Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 21, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Highlights / Catch Notes
Income Tax
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Charitable/educational trust - at the time of registration u/s 12AA, CIT is not required to look into the activities, where such activities have not or are in the process of its initiation - HC
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Deduction u/s 80-I - by galvanization iron and steel are not changed and remained iron and steel - Not a manufacturing activity - not entitled for the benefits under Section 80I - HC
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Adjustment of Refund with Tax Demand of a Group company - There is no provision which authorizes Income-tax authorities to set off the refund of a person against the dues of another person. - HC
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Tonnage Tax Scheme - delay of 4 days - time stipulation in section 115VP(2) is held to be directory and therefore it would be sufficient if it is substantially complied with by the assessee - Revenue directed to consider the application - HC
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Penalty u/s 271(1)(c) - there is only a change of head of income and in the absence of any facts that the claim of the assessee was not bonafide - Tribunal was correct to delete penalty - HC
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A unit approved by the Director under the Software Technology Parks scheme will be allowed exemption only under Section 10A as a STPI unit and not under 10B as a 100% export oriented unit - HC
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Software expenses - revenue v/s capital - expenditure incurred are not capital expenditure as due to technological changes and the need to upgrade the software on a regular basis it cannot be said that the software was of an enduring nature - HC
Customs
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Undervaluation - mis-declaration - there is no reference to any evidence on record to create a doubt about transaction value or to believe the certificate given by the foreign supplier - AT
Indian Laws
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Exemption from RTI - exemption notifications cannot apply retrospectively. Apart from that the same exemption does not cover allegations of corruption and human right violations. - SC
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Exemption from RTI - Power of CIC or SIC - Commission while entertaining a complaint under Section 18 of the said Act has no jurisdiction to pass an order providing for access to the information. - SC
Central Excise
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Cenvat Credit - When spent wash and press mud had emerged as inevitable wastes during the process of manufacturing of final products viz., sugar and Denatured Ethyl Alcohol and the said wastes are combined and treated together to form another final product viz., bio-compost, the said final product cannot be brought under Rule 57CC. (Rule 6) - HC
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Cenvat Credit - The store ledgers and the store issue slips did not establish the use of structural steel items issued - the questions raised in these appeals are questions of fact, and thus no substantial questions of law arise for consideration by us in these appeals - against assessee. - HC
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Cenvat credit - Input Services - Rule 2(l) would also cover the services of procuring sale orders through commission agent. - AT
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Rebate claims - Procurement of excisable goods duty free - Petitioner entitled to cash refund only of the portion deposited by it by actual credit and for remaining portion, refund by way of credit is appropriate - CGOVT
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Cenvat Credit - revenue denied the credit of the balance of 50% credit during the next year since the capital goods were still at the stage of erection and had not actually been put to use - credit allowed - HC
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Interpretation of Notification No. 29/2004-CE - The Concessional rate of duty can not be denied on the ground that one of the division out of three is engaged in the manufacture of POY and the application for separate registration cannot be rejected on the ground of revenue consideration - AT
VAT
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Cancellation of eligibility certificate - no cancellation certificate can be issued after the expiry of the eligibility certificate is over. - HC
Case Laws:
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Income Tax
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2013 (3) TMI 377
Charitable/educational trust - Registration u/s 12AA - commencements of activity before registration - ITAT, observed that considering the facts of the case that the assessee Trust is still at the stage of raising construction for schools and colleges and yet to start educational and charitable activities, it is given an opportunity to file fresh application before the ld. Commissioner for grant of registration and approval, when it would actually start educational and charitable activities and in that event, the led. Commissioner shall consider fresh applications of the assessee in accordance with law. Held that:- at the time of registration under Section 12AA of the Income Tax Act, which is necessary for claiming exemption under Section 11 and 12 of the Act, the Commissioner of Income Tax is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, is in the process of establishing such institutions, and receives donations, the registration under Section 12AA cannot be refused, on the ground that the Trust has not yet commenced the charitable or religious activity. It is not denied that for subsequent year the appellant has been granted exemption under Section 12AA and has also been approved under Section 80G of the Act, subject to certain conditions. If the Commissioner of Income Tax was satisfied with the genuineness of the objects of the trust for the subsequent assessment year, the refusal of the registration for the previous assessment year 2011-12 was not justified. - Decided in favor of assessee.
