TMI Tax Updates - e-Newsletter
May 10, 2013

Case Laws in this Newsletter:

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

Articles

1. DISCLOSURE OF INFORMATION ABOUT EXAMINERS UNDER RTI ACT, 2005

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. RBI Central Board meets today at Srinagar

Notifications

Central Excise

1. 16/2013 - dated 8-5-2013 - CE

Seeks to amend notification Nos. 1/2011-Central Excise and 2/2011-Central Excise both dated the 1st March, 2011 and 12/2012-Central Excise, dated 17th March, 2012

Customs

2. 26/2013 - dated 8-5-2013 - Cus

seeks to amend notification No. 21/2012-Customs, dated the 17th March, 2012, so as to withdraw exemption of Special Additional Duty of Customs (SAD) on imports of brass scrap

3. 25/2013 - dated 8-5-2013 - Cus

seeks to amend notification No. 12/2012-Customs, dated the 17th March, 2012

Service Tax

4. 09/2013 - dated 8-5-2013 - ST

Seeks to amend the notification No.26/2012-Service Tax, dated the 20th June, 2012.

Circulars / Instructions / Orders

Customs

1. 19/2013 - dated 9-5-2013

Regarding classification of Filters referred to as “Disposable Sterilized Dialyzer” and “Microbarrier”: for filtering blood”

Companies Law

2. 10/2013 - dated 8-5-2013

Applicability of Regulation 17(6) in processing the work items.

Highlights / Catch Notes

Income Tax

• Chit Group Bad Debts Allowed for Defaulted Installments Written Off by Prized Subscribers u/s 36(1)(vii.

  Case-Laws - AT : Bad debts in respect of chit groups - Bad debts can be allowed to the extent of instalments defaulted by the prized subscribers and written off as bad debt - AT
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• 'Audi Alteram Partem' in Tax Law: Ensuring Fair Hearings Before Decisions on Additions or Disallowances.

  Case-Laws - AT : Additions/ disallowances - It is well settled that nobody should be condemned unheard as per maxim 'Audi Alteram Partem' - AT
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• Rented property ALV can't rise due to notional interest on an interest-free deposit under Income Tax Act section 23(1)(a).

  Case-Laws - AT : Annual Letting Value (ALV) - rented property - no addition to the ALV can be made on account of notional interest on interest free deposit with the landlord u/s.23(1)(a) - AT
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• Assessee Liable for Grossed-Up TDS on Tax-Free Payments, Deduction Allowed for TDS Liability Adjustment.

  Case-Laws - AT : Tax free payments - TDS liability born by the assessee - the TDS, as exigible on payments, is grossed up, and payment made accordingly - deduction on account of tax liability allowed - AT
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Customs

• Court Remands Case for Further Review Due to Missing Sale Invoices in Chartered Accountant's Certificate for Tax Refund Claim.

  Case-Laws - AT : Eligibility of notification claiming refund of Special Additional Duty – The Chartered Accountant's certificate did not mention, of any of the sale invoices. - matter remanded back - AT
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• Customs Act: Revenue fails to prove goods' foreign origin and smuggling; burden of proof unmet u/s 123.

  Case-Laws - AT : Illicit Import of goods – Revenue has failed to discharge its burden in establishing that the goods were of foreign origin and smuggled one particularly when the impugned goods were not notified under Section 123 of the Customs Act, 1962 - AT
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Service Tax

• Construction Services for Charitable Organizations Exempt from Service Tax Under Prima Facie Rule.

  Case-Laws - AT : Commercial or industrial construction service for a charitable institution/no profit making organisation - prima facie no service tax - AT
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VAT

• Court Upholds Tax Exemption for Petitioner Despite State Reorganization, Ensuring Continued Benefits.

  Case-Laws - HC : Continuity of exemption even after reorganization of state - the exemption which was granted shall remain applicable to the petitioner even after reorganization of the State. - HC
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Case Laws:

• Income Tax

• 2013 (5) TMI 234
  Deduction u/s.10(10C) - assessee had opted for voluntary retirement from State Bank of India under Exist Option Scheme and has received Ex-gratia payment - disallowance of claim as exit option scheme did not fulfill the stipulated requirements of rule laid down in rule 2BA of Income tax Rules, 1962 - Held that:- As decided in ITO vs. Shri Kanaiyalal Vadilal Bhavsar [2010 (1) TMI 961 - ITAT AHMEDABAD] relying on CIT vs. G. V. Venugopal [2004 (12) TMI 35 - MADRAS High Court] that there is no prohibition to the twin benefits in respect of the amount received under the voluntary retirement scheme - The mere fact that the relief has been spread over several years does not mean that the relief is not in respect of a particular assessment year, thus assessee is eligible to claim simultaneous benefit under section 10(10C) as well as section 89(1) in respect of the compensation received under the voluntary retirement scheme – Further, it is well settled that if two reasonable interpretations of taxing statutes are possible, the one in favour of the assessee should be accepted. In favour of assessee.

