Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
March 29, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Reassessment - The audit objection is based upon the legal opinion expressed by them and not pointing out any factual error or omission - reopening of assessment was not valid - AT
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Validity of Assessment U/s 143(3) r.w.s. 154 - What the AO has done by the impugned order is to conduct a substantive review of the earlier which was clearly impermissible. - HC
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As the department has more amount in its control than the amount of advance tax payable by the assessee. Therefore, it cannot be said that assessee is liable to pay interest on the amount of advance tax. - HC
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The question whether 20% or 19.72% gross profit rate should be applied, is the question of fact. - No question of law arises for consideration by this Court. - HC
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It is the cardinal principle that the power of stay is not ordinarily to be exercised in a routine way or as a matter of course - Only when a strong prima-facie case is made out and when there is balance of convenience, the AA will consider whether or not to grant stay of the recovery proceedings - HC
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Deduction u/s. 80IB(10) - the date on which building plan of such housing project is approved shall be deemed the date of approval of the housing project. - AT
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Exemption u/s.10B - if a decision of High Court is available, then the decision of Tribunal, even if that is of Special Bench, cannot override the same. - AT
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Additional evidence - rule 46A - Appellate authority should not refuse to make enquiry in the case where facts and circumstances so demand - CIT(A) directed to consider the additional evidence - AT
Customs
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Conversion of Shipping Bills - For enabling an exporter to draw the benefits of any scheme, not only physical verification of documents would be required, but also verification of the goods of export and their examination by the Customs was necessarily required to be done. - HC
FEMA
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Section 8(1) of the Foreign Exchange Regulation Act, 1973 (FERA) - To meet the charge of having acquired foreign exchange, it must be shown that the petitioner was the owner thereof - HC
Service Tax
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Renting of Immovable Property - valuation - electricity is ‘goods' and the same shall not form part of taxable service - AT
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Providing helicopters to the State Governments for transportation of their personnel - supply to tangible goods service or transportation of passenger by air service - prima facie not taxable during the period - AT
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Cenvat Credit - input service – There is no dispute that PMP certificate is relatable to Maintenance & Repair of Whirlpool products since buyers of products of the said concern get assured post sales service. - Cenvat Credit allowed - AT
Central Excise
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The Brass Brazing Granules/Pellets would be correctly classifiable under sub-heading 7403.21 as the goods, in question, are in the nature of unwrought metal - AT
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Cenvat credit denied on MDEA not being a input eligible - role of MDEA is only in removal of sulphur. - cenvat credit allowed - AT
Case Laws:
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Income Tax
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2013 (3) TMI 517
Validity of reopening of assessment - Held that:- Audit party has not pointed out any factual error or omission but has expressed the opinion on the analysis of the balance sheet of one of the two concerns of the assessee that the interest paid by the assessee needs to be disallowed because the borrowed funds were diverted by providing interest free loans to others. The audit objection is based upon the legal opinion expressed by them and not pointing out any factual error or omission and, therefore, on these facts, the decision of Xerox Modicorp Ltd. (2013 (1) TMI 160 - DELHI HIGH COURT) in the case of Air India (1994 (10) TMI 33 - BOMBAY HIGH COURT) and of Indian Eastern and Newspaper Society (1979 (8) TMI 1 - SUPREME COURT) would be applicable as no opersiion has been pointed but only legal opinion given thus to hold that the reopening of assessment was not valid. The same is quashed and the cross-objection of the assessee is allowed.
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2013 (3) TMI 516
Validity of Assessment U/s 143(3) read with section 154 passed by successor AO - Held that:- The Tribunal by its judgement dated 17 February 2010 set aside the order of the Commissioner of Income-tax (Appeals) and restored the assessment proceedings back to the Assessing Officer for a fresh examination. In this view of the matter, once the Assessing Officer had given effect to the order of the Tribunal, his successor in office had no jurisdiction to pass a fresh order dated 27 December 2011. The impugned order dated 27 December 2011 in fact reflects an awareness of the Assessing Officer of the earlier order which was passed in order to give effect to the order of the Tribunal. The Assessing Officer in the table which has been extracted earlier has in his computation commenced with a total income as computed in the order of the Assessing Officer dated 27 December 2010 (viz., a loss of Rs.16.82 crores). The Assessing Officer has not purported to exercise the jurisdiction under section 154. Once effect was given to the order of the Tribunal by the passing of an order under section 254 on 27 December 2010, that order could have been modified or set aside only by following a procedure which is known to the Income-tax Act, 1961. What the Assessing Officer has done by the impugned order is to conduct a substantive review of the earlier order dated 27 December 2010 which was clearly impermissible. - Decided in favor of assessee.
