Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 21, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
Highlights / Catch Notes
Income Tax
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Additions u/s 68 - AO could not shift the burden back onto the Assessee Company without producing any tangible material to doubt the veracity of the documents furnished by the assessee. - HC
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MAT - for computation of adjusted book profit, the provisions of sec.14A cannot be imported into clause (f) of the Explanation to sec. 115JB. - AT
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Registration u/s 12A cancelled - After insertion of proviso to section 2(15) the assessee has lost its character of charitable organization. The assessee is a service provider. Against assessee. - AT
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Entitlement for Registration under Section 12AA - Since the object of the assessee society is only to benefit a particular community, primarily, Telugu Beri Vysia community and for performance of similar functions by other Hindus, the Tribunal rightly dismissed the appeal - HC
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Addition - Mere disparity in the consumption of electricity could not be a reason for estimating higher turnover as the production depends upon various factors. - AT
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Forward contract cancellation loss - whether be treated as business loss - held yes since it is not a speculation transaction - HC
Corporate Law
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A shareholder holding only 0.001% shares cannot be permitted to hold the company to ransom where 99% of the shareholders have accepted the scheme and the majority of the remaining shareholder comprising 1% have accepted the scheme and taken the moneys in lieu of their shares. - HC
Service Tax
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Levy of service tax - The petitioner has adopted a non-cooperative attitude and collected mob on the spot and sensitized them of the requirement of law and threatened the officers, while the search continued. - against the assessee. - HC
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Levy of service tax on packaging activity - palletizing of cargo for export - the packing done by the appellant forming part of “cargo handling service” is not the type of packing referred to in sub-section (76b). - HC
Central Excise
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Cenvat Credit - Supply to SEZ - Amendment to rule 6 - whether retrospective or prospective - the amendment is clarificatory in nature - held as retrospective - HC
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Rebate claims under Rule 18 - Export - original and duplicate copies of the ARE-1 forms were lost by their CHA and the Petitioner had lodged an FIR - all other conditions met - rebate allowed - HC
Case Laws:
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Income Tax
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2013 (5) TMI 476
Additions u/s 68 - unexplained investment and cash credits shown as share application money received by the assessee - CIT(A) deleted the addition -Held that:- The identity of the two companies which are sister companies stood established. Furthermore, this is not a case of mere furnishing of copies of bank accounts of the subscribers. But, in the present case, as noted by the CIT (A) the assessee had filed the income-tax returns of the subscriber companies as also their bank statements and balance sheets in addition to the confirmation letters from the said two companies. A copy of the Form No. 2 filed by the assessee with the Registrar of Companies regarding the allotment of shares to the said two companies had also been furnished. It is in this backdrop CIT (A) concluded that the assessee had been able to prove its case and that the AO could not shift the burden back onto the Assessee Company without producing any tangible material to doubt the veracity of the documents furnished by the assessee.ITAT concurred with the views taken by the Commissioner of Income-tax (Appeals). Case law of Nipun Builders and Developers Pvt. Ltd. [2013 (1) TMI 238 - DELHI HIGH COURT] as relied upon by revenue in making the addition is different and is distinguishable from the present case as assessee in the present case been able to discharge the initial burden to establish the identity, creditworthiness and genuineness as regards the transactions concerning the allotment of shares. In favour of assessee.
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2013 (5) TMI 475
Loans and advances to the Subsidiary Companies - whether be termed Revenue Nature on account of Business Exigency and Commercial Expediency? - Tribunal returned a finding that the amounts advanced have been written off after the said companies have been closed and the employees retrenched thus are clearly capital loss - Held that:- No merit in the present appeal as the appellant has advanced loan to its subsidiary companies, the same has to be treated as capital loss. The assessee has not shown any increase in the previous years, therefore, the assessee has been rightly found not entitled to claim such written off amount as revenue expenses. No error in the findings recorded by the authorities under the Act. In respect of the interest and the other expenses, the matter has been remanded back to the AO to examine the nature of transaction claimed by the assessee as revenue loss. Since the facts are yet to be examined, therefore, no argument can be examined at this stage. No substantial question of law arises for consideration of this Court.