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• 2013 (5) TMI 227
  Bad debts in respect of chit groups - Held that:- The amount of loss incurred by the assessee has to be allowed on both running and terminated chits if irrecoverable if the prized chit amount has gone out of the hands of the assessee. Bad debts can be allowed to the extent of instalments defaulted by the prized subscribers and written off as bad debt in the books of the assessee. Accordingly, AO directed to decide the issue in the light of the order in assessee's own case dated 26.7.2004 wherein the Tribunal remitted the issue back to the file of the Assessing Officer to see whether the assessee made a claim of bad debt and written off in the books of account. Taxability of foreman dividend upheld - Held that:- The issue considered by the Madras High Court in CIT vs. Shriram Chits and Investments Ltd. [2012 (12) TMI 134 - MADRAS HIGH COURT] as relied upon by assessee is relating to allowability of contribution of the assessee as a foreman in the place of a defaulted subscriber as bad debt u/s. 36(1)(vii) or as a business loss u/s. 28(1). As concerned in assessee's present case with regard to taxability of foreman dividend received it was categorically held by the Tribunal in earlier years as there is no applicability of "mutuality" on this income. Being so, we are inclined to follow the earlier order of this Tribunal and dismiss this ground.

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• 2013 (5) TMI 226
  Additions/ disallowances - case selected for scrutiny and AO framed the assessment u/s 144 - Held that:- It is an admitted fact that the AO framed the assessment ex-parte u/s 144 and the CIT(A) also decided the appeal of the assessee ex-parte. Therefore, opportunity of being heard was neither given by AO nor by CIT(A). It is well settled that nobody should be condemned unheard as per maxim 'Audi Alteram Partem' - remand this case back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee and also direct the assessee to cooperate and not to seek any unreasonable or unwarranted adjournment - appeal of the assessee allowed for statistical purposes.

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• 2013 (5) TMI 225
  Re opening of assessment - disallowance of exemption u/s 10B - Held that:- It is crystal clear that the assessee was not considered to be a manufacturer and eligible for exemption u/s 10B only on the basis of the judgment of Lucky Minmat Pvt. Ltd. vs CIT (2000 (8) TMI 6 - SUPREME Court). However, AO did not consider this vital fact that conversion of Marble Blocks into slabs and tiles i.e. the activity in which the assessee was engaged was held to be a manufacturing activity in the case of Arihant Tiles & Marbles Pvt. Ltd. vs ITO (2007 (5) TMI 132 - HIGH COURT, RAJASTHAN). In the said judgement, earlier judgment of Hon'ble Supreme Court in the case of Lucky Minmat Pvt. Ltd. vs CIT (supra) was considered, subsequently the Hon'ble Supreme Court affirmed the judgemnt of Hon'ble Rajasthan High Court and held in the case of ITO vs Arihant Tiles and Marbles Pvt. Ltd. (2009 (7) TMI 403 - CESTAT, MUMBAI) that conversion of Marble Blocks into polished slabs and tiles constitutes 'manufacture or production' as it results in emergence of a new and distinct commodity. In the present case, the only basis with the AO for initiating reassessment proceedings was the judgment of Hon'ble Supreme Court in the case of Lucky Minmat Pvt. Ltd. vs CIT (supra) wchich was considered by in the case of Arihant Tiles & Marbles Pvt. Ltd. vs ITO (supra), thereafter it was held that process of cutting and sizing or polishing of Marble Blocks into slabs and tiles which results into making raw marble usable amounts to manufacturing. Therefore, the reopening by the Assessing Officer was not sustainable. Rectification made u/s 154 for the disallowance u/s 40(a)(ia) - Held that:- Credit balance written off were the balances not payable by the company due to various reasons. On the similar issue, the decision of in the case of Wipro Ltd. vs DCIT, (2002 (7) TMI 752 - ITAT BANGALORE) was held in favour of the assessee therefore, it can be said that the issue was highly debatable. Similarly, the applicability on reimbursement of the expense in the case of exporters i.e. Ocean Freight paid and other expenses was highly debatable, therefore, it cannot be said that there was a mistake apparent on record particularly when the AO examined the issue in detail during original assessment proceedings u/s 143(3) and excluded the amount under consideration for determining the disallowance u/s 40(a)(ia) - it can be said that this issue was also debatable issue and it is well settled that rectification u/s 154 cannot be made for the issue which is debatable.

