2012 - FTP

Amendment in Chapter 10 of Schedule 2 of ITC(HS) Classification of Export and Import Items relating to export of Basmati Rice.

Income Tax

4. 10/2012 - dated 21-2-2012 - IT

Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc. - Notified undertakings.

Circulars / Instructions / Orders

Service Tax

1. 152/3/2012 - dated 22-2-2012

Toll in the nature of ‘user charge’ or ‘access fee’ paid by roads users — regarding.

Income Tax

2. 02/2012 - dated 22-2-2012

Section 119 of the Income-tax Act, 1961 - Instructions to subordinate authorities - Condonation of delay in filing return of income under section 119(2)(b) in case of applicants who have made investment in 8% Savings (Taxable) Bonds, 2003 issued by Government of India and opted for scheme of cumulat

Customs

3. 05/2012 - dated 23-2-2012

Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 – regarding.

4. F.No. 528/133/2011-STO (TU) - dated 22-2-2012

Applicability of provisions of the Notifications No. 417 (E) dated 27.05.2011 on Molasses used in Hookah containing tobacco – regarding.

Highlights / Catch Notes

Income Tax

• Condonation of Delay for Late Tax Returns on 8% Savings Bonds under Income-tax Act, Section 119(2)(b) Explained.

  Circulars : Section 119 of the Income-tax Act, 1961 - Instructions to subordinate authorities - Condonation of delay in filing return of income under section 119(2)(b) in case of applicants who have made investment in 8% Savings (Taxable) Bonds, 2003 issued by Government of India and opted for scheme of cumulat - Cir. No. 02/2012 Dated: February 22, 2012
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• Tax Deductions for Profits from Infrastructure Development u/s 80-IA of Income-tax Act, 1961.

  Notifications : Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial infrastructure undertakings, etc. - Notified undertakings. - Ntf. No. 10/2012 Dated: February 21, 2012
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• Garnishing Order Issued Over TDS Default; Funds Attached, Case Under Appeal Before Commissioner of Income Tax (CIT.

  Case-Laws - HC : Garnishing order passed in pursuance of order passed for default in deduction of TDS - said orders are subject matter in the appeal before the CIT - money lying in the bank account of the petitioner attached by the department ... - HC
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• "Served" in Income Tax Act Section 143(2) Means Issue Date, Not Receipt Date, Ensuring Compliance and Certainty.

  Case-Laws - HC : Meaning of expression ‘Served’ / 'issued' - Notice u/s 143(2) - The date of receipt of notice cannot be left to be undetermined dependent upon the will of the addressee. Therefore, to bring certainly and to avoid attempts of the addressee to evade the process of receipt of notice, the purpose of the statute will be better served, if the date of issue of notice is considered as compliance of the requirement of proviso to Section 143(2) of the Act. - HC
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• Court Rules Trust Income Taxable Due to Violation of Income Tax Act Sections 13(1)(c) and 13(3) Provisions.

  Case-Laws - HC : Contravention of provisions of Section 13(1)(c) and 13(3) of the Income Tax Act, 1961 - in view of clause (c) of Section 13(1) rendering the entire income of Trust or charitable institution on liable to tax even if only part of income is directed to be applied for the benefit of the specified persons - Decided against the assessee - HC
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• Penalties for late audits u/s 271-B dismissed due to delays, protected by Section 275(1)(c) for multiple years.

  Case-Laws - HC : Penalty u/s 271-B – failure to get accounts audited u/s 44AB - penalty proceedings for the A.Y. 2000-01, 2001-02, 2002-03 & 2003-04 were initiated after the period of more than 4.5, 3.5, 2.5 & 1.5 years respectively after the completion of assessment. Therefore in wake of Section 275(1)(c), no penalty can be imposed - HC
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• Expenses to Increase Share Capital Are Capital Expenditure, Regardless of Use by Assessee.