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2013 (5) TMI 474
Unexplained expenditure u/s.69C - Notices u/s.133(6) - Held that:- Clearly, if the goods stand transported as well as processed by third parties, with even duty having been paid on such processing, it cannot be said that no goods at all have been purchased. Further, as regards the 'fact' of sale, the same would become material only if the assessee could, with reference to its stock register or any other record, exhibit that the goods so purchased were either sold during the relevant year itself or, being unsold, stand included in the closing stock. It is only in either of these two situations, it may be appreciated, that a claim for purchase could be validly made. This matter, which we consider as relevant, though arising out of the record, has not investigated or examined by the authorities below. In view of the foregoing, it is fit and proper that the matter is restored back to the file of the FAA for the purpose. The onus, there is no gainsaying, to establish its claims, would only be on the assessee & adverting to the decision of Kachwala Gems vs. JCIT [2006 (12) TMI 83 - SUPREME COURT] whereat it approved of best judgment assessment where the purchases could not proved by the assessee beyond doubt. Qua difference in the amount of purchases, resulting in a disallowance of Rs.2.39 lakhs - Held that:- When the assessee's accounts are considered as incorrect on the basis of the accounts of the corresponding party, the same becomes a material with the Revenue on the basis of which the assessee's books of account are being impugned by it. It was, therefore, incumbent on the Revenue to provide the assessee the same, which it has failed to, despite, repeated requests by the assessee for the same, as gathered from the statement of facts, as filed both during the course of proceedings in the first and the second round, as well as the arguments made before us - this issue is also likewise restore back to decide the same afresh.
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2013 (5) TMI 473
MAT - Adjustment on account of the expenditure incurred for exempt income for the purpose of computation of book profit u/s 115JB - disallowance of exemption u/s 10(23G) and 10(34) for interest income as well as dividend income - Held that:- Though the authorities below have not given a finding that the assessee has incurred any expenditure exclusively for earning of the exempt income in the shape of interest and dividend, however, section 14A has an implicit principle of apportionment in the cases where the expenditure is incurred for composite/indivisible activity, in which taxation and non taxable income is received, therefore, following the order of M/s Godrej Agrovet Ltd [2010 (9) TMI 291 - ITAT, MUMBAI] AO directed to restrict the disallowance on account of administrative expenditure u/s 14A to 2% of the total exempt income. As regards the addition of the amount of disallowance, as computed u/s 14A while computing the book profit u/s 115JB is concerned, this Tribunal in the case of Goetze (India) Ltd (2009 (5) TMI 615 - ITAT DELHI ) has held that for computation of adjusted book profit, the provisions of sec.14A cannot be imported into clause (f) of the Explanation to sec. 115JB. Also see case M/s Bengal Finance & Investments P Ltd (2013 (5) TMI 117 - ITAT MUMBAI) where it is clear that the amount disallowed u/s 14A cannot be considered while computing the book profit u/s 115JB of the Act. appeal of assessee partly allowed.
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2013 (5) TMI 472
Registration u/s 12A cancelled - eligiblity for exemption under section 11 denied - AO in view of the amended provision of section 2(15) held that the activities carried on by the assessee are in the nature of trade, commerce or business and are not for charitable purposes treating the assessee as an AOP - Held that:- Assessee although an extended arm of State Government formed as a society to carry out charitable activities in the nature of 'general public utility' is in fact providing assistance to industrial houses and entrepreneurs for setting up of industry in the State of Tamil Nadu. The assessee facilitates in providing licence, approval and permission from various Government agencies for setting up of industry in the State, for which it is charging fee. The fee charged by the assessee is not remitted to the Government treasury or exchequer. After insertion of proviso to section 2(15) the assessee has lost its character of charitable organization. The assessee is a service provider. Against assessee.
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2013 (5) TMI 471
Concealment of commission income - CIT(A) deleted the addition admitting the additional evidence - whether CIT (A) erred in deleting the addition without giving due weightage to the fact that AO confronted assessee with the gross octroi at Rs.38,90,67,651 and going by the evidences gathered, adopted commission on the same at 2% - Held that:- After perusing the orders of AO and the CIT (A) and hearing the DR, no reason to differ from the findings of the CIT (A). AO, as rightly pointed out by the CIT (A) might have been confused with the receipts and the payments made by assessee which are independent and separate as one that of gross receipts. Since the facts are examined by the CIT (A) and nothing was brought on record to counter the same by the Revenue, decline to interfere with the orders of the CIT (A). The grounds raised by the Revenue are rejected.
