TMI Tax Updates - e-Newsletter
May 11, 2013

Case Laws in this Newsletter:

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

Articles

1. SERVICE OF NOTICE/ORDER

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Corrigendum to Notification Dated 10.04.2013: Exchange Rate of Foreign Currency Relating to Imported and Export Goods Notified

Notifications

Companies Law

1. F. No. 5/37/2012-CS - dated 17-4-2013 - Co. Law

Appoints Shri S.L.Bunker as Member of the Competition Commission of India for a period of five years

Customs

2. F. No. 468/03/2013-Cus.V - dated 9-5-2013 - Cus (NT)

Corrigendum-Notification No. 36/2013-Custom (N.T.) dated 10th April 2013.

SEZ

3. S.O. 935(E) - dated 8-4-2013 - SEZ

Set up a sector specific Special Economic Zone for information technology and information technology enabled services at Chengamanad Village of Aluva Taluk, Ernakulam District in the State of Kerala

Highlights / Catch Notes

Income Tax

• Appellant can't claim asset depreciation due to prior Section 24 deduction for infrastructural services.

  Case-Laws - AT : Depreciation on assets used in providing services denied being appellant cannot claim depreciation on the same infrastructural facilities on which it has already claimed deduction u/s 24 - AT
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• Cash Discounts for Dealers Not Subject to TDS u/s 194H for Promoting Goods.

  Case-Laws - AT : Cash discount allowed to the dealers and sub-dealers for promotion of goods - Non deduction of TDS - provisions of section 194H are not applicable. - AT
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• CIT Cancels Section 12A Registration Due to Record Mistake After Amendment to Section 2(15.

  Case-Laws - AT : Registration u/s 12A cancelled - CIT has rightly cancelled the registration granted under Section 12A as a mistake apparent on record as occurred in the order due to the amendment in section 2(15) - AT
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• Tribunal Criticized for Inefficiency; Petition Lacks Details, No Right to Mandamus Against Authority Established Under Act.

  Case-Laws - HC : Inefficient working of tribunal - Not only the writ petition is bereft of any material particulars but also the petitioner has no right to claim mandamus for restraining an authority constituted under the Act - HC
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• Assessing Officer Ordered to Recompute Income for Association of Persons and Apply Maximum Marginal Tax Rate.

  Case-Laws - AT : Re opening of assessment - AOP - CIT(A) has given the right direction to the AO to compute the total income of the assessee and thereafter levy tax at the Maximum Marginal Rate - AT
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• High Court Rules Security Deposit for Gas Cylinders Not a Trading Receipt.

  Case-Laws - HC : Security for gas cylinders received - the security for gas cylinders received by the assessee could not be treated as trading receipt. - HC
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Customs

• Smuggling Case: No Reduction in Redemption Fine Despite Three Prior Undetected Imports.

  Case-Laws - AT : Smuggling of goods - not a first time import but on earlier occasions, three such imports had been made and that the same has gone undetected and unpunished - no reason for reducing the redemption fine. - AT
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Wealth-tax

• Assessee's Land Near Municipality Limits Escapes Wealth Tax Assessment; AO Concludes Non-Compliance with Filing Obligations.

  Case-Laws - AT : Since the land in three villages belonging to the assessee fell within the prescribed distance of the municipal limits and no wealth tax return had been filed by the assessee, the AO was justified in coming to the conclusion that wealth belonging to the assessee had escaped assessment. - AT
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Service Tax

• Sale of Ad Space or Time is Taxable u/s 65(105)(zzzm) Due to Consistent Legal and Grammatical Interpretation.

  Case-Laws - AT : Sale of space or time for advertisement - as the grammatical meaning of the taxing provision is in conformity with its legal meaning, the activity is taxable u/s 65(105)(zzzm). - AT
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• High Court Grants Full Waiver on Service Tax Demand for Import of Services, Interpreting Section 66A.

  Case-Laws - HC : Business auxiliary service - Repair and maintenance service - service tax demand -import of service - section 66A requires interpretation - there shall be full waiver - HC
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Central Excise

• Refund Claim Denied: No Interest Payment Basis on Irregular CENVAT Credit Reversal.

  Case-Laws - AT : Rejection of refund claim of the interest - there was no question of payment of interest on irregular reversal of cenvat credit - AT
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• Cenvat Credit Allowed for Travel Agent Services After Initial Denial; Head Office Issued Invoices as Input Service Distributor.

  Case-Laws - AT : Cenvat credit denied - travel agents services on the basis of invoices issued by the Head Office as input service distributor - credit allowed - AT
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• Service Providers' Debit Notes Valid for CENVAT Credit if All Required Details Are Included.

  Case-Laws - AT : Validity of debit notes issued by the service providers for availing cenvat credit - debit notes are valid documents for availing cenvat credit, if the same contained all the information - AT
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VAT

• Poha and Murmura Now Exempt from MP Sales Tax Under Notification Dated March 30, 1994.

