Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 26, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Computation of Capital Gains - Whether the sum paid by the assessee pursuant to the award passed in favour of Onkar Management Private Limited can be treated as expenditure incurred with regard to the transfer u/s 48(i) - held yes - HC
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Validity of notice u/s 148 - TDS was deducted on demat expnses - It is difficult to understand on what basis it is alleged that the income had escaped tax on a deduction that had not been claimed - HC
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Exemption u/s 10B – Process of segregation of metal scrap from cable scrap - process would derive ferrous metal, other non-metallic parts etc. - the process amounted to manufacturing - HC
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Scope of term charitable purpose u/s 2(15) - improvement of educational standard of science students by making available superior course material and methodology for examination in this behalf - There was no merit in the order of AO to give a restricted meaning - AT
Customs
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IF any doubt or question arises in respect of interpretation of Foreign Trade Policy or in the matter of classification of any item of the ITC (HS) or in the Handbook, the said question or doubt shall be referred to DGFT, whose decision thereon shall be final and binding - AT
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Confiscation of goods - Goods declared as waste and scrap - if the goods are serviceable but cannot be used as such then it is to be treated as scrap. - AT
Service Tax
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Waiver of pre deposit - when there were two views before the tribunal and on a legal point, then, a prima facie case was made out and for waiver of pre-deposit. - HC
Central Excise
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Duty demand - Goods seized and confiscated - Charges of clandestine removal are required to be proved by positive evidence and cannot be upheld on the basis of assumptions. - AT
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Condonation of Delay - A firm which is not a human entity cannot remain on tour. - condonation denied - AT
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Refund - amount due was not reflected in the books of account as claims receivable - refund claim was filed about 3 years after the decision of the Tribunal and more than 5 years after the payment of duty - refund not allowed on the ground of period of limitation as well as unjust enrichment - AT
VAT
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UPTT on the job work - colour, dye chemicals etc. used in bleaching, dyeing, processing and printing of gray cloth are consumable and are not transferred and not included in the definition of sale - HC
Case Laws:
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Income Tax
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2014 (5) TMI 782
Restriction u/s 43B - conversion of interest amount into loan - actually paid or deemed paid - retrospective effect of amendment - Held that:- The explanation which was sought to be pressed into service by the Revenue was introduced by the Finance Bill, 1999 and the Bill expressly stated that the Explanation would be operative with effect from 1st April, 2000 - Relying upon Eicher Motors Limited vs. Commissioner of Income Tax [2006 (7) TMI 201 - MADHYA PRADESH HIGH COURT]- the question was whether in spite of the clarification in the Bill itself, the Explanation could be applied with retrospective effect - Explanation 3C added to section 43B has specifically been made retrospective with effect from 1st April, 1989 - It is not possible to hold that Explanation 3C would nonetheless apply prospectively as contended by the assessee – Decided in favour of Revenue.
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2014 (5) TMI 781
Computation of Capital Gains - Expenses u/s 48(i) of the Act - Whether the sum paid by the assessee pursuant to the award passed in favour of Onkar Management Private Limited can be treated as expenditure incurred with regard to the transfer u/s 48(i) of the Act – Held that:- Following Commissioner of Income-Tax Versus Bradford Trading Co. P. Ltd. [2002 (9) TMI 33 - MADRAS High Court] and Commissioner Of Income-Tax Versus Shakuntala Kantilal [1991 (3) TMI 123 - BOMBAY High Court] - unless the assessee had settled the dispute, the sale transaction could not have materialised and the sale consideration had to be reduced by the amount of compensation paid – the expression used in section 48 of the Act, expenditure incurred wholly and exclusively in connection with such transfer has wider connotation than the expression, ‘for the transfer’ - the transfer would not have taken place and the payment has necessarily to be made for the transfer of the hotel - the sum was expended by the assessee wholly and exclusively in connection with the transfer of the capital asset and not de hors the transfer – Decided against Revenue.
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2014 (5) TMI 780
Validity of notice u/s 148 of the Act – Bar of limitation – Mere change of opinion - TDS not deducted – Wrong claim of deduction of STT – Held that:- Neither the notice issued u/s 148 nor the reasons furnished contained any allegation that the escapement of tax was on account of any failure on the part of the assessee to fairly and truly disclose any material - what is sought to be argued was the merits of the issue pertaining to the amount that ought to have been added to the assessee's income - It is not even suggested that any material had been withheld or that the AO had not applied his mind to the relevant material - such a contention could not have been raised as the assessee had clearly disclosed the entire record – thus, the reopening on this ground is not maintainable. The assessee has furnished the details of the deductions of tax in respect of which he had claimed expenditure - it has deducted tax at source u/s 194J of the Act and a statement giving details was also enclosed - It is not contended that any information in this regard had not been disclosed - It is not suggested that the deduction had not been made in respect of any item other than that mentioned in the said query-sheet – the assessee stated that it had deducted tax on Demat charges - it is not contended that any material had been withheld or that the tax not being deducted in respect of any payment other than the mentioned in the statement - It is difficult to understand on what basis it is alleged that the income had escaped tax on a deduction that had not been claimed - the reasons do not even allege that the assessee had failed to disclose fully and truly all material facts necessary for the assessment – thus, the proposed reopening is only on the basis of a change in opinion which is not permissible – Decided in favour of Assessee.
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2014 (5) TMI 779
Validity of notice u/s 148 of the Act – Bar of limitation – No concealment of information – Deduction of VSAT expenses – Derivative loss – Applicability of section 43(5)(b) of the Act - Held that:- The reasons indicate that the proposed reopening is not on the basis of any new or tangible material - The applicability of the Notification is prospective - the reasons that the derivative transactions till 25th January 2006 were not entitled to the benefit of the Notification and were treated as speculative transactions - It would be absurd to presume that the AO was not aware of the fact that the transactions pertained to the period prior to 25th January 2006 as he was dealing with the return of income for the AY 2005-06 – notice u/s 148 of the Act do not say that the escapement of income was on account of failure on the part of the assessee to fully and truly disclose the facts.
