Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 7, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Highlights / Catch Notes
Income Tax
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Set off of losses u/s 72 - Amalgamation of societies – assessee society could not have got the benefit of carrying forward losses of the erstwhile societies which were not in existence during the relevant Assessment Year - SC
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Nature of income – Prize money received on unsold tickets – prize won on such tickets amounts to income by way of winnings from lottery - The provision of Section 115BB of the Act is fully applicable - HC
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Block Assessment - Requirement to record the satisfaction – Proceeding u/s 153A & 153C versus 158BC, 158BD - The provisions of Section 158BD are pari materia with the provisions of Section 153C - HC
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Transfer of jurisdiction u/s 127 - neither any notice nor any opportunity has been given to the assessee before passing the order, nor there is any finding that it is not possible to give opportunity - order set aside - HC
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Entitlement for claim of set off of past losses - same business - two nature of business is wholly irrelevant - there was common management, unity of control and common control of business continued – set off allowed - HC
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Interpretation of Article 18 of Indo-UK DTAA – TDS on commission paid to Mr. Colin Davie who acted as an agent between the Assessee and the Artists - services were rendered outside India - NO TDS - HC
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TDS u/s 194C - placing of orders by the assessees to the manufacturers/suppliers to supply SIM/scratch cards as per their requirements cannot be treated as contract for carrying out works within the meaning u/s 194C(1) - HC
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Applicability of section 28(iv) - when such benefit or perquisite, whether convertible into money or not, has not been derived in this case by the Assessee, from business or profession, Section 28(iv) cannot be invoked - HC
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Once the assessee has accepted the findings in the order passed in the substantive proceedings that the concerns were benami and that the income of the benami concerns ought to be included in his income, then, the appeals do not raise any substantial question of law - HC
Customs
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Date of entry inward is the date mentioned in the Customs Register - The application for date of entry inwards as also the grant of entry inwards was on 01/03/2001 and rate of duty that would apply is the rate prevalent on 01/03/2001 - AT
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Liability of duty – non–performance of export obligation – duty and interest is paid before the service of notice - order of the adjudicating authority imposing penalty is one without jurisdiction - HC
Service Tax
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Club or Association service - principal of mutuality - FICCI and ECSEPC - activities fall outside the scope of the definition of ‘Club or Association’ service and the taxable service defined in Section 65(25a) read with Section 65(105)(zzze), prior to 01.05.2011 - AT
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Difference of opinion between members of tribunal - difference of opinion on facts - manner in which issues to be addressed - HC
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Claim of Notification No. 12/2003-ST - Tribunal has committed a fundamental error in insisting only upon production of Invoices, as evidence of goods being sold and ignoring the contract, R.A. Bills, etc. to arrive at the value of goods sold - HC
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Refund of the Service Tax - it is impracticable for the authorities to refund applications that are filed beyond time even it is paid under a mistake of law. - HC
Central Excise
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Denial of rebate claim - Duty paid mistakenly - export of goods - all the authorities have committed serious error in denying the rebate claims filed by the petitioner under Section 11B of the Act read with Rule 18 of the Rules. - HC
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DTA clearances of the cut-flowers (non-excisable goods) - 100% EOU - words “in an amount equal to the Custom Duty leviable on such articles, as if imported, as such” mentioned in Notification ibid should be read as it is - AT
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Denial of refund claim - area based exemption - the claim of the appellant for the refund of Education Cess and S&H Education Cess is not sustainable. - AT
VAT
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Exemption of Tax - Classification – Common salt – Res Judicata - what is excluded from exemption is only the 'salt for industrial use' and not the 'common salt' - HC
Case Laws:
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Income Tax
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2014 (5) TMI 160
Set off of losses u/s 72 of the Act - Amalgamation of societies – Societies in existence or not – Held that:- The contention of the assessee that the purpose of getting carried forward losses adjusted or set off against the profits of subsequent years, there must be some provision in the Act cannot be accepted - If there is no provision, the societies which are not in existence cannot get any benefit - The losses were suffered by the societies which were in existence at the relevant time and their existence or legal personality had come to an end upon being amalgamated into another society - the societies had no right under the provisions of the Act to file a return to get their earlier losses adjusted against the income of a different legal personality. The order of the HC is upheld that as there is no provision under the Act for setting off accumulated losses of the amalgamating societies against the profits of the amalgamated society, the assessee society could not have got the benefit of carrying forward losses of the erstwhile societies which were not in existence during the relevant Assessment Year – Decided against Assessee.
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2014 (5) TMI 159
Nature of income – Prize money received on unsold tickets – Business income OR income from any winnings from lotteries u/s 2(24)(ix) r. w section 115BB of the Act – Held that:- The assessee was appointed as a Stockist by the State Government on payment of commission on the sale of lottery tickets - the assessee was appointed as a stockist on principle to principle basis and not an agent to sell tickets on behalf of the State Government - In case of non-intimation within 24 hours from the closing date of the draw about the unsold tickets through the telegraphic message, the unsold lottery tickets would be treated as sold and included in the draw and the assessee was made liable to pay the price of the tickets to the State Government - the assessee has not been held to be organizer of the sale and to conduct draw of the lottery – thus, the amount of prize received on unsold lottery tickets is an income by way of winning prize from lottery - the prizes awarded to the assessee by draw of lots fall within the ambit of lottery and the amount gained falls within the ambit of income by way of winnings from lotteries. Relying upon Commissioner of Income-tax Versus Manjoo and Co. [2010 (9) TMI 754 - Kerala High Court] - the entire lottery tickets ceased to be stock-in-trade on the date of the draw because after the draw those tickets were unsaleable and have no value except waste paper – Section 115BB is a special provision under the Act to tax the income by way of winnings from lotteries - the agreement was for the appointment of stockist on the payment of commission on the tickets sold by the assessee - The unsold tickets for which the information has not been given within the stipulated period was deemed to be sold by the State Government to the assessee - being the purchaser, the assessee gets right to participate in the draw through such tickets - Thus, prize won on such tickets amounts to income by way of winnings from lottery - The provision of Section 115BB of the Act is fully applicable – thus, the order of the Tribunal is set aside - Decided decided Assessee. Disallowance of expenses – Addition u/s 68 of the Act - Held that:- It is not clear from the order of the Tribunal that from which source the money has been brought and credited in the accounts of the creditors - If the amount has been credited in the creditors' accounts by debiting the account of the State Government, the source is fully proved and the addition of the balance amount of Rs.7,21,840/- cannot be added u/s 68 of the Act - from the assessment order, it appears that the assessee maintains mercantile system of the accounts - It is not clear whether the assessee has claimed deduction and same has been disallowed or since the amount was found deposited in credit side therefore added u/s 68 of the Act or added treating it as revenue receipt – thus, the matter is remitted back to the Assessing Authority for the fresh adjudication – Decided in favour of Assessee. Disallowance of amount – Burden to prove - Held that:- There was no error in the order of the Tribunal - The burden lies upon the assessee to prove loss claimed by it - The assessee has claimed loss at Rs.21,13,848/-, out of which furnished details to the extent of Rs.19,22,168/-, therefore, disallowance of loss to the extent of Rs.1,91,680/- for want of evidence cannot be said to be unjustified – Decided against Assessee.