  Case-Laws - HC : MP sales tax - Poha & Murmura are covered under the notification dated 30-3- 1994 for the purpose of exemption - HC
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• Incorrect Provision Citation Doesn't Invalidate Proceedings; Procedural Errors Won't Nullify Tax Actions, Says Court.

  Case-Laws - HC : Suppression of turn over - the fact a wrong provision has been quoted, by itself, will not invalidate the proceedings conclude against the petitioner (assessee) - HC
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Case Laws:

• Income Tax

• 2013 (5) TMI 254
  Depreciation on assets used in providing services denied - as per CIT(A) appellant cannot claim depreciation on the same infrastructural facilities on which it has already claimed deduction u/s 24 - Held that:- The loss returned by the assessee includes claim of depreciation which depreciation being less than 30% was claimed against 30% statutorily allowable u/s 24(a) would therefore lead to double deduction. Therefore no infirmity in the order of the CIT(A). Licence fees - income from house property v/s income from other source - CIT(A) held the same to be computed under the head "income from house property" - Held that:- No infirmity in the order of the CIT(A) for the simple reason that the assessee himself had bifurcated the income to be shown as income as licencee and income from house property. It was the case that on the basis of facts and circumstances the assets have been put to use or in other words whether it can be allocated to be claimed as income from house property, in so far as, as per the contention of the assessee also providing facilities such as cable, telephone, water which the assessee proposes to hold as assets being put to use for the purpose of rendering income cannot be the end of earnings from its assets, in so far as, CIT(A) rightly considered that section 24(1) provides for claiming of such type of expenditure repairs and maintenance which repairs and maintenance are basically for claiming of depreciation without having actually incurred are in line with the proposition that the assessee cannot claim depreciation after having put them to use. Appeal of the revenue dismissed.

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• 2013 (5) TMI 253
  Unexplained cash credit - Lack of creditworthiness of Sundry Creditor - CIT(A) deleted addition - Held that:- CIT(A) rightly considered that non response of summons u/s 133(6) were not to be considered in the case of assessee, in so far as, the creditors had sold the goods to the assessee which bills were produced before the AO were documented to the extent that identity, genuineness and creditworthiness were established. AO could not have considered the application of case laws without accepting the facts that there was no cause for him to invoke the provision of section 68 merely on non response from the trade creditors. Against revenue. Unexplained cash credit - advance received from sundry debtors unexplained - CIT(A) deleted addition - Held that:- CIT(A) held that the AO ought not to have taken shelter of the cited case laws that misinterpretation of the statements cannot be a ground for invoking the provision of section 145(3). It was the case of postponing the sales against such advance in the impugned assessment year, in so far as, the AO has not pointed out any specific defect in receiving the advance from sundry debtors to be applied as future as sales. CIT(A) thereafter held the same as onus being discharged by the assessee as, creditworthiness of the sundry creditors or advance received from sundry debtors cannot be questioned under the provision of section 68 as the onus rests on the AO to disprove the facts that the purchases were bogus & challenging merely on non response from the trade creditors - Against revenue. Commission on sale being extra-commercial in nature - CIT(A) deleted addition - Held that:- AO has resorted to compare the payments of commission on the turn over in the immediately assessment year. Both the turn over and the commission are variable items for computing the income. Therefore, cannot be compared, in so far as, there is no fixed percentage to be derived on earning income after parting with commission. This ground of the Revenue stands dismissed. Disallowance of installation expenses - CIT(A) deleted addition - Held that:- AO tried to import his own version of incurring expenditure to be supported by evidences when the assessee produced the ledger copy of the party from whom the assessee had purchased the goods as the sales had been incorporated and the purchases included the installation expenses, in so far as, the assessee's not rendering the job work was got done from the seller of the goods only. The amounts have been incurred by the assessee on the basis of the bills raised by the party when the total purchases were sold already been subjected to tax in the hands of the other party. CIT(A) has rightly considered that the AO had not been able to establish separation of income, and it was only a hint that the AO out of surmises and doubts had not been clarified by the revenue even as of now - appeal of the Revenue dismissed.

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• 2013 (5) TMI 252
  Cash discount allowed to the dealers and sub-dealers for promotion of goods - Non deduction of TDS - CIT (A) deleted the addition - Held that:- As decided in assessee's own case [2013 (4) TMI 678 - ITAT DELHI] goods had been sold to them as principal to principal basis and they were not acting on behalf of the assessee, therefore, there was no agency relationship with them. As per the policy of the assessee company, no commission was payable to the dealers / sub-dealers for promotion of the selling of the goods & this cash discount was for the prompt payment for the goods supplied to them as abetment of cost and not in the nature of commission, therefore provisions of section 194H are not applicable. In favour of assessee. Disallowance u/s 14A - CIT (A) deleted the addition - Held that:- Assessee fairly agreed that Rule 8D is applicable for the concerned assessment year. However, he submitted that under Rule 8D the disallowance will be of Rs. 2500/- interest of justice will be served if the matter is remitted to the file of the AO to apply Rule 8D in this case. In favour of revenue statistical purposes. Advertisement expense incurred on purchase of gold items - disallowance as non furnish of satisfactory documentary evidence as it was for wholly and exclusively for business purpose - CIT (A) deleted the addition - Held that:- As assessee has submitted additional evidence before CIT(A) pertained to the confirmation of the dealers regarding having receipts of gold coins who in turn has obtained remand report from AO who has not given any adverse comments in this regard - no infirmity in the order CIT(A) - in favour of assessee. Increase in Director's remuneration - CIT (A) deleted the addition - Held that:- As AO has disallowed the expense on the ground that the assessee has failed to submit the necessary Resolution for the increase in remuneration. However, the required Resolution was submitted before the CIT(A) as additional evidence who in turn has obtained remand report from AO who has not given any adverse comments in this regard - no infirmity in the order CIT(A) - in favour of assessee.