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2013 (3) TMI 376
Relief u/s 80-I - Tribunal directed the A.O. to allow the relief to assessee treating the assessee as engaged in manufacturing - whether processing of mild steel rod, bars and rounds from scrap iron amounts to manufacture within the meaning of Section 80-I? - Held that:- As decided in CIT v. Krishna Copper Steel Rolling Mills [1991 (11) TMI 223 - SUPREME COURT] the mild steel rods, bars or rounds which are manufactured by the assessees are only finished forms of the metal and not articles made of iron and steel. They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning. The rod or the wire rods are likewise not products of iron and steel but only certain finished or refined forms of the metal itself & CIT Vs. Gem India Manufacturing Company [2000 (12) TMI 7 - SUPREME COURT] wherein held that cutting and polishing of diamond does not amount to manufacture and industrial undertaking is not entitled to the benefits of Section 80-I This court in Commissioner of Sales Tax Vs. M/S Tata Iron and Steel Co. Ltd. [1974 (9) TMI 83 - ALLAHABAD HIGH COURT] and Commissioner of Sales Tax Vs. M/S Om Engineering Works [1985 (11) TMI 220 - ALLAHABAD HIGH COURT] and Supreme Court in Gujarat Steel Tubes Ltd. Vs. State of Kerala [1989 (5) TMI 62 - SUPREME COURT OF INDIA] held that by galvanization iron and steel are not changed and remained iron and steel. Thus from the aforesaid discussions, it is held that industrial undertaking of the assessee which is engaged in the business of galvanizing MS Pipes, is not involved in manufacture or production of any article or thing, as such, it is not entitled for the benefits under Section 80I. The view taken by the Tribunal is illegal. The questions of law raised in these are decided in favour of the Revenue.
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2013 (3) TMI 375
Adjustment of Refund with Tax Demand of a Group company - as per dept. the amount refundable to the petitioner has been adjusted towards the demand of M/S Narain Properties Ltd., the Mall, Kanpur a group of company of assessee - Held that:- As per Section 245 where any refund is due to any person, the Income-tax authorities may set off the amount to be refunded against any sum remaining payable under the Act by the person to whom refund is due, after giving him an intimation in writing to such person. Thus Section 245 authorizes for set off the refund against the dues of the same person that too after giving notice to him which is mandatory as held in Heera Lal and sons Vs. Income Tax Officer (1983 (2) TMI 5 - ALLAHABAD HIGH COURT) and Pradeep Kumar Harsaran Lal Vs. Assessing Officer (1997 (3) TMI 62 - ALLAHABAD HIGH COURT) There is no provision which authorizes Income-tax authorities to set off the refund of a person against the dues of another person. The petitioner was not given any notice nor he ever gave his consent for set off against the dues of M/S Narain Properties Ltd. The record shows that the petitioner has consistently made representations for his refund to the various authorities and had made all efforts from pillar to post. Action of the respondents in avoiding the refund of the petitioner is most arbitrary. The step of setting off the refund towards dues of another person without intimation to the petitioner is illegal and without jurisdiction. - Thus refund along with interest allowed up to date at the rate given under Section 244A (1) (a) to the petitioner within a period of one month from the date of production of a certified copy of this order before AO - in favour of assessee.
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2013 (3) TMI 374
Time stipulation for exercising the option of Tonnage Tax Scheme - whether mandatory or directory - application made by the assessee opting for Tonnage Tax Scheme belatedly - Held that:- Section 115VP deals with procedure for exercising the option of tonnage tax scheme. Neither section 115VP(2) nor any other provision in this behalf provides for the consequences that will follow in the event of non-submission of application between 01.10.2004 and 31.12.2004. It merely requires an assessee opting for tonnage tax scheme to make an application between 01.10.2004 and 31.12.2004. Keeping the aforesaid aspects in view, the time stipulation in section 115VP(2) is held to be directory and therefore it would be sufficient if it is substantially complied with by the assessee. No prejudice would be caused if the Revenue is directed to consider the application made by the assessee on 04.01.2005 and dispose off the same as per the provision of section 115VP(3). As the statute did not provide for any adverse or penal consequences, if the prescription of sub-section (2) of Section 115VP was not fulfilled. More importantly, the issue is not a recurring one and further that, in any case, the application was made only 4 days after the last date prescribed. Such being the facts, there was substantial compliance with the procedural requirements. These tax appeals are, therefore, dismissed - Tribunal's view accepted - in favour of assessee.
