Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 18, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS u/s 194C - AO to give a clear finding from the verification of the bills as to whether any profit element is loaded by the C&F Agent while seeking reimbursement of expenses from the assessee. - AT
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It is true that assessee has been unable to give any explanation that why earmarked slow moving items do not have any scrap value but this cannot be a basis for which penalty u/s 271(1)(c) can be imposed - AT
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TDS u/s 192 - per-diem allowance paid to the employees - When the payment is made to meet the expenses incurred and when not taxable u/s 10(14) merely because the actual expenses were not verified, the character or nature of the payment would not be changed so as to include u/s 17(2) - HC
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Levy of penalty u/s 271(1)(c) - The Tribunal had observed that by not adding back the amount, no one had been benefitted as the assessee is an undertaking of Government of Punjab - No penalty - HC
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AAR Application - case was pending or not - mere issuance of a notice u/s 143(2)(ii) of the Act which merely stated that the AO would like some further information on certain points in connection with the return that was filed would not result in attracting the bar under clause (i) of the proviso to Section 245R(2) - HC
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Income Tax Act, 1961 as amended by Finance Act, 2016
Customs
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Right to file an appeal - Duty once paid on enhanced value - As per Section 17 where such enhancement of value is accepted by the importer, the importer is not precluded from filing appeal against the assessment order - AT
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Imposition of penalty - If the proceedings of demand of duty and confiscation were made against main party and the same being dropped, subsequent parties are also not liable for penalty - AT
Corporate Law
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Companies, while undertaking Corporate Social Responsibility activities under provision of Companies Act, 2013, shall not contravene any other prevailing laws of the land including Cigarettes and Other Tobacco Products Act (COTPA), 2003
Service Tax
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Refund claim - Export of Sevices - Cenvat credit would be available of input services even if out-put services are non-taxable. - HC
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Cenvat Credit - Refund claim - 100% EOU unit - Input services - Tribunal was to find out as to whether input services has nexus with the output services, which was being rendered by the respondent or not - HC
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Refund claim - Unutilized accumulated Cenvat credit - Rent-a-cab Service was excluded from the definition of input services - therefore even though the same was used for the conveyance of staff but due to specific exclusion, the same does not remain as input service and therefore refund is not admissible - AT
Central Excise
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Delay in filing an appeal before the Commissioner (Appeals) - Section 35 of the Act - Condonation of delay of 118 days - Writ jurisdiction under Article 226 of the Constitution - Matter restored before the adjudicating authority subject to conditions - HC
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Entitlement to avail Cenvat credit - Invoices issued without actually receiving the goods - No legally justified reasons have been recorded by the Tribunal for dismissing the appeal of the revenue. - Tribunal to re-adjudicate the issue - HC
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Condition to make a pre-deposit of a fixed percentage of the tax demanded or penalty levied or both - the writ petition seeking a declaration that the amended Section 35-F of the Central Excise Act 1944, is applicable only to show cause proceedings initiated on or after 6.8.2014 is liable to be dismissed. - HC
VAT
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VAT on petroleum products - effect of Roll pack in the price - DVAT - When there was no increased component and therefore no liability to pay VAT in respect of such increased component, benefit under the proviso ceased to be applicable. - SC
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Reopening of the CST assessment - rate of CST @2% or 4% - The finding of the High Court as regards oil-cake and de-oiled cake being different products as per the notification is correct. However, the assessee shall reap the benefit of initial assessment as the same could not have been reopened - SC
Case Laws:
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Income Tax
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2016 (5) TMI 699
Computation of capital gain - whether there is no valid transfer? - Held that:- HC order confirmed [2015 (7) TMI 482 - KARNATAKA HIGH COURT] no justification in concluding that there is no transfer of FAR relating to 1 acre 6 guntas during the relevant year. The Appellate Tribunal is also not justified in holding that no income has accrued during the year as no construction has taken place relating to such FAR. The reasons assigned by the Income Tax Appellate Tribunal while setting aside the orders passed by the Assessing Officer and the Appellate Commissioner cannot be accepted - Decided in favour of the Revenue.
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2016 (5) TMI 698
AAR application rejected - whether the AAR was justified in rejecting the application on the ground that the question referred to it was pending consideration before the Income Tax authorities, by virtue of notice having been issued on 13th August 2013 under Section 143 (2) of the Act with reference to the return filed for AY 2012-13 thereby attracting the bar under clause (i) of the proviso to Section 245R (2) of the Act? - Held that:- The said question stands answered in favour of the Petitioner and against the Department in the recent judgment of this Court in Hyosung Corporation v. The Authority for Advance Rulings [2016 (2) TMI 575 - DELHI HIGH COURT ] as held that mere issuance of a notice under Section 143(2)(ii) of the Act which merely stated that the AO would like some further information on certain points in connection with the return that was filed would not result in attracting the bar under clause (i) of the proviso to Section 245R (2) of the Act. It is only if on the date of filing of the application before the AAR the question raised therein was already the subject matter of proceedings before the income tax authorities that the bar in terms of the proviso to Section 245R(2) of the Act would apply. If such application is not already pending on the date of the application, and is the subject matter of a notice issued thereafter by the income tax authority, it cannot be said that such question is "already pending before such income tax authority". What is relevant is not the date of consideration of the application by the AAR but the date of filing of such application before the AAR. For the above reasons, the impugned order dated 3rd August 2015 of the AAR rejecting the Petitioner’s four applications is unsustainable in law. The mere issuance of a notice under Section 143(2) of the Act to the Petitioner on 13th August 2013 in relation to the return filed for AY 2012-13 by merely stating that “there are certain points in connection with the return income submitted by you on 29th November 2012 for the assessment year 2012-13 on which I would like some other information” does not tantamount to the issues raised in the application filed by the Petitioner before the AAR on 20th September 2013 being already pending before the AAR.
