Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 18, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
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RBI signs Letter on “Cooperation in the area of Banking Supervision” with Financial Services Agency, Japan (FSA)
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Overseas Direct Investment for February 2014
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, others – Palm Oil, Crude Palmolein, Rbd Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Taxability of capital gains – STCG OR LTCG – Section 2(42A) of the Act only uses the term “held” and not “owned”, thus indicating that a capital asset need not only refer to full title over any property - HC
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Power to transfer the case u/s 127 of the Act – Section 127(1) of the Act gives ample power to the Commissioner to transfer a case on a valid and cogent reason - HC
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U/S 80HHD the reference is to the business of the assessee which is the business as a whole and as one unit and not by sub-dividing the total income of the business into unit-wise total income - HC
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Deletion made u/s 69 of the Act – NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor - HC
Customs
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Exemption under Notification No.21/2002-Cus. - The appellant should get an opportunity to study and find out whether there is any method by which they can claim exemption from customs duty - AT
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Refund of SAD which was paid at Higher Rate - Even if higher SAD would have been paid by them at the time of import of earlier 27 consignments, the same would have been refunded to the importer. - AT
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Rejection of the transaction value - Without having NIDB data and the value of contemporaneous import, enhancement of value is not sustainable. - AT
Service Tax
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Payment of full rate of service tax on works contract and availing CENVAT Credit on inputs and input services - action of assessee cannot be called in question by the Revenue - AT
Central Excise
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Availment of CENVAT Credit on rail track material - rail used by the appellant is not covered under the definition of capital goods - AT
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MRP Based valuation - Valuation where MRP was not declared - Rules 2008 is a curative provision to deal with a situation where the RSP is not declared or tampered with. Therefore, it is retrospective in nature. - AT
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Penalty under Rule 25 of the Central Excise Rules, 2002 - Contravention of Rule 8(3A) - penalty under Rule 25 is not permissible, but penalty under Rule 27 is to be imposed - AT
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Levy of Cess - Tea Act, 1953 - Prime facie, there is no notification in the instant case for exemption of the cess in respect of export under-bond - AT
VAT
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Legality and validity of two amendments introduced by the first appellant-State of Kerala, in pursuance of its Abkari Policy framed in 2011- 2012 - SC
Case Laws:
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Income Tax
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2014 (3) TMI 474
Taxability of capital gains – STCG OR LTCG – Whether the booking rights to the apartment accrued to the assessee on the date of application for allotment/confirmation of allotment or on the date of execution of the agreement to sell i.e. the buyer’s agreement – Held that:- A right or interest in an immovable property can accrue only by way of an agreement embodying consensus ad idem - The nature of the right sought to be transferred here is the right to purchase the apartment and obtain title, termed “booking rights” - Only that agreement which intends to convey these rights according to both parties can be considered as the source of accrual of rights to the assessee - the Builders do not intend to convey any right of provisional/final allotment or any right to claim title/ownership under the confirmation letter - There being no intention to convey rights in this document, it would be impermissible for the Court to find that the right to obtain title/“booking rights” emanated from the confirmation letter - These rights may only be located in the Buyer’s agreement - the date of acquisition of the capital asset must be considered the date of signing of said agreement i.e. 4.11.2004 – thus, the capital asset in the form of these rights was held for a period of 35 months and 28 days, i.e. a short-term capital asset thus rendering the profits from the transfer of this capital asset taxable as short-term capital gains. It is incorrect to say that the assessee had no right or interest in the property until the completion of payment of all instalments under the agreement as the assessee was a beneficial owner from the date of signing the agreement, having been put in possession of the property as of that date - Section 2(42A) of the Act only uses the term “held” and not “owned”, thus indicating that a capital asset need not only refer to full title over any property – thus, there is no infirmity in the order of the Tribunal – Decided against Assessee.
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2014 (3) TMI 473
Power to transfer the case u/s 127 of the Act Held that:- Two notices were issued to the petitioner and she was also given the opportunity of being heard There cannot be any dispute to the proposition that the reasons for exercising power under Section 127(1) of the Act has to be relevant and germane - the power under Section 127(1) of the Act is exercised on extraneous reason the order falls outside the purview of Section 127 (1) of the Act - The reasons given in the order cannot be said to be irrelevant or not germane to the issues - Section 127(1) of the Act gives ample power to the Commissioner to transfer a case on a valid and cogent reason - There is no error in the order of the Commissioner in exercising the power by the Commissioner under Section 127 (1) of the Act in transferring the case of the petitioner. Search u/s 132(4A) of the Act Held that:- Section 132(4A) of the Act contains a provision regarding presumption - The provision may be relevant at the time of final assessment regarding the cash seized in the search, but the provision does not help the petitioner in finding any fault in exercise of power under Section 127 (1) of the Act Decided against Assessee.