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2014 (5) TMI 778
Computation of capital gain - Sale of land – Indexed cost of acquisition - Demand raised including interest u/s 234B of the Act – Held that:- Assessee contended that the sale deed was relating to 7 kanals 8 marlas of land of which the value was estimated by the Registrar for stamp duty purposes at Rs. 13,87,500/- whereas the AO had taken the land sold to be measuring 1 kanal only - The AO as well as the CIT had taken the land sold to be measuring 1 kanal instead of 7 kanals 8 marlas – the orders passed by the AO and the CIT cannot be legally sustained – this, the order is set aside and the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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2014 (5) TMI 777
Scope of section 10B of the Act – Process of segregation of metal scrap from cable scrap - Whether the Tribunal erred in treating the processes employed by the assessee in segregating the metal scrap from cable scrap as 'Manufacture or produce' within the meaning of section 10B of the Act and whether the assessee carried out manufacturing process or not – Held that:- The term "manufacture", which definitions are worded slightly differently, the Courts have accepted the principle of fairly universal application that where the change or series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the process, it would amount to manufacture of an article or thing – Relying upon M/s. Ujagar Prints and others (II) vs. Union of India [1988 (11) TMI 106 - SUPREME COURT OF INDIA] - the word "manufacture" implies a change but every change in the raw material is not manufacture - There must be such a transformation that a new and different article must emerge having a distinct name, character or use. In case of mix cable scrap the material would be sorted and segregated in the factory in different diameters of various lengths - jackets and upper layers would be removed mechanically in order to make them suitable for feeding in different cable cutting machines and stripping machines - various strips in the cables are removed and sorted cable scrap would be put in cable cutting machines for cutting and stripping - several types of copper wires would be generated - Impurities such as plastic, dust and other metals would be separated through this detailed process and clean copper material would be sold after baling them on the baling machines and packing for export sale. Mix metal scrap would consist of several substances such as stones, rubber, steel, ferrous as well as nonferrous metals - This would be derived mostly from dismantling of buildings and other structures and plants - Scrap as such would have no other use or marketability before subjecting to manufacturing process - Assessees would segregate and remove attachments, sorting out various metals in categories from the mix metals - This process would derive ferrous metal, other non-metallic parts etc. - the Tribunal correctly came to the conclusion that the process amounted to manufacturing - the assessee, as an EOU is required to carry out manufacturing activity and on its DTA sales is also required to pay excise duty which the assessee paid and excise department collected. The assessees were to pay excise duty on the ground that the same amounted to manufacturing activity but would be declined deduction under the Income Tax Act on the ground that the same did not - the Tribunal has merely remanded the entire issue before the AO for fresh consideration of the entire issue without any observations and/or directions, we do not see any reason to interfere - the AO shall examine whether on DTA sales by the assessee, claim of deduction under section 10B of the Act would be allowable - whether the remittances on such sales have been received in foreign exchange or not would be just one of the additional aspects of the matter – Decided against Revenue.
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2014 (5) TMI 776
Requirement to serve notice for initiating proceedings u/s 271(1)(c) of the Act – Effect of amendment w.e.f. 1.4.1989 - Held that:- The Tribunal was of the view that the AO had not recorded any satisfaction while initiating the penalty proceedings and thus he had no jurisdiction to levy penalty u/s 271(1) (c) of the Act - Finance Act, 2008 effective retrospectively from 1.4.1989 had inserted sub section 1B in Section 271 of the Act – Relying upon Commissioner of Income Tax v. Pearey Lal and Sons (EP) Limited [2008 (9) TMI 142 - PUNJAB AND HARYANA HIGH COURT] - the view taken by the Tribunal that mere making of mention that penalty proceedings were being separately initiated in the order of assessment did not justify initiation of penalty proceedings, cannot be upheld - the initiation of penalty proceedings are held to be valid – Decided in favour of Revenue. Validity of deletion of penalty by Tribunal – Held that:- The AO had primarily levied penalty by treating the amount as cessation of liability whereas the CIT(A) did not agree with it but held that the account of BPCL showed less balance - there was inaccurate furnishing of particulars of income - The amount was shown payable to BPCL as on 31.3.2000 and 31.3.2001 - it would not amount to cessation of liability - The assessee had pleaded that the account of BPCL could not be reconciled as they were not supplying copy of the account - It was only after getting a copy of account from BPCL that the discrepancy in the account was added as income - It was claimed that there was no intentional understatement of income or deliberate furnishing of inaccurate particulars on the part of the assessee - The plea of the assessee is plausible and it cannot be held to be without any substance – thus, the levy of penalty by the AO and CIT(A) was not justified - Decided against Revenue.
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2014 (5) TMI 775
Jurisdiction of the AO u/s 153A of the Act – No valid search conducted u/s 132 of the Act – Addition u/s 69 of the Act – Unexplained investment - Allowability of rebate in respect of jewellery – Held that:- The issue of applicability of the Instruction No. 1916 dated 11.5.1994 to the assessment proceedings was considered in CIT vs. Ratanlal Vyaparilal Jain [2010 (7) TMI 769 - Gujarat High Court] – Tribunal has allowed the rebate to the assessee as per the aforesaid CBDT’s Instructions – unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained - the approach adopted in considering the extent of jewellery specified under the circular to be a reasonable quantity, cannot be faulted with - it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law - the AO is directed to allow the rebate of 950 gms. of jewellery as against the 700 gms. of jewellery directed by the CIT(A) – Decided in favour of Assessee.
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2014 (5) TMI 774
Scope of term charitable purpose u/s 2(15) of the Act – Educational institution - scope of imparting education - to pursue educational activities - improvement of educational standard of science students by making available superior course material and methodology for examination in this behalf – Held that:- Assesses books of accounts are audited and upheld by AO - No discrepancy or question about genuineness of the books and affairs of the assessee have been called into question - In earlier assessments u/s 143(3) assesses activities have been held to be educational and charitable activities and benefits of sec 11 have been allowed to the assessee - Registration u/s 12A has not been withdrawn – assessee demonstrated that nature of its educational activities, modalities of working, methodology of affiliation with CBSE and other Boards, fee structure, examination pattern remain same as in earlier year - AO has taken a divergent view on the assessee educational activities by holding that they are no more educational activities as regular classes are not held – Relying upon COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS Versus DIRECTOR GENERAL OF INCOME TAX [2012 (3) TMI 289 - DELHI HIGH COURT] - assessee though being only in conducting examinations is still to be regarded as educational institution. Also in Assam State Text Book Production and Publication Corporation Limited Versus Commissioner of Income Tax, Gauhati-I [2009 (10) TMI 60 - SUPREME COURT] it has been held that board though being only in the publication of books falls within the meaning of educational institution - It is not necessary to hold regular classes to be regarded as an educational institution – in AMERICAN HOTEL & LODGING ASSOCIATION EDUCATIONAL INSTITUTE Versus CBDT & OTHERS [2008 (5) TMI 17 - SUPREME COURT OF INDIA] publication of curriculum, reproduction of text books, faculty development programmes are to be held as educational activities. There was no merit in the order of AO to give a restricted meaning to the scope of meaning of term educational activities - AO's necessity of holding of regular classes or wholesome educational activities to be only eligible to be called educational activities eligible for benefits u/s 11 cannot be sustained - a charitable or educational institution can charge fees for rendering services, it is so as the surplus is accumulated which is further to be applied for charitable objects of the institution - in case of winding up, surplus has not dwell upon shareholders or relatives - the AO’s allegations in this behalf cannot be sustained - adverse inference drawn by AO is without any basis – thus, the order of the CIT(A) is upheld – Decided against Revenue.
