Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 24, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Charitable trust - The objects of the respondent-trust are based on religious tenets under Quran according to religious faith of Islam - The objects do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of Section 13(1)(b) - Exemption allowed - SC
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Suppressed sale – Excess consumption of gold in manufacture - It was simply a case where the assessee utterly failed to explain the considerable difference in the gold quantity in two sets of documents maintained by itself - HC
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Validity of reopening of assessment u/s 147 - Though the assessment of the assessment year 2005-06 was reopened beyond the period of four years, yet the same has to be upheld in view of the Explanation 1 to sec. 147 - AT
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Deduction u/s 80P(2)(a)(i) - In case the AO finds that the bye-laws do not permit the admission of any other co-operative society, the Assessee will be regarded as a primary co-operative bank and will not be entitled for deduction u/s 80P(2)(a)(i) - AT
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Disallowance of deduction u/s 80P(2)(a)(i) of the Act – There is no prohibition u/s 80P not to allow deduction to such co-operative societies in respect of business relating to its members. - AT
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The project undertaken by the assessee was approved as a 'housing project' by the local authority in March, 2004 and the construction also having been commenced in 2004 the pre-amended provisions are applicable in which event the assessee is entitled to claim deduction under section 80IB(10) - AT
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Disallowance of capital loss – Revenue was of the view that the transaction is a sham to book an artificial loss – just because the transaction is between the relatives, it cannot be said to be a sham - AT
Customs
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Since there was no demand under section 28(8) of the Customs Act for duty, no penalty could have been imposed under that provision and consequently the penalty under section 114A was not sustainable. - HC
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Whether the 2009 Amendment of Section 9A(8) (Finance (No. 2) Act, 2009) has retrospective application w.e.f. 1st January, 1995, thus causing Section 27 of the Customs Act to apply over and above Sections 9A and 9AA of the CTA - Held no - HC
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Refund claim - Anti-dumping duty under protest - The refund application, therefore, must be filed by the assessee within one year from the date of the order in Relaxo Rubber, i.e. March 8, 2006. - HC
Service Tax
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Bail application under offence punishable under Section 89 r.w.s 90 - service tax due - it is not a case in which the applicant can be released on bail more so when the investigation is still going on - HC
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Review of order where tribunal Condoned the delay - It is regrettable that not only are such frivolous applications filed by Revenue but are even argued by DR's at great length and unmerited vehemence - AT
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Suppression of facts - how the appellant’s presumed knowledge of its tax liability on fore-closure charges received, would render it liable to service tax, for being provided Business Auxiliary Service, which is admittedly inapplicable - AT
Central Excise
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Excess clearance by SSI unit after exhausting the limit of one crore - The main contention of the appellant is that they have applied for registration much before the visit of department officers - confiscation and penalty set aside - AT
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Whether the applicant is eligible to avail the credit in respect of service tax paid on the rent of immovable property to corporate office situated at Kolkata - prima facie, credit is allowable - AT
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Rule 6 of CENVAT Credit Rules are not applicable on the by-products, which are exempt - stay granted - AT
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CENVAT Credit on photocopy - applicant has not produced the bill of entry or the order finalising the assessment and has taken credit only on the strength of photocopy which is provisionally assessed - credit denied - AT
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Demand of interest - for demanding interest also, the revenue authorities have to issue the notice within period of limitation. - AT
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CENVAT Credit - Cenvat credit on the invoices issued by appellants head office before getting the head office registered under Input Service Distributor (ISD) - Credit allowed - AT
VAT
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Validity of assessment order - When tax is levied, it must be legally recoverable and if the assessee could substantiate that tax liability is not to the extent as assessed, there has to be a true assessment - HC
Case Laws:
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Income Tax
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2014 (3) TMI 652
