Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 30, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Royalty / FTS – back-up services and IT support services for solving IT related problems - DTAA - unless and until the services are not made available, same cannot be taxable in India. - AT
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Exemption 10A(7) r.w.s. 80IA(10) - Excessive profit - since the assessee's operations are efficient enough to obtain more profits AO's action in restricting the profits is not correct. - AT
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Cessation of trading liability U/s 41(1)(a) - Outstanding of creditors even for more than three years cannot be considered as sufficient evidence of cessation of liability automatically - AT
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Computation of capital gains - deduction u/s 48 or u/s 54 - consideration paid to wife under the condition of separation - should be considered as allowable deduction u/s.54(2) - AT
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TDS u/s 194C - separate contracts or composite contract - essentially it was only the main contract for construction of refinery - TDS liable to be deducted on the whole amount - HC
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Revenue Recognition - Reimbursement of advance tax - it cannot be said that the amount disputed by APTRANSCO has really accrued only because, the assessee company has raised the bill - AT
Customs
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MRP based valuation - imports - the appellants are importing the goods not for retail sale but for repacking, labelling and branding and selling the same in bulk - No CVD on MRP – AT
Corporate Law
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Unfair trade practice –u/s 19 (1) (a) – installation of people meters only in urban areas can not reflect viewers choice PAN India. - it is apparent that OP was not displaying the true picture regarding TVR/TRP of Doordarshan. - CCI
Service Tax
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Levy of Service Tax on Chit Business - Scope of the term “services“ - section 65B(44) - Negative list - transaction in money - No Service Tax - Sr. No. 8 of the Abatement Ntf no. 26/2012 quashed. - HC
Central Excise
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Cenvat Credit - Job Worker availed cenvat credit on inputs and capital goods - Job work under NTF No. 214/86-C.E. not to be considered as exempted goods if principal is payaing duty - AT
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Refund claim - reduction of price subsequent to clearance of the goods - Refund claim rejected - price variation clause itself is not a ground to consider the assessment as provisional assessment - AT
Case Laws:
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Income Tax
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2013 (4) TMI 643
Royalty / FTS – back-up services and IT support services for solving IT related problems - DTAA - Assessee is a non-resident company incorporated in Australia and appeal is on following grounds – (i) IT support services rendered by the Appellant are in the nature of Royalty/FTS within the meaning of article 12 of the India-Australia treaty and/or Section 9(1)(vii) of the Income Tax Act, 1961. (ii) services rendered by the Appellant fall within the ambit of Royalty/FTS and making an addition by treating such IT support services as chargeable to tax in India. Held that - In the present case, the assessee has not made available any technical knowledge or expertise to the recipient Indian company. In our opinion, the assessee has only provided the back-up services and IT support services for solving IT related problems to its Indian subsidiary. Hence, unless and until the services are not made available, same cannot be taxable in India. We, therefore hold that the services rendered by assessee company to its Indian group companies, though are in the nature of technical services, but is not covered in para (3)(g) to Article 12 of the India Australia Treaty and hence, the same is not taxable in India. We also hold that the amount received by the assessee cannot be treated as a Royalty even under the normal provisions of I.T. Act. But under the normal provision of the I.T. Act the same constitute consideration for rendering the technical services covered u/s.9(1)(vii) of the I.T. Act. Accordingly, Ground No. 1 is allowed and issue is decided in favour of the assessee. The assessee has taken alternative Ground by way of Ground No. 2. As we have decided the issue in favour of the assessee, the alternate Ground does not survive. In the result, the assessee's appeal is allowed.
