Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 24, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Customs
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16/2012 - dated
20-3-2012
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ADD
Amends notification No. 124/2007-Customs, dated 31st December,2007 so as to continue, up to and inclusive of 27th March, 2013, the anti-dumping duty on imports of Flat Base Steel Wheels, originating in, or exported from, China PR .
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24/2012 - dated
22-3-2012
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Cus (NT)
Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.
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23/2012 - dated
21-3-2012
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Cus (NT)
Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.
DGFT
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108 (RE-2010)/2009-14 - dated
22-3-2012
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FTP
Exemption of Assam Comilla Cotton [ITC(HS) Code 5201 00 12] from export restriction on cotton during the current cotton season upto 30.09.2012.
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107 (RE-2010) /2009-2014 - dated
21-3-2012
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FTP
Addition of new paragraph 8.7 in FTP making supplies to non mega power project ineligible for Deemed Export benefits.
Income Tax
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5(4)-B(PD)/2011 - dated
13-3-2012
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IT
Special Deposit Scheme for Non-Government Provident, Superannuation and Gratuity Funds - Notified rate of interest on such deposits.
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S.O.406(E) - dated
9-3-2012
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IT
Section 35AC, read with Explanation (b) thereto, of the Income-tax Act, 1961 - Eligible projects or schemes, expenditure on - Notified eligible projects or schemes.
Circulars / Instructions / Orders
Highlights / Catch Notes
Customs
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Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. - Ntf. No. 24/2012 - Customs (N. T.) Dated: March 22, 2012
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Amends notification No. 124/2007-Customs, dated 31st December,2007 so as to continue, up to and inclusive of 27th March, 2013, the anti-dumping duty on imports of Flat Base Steel Wheels, originating in, or exported from, China PR . - Ntf. No. 16 /2012-Customs (ADD) Dated: March 20, 2012
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Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. - Ntf. No. 23/2012 - Customs (N. T.) Dated: March 21, 2012
DGFT
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Amendment in SION A-1778. - Cir. No. 103 /2009-2014 (RE 2010) Dated: March 22, 2012
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Exemption of Assam Comilla Cotton [ITC(HS) Code 5201 00 12] from export restriction on cotton during the current cotton season upto 30.09.2012. - Ntf. No. 108 (RE-2010)/2009-14 Dated: March 22, 2012
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Addition of new paragraph 8.7 in FTP making supplies to non mega power project ineligible for Deemed Export benefits. - Ntf. No. 107 (RE-2010) /2009-2014 Dated: March 21, 2012
Case Laws:
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Income Tax
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2012 (3) TMI 281
Turnkey project taxability of amount receivable under project - DTAA between India and Germany - consortium formed by applicant (German company) and Samsung (Korean company) to undertake the project of carrying work of all activities and services required for the design, engineering, procurement, construction, installation, commissioning and handing over of the plant on a lump sum turnkey basis project awarded by OPAL assessee contended it to be divisible, off shore contract of sale and services, and consideration of obligations of the applicant independent of the obligations of Samsung - Held that:- It is supply and erection contract, and risk is retained not merely until delivery but until acceptance of the works by OPAL, which is after trial and commissioning of the project. Moreover, contract does not specify that title to the machinery shall pass on to OPAL on high seas or in the country of origin. There was no mention of off-shore or on-shore supply of services in contract. Therefore, situs of the contract is in India. Contract was awarded to the Consortium and not to the two members individually. Also, price schedule and payment also deals with the entire gamut of works to be performed under the contract. Therefore, this is a case of the applicant and Samsung forming an AOP in respect of the work undertaken by the Consortium. Since contract is indivisible, hence if a part of the design and engineering work prepared solely for manufacture, procurement of equipment outside India, is done outside the country, even if it constitutes a significant part, the same cannot be viewed in isolation and apart from the contract as a whole and amount received/receivable against the aforesaid are liable to tax in India. Since the assessment is to be as an AOP and taxable in India, the question of existence or non-existence of a PE does not arise.
