TMI Tax Updates - e-Newsletter
February 5, 2014

Case Laws in this Newsletter:

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

TMI SMS

• Condonation of delay u/s 119(2)(b) for claiming refund of tax - revised return should itself be considered as application for condonation of delay - HC

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• Denial of refund of service tax - Unjust enrichment - appellant has not provided any service at all. - question of unjust enrichment does not arise - Tri

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• Programmable Logic Controllers and Programmable Process Controllers are classifiable under CETH 85.37 as programmable logic controllers. - Tri

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Articles

1. Service Tax - Reverse Charge liability paid by Service Provider, should not be demanded again from Service Recipient

   By: Bimal jain

2. VAT on milk and wheat reduced in certain cases under Punjab VAT

   By: AMIT BAJAJ ADVOCATE

3. RESTRICTIONS ON THRESHOLD EXEMPTION IN SERVICE TAX

   By: Dr. Sanjiv Agarwal

News

1. No Service Tax Required to be Paid on Services Provided by An Authorised Person or Sub-Brokers to the Member of a Commodity Exchange in Respect of Such Taxable Service

2. Finance Minister says though on the Domestic Front, the Deceleration in Growth has been Arrested in the Second Quarter of F.Y. 2013-14

3. Prime Minister Approves Composition of 7th Central Pay Commission Under the Chairmanship of Justice Ashok Kumar Mathur, Retired Judge of the Supreme Court and Retired Chairman, Armed Forces Tribunal

4. RBI Reference Rate for US $ and Euro

5. Anand Sharma Meets Zimbabwe’s Vice President, Finance and Commerce Ministers Bilateral Trade Touches US$ 186 Million in 2013

6. Empowered Institution (EI) Recommends PPP Projects Worth Rs. 2778.72 Crores with Viability Gap Funding (VGF) of Rs. 555.72 Crores

7. Auction for Sale (re-issue) of Government Stock

8. Satisfactory Progress in the India Assisted Programme of Constructing/Repairing Fifty Thousand Houses in Sri Lanka says Finance Minister P. Chidambaram

Notifications

Companies Law

1. G.S.R. 32 (E) - dated 16-1-2014 - Co. Law

Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and allowances of the Chairperson and members of the Board (Amendment) Rules, 2014

Customs

2. 04/2014 - dated 3-2-2014 - Cus

Seeks to amend Notification No. 12/2012-Customs, dated the 17th March, 2012

Income Tax

3. 08/2014 - dated 22-1-2014 - IT

Notification u/s 35(1) (ii) - Approved organization - Amrita Vishwa Vidhyapcetham University Kochi

4. 03/2014 - dated 7-1-2014 - IT

Agreement between the Government of the Republic of India and the Government of the Belize for the Exchange of Information with respect to taxes

5. 02/2014 - dated 7-1-2014 - IT

Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries - Albania

Service Tax

6. 03/2014 - dated 3-2-2014 - ST

Regarding levy of service tax on services provided by an authorised person or sub-brokers to the member of a commodity exchange

Circulars / Instructions / Orders

Income Tax

1. F.NO.225/189/2013/ITA.II - dated 6-1-2014

Section 138 of the Income-Tax Act, 1961 - Central Board of Direct Taxes specified authority for the purpose of providing information for purposes of implementation of National Food Security Act, 2013.

2. F.NO. TARC/MEETING/1/2013-14 - dated 24-12-2013

Set up Tax Administration Reform Commission

3. F. NO. 500/139/2012-FTD-I - dated 20-12-2013

U/S 92CB - SAFE HARBOUR RULES - IMMEDIATE ACTION REQUIRED INCLUDING REPORT FROM ALL ASSESSING OFFICERS (AOs) ON DETAILS OF FORM 3CEFA RECEIVED BY THEM

4. DGBA.CDD.NO. 3688/13.01.999/2013-2014 - dated 19-12-2013

INFLATION INDEXED NATIONAL SAVINGS SECURITIES - CUMULATIVE, 2013

5. F. NO. 500/59/2003-FTD-I - dated 10-12-2013

Revision of work distribution among the Director (FT&TR-I), Director FT&TR-III) and Director (APA) under the Central Board of Direct Taxes (CBDT)

FEMA

6. 100 - dated 4-2-2014

Third party payments for export / import transactions

7. 101 - dated 4-2-2014

Export of Goods and Services: Export Data Processing and Monitoring System (EDPMS)

Highlights / Catch Notes

Income Tax

• Court Reviews Share Premium Hike u/s 68: New Company Lacks Evidence for Thousandfold Increase Over Face Value.

  Case-Laws - HC : Deletion made u/s 68 - assessee in the case was incorporated barely few months before the commencement of the assessment year, and there is no material to indicate why its markup of the share premium thousand folds in respect of the shares which were of the face value of Rs. 10 lakhs was justified - HC
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• Criminal Cases Stand Alone: Ongoing Section 201 Proceedings Don't Justify Dismissal of Criminal Proceedings.

  Case-Laws - HC : The criminal proceedings are independent of recovery proceedings - proceedings initiated against the petitioners cannot be quashed on the ground that the proceedings u/s 201(1) and 201(1-A) are pending - HC
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• High Court: Revised Tax Return Can Serve as Delay Condonation Application for Tax Refunds u/s 119(2)(b.

  Case-Laws - HC : Condonation of delay u/s 119(2)(b) for claiming refund of tax paid - The revised return should itself be considered as application for condonation of delay under section 119(2)(b) and refund granted - HC
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• Authorities Must Clearly Distinguish Between "Reasons" and "Conclusions" u/s 271 for Penalty Imposition.

  Case-Laws - HC : Imposition of Penalty u/s 271 - It is well established that “reasons“ and “conclusions“ are two different things and “reasons“ must show mental exercise of authorities in arriving at a particular conclusion - HC
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• Court Clarifies Section 10A Deduction: Audit Report Not Mandatory with Return if Submitted Later During Appeal.

  Case-Laws - HC : Entitlement for deduction u/s 10A – assessee produced the Form No.56F at the appellate stage - it is not necessary that in all cases, return must be accompanied by the audit report - HC
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• High Court Confirms Section 43B Amendment Applies to Employees' Provident Fund Contributions in Income Tax Act.

  Case-Laws - HC : Whether the benefit of the amendment of Section 43B of the Income Tax Act equally applies to the employees’ contribution of provident fund - held yes - HC
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• Section 2(43) Income Tax Act: Interest and penalties not defined as 'tax'; crucial for assessee default status determination.

  Case-Laws - HC : Assessee in default - The definition of 'tax' under Section 2(43) of the Act does not include penalty or interest - interest cannot be held to be 'additional tax'. - HC
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• Scheduled Tribe Members Outside Specified Areas Ineligible for Tax Benefits Under Income Tax Act Section 10(26.

  Case-Laws - HC : Members of the scheduled tribe residing in other part of the country other than the one and specified under section 10(26) of the Act are not entitled to the benefit of section 10(26) of the Act - HC
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Customs

• Customs Regulations Highlight Importance of Sealing Parcel Vans to Prevent Unauthorized Access and Loss During Transit.

  Case-Laws - AT : Confiscation - Goods seized from parcel van - A man of ordinary prudence and diligence would never believe that a leased parcel van shall leave a station without seal when appellant is answerable to pilferage and loss thereto. - AT
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• Importing Defective or Scrap Goods Prohibited Under DEEC Scheme to Maintain High-Quality Standards for Duty-Free Imports.

  Case-Laws - AT : Clearance of second quality goods under DEEC Scheme - under the DEEC scheme, no defective/seconds and/or scrap stainless materials were permitted for import. - AT
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• CBE&C Clarifies: Customs Law Clarifications Must Be Considered, Not Overruled by Foreign Certificates.

  Case-Laws - AT : Classification - CBE&C is an apex authority implementing customs laws in this country and, therefore, the clarification issued by such an authority needs to be given due consideration - same cannot be brushed aside merely on the basis of a certificate issued by a foreign authority - AT
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Service Tax

• Pipeline Laying Services Not Taxable Under 'Erection, Commissioning or Installation' or 'Construction' Services Before June 1, 2007.