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2014 (3) TMI 472
Interest u/s 215 of the Act – Deductibility of interest along with income tax liability - Companies (Profits) Surtax Act, 1964 - Whether the Tribunal was legally correct to hold that interest u/s 215 is to be regarded as part and parcel of Income Tax liability – Held that:- The assessee has revised the chargeable profit deducting interest from the total income as per the letter dated 9.6.1987 - Under Rule 2(i) of the First Schedule, tax and liability payable by the company is to be excluded while computing the chargeable profits, interest charged under any section of the Income Tax Act is covered for exclusion from profits assessed to tax - interest was paid as a consequence of default committed by the assessee in discharging its statutory obligation. The interest under sections 215 or 217 has a direct connection with the amount payable as advance tax by charging interest on which the corpus of the tax amount is enlarged - Section 139 (8) or section 215/217 is to be regarded as part and parcel of the liability to pay tax – thus, the same is deductible along with income tax liability while computing the chargeable profits of the company in accordance with the relevant provisions of Companies (Profits) Surtax Act, 1964 – thus, there is no reason to interfere in the findings of the Tribunal – Decided against Revenue.
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2014 (3) TMI 471
Validity of assessment order of the Tribunal – Held that:- The order of the Tribunal is cryptic - The Tribunal has not considered the case independently on merits, as against the order passed by the Assessing Officer - The Tribunal whether or not it agreed with the reasons of the Assessing Officer, ought to have recorded its reasons and considered the matter independently in the light of relevant provisions of the Income Tax Act, 1961 – thus, the matter is remitted back to the Tribunal – Decided in favour of Assessee.
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2014 (3) TMI 470
Allowability of Expenditure u/s 37 of the Act - Nature of Expenses – Payment made for right to use - Capital OR Revenue - Whether the Tribunal was correct in holding that the payment made for the right to use central court yard along with the marble installed to carry on its hotel business is a revenue expenditure allowable u/s 37 of the Act – Held that:- The decision in EMPIRE JUTE CO. LTD. -vs- COMMISSIONER OF INCOME TAX [1980 (5) TMI 1 - SUPREME Court] followed - There is no all-embracing formula which can provide a ready solution to the problem - no touchstone has been devised - Every case has to be decided on its own facts, keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred - But a few tests formulated by the Courts may be referred to as they might help to arrive at a correct decision of the controversy between the parties. If the advantage consists merely in facilitating the assessee’s trading operations or enabling the management and conduct of the assessee’s business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future - the amount paid to the Trust was for the use of the court yard under the MOU for an indefinite future – thus, it would be on revenue account - merely because the advantage may endure for an indefinite future would not mean that the expenditure would be on capital account and not revenue - The advance consists merely in facilitating the assessee’s business operations, enabling the management to conduct their Hotel business more efficiently and profitably – Decided against Revenue. Computation of deduction u/s 80IA of the Act – Interest on deposits – Held that:- The decision in LIBERTY INDIA Vs COMMISSIONER OF INCOME-TAX [2009 (8) TMI 63 - SUPREME COURT] followed – interest cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking - Decided in favour of Revenue. Allowability of deduction u/s 80HHD of the Act – Held that:- The decision in Commissioner of Income Tax & anr. Vs M/s.ITC Hotels Ltd. [2009 (9) TMI 675 - Karnataka High Court] followed – u/s 80HHD of the Act the reference is to the business of the assessee which is the business as a whole and as one unit and not by sub- dividing the total income of the business into unit-wise total income and then arriving at the unit-wise overall profit proportionate profit and then adding up the same for arriving at the benefit under section 80HHD of the Act – the decision followed has been admitted in the SC as SLP – thus, the assessee is entitled for the deduction by the time final judgement does not came – Decided against Revenue.
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2014 (3) TMI 469
Computation of total income for the purpose of exemption u/s 10(23C)(iiiad) of the Act - Registration u/s 12A of the Act - The decision in Commissioner of Income Tax v. St.Mary's Malankara Seminary [2012 (3) TMI 263 - KERALA HIGH COURT] followed - imparting training to students in Seminary is also education and it is also with reference to very same assessee – now it need not ponder much over the issue or the controversy regarding the registration under Section 12A to be given to the assessee. Whether Section 12A registration should be given for the assessment 2005-06 – Held that:- The Tribunal opined that the amount shown under the other income head cannot be added to the receipts – it cannot be understood what exactly the Tribunal meant by making a statement that 'no man can make profit of himself' - the Tribunal has not explained what exactly this Rs. 17 lakhs amounts to - The order of the Tribunal does not provide a clear picture as to what this amount of Rs. 17 lakhs represents - If Rs. 17 lakhs is not counted as receipts, the total receipt would come within one Crore. If Rs. 17 lakhs is added, it crosses one Crore - Thus if this Rs. 17 lakhs is added, the entire scenario would change - In the absence of any particulars, the matter is remitted back to the Tribunal for clarification - It has to consider the source of Rs. 17 lakhs alone so as to consider the controversy under Section 10 (23C)(iiiad) of the Act – Decided partly in favour of Revenue.
