TMI Tax Updates - e-Newsletter
April 29, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. IRDA (ISSUANCE OF CAPITAL BY GENERAL INSURANCE COMPANIES) REGULATIONS, 2013

   By: DR.MARIAPPAN GOVINDARAJAN

2. Excise on Inputs and ST on Input services used in construction can be utilized for discharging ST liability on Renting

   By: Bimal jain

News

1. Tax Foregone Statement

2. Agricultural Credit to Drought Prone Areas

3. Inclusion of Ayurveda/Homoeopathy in Mediclaim Insurance

4. India Inclusive Innovation Fund

5. Estimated Outflow of Funds

6. Se tting Up New Bank for Brics countries

7. No Restrictions on Issue of Number of Cheques

8. Ceiling of 15% for Insurance Agents Commission

9. KCC Norms Simplified

Notifications

Customs

1. 50/2013 - dated 26-4-2013 - Cus (NT)

Amends Notification No. 36/2013-Customs (N.T.), dt. 04-04-2013 - TARIFF VALUE

Highlights / Catch Notes

Income Tax

• Capital Gains Tax: Applying Section 2(42A) Definition Crucial for Transfers via Gift or Will u/s 48.

  Case-Laws - AT : Cost inflation index - If the meaning given in s. 2(42A) is not adopted in construing the words used in s. 48, then the gains arising on transfer of a capital asset acquired under a gift or will will be outside the purview of the capital gains tax which is not intended by the legislature. - AT
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• Exemption Denied: Assessee Fails to Prove Agricultural Use of Land for Section 54B Benefits.

  Case-Laws - AT : Exemption u/s 54B - agriculture land - assessee has failed to substantiate her claim with regard to the nature of land and its user in the immediately preceding two years - No exemption u/s 54B. - AT
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• Unsigned Assessment Order Remains Valid: Legal Principle in Income Tax Case Laws.

  Case-Laws - AT : Non-signing of the copy of assessment order - the absence of signature in the copy of the assessment order would not vitiate the assessment. - AT
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• Tax-Exempt Income Mistakenly Taxed? Inform Authorities for Potential Refund or Relief.

  Case-Laws - AT : Any mistake or inadvertence or on account of ignorance any income which is exempt from payment of tax or is not an income within the contemplation of law it may be brought to the notice of the assessing authority, which, if satisfied, may grant him relief or refund the taxes paid in excess, if any. - AT
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• Consistent Change in Accounting Method for Stock Valuation Not Grounds for Adverse Inference Against Taxpayer.

  Case-Laws - AT : Method of accounting - Change in method valuation of closing stock – if there is a bona fide change in the method of accounting which is consistently followed, no adverse inference can be drawn against the assessee. - AT
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• High Court: Assessing Officer Can't Reopen Tax Assessments on General Observations u/s 148 of Income Tax Act.

  Case-Laws - HC : Reopening of assessment u/s 148 – on the basis of some general observation and discussion on principles for treating an expenditure either revenue or capital in nature, AO can not reopen the assessment - HC
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Customs

• Anti-Dumping Duty on Imported Melamine: Section 9A of Customs Tariff Act, 1975; "Importer" Definition Not Applicable.

  Case-Laws - HC : Request for imposition of anti-dumping duty on imported Melamine - Section 9A of CTA, 1975 - definition of importer in Customs Act, 1962, can not be applied here. - HC
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• Subcontractors qualify for exemption under notification No. 21/2002-Customs when working through a general contractor, not directly with the employer.

  Case-Laws - AT : Exemption under notification No. 21/2002-Customs – Sub-Contractor - Subcontractor performs work under a contract with a general contractor, rather than the employer who hired the general contractor. - AT
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Central Excise

• Job Worker Ineligible for Exemption Due to Lack of Principal's Facility and Power Connection Under Notification No. 214/86-CE.

  Case-Laws - AT : Job work - Principal was not having a manufacturing facility, power connection etc. - Notification No.214/86-CE dated 25.3.1986. - prima facie job worker is not eligible for exemption - AT
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• Government Confirms Duty on Skimmed Milk Powder for Sale Only, Supported by Exemption Notification /95.

  Case-Laws - AT : Notification No. 67/95 - it is very clear that the Government had intention only for levying duty on skimmed milk powder intended for sale and this is reinforced by the exemption notification issued subsequently - AT
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• Waiver of Pre-Deposit in Central Excise Case Linked to Notification No. 23/2003-C.E and Foreign Trade Policy Violations.

  Case-Laws - AT : Waiver of pre-deposit - Violation of conditions of Notification No. 23/2003-C.E - As regards the violation of the paras 6.8 & 6.9 of the Foreign Trade Policy, we find that it is a settled law that such violations, if any, can be only adjudged by the DGFT authorities. - AT
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VAT

• Input Tax Credit Valid for Transactions with Sellers Holding Valid Registration, Even if Later Cancelled Retrospectively.