  Case-Laws - AT : Works contract service - laying of pipelines - 'Erection, Commissioning or Installation Service' or 'Commercial or Industrial Construction Service' prior to 01/06/2007 - not taxable - AT
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• Appellate Authority Can't Reduce Penalties Below Legal Minimum; Lower Authority Reductions Unsustainable.

  Case-Laws - AT : Discretion was available to the appellate authority only within the minimum value - reduction in penalty by the lower authority below the minimum prescribed is not sustainable in law - AT
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• Court Denies Service Tax Refund Claim; Appellant Challenges Unjust Enrichment Rationale, Asserts No Services Rendered.

  Case-Laws - AT : Denial of refund of service tax - Unjust enrichment - appellant has not provided any service at all. - question of unjust enrichment does not arise - AT
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Central Excise

• PLCs and Programmable Process Controllers Classified Under Central Excise Tariff Heading 85.37 as Programmable Logic Controllers.

  Case-Laws - AT : Classification - Programmable Logic Controllers/Programmable Process Controllers and Automatic Data Processing Machines - classifiable under CETH 85.37 as programmable logic controllers. - AT
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• Single Member Bench Rules for Assessee on Duty Remission for Goods Destroyed in Transit, Aligns with Prior Ruling.

  Case-Laws - AT : Remission of duty - goods destroyed in transit - place of removal in case of FOR delivery - given dissenting note but following the decision of division bench, single member bench decided in favor of assessee - AT
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• Court Accepts 5% Footwear Wastage Claim Due to Rain; Lack of Evidence Against Manufacturer's Explanation Key to Decision.

  Case-Laws - AT : Disallowance of higher wastage @ 5% - manufacture of footwear - unaccounted stock - There is absolutely no other evidence on record. - claim of higher wastage of 5% on account of rain water has to be accepted - AT
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• Cenvat Credit Refund Approved for DTA Units Supplying to 100% EOUs.

  Case-Laws - AT : Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100% Export Oriented Unit (EOU) - refund allowed - AT
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• Court Sets Aside Order Imposing Penalties on Appellants Due to Different Grounds Than Alleged in Notice.

  Case-Laws - AT : An orders that confirms the demands, interest and imposes penalties on all appellants on a ground different than the allegations made in the show cause notice, is unsustainable and is liable to be set aside - AT
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VAT

• Court Rules Packing Charges in Sale Price Under Cement Control Order Taxable Without Deduction.

  Case-Laws - HC : Tax liability on packing charges - when charges on packing also was included in the Cement Control Order as part of the sale price, the question of deduction did not arise - HC
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• High Court Rules Local Sales Tax Applies to Goods Manufactured Out of State but Finished Locally, Clarifying Business Tax Obligations.

  Case-Laws - HC : Interstate sale or local sale - manufacturing was done in another state but finishing work done in the state in question - transaction is liable to tax as local sales - HC
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Case Laws:

• Income Tax

• 2014 (2) TMI 138
  Liability to deduct TDS – Payments made to constituent partners – Held that:- The Assessing officer erred in recasting the P&L of the AOP to bring in the works directly taken up by the constituents - the constituents have offered the income from their portion of the project as their income and offered the same for tax - in the case of a JV/ Consortium formed specifically for the sole purpose of obtaining the contracts and specific portions of the projects are carried out by mutual agreement by specific constituents, the profits from the portion of the projects derived from the individual constituent can be offered by them for tax in their return - Once such income is assessed in their individual hands the Assessing officer cannot again bring to tax the entirety of the receipts in the hands of the Consortium - The credit for the TDS made by the client will be available to the respective constituents who has offered income on which such TDS has been made, even though the certificate issued by the client is in the name of the Consortium - Relying upon CIT v Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT] - TDS paid before the due date for filing of the Income Return is an allowable deduction and cannot be disallowed u/s 40(a)(ia) - disallowance u/s 40(a)(i) is only to the extent of the amount outstanding as on the last day of the previous year and amounts which have been paid during the previous year cannot be disallowed for non-deduction of TDS. Disallowance made u/s 40a(i) of the Act - Non-deduction of tax on payments made – Held that:- Earlier the profits of the individual constituents are to be assessed in their individual hands and there is no question of the Assessee deducting tax at source while passing on the payments to the constituents towards their share of work carried out by them, the disallowance being the share of receipts of the Chinese concern towards their share of work carried out in the hands of the Assessee is deleted - it has to be verified whether the Chinese concern has offered this income for tax in India - If the Chinese concern has not filed income Tax return and offered this amount as part of their income in computing their taxable income, the same shall be assessed as income of the assessee, as the person responsible for making the payment to the Non Resident. Addition made - Whether the addition was in the nature of investment or payment for works executed – Held that:- The matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee. The AO erred in recasting the P&L of the Assessee, when the individual portions of the project was separately carried out by the individual constituents and the constituents have offered the profits from their share of the project to tax in their return, which has been accepted - Therefore there can be no disallowance in respect of amounts payable to the constituents on the ground that no tax has been deducted at source - the discrepancies if any in the account arising due to the AO recasting the accounts of the Assessee including the entire projects in the hands of the Assessee has to be reviewed – Matter remitted back to the AO for fresh adjudication – Decided in favour of Revenue.

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• 2014 (2) TMI 137
  Disallowance u/s 36(1)(viia) of the Act – Claim of provision for bad and doubtful debts - 10% of the aggregate advances made by the rural branches – Held that:- The term “banking Company” also includes a “Co-operative Bank” - Thus a co-operative bank falls under the definition of “banking company” - Further as per the definition given in Explanation under sec. 36(1)(viia) of the Income tax Act, a “banking company” as defined in sec. 5(c) of the Banking Regulation Act, which is not a scheduled bank, is classified as a “non-scheduled bank” – thus, a Co-operative bank would be classified as a “non-scheduled bank” for the purpose of sec. 36(1)(viia) of the Act – Decided against Assessee.

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• 2014 (2) TMI 136
  Revision u/s 263 of the Act – Held that:- The assessee has un-cleared goods and cheque bouncing details and by this he has reconciled the entire figure - It is to be mentioned here that the AO during the course of original assessment proceedings issued notice u/s. 133(6) of the Act calling for information from Mirc Electronics Ltd. and Mirc Electronics Ltd. in turn submitted ledger copy of assessee's account whereby complete purchase, cheque return, goods return are clearly mentioned. Once factually this is the position, there is no issue of revision of the assessment framed by the AO u/s. 143(3) of the Act - the assessee has a full proof case on the issue and the other aspects of the revision order of CIT that the revenue wants to verify these transactions, once the information is called by AO u/s 133(6) of the Act there is no further purpose for verification - the AO has verified the transactions and came to right conclusion. Revision order regarding commission paid – Held that:- The position that the nomenclature used by the assessee in his statement filed before AO as commission whereas this is only discount on the purchases by various parties - the details were filed before the AO during the course of assessment proceedings originally and even before CIT during the course of revision proceedings - As the assessee has filed complete details before the AO during the course of assessment proceedings and CIT in his revision order has observed that the AO needs verification of the same is without any purpose - It is for the CIT to point out as to what error was committed by the AO in having reached the conclusion accepting the reconciliation statement filed by the assessee qua the bank account of the assessee and purchases made - the commission disclosed by the assessee in a statement filed before AO and explained the same as discount has also been accepted - The CIT having failed to point out any error, no error can be inferred from the order of the AO for the simple reason that they are bereft of details - the revision order passed by CIT u/s. 263 of the Act is without any basis and deserves to be quashed – Decided in favour of Assessee.

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• 2014 (2) TMI 135
  Deletion made u/s 68 of the Act – Notices issued u/s 133(6) of the Act – Burden to prove – Held that:- The investors not only did not submit any confirmation and had concededly reported far less income than the amounts invested, the assessee could not under the circumstances be said to have discharged the burden which was upon it in the first instance – Relying CIT v. Lovely Exports [2006 (11) TMI 121 - DELHI HIGH COURT] - It is not sufficient for the assessee to merely disclose the addresses or identities of the individuals concerned - The other way of looking at the matter is that having given the addresses, the inability of the noticees who are approached by the AO to afford any reasonable explanation as to how they got the amounts given the nature of their income which was disproportionally less than what they subscribed as share capital would also amount to the Revenue having discharged the onus if at all which fell upon it - the assessee in the case was incorporated barely few months before the commencement of the assessment year, and there is no further information, or anything to indicate why its markup of the share premium thousand folds in respect of the shares which were of the face value of Rs. 10 lakhs was justified – Decided partly in favour of Revenue.

