TMI Tax Updates - e-Newsletter
April 7, 2014

Case Laws in this Newsletter:

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

Articles

1. HIGHLIGHTS ON CSR PROVISIONS NOTIFIED ON 27.02.2014

   By: dhanapal sreepathi

2. LOAN TO DIRECTORS AND OTHER ENTITIES UNDER THE NEW REGIME

   By: dhanapal sreepathi

3. Utilisation of Cenvat Credit For Education Cess Payment By A Manufacturer

   By: Srikanth Rao

News

1. Issue of Rs. 5 coins to commemorate the occasion of "Acharya Tulsi Birth Centenary"

Notifications

Income Tax

1. 23/2014 - dated 28-3-2014 - IT

Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries - Sri Lanka

2. 21/2014 - dated 27-3-2014 - IT

U/S. 80-IA IT ACT, 1961 - DEDUCTIONS - PROFITS AND GAINS FROM INDUSTRIAL INFRASTRUCTURE UNDERTAKINGS BEING DEVELOPED AND BEING MAINTAINED AND OPERATED BY M/S. FINEST PROMOTERS PRIVATE LTD., NEW DELHI

Highlights / Catch Notes

Income Tax

• Delivery of Equipment to Lessee Doesn't Automatically Make It a Finance Agreement; Key for Tax Implications.

  Case-Laws - HC : Accrual of income - Nature of Lease – The fact that the equipment is delivered by the supplier to the location of the assessee thus by itself, will not make the agreement, the Finance Agreement - HC
  Visit to Get Source

  ---

• Tribunal's Rs. 50 lakh demand deemed unnecessary; assessee's substantial compliance with Section 271(1)(c) penalty acknowledged.

  Case-Laws - HC : Stay application on penalty u/s 271(1)(c) - the assessee has already paid the full tax amount and also approximately 25 percent of the penalty amount earlier, the Tribunal ought not to have required the assessee to deposit a further sum of Rs. 50 lakhs - HC
  Visit to Get Source

  ---

• No penalty under IT Act section 271(1)(c) if income u/s 115JB exceeds assessed income.

  Case-Laws - AT : Penalty u/s 271(1)(c) - no penalty u/s 271(1)(c) of the Act can be levied when the income u/s 115JB of the Act is higher than the assessed income - AT
  Visit to Get Source

  ---

• Penalty Waived for Delay in Tax Audit Report Due to Statutory Audit Completion Issues u/s 271B.

  Case-Laws - AT : Levy of penalty u/s 271B – Delay in getting and furnished Tax Audit report - delay in completion of statutory audit was reasonable cause for non-compliance with section 44AB - penalty waived - AT
  Visit to Get Source

  ---

• No Time Limit for Section 158BD Notices, But Proceedings Can't Be Indefinitely Delayed or Initiated Years Later.

  Case-Laws - AT : There is no limitation for issuing a notice u/s.158BD is provided under Act, but this cannot be construed as proceedings can be initiated even after lapse of many years or after indefinite period - AT
  Visit to Get Source

  ---

• Service Tax Expenses Allowed: Liability Crystallized and Paid in Current Year for Previous Years' Expenses.

  Case-Laws - AT : Disallowance of service tax expenses despite fact that expenditure pertains to earlier years - As liability was crystallized and paid during year under consideration, it was allowable as expenditure - AT
  Visit to Get Source

  ---

• Appellant Must Deduct TDS u/s 194C for Payments to Holding Company Providing Services and Support.

  Case-Laws - AT : TDS u/s 194C - aspayment to holding company where holding company was to make available to the appellant staff, infrastructure, administrative support and support services. - TDS to be deducted u/s 194C - AT
  Visit to Get Source

  ---

Customs

• Appellant Cleared of Penalties as Name Used by Another Party for Import; No Further Investigation Required.

  Case-Laws - AT : Appellant is not the importer in the matter and somebody has used their name for import of the goods - No penalty - no further investigation - AT
  Visit to Get Source

  ---

Corporate Law

• Financial years before April 1, 2014, governed by Companies Act, 1956 provisions and rules.

  Circulars : In respect of financial years that commenced earlier than 1st April, 2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act, 1956. - Circular
  Visit to Get Source

  ---

Service Tax

• Appellate Commissioner initially denies condonation of delay due to lack of authority, but delay later condoned with costs.

  Case-Laws - AT : Condonation of delay - appeal before the appellate Commissioner. - Commissioner denied condonation on the basis that the he has no power to condone delay - delay condoned subject to cost - AT
  Visit to Get Source

  ---

• Goodwill Receipt Subject to Service Tax as 'Intellectual Property Services' Under Taxable Services Category.

  Case-Laws - AT : Receipt for goodwill - prima facie it is chargeable to service tax under the taxable services, ‘Intellectual Property Services’ - AT
  Visit to Get Source

  ---

Central Excise

• Court Should Prioritize Substantial Justice Over Technicalities in 95-Day Delay Condonation Case.

  Case-Laws - HC : Condonation of delay - by and large, approach of the court should not be so technical, but it should be always to ensure that substantial justice is done - since delay was hardly of 95 days, Tribunal should have condoned the same - HC
  Visit to Get Source

  ---

• New Interest Rate Applies from April 1, 2003; Old Rate Renders Rule Ineffective.

  Case-Laws - AT : Rate of interest - for the period from 1.4.2003, the new rate of interest shall apply and not the old rate of interest - Otherwise, the entire rule becomes infructuous/otiose - AT
  Visit to Get Source

  ---

• CENVAT Credit Confirmed: No Evidence of Suppression or Fraud; Supplementary Invoices Valid for Credit Claim.

  Case-Laws - AT : CENVAT Credit - there was no suppression, fraud, misstatement etc. with an intent to evade duty - supplementary invoices raised by M/s Maruti Udyog Ltd. have to be held as eligible document - credit allowed - AT
  Visit to Get Source

  ---

• Refund of Cenvat Credit for AED(T&TA) on Exported Goods Required u/r 5 of Cenvat Credit Rules.

  Case-Laws - AT : Refund – cenvat credit of AED(T&TA) accumulated on account of the final exported product being not leviable to the same is required to be refunded in terms of Rule 5 of Cenvat Credit Rules - AT
  Visit to Get Source

  ---

• Recipient Can't Challenge Excise Duty Assessment if Manufacturer Complies; Refund Claims Denied.

  Case-Laws - AT : Denial of refund claim - the assessment which is not challenged by manufacturer after discharge of Central Excise duty cannot be challenged by the recipient of such products. - AT
  Visit to Get Source

  ---

VAT

• Court Rules Non-Existent Items in Tax Schedules Can't Be Taxed; Clarifies Paddy and Rice Husk Definitions.

  Case-Laws - HC : When a paddy is dehusked, it becomes paddy husk and when the rice is dehusked, it becomes rice husk - If something is included in the Schedule which is non-existent, no tax can be levied thereupon - HC
  Visit to Get Source

  ---

• Court Rules Sharing Mobile Towers Not Subject to VAT, Prima Facie Decision on Infrastructure Sharing Tax Applicability.

  Case-Laws - HC : Levy of VAT Tax on sharing of the mobile towers - sharing of passive infrastructure - the activity being subjected to VAT does not prima facie arise - HC
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2014 (4) TMI 218
  Power of the High Court u/s 260A(4) of the Act - Questions in the memo rejected – Held that:- The Revenue is under some mis-conception – The High Court s power to frame substantial question(s) of law other than the questions on which appeal has been admitted remains u/s 260A(4) - This power is subject to the conditions that the Court must be satisfied that appeal involves such questions and the Court has to record reasons – there is no justifiable reason to entertain the petition – Decided against Revenue.