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2016 (5) TMI 697
Taxability of administrative fee paid - Indo-US DTAA - applicability of Section 40 (a) (i)- Held that:- A plain reading of Section 90 (2) of the Act, makes it clear that the provisions of the DTAA would prevail over the Act unless the Act is more beneficial to the Assessee. Therefore, except to the extent a provision of the Act is more beneficial to the Assessee, the DTAA will override the Act. This is irrespective of whether the Act contains a provision that corresponds to the treaty provision. In light of the above discussion, question (b) is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue by holding that Section 40 (a) (i) of the Act is discriminatory and therefore, not applicable in terms of Article 26 (3) of the Indo-US DTAA. ITAT was correct in allowing a deduction being the administrative fee paid by the Assessee to HIAI. - Decided in favour of the Assessee Allowance of prior expenses - Held that:- The Court concurs with the view expressed by the ITAT in the present case, that the expenses for the period 1st January 2000 to 31st March 2000 accrued as a liability to the Assessee only during the previous year and that the said expenditure was rightly allowed as deduction during the AY in question - Decided in favour of the Assessee Payment of administrative fee - Held that:- The Court concurs with the view expressed by the ITAT that in respect of the fee paid for the period relating to the period 1st January 2001 to 31st March 2001, the liability should be held as accrued and arisen during the previous year relevant to the AY 2001-02 and therefore, is rightly allowed by the ITAT. - Decided in favour of the Assessee
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2016 (5) TMI 696
Addition u/s 69A - Held that:- Assessee has no valid explanation regarding the source of his income for making gifts to the tune of ₹ 1.8 crores during the AY in question. The person he named as the source was an accommodation entry provider. The addition was made on substantive basis in the hands of Mr. Amar Khosla and on protective basis in the Appellant's hands. The addition in Mr Khosla's hands could not be sustained since the re-opening of his assessment was set aside on technical grounds. The Court is unable to find any legal infirmity in the impugned order of the ITAT sustaining the additions in the hands of the Appellant under Section 69A of the Act. No question of law arises for determination.
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2016 (5) TMI 695
Levy of penalty u/s 271(1)(c) - Held that:- The assessee had submitted revised computation during the course of assessment proceedings and there was no intention to conceal the income. Further, the Tribunal held that the assessee had duly paid tax on the amounts of capital gains tax and property tax suo motu and due to inadvertent mistake on the part of the counsel of the assessee, the amount of capital gains tax and property tax paid were not added back resulting into refund. The Tribunal had observed that by not adding back the amount, no one had been benefitted as the assessee is an undertaking of Government of Punjab. No illegality or perversity could be demonstrated by learned counsel for the revenue that the findings of the CIT(A) and the Tribunal were erroneous or perverse in any manner. - Decided against revenue
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2016 (5) TMI 694
Disallowance under section 14A - ITAT allowed the claim - Held that:- Once Rule 8(D) of the I .T. Rules, is held to be having prospective effect, naturally it could not be applied to the assessment year in question and therefore, the view taken by the Tribunal cannot be said to be erroneous nor it can be said that any substantial question of law would arise for consideration. No substantial question of law. Disallowance of interest under section 36(1)(iii) - ITAT allowed the claim - Held that:- Once the interest is of a loan taken for the existing manufacturing unit, may be as term loan or may be working capital, the interest cannot be disallowed. Further on the question of diversion of fund, it is by now well settled that the business wisdom of the assessee cannot be substituted by the assessing officer. Further the loan was actually taken for establishing a new unit and the utilization thereof is proved. Under these circumstances, we find that it cannot be said that the Tribunal has committed an error in deleting the disallowance made by the Assessing Officer or CIT (Appeals) of the amount of interest. No substantial question of law.
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2016 (5) TMI 693
TDS u/s 192 - per-diem allowance paid to the employees as a part of the salary - ITAT deleted tds liability - Held that:- f any allowance or benefit not being in the nature of perquisite is granted to meet the expenses wholly, necessarily or exclusively incurred in performance of duties, to the extent to which such expenses are actually incurred would fall in the sa id category. It is the case of the assessee that the payment was not made as an allowance on par with the perquisites, but the case of the assessee was that the payment was made to meet the expenses incurred. When the payment is made to meet the expenses incurred and when not taxable under Section 10(14) of the Act merely because the actual expenses were not verified, the character or nature of the payment would not be changed so as to include under Section 17(2) of the Act. On the aspects of verification, the Tribunal has relied upon not only its own decision but has further relied upon the circular issued by the Ministry. No substantial question of law, would arise for consideration, as canvassed - Decided against revenue.
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2016 (5) TMI 692
Assessment of income - Held that:- Additions made or the deletions granted by the appellate authority. These additions and deletions are based on scrutiny of the records or the account books and the orders passed by the Tribunal indicate that they are based on factual assertions of various material that were available on record and the additions or deletions have been ordered after evaluating the factual aspects of the matter and the orders passed are based on appreciation of the documentary evidence and on scrutiny of the facts based on record, the orders concurrent in nature passed by both the Commissioner (Appeal) and the Tribunal are nothing but evaluation of the account books, documents and various other evidence available on record. In the assessment so made, on scrutiny of the records, we find that no substantial questions of law are involved warranting consideration in these appeals under section 260- A, as we find each and every addition either upheld by the Tribunal or interfered with by the Tribunal and by the Commissioner (Appeal) to be nothing but analysis of the account books, documents and various other material available on record and the decision is taken after due analysis of the same. - the appeals stand dismissed.