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2014 (5) TMI 773
Disallowance of deduction u/s 10AA of the Act – Non-appearance of assessee on various occasions – Held that:- No one appeared on behalf of the assessee nor any request for adjournment is made - Notice has been issued on 01/04/2014 fixing the date of hearing on 15/05/2014 which was sent through Registered Post (A.D.) to the assessee and the same was returned by the Postal Authorities “unserved” - It is transpired from the order-sheet that the assessee has sought various adjournments, i.e. on 12/4/2013, 12/02/2014 & 01/04/2014 - From the conduct of the assessee, the assessee is not interested in prosecuting its appeal – Decided against Assessee.
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2014 (5) TMI 772
Transfer pricing adjustment – Determination of ALP – Held that:- The assessing authority issued notice u/s 133(6) to M/s Magnum Interior P. Ltd. on 28-1-2014 - the party did not furnish any detail except balance confirmation, the AO proceeded to add the entire amount as deemed income on account of short receipt declared in P&L A/c - The AO is found to have made an order within a short span of time on 8-2-2014 after it had required M/s Magnum Interior P. Ltd. to furnish information through its notice dated 28- 1-2014 - No reasonable time was allowed to the said vendor to furnish details as sought by the assessing authority nor assessee was required to bring such details on record from the vendors - The AO has not made genuine efforts to obtain the details and reconcile the difference - The addition made appears to be a result of lack opportunity to the assessee – thus, the addition is set aside and the matter is remitted back to the AO for procuring requisite details by exercise of his powers under the Act and make reconciliation with the transactions recorded in assessee’s books of account before making any addition for deficiency. Addition on account of transaction with M/s N Links – Held that:- The assessment order does not reveal the mode and manner of sending the notice to the vendor - After the notice stood returned, the AO did not confront the assessee about this fact nor required him to give his address or call for the requisite information and furnish it to the AO for carrying out the directions given by DRP - the assessee could not be expected to have reconciled the difference nor assessing officer can be said to have made bona fide effort to carry out the exercise as directed by the DRP- thus, the addition is set aside and the matter is remitted back to the AO so that requisite inquiries are made and assessee is confronted with the results. The transactions with M/s Thinkpot, the assessee has pointed out that difference in accounts of the vendor with that of assessee is due to the fact that different method of accounting have been adopted by them - The assessee claims to have furnished copies of invoices issued by M/s Thinkpot and has also furnished bank statement for evidencing the payment made to the vendor through a/c payee cheuqes - The AO did not make any reasonable effort or attempt to verify the genuineness and correctness of the transactions before reaching the conclusion of difference in the accounts – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Adjustment of interest on outstanding payment from AE – Held that:- There is delay beyond stipulated period in recovery of dues in the international transaction with AE - The assessee did not bring on record any similar uncontrolled transaction to show that no interest has been charged by it for similar delays nor any exact comparability has been established - DRP after considering the legal position, as contemplated under explanation (1)(c) below sec. 92B of the Act – Relying upon with reference to material and relevant facts on record, passed reasoned order and having regard to judgment dated 7-10-2010 of ITAT Bangalore Bench in the case of M/s Logix Micro Systems Ltd. Vs. ACIT [2010 (10) TMI 902 - ITAT BANGALORE] – there was no infirmity in the directions given by DRP – Decided against Assessee.
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2014 (5) TMI 771
Deletion of excess rent paid – No fresh deed has been signed - Held that:- CIT(A) was rightly of the view that the increase in rent from last year was due to taking more area on rent of 9000 sq.ft. as against 6000 sq.ft. – the AO has not been able to bring anything on record that this is an inadmissible expenditure u/s 37 of the Act being capital or personal in nature and not incurred for the purpose of business - the rent paid by the assessee has been duly reflected by the holding company and the holding company has shown it as its income from house property paying the applicable tax fully, at the maximum rate and has been accepted in an assessment completed u/s 143(3) of the Act - the addition is not justified and the order of the CIT(A) is upheld – Decided against Revenue.
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2014 (5) TMI 770
Recall of order u/s 254(1) of the Act – No communication for adjournment – Held that:- There was no communication of the date of hearing, even as the Bench had explicitly directed the Registry for informing the parties while granting adjournment for the said date on 14.01.2013 – there was sufficient reason for the non-appearance by or on the assessee’s behalf on the date of hearing, and not a lack of earnestness in pursuing its appeal, as inferred by the tribunal while dismissing the assessee’s appeal – thus, it would be justifiable to recall the order for being heard afresh by the tribunal – Decided in favour of Assessee.
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2014 (5) TMI 769
Deletion of penalty u/s 271(1)(c) of the Act – Agricultural income added in revised return – Held that:- Unless actual concealment of income or furnishing of inaccurate particulars of income is found from the return of income, penalty cannot be imposed - the assessee has made complete disclosure of income in the revised return and the AO has also accepted such income, provisions of sec. 271(1)( c) will not be attracted as imposition of penalty u/s 271(1)(c ) can only be considered on the basis of income tax return – Relying upon Commissioner Of Income Tax Versus Suresh Chandra Mittal [2001 (6) TMI 63 - SUPREME Court] - when income declared by the assessee is accepted no penalty can be imposed u/s 271(1)(c) of the Act – the order of the CIT(A) is upheld – Decided against Revenue.
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2014 (5) TMI 768
Disallowance of expenses u/s 14A r.w. Rule 8D of the Act – Held that:- Following assessee’s own case for the previous assessment year, it has been held that, revenue has not brought out any evidence to prove that the assessee has engaged any specialized staff either for making the investments in shares and mutual funds or for looking after such activities of the assessee, or to prove that any expenditure has in fact been specifically incurred for making such investments or for carrying out such activities - no disallowance in terms of S.14A is called for, merely based on the presumption that certain expenditure must have been incurred, by resorting to estimation of such expenditure - For bringing any interest expenditure claimed by the assessee under the ambit of Rule 8D(2)(ii) the AO has to show that the interest is not directly attributable to any particular income or receipt - there was merit in the contention of the assessee that the investments have been made from out of the interest-free funds available with it - no disallowance out of the interest expenditure is called for in terms of S.14A of the Act, by estimating such interest expenditure as attributable to the amounts of investment - there was no merit in the appeal of the department – Decided against Revenue.
