TMI Tax Updates - e-Newsletter
April 3, 2012

Case Laws in this Newsletter:

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

Articles

1. Unjust and unreasonable amendment vide notification dated 30.03.2012 withdrawing higher rate of depreciation for certain renewable energy machines to be installed on or after 01.04.2012. A request for reconsideration.

   By: DEVKUMAR KOTHARI

2. No cess on imported goods

   By: rajavel calaimany

3. Budget 2012- TDS AND TCS

   By: CSSwati Rawat

4. QUICK REVIEW ON BUDGET 2012- DEDUCTIONS

   By: CSSwati Rawat

5. The Indian Constitution: Judge who did not himself wrote judgment and got it written by others can be dismissed - the Supreme Court.

   By: DEVKUMAR KOTHARI

News

1. Joint Press Statement by the Chancellor of the Exchequer of UK and the Finance Minister of India After the Fifth Round of UK-India Economic and Financial Dialogue.

2. Calendar for Auction of Government of India Treasury Bills for the quarter ending June 2012 issued .

3. Change in Tariff Value of Gold, Silver, Brass Scrap (All Grades) and Poppy Seeds Notified .

4. Government of India (GOI), Asian Development Bank (ADB) and States of Tamil Nadu and Uttarakhand sign a $ 43.84 Million Loan Agreement for the Second Tranche of Infrastructure Development Investment Program to boost Tourism in two States.

5. India’s Foreign Trade: February, 2012.

Notifications

Central Excise

1. 22/2012 - dated 30-3-2012 - CE

Amend notification no. 18/2012-Central Excise - Prescribes peak rate of excise duty as 12% in most of the products and 6%, 14% adn 15% in certain cases .

2. 21 /2012 - dated 30-3-2012 - CE

Amends notification no. 12/2012-Central Excise - Prescribes effective rate of duty on goods falling under chapter 1 to 96.

3. 22/2012 - dated 30-3-2012 - CE (NT)

Central Excise ( Third Amendment) Rules 2002.

Customs

4. 17/2012 - dated 30-3-2012 - ADD

Anti-dumping duty on import of bias tyres, tubes and flaps falling under tariff items 4011 20 90, 4013 10 20 and 4012 90 49 of the First Schedule to the Customs Tariff Act, 1975, originating in, or exported from, China PR and Thailand.

5. 30/2012 - dated 30-3-2012 - Cus (NT)

Amends notification no. 36/2001-Cus (N.T.) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.

6. 29/2012 - dated 30-3-2012 - Cus (NT)

Amends notification no. 101/2004-Customs (N.T.) - Thailand — Interim Rules of origin for preferential tariff concessions for trade between India and Thailand.

Circulars / Instructions / Orders

FEMA

1. 101 - dated 2-4-2012

Overseas Direct Investments – Liberalisation / Rationalisation.

Highlights / Catch Notes

Customs

• Notification No. 30/2012-Customs (N.T.) amends tariff values for palm oil, palmolein, crude soybean oil, and brass scrap.

  Notifications : Amends notification no. 36/2001-Cus (N.T.) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values. - Ntf. No. 30/2012 - Customs (N. T.) Dated: March 30, 2012
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• India-Thailand Trade Boost: New Interim Rules for Preferential Tariff Concessions Under Notification No. 29/2012-Customs (N.T.

  Notifications : Amends notification no. 101/2004-Customs (N.T.) - Thailand - Interim Rules of origin for preferential tariff concessions for trade between India and Thailand. - Ntf. No. 29/2012 – Customs (N. T.) Dated: March 30, 2012
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• Anti-dumping duties imposed on bias tyres, tubes, and flaps from China and Thailand under Customs Tariff Act, 1975.

  Notifications : Anti-dumping duty on import of bias tyres, tubes and flaps falling under tariff items 4011 20 90, 4013 10 20 and 4012 90 49 of the First Schedule to the Customs Tariff Act, 1975, originating in, or exported from, China PR and Thailand. - Ntf. No. 17/2012-Customs (AD) Dated: March 30, 2012
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FEMA

• FEMA Circular No. 101: Streamlining Overseas Direct Investments for Easier Global Economic Engagement and Compliance.

  Circulars : Overseas Direct Investments – Liberalisation / Rationalisation. - Cir. No. 101 Dated: April 2, 2012
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Central Excise

• Excise Duty Amendment: New Peak Rate Set at 12% with Variations at 6%, 14%, and 15% for Specific Cases.

  Notifications : Amend notification no. 18/2012-Central Excise - Prescribes peak rate of excise duty as 12% in most of the products and 6%, 14% adn 15% in certain cases . - Ntf. No. 22/2012-Central Excise Dated: March 30, 2012
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• Central Excise Rules 2002 Amended: Streamlining Tax Procedures and Enhancing Compliance with 2012 Updates.

  Notifications : Central Excise ( Third Amendment) Rules 2002. - Ntf. No. 22 /2012--Central Excise (N.T.) Dated: March 30, 2012
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• Central Excise Duty Rates Updated for Goods in Chapters 1-96 per Notification No. 21/2012, Effective March 30, 2012.

  Notifications : Amends notification no. 12/2012-Central Excise - Prescribes effective rate of duty on goods falling under chapter 1 to 96. - Ntf. No. 21 /2012-Central Excise Dated: March 30, 2012
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Case Laws:

• Income Tax

• 2012 (4) TMI 80
  Indo-Japan Treaty – Japanese Banking company having branch offices in India – loan advanced by HO to PE on which interest has been provided by the PE - deductibility of interest payable to the H.O. and other Overseas Branches in the hands of branch offices in India - taxability of interest payable by PE in the hands of Head Office in India – deduction of tax at source from interest payments – Held that:- Although interest paid to the H.O. of the assessee bank by its Indian branch which constitutes its PE in India is not deductible as expenditure under the domestic law being payment to self, the same is deductible while determining the profit attributable to the PE which is taxable in India as per the provisions of article 7(2) & 7(3) of the Indo-Japanese treaty read with paragraph 8 of the protocol which are more beneficial to the assessee. The said interest, however, cannot be taxed in India in the hands of assessee bank, a foreign enterprise being payment to self which cannot give rise to income that is taxable in India as per the domestic law or relevant tax treaty. Accordingly, no liability for deduction of tax at source. Same is held for interest payments made to overseas branches – Decided in favor of assessee.