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2014 (5) TMI 158
Block Assessment - Requirement to record the satisfaction – Proceeding u/s 153A & 153C versus 158BC, 158BD - Notice to be issued u/s 158BD of the Act - Notice for undisclosed income of any other person - At what stage of the proceedings under Chapter XIV-B does the assessing authority require to record his satisfaction for issuing a notice u/s 158BD of the Act – Held that:- Following Commissioner of Income Tax-III Vs. M/s Calcutta Knitwears, Ludhiana [2014 (4) TMI 33 - SUPREME COURT] - For the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person - the assessing officer had not recorded the satisfaction note as required u/s 158BD of the Act - The provisions of Section 158BD are pari materia with the provisions of Section 153C. Bothe the CIT(A) and the ITAT rightly noted that there is no material showing the recording of satisfaction by the AO of the 'searched person' prior to issuance of notice u/s 153C to the assessee, i.e. 'the other person' - though the AO (of the other person) in the assessment order had stated that satisfaction for issuing notice u/s 153C was recorded on examination, it was seen that recording of satisfaction alleged to be recorded by the AO was not available thus, there was no substantial question of law arises in the appeal for interference with the judgment u/s 260-A of the Act – Decided against Revenue.
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2014 (5) TMI 157
Deletion of disallowance of claim of share loss – Detailed enquiry made by the AO - Whether the Tribunal was justified in upholding the order of the CIT(A) for deleting the addition made by the AO on account of disallowance of assessee's claim of share loss – Held that:- The Tribunal was rightly of the view that the AO has made his suspicion that the share loss claimed by the assessee is bogus only on the reasons that the assessee has been claiming loss of shares continuously - the share brokers through whom the assessee entered into shares transactions were the registered stock brokers - the assessee has been able to produce all the relevant documentary evidence in respect of the shares transactions entered into – thus, no question of law arises for consideration – Decided against Revenue.
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2014 (5) TMI 156
Transfer of jurisdiction u/s 127 of the Act – Held that:- As such no reason has been recorded, that is not possible to provide the reasonable opportunity of hearing - it was obligatory on the part of the CIT to provide the reasonable opportunity of hearing before passing the transfer order - It is a pre-requisite and mandatory - no opportunity has been given before passing the transfer order - u/s 127, the reasons should be recorded for the transfer of the case – but the order reveals that no reason has been recorded - both the requirements have not been fulfilled, thus, the transfer order dated 11.9.2008 is illegal. Relying upon Ajantha Industries v. Central Board of Direct Taxes [1975 (12) TMI 1 - SUPREME Court] - for exercising the power u/s 127 for transferring of the case from one officer to another officer of different jurisdiction, it is mandatory to give opportunity of hearing before passing the order and further the reason for the transfer of the case must be recorded - neither any notice nor any opportunity has been given to the assessee before passing the order, nor there is any finding that it is not possible to give opportunity nor any reason has been recorded for the transfer of the case - the Central Circle-4, New Delhi has assumed the jurisdiction by virtue of the transfer order dated 11.9.2008, all the orders passed by the Assistant Commissioner of the Income Tax, Central Circle-4 New Delhi are without jurisdiction and are set aside – Decided in favour of Assessee.
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2014 (5) TMI 155
Dismissal of registration u/s 12AA of the Act – Running of school – Purpose charitable or not - Held that:- Running of a school falls within the scope of activities for which registration can be granted u/s 12AA of the Act - the similar activities carried out by Shishu Niketan Model School have been granted registration, which is running four institutions - The Society has been established to manage one of such schools - There cannot be any attempt of the assessee to evade tax liability, as Shishu Niketan Model School has been granted registration and availing the benefit of tax – thus, the order of the CIT and the Tribunal in declining the registration to the assessee are not sustainable in law – Decided in favour of Assessee.
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2014 (5) TMI 154
Technical services - Article 12 and 13 of DTAA – Service Permanent Establishment - Whether the secondment of employees by BSTL and DEML, the overseas entities, falls within Article 12 of the India-Canada and Article 13 of the India-UK DTAAs – Held that:- The mere rendition of service is not an ‘included service’ that triggers tax liability - the enterprise must ‘make available’ the skill behind that service to the other party, i.e the Indian recipient - The definition is more restricted that in the India-UK DTAA - The service provided by the secondees is to be viewed in the context in which their secondment or deputation was necessitated - The overseas entities required the Indian subsidiary, CIOP, to ensure quality control and management of their vendors of outsourced activity - For the activity to be carried out, CIOP required personnel with the necessary technical knowledge and expertise in the field, and thus, the secondment agreement was signed since CIOP - as a newly formed company - did not have the necessary human resource. Relying upon Morgan Stanley and Co., In re [2006 (2) TMI 77 - AUTHORITY FOR ADVANCE RULINGS] - the salary is ultimately paid through the overseas entity, which is not a mere conduit - the social security, emoluments, additional benefits etc. provided by the overseas entity to the secondee, and more generally, its employees, still govern the secondee in its relationship with CIOP - It would be incongruous to wish away the employment relationship, as CIOP seeks to do today, in the face of such strong linkages - Whilst CIOP may have operational control over these persons in terms of the daily work, and may be responsible (in terms of the agreement) for their failures, these limited and sparse factors cannot displace the larger and established context of employment abroad. Reimbursement and the doctrine of diversion of income by overriding title – Held that:- Following AT&S India Private Limited, In re [2006 (11) TMI 138 - AUTHORITY FOR ADVANCE RULINGS] - The mere fact that CIOP, and the secondment agreement, phrases the payment made from CIOP to the overseas entity as ‘reimbursement’ cannot be determinative - Neither is the fact that the overseas does not charge a mark-up over and above the costs of maintaining the secondee relevant in it, since the absence to markup (subject to an independent transfer pricing exercise) cannot negate the nature of the transaction - the various factors concerning the determination of the real employment link continue to operate, and the consequent finding that provision of employees to CIOP was the provision of services to CIOP by the overseas entities triggers the DTAAs - The nomenclature or lesser-than-expected amount charged for such services cannot change the nature of the services - once it is established that there was a provision of services, the payment made may indeed be payment for services - which may be deducted in accordance with law - or reimbursement for costs incurred – thus, the ruling of AAR is upheld – Decided against Assessee.