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Customs
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2014 (5) TMI 789
Mis declaration of goods - classification of the API 5L PSL2x70 and x80 grades - Stainless Steel - Alloy steel’ - ‘Non alloy steel - production of Advance Authorizations - power of DGFT and its subordinate officers under the Foreign Trade Policy to amend/modify the Advance Authorizations retrospectively - Held that:- if any one of the elements specified in Chapter Note 1(f) to Chapter 72 in a steel, imported by importer appellants, is within the specified limit mentioned therein then that steel will be considered as ‘Other alloy steel’. When the grades imported by the importer appellants had Niobium (Nb) and Molybdenum (Mo) elements as per the limits specified in Chapter Note 1(f), theoretically those grades were required to be classified under Customs Tariff Head 7225, as even opined by importer appellants when these facts were confronted to them by the investigating agency. Production of advanced authorization - Held that:- From the above facts available on records technically the Advance Authorizations produced before the Customs assessing officers were not valid for the import of ‘Other alloy steel’ at the time of importation but looking to the provisions of Foreign Trade Policy and the subsequent acts of the offices of DGFT, necessary curative action was taken in favour of some of the importer appellants by the appropriate authorities in the interest of exports and export obligations with respect to certain Advance Authorizations have been accepted. However, the matter has not reached finality till date in view of the conflicting views expressed by the authorities under DGFT & due to the fact that the matter is subjudice before the Mumbai High Court but the defects in Advance Authorisations seem rectifiable. Preliminary objection taken by the appellants that provisions of sub-Section (ii) of Section 28 of the Customs Act, 1962 are not applicable to the show cause notices issued before 16.09.2011, is not acceptable as the amendment carried out under the Customs (Amendment and Validation) Act, 2011 uses the word Section which has to mean the entire Section 28 of the Customs Act, 1962, because amendment carried out inserted a sub-Section (ii) to the main Section and not a Section. Therefore, the argument taken on jurisdiction by the appellants is rejected. Willful mis-declaration on the Bills of Entry - Held that:- in the present imports made by the importer appellants a declaration given with respect to classification of steel as CTH 7208 in the Bills of Entry, cannot be considered as wilfull mis-declarations with intention to evade customs duty, in the absence of any other corroborative evidence - revenue is unable to bring on record that MTCs were manipulated by M/s PSL Ltd. or its employees. Further admission of non-alloy nature of imported steel grades by the appellants will not help the Revenues case because at the time of placing orders the exact percentages of various alloying elements are not known which can be seen only at the time of actual import of steel grades as per the MTCs - no malafide can be attributed on the part of the appellants and it cannot be held that imported goods were liable to confiscation or the importer appellants and other appellants were liable to penal action under the Customs Act 1962. Extended period of limitation - Held that:- All the appellant importers have been importing these grades of HR Coils from 2000 onwards under CTH 7208 as per SION Code C-593. On this ground also it cannot be said that these importers had any malafide intention to deliberately declare a wrong classification in the Bills of Entry to get undue financial advantage when such a classification practice was in vogue before the period of demand in the present proceedings. Accordingly extended period of five years available under Section 28 of the Customs Act, 1962 cannot be invoked. Powers of DGFT and its subordinate offices to amend the Advance Authorizations issued when the export obligations with respect to majority of them have already been fulfilled - Held that:- if any doubt or question arises in respect of interpretation of Foreign Trade Policy or in the matter of classification of any item of the ITC (HS) or in the Handbook, the said question or doubt shall be referred to DGFT, whose decision thereon shall be final and binding - The Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the advance licensing scheme. If at all they felt that the appellant had violated any of the terms and conditions of the licences, they should have referred the matter to the licensing authority for appropriate action rather than taking action suo motu. Practice of Customs clearance of the same grades of steel under similar Advance Authorizations right from 2000 onwards, clearly convey that classification of impugned grades was not considered important by the Assessing Officers in view of the export incentive schemes under Foreign Trade Policies read with Customs exemption notifications availed by the importer appellants. The most important aspect of the export incentive schemes under Advance Authorizations is that the same grade of steel (whether non-alloy or alloy steel) when exported in the exported goods the same grade of steel was eligible for import by the importer appellants. These appeals filed by the appellants cannot be decided against them on the basis of few admission statements of the individuals who were not involved in the practice of Customs clearances and were also not the metallurgical experts. The assessments made by the Assessing Officers on the Bills of Entry have not been challenged by the Revenue and the assessments already made cannot be opened only on the basis of a change in the mind of an authority based on a different interpretation when all the material facts were also within the knowledge of the Assessing Officers. - Decided in favor of assessee and against the revenue.
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2014 (5) TMI 788
Penalty u/s 112 - Forgery of signatures - Held that:- there is no direct evidence on record showing that Unisons Clearing Pvt. Ltd. which is a CHA firm, was directly involved in the fraudulently activity of importers. The adjudicating authority has observed that neither importer knew the appellant nor the appellant has signed any document and it was only their employees who were creating the problem and the mischief. In the absence of any direct involvement of the appellant, showing that they were aiding and abetting and associated with the importer, the imposition of penalty upon by them cannot be sustained - Decided in favour of Appellant.
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2014 (5) TMI 787
Waiver of interest - Duty already paid - Goods kept in warehouse even after expiry of warehousing period - Held that:- The period involved is from 1976. The statutory provision for payment of interest under Section 61 of the Customs Act, 1962 was not existence prior to 23-12-1991 and the appellant have paid duty on 31-3-2004. Therefore the appellant are liable to pay interest from 23-12-1991 till the date of payment of duty. The appellant are contesting the quantification of the interest with effect from 23-12-1991. In these circumstances, case is remanded to the lower adjudicating authority for the limited purpose of quantification of interest from the date of introduction of the provisions for interest. The appellant are at liberty to produce document in support of their claim for the quantification of the amount of interest - Decided in favour of assessee.
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2014 (5) TMI 786
Confiscation of goods - Goods declared as waste and scrap - On examination it was found that 50% of the goods are scrap but defective and serviceable and remaining 50% are unserviceable and scrap - Adjudicating authority allowed appeal and declared goods as scrap - Held that:- report filed by M/s. Anand Kulkarni & Associates itself is contradictory and examination report of M/s. SGS India Pvt. Ltd. clearly state that the goods are scrap. We further find that as the goods were found that the goods are bits which are used in the rigs. It is a clearcut observation that these bits are damaged and broken. Therefore, they cannot be used as such. In these circumstances, as held by the Hon'ble High Court of Punjab & Haryana in the case of Patiala Castings P. Ltd. v. UOI - [2002 (5) TMI 72 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH] and Board circular dated 12-5-2000, it is clearly held that if the goods are serviceable but cannot be used as such then it is to be treated as scrap. - Decided against Revenue.
