Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 11, 2014
Case Laws in this Newsletter:
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deemed dividend - an assessee who is not a shareholder of the company, from which it received a loan or an advance cannot be treated as being covered by the definition of the word dividend as provided in Sec.2(22)(e) - AT
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Genuineness of expenses incurred on supports event - If such expenditure is not allowed, it may amount to taxing the gross receipts of the assessee and not the income, which is not permissible - HC
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Taxability of interest income from investment in Portfolio Management Scheme under which the banks gave an assured earning guarantee. - interest income cannot be permitted to be adjusted against the capital work in progress or the pre-operative expenses - HC
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LTCG - When time is essence of the contract, and the time schedule is not adhered to, it cannot be said that such a contract confers any rights on the vendor/landlord to seek redressal u/s 53A of the Transfer of Property Act - AT
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Interest u/s 244A of the Act - merely there is a delay in payment of the refund, the assessee is entitled to interest as per the provisions u/s 244A and not interest on interest - AT
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The capital gain, though arising in the year of conversion/treatment as stock-in-trade, so that the same is to be computed applying the fair market value on the date of conversion/treatment, the charge to tax is deferred to the year of actual sale or transfer of the asset - AT
Customs
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Merely, because the appellant had initially made a claim for exemption from duty based on the documents available, it cannot be said that the appellant had misdeclared the goods - AT
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Redemption Fine and penalty - import of Boric acid under DFIA scheme - non-insecticidal purpose - appellant are not required to obtain any permission from the Ministry of Agriculture. - AT
Indian Laws
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Territorial Jurisdiction of HC - “Cause of action“, for the purpose of Article 226(2) of the Constitution of India, for all intent and purport, must be assigned the same meaning as envisaged under Section 20(c) of the Code of Civil Procedure. - HC
Service Tax
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Sale of Space or Time for Advertisement Service - Since the appellant herein is a Municipal Corporation and it is difficult to attribute intention to evade tax on the part of such bodies - AT
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Cargo Handling Service - Composite services of shifting/transportation of materials - GTA Services - loading and unloading is ancillary to the main activity - prima facie held as GTA service - AT
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Levy of Service Tax on Chit Business - Scope of the term “services“ - section 65B(44) - Negative list - transaction in money - SC dismissed the appeal against the decision of Delhi High Court in favor of assessee - SC
Central Excise
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Education Cess - Sugar cess levied under Sugar Cess Act, 1982 was not a duty of excise for the purpose of levy of Education Cess - AT
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End use based exemption - Notification No. 10/97-C.E. - appellant has produced the required certificates to the effect that the goods in question are accessories and spare parts of scientific and technical instruments/apparatus/equipment - AT
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Penalty u/s 11AC - there is no rigorous against the appellant when “intention” and “evasion” are companion of each other to speak for themselves as to their association to cause prejudice to Revenue. Absence of one does not make the other to stand. - AT
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Extension of stay already granted - Tribunal has power to extend stay after specified period - even after insertion of third proviso of sub-section (2A) of Section 35C of the Act, 1944 - AT
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Denial of CENVAT Credit - there was no intention of the appellant to avail inadmissible, credit. Therefore penalty under Section 11AC is not warranted. - AT
VAT
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Levy of Sales tax or Service Tax - Transfer of the right to use the equipments - Even though the possession of the equipments was with O.N.G.C., they had been operated only by the personnel from the respondent company. - Not liable to sales tax - HC
Case Laws:
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Income Tax
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2014 (3) TMI 299
Taxability of interest income from investment in Portfolio Management Scheme under which the banks gave an assured earning guarantee. - Held that:- The facts of the present case are not on all fours with those in Bokaro (1998 (12) TMI 4 - SUPREME Court). - Herein the investment of the funds has nothing to do and was not inextricably linked with the construction of the project. It was an investment under the “portfolio management scheme” operated by banks under which an assured return was guaranteed by the banks. It was a conscious act of investment of funds by the assessee and if such investment results in income, the same must be brought to tax under the residual head, even if the company has not commenced its business, on the basis of Tuticorin (1997 (7) TMI 4 - SUPREME Court). Tribunal placed undue emphasis on the source of the funds instead of focussing its attention to the utilisation of the fund – whether they were invested in activities which are inextricably linked with the construction of the project. In fact, the assessee in the present case had invested the funds under the PMSV operated by the banks for an assured return. The interest income cannot, therefore, be permitted to be adjusted against the capital work in progress or the pre-operative expenses. - Decided in favor of revenue.
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2014 (3) TMI 298
Genuineness of expenses incurred on supports event - Revenue challenged the order of CIT(A) on the ground that CIT(A) has not given the benefit of exemption under Section 11 to the assessee but has allowed the expenses incurred on sports activity considering their genuineness. - Held that:- Though prima facie it would appear that the phraseology employed in Section 57(iii) is different from Section 37(1), it has been held by the Supreme Court in CIT vs. Rajendra Prasad Moody, [1978 (10) TMI 133 - SUPREME Court] that Section 57(iii) must be construed broadly and the somewhat wider language of Section 37(i) should not affect the interpretation of Section 57(iii). The assessee in the present case was created in 1979 with the object of promoting sports; there was no other object and all its constituents were giving grants/ funds only for that purpose. In truth and reality the assessee was merely acting as a custodian or conduit to the constituents for the purpose of promoting sports activity inside and outside the country. The expenditure incurred by the assessee is only for the purpose of promoting the sports events and activities and in this respect there is no challenge to the finding of fact recorded by the Tribunal. If such expenditure is not allowed, it may amount to taxing the gross receipts of the assessee and not the income, which is not permissible - Decided against the revenue.