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2016 (5) TMI 691
Benefit of deduction under Section 80P(2)(a)(i) - Held that:- Section 80P(1) of the Act restricts the benefits of deduction of income of cooperative society to the extent it is earned by providing credit facilities to its members. Therefore, to the extent the income earned is attributable to dealings with the nonmembers are concerned the benefit of Section 80P of the Act would not be available. Considering the concurrent findings of facts in the present appeal, and no perversity has been shown in such findings, we find that on going through the byelaws and the objects of the said Society, there is nothing to suggest that the primary business of the appellant was banking. We find that there is no case made out for any interference in the impugned Orders. We find that no substantial question of law arises in the present appeal
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2016 (5) TMI 690
Share transactions - Capital gain or income from business - Held that:- In the facts and circumstances of the instant case, on the basis of principle of consistency alone, the action of the revenue authorities was liable to be quashed. It was ordered accordingly and the Assessing Officer was directed to accept the claims of assessee in regard to short-term capital gain and long-term capital gain. The ratio laid down in Gopal Purohit vs. JCIT (2009 (2) TMI 233 - ITAT BOMBAY-G ) supports the case of assessee before us. We find that the assessee is only an investor in shares. Merely because the volume of transactions had gone up, the character of the assessee as an investor does not change. Thus, addition made by the Assessing Officer treating the Short Term Capital Gain as business income is not justified and assessee's claim to treat the profit on sale of shares as Short Term Capital Gain, is required to be accepted. Assessing Officer is directed accordingly. - Decided in favour of assessee
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2016 (5) TMI 689
Penalty u/s 271(1)(c) - disallowance of stock written off - Held that:- The impugned disallowance of stock written off finds its origination from the books of account, as the assessee which is maintaining regular books of account with complete quantitative details, figured out certain slow moving items depicted at pages 31 to 34 of the paper book having a list of 79 items which are mainly related to computer hard-wares and the same were categorized under list of items not moving for a long time due to change in technology and other wear and tear and the total of these items at ₹ 13,59,000/- were specifically debited to profit and loss account. Certainly this action of assessee cannot be categorized as furnishing of inaccurate particulars of income or concealment of income because the same have been carried out in the normal course of business and when this entry was made by assessee it was in the firm belief that all these items which are slow moving and having no present market value, needs to be cleared off from the inventory, so that inventory is appearing on the last date of the financial year is backed up by correct value. It is true that assessee has been unable to give any explanation that why earmarked slow moving items do not have any scrap value but this cannot be a basis for which penalty u/s 271(1)(c) of the Act can be imposed. We are, therefore, of the view that assessee should not be visited with penalty u/s 271(1)(c) of the Act for the addition confirmed upto the stage of Tribunal for disallowance of stock written off - Decided in favour of assessee Disallowance of selling and distribution expenses towards Mizoram-e-governance project - Held that:- , in the given appeal relating to imposition of penalty u/s 271(1)(c) of the Act, we observe that no such effort has been made on the part of Revenue to get the information from Mr. Larsingh M (proprietor of NEITCS) and also no other efforts were made to take information about the bank account in which the impugned payment was credited. Assessee has already lost in appeal on quantum addition but as far as penalty u/s 271(1)(c) of the Act, we are of the view that details of types of services provided to assessee were clearly mentioned in the bills issued by Larsingh M, payments were made by account payee demand draft and above all there was a corresponding income by way of collection on gross revenue of approximate ₹ 2 crores from Mizoram-egovernance project and looking to the facts that no efforts were made by the Revenue to extract necessary information, certainly in such circumstances, assessee should not be visited with penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee
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2016 (5) TMI 688
Disallowance towards bad debts and advances - Held that:- The claim of bad debts in respect of debts due from Bajaj Glass Centre amounting to ₹ 1,13,343/-, we find that assessee had actually sold materials worth ₹ 4,13,343/- vide Bill No. PE/0607/0032 dated 13.07.2006 and had received only ₹ 3 lacs against the same and the party had withheld the balance due to inferior quality of material supplied. Under these circumstances, the assessee chose to write off the balance sum of ₹ 1,13,343/- in his books as irrecoverable and claimed the same as bad debt in the return of income. It is not in dispute that the assessee had duly offered the sale made to said party as income in the return of income of earlier year. We find that assessee is duly entitled for the same as deduction u/s. 36(1)(vii) of the Act read with section 36(2) of the Act. - Decided in favour of assessee Disallowance of C&F charges invoking the provisions of section 40(a)(ia) read with section 194C - Held that:- We find that from the perusal of the bills submitted by the assessee in his paper book and from the perusal of the orders of the lower authorities, there is no clear finding given with regard to the fact as to whether profit element has been loaded by C&F Agent in his bills seeking reimbursement of expenses. We find that this finding is very crucial to decide the impugned issue before us. We hold that no tax needs to be deducted u/s. 194C of the Act for the reimbursement portion. In the facts and circumstances of the case, we deem it fit and appropriate in the interest of justice and fair play to set aside this issue to the file of the Ld. AO to give a clear finding from the verification of the bills as to whether any profit element is loaded by the C&F Agent while seeking reimbursement of expenses from the assessee. The assessee is also directed to adduce adequate cooperation and produce evidences in support of his contentions. - Decided in favour of assessee for statistical purposes. Disallowance of sales promotion expenses - Held that:- We find that incurrence of these expenses by the assessee are in the normal course of business and adequate evidences were also submitted in this regard. In any case, there cannot be any addition made by the lower authorities on estimated basis without bringing any material on record for justifying the said addition. - Decided in favour of assessee.
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2016 (5) TMI 687
Benefit of deduction u/s 10B denied - Held that:- From plain provisions of sec.10B, we hold that the period of 10 consecutive years should be reckoned from the assessment year 1997-98 i.e. from the year of commencement of production or manufacture of an article or thing upto the assessment year 2006-07. In the present appeal, we are concerned with the assessment year 2008-09, therefore, the respondent-assessee-company is not entitled for deduction u/s 10B of the Act as the period of 10 consecutive years expired with assessment year 2006-07. - Decided in favour of revenue
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2016 (5) TMI 686
Taxability of interest on compensation awarded by the MACT - revenue or capital receipt - Held that:- Relying upon the decision of the Hon’ble Punjab & Haryana High Court in Drawing and Disbursing Officer Versus Income Tax Officer [2011 (3) TMI 1671 - PUNJAB AND HARYANA HIGH COURT ], we hold that interest component in compensation awarded by MACT is part of compensation and has to be treated as capital receipt and not income till the assessee received the amount in pursuance of award. The interest earned by the assessee on the amount of compensation after its receipt will be taxed in accordance with law. In view of the aforesaid facts, we restore the issue back to the file of AO to rework the income in accordance with the aforesaid decision of Hon’ble P&H High Court and decide the issue.