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2013 (4) TMI 642
Invocation of the provision of section 10A(7) r.w.s. 80IA(10) of the Act on the basis of the Transfer Pricing (TP) Study undertaken by the assessee - assessee's service Center is registered under the Software Technology Parks of India and provides services to its Associate Enterprise (AE) – Assessee choose CUP method for determination of ALP - the Assessing Officer invoked the provisions of S.10A(7) read with S.80IA(10) to consider that the assessee has earned more than the ordinary profit and considering the same TP study submitted by the assessee under TNMM method, determined the excess profit and denied deduction under S.10A while completing the assessment. Held that - In view of the decisions of the Coordinate Benches of the Tribunal we hold that the exercise undertaken by the Assessing Officer under S.10A(7) is neither sustainable on facts nor under the provisions of law. The Coordinate Bench in the above referred case has relied on the decision in the case of Tweezerman (India) (P.) Ltd. v. Addl. CIT [2010] 4 TMI 892 - ITAT Chennai]. In this case, the transfer pricing study has not resulted in any addition and ALP was accepted. Even though the authorities relied on "arranged" transaction between the assessee and AE, we do not see any such arrangement on the facts of the case. Nor there is any passing of profits directly or indirectly. In view of this, since the assessee's operations are efficient enough to obtain more profits and since the receipts are at arms length and there is no passing of excess profits by the parent company (AE) to the assessee, we are of the opinion that Assessing Officer's action in restricting the profits is not correct. We also do not see any reason to restore it to the Assessing Officer since there is nothing else to examine. Accordingly, we allow the grounds of the assessee and direct the Assessing Officer to treat the profits declared by the assessee as ordinary profits and allow deduction under S.10A, without any further adjustment.
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2013 (4) TMI 641
Royalty income received by assesse/respondent – claiming for concessional rate of tax provided in Article 12 of DTAA – tax rate of 10% - held that:- the CIT(A) and the Tribunal arrived at a finding of fact on the basis of the evidence in the form of certificate dated 25/7/2003 from revenue authorities in Netherlands certifying that the respondent assessee was a beneficial owner of the royalty received in respect of musical track given to M/s. Universal Music Pvt. Ltd. Besides, reliance was placed by the Tribunal upon the CBDT Circular No.789 dated 13/4/2000 that certificate from revenue authorities is sufficient evidence of beneficial ownership. On these findings of fact the Tribunal upheld the order of CIT(A) and held that the respondent assessee is entitled to benefit of Article 12 of DTAA. - Appeal of the revenue dismissed.
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2013 (4) TMI 640
Depreciation claim u/s 32 - Depreciation claim by the assessee, disallowed and penalty proceedings u/s 271(1)(c) were initiated by the AO. – Held that - During the assessment proceedings, the assessee had voluntarily come forward and pointed out the mistake to rectify the same. The assessee was under the bonafide belief that there cannot be said to have concealed particulars of income and the case cannot fall under the provisions of section 271(1)(c) of the Act. In the facts and circumstances, the ld. CIT(A) is not justified in confirming the action of the A.O. of levying penalty under section 271(1)(c) of the Act. The A.O. is directed to cancel the penalty so levied.
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2013 (4) TMI 639
Disallowance of deduction u/s 80HHC – Two appeals raised - ld. CIT(A) has decided the issue in favour of the assessee by respectfully following the judgment of Hon'ble Supreme Court in the case of M/s. Topman Exports & others (2012 (2) TMI 100 – SC]. Keeping in view the above discussions, we do not find any infirmity in the well-reasoned order passed by the ld. CIT(A). Accordingly, the appeal of the Revenue is dismissed. Both appeals are identical on the grounds arising from the same order of the ld. CIT(A),. In the result, the second appeal of the Revenue is dismissed.
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2013 (4) TMI 638
Cessation of trading liability U/s 41(1)(a) - Existence of liability which is of three years - Held that:- We observe that ld CIT(A) in the impugned order has stated that the AO has not established that the liability in respect of those creditors had ceased to exist within the meaning of section 41(1) of the Act - It was submitted by the assessee before the authorities below that assessee's business was discontinued due to loss - Therefore, The loan taken from State Bank of India was outstanding for over five years - The sundry creditors were outstanding on account of non-availability of sufficient funds - In view of above, ld CIT(A) has stated Outstanding of creditors even for more than three years cannot be considered as sufficient evidence of cessation of liability - Assessee has not written back the amount payable to these creditors in the books of account We do not find infirmity in the order of ld CIT(A) directing the AO to delete the amount which is outstanding even for more than three years - We accordingly uphold the order of ld CIT(A) and reject grounds of appeal taken by department - Appeal is dismissed in favour of Assessee.
