Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 20, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Valuation of the closing stock - method of valuing the slow moving and obsolescent stock at a price below the cost was a recognized method in other countries and can be properly followed in India too - HC
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Investment allowance - it cannot be said that the petitioner did not employ new plant or machinery for the manufacture or production of caustic soda by using technology or process developed by CECRI. - revenue directed to issue appropriate certificates under section 32A(2B) - HC
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Outstanding demand u/s 177(3) - beneficiaries who are named in the trust as recipients of the income of the trust cannot be considered as an association of persons. - If that be the position, prima facie, the question as to whether Section 177(3) would apply to the Petitioner raises a serious issue for consideration. - HC
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Jurisdiction power u/s 263 by CIT(A) - CIT was not justified in not allowing the unabsorbed depreciation against income from capital gains to the extent of admissibility to Rs.66.67 % - HC
Corporate Law
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A winding up petition cannot be used as a substitute for a civil suit. If the company petition for winding up is filed with oblique motive and only to put pressure on the respondent company, the same should be dismissed.- HC
Indian Laws
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Writ petition - mandamus -If the rights are purely of a private character no mandamus can issue. If the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to Mandamus. - HC
Wealth-tax
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Inclusion in total wealth - initial compensation not to be included - The claim of the assessee for enhancement of the compensation amount if ultimately is accepted by the Court, will be added in the net wealth of the assessee on the valuation date of that year - HC
Central Excise
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Eligibility for CENVAT Credit - 'Plastic Crates' - Capital goods or inputs - crates used for transportation of finished goods in to bonded store room, are eligible for credit as input - HC
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Whether gutka manufacturing machines were properly sealed in accordance with the Rules? - If the departmental officials have not followed the rules, the assessee cannot be penalized for the same. - AT
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Cenvat credit denied - there is no escape from the conclusion that the Helmet Lock is squarely covered under the definition of Input under Section 2(k) of the Cenvat Credit Rules, 2004 - AT
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Brass Brazing Granules/pallets would be correctly classifiable under 7403.21 and since they are other than the items specified in the SSI exemption notification, the same would not be available to them. - AT
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Jurisdiction to pass an adjudication order - monetary limit - Power of adjudication prescribed by the Board vide a Circular dated 19/02/2008 is only an administrative order and it is meant for smooth and efficient running of the administration. Such circular cannot take away the power vested on a Central Excise officer under the provisions of the Central Excise Act. - AT
VAT
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Penalty was visited by AO upon the assessee on the mere discrepancy of value of goods in documents accompanying the goods - Tax Board has not committed any illeglaity in setting aside penalty orders. - HC
Case Laws:
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Income Tax
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2013 (3) TMI 353
Exclusion of sale proceeds of DEPB licence in the computation of 80HHC deduction - Whether the Tribunal was right in remanding the issue back to AO based on the case of Topman Exports v. Income Tax Officer, (2009 (8) TMI 827 - ITAT MUMBAI) - revenue submitted that the decision of the Topman Exports was reversed by the Bombay High Court - Held that:- The decision of the Bombay High Court as appealed before Supreme court [2012 (2) TMI 100 - SUPREME COURT OF INDIA] disposed of appeal by directing the AO to compute the deduction under Section 80HHC considering DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 – Decided in favor of assessee.
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2013 (3) TMI 352
Valuation of the closing stock - Addition on account of provisions for impairment of stock - ITAT deleted the addition - Held that:- The assessee can value the stock at the lower of the cost or the net realizable value as it is a recognized and accepted method. The finding of the Tribunal referred to the assessee's letter dated 27.12.2006 submitted before the AO along with the necessary details in support of the valuation unable to accept the contention of the revenue that the claim of the assessee remains unsupported. It is also to be noted that on a question of valuation of the closing stock, any alleged difference or discrepancy tends to balance itself out over a period of years if the same method is consistently followed. This is because the closing stock of one year becomes the opening stock of the succeeding year and any addition made to the valuation of the closing stock to increase the profits for that year automatically gets neutralised when the same figure of closing stock is taken as the opening stock of the succeeding year. There is also no finding to the effect that the true profits of the business cannot be determined having regard to the method of valuation of stock employed by the assessee. As decided in India Motor Parts & Accessories Pvt. Ltd. vs. CIT (1965 (2) TMI 84 - MADRAS HIGH COURT) the method of valuing the slow moving and obsolescent stock at a price below the cost was a recognized method in other countries and can be properly followed in India too - in favour of assessee. Addition on account of Sales of VSAT equipment - ITAT deleted the addition - Held that:- The addition was made on the basis of the sales tax assessment and that the Tribunal deleted the addition on the basis of the order passed by the Joint Commissioner of Sales Tax (U.P.) on 22.12.2006 in appeal by the assessee. The appellate authority by the aforesaid order had deleted the addition. The Tribunal, therefore, held that the addition made in the income tax assessment can no longer survive. It further noted that the assessing officer had no case that the service charges for installation and/ or de-installation of VSATs were not declared by the assessee in its books of accounts. Thus it was the view of the Tribunal that the amount of Rs.5 crores cannot also be added as service charges - in favour of assessee.