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2014 (5) TMI 153
Entitlement for claim of set off of past losses - same business - Criteria for determination of claim – Nature of the business OR common management – Held that:- The decisive test is the unit of control, common management and common control of business and not the nature of the two line of the business - The main consideration which has to prevail is notwithstanding the fact that the assessee may close one activity and to carry on the other activity, if there is unity of control, common control and common management who carried out the business earlier and in a subsequent year it amounts to carry on the same business in the year under consideration - the set off of the loss has been claimed against income from the business which accrued from the business activity - The two nature of business is wholly irrelevant - The Tribunal has categorically recorded the finding that there was common management, unity of control and common control of business continued – there was no error in the order of the Tribunal – Decided against Revenue.
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2014 (5) TMI 152
Disallowance u/s 40(a)(ia) of the Act – TDS deposited beyond time – Held that:- Following CIT v. Rajinder Kumar [2013 (7) TMI 454 - DELHI HIGH COURT] - the amendment made by the Finance Act, 2010 was curative and the amount has to be allowed as deduction, if the tax deducted is deposited on or before the last day for filing the return u/s 139(1) for the relevant AY – thus, no substantial question of law arises for consideration – Decided against Revenue.
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2014 (5) TMI 151
Establishment of Permanent Establishment – Rig operated for the clients in India - Held that:- The Tribunal rightly was of the view that the word ‘used’ has been sufficiently explained in the Agreement requiring no further explanation - there is no scope of entering into the Income Tax Act as the word ‘used’ has been used in conjunction of ‘an installation or structure for exploration or exploitation of natural resources and only if so used for a period of more than 120 days in 12 month period’ - it is absolutely clear that the Agreement meant user of installation and structure for exploration or exploitation of natural resources and not merely being ready for use – the order of the Tribunal is upheld – Decided against Revenue.
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2014 (5) TMI 150
Deletion made after including the consideration received in kind – Scope of Section 48 of the Act – Whether the taking up of full value of consideration has to be look into while the computation of capital gains – Held that:- The Tribunal and the CIT(A) rightly was of the view that under the collaboration agreement the assessee had transferred 60% of the ownership in the plot for a consideration of Rs.1,90,00,000/- on which the capital gains was paid and the addition made by the AO of Rs.1,33,54,388/- on account of remaining 40% of the plot could not have been made as the assessee did not transfer that share to the collaborator and retained the same for himself - the penalty proceedings are independent proceedings and the issue could not be adjudicated in quantum proceedings. It has rightly observed that the share was kept by him on which the builder constructed the ground floor and has given the same to the assessee after construction - The value of that construction which the assessee had received was Rs.29,78,965/- which the assessee was entitled to for exemption u/s 54 of the Act – there was no justification for adding an amount – thus, the order of the Tribunal is upheld – Decided against Revenue.
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2014 (5) TMI 149
Interpretation of Article 18 of Indo-UK DTAA – TDS on commission paid to Mr. Colin Davie who acted as an agent between the Assessee and the Artists - Held that:- The Tribunal has correctly understood the limited controversy - the Assessee paid the remuneration to the Artists, to the agent and reimbursed the expenses in connection with the visit and performance of the Artists in India - the Assessee deducted tax at source and paid to the credit of the Central Government on the fees paid to the International Artists in India - The Tax was deducted at source on the payment made to Artists for performance in India but it was not deducted at source on the commission paid to Mr. Colin Davie who acted as an agent between the Assessee and the Artists performed in India. Mr. Colin Davie did not perform any services in India, but they were rendered outside India - thus, the commission income to the agent is not liable to tax in India - There was no obligation on the part of the assessee to deduct the tax at source at the time of making of payment - in the facts peculiar to the case of Mr. Colin Davie, Article 18 and particularly clause (2) is not attracted - The payment in relation thereto is not in terms of clause (2) of Article 18 - Mr. Colin Davie's commission income cannot be said to be taxable in India – as such no substantial question of law arises for determination – Decided against Revenue.
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2014 (5) TMI 148
Deletion of disallowance of provision for obsolete stock – Compliance of the method of valuation u/s 145A of the Act - Held that:- The Tribunal was rightly of the view that the assessee is continuously following the policy of valuation of closing stock on the basis of net realizable value which is in accordance with accounting principle - there is no deviation from the method of valuation prescribed u/s145A - the dispute is intensely factual - The Tribunal was guided by the tax auditor’s report which indicated that a reasonable method was adopted for treatment of the obsolete stock - The Tribunal’s view is not only plausible but a reasonable one - The assessee has been found to have followed the accounting standard – thus, no substantial question of law arises for consideration – Decided against Revenue.
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2014 (5) TMI 147
Validity of notice issued u/s 153A after search and seizure where - petitioner objected to assessment/ reassessment of income for assessment years 2004-05 to 2006-07 under the said provision since the assessments had already been concluded by the order of the Settlement Commission dated 17.03.2008. - Justification on the position of order passed u/s 245C – Held that:- Following M/s OMAXE LTD. THROUGH JAI BHAGWAN GOEL Versus ASSTT. COMMISSIONER OF INCOME TAX AND ANR [2012 (7) TMI 529 - DELHI HIGH COURT] - the applicability of any other provision of law including Section 148 had been ruled out once an order is made by the Settlement Commission - the order of settlement is conclusive as expressly stated in Section 245I – u/s 245F(1), the Income Tax Settlement Commission, in addition to the powers conferred on it under Chapter XIX-A, shall have all the powers which are vested in an income-tax authority under the Act - the finality attaches itself to Settlement Commission’s order is in respect of the matters referred to it – the orders of Settlement Commission are final and conclusive as to matters stated therein - The “matters” necessarily could comprehend disputed questions, items or heads of income, disallowance, etc. or variants of it, but always with reference to a particular assessment year - the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition u/s 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the petition - the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition u/s 245C - It cannot be said that there has been a true and fair declaration of income which is the pre- requisite for settlement by the Commission - If an order is obtained by fraud or misrepresentation of facts, it cannot be said that there was true and fair disclosure - The declaration contemplated in Section 245C is in the nature of voluntary disclosure of concealed income, it must be true and fair disclosure - Voluntary disclosure and making a full and true disclosure of the income are necessary preconditions for invoking the Commission's jurisdiction – thus, the notice issued to the petitioner u/s 153C cannot be sustained - the notice and all further proceedings are hereby quashed – Decided in favour of Assessee.
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2014 (5) TMI 146
TDS u/s 194C - Business of providing communication facilities – Transaction constitutes works contract or not u/s 194C of the Act - Payment made for obtaining SIM card & scratch card – Held that:- The word “work” as occur u/s 194C(1) has been explained to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer – Relying upon CIT-XVII, Delhi –vs- Silver Oak Laboratories P. Ltd. [2010 (8) TMI 839 - SUPREME COURT] - the assessees did not supply any material whatsoever to the manufacturer/supplier for the supply of SIM/scratch cards as per their requirement or specification, thus, the transaction cannot be treated as a contract for carrying out works within the meaning of the word “work” used u/s 194(1) of the Act, before its amendment. Even if the first part of the amendment i.e., sub-clause(e) of Clause(iv) of Section 194C is applied, the case of the assessees would not be covered by the clause since the assessees did not supply any material to the manufacturers - placing of orders by the assessees to the manufacturers/suppliers to supply SIM/scratch cards as per their requirements cannot be treated as contract for carrying out works within the meaning u/s 194C(1) of the Act as it existed prior to its amendment – Decided against Revenue.