  ---

• 2014 (4) TMI 217
  Jurisdiction u/s 158BD of the Act - Whether the Tribunal fall into error in not holding that the addition made to the assessee’s income was in a proceeding without jurisdiction on account of no satisfaction (and consequent notice) under Section 158BD of the Act – Held that:- The search conducted previously in respect of her husband formed the material which ultimately resulted in the addition and the assessment - the addition cannot be considered unauthorized for not fulfilling the conditions prescribed u/s 158BD – the case cannot be considered as one in which no incriminating material was found pursuant to the search u/s 132 - the search of the locker in the assessee’s case is closely linked to the search in the husband’s case where incriminating materials pertaining to the assessee were found - The close proximity of both the searches and the continuous course of events in the case rule out the acceptance of the argument that no incriminating material was found in the search of the locker – thus, the additions were invalid. Relying upon Friends Overseas (P) Ltd v. CIT [2003 (11) TMI 27 - DELHI High Court] - The findings of the lower authorities are based on a proper appreciation of the facts - The documents, in the form of the (unsigned) agreement to sell do disclose that the real and undisclosed consideration for sale of the property was far in excess of what was in fact reported in the assessment - the CIT (A) and Tribunal was of the opinion that since only a portion of the property had been gifted by the assessee’s husband to her, the entire addition could not be made in her hands – this was purely a question of fact, the Court cannot interfere in it – Decided against Assessee.

  ---

• 2014 (4) TMI 216
  Validity of reassessment of proceedings u/s 148 of the Act – Held that:- The reasons are recorded by the AO for reopening an assessment are the only reasons which can be considered - No substitution or deletion is permissible - No additions can be made to those reasons - No inference can be allowed to be drawn based on reasons not recorded – Relying upon Hindustan Lever Ltd. Vs. R B Wadkar, Asst Commissioner of Income Tax and Others [2004 (2) TMI 41 - BOMBAY High Court ] - all the documents had been filed along with the return of income on 29th August 2006 – all the material facts were disclosed by the assessee in relation to its acting as an agent of the Government of Maharashtra for the Navi Mumbai Project. There can be no doubt that there was no failure on the part of the assessee to disclose fully and truly all material facts in relation to it being appointed as an agent of the Government of Maharashtra for the Navi Mumbai Project - no income chargeable to tax had escaped from assessment for the A.Y. 2005-06 by reason of any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment – the notice and the order are unsustainable and are liable to be set aside - There is no difference between the two – the assessee in several documents stated that it was “acting as an agent of the Government of Maharashtra” with respect to the Navi Mumbai Project - The statements were made to justify the assessee not having made any provision for the income of the Navi Mumbai project - This itself shows that the assessee's assertion was that it acted as an agent and made no provision for the income of the project. The initiation of reassessment proceedings u/s 147 of the Act was only based on a “change of opinion” which is impermissible under the Act - all disclosures were made by the assessee regarding its appointment as an agent of the Government of Maharashtra for developing the new town of Navi Mumbai - Merely because he had about six days, it cannot be presumed that he had not applied his mind to the issue - It would be unfair to the AO who made the Assessment Order, to speculate that he was either incapable of applying, or did not apply his mind to the very aspects in respect of which he sought details within six days - It would also be unfair to the assessee to permit such a contention to be raised in the absence even of any pleading. The Government Resolutions were disclosed - The relevant Government Resolutions were even referred to in the Assessment Order - It is difficult to see how the failure to disclose the judgment case can possibly justify reopening the assessment - The failure to disclose contemplated u/s 147 is of documents or particulars which are or even may be adverse to the assessee - The nondisclosure of such material would adversely affect the assessee and not the Revenue - The provisions of section 147 can operate only where the failure to disclose any material that is or even may be adverse to the assessee and not where it is only advantageous to the assessee – Decided in favour of Assessee.

  ---

• 2014 (4) TMI 215
  Accrual of income - Nature of Lease – Finance by hire purchase lease - Whether the Tribunal was right in holding that in the case of "Finance Lease" transaction the entire lease rental should be offered as income contrary to the AS-19 dealing with accounting of leases issued by the ICAI – Held that:- In respect of lease of a car, the terms of lease was stated to be three years, with monthly rentals and total rentals payable - The terms of the lease agreement point out that the lessor takes on lease the goods described in the Schedule on terms and conditions set forth in the Schedule - the agreement is a lease agreement sample and that there is nothing in the agreement to speak about mere financing for the purchase of an equipment as it had been contended by the assessee. The fact that the equipment is delivered by the supplier to the location of the assessee thus by itself, will not make the agreement, the Finance Agreement and the terms thus seen are matters of arrangement between the parties, which in effect clearly points out that it is only a simple lease agreement and not a finance agreement - even in the calculation of the lease rental, the monthly repayment of the rent and the number of months of the lease rent payment is also clearly stated in the agreement - there was no justifiable ground to accept the case of the assessee that based on AS19 only that the agreement in question was entered into by the assessee and it has to be treated as the finance agreement - relying upon Sundaram Finance Limited vs. State of Kerala [1965 (11) TMI 123 - SUPREME COURT OF INDIA] - the question has to be seen from the terms of the agreement entered into between the assessee, which was placed before the AO as well as before other Appellate Authorities - the contentions of the assessee's is rejected that the transaction is only a finance lease. - Decided against the assessee.

  ---

• 2014 (4) TMI 214
  Claim of bad debt of advances paid - Assessee contended that the amount pertains to transaction of loan in the normal course of money lending, which is one of the objects of the assessee-company as per Articles of Memorandum of Association – Held that:- If object clause is already in existence well and good, but even in the absence of such object clause, it is possible for one corporate company to lend money to another corporate company for various reasons - What actually forms basis to allow the benefit of claim as bad debt would be whether a particular transaction was in the ordinary course of business with an intention to lend money or something else - Unless factual material is looked into, one cannot straightaway come to conclusion that a particular transaction is either money lending activity or not - there has to be fresh consideration of the matter, so far as lending of Rs. 30 lakhs and also the interest accrued with reference to whether it was disclosed in the earlier assessment years or not as interest due – the order of the Tribunal is set aside and the matter us remitted back to the AO for fresh adjudication as to the amount claimed as bad debt – Decided in favour of Assessee.

  ---

• 2014 (4) TMI 213
  Belated return filed u/s 80AC r.w. section 139 of the Act - Rejection of Claim u/s 80IB of the Act – Held that:- The court is of the view that assessee rightly contended that the CBDT had issued notification dated 31.10.2007, Annexure A.5, whereby in exercise of powers u/s 119 of the Act, the Board had extended the date for filing of the returns and reports of audit upto 15.11.2007 instead of 31.10.2007 – also, in terms of sub sections 6 and 7 of Section 260A of the Act, the matters go to the root of the case, it should be require to be taken up by the Court – the matter requires to be adjudicated afresh as the notification goes to the root of the matter and in view of sub sections 6 and 7 of Section 260A of the Act, it can be entertained by the Court – thus, the order is set aside and the matter is remitted back to the Tribunal for fresh adjudication – Decided in favour of Assessee.