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2013 (5) TMI 470
Entitlement for Registration under Section 12AA - denial of claim as per DIT(Exemptions) all the income and expenditure relatable to the maintenance of Kalyana Mandapam and shops are not in conformity with the definition of charitable objects u/s 2(15) - Tribunal noted the Article set out in the Scheme award relating to the running of the choultry alone and the objects are targeted towards a particular community alone - Held that:- Objects of the assessee society as incorporated stated as to provide accommodation and facilities to the poor and needy for the purpose of functions and ceremonies and for temporary shelter and to undertake Annadanam to public and other forms of poor feeding, to work for the development of any games or sports activities, to help poor students for their education based on merits by way of scholarships,etc., to undertake and provide medical care to the poor and the needy. Being governed by the Scheme Award, the expansion of objects and activities has to be approved by the Court, which framed the Scheme Award. In fact, the assessee has moved an Interlocutory Application in the Court of Principal District Judge at Tiruvallur in Scheme to permit the Assessee - Gowri Ashram to expand the new objects pertaining to distribution of scholarships, celebration of other festivals, conducting sports and cultural activities, helping poor and destitute people from the weaker sections of the community/society and to help the needy people. The said Interlocutory Application filed before the District Court, Tiruvallur is stated to be pending. Unless expanded objects of the assessee are approved and incorporated in the Scheme Award, the assessee cannot claim to be the Trust with charitable purpose. Since the object of the assessee society is only to benefit a particular community, primarily, Telugu Beri Vysia community and for performance of similar functions by other Hindus, the Tribunal rightly dismissed the appeal and we do not find any substantial question involved in this appeal. Against assessee.
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2013 (5) TMI 469
Addition to income - whether CIT(A) and ITO erred in disregarding AS-7 issued by the ICAI and in relying upon section 145(3)? - assessee is a non-resident firm having its registered office in U.S.A. with place of business is Enron Corporation, Houston, Texas entered into a contract with Dabhol Power Corporation for on-shore construction work and on-shore service - Held that:- There cannot be any basis to doubt the completion of the work in this year thus unable to understand as to what the Commissioner (Appeals) meant by that "it is not possible to calculate the profit on the basis of percentage of completion method in the absence of any details". He has also doubted that the assessee has not consistently following percentage of completion method. This finding of the Commissioner (Appeals) cannot be upheld as in the assessment year 1999- 2000, it has been accepted by the Tribunal that the assessee has been following percentage of completion method as per AS-7. In the earlier year, the Tribunal has restored this issue to the file of AO as the assessee could not produce the invoice before the Assessing Officer. However, in the year under consideration, it has not been disputed by the AO that invoice has not been furnished. Thus, no basis for sustaining the addition and consequently set aside the impugned order passed by the Commissioner (Appeals) and allow the ground no.1, raised by the assessee. Disallowance of overheads of Enron Power Service B.V. pertaining to employees whose salaries have been debited by the assessee on which tax has been paid - Held that:- For claiming any expenses under section 37(1) onus is upon the assessee to prove that the expenditure has been incurred only for its business purpose which can be discharged by way of some evidence. In the present case, the assessee has neither produced any agreement between the assessee and Enron Power Service, B.V., as to what kind of training and service have been provided to the employees of the assessee and what was the terms and conditions for making such payments. No details have been produced showing the nature of service rendered and the nature of reimbursement of expenses & reasoning given by the AO has not been rebutted with any kind of documentary evidence to support the claim. Hence, confirm the disallowance and accordingly, ground no.2, is treated as dismissed. Disallowance of legal and professional charges - Held that:- From the findings recorded, it is seen that for expenditure aggregating to Rs. 1,56,61,303 out of Rs. 3,89,37,000, the assessee could not furnish even an iota of evidence in the form of bills or the nature of services rendered. It is also an admitted fact that no TDS has been deducted on such payments. In the absence of any details or evidence,no reason to tinker with the reasons and the conclusion drawn by the AO and the Commissioner (Appeals). Thus, the disallowance confirmed Thus, ground no.3, is treated as dismissed. Disallowance u/s 40A(3) r/w Rule-6DD - Held that:- None of the circumstances, as