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2016 (5) TMI 685
Penalty u/s 271(1)(c) - commission income receipt - Held that:- No penalty is leviable in the instant case keeping in view peculiar facts and circumstances of the case as set out above, as there is no deliberate attempt or positive act on the part of the assessee firm to conceal income or furnish in-accurate particulars of income. The bona-fide claim was made by the assessee firm based on the terms and condition of the agency agreement and the method of accounting was consistently followed based on the bona-fide belief that the commission income will become due to the assessee firm and right to receive will be vested in favour of the assessee firm only when the foreign principals have got their payments from Indian Buyers for products supplied by the foreign principals to the Indian Buyers and any deductions by the Indian Buyers in the payments due to the foreign principals will lead simultaneously deduction in the commission income of the assessee firm as per terms of agency agreement, But the said explanation did not found favour with the Revenue as in their view , the commission has already accrued to the assessee in terms of provisions of the Act and the same is exigible to tax . Thus, the assessee came out with an bona-fide explanation for substantiating the claim made by it in the return of income filed with the Revenue which was not accepted by the Revenue but it did not made the assessee firm liable for penalty u/s 271(1)(c) of the Act. There is a difference of opinion between the assessee firm and A.O. and the claim of the assessee firm was not accepted by the A.O. Mere non-acceptance of the bona-fide claim of the tax-payer by the Revenue does not call for imposition of penalty within the ambit of provisions of Section 271(1)(c) of the Act , more-so the assessee firm came forward with a bona-fide explanation to substantiate its claim and hence the case of the assessee is not hit by explanation 1 to Section 271(1)(c) of the Act. - Decided in favour of assessee
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Customs
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2016 (5) TMI 671
Period of limitation - Revokation of CHA licence and forfeiture of security deposit - Regulation 20 of the CHALR, 2004 - Mis-declaration of value as well as description - Held that:- the show cause notice proposing revocation has been issued on 12.07.2013, well beyond the ninety days limit prescribed for the same in regulation 22(1). The inquiry report which is mandated to be completed within ninety days from the date of the show cause notice has been filed only on 27.11.2014, very much beyond the ninety days time limit prescribed for the same. Finally the impugned order has been passed within ninety days from the date of inquiry report. However, the overall time taken were completion of regular proceeding is a period of 23 months, which is much beyond the allowed total duration of nine months. Therefore, by following the decision of Hon'ble High Court of Madras in the case of A.M. Ahamed & Co. vs. Commissioner of Customs (Imports), Chennai [2014 (9) TMI 237 - MADRAS HIGH COURT], which directly dealt with CBLR and sanctity time limit under the regulation, the order of the lower authority which was issued without adhering to the time schedule is set aside. Decided in favour of appellant
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2016 (5) TMI 670
Demand of Central Excise duty and Customs duty - Raw materials imported duty-free for export of the finished goods - diversion of consignments of goods meant for export to domestic area - Held that:- adjudicating authority has not considered the explanations given and the defence taken by the appellants before him while deciding the case. It has not even recorded a single line of reasoning as to why he is not accepting the defence raised by the appellants. It is also to be noted that there is no reasoning given as to how the adjudicating authority has come to a conclusion that bulk drugs cleared from M/s Tini Pharma Ltd. were not exported but something else was exported in respect of the consignments which were already cleared for export. In the absence of any reasoning or the findings, it is not possible for the Tribunal to go into the issue raised. In the interest of justice, it is found that the impugned order needs to be set aside and the matter be remitted to the adjudicating authority to reconsider the issue afresh after following the principles of natural justice. - Appeal disposed of by way of remand
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2016 (5) TMI 669
Imposition of penalty - Section 112 of the Customs Act, 1962 - Confiscation of goods - Import of duty free goods under Import Passbook Scheme and diverted the same to local market - defrauding the Government of its legitimate revenue of Customs duty - Held that:- the proceeding of demand of duty and confiscation was made against the main party M/s. Orient Arts & Crafts, wherein finally the demand of duty and confiscation was dropped, accordingly the present appellant is also not liable for penalty under Section 112 of the Customs Act, 1962. - Decided in favour of appellant
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2016 (5) TMI 668
Whether an assessee can file an appeal against assessment made in the bills of entries, once he pays duty on the same and clears the goods, observed that acceptance of enhanced value proposed by the Department by an assessee does not preclude him from challenging the enhancement by way of appeal - Import of fabrics. Held that:- provision of Section 17 does not preclude an assessee from filing an appeal against the enhancement. The issue is no more res-integra and stands settled by various decisions. It is a common case for the importers that on account of immediate requirement of imported goods or to avoid demurrage charges, such goods are cleared immediately on payment of duty on the enhanced value. Section 17 is to the effect that where such enhancement of value is accepted by the importer, there is no need for the Proper Officer to pass a reasoned order. This does not mean that the importer is precluded from filing appeal against the assessment order. The said Section would apply only in those cases where the assessee is not aggrieved by the enhancement and has accepted such enhancement in which case the Section requires that no reasoned order needs to be passed by the Proper Officer. The said section reflects upon the intention of the Legislature to avoid passing of the reasoned order and to unnecessary introduce litigation. As such, no merits found in the Revenue's stand that an importer’s right to file an appeal stands curtailed down on his clearing the goods on payment of duty on the enhanced value. No reasons provided for enhancement as well as rejection of transaction value - Seems to have been done on the basis of a DRI Alert dated 09/5/2011 - Respondent contended that DRI Circular, which stands issued after considering the value of the goods on which they should be imported on the basis of detailed investigation, should have been adopted - Held that:- Commissioner (Appeals) has gone into detailed examination of the provisions of Section 14 as also the Customs Valuation [Determination of Value of Imported Goods] Rules, 2007. As rightly observed by him, for adopting the provision of Customs Valuation Rule, the transaction value is required to be rejected as incorrect value. There being no evidence to show that the importer has paid over and above than the transaction value, to the seller of the goods, there is virtually no reasons to reject the transaction value. It is also a settled law that DRI Alerts cannot be adopted as a reason for enhancing the value. Therefore, no infirmity found in the views adopted by Commissioner (Appeals) so as to interfere in the impugned order. - Decided against the revenue
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Corporate Laws
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2016 (5) TMI 664
Sanction of the Scheme of Amalgamation - Held that:- On the consideration of all the relevant facts and the procedural requirements contemplated under Sections 391 & 394 of the Act and the relevant Rules and on due consideration of the report of the Regional Director Northern, Ministry of Corporate Affairs, New Delhi and Official Liquidator, the Scheme of Amalgamation is hereby sanctioned and as a result thereof, the assets and liabilities of the Transferor Company shall stand vested in the Transferee Company and the Transferor Company shall be dissolved without being wound up. The Transferee Company shall comply with the procedural requirement as per the Accounting Standard 14 related to “the pooling of interests method” as prescribed under Section 211(3C) of the Companies Act, 1956 and under Section 133 of the Companies Act, 2013 as stated in Clause 10 of the Scheme of Amalgamation and shall also abide by the result of the pending litigation for the Assessment Year 2010-11 and the transfer pricing matter in case it is decided against the company.