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2013 (3) TMI 351
Investment allowance - Refusal to issue certificates to the petitioner under section 32A(2B)(ii) - It is the case of the petitioner that he has manufactured or produced caustic soda, liquid chlorine and hydro-chloric acid by using the technology (including the process) and other know-how developed by Central Electrochemical Research Institute (CECRI), which is a unit of National Research and Development Corporation of India (NRDC), a specified laboratory therefore, the certificate ought to have been issued - writ of mandamus directing the respondent No.3 to grant investment allowance at the higher rate of 35% as claimed by the petitioner as against the rate of 25% already granted by the income tax department Held that:- On going through the provisions of section 32A(2B)(ii) three conditions were necessary before the higher rate of 35% could be claimed. Firstly the right to use such technology (including any process) or other know-how or to manufacture or produce such article or thing must have been acquired from the owner of such laboratory or from any person deriving title from such owner. Secondly, the assessee was required to furnish, alongwith his return of income for the assessment year for which the deduction was claimed, a certificate from the prescribed authority to the effect that such article or thing was manufactured or produced by using such technology (including any process) or other know-how developed in such laboratory or was an article or thing invented in such laboratory. And, thirdly, the machinery or plant was not used for the purpose of business of manufacture or production of any article or thing specified in the list in the 11th schedule. It is an admitted position that the third condition has no applicability in the present case. The second condition is the issue in dispute as to whether such a certificate ought to have been issued or not. In so far as the first condition is concerned, the same seems to have been satisfied because the technology had been invented and developed by CECRI which was a unit of NRDC and had been licenced to TEAM and, in turn, TEAM had licenced that technology to the petitioner and, therefore, the right to use that technology had been acquired from TEAM, which was a licensee of NRDC. The only question that remains to be considered is whether the petitioner employed the technology which was developed by CECRI for the manufacture of its product, that is, caustic soda. As already pointed out above that the petitioner had entered into a composite transaction with TEAM. One component was the purchase of TSIA and the other component was the right to use the technology whereby the said TSIA was used in the manufacturing of caustic soda. Both, the technology for the manufacture of TSIA and the process whereby the TSIA so manufactured was employed for producing caustic soda were developed by CECRI. One component has been utilised by TEAM for the manufacture of TSIA and the other component which relates to the know-how as regards the practical application of TSIA in the manufacture of caustic soda was employed by the petitioner. Therefore, it cannot be said that the petitioner did not employ new plant or machinery for the manufacture or production of caustic soda by using technology or process developed by CECRI. As a result, respondent Nos.1, 2 & 5 are directed to issue the appropriate certificates under section 32A(2B) to the assessee & the same may be presented by the petitioner to the income tax authorities for consequential reliefs in accordance with law - in favour of assessee.