enumerated in Rule-6DD, has been found to be applicable in assessee's case for making the cash payment exceeding Rs. 20,000, to the expatriate staff. Once the exceptions provided in Rule-6DD is not fulfilled in the present case, agreeing with the conclusion drawn by the AO which is based on audit report that such a cash expenditure is disallowable under section 40A(3). Accordingly, disallowance is hereby confirmed. Ground no.4, is thus treated as dismissed. Disallowance should be restricted to 42.8% i.e., the percentage of the work completed cannot be accepted as the entire expenditure has been claimed in the Profit & Loss account against the contract receipts disclosed in this year. Thus, this alternate plea is also rejected. Levy of interest under section 234A and 234B - assessee submitted that this issue is covered in favour of the assessee by the judgment Director Of Income Tax (International Taxation) v/s NGC Network Asia LLC, (2009 (1) TMI 174 - BOMBAY HIGH COURT), wherein held that when a duty is cast on the payer to deduct TDS, on failure of the payer to do so, no interest can be imposed on the payee assessee under section 234B - Held that:- Restore this issue to the file of the AO to workout the tax liability after giving effect of this order and decide the chargeability of interest under section 234B in accordance with the judgment of Hon'ble Jurisdictional High Court cited supra. Thus, this ground is treated as partly allowed for statistical purposes.
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2013 (5) TMI 468
Addition in income – As per CIT(A) mere disparity in the consumption of electricity could not be a reason for estimating higher turnover as the production depends upon various factors. The estimation of production, made by the (AO), did not lend itself to be a scientific basis, so that the addition to income worked with reference to such higher turnover, stood deleted. Revenue appeal against CIT(A). Held that:- Issue under reference in the instant appeal stands decided by the Tribunal in the assessee's favour in its own case [2013 (5) TMI 456 - ITAT MUMBAI] for the earlier years, being A.Ys. 1998- 99 and 1999-2000, by confirming the order of the first appellate authority, who had followed the decision by the tribunal in the case of assessee's sister concern, M/s. Boon Industries [2010 (7) TMI 833 - ITAT MUMBAI], referring to the relevant part of the said order. In the current year also no distinguishing feature has been brought on record by the Revenue, so as to impugn the reliance by the ld. CIT (A) on the decision by the tribunal in the case of Boon Industries (supra), or otherwise show us as to how the same is not applicable to the assessee's case as well. Thus, impugned order is upheld.
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2013 (5) TMI 458
Forward contract cancellation loss - whether be treated as business loss - Held that:- As decided in CIT v. Badridas Gauridu (P) Ltd. [2003 (1) TMI 61 - BOMBAY High Court] & CIT v. Soorajmull Nagarmull [1980 (9) TMI 69 - CALCUTTA High Court] the expenditure would not be covered under section 43(5) of the Act as speculative transaction. Assessee was not a dealer in foreign exchange therefore, foreign exchange contracts were booked only as incidental to the assessee's regular course of business. Under section 43(5) “speculative transaction” has been defined to mean a transaction in which a contract for the purchase or sale of commodity is settled otherwise than by the actual delivery or transfer of such commodity. However, as state above, the assessee was not a dealer in foreign exchange. In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank. However, the export contracts entered into by the assessee for export in some cases failed. Thus the assessee was entitled to claim deduction as a business loss. In favour of assessee.
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Customs
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2013 (5) TMI 467
Enhancement of unit price - rejection of declared transaction value - Held that:- As at the time of import the declared per unit price of mother board imported by the respondent is 16 USD, the Assistant Commissioner has enhanced the same to 26.85 USD without assigning any reason. It is well settled law that the declared transaction value can be rejected only if it does not satisfy the criteria as prescribed for the same in proviso to Rule 3(2) of the Customs Valuation Rules 2007 or that the proper officer after following, the procedure prescribed in Rule 12 of the valuation Rule had come to conclusion that there are reasons to doubt the correctness of the declared transaction value. In this case no reasons have been given by the assessing officer for rejecting the declared value and enhancing the per unit price. Also bill of entry relied for rejecting the declared value and enhancing the same is in respect of goods classifiable under sub heading 84733030 which covers the printed circuit board while the goods imported in this case are plain mother boards classifiable under 84733020 and thus bill of entry relied upon by the department is also not applicable to this consignment. In favour of assessee.
