Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 16, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Tax paid by the employer on the salary/remuneration of the employee - Section 17(2) - such payment was to be excluded from the income of the employees - AT
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Adjustment of tax on the date of seizure - assessee would be entitled to interest u/s.244A from the date of the amount held by the Revenue in their account of seizure. - AT
Customs
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Seizure U/s 110 - As the goods in question are not prohibitory items under the provisions of the Act , provisional release of the goods in question, is ordered with conditions - HC
Central Excise
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Whether “Served From India Scheme“ (SFIS) can be treated as exempted goods for the purposes of Rule 6(3)(b) of Cenvat Credit Rules - Held No - HC
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Strangely, the revenue authority was of the opinion that a person who is not party to a fraud or collusion or wilful mis-statement, may avoid penal consequences but not extended period of limitation. - HC
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Exemption under Notification No. 88/88 - when the recognition granted (by the KVIC)to the petitioner is conditional, in respect of any other manufacturing unit except those specified in the certificate of recognition, the petitioner would be an unrecognized institution. - HC
Case Laws:
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Income Tax
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2013 (4) TMI 318
Profit arising out of the sale of shares - business income v/s short term capital gain - Held that:- In the present case assessee has held these shares and units as investment being capital asset. The assessee has not claimed any loss due to fall in value of capital asset or investment, which would have been the case if the said investment is to be treated as stock in trade. Even the assessee is consistently valuing the investment at cost. The assessee is consistently offering the income accruing to him from sale of shares under the head capital gains and the same is accepted by the Income Tax Department during earlier years' scrutiny assessments i.e. in AYs 2005-06 and 2006-07. The assessee has filed copies of assessments orders for these two assessment years wherein the said short term capital gain disclosed by the assessee was accepted. The assessee has filed evidences qua that sales of shares are made and on which short term capital gains has accrued are acquired during earlier years. In such circumstances, CIT(A) has rightly treated the sale of shares as short term capital gain. Appeal of revenue is dismissed.
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2013 (4) TMI 317
Undisclosed income - search and seizure - assessment completed ex-parte u/s 144 as the assessee neither filed its return in response to notice issued u/s 158BC nor appeared in the assessment proceedings - Held that:- As it is evident from the impugned order of the CIT(A) that the appeal was disposed of ex-parte as the assessee did not avail the various opportunities afforded by the CIT(A) by granting adjournments as requested by the assessee however, the assessee has prayed for one more opportunity for putting forth the case of the assessee in relation to various issues involved in the appeal before the CIT(A) for proper adjudication of the matter. Considering the totality of facts and circumstances of the case and the prayer of the assessee for one more opportunity it is just and proper to set aside the impugned order of CIT(A) and restore the matter to his file for disposal of the appeal of the assessee before him.
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2013 (4) TMI 316
Addition on account of interest on Non Performing Assets not recognized by the appellant - Assessee submitted that in view of the RBI guidelines, Accounting Standards and guidance notes of ICAI etc. following the principles of income recognition, the assessee had followed these directions and accordingly not recognized the interest on NPA for the year - Held that:- As decided in C.I.T. vs. M/s Vasisth Chay Vyapar Ltd. [2010 (11) TMI 88 - DELHI HIGH COURT] the assessee herein had advanced certain Inter Corporate Deposits (ICD) to M/s Shaw Wallace Company. The interest thereupon could not be received by the assessee for more than six months. The assessee is a Non-Banking Financial Company (NBFC) and, therefore, is bound by the directions given by the Reserve Bank of India. These directions, inter alia, mandate a NBFC to declare such advances as Non Performing Assets (NPA) when the accrued interest therein is not paid by the debtor continuously for six months. The assessee company being NBFC is governed by the provisions of RBI Act. In such a case, interest income cannot be said to have accrued to the assessee having regard to the provisions of section 45Q of the RBI and Prudential Norms issued by the RBI in exercise of its statutory powers. As per these norms, the ICD had become NPA and on such NPA where the interest was not received and possibility of recovery was almost nil, it could not be treated to have been accrued in favour of the assessee. As DR could not controvert the submissions of the assessee that this issue is squarely covered in favour of the assessee by the decision of Vasisth Chay Vyapar Ltd.(Supra) the issue in favour of the assessee decided.