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2013 (4) TMI 637
Section 154 of the Income-tax Act - Deduction u/s.80HHC in respect of DEPB licence - Held that:- As held by the Special Bench of the Tribunal in the case of Topman Exports (2012 (2) TMI 100 - SUPREME COURT OF INDIA ) the face value of DEPB lincence has to be considered to be income u/s. 28(iiib) which will be covered by the first proviso to section 80HHC(3) and excess of sale proceeds over the sales value has to be considered as business profit u/s.28(iiid) to which only third proviso to section 80HHC(3) can be applied. Said decision of the Special Bench has been upheld by the Hon'ble Supreme Court. We, therefore, modify the order passed by the CIT(A) in relation to deduction u/s.80HHC in respect of DEPB income and direct the AO to recompute the deduction in the light of judgment of Hon'ble Supreme Court in the case of Topman Exports (2012 (2) TMI 100 - SUPREME COURT OF INDIA) - Appeal of the assessee is partly allowed.
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2013 (4) TMI 636
Computation of capital gains - deduction u/s 48 or u/s 54 - consideration paid to wife under the condition of separation - cost of the flat which the assessee was required to provide to his wife who had separated from him. Held that - Respectfully following the decision of the Hon'ble Karnataka High Court in the case of Director of IT, International Taxation Vs. Mrs. Jennifer Bhide [2011 (9) TMI 1961].we are of the considered opinion that the flat purchased by the assessee in the name of his wife out of the sale consideration of flat in the name of the assessee should be considered as allowable deduction u/s.54(2) of the Income Tax Act. Since in the instant case the flat in the name of the assessee was sold on 08-05-2006 for Rs. 50 lakhs and since flat in the name of the wife and daughter has been purchased on 22-03-2006 for a consideration of Rs. 28 lakhs, plus registration expenses etc, therefore, the assessee is entitled to benefit of deduction u/s.54(2) in respect of the property purchased in the name of his wife. However, since the total cost of the property including stamp duty and registration expenses is not verifiable, we deem it proper to restore the issue to the file of the AO with a direction to verify the details and allow the deduction accordingly in respect of the flat purchased by the assessee in the name of his wife instead of the flat purchased in his name. We hold & direct accordingly.
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2013 (4) TMI 635
TDS u/s 194C - assessee in default u/s 201(1) - separate contracts or composite contract - three separate contracts viz., one for Supply of Indian sourced equipments and materials; second for labour-cum-erection; and third for construction of refinery. As it was emphasized by the Department that this amounts to only one contract which was signed on 7th November 1994, deduction of amount equal to 2% of such sum as Income-tax on income comprising therein was a must whenever the person responsible for paying any sum to any contractor for carrying out any work in pursuance to a contract.Department issued a SCN as why the assessee-company should not be treated as a defaulter for recovery of dues towards TDS amount. Held that - appellant had originally entered into a single agreement dated 7.11.1994 for construction of refinery plant. The assessee had thereafter, made amendments to the original agreement and created three separate contracts for supply of (i) Indian sourced equipment and material, (ii) labour-cum-erection and (iii) construction. These amendments were made later on i.e. on 25.3.1997. In the subsequent agreements, the original agreement was mentioned at various places. - the covenants of the agreement led both the authorities to conclude that essentially it was only the main contract for construction of refinery and not three separate contracts. There is no reason to hold otherwise than what has been concluded by these authorities consecutively. - Decided against the assessee.
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2013 (4) TMI 634
Revenue Recognition - Reimbursement of advance tax - Application of Accounting Standard No. 9 issued by the ICAI - held that:- it cannot be said that the amount disputed by APTRANSCO has really accrued to the assessee company in the assessment year under dispute. Only because, the assessee company has raised the bill for the said amount as per the Power Purchase Agreement. - Decided in favor of assessee. Interest income - the company availed foreign currency loans for setting up of a power plant at Libor Plus Fix Rate. In order to hedge the risk on account of exchange rate fluctuations, the company entered into an interest rate swap contract with State Bank of India, Koti, Hyderabad fixing the LIBOR rate. As the interest rates grew during the year, the assessee sold the above contract and made a profit of Rs 3,00,09,300. This profit was disclosed as income from business. - held that:- earning from business activity is independent from earning from saving on account of this kind of hedging. - Order of AO treated the same as income from other sources sustained. - Decided against the assessee.
