Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 8, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Review petition - Reassessment u/s 147 - Scope of the proviso to the Section 14A - The proviso is not procedural but guarantees vested rights of parties against reopening concluded assessments. - HC
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Notice U/s 148 & 142(1) - Non issuance of notice u/s 143(2) - So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding - HC
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Arrears of rent - Escaped Assessement U/s 147 & 148 - Since it relates to the period prior to insertion of Section 25B the said income can be brought under Sections 147 and 148. - HC
Customs
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Valuation custom - Once the goods are held to be old and used, their value cannot be enhanced by treating the goods as other than old and used goods. - AT
Wealth-tax
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Valuation - Wealth Tax Rules, 1957 - Rule 1BB is essentially a rule of evidence as to the choice of one of the well-accepted methods of valuation in respect of certain kinds of properties - HC
Service Tax
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Valuation - pure agent - reimbursement of expenditure - prima-facie not in agreement with the contention of the Revenue that the sovereign authority in other countries are rendering service to the appellant. - stay granted. - AT
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Scope of input services - Rule 2(l) - whether the 'input services' for the 'output service“ of 'Commercial or Industrial, 'Construction Services' can be accepted as 'input services' for 'Renting of Immovable Property' as well. - Prima facie against the assessee - AT
Central Excise
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Refund - unjust enrichment - Cost Accountant’s certificates do not specify any records or books of account which were claimed to have been verified at his end. - claim of refund rejected - AT
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Valuation – inclusion of value of the diesel which was purchased for testing, the DG sets manufactured and supplied by the assessee - prima facie not includible - stay granted - AT
VAT
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Valuation - sale price of the soft drinks - Merely because the soft drinks and bottles cannot be separated till they reach the end-customer, in the absence of sale of the bottle, it cannot be said that there is no transfer of the right to use the bottle - cost of bottles not to be included - HC
Case Laws:
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Income Tax
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2013 (4) TMI 144
Remitting the matter back to the file of the A.O - Depreciation U/s 32 on Intangible Assets - Interest U/s 234C - Bad debt - Held that:- The Tribunal, as noted above, has considered it appropriate to restore the issue back to the Assessing Officer on the ground that neither the Assessing Officer nor the Commissioner of Income-tax (Appeals) has considered as to whether there was a default on the part of the assessee in the payment of advance tax. Since the Tribunal has merely restored the issue to the file of the Assessing Officer, we are not inclined to entertain this appeal as giving rise to any substantial question of law since we are of the view that the order of the Tribunal, if appropriately construed, leaves open all questions to be decided by the Assessing Officer, including on the applicability of the decision of this court in the case of Prime Securities Ltd. [2010 (12) TMI 475 - BOMBAY HIGH COURT] - Decided against the revenue.
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2013 (4) TMI 143
TDS u/s 195 - Disallowance u/s 40(a)(ia) - The assessee has made payment of freight charges without deducing tax at source - Held that:- he payment of freight charges was made by the assessee on account of air fare and not shipping charges and even the said air fare was not directly paid to the airlines but the same was paid to the different parties who acted as freight booking agents. - CIT has not given any reason or basis to show as to how the said payments were exempt either under the relevant tax treaties or under the Board's circular. No opportunity was also given by him to the AO to examine the various details and documents filed by the assessee for the first time before him before giving relief to the assessee relying on the said details and documents Matter remanded back to AO for fresh decision.
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2013 (4) TMI 142
Review petition - Reassessment u/s 147 - Scope of the proviso to the Section 14A - expenditure in relation to exempted income - reopening of concluded assessments - CBDT Circular No.11 of 2001 - Held that:- when assessment stands set aside and remanded for reconsideration by the assessing authority, such assessment cannot be treated as a concluded assessment and so much so, the Circular referred to therein does not bar revision of assessment by the Commissioner under Section 263 of the Act for the purpose of making disallowance under Section 14A. In fact, the scope of the proviso to Section 14A was not considered in the said decision at all. Obviously, the facts arising in these cases are not similar to the facts based on which we rendered our judgment in Catholic Syrian Bank Ltd. v. CIT [2009 (8) TMI 750 - KERALA HIGH COURT] because in all these cases, assessment involved remained concluded and the powers of the Commissioner to suo motu order revision of assessment under Section 263 was considered with specific reference to the proviso to Section 14A, which is part of the statute. The proviso is not procedural but guarantees vested rights of parties against reopening concluded assessments. So far as concluded assessments are concerned, the proviso makes it clear that the assessee should not be subjected to disallowance either by reopening assessment under Section 147 or under Section 154 for raising demand of tax after disallowance or for withdrawing refund granted. If the right of the assessee cannot be taken away by the Assessing Officer, we see no reason why it can be permitted to be done by the Commissioner under Section 263 to achieve the same purpose, which is prohibited under the proviso to Section 14A. - Review petition dismissed.