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2013 (4) TMI 315
Cess on green leaf - CIT(A) deletion of addition - Held that:- This issue is covered by the decision of the AFT Industries Ltd. -vs- CIT [2004 (7) TMI 81 - CALCUTTA HIGH COURT] wherein held that entire amount paid as cess on green leaf seems to be eligible for deduction - in favour of the assessee. Depreciation claim disallowed - AO refused to allow the assessee's claim on the ground that the entire depreciation at the relevant rate was allowed in computing the business income to which Rule 8 was applied - CIT(A) allowed the claim - Held that:- The case of the assessee in this ground is duly covered by the decision of CIT-vs- Doom Dooma India Ltd. [2009 (2) TMI 9 - SUPREME COURT] wherein meaning of expression "depreciation actually allowed" in S. 43(6)(b) is that "limited to depreciation actually taken into account i.e. debited by the ITO against the incomings of the business in computing the taxable income” - for computing depreciation in cases falling u/r 8 of ITR, the income which is brought to tax as "business income" is only 40 % of the composite income & consequently proportionate depreciation should be taken into account because that is the depreciation "actually allowed" - in favour of the assessee. Software development expenses - revenue v/s capital - Held that:- The assessee has incurred the expenses on the upgradation of the computer hardware and the software. The expenditure has not been incurred for starting new hardware or software. The upgradation of the computer will not make the expenditure to be capital in nature. The CIT(A), following the decision of Amway India Enterprises -vs- DCIT (2008 (2) TMI 454 - ITAT DELHI-C) deleted the addition made by the AO. The decisions relied on by the D.R. are not applicable in the case of the assessee - in favour of the assessee. Provision for diminution in the value of the investment and provision for contingency written back for ascertaining the book profit under section 115JB - CIT(A) deleted the addition - Held that:- The case of the assessee is duly covered by Explanation 1(i) of section 115JB of the Income Tax Act. The CIT(A), after appreciating the documents, has given the clear-cut finding that both the provisions written off by the assessee were not allowed as deduction where determination in the book profit for the assessment year 2001-02 and in the hands of George Williamson (Assam) Ltd. over determining book profit for the assessment years 1999-2000 to 2005-06, no contrary evidence was brought to knowledge which may compel to take a view different from the CIT(A). In view of the Explanation 1(i) of section 115JB, no interference is called for in the order of the CIT(A) - in favour of assessee. Interest receipt - CIT(A) deleted the addition 40% of which was added by the AO as part of assessee's income of growing and manufacturing of tea, while determining the profit under section 115JB - Held that:- It is apparent that the Hon'ble High Court in Eveready Industries India Ltd.[2009 (12) TMI 226 - CALCUTTA HIGH COURT] has held that interest income of the assessee, by investing the surplus funds, is the business income and not income from the other sources. It nowhere took the view that the interest income earned by the assessee by investing surplus funds is to be regarded to be the income derived from the sale of tea grown and manufactured by the seller in India. But to note the Hon'ble Supreme Court in the case of Pandian Chemicals Ltd. (2003 (4) TMI 3 - SUPREME COURT) has categorically held that the interest income earned on the deposits made cannot be regarded to be the income derived from the industrial undertaking. Thu the case of the assessee is duly covered by the decision of the Hon'ble Supreme Court as we are bound to follow the decision of the Hon'ble Supreme Court as the decision of the Hon'ble Supreme Court is binding on all the judicial bodies, even the Jurisdictional High Court. Accordingly set aside the order of the CIT(A) and restore the order of the AO on this issue - in favour of revenue.
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2013 (4) TMI 314
Disallowance u/s 37 - CIT(A) deleted the addition - Held that:- Company is a private limited company registered under the Companies Act and is liable to statutory audit under Companies Act and tax audit u/s 44AB of the Income Tax Act, 1961. Unable to understand the proposition of AO of disallowances of all expenses excluding audit fees alleging that the company had not done any business and it had booked expenditure only to adjust share application money as share application money is not an item of income rather it is a liability which is shown in the balance sheet of the company and is not shown in Trading & P&L account. Therefore, logic of AO in disallowing whole of the expenses is not correct. CIT(A) rightly concluded that out of total expenditure of Rs. 22,69,989/-, Rs.13,16,265/- was on account of salary and wages and Rs.4 lakhs was on account of management consultancy on which TDS was deducted - disallowance of expenses by AO without recording the factual finding was not justified - no interference in the order of CIT(A) on this account required - against revenue. Unexplained cash credit - CIT(A) deleted the addition - Held that:- As on account of share application money received from EN Singapore through proper banking channel and money had traveled from Singapore account of EN Singapore. Considering the copy of Pay Order of Rs.20 lakhs & copy of confirmation of Singapore company regarding investment of Rs.25 lakhs in the assessee company nothing to interfere in the order of CIT(A)- against revenue..