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• 2013 (5) TMI 224
  Depreciation on goodwill disallowed - Held that:- This issue is no more res integra in view of the judgment of CIT v. Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] wherein excess consideration paid by assessee over the value of net asset acquired was considered as goodwill on which depreciation was claimed. In favour of assessee. Disallowance u/s 14A as per Rule 8D - Held that:- As the assessment year involved is 2004-2005. As decided in Godrej Boyce Ltd. Mfg. Co. v. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] provisions of Rule 8D cannot be applied to any assessment year prior to 2008-2009 - matter sent back to the AO for working out of disallowance under this provision on reasonable basis. Disallowance of u/s 145A - difference between the Cenvat addition to opening and closing stock of raw material and packing material - Held that:- According to the prescription of section 145A the amount of tax, duty, cess etc. is liable to be included in the value of purchases, sales, opening and closing stock. It is not appropriate to include the closing CENVAT in the figure of closing stock without modifying the figures of purchases, sales and opening stock. See CIT Vs. Mahalaxmi Glass Works Pvt. Ltd. [2009 (4) TMI 182 - BOMBAY HIGH COURT] and CIT Vs. Mahavir Alluminium [2007 (11) TMI 41 - HIGH COURT, DELHI] - store the matter to the file of A.O. as the authorities have not properly adjusted other figures with the amount of tax, duty, cess etc.

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• 2013 (5) TMI 223
  Computation of Annual Letting Value (ALV) of the rented property in a particular way - AO had made addition by determining ALV which included 12% interest on interest free earnest deposits received by the assessee - Held that:- This issue is no more res integra in view of the judgment of CIT v. Moni Kumar Subba [2011 (3) TMI 497 - DELHI HIGH COURT] in which it has been held that no addition to the annual letting value can be made on account of notional interest on interest free deposit with the landlord u/s.23(1)(a). Thus there is no basis for inflating the ALV with the amount of notional interest on interest free securities. Also CIT(A) has directed the AO to re-work out the ALV by obtaining data from three websites of internet and then adjusting it with a suitable cost inflation index. This direction was even after considering that the actual rent received by the assessee was higher than the Municipal ratable value representing the fair rent value. In our considered opinion, this direction for determining the ALV has no legal legs to stand out. As such, we cannot approve such direction which has no sanction of law.