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2013 (3) TMI 515
Adoption of sales figures - Whether ITAT was right in holding deletion of addition of Rs. 98,813/- by the CIT(a) by observing that the sales should not be estimated at the figure of Rs. 2.30 crores and total sales should be restricted to the figure declared by the assessee at Rs. 1,67,19,652/- by enhanced by Rs. 9.10 lakhs? - Held that:- As CIT(A) has found that sales to the tune of Rs. 7,49,608/- were affected outside the books of account and therefore the gross profit rate has to be applied in respect of the said amount alone. Consequently, the addition of Rs. 98,813/- (48,813+50,000/-) was set aside. The said finding is pure finding of fact. No question of law on the basis of such finding arises for consideration, as only income from concealed sales could be taken into consideration. Interest charged under Section 215/217 - ITAT disposed of the additional ground regarding cancellation by the CIT (A) of interest by observing that the department has challenged only the admission of additional ground by the CIT(A) and also not impliedly challenged the decision on merits - Held that:- As the department has more amount in its control than the amount of advance tax payable by the assessee. Therefore, it cannot be said that assessee is liable to pay interest on the amount of advance tax. We do not find any substantial question law arises for consideration in the present appeal.
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2013 (3) TMI 514
Application of gross profit rate - 20% or 19.72% on the correspondingly enhanced sales - Held that:- As Tribunal in its order found that the gross profit rate of 19.72% was applied for the assessment year 1985-86 and 1986-87 as well. It was found that such gross profit rate applied for the year 1985-86 was affirmed by the CIT (Appeals), though the appeal was pending before the Tribunal. The question whether 20% or 19.72% gross profit rate should be applied, is the question of fact. Tribunal has applied gross profit rate of 19.72% as such rates were applied in the earlier years of assessment. No question of law arises for consideration by this Court.
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2013 (3) TMI 513
Stay - Recovery proceedings of the disputed demand - disallowance of the claim of relief under Section 10-B, disallowance of sale of scraps for the reason that the TDS was not collected at source under Section 206 and an amount was added on the ground that charges towards job work and clearing agents were not subjected to tax deduction at source - petitioner filed appeal before the second respondent-appellate authority along with stay petition praying to stay the collection of the disputed demand - Held that:- It is the cardinal principle that the power of stay is not ordinarily to be exercised in a routine way or as a matter of course, in view of the special nature of Taxation and Revenue laws. Only when a strong prima-facie case is made out and when there is balance of convenience, the Tribunal/appellate authority will consider whether or not to grant stay of the recovery proceedings and the stay will be granted only in deserving and appropriate cases, where the Tribunal/appellate authority is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal before it. In the present case, it is informed by the learned counsel appearing for the parties that the recovery proceedings would be initiated, as impugned notice of demand is issued and the stay petition has not yet been disposed of by the second respondent-appellate authority. Thus the Writ Petition is disposed of, with a direction to the second respondent-appellate authority to dispose of the said stay petition, on merits and in accordance with law, within a period of four weeks from the date of receipt of a copy of this order. Till such time the parties shall maintain status-quo as on today.
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2013 (3) TMI 512
Deduction u/s. 80IB(10) of the I.T. Act 1961 - Requirements of Sec. 80 IB(10) of the Act - Commercial space - Waiver of applicability of Urban Land Ceiling Act - Continuation of the old project - Date of approval of the building plan to - Held that :- From the very reading of the Explanation (i) makes it clear that the date on which building plan of such housing project is approved shall be deemed the date of approval of the housing project. - the assessee is very much eligible for the claimed deduction u/s. 80 IB (10) on the project ‘KKT’ in view of the above cited decisions including decision of Pune Bench of the Tribunal in the case of Nirmiti Construction Vs. DCIT (2004 (8) TMI 370 - ITAT PUNE ), following which, in our view, the Ld CIT(A) has rightly allowed the claimed deduction. The same is upheld. - Decided in favor of assessee.