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2013 (4) TMI 313
Profits chargeable to tax - Addition u/s. 41(1) of waiver interest portion - Assessment was completed u/s. 144 - Held that:- In view of the judgement of CIT v. T.V. Sundaram Iyengar & Sons Ltd. [1996 (9) TMI 1 - SUPREME COURT] and the provisions of section 28(iv) for attracting provisions of section 41(1), the first requisite condition to be satisfied is that the assessee should have got deduction or benefit of allowance in respect of loss, expenditure or trading liability by way of remission or cessation thereof. The remission would become income only if the assessee has claimed deduction in respect of expenditure or trading liability. Being so, the CIT(A) is required to examine the issue afresh in the light of above observations. The issue is remitted back to the file of the CIT(A) for fresh consideration. Addition u/s.68 - the assessee has not furnished requisite information - Held that:- As the assessee submitted that this a running account the assessee having with M/s. Sreem Remedy Hospital and submitted that the account could be reconciled if one more opportunity is given to the assessee. Accordingly the issue remitted back to the file of the CIT(A) for fresh consideration - appeal of the assessee is partly allowed for statistical purpose.
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2013 (4) TMI 312
Tax paid by the employer on the salary/remuneration of the employee - whether covered under section 17(2) although a monetary perquisite as held by CIT(A) - whether eligible for exemption u/s 10 (10CC) - assessee filed return of income of the above persons as an authorized agent u/s 163 - Held that:- As decided in Director, Income Tax (International Taxation) Versus Sedco Forex International Drilling Inc & Others [2012 (8) TMI 426 - UTTARKHAND HIGH COURT] & bunch of cases despite prohibition contemplated in the Section 200 of Companies Act for payment of tax free remuneration to an employee, Section 10(10CC) of the Income Tax Act provides for exemption of amount which is not a monetary payment to employee and is also provided as perquisite u/s 17(2) and thereby has acknowledged that remuneration plus tax payable thereon is permissible. Therefore, the payment of tax on account of salaries of the employees not by way of monetary payment to the employees concerned, but for or on their account to the Department and the same being one of the perquisites included in Section 17(2), such payment was to be excluded from the income of the employees - Decided in favour of assessee.
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2013 (4) TMI 311
Unexplained cash credit & investment - CIT(A) deleted the addition - Held that:- The appellant had invested Rs. 22.5 lacs in A.Y. 04-05 & 05-06 which has been re-paid by M/s. Tanishq Hotel Limited in the year under consideration. All the payments were made through account payee cheques. Therefore, assessee's own money has been returned back. Thus, the source of the credit is not required to be explained. The appellant had filed necessary certificated from both the Banks, which has been rightly considered by the CIT(A). Therefore,no reason to intervene in the order of the CIT(A). Accordingly, the Revenue's appeal is dismissed
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2013 (4) TMI 310
Adjustment of tax on the date of seizure ignoring the interest to be allowed to the assessees u/s.234A, 234B and 234C - For the AY 2009-10, the assessee was required to file the return under the Income-tax provisions when it was prayed that the income returned by the assessee includes the income so considered by the assessing authorities having already suffered tax - - Held that:- When the AO soumoto could adjust the liability existing on the basis of self assessment tax which self assessment tax partakes the tax liability the AO was stopped short of charging of interest u/ss.234A, 234B and 234C when the assessee as of now has pointed out for the period of the liability for advance tax was not for a completed month therefore cannot be charged to the extent that a delay of 8 days may be considered as part of the period when the interest u/s.234C may be charged. See CIT v. Kesr Kimam Karyalaya (2005 (5) TMI 58 - DELHI HIGH COURT) wherein held that when a search is carried out on a business group as a whole to request made by partners were binding on the group when the request for adjustment was not to be doubted by the assessing authorities for adjusting the liability of tax , if any, on the partners against the cash seized. Also Satpaul D.Agarwal (HUF) v. ACIT [1997 (11) TMI 487 - ITAT MUMBAI] wherein held that the amount so adjusted should be treated as advancer tax for the purpose of computation of interest u/ss.234A, 234B and 234C insofar as the claim for non-levy of interest there under is an appealable issue. Also see Vishwanath Khanna v. Union of India (2011 (6) TMI 146 - DELHI HIGH COURT] seizure of cash which the assessee was entitled to interest on the amount which became refundable after giving effect on the basis of the order of the AO insofar as the assessee would be entitled to interest u/s.244A from the date of the amount held by the Revenue in their account of seizure. Thus set aside the orders of the CIT(A) and direct the AO to grant interest u/s.234A, 234B and 234C on the demand so raised against the amount adjusted by him from the date of seizure as prayed for by the assessee - in favour of assessee.