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2013 (4) TMI 141
Inclusion of Closing stock in the hands of subsidiary company and / or holding company - held that:- closing stock of the subsidiary company is shown as opening stock of the holding company, which is a strange principle of accounting by both the companies. We felt that the value of the stock should be considered for assessment only at the hands of one company. When the appeal of the holding company was heard, learned Senior counsel appearing for the assessee after taking instructions from the subsidiary company submitted that in the Income Tax Appeal that was pending against the assessment of closing stock of the subsidiary company, they will not press that ground thereby accepting the closing stock of that company to be treated as opening stock for assessment. In spite of the above judgment delivered based on undertaking given by the assessee in this Court the assessee did not inform the Tribunal about the above judgment and the matter was argued on merit, which led to impugned orders issued by the Tribunal. The consequence of this conduct of the assessee is that the Department was disabled from contesting the Tribunal's order at the hands of the holding company and the Department's appeal was dismissed. Matter remanded back to tribunal.
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2013 (4) TMI 140
Disallowance U/s 14A of the Income-tax Act, 1961 - Held that:- Following this judgment CIT v. Catholic Syrian Bank Ltd.2010 (10) TMI 806 - Kerala High Court)we answer this question against the assessee and in favour of the Revenue. Assessment of excess cash - Shown under Suspense account under the head "other liabilities and provisions" - held that:- assessee themselves conceded that the amount is excess cash with them retained for several years and there is no claimant for the same. - the appellant cannot treat it as a liability or a provision for liability. - Further, as and when a claim is made and the appellant has to make any payment, the same will be allowable as a deduction in the year in which the claim is made. - additions confirmed - decided against the assessee.
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2013 (4) TMI 139
Notice U/s 148 & 142(1) - Non issuance of notice u/s 143(2) - of the Income-tax Act, 1961 - The return filed by the assessee was not taken up for scrutiny and no notice under section 143(2) was issued - Subsequently, the impugned notice U/s 148 was issued and served - Held that:- Admittedly there were no original assessment pro-ceedings and no notice under section 143(2) was issued. The time for issue notice under section 143(2) had lapsed. The Assessing Officer, therefore, could have only examined the question/aspect after issue of notice under sections 147/148 of the Act. Whether or not notice can be issued in such cases is no longer res integra and has been decided by the Supreme Court in case of Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME Court ) So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. We do not find any merit in the writ petition and the same is dismissed - However, it is clarified that in this order we have not expressed any opinion on the merits - It will also be open to the petitioner to explain and show that the orders of the Tribunal and this court for the assessment years 1990-91 and 1991-92 should not be applied to the assessment year in question due to change of facts/circumstances - In the facts of the case, there will be no order as to costs.
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2013 (4) TMI 138
Arrears of rent - Escaped Assessement U/s 147 & 148 - The assessee had received arrears of rent pertaining to the years under consideration after the assessee filed returns declaring income received during the said assessment years originally - Held that:- During regular assessment under Section 139 the aforesaid amount could not be brought into tax network prior to insertion of Section 25B. Now it has become possible to take into consideration of the arrears of rent irrespective of the years of receipt under the heading of income from house property within the meaning of Section 22. Since it relates to the period prior to insertion of Section 25B the said income can be brought under Sections 147 and 148. There is no clear decision or indication in the judgment of Delhi High Court that Section 25B of the Act has been declared to be clarificatory in nature. Mr. Khaitan, learned Senior Counsel seems to be right that no ratio has been laid down in that judgment. But ultimately the Court held that arrears of rent is taxable by virtue of the provision of Section 5(1)(a) of the Income Tax Act, 1961. In view of the discussion as above, we are unable to accept the contention of Mr. Khaitan. If his contention is accepted then the aforesaid income which is not otherwise permitted to be escaped by the Act has to be exempted from income tax. Neither the Hamilton case [(1992) 194 ITR 391] nor Hope (India) [1999 (4) TMI 72 - CALCUTTA HIGH COURT] case has dealt with the aforesaid aspect of the matter. Even the Full Bench decision rendered in case of P.G. and Sawoo Private Ltd. v. Assistant Commissioner of Income Tax [2008 (9) TMI 92 - CALCUTTA HIGH COURT] did not deal with this aspect rather this Full Bench decision has merely explained that there was no conflict between the judgment of this Hon’ble Court in Hamilton case and Hope (India) case. - Decided against the assessee.