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2014 (5) TMI 145
Applicability of section 28(iv) - value of any benefit or perquisite – transfer of shares for Failure to comply with the conditions of contract - Held that:- The Tribunal held that one crore shares of M/s Reliance Infocom Limited were given to three companies, namely, M/s Fairever Traders & Consultants Private Limited, M/s Softnet Traders and Consultants Private Limited and M/s Prena Auto Private Limited on face value of ₹ 1/ - the condition mentioned was not fulfilled by the Assessee and he returned one crore shares - there was no final transfer of the shares either in the name of Assessee or in the name of Companies in which the Assessee is a Director - If the transfer was conditional and if the Assessee fails to comply with conditions and the shares could not be transferred in his name, then, applicability of Section 28(iv) of the Act is ruled out. If the income chargeable to income tax under the head “profits and gains” includes the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession, but finding that such benefit or perquisite, whether convertible into money or not, has not been derived in this case by the Assessee, Section 28(iv) cannot be invoked - no substantial question of law arises for consideration – Decided against Revenue.
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2014 (5) TMI 144
Jurisdiction to invoke section 263 of the Act - Nature of gain – LTCG OR STCG - Validity of LTCG declared on sale of land – Land sold as part of the block – Held that:- The power u/s 263 should not have been invoked - The requisite satisfaction has not been reached - the Assessee while purchasing the assets executed a single document - It was a single composite transaction of purchase and undertaken in the year 1981 - The Assessee consistently claimed the depreciation on the entire asset including the value of land up to the Assessment Year 2000-2001, but in the Assessment Year 2001-2002 the Assessee made the valuation of land and building independently as on 01.04.1981 - The Tribunal rightly answered in favour of the Assessee because it referred to the undisputed facts that the AO right up to the AY 2000-2001 allowed the depreciation - the ITAT arrived at a conclusion that the view taken was possible and probable - in the facts and circumstances peculiar to the Assessee's case and when the land has been transferred by offering the amount of depreciation claimed earlier as income and which has been also assessed – no substantial question of law arises for consideration – Decided against Revenue.
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2014 (5) TMI 143
Substantial question of law – Jurisdiction u/s 154(3) of the Act – Doctrine of merger - Held that:- The proceedings are not substantive proceedings from which the appeals have been filed - They are rightly termed as consequential one. The substantive proceedings on the own showing of the assessee were that, in assessment years 1995-1996 to 1999-2000, the assessment was reopened - no prejudice would cause to the assessee merely because a personal hearing was not granted to him – the Tribunal has noted the objection and the dispute raised by the AO in the proceedings u/s 154 of the Act – the Tribunal have found that the assessee is trying to merely delay the proceedings and thwart the consequences of the orders passed in substantive proceedings - This is clearly a factual matter - Once the assessee has accepted the findings in the order passed in the substantive proceedings that the concerns were benami and that the income of the benami concerns ought to be included in his income, then, the appeals do not raise any substantial question of law – Decided against Assessee.
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2014 (5) TMI 142
Nature of income – STCG/LTCG OR business income - dealing in shares for the last 3-4 years while engaged in trading of educational books – Held that:- Both the CIT(A) and Tribunal was of the view that even though separate books of accounts were not maintained, the assessee had kept details of the share transactions with respect to each transaction of the sale of shares claimed as an investment which yielded income by way of capital gain - apparently dividend income was returned to the tune of Rs.2,65,634/- which was also offered for taxation - CIT(A) analysed every transaction and treated the profit arising on account of sale within a month from the date of purchase as a business income and the rest as capital gain - The Tribunal rightly held that out of the total capital gains claimed by the assessee to the tune of Rs.65,70,492/-, Rs.63,30,607/- was in respect of shares held as investment and disclosed as such in the audited balance sheet - this is itself indication that the volume-frequency-regularity test was applied – thus, no substantial question of law arises for consideration – Decided against Revenue.
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Customs
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2014 (5) TMI 165
Aid and abetment - Diversion of goods – Liability to confiscate goods - No High Seas Sales agreement - Non-existent unit - Goods sold without receiving payment - No High Seas Sales agreement – Reduction in Penalty - Held that:- Appellants knew the activities of M/s. Resham Exports that the goods will be diverted in the open market – It is held that appellants have aided and abetted in the activities of M/s. Resham Exports relating to diversion of the goods - The goods are liable to confiscation and appellants are liable to penalty - However, value of the goods sold is Rs.9.14 lakhs and duty involved is approximately Rs. 6 lakhs, the penalty imposed is on the higher side and therefore, penalty is reduced to Rs. 2 lakhs (Rupees Two lakhs only) – Decided partly in favour of assesse.
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2014 (5) TMI 164
Validity of Commissioner (A) Order - Date for Determination of duty - Imported goods, Canadian Whole Desi Chick Peas (pulses) – ‘No entry inward’ granted - Held that:- From documentary evidences available on record viz. port dues discharged on 01/03/2001; entry inwards application allowed on 01/03/2001 it is clear that the date of entry inwards is 01/03/2001 and not any other date. Relying upon Bharat Surfactants (Pvt) Ltd.v. UOI [1989 (5) TMI 66 - SUPREME COURT OF INDIA] - Date of entry inward is the date mentioned in the Customs Register - The application for date of entry inwards as also the grant of entry inwards was on 01/03/2001 and rate of duty that would apply is the rate prevalent on 01/03/2001 – This Court do not find any merit in this appeal – Decided against assessee.