Claim of benefit of exemption u/s 11 and 12 r.w.s. 13 of the Act – Public religious trust – Whether the Courts were justified in coming to the conclusion that the respondent- trust is a public religious trust and is outside the purview of Section 13(1)(b) and eligible for exemption under Section 11 of the Act – Held that:- Determination of nature of trust as wholly religious or wholly charitable or both charitable and religious under the Act is not a question of fact - It is but a question which requires examination of legal effects of the proven facts and documents, that is, the legal implication of the objects of the respondent-trust as contained in the trust deed - It is only the objects of a trust as declared in the trust deed which would govern its right of exemption u/s 11 or 12 – thus, the High Court has erred in refusing to interfere with the observations of the Tribunal in respect of the character of the trust. The objects of the trust exhibit the dual tenor of religious and charitable purposes and activities - Section 11 of the Act shelters such trust with composite objects to claim exemption from tax as a religious and charitable trust subject to provisions of Section 13 - The activities of the trust under such objects would therefore are entitled to exemption accordingly. Whether the respondent-trust is a charitable and religious trust only for the purposes of a particular community and therefore, not eligible for exemption under Section 11 of the Act in view of provisions of Section 13(1)(b) of the Act – Held that:- The Section requires it to be established that such charitable purpose is not for the benefit of a particular religious community or caste - it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large. Relying upon Sole Trustee, Loka Shikshana Trust v. CIT [1975 (8) TMI 1 - SUPREME Court] - The objects of the respondent-trust are based on religious tenets under Quran according to religious faith of Islam - the objects and purposes of the respondent-trust would clearly demonstrate that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community - The objects do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of Section 13(1)(b) of the Act – thus, the respondent-trust is a charitable and religious trust which does not benefit any specific religious community - it cannot be held that Section 13(1)(b) of the Act would be attracted to the respondent-trusts and it would be eligible to claim exemption under Section 11 of the Act – Decided against Revenue.
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2014 (3) TMI 651
Suppressed sale – Excess consumption of gold in manufacture - Whether the Tribunal were right in raising inference on fact and in law that the alleged excess consumption of gold in manufacture of gold ornaments through various artisans, were suppressed sales within the country and liable to be treated as the income of the assessee – Held that:- The CIT [A] observed that if the gold ornaments were carrying greater purity value, and therefore, greater content of gold, the assessee had no reason to make a mis-declaration - assessee was meeting with the minimum standard of 22 carat gold - What the assessee had to charge from its importers had nothing to do with what the assessee may declare in the export documents regarding the purity of gold - As per the bylateral understanding, even if the importers would have paid the assessee for the gold purity at 91.66%, there was no reason why the assessee should shy away from declaring that the correct purity of the gold ornaments is 93.37%, if that was the real case - The CIT [A] also made a significant point in observing that the assessee could import only that much quantity of gold that was exported - By making misdeclaration therefore, the assessee was seriously reducing quantity of gold that would be available for import against the export undertaken by it - The analysis made by the Customs authorities also matched with that of the assessee’s own declaration regarding purity of gold. The difference between the two sets of declarations was not minor or insignificant - It could not have been passed off as mixing of impurity or error in measuring standards - It was simply a case where the assessee utterly failed to explain the considerable difference in the gold quantity in two sets of documents maintained by itself - the contention that in absence of proof of local sale, it must be presumed to have been exported, is fallacious - It is not even the case of the assessee, barring his explanation about the higher purity of gold being exported when lower purity gold is declared in the export documents, that such gold was in some form or the other, separately or independently exported - When the authorities did not accept the assessee’s explanation, it comes to a situation where such differential quantity of gold did not form part of the assessee’s exports – the authority rightly reached at was that the gold was subjected to local sale – the order of the Tribunal upheld – Decided against Assessee.
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2014 (3) TMI 650
Validity of notice u/s 148 of the Act – Reopening of assessment – Proper disclosure of material facts - Held that:- The notice dated 30 March 2013 has been issued beyond the period of 4 years from the end of the relevant assessment year 2006-07 - The jurisdictional requirement in such a case as provided under first proviso to Section 147 of the Act is that there must be failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment - the assessment for assessment year 2006-07 is sought to be reopened on the basis of the material which is already on record - there is no averment also in the reasons for reopening the assessment that there has been any failure on the part of the petitioner to truly and fully disclose all material facts necessary for assessment - the jurisdictional requirement for issuing a notice under Section 148 of the Act beyond the period of 4 years from the end of the relevant assessment year is not satisfied - the assessee has disclosed fully and truly all material facts necessary for assessment – thus, the notice u/s 148 of the Act as well as order set aside – Decided in favour of Assessee.