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2013 (3) TMI 373
Penalty u/s 271(1)(c) - interest received on 6% Government of India Capital Index tax free bonds which was accepted by the assessee during the course of assessment proceedings and not offered voluntarily - ITAT cancelled the penalty levy - Held that:- Tribunal in the impugned order records a finding of fact that by inadvertent mistake interest @ 6% on the Government of India Capital Index Bonds was shown as tax free bonds as there was no desire on the part of the assessee to hide or conceal the income so as to avoid payment of tax on interest from the bonds & as the decision of the Tribunal is based on finding of fact that there was an inadvertent mistake on the part of the assessee & it is not contended by the Revenue that above finding of fact by the Tribunal is perverse. Thus no reason to entertain the proposed question - in favour of assessee. Penalty u/s.271(1)(c) - addition made treating premium received on redemption of debentures as income from other sources against claim of assessee as capital gain - ITAT cancelled the penalty levy - Held that:- As it is not the case of the department that the assessee had concealed any particulars of income or furnished inaccurate particulars of income by stating incorrect facts, thus there is only a change of head of income and in the absence of any facts that the claim of the assessee was not bonafide - Tribunal was correct to delete penalty- in favour of assessee.
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2013 (3) TMI 372
Software expenses - revenue v/s capital - Whether Tribunal failed to appreciate that as regards the software it was a case of a sale of copyrighted article and hence the expenditure could not be treated as revenue in nature? - Held that:- The issues of software expenses stand covered by the decision of CIT Vs. GE Capital Services Ltd. [2007 (7) TMI 185 - DELHI HIGH COURT] that expenditure incurred are not capital expenditure as due to technological changes and the need to upgrade the software on a regular basis it cannot be said that the software was of an enduring nature - in favour of assessee. Approvals under section 10A - whether the Approval granted by the Director of STPI was sufficient approval so as to satisfy the conditions relating to Sec 10A of? - Held that:- Central Board of Direct Taxes and an instruction (Instruction No.1/06 dated 31.3.2006) issued clarifying the position with regard to the deduction under Section 10A that the claim of deduction under Section 10A of the said Act should not be denied to the Software Technology Park units only on the ground that the approval/registration to such units had been granted by Directors of the Software Technology Parks. Also inter-ministerial communication dated 23.3.2006 issued by the Secretary, Ministry of Communications and Technologies makes it clear that the approvals issued by the Directors of the Software Technology Parks of India have the authority of the Inter-Ministerial Standing Committee and that all approvals granted by the STPI Directors are therefore deemed to be valid. The position is also clear from a letter dated 6.5.2009 issued by the Central Board of Direct Taxes to the Joint Secretary, Ministry of Commerce and Industry wherein a distinction has been drawn between the provisions of section 10A and 10B of the Income Tax Act, 1961 and in which it has been clarified that a unit approved by the Director under the Software Technology Parks scheme will be allowed exemption only under Section 10A as a STPI unit and not under 10B as a 100% export oriented unit - in favour of assessee.
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2013 (3) TMI 371
Unexplained profit on transactions outside the books of account - Held that:- The assessee did not produce even trading and profit and loss account etc. after being given various opportunities. Seized documents clearly show that sales and some expenditure was carried out which was not shown in books. The Assessing Officer was totally justified in estimating the profit. The profit is approximately 10% of undisclosed sales of Rs. 6,10,450/- and seems to be reasonable and accordingly we confirm the addition on account of estimated profit towards undisclosed sales. Unexplained investments - Held that:- As far as estimate for investment on such undisclosed sales is concerned, the assessee was already running a brick kiln and investments have already been made. No material was found to show the additional investments and accordingly the addition of Rs. 25,000/- on account of additional investments for conducting undisclosed sales is to be deleted.
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2013 (3) TMI 370
Penalty u/s 271(1)(c) - as per AO the assignment transaction between the assessee and MIRC was a sham transaction / colourable device and brought to tax an amount of Rs.26.68 crores in the hands of MIRC on account of cessation of sales tax liability under Section 41(1) of the Income Tax Act - Tribunal deleted the penalty - Held that:- Tribunal was of the view that the assessee had disclosed the accounting policy adopted by it in determining profits from the assignment of business, that the assignment of liability and purchase of debts were two integral part of assignment of business and the net realizable value of the debt made by the assessee was bona fide and honest. The basis adopted by the Tribunal in the quantum proceedings to determine the income of the assessee from assignment business was entirely different from the one adopted by the assessee as also the basis adopted by the assessing officer and, therefore, it is clear that the issue of determination of exact income of the assessee from assignment business was not free from debate on which different views were possible. Accordingly, the Tribunal held that in the facts and circumstances of the case, it cannot be said that the assessee had concealed income so as to attract penalty under Section 271(1)(c) of the Act. The decision of the Tribunal in deleting the penalty inter alia on the ground that all the relevant particulars about the income relating to assignment of business were fully furnished and even the accounting policy adopted for determining the said income was disclosed, cannot be faulted - in favour of assessee.