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• 2014 (2) TMI 134
  Validity of order – Jurisdiction u/s 163 of the Act – Substantial question of law - Held that:- The Assessing Officer having found certain mistake and short comings in the books of account, if makes an addition of the income which is sufficient in his opinion to compensate the loss of revenue to the department - The revisional authority cannot substitute its own decision to say that the addition made by the Assessing Officer is insufficient - Relying upon CIT Vs. Satpal Agrawal [2007 (2) TMI 104 - HIGH COURT, PUNJAB AND HARYANA] - no substantial question of law arises for consideration, the assessing officer has assessed the income by making certain addition based on his own opinion and have given cogent reasons for the same - There is nothing to say that the opinion and reason given by the assessing officer is wholly erroneous –Decided against Revenue.

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• 2014 (2) TMI 133
  Maintainability of the complaint criminal proceedings - Petitioner treated as an office in default u/s 201(1) and 201(1A) of the Act Held that:- The criminal proceedings are independent of recovery proceedings - The criminal proceedings are not dependent on the recovery proceedings thus, the pendency of proceedings initiated under Section 201(1) and Section 201(1-A) of the I.T. Act is not a legal impediment to continue the criminal prosecution against the petitioners - The pendency cannot act as a bar to the institution and continuance of criminal prosecution for the offences punishable under Section 276-B of the I.T. Act - the proceedings initiated against the petitioners cannot be quashed on the ground that the proceedings under Section 201(1) and Section 201(1-A) of the I.T. Act are pending Decided against Assessee. Necessary ingredients to be filed in the complaint Held that:- The details of non-remittance of TDS of salaries for each financial year and monthwise is also specified thus, the complaint filed by the respondent contains the necessary ingredients for taking cognizance of offence against the petitioners Decided against Assessee. Validity of sanction u/s 279(1) of the Act Held that:- Section 2(35-B) of the I.T. Act specifies that there is no bar for treating more than one person as the Principal Officer for initiation of criminal proceedings Relying upon Madhumilan Syntax Limited And Others Versus Union of India And Another [2007 (3) TMI 205 - SUPREME Court] - The subsequent event treating Sri. T. R. Venkatadri as the Principal Officer of petitioner No.1 company will not result in quashing of the proceedings against petitioner No. 2 - It is open for the Revenue to proceed against the company, its directors or any other principal officer or officers responsible for default Decided against Assessee.

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• 2014 (2) TMI 132
  Condonation of delay u/s 119(2)(b) for claiming refund of tax paid - Refund of Tax on TDS – Payment made in Optional early retirement scheme – Held that:- The application under section 119(2)(b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 2004-05. - The revised return of income filed on 08 September 2011 should itself be considered as application for condonation of delay under section 119(2)(b) of the Act and refund granted – The Decision in Chandra Ranganathan and ors. vs. Commissioner of Income Tax [2009 (10) TMI 498 - SUPREME COURT OF INDIA] followed. The amounts received by retiring employees of Reserve Bank of India opting for the scheme are eligible for exemption under section 10(10C) of the Act – thus, the revenue is directed to grant refund to the assessee – Decided in favour of Assessee.

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• 2014 (2) TMI 131
  Imposition of Penalty u/s 271 of the Act – Held that:- When the steps provided in Sub-section (2) of Section 271AAA are observed by Assessee, besides the fact, he shall absolve himself from the liability of penalty under Sub-section (1) of Section 271AAA, he will also legally escape from liability of penalty under Section 271 (1) (c) in respect to undisclosed income vide Sub-section (3) of Section 271AAA – Relying upon Assistant Commissioner of Income Tax Vs. Gebilal Kanhailal [2012 (9) TMI 297 - SUPREME COURT] - The authorities below have not at all discussed the matter, except of recording their conclusion by reiterating the language of Sub-section (2) of 271AAA of Act, 1961 and saying that the same have not been complied with. It is well established that "reasons" and "conclusions" are two different things and "reasons" must show mental exercise of authorities in arriving at a particular conclusion – since revenue have not looked into this aspect of the matter, the matter sent to the ACIT for re-examination – Decided in favour of Assessee.

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• 2014 (2) TMI 130
  Additions made u/s 68 of the Act – Held that:- The capital was introduced by the partners - The Assessing Officer did not bring any material to indicate that the partners had no capacity to introduce such capital - the Assessing Officer did not hold that the capital was, in fact, not introduced by the partners, but it was only in disguise the cash credit of the firm - the partners were also subjected to tax assessment - Their assessment orders were placed on record, which showed that in the return of income, they declared the income from agricultural operations – Relying upon COMMISSIONER OF INCOME-TAX Versus PANKAJ DYESTUFF INDUSTRIES [2005 (7) TMI 601 - GUJARAT HIGH COURT] - the assessee had furnished the details, which would discharge the onus which lay on the assessee – Decided against Revenue.

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• 2014 (2) TMI 129
  Disallowance u/s 80IB of the Act – Procedural requirements not made - Form 10CCB not submitted – Held that:- The appellant has not made out any ground why such report could not be filed earlier - In the application filed for taking into account the additional document on record also, no valid grounds are made out - even to be able to produce additional evidence before the appellate Commissioner, the assessee has to satisfy the conditions of sub-Rule (1) thereof and further the Rule requires the appellate authority to record his reasons in writing for admitting such additional evidence. The assessee simply cannot for the first time present such document before the High Court and seek benefit of the deduction on the basis of such document - The appellate jurisdiction of the High Court under section 260A of the Act permits taking into account the substantial question of law and not examine the factual disputes - Further a mere presentation of report under Form 10CCB would not enable the assessee to claim deduction under section 80IB - The form and the report would enable the Assessing Officer to examine the claim and different calculations on the basis of which the claim is sought to be substantiated – the question cannot be gone into in the Tax Appeal before the High Court under section 260A of the Act – Relying uponCommissioner Of Income-Tax Versus Nagpur Hotel Owners Association [2000 (12) TMI 99 - SUPREME Court] - Since appeal would be continuation of the assessment proceedings, filing of the material at an appellate stage would satisfy the requirement of presenting the same before completion of the assessment – there was no reason for interference in the order of the Tribunal though for reasons somewhat different from those recorded by the Tribunal – Decided against Assessee.

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• 2014 (2) TMI 128
  Entitlement for deduction u/s 10A – certificate required u/s.10A(5) of the Act having not been filed along with the return – assessee produced the Form No.56F at the appellate stage - Held that:- The decision in Commissioner of Income-Tax And Another -vs- Ace Multitaxes Systems Pvt.Ltd. [2009 (1) TMI 260 - KARNATAKA HIGH COURT] followed - sub-section (7) of Section 80-IA of the Act does not cast any obligation on the assessee that the return must be accompanied by the audit report - For meeting the practical difficulties of the assessee, it is not necessary that in all cases, it must be accompanied by the audit report – thus, the order of the Tribunal, declining to interfere with the order of the Appellate Authority is valid – Decided in favour of Assessee.

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• 2014 (2) TMI 127
  Benefit of amendment of section 43B of the Act - Whether the benefit of the amendment of Section 43B of the Income Tax Act equally applies to the employees’ contribution of provident fund – Held that:- The contributions payable by the employer under the scheme shall be at the rate of 10% of the basic wages, Dearness Allowance - The contribution payable by the employee shall be equal to the contribution payable by the employer in respect of such employee - the payment of contribution by the employer to the fund under the scheme means both employer’s contribution and employee’s contribution - Whether he deducts the employee’s contribution from the salary or not, in law, he is liable to pay the said amount –thus, Section 2(24)(x) of the Act makes it clear that the employee’s contribution which the employer deducts from his salary before it is paid into the fund, is treated as the income of the employer, and the employer by contributing can get the deduction. The payment must be made within the due date i.e. the due date prescribed under Section 139(1) of the Act – Relying upon Commissioner of Income Tax Versus M/s. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] - Though such contributions are not paid within the time prescribed under the relevant act, if those contributions are paid before the due date prescribed under Section 139(1) of the Act, the employer shall be entitled to the deductions as provided under Section 36(1) of the Act - it is for the simple reason, under the provident fund scheme, an employer has to pay both the contribution and then recover from the salary of the employee – Decided against Revenue.