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2013 (3) TMI 511
Undisclosed Income under Section 69A of the Act - Deleting the addition - unreliability of the accounts - Search & seizure under Section 132 of the Income Tax Act, 1961 - Furnish return for the block period - Held that:- It is true that the records may be incomplete. But this largely due to the fact that the assessee is a fisherman and he is illiterate and nomadic. Most of his transactions are required to be carried out in cash. It would be practically impossible to maintain vouchers and other preliminary records. The nature of business is such that half of the year he would be in high seas. - Decided against the revenue.
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2013 (3) TMI 510
Disallowance U/s 40(a)(ia) - Non deposit of TDS amount within due date - Penalty U/s 271(1)(c)- Amendment which was brought about to section 40(a)(ia) by the Finance Act of 2010 - Held that :- The Tribunal in the course of its decision took the view that the issue was covered by the decision in Bansal Parivahan [2010 (9) TMI 552 - ITAT, MUMBAI] and sustained the deletion of the penalty only on that ground. As we have noted earlier, the submission which has been urged on behalf of the assessee in this case is that since the appeal arises not out of the quantum proceedings, but on the issue of penalty, the correctness of the view in Bansal Parivahan would not be determinative, strictly speaking of the issue as to whether a penalty should be imposed under section 271(1)(c). The Tribunal subsequent to its decision in Bansal Parivahan has reconsidered the amendment which was brought about to section 40(a)(ia) by the Finance Act of 2010 with effect from April 1, 2010. In Bharati Shipyard [2011 (9) TMI 258 - ITAT MUMBAI], the Special Bench of the Tribunal has held that the amendment was not retrospective. Matter remanded back.
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2013 (3) TMI 509
Exemption u/s.10B - Deduction on the total income of both the units - Held that:- It is settled law that if a decision of High Court is available, then the decision of Tribunal, even if that is of Special Bench, cannot override the same. Since the decision of Hon’ble Kerala High Court is squarely applicable to the facts of the case and therefore following the same, we decide this issue against the assessee. Section 10B(4) itself refers to “total income” which would mean “income of all units put together”. The Special Bench of the Tribunal in the case of the Tribunal in the case of M/s. Scientific Atlanta India Technology P. Ltd. vs. ACIT [2010 (2) TMI 658 - ITAT, CHENNAI] has taken the view that deduction u/s.10A does not fall in Chapter VIA. Therefore, sec. 80AB could not be applied which mandates the deduction to be out of ‘gross total income’. On this basis, deduction of profitable unit was held to be allowable without adjusting the same against the loss of other units. However, the Hon’ble Kerala High Court in CIT, Cochin vs. Patspin India Ltd. [2011 (9) TMI 276 - KERALA HIGH COURT] has taken a contrary view. In that case also, the assessee had two industrial units and both of them were qualifying u/s.10B. The Hon’ble Court referred to the provisions of sec.10B and held that profit has to be computed in the manner laid down in sections 32 to 43D. Deduction eligible under section 10B(4) has to be determined with reference to export turnover and the total turnover. - Decided in favor of revenue and against the assessee.
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2013 (3) TMI 508
Long Term Capital Gain or business income - Additional evidence under rule 46A - Rejection of exemption claimed by assessee u/s. 10(38) - Treating Short Term Capital Gain as business income - Interest u/s. 234B and 234C - Held that :- CIT(A) vide para 5.1 and 5.2 has stated that assessee was not prevented by any cause to produce said documents before AO and therefore did not admit additional evidences / documents. - The Hon’ble Jurisdictional High Court in the case of Smt. Prabhavati S. Shah v. CIT (1998 (2) TMI 107 - BOMBAY HIGH COURT) has held that the Appellate authority should not refuse to make enquiry in the case where facts and circumstances so demand. - documents proposed to be filed by assessee are relevant and necessary to be considered to decide the issue as to whether shares were held by assessee as investment or stock-in-trade. - CIT(A) directed to consider additional evidence - decided in favor of assessee - matter remanded back.
