TMI Tax Updates - e-Newsletter
May 16, 2013

Case Laws in this Newsletter:

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

Articles

1. IGNORANCE OF LAW – A REASONABLE CAUSE?

   By: DR.MARIAPPAN GOVINDARAJAN

2. FAQ ON VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME 2013 ( Service Tax )

   By: NANDKUMAR SAGWEKAR

News

1. Double Digit Returns on National Pension System (NPS) Schemes for Financial Year 2012-13

2. Repayment of 9.00% Loan 2013 on May 24, 2013 and 9.81% Government Stock, 2013 on May 30, 2013

3. Government Decides to Launch Inflation Index Bonds (IIBs)

4. Finance Minister Leaves Today for Five Day Foreign Visit to UK, France and Qatar: to Hold Discussions on Various Bilateral and Investment Related Issues

5. Strengthening the Banking Supervision through Risk Based Approach: Laying the Stepping Stones (Address by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India at the Inaugural Session of the Conference of non-Executive directors on the Boards of Commercial Banks, organized by CAFRAL in Mumbai on May 13, 2013)

Notifications

DGFT

1. 13(RE – 2013)/2009-2014 - dated 14-5-2013 - FTP

Nomination of Export Promotion Council for Handicrafts (EPCH) as nodal agency for certificate on due diligence adopted by the exporters in procuring wood from legal sources for manufacture of Handicraft articles

Circulars / Instructions / Orders

VAT - Delhi

1. F.3(33)/P-II/ VAT/ Misc./2006/168-178 - dated 9-5-2013

DVAT 51 reconciliation return Qtr 1 to 4 of 2011-12 extended to 27/05/2013

Highlights / Catch Notes

Income Tax

• Retention Money Is Not Income Until Contract Obligations Are Met, Implying Deferred Recognition of Income.

  Case-Laws - HC : Accrual of income - the right to receive retention money accrues only after the obligations under the contract are fulfilled. Therefore, it will not amount to income in the year in which amount is retained. - HC
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• High Court Clarifies Assessing Officer's Authority to Evaluate Fund Application for Section 80G(5) Exemption in Tax Assessments.

  Case-Laws - HC : Exemption u/s 80G(5) - Whether the funds are properly applied or not, can be examined by the AO at the time of framing the assessment. - ITAT has erred in law in refusing exemption to the assessee u/s 80G(5) - HC
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• Retired Laborer Seeks Refund of Rs. 33,949; Tribunal Error Acknowledged, No High Court Escalation Due to Financial Impact.

  Case-Laws - HC : The man has retired in the year 2000 as a labourer. He is seeking refund of small sum of Rs.33,949/- which for him is very substantial. Only to correct an apparent error committed by the Tribunal, we would not drag him before High Court. - HC
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• Assessing Officer Must Follow CIT(A) Directions on Advances and Peak Credit Deductions Without Questioning Their Correctness.

  Case-Laws - AT : Directions issued by CIT(A) - It is not for the AO to sit on judgment over the correctness of the directions either in adding the advances or in directing the deduction of the peak credit added in the earlier years. - AT
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• Additional Depreciation Denied for Assessee Not in Manufacturing Before Windmill Electricity Generation.

  Case-Laws - AT : Additional depreciation on windmill - the assessee is not engaged in the business of manufacture or production of an article or thing prior to the manufacture of the electricity using the impugned 'windmill'. - No Additional depreciation - AT
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Customs

• Custom Valuation Rules: Transaction Value Raised Unjustifiably by 10% for Lump-Sum Royalty Payments u/r 10(1)(c.

  Case-Laws - AT : The transaction value has been enhanced under Rule 10(1)(c) of the Custom Valuation Rules, 2007 which clearly deals with lumpsum payment of royalty. There is no justification for addition of 10% of the value of the declared value. - AT
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• High Court Remits Case to Tribunal for Fresh Consideration Due to Non-Supply of Inquiry Report in Show-Cause Notice Case.

  Case-Laws - HC : Request of crossexamination of the persons whose statements have been referred to in the show-cause notice - non-supply of the enquiry report - set aside the impugned order and remit the matters to the Tribunal for a fresh consideration. - HC
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FEMA

• Court Affirms DIPP's Authority to Announce FDI Policies in Retail, Dismissing Petitioner's Claims Against Central Government's Competence.

  Case-Laws - SC : FDI in Retail Trading - DIPP is empowered to make policy pronouncements on FDI. There is no merit in the submission of the petitioner that Central Government has no authority or competence to formulate FDI Policy. - SC
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Corporate Law

• Companies Act Section 211(7): CLB Can Compound Offences Without Court Approval.

