Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 23, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Panelty U/s 271C - Short deduction of TDS - there was sufficient cause for short deduction of tax at source - No penalty in view of Section 273-B - HC
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RBI Guidelines - the duty to examine the compliance or otherwise of these Guidelines lies squarely within the purview of the 'Authorised Dealer Banks' and not the Income-tax Authorities. - AT
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Speedy and affordable justice is the requirement of the day. But it cannot be achieved until the executive including tax-man discharge their duties faithfully honestly within the four corners of law. - HC
Customs
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Smuggling of goods from Nepal through Rail - goods are of the Chinese origin and being dispatched from Tinsukia Railway station Assam, Department is able to prove that goods come to India in violation of the Notification 9/96. - AT
Central Excise
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100% EOU - DTA Clearance - who is liable to pay duty i.e. purchaser of the goods or 100% EOU - Central Excise duty need not be discharged by 100% EOU & entitled for the benefit of Notification 2/95 - AT
VAT
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Principle natural justice - The entire order, which runs to about seven pages, contains only the extract of the notice and the reply upto six pages and the last paragraph of the seventh page only deals with the record of findings by the authority - matter remanded back - HC
Case Laws:
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Income Tax
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2013 (4) TMI 466
Bogus purchases of ‘colour & chemicals’ - Shri Rohit Panwala stoutly stated that he never supplied chemicals/colour & neither knew any of the director nor any employees of the assessee company - CIT(A) restricted the addition of Rs.44,56,916/- to Rs.11,24,250/- made by AO - Held that:- There is violation of natural justice as assessee was not offered for cross-examination to Rohit panwala and, therefore, addition cannot be made on the basis of such statement of Rohit Panwala alone. Accepting the arguments of assessee that all the concerns from whom assessee has shown to have made purchases of colour and chemicals are owned by different persons. It was incumbent on the AO to call these persons or prove that they were nonexistent. If there are some existing owners of these concerns then their statements should have been recorded and these persons should have also been offered for cross-examination. The statement of any other person claiming to be the owner of these concerns applying to the facts of assessee’s case cannot be blindly relied upon without confronting the ostensible owner. Since no enquiry/investigation has been carried out into the existence of ostensible owner the reliance of the AO merely on the statement of Rohit Panwala is vitiated. As relying on Suman Silk Mills Pvt . Ltd. (2013 (4) TMI 465 - ITAT AHMEDABAD) the entire case of the Revenue revolves around the statement of Rohit Panwala. Since no cross examination of Rohit Panwala is allowed to the assessee then his statement recorded at the back of the assessee cannot be read in evidence against him. In this regard as decided in Kishinchand Chelaram vs. CIT (1980 (9) TMI 3 - SUPREME Court)wherein it is held that opportunity to controvert should be given to the assessee. Then there is no reason to make any addition in the case of the present assessee solely on the ground of statement of Rohit Panwala - appeal of the assessee is allowed. Commission paid on bogus purchase - CIT(A) deleted the addition made by AO - Held that:- DR did not place any material in support of their ground - Against revenue.
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2013 (4) TMI 465
Addition on account of bogus purchases - Held that:- The assessment order passed by the AO is vitiated on account of violation of principles of natural justice. Once Shri Rohit Panwala has stated through an affidavit that he is running 12 concerns and operating 12 bank accounts issuing bogus bills to various parties and returning cash to them and on that basis assessment of the assessee is reopened under section 147 then it was necessary for the AO to offer Shri Rohit Panwala for cross-examination by the assessee. Since Rohit Panwala is the witness of the Revenue the onus lies on the Revenue to enforce his attendance and allow the assessee to cross-examine him. Merely issuing summons by the AO to Rohit Panwala is not enough to discharge the onus which has to be ensured that Rohit Panwala attends his office and assessee attends his office and he is offered for crossexamination by the assessee. The entire case of the Revenue revolves around the statement of Rohit Panwala. Since no cross examination of Rohit Panwala is allowed to the assessee then his statement recorded at the back of the assessee cannot be read in evidence against him. As decided in Kishinchand Chelaram vs. CIT (1980 (9) TMI 3 - SUPREME Court) that opportunity to controvert should be given to the assessee. Merely on the strength of statement of Rohit Panwala it cannot be held that purchases are bogus.
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2013 (4) TMI 456
Matter related to the what will be the adequate rate of net profit will be applied while making assessment of the assesse pertaining to the year 2007-08. – Held that - The Tribunal has applied net profit rate of 8% for the reason that net profit rate of 8% was applied in the case of assessee in the previous years 2005-06 and 2006-07, therefore, in the present assessment year, the Tribunal found no reason to interfere with the order passed by the Commissioner of Income-Tax (Appeals).of such rate applied in earlier years. Therefore, we do not find that any substantial question of law arises for consideration in the present appeal. Dismissed.
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2013 (4) TMI 455
Explanation 5 added the Section 32 of the Income Tax Act, 1961 - Partly disallowance of depreciation - Depreciation to be computed on the basis of actual cost of the assets without reducing the depreciation of earlier years - Held that:- The Tribunal by the impugned order while upholding the order of the CIT(A) records the fact that the parties appearing before it had agreed that the issue of allowing higher depreciation then that claimed in the earlier Assessment Years, was concluded by the decisions of the Coordinate Bench of the Tribunal for the earlier Assessment Year wherein depreciation was allowed only to the extent claimed by the Respondent. We notice that the assessment for the earlier years were final as held by the Tribunal - Therefore, without disturbing the written down value of Plant & Machinery for the earlier years, it would not be possible to change the opening written down value of its Plant & Machinery for the subject Assessment Years - The Explanation 5 added to Section 32 of the Act would be applicable w.e.f. 1st April, 2002 and could not unsettle the Assessment Orders for earlier years which are final and accepted both by the Revenue as well as the Assessee - In these circumstances, the position in law being self evident, as held by the Tribunal - we see no reason to entertain the proposed question of law - All the three appeals are dismissed in favour of Assessee.