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Customs
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2013 (3) TMI 369
Condonation of delay - stay applications filed seeking waiver of pre-deposit of the impugned demands - Held that:- Appeal is to be preferred within 90 days of the communication of the impugned order. As the impugned order has been received by the applicant on 27.09.2011 and appeals have been preferred on 26.12.2011 which is within three months of the communication of the order, therefore, delay is condoned. For stay application, AR sought time to go through the records. Therefore, matter is adjourned for consideration of stay application on 25.03.3013.
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2013 (3) TMI 368
Undervaluation - enhancement of valuation - mis-declaration - The Commissioner (Appeals) accepted the contention of the respondent. He observed that the respondent was not put to notice before enhancement and no opportunity was given to them. He also sought a report from the concerned Deputy Commissioner who agreed that Chartered Engineer’s report/certificate was not given to the importer. Held that:- In any case, we find that the lower authorities while enhancing the value of the machine has solely relied upon Indian Chartered Engineer’s certificate. For enhancement of value, Revenue is first expected to discard the transaction value or at least reflect upon some evidence to cast doubt in respect of the same. Revenue in their memo of appeal is silent about the supplier’s certificate indicating that the word “C” refers to third generation model of machine and not to computerised machine. In any case, the expression “console” stands declared by the respondent in their bill of entry. They have adopted the same declaration as is available in the invoices of the foreign supplier and the other relevant documents like bill of lading etc. As such no mis-declaration charge can be pressed against the respondent. Otherwise also we find that there is no reference to any evidence on record to create a doubt about transaction value or to believe the certificate given by the foreign supplier. In this scenario, the Commissioner (Appeals) has rightly relied upon decision of the Hon’ble Supreme Court mentioned in TOLIN RUBBERS PVT. LTD. Versus COMMISSIONER OF CUSTOMS, COCHIN [2003 (11) TMI 90 - SUPREME COURT OF INDIA] or of the Tribunal IQUIRA INC Versus COMMISSIONER OF CUSTOMS, CHENNAI [2004 (5) TMI 141 - CESTAT, BANGALORE]. - Decided against the revenue.
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Corporate Laws
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2013 (3) TMI 367
Interpretation of Section 21D of the Chartered Accountants Act, 1949 - Unamended & Ammended CA Act - The Department of Company Affairs had carried out inspection of books of accounts of Global Trust Bank Limited under Section 209A of the Companies Act, 1956 - Chartered Accountants, who were also asked to furnish certain details to the Department of Company Affairs and the Reserve Bank of India. - Violations of Sec. 227, 228, 292 and 211 of the Companies Act by the Auditors of the Bank - letter dated had been forwarded to the Disciplinary Committee - L&L submitted their reply dated 9th August, 2004 - Held that:- Amended provisions would apply to a fresh complaint or information and the Unamended Act will apply to the pending complaints or information. Proceedings or complaint in the form of information was pending before the Council on 17th November, 2006 and accordingly the unamended provisions will apply As per the unamended Act, on receipt of information or a complaint, the Council is required to see whether the member of the institute is guilty of any professional or other mis-conduct. If the Council finds that the member is guilty of any professional or other misconduct, reference of the case is made to the Disciplinary Committee, it will hold an enquiry and submit a report to the Council. If on receipt of the report, the Council holds that the member is not guilty of any professional or other misconduct the complaint is dismissed. And if the Council holds that the member is guilty of professional or other misconduct, then the Council will proceed under Section 21 makes distinction between professional misconduct specified in the First Schedule and the Second Schedule. For professional misconduct specified in the First Schedule, the Council after hearing the member, can make an order of reprimand or recommend removal of name of the member from the register for a period not exceeding five years. As per the proviso to sub-section 4 to Section 21, in case the Council is of the opinion that the name of the member ought to be removed from the register for a period exceeding five years or permanently, it is required to forward the case to the High Court with it's recommendation. Thus in cases not covered by the First Schedule and covered by the proviso to sub-section 4 to Section 21, the recommendation of the Council have to be forwarded to the High Court. Sub-section 6 to Section 21 relates to the procedure to be followed when reference is made to the High Court under sub-section 4 or sub-section 5 to Section 21 of the CA Act, 1949. Section 22A deals with appeals to the High Court from penalties referred to in sub-section 4 to Section 21. These obviously will not apply when reference is made to the High Court under the proviso to sub-section 4 or sub-section 5 of Section 21 of the CA Act, 1949. The appeal is allowed and it is held that the procedure prescribed by the unamended C.A. Act, 1949 i.e. Sections 21, 22 and 22A as discussed above would be applicable to pending proceedings.