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2012 (3) TMI 280
Approval under section 80G - request was rejected by the DIT(E) as the trust deed contains object clause that objects are not confined to India alone and can be conducted outside Indian Territory - contention by the assessee has not taken up any activities outside India and the said clause 'r' of the objects clause-3 merely remained on paper and was never implemented - assessee has further submitted that it is charitable institution registered under section 12AA of the Act - as a precautionary measure, the Trust passed a resolution amending the clause 'r' and also made an application addressed to the DIT(E) requesting for permission to amend clause 'r' of the objects clause No.3.2 - Held that :- In the present case it is clear that all the conditions laid down in Rule 11AA i.e. condition laid down in sub-clauses (i) to (v) of sub-section (5) of section 80G are fulfilled. When the assessee trust was granted registration under section 12AA, it is a testimony to the fact that the trust is established for charitable purposes - Once the condition laid down in Rule 11AA as also in sub-clauses (i) to (v) of sub-section (5) of section 80G are complied with, the trust is, eligible for registration under section 80G(5)(vi) of the Act - the assessee has already made amendment to the trust deed amending Clause 3.2 - no objection to grant approval appeal of assessee allowed
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2012 (3) TMI 267
Deduction u/s 80-I - assessee engaged in the business of manufacturing caustic soda primarily and other chemicals incurred expenditure of 7.5 crore towards substantial expansion and bringing into effect new industrial undertaking production capacity increased from 37245 M.Tonnes to 70425 M.Tonnes Revenue denied deduction u/s 80I on ground that it is expansion of the same manufacturing unit Held that:-The fact that an assessee by establishment of a new industrial undertaking expands his existing business which he certainly does, would not on that score deprive him of the benefit u/s 80-I. Every new creation in business is some kind of expansion and advancement. The true test is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is a new identifiable endeavour where substantial investment of fresh capital is made to enable earning of profit attributable to that new capital. Only because to a certain extent the new undertaking is dependent on the existing unit, will not deprive the new undertaking the status of a separate and distinct identity. See Textile Machinery Corporation Ltd. v. CIT (1977 - TMI - 6503 - Supreme Court) Relief u/s 80I to be granted Decided in favor of assessee.
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2012 (3) TMI 266
Validity of notice issued u/s 148 for re-opening of assessment beyond 4 years A.Y. 2004-05 purport to be reopened on ground of escapement of income received in A.Y. 2003-04, assessment of which was framed after scrutiny belief formed on basis of letter of Additional DIT (Investigation) - approval u/s 151 for issue of notice u/s 148 granted by CIT Held that:- It is impossible to comprehend as to how the Assessment for A.Y. 2004-05 can be reopened on the ground that income escaped assessment in A.Y. 2003-04. Moreover, exfacie the reasons disclosed cannot form the basis of a reason to believe escapement of income for A.Y. 2004 05. Also, letter dated 11.03.2010 of Additional DIT (Investigation) was much prior to the finalization of the Assessment for A.Y. 2003-04 on 27.12.2010. Thus, no new tangible material is on record as required u/s 147. Further, requirement of Section 151(2) could have only been fulfilled by the satisfaction of the Joint Commissioner that this is a fit case for the issuance of a notice u/s 148. In instant case, approval was granted by CIT. There is no statutory provision here under which a power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Therefore in view of non-compliance of the mandatory requirements of Section 147 and 151(2), the notice reopening the assessment cannot be sustained in law - Decided in favor of assessee.
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2012 (3) TMI 265
Addition made in assessee's hands relating to dividend income on bonus shares received by M/s. Raman Kant Brothers & Associates to whom the assessee had earlier gifted equity shares and that this said gift was held to be wholly void Tribunal deleted the addition Held that:- Division Bench judgment of this Court in 2001 answered the question in favor of assessee in respect of the A.Y. 1989- 90 and since Revenue could not successfully point out any distinguishing feature between the decided case and the one in hand. Thus decided in favor of the assessee.
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2012 (3) TMI 264
Capital gains transfer buy back of shares under Section 77A of Companies Act, 1956 applicant being German company held 99.99986% in its subsidiary Indian company 0.00002% i.e. one share each held by its 6 nominees to comply with requirement of having minimum 7 members applicant contended that transfer of shares vide buy back of shares by indian company is exempted transfer u/s 47(iv) since it together with its nominee held 100% shares of company applicability of Section 115JB TDS Held that:- Applicant's argument that the holding of the shares by the nominees should be treated as the holding of the shares by the applicant and the applicant must be treated to be holding 100% shares cannot be accepted in the face of the requirement u/s 49(3) of the Companies Act and the illegality that would spring from its acceptance. Therefore, word 'or' will not be read as 'and' in Section 47(iv). Further Section 47 overrides Section 45 but does not override Sec 46A. Therefore, proposed buyback of shares would not be exempt in view of Section 47(iv) and income is chargeable to tax in terms of Section 46A r.w.s. 48. Also, applicant is not entitled to receive the amount on buy-back of shares without any deduction of tax at source and Section 115JB has no application in this case.