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2013 (4) TMI 454
Revision U/s 263 - The amount withdrawn from the bank claimed as refund to its client was found to be bogus - Tribunal held that the exercise of jurisdiction by the Commissioner of Income Tax was not proper - Held that:- Tribunal held that though it is an undisputed fact that amounts were withdrawn from bank, the Respondent-Assessee had claimed the withdrawal were for refund to its clients, yet in fact, these amounts withdrawn from the bank were not refunded to its clients. However, as these refunds were not claimed as an expenditure and/or reduced from its income to arrive at the taxable profits, addition of the same is not justified. As the decision of the Tribunal is on a finding of fact, we see no reason to entertain the proposed question of law for the subject Assessments Year 2000-01 and 2001-02 - Both the appeals are dismissed with no order as to costs.
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2013 (4) TMI 453
TDS on amount deposited as provided in the third proviso to Sub-Section (1) of Section 33ABA. - It is the contention of State Bank of India that any withdrawal from the said Account will be deemed to be income, under Sub-Section 5 of Section 33ABA, of ONGC. It is the contention of State Bank of India that, inasmuch as, interest, thus credited in the Account, is to be treated as deposit, the same cannot be treated as income by way of interest as dealt with in Section 194A of the Income Tax Act. It is the further contention of State Bank of India that since the deposit, thus credited in the Account, cannot be treated as income by way of interest, there is no obligation on the part of State Bank of India to deduct tax at source and, thereupon, to deposit the same with the Revenue. Held that:- having regard to the fact that State Bank of India was aware of the fact that its challenge to the legality of the demand can only be assailed by preferring an appropriate Appeal and it approached the writ Court only for a limited protection until such time the Appellate Authority considers its Appeal and the connected application for stay of the demand and having regard to the fact that an Appeal has been preferred by State Bank of India against the assessment orders and, along with that, it has also applied for stay of the demand pursuant to the assessment, we dispose of this Appeal and, thereby, while set aside the order under Appeal, permit State Bank of India to press its application for stay before the Appellate Forum, where it is pending with a request to the appellants not to enforce the demand before that application is heard and decided, one way or the other.
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2013 (4) TMI 452
Reassessment U/s 147 - Ground is change of opinion - Capitalization of interest on capital work in progress and on addition to fixed assets - Held that:- Since the notice is based upon application of law, which has the effect on the total income computed by the assessee, the same cannot be said to be without jurisdiction which may warrant interference by the Writ Court at the threshold. We do not find that this Court in the writ petition at the stage of issuance of a show cause notice can return a finding on the basis of inference drawn by the petitioner - Since the assessment order does not deal with either allowance or disallowance of interest capitalized, therefore, it cannot be said that the Assessing Officer is seeking to re-open the assessment only on mere change of opinion Consequently, we do not find any reason to quash the show cause notice at this stage. Hence, the present writ petition is dismissed - It shall be open to the assessee to raise all pleas as are raised before this Court in the proceedings for re-assessment
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2013 (4) TMI 451
Proceedings under sub-section (5) of section 132 - Survey U/s 133A - Provisional attachment U/s 281B of the Income Tax Act, 1961 - Held that:- If the petitioner is able to establish that the value of the property at Door No.31/32, Commander-in-Chief Road, Egmore, Chennai 600 008 is sufficient to cover the tax liability that may arise on final assessment, then it is incumbent on the part of the department to consider the release of the provisional attachment order insofar as the debts and security deposits due from the third parties - This is because the provision of Section 281B of the Act clearly provides for safeguarding the interest of the Revenue and that cannot be more than what is likely to arise - It cannot be taken as a mandate to attach all properties of the assessee or amounts due to the assessee indiscriminately. The petitioner is given an opportunity to make a detailed request to the competent authority enclosing the valuation report in respect of the property at Door No.31/32, Commander-in-Chief Road, Egmore, Chennai 600 008 at the earliest . If the petitioner is able to satisfy the authorities on the valuation and if the value of the said property is sufficient enough to safeguard the interest of the Revenue - Then the respondents shall consider and revoke the provisional attachment insofar as the debts and security deposit due from third parties - The petitioner is given one week time from the date of receipt of a copy of this order to submit his further request in this regard and the competent authority shall consider the same and pass appropriate orders within three weeks thereafter - These writ petitions are disposed of in the above terms.
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2013 (4) TMI 450
Panelty U/s 271C - Short deduction of tax at source under the Act - Held that:- Looking to the fact that the petitioner is a part of State Government, we find that there was sufficient cause for short deduction of tax at source. The impugned orders have not taken into consideration Section 273-B of the Act, while upholding the penalty. The section provides that no penalty shall be impossable on the person or the assessee, as the case may be, for any failure referred to Section 271-C if he proves that there was reasonable cause for the said failure. Authorities were under legal obligation to consider the explanation given by the petitioner. We are of the opinion that no case for levying the penalty under Section 271-C of the Act has been made out as cause shown by the petitioner is sufficient - The impugned orders cannot be allowed to stand and are hereby quashed - The impugned penalty is set aside - the writ petition succeeds and is allowed.
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2013 (4) TMI 449
Disallowance of burning loss - Examining the merit of the case - Held that:- The Tribunal dismissed the appeal filed by the Department and rightly so by making the observation that the order of the C.I.T. (A) has not been challenged before it on merits. Merely because for the earlier assessment years, the order of C.I.T. (A) has not been accepted by the Department, is no ground to challenge the order of C.I.T. (A) in the subsequent appeal before the Tribunal, without pointing out any error therein on merits. - Decided against the revenue.