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2014 (3) TMI 297
Application for Restoration - Held that:- Assessee as well as Revenue agreed for setting aside the earlier order passed by the HC [2014 (3) TMI 240 - DELHI HIGH COURT] and AAR [2013 (12) TMI 1118 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI] – thus, the earlier order is set aside and the matter remitted back to the AAR for fresh adjudication.
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2014 (3) TMI 296
Ex-parte order - Opportunity of being heard - Order u/s 143(3) of the Act – Addition on account of ad-hoc disallowance @ 2% - Held that:- There was no infirmity in the order of learned CIT(A) - The Assessing Officer has recorded the finding that some vouchers/bills are only self-generated vouchers - he disallowed only 2% of the expenses incurred - The CIT(A) wanted to verify the expenses - He asked the assessee to produce the vouchers before him - He allowed the assessee 13 opportunities but the assessee did not produce the vouchers – Decided against Assessee. Interest u/s234B of the Act – Held that:- It has not been shown as to how the charging of interest was not correct – thus, there was no justification to interfere with the interest charged under Section 234B of the Act Decided against Assessee.
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2014 (3) TMI 295
Deemed dividend u/s 2(22)(e) of the Act – Held that:- The decision in Commissioner of Income Tax Versus Navyug Promoters (P) Ltd. [2011 (11) TMI 318 - Delhi High Court] followed - Legal provision relates to dividend, loan or advance given under the conditions specified under Section 2(22)(e) of the Act would be treated as dividend - By a deeming provision, it is the definition of dividend which is enlarged and is not to be extended further for broadening the concept of shareholder - an assessee who is not a shareholder of the company, from which it received a loan or an advance cannot be treated as being covered by the definition of the word dividend as provided in Sec.2(22)(e) of the Act - Decided Against Revenue.
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2014 (3) TMI 294
Deletion of disallowance of interest – Interest free advance given – Held that:- The CIT(A) has recorded the finding that the advances were for the purpose of business because the assessee is in the business of real estate, share trading etc. and these advances were given for the purpose of purchase of property or as share application money - There is no nexus of the borrowed money with these advances and the own funds available with the assessee - the interest free advance is coming from preceding years and no disallowance was made in the preceding years in which the advance was given – thus, there was no infirmity in order of CIT(A) – Decided against Revenue. Disallowance u/s 14A of the Act – Held that:- The CIT(A) held that Rule 8D is not applicable - he directed the Assessing Officer to work out the disallowance under Section 14A, if any, having regard to proximity of the expenses to earn the income which did not part form of the total income – The decision in Maxopp Investment Ltd. Vs. CIT - [2011 (11) TMI 267 - Delhi High Court] followed – Decided against Revenue. Deletion made u/s 50C of the Act - Full value of consideration – Valuation of Building – Held that:-It is not clear that the assessee objected to the stamp duty valuation of both the flats or one flat only - If he objected to the valuation of both the flats, then why the matter was referred to the DVO only for one flat - If the matter was referred to the DVO for both the flats, then what about the valuation of the second flat - All these questions arise because in the order of the Assessing Officer, there is no mention of the valuation report of even first flat – Thus, the matter remitted back to the AO for verification of the record – Decided in favour of Revenue.
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2014 (3) TMI 293
Disallowance u/s 80P(2)(a)(i) of the Act – Co-operative society - Whether the Assessee is a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank – Held that:- Held that:- None of the aims and objects allows the Assessee co-operative society to accept deposits of money from the public for the purpose of lending or investment - until and unless this condition is satisfied, it cannot be said that the prime object or principal business of the Assessee is banking business - the Assessee will not comply with the first condition as laid down in the definition as given u/s 5(ccv) of the Banking Regulation Act, 1949 for becoming primary co-operative bank - if the business of the Assessee is limited only to the members and even if it is a banking business, the Assessee will be entitled for deduction u/s 80P(2)(a)(i). There is no dispute that the paid up share capital and reserves in the case of the Assessee is more than Rs. 1 lac. - Sec. 16 of The Karnataka State Co-operative Societies Act, 1959 permits admission of any other co-operative society as a member - Assessee did not file copy of its bye-laws - neither are the provisions of Sec. 17 of The Karnataka State Co-operative Societies Act, 1959 - Therefore, we are unable to give a finding whether the Assessee complies with the third condition but since the Assessee did not comply with the first condition - the Assesse cannot be regarded to be a primary co- operative bank - Since the Assessee cannot be regarded to be a primary co-operative bank – thus, it cannot be a co-operative bank and therefore the provisions of Sec. 80P(4) are not applicable in the case of the Assessee and Assessee shall be entitled for deduction u/s 80P(2)(a)(i) – thus, the order of the CIT(A) set aside – Decided in favour of Assessee.