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• 2013 (5) TMI 251
  Registration u/s 12A cancelled - CIT was of the opinion that the assessee institution no more can be said to have carrying on charitable purpose in view of the amendment to section 2(15) - whether the assessee is regarded to have been established for charitable purpose even after insertion of proviso to Section 2(15) - Held that:- The assessee when applied for registration was very much a charitable institution as per the definition of the charitable purpose given u/s 2(15) at that time, therefore entitled for the registration u/s 12A. Once, the assessee no more remains being established for charitable purpose after the insertion of proviso in section 2(15), the eligibility of the assessee for registration stands cancelled. The CIT is the law implementing authority u/s 12A and therefore, it has power to rectify its order by cancelling / withdrawing the registration by rectifying the Order passed u/s 12A from the date when the assessee no more remains to be charitable institution as is held by us in the preceding para. A legal mistake has occurred in the order of the CIT dtd. 13.4.2006 from the date when the proviso under Section 2(15) has been inserted as the institution no more remains to have been created/established for charitable purposes or religious purposes. It is not the case of the assessee institution that it has been created or established for religious purposes. If the registration will remain continued, the purpose of amendment made in section 2(15) will be defeated and injustice will be caused to those institutions having the similar objects as the assessee has but created or established after the amendment in section 2(15) of the Income Tax Act. As going through the decision of the CIT V/s Sarvodaya Ilakkiya Pannai (2012 (2) TMI 160 - Madras High Court) issue before relates to the power of the CIT given under Section 12AA(3) and under these facts, the Madras High Court has upheld the order of the I.T.A.T. cancelling the withdrawal of the registration by the CIT under Section 12AA(3) as Tribunal held that there was no violation of the provisions of Section 12AA(3). The question whether there had been a legal mistake in the order by which the registration was granted was not before the Hon'ble High Court. Even otherwise, the decision of the Madras High Court is not binding on us in view of the decision of CIT Vs. Thana Electricity Supply Ltd. [1993 (4) TMI 37 - BOMBAY High Court] Thus CIT has rightly cancelled the registration granted under Section 12A as a mistake apparent on record as occurred in the order due to the amendment in section 2(15) and therefore no interference is called for in the order of the CIT. Against assessee.

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• 2013 (5) TMI 240
  Registration u/s 12A - denial of claim as not satisfied about the objects of the assessee and genuineness of its activities by CIT(A) - Tribunal allowed the claim - Held that:- The Tribunal held that when an application under Section 12AA is filed for being registered under Section 12A, CIT is required to see, whether the application is in accordance with Section 12AA read with Rule 17A and, whether Form 10B has been properly filled up. In addition to that CIT is also required to see the objects of the Trust / Society and to ascertain, whether they are exclusively charitable or not. At the stage of considering such an application, the Tribunal held that CIT was not required to examine the application of income, which can be examined only by the AO - thus no contrary view can be taken. In favour of assessee.

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• 2013 (5) TMI 239
  Receipt of money from the State Government to be distributed to distributing agencies - balance amount left was treated to be income in assessee's hand - Tribunal deleted the additions - Held that:- On an admitted facts and circumstances of the case, that the assessee was only a trustee holding those monies for the benefit of others and, accordingly, no income accrued in its hands. Conclusion of the Tribunal is final - in favour of assessee.

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• 2013 (5) TMI 238
  Inefficient working of tribunal - Writ of mandamus - petitioner is a Chartered Accountant whose grievance that was facing lot of harassment at the hands of Judicial and Accountant Member of the Tribunal at Amritsar - Held that:- The petitioner has asserted that he is not able to meet the expectations and illegal demands raised by the Members but there is no details as to when and how the demands were raised. Not only the writ petition is bereft of any material particulars but also the petitioner has no right to claim mandamus for restraining an authority constituted under the Act from discharging the functions entrusted to it by the Statute. The present writ petition is gross abuse of process of law and, therefore, it is dismissed.

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• 2013 (5) TMI 237
  Re opening of assessment - assessment of tax - AO has levied tax on the gross receipts and not on the total income - revenue contested that CIT(A)failed to note that the income of the assessee is donation and there is no nexus of expenses to earn this income and the expenditure are not genuine - Held that:- CIT(A) rightly concluded that tax is chargeable on the total income of the assessee. In view of sec.167A, the assessee has to be assessed in the status of an A.O.P., where shares of the members are indeterminate i.e. Maximum Marginal Rate. CIT(A) has given the right direction to the AO to compute the total income of the assessee and thereafter levy tax at the Maximum Marginal Rate & has correctly rectified the mistake committed by the AO in levying the tax on the entire gross receipts of the assessee.