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2013 (4) TMI 137
Payment of commission - According to the AO, the assessee failed to prove that the alleged commission agent rendered any service and thus, disbelieved the agreement - Held that:- The Revenue could not place any evidence before us to the extent that the actual payment was not genuine or that the agent has not disclosed such payment in its Return - In absence of such evidence, once it is proved that there existed a written agreement and consequent to such agreement payments were actually made from time to time by account payee cheques - having regard to the nature of work the agent was required to perform, in our opinion, the Tribunal below was quite justified in deleting the addition. - Decided against the revenue.
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2013 (4) TMI 136
Revenue expenses or capital expenses - expenses was incurred for production of animation film - commission expenses - Valuation on the basis of certificate - Held that:- in the previous year relevant to the Assessment Year, the assessee had not sold the project which was shown in the earlier year as work in process - there is no evidence on record that any revenue was generated from the said project and there was any chance of recovery. In the previous year relevant to the Assessment Year, the assessee – Company had written off the said amount by debiting Profit and Loss account as animation film, which was made in the year 2001, became out of date - deduction allowed - Decided in favor of assessee. Regarding allowability of Commission - Held that:- The Commissioner of Income Tax (Appeals) specifically found that the assessee had paid commissions in the past years also and the same had been allowed by the Assessing Officer in the previous years and the assessee had deducted 'Tax Deducted at Source' for commission payments and the commission had been paid to three agents who have brought business and added clients there was no justification for disallowance of commission - Deduction allowed - decided in favor of assessee. Valuation of work in progress - Certificate of Valuation - Held that:- The assessee had completed the projects in May and June 2006 and on the basis of the bills raised for these projects aggregating Rs.8,28,895=00, the assessee had valued the work in process as on 31st March 2006 at Rs.3,75,500=00 as per the certificate of the Officer In-charge of the projects. - the finding cannot be said to be based on 'No Evidence' nor can it be said to be based on any inadmissible evidence - Decided in favor of assessee and against the revenue.
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Customs
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2013 (4) TMI 134
Offence U/s 135 (1) (a) of the Customs Act, 1962 - Confiscation U/s 111 (d) - Section 108 - Upon search of Ashwani's car, pieces of watches, VCRs, etc. were recovered alongwith some documents and bill of entry, and the same were seized - Held that:- A statement of co-accused cannot be excluded from consideration at the threshold of trial as its admissibility or inadmissibility under Section 30 of the Indian Evidence Act, 1872 has to be considered after the evidence is led in relation to it. Apart from this, there is similar statement of independent person-Dinesh Kumar, whose evidentiary value cannot be pre-judged at the initial stage. This Court is conscious of the fact that aforesaid Dinesh Kumar is not a cited witness by the respondent, but on this technical ground, petitioner cannot get a clean chit as list of additional witnesses can be always filed by the respondent even now before the trial court - Due to whose fault the trial of this case has not begun, is a matter which is not required to be gone into in these revisional proceedings, as mere delay would not be detriment because trial court record has been reconstructed. Prima facie, it appears that petitioner is the beneficiary of the seized goods and because applicability of Section 30 of the Indian Evidence Act, 1872 cannot be altogether excluded from consideration at this initial stage of trial, therefore, on the strength of decisions relied upon, petitioner is not entitled to discharge - Finding no illegality or infirmity in the impugned order - Dismiss this revision petition while refraining to comment upon the merits of this case lest it may prejudice either side at trial.
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2013 (4) TMI 133
Valuation - Misdeclaration/undervaluation of goods imported - Confiscation/penalty - Assesse imported 540 bales of old and used garments through his custom house agent. - old and used goods or other than ‘old and used goods’ - classifiable under Chapter 6309 of CTA, 1975 - Held that - So far as valuation is concerned reliance made on the judgement of Hon’ble Supreme Court in the case of Eicher Tractors Limited, reported in [2000 (11) TMI 139 - SUPREME COURT OF INDIA], wherein it has been held that if the transaction value cannot be determined under Rule 4(1) [now Rule 3(1)] and does not fall under any of the exceptions in Rule 4(2) [now rule 3(2)], there is no question of determining the value under the subsequent Rules. The value was sought to be enhanced by treating the impugned goods as other than old and used garments and by comparing the sale price of earlier imported old and used garments, the classification of the goods have been decided by ld. Commissioner as old and used garments classifiable under 6309 as claimed by the importer by rejecting the claim of the DRI. Once the goods are held to be old and used, their value cannot be enhanced by treating the goods as other than old and used goods. There is no findings that the invoices issued by the overseas suppliers are fake or fabricated and that the importer had paid any amount more than that mentioned in invoices either in kind or any other manner. - Decided in against the revenue.