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• 2013 (5) TMI 222
  Addition on undisclosed income - search u/s 132 - time limit for completion of Block assessment - whether 31-01-03 or 31-03-03 - addition of donations, estimation of income for the entire block period - Held that:- In spite of repeated requests by assessee, the order of the CIT on special audit was never furnished to assessee and it has been placed on record only in the present appeal proceedings - there is no reference to the period under which the audit was to be completed either in the order or in the communication by AO. This comes out only from the letter written by the said auditor to assessee and to the ACIT for extension of period. It is a fact that assessee was not given any opportunity before preferring to the Special Audit, as seen from the notices issued in the course of block assessment proceedings before referring to the special audit by AO, assessee/ AR was attending before AO and was furnishing various information as required. As decided in Rajesh Kumar vs. Deputy Commissioner of Income-tax (2006 (11) TMI 135 - SUPREME Court) formation of opinion before invoking section 142(2A) indisputably must be based on objective consideration. The factors enumerated in section 142(2A) are not exhaustive. Once it is held that the assessee suffers civil consequences and any order passed by it would be prejudicial to him, principles of natural justice must be held to be implicit. In the instant case itself, the assessees were not made known as to what led the Deputy Commissioner to form an opinion that all relevant factors including the ones mentioned in section 142(2A) were satisfied. If even one of them was not satisfied, no order could be passed. If the attention of the Commissioner could be drawn to the fact that the underlined purpose for appointment of the special auditor was not bona fide he might not have approved the same. Assuming that two sets of accounts were being maintained, the same would not mean that the nature of accounts was difficult to understand. It could have furthermore not been shown that the power was sought to be exercised only for an unauthorised purpose, viz., for the purpose of extension of the period of limitation as provided for under Explanation 2 to section 158BE. Thus, the order passed by the Deputy Commissioner under section 142(2A) without giving opportunity of hearing to the assessee and refusing the assessee's request for supplying reasons for passing such order, could not be sustained". As AO has only power to extend the time limit originally granted only when the assessee makes an application. He has no suo motu powers which were subsequently inserted with effect from April 1, 2008. Case of B.N. Amarnath v. CIT (2002 (10) TMI 81 - KARNATAKA High Court) will equally apply to the facts of this case. Since the assessee had not made any request for extension of time, the action of the Assessing Officer in extending the period by another three months was not according to the provisions of the law. AO has no jurisdiction to extend the period granted originally for completion of audit which was up to end of April 2003. Therefore, the time period to be counted, even if the reference was considered valid, for the extension of time barring period can only be upto 30.04.03. In view of these two reasons ie. assessee was not given an opportunity before ordering special audit and further extended the time from April 03 to July 03 being bad in law the orders so passed in September 2003 is beyond the time limit permitted under the Act and therefore, order so passed becomes bad in law. Since the period from Feb 2003 to Sep. 03 was taken under the guise of Special audit, which is held without proper jurisdiction, the time so taken can not be counted and the period does not get extended. The order at best could have been completed by 31-01-03 or by 31-03-03. Since the order was passed on 22-09-03, the same has to considered, as time barred. Therefore, the order passed by AO suffers from legal jurisdiction and is therefore, bad in law. Even on merits assessee's contentions seems to be prima facie correct as the addition of donations, estimation of income for the entire block period without there being any evidence for that period on the limited material for the year of search and further bringing to tax the entire amount which was already offered in the regular return cannot be sustained in the block assessment - appeal filed by assessee allowed.

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• 2013 (5) TMI 221
  Search/seizure – u/s 132 - ownership of seized jewellery – Held that:– As the Civil Suit pending between the parties in Civil Courts at Ludhiana, and If the Assessee or its partners succeed and the levy of interest is set aside or reduced by a Statutory Forum, the amount shall be released along with interest to the party, who shall be finally entitled to receive the jewellery or its value as per the decision of the Civil Court at Ludhiana. Commissioner powers to waive off the levy of interest u/s 220(2) of the Act - Held that:- It may be seen that sub-section (2A) of Section 220 of the Act opens up with a non obstante clause to say that even if Section 220 (2) of the Act is mandatory in nature, yet the Chief Commissioner or Commissioner have the power to reduce or waive the amount of interest paid or payable by an assessee if there exist the circumstances enumerated in the provision. Since the existence of circumstances which may justify reduction or waiving off the interest liability is a question of fact and this aspect has not been discussed in the impugned order by the Commissioner of Income Tax (Central), Ludhaina, we are of the considered view that the findings to the extent is contrary to the Statute as sub-section (2A) of Section 220 of the Act which came into force w.e.f. 1.10.1984 expressly vests such power with the Chief Commissioner or Commissioner of Income Tax, though it is a different issue that the facts and circumstances of a case may or may not justify the exercise of such power.

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• 2013 (5) TMI 220
  Tax free payments - TDS liability born by the assessee - the TDS, as exigible on payments, is grossed up, and payment made accordingly - Held that:- In terms of the agreement entered by with the International Credit Card Agencies, i.e., VISA and Master Card, the assessee is also to bear the tax on the payments made thereto. Accordingly, the TDS, as exigible on payments, is grossed up, and payment made accordingly, there is no merit in the argument that tax-free payments could not be allowed or, alternatively, the assessee would not be entitled to deduction in respect of the tax liability of the payee - FAA has allowed relief to the assessee following the decision of CIT vs. Standard Polygraph Machines Pvt. Ltd. [1998 (11) TMI 49 - MADRAS High Court]. As this is a recurring feature in the assessee's case there is no merit in the Revenue's argument that the assessee had not supplied it with the copy of the relevant agreements. Against revenue. Claim for bad debt - Held that:- No merit in the Revenue's case that the assessee, being a NBFC, is not in the business of money lending, so that the provision of section 36(2) is not satisfied. See T.R.F. Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT] and CIT vs. Star Chemicals (Bombay) P. Ltd. [2008 (2) TMI 399 - BOMBAY HIGH COURT] among others, so that the matter ought to be considered as settled. Against revenue.