  Case-Laws - SC : Compounding of offences – u/s 211(7) of the Companies Act, 1956 - prior permission of Court is not necessary for compounding the offence, when power of compounding is exercised by the CLB. - SC
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• Company Court's Role in Winding-Up: Authority Retained, No Power to Alter Sanctioned Schemes Post-Sanction.

  Case-Laws - HC : Winding up – while the Company Court “is not powerless and can never become functus officio“, it cannot rewrite a scheme in any manner, even at the post sanction stage. - HC
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Indian Laws

• Finance Act 2013: New Surcharges, Revised Tax Rates, Anti-Avoidance Measures Reshape India's Tax Landscape for Fair Revenue Collection.

  None : Finance Act, 2013
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Service Tax

• Penalties Waived for Disputed Service Tax Liability Under Reverse Charge Mechanism; Sections 77 and 78 Not Applied.

  Case-Laws - AT : Waiver of penalty u/s 77 & 78 - during the period service tax liability under reverse charge mechanism was being disputed - penalty dropped - AT
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• BSNL Service Tax Already Covered: Additional Tax Demand on Distributors for Business Support Service Unjustified.

  Case-Laws - AT : Where the BSNL had already paid the Service Tax on full face value on the Sim card / recharge coupon, the confirmation of demand against the distributor under the category of Business support service would not be justified. - AT
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Central Excise

• Coils for Transformer Repair Division Not Subject to Excise Duty Due to Lack of Marketable Commodity Status.

  Case-Laws - AT : Excisability & dutiability of fabrication of Coils cleared for their Transformer Repair Division - the coil does not exist at any time as a marketable commodity. - AT
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• Nitco brand owner entitled to Small Scale Industry exemption despite shared brand name use by other companies.

  Case-Laws - AT : SSI exemption – Brand Name - Just because the said brand name Nitco which is owned by the appellant is being used by other companies, the appellant cannot be denied the benefit - AT
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VAT

• Reopening Proceedings Needs More Than New Evidence; Jurisdictional Error Must Be Revealed for Consideration.

  Case-Laws - HC : Discovery of new materials although may form a ground, it, by itself, would not be a ground for reopening of proceedings unless such discovery indicates a jurisdictional error. - HC
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Case Laws:

• Income Tax

• 2013 (5) TMI 372
  Expenses on account of sales promotion - whether be charged under FBT? - Held that:- When there is no direct or indirect benefit accrued to the employees of the assessee, the provisions of FBT cannot be invoked. See H.V. Transmissions Limited vs. ACIT, I [2013 (5) TMI 371 - ITAT MUMBAI] & DCIT vs. M/s. Tata Asset Management Ltd [2012 (6) TMI 137 - ITAT MUMBAI] wherein held that the charge to FBT is dependent on enjoyment of benefit collectively by the employees as clarified by CBDT’s circular No.8 dated 29.08.2005 which is totally missing in the present case of brand equity payment and hence cannot be subjected to FBT - In favour of assessee.

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• 2013 (5) TMI 371
  Hotel expenses on travel and motor car expenses and brand subscription fees - whether would be called as a ‘privilege, service facility or amenity’, within the meaning of 115 WB (1) - whether be charged under FBT? - Held that:- As per the settled law FBT is leviable with regard to the payments that result in some benefit to the employees of the assessee. If on the touchstone of this principle case under consideration is tested it becomes clear that addition made by the AO to the value of the FB cannot be endorsed. Though the AO and the FAA have held that expenses incurred by the assessee under the head hotel expenses and car expenses were incurred for employees, yet they have nowhere referred to any material on the basis of which they arrived at the said conclusion. The fact of benefit to employees has not been established, therefore, value of car expenses and hotel expenses cannot be added to the FB value declared by the assessee company. Brand promotion expenses - Held that:- They cannot be treated as FB to the employees as circular no.8 dtd.29.08.2005 CBDT has clarified that for levy of FBT employer-employee relationship is the basic condition. In the case under consideration payment had been paid to another group concern. Thus, there is no direct or indirect benefit has accrued to the employees of the appellant company. Therefore FBT cannot be levied on brand promotion expenses. See M/s. Toyota Kirloskar Motor P.Ltd. (2012 (6) TMI 484 - ITAT, Bangalore), Kotak Mahindra Old Mutual Life Insurance Ltd., (2011 (11) TMI 497 - ITAT MUMBAI) and M/s. Tata Asset Management Ltd. (2012 (6) TMI 137 - ITAT MUMBAI) - In favour of assessee.