  Case-Laws - HC : Input tax credit - registration certificates of the selling dealers have been cancelled with retrospective effect - credit can not be denied for the transaction when R/C was in effect - HC
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• High Court Confirms Penalty for Passenger Failing to Declare Gold Ornaments at Jammu & Kashmir Check Post.

  Case-Laws - HC : Passenger carrying golden ornaments,entered the State of Jammu & Kashmir crossing Check Post Lakhanpur without making any declaration - Usual place of residence is hotel - levy of penalty confirmed - HC
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Case Laws:

• Income Tax

• 2013 (4) TMI 608
  Cost inflation index for computation of long term capital gain - Long term capital gain assessable on the sale of property sold by the father of the assessee as Power of Attorney of the assessee - On 09.07.1984, Shri Suresh Babu gifted the property acquired by him by way of gift from his father, in favour of his nieces & since they were minors at that point of time,a trust deed was executed and appointed their parents as trustees with the condition - CIT(A) convinced with the submissions made by the assessee directed AO to adopt the cost inflation index pertaining to the financial year 1981-82 - Held that:- In s. 48 the expression 'asset held by the assessee' is not defined and, therefore, in the absence of any intention to the contrary the expression 'asset held by the assessee' in cl. (iii) of the Explanation to s. 48 has to be construed in consonance with the meaning given in s. 2(42A). If the meaning given in s. 2(42A) is not adopted in construing the words used in s. 48, then the gains arising on transfer of a capital asset acquired under a gift or will will be outside the purview of the capital gains tax which is not intended by the legislature. Therefore, the argument of the Revenue which runs counter to the legislative intent cannot be accepted. See DCIT vs. Manjula J.Shah (2011 (10) TMI 406 - BOMBAY HIGH COURT). Against revenue. Whether the CIT(A) was justified in deleting the capital gain relating to "Property No.2" - Held that:- A plain reading of the recitals made in the Gift deed dated 08-06-2005 would show that Shri V.K.Mohan(father of minors) has handed over the possession of the Property No.2 to the assessee herein. Further following recitals made in the irrevocable Power of Attorney dated 13-07-2005 executed by the assessee herein in favour of Shri V.K. Mohan show that the assessee herein accepted the gift and was also in possession of the property As per the provisions of sec. 47(iii) of the Act, the transfer of property by way of settlement deed by Shri V.K.Mohan to the assessee herein is not considered as a "transfer' and hence the same is not assessable to capital gains. On the execution of the Settlement deed, the assessee herein became absolute owner of the Property No.2 as per the Transfer of Property Act. The provisions of Transfer of Property Act are not overridden by sec. 47(iii) of the Act. Hence, CIT(A) has misdirected himself in interpreting the scope of provisions of sec. 47(iii) of the Act. Since there was absolute transfer of Property No.2 by way of settlement deed, there is no scope to interpret that there was transfer of income only without transfer of asset so as to attract the provisions of sec. 60 - the various reasoning given by CIT(A) are not in accordance with the law and are liable to be struck down. Accordingly AO was right in law in assessing the capital gain arising on transfer of Property No.2 in favour of the Construction company. Further the assessee would not be entitled for exemption u/s 54F of the Act on the purchase of property by her father. In favour of revenue.

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• 2013 (4) TMI 607
  Exemption u/s 54B denied - Held that:- It is pertinent to note that the assessee herein held the impugned land jointly along with her elder sister who did not claim the impugned land as an agricultural land. Under these circumstances, it is unable to understand as to how the assessee herein alone can claim the same as an agricultural land. A plain reading of the provision of sec 54B show that the land should have been used for agricultural purposes in the two years immediately preceding the date of transfer and as the assessee did not bring any material on record to show that the impugned land was used for agricultural purposes in the immediately preceding two years the assessee has failed to substantiate her claim with regard to the nature of land and its user in the immediately preceding two years - AO was justified in rejecting the claim of exemption u/s 54B. Amount invested in Capital Gains Account scheme - whether would be taken at Rs.47 lakhs as per AO or actual investment of Rs.55 lakhs - Held that:- The assessee claims that he has invested a sum of Rs.55 lakhs in the Capital gain Account scheme in two instalments viz., Rs.47.00 lakhs and Rs.8.00 lakhs. It appears that the deposit of Rs.47 lakhs was made in connection with the claim made u/s 54F and the deposit of Rs.8.00 lakhs was made in connection with the claim made u/s 54B. Under these circumstances, the assessing officer was justified in computing the deduction u/s 54F in respect of Rs.47.00 lakhs only. Appeal of assessee rejected.

