Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 1, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
Highlights / Catch Notes
Income Tax
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Whether or not there is any failure on the part of the assessee in disclosing fully and truly all material facts necessary for his assessment, is a matter of fact and there can be no deemed failure - HC
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Reopening of assessment - rent receipt from leasing of property - the formation of opinion by the AO that income has escaped assessment cannot be regarded as a mere subjective satisfaction - HC
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Bogus and unverified purchases - in the earlier assessment years as well as in the subsequent assessment year, a particular net profit rate has been applied, it is a prudent rate of income - HC
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Rebuttal of statement made u/s 132(4) - The period within which a statement made on oath is retracted is of abundant relevance in deciding statutory matters of such nature. - HC
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Whether the publication of books of professional interest to be used as a reference material in respect of bank audit, tax audit, etc., would be construed to be a charitable purpose - held yes - HC
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No doubts, the views expressed are by a non jurisdictional High Court. However, there being nothing to the contrary by Hon’ble jurisdictional High Court, or, for that purpose, by any of the Hon’ble High Court, these views bind us as well. - AT
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Deemed dividend - Section 2(22)(e) - when the nature of receipt partakes the character of share application money, it cannot be treated as loan/advance. - AT
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The claim of the assessee cannot be considered as false to attract the rigours of penalty u/s 271(1)( c) which is quasi criminal in nature and accordingly deleted the penalty. - AT
Central Excise
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Valuation - Captive Consumption - mere allegation of non-cooperation from the assessee would not justify arbitrarily fixation of the cost of manufacture - AT
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The mere contingency that at some earlier point of time, the acceptance of the proof of export had been issued by the concerned excise authorities, would not entitle it to the benefit of Rule 19 - HC
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CENVAT credit - Notwithstanding excisability of the input, the supplier of the input paid duty thereon and issued a valid invoice to the respondent. - credit allowed. - AT
VAT
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Whether the assessee can change its stand in course of reassessment proceeding under Section 43 of the OVAT Act when its claim of exemption under Section 6(2) of the CST Act is disallowed? - HC
Case Laws:
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Income Tax
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2013 (3) TMI 563
Re opening of assessment - notice issued after the expiry of four years - reasons recorded for reopening that an Explanation has been introduced to Section 80-IA vide Finance (No.2) Act, 2009 with retrospective effect i.e. from April 01, 2000 - Held that:- From the reasons recorded, it is apparent that deduction u/s 80-IA would not be admissible to an assessee due to retrospective amendment brought who carries on business which is in the nature of works contract and as such, the petitioner/assessee being engaged in the business of works contract is not eligible for deduction under section 80-IA but the same has been claimed by the assessee, hence, there was reason to believe that income chargeable to tax has escaped assessment for the assessment years under consideration. The record of the case does not in any manner indicate that proceedings under section 147 are sought to be reopened by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for assessment years under consideration. As to whether or not there is any failure on the part of the assessee in disclosing fully and truly all material facts necessary for his assessment, is a matter of fact and there can be no deemed failure as is sought to be contended on behalf of the respondents - thus notice u/s 148 issued cannot be sustained - in favour of assessee.