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2012 (3) TMI 263
Educational institution whether "Seminary" teaching students for priesthood is an educational institution entitled to exemption from tax u/s 10(23C)(iiiad) whether such exemption can be granted at the appellate stage Held that:- There is nothing to indicate that S.10(23C)(iiiad), requires the educational institutions to impart education in any particular subject or in any manner whatsoever. The term 'education' should enjoy a wide connotation covering all kinds of coaching and training carried on in a systematic manner leading to personality development of an individual. Thus, we hold that religious teaching in the seminary is also education and seminary is therefore an "educational institution" entitled for exemption u/s 10 (23C)(iiiad). In view of decision in case of National thermal Power Corporation Vs. CIT (1996 - TMI - 5626 - Supreme Court), pure question of law can be raised at any stage of the proceedings Decided in favor of assessee.
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2012 (3) TMI 262
Cancellation of the registration granted to the Trust under Section 12AA(3) - assessee contented that Commissioner was not empowered to pass an order canceling registration u/s 12AA(3) which were brought on the statute book with effect from 1 June 2010 and hence could not have retrospective effect - Held that :- the Finance Act of 2010, subsection (3) was amended so as to empower the Commissioner to cancel the registration of a trust or an institution which has obtained registration at any time under Section 12A (as it stood before its amendment by the Finance (No.2) Act, 1996 - Every statutory provision which operates in respect of a trust, which has already been registered in the past does not have a retrospective character. A law which operates with respect to an event which has occurred in the past is not necessarily retrospective - This cannot by any stretch of imagination, be regarded as a retrospective alteration of the law
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2012 (3) TMI 261
Notice under Section 143(2) that the case was taken up for scrutiny - after the scrutiny Assessing Officer added an income of Rs. 43,91,913/ - The assessee contented that AO has exceeded the jurisdiction under Section 143(2) of the Act because the notice was sent to an address at which the assessee was not available and no presumption of service of notice upon the assessee within the period of limitation of 12 months of the end of the month in which the return was filed, could be drawn - Held that :- From the perusal of Section 27 of the General Clauses Act it is clear that service of notice would be deemed to be sufficiently effected if a letter containing the document is properly addressed, prepared and posted by registered post - revenue has sent the notice under Section 143(2) of the Act on a wrong address and not on the address mentioned in the income tax return and has not been able to substantiate by adducing any evidence that any notice under Section 143(2) was issued within the prescribed period of limitation.
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2012 (3) TMI 260
An assessment sought to be reopened by a notice as per Section 148 - on examination of the assessees financial statements AO stated that the activities carried on by the assessee do not cover any public charity but are commercial activities for which the Petitioner is not entitled to an exemption under Section 10(23B) - the assessment is sought to be reopened beyond a period of four years - assessee contented that he had filed its return of income upto 2011-12 after receiving approval from the Khadi and Village Industries Commission for claiming exemption under Section 10(23B) - during the course of the assessment proceedings under Section 143(3),the Petitioner had responded to the queries of the AO by its replies - Held that :- The primary requirement, which is of a jurisdictional nature, for reopening of an assessment beyond a period of four years has not been fulfilled - no basis in the submission to the effect that there was a failure on the part of the assessee to disclose material facts fully and truly - The AO has manifestly failed to consider the grounds of objection submitted by the assessee - the reopening of the assessment is based purely on a change of opinion by the Assessing Officer and cannot be permitted in law - to allow the petition by setting aside the notice issued under Section 148
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2012 (3) TMI 259
Article 12 of DTAA - The assessee had entered into agreements with the ITC Hotels Ltd to provide marketing and advertising services through sales, promotion, public relations and reservations - income received in the form of marking fees for services provided by the assessee outside India - Revenue contented that the assessee had received income from royalty and / or fees from technical services - the payment was also held to be covered by the definition of 'fees for technical services' as per Explanation 2 of section 9(1)(vii), being a consideration for the rendering of technical, managerial and consultancy services - Held that :- payments received were in the nature of business income, and not in nature of royalty or fees for technical services. It was accepted that the assessee did not have a permanent establishment in India, and hence the business income could not be brought to tax under Article 7 of the India-USA DTAA - decided the issue in favour of the assessee.