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2013 (4) TMI 448
Order U/s 263 of the Income Tax Act? - Claiming that the income of the trust was exempt -Held that:- Tribunal has considered the matter in great depth and has noticed that the trust Deed is a registered document - The trust Deed is on the file - The Settler was the maternal uncle of the beneficiaries - The Tribunal has examined the matter and found that there is sufficient material on record to show that as a matter of fact, the trust was created and it is a trust which carried on it's business - The findings recorded by the Tribunal are essentially findings of fact - in favour of Assessee.
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2013 (4) TMI 447
Reopening of the assessment u/s 147 (b) - Time barred U/s 153 (1) of the Act - Held that:-the return was processed under Section 143 (1) of the Act on 26.12.1973. The assessment proceeding was started on the application of the assessee dated 18.02.1974, which was ultimately held as bad by the appellate authority, by the order dated 15.02.1980, on the ground that assessment was not completed within the time-limit provided under Section 153 of the Act. In the meantime, reassessment proceeding was started by the notice dated 04.02.1978. In view of the judgment of the Supreme Court in Chatturam (1955 (4) TMI 1 - SUPREME Court), the tribunal was not correct in holding that reassessment proceeding could not have been initiated as the assessment proceeding was not completed within time-limit. In view of the aforesaid discussion appeal is allowed in favour of the Revenue.
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2013 (4) TMI 446
Calculation of capital gains – Additions were made in the total income of the assessee by the A.O. by taking the sale consideration of the shares @ 400/- per share, as against the actual sale consideration of Rs. 390/- per share by applying the RBI Guidelines related to pricing of shares. Held that - RBI Guidelines are Guidelines for the banks, issued for FEMA purposes. The very opening paragraph of these Guidelines shows that they are addressed to 'Authorised Dealer (AD) Banks'. Thus, the duty to examine the compliance or otherwise of these Guidelines lies squarely within the purview of the 'Authorised Dealer Banks' and not the Income-tax Authorities. If the assessee, in the view of the Income-tax Authorities, had committed any violation of these Guidelines, the appropriate course open to them was to bring it to the notice of the banks. No further. Then, since the Guidelines have been issued for FEMA purposes, it is the FEMA Authorities who are competent to take appropriate action against the assessee on breach of the Guidelines. Rather, it is seen that no objection whatsoever has been raised by the RBI. In view of the above, finding the grievance of the assessee to be justified, we accept it as such. Appeal allowed.
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2013 (4) TMI 445
Search/Seizure - return/release the cash seized - dispute is with regard to the return of Rs.25 Lakhs seized in the search operation and interest thereupon - Held that - it is but evident that the respondents have failed to discharge their legal obligation in not refunding the seized amount immediately or shortly after the completion of the assessment proceedings finally at least. Speedy and affordable justice is the requirement of the day. But it cannot be achieved until the executive including tax-man discharge their duties faithfully honestly within the four corners of law. As seen above, it is clear that the revenue official failed to take any decision right or wrong on the refund application filed by the petitioners and passed on the buck on the Court. Time has come for the heads of the departments to keep a strict vigil on such shirkers and to fix their responsibility. While it is no doubt true that collection of revenue is a serious matter for the State -and the bounden duty of the authorities functioning under the Act is to implement the provisions of the Act, there should be safety and assurance to an honest tax-payer. The Apex Court in the case of Sandvik Asia Ltd. (2006 (1) TMI 55 - SUPREME Court) by the following paragraph has recorded their displeasure for this kind of attitude of the department. We also do not appreciate the argument of the respondent that unless a direction is issued, the respondents shall not pass any speaking order on the application filed by the petitioner for refund. As seen above, it is clear that the revenue official failed to take any decision right or wrong on the refund application filed by the petitioners and passed on the buck on the Court. In the result, the writ petition succeeds and is allowed. The respondents are directed to refund in all Rs.25 Lakhs seized from the petitioners along with interest.
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2013 (4) TMI 444
Reassessment - escaped income - petitioner contention proceedings is time barred - reason for reopening is that the petitioner after converting the leasehold land into freehold sold the property within three years resulting into short term capital gain and has not disclosed the income under the head 'capital gains' in the return filed - Held that - The only point urged and pressed before us is whether in absence of anything in the reasons recorded to suggest that the income chargeable to tax which has escaped the assessment is Rs. one lakh or more having not been mentioned the reassessment notice given after four years of the close of the assessment order is valid or not. Thus sufficient force in the argument of the petitioner that the initiation of the reassessment proceedings relevant to the Assessment Year 2000-2001 after more than four years is clearly barred by time. In the result, all the three writ petitions succeed and are allowed.
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Customs
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2013 (4) TMI 443
Conversion of shipping bill - Advance Licence Scheme to DEPB scheme - Board’s Circular No. 04/2004-Cus allow shipping bill to be treated as a bill under DEPB scheme when thare is a denial of export promotion scheme by DGFT/Ministry of Commerce or by Customs authority give rise to disputed export - Held that - It appears that the instructions of the Board through circular No. 04/2004 contingent events are permitted to be considered by the authority for conversion of the shipping bill. One of such contingency being denial of export promotion scheme by DGFT/Ministry of Commerce or by Customs authority give rise to disputed export. However, conversion is permitted on case to case basis subject to fulfilment of five cumulative conditions prescribed by circular. Thus, matter is remanded to the Adjudicating Authority.