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2013 (3) TMI 350
Recovery of Outstanding demand u/s 177(3) to the extent of share of investment in a securitization trust, called the Indian Corporate Loan Securitization Trust 2008 Series 24 - whether the Petitioner has, prima facie, a serious triable case to urge on the basis of which a stay can be sought on the enforcement of the notice pending disposal of the appeals by the CIT (A) being preferred by the trusts who have been assessed under Section 143(3) - Held that:- Foundation of the notice is Section 177(3) where every person who was at the time of such discontinuance or dissolution a member of the association of persons shall be jointly and severally liable for the amount of tax, penalty or other sum payable. As the previous judgment of this Court in UTI Mutual Fund (2012 (3) TMI 333 - BOMBAY HIGH COURT) notes there are two Division Bench judgments in CIT v. Marsons Beneficiary Trust (1990 (7) TMI 37 - BOMBAY HIGH COURT) and L.R. Patel Family Trust v. ITO (2003 (3) TMI 85 - BOMBAY HIGH COURT) in which it has been held that a beneficiary of a trust cannot be construed as having set up the trust or having authorized the trustees to carry on the business. Thus the law laid down indicates that the beneficiaries who are named in the trust as recipients of the income of the trust cannot be considered as an association of persons. If that be the position, prima facie, the question as to whether Section 177(3) would apply to the Petitioner raises a serious issue for consideration. Whether Section 161(1A) lays down only the rate of tax without affecting the basic principle underlying Section 161(1) - Held that:- The nature of the controversy in the present case is adverted in order to elucidate that the questions on which there is a controversy, which is still to be resolved, involves serious triable issues. The contention of the Petitioner, prima facie, cannot be rejected out of hand particularly having regard to the fact that the earlier judgment of this Court for Assessment Year 2009-10 also took the same position. Moreover, the issue as to whether the income in question is business income is a matter which would have to be determined. Finally, on this aspect of the matter, it may be necessary also to note the submission of the Petitioner with reference to the provisions of Section 161 which stipulate that all income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as the income of the transferor and shall be included in his total income. Section 63(a)(i) stipulates when a transfer shall be deemed to be revocable and the contention of the Petitioner is that in the case of a revocable transfer of assets, the income as in the present case would be income in the hands of the transferor which is exempt under Section 10(23D). The Appeals for Assessment Year 2009-10 are pending, the Court being informed that the Appeals are in the course of being heard. In this view of the matter, and for the reasons which indicated already in the earlier judgment of this Court in UTI Mutual Funds (supra) and for the reasons indicated in this judgment, a prima facie case raising serious triable issues has been made out for stay of the enforcement of the demand in the hands of the Petitioner in pursuance of the impugned notices dated 25 February 2013. Also direct that pending the disposal of the appeals which have been filed by the trusts for Assessment Year 2010-11 and for a period of six weeks thereafter, no coercive steps shall be taken against the assessee for the recovery of the demand in pursuance of the impugned notices dated 25 February 2013 calling upon the Petitioner to pay an outstanding demand under the provisions of Section 177(3).
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2013 (3) TMI 349
Jurisdiction power u/s 263 by CIT(A) - as per CIT(A) the set off of unabsorbed depreciation and investment allowance is to be restricted to 2/3rd of such allowance and it is not permissible to be set off against any head of income other than the income from business and profession - ITAT set aside the order under section 263 of CIT(A) - Held that:- Section 71(2) contemplates a situation where in respect of any assessment year, the net result of computation under any head of income, other than capital gains Capital gains , is a loss and the assessee has income assessable under the head Capital gains , In such a situation, such loss may, subject to the provisions of this Chapter, be set off for and from assessment years 1992-1993, against assessee's income if any, assessable for that assessment year under any head of income including the head Capital gains . The brought forward unabsorbed depreciation and brought forward investment allowance shall be added in the current depreciation and investment allowance be set off against the income from capital gains. The business income is a loss. The view taken by the Tribunal is therefore, fully justified proceeded to decide the appeal on the footing that the law provides to give full effect to the unabsorbed depreciation and investment allowance as per provisions of Section 32(2)/Section 32A (3) whereas under Section 34A it is 2/3rd of. It held that the view taken by the CIT that set off to 2/3rd of the unabsorbed depreciation and investment allowance is permissible only against the income from the business and profession and not from the income under the head income from other sources. No merit in the argument of the appellant which proceeds on the footing that business loss and unabsorbed depreciation and unabsorbed investment allowance are one and the same thing. In this view of the matter, the Commissioner of Income Tax was not justified in invoking the jurisdiction under section 263 of the Income Tax Act or not allowing the unabsorbed depreciation against income from capital gains to the extent of admissibility to Rs.66.67 %.