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2014 (3) TMI 468
Computation of deduction 80HHC of the Act - Exclusion of Excise duty and sales tax from turnover - Whether the Tribunal is right in directing the AO to exclude excise duty and sales tax from the total turnover computing deduction u/s 80HHC of the Act – Held that:- The decision in CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court] followed - There was no merit in the contentions of the revenue - tax under the Act is upon income, profits and gains - It is not a tax on gross receipts - Under Section 2(24) of the Act the word "income" includes profits and gains. The words "total turnover" in the cannot be interpreted with reference to the definition of the word "turnover" in other laws like Central Sales Tax or as defined in accounting principles. Goods for export do not incur excise duty liability - even commission and interest formed a part of the profit and loss account were not eligible for deduction under Section 80HHC - It is important to bear in mind that excise duty and sales tax are indirect taxes - They are recovered by the assessee on behalf of the Government - if they are made relatable to exports, the formula under Section 80HHC would become unworkable – thus, the excise duty is excise duty is to be excluded for the purpose of computation of deduction u/s. 80HHC – Decided against Revenue.
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2014 (3) TMI 467
Deletion made u/s 69 of the Act – Unexplained and ingenuine credit in the capital account – Held that:- The amount was own money of the assessee firm which was introduced by way of gift in the name of partner from a Non-Resident account – The decision in Jaspal Singh v. CIT [2006 (9) TMI 143 - PUNJAB AND HARYANA High Court] followed - NRI gift from a stranger was neither genuine nor valid - the assessee discharged onus on him to prove the genuineness of the gift - NRI gift could not be accepted as genuine unless the assessee was able to prove natural love and affection and financial capacity of the donor - The legal position involved clearly did not engage the attention of the Tribunal, deserved from it - partners of the assessee firm had not been maintaining their own books of accounts. Any credit found unexplained and ingenuine was to be accounted for in the books of accounts of the assessee firm only - sequelly such credit was to be treated as income of the firm for the year in such ingenuine and unexplained credits were found in its books of accounts - thus, the finding of the Tribunal and that of the CIT(A) had gone wrong in reversing the finding of the AO which are restored, as unexplained and ingenuine credit in the capital account of the partner Sat Pal Singh in the book of accounts of the assessee firm in absence of any separate account books having been maintained by the partners, was to be credited in the account of the assessee firm only – Decided in favour of Revenue.
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2014 (3) TMI 466
Deletion of disallowance u/s 54B of the Act – Sale of non-agricultural plots - Held that:- The Revenue contended that the CIT(A) has erred in accepting the additional evidences furnished during the appellate stage without remanding the same to the AO - the additional evidences filed by the assessee were registered purchase deed of land, development permission and building use permission certificate issued by the Surat Municipal Corporation – thus, the matter is remitted back to the AO for fresh adjudication after examining all the evidences in connection with the claim of the assessee for deduction u/s. 54F of the Act – Decided in favour of Revenue.
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2014 (3) TMI 465
Allowability of exemption u/s. 80IB of the Act – Profit earned as taxable income u/s. 68 of the Act - Revenue was of the view that the firm is non-existent and also the manufacturing activities carried out are not genuine - Held that:- The assessee has complied with rules and regulations and obtained industrial license as SSI unit, Pollution Clearance Certificate from Pollution Control Board towards industrial undertaking, it is registered under Sales tax/VAT - The assessee also produced details of sales and purchase invoice during the course of original assessment proceedings, during the course of set aside proceedings and even before CIT(A) and which were verified by issuing notices u/s. 133(6) of the Act - The AO also verified the transactions of purchase of machinery and sales as well as manufacturing of goods have been accepted – thus, the CIT(A) has rightly allowed the claim of assessee u/s. 80IB of the Act to the assessee being a manufacturing unit and all rules and regulations and necessary permission also obtained on the same plot – Decided against Revenue.