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• 2013 (4) TMI 606
  Non-signing of the copy of assessment order - as per the assessee copy of the assessment order served upon him was not signed by AO hence, the entire assessment has to be treated as invalid - assessee is a non-resident and is a practicing Ophthalmologist - Held that:- A.R, after examination of the assessment record, has confirmed that the Assessing Officer has duly signed the original assessment order. Accordingly, in view of the decision of Kalyankumar Ray (1991 (8) TMI 291 - SUPREME COURT) and Sushil Chandra Ghose (1991 (8) TMI 291 - SUPREME COURT) the statutory requirement has been duly complied with by the assessing officer. Further, it is pertinent to note that the "Notice of demand" served upon the assessee bore the signature of the assessing officer. Hence, the absence of signature in the copy of the assessment order would not vitiate the assessment. Against assessee. Validity of reopening of assessment - Held that:- On a perusal of the assessment order, AO has pointed out that (a) the assessee has claimed indexation benefit while computing the short term capital gain, (b) the exemption claimed by the assessee under sec. 54 of the Act is not in order and (c) the land on which short term capital gain was claimed was only a vacant land and not an agricultural land. All these reasons cited by the Assessing Officer cumulatively show that the AO had reason to believe that there was escapement of income. Hence, AO was justified in initiating re-assessment proceedings and accordingly, the grounds raised by the assessee in this regard rejected. Against assessee. Whether the land sold by the assessee is an agricultural land or not? - Held that:- The issues relating to the nature of land and the claim of exemption u/s 54B have not been properly examined by the tax authorities as the AO as well as the CIT(A) has placed more reliance on the report of the Inspector of Income tax and the development work carried out by the purchaser of land. Thus all these issues require fresh examination at the end of the assessing officer. In favour of assessee for statistical purposes.

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• 2013 (4) TMI 605
  Reopening of assessment – after duration of 4 years - negligence - as the taxpayer has not furnished the details on expenditure incurred on DEPB licence – Disallowance of deduction u/s 80HHC. Held that - The question arises for consideration is whether there was negligence on the part of the taxpayer in furnishing fully and truly all the material facts necessary assessment. No one could anticipate an amendment which would be brought into the statute book after lapse of 5-6 years retrospectively. Therefore, the taxpayer cannot be blamed for not anticipating a law. It is not in dispute that the taxpayer was claiming deduction on DEPB licence. Moreover, the deduction was not denied because the details of cost was not furnished but because the taxpayer has not complied with Proviso to section 80HHC which was brought into the statute book by Taxation Laws (Amendment) Act, 2005. Therefore, it may not be correct to contend that the taxpayer has not disclosed the expenditure on sale of DEPB licence. The disallowance was made only on the basis of Taxation Laws (Amendment) Act, 2005. Therefore, the taxpayer cannot be blamed after expiry of four years from the end of the relevant assessment year. Thus, the reopening is invalid. Rectification made by the A.O. on the basis of the Proviso to section 80HHC which was inserted by Taxation Laws (Amendment) Act, 2005. – Held that - The A.O. made an attempt to rectify the original assessment order dated 05-02-2001 on the basis of the retrospective amendment brought in section 80HHC of the Act. On the date of filing of the return, the taxpayer has made the claim on the basis of the law as it stood on the first day of April of the assessment year. Therefore, the amendment made in section 80HHC by Taxation Laws (Amendment) Act, 2005 cannot be a ground to extend the period of limitation for rectifying the original order.

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• 2013 (4) TMI 604
  Revised return - taxpayer's claim of exclusion of the capital gain arising on sale of agricultural land as the same was wrongly included in the original return - valid or not? - Held that - After considering the provisions of section 139(5) of the Act which enables the taxpayer to file a revised return. As per section 139(5), if any person having furnished a return of income either u/s 139(1) or in pursuance of a notice issued u/s 142(1), discovers any omission or wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. In this case, the return was not filed either u/s 139(1) or u/s 142(1) of the Act. Therefore, the taxpayer cannot revise the return. Hence, the revised is not a valid return. When the taxpayer by mistake or ignorance of law included an income which is not taxable otherwise, can it be brought to the notice of the A.O. in the course of assessment proceedings – held that - In view of the above judgment of the Apex Court in CIT vs Shelly Products [2003 (5) TMI 4], it is obvious that any mistake or inadvertence or on account of ignorance any income which is exempt from payment of tax or is not an income within the contemplation of law it may be brought to the notice of the assessing authority, which, if satisfied, may grant him relief or refund the taxes paid in excess, if any. Therefore, if any income which is otherwise not taxable is included in the return of income, it can be brought to the notice of the assessing authority in the course of assessment proceedings. Thus, the claim made by the taxpayer with regard to the assessability of the capital gain on sale of land needs to be examined by the A.O. even though such a claim was not made in the original return and the revised return was invalid.

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• 2013 (4) TMI 603
  Revision of orders prejudicial to revenue - search - Revenue in exercise of her powers u/s 263 of the Income-tax Act found that there was an undisclosed consideration to the extent of Rs.9 lakhs since the property was immediately mortgaged for Rs.10 lakhs by the purchaser. As per revenue, the taxpayer sold the property for Rs.1 lakhs to Shri RV Radhakrishnan. It appears, Shri RV Radhakrishnan availed a loan of Rs.10 lakhs from Kerala State Co-operative Bank by mortgaging that property. The loan availed was subsequently passed on to Welcare Hospital as loan. Welcare Hospital repaid the loan with interest. Held that - Direction was issued to A.O. to examine whether the taxpayer has received any amount more than what was disclosed in the registered sale deed. If any material is available on record to suggest that the taxpayer has received more amount than what was disclosed in the sale deed, then that amount has to be treated as sale consideration and be brought to tax for the assessment year 2005-06. This Tribunal is of the considered opinion that there cannot be any addition for assessment year 2008-09 in respect of the sale of property on 31-03-2005. With the above observations, the order of the Administrative Commissioner is confirmed and the appeal filed by the taxpayer dismissed.