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• 2012 (4) TMI 79
  Depreciation on intangible assets being “business and commercial rights” - assessee, vide slump sale agreement, acquired power transmission and distribution business as a going concern for a total sale consideration of Rs. 44.7 crores out of which Rs. 16.58 crores were paid for acquisition of “business and commercial rights” being business claims; business information; business records; contracts; skilled employees; know-how described as “goodwill” –dis-allowance of depreciation on the amount described as goodwill by Revenue – Held that:- Addition of the words “business or commercial rights of similar nature” after the specified intangible assets clearly demonstrates intention of Legislature to provide depreciation to other categories of intangible assets which are not exhaustively enumerated. It is observed that in case of the assessee, intangible assets being Business claims; business information; business records; contracts; skilled employees; knowhow were invaluable and resulted in carrying on the transmission and distribution business by the assessee, without any interruption. Therefore, specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) and were accordingly eligible for depreciation. It is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation u/s 32(1)(ii) – Decided in favor of assessee.

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• 2012 (4) TMI 78
  Charitable Institution - Trust registered u/s 12A engaged in conducting coaching classes for open university/distance education – dis-allowance of exemption u/s 11 by A.O. - CIT(A) set aside dis-allowance on the ground that the assessee is entitled for exemption u/s 10(23C)(iiiad) – Held that:- Mere conducting of classes for open university/distance education cannot be construed as charitable activity within the meaning of section 2(15) of the Act. See Sole Trustee, Loka Shikshana Trust vs CIT (1975 - TMI - 6453 - Supreme Court), Bihar Institute of Mining And Mine Surveying v. CIT (1993 - TMI - 20160 - Patna High Court) Furthermore, when no approval was granted u/s 10(23C), CIT was not justified in holding that assessee is a charitable institution and eligible for exemption u/s 10(23C)(iiiad) – Order of CIT(A) is set aside. Also, cancellation/rejection of registration u/s 12A and completion of assessment under 'AOP' by the A.O. is without jurisdiction. Hence, it is open to the Commissioner to consider the case of the assessee and pass necessary order u/s 12AA(3). - Decided in favor of Revenue.

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• 2012 (4) TMI 77
  ITAT deleted the addition of Rs. 1.50 crore made by AO invoking the provisons of Section 40(a)(ia) read with section 194C - During the course of assessement proceedings in the case of the assessee, it was noticed by the Assessing Officer that the assessee had claimed that it had carried out work worth Rs. 4.92 crores for PGF Ltd. but the TDS certificate issued by PGF Ltd. was only in respect of Rs. 4.55 crores - In the present case payments has not been made by the respondent assessee to M/s. Rishikesh Properties Pvt. Ltd. for carrying out any work for it as sub contractor, secondly it is claimed as an expenditure under the head “profits and gain of business and profession” - Tribunal while deleting the addition made under Section 40(a)(ia) of the Act has made out altogether a new case and accepted the stand of the assessee that they had not paid Rs. 1.50 crores and the said work was not sub-contracted by them to Rishikesh Properties Pvt. Ltd - Held that: the order of the Tribunal is perverse and this Court should interfere with the said order - Decided against the assessee

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• 2012 (4) TMI 76
  DTAA between India and UAE - there is no dispute that tax has been assessed upon the assessee as agent of a shipping Company situated at UAE - Circular No. 333 dated February 2, 1982 issued by the Board which states that the provisions made in DTAA would prevail over the general provisions of the Act - Held that: the owner of the ship being admittedly a resident of UAE, there was no scope of taxing the income of the ship in any of the ports in India. - once it is found that the ship belongs to a resident of the other contracting country and such position has also been clarified by the Circulars issued by the Board as indicated above. - Appeal is dismissed

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• 2012 (4) TMI 75
  Writ petition - learned counsel appearing on behalf of the petitioner had submitted that it would suffice, if this Court is pleased to permit the petitioner to make a representation to the second respondent - the petitioner is permitted to make a representation to the second respondent, with regard to the return of the sale deed, dated 22.1.1973, registered on 13.2.1996, along with the other relevant documents, within a period of two weeks from today and on receipt of such representation - Petition is disposed of

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• 2012 (4) TMI 74
  DTAA - No PEs - Fees for technical services - Whether, on the facts and circumstances of the case, the payments received/receivable in connection with following costs incurred/proposed to be incurred for and on behalf of X India, are chargeable to tax in India - the payment received/receivable by the applicants in connection with the IVTC services are in the nature of technical services and taxable as FTS under section 9(1)(vii) of the Income-tax Act and that the exception provided in section 9(1)(vii)(b) is not available to the applicants - applicants have opted for and are entitled to avail the beneficial provision of the DTAA entered into by India with the respective countries of their residences - Technical services rendered by the affiliates do not “make available” technical knowledge, experience, skill, know-how or process while preparing these reports for their clients, X India / Indian customers - Held that: The payments received / receivable by the applicants in connection with IVTC Services are chargeable to tax as FTS under section 9(1)(vii) of the Act, but not under the provisions of Article on “Royalties and fees for technical services” under the respective DTAAs or when the said Article is read with the MFN clause, which has to be taken as part of the Convention In the absence of a provision on FTS, the amount received by the applicants would be taxable as business income under Article 7 of the DTAA. As the applicants do not have a PE in India, the amount received would not be taxable as business income - FTS shall be governed by Article 22 of the Tax Treaty and not as per Article 7 of the Tax Treaty that deals with taxation of business profits - Rulings are given