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Customs
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2013 (3) TMI 348
Non authorization to act as an agent of the ten consignees - all the addresses of the purported consignees given by the respondent were found incomplete/fake - benefit of Notification No. 171/93-Cus., dt. 16-9-1993 availed on the imported goods declared as gifts exceeding the value of Rs. 10,000/- - SCN issued that as the goods in question could not be classified as ‘gift’ and were actually dutiable proposing to confiscate the imported goods with demand the duty confirmed along with interest and penalty - FAA sett aside the demand raised against the courier company and also the penalties imposed - Held that:- The respondent’s action of filing the courier Bill of Entry with the other available material would itself indicate that the respondent had been functioning as a courier. It is clear from the facts on record that the respondent did not import consignment and is not liable to pay the Customs duty as per the provisions of Customs Act, 1962, as he has filed courier Bill of Entry in proper prescribed format. This fact being undisputed, the penalty imposed by the adjudicating authority under Section 114A of Customs Act, 1962 was unwarranted and was correctly set aside by the first appellate authority. As regards penalty under Section 112 of Customs Act, 1962 imposed on the proprietor of the courier firm can be invocable as it is undisputed that he has filed a courier Bill of Entry and the consignment which was sought to be cleared under courier regulations, is confiscated by the lower authorities. The respondent courier firm or its proprietor is not in appeal against absolute confiscation of the cigarettes by the first appellate authority. In such a situation, the provisions of Section 112(a) of Customs Act, 1962 can be invoked against the firm or its proprietor, as the proprietor and the firm are not different entities. As the proprietor of the courier firm was not in India when the consignment was received and travelling abroad, ends of justice would meet if the penalty imposed on the said proprietor is reduced to Rs. 25,000/-. Accordingly, I modify the order of the first appellate authority to the extent that Shri Sujal Patel, Proprietor of M/s. ACX International is liable to be imposed by a penalty of Rs. 25,000/- (Rupees Twenty Five Thousands only) under Section 112(a) of Customs Act, 1962.
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2013 (3) TMI 347
Undervaluation - Confirming duty along with the interest and penalties of the undervalued imported goods by the Custom Authorities/Revenue Authorities. - The Counsel for appellants submits that the values of the consignments were once loaded by the Customs Authorities at the time of import and hence the Revenue authorities cannot load it again through another proceeding. They rely on many decisions of judicial forums to support the above argument. Held that:- Nothing from case of Eicher Tractors Ltd [ 2000 (11) TMI 139 - SUPREME COURT OF INDIA] can apply to the facts of this case where there are evidences to prove the undervaluation of the goods except evidence regarding remittance of the extra consideration. It is in the context of this that Revenue is pointing out that the transaction was between closely related persons, with the appellants acting just as conduits, who could easily do such transactions without getting noticed by Government authorities. Existence of certain facts has to inferred based on acts that are proved and there is no reason to insist of producing proof of aspects which could be easily hidden in the circumstances of the case. On an overall appreciation of facts before us we find the following relevant facts. The impugned imported goods are something needed by many manufacturers in India. The importers are neither manufacturers who consume the goods in their own manufacturing process or traders, who import the goods and make available the goods at competitive prices to manufacturers in India at arm’s length. The importers in question were acting as mere conduits between suppliers in China and actual buyers who used it in further manufacture and having close nexus with the supplier in China. In fact there is only one person behind the three importers. This person cannot demonstrate any special skill or circumstances enabling him to get the impugned goods at low prices. The inference of undervaluation in such circumstances is quite reasonable. So when contemporaneous imports of the goods are shown the burden to prove bona fides definitely shifted to the importers. At such a juncture the main defense is that they had not declared the full details at the time of import and hence their goods were different. The specifications declared at the time of importation are sketchy. There is nothing to show that the goods manufactured using the components imported by them were of any inferior quality. In fact their prices were competitive only to the extent of duty evasion engineered in these imports. Once the burden had shifted to the importer to prove that the declared values were correct the appellants have hardly done anything to discharge such burden except arguments about possible difference in specifications which they chose not to declare at the time of import. They only want to take advantage of the fact that their declarations were vague at the time of import and for that reason their price has to be considered to be lower.The four appeals are disposed of in the above terms by giving partial relief in respect of penalty imposed under the Customs Act subject to condition.