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2014 (3) TMI 292
Capital Gain - Transfer u/s 2(47) - Claim of deduction u/s 54F of the Act - Development Agreement to develop the property - liability of the capital gains of the co-owners – Held that:- The decision in Ms. K. Radhika Versus Deputy Commissioner of Income-tax, Central Circle-2 [2011 (9) TMI 257 - ITAT HYDERABAD] followed - the provisions of deemed transfer under Section 2(47)(v) could not have been invoked - Without accrual of the consideration to the assessee, the assessee is not expected to pay capital gains on the entire agreed sales consideration - When time is essence of the contract, and the time schedule is not adhered to, it cannot be said that such a contract confers any rights on the vendor/landlord to seek redressal under section 53A of the Transfer of Property Act - The agreement cannot be said to be in the nature of a contract referred to in section 53A of the Transfer of Property Act - It cannot be said that the provisions of section 2(47)(v) will apply in the situation – thus, the capital gains could not have been taxed – Decided in favour of Assessee.
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2014 (3) TMI 291
Taxability of Technical fees – DTAA between India and Japan - Whether the fees for technical services received by the assessee was taxable under Article 12 (2) or Article 12(5) read with Article 7 (3) of Double Taxation Avoidance Agreement between India and Japan – Held that:- The supervision fee in dispute is related to the fee received for installation of equipments supplied to MUL - Article 12 (5) of DTAA between India and Japan is on the line of OECD Model Convention wherein the clause allows the state where the PE is located to tax only those profits which are economically attributable to the PE - The income should arise as a result of activities of PE - The state where the PE is located can tax the income only, if a connection exists, between the income and the PE - Thus, Article 12(5) of Indo Japan DTAA adopts "No Force of Attraction” principle - the term “effectively connected” used in the language of Article 12 (5) of DTAA between Indo Japan is not to be construed as the opposite of "legally connected" but in the sense of something "really connected". Producing activities should be closely connected in terms of relationship besides being connected economically also with the PE - LO was only facilitating the communication of the Head Office with MUL and was nowhere involved in the supervisory activities - Simply existence of the LO cannot be merely a basis that assessee was having supervisory PE in India - LO was not permitted to carry out any trading, commercial or industrial activity - There is no evidence whether the LO has violated the conditions laid down by RBI in this regard - The assessee has established a project office with the approval of RBI for each separate project. Equipments supplied under one purchase order were not complemented to the equipment supplied in another purchase order - The installation of equipments was to be carried out by MUL. The technicians were deputed for supervisions of work from Japan. Separate tenders were floated for each of the purchase orders and the assessee was not the only bidder and there were other enterprises which were awarded purchase orders also. There are finding of ITAT that the period of supervision under each contract was less than the period of 180 days as contemplated in Article 5(4) of the DTAA. There is no dispute remains about the payment received by the assessee the same is fee for technical services - The LO was only facilitating the communication of the Head Office with MUL - There is no evidence on record to establish that LO was involved in the supervisory activities - The LO was not allowed to do any trading, commercial or industrial activity as per RBI guidelines - There is no evidence on record that the LO has violated any of the conditions laid down by Reserve Bank of India in this regard - The personnel of LO present in the meetings with MUL were only accompanying the persons deputed from Japan and they were not having any role in the meeting – thus, the income is taxable as “fee for technical services” as per Article 12(2) of the DTAA between India and Japan - the FTS received by the assessee for Assessment Years 1992-93, 1993-94, 1994- 95 and 1996-97 are covered under Article 12 (2) of the Indo Japan DTAA and liable for the tax @ 20% - Decided against Assessee. For Assessment Year 1995-96 – since the details of contract No.19 to 25 were not available there for question of taxability of F.T.S. – thus, the matter remitted back to the AO – Decided in favour of Assessee.
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2014 (3) TMI 290
Exparte order – Quantum addition – Power of CIT(A) - Held that:- CIT(A) who after giving opportunity to the assessee dismissed the appeal of the assessee by passing an ex-parte order as assessee did not avail the opportunities provided by the CIT(A) –during remand also, CIT(A) again gave several opportunities to the assessee to present his case, but the assessee neither appeared personally nor through his authorized representative - assessee has failed to appear despite the fact that notice for hearing was duly served upon her, it appears that she does not have anything to support the grounds taken by her – thus, there is no need to interfere with the order passed by CIT(A) and the same is hereby upheld.