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2013 (3) TMI 562
Reopening of assessment - rent receipt from leasing of property - Till A.Y. 2007-08, the rental income was declared by the assessee under the head of business income but from A.Y. 2008-09 the rental income was declared as income from house property - AO was of opinion that the same view needs to be taken for A.Ys. 2006-07 and 2007-08 as taken in A.Y. 2008-09 since the facts of the case for the subsequent years and the two years in question are the same - notice issued to the assessee u/s 142(1) calling upon the assessee to clarify - Held that:- The failure of the assessee to issue a clarification before the AO and to explain how the facts for A.Ys. 2006-07 and 2007-08 were different from those of A.Y. 2008-09 and subsequent years was a circumstance which led the AO to believe that the rental income has been wrongly assessed under the head of income from business rather than as income from house property. Before the AO it was contended that the assessee had followed the judgment of this Court for A.Ys. 2006-07 and 2007-08. However, as the AO noted, the returns for those two years were filed on 29 November 2006 and 27 October 2007 whereas the decision of this Court had been pronounced much later on 12 January 2012. Thus AO was justified in purporting to reopen the assessments for A.Ys. 2006-07 and 2007-08. Sufficient opportunity was given to the assessee during the course of the assessment for A.Y. 2009-10 to explain to the satisfaction of the Assessing Officer how the facts for A.Ys. 2006-07 and 2007-08 were different. In this view of the matter, the formation of opinion by the AO that income has escaped assessment cannot be regarded as a mere subjective satisfaction & reopening of assessments cannot be held to be contrary to law - against assessee.
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2013 (3) TMI 561
Bogus and unverified purchases - appellant argued that earlier CIT(A) has applied 11% as net profit rate of the contract receipts but after remand has applied 8% of the contract receipts as a net profit rate - Held that:- The Tribunal in the earlier appeal found that the books of account were not rejected by AO therefore, the best judgment assessment could not be framed by the CIT(A). However, after remand, it has been found that in fact the AO has proposed to reject the books of account and to compute income by applying net profit @ 8% of the contract receipts. - Since the assessee has not maintained proper books reflecting the purchase of the material and the wages payable or paid, the revenue has no option but to frame best judgments assessment. It is not the case of the revenue that the assessee has not executed the work at all. In fact the order passed by the AO shows the details of the work executed by the assessee. AO in the following assessment year applied 8% net profit rate on contract receipt. There is no dispute to the argument that each of the assessment year is independent proceedings and the AO is within its jurisdiction to frame assessment by applying net rate of profit which he found prudent. But if in the earlier assessment years as well as in the subsequent assessment year, a particular net profit rate has been applied, it is a prudent rate of income, which has been applied by the CIT (A). Such finding cannot be said to give rise to any substantial question of law in the present appeal.
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2013 (3) TMI 560
Rebuttal of statement - Additions on the basis of statements made u/s 132(4) during the course of search – Assessee says that the statement under Section 132(4) was recorded from him while he was in a confused state of mind - Held that:- The Tribunal was right in holding that there is nothing on record to show that the assessee had ever rebutted the presumption available under Section 132(4). At best what he is shown to have done is to file an affidavit when the matter came up before the Tribunal. - even in his letter dated 13.2.1997, the assessee did not make any reference to the earlier statements made under oath on 19.2.1996 and 29.2.1996, to which statements provisions of Section 132(4) of the Act applies. - The period within which a statement made on oath is retracted is of abundant relevance in deciding statutory matters of such nature. - Decided against the assessee.
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2013 (3) TMI 559
Renewal of its approval under section 80G - Application in Form 10G - Section 2(15) - Charitable purpose - whether the publication of books of professional interest to be used as a reference material by the general including the professionals in respect of bank audit, tax audit, etc., would be construed to be a charitable purpose. - Held that:- In our opinion, such activities of the assessee-trust cannot be construed to be one of trade or commerce or business and it would only be a charitable in nature. Therefore, it cannot be held that the activities of the assessee-trust in publishing and selling books of professional interest, which are meant to be used as a reference material even by the general public as well as the professionals in respect of bank audit, tax audit, etc., cannot be construed to be one of commerce in nature. The finding of the Tribunal in this regard requires no interference. In the given case, there is nothing to doubt about the genuineness of the activities of the assessee-trust in question - Dismissed the appeal of Revenue.