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Corporate Laws
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2013 (3) TMI 346
Winding up petition - as per the appellant the respondent company did not come forward and make payment of the third installment of 60% and the balance 40%, as agreed upon as per the agreement entered - Held that:- If the case in hand and the facts as available on record are evaluated it would be seen that after the statutory notice was sent by the petitioner company to the respondent on 17.5.2011, and when a demand was made for payment of the aforesaid amount of Rs. 61,85,951=90, the respondent company submitted its objection on 14.6.2011 and disputed its liability to pay the amount and raised various objections. It was pointed out that the petitioner company wrongly represented about its business, made false claim and the respondent company has raised various grounds with regard to breach of agreement by the petitioner company as a result it is stated that no amount is to be paid and it has denied its liability to pay the debt and have disputed the claim. If the claim made by the petitioner and the reply submitted by the respondent in response to the statutory notice is meticulously scrutinized, it would be seen that there is serious disputed questions of fact between the parties and by giving various justifiable reasons, respondent company has stated that they are not liable to make payment and even breach of agreement on the part of the petitioner company is raised as a ground for denying the payment. It is, therefore, a case where the debt in question is disputed and it is not a case where debt is admitted or acknowledged by the respondent. On the contrary, it is a case where the debt is bonafidely disputed by the respondent company and they have substantively made out a defence, thus this Court cannot direct the winding up of the company in question as seeked as a procedure for winding up cannot be used as a substitute for proceeding with recovery of a debt in accordance to the common law nor is it be used to pressurize, coerce or enforce payment of a debt, which is bonafidely disputed by the respondent company. A winding up petition cannot be used as a substitute for a civil suit. If the company petition for winding up is filed with oblique motive and only to put pressure on the respondent company, the same should be dismissed. This is the principle of law laid down as it emerges on a complete reading of various judgments on the question. It is only when a legitimate claim is made out and the material available shows that the company is unable to pay the debts and its financial position is so precarious that it would not be able to meet the demand that action should be taken in a company petition else it is liable to be dismissed.
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Service Tax
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2013 (3) TMI 357
Severe hardship - as per the assessee order of confirmation of the impugned demand towards Service Tax with interest and penalty and the impugned order calling upon the petitioner to make pre-deposit amount of ₹ 10 lakhs, is on the higher side - Held that:- With regard to the undue hardship and other difficulties expressed by the petitioner, much less what is now claimed, the respondent himself has come to a conclusion while ordering the pre-deposit amount with a lenient approach to reduce it to 10 lakhs to be paid in cash as against ₹ 13,02,384/- + ₹ 20,95,992/- towards Service Tax with interest and penalty. Therefore, there is no merit in this writ petition. However taking into account the submissions made by petitioner he shall pay the pre-deposit amount as ordered within a period of two weeks from the date of receipt of a copy of this order, and on such payment, the respondent shall dispose of the appeal itself, on merits and in accordance with law, within a period of four weeks thereafter.
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2013 (3) TMI 356
Waiver of predeposit of service tax and penalty imposed u/s 76 of the Finance Act, 1994. - Commissioner (Appeals) has dismissed their appeal without giving any personal hearing for non-compliance under the provisions of Section 35F of the Central Excise Act, 1944 as the case is made on the disallowance of abatement of service tax on GTA. Held that:- Ld. Commissioner (Appeals) has not decided the case on merits. Therefore, we remand the case to the ld. Commissioner (Appeals) to decide the case on merits without insisting for any further predeposit. Both sides are at liberty to produce the relevant documents in their support. Appeal is disposed of by way of remand. Stay petition is disposed of.
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2013 (3) TMI 355
Classification of Services - Composite services - excavation, picking, sorting, breaking, sizing and stacking, loading of iron ore into trucks, transporting to screening plant or railway siding, loading of ore into BG wagons at railway sidings and removal of rejects etc. - mining service versus Business Auxiliary Service - period 2005-06 - Held that:- guideline laid down by the Board’s Circular and as per the provision of Section 65A, the classification of service under composite contract is appropriately classifiable under mining service. The said mining services were not taxable services during the relevant period. The Revenue is trying to divide the contract which is not the case in the show-cause notice. - Therefore, division contract cannot be permitted at this stage and the grounds taken by the Revenue in their appeal are beyond the purview of show-cause notice. - Decided in favor of assessee.