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2016 (5) TMI 663
Composite Scheme of Arrangement of amalgamation - Held that:- There does not appear to be any impediment to the grant of sanction to the Scheme of Arrangement, inasmuch as from the material on record and on a perusal of the Scheme, the Scheme appears to be fair and reasonable and is not violative of any provisions of law, nor is it contrary to public policy. The Arrangement under the proposed Scheme appears to be in the interest of the company and their members and creditors and, therefore, deserves to be sanctioned. Accordingly, the Scheme, as proposed by the Petitioner Company, is hereby sanctioned. It is however, clarified that the sanctioning of this Scheme would not absolve anyone who is otherwise liable for any responsibility or liability, only on account of the sanctioning. The Petitioner Company shall pay towards professional charges to learned Assistant Solicitor General ₹ 7,500/. The Petitioner Company is further directed to lodge a copy of this order and the Scheme duly authenticated by the Registrar, High Court of Gujarat, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty, if any, on the same within 60 days from the date of the order.
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Service Tax
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2016 (5) TMI 684
Refund claim - Export of Sevices - Held that:- Cenvat credit would be available of input services even if out-put services are non-taxable. - the appeal is covered by the decision of this Court in the case of PR. Commissioner of Service Tax Versus Mportal (India) Wireless Solutions Pvt. Ltd. [2016 (4) TMI 409 - KARNATAKA HIGH COURT]. Therefore in view of this, the present appeal is disposed of. - Appeal disposed of
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2016 (5) TMI 683
Refund claim - 100% EOU unit - Event management service, Real estate agent service, Tour operator service and Travel agents service - Refund claim was allowed for the services where nexus was found and not allowed +for services where nexus was not found by the appellate authority - Held that:- the Tribunal did not examine the question of nexus vis-ŕ-vis the particular service for which the refund claim was disallowed, but gave a summary finding for the refund available on all the above input services but has not categorically mentioned nor the question of nexus is examined by the Tribunal. It is true that the Tribunal found that liberal interpretation was to be made with regard to input services when one has to examine the nexus with the output services. But in our view, such could not be said to be sufficient to conclusively allow the revision claimed, unless the nature of service is examined and the nexus is found with the output services. It was required for the Tribunal to examine each of the services namely, event management service, real estate agent service, tour operator service and travel agents service for which the claim of refund was made and the Tribunal was to find out as to whether it has nexus with the output services, which was being rendered by the respondent or not. As there is no discussion whatsoever on the said aspects, we find that the order of the Tribunal can be said to be without consideration of the relevant aspects germane to the exercise of the power and hence, the order cannot be sustained in the eye of law. Therefore, the impugned order passed by the Tribunal is set aside with a direction that the appeal shall stand restored to the file of the Tribunal and the Tribunal shall examine the appeal afresh in light of the observations made by this court in the present judgment and after hearing both sides, the Tribunal shall pa ss an appropriate order as early as possible. - Decided partly in favour of revenue
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2016 (5) TMI 682
Refund claim - Unutilized accumulated Cenvat credit - Manpower Recruitment Agency Services - Export of services as providing to foreign client - Department contended that input services have no nexus with the output services - Held that:- all the services except ‘Rent-a-Cab Service’ are essential services for providing the service of Manpower Recruitment Agency. it is also found that any service whether it is used for providing output services or otherwise, cannot be decided in isolation but it is necessary to see what is the output service and accordingly it can be decided whether the service is input service for providing a particular output service. In the present case, output service is Manpower Recruitment Services. As per the nature of aforesaid input services, they are essential services for providing ‘Manpower Recruitment Agency Services’. Therefore, no reason found to interfere in the impugned order which is just and proper and in conformation to definition of input services. Refund claim - Rent-a-cab Service - Held that:- this service was excluded from the definition of input services in terms of Clause (B) of Rule 2(1) of CCR, 2004, therefore even though the same was used for the conveyance of staff but due to specific exclusion, the same does not remain as input service and therefore refund is not admissible in respect of Transport Service (Rent-a-Cab Services). - Decided partly in favour of appellant
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2016 (5) TMI 681
Waiver of pre-deposit - Tribunal passed order by setting aside only two contentions of appellant - Service tax demanded under the head Construction service was in contravention of circular dated 24th August, 2010 issued by CBEC clarifying that the activity had to be treated as a works contract and a distinction had to be drawn between the value of goods supplied as part of the works contract and the value of the services rendered for the purposes of Service Tax - Held that:- the Court notices that in a similar appeal before this Court by a sister concern of the Appellant reported in [2015 (10) TMI 2484 - DELHI HIGH COURT] noted a similar contention of the Appellant and remanded the matter to the CESTAT for consideration of the Appellant’s application for waiver of the pre-deposit afresh in accordance with law. In view of the fact that the above contentions have not been considered by the CESTAT when it passed the impugned order, the Court sets aside the impugned order and revives the stay application filed by the Appellant before the CESTAT for a fresh decision in accordance with law. - Appeal disposed of
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2016 (5) TMI 680