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2013 (3) TMI 558
Principle of merger - Revision U/s 263 of the Income Tax Act, 1961 - Under assessment of Book Profit - Interest U/s 244A - Held that:- Rs 81.32 crores in respect of depreciation on investments has already been added back to assessee’s income, vide appeal effect order dated 5th March 2010 (copy placed before us at page 34 of the paper-book), and as such revision order was not warranted in respect of the same. The appeal effect order stands merged with the assessment order, and once the adjustment is carried out, there cannot be any occasion to invoke powers under section 263 in respect of the same. Decision in the case of CIT Vs Yokogawa India Ltd (2011 (8) TMI 766 - KARNATAKA HIGH COURT) followed. Decision of non-jurisdictional high court - held that:- No doubts, the views so expressed are by a non jurisdictional High Court. However, there being nothing to the contrary by Hon’ble jurisdictional High Court, or, for that purpose, by any of the Hon’ble High Court, these views bind us as well. In any case, the set off of amortization with admissible depreciation does not appeal to us, nor any conceptual or legal basis for the same was demonstrated to us. However, we need not really deal with that aspect of the matter on this factual matrix. In view of these discussions, in respect of all the three issues, the impugned revision order is devoid of legally sustainable merits. - Decided in favor of assesse.
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2013 (3) TMI 557
Deemed dividend - Section 2(22)(e) of the Income Tax Act - Share Application money received under Current Liabilities - Held that:- we are of the view that the amount received by the assessee does not come under the scheme of loan and advances, therefore, the ld.CIT(A) was fully justified in holding that the provisions of section 2(22)(e) are not attracted and hence the case falls outside the ambit of deemed dividend u/s 2(22)(e). We upholding the order passed by the ld. CIT(A). CIT(A) observed that it is agreed by the AO that the sums received are towards share application money. He further observed that when the nature of receipt partakes the character of share application money, it cannot be treated as loan/advance. He further observed that at the time of receipt of money the intention was to invest in shares of the appellant company and hence the nature of the receipt was not that of loan or advance. He further observed that only loans and advances can be considered as deemed dividend for the purpose of section 2(22)(e) and accordingly held when what has been received as share application money on which there is no dispute, the provisions of section 2(22)(e) are not attracted and hence deleted the addition made by the AO. CIT(A) on this account reject the grounds taken by the Revenue and Revenue’s appeal stands dismissed.
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2013 (3) TMI 556
Penalty proceedings u/s 271(1)(c) of the Act - Disallowance of differential interest paid on inter corporate deposits - Other disallowances - Assessment U/s 143(3) of the Income Tax Act, 1961 - Held that:- The ld.CIT(A) restricted the disallowance of interest On further appeal by the Revenue to the Tribunal, the Tribunal dismissed the Revenue’s appeal and upheld the order passed by the ld. CIT(A). - The claim of the assessee cannot be considered as false to attract the rigours of penalty u/s 271(1)( c) which is quasi criminal in nature and accordingly deleted the penalty. Following the decision of the the Hon’ble Apex Court in CIT V/s Reliance Petroproducts Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT), Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). In case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature.” - Decided in favor of assessee.
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2013 (3) TMI 555
Penalty U/s 271(1)(c) on the disallowance of depreciation on plant and machinery - sustenance of penalty on the addition of lease equalization amount - Held that:- Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c) The assessee has claimed the amount of lease equalization charges on the basis of guidance note issued by ICAI and has disclosed all material facts in its Profit and Loss Account and balance sheet filed along with the return of income. We further find that on the similar issue Hon’ble Apex Court in CIT V/s Reliance Petroproducts Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT)d eleted the similar penalty - Decided in favor of assessee.