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• 2014 (2) TMI 126
  Assessee in default - Deletion of Penalty u/s 221 of the Act - Non-deduction of tax on returned income – Interest u/s 234B and 234C of the Act- Default u/s 140A(3) of the Act – Advance tax - Held that:- Wherever there is default in deposit of the tax, the assessee in addition to the amount of arrears and the amount of interest payable under section 220, is liable for penalty which shall not exceed the amount of tax in arrears - The tax, penalty and interest are different concepts under the Act - The definition of 'tax' under Section 2(43) of the Act does not include penalty or interest – Relying upon Shreeniwas & Sons v. I.T.O. [1974 (1) TMI 8 - CALCUTTA High Court] - interest cannot be held to be 'additional tax'. Unless the assessee is or is deemed to be in default in making a payment of "tax", as defined in section 2(43) of the Act, which means that he is in default or in deemed default in payment of income-tax chargeable under the provisions of the Act or super-tax chargeable under the provisions of the Act, depending upon the assessment year in question, there could be no levy of penalty under section 221(1) - Advance tax would fall within the ambit of tax - The position here is different as it relates to interest and not advance tax and, therefore, no benefit can be derived by the revenue – Decided against Revenue.

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• 2014 (2) TMI 125
  Principles of natural justice - Validity of addition made upon relying on the statement and affidavit – Held that:- The principles of natural justice, which are inherent in any adjudicatory process, have been violated - The principles of natural justice are too well engrafted in our system of adjudication for us to dilate upon, except to the extent that where an order is passed in violation of the principles of natural justice and serious prejudice is caused to an assessee, such an order cannot stand the test of judicial scrutiny and must fall on the touchstone of violation of the principles of natural justice – the petition allowed to the limited extent of setting aside the conclusions/findings and the additions made on the basis of the statement made by and the affidavit sworn by Sandip Singh but with liberty to the Settlement Commission, to decide the matter afresh – Decided partly in favour of Assessee.

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• 2014 (2) TMI 124
  System of accounting – Deletion made on account of non-accrual of income – Held that:- The approach made by the Tribunal is insupportable – the assessee is maintaining its accounts on the mercantile system of accounting - the Tribunal ought not have found when there is no accrual of income for the reason that foreign exchange was not received on June 11, 1981 - The fact that foreign exchange was not received on June 11, 1981, is completely irrelevant having regard to the system of accounting followed - The question of accrual is essentially related to the question whether the assessee became entitled to receive the amount - If once the question is answered in favour of the assessee, namely, the assessee was entitled to get the amount then necessarily the further question would be that when the assessee would be entitled to get the amount - Once both these questions are answered, then the further question as to when actually the assessee received the amount falls into insignificance in a situation where accounts are maintained under the mercantile system of accounting – Decided in favour of Revenue.

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• 2014 (2) TMI 123
  Violation of provisions of section 192 of the Act – Non-deduction of TDS - Held that:- The letters are the internal correspondences between the Revenue and the employers of the petitioners and in none of the letters, it is stated that the petitioners are debarred from getting exemption of paying income-tax in view of the provision of section 10(26) of the Act - A person when migrated from his own State, where he belonged to the scheduled tribe or caste, to another State in connection with his employment or any other purposes, he cannot be considered as a scheduled tribe or scheduled caste in the migrated State where his tribe is not in the order notified under clause (25) of article 366 of the Constitution. In clause (26) of section 10 of the Act stipulates that income of a member of scheduled tribe which accrued or arose from whatever source in the area or States referred to in the said sub-section or income received by such scheduled tribe by way of dividend or interest on security shall not be included in his total income in his previous year, meaning thereby, the benefit of clause (26) of section 10 of the Act will be available to the members of the scheduled tribe residing "in any areas" specified in the said section - members of the scheduled tribe residing in other part of the country other than the one and specified under section 10(26) of the Act are not entitled to the benefit of section 10(26) of the Act – the petition is disposed of with a direction to the petitioners to furnish a certificate to the respondent-employer as required under the provisions of the Act – Decided against Assessee.

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• 2014 (2) TMI 122
  Deduction of buyers commission from the sale proceeds – Held that:- The claim of the assessee accepted relating to the subsequent assessment year 2004-05 - It further pointed out that even for the subsequent assessment year, the bills produced clearly showed the net amount paid after deducting the commission in the bills - There was no ground to disturb the finding of fact given by the Tribunal - Ongoing through the relevant bills as well as the accounts of the assessee, the authorities below came to the conclusion on the genuineness of the payment made to the agent while negotiating the sale and that when the Department had accepted this practice for the subsequent year – Decided against Revenue.

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• 2014 (2) TMI 121
  Notice for reassessment u/s 147 of the Act – Held that:- Notice under section 148 of the Act has been issued on 27/4/2011 in relation to the Assessment Year 2005- 06 – it has been issued after expiry of a period of four years from the end of the relevant assessment year – as per section 147 of the Act, where assessment has been framed under section 143(3) of the Act, no action can be taken under section 147, unless income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for the assessment year - there is not even a whisper to the effect that income has escaped assessment on account of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment. There is no allegation of any such failure on the part of the petitioner - the requirement of the proviso to section 147 are not satisfied - in absence of any satisfaction having been recorded by the Assessing Officer that the income has escaped by reason of the failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the Assessment Year under consideration, assumption of jurisdiction under section 147 of the Act is failure – thus, the notice under section 147 of the Act cannot be sustained – Decided in favour of Assessee.

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• 2014 (2) TMI 120
  Retrospective application of amendment to section 40(a)(ia) of the Income Tax Act – Held that:- Amendment to section 40(a)(ia) of the Income Tax Act by virtue of Finance Act, 2010 would apply to pending proceedings also – the question is not required to be entertained.

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• 2014 (2) TMI 119
  Computation of deduction u/s 80HHC of the Act - Whether entire amount received on sale of the Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB for the purpose of the computation of deduction u/s 80HHC – Held that:- The decision in Topman Exports v. CIT [2012 (2) TMI 100 - SUPREME COURT OF INDIA] followed - DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 – Decided in favor of assessee

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• Customs

• 2014 (2) TMI 152
  Classification of goods - import of coated paper - Classification under CTH 4707.90 or under CTH 48 - Denial of refund claim - Lower appellate authority has allowed the full refund - Held that:- Though the lower appellate authority did not specifically allow the appeal of the respondents regarding their claim that the impugned paper was only waste paper chargeable to lower rate of duty under CTH 4707.90 and not under CTH 48, while allowing the appeal on the valuation issue he had specifically stated that the original authority had not categorically held the impugned paper to be serviceable paper. - earlier order of the lower appellate authority has attained finality in the absence of any appeal against it - Decided against Revenue.

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• 2014 (2) TMI 118
  Confiscation of goods - Recovery of Swiss origin gold bar of 1 kg - Provisional release of gold on furnishing bank guarantee - Held that:- father and the son were associated with the illegal import and were concerned with acquiring, carrying, keeping etc. of goods liable to confiscation under provisions of the Customs Act, 1962 - no grounds to interfere with the findings of fact recorded by the appellate authority as confirmed in appeal. There is neither any error in the appreciation of relevant facts nor any perversity in analysis of the evidence on record, nor in application of the appropriate statutory provisions, warranting appellate inference - Decided against assessee.