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• 2013 (5) TMI 236
  Excess of ‘security deposits’ over refunds received on sale of bottles - whether a excess is trading receipt? - Held that:- Decided in favour of assessee as relying on The Commissioner of Income Tax (Central), Ludhiana Vs. Munjal Gases, Hero Nagar, Ludhiana [2013 (5) TMI 235 - PUNJAB & HARYANA HIGH COURT] Interest on interest free loans advanced to directors and sister concerns - ITAT deleted the addition - Held that:- There is no clear and categorical finding recorded by the CIT(Appeals) or by the Tribunal in respect of commercial expediency of the advancement of interest free loan to the sister concerns or the Directors & though concluded that the Directors were interested in the assessee but the question whether such Directors, who have advanced loan to the assessee, are also the Directors, who are beneficiary of interest free loan from the assessee, has not been examined. The commercial expediency cannot be mere availing of interest free loan from one assessee and giving interest free loan to another - set aside the orders of the CIT(A) and Tribunal and redirect to examine the said question.

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• 2013 (5) TMI 235
  Security for gas cylinders received - whether be treated as trading receipt and assessable as income in the hands of assessee? - Held that:- The security deposit did not belong to the assessee, as the money remained as that of consumer and the same was refundable and thus not a trading receipt. The money in such cases was not in the nature of income as such because it had to be returned to the customer from whom it was received on fulfillment of certain conditions on behalf of the customer. Thus the security for gas cylinders received by the assessee could not be treated as trading receipt. See Commissioner of Income Tax Vs. Madurai Soft Drinks (P) Ltd. [1998 (8) TMI 33 - MADRAS High Court], Commissioner of Income Tax Vs. Goyal Gases P. Ltd. (1990 (5) TMI 13 - DELHI High Court), CIT Vs. Doongaji & Co. Distillery (2005 (2) TMI 62 - MADHYA PRADESH High Court) . In favour of assessee.

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• Customs

• 2013 (5) TMI 250
  Demand of erroneous refund - Held that:- Since the impugned order is in consequence of an order which was passed by Commissioner (Appeals) in setting aside the impugned order which granted SAD to the appellant herein and that the said order has been set aside by the Tribunal on 15.01.2013, the entire issue in this case has attained finality in the hands of the Tribunal. Thus impugned order, which has been passed consequent to the demand notice issued to the appellant is liable to be set-aside.

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• 2013 (5) TMI 249
  Smuggling of goods - The first appellant had engaged the second appellant to bring the impugned contraband goods from Singapore, which was procured by the contacts of the first appellant in Singapore – Department conducted a enquiry and seized the goods - Department submits that first appellate smuggled the goods through second appellant from Singapore and after conducting necessary enquiry they come to the conclusion that this was not the first time they are doing so. (i) Objection was raised to the effect that the seizure itself was illegal as it was effected by DRI officers having no legal authority to seize the impugned goods. (ii) Appellants further states that the department has not established any connection of the first appellant with the impugned goods and hence, he should be exonerated of all the charges. As regards the second appellant states that a forced statement was recorded from him by the DRI officers but he has retracted the same when he was detained in the jail under COFEPOSA. Held that – (i) It is amply clear that the IO / SIO who have effected the impugned seizures were empowered to exercise powers under Section 110 of the Customs Act by the Director of Revenue Intelligence who in turn was appointed by Central Government under Section 4 of the Customs Act, 1962 to be the Collector of Customs with all India jurisdiction. (ii) After hearing both sides and going by various statements obtained in the course of investigation, it can reasonably be concluded that the first appellant had engaged the second appellant to bring the impugned contraband goods from Singapore, which was procured by the contacts of the first appellant in Singapore. As regards the first appellant penalty is confirmed and second appellant, considering the fact that he was a carrier engaged on a small fee, and taking into consideration the mitigating factors such as he has no regular source of income, has a big family and no assets worth mentioning tribunal reduced the penalty. As regards the redemption fine. Considering the fact that the present contraband import was not a first time import but on earlier occasions, three such imports had been made and that the same has gone undetected and unpunished, I see no reason for reducing the redemption fine. Accordingly, Appeal is partly allowed by reducing the penalty & dismissed.

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• 2013 (5) TMI 248
  Condonation of delay - Specific reason & period of delay is not given - Accordingly, tribunal dismiss the application for condonation of delay in filing the cross-objection.