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2013 (3) TMI 554
Determination of advertising revenues of the assessee company to the extent attributable to its PE in India - different percentages of advertisement revenues for different years - Held that:- Though the appellant has not produced any details of the various expenses, by no stretch of imagination it can be said that the appellant has not incurred any expenses under these heads. At the same time, it cannot be said that income of Indian Operations of the appellant of is definitely ascertainable in view of the fact that the appellant has not produced documentary evidence in cases of various other expenses. Further, the method of allocation of various expenses to India Operations cannot be said to be foolproof. Therefore, there is no other option but to apply Rule 10 in order to ascertain the profits attributable to Indian Operations of MTVA. Considering the verifiability of purchase of programmes and transponder charges the margin of the appellant comes to 0.85% ignoring all other expenses. Further the appellant has filed copies of tax computations file with Singapore Tax Authorities in respect of the Global Operations, in which substantial loss is reflected. On a perusal of the same it is clear that the appellant has indeed incurred huge losses. Therefore the margin of 30% applied by the Assessing Officer seems to be very high. - Estimation of profit reduced from 30% to 10%. - Decided partly in favor of assessee. Interest u/s 234B for failure to pay advance tax - held that:- issue is squarely covered in favour of the assessee and against the Revenue by the decision of Hon’ble Bombay High Court in the case of Director of Income Tax (International Taxation) vs. NGC Net Work Asia LNC [2009 (1) TMI 174 - BOMBAY HIGH COURT] wherein it was held that when the entire income of non resident assessee was liable for deduction of tax at source by the payer, there was no obligation on the payee to pay advance tax in respect of his income and no interest u/s 234B, therefore, could be charged. - Decided in favor of assessee.
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Customs
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2013 (3) TMI 553
Question of penalty imposed on a CHA against whom here is a contemplation of proceedings under CHALR. - Appeal is filed against the penalty imposed u/s 112A of Customs Act, 1962. It has been found that the CHA did not wait for the assessment and out of charge but advised the shipping agent to sail. Held that – The question arises here whether CHA can be punished for sending the communication before assessment of bill of entry. After considering the mail sent by CHA tribunal finds that it can not be said that CHA rendered the vessel liable to confiscation since CHA never informed the shipping agent that clearance formalities were completed and as we have observed earlier, according to Assistant Commissioner’s report vessel had left much before receipt of e-mail from CHA. If CHA can not be said to have rendered the vessel liable to confiscation, he is not liable to penalty under Section 112 of Customs Act, 1962. - The penalty imposed on the appellant cannot be justified and therefore the impugned order is set aside and appeal is allowed.
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Corporate Laws
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2013 (3) TMI 552
Decree for Permanent Injunction - plaintiff holding 49% shares in the defendant No.1 instituted this suit on behalf of defendant No.1 Company, to prevent the defendant No.2 holding the remaining 51% shares in the defendant No.1 Company and its 100% two subsidiaries impleaded as defendants No.3 & 4 from illegally and malafidely terminating the Business Service Agreement (BSA) between the defendant No.1 Company on the one hand and defendants No.2 to 4 on the other - also to restrain the defendants No.2 to 4 from entering into an agreement with the defendant No.5 for the same services for which they had entered into the BSA with the defendant No.1. - argument of the plaintiff that it is only owing to the negative covenant in Clause 8.1 of the JVA, that the BSA cannot be terminated before the end of the year 2013. Held that:- Clause 8.1 of the JVA is not concerned with the determination of the BSA. Clause 8.1 is of the genre as often found in the JVAs whereby notwithstanding one of the joint venture parties being in majority, the decision on certain aspects requires affirmative vote of the minority shareholder also. Such clauses are intended to protect the interest of the minority shareholder. One such decision for which affirmative vote of the plaintiff was agreed to be necessary was of sale or disposal of the whole or any substantial part of the business and / or assets of the defendant No.1 Company in any manner whatsoever. However what that Clause encompasses is a decision of the defendants No.2 to 4 as shareholders of the defendant No.1 Company to transfer the business of the defendant No.1 Company. The defendants No.2 to 4 vis-ŕ-vis the plaintiff had two different status, one as joint venture partners of