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Service Tax
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2013 (3) TMI 383
Stay - Cenvat Credit - Input services - Duty paying documents - Held that:- The appellant had an opportunity of producing all relevant documents before both the lower authorities and it is very evident from the findings recorded by both the lower authorities that it was not availed. we deem it fit to remit the matter back to the adjudicating authority for reconsideration. In view of this, as a condition of hearing and disposing the matter by adjudicating authority, we direct the appellant to deposit an amount of Rs.5 lakhs (Rupees Five lakhs only) within a period of twelve weeks from today and report compliance on 08.10.2012 to the adjudicating authority.The Stay Petition as also the appeal are disposed off as indicated hereinabove.
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2013 (3) TMI 382
Classification of Services - activity of canvassing for advertisements in the publications - Service tax on retainership fee - Held that:- appellant’s activity is not taxable and classified under “business auxiliary service” and the appellant is not liable to pay Service tax on the retainer fee paid by the publications during the disputed period. It is pertinent to mention here that Board vide its Circular No. 64/13/2003-S.T., dated 28-10-2003 clarified that canvassing for advertisements not liable to service tax when limited to space selling. a specific exclusion has been made to this effect. “Sale of space or time for Advertisement Services” was brought into the Service tax net w.e.f. 1-5-2006 only. The disputed period in the instant case is prior to that. Thus, the activity of the appellant during the disputed period is not taxable under Advertising Agency Service and Sale of Space or time for Advertisement Services too. - Demand set aside - decided in favor of assessee.
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2013 (3) TMI 381
Reversal of Cenvat credit - Inputs used in the manufacture of exempted goods or services - Appellant revised their computation - Omitted to exclude the clearances under Rule 6(6) - Export of electricity to Tamilnadu Electricity Board (SEZ) - Common inputs and input services used in the final product consisting of dutiable and exempted products - Proportionate credit reversal of Cenvat credit under Rule 6(3A) of CCR’ 2004 – Held that:- The instant case falls under Rule 6(3)(ii) of CCR’ 2004 [for which the procedure is prescribed in Rule 6(3A)], the value of goods removed which are specified under Rule 6(6) has to be excluded in computing the Cenvat credit attributable to exempted goods and exempted services under Rule 6(3A). - the appellant has excluded these clearances in computing the denominator [N] while determining finally under Rule 6(3A)(c) of CCR’ 2004, the amount of Cenvat credit attributable to exempted goods and exempted services. In respect of export of electricity to TNEB - Held that:- Since the appellant has already reversed the said amount and shown in their ER-1 Return no further reversal arise. - Demand set aside - decided in favor of assessee.
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2013 (3) TMI 380
Commercial Training or Coaching - Recognized Course - Service Tax applicability under Section 65(105)(zzc) - Classification of Services - Held that:- The expression “Commercial Training or Coaching Centre” as defined under Section 65(27) means, institutes, which issue certificates recognized by the law are excluded from the definition of “Commercial Training or Coaching Centre”. Prima facie, we are of the view that this recognition of the degree by the IGNOU indicates that the degree awarded by the appellant’s institute is recognized in India and in view of this, the appellant’s institute would not be covered by the definition of “Commercial Training or Coaching”. we are of the view that the appellant have a strong prima facie case in their favour and the requirement of pre-deposit of service tax demand, interest and penalty for hearing of their appeal would cause undue hardship. - Stay granted in full.
