TMI Tax Updates - e-Newsletter
May 29, 2013

Case Laws in this Newsletter:

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

Articles

1. Electricity charge recovered from tenant not includible in renting of immovable property

   By: Bimal jain

2. COGNIZANCE OF OFFENCES

   By: Dr. Sanjiv Agarwal

News

1. Quarterly Report on Public Debt Management for the Quarter – January-March 2013 Released; Gross and Net Market Borrowings are Higher than Previous Year By 9.4 Per Cent and 7.1 Per Cent Respectively

2. Auction for Sale of Government Stock

Notifications

Customs

1. F. No. 437/33/2013-Cus-IV - dated 23-5-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

2. F. No. 437/32/2013-Cus-IV - dated 23-5-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

3. F. No. 437/31/2013-Cus-IV - dated 23-5-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

4. F. No. 437/30/2013-Cus-IV - dated 23-5-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

5. F. No. 437/29/2013-Cus-IV - dated 23-5-2013 - Cus (NT)

Appointment of Common Adjudicating Authority

Highlights / Catch Notes

Income Tax

• High Court Affirms Securities Transaction Tax Rebate u/s 88E; Applicable Even with Income Assessed u/s 115JB.

  Case-Laws - HC : Rebate in respect of securities transaction tax u/s 88E - the contention that this benefit is not available to the assessee whose total income is assessed u/s 115JB has no substance - HC
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• Court Reduces Petitioner's Monthly Installments from Rs. 80 Crores to Rs. 15 Crores Due to Genuine Hardship Plea.

  Case-Laws - HC : Stay application - plea of genuine hardship - instead of paying installments of Rs. 80 crores each month, the petitioner shall pay installments of Rs. 15 crores each month. - HC
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• High Court Quashes Reopening of Assessment on Unaccounted Bad Debts; Issue Should Have Been Addressed Initially.

  Case-Laws - HC : Reopening of assessment - unaccounted bad debts written off - Had the assessing officer felt that this point had been missed out in the first round he would have been stated so. - notice quashed - HC
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• CIT's Review of Audit Party's Suggestions Does Not Meet Reassessment Compliance Standards, Court Rules.

  Case-Laws - HC : Reassessment - conditioins - the argumnet that when the CIT had perused the suggestions of the audit party, the same should be seen as substantial compliance of such a requirement cannot be accepted - HC
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Service Tax

• Appellant Wins Refund of Service Tax u/r 6(3) Due to Non-Provision of Services; Lower Authorities Overruled.

  Case-Laws - AT : Refund - Re-credit of the service tax amount when services are not provided - Rule 6(3) -both the lower authorities are in error in not sanctioning the refund to the appellant. - AT
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• Company Avoids Penalty for Failing to Remit Service Tax Due to Bona Fide Mistake.

  Case-Laws - AT : Penalty - Non payment of service tax amount to the department despite being collected from the client - bonafide mistake - no penalty - AT
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• Appellant Faces Service Tax Liability on Software Import Despite Customs Duty and VAT Payments.

  Case-Laws - AT : Import of software - stay - duty of customs paid at the time of import - they paid vat at time of sale - Prima facie, the appellant is liable to pay service tax - AT
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Central Excise

• Court Rules on Cenvat Credit: Revenue Can't Selectively Appeal Against Some Assessees, Ensures Fairness in Tax Law Application.

  Case-Laws - HC : Cenvat Credit - use of inputs in exempted and non-dutiable products - Revenue cannot pick and choose between the assessees of same nature to file appeal in respect of the very same issue. - HC
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• Re-testing of Samples Allowed Even if Initial Tests by Approved Labs Are Clear and Complete.

  Case-Laws - HC : Request for re-testing of the samples - The application may not be rejected on the ground that the testing was done by Government recognized independent labs, and that the test reports are clear and complete. - HC
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Case Laws:

• Income Tax

• 2013 (5) TMI 669
  Rebate in respect of securities transaction tax u/s 88E - whether was liable to be adjusted from the tax as payable for the purpose of Section 115JB or is not relevant/material? - MAT - ITAT allowed the claim - Held that:- U/S 88E where the total income of an assessee in a previous year includes any income chargeable under the head Profits and gains of business of profession , arising from taxable securities transactions, he shall be entitled to a deduction, from the amount of income-tax on such income arising from such transactions. Section also provides the limit to which deductions shall be given. Therefore, it is clear that the assessee is liable to pay Securities Transaction Tax when he enters into securities transaction. Tax is payable simultaneously after realizing the consideration. However, if that transaction is included in the total income of the assessee where the total income is assessed either under the provisions of the Act or under Section 115JB when tax chargeable on such income is arrived at, he is given the benefit of tax deductions of the amount, which he has paid under section 88E by virtue of Section 87. When under Section 82A, the assessee is made liable to pay tax with an assurance that it will be deducted and Section 87 gives effect to such promise made under the statute. That is the reason why the word used to rebate. The amount paid is handed back to the assessee. Thus payment of tax twice on the same income is avoided. Therefore, the contention that this benefit is not available to the assessee whose total income is assessed under Section 115JB has no substance. As when the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid u/s 88E is given deduction, by way of rebate, u/s 87. This is the legislative intent. That is a promise to give deduction of the tax already paid. This is the mode in which tax already paid is handed back at the time of final computation. Therefore, the judgment referred by the Tribunal i.e. CIT V/S Horizon Capital Ltd. [2011 (10) TMI 489 - KARNATAKA HIGH COURT] strictly in accordance with law and does not called for interference. No substantial question of law involved in this appeal - In favour of assessee.

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• 2013 (5) TMI 668
  Revisionary proceeding u/s 263 - scope of the remand order - whether open or not - to pass fresh order or not - Held that:- The Income Tax Officer in para 3(i) of the impugned order has made reference to paras-2.2, 2.3 & 2.5 in particular and other paragraphs of the order passed by C.I.T. to support his view that the remand order passed by the C.I.T. was an open remand order. Meaning thereby, the assessment order was set aside in its entirety. No such thing in the order of the C.I.T. suggesting that the entire assessment order is being set aside. As discussed herein above, subject matter of revisional order was the income drawn from the cattle feed and green vegetable business and not other income. The Income Tax Officer was not justified in coming to the conclusion that he is also required to pass fresh assessment order for mentha business. To this extent, the impugned order cannot be allowed to stand and is hereby, set aside. However, by way of clarification, it may be added that it shall be open to the AO to raise all such queries which according to him, are relevant to determine the income of the assessee with regard to the cattle feed and green vegetable business. Thus by way of clarification it may be added that the petitioner cannot refuse to give the reply to the queries raised by the Assessing Authority. However, AO shall bear in mind the dictum of law as indicated above. Merits in the present writ petition. The writ petition is allowed rejecting the contention of the petitioner that the scope of order passed under Section 263 of the Act is confined to the determination of income of cattle feed and green vegetable business only.

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• 2013 (5) TMI 667
  Stay application - plea of genuine hardship - Commissioner directed the assessee to pay the demand by way of installments of Rs. 80 crores each month, the first being due on 20.05.2013 as initially, the installments are to be for Rs. 15 crores each month - Held that:- As petitioner is under no position (financially) to make the payments as per the directions of the Commissioner by virtue of the impugned order and that the petitioner has an excellent case Commissioner ought to have stuck to the same methodology of payment as indicated in the earlier order dated 11.02.2013 where only directed the payment of the undisputed amount of Rs. 369 crores by requiring payment in two installments of Rs. 15 crores each so that the amount of Rs. 30 crores is collected by the end of financial year 2012-2013. Since the Commissioner had initially only directed payment of installments of Rs. 15 crores each month, the same should have been continued even by virtue of the subsequent order, particularly, as at the stage of passing the subsequent order, the petitioner had clarified that the entire amount was disputed. That being so, order of the Commissioner dated 08.05.2013 modified to the extent that instead of paying installments of Rs. 80 crores each month, the petitioner shall pay installments of Rs. 15 crores each month. The first installment shall be due on 31.05.2013 followed by payments each month to the extent of Rs. 45 crores. Also CIT (Appeals) directed to dispose of the appeal positively within three months, that is, by 31.08.2013.