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2013 (5) TMI 466
Time for pre-deposits - appellant has not deposited the amount as ordered, as they are filing a SLP against such order in the apex Court and requests for time of six weeks to comply with the same. held that - In the absence of any compliance of the stay order which has been upheld by the Hon’ble High Court of Gujarat appeal is dismissed for non - compliance.
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Corporate Laws
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2013 (5) TMI 465
Validity of the scheme of amalgamation sanctioned - Held that:- Scheme was sanctioned in the year 2004 and has in fact being implemented in 2004 itself and majority of the shareholders whose shares were acquired under the scheme have already accepted their money and it is only the present appellant who possesses only 0.001% of the shareholding is approaching to the court for rejecting the scheme. A shareholder holding only 0.001% shares cannot be permitted to hold the company to ransom where 99% of the shareholders have accepted the scheme and the majority of the remaining shareholder comprising 1% have accepted the scheme and taken the moneys in lieu of their shares. Much water has flown under the bridge for this court now to interfere with the scheme of amalgamation/arrangement. The scheme has been examined by the Company Court not only at the time when it was sanctioned in 2004 but also at the time of the passing of the impugned order. The company Court has found the scheme to be reasonable bona fide and not unjustified. Thus no reason to take a contra view to the view taken by the Single Judge. As present appeal has been filed under section 483 of the Companies Act which forms part of Part – VII of Chapter – II which deals with winding up of a company but in the present case, we are concerned with a scheme of amalgamation/ arrangement which would be governed by Part – VI, Chapter – V dealing with Arbitration, Compromises, Arrangements and Reconstructions. In fact, u/s 391 of the Companies Act there was earlier a provision of appeal under sub-section (7) which since stands deleted without creating a corresponding provision for appeal. The present appeal has been filed impugning the order dismissing the application seeking recall of the sanction of the scheme which would virtually amount to being an appeal against the order of review - no infirmity in the impugned order and the appeal being devoid of merit is accordingly dismissed.
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Service Tax
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2013 (5) TMI 479
Stay - Business Auxiliary Service’ (BAS) - export - exemption Notification No. 21/2003-S.T., dated 20-11-2003 - service recipient is located abroad with no office in India. - held that:- It is not in dispute that the appellant was rendering ‘Business Auxiliary Service’. It appears from the record that the commission was collected by the appellant from the foreign company. This realisation was noted in the show-cause notice and in the Commissioner’s order. The Chartered Accountant’s certificate now produced by the appellant prima facie shows that the commission was realised in convertible foreign exchange and no part of it was repatriated by them. - prima facie case in favor of assessee - stay granted.
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2013 (5) TMI 478
Levy of service tax - Electrification work of underground cabling, lightning work, external electrification, shifting work and electrification of roads - constructions of 11 KV sub stations and external electrification work. - agreement with Ghaziabad Development Authority and Greater Noida Development Authority. - held that:- The activities were liable to Service Tax under the category of 'construction of residential complex services', 'work contract services' and 'erection, commissioning & installation services' as defined under Section 65 (105) (zzzh), 65 (105) (zzzza) and 65 (105) (zzd) respectively of the Finance Act, 1994. Regarding Search - held that:- Since the petitioner was not registered, and was not paying Service Tax, the material collected by the department was sufficient for authorization by the Commissioner Customs, Central Excise & Service Tax, Ghaziabad to search the premises under Section 82 (1) (2) of Chapter V of the Finance Act 1994. Since all the records could not be found during search operation, summons were issued on 27.10.2010, 19.11.2010, 07.12.2010, 19.01.2011, 02.02.201, 09.02.2011 and 13.02.2011, in respect to which, the petitioner did not produce the documents. The petitioner has adopted a non-cooperative attitude and collected mob on the spot and sensitized them of the requirement of law and threatened the officers, while the search continued. - there was sufficient material with the Department, to authorize carrying out the search. - Decided against the assessee.