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Customs
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2013 (3) TMI 506
Conversion of Shipping Bills from Drawback and EPCG Scheme to EPCG Drawback and DEEC Scheme - Whether conversion without any proof for rejection of their request for allowing the benefit on export promotion scheme by DGFT, is appropriate in terms of Circular No.4/2004 dated 16.01.2004? - scope of Section 149 of Customs Act questioned - Held that:- To claim benefit under Drawback EPCG scheme and DEEC scheme, the exporter has to file DEEC declaration to the effect what are the raw materials used in the manufacture of the final product. At the time of examination of the goods materials given in the declaration will be verified. In the present case, the same was not verified since Shipping Bills were not filed under DEEC scheme. Therefore, it is not open to the 1st Respondent to contend that there was no finding by the Commissioner of Customs that the materials were not used in the manufacture of the final export product. From the reading of Circular No.36 of 2010 dated 23.9.2010 which dilutes the earlier Circular No.4 of 2004, it is seen that the same is applicable only for the Shipping Bills filed on or after the date of issuance of the said Circular. In this case, the 1st Respondent had filed the Bill of Entry on 17.3.2010, 21.3.2010 and 22.3.2010 respectively, admittedly, prior to the issuance of the said Circular No.36 of 2010 dated 23.9.2010. Therefore, the learned counsel for 1st Respondent cannot rely on Circular No.36 of 2010 dated 23.9.2010. In the decision of M/s.Terra Films Pvt. Ltd. Versus Commissioner of Customs [2011 (4) TMI 13 - DELHI HIGH COURT] considering the scope of Section 149 of Customs Act found that the discretion vested in the Proper Officer to permit amendment in any document after the same has been presented in the Customs house has to be though exercised judicially, it was qualified with the proviso that the amendment could be allowed only if it was based on the documentary evidence in existence at the time the goods were exported. It is further observed therein that the request was made for conversion from one Scheme to another is a case of request for conversion and not of an amendment inasmuch as by converting from one Scheme to another, it was not only addition of certain word, but change of entire status and character of the documents. For enabling an exporter to draw the benefits of any scheme, not only physical verification of documents would be required, but also verification of the goods of export and their examination by the Customs was necessarily required to be done. By observing so, the Delhi High Court upheld the rejection of the request of the exporter seeking for conversion of the Shipping Bill from one Scheme to another. Thus 1st Respondent's claim seeking conversion is not maintainable and the same has been rightly rejected by the Commissioner of Customs. The Tribunal has not gone into any of these aspect in detail, even though it happens to be a final fact finding authority. It has simply allowed the conversion by resorting to the provision under Section 149 of Customs Act as if, it is a simple request for amendment. Therefore, the order passed by the Tribunal cannot be sustained and accordingly, the same is set aside and the appeal filed by the Department is allowed.
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Corporate Laws
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2013 (3) TMI 505
Revival - sanction seeking for Scheme of compromise and arrangement for revival of TAML [Thapar Agro Mills Ltd.] which was ordered to be wound up by the Court - objections by the OL in granting revival claim as it does not disclose the name of the strategic investor whose help is sought for reviving TAML - Held that:- As over 90% of the share holders, secured creditors and unsecured creditors of TAML have approved the Scheme. The strategic investor has demonstrated its bonafides by bringing in the money which has been used to pay off some of the secured creditors as noted hereinbefore. The terms on which the balance amount will be paid to the creditors appears to be reasonable. Learned counsel appearing on behalf of the creditors have conveyed to the Court that they accept the terms of payment as proposed. Therefore the objections of OL do not survive. This also accounts for the points raised by the RD in its report. When no objection till date has been received, it cannot be presumed that they have any objection to the Scheme as such. Propounders will file an affidavit in this Court within three days stating that if there are any further statutory or Government dues that may be found to be payable by TAML, they will be paid in accordance with law. With the above statement there are no further objections to the Scheme. Accordingly, sanction is hereby accorded to the Scheme as propounded by the Propounders with the modifications that the post dated cheque dated 31st March 2013 issued to IDBI will be honoured upon presentation, the balance dues of the IFCI will be paid within six months from today together with simple interest @ 15% per annum. IARC will be permitted to appropriate Rs.2.5 crores kept with it in a no lien account towards its dues. The balance dues of IARC will be paid within four months from the date of sanction of the