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• 2013 (5) TMI 666
  Reopening of assessment – escaped income – Assessee is a society registered u/s 12A and also exempted from the tax u/s10(23C)(iv) of the Act For the assessment years under consideration, at the relevant time, the exemption was not available. In these circumstances, the assessee has filed the returns by showing "NIL" income. So, the AO has issued notice under Section 148 of the Act. Held that:- In the previous and subsequent assessment years, the exemption was available to the assessee. As per the notice issued u/s 148 of the Act, the taxable income was shown at Rs.74,202/- and Rs.1,67,450/- respectively for both the assessment years. The amount is meager one and department was not supposed to file the present appeals. The same is barred by Section 268A of the Act also before initiating proceedings for the reassessment, the AO has neither recorded the reasons nor satisfaction as observed by the Tribunal in its order. Tribunal is the final fact finding authority as per the ratio laid down by the Hon'ble Apex Court in the case of Kamla Ganpati vs. Controller of State Duty, [2001 (2) TMI 132 - SUPREME COURT]. Thus, there is no reason to interfere in the impugned orders passed by the Tribunal.

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• 2013 (5) TMI 665
  Reopening of assessment - unaccounted bad debts/ advances written off - Held that:- In the present case AO had clearly raised a specific query with regard to bad debts/ advances written off and the petitioner/assessee had given details in respect thereof. It is obvious that since no such addition was made on that count, the AO had considred and examined the position and held in favour of the petitioner/assessee. Therefore, it can be safely concluded that, in the facts and circumstances of the present case, the assessing officer had, indeed, examined the issue at the time of the original assessment proceedings and had formed an opinion by not making any addition in respect thereof. Thus, the reopening of the assessment which had been concluded on 13.03.2006, would be nothing but a mere change of opinion. Revenue's submission that the point of bad debts written off may have been missed by the AO inasmuch as the present case was a complicated matter - Held that:- AO had finally raised only 4 issues, one of them being the issue of bad debt/advances written off. Therefore, it is not as if the AO had lost sight of the issue of bad debts/advances. In fact, he had specifically raised queries in this regard towards the fag end of the assessment proceedings and therefore it must be presumed that he was very much alive to the issue. Also in the reasons recorded for reopening AO does not says that he missed it as it revealed that AO in the second round was of the view that the addition should have been made in respect of bad debts/advances amounting to Rs. 40 lakhs because of the fact that it was on the capital account. Had the assessing officer felt that this point had been missed out in the first round he would have been stated so. The reasons as recorded also belie the contention raised by the respondent. Thus the notice u/s 148 is invalid - In favour of assessee.

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• 2013 (5) TMI 664
  Miscellaneous income and interest income - MAT - grievance of the assessee was only that the deductions to 30% of the deduction u/s 80HHC by invoking Section 80HHC (1B) while computing the book profit under Section 115JB was allowed - Held that:- The issue is no longer in dispute in view of the decision of in the case of Ajanta Pharma v. CIT (2010 (9) TMI 8 - SUPREME COURT) where it was made clear that 100% of the deduction would be allowable. Therefore AO was wrong in allowing only 30% of the deduction allowable under Section 80HHC for the purposes of computing book profits under Section 115JB. It is therefore, apparent that with regard to the issue of miscellaneous income and interest income, there was no dispute with the AO’s treatment of the same as being part of business income. Consequently, the contention sought to be raised on behalf of the revenue that the miscellaneous income and interest income should be excluded does not arise at all. This is so because the assessing officer had treated the same as part of business income of the assessee - no question of law arises for our consideration.

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• 2013 (5) TMI 663
  Advances written off - CIT(A) deleted the addition by holding that the amount involved was a trade debt - Held that:- Revenue was unable to point out any infirmity in the order of the Tribunal in allowing the appeal of assessee except that the provision of Section 36 was not followed to appellant, rightly answered that the claim for the written off amount in this case is based under Section 37 and not under Section 36, as contended by revenue. Appeal in favour of assessee.

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• 2013 (5) TMI 662
  Reopening of assessment - Capital gain chargeable to tax has escaped assessment as the cost adopted by the assessee as on 1.4.1981 in the present case is excessive and has based on the wrong estimation - assessee received the compensation of the land acquired by the Govt - Held that:- As the decision in the case of Vibha Gupta, co-sharer of the same land was the basis to reopen the assessment of the petitioner, as noted in the show cause notice and the reasons recorded and since that basis has become non-existent because of the supervening circumstance of the decision of the appeal-Authority, which has noted in its decision, that the rate of Rs. 130 must be reckoned as the basic price as on 1.4.1981. At best, that may apply even to the case of the petitioner. Suffice it to observe that the assumption of the Income Tax Officer of rate in respect of the said land as Rs. 180.07 per square yard, is a non-existent fact. Thus understood, the impugned show cause notice issued to the petitioner cannot be taken forward and for the same reason, the reasons recorded on 23rd February, 1996 deserves to be quashed and set aside. In favour of assessee.