Rectification of mistake - Section 74 of the Finance Act, 1994 - Demand of Service tax in terms of Section 73 of the Act on residential complex service - Petitioner contended that the sum of ₹ 41,14,69,442/-, referred to by them before the assessing authority, was a typographical mistake and the correct receipts, for the project of construction of 928 houses for the Financial Year 2008-09, was only ₹ 4,14,69,442/-. Held that:- in the exercise of its Certiorari jurisdiction, this Court would not re-appreciate findings of fact recorded by the Commissioner in his order. It is only if the order were to suffer from an error apparent on the face of the record, would there be any justification to interfere with the impugned order. We are satisfied that the impugned order does not suffer from any such infirmity. As the scope of Section 74(1) of the Act, for rectification of a mistake, is limited, and as the statements made by the petitioner, at different points of time, are inconsistent, we see no reason to interfere with the well-reasoned order passed by the Commissioner. Rejection of the application, for waiver of pre-deposit, by the CESTAT would only enable the respondent to collect the amount demanded from the petitioner towards service tax, interest and penalty. It would not result in the dismissal of the appeal itself. As the CESTAT has the power to examine the material on record, reappreciate the evidence, and arrive at a finding different from that of the adjudicating authority, we request the CESTAT to hear and decide the appeal with utmost expedition. - Decided against the petitioner
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2016 (5) TMI 679
Review application - Demand of service tax - rent which had been received in the matter of allotment of plots by the assessee to use for construction for business/commercial purposes during the terms of the lease - an act of sovereign/public duties/functions or not - High Court upheld the Tribunal's order that the lease of open land for use as commercial/business purpose, as an taxable event, but what amount is to be taken into consideration for computation of service tax has been confined to the periodical rent only reported in [2015 (4) TMI 661 - ALLAHABAD HIGH COURT] - High Court rejected the review application for no case being made out.
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2016 (5) TMI 678
Refund of Cenvat credit - Rule 5 of CENVAT Credit Rules - Appellant not registered with the Service tax department during the relevant period - Held that:- the issue relating to registration is no more res integra and settled by the Hon'ble Karnataka High Court decision in the case of Mportal India Wireless Solutions Pvt Ltd Vs CST Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT], therefore, no merits found in the objection raised by the Revenue. Refund of Cenvat credit - Rule 5 of CENVAT Credit Rules - Certain services do not have nexus with the output services - Appellant contended that almost 24 services were involved and the Commissioner (Appeals) has discussed only about 11 services and has not given any finding on the balance services. Also there are various decisions of the Tribunal wherein disputed services have been held to be CENVATTABLE input services having nexus with the output services. Held that:- the issue of input-output nexus can only be examined and verified at the level of the adjudicating authority. Inasmuch as the matter already stands remanded to the original adjudicating authority, we deem it fit to remand the entire proceedings to him for fresh examination in the light of declaration of law by the Tribunal in various decisions, which the appellant would place before the original adjudicating authority. However we make it clear that as we have already held that the objection of the assessee not being registered with the Revenue is not available to the department, the same would not be considered as a bar for examining the assessee's refund claim. - Appeals disposed of
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2016 (5) TMI 677
Period of limitation - Adjudication order was dispatched to the appellant on 29-12-2010 whereas the appeal has been filed by the appellant before the ld. Commissioner (Appeals) on 8-3-2013 - time barred - Held that:- the appellant has filed an affidavit to the fact that they have not received the adjudication order and the affidavit has not contraverted by the ld. Commissioner (Appeals) with cogent evidence. In that circumstances, the affidavit filed by the appellant is having evidential value. Therefore, it is held that the appellant has not received the order in 2010 and received the order only on 9-2-2013. Thereafter field appeal on 8-3-2013 which is well within time. In such circumstances, the appellant has filed an appeal before the ld. Commissioner (Appeals) within time. Therefore, the impugned order is set aside. - Appeal disposed of by way of remand
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Central Excise
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2016 (5) TMI 676
Entitlement to avail Cenvat credit - Invoices issued without actually receiving the goods - Corporation diverted the duty paid brass circles/strips/sheets purchased from M/s Agarwal Metal Works Pvt. Ltd. in the open market - Held that:- a perusal of the Tribunal order shows that it does not satisfy the test of a reasoned and speaking order. Further, it was noticed that the case had been booked against the respondent on the ground that the Corporation had diverted the goods as they had altered the description of goods in the invoices issued by them showing the goods supplied by the manufacturer/ supplier. It was only recorded that the revenue had failed to produce corroborative evidence to prove that the respondent had not received the goods against the invoices issued by the Corporation. The Tribunal being a final fact finding authority was required to deal with all aspects of facts and law and then record its conclusions based thereon. No legally justified reasons have been recorded by the Tribunal for dismissing the appeal of the revenue. Therefore, since the tribunal's order does not qualify being a reasoned speaking order as enunciated by the Apex Court in M/s Kranti Associates Pvt. Ltd. and another v. Sh. Masood Ahmed Khan and other [2010 (9) TMI 886 - SUPREME COURT OF INDIA], the same is set aside. - Decided in favour of revenue
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2016 (5) TMI 675
Maintainability - Crushing of iron ore into smaller sizes and separation of different sizes - Revenue contended that there is clear provision under Section 35-B of the Act to file appeal before the CESTAT against the impugned order passed by the Commissioner of Central Excise and this is not a case where the writ petition should lie when there is efficacious remedy available under the statute. Held that:- it is available from the petition that the Commissioner of Central Excise had fixed for spot visit but without going to the said Mines has passed the impugned order, thus, requiring further materials to be gone through by the fact finding authority. If the facts required to be decided will prove the way to decide the issues arising between the parties, same can only be decided either by the Commissioner of Central Excise or by the appellate authority but not the same can be entertained in the writ petition. Also it appears that against any decision passed by the Commissioner of Central Excise as an adjudicating authority, the appeal lies to Appellate Tribunal. It is already discussed that there are certain facts raised before us are required to be adjudicated in appeal and the same cannot be adjudicated in the writ petition. We have already observed in this writ petition that further facts are to be adjudicated and same can only be addressed before the appellate court. Moreover, there is clear-cut provision under Section 35-B to file appeal. It is available from the contention of the petitioner that in an earlier occasion when the petitioner manufactured the same product, the petitioner was served notice by the Department in the year 1996 asking to pay duty as same was iron ore concentrate chargeable to duty. Petitioner had also challenged the same before this Court and this Court dismissed the writ petition directing the parties to file appeal as the alternative remedy is available. Now the same party with same contention has come up to this Court of course due to demand made basing on amendment to Ch.26 w.e.f. 1.3.2011. Therefore, we refrain from deciding any issue raised before us and are of the considered view that since efficacious remedy by way of filing appeal before the CESTAT is available, the petitioner is directed to challenge the impugned order before the appellate authority under Section 35-B of the Act and raise all such contentions raised before us within a period of two weeks from today and in the event of filing appeal, the appellate authority will dispose of the same early by hearing both the parties and both parties are free to raise respective contentions as raised before us and also any other materials to which they think it proper to address. - Petition disposed of