the plaintiff having majority share in the joint venture company floated / acquired with the plaintiff, and other as the channel owners. The said two status of the defendants No.2 to 4 cannot be mixed up. Plaintiff himself said that the BSA and the JVA are part of the same transaction. Rather when during the hearing, it was put to the plaintiff that the JVA being of three days subsequent to the date of the BSA should prevail, the response of the senior counsel was that they have to be read together. Thus unable to understand as to why, if the understanding of the plaintiff was that the defendants No.2 to 4 as channel owners will not take away the business from the defendant No.1 prior to three years, should the plaintiff have agreed to the BSA being terminable at the instance of the defendants No.2 to 4 without any cause whatsoever also. The BSA, on behalf of the defendant No.1 has been signed by the plaintiff himself and not by any nominee of the defendants No.2 to 4 in the defendant No.1 Company. The plaintiff having made the BSA determinable by its very nature cannot be permitted to rely on Clause 8.1 of the JVA to make it non determinable. Clause 8.1 is concerned with the decision making by the Board of Directors of the defendant No.1 Company and not by the action of the defendants No.2 to 4 as channel owners. It is nobody's case that the defendants No.2 to 4 as shareholders of the defendant No.1 Company or through their nominee Directors in the defendant No.1 Company have agreed to transfer the business of the defendant No.1 Company to some other person, even though the action of the defendants No.2 to 4 in their capacity as channel owners, of termination of the BSA with the defendant No.1 may have the same effect. The defendants No.2 to 4 as joint venture partners of the plaintiff can be said to have agreed to not using their majority on the Board of Directors of the defendant No.1 Company to take any decision of disposal of the whole or any substantial part of the business and assets of the defendant No.1 Company without the affirmative vote of the Directors of the defendant No.1 Company representing the interest of the plaintiff therein. The undisputed position is that the BSA is anterior in point of time to the JVA. For the settled position in law see Radha Sundar Dutta Vs. Mohd. Jahadur Rahim AIR [1958 (9) TMI 74 - SUPREME COURT], Sahebzada Mohammad Kamgar Shah Vs. Jagdish Chandra Deo Dhabal Deo [1960 (4) TMI 50 - SUPREME COURT] and Uma Devi Nambiar Vs. T.C. Sidhan (2003 (12) TMI 582 - SUPREME COURT) that in construction / interpretation of deeds / documents, except a Will, the clause first appearing in the document / deed, prevails over the one appearing latter in the deed / document. Thus, applying the said test also, it will be the clause in the BSA permitting termination which will prevail over the clause if any to the contrary in the JVA. There can be no manner of doubt that the requirement of affirmative vote is a negative covenant. There can be no substantial or tangible distinction between a contract containing an express negative stipulation and a contract containing an affirmative stipulation which implies negative. The affirmative vote for the decisions mentioned in Clause 8 of the JVA, after its incorporation in the AoA, would thus make any decision and action in pursuance thereto requiring an affirmative vote without such affirmative vote, ultra vires the company. Unable to subscribe to the contention of the plaintiff that the purport of Section 42 of the SRA is to make agreements which by their very nature are not enforceable, enforceable. Section 42 of the SRA provides for a situation where even though the agreement may be found to be specifically not enforceable but the defendant has separately agreed not to do a certain act and permits grant of an injunction restraining the defendant from doing that act. It cannot be interpreted as making the agreement which is non enforceable, enforceable. It is also not as if the negative covenants are necessarily to be enforced. The Joint Venture Company defendant No.1 was not formed for a period of three years only there is nothing to suggest that it was to carry on business for a period of three years only. Nevertheless the plaintiff agreed that the right of the defendant No.1 Company to distribute the channels of the defendants No.2 to 4 was for a period of three years only, of which two years are already over. The plaintiff also agrees that the defendant No.1 Company after the third year has no right to claim any right to distribute the channels of the defendants No.2 to 4. In this light also, it is felt that it is not essential to protect the right even if any, of the defendant No.1 to distribute channels of the defendants No.2 to 4 for the remaining less than one year of the said three years by issuing an injunction and when the damages suffered are easily computable. Thus the suit for injunction is thus found to be not maintainable and is dismissed. Any observation made will not come in the way of the plaintiff / defendant No.1 claiming relief of damages or any other relief to which they may be entitled.