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2013 (5) TMI 477
Levy of service tax on packaging activity - palletizing of cargo for export - Section 65(76b) - classification - held that:- It is common knowledge that small consignments of goods to same destination are packed in groups and loaded in containers to prevent damage to the goods and to save time and cost in loading and unloading. This is exactly what is done by the appellant. If appellant’s service falls within the exception clause of Section 65(23)(b) of the Act, then certainly there is no justification to make an adjudication demanding tax. On the other hand, if appellant is engaged in packaging activity falling under Section 65(76b) then adjudication has to be upheld. In this case the controversy arose only because packing is covered by both sub-sections (23) and (76b) of Section 65. However, we find a distinction between the “packing” covered by sub-section (23) and the “packing” covered by sub-section (76b). In our view, the packing covered by sub-section (76b) is the basic packing of products either in the course of manufacturing or subsequent to manufacturing for marketing. This work is not done by the appellant because the appellant is not a manufacturer or packer for manufacturers of goods. On the other hand, the packing i.e. covered by the broad definition of “cargo handling service” under sub-section (23) is the group packing of cargo for easy handling. As already explained above, the packing done by the appellant is group packing in a rough form just for easy loading into containers or ships, of goods taken by shipping companies in loose form for transport to same destination. So much so, in our view, the packing done by the appellant forming part of “cargo handling service” is not the type of packing referred to in sub-section (76b). Regarding exemption in relation to export - held that:- In fact all kinds of incentives such as tax and duty exemptions are allowed for export cargo to make the Indian goods competitive in international markets. If service tax is demanded at the last point packaging of goods for loading into containers or ships, the same will certainly lead to escalation of cost for export by way of freight increase, and that is the reason why service tax exemption is provided for handling of export cargo. We, therefore, feel the adjudication order defeats the very purpose of exemption covered by sub-section (23)(b) of Section 65. Demand set aside - decided in favor of assessee.
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Central Excise
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2013 (5) TMI 463
Availment of Cenvat credit - Air Travel Agent service, Rent-a-Cab service, Mandap Deeper Service, Rail Travel Agent’s service & Tour Operator Service - As per Revenue these services have no nexus with the manufacturing activities and therefore service tax paid on the services could not have been availed. Held that:- In the appeal filed by Revenue, they have not submitted any evidence to contradict the claim of the respondent. That being the case, there is no benefit of prolonging the matter involving such small amounts by remanding the matter and I am inclined to accept the finding of the Commissioner and the submissions of the counsel for the respondent that these services were used for the purposes as stated in the reply to the SCN and that they have not recovered any amount from the employees. Thus, allow CENVAT credit of tax paid on first two services viz. Air Travel Agent Service & Rent-a-cab service. Revenue’s appeal is rejected in respect of these services. In respect of the other three services, the respondent have given up their claim and accordingly Revenue’s appeal is allowed to the extent of denial of CENVAT credit totaling to along with appropriate interest.
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2013 (5) TMI 462
Denial of benefit of provisions of Rule 6(6) of Cenvat Credit Rules, 2004 - supplies made by the assessee to SEZ - Revenue contended that SEZ Developers are not specified - Held that:- The issue stands squarely covered by the decision of the Tribunal in the case of Sujana Metal Products Ltd Vs CCE Hyderabad reported in [2011 (9) TMI 724 - CESTAT, BANGALORE. Thus, impugned order is set aside.
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2013 (5) TMI 461
Non-maintainability of the appeal - Held that:- Appeal was formed by the officers below the rank of Commissioner. The file was placed before the Committee of Commissioners who simply signed the same without recording any independent opinion. In terms of law declared by the Hon'ble Delhi High Court in the case of CCE, Delhi-I Vs Kundalia Industries [2012 (8) TMI 789 - DELHI HIGH COURT] the Committee of Commissioners is required to form an independent opinion themselves and then to file an appeal instead of signing the already formed opinion of lower authorities.Appeal is dismissed.