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Corporate Laws
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2014 (5) TMI 785
Withdrawal of offer - Whether an open offer voluntarily made through a Public Announcement for purchase of shares of the target company can be permitted to be withdrawn at a time when the voluntary open offer has become uneconomical to be performed. - Held that:- in the years 2006- 07, 2007-08 and 2010-11, the respondent had acquired shares in excess of 5% which breached the 5% creeping acquisition limit. In our opinion, the respondent was required to comply with Regulation 11 and make a Public Announcement to acquire shares in accordance with law. The respondent admittedly not having complied with Regulation 11, in our opinion, the appellant was perfectly justified in taking the non-compliance into consideration whilst considering the feasibility of the public offer made on 20th October, 2011 - Delay in performance of its duties by SEBI can not be equated to refusal of the statutory approval requires from other independent bodies, such as under the RBI, Taxation Laws and other regulatory statutes including Foreign Exchange Regulations. Delay by SEBI in taking a final decision in making its comments on the letter of offer would not fall under Regulation 27(1)(b). Respondent has failed to place on the record either before SAT or before this Court the prejudice that has been caused by not observing Rules of Natural Justice. It is by now settled proposition of law that mere breach of Rules of Natural Justice is not sufficient. Such breach of Rules of Natural Justice must also entail avoidable prejudice to the respondent. This reasoning of ours is supported by a number of cases. We may, however, refer to the law laid down in N atwar Singh Vs. Director of Enforcement & Anr., (2010) 13 SCC 255 wherein it was held that “there must also have been caused some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice - All the information sought by SEBI related to the three earlier acquisitions when the creeping limit for acquisition has been breached for triggering the mandatory Takeover Regulations. In appeal, SAT has left the question with regard to the earlier three acquisitions open and to be decided in accordance with law. Therefore, clearly no prejudice has been caused to the respondent. Distinction sought to be made by Mr. Nariman with regard to voluntary open offer and mandatory open offer which is the result of a triggered acquisition is not accepted. The consequences of both kinds of offers to acquire shares in the Target Company, at a particular price, are the same. As soon as the offer price is made public, the securities market would take the same into account in all transactions. Therefore, the withdrawal of the open offer will have to be considered by the Board in terms of Regulation 27(1)(b)(c) and (d). Further, the deletion of Regulation 27(1)(a) does not, in any manner, advance the case of the respondent. It rather reinforces the conclusion that an open offer once made can only be withdrawn in circumstances stipulated under Regulation 27(1)(b)(c) and (d). We also do not agree with Mr. Nariman that voluntary open offer made by the respondent ought to be permitted to be withdrawn under Regulation 27(1)(b) for the reasons already stated. We have already come to the conclusion that the delay in offering comments by the Board on the letter containing voluntary open offer, though undesirable, is not fatal to the decision ultimately taken by the Board. - Following decision of Nirma Industries Ltd. & Anr. Vs. Securities and Exchange Board of India [2013 (5) TMI 629 - SUPREME COURT OF INDIA] - Decided in favour of appellants.
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FEMA
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2014 (5) TMI 784
Contravention of Sections 8(1) and 8(2) of the Foreign Exchange Regulation Act’ 1973 - Penalty - recovery and seizure of Indian currency - No opportunity for cross examination granted - Held that:- there was miscarriage of justice in denying the request of the Appellants for cross-examination of the ED officials. Allowing the request would have enabled the SD to determine whether the claim that the confessional statements were recorded under threat and coercion was credible - Although the mere discharge of the Appellants in the criminal proceedings will not ipso facto result in their being exonerated in the adjudication proceedings’ it is significant that even in the criminal proceedings the ED was unable to prove the so-called confessional statements of the Appellants under Section 40 FERA in accordance with law. A perusal of the original records shows that only the photocopies of the loose handwritten sheets are available. The originals of the Section 40 statements have not been marked as exhibits by examining the persons who recorded them. The AT also erred in proceeding on the basis that the failure to supply English translations of the seized documents was not violative of natural justice since the author of the documents was Prem Singh. The writings on the loose sheets were in Gurmukhi and not Pushto as thought by the ED during the adjudication proceedings. If reliance was going to be placed on the said loose sheets’ then surely they ought to have been translated if they had to corroborate the retracted statements of Prem Singh and Tarlochan Singh - Order set aside - Decided in favour of appellant.
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Service Tax
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2014 (5) TMI 803
Waiver of pre deposit - service tax on chit funds - Whether despite divergent views of two High Courts on the same issue, the Tribunal was right in holding that the Appellant has not made out a prima facie case and therefore directing the Appellant to deposit additional ₹ 30 lakhs to make the entire amount of assessed duty liability deposited at the Stay stage - Held that:- Even if there is a provision in the Finance Act, it will not applied to all forms of cash management and it would not be liable to service tax. That was a case dealt with and in the context of chit funds. The Andhra Pradesh High Court's judgment was holding the field. It was cited before the Kerala High Court but a learned single Judge of the Kerala High Court has taken a different view. To our mind, when there were two views before the tribunal and on a legal point, then, a prima facie case was made out and for waiver of pre-deposit. Moreso , when the appellant has already deposited a sum by way of service tax and by way of interest. In such circumstances, the amount was substantially secured. In the light of the legal argument canvassed and it requiring serious consideration, this was a fit case where the demand for balance deposit could have been waived - Stay granted.
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2014 (5) TMI 802
Waiver of pre-deposit - Business Auxiliary service - import of services - reverse charge - Held that:- petitioner is a manufacturer and a 100% exporter of Guar Gum Powder and had engaged agents abroad for procuring export orders. Canvassing for export of the petitioners goods falls within the ambit of Business Auxiliary Service and since the service was received from abroad, the petitioner would be liable to remit service tax on the considerations remitted to foreign agents, under the reverse charge mechanism operationalised on introduction of Section 66A in the Finance Act, 1994 w.e.f. 18/04/06. Prior to this date, the petitioner would not be liable to remit tax under the reverse charge mechanism. Petitioner asserts before us that the services of foreign agents were availed prior to 18/04/06 but consideration for such services received was however remitted after 18/04/2006. The petitioner failed however to respond either to the show cause notice or notices for personal hearing - As and when petitioner files an application for receipt of additional evidence, the same would be considered and such evidence, if legitimately could be considered at the hearing of the appeal. For the nonce, since the petitioner has already remitted the assessed tax liability, we are inclined to grant waiver of pre-deposit on condition that the petitioner remits the component of the interest due on the quantum of the assessed tax, within four weeks - Conditional stay granted.