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2013 (4) TMI 309
Taxing the Net Profit at 8% or 9% of gross receipts on estimation - Held that:- The issue raised by the assessee is partly covered by the decision of the Tribunal in assessee's own case for the Assessment Year 2003-04 which was followed by the AO in the Assessment Year 2004-05. Thus the contention of the assessee has to be interpreted on the basis of financial statements duly submitted along with the return and were considered for estimation after rejecting the book result. The bifurcation between the contract receipts and the hiring out receipts was considered for computation of correct income by the assessing authorities when the same rate has been applied to both the nature of receipts. The assessee has submitted that the interest is part and parcel of the assessee's expenditure when the secured loans are against the assets held by the assessee amounting to more than Rs.5 Crores. Similarly the interest earned by the assessee has no bearing to the expenditure of interest along with the depreciation claimed when the CIT(A) has considered taxation of the contract receipts at 8% net of depreciation. That means the bulk of the secured loans against which assets are held requires claim of interest and depreciation in accordance with the law and not because the assessing authorities have tried to tax 8% of the gross receipts when the direct expenditure being interest and depreciation on account of hire receipts would lead to loss in the business of hiring out would be paid for by the assessee from the contract receipts leading the net income of 6.45% only. The assessee has returned more than 8% as per the benchmark of Section 44AD provisions which the authorities have applied clinches the issue in favour of the assessee that the estimation has to be in accordance with the provisions of law as was also considered by the Tribunal in assessee's own case for the Assessment Year 2003-04 when the assessment having been made by the AO in the impugned AY u/s.144 required consideration of the computation of the correct income as rendered to tax by the assessee. The depreciation and interest being indirectly paid could not be segregated required by the assessee being integral part of the consolidated business of the assessee being a Private Limited Company was to be considered insofar as the contention of the CIT-DR that the service tax percentage income at 0.8% could also be retained by the assessee has been explained by the assessee in the form of the ratio of Net Profit being 6.45% will be below the estimation as well. In this view of the matter, set aside the impugned order of the CIT(A) and direct the AO to tax 8% of the gross receipts net of service tax and allow interest and depreciation thereafter insofar as the income should not be rendered less than as returned by the assessee in the first place - in favour of assessee.
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Customs
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2013 (4) TMI 308
Sec. 45(1) of the Customs Act, 1962 - Regulation 2 of the Handling of Cargo in Customs Areas Regulations, 2009 includes a custodian as referred to in Sec.45 & sub-section (2) of Section 141 of the Act - JNPT is the custodian & the appellants are working as CFS on behalf of JNPT - Held that:- The appellants are not directly involved with the customs. They are working on behalf of JNPT and JNPT has given licence to the appellants to work as CFS on furnishing the bank guarantee of Rs.24 crores. By mere denying by JNPT that they are not responsible for the activities of the appellants does not seem to be correct - In fact, the dispute is between the JNPT and the Customs - The Commissioner of Customs (Export) Nhava Sheva was not required to pass this order - We, therefore, set aside the impugned order in the light of the above discussions and allow the appeal with consequential relief - Appeal is disposed of in the above terms - Submission of bond are required to be complied by JNPT.