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• 2013 (5) TMI 364
  Eligibility for claiming deduction u/s 80G(5) - Assessee appeal against declining the request for exemption u/s 80G of the Act – Held that:- The issue has been examined that at the stage of registration and for exemption u/s 80G of the Act, the stated object of the trust is required to be examined. Whether the funds are properly applied or not, can be examined by the AO at the time of framing the assessment. Thus, the Tribunal has erred in law in refusing exemption to the assessee u/s 80G(5) of the Act. Assessee's appeal is allowed. Criteria for getting registration u/s 12AA of the Act - Revenue appeal against the grant of registration u/s 12AA – Held that:- The university is a body corporate and established for the cause of education. It is, thus, a Institution eligible for registration within the meaning of Section 12AA of the Act. In the earlier writ petition, a categorically finding has been recorded that the university has been established solely for educational purpose and not for profit therefore, it is a charitable institution read with Section 15(2) of the Act. In view of the said fact, the assessee was, thus, rightly found eligible to seek registration under Section 12AA of the Act by the Tribunal.

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• 2013 (5) TMI 363
  Accrual of income - Addition in income including disallowance on account of retention money related to the contract - Held that:- In Commissioner of Income Tax vs. Chanchani Brothers (Contractors) Pvt. Ltd, [1986 (2) TMI 26 - PATNA High Court], Commissioner of Income Tax, Simplex Concrete Piles (India) Pvt. Ltd., [1988 (12) TMI 52 - CALCUTTA High Court], it has been held that the right to receive retention money accrues only after the obligations under the contract are fulfilled. Therefore, it will not amount to income of the assessee in the year in which amount is retained. - In view of the consistent view of the different High Courts with there is no substantial question of law involved.

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• 2013 (5) TMI 362
  Assessment proceedings – scope of judicial review against the order of Settlement Commission - Commission recorded that there was over-all non-cooperation on the part of the applicants at all stage and that no material has been furnished by the applicants on the basis of which a reasonable order of settlement can be passed. Held that:- The applications for settlement were filed in 1983, but the detention order came to be passed after five years. Assessee was required to co-operate from the date of filing of the application and also produce material on the basis of which settlement can be arrived at. Neither the petitioners have furnished sufficient material before the Commission nor co-operated with the Commissioner to furnish report, therefore, the reasoning given by the Commission cannot be said to be irregular or illegal. The scope of judicial review against the order of Settlement Commission has been delineated in M /s R .B. Shreeram Durga Prasad and Fatehchand Nursing Das v. Settlement Commission (IT & WT) [1989 (1) TMI 4 - SUPREME Court] - Thus, there is no illegality or irregularity in the orders passed by the Commission. - Decided against the assessee.

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• 2013 (5) TMI 361
  Reopening of assessment – Reasons as per revenue on verification of records (i) assessment advances are made from the borrowed funds and there is no instance to prove that the advances were made for the business purpose therefore same would be disallowable u/s 36(1)(iii) of the Act (ii) Disallowance of interest related to the funds utilized towards non-taxable income u/s 14A of the Act (iii)Disallowance of additional depreciation as the same was not explained by the assessee (iv) Assesse filed TDS acknowledgments, reconciliation of the expenditure and amount subjected to TDS, would give rise to a possible disallowance under Section 40(a)(ia) of the Act. Held that:- During the assessment proceedings, the assessee had brought to the pointed notice of the AO that the assessee had paid interest to IDBI. Along with such answer in the correspondence, copy of the ledger account of the interest paid was already enclosed. Disallowance of expenditure relatable to tax free income in terms of section 14A of the Act, it is undoubtedly true that rule 8D of the Income Tax Rules, 1962 was not in operation at that time. The determination, therefore, could not have been based on such formula. This is, however, not to suggest that there could be no disallowance at all under section 14A of the Act if it was found that expenditure was incurred for earning tax free income. With respect to the question of TDS, the AO himself has recorded that the tax was deducted and return was duly filed. Surely, for such a fishing inquiry reopening of assessment could not be permissible that too assessment beyond the period of four years from the end of the relevant assessment year when it is not even the case of the Department that the assessee had not disclosed truly and fully all material facts. As the AO based his reasons on verification of the material already on record during the original assessment. In the reasons recorded, or the notice issued for reopening it is not even alleged that there was failure on the part of the assessee to disclose truly and fully all material facts. On this ground, petition cannot be allowed.