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2014 (5) TMI 163
Entitlement for benefit of Project Import Regulations – Confiscation of imported Goods - Redemption fine – Requirement of recommendatory letter from DGTD/sponsoring authority – Principal-to-principal basis contract - Suppliance of material handling equipment - Differential duty demand - Levy of Penalty - Section 111 (o), 112 (a) of the Customs Act, 1962 – Imposition of another penalty - Section 112(a) and 112 (b) - Held that:- Recommendatory letter from DGTD/sponsoring authority was required only in respect of imports covered by Open General Licence or imports made by Central Government, State Government, statutory Corporations, public body or government undertakings run as a joint stock company - It was not mandated if the goods were covered by an import trade control licence or the imports were made by importers not covered by the above category of persons. In terms of said contract, M/s. Samsung Co. Ltd. obtained import licence No. 2042567 dated 07/10/1987 for import of the material handling equipment - Project Import Regulations, 1986 did not envisage submission of recommendation letter from the sponsoring authority in the case of goods, the import of which were covered by an Import Licence and when the imports were made by non-governmental authorities Para 288 of the Handbook of Procedures of the Foreign Trade Policy stipulated a condition that for the grant of project import benefits, recommendation from the sponsoring authority was required in addition to the licence - However, this condition was in existence only in the policy provisions relating to 1985-88 and the said condition was deleted when the policy provisions relating to 1988-91 came into force w.e.f. 01/04/1988 - The period of imports in the present case is after 01/04/1988. As per the policy prevailing at the time of importation, there was no requirement of obtaining any recommendation from the sponsoring authority - Thus, both in terms of the Project Import Regulations, as also in terms of the Foreign Trade Policy, there was no requirement of obtaining any recommendation letter from the sponsoring authority and hence this stipulation by the Customs authority on the basis of a public notice issued by them is not sustainable in law - Any requirement with respect to registration has to be in terms of the Project Import Regulations or the Foreign Trade Policy as it stood at the relevant point of time - Further, the Bills of Entries had been filed by M/s. Samsung Co. Ltd in their own name and the customs duty payments have also been made in the name of M/s. Samsung Co. Ltd. as per the documentary evidence available on record – Therefore, appellant is rightly entitled for the benefit of Project Import Regulations - Thus, the impugned demand denying the benefit of Project Import concessions to M/s. Samsung Co. Ltd. is clearly not sustainable in law and the same is set aside - Inasmuch as there is no violation of any provisions of law, the confiscation of the goods u/s 111(o) is also not warranted and question of imposing any redemption fine would not arise - Inasmuch as there is no commission or omission on the part of the importer and M/s. JNPT, imposition of penalties on them is also unsustainable in law - Inasmuch as differential duty demand itself is not sustainable, there cannot be any demand towards interest – Therefore, the impugned order is set aside – Decided against revenue.
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2014 (5) TMI 162
Waiver of pre-deposit - tribunal dismissed the appeal for non deposit of an amount as per stay order - Liability to pay import duty – Non-fulfillment of export obligation - Held That:- Tribunal found that there was no prima facie case and export obligation was not fulfilled in terms of the advance licence and the Customs Notifications by the petitioners and therefore, it came to a conclusion that the appellants are prima facie liable to pay the duty on the imported materials - Financial incapacity was not pleaded before the Tribunal by the petitioners - Tribunal in exercise of its discretion directed to pay only 50% of the duty - Unless the discretionary power exercised by the statutory authority is either perverse or arbitrary, this Court sitting under Article 226 would not interfere in such exercise of discretion - No record has been placed before this Court to establish as to whether the finding rendered by the Tribunal is either arbitrary or perverse - Assessees have not made out any case for interference by this Court – Decided in favour of assesses.
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2014 (5) TMI 161
Liability of duty – Imposition of Penalty and interest - Non–performance of export obligation – Issuance of Notice - Duty and interest paid before the service of notice - Once the duty is not paid within the specified time the liability to pay interest is automatic and the assessee is bound to pay interest for the delayed payment of duty - When the entire duty and interest payable was paid on 6-1-2003, the issue of notice on 7-3-2003 was one without jurisdiction – In view of Section 28(2B) if the duty and interest is paid before the service of notice and the said payment is informed to the proper officer, then the proper officer shall not serve any notice under sub-section (1) in respect to the duty or the interest so paid - If the amount of Rs. 7,24,161/- had been deposited more than what is actually due by the assessee after appropriating the amount due towards duty and interest, the balance amount should have been refunded to the assessee, question of imposition of penalty in these circumstances would not arise - Therefore, the order of the adjudicating authority imposing penalty is one without jurisdiction. Thus, order of the Tribunal setting aside the imposition of penalty is upheld - The order of the Tribunal setting aside the entire interest portion is set aside - The adjudicating authority shall calculate the interest payable for each year on the amount of duty payable that the said duty was due from the day it was due till the date of 6-1-2003 at the rate of 15% recalculating the interest and after apportioning the said interest portion, the remaining amount is to be refunded to the assessee - The matter is remitted back to the adjudicating authority to recalculate the interest – Decided partly in favour of assessee.
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Service Tax
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2014 (5) TMI 183
Club or Association service - principal of mutuality - services being provided by M/s Electronic and Computer Software Export Promotion Council (ECSEPC) and Federation of India Chambers of Commerce and Commerce and Industry (FICCI) - Held that:- FICCI and ECSEPC are engaged in activities having objectives which amount to public service and are of a charitable nature; the appellant ECSEPC is also a body falling within the exclusionary clause (i) of Section 65(25a) of the Act Services provided by appellants to their respective members and consideration received therefor is not exigible to tax in view of the principle of mutuality - The services provided by the appellants is not authorised for levy and collection of service tax under ‘Club or Association’ service, in view of declaration of unconstitutionality of the relevant and applicable provisions, by the judgment of the Gujarat High Court in Sports Club of Gujarat Limited vs. Union of India [2013 (7) TMI 510 - GUJARAT HIGH COURT] Services provided by the appellants to non members and the consideration received for rendition of such service, fall outside the scope of the definition of ‘Club or Association’ service and the taxable service defined in Section 65(25a) read with Section 65(105)(zzze) of the Act, prior to 01.05.2011 Services provided by the appellant FICCI to non members subsequent to 01.05.2011, though presumably may fall within the expanded scope of the taxable ‘Club or Association’ service, (by virtue of the amendments by the Finance Act, 2011), the proportionate service tax and interest for these services provided subsequent to the amendments w.e.f. 01.05.2011 (not identified in the impugned order), cannot be sustained since the show cause notice dated 28.12.2012, issued to FICCI covering part of the post amendatory period omits to allege FICCI’s liability to tax on the basis of the amended provisions and thus there is denial of due process Invocation of the extended period of limitation for initiation of proceedings against both the appellants, to the extent the extended period is invoked and the confirmation of penalties, is unjustified and unsustainable - Decided in favor of assessee.
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2014 (5) TMI 182
Difference of opinion between members of tribunal - difference of opinion on facts - manner in which issues to be addressed - Held that:- It is expected that Member (Technical) and Member (Judicial) work in coordination and in tandem. They ought to match their experience in their respective fields, their expertise in rendering a quality judgment. This harmony and order has to be maintained on the Bench and in all causes. The Tribunal Members should bear in mind that litigants would suffer and eventually justice would be a casualty if there are frequent differences of opinion resulting in matter being referred to a third Member. The experience shows that virtually the same members assemble for work day in and day out. If there is lack of cordiality and co-operation between them, then, the composition of the Tribunal itself may have to be altered. It is not possible and frequently to replace members or alter the composition of benches. The President is not expected to address such issues repeatedly. In these circumstances, we expect a better understanding and coordination between the members manning this Tribunal. At one time this Tribunal was known for its professionalism and expertise. The decisions were rendered efficiently and quickly. It was one of the best Tribunals and its example was cited even during the course of imparting training to the Judicial Officers at Academies. Its working resulted in saving time and costs. Further, both the Revenue and Assessee knew where they stand in terms of the Applicability of Tax laws. That serves larger Public Interest and guarantees Economic Justice to all. We would now at least expect the Tribunal to work in a manner so as to uphold the object and purpose of the Act. It may not to be out of context if we remind the members of the Appellate Tribunal of the practice, tradition Customs followed over decades by the Judges and which have been referred by the Hon'ble Supreme Court in several judgments. We are not at all critical of the manner in which the Tribunal is functioning and working. We are aware of the fact that at times large number of cases take a toll on the Judicial Officers or the Members. Pressure of work and docket explosion requires one to work tirelessly. However, Cordiality, Co-operation, Courtesy and respect for each other's view would assist in avoiding divergence of opinion on factual issues. If the view held by the other is possible, then, nothing is lost in going by it and if that furthers the cause of justice. To avoid differences of opinion on Mixed and purely factual matters, to foster the spirit of brotherhood and uphold judicial fraternity that we have invited the attention of all concerned to the above Judgment of the Supreme Court. Beyond that we may not be understood to have said anything and in disapproval. Debate resolves but dissent is unending at times. The word "Comrade"as defined in the concise Oxford Dictionary means a "workmate, friend or companion". The word and spirit need not be forgotten even by Judges and Adjudicating Bodies. We should continue the debate, dialogue, discussion and deliberation but differ rarely and in exceptional cases, with dignity.