  Case-Laws - AT : Capital OR Revenue expenditure - When expenses are incurred to increase the share capital and it was immaterial for what purpose the share capital was utilized by the assessee. - AT
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• Court Rules Tenancy Rights Surrender Payment Falls u/s 10(3) of Income Tax Act; Cost of Acquisition Ascertainable.

  Case-Laws - HC : Amount received for surrender of tenancy rights – applicability of section 10(3) – the cost of acquisition of tenancy was capable of ascertainment but the Revenue had taken a contrary stand that the cost of acquisition was incapable of being ascertained.- decided against the Revenue - HC
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• High Court Quashes Special Audit Order u/s 142(2A) for Failing Conditions of Complexity and Revenue Interest.

  Case-Laws - HC : Special audit u/s 142(2A) - Search and seizure - Time limitation - twin conditions of 'complexity of accounts' and 'the interests of the revenue' - order quashed - HC
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• Audit Report Delay Leads to Penalty u/s 271B Due to Eight-Month Filing Lapse by Petitioner.

  Case-Laws - HC : Penalty u/s 271B - Delay in filling of audit report - It was the duty of the petitioner to ensure that the accountant does his job properly. The delay in this case is almost eight months - penalty confirmed - HC
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Customs

• Customs Notification 13/2012 Rescinds 58/2011, Amends Anti-Dumping Duties from February 22, 2012.

  Notifications : Rescinds Notification No. 58/2011-Customs, dated the 8th July, 2011. - Ntf. No. 13/2012-Customs (ADD) Dated: February 22, 2012
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• Circular No. 05/2012 Streamlines Electronic Processing for Courier Imports and Exports Under 2010 Regulations.

  Circulars : Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 – regarding. - Cir. No. 05 / 2012 - Customs Dated: February 23, 2012
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• Customs Duty Refund Granted as No Demand Notice Issued u/s 28 by Revenue Authorities.

  Case-Laws - AT : Refund - Customs duty - revenue authorities have not issued any demand notice under Section 28 or under any other provisions. - refund allowed - AT
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DGFT

• DGFT amends Chapter 10 of Schedule 2 in ITC(HS) Classification for Basmati Rice exports per Notification No. 97.

  Notifications : Amendment in Chapter 10 of Schedule 2 of ITC(HS) Classification of Export and Import Items relating to export of Basmati Rice. - Ntf. No. 97 (RE-2010) /2009-2014 Dated: February 21, 2012
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FEMA

• High Court upholds penalty for breaching Foreign Exchange Regulation Act, 1973 by releasing forex against RBI instructions.

  Case-Laws - HC : FERA 1973 - Release of foreign exchange in violation of the instructions of the RBI resulting in a violation of the relevant provisions of the FERA 1973 - Imposition of penalty upheld - HC
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Corporate Law

• Supreme Court: Companies Act Scheme Doesn't Override Obligations Under Negotiable Instruments Act for Dishonoured Cheques.

  Case-Laws - SC : Offence committed under Negotiable Instrument Act - non-payment of debts arising out of dishonour of cheques - sanction of a scheme u/s 391 of the Companies Act, 1956 - Scheme u/s 391 of the Companies Act cannot have the effect of overriding the requirement of any law. - SC
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Service Tax

• Service Tax Confirmed on Loan Application Processing for Commercial Vehicles u/s 65(19) as Business Auxiliary Service.

  Case-Laws - AT : Business auxiliary service - Section 65 (19) - processing of loan application for commercial vehicle which resulted in promotion of business of the bank as well as the vehicle seller - Demand confirmed within normal period - AT
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• Turnkey Projects and Composite Contracts in Consulting Engineering: Service Tax Implications and Limitations on Extended Periods.

  Case-Laws - AT : Turnkey Projects - Composite Contracts - Consulting Engineering Services - the matter was within the knowledge of the department - extended period of limitation not invokable - AT
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• Tolls Classified as 'User Charge' or 'Access Fee' Impact Service Tax Implications, Per 2012 Circular Guidance.