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Customs
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2013 (4) TMI 626
Provisional assessment of duty U/s 18 - Valuation of goods U/s 14 - Provisional release of goods, documents and things seized pending adjudication U/s 110A - Clearance of goods for exportation U/s 51 of the Customs Act - Held that:- As the case is at the stage of adjudication. The petitioner is now adjudicating the matter by giving necessary documents and the reply to the show cause notice and the only question, which the respondent resisted is the non-production of BRC, which according to the petitioner has already been produced. If such is the case, the below cardinal principle as envisaged by the provisions of the Act would apply to the case then the adjudicating authority would decide finally what would be the outcome of the decision. On such a decision, the petitioner is entitled for the release of the goods and then only, it can be released. Therefore, the claim has to be considered in the light of the following provisions. U/s 14 of the Act would make it clear that the value of the imported goods and export goods shall be the transaction value of such goods the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for the delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the Rules. The ordained principle as envisaged by the Act for the provisional release of goods contemplates that any goods, documents or things seized under Section 110 may pending the order of the adjudicating officer to release to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require. Accordingly, the mandamus sought for by the petitioner, to direct the respondent to grant provisional release of goods on adjudication of the matter, is ordered and the respondent is directed to pass appropriate orders in accordance with law and on merits, on the basis of personal hearing, dated 01.12.2011 and the production of BRC, dated 05.12.2011, which was endorsed, and thereafter release the goods - Miscellaneous petition is closed.
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2013 (4) TMI 625
Suspension of license as a Custom House Agent - charge made is that these exports were of inferior quality of goods and the goods were over priced by the exporters for availing ineligible drawback. - appellant filed the shipping bills without verification of the identity of the exporters Held that - In this case, we find that no direct involvement of the CHA in fraudulent export of the goods and claim of the drawback is proved except that he filed shipping bills in those cases. If any evidence has been unearthed during further investigation conducted that has not been placed before the Tribunal. Further considering the time that has passed, the time limit indicated in Circular No. 9/2010-Cus., dated 8th April, 2010 for issue of final notice for revocation of license is already over. Such notice has not been issued so far. In such a circumstances, we are of the view that it is proper to revoke the impugned order suspending the licence of the appellant.
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2013 (4) TMI 624
Undervaluation - MRP based valuation on imports of goods - repacking, labelling and branding and selling the same in bulk to other entity – Held that: - the declaration of MRP for the purpose of levy of CVD is required only when there is a statutory requirement under the Legal Metrology (Packaged Commodities) Rules, 2011 to declare on the package thereof the retail sale price of such article. Only when the goods are intended for retail sale and are packed in retail packages, the provisions of Legal Metrology (Packaged Commodities) Rules, 2011 would apply. In the case under consideration, from the records of the case, it is absolutely clear that the appellants are importing the impugned goods not for retail sale but for repacking, labelling and branding and selling the same in bulk to M/s. Bajaj Electricals Ltd. Therefore, they are not required to declare MRP in terms of Rule 3 of the said Legal Metrology (Packaged Commodities) Rules, 2011 as they are industrial consumers. - Demand of differential duty is not justified - Decided in favor of assessee.
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Corporate Laws
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2013 (4) TMI 623
Unfair trade practice –u/s 19 (1) (a) – consideration of relevant market - informant alleged that the OP was a sole and dominant television viewership measurement firm in India and it has abused its position with respect to measurement of viewership in contravention of the provisions of section 4 - The Informant also alleged that as a result great financial loss occurred to him and it also affects its reputation. The acts of the OP were not only abusive but also adversely affected competition and were in contravention of the provisions of the Competition Act. Held that - The relevant market for the case is required to be determined keeping in view the provisions of section 2 (r), (s) and (t) read with section 19 (5), (6) and (7) of the Act. The relevant market in the instant case would be a service market of 'popularity evaluation of T.V. Programmes'. Popularity of a programme is directly related to the advertisement revenue a broadcaster can generate from the programme. T.V. Programmes popularity rating, on a commercial basis, is being done mainly by the OP and, prima facie, the OP appears to be a dominant player in the above mentioned relevant market. It is a well-known fact that the taste of programmes differ in urban and rural areas. Thus, installation of people meters only in urban areas can not reflect viewers choice PAN India. The OP had limited its surveys and viewers measurement only to the larger cities with a population of one lakh or more. The rural viewership was completely ignored. Therefore, it is apparent that OP was not displaying the true picture regarding TVR/TRP of Doordarshan. whether there was abuse of dominant position by OP. – held that - Section 4 of the Competition Act provides that there shall be an abuse of a dominant position, if an enterprise directly and indirectly discriminates in providing services to the customers or indulges in practice resulting in denial of market access in any manner to a customer. Due to the discrimination between rural and urban viewers and basing TRP only on the basis of urban viewers, the OP was prima facie indulging in practice of denial of advertisement market. Thus, the Commission is of the opinion that there was sufficient material to refer the case to the DG to cause an investigation u/s 26(1).