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• 2014 (2) TMI 117
  Confiscation of goods - Goods seized from parcel van - Parcel contained Charas and Ganja - Assessee contends that he had no knowledge of the contents - Held that:- appellant cannot pleads that the parcel van was not sealed when valuable goods of consigners were in the leased parcel van. Appellant made plea of breaking of seal baselessly in absence of any FIR or police report. When loading and unloading of goods, is made to and from parcel van, it is responsibility of appellant to answer as to identity of consigner and consignee on record and their address as well as description of goods. Appellant cannot plead innocence. A man of ordinary prudence and diligence would never believe that a leased parcel van shall leave a station without seal when appellant is answerable to pilferage and loss thereto. Appellant is always accountable to the contents inside the parcel van. It is unbelievable that the appellant has no knowledge about the NDPS substance inside the van which were found during search. So also smuggled goods of third country origin were found therein without any evidence of lawful import. NDPS substance being harmful and injurious to society, there shall be no leniency to the appellant at all against penalty imposed on him - Decided against assessee.

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• 2014 (2) TMI 116
  Maintainability of the appeal - Revocation of registration - Held that:- Under Regulation 14 (1) of the Courier Imports and Exports (Clearance) Regulations, 1998, there is no provision for filling appeal before this Tribunal - Decided against assessee.

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• 2014 (2) TMI 115
  Clearance of second quality goods under DEEC Scheme - Valuation of goods - Held that:- Both on visual examination by the customs officials and as per the inspection by the NML authorities, the materials were found to be of seconds quality. It has been duly taken note by the adjudicating Commissioner that under the DEEC scheme, no defective/seconds and/or scrap stainless materials were permitted for import. Hence, in our view, he has rightly disallowed clearance under the DEEC scheme and ordered for assessing the same to duty including anti-dumping duty on merits. As regards the value adopted for duty purposes, the appellants can have no grievance as the same has been based on their own declared value and the invoices submitted by them - Decided against assessee.

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• 2014 (2) TMI 114
  Classification of goods - Import of Combined refrigerator freezer with separate external doors - Classification under heading CTH 8418 21 00 or 8418 10 90 - Benefit of exemption under Sr. No. 50 of Notification No. 85/2004-Cus., dated 31-8-2004 - Held that:- sub-heading 841810 covers refrigerators which are combined with freezers and have separate doors, whereas, sub-heading 841821 covers only refrigerators without separate freezers and separate doors. Further, sub-heading 8418 30 covers only “freezers”. Therefore, a ‘Combined refrigerator freezer with separate external doors’ merits classification under sub heading 841810. This view is also supported by HS classification. Further, ‘Combined refrigerator freezer with separate external doors of household type’ is appropriately classifiable under tariff item 8418 10 90, as the other tariff entry at 8418 10 10 covers such refrigerators of commercial type only. Classification of ‘Combined refrigerator freezer with separate external doors’ would be under sub-heading 8418 10 and not under 8418 21, as was being followed by certain Customs field formations - CBE&C has clarified that the ‘combined refrigerator-freezer fitted with separate external doors’ would be classifiable under Heading No. 8418 10 and not under Heading No. 8418 21 and, therefore, they are not covered under Sr. No. 50 of the Notification No. 85/2004-Cus., dated 31-8-2004. CBE&C is an apex authority implementing customs laws in this country and, therefore, the clarification issued by such an authority needs to be given due consideration. Hence, the same cannot be brushed aside merely on the basis of a certificate issued by a foreign authority, who is not required to undertake classification for customs purposes - Prima facie case not in favour of assessee - Stay denied.

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• 2014 (2) TMI 105
  Denial of refund claim - Release the bank guarantee - Provisional release of the goods - Jurisdiction to raise demand - Application made u/s 27 - Held that:- petitioner has concededly deposited Rs. 47,14,188/- at various point of time as against the duty demanded of Rs. 73,92,399/-. Eventually, the entire confirmed duty was held to be illegal and set aside. The order of the CESTAT dated 6.7.2011 has become final. The provision relied upon by the Deputy Commissioner, i.e., Section 27 indicates that refund applications are to be made before the expiry of one year. In the present case, the department’s responsibility of ensuring refund in accordance with the Circular of 8.12.2004 existed and the said refund had to be made within three months of the date of the order, i.e., 6th July, 2011. The department did not do so, compelling the petitioner to approach it for refund on 11.8.2012. Even if the arguments of limitation were to be accepted, the department could not have summarily rejected the application having regard to the duty cast upon it to ensure refund within three months. Claim of an individual whose amounts are retained without authority of law to seek refund or restitution cannot be rejected merely on the application of Section 27 - Decided in favour of assessee.

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• Corporate Laws

• 2014 (2) TMI 113
  Rejection of appeal u/s 17 - Transfer of counter guarantee - Termination notice - Held that:- A perusal of the Development Agreements, entered into between the parties it is clear that the the respondent had proposed to construct a modern township in order to meet housing requirements of MIHAN and was a public project. The petitioner was issued a letter of intent. The petitioner was required to develop the plots of land in accordance with the terms and conditions recorded in the letter of intent and in the development agreement. The petitioner was also under obligation to comply with all the provisions of law and the conditions as may be imposed by the authorities. Airport authority of India Ltd had approved the height up to 61 meters of the buildings in the modern townships. Subsequently, the height was reduced by the Airport Authority of India Ltd from 61 meters to 43.2 meters on 27.10.2008 and subsequently increased on 27.2.2010 to 54.30ft. The petitioner had made a claim for compensation in view of the area reduced due to reduction of height originally permitted. The respondent had considered such representations and claim of the petitioner. Inspite of reduction of height, the petitioner accepted the additional plot of land and chose to enter into final development agreement on 24.7.2010 and second Development agreement on 29.3.2010. The learned Arbitrator has in my view, rightly rendered a prima facie view that the petitioner could not attribute any delay to the respondent. The petitioner had with open eyes and with full knowledge that certain approvals and permissions would be necessary from the Airport Authority of India Ltd had entered into a Development Agreement on 22.6.2006 as well as Final Development Agreement dated 24.7.2010 and has thus rightly rejected the submissions of the petitioner that the delay was attributable on the part of the respondent due to change of height by the Airport Authority of India Ltd - A perusal of the Agreement indicates that the petitioner was solely responsible for arranging the funds required for development in accordance with the provisions of the agreement and in accordance with the standard of a reasonable prudent developer. Respondent was justified in terminating the contract. In my view, even though there is no provision in the contract entered into between the parties permitting either party to terminate the contract, since events of default on the part of one party had already occurred, other party is entitled to terminate the contract under the provisions of the Indian Contract Act - in the absence of specific clause permitting either of the party to terminate the contract even if breaches are committed is accepted, no contract can be terminated even if one party has committed breach and the other party would have to continue his contractual rights - Arbitrator has rightly come to such a prima facie conclusion based on the documents placed on record and interpretations of the terms and conditions. No infirmity can be found in the findings rendered by the learned arbitrator. Petitioner was not ready and willing to comply with their part of the obligation. The petitioner has not carried out any work since January 2011. Even according to the petitioner they have completed only 34 % work. The petitioner has no funds and their accounts with Vijaya Bank are already freezed and Vijaya Bank has already taken symbolic possession of the lands on which the development was to be carried out by the petitioner - though a party had invested a large sum of money in the project, but that cannot entitle it to pray for a mandatory order to operate the contract once it is noted that the remedy of the petitioner would be if any in action for damages against the respondent for beach of any of the terms and conditions of the Joint Venture agreement and MOU - arbitrator has rightly not stayed the termination of the agreement effected by the respondent. A perusal of the pleadings before the learned arbitrator and in the writ petition which was on record before the learned arbitrator, it is clear that the petitioner was pressing demand of the additional terms and conditions for completion of the project. In my view, the readiness and willingness of a party has to be all throughout. The petitioner has not carried out any work since January 2011. Status quo order passed by this Court which has been continued form time to time the public project of this magnitude has been stalled for no fault of the respondent and the learned arbitrator was thus justified in refusing to continue such status quo order in favour of the petitioner. In the event of the petitioner succeeding in the arbitration proceedings and if termination of the agreement is found to be illegal the petitioner can be compensated in terms of money - termination of the Agreement thus cannot be stayed. There is no infirmity found by this Court in the order passed by the Arbitral Tribunal. The impugned order is a reasoned order and is passed after considering the submissions of the parties at length, documentary evidence and provisions of law and thus no interference is warranted by this court - Decided against Petitioner.