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Corporate Laws
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2013 (4) TMI 132
Whether the company/corporation can be held to be a State within the meaning of Article 12 of the Constitution, or any other authority for that matter instrumentality or an agency of the State? - respondent working in different branches of the company as an Accountant-cum- Administrative Officer challenged his termination order by filing writ in the High Court of Calcutta, praying for the issuance of a writ of mandamus, directing that the said termination order be quashed - The appellant company contested the said writ petition contending that it was not an authority within the meaning of Article 12 of the Constitution, and therefore was not amenable to writ jurisdiction - Held that:- Admittedly, the appellant is a government company which is managed under the guidance of the Ministry of Petroleum and Natural Gas. The Ministry of Petroleum and Natural Gas exercises administrative control over the appellant company. The appellant company started its business as a partnership firm in 1867 and subsequently, the same was converted into a private limited company in 1924, and then eventually, into a public limited company in 1936. There is nothing on record to show that the Central Government provides any financial or budgetary support to the appellant company. The appellant company is a profitable company and meets its own working capital requirements, as well as its fixed capital requirements for all requisite purposes through internal funds generated by the re-deployment of its own profits, and also by borrowing short term funds from financial institutions. The grant given by the government to the appellant company is in fact very limited. Under the Conduct, Discipline and Review Rules applicable to the officers of the appellant company, a letter dated 31.3.1989 written by Managing Director of the company, shows that government directives on the subject have been made applicable with certain modifications as required to the terms and conditions of employment that are applicable to various organizations of the company. The company is not only a Government of India enterprise, but is also under the Administrative control of the Ministry of Petroleum, Chemicals and Fertilizers, Government of India. It is also evident from the material on record that all the whole time Directors of the appellant company are appointed by the President of India, and such communications are also routed through the Administrative Ministry.In order to determine whether the appellant company is an authority under Article 12 of the Constitution, factors like the formation of the appellant company, its objectives, functions, its management and control, the financial aid received by it, its functional control and administrative control, the extent of its domination by the government, and also whether the control of the government over it is merely regulatory are considered and have come to the conclusion that the cumulative effect of all the aforesaid facts in reference to a particular company i.e. the appellant, would render it as an authority amenable to the writ jurisdiction of the High Court. Undoubtedly, the High Court has not dealt with the issue on merits with respect to the termination of the services of the respondents herein. However, considering the fact that such termination took place several decades ago, and litigation in respect of the same remained pending not only before the High Court, but also before this Court, it is desirable that the dispute come to quietus. Therefore,it cannot be approved the “hire and fire” policy adopted by the appellant company, and the terms and conditions incorporated in the Manual of Officers in 1976, cannot be held to be justifiable, and the same being arbitrary, cannot be enforced. In such a fact-situation, clause 11 of the appointment letter is held to be an unconscionable clause, and thus the Service Condition Rules are held to be violative of Article 14 of the Constitution to this extent. The contract of employment is also held to be void to such extent. The dictionary meaning of the word ‘unconscionable’ is “showing no regard for conscience; irreconcilable with what is right or reasonable. An unconscionable bargain would therefore, be one which is irreconcilable with what is right or reasonable. Legislation has also interfered in many cases to prevent one party to a contract from taking undue or unfair advantage of the other. Instances of this type of legislation are usury laws, debt relief laws and laws regulating the hours of work and conditions of service of workmen and their unfair discharge from service, as also control orders directing a party to sell a particular essential commodity to another.” Thus, we do not find any force in the said appeals. The same are dismissed accordingly. As the present appeal stands abated owing to his death, and the non- substitution of his legal heirs, his legal heirs may enure the benefits of this judgment, to the extent that respondent was entitled to receive 60% of the arrears of wages due to him, from the date of his termination to the date of his superannuation. The benefit shall be calculated on the basis of periodical revision of salary and other terminal benefits which shall be paid to the LRs of the deceased employee within three months. If it is not given within three months then interest at the rate of 9% will accrue. Additionally, they shall also be entitled to all statutory benefits like gratuity, provident fund and pension, if any.
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Service Tax
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2013 (4) TMI 153
Scope of input services – Rule 2(l) - Renting of Immovable Property Services - held that:- We do not, prima facie , agree with the submission of the learned counsel that the inputs like cement, iron and steel, tiles, marbles, granite, etc. which were used in the construction of the buildings can be treated as inputs in relation to the 'Renting of Immovable Property Services'. They may qualify to be input for earlier stages and not for the purpose of the impugned output service. - Stay granted partly.
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2013 (4) TMI 148
Waiver of per-deposit - CENVAT Credit of the service tax as input services received at windmill site - generation of electricity - Held that:- the issue seems to be prima facie covered by the decision of the Division Bench of this Tribunal in the case of Rajhans Metal Pvt. Ltd. [2007 (9) TMI 34 - CESTAT, AHMEDABAD] - he appellant has not made out a prima facie case for complete waiver of pre-deposit of the amounts involved. - stay granted partly.