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• Corporate Laws

• 2013 (5) TMI 247
  Permanent injunction - As per the plaintiff the trademark “GULVARI” of defendant deceptively or phonetically similar to the trademark of the Plaintiff "GULABARI" - Held that:- As the plaintiff led evidence by filing affidavits & also exhibited its trade mark registration certificates, invoices, photographs and sale invoices, thus this Court is of the opinion that plaintiff has proved the facts stated in the plaint & since the plaintiff’s evidence has gone unrebutted, said evidence is accepted as true and correct. Adoption of the trade mark GULVARI by the defendant amounts to infringement of the plaintiff’s trade mark GULABARI - use of the mark GULVARI by the defendant which is deceptively similar to the plaintiff’s registered trade mark GULABARI is bound to cause confusion in the mind of the consumers about the source of the rose water on account of deceptive similarity between the two marks. The possibility of confusion and deception is compounded on account of visual similarity between the trade dress and get up of the defendant’s packaging with those of the plaintiff predominantly on account of similarity of colour combination of pink, white and silver as well as lay out and arrangement of features including the cap and size of the bottle. Also considering the nature of goods and the class of consumers who purchase and use rose water, this Court is of the opinion that confusion or deception is inevitable leading to passing off of the defendant’s goods as those of the plaintiff. In favour of plaintiff.

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• 2013 (5) TMI 246
  Appeals against the orders of the CLB – u/s 10F of the Act - CLB's rejection of the Appellants' prayer for a higher percentage of shareholding in NHEL. The question whether on the death of Mrs. Suhag Rani, the mother of the Appellant 1 and Respondents 3 and 4, who died in 2000 leaving behind a will, the Appellants would be entitled to any share therein or in the 22,600 equity shares held by Respondent 2 as Karta of the HUF? Held that:- Considering that the Appellants have limited their reliefs before the CLB, this Court is not inclined to permit the Appellants to expand the scope of the reliefs sought for. At the same time, the Appellants cannot be deprived of the relief of being compensated for the shares held by them in NHEL. This will require valuation of shares to be carried out by a C.A appointed by the Court. Court sets aside the impugned order to the extent that it directs that the Appellants will be paid a sum of Rs. 706.73 per equity share as well as restore to NHEL possession of the premises, plant and machinery and building. The matter is accordingly remanded back to the CLB with the following directions. The CLB will appoint a Local Commissioner to ascertain, in a time bound manner, as to who is in possession of the properties of NHEL and submit a comprehensive report (ii) The fee of the Local Commissioner will be shared equally by the Appellants and Respondents 2 to 4. The CLB will appoint an accredited valuer to value the shares of NHEL for current market value of the assets. The valuer so appointed will submit a valuation report within the time stipulated by the CLB. On the basis of the valuation report, the CLB will proceed to issue further directions for payments by Respondents 2 to 4 for the shareholding of the Appellants. Based on the report of the Local Commissioner to be submitted before the CLB in a time bound manner, the CLB will issue further directions as regards the possession of the property and assets of NHEL. The appeal is disposed of in the above terms with costs of Rs. 10,000 which shall be paid by Respondents 2 to 4 to the Appellants within a period of 4 weeks.

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• Service Tax

• 2013 (5) TMI 263
  Outdoor catering service - service tax demand worked out after allowing abatement of 50% of the total catering charges - period from September 2004 to December 2006 - as per adjudicating authority assessee did not have tax liability for the period prior to 16.6.2005 and also invoked Section 80 of the Finance Act, 1994 to drop all penalties - Held that:- Appellant fell within the ambit of outdoor caterer as defined at all times inasmuch as he was admittedly catering food to Dr. Reddy’s Laboratories Ltd. at a place owned by the latter and it is not the case of the appellant that he was the owner of those premises. Thus it is held that the appellant was liable to pay service tax prior to 16.6.2005 also. For the period from 16.6.2005, there is no room for doubt inasmuch as the amended definition is explicit. Thus the appellant was liable to pay service tax for the entire period. Demand of service tax barred by limitation - Held that:- Factum of the service provided to the client was never disclosed by the appellant to the department. It was from the AG’s audit note and the connected letters of the appellant that the department gathered the relevant information. This happened during the period from September 2006 to December 2008 & show-cause notice was issued in January 2009 invoking the proviso to Section 73(1) of the Finance Act, 1994 on the alleged ground of suppression with intent to evade payment of service tax. No valid point in the grounds raised by the appellant against invocation of the said proviso. The plea of limitation is therefore rejected. Invoking section 80 - Held that:- The statutory definition of outdoor caterer at all times has been clear enough for any prudent person to believe that anyone engaged in providing services in connection with catering at a place other than his own would fit in the definition. Thus it was not open to assessee to plead ignorance of law as an excuse for not getting registered with the department, not filing service tax returns, not paying service tax, etc. Therefore, the plea of bona fide belief raised in this appeal is not acceptable - claim the benefit of Section 80 of the Finance Act, 1994 denied - against assessee.