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2012 (3) TMI 258
Claiming a deduction under Section 10AA - Special provisions in respect of newly established Units in Special Economic Zones - The AO examined the process through which the assessee is obtaining the finished products as against initial purchase items inferred that the assessee merely doing purchase and sale of goods and no manufacturing or processing was done as there were no machines or manufacturing set up - the assessee contented that is continuously engaged in the business of trading and manufacturing of precious and semi precious stones and the revenue itself has allowed deduction u/s 10AA in the immediately preceding year and has been granted letter of approval by the Development Commissioner, Surat u/s 15(9) of the SEZ Act to set up a unit for undertaking authorized operations of manufacturing and trading of the Diamond and Jewelery and the benefits u/s 10AA will be available to trading in the nature of re-export of imported goods- The assessee claims benefit under Section 10AA justifying its classification under service (referred to as "provide any service" under the said section). As the Income Tax Act does not define the term "service", the assessee company has to take reference to the definition of service referred to in the SEZ Act, 2005 (given that the Section 10AA was introduced by SEZ Act, 2005 and referred to in the Second Schedule to the said Act) and further the SEZ Act, 2005 has overriding effect on all other enactments by virtue of section 51 of SEZ Act, 2005. Held that :- Though vide Instruction no. 1/2006 dated 24-03-2006, it was clarified that trading units can be set up in the SEZ. However, the modification was made on 24-05-2006 in which it was made clear that the deduction u/s 10AA will be available in respect of the trading in the nature of re-export of imported good- Thus one will have to consider the implication of Section 51 of the SEZ Act , which says that it will have overriding effect over all the other laws. It means that anything in-consistent to the provision of the SEZ Act will not be considered. Thus the word services as mentioned in Section 10AA cannot be construed in-consistently with the definition of services given in the SEZ Act. Under the SEZ act, the trading is included in the services provided the trading is export of imported goods. We therefore, feel that the assessee is entitled to deduction u/s 10AA of the Act and therefore, the ld. CIT(A) was justified in allowing the exemption - Appeal in the favour of assessee.
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2012 (3) TMI 257
Claim of deduction u/s 54EC - Revenue filled an appeal that CIT(A) Ajmer has erred in allowing the claim of deduction u/s 54EC bynot appreciated the facts that the deemed date of allotment of Bond1 is beyond the time limit of 6 months as per section 54EC from the date of transfer - The assessee claimed deduction in respect of Long Term Capital Gain amounting to ₹ 1.00 Crore as the date of the investment by the assessee must be regarded as the date on which payment was made and received by the National Housing Bank. This was within a period of six months from the date of transfer of the asset thus the provisions of section 54EC were complied - Held that :- It was provided in Section 54EC that in case the amount of Long term capital gain is invested in the long term specified asset then the assessee is not required to pay the capital gain tax - No more bonds will be issued by any person, if he has already made an investment of an amount aggregating more than ₹ 50 lakhs in the bonds already notified in notification no. 963E dated. 29 June, 206 or 964E dated 29th June - Investment within 06 months is the investment for that financial year in which transfer has taken place. Hence, subsequent investment is to be considered as part of the investment of financial year in which transfer has taken place - appeal in the favour of revenue was allowed.
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2012 (3) TMI 256
Assessee's claim with regard to benefit of indexation available to him from the year it was acquired by the 1st owner as against the year it was held by the assessee - the assessee held the property upon the death of his father and became owner of property by inheritance - the AO as per Explanation (iii) to section 48 of the Act contented that the assessee could get benefit of indexation only from the date when the asset was first held by him - Held that :- U/s 49(1)(iii), where the capital asset became the property of the assessee by succession, inheritance or devaluation, the cost of acquisition of asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee - the period from 1.04.1981 till the death of previous owner shall be included in the period of holding by the assessee for the purpose of determination of indexation cost of the property Dis allowing deduction under sec. 54 of the Act in respect of the whole of the amount invested by the assessee in the purchase of residential house - assessee purchased residential property in joint name with his wife and claimed deduction under sec. 54 in respect of amount of invested in residential property and the whole purchase consideration was paid by the assessee only out of sale proceeds of the property the name of his wife in the agreement to transfer was included only to avoid future hassle due to old age of the assessee his wife has not contributed towards purchase of property nor does her name get reflected in the possession certificate - Held that :- the assessee had invested ₹ 80,00,000/- in the house property, which was jointly held by him with his wife, his wife is a joint owner and did not have any source of income - property was purchased only by the assessee by deploying long term capital gain on sale of property, which he received on inheritance - the name of his wife has been entered in the sale agreement just for the purpose of security reasons - as per Section 64(1)(iv) subject to provisions of sec. 27(i) the income as arises directly or indirectly to the spouse of an individual from the assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration shall be included in the income of such individual - Once the assessee is owner, the capital gain, if any, on sale will be assessable in the hands of the assessee only - the assessee will be eligible for benefit of entire amount spent on acquisition of new asset, which is jointly held by him with his wife - allow the benefit of sec. 54 in respect of entire amount of ₹ 80,00,000/- - both the appeals of revenue were dismissed.