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• 2013 (5) TMI 219
  Transfer pricing adjustment on account of payment of royalty to its AE - assessee submitted that he had referred to contract manufacturing in transfer pricing analysis by mistake - Held that:- Tribunal in the assessee's own case in assessment years 2003-04 and 2004-05 held that TPO was required to determine arms-length-price and then recommend adjustment which had not been done. The disallowance had been made on the ground that there was no justification for royalty which was not correct. The Tribunal, therefore, held that TPO exceeded its jurisdiction in making recommendation for disallowance of royalty on the ground of no justification. Even on merit, no addition was required as assessee was manufacturing specific products as per specification of the principal and selling the same to principal and to other parties. The royalty was payable as per agreement for using of technical know-how on value added price to the principal as independent of manufacturing of goods. Further, royalty had been paid not on entire sale price but only value added price which was worked out separately. The royalty had also been paid on sale to third parties which had been allowed but royalty on sales to AE had not been allowed when rate of royalty was the same. Further, no disallowance had been made in the earlier year. Thus held by the Tribunal that the royalty was thus for the purpose of business - deleted of additions confirmed. In favour of assessee.

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• 2013 (5) TMI 218
  Miscellaneous Application filed after the expiry of four years - Maintainability on ground of limitation - Held that:- The limitation for filing of application under order (9) Rule (9) of CPC for setting aside the exparte order is 30 days. The assessee has neither filed any application for condonation of delay nor explained the cause of such inordinate delay of more than 4 years. In the affidavit, the assessee has not explained the cause and period of delay in filing the present Miscellaneous Application. Further, this is not a case of non receipt of the impugned order or having no knowledge about the impugned exparte order. As it is clear from the averments made in the application as well as in the affidavits that the applicant came to know about the exparte order on 4.12.2007 itself and thereafter also in receipt of the impugned order. In these facts and circumstances, the assessee has not made out any case to show any good reason much less a sufficient reason for the delay of more than 4 years. Miscellaneous Application filed by the assessee is barred by limitation and consequently, dismissed.

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• Customs

• 2013 (5) TMI 217
  Eligibility of notification claiming refund of Special Additional Duty – Notification No.102/2007-Cus had exempted the goods imported into India for subsequent sale, from the whole of the additional duty leviable hereon under sub-section (5) of Section 3 of the Customs Tariff Act, 1975 (referred to as SAD) subject to some conditions. According to the revenue, the respondent did not duly comply with the conditions of notification. Cross objection was filed by the respondent. Held that - On a careful examination of the records filed by the respondent with their “cross objections”, tribunal find that, barring a specimen copy of sale invoice, the relevant invoices covering sales of all the imported goods within the prescribed time limit have not been produced by the respondent even at this stage. The Chartered Accountant's certificate did not mention, of any of the sale invoices. This certificate does not even specify the particulars of the imported goods so as to establish a correlation. we set aside the impugned order and allow this appeal by way of remand with a request to the original authority to decide afresh on the refund claims filed by the assessee after giving them a reasonable opportunity of being personally heard. The appeal stands disposed off. The cross objections filed by the respondent are also disposed off. The stay petition also stands disposed off.

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• 2013 (5) TMI 216
  Illicit Import of goods – Confiscation/seizure - Issue involved relates to seizure of brass metal scrap on the ground that they were of foreign origin and same were imported in contravention of provisions of Section 3(1) & 3(2) of Foreign Trade (Development & Regulation) Act, 1992 as amended under Section 110 of the Customs Act, 1962 illicitly brought into India. The adjudicating authority had directed under Section 111(b) & (d) of the Customs Act, 1962 absolutely confiscation. Held that:- Needless to mention that the said brass metal scrap is not a notified item under Section 123 of the Customs Act, 1962 during the relevant time. It is the case of the appellant that since if it is not notified goods, burden lies on the Revenue to establish that the said brass metal scrap were of foreign origin and smuggled into India. It is their claim that on both these counts, the Revenue has miserably failed to establish the same and hence the goods are not liable to confiscation. The Tribunal in its earlier proceeding, allowed the appeal filed by the appellant on the ground that the Revenue has failed to discharge the burden in establishing that these goods were of foreign origin and smuggled into India. However, on appeal filed by the Revenue, the Hon’ble High Court has remanded the matter to consider the statements of various persons and retractions made by these persons in deciding the issue afresh. In the present case, except the statement of the persons referred to above, there is no other corroborative evidence indicating that the impugned goods were of foreign ship breaking scrap and illicitly imported into India. In these circumstances, Tribunal find that the Revenue has failed to discharge its burden in establishing that the goods were of foreign origin and smuggled one particularly when the impugned goods were not notified under Section 123 of the Customs Act, 1962. - Decided in favor of assessee.