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2013 (3) TMI 379
Classification of Services - Waiver of Pre-deposit - modification/rectification of the stay order [2012 (6) TMI 301 - CESTAT, MUMBAI] - NHAI is a statutory body performing a statutory function - Held that:- Activity undertaken by NHAI is a business activity and the service rendered by the appellant to NHAI appeared to be classifiable under ‘business auxiliary service. This activity was outsourced by NHAI by engaging agents for collection of toll on their behalf. It is not a statutory levy and NHAI was not performing a statutory function As has been held by Tribunal in the case of Parasrampuria Indus. Ltd.(2011 (2) TMI 535 - CESTAT, MUMBAI ), unless there are change of circumstances or new developments that have taken place after passing the stay order, the stay order cannot be modified/rectified. - stay order to be complied with - against assessee.
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Central Excise
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2013 (3) TMI 366
Liablity to pay 8% on the price of the final product viz., Bio-compost fertiliser, which is a mixture of bye products viz., Press mud and Spent wash, under Rule 57C r.e.r. 57CC of the Central Excise Rules - assessee is a manufacturer of Sugar, Molasses and Denatured Ethyl Alcohol - as per dept. assessee manufactured and cleared bio-compost fertiliser during the period from 21.8.1996 to 28.3.2000 without following the Central Excise Procedures - Whether the Tribunal is correct in holding that the provisions of erstwhile Rule 57CC Central Excise Rules, 1944 is not applicable in this case? - Held that:- Finding force in the submission made by the assessee as the cenvated inputs were brought into the factory by the assessee for using it in the manufacture of their final products viz., sugar, molasses, Denatured Ethyl Alcohol. Once they use those cenvated inputs at the initial stage and obtain certain final products as well as wastes such as press mud and spent wash, there was no further application or usage of those inputs either in or in relation to the manufacture of final products once again. The same inputs cannot be considered to have been utilised or used even indirectly in the manufacture of disputed item viz., bio-compost fertiliser, especially under the factual circumstances that the same came to be manufactured only by adding those two waste materials together. May be those two waste materials contained the trace of certain chemicals with the characteristics of original inputs. That itself cannot be taken to mean that the product emerged out of those wastes was also manufactured by using those cenvated credit inputs. As rightly contended by the assessee, the characteristic of sugar cane containing various chemicals cannot be stopped or prevented by the manufacturer to pass on even to the wastes, as it is undoubtedly a natural flow of in born character from one stage to another. Only when there is a further addition of inputs or chemicals with similar characteristics externally by the manufacturer, the Revenue can invoke Rule 57CC. When spent wash and press mud had emerged as inevitable wastes during the process of manufacturing of final products viz., sugar and Denatured Ethyl Alcohol and the said wastes are combined and treated together to form another final product viz., bio-compost, the said final product cannot be brought under Rule 57CC. See Rallis India Ltd Vs., Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] the fact that the waste mother liquor arising in the manufacture of gelatin was further processed to manufacture exempted phosphoryl 'A' and 'B' would not attract Rule 57CC, because, if Rule 57CC was not applicable at the time of clearance of the waste mother liquor arising in the manufacture of dutiable gelatin, then the said rule cannot be applied merely because mother liquor was further processed to manufacture exempted final product, namely, phosphoryl 'A'and 'B' ". Also see Commissioner of Central Excise Vs. Sterling Gelatin (2010 (9) TMI 857 - GUJARAT HIGH COURT) who relied on the decision of Commissioner Vs. National Organic Chemical Industries Limited (2008 (11) TMI 6 - SUPREME COURT) As the very same Tribunal considered the same issue and given a finding in favour of the assessee in the case of Commissioner of Central Excise, Tirunelveli Vs. Dharani Sugars & Chemicals Ltd. [2008 (8) TMI 618 - CESTAT, CHENNAI (Tri Chennai) ] we wonder as to how the Revenue is justified in contesting the very same issue in this appeal in respect of another assessee. If an issue is decided in favour of any party and had attained finality and accepted by the parties, the affected party in that case is certainly precluded from questioning its correctness in an another case - in favour of the assessee and against the Revenue.