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2012 (3) TMI 255
AO allowed the claim of bad debt out of the total bad debt being the lease amount to be received from Madhya Pradesh State Transport Corporation and the assessee had written off bad debts as per section 36(1)(vii) of the Act - contention of assessee is that the AO on examination of the case and going through the facts held that the claim of bad debt is justifiable in law as the same is written off as irrecoverable in the accounts. Even in the reply to the show-cause notice, it was brought to the notice of the Commissioner of Income-tax about the debt being written off as irrecoverable However, the Tribunal in its order had stated that the Assessing Officer has not discussed anywhere in the order that the assessee has written off the bad debts in their accounts. Further, the Tribunal held that the Madhya Pradesh State Road Transport Corpo- ration Ltd., was fully owned, controlled and managed by the Government therefore, it cannot be said that the said amount would be written off as irrecoverable - Held that :- set aside the order of the Income-tax Appellate Tribunal with a direction to rehear the matter afresh after giving opportunity to both parties to sub- stantiate their case and decide the matter in the light of the apex court judgment in the case of T. R. F. Limited v. CIT (2010 -TMI - 76626 - SUPREME COURT) - the respondent not to take any recovery proceedings against the assessee in respect of tax collection till the matter was disposed of by the Tribunal
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Customs
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2012 (3) TMI 273
Relief - Notification No.17/01-Cus dated 1.3.2001, as amended by Notification No.44/01-Cus, dated 26.4.2001 - Customs authorities had refused to accept the request of the assessee and accordingly, had directed the assessee to pay the duty under the provisions of the Customs Act, 1962 - It is a settled proposition in a fiscal or taxation law that while ascertaining the scope or expressions used in a particular entry, the opinion of the expert in the field of trade, who deals in those goods, should not be ignored, rather it should be given due importance - In G.P. Ceramics Private Limited v. Commissioner, Trade Tax, Uttar Pradesh, (2009) 2 SCC 90 - Decided in favor of the assessee
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2012 (3) TMI 272
Waiver of predeposit of duty,interest and penalty and stay of the impugned order -the impugned goods imported namely urea, under the licence issued by the DGFT was required to be taken into the appellants-factory for manufacture of NPK Fertilizer and the same was packed and sold to authorized dealers to be used as manure for agricultural use by the farmers at the consumer price fixed by the Government in accordance with the provisions of Essential Commodities Act - the assessee contented that when the expression used in the notification 11/97, 23/98 and 20/99 is "for use as manure" and the urea has been sold under the Fertilizer Control Order, it has to be assumed that the urea was for use as manure and the exemption has to be allowed, in view of the affidavit filed by the appellants - Held that :- the customs duty exemption states that the same is not linked to the import condition of actual use as the relevant customs notifications provided for no conditions hence, order to waiver of predeposit of the duty and interest amounts during the pendency of the appeal - the appellants have definitely violated the conditions of import license hence the appellants need to predeposit Rs.5,00,000/- towards penalty within four weeks from the date of order and report compliance .
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2012 (3) TMI 254
Denial of refund claim on grounds not mentioned in the Show Cause Notice SCN issued for denial of refund claim on ground of non-production of relevant document Order rejecting refund passed on ground that the shipping bills are not being challenged - Held that:-Whether the appellant was entitled for filing the refund claim or not, is purely a legal issue, which could be examined for the first time at any stage of the proceedings including at the appellate stage, as held in case of National thermal Power Corporation Vs. CIT (1996 - TMI - 5626 - Supreme Court). In our view, both the lower authorities have traveled beyond the allegations made in the SCN hence these orders are not sustainable Decided in favor of assessee.