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• Service Tax

• 2014 (2) TMI 149
  Works contract service - laying of pipelines - 'Erection, Commissioning or Installation Service' or 'Commercial or Industrial Construction Service' prior to 01/06/2007 - Held that:- works executed by the petitioner more appropriately fall within sub-clause (b) of Section 65(25b) of the Act and are therefore CICS and not ECIS as concluded by the learned adjudicating authority. Section 65(25b) clearly limits the scope of the taxable service defined therein to a service provided in relation to works which are used primarily in commerce and industry or intended for commerce and industry. It is the unequivocal case of the petitioner that all these works were executed for the State Government, for irrigation projects and for supply of drinking water and not for commerce or industry and therefore there is no liability to service tax. The adjudication order did not advert to this contention of the petitioner, since the order proceeded on the premise that services provided prior to 01/06/2007 require to be classified as ECIS and since Section 65(39a) does not restrict the definition of the taxable service defined therein to services provided in relation to commerce or industry only, service tax is leviable. On the basis of the analysis in the adjudication order, it is not very clear whether all works and the associated services executed or provided by the petitioner prior or subsequent to 01/07/2007 were in relation to laying of pipeline or whether a few of these were outside the scope of construction of pipeline and therefore might fall within sub-clause (e) of Section 65(105)(zzzza) of the Act. We, therefore, proceed at this stage of the matter on the basis of the assertion on behalf of the petitioner that all the works pertain to laying/construction of pipeline falling within Section 65(105)(zzzza)/(b) and not sub-clause (e) of the said provision and the observations in adjudication order, that these are pipeline construction works. Since under sub-clause (b) of Section 65(105)(zzzza) of the Act (for the period subsequent to 01/06/2007), inter alia construction of pipeline primarily for the purposes of commerce or industry falls within the ambit of the definition of works contract service and services provided by the petitioner under the several agreements with the State Government were for irrigation or drinking water supply purposes, we are prima facie of the view that these not being commercial or industrial purposes are excluded from exigibility to service tax, as falling outside the purview of the taxable service - Decided in favour of assessee.

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• 2014 (2) TMI 148
  Demand raised before 01-06-2007 - Waiver of pre deposit of tax - Erection, commissioning or installation service - Service rendered to Delhi Metro Rail Corporation Ltd. - Held that:- demand under the erection, commissioning or installation service is not sustainable and the demand under the works contract service prior to 01/06/2007 is also not sustainable - applicant has made out a prima facie case for waiver of pre deposit of entire amount of tax along with interest and penalty and the stay of recovery is granted - Stay granted.

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• 2014 (2) TMI 147
  Imposition of penalty - Commissioner reduced the amount of penalty - Held that:- appellant is not disputing the tax liability. However, he is seeking abatement towards the tax from the total consideration received; however, there is no documentary evidence available on record to show that the amount received by the appellant was cum tax. In the absence of such a documentary evidence it is difficult to accept the submission of the appellant that consideration received should be treated as cum tax. Discretion was available to the appellate authority only within the minimum value and the maximum value and there was no discretion given to the authority under the law for reducing the penalty - reduction in penalty by the lower authority below the minimum prescribed is not sustainable in law. Consequently, the appellant would be liable to pay penalty equal to the service tax demand confirmed in the order of the adjudicating authority - Decided in favour of Revenue.

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• 2014 (2) TMI 146
  Demand of service tax - Imposition of equivalent penalty - Appellant submits that there is a duplication of demands - Steamer Agent Service - Held that:- what the appellant has undertaken is booking/canvassing of cargo. Therefore, the activity undertaken by the appellant squarely falls within the definition of steamer agent service - booking of cargo space would be liable to service tax and accordingly pre-deposit of the duty demand pertaining to normal period of limitation is ordered - Following decision of Greenwich Meridian Logistic (I) Pvt. [2013 (9) TMI 260 - BOMBAY HIGH COURT] - Conditional stay granted.

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• 2014 (2) TMI 145
  Waiver of pre deposit - Renting of immovable property service - Address of the property for which they have availed services is not entered to registration certificate - Held that:- It can be seen at the final hearing whether this premise are required to be entered in the registration certificate or not. Prima facie I am of the view that stay can be granted to them. Accordingly, I waive the requirement of pre-deposit of disputed amount and stay recovery thereof during the pendency of the appeal - Stay granted.

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• 2014 (2) TMI 144
  Denial of refund of service tax - Unjust enrichment - Online information and data access service - Held that:- appellant has not provided any service at all. When service is not provided, question of service tax does not arise. The appellant has filed a refund claim of the service tax paid. Therefore, question of unjust enrichment does not arise - impugned order is set aside as bar of unjust enrichment is not applicable - Decided in favour of assessee.

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• 2014 (2) TMI 143
  Waiver of pre-deposit of Service Tax - Penalty under Section 78 - construction services - Held that:- Applicant was allowed sufficient time to place the proof of payment of Service Tax by the principal contractor M/s.Larsen circumstances, we are of the view that the Applicant could not able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. No financial hardship has been pleaded - Conditional stay granted.

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• 2014 (2) TMI 142
  Waiver of pre-deposit of tax - Demand of service tax - Club or Association Services - Held that:- prima facie the applicant is liable to pay tax on interest on installment sales and room rentals and directed to deposit 10% of the tax - Upon such deposit, pre-deposit of the balance amount of tax, interest and penalty are waived and recovery thereof stayed during the pendency of the appeal - Conditional stay granted.

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• 2014 (2) TMI 141
  Rectification of mistake - Business Auxiliary Service - Ocean Freight Services - Held that:- demand is confirmed under the head ‘Business Support Service’ and therefore the order requires correction - date of hearing it is noted as 24.7.2012. He submits that the case was heard on 26.7.2012. We have checked the cause list as also proceedings recorded in the file which show that stay petition was heard on 26.7.2012 and decided on that date. Accordingly, the date of hearing is corrected as 26.7.2012 instead of 24.7.2012 as recorded in the stay order. Further, since the order was dictated and pronounced on 26.7.2012, the stay order number itself is revised as 656-657/12 dt. 26.7.12 - Rectification done.

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• 2014 (2) TMI 140
  Cenvat credit on service tax –Input service used for both dutiable as well as exempted goods - Waiver of Pre-deposit – Held that:- The appellant having reversed the entire amount of Service Tax credit availed on common input services which are used for manufacturing of dutiable as well as exempted products - Prima facie, the appellant can be said to have not availed Service Tax credit on the common input services - this reversal is enough deposit to hear and dispose the appeals – Pre-deposits waived till the disposal – Partial Stay granted.

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• Central Excise

• 2014 (2) TMI 154
  Authority to file appeal - One person holding charge of 2 Commissionerate - Held that:- Committee which authorize the appeal to be filed was one man Committee and Shri Arvind Singh who has holding the charge of Commissionerate, Bhopal and Indore Commissionerate was signatory to the authorization. The word ‘Committee’ always implies more than one Member to take a decision. Even if one person holds charge of 2 Commissionerate he does not become 2 Members to form the Committee. Accordingly, the decision of the Committee has not yet seen the light of the day not comprising two Members therein - Decided against Revenue.

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• 2014 (2) TMI 153
  Maintainability of appeal - Held that:- appeals stand filed by the Commissioner under his signature on 8-7-2005 against the order of Commissioner (Appeals) passed on 12-4-2004. The provisions of Sections 35B were amended with from 13-5-2005 and accordingly to the said amended provisions, the order passed by the lower authorities were required to be reviewed by a Committee of Commissioners for forming their opinion about the legality of the said order and then taking a view for filing appeal their against. Though the said procedure was in force at the time of filing of appeal by Revenue on 8-7-2005, no such review order by a Committee of commissioners seems to have been passed, inasmuch as no such review order was attached along with appeal. The Appeals stand filed by Commissioner under his signature in accordance with earlier provisions of section 35B - in the absence of any review order passed by a Committee of Commissioners, the present appeals are not maintainable - Decided against Revenue.