  ---

• 2014 (4) TMI 212
  Validity of reassessment proceedings u/s 148 of the Act - Reason to believe as to the income escapement - Held that:- Every aspect of the transaction was not only disclosed but was specifically noticed by the AO -every relevant aspect had been brought to the notice of the AO not merely in the return filed by the assessee but in answer to the specific queries and in response to the requisitions of the AO during the assessment proceedings - No aspect of the matter remained to be disclosed - No aspect of the matter remained to be even sought by the AO - the assessee had not failed to disclose any material relevant to the assessment of its income for the assessment year. Relying upon Rabo India Finance Limited vs. Deputy CIT [2012 (7) TMI 519 - BOMBAY HIGH COURT] - there is nothing on record that indicates that the AO did not consider the material before him – though the nature of the queries raised and the information sought by him indicates that he not only noticed but considered the information supplied by the assessee – thus, it cannot be held that the assessee had failed to disclose fully and truly all material facts necessary for its assessment for the assessment year – Decided in favour of Assessee.

  ---

• 2014 (4) TMI 211
  Deduction u/s 54F - Validity of Tribunal’s action - Tribunal remanded the matter back to the AO - Due date is u/s 139(1) and not u/s 139(4) - Held that:- It is possible that facts of the other appeal considered by the Appellate Tribunal along with appeal of the revenue may be different - the scheme for depositing capital gain is contemplated u/s 54F(4) and it depends upon when the property of the assessee is sold and when exactly the amounts were invested, whether it was invested in a residential house or otherwise - All the facts have to be considered with reference to provisions of Section 54F(4) along with Section 139 (1) of the Act, as the due time would be under Section 139(1) only not under Section 139(4) of the Act - Tribunal has accorded one more opportunity to the appellant assessee to place on record relevant facts for consideration and if his case were to be different from the facts of the other case and makes a vast difference altogether - it is always open to him to place such facts before the AO for consideration – Decided against Assessee.

  ---

• 2014 (4) TMI 210
  Validity of order u/s 179(1) of the Act – Liability of directors of private company in liquidation - Held that:- The assessees were the directors of a private company - The company had tax dues towards the Department - Despite the efforts by the Department, such dues could not be recovered – Relying upon Maganbhai Hansrajbhai Patel v. Asst. CIT [2012 (11) TMI 189 - GUJARAT HIGH COURT ] - the company had run into losses - The company had substantial dues towards the State Bank of India from which it had taken loans and also enjoyed overdraft facility. Certain properties of the company were also mortgaged to the bank - the AO ought to have held that the assessees had succeeded in establishing that non-recovery of the tax dues of the company could not be attributed to gross neglect, misfeasance or breach of duty on the part of the directors in relation to the affairs of the company - It does not appear that the assessees had consented that the bank dues may also be recovered from such fixed assets - It was the DRT which had given such liberty to the bank - the contention of the counsel for the Revenue that the petitioners should have offered the said properties for recovery to the Department, can still not bring the action of the petitioners within the expression of gross neglect, misfeasance or breach of duty on their part – thus, the order passed by the CIT set aside – Decided in favour of Assessee.

  ---

• 2014 (4) TMI 209
  Stay application on penalty u/s 271(1)(c) of the Act - Order for deposit of amount – Held that:- The order of the Tribunal has been passed in total disregard of the principles laid down in KEC International Ltd. v. B. R. Balakrishnan [2001 (3) TMI 32 - BOMBAY High Court] wherein parameters have been laid down to be observed by the authorities - the assessee has a strong prima facie case on the merits before the Tribunal - the assessee has already paid the full tax amount and also approximately 25 percent of the penalty amount earlier, the Tribunal ought not to have required the assessee to deposit a further sum of Rs. 50 lakhs – thus, the order of the Tribunal is set aside to the extent it directs the assessee to deposit a further amount – stay granted.

  ---

• 2014 (4) TMI 208
  Reopening of the Assessment u/s 148 of the Act - Incorrect valuation of closing stock – valuation of shares - Accommodation entries taken from Mukesh Choksi and his related/controlled companies – Held that:- the objections are raised to the notice u/s 148 seeking to reopen the assessment, the AO has to deal with the objections on merits following the principles governing reassessment – the AO cannot brush aside the objections merely with a statement that proceedings are only initiated when AO has reasons to believe that there is an escapement of income - There is a difference between recording of reasons to believe and reassessment order - Reopening is permissible on foundation of prima facie belief but the fact alleged or the reason propounded must have some basis and should not be mere surmise, gossip or rumour - Comparison of the reason to believe communicated vide letter dated 05.09.2012 and the audit memo dated 31.03.2008 shows that the reasons are verbatim copy of the audit memo - The reasons to believe reproduce the audit memo. Relying upon G.K.N Driveshafts (India) Limited v. Income Tax Officer [2002 (11) TMI 7 - SUPREME Court] - the reassessment notice is not sustainable on the issue of valuation of closing stock - on the issue of valuation of closing stock of M/s MRPL Ltd. and taking of accommodation entries, the order is cryptic and does not deal with the objections raised, it needs to be relooked by the AO – the matter remitted back to the AO for re-examination of the issue of reopening on the ground of valuation of closing stock of M/s MRPL Ltd. and taking of accommodation entries Decided partly in favour of Assessee.

  ---

• 2014 (4) TMI 207
  Penalty u/s 271(1)(c) - income computed u/s 115JB of the Act was higher than the assessed income - furnishing of inaccurate particulars of income – Held that:- penalty u/s 271(1)(c) is leviable only if higher income was assessed under the normal provisions after making any additions in the assessment order - penalty u/s 271(1)(c) is leviable only if higher income was assessed under the normal provisions after making any additions in the assessment order - CIT (A), it is seen, while deleting the penalty, has followed the decision in 'CIT vs. Nalwasons Investments Ltd. [2010 (8) TMI 40 - DELHI HIGH COURT]. Therein, it has been held that no penalty u/s 271(1)(c) of the Act can be levied when the income u/s 115JB of the Act is higher than the assessed income. well reasoned order passed by the Ld. CIT (A) following 'Nalwasons Investments Ltd.' (supra), is hereby upheld- Decided against Revenue. Evasion of Tax - Provisions of Section 115JB (5) of Act – Held that:- no evasion of tax in this case as tax was paid on basis of 115JB calculations as returned by appellant at a total income of Rs.99,74,805/- - While assessment was completed on an income of Rs.7,65,780/- as per normal provisions which is lower than income declared u/s 115JB. Since there is no evasion of tax, penalty levied for furnishing inaccurate particulars of income is not sustainable – Rightly found by the Ld. CIT (A), the income of the assessee u/s 115JB of the Act was of Rs. 99,74,805/-.

  ---

• 2014 (4) TMI 206
  Levy of penalty u/s 271B – Delay in getting and furnished Tax Audit report - non-compliance with provisions of section 44AB – Held that:- According to section 273B, no penalty shall be imposable on person, for any failure which interalia include defaults mentioned in section 271B, if he proves that there was reasonable cause for the said failure - Section 271B maintains imposition of penalty on failure but, by reason of rule of evidence provided u/s 273B, such imposition of penalty is dependent on proof that there was no reasonable cause for failure - Material on record stated that Assessee was prevented by sufficient cause for non-compliance with provisions of section 44AB - Reason given in present case for non-compliance with statutory provisions of section 44AB is late completion of statutory audit by auditors which was completed on 21.04.2009 - After completion of said statutory audit, within a reasonable time, assessee obtained tax audit report on 25/06/2009 and return was e-filed on 03.09.2009 - Without completing statutory audit, Assessee could not have obtained tax audit report, which constitutes reasonable cause - Punjab & Haryana High Court in case of CIT vs. Punjab State Leather Development Corporation Ltd. [2001 (7) TMI 1275 - PUNJAB AND HARYANA HIGH COURT] held that delay in completion of statutory audit was reasonable cause for non- compliance with section 44AB and it was held that Tribunal was right in cancelling penalty levied under section 271B - CIT(A) was not right in upholding the levy of penalty under section 271B – Decided in favor of Assessee.