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• 2013 (5) TMI 258
  Sale of space or time for advertisement - allegation of suppression of value of the advertising services provided - appellate Commissioner relying on the judgment of Euro RSCG Advertising Ltd. (2006 (12) TMI 61 - CESTAT, BANGALORE) and the CBEC Circular No. 64/13/2003-ST dated 28.10.2003 concluded that the amounts received by the appellant are not exigible to service tax as advertising service agency - Held that:- Interpretation of provisions of Section 65(105) (zzzm) as elucidated in Board’s Circular dated 28.10.2003 clearly enacts that any service provided to any person by any other person in relation to sale of space or time for advertisement [as defined in explanation (1) to clause (zzzm)], would constitute the taxable service. The clarification issued by the Board which facially conveys an implication that mere sale of space or time would not constitute the service provided an advertising agency service fails to bring out the true import of the taxing provision. On the above analysis, as the grammatical meaning of the taxing provision is in conformity with its legal meaning, the activity of the petitioner as delineated in the adjudication order, would fall within the net of service tax as spelt out in Section 65(105)(zzzm). The contrary conclusion by the appellate authority, founded on to the decision of this Tribunal in Euro RSCG Advertising Ltd. which is distinguishable on its distinct facts and the Board’s circular dated 28.10.2003 (which as founded does not really clarify the position), is therefore unsustainable. Invocation of the extended period of limitation - Held that:- The adjudication authority clearly recorded a finding that failure of the assessee to disclose the position inconformity with the position in its balance sheet, in the ST-3 returns filed amounts to suppression of the correct taxable value from the department; that this position is fortified by the figures in the balance sheet of the assessee admitted by Ms. Shaifali Singh, in her statement recorded on 23.8.2006. Since there is a suppression by the assessee, rationally concluded by the adjudication authority, invocation of the extended period of limitation is legitimate. The adjudication order is thus impeccable and warrants no interference. The appellate authority erred in reversing the adjudication order. Against assessee.

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• 2013 (5) TMI 257
  Condonation of delay - Held that:- The findings of the case of Singh Enterprises Vs. CCE, Jamshedpur [2007 (12) TMI 11 - S.C.] wherein the apex court considered the question whether a Commissioner (Appeals) was empowered to condone any delay of more than 30 days under Section 35 of the Central Excise Act, and answered the question in the negative and, further, held that Section 5 of the Limitation Act 1963 was not applicable is equally applicable to service tax appeals filed belatedly with Commissioner (Appeals) inasmuch as the provisions of Section 85(3) of the Finance Act 1994 are pari materia to those of Section 35 of the Central Excise Act. Thus, the appeal filed against the impugned order is rejected. The stay application also stands disposed of.

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• 2013 (5) TMI 256
  Service tax - Correct quantitative extent of tax liability - Held that:- From the impugned order, it is obvious that the payments claimed to have been made by the assessee were not taken into account by the adjudicating authority while confirming the demands against them. The factual position is that service tax liability stands admitted to the extent of Rs. 66,59,354/- and an amount of Rs. 11,00,000/- stands paid towards the same. We further observe that it will not be open to the assessee to dispute tax liability, though it shall be open to them to argue against the penal proposals raised in the SCN. Thus, we set aside the impugned order and allow this appeal by way of remand with a request to the Commissioner to requantify the assessee’s tax liability correctly after taking into account the payments hitherto made by them.

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• 2013 (5) TMI 255
  Business auxiliary service - Repair and maintenance service - service tax demand -Tribunal directed the appellant to make a pre-deposit of Rs. 8 crores - assessee contested that the ultimate beneficiaries of the services were customers located abroad - Held that:- Provisions of section 66A would require interpretation is not so clear-cut and is debatable. In these circumstances, and particularly in view of the fact that the financial hardship of the appellant has already been recognised by the Tribunal in other orders dated 29.11.2011 and 12.10.2012, the entire amount of tax, penalty and interest demanded ought to have been waived as a condition for hearing the appeal. Consequently, the order of the Tribunal modified by directing that there shall be full waiver of the requirement to pre-deposit the tax, penalty and interest. The appeal of the appellant before the Tribunal shall be heard without insisting on any pre-deposit.

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• Central Excise

• 2013 (5) TMI 245
  Rejection of refund claim of the interest - Remission of duty due to fire accident took place in the factory - assessee reversed the cenvat credit on asked by the dept but later on realizing that in terms of the Cenvat Credit Rules they were not required to reverse the credit filed an application for refund which was denied - Held that:- The fire accident had taken placed on 19.7.2005 & for the period prior to 7.9.2007 this issue was governed by the judgment of Grasim Industries vs. C.C.E., (2006 (8) TMI 69 - CESTAT,NEW DELHI) holding that where any finished goods lost /destroyed in fire or accident, and remission of duty under Rule 21 of Central Excise Rules is claimed in respect of said goods, Cenvat credit in respect of inputs is not required to be reversed. Also see C.C.E., Ahmedabad II vs. Intas Pharamaceuticals Ltd. [2013 (4) TMI 532 - GUJARAT HIGH COURT]. Besides this, the fact that the Appellant had received compensation for finished goods lost in fire, from insurance company which included the element of duty on finished goods lost, would also not come in the way of availing cenvat credit in view of judgment Tata Advanced Materials Ltd. (2011 (4) TMI 1124 - KARNATAKA HIGH COURT) that when in respect of finished goods lost in fire in this case, the input cenvat credit was not required to be reversed, for claiming remission of duty, there was no question of payment of interest on such cenvat credit. The impugned order upholding the denial of refund is, therefore, not sustainable. In favour of assessee.