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• 2013 (5) TMI 661
  Demand notice - Direction to pay Rs. 5,00,000/- issued by CIT(A) in exercise of the powers u/s 220(6) r.w.s. 120 founded on the conclusion that the petitioner was claiming exemption under Section 12A - Held that:- The basis on which CIT issued the demand notice to the petitioner being untenable, the direction so issued cannot stand to reason and will have to be set aside, being perverse. The fact that the petitioner has resorted to rectification and/or appeal proceedings against the decision of the AO, does not mean that the petitioner should be forced to pay amount of Rs. 5,00,000/-, as condition precedent on the assumption that the petitioner was liable to pay tax to the extent of Rs. 79, 43,170/-, which as aforesaid, is completely misplaced and which view suffers from non application of mind. Accordingly the impugned communication is quashed and set aside.

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• 2013 (5) TMI 660
  Re opening of assessment - no true and full disclosure on the part of the petitioner with respect to purchase of the Ship/Tug particularly in context of the petitioner’s claim for full depreciation @ 25% of the total value - Held that:- Present being a case of issuance of notice after four years from the end of relevant assessment year, and therefore, proviso to subsection (1) of Section 151 would apply. In such a case, irrespective of the level of AO issuing notice for reopening, a precondition of the Chief Commissioner or the Commissioner being satisfied on the reasons recorded by the AO that it is a fit case for issuance of such notice must be satisfied. This additional safeguard not only involves the application of mind on the part of the Chief Commissioner or the Commissioner but his satisfaction, which would be based on the reasons recorded by the AO, and such satisfaction should be that it is a fit case for issuance of the notice. Admittedly, in the present case, these requirements have not been fulfilled. What the Revenue however argues is that when the Commissioner had perused the suggestions of the audit party, the same should be seen as substantial compliance of such a requirement cannot be accepted. See CIT v. SPL’s Siddhartha Limited [2011 (9) TMI 640 - DELHI HIGH COURT]. Thus impugned notice for reassessment quashed.

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• Customs

• 2013 (5) TMI 659
  Principles of natural justice and reasonableness in the conduct of the adjudication proceedings - rejection of petitioner's demand for cross examination of the persons named in the show cause notice - Whether contraband concealed in the export consignment and taken out in the guise of Indian Attars is unsustainable in law? - Held that:- A perusal of the claim reveals that show cause notice can be visualised in one angle viz. that the counsel for the petitioner and the counsel for the co-noticee requested for an adjourment and it was granted for both of them. Further, three more personal hearings were granted on 26.09.2011, 18.10.2011 and 11.11.2011 and there was request on 20.09.2011, by the counsel for the co-noticee, who pleaded for leniency and mercy while passing the order. Another adjournment sought for was also granted. The hearing notice sent to M/s. Chennai Essential Oils and Aromatic was returned undelivered and then the notice was placed on the notice board. In the meantime, petitioner filed a writ petition before this Court and the said writ petition was disposed of on 08.12.2011 by directing the respondents to consider the petitioner's representation dated 14.11.2011. Thereafter, by a detailed order dated 13.01.2012, the respondents rejected the petitioner's claim for cross examination of the said persons named in the show cause notices. As there is no challenge to this order dated 13.01.2012, it has attained finality. But, only a consequential order passed alone was challenged wherein the confiscation of the prohibited goods was ordered and penalty of Rs. 30 lakhs on the 1st petitioner, Rs. 20 lakhs on the 2nd petitioner and Rs. 20 lakhs on proprietor of the supplier of Red Sanders. Immediately, without resorting to any further remedy, petitioners have rushed to this Court as if there is denial of an opportunity of cross examination.When the petitioners have not challenged the order dated 13.01.2012, on the question of denial of opportunity to cross examine the named persons, this Court cannot look into the matter as if there is violation of principles of natural justice. On the other hand, the order challenged being one which confiscated the prohibited goods and imposed penalty on the individual for their respective act, is an issue to be looked into by the appropriate appellate authority namely the CESTAT and without availing such a remedy, the petitioners have rushed to this Court. Thus the approach made by the petitioners by filing this writ petition without availing the appropriate appellate remedy by filing an appeal before the CESTAT is not appropriate in the given circumstances as the challenge is only to the order confiscating the prohibited goods and imposing penalty on the individuals. The reliance made by the counsel appearing for the petitioners on the various decisions of the High Court as well as the Hon'ble Supreme Court of India are all matters concerned with the denial of an opportunity to cross examination. In the absence of any challenge to such a denial, these decisions cannot come to the rescue of the petitioners - writ petition dismissed. Against assessee.