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• 2013 (5) TMI 360
  Rectification appeal against the order of ITAT - Tribunal has in the impugned order done is to require the Commissioner to pass a fresh order. Tribunal was persuaded to do because in the order passed by the Commissioner u/s 119(2)(b) of the Act, he was influenced substantially by the fact that according to him, the return was belated by three years. The respondent pointed out to the Tribunal that such delay was of about one year and three months. The Commissioner had mistakenly taken into account the date of filing of the application u/s 119(2)(b) of the Act. Only to correct the Tribunal's order, respondent cannot be dragged. The man has retired in the year 2000 as a labourer. He is seeking refund of small sum of Rs.33,949/- which for him is very substantial. Only to correct an apparent error committed by the Tribunal, we would not drag him before High Court. Even if we had issued notice and called him before us, we would have been persuaded to replace the Tribunal's order by our order and same direction would have followed. Only to bring about some result in a correct manner, we would be wholly unjustified in asking a man of advanced age and of poor means before us. Response to a High Court notice comes at a considerable cost. In exercise of discretionary writ jurisdiction, we refuse to entertain this petition. This is the beauty of the writ jurisdiction and we would be failing in our duty, if we entertained the petition.

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• 2013 (5) TMI 359
  Addition in income made by AO on account of bogus purchases – Deletion of the same by CIT(A) and the same is upheld by Tribunal. - Held that:- In respect of purchases by the assessee from M/s. VISPL other than the allegation of fake and ingenuine purchases and a statement from the Director of VISPL, which remained uncorroborated, there is no evidence contrary to the claim of the purchases by the assessee herein. Therefore, it is clear that the question raised by the Revenue is a pure question of fact. The finding recorded by the Tribunal in that regard is final.

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• 2013 (5) TMI 358
  Reopening of assessment – Claimed deprecation – On verification of records, the Department found that the depreciation claimed is excessive and therefore issued a notice u/s 148 and then proceeded to reassess the same and finally passed an order. The same is questioned as there was an interim order of status quo and without considering the same, the respondent has proceeded to conclude the proceedings. Held that:- The above aspects are concerned with the material information and only on the apprehension of the petitioner, the court intended to hear the learned counsel on either side and therefore, passed an order of status quo. That could not be a factor to interfere with the order passed by the AO, when there is an effective appeal remedy available before the Commissioner (Appeals) within a period of thirty days. Therefore, without availing such remedy, the petitioner has approached the Court. In the absence of any infringement of fundamental rights, violation of principles of natural justice or anything contrary to law, there is no possibility of any scope of interference of this nature, when such a matter can be adjudicated before the appellate authority. Thus, this Writ Petition is disposed of with a direction to the petitioner move the appellate authority within a period of four (4) weeks from the date of receipt of a copy of this order and take all other course available and on such appeal being made.

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• 2013 (5) TMI 357
  Deduction u/s 80IA - AO reduced the profits shown by the assessee for the purpose of computing the deduction allowable u/s 80IA of the Income Tax Act on the basis of the reasons that the assessee company itself has shown the sale to UPPCL and that is to be considered as market rate for the sale of power as it cannot be sold to any other person except the UPPCL - The learned Tribunal allowed the claim for deduction under Section 80IA stating that, " AO has taken figures from units of powers sold to UPPCL at 0.89 units @ Rs.24,43,159/- as against the price of assessee i.e. inter-unit transfer @ Rs.43,02,187/- per unit. We are of the view that the figures picked up by the AO from the orders of UPPCL does not represent the open market value of electricity" Held that:- It would appear that the views adopted by the learned Tribunal, prima facie, are correct. - After hearing both the parties, the appeal does not involve any substantial question of law therefore, not admitted and thus rejected.

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• 2013 (5) TMI 356
  Unexplained credits – set off of the addition - Withdrawal of set off of peak of cash credits against unaccounted advances to farmers by AO on direction given by CIT(A). - Held that:- Similar dispute regarding set off of peak of cash credits against unaccounted advances to farmers also arose in case of the assessee's wife [2013 (5) TMI 355 - ITAT HYDERABAD] for the impugned assessment year. In assessee's wife case also, the AO by virtue of an order passed u/s 154 of the Act withdrew the set off of peak of cash credits allowed in the consequential order passed by him in pursuance to the order of the CIT (A). In this case also, the facts are materially similar to the facts involved in earlier case of Smt. C. Prabhavathi. In fact, the CIT (A) has followed the order passed by the first appellate authority in case of assessee's wife. - Decided against the revenue.