Scheme. Apart from clearing the statutory dues as mentioned in the Scheme, any further statutory dues that may become payable will be paid by the Propounders in accordance with law. The dues of the Government and statutory bodies as mentioned in the Scheme and in the affidavit dated 11th October 2012 of Mr. Satish Thapar will be paid within four months from the date of sanction of the Scheme. The fund position of TAML as on 5th September 2012 is Rs.78,61,836. The OL will after paying of the dues of the security agency as well as deducting the expenses incurred by the OL thus far release the balance sum to the Propounders simultaneous with handing over to the Propounders possession of the registered office and any other movable or immovable assets that have been seized and which remain in the possession of the OL together with the books of accounts, records and all other documents within a period of four weeks from today. With such handing over of the books of accounts, the OL will stand discharged and Co. Pet. No. 81 of 1996 will be closed. Within 30 days TAML will file with the ROC an intimation of revival of TAML and take all other appropriate steps including filing of final returns, balance sheets and other statutory documents in accordance with law. Application for modification of order dated 29th September 2005 passed by the Court in regard to purchase of 8.78 acres of land by the Applicant belonging to TAML at Rudrapur, Tehsil Kichha, District Nainital (Uttarakhand) - Held that:- Possession of the extent of 8.78 acres of land was given to the Applicant way back in 2004. The application earlier filed by the Applicant was also disposed of on 29th September 2005. The Applicant has waited for almost nine years thereafter to file the present application. It is, therefore, not possible for the Court to entertain his prayer at this stage. In the event that the Applicant is aggrieved by any unauthorized encroachment on the land in question, it will be open to the Applicant to take recourse to other remedies as may be available to the Applicant in accordance with law.
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FEMA
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2013 (3) TMI 507
Section 8(1) of the Foreign Exchange Regulation Act, 1973 (FERA) - The petitioner and one Seethalakshmi Nagaraj were examined under Section 40 FERA and it was their common stand that the money seized belonged to Seethalakshmi Nagaraj and with the permission of the mother of the petitioner, the same had been left with his wife for safekeeping. Despite an opportunity notice, the petitioner had not been able to show that he had obtained any permission from the Reserve Bank of India - Charge of commission of offence u/s 8(1) punishable under Section 56(1)(i) of FERA - Held that:- To meet the charge of having acquired foreign exchange, it must be shown that the petitioner was the owner thereof, whereas the finding of the Division Bench is that there was nothing to show that the same belonged to the petitioner. We may inform that the Court below indeed is wrong in observing that no petition for discharge would like after the recording of the preliminary prosecution evidence under Section 244 Cr.P.C. This Revision shall stand allowed. The petitioner shall stand discharged of the charge against him in C.C. No. 252 of 1997 before the Court. Consequently, connected miscellaneous petition is closed.
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Service Tax
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2013 (3) TMI 523
Renting of Immovable Property - valuation - inclusion of electricity charges from the tenant in the gross value of taxable service - that:- electricity is ‘goods' and the same shall not form part of taxable service is clarified by the Notification No.12/2003. - the applicant has made out a prima facie case for 100% waiver of the service tax confirmed and penalty imposed - stay granted.
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2013 (3) TMI 522
Classification of service - supply to tangible goods service or transportation of passenger by air service - taxability - period from 2006-07 to 2008-09 - held that:- the appellant in terms of the agreements were providing helicopters to the State Governments for transportation of their personnel as and when required, and for this purpose they were required to keep the helicopters in readiness at particular places, maintain the same and also provide the qualified and experienced crew for operation and maintenance. The expenses on fuel, maintenance, parking fee etc. are to be borne by the appellant in terms of the agreement. While the appellant was receive certain minimum fixed monthly charges on account of certain minimum flying hours per calendar month, in addition to this, they also receive remuneration on per hour basis during the period when the helicopter had been operated for transportation. The agreements are for transportation of personnel by air. This can not be treated as a case where the helicopters are place by the owner, with crew or without crew, at the disposal of another person for a specified period and that person is free to operate the same. Prima facie the appellant's activity is transportation or persons within India by air and not supply of tangible goods and as such during the period of dispute the same was not taxable. - stay grated.