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2013 (4) TMI 442
Smuggling of goods from Nepal through Rail - DR submits that since the goods were of Chinese origin these goods qualified as third country origin goods and it is not necessary for revenue to produce the export documents from China to Nepal - seizure of goods - The appellant submits that these goods were legally imported at Nhava Sheva Port vide Bill of entry and after the import these goods were transferred to their unit in Assam & later on it was decided that goods should be shifted to their another unit at Haridwar through a Courier - Held that:- Available records do not establish any identifiable co-relation between the seized goods and goods imported vide Bill of entry dated 30.12.2009. Commissioner (appeal) has also observed that since the addresses given for the consigne and consignee were found fake, the import of goods through documents submited by appellant becomes doubtful. More over consignor and consignee were genuine persons, there should not have been any problem in serving the letters on them either on given address or through M/s Bom Gim Couriers & Logistic Ltd. M/s Bom Gim Courier & Logistic Ltd. in their letter dated. 01.07.2010 certified that both consinore & consignee were their agents in Tinsukia and Delhi but later vide their letter dated 2802.2011, they informed that Shri Ram Babu Sharma & Md. Allauddin were not on their employment. In such circumstances contention to treat the consignment legally imported is not acceptable. No infirmity in finding of Commissioner (Appeal) that seized goods are different from good mentioned in B/E submitted at Nhava Sheva Port. Contravention of notification 9/96 - Held that:- When the goods of Chinese origin come from Nepal, there is no need to prove that goods were exported from China to Nepal. Regarding the point proving the goods imported from Nepal, goods were dispatched from Tinsukia Railway station Assam and that place is bordering Nepal and when the goods are clandestinely bought into the country, there will not be any legal document showing import from the Nepal. Thus the goods are of the Chinese origin and being dispatched from Tinsukia Railway station Assam, Department is able to prove that goods come to India in violation of the Notification 9/96. Against assessee.
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Corporate Laws
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2013 (4) TMI 441
Unfair trade practice - Application is filed u/s 19(1)(a) of the Competition Act, 2002 alleging inter-alia contravention of Sections 3 and 4 of the Act. – Informant association alleged that OP 1, the largest mineral (iron ore) producer in India, abused its dominant position and colluded with the other opposite parties this affected competition in the iron ore production market in India. Held that – It is necessary to consider as to what will be the relevant market in this case. Having regard to these facts and circumstances, the Commission is of the view that the relevant market in this case would be the market of 'iron ore production/supply in India' and OP 1 (which holds only 16% for the year 2011-12) is not a dominant player in this market. The Commission considered the facts and data placed on record by both sides and is of the view that the relevant market definition proposed by the informant cannot be accepted. The informant has inflated the market share of OP 1 by excluding captive iron ore production, low grade iron ore having less than 60% Fe content and exports from the relevant market definition. This indicates that the relevant market was much broader than the one proposed by the informant. However the relevance of determining relevant market and dominance of an enterprise is only there in free markets. Where mining activities was being done as per the orders of the Supreme Court and pricing was looked after by another Committee, determination of relevant market may not be appropriate. The Commission is not convinced that there existed a deliberate reduction in production in view of the Supreme Court orders. Prima facie there seemed to be no collusion between OP 1 and other private parties and no competitive issue was there that required intervention of the Commission. There is no case either under section 3 or under section 4 of the Act. The case deserves to be closed under section 26 (2) of the Act and is accordingly hereby closed.
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2013 (4) TMI 440
Section 34 of the Arbitration and Conciliation Act, 1996 - The contention of the petitioners is that the works claimed by the respondent were never executed and the claims made by the respondent were beyond the scope of the allotment agreement - Held that:- The sole Arbitrator has dealt with each and every objection raised by the petitioners in their application under Section 16 of the Act and held that the Arbitrator has got the jurisdiction to adjudicate the dispute between the partiesThough the allotment letter and allotment agreement were executed at different stage, are part and parcel of the same transaction and flat buyer agreement regulates the rights and liabilities qua the allotted flat - Both these documents form part of the sale deed - The flat buyer agreement which regulate the rights and liabilities in regard to allotment and transfer of flats, would not come to an end and arbitration clause 42 will not be wiped out on execution of sale deed. The Arbitration Clause is wide enough to cover the claims made - Clause 2(9) of the flat buyers agreement speaks of the liability of the flat buyer to compensate for the works contract tax which is one of the item. After hearing the learned counsel for the petitioners as well as reasons given by the Sole Arbitrator, I find that there is no force in the petition as the petition under Section 34 Act is not maintainable against the disposal of application under Section 16 of the Act filed by the petitioners - Whatever the grievances raised by the petitioners in the present petition or in the application filed by them before the learned Sole Arbitrator - The petitioners are at liberty to raise the same after rendering of the award by the sole Arbitrator if such a situation arises - As far as present petition is concerned, the same is not maintainable and is dismissed.