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• 2013 (5) TMI 658
  Misconduct of enquiry officers - Held that:- As the Chairman himself has taken initiative to proceed on administrative side by instituting departmental inquiry under CCS (CCA) Rules, 1965, against the Custom Officers and that this is the first act of alleged misconduct bordering the act of criminal offence on the part of custom officers present before us. Besides, the Chairman has already issued necessary instructions against the repetition of such acts of harassment as alleged and the petitioners have also participated in the pending proceedings without any further complaint. Thus, it would be appropriate to accept the prayer on behalf of Chairman, Central Board of Excise and Customs for final disposal of the case. Permission to use C.B.I. Report in the departmental proceeding to be conducted by the Custom Department is concerned - Held that:- Looking to secrecy required to be maintained in the interest of protection of witnesses,decline to accept the request. Thus, the Chairman shall proceed against the Officers independently on the basis of affidavit given before this Court without any reference to the extracts of the C.B.I. Report. Also direct the petitioner to participate in further proceedings under the Customs Act, if not already concluded.

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• Corporate Laws

• 2013 (5) TMI 657
  Compromise and arrangement - whether while sanctioning the Scheme proposed by the appellants/ propounders the Sugar Development Fund (SDF), a Government Company shall remain outside the Scheme - appellant-company registered as a sick company before the BIFR winding up of the company was recommended & during the pendency of the winding up petition promulgated a scheme for its revival - Held that:- SDF in terms of its extant rules could not restructure its debts it was legally not permissible the SDF is also a Government company and in fact, a clear and categorical statement had been recorded in the order dated 31-3-2006 which was to the effect that the Government companies which included the SDF would not be a part of the Scheme. The further submission being that this order is even otherwise not the subject matter of challenge what has been challenged before the Court is only the order dated 31-3-2006. Record shows that IFCI (Nodal Agency of SDF) did not have the requisite authority to cast its vote on behalf of the SDF and had, thus, been precluded from casting its vote. It has wrongly been recorded in the report dated 22-7-2005 that the SDF has voted in favour of the Scheme. The submission of the appellant that a 3/4th majority of the secured creditors had voted in favour of the Scheme is, thus, incorrect. Section 392 envisages a situation of 3/4th majority of the creditors present and voting. The SDF was neither present nor did it vote. This is substantiated from the record. Company Application had enlisted the list of secured creditors computing their liability. An amount of Rs. 182 lakhs had been shown as due to the IDBI. A sum of Rs. 149.60 lakhs was due to the IIBI. This is mentioned in the proposed scheme of arrangement itself. Submission of the appellant that 75 per cent of the secured creditors had voted in favour of the Scheme is, thus, an incorrect fact. The language of sections 391 and 393 makes it abundantly clear that when the company Court is called upon to sanction a Scheme it is in fact the duty of the Court to go through the proposed Scheme carefully and find out whether all the provisions of law and directions of the Court as to the conduct of meetings have been complied with and whether Scheme is in the interest of the Company as well that of its creditors and only then it should be given effect to. The order dated 31-3-2006 had noted that the promoters of the Scheme had in fact pointed out that the loans of the Central Government should be kept outside the scope of the Scheme and their claim could be apportioned. While expressing its reservation to the proposed Scheme, the Single Judge had however noted that it could in no manner be presumed that the Central Government had agreed to entirely waive off its custodian loan of Rs. 5461.10 lakhs to nil or to reduce SDF loan (also a Government loan) from Rs. 728.60 lakhs to Rs. 182.15 lakhs. Both these loans being Central Government loans were permitted to be treated as outside the Scheme. The different parameters for settlement with the IDBI and IIBI by paying of 40 per cent of their total dues whereas the Government dues of which the custodian loan was sought to be reduced to nil and the SDF loan being reduced to 25 per cent of its principal was also noted. These distinct parameters applied qua different secured creditors was against fairness. Accordingly, on the specific request of the promoters, a concession was granted and the Government loans which included not only the custodian loan but also the SDF loan were kept outside the Scheme. The scheme of arrangement, was in fact sanctioned only to benefit the class of unsecured creditors and the employees as apart from the OTS settlement with the IDBI and IIBI, the Scheme envisaged payment to the said persons. The Company Judge had noted that in the eventuality that the Scheme is not sanctioned there could be no other alternate but to wind up the company because the dues of the Company were enormous. Thus SDF loan also being a Government loan, both the custodian loan and the SDF were to be excluded from the purview of the Scheme. The Company Judge has ample power to pass such an order.