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2014 (3) TMI 464
Deletion on account of shortage of stock – Failure to make satisfactory explanation – Held that:- The findings of the CIT(A) upheld – CIT(A) was of the view that there cannot be a straight jacket formula in case of such type of materials for determing the amount of shortage year to year - The percentage of the loss can vary from case to case, year to year and from place to place - The main criteria for the Assessing Officer are to establish that the loss/shortages claimed by the assessee is excessive and bogus which he has failed to do so - thus, in the absence of any direct link or remark by the Assesing Officer to prove the non-genuineness of the shortage claimed, the estimated disallowance is set aside - Revenue could not point out any defect or any error in the order of CIT(A) that loss cannot increase to 5% to 6% from 1 to 2% as declared in earlier years - Since revenue could not bring out any discrepancy – thus, the CIT(A) has rightly deleted the addition – Decided against Revenue. Restriction of disallowance u.s 14A of the Act r.w. Rule 8D of the Act – Held that:- The AO made disallowance of expenses related to exempted income by applying Rule 8D of the I. T. Rules, 1962 for the reasons that the assessee has not added back any expense qua exempted income - the CIT(A) has considered that the AO has not recorded any satisfaction or proved any link to extablish that borrowed funds were utilised for the purpose of investment in shares - thus, he has rightly restricted the addition – Decided against Revenue.
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2014 (3) TMI 463
Deletion of difference on account of excess purchases and sales – Held that:- CIT(A) was of the view that the assessee shows purchases and sales on the basis of value of each transaction it has entered into to derive true profit or loss on such transaction - the figures of Purchases and sales in Form 1ODB are without Brokerage while the assessee has to account for all the transactions net of Brokerage - The CIT(A) has considered the reconciliation statement which was also filed before AO but he has not considered fact that there is brokerage which has to be taken into account and the assessee has accounted for sales as well as purchases on the basis of net of brokerage - Once this fact has been considered by the CIT(A) and even now revenue could not point out any defect in the reconciliation statement – there is no reason to interfere in the order of CIT(A) – Decided against Revenue. Deduction on account of settlement guarantee fund – Held that:- The amount on account of payment of settlement guarantee fund by the calcutta Stock Exchange Ltd. was borne by all the members of Calcutta Stock Exchange vide rules and regulation of the exchange - The financial contribution compulsorily collected by Stock Exchange of which assessee is a member and who is also governed by rules and regulations of the Calcutta Stock Exchange is not penalty - assessee never defaulted in Calcutta Stock Exchange at any point of time and this payment made was for the better functioning of Calcutta Stock Exchange, which in no way can be called as penalty in nature – thus, the CIT(A) has rightly allowed the claim of the assessee – Decided against Revenue. Disallowance u/s 14A of the Act r.w. Rule 8D of the Act – Held that:- CIT(A) was of the view that the assessee's books of account are clear and no defect is pointed out by the AO in the interest free fund position explained by the assessee or in the books of account of the assessee which proves that borrowed funds were not used for the purposes of making the investments, the disallowance cannot be made - Assessee contended that no satisfaction whatsoever has been recorded by the AO regarding correctness of accounts of the assessee no diwsallowance can be made u/s. 14A of the Act read with Rule 8D of the Rules - As regards to AY 2008-09, the CIT(A) specifically made disallowance of demat charges and 0.50% on average value of investment - Once the CIT(A) held that there is no defect pointed out by AO and there is no satisfaction that the borrowed funds were used for making investment, the disallowance is unwarranted – Decided in favour of Assessee.
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2014 (3) TMI 462
Confirmation of addition made u/s 40A(3) of the Act – Payments made does not exceeded the limit – Held that:- The assessee was required to establish satisfaction of the conditions prescribed in Rule 6DD when payments were made in cash at a time in excessive of the amount prescribed u/s. 40A(3) of the Act - when payments were made by the assessee were within the limit specified u/s. 40A(3) of the Act, the genuine business expenditure could not be disallowed by the AO merely because the assessee could not satisfy to the AO about business exigencies for which payments were made in cash – Relying upon CIT vs. Aloo Supply Company [1979 (12) TMI 60 - ORISSA High Court] - where singular payment has not exceeded Rs. 20,000/- the department was not justified in invoking the provisions of section 40A(3) of the Act by aggregating the entire payment made to a party – Decided in favour of Assessee. Disallowance of telephone expenses for personal use – Held that:- The decision in Sayaji Iron and Engineering Co. vs. CIT [2001 (7) TMI 70 - GUJARAT High Court] followed - Once any remuneration was fixed as provided in section 309 it was not possible to state that the assessee incurred the expenditure for the personal use of the directors - Even if there was any personal use by the directors that was as per the terms and conditions of service and, in so far as the assessee was concerned, it was business expenditure and no part of the expenditure could be disallowed – revenue could not controvert the findings of the decision followed – thus, the disallowance made on the ground of personal use of telephones is allowed – Decided in favour of Assessee.