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2013 (4) TMI 147
Valuation - pure agent - inclusion of reimbursement of expenditure in the gross value - Expenditure towards fees and statutory levies paid to the agent in abroad for selling & registering goods exported - Revenue's contention is that the appellant should have paid service tax on the expenditure incurred by their agents on their behalf and exemption under Notification No.18/09, claimed by the appellants cannot be extended to them. - Held that - we are not convinced that payments made to the agents abroad who incurred expenditure as pure agents of the appellants, can form part of the value of the service of the agent. Prima-facie there cannot be any service tax demand on that count. - We are also prima-facie not in agreement with the contention of the Revenue that the sovereign authority in other countries are rendering service to the appellant. - stay granted.
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2013 (4) TMI 146
Scope of input services - Rule 2(l) - whether the 'input services' for the 'output service" of 'Commercial or Industrial, 'Construction Services' can be accepted as 'input services' for 'Renting of Immovable Property' as well. - Held that - all the services on which CENVAT credit was availed by the appellant were 'input services' for 'Commercial or Industrial Construction service' which were rendered to the appellant by the contractors. As far as the appellant is concerned, the 'output service' rendered by the contractors, viz. 'Commercial or Industrial Construction service' was the 'input service' and the service tax paid thereon should have been availed and utilized for payment of service tax on the 'output service' of 'Renting of Immovable Property'. It would appear that the 'input services' which were used in the construction of the building by the appellants' contractors are far removed from the appellants' 'output service' so that no nexus can be claimed between those 'input services' and the appellants' 'output services'. This is the view which this bench took in the case of Millennia Realtors Pvt. Ltd. [2013 (4) TMI 153 - CESTAT, BANGALORE] and, therefore, the cited Stay Order would operate against the appellant. Prima facie, the appellant has no case against the impugned demand of service tax which arises out of wrong utilization of CENVAT credit. Coming to the plea of limitation, again, we have not found any strong case for the appellant. - stay granted partly.
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Central Excise
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2013 (4) TMI 131
Condonation of Delay - Service on an order - period of limitation - Section 37-C (1b) of Central Excise Act - Held that:- Section 37-C of the Act provides for the method of service of the order - The revenue made an attempt to serve the appellant by substituted service - It is not denied that the order was pasted on the factory gate and that the appellant came to know about it on 26.12.2007. The appellant satisfied himself by sending a letter to the department to provide a copy of the order. He did not make any efforts to obtain a certified copy of the order, to file the appeal within limitation which in such case has to be counted from 26.12.2007. The question of condonation of delay beyond 30 days after the limitation expires, was considered in Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur & others [2007 (12) TMI 11 - SUPREME COURT OF INDIA]. The Supreme Court held that the provisions of Section 35 override the provisions of Section 5 of the Limitation Act and that whether there is any sufficient cause for condonation of delay which means adequate or enough is essentially a question of fact - The CESTAT has not committed any error of law in finding that the appeal was barred by limitation, and thus no substantial question of law arises for consideration of the Court - Appeal is dismissed in limine.
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2013 (4) TMI 130
Whether Tribunal has the power to review its own order based on subsequent change in law - Whether the impugned order could have been passed by the ld. Tribunal without affording any opportunity of hearing to the appellant?" - Held that:- If the Tribunal does not refer the questions of law for the opinion of this Court, the aggrieved party could invoke jurisdiction of this Court under Section 35-H of the Act. It was in these terms, the jurisdiction of this Court was invoked by the Revenue against the order dated 09.10.2000 passed by the Tribunal. The opinion rendered by the High Court, on such reference sought by the Revenue, is binding on the authorities under the Act. The Tribunal is to give effect to the order passed by this Court. We find that the appellant has sought to confuse the provisions then existing and after amendment with effect from 14.5.2003 substituting Section 35 G by Section 144 of the Finance Act, 2003 - Consequently, we do not find that any substantial question of law arises for consideration in the present appeal.
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2013 (4) TMI 129
Rejection of refund claim of SED (Notification No. 6/2000-C.E) - unjust enrichment - Special Excise Duty (SED) paid on tyres and tubes. - manufacture of MUV - Held that - As per Section 12B of the Central Excise Act the incidence of duty paid on the tyres and tubes (inputs) received by the assessee from SATL during the period of dispute shall be deemed to have been passed on to the buyers of the motor vehicles (final products) unless the contrary is proved by the assessee. The Hon’ble Supreme Court has remanded the matter to this Tribunal [2011 (3) TMI 1362 - SUPREME COURT OF INDIA] to examine the evidence adduced by the assessee and to ascertain whether such evidence is adequate to establish that the incidence of SED paid on the inputs had not been passed on to the buyers of the final products. In terms of the Supreme Court’s remand order, we have stepped into the shoes of adjudicating authority and hence can call upon the assessee to adduce primary evidence to support their claim that the incidence of duty paid on tyres and tubes had not been passed on to the buyers of motor vehicles. It is pertinent to note that the Cost Accountant’s certificates do not specify any records or books of account which were claimed to have been verified at his end. Even the certificate issued on 17-6-2002 is silent about specific records or other books of account. No records or books of account, nor any invoices, were produced by the assessee The appellant failed to rebut the presumption created in favour of the Revenue under Section 12B of the Act. Consequently, we hold that the incidence of SED paid on tyres and tubes which were used in the manufacture of motor vehicles by the assessee was passed on to the buyers of the motor vehicles. Consequently, the refund claim is barred by unjust enrichment. The impugned order is sustained and this appeal is dismissed.