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• Corporate Laws

• 2013 (5) TMI 214
  Winding up u/s 483 – Demand for unearned increase on transfer of leased land - Appellant had granted the leasehold rights of Plot to one M/s Amar Singh & Co. who, prior to the order of winding up of M/s Globe Associates (P) Ltd. had agreed to sell/transfer the same to the said M/s Globe Associate (P) Ltd. As per the terms and conditions of the perpetual lease deed executed by the appellant to M/s Amar Singh & Co., the same were transferable after obtaining permission of appellant and on payment of 'unearned increase'. M/s Globe Associates (P) Ltd. being ordered to be wound up respondent M/s Aeroshine and which was approved by the learned Company Judge. Held that:- In the present case, the transfer is under the aegis of the Company Judge of this Court. The counsel for the appellant has throughout been involved in the same. The appellant was thus fully conscious that the transfer of the leasehold rights had been approved by this Court and the respondent had taken over the responsibility to pay the unearned increase and for which purpose the appellant had been called to the Court. Thus, it would be highly unjust and unfair to ask the respondent who though has purchased the leasehold rights at the rates of the year 1983-85, to pay unearned increase to the appellant DDA of the year 2004 or of today. Therefore there is no reason to interfere with the order of the learned Company Judge, insofar. However, we are of the opinion that the interest at the rate of 9% per annum awarded by the learned Company Judge, on the arrears of unearned increase, is on the lower side. All the facts and circumstances and the fact that the appellant DDA itself generally charges interest at the rate of 12% per annum, therefore interest of justice would be served if the rate of interest is enhanced from 9% per annum to 12% per annum. We thus, while dismissing this appeal, direct the respondent to within four weeks hereof deposit with the appellant DDA the amount due towards such additional interest for the period from 03.07.1985 to 31.01.2005.

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• Law of Competition

• 2013 (5) TMI 215
  Application u/s 19(1)(b) of the Competition Act, 2002 Manipulation of tender Bid rigging - Formation of cartel - Tender notice of rail lines was floated by South Eastern Railway for procurement of Anti-Theft Elastic Rail Clips with Circlips from RDSO approved firms, 29 firms submitted offer. The rate quoted by most of the firms was @ 66.50 (all inclusive). The quantity quoted by each of the firms was far less than 50% of the total tender quantity. It is also alleged that the quoted rate was about 10% higher than the neighboring Railways last purchase rate. Suspecting cartelization by the bidders in fixing the price and distributing the tender quantity of the materials amongst themselves, the instant reference has been filed by Principal Chief Engineer, South Eastern Railway. Held that:- It may be noted that in the Instruction to Tenderer and General Conditions of Tender, it was provided that wherever all or most of the approved firms quote equal rates and cartel formation is suspected, Railways reserve the right to place order on one or more firms to the exclusion of the rest without assigning any reasons thereof. Further, it was provided therein that firms were expected to quote for a quantity not less than 50% of tendered quantity. Offers for less than 50% quantity were to be considered unresponsive and liable to be rejected in case cartel formation was suspected. In the result, the Commission is of the view that conduct of the opposite parties amounts to bid rigging within the meaning of the said expression as given in explanation to section 3(3) of the Act as the impugned agreement being an agreement between enterprises or persons engaged in identical or similar production or trading of goods or provision of services, had the effect of eliminating or reducing competition for bids/ adversely affecting or manipulating the process for bidding. As regards penalty u/s 27 of the Act, the Commission notes that there are circumstances in this case which require the issue of penalty to be looked into somewhat differently. The facts as projected in the present reference reveal a complete lack of awareness by the opposite parties which are small and micro enterprises. Thus, right in the beginning the offers made by these parties were not in accordance with the requirement of the tender and hence they could not have got supplies as per the tender conditions. Moreover, the bid given by these parties was not the lowest and so they could not have been awarded the contract.