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2014 (3) TMI 461
Assessment of receipts –Rental income - Income from house property treated as business income - Order passed u/s 144 of the Act – Held that:- The issue as to whether the rental income is to be considered under the head 'Income from House Property' or not has to be considered in the light of the facts for the first AY i.e. AY 2002-03 - As the decision for AY 2002-03 will have consequential effect in the subsequent AY.s – thus, in the interest of justice – the matter is remitted back to the AO for fresh adjudication after giving due opportunity of hearing to the assessee and after considering such evidences as may be placed before him. If the assessee fails to co-operate the AO and/or do not furnish the requisite documents as may be required by him, the AO will be at liberty to decide and pass the fresh Assessment Order as per law on the basis of the papers available before him by a reasoned order - the orders of the FAA for all the three AY.s under consideration are set-aside to the file of the AO – Decided in favour of Assessee.
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Customs
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2014 (3) TMI 460
Exemption under Notification No.21/2002-Cus. dt. 1.3.2002 under Sl. No.347-C read with condition No.105 - Exemption is available in respect of inputs made for overhauling the engine of flying clubs - Penalty under Section 28 of Customs Act, 1962 - Penalty under Section 114A of Customs Act - Held that:- in the annexures, the bills of entry have not been relied upon and the statement prepared based on the bills of entry has been relied upon. List of false/fake purchase orders is shown as annexures but copies of fake orders is not found as an annexure to the show-cause notice - The show-cause notice as well as order-in-original relied on the statement which was prepared by the employee of the appellant - There is no evidence to show that the appellant had asked for documents from DRI before the order-in-original was passed. Further, the appellants have also not replied to the show-cause notice. The appellant should get an opportunity to study and find out whether there is any method by which they can claim exemption from customs duty - it is proper that the matter has to be remanded and such remand cannot be done without requiring the appellant to deposit at least a portion of the amount demanded - Matter remanded back with partial stay granted.
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2014 (3) TMI 459
Refund of SAD which was paid at Higher Rate - waiver of pre-deposit - Held that:- Even if higher SAD would have been paid by them at the time of import of earlier 27 consignments, the same would have been refunded to the importer. Revenue has not initiated proceedings against the assessee in respect of SAD already refunded to them. As such, we are of the view that differential SAD now being confirmed against the assessee, by way of impugned order, is also eligible to be refunded to them, thus making the entire situation revenue neutral - appellant directed to keep the said bank guarantee alive during the pendency of the appeal subject to which balance amount of duty and penalties imposed upon all the applicants shall stand waived and its recovery stayed during pendency of the appeal - Stay granted.
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2014 (3) TMI 458
Rejection of the transaction value - Rule 12 of the Customs (Valuation) Rules, 2007 - Enhancement of transactional value - Held that:- although the transaction value has been rejected but loading of the value has not been on the basis of contemporaneous import. The loading has been done on the basis of NTN pricelist by offering discount of 35%. As per the invoice, transaction value has been declared by different description, size and quantity of the impugned goods shown in the invoice and no comparable price of the said goods had been brought on record by the adjudicating authority. Without having NIDB data and the value of contemporaneous import, enhancement of value is not sustainable. Therefore, the case law relied upon by the learned A.R. are not relevant to the facts of this case as no contemporaneous imports are available for the impugned goods. Therefore, the value addition made on the transaction value as declared by the appellants is not justified - Decided in favour of assessee.
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Service Tax
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2014 (3) TMI 477
Restoration of appeal - Condonation of delay - Mistake in interpretation of impugned order - Held that:- Assessee have already paid the amount of service tax of ₹ 1,18,320/- and ₹ 1,28,272/- along with interest and therefore they were under the impression that the impugned order has upheld the demand of service tax and interest which they have already paid - applicant is a small entrepreneur registered with the service tax authorities and wrongly understood the word ‘appeal allowed as above’ as mentioned in the impugned order. It appears from the operative portion of the order that the applicant failed to understand the implications of this order as they have already deposited duty and interest, which they were not contesting. After considering the facts and circumstances of the case and the operative portion of the order, it is appropriate to condone the delay of 169 days involved in the filing of the appeal and we do the same - Delay condoned.
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2014 (3) TMI 476
Waiver of pre-deposit - Photographic Service - Supply of tangible goods - business of supplying equipment for cinematography on hire basis to various agencies which shoot cine film - Held that:- this is a dispute which can be argued on either side and this requires detailed examination at the time of final hearing - Conditional stay granted.