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2014 (3) TMI 289
Interest u/s 244A of the Act - Whether the CIT(A) has erred in confirming the order u/s 154 passed by AO in which AO had not granted interest on interest u/s 244A of the Act – Held that:- Section 244A provides for interest on refunds under various contingencies and clarified that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest - The decision in CIT V/s Gujarat Fluoro Chemicals 2013 (10) TMI 117 - SUPREME COURT] followed. The assessee is entitled for compensation by way of interest in case of delay on the refund is only the payment of statutory interest and not the interest on interest on the refund due to the assessee - the assessee is entitled only for simple interest - If the interest is calculated and becomes part of the amount of tax to be refunded to the assessee and in case there is a delay in payment thereof, the assessee may be entitled to get interest on the said amount due from the department which has been calculated and ascertained and in case the interest has not been calculated and merely there is a delay in payment of the refund, the assessee is entitled to interest as per the provisions of Act i.e. section 244A of the Act and not interest on interest – thus, the order of the CIT(A) upheld – Decided against Assessee.
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2014 (3) TMI 288
Nature of Asset - Whether the development arrangement entered into by the owners is in furtherance of their business activity of real estate development or is only toward realizing a capital asset - No capital gains arises to the assessee prior to A.Y. 2005-06, whereat the entire capital gain under the agreement dated 28.08.2001, as modified by the conciliation deed dated 05.04.2004, inures - To the extent, the same is against cash consideration, the capital gain is assessable u/s.45(1), while to the extent it is against the consideration in kind, i.e., the constructed space, the same is assessable u/s.45(2) - thus, liable to tax in the year of sale of the corresponding stock-in-trade. The difference in the per unit sale price, i.e., between the rates at which it is effected in respect of the assessee and her co-brother, Sh. Bharat Khatiwala even though the consideration for the area foregone for both is qua the same property and from the same person (Developer), being in fact qua the same Agreement - the area foregone for cash consideration, is only toward direct transfer u/s. 45(1) - the area stipulated as consideration for transfer of land being since substituted for cash, the consideration as stipulated, i.e., without reference to a different (or higher) rate for the other would be adopted - the different rate would not have any bearing on the computation of capital gains, which in either case would be per the respective rates - This is also so as the Revenue has not doubted the genuineness of the arrangement, and neither invoked s.50C. The assessee has worked out the area finally retained (6172.75 sq. ft.), and which would therefore be subject to capital gains u/s. 45(2), at 11%, qua which there is though no adjudication. Besides, how and in what manner, in case of any difference between the parties, would the issue get resolved. The ld. CIT(A) has also himself not given finding of the entire capital gains as having been computed by the assessee in terms of his findings. We have already stated that we consider this aspect as integral to the income determination (qua the relevant agreement). Accordingly, while presenting our observations in the matter (which may not be considered as final findings, but only as representing our understanding), we remit this aspect back to the file of the first appellate authority, so that the due process of adjudication is observed and no prejudice caused to either side; there being no argument on this aspect of the matter before us. We shall, nevertheless, clearly state the basis on which our calculation is premised to enable its appreciation. What is important is that internal consistency is maintained inasmuch as it is only the transfer consideration as agreed to and arrived at between the parties that forms the basis of the determination of the land and the construction component of the assets under reference, with the Revenue having not applied s.50C - Each method would have its pluses and minuses, being essentially an estimation exercise, so that what is paramount is that internal consistency, or the integrity of the computation, is maintained. The value of the capital asset (land) treated as stock-in-trade and the construction as reckoned for computing the capital gains, shall become the cost thereof for the purpose of computing the business income on its sale/transfer - The capital gain, though arising in the year of conversion/treatment as stock-in-trade, so that the same is to be computed applying the fair market value on the date of conversion/treatment, i.e., 05.04.2004, the charge to tax is deferred to the year of actual sale or transfer of the asset - the difference between the final sale (transfer) consideration and the cost, so arrived at, would be chargeable u/s.28 as business income; the assessee selling one flat and two flats in the previous years relevant to A.Ys. 2005-06 and 2006-07 respectively – thus, the matter remitted back to the CIT(A) for computation of capital gain as well as the business income arising to the assessee for both the years – Decided in favour of Assessee.
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2014 (3) TMI 287
Exparte order passed - Confirmation of penalty u/s 271(1)(b) - Non appearance before CIT(A) – Held that:- The assessee could not appear before the AO on both the occasions due to unavoidable circumstances, that on 14th July,2009 he was not in Mumbai and had met one advocate, that between 5th Aug. to 13th Aug,2009 he was sick - After considering the documents by the assessee and considering the facts and circumstances of the case under appeal, there was reasonable cause for the assessee for not appearing before the AO - It is also a fact that by not appearing before the authority harm is caused to the assesse - thus, the order of the FAA set aside – Decided in favour of Assessee.
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2014 (3) TMI 286
Disallowance u/s 14A of the Act – Held that:- The relevant assessment year 2007-08 is outside the scope of provisions of Rule 8D - The provisions cannot be treated as applicable to the A.Y.2007-08 – the decision in Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT 2010 (8) TMI 77 - BOMBAY HIGH COURT] followed - the percentage of the exempt income can constitute a reasonable estimate for making disallowance in the years earlier to the assessment year 2008-09 – thus, the AO is directed to quantify the disallowance – Decided partly in favour of Assessee.