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2014 (3) TMI 649
Disallowance of excess Interest u/s 40A(2)(a) of the Act - Commercial expediency not proved - Whether the Tribunal was justified in not upholding the disallowance of excess interest u/s 40A(2)(a) sustained by the CIT(A) - Held that:- The decision in Commissioner of Income Tax II Versus Southern India Bidi Works Pvt. Ltd. [2014 (3) TMI 145 - GUJARAT HIGH COURT ] followed - There was no question of law arising - The assessee paid interest in the range of 12% to 18% on unsecured loans - in the business of making beedies finances were needed for steady flow of cash to keep the business going - The interest rates were related to old borrowings - In the earlier years, such interest rate was accepted by the Revenue – also, the directors in question were in the highest tax bracket – thus, there is no reason to interfere in the findings of the Tribunal – Decided against Revenue.
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2014 (3) TMI 648
Validity of reopening of assessment u/s 147 of the Act – Held that:- There is difference in the quantum of "Operational income" shown in the Profit and loss account and that was shown in the TDS certificates - The assessee has accounted for the reimbursable expenses incurred by it under the head "Expenses recoverable Account", but the accounting practice was not examined by the AO during the course of original assessment proceedings - the validity of the re- opening of assessment has to be judged on the basis of reasons recorded by the assessing officer - Even if the belief about the escapement of income did not ultimately result in assessment of any income, still the re-opening of the assessment shall be held to be valid, if the existence of reasons for belief about escapement of income is accepted - the AO had reason to believe that the income chargeable to tax has escaped the assessment in both the years - Though the assessment of the assessment year 2005-06 was reopened beyond the period of four years, yet the same has to be upheld in view of the Explanation 1 to sec. 147 – thus, the order of the CIT(A) upheld – Decided against Assessee. Difference between the Operating income disclosed by the assessee and the amount shown in the TDS certificates – Held that:- The CIT(A) has deleted the addition in both the years on the basis of sample bills and the reconciliation statements furnished to him by the assessee - mere reimbursement of expenses on actual basis would not give rise to any income assessable in the hands of the assessee – the AO did not examine the books of account to satisfy himself about the veracity of the said claim put forth by the assessee – the practical position in conducting the business has not been appreciated by the AO – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Revenue.
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2014 (3) TMI 647
Rejection of claim of deduction u/s 80P(2)(a)(i) of the Act – Held that:- Sec. 80P(2)(a)(i) provides two types of activities in which the co-operative society must be engaged to be eligible for deduction under sub- clause (i) - The two activities are not alternate ones because the section allows deduction to the co-operative society on the whole of profits and gains of business attributable to any one or more of such activities - This pre-supposes that eligible co-operative society can carry on either one of these two businesses or can carry both these businesses for the members - If the Assessee co-operative society carries on one or both of the activities, it will be eligible for deduction. If a co-operative society is engaged in carrying on these activities/facilities for the persons other than its members, the co-operative society, will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members - where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilties to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to such co- operative societies in respect of business relating to its members. Nature of Assessee - Application of section 80P(4) of the Act on society - Whether the Assessee is a co-operative bank or not – Held that:- The Assessee did not file the copy of the bye-laws - neither are the provisions of Sec. 17 of The Karnataka State Co-operative Societies Act, 1959 - In the absence of the copy of the bye-laws we are unable to express any opinion whether the Assessee complies with the third condition or not – thus, the matter is remitted back to the AO for examination to look into the rules and bye-laws of the Assessee co-operative society – In case the AO finds that the bye-laws do not permit the admission of any other co-operative society, in our opinion, the Assessee will be regarded as a primary co-operative bank and will not be entitled for deduction u/s 80P(2)(a)(i) - Decided in favour of Assessee.