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2014 (3) TMI 454
Payment of full rate of service tax on works contract and availing CENVAT Credit on inputs and input services - Valuation under Service Tax (determination of value) Rules 2006 - Whether the appellant are correct in paying full rate of Service tax @ 12.36% or 10.30% (including education cess and SHE cess) and avail cenvat credit on the inputs and inputs services utilised for rendering of ‘Works Contract Services.’ - Held that:- Service Tax liability is to be discharged on the gross amount charged by the service provider. In the case in hand there is no dispute as to the value or gross amount which needs to be considered for discharge of service tax liability. It is admitted by both sides that the value of the works contract executed by the appellant is the value on which the appellant has discharged full rate of service tax. While applying provisions of 67(4) necessary implication is that the value for discharge of service tax liability needs to be determined by referring to service tax valuation rules. In the case in hand since there is no dispute as to the gross value charged by the appellant there is no necessity to take recourse for determining the value under Service Tax (determination of value) Rules 2006. Appellant is discharging full Service Tax under the category of Works Contract Service using Inputs and Input Service are used for rendering of ‘output services’; on reading of provisions of Rule 2(l) of the cenvat credit rules 2004 it would indicate that assessee is eligible avail to cenvat credit of Inputs and input services which are used to provide ‘output service’ which would include ‘setting up’ of a factory premises. In the case in hand, it is undisputed that the appellant had provided output services which covered by works contract for setting up of plant, it has to be held that cenvat credit availed by the appellant is in consonance with the provisions of the Cenvat Credit Rules 2004. We also hold that the discharge of Service Tax liability at full rate by the appellant by applying provisions of section 67 of the Finance Act 1994 cannot be called in question by the Revenue - Decided in favour of assessee.
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Central Excise
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2014 (3) TMI 457
Waiver of pre-deposit - Stay of recovery of Cenvat Credit - Imposition of interest and equal penalty - Held that:- Cenvat Credit on inputs used in manufacture of exempted goods is deniable under Rule 6(1) Cenvat Credit Rule. In this case if Dairy Machinery manufactured by the applicants classifiable under Chapter heading 8434 is exempted under the notification No. 06/2006-CE dt. 01.03.2006. Therefore prima Facie the credit of duty paid on inputs is deniable in terms of Rule 6(1) of the Cenvat Credit Rules and the demand confirmed on this ground is sustainable against the applicants - Conditional stay granted.
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2014 (3) TMI 455
Availment of CENVAT Credit on rail track material - waiver of predeposit - Whether Cenvat credit is available on rail used in the factory and has been utilized further for movement of goods within the factory as capital goods - Held that:- From the perusal of above definition it is very clear that rail track material does not fall within definition of capital goods. Only Chapter Headings 6804 and 6805 of Chapter 68, have been included in the definition, whereas PSC sleepers is classified under Chapter Heading 6807. Therefore, rail used by the appellant is not covered under the definition of capital goods. In view of this, assessee has failed to prove its case to be fit for waiver of pre-deposit.
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2014 (3) TMI 453
Availment of CENVAT Credit - Whether the cenvated inputs were actually exchanged between the three units without reversal of equivalent credit or the same were sold out to some other persons - allegation of clandestine removal - Revenue neutrality - Held that:- it is not established by the investigation that the cash seized represent the sale proceeds of clandestinely removed inputs/ finished goods either by way of a statement or by a documentary evidence. On presumptions alone it cannot be held that cash seized from the residential premises represent the sale proceeds of clandestinely removed inputs/ goods in the absence of any affirmative tangible and positive evidence. It has not been disputed by the appellants that the inputs have not been removed as such without reversal of cenvat credit contrary to what is prescribed under Rule 3(5) of the Cenvat Credit Rules, 2004. Appellants are established registered units and cannot plead ignorance of law. It is upheld that appellants are liable to penalties under Cenvat Credit Rules, 2004 for removing the cenvatable inputs without reversing the corresponding cenvat credit at the time of removal of inputs as such - Matter remanded for de-novo consideration - Decided partly in favour of assessee.
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2014 (3) TMI 451
Waiver of pre-deposit of duty - Denial of cenvat credit pertaining to inputs transferred to the EOU, along with interest - Held that:- Following decision of Sun Pharmaceuticals Industries vs. Commissioner of Central Excise [2009 (5) TMI 849 - CESTAT CHENNAI] - prima facie the applicant has a strong case for waiver - Stay granted.