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• 2014 (2) TMI 112
  Duty demand - Clandestine removal of goods - Goods cleared without payment of duty - Held that:- Allegation against the appellant company is clandestine clearances without payment of duty of HDPE/PP Bags involving the duty of Rs. 7,77,256/-. The basis of this duty demand confirmed by the Additional Commissioner and upheld by the Commissioner (Appeals) is three documents recovered from the office of the appellant company in their factory premises in course of search. The first two documents are in form of computer generated charts giving details of dispatches during May’98 & July’98 - duty demand of Rs.5,65,466/- in respect of the entries in the dispatch charts for the month of May, 1998 and July, 1998, where no invoice numbers are mentioned, is not sustainable as the omission to mention the invoice number is either due to mistake of the person, who had prepared these charts as the goods were covered by other invoices or there were no dispatches as the sale orders had been cancelled. Allegation of non-accountal of 5,000 bags, it is seen that the appellant packed 500 bags in one bale and 10 such bales were in excess of the balance recorded in RG-I register. There is, thus, non-accountal of 5,000 bags in RG-1 register and hence, the same have been correctly confiscated. In view of this, confiscation of the bags not accounted in the RG-I register and imposition of redemption fine in lie of confiscation has to be upheld. However, no penalty would be imposable on this count as there is no evidence indicating that non-accountal was with the intention to clear the goods clandestinely - except for confiscation of 5,000 bags and redemption fine imposed in respect of the same, rest of the order is set aside - Decided in favour of assessee.

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• 2014 (2) TMI 111
  Classification of goods - Programmable Logic Controllers/Programmable Process Controllers and Automatic Data Processing Machines - Classification under Heading 85.37 or Heading 84.71 / 90.32 - Held that:- barring the product literature, the other documents cannot be admitted as evidence at this stage. This is the second round of litigation and in the first round, the issue was considered by the adjudicating authority, first appellate authority and this tribunal which was the second stage appellate authority. These documents were not produced before any of these authorities in the first round of litigation. In the second round of litigation also the same route/hierarchy has been followed and the appellant chose not to produce these documents before all the authorities. Neither any explanation nor any sufficient cause is forthcoming as to why the appellant could not produce any of these documents before the authorities. The Revenue also had no occasion to consider any of these documents. In these circumstances, we reject the request of the appellant to take the additional evidences on record except the product literature. As regards the product literature, the same formed part of the technical/expert opinion adduced by the appellant before the lower authorities and therefore, it is not a new evidence. To qualify as 'programmable process controller', Continuous monitoring of the various parameters such as pressure, flow and temperature level etc. has to be done and comparison should be made of the parameters of the desired value with the actual value and the machine should be capable of bringing the variables to the desired value. None of the machines in the present case undertake these functions nor do they have a measuring device to measure any of these parameters. As per the HSN Explanatory Notes, to fall under heading 9032, the equipment should consist of a measuring device (sensing device, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal, an electrical control device which compares the measured value with the desired value and a starting or stopping or operating device (contacts, switches or circuit breakers, relay switches). From the technical literature, it is seen that the impugned goods do not satisfy the criteria laid down. The Programmable logic controllers manufactured by the appellant do not fall under CETH heading 90.32 as programmable process controllers nor do they fall under CETH 84.71 as automatic data processing machines; - All the seven products under consideration, Simatic S5 110A/s, Simatic S-5 135/150U, Simatic AS-5 100U, Teleperm ME, Sinaut 8F, Sicomp M and Coros 2000 merit classification under CETH 85.37 as "programmable logic controllers." - Decided against assessee.

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• 2014 (2) TMI 110
  Remission of duty - goods destroyed in transit - Place of removal - Exports - Held that:- it is also doubtful as to whether the definition of ‘place of removal’ as given in section 4(3)(c) can be adopted for the purpose of Rule 21 of the Central Excise Rules, 2002 as in terms of section 4(3), the definitions of various terms given in this sub-section are for the purpose on this section i.e. section 4 which is applicable for determination of assessable value of the goods in respect of which there is ad-valorem rate of duty and which are not covered by section 3(2) or section 4A of the Act. The natural meaning of the expression ‘at any time before removal’ is any time before the time of clearance of the goods from the factory. Decision of KUNTAL GRANITES LTD. Versus COMMISSIONER OF C. EX., BANGALORE [2007 (3) TMI 540 - CESTAT, BANGALORE] is in favor of assessee. wherein it was held that, remission of duty would be admissible even in the cases where the goods are destroyed or lost in course of transit from the factory to the depots or to consignment agents premises or to the customer’s premises in the case of FOR sales or are lost/destroyed or rendered unfit for marketing during storage at the depots or at Consignment Agents premises. Single member bench states that, "I, therefore, have strong reservations about the correctness of this decision." - However, since the judgment in the case of Kuntal Granite Ltd. (Supra), is the judgment of a Devision Bench which is binding on a single bench, judicial discipline requires that this judgment must followed - Decided in favor of assessee.

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• 2014 (2) TMI 109
  Disallowance of higher wastage @ 5% for the year - manufacture of footwear - unaccounted stock - Commissioner (Appeals) has allowed the wastage of @ 2.5% of the total purchase of inner boxes - Whether the wastage @ 5% in the 2000-2001, as claimed by the appellant has to be allowed or not - Held that:- demand of duty on the basis of short found raw material is on presumption of clandestine removal of the finished goods without any evidence of such clandestine removal and cannot be upheld. In the instant case also I find the entire case of the revenue is based upon the inner boxes purchased by the appellant during the last four or five years. There is absolutely no other evidence on record. In this background, the appellant claim of higher wastage of 5% on account of rain water has to be accepted - Decided in favour of assessee.

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• 2014 (2) TMI 108
  Exemption under Notification No. 204/92-CUS dated 19/5/92 - Failure to meet the export obligation - Availment of CENVAT Credit - Whether the appellant would be eligible for Cenvat credit - Held that:- CRNGO steel sheets had been imported by the previous owner of the factory M/s Kelvinator of India Ltd. in 1993-94. At that time, the import was made free of duty against advance licences with export obligation. During 1995-96, the factories of M/s Kelvinator of India Ltd. were taken over by M/s Whirlpool of India Ltd. As per the Commissioner’s finding, the CRNGO steel sheets had been used in Ballabhgarh unit of M/s Kelvinator of India Ltd. for manufacture of Rotors and Stators and subsequently, the Ballabhgarh factory had been sold by new owners - (M/s Whirlpool of India Ltd.) to another company M/s Tecumseh India (P) Ltd. in 1997. Even if the customs duty alongwith additional customs duty in respect of the goods imported against advance licences free of duty by M/s Kelvinator of India Ltd. during 1993-94 was paid by the present appellant in 2002, they would be eligible for Cenvat credit of this additional customs duty, if and only if they have evidence to prove that the goods on which this duty had been paid had also been transferred by M/s Kelvinator of India Ltd. to them and had been used by them in the manufacture of excisable goods. If the goods imported by M/s Kelvinator of India Ltd. free of duty during 1993-94 were used by them (M/s Kelvinator) in the manufacture of Rotors and Stators prior to their factory having been taken over by the present appellant and, as such, the present appellant did not receive on transfer the stock of CRNGO steel sheets imported by M/s Kelvinator against advance licences, they (the appellant) would not be eligible for Cenvat credit, even if the duty on those goods was subsequently paid by them in 2002 for failure to meet the export obligation. But, if some quantity of steel sheets imported by M/s Kelvinator of India Ltd. had got transferred to M/s Whirlpool of India Ltd. (the appellant) when they took over the factories of M/s Kelvinator of India Ltd., and that quantity was used by them for manufacture they would be eligible for Cenvat credit of additional customs duty paid by them in 2002 on that quantity - Matter remanded back.

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• 2014 (2) TMI 107
  Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100% Export Oriented Unit - Held that:- clearances were affected by the appellant to EOUs on CT-3 and ARE-1/ARE-3 certificates. Since the clearances are made to EOU, appellant was unable to utilise the cenvat credit which were lying in the balance with them - Following decision of case in NBM Industries [2011 (9) TMI 360 - GUJARAT HIGH COURT] - Decided in favour of assessee.