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• 2013 (5) TMI 355
  Unexplained investment/ credit - set off of addition - rectification of order u/s 154 - held that:- CIT(A) in the first round of appeal, had clearly given a direction to adjust against the addition of Rs.30,45,000/-, peak cash credit which was also available outside the books of account and assessed to tax once it was recorded in the books of account. The directions of the CIT(A) are clear. He has directed that the peak credit taxed in the earlier years should be reduced from the addition of unexplained advances of Rs. 30,45,000/-. There is no ambiguity in it. While giving effect to the order of the CIT(A), the AO has to merely follow the directions. It is not for the AO to sit on judgment over the correctness of the directions either in adding the advances or in directing the deduction of the peak credit added in the earlier years. Much less in an order of rectification of the order giving effect to the order of the CIT(A). We agree with the conclusion of the CIT(A) and dismiss the Revenue’s appeal. - Decided against the revenue.

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• 2013 (5) TMI 354
  Stay petition - In the previous order of this Court, the Petitioner was directed to effect payment of the installments of Rs.2.5 crores each for the months of February and March 2013 by 25 March 2013. Petitioner states that payment in terms of the order of this Court has been effected and that in consequence, the Petitioner had made a total payment of Rs.12.45 crores in installments. Petitioner was called upon by an order dated 21 December 2012 to make payment of a total amount of Rs.25 crores in monthly installments of Rs.2.5 crores between December 2012 and September 2013. There was a default on the part of the Petitioner in complying with the directions of the DCIT. Thus, no payment has been made for the month of April 2013. The appeal has been heard in the meantime by the C.I.T. (A) and the Court has been informed that the order has been reserved. Therefore, it would be necessary to safeguard the interest of the Revenue. Held that:- Thus, the Court orders to made the necessary deposits towards for all relevant period. The C.I.T.(A) shall dispose of the appeal by 15 June 2013 in the event that an order adverse to the Petitioner is passed by the C.I.T.(A), the recovery of the balance of the demand shall remain stayed for a period of two weeks in order to enable the Petitioner to seek recourse to the remedy in appeal.

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• 2013 (5) TMI 353
  Additional depreciation on windmill - As per revenue the provisions of Section 32(1)(iia) of the Act refers to the expression "engaged in the business of manufacture and production of any article or thing" and mentioned that the assessee who is only engaged in the construction business is in the past, undisputedly not engaged in the business of manufacturing and production of electricity i.e. any article or a thing. Held that:- The specific interpretation given by the cited decisions of Honble High Court of Madras in CIT v. VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] or the Chennai Bench of the Tribunal in Shiva Cargo Movers Ltd. [2012 (7) TMI 429 - ITAT CHENNAI] to the expression "engaged in the business of manufacture or production of any article or things" used in the said clause (iia) to section 32(1) of the Act remain unchanged. The provisions of section 32(1)(iia) of the Act have been interpreted by the Chennai Bench of the Tribunal to hold that the assessee who is already engaged in the business of production or manufacture of an article or a thing or good in the past alone is entitled to the claim of additional depreciation. There is no other contrary decision in existence on the issue. Further, the assessee is not engaged in the business of manufacture or production of an article or thing prior to the manufacture of the electricity using the impugned 'windmill'. Thus, assessee is not entitled to the claim of additional depreciation according for the above said decisions. - Decided against the assessee.

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• Customs

• 2013 (5) TMI 351
  Rejection of declared value - loading of 10% on the declared transaction value - Held that:- On perusal of the records, we find that in Order-in-Original a clear cut finding was given that there is no case of loading the transaction value on account of factors such as Royalty, Technical Know-how and Lumpsum payment to the related supplier. No evidence has been brought on record by the adjudicating authority that there is some flow of funds other than the transaction value. The transaction value has been enhanced under Rule 10(1)(c) of the Custom Valuation Rules, 2007 which clearly deals with lumpsum payment of royalty. There is no justification for addition of 10% of the value of the declared value. Thus, order is set aside.