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2014 (3) TMI 646
Disallowance of deduction u/s 80P(2)(a)(i) of the Act – Whether the Assessee is entitled for deduction u/s 80P(2)(a)(i) and whether the Assessee is hit by the provisions of Sec. 80P(4) which was introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007 – Held that:- Sec. 80P(2)(a)(i) provides two types of activities in which the co-operative society must be engaged to be eligible for deduction under sub- clause (i) - The two activities are not alternate ones because the section allows deduction to the co-operative society on the whole of profits and gains of business attributable to any one or more of such activities - This pre-supposes that eligible co-operative society can carry on either one of these two businesses or can carry both these businesses for the members - If the Assessee co-operative society carries on one or both of the activities, it will be eligible for deduction. If a co-operative society is engaged in carrying on these activities/facilities for the persons other than its members, the co-operative society, will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members - where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilties to its members will only be eligible for deduction u/s 80P(2)(a)(i) - There is no prohibition u/s 80P not to allow deduction to such co- operative societies in respect of business relating to its members. Nature of Assessee - Application of section 80P(4) of the Act on society - Whether the Assessee is a co-operative bank or not – Held that:- The Assessee did not file the copy of the bye-laws - neither are the provisions of Sec. 17 of The Karnataka State Co-operative Societies Act, 1959 - In the absence of the copy of the bye-laws we are unable to express any opinion whether the Assessee complies with the third condition or not – thus, the matter is remitted back to the AO for examination to look into the rules and bye-laws of the Assessee co-operative society – In case the AO finds that the bye-laws do not permit the admission of any other co-operative society, in our opinion, the Assessee will be regarded as a primary co-operative bank and will not be entitled for deduction u/s 80P(2)(a)(i) - Decided in favour of Assessee.
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2014 (3) TMI 645
Addition towards profit on undisclosed turnover – Held that:- The turnover is reflected in the bank account in the name of the assessee’s proprietary concern, with the assessee itself stating it to be on account of his business, representing receipts - The gross profit rate adopted is disclosed by the assessee per its return of income - no material to the contrary has been led by the assessee at any stage – Decided against Assessee. Non-disclosure of bank account with BOB – Addition u/s 69A of the Act – Unexplained credit –Held that:- Merely because the said account is a savings bank account is not determinative of the matter, more particularly when the account statement states the names of the parties to whom the payments are made, which could have been subject to verification, i.e., in case of doubt, by the Revenue - it is much considered as a part of the assessee’s business as any other – thus, treating the entire cash deposits as arising from the sale proceeds of his business, as claimed by the assessee - the profit element therein at 16% - also, taking the operating cycle as one month, 1/12 of 84% of the turnover in the said account would be a fair estimate - The addition u/s.69A is confirmed to that extent – Decided partly in favour of Assessee.
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2014 (3) TMI 644
Deduction u/s 201(1) of the Act - Levy of interest u/s 201(1A) of the Act – Proper verification of documents not made – Held that The Revenue rightly contended that CIT(A) has erred in just considering that the books of accounts, vouchers and bills which was produced before the regular A.O. of the Co. Circle to delete the demand without properly appreciating the facts of the case, the material on record as contained in the order, passed by the A.O. and without examining the books of accounts, which were not produced before the A.O., while creating demand u/s 201(1) and interest u/s 201(1A) of the I. T. Act, 1961 for all the four years. Certain discrepancies were there in the order of the AO and also in the order of CIT(A), who has just relied upon the books of accounts produced before the AO in regular assessment of the assessee without either calling for the books of accounts and examining them himself - there are serious infirmities and flaws in both the orders – the order set aside and the matter remitted back to the AO for readjudication – Decided in favour of Revenue.
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2014 (3) TMI 643
Eligibility to claim deduction u/s 80IB(10) of the Act - Retrospective applicability of section 80IB(10)(d) of the Act - Benefit of 100% deduction taken from the profits earned from undertaking, developing and building housing projects – Held that:- The decision in The Commissioner of Income Tax-II, Pune Versus M/s. Brahma Associates [2011 (2) TMI 373 - BOMBAY HIGH COURT] followed - clause 'd' to section 80IB(10) is prospective in nature and cannot be made applicable to the projects approved prior to 01.04.2005 – also in MANAN CORPORATION Versus ASSTT COMMISSIONER OF INCOME TAX [2012 (9) TMI 700 - Gujarat High Court] it has been held that the condition of built up area provided in clause 'd' is prospective in nature and it is not applicable to projects approved prior to 01.04.2005. CIT(A) was of the view that when a housing project is approved, the law as on the date of approval should be taken into consideration in which event the amended provision, which has come into effect from 01.04.2005, cannot be made applicable - so long as the built up area of shops is less than 10% of the total built up area the assessee cannot be denied the benefit under section 80IB of the Act - the project undertaken by the assessee was approved as a 'housing project' by the local authority in March, 2004 and the construction also having been commenced in 2004 the pre-amended provisions are applicable in which event the assessee is entitled to claim deduction under section 80IB(10) of the Act - thus, the order of the CIT(A) is upheld – Decided against Revenue.