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• Service Tax

• 2013 (5) TMI 230
  Penalty – u/s 78 of the Act – appellant collected the tax and have not deposited. – appellant submits the he deposited the amount of duty, interest before issuance of SCN the non-payment of tax was due to wrong reconciliation of the amount received. Therefore the penalty cannot be imposed. Held that - The facts for imposition of penalty u/s 78 is narrated clearly in the SCN. Further, the adjudicating authority had clearly mentioned in the adjudication order that if the service tax determined is paid within thirty days from the date of communication of the order, then the amount of penalty liable to be paid shall be 25% of the service tax so determined. This option was not exercised by the appellant. - Levy of penalty confirmed.

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• 2013 (5) TMI 229
  EA-2000 audit of the appellant - appellant had failed to pay service tax within stipulated time – Recovery of interest/penalty – Held that - The order of the lower authorities confirming the amount of recovery of the interest seems to be correct as per the provisions of Finance Act, 1994. Waiver of penalty - held that:- appellant had given a reasonable cause due to slow down in the realty sector during the material period they were unable to pay the amount of service tax liability in time. - appellant has made out a case for invocation of Section 80 of the Finance Act, 1994. - penalty waived.

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• 2013 (5) TMI 228
  Waiver of pre-deposit of Service tax/penalty – applicant have provided commercial or industrial construction service - charitable institution/no profit making organisation – Held that - After considering the MOA, which reveals that the organisation is working on no profit basis. we agree with the ld. Advocate that the construction activity would not be covered by the definition of commercial and industrial construction services. As such, at this prima stage, we are of the view that the appellant has been able to make out a good prima facie case in its favour on the above count. Appeal allowed.

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• Central Excise

• 2013 (5) TMI 213
  Cenvat credit on Nylon Granules sent to job workers for making bobbins denied - allegation of the Department that no permission of Asstt. Commissioner was obtained for sending cenvated inputs to job workers, that no account of the materials sent for job work and its return was maintained and the bobbins made out of the Nylon Granules had infact not been received back within 180 days - assessee contested that they had been maintaining the records of the Nylon Granules being received by them in respect of which cenvat credit had been availed and record of sending the same to job workers for making bobbins and that the Nylon Granules sent to the job worker had been returned back under the job work challans - Held that:- On-going through the impugned order, no finding has been given either by the Asstt. Commissioner or by the Commissioner (Appeals) on this point, though precisely for making a finding on this point, that this matter had earlier been remanded. If the inputs had been sent under job work challans to the job workers for processing and the same had been returned back, even if after some delay, the cenvat credit would have to be allowed and as such, there was no provision for obtaining prior permission from the jurisdictional Commissioner for sending cenvated inputs for job work. Since on the crucial point of return of the inputs after processing, there is no finding the matter has to be sent back again to the original adjudicating authority for giving a clear finding as to whether appellant had maintained account for the receipt and utilization of the Nylon Granules in their RG-23, Part-I and Part-II Account, whether the cenvat credit availed Nylon Granules had been sent to the job workers under job work challans and whether the Nylon Granules sent to the job worker had been received back by the appellant, even if, after 180 days.

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• 2013 (5) TMI 212
  Waiver of the pre-deposits - Revenue submits that cenvat credit is ineligible as same is not related to activity of manufacturing. - held that - As the appellant having deposited the entire amount of Cenvat credit which has been disallowed by the lower authorities, the first appellate authority should have disposed the appeal on merits, the impugned order is set aside and remit the matter back to the first appellate authority.

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• 2013 (5) TMI 211
  Waiver of pre-deposit of duty/interest/penalty - clandestinely removal of goods manufactured in the factory premises – Held that – We find strong force in the contentions raised by appellant that if it is the case of the Revenue that appellant has used imported polyester chips for clandestine manufacturing and clearing of polyester yarn, it is for them to provide the evidences regarding the consignment which were imported and consigned to the appellant. In our view, the issue needs to be reconsidered by the adjudicating authority by providing the evidences relied upon in the show cause notice for arriving at conclusion. The issue also needs to be re-considered by the adjudicating authority, on granting the copies of Bills of Entry on which reliance has been placed for arriving at the quantum of polyester chips received by the appellant from M/s Shri Karni Enterprises. The lower authorities are directed to grant the copies of documents to the appellant and appellants, on receipt of such documents, would make their submissions. Thus, set aside the impugned order and remit the matter back to the adjudicating authority.