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2013 (4) TMI 622
Section 37 of the Arbitration & Conciliation Act - Non compliance of clause 52(5) of the agreement - Time barred claims - Held that:- The arbitral tribunal rendered finding of fact that the claims were not barred by law of limitation - While doing so has also interpreted the terms of the contract and the documents placed on record by both the parties - On perusal of the record, it is seen that there was no material placed by the appellant before the arbitral tribunal in respect of each claim in support of the plea of limitation as to how each of such claim was affected by alleged non compliance of clause 52(5) of the agreement and as to whether the procedure under clause 67 was followed or not or was time barred. In view of this position, the arbitral tribunal rendered finding of fact based not on any specific averment advanced by the appellant but on consideration of the documents and on interpretation of the provisions of the contract Act - In my view findings rendered by the arbitral tribunal is not perverse and thus the learned District Judge was right in not interfering with such finding of fact rendered by the arbitral tribunal U/s 34 of the Arbitration & Conciliation Act, 1996 - No case is made out for interference with the order of the arbitral tribunal as well as the learned District Judge in this proceedings U/s 37 of the Arbitration Act. In so far as the plea of interest raised by Mr. Gorwadkar, the learned counsel for the appellant is concerned, it is not in dispute that there is no provision in the contract prohibiting the payment of interest - Held that:- The arbitral tribunal is empowered to award interest under section 31(7)(a) of the Arbitration and Conciliation Act, 1996 for such period and at such rates as the Arbitral Tribunal deems fit - There is no substance in the submission of Mr. Gorwadkar that the claim for interest is beyond the powers of the arbitral tribunal - he arbitral tribunal is empowered to award interest under section 31(7)(a) of the Arbitration and Conciliation Act, 1996 for such period and at such rates as the Arbitral Tribunal deems fit. In my view, there is no substance in the submission of Mr. Gorwadkar that the claim for interest is beyond the powers of the arbitral tribunal.
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2013 (4) TMI 621
Application by former Director of SCL seeking directions to HLL to honour all the liabilities and commitments which arose during the period which SCL was under its management and control - first contention of Applicant that HLL has failed to settle various demands/liabilities appearing in the balance sheet - Held that:- Clause 5.1(c) of the Scheme clearly stated that HLL would take over the entire liabilities outstanding at the time of disposal to all the bank/institutions both existing and future, and “not any other additional liabilities (including sales tax, excise duty and dues to the railways) which shall be met out of the sale proceeds of the soap plant”. Only if HLL opted to purchase the soap plant including land, buildings and other facilities at Gajraula used by the soap plant. Clause 5.1(c) of the Scheme also envisaged that if that option was not exercised by HLL, then the above statutory liability was to be paid out of the processing charges paid by HLL to SCL. Further the debt would get enhanced to Rs. 6 crores only if HLL exercised its option to implement Phase-II of the soap manufacturing capacity. The conversion charges to SCL of Rs. 1,900 per tonne of soap packed was to be paid in terms of Clause 6.3(b)(i) after implementation of Phase-II of the project, i.e., after the manufacturing unit was set up. Neither did HLL opt for purchasing the soap plant nor did it proceed with Phase-II of the project. According to HLL it paid SCL conversion charges in excess of Rs. 3 crores per annum. This is not denied by SCL. Thus contention of the Applicant that SCL should have been paid enhanced conversion charges is untenable. HLL owes the Applicant arrears of conversion/processing charges - Held that:- It is seen that in a board meeting of SCL as attended by applicant that the Board was informed that the equipments in fact had got rusted and could not be used unless heavy expenditure was incurred. Quotations had been invited from two-three parties, including HLL for the sale of such equipment. In the meeting applicatant suggested that as the machines were idling it would be better to