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2013 (3) TMI 365
Cenvat Credit disallowed - credit had been taken by the three units of the appellant in respect of M.S. Angles, Channels, Plates, Sections, Beams, Flats etc. claimed to have been used for fabrication of plant and machinery, for manufacture of sugar - assessee contested against SCN which have been framed without verification of any records and physical verification of machineries and structures fabricated by the appellants in connection with the setting up of the new manufacturing units - Held that:- The CENVAT Credit Rules in order to avail CENVAT credit, require the assessee to establish that the items in question were actually put to use for manufacture, or in relation to manufacture of final product, or the capital goods for which the assessee seeks to avail CENVAT credit. The CESTAT did not find any error in the order of the Commissioner, Meerut-I in denying the CENVAT credit as the appellant had failed to prove that the items, on which the CENVAT credit was claimed, were actually used for fabrication of capital goods used for manufacture of final product. The CESTAT observed that there is no dispute about the facts, that in fabrication of capital goods, the CENVAT credit was taken for M.S. angles, channels, plates etc. The appellant, however, neither specifically intimated the department at any point of time nor the details of these items of capital goods fabricated was declared in ER-I, returns filed by the appellant. The drawings and designs of the capital goods claimed to have been fabricated along with the plant of the material used were not produced before the Adjudicating Authority on the basis of which it could be ascertained as to how much quantity of structural steel material was used for various items of capital goods claimed to have been fabricated. The store ledgers and the store issue slips did not establish the use of structural steel items issued - the questions raised in these appeals are questions of fact, and thus no substantial questions of law arise for consideration by us in these appeals - against assessee. Penalty is to be attracted in this case as the appellants had taken CENVAT credit without satisfying the conditions set out and in violation of the CENVAT Credit Rules. Respectful agreement with the reasons given in Commissioner of Customs & Central Excise vs. M/s Majestic Auto Limited (2013 (3) TMI 338 - ALLAHABAD HIGH COURT) the quantum of the penalty equal to the duty determined as contemplated by Section 11AC is mandatory and there is no discretion in the adjudicating authority or the Tribunal to impose different amount of penalty - no error of law in the impugned orders imposing penalty - against assessee.
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2013 (3) TMI 364
Cenvat Credit - Input Service - Rule 2(l) - Services of commission agents - nexus with the manufacture of final products - Held that:- As per Rule 2(1)the appellant are eligible for cenvat credit on the services of the commission agent and there is nothing in the definition of ‘input service’ or in any other provision of Cenvat Credit Rules that the input services, for availing cenvat credit, have to be availed before the removal of the goods. The‘input service’ under Rule 2(l) of the Cenvat Credit Rules, 2004, the services of commission agent, which are meant for promoting the sale of the goods are specifically covered by the expression “advertisement or sale promotion services” in the definition of “input service” and “activities related to business” would also cover the services of procuring sale orders through commission agent. - Stay granted.
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2013 (3) TMI 363
Rebate claims - Procurement of excisable goods duty free - Exported the said goods on payment of duty under Rule 18 of Central Excise Rules, 2002 - Penalty under Rule 27 - Consumer Welfare Fund - Rule 18 or Rule 19 of the Central Excise Rules, 2002 - Held that:- applicant had opted to work under Rule 19 by procuring raw materials duty free under Not. No. 43/2001-C.E. (N.T.). The amendment made in said notification makes it mandatory for the exporter to export goods under bond only and facility of rebate of duty under Rule 18 is not admissible in such cases.So duty paid raw materials are to be exported under bond in application form in ARE-2 in terms of Rule 19(1) of CER 2002. Similarly in case of refund of rebate - Held that:- “Rebate/Refund - Mode of payment - Petitioner paid lesser duty on domestic product and higher duty on export product which was not payable - Petitioner entitled to cash refund only of the portion deposited by it by actual credit and for remaining portion, refund by way of credit is appropriate as per M/s. Nahar Industrial Enterprises v. UOI (2008 (9) TMI 176 - PUNJAB AND HARYANA HIGH COURT ) In view of above circumstances, the impugned order-in-appeal is modified to the above extent and revision application is allowed.
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2013 (3) TMI 362
Cenvat Credit on Capital goods - Rule 4(2)(b) - Balance 50% of credit - According to the Revenue, the assessee was not entitled to avail of the balance fifty per cent credit during the year 2002-03 since the capital goods were still at the stage of erection and had not actually been put to use. - Held that:- The assessee was entitled to avail of the balance fifty per cent credit during the year 2002-03 as the capital goods were lying in the factory for installation and the process of erection was being carried out. The requirement that the goods were in the possession and use of the manufacturer in the year in which the balance of credit was availed of has been fulfilled and the issue of limitation therefore is also of no practical relevance. The Appeal is accordingly dismissed. There shall be no order as to costs.