  Circulars : Toll in the nature of ‘user charge’ or ‘access fee’ paid by roads users - regarding. - Cir. No. 152/3 /2012-ST Dated: February 22, 2012
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• Appellant's Penalty Overturned in Early Tax Levy on Manpower Services; Lack of Education Considered by Authority.

  Case-Laws - AT : Manpower Recruitment and Supply Agency Services - findings of the original authority that the appellant was not educated and that the tax demand related to initial stages of levy on manpower recruitment services which got enlarged to include services of manpower supply later on - order of imposition of penalty is set aside - AT
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Central Excise

• Amendment to Central Excise Notification No. 21/2004: Updates to Excise Regulations Effective February 22, 2012.

  Notifications : Amends Notification No.21/2004-Central Excise (N.T.), dated the 6th Sept., 2004. - Ntf. No. 02 / 2012-Central Excise (N.T.) Dated: February 22, 2012
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• Tribunal Upholds Favorable Entry for Assessee as Executed by Adjudicating Authority in Tax Dispute Resolution.

  Case-Laws - SC : Classification - an entry which is beneficial to the assessee requires to be applied and the same has been done by the adjudicating authority, which has been confirmed by the Tribunal - SC
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• Slagwool and Rockwool Classified Under Tariff Sub-heading 6807.10 According to Case Law and Excise Guidelines.

  Case-Laws - SC : Classification of Slagwool and Rockwool under Chapter sub-heading No.6807.10 – the goods in issue are appropriately classifiable under Sub-heading No.6807.10 of the tariff entry. - SC
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• Appellant to receive 12% monthly interest on bank guarantee after three months from application date.

  Case-Laws - HC : Interest of bank guarantee encashed earlier - the appellant will be entitled to interest @ 12% p.m., after three months from the date of receipt of the application - HC
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• High Court Rules: Filing Consolidated Return Post-Search Doesn't Allow Access to Settlement Commission Under Central Excise Regulations.

  Case-Laws - HC : Search - Registration after search - filing of consolidated return would not entitle to file an application before settlement commission - HC
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VAT

• Maharashtra VAT Act: Petitioner Entitled to Refund u/s 51 Due to Unjustified Delay by Department.

  Case-Laws - HC : Maharashtra VAT Act 2002 - Refund - Petitioner falls within Section 51(3)(a)(3) relating to holders of a certificate of entitlement under any Package Scheme of Incentives. In view of provisions of Section 51, department is not justified in keeping the refund application pending inordinately without explanation. - HC
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Case Laws:

• Income Tax

• 2012 (2) TMI 308
  Period of Limitation to revise an order by CIT – CIT's order dated 28.03.2003 passed u/s 263 setting aside the Assessment Order dated 26.03.2002 passed u/s 143 r.w.s. 147 - disallowance u/s 36(1)(vii), (viia) and in respect of foreign exchange rate difference - Held that:- Original A.O. allowing such expenses was passed on 10.03.1999 u/s 143(3). However aforesaid issues were not raised & decided either in the first reassessment dated 22.02.2000 or in the second reassessment dated 26.03.2002. Where the jurisdiction u/s 263(1) is sought to be exercised with reference to an issue which is covered by the original order of assessment u/s 143(3) and which does not form the subject matter of the reassessment, as in the present case, limitation must necessarily begin to run from the order u/s 143(3). See Ashoka Buildcon Ltd. Vs. ACIT (2010 - TMI - 76630 - Bombay High Court). Therefore invocation of the jurisdiction u/s 263 held to be barred by limitation by Tribunal u/s 263(2) is upheld. See CIT vs Alagendran Finance Ltd (2007 - TMI - 40388 - Supreme Court) – Decided against the Revenue.