  ---

• 2014 (4) TMI 205
  Assessment u/s.158BD - recording of necessary satisfaction - period of limitation for issuance of notice - Held that:- CIT(A) has decided issue in a causal manner without referring to facts of case - CIT(A) has not given any finding on submission of assessee that satisfaction was recorded by AO of searched party in respect of company but not in respect of Appellant - CIT(A) failed to appreciate fact that company is having distinct entity - Even if Revenue wanted to proceed against appellant, AO of searched party should have recorded his statement - Under facts and circumstances of present case, satisfaction as recorded by the AO is not valid in view of fact that satisfaction has been recorded by AO other than AO of searched party - Ratio laid down by Jurisdictional High Court in case of Chandrakantbhai Amratlal Thakkar vs. Dy.CIT & Anr [2011 (4) TMI 582 - Gujarat High Court] would apply – Assessment made is required to be quashed on this basis alone - Decided in favour of Assessee. Limitation for notice u/s 158BD – Held that:- Search was conducted on 27/04/2000 and notice was issued u/s.158BD on 29/03/2006, i.e. after a lapse of nearly six years - Proceedings are required to be initiated within a reasonable time even if there is no limitation is provided - As per section 158BE(1) of Act, order u/s.158BC is required to be passed within 2 years from end of month in which last of authorizations for search under section 132 was executed - In respect of assessment made u/s.158BD of Act, two years from end of month in which notice under this Chapter was served on such other person - However, there is no limitation for issuing a notice u/s.158BD is provided under Act, but this cannot be construed as proceedings can be initiated even after lapse of many years or after indefinite period – Decided in favour of Assessee.

  ---

• 2014 (4) TMI 204
  Capital Gains u/s 48 r/w Sec. 55 - deduction of expenditure incurred towards transfer of capital assets - cost of transfer or cost of acquisition - CIT(A) allowed deduction of Rs. 3 crore in computing Long Term Capital Gains – Held that:- CIT(A) although directed AO to allow deduction to Assessee, has not given any finding whether payment made by Assessee represents expenditure incurred wholly and exclusively with regard to transfer or it is cost of acquisition or it is cost of improvement thereof. High Court has directed Assessee to pay a sum of Rs. 3 crores to Shri Digambar Juwarkar for withdrawal of application filed by Digambar Juwarkar dt. 29.6.1995 and 15.2.1994 before Civil court - Set aside order of CIT(A) and restore this issue to file of CIT(A) with direction that CIT(A) will reconsider this issue afresh and give a clear-cut finding under which head expenditure has to be allowed under provisions of Sec. 48 of Act - Assessee should be given proper opportunity before deciding issue afresh so that Assessee may adduce necessary evidence in this regard – Decided partly in favour of Revenue. Determination of Fair Market Value - AO rejected Fair Market Value as determined by Inspector and adopted Fair Market Value at Rs. 3.75 per sq. mtr. – CIT(A) adopted cost of land at rate of Rs. 17 per sq.mtr - Held that:- Sub-Registrar has also cited instances from surrounding villages where rate varies from Rs. 0.96 to Rs. 70/- per sq. mtr. - Other Inspector has worked out average Fair Market Value at Rs. 15-16/- per sq. mtr. - In view of all these different Fair Market Value being determined by different persons - AO cannot take least Fair Market Value since in case of Assessee, Inspector of same office has duly verified nature of land and has also collected various sale instances of comparative villages - Therefore it will be appropriate that Fair Market Value as on 1.4.1981 be taken at Rs. 25/- per sq. mtr. - Fair and reasonable to adopt Fair Market Value as has been worked out by Inspector of Department - Set aside order of CIT(A) on this issue and direct AO to work out Fair Market Value as on 1.4.19981 at Rs. 25/- per sq. mtr. – Decided partly in favour of Revenue.

  ---

• 2014 (4) TMI 203
  Reassessment u/s 147 – CIT(A) has set aside the reassessment on the ground that there has been o failure on the part of the assessee to disclose the necessary details. - Reassessment framed after period of more than four years from end of assessment year - Held that:- Where assessee has been made a full and true disclosure of facts the case cannot be reopened after the period of four years – In case Inducto Ispat Alloys Ltd. Vs ACIT (OSD) [2009 (3) TMI 512 - GUJARAT HIGH COURT] and CIT Vs Goetze (India) Ltd. [2010 (1) TMI 29 - DELHI HIGH COURT ] ground is decided in favour of assessee. No mention about assessee's having failed to disclose fully and truly all material facts necessary for the assessment for the assessment year under consideration, as provided in first proviso to Section 147 - Reopening of assessment in view of facts and circumstances of case is not justified - Ld. CIT(A)'s action in deciding the issue in favour of the assessee is proper and legally correct - Decided against Revenue.

  ---

• 2014 (4) TMI 202
  Depreciation - Deletion of disallowance made by A.O. on account of higher rate of depreciation on civil work for foundation, electrical equipments and evacuation charges relating to wind mill – Held, that:- Issue is covered in favour of assessee in ACIT, Circle-1, Udaipur Versus M/s. Pyrotech Electronics Pvt. Ltd. [2014 (4) TMI 180 - ITAT JODHPUR] for A.Y. 2009-10 vide order dated 24/01/2013 - CIT (Appeals), Udaipur against each addition made by AO, on basis of which impugned order under appeal was passed by Ld. CIT (Appeals), Udaipur in this case - all the above items are part and parcel of the Wind Mills – Decided in favor of Assessee. Deletion of disallowance of service tax expenses despite fact that expenditure pertains to earlier years – Held that:- admitted fact that liability of service tax, which were claimed as expenditure in year under consideration, although pertained to earlier year, but it was settled during year under consideration - As liability was crystallized and paid during year under consideration, it was allowable as expenditure - Therefore do not see any infirmity in order of learned CIT(A) – Appeal decided against Department.

  ---

• 2014 (4) TMI 201
  Cancelling registration u/s. 12A - Whether, Registration once granted to Assessee being a charitable institution cannot be cancelled because of newly inserted proviso to section 2(15) of Act – Held that:- Not mentioned that first proviso will not apply if total receipts from charitable activities exceeds limit of Rs.10.00 lacs during "any year" - Does not mean that such benefits will not be available to institution for all other assessment years during which its receipts does not cross limit of Rs.10.00 lacs. - Insertion of second proviso has not made definition restrictive or rigorous rather with insertion of second proviso to section 2(15) of Act - For previous year, during which gross receipt income crosses limit of Rs.10.00 lacs, trust will not get exemption or benefit of its being charitable in nature despite its carrying out charitable activities - However, it will get such benefit if it is registered as charitable institution and income from business activities, as mentioned in first proviso to section 2(15), does not cross limit of Rs.10.00 lacs - Action of CIT(A) relying upon newly inserted proviso from 01.04.2009 in cancelling registration of trust, is not correct or justified - Cancellation of registration granted to Assessee u/s. 12A is hereby set aside – Decided in favor of Assessee.