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2013 (4) TMI 307
Seizure U/s 110 - Provisionally release of goods U/s 110 A of the Customs Act - Valuation - Held that:- Section 110-A of the Customs Act, 1962 provides for provisional release of goods, documents and things seized pending adjudication - Should be released to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require - The only reason for non-releasing of the goods is that the petitioner has under-valued the goods in question - The respondents, on investigation, found that the differential duty has to be paid even for the provisional release of the goods - The investigation has to be completed and thereafter, the adjudication has to be done for the assessment of the value - Since the goods are perishable in nature, the petitioner claims for provisional release of the goods in question. As the goods in question are not prohibitory items under the provisions of the Act , provisional release of the goods in question, is ordered with the following conditions:- i) The petitioner shall deposit with the custom authorities the duty payable on the value declared by them - ii) The petitioner shall deposit with the customs authorities 50% of the differential duty - iii) The investigation is yet to be completed and the adjudication has also to be done. Therefore, it is needless to state that this order shall not stand in the way of the respondents to proceed with the investigation and also the adjudication process - The petitioner shall co-operate with the respondents for conclusion of the investigation as well as the adjudication proceedings - The Writ Petition is disposed of.
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Corporate Laws
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2013 (4) TMI 306
Ground of maintainability - Beyond the scope U/s 397 and 398 - Whether or not the disputes between the parties are purely private or not - It is a family Company - Two brothers are fighting against the third - The third one complains that the other two brothers have oppressed him and his family by inter alia deceiving him to purportedly transfer shares in their favour - Held that:- At this stage it is to be assumed that the platform of this family Company resting on a pivot is to be kept in equilibrium - This platform is kept in equilibrium by recognition of rights, obligations, expectations of every family member who constitutes a small family company which resembles a partnership, as recognised in the above case and in O Neil’s Case and in the Madras decision following it. Permission is granted to the first respondent to go ahead with the rights issue - However, Bijay and his group have to be offered rights shares as if their claim for shares was true, subject to the results of the Company Law Board petition - Furthermore, Bijay and his group will be able to exercise the option of provisionally taking the rights shares without making any payment for them, for the time being - The rights shares will be allotted to them, subject to the stipulations - Upto this time they will not have any voting right in 9,66,638 - Only, after disposal of the Company Law Board petition the said group will be obliged to exercise the final option to take and pay for the rights shares- The rights shares should be strictly in the ratio of 1:1 - Therefore, even if the rights shares are allotted, the said group will not be prejudiced by dilution of their shares or by being put to financial burden - Therefore, the Company Law Board should not have dismissed the application - This appeal is disposed of with the above directions - The Company Law Board is directed to dispose of the Company Law Board petition within six months from date positively.
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2013 (4) TMI 305
Infringement of registered trade marks - Passing off - Unfair trade competition - The defendants’ mark was deceptively and confusingly similar to the plaintiff’s registered trade mark/trade name - Held that:- Having heard learned counsel for the plaintiff and perused the ex parte evidence as well as documents placed on record, this Court is of the opinion that plaintiff has in fact proved the facts stated in the plaint and has also exhibited the relevant documents in support of its case. Since the plaintiff’s evidence has gone unrebutted, said evidence is accepted as true and correct. Use of the plaintiff’s mark by the defendants besides constituting infringement and passing off as well as unfair trade competition also amounts to dilution of the mark. The defendants, their partners, officers, employees, agents, distributors, franchisees, representatives and assigns are restrained by way of permanent injunction from using AGARWAL and/or AGARWAL’s PACKER and/or AGARWAL’s PACKER & MOVERS or any other trade mark or name similar to the plaintiff’s registered trade mark or in any other manner whatsoever so as to infringe the registered trade marks of the plaintiff or to pass off their services or business as and for the services or business of the plaintiff or from using any other indicia whatsoever to show any association or affiliation or connection of the defendants or their services with the plaintiff or its services- Registry is directed to prepare decree sheet accordingly.