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Customs
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2014 (3) TMI 285
Redemption Fine and penalty - import of Boric acid under DFIA scheme - Failure to produce import permit issued by the Central Insecticide Board and Registration Committee under the Ministry of Agriculture - Held that:- As the condition no. 7 of the Notification 2/2006 has already been stuck down by the Hon'ble Kerala High Court [2013 (8) TMI 100 - KERALA HIGH COURT]; furthermore, in the insecticides Act, 1968 provided exemption under for non-insecticidal purpose, therefore, the appellant are not required to obtain any permission from the Ministry of Agriculture. Accordingly, they are entitled for the benefit of Notification 2/2006 dated 07.04.2006 and entitled to get the benefit of the DFIA Scheme. - Decided in favor of assessee.
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2014 (3) TMI 284
Redemption fine and penalty - import of cuts of rough diamonds / semi-processed diamonds - On the basis of report, the appellant offered to pay the appropriate duty and paid duty of ₹ 1,56,725/- on 23/02/2013 and cleared the goods waiving the requirement of show-cause notice - Held that:- the confiscation of the goods under Section 111(m) is without any basis. - the appellant has cleared the goods already on payment of duty and the goods are not available for any redemption. Therefore, imposition of redemption fine under Section 125 of the Customs Act, is clearly unsustainable in law. Merely, because the appellant had initially made a claim for exemption from duty based on the documents available, it cannot be said that the appellant had misdeclared the goods. - there is no warrant for confiscation or imposition of any penalty. - Decided in favor of assessee.
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2014 (3) TMI 283
Revocation of CHA License - Regulation 22(7) of CHALR, 2004 - Misuse of the name and their licence for monetary gain - violation of Regulation under Sections 12, 13(a), 13(b) - Sub letting of CHA License - Held that:- appellant in the capacity of a CHA is not supposed to look into the details of genuineness of the importer when IEC number is produced by the importer. Moreover, it has been held that the CHA files shipping documents on the basis of the material given to him by his clients and if in the case of such exercise of his functioning, he believes in good faith that these documents were genuine, he is not liable for penal action - appellant has obtained proper authorization and the shipping documents were filed by the appellant’s employee were having the customs pass of the CHA therefore, the charges framed against the appellant are not sustainable - License revoked.
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PMLA
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2014 (3) TMI 300
Territorial Jurisdiction of HC - Place of cause of action - Action under Money Laundering Act, 2002 ('PMLA') and COFEPOSA - Held that:- the concept of forum conveniens has been recognised by the Courts and cause of action for determining territorial jurisdiction has been held to be a bundle of facts which the petitioner must prove to entitle him to a judgment in his favour. The petitioner had incorporated the companies in question in Mumbai; FIRs had been registered in Mumbai; investigations had been carried out in Mumbai; the initial information report under PMLA, 2002 being ECIR/65/MZO/2009 dated 30th October, 2009 was registered in Mumbai, pursuant to which the complaint, being PMLA Special Case No.01/2013, had been filed before Special Court, Mumbai, which is still pending adjudication in Mumbai. Consequently, it is not difficult for this Court to arrive at the conclusion that if not in whole, but at least the material and substantial cause of action had arisen in Mumbai. Petitioner's submission that since arrest order was issued in Delhi and subsequently, the petitioner was also arrested in Delhi constitutes a cause of action is misplaced. "Cause of action", for the purpose of Article 226(2) of the Constitution of India, for all intent and purport, must be assigned the same meaning as envisaged under Section 20(c) of the Code of Civil Procedure. It means a bundle of facts which are required to be proved. The entire bundle of facts pleaded, however, need not constitute a cause of action as what is necessary to be proved is material facts whereupon a writ petition can be allowed. It is pertinent to mention that in the entire petition there is not even a whisper as to what cause of action in favour of the petitioner had accrued within the jurisdiction of this Court and why this Court should exercise jurisdiction. The petitioner, for reasons best known to himself, has even omitted the mandatory jurisdiction clause in the present petition. - petition dismissed.
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Service Tax
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2014 (3) TMI 306
Levy of Service Tax on Chit Business - Scope of the term "services" - section 65B(44) - Negative list - transaction in money - SC dismissed the appeal against the decision of Delhi High Court [2013 (4) TMI 630 - DELHI HIGH COURT] wherein it was held that, there can be no levy of service tax on the footing that the services of a foreman of a chit business constitute a taxable service. - Decided against the revenue.