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2012 (3) TMI 253
Determination of nature of the activity - repair and maintenance of an existing asset or industrial and commercial construction Held that:- Tribunal has already delivered its judgment on liveability of service tax on works contract in cases like Alstom Projects India Ltd. vs. CST, Delhi (2011 - TMI - 206129 - CESTAT, New Delhi), and in Instrumentation Ltd. vs. CCE, Jaipur I (2011 - TMI - 206162 - CESTAT, New Delhi). Therefore the authority shall taking into consideration all the averments of the appellant with evidence before him pass order. Appellant is directed to appear before the Adjudicating Authority within stipulated time Stay & appeal disposed.
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Corporate Laws
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2012 (3) TMI 252
Petition is filed under Section 433(e) of the Companies Act, 1956 seeking to wind up the Respondent Company - petitioner carried out work of interior decoration for the respondent company - the respondent is unable to pay the debts of the petitioner, despite the fact that the director Sri S.M. Arshad is further the proprietor of M.S. Enterprises thus the respondent Company may be wound up - the respondent contented that there is no legal obligation created on the part of the respondent Company to honour the liability of the petitioner, which is in respect of a firm - Held that :- there is no contractual obligations between the respondent Company and the petitioner and therefore, no liability arises - the petitioner has failed to prove the case under Section 433 of the Companies Act - the petition is dismissed.
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Service Tax
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2012 (3) TMI 284
IPO Financing Fees - demand confirmed against the applicants for IPO finance under the head "Business Auxiliary Services" on the activity undertaken where they are financing to their clients through Non Banking Finance Company which are sister concerns of the applicants and share the income of interest on revenue sharing basis - MOU between the applicants and the NBFC so as to arrange finance for the applicant's clients and to share the income earned from this activity after deducting the expenses - Held that :- As per the MOU, the applicants have agreed to compensate these NBFC's, if any demand arises thus have not acted as a commission agent, hence are doing business with these NBFC's on principal to principal basis and sharing their profits. Therefore, the applicants are not rendering any service under the category of "Business Auxiliary Services"- Processing fee - applicants are collecting money on behalf of the company who issues IPOs and deposit in a designated bank assigned by the IPO issuing company and banks shared interest earned by them with the applicants on money deposited - Revenue considered this activity of promotion of the business of the Banks and liable to pay service tax under the category of "Business Auxiliary Services" - Held that :- The amount of interest income which the bank shares with the applicant is not because applicant is promoting or marketing of any of the services provided by the bank and not liable to pay service tax - Recovery of Common expenses - expenses recovered by the applicants from the co-user of the premises on actual basis - Revenue considered such recovery under the category of infrastructural support service as the applicants are providing infrastructure support service to the co-user - Held that :- these activities are not covered under the "Business Support Services" as the applicants are paying the expenses incurred by them on all the premises and thereafter recovered from the co-user on actual usage basis - Complete waiver of pre-deposit of dues adjudged in the impugned order and stay recovery thereof during the pendency of the appeal
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2012 (3) TMI 283
Whether a co-operative society can be held to be liable for service tax in respect of providing banking and other financial services as covered by the expression "or any other body corporate, or any other person" used in sub-section 65 (105) (zm) and sub-section 65 (12) - Appellants rely on the section 2 (7) of the Companies Act 1956 that " body corporate" or "corporation" includes a company incorporated outside India but does not include a co-operative society registered under any law relating to co-operative societies - assessee contented the co -operative societies are already excluded from the expression "body corporate" so it cannot be brought in by another expression which is not specific to include co-operative society - The argument of the Ld AR for revenue is that a co-operative society will be covered by the expression "any other person", because such societies also are doing banking business like any other bank - Held that :- since the Co-operative societies are managed by simplified controls through different enactments does not mean that for taxing the services such societies would be on a different footing as compared to services provided by a company - Since no specific exclusion is made in Finance Act, 1994,bank run by a co-operative society will come within the scope of entry 65 (105) (zm) and 65 (12) during the relevant time- since adjudication order has imposed both penalty under section 76 and section 78 the penalty under section 76 was uphold and set side penalty under section 78 - Appeals of assess were rejected on the issue of liability for tax and held the society to pay tax.