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Service Tax
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2013 (3) TMI 567
Penalty – Delay in payment of service tax – Waiver of Pre-deposit - Held that – that there has been considerable delay consistently for about 21 months and this cannot be condoned. - Prima facie, Section 76 is attracted - prima facie against the assessee - pre-deposit ordered partly.
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2013 (3) TMI 566
Application for Condonation of delay, rejected by Commissioner (appeals) - Delay more than 10 months – Held that – Reliance was made on the case Singh Enterprises vs. CCE, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA] wherein it was held that a Commissioner (Appeals) did not have the power to condone any delay of appeal beyond the condonable period of delay prescribed under Section 35 of the Central Excise Act, 1944. The apex court further held that even this Tribunal, High Court, or even the Supreme Court could not condone such delay. - Appeal dismissed - Against the assessee.
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2013 (3) TMI 565
Service Tax – Commission paid to agent situated abroad – Revenue trying to tax the appellant under Reverse Charge Mechanism. Held that - The issue involved is no more res-integra, as the reliance was made on judgment of Hon'ble High Court of Mumbai in the case of Indian National Shipowners Association [2008 (12) TMI 41 - HIGH COURT OF BOMBAY] tribunal set aside the impugned order and allow the appeal filed by the appellant.
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2013 (3) TMI 564
Waiver & Stay - Irregular availment of credit - Debit Note - Duty paying documents - Business Auxiliary Service - Business Support Service (BSS) - Transportation of Goods by Road services (GTA) - Extended period of limitation - Held that:- During the period prior to 1-4-2007, the appellant was deducting the excess yield charges, inter alia, from the gross amount received from KPCL, for the purpose of payment of service tax and that this aspect was within the knowledge of the department. The audit report is dated 24-3-2008 and the same also indicates that the findings in the report were vetted in the monitoring committee (constituted by the Department). Prima facie, the material fact was gathered by the Department as early as in March, 2008 and therefore, the extended period of limitation could not have been invoked in the show-cause notice of 2010 for recovery of service tax on excess yield charges for the subsequent period from April, 2007 - Decided in favour of Assessee. As regards the demand arising out of denial of Cenvat credit - Held that:- It was told that the credit in question was taken not merely on the basis of the debit notes but rather on the basis of the statutory invoices. There is no other reason for denial of the credit. We have also found that the debit notes and invoices contained all the requisite particulars in terms of Rule 4A of the Service Tax Rules, 1994. Prima facie, therefore, the denial of Cenvat credit is not sustainable in law - Decided in favour of Assessee. As regards the demand of under the head ‘BSS’ - Held that:- The power stations were engaged in the business of generating power from coal. It is difficult to believe that a service provided in relation to supply of the raw material (washed coal) to the power stations is not a service provided in relation to business or commerce of the power stations. The inclusion part of the definition just widens the scope of the service. Prima facie, the demand of service tax of Rs. 50.06 lakhs on ‘BSS’ cannot be successfully resisted by the appellant. The learned counsel has pleaded limitation in this context also. The basis of this plea is, again, the audit note. Prima facie, this plea merits consideration. Consequently, the sustainable part of the demand amounts to Rs. 6 lakhs. As regards the demand on GTA service - Held that:- It is submitted that the tax was paid in reverse charge mechanism by the appellant and they are entitled to take Cenvat credit of the same and therefore any intent to evade payment of service tax cannot be attributable to the appellant. The amount coming within the normal period is stated to be Rs. 6.61 lakhs. It is submitted that the appellant paid an amount of Rs. 50 lakhs towards the above demand. We have heard the learned Additional Commissioner (AR) on this count also but he has not been able to rebut the plea of limitation successfully. As regards the last leg of the demand which arises out of reconciliation of accounts - Held that:- It was claimed that upon correct reconciliation, the demand would not be sustainable. This claim has also been contested. After considering the submissions, we note that these rival contentions with regard to reconciliation of accounts can be taken up at final hearing in the appeal. However, against the demand falling withing the normal period of limitation, pre-deposit ordered for an amount of Rs. 30 lakhs. - Partly in favor of assessee.