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2014 (3) TMI 304
Waiver of pre-deposit of Service Tax - Cargo Handling Service - Composite services of shifting/transportation of materials - GTA Services - Held that:- Applicant in this case has got various work orders from M/ s.UML for unloading, loading, track cleaning and transportation of iron ore from Railway siding to the premises of M/ s.UML and stacking thereof at M/ s.UML . In other cases the contract was for hiring of the equipments to M/ s.UML's Railway siding for hoping of iron fines, cleaning of rakes, handling of materials in the works of M/ s.UML etc. We find from the various contracts that rate quoted is for composite services and on per M.T. basis. As per note appended to the contract order the above rates are based on considering the day time traffic restriction. Further in order to cope up with the increased movement of additional quantity of raw material through Railway siding, adequate number of vehicles (dumpers/trucks) is to be deployed on regular basis. It is to be ensured that all the lorries/dumpers used for carrying out the job are fully equipped with all valid genuine documents such as tax token; owner-book, insurance policy, driving licence etc. so that there will be no problem/non-compliance en route till the delivery of the materials at the stacking yard. Any liability arising on lapse on this account will be to the Applicant's account. No increase in transportation rate will be entertained during the contract period. However, the same may be reviewed at discretion of M/ s.UML . It appears from the foregoing facts that transportation is the principal activity and the loading and unloading are only ancillary to the activity of transportation. In case of composite services of shifting/transportation of materials where loading and unloading is ancillary to the main activity of transportation are held to be classifiable under GTA Services. Further the various activities undertaken by the contractor inside the works were held to be non-taxable. We also find that in this case M/s. Usha Martin Ltd. has already discharged the tax on GTA Services under the Reverse Charge Mechanism. In these circumstances we are prima facie of the view that all the Applicants have made out prima facie case for waiver of pre-deposit of entire amount of dues adjudged against each of them. Accordingly pre-deposit of dues adjudged against each of the Applicants is waived and its recovery stayed during pendency of the Appeals - Following decision in Om Shiv Transport [2013 (5) TMI 110 - CESTAT NEW DELHI] and M/s. R.K.Transport Company [2012 (3) TMI 271 - CESTAT, NEW DELHI] - Stay granted.
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2014 (3) TMI 303
Denial of refund claim - Export made under drawback claim - Notification No.41/2007-ST dated 06/10/2007 - Held that:- appellant has violated the conditions stipulated in Notification No.41/2007-ST, as regards the non-availment of draw back on export of goods. Whether the claim is made in a routine manner or otherwise, it does not make any difference - Decided against assessee.
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2014 (3) TMI 302
Denial of the benefit of exemption under Notification No. 12/2003-ST - Abatement of 67% under notification No.1/2006-ST - Penalties under sections 76, 77 and 78 - Held that:- matter referred to President for reference to the 3rd Member with the following questions: (1) Whether the sub-contractor of a main contractor is liable to discharge the service tax liability on the services provided by him as held by the Ld. Member (Technical) relying on the decision of the Larger Bench of this Tribunal in the case of Vijay Sharma & Co. [2010 (4) TMI 570 - CESTAT, NEW DELHI] and the decision of this Tribunal in the case of Sew Construction Ltd. [2010 (11) TMI 469 - CESTAT, NEW DELHI] OR The appellant being a sub-contractor is not liable to pay service tax prior to 23/08/2007 in view of the clarification issued by the Revenue vide Master Circular No. 96/7/2007 dated 23/08/2007 (2) Whether the appellant is liable to penalty under the provisions of Section 76 & 78 of the Finance Act, 1994 as held by the Ld. Member (Technical) relying on the decisions of the Hon'ble High Court of Kerala in the case of Krishna Poduval [2005 (10) TMI 279 - Kerala High Court], and of the Hon'ble Apex Court in the case of Chairman SEBI Vs. Shriram Mutual Fund & Another [2006 (5) TMI 191 - SUPREME COURT OF INDIA] and Rajasthan Spinning & Weaving Mills [2009 (5) TMI 15 - SUPREME COURT OF INDIA]. OR The appellant is not liable to penalty under Section 76 & 78 of the Finance Act, inasmuch as the appellant had paid the tax with interest before issue of show-cause notice as held by the Ld. Member (Judicial).
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2014 (3) TMI 301
Sale of Space or Time for Advertisement Service - Intention to evasion - Appellant entered into agreements with certain private agencies whereby the sold their exclusive rights over space belonging to them such as bus shelters, street lights, municipal property, etc., to the private agencies whereby the private agencies were entitled to allot the space for advertisement purposes on rental basis - Held that:- Since the appellant herein is a Municipal Corporation and it is difficult to attribute intention to evade tax on the part of such bodies, we are of the prima facie view that the demand would survive for the normal period of limitation. In the present case, as per the statement furnished by the appellant the demand for normal period would be approximately Rs. 49 lakhs. No financial hardship has been pleaded by the appellant - Conditional stay granted.
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Central Excise
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2014 (3) TMI 282
Denial of CENVAT Credit - Manpower service - Input service credit on rent-a-cab service - Invocation of extended period of limitation - Held that:- nowhere manpower service was said to be supplied at the doorstep of the appellant. Furthermore, remuneration is to be paid by the appellant for manpower is part of the agreement. Nowhere in the agreement it is shown how the quantification is to be done. In the absence of these things, the contention of the counsel is not acceptable that transportation of employees is part of manpower supply. Therefore in the absence of concrete evidence by the appellant the input service credit is denied. Further, I find that there was no intention of the appellant to avail inadmissible, credit. Therefore penalty under Section 11AC is not warranted. Further, I find that the show cause notice has been issued by invoking the extended period of limitation as there was no malafide intention of the appellant to avail inadmissible credit. Therefore, extended period of limitation is not invokable - Decided in favour of assessee.