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2014 (5) TMI 801
CENVAT Credit - Denial of benefit of Notification No. 15/2004, dated 10-9-2004 - Benefit of abatement of 67% - Held that:- Notification No. 15/2004, dated 10-9-2004 grants benefit of abatement of 67% on taxable value in respect of construction service. This benefit is available if no Cenvat credit has been taken on inputs and capital goods under Cenvat Credit Rules or no benefit under Notification 12/2003, dated 20-6-2003 has been availed. We find this Notification does not put any restriction that benefit under this Notification has to be availed during currency of entire contract. We also note that this Notification was rescinded on 28-2-2006 and Notification 1/2006 issued on 1-3-2006 granting the benefit of abatement subject to condition that no Cenvat credit has been taken in respect of input, capital goods and input services or no benefit has been claimed under Notification 12/2003. Contention of respondents that since they were availing credit of tax on input services prior to 1-3-2006, they will not be eligible for abatement under Notification No. 1/2006 and they opted for availing of Cenvat credit, has substantial force and we do not find any infirmity in findings of the Commissioner allowing abatement under Notification 15/2004 prior to 1-3-2006 and Cenvat credit facility with effect from 1-3-2006. - Decided against Revenue.
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2014 (5) TMI 800
Abatement under Notification No. 15/2004-ST and under Notification No. 1/2006-ST - Commercial and Industrial Construction services. - Revenue contends that assessee could not have availed abatement for some projects and at the same time could not pay full tax on other projects, availing the benefit of Cenvat credit on the latter type of projects - Held that:- The adjudicating authority has not stated any evidence to prove that the applicant used inputs or capital goods on which cenvat credit was taken, in projects for which abatement was claimed. Adjudicating authority has put the onus of proving the converse of this position on the applicant and held that such onus has not been discharged. Abatement can be extended with respect to each project for which conditions in the notification are satisfied rather than all projects of an assessee taken together. Further, the applicant provided the details of credit taken. Without providing any evidence to even suggest that credit was taken on inputs and capital goods used for projects on which abatement was claimed, tax demand confirmed by the impugned order cannot be prima facie sustained. That is to say demand based on the probability and not on records cannot prima facie be sustained. Therefore, we grant waiver of pre-deposit of adjudged dues for admission of appeal and stay its recovery till the disposal of the appeal - Stay granted.
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Central Excise
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2014 (5) TMI 795
Area Based Notification No. 56/2002-CE dated 14.11.2002 - Shortage of stock - Clandestine activity - Held that:- Both the units are located in area of Jammu & Kashmir and were enjoying the exemption Notification No. 56/2002. As per the said notification an assessee is entitled to avail the Cenvat credit of duty paid on the inputs. The said Cenvat credit is required to be first exhausted for payment of duty on the final product and thereafter the balance duty on the final product is to be paid out of the PLA. The duty paid out of PLA is subsequently refunded to the manufacturer. The said mechanism of payment of duty first by exhausting the credit amount and then by way of refund of the PLA duty amounts to exemption to an assessee located in the area of Jammu & Kashmir. The entire situation is Revenue neutral and no assessee would get benefitted by indulging into clandestine activity. Appellants have given suitable explanations for the removal of the aluminium coils to their sister unit, which the sister unit has accepted and was also in the process of returning the processed goods to M/s Alu Bond Enterprises. Mere non-following of the procedure, if at all, would not result in denial of credit. The shortages in respect of the other raw materials are marginal and keeping in view that the entire exercise is Revenue neutral, I find no favour that the impugned orders confirming demands against the appellants and confiscating the raw material and imposing penalty. Accordingly, the impugned orders are set aside - Decided in favour of assessee.
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2014 (5) TMI 794
Duty demand - Goods seized and confiscated - 40 bags of gutkha being transported - Driver produced invoice for 10 bags only - Clandestine removal of goods - whether 30 bags of Gutkha which were found loaded in the intercepted truck were cleared by the manufacturing unit M/s. Phoolchand Sales Corporation without payment of duty. - Held that:- immediately after the seizure one Shri Ram Narain Maurya claimed the ownership of the said bags and also produced on record invoice dated 30.8.2004 and issued by M M Marketing, Lucknow. The goods were also released provisionally to said Shri Maurya. However, the appellate authority has rejected the stand of Shri Ram Narain Maurya on the ground that his name was not disclosed by the driver on the spot. - Admittedly M/s. M M Marketing is dealing with the goods manufactured by Phoolchand and Shri Ram Narain Maurya was a sales man. The goods sold by M/s. M M Marketing to Shri Ram Narain Maurya are covered by a regular bills issued by M/s. MM Marketing. There is no direct evidence of clearance of the goods from the factory of M/s. Phoolchand Sales Corporation whereas on the contrary, the ledgers produced by M/s. M M Marketing clearly show the goods in question as also sale of same to Shri Maurya. Charges of clandestine removal are required to be proved by positive evidence and cannot be upheld on the basis of assumptions. When there is clear evidence of removal of goods from the factory premises and other evidence placed on record indicate the ownership of same by Shri Ram Narain Maurya, I find no reason to uphold the charges against all the appellants. In support reliance can be placed on the Tribunal’s decisions in the case of CCE, Delhi I vs. Ashok & Co. Pan Bahar Ltd. [2012 (9) TMI 863 - CESTAT NEW DELHI] and Shirley Dyers vs. CCE, Jallandhar [2013 (12) TMI 108 - CESTAT NEW DELHI]. - Decided in favour of assessee.
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2014 (5) TMI 793
Condonation of Delay - reasons for causing delay in filing the appeal is stated that the petitioner no. 1 i.e. M/s Blue Circle Speciality Chemicals P. Ltd. was on business tour and applicant no. 2 i.e. Smt. T.C.Urankar was unwell - Held that:- After three notices were sent to the appellant, the appellant neither bothered to attend the proceedings nor any affidavit/request has been received by the Tribunal. Further, on perusal of the record, it is seen that the applicant no. 1, M/s Blue Circle Speciality Chemicals P. Ltd. was on business tour. A firm which is not a human entity cannot remain on tour. Therefore, the application for Condonation of Delay has stated wrong facts. In these circumstances, the application for Condonation of Delay is dismissed as no reason for causing delay has been explained satisfactorily - Condonation denied.