  ---

• 2014 (4) TMI 200
  Addition on account of transfer pricing adjustment by A.O. – Most appropriate method which has to be adopted for determining ALP - Held that:- Assessee is only a job worker or a contract manufacturer who is entitled for making charges based on its cost incurred and not based on value of material supplied by its AE - Comparables chosen by TPO, who are full fledged independent manufacturers cannot be prima facie considered for purpose of comparability analysis, as in all cases of comparables there is a value addition and a mark up on cost at time of sale - If any of direct methods like CUP, RPM or CPM can be adopted for bench marking transactions, then they should be given preference - Once these traditional methods are rendered inapplicable then only TNMM should be resorted to as a last measure - Entire matter is remanded back to file of the AO/TPO to examine whether CUP can be considered as the most appropriate method or not - Entire assessment is set aside for fresh adjudication in the light of observation made in this order – Decided in favour of assessee.

  ---

• 2014 (4) TMI 199
  TDS u/s 194C - assessee is a wholly owned subsidiary - payment to holding company where holding company was to make available to the appellant staff, infrastructure, administrative support and support services. - Whether, conditions of MOU constituted "work contract" u/s 194C – Held that:- As per MOU, the appellant neither had any employee on its roll nor any separate office space/infrastructurewhole agreement – Documents reveals that said agreement is essentially an agreement of contract for work and services - There is no mention in the MOU that the assessee will reimburse the actual salary or actual cost of the services to the first party - Company thus falls within definition of service provider i.e. contractor as defined under section 194 C of act - Though technical services have also been agreed to be provided under MOU, but since it is a composite agreement providing all type of services by service provider, hence, provisions of section 194 C are attracted in this case – Decided against Assessee. Nature of payments covered u/s. 194C/194J - A.O. held that payment made by appellant company to its holding company were in nature of payments covered u/s. 194C/ 194J of Act – Expenditure was Disallowed by A.O. u/s. 40(a)(ia) of Act – Held that: - Agreement in question is a composite agreement - Perusal of clauses of agreement reveals that there is no such clause in agreement from which it can be gathered that services provider i.e. first party in the agreement will provide services on actual cost basis or that no profit element is involved as has been alleged by the ld. Authorized Representative - There is specific clause in agreement regarding payment on service charges - Even assessee has claimed that it has deducted the tax in relation to service fee - It may be observed that sum payable or paid to a contractor for the work, as provided under section 194C, refers to entire payment and not profit element only - Such payment u/s 194C refers to the entire payment i.e. cost to contractor for work carried out plus profit element if any – Decided against Assessee. Disallowance for non-deduction of TDS u/s 40(a)(ia) - Disallowing expenses from business and profession on ground that TDS has not been deducted, amount should be payable and not which has been paid by end of year – Held that:- This question came for consideration before Hon'ble Calcutta High Court in CIT v. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] wherein High court held that provisions of section 40(a)(ia) are applicable not only to amount which is shown as payable on date of balance-sheet - But it is applicable to such expenditure, which become payable at any time during the relevant previous year and was actually paid within the previous year - Correct law is that s. 40(a)(ia) covers not only to the amounts which are payable as on 31th March of a particular year but also which are payable at any time during the year - Assessee claimed deduction and payment of TDS regarding service fee - A.O. therefore is directed to verify the said claim and delete disallowance in respect of payments upon which tax was deducted and duly deposited by assessee in accordance with law - Matter restored to AO only on this specific point – Decided partly in favour of Assessee.

  ---

• 2014 (4) TMI 198
  Deletion of disallowance on account of bad debt – AO was of the view that it is not only the requirement to write-off the amounts in the books of account but the assessee also has to establish that the debt has become bad which has not been done by the assessee. - Held that:- assessee had continuously shown in its account that there were non-recoveries of dues from customers, which were earlier shown as sales in books of account, owing to shipment defaults by the assessee on account of natural calamity in form of cyclone at Kandla in the year 1998 in which the assessee suffered a huge loss of goods lying at docks and the adjacent stores - Owing to this non-fulfillment of outstanding contracts, the assessee in the passage of time decided to write off these dues in the books of account, which were earlier offered as sales - Commissioner (Appeals) has recorded a very categorical finding that in the audited accounts for the financial year 1998-99 - Findings recorded by Commissioner (Appeals) is wholly in accordance with law as laid down by Hon'ble Supreme Court in TRF Limited [2010 (2) TMI 211 - SUPREME COURT] and the same is confirmed - Do not find any substance in ground raised by Revenue and, accordingly, same is treated as dismissed – Decided against Revenue. Bad Debt - Condition u/s 36(1)(vii) r/w 36(2) – Held that:- Amounts in question represented transactions made in F.Y. 1998-99 and subsequently were written off by the appellant in the books of account on account of non-recovery - Conditions of sec. 36(1)(vii) r/w section 36(2) are satisfied and the claim of the appellant as a bad debt deserves to be allowed.

  ---

• Customs

• 2014 (4) TMI 197
  Granting of CHA Licence - Regulations under Customs House Agents Licensing Regulations, 1984 & 2004 u/s 146(2) of the Customs Act - Held that:- Judgment in SUNIL KOHLI & ORS Versus UNION OF INDIA & ORS [2012 (10) TMI 638 - SUPREME COURT] followed -The Regulations framed by the Board u/s 146(2) of the Customs Act are in the nature of delegated legislation - The language of that section and other provisions of the Customs Act do not indicate that the Board is empowered to make Regulations with retrospective effect - Thus, the 2004 Regulations would operate prospectively and would not in any manner affect the eligibility and entitlement of those who had qualified the examination held under the 1984 Regulations for grant of licences to act as CHA - The saving clause contained in the opening paragraph of the 2004 Regulations unmistakeably show that while enacting the new Regulations, the Board did not want to adversely impact the right of those who had qualified the examination held under the 1984 Regulations because the nature of the examinations envisaged under the two sets of Regulations is substantially similar - Considering the Supreme Court decision in Sunil Kohli (supra), it is not possible for the appellants to refuse to give licence to the writ petitioner-respondent no.1 on the specific plea that he is qualified under the Regulations 1984 and not under the Regulations 2004 - No substance in appeal and thus dismissed – Decided against appellant.

  ---

• 2014 (4) TMI 196
  Smuggling - Absolute confiscation of Indian currency – Whether confiscation should be absolute one or should be converted into an option for redeeming – Imposition of penalty - Held that:- Judgment in Nitu Bhojwani vs. CC Ahmedabad [2009 (4) TMI 623 - CESTAT, AHMEDABAD] followed - It is found that offence of smuggling is not being challenged by the appellants - However, they pray that instead of absolute confiscating the Indian currency, the same should be converted into an option for redeeming the same on payment of redemption fine - In the absence of any malafide, the absolute confiscation of IC is not warranted – Given the bona fide of appellants, absolute confiscation of IC is set aside and redemption of the same allowed on payment of redemption fine of Rs.50,000/- - The redemption fine imposed by the Tribunal in all the above cases ranges from 10% to 20% - Penalty imposed upon Shri Khima Nand Sharma is reduced from Rs.50,000/- to Rs. 20,000/- - As regards penalty on Shri Hari Singh, a labourer working on behest of his master, his penalty is reduced from Rs.10,000/- to Rs.1,000/- Decided partly in favour of appellants.

  ---

• 2014 (4) TMI 195
  Validity of Commissioner (A) order – Appellant fraudulently named as importer – Held that:- Appellant is not the importer in the matter and somebody has used their name for import of the goods and after arriving at the decision, he exonerated the appellant from imposition of penalty - Therefore, the observation of the Commissioner (A) “without prejudice to taking further action against them, if necessary, and if found that they have also connived/colluded in the fraud committed in this matter, on conclusion of the investigations directed above” are not warranted -Thus, that part of the order is set aside - Appeal disposed of – Decided in favour of appellant.