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2012 (3) TMI 271
Cargo Handling Service - The Appellants are engaged in activities of mining for excavation of bauxite ore, loading of the same into trucks at the stock yards, transportation of the same by road and unloading of the same at specified area to BALCO and HINDALCO - revenue issued a Show Cause Notice confirming a Service tax demand along with interest and penalty classifying the activities under "Cargo Handling Service" - Assessee contented that their contract is for integrated activity of mining and cannot be vivisected and subjected to tax- . For the period from 01-01-05 service tax has been discharged on the entire consideration received for transportation of goods and for the period prior to 01.01.05 no service tax is legally tenable as neither GTA nor Business Auxiliary Service was in force - the Appellants have also the argument that the demands are time barred - the The Ld SDR on the other hand relies on Circular 232/2/2006-CX-4 dated 12-11-07 issued by CBEC when mining service was brought under tax net by Finance Act, 2007 - Held that :- In the activities carried out by the appellants there appears to be a small component of loading and unloading of cargo. The contract with BALCO has an integrated rate of ₹ 485 per ton for mining, transportation, loading and unloading - on the entire component of transportation the receiver of the service has already paid service tax under the category of services of Transportation of Goods by Road - The cargo handling activity is incidental to transportation - It can be seen from fixed base transportation charge and there is no attempt to show that this is an unreasonable rate for transportation, jacked up on account of value of cargo handling included in it - Appeal was allowed in the favour of Assessee
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2012 (3) TMI 269
waiver of pre-deposit along with interest and penalty under Section 76 - applicants are registered under the category of "Commercial or Industrial Construction Services" and filing their ST-3 return periodically by availing the benefit of Notification No. 15/2004 dated 10.9.2004 upto 1.3.2006 and thereafter Notification No. 1/2006 dated 1.3.2006 - the Notification No. 1/2006 which was effected from 1.3.2006 provided for exemption from payment of Service Tax to the value which is in excess of 33% of the gross amount with the condition that service provider shall not avail CENVAT Credit of excise duty paid on inputs and capital goods and Service Tax paid on input services - it is contended that the credit availed by the applicants after 1.3.2006 pertains to the input services received prior to 1.3.2006 and they have not availed any credit for input services received after 1.3.2006 - Held that :- When these input services were received by the applicant, there was no bar for availment of CENVAT Credit and has paid the amount for input services received by them prior to 1.3.2006 after introduction of the Notification No. 1/2006, therefore, they are entitled for CENVAT Credit - inputs services and utilize the same - it is undisputed that the applicant had taken Cenvat credit of the service tax paid on inputs, services, which was received by them prior to 1-3-2006 but the payment thereof were made subsequently i.e., 1-3-2006 and said credit was utilized by them for discharging the service tax liability on the services rendered by them prior to 1-3-2006 - in view of the fact that the applicant has already reversed the amount of Cenvat credit of the service tax on the inputs services, they have made out a prima facie case for the waiver of pre-deposit of the amount involved - decided in favour of assessee.
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2012 (3) TMI 268
Applications for waiver of pre-deposit of total service tax amount, interest and penalties - show cause notices were issued on the ground that the applicants provided rent-a-cab operator service - contention of the applicants is that show cause notice was not received by the applicants and the adjudication order was passed ex-parte and applicants are entitled for small scale exemption Notification No.9/2004-ST dated 9.7.2004 which was not considered while confirming the demand - Held that :- in view of the fact that the benefit of small scale exemption notification was not considered at the time of confirming the demands, the applicants are directed to pre-deposit Rs.1 lakh for hearing of the appeals - the matter is remanded to the adjudicating authority after setting aside the impugned orders to pass a fresh order after affording an opportunity of hearing to the appellants and produce evidence before the adjudicating authority within eight weeks from the receipt of the order.
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Central Excise
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2012 (3) TMI 251
Petition filed for directing respondent to refrain from initiating denovo proceedings, pursuant to the final order dated 6.4.2011, pending disposal of the application for rectification of mistake, filed by the petitioner, before the CESTAT Held that:- Court is not inclined to interfere with the final order dated 6.04.2011 passed by the CESTAT. It is for the tribunal to consider the rectification application filed by the petitioner, and pass appropriate orders - Petition dismissed.
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2012 (3) TMI 250
Direction given to the Commissioner to verify the correctness of the invoices on the basis of which the cenvat amounting to Rs. 1.11 crores have been taken by the appellant - verification report placed on record stating that all the documents have been checked and verified except original invoices involving cenvat credit of Rs. 92445/- could not be produced by the appellant - appellant pleaded that in respect of these documents the original duty paying documents are now available and can be provided - the verification report also mentioned that cenvat credit of Rs. 2050607/- has been availed on the basis of Advise of Transfer for Debit (ATDs) issued by Central Telecom Store Depot (CTSD) which procures the material and passes on the cenvat credit to various units along with the material supplied - Held that :- the impugned order is set aside and the matter is remanded to the Commissioner giving opportunity of personal hearing to the Appellant in course of which they can produce the documents in support of their claim for balance amount of cenvat credit.