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• 2013 (5) TMI 210
  Waiver of pre-deposit - Revenue submits that amount of ineligible Cenvat credit availed by the appellant on the service tax paid by CHA, Port and the Transporters, who provided the services in respect of the goods which were exported by the appellant.- Held that - There are various decisions of this Bench which settled the law that credit of such service tax paid by service providers is allowed to the assessee. Since the issue is more or less settled, impugned order set-aside appeal is allowed by way of remand.

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• 2013 (5) TMI 209
  Manufacture - whether activity of conversion of bitumen into Polymer Modified Bitumen and cleared under the sealoflex amounts to manufacture and could be classified as bitumen mixture under Tariff Sub-heading 2715 00 90. - Held that - No, following the decision of the Hon’ble Supreme Court in the case of Osnar Chemical [2012 (1) TMI -27], the impugned order is set aside and the appeal is allowed with consequential relief, if any.

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• CST, VAT & Sales Tax

• 2013 (5) TMI 233
  Pre-revision notices - TNVAT Act - petitioner removed the goods on stock transfer basis to the other States in India without reversing the Input Tax Credit and the PRN sought to invoke Section 19(4) of the TNVAT Act for reversal of the ITC amounts - petitioner contested against violation of principles of natural justice without even considering the request of the petitioner for extension of time to file their objections to the PRN - Held that - Held that:- On a perusal of the impugned order, it reveals that a reference has been made to the respondent's Office Notices, dated 6.3.2013 and 15.3.2013 & also that the petitioner has filed replies, dated 15.3.2013 seeking time to file their objections. When such a request has been made by the petitioner, the same has to be looked into by the respondent by taking appropriate decision. On the other hand there is no order of stay in respect of the appeals pending before the appellate authority challenging the orders of the earlier assessment years, the respondent observed that the demand raised now is open for recovery and accordingly ordered recovery of the amounts. Such a course adopted by the respondent without considering the objections of the petitioner, is not sustainable - Writ Petitions disposed of, with a direction to the petitioner-Company to file their objections to the pre-revision notices within a period of two weeks from the date of receipt of a copy of this order.

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• 2013 (5) TMI 232
  Appeal u/s 78 - Gujarat Value Added Tax Act, 2003 - Department made the additions on the total sales of the appellant on an estimation basis without finding any irregularity, for the entire year on the basis of sales for one week and on that were made by the Sales Tax Officer under section 41 of the Act With the order, demand was raised by him by issuing a separate assessment order. Deputy Sales Tax Officer partly allowed the appeal. Against that order, the assessee approached the Gujarat Value Added Tax Tribunal by way of Second Appeal. Tribunal confirmed the order.The assessee preferred restoration application which was rejected. Aggrieved by the order filed the application before High Court. Held that:- From the facts and material on record, it was an undeniable fact that the accounts of the assessee were fully audited. They were computerized accounts. In respect of all the sales, computerized bills were issued. The officers of the Department, who visited appellant's premises, did not notice any irregularity as such. The question of law formulated is answered in the negative in favour of the assessee. The appeal is allowed.

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• 2013 (5) TMI 231
  Writ – Certiorari - Continuity of exemption even after reorganization of state - Petitioner was a registered dealer and is a trader of Cement, Cement Colors, etc. and was working in the erstwhile State of Madhya Pradesh which was prior to 1.11.2000 before reorganization of the State. He made certain purchases from M/s L & T Limited, Raipur, now known as M/s Lafarge India Pvt. Ltd., which was a new industrial undertaking exempted from the tax by Notification No.A-3-27/89-ST-V(15).The aforesaid exemption was granted before reorganization of the erstwhile State of Madhya Pradesh. The period in question in this petition is between 1.4.2002 and 31.3.2003. The question involved in the present petition is whether the purchases made by the petitioner after 1.11.2000 from an industry which was exempted after creation of the State of Chhattisgarh, petitioner was entitled for the same exemption or not which was available to the petitioner prior to 1.11.2000. The authorities have turned down the contention of the petitioner and subsequently he filed the Writ petition against the order. Held that: - Relying on the decisions made by apex court in Commissioner of Commercial Tax and anr. Vs. Swaran Rekha Cokes and Coals Pvt.Ltd. & ors reported in [2004 (5) TMI 528 - SUPREME COURT] all these petitions are allowed and it is held that the exemption which was granted shall remain applicable to the petitioner even after reorganization of the State.

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