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2014 (3) TMI 642
Disallowance of capital loss – Revenue was of the view that the transaction is a sham to book an artificial loss – Held that:- The AO has rejected the assessee's claim of loss in share transactions by merely holding that assessee's reply in this regard was not satisfactory - He has not spelt out what was not satisfactory in the assessee's reply - AO has not brought out that the sale price recovered in this regard was not proper - No reasonable cause has been attributed whatsoever for holding that the transaction was not satisfactory - CIT(A) has also affirmed the AO's action without any basis. Nothing has been brought on record to show the share transaction was the sham. Just because the transaction is between the relatives, it cannot be said to be a sham - The decision in Ashwani Khurana vs. ACIT [2014 (3) TMI 625 - ITAT DELHI] followed - no reason is given either by the AO or by the CIT(A) and except the bald statement, no evidence is produced to point out that the market value of the assets was much more than what is shown in the balance sheet – thus, the order of the CIT(A) set aside – Decided in favour of Assessee.
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Customs
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2014 (3) TMI 641
Nature of assessment – duty demand – penalty u/s 114A - Misdeclaration of goods - Confiscation of goods – Redemption fine - Tribunal deleted penalty - Held that:- no exception can be taken to the finding that since there was no demand under section 28(8) of the Customs Act for duty, no penalty could have been imposed under that provision and consequently the penalty under section 114A was not sustainable. The further reasoning that there could have been penalty under section 112 but since that provision was not invoked, the direction to pay penalty at ₹ 2.34 crores was not warranted in the circumstances, does not appear to be in error of law - Decided against Revenue.
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2014 (3) TMI 640
Refund claim - Anti-dumping duty under protest - Bar of limitation - Held that:- since the goods imported in this case are of the same description – which has not been denied by the Customs authorities – no anti-dumping duty can be levied. Thus, in terms of Section 9A which states that “refund shall be made of so much of the anti-dumping duty which has been collected as in excess of the anti-dumping duty as so reduced”, the CC(A) held that the duty paid was liable to be refunded even though the original assessment order was not challenged - duty became refundable as a consequence of the order of the Supreme Court in Commissioner of Customs v. M/s Relaxo Rubber and Anr. [2006 (3) TMI 721 - SUPREME COURT] - The refund application, therefore, must be filed by the assessee within one year from the date of the order in Relaxo Rubber, i.e. March 8, 2006.The refund application having been made on July 24, 2006 was thus made within the limitation period. Whether the 2009 Amendment of Section 9A(8) (Finance (No. 2) Act, 2009) has retrospective application w.e.f. 1st January, 1995, thus causing Section 27 of the Customs Act to apply over and above Sections 9A and 9AA of the CTA. - Held that:- The ruling in Sneh Enterprises (2006 (9) TMI 179 - SUPREME COURT OF INDIA) is of no consequences to the question before this Court - Section 27 of the Customs Act is to be incorporated through this provision, as regards refund claims w.e.f. 1st Jan 1995, only “as far as may be” applicable, i.e. as far as is not covered by Sections 9A and 9AA of the CTA. As concluded earlier, since Section 9AA of the CTA is a complete code, Section 9A(8) has extremely restricted application in its allusion to provisions of the Customs Act, “so far as may be” in their application to the CTA itself - Decided against Revenue.
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2014 (3) TMI 639
Waiver of pre deposit - Tribunal directed predeposit 50% of the duty amount confirmed - Tribunal considered the appellant's case on merits at the prima facie stage - Held that:- No substantial question of law arises at this stage. The Tribunal was not supposed to examine the case of the appellant on merits, when the Chairman and the Managing Director of the appellant company had admitted during the investigation that goods were of China origin and were loaded at Port of Shanghai in China - appellant is not in a position to deposit 25% or even 10% of the duty amount - Therefore, decided against assessee.
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Service Tax
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2014 (3) TMI 656
Bail application under offence punishable under Section 89 read with Section 90 of the Finance Act, 1994 - non payment of Service Tax - Held that:- scheduled payment offer made by the assessee was not acceptable by the revenue - it is a continuing offence and as on 10.5.2013 there were huge outstandings definitely beyond the amount of Rs.50 Lakhs and more so said amount was outstanding even at the time of arrest of the applicant, it is not a case in which the applicant can be released on bail more so when the investigation is still going on - Decided against appellant.