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• 2012 (4) TMI 73
  Deduction u/s 80-IC - Rule 8 of the ITAT's Rules - the assessee has pleaded two more issues in ground Nos. 7 & 8, wherein it has challenged the selection of its case for scrutiny assessment and non-service of notice under sec. 143(2) of the Income-tax Act, 1961within the statutory time period - Whether manufacturing of fragrances, fragrant compound, attar and other floral waters at its undertaking at Bhimtal amounts to manufacture within the meaning of definition of expression "manufacture" provided in section 2(29)(BA) of the Income-tax Act, 1961 - In order to avail deduction under section 80IC, an assessee has to fulfill the conditions contemplated in the section - The assessee has not manufactured any article or thing, which provided in thirteenth schedule. It is situated in Industrial Estate, thus it falls in section 80IC(2)(ii) of the Act - it is concluded that as far as geographical location of the assessee is concerned, it falls within the industrial estate specified for the purpose of admissibility of deduction under sec. 80-IC of the Act Regarding manufacture - The stand of the revenue authorities is that at the most activity carried out by the assessee is of blending one. It has just mixed the floral distillate from Kannouj and no new or distinct product has emerged out - learned counsel for the assessee has placed in the written submissions a flow chart exhibiting the activities carried out by the assessee before producing altogether distinct saleable commodity which has its own identification in the commercial world - he moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes 'manufacture' takes place and liability to duty is attracted - assessee contended that its undertaking is registered with Excise Department, however, excise duty is exempt by virtue of notification Nos. 49 and 50 of 2003 - Decided in favor of the assessee by way of direction to allow the deduction

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• 2012 (4) TMI 72
  Recovery of arrears of tax and interest - learned counsel had further submitted that the petitioner would pay a sum of Rs.3 lakhs, which is about 1/3 of the amount said to be payable by the petitioner, as arrears of tax and interest - The attachment of the bank account of the petitioner, made by the second respondent, if any, in respect of the above mentioned dues, shall be raised, on the petitioner paying the amount of Rs.3 lakhs

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• 2012 (4) TMI 71
  Interest under Section 220(2) - Application u/s 220(2A) - learned standing counsel appearing for the respondents submit that from the pleadings itself it is obvious that this is a case where the grounds mentioned in section 220(A) were not cumulatively made out and that in spite of it partial waiver has been granted - the order does not contain any reason why the first respondent has limited the waiver only to 1/3rd of the interest levied - Held that: the interest should be limited 1/3rd of what is levied on the petitioner - petition is disposed of

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• 2012 (4) TMI 54
  Deduction u/s 80IB - Housing projects – assessee constructed buildings A, B, C and D and did not claimed deduction on ground of approval being granted prior to 01.10.1998 – approval for additional 'E' building received on 11.10.2002 - Revenue contended that 'E' building being continuation of A, B, C and D buildings, the project must be held to have commenced prior to 1st October 1998 hence no deduction – deduction also denied on ground of area of plot and size of the flats – Held that:- Construction of 'E' building constitutes an independent housing project and, therefore, the date on which the earlier housing project had commenced construction could not be applied to the housing project consisting of 'E' building merely because the conditions set out while granting approval to the earlier housing project have also been made applicable to the housing project in question. In present case, total area of plot for 5 buildings is 2.36 acres – Revenue contending proportionate vacant area for E building would be less than one acre – Held that:- Section 80IB(10) does not suggest that the plot of land must be vacant. Deduction is available on construction of a housing project on a plot having area of one acre, irrespective of the fact that there exist other housing projects or not. Further, as contended by Revenue that two flats were merged and size of flat exceeded 1000 sq ft – It is found that there was no merger of flats. Therefore, Tribunal rightly allowed deduction u/s 80IB – Decided in favor of assessee.

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• 2012 (4) TMI 53
  Reopening - Set off of business loss ignoring the provisions of section 90(2) - held that:- From the prescription of section 71, it is palpable that there is no bar in allowing set off of loss under the head "Profits and gains of business or profession" against income under the head "Income from other sources". This section applies to all assesses, whether resident or non-residents, so long as income of non-resident assesses is computed under the provisions of the Act. The present assessee has also chosen to be covered under the Act. It is seeking loss under the head 'Profits and gains of business or profession' to be set off against 'Income from other source'. There is hardly any difficulty in holding that the Assessing Officer was not justified in taxing 'Income from other sources' amounting to Rs. 12.57 crore without allowing its set off against the business loss of Rs. 48.80 crore. - Decided in favor of assessee. Regarding reassessment - it is abundantly clear that where an assessment order is passed u/s 143(3), no action can be taken under this section after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax escaped assessment by reason of failure on the part of the assessee inter alia to disclose fully and truly all material facts necessary for his assessment - The reassessment has been initiated on the score that the loss so declared by the assessee was liable to be considered as 'Capital gain' and not 'Business income' and hence its set off was not permissible against income from other sources - It is a trite law that change of opinion cannot be a reason to reopen the completed assessment - Appeal is allowed

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• 2012 (4) TMI 52
  Nature of DEPB credit and premium received on transfer of DEPB – impact on eligible profits for section 80HHC – alleged non-satisfaction of conditions prescribed in the third proviso to Section 80HHC(3) - Held that:- DEPB credit falls under Clause (iiib) of Section 28, whereas the premium received thereon on transfer will represent profits chargeable u/s Clause (iiid) and the deduction u/s 80HHC has to be computed accordingly. It was held that only 90% of the “profits” can be excluded by applying Explanation (baa) below Section 80HHC – Decided in favor of assessee. Applicability of third proviso to Section 80 HHC(3) is not examined and have been referred back to the Assessing Officer.