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2013 (3) TMI 354
Valuation - Classification of services - Re-imbursement expenses - inclusion in the gross value - Extended Period of Limitation - Held that:- appellant received was service charges for the services such as supervision, management and execution of cable laying and associated works which has been rightly classified by the appellants themselves under ‘consulting engineer service’ and had paid appropriate service tax. Handling and transporting the materials is not at all a part of such consulting engineering services. Similarly it is seen that LAA had held that the appellant is liable to pay service tax under “Erection, Commissioning and Installation service”. This is beyond the scope of the SCN as there was no proposal in the SCN agitating the classification of the taxable services rendered and had not discussed as for what reasons the activities of the appellant cannot be considered as alleged in the SCN i.e. handling charges. - the lower adjudicating authority had traversed beyond the scope of the show cause notice and on that score alone the impugned order could be set aside. Regarding reimbursement of expenses - The appellant submitted that the handling and transportation charges paid to the appellant by BSNL has got no connection with the services rendered by the appellant to BSNL. These amounts are paid by BSNL for the specific purpose of handling and transporting the materials from BSNL to the site of work. - held that:- concur with the appellant that as they are rendering services in the category of consulting engineering services, handling and transporting the materials is not at all a part of such consulting engineering services. Regarding extended period of limitation - held that:- the appellant is a government enterprise and there cannot exist any intention to evade the service tax liability as claimed by them and hold that the entire Show Cause Notice is time-barred and hence the demand is not maintainable. - Decision of Hon’ble Supreme Court in the case of Collector v. Chemphar Drugs (1989 (2) TMI 116 - SUPREME COURT OF INDIA) followed - Demand and penalty set aside - Decided in favor of assessee.
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Central Excise
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2013 (3) TMI 345
Eligibility for CENVAT Credit - 'Plastic Crates' - Capital goods or inputs - appellants had taken Cenvat credit on the goods 'Plastic Crates' falling under Chapter 3923.90 during the months of September 2001 to May 2002 - Held that:- As decided in BANGO PRODUCTS (INDIA) LTD. VS. COMMISSIONER OF C. EX., VADODARA-1 [2009 (2) TMI 101 - CESTAT AHMEDABAD]Plastic crates which is used in handling of material inside the factory for internal transportation of goods, acts a accessory as they help in increasing effectiveness of machinery so credit is admissible as Capital goods – Proper storage of inputs is essential for efficient manufacturing process and in absence of proper facilities for storage and transportation; the same will affect the manufacturing process, therefore crates used for transportation of finished goods in to bonded store room, are eligible for credit as input. As against the above judgment of the Larger Bench of the Tribunal, no appeal has been preferred by the Department and it is submitted that the Department has accepted the said judgment and acted upon the same - in favour of assessee.
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2013 (3) TMI 344
Whether gutka manufacturing machines were properly sealed in accordance with the Rules? - allegation on assessee for sale during the period of closure - as per Joint CDR that as per the Rules, every machine has to be sealed separately and which was not done - Held that:- No such invoices have been placed on record to know about the issue of invoices regarding sale of gutka by the assessee during the period of closure. Further there is no evidence to show that during the period of closure Gutka was cleared as could to anyone. Thus on perusal of the Panchnama, it is found that the excise officials unplugged the machines to make them un-operative and thereafter entrance door of the hall in which those machines were located were locked to prevent ingress and the lock was properly sealed. Not only this, the entrance hall of the factory was also locked and sealed. From this, prima facie, it appears that the officials of central excise department ensured that the machines, in question, could not be used during the period in question. Shri D. Singh, . As on prima facie reading of the Pan Masala Packing Machines Rules obligation of the assessee is to inform the department of his intention not to use the packing machines for a period more than 15 days. The sealing is to done by the departmental officials and it is for them to ensure proper sealing of machines in accordance with the Rules. If the departmental officials have not followed the rules, the assessee cannot be penalized for the same. Moreover, it is not the case of the Revenue that excise officials who went for sealing of the machines colluded with the assessee. Thus the appellant has been able to make out a prima facie case for waiver of pre-deposit.
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2013 (3) TMI 343
Cenvat credit denied - as per department the “Helmet Lock” cleared alongwith motorcycle does not fall within the definition of “Input” - assessee seeking waiver of pre-deposit of duty demand, interest and penalty - Held that:- As per Board Circular No. 24/90-CX.4, dated 11-7-1990 it is apparent that Helmet Lock fitted in the motorcycle satisfies the conditions of an accessory. Admittedly, the value of Helmet Lock is included in the assessable value of motorcycle for the purpose of payment of excise duty. Therefore, there is no escape from the conclusion that the Helmet Lock is squarely covered under the definition of Input under Section 2(k) of the Cenvat Credit Rules, 2004. As Punjab & Haryana High Court has directed all the manufacturers/ dealers in the states of Punjab, Haryana and U.T. of Chandigarh to provide Helmet and Lock for it to the ultimate consumer at the time of sale of two wheeler. From this also prima-facie it appears that the appellant was under legal obligation to provide duly fitted Helmet Lock in the motorcycle cleared to the ultimate customer as such Helmet Lock is an accessory of the motorcycle and covered under the definition of Input. Thus, prima-facie the appellant has rightly availed the Cenvat credit disallowed to him vide impugned order. The appellant has been able to make out a prima-facie case for waiver of pre-deposit of duty demand, interest and penalty. Stay application is, therefore, allowed and condition of pre-deposit of duty demand, interest and penalty is waived and recovery thereof stayed.