dispose them of to the highest bidder. As a result the plant and machinery was sold to HLL which was the highest bidder. The Court is unable to discern any malafides on the part of HLL. The allegations by the Applicant in this regard are unsubstantiated. HLL has charged an amount of Rs. 1,52,32,900 from SCL on account of salaries and wages payable to managers and supervisors stated to have been deputed to SCL’s factory for the period 1998-2002 - Held that:- HLL has denied charging Rs. 1,52,32,900 from SCL towards wages of the employees who were sent on deputation to SCL. It is stated that in the handing over docket, HLL had mentioned that Rs. 81,22,072 was payable to it towards balance part payment of salaries and wages of managers and supervisors on full time deputation to SCL factory. In the circumstances, the above plea of the Applicant is rejected. HLL was responsible for clearing the dues of UPSIDC - Held that:- As in a joint meeting held on 12th August 2004 the Applicant informed about a claim of Rs. 209 lakhs against SCL. It is seen that the land cost to the extent of Rs. 63 lakhs has been met by HLL and the responsibility of getting a no dues certificate from UPSIDC was that of SCL. Under the Scheme as approved by the Court, there appears to be no basis for fastening on to HLL the liability owing to UPSIDC. In terms of the Scheme HLL upon implementation of both the phases would have added plant and machinery and due to non-implementation of Phase-II, SCL was deprived of such assets that were to be left by the lessee and the loss on that score has been quantified as Rs. 718.18 lakhs - Held that:- As already noticed, there was no compulsion on HLL to proceed with Phase II of the Scheme. It was an option that HLL did not exercise. This submission of the Applicant is rejected as being misconceived. Tax liabilities - Held that:- HLL is right in contending that there was no obligation on it to pay the said dues. According to the Applicant since 1998-99 the ITD had been assessing SCL under Section 115J/JA of the Income Tax Act, 1961 on the basis of book profits, disregarding the fact that SCL is a sick company. HLL cannot be held liable for being responsible for the said losses. The full discharge of HLL has been certified by IDBI itself. Therefore, this submission of the Applicant is rejected.
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Service Tax
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2013 (4) TMI 630
Levy of Service Tax on Chit Business - Scope of the term "services" - section 65B(44) - Negative list - transaction in money - held that:- In a chit business, the subscription is tendered in any one of the forms of ― money as defined in section 65B(33). It would, therefore, be a transaction in money. So considered, the transaction would fall within the exclusionary part of the definition of the word "service" as being merely a transaction in money. This would be the result if the argument that the exclusionary part of the definition in clause (a) is considered to have been enacted ex abundant cautela; If the argument based on Explanation 2 read with the exclusionary part of the definition is accepted as correct, even then the services rendered by the foreman of the chit business for which a separate consideration is charged, not being an activity of the nature explained in the said Explanation, would be out of the clutches of the definition. Either way, there can be no levy of service tax on the footing that the services of a foreman of a chit business constitute a taxable service. No Service Tax - Sr. No. 8 of the Abatement notification no.26/2012 dated 20.6.2012 quashed. - Decided in favor of assessee.
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2013 (4) TMI 629
Construction of civil structures and erection of specific equipments - service tax liability - imposition of penalties under Sections 76, 77 & 78 of Finance Act, 1994 - Held that:- The appellant had voluntarily paid almost 80% of the amount and balance amount before issuance of show cause notice. It is also to be noted that the appellant herein is a proprietary concern and could not have been aware about the intricacy of discharge of Service Tax liability within the time period. In my view, this is a fit case for invoking the provisions of Section 80 of Finance Act, 1994. Accordingly, the provisions of Section 80 of Finance Act, 1994 invoked and set aside the penalties imposed on the appellant by the first appellate authority. In favour of assessee.