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2014 (5) TMI 792
Interest u/s 11AB - Penalty u/s 11AC - whether the assessee would be absolved from the liability to pay penalty in view of their payment of differential duty before the issuance of show cause notice - Held that:- Section 11AB deals with interest on delayed payment of duty. Similarly Section 11AC deals with penalty for short-levy or non-levy of duty in certain cases. Both these provisions indicate that in case the duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Central Excise Act or the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty shall also be liable to pay penalty equal to the duty so determined. The assessee is also liable to pay interest for the period in question - CESTAT was not correct in their finding that payment of differential duty before issuance of show cause notice would put an end to the penalty proceedings initiated against the assessee. Therefore, the said finding is liable to be set aside - However penalty reduced to 25% - Decided partly in favour of Revenue.
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2014 (5) TMI 791
Duty demand - Equivalent penalty - Held that:- The reasons of imposing penalty are inherent in the order dated 30-6-2010 when the Tribunal has affirmed the stand of the appellant as untenable - The appellant improved its stand at different stage of proceedings. The variation in the ‘d’ factor was found as a matter of fact, therefore, the mens rea in not declaring the increased capacity is apparent. Though the authority has imposed 100% of the short amount of the duty as penalty but keeping in view the fact the amount of penalty is only Rs. 1,23,620/-, we do not find that such amount calls for any interference. Such amount is not even sufficient to set off the expenses incurred by the department in prosecuting the present proceedings forced upon the department for the wrongful and changing stand of the appellant - Decided against Assessee
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2014 (5) TMI 790
Cenvat/Modvat - Quantum of credit - Restriction of credit - Penalty whether the assessee can claim Cenvat credit pursuant to the provisions of Rule 57AC of the Rules in respect of the goods received prior to 1-4-2000 and installed after date in view of the inclusion of the provisions of Rule 57AC of the Rules inserted on 3-5-2000 - Held that:- capital goods were received by the assessee prior to 1-4-2000, but they had not been installed as on 1-4-2000 and the assessee availed credit of 50% for the assessment year 2000-2001 and availed credit of 50% in the next year which was clearly irregular. In view of the provisions which is clearly contrary to the provisions of Rule 57AC(c) of the Rules, the Hon’ble Supreme Court, after considering the provisions of Rule 57Q(3) of the Rules which was in existence prior to 1-4-2000 and also the provisions of Rule 57AC of the Rules which has come into effect from 1-4-2000, has clearly held that in view of the provisions of Rule 57AC(c) of the Rules, Cenvat credit may also be taken in respect of such capital goods having been received in the factory, but have not been installed before 1-4-2000 subject to the condition that during the financial year 2000-2001, the credit shall be taken for an amount not exceeding 50% of the duty paid on such capital goods - in respect of capital goods received prior to 1-4-2000, installed after that date, only 50% credit is eligible and balance of 50% is not eligible to be availed in the subsequent years - Order set aside - Decided in favour of Revenue.
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2014 (5) TMI 767
Refund claim - Unjust enrichment - Period of limitation - amount due was not reflected in the books of account as claims receivable - Eligibility for the duty exemption - benefit of Notification NO. 67/95-CE dated 16-3-95 - Held that:- it is an admitted position that the appellant HPCL did not follow the procedure for payment of duty under protest prescribed in rule 233B of the Central Excise Rules, 1944 or other provisions prescribed at the relevant time. Having failed to do that they cannot claim that merely because they had challenged the assessment order dated 30-01-2002, the payment made much earlier to the assessment order should be deemed as “payment under protest”. It is a well-settled statutory principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other. Period of limitation - Refund arose consequent to the decision of the Tribunal dated 15-7-2005. - Held that:- The payments were made much before, that is during December 1998 to June 2001 and part of the payments were made in June and September 2002 and in July, 2003. The refund claim was filed only on 19-5-2008, that is about 3 years after the decision of the Tribunal and more than 5 years after the payment of duty. Thus the refund claim has been filed much after the stipulated period of one year under section 11B and hence they are clearly time-barred - Thus in respect of refunds which became payable, this time limit would apply. In the present case the claim was filed only on 19-5-2008 and the amended provisions would certainly apply in respect of such claims. Viewed from this angle also, the refund claim is clearly time-barred. Unjust enrichment - Held that:- Refund amount due was not reflected in the books of account of HPCL as claims receivable. This implies that the duty paid was shown as current expenditure and formed part of the Profit and Loss account of the assessee. Thus, if the claimant himself has treated the refund amount due as expenditure and not as “claims receivable”, the claimant cannot said to have passed the test of unjust enrichment. This is the settled position in law. The appellant has also contended that the appellant's goods are sold at prices determined by the Govt. and therefore, it should be presumed that the appellant has borne the incidence - “uniformity in price before and after the assessment does not lead to the inevitable conclusion that incidence of duty has not been passed on to the buyer as such uniformity may be due to various factors”. Therefore, in the present case, the appellant HPCL has failed to cross the bar of unjust enrichment also and hence they are not eligible to claim the refund - Decided against assessee.
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CST, VAT & Sales Tax
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2014 (5) TMI 799
Exemption from tax - tax on the job work - process of Printing and dyeing of cloth - dyes and colour used - Whether on the facts and in the circumstances of the case the Trade Tax Tribunal was legally justified in exempting the dealer from payment of tax levied by the assessing authority under Section 3F of the Act - Held that:- Decision taken by the State Government on 7.10.2005, on the representation made by two such similarly situated persons as also the Northern India Textile Processors Association would be binding on the Assessing Authority within the State of U.P. wherein it has been held that colour, dye chemicals etc. used in bleaching, dyeing, processing and printing of gray cloth are consumable and are not transferred and not included in the definition of sale and the writ petitioners were allowed - Following decision of M/s Super Fine Processors Pvt. Ltd. Vs. State of U.P. and Others [2013 (6) TMI 482 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.