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• Service Tax

• 2013 (5) TMI 673
  Refund - Re-credit of the service tax amount when services are not provided - Rule 6(3) - Mandap Keeper services - party plot could not be given for the intended purposes - refund of amount to the customers - period of limitation - held that:- there is no time limit indicated in the provisions of Rule 6(3) of Service Tax Rules, 1994 for the appellant to utilize or take credit of excess tax paid by him. In the case in hand, there being no dispute as to the payment of excess Service Tax by the appellant and having refunded to his client, in my view, the appellant can avail the credit of such excess Service Tax paid by him for discharge of Service Tax liability which may arise subsequently having started his business as Mandap Keeper services. - both the lower authorities are in error in not sanctioning the refund to the appellant. Lower authorities directed to give the credit of excess amount of Service Tax paid by the appellant that can be utilized to discharge the Service Tax liability arising out of the services rendered by him, after lifting of sealing of the party plots. - Decided in favor of assessee.

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• 2013 (5) TMI 672
  Man Power Supply Agency services - stay - issue involved in this case is regarding Service Tax liability on the appellant on the ground that they have supplied labourers to their service receiver for the purpose of conversion of big lumps of bauxite and chalk into small pieces. - held that:- there is some statement indicating that the labourers are supplied on instruction of mine supervisor and they were working as per the instructions given by the supervisor. - matter needs reconsideration - pre deposit ordered for Rs. 2 lakhs - subject to compliance matter remanded back to commissioner (appeals).

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• 2013 (5) TMI 671
  Penalty - Non payment of service tax amount to the department despite being collected from the client - The only issue involved in this case is imposition of equal amount of penalty under Section 78. The allegation of the department is that the appellant deposited the Service Tax after being pointed out by the department and thus they intentionally suppressed the facts, thus liable for the penalty. - held that:- The appellant could not pay Service Tax only on the bona fide belief that they have to pay Service Tax after completion of the entire service not on the basis of account payment received in several lots. The department could not bring out any suppression or wilful misstatement or any intention to evade duty on the part of the appellant. Hon’ble Supreme Court judgment in the case of Rajasthan Spinning Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA) would apply in cases where ingredients of fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of Service Tax are present.- penalty waived. - decided in favor of assessee.

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• 2013 (5) TMI 670
  Import of software - stay - duty of customs paid at the time of import - they paid vat at time of sale - extended period of limitation - held that:- Hon’ble Supreme Court’s decision in Idea Mobile Communication Ltd. case (2011 (8) TMI 3 - SUPREME COURT) is to the effect that the mere payment of VAT on sale value would not per se preclude the Revenue from levy of service tax on the taxable service involved in the transaction. Prima facie, therefore, the appellant is liable to pay service tax on the service element of the transaction involving the software in India. However, as regards the demand for the extended period, they seem to have a valid point, which is that the findings recorded by the Commissioner in the context of dropping Section 78 penalty are in favour of the appellant also in the context of their challenge to the demand of service tax for the extended period. If the appellant did not have guilty mind for the purpose of Section 78, they did not have it for the purpose of the proviso to Section 73(1) of the Act as well, which is our prima facie view. Pre deposit ordered towards service tax demand pertain to normal period - stay granted towards penalty and balance amount of service tax liability and thereon pertaining to extended period of limitation.

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• Central Excise

• 2013 (5) TMI 656
  Stay order passed by the CESTAT - undue hardship and prima facie case - the question that has to be considered is whether an order passed by the CESTAT in terms of Section 35-F of the Excise Act or Section 129-E of the Customs Act would be an order against which an appeal would lie. - held that:- there is enough confusion in different Courts as to how such an order should be dealt with. There has to be a clarity to a person approaching this Court as to which is the correct forum. There cannot be an element of doubt with regard to the forum to which a person is entitled to approach under the statute. - matter needs to be referred to larger bench.