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2013 (4) TMI 304
Appointment of Arbitrator - The time limit for completion of contract has been stipulated to be essence of the contract imposing reciprocal obligation - No claim certificate is specifically denied by the applicant- Held that:- Upon careful perusal of para 52 of the judgment of the Supreme Court in the case of National Insurance Company Ltd. (), the case in hand will fall under clause III of the said paragraphs - Therefore, the contention of the counsel appearing for the respondents that the case of the applicant would fall in clause II of para 52 from the said judgment, cannot be accepted. Upon careful reading of the averments in the application and contents of the notice/letter/correspondence by the applicant with the respondent, it prima facie appears that said no claim certificate is under financial duress on account of condition of the employer that unless such certificate is issued by the applicant/contractor, he is not entitled to get the payment. Whether the claim made falls within arbitration clause or not, can be taken care of by the Arbitrator -Held that:- As stated by the Supreme Court in para 22.3 of the judgment in the case of National Insurance Company (supra). The issue (third category) as stated in paragraph which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal. When the facts of the case in hand are examined in the background of law as laid down by Apex Court in the case of National Insurance Company Ltd. (supra) - It cannot be said that the applicant has no prima facie case to seek a reference - The other details to which advocate Shri Godhamgaonkar wants to invite attention are disputed questions of facts and law, which can be looked into by Arbitrator - Hence, those facts and contentions or accompanying documents or evidence are kept open and it is for the Arbitrator to look into said details - The Arbitrator will also look into whether the parties have concluded the contract/transaction by recording satisfaction of their mutual right or obligation or by receiving final payment without objection or whether the claim is a dead (long barred) claim or a live claim. The issue (third category) whether the claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration) and merits of any claim involved in the arbitration will be looked into by the Arbitrator -Aapplication U/s 11(6) is allowed - Hon’ble Shri Justice S.C. Malte (Retired) is appointed as Arbitrator - Proceeding charges of Rs.5000/- be deposited within two weeks. Application is accordingly allowed and disposed of.
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Service Tax
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2013 (4) TMI 322
Transaction between the associated enterprises - demand confirmed constituent to amendment dt. 10/05/2008 to Section 67 of the Finance Act where it has been made mandatory that service tax in respect of transaction between associated enterprises should be paid based on debiting the amount to the account of the associated enterprises, irrespective of whether the amount was received or not - Held that:- Regarding the demand of Rs.49.7 cores merit in the submission that the demand should have been restricted to the amount actually realized and not on the billed amounts. The appellant has not made such a claim before the Commissioner. However, for the purpose of stay, this submission into account has to be taken into consideration. Regarding the demand of Rs.13 crores (approximately) in respect of transaction between the associated enterprises and the appellant appellant has a case in their favour in the light of the decision in the case of Sify Technologies Ltd. (2012 (5) TMI 376 - CESTAT, CHENNAI). Thus a sum of Rs.50 lakhs stands paid and appropriated in the impugned order. Thus appellant directed to deposit a further sum of Rs.2 crores within six weeks from today and report compliance to the Assistant Registrar on 25/09/2012 and Assistant Registrar to report to the Bench on 03/10/2012.
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2013 (4) TMI 321
Service Tax liability on the GTA services - The issue involved in this case needs to be factually appreciated whether the inputs which were delivered in the factory premises were delivered by courier agency by a transport agency, it is better that the adjudicating authority considers the evidences in its correct perspective and come to conclusion.Held that - Matter remanded back back to the adjudicating authority
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2013 (4) TMI 320
Adjustment of excess amount paid by the appellant for discharge of Service Tax liability – Held that - matter remanded back to the adjudicating authority to reconsider the issue afresh.The impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority.
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2013 (4) TMI 319
Business auxiliary Service under Section 65(105) (zzb) of chapter V of the Finance Act, 1994 - Audit conducted – Appellant had not obtained the Registration under the category of Business Auxiliary Service and also failed to file periodical half yearly returns. For the period 1.4.04 to 30.9.04 they have filed NIL returns belatedly whereas they had received the commission during the said period. Accordingly, demand of duty along with interest & penalties arise. Held that – On perusal of the records and the certificate produced by the appellant of their chartered accountant tribunal confirm the said demand of service tax liability and proportionate education cess on the same for material period. Appellant is also directed to pay interest on the said amount. On perusal of the records, I find that the appellant has pre-deposited an amount of Rs.1 lakh. Lower authorities are directed to work out the exact amount of service tax liability, interest thereof and adjust the amount from the pre-deposit already made by the appellant. As regards the penalty imposed by the first appellate authority in non- filing of return under Section 77, I uphold the same. As regards the penalty imposed under Section 78 by the appellate authority, I find that during the material period, appellant could have entertained a bonafide belief that up to 10.9.04 they are eligible for benefit of Notification No.13/03-ST. - Penalty waived.