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2013 (4) TMI 439
Arbitration and Conciliation - petitioner seeks to challenge an order passed by the learned arbitrator granting interim measures in favour of the respondents under Section 17 of the Arbitration Act 1996. Some of relevant facts for the purpose of deciding this petition are as under. - The petitioner entered into a Coproduction Agreement for remake of the said film 'Zanjeer' with Flying Turtle Films (FTF) and started working on the script of the remake at the end of December 2011, the respondents learned about the said agreement between the petitioner and M/s FTF. It is the case of the respondents that on 24th January 2012, the respondents finally agreed to license of remake rights to Amit Mehra and entered into an agreement with the petitioner, granting the petitioner the right to 'remake' the film 'Zanjeer' in Hindi and Telugu. The writers of the said film Mr Salim Khan and Mr Javed Akhtar were claiming Copyrights in the said film. The petitioner requested the respondents to provide to the petitioner with the agreements with the said writers with PMP for the original 'Zanjeer' for the petitioner to understand their claims.. The petitioner made it clear that it would not pay next installment till the documents were provided by the respondents. The first question that arises for consideration of this court is whether under the provisions of Copyrights Act 1957, there is a separate copyright for cinematography film and literary work and what is the effect thereof on the subject matter of this dispute. The respondents addressed to the petitioner that due date for third installment to be paid by the petitioner to the respondents was 23rd May 2012, however, the petitioner had issued a letter interalia raising flimsy ground for non payment of third installment and the respondents were to terminate the said agreement. Respondents stated that from the date of the said notice all the rights in the said film stood revered back to PMP including the right to remake the said film and no rights for the said film existed with the petitioner. The said notice was issued by the respondents without prejudice to their other rights and remedies in law. The respondents filed petition under Section 9 of the Arbitration and Conciliation Act 1996 in this Court for temporary injunction and succeeded. The learned sole arbitrator disposed of the said application under Section 17 of the Arbitration and Conciliation Act 1996 and if the petitioner herein is restrained from proceeding with the remake, and ultimately the petitioner succeeds, it can still proceed with the remake and complete it and if it suffers loss because of the interim injunction, the same can be compensated in terms of money. Being aggrieved by the said order passed by the learned arbitrator, petitioner filed this petition under Section 37 of the Arbitration Act 1996. Held that - It is not in dispute that claims made by the writers before the association against the petitioner as well as respondents is pending which is for a large amount. The respondents have not even produced the document of title in respect of copyrights in the literary work till today. In the event of the writers succeeding in their claim against the petitioner and the respondents in respect of their alleged copyright in the screenplay of the original film, that would affect the consideration amount agreed to be paid by the petitioner to the respondents. The consideration thus agreed, would have to be modified and/or appropriate adjustments would have to be made while considering the claims of the parties in arbitration. It is made clear that this Court has not expressed any views on the correctness of the claims made by the writers in respect of alleged copyrights in their favour in this order. It is also made clear that observations made by this Court in this order regarding termination and/or representation of title or regarding merits of the matter are all tentative. The learned arbitrator shall decide the matter on merits and in accordance with law without being influenced by the findings and/or observations made by the learned arbitrator in the impugned order and by this Court in this order. I, accordingly pass the following order. The impugned order passed by the learned arbitrator granting interim measures in favour of the respondents is set aside. Application u/s 17 of Act is rejected. During the pendency of arbitration proceedings, the petitioner would be at liberty to proceed with remaking of the film 'Zanjeer' and to release the said movie on the condition that petitioner deposits the balance installment agreed to be paid in terms of Clause 2.2 within eight weeks from today. It is made clear that release of the said film would be subject to the final outcome of the arbitration proceedings which are pending before the learned arbitrator.
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Service Tax
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2013 (4) TMI 461
Refund of service tax under technical Testing & Analysis service or CHA service - notification No.17/2009-ST – The adjudicating authority sanctioned the refund claim but rejected an amount of Rs.96,019/- and of Rs.6,936/-, holding that the services covering the rejected amounts have not been provided in relation to export of goods. – Held that - The entire exercise of the Revenue to reject the refund claim is non-starter in as much as it is settled law that the classification of the product or services at the recipients end cannot be done by the authorities. - this view has been held by the Tribunal in the case of Akanksha Overseas Versus Commissioner of Service Tax, Surat [2012 (11) TMI 402 – CESTAT] - Decided in favor of assessee.
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2013 (4) TMI 460
Services received from overseas agent for procuring export orders - demand dropped by the adjudicating authority for the period upto 18.04.06 in terms of the decision in the case of Indian National Ship Owners Association (2008 (12) TMI 41 - HIGH COURT OF BOMBAY) - Revenue appeal as that the Indian National Ship Owners Associations judgement has not been accepted and subsequent judgement in the case of Bhandari Hosiery Export Ltd. which rejected has been upheld by the Honble Supreme Court [2010 (10) TMI 907 - SUPREME COURT] which has not been accepted by the Revenue and the review petition is being filed there against - Held that:- It is seen that subsequently Boards letter F.No.276/8/2009-CX8A issued on 26.09.11 which observed that the appeals filed by the Revenue against the various orders of the courts/Tribunal, for defending levy of service tax on services received from outside India stands dismissed. Further, the review petition filed by the Revenue in the case of Bhandari Hosiery Export Ltd. has also been dismissed by the Honble Supreme Court [2013 (4) TMI 204 - SUPREME COURT] as observed in the said letter. After taking into consideration the entire developments, the Board has observed that in view of the aforesaid judgement of the Honble Supreme Court, the service tax liability on any taxable service provided by a non-resident or a person located outside India to a recipient in India would arrive w.e.f. 18.04.06, i.e.,enactment of section 76 of Finance Act, 1994. As such it is seen that the letter of the Board issued vide F.No.276/8/09-CX8A, dtd. 26.09.11 supports the respondents case. Thus no reasons to interfere in the impugned order of the Commissioner(Appeals). Accordingly the appeal filed by the Revenue is rejected.
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2013 (4) TMI 459
GTA services - service tax demand - appellant plea of adjustment as he had deposited an excess amount of Service Tax in the month of March 2006, March 2007 and December 2007 which were to be adjusted in the months of April, 2006 to September, 2006, April, 2007 and January, 2008 respectively - the benefit of Rule 6(3) does not stand extended for the period April, 2007 onwards by referring to the provisions of Rule 6(4B)(iii) - Held that:- Going through the said Rule 6(4B)(iii) which lays down that in a case other than specified under clause (ii), the excess amount paid by adjustment with monetary limit of Rs. 50,000/- for a relevant month or quarter, however, Rule 6(3), under which relief stand granted to the appellant for the previous period, continues to remain on statute. The benefit of said provisions would be available to the appellant for adjustment of excess payments as even for the subsequent period all the conditions of said Rule 6(3) stand fully specified by the appellant. As such, reference to the provisions of Rule 6(4B)(iii) was not called for. Allow the appeal with consequential relief to the appellants.