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• 2013 (5) TMI 654
  Recovery proceedings - circular dated 1-1-2013 - held that:- Commissioner of Central Excise (Appeals) directed to pronounce the order either in the stay application or in the appeal finally within four weeks. Till such time, the respondent shall not take any coercive measures to recover the amount as demanded by the notice dated 28-1-2013. With these directions the writ petition is disposed of.

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• 2013 (5) TMI 653
  Cenvat Credit - fraud - writ petition against the stay order wherein assessee was asked to predeposit rs. 40 lakhs - held that:- the appellant was afforded adequate opportunity to submit reply, and its request to supply the documents and cross-examination was accepted by the adjudicating authority. Inspite of several adjournments granted to the appellant, no proper reply was submitted. Several dates were fixed on which the owners of vehicle and transport companies were summoned. The appellant avoided these hearings. The adjudicating authority had sufficient material to record the findings that the appellant had played fraud in preparing documents. The consignments weighing 35 mt. tonnes were shown to be transported on vehicles, which was found to be three wheelers; and consignment of 28.148 mt. tonnes was found to be transported by vehicle, which was found to be a scooter. - stay order of tribunal is not erroneous - decided against the assessee.

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• 2013 (5) TMI 652
  Second round of litigation before tribunal - SSI Exemption - Notification no. 175/86 - submission of SSI certificate - extended period of limitation - held that:- In the earlier order dated 22.2.2001 the Tribunal had categorically held the applicant not to be entitled for the benefit of S.S.I. exemption which was available to the earlier Unit but would be entitled for exemption from the date of application i.e. 31.7.1987. This order had become final between the parties as the applicant did not challenge the same in any higher forum. That being the position, we are of the considered opinion that the Tribunal was justified in holding that this issue cannot be reopened in the second round of litigation. Demand beyond five years - held that:- from the adjudication order that the demand has been raised with effect from 06.11.1986 even though 86-87 had been mentioned. That being the position, we are of the considered opinion that there is no illegality in the demand as confirmed by the Tribunal as it falls well within the period of 5 years from the date a show cause notice issued to the applicant. Suppression, concealment or fraud or mis-statement - held that:- From the order of the Tribunal we do not find any such plea having been raised. The only plea raised before the Tribunal was that the demand beyond the period of five years under section 11 A of the Act could not have been raised. That being the position, we are of the considered opinion that the order passed by the Tribunal does not suffer from any legal infirmity. - decided against the assessee.

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• 2013 (5) TMI 651
  Rate of excise duty - re-testing of the samples - classification - manufacturer of rubber sheets - The department relied upon the test report dated 5.8.2010, given by the Director, FDDI, Noida, and the test report dated 29.3.2011, given by the Rubber Institute, Thane, Maharashtra. - The petitioner's request for re-testing the samples was rejected by the Additional (Technical), Central Excise, Kanpur - held that:- The provisions of the Central Excise Act provide for imposition of penalty and interest, for non payment of duty. The consequence may also result into quasi criminal liability on the manufacturer. In the circumstances, we are of the opinion that the denial of the statutory right for retesting the sample amounts to violation of principles of natural justice resulting into serious civil and criminal liability. Where the application for retesting, comply with these conditions, it should be invariably allowed. The application may not be rejected on the ground that the testing was done by Government recognized independent labs, and that the test reports are clear and complete. Re-testing allowed - decided in favor of assessee.

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• CST, VAT & Sales Tax

• 2013 (5) TMI 674
  Default of transit pass - Compounding fee for release of the goods vehicle detained - offence stated to have been committed by the petitioner u/s 70(1)(c), 71(3)(d), 71(3)(e) and 71(5)(a) of the Tamil Nadu Value Added Tax Act - Held that:- As the the petitioner now pleaded before this Court that the petitioner has valid objections to be filed as against the impugned goods detention notice and notice demanding compounding fee, this Writ Petition is disposed of, with a direction to the petitioner to file their objections to the impugned notices, dated 1.2.2013 respectively, within a period of two weeks from the date of receipt of a copy of this order, and on filing such objections, the respondent shall consider the same, afford an opportunity of hearing to the petitioner and pass appropriate orders, on merits.

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