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• 2013 (4) TMI 602
  Method of accounting - Change in method valuation of closing stock – Rejection of the same subsequent to which additions were made in the income of the assessee - As per revenue AS-II, issued by the ICAI, is not a valid reason for the change adopted by the assessee and it is not for the assessee's legitimate business needs. Also, once the Companies Act mandates the following and compliance of the Accounting Standards issued by the ICAI, the CIT (A)'s observation that the ICAI Guidelines do not override the Income- tax Act, causes no detriment to the case of the assessee and, as such, the Ld. CIT (A) clearly erred in upholding the addition made by the A.O. Held that - The Companies Act, in Section 211, prescribes that the assessee shall follow the Accounting Standards issued by the ICAI in preparing its financial statements and AS-II, relevant to the year under consideration, the same has been conformed by the assessee by way of change in its method of valuation of closing stock, it cannot be but said that the action of the assessee in changing its method of valuation of closing stock was bona fide. In Jackson Engineers (P) Ltd. vs. ITO [1989 (2) TMI 159], Hero Honda Motors Ltd. vs. JCIT [2005 (5) TMI 265], Jaipur Taj Enterprises Ltd. vs. ITO [1991 (9) TMI 121] and DCIT vs. Venus Wire Industries Ltd. [2004 (9) TMI 569], it has been repeatedly held that if there is a bona fide change in the method of accounting which is consistently followed, no adverse inference can be drawn against the assessee. Thus, change in method of valuation of closing stock in conformity with AS-II has been held to be a bona fide change. Appeal filed by the assessee is allowed.

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• 2013 (4) TMI 601
  Disallowance u/s 40 (a)(ia) – On the amount paid by the assessee to the consolidator for transfer of rights - As per revenue the payment as consolidation charges had been made without deduction of TDS and the consolidator was working as an agent of the assessee and, hence, made contraventions of provision of Section 40(a)(ia). Held that – The matter, it is seen, is squarely covered in favour of the assessee by Finian Estates Developers (P) Ltd [2012 (6) TMI 705] inasmuch as in that case, the very same agreement as the one under consideration herein, was at issue. Thus, finding merit in the grievance sought to be raised by the assessee, the same is accepted. Appeal allowed.

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• 2013 (4) TMI 600
  Disallowance u/s 10(23C) (iiiad) - eligible for exemption u/s 11 not considered by CIT(A)- addition of corpus donations received by the appellant society by invoking section 115BBC by CIT(a) - assessment finalized u/s 144 by CIT confirmed and not u/s 143 (3) as contested by assessee - CIT(A)upholding the levy of interest u/s 234B - Held that:- Bare perusal of the observations of the CIT (A) regarding the issues involved shows that indeed, the grievance of the assessee, taken by way of Ground No.5, to the effect that fair and proper opportunity of hearing was not granted to the assessee by the CIT (A), is found to be justified and is accepted as such. The Order under appeal has been passed without even adverting to the afore-quoted written submissions filed by the assessee before the CIT (A). Therefore, it would be in the interest of justice to remit this case to the file of the CIT (A), to be decided afresh, in accordance with law on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the proceedings before the CIT (A) - appeal of the assessee allowed for statistical purposes.

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• 2013 (4) TMI 599
  Reopening of assessment u/s 148 – reason to believe - assessee has made payment towards Voluntary Retired Scheme which was allowed as revenue expenditure. The CBDT has issued a Circular in which it has stated that any ex gratia amount which results in an enduring benefit to assessee should be treated as capital expenditure. In view of this, the said VRS payment is required to be disallowed as capital expenditure. Revenue therefore, reason to believe that the amount chargeable to tax has escaped assessment. Therefore, notice u/s. 148 is issued. Petitioner challenged the same in this court. Held that - In our opinion, the Assessing Officer could not have issued the impugned notice on the basis of C.B.D.T circular. In that view of the matter, the circular of C.B.D.T may be a trigger, on the basis of which, the Assessing Officer may himself be satisfied that income chargeable to tax in a given case had escaped assessment. Such a circular by itself, in our opinion, cannot be the tangible material required for Assessing Officer to hold a belief that income chargeable to tax had escaped assessment. The Apex Court in the case of CIT v. Kelvinator of India Ltd. [2010 (1) TMI 11 – SC] has held that even post amendment in section 147 of the Act with effect from 1.4.1989, the concept of change of opinion has not been given a go-by. Even after the amendment in section 147, the Assessing Officer must have some tangible material to hold a belief that income chargeable to tax had escaped assessment. Thus on the basis of some general observation and discussion on principles for treating an expenditure either revenue or capital in nature, the Assessing Officer cannot claim to have been in possession of tangible material to hold a belief that income chargeable to tax had escaped assessment. we are satisfied that in the present case, notice for reopening has been issued without jurisdiction. In the result, the petition is allowed.