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2014 (3) TMI 450
Penalty under Rule 25 of the Central Excise Rules, 2002 - Contravention of Rule 8 (3A) of the Central Excise Rules - Failure to pay their excise duty within 30 days - Utilization of CENVAT Credit - Held that:- although the appellant has contravened the provisions of Rule 8(3A) of the Central Excise Rules, 2002, but the intent to evade payment of duty is missing. Therefore, the provisions of Section 11AC of the Central Excise Act are not reflected. Accordingly, penalty under Rule 25 of the Central Excise Rules is not permissible, but penalty under Rule 27 of the Rules is to be imposed. As the appellant has contravened the provisions of Rule 8(3A), therefore, following the decision of Solar Chemferts (2011 (6) TMI 640 - CESTAT, MUMBAI), I impose penalty of Rs. 5,000/- each on the appellants - Decided against assessee.
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2014 (3) TMI 449
Levy of Cess - Tea Act, 1953 - Whether cess is payable on export under-bond - Held that:- Tribunal in the case of Hindustan Lever Ltd. (2009 (9) TMI 402 - CESTAT, NEW DELHI) following the decision of the Hon'ble Supreme Court in the case of Union of India and Ors. Vs Ahmedabad Manufacturing and Calico Printing Co. Ltd. - reported [1985 (8) TMI 70 - SUPREME COURT OF INDIA], observed that exemption granted in relation to excise duty under Central Excise Act cannot be extendable in different statutes. No such notification has been placed before the Hon'ble court nor it is contended that there is any such notification. Prime facie, we do not find any notification in the instant case for exemption of the cess in respect of export under-bond. We have also noticed the decision of the Hon'ble Supreme Court in the case of Tata Tea Ltd., (2002 (5) TMI 235 - SUPREME COURT OF INDIA) has held that cess is liable to be levied under Section 25 of the Tea Act, 1953 and the Hon'ble court answered the question in favour of the Revenue - Conditional stay granted.
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2014 (3) TMI 448
Waiver of pre deposit - Benefit of exemption Notification No.6/2006-CE dated 01.03.2006 - Whether the applicant is eligible for the benefit of exemption Notification No.6/2006-CE dated 01.03.2006 (Sl. No.91) for supply against International competition bidding (ICB) to the Chandrapur Project and Bhusawal Project of Maharashtra State Power Generation Co. Ltd (MAHAGENCO) during the period January 2010 to February 2011 - Held that:- subsequent amendment of Customs Notification by Notification No. 49/2012-Cus dated 10.09.2012, Bhusawal and Chandrapur expansion projects were incorporated in the same notification. In view of the above, the applicants have made out a prima facie case for waiver of predeposit of duty and penalty. We have also noticed that the order of the Commissioner as mentioned above and this Tribunal in the appellant's own case in respect of Chandrapur Thermal unit has already granted stay - Stay granted.
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2014 (3) TMI 447
Waiver of pre-deposit of duty - Manufacture of Twisted Polyester Filament Yarn and Draw-twisted Polyester Filament Yarn out of duty paid textured or draw-twisted polyester filament yarn- Exemption Notification No. 6/2002-C.E., Sr. No. 123 and 126 - Held that:- condition Nos. 123 & 126 of Notification No. 6/2002 which exempts Twisted Polyester Filament Yarn and Draw-twisted Polyester Filament Yarn, produced by the appellant are subjected to conditions mentioned in the notification - said conditions does not specify ‘only’ use of specified raw material on which the duty has been paid, which would indicate that the appellant is eligible to use non-duty paid material along with duty-paid specified material for manufacture of final product - appellant has made out a prima facie case for the waiver of pre-deposit of the amounts involved - application for waiver of the pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Following decision of COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Versus SUNDER STEELS LTD. [2005 (2) TMI 117 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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2014 (3) TMI 446
Valuation - Valuation on basis of transaction value or MRP - Held that:- appellant is clearing sachets which contain less than 10 gms of Bru instant coffee powder and which are sold on the basis of numbers. Proceedings were initiated on the ground that the retail sale of the same is not on the basis of weight but on the basis of numbers, therefore, exemption under Rule 34 of Standards of Weights and Measures (Packaged Commodity) Rules 1977 prior to amendment and under Rule 2 subsequent to the amendment is not available and therefore duty should be discharged on the basis of MRP/RSP - Commissioner of Central Excise, Bangalore-I who while passing the order in respect of show cause notices issued for the period from October 2011 to August 2012 has indicated clearly that there were two show cause notices issued earlier which are the show cause notice culminated in the impugned order and are before us and has come to the conclusion that for the period from October 2011 to August 2012, the demands cannot be sustained - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2014 (3) TMI 478
Clarification on jurisdiction of Tribunal - Held that:- the Court relied upon its earlier order which required the petitioner to appeal in Tribunal and make submissions and applications including the request for waiver of pre-deposit as available in law - Tribunal had wrongly expressed its reservations – the view expressed by the Single Member of VAT Tribunal is not only astonishing but virtually amounts to overreaching this Court’s order which kept rights and contentions of all parties open - Matter remitted back to tribunal – Decided in favour of assessee.