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• 2013 (5) TMI 244
  Cenvat credit denied - travel agents services on the basis of invoices issued by the Head Office as input service distributor - Held that:- There is no dispute that journeys in respect of which the same had been received, had been undertaken by the officers of the appellant company in connection with company’s business. Thus cenvat credit would be admissible in respect of this service - in favour of assessee. Services of maintenance of the Head office - Held that:- It has to be treated as in relation to manufacturing of business of the appellant. Therefore, this service would also be covered by the definition of input service - in favour of assessee.

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• 2013 (5) TMI 243
  Validity of debit notes issued by the service providers for availing cenvat credit - Held that:- Debit notes placed on record contain all the information, which is required to be mentioned in the invoices. Thus as decided in Misson pharma Logistics (I) P. Ltd. [2012 (11) TMI 117 - CESTAT, AHMEDABAD], Indore Vs. Gwalior Chemical Industries Ltd. [2012 (5) TMI 352 - CESTAT, NEW DELHI] and CCE, Nasik Vs. Graphite (I) Ltd. [2006 (10) TMI 224 - CESTAT, MUMBAI] debit notes are valid documents for availing cenvat credit, if the same contained all the information which is required to be mentioned in the invoices. In favour of assessee.

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• 2013 (5) TMI 242
  Clearances of baggase - whether in respect of clearances an amount equal to 10% of the sale value would be required to be paid in terms of the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 - Held that:- As decided in Bajaj Hindustan Ltd. Vs. CCE, Meerut-I [2013 (4) TMI 180 - CESTAT NEW DELHI] and Indian Potash Ltd. Vs. CCE, Allahabad (2012 (12) TMI 347 - CESTAT, NEW DELHI) the provisions of Rule 6(2) and 6(3) are applicable when some common inputs are used in or in relation to the manufacture of dutiable final products as well as exempted final products and separate account of inventory of such common inputs and input services in respect of which cenvat credit had been availed is not maintained. In the present case SCN does not even mention as to which are the common inputs which are used at the stage of crushing of sugarcane & mentions chemicals viz. Phosphoric Acid, Hydrogen Peroxide, Caustic Soda, Sulphur, etc. but the same are used in the course of processing of the sugar and not at the stage of crushing of sugarcane at which stage the baggase arises.Thus Rule 6(2) and Rule 6(3) is not applicable & impugned order is not sustainable. In favour of assessee.

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• 2013 (5) TMI 241
  Cenvat credit on H.P. Plates, Angles, Channels treated as items of capital goods - denial of claim as per the dept the mentioned items were neither capital goods nor inputs - whether various steel items used in fabrication of tanks embedded to earth tanks would be eligible for cenvat credit - Held that:- As regards jigs, the same is specifically covered by the definition of capital goods as given in Rule 2(a) of Cenvat Credit Rules and, therefore, the steel items used for fabrication of jigs would be eligible for cenvat credit as inputs. Gantry rails has to be treated as part of the EOT Crane system, which covered by Chapter 84 and hence is capital goods. As decided in CCE Raipur Vs. Ambuja Cement Eastern Ltd. (2003 (10) TMI 589 - CESTAT, NEW DELHI) steel items used for fabrication of gantry rails on which EOT cranes mines would be eligible for cenvat credit as inputs, as the definition of inputs also includes the items used for fabrication of capital goods used in the factory. Commissioner (Appeals)’s order disallowing the cenvat credit in respect of steel items used for embedded to earth tanks is upheld as from the way Rule 2 (a) is worded, it is absolutely clear that the various items mentioned in this Rule has to be goods i.e. movable properties. Since the impugned order does not mention the separate account of cenvat credit in respect of the steel items used for storage tanks and steel items used for gantry rails and jigs, for quantification of the cenvat credit demand, the matter is to be remanded. Penalty levy is deleted as the issue involved relates to interpretation of the provisions of Cenvat credit Rules on which there are and have been contradictory judgements, imposition of equal penalty is not called for.

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• CST, VAT & Sales Tax

• 2013 (5) TMI 261
  Entitlement to exemption from payment of Sales Tax on Poha (Parched Rice) and Murmura (Puffed Rice) under the notification No.A-5-I/94/ST-V (55) dated 30-3-1994 - Madhya Pradesh General Sales Tax Act, 1959 and Central Sales Tax Act, 1956 - Held that:- In the exemption notification the word includes, inter alia, 'rice' as enumerated from (i) to (x), as aforestated. All the terms used are the basic product, not other forms of the product. Paddy, rice, wheat, jowar or milo, bajra, maize, ragi, kodon, kutki & barley are the basic products. As observed rice includes beaten and puffed rice both. Thus, since the exemption is granted to all the goods, as specified in the State Act, the State cannot get any advantage from the fact that there has been a separate entry for exigibility of tax in respect of Poha & Murmura. Accordingly, Poha & Murmura are one form of rice and entitled to exemption under the above-stated notification. The exemption has been granted to cereals, which are enumerated after, ‘that is to say’. Cereals used in Section 14 (i) of the Central Act clearly means ‘rice’ and other like products of rice like Poha & Murmura. Thus, rice including Poha & Murmura are included within the definition of ‘cereals’. The notification dated 30-3-1994 is not issued on the basis of entries made in the State Act for the purpose of exigibility to tax and, as such, Poha & Murmura are covered under the notification dated 30-3- 1994 for the purpose of exemption - matter referred back to the AO to make assessment afresh.