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2014 (3) TMI 655
Maintanability of appeal - Bar of limitation - Whether the Appellate Tribunal is right in upholding the order of the Commissioner (Appeals) dated 7.8.2012, dismissing the appeal as time barred - Held that:- It is a well settled position in law that the period of limitation prescribed for the hearing of the appeal, by the Appellate Tribunal, under Section 85(3) of the Finance Act, 1994, cannot be extended - appellate Tribunal does not have the power or the authority to extend the period of limitation prescribed by the statute, for entertaining the appeal - Decided against the assessee.
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2014 (3) TMI 654
Review of order where tribunal Condoned the delay - Delay of 9 days - Revenue now pleads that in view of several decisions of the Supreme Court - Held that:- This application seeking rectification/review of the order dated 19.8.2013, condoning a delay of nine days, for the detailed reasons recorded therein, is clearly a fundamentally misconceived and frivolous application. We are burdened with a huge pendency. It is regrettable that not only are such frivolous applications filed by Revenue but are even argued by DR's at great length and unmerited vehemence. There is also no provision, conferring jurisdiction on the Tribunal to review an order condoning delay in presenting the appeal - Decided against revenue with cost.
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2014 (3) TMI 653
Demand of service tax on fee for pre-closure of loans - Business auxiliary service - Suppression of facts - Held that:- Revenue’s contention is that the National Housing Bank with which the appellant is associated collects pre-closure charges from the appellant along with the service tax component and the National Housing Bank remits service tax (for an unspecified taxable service) and the appellant avails Cenvat credit on the service tax component remitted to the National Housing Bank, together with the pre-closure fee charged by National Housing Bank. In the circumstances, the appellant must be presumed to be aware of its liability to service tax on the consideration/charges received by it from its customers, i.e. on pre-closure of loans. Since Revenue concedes the position that the transactions in issue do not amount to business auxiliary service and since there is no allegation of the appellant having provided any other taxable service, we fail to comprehend this contention and as to how the appellant’s presumed knowledge of its tax liability on fore-closure charges received, would render it liable to service tax, for being provided Business Auxiliary Service, which is admittedly inapplicable - Decided in favour of assessee.
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Central Excise
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2014 (3) TMI 638
Levy of Penalty u/s 11AC - Availment of CENVAT Credit - Commissioner (appeals) set aside the penalty imposed under Section 11AC of Central Excise Act on the ground that the amount of duty was paid before issue of Show Cause Notice. - Held that:- In view of the decision of the Hon’ble Supreme court in the case of Union of India Vs Rajasthan Spinning & Weaving Mills - [2009 (5) TMI 15 - SUPREME COURT OF INDIA], we are unable to accept the finding of the Commissioner (Appeals) for setting aside the penalty. However, we uphold the order of the Commissioner (Appeals) in so far as setting aside of the penalty for the reason that we do not find any ingredients of Section 11AC in the present case. After considering facts and circumstances of the case, in our considered view, the imposition of penalties are not warranted. But, the demand of interest as applicable for the period Oct’98 to Jan’2000 is justified. - Decided partly in favour of Revenue.
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2014 (3) TMI 637
Duty demand - Excess clearance by SSI unit after exhausting the limit of one crore - Confiscation of the excess found goods along with imposition of penalties - The main contention of the appellant is that their factory was visited by the officers on 20.3.2007 and they had already filed an application before the authorities for registration vide their application dated 22.2.2007. - Held that:- If the appellants have filed an application, as contended by them for registration of their unit, which had crossed the exemption limit, I find that subsequent actions of the Revenue in confiscating the excess found goods and imposing penalties upon them is not justifiable. By extending the benefit of doubt to them on the point of filing of application for registration, I set aside the impugned order - Decided in favour of assessee.
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2014 (3) TMI 636
Availment of CENVAT Credit - Whether the applicant is eligible to avail the credit in respect of service tax paid on the rent of immovable property to corporate office situated at Kolkata - Held that:- rent paid for corporate office will form part of cost of production. It is also seen that the Tribunal in the case of National Engineering Industries (2013 (6) TMI 590 - CESTAT NEW DELHI) held that rent paid for corporate office would come within the purview of Rule 2(l) of CENVAT Credit Rules, 2004. Accordingly, I grant waiver of predeposit of entire amount of duty along with interest and penalty and stay its recovery thereof during the pendency of the appeals - Stay granted.