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2014 (3) TMI 456
Legality and validity of two amendments introduced by the first appellant-State of Kerala, in pursuance of its Abkari Policy framed in 2011- 2012 - Abkari Policy to curb the rampant alcoholism in the State of Kerala, which claims to have the highest consumption of alcohol as against the other states in India - Kerela High Court struck down amendments on the touchstone of Article 14 of the Constitution of India, as being arbitrary, discriminatory, irrational, excessive, and even malafide - Desired objective not to be fulfilled - fundamental right to trade in liquor - Held that:- There cannot be any dispute on the proposition that, there is no fundamental right to trade in liquor. At the same time we cannot ignore the dicta of the Supreme Court in Khoday Distilleries (1994 (10) TMI 269 - SUPREME COURT) and particularly in para 60(g) where the Apex Court has laid down that where such a trade is permitted, there can not be any room for discrimination. Government stated (November 2011) that there are certain bar hotels functioning with standard below two star specifications. As these hotels were functioning for long periods, they were regularised based on Abkari Policy 2007-08 - as per Rules the licences are issued each year and the standard for granting licence are still three star standard - Government, 15 years after extending time limit for the first time, again extended (12 March 2007) the time limit up to 31 March 2007 and stated that failure to comply with the standards would lead to cancellation of licences. However, on the very next day, i.e. 13 March 2007 the Government added a proviso to Rule 13 that all existing licensees not having the above classification and which were functional as on 31 March 2007 shall be regularised. The Abkari policy for 2008-09 (February 2008) stated that the Government would insist on minimum facility and hygienic conditions in all the 418 bar hotels which did not have 2-star status, but which were regularised during 2007-08. Consequences of the amendment of 2012 will be that four star and five star hotels would not be permitted to have FL-3 licences only on the ground that they are within the prohibited distance from such hotels which have poor hygiene standards, and which are not following norms laid down by the State Government. We may mention that the FL3 licences are issued on an annual basis, and it is quite within the powers of the Government not to renew these licenses if such serious violations are reported. But the Government appears to be slow in taking any such action. It will surely be counter- productive to the objective of Rule 13 (3), which is to promote tourism, as well as to the State's avowed policy of improving the health and nutrition standards of its citizens. The criticism of the respondents, particularly of the hotels which have been permitted under the 6th and 7th proviso to Rule 13(3), is therefore quite justified. If the Government is really serious about reducing the consumption of liquor, it should also take steps to reduce its own shops and depots and in any case should not open new ones. In view of the very high consumption of liquor, which the State Government intends to reduce, what we expect is that the Government should consider not issuing further FL-1 licences. If it is not possible for the Government to reduce the existing FL-1 shops, with respect to which it enjoys a monopoly, it is of no use for it to direct the private sector alone to function in a particular manner. The Government must as well behave in conformity with the mandate of Article 47. The judgment rendered by the Division Bench is set-aside to the extent it interferes with the amendment brought in the year 2011. The deletion of three star hotels from the category of hotels eligible for FL3 licenses under Rule 13(3) is held valid - The state government will not proceed to deny FL3 licenses to hotels with a classification of four star and above by resorting to their deletion under Rule 13 (3) until the report of the one-man commission is received, and until it takes action against the non-standard restaurants which have been permitted under the sixth and seventh proviso of Rule 13(3) - Decided partly in favour of Revenue.
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Indian Laws
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2014 (3) TMI 475
Denial of information under RTI Act sought as regards one Bhupinder Singh son of Mewa Singh and in respect of all such other employees of SGPC who have so far been suspended, the grounds of suspension, the details of reinstatement and the punishments awarded to such employees. - Shiromani Gurudwara Prabandhak Committee (SGPC), Amritsar. - Held that:- the petitioner had failed to establish any public interest which would merit the disclosure of the information sought. To the contrary, the State Information Commission has specifically noticed in the impugned orders dated 17-4-2013 that the petitioner had been called upon to disclose the public interest involved during the course of hearing to which he had responded that he wants to use the information sought in a Court case which is to be filed by him to challenge his suspension order. Clearly, the information sought by the petitioner was towards furtherance of a personal grievance and not in relation to any public interest. - writ petition dismissed.
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