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• 2012 (4) TMI 51
  Method of accounting - works contract – denial of project completion method – rejection of books of account – addition made - assessee have shown running payment and expenses against WIP in Balance sheet and excluded it from P/L A/c - Held that:- CIT(A) while confirming addition made contradictory statements – on one hand allowed project completion method & on other hand denied it. Accordingly, it is clarified that in case assessee had not claimed loss in the P/L A/c, the same will not be reduced. In case he had claimed this loss, it will be disallowed. Also, amounts related to payments received/bills raised and the expenditure incurred will be excluded from P/L A/c. Further, Completed contract method is not contrary and can be adopted and applied when an assessee follows mercantile system of accounting. However, we remand the matter to the tribunal to examine the other aspects relating to computation of taxable income on the basis of completed contract method – Decided partly in favor of assessee.

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• 2012 (4) TMI 50
  DTAA between India and Netherlands - Capital gain - release and relinquishment of tenancy rights - The applicant is a Dutch citizen since 1984 and holds a card of Person of Indian Origin since 6.10.2003 - As regards the amount received on release of tenancy rights, the tenancy rights are in respect of real estate and would be gains derived from alienation of immovable property. As the immovable property is situated in India, the gains are taxable in India under Article 13.1 of the DTAA Regarding capital gain - since the value of the shares is derived principally from immovable property situated in India, the same are taxable under Article 13.4 of the DTAA in India - TDS already paid on the sale of shares is to be allowed credit against any tax demanded by the Revenue, upon its proper verification - Ruling is given

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• 2012 (4) TMI 49
  Refund of the tax amount with interest - the petitioner submitted that petitioner's applications submitted on 06.06.2008, 06.10.2008, 25.11.2008, 16.12.2009 and 27.04.2011 are pending consideration before the authority under Section 132B(4) of the Income Tax Act, 1961 - If the authorities have not decided these applications for such a long time, then it is a serious matter but we are not taking immediate action and in future there may be harsh order against the officers who have not decided the applications - Petition is allowed

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• 2012 (4) TMI 48
  Reassessment - Assessment was completed u/s 143(3) - The investigation had been conducted and on the basis of information received, the Assessing Officer formed a prima facie or tentative opinion that the assessee had received bogus credit entries of Rs.42,03,250/- from the parties mentioned in the table - the information provided by the Directorate of Income Tax Investigation was not available with the Assessing Officer during the course of the first/original proceedings - Decided against the assessee. Regarding approval u/s 151 - assessee submits that one of the conditions raised by the assessee was that there was no valid approval under Section 151 of the Act and the said aspect has not been examined by the tribunal as they had decided the appeal as noticed above on a different contention/argument. It will be open to the tribunal to examine the question whether or not there was a valid approval under Section 151 of the Act and decide the appeal of the Revenue on merits. - Matter remanded back to tribunal.

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• Customs

• 2012 (4) TMI 70
  Re-export of consignment – goods imported did not match and tally with the description of the goods mentioned in the bill of entry/invoices - petitioner paid the custom duty on default goods -fault and negligence of the consolidator - petitioner's consignment had been sent to Taiwan and the consignment that was meant for Element Fix Ltd., Taiwan had been sent to India instead – permission asked to re-export the consignment - granted permission after 22 months levying a penalty of Rs.10,000/ - petitioner claimed refund or drawback being 98% of the customs duty paid by them – AO rejected the refund claim goods were not entered for re-export within two years from the date of payment of customs duty – Held that :- the custom authorities took their own time to grant permission to re-export - permission for re-export was granted on 1st May, 2007, though the request was made on 30th June, 2005 - the lapses and default have been on the part of the Respondents - present case would be covered under Section 154 of the Act as it is a case of errors arising out of incidental slip or omission - The petitioner has been made to go through several proceedings, furnish NOC, etc - penalty imposed is quashed allowing a refund along with interest @ 10% per annum w.e.f. 1st January, 2008 till payment is made - respondents will pay costs of the present proceedings which are assessed at Rs.10,000/- within 2 months of order.