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2012 (3) TMI 249
Notification No. 49/2003-CE was mentioned instead of Notification No. 50/2003-CE - a declaration in terms of Notification No. 49/2003-CE dated 10.06.2003 was filed by the appellant - the exemption under the notification shall exercise his option in writing before effecting the first clearance and since a declaration to Notification 50/2003-CE was not made its exemption cannot be claimed - Appellant contented that Notification No. 49/2003-CE was filed by mistake instead of 50/2003-CE - Held that :- It is well settled law that the substantive benefit if otherwise available should not be disallowed on the basis of minor procedural irregularities - the fact that Notification No. 49/2003-CE was mentioned instead of Notification No. 50/2003-CE, cannot be considered to be a mistake fatal to the appellant s claim of benefit. Hence exemption is allowed to be claimed under Notification No. 50/2003-CE.
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2012 (3) TMI 248
Denial of refund of duty paid under protest on ground of unjust enrichment assessee engaged in producing compounded asafoetida - not amounting to manufacturing process - revenue contended that assessee had raised the sale price and thus burden of duty has passed on to the customers - Held that:- Commercial invoices clearly indicate that the customers were made known that the central excise duty is borne by the assessee and the same is not passed on to the customers. Also, assessee claimed that upward revision in sale price is on account of increase in the price of the raw materials.See Commissioner of Customs, New Delhi V/s. Organan (India) Ltd (2008 - TMI - 31607 - SUPREME COURT). Therefore, on basis of verification of evidences, order of Tribunal granting refund is upheld Decided in favor of assessee.
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2012 (3) TMI 247
Wrong availment of Modvat Credit on capital goods - conducted physical stock verification at the premises of the three units it was noticed that the shortages of Yo Frooti was on account of clearances to their own unit in the same premises i.e. from Yo Frooti Unit to Agro Unit and there was surplus of modvat inputs in the premises of other unit(s) - overall there was no shortage or excess - Yo Frooti unit had procured capital goods for the manufacture of finished goods and declared that the actual use was for packing of Yo Frooti which was exempt from duty but revenue contented that there was no manufacture of mineral water in the Yo Frooti unit at that time and wrongly availed the duty credit of Rs.23,91,513/- on capital goods. Held that :- the goods (both the finished goods as well as raw materials) were found in the same premises, it cannot be held that there was an intention to evade duty or to avail ineligible Cenvat credit on inputs, which were found short in premises of one unit but available in the premises of other unit so it will be considered an offence of a technical nature rather than any removal without payment of duty. From the records of the case it is seen that at the time of receipt of the capital goods, the product Yo Frooti was completely exempt from duty and Yo Frooti became dutiable only after a gap of few months and the eligibility for Cenvat credit has to be determined at the time the goods are received from the manufacturer and if the goods become dutiable subsequently and the manufacturer of goods puts the capital goods to other use, the same will not revive the question of admissibility of modvat credit on capital goods - direct the appellant to make a pre-deposit of Rs.11,50,000/- within a period of eight weeks and report compliance on 10/04/2012
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CST, VAT & Sales Tax
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2012 (3) TMI 285
Inter-state sale vs Intra-state sale assessee registered under MP VAT Act and CST Act, 1956 purchased tendu leaves in bid organized by MP State MFP Co-operative Federation Ltd - High court held assessee liable for payment of tax under VAT merely relying upon certain clauses in the tender documents assessee contending it to be inter-state sale and not exigible for the levy of tax under the relevant VAT Act - Held that:- In the instant case, relevant facts were not before the High Court nor the finding of the assessing authority to decide whether the transactions in question are intra-state sales or inter-state. In our view, whenever a question arises as to whether a sale is inter-state sale or not, it has to be answered with reference to Section 3 and when the question arises, in which State is the tax leviable, one must look to and apply the test in Section 9(i). Therefore, orders passed by the High Court are set aside and appellants are directed to file their monthly/annual returns before the assessing authority. It is also directed to assessing authority to adjudicate upon the returns so filed.
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