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Central Excise
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2013 (3) TMI 551
Grievance of the appellant that even though the Larger Bench decision of the CESTAT in the case of Noble Drugs Ltd. v. Commissioner of C. Ex., Nasik (2007 (7) TMI 327 - CESTAT, MUMBAI) was brought to the notice of the Tribunal, the Tribunal has disposed of the appeals without considering the said decision - Held that:- The impugned order of the CESTAT is quashed and set aside and the matter is restored to the file of the CESTAT for fresh adjudication in accordance with law, as expeditiously as possible.
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2013 (3) TMI 550
Valuation - Captive Consumption - Supply of acid slurry to their sister unit for its captive consumption - Duty demanded on the value determined under Rule 8 of Central Excise (Valuation) Rules, 2000 i.e. on 115% of the cost of production as appellant did not furnish the cost data or cost of production - Held that:- On bare reading of the Rule 8 it is evident that if the clearance of the excisable goods is only for captive consumption the excise duty has to be worked out on the valuation based upon the 115% of the cost of manufacture. Thus it is evident that cost of manufacture is the most relevant aspect of this adjudication. Neither in the show cause notices nor in the order-in-original nor in the order-in-appeal there is even suggestion that the officers tried to work out the cost of manufacture. The only reason to justify this valuation as given in the impugned order is that the appellant was non-cooperative and despite request he did not furnish any information regarding his manufacturing cost. That by itself does not vest the adjudicating authority or the Appellate Authority with powers to arbitrarily fix the cost of manufacture without making any efforts to scrutinize the relevant record of the assessee. - Matter remanded back for reconsideration.
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2013 (3) TMI 549
Withdrawal of acceptance of export - Exporting without payment of duty under Rule 19 of the Rules - Duty U/s 11A - Interest U/s 11AB - Mismatch between description of the commodities laid for export, as referred to in the AREs, and those mentioned in the other documents - Held that:- the petitioner cannot/could not have claimed the benefit of Rule 19 for such goods not having been manufactured by it. Such exemption of excise duty would not only be opposed to the letter and spirit of this provision of the Rules, but would also result in its undue enrichment at the cost of public revenue. Actual export of the consignments of the goods not manufactured by the petitioner per se would not entitle it to the benefit of Rule 19. The identification of the goods, thus, claimed to have been exported is of definitive significance and can by no means be compromised with, notwithstanding the fact that initially, the acceptance of the proof of export had been issued by the authorities and the same had been cleared for export after examination of the same at the place of export as required by CBEC guidelines to ascertain the identity and the quantity thereof. The view taken by the Revenue, having regard to the entire gamut of the facts involved, does not appear to be wholly implausible and absurd so as to be discarded as preposterous. Thus its plea of similar antecedents of the petitioner also cannot be lightly ignored. The relief claimed by the petitioner is statutory in nature and would be logically available to it on strict compliance of the prescriptions in connection therewith. The mere contingency that at some earlier point of time, the acceptance of the proof of export had been issued by the concerned excise authorities, would not entitle it to the benefit of Rule 19, in the singular facts and circumstances of the case. No final decision, as yet, has been taken by the excise authorities on the reply/explanation filed by it to the show cause notice(s). - the respondents would take an appropriate decision in accordance with law in the said proceedings without being influenced by the above observation after affording due opportunity of participation to the petitioner.