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2013 (5) TMI 460
Cenvat Credit - Supply to SEZ - Amendment to rule 6 - whether retrospective or prospective - Held that:- The Assessee had supplied goods from the domestic tariff area to a developer and it is to be treated as an export in view of sub-section 2(m) of the SEZ Act. In case it is treated to be export then all benefits as given to export under any other law should be given. Rule 6 of the 2004-Rules is titled 'obligation of a manufacturer of dutiable and exempted goods and provider of taxable and exempted services'. It provides certain obligation on the manufacturer of such goods. The Assessee is one such manufacturer. It not only manufactures dutiable goods but exempted goods as well. 2004-Rules as initially envisaged provided benefit to the goods cleared to a unit in SEZ only and not to the developer though under the SEZ Act the position of the developer as well as the unit was one and the same they were in the same class, entitled to the same treatment. This appears to be an inadvertent omission. It appears that the aforesaid mistake was realised by the Government and rule 6(6)(i) of the 2004-Rules was substituted by the following new sub-rule & after substitution of rule 6(6)(i) by the Amended Rules, the discrimination between the developer and a unit in SEZ has been obliterated. Both stand in the same footing. It is now in consonance with the Article 14 of the Constitution of India. It is settled rule of interpretation that rule or notification takes effect from the date it is issued and not from any prior date. However, Justice GP Singh in his book 'Principles of Statutory Interpretation' 12th Edition, 2010 at page 1021 observes that a rule, which is not in terms retrospective, may have retrospective operation because of the retrospective operation of the enactment in respect of which it is made.So is the case here. The substituted sub-rule 6(6)(i) of the 2004-Rules should have retrospectivity in order not to discriminate and to be in consonance with the nature of excise duty. Thus the rule is clarificatory, corrects an obvious mistake, removes discrimination, and provides correct legal principle. Its prospective enforcement would leave it to be suspect at the touchstone of Article 14 of the Constitution. Considering this aspect it is proper to hold that the substituted sub-rule 6(6)(i) is came into force from the date the 2004-Rules were enforced. The Excise Duty is imposed on the manufacture of the product that is to be consumed in the country whereas a customs duty is imposed on the product that is manufactured within the country but is to be used outside the country ie exported as well as manufactured outside the country and brought into the country for use ie imported. The amended rule is merely clarificatory, corrects an obvious mistakes, removes discrimination between developers and units in special area zones. It merely clarifies or explains the existing law of providing non-imposition of excise duty on goods that are held to be export under the Special Area Zone Act. The substituted sub-rule 6(6)(i) is enforced from the date the 2004-Rules came into force.
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2013 (5) TMI 459
Rebate claims under Rule 18 of the Central Excise Rules 2002 - rejection of claim in the absence of the original and duplicate copies of the ARE-1 forms - contention of the Petitioner that the original and duplicate copies of the ARE-1 forms were lost by their CHA and the Petitioner had lodged an FIR - Held that:- Non-production of the ARE-1 form would not ipso facto result in the invalidation of the rebate claim. In such a case, it is open to the exporter to demonstrate by the production of cogent evidence to the satisfaction of the rebate sanctioning authority that the requirements of Rule 18 of the Central Excise Rules 2002 read together with the notification dated 6 September 2004 have been fulfilled. As the primary requirements which have to be established by the exporter are that the claim for rebate relates to goods which were exported and that the goods which were exported were of a duty paid character. As at this stage that the attention of the Court has been drawn to an order dated 23 December 2010 passed by the revisional authority in the case of the Petitioner itself by which the non-production of the ARE-1 form was not regarded as invalidating the rebate claim and the proceedings were remitted back to the adjudicating authority to decide the case afresh after allowing to the Petitioner an opportunity to produce documents to prove the export of duty paid goods in accordance with the provisions of Rule 18 read with notification dated 6 September 2004 Order No.1754/10-CX dated 20 December 2010 of D.P. Singh, Joint Secretary, Government of India under Section 35 EE of the Central Excise Act 1944 also placed on the record other orders passed by the revisional authority taking a similar view Garg Tex-O-Fab Pvt. Ltd. (2010 (10) TMI 880 - GOVERNMENT OF INDIA), Hebenkraft [2001 (3) TMI 124 - GOVERNMENT OF INDIA], Shreeji Colour Chem Industries v. CCE [2007 (10) TMI 523 - CESTAT, AHMEDABAD], Model Buckets Attachments (P) Ltd. v. CCE (2007 (2) TMI 520 - CESTAT, BANGALORE) and CCE v. TISCO 2003 (2003 (3) TMI 191 - CEGAT, KOLKATA) Thus as in the present case the Petitioner has inter alia relied upon the bills of lading, banker's certificate in regard to the inward remittance of export proceeds and the certification by the customs authorities on the triplicate copy of the ARE-1 form the rebate sanctioning authority directed to reconsider the claim.