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2014 (3) TMI 281
Extension of stay already granted - Revenue contends that after insertion of the third proviso to sub-section (2A) of Section 35C of Central Excise Act, 1944, by Finance Act, 2013, the Tribunal should not extend the stay order - Held that:- third proviso to Section 35C (2A) of the Central Excise Act, 1944 was inserted by Finance Bill, 2013, in the context of such appeal is not disposed of within the period specified in the first proviso of the said Section, which was inserted by Finance Bill, 2002 - Tribunal has power to extend stay after specified period - even after insertion of third proviso of sub-section (2A) of Section 35C of the Act, 1944 as the said proviso provides in case the appeal is not disposed of within the total period of three hundred and six-five days from the date of order referred to in the first proviso - Following decision of COMMISSIONER OF CUS. & C. EX., AHMEDABAD Versus KUMAR COTTON MILLS PVT. LTD. [2005 (1) TMI 114 - SUPREME COURT OF INDIA] - Stay extended.
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2014 (3) TMI 280
Cenvat Credit - Supply of goods against ICB without payment of duty - final products were manufactured and cleared without discharging the obligation prescribed under Rule 6 of Cenvat Credit Rules, 2001, the department was of the view that the benefit under the captive consumption notification was not available – Held that:- Assessees prima facie were not required to discharge the obligation prescribed under Rule 6 of Cenvat Credit Rules, 2001 as they were covered by clause (vii) of Rule 6(6), which stipulates that the provisions relating to payment of 10% or 5% as the case may be were not required to be followed as the goods were supplied against I.C.B. in terms of Notification No. 6/02 or 6/06 and therefore, exempted from levy of duty of customs and additional duty as per clause (vii) of Rule 6(6) of the Cenvat Credit Rules - Following decision of assessee's own previous case [2012 (10) TMI 105 - CESTAT, CHENNAI] - Stay granted.
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2014 (3) TMI 279
Non-supply of relied upon documents - Clandestine removal of goods - Appellant made a request for supply of non-relied upon documents so as to file his defence reply - Request was not entertained and order had been passed confirming demands and imposing penalties - Violation of principle of natural justice - Held that:- When the matter travelled before the Tribunal, Tribunal took note of the said lapse on the part of the Revenue and directed the Revenue to supply all documents at the cost of assessee. Liberty was given to the assessee to inspect the files and Revenue was to place a report from the jurisdictional authority on record on 7-11-2011. There is no action by the Revenue on the said direction of the Tribunal and surprisingly no report stand filed by them. Even when the appellant was granted unconditional stay subsequently on the above ground, Revenue did not make any efforts to supply the said documents. In fact even till date the same do not stand supplied. Adamant stand of the Revenue not to supply the non-relied documents to the assessee, which stand seized from their premises and admittedly belonged to them and are required by them for taking a proper defence, result in such type of mess and may result in losing of the case of the Revenue which otherwise may be a good case for them. According to the basic principle of adjudication, the principle of natural justice are required to be followed strictly - No reason on the part of the Revenue can justify such non-return of the documents. It is difficult to understand as to what can be the objection of the Revenue for return of such seized documents, which they no longer require and which admittedly belong to assessee. Probably, there is no valid answer to such question by the Revenue - I set aside the impugned order and remand the matter to the original adjudicating authority with directions to make all efforts for supply of non-relied upon documents to the assessee so as to give a fair chance and fair opportunity to the assessee to consult the said documents and prepare a proper defence reply - Decided in favour of assessee.
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2014 (3) TMI 278
Inadmissibility of Cenvat credit - Calculation of inadmisssibility - Bar of limitation - Penalty u/s 11AC - Held that:- When the show cause notice is perused, it throws light that only allegation therein is that excess credit was taken - show cause notice has brought the appellant to the scope of allegation. But that does not throw light whether the arithmetical calculation should imput the appellant to the grave of charge of suppression. Said para also does not throw light whether there was any intention to evade which is essential condition of Section 11AC of Central Excise Act, 1944 when the appellant says that part of the demand is time-barred. Therefore, there should not be construction of Para 9 of the show cause notice to be rigorous against the appellant when “intention” and “evasion” are companion of each other to speak for themselves as to their association to cause prejudice to Revenue. Absence of one does not make the other to stand. Therefore, there shall not be any penalty under Section 11AC of Central Excise Act, 1944 - remand is made to re-determine the duty demand relating to inadmissibility of Cenvat credit applying proper formula as statutorily mandated and the appellant shall get relief in respect of penalty - Decided in favour of assessee.