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• 2012 (2) TMI 307
  Payments above Rs.10,000/- made in cash – A.Y. 1992-93, 1993-94 and 1994-95 – dis-allowance u/s 40A(3) - Rule 6 DD (j) of the Income Tax Rules, 1962 – assessee contending exceptional/unavoidable circumstances for making payment in cash – Held that:- Assessee had furnished explanations on the basis of the bank statements as well as the ledger accounts of the payees to show that the assessee did not have sufficient cash balance. This position is clear and cannot be doubted. Further it would have missed out on the business opportunity, if had failed to make cash payments. These were relevant and material aspects which were required to be considered and examined by the tribunal but have been overlooked. Therefore dis-allowance is deleted – Decided in favor of assessee.

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• 2012 (2) TMI 306
  Garnishing order passed in pursuance of order passed for default in deduction of TDS - said orders are subject matter in the appeal before the CIT - money lying in the bank account of the petitioner attached by the department – assessee contends no amount is due from it since amount has been paid by the deductee – validity of garnishing order – assessee also apprehends that once the money has been taken away by the department under garnishing order, revocation of the notice will be of no consequence - Held that:- The attachment is only interim arrangement and it also does not attain the finality with the payment to the person who is entitled to receive the amount for whom the garnishing order was passed till liability of that defaulter attains finality and money is adjusted under lawful order. Attachment order would itself will fell if the garnishing order and the notice itself is withdrawn by the A.O. requiring re-payment of the money by the department to the Bank. In that situation, petitioner may approach the A.O. for revocation of the garnishing order and further we direct the CIT to proceed with the appeal preferred by the petitioner expeditiously.

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• 2012 (2) TMI 305
  Power of Commissioner - Sale of Scrap deductible under 80HHC - Held That:- profits of the business was neither restored by this Tribunal to the AO nor decided by the AO nor otherwise originated from the assessment order passed by the AO u/s 143(3)/254. The ld. CIT(A), however, proceeded to examine them. In our view, the ld. CIT(A) had no jurisdiction to decide upon the issues which were not restored by this Tribunal to the file of the AO. Eligibility under 80HHC - Duty Entitlement Pass Book (DEPB) and Duty Free Replenishment Certificate (DFRC) - Held That:- In view of Topman Exports (2009 - TMI - 208946 - ITAT MUMBAI) case remanded back to AO for fresh perusal.

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• 2012 (2) TMI 304
  Penalty for non-quoting of PAN in TDS return - Held That:- Appellant deducted TDS correctly and revised PAN and filed the revised statement on Form No. 26Q, hence there is sufficient compliance of the provisions of section 139A. Reliance placed on Financial Co-operative Bank Ltd. v. ITO (Tribunal). Show Cause Notice - Held That:- In absence of issue of show cause notice penalty cannot be levied.

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• 2012 (2) TMI 303
  Additions on account of undervaluation of Stocks - Held That:- Sales of 40,000 pieces of HUB PH/Type, sales have been reflected in stock register, assessee has not been able to fully substantiate his argument and, therefore, taking into consideration the totality of the circumstances, the addition of Rs.7,60,000/- (40000 pieces x Rs.19/- ) is confirmed, out of the addition of Rs.8,17,050/- and the relief allowed is Rs.57050/- is justified. Dis-allowances to the tune of 7,53,949 as CIT(A) has not given any categorical finding - Held That:- Assessee had been following consistent method of accounting for valuing at cost or market value, whichever is less, and also most of the items in the closing stock are out of the opening stock and, whatever, items had been purchased, they have been sold and thus, the AO was not justified to adopting the rates which have been mentioned in the stock register in an adhoc manner. Thus, the assessee is entitled to relief of a sum of Rs.7,53,949/- .” AO disallowed interest as advances were given without any business expediency - Held That:- In view of S.A.Builders(Supreme Court), held that the advances were made for commercial use, hence impugned disallowance was deleted.