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2014 (5) TMI 181
Claim of Notification No. 12/2003-ST - Tribunal held that demand for the period 2009-10 is within the normal period of limitation and the benefit of the Notification No. 12/2003-ST is not available to applicants as he had not produced evidence by way of invoices under which the goods were sold to the service recipient - Held that:- The condition in the Notification is only production of documentary proof indicating the value of the goods and materials supplied. This does not in any manner mean that the goods have to necessarily be supplied by way of or under invoices. Therefore, evidence was produced before the authority and the sufficiency of it has to be examined. If the appellant is able to show from the documents i.e. contract read with other documents including its R.A. Bills (Running Account Bills) and returns filed with the Sales Tax Authorities, the value of goods sold and supplied to the satisfaction of the authorities, it would be complying with the condition provided in Notification No. 12/2003-S.T., dated 20 June, 2003. We are normally loath to interfere with the discretion exercised by the Tribunal in passing orders, directing pre-deposit for the purposes of entertaining the appeal on merits. However, in this case, the Tribunal has committed a fundamental error in insisting only upon production of Invoices, as evidence of goods being sold and ignoring the contract, R.A. Bills, etc. to arrive at the value of goods sold. Therefore, grave prejudice has been caused to the appellant and we are required to interfere with the impugned order. - Matter remanded back - Decided in favour of assessee.
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2014 (5) TMI 180
Dismissal of appeal - Pre deposit order - Held that:- where the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, it may dispense with such deposit. The Appellate Tribunal has, therefore, to apply its mind to the facts of the case. Appellant has specifically urged in appeal that its other Unit has been given exemption and the same has been arbitrarily denied to present Unit. However, that ground appears to have not been looked into by the Appellate Tribunal. Thus, a material factor having bearing on the controversy has been lost right of. Appellant has been asked to make pre-deposit of Rs. 53 lakh under Section 35F of the Act. This Court granted stay of coercive recovery subject to appellant depositing Rs. 25 lakh. Admittedly, that amount has been deposited by appellant. - Assessee directed to furnish Bank guarantee - Decided conditionally in favour of assessee.
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2014 (5) TMI 179
Refund of the Service Tax - Bar of limitation - Held that:- From the materials available on record, it is seen that the amounts were credited to the Revenue under the Head of Account. "0044 - Service Tax" through TR-6 challans, which are purported for payment of Service Tax only and as such, the claim of the respondent that the payment was only deposit and not Service Tax, cannot be sustained. Further, a tax, be it., direct or indirect, is intended for immediate expenditure for the common good of the state and it would be unjust to require its repayment after it has been in whole or in part expended, which would often be the case in most payments of such sort. Therefore, it is impracticable for the authorities to refund applications that are filed beyond time even it is paid under a mistake of law. Therefore, the authorities have rightly rejected the claim of the respondent and this aspect has not been taken note of by the learned single Judge. - respondent. is not entitled for refund of the claim and the order of the learned single Judge needs to be interfered with - Decided in favour of Revenue.
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2014 (5) TMI 178
Waiver of pre deposit - Whether the order passed by the Customs, Excise and Service Tax Appellate Tribunal dismissing the appeal presented by the appellant is legal and proper and whether there is prima facie case, balance of convenience in favour of the appellant and whether irreparable loss would cause to the appellant if the order dismissing the appeal on account of failure to make pre-deposit is not set aside - Held that:- directions of the appellate Tribunal in respect of the pre-deposit of the amount need not be interfered with. The counsel appearing for the appellant, on instructions, states that the appellant would deposit the amount as directed by the Appellate Tribunal within a specified period and the Tribunal be directed to decide the appeal on its own merits. - Time to make pre deposit is extended - Decided partly in favour of assesee.
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Central Excise
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2014 (5) TMI 173
Duty demand - Whether in view of the undisputed facts that concentrates were initially cleared on payment of duty and the fact that said concentrates were received back in the factory premises and thereafter reprocessed with the existing in-process quantity of concentrates and declared on payment of duty again, the requirement of Rule 173L were fully satisfied and consequently rejection of refund claim was absolutely arbitrary, void and unjustified - Held that:- From the orders passed by the Commissioner (Appeals-II) and CESTAT, it is abundantly clear that despite being aware of the requirements of Rule 173L of the Rules for the purpose of claiming refund, first the appellant claimed Modvat credit, then reversed the same and is claiming the declaration submitted for claiming Modvat credit to be sufficient compliance of provisions of Rule 173L. Further, the basic requirement of submitting Form D-3 was never complied with by the appellant and, as such, in fact the process of seeking of refund under Rule 173L was not even properly initiated by the appellant, as such, having failed to satisfy the conditions of Rule 173L, the appellant’s refund claim was rightly rejected. In that case to avail of the concessional rate of octroi, importers were required to make declaration in prescribed form to the effect that the goods imported shall not be used for any other purpose for sale or otherwise, etc. Thus an incentive was sought to be given to such entrepreneurs by such concession if the raw material which is imported is also utilised in the industrial undertaking without selling or disposing of otherwise. This being the object, a verification at the relevant time by the octroi authorities becomes very much necessary before a concession could be given. Since the company in that case which had imported the goods within the Municipal Limit had failed to fulfil the obligation of filing the requisite declaration, the Supreme Court held that it cannot turn-around and ask the authorities to make verification of record. The Supreme Court further observed that the verification at the time when the raw material was there is entirely different from a verification at a belated stage after it has ceased to be there. The Supreme Court further observed that the failure to file the necessary declaration would disentitle the company from claiming any such concession - Decided against assessee.