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Central Excise
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2013 (4) TMI 303
Whether "Served From India Scheme" (SFIS) can be treated as exempted goods for the purposes of Rule 6(3)(b) of Cenvat Credit Rules - Held that - The wordings of notification and subsequent CBEC Circular, would make it clear that the duty liability which has been debited in the SFIS scrip, would amount to discharge of duty liability and not amounting to exemption, as was proposed by Revenue. It is nobody's cases that the functioning of SFIS certificate is different then the functioning of DEPB scheme. In DEPB scheme the exporters are issued DEPE, which allow them specific amount to be utilised as customs duty, while the SFIS scheme, the service providers are issued SFIS certificate which allow them to import or procure indigenous goods without payment of duty by debiting the said script. - Decided against the revenue.
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2013 (4) TMI 302
Cenvat Credit - Job work - It was the case of the Department that the inputs were not sent for job work. The parties to whom they were sent had paid duty on the manufacture, which should have been reversed by the appellant. On the other hand, it was the submission of the assessee that no revenue loss had actually occurred. The job worker added some additional material, and paid duty again, which was already paid by the appellant, and therefore, the appellant had no alternative but to take credit of the same in the books of account, else, it would have resulted in excess payment. According to the assessee, the credit taken was nothing but in respect of what was actually paid. Held that –In the case of Division Bench of this Court of Commissioner of Central Excise vs. M/s. Rohan Dyes and Intermediates Limited [2007 (3) TMI 651 - CESTAT, AHMEDABAD] and Apex Court in M/s. International Auto Ltd. v. Commissioner of Central Excise, Bihar [2010 (1) TMI 151 - SUPREME COURT OF INDIA] If we apply the aforesaid principle to the facts of the present case, there is no dispute that according to the modvat scheme, it is the modvat of such final product which would have to include the cost of the inputs and in respect of which modvat credit could be taken at the time of clearance of the final product and thus, in the facts of the present case, the Tribunal rightly rejected the contention of the Revenue that the respondents should have reversed the cenvat credit taken before sending the goods to the job worker since the job worker had not followed the procedure of job work. Decision against the Department.
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2013 (4) TMI 301
Recovery of rebate / refund earlier allowed - export of goods - supplier had not paid excise duty on goods. – by the competent authority it is held in favour of the petitioners that the petitioners were not a party to the fraud committed by Anjana Textiles. The question of applicability of extended period of limitation, therefore, shall have to be judged on this basis. Held that - Strangely, the revenue authority was of the opinion that a person who is not party to a fraud or collusion or wilful mis-statement, may avoid penal consequences but not extended period of limitation. To us, the logic does not appeal. Our conclusion gets further support from the observations made by the Apex Court in the case of Union of India v. Rajasthan Spinning and Weaving Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA) noted above. Under the circumstances, quite apart from and in addition to the decision of the Division Bench of this Court in the case of Commissioner of C.Ex. & Customs v. D.P. Singh reported in [2011 (3) TMI 1370 Gujarat High Court], the decisions of the authorities are legally not sustainable. The same are, therefore, quashed and set aside. Resultantly, the petitioners are held entitled to retain the rebate previously sanctioned and paid over. The authorities are refrained from seeking any recovery thereof. If during the pendency of this petition in view of no interim relief being granted, such rebate is already recovered, the same shall be refunded to the petitioners with simple interest at the rate of 9% per annum from the date of recovery till actual refund. The petition is disposed of accordingly. Rule made absolute. No costs.
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2013 (4) TMI 300
Exemption under Notification No. 88/88 - recognition from Khadi and Village Industries - held that:- Under the certificate given by KVIC, the petitioner appears to have been given recognition for manufacturing detergent etc. in respect of 27 manufacturing centres enumerated in the list appended thereto. However, village Iyava, Sanand does not find place in the said list. The petitioner had initially availed cash assistance from Gujarat State Khadi Gramodhyog Board for the purpose of starting its factory at Chhatral which appears to be one of the locations enumerated in the said list. However, instead of starting the factory at Chhatral, the petitioner set up a unit at Iyava, Sanand. It may be pertinent to note that it is not the case of the petitioner that Iyava, Sanand is one of the centres listed in the recognition certificate. The petitioner as an institution, per se, has not been granted recognition by the KVIC, but it has been granted recognition conditionally, namely in respect of location of units or manufacturing centres for village industry goods as specified thereunder. Thus, when the recognition granted to the petitioner is conditional, in respect of any other manufacturing unit except those specified in the certificate of recognition, the petitioner would be an unrecognized institution. - Benefit of exemption denied - decided against the assessee.