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CST, VAT & Sales Tax
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2013 (5) TMI 481
Maintainability of petition u/s 16(2) of the Tamil Nadu General Sales Tax Act, 1959 after the amendments dated 01.07.2002 came into force – Petition challenging the order of the respondent levying penalty under revision of assessment. Held that - we see Section 16(1)(a) of the Act, it clearly says the revision of the assessment under Section 16 is permitted within five years from the date of order of the final assessment by assessing authority. Earlier it was incorporated as five years from the expiry of the year to which the tax relates. After considering the relevant amendments, there is no ambiguity for escaped assessment. The authority can definitely look into the matter and pass orders within five years from the date of order of the final assessment. Admittedly, the order was passed in this case on 30.04.2004 which is much after coming into force of the amending Act viz., 01.07.2002. Writ Appeal is dismissed.
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2013 (5) TMI 480
The petitioner has challenged show cause notice issued for imposition of penalty because of some observations made in the assessment order.- against the assessment order an appeal preferred by the petitioner is pending before the respondent no.4 and till the appeal is decided, further proceedings in continuation to show cause notice may be stayed. Held that - We dispose of this petition in terms of the directions issued by the Division Bench in Court in M/s Vijay Tank & Vessels Private Limited Vs. The Divisional Deputy Commissioner of Commercial Tax, Sagar & others. The aforesaid directions shall be applicable in the present case mutatis mutandis.
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Indian Laws
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2013 (5) TMI 464
Jurisdiction of court - Whether the allegation that GOI has not, at all stages of the tender, consulted English and Foreign languages University [EFLU] which is located at Hyderabad would, by itself, constitute "cause of action in part" having arisen within the territorial limits of this Court? - Held that:- It is evident from the letter dated 25.03.2013, addressed to the petitioner by EFLU, that the tender specifications were approved by EFLU for the purpose of inviting tenders. Both the letter addressed by the petitioner to EFLU on 18.03.2013 and the reply thereto by EFLU dated 25.03.2013 are three months after respondents 1, 3 and 4 had accepted the bids, of respondents 5 and 6, on 21.12.2012. The petitioners' grievance is only against respondents 1, 3 and 4, for having accepted the bids of respondents 5 and 6, and not against the 2nd respondent. The relief sought for in this writ petition is also not against EFLU which is located at Hyderabad, but against respondents 1, 3 and 4. That EFLU is located at Hyderabad, or that EFLU was not consulted at all stages by the 1st respondent - Government of India, are neither facts of substance nor do they constitute material, integral or essential facts which have nexus and relevance to the lis. The said plea is relevant only to show that the petitioner has a right of action on the accrued cause of action. The distinction between a "right of action" and the "cause of action" must be borne in mind, for it is the bundle of facts taken with the law applicable to them which constitutes the "cause of action", and it is before the High Court, within whose territorial limits the "cause of action" has arisen, can the petitioners have his right to the relief enforced. While the petitioners "right of action" may arise because EFLU was not consulted at all stages of the tender process, the "cause of action" is the failure of the 1st respondent, (which is located at New Delhi), to consult EFLU at all stages in the tender process, and in respondents 1, 3 and 4 accepting the bids of respondents 5 and 6, none of whom are located within the territorial limits of this Court. The action of the 1st respondent in not consulting EFLU, and that of respondents 1, 3 and 4 in accepting the bids of respondents 5 and 6, is either at New Delhi where the 1st respondent is located, or at Cochi in the State of Kerala where respondent No.6 is situated, and not at Hyderabad merely because EFLU is located thereat. As no part of the cause of action has arisen within the territorial jurisdiction of this Court, the Writ Petition as filed is not maintainable. The Writ Petition is liable to be accordingly, dismissed.
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