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• 2013 (5) TMI 350
  Request of crossexamination of the persons whose statements have been referred to in the show-cause notice - non-supply of the enquiry report conducted after the conclusion of hearing by the Srilankan authorities - allegation against the appellants that they have imported Ball Bearings of Chinese origin but showed by as from Srilanka in order to evade anti-dumping duty - Held that:- There can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd. (2000 (7) TMI 85 - SUPREME COURT OF INDIA) and Laxman Exports Limited (2002 (4) TMI 66 - SUPREME COURT OF INDIA). Apart from this, the decision of this court in J & K Cigarettes Ltd. (2009 (8) TMI 64 - DELHI HIGH COURT) wherein held that before arriving at the opinion, the authority would give opportunity to the affected party to make submissions - affected party can challenge the invocation of provisions of Sec. 9-D of the Act in a particular case by filing statutory appeal, which provides for judicial review clinches the issue in favour of the appellant. Thus set aside the impugned order and remit the matters to the Tribunal for a fresh consideration.

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• 2013 (5) TMI 349
  Valuation - provisional assessment or final assessment - Case of the petitioner is that it imports Zink ash and Zink skimming as per value declared in the bill of entry which is to be cleared as per provisional or final assessment under Sections 17(5) or 18 of the Customs Act, 1962. In an earlier case [2010 (12) TMI 1048 - PUNJAB & HARYANA HIGH COURT], this Court disapproved the course adopted and directed that the norms laid down by the Commissioner of Customs, Nhava Sheva could not be mechanically applied, irrespective of genuineness of transaction value. The said order has become final but still in flagrant violation of the order of this Court, the impugned assessment has been made. Thus, the plea taken in the reply is clearly based on non-application of mind and cannot be accepted. An officer exercising quasi judicial jurisdiction is not expected to ignore or show incompetence in understanding clear orders of this Court.

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• Corporate Laws

• 2013 (5) TMI 348
  Appeal against CLB for assailing compounding of offences – u/s 211(7) of the Companies Act, 1956 - whether the CLB can compound offence punishable with fine or imprisonment or both without permission of the court? Facts of the case Company had taken a land from New Delhi Municipal Corporation on licence and the Company only pays the yearly licence fee thereof. Thus, according to the complainant, without any right land has been shown as land in the Schedule of fixed assets, which is not a true and fair view and punishable under Section 211(7) of the Companies Act, hereinafter referred to as “the Act”. Before the court in seisin of the case could proceed with the complaint, the Company and its Managing Director jointly filed an application before the CLB for compounding the offence. CLB, by its order dated 9th of August, 2000 acceded to the prayer. Which gives rise to present appeal. Held that:- The power under sub-section (1) and sub-section (7) of Section 621A are parallel powers to be exercised by the CLB or the authorities mentioned therein and prior permission of Court is not necessary for compounding the offence, when power of compounding is exercised by the CLB. Thus, the impugned order cannot be interfered.

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• 2013 (5) TMI 347
  Winding up – Prayers made in the present application read as under: (a) Pass necessary orders and directions to ensure that the Scheme is workable u/s 392(1) and 394; Alternatively (b) Declare the Scheme dated 29.03.2011 as sanctioned by Hon'ble Court in CP/20/2011 as unworkable and cancelled and consequently order the winding up of the Applicant Company. Held that:- It is clear from the law explained by the Supreme Court IN Reliance Natural Resources Ltd. v. Reliance Industries Ltd. [2007 (10) TMI 402 - HIGH COURT OF BOMBAY] case that while the Company Court "is not powerless and can never become functus officio", it cannot rewrite a scheme in any manner, even at the post sanction stage. The Court has to ensure that the basic nature of the arrangement remains and whatever modification is made "should be necessary for the working arrangement." The scope of the powers of the Company Court u/s 392 of the Act, as explained by the majority opinion of the Supreme Court in Reliance Natural Resources Ltd. (supra), does not permit rewriting of the scheme or introducing into it clauses that plainly do not exist. The pleas of RLB in the present application go far beyond mere modification of the Scheme. The Court is satisfied that accepting the prayer of RLB to restore it the distribution network would be nothing short of ordering specific performance of an agreement that has already worked itself out and would be reading into the Scheme, clauses and obligations which did not exist when the Scheme was accorded sanction. The alternative prayer that RLB should be directed to be wound up, since its entire substratum has disappeared, will require a detailed examination of several relevant factors, all of which are not before the Court. Nothing precludes RLB from seeking winding up in accordance with law in appropriate proceedings by placing the full facts before the Court which can then be responded to by the OL, the RD and other interested parties including creditors. Given the pleadings in the present application, it is not possible to undertake that exercise at this stage. Therefore, while reserving RLB's liberty to seek winding up in accordance with law, the present application is dismissed with costs of Rs. 20,000 to be paid by RLB to Turner within four weeks from today.