  ---

• Service Tax

• 2014 (4) TMI 222
  Waiver of service tax - Valuation - Commercial or Industrial Construction Services - Method of valuation to be adopted for discharge of service tax liability - Held that:- issue needs deeper consideration, at the same time the Larger Bench decision of the Tribunal in the case of Bhayana Builders Pvt. Limited [2013 (9) TMI 294 - CESTAT NEW DELHI], helps the appellants for the proposition that the cost of free supplies of the materials need not be included for discharge of service tax liability, which is being contested by the learned departmental representative stating that the appellant has not included the value of free supply of the materials. In our view the issue is contestable and arguable hence, require some time for coming to a conclusion - Conditional stay granted.

  ---

• 2014 (4) TMI 220
  Condonation of delay - appeal before the appellate Commissioner. - Commissioner denied condonation on the basis that the he has no power to condone delay - Held that:- appeal if presented within a further period of 3 calendar months, beyond the initial period of three months specified in Section 85(3) and in terms of the proviso thereto, would fall within the discretionary ambit of the Commissioner (Appeals), liable for consideration. In seeking condition of delay, the appellant provided not clear and cogent grounds for seeking condonation except stating that the appellants representative was out of station. - On this factual matrix, the appellant herein had failed to make out a case for condonation. There are, however, several decisions, which postulate the principle that a liberal view must be taken while considering an application for condonation of delay and that even where no wholly satisfactory cause is pleaded, the appellate court is not denuded of the discretion to condone the delay but on the terms as to costs. As the impugned order has rejected the appeal as a consequence of rejection of the application for condonation of delay, we refrain from going into the substantive merits of the appeal. Suffice it to notice that prima facie, the appellant herein appears to have an eminently arguable case on merits, to be presented before the Commissioner (Appeals), though the appeal was filed with delay not wholly explained satisfactorily - Delay condoned conditionally.

  ---

• 2014 (4) TMI 219
  Waiver of pre deposit - Receipt for goodwill - Intellectual Property Service - Whether the amount of Rs. 8.98 crore received by the Applicant from KDHP on the transfer of the ‘Goodwill’, viz. ‘Kanan Devan’, along with transfer of the ongoing business, against two Deeds of Transfer dated 30.03.2005 and 02.07.2005, be subjected to service tax levy, under the category of ‘Intellectual Property Service’ or otherwise - Held that:- Prima facie, we find that the Applicant themselves had declared in the respective Deeds allocating the total amount, Rs. 8.98 crore towards the use of such ‘Goodwill’, which the Revenue has considered as the gross taxable value in the services of allowing to use the ‘Goodwill’, which would fall under the definition of ‘Intellectual Property Right’ and consequently, it is chargeable to service tax under the taxable services, ‘Intellectual Property Services’ - at the time of disposal of the Appeal. No financial hardship has been pleaded. In the result, the Applicant failed to make out a prima facie case for total waiver of predeposit of the dues adjudged - Conditional stay granted.

  ---

• Central Excise

• 2014 (4) TMI 221
  Eligibility of SSI exemption - Amalgamation of company - Effective date of amalgamation - Whether the effective date of amalgamation in the present case is 22.10.1997 as contended by the appellant or 01.04.1996 as alleged by the Revenue for the purpose of eligibility of SSI exemption - Held that:- no specific date of amalgamation has been specified by the of Order dated 01.10.1997 of the Hon’ble High Court of Gujarat. The effective date of amalgamation/ transfer, therefore should be 22.10.1997, the date when the transferor company M/s Marigold Coatings P Ltd filed the certified copy of the court’s order dated 01.10.1997 with the Registrar of Companies. We, accordingly, hold that the date of amalgamation/ transfer in this case will be 22.10.1997 and consequently appellants are eligible for SSI exemption notification up to 21.10.1997 - Following decision of of Tata Iron and Steel Company Ltd Vs. Presiding Officer and Ors. [1999 (8) TMI 952 - PATNA HIGH COURT] and State of A.P. Vs Jindal Strips Limited [2006 (7) TMI 621 - ANDHRA PRADESH HIGH COURT] - Decided in favour of assessee. Clearances of raw materials removed from Sab Chem Division under the cover of challans - Whether duty on raw materials removed from Sab Chem Division of appellant, under the cover of challans maintained by the appellant, could be demanded from the Sab Chem Division of the appellant - Held that:- During the material period, the Sub Chem Division was engaged in the manufacture of excisable goods on job work basis for M/s Berger Paints Ltd, which was cleared on payment of full rate of duty after availing MODVAT Credit of duty paid on inputs. While it is true that excise duty cannot be demanded on removal of raw materials on which no MODVAT Credit had been taken, but when MODVAT Credit was availed by Sab Chem Division on raw materials/ inputs received from Berger Paints Ltd, a part of which (involving duty of Rs. 2,21,134/- as accepted by the appellant) was subsequently returned to Berger Paints Ltd, Sab Chem Division was required to pay duty on the such returned inputs/ raw materials at the time of removal from their factory in terms of the provisions contained in Rule 57F of the erstwhile Central Excise Rules, 1944. It is also evident from appeal records that the Sab Chem Division was also manufacturing excisable goods for the main appellant out of raw materials supplied by them without availing MODVAT Credit - Partial demand sustainable - Decided partly in favour of assessee. Removal of finished goods without payment of duty - Held that:- all goods including inputs/ raw materials, whether excisable or not, invariably used to be removed from the appellant’s factory under the cover of serially numbered challans issued from bound books since the inception of the appellant s factories. The investigating officers have not come across even a single instance where the appellant had removed any goods at any point of time without the cover of the said serially numbered challans. Even the alleged evasion of duty on various counts in this case has been worked out by the investigating officers on the basis of the said serially numbered Challans treating them as authentic evidence of removal of goods, and the main appellant has explained their position on the basis of the serially numbered challans - The demand is, therefore, set aside and the matter is remanded to the adjudicating authority to adjudicate this portion of the demand after supplying copies of all the relevant relied upon records on this issue to the appellants - Decided in favour of assessee. Confiscation of goods - Clandestine removal of goods - Held that:- goods were lying within the appellant s factory. There was no evidence on record to show that there was any attempt to remove those goods clandestinely without payment of duty. Appellant has given reasons as to why according to them the entries are required to be made in the statutory records only when goods are in a condition of finishing as available in the market. In view of the above decisions on the issue, we hold that the goods in question were not liable to confiscation under Rule 173Q of the erstwhile Central Excise Rules 1944 - However penalty upheld - Decided partly in favour of assessee.

  ---

• 2014 (4) TMI 193
  Condonation of delay - Tribunal's power to condone delay - Held that:- Condoning the delay always advances cause of justice and affords opportunity to parties to contest the case on merits whereas not condoning the delay results in denial of justice and deprives them of an opportunity - we do not want to say that in every case delay should always be condoned, but by and large, approach of the court should not be so technical, but it should be always to ensure that substantial justice is done by giving them an opportunity of being heard to both the parties - since delay was hardly of 95 days, Tribunal should have condoned the same - Delay condoned.

  ---

• 2014 (4) TMI 191
  Rate of interest - Interest on delayed duty - Rule 8 of the Central Excise Rules, 2002 - Held that:- Once the amended rules have come into force, they have to be given full effect and, therefore, for the period from 1.4.2003, the new rate of interest shall apply and not the rate of interest which was prevalent when the amount of duty was due - Otherwise, the entire rule becomes infructuous/otiose - interest leviable for the period from 1.4.2003 to 2.9.2003 would be at the rate prescribed in the amended provisions of sub-rule (3) of Rule 8 of the Central Excise Rules, 2002 - Decided in favour of Revenue.