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2016 (5) TMI 674
Delay in filing an appeal before the Commissioner (Appeals) - Section 35 of the Act - Condonation of delay of 118 days - Writ jurisdiction under Article 226 of the Constitution - Held that:- If the two aspects, one, regarding the case law prevailing earlier and two, interpretation of the word "as such" and thereafter, the amendment and the decision of this Court, in case of CCE v. Solectron Centum Electronics Ltd.[2014 (10) TMI 596 - KARNATAKA HIGH COURT], would go to show that there was a substantial question to be considered even by the first authority. We do not propose to make any final observations on the ultimate merit of the demand, since we find that it might prejudice the case of either side. But in our considered view, if the aforesaid vital defence is not to be considered by the first appellate authority, the resultant effect would be gross miscarriage of justice. Under these circumstances, we find that it would be an appropriate case to exercise power under Article 226 of the Constitution to interfere with the order of the first appellate authority and to direct the first appellate authority to consider the matter in light of the observations made by this Court in the present order as well as after giving opportunity of hearing the appellant herein. Therefore, the absence of consideration of the case of the appellant by the first appellate authority has resulted in a failure of justice or gross miscarriage of justice, as per the view taken by the Full Bench of High Court of Gujarat in case of Panoli Intermediate (India) (P.) Ltd. (supra). Hence, the petition under Article 226 of the Constitution could be maintained and it was a fit case to exercise power under Article 226 of the Constitution to interfere with the order of the first appellate authority and the interference not being made, has resulted in failure of justice. But at the same time, even if it becomes a case for exercise of the power under Article 226 of the Constitution, the Court may ensure that no litigant or the assessee takes any undue benefit of the power under Article 226 of the Constitution. If the case is considered in favour of invoking the appellate power, the requisite condition would be to deposit 7.5% of the duty demanded. Further, it cannot be said that the appellant was vigilant about its right to pursue the matter in time and there is delay also in filing this appeal. If the appellant has not pursued the remedy well in time, though we may keep in mind the real merits of the matter, the appellant cannot get away from paying appropriate cost, by way of compensation, by the delay caused in pursuing the litigation up to this Court. Hence, we find that even if the order of the first appellate authority is to be interfered with, it should be on a condition that the appellant deposits 7.5% of the demand of duty, plus pay the cost of ₹ 25,000/- to the respondent. - Matter remanded back - Decided in favour of appellant to some extent
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2016 (5) TMI 673
Demand of duty and tax penalties - Confiscation in lieu of redemption fine - Seizure of gutkha from the retailer - Available recourse under Section 3-A - Provision of Section 3A was not on the statute book during the subject period of 2002-03 to 2004-05. or upto not even for 2005-06 and came to be inserted only on 10.5.2008 - Held that:- even if Section 3-A is to apply, then also, a further scrutiny may be required to be undertaken as to whether, for the goods in question, the notification was issued or not. It is only after the two aspects of applicability of Section 3-A and the availability of the notification for production of Gutka, the matter can be considered for finalization of excise duty by the Revenue. As, neither there is reference to such contention nor there is discussion by the Tribunal on the aforesaid aspects which are vital aspects for charging of excise duty, we find that it would be just and proper to remand the matter to the Tribunal for appropriate consideration in accordance with law. Therefore, the impugned order passed by the Tribunal is set aside with a further direction that all Appeal shall stand restored to the Tribunal for its consideration in accordance with law and in the light of the observations made by this Court in the present Judgment. - Appeals allowed by way of remand
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2016 (5) TMI 672
Whether the amendment to Section 35F of Central excise Act, 1944 could be prospective or retrospective in nature - Condition to make a pre-deposit of a fixed percentage of the tax demanded or penalty levied or both - Petitioner contended that inasmuch as the right of appeal available to a person is a vested right, which accrues on and from the date on which the lis commences, the date on which such right of appeal accrues should be the date on which the original cause itself arose. Therefore, the right so vested cannot be taken away retrospectively by an amendment. Held that:- the right of appeal is neither an absolute right, nor an ingredient of natural justice, and that it is only a statutory right which can be circumscribed by the conditions in the grant. Therefore, it is well settled that the right of appeal is a creature of statute and the legislature is well within its competence to impose conditions for the exercise of such a right subject only to the restriction that the conditions so imposed are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory. Therefore, if one condition that was already available in the statute for the exercise of a right of appeal, is merely replaced by another condition, the same cannot be said to be retrospective, unless it is definitely shown that the amended condition is more onerous than the unamended condition. When the unamended condition gave only a chance or hope for an assessee to get a total waiver at the discretion of the Appellate Authority, the same cannot be equated to a vested right. A mere chance of convincing the Appellate Authority to exercise the discretion for the grant of a total waiver is no vested right. The amendment, did not take away a right vested, but merely made a chance divested. What has now gone, is not the right , but the chance or hope. Therefore, the first contention of the petitioner is liable to be rejected. Legal effect of a proviso - Petitioner contended that the second proviso to the amended Section 35F cannot be taken to have excluded all other possible alternatives, that could arise out of the amendment of a proviso - Held that :- on the first contention of the writ petitioner, we have independently come to a conclusion that even the substantive provision of Section 35-F, after its amendment, is not capable of any other interpretation. Our conclusions on the first contention was not on the basis of the second proviso. Therefore, we need not even find out whether the second proviso is exhaustive about the exclusions, or whether the second proviso is a substantive provision in itself or the extent to which the second proviso would control the substantive provision. Hence, the second contention of the petitioner is also rejected. Petitioner contended that the High Courts of Andhra Pradesh and Telungana and Kerala have already taken a view that the amendment is prospective in nature and that it would apply only to proceedings initiated after 6.8.2014 - Held that:- the decision of the High Court of Andhra Pradesh relied upon by the learned Senior Counsel in K.Rama Mohanarao is only a prima facie view. We have already analysed this decision while dealing with the first contention. Similarly, the decision of the Kerala High Court in Muthoot Finance Limited has also been analysed in great detail by us. With great respect to these Courts, we have not agreed with the view taken by them, for the reasons that we have indicated in great detail while dealing with the first contention. Therefore, the third contention is also rejected. Therefore, the writ petition seeking a declaration that the amended Section 35-F of the Central Excise Act 1944, is applicable only to show cause proceedings initiated on or after 6.8.2014 is liable to be dismissed. Accordingly it is dismissed. Alternative remedy of appeal - In the course of hearing of writ petition, the assessee seems to have agreed to go before the Appellate Authority and sought a clarification that the amendment would not apply to his case - Learned Single Judge agreed with the said contention and allowed the assessee to file an appeal along with an application for waiver without making a pre-deposit of 7.5% as per the amendment - Held that:- the interpretation given by the learned Judge to the amendment, is not correct. - Decided in favour of appellant
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CST, VAT & Sales Tax
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2016 (5) TMI 667
VAT on petroleum products - Interpretation to Section 2(1)(zd) of DVAT - Roll back in Petrol and High Speed Diesel prices - High Court held that upon the partial roll back w.e.f. 30.11.2006 and upon the complete roll back w.e.f. 16.02.2007 benefit of the proviso ceased to be partly or fully applicable - Held that:- the proviso ought to be given normal and natural meaning keeping in mind the context, object and reasons for its enactment and incorporation. The idea was to protect the interest of the consumers by giving exemption in respect of enhanced ad valorem VAT payable on account of increase in prices of diesel and petrol from 06.06.2006. On the element of increase no additional ad valorem VAT was payable and according to the proviso the increased component was not to be part of sale consideration. Consequently VAT was not to be charged in respect of such increased component, as per definition of the term “sale price” which came to be controlled by introduction of the proviso. When there was no increased component and therefore no liability to pay VAT in respect of such increased component, benefit under the proviso ceased to be applicable. The proviso cannot be given operation beyond the element of increase, so much so that even after complete roll back, the benefit in respect of that amount must operate. That certainly was not the intent. The idea was to grant benefit only in respect of that element of VAT respecting increase in rates and not beyond. If that component of increase ceased to be in existence, the benefit of proviso also ceased to be in operation. Therefore, the view taken by the High Court and the Appellate Authority are affirm. - Decided against the appellant
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2016 (5) TMI 666
Reopening of the CST assessment - Sale of SF DOC in the course of inter-state trade - 'C' Forms obtained from the dealers in inter-state sales - whether the inter-state sale of SF DOC is liable to tax at 2% as per assessee or 4% as per succeeding assessing officer - Escapemant of tax - Held that:- by agreeing with the conclusion of the Hon'ble High Court in the case of M/s. Binani Industries Limited v. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore [2011 (8) TMI 992 - KARNATAKA HIGH COURT], yet the fact remains that the assessing authority had expressed the opinion with regard to the rate of tax on the de-oiled cake while scrutinizing ‘C’ Forms which is an expression of opinion on the available materials brought on record and, therefore, the first appellate authority as well as the tribunal was justified in concurring with the said order. The High Court has not expressed any opinion on this score. Considering the cumulative effect of the facts and law we have stated, we have not an iota of doubt in our mind that there should not have been reopening of assessment. However, the finding recorded by the High Court overturning the view of the tribunal that oil-cake and de-oiled cake are the same product and, therefore, both are liable to reduced rate of tax despite the notification only mentions oil-cake, is not defensible. The finding of the High Court as regards oil-cake and de-oiled cake being different products as per the notification dated 31st May, 2002 is correct. However, the assessee shall reap the benefit of initial assessment as the same could not have been reopened. - Decided partly in favour of appellant
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2016 (5) TMI 665
Seeking quash of suspension of registration order and Seizure order - Section 17(12) of the Uttar Pradesh Value Added Tax Act, 2008 - Petitioner contended that under section 17(12) of the Act, it is only when the cancellation proceedings are pending under sub-section (11) that the registering authority can suspend the registration certificate but as in the instant case, no proceedings for cancellation of the registration certificate were pending initially under section 17(11) of the Act when the order of suspension was passed. Held that:- when the order of suspension was passed on 11 March 2016, cancellation proceedings were not pending against the petitioner. This is in the teeth of the provisions of section 17(12) of the Act. The suspension order dated 11 March 2016, therefore, cannot be sustained. So far as the seizure order is concerned, the petitioner has a statutory alternative remedy of filing a representation under section 48(7) and thereafter an appeal under section 57 of the Act. Therefore, we are not inclined to examine the order seizing the goods of the petitioner. The impugned order is quashed. - Decided partly in favour of petitioner
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