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2013 (4) TMI 628
Incorrect utilization of Cenvat credit – as per by revenue amount mentioned in the invoices have been corrected by the appellant himself to arrive at the new rate at the time of payment. The invoices issued by the service provider can be corrected only by the service provider and not by the appellant. Accordingly credit was disallowed and imposition penalty. Held that - On perusal of the record, It was found that there is enough balance available with the appellant and the excess utilisation seems to be an inadvertent error and the same has been made good by the appellant on their own by adjusting and debiting the amount in the Cenvat credit available with them. Subsequent scrutiny has resulted in issuance of SCN to the appellant and the same has been issued after three years. Since the credit was available with the appellant and the excess amount inadvertently utilised was debited in the very next month, though it happened twice, there was no intention to evade the service tax liability as the appellant has been regularly filing returns with the lower authorities. Thus, this is fit case, for invoking the provisions of Section 80 and set-aside the penalty imposed by the lower authorities. As regards the interest amount, it is his submission that the same may be calculated by the revenue and on being informed to the appellant, they will discharge the same in due course. Thus, the penalties imposed is set aside.
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2013 (4) TMI 627
Penalty - Non-payment of service tax - Manpower Recruitment or Supply Agency Services – Appellant contesting the imposition of penalties as he discharged the service tax liability along with interest before issuance of SCN. Held that - All these confusions may have created a situation wherein the assessee in this case may not be aware of exact service tax liability and also that the appellant being situated in a remote area of Gujarat, could have not been advised by the local authorities as well as could not have known by himself about the liability. All these findings fortify my views that this is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 for setting aside the penalties imposed by the lower authorities u/s 76 and 78. Thus, the penalties imposed by the lower authorities is set aside and appeal to that extent is allowed.
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Central Excise
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2013 (4) TMI 620
Application for waiver of pre-deposit of duty, interest and penalties - manufacture of sugar during which - bagasse emerges – Appellant availing credit in respect of the common inputs used in the manufacture of excisable goods and exempted goods – Held that - The Tribunal in the case of Indian Potash Ltd vs CCE, [2012 (12) TMI 347 - CESTAT, NEW DELHI] set aside the demand which was confirmed on the same grounds pre-deposit of the remaining dues is waived and recovery thereof stayed for hearing of the appeals.
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2013 (4) TMI 619
Cenvat Credit - Job Work - Job Worker availed cenvat credit on inputs and capital goods - Held that - If the job work is considered as non-exempted and the CENVAT credit is allowed on the inputs which are used on such job work items, we do not find any valid reason to deny the CENVAT credit of Central Excise duty paid on capital goods, which were received by the appellant during the relevant period and used in the manufacturing of very same job worked goods. Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd. (2004 (12) TMI 108 - CESTAT, MUMBAI), has categorically settled the law as to that if an assessee is functioning under Notification No. 214/86-C.E. and if the ultimate principal manufacturer is discharging Central Excise duty liability after consumption of job worked goods, it has to be held that the said notification does not exempt the goods manufactured on job work by an assessee. The demand of Central Excise duty CENVAT Credit availed by the appellant on the capital goods is liable to be set aside and we do so. - As regards the penalties imposed on the appellant as well as the individuals, we find that as bulk of the demand is being set aside on the merits of the case itself, there is no reason for visiting the appellant with penalties under any Section or Rules. - Decided in favor of assessee.
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2013 (4) TMI 618
Rejection of refund claim - reduction of price subsequent to clearance of the goods - department issued show-cause notice proposing to reject the refund claim on the ground of limitation and also not hit by the unjust enrichment. Held that - when an assessee claims refund of duty on the basis of price variation under the price variation clause of the relevant contract subsequent to clearance of the goods, the claim, for whatever reason, cannot be allowed. Such fluctuation in price subsequent to clearance of the goods cannot affect the manufacturers’ liability to pay excise duty. - The ruling of the Apex Court in MRF Ltd. v. Collector of Central Excise, Madras [1997 (3) TMI 104 - S.C.] followed - Refund claim rejected - price variation clause itself is not a ground to consider the assessment as provisional assessment - Decided against the assessee.