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2014 (5) TMI 172
Waiver of pre deposit - Held that:- order dated 27-4-2013 is modified in the following terms :- (i) the petitioner shall deposit, within a period of 15 days from today, half the amount of Rs. 15,76,805/- with the department; (ii) as regards the balance amount, the petitioner shall file an affidavit before the appellate authority undertaking to pay the balance amount within 15 days of decision of the appeal; (iii) in case the petitioner does not abide by the aforesaid conditions, present writ petition shall be deemed to have been dismissed - Decided conditionally in favour of assessee.
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2014 (5) TMI 171
Denial of rebate claim - Duty paid mistakenly - export of goods - Held that:- when the petitioner is not liable to pay duty in light of the absolute exemption granted under Notification No. 29/2004 as amended by Notification No. 59/2008-C.E. read with the provision of Section 5A(1A) of the Act and when it has not got any other benefit in this case, other than the export promotion benefits granted under the appropriate provision of the Customs Act and Rules (which even otherwise he was entitled to without having made such payment of duty), we are of the firm opinion that all the authorities have committed serious error in denying the rebate claims filed by the petitioner under Section 11B of the Act read with Rule 18 of the Rules. The treatment to the entire issue, according to us, is more technical rather than in substance and that too is based on no rationale at all - Decided in favour of assessee.
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2014 (5) TMI 170
Maintainability of appeal - the question as to whether any goods are excisable or not - Held that:- Section 35G(1) provides, among other things, that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal. The precedents noted above are rendered dilating on the concept of the term ‘rate’. The question whether any particular transaction or goods is excisable is an issue directly linked to the question as to what would be the rate of duty of excise. If it is not liable for levy of excise duty, then it would be a case of 0% or ‘nil’. The question of coverage is, thus, a matter intrinsically linked with the determination of questions having a relation to the rate of duty of excise. Not only that, the phrase “any question having a relation to the rate of duty of excise” is part of the exclusionary clause in Section 35G(1). Reverting to Section 35L, we notice that clause (b) thereof provides for an appeal to the Supreme Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise. This means that anything attendant to the determination of any question having a relation to the rate of duty of excise would also fall within the trappings of the exclusion, thus, taking the jurisdiction away from the High Court; to be agitated before the Supreme Court in terms of Section 35L - there will be no situation of conflict of opinions between the different High Courts on any issue referable to the question of coverage - Appeals are not maintainable - Decided against Revenue.
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2014 (5) TMI 169
Stay application - Tribunal dismissed the appeal on the ground that clearance from committee of disputes was not taken by the appellant - Held that:- on 16th November, 2012 when the Tribunal applied its mind to the appeal, the order in the case of ONGC (1994 (1) TMI 88 - SUPREME COURT OF INDIA) constituting the committee of disputes was no longer operative. This subsequent event should have been taken note by the learned Tribunal to shorten the matter rather than relying on a technicality for the purpose of dismissing the appeal by holding that the order in ONGC was valid on 13th May, 2010 when the appeal was filed. - Decided in favour of assessee.
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2014 (5) TMI 168
Restoration of appeal - Waiver of pre deposit - Appeal dismissed for non compliance of pre deposit order - manufacture of M.S. Round / Bars by rolling mills - experiment was conducted by the Revenue and it was found that from the consumption of 1 KWH of electric power 830 kgs. Of finished goods are manufactured - As per the experiment, it was found that the applicant was showing higher consumption of electricity with intent to evade payment of duty - Held that:- experiment was conducted in the factory of the applicant in the presence of the applicant, which shows that the applicants are showing higher consumption of electricity than the actual consumption in the manufacture of excisable goods. There is evidence on record to show that the applicants are showing the sale of goods on losses, however, the applicant had given huge amount to traders on loan and received the interest of more than Rs. 36 lakhs in one year - prima facie the applicant has not made out a case for total waiver of pre-deposit of dues. Accordingly, the applicants are directed to pre-deposit 25% of Rs. 2,22,40,449/-the demand confirmed in respect of clandestine clearance of goods within a period of eight weeks. On deposit of the above mentioned amount, pre-deposit of the remaining amount shall stand waived during pendency of the appeal - Following decision of Orange City Alloys Pvt. Ltd. and other [2011 (10) TMI 440 - BOMBAY HIGH COURT] - Conditional stay granted.
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2014 (5) TMI 167
DTA clearances of the cut-flowers (non-excisable goods) - cut flowers grown by 100% EOU and cleared for DTA sales - Custom Duty on the inputs used in the production of those cut-flowers - whether the Custom Duty payable on the inputs used in the production of the cut- flowers which had been cleared to DTA, is to be taken as an amount equal to Custom Duty chargeable on the import of cut- flowers, as such, or it should be the actual Custom Duty on the inputs used in the production of cut- flowers cleared to DTA - Held that:- as per Notification 126/94-CUS., as it existed at that time, Custom duty was equal to the Customs Duty chargeable on the import of cut-flowers, as such – words “in an amount equal to the Custom Duty leviable on such articles, as if imported, as such” mentioned in Notification ibid should be read as it is – so, custom duty on import of Cut flowers is rightly charged - Following decision of LR. BROTHERS, INDO FLORA LTD. Versus COMMISSIONER OF CUSTOMS, MEERUT [2008 (7) TMI 288 - CESTAT, NEW DELHI] - Decided in favour of Revenue.
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2014 (5) TMI 166
Denial of refund claim - area based exemption - Whether or not the education cess and S&H Education Cess paid by the assessee in cash through PLA account would be refundable under Notification No. 56/2002-CE - Held that:- in this appeal, we are only concerned with the legality of rejection of refund order within the parameters of Notification No. 56/2002– CE. If at all, there is any force in the contention of the appellant, that the collection of education cess and S&H cess is without the authority of law, the appellant could apply for refund of erroneously paid excise duty under Section 11B of the Central Excise Act, 1944. Otherwise also, admittedly the excise duty as well as education cess and S&H Education Cess paid by the appellant at the time of removal of excisable goods from his unit has been passed on the customers, therefore, any refund of the excise duty or education cess given to the appellant would amount to unjust enrichment, which is not permissible, in view of Section 11B of the Central Excise Act which provides that refund in term of the provision shall be allowed if the incidence of duty paid erroneously has not been passed on to any other pers on. Thus, viewing from any angle, the claim of the appellant for the refund of Education Cess and S&H Education Cess is not sustainable. Thus, we are of the view that the refund claim in respect of the aforesaid cess in terms of exemption Notification No.\56/2002–CE has been rightly rejected by the authorities and there is no cause for interference with the impugned order - decided against assessee.
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CST, VAT & Sales Tax
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2014 (5) TMI 177
Transit fee - Method of Realisation of Transit fee – Transit Fee on transportation/imports of misc. coals – Transit Fee Under the U.P. Transit of Timber and Other Forest Produce Rules, 1978 Held that:- In terms of the directions issued by the Supreme Court on 29 October 2013, the realisation of the transit fee as directed by the Supreme Court will be subject to the final decision of the Supreme Court in the pending Special Leave Petitions against the judgment of this Court - The writ petition is disposed of.