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2014 (3) TMI 277
Duty demand - Penalty u/s 11AC - Commissioner (Appeals) reduced penalty from equal amount of duty - During the period from October, 1997 to November, 1997 the manufacturer has cleared 1585 MTs of sugar on loan basis to M/s. Food Corporation of India (FCI) - The free sale sugar was cleared by discharging the duty liability, as the rate applicable to levy of sugar - Government of India vide order dated 29-11-1999 decided to treat the entire loan quantity of sugar as free sale sugar and reimbursed the price difference between the levy of sugar and Free Sale Sugar - the appellants received the differential amount in the month of November, 2001 - show cause notice was issued demanding duty along with interest and also proposing to impose penalty - Held that:- w.e.f. the 11-5-2001 the provisions of Section 11AB of the Central Excise Act were amended and the provisions of Section 11AB was made applicable in all situations wherever there was a short levy or short payment, etc., of duty. In view of this the applicants are liable to pay interest w.e.f. 11-5-2001 till the payment of differential duty. In respect of penalty the manufacturer is clearing sugar as per the directions to the Food Corporation of India as per the director of Government of India decided that the Free Sale Sugar which was cleared on loan basis as levy sugar to the Free Sale Sugar and subsequently decided reimbursed the differential duty treating the same as Free Sale Sugar - it is not a case for imposition of any penalty. In view of this the penalty imposed under Section 11AC of Central Excise Act, is set aside - Decided partly in favour of assessee.
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2014 (3) TMI 276
Rectification of mistake - Mistake in the finding of the Tribunal that the appellant using the brand name only from 17-2-2001 - Held that:- There is a clear finding in the order-in-original that the appellant is affixing brand name only from 17-2-2001 - The order was pronounced and dictated in the Court in the presence of the departmental representative and the advocate. Since the observations were made based on the submissions made by both the sides and taking note of the submissions and we find that mistake sought to be rectified goes into root of the matter and if attempted to be rectified, such an effort would result in review of the order - Rectification denied.
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2014 (3) TMI 275
Availment of CENVAT Credit - Nexus of goods with manufacturing activity - Proceedings have culminated in confirmation of the demand for the Cenvat credit with interest and penalty equal to the credit availed - Held that:- In this case a detailed stay order was passed wherein the Tribunal had given detailed observations for requiring the appellant to make pre-deposit. Even at the final hearing stage, no new facts to support the case of the appellant have been brought out. The appellant had failed to maintain proper records for the utilization of the inputs and admittedly there are no records reflecting the issue of goods and their utilization in their factory - appellant has failed to show that the items in dispute have been used for the purpose for which they were received - Decided against assessee.
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2014 (3) TMI 274
End use based exemption - Notification No. 10/97-C.E. - Whether impugned goods are spare parts or accessories of the scientific and technical instruments/apparatus - end use certificate - Duty demand - Imposition of interest and equivalent penalty - Held that:- Appellant produced end-use certificates to the effect that the impugned goods are used as parts/accessories, scientific and technical instruments/apparatus, for example, certificate dated 7-5-2008 issued by BARC certifying that pipes/tubes are used as parts/accessories and used for setting up of pickling and passivation plant and installation of ventury scrubber system. Similarly, the other certificates are also to the same effect - appellant has produced the required certificates to the effect that the goods in question are accessories and spare parts of scientific and technical instruments/apparatus/equipment - Decided in favour of assessee.
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2014 (3) TMI 273
Education Cess - Commissioner (Appeals) has held that appellants are not required to pay Education Cess and Secondary Higher Education Cess on the Jute Cess collected by the Revenue under Jute Manufacture Cess Act, 1983 - Held that:- Sugar cess levied under Sugar Cess Act, 1982 was not a duty of excise for the purpose of levy of Education Cess - provisions of Sugar Cess Act and the Jute Manufacture Cess Act are similar - officers have violated the instructions of C.B.E. & C. by filing the appeals. It has to be noted that instructions were issued in exercise of powers vested in C.B.E. & C. under Section 35R of Central Excise Act, 1944 and by filing appeals against the instructions, officers have contravened the provisions of Central Excise Act - Following decision of Commissioner v. Sahakari Khand Udyog Mandli Ltd. [2010 (3) TMI 718 - GUJARAT HIGH COURT] - Decided against Revenue.
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CST, VAT & Sales Tax
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2014 (3) TMI 305
Levy of tax u/s 3A - Transfer of the right to use the equipments - Whether the Tribunal is right in concluding that in order to attract the levy of tax under Section 3A of the Tamil Nadu General Sales Tax Act, whether the possession of the goods has to be given to the user of the goods - Held that:- it had been found that the O.N.G.C. had imported the equipments viz., the R.P. Chain and the radio paging system, from Dubai, and they had been used by the respondent company, by deployment of the equipments, with their specialised personnel, and that no other person had any access to the equipments, except the staff of the respondent company. As such, the Tribunal held that there was no transfer of the right to use the equipments. Even the O.N.G.C. had no right to use the equipments on their own. However, the physical possession and the effective control of the equipments had been given to O.N.G.C. Even though the possession of the equipments was with O.N.G.C., they had been operated only by the personnel from the respondent company. Section 3-A of the Tamil Nadu General Sales Tax Act, 1959, does not get attracted. The Sales Tax Appellate Tribunal had found that the transactions cannot be treated as one falling under Section 3-A of the Act, warranting levy of tax, as the transactions were in the nature of services and there was no transfer of the right to use the goods in question. Thus, the Tribunal had confirmed the view of the Appellate Assistant Commissioner - In view of the findings of fact relating to the question, with regard to the applicability of Section 3-A of the Tamil Nadu General Sales Tax Act, 1959,we find that it is not necessary for this Court to go into the aspect of limitation, at this stage - Decided against Revenue.
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