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• 2012 (4) TMI 69
  Demand - Redemption file - Penalty - When the value declared and taken for determination of duty by the department is found to be not acceptable in these cases, we have to give a finding as to what value should be adopted for quantifying the duty amount - The two importers are 100% EOU viz. M/s. ETK Softech (P) Ltd. Ranipet and M/s. ORJ Electronic Oxides Ltd. Pudukottai, both licensed under Section 58 of the Customs Act, 1962 to operate as private warehouses for goods imported by them - Investigation by DRI also revealed that similar capital goods imported from Singapore by M/s. ORJ through Tuticorin Port and cleared under Bill of Entry No. 346 dated 27.5.97 were the same goods which M/s. ETKIF had manufactured and exported under Shipping Bill No. 1516 dated 9.4.1997 through Chennai Port - This is a case where admittedly the goods of Indian origin exported earlier have been re-imported. - if proper goods of the declared value were actually imported and the same was either mis-used or diverted for home consumption, and not used in an EOU unit, there would have been evasion of customs duty on that score - Held that: the export value is available in respect of both the consignments in terms of FOB value in both the cases the value is indicated as USD 1,71,300 Whether any amount would have to be added to the value towards insurance and freight charges as the import value is required to be computed on CIF basis - Held that: addition of actual freight and insurance charges or the addition of usual 20% when such amounts are not available may not be necessary as the FOB value in India can be taken as it is as the CIF value in India in respect of these cases for the purpose of determining customs value and customs - it is clear that the fraudulent transactions involved in these cases were not so much intended to defraud the customs department or cause customs duty evasion as was for obtaining inadmissible benefits violating provisions of other enactments such as the Income Tax Act and the Foreign Exchange Management Act etc In the eyes of the customs law, being owners, they were importers and under the income tax law being owners, they alone were eligible for claiming depreciation in respect of the impugned imported machinery - It makes no difference to the legal position that in respect of one Bill of Entry, the financing institution had signed the Bill of Entry and in the other case, the bank had not signed it, since in both the cases, the Bills of Entry were filed in the joint name, the ownership was retained with SFL/Bank, the purchase order was placed by SFL/bank, the Bill of Lading was in the name of SFL/Bank and the commercial invoice was also in the name of SFL/bank Regarding penalty - Held that: the order passed in this case confirming the penalty in an export fraud case, has been passed in the larger interest of arresting fraudulent acts, in a Writ Petition and does not interpret the statutory provisions of Section 114 or under any of the sub-sections thereof to conclude that value under Section 14 has to be taken as the mis-declared value - the penalty imposed was very low even compared to the actual value of the goods. It was held by the Tribunal that the penalty imposed by the adjudicating Commissioner was very low considering the declared value of the goods, gravity of offence and the extent of mis-declaration - Appeals are partly allowed by way of remand to Adjudicating Commissioner

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• 2012 (4) TMI 68
  writ Petition- Petitioners had imported second hand Digital Multifunction Print and Copying Machines - the customs authorities may be directed to release the retained goods on payment of the applicable customs duties on the declared value of the goods on their furnishing the necessary provisional duty bonds, pending final assessment in order to safe guard the interest of the Revenue - The petitioners stated that they had imported the second hand goods from their overseas suppliers who had also filed the Bills of Entry, with the assessment group concerned, at the Chennai Custom House, declaring the value of the imported goods and sought the clearance of the goods, under `Free Importability', as second hand capital goods, in terms of Foreign Trade Policy - the Customs authorities had not taken up the goods for assessing their value, for the payment of the customs causing a delay - petitioners are incurring heavy financial losses due to the payment of detention and demurrage charges – Held that: - the authorized chartered engineers had not inspected the goods in question, the customs authorities concerned shall direct the inspection of such goods before they are released. Such goods may be directed to be released, on payment of the appropriate customs duty and on the fulfillment of the conditions prescribed by law - writ petitions of assessee allowed.

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• 2012 (4) TMI 67
  Classification of goods being natural sea water used for curbing deficiency of mineral in the body – Commissioner(Appeals) classified it under heading 2501 – Revenue contending heading 2106 covering food preparations – Held that:- Once we are satisfied that the goods have not undergone any preparation and nothing contradictory evidence is brought by revenue to discard the observation of first appellate authority. Classification under heading 2501 is upheld – Decided against the Revenue.

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• 2012 (4) TMI 60
  Redemption fine - Penalty - the respondent refuses to allow the petitioner to clear the goods on the ground that the imported goods comprises of hazardous electronic waste - The grievance of the petitioner in this writ petition is that despite the appellate order, the respondent is not permitting clearance of the goods, although the petitioner is willing to pay the redemption fine and penalty - The only contention raised by the respondent is that against the appellate order, the respondent has already approached the Tribunal with an appeal and, therefore, the goods cannot be released until the appeal is disposed of - that is no ground to refuse the relief to the petitioner in accordance with the appellate order obtained by him insofar as there is no order staying the appellate order yet - Petition is disposed of

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• 2012 (4) TMI 59
  Differential duty - Writ petition for a Mandamus directing the respondents to release the goods namely 42.260 kilograms of Slack Wax, imported vide Bill of Entry No.5526310, dated 21.12.2011 on the value declared by the petitioner at USD 16,904.00 - the claim of the petitioner is that they had imported 42.260 kilograms of Slack Wax from M/s.Baykim Chemicals, Turkey, vide invoice No.70221, dated 19.08.2011 - While examining the claim of the petitioner for provisional release, it is to be seen what are all the circumstances under which the import was done and thereafter, the value so declared by the petitioner is a matter to be taken into account - The only reason for non releasing of the goods is that the petitioner has undervalued the goods at USD 400 per MT. Now the Directorate of Revenue Intelligence, Thoothukudi, on investigation found that the value of goods is USD 1058 per MT - the goods in question is not a prohibitory item under the provisions of the Act and having regard to the foregoing reasons and discussions and considering the circumstances of the case, provisional release of the goods is ordered with reasonable conditions.

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• 2012 (4) TMI 43
  Demand - Notification Nos.13/81-Cus dated 9/2/1981 and 53/97-Cus dated 3/6/1997 - Assessee, a 100% Export Oriented Unit (EOU) failed to fulfill the export obligation even after importing duty free import of raw materials to the tune of Rs.3.94 crores - The Tribunal held that the extension of the Bonding period could be granted even after the expiry of the bond period in appropriate cases and accordingly, granted extension of the bond period to the assessee. It is not in dispute that in the present case, the respondent-assessee had neither sought re-warehousing of the goods nor sought extension of the bond period. - matter remanded back to tribunal for fresh decision.