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2014 (5) TMI 176
Exemption from Tax - Govt. Circular - Sale of diesel to Fishermen on par with the Government outlets – Colorable exercise of power – Jurisdiction under Article 226 – Reasonable Classification – Discriminatory & Arbitrary Actions – Article 14 - Held that:- By G.O.Ms.No.170 and G.O.M.s.No.130, the Government granted exemption from tax on sale of diesel to fishermen though outlets run by TNFDC, TAFCOFED and Authorised Private Dealers - There is no differentiation in the Government Order - The beneficiary under the Government Orders is the fishermen - If no exemption is granted, they have to purchase diesel at a higher rate - In both the Government Orders referred above, the exemption was also made applicable to Authorised Private Dealers - Therefore, any restriction at the point of supply can only be termed as arbitrary. Again in 2005, G.O.(D)No.110, Animal Husbandry and Fisheries Department was issued, wherein the Government had considered the need to grant exemption from sales tax to sale of diesel to fishermen by opening new outlets and even there no such restriction was contemplated - When the Government has not imposed any restriction in the Government Orders, the Committee has no right to give such findings that too without any reasoning - The Committee was only authorised to identify the private outlets which can be permitted to sell diesel to fishermen with tax exemption - However, it has gone beyond the scope of reference and imposed the conditions which according to us is arbitrary, as the Committee restricted supply in favour of TNFDC and TAFCOFED outlets - No doubt the scope of judicial review in the matters of policy decision is limited - However, when there is colourable exercise of power under the guise of reasonable restriction, this Court under Article 226 of the Constitution of India can very well interfere - For a classification to be reasonable, the conditions under which the classification is made must be different - When the conditions that apply to different parties are one and the same, any restriction on one party can only be termed as arbitrary and erroneous. Similarly, as rightly observed by the learned single Judge, when such restrictions were not imposed by GO, under the guise of memo / recommendations, the respondent cannot impose such restrictions - From the facts it is also seen that there is more demand in the areas where Authorised Private Dealers operate and the Government outlets are unable to sell their indented quota - Therefore, the argument that when sale is made, the revenue goes directly to the Government Agency cannot be applicable to the present facts - Because of the restriction imposed, the objects of the Government Orders are defeated - Not even a single case where there is misuse of the exemption in the sale made by Authorised Private Outlets is reported before this Court - Therefore, mere apprehension cannot be the ground for imposing restrictions, not contemplated under the Government Orders - The indent itself contains check and balance measures - Thus, concurring with the view of the learned single Judge and keeping in mind the public interest, it is hold that the actions of the appellants are discriminatory and arbitrary and affirm the Common order dated 15.06.2010 - In the result, these Writ Appeals are dismissed - Consequently, connected miscellaneous petitions are closed – Decided against Revenue.
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2014 (5) TMI 175
Exemption from Tax - Whether sale is Taxable for the purpose of granting exemption – Held that:- The mere fact that the department had cancelled the registration certificate of the vendors retrospectively per se would not be of any assistance to the Revenue to deny the second sale exemption - The cancellation of registration took effect from 1.4.90 and not prior to that period, which is relevant to the assessment under consideration viz., 1989-90 - There is hardly any material to show when the vendors started doing business as bill traders – No justifiable reason found to deny the assessee's exemption granted originally - The assessment order merely pointed out to the assessee not maintaining separate stock account regarding interstate purchase and sales as a ground for denying the second sale exemption - In the absence of any specific case made out to doubt the claim of the assessee as regards the details on freight charges for taking delivery, no justification found in upholding the order of the Tribunal - The order of the Tribunal is set aside, thereby, the above Tax Case (Revision) is allowed – Decided in favour of assessee.
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2014 (5) TMI 174
Exemption of Tax - Classification – Common salt – Res Judicata - Whether common salt purchased and used in the manufacture of biscuits and other items, is an exempted item under Entry 7 of Part B of the Third Schedule of the TNGST Act – Held that:- Judgment in MUNICIPAL CORPN. OF THANE v. VIDYUT METALLICS [2007 (9) TMI 399 - SUPREME COURT OF INDIA] followed - SC while considering the question of 'res judicata' in the matter of similar nature, observed that it would indeed be very difficult to hold that such a decision would not continue to operate in subsequent years unless it is shown that there are changed circumstances or the goods imported by the company in subsequent years were different than the ones which were imported earlier and in respect of which decision had been arrived at by the court - Thus by pointing out that the corporation therein has not brought any such contention or any material before the Court to take a different view, the Apex Court has held that the benefit of the earlier decision given by the High Court was right - Here also, by applying the said principle we find that there are no materials placed before this Court that the commodity which is the subject matter in both the occasions viz., for the assessment years 1997-98 and 1998-99 and for the present assessment years is different and distinct one - There are no change of circumstances also - On the other hand it is admitted that the commodity purchased and used by the assessee herein is only a 'common salt' - Therefore, having accepted the decision rendered by the Tribunal in respect of the very same commodity and treated it as an exempted goods under Entry 7 of Part B of the Third Schedule, there was no reason as to why the State took different view. Relying upon SHREE RAM MULTI TECH. LTD v. CCE [2006 (1) TMI 7 - SUPREME COURT] wherein Supreme Court considered the question of 'res judicata' in classification dispute – Held that:- Assessee was entitled to challenge the classification, especially when they were parties to earlier proceedings - Applying the said SC reasoning and the finding that the Revenue being a party to the earlier decision of the Tribunal in respect of the very same classification dispute and having allowed the same to become final, it is not justified in contending otherwise in this case especially in the absence of any change or circumstances - Even on merits, we find that the Revenue is not justified in treating the common salt, purchased and used by the assessee under Entry 62 of Part B of the First Schedule. Interpretation of Statute – Held that:- A bare perusal of the Entry 62 in Part B of the First Schedule would only show that what is placed therein is the "salt for industrial use", whereas, Entry 7 of Part B of the Third Schedule shows “the common salt (sodium chloride) other than the salt for industrial use" - Thus, by a mere reading of these two entries, a distinction can certainly be made between the words 'salt for industrial use' and 'common salt other than the salt for industrial use' - If the intention of the legislature is to bring the common salt used for industrial purpose also under Entry 62 of Part B of the First Schedule, then they would have not avoided the word 'common salt' in such entry - On the other hand the word used under Entry 62 is only 'salt' for industrial use and not 'common salt' for industrial use - Likewise exemption granted to the item under Entry 7 of Part B of the Third Schedule, is 'common salt (sodium chloride) other than the salt for industrial use' - It is to be noted here that what is excluded from exemption is only the 'salt for industrial use' and not the 'common salt' - The Tribunal has not noted the distinction between the "salt" referable to Entry 62 of Part B of the First Schedule and "common salt" referable to Entry 7 of Part B of the Third Schedule - There is no hesitation in accepting the case of the assessee - Revisions are allowed – Decided in favour of the assessee.
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