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2013 (4) TMI 617
Admissibility of exemption under notification No. 17/98-C.E. whereby tea put up in unit container of content not exceeding 100 grams per unit container was exempted from excise duty. – whether the respondent was eligible for credit in considering available the exemption under Notification No. 17/98 on the Tea pack which were to be put in Bandha Pack by him. Held that - It can be seen from first appellate authority’s findings that he has considered the evidences produced before him about actual facts as well as arguments put forth by the assessee. It can be seen that Revenue is unable to contradict the factual matrix in the grounds of appeals. In absence of any contrary evidences, the detailed findings recorded by the first appellate authority, remain unrebutted, we hold that Revenue has failed to make out a case. Period of limitation - held that:- We find that the assessee has been discharging duty liability on the packages which were more than 100 gms. in weight, but they could be under a bona fide belief that they are not liable to pay central excise duty on the Bandha Pack, as the same had smaller pack, which contained Tea which is less than 100 gms. It is also to be noted that the appellant had indicated in the return, the clearance of Tea Packs are less than 100 gms. The findings recorded by the first appellate authority as regards limitation are correct and we concur with the same. Accordingly, we find the said impugned order is correct. - Decided against the revenue.
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2013 (4) TMI 616
Withholding of Allowed refund - Department is not returning the same - Held that:- Under Rule 41 of the CESTAT (Procedure) Rules, 1982, The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of the process or to secure the ends of justice.” As per the said Rule, this Tribunal can pass such order to secure the ends of justice - In this case, there is no stay application filed by the Revenue. Therefore, to secure justice we direct the concerned officer to return the amount which is entitled to the applicant in consequence to the impugned order within seven days of the receipt of the order - The miscellaneous application is disposed of in the above terms.
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CST, VAT & Sales Tax
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2013 (4) TMI 633
Application for Settlement of cases under Section 24-B of the M.P. VAT Act, 2002 - assessee contested against respondent issuing a notice under Section 146 of the M.P. Land Revenue Code for recovery of the amount though the settlement application has been filled - Held that:- Section 24-(8) {Sic 24-C(8)} provided that after settlement of the dispute no penal action shall be initiated against the assessee under any Act administered by the Department after an order of settlement has been passed under this Section. Meaning thereby that a protection is provided to the assessee who had moved an application before the settlement Authority to settle the cases under Section 24-B of the Act. Thus to dispose of this matter with the directions to the settlement Authority to expedite the matter within a period of 6 months from the date of this order but not later than 30th June, 2012 & till the matters are settled by the Authority, no coercive action shall be taken against the petitioner in respect of dues for the assessment years 2003-04 to 2006-07 & any amount not disputed by the petitioner shall be deposited by the petitioner as per provisions as contained under Section 24-B and 24-C within a period of 30 days from today.
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2013 (4) TMI 632
Interest u/s 24(3) of the Tamil Nadu General Sales Tax Act, 1959 - Held that:- As decided in Raj Kumar Shivhare vs. Assistant Director, Directorate of Enforcement and another [2010 (4) TMI 432 - SUPREME COURT] that in such matters, exercising of the jurisdiction under Article 226 of the Constitution of India, is not proper and the parties should be directed to approach the appropriate forum available as alternative remedy under the statute itself. Thus dismiss the writ petition with liberty to the petitioner to approach the revisional authority within a period of four weeks from the date of receipt of a copy of this order.
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2013 (4) TMI 631
Composition of offence in terms of Section 72 of TNVAT Act, 2006 - as per the GD Notice the consignment moved from Tamil Nadu to Andhra Pradesh, but the documents as verified showed that the goods had moved from Chennai to Nellore with an invoice raised by the dealer at Kohlapur to Nellore - the goods were detained - Held that:- Petitioner is entitled to approach the authority and pay the tax or security as may be required under protest and seek release of the detained goods. If the petitioner pays the tax as required under Section 67(4) of the TNVAT Act, 2006, the authority is bound to release the goods forthwith. Insofar as composition of offence is concerned, a detailed procedure has been prescribed for composition and an opportunity should be given before passing an order under Section 72 of the TNVAT Act, 2006. The said section prescribes that an order should be passed on composition either way on merits and the petitioner is entitled to pursue the same on merits, if aggrieved. In such view of the matter, the petitioner is given liberty to seek release of the goods & insofar as composition of the offence, as per notice issued, it has to be dealt with independently.
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