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• 2012 (2) TMI 302
  Validity of Re-assessment under 147 - Held That:- The amount of deduction claimed u/s 80IB amounting toRs.78,82,237/- was required to be deducted from profits and gains of business while calculating deduction u/s 80HHC. This has resulted in excess allowance of deduction u/s 80HHC to the extent of Rs.38,59,364 therefore issue of show cause under 148 is valid. Deduction under 80HHC and 80IA - Held That:- In view of CIT V Sharon Vencers (P) Ltd.(Madras High Court), CIT vs Great Easter Exports (2010 - TMI - 202426 - DELHI HIGH COURT) and Olam Exports India Ltd. V CIT (2009 - TMI - 204204 - KERALA HIGH COURT), held that deduction u/s 80HHC has to be calculated after deduction of the relief claimed u/s 80IA. Appeal of assessee rejected.

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• 2012 (2) TMI 284
  Validity of reopening of assessment previously framed after scrutiny beyond 4 years from the end of relevant A.Y. - wrong cliam of depreciation since business was yet to commence – no failure or omission on the part of the petitioner to furnish fully and truly all material facts – Held that:- Petitioner had disclosed full and true particulars relating to the claim of depreciation at the time of original assessment. The notice u/s 148 has been issued beyond the period of 4 years from the end of relevant A.Y. Therefore, primary jurisdictional condition for issue of such notice has not been satisfied – Decided in favor of assessee.

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• 2012 (2) TMI 283
  Validity of reopening of assessment – A.Y. 06-07 sought to be reopened on the basis of an order of assessment for A.Y. 07-08 framed after scrutiny - Petitioner, wholly owned subsidiary of a non resident shipping line – retention of US $ 1.5 per day per container collected on behalf of the principal between 1993 to 2009 as administration charges in accordance with norms prescribed by RBI - offered the same as its own income during the period 1993 to 2009 for A.Y. 2010-11 – Held that:- The Assessee in the present case had made a disclosure in the notes forming part of the accounts of the nature of payments required to be made to the foreign principal on account of Container Detention Charges. Moreover, entire amount has been offered to tax. There was no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment for A.Y. 2007-08 which can justify the reopening of the assessment for Assessment Year 2006-07 – Decided in favor of assessee.

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• 2012 (2) TMI 282
  Validity of reopening of assessment beyond 4 years from the end of relevant A.Y – A.Y. 04-05 sought to be reopened on the basis of an order of assessment for A.Y. 07-08 framed after scrutiny - Petitioner, wholly owned subsidiary of a non resident shipping line – retention of US $ 1.5 per day per container collected on behalf of the principal between 1993 to 2009 as administration charges in accordance with norms prescribed by RBI - offered the same as its own income during the period 1993 to 2009 for A.Y. 2010-11 – Held that:- Beyond a period of four years the test is not merely whether there has been an escapement of income, but whether, there has been a failure on the part of the Assessee to disclose fully and truly all material facts necessary for the assessment. Since there was a disclosure by the Petitioner of the material facts necessary for the assessment. Hence, primary jurisdictional requirement under the proviso to Section 147 has not been fulfilled – Decided in favor of assessee.

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• 2012 (2) TMI 281
  Validity of reopening of assessment previously framed after scrutiny beyond 4 years from the end of relevant A.Y – A.Y. 04-05 sought to be reopened on the basis of an order of assessement for A.Y. 06-07 – A.O. did not specifically deal with the eligibility to claim a deduction u/s 10A – Held that:-The order for A.Y. 2006-07 is based on disclosures made by the assessee during the course of assessment proceedings for that year and it is not the submission of the assessee before this Court that the same disclosures were also made during the course of A.Y. 2004-05. In the circumstances, we are of the view that though the reopening of the assessment in the present case has taken place beyond a period of four years, the jurisdictional condition for reopening the assessment u/s 147 has been fulfilled – Decided against the assessee.

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• 2012 (2) TMI 280
  Penalty u/s 271-B – failure to get accounts audited u/s 44AB - A.Y. 2000-01 to 2003-04 – Tribunal deleted the penalty on ground that penalty proceedings having been initiated long after the completion of the assessment – Held that:- In the given case, penalty proceedings for the A.Y. 2000-01, 2001-02, 2002-03 & 2003-04 were initiated after the period of more than 4.5, 3.5, 2.5 & 1.5 years respectively after the completion of assessment. Therefore in wake of Section 275(1)(c), no penalty can be imposed – Decided against the Revenue.