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• Corporate Laws

• 2012 (4) TMI 66
  Dissolution of the Company (in liquidation) under Section 481 of the Act - application moved by the Official Liquidator ) for dispensing with the requirement of filing the accounts and audit of the Company (in liquidation), since it has no funds to its credit - that the Official Liquidator is not in a position to proceed further with the winding up of the Company for want of funds, assets and reasons stated in the application and for discharging the Official Liquidator from proceeding further - promoters of the Company (in liquidation) filed for winding up of the said Company on the ground that though the Company was incorporated in the year 1992, no shares was subscribed and no statutory meeting of the Company has held - Held that:- when the affairs of the Company had been completely wound up or the Court finds that the Official Liquidator cannot proceed with the winding up of the company for want of funds or for any other reasons, the Court can make an order dissolving the Company from the date of that order [Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti [2007] 78 SCL 482 ] - Consequently the Company (in liquidation) shall stand dissolved and the Official Liquidator attached to this Court is discharged - make necessary arrangement for payment of fee to the counsel for the Official Liquidator from the Common Pool Fund

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• 2012 (4) TMI 47
  Annual general meeting - the 7th to 12th annual general meetings of the company could not be held. On 28th May, 2008 the company issued notices for holding these annual general meetings on 27th and 28th June, 2008 at diverse timings specified in the notices. - Sajal was aggrieved by issuance of these notices and approached the Company Law Board by filing an application to restrain holding these meetings. The Company Law Board allowed that application on 25th June, 2008. The company and Kamal and his group were restrained from holding these meetings on 27th and 28th June, 2008 further to the notice dated 28th May, 2008. Held that:- Board of directors to be constituted as per the direction - in view of the Supreme Court order read with the Company Law Board order and the Companies Act, 1956 Mr. Sajal Dutta would retire by rotation but would be deemed to be re-elected at the general meeting. - Board of directors will issue fesh notice holding all the 7th to 12th AGM. The Company Law Board (CLB) fell into great error in altogether preventing holding meetings as mentioned in the above notices. It ought to have permitted them to be held

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• 2012 (4) TMI 46
  Petition u/s 100 to 105 - Rule 46 of the Companies (Court) Rules, 1959 - Reduction of share capital - Upon the respondent Company thereafter filing the petition aforesaid for approval of its action of reduction of share capital, initially 24 shareholders including the appellant filed objections - Held that: the valuation of the shares, since the Board of Directors of the respondent Company itself had not accepted the valuation at Rs. 836/- per share of the Accountants engaged by the respondent Company and had increased the valuation to Rs. 940/- and further since the respondent Company when faced with the objections had further increased the said valuation to Rs. 1,500/- but nevertheless find that there can be no better indice of valuation than the market forces - The acceptance by all the other public shareholders except the appellant of the price of Rs. 1,500/- clearly establishes that though the price of Rs. 940/- offered may not have been the correct price but the price of Rs. 1,500/- clearly was - Appeal is dismissed

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• 2012 (4) TMI 45
  Registrar of Companies (ROC) received a complaint regarding the affairs of M/s. Tianjin Tianshi India Pvt. Ltd. (the Company) being irregular and illegal - a report was sent by ROC to the Central Government in terms of section 234 (6) of the Act seeking advice for prosecution of company u/s 234 of the Act - It was submitted that the alleged offences being punishable with fine only, the limitation of taking cognizance under Section 468(2) Cr.PC was six months - It was submitted that the alleged offences being punishable with fine only, the limitation of taking cognizance under Section 468(2) Cr.PC was six months - There is no dispute with regard to the proposition of law that the powers of this Court under Section 482 Cr.PC were to be exercised sparingly and in exceptional circumstances where there appeared to be glaring injustice or manifest error committed by the trial court Regarding non-issuance of notice under Section 234 of the Act to the petitioners, it is seen that ROC issued a letter dated 24.2.2004 to the company to enquire about its affairs - the contention of the petitioner that cognizance by the Trial Court was barred by the limitation, the Trial Court record must be perused - The period of limitation for taking cognizance of the offences commences when the knowledge of the commission of offence is gained by the prosecuting agency - Held that: present offence arises out of a failure to comply with the statutory rule and such liability will continue until the requirement is complied with - Petition is allowed

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• Service Tax

• 2012 (4) TMI 472
  Failure to examine the material which gives rise to the demand making the adjudication unsustainable - both the authorities proceeded under presumptions and suppositions without applying their mind to examine the evidence which has determined liability - Held that :- it is desirable in the interest of justice to send the matter back to the adjudicating authority to examine the very source document which creates liability and incidence tax shall be determined - All legal pleadings are open to the appellant to argue before the adjudication authority in its defence leading permissible evidence

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• 2012 (4) TMI 471
  Penalty imposed u/s 76, 77 & 78 of Finance Act 1994 - Cable operator – period 1.9.03 to 31.3.06 – services taxable w.e.f. 16.08.2002 – assessee pleaded illiteracy, bona fide belief of non-taxability of said service and financial hardship – Held that:- Service tax together with interest is confirmed as not contested by the applicant. Tribunal in the case of Krishna Satellite Cable Network v. CCE [2008 - TMI - 31294 - CESTAT NEW DELHI] has held that there could be bona fide reasons on the part of the assessee, who was cable operator and was receiving signals from multiple system operator, as regards the fact of services not being taxable. In view of aforesaid, penalties are set aside – Decided in favor of assessee.

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• 2012 (4) TMI 83
  Whether Cenvat Credit on service tax availed in respect of GTA services, received by assessee, can be used for payment of service tax on the GTA services for outward transportation of the goods – Held that:- The issue is no more res integra. Assessee was within his rights to utilise Cenvat Credit for payment of service tax on the GTA service so received by him. See Nahar Industrial Enterprises Ltd. v. UOI (2010 - TMI - 207889 - Punjab And Haryana High Court), CCE vs Auro Spinning Mills (2011 - TMI - 211441 - Himachal Pradesh High Court) – Decided in favor of assessee.