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• Customs

• 2013 (4) TMI 598
  Exemption under notification No. 21/2002-Customs – import of Electronic Sensor Paver Vogetel model super 1800-2 with AB 600-2 TC screed for laying bituminous pavement upto 9 M width along with accessories - held that:- As the maximum pave width of the equipment is only 6 meters, it does not satisfy the criterion of 7 meters size and above. If the intention was to cover the width of the bolt-on extensions also, the same would have been so specified in the notification. Thus from the product catalogue, it is amply clear that the equipment under import does not satisfy the product specification stipulated in List 18 of the notification and consequently, the equipment under importation does not qualify for the benefit of exemption and we hold accordingly. - Against assessee. Sub-Contractor - whether the appellant is eligible to claim the duty exemption in terms of sub-clause (iii) of clause (a) of condition 40. - held that:- In law, “Subcontractor” is a person who is awarded a portion of an existing contract by a principle or general contractor. Subcontractor performs work under a contract with a general contractor, rather than the employer who hired the general contractor. - the appellant cannot be considered as a sub-contractor since he has not been named as such in the contract awarded to the consortium. - Against assessee.

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• 2013 (4) TMI 597
  Anti-dumping duty - request for imposition of anti-dumping duty on imported Melamine. - scope of the term 'importer' - Section 9A of CTA, 1975 - held that:- while ascertaining the meaning or definition of any particular word the subject and context of the Act or Rule has to be understood in rational way avoiding absurdity and keeping in view the real intention and object to be achieved by framing of such Act or Rules. The Superior Court is empowered to do so if for this reason there may be little conflict with the apparent expression of a particular provision. Nearly 15% of its total production is imported by it and that too casually and to meet customer’s demand during the time when the production was disrupted, and this quantity of import is very insignificant portion of the total import from the same exporting countries. - Realistic and logical meaning should be the person who is carrying on business of import exclusively for trading purpose is the importer under the said Rule. Appellant does not carry on business principally, of import of Melamine. It is carrying on business amongst other of manufacturing of heavy chemicals of every description, whether required for civil, commercial or military defence purposes. - definition of importer in Customs Act, 1962, can not be applied here. The definition in this Act is of general application of any import, which includes both for regular trader and exclusive consumer. Moreover Anti-Dumping Rules have not been framed under the Customs Act. This Rule has been framed under Section 9A of CTA, 1975 which is meant as correctly urged by Mr. Bajoria for imposition of rate of various duties under Act of 1962. In this Act there is no definition of the word import. But the Central Government being subordinate legislature has described importer differently and independently and for specific purpose and it would be absurd to borrow any expression from Act of 1962 by the Court, when by the Rule 2(g) of the said Rules provide no other definition of any unexplained word can be adopted other than in the Tariff Act, 1975, therefore the definition given in the Rule has to be accepted in the context of object of the Rule. - Designated authority directed to proceed with investigations.

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• Corporate Laws

• 2013 (4) TMI 596
  Auction of the property of company in liquidation (Respondent 1) by Karnataka State Financial Corporation (KSFC) (Respondent 2) secured creditor of the company in association with O.L. – appellant was the successful bidder of the property - erstwhile Directors of the Company-in-liquidation called in question the confirmation of sale made by filing an appeal. The said appeal came to be ultimately allowed setting aside the sale in favour of the applicant. With regard to the amount which had been deposited as the auction sale price, the same has been refunded to the applicant - The issue in the instant application is however with regard to the amount which had been incurred by the applicant for taking possession and that was invested for improvement of the said property for its utilisation and also to protect the property. Held that - In that regard, it cannot be in dispute that though the property was sold by the KSFC, the same was in association with the Official Liquidator and when such responsibility is cast on the Official Liquidator also to ensure the sale be conducted in accordance with law and when the Division Bench has found fault with the procedure, there would be joint responsibility. However, in the instant case, the undisputed position is that the dismantled steel structures and other materials which was available in the property due to the work of dismantling carried out by the applicant, which would in a normal circumstance have ensured to the benefit of the applicant has been subsequently sold for by the KSFC. The said amount is available with the KSFC. Further, when the property is re-auctioned, it would fetch a higher value and the liability of the KSFC in any event would be recoverable. The said amount with accrued interest will cover the major portion of the amount which is held as payable to the applicant. The application is allowed in part. The respondents 1 and 2 are held liable to pay the sum of, Rs.29,55,010/- to the applicant.