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2014 (3) TMI 635
Waiver of pre-deposit of duty - Applicant used the input in the manufacture of exempted product - Held that:- Rule 6 of CENVAT Credit Rules are not applicable on the by-products, which are exempt - applicant has made out a prima facie case for waiver of pre-deposit of entire amount of duty, interest and penalty - Following decision of Rallis India Ltd. Vs Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] - Stay granted.
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2014 (3) TMI 634
Denial of benefit of cenvat credit of duty paid on Iron and Steel items used as support structural - Held that:- demand of around Rs.6 lakhs would be within limitation period. No financial hardship is pleaded. As such, we direct the applicant to deposit Rs. 10 Lakhs (Rupees Ten Lakhs) within a period of 8 weeks from today, as a condition of hearing of the appeal. Subject to deposit of the above amount, pre-deposit of the balance amount of duty and entire amount of penalty shall stand waived and its recovery is stayed during the pendency of the appeal - Conditional Stay granted.
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2014 (3) TMI 633
Penalty u/s 11AC - Shortage in stock - Clandestine removal of goods - Held that:- respondent are engaged in the manufacture of dies, Gen. Set, A.C. Generator, I.C. Diesel Engines and C.F. Water pumps falling under chapter 84 and 85 of the Central Excise Tariff. The factory premises of the respondent were visited by the Revenue Officers and it was found that there was shortage and excess in the stock of finished product. The goods which was in excess were seized and the adjudicating authority confiscated the goods and allowed the same on redemption fine. The goods which were found short, the adjudicating authority confirmed the demand and imposed the penalty under Section 11AC of the Act. During verification 18 units of A.C. Generator, 58 nos. of Diesel Engines, 40 nos. of C.F. Water Pumps and 12 nos. of diesel set found short against the quantity mentioned in the statutory record. The respondent cannot putforth any valid reason behind the shortage of finished goods. The respondent accepted the shortage and deposited the amount of duty. finding of the Commissioner (Appeals) that it is a case of improper accountal of finished goods is not sustainable. As the finished goods were found short and there is no explanation putforth by the respondent, therefore, the impugned order whereby the penalty imposed under Section 11AC is set aside is not sustainable - Decided in favour of Revenue.
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2014 (3) TMI 632
Denial of CENVAT Credit - Credit denied on the ground that photocopy is not a valid duty paying document - as per the provision of Rule 9 (c) a manufacturer can avail credit on the basis of the bill of entry. In the present case, the applicant were having the photocopy of bill of entry which shows the goods are imported by M/s Panoli Intermediates (India) Pvt. Ltd. and it has been mentioned that the document transferred in favour of the appellant. The bill of entry was provisionally assessed as per the photocopy on record. If the bill of entry was provisionally assessed there must be final assessment in respect of goods imported by M/s Panoli Intermediates (India) Pvt. Ltd. Applicant had not produced any order finalising the assessment in respect of imported goods. In respect of limitation, I find that applicant had not disclosed to the Revenue in the monthly return that the credit has been availed on the basis of photocopy of bill of entry. as applicant has not produced the bill of entry or the order finalising the assessment and has taken credit only on the strength of photocopy which is provisionally assessed - No infirmity in order - Decided against assessee.
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2014 (3) TMI 631
Demand of interest - Whether the appellant is liable to pay interest amount of Rs. 2,375/- on the Cenvat credit availed by them improperly on the basis of Xerox copies of bill of entry and whether the appellant is liable to penalties under rule 15 of the Cenvat Credit Rules, 2004 - Held that:- appellant had reversed the Cenvat credit on 04.12.2008, as soon as it was pointed out by the audit party. It is also on record that the said reversal was kept informed by the appellant to the authorities - there are various decisions of the Tribunal in the case of Emco Limited vs. CCE, Mumbai [2011 (6) TMI 567 - CESTAT, MUMBAI] and CEAT Limited vs. CCE, Mumbai [2011 (10) TMI 235 - CESTAT, MUMBAI], wherein it has been held that for demanding interest also, the revenue authorities have to issue the notice within period of limitation. In the case in hand, as reproduce above, the reversal was in 2008 while the show cause notice was issue in 2010, which according to me is blatantly time bared - Decided in favour of assessee.