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2014 (5) TMI 798
Section 7 - Garnishee Order - Demand of Differential amount - revision petition and also the stay petition are pending before the first respondent - in another case, in revision application the matter was remanded back and there was no notice has been issued to the petitioner nor any fresh assessment order was passed as directed by first respondent. - Held that:- disputing the differential amount in the writ petitions, the petitioner has inter alia raised many grounds. In respect of W.P.(T) No. 1200 of 2014, it is stated by the counsel appearing for the respondents that the revision petition preferred by the petitioner is pending and the revision petition in respect of W.P.(T) No. 1183 of 2014 has finally been disposed of. If that is so, the petitioner would be at liberty to avail the statutory remedy as provided under the Jharkhand Value Added Tax Act, 2005. Since there is an effective statutory remedy available to the petitioner, we do not propose to go into the merits of the contentions raised by the petitioner in the writ petitions. Mr. Sumit Kumar, Senior Manager (Finance), BHEL, Bokaro Thermal Power Station is present in the Court and the Senior counsel on instruction submitted that the petitioner has sufficient funds with the DVC and the statement is recorded. Having regard to the submissions of the petitioner that the petitioner's source of finance is only DVC and consequent to the garnishee order issued to the DVC, the petitioner – which is a public sector undertaking is not in a position to make day to day payment of salary, statutory liability and other legal obligations and keeping in view the interest of the petitioner – a public sector undertaking and also the employees, we are inclined to grant interim stay of the garnishee order on conditions stated hereunder. Accordingly, the common garnishee order dated 06.03.2014 in respect of the financial year 2007-08 in W.P.(T) No. 1183 of 2014 and 2009-10 in W.P.(T) No. 1200 of 2014 is ordered to be kept in abeyance for four months.
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2014 (5) TMI 797
Rate of Tax – Classification of Masala powder – Interpretation of Statute - Whether the sale of Masala Powder by the assessee should be treated as food item taxable under Entry 63 of Part D of First Schedule or as Item 1(ix) of Part E of the First Schedule – Held that:- Tribunal correctly found that even though Masala Powder is used as an accessory for making mouthwatering combination of curries and other preparations of food that itself cannot be food and applying commonsense interpretation the Tribunal found that there is no infirmity in the order of the AC(A) in holding that in respect of 3 assessment years Masala Powder is unclassified item and should be treated under residuary clause - This Court in State of Tamil Nadu v. A.K.Sundaram [1983 (3) TMI 233 - MADRAS HIGH COURT] had observed that food must be something which must be taken to maintain life and growth and to supply nourishment - That being the basis, even as per the dictionary meaning of food which has got relationship to the maintenance of life and growth, by no stretch of imagination it can be held that Masala Powder is food by itself. Referring judgment in Ardeshir H. Bhiwandiwala v. State of Bombay, [1961 (1) TMI 70 - SUPREME COURT] relied upon Commissioner of Income Tax, Tamil Nadu-III v. Engine Valves Ltd., [1980 (7) TMI 87 - MADRAS High Court] and held that there is no reason to interfere with the order of Tribunal - Decided against the Revenue.
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2014 (5) TMI 796
Exemption of Tax – Levy of purchase tax - Whether exempted turnover would come into reckoning of the charging provision u/s 7A – Tamil Nadu Electricity Board Notified that all sales of goods u/s 17(1) of the TNGST Act are exempted from tax - Held that:- Judgments in STATE OF TAMIL NADU v. KANDASWAMI [1975 (7) TMI 123 - SUPREME COURT OF INDIA] and HOTEL BALAJI v. STATE OF A.P.[ 1992 (10) TMI 240 - SUPREME COURT OF INDIA] followed - The scheme of purchase tax levy u/s 7-A of the Act does not cover cases of sale or purchase of goods totally exempted from tax at all points u/s 8 or Section 17(1) - However, where the exemption is a qualified one, be it goods related or dealer related, purchase or sale of goods subjected to any of the contingencies enumerated under Section 7-A, would certainly attract the charge under Section 7-A of the Act - Going by these decisions, there is no hesitation in rejecting the plea of the assessee that the notification granting exemption to sale by Tamil Nadu Electricity Board cannot be considered as a circumstance to apply to the assessee to exclude the charge u/s 7-A of the Act - Quite apart from that Section 7-A itself underwent an amendment with effect from 1.1.1987. In the light of the provisions u/s 3 as well as Section 7-A of the Act, before the amendment in the 1986 i.e. upto 31.12.1986, and there afterwards from 1.1.1986 onwards, no hesitation in holding that the assessments were correctly made and the Tribunal's order is in accordance with the principle of law laid down by the Apex Court in KANDASWAMI [Supra] and HOTEL BALAJI [[Supra] - Revision is dismissed - Consequently, connected MP is also dismissed – Decided against assessee.
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Indian Laws
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2014 (5) TMI 783
Prevention of Corruption Act - requirement of previous approval of the Central Government - constitutional validity of Section 6-A of Delhi Special Police Establishment Act, 1946 (he DSPE Act)- Violation of Article 14 - Held that:- Section 6-A replicates Single Directive 4.7(3)(i), which was struck down by this Court. The only change is that executive instruction is replaced by the legislation. Now, insofar as the vice that was pointed out by this Court that powers of investigation which are governed by the statutory provisions under the DSPE Act and they cannot be estopped or curtailed by any executive instruction issued under Section 4(1) of that Act is concerned, it has been remedied. The essence of police investigation is skilful inquiry and collection of material and evidence in a manner by which the potential culpable individuals are not forewarned. The previous approval from the Government necessarily required under Section 6-A would result in indirectly putting to notice the officers to be investigated before commencement of investigation. Moreover, if the CBI is not even allowed to verify complaints by preliminary enquiry, how can the case move forward? A preliminary enquiry is intended to ascertain whether a prima facie case for investigation is made out or not. If CBI is prevented from holding a preliminary enquiry, at the very threshold, a fetter is put to enable the CBI to gather relevant material. As a matter of fact, the CBI is not able to collect the material even to move the Government for the purpose of obtaining previous approval from the Central Government. Undoubtedly, every differentiation is not a discrimination but at the same time, differentiation must be founded on pertinent and real differences as distinguished from irrelevant and artificial ones. A simple physical grouping which separates one category from the other without any rational basis is not a sound or intelligible differentia. The separation or segregation must have a systematic relation and rational basis and the object of such segregation must not be discriminatory. Every public servant against whom there is reasonable suspicion of commission of crime or there are allegations of an offence under the PC Act, 1988 has to be treated equally and similarly under the law. Any distinction made between them on the basis of their status or position in service for the purposes of inquiry / investigation is nothing but an artificial one and offends Article 14. Office of public power cannot be the workshop of personal gain. The probity in public life is of great importance. How can two public servants against whom there are allegations of corruption or graft or bribetaking or criminal misconduct under the PC Act, 1988 can be made to be treated differently because one happens to be a junior officer and the other, a senior decision maker. - Section 6- A(1), which requires approval of the Central Government to conduct any inquiry or investigation into any offence alleged to have been committed under the PC Act, 1988 where such allegation relates to (a) the employees of the Central Government of the level of Joint Secretary and above and (b) such officers as are appointed by the Central Government in corporations established by or under any Central Act, government companies, societies and local authorities owned or controlled by the Government, is invalid and violative of Article 14 of the Constitution - Decided in favour of Appellant.
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