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• FEMA

• 2013 (5) TMI 352
  Writ petition against the reviewed policy of FDI in Single-Brand Product Retail Trading, Multi-Brand Retail Trading, Air Transport Services, Broadcasting Carriage Services and Power Exchanges. As per petitioner that the impugned FDI Policy is not founded on any material obtained from the government agency and no extensive consultation was made before formulation of the impugned Policy. Held that:- DIPP is empowered to make policy pronouncements on FDI. There is no merit in the submission of the petitioner that Central Government has no authority or competence to formulate FDI Policy. The competence of the Central Government to formulate a policy relating to investment by a non-resident entity/person resident outside India, in the capital of an Indian company is beyond doubt. The Reserve Bank of India (RBI) is empowered to prohibit, restrict or regulate various types of foreign exchange transactions, including FDI, in India by means of necessary regulations. RBI Regulates foreign investment in India in accordance with Government of India's policy. Writ Petition is dismissed

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• Service Tax

• 2013 (5) TMI 368
  Waiver of penalty - Due to financial hardship - Held that:- Keeping in view the financial difficulties and the hardship expressed, the penalty to be reduced to 25% of the imposed amount. Appellant is directed to deposit the same within one month of receipt of this order and produce the challan before learned Adjudicating Authority within a fortnight thereof. If such compliance is made, the appellant shall get the benefit of concession in penalty otherwise the first appeal order shall stand confirm.

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• 2013 (5) TMI 367
  Waiver of penalty u/s 77 & 78 - dispute relating to import of services - Marketing and Management Consultancy from foreign consultancy - Held that:- Appellant herein had discharged the service tax liability along with interest on receipt of the show-cause notice and before adjudication. It is also undisputed that the serviced tax liability has arisen on the ground of appellant being the recipient of services of Management and Business Consultancy Services from an overseas Consultancy Service and these services are received by the appellant for the advises given on marketing. Understandably, service tax paid on such services rendered would be available to the appellant themselves as cenvat credit which can be utilized for discharge of any excise duty on the final goods manufactured and cleared by the appellant. On the factual matrix the issue is to be decided in favour of the appellant, as regards penalty imposed as that during the period service tax liability under reverse charge mechanism was being disputed at various forums and attained finality, after the judgment of the Honble High Court of Bombay in the case of Indian National Ship Owners Association [2008 (12) TMI 41 - HIGH COURT OF BOMBAY]. Also Dinesh chandra R. Agarwal Infracon Pvt. Ltd. (2009 (10) TMI 395 - CESTAT, AHMEDABAD) and Sagar Enterprises (2009 (10) TMI 242 - CESTAT, AHMEDABAD) directly in favour of the assessee.

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• 2013 (5) TMI 366
  Waiver of Penalty - Held that:- whereas the entire amount of duty, interest and 25% penalty was required to be paid within one month of the date of receipt of order in original. There is no power to relax this condition and accordingly appeal filed by the appellant is required to be rejected. Thus, the order in appeal of the first appellate authority is upheld and appeal rejected.

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• 2013 (5) TMI 365
  Service tax - Sim card/recharge coupon - Business auxiliary service - The tribunal in its latest decision in the case of M/s. G R Movers vs CCE, Lucknow [2013 (6) TMI 339 - CESTAT NEW DELHI] has considered the entire case law on the subject and has held that where the BSNL had already paid the Service Tax on full face value on the Sim card / recharge coupon, the confirmation of demand against the distributor under the category of Business support service would not be justified. Thus, by following the said decision the appeal is rejected.

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• Central Excise

• 2013 (5) TMI 346
  Determination of excisability of the bio-compost arise from the manufacture of sugar - Held that:- Following the Bombay High Court in the case of Rallis India Ltd. v. UOI reported in [2008 (12) TMI 46 - HIGH COURT BOMBAY] has held there is no justification for confirmation of demand in respect of bio-compost in terms of Rule 6(3) of Cenvat Credit Rules, 2004. Inasmuch as the issue involved is fully covered by the above declaration of law. Thus, following the same, set aside the impugned order and allow the appeal with consequential relief.

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• 2013 (5) TMI 345
  Excisability & dutiability of fabrication of Coils – Goods cleared by the appellants to their Transformer Repair Division. - Held that:- Three Member bench in appellants own case vide order [1994 (12) TMI 181 - CEGAT, NEW DELHI] has decided the issue in appellant’s favour as, it is clear that in this transformation from electrical wire into a part of transformer, there is no moment in time when the coil itself exists independently as a coil. Thus, the coil does not exist at any time as a marketable commodity. - Following this decision of the Tribunal we set aside the impugned orders and allow the appeals filed by the appellants.