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• 2014 (2) TMI 106
  Valuation of goods - Non adherence to provisions of Central Excise Law as regards valuation of goods manufactured and cleared by them - Demand of differential duty - Held that:- Undisputed by the goods were cleared from factory premises of the appellant declaring a price and discharging applicable excise duty on such rate, and not on the price at which M/s US Vitamins sold the products in the market. It is also undisputed that the demand of duty is on the differential value between contracted price and actual price on which duty is discharged - adjudicating authority has abandoned the allegations made in the show cause notice and has held that the price charged by M/s US Vitamins Ltd., cannot be the price on which excise duty can be demanded from the main appellant. Having recorded such findings, the adjudicating authority in all fairness should have dropped the proceedings initiated but he has gone beyond the allegations and has confirmed demands by recordings findings which were not alleged in the show cause notice, hence could not be met by the main appellant - Therefore, impugned orders that confirms the demands, interest and imposes penalties on all appellants on a ground different than the allegations made in the show cause notice, is unsustainable and is liable to be set aside - Decided in favour of assessee.

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• 2014 (2) TMI 104
  Rejection of rebate claim - Difference in description given in the Central Excise Invoice, ARE-1s and their export documents - Held that:- Applicant has exported the goods vide ARE-I on payment of duty and filed claim for rebate of duty. There is no dispute to the factual position of exports herein. The department as well as the Commissioner (Appeals) have rejected the impugned claim on the grounds that the name and address of the consignee and country of destination do not tally with the name and destination as shown in ARE-1s. The order was further confirmed by the Commissioner (Appeals) who also observed that the description of goods show in Central Excise Invoice was different than those shown on ARE-1. Although, the applicant has submitted in their grounds of appeal, that both the description are for the same goods and further submitted that they had indeed mentioned the name of buyer and final destination in Customs invoice which is co-related with the impugned Shipping Bills, there are no findings on these points of the applicant by either of the above authorities. in the commercial invoice and packing list the consignee name is mentioned as Zambezi Shipping Agency LLC Dubai United Emirates and buyer name Is also mentioned as, M/s. Zainab Bottlers Ltd Zanzibar Tanzania which appeared in the Central Excise Invoices/ARE-1s. The endorsement of Customs authorities in part B of ARE-1 to the effect that goods have been exported/shipped on Board is not disputed by the department. So the goods mentioned in ARE-1 stand exported - export of duty paid goods outside India. The commercial invoice also contain the name of buyer in Tanzania. Applicant has received the foreign remittances also and produced BRC. As such, the rebate claims cannot be denied to the applicant under Rule 18 of Central Excise Rules, 2002, read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 - Decided against Appellant.

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• 2014 (2) TMI 103
  Denial of rebate claim - Conditions, limitations and procedures, prescribed in Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, as amended, issued under Central Excise Rules, 2002, for grant of rebate of duty on export of goods, have not been adhered - Evidence – As per stated that the photocopy of original can’t be adduced as a secondary evidence – Assistant Commissioner of Central Excise rejected the claim but on appeal filed by the respondent, Commissioner (Appeals) allowed the rebate claim - Held that:- applicant failed to comply with the proper procedure as laid down in Notification No. 19/2004-C.E. (N.T.) dated 6-9-2004 issued under Rule 18 of the Central Excise Rules, 2002. As per Para 3(B)(1) of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 read with Para 8.4 of Chapter 8 of CBEC Excise Manual of Supplementary Instructions, the goods shall be exported on the application in Form ARE-1 specified in the annexure to Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 and procedures as specified in Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 shall be followed. So, it is clear that ARE-1 is the basic and essential export document for such exports for which impugned rebate claims have been filed. The ARE-1 form is an application for removal of excisable goods for export. In the absence of main document ARE-1 and without following the procedure described above, it cannot be established that same goods which were cleared from factory were actually exported. Since original ARE-1 is not produced, the duty paid character of exported goods cannot be established - When non-compliance of said requirement leads to any specific/odd consequences then it would be difficult to hold that requirement as non-mandatory. As such there is no force in the plea of the applicant that this lapse should be considered on a procedural lapse of technical nature which is condonable in term of case laws cited by applicant. Photocopies cannot be received as secondary evidence in terms of Section 63 of the Act and they ought not to have been received since the documents in question were admittedly photocopies, there was no possibility of the documents being compared with the originals. Government, therefore holds that non-submission of statutory document of ARE-1 and not following the basic procedure of export goods as discussed above, cannot be treated as just a minor/technical procedural lapse for the purpose of granting rebate of duty - Decided in favour of Revenue.

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• CST, VAT & Sales Tax

• 2014 (2) TMI 151
  Tax liability on packing charges - Whether packing materials separately charged, though included in the price of goods, is liable to sales tax - Held that:- As is evident from the reading of the Assessment Order this turnover relates to the packing charges relating to cement sales governed by the Cement Control Order. Thus, having regard to the limited scope of the revisional order, the liability in respect of packing charges on this turnover stands covered by the decision of the Apex Court reported in Dalmia Cement (Bharat) Ltd. & Ramco Cement Distribution Co. Pvt. Ltd. Versus State of Tamil Nadu [1992 (10) TMI 228 - SUPREME COURT OF INDIA] wherein it was specifically held that packing charges and excise duty on packing materials should not be excluded under Rule 6(cc) of the Tamil Nadu General Sales Tax Act. Thus, when charges on packing also was included in the Cement Control Order as part of the sale price, the question of deduction did not arise. Thus, applying the said decision, we reject the assessee's appeal. We make it clear that the turnover, which was the subject matter of revision as confirmed in the errata order relates to the turnover of Rs.1,43,63,569/- only relating to packing charges on the cement sales governed by the Cement Control Order - Decided against assessee.

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• 2014 (2) TMI 150
  Interstate sale or local sale - place of compliance of the contract - head office at Chennai and factory at Pondicherry - the factory at Pondicherry manufactured the required type of laminated H.D.P.E., fabrics and despatched the same to Tamil Nadu to give the shapes of the sacks as per requirement of the parties and to have the logos inprinted thereof. - Penalty u/s 12(3) of the Tamil Nadu General Sales Tax Act - Held that:- an appropriation for the purposes of an inter-State sale would be completed, only in respect of goods, which are earmarked for a particular customer. - Even though, the fabric might have been manufactured to the specifications, yet given the fact that the contract is not for the fabric as such, but for stitched sacks on a specified shape, and the compliance of the contract itself arose only in Tamil Nadu, we fail to understand that the mere despatch of fabric, which incidentally might have fitted in with colour or the textiles would not by itself result in appropriation to the contract placed by the customer - Tamil Nadu State was the only State competent to levy Sales Tax. - Decided against the assessee. Whether the assessment is best judgement assessment or not - Held that:- The mere fact that the turnover were culled out from the books of accounts by itself does not mean the assessment is not a best of judgment assessment. The material based on which the best of judgment thus made being the account books, we do not find any justifiable grounds to accept the plea of the assessee that the assessment is one based on books and hence not the best of judgment assessment. - Decided against the assessee. Levy of penalty - Held that:- he transaction is a of local sale, in the background of the admitted fact that the order placed by customers were for supply of sacks of specified description, we hold that the facts herein certainly attract the provisions under Section 12(3) of the Central Sales Tax Act - however taking lenient view instead of the maximum penalty, the levy of penalty at 50% imposed.

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• Indian Laws

• 2014 (2) TMI 139
  Transfer from one department to another - Violation of Article 14 of the Constitution - Held that:- The maximum period specified in the transfer order was only for five years. Learned Single Judge also noticed that the appellants herein had maintained their lien in their parent Department and their service conditions were still governed and controlled by the parent Department. Besides, by passing the impugned order, they were simply repatriated to their parent Department and in no manner their service lien with the Irrigation Department stood terminated. Learned Single Judge also noticed that there was no violation of any provision of the Act, the rule, the regulation or any government order governing their service conditions. The orders so passed also did not cast any stigma on the appellants. The orders were neither whimsical nor arbitrary, nor were they based on extraneous consideration - Following decision of Paritosh Singh and others Vs. State of U.P. and others [2010 (12) TMI 1082 - ALLAHABAD HIGH COURT] - Decided against Appellants.

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