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2013 (3) TMI 361
Interpretation of Notification No. 29/2004-Central Excise - Concessional rate of duty - Manufacturer who does not have facilities in his factory for the manufacture of filament yarn of Chapter 54 - The contention of the Revenue is that PFY Division in Jolwa and D.T. Division in Jolwar have to be treated as one factory. - Separate registrations for the three units - Held that:- The Concessional rate of duty can not be denied on the ground that one of the division out of three is engaged in the manufacture of POY and the application for separate registration cannot be rejected on the ground of revenue consideration so the factories at Jolwa have to be treated as separate. Facts in this are somewhat similar to that of VARDHMAN Spinning Mills case [1999 (8) TMI 916 - CEGAT, NEW DELHI] in which Tribunal held that benefit of notification can not be denied, even if the factories are under the same management. - Stay granted.
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CST, VAT & Sales Tax
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2013 (3) TMI 385
Payment of VAT - tribunal has extended protection to 90% of the disputed amount of tax assessed and the assessee has been required to deposit 10% amount and to furnish security for 90% of it - assessee preferred revision application as in granting interim protection even to the extent of 90%, the tribunal has not considered the prima-facie merits of the case - Held that:- The assessee has strong prima-facie case in as much as the impugned assessment has been passed without adverting to the books of accounts and pointing out any discrepancy therein. As decided I. T. C. LTD. Versus COMMISSIONER (APPEALS), CUS. & C. EX., MEERUT-I [2003 (10) TMI 70 - HIGH COURT OF JUDICATURE AT ALLAHABAD] the stay should not be granted on mere asking of the party but on consideration of the prima-facie merits of the case. The tribunal has not dealt with the prima-facie merits of the case in deciding the stay application, thus its order is accordingly set aside and the matter is remitted to the tribunal for fresh consideration of the stay application of the assessee in accordance with law within a period of six weeks time. The notice dated 5.4.2013 requiring the assessee to deposit 10% of the disputed tax assessed by 8th March 2013, failing which the bank accounts of the assessee are threatened to be attached is to be set aside as some breathing time may be allowed for depositing the aforesaid 10% of the amount. Thus the assessee is permitted to deposit 10% of the amount demanded as per the order of the tribunal within a period of two weeks from today.
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2013 (3) TMI 384
Cancellation of eligibility certificate u/s 4-A of the U.P. Trade Tax Act, 1948 - old machines for the new unit were used - Held that:- It appears that the eligibility certificate was issued on 30.04.1984 for a period of five years w.e.f. 06.05.1983 to 05.05.1988 and Assistant Commissioner recommended the assessee's case for cancellation of the eligibility certificate after the expiry of eligibility certificate. Thus the cancellation certificate was issued when the eligibility period had already expired. Thus, it is well settled legal position that no cancellation certificate can be issued after the expiry of the eligibility certificate is over.
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Indian Laws
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2013 (3) TMI 378
Exemption from RTI - Power of CIC or SIC - Application under Section 6 of the Right to Information Act - The High Court has held that under Section 18 of the Act the Commission has no power to direct the respondent to furnish the information and further held that such a power has already been conferred under Section 19(8) of the Act . held that:- It has been contended before us by the respondent that under Section 18 of the Act the Central Information Commission or the State Information Commission has no power to provide access to the information which has been requested for by any person but which has been denied to him. The only order which can be passed under Section 18 is an order of penalty provided under Section 20. However, before such order is passed the Commissioner must be satisfied that the conduct of the Information Officer was not bona fide. We uphold the said contention and do not find any error in the impugned judgment of the High Court whereby it has been held that the Commissioner while entertaining a complaint under Section 18 of the said Act has no jurisdiction to pass an order providing for access to the information. This Court, therefore, directs the appellants to file appeals under Section 19 of the Act in respect of two requests by them for obtaining information within a period of four weeks from today. If such an appeal is filed following the statutory procedure by the appellants, the same should be considered on merits by the appellate authority without insisting on the period of limitation. By virtue of the notification dated 15-10-2005 issued under Section 24 of the Act, the Government of Manipur has notified the exemption of certain organizations of the State Government from the purview of the said Act. This Court makes it clear that those notifications cannot apply retrospectively. Apart from that the same exemption does not cover allegations of corruption and human right violations. The appeals which the respondents have been given liberty to file, if filed within the time specified, will be decided in accordance with Section 19 of the Act and preferably within three months of their filing. With these directions both the appeals are disposed of.
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