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2013 (4) TMI 128
Waiver of pre-deposit - valuation – inclusion of value of the diesel which was purchased for testing, the DG sets manufactured and supplied by the appellant - Held that - On perusing the terms and conditions of the purchase order, we find that the condition of erection, installation and commissioning is not mentioned in the purchase order and the delivery is considered as effected the moment the DG sets are delivered at the purchaser’s site. The condition of erection, installation and commissioning is not a part of the sales contract or the purchase order placed for the DG sets manufactured by the appellant and if the same is not a part of the sales contract, we are unable to understand how the cost of the diesel used by the appellant while taking the trial run of the DG sets at the customer’s premises, would form a part of the assessable value of the DG sets and is liable to duty. Accordingly, the application for waiver of pre-deposit of balance amounts involved is allowed and recovery thereof stayed till the disposal of appeal.
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2013 (4) TMI 127
Applicability of circular dated 17/8/2011 related to Reduction of Government litigation - providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme Court - Matter before the Court is whether Credit of service tax paid on services of Customs House Agent/port services is admissible to the manufacturers as ‘input service tax credit’ by overlooking statutory provision of Rule 2(l) of Cenvat Credit Rules, 2004 for which respondent has raised a preliminary objections that the appeal is not maintainable in view of the smallness of amount as in this case the Cenvat Credit amount and of penalty. Held that - In the present appeal the amount involved is Rs. 1,23,739/-. Learned Senior Standing Counsel for the appellant could not dispute the contents of the circulars and the monetary limits respectively fixed therein. When the matter came up for admission, the circular had come into force. Therefore, we are of the considered view that the learned counsel for the appellant ought to have produced to the notice of this Court the Circular dated 17th August 2011 and if this circular had been brought to the notice of this Court the appeal would not have been admitted. It cannot be gainsaid that the Tribunal is bound by its own circular. In our opinion, since in the instant appeal the amount of Cenvat credit and penalty involved is small only in view of Circular dated 17th August 2011 the appeal could not have been preferred by the Central Excise and Customs Department. Same view has been taken by this Court in Tax Appeal No. 7 of 2011 in Commissioner of Central Excise and Customs, Surat-I vs. M/s. Sanoo Fashion Pvt. Ltd.[2013(4) TMI 76 - GUJARAT HIGH COURT]. Therefore, it is not necessary for us to go into the substantial question of law formulated by this Court as the appeal filed by the Revenue itself was not maintainable. For the reasons aforesaid, this appeal is dismissed keeping question open to be filed in appropriate case.
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2013 (4) TMI 126
Job Working activity or selling activity - Valuation - rule 10A - appellants manufacture electronic devices and entered into an agreement with M/s. Honeywell. - Held that – In this case, M/s. Honeywell is not supplying any inputs or goods. Specification of the manufacturer from whom the appellant should buy the raw materials does not make the supplier of such raw material “as a person authorized by him”. The appellant can get the goods only if he pays for the goods and not based on any authorization by M/s. Honeywell. - prima facie case in favor of assessee - stay granted.
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CST, VAT & Sales Tax
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2013 (4) TMI 151
Compounding under section 7-D of U.P Trade Tax Act - assessment framed under Rule 41(8) r.w.s. 7-D wherein AO has demanded a tax @ 1% towards State Development Tax - Held that:- As decided in M/s Systematic Conscom Limited versus State of U.P & Others [2009 (3) TMI 872 - ALLAHABAD HIGH COURT] the State Development Tax cannot be levied and realize from the contractors who have opted for compounding under section 7-D of the U.P Trade Tax Act. Thus merit in the contention of the petitioner that the State Development Tax could not levied upon it. In favour of assessee.
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2013 (4) TMI 150
Detention of consignment of hand made soaps on grounds of undervaluation - KVAT Act - assessee contested that whenever goods are detained on allegation of undervaluation the goods should be purchased as mandated in Section 45 and the circular No.47/06 - Held that:- The provision under Section 45 and the circular only show that it is only an enabling power of the respondents and there is no mandatory obligation for them to purchase the goods in each and every case, when their statutory powers are exercised. Therefore no direction as sought for in that behalf granted. Adjudication be conducted and in the meanwhile, the goods be released subject to the petitioner therein furnishing bank guarantee for the security demanded.