  ---

• 2014 (4) TMI 190
  Denial of CENVAT Credit - Availment on the basis of supplementary invoices - Commissioner allowed credit - Held that:- there is no dispute that M/s Maruti Udyog Ltd. had earlier imported the goods under EPCG scheme without payment of duty. The duty became payable subsequently as M/s Maruti Udyog Ltd. could not fulfil the export obligation. Accordingly duty was paid by M/s Maruti Udyog Ltd. in March, 2002 by way of supplementary invoices on the basis of which the respondents has availed the credit. From the said facts, it can be reasonable concluded that there was no suppression, fraud, misstatement etc. with an intent to evade duty. As such the exception carved out in Rule 7(1)(b) is not available in the present case. In the absence of the same, the supplementary invoices raised by M/s Maruti Udyog Ltd. have to be held as eligible document for the purpose of availment of credit - show cause notice was raised on the sole ground that the respondents are not owners of the said capital goods and as such the availment of credit was not justified - Following decision of Maruti Udyog Ltd. [2003 (10) TMI 166 - CESTAT, NEW DELHI] and Pepsi Foods Ltd. reported as [2010 (2) TMI 608 - PUNJAB & HARYANA HIGH COURT] and SGS India P. Ltd. reported as [2011 (3) TMI 759 - CESTAT, MUMBAI] - Decided against Revenue.

  ---

• 2014 (4) TMI 189
  Availment of CENVAT Credit - Whether, appellants were entitled to CENVAT credit on the services provided to them by commission agents (procurement of purchase orders on commission basis) during the periods of dispute (April 2007 to March 2008 in the case of the first appellant and April and May 2007 in the case of the second appellant) - Held that:- The period of dispute in the present case is prior to 01.04.2008, the date on which a significant amendment was brought to Rule 2(l)(ii) of the CCR. The Hon'ble High Court held that, notwithstanding the Board's clarification in Circular No. 97/8/2007-ST dated 23.08.2007, transportation of final products from the place of removal stood within the ambit of the definition of input service prior to 01.04.2008. The benefit of the High Court's decision in [2011 (3) TMI 248 - KARNATAKA HIGH COURT] is available to the appellant - Decided in favour of assessee.

  ---

• 2014 (4) TMI 188
  Denial of refund claim - Unjust enrichment - Held that:- Appellant in the present case has lost its stand and upheld to the level of Tribunal and filed an appeal there against before the Hon’ble Supreme Court which stand accepted by them. There is a huge time gap between the decision of the Tribunal and the decision of the Hon’ble Supreme Court. As such, during the relevant period the decisions of the lower authorities were against the appellant holding their activity to be a manufacturing activity liable to pay duty of excise. In such a scenario, a common prudent business man would collect the duty which he was paying on their final product from their customers and would not take the risk of not collecting such duty, and to bear the loss from his pocket, in the case the appeal is dismissed by the highest authority. In these circumstances the onus becomes more heavy on the appellant to be discharged by production of evidence that such duty was not being charged by them from their customers. We do not find any evidence produced by the appellant on record - Following decision of Allied Photographic case [2004 (3) TMI 63 - SUPREME COURT OF INDIA] - Decided against assessee.

  ---

• 2014 (4) TMI 187
  Refund – Appellant demanded for refund was in respect of Cenvat credit of AED on the ground that they consumed raw material purchased for the manufacture of excisable goods exported on payment of duty - Held that:- cenvat credit of AED(T&TA) accumulated on account of the final exported product being not leviable to the same is required to be refunded in terms of Rule 5 of Cenvat Credit Rules - Following decision of COMMISSIONER OF C. EX., ROHTAK Versus INDO DANE TEXTILE INDUSTRIES [2007 (2) TMI 77 - CESTAT, NEW DELHI] - Decided in favour of assessee.

  ---

• 2014 (4) TMI 186
  Rejection of remission claim - Demand in respect of fully manufactured goods which were destroyed in the fire accident - Held that:- though it is a fact that the entire manufactured goods along with the statutory records maintained in the ordinary course of business were destroyed in the fire. If that be so, the numbers of pairs of footwear becomes irrelevant in as much as it was the entire stock which was damaged. We also take into notice a subsequent show cause notice raising the demand of duty against the appellant in respect of 4200 pairs of shoes which were destroyed in the fire. This indicates that the Revenue accepts the appellant contention that prior to the fire accident, the figures appearing in RGI register of 4200 shoes. Further, from the insurance papers, it becomes clear that the claim was made in respect of same quantity of footwear in as much as the same tallies with the value. It is also on record that while claiming the insurance, the appellant has not claimed the excise duty. Otherwise also, we find that if the number of shoes destroyed in the fire were not 4200 but 42, the claim has to be accepted in respect of entire quantity and no demand of duty on any quantum of footwear can be raised - Decided in favour of assessee.

  ---

• 2014 (4) TMI 185
  Waiver of predeposit of duty - SSI exemption notification - Held that:- clause (b) of Notification No. 83/94 states that in the event of failure on the part of receiving back the goods from the job worker, the manufacturer would pay the duty as if such goods were manufactured by the said supplier and sold on his own account. In any event, if we take the job work goods of Rs. 31 lakhs then it would be within the exemption limit of Notification No. 8/2003-CE dated 1.4.2003. However, the Commissioner (Appeals) observed that they have surrendered the registration certificate and have no official communication with the Department regarding the movement of the semi-finished goods to the job worker. Hence, there is a factual dispute on the movement of the job worked goods - Conditional stay granted.

  ---

• 2014 (4) TMI 184
  Waiver of pre deposit - Duty demand - Held that:- Shri Girish Kumar Thampy in his statement has admitted that Shri Rajesh Bhatia was employed by him to make entries in the computer and for the said purpose Shri Rajesh Bhatia was given Rs.2500/- per month. Shri Rajesh Bhatia has admitted that they have made entries in the computer printout. We have already seen the computer printout which reflect the date, RR No., Brake mould, product, quantity, Misc. party and the buyer’s name. The product shown in said computer printout is B-1 indicating appellants brand name as Bombay 1000. Railway receipts mentioned in the said computer printout stand recovered by Revenue to a large extent. All these evidences and statements of various persons indicate clandestine activity of Raj Pan Masala (P) Ltd. At this stage, we are of the view that appellants have not made out a prima facie case so as to dispense with the condition of pre-deposit of entire duty and penalty - Conditional stay granted.

  ---

• 2014 (4) TMI 183
  Waiver of pre deposit of penalty - Clandestine manufacture and removal of final product - Held that:- The company manufacturing final product and evading duty on the finding of clandestine removal has already been sold. The appellants have not made out a prima facie case so as to dispense with the condition of pre-deposit. Though we agree that recovery is required to be made against the company and the said fact cannot be made the basis for deciding the quantum of penalty on the present Director but we find that the adjudicating authority has discussed and has taken into consideration ample evidence for imposing penalty. As such we note that there is evidence in the shape of statement of various persons which reflect upon the role played by the Director. We also agree with the ld. A.R. for Revenue that financial status of the present applicant has not been fully & correctly revealed by him. The same is only as regards the present scenario and there is nothing to show about his earning as the Director of the company - Conditional stay granted.