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• 2013 (4) TMI 595
  Oppression and mismanagement - plea for rectification of register - petitioner was among the first subscribers to the MOA & AOA of respondent No. 1 company filing instant petition invoking the provisions of sections 111, 397 and 398 of the companies act as petitioner respondent No. 2 has removed the petitioner illegally from the directorship of the company under section 283(1)(g) and section 283(1)(z) by creating false record of issuing notices for Board meetings under certificate of posting and conducting meetings only on paper & the said notices of Board meetings were never received by the petitioner - whether the petition is maintainable? - Held that:- The petitioner contended that he is a subscriber to 3,333 shares and was the first director of the company. However, there is no admission by the petitioner that he paid the subscription amount to the company. In the affidavit the petitioner stated that he spent considerable amounts from his personal bank account running into lakh of rupees for the R1-company since its incorporation. It is to bear in mind that even to seek relief for rectification of register of members, one has to necessarily establish the reasons/grounds for such rectification. It is not the case of the petitioner that even though he had paid the amounts for the subscribed shares, the company removed his name without any reason. Mere mention of a particular provision would not make out a case automatically unless, the ingredients of that provision is satisfied in the petition. In the present case no such grounds are mentioned nor is any case made out seeking enforcement of that provision of law. Moreover it is an attempt to make out a case to maintain a petition. Admittedly, the petitioner's name appears in the MoA of the company as a subscriber and there is no other documentary proof to establish that he is a member of the company. The respondents categorically stated that the petitioner did not pay the subscription amount to the company. The petitioner did not deny the same except stating that he spent huge amounts on the company. Therefore, the petitioner did not pay the subscription amount thereby he cannot claim to be a member of the company. It is mandatory requirement that any member or members who hold not less than 1/10th of the issued share capital and have paid all calls and other sums due on their shares can only maintain the petition. In the present case the petitioner alleges that he subscribed to the shares but the sum due on the said shares has not been paid to the company. Therefore, the petitioner is not entitled to file a petition since he did not fulfill the statutory requirement as contemplated under section 399 of the Act. Hence, the petition fails. It is a well settled principle of law that if the petition is not maintainable, the same cannot be entertained by the Bench. As the petitioner is not a member of the company, he cannot maintain the petition.

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• Service Tax

• 2013 (4) TMI 612
  Refund claim - unjust enrichment - Erection, Commission and Installation services - Held that:- It is undisputed that the first appellate authority has come to the conclusion that the appellant is eligible for the refund of the amount paid by him during the observation by the audit party. As regards the unjust enrichment, the contentions of counsel needs to be considered by the lower authorities in as much as having been out of business from 2008, appellant would not have passed on the service tax liability to any customer. On this factual matrix, since there is no evidence, this issue cannot be decided. Accordingly, holding that the lower authorities are required to pass an order on the question of unjust enrichment as per the facts put up by the ld. counsel, portion of the impugned order is set aside and remand the matter back to the adjudicating authority to consider the issue of granting refund to the appellant after ascertaining the claim of the appellant regarding the closure of the business and there cannot be any passing of the service tax liability.

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• 2013 (4) TMI 611
  Rejection of the refund claim - appellant is a 100% HTP unit receiving various services for providing such services and has claimed the refund on the Service Tax paid by the service provider - The department is of the view that services are not used in providing the output service accordingly rejected the refund claim - Held that - I find that by producing the C.A certificate, the appellant has complied with the requirement of CBEC Circular dt.19.01.2010. Since the appellant has complied with the requirement of the documents to be filed along with refund claim, I find that the first appellate authority was in error in rejecting the refund claim filed by the appellant. Thus findings of both the lower authorities are unsustainable.

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• 2013 (4) TMI 610
  Rejection of appeal - violation of condition of deposit - held that - the assesse is directed to file the challan before the appellate authority within two weeks. Thereafter the learned Commissioner (Appeals) shall take up and dispose of the appeal on merits

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• 2013 (4) TMI 609
  Demand of service tax/interest/penalty – laying of the cables - repair and maintenance service. - Held that - On perusal of the work order placed on record, it is clear that the service provided by the Respondent to BSNL is in relation of laying of the cables, are not repair and maintenance. In view of this, we held that there is no infirmity in the impugned order. Revenue’s appeal is dismissed. The Cross-objection also stands dispose of.

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• Central Excise

• 2013 (4) TMI 594
  Stay - job work - Principal was not having a manufacturing facility, power connection etc. - Notification No.214/86-CE dated 25.3.1986. - whether job worker is entitled to clear the job-worked goods without payment of duty - non compliance of order of pre-deposit issued by the Commissioner (appeals) - job work - Notification No.214/86-CE dated 25.3.1986. - held that:- appellant was not entitled to clear the goods to ROL without payment of duty. - Further, we have taken note of one submission made by the learned counsel which is to the effect that the department has initiated proceedings against ROL. - In the totality of the facts and circumstances of the case, in our view, a pre-deposit of 25% of the duty amount would suffice the purpose of Section 35F of the Central Excise Act before the learned Commissioner. - Stay granted partly.