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2013 (3) TMI 519
Utilization Cenvat Credit Service Tax - Appellant has taken and utilized Cenvat credit on purchase of PMP Certificate on Royalty paid to whirlpool which according to department is not a input services for providing service of Maintenance and Repair. Hence Cenvat credit wrongly taken and utilized is liable to be disallowed and recovered. The appellate authority upheld the adjudication order. Held that It is not understood the reason why service tax is collected against PMP certificate purchased since service tax is not commodity taxation but only upon providing taxable service, levy of service tax is permitted by Finance Act, 1994. There is no dispute that PMP certificate is relatable to Maintenance Repair of Whirlpool products since buyers of products of the said concern get assured post sales service.There was no examination done by the authorities below as to the incidence of payment of service tax on royalty. - Decided in favor of assessee.
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Central Excise
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2013 (3) TMI 504
Entitlement to CENVAT credit on CHA service used in connection with export of certain goods - Held that:- In the present case, the goods were exported and when export documents are presented to the Customs office, then that is the place of removal as per section 5 of C.E. Act. The same finding has been rendered by this bench in the case to Koeleman India Pvt. Ltd. v. CC, Bangalore [2005 (4) TMI 228 - CESTAT, BANGALORE]. There is no reason to take a different view from the same. The Superintendent (AR) attempt to distinguish the above case by submitting that the above decision was rendered in respect of remission of duty and not in respect of CENVAT credit is inconsequential inasmuch as there is only one definition of 'place of removal' under the Central Excise Act or the Rules framed thereunder whether for the purpose of valuation of excisable goods or for the purpose of determination of claim of CENVAT credit or for any other purpose whatsoever. On a harmonious construction of the provisions, in respect of the excisable goods cleared from factory for export and subsequently shipped from the port, the port of export could be held to be the 'place of removal'. In view of this it has to be held that the respondents were entitled to treat CHA service/GTA service as 'input services' under Rule 2(1) of the CENVAT Credit Rules, 2004 as these services were used for clearance of excisable goods from the 'place of removal'. Entitlement to CENVAT credit on 'Business Auxiliary Services' received from foreign and domestic commission agents - Held that:- There is no valid ground for the department's appeals as its plea that there was no nexus between the 'Business Auxiliary Services' and manufacture of the goods does not advance their case inasmuch as a nexus between 'Business Auxiliary Services' and clearance of the goods from the 'place of removal' has been established by the assessee. This nexus is enough for reckoning the service as 'input service' under Rule 2(1) of the CENVAT Credit Rules, 2004. It is not the case of the department that the assessee was not entitled to claim CENVAT credit of the service tax paid by themselves under section 66A of the Finance Act, 1994. Therefore, in the result, the second issue also must be held in favour of the assessee.
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2013 (3) TMI 503
Cenvat Credit denied on services used for the civil construction work for pollution control equipment, consulting services and , transportation service, clearing and forwarding charges, legal charges etc. - Held that:- The applicant has a strong case in view of the definition of inputs as provided under Cenvat Credit Rules, 2004 that the input service means any service used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services in respect of the business activity. Pre-deposit of the dues is therefore waived and recovery thereof waived for hearing of the appeal.
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2013 (3) TMI 502
Deemed credit in terms of Notification No. 58/97 dated August 30, 1997 - claim of Modvat credit disallowed - Whether credit admissible to the inputs user on the basis of Invoice on which appropriate duty has not been paid by the input suppliers u/s 3A r.e.r. 96ZP(3) of the Central Excise Rules, 1944? - Held that:- Though it is not in dispute that the manufacturer from whom the respondent-assessee had purchased the inputs had paid only a part of the duty under the compounded scheme and was disputing its liability to pay the balance amount, but that would not come in the way of the respondent-assessee claiming the benefit of the Modvat credit in view of the notification dated 30-8-1997. Admittedly, part of the amount of the compounded levy has been paid and it cannot be ascertained as to whether it related to the invoice in respect of which the respondent-assessee had claimed the Modvat Credit or not. Thus the Tribunal had rightly decided the claim in favour of the assessee.