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• 2012 (4) TMI 82
  Demand - Classification - Business Auxiliary Service or storage and warehousing - During the pendency of the application for centralized registration, the anti-evasion wing at Bangalore initiated investigation against the branch office of the appellant at Bangalore for evasion of service tax - another show-cause dated 16.04.2007 was issued demanding service tax amounting to Rs. 3,14,81,709/- for the period from 01.10.2005 to 30.09.2006 as the same formed as in the previous notice and the case was assigned to Commissioner of Central Excise, Thane I for adjudication - Ld. Advocate for the appellant submits that the provisions relating to storage and warehousing under section 65(102) and 65(105)(zza) of the Finance Act, 1994 applies only in respect of good as defined in the Sale of Goods Act, 1930 Whether the records such as discharged cheques, vouchers, deeds, agreements, books of accounts of banks and corporate houses would come under the category of ‘goods' as per the provisions of section 2(7) of the Sale of Goods Act, 1930 or not - it is clear that to constitute goods, saleability is an essential criteria. If "saleability" was not a relevant criterion, there was no necessity to refer to the definition of goods, under the Sale of Goods Act, 1930. Sale of Goods Act governs sale and purchase of goods - the various old records such as discharged cheques, vouchers, books of accounts in respect of which the service was rendered by the appellant to his clients such as banks and corporate houses for management of the records, cannot be considered as storage and warehousing of "goods" as defined in the Finance Act, 1994 read with section 2(7) of the Sale of Goods Act, 1930 - Decided in favor of the assessee

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• 2012 (4) TMI 81
  'Maintenance and repair services' – tyre retreading – non payment of service tax – demand imposed on non-production of documents by appellant – appellant partly paid demand on the presumption that 30% of the total services is liable to tax – Held that:- Since Invoice produced during proceedings covers almost 35% of the amount of service provided. Therefore, on further pre-deposit of Rs.1,00,000/- apart from amount already deposited, matter would be remanded back to adjudicating authority.

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• 2012 (4) TMI 62
  Stay petition - Cenvat credit - During the course of audit of the records of the assessee, it was noticed that the appellants had taken Cenvat credit of Rs.1,45,245/-against debit notes issued by Shri Ganpat Pal Onkarlal Agarwal & Co. for clearing and forwarding charges as also loading and unloading charges at Railway Station - The Counsel for the Appellant submits that though the document is titled as "Debit Note" the said document contains all relevant details as specified in Rule 9(2) of the Cenvat Credit Rules, 2004 and therefore there is no reason to deny the credit - Appeal is allowed

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• 2012 (4) TMI 57
  Writ petition - The learned counsel appearing on behalf of the petitioner had submitted that it would suffice, if the respondent is directed to consider the representation of the petitioner on merits, within a specified period - Held that:- the respondent is directed to consider the representation of the petitioner on merits and in accordance with law, within a period of two weeks from the date of receipt of a copy of this order - Petition is disposed of

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• 2012 (4) TMI 56
  Application for stay - Demand - Suppression of facts - The department was of the view that the service undertaken by the appellants is liable to be taxed under the category of "Manpower Recruitment or Supply Agency Service" for the period prior to 01.05.2006 and under the category of "Ship Management Services" w.e.f 01.05.2006 - Board's Circular no. 334/1/2008-TRU dated 29.02.2008 - As per the agreement entered into by the appellant with their customers, it is seen that the appellant has to arrange for Master, officers and crew on-board the vessels as required under the Merchant Shipping Act, 1958 and any other International Maritime Act and as per manning standards - The very fact that the appellants have collected the Service Tax from their customers such as M/s ABG Shipping Co. and M/s Pranik Shipping without remitting the same to the exchequer clearly shows that they were fully aware of their service tax liability CBE & C in their letter dated 29.02.2008 has clarified that introduction of a later entry under the Service Tax does not ipso facto mean that the said activity was not covered under the previous entry though they were specifically included under the definition of taxable services - the appellant has not made out any prima facie case for grant of complete waiver of pre-deposit. Inasmuch as the appellant has collected the amount of service tax form some of their clients, the balance of convenience lies in favour of the Revenue by way of direction to deposit Rs. 85 Lakhs

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• 2012 (4) TMI 55
  Overseas commission agent services received – 'Business Auxillary Services' - services provided being before 18.04.2006 - Held that:- Liability under Finance Act 1994 for availing service of foreign agents arise after 18.04.2006 following Apex Court decision in case of Indian National Shipowners Association v. Union of India (2010 - TMI - 78723 - Supreme Court of India) - Decided in favor of assessee

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• Central Excise

• 2012 (4) TMI 65
  Exemption under Notification No.8/97-CE, dated 1.3.1997 - finished goods manufactured by the 100% EOU out of the raw material supplied by another 100% EOU, and subsequently, cleared in the Domestic Tariff Area (DTA) in accordance with the EXIM Policy 1997-2002 – Revenue contended availiability of alternative benefit of Notification No.2/95-CE, dated 4.1.1995 – Held that:- The notification requires to be interpreted in the light of the words employed by it and not on any other basis. There cannot be any addition or subtraction from the notification for the reason the exemption notification requires to be strictly construed by the Courts. The wordings of the exemption notification have to be given its natural meaning, when the wordings are simple, clear and unambiguous. Therefore, Tribunal has rightly allowed the benefit of exemption under Notification no. 8/97-CE – Decided against the Revenue.

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• 2012 (4) TMI 64
  Writ petition - alternative remedy to file an appeal - demand of duty of excise on an amount written off representing advances towards dies and tools - held that:- the petitioner company ought to have availed the appellate remedy, by filing an appeal before the Commissioner (Appeals), Chennai. However, the petitioner has chosen to prefer the present writ petition before this Court, under Article 226 of the Constitution of India, without showing proper cause or reason to do so. - it would be open to the petitioner company to file an appeal before the Commissioner (Appeals) Chennai, by raising all the grounds available to it, as per law, within a period of thirty days from the date of receipt of a copy of this order.