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• 2013 (4) TMI 593
  Entitlement of Cenvat Credit – construction activity - AR argued that both construction of workers quarters and vastuwall have no relationship with the manufacturing activity and, therefore, Cenvat Credit with respect to construction of workers quarters and vastuwall is not admissible. Held that - applying the ratio laid down by the Hon’ble Apex Court in the case of Maruti Suzuki Limited vs. CCE, Delhi [2009 (8) TMI 14], we hold that unless the nexus is established between the services rendered and the business carried on by the assessee, the benefit of CENVAT Credit is not allowable. It is held that workers quarters and the vastuwall made inside the factory have no relationship with the manufacturing activity of the appellants and accordingly credit taken with respect to construction of same will not be covered within the definition of input service as defined under Rule 2(1). Matter remanded to the Original Adjudicating Authority for quantification of the above demand. So far as imposition of penalty is concerned, as issues were under litigation. Therefore, penalty under Rule 15(2) read with Section 11AC cannot be invoked and is accordingly set-aside.

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• 2013 (4) TMI 592
  The present appeal seeks setting aside the penalty sustained by the Commissioner (Appeals) and the interest demand as per the provisions of Section 11AC of the Act - Larger Bench of the Tribunal finds that the applicant have suppressed the relevant facts during the earlier period should be applied to the present period also inasmuch as for the period from 1.4.2000, the appellant has not disclosed the relevant details to the department and failed to furnish correct details in the declarations filed under Rule 173C of Central Excise Rules, 1994. Hence, it is a clear case of intention to evade duty. -. Held that – Considering the decision of the Larger Bench, Tribunal do not find any reason to set aside the penalty or reduce the penalty. Appeal of the party fails and the same is dismissed.

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• 2013 (4) TMI 591
  Notification No. 67/95 - Appellants paid excise duty on skimmed milk powder cleared for sale. They did not pay excise duty on skimmed milk powder which was retained and later converted into milk in their own factory - Held that:- Notification was issued on 19-7-1998 specifically exempting skimmed milk powder used in the regeneration of milk and this notification clearly brings out the intent of the Government that duty was not to be calculated on such use. We take note of the fact that the tariff entry clearly uses the expression “intended for sale” - It is also a well-known practice in this industry that milk in surplus is preserved as skimmed milk powder for use during the lean season - Therefore, it is very clear that the Government had intention only for levying duty on skimmed milk powder intended for sale and this is reinforced by the exemption notification issued subsequently - Therefore, we do not find any reason for confirming demand of duty on skimmed milk powder which the appellant did not intend to sell and was stored for use in the lean season - The appeal is allowed setting aside the impugned order.

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• 2013 (4) TMI 590
  Rejection of Rebate claims(not discharged the duty liability) - Rule 12 or the notifications issued thereunder would not apply to goods covered in the Compounded levy was not correct and to that extent, the impugned order was required to be set aside/modified - Held that:- Govt. finds force and concurs with the view of the applicant in view of the self explanatory and clarificatory portion of C.B.E. & C. Circular No 418/51/1998-CX., dated 2-9-1998 extracted as per para 15 above which clarifies : “That rebate will be allowed even in cases where manufacturers make delayed payment.” - Further, the Hon’ble Supreme Court’s Judgment in Omkar Overseas Ltd. v. UOI (2003 (8) TMI 45 - SUPREME COURT OF INDIA ) cited by the applicants also support this view. Thus finally Govt. of India allowed the rebate claim on the condition that the rebate has to be allowed in respect of the claims which are not hit by limitation, provided the duty under the Compounded Levy Scheme is fully discharged by the manufacturer of the goods under Compounded Levy Scheme as per the rate specified by Notification No. 31/98-C.E. (N.T.), dated 24-8-98 even for the period 1-8-1997 to 23-8-1998 - The rate of rebate specified is 12% on FOB value - Hence, the Revenue’s contention in this aspect also does not survive.

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• 2013 (4) TMI 589
  Waiver of pre-deposit - Violation of conditions of Notification No. 23/2003-C.E - Violation of Foreign Trade Policy - Held that:- Regarding Violation of conditions of Notification No. 23/2003-C.E - Held that:- We find that Notification No. 23/2003-C.E. only talks about clearances of the goods to the person who is holding an advance release order or advance licence in terms of para 4.1.1 of the export policy. It is undisputed in this case that the clearances affected by the appellant was to advance licence holder who has been producing the advance release orders to the appellant, who in turn produced the same to the jurisdictional authoritie - Appellants have been following the provisions of Notification No. 23/2003-C.E. correctly for all the clearances made to advance licence holders. As regards the violation of the paras 6.8 & 6.9 of the Foreign Trade Policy, we find that it is a settled law that such violations, if any, can be only adjudged by the DGFT authorities. We also find that the appellant had been clearing the goods under advance licence/advance release order, during the period 2005 to 2008 while the show cause notice has been issued on 18-3-2010 which seems prima facie to be time barred, inasmuch as the clearances were countersigned by the range Superintendent in-charge of the appellant’s factory. Prima facie - We find that the appellant has made out a case for the complete waiver of the pre-deposit of the amounts involved - Application for the waiver of pre-deposit of the amounts involved is allowed - Recovery thereof stayed till the disposal of appeal.