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2013 (3) TMI 548
Rectification of mistake versus Review of order - Limited scope under Central Excise Act, 1944 - Held that:- In absence of power to review to discover the mistake, if any crept in record, Revenue’s prayer for recalling of the appeal for substitution of earlier order of the Tribunal by a fresh decision is not permissible. Following various decisions of Apex Court, rectifiable mistake apparent from the record has been explained in that case. Where microscopic analysis is not required to notice mistake from record but is mere apparent that only can be rectified. Therefore, prayer of Revenue is rejected.
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2013 (3) TMI 547
Availment of CENVAT credit on inputs - Excisability of the input - meaning of Manufacture - Held that:- The respondent has submitted that there is no dispute with regard to receipt of aluminium foils in their factory and use thereof in or in relation to the manufacture of their final product. - The respondent satisfied the essential requirements for CENVAT credit. Notwithstanding excisability of the input, the supplier of the input paid duty thereon and issued a valid invoice to the respondent. The input so received in the respondent’s factory was used in or in relation to manufacture of their final product and its duty-paid character was evidenced by the invoices. So he is entitled to take CENVAT credit of duty paid on the input. - Decided against the revenue.
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CST, VAT & Sales Tax
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2013 (3) TMI 569
Reopening of assessment - turn over relating to 'extended warranty' as well as 'logistic charges' is subject to tax - Held that:- The issue of tax on turn over relating to 'extended warranty' and 'logistic charges' should be taken initially before the same authority, who has issued notice to petitioner as although this is purely a legal question and should be decided as a preliminary issue, but assessing officer will not decide it as a preliminary issue and will decide along with main case. Since, prima facie, it appears to be a legal question and in case the objection is allowed, then notice is liable to be consigned to record or discharged, therefore, it will be proper for the concerned authority to hear and decide this question first as a preliminary issue. It is made clear that in case, any adverse order is passed, then it will be open for the petitioner to challenge the same before appropriate forum, in accordance with law.
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2013 (3) TMI 568
Alternative Claim - Disallowing Exemption claimed from payment of tax u/s. 6(2) of the Central Sales Tax Act, 1956 in respect of some local sales - The petitioner supplies specified goods and equipments to PGCIL and NTPC, the movement of which is occasioned from a State other than Odisha(Exemption U/s 6(2) of the CST Act.) - Escaped assessment and resulted in evasion of VAT - Held that:- Law is well settled that when the statute requires to do certain thing in certain way, the thing must be done in that way or not at all. Other methods or mode of performance are impliedly and necessarily forbidden. The aforesaid settled legal proposition is based on a legal maxim “Expressio unius est exclusion alteris”, meaning thereby that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner and following of other course is not permissible. At the time of scrutiny of the return under any of the provisions of the statute the assessee is required to adduce evidence in support of his particulars disclosed in the return/revised return validly filed under the statute including the claim of exemption/deduction. Whether the assessee can change its stand in course of reassessment proceeding under Section 43 of the OVAT Act when its claim of exemption under Section 6(2) of the CST Act is disallowed on the basis of a tax evasion report and the dealer is entitled to take altogether a different stand and to submit new evidence in support of its changed stand? In view of the above, if the petitioner fails to establish its claim of exemption under Section 6(2) of the CST Act made in its return, the appellate authority while dealing with its alternative prayer claiming exemption under Notification No.629/2008 dated 23.12.2008 shall adjudicate various issues arise out of such claim. Here the writ petition is dismissed.
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Wealth tax
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2013 (3) TMI 570
Rectification u/s 35 of wealth tax act - mistake apparent from the record - held that:- when on the admitted fact that the claim of loss and non-declaration of dividend itself was made long after the revised assessment order and it never formed part of the record, the said facts being materials outside the record - the Tribunal was correct in holding that the recourse to Section 35 was legally not sustainable and thus rejecting the case of the assesee. - Decided against the assessee. Decision in the case of T. Manickavasagam Chettiar Vs. Commissioner of Income Tax [1983 (2) TMI 39 - MADRAS HIGH COURT] distinguished.
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