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• 2013 (5) TMI 260
  Conditional order of stay - appellant submits that actually no amount is due and amounts are due to it - Held that:- Considering the orders passed by this Court in Ext.P3 wherein a Division Bench of this Court has allowed the appeal in part and granted conditional order of stay on remitting Rs.10 crores instead of 1/4th of the KGST and VAT due for the assessment year 2005-2006 & that by Ext.P3(a), operation of the said order was stayed by the Apex Court. The demand for tax is to the tune of Rs.478 crores only. Thus interest of justice will be sufficiently met if Ext.P7 impugned order of conditional stay further modified and directed to appellant to pay Rs.20 crores as against Rs.25 crores as ordered by the learned Single Judge and furnish security for the balance amount within a period of one month from today, proceedings will be kept in abeyance till the disposal of the Appeal.

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• 2013 (5) TMI 259
  Suppression of turn over - Contention raised by assessee that Ext.P3 notice proposing suo motu revision was issued invoking power under Section 37 of the KGST Act thus if a penalty order issued under Section 45A is to be revised, the power that can be invoked is under Section 45A(5) only - Held that:- Section 37 of the KGST Act empowers the Commissioner to suo motu call for and examine any order passed by any officer or authority subordinate to him other than Appellate Assistant Commissioner, which in his opinion is prejudicial to revenue and he may make such enquiy or cause such enquiry to be made and subject to the provisions of the Act, may pass orders thereon. An order passed under Section 37 is appealable to this Court under Section 40 of the Act also. In a proceedings under Section 45A, if the order is to be revised by the Commissioner suo motu. However, the fact a wrong provision has been quoted in Ext.P3 notice or Ext.P4 order, by itself, will not invalidate the proceedings conclude against the petitioner. In this case, the petitioner has not been able to prove before this court that any prejudice has been caused to him on account of the wrong quoting of the provision. If that be so, the fact that Section 37 has been mentioned in Ext.P3 or P4, does not result in nullification of the orders. Grounds mentioned in Ext.P4 are not the reasons mentioned in Ext.P3 notice therefore petitioner was incapacitated in producing the documents to substantiate his defence against the finding - Held that:- A reading of Ext.P4 order shows that the petitioner has been found to have resorted to clandestine transactions mainly relying on delivery notes and relevant forest passes. None of these documents were relied on in Ext.P3 and therefore the findings in the aforesaid respect arrived at in Ext.P4 were without putting the petitioner on notice in respect of those issues. In such circumstances, counsel for the petitioner is justified in contending that the petitioner was seriously prejudiced in his defence. For that reason petitioner view is to be accepted and therefore set aside Ext.P5. However that will not absolve the petitioner from the liability to be proceeded against under Section 45A(5) of the Act. Ext.P4 will be treated as a notice and the petitioner will file his reply to Ext.P4 within 4 weeks from today and on filing reply as above, the first respondent will issue notice to the petitioner, afford him an opportunity of hearing and to produce documents.

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• Wealth tax

• 2013 (5) TMI 262
  Levy of Wealth tax on agricultural land - Reopening of assessment - Held that:- Levy of wealth tax on agricultural land situated in urban areas or within specified distance of municipal limit has been decided in the case of Tara Singh vs. DCWT (2005 (7) TMI 281 - ITAT AMRITSAR) in which it had been held that on a plain reading of the provisions of W.T.Act, "agricultural land", if situated within the limits of municipal corporation or within 8 km of municipal limits, would be chargeable to Wealth Tax. Since the land in three villages belonging to the assessee fell within the prescribed distance of the municipal limits and no wealth tax return had been filed by the assessee, the AO was justified in coming to the conclusion that wealth belonging to the assessee had escaped assessment. The contention that land in one of the villages mentioned in the reasons recorded was not owned in the relevant previous year does not detract from the action for reassessment taken by the AO since the assessee was owner of land in three other villages which were chargeable to wealth tax. Whether CWT(A) erred in not allowing suitable reduction in the value of land at village Waryana which was low lying and was adjoining to the water body - Held that:- No infirmity in the order of the CWT(A) as there was nothing brought on record by the assessee with regard to claim of rebate of 50% with regard to the land at village Wariana. As regards the valuation of land at village Madhar, the order of the CWT(A) in confirming the action of the AO is based on the rates prescribed by the Tehsildar and accordingly, rightly upheld the order of the A.O. appeal against assessee.

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