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• 2012 (2) TMI 279
  Expenditure Incurred on Increasing authorized Share Capital - Capital OR Revenue - Held That:- When expenses are incurred to increase the share capital and it was immaterial for what purpose the share capital was utilized by the assessee. Reliance placed on CIT vs Kotak India (2001 -TMI - 6052 - SUPREME Court). - Decided against the assessee. Employees’ contribution to the provident fund after the due date under relevant act - Held That:- CIT Vs. Nexus Computer P. Ltd.(2008 - TMI - 33881 - MADRAS HIGH COURT) and in view of Vinay Cement (2007 - TMI - 102762 - Supreme Court of India), payments made before date of filing return under 139(1), deduction allowed. Deemed Dividends - Deposits from common shareholders having more than 20% equity - Deposits for office space - Held That:- It could not be brought to notice that assessee and the creditor were in the line of the same business of garment export and as to whether there was any business relation earlier to this transaction. As the facts are not clear we remand the matter back to AO.

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• 2012 (2) TMI 278
  Deduction - Projects to be completed within time after "approvals" - Facts: "Hill Side" and "Silver Valley" different projects - Land transferred on 9.02.05 and 10.02.05 - Building Plan approved and Commencement Certificate received on 30.04.05 - Held That:- Completion time for above projects were 31.03.10 and when the above projects are completed on 18.11.09 it is well within stipulated time. Decided against revenue.

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• 2012 (2) TMI 277
  Assessee exporting human hair - Cash purchases - AO: disallowed 25% cash & cheque purchases - CIT(A) restricted disallowance upto 20% - Held That:- Quantitative details cannot be accepted to be true and correct because internally prepared purchase memos are not reliable at all in absence of name, address and signature of the vendors. What is surprising is that even signature or thumb impression has not been taken on any memo, which leads to the conclusion that some or all of them have been prepared by the assessee at its convenience. CIT(A) was correct in disallowing 20%. All details were provided for cheque purchases thus no disallowance required. Addition on account of purchases from director - CIT(A): Purchases were made by cheques and duly accounted in stock register - Purchases at Rs.2806/- per kg. as against overall average purchase price of Rs.3233 per kg. - Held That:- When relevant material were on record, additions cannot be made. On the above factual matrices, purchases cannot be disallowed.

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• Customs

• 2012 (2) TMI 292
  Valuation adopted by first appellate authority under Customs Valuation (DPIG) Rules, 2007 – Revenue contesting such valuation – Held that:- When the authority examined the issue under touch stone of Valuation Rules to come to conclusion, we do not propose to interfere with the order – Decided against the Revenue.

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• 2012 (2) TMI 267
  Goods detained on alleged mis-declaration in the description of the goods - Revenue contends goods imported was machine declared as heavy melting scrap – appellate authority held that detained goods can be released upon mutilation rendering it as scrap and clearance upon payment of duty as scrap - Held that:-There is no evidence to controvert averment of appellant about life and condition of goods. Neither revenue had any material to prove that the goods imported was not 20 50 years nor proved that the same is usable for more than the period certified by Chartered Engineers without major repair and renovation and also looking to lapse of 18 months from the import. Accordingly there is no scope to reverse the first appeal order – Appeal of Revenue dismissed.

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• Corporate Laws

• 2012 (2) TMI 291
  Companies Act 1956 - Plea filed under Rule 9 of the Companies (Court) Rules, 1959 seeking a direction to the Official Liquidator to release the land from attachment - Trust claims to have entered into an agreement to sell with company – Held that:- In present case, agreement to sell was executed with the Company under liquidation after the filing of the winding up petition against it and even the sale consideration is paid. In view of the provisions of Sections 531 and 531-A of the Companies Act, the transaction between the applicant Trust and the Company under liquidation has to be declared invalid and not enforceable. Ignorance of Trust of filing of the winding up petition will not validate the transaction in question – Decided against the applicant.