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2013 (4) TMI 458
Levy of service tax/interest/penalty – taxable service of maintenance and repair; that it failed to remit service tax pursuant to which service tax, interest and penalty is leviable – assessee contended that repair or service carried out under a contract other than a maintenance contract or agreement was not covered within the purview of service tax. Held that - In the case on hand, the respondent-assessee is admittedly provide repairing service to several firms and had received payments for the repairing services provided. The assessee thus clearly falls within the second limb of the expression maintenance or repair as defined in Section 65 (64) of the Act and must be deemed to have rendered the taxable service under Section 65(105)(zzg). Since we are now of the considered view that the appellate order is fallacious and unsustainable, this would result in restoration of the adjudication order. However we are of the view that in the totality of the facts and circumstances already referred to, imposition of penalty u/s 76 & 78 is unjustified and in view of provisions of Section 80 no penalty u/s 76 or 78 ought to be imposed. Thus the order in Appeal is quashed and the adjudication order is restored but modified to the extent. Appeal is allowed
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Central Excise
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2013 (4) TMI 438
Duty exemption notification No.162/86 dt. 1.3.86 denied - Water tanker lorries cleared without payment of duty by availing exemption Notification - Commissioner confirmed the demand of duty as proposed in the Show Cause Notices - Held that:- In view of Board’s circular dated 13.1.1989 no hesitation to hold that, in the present case, the fabricated water tank, mounted on chassis would be considered as parts and components captively used for building on chassis of a motor vehicle and covered under Notification No.9/96-CE (NT) dt. 17.5.96 and exempted from duty for the period commencing from 28.2.1993 to 28.2.1994. Accordingly, set aside the order of the Commissioner (Appeals) and uphold the order of the original authority subject to demand of duty for the period 28.2.1993 to 28.2.1994 would be dropped. In favour of assessee.
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2013 (4) TMI 436
Admissibility of credit – Extended period of limitation – penalty u/s 11AC - Appellant has not contested the issue on merits that credit is not admissible. Appellants agitating that extended period cannot be invoked and penalties cannot be imposed in this case as contrary judgments on admissibility of Cenvat credit on disputed items were existing during the relevant period. - Held that - In this case ITC Ltd. vs. CCE, Salem [2013 (1) TMI 555] this is an issue of interpretation as to whether the assessees are entitled to credit or not therefore, extended period of limitation is not invocable in view of this observation, demand is restricted to the normal period of limitation as discussed above. So far as imposition of penalty upon the appellant is concerned, it is observed that the issue of admissibility of Cenvat credit on disputed items was subject matter of litigation and several decisions were in favour of the litigants. Under these circumstances, no penalty under Rule 15(2) of the Cenvat credit Rule, read with Sec. 11AC of the Central Excise Act, 1944, is attracted in the present proceedings.
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2013 (4) TMI 435
Waiver of pre-deposit of duty/interest/penalty - violation of principles natural justice as the lower authorities did not give copies of the seized documents but granted personal hearing - Revenue submits that despite there being three opportunities given to appellant, he had sought an adjournment. Held that - Since we are not happy with the conduct of the appellants, in order to ensure that the main appellant and other appellants appear before the adjudicating authority and cooperate in the proceedings, we direct the main appellant to deposit an amount of Rs. 5 lacs within four weeks from the date of receipt of certified copy of this order and produce evidence before the adjudicating authority. appeals are allowed by way of remand.
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2013 (4) TMI 434
Classification under Central Excise Tariff Act, 1985 - Demand of duty - The respondents paid duty at the spindle stage and also conducted pre-weaving process - The duty is on ad valorem basis should pay the duty on the value including all expenses incurred - Held that:- We find that sizing is not covered under any of the Notifications prevailing during the period of dispute in these appeals - Duty is liable to be paid on the value of sized yarn by the appellants during the relevant period. Similar view was taken by the Tribunal in the case of Mafatlal Industries Ltd. v. C.C.E.(2004 (6) TMI 429 - CESTAT, MUMBAI). We accordingly, hold that duty on sized yarn falling under Chapters 52 and 55 of Tariff is payable at ad valorem rates - We set side the Orders-in-Appeal dropping the demand pertaining to the process of sizing. However, we uphold the Orders-in-Appeal dropping the demand on account of other processes - The matter is remanded back to the original authority
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2013 (4) TMI 433
100% EOU allowed to make DTA clearances - Duty paid under proviso to Section 3(1) of the Central Excise Act, 1944 read with duty exemption under Notification No. 2/95-C - Duty free import of the inputs had been made - Manufacture U/s 2(f) of the Central Excise Act - Held that:- If the process undertaken by the respondent does not amount to manufacture, the stand of the department would be correct and the respondent would be liable to pay customs duty in terms of Condition No. 7 of the Exemption Notification No. 53/97-Customs - But if the process undertaken by the respondent amounts to manufacture, they would be liable to pay Central Excise duty under proviso to Section 3(1) of the Central Excise Act, 1944 read with duty exemption Notification No. 2/95-C.E - However, for deciding as to whether the process undertaken by the respondent amounts to manufacture or not, this matter has to be remanded to the original adjudicating authority. Condition No. 7 of the Notification No. 53/97-Cus., under which the duty free import of the inputs had been made, they would be required to pay customs duty on the inputs used in the manufacture of their finished products in an amount equal to the customs duty payable on the import of their finished products i.e. scrap The impugned order is set aside and the matter is remanded to the original adjudicating authority for de novo decision on this issue - The appeal is allowed by way of remand - The cross objection filed by the Respondent also stands disposed off.