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• 2012 (4) TMI 63
  Tribunal had remanded the matter to the lower authority - the respondent aggrieved by order went before the Hon'ble High Court that passed order on 28.2.2005 without considering that Revenue's appeal was time-barred - review was done before 31.12.02 and unsigned review order was communicated on 17.3.2003 - upon receipt of such order, appeal was filed before Tribunal on 31.3.2003 - respondent challenged the date of review by Board, Revenue was directed to place review record for perusal of the Bench but failed to produce its record and establish that review was done actually on or before 31.12.2002. Revenue explains its stand relying on an unsworn affidavit received from Board – Held that: - Right to appeal is a statutory right which is exercised in accordance with law and within the time prescribed by it to put an end to the litigation - Time of 1 (one) year was prescribed to review order - merely explaining the practice followed by Board in decision making, Revenue is not absolved of its obligation to adhere to the limitation prescribed by law - entire contention of Revenue based on Board's unsworn affidavit averring non-availability of review record does not grant immunity from bar of limitation - in absence of any cogent evidence establishing date of review was on 31.12.02 Revenue's appeal is dismissed.

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• 2012 (4) TMI 61
  Demand - on the ground that invoices did not contain necessary details as required under Rule 11 of Central Excise Rules, 2002 - . Learned consultant on behalf of the appellants submitted that appellant's grievance is that Cenvat credit has been denied without considering the provisions of Rule 9(2) of Cenvat Credit Rules, which provides that Cenvat credit can be allowed even when certain details which are required to be contained in invoices are not available - The fact that Rule 9(2) is an exception to the provisions of Rule 11 of Central Excise Rules, has not been taken note of by both the lower authorities - it is necessary to go through the records maintained by the assessee and the documents in detail and thereafter come to a conclusion - Decided in favor of the assessee by way of remand to original adjudicating authority

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• 2012 (4) TMI 44
  Waiver of pre-deposit - In the present case, by a showcause notice dated 24th June 2008, the assessee was called upon to showcause as to why the price charged by Thomson India to Tata Sky Limited (instead of the price charged by the assessee to Thomson India) in respect of the goods cleared during the period from 1st April 2007 to 23rd January 2008 should not be treated as the transaction value of the goods sold by the assessee to Thomson India under Rule 10A of the 2000 Rules and the duty be recovered accordingly - Advocate appearing on behalf of the assessee submitted firstly that in the present case, the sale effected by the assessee is governed by the provisions contained in Section 4(1)(a) of the Act and, therefore, the transaction value alone should be the basis for determining the central excise duty liability - the Adjudicating Authority concluded that the price of the raw materials purchased by the assessee are controlled by the Thomson India and, therefore, Thomson India indirectly supplied the inputs to the assessee through its sister concerns set out in the approved Vendors List at the price controlled / approved by the Thomson India - the prima facie view of the CESTAT that the Adjudicating Authority was justified in holding that Thomson India supplied the inputs to the assessee by persons authorized by Thomson India and, therefore, the assessee being a jobworker manufacturing goods on behalf of Thomson India would be covered under rule 10A of the 2000 Rules cannot be faulted.

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• 2012 (4) TMI 42
  Recovery Rules - father of the Petitioner during his life time had by a deed of Gift gifted a property to her daughter (petitioner)- a notice of demand was addressed to the Petitioner’s father to pay Central Excise duty and penalty on the basis of a Certificate No.01/2011-12 dated 2 May 2011 else the procedure for attachment under the Recovery Rules 1995 would follow - the Petitioner was informed by notice that arrears of duty and penalty are recoverable from the Company; in the Municipal record the property stands in the name of the Petitioner’s father and as she was in occupation of the said property - petitioner contented that neither she nor her father was a defaulter of Excise duty under Section 142 (1) and the notice itself which very clearly states that the arrears of duty and penalty are recoverable from the company - Respondents have filed an affidavit that an agreement exists Mukherjee Brothers and Kapoor family who together controlled the said company, the shares of the Kapoor family were transferred to Mukherjee Brothers provided that the Mukherjee family would be responsible to discharge the Excise duty liabilities of the said company -Held that :- as per the Recovery Rules, 1995 “Defaulter” means any person from whom government dues are recoverable under the Act and in this case neither the Petitioner nor her father who was a Director of the company, were defaulters hence recovery rules will be applicable for the company - It is an undisputed position that duty and penalty are arrears of the company as per the agreement - allow the petition of assessee.

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• 2012 (4) TMI 41
  Availability of turnover discounts – Commissioner dismissed appeal for non-compliance with the stay order – pre-deposit confirmed - Held that:- Identical issue came before Tribunal in 2011 and unconditional stay was granted. Since Commissioner has not decided the appeal, matter is remanded back for decision on merits without insisting of any pre-deposit.

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• CST, VAT & Sales Tax

• 2012 (4) TMI 58
  Demand - whether imposing/charging of interest under Section 30(4) of the Maharashtra Value Added Tax Act 2002 in respect of the late payment of tax for the years 2005-06, 2006-07 and 2007-08 is valid in law - Consequent to the Intimation, on 20 August 2009 the Petitioner filed revised returns for the years 2005-06, 2006-07 and 2007-08 and also paid the differential tax demanded consequent to the audit, aggregating to Rs. 41,38,416/- along with interest thereon under Section 30(3) of the Act - The demand for interest is not for the period prior to 1 July 2009 as the interest is being charged not with regard to a delay (period/time wise) in making the payment of tax to the State but is charged at a flat rate of 25 per cent of the additional tax payable as per the revised returns - In the present case, the interest is being charged at a flat rate and has no relation to the length of time(delay) in making the payment of tax - Petition is dismissed

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