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2013 (4) TMI 149
Valuation - inclusion of cost of bottles - sale price of the soft drinks - Taxability of Rental charges collected by the manufacturer from the distributors/ wholesalers for bottles and crates - Held that:- entry 21 of Schedule-VI to the AP General Sales Tax Act,1957 imposes Sales Tax only on the soft drinks which are bottled and sold under a brand name and merely because the words "bottled soft drinks under a brand name" are used in the entry, it does not follow that the bottle has to be taken as sold along with the soft drink. Merely because the soft drinks and bottles cannot be separated till they reach the end-customer, in the absence of sale of the bottle, it cannot be said that there is no transfer of the right to use the bottle. In our view there is a transfer of the right to use, such use being "for storing the contents", thereby attracting S.5-E of the Act. The decision of State of Orissa vs Asiatic Gases Limited [2007 (5) TMI 322 - SUPREME COURT OF INDIA] applies to this case and it has to be held that there is only a transfer of the right to use the bottle or crate and there is no sale of the bottle or crate as the bottle is to be returned by the end-customer to the retailer and by the retailer to the wholesaler and by the wholesaler to the manufacturer. The Tribunal erred in distinguishing the said case simply on the ground that entry 118 of Schedule-I to the Act mentions "industrial gases other than petroleum gases and gases specified elsewhere in the schedules" i.e., only "gases" were mentioned and not "bottled gases". Admittedly, the sale invoices indicate the price of the soft drink separately and the rentals on bottles and crates separately. The Tribunal appears to have not noticed that even prior to 01-08-1996, the same entry was there from 01-09-1976 as entry 108 in Schedule-I to the Act taxable at the point of first sale. It was omitted w.e.f, 1-8-1996 from Schedule-I and introduced as entry 21 in Schedule-VI making soft drinks taxable at every point, such tax to be determined after deducting the tax levied on the turn over on such goods at the immediately preceding point of sale by registered dealer from the tax leviable on the turn over of the same goods at the point of sale by the selling dealer. Only "mineral water sold under brand name" was added for the first time at the end of the entry w.e.f., 1-8-1996. As decided in Government of Madras vs Simpson & Co., Limited [1967 (5) TMI 58 - SUPREME COURT OF INDIA] that in the absence of any other material, recitals in invoices will furnish good proof of the intention of the parties relating to the terms of the agreement and that by themselves, they will be inclusive piece of evidence. The Revenue, in the present case, has not adduced any evidence to rebut the contents of the invoices or its correctness therefore, the invoices filed by the manufacturers, which show clearly the separate charge on the sale of soft drinks and rental charges on crate and bottles indicate a contract between the parties to treat both as separate categories ( to be charged at the rate of 12 %(u/s. 5 of the Act) and 5 % (u/s. 5-E of the Act) respectively) have to be accepted and tax levied accordingly. The rotation of the bottles and crates takes place about six times during their lifetime and the manufacturers are entitled to calibrate their charges keeping this in mind. Thus this cannot be said to be a colourable device adopted by the manufacturers to evade tax. Sec 6-C would apply only if the packing material is sold with the goods and as that is not the case here as bottles are returned to the retailer and ultimately to the manufacturer, thus S.6-C has no application to the facts of these cases. As already held that in the business of sale of soft drinks, there is a facility and practice of recycling the bottles and crates in which beverages are sold and that the charges for such limited user of bottles and crates is recovered separately. Since the bottles and crates constitute packing material,such turnover is liable to be taxed @ 4 % u/s. 4(8) of the Andhra Pradesh VATAct, 2005 r/w Item No.90 of Schedule-IV of the said Act. The Revenue thereforeis not entitled to treat the entire turnover as taxable @ 12.5 % by placing reliance on S.6 of the Andhra Pradesh VAT Act, 2005 which was not even mentioned by the assessing authority in the show cause notice issued by him to the petitioner.
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Wealth tax
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2013 (4) TMI 152
Co-owners - Valuation as per Rule 1-BB of Wealth Tax Rules, 1957 - valuations of residential house, kitchen, servants' quarters, garages, godown and cowshed at Sukhbir Sinha Park - Held that:- In view of the decision of Apex Court in the case of Commissioner of Wealth Tax vs. Sharvan Kumar Swarup and Sons(1994 (9) TMI 2 - SUPREME Court ) decided in favor of assessee. Rule 1BB is essentially a rule of evidence as to the choice of one of the well-accepted methods of valuation in respect of certain kinds of properties with a view to achieving uniformity in valuation and avoiding disparate valuations resulting from application of different methods of valuation respecting properties of a similar nature and character.