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2013 (3) TMI 501
SSI exemption under Notification No. 9/2000-C.E., dated 1-3-2000 as amended by Notification No. 9/2001-C.E., dated 1-3-2001 denied - as per the department some of assessee's final products were Brass Pellets and Brass Granules falling under sub-heading 7403.21 which were excluded from the purview of SSI exemption - demand of duty - Held that:- Heading 7403.21 covers - “Copper Zinc Base Alloys” (Brass). There is also another heading in Chapter 74 - Heading 7406, which covers the Brass Powder or flakes but the since goods, in question, are not in form of Brass Powder or flakes, the classification under this sub-heading is ruled out. Thus the Brass Brazing Granules/Pellets would be correctly classifiable under sub-heading 7403.21 as the goods, in question, are in the nature of unwrought metal and this sub-heading covers that “Copper Zinc Base Alloys”. It would not be correct to classify these Brass Granules/Pellets as ‘articles of Brass’ as the articles are something which are made by working on the Metal while the goods, in question, are in the nature of unwrought metal. Since the goods are correctly classifiable under sub-heading 7403.21 and since the same are other than the Brass Rods/Bars used for making wire, the same would not be covered by SSI exemption - against assessee.
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2013 (3) TMI 500
Cenvat credit denied on MDEA not being a input eligible - refinery of the appellant company at Panipat where the crude oil is refined for production of motor spirit, high speed diesel oil (HSD), Superior Kerosene Oil (SKO) etc - Held that:- In terms of ISI Standards prescribed for HSD Oil, its sulphur content should not be more than 0.25%. Therefore, if the crude oil has higher sulphur content, as a result of which, the HSD oil obtained by refining of crude oil also has sulphur content much higher than that prescribed in the ISI specifications, the same would have to be removed. In course of de-sulphurisation process, the HSD Oil is reacted with hydrogen in presence of catalyst in course of which the sulphur present in the HSD reacts with hydrogen to form Hydrogen sulphide. The MDEA is used for dissolving the Hydrogen Sulphide gas so formed. Subsequently, the MDEA containing dissolved hydrogen sulphide is transferred to Amine recovery unit where the MDEA and hydrogen sulphide are separated. Since the Hydrogen sulphide, being a poisonous gas, can not be released in the atmosphere, in accordance with the Pollution Control norms, the same is required to be processed in Sulphur Recovery Unit where the sulphur is recovered from the Hydrogen Sulphide. Thus from the above process to which HSD is subject to for removal of sulphur, it is clear that role of MDEA is only in removal of sulphur. This chemical is not used in the Sulphur Recovery Unit. It is used only in the de-sulphurisation process which is necessary for manufacture of HSD confirming to the ISI standards which alone can be marketed. Therefore, the MDEA has to be treated as an input used in or in relation to the manufacture of HSD oil. It will be totally wrong to treat the MDEA as an input used, for manufacture of sulphur, as this chemical has no role to play in the recovery of sulphur from Hydrogen Sulphide in the Sulphur Recovery Unit. Impugned order denying the Cenvat credit in respect of this item is not sustainable - in favour of assessee.
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2013 (3) TMI 499
Clandestine removal of Cenvat credit availed inputs without reversal of the Cenvat credit - demand confirmed - Held that:- The only basis of the demand raised is that while in some cases, in the monthly statements to bank regarding stock of raw material, the appellant were showing some stock in the RG-23A Pt. I register there was nil stock in other cases, the stock of Cenvated inputs reflected in RG-23A Pt. I register was less than the stock of inputs reported in statements to the bank. As other than this discrepancy, there is absolutely no evidence of removal of the Cenvated inputs to anybody. For the entire period of dispute, there is no evidence that the officers had conducted physical stock taking of the Cenvated inputs and had detected shortage in respect of the same. Thus the case against the appellant is not sustainable. The impugned order is set aside. The appeals as well as stay applications are allowed.