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2013 (4) TMI 432
100% EOU - DTA Clearance - who is liable to pay duty i.e. purchaser of the goods or 100% EOU - binding precedence of earlier decision - Held that:- in the appellants own case for subsequent period on the identical facts and issue [2008 (4) TMI 670 - CESTAT, Mumbai], this Tribunal has passed the order in favour of the appellants. Now the only question before us on today is that whether the order, passed by this Tribunal in appellants own case on identical facts and issues is binding on us or not? In the case of Sant Lal Gupta & Ors. (2010 (10) TMI 194 - SUPREME COURT OF INDIA). The Hon’ble Apex Court has observed as under:- A coordinate bench cannot comment upon the discretion exercise or judgement rendered by another coordinate bench of the same court. The rule of precedent is binding for the reason that there is a desire to secure uniformity and certainty in law. Thus, in judicial administration precedents which enunciates rules of law form the foundation of the administration of justice under our system. Therefore, it has always been insisted that the decision of a coordinate bench must be followed. We are bound to follow the precedent decision in these appeals - Accordingly, we find that both the issue in this case has been decided by this Tribunal earlier in appellants own case on similar facts and identical issues - Accordingly Central Excise duty need not be discharged by 100% EOU & entitled for the benefit of Notification 2/95. - Decided in favor of assessee.
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CST, VAT & Sales Tax
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2013 (4) TMI 464
Tax Evasion - no evidence was produced by the assessee inspite of allowing time to produce the record, and on the basis of this, the Assessing Officer had passed the assessment order reiterating the earlier assessment order - Held that:- While as per the remand order, the Assessing Officer was required to frame a fresh assessment order after complying the remand order passed by the Revisional Authority, but it appears that mechanically assessment order was passed by the Assessing Officer. When remand order was very specific in respect of certain directions, then those points ought to have been considered by the Assessing Officer even without production of any material by the assessee. The Assessing Officer ought to have recorded a fresh finding that there was tax evasion by the petitioner, on the basis of some material and documentary evidence tax evasion was found proved. But, in the Assessment Order and Revisional Order we do not find any such finding while it was necessary for the Assessing Officer and Revisional Authority to record such findings. From the perusal of the impugned order, it is find that after narration of the facts, the Revisional Authority because of non-production of any material before it by the petitioners reiterated the earlier order only, while as per directions issued by the Revisional Authority the Assessing Authority was under an obligation to meet out all the directions, but it appears that the Assessing Officer impressed with the fact that no evidence was produced before it by the assessee reiterated the earlier order, while it was under an obligation to decide the matter as directed by the Revisional Authority. When the important and vital issues are not considered by the Assessing Officer, the assessment order after remand cannot be sustained under the law - the petitioner shall cause appearance before the Assessing Officer on 04.03.2013.
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2013 (4) TMI 463
Interstate sales transaction dispute - notice issued for provisional assessment order calling upon the petitioner to state as to why the sale should not be treated as intrastate sale and also an allegation of suppression relatable to local sale - Held that:- The order suffers from total non-application of mind as well as non-consideration of the documents and records produced by the petitioner. The authority states that she had examined the objections and copies of records and therefore the production of records is not in dispute. If the records were taken for consideration, it is not clear as to how the authority can state that no evidence was filed to show the movement of goods from other States to the local purchasers based on the covenant. This statement appears to be a fallacy, as the purchase orders had already been produced showing the origin of goods from Cochin to the purchaser at the State of Tamil Nadu. The next allegation that there was no evidence to show that the purchase orders were transmitted to the Cochin branch was unwarranted as the petitioner has submitted the central excise records to show the delivery of goods after import and the payment of central sales tax at 4% supported by the certificate issued by the Assistant Commissioner (Assessment), Special Circle-II, Commercial Taxes Department, Ernakulam. Those records have not been taken into consideration by the authority. The allegation to say that the records have been camouflaged to show that they were inter-State sales from Cochin but has not stated as to which document has been camouflaged and in what manner to show the inter-State sales from Cochin is not acceptable. A finding of this nature should be based on analysis of documents and not merely on conjectures and surmises therefore, the said statement of camouflage appears to be a figment of imagination by the authority. The next allegation that the goods had been received by the Coimbatore branch, taken to stock and then delivered to customers in Tamil Nadu done only to avoid the local tax was neither supported by any evidence nor has the officer relied upon any material document. It is, therefore, clear that all these allegations are mere conjectures and surmises on the part of the authority, without analysing the documents produced by the petitioner and what makes the matter worse is that, there are no reasons recorded as to which of the documents are invalid under law and which of the documents have been camouflaged to show the inter-State sales and how those documents are inadmissible in law. The question of suppression, which is also the reason for levy of penalty, appears to be unsupported by any material. The entire order, which runs to about seven pages, contains only the extract of the notice and the reply upto six pages and the last paragraph of the seventh page only deals with the record of findings by the authority, which apparently do not contain any reasons. Keeping in view the principles of natural justice, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. This Court has no hesitation to hold that the first respondent-Commercial Tax Officer has passed a non-speaking order, bereft of reasons, without application of mind to the records produced. The entire findings are in the realm of conjectures and surmises and, therefore, the petitioner was justified in approaching this Court to interfere with the same - matter is remitted to the first respondent-authority for re-consideration of the entire issue - in favour of assessee by way of remand.