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CST, VAT & Sales Tax
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2013 (4) TMI 325
Detention of medical equipment consignment - Proceedings initiated under section 47 KVAT Act - writ filed restraining the 1st and 2nd respondents from encashing Bank Guarantee furnished by the petitioner before expiry of 30 days from the date of service of any order imposing penalty on conclusion of the enquiry /adjudication - whether the waiting period of 30 days mentioned in section 47(8) is confined only to cases where the goods are seized? - Held that:- subsection 8 of section 47 as provided in Rule 67(9) is unambiguous in its opening words that it contemplates a case where penalty has not been paid within the time limit under sub section 8 of section 47. Sub Rule 9 contemplates action under clause (a) and (b) only in a case where penalty is not paid within the time specified under subsection 8 of section 47. Learned Government Pleader does not have a case that any other time limit is mentioned in section 47(8) other than the period of 30 days. Therefore, the time limit of 30 days mentioned in 47(8) is imported into Sub Rule 9 of Rule 67 and the Rule maker contemplates that only if penalty is not paid within the time specified in Sub-Rule (8) can cash security which has been furnished be adjusted against penalty under Sub-Rule (a).Likewise under clause (b), if any other security or bond has been furnished, the Officer is to take steps for reaslising the amount from the security and adjust the same towards penalty, and expenses and incidental charges after the waiting period is over. Thus without waiting for the expiry of the period mentioned in section 47(8), even if the goods have not been seized, and on the other hand the goods have been released under section 47(2) on furnishing either cash security or any other security, the security can be enforced only after the expiry of 30 days. This is the unambiguous declaration of law, contained in the Rules. Therefore having regard to the stand taken by the learned Government Pleader also it becomes necessary to grant relief to appellant in this case directing that the security furnished in this case namely the bank guarantee can be realised or enforced and adjusted towards the penalty and expenses and incidental charges only if penalty is not paid within the time specified in subsection 8 of section 47 as provided in Rule 67(9) of the Rules.(30 days).
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2013 (4) TMI 324
Recognition in terms of Section 4-B of the U.P. Trade Tax Act, 1948 - Held that:- The sole argument put forth before this Court on behalf of the Department/revisionist was that all these items, indicated above, were not directly and substantially connected with the generation of the electricity. So, the learned Tribunal did not rightly construe the provisions of law and allowed the special relief on those goods as per Section 4-B(2) of the Act - This contention has been rebutted by learned Counsel for the Corporation by contending that use of these items is indispensable in construction of a new unit or plant, which goes into production after the date Without establishment and making the provisions for its construction and effective running, the generation of the power is not possible. So, the Corporation was right in claiming the tax exemption, in respect of those goods used in the establishment and effective running of the plant, as per Section 4-B(2) of the Act, as the power can only be generated when the entire plant is established and becomes functional thereafter. This Court is convinced with the contention of the learned Counsel for the respondent Corporation and feels that the analogy, whereupon the decision of the Assessment Officer was based, lacks substance and was rightly rejected by the learned Tribunal - As such, impugned judgment and order passed by the Commercial Tax Tribunal requires no interference by this Court - The same is hereby upheld - This revision is dismissed.
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2013 (4) TMI 323
Double taxation under the U.P. Sheera Niyantran Adhiniyam, 1964 & under the U.P. Trade Tax Act or VAT Act - Refund - Held that:- we dispose of the instant writ petition finally in terms of the Division Bench judgment of this Court in the case of 2008 NTN (Vol. 38) 296: M/s. SAF Yeast Company Private Limited. Vs. State of U.P. and another, read with interim order passed by the Hon'ble Supreme Court dated 8.3.2010 (supra). The benefit of the present order shall be subject to final outcome of pending appeal in the Hon'ble Supreme Court. During the pendency of the special appeal before Hon'ble Supreme Court, we provide that the respondents shall not realise tax on molasses but shall keep an account of molasses purchased/sold during the pendency of appeal so that in any case, the appeal fails by the judgment of Hon'ble Supreme Court - The petitioner shall be held liable to pay tax in accordance with law.
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