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• 2013 (4) TMI 588
  Waiver of duty , interest and penalty - Denying credit of service tax paid in respect of medical insurance covers for the families of the workmen is not in or in relation to the manufacture of the goods.- Held that:- The contention of the Revenue is that for stay purpose, service tax paid in respect of mediclaim policy in respect of families of the workmen cannot qualify as an activity in or in relation to the manufacture of final product. It is also submitted that mediclaim insurance service is a welfare activity and cannot be treated as ‘input service’ for the manufacture of goods. We find prima facie merit in the contention of Revenue - We find that this is not a fit case for total waiver of duty. Therefore, applicant is directed to deposit 50% of the demand within 6 weeks - On deposit of above mentioned amount, pre-deposit of remaining dues are waived - Recovery of the amount is stayed during pendency of the appeal.

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• CST, VAT & Sales Tax

• 2013 (4) TMI 615
  Input tax credit denied - registration certificates of the selling dealers have been cancelled with retrospective effect - TNVAT Act, 2006 - Held that:- Retrospective cancellation of the registration certificate of the selling dealer can have no effect on the person who acted upon the strength of the registration certificate when it was in force. The Supreme Court in State of Maharashtra Versus Suresh Trading Company [1996 (2) TMI 451 - SUPREME COURT OF INDIA] had rejected the department's argument that duty is cast on the person who is dealing with the registered dealer to find out whether the registration certificate is valid or cancelled, by stating that such a plea would be against the provisions of the statute. As in the present case, it is not in dispute that the registration certificates of the selling dealers have been cancelled with retrospective effect and, therefore, to reverse the input tax credit on the plea that registration certificates have been cancelled with retrospective effect cannot be countenanced. Whatever benefits that has accrued to the petitioners based on valid documents in the course of sale and purchase of goods, for which tax has been paid cannot be declined. The transaction that took place when the registration certificates of the selling dealer were in force cannot be denied to the petitioners/assessees on the above plea. This is contrary to the law laid down by the Supreme Court in the above stated case. Thus the notices, revised assessment orders and the provisional assessment order to deny the benefit of input tax credit to the petitioners -assessee on the ground that the registration certificates of the selling dealers have been cancelled with retrospective effect, are set aside.

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• 2013 (4) TMI 614
  Detention of consignment of diamonds for exhibition - Section 47(8) of the KVAT Act proposing to auction the detained commodity it is at that stage petitioner has filed this writ petition seeking to challenge the aforesaid proceedings - Held that:- In such circumstances, as the petitioner admittedly is the consignor of the goods in question, if the goods are released to them on their furnishing security as demanded no prejudice will be caused to the interest of respondents 1 to 5. The petitioner will deposit Rs.1,48,800/- demanded as security and on depositing the same the consignment detained will be released to the petitioner. On such release, it will be open to the petitioner to deal with the commodity in the manner as they deem fit. Once the goods are released, the competent authority will conduct adjudication in terms of Section 47 of the KVAT Act with notice to the petitioner and the 6th respondent at the premises of whom the exhibition was to conduct.

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• 2013 (4) TMI 613
  Seizure and confiscation and levy of penalty - passenger carrying golden ornaments,entered the State of Jammu & Kashmir crossing Check Post Lakhanpur - Commissioner Commercial Taxes appear to have received an information, about the appellants stay in Room No.2108 of Grand Palace Hotel possessing some unaccounted for goods with intent to evade tax, has vide his order No.Camp/PA/CCT/325 dated 19.06.2005, authorized,under Section 66(3),Shri K. H. Rizvi, Additional Commissioner, to inspect the premises and also to take action under Section 66(6) of the Act, if necessary. Held that:- Stringent provisionsas incorporated in the Statute books so as to ensure that the party/dealer shows transparency to the satisfaction of the authorities that tax leviable shall not, in any way, be evaded, have to be adhered to strictly so that contravention may not get chance of encouragement or may not have implication of sending a signal that the stringent provisions only remain on the statute book and are never meant for implementation. - , the appellant, admittedly, on her own showing before the first Appellate Authority has stated that she had come along with golden ornaments for market survey, means she is dealing in the business and had got a huge quantity for sale, therefore, she cannot escape the liability of penalty, as has been imposed. - Levy of penalty confirmed. The appellants ordinary place of residence i.e. room in hotel Grand Palace where she had stayed, was inspected, so properly proceedings, in accordance with Section 66 of the VAT Act were initiated and there from it has emerged that the appellant had committed a default as she had not declared carrying of goods at Check posts, one at Lakhanpur and another at Lower Munda, while entering into the State of Jammu & Kashmir. Such kind of default has to be dealt with in accordance Section 69(1)(o) and Section 69(1)(s)(xiii). Additional Commissioner, no doubt, has been authorized so was dealing with the proceedings under Section 66(6) of VAT Act, that falls within the scope of other proceedings. When it is so, the said authority has to be treated as an appropriate authority for the purposes of Section 69(1)(s) of the VAT Act, therefore, Additional Commissioner was competent to impose penalty under Section 69(1)(o) read with Section 69(1)(s)(xiii). It is clear that when penalty is levied, unless amount of penalty is paid or security in prescribed form is furnished, the seized taxable goods shall not be released. Therefore, when amount of penalty is paid, security is not required.

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