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• 2013 (5) TMI 344
  SSI exemption – Brand Name - As per revenue brand name NITCO is also used by other group companies which are controlled by the same family, the appellant company is not eligible for the benefit of SSI exemption as the combined turnover of all the group companies is more than Rs. 3 Crore. – Demand of duty/interest/penalty accordingly. Held that:- Certificate issued by the Trade Marks Authority makes it clear that the brand name belonged to the appellant. In such a case, the denial of benefit of exemption Notification on the ground that other companies are also using the said name is not in accordance with the notification. Just because the said brand name Nitco which is owned by the appellant is being used by other companies, the appellant cannot be denied the benefit and also all other group companies who are using the said brand name Nitco are not availing the benefit of SSI exemption and are clearing their final products on payment of duty. Thus, impugned order is set aside. Appeal is allowed.

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• 2013 (5) TMI 343
  Inspection - Non-maintenance of record - shortage of goods – Demand of duty - Discharge of duty by appellant under compounded levy scheme – rejected - Held that :- The question required to be decided in the present appeal is as to whether the non-maintenance of record by the appellant during the intervening period of filing the application and rejection of the same by the Commissioner, which resulted in shortages of grey fabrics and final product would call for confirmation of duty of Rs.300,020/-. As per the appellant during the said period, they discharged their duty liability under compounded levy scheme, which does not take into consideration. There is nothing on record to show that the goods found short were not included in the goods cleared under compounded levy scheme, on which the duty already stand discharged. It is not the Revenue’s case that such shortages were not part and parcel of the clearances effected under compounded levy scheme on which duty already stand paid by the appellants. Thus, no justification in separate confirmation of demand of Rs.3,00,020/-. Accordingly, we set aside the impugned order.

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• 2013 (5) TMI 342
  Repacking of goods - Maize Starch - deemed manufacture - Held that - In the case of Riddhi Siddi Gluco Biols Ltd Vs CCE [2011 (4) TMI 970 - CESTAT, BANGALORE] has held that Maize Starch is correctly classifiable under Chapter 11. Thus, the activity of repacking would not amount to manufacture. Thus, grant of unconditional stay and remand the matter to Additional Commissioner to decide the present matter after the dispute of classification at the end of M/s Anil Products attains finality.

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• CST, VAT & Sales Tax

• 2013 (5) TMI 370
  Inter state sale or Intra state sale - stock transfer / consignment sales - The assesse main contention is that its only a consignment sale which is eligible for exemption. The grievance of the department is that the goods were supplied directly from the purchaser to the other State and therefore, it can be only treated as of other State sales as the goods never reached the agents place and the goods were sent through the same lorry directly to the buyer. Therefore, the exemption which was originally granted by the assessing authority way back in the year 1994, was rightly sought to be withdrawn subsequent to the inspection according to the department. Held that – It is settled by Supreme Court that once form F has been accepted and an assessment has been made on the basis of form F declaration filed by the assessee, revision of assessment cannot be made unless or otherwise the assessing authority has recorded a finding that assessment has been completed by fraud, misrepresentation or collusion. Useful reference can be had to the judgment of the Supreme Court in the case of Ashok Leyland Ltd., v. State of Tamil Nadu reported in [2004 (1) TMI 365 - SUPREME COURT OF INDIA]. Discovery of new materials although may form a ground, it, by itself, would not be a ground for reopening of proceedings unless such discovery indicates a jurisdictional error. - do not find any reason to interfere with the reasoned order of the Tribunal which has rightly held that the exemption originally granted was correct. Hence, the writ petition is dismissed. - Decided against the revenue.

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• 2013 (5) TMI 369
  The notice has been issued to petitioner u/s 47(2) of the KVAT Act doubting evasion of tax and demanding security deposit. According to the Department the nature of contract between petitioner and its consignor is fall under the category of “work contracts” and therefore department detained the goods of the petitioner. - Petitioner challenged the department by filing this writ petition. Held that:- Court finds that the Goods needs not be detained any further and the same shall be released to the petitioner forthwith, on satisfying the security deposit to an extent of 50% as demanded either by cash or by Bank Guarantee or by way of immovable properties to the satisfaction of the authorities concerned and on execution of a 'simple bond' without sureties for the balance amount. Writ petition is disposed of.

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