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Indian Laws
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2013 (4) TMI 145
Limitation Act - SAIL entered into a Charter Party agreement with ICL (Company) for importing coal. The vessel was to discharge cargo at four places in India. The dispute arose when the vessel arrived at Paradip Port and completed discharge of unloading coal to the extent of 24,088 MT and leaving a balance quantity of 23,501 MT to be discharged at Haldia Port being the next port of discharge. At the time of unloading at Paradip Port, one of the cranes out of four cranes of the vessel had been found out of order for which SAIL calculated the lay time on pro-rata basis which ICL did not agree, that gave rise to dispute to be resolved through arbitration in terms of the arbitration clause stipulated in the Charter Party Agreement. SAIL was not happy with the award. SAIL challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court on December 16, 1999. Court declined to entertain the appeal. Finally SAIL filed the appeal in this court. ICL raised preliminary issue to the effect that applications were barred by laws of limitation u/s 14 and this Court also lacked territorial jurisdiction to entertain the applications. ICL contended that they would have to file a civil action either before a Paradip Court or Haldia had there been no arbitration clause. None of the eventualities occurred within the territorial jurisdiction of this Court. Held that – Section 14 of the Limitation Act would exclude the period when a litigant would approach a different Court other than the appropriate Court. The Arbitration was held at Delhi. SAIL thought, it would be the appropriate Court. On such bonafide belief, they approached the Delhi High Court who later on held that it did not have territorial jurisdiction to entertain the same. Delhi High Court did not dismiss the petition. It directed return of the petition with a liberty to file it in the proper Court. Hence the time taken by Delhi High Court would certainly stand excluded. Once the Court found that it had no territorial jurisdiction to entertain a lis it must return the same to the litigant at the earliest so that the delay in the process must not prejudice his right to approach a Court of law. That was the basic concept behind Section 14. In the instant case, on facts, we would find the Courts at Haldia and Paradip would be appropriate to decide an identical controversy in a civil action. Hence the principal Civil Court having jurisdiction on either of those two places would be the right choice. From the Apex Court decisions in Consolidated Engineering Enterprises –Vs- Principal Secretary, Irrigation Department and Others[2008(4) TMI 668 - SUPREME COURT]. It is clear that enunciated in Section 14 would also apply in case of Section 34 application. Hence we hold that the period taken by the Delhi High Court in deciding the issue would stand excluded from being counted in the instant case. If we exclude the said period we would find the petition well within the prescribed period of limitation. Hence the learned Judge was perhaps not correct on the issue. We thus hold, it is a fit and proper case, SAIL should approach “Principal Civil Court” having territorial jurisdiction over Paradip Port or Haldia Port. We thus direct return of the petition to SAIL for being filed at the appropriate Court as referred to above. We direct the Registrar Original Side to cause return of the petition to SAIL keeping a loco copy thereof.
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2013 (4) TMI 135
Article 226/227 of the Constitution of India - Criminal Revision Application - Respondent No.2 has transferred shares into his wife's Demat Account with Peoples Cooperative Bank instead of transferring the shares to respective client's Demat Account - He has further transferred the shares from his wife Demat Account with Peoples Cooperative Bank to the Demat Account with ICICI Bank - Also sold some of the shares from ICICI Damat Account - Held that:- the learned Magistrate issued notice upon the Income Tax Department with respect to the shares in question. - It appears that thereafter the Income Tax Department has inquired into the case and conducted inquiry and after conclusion of the inquiry it has been found that the misappropriated shares were duly reflected in the Books of Accounts of the petitioner and that some of the shares which were related with some of the clients, have given their confirmation that they have purchased the shares through the petitioner. The stand taken by the Income Tax Department is allowed and the impugned orders passed by the learned Additional Sessions Judge and Presiding Officer, Fast Track Court No.5, Surat passed in Criminal Revision Application No.144 as well as order passed by the learned Additional Senior Civil Judge and Judicial Magistrate are hereby quashed and set aside - It is directed to handover the Instruction Slip Books with respect to the shares which are alleged to have been misappropriated by the original accused Nos.1 and 2, and thereafter the petitioner is permitted to transfer the alleged misappropriated shares in question lying in the Demat Account of the respondent Nos.2 and 3 – original accused Nos.1 and 2 to the Demat Accounts of the petitioner in the respective Banks. It is further observed that after transfer of the shares in his Demat Account, if the petitioner wants to transfer any of the shares in question for which the complaint is filed, the petitioner shall submit an appropriate application before the concerned Magistrate - And on undertaking that in case ultimately at the conclusion of the trial any adverse order is passed against the petitioner he will deposit the said amount and such a transfer shall be subject to ultimate outcome of the trial - Rule is made absolute to the aforesaid extent
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