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CST, VAT & Sales Tax
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2013 (3) TMI 521
Tax Evasion - block assessment as the petitioner submitted incomplete tax statements for the period 1.4.2006 to 6.8.2008 - Anti Evasion Bureau investigated the transaction - revisional authority raised the demand - Held that:- As decided in Girdhari Lal Nannelal Versus Sales Tax Commissioner, M. P. [1976 (3) TMI 51 - SUPREME COURT] the payment of income tax in respect of the unexplained income may not hold good in sale tax case because in sales tax case the authority has to hold the actual amount of sale, which has been concealed by the assessee. But in the present case, the authority has relied on the assessment in fixing the amount of sale of the tax fixed by the income tax department for the year 2006-07, 2007-08 and 2008-09. Similarly, the authority has relied on the report of New Dixit Transport Commission Agent. The petitioner specifically requested to summon the witnesses and permit the petitioner to cross examine the witness of the transport authority, but the authority has not examined the aforesaid witness. It has simply relied the statement of the transport agent before the Anti Evasion Bureau, which were the part of the report of Anti Tax Evasion Bureau. From the perusal of the orders passed by the authority it is clear that the authority has fixed the amount of sale, which was escaped from income, on the basis of the report submitted by the Anti Evasion Bureau. However, the authority was performing the quasi judicial function. Hence, it was obligatory on the part of the authority to arrive on its own findings and the authority was obliged to adopt the procedure, which is known to the law. Thus the procedure adopted by the authority is against the law and perverse. The authority relied on the Income Tax returns and the findings of the enquiry report of New Dixit Transport Commission Agent without assessing the contents independently. The arguments advanced by the petitioner that the assessment is beyond the power of authority and beyond the period of limitation could not be accepted because in the present case, the assessment is for block period, which is in accordance with Section 55-A of the VAT Act and it was introduced vide amendment of Act No.26/2007 that for the purpose of this section the expression "block period" shall mean the period comprising of six years preceding the year in which the requisition was made or the inspection was conducted and shall include the period upto the date of requisition or inspection.In such circumstances, vide notification dt.6.4.2011 (Annexure P/10) filed by the petitioner alongwtih the petition the government has power to extend the period of limitation because at that time, the period of limitation was not expired. Hence, the contention of the petitioner in this regard is hereby rejected. The impugned orders of revisionary authority are hereby quashed, however, it is hereby clarified that the authorities are at liberty to make assessment of the petitioner in accordance with law after following the procedure as mentioned in the order.
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2013 (3) TMI 520
Detention of goods - appellant seeking release of the goods detained - TNVAT Act, 2006 - Held that:- Section 67(4) of the TNVAT Act, 2006 provides for release of goods on payment of tax or the security either voluntarily or under protest. In such view of the matter, direction is issued to the respondents to release the goods forthwith as and when the petitioner pays the tax as demanded, under protest and proceed further in respect of the composition notice subject to the right of the petitioner to contest the same on merits and in accordance with law.
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Indian Laws
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2013 (3) TMI 518
Interest on delayed payments to small scale and ancillary industrial undertakings - The supplier/appellant has raised the demand for interest on delayed payment made by the respondent/Board related to the supplies of goods namely Aluminium Conductors Steel Reinforced (for short "ACSR"), however, the same was not acceded. These supplies were made after the expiry of the time stipulated in the agreement/supply order, but after obtaining specific extension of time by the respondent/Board. - held that:- what is to be considered relevant is the date of supply order placed by the respondents and when this Court used the expression "transaction" it only meant a supply order. When this Court said "transaction" it meant initiation of the transaction i.e. placing of the supply orders and not the completion of the transactions which would be completed only when the payment is made. Therefore, the submission made by the learned Senior Counsel appearing for the appellant-plaintiff fails. Binding value of a precedent - We are in full agreement with the view expressed in Keshav Mills Co. Ltd.'s case (supra). The learned Senior Counsel Shri Rakesh Dwivedi has not been able to make out a case for reconsideration of the decision of this Court in Assam Small Scale Industries Development Corpn. Ltd (supra). In fact, a plea for reconsideration of the same was rejected by a Division Bench of this Court in Shakti Tubes Ltd. (supra). We are unable to agree with the argument of Shri Dwivedi and Shri Gupta that the provisions of the Act were not considered in its entirety. In fact, the entire scheme of the Act has been considered in the case of Rampur Fertilizers Ltd. (supra) and specific answer to the issue under consideration was answered. When there are four decisions of this Court with regard to the applicability of the Act for contracts entered into prior to the commencement of the Act, and when the plea for reconsideration has been expressly rejected in the past, we are of the view, it would be against the spirit of the doctrine of stare decisis for us to take any view in divergence with same. - The result is appeals fail and accordingly, they are dismissed. No order as to costs.
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