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2014 (3) TMI 630
Availment of CENVAT Credit - Cenvat credit on the invoices issued by appellants head office before getting the head office registered under Input Service Distributor - Held that:- head office of the appellant has obtained the ISD registration on 06.12.2005 while the credit was availed by the appellant on the invoices issued dated 20.09.2005 - there is no dispute regarding the receipt of input services at the head office. It is also undisputed that the said services can be distributed by the head office to the various factories and the appellants factory being one of them. It is also undisputed that the appellant is eligible to avail the Cenvat credit of such services which has been received by the head office and distributed to them - Following decision in the case of Jindal Photo Limited [2009 (1) TMI 187 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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2014 (3) TMI 629
Availment of CENVAT Credit - Whether the appellant is eligible for cenvat credit of the central excise duty paid on M.S. Beams and M. S. Channels etc. which were used for the construction of the various structures - Held that:- appellant had reversed the cenvat credit availed of the duty paid on the items after receipt of order in original dated 06.07.06. It can be held that having not contested the issue of availment of cenvat credit on the very same item which was denied by order in original dated 06.07.06, the appellants, cannot, in this appeal claim to have a bonafide belief as to eligibility of cenvat credit on these items. The bonafide belief comes from the fact that the appellant could have had entertained a view that they are eligible for the cenvat credit, which in the current case seems to be absent due to and earlier order passed by the adjudicating authority holding that the appellant is ineligible for availment of cenvat credit on identical goods, for earlier period - appellant has not made out a case either on merits or on limitation - Decided against assessee.
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CST, VAT & Sales Tax
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2014 (3) TMI 659
Detention of vehicle u/s 47(4) of the KVAT Act – validity of order – whether the petitioner can be termed as a 'defaulter' - Held that:- The purpose behind Section 47(4) is to meet the specific requirements with regard to the course to be pursued in the case of defaulters - Ext.P4 order was passed on the next date, i.e. '26.12.2013' - No valid order was in existence on '25.12.2013', so as to have sustained the detention with reference to Section 47(4). The detention of the vehicle on 25.12.2013 w.r.t. Section 47(4) is not correct or sustainable in the eye of law - the vehicle and goods ordered to be released to the petitioner forthwith – The authorities concerned to proceed with further steps under the relevant provisions of law - The authorised officer of the assessee shall execute a 'personal bond' so as to cause release of the goods and vehicle - The petitioner shall produce a copy of the judgment along with a copy of the writ petition before the second respondent/CTI for further steps – Decided in favour of assessee.
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2014 (3) TMI 658
Tax Liability under the Assam Value Added Tax Act 2003 - Whether Tribunal was justified in dismissing the Assessee`s appeal and in turn justified in affirming the order of the assessing authority – Whether petitioner was given proper notice and adequate opportunity in the assessment proceedings - Held that:- The Assessee being a dealer under the provisions of the Act, she was under obligation to file the return and pay taxes - It was not done by them - Assessee`s business of sale of LPG gas was subjected to payment of tax. Assessee was given due show cause notice and she also availed of the same - Nothing prevented her to participate in the assessment proceedings and submit her own documents to show her extent of liability in payment of tax - she did not file any documents in first or second appeal or even in this revision petition to show the error committed in the impugned assessment - the Revenue rightly made best judgment assessment on the basis of documents/material collected by the raiding party from the assessee`s business premises - Petition dismissed – Decided against assessee.
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2014 (3) TMI 657
Validity of assessment order - Correctness of the inspection report – opportunity of being heard - Refusal to entertain documentary proofs - Held that:- Before any punitive order is passed, there has to be assessment in reality and that will be possible only on verification of books of account - even if they had found discrepancies, petitioner was entitled to explain and had to be heard personally which the respondent has failed to accord - to support its reply with documentary proof like books of account, etc. it has sought four weeks time, but the revenue refused to accommodate and has proceeded to determine alleged tax liability on the allegation of suppression of facts based on inspection report. When tax is levied, it must be legally recoverable and if the assessee could substantiate that tax liability is not to the extent as assessed, there has to be a true assessment - That is the primary purpose of issuing show-cause notice soliciting reply and then to pass order - It is only when such order is passed after giving opportunity to the assessee, it could be enforced through punitive action, i.e. demand notice – matter remitted back to the department for assessment - Assessee directed to produce books of account and file statement - Decided in favour of assessee.
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