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2013 (3) TMI 342
Duty demand in respect of Brass Brazing Granules - clandestine removal - classifiable under 7403.21 OR 7419.99 - Commissioner (Appeals) dropped the duty demand confirmed against assessee - Held that:- The Brass Brazing Granules, in question, are made by pouring molten brass in cold water. These pallets/granules are used for the purpose of brazing and welding. Thus the term of ‘article’ would cover the items made by working on a metal. The goods, in question, are of in the nature of unwrought metal. Heading 7403.21 covers “copper zinc base alloys (brass)”. Though the goods, in question, are used for soldering and brazing, they are not classifiable under 7406 as the same are not in form of powder or flakes. Therefore, the Brass Brazing Granules/pallets would be correctly classifiable under 7403.21 and since they are other than the items specified in the SSI exemption notification, the same would not be available to them. The impugned order classifying the Brass Brazing Granules under sub-heading 7419.99 is, therefore, not correct. Since, in this case, the respondent, though manufacturing dutiable items not eligible for SSI exemption, had neither obtained Central Excise registration nor were paying any duty nor had intimated to the department about their activity, thus the extended period under proviso to Section 11A(1) would be available to the department for recovery of duty. Therefore, the impugned order setting aside the duty demand and penalty on the respondent is, not correct. The same is set aside and in this regard the order passed by the original Adjudicating Authority is restored. The Revenue’s appeal is allowed. Against assessee.
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2013 (3) TMI 341
Condonation of delay of 364 days in filing of appeal - Held that:- The explanation of the appellant for delay is that the Excise officer of the company misplaced the order-in-appeal and failed to inform about the same to responsible officer of the company. This explanation appears to be reasonable and it does not smack of mala fides or as a part of dilatory tactics. Therefore, in the interest of justice, the application allowed and delay condoned in filing of appeal.
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2013 (3) TMI 340
Jurisdiction to pass an adjudication order - monetary limit - as per jurisdictional Commissioner the order passed by the Assistant Commissioner is not legally correct as the monetary limit for adjudication by the Assistant Commissioner is only up to ₹ 5 lakhs in terms of Board's Circular no. 865/3/2008-CX dated 19/02/2008 and, therefore, he filed an appeal before the lower appellate authority on the ground of exceeding jurisdiction - Held that:- The demand has been confirmed by the Assistant Commissioner under the provisions of section 11A(1) of the Central Excise Act, 1944 and the said section empowers a ‘Central Excise Officer' to issue notice in cases where Excise duty has not been levied or paid or short-levied or short-paid or erroneously refunded. The ‘Central Excise officer' referred to therein is the officer competent to assess and determine the duty liability. Under the Excise law it is the Superintendent of Central Excise who is the assessing officer and, therefore, the notice issued by the jurisdictional Assistant Commissioner, who is a superior authority, is perfectly valid in law and, therefore, he is competent to adjudicate the duty not levied or short-levied or erroneously refunded. Power of adjudication prescribed by the Board vide a Circular dated 19/02/2008 is only an administrative order and it is meant for smooth and efficient running of the administration. Such circular cannot take away the power vested on a Central Excise officer under the provisions of the Central Excise Act. See Pahwa Chemicals Pvt. Ltd. vs. Commissioner of Central Excise, Delhi 2005 (2005 (2) TMI 136 - SUPREME COURT OF INDIA) wherein held that the administrative directions of the Central Board of Excise & Customs allocating different works to various classes of officers cannot cut down jurisdiction vested in them by statute and may be followed by them at best as a matter of propriety. Thus the Assistant Commissioner, who is a Central Excise Officer was statutorily competent to decide the matter. Therefore, setting aside such an order by the lower appellate authority, though on appeal filed by the Revenue, is clearly unsustainable and bad in law and, therefore, the order of the lower appellate authority has to be set aside.