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• 2012 (2) TMI 269
  Offence committed under Negotiable Instrument Act - non-payment of debts arising out of dishonour of cheques - sanction of a scheme u/s 391 of the Companies Act, 1956 – whether such sanction amounts to compounding of an offence u/s 138 read with Section 141 of the N.I. Act - High Court held aforesaid in negative and also held that such sanction will not have the effect of termination or dismissal of complaint proceedings under N.I. Act – Held that:- In the instant appeal in most of the cases the offence under the N.I. Act has been committed prior to the scheme. Therefore, the offence which has already been committed prior to the scheme does not get automatically compounded only as a result of the said scheme. Scheme u/s 391 of the Companies Act cannot have the effect of overriding the requirement of any law. Further, basic mode and manner of effecting the compounding of an offence under Section 320 of the Criminal Procedure Code cannot be said to be not attracted in case of compounding of an offence under N.I. Act in view of Section 147 of the same. However, the main principle of such compounding, namely, the consent of the person aggrieved or the person injured or the complainant cannot be wished away nor can the same be substituted by virtue of Section 147 of N.I. Act. For the reasons aforesaid - Appeal stands dismissed.

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• FEMA

• 2012 (2) TMI 268
  FERA 1973 - Release of foreign exchange in violation of the instructions of the RBI resulting in a violation of the relevant provisions of the FERA 1973 - allegation against the Appellants is a failure to discharge their responsibilities under the law and to ensure legal compliance - Section 68(1) & 68(2) – Held that:-The burden of establishing a defence in terms of the proviso to subsection (1) of Section 68 lies upon the person against whom the contravention is established under the substantive part of the provision. Having failed to establish their burden, the absence of connivance cannot come to the aid of the Appellants. Hence, no substantial question of law would arise in these appeals. The Appeals are accordingly dismissed.

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• Service Tax

• 2012 (2) TMI 299
  Business auxiliary service - Section 65 (19) of the Finance Act, 1994 – marketing efforts - appellant promoted business of ICICI Bank providing the services of processing of loan application for commercial vehicle which resulted in promotion of business of the bank as well as the vehicle seller – Held that:- The nature of activity carried out falls within the ambit of Business Auxiliary Service. Further, Appellate order does not demonstrate any mala fide of the assessee to bring it to the fold of penalty u/s 76 and 78 of the Finance Act, 1994. However penalty u/s 77 is confirmed – Decided partly in favor of assessee.

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• 2012 (2) TMI 298
  Turnkey Projects - Composite Contracts - Consulting Engineering Services - first appellate authority held turnkey contract can be vivisected - allowed the appeal on merit but also on limitation – Held that:- earlier & present show cause notices demonstrates that activities of the appellant was well within the knowledge of the Department. When Revenue intended the respondents to be taxed under the category of Consulting Engineer Service , they should have issued notice forthwith. Therefore, the first Appellate order granting relief to respondent on time bar does not appear to be erroneous – Appeal dismissed.

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• 2012 (2) TMI 271
  Whether proceeding dropped before revalidation law shall revive after revalidation – GTA services - proceeding initiated by SCN dated 31.12.98 ended with no liability - said proceeding was revalidated by SCN dated dated 9.2.2004 u/s 116 of Validation Act, 2000 - Held that:- Under the provision of law at the relevant point of time when recipient was not required to discharge tax liability for availing GTA service filing of return did not arise. Once such legal obligation was not there, it cannot be said that Section 73 of Finance Act, 1994 is invokable. Accordingly, appeal is allowed without re-adjudication.

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• 2012 (2) TMI 265
  Cenvat credit on services used for outward transportation of goods from the factory to the buyers premises - period involved prior to 01.04.2008 – appellant provided evidences showing satisfaction of conditions specified in Circular no. 97/6/2007-ST dated 23.8.07 for availment of credit - Held that:- Matter was not contested at earlier stages by the Appellants and they did not have opportunity to adduce evidence. Now evidences are submitted which should be examined and credit allowed if they are legally eligible. The impugned order is set aside and the appeal is allowed by remand to the original authority.