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2013 (4) TMI 462
Seizure of truck containing Desi Ghee and other milk products - penalty imposed - goods imported by road accompanied a challan and a blank declaration form - revisionist submitted that by mistake the declaration form was not filled-in or duly verified with no intention not to carry along with the goods imported, a declaration duly verified - Held that:- There may be some substance that, by reason of mistake, inadvertence or error, the accompanying declaration form was not filled-in but it is impossible to state, with certainty, that only because of mistake, inadvertence or error, the accompanying declaration form was not filled-in. There was nothing in the declaration, which would show that the same stood appropriated to the goods in question, and that the said declaration cannot be used for any other goods. That being the situation, it is also possible that the revisionist was taking a chance of taking the goods without appropriating the goods to the declaration form for using the declaration form for the next trip. In the circumstances, not only the seizure was valid, but imposition of penalty too was valid.
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2013 (4) TMI 437
Granting of licence – notice issued by Collector and District Excise Officer Kanpur, inviting applications for grant of licence to the shops of which licenses were not renewed and 40 new shops foreign liquor and 2 new model shops. Petitioners challenged this notification on following grounds. Petitioner contention - opening of new liquor shops is contrary to Article 47 of Constitution of India as well as preamble of U.P. Excise Act, 1910. - held that - Supreme Court has clearly held that in Khodey Distilleries Ltd. Vs. State of Karnakata, [1994 (10) TMI -269] law has created monopoly in State to regulate the business of liquor. In exercise of such privilege, State has right to open new liquor shop to raise revenue. However the Court can examine as to whether the State is exercising it's privilege in a reasonable manner or in arbitrary manner. Accordingly other arguments of the counsel for the petitioners are required to be examined. Petitioners contended that opening new liquor shop was arbitrary – held that - The arguments in this respect is not liable to accepted. The report of November, 2012 is not a proof that quantity of sale of liquor has been decreased from the sale of the previous year. The petitioners have deliberately not filed the report relating to the actual quantity of sale for the previous year as well as for the year 2012-13. Excise policy merely authorise the Excise Commissioner to increase new shops up to 15% and with the approval of the Government more than 15%. The actual number of new shops are increased on the basis of the report of the Collector of the district and not at the level of Excise Commissioner. Petitioner contention - there is a violation in the excise policy, it has been advertised that new shops will be increased up to 15% of the existing shops, but 40 new shops have been opened - held that - arguments that number of shops cannot be increased more than 15% is not liable to be accepted. In addition, a reading of the excise policy would show that the limit of 15% increase is not district wise but is applicable to whole State of U.P. Petitioner contention - the new shops have been located within a radius of 500 meters from the existing shops in violation of the provisions of Rules – held that - The Standing Counsel however submitted that till today, only the locality of new shops have been allotted, and it's boundary have not been fixed. Therefore, the argument of the counsel for the petitioner in this respect is misconceived. Petitioners contention - no notice of opening new shops has been given before inviting applications for renewal. - held that - extensive survey was made by the Excise Inspectors of different localities and they submitted their reports for opening 40 new foreign liquor shops. The petitioners are in the excise business and all these facts were through out in their knowledge. The entire policy was available on the website as well as in the Office of the Excise Commissioner, U.P. In this policy itself, three phases of the renewal /allotment have been prescribed, fixing their time schedule. Accordingly, the argument of counsel for the petitioner is not liable to be accepted. Petitioner contention - Section 24-A (3) of the Act provides that where more licences than one of foreign liquor shop are proposed then advance intimation of the proposal was required - held that - Under this provision advance intimation is required to be given to the prospective applicants. Thus this section contemplate for wide publicity and not for individual notice. The Collector has published notice in the news papers for settlement of the new shops. writ petitions are dismissed.
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Indian Laws
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2013 (4) TMI 457
Applicability/refund of Entertainment duty – demand of NOC - whether the trade show constitutes an "entertainment" within the meaning of the Bombay Entertainments Duty Act, 1923 - petitioner submits that The annual IIJS and IIJS Signature events organized by the petitioner do not constitute entertainment and in order to constitute an entertainment an event must provide for amusement or enjoyment or something in the nature of a diversion or distraction. Petitioner has been paying entertainment duty on the sponsorship amount-received for IIJW in accordance with section 2(b)(viii) read with section 3. According to him IIJW is an event which is separate from IIJS. Held that - The fact that in a given case an exhibition involves a musical performance or a ramp show it constitutes an entertainment for the purposes of section 2(a). As the Supreme Court noted in the judgment in Geeta Enterprises [2008 (8) TMI 546], the expression "entertainment" has various shades, aspects, forms and implications. The event must possess a public colour and also that if the exhibitor derives some benefit in terms of money, it would be deemed to be an entertainment. The identity of the person who derives pleasure or entertainment is wholly irrelevant. The event which is organized by the petitioner is evidently organized on a massive scale. The nature of the event, the character of the goods displayed, the benefit which is derived by the exhibitor in terms of money and the nature of the budget both of the organizer and the exhibitors are indicative of the fact that the exhibition in the present case to which admission is made against the payment of money falls within the definition of the expression "entertainment" in section 2(a). In the circumstances, there is no occasion to direct a refund. Since we have held against the petitioner on the issue of exigibility to tax under section 3 of the Bombay Entertainments Duty Act, 1923, the direction which has been sought to the Commissioner of Police not to insist upon an NOC of the Additional Collector will not survive. Revisional remedy – Held that - An objection was raised in the affidavit in reply to the maintainability of the petition on the ground that a revisional remedy is available under section 10A(3) to the State Government against the impugned order, we have entertained the petition in view of the fact that the petitioner had sought to question the jurisdiction of the State in levying and demanding entertainment duty. The petition shall accordingly stand dismissed.
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