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CST, VAT & Sales Tax
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2013 (3) TMI 359
Application for interim relief rejected - By order Commercial Tax Tribunal, granted the interim stay only to the extent of 80% tax directing the appellant to deposit 20% tax/penalty during the pendency of first appeal filed before the first appellate authority - Held that:- As decided in M/s Pennar Industries Ltd. vs. State of A.P. and others [2009 (2) TMI 457 - SUPREME COURT OF INDIA] the stay application should not be disposed of in a routine manner unmindful of the consequences. As in the present case authorities have not indicated its mind so far as the existence of the prima facie case on merits on appeal as well as the financial condition which are to be considered by appellate authority/tribunal while passing the impugned orders on an application for stay pending in the first appeal. The said mandatory condition is to be taken into consideration while disposing of an application for interim relief moved by the assessee by the appellate authority as well as tribunal during the pendency of appeal. Thus the present revision is disposed of with a direction to the first appellate authority to decide the appeal filed by the assessee expeditiously say within a period of two months from the date of receiving a certified copy of this order till then no coercive measure shall be taken against the assessee in the matter in question.
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2013 (3) TMI 358
Penalty u/s. 78 (5) of the Rajasthan Sales Tax Act, 1994 set aside - whether Form ST-18A was not required to accompany the goods in transit in the course of stock transfer of goods prior to March 30, 2000 - Held that:- It is not in dispute that goods in transit were in the course of a branch transfer and not sale. Admittedly prior to 30-3-2000, the goods in transit were not required to be accompanied by form ST-18A. The discrepancy in the value of goods as alleged in the documents accompanying goods in transit cannot per se entail any falsehood or forgery qua the documents in issue. It could have been a case of a mere inadvertent error. In any event of the matter the discrepancy in value of goods as recorded in different documents accompanying goods in transit ought to have been addressed by the AO after giving to the person authorised or owner of the goods a reasonable opportunity of being heard and holding an enquiry as required in law. This has not been done in the present case and the penalty was visited by AO upon the assessee on the mere discrepancy of value of goods in documents accompanying the goods. Thus the Tax Board has not committed any illeglaity in setting aside penalty orders.
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Wealth tax
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2013 (3) TMI 360
Initial compensation, enhanced compensation and interest - whether the right to compensation is an asset includable in the Net Wealth? - matter relates to the assessment year 1985-86 - Held that:- As decided in Commissioner of Income Tax vs. Mehtab (U.C.) [1995 (3) TMI 7 - SUPREME COURT] following it's earlier decision of CWT vs. Smt. Anjamli Khan (1990 (11) TMI 1 - SUPREME COURT) has clarified while issuing the direction that the value of the assessee's right to receive compensation can only be the 'present' value, i.e. the value as on the valuation date of the amount. Thus only such amount which has been received by the assessee or receivable on the date of valuation can be added in the net wealth of the assessee. The claim of the assessee for enhancement of the compensation amount if ultimately is accepted by the Court, will be added in the net wealth of the assessee on the valuation date of that year. Tribunal is justified in holding that the initial compensation for the period from 14.12.77 to 10.05.91 was not assessable in the hands of the assessee.
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Indian Laws
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2013 (3) TMI 339
Maintainability of the writ petition seeking mandamus against a Private Concern - Writ of mandamus directing the MD of R-1 Company to pay the difference in the VRS amount based on the revised scale of basic pay and D.A. as per the Circular dated 12.07.2000 together with 9% per annum from the date of the Circular - petitioners herein were employed with the first respondent/HTL, Guindy - Held that:- In the present case, the acceptance (even assuming that it was illegal acceptance) for voluntary retirement of a particular employee cannot be characterized as leading to such a monstrosity so as to exercise power under Article 226 against a private organisation, which is clearly beyond the ordinary purview of Article 226. Even though in many cases it has been held that writ of Mandamus would be maintainable even against a private person, such cases relate to question of enforcement of public duty. Having regard to all these aspects, it is a fit case where a writ can no longer be issued in view of the changed circumstances, namely privatisation of the respondent. If the rights are purely of a private character no mandamus can issue. If the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to Mandamus. But once these are absent and when the party has no other equally convenient remedy, mandamus cannot be denied. Testing the present case even in the light of the aforesaid criterion, it could be seen that the two traits/exceptions viz., (i) the rights are purely of a private character and (ii) the company is purely a private body, are apparently present here. Thus, even if the decision cited by the learned counsel for the petitioners is applied, his case will have to be dismissed in threshold on the ground that no writ would lie against the first respondent, a private entity. Writ Petition is liable to be rejected on the ground of maintainability.
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