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• Central Excise

• 2012 (2) TMI 290
  Rejection of appeal for not filing appropriate papers before Court - Exemption under Notification No.1/93 dated 28.02.2003 CESTAT allowed such exemption affirmed by High Court Revenue is in appeal - final order passed by CESTAT is not produced Held that:- In the absence of the such orders it would not be proper for us to decide between the parties and would be handicapped while appreciating the legal issues. Hence, appeal is rejected solely on the ground that the Revenue has not filed the appropriate papers before this Court.

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• 2012 (2) TMI 289
  Classification of Slagwool and Rockwool under Chapter sub-heading No.6807.10 – revenue contending it to be classified under sub- heading No.6803.00. - assessee submits that they are manufacturing `Min wool' using more than 25% of blast furnace slag by weight, right from 1993 - Held that:- Sub-heading No.6807 is specific to the goods in which more than 25% by weight, red mud, press mud or blast furnace slag is used. The heading is based entirely on material used on composition of goods. A tariff heading, based on composition of goods, is also specific heading like a heading based on commercial nomenclature. Therefore, we are of the view that the goods in issue are appropriately classifiable under Sub-heading No.6807.10 of the tariff entry. See CCE, Raipur Vs. Punj Star Insulation Fibre Co (2004 - TMI - 48995 - CESTAT, Northern Bench, New Delhi), M/s.Rockwool (India) Pvt. Ltd. Vs. CCE, Hyderabad (2005 - TMI - 54236 - CESTAT, South Zonal Bench, Bangalore) Further, in a classification dispute, an entry which is beneficial to the assessee requires to be applied and the same has been done by the adjudicating authority, which has been confirmed by the Tribunal – Decided in favor of assessee.

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• 2012 (2) TMI 288
  Non-reversal of proportionate credit on input service going into the manufacture of exempted product – slag generated during the course of manufacture of MS ingots – Revenue contended procedure under Rule 6(3A) has not been followed – reversed the credit and imposed demand & penalty – Held that:- Dispute is only about compliance with some procedure. Proportionate credit on inputs and input service going into the manufacture of exempted product stands reversed and hence a demand for 10% of the value of exempted goods is prima facie not warranted. Dues are waived – Decided in favor of assessee.

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• 2012 (2) TMI 266
  Availment of non- existent Cenvat Credit by Second stage dealer on goods – non-manufacturing & non-payment of duty by manufacturer of goods – assessee claimed credit on basis of invoices showing payment of duty – Held that:- Prima facie there are evidences appearing to show that the credit that was passed on was not against proper duty payment. The real merit in the matter can be decided only during final hearing. Thereby, appellants are directed to make pre-deposit.

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• CST, VAT & Sales Tax

• 2012 (2) TMI 294
  Maharashtra VAT Act 2002 - Refund pending of VAT / tax paid on the inputs/purchases for the period january 11 to March 11 – assessee being manufacturer and seller of consumer durables - entitled to the benefit of the Package Scheme of Incentives, 1993 framed by the State Government – entitled to claim refund for the period 1 March 1998 to 31 March 2012 under eligibility certificate issued to it - bank guarantees furnished in August 11 for facilitating the grant of a refund - Held that:- Petitioner falls within Section 51(3)(a)(3) relating to holders of a certificate of entitlement under any Package Scheme of Incentives. In view of provisions of Section 51, department is not justified in keeping the refund application pending inordinately without explanation. The refund, if any, that is found due and payable to the Petitioner in accordance with law shall, subject to the due satisfaction of the competent authority in regard to the entitlement of the Petitioner and the validity of the bank guarantee furnished, be granted expeditiously and preferably within a period of one month from date of order - Decided in favor of petitioner.

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