  ---

• 2014 (4) TMI 182
  Waiver of pre-deposit of duty - quantum of credit availed by the appellant in terms of the formula mentioned in Rule 3(7) (a) - Held that:- it is thus clear that the noticee has taken wrong cenvat credit in contravention of Cenvat Credit Rules, 2004. The noticee’s contention that they have declared the fact of taking of credit in the ER- returns and therefore, extended period is not invokable is not sustainable due to the fact that in the ER-I returns only consolidated figures of total credit taken on inputs is shown in the ER- 1 returns, invoice wise credit figures are not shown. This fact of wrong credit could only be detected by audit on scrutiny of input invoices with cenvat credit account. Hon’ble Supreme Court in the case of C.C.E. vs. Mehta & Compan 2011 (264) ELT 481 has held that for the purpose of computation of relevant date for invoking extended period cause of action is date of knowledge. Accordingly, Hon’ble Apex Court has held that limitation of five year is to be computed from the date of knowledge to the department. However, in this case the assessee had never informed the department & even their invoice were camouflaged. The invoices did not contain the details of credit available to the Noticee. The said invoice only indicate the total amount of duty paid on DTA clearances - there is no column in the ER - 1 return requiring the assessee to show all the above detail. In the absence of requisition of law to disclose the above particulars non-disclosure would not reflect upon the mala fide of the appellant - Conditional stay granted.

  ---

• 2014 (4) TMI 181
  Denial of refund claim - whether the appellant herein is eligible for refund of the so-called excess duty paid by M/s. Nirman Pharma - Held that:- M/s. Nirman Pharma has assessed the Physician’s Samples cleared by them and the said assessment of duty liability is discharged by M/s. Nirman Pharma as a manufacturer of excisable goods. In my view, the assessment which is not challenged by manufacturer after discharge of Central Excise duty cannot be challenged by the recipient of such products. Undoubtedly the appellant could have claimed refund of the amount of excess Central Excise Duty paid by M/s. Nirman Pharma provided the said Nirman Pharma had contested the duty liability under Section 4A of the Central Excise Act, 1944, on Physicians Samples, before the lower authority. I find that the impugned orders of the lower authorities rejecting the refund claims though on different reasons, needs to be upheld - Decided against assessee.

  ---

• CST, VAT & Sales Tax

• 2014 (4) TMI 225
  Tax Exemption - Whether Paddy husk falls under exemption - paddy husk versus rice husk – Interpretation – Held that:- Judgment in Commissioner of Trade Tax, U.P. Vs. S.S. Ayodhya Distillery & others, [2008 (12) TMI 394 - SUPREME COURT OF INDIA] followed - As paddy and rice are considered to be the separate commodities, paddy husk cannot be treated to be rice husk - Paddy husk is not mentioned in both the notifications dated 7.9.1981 5.6.1985 - By notification dated 6.6.1996 'paddy husk' was inserted - Even then, the rice husk was not deleted - No explanation was offered therefor. Interpretation – Held that:- Two expressions having been used ordinarily two different meanings should be assigned thereto - If by reason of a notification taxes are sought to be imposed upon a new commodity applying Haydon's Rules it must be held that the mischief was sought to be remedied thereby - It is, thus, difficult to agree that rice husk and paddy husk denote the same commodity - If, according to the Government of UP, rice husk is this cover which further requires husking, no exception thereto can be taken - When a paddy is dehusked, it becomes paddy husk and when the rice is dehusked, it becomes rice husk - If something is included in the Schedule which is non-existent, no tax can be levied thereupon - Furthermore, if there is a doubt or dispute as to whether paddy husk or the rice husk denotes the same commodity or not, the benefit thereof shall be given to the assessee - Furthermore, it is not the case of the appellant that the respondent extracts any oil out of paddy husk - Decided against Revenue.

  ---

• 2014 (4) TMI 224
  Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that:- The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. [2014 (2) TMI 1003 - ALLAHABAD HIGH COURT] followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of Section 2(i) of CST Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8(2-A) of the 1956 Act even though there was general exemption u/s 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided against assessee. Inclusion of export pass fee in taxable turnover – Held that:- Decision in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited[2004 (11) TMI 88 - ALLAHABAD High Court] followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover – Decided in favour of assessee.

  ---

• 2014 (4) TMI 223
  Levy of VAT / Tax on sharing of the mobile towers - sharing of passive infrastructure - Nature of services and whether it amounts to transfer of tax due - Pre-deposit, interest and penalty – Held that:- Prima facie it would appear that the facts of the present case are closely similar, if not, entirely identical to the appeals that this Court had dealt with in Indus Towers Ltd. V. Union of India [2013 (6) TMI 294 - DELHI HIGH COURT] - Consequently, the activity being subjected to VAT does not prima facie arise - Tribunal’s impugned order requiring pre-deposit of 20% of the tax and interest and 10% of the penalty amount is set aside - stay granted.

  ---

• Indian Laws

• 2014 (4) TMI 194
  Applications for purchasing the privilege for vending toddy - Applicants filed joint application for doing joint business - 5th Respondent without informing other filed separate application for the same - Applicants request for offered production of Demand Draft or payment of the requisite amount made by 5th Respondent - Applicant contends that offers made as per Ext.P3 were not taken into consideration and at the same time the first respondent allotted the said shops in Group No.XI in Thodupuzha Excise Range in favour of the 5th respondent and provisionally confirmed the same - Held that:- petitioners have requested time for complying with the conditions and also for producing the Demand Draft towards the amount payable, in accordance with law, for purchasing privilege for vending the shops in question for which they claim to be the joint licencees and also offered to pay the requisite amount in cash on the date of auction itself. As noticed hereinbefore, they attribute fraud on the part of the 5th respondent. As noticed hereinbefore, the learned Government Pleader submitted that the sale of the shops in question in favour of the 5th respondent was subsequently confirmed finally as he had submitted a valid application and also had complied with all the conditions for purchasing the privilege in tune with the provisions under Rule 5(1) of the Kerala Abkari Shops Disposal Rules, 2002. This Court will not justified in interfering with the proceedings at this stage especially taking note of the fact that Ext.P5 representation is pending before the 2nd respondent. It is to be noted that, admittedly, the sale of toddy shops in Group-XI of Thodupuzha Excise Range has now been finally confirmed in favour of the 5th respondent - Matter remanded for consideration - Decided partly in favour of applicant.

  ---

• 2014 (4) TMI 192
  Application for preferential right - Cancellation of license - Preference under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002 - Held that:- incontestably, even after the said amendment the condition for grant of privilege of vending toddy in respect of those licensees who had conducted the shops during 2002-03 and subsequent years and whose licenses were cancelled due to registration of abkari cases falling under latter limb of Rule 5(1)(a) of the Rules and subsequently exonerated by the courts remains as such without any change. In such circumstances, I am of the view that the reasons in Ext.P5 viz., registration of an abkari case and consequential cancellation of the license should not have been assigned as a reason for rejecting his claim for preferential right under Rule 5(1)(a) of the Rules owing to his acquittal as per Ext.P1 judgment. In the circumstances, the said rejection was based on a non-existent ground and therefore, the petitioner's claim for preference calls for a fresh consideration. Accordingly, Ext.P5 is set aside. Consequently, there will be a further direction to the fourth respondent to restore Ext.P3 application and consider the claim of the petitioner for preference in terms of Rule 5(1)(a) of the Rules and pass appropriate orders thereon taking into account whether the petitioner satisfies the requisite conditions for preference in terms of the latter limb of Rule 